1955-04-05

[Stage Direction]
Right Hon. L. S. St. Laurent (Prime
Minister): Mr. Speaker, the following announcement from London reached Canada just about an hour ago:
The Right Honourable Sir Winston Churchill had an audience of the Queen this evening and tendered his resignation as Prime Minister and First Lord of the Treasury, which Her Majesty was graciously pleased to accept.
I know that the thoughts of all hon. members, as indeed those of our fellow Canadians, are turned at this moment toward that very great statesman of our time. His decision to seek Her Majesty's acceptance of his resignation will be received with mixed feelings. All of us know that no one more richly deserves a respite from the overpowering public responsibility that high office imposes. But we shall miss a leadership which for so many years-and especially in the anxious days of war-has inspired and encouraged the people of the commonwealth of nations and indeed the whole free world.
Sir Winston, during his 80 years of restless activity, has played many parts. Few figures in history have compressed so many careers in a single life span. He has been soldier, author, painter, lecturer, journalist and statesman, and he has won recognition in all. But on this occasion peace-loving people throughout the world remember first with deepest gratitude his unequalled contribution to the cause of human freedom and peace. They recall especially that time of great adversity, when the commonwealth stood alone against the forces of nazism, and democracy was in such grave peril-how his actions and his words inspired in us then courage and hope-those qualities which were so desperately needed.
Referring to that struggle, on his 80th birthday, he said:
I have never accepted what many people have kindly said, namely, that I inspired the nation. Their will was resolute and remorseless, and it proved unconquerable ... It was the nation and the race dwelling all round the globe that had the lion's heart; I had the luck to be called upon to give the 'roar'.
We all realize that Sir Winston's contribution was infinitely beyond what his modesty would allow him to admit, and we all agree that his "roar" was one of the greatest and most memorable sounds ever to come from a human throat.
With victory won, Sir Winston could have retired secure in the knowledge that he had accomplished more in his lifetime, on behalf of his fellow men, than most men are called to do. But the restless Elizabethan spirit which possessed him, and his deep sense of public service, would not permit him even the briefest respite. He continued to devote his great talents and energies, both in opposition and in government, to the problems confronting his nation and to the cause of peace which had been so dearly won.
Canadians have been privileged to greet this great world leader many times. But I do not suppose any visit gave us greater joy than the one he made here last summer; for we were able to see for ourselves how completely he had recovered from his grave illness of two years ago. The citizens of Ottawa who lined the streets of this city during that visit will recall with warm delight how, in order to better exchange greetings with them, he climbed up on the back seat of the convertible automobile and gave them his famous victory sign.
Two months ago I had the privilege of attending the last prime ministers' conference with Sir Winston as chairman. He was immensely proud of our great commonwealth of nations, and I do not think any occasion pleased him more than to have the commonwealth leaders assembled in London to discuss the many problems confronting our association and the world at large. I know each of us there was filled with admiration and respect for the manner in which he conducted our discussions and for the brilliant analysis he gave us of the problems before us.
As Sir Winston Churchill steps down from the post of prime minister of Great Britain, I am sure that all Canadians will extend to him their most affectionate and grateful greetings and offer their sincere prayer that he and Lady Churchill may enjoy many more years of health and happiness together.
Hon. George A. Drew (Leader of ihe Opposition):: Mr. Speaker, I think that most of us here today have an uneasy feeling that the end of a great period of parliamentary

Sir Winston Churchill history has now appeared before our eyes. However, it would be wrong to suggest that the resignation of Sir Winston Churchill changes substantially the great institutions with which he has been associated for more than half a century. Of course the first impression is one of immense loss in the departure from the active parliamentary scene of the greatest parliamentarian of all time.
For fifteen years he has been the authentic leader of the free world. For fifteen years it has been his voice that has given expression to the hopes and aspirations and fortitude of people who have seen much that they cherished disappear, but have found comfort in his unwavering faith in the religious background of our life and in the strength of democracy itself to survive every change that may come.
It is a long time since the desperate days of 1940 when Britain stood alone-not alone, in fact, because there was the whole commonwealth ranged at her side, but alone in the immediate presence of the enemy. At that time words were spoken which must to many have seemed almost empty expressions of a faith that could hardly be supported by the dreadful arithmetic of war.
We will always remember how with that buoyant humour, never diminishing even in the most ominous hours, he came here to make a speech which will remain on the pages of the history of all countries which love freedom. He reminded his hearers that he had been told that if Britain fought on, separated from the nazi hordes by only a little more than 20 miles, her neck would be wrung like the neck of a chicken. There is no one here who will forget the way in which he gave his answer, the pause in his remarks when he said, "Some chicken, some neck."
It was his ability then, and in the troubled years which followed, to convey his meaning in the simple colloquial terms of the people who bear the brunt of every struggle, terms which appealed to people everywhere, because the words he used were understood in every language whatever it might be.
One of the great things about his life has been his close association at all times with the United States. Along with the great speeches that were made here in Ottawa to the people of Canada are those memorable speeches which he made in Washington. He appealed to the spirit and confidence of people with the same historic background in a way that no other man could have done. He said that if conditions had been reversed, if instead of his mother being the American member of the family it had been his father, he might have got into congress on his own.


That brought him very close to the hearts of the people of the United States. I feel sure that at this hour throughout the whole United States there is the same feeling of affection, the same feeling of respect and admiration which we cherish here, because the respect for Sir Winston Churchill and all he represents is something that is limited by no international boundary but is a common heritage of free people everywhere for all time.
His boldness in the face of immense difficulties, his challenge to the enemy who thought they were certain to prevail, rallied his own people and gave them courage and strength. It is true, as the Prime Minister (Mr. St. Laurent) has pointed out, that he sought to play down his own part. He sought to give the impression that he had merely been the interpreter of the sentiment of the people of Britain and of the commonwealth at that time. Thank God we had such an interpreter at that hour. There might have been others who with less certain voice would not have aroused the same response.
The simple fact is that no other man in history has occupied so many roles with such distinction as has Sir Winston Churchill. He is the greatest statesman of all time and I am confident that history will declare that fact. I remember that in his own book on his early life, written long before there seemed any possibility that he might occupy such a role, he spoke of the fact that seldom had a great leader in war been a great leader in peace. He then went on to make a statement the accuracy of which some of my medical friends challenge. He said that the brain is divided into two parts, of which one controls military affairs and the other deals with problems of peace, and for that reason very rarely has one man been able to be successful in both fields. Then long before he occupied a position of any substantial importance he said, "Who knows but that I may prove the exception to the rule?"
Whether his description of the brain was accurate or not, and there are those here who are more competent to express an opinion on that than I am, the fact remains that he emerged from the years of great war leadership; he tasted defeat without bitterness; he returned to power without boasting, and he has proved himself almost as great a leader in peace as in war. In fact I hesitate to place any reservation on his peacetime achievements because I have the impression that when the history of these times is written it may well be told that almost as great as his contribution to the freedom of the world in 1940 was his contribution to the unity of the western world at the time when disharmony seemed to prevail after the collapse

of EDC last summer. I think it will be found that his immense prestige brought together nations which seemed then to be drawing apart, and that the growing unity of western Europe is a tribute to the manner in which he was able to speak to the leaders of other nations and bring them together at that time.
Fortunately we are not here to mourn him; on the contrary he is very much alive. The news reports we have received today state that he enjoyed a pleasant evening last night surrounded by his immediate friends and honoured by the presence of the Queen to whom he has rendered such magnificent service. How fitting it was that on his last day in office he should be host, with Lady Churchill, to the Queen whom he served so well; this remarkable man who had the unique opportunity to serve Queen Victoria, her son King Edward VII, King George V, King George VI and now the new and young Queen Elizabeth II. What an unparalleled service that has been to the institution of monarchy in which he so strongly believes. He is still very much alive and I prefer to believe that instead of this being, by any manner of means, the end of his activities we shall probably see this as the beginning of a new period of adventure which will greatly help all of us.
He now goes out, free from any suggestion of partisan political association, as the elder statesman not only of Britain but of all free nations. He enters that new period of adventure with a spirit of youth which he has expressed so well even during recent weeks. When I learned just a short time ago that his resignation was official-and most of us thought it would not be official for at least a few hours yet-I was reminded of these lines of Oliver Wendell Holmes, which it seems to me apply to him so aptly at this time:
Call him not old. whose visionary brain
Holds o'er the past its undivided reign.
For him in vain the envious seasons roll
Who bears eternal Summer in his soul.


Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, on behalf of those associated with me I wish to join with the Prime Minister (Mr. St. Laurent) and the Leader of the Opposition (Mr. Drew) in the moving tributes they have paid on the occasion of the resignation of the Right Hon. Sir Winston Churchill.
On occasions like this, one is tempted to look down the long avenue of time at the history of the institution of parliament which we share in common with the people of Britain and other parts of the commonwealth, and perhaps to appraise those who are in power and exercising influence within that institution. When I heard that Sir Winston
Sir Winston Churchill
Churchill had resigned I looked back and could think of no prime minister in British history who occupies a higher place in the affections of the British people, the Canadian people and indeed of the world than Sir Winston Churchill. The only name I can think "bf that can be placed beside that of Sir*; Winston Churchill is that of William Pitl the Elder, the great Earl of Chatham. He laid in large part the foundation of this commonwealth or of the British Empire, as it was called then, and Churchill in his time has been one of the architects of the modern commonwealth.
'What a long span of history that is. No man, I think, has better expressed the ideals and the determinations of the democratic peoples of the world than has Churchill. I, of course, can look back to a time when Churchill was prominent in public life in the early part of this century as a pungent spokesman for the Liberal party. I remember him as an outstanding leader of the British commonwealth during the first war in the coalition government. I of course remember him later on sitting as an independent member in the British House of Commons, and now we realize that he has won the admiration and support of many people who have disagreed with him on occasion throughout the years.
When it came to the formation of that wartime government in 1940, despite the fact that many people had bitterly opposed many of his views, the Labour party said, "We will serve under Churchill, and under none other will we serve." And so today, as the curtain of public life is rung down as far as the prime ministership of Britain is concerned, one can only say that whether or not one agrees with the political philosophy which governs the party views of Sir Winston Churchill, I believe it is the glory of democracy, of this commonwealth and of this institution that on occasions like this we can all admire and pay tribute to the great services rendered by a statesman to the people of his day and his generation, whether or not one agrees with all his views.


Mr. Solon E. Low (Peace River):: Mr. Speaker, it is not often that this parliament pauses to pay tribute to a man or a woman who is still living. This therefore marks a very interesting precedent in my experience in this house. I am very glad to join with those who have spoken this afternoon to pay tribute to a man who has earned the place he now holds in the affections of everyone. I suppose it is because Sir Winston Churchill is such an amazing man that we are doing what we are doing today, breaking new ground. This man has aroused the imagina-
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Inquiries of the Ministry tion and the admiration of free people in all parts of the world. Churchill surely represents the very best in British statesmanship, and for that reason he is looked to for advice, counsel and guidance, and this has been true for many years.
It is to be regretted that Churchill was not able to realize his dream of peace throughout the world while he was still in office. I imagine he would like to have stayed in office until he did realize his dream, 'but perhaps in his new-found retirement he might still be able to contribute something to the achievement of peace.
Sir Winston Churchill has earned the gratitude of many millions of people in all lands for his great services to humanity in many fields. I sincerely hope that he will have as many years as he might desire in which to enjoy his retirement, free from the responsibilities of office. And if he wishes to continue to represent his old constituency in the House of Commons I hope he will have that privilege, too.



PRIVATE BILL


[Stage Direction]
Bill No. 307, respecting the Fredericton & Grand Lake Coal & Railway Company.-Mr. Murphy (Westmorland).

[Stage Direction]
On the orders of the day:
Mr. J. H. Dickey (Parliamentary Assistant to the Minister of Defence Production):: Mr. Speaker, on March 31 the hon. member for Eglinton (Mr. Fleming) asked the Minister of Trade and Commerce what arrangements are being made for printing the documents pertaining to GATT which the minister tabled on March 28. We have now received from Geneva a limited number of copies of these documents bound together in a more convenient form. This includes all the documents tabled by the minister on March 28, except the declaration on the continued application of the tariff schedules. I now wish to lay on the table a copy in English and in French of this publication. This declaration referred to is not included in the documents I have tabled because it is simply one of a series of declarations affecting the GATT tariff schedules.
The documents now available in this printed form relate directly to the revision of the general agreement itself and the proposed organization for trade co-operation. Copies of these documents, and of the declaration on tariff schedules, may be obtained from the Clerk of the house.


The government is now giving consideration to arrangements for making available in printed form an edition of the GATT, which will make clear the nature of the general agreement as it emerged from the review session, the character of the proposed organization on trade co-operation and the significance of the declaration on continued application of tariff schedules.



REPLY OF UNITED STATES GOVERNMENT


[Stage Direction]
On the orders of the day:
George Alexander Drew: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce particularly in view of the fact that we have joined in wishing him happy landings in the flight he is to make. Because in this matter he represents Canada, our good wishes go with him in the trip he is making. But I still would hope that before he leaves he will have obtained the ordinary privilege that is usually available of giving publicity to the other side of the communication which was made to this house. I would point out that the minister thought we should know about our communication to the government of the United States. I would hope that before we leave tomorrow we shall know what the answer is which has been in the hands of the government now for some time.


Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, I think I can turn over my responsibilities in this connection to the Secretary of State for External Affairs (Mr. Pearson). I am sure he is anxious, as are we all, to make public the reply. But international courtesy requires that we obtain the consent of the government of the United States. I think perhaps the reason for the delay may be that the subject matter of the exchange is a matter of controversy in the congress of the United States at the present time. I am suggesting that as my own idea of the reason for the delay. But I can assure my hon. friend that he can rely on the Secretary of State for External Affairs to make the reply public as soon as permission can be obtained.


Major James William Coldwell: May I suggest to the
minister that he exercise a little pressure on the United States in the same way that the United States exercised pressure recently on another government in connection with the publication of the Yalta papers.


Mr. Pearson:: Possibly I might say a word on that point, because I do not think the government of the United States is at fault. When the note on this matter, which was

tabled in the house, was received by the United States government we were informed that they would wish to make a reply to it in due course. They did give us their reaction to that note orally but we have not yet received the formal written reply. We have been pressing them very hard to get it and have indicated that we would like to have it before parliament rises. Until we get the formal written reply there is, of course, nothing that can be tabled here, and they have assured us they will do their best to furnish it before parliament rises.


George Alexander Drew: Mr. Speaker, I would point out that this is the first occasion we have been informed it was only an oral reply. I wish to make it quite clear that there should be no discourtesy on the part of our government with regard to a matter of this kind or of any other kind in its dealings with the government of the United States. I was under the impression that there had been the ordinary formal reply and that it was merely a case of release. That was the way it appeared from what was said in the house. The extent to which I have pressed this point was related to my understanding that the formal reply had been received and that it was merely a case of securing permission to have it released. I repeat, however, that, subject to the courtesies which I hope will always be extended in the widest measure possible in dealings with the government of the United States, the people of this country will be interested in knowing what is being done with regard to a matter that has implications going far beyond the subject matter in this case which happens to be the movement of oil across our boundaries.



DOMINION-PROVINCIAL CONFERENCE REFERENCE TO LETTER RECEIVED FROM PREMIER OF SASKATCHEWAN

[Stage Direction]
On the orders of the day:
Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, in order to give a more positive answer than I was able to give yesterday, when I did not have the correspondence before me, to the questions asked by the hon. member for Dufferin-Simcoe (Mr. Rowe) and the hon. member for Broadview (Mr. Hees) as to whether there was any suggestion from the provincial premiers about the agenda for the preliminary meeting in April, may I say that I have re-examined the correspondence and find that when we were having this correspondence and trying to arrange a date that would suit everyone, there was a letter from the premier of Saskatchewan dated March 10 in which there is this paragraph:
Inquiries of the Ministry Press reports emanating from Ottawa have indicated that there might be some discussion of the unemployment problem at the proposed preliminary meeting in April. I think most of the provinces would welcome an opportunity of discussing this question at the preliminary meeting rather than waiting for the federal-provincial conference which is to be held later in the year.



NATURAL GAS


[Stage Direction]
On the orders of the day:
George Alexander Drew: Mr. Speaker, in view of the speculation which is naturally appearing in the columns of the press throughout the country with regard to an extremely important matter of concern to all Canadians, I should like to direct a question to the Prime Minister and ask him if he would consider the advisability of having a comprehensive statement made by the government before we rise tomorrow informing the house as to what the situation actually is with regard to the use of gas from Alberta. The subject has been under discussion. It is one of concern to all Canadians. There are many in western Canada particularly who are anxious to see some action with regard to this matter. All Canadians want to know what is likely to happen with regard to something that was placed before the house in a clear and emphatic manner and dealt with on that basis a year ago.
Right Hon. L. S. St. Laurent (Prime
Minister): Mr. Speaker, there is nothing new that I could place before the house at this time. The gentlemen who are interested in the establishment of a pipe line in Canada to bring the gas from the west to the east are, I understand, still persisting in their efforts to work out arrangements for the private financing of that project. The government's policy with respect to gas is unchanged and remains such as was stated on March 13, 1953.



NATIONAL CAPITAL PLAN


[Stage Direction]
On the orders of the day:
Major James William Coldwell: Mr. Speaker, may I direct a question to the Minister of Finance. In view of the urgency of reviewing policies in connection with the capital plan and perhaps more particularly, may I say, the development of the Gatineau national park, when is the joint committee of both houses, suggested in the speech from the throne, to be set up to examine the financial
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Inquiries of the Ministry and other relationships of the government and the federal district commission with the city of Ottawa and the neighbouring municipalities? I also have in mind, of course, the province of Quebec in which a large part of the park is situated.


Hon. W. E. Harris (Minister of Finance):: At
the beginning of the session it was announced that we would ask Their Honours in the other place to join with us in a joint committee on this particular subject. As a matter of fact, however-and I think the house will agree with me in this statement- there has been a considerable amount of committee work in the house so far, and we thought that until it was completed or at least until a considerable part of it was completed, we would not be able to go forward with this committee out of consideration for members who would want to serve on it. After the Easter recess we shall have another look at the matter in order to see whether we can fit it into the program later on this session.


Major James William Coldwell: The idea has not been abandoned?


Walter Edward Harris: By no means.



FERRY SERVICE


[Stage Direction]
On the orders of the day:
Mr. G. C. Nowlan (Digby-Annapolis-Kings):: May I direct a question to the Minister of Transport. Can the minister advise the house whether any submissions or recommendations have been made to him or to his department with respect to the maintenance or re-establishment of the Boston-Yarmouth steamship service which is threatened with permanent suspension? Can the minister tell us what action if any will be taken in that direction?


Hon. George C. Marler (Minister of Transport):: Mr. Speaker, there is a freight steamship service between Yarmouth and Boston which operates from late September to late June. Last year Eastern Steamships Limited, an American company, operated a passenger and cargo service during the summer months. Press reports indicate that the government of Nova Scotia has been discussing a renewal of this service for the coming season. I have no knowledge of these discussions, of the provincial government's actions on this matter or of the American company's intentions. I should like to add that no representations have been made to me or to the Department of Transport.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of National Health and Welfare arising out of the statement he placed on the record yesterday in answer to certain order paper questions by the hon. member for York-Scarborough? Do the studies made thus far by the minister's department indicate whether or not the hydrogen and atomic bomb tests already conducted have raised the level of radioactivity to the point of danger to human life?


Hon. Paul Martin (Minister of National Health and Welfare):: My hon. friend did not give me any notice of his intention to ask this question, which concerns a matter of very great importance. I would think we had already dealt with the matter in the answer tabled yesterday, but I should like to take the matter under consideration and give the hon. member an answer later.



POWER, FLUIDS AND GAS   LICENSING CONTROL OVER EXPORTATION OF ELECTRIC POWER AND FLUIDS, AND IMPORTATION OF GAS-CONCURRENCE IN SENATE AMENDMENTS

[Stage Direction]
Righf Hon. C. D. Howe (Minister of Trade and Commerce) moved the second reading of and concurrence in amendments made by the Senate to Bill No. 4, to regulate the exportation of power and fluids and the importation of gas.
Motion agreed to, amendments read the second time and concurred in.


[Stage Direction]
The house resumed, from Monday, April 4, consideration in committee of the following resolution-Mr. Gregg-Mr. Robinson (Simcoe East) in the chair:
That it is expedient to introduce a measure to amend and consolidate the Unemployment Insurance Act and, inter alia,
(a)	to increase benefit rates, as well as to provide for certain changes in the duration of both regular and seasonal benefits;
(b)	to adjust the contributions, and to change contributions from a daily basis to a weekly earnings basis, and benefits from a daily to a weekly basis;
(c)	to provide a graduated scale of allowable earnings in place of present provisions related to casual earnings and non-compensable days and,
(d)	to provide further for certain changes in connection with the administration of the act.
Mr. Winch:: Mr. Chairman, when the
house rose at ten o'clock last evening I was saying that I, and I think all members of the house, welcomed the recommendations of the minister as outlined by him and that I felt sure organized labour throughout Canada would also welcome them although perhaps it would be somewhat regretful that he had not gone a little further. I also pointed out that I had followed very closely the entire speech of the Minister of Labour and that I appreciated very much what I term his outline of policy before he went into the details of the bill amending and consolidating the act which he proposes to bring before the house after this motion is carried. As far as certain aspects are concerned, I found it somewhat puzzling to try to tie together his policy statement and the motivation outlined by the minister with some of the details he gave following his outline of policy.
In order to make my position clear I should like to refer to what I term the policy outline as given by the minister and quote three paragraphs found on page 2663 of yesterday's Hansard. The minister said:
It will be apparent from what I have said, Mr. Chairman, that what the government is here proposing is not merely a series of amendments to the Unemployment Insurance Act. It is something much more fundamental than that. We are undertaking, in fact, the most far-reaching revision of our unemployment insurance program that have been attempted in the decade and a half of its existence during the course of the seven times the legislation has been reviewed by the house.
Again, he said:
Born out of the suffering and the hardship of the great depression, the Unemployment Insurance Act of 1940 established a new dimension of social statesmanship to which all our subsequent social legislation-family allowances, the new veterans charter, old age security, the national health program, rehabilitation of civilian disabled, have faithfully conformed. It was the passage of the Unemployment Insurance Act which enabled my predecessor, who introduced it, and all his fellow countrymen, for the first time to speak of "a Canadian social security program".
One more quotation:
What we are doing today, in the new legislation which I have the honour to introduce, is adding a worthy addition to the steadily growing structure of social security that we have been building in Canada.
I am certain that no one in the house or, as a matter of fact, in Canada, will question the principle and the motivation as outlined in those words of the Minister of Labour. My puzzlement arises from the fact that in his outlining of the details he did not, in my humble estimation, carry through in the way we had a right to expect in view of the magnificent principles and objectives outlined by him in his policy statement. If this
5, 1955
Unemployment Insurance Act proposal of the minister is to be a great advance in the over-all security program of the people of Canada, I think it automatically and axiomatically follows that it should mean not only an increase in benefits to a certain group but should also definitely mean no retreat from any security measures already in effect under the legislation. In addition, it should also mean an extension so as to give greater coverage than that which has been in effect under the act up to the present time. Therefore I look forward, may I say, to a clarification of some of the details as outlined by the minister in the light of his very excellent policy pronouncements.
In his outline the Minister of Labour told us that up until now 95 per cent of all the claimants have drawn less than 30 weeks benefits. I take it, sir, it is because of that, and one or two other factors, that a change is being made to reduce the maximum payments from 51 weeks down to 30 weeks. It may not seem of major importance, but in principle I think it is. The details given to us on this matter by the minister actually mean that according to the experience of the unemployment insurance commission over the many years, 5 per cent are going to lose a security coverage which they previously had. I believe that is an important matter. The minister made a statement on this question, and I quote from page 2261 of Hansard for April 4, 1955:
Many of these one-twentieth are married woman and elderly people for whom alternative social security programs would seem to be more appropriate.
If this is an extension of Canada's security program, I am puzzled that we should have it suggested by the minister that 5 per cent are going to lose security.


Mr. Gregg:: I am sure my hon. friend will not mind if I interrupt. I said that none of those presently insured need lose any of their equity. I am sure the hon. member, if he referred to the centre portion of page 2661 of Hansard, will see that I made that perfectly clear. Those who are insured at this time can receive the same benefit as though this change had not been made.


Harold Edward Winch: That is quite correct, Mr. Chairman. If I understand the minister, he is referring to the fact that provision is being made over a period of three years, and that is correct. I am speaking of the principle of the thing, because I presume the government is now introducing their ideas, and their amendments, as they conceive them for at least some time to come. Although the minister has quite correctly stated that those who are now making certain payments under the
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Unemployment Insurance Act old act would have the right to certain benefits, he is at the same time laying down a principle which means in effect that beyond that period, or if they are not now qualified, there will be a reduction of 5 per cent in those who are covered. I believe the minister understands my point concerning this principle.
What I am saying is correct. It is a retreat from the principle that has been established up until now. I fail to see by what miracle or legerdemain that 5 per cent, or an individual if you want to put it that way, can be expected to find a job in 30 weeks when they have not been able to find one in 51 weeks. I feel that is a reasonable and logical question.
I want to refer to the statement of the minister which I just quoted from page 2661 of Hansard:
Many of these one-twentieth are married women and elderly people for whom alternative social security programs would seem to be more appropriate.
It sounds very nice, but it only sounds very nice. It does not point out that for a great many of these people there are not now any provincial or federal security measures to which they can turn if they are no longer eligible for unemployment insurance beyond the 30-week period. What are they supposed to do? If we had an over-all program, if there were provincial or municipal legislation to take care of them, I could understand the statement. But to make it when there is no program unless they are over the age of 65-


Milton Fowler Gregg: Three years to go.


Harold Edward Winch: -the government is outlining a principle concerning those who can meet certain requirements now, but I am trying to look into the future and find out why they have that principle in mind. Is it because they contemplate having to change this act in the next three years? If so, why not introduce the coverage now to take care of those people in the future? I assume that if they cannot conform and are over the age of 65, then if they are destitute they can make application under the Old Age Assistance Act. But there is a big difference between the payment of $40 per month to married people under that act and the amount of $120 to which they would be entitled if the extended period which we have now remained in the Unemployment Insurance Act.
If these people are not 65, then where do they turn? The federal government does not assume responsibility for the employable unemployed if they are not covered by the


Unemployment Insurance Act. In some instances provinces do, but on a far lower basis in total than the amount for which those people would be eligible under the Unemployment Insurance Act. There are many who move around, and as I stated in a previous speech there is no province that dares accept responsibility for such people who are not covered by the Unemployment Insurance Act and who have not been domiciled in their own province. In my estimation that is a serious problem now and will be for a long time to come.
I find it rather strange, Mr. Speaker, that here we have a principle that will take people off unemployment insurance after 30 weeks. I admit that only applies to 5 per cent if the same figures apply in the future as they have in the past, but such people cannot get provincial assistance if they are not domiciled in the province. There is a very strong mobile labour force in Canada. People who move around trying to get employment, and who cannot get it, are denied any security under any plan, provincial or national. Yet we find some reactionary employers or the spokesman for such reactionary employers such as the Financial Times, published in Montreal, stating that the biggest problem -I would almost say "curse"-in Canada is the policy of trying to get workers to own their own homes.
I was amazed to read this editorial, and may I just quote one section of it:
There is, as a matter of fact, nothing that industry can do about it so long as the mass of workers refuse, as they are doing, to accept a job whenever and wherever it is offered. There is today considerably more unemployment than is necessary; due in large measure to the widespread "own your own home" movement throughout the country in recent years.
For some time now the Financial Times has been warning that there are economic dangers in the universal trend towards home ownership;
Did you ever hear anything so fantastically reactionary and diabolical as the viewpoint that we have to have an itinerant labour force? It means, according to the Financial Times, that this government and the provincial governments have been doing wrong by encouraging, through free enterprise, the workers of Canada to own their own homes. While I have not seen any expression of opinion on that, if they do or do not own their own homes and have to travel Canada in search of work, or are doing their utmost to find employment away from their own domicile, they should be protected either by industry or by government unemployment, insurance and other measures so that they will have some semblance of security.
I merely want to express the opinion at this time, Mr. Chairman, that there should not be any restriction on the amendments to

the Unemployment Insurance Act at this time that will remove either now or in the future any probable or potential security which workers have been enjoying up to the present time. In view of the minister's statement that there should be some appropriate security measures to take care of those who may be affected by the new legislation, there is a responsibility on the minister and on the government, in view of his pronouncement and in view of his policy statement. If there is not now that provision of security, he should do his utmost to include it in this Unemployment Insurance Act. Failing that, he should fill the gap as speedily as possible in those sections of our economy where we do not now have security provision.
When I first rose to my feet I said that in view of the policy statement of the minister, since I know he was sincere in the statement he made as to his belief and desire, I was puzzled that there should not be an extension of coverage. If we can go by the information given to the house yesterday by the hon. member for Hamilton West, 38 per cent of the workers of Canada are still not covered by the provisions of unemployment insurance. I heard the minister yesterday and I reread his remarks in Hansard this morning. I could not find any intimation whatsoever that he was going to bring in any alterations that would mean an extension of coverage to workers of this country under the Unemployment Insurance Act. In view of the minister's emphatic statements, reiterated time after time, of the terrific advances, I am puzzled as to why there is nothing to indicate, in what he calls the terrific advance, that there are to be any changes made to bring, not all but at least a part of this 38 per cent under the security provisions of the Unemployment Insurance Act. I sincerely hope that he will give us a little bit of clarification on that matter.
Personally, I find it very difficult to understand why it is that in Canada we should have these gaps in all the security measures of this country, as to why we should have so many people who can come up against varying degrees of insecurity because of old age, disability or unemployment. I fail to understand why in a country like Great Britain they can have an over-all security program. I can hardly think of any difficulty that a person in Britain can meet, over which they have no control, in which they are not covered by some security measure. Certainly if Great Britain can do it-she has done it for many years-so can we. We have heard a great deal this afternoon about Sir Winston Churchill. We noticed only two months ago
5,	1955
Unemployment Insurance Act that they increased the benefits of their overall security program all down the line. If Great Britain can give 100 per cent coverage, then I fail to understand why this Liberal government, with all it says it stands for, administering the great economy of the Dominion of Canada, with all its resources and wealth, and if they are imbued, as I hope they are, with all the principles, as outlined by the minister in Hansard yesterday, cannot do it. I fail to understand why we should have so many gaps in our own program and why it is going to take time to fill those gaps.
I fail to understand why, when the minister has this opportunity of amending and consolidating his present act, he cannot go a bit farther than he has to see that he does not retreat in any way but takes strides toward a greater coverage and a greater protection.
I want it to be understood that I am not criticizing. I am not trying to deprecate the worth-whileness and the great benefits that will accrue from many of the suggestions that have been brought in by the minister at this time. I most sincerely commend him for a vast number of his suggestions.
Now, sir, there are just two other items that I should like to draw to the attention of the minister, and I can do it very rapidly. I regret that there has been no intimation, at least in the speech of the minister, that he intends to take care of a very difficult situation that has been obvious for a number of years. Almost every province-as a matter of fact, every province-has its labour legislation. Under this labour legislation, if the workers get into a dispute with their employers, they have to go through a period of collective bargaining. If that fails, then there is mediation, conciliation and arbitration. If those fail, then a strike vote is taken. After that, under the terms of the provincial legislation, there is the right to strike. That occurs upon occasion in our country, unfortunately. When it does occur we often see workers who are not affected by the dispute itself, unemployed, because, as union men, they refuse to go through a picket line. On many occasions we also see workers in supply industries become unemployed. It is the history of the administration of the Unemployment Insurance Act that when this occurs those who are not directly in the strike but are affected because they will not cross a picket line, or because they are employed in a supply industry which is affected by a strike in the main industry, have to wait days and weeks before it is decided as to whether or not they are entitled to unemployment insurance. To the best of my knowledge, in most cases at least, -I am not sure about all-eventually there
2710	HOUSE OF
Unemployment Insurance Act is a decision that they are entitled to unemployment insurance. I think I am correct in saying that, sir, but because that principle has been established in instance alter instance of the nature I have outlined, why is it still the situation that there has to be all of this negotiation, uproar, argument and a lapse of a considerable period of time before these people can be recognized as eligible for unemployment insurance?
It had been my hope that this very serious matter would be clarified. It affects thousands of people across the length and breadth of Canada when industrial disputes end in a strike. I wondered why we did not have some intimation that this matter was to be clarified by legislation? If it is not to be clarified by legislation, I do hope the minister will give us a statement on the position of his administration with regard to this matter in order to make it clear to the people of Canada, and perhaps bring about a greater speed-up in the handling of such instances under such circumstances.
Very briefly I want to add my word to that of the others who have spoken previously to request the Minister of Labour to take a second look at this matter of the eligibility of workers to receive unemployment insurance when they are ill. That is one of the things that puzzle me. If a person is unemployed and becomes sick on the seventh day of his unemployment he is eligible for unemployment insurance, but if he is laid off because of sickness he is not entitled to unemployment insurance.
This works a great hardship on a considerable number of people, especially when you put them together over a period of years. I hope that the minister will take a second look at this matter. I have heard it said that there is a constitutional issue involved but I fail to see where there is because if you can do the one I do not know why you cannot do the other.
This is all I wish to say at this time.
I conclude by saying that I commend the minister for the changes he is bringing in as I know they will prove beneficial, but I do think that in his outline of the principles and details which he gave yesterday he did not come as close as I think he should, and perhaps as he might want to, to the fulfilment of the high principles he outlined in his policy statement. I hope that between now and the time when the bill is passed the minister will see his way clear to make the Unemployment Insurance Act a consolidated one which will grant greater security to the people of Canada.


George Clyde Nowlan: Mr. Chairman, I intend to speak but briefly in connection with this [Mr. Winch.l

matter. First I want to say that I agree with what was said yesterday by the hon. member for Hamilton West and by the hon. member for Cape Breton South with regard to regulation 5A which deals with married women. I think the hon. member for Cape Breton South referred to it as a bear trap. It certainly is a booby trap which is giving a great deal of trouble and I think the regulation should be taken out entirely.
I sometimes wonder about the appeal procedure laid down by this act. I do not intend to go into the details at the moment, but I do think the department is most fortunate in the people it has administering the appeal procedure, especially in so far as the umpire in Ottawa is concerned. But here the government is setting up a court of its own, it chooses the personnel which is not known to the unemployed who may be claiming unemployment benefits. He has no voice in the selection of the personnel. He brings a claim before the board of referees and may obtain a favourable decision.
I wonder why the department should then appeal the decision of its own board to an umpire who may be two or three thousand miles away from the unemployed person. That person is faced with considerable delay and is sometimes put to additional expense in having the matter determined finally. Having appointed its own board of referees, having made its own selection of qualified men to make up that board, I submit that at least generally the government should accept its decision and not carry the appeal further. Certainly it should not carry the appeal further without advising the unemployed claimant of his rights and not merely suggesting to him that the matter is settled and he need not be worried about it because nothing is going to happen. Very often something does happen and the unemployed person does not know what it is all about until he gets a notification to the contrary.
My principal reason for rising is to refer briefly to a matter which was mentioned by the hon. member for Hamilton West and by the hon. member for Esquimalt-Saanich earlier in the session, that is, the position of fishermen with respect to the Unemployment Insurance Act. I am the first to admit that there are difficulties in the way of including this industry within the act but I do not think they are insuperable. The men employed in this industry deserve every possible consideration. I know of no group who work harder, who risk their lives and health in the earning of a livelihood to the extent the fishermen do and who generally speaking are paid less for the work and sacrifice which is necessary in this type of employment.

Surely some system can be evolved whereby these men can benefit from at least a modified form of unemployment insurance. The department itself has made a study of this matter. I have here the report of a commission which made a survey of the fishing industry in 1951. This is a pretty analytical survey; it is informative and statistical and gives a fair summary of the problems confronting this industry. In the second paragraph of their conclusions, being paragraph No. 273, they state that the administrative difficulties, although appreciable, can be overcome.
I am suggesting that if the commission appointed by the department to consider this matter found, as they did quite frankly, that the administrative difficulties can be overcome, then the minister should submit to parliament machinery which would include this group of men within the framework of the act and overcome the difficulties which his officials have admitted can be overcome.
It is easy enough to say that this cannot be done, to paint a picture of the fisherman who is part labourer, partly self-employed or a share fisherman, a man who owns part of the boat, and then ask how it can be done. The simple answer is that it is done in Great Britain.


An hon. Member:: And the United States.


George Clyde Nowlan: And the United States. If it has been done in those countries I suggest that it should not be too difficult a problem for the minister to adopt a similar procedure here. It is true that at one time in Great Britain the fishing industry was not included. In 1944 or 1945 a commission was appointed to inquire into the matter and it recommended in favour of including this group. But it was not until 1949 that they passed a new unemployment insurance act in Great Britain directed particularly at the fishing business and including share fishermen, those who were working for wages and those who were self-employed provided they were employed on a boat of more than ten tons.
At one time in the United States it was thought that the constitution prevented the government from insuring marine workers or fishermen, but in 1942 or 1943 the supreme court of the United States gave a judgment that it was open to insure this type of worker. They now have a situation in the United States where these people are recognized not only by the federal government but also by all the American states which border on the sea coast or on the great lakes. They now have a wide system of unemployment insurance for fishermen in the United States.
5,	1955
Unemployment Insurance Act
With those two examples before him as lighthouses or beacons along which the minister can pilot his course and the fact that they are working successfully I do suggest and urge that he give this matter more careful consideration than has been given in the past and not allow it to be brushed off simply because there are difficulties. There are difficulties in the way of any program on which the government may wish to embark. I urge the minister to give this matter consideration and either later on this session, or if that is impossible, because we do not want to hold up the passing of this bill, at the next session of parliament, bring in amendments which will include the fishing business along the lines which have been worked out so successfully by the country to the south and by Great Britain.


Mr. Mclvor:: I will say just a few brief words. Like the hon. member for Vancouver East, I congratulate the minister on the good things which are in the bill. I just wonder what kind of bill the Minister of Labour would have to bring in in order that the hon. members could not find any fault with it? However, I am waiting with interest to hear the reply the minister will make to the criticism which has been made of this bill.
I remember becoming acquainted in the thirties with one who is now a cabinet minister and I am convinced that he found a cure for unemployment, although it cost him a penny. He called his own workers into his office and said, "There is no more work but you can come as usual and enjoy yourselves and your salary will be paid as usual". I would like to ask the minister if it would not be possible to have a check-up of all industries and employers of labour who expect to lay off some workers and have them get in touch with the Minister of Labour to see if the workers could be kept on.
I know that our employment officer in Fort William has done an outstanding job. As I said before, he organized a "do it now" campaign. Unemployment at Fort William is no higher than it was last year and in fact the latest report I have received indicates that it is going down. Instead of 175 to 200 calls there are only between 30 and 40 now. This shows that the local employment offices and the municipalities can do a great deal to help the situation when they dig into their jobs.
I would like to see the waiting time cancelled altogether. The minister sees fit to retain it but perhaps he will give some explanation for doing so. If an individual is earning only $1 an hour, his salary will be $8 a day or $40 a week if he works a five-day week. That appears to be a lot of money to a man

Unemployment Insurance Act who has a family and I would like to see the waiting time cancelled altogether.
I wish to congratulate the minister once again; he is doing a great job and when he is through with this you will see what it will mean to the workers.


Mr. Noseworthy:: Mr. Chairman, as I
listened to the minister yesterday I concluded that this was exceptional legislation visualized by this resolution. I thought that the legislation would be in line with the advance publicity which was given the amendments to the Unemployment Insurance Act by the government. The more I study the legislation that is likely to be introduced in the light of the remarks made by the minister and by others, I begin to wonder just what is the primary purpose of the amendments that are to be introduced. I had thought that the primary purpose of these amendments was to make this act a more efficient measure for those who are unemployed. I am now beginning to wonder whether or not the main purpose of these amendments is to maintain the present level of the insurance fund at or around somewhere between $800 million and $900 million.
As I study the proposed amendments I am forced to conclude that certainly one important function of those amendments is to maintain the actuarial stability of the fund and I am inclined to think that more emphasis is being placed on the stabilization of this fund at the figure I mentioned than on meeting the actual needs of the people who are to be served by the unemployment insurance fund. It is true that those who experience short periods of unemployment will benefit by reason of the fact that their weekly payments will be increased both in the case of those with family responsibilities and those without. But to offset that, the maximum period of time for which these payments are to be made will be considerably decreased. Those who experience long extended periods of unemployment, as a great many do at the present time, are likely to suffer, especially if the time in which their regular unemployment insurance expires coincides with the 15th of April. A number of people have already interviewed me in this regard. Some of them interviewed me over the past week end. They were men whose regular unemployment insurance will expire on or about April 15. After that date these men will not be eligible for either regular or supplementary benefits. Therefore in some respects the legislation visualized by this resolution is disappointing, particularly in the light of present circumstances. It would offer no relief to those who are unemployed but are not now covered by unemployment insurance


and there is a considerable sector of the working force not covered at all by unemployment insurance but who are unemployed at the present time and unable to receive any benefits.
It was to be hoped that, in view of the advance publicity given to this measure by the government and in view of the present unemployment situation, the area of those eligible for benefits would be extended and some categories not now covered by unemployment insurance would be brought under that umbrella. The amendments will be of little benefit-as a matter of fact, they will be of no benefit-to those who have exhausted their unemployment benefits. They will be of no benefit to those who have not had an opportunity to fulfil the requirements of the act. They will be of no assistance to the great many young people who are unemployed simply because they cannot find jobs and who have never had an opportunity of building up a fund on which they can draw. The amendments will not benefit those who now find their family responsibilities exceedingly high in relation to the unemployment benefits, those who are now finding it extremely difficult to provide shelter and food for their families with the present unemployment insurance benefits.
Then there are a few other ways in which the measure will be disappointing. The five-day waiting period against which labour has been protesting for some considerable time apparently is to be retained. There is no mention that the five-day waiting period is to be abolished. Regulation 5A under section 35 which the hon. member for Cape Breton South referred to as a bear trap is apparently to be retained. There has been no indication that there will be any change in that regulation. I did not hear from the minister anything to indicate that the employees of unemployment insurance offices are to receive any new consideration in the matter of wages or especially in the matter of accommodation.
I have been in many of the unemployment insurance offices in and around greater Toronto. As a matter of fact, I have been in most of them. Anyone visiting those offices at almost any time during the past months would realize how overcrowded they are and how inadequate is the accommodation in which those who administer this act are obliged to work. I had hoped that the minister would give consideration particularly to those who are the managers of those offices. I pointed out here previously the nature of the responsibility which these men assume and the qualifications which are required in those who are to manage efficiently some of these larger employment service offices.

These persons certainly warrant a much higher category of wages or salaries than those they are receiving at the present time.
Those are some of the shortcomings of the present amendments, as I see them, and the extent to which these amendments fail to measure up to the advance publicity which this act has received or to meet the present-day pressing needs. I know that in itself unemployment insurance cannot be expected to care for all those who may become unemployed and to do so indefinitely; certainly that is so if that fund is to remain actuarially sound. I suppose any unemployment insurance fund which was to provide for all the unemployed for indefinite periods of unemployment would have to be one that would make subsidies from the federal treasury from time to time a part of the fund. The hon. member for Winnipeg North Centre quoted the Minister of National Health and Welfare, when he was speaking at the time of the inauguration of the fund in 1940, as follows, as reported at page 2673 of Hansard:
.	.	. unemployment Insurance in itself is not
sufficient to meet the needs presented by a situation of that sort and must be related to the question of unemployment relief, . . .
As a matter of fact, the maintenance of employment and protection against unemployment are both parts of the same problem. The present unemployment insurance is only a partial protection against unemployment. This revision of the act fails to meet that over-all problem. The over-all problem consists of both the maintenance of employment and protection against unemployment.
I realize that the federal government at the present time takes the position that the maintenance of employment or the maintenance of conditions favourable to employment is a federal responsibility and that the maintenance of the unemployment insurance fund is a federal responsibility but that it maintains that the residual problem, namely the protection of the employable unemployed who are without unemployment insurance benefits, is a provincial responsibility until such time as the provinces are unable to meet that responsibility. That appears to be the official position taken by the federal parliament at the present time.
For the life of me I fail to see by what logic or on what grounds the government has reached that conclusion. I fail to see how the government can possibly reach the conclusion that the most serious part of protection against unemployment must be left on the doorstep of the provincial government or the municipality. As a matter of fact, most of the inquiries which have been made into this
Unemployment Insurance Act problem-including the inquiry by the unemployment insurance commission, by the Sirois commission and by the government itself in 1945-all agree that this is a federal responsibility. The government itself in 1945 was agreed that not only were the maintenance of employment and the maintenance of the unemployment insurance fund federal responsibilities but that protection against unemployment was a federal responsibility.
When one considers the nature of that problem, one fails to see how any organization to deal with it can possibly be successfully administered by a provincial or a municipal government. If those who move from place to place in search of work are not to be penalized for so doing, we must have some uniform national system of unemployment protection. Otherwise those who move from one province to another or from one municipality to another are going to be penalized. If unemployed Canadians are to be treated in all the provinces by the same standards and are to receive the same treatment, this whole problem of protection against unemployment must be administered by some such organization as the unemployment insurance offices or some organization under federal direction which will give some uniformity of treatment to unemployed people, regardless of the province or the municipality in which they are. Certainly, whether or not the federal government admits it, the country today believes that responsibility for protection against unemployment is a federal matter, and we think that the major share of that responsibility, both in connection with financing and organizing for its administration, rests with the federal government. These facts were recognized by the government in 1940. I have before me a brief presented to the members of parliament from the Toronto district on Saturday morning by the Toronto branch of the Canadian association of social workers.


Milton Fowler Gregg: Mr. Chairman, I know my hon. friend will not mind if I make a comment at this point. I feel that I have just as much concern about this problem as he has, but I think I should point out that the matters he is bringing up now are ones that were covered quite fully over the period of a month's debate. Furthermore, with respect to the special problem of the gap which exists amongst those to whom he has referred, and which has been admitted time and time again in the house, it is hoped and believed that matter will come up for discussion in a very short time by the heads of all the governments of Canada who I feel sure are keenly interested in it. Since this matter could under no circumstances be taken care of by

Unemployment Insurance Act the amendments that will be forthcoming, I wonder whether or not discussion of it might be deferred until some later date after we have seen what may happen later this month.


Joseph William Noseworthy: If that is the minister's wish, I shall be very happy to accede to it. I merely want to make one more reference. There was a statement in the minister's speech to the effect that the present amendments will furnish a foundation for additional measures to be worked out at the forthcoming federal-provincial conference. I merely want to suggest to the minister at this point it is important that some agreement be sought at the conference to convene later this month as to responsibility and also with respect to some measure that will take care of the people who have been depending throughout the winter on supplementary unemployment insurance benefits and who are going to have them cut off on April 15.
Many of them are in age groups where they will not be able to secure employment. Many of them had nothing except the supplementary benefits. If the government has decided to cut off the supplementary benefits on April 15, then I suggest that every effort be made to reach an interim agreement with the provinces whereby these people can be given some form of protection as soon after April 15 as possible.


Milton Fowler Gregg: Mr. Chairman, I take it I am expressing the sense of the committee that it would be desirable to have the resolution passed this afternoon so that copies of the bill can be made available before the Easter recess. I have followed very closely the interesting and helpful discussion that has gone on yesterday and today, and I appreciate it very much indeed. I know that all hon. members who took part would not want me, without the bill in front of them, to go fully at this stage into the various points raised. There are a few I should like to mention in some detail, particularly one referred to by practically every speaker, namely, the length of the period of winter seasonal benefits.
As the hon. member for Cape Breton South inferred last night, the reason I made such a long-winded statement yesterday on the presentation of the resolution was to attempt to put on the record in layman's language an interpretation of what must of course be in bill form the language of the lawyers, and I for one find the language of the lawyers, when incorporated in a bill, very difficult indeed to understand. Perhaps others are in the same category.


Mrs. Fairclough:: Hear, hear.
[Mr. Gregg.l


Milton Fowler Gregg: I was glad to see that the hon. member for Hamilton West maintained a position with regard to this plan that would give her mobility of action in the days to come. At the very outset she took up the cudgels on behalf of the fishermen, and as one who lives near the seashore I am delighted that an inlander like herself is on our side. I want to say two or three things about fishermen. I agree with what the hon. member for Digby-Annapolis-Kings said about their contribution to our economic life, the difficulties they face in earning their livelihood, and so on. For many months now we have had officials working on the problem of insurance coverage for them in the most serious and intensive fashion. I have not given up hope that we may find a solution. I know it will not be a perfect solution but I hope we can find a good solution somewhere, whether it comes within the field of unemployment insurance, under some special measure administered by the Department of Fisheries, or a combination of both.
But what I can say, as far as this measure is concerned, is that if, as and when a solution is found with respect to unemployment insurance, it will be possible for fishermen so recommended for inclusion to be brought within the legislation without any further amendment of the act. I shall see to it that the study proceeds. I should like to suggest that the officials responsible for the study be brought before the standing committee on industrial relations when it meets, and the hon. member for Hamilton West and all the other fishermen can then cross-examine them.
The hon. member for Hamilton West says that the coverage should be as wide as possible. That unquestionably continues to be the policy of the government, and that is why I did not mention it yesterday. Now, it is not as easy as it looks, and I am sure that hon. members realize that. I am going to take only one example. We live and work in a free economy and believe that our various organizations have a right to express themselves without our pushing them around and imposing something upon them. In the very mild and friendly discussion on the resolution that took place yesterday one hon. member said something to the effect that rumours had been heard that the Minister of Labour was going to bring hospital workers under unemployment insurance, and why in the world was the minister delaying so long?
I did not see that report in the press but it must have been somewhere because on my desk this morning I had wires from the chairmen of hospital boards saying in effect, "For heaven's sake, don't do it". I mention

that as an example. You will recall that the former minister of finance introduced last year quite a mild little measure affecting the welfare of our federal civil servants on the assumption that it would apply 100 per cent to everybody. You will recall what happened under the banner of freedom with respect to that measure. What happened under the banner of freedom as to that measure would be small business compared with what would happen under the banner of freedom if the Minister of Labour were to say, without a good deal of prior spade work, if you like, that 100 per cent of federal civil servants were going to be brought under this legislation on this day in April, 1955. But I will say that we are from month to month bringing in any groups that can be brought in and we can always do it; we do not have to amend the act. Quite a number of members mentioned that point.
The point concerning supplementary benefits and their effect upon the period this year, I shall leave until the end of my remarks. I shall make a short reference now to two points that were mentioned by many, one of them concerning the women. This point is always forcibly put forward by the hon. member for Cape Breton South as well as the hon. member for Hamilton West. I will undertake now to have still another look at that regulation. It is a regulation, and I am confident it is one that has to be there in some form. It is not there because of discrimination, but simply because a woman is a different sort of individual from a man, with all the implications that go with that. It is the desire of the government, and the desire of the commission, that that regulation should only affect the few who might be tempted to take advantage of the situation to the detriment of the thousands of others who are paying into the insurance fund. But we will have another look at it this winter.
The other point mentioned by many members concerned the interesting item of the guaranteed annual wage, on which I shall only make two comments. One of them is that during the last five years I have been Minister of Labour I have learned one thing, and that is that while an item is in the process of discussion under collective bargaining, the federal government or Department of Labour should not interject itself. At the same time, I add quickly that the federal Department of Labour should not keep its eyes and ears closed but its officials, as they are doing, should keep the situation under review and know what is happening so they will at least be able to think intelligently about it. I shall touch upon the 50433-172i
Unemployment Insurance Act other points mentioned by the hon. member for Hamilton West as I come to them.
The hon. member for Winnipeg North Centre rather poked fun at me by saying that I was like Gaul. I was very much interested in following him as he traced areas of my own research in his historical review. I found it, as a matter of fact, a very interesting survey with which I take no exception at all. However, he did leave me rather up in the air in the speech I made to the Canadian Manufacturers' Association last summer. The facts of that are simply these. On invitation, I went out to Jasper and, after a good deal of sweat and walking in the mountains because of the flood, I talked to the association on seasonal unemployment. I did state that there were certain fixed charges, certain fixed things they would have anyhow and the moral of the speech was to the effect, why not use these fixed facilities that you have to have to make sure your employees work a full year rather than being seasonally unemployed in the wintertime. That was the essence of the message. It was not related to the guaranteed annual wage, but I will admit it was related to the same objective, namely, providing year-round work during the winter months.
I can say this this afternoon, that the experiments we have been carrying out in this regard are not going to be the entire cure of unemployment. However, long before next winter we shall learn how big a dent, if it can make a dent, this program can make in seasonal unemployment. If it is a reasonably sized dent, then what we can do federally we are going to do in co-operation with all the other forces. I do not know yet how far we can go, but in the experiments we have conducted this winter the great labour organizations and organized industry have co-operated in the fullest possible fashion.
The leader of the Social Credit party expressed his general approval of this measure, as did the representatives of that party who spoke when the resolution was introduced in 1940. I thank him for his kind words. I also wish to thank the hon. member for Welland for expressing his opinion that, by and large, what he sees coming forward in this legislation fulfils what he had in mind when he placed his resolution on the order paper some time last November.
Now, the hon. member for Broadview spoke, and I was glad to give him an opportunity to tell his Texas story concerning the grasshopper. In my opinion he took an extraordinary stand when he gave us the impression he was prepared to place no limit upon the extension of these benefits. I can tell you today, Mr. Chairman, that not only management but the national labour organizations of

Unemployment Insurance Act this country would look with the utmost concern upon an unlimited extension of these benefits. They, as well as the government, are anxious that this plan shall be on a sound financial basis, and it is easy to see the reason for that. During these 14 years, both of these groups have been making their contributions to this fund day after day and week after week. They have been making these contributions on the understanding that the fund is to be maintained financially sound. The government and any minister of labour must, therefore, to a degree, look upon this as a trust fund on behalf of the two parties concerned, as well as on behalf of the taxpayer. If any minister of labour, without going back and reviewing the whole ground once more, were to say that benefits may be given to a few people for an unlimited period from the money contributed by a great many who want to be sure when they become unemployed that assistance will be there, it would in my opinion be a violation of that trust.


Ellen Louks Fairclough: If the minister will permit an interjection, I did not get the same sense from the hon. member's remarks as he did. While he has been speaking I have looked at them again, and I am sure the minister has misunderstood the hon. member for Broadview. There is nothing in his remarks to indicate that it be unlimited.


Milton Fowler Gregg: If I am mistaken, I will amend my remarks. I am sure, however, the hon. member for Broadview did indicate that we should extend the period, and I don't recall he suggested a limit.


Ellen Louks Fairclough: Beyond April 1.


Milton Fowler Gregg: Yes, but without mentioning
any limit.
The hon. member for Nanaimo also discussed the guaranteed annual wage. I believe I have covered the points put forward by all hon. members except those by the hon. member for Cape Breton South.
Among other things he said that the heads of our great industries were not using our national employment service. With all due respect I say that is not entirely true. However, it is true to say that many of them do maintain their own employment offices or, if you like, their own aptitude assessment offices. Great companies like General Motors at Oshawa, for one, do use our services in a big way; but since such companies, in this modem age, have so many technical jobs to carry out they quite naturally depend upon their own people to assess the qualifications for those jobs. This they can do more specifically than can our

staff. I should like to go that far in correcting the record to show that a great many of our large industrial organizations do use the national employment service.
The hon. member said that unemployment insurance is no good to those who have exhausted their benefits 100 per cent. A good many other hon. members said the same thing. My hon. friend quoted two industries which have been very much to the fore in unemployment and very much in the minds of many of us, namely the soft coal industry and the textile industry. If ever there were examples of personnel exhausting their benefits 100 per cent they were in the two communities he mentioned, one at Westville, the soft coal industry, and one at Marysville, a cotton textile industry. I happen to have a very intimate knowledge of both, since both are near my home.
This afternoon I am going to say a word about Westville. A little over a year ago, on the recommendation of my colleagues the Minister of Mines and Technical Surveys and the cabinet minister representing Nova Scotia, the Minister of Public Works, and at the needling of the hon. member for Pictou, we recommended to our colleagues in the government that we take a step, in co-operation with the province of Nova Scotia, that was completely uneconomical, namely that certain subsidies should be continued for another six months if the province of Nova Scotia did certain things and if the management of the industry did certain things, with the definite and specific object of extending for another six months the life of the project in Westville to make employment possible for those who had been thrown out of work before they reached 100 per cent of their insurance benefits.
From time to time since then I have informed the three gentlemen I have mentioned of the progress made. Without going into details, it is the kind of thing you cannot transfer to Windsor, to Montreal, or to Sault Ste. Marie, but in pleasant, snug little places like Westville and Marysville, you can do something because it is much easier to encompass the situation. In co-operation with the provinces concerned, under schedule M of our Vocational Training Co-ordination Act which, as hon. members know, contains a provision for training at the same time one is receiving benefits, a great deal has been done in both places. In fact, in these places I am looking forward to the time within a very few months when the situation may be liquidated with the least possible hardship and the fewest possible number of people left unemployed, or older people left without some more appropriate means for their care.

I am referring not only to old age pensions for those over 70 and other pensions for those between 65 and 70 and not only to the rehabilitation program. The sort of thing I am referring to has to do with the older person who has lost his employment, who has used up his regular benefits and his supplementary benefits, and for whom a job cannot be found. Even though we are trying hard, and with some success, to find jobs for older workers, some other means must be provided. I agree with that entirely. Some other, as I said yesterday, more appropriate means should be provided.
So far as Westville is concerned, I have mentioned one of those means. Another which is not so clear is what is going to happen to those who never took advantage of the labour benefits and for whom there is no provision at all. Well, Mr. Chairman, that was recognized here. For those long-term unemployed it was recognized and that is the reason we provided for a three-year period of grace, in the hope that the gap might be filled before the three years were up. As far as I am concerned, if perchance I am minister of labour three years hence, I shall certainly want to look at the picture again, if no more appropriate means is provided for them than there is at the present time, though I think there will be.
The hon. member for Kootenay West agreed with my expression of policy but with respect to part 3, as the hon. member for Winnipeg North Centre called it, he did not agree with the way in which it was put into effect. The main reason he did not agree with that was, if I followed him closely, on account of the point I have just been discussing. He said we were making a retreat because we were cutting down the long-term benefit period of the old act. I claim we are not making a retreat, because for the three years we are seeing to it that the people who are now insured shall receive just as good or better benefits in those three years as they would have received if the act had not been changed.
With respect to the point made by the hon. member for Digby-Annapolis-Kings, having to do with the appeal under the act, that he would like to see the matter settled on the decision of the local referees rather than having it finally go for appeal to the umpire, I was glad to hear his comments on the fairness and capacity of the local board of referees. The only reason the machinery set up a central umpire was to give, as in the veterans legislation and other legislation, the applicant one more opportunity to win his case by taking it to yet another appeal in the
Unemployment Insurance Act hope of getting more consideration. However, I shall be glad to have the point of view that he expressed presented to the committee when it meets.
I know, Mr. Chairman, that I have left a number of points unanswered, but I shall be glad to search Hansard during the Easter recess and try to rectify any omissions. But there is one point I have put off to the end, and that has to do with the extent of supplementary or seasonal benefits this year. From now on I shall call them seasonal benefits so as not to get it mixed.
Practically every hon. member who spoke referred to his concern about this winter. I can tell the committee that the government has also felt concern about this. I can remember that last year at this time many insured workers were on seasonal or supplementary benefits and were looking forward to April 15, realizing, as somebody put it, that there would be no more for them, that that would be the end. They were wondering what was going to happen.
I kept in close touch with things and to my surprise it worked out reasonably well. In other words the change-over was gradual, and apparently there was no serious hardship. I did not consider only what came to my attention; to some extent I went out to see if it was true. That was last year.
In the discussion yesterday some suggested that the supplementary period should start in December. Then I think someone suggested that the governor in council should be allowed to decide when it would end, based on the weather in any part of Canada. Others suggested that it should be extended beyond April 15 for longer or shorter periods.
I shall deal first with the suggestion that it start before the first of the year. I am sure that would be useful, but our experience has shown that the impact of summer and fall earnings carry over the Christmas holidays into a time after January 1, when for all unemployed some added resources are most useful. Therefore we believe that the first of the year is most appropriate as a starting point.
At this juncture I should like also to say that I am confident the dates of start and finish must be the same all across Canada. As Minister of Labour I would hate to be put into the position of having to recommend to the governor in council when each seasonal benefit period should end. I am sure there would be a great contest as to whether the storm which I believe happened the day before yesterday in Alberta was worse than the spring flood which probably will be coming along in a few weeks on the Grand river

Unemployment Insurance Act and the effect of each on spring employment. It would be an impossible position for the government to have to decide those things each spring, based on the weather or the length of the winter.


Mr. Rowe:: It is a fair weather government.


Milton Fowler Gregg: Quite true. Having set the time, I think you must be fairly rigid. We were rigid at the beginning. We set the period as January 1 to April 1. Then we went on with the one-cent business which worked out a lot better than we thought it would. Then we cautiously put on another couple of weeks to the seasonal benefit period and said we would make it go to the middle of April. But it is obvious from what I presented yesterday, that under the new arrangement and by mopping up that one cent and in the general revision proposed, we feel that we can do something much more useful now.
Back in 1950 the supplementary benefits were tailored especially for Canada, for our heavy winter and the unemployment resulting therefrom. It was felt that we should deliberately place the weight of our benefits on the winter months. If the over-all structure of the act was sound in 1950, then it was realized that any benefits we concentrated on the winter season would have to be taken away from the year-round benefits if this one cent did not make up the difference.
It is important to remember also that a great number of the insured workers are in employment which rides along through the year with winter, spring and summer, making very little difference in the amount of unemployment in those industries. We had to be careful as to what was happening during the winter. Back in 1950 an estimate was made of the concentration of full resources which would be aimed at the winter. That might be called X. It was then a question as to how that quantity X could be handled most usefully and equitably during any winter. After our first extension it became evident that this X was a much more buoyant amount than perhaps was anticipated.
A few weeks ago I took some of these suggestions home with me, and on looking through them I was greatly pleased with what appeared to me to be a surprising effect upon this winter and future winters. After all if our X is a good-sized amount and it is broken down into various shares for the purpose of a worker getting through a difficult winter, it does not matter whether that amount is spread over three or four months, or whether it comes in two or three months, or in 15, 20 or 25 weeks.

Here is the point I think we overlooked when we rushed through the supplementary benefits in January. Let us take a worker who this year and last year accumulated- we do not need to go into the background -exactly the same seasonal benefits each year. Take the worker who is in receipt of regular benefits of $24 per week. Last year the seasonal benefits were roughly 70 per cent of $24, which amounts to $17. Last year the minimum number of weeks a worker could have in the seasonal period was six. I will ask the hon. member for Hamilton West to check me on this, but I believe that six multiplied by $17 gives a total of $102. That is the amount of X that that man could have last year, and it did not matter how it was spread out. This year that same man can get seasonal benefits for 10 weeks at $24 a week, which gives a total of $240.
I think this provides a good answer to the demand to extend the period. We have nearly trebled the amount of money paid in the same period, and after all that is what counts. In case anyone thinks I am giving a distorted picture by taking the top man, let us consider the man in the lowest category and see what he will get this winter. Last winter under our old plan the lowest paid married man could get 70 per cent of $4.80 per week; that was all. Last year during the seasonal benefit period he could get 3 weeks, multiplied by $3.60, which is 70 per cent, or $10.80.
This year he can get 10 weeks multiplied by $4.80 or $48, which in this case is five times better than it was last year.
I wanted to mention these things because we do not intend to extend the seasonal benefit period this year. As a matter of fact we could not extend the period unless we rushed this bill through and made it law by tomorrow. As the 15th of the month comes during the Easter recess I felt the house should have that much reassurance on behalf of those who formally come to the end of their benefit period on the 15th of April but in reality, due to the working of the machine the receipt of the last cheques will be spread over the last half of April and in some cases extend into May. I join with hon. members in expressing the hope that we might move into the spring period without any serious hardship in that regard.
Resolution reported, read the second time and concurred in.
Mr. Gregg thereupon moved for leave to introduce Bill No. 328, to amend the Unemployment Insurance Act.
Motion agreed to and bill read the first time.


Mr. Speaker:: When shall this bill be read a second time; by leave, now?


Some hon. Members:: No.


Mr. Speaker:: Next sitting of the house.

The house resumed, from Tuesday, March 29, consideration of the motion of Mr. Harris for committee of supply.


Mr. Speaker:: May I go back a moment to the remarks I made which appear at pages 2523 and 2524 of Hansard of March 29. I would like to tell the hon. members for Acadia (Mr. Quelch) and Winnipeg North Centre (Mr. Knowles) that they are absolutely right in their contention that whenever amendments and subamendments have been moved on a motion to go into supply, members who have spoken to the amendment and the subamendment are entitled to speak again to the main motion. The citation I had in mind was No. 468 of Beauchesne, third edition, which referred to a ruling given away back in 1853, I think, in the British house and which perhaps applied at that time much more than it does now-certainly much more than it does now-because in those days there were hardly any amendments moved to go into supply. Now such amendments are moved, and since 1927 there have been even subamendments moved not only in this house but also over there.
If I had followed that line of reasoning I would have been hopelessly wrong; therefore I wish to straighten out the point. Theoretically the only four persons who have spoken to the main motion are the mover and seconder of the motion that the Speaker leave the chair for the house to resolve itself into committee of supply, and the mover and the seconder of the amendment to the main motion. On that point the rules say the seconders of both these motions may be precluded from speaking, but the Chair has always been very lenient towards those two members, and generally speaking whenever they wanted to speak I think they have been allowed to do so.
We are now drawing close to five o'clock. The hon. member for Fraser Valley (Mr. Patterson) had the floor when we concluded the last time. He is not precluded from speaking again if he so wishes because of the special circumstances which entered the debate on the last occasion, but if it is the wish of hon. members at the moment perhaps we might now start considering private bills.


Some hon. Members:: Agreed.
5,	1955	2719
Criminal Code PRIVATE BILLS



CONSIDERED IN COMMITTEE


[Stage Direction]
Bill No. 243, to incorporate Caledonian-Canadian Insurance Company.-Mr. Hunter.
Bill No. 280, to incorporate Victoria Insurance Company of Canada.-Mr. Hunter.
Bill No. 281, to incorporate St. Mary's River Bridge Company.-Mr. Nixon.


[Stage Direction]
The house resumed, from Tuesday, March 29, consideration of the motion of Mr. Die-fenbaker for the second reading of Bill No. 186, to amend the Criminal Code (nuisance).
Mr. A. M. Campbell (The Battlefords):: Mr. Speaker, I am sorry the Minister of Justice (Mr. Garson) is not in his seat this afternoon because I want to make a few comments with regard to what he said on March 18.
In the debate we had last year the minister made what I thought was a good move when he suggested that an interprovincial water board be given power to control interprovincial rivers, or to control the pollution in interprovincial rivers. The meeting was called, as was suggested, and the other day the minister gave a report of what took place at that meeting. The result was that the provinces of Saskatchewan and Manitoba and the dominion government agreed to the setting up of this board, but the province of Alberta did not agree.
The minister, however, went on to give a report of what this meeting had done and the recommendations it had made. He said that the province of Alberta was controlling the situation at the present time. That is correct; that is the situation at the present time. But the people whom I represent are still worried. They wonder what would happen if at some time in the future the Alberta government should get a little bit careless, perhaps, and not look after this situation in the way it should. What have they to protect them from a recurrence of pollution? What protection have they? They simply have nothing, as far as I can see.
I want to support this amendment moved by the hon. member for Prince Albert because, in spite of what the minister said, I think it clarifies section 165 of the Criminal Code. I think it makes it clearer to anybody-especially to a person like myself, an

Criminal Code
ordinary layman-that it is a crime to pollute the water of any interprovincial river. In speaking on March 18 the minister, as reported at page 2174 of Hansard, had this to say:
Having regard to the fact that in the Alberta provincial law and in the federal Fisheries Act there are provisions that prohibit the discharge of effluents and the placing of waste in the Saskatchewan river in Alberta-
I want to say something about the Fisheries Act because last year on February 5, I asked the Minister of Fisheries (Mr. Sinclair) this question, as reported at page 1812 of Hansard:
I should like to direct a question to the Minister of Fisheries. Will the minister have an inspection made of the fish life in the North Saskatchewan river to determine whether the pollution of the water in that river is killing or affecting the health of the fish in that river?
This is what the Minister of Fisheries said in answer to that question:
Mr. Speaker, I thank the hon. member for having given me notice of this question. There is no question that under the British North America Act legislative jurisdiction over fisheries rests with the federal government. However, by agreement with the government of Canada in 1930 the three prairie provinces took over the responsibility of administering their own natural resources, including fisheries. Since that date provincial officers enforce federal fisheries conservation laws. The federal government does not maintain any staff in those provinces for this purpose. Therefore the inspection of the alleged pollution of the North Saskatchewan river would primarily be the responsibility of the governments of Saskatchewan and Alberta.
There is no question whatsoever about the fact that the Fisheries Act which is enforced in those provinces by the provincial authorities contains sufficient authority.
I agree with that statement. But I would point out that if one province causes pollution affecting another province, the province affected has no protection. It does not matter which province it is that does it. It might be the province of Saskatchewan next time which would cause pollution and harm the province of Manitoba. Under this act the province of Manitoba has absolutely no protection whatsoever. I continue with the quotation from the minister's answer:
Perhaps if I just read subsection 2 of section 33 of the Fisheries Act, it will be seen how wide the powers are. Subsection 2 of section 33 reads as follows:
"No person shall cause or knowingly permit to pass into, or put or knowingly permit to be put, lime, chemical substances or drugs, poisonous matter, dead or decaying fish, or remains thereof, mill rubbish or sawdust or any other deleterious substance or thing, whether the same is of a like character to the substances named in this section or not, in any water frequented by fish, or that flows into such water, nor on ice over either such waters."

I want to point out that the wording of the amendment is quite similar to that of the Fisheries Act. The amendment reads as follows:
Every owner, lessee, or person operating any industrial plant, oil refinery, chemical works, sawmill or other plant or works, or any other person, who discharges or throws or allows to be discharged or thrown any noxious waste product, raw sewage, oil, sawdust, chemical or other matter or thing into a river, stream or other water any part of which is interprovincial or which flows into any interprovincial water, which has the effect of endangering the lives, safety, health or comfort of the public is guilty of
(a)	an indictable offence and is liable to a fine of ten thousand dollars for a first offence and of twenty thousand dollars for a second offence, or
(b)	an offence punishable on summary conviction.
As I said before, this amendment is quite similar to the Fisheries Act. It is quite evident that the Department of Fisheries considered that it was necessary to have in the act something which would prevent the putting in the rivers of anything that would harm the fish. It seems to me that if we are interested in the welfare of fish we should certainly be equally interested in the welfare and health of our people.
This question is not dead. It is still quite a live question in my province. Only a few days ago-on March 31, to be exact-in the Saskatoon Star-Phoenix, which is a paper that usually supports the government, there appeared an editorial which is headed "Unsound Case" and which reads as follows:
Who is there that does not agree with Mr. Garson that the best way to deal with pollution in interprovincial rivers is through co-operation of health authorities in the various provinces? But can Mr. Garson suggest what is to be done if one of the provinces refuses to co-operate?
At this point I want to interject that I am not accusing the Alberta government at this time of not co-operating. They are not co-operating as part of an interprovincial board, but I believe they are making a pretty good job of controlling pollution at the present time. The editorial continues:
That is the situation now with regard to the North Saskatchewan river which was polluted a year ago, to the great inconvenience of residents living along it. Manitoba and Saskatchewan are agreed on a joint commission which would have advisory jurisdiction over interprovincial waters in the western provinces. Alberta so far has not agreed to co-operate fully, although that province has pledged to control pollution within its borders by unilateral action.
Such a pledge is better than no agreement at all; but it is not as good as a broader arrangement which would cover every situation, as a federal law would do. Mr. Garson has always countered this argument by noting that any law prohibiting pollution of interprovincial waters anywhere in Canada would complicate the situation in eastern Canada. We gather by implication that he is saying that many interprovincial rivers in eastern Canada are now being polluted, and that to forbid

this would harass both Industries and municipalities. II this is his point, then on this matter he is basing his argument on convenience rather than principle. Perhaps it does appear expedient to allow pollution of eastern waters to continue, but it is not wise in principle, as the future may demonstrate. The federal government would be on sounder ground if it faced up to this matter now, and undertook to control interprovincial waters with regard to pollution.
I do not believe the bill before us is a solution to the problem of pollution. Pollution has to be stopped before it starts if effective control is to be exercised. However, I believe the amendment might be a better deterrent than subsection 2 of section 165 of the Criminal Code. Perhaps, as the minister said, the penalty is too light; but I was sold on the suggestion made by the minister last year, as I have said before, that an interprovincial water board be given powers to prevent pollution. I think such a board could set up a licensing system that could control effectively what effluents and the amounts thereof could be discharged into an interprovincial river, and where pollution did take place such licences could be cancelled.
It is the feeling now of the provincial government and the people of the constituency I represent that the federal government should accept the responsibility of preventive control. This view is also held by many other people. Now that the Alberta government has refused to become a party to an interprovincial water board assuming control, where are we if that government falls down on the job? We in the province of Saskatchewan have to depend on the good offices of the Alberta government, and the people of Battle-ford are living in dread of a recurrence of last winter's pollution.
The Alberta government, while disagreeing with the idea of such a board, have stated that they will look after the problem themselves, and it would appear that they are doing so. But the people of Battleford remember the statement made to the delegation last spring by Dr. Somerville. I was a member of the delegation that went to the city of Edmonton. We interviewed Dr. Cross and Dr. Somerville and one of his engineers, and we also went to the plant. But one statement made by Dr. Somerville stood out and caused us considerable worry, and is still doing so. He said that the province of Alberta is being industrialized very rapidly. He said that industries are coming in at a tremendous rate, and it is going to be almost impossible to prevent pollution. He went on to suggest that the city of Prince Albert, the town of Battleford and the mental institution in North Battleford try to find a new source of water supply.
Canada Elections Act
We were pretty much flabbergasted when Dr. Somerville made that statement, and that is the reason I am on my feet today. That is also the reason the people of my constituency are still worried. If industries continue to come into Alberta, and if an industry happens to be a borderline case-perhaps it will pollute the river and perhaps it will not- it may be that the Alberta government which, as I have already said, is doing a good job now, might be persuaded to take a chance and let that industry discharge effluents into the river, thus bringing about another period of pollution. I want to warn both the Alberta government and the federal government that the people along the North Saskatchewan river will not tolerate further pollution, and if it does take place strong pressure is going to be put on the federal government to take action. The federal government has now created a precedent bytaking control under recent legislation of that portion of international rivers which lies within Canada. They can hardly refuse to accept the responsibility of looking after the pollution of interprovincial rivers and the health of the people of all the provinces concerned, especially the provinces of Saskatchewan and Manitoba, if the province of Alberta falls down on the job and does not see to it that pollution does not take place again.


William Earl Rowe: Mr. Speaker, may I adjourn the
debate?
On motion of Mr. Rowe the debate was adjourned.



CANADA ELECTIONS ACT


[Stage Direction]
The house resumed, from Friday, April 1, consideration of the motion of Mr. Thomas for the second reading of Bill No. 185, to amend the Canada Elections Act (ballot papers).
Mr. Ray Thomas (Wetaskiwin):: Mr. Speaker, on Friday last I was dealing with the arguments raised by those opposed to the bill. One of them was that as members of parliament we had been elected as individuals rather than on a party basis. I did not spend any time dealing with the fact that all the election literature one finds floating around in an election year is concerned more with party policies than with individuals. I think that angle of the matter was dealt with very well by the hon. member for Winnipeg North Centre (Mr. Knowles).
However, I did point out that after we are elected to the House of Commons and come

Canada Elections Act
here to sit as members we are segregated, so far as the seating plan is concerned, in political groups. In addition, each Wednesday Hansard contains a list of members together with their political affiliations, as does the alphabetical list of members which is published and distributed. I might also point out that the leaders are addressed quite frequently as the leader of the C.C.F. party, the leader of the Social Credit party, and so on, so there is no doubt there is recognition of the various political groups in the house.
When the Secretary of State (Mr. Pinard) was speaking the other day he dealt with the matter of the letter from the party leader stating which candidate was the official candidate of the party, and he said there would have to be a leader in order to have a candidate. Of course that is ridiculous, because if he had read the next two words, "if any", his argument would have been completely demolished. I might also point out that in practically all cases members of the House of Commons are nominated by fully authorized nominating conventions, and the leader's letter would simply ratify the decision of the convention. Therefore the argument that the leader himself would select the candidate seems to be pure nonsense, although the Secretary of State pointed out he was afraid that might be the case. He might be a bit worried about the dictatorial powers of the leader in his party, but we are not the least bit worried about that in ours.
Following the same line of argument, the minister said it would be impossible for an independent candidate to be elected to the house because of the letter required from the leader of a party. However, the bill contains a provision that if there is no letter forthcoming from a recognized leader, then the affiliation as set out in the nomination paper would suffice. I might say, too, that all the objections to the bill have been on the basis of technicalities or so-called errors. I assure hon. members that a great deal more consideration was given to the drafting of this bill than was shown in the arguments used against it. If it is a matter of technicalities, if it is a matter of wording, as has been pointed out by several hon. members opposing the bill, then I suggest we simply give this bill second reading and turn it over to the elections committee to make any minor changes they feel are necessary.
The hon. member for Dauphin (Mr. Zaplitny) suggested that rather than have the political affiliation set out on the ballot paper it would be more proper if it were placed on the nomination paper. I have no objection to it going on the nomination pape. [DOT]. -r.d

undoubtedly if this bill were passed the political affiliation would eventually appear on the nomination paper. The fact the political affiliation was on the nomination paper does not mean that the public would be aware of the political affiliation of the various candidates in the same way they would if it appeared on the ballot paper.
In closing, Mr. Speaker, I would simply say this. It is quite possible that members of the Conservative party and of the Liberal party might have some qualms about having their political affiliations placed beside their names on the ballot paper. I should like to say that I not only do not mind having "Social Credit" placed opposite my name, but I am mighty proud to have it associated with my name.
The house divided on the motion (Mr.	
Thomas) which was	negatived on the following division:	
YEAS	
Messrs:	
Blackmore	Jones
Bryce	Knight
Bryson	Knowles
Cameron (Nanaimo)	Low
Campbell	McCullough
Coldwell	(Moose Mountain)
Ellis	McLeod
Gagnon	Nicholson
Gillis	Quelch
Hansell	Regier
Herridge	Thomas
Johnson (Kindersley)	Winch
Johnston (Bow River)	Zaplitny-25.
	NAYS
Messrs:	
Aitken, Miss	Cloutier
Applewhalte	Crestohl
Arsenault	Croll
Ashbourne	Dechene
Balcer	Denis
Balcom	Deschatelets
Batten	Deslieres
Bell	Dinsdale
Benidickson	Drew
Bennett	Dumas
Blair	Dupuis
Blanchette	Enfield
Boisvert	Eudes
Bonnier	Eyre
Boucher (Chateauguay	- Fairey
Huntingdon-	Ferguson
Laprairie)	Follwell
Bourget	Forgie
Bourque	Fraser (Peterborough)
Breton	Garland
Brisson	Garson
Brown (Essex West)	Gauthier (Lake St. John)
Cameron (High Park)	Gauthier (Portneuf)
Cannon	Gingras
Cardin	Gingues
Caron	Gour (Russell)
Carrick	Gourd (Chapleau)
Cauchon	Gregg
Cavers	Habel
Charlton	Hamilton (Notre Dame
Churchill	de Grace)
Clark	Hamilton (York West)

Hanna	Monette
Hardie	Monteith
Harkness	Montgomery
Healy	Nesbitt
Hellyer	Nixon
Henderson	Nowlan
Henry	Pallett
Hodgson	Pearson
Hollingworth	Philpott
Hosking	Pickersgill
Houck	Pinard
Howe (Port Arthur)	Pommer
Huffman	Pouliot
Hunter	Proudfoot
James	Prudham
Jutras	Purdy
Kickham	Ratelle
Kirk (Antigonish-	Reinke
Guysborough)	Richard
Kirk (Shelburne-	(Ottawa East)
Yarmouth-Clare)	Richard
Lafontaine	(St. Maurice-
Langlois (Gaspe)	Lafleche)
Lavigne	Richardson
Leduc	Robertson
(Gatineau)	Robinson (Bruce)
Leduc (Jacques Cartier-	Robinson
Lasalle)	(Simcoe East)
Leduc (Verdun)	Rowe
Lefrangois	Roy
Legare	St. Laurent
Lesage	Schneider
Lusby	Shipley, Mrs.
Macdonnell	Sinclair
MacKenzie	Small
MacNaught	Smith
McBain	Stanton
McCann	Starr
McCubbin	Stuart
McCulloch (Pictou)	(Charlotte)
McDonald	Thibault
McGregor	Tucker
McWilliam	Tustin
Marler	Weaver
Martin	Weir
Masse	Weselak
Matheson	White (Hastings-
Meunier	Frontenac)
Michaud	White (Waterloo
Michener	Winters-152.
Mitchell	
(London)


Daniel (Dan) McIvor: Mr. Speaker, I was absent on duty. Had I been present, I would have voted right.


Mr. Speaker:: The public and private bills having been disposed of, the house will now resume consideration of the business which was interrupted at five o'clock.

The house resumed consideration of the motion of Mr. Harris for committee of supply.



LAW ENFORCEMENT

Mr. W. M. Hamilton (Notre Dame de Grace):: Mr. Speaker, in rising to present a grievance to this house on the motion to go into supply, I should like to say first that in general law enforcement is not the direct concern of this house; it is primarily the concern of the provincial and municipal authorities. However when the action, or rather the inaction, 50433-1734
Law Enforcement
of a federal department results in a set of conditions under which certain illegal activities are carried out by those who do not appear to be Canadian citizens, the time has arrived for the situation to be brought to the attention of the house so that some action may be taken.
Since my grievance concerns the continued presence in Canada of non-Canadians of questionable character it is obviously the responsibility of the Department of Citizenship and Immigration. This department must accept the responsibility for not having dealt with United States gamblers and big-time bookies who have operated in Canada for the past two years without interference save by municipal authorities. Before I have finished this presentation I shall name names and cite cases to document this charge.
The basis of the invasion of Canada by these United States racketeers goes back to the Kefauver investigation in the United States. Following that investigation United States syndicates which had been there disclosed began to move into Canada and located themselves in Montreal in 1952, because the United States government had passed a law requiring all bookmakers to register, pay a fee of $50 and keep elaborate written records of all their transactions. Severe fines and penalties were provided for those who disobeyed these regulations.
Since it is obvious that operations of this kind do not flourish under any kind of regulation or restraint, and these conditions were making it most difficult for them to operate, the bookmakers in search of a more favourable climate turned to Canada. They could locate where they wished, because as far as convenience in carrying on their business is concerned it might be noted that the practice of bookmaking requires little more than a telephone and an office. A bookmaker operates on a split second schedule. In the United States his principal method of communication is the leased wire service, but here in Canada he depends upon the long distance telephone. In one case to which I shall refer subsequently it is stated that the long distance telephone bills of one organization which was uncovered amounted to something over $6,000 a month.
Since I am here making reference to telephone service in Canada I should point out in all fairness that it is almost impossible for the Bell Telephone Company to stop the illegal use of its lines and equipment unless that is reported upon by the police authorities. They are legally obliged to give these services wherever possible and whenever anyone requests them. In applying for the service the applicant must state that he proposes to

Law Enforcement
use it for legal purposes. On February 22, 1955, I asked the following question of the Minister of Citizenship and Immigration (Mr. Picker sgill):
Since Montreal police have confirmed that a large number of notorious American thugs have entered Canada illegally and are currently resident in and around Montreal, is there no process by which the Department of Citizenship and Immigration can locate and deal with such undesirables?
The minister replied as follows:
Mr. Speaker, just before I came into the house I received a notice from the hon. gentleman that he was going to ask the question he has just put in the house. I anticipated a question of this nature. Like the hon. member for Notre Dame de Grace, I had advice of the report in the Montreal Star. I made immediate inquiries of the appropriate officials of the department.
Then later:
I am advised that somewhat similar reports were brought to the attention of the R.C.M.P. and the immigration branch of the Department of Citizenship and Immigration, and that an investigation has been under way for some time to see whether there has been any violation of the laws which the federal government has the responsibility of enforcing:	and that, of course, includes the
Immigration Act.
I do not think there is anything useful I can add to this answer until this investigation has been completed.
That was over five weeks ago. The fact that the minister could give an answer such as that at that point indicates almost unbelievable inefficiency in the way he operates his department. In the first place the men to whom I referred had at that time been in Canada for approximately two years, during the greater portion of which their presence in this country had been to say the least rumoured and discussed. Yet the minister made no inquiries whatsoever about them until I raised the point in this house; at least that was the purport of his answer.
The basic point at issue is whether or not the minister and his officials should have been aware of this illegal activity some considerable time before I raised the matter in the house. I submit that they certainly should. Besides having been a matter of discussion around Montreal for some two years the whole situation had been a matter of public record in Montreal for almost two months before the minister, prodded by my questioning, even said he would look into it. I should like now to present him with a little evidence in support of this complaint.
A raid by the Montreal police on January 1, 1955, at 1421 Bleury street revealed the existence of a gambling establishment with nine telephones, along with telephone bills, betting slips, racing publications and typewriters. This is the establishment to which

I referred earlier with telephone bills averaging $6,000 a month. In its issue of January 5, 1955, the Montreal Herald, in addition to giving the previous information, had this to
say:
Details of the operation have remained secret although the identity of many of the American gamblers handling the business is commonly known. The move to Montreal came largely as part of an attempt to avoid the attention of American federal law enforcement agencies where interstate transactions were involved.
The same story dealt at some length with a raid on Tuesday, January 4, 1955, on the offices of an organization called the Seaway Construction Company, located on Stanley street in Montreal. A Mr. Camille Joseph was arrested in this raid, and the story contains this interesting statement referring to Mr. Joseph:
Detectives said he claimed to come from San Antonio, Texas.
I have had somebody look further into this case and am informed that certain claims were made that this man is an American and certain claims were made that he is a Canadian. However, these reports identify him as an American. The January 6, 1955, issue of the Montreal Herald contains an article indicating that local gambling activities have been partly discontinued, but there is the following paragraph regarding those which have continued:
Main gambling activities here lately have been the American lay-off operations-underwriting the bets of American bookies by long distance telephone-and the chartered gambling clubs, legal as long as they observe certain rules.
We now see that some two months before my question in this house it became a matter of public record in Montreal that there had been American infiltration into this illegal field. Yet at the time of my asking my question it was obvious that the minister knew nothing about the situation, even though his department had been conducting an investigation for some time-and I quote from the minister's reply-
-to see whether there had been any violation of the laws which the federal government has the responsibility of enforcing; and that, of course, includes the Immigration Act.
I suggest that this is one case to start with, where if the minister and his officials were on their toes they would have dealt with the offender properly and been in a position to report to this house when the question was raised.
Let us now turn to the situation as it existed on February 22, when the question was raised in the house. Through a newspaper story which appeared in the Toronto Telegram of that date I propose to show that

more than adequate information was available to permit the Department of Citizenship and Immigration to deal adequately with the situation either on or before that date. I use the newspaper story, first because it is a matter of public record and second because if a working newspaperman could procure the information contained in this story it could surely have been procured by the government through the extensive facilities and resources of the Department of Citizenship and Immigration and the Royal Canadian Mounted Police. The story is headlined, "United States Gang Set Up Headquarters in Quebec" and it carries the byline of Jack Macbeth.
As I said, I propose to put this story on the record not so much to bolster my facts as to show in the first place the information which was available to the department, and second to show what an ordinary newspaperman-a working newspaperman, because no newspapermen are ordinary-could find out through his own efforts. The story reads-


Mr. Pickersgill:: Mr. Speaker, on a point of order, as this story was denied, I believe, by the chief of police in Montreal in the newspapers the following day, I wonder-


William Earl Rowe: How do you know; you have not heard the story?


John Whitney Pickersgill: According to the newspaper reports the following day it was denied, and I am wondering if this is not a little irrelevant.


William Earl Rowe: You have not heard it yet.


John Whitney Pickersgill: I read it.


William Earl Rowe: You are anticipating it.


William McLean Hamilton: The
interjection of the minister, Mr. Speaker, will be dealt with in due course. I think he would be well advised to read the Montreal newspapers much more carefully both before and after any event.


Mr. Speaker:: The minister rose on a point of order. An hon. member who is interrupted on a point of order may explain, and that is what I expected the hon. member to do. I feel, however, that I must now intervene to dispose of the point.


William McLean Hamilton: I can
explain-


Mr. Speaker:: Will the hon. member please explain?


William McLean Hamilton: Certainly. This is interesting, because I have a reference to it in my notes. The following day the Montreal Herald carried a follow-up on
5, 1955	2725
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this particular story. Various newspapers carried different versions of statements of Mr. Pacifique Plante, assistant director of the Montreal police department. However, let it be said that the next day, that is February 23, the Herald story quoted Mr. Plante as saying:
I had information-reliable information-weeks ago that five groups of American gamblers were operating in the suburbs.
Later on in the same story he is quoted as saying:
On Bleury street they were doing a business of perhaps $1 million a week. That is my estimate. Perhaps I am wrong. Their phone bill alone was $10,000 a month.
I could go on and read one or two more quotations, Mr. Speaker. While the minister may feel he has a point, I have read the following story quite clearly and carefully and if I had it here, which I do not, I think I could say there is much uncertainty as to what Mr. Plante actually did say.
I might say further, Mr. Speaker, that the point of order is irrelevant to a degree because I was attempting to show what information was available and in the hands of the working press and those who investigated this situation.


Mr. Speaker:: Well, the point obviously is this: that the hon. member, being entitled to make a speech, is supposed to express his own views, and in putting his case forward at the moment he is attempting to substantiate what he intends to argue by reading newspaper articles. The minister rose and said, "You quoted from one article but there is another one I know of which challenges what you are about to quote."
Now, what are we going to do in this house if one hon. member in making his speech is going to base his arguments on the views expressed by others in newspapers, if other members feel the need to quote from other newspapers in order to contradict the newspaper article which was used by the first member? If the hon. member wishes to put his own views forward I think he is quite entitled to do so and no one will stop him; but whenever he says, "I want to prove my point by what a newspaper said," he is bringing in an outside witness.
What facilities do we have to ascertain the accuracy of stories that are written in newspapers? There is no way of ascertaining their accuracy. The hon. member must put forward his own views and must take the responsibility for them. If he wishes to take the newspaper article as a basis for his argument he might make a passing reference to it and in that way take the newspaperman

The Budget-Mr. Harris as an ally, but I suggest he should paraphrase what the newspaper said. It in attempting to advance his argument he is going to make a review of the press on that particular point, then contradictory articles will be introduced and we will have an argument between two members who are quoting newspapers one against the other. Argument in this house should be as between members and not as between newspapers despite the fact that newspapermen, as the hon. member has said, are not ordinary people.


William McLean Hamilton: In
view of the hour, will you call it six o'clock?


Mr. Speaker:: As it is six o'clock we will adjourn, because we go into ways and means at eight o'clock and it might be preferred that the hon. member adjourn the debate now.


William McLean Hamilton: shall adjourn the debate.
On motion of Mr. Hamilton (Notre Dame de Grace) the debate was adjourned.
At six o'clock the house took recess.


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AFTER RECESS

The house resumed at eight o'clock.


Walter Edward Harris: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said:	Before I proceed with my
remarks, Mr. Speaker, I think 1 ought to draw attention to the fact that it was 81 years ago this week that the first Liberal finance minister presented his first budget. Since Sir Richard Cartwright there has been a long succession of distinguished predecessors of mine: Fielding, Robb, Dunning, llsley and my immediate predecessor, Mr. Abbott.


William Earl Rowe: There have been some others.


Walter Edward Harris: My hon. friends opposite have their traditions also. They have had distinguished gentlemen in this portfolio. I mention only a few: Tilley, Tupper, Foster and, more recently, Sir Thomas White. At this point I should like to pay my respects to the memory of Sir Thomas White who was, as everyone knows, the finance minister in the first world war. He has just recently passed from us full of years and honours which were richly deserved for the service he gave to his country.


In presenting the ninety-first budget since confederation, Mr. Speaker, I have followed the practice of the last few years in placing before hon. members a white paper which contains the facts and the figures with respect to the accounts of the past year. With this white paper before you it will not be necessary for me to go into any great detail about the accounts for the time being. However, I wish to make a general survey of the economic conditions of the country and of the accounts of last year. In doing so I crave the indulgence of hon. members, who may recall that on occasion I have expressed certain views about the length of speeches in the House of Commons, because I am now obliged to break the rule that I have heretofore tried to observe.



THE INTERNATIONAL POSITION

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I should like to begin with a short review of the international scene as it affects our budgetary problems.
On the political side, 1954 was a year of constructive achievement, although our hopes of realizing a permanent and stable peace continued to be disappointed. In Europe there was some easing of tensions as further improvement was made in the political and military strength of the Atlantic alliance. Hostilities in Indo-China were brought to an end and a number of countries in south and southeast Asia made additional progress in their program of economic development. Despite these improvements, however, the world situation, particularly in the Far East, remains troubled and uneasy, and it is abundantly clear that the free world cannot yet afford to relax its efforts to build up their defences.
We must therefore continue to expect substantial expenditures for this purpose.
In economic matters abroad, 1954 was in most respects a good year. In the United States, economic activity, after receding from the peak level of 1953, began to turn up in the last quarter of the year and has continued to improve since that time. This progressive improvement in the United States has been a very heartening development, not only to us but to all friendly countries.
Another encouraging feature of the past year has been the continued expansion in production in most overseas countries of the free world, particularly the United Kingdom and western Europe. As post-war shortages have been overcome, most of the controls and restrictions which distort production and hinder basic adjustments have been abandoned. This has undoubtedly helped to bring

about the improvement which has occurred both in productive investment and in living standards.
There has been a welcome easing of restrictions on international trade and payments. The United Kingdom has continued to give a constructive lead on these matters by relaxing quotas and licensing requirements, reducing discriminations against dollar imports, easing exchange restrictions and reopening commodity markets.
There is still, of course, a long way to go before the goal of full convertibility and truly liberal trade arrangements is attained. A number of countries still face formidable inflationary problems and balance of payments difficulties, and some succeed in balancing their external accounts only with the help of large amounts of United States offshore purchases and other forms of aid. However, substantial inroads have been made on entrenched restrictions and there is growing recognition that domestic inflationary pressures must be contained if international balance is to be achieved and maintained. In this connection, it is encouraging that the recent set-back in the steady progress made by the United Kingdom during the last few years in rebuilding her international reserves has not been dealt with by imposing new restrictions, but in other, and better, ways.
In helping countries to restore stability in the post-war years, to expand production and to increase their international trade, no nation has played a more constructive role than the United States. As every member of this house is aware, the success that has already been recorded is due largely to generous and farsighted American policies. In the past twelve months, however, while there was no basic change in American policies, there was a disappointing lack of progress toward actual reductions in trade barriers and there were disconcerting signs of a revival of protectionist feeling in response to the increase in competitive conditions.
I should remind the house that the United States administration has resisted proposals which, in our opinion, would not advance the cause of friendly and mutually advantageous trade. This resistance we welcome. On the other hand, it must be confessed that the resistance has not been uniformly successful. We all have our difficulties and it is not always possible to achieve ideal solutions. But it must be recognized that actions taken or even implied by the government of the United States may weaken support for liberal commercial policies and may impose upon those of us who are firm supporters of such policies a greater burden in defending them in our own countries. One country
The Budget-Mr. Harris cannot attempt to get the maximum benefit at the cost of the minimum adjustments without creating a desire in other countries to achieve the same result. There must be a reasonable give and take in any durable trade relationships, whether under the GATT or under any other system.
It is of the utmost importance for the future of international economic co-operation that the United States should continue to give positive direction and leadership in reducing barriers to the free flow of world trade.
We in Canada will continue to play our part in any further steps that are taken to promote these objectives. As one of the world's great trading nations, it is clearly in our interest to encourage overseas countries to earn dollars in order that they may be able to buy our exports, which are the source of over one-fifth of our income. If we are to maintain our standard of living and use our resources and skills to best advantage, we must be prepared to permit other nations to do the same. Markets everywhere are becoming more competitive, but as an important exporting nation we must continue to look very carefully at all proposals involving government protection and aid. The effects of the higher costs resulting from artificial assistance in one form or another would have to be borne by the Canadian consumer in the form of higher taxes and higher prices and, even more important, by the Canadian producer for export in the form of lost markets overseas and lost employment here.
We should be particularly careful about impeding imports from countries whose trading position was impaired by the war, countries which are now dismantling their discriminatory restrictions against our exports and which can be expected to buy still more from us as long as we do not prevent them from earning the dollars with which to do so. With such considerations as these in mind, the government has studied the recent report of the tariff board relating to our tariff on British woollens. We have decided that even though sections of our own industry are experiencing difficulties it would not be wise to increase the tariff. While the relatively low level of our present rates may have contributed to the difficulties of certain sections of the industry, there are, as the report emphasizes, many other factors at work, including changes both of consumer preference and of technology. It seems clear that no change in the tariff, such as was proposed to the board by the industry as a minimum requirement, would solve the basic problems that currently beset the Canadian woollen and worsted manufacturer.
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The Budget-Mr. Harris
Our trade relations with most of the outside world continue to be governed by the general agreement on tariffs and trade. This agreement, I believe, serves our interests far better than a series of separate individual trade agreements with all the other contracting parties and it is, of course, infinitely better for us than the chaotic trade warfare that might take place if there were no trade agreements at all. The articles of the general agreement were the subject of close scrutiny during a long conference this winter in Geneva and a number of amendments were provisionally agreed upon there.
These negotiations were under the personal direction of my colleague the Minister of Trade and Commerce (Mr. Howe), and I am sure we all agree that there is no one better qualified to conduct such negotiations on behalf of Canada. He has reported to the house that the revised GATT is greatly to be preferred to no agreement at all, and that it will continue to be in Canada's interest to adhere to it. In this connection I can now announce that we propose to join with others in the general rebinding of tariff schedules as from July 1 of this year.

[Stage Direction]
I turn now to our own domestic circumstances and prospects. It is not an easy matter to generalize about the course of economic events last year, or about the probable trend for the immediate future.
In the fall of 1953 it began to be apparent that the year by year expansion of the Canadian economy which has been so conspicuous a feature of our post-war development was slowing down. Nevertheless it was felt at that time, and the record of 1954 shows that this belief was well founded, that the basic strength of our economy was not in question.
There were some people who feared a major economic downswing. This fear was based, I suppose, on the thought that the decline in production which was then taking place would inevitably spread from one industry to another by a sort of contagion of falling confidence exerting its adverse influences on wider and wider circles of the economy. In fact, no such contagion or acceleration of the forces making for weakness occurred.
By and large, the principal declines in the Canadian economy have stemmed from the small western grain crop, reductions in business spending on new machinery and equipment, and lower purchases by consumers of the more durable kinds of goods. All these reductions were from levels which had been unusually high by any standard of comparison. The lower expenditure on capital equipment and consumer durables was largely, but
[Stage Direction]

not wholly, offset by new records of production in our lumber, pulp and paper, mineral and petroleum industries. The net result was that our gross national product in 1954, estimated at $24 billion, was 2 per cent, or $400 million, below 1953.
In dollar terms the sharp decline in the grain crop was equal to the total decline in the gross national product, and in addition its effects permeated all other sectors of the economy. For example, loans under the Farm Improvement Loans Act, which are a good indicator of farm equipment sales, fell from $98 million in 1953 to $62 million in 1954. Retail sales on the prairies in the last half of 1954 were 7 per cent below the same period of 1953 while in the rest of the country they were slightly higher. The small western harvest thus contributed both directly and indirectly to our lower gross national product. Apart from the three prairie provinces, however, agriculture had a good year, and farm cash income was moderately higher than in 1953.
On the industrial side, it is necessary to remind ourselves that unevenness in the rate of growth, as well as adjustments within industries, are more characteristic of an expanding economy such as ours than of a mature or static economy. In recent years we have become so accustomed to big improvements in production that even a minor reversal of the trend is apt to cause more concern than the situation warrants. In a real sense, of course, such changes are partly the result of the very rapid expansion of earlier years, as well as the result of a changing external situation.
As I said a moment ago, the principal declines in the industrial sector were in capital equipment and consumer durables, and these, in turn, were reflected in reduced activity in the primary iron and steel industry. The output of metals and minerals, however, continued to grow, supported by strong markets at home and abroad. The output of oil and other petroleum products increased at an impressive rate, giving more employment and enabling us to reduce our dependence on external supplies. 1954 was also a record year for lumber, woodpulp and newsprint. Employment in trade, in finance and in other service industries also continued to grow. The improvement in this last group of industries is not featured in the headlines, but it employs about one-third of the total labour force of Canada.
Perhaps the principal sustaining factor behind the demand for goods and services in 1954 was consumer expenditures. The increase was from $15,100 million to nearly

$15,600 million, or slightly more than 3 per cent. The continued confidence of consumers in their economic future is important since their decisions to spend or not to spend can spell the difference between expansion and contraction for many of our industries, and, of course, for the economy as a whole.
I should note at this point the important role played by our federal welfare and income maintenance policies. During the past year almost $1,200 million was paid out in veterans benefits, family allowances, pensions or assistance to the old, the disabled and the blind, and in unemployment benefits.
In 1954 more than 100,000 families decided to build or acquire new housing accommodation, involving an increase of 10 per cent in the number of housing starts during the year. The new provisions of the National Housing Act helped them to finance their plans. Of course this increase in consumer expenditures and in housing starts was supported by the growth in population and by an increase in the total of personal incomes, largely in wages and salaries.
The increase during 1954 of 405,000 in our population is especially worth noting. It is as if we had added one new Vancouver or 20 new Guelphs to our country. It may be that some small part of this increase in population had its reflection in our total unemployment; but I am certain that if we had not had this increase-both native born and immigrant-we would have had relatively less employment and been a poorer country.
Defence spending also remained high throughout 1954 although there was a decrease of about 8 per cent compared with the previous year. However, an increase in the non-defence expenditures of the federal, provincial and municipal governments almost exactly offset the defence decline in the total demand for goods and services.
New capital investment in plant and equipment continued at a high level and, if we include housing also, constituted nearly 20 per cent of the total national product. However, for the first time in the post-war period there was a small decline in total new investment, amounting to about $300 million or about 6 per cent. Investment in new plant and equipment declined by nearly $400 million, but the amount of new housing construction increased by about $100 million. I shall revert to this question of capital investment a little later.
Exports continued to support a high level of production and to give encouragement to plans for the further expansion of many of our primary industries. The experience of 1954 confirms the view that Canada has the
The Budget-Mr. Harris potentialities for producing efficiently and cheaply a larger output of many of the basic commodities which the world needs. Although total exports were some 5 per cent below the level of the previous year the decline in the sales of wheat and flour is largely responsible for this change. Moreover, the past four months have seen an encouraging reversal in the trend of our total export sales. In these four months exports have been $107 million, or 8J per cent, above the figures for the same four months a year ago. Wheat and flour exports have improved; pulp and paper were up 10 per cent; non-ferrous metals 25 per cent; lumber 40 per cent; and chemical products 50 per cent.
Imports fell by a little more than exports so that the small deficit on merchandise trade in 1953 was replaced by a small surplus last year. Taking the non-merchandise transactions into account as well, there was a deficit in Canada's international transactions on current account of $427 million, or about $12 million less than last year.
Large amounts of foreign capital, chiefly from the United States but also in good volume from British and European sources, continued to be invested in Canada in 1954. Direct investment inflows were down somewhat on the year, and new issues by Canadians on United States security markets fell quite noticeably after the first quarter of 1954. On the other hand, non-resident purchases of outstanding Canadian shares were distinctly higher.
Net capital movements, on balance, were more than sufficient to cover the current account deficit. Official reserves of gold and U.S. dollars rose during 1954 by $124 million to $1,942 million. The rate of exchange of the Canadian dollar was, on the average, slightly higher in 1954 than in the preceding year. As hon. members are aware, the Canadian dollar rate has declined again in recent months.
There has been no change in the policy of the government to allow the rate of exchange to be determined by the sum total of the forces operating in the exchange market, including of course the influence of fiscal and monetary conditions. The resources of the exchange fund are not used to reverse persistent trends but only to contribute to orderly conditions by limiting excessive short-run movements in either direction which might otherwise occur.
No appraisal of the economic situation could avoid some reference to the revival of international competition. So far as the basic industries are concerned, most of our producers have proved quite capable of maintaining and even increasing their markets at
[Stage Direction]
The Budget-Mr. Harris home and abroad. However, some of the secondary manufacturing industries have lost ground in export and domestic markets to their competitors. I mention this to illustrate the point that the difficulties which some industries are facing today are not the result of any general decline of demand, but of a new situation applicable to the industries concerned and in large measure capable of correction by those industries. Clearly these are situations which cannot be corrected by government. What is needed is resourceful efforts by management and labour to meet that competition by reduction in real costs and the improvement of quality and efficiency-all of which I firmly believe Canadian management and labour can provide.
Canadian production and employment last year was, of course, adversely influenced by the recession in the United States. Our economic relations with that country are too significant for Canada to remain unaffected when the American economy is going through a period of readjustment. Fortunately, those conditions are beginning to disappear.
In the United States the new year got off to a good start and I note that there is a widespread belief in that country that the present expansion of production will continue. This is already reflected in our exports to the United States. The continuation of prosperous conditions in western Europe and in commonwealth countries, together with better prices for many of the industrial raw materials which count so heavily in our exports to these areas, supports the belief that total exports will continue to expand in the year ahead.
The second important ingredient of further expansion exists in the program for the construction of new capital facilities. The present intentions of individuals, business and governments in this respect were summarized in a white paper tabled by my colleague the Minister of Trade and Commerce, a few weeks ago, which indicates a 6 per cent increase in 1955 over 1954. Quite apart from the extension of capital facilities in the industrial and commercial sectors of the economy it is to be observed that new investment for the development of natural resources is going on apace, despite the completion of some of the more spectacular developments which have captured our imagination in recent years.
There should also be an increase in construction activity in the season now beginning. Indeed, it is clear to all of us that alongside the pushing back of the physical frontiers of our country there is also taking place an expansion of urban facilities which is simultaneously making Canada a land of large cities. This trend toward metropolitan
[Stage Direction]

development creates special problems of its own, but it is undoubtedly expanding the demands upon the products of industry and for the employment of our people.
Our fiscal and monetary policies will continue to be directed towards the encouragement of enterprise, investment and employment. I shall speak of fiscal policy in a moment. As for monetary policy, it has been definitely expansionist in character. Through 1954 the cash reserves of the chartered banks were more than sufficient to enable them to meet the demand for loans. The banks were therefore in a position to purchase government securities in the market on a substantial scale and thus add to the money holdings of the public. This and other influences brought about a considerable reduction of interest rates in Canada and rising security prices, which have made it easier to finance capital and other expenditures by borrowing or by converting securities into cash. I may add that interest rates in Canada have declined somewhat since the beginning of 1955 while rates were tending to rise in the United States and elsewhere.
Government expenditures will continue to provide a substantial support to production and employment in the year ahead. Total expenditures on defence will not differ much from last year. The construction of the St. Lawrence seaway and power development will require large expenditures this year, and will stimulate production in other industries. In addition, of course, the so-called "built-in" supports to production and employment through government payments of pensions, family allowances and other welfare payments will continue to expand in line with the growth in population. Provincial and municipal expenditures are expected to increase. It is also reasonable to assume a normal grain crop this year, with a resultant stimulus to purchasing power in rural areas.
These estimates of future demand, imperfect and rough as they must be, confirm my feeling of confidence for the coming year. They indicate an active year for production, which will be reflected in increased incomes and employment, and a further increase in consumer demand can be confidently anticipated. All in all, then, I feel justified in counting upon an increase in the total national product in 1955 of something better than a normal rate of growth. Assuming normal crops, and if no unforeseen adverse events occur, I would expect our gross national production in 1955 to exceed 1954 by 5 or 6 per cent: that is, it should reach $25i billion or perhaps just a bit more, and on that figure I shall base my revenue forecasts.

[Stage Direction]
I turn now to a brief survey of the government accounts for the fiscal year which ended last week. These are set Out in considerable detail in the white paper. I should, of course, remind hon. members that our books of account will not be finally closed and audited for some time, and that the figures which I use tonight are subject to revision.
Subject to these qualifications, the results for the year can be stated briefly. Our total budgetary revenues were about $4,107 million, our expenditures about $4,255 million and the deficit for the year was about $148 million.
Revenues at $4,107 million were about $360 million or 8 per cent less than the forecast of a year ago and about $290 million less than we collected in 1953-54. Customs, sales, and excise duties and taxes, and non-tax revenues have all fallen slightly short of expectations. However, corporation income tax collections which were $190 million less than expected and personal income tax receipts which were $60 million less than expected were the two principal factors contributing to the over-all shortfall. Corporate profits were substantially lower than had been expected at the time of the last budget.
In his budget speech last year my predecessor projected a scale of expenditures and revenues that almost exactly balanced. He made it clear, however, that his projection was based upon two assumptions-normal crops and an early resumption of our normal rate of industrial expansion. He said explicitly that if these conditions did not materialize there would be a deficit of 2 or 3 per cent. Well, as hon. members know, we had a poor wheat crop, the poorest in 17 years, and the resumption of a normal rate of industrial expansion has been slower than we had hoped. As a consequence we have a deficit equal to 3J per cent of our expenditures.
Expenditures last year amounted to $4,255 million. This was $205 million or 4J per cent less than forecast and $95 million less than the total spent in the previous year. Expenditures for defence amounted to $1,700 million. Although this was $160 million or 8 per cent less than in 1953-54, it still constituted 40 per cent of the total budgetary outlay. Civil or non-defence expenditures amounted to about $2£ billion. About $775 million or 30 per cent of this was for family allowances and other health, welfare and social security services, and veterans' benefits. In addition, we paid out about $350 million from the old age security fund. Interest and other charges for servicing the public debt amounted to over $500 million or 20 per cent of the total,
The Budget-Mr. Harris and subsidies and tax rental payments to provinces were $360 million or 15 per cent. In brief, two-thirds of all our civil expenditures were for welfare and social security services, public debt charges, and provincial subsidy and tax rental payments.
As usual, in addition to these expenditures for government services which are included in the budgetary accounts, we made substantial loans and advances and provided large sums for a variety of other authorized and essential purposes. I should like to say a word about these non-budgetary transactions and their effect on our cash position.
During the fiscal year non-budgetary disbursements amounted to $290 million. To meet them, $490 million was available from non-budgetary sources of which $205 million came from the various annuity, insurance and pension accounts which the government holds and administers, and $220 million from the repayment of loans and advances.
After taking into account the budgetary deficit of $148 million and the net balance of $200 million available from non-budgetary transactions, some $50 million was available for debt reduction. By using this amount and by drawing down about $150 million of the large cash balances we held at the beginning of the year, the funded debt in the hands of the public was reduced during the year by $200 million.
The government's public debt operations during the past year have again included the redemption or refinancing of a large volume of bonds. The redemption of the third and fourth victory loans, amounting to $2,000 million, involved the two largest refunding operations in our history. Net sales of Canada savings bond series 9 amounted to $767 million, and represented the largest net increase in savings bond holdings by the Canadian public in any year since this type of security was introduced nine years ago. During the year there was a net increase in the amount of treasury bills outstanding of $240 million reflecting the government's desire to develop a more active Canadian market for shortterm securities. Apart from the refunding of treasury bills which matured periodically, the total of new securities issued was $4,610 million and we redeemed matured or called securities and acquired others for our sinking fund and securities investments accounts to a total of $4,810 million. In consequence, as I have pointed out, we were able to reduce our unmatured funded debt outstanding in the hands of the public by $200 million.
Interest rates declined during the year. Early in 1954, long-term government of Canada bonds were selling to yield about 3-75 per cent. During the past two months the
[Stage Direction]
The Budget-Mr. Harris
rate has been under 3-20. Treasury bill rates also declined. A year ago the rate on three-month bills was around 1.60 per cent. Currently this rate is about 1.15 per cent. The average rate of interest on the government's entire funded debt was 2.86 per cent a year ago. Now it stands at 2.74.

[Stage Direction]
Federal-provincial relations are currently a matter of particular interest and concern. They are one of the most important problems facing us as a nation today. I do not propose at this time to review them in detail, or to suggest any revisions or alternatives to our present arrangements. We will be meeting with the provincial representatives later this month, preliminary to a full federal-provincial fiscal conference later in the year. We, on our part, will be coming to these meetings with open minds, and I do not wish to prejudge the issues and the problems we shall then be discussing.
Government in a federal state is an extremely complex matter, and in no field is this truer than in federal-provincial financial relations. Various provincial spokesmen have from time to time expressed views on these questions. Some have proposed larger payments by the federal government to the provinces; others have asked that the federal government take on additional responsibilities, or contribute substantially to their cost. Some have pressed for a return to what they believe to be the original intentions of the framers of our constitution; others have advocated a formal reallocation of financial powers and responsibilities.
I find it difficult to envisage any reallocation of taxing powers or more precise definition of sources of revenue that is likely to meet all future contingencies. If that is the case, there is much to be said for medium-term agreements, freely entered into, and subject to renewal or reconsideration at regular intervals. I think we are more likely to reach sensible and acceptable solutions in that way.
No one, so far as I know, has ever claimed that the tax rental approach has been satisfactory in all respects; but it would be most unwise to undervalue the many advantages the country has gained from it. These agreements have been a unique and interesting experience in intergovernmental cooperation and the disagreements that have occurred from time to time should not lead us to overlook the substantial benefits that

have accrued to the provincial governments and to the people of Canada through this co-operation.
In considering our future course of action we can hope and expect that the expansion of our economy will continue to provide a tax potential sufficient for all levels of government. I suggest that we should seek a scheme of federal-provincial fiscal arrangements that will provide the total revenues required with the greatest degree of equity and efficiency; that will impose as little duplication and confusion as possible on the common body of taxpayers; that will spend the revenues so acquired so as to afford the greatest measure of public service; and at the same time will fully preserve provincial autonomy as provided in our constitution. Our success in achieving the best possible blend of these will be the test of our collective statesmanship.
I have not considered it necessary at this time to refer in any detail to the solution reached in the matter of the credits for personal income tax levied by the province of Quebec. This was explained to this house by the Prime Minister on January 17 last. I need only say that no other province has indicated a desire to withdraw from its agreement in favour of terms similar to those made available to Quebec. Among the resolutions I shall be tabling this evening will be those giving effect to the arrangements announced by the Prime Minister last January.
May I say by way of interpolation that I am quite sure nearly all Canadians are extremely pleased that the present Prime Minister (Mr. St. Laurent) will be presiding over the conference with the provincial premiers.

[Stage Direction]
I come now to the question of what should be the basic principles governing our tax policy this year.
I am sure that all will agree that when employment and incomes are high, and the economy expanding at a normally healthy rate, we should fully balance our budget, with a modest amount for the reduction of debt.
I think there will also be general agreement that, under boom conditions when abnormal demands are putting undue strain on our resources and inflationary pressures are building up, fiscal policy should play its part, along with other appropriate policies, in placing some restraint on such boom conditions. Conversely, when the rate of economic advance slackens, and the economy

as a whole is not fully employed, a moderate budgetary deficit should be no cause for alarm.
Let me add at once that I do not think that fiscal policy is the only means of promoting economic stability and expansion. Fiscal policy is just one of several means to that end. Monetary policy, trade policy and policies relating to resource development and basic income maintenance are equally important, and in certain contexts may have considerably greater influence. The important thing is that all the useful tools and weapons at the disposal of the government should be used and directed toward that fundamental objective of all economic policy-the steady expansion of the wealth and welfare, the employment and incomes, of the Canadian people. Nor would I want to leave the impression that governments alone bear these responsibilities. The healthy expansion of the Canadian economy is everybody's business.
Fiscal policy, however, is one of several important means of promoting the expansion of wealth and welfare. I propose to recommend to the house a tax policy and a tax structure that would produce a balanced budget under conditions which represent a high level of output and employment.
There are various ways of describing what we mean by high levels of employment and incomes, and various ways of estimating what revenues a certain tax structure will produce from a given level of activity. This is not a simple exercise, but I shall put it in simple terms without adding all the qualifications-the "ifs" and "buts"-which perhaps ought to accompany it.
1953 was a good year, in fact the best we have ever had. The gross national product in that year was $24.4 billion. Our available labour force, our managerial and technical skills, and our stock of capital equipment should grow and improve. Consequently our capacity to produce goods and services should normally expand. Had we had this expansion during the past year our gross national product in 1954 would have been a bit over $25 billion. Actually it was only $24 billion.
If it were possible to pick up this slack and at the same time add a normal rate of growth, we would have a gross national product in 1955 of a little more than $26 billion. I propose, therefore, to recommend a tax structure which, as closely as I can estimate, would produce a balanced budget if we had a gross national product of about $26 billion.
The Budget-Mr. Harris
As I said a moment ago, it is not a simple matter to forecast revenues under changing economic conditions. Our tax structure as a whole is progressive, that is, our tax yields tend to rise more rapidly and fall more rapidly than the national income as a whole. How rapidly our revenues rise or fall depends largely on the shifts in the various elements that make up the total national income.
After analysing all the relevant considerations, I have concluded that our present tax structure would produce revenues close to $4,550 million if we had a gross national product of $26 billion. I have already said that I do not expect that we shall average so high a rate for 1955 as a whole, but I am hopeful that we shall reach that rate before the end of our fiscal year. For the purpose of forecasting our actual revenues I shall assume, as I said earlier, a realized gross national product of $25i billion in this calendar year, and on that basis our federal revenues will be about $4,350 million.
If I may have unanimous consent I would like to place in Hansard at this point a table showing my estimate of our revenues for the year just closed and of the revenues that would be received in the coming year if no changes in taxation were made.
Mr. Speaker:: Has the minister unanimous consent to place this on the record?


Some hon. Members:: Agreed.


Walter Edward Harris: The table follows:



TABLE I

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Revenues before Tax Changes (in millions of dollars)
	Preliminary 1954-55	Forecast 1955-56
Personal income tax 	.. $1,176	$1,235Non-resident income tax ....	.. 61	65Corporation income tax 	
Succession duties 	.. 1,008 .. 42	1,085 45Customs duties 	. . 393	410Excise duties 	.. 227	238.. 576	600.. 254	265Miscellaneous taxes 	.. 16	17Total tax revenues 	
Non-tax revenues and credits	... 3,753 .. 354	3,960 390$4,107	$4,350
The main estimates of expenditure have already been tabled in the amount of $4,360 million. The government has continued its efforts toward maximum economy and efficiency in government operations. With the co-operation of all my colleagues it has been possible this year to achieve a reduction in
2734	HOUSE OF
The Budget-Mr. Harris the main estimates-the first in seven years. Decreases from last year are shown for ten departments. The reduction in estimates has been achieved after providing for the automatic increase in social security payments arising from the growth of our population. In order to help maintain employment, there has been no curtailment in the planned program of useful and necessary public works. Indeed, if we include loans to government agencies, there is provision for a substantial increase in expenditures on public works during the present year. Also there is provision for the normal expansion of government services designed to promote the expansion of our economy. For this purpose, increases have been proposed in the outlays on research, on services which encourage the development of resources, and on the administration and development of our northern areas.
We have sought to reduce expenditures through economies in administration and overhead. In the coming year there will be substantial savings in interest charges resulting from refinancing of loans at lower interest rates. Additional steps have been taken to ensure proper economy in the use of staff in government departments. Administrative procedures are constantly being reviewed in order to eliminate waste and to increase efficiency. There will be no relaxation in these efforts. The more successful we are in the exercise of economy and efficiency in operating costs, the more possible it will be to provide necessary services and to undertake constructive projects which promote the growth and prosperity of our economy.
There will, of course, be the usual supple-mentaries. On the other hand, there will be the usual lapsings and underspending in many of the 500 separate items in the estimates. After a careful study of all these factors, I have reached the conclusion that a fair estimate of our actual spending during the coming year is $4,300 million. Thus on the basis of the accounting methods we have been using in the past I would expect a surplus of about $50 million at the present rates of taxation.
At this point, however, I should like to report on the operations of the old age security fund. Hon. members will recall that parliament set up this system and this fund in 1951, and it came into operation in stages during 1952. The revenue of the fund comes from a 2 per cent sales tax, a 2 per cent corporation income tax, and a 2 per cent personal income tax with a maximum individual payment of $60.
[Stage Direction]

The amount and the disposition of the annual deficit of this fund are shown in the following table which I ask leave to place upon Hansard.
Mr. Speaker:: Agreed?


Some hon. Members:: Agreed.


Walter Edward Harris: The table follows:



TABLE II

[Stage Direction]
Old	Age	Security	FundFiscal	(in	millions of dollars) Pay- Disposition of	Years	Receipts	ments	Deficit	Deficit1951-52	$26	$76	$50	Charged to current expenditure1952-53	244	323	99	Written off to active asset reserve1953-54	293	339	46	Carried as a temporary loan1954-55"	! 291	353	62	Carried as a
temporary loan
Preliminary-final figures not available until final closing of the 1954-55 accounts.
The deficit in the fund for the year just closed is about $62 million and during the coming year I expect that it will be about the same.
We have now had three full years of experience with the operations of this fund, and I think we should now take steps to close out the deficit each year. I propose, therefore, to ask the authority of parliament to wipe out the temporary loan for the year 1953-54 by charging it to current expenditure in the year 1954-55. Similarly I shall ask parliament in the June supplementaries, when the exact deficit for 1954-55 is known, to charge the past year's deficit to this year's expenditure.
When this is done it will have the effect of increasing our budgetary deficit for the year just ended by $46 million; that is, instead of the $148 million I reported earlier, and also referred to in the white paper, the adjusted deficit will be $194 million. It will have the further effect of adjusting the current year's estimated expenditure from the $4,300 million I mentioned a moment ago to $4,362 million.
Having forecast the revenues, before any tax changes, at $4,350 million, and the expenditures at $4,362 million, I would face a deficit of $12 million this year. If, however, employment, incomes and business activity were at the desirable level-that is, such as to yield a gross national product of about $26 billion-our present tax structure would be generating a substantial surplus. I think in these circumstances it is good sense to anticipate this situation and make some moderate tax reductions now.
[Stage Direction]
Apart from and outside the budget, we shall as usual be called upon to make a number of authorized loans and advances for which we must find cash. The Canadian National Railways capital requirements are financed initially by advances from the government. In 1955 these may amount to $150 million. Loans to the St. Lawrence seaway authority will be about $50 million and another $40 or $50 million will probably be required for advances to Central Mortgage and Housing Corporation. In addition cash will be needed for other crown corporations and departmental working capital accounts, for loans to veterans and other authorized purposes. Moreover, I should expect that there will be substantial net disbursements from the defence equipment replacement account.
On the other hand, we shall have cash coming in from the repayment of various loans and advances and from various annuity, insurance and pension accounts which the government administers. Changes during the year in the exchange fund cannot be accurately forecast. However, all in all I should expect that apart from our funded debt and exchange fund operations and the net requirements of the Canadian National Railways, the non-budgetary accounts will be approximately in balance.

[Stage Direction]
I turn now to specific tax proposals. The burden of our present taxes is, I believe, distributed pretty fairly and sensibly. My problem, therefore, is to spread such reductions as I am able to recommend as fairly as possible. However, in addition to wanting to be as fair as possible, it is desirable that the reductions be made where they will be helpful in encouraging business activity and promoting employment.

[Stage Direction]
It is well known that a great part of our post-war industrial development has been financed out of corporate earnings which have been retained to expand production and create more jobs. Our present rate of tax on corporate profits is very high. The standard rate takes away nearly half the earnings of business enterprise. I share my predecessor's view that in the interests of the future of Canada-and that means all of us-the rate should be lowered as circumstances permit. Sound and prudent government policies with respect to business enterprise encourage the growth and expansion of the whole country.
5. 1955
The Budget-Mr. Harris
In the light of these considerations I propose to reduce the standard corporate rate from the present 49 per cent level to 47 per cent, effective January 1, 1955. On an annual basis this will reduce revenue by about $43 million and the revenue loss for this fiscal year will be about $28 million.

[Stage Direction]
The personal income tax is our largest source of revenue. It is also a progressive tax, broadly based, and directly touches more than 3,800,000 individual taxpayers. It is a tax where changes in rates-up or down-are quickly reflected in the current stream of personal incomes. It is in this direction that I propose to apply the greater part of the relief available this year.
I am recommending a new schedule of rates which will reduce the tax payable by 12 to 13 per cent for 85 per cent of our taxpayers. The method by which this result will be reached is to reduce the rates of tax payable on each bracket of income by two percentage points. The maximum reduction in the tax payable will be 13.3 per cent. Every married taxpayer with an income up to about $5,000 will get at least a 12 per cent reduction. The rate of reduction beyond this point drops off gradually until it reaches 2.8 per cent at the highest income levels.
These changes, as is our regular practice, will be effective July 1, 1955. This means that for the great majority of taxpayers then-tax reductions at the source will be reduced by 12 or 13 per cent commencing with their July pay cheques. For the calendar year 1955 the reduction in total tax payable will, of course, be just half that which I have mentioned, because every taxpayer will have paid during the first six months at the old rate, and the last six months at the new.
This reduction in personal income taxes will be confined to the regular income tax as calculated under the graduated schedule of rates and will not apply to that part of income tax levied under the Old Age Security Act nor to the special 4 per cent tax on investment income. The cost to the treasury of this abatement will be $128 million in a full year, or $85 million in this fiscal year.
With consent I should like to place on Hansard at this point the usual tables showing the tax payable at various income levels for the calendar year 1954, the calendar year 1955, and on a full year basis.
Mr. Speaker:: Is it agreed that the minister has consent?


Some hon. Members:: Agreed.


Walter Edward Harris: The tables are as follows:

The Budget-Mr. Harris



TABLE III

[Stage Direction]
Effect of the Proposed Personal Income Tax Changes Single Taxpayer
Income	Tax paid for 1954	Tax for 1955 (6 months at present rates and 6 months at new rates)	Tax in full year at new rates	% reduction in full year$	$	$	$	%1,000	-	-	-	1,500	75	70	65	13-32,000	150	140	130	13-32,500	235	220	205	12-83,000	320	300	280	12-53,500	415	390	365	12-04,000	510	480	450	11-85,000	700	660	620	11-47,500	1,270	1,205	1,140	10-210,000	1,960	1,870	1,780	9-215,000	3,760	3,620	3,480	7-420,000	5,960	5,770	5,580	6-430,000	10,660	10,370	10,080	5-450,000	21,814	21,324	20,834	4-575,000	37,264	''36,524	35,784	4-0100,000	53,714	52,724	51,734	3-7200,000	126,414	124,424	122,434	3-1400,000	283,114	279,124	275,134	2-8
Notes:
(1)	The old age security tax of 2 per cent of taxable income (maximum tax $60) is payable in addition to the above amounts.
(2)	In calculating the above taxes it has been assumed that where incomes are in excess of $30,000, that part of income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.

[Stage Direction]
Effect of the Proposed Personal Income Tax Changes Married Taxpayer-No Dependents
Income	Tax paid for 1954	Tax for 1955 (6 months at present rates and 6 months at new rates)	Tax in full year at new rates	% reduction in full year$	$	$	$	%2,000	-	2,500	75	70	65	1333,000	150	140	130	13-33,500	235	220	205	12-84,000	320	300	280	12-55,000	510	480	450	11-87,500	1,030	975	920	10-710,000	1,660	1,580	1,500	9-615,000	3,360	3,230	3,100	7-720,000	5,510	5,330	5,150	6-530,000	10,160	9,880	9,600	5-550,000	21,264	20,784	20,304	4-575,000	36,664	35,934	35,204	40100,000	53,064	52,084	51,104	3-7200,000	125,714	123,734	121,754	3-2400,000	282,364	278,384	274,404	2-8
Notes:
(1)	The old age security tax of 2 per cent of taxable income (maximum tax $60) is payable in addition to the above amounts.
(2)	In calculating the above taxes it has been assumed that where incomes are in excess of $30,000, that part of income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.
IMr. Harris.]

The Budget-Mr. Harris

[Stage Direction]
Effect of the Proposed Personal Income Tax Changes Married Taxpayer-With Two Children Eligible for Family Allowances
Income	Tax paid for 1954	Tax for 1955 (6 months at present rates and 6 months at new rates)	Tax in full year at new rates	% reduction in full year$	$	$	$	%2,300	-2,500	30	28	26	13-33,000	105	98	91	13-33,500	184	172	160	13-04,000	269	252	235	12-65,000	453	426	399	11-97,500	964	912	860	10-810,000	1,582	1,505	1,428	9-715,000	3,240	3,113	2,986	7-820,000	5,375	5,198	5,021	6-630,000	10,010	9,733	9,456	5-550,000	21,099	20,622	20,145	4-575,000	36,484	35,757	35,030	4-0100,000	52,869	51,892	50,915	3-7200,000	125,504	123,527	121,550	3-2400,000	282,139	278,162	274,185	2-8
Notes:
(1) The old age security tax of 2 per cent of taxable income (maximum tax $60) is payable in addition to the above amounts.
(2) In calculating the above taxes it has been assumed that where incomes are in excess of $30,000, that part of income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.
There are a number of minor changes in the field of income tax that need to be made. Many of these will be found in the resolutions. I perhaps might explain some of them.
Our Income Tax Act imposes a special tax of 4 per cent on investment income. Profits from carrying on business are, of course, earned income and not subject to this tax. In the case of rental incomes derived from the ownership and management of real estate it has been found impossible to draw a consistent line defining the "carrying on of a business". I am proposing, therefore, that income in the form of rentals from real estate be excluded from the base to which the special 4 per cent tax on investment income applies. The revenue loss will be about $700,000 in a full year, and about $300,000 in this fiscal year.
An amendment will be introduced to allow as a business expense the costs incidental to borrowing money and issuing shares. This deduction will cover such items as professional fees, printing costs, and the like, but
will not include bond discount or commissions on the sale of securities.
The amending bill will make provision for a tax on companies which in future pay dividends out of "designated" surplus to nonresident persons or to tax-exempt persons where control of the corporation has been acquired since December 31, 1954. The rate of tax on such companies will be 15 per cent and it will be computed by reference to the amount of dividends paid to the person controlling it.
For fiscal periods ending in 1956 and thereafter, income in the form of rentals in excess of 10 per cent of gross income will disqualify a company from the status of "non-resident owned investment corporation". Likewise, the receipt of income from operating ships or aircraft will debar a company from the status of "foreign business corporation".
Commencing tomorrow, payments for timber cut in Canada made to non-resident
[Stage Direction]
The Budget-Mr. Harris persons will be subject to our regular 15 per cent tax. This will close a gap in the existing law.
Our tax laws contain special incentive provisions for the oil, gas and mining industries. It has been the policy in the past few years to review these provisions each year and annually to grant an extension of them. There are certain advantages in this procedure but, on the other hand, it carries with it some uncertainty for the future. In the past few months I have been giving considerable thought to the operation of these incentives and to the importance of these two industries to the future of Canada. I believe these special tax provisions have clearly established their value in promoting expansion and I now propose to make them a permanent part of our law. There is one minor exception to the general statement I have made. The tax credits which are specially authorized under orders in council for deep test wells will not be continued beyond the present year.
In addition to the income tax changes which I have just mentioned the amending bill will contain numerous changes of a technical nature and less general in their application.
Now just a word about succession duties. The budget speech of last year indicated the intention of the government to undertake a complete revision of the act and invited representations regarding it. Useful briefs and comments have been received and the work of drafting and shaping a new structure is under way. The task has proved to be somewhat more difficult and time-consuming than was anticipated. The new bill will not be ready for introduction at the present session, but I hope it will be ready next year. In the meantime the present law will stand unchanged.

[Stage Direction]
The resolutions which I am placing before the house tonight contain a number of tariff changes; for the most part, however, these changes are of a familiar character. Many of them are essentially formal; but they serve to bring the wording of individual tariff items into line with changing trade practices and changing technology. Others make permanent certain temporary reductions in our tariffs on materials imported for use in Canadian manufacturing, reductions that were originally introduced by order in council in past years on a trial basis. Still others provide for new tariff reductions.
None of the proposed tariff changes affects items producing a substantial amount of revenue, and the aggregate effect of all the
[Stage Direction]

changes on revenues will not be significant. Nevertheless a number of the changes are of some general interest.
One of these relates to Canadians returning from abroad. Recently the tariff board ruled that returning Canadians are not entitled to bring in their personal and household goods as settlers' effects, and therefore some new provision has to be made for them. I am sure we do not want to put obstacles in the path of Canadians who, after working or studying abroad, decide to come home. Accordingly I propose to extend to all returning Canadians facilities similar to those at present available to members of the armed forces and government employees who have been posted abroad for more than one year.
In our effort to keep the tariff abreast of technical changes we have substantially rewritten two groups of items, one covering sugar syrups and molasses and the other covering aircraft parts. In the former field, apart from one deliberate reduction, no changes are intended from the rates in effect over past years. In the latter field there are a number of reductions.
A number of the reductions will benefit farmers, directly or indirectly. They include reduction or elimination of tariffs on brooders for farm animals, certain components of feedstuffs, sweet potato seedlings, poultry eviscerating equipment, and others.
Several items will be of interest to the fishing industry, in particular the elimination of duty on fishing vessels over 100 feet in length and the reduction of duty on fish meal plant and fish cooking equipment.
Two items in tonight's resolutions stem from reports of the tariff board. Some years ago the board reviewed the whole plastics schedule and recommended a series of adjustments in rates which parliament adopted in 1952. Naturally there have been changes since that time in the rapidly developing plastics industry. Some of these changes were in fact forecast in 1952, and I have recently received a supplementary report which my predecessor requested from the board on polyethylene and its products. This report recommends a change from free entry to a rate of 10 per cent for polyethylene resins, together with some consequential adjustments on manufactures of polyethylene. After considering this report I have decided to recommend a rate of 7£ per cent together with appropriate consequential adjustments. In addition, the duty on phenol-aldehyde resins is changed from free entry to 7£ per cent, except when used for the manufacture of plywood. The new rate is in line with those established in 1952.
[Stage Direction]
This evening I am tabling two tariff board reports. One, which I have just mentioned, relates to polyethylene, and the decision to accept its recommendations in large measure is embodied in tonight's resolutions. The other, relating to ethylene glycol, recommends an increase in a rate bound under GATT. If it is decided to accept this recommendation, it will be necessary to renegotiate the rate under the provisions of GATT; otherwise the GATT countries affected might withdraw tariff concessions of value to our exporters. It may be necessary to introduce this item, and possibly one or two others, into the resolutions as an amendment at the time they are in committee.
It is my intention to continue the practice of my predecessors in referring individual tariff rates or sections of the tariff to the tariff board from time to time. This is one of the ways, and a very important way, of keeping our tariff abreast of technical and industrial change, and the newly revised GATT will allow us a little more flexibility than the old. However, I should like to emphasize that I am not implying any general change in our present commercial policy.
I am at present planning to refer to the tariff board two sections of the tariff that have become out of date: a section covering chemicals, and a section covering primary iron and steel products. The former section is, perhaps, the more urgently in need of review, because the chemical industry has been changing and developing so rapidly; but the primary iron and steel schedule was worked out many years ago and badly needs overhauling. I am also planning to refer to the tariff board the item covering potatoes. There have been many representations made to the government on this commodity. I am aware of the varied regional and seasonal aspects of this problem, and I believe the tariff board is the appropriate body to study and report upon it.

[Stage Direction]
Turning now to the field of domestic commodity taxes, I should say at once that I am not making any change in the general sales tax. I am proposing, however, a few additions to the schedule of exemptions. These include, among others, materials to be used exclusively in the manufacture or production of feeds for poultry, cattle and other livestock and furbearing animals; creosote oil and other wood preservatives when used exclusively in the treatment of timber; poles or lumber; perforated bituminous fibre pipe for drainage purposes not exceeding 4 inches in diameter; floor tile and wall paper. It is estimated that
5,	1955	2739
The Budget-Mr. Harris the cost of allowing sales tax exemption on these items will be about $1 million annually.
No changes will be made this year in the special class of taxes on liquor, beer, wines, cigarettes and tobacco products.
This leaves for consideration the so-called special excise taxes.
A few of these items bear a rate of 15 per cent. This higher rate still applies to automobiles and to radios and T.V. sets. In the case of radios and T.V. sets hon. members will recall that this tax replaces the former annual licence fee on all receiving sets.
In the case of automobiles, however, I think the rate should now be brought down to 10 per cent. Effective tomorrow, therefore, the rate of excise tax on automobiles will be reduced by five percentage points. It is estimated that on a full year's basis this reduction will cost the treasury $27 million and in the current fiscal year $26 million.
At the present the 10 per cent excise tax' applies to tires and tubes; not merely to automobile tires but also to those used for trucks, buses, and aircraft. In these latter cases the special tax applies to items which enter into the cost of carrying on certain kinds of business. I have decided to repeal completely the excise tax on all tires and tubes regardless of their use. The revenue loss will be $8-5 million in a full year and $8 million in this fiscal year.
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.
Before leaving this subject of sales and excise taxes I want to say that my colleague, the Minister of National Revenue, and I are concerned about the present statutory provisions with respect to the base on which the tax rate applies. The problem arises when manufacturers sell to customers at different levels in the marketing process. This and several related questions need careful examination. In view of the nature of the particular problems involved it seems desirable to seek some advice from persons outside the government service. We propose, therefore, to invite a small committee, including experienced persons in the business world, to study these technical problems with us and to make recommendations.
May I say at this point, Mr. Speaker, what I think all hon. members know, that the Minister of Finance imposes and receives taxes. It is the duty of the Minister of National Revenue and his department to collect them.
[Stage Direction]
The Budget-Mr. Harris I should like to express my thanks to him and to his officials for the efficient and impartial manner in which this duty is discharged.

[Stage Direction]
I am now in a position to summarize my over-all budgetary position for the coming year. The total tax reductions I have proposed will reduce the revenue by about $207 million in a full year, and the actual revenues in this fiscal year by approximately $148 million. If I may have consent I shall insert here in Hansard the following table of expected annual revenues.
Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.


Walter Edward Harris: The table is as follows:
1955-56 Revenues Before and After Tax Changes (in millions of dollars)
Before Reduction After
Personal income tax ...	. $1,235	$85	$1,150Non-resident tax 	. 65	-	65Corporation income tax .	. 1,085	28	1,057Succession duties 	.. 45	-	45Customs duties 	. 410	-	410Excise duties 	. 238	-	238Sales tax 	. 600	1	599Other excise taxes 	. 265	34	231Other taxes 	. 17	-	17Total tax revenue ...	. 3,960	148	3,812Non-tax revenue 	. 390	-	390Total 	. $4,350	$148	$4,202It will be seen that I estimate the	totalrevenue to be $4,202	million.	Since I	have
forecast expenditures, including the past year's deficit in the old age security fund, at $4,362 million, I shall expect a budgetary deficit this year of $160 million, as compared with the adjusted deficit for last year of $194 million.
But in line with my earlier analysis, as we reach a level of economic activity represented by a gross national product of $26 billion, I would expect our revenues, after making these tax changes, to be flowing in at an annual rate of about $4,350 million. Under these conditions our deficit in the old age security fund would be declining, and I would therefore expect our flow of total revenue and expenditure to be in very close balance.
I have one further matter I should like to mention.
I referred earlier in my speech to existing policies which are promoting steady economic expansion.
I have referred to monetary and trade policies and I have naturally dealt at some length with fiscal policy. I have also mentioned our policies relating to basic income
IMr. Harris.]
maintenance and social security, unemployment insurance, family allowances, old age security, pensions to veterans, the disabled and the blind, agricultural and fisheries price supports.
I should like to say something more about the longer-run questions of economic expansion. The long-term economic outlook for Canada is extremely bright. It has changed tremendously in the past 25 or 30 years, and it will continue to change. The world we live in has changed too, and that process will go on.
To meet these changes, as a federal government we are spending many scores of millions of dollars on research, surveys and development, and we have been steadily increasing our expenditure in these directions year by year. The provinces are doing a good deal along these lines also. Several of them have research councils and industrial development councils, and recently I have been greatly interested to learn something of the regional development council set up co-operatively in the Atlantic provinces. I think we all agree that this money and these efforts have been paying us dividends and will continue to do so.
None of us has any doubts as to our great future, or of our capacity greatly to expand our population and our standards of living. I suppose that all of us in the house have, from time to time, made speeches about our great opportunities and our shining future. I think the time has come to spend a little time, thought and money on carefully documenting the reality underlying these afterdinner speeches.
The government intends, therefore, to appoint a royal commission with instructions to look ahead and examine carefully our future economic prospects. The sort of study we have in mind would include probable developments both in our productive capacities and in our external markets. It would include an examination of our population growth in both its regional and age distribution aspects. It would assemble information and speculate thoughtfully about the magnitude and nature of our future requirements for the great varieties of physical amenities which contribute to a steadily rising level of well-being. I am sure our provincial and municipal governments, our businessmen and producers, management and workers, would like to have comprehensive and carefully documented analyses of our various potentialities.
All Canadians will agree that a clear understanding of these matters is a first step in developing wise and practical policies.

Wise and practical policies are founded on knowledge, inspiration and courage. The Canadian people have always demonstrated that they have inspiration and courage. I suggest we improve our knowledge that we may not fail to take full and proper advantage of the heritage with which Providence has so richly endowed this nation.
What would emerge from the work of such a royal commission? Not a detailed blueprint of the Canadian economy 30 years hence; that would be impossible. Nor a long series of detailed policy recommendations- governments cannot abdicate their functions to royal commissions.
I think the work of this royal commission will do several things. It will focus public attention, here and abroad, in a rather specific and detailed way, on our prospects. It will gather together the considerable amount of material already in existence, but scattered in many different places, that throws light on these prospects. It will also promote and stimulate studies to fill the many gaps in essential factual material. It will sharpen our understanding of some of the problems we face, and will provide useful guides to governments and businessmen, and to leaders in all walks of life, in making plans and policies for the future.
This will be no short-run undertaking. The commission will probably take many months to complete its report. But in the light of such a report on our economic prospects, and the further and continuing studies it will inspire, we shall all of us be better able to review our current policies, revise or modify those which may have served us well in the past, but may not be so well adapted to the coming decades, and press forward those which seem likely best to serve our future.
That, Mr. Speaker, completes the contents of my budget for 1955. The financial policies of this government, I dare say, over the past two decades have won the respect and admiration of our friends in other countries and, if I can count, sir, seem to have met with the approval of our people at home.



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 for the 1956 and subsequent taxation years each of the graduated rates of tax at present applicable to individuals be reduced by two percentage points, and that for the 1955 taxation year each of the graduated rates of tax at present applicable to individuals be reduced by one percentage point.
The Budget-Resolutions
2.	That with respect to income of corporations earned on and after January 1, 1955, the 47 per cent rate of tax on income in excess of $20,000 be reduced to 45 per cent.
3.	That for the 1954 taxation year an individual may deduct from the tax otherwise payable by him the amount of tax on income paid to the government of any province in which he resided, was employed or carried on business, not exceeding 10 per cent of the tax otherwise payable by him.
4.	That for the 1955 and 1956 taxation years an individual who resided, was employed or carried on business in a province in which a tax on income was payable to the government of the province may deduct from the tax otherwise payable by him to Canada that proportion of 10 per cent of his tax otherwise payable that his income for the period during which he resided in the province or his income earned in the province is of his whole income.
5.	That for the 1955 and subsequent taxation years rental income from real property shall not be included in income to which the additional 4 per cent tax on investment income applies.
6.	That the right of an investment company at present to elect as regards its taxable status be repealed and that for the 1955 and subsequent taxation years an investment company be subject to a tax of 20 per cent on its taxable income.
7.	That expenses incurred in the 1955 and subsequent taxation years by a taxpayer in the course of issuing or selling shares of its capital stock or in the course of borrowing money used in the taxpayer's business (other than amounts in respect of commissions, bonus payments or discounts) be allowed as a deduction in computing the income of the taxpayer.
8.	That for the 1955 and subsequent taxation years proceeds of a sale or realization of inventory or accounts receivable of a taxpayer upon or after selling or ceasing to carry on a business be included in computing income, but that the taxpayer be given the option of paying tax in respect thereof at his average rate of tax for the three taxation years immediately preceding the year in which he sold or ceased to carry on the business.
9.	That a corporation resident in Canada that pays a dividend out of its designated surplus to a non-resident corporation or a person exempt from tax, by whom the payer corporation was controlled, be subject to a tax of 15 per cent computed by reference to the amount of the dividend, where control of the payer corporation was acquired after December 31, 1954.
10.	That for the 1956 and subsequent taxation years a corporation more than 10 per cent
2742	HOUSE OF
The Budget-Resolutions of whose gross revenue was derived from rents be disqualified from being treated for tax purposes as a non-resident-owned investment corporation.
11.	That for the 1956 and subsequent taxation years a corporation any part of whose income was derived from leasing or operating ships or aircraft be disqualified from being treated for tax purposes as a foreign business corporation.
12.	That payments made after April 5, 1955, to a non-resident, computed by reference to the amount of timber cut or taken from a timber limit in Canada be subjected to the 15 per cent tax on income from Canada of non-residents.
13.	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 at any time hereafter.
14.	That the special deduction from income allowed for expenses of exploring or drilling for petroleum or natural gas in Canada and the special deduction from income allowed for expenses of searching for minerals in Canada be allowed for expenses incurred at any time hereafter.
15.	That a deduction from income be allowed to a corporation whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, and to a corporation whose principal business is mining or exploring for minerals, for expenses incurred in the 1954 and subsequent calendar years in exploring or drilling for petroleum or natural gas in Canada or searching for minerals in Canada, if such expenditures were incurred otherwise than on its own account, in consideration for shares or an option or right to purchase shares of a corporation on whose account they were incurred.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, amongst other things:
1.	That the excise tax on automobiles adapted or adaptable to passenger use be reduced from 15 per cent to 10 per cent.
2.	That the excise tax on tires and tubes for automotive vehicles of all kinds be repealed.
3.	That the sales tax on the following goods
be repealed:
(a)	materials to be used exclusively in the manufacture or production of feeds for poultry, cattle and other stock and fur-bearing animals;
(b)	creosote oil and other wood preservatives when for use exclusively in the treatment of timber, poles or lumber;
(c)	material to be used exclusively in the production of terrazzo flooring;
(d)	perforated bituminized fibre pipe for drainage purposes not to exceed four inches in diameter;
(e)	rims for kitchen sinks;
(f)	floor tile;
(g)	wallpaper.
4.	That any enactment founded upon this resolution be deemed to have come into force on the sixth day of April, nineteen hundred and fifty-five.

[Stage Direction]
1.	Resolved, that schedule A to the Customs Tariff be amended by striking out tariff items 9c, 46a, 134, 135, 135a, 135b, 136, 136a, 140, 157a, 181b, 237a, 254, 254b, 326c(4), 364, 407, 409e(l), and (2), 409f, 409m(l), 410k, 410p, 410t, 418, 422a, 423, 427b, 438b, 438c, 438i, 4401, 440m(i) and (ii), 440n, 440o(i) and (ii), 443c, 447b, 476, 523f, 541, 557b, 663i, 695a, 696a, 703(c), 711, 756, 825, 901(a), 901(b), 902, and 905, 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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Most-F avoured-Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	Item	-	is i iusn Preferential Tariff	British Preferential Tariff	Most- F avoured-Nation Tariff	General Tariff9c	Horse meat, tripe and other animal offal, ground or unground, unfit for human consumption; whale meat; feeds consisting wholly or in part of cereals but not including baked biscuits; all the foregoing when for use exclusively in the feeding of fur-bearing animals or in the manufacture of feeds for such purposes..	Free	Free	Free	Free 2 cts. per lb.	Free 2! cts. per lb.	Free 5 cts. per lb.82	Sweet potato plants	Free	Free	30 p.c.	12| P-c.	12§ p.c.	30 p.c.134	All sugar above number sixteen Dutch standard in colour, and all refined sugars of whatever kinds, grades or standards, not covered by tariff item No. 135, when not exceeding eighty-eight degrees of polarization	per one hundred pounds	83 cts.	$1.50	$1.50	83 cts.	$1-50	$1-50When exceeding eight-eight degrees but not exceeding eighty-nine degrees	per one hundred pounds	85 cts.	$1.53	$1.53	85 cts.	$1-53	$1-53When exceeding eighty-nine degrees but not exceeding ninety degrees	per one hundred pounds	87 cts.	$1.55	$1.55	87 cts.	$1-55	$1-55When exceeding ninety degrees but not exceeding ninety-one degrees	per one hundred pounds	89 cts.	$1.58	$1.58	89 cts.	$1-58	$1-58When exceeding ninety-one degrees but not exceeding ninety-two degrees	per one hundred pounds	91 cts.	$1.62	$1.62	91 cts.	$1-62	$1-62When exceeding ninety-two degrees but not exceeding ninety-three degrees	per one hundred pounds	93 cts.	$1.65	$1.65	93 cts.	$1-65	$1-65When exceeding ninety-three degrees but not exceeding ninety-four degrees	95 cts.	$1.68	$1.68	95 cts.	$1.68	$1.68When exceeding ninety-four degrees but not exceeding ninety-five degrees	per one hundred pounds	97 cts.	$1.70	$1.70	97 cts.	$1.70	$1.70When exceeding ninety-five degrees but not exceeding ninety-six degrees	per one hundred pounds	99 cts.	$1.74	$1.74	99 cts.	$1.74	$1.74When exceeding ninety-six degrees but not exceeding ninety-seven degrees	per one hundred pounds	$1.01	$1.77	$1.77	$1.01	$1.77	$1.77When exceeding ninety-seven degrees but not exceeding ninety-eight degrees	per one hundred pounds	$1.03	$1.80	$1.80	$1.03	$1.80	$1.80When exceeding ninety-eight degrees but not exceeding ninety-nine degrees	$1.09	$1.89	$1.89	$1.09	$1.89	$1.89
The Budget-Customs Tariff
Harris.]
g

Tariff	Most-	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	Item	Preferential Tariff	Nation Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff134 Con.	When exceeding ninety-nine degrees	$1.09	$1.89	$1.89	$1.09	$1 89	$1 8Q135	Refined sugar shall be entitled to entry under the British Preferential Tariff upon evidence satisfactory to the Minister, that such refined sugar has been manufactured wholly from raw sugar produced in the British colonies and possessions, and not otherwise. Sugar imported under this item shall not be subject to special duty in excess of three-fourths of one cent per pound. Sugar above number sixteen Dutch standard in colour when imported or purchased in bond in Canada by a recognized sugar refiner, for refining purposes only, under regulations by the Minister, and sugar, n.o.p., not above number sixteen Dutch standard in colour, when not exceeding seventy-six degrees of polarization	per one hundred pounds	Cts.	Cts.	Cts.	20-627	70-851	70-851	20-627	70-851	70-851When exceeding seventy-six degrees but not exceeding seventy-seven degrees	per one hundred pounds	20-647	73-213	73-213	20-647	73-213	73-213When exceeding seventy-seven degrees but not exceeding seventy-eight degrees, .per one hundred pounds	20-667	75-574	75-574	20-667	75-574	75-574When exceeding seventy-eight degrees but not exceeding seventy-nine degrees.. .per one hundred pounds	20-687	77-936	77-936	20-687	77-936	77-936When exceeding seventy-nine degrees but not exceeding eighty degrees	per one hundred pounds	20-707	80-298	80-298	20-707	80-298	80-298When exceeding eighty degrees but not exceeding eighty-one degrees	per one hundred pounds	20-727	82-659	82-659	20-727	82-659	82-659When exceeding eighty-one degrees but not exceeding eighty-two degrees	per one hundred pounds	20-747	85-021	85-021	20-747	85-021	85-021When exceeding eighty-two degrees but not exceeding eighty-three degrees	per one hundred pounds	20-767	87-383	87-383	20-767	87-383	87-383When exceeding eighty-three degrees but not exceeding eighty-four degrees	per one hundred pounds	20-857	90-040	90-040	20-857	90-040	90-040When exceeding eighty-four degrees but not exceeding eighty-five degrees	per one hundred pounds	20-947	92-697	92-697	20-947	92-697	92-697When exceeding eighty-five degrees but not exceeding eighty-six degrees	per one hundred pounds	21-036	95-353	95-353	21-036	95-353	95-353When exceeding eighty-six degrees but not exceeding eighty-seven degrees	per one hundred pounds	21-126	98-010	98-010	21-126	98-010	98-010
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The Budget-Customs Tariff
When exceeding eighty-seven degrees but not exceeding eighty-eight degrees.. .per one hundred pounds When exceeding eighty-eight degrees but not exceeding eighty-nine degrees	per one hundred pounds
When exceeding eighty-nine degrees but not exceeding ninety degrees	per one hundred pounds
When exceeding ninety degrees but not exceeding ninety-one degrees	per one hundred pounds
When exceeding ninety-one degrees but not exceeding
ninety-two degrees	per one hundred pounds
When exceeding ninety-two degrees but not exceeding
ninety-three degrees	per one hundred pounds
When exceeding ninety-three degrees but not exceeding ninety-four degrees	per one hundred pounds
When exceeding ninety-four degrees but not exceeding
ninety-five degrees	per one hundred pounds
When exceeding ninety-five degrees but not exceeding
ninety-six degrees	per one hundred pounds
When exceeding ninety-six degrees but not exceeding
ninety-seven degrees	per one hundred pounds
Wfhen exceeding ninety-seven degrees but not exceeding ninety-eight degrees______per one hundred pounds
When exceeding ninety-eight degrees but not exceeding
ninety-nine degrees	per one hundred pounds
Over ninety-nine degrees	per one hundred pounds
Sugar imported under this item shall not be subject to special duty.
135a
Invert sugar, and syrups the product of the sugar cane or beet, and all imitations thereof or substitutes therefor, in which the percentage of the total of reducing sugars after inversion is 71 per centum or greater of the total solids by weight, not including syrups in receptacles of such size that the gross weight of the receptacle and contents does not exceed 60 pounds:
When the total of reducing sugars after inversion is equivalent to not more than 65 per centum by weight of the total syrup.per one hundred pounds
When the total of reducing sugars after inversion is equivalent to more than 65 per centum, but not more than 70 per centum by weight of the total syrup per one hundred pounds
When the total of reducing sugars after inversion is equivalent to more than 70 per centum by weight of the total syrup	per one hundred pounds
Cts.
21-	897
22-	872
23-	848
24-	823
25-	799
26-	762
27-	737
28-	712
29-	688
30-	664
31-	64 35-606
68 cts.
74 cts. 83 cts.
[Stage Direction]
Cts.		
$1-00963	21-512	$1-00963	$1-00963$1-03915	21-897	$1-03915	$1-03915$1-07457	22-872	$1-07457	$1-07457$1-11000	23-848	$1-11000	$1-11000$1-14542	24-823	$1-14542	$1[DOT]14542$1-18085	25-799	$1-18085	$1-18085$1-21627	26-762	$1-21627	$1-21627$1-25170	27-737	$1-25170	$1-25170$1-28712	28-712	$1-28712	$1-28712$1-32255	29-688	$1-32255	$1-32255$1-35798	30-664	$1-35798	$1-35798$1-47606	31-64	$1-47606	$1-47606$1-47606	35-606	$1-47606	$1-47606$1.23	68 cts.	$1.23	$1.23$1.33	74 cts.	$1.33	$1.33$1.50	83 cts.	$1.50	$1.50
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The Budget-Customs Tariff
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 Tariff136	Syrups, the product of the sugar cane, in which the per-	cent age of the total of reducing sugars is less than 71	per centum of the total solids by weight.... per gallon	Free	1 ct.	1} cts.	21 cts.	3 cts.Free	1 ct.	11 cts.140	Syrups, the product of the sugar cane or beet, and all	imitations thereof or substitutes therefor, n.o.p.	per gallon	5 cts.	61 cts.	7 cts.	35 cts.	45 cts.	50 cts.per 100 lbs.	per 100 lbs.	per 100 lbs.157a	\myl alcohol	Free	Free	Free	15 p.c.	20 p.c.	25 p.c.181b	'rocessed paper, in single sheets, punched or not,	printed or not, for use as master units in offset dupli-	eating machines	Free	71 p.c.	35 p.c.	Free	71 p.c.	35 p.c.219b	Chemicals, except antibiotics, of a kind not produced in	Canada, without admixture or mixed only with any	necessary carrier or diluent, when for use in the	manufacture of animal or poultry feeds	Free	Free	25 p.c.	Various	Various	Various237a	Deuterium oxide or heavy water; 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.	238	Activated carbon	Free	Free	25 p.c.	Free	Free	25 p.c.Free	15 p.c.	25 p.c.254	Gums, namely:	(1) Copal, damar, benzoin, Pontianac, nattaku-	ching, barberry, elemi, gedda, Senegal, traga-	canth, mastic and sandarac	Free	Free	15 p.c.	Free	Free	15 p.c.(2) Amber and Arabic	Free	Free	Free	Free	Free	Free(3) Australian and kauri; ambergris	Free	10 p.c.	15 p.c.	Free	10 p.c.	15 p.c.(4) Gums and blends consisting wholly or in chiel	part of gums, n.o.p	Free	Free	15 p.c.	Free	Free	15 p.c.255	Lac, crude, seed, button, stick and shell	Free	10 p.c.	15 p.c.	Free	10 p.c.	15 p.c.255a	Bleached shellac, including refined or dewaxed bleachec	shellac	Free	10 p.c.	15 p.c.	Free	10 p.c.	15 p.c.255b	Lac, crude, seed or stick when imported by manu-	facturers of bleached shellac for use exclusively in	the manufacture of bleached shellac in their own	factories	' Free	Free	Free	Free	Free	Free
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The Budget-Custovis Tariff
262
326c
407
409e
409f
Chemical compounds for removing water and salts from crude petroleum oils		Free
(4) Glass plates or discs and prisms, rough cut or unwrought, for use in the manufacture of optical instruments, when imported by manufacturers of optical instruments		Free
Diamond dust or bort and black diamonds, for borers; diamond dust mixed with a carrier, in cartridges or in tubes, the component material of chief value being diamond dust		Free
Silent chain and finished roller chain, of iron or steel, and complete parts thereof, of a class or kind not made in Canada, n.o.p., either chain of the type which operates over or with gears or sprockets or radially grooved wheels with machine cut teeth...	Free
(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; automatic explosive bird-scaring devices; 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
(2) Combination bagging and weighing machines, and grading, grating, washing and wiping machines, for fresh fruits and fresh vegetables; machines for topping vegetables; machines for bunching and/or tying cut flowers, vegetables and nursery stock; machines for making or lidding boxes for fruit or vegetables; egg-graders and egg-cleaners; silage caps; parts of the foregoing		Free
Automatic stock watering bowls; Barn hay forks, carriage, pulleys and track; Bam litter carriers and track; Grain crushers; Grain or hay dryers; Grain or hay grinders; Hitches and couplings; Hydraulic hoists for unloading vehicles; Machines and tools for use on tractors, including blades, loaders, rippers, rakes and related operating and controlling gear; Milk coolers; Plough bolts; Sodium metabisulphite;	
Free
Free
Free
20 p.c.
Free
Free
25 p.c.
Free
Free
25 p.c.
Free
Free
15 p.c.
10 p.c.
12 p.c.
15 p.c.
10 p.c.
Free
20 p.c.
17} p.c.
17} p.c.
22} p.c.
22} p.c.
Free
25 p.c.
22} p.c.
27} p.c.
35 p.c.
35 p.c.
Free
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Tariff Item	British Preferential Tariff	Most-Fa vo ured-Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	-	British Preferential Tariff	Most- Fa voured-N ation Tariff	General Tariff409f Con.	Sprinkler irrigation systems; Steel stanchions for confining livestock either in pens or individually, and complete equipment for milking parlors; All the foregoing for use on the farm for farm purposes only;	Brooders for rearing young farm animals; Ensilage cutters; Fodder or feed cutters; Grain loaders or elevators with a capacity not exceeding 40 bushels per minute; Hay loaders; Hay tedders; Post hole diggers; Potato diggers; Potato planters; Snaths; Stumping machines; All other agricultural implements or agricultural machinery, n.o.p.;	Free	Free	Free	Free409m	(1) Internal combustion tractors other than highway truck-tractors; accessories for such tractors, n.o.p.;	Free	Free	Free	Free 10 p.c. Free	12} p.c. 22} p.c. Free	20 p.c. 35 p.c. Free409s	Poultry processing equipment, namely: plucking, scalding, washing, singeing, eviscerating and packaging	Free	7} p.c.	35 p.c.	10 p.c. Free	22} p.c. 7} p.c.	35 p.c. 35 p.c.
410k	Machinery and apparatus, of a class or kind not made in Canada, for use exclusively in handling ore and other materials to be charged into a blast furnace or an electric smelting furnace, from the dock, car or stock pile, at the smelting works		Free	Free	Free	Various	Various	Various
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410p	Sundry articles of metal as follows, for use exclusively in metallurgical operations, viz.: furnaces for the smelting of ores; converting apparatus for metallurgical processes in metals; apparatus for chemical conversion, extraction, reduction or recovery, n.o.p.; machinery for the extraction of precious metals by the chlorination or cyanide processes, not to include pumps, vacuum pumps or compressors; blast furnace blowing engines for the produc-	
	tion of pig iron; parts of the foregoing		Free
410t	Blowers, of iron or steel, of a class or kind not made in Canada, for use in the smelting of ores, or in reduction, separation or refining of metals, ores or minerals; rotary kilns, revolving roasters and furnaces of metal, of a class or kind not made in Canada, for roasting ore, mineral, rock or clay; furnace slag trucks and slag pots, of a class or kind	
	not made in Canada; and parts of all the foregoing.	Free
418	Machinery and apparatus and parts thereof, for use exclusively in the manufacture of fish meal, liquid fish and fish solubles, stock and poultry food and	
	fertilizers from fish and waste thereof		Free
422a	Concrete road-paving machines, self propelling, end loading type, with a capacity of 21 cubic feet of wet concrete or more; concrete and asphalt road finishing machines; form graders; sub-graders; combination excavating and transporting scraper units; concrete mixers, transit type; dump wagons or trailers, having a capacity of 10 cubic yards or over, not self-propelled; back-filling machines and equipment, mounted on self-propelling wheels or crawling traction, semi- or full-revolving boom and scraper type; steam or air driven pile hammers or extractors; well points, well screens, well strainers; truck turntables; all the foregoing of a class or kind not made	
	in Canada, and complete parts thereof		Free
423	Dental chairs; dental units; electric dental engines;	
	parts of the foregoing		Free
427b	(1) Ball and roller bearings for the repair of agricultural implements and agricultural machinery specified in tariff items 409, 409a, 409b, 409c, 409d, 409e, 409f, 409h, 409j, 409k, 4091, 409n, 409o, 409q and the	
	tractors provided for in tariff item 409m; parts thereof. (2) Ball and roller bearings of a class or kind not made in	Free
	Canada, n.o.p.; parts thereof		Free
	(3) Ball and roller bearings, n.o.p.; parts thereof		Free
Free
Free
10 p.c.
10 p.c. Free
Free
Free
Free	Free	FreeFree	Free	Free20 p.c.	Free	15 p.c.12$'p.c.	20 p.c.	20 p.c.35'p.c.	10 p.c.	22$ p.c.15 p.c.	22$ p.c.Free	20 p.c.Free	Free	17$ p.c.35 p.c.	Free	17$ p.c.Free	Free35 p.c.	Free	17$ p.c.
Free
Free
20 p.c.
30 p.c.
35 p.c. 30 p.c. 35 p.c.
35 p.c. 35 p.c.
Free
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35 p.c.
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The Budget-Customs Tariff

British
Preferential
Tariff
Tariff
Item
427m
Machines and tools, including blades, loaders, rippers, rakes and related operating and controlling gear; all the foregoing for use on internal combustion tractors, other than highway truck-tractors; parts of the foregoing:
(1)	of a class or kind made in Canada	
(2)	of a class or kind not made in Canada	
10 p.c. Free
432f
Closures or caps, bearing the tax seal of a foreign government, to be used for capping receptacles holding liquid to be exported	
Free
438b
Bearings, ball or roller;
Bearings, clutch release, with or without collar attached;
Bearings, graphite;
Bearings, steel or bronze backed, with non-ferrous metal lining, parts and materials therefor;
Bearings, steering knuckle thrust;
Bushings or sleeve bearings of bronze or powdered metal;
Bushings, graphited or oil impregnated;
Ceramic insulator spark plug cores not further manufactured than burned and glazed, printed or decorated or not, without fittings;
Collars, crankshaft thrust;
Compressors and parts thereof, air;
Commutator copper segments; commutator insulating end rings;
Tapered discs of hot rolled steel, with or without centre hole, for disc wheels;
Diaphrams for fuel and vacuum pumps;
Distributor rotors and cam assemblies;
Door bumper shoes;
Electric wiring terminals, sockets, fittings and connectors and parts and combinations thereof, including brackets and fittings permanently attached thereto, but not to include battery terminals;
Gaskets of any material except cork or felt, composite or not, parts and materials therefor;
Ignition contact points;
Keys for shafting;
General
Tariff
35 p.c. 35 p.c.
30 p.c.
Rates in Effect Prior to Rates Proposed in this Budget
British
Preferential
Tariff
Most-
Favoured-Nation
Tariff
General Tariff
10 p.c. Free
22} p.c. 7} p.c.
35 p.c. 35 p.c.
10 p.c.
20 p.c.
30 p.c.
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Auxiliary driving control kita, designed for attachment to motor vehicles to facilitate their operation by physically disabled persons, and parts thereof;
Lenses of glass for motor vehicle lamps and for light reflectors;
Lock washers;
Magnetic plugs;
Piston ring castings in the rough, with or without gates and fins removed;
Propeller shaft tubes of steel bonded by rubber;
Bails of lock seam section, corners, locks and catches, unplated ventilators and parts thereof, the foregoing being of metal other than aluminum, for the manufacture of window sashes for bus bodies;
Steel bolts, studs, plugs, rivets or nuts, capped with stainless steel, and parts thereof;
Switches, relays, circuit breakers and solenoids and combinations and parts thereof, including starter switch assemblies;
Shift control, electric, for two speed rear axles;
Vacuum, hydraulic or air control assemblies and parts thereof;
Vulcanized fibre in sheets, rods, strips and tubings;
Parts of all the foregoing;
All of the foregoing for use in the manufacture or repair of goods enumerated in tariff items 424 and 438a, or for use in the manufacture of parts therefor:-
1.	When of a class or kind not made in Canada..
2.	When of a class or kind made in Canada	
438c
Ammeters;
Arm rests and wheel housing lining of indurated fibre, pressed to shape;
Axle housings, one piece welded, machined or not, including parts welded thereto;
Carburetors;
Chassis frames and steel shapes for the manufacture
thereof;
Cigar and cigarette lighters, whether in combination with a cigarette holder or not, including base;
Control ventilator gear box;
Cylinder lock barrels, with or without sleeves and keys thereof;
Dash heat indicators;
Engine speed governor units;
External ornaments unplated, including name plates, letters and numerals, not including finish or decorative mouldings;
Fluid couplings with or without drive plate assemblies;
30 p.c. 30 p.c.
Free
Free
25 p.c. 25 p.c.
The Budget-Customs Tariff

Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff
438c Con.	Gauges, gasoline, oil or air; Grilles not plated, polished or not before assembly, and parts thereof not plated or polished after fined forming, casting or piercing, not to include added finish or decorative mouldings; Hinges, finished or not, for bodies; Horns; Instrument bezel assemblies; Instrument board lamps; Instrument panel, glove compartment, luggage compartment, hood compartment and door step lamps and wire assemblies; Locks, electric ignition, steering gear, transmission, or combinations of such locks; Mouldings of metal, with nails set in position, lead filled or not; Oil filter parts, viz:-perforated filter refill oil board bodies, refill end discs, and roll-seam perforated tubes;		
	Ornaments and identification plates of metal, unplated, not including finished or decorative mouldings; Pipe lines of tubing, rigid, covered or not, with or without fittings, and tubing therefor; Purifiers for gasoline, including brackets and fittings therefor; Radiator shutter assemblies, automatic; Radiator water gauges; Radiator shells not plated nor metal finished in any degree; Shackles, bearing spring; Speedometers; Spring covers of metal and closing strips or shapes therefor; Steering wheels, rims and spiders therefor; Sun visor blanks of gypsum weatherboard; Tachometers, with or without tachographs, both electric and gear driven; Thermostatic controls; Throttle, spark, choke, and hood lock release assemblies, including buttons therefor; Torque convertors;		
	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget		
		British Preferential Tariff	Most- Favoured- N ation Tariff	General Tariff
				
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The Budget-Customs Tariff
Auxiliary transmission overdrive units and controls therefor;
Universal joint ball assemblies;
Windshield and window wipers;
Parts of all the foregoing, including brackets, fittings and connections therefor;
Stampings, body, cowl, fender, front end, hood, instrument board, shields and baffles, of metal in the rough, trimmed or not, whether or not welded in any manner before final forming or piercing, but not metal finished in any degree;
All of the foregoing when for use in the manufacture or repair of the goods enumerated in the tariff items 410a(iii), 424 and 438a, or for use in the manufacture of parts therefor	
(1)	provided, that if the above articles, when of
a class or kind not made in Canada, are for use as original equipment by a manufacturer of passenger automobiles (having a seating capacity for not more than ten persons each) enumerated in tariff item 438a whose total factory output, during the year in which importation is sought, does not exceed ten thousand such complete passenger automobiles, and provided that not less than forty per cent of the factory cost of production of such automobiles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	
(2)	provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of passenger automobiles (having a seating capacity for not more than ten persons each) enumerated in tariff item 438a, whose total factory output, during the year in which importation is sought, exceeds ten thousand, but does not exceed twenty thousand such complete passenger automobiles, and provided that not less than fifty per cent of the factory cost of production of such automobiles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be.
Free
Free
Free
17$ p.c.
Free
Free
30 p.c.
25 p.c.
25 p.c.
The Budget-Customs Tariff

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Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff438c Con.	(3) provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of passenger automobiles (having a seating capacity for not more than ten persons each) enumerated in tariff item 438a, whose total factory output, during the year in which importation is sought, exceeds twenty thousand such complete passenger automobiles, and provided that not less than sixty per cent of the factory cost of production of such automobiles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	Free	Free	25 p.c.(4) provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of motor trucks, motor buses, electric trackless trolley buses, fire fighting vehicles, motor ambulances, and hearses, or chassis for same, as enumerated in tariff items 410a(iii), 438a and 424, whose total factory output of such vehicles during the year in which importation is sought, does not exceed ten thousand such vehicles, and provided not less than forty per cent of the factory cost of production of such vehicles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	Free	Free	25 p.c.(5) provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of motor trucks, motor buses, electric trackless trolley buses, fire fighting vehicles, motor ambulances and hearses, or chassis for same, as enumerated in tariff items 410a(iii), 438a and 424, whose total factory output of such vehicles during the year in which importation is sought, exceeds ten thousand units, and provided not less than fifty per cent of the factory cost of production of such vehicles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	Free	Free	25 p.c.
Rates in Effect Prior to Rates Proposed in this Budget
British	Most-	
Preferential	Favoured- N ation	General Tariff
Tariff	Tariff	

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50433-175J
(6) Provided, that if the above articles are of a class or kind not made in Canada and are for use in the repair of the goods enumerated in tariff items 410a(iii), 424 and 438a, or are for use in the manufacture of repair parts therefor, the rates of duty under this item shall be	
Free
(7) Provided that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
438i
Body bottom cross members and steel shapes for the manufacture thereof;
Bumpers, front and rear, including spring steel bumper plates;
Casket tables or platforms for hearses;
Destination and route sign assemblies, illuminated or not;
Direction signals, illuminated or not;
Door and step mechanism, hand, vacuum or air operated;
Door locks and catches;
Electric switches, buzzers, bells, push buttons, fuse assemblies;
Forward drive control conversion assemblies;
Lamps of all kinds, illuminating and indicating, including sockets. flanges, terminals, glassware, lenses and gaskets therefor, assembled or not, but not to include lamp bulbs, sealed beam units, and electric head lamps;
Metal stampings and assemblies thereof, whether or not coated with oil, primer or sound deadening compound;
Rubber fenders;
Seat operating mechanisms;
Ventilators, including motor driven fan type, and grilles;
Window operating mechanisms;
Parts of all the foregoing;
All of the foregoing when imported to be used only in the manufacture or repair of motor truck bodies, motor bus bodies, electric trackless trolley bus bodies, fire fighting vehicles, ambulances and hearses	
Free
Free
Free
439g
Ships and other vessels, for use in the commercial fishing industry, over 100 feet registered length	
Free
Free
25 p.c.
20 p.c. 25 p.c.
Free
Free
Free 25 p.c.
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The Budget-Customs Tariff
{Mr. Harris. 1
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Tariff Item	British Preferential Tariff	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget	-	Tariff	British Preferential Tariff	Most- Fa voured-Nation Tariff	General Tariff440m	Aircraft, not including engines, under such regulations as the Minister may prescribe:-	1. When of types or sizes not made in Canada... on and after July 1, 1958	Free Free	Free 15 p.c.	27$ p.c. 27$ p.c.	Free	Free	Free440n	2. When of types and sizes made in Canada	
Aircraft engines, when imported for use in the equipment of aircraft:-	Free	15 p.c.	27$ p.c.	Free	15 p.c.	27$ p.c.1. When of types or sizes not made in Canada- on and after July 1,1958	Free Free	Free 15 p.c.	27$ p.c. 27$ p.c.	Free	Free	Free440p	2. When of types and sizes made in Canada	
Parts of aircraft, n.o.p.:	Free	15 p.c.	27$ p.c.	Free	15 p.c.	27$ p.c.1. When of types or sizes not made in Canada	Free	Free	27$ p.c.	Various	Various	Various440q	2. When of types and sizes made in Canada	
Parts of aircraft engines, n.o.p.:	Free	15 p.c.	27$ p.c.	Various	Various	Various1. When of types or sizes not made in Canada	Free	Free	27$ p.c.	Free	7$ p.c.	27$ p.c.440r	2. When of types and sizes made in Canada	
Auxiliary power units; Bars, tubes, extrusions of aluminum, aluminum alloys and magnesium alloys; Batteries; Bolts, cocks, cotter pins, eyelets, nuts, pins, rivets, screws, turnbuckles and clevis, washers; Brakes, with related operating gear; Carburetors; Direct or inertia starters with or without related operating gear; Distributors; De-icing and anti-icing equipment; Electric generators; Electric lamps; Exhaust gas analyzers; Fuel pressure warning devices; Forgings and castings;	Free	7$ p.c.	27$ p.c.	Free	7$ p.c.	27$ p.c.
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The Budget-Customs Tariff
Hinges;
Hydraulic jacks;
Hydraulic pumps;
Ignition coils;
Instruments;
Landing and navigation lights;
Magnetos;
Oil coolers;
Pressure fire extinguishers;
Primer pumps;
Propellers and helicopter rotors',
Radio for navigation and air traffic communication; Seats;
Spark plugs;
Steel tubing;
Swaged wires and tie rods;
Tires and tire inner tubes;
Vacuum pumps with related operating gear; Voltage control boxes;
Wheels;
Parts of all the foregoing;
All of the foregoing when of types or sizes not made in Canada and for use in aircraft, aircraft engines, airborne aircraft equipment, or parts of aircraft, aircraft engines, or airborne aircraft equipment	
443c
Automatic pilots, thermostatic controls, thermostatically-operated controls, hydrostatically-operated controls and parts of the foregoing, of a class or kind not made in Canada, for use in the manufacture of gas water heaters	
Free
Free
443f
Fryers, equipped with automatic conveyors, for use in the commercial processing of food; parts of the foregoing..
Free
447b
Forged steel rolls, hardened and ground; solid tungsten carbide rolls; steel rolls, faced with tungsten carbide on the rolling surface; any roll of iron or steel consisting of a forged or cast mandrel and a forged sleeve; all Oj the foregoing for use exclusively in rolling ferrous or non-ferrous metals	
Free
Surgical and dental instruments of any material; surgical needles; clinical thermometers and cases therefor; X-ray apparatus and X-ray film; microscopes valued at not less than fifty dollars each, retail; complete parts of all the foregoing.
Free
476d
Gloves, mittens and other wearing apparel; all of the foregoing when lead-impregnated or lead-lined, for the use of X-ray operators	
Free
Free
5 p.c. 7i p.c.
Free
Free
Free
271 P-c.
30 p.c. 30 p.c.
Free
Free
Free
Various
Free 15 p.c.
10 p.c.
Free
Free 20 p.c.
Various
10 p.c.
221 P.c.
221 P-c. 71 p.c.
Free 25 p.c.
Various
30 p.c. 30 p.c.
35 p.c. 35 p.c.
Free 45 p.c.
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Tariff Item	British Preferential TariS	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	-	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff481a	Individual pairs of boots or shoes for defective or abnormal feet, when purchased on the written order of a registered medical practitioner	Free	Free	40 p.c.	20 p.c.	27J p.c.	40 p.c.523f	Woven fabrics of cotton, not coloured, for use in the manufacture of typewriter ribbons	Free	12J p.c.	15 p.c.	17$ p.c.	171 P-c.	27} p.c.532e	Fabrics wholly of cotton, coated or impregnated, for use in the manufacture of projection screens	Free	Free	20 p.c.	Free	and 3 cts. per pound Free	and 4 cts. per pound 20 p.c.541	Woven fabrics, wholly of jute, not bleached nor coloured, n.o.p	Free	5 cts. per 100	15 p.c.	Free	5 p.c.	15 p.c.550d	Garnetted material, wholly or in part of wool, the hair of the camel, alpaca, goat or other like animal, in the natural or undyed state, but not containing silk, nor synthetic fibres or filaments, nor cotton, for use in Canadian manufactures	Free	lineal yards Free	Free	Free	Free	Free557b	Garnetted material wholly of silk or of synthetic textile fibres or filaments, obtained by disintegrating cocoons, yarns or fabrics, prepared for use; waste portions of unused fabrics, wholly of silk or of synthetic textile fibres or filaments, n.o.p., not to include remnants nor mill ends	Free	7$ p.c.	10 p.c.	Free	7} p.c.	10 p.c.557c	Synthetic staple fibres not exceeding twelve inches in length, not more advanced than in the form of sliver; continuous or uncut synthetic fdaments imported for converting into lengths not exceeding twelve inches, for use in the manufacture of textile yarns or flock, n.o.p..	Free	7} p.c.	10 p.c.	Free	71 p.c.	10'p.c.561d	Woven cord tire fabric, wholly or in chief part by weight of synthetic textile fibres or filaments, not to contain silk nor wool, coated with a rubber composition, when imported by manufacturers of rubber, to be incorporated by them in pneumatic tires, in their own factories	Free	17} p.c.	25 p.c.	Free	17} p.c.	25 p.c.and, per pound	1 3} cts.	4 cts.	3} cts.	4 cts.
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The Budget-Customs Tariff
604c
Alum tanned horsehide leather when imported for use in the manufacture of baseballs	
663i Defluorinated calcium phosphates for use in the manufacture of animal or poultry feeds	
671 Artificial abrasive grains, crushed or ground	
681c
695a
696a
Cobalt-bearing scrap imported by refiners or smelters for the recovery of the cobalt and attendant by-products.
Paintings, drawings and pastels by artists, all of the foregoing when valued at not less than twenty dollars each; paintings and sculptures by artists domiciled in Canada but residing temporarily abroad for purposes of study, under regulations by the Minister..
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 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	
696d
Sound recordings for the use and by order of any society or institution incorporated or established solely for religious purposes, and not for sale or rental, under such regulations as the Minister may prescribe	
696e
Articles and materials designed for the training of mentally retarded children, when for the use and by order of any association, society or institution which trains mentally retarded children	
(c) Goods (not including alcoholic beverages, cigars, cigarettes or manufactured tobacco) imported
(1) by members of the Canadian Armed Forces or by employees of the Canadian Government after an absence from Canada of not less than one year, or
Free
Free
Free
Free
Free
Free
Free
Free
(2) by former residents of Canada returning to Canada to resume residence therein after having been residents of another country for a period oj not less than one year,
7} p.c.	27} p.c.	Free	7} p.c.
		Free	Free
Free	Free	Free	15 p.c.
Free	Free		
Free	Free	Free	FreeFree	Free	12} p.c.	20 p.c.i : Free	Free	Free	FreeFree	Free	Free	Free15 p.c.	20 p.c.Free	Free	Various	Various
27} p.c. Free 25 p.c.
Free
22} p.c.
Free
Free 30 p.c.
Various
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The Budget-Customs Tariff

Tariff
Item
British
Preferential
Tariff
Most-
Favoured-
Nation
Tariff
Con.
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	,	
Free
Free
Any such goods that are sold or otherwise disposed of within twelve months after importation are subject to the duties and taxes otherwise prescribed.
All goods not enumerated in this schedule as subject to any other rate of duty, and not otherwise declared free of duty, and not being goods the importation whereof is by law prohibited	
15 p.c.
Duty shall not be deemed to be provided for by this item upon dutiable goods mentioned as "n.o.p." in any other tariff item.
25 p.c.
When the component material of chief value in any non-enumerated article consists of dutiable material enumerated in this schedule as bearing a higher rate of duty than is specified in this tariff item, such non-enumerated article shall be subject to the highest duty which would be chargeable thereon if it were composed wholly of the component material thereof of chief value, such "component material of chief value" being that component material which shall exceed in value any other single component material in its condition as found in the article.
(a)	Synthetic resins without admixture, including scrap or waste:
1. Phenol-aldehyde type
7J p.c.
7* p.c.
2.	Amino-aldehyde type
3.	Alkyd type	
4.	Polyamide type...
Free 5 p.c. Free
Free 5 p.c. Free
	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget		
British Preferential Tariff	Most- Favoured-Nation Tariff	General TariffFree	Various *T	Various	Various25 p.e.	15 p.c.	25 p.c.	25 p.c.17* p.c.	Free	Free	10 p.c.10 p.c.	Free	Free	10 p.c.15 p.c.	5 p.c.	5 p.c.	15 p.c.10 p.c.	Free	Free	10 p.c.
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5.	Polystyrene type	
6.	Vinyl type, except vinylidene	
7.	Resins derived from natural resin or tall oil, n.o.p.
8.	Polyethylene type	
9.	Other type	
(b)	Synthetic resins in the form of aqueous emulsions, aqueous dispersions or aqueous solutions, without admixture:
1.	Phenol-aldehyde type	
2.	Amino-aldehyde type	
3.	Alkyd type	
4.	Polyamide type	
5.	Polystyrene type	
6.	Vinyl type, except vinylidene	
7.	Resins derived from natural resin or tall oil,
n.o.p	
8.	Other type	
Synthetic resins, compounded with other materials, in any form, including scrap or waste, for moulding, casting, extruding, calendering, pressing, (moulding compositions or materials for processing into moulding compositions); synthetic resins compounded with other materials in the form of not fully cured preforms or not fully cured blanks for compression mouldings:-
(а)	Phenol-aldehyde type	
(б)	Alkyd type	
(c)	Polystyrene type	
(d)	Vinyl type, except vinylidene	
(e)	Polyethylene type	
(J) Other type	
71 P-c 5 p.c. Free 71 p.c Free
71 p.c Free 5 p.c. Free 7J p.c 5 p.c.
Free
Free
10 p.c 5 p.c 10 p.c 10 p.c 10 p.c Free
7} p.c.	171 P-e.	7} p.c.	7} p.c.	17} p.c.S p.c.	15 p.c.	5 p.c.	5 p.c.	15 p.c.Free	lOp.c.	Free	Free	10 p.c.7} p.c.	171 P-c.	Free	Free	10 p.c.Free	10 p.c.	Free	Free	10 p.c.7} p.c.	17} p.c.	Free	Free	10 p.c.Free	10 p.c.	Free	Free	10 p.c.5 p.c.	15 p.c.	5 p.c.	5 p.c.	15 p.c.Free	10 p.c.	Free	Free	10 p.c.7} p.c.	17} p.c.	7} p.c.	7} p.c.	17} p.c.5 p.c.	15 p.c.	5 p.c.	5 p.c.	15 p.c.Free	10 p.c.	Free	Free	10 p.c.Free	10 p.c.	Free	Free	10 p.c.15 p.c.	25 p.c.	10 p.c.	15'p.c.	25 p.c.5 p.c.	15 p.c.	5 p.c.	5 p.c.	15 p.c.10 p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.c.10 p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.o.10 p.c.	20 p.c.	Free	Free	10 p.c.Free	10 p.c.	Free	Free	10 p.c.
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The Budget-Customs Tariff

Tariff Item	British Preferential Tariff	Most-Fa voured-Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	-	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff90S	Synthetic resin plates, sheets, film, sheeting or strips, not less than 6 inches in width, n.o.p.; synthetic resin lay-flat tubing, not less than 6 inches in circumference, n.o.p:- (a) Phenol-aldehyde type, not further manufactured than cast	Free	Free	10 p.c.	Free	Free	10 p.c.(6) Acrylic type, not further manufactured than moulded or cast	Free	Free	10 p.c.	Free	Free	10 p.c.(c) Polyethylene type: 1. Plain, uncoated, undecorated	12} p.c.	12} p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.c.2. Other	15 p.c.	15 p.c.	25 p.c.	15 p.c.	15 p.c.	25 p.c.(d) Vinyl type, except vinylidene: 1. Plain, uncoated, undecorated	15 p.c.	15 p.c.	25 p.c.	15 p.c.	15 p.c.	25 p.c,15 p.c. Free	20 p.c. Free	30 p.c. 10 p.c.	15 p.c. Free	20 p.c. Free	30 p.c.(e) Vinyl type, vinylidene: 1. Plain, uncoated, undecorated	10 p.c,2. Other	Free	Free	10 p.c.	Free	Free	10 p.c.(/) Other type: 1. Plain, uncoated, undecorated	Free	Free	10 p.c.	Free	Free	10 p.c.2. Other	10 p.c.	10 p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.c925	Phenol-aldehyde resins in the form of aqueous emulsions, aqueous dispersions or aqueous solutions, without admixture, for use in the manufacture of plywood	Free	Free	17} p.c.	Free	Free	10 p.c.
The Budget-Customs Tariff
2. Resolved, that Schedule B to the Customs Tariff be amended by striking out tariff items 1044, 1052 and 1053, the enumerations of goods and the rates of drawback of customs duties set opposite each of 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 aa Drawback1019	Electric-welded pipe of iron or steel, more than sixteen inches in	IFAen used in the transmission of natural gas under high pressure to points	50 p.c.diameter, iron or steel couplings therefor and complete parts of such couplings.	of distribution	1044	Fire brick	When used by producers of ingots, blooms, slabs and billets of iron or steel, in the construction or repair of blast furnaces, blast furnace stoves, open hearth furnaces (including checker chambers) and soaking pit furnaces	99 p.c.1052	Machinery; 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 motor	99 p.c.precision instruments and apparatus; all of the foregoing of a class or kind not made in Canada; accessories and attachments for use with the aforementioned machinery and precision instruments and apparatus; parts of all the foregoing, not including consumable tools.	vehicle parts	1053	Machinery; precision instruments and apparatus for heat treating,	When for use in the manufacture of aircraft, aircraft engines, airborne	99 p.c.welding, sorting, testing, inspecting, or correcting; control panels for use with the aforementioned machinery and precision instruments and apparatus; all of the foregoing of a class or kind not made in Canada; accessories and attachments for use with the aforementioned machinery and precision instruments and apparatus; parts of all the foregoing, not including consumable tools.	aircraft equipment, or of parts of the foregoing	1071	Materials of a class or kind not made in Canada	When for use in the manufacture or repair of aircraft, aircraft engines, airborne aircraft equipment, or of parts of the foregoing	99 p.c.
3. Resolved, that Schedule C to the Customs Tariff be amended by striking out tariff item 1209 and by inserting the following item in said Schedule C:
(а)	the importation of which has been prohibited by an order made under section 61 of the Trade Marks Act or had been specifically prohibited under this item before April 1, 1955, except with the consent of the person or the successor of the person at whose instance the prohibition has been imposed; provided however that specific prohibition relating to goods to which a trade mark registered in Canada has been applied may be removed if the registration of such trade mark is expunged
or struck out or cancelled or is amended to exclude such goods, or	,	,	. .	. .	...	.	,	. .
(б)	in association with which any description is used that is false or incomplete in a material respect and likely to mislead the public as to the geographical origin
of such goods.	___________________________________________________________________________________
4. Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the 6th day of April, 1955, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on or 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 2769 to 2S58.)
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The Budget

Customs Tariff
[Stage Direction]
The Budget-Mr. Macdonnell
Mr. J. M. Macdonnell (Greenwood):: Enthusiasm, Mr. Speaker, is really a delightful thing. Further, it seems to me that the enthusiasm of those who sit around us has no relation whatever to what is said; it is just enthusiasm on its own. Last year, when the news was not so good, the enthusiasm was just as great, so far as I can remember, and the noise was just as loud. I seem to have stood here just as long tonight as I did then.
Tonight, of course, we have a change. I am sorry the Minister of Trade and Commerce (Mr. Howe) has to leave us but I wish him bon voyage. We have had a change of taskmasters, I might say of tax masters. Last year we had a swan song and this year we have a chicken breaking out of the shell. I am sure all hon. members across the way would wish me to say, "Some chicken". I was told not long ago that we might expect a change, that the budgets we had been having were St. James, street budgets and now we would have a Grey-Bruce budget. I am not so sure. I think perhaps the people of St. James street may think it is a Grey-Bruce budget and the people of Grey-Bruce may think it is a St. James street budget. At any rate I will leave that without trying to decide.
We now have the answer to the minister's speech of last November in Montreal, which I heard. At that time he teased us along. He referred rather patronizingly to the timid attitude of the taxpayers who apparently were ready to be fleeced of all the money the government wanted to take out of them. At the end of the speech many people thought, and apparently they were right, that the minister had intended to indicate a tax reduction. I confess I was dizzy then, and I am a little dizzy now. But now we have the story. Whatever else can be said, I think we can regard this as a delightful excursion into optimism. I think the Minister of Trade and Commerce, and I am sorry he has gone, must have been green with envy to see the optimism of the Minister of Finance. I cannot help wondering if this is an election year, because under his predecessor, in spite of his winning ways, we did not always get tax reductions, even when things were rather good. Even when one of those surpluses built up on inflated money came along so unexpectedly, we did not always get tax relief. We usually had to wait for the election year.
As I say, the Minister of trade and Commerce must be green with envy, because this is really a big adventure in optimism. Let me give you one or two figures. In 1953, our record year, the gross national product, as 

we call it, was $24.4 billion. The year 1954 disappointed us and the gross national product was only $24 billion. Now, in 1955, I cannot quite make out what the minister is doing. He seems to waver between $25.25 billion and $26 billion. At one time I thought he was saying $25.25 billion, and in the next breath he seemed to be saying $26 billion. On the basis of $26 billion we would get a revenue which is estimated at $4,550 million. On the basis of $25.25 billion we would get $4,350 million. On the lower basis, then, we would have a deficit of $160 million, following one this year of $194 million.
Then the minister used a curious phrase. After outlining the $160 million he said "in line with my earlier analysis, as we reach a level of economic activity represented by $26 billion" not "if" we reach, but "as" we reach. I just point that out to show the delightful optimism on which this budget is based and which we may all hope is fully realized.


Mr. Sinclair:: Belief in our country.


James MacKerras Macdonnell: Oh, yes.


James Sinclair: We believe.


James MacKerras Macdonnell: Yes; so did the previous minister believe. Last year he was not quite so optimistic, though he was optimistic; and even then it did not quite work out.
Now, deficits are things we should fully understand. We should realize what happens when we have a deficit; we should realize what it means. It means that the minister, after wringing out of us every dollar that he feels he can, after scraping the barrel, or rather the pocket, then goes out and borrows money. This year we shall have to borrow $194 million in order to keep level, and that means you and I and all the other taxpayers will have to pay that money back.
In the coming year the minister, by allowing his imagination free vent, and allowing himself to think of $26 billion, which is a much higher figure than any economist I happen to know has given, is able to believe that this $160 million will be reduced, and we may well hope that it will.
I do not propose to go into the details of the tax reductions. That can come later. Tax reductions are always pleasant; but now, after this pleasant voyage of the imagination, I should like to come back and deal with a few of the facts of life because it seems to me the minister has ignored them entirely.
I was fascinated by some of his figures. Perhaps I did not hear every word of the speech but in general I think we can say that he dealt with the delightful things of life, optimism, the belief in billions and billions

swelling and growing in taxes. They grow in his hands and enable him in a way to have optimism to make these tax reductions. But I want to come back and remind him that he has said nothing to comfort the people in this country who are suffering at the present time. There is nothing here for them. They might as well not exist so far as I can see.
We have really been on a pleasant voyage. I do not know whether or not it is a voyage of discovery, but we have been on a pleasant voyage. We have not had to bother about these unpleasant things which plague us. I must now ask the minister and the rest of us to come back to some of the realities of life. In the first place, I should like to point out that while tax reductions are pleasant things, they should not come out of deficits; they should not have to be borrowed. We should not have money given back to us which we shall have to pay back again, money which has been borrowed. We should get tax reductions from savings of expenditures, and of course that is what we have not got.
Another thing I should like to point out is that this is inflation. It is going counter to what wise nations such as Britain and United States are doing. They are turning away from inflation and we are going further into it. I also want to point out that though we are apt to forget these people, this is anoher blow to that great element in the community who are not able to keep pace with rising costs. We are also inclined to forget that they are still suffering from high costs. I refer to the people on fixed incomes.
After these pleasant boastings let us come back and, as I say, try to remind ourselves of some of the facts of life, try to remind ourselves of those people who, as I said, have not tasted the good things of life, and are not going to taste very much of these good things that we have now. I am going to remind you of some of the things that have not been done. We have been told tonight of the things we hope are going to be done if the pleasant future painted for us turns out to be a reality. But we have been told of nothing that is to be done for the people who at the present time are suffering, and we have been told nothing about the other neglects, of government neglect not only of the unemployed but neglect with regard to trade, because after all some of the things which are very real and which the minister did not refer to will have to be dealt with. As we all know, it has been a great disappointment to us that apparently nothing at all has been done with regard to improving the position
The Budget-Mr. Macdonnell of commonwealth trade. Yet, of course, we are still asked to believe that complete wisdom resides on the government benches.
We come now to the deficit, which is not a good thing. There is not a word to indicate any sense of uneasiness. There is not a suggestion that there is any chagrin. Certainly there is not a suggestion of any apology to the people of Canada. But after several years of booming times, of good times, they have not been able to organize the economy so people can get work. After all, in two general elections we were told that everything was going to be taken care of.
What do we find now? We find that in this community of ours there is unbalance. Is it natural, is it right that there should be 613,000 people applying for employment on February 15, or that there should be 379,000 out of jobs and seeking work? Both these figures are substantially greater than they were the month before. That does not sound like this pleasant excursion that we have been taking where everything in the garden was lovely. Yet is there any suggestion of any kind that anything could have been done better than it has been done? Not a word. The Government, like Louis XIV, have come to believe that they are the state, and that what they do is right. No long ago when I ask a question the Minister of Finance really answered by saying, "Have we not been in power 20 years?" That was an answer I did not expect to get from him. I have had that from other people. The minister laughs. He can look it up.
As we survey what has been done; as we ask questions about unemployment and what has been done about trade, and as we get no answer I am reminded-I think I used this illustration once before-of the French exercises we did. They were not very well constituted. They might have been done much better. They were always in the form of question and answer, and the answer never had anything to do with the question. The question would be, "Have you the axe of the butcher?" The answer would be, "No, but I have the pen of the Sunday school teacher." In the same way we ask the government, "Have you done anything to improve employment? Have you done anything in regard to trade?" The answer comes back, "No, but in the Historic Sites and Monuments Act we have provided stenographic assistance for the members of the board."
I want to say a word about unemployment tonight. It is an old topic. My remarks will not be very long. I want to say a word about the debate that took place because it seemed

The Budget-Mr. Macdonnell to me-and of course I may be a little prejudiced-that as we talked about it we were distressed, as the hon. member for Hamilton West (Mrs. Fairclough) said, about cold bodies and empty stomachs. It seemed to me that on the other side they were talking about figures; they were talking about economic conditions. When we said there were hundreds of thousands of people unemployed the answer was "Well, there are millions employed." And that was true, of course. But what good did it do to those who were unemployed? That was the answer we got. As the hon. member for Hamilton West said, you cannot eat Kitimat; and you cannot eat this budget, either.
I just want to add a word to what I am saying about unemployment, because I think it is symptomatic. I did not take part in that debate but I watched it for a day and I was absoluely amazed by two things. I was amazed first of all that the government did not seem to be taking it seriously. The Prime Minister sat it out.


Mr. Speaker:: Order.


James MacKerras Macdonnell: I was surprised by that.


Mr. Speaker:: It is not because at this particular moment the hon. member has happened to refer to the attitude of the Prime Minister in the last debate that I am interrupting him. I assure the hon. member that he may refer to the situation with respect to employment at this particular moment, but he cannot refer to a previous debate which has already been concluded. I ask him not to review the situation with respect to a debate which has been concluded. I thought he was merely going to make a passing reference to that and therefore did not interrupt him, but I find that at this moment he seems to be very much engaged in that direction and I must ask him to come back to an observance of the rules.


James MacKerras Macdonnell: Mr. Speaker, as always I shall defer to your ruling. I shall change slightly what I was going to say. I am sure you will allow me to ask the Prime Minister a question. I should like to ask him whether he is happy about the employment conditions Which exist in the province of Quebec, particularly in his own city. I am sorry the Minister of National Revenue (Mr. McCann) has gone, as I intended to ask him whether he is satisfied. I want to ask the Minister of Labour (Mr. Gregg) whether employment in New Brunswick and particularly in his own riding is good. I want to ask the Minister of Transport (Mr. Marler) how things are in St. Lawrence-St. George.


George Carlyle Marler: Ask the hon. member from that riding.


James MacKerras Macdonnell: I feel confident that not one of these hon. gentlemen will answer that he is satisfied, nor will anyone else.
I hope I am within the rules when I say that I think these questions demand answers now, and we should not have to wait for these predictions which the minister hopes are going to turh out or which may turn out. There was a headline in one of the papers the other day with reference to what the Prime Minister had said, which read "Woes temporary". I would say in answer to that that life is also temporary. It will not help those who are unemployed to be told that their woes are temporary.
I have tried to indicate what seems to me to be the situation respecting this budget. We are going to be given some money which will be borrowed. The minister has taken a most optimistic view of our expectations for the year, far more optimistic than any I have seen. He is going to borrow this money and hopes that by the time the year is over it will turn out that he has not had to borrow much.
I contend that these tax reductions should have -come through savings. I say that there are no thanks due to the government for them. The reason we have not had these reductions sooner is that there has been no true economy. A great deal is said about economy, but if you examine it you will find that we are to spend next year, apart from defence, approximately as much as we are spending this year. It was pointed out by Blair Fraser in Maclean's magazine the other day that our civil service list is up this year by about 9,000, and is going to be up another 8,000 next year. For example, there are 89 architects throughout the service.
While everyone in this chamber has the interests of the civil service at heart and wants to do everything he can for them, the very fact that their numbers are diluted by adding thousands weakens their position and makes it harded than ever to do what one would like to do for those who are there. Next year we will have a bill of something like $50 million for the additions to the civil service. That is the kind of thing we are entitled to expect this government to do something about.
This excursion in optimism, pleasant as it has been, is something like the flowers that bloom in the spring. I will not say that it has nothing to do with the case, but it does not cover the situation. There are other pressing things to be done about which we have heard nothing but about which we hope to

hear much more later. The government has tried by means of this gratuity to spread things thin and give something to as many people as possible in order to create a good impression, but we shall see whether the taxpayers are taken in by this simple device.
On motion of Mr. Macdonnell the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: My understanding is that the hon. member for Notre Dame de Grace was about to complete his remarks on the motion to go into supply, and as we have ten minutes we could probably carry that motion tonight if there were no other speakers and then have tomorrow free for the continuation of the debate on external affairs. I do not know whether there are other speakers, but I understand there are not.


William Earl Rowe: You have done pretty well today, and you had better call it a day.


Walter Edward Harris: If that were the case we could go on with that item.
Business of the House


George Alexander Drew: I certainly wish to see the business of this house facilitated, but I believe it is a time-honoured practice for a partial answer to be given on behalf of the opposition to the budget speech and then for the house to adjourn. I think it would be well for that practice to be followed tonight.


Walter Edward Harris: I just make one caveat, that it has not been a time-honoured practice except in recent years. However, I have no objection, but I do hope hon. members will carry both motions tomorrow, because I think they should be completed before we leave. Therefore I move the adjournment of the house.
It is my understanding that the hon. member for Greenwood does not desire to resume his remarks until the Tuesday after we come back. Accordingly this debate will be continued on Tuesday for the balance of that week.
Motion agreed to and the house adjourned at 9.50 p.m.

The Budget-Appendix



BUDGET PAPERS

[Stage Direction]
presented by
the Honourable W. E. Harris, M.P., for the information of Parliament in connection with the Budget of 1955-56

The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1954, 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 ended March 31, 1955.
[Stage Direction]
The Budget-Appendix

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Page
1.	National Accounts-
National Income and Product	 2773
National Expenditure	 2775
Personal Income and its Disposition	 2776
Source and Disposition of Saving	 2779
Investment and Capital Expenditure	 2780
Revenue and Expenditure of All Governments	 2783
2.	Monetary and Credit Developments	
27883.	Balance of International Payments	
27904.	Employment and Earnings	
27945.	Price Trends	
2796
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1954 estimates are preliminary and subject to revision.

The Budget-Appendix THE NATIONAL ACCOUNTS
National Income and Product
Gross national product for 1954 is estimated at $24-0 billion, a decline of $[DOT]4 billion from 1953. This indicates a reduction of 2 per cent in terms of value; but in terms of volume or real product the decline may have been slightly larger. The decline in production for 1954 is in sharp contrast with the large gains of the four years 1950 to 1953; and came about despite a further increase in the potential of the economy, because the effect of some slackening in aggregate demand was combined with a large and fortuitous reduction in the western grain crop. During the year population increased by 3 per cent. Despite an increase of 1 per cent in the civilian labour force, there was a small decrease in the number of people employed. Unemployment was in consequence substantially above the levels of 1953.
For the most part, the decline in production was confined to the goods producing industries, particularly agriculture and manufacturing. The reduction in agricultural output was itself equal to about 2 per cent of gross national product. But this decline was the result of natural and uncontrollable factors and its impact was partly offset by the existence of large inventories of grain. In this sense it was less significant than the shrinkage in manufacturing output which was a reflection of weakened demand. The largest offsets to these twro major declines were provided by the continuing expansion of services and by increases in the primary industries other than agriculture, notably in mining. There was also some gain in the construction industry where increases in home building more than outweighed the decline in non-residential construction.
Although production in 1954 was lower for the year as a whole than in 1953, there was an upturn in the volume of production in the last quarter of the year. The fourth quarter estimate of gross national product exclusive of agriculture was higher on a seasonally adjusted basis than any previous quarter

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BILLIONS OF DOLLARS	1926 - 1954	BI LLJONS OF DOLLARS
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The Budget-Appendix in either 1954 or 1953. At the same time the index of industrial production, which was consistently below 1953 throughout the first nine months of 1954, exceeded the 1953 level in the fourth quarter. This was partly the result of increased activity in mining, exaggerated in the year-to-year comparison because strikes adversely affected production in the latter part of 1953. Although non-durable manufactures showed some increase, manufacturing as a whole remained below the 1953 level largely because of continued slackness in the iron and steel and transportation equipment industries.
Salaries and wages, inclusive of military pay and allowances, increased by 1297 million or 2 per cent in 1954 compared with an increase of 8 per cent in the previous year. All of the increase was accounted for by higher rates of pay since there was a decline of about 1 per cent in the number of paid workers. For the three-year period following 1951 labour income increased by $2,350 million, almost 1| times the total increase in national income. Farm income and corporation profits were both at peak levels in 1951 and have declined in each year since then. As a result, labour income grew from 58 per cent of national income in 1951 to 65 per cent in 1954-the highest percentage in the last twenty years.
Net farm income declined by almost one-third from the previous year's level. Most of this decline was the result of the poor western grain crop. The reduction in farm cash income was considerably smaller than the reduction in farm net income and amounted to about 12 per cent. This was because the effect on cash income of a lower volume of production was partially offset by the running down of farm inventories. In areas other than the prairie provinces there was actually a modest gain in farm cash income. During the year there was a slight increase in the agricultural labour force, a change from the downward trend which has been noticeable for some time.
Net income of unincorporated businesses other than farming is estimated to have decreased by about 3 per cent. This decline was concentrated in manufacturing and retail trade.


[Stage Direction]
-	1951	1952	1953	Prelim. 19541. Wages, salaries and supplementary labour income	9,716 201 3,642 2,072 1,507	(Millions 10,818 270 3,733 1,858 1,575	>f Dollars) 11,661 309 3,775 1,649 1,692	11,900 367 3,709 1,114 1,645
4. Net income of unincorporated business- (a) larm operators from farm production1...				
				
	17,138 2,478 1,910 -52	18,254 2,714 2,115 119	19,086 2,900 2,364 66	18,735 2,913 2,490 -153
				
7. Depreciation allowances and similar business costs				
9. Gross National Product at Market Prices (5+6+7+8) 					
	21,474 100	23,292 107	24,416 111	23,985 108
				
				
1 Includes undistributed Wheat Board trading profits, and inventory valuation adjustment on a oalendar year basis for grain held by Wheat Board.

The Budget-Appendix
Investment income is estimated to have declined by $66 million or 2 per cent in 1954. But within this total there were opposite tendencies. Corporation profits, the largest single component, fell for the third successive year; and this decline, estimated at 7 per cent, brought the total to about 15 per cent below the peak of 1951. The decline of 1954 reflects the weakening of demand as well as the generally more competitive conditions induced by growth in capacity and supply. Interest and rents, the other major part of investment income, are estimated to have increased by about 12 per cent under the combined influence of somewhat higher rents and increases in the stock of housing and the amount of interest-bearing securities outstanding.
National Expenditure
During 1954 gross national expenditure fell by 2 per cent. There was a sizeable decrease in the amount of capital expenditure; exports and defence spending were lower and the economy received no such stimulus as in 1953 from additions to inventories. But consumer expenditure continued to grow.
Consumer expenditure rose from $15,115 million in 1953 to $15,581 million in 1954, an increase of $466 million or 3 per cent compared with the increase of $752 million or 5 per cent in 1953. This increase in consumer spending together with increased expenditure for new housing was an important sustaining influence although its effect was outweighed by the cessation of investment in inventories and by the declines in exports, in capital formation and in outlays for defence. As in 1953, the increase in consumer expenditure was closely related to the growth in labour income noted above.
Government expenditure on goods and services remained relatively stable in 1954, the 9 per cent decrease in defence spending being offset by increases in non-defence spending at federal, provincial and municipal levels. Defence spending which had been a very powerful stimulant for the economy in 1952 and which had acted positively although with lesser strength in 1953, declined by $179 million in 1954 and this accounted for some of the reduction in aggregate demand.

[Stage Direction]
-	1951	1952	1953	Prelim. 1954
		(Millions of Dollars)		
1. Personal expenditure on consumer goods and				
services	13,273	14,363	15,115	15,5812. Government expenditure on goods and services....	3,243	4,259	4,362	4,3603. Gross domestic investment-	(a) plant, equipment and housing	3,810	4,256	4,840	4,546(b) change in inventories	1,620	270	605	-2304. Exports of goods and services1	5,089	5,573	5,420	5.1345. Imports of goods and services1	-5,613	-5,400	-5,860	-5,5596. Residual error of estimate	52	-119	-66	1537.	Gross National Expenditure at Market Prices (1+2+3+4+5+6)	
8.	Index of G.N.E. in Constant Dollars	21,474 100	23,202 107	24,416 111	23,985 108
1 Minor adjustments have been made to the figures of current receipts and payments shown in Table 13 and in "The Canadian Balance of International Payments, 1951 to 1954", Dominion Bureau of Statistics, to achieve consistency with the other component series.
277$
[Stage Direction]
The Budget-Appendix
For the first time in the post-war period, investment in non-residential construction and machinery and equipment declined. The major decrease was in machinery and equipment although there was a decline of about 2 per cent in non-residential construction. Investment in housing on the other hand continued to increase and was 9 per cent higher than in the previous year.
Inventories of farm grain and livestock and grain in commercial channels declined by $157 million in 1954, a change of $353 million from 1953 when there had been heavy accumulation. This was largely the result of the poor western grain crop. The change in business inventories was also quite different than in 1953 as lower levels of sales and expectations reduced the willingness to hold inventories. In the first three quarters of 1953 there had been continuous inventory accumulation and despite some decline in the fourth quarter, the effect for the year as a whole was positive and substantial. The change from moderately heavy additions to inventory in 1953 to a slight reduction in 1954 as a whole had the effect of withdrawing demand from the Canadian economy; and this withdrawal was greater than the whole increase in consumer spending. The effect of this inventory movement was greatest in the second and third quarters when there was heavy liquidation and new demands were to this extent met from stocks instead of setting production in motion. In the fourth quarter of 1954, however, the inventory decline appears to have been less than the normal seasonal movement and this suggests that growth factors have reasserted their influence.
Personal Income and its Disposition
Personal income differs from national income in a number of ways although the components of these two totals are for the most part similar or identical. 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.

[Stage Direction]
-	1951	1952	1953	Prelim. 1954
		(Millions of Dollars)		
1. Wages, salaries and supplementary labour income.	9,716	10,818	11,661	11,900
Deduct: Employer and employee contributions to				-395
social insurance and government pension funds	-329	-358	-390	2. Military pay and allowances	201	270	309	3673. Net income received by farm operators from farm	produc tion1	2,108	1,860	1,616	1,1094. Net income of non-farm unincorporated business..	1,507	1,575	1,692	1,6455. Interest, dividends and net rental income of	persons2	1,406	1,573	1,683	1,8656. Transfer payments to persons (excluding interest)-	1,356	1,461	1,601(a) from government	1,032	(b) charitable contributions made by cor-	porations	27	26	25	24(c) net bad debt losses of corporations	25	25	28	287. Personal Income (1+2+3+4+5+6)	15,693	17,145	18,085	18,144
1 Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board.
* Includes all government debt interest paid to persons.

The Budget-Appendix
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.
For the first time in the post-war period there was during 1954 very little increase in personal income. A modest gain in labour income and increases in investment income and transfer payments were more or less offset by a large decline in net farm income.
Because of the great similarity in their composition, national income and personal income normally change in the same direction. In 1954, however, differences in their composition account for the fact that personal income rose slightly while national income declined by $351 million. Thus, national income was affected by the decline of $170 million in corporation profits, whereas personal income excludes this item but includes instead dividends paid out which rose by $31 million. Similarly, national income does not include government transfer payments but the $140 million increase in this item was reflected in personal income. Most of the increase in transfer payments was the result of a rise of approximately 50 per cent in unemployment insurance benefits and the normal growth in the numbers receiving family allowances and old age pensions.
The pattern of the disposition of personal income differed somewhat from
1953.	With comparative stability in both personal income and personal direct taxes the growth of about 3 per cent in consumer expenditure resulted in some decline in the rate of personal saving. Thus personal saving, or the amount set aside from current personal income, constituted 6-8 per cent of disposable income in 1954 compared with 9-2 per cent in 1953. In absolute terms personal saving fell from $1,539 million in 1953 to $1,137 million in 1954, a decline of $402 million, of which about half represented a reduction in saving in the form of farm inventories. The growth in personal assets was even more sharply reduced in 1954 than the $402 million reduction in personal saving would indicate; for personal saving takes many forms and involves changes in both assets and liabilities.


[Stage Direction]
PERSONAL EXPENDITURE ON TOTAL CONSUMER GOODS} AND SERVICES
1 PERSONAL EXPENDITURE ON [ CONSUMER DURABLE GOODS

[Stage Direction]
The Budget-Appendix During 1954 personal assets and personal liabilities both increased, but by very much smaller amounts than in 1953. The growth in liquid assets was much slower, the heavy liquidation of Government of Canada market securities being only partially offset by an increase above 1953 levels in additions to bank deposits and to holdings of Canada Savings bonds and other bonds and stocks. Direct investment was also lower since the drop in farm investment in machinery and equipment more than offset increased investment in housing. On the liability side, consumer debt is estimated to have increased by $125 million compared with the much larger increase of $314 million in 1953. The increase in mortgage debt, on the other hand, was greater than in the previous year.
The increase in consumer spending was confined to non-durable goods and to services. The largest percentage increase was in services, which rose by more than 6 per cent. However, somewhat more than half of this increase was attributable to higher prices. There was an increase of 3 per cent in expenditure on non-durable goods and with prices relatively unchanged this represented a volume increase of like amount. There was a sizeable decline of 6 per cent in spending on durable goods and with prices slightly lower than in the previous year the volume decline was probably about 5 per cent. The largest factor in the decline in durable goods was the reduction in purchases of automobiles.
Examination of the quarterly trends in consumer expenditure indicates that 1954 expenditures were consistently above those of 1953 and that the rate of advance was uniform. Thus, each quarter of 1954 was about 3 per cent above the comparable quarter of 1953. After allowing for price changes, the volume of total consumer expenditure rose by about 2 per cent for the year.

[Stage Direction]
-	1951	1952	,0., Prelim. 1953 1954	1. Personal direct taxes-	890 69 71	(Millions c 1,177 73 70	( Dollars) 1,287 73 71	1,290 77 59
1,030	1,320	1,431	1,426
2. Personal expenditure on consumer goods and services- Goods-				
	7,969 1,399 3,905	8,366 1,590 4,407	8,571 1,795 4,749	8,847 1,682 5,052
				
				
				
	13,273	14,363	15,115	15,581
3. Personal saving- (a) personal saving excluding farm inventories				
	1,036 354	1,225 237	1,488 51	1,281 -144
				
	1,390	1,462	1,539	1,137
				
	15,693	17,145	18,085	18,144
				
. J-	m	APRIL 5. 1955	2779
The Budget-Appendix
Source and Disposition of Saving
Saving is the source from which investment expenditure is financed. In addition to personal saving, which is discussed in the preceding section, there is business saving and government saving.
It is estimated that during 1954 the nation as a whole saved $895 million less than in 1953, a decline of 18 per cent. The decline was confined for the most part to the personal and government sectors. Thus, business saving, which declined only slightly, became relatively more important in 1954 and constituted 75 per cent of the nation's total saving compared with 63 per cent in 1953, 59 per cent in 1952 and 52 per cent in 1951.

[Stage Direction]
-	1951	1952	1953	Prelim. 1954Personal saving	1,390	(Millions 1,462	)f Dollars) 1,539	1,137Gross business saving-total	8,567	2,717	3,107	3,053(a) Undistributed corporation profits	721	624	733	587(b) Depreciation allowances	1,910	2,115	2,364	2,490(c) Net bad debt losses of corporations	-25	-25	-28	-28(d) Undistributed Wheat Board trading profits and inventory valuation adjustment on grain held by Wheat Board	-36	-2	33	5(e) Inventory valuation adjustment1	-3	5	5	-iAdjusted government surplus (+) or deficit (-)* 3	1,053	282	227	7Residual error of estimate3	-52	119	66	-153Total	4,958	4,580	4,939	4,044
' The adjustment has been made only to grain held in commercial channels. ! See Table 10.
3 See Tables 1 and 2.
Throughout the post-war period 1947 to 1953 the combined total of revenues for all levels of government had exceeded the combined total of expenditures both capital and current. That is, there had been government saving of substantial amount. In 1954, however, the surplus for all levels of government combined all but disappeared. This was almost wholly the result of the change in the federal accounts from a moderate surplus in calendar year 1953 to a slight deficit in calendar year 1954; but there was also a small reduction in the combined surplus of provincial and municipal governments.

[Stage Direction]
Gross domestic investment-
Housing, plant and equipment. Change in inventories	
Net increase in foreign assets (including foreign exchange) adjusted1	
Residual error of estimate3	
Total	
1952
(Millions of Dollars)
Prelim.
3,810 1,620	4,256 270	4,840 605	4,546 -230-524	173	-440	-42552	-119	-66	1534,958	4,580	4,939	4,044
1 Minor adjustments have been made to the figures appearing in Table 13.
3 See Tables 1 and 2.
2780
[Stage Direction]
The Budget-Appendix
Business saving is comprised for the most part of amounts set aside by corporations for depreciation allowances and of undistributed profits. During 1954 these two major components of business saving behaved differently. It is estimated that there was a further increase of about 5 per cent in depreciation allowances. Undistributed profits, on the other hand, declined substantially, largely because of the decline in corporation profits after taxes but to some extent because of the modest increase in dividends paid out. The estimated increase in business savings through depreciation allowances was not quite as large as the decline in undistributed profits and a slight reduction in business saving out of current income for 1954 is therefore indicated. It is interesting to note the very large extent to which capital investment of the post-war period has been financed by business saving; that is, the extent to which business has been able to provide the funds for its own expansion.

[Stage Direction]
-	1951	1952	1953	Prelim. 19542,810 -1,429	(Millions 2,640 -1,386	>f Dollars) 2,570 -1,209	2,400 -1,154
1,381 -660	1,254 -630	1,361 - C28	1,246 -659
				
				
	721	624	733	587
				
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).
3	Includes charitable contributions made by corporations (See Table 3 Item 6(b)).
4	See Table 5.
It is estimated that Canada's total payments abroad on current account exceeded total receipts by $425 million and there was, therefore, an increase of like amount in net foreign liabilities. Thus, capital inflows from abroad were almost unchanged from 1953 and because of the lower level of domestic investment, slightly more important in the nation's financing. Some of the capital inflow was the result of Canadian borrowing abroad; but the greater part was initiated outside the country as capital flowed into Canada in response to opportunities for direct investment, thus contributing to the deficit on current account while furnishing the funds to finance it. These transactions are treated more fully in the section on the Balance of International Payments.
Investment and Capital Expenditure
It is estimated that investment in plant, equipment and housing amounted to $4,546 million, a decline of $294 million or 6 per cent from 1953. This is the first decline of the post-war period. Most of the reduction was in machinery and equipment which was 17 per cent lower than in 1953 but there \vas also a reduction of 2 per cent in non-residential construction. Investment in housing, on the other hand, continued to increase, stimulated by easier financing under the National Housing Act and aided by the increased availability of mortgage funds after the chartered banks were authorized to invest in insured loans on residential real estate. The gain of 9 per cent was less striking than the 35 per cent expansion of 1953. However, the 1954 increase marked a movement beyond an already high level whereas the rapid growth in 1953 must be considered in part as a recovery from lower levels.

The Budget-Appendix
Despite the decline in capital investment during 1954, it was still high in absolute and relative terms and constituted 19 per cent of gross national expenditure compared with 20 per cent in 1953. As mentioned previously, in explaining the lower aggregate demand of 1954, the cessation of growth in business inventories is an even more important factor than the decline in capital investment. Together they would account for a drop of 3 per cent in the nation's product.

[Stage Direction]
-	1951	1952	1953	Prelim. 1954
		(Millions of Dollars)		
Housing, plant and equipment-total1	3,810	4,256	4,840	4,546New residential construction	781	786	1,061	1,159Other new construction	1,260	1,554	1,706	1,676New machinery and equipment	1,769	1,916	2,073	1,711Change in inventories-total	1,620	270	605	-230Grain in commercial channels2	-1	92	145	-13Farm grain and livestock2	354	237	51	-144All other inventories3	1,267	-59	409	-73Gross Domestic Investment*	5,430	4,526	5,445	4,3161	Includes private businesses and institutions, and publicly owned public utilities.2	Value of physical change.
* Change in value. Includes privately financed industrial and trade inventories. 4 See Table 2, Item 3 and footnote to Table 9, page 14.
Table 9 gives an industrial distribution of business capital expenditures1 and brings them together with public capital outlays included under government expenditure in Table 2. The total of public and private capital expenditure is estimated to have declined by $343 million or 6 per cent. As mentioned above, this is in contrast with the continued advances of the post-war period. The original forecast of capital investment for 1954 indicated that it would be about 3 per cent above the 1953 level. It was expected that there would be some declines in heavy manufacturing and in goods producing industries generally, and that these would be more than offset by an increase in the service industries and in housing. As it turned out, the expansion in the service industries and housing was not sufficient to offset the declines in the goods producing industries. Some of these declines followed the completion of projects set in motion by the post-Korean defence demands. Others were an indication of the inevitable unevenness in investment which results from the completion of individual large scale projects such as the Labrador iron ore development and Kitimat. In some instances, the bad weather of the early part of the year delayed the start of construction, and investment plans were not fully realized within the year. At any rate, the decline of 1954 does not appear to mark the beginning of a new trend since the capital forecast for 1955 indicates a further increase of about 6 per cent.
The greatest percentage decline was in agriculture and fishing which fell by $153 million or 28 per cent from 1953 to 1954. This was almost wholly the result of reduced purchases of machinery and equipment.
In the manufacturing group, there was a large overall decline of $174 million but there were also many increases. There was a large decline of $83 million in the chemical products group and this followed completion of large plants
[Stage Direction]
The Budget-Appendix such as those at Edmonton and Sarnia. Transportation equipment declined by $29 million largely because of the completion of Ford and General Motors expansion in 1953; iron and steel products declined by $30 million, paper products by $22 million, and clothing by $6 million. On the other hand, investment in food and beverage industries increased by $13 million, printing, publishing and allied industries by $12 million, non-metallic mineral products by $10 million, and products of petroleum and coal by $14 million.
In the utilities group, there was a decline of about 8 per cent in which the drop in machinery and equipment was about equal to the drop in construction. Within this total, central electric stations and steam railways provided the major declines, while the continued expansion of telephone facilities provided a sizeable offset. The railways continued to increase their expenditure for machinery and equipment but new construction was reduced by almost a half with the completion of the Quebec North Shore railway. Part of the decline in central electric stations can be attributed to the completion of a phase of the Adam Beck development at Niagara.
In 1954, as in 1953, the largest growth was in the trade, finance and commercial services group where the increase was about 10 per cent. This was largely the product of continued urban growth. There was also a substantial increase in investment in institutions, the growth being particularly marked in schools. The growing urbanization of the war and post-war periods has been placing increasing strains on school facilities and on municipal services generally. There was some decline in capital investment of government departments but only at the federal level where there were sizeable reductions in defence construction and capital assistance.

[Stage Direction]
-	1951	1952	1953	Prelim. 1954515	(Millions c 555	>f Dollars) 546	39358	39	34	41181	211	257	249793	973	969	795440	578	536	478460	581	673	63666	73	91	66412	344	526	577236	278	301	329821	826	1,084 824	1,169 765595	827	
Total Capital Expenditure1		4,577	5,285	5,841	5,498
				
Total Capital Expenditure as a percentage of	21-3	22-8	23-9	22-9
				
Index of total Capital Expenditure in Constant	100	112	121	113
				
1 For reconciliation with Gross Domestic Investment in Table 8, see
Public and Private Capital Expenditure-Table 9	
Deduct:
Provincial hospitals and schools, and municipal schools
Government housing excl. C.M.H.C. rental housing.
Direct government department outlays	
Other	
Add:
Change in Inventories	
below.
Prelim.
1951	1952	1953	19544,577	5,285	5,841	5,498-130	-159	-151	-173-40	-40	-23	-10-595	-827	-824	-765-2	-3	-3	-41,620	270	605	-230
Total Gross Domestic Investment-Table 8
5,430	4,526	5,445	4,316

The Budget-Appendix PUBLIC AND PRIVATE CAPITAL EXPENDITURE

[Stage Direction]
1947	1948	1949	1950	1951	1952	1953	1954
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. Total expenditure includes both current and capital expenditure but government loans and investments and debt retirement are excluded. Municipalities are for the most part on a calendar year basis but the provincial and federal fiscal year figures are adjusted to the calendar year basis. Some of the more substantial adjustments to the federal accounts are shown in the reconciliation statement appended to Table 10.
On the national accounts basis it is estimated that the revenue and expenditure of all levels of government combined were in approximate balance for the calendar year 1954 compared with the surplus of about 3 per cent indicated for 1953. Thus, viewing the operations of Canadian governments as a unit, their fiscal effect was approximately neutral in 1954; whereas they had in 1953 exerted some mild negative or restraining influence on economic activity by taking about 3 per cent more in revenue than they spent on current and capital account. Apart from disparate tendencies within these three levels of government, this broad effect was the result of comparative stability in revenues which declined by less than 1 per cent, and an increase of a little more than 2 per cent in expenditures altogether accounted for by the growth of transfer payments. In terms of specific levels of government, however, there was a moderate rise in both revenues and expenditures of provincial and municipal governments
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	1951	1952	1953	Prelim. 1954
		(Millions of Dollars)		
Government Revenue-				
Direct Taxes-Persons		1,030	1,320	1,431	1,426
Income-				
Federal		890	1,177	1,287	1,277
Provincial and Municipal					13
Succession Duties-				
35	39	40	41Provincial	34	34	33	36Miscellaneous-	Federal	6	7	2	1Provincial and Municipal	65	63	69	58Direct Taxes-Corporations	1,429	1,386	1,209	1,154Income-	Federal	1,240	1,232	1,150	1,090Provincial	189	154	59	64Other Direct Taxes-	Withholding taxes-Federal	56	55	54	58Indirect Taxes	2,606	2,814	3,009	3,001Federal	1,495	1,595	1,697	1,612Provincial and Municipal	1,111	1,219	1,312	1,389Investment Income	456	533	558	562Federal	167	218	226	222Provincial and Municipal	289	315	332	340Employer and Employee Contributions to Social	Insurance and Government Pension Funds	329	358	390	395Federal	214	230	253	255Provincial and Municipal	115	128	137	140Transfers from Other Governments-	Provincial and Municipal	259	368	412	430Total Revenue	6,165	6,834	7,063	7,026Federal	4,103	4,553	4,709	4,556Provincial and Municipal	2,062	2,281	2,354	2,470Deficit (or surplus-)	-1,053	-282	-227	-7Federal1	-1,042	-219	-178	+ 16Provincial and Municipal	-11	-63	-49	-23Total Revenue plus Deficit (or minus Surplus)....	5,112	6,552	6,836	7,019Federal	3,061	4,334	4,531	4,572Provincial and Municipal	2,051	2,218	2,305	2,447
1 For reconciliation with Public Accounts Surplus, see page 2785,

The Budget-Appendix
TABLE 10-Concluded

[Stage Direction]
-	1951	1952	1953	Prelim. 1954
		(Millions of Dollars)		
Government Expenditure-				
Goods and Services		3,243	4,259	4,362	4,360
Federal-				
Defence	1,157	1,800	1,907	1,728Non-defence	537	670	619	684Provincial and Municipal	1,549	1,789	1,836	1,948Transfer Payments	1,482	1,825	1,953	2,141Federal	984	1,400	1,487	1,645Provincial and Municipal	498	425	466	496Subsidies	128	100	109	88Federal	124	96	106	85Provincial and Municipal	4	4	3	3Transfers to Other Governments-	Federal	259	368	412	430Total Expenditure	5,112	0,552	6,836	7,019Federal	3,061	4,334	4,531	4,572Provincial and Municipal	2,051	2,218	2,305	2,447Prelim.1951	1952	1953	1954Reconciliation with Public Accounts Surplus:	(Millions of Dollars)	Federal Government calendar year surplus for	national accounts purposes	.. +1,042	+219	+178	-16Adjustments:	Difference between calendar and fiscal year	.. -300	+367	+24	+195Difference between corporation tax accruals and	government receipts	.. -161	-8	+87	-33Revenue items omitted	.. +67	+49	+92	+79Reserves, write-offs and similar items omitted from	expenditure	.. -167	-195	-139	-142Change in inventories of government commodity	agencies	.. -16	+72	-24	-4Shipment of military equipment to NATO countries,	less replacement	.. -70	-95	-55	-5Extra-budgetary funds for pensions and social insur-	ance (net)	.. -144	+27	-30	+54Adjustment to place debt interest on a "due date"	basis	-90	-14	+23Other adjustments	.. -40	-98	-95	-105Federal surplus for fiscal year as per public accounts +211	+248	+24	+46(1950-51)	(1951-52)	(1952-5S;	(1953-54)
2786
[Stage Direction]
The Budget-Appendix with a relatively small change in surplus. The change in the combined surplus was, therefore, almost wholly the result of the movement in the federal accounts from a moderate surplus of about 4 per cent in the calendar year 1953 to a slight deficit for the calendar year 1954. And this change in federal surplus was produced by a decline of 3 to 4 per cent in revenue coupled with a rise of less than 1 per cent in expenditure.
The fiscal effects of government operations are not, of course, confined to revenues and expenditures since cash outlays are affected also by changes in loans, advances and investments. In this sphere too the overall effect of federal government operations was moderately on the side of stimulation.
Expenditure on goods and services by all levels of government combined was practically unchanged between 1953 and 1954. This was the result of a decline in federal expenditure on goods and services and increases in provincial and municipal expenditure. The federal government's expenditure on goods and services declined by $114 million or 5 per cent compared with an increase of $56 million or 2 per cent in 1953. This change came about because of the decline of $179 million or 9 per cent in defence spending for the calendar year
1954.	Although federal defence expenditure accounted for a significant part of the withdrawal of demand in 1954, it remained an important element in the overall use of goods and services comprising about 7 per cent of total gross national expenditure and providing 72 per cent of the federal government's total demand for goods and services. Federal government non-defence spending, exclusive of inventory change, increased by about 7 per cent, a considerable part of which was the result of increases in the rates of pay to government employees.
The increase in provincial and municipal expenditure on goods and services is estimated at $112 million, an increase of 6 per cent. About two-thirds of this increase was in municipal expenditure where the growth of cities continued to raise the requirements for schools and municipal facilities generally. The cost of municipal services also rose with generally higher rates of pay. In provincial governments the increase is mainly attributable to an expansion in highways expenditure and some increase in the general level of salaries and wages.
Transfer payments were substantially higher in 1954 than in 1953. The largest increases were in the federal sphere and amounted to $158 million. A.bout half of this increase was the result of a rise in unemployment insurance

[Stage Direction]
PERCENT	PERCENT

The Budget-Appendix
benefits but there was also a substantial increase in cost as a result of the growth in the numbers receiving old age pensions and family allowances. The largest increase in provincial and municipal transfer payments was in grants to private non-commercial institutions including hospitals.
Total revenue was down very slightly by something less than 1 per cent and this decrease was in direct taxes rather than in indirect taxes. Revenue from direct taxes, which is predominantly federal, declined by 2 per cent. Receipts from the federal personal income tax are estimated to have declined very slightly, the effect of the lower rates introduced in mid-1953 being more or less offset by an increase in personal taxable income. The yield of the corporation tax on an accrual basis was down about 5 per cent for the calendar year and this is a direct reflection of the estimated decline in corporation profits.
The stability in the yield of indirect taxes came about because the decrease of about 5 per cent in federal indirect taxes was offset by an increase of about 6 per cent in provincial and municipal taxes. In the federal accounts, receipts from customs duties were less because of the fall in imports. The yield of the sales tax and of a number of excise taxes shrank with the somewhat lower level of retail sales. The special excise tax on automobiles, tires and tubes, for example, yielded almost 20 per cent less than in 1953 when automobile sales were at their peak. In addition, certain excise taxes were removed and the rates for others were reduced in the 1954 budget and this led to lower revenues. These changes included the removal of the 15 per cent special excise tax on furs, electrical household appliances, cameras, etc. and the reduction of the tax rate from 15 per cent to 10 per cent in the case of candy, soft drinks, smokers' accessories, watches, jewellery, etc. At the time of the 1954 budget the revenue loss from these reductions was estimated at $33 million. Of the increase of $77 million in provincial and municipal indirect taxes, a little more than half was in the municipal sphere and consisted in the main of an increase in real property taxes. In the provincial governments there was some increase in the yield of the gasoline tax but the increased yield resulting from the higher rate of sales tax in British Columbia was even more important.

[Stage Direction]
i939	1942	1945	1948	1951	1954
Direct taxes include taxes on personol ond corporate income-.succession duties,and personal fees. Indirect toxes include toxes on commodities,services ond real property,ond business fees.
50433-177J
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Monetary and credit conditions in 1954 were characterized by a noticeable decline in interest rates, by a rise in security prices, and by a generally easier availability of credit in Canada. These conditions considerably facilitated capital and consumer expenditures financed by borrowing or by converting securities into cash, and brought about a substantial increase in the bank deposits and [DOT]currency holdings of the general public.
The decline in Canadian interest rates in 1954 represented a continuation of the trend which had become evident in the last quarter of the previous year. The main fall in rates on long-term government bonds occurred in the first quarter, but short-term yields continued to decline throughout the year. In the early part of the year particularly, declining interest rates in the United States had important direct and psychological effects on yields in Canada. In the second half of the year, the Canadian chartered banks were active buyers of securities and were a major factor in the change of interest yields. The 1954 revision of The Bank Act had the effect of increasing the amount of cash reserves which the chartered banks felt free to employ in expanding their earning assets. Prior to this revision, which took effect on July the first, the banks had been required to maintain a daily cash ratio of not less than 5 per cent, although they had in practice worked to a figure of about 10 per cent. The revised Act set the new minimum reserve ratio at a monthly average of 8 per cent. The chartered banks immediately began to work towards lower ratios and their average reserve declined to 8 [DOT] 7 per cent at the year end compared to 10 [DOT] 2 per cent at the end of 1953. In consequence, the chartered banks were in a position to add substantially to their assets during the second half of 1954.
As the demand for loans had levelled off, the banks employed their free reserves in the purchase of government bonds, treasury bills and other types of securities. At the same time, an increase in day-to-day loans made by the banks enabled dealers to increase their demand for short-term securities. These factors, together with a reduction in the outstanding supply of short-term maturities,

[Stage Direction]
Long-Term Bonda1
Medium Term Bonds2
3 Month Treasury Bills2
	Canada	U.S.
December 1953	3-61	2-78June 1954	309	2-52December 1954	3'05	2-57March 1955	2-96	2-67Spread	Canada	U.S.[DOT]83	3-53	2-23[DOT]57	2-63	1-81*48	2-36	1 -94[DOT]29	2-20	2-26Spread	Canada	U.S.1-30	1-88	1-68[DOT]82	1-60	[DOT]63[DOT]42	1-08	1-25-[DOT]06	1-20	1-29
Spread
[DOT]20
[DOT]97
-[DOT]17
-*09
1	Canada-15 year theoretical 15th of each month. U.S. 2}'s of 67-72, Wednesday nearest 15th.
2	Canada-average of 3-5 year theoreticals, 15th of each month. U.S.-Federal Reserve average of 3-5 year bonds, nearest mid-month.
2 Average tender nearest 15th of month.
contributed to the decline in medium and short term interest rates. The importance of chartered bank purchases is indicated by the fact that during the year as a whole they added $553 million of all types of Government of Canada securities to their portfolios, while the total outstanding declined by $175 million due to government redemptions. In the early part of 1955, the banks again added to their security holdings, thereby contributing to a further decline in interest rates, which in some cases reached levels below those prevailing in the United States.
_ *£

The Budget-Appendix
The small increase in bank loans in 1954 was in contrast to 1953 when bank loans increased substantially, and reflects among other things the decline of business inventories, and the reduced rate of growth in consumer credit. The new day-to-day loans and insured residential mortgages which were introduced during the year more than accounted for the modest over-all increase, as there was a slight decline in the combined total of other categories of loans. Day-today loans were $68 million at the year-end while net disbursements under residential mortgage loans were $74 million, with commitments totalling a further $86 million, involving in all some 17,000 housing units. On balance, the net effect of the activities of the chartered banks in 1954 on the public's holdings of liquid assets was small in comparison to the previous year, the increase being, $19 million compared to $466 million in 1953.
The public's holdings of currency, bank deposits, and Government of Canada securities increased in 1954 by $232 million, compared to $264 million in 1953 and stood at the record year-end level of $18,860 million. The main factor leading to this increase was the excess of $227 million of cash outlays over receipts in the federal government sector. This was the result of both budgetary and nonbudgetary transactions, as well as of changes in government loans and advances and the operations of the Unemployment Insurance Fund and other government accounts. These net disbursements in 1954 were in sharp contrast to the experience of 1953 when there was an overall surplus of receipts over disbursements of $220 million which partially offset the increase of $466 million in the public's liquid assets stemming from the operations of the chartered banks.
The increase of $232 million in the public's quick assets differed in composition, as well as in origin, from the increase in 1953. There was a pronounced shift into bank deposits in 1954 with active deposits increasing $272 million compared to a decrease of $91 million in 1953, and inactive notice deposits rising $501 million compared to a rise of $82 million in the previous year. At the same time public holdings of Government of Canada securities, which had increased by $221 million in the previous year, decreased by $570 million despite an increase in holdings of non-market securities, mainly Canada Savings Bonds. There was

[Stage Direction]
(Millions of Dollars)
-	1951	1952	1953	1954Currency-notes and coin	1,275	1,377	1,429	1,458Bank deposits-	Active deposits	3,568	3,796	3,705	3,977Inactive notice deposits	3,894	4,129	4,211	4,712Total bank deposits	7,462	7,925	7,916	8,689Government Securities-	Market securities	8,194	7,812	7,651	6,623Non-market securities	1,194	1,250	1,632	2,090Total government securities	9,388	9,062	9,283	8,713Total liquid assets	18,125	18,364	18,628	18,860
1 Includes all holdings other than those of the banking system and the federal government and government accounts.
[Stage Direction]
The Budget-Appendix also a shift towards the more liquid types of market securities such as treasury bills. The sharply increased liquidity of the general public as a result of the shift from government securities to bank deposits was effected mainly through the chartered bank purchases of securities discussed above. The redemption operations of the Government of Canada also played some part in this development.
The increased supply of money in the hands of the public, together with the lower interest rates and security yields prevailing during the year created a favourable climate for new provincial, municipal and corporate borrowing. Net new issues rose by about 12 per cent to an estimated $1,132 million in 1954, with borrowings abroad being substantially reduced after the first quarter of the year. Consumer credit also continued to rise, although at a slower rate than in the previous year, the increase being of the order of $125 million compared to $314 million in 1953. Mortgage credit also expanded further, with the main supply coming from resident life insurance companies who sold about $110 million of government securities compared to $49 million in 1953 in order to finance their increased volume of new investments. As indicated above, the chartered banks were also an important source of credit in the field of new residential construction. Although non-residents continued to be sellers of Government of Canada securities, there was, on balance, a net inflow of funds for all types of outstanding Canadian securities of $55 million, and this development, together with the net inflow of capital for investment in new issues, contributed to the buoyancy of Canadian security markets in 1954.

[Stage Direction]
Canada's international payments and receipts reflected in 1954 the somewhat lower level of domestic economic activity and the maintenance of relatively firm international markets. Merchandise exports and imports were both lower than in 1953. The decline of 5 per cent in the value of exports was the result of a volume reduction of 3 per cent combined with a decline of 2 per cent in export prices; while the 7 per cent decline in the value of imports was wholly the result of a volume reduction. The terms of trade, or the ratio of export prices to import prices, were therefore slightly less favourable to Canada and consequently the greater volume decline in imports was not fully reflected in an improvement in the balance on merchandise account. Nevertheless, there was a small surplus of $9 million in merchandise trade in 1954 compared with the deficit of $57 million in 1953. Taking into account non-merchandise trade as well, the current account deficit of $427 million in 1954 was only slightly changed from the $439 million deficit of 1953.
The total value of merchandise exports in 1954 was $3,929 million, down by $223 million from 1953. The decline resulted for the most part from special situations and was concentrated in a few commodities such as wheat and other grains, motor vehicles, primary iron and steel, and items related to defence needs such as aircraft and parts and electrical apparatus. Wheat exports showed the greatest single decline. Part of this was the result of better crops in other parts of the world but there was in addition some running down of stocks in anticipation of lower prices. In addition, there was a decline in the value of wheat flour and coarse grain exports, bringing the fall in grain exports as a whole to almost $300 million or considerably more than the total decline in exports. It is apparent, therefore, that apart from grain exports and the other commodities mentioned above, Canadian exports maintained their 1953 levels or showed substantial gains. The most marked increase was in exports of forestry products with newsprint reaching the highest value ever recorded for a single commodity in a calendar year. Fishery products, chemicals and base metals, particularly nickel, also recorded substantial gains over 1953.

The Budget-Appendix
Despite a decline of 7 per cent in 1954, imports remained at relatively high levels. Imports amounted to $3,920 million in 1954 compared with $4,209 million in 1953, a drop of $289 million. In contrast to exports, the decline in imports was fairly general with agricultural products as a group showing the only significant increase. The moderately lower level of economic activity in Canada during 1954 reduced requirements for both industrial materials and many finished consumer goods. Poor weather in the early part of the year also reduced the demand for materials and equipment used in construction. In addition, a more cautious inventory policy on the part of business contributed to the lower level of imports. This last factor was especially important in the case of textiles which were also affected by a weaker Canadian market for products using textiles in their manufacture. Imports of farm implements also showed a substantial decline as a result of lower farm income. Other major decreases occurred in the import of automobile parts because of the lower output of automobiles, and in coal as a result of the substitution of oil for fuel uses.

[Stage Direction]
Estimated Current Account Between Canada and all Countries (Millions of Canadian Dollars)
-	1951	1952	1953	Prelim. 1954
Current Credits-				
Merchandise exports (adjusted)1	3,950	4,339	4,152	3,929Gold available for export	150	150	144	155Travel expenditures	274	275	302	300Interest and dividends	115	145	164	136Freight and shipping	351	383	337	306Inheritances and immigrants' funds	77	85	92	91Other current receipts	249	281	321	308Total Credits	5,166	5,658	5,512	5,225Current Debits-	Merchandise imports (adjusted)	4,097	3,850	4,209	3,920Travel expenditures	280	341	365	380Interest and dividends	450	413	410	443Freight and shipping	354	375	382	341Inheritances and emigrants' funds	70	94	91	93Other current payments	432	421	494	475Total Debits	5,683	5,494	5,951	5,652Net Balance on Current Account	-517	+164	-439	-427
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)
-	1951	1952	1953	1954Between Canada and-	-951	-849	-924	-818+223 - 24	+388	+142	+230+114	+ 87	+ 38+223 + 12	+332	+ 179	+118+179	+ 77	+ 5
-517	+164	-439	-427
				
2792	HOUSE OF COMMONS
The Budget-Appendix
The customary deficit on non-merchandise account widened from $382 million in 1953 to an estimated $436 million in 1954, an increase of $54 million. Both payments and receipts fell below their 1953 levels with the greatest declines taking place in the freight account. This was a reflection of lower levels of trade in 1954 and further transfers of ships from Canadian registry. Interest and dividend receipts also showed a decline while payments showed a marked increase reflecting rising payments on earlier direct investment by foreigners in Canada and on Canadian issues held abroad. Travel expenditures by Canadians abroad were higher while receipts on this account were slightly lower than in the previous year. There was some drop in payments because of the large nonrecurring military expenditures in 1953. The net result of these movements was that non-merchandise receipts declined from $1,360 million in 1953 to $1,296 million in 1954, a drop of $64 million. Payments fell by only $10 million from $1,742 million in 1953 to $1,732 million in 1954.
There were no significant changes in the direction of Canadian exports and imports in 1954. The decline in total exports was widely distributed. The lower value of exports to the United States was partly a consequence of reduced economic activity in that country in the early part of the year. On the other hand, the decline in exports to Commonwealth countries, including the United Kingdom, and to other overseas countries can be attributed almost entirely to lower exports of wheat and, to a lesser extent, motor vehicles. Apart from these items most other Canadian exports to these markets showed a strong upward trend. This was particularly true of the United Kingdom and Europe and is related to high levels of industrial activity as well as to increased liberalization of dollar trade and payments in those countries.


[Stage Direction]
The decline in imports was concentrated in trade with the United States and the United Kingdom. The declines were mainly in consumer durable goods and machinery from the United States, in fibres and textiles from the United Kingdom and in iron and steel imports from both countries. Imports from the rest of the sterling area, Europe and all other overseas countries showed an increase, with the exception of imports from Latin America which declined fractionally from the previous year's level.
Excluding the movement in official reserves, the net inflow of capital into Canada in 1954 was considerably larger than in 1953. There were as well some changes in the components of the capital account. Direct investment was slightly lower, reflecting the somewhat lower level of activity and the effect

The Budget-Appendix

[Stage Direction]
AS AT DECEMBER 31 (Millions of U.S. Dollars)
-	1951	1952	1953	1954Exchange Fund Account and Bank of Canada- OnlH 	841-7 899-5 37-4	885-0 961-8 13-4	986-1 802-0 30-4	1,072-7 833-4 36-5U.S. Dollars	
1,778-6	1,860-2	1,818-5	1,942-6
				
of bad weather in hampering development of the western oil fields. The total value of new Canadian securities issued abroad was also lower as a result of the decline of Canadian rates of interest relative to rates in the United States. The net proceeds from these issues were further reduced by large capital retirements. In contrast to 1953, there was however a substantial net inflow of capital arising from dealings in outstanding Canadian issues. The outflow resulting from repatriation of government securities was somewhat larger than in 1953, but this was more than offset by an increase of 1100 million in nonresident net purchases of common and preferred stocks of Canadian corporations. The operations of United States investment funds played an important part in this latter development. Other capital movements also resulted in a small inflow in 1954 compared with the large outflows of 1952 and 1953.
The total net inward movement of capital was more than sufficient to cover the deficit on current account and official exchange reserves rose by $124 million during the year and the Canadian dollar remained at a premium over the United States dollar. Official reserves of gold and United States dollars were $1,942 million at December 31, 1954, as compared with $1,818 million at December 31, 1953. At the same dates, the United States dollar was $. 96 19/32 and $. 97 3/8, respectively, in terms of the Canadian dollar. In recent weeks the premium on the Canadian dollar has been somewhat less and the noon rate of exchange on the United States dollar in Canadian funds was 98^- on March 29, 1955.

[Stage Direction]
SUMMARY OF CAPITAL MOVEMENTS (Millions of Dollars)
1951	1952	1953	Prelim. 1954-	-	-	-Direct investment in Canada	+309	+346	+398	+325Direct investment abroad	- 20	- 77	- 56	- 70Canadian securities- Trade in outstanding issues	+ 38	- 94	- 31	+ 55New issues	+411	+316	+342	+318Retirements	-184	- 89	-142	-192Foreign securities	+ 15	- 8	- 1	- 21Official Loan Repayments	+ 68	+ 56	+ 87	+ 72Canadian dollar holdings of foreigners	-192	- 66	- 17	+ 26Official holdings of gold and foreign exchange (increase, -)	- 56	- 37	+ 38	-124Other capital movements	+128	-511	-179	+ 38Net capital movement financing current account balances	+517	-164	+439	+427
The Budget-Appendix

[Stage Direction]
Employment in 1954 reflected the weakening of demand and the more competitive conditions which became evident in some sections of the economy in the latter part of 1953. The growth in the labour force was accompanied by a decline in employment and there was consequently some increase in unemployment. The number of persons without jobs and seeking work rose from an average of 137,000 in 1953 to 232,000 in 1954. The average number of persons employed in 1954 was 5,194,000 compared with 5,246,000 in 1953.
Although the demand for labour was stronger in 1953 than in 1954, this was less true of the last quarter of the year. Thus, in 1953 employment was relatively high for the first three quarters of the year but conditions deteriorated noticeably in the last quarter. This deterioration continued into 1954 and each month from January to September showed lower employment than the comparable month of the preceding year. However, at the beginning of the fourth quarter of 1954 the number of people with jobs was approximately equal to the number at the same time in 1953; and in December of 1954 employment was considerably above the level of December 1953 although because of the expansion of the labour force the number without jobs and seeking work was also higher. Total industrial employment increased slightly in the last quarter of 1954 and the decline relative to 1953 was less pronounced than for the first three quarters of the year. Employment in non-durable manufactures and in construction showed a similar pattern. In forestry and mining the level of employment was actually higher than had prevailed in the last quarter of 1953. In the service sector the first three quarters of the year had shown a gain over the comparable period of 1953; and this gain was continued into the fourth quarter.
The number of persons without jobs and seeking work averaged 4.3 per cent of the labour force in 1954 compared with 2 [DOT] 5 per cent in 1953. The highest unemployment was reached in March of 1954 when there were 321,000 persons without jobs and seeking work or 147,000 more than the number for the same month in 1953. The point of lowest unemployment was reached in September 1954 with 168,000 jobless persons looking for work or 83,000 more than in September 1953. In January 1955 the number of persons without jobs and

[Stage Direction]
THOUSANDS Of PERSONS	THOUSANDS OF PERSONS

The Budget-Appendix
seeking work was 363,000 or 80,000 above the level of the comparable month in 1954; and in February 1955 the number of persons without jobs and looking for work was 379,000 or 64,000 more than in February 1954.
Despite the fact that employment averaged a little less in 1954 than in 1953 there was an increase of about 2 per cent in total labour income. Thus, the higher rates of pay in 1954 more than offset the combined effect of reduced employment and a slightly shorter working week. The average annual earnings per paid worker rose from $2,940 in 1953 to $3,034 in 1954, an increase of 3 per cent. Since 1951 average earnings per paid worker have risen by almost 17 per cent. Most of this increase represents a gain in real income, for the upward movement in prices, as indicated by the consumer price index, has only amounted to 2 per cent.
The greater part of the 8 per cent increase in labour income for 1953 was concentrated in the first half of the year. There was very little growth for the last half of the year and the seasonally adjusted figures indicate a slight decline in total earnings between the fourth quarter of 1953 and the first quarter of 1954. The moderate rise in total labour income for 1954 was distributed fairly evenly over the last three quarters of the year.
Finance and other services was the only industrial group in which the total of wages and salaries advanced at a faster rate in 1954 than in 1953 and this increase amounted to 9 per cent. The total of wages and salaries paid in the primary industries rose by 2 per cent during 1954. In public utilities, transportation, storage and trade there was a moderate increase slightly greater than for labour income as a whole. In both manufacturing and construction on the other hand there was a small decline in aggregate earnings.

[Stage Direction]
Annual Averages1 (Thousands of Persons)
Civilian Labour Force	
Male	
Female	
Non-Agricultural	
Agricultural	
Persons without jobs seeking work	
Persons with jobs	
In Non-Agricultural Industries	
Paid Workers	
Employers, own account workers and unpaid family workers	
In Agriculture	
Paid Workers	
Employers, own account workers and unpaid family workers	 * *
1951s	19522	1953s	1954s5,217	5,315	5,383	5,4264,071	4,136	4,197	4,2071,146	1,179	1,186	1,2194,274	4,420	4,521	4,547943	895	862	879106	129	137	2325,111	5,186	5,246	5,1944,171	4,295	4,388	4,3213,636	3,773	3,853	3,802535	522	535	519940	891	858	87399	111	113	120841	780	745	753
1 Average of the quarterly labour force surveys in 1951 and 1952 and of the monthly surveys in 1953 .*and 1954.
* Revised to include all areas in the ten provinces.
[Stage Direction]
The Budget-Appendix
The civilian labour force, which includes both the employed and the unemployed, averaged 5,426,000 for 1954 and accounted for 52-7 per cent of the non-institutional civilian population over 14 years of age. This compares with 53-1 per cent in 1953. The agricultural labour force increased from 862,000 in 1953 to 879,000 in 1954. This increase of 17,000 is in contrast to the trend of recent years when there has been a marked shift from rural to urban occupations.
In addition to the civilian labour force, there were 115,000 men and women in the armed forces in 1954 compared with 106,000 in 1953.

[Stage Direction]
Canadian prices were relatively stable during 1954. The consumer price index varied little more than \ per cent from its yearly average and ended the year less than 1 per cent above the January level. The general wholesale index declined slowly but more or less steadily throughout the year and was about 2 per cent lower in December than in January. The consumer price index has been almost unchanged for about three years and the wholesale price index has declined less than 3 per cent since September 1952.
The consumer price index moved fractionally upward from an average of 115-5 in 1953 to 116-2 in 1954. This was the result of moderate increases in the price of services. The largest increase was the 2 per cent rise in the shelter index. During the year the variations in the consumer price index followed closely the variations in food prices. The food index reached a low of 110-2 in May and a high of 114-4 in August. It was half a point higher at December 1954 than at December 1953, but the average of food prices for 1954 was slightly lower than for 1953. Clothing was the only other group in which prices averaged less than in 1953. There was a fairly steady decline throughout the year and clothing prices were about 2 per cent lower at the end of the year than at the beginning and about 6 per cent lower than they had been in December 1951.

[Stage Direction]
;*cx	1949 = 100

The Budget-Appendix
The United States consumer price index also averaged a little more for 1954 than for 1953. However, in the United States the movement throughout 1954 was slightly downward both in the total index and in the food component.
In Canada, as has been pointed out, the movement was slightly upward.
The Canadian index of wholesale prices declined for the third successive year. The average for the year was 2 per cent below the average of 1953; and the moderate downward course throughout the year brought the index at year-end to a point only 3 per cent above the level of June 1950. Since wholesale prices reached their peak in July 1951, following the outbreak of war in Korea, the decline in the index has amounted to 12 per cent. The slight downward movement of the wholesale index in 1954 reflected the trend for the majority of goods. In general, raw materials declined somewhat less than manufactured products. The larger decreases took place in wholesale prices for farm products and textile and iron products. However, the decline in the price of farm and textile products was considerably less than in 1953. The fall in the wholesale price for iron products was about 4 per cent compared with an increase of 1 per cent ip the previous year. Exceptions to the general downward trend occurred in the case of non-metallic minerals and chemicals which moved fractionally above 1953 levels.

[Stage Direction]
WHOLESALE PRICE INDEXES (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	250-2220-7	228-8	220-9217-0	224-2	209-2219-8	227-8	212-9219-0	227-3	212-3218-6	226-9	210-2217-9	225-1	209-0Mav	218-2	224-5	213-1June	217-8	224-5	213-1July 	217-4	223-6	217-8215-8	222-3	207-9215-3	222-6	204-1214-3	221-8	201-1214-8	222-2	203-8215-3	222-3	204-7215-7	222-1	206-5217-4	223-2	206-1
Note: 1954 Indexes are preliminary. The Canadian Farm Products index is fully revised only up to July 1953 and does not reflect final payments on all grains for subsequent months.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	Canada	United States	Total	1 Food	Total	1 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	100-0102-9	102-6	102-8	101-2113-7	117-0	111-0	112-6116-5	116-8	113-5	114-6115-5	112-6	114-4	112-81954	116-2	112-2	114-8	112-61954-January	115-7	111-6	115-2	113-1February	115-7	111-7	115-0	112-6March	115-5	110-7	114-8	112-1April	115-6	110-4	114-6	112-4May	115-5	110-2	115-0	113-3June	116-1	112-0	115-1	113-8July	116-2	112-1	115-2	114-6August	117-0	114-4	115-0	113-9September	116-8	113-8	114-7	112-4October	116-8	113-8	114-5	111-8November	116-8	113-4	114-6	111-1December	116-6	112-6	114-3	110-41955-January	116-4	112-1	114-3	110-6February	116-3	111-5	114-3	110-8
The Budget-Appendix
Part II

[Stage Direction]
Table of Contents
Page
1.	Introduction	
28002.	Highlights of Governmental Financial Operations	during 1954-55	
28003.	Budgetary Accounts	
2803A.	Revenues	
2804B.	Expenditures	
28124.	Summary of Assets and Liabilities at	March 31,	1955	
2831A.	Changes in Principal Liability Classifications	during 1954-55	
2832B.	Changes in Principal Active Asset Classifications during 1954-55	
2836C.	Increase in Net Debt	
28405.	The Cash Position	
28416.	The Public Debt	
28437.	Supplementary Detailed Tables	
2851
The Budget-Appendix
Part II

[Stage Direction]
The figures which are presented in this Part must be regarded as preliminary and subject to revision. Although the Government's fiscal year ended on March 31, 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 1954-55. Consequently the final figures when they become available next August may 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, 1955 are now estimated at $4,107 million. This is $357 million or about 8 per cent less than the amount of $4,464 million forecast in last year's budget speech and approximately $289 million less than the total collected in the preceding year.
Budgetary expenditures are estimated at $4,255 million which is $205 million or 4§ per cent less than the budget forecast and about $95 million less than the total spent in 1953-54.
On the basis of these figures the indicated deficit is about $148 million compared with the budget forecast of a nominal surplus of $4 million and a surplus of $46 million for 1953-54.
On the revenue side of the government's budgetary operations the most significant feature was the decline of $251 million in tax revenues. Corporation income taxes declined by $183 million, excise taxes by $53 million, customs import duties by $14 million and personal income taxes by $12 million, but these were only slightly offset by increases of $7 million in taxes on dividends, interest, rents and royalties going abroad, and $3 million in succession duties.
On the expenditure side, the most significant feature was the continued importance of defence in the government's expenditure programme. Although defence expenditures at $1,697 million were $157 million or about 8 per cent less than those of the previous year, they still constituted 40 per cent of the government's total budgetary outlay. In 1953-54, defence expenditures represented 42-6 per cent of the total.
Although the budgetary deficit was $148 million, the government made loans, advances and other non-budgetary disbursements of about $292 million and at the same time reduced the amount of its unmatured funded debt outstanding in the hands of the public by approximately $202 million. This was achieved by using the $488 million available from insurance, pension and annuity accounts receipts, the repayment of loans and advances and other non-budgetary receipts and credits, and by letting cash balances run down by $154 million.

The Budget-Appendix
The following table summarizes the budgetary and non-budgetary transactions and changes in cash position for the fiscal year ended March 31, 1955:
TABLE i
Summary of Budgetary and Non-Budgetary Transactions and Changes in Cash Position	Fiscal Year Ended March 31, 1955 (Estimated)
	(in millions of dollars) 	 4,107
		 4,255
		 -148
Non-budgetary receipts and credits (excluding unmatured debt transactions)-	222 64 139 63 488 179 113 292 	 196 	 48 	 -202 	 -154
	
	
	
Non-budgetary disbursements and charges (excluding unmatured debt transactions)- #	
	
	
	
	
	
	
Pension payments from the old age security fund amounted to $353 million in 1954-55 and tax receipts credited to the fund amounted to $291 million with the result that there was a deficit for the year of $62 million which was covered by a temporary loan by the Minister of Finance to the fund. This amount, together with the loan of $46 million covering the deficit of the fund for 1953-54 brings the total outstanding temporary loans made by the Minister of Finance to the fund to $108 million.
During 1954-55, the government's liability for unmatured debt decreased by $88 million, but as other liabilities of the government increased by $109 million, the gross public debt increased by $21 million to $17,944 million at March 31,
1955.	During the same period the net active or realizable or revenue-producing assets decreased by $127 million to $6,680 million with the result that the government's net debt-that is, the gross debt less the active assets-was $11,264 million at March 31, 1955, an increase of $148 million.
After taking into account the budgetary deficit of $148 million and the net balance of $196 million available from non-budgetary transactions, $48 million was available for debt reduction. By using this amount and by allowing cash balances to run down by $154 million, unmatured funded debt in the hands of the public, after taking into account sinking fund purchases and transactions in the securities investment account, was reduced by $202 million.
[Stage Direction]
The Budget-Appendix
1948	1049	1950	1951	1952	1953	1954	1955 *


[Stage Direction]
MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
1948	1949	1950	1951	1952	1953	1954	1955*

[Stage Direction]
The Budget-Appendix
3.	THE BUDGETARY ACCOUNTS
Total revenues, at $4,107 million for 1954-55, were $289 million less than the total for 1953-54. Total expenditures at $4,255 million were $95 million less than in the previous fiscal year. The deficit for the fiscal year was $148 million compared with a surplus of $46 million for 1953-54.
A summarized statement of the estimated revenues and expenditures and deficit for the fiscal year ended March 31, 1955, with the actual figures for the fiscal years ended March 31, 1948 to 1954, inclusive, is given in the following table:

[Stage Direction]
Budgetary Revenues, Expenditures and Surplus or Deficit (In millions of dollars)
Fiscal Year Ended March 31	Budgetary Revenues	Budgetary Expenditures	Surplus or Deficit (-)2,871-7	2,195-6	676-12,771-4	2,175-9	595-52,580-1	2,448-6	131-53,112-5	2,901-2	211-33,980-9	3,732-9	248-04,360-8	4,337-3	23-54,396-3	4,350-5	45-81955 (Estimated)	4,107-1	4,255-4	-148 - 3
The Budget-Appendix
A. Revenues
Budgetary revenues amounted to $4,107 million for the fiscal year 1954-55. This is $289 million or 6-6 per cent less than the record amount of $4,396 million received in the previous year. Of the total for the year $3,753 million or 91-4 per cent was derived from taxes and $354 million or 8 [DOT] 6 per cent from non-tax revenues and special receipts and credits.
A statement of estimated revenues for 1954-55 classified by major categories, and the corresponding actual figures for 1953-54 is given in Table III.

[Stage Direction]
Statement of Budgetary Revenue by Major Classifications (In millions of dollars)
Source	Fiscal Year Ended March 31				Increase or Decrease (-)	
	1955 (Estimated)		1954			
	Amount	Per cent	Amount	Per cent	Amount	Per cent
Tax revenues-						
Personal income tax*		1,176-0	28-6	1,187-7	27-0	-11-7	1-0
Taxes on interest, dividends, etc.,						
going abroad	61-0	1-5	53-8	1-2	7-2	13-4Corporation income tax*	1,008-0	24-5	1,191-2	27-1	-183-2	15-4Succession duties	42-0	1-0	39-1	0-9	2-9	7-4Customs import duties	393-0	9-7	407-3	9-3	-14-3	3-5Excise duties	227-0	5-5	226-7	5-2	0-3	0-1Sales tax*	576-0	14-0	587-3	13-4	-11-3	1-9Other excise taxes	254-3	6-2	296-0	6-7	-41-7	14-1Other taxes	15-5	0-4	14-5	0-3	10	6-8Total tax revenues	3,752-8	91-4	4,003-6	91-1	-250-8	6-2Non-tax revenues-	Post Office	130-1	3-2	111-0	2-5	19-1	17-2Return on investments	133-7	3-2	151-9	3-5	-18-2	12-00-8	-0-8	100-0Other non-tax revenues	56-8	1-4	54-5	1-2	2-3	4-2Total non-tax revenues	320-6	7-8	318-2	7-2	2-4	0-8Special receipts and credits	33-7	0-8	74-5	1-7	-40-8	54-8Total revenues	4,107-1	100-0	4,396-3	100-0	-289-2	6-61954-55	1953-54
'Excluding tax credited to Old Age Security Fund-*
2% personal income tax	
101-0	90-72% corporation incometax	
46-0	55-62% sales tax	
144-0	146-8291-0	293-1(1)	Tax Revenue
Tax on Personal Incomes
The personal income tax in 1954-55 replaced corporation income tax as the largest class of government revenues. The yield (excluding the old age security tax) for the year was $1,176 million, a decrease of $12 million or 1 per cent from 1953-54. This decrease is due to the continuing effect of the 1953

The Budget-Appendix
tax reductions and the introduction of a personal income tax in the Province of Quebec. Tax rates on personal incomes were reduced about 11 per cent on July 1, 1953. Consequently these lower rates were in operation for only three quarters of 1953-54 but applied through all of 1954-55. The fact that the tax rates for 1954 were on the average about 6 per cent below those for 1953 was reflected in lower quarterly instalments and balances of tax paid with returns in the fiscal year 1954-55. The allowance of a credit for the Quebec income tax up to 10 per cent of the federal tax resulted in lower quarterly instalment payments of federal tax during the year for some taxpayers in Quebec and refunds to some taxpayers in that province who filed their 1954 returns before the end of the fiscal year. The influence of these factors more than offset the small increase in the total of personal incomes that took place in 1954.
In addition the 2 per cent tax on personal incomes levied under the Old Age Security Act yielded an estimated amount of $101 million during 1954-55 compared with $91 million in 1953-54. The apparent increase in revenue from this tax during the period when the revenue from the personal income tax declined is due to the fact that the yield from this tax in 1953-54 did not represent a full year's return at the 2 per cent rate. This revenue was credited to the Old Age Security Fund.
Taxes on Interest, Dividends, Rents and Rorjalties Going Abroad
These revenues are derived from taxes withheld on payments of interest, dividends, rents, royalties, alimony and income from estates and trusts made to non-residents. The total of $61 million in 1954-55 is $7 million greater than in the previous year reflecting increased dividend payments during the year.


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OTHER REVENUES REVENUE TAXES 91%

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1000

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1948	1949
1955
1951
1954
2806
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The Budget-Appendix Corporation Income Tax
Corporation income tax was the second largest class of government revenue in 1954-55, being replaced as the largest revenue producer by the personal income tax. Collections (excluding the old age security tax) amounted to $1,008 million, a decrease of $183 million or 15 per cent from the previous year's total of $1,191 million. Most of this decrease is due to the lower corporation profits in 1954. However, the continuing effect of the reduction in rates announced in the 1953 budget also influenced the comparison of revenue in 1954-55 with that of the previous year because some of the collections in 1953-54 were based on the higher rates of tax in force before January 1, 1953.
The total revenue from corporation income tax includes $6 [DOT] 5 million paid by corporations paying the 15 per cent tax on their undistributed income. This compares with $8-8 million collected from this source in 1953-54.
In addition the 2 per cent tax levied on corporate profits under the Old Age Security Act yielded $46 million during 1954-55 compared with $56 million collected from this source in 1953-54. These collections were credited to the Old Age Security Fund.
Succession Duties
Revenues from succession duties were $42 million in 1954-55, an increase of $3 million or 7 per cent over the previous year.

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I94fl 49	50	51	52	53	54	55 *

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600 300 0
300 0
1940	49	50	51	52	53	5 4	55*

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riiillll
1948	49	50	51	52	53	54	55*
EXCISE DUTIES		
J	* iimn	

The Budget-Appendix
Customs Import Duties
Revenue from customs import duties amounted to $393 million, a decrease of $14 million or 3§ per cent from 1953-54. This decrease in revenue reflects the decrease in the total value of imports.
Excise Duties
Excise duties are levied exclusively on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act). The revenue from excise duties for the year was $227 million, only $0.3 million less than in the previous year. The receipts from the tax on alcoholic beverages, before deducting refunds, showed a decline of $2 million from the previous year but gross receipts from tobacco products were $2 million higher.
Excise Taxes
Included under this heading are the revenues from the general sales tax and the special excise taxes levied on a wide range of manufactured products. Total net collections for the year are estimated at $830 million, a decrease from 1953-54 of $53 million or 6 per cent.
The sales tax, which from the standpoint of revenue is the most important tax levied under the Excise Tax Act, yielded an estimated net revenue of $576 million in 1954-55 (excluding the 2 per cent old age security sales tax). This is $11 million or 2 per cent less than the amount of $587 million received from this source in the previous year. About $3 million of this reduction may be attributed to the exemption of certain items from tax following the 1954 budget. The remaining part of the reduction in revenue was due to the slight decrease in sales of taxable goods during the year.
Excise taxes other than sales tax yielded approximately $254 million or $42 million less than 1953-54. Approximately $33 million of this reduction in revenue is due to the reduction of the tax rate from 15 per cent to 10 per cent for a wide range of items and the repeal of the tax on certain other items such as household electrical applicances, furs, cameras and luggage following the 1954 budget. The rest of the reduction in revenue is more than accounted for by the decline in passenger automobile production during the year. The combined revenue from the tax on automobiles and tires and tubes in the year was $84 million. This was $22 million less than in the previous year.
The item showing the largest increase in revenue over the previous year was the tax on television sets, radios and tubes, which yielded $22 million or $5 million more than in 1953-54. Small increases in revenue were also realized from the tax on tobacco products and the tax on wines.
In addition the 2 per cent tax on sales levied under the Old Age Security Act yielded $144 million during 1954-55 compared with $147 million in 1953-54. These collections were credited to the Old Age Security Fund.
Other Taxes
The principal tax under this heading is the tax on the premium income of insurance companies which produced $15 million in 1954-55 compared with $14 million in the previous year. Small amounts of revenue were also received from the tax on the export of electrical energy from Canada and the tax on the export of furs from the Northwest Territories.
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The Budget-Appendix
(2)	Non-Tax Revenues
Non-tax revenues for 1954-55 are estimated at $321 million, an increase of $2-4 million over the total for 1953-54. The following table presents a comparative summary of revenues under this heading for the past two years:

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(In millions of dollars)
Non-Tax Revenues	Fiscal Year Ended March 31	Increase or Decrease (-)	1955 (Estimated)	1954	Amount	Per CentPost Office	130-1	111-0	19-1	17-2Return on investments	133-7	151-9	-18-2	12-00-8	-0-8	100-0Bullion and coinage	1-5	4-2	-2-7	64-3Privileges, licences and permits	13-8	13-3	0-5	3-8Proceeds from sales	5-3	5-4	-0-1	1-9Services and service fees	19-8	17-6	2-2	12-5Refunds of previous years' expenditures	13-1	11-3	1-8	15-9Miscellaneous	3-3	2-7	0-6	22-2Total non-tax revenues	320-6	318-2	2-4	0-8
Post Office
Gross Post Office receipts for 1954-55 are expected to amount to $151 million. After making authorized disbursements from revenue of $21 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 $130 million. The increase of $21 million in gross receipts over the corresponding amount received in 1953-54, due mainly to the increase in postal rates, is offset in part by an increase of $2 million in disbursements from revenue, chiefly on account of an increase in remuneration paid to revenue postmasters and their assistants.
As costs of operating the Post Office during 1954-55 (excluding the $21 million charged to revenue) are expected to total $124 million, net revenue will exceed net costs by approximately $6 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 certain miscellaneous 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 $134 million, a decrease of $18 million from the total of $152 million received in 1953-54. The largest decrease was in the surplus of Canadian Arsenals Limited which for 1954-55 is expected to total $6 million compared with $12 million received in 1953-54. There was a decrease in profits in the Exchange Fund account of $5 million and in the profits received from the Bank of Canada of $3 million. Interest received on loans to the Canadian National Railways decreased by $4 million while interest received from the Central Mortgage and Housing Corporation increased by $2 million.

The Budget-Appendix
A comparative summary of receipts during 1954-55 and 1953-54 under this heading is given in the following table:

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(In millions of dollars)
Return on Investments	Fiscal Year Ended March 31	Increase1955 (Estimated)	1954	Decrease (-)Loans to, and investments in, Crown agencies-	Bank of Canada	41-5	44-1	-2-6Exchange fund account	10-9	16-3	-5-4Central Mortgage and Housing Corporation	16-4	14-3	2-1Canadian Arsenals Limited	5-5	11-9	-6-4Canadian National Railways	4-1	7-7	-3-6National Harbours Board	4-2	4-5	-0-3Polymer Corporation Limited	31	3-2	-0-1Other Crown agencies	1-8	1-5	0-387-5	108-5	-16-0Other loans and investments-	United Kingdom	22-8	23-1	-0-3Other national governments	12-0	12-5	-0-51-2	1-2	Soldier and general land settlement loans and Veterans Land Act advances	4-8	4-6	0-2Securities investment account	0-2	3-1	-2-9Sinking fund and other investments held for retirement of unmatured debt	41	2-4	1-7Other loans and investments	11	1-5	-0-446-e	48-4	-2-2133-7	151-9	-18-2
Premium, Discount and Exchange
Accounting adjustments with respect to premium, discount and exchange in the year under review are expected to result in a net expenditure of SI million compared with a net revenue of $0-8 million in 1953-54. This is due mainly to exchange deficiencies resulting from the revaluation of the government's holdings of its own securities payable in United States dollars.
2810
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The Budget-Appendix
(3)	Special Receipts and Credits
Special receipts and credits are estimated at $34 million for the fiscal year 1954-55. This is a decrease of $41 million from the total of $75 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:

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(In millions of dollars)
Special Receipts and Cbedits	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Transfer to revenue of provincial 5 per cent corporation income tax suspense account pursuant to the 1952 tax	46-8	-46-829-2	22-4	6-8Transfer to revenue of royalties and license fees (Department	1-0	1-0Payment received from the Government of the Union of Soviet Socialist 1 republics in settlement of equipment and material delivered under mutual aid after Sept-	2-8	-2-83-5	2-5	1-0
33-7	74-5	-40-8
It will be noted from the table that the transfer to revenue in 1953-54 of the balance of provincial corporation income taxes transferred to the Receiver General pursuant to the 1952 tax rental agreements more than accounts for the decrease in receipts in 1954-55.
A total of $29 million was received during the fiscal year from the sale of Crown assets. Of this amount $7 million was received from the Crown Assets Disposal Corporation representing the amount realized from the disposal of surplus Crown assets; $16 million represented receipts from sales of Crown lands, buildings and equipment under agreements of sale; $1 million was received from the sale of Government telegraph and telephone facilities in British Columbia; and $5 million was received from the Central Mortgage and Housing Corporation representing the proceeds from the sale of wartime housing properties including depreciation provisions set aside in previous years by the corporation on properties that have now been sold.
An amount of $1 million was transferred from Defence Production suspense account to revenue. This amount represented royalties and license fees on the use of patents in connection with war production.
(4)	Comparison of Actual Revenue with Budget Forecast
Total budgetary revenues for 1954-55, excluding revenue from the old age security taxes, as now estimated were $357 million less than the forecast made in the budget speech of April 6, 1954. This represents a shortfall of about 8 per cent. Revenue from all sources except the tax on non-residents, succession duties and miscellaneous taxes were less than expected and revenues from these three sources exceeded expectations by only small amounts. This failure of revenues to come up to the amounts forecast reflects the fact that the general level of economic activity and production throughout the year was somewhat less than the level which formed the basis for the budget forecast.

The Budget-Appendix
The following table shows the extent to which actual revenues for 1954-55 as now estimated, differ from the budget forecast:

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Comparison or Budget Forecast with Actual Revenues for Fiscal Year Ended March 31, 1955
(In millions of dollars)
Source of Revenues	Budget Forecast of Revenues	Actual Revenues (Estimated)	Increase or Decrease (-) compared with Budget ForecastPersonal income tax	1,235-0 55-0 1,200-0 40-0 415-0 607-0 507-0 15-0	1,176-0 61-0 1,008-0 42-0 393-0 576-0 481-3 15-5	-59-0 6-0 -192-0 2-0' -22-0 -31-0 -25-7 0-5Non-resident income taxes	Corporation income tax	Succession duties	Customs import duties	Sales tax (net)	Other excise duties and taxes	Miscellaneous taxes	Total tax revenues	4,074-0 340-0 50-0	3,752-8 320-6 33-7	-321-2 -19-4 -16-3Non-tax revenues	Special receipts and credits	Total budgetary revenues	4,464-0	4,107-1	-356-9
The revenue from the personal income tax was $59 million or about 5 per cent less than the budget forecast. About $3 million of this deficiency is due to the increased credit now allowed for the Quebec personal income tax but most of the shortfall occurred because the total of personal incomes did not rise as much as had been expected.
Revenue from the tax on income going to non-residents exceeded expectations because of a sharp increase in the dividend payments going from companies in Canada to persons abroad.
Corporation income tax revenue was approximately $192 million less than the budget forecast which was based on the assumption that 1954 corporate profits would be slightly better than in 1953. Preliminary estimates are that 1954 profits were nearly 7 per cent below those for 1953.
Revenue from customs duties, sales tax and other excise taxes and duties fell from 5 to 6 per cent below the budget forecast. The deficiency in the sales and other excise tax revenue occurred in part because of the unexpected drop in automobile production during the year.
The shortfall of $19 million in non-tax revenues from the budget forecast is attributable largely to return on investments being lower than anticipated.
Special receipts and credits are extremely difficult to estimate and the total of $34 million fell short of the budget forecast by $16 million.
50433-178J
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The Budget-Appendix
B. Expenditures
The table which follows presents a comparative summary of estimated expenditures by departments and principal purposes for the fiscal year 1954-55, with actual expenditures for the preceding year:

[Stage Direction]
Statement of Budgetary Expenditures by Departments and Major Classifications
(In millions of dollars)
	Fiscal Year Ended March 31				Increase or Decrease (-)	
-	1955 (Estimated)	1954	Amount	Per cent	Amount	Per cent	Amount	Per cent1,677-3 19-6	39-4	1,805-9	41-5	-128-0	7-10-5	47-9	1-1	-28-3	59-11,696-9	89-9	1,853-8	42-6	-156-9	8-2Public debt charges-	478-2	11-2	476-0	10-9	2-2	0-524-5	0-6	19-7	0-5	4-8	24-4502-7	11-8	495-7	11-4	7-0	1-4Provincial subsidies and tax rental payments (including transitional grant to	358-5	8-4	341-0	7-8	17-5	5-1Government contributions with respect	37-4	0-9	54-5	1-3	-17-1	31-4Provision for reserve for possible losses on ultimate realization of active	50-0	1-2	-50-0	100-0366-5	8-6	350-1	8-0	16-4	4-7Unemployment Insurance Act-Administration and Government's contri-	60-2	1-4	57-9	1-3	2-3	4-083-3	2-0	108-4	2-5	-25-1	23-215-0	0-4	12-7	0-3	2-3	18-1Canadian Broadcasting Corporation....	30-3 28-1	0-7 0-7	25-0 25-5	0-6 0-6	5-3 2-6	21-2 10-244-1	1-0	45-7	1-1	-1-6	3-533-5	0-8	30-2	0-7	3-3	10-642-5	1-0	38-5	0-9	4-0	10-486-6	2-0	80-4	1-8	6-2	7-715-7	0-4	15-4	0-4	0-3	1-955-2	1-3	49-9	1-1	5-3	10-6Northern Affairs and National Re-	20-4	0-5	19-1	0-4	1-3	6-8124-5	2-9	113-6	2-6	10-9	9-6138-0	3-3	115-0	2-6	23-0	20-036-0	0-8	33-9	0-8	2-1	6-217-7	0-4	16-5	0-4	1-2	7-3158-8	3-7	118-0	2-7	40-8	34-6242-2	5-7	238-7	5-5	3-5	1561-3	1-4	61-0	1-4	0-3	0-5
4,255-4	100-0	4,350-5	100-0	-95-1	2-2
						
National Defence and Defence Production
Defence expenditures, comprising the expenditures of the Department of National Defence and the Department of Defence Production, constituted 40 per cent of all government expenditures in 1954-55 and were consequently the largest category of government expenditure. Expenditures of the Department of National Defence were $1,677 million, a decrease of $129 million from the previous year, while those of the Department of Defence Production were

The Budget-Appendix
$20 million, a decrease of $28 million. The combined expenditures of $1,697 million for these two departments in 1954-55 were $157 million less than the total of $1,854 million for 1953-54.
A comparative summary of expenditures for the two departments for the last two fiscal years is presented in the table which follows:

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(In millions of dollars)
National Defence and Defence Production	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Department of National Defence-		401-3	-18-8
Army services		382-5		
Naval services	284-1	266-3	17-8Air services	645-0	740-7	-95-71,311-6	1,408-3	-96 -7Defence research and development	44-4	40-8	3-6Government's contribution to the permanent services	36-7	35-2	1-5pension account	Mutual aid to NATO countries	257-4	289-7	-32-3Contributions towards military costs of NATO	6-8	10-5	-3-7Administration and general	20-4	21-4	-1-01,677-3	1,805-9	-m-6Department of Defence Production-	10-1	37-8	-27-7Capital assistance	Administration and general	9-5	10-1	- 0-619-6	47-9	-S8-S1,696-9	1,853-8	-156-9
While expenditures for naval service showed an increase of $18 million, expenditures for army and air services were below the 1953-54 level by $19 million and $96 million respectively, with the result that total expenditures for the three services were $97 million less than in the previous year. Expenditures on defence research and development were $44 million, or $4 million more than in 1953-54.
The Government makes a contribution to the permanent services pension account of an amount equal to If times the contributions by permanent services personnel. During 1954-55 this contribution amounted to $37 million, or $2 million more than the amount of $35 million contributed in 1953-54. Of the 1954-55 expenditures $34 million related to current contributions and $3 million to contributions for arrears. The corresponding amounts in 1953-54 were $30 million and $5 million respectively.
Expenditures under the Mutual Aid programme, which are authorized under Section 3 of the Defence Appropriation Act, 1950, were $257 million in 1954-55, a decrease of $32 million from 1953-54. 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 credited to a special defence equipment replacement account. The equipment is valued on the basis of its estimated replacement value. In accordance with the provisions of Vote 239 of the Appropriation Act, No. 4, 1954, where equipment and supplies acquired for the services since March 31, 1950, are transferred as Mutual Aid, the 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
[Stage Direction]
The Budget-Appendix $257 million from the replacement account in 1954-55 consists of approximately $46 million for equipment and supplies transferred from Canadian stocks to North Atlantic Treaty countries and $211 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 training in Canada aircrews from allied countries. In 1953-54, stock transfers totalled $68 million and direct aid, $222 million.
Contributions are also made from National Defence appropriations towards the military costs of NATO, on account of Canada's share of the NATO military budgets and infrastructure costs. The percentage share borne by each nation is established in the North Atlantic Council and is subject to ratification by the respective member governments. Expenditures for 1954-55 for this purpose are estimated at $7 million, compared with payments of $10-5 million during 1953-54.
As the capital assistance programme, which reached its peak in 1952-53, drew closer to completion, expenditures for the Department of Defence Production decreased in 1954-55; the total of $20 million for the year represented a decrease of $28 million from the amount of $48 million spent in 1953-54. Capital assistance to private contractors, Crown plants operated on a management fee basis, and Crown corporations undertaking contracts essential to the defence programme, totalled $10 million in 1954-55, compared with $38 million for the preceding year. Administration and general expenditures, at $10 million, decreased slightly from the total for 1953-54.
In addition to its budgetary expenditures the Department of Defence Production made cash outlays from the defence production revolving fund for the procurement of materials to be 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 asset holdings of the fund decreased by $5 million in 1954-55, as compared with a decrease of $22 million in 1953-54.
The replacement of equipment and supplies acquired by the Department of National Defence prior to March 31, 1950, and subsequently transferred to parties to the North Atlantic Treaty, also involved cash outlays that 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 1954-55 were $47 million, and $79 million was disbursed for the purchase of replacement equipment and supplies. The balance of the account at March 31, 1954, was $306 million, and as a result of the year's operations there was a net disbursement of $32 million from the account bringing the balance to $274 million as of March 31, 1955.
In addition, credits were made to the replacement of materiel account in the amount of $3-8 million and disbursements from the account totalled $20 million. This account was established under the authority of section 11 of the National Defence Act to record 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 the sale are credited to this account to be used for the procurement of replacement materiel.
By consolidating the net cash outlays from the defence equipment replacement account, the replacement of materiel account and the defence production revolving fund, with the net cash budgetary expenditures of the Departments of National Defence and Defence Production, the net effect of the defence programme

The Budget-Appendix
upon the Canadian economy can be seen. In 1954-55 cash outlays for defence amounted to $1,740 million a decrease of $58 million from the corresponding total in 1953-54.
A summary of cash disbursements for defence for the last two fiscal years is presented in the following table:

[Stage Direction]
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
Cash Outlays foe Defence	1955 (Estimated)	1954	Budgetary expenditures-	1,805-9	-128-6Department of National Defence	1,677-3	Department of Defence Production	19-6	47-9	-28-3Less: value of military equipment and supplies transferred from existing Canadian stocks to NATO countries (in-	1,696-9	1,853-8	-156-9eluded in budgetary expenditures)	46-5	67-8	21-31,650-4	1,786-0	-135-6Disbursements from-	Defence equipment replacement account	
Replacement of materiel account (sec. 11, National	78-7	32-9	45-8Defence Act) (net)	16-2	0-8	15-4Defence production revolving fund (net)	-5-2	-21-9	16-789-7	11-8	77-9Net cash outlay for defence	1,740-1	1,797-8	-57-7

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MILLIONS OF DOLLARS	,	FISCAL YEARS ENDED MARCH 31	MILLIONS OF DOLLARS
1200
1948	49	50 SI 52	53	54	55*

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| | |
1948	49	50	51	52	53	54	55 *
nil 11II i
1948	49	50	51	52	53	54	55*

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1948	49
[DOT]estimated
50	51	52	53	54	55*
SUBSIDIES & TAX RENTAL R&YMENTS TO PROVINCES 800
1948	49	50	51	52	53	54	55*
Note: The lightly shaded area in the chart for Health, Welfare and Social Security represents pension payments out of the old age security fund.
[Stage Direction]
The Budget-Appendix Public Debt Charges
Public debt charges in 1954-55 are estimated at $503 million or 12 per cent of aggregate budgetary expenditures, an increase of $7 million compared with a total of $496 million or 11 per cent for the previous year. In 1954-55, as in 1953-54, public debt charges comprise the second largest item of Government expense.
Interest on public debt amounted to $478 million, or $2 million more than the total spent in the previous year. A decrease of $6 million in interest on unmatured debt was more than offset by an increase of $8 million in interest on insurance, pension and guaranty accounts.
Interest on unmatured debt payable in Canada, London and New York amounted to $406 million compared with $412 million in 1953-54. The decrease of $6 million is due in part to a decrease of approximately $88 million in unmatured debt payable in Canada and in part to lower rates of interest on new and renewal issues. Interest payable in London and New York reflect only minor changes due to slight changes in rates of exchange.
Interest on deposit and trust accounts decreased by $0-1 million while interest on insurance, pension and guaranty accounts at $69 million increased by $8 million over the total of $61 million in 1953-54. Of this increase, $6 million relates to the superannuation account; $2 million to the Government annuities account and $2 million is in respect of the permanent services pension account; but these are partially offset by a decrease of $2 million in respect of the civil service insurance fund, on which the crediting of interest was discontinued at the close of 1953-54.
Other public debt charges in 1954-55 are estimated at $25 million compared with $20 million in the previous year. The increase of $5 million is attributable largely to higher annual amortization charges for discounts and commissions on previous bond issues.
The following table presents a comparative summary of public debt charges for 1954-55 and for the previous year:

[Stage Direction]
(In millions of dollars)
Interest and Other Public Debt Charges	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Interest on public debt- Funded debt and treasury bills- Payable in Canada	394-8	400-3	-5-5Payable in London	1-5	1-6	-0-1Payable in New York	9-9	9-9	m-s	411-8	-5-6Deposit and trust accounts	30	3-1	-0-1Insurance, pension and guaranty accounts	690	61-1	7-972-0	64-2	7-8Total interest on public debt	478-2	476-0	2-2Annual amortization of bond discounts and commissions.. ..	22-5	17-8	4-7Servicing of public debt	0-8	0-6	0-2Cost of issuing new loans	1-2	1-3	-0-1Total public debt charges	502-7	495-7	7-0
The Budget-Appendix
Subsidies and Tax Rental Payments to Provinces
Payments to the provinces during 1954-55 for statutory subsidies, rentals under the tax rental agreements, the transitional grant to Newfoundland, and the transfer of a portion of income tax receipts from certain public utility companies were $358 million compared with $341 million in 1953-54.
A comparative summary of the payments for the two years is given in the following table:

[Stage Direction]
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
Subsidies and Tax Rental Payments to Provinces	1955 (Estimated)	1954	Rentals under tax rental agreements, c. 49, Statutes of 1952..	327-4	309-2	18-2Statutory subsidies	20-4	20-1	0-3Transitional grant to Newfoundland	3-9	4-8	-0-9Transfer of certain public utility tax receipts-	6-8	-6-8
6-8		6-8
	358-5	341-0	17-5
The payments under the tax rental agreements in 1954-55 were $18 million greater than in the previous year reflecting the increases in provincial populations and gross national product per capita in 1953 over the base year 1948.
Statutory subsidies in 1954-55 were $0-3 million greater than in 1953-54 because of the upward adjustment of the subsidies to the three prairie provinces based on the estimated increases in their population at the mid-point between the quinquennial census of 1951 and 1956.
The amount of public utility tax receipts transferred to the provinces in 1954-55 is expected to be the same as in the previous year. Section 7 of the Dominion-Provincial Tax Rental Agreements Act, 1947, and section 6 of the Tax Rental Agreements Act, 1952 authorize 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 electrical energy, gas or steam.
2818
[Stage Direction]
The Budget-Appendix
A summary of payments, by provinces, during 1954-55 is given in the following table:

[Stage Direction]
(In millions of dollars)
Subsidies and Tax Rental Payments to Provinces	Fiscal Year Ended March 31, 1955			
Statutory Subsidies	Rentals under 1952 Tax Rental Agreements	Transitional Grant	TotalNewfoundland	1-6	12-5	3-9	18-02-1	20-5	22-60-7	3-9	4-61-7	17-0	18-73-3	3-33-6	142-8	146-4Manitoba	1-8	26-2	28-02-1	26-6	28-7Alberta	2-2	31-8	34-013	46-1	47-4
20-4	327-4	3-9	351-7
Transfer of certain public utility tax receipts-Sec.				
				6-8
				358-5
Government contribution with respect to the Superannuation Account
The Government's contribution to the superannuation account was $37 million in 1954-55 or $17 million less than its contribution in 1953-54. Approximately one-half of this sum was required to match amounts transferred from the retirement fund in respect of contributors coming under the new Act. The balance is the Government's matching contributions in respect of current and prior service contributions of individuals. Of the $54 million contributed in the previous year, $38 million was in respect of the additional liability created by the general salary increases to civil servants effective December 1, 1953, and $16 million representing the Government's contribution of an amount equal to the current and prior service payments of individuals.
Provision for Reserve for Possible Losses on Ultimate Realization of Active Assets
No charge to expenditures was included in the Government's accounts during 1954-55 for an addition to the general reserve for possible losses on the ultimate realization of active assets. In 1953-54, $50 million was added to the reserve and charged to expenditures. The balance of the reserve at March 31, 1955 was $496 million which is equivalent to 7 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 must reside in Canada a year before an allowance is payable.

The Budget-Appendix
The monthly allowance is $5 if the child is less than six; $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. There is no limit to the number of children in a family that may be eligible.
Payments for family allowances are estimated at $366 million for 1954-55 representing 9 per cent of total expenditures compared with $350 million or 8 per cent in the previous year. The increase of $16 million reflects the increase in the number of children in the eligible age groups.
The following table presents a comparative summary of family allowance payments by provinces for the last two fiscal years:

[Stage Direction]
(In millions of dollars)
Family Allowance Payments	Fiscal Year Ended March 31		Increase
	1955 (Estimated)	1954	
12-0	11-5	0-517-1	16-7	0-42-6	2-6	15-0	14-7	0-3116-1	111-4	4-7110-5	104-4	6-118-8	18-0	0-820-9	20-2	0-725-4	24-0	1-427-4	25-9	1-50-7	0-7	
366-5	350-1	16-4
Unemployment Insurance Act Administration and Government's Contribution
Expenditures relating to the Unemployment Insurance Act (excluding the Government's payment as an employer) are estimated at $60 million for 1954-55, an increase of $2 million over the total of $58 million spent in 1953-54.
Unemployment insurance benefit payments 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 combined employer-employee payments.
The Government's contribution to the fund for 1954-55 is estimated at $32 million, about the same amount as contributed in the previous year. Administration costs are estimated at $28 million, or $2 million more than the total of $26 million for 1953-54.
Agriculture
Expenditures of the Department of Agriculture are estimated at $83 million for 1954-55, a decrease of $25 million from the previous year. Operating losses of the agricultural prices support board decreased by $35 million, and rehabilitation and reclamation project expenditures, at $13 million, are $2 million less than in the previous year. However, these decreases are offset in part by increases of $5 million in marketing service $2 million in freight assistance on western feed grains, $1 million in experimental farms, and $4 million in other services. The increase in marketing services is due in large part to payments of $5 million
2820
[Stage Direction]
The Budget-Appendix in 1954-55 under the Agricultural Products Co-Operative Marketing Act, c.5, R.S. 1952, the purpose of which is to assist and encourage the co-operative marketing of agricultural products by primary producers.
The following table presents a comparative summary of the expenditures of the department for the last two years:

[Stage Direction]
(In millions of dollars)
Agriculture	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1964	
Operating losses of the agricultural prices support board....	3-2	37-8	-34-6Freight assistance on western feed grains	19-0	17-0	2-0Rehabilitation and reclamation projects	13-1	14-8	-1-7Premium on hog carcasses including administrative costs	5-0	4-7	0-3Experimental farms service	9-9	8-6	1-3Science service	9-4	9-0	0-4Production service	10-3	9-6	0-7Marketing service	9-5	4-2	5-3Administration and general	3-9	2-7	1-283-3	108-4	-25-1
Atomic Energy Control Board and Atomic Energy of Canada Limited
Expenditures of the Atomic Energy Control Board and payments to Atomic Energy of Canada Limited are estimated at $15-4 million for 1954-55 compared with $12-7 million in 1953-54, an increase of $2-7 million.
Administration expenses of the Atomic Energy Control Board and grants for researches and investigations with respect to atomic energy were $0-3 million for the past two fiscal years.
Expenditures of Atomic Energy of Canada Limited under its research programmes are estimated at $15-1 million compared with $12-4 million in 1953-54.
In addition, $15 million was advanced to Atomic Energy of Canada Limited during the fiscal year to finance the construction of the new reactor and other buildings and works at Chalk River and Deep River. The Government's investment in the company was increased further by a net amount of $1-4 million reflecting a write-up of $2-8 million on the books of the Government and the company in respect of the value of housing accommodation at Deep River previously written off to research less a write-off of $1 -4 million on account of an adjustment in the proportion of the costs of the new reactor chargeable to the company's research programme. This brings the total of loans to the company to $32-4 million to be covered by the issue of obligations or shares of the company.
Canadian Broadcasting Corporation
Payments by the Government of Canada to the Canadian Broadcasting Corporation were $30 million in 1954-55 compared with $25 million in 1953-54, an increase of $5 million. Payments to the corporation of an amount equivalent to the collections of the 15 per cent special tax imposed on radio and television sets and tubes are estimated at $22 million in 1954-55 compared with $17 million in the previous year. For the current fiscal year $17 million is in respect of television and $5 million in respect of radio. In 1953-54, payments were $12 million and $5 million respectively.

The Budget-Appendix
The following table presents a comparative summary of expenditures for 1954-55 and the previous year:

[Stage Direction]
(In millions of dollars)
Payments to Canadian Broadcasting Corporation	Fiscal Year Ended March 31	Increase1955 (Estimated)	1954	Decrease(-)6-2	6-2	2-3	20	0-3Payments to the corporation of amount equal to tax collected under the Excise Tax Act in respect of radio and tele-	21-8	16-8	5-0
30-3	25-0	5-3
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration are estimated at $28 million for 1954-55, compared with $25 million in the previous year.
The following table presents a comparative summary of the expenditures for 1954-55 and 1953-54:

[Stage Direction]
(In millions of dollars)
Citizenship and Immigration	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Indian affairs	18-0	16-5	1-5Citizenship and citizenship registration	0-9	0-7	0-2Immigration	8-4	7-3	1 [DOT] 1Administration and general	0-8	1-0	-0-228-1	25-5	2-6
External Affairs
Expenditures of the Department of External Affairs were $44 million in 1954-55, a decrease of $2 million compared with $46 million in the previous year. Assistance to other countries directly or through international organizations was $27 million compared with $32 million in 1953-54. The principal item in this category is an amount of $25 million for grants to assist in the economic development of countries in South and South-east Asia. A similar amount was provided in 1953-54. The decrease of $5 million is attributable mainly to the fact that there was no item in 1954-55 comparable to the gift of $5 million for wheat in 1953-54 as a contribution towards the relief of famine in Pakistan. Expenditure on representation abroad including construction, acquisition or improvement of buildings, works, and land, and outlay on new equipment andi furnishings is estimated at $8 million compared with $6 million for 1953-54.
[Stage Direction]
The Budget-Appendix
The following table presents a comparative summary of expenditures of the Department of External Affairs for the past two years:

[Stage Direction]
(In millions of dollars)
External Affairs	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
27-5	31*9	-4-4Canada's assessment for membership in international or	4-3	3-5	0-8Representation abroad	7-5	6-3	1-2Administration and general	4-8	40	0-8
44-1	45-7	-1-6
Finance
The major items of expenditure during 1954-55 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 contributions in respect of the Superannuation Account".
In addition, other expenditures of the department for 1954-55 are estimated at $33 million compared with $30 million in 1953-54, an increase of $3 million of which $1 million is due to the federal contribution to the Government of the province of Ontario for assistance in meeting costs resulting from floods arising out of hurricane "Hazel".
The following table presents a comparative summary of these expenditures for the past two fiscal years:

[Stage Direction]
(In millions of dollars)
Finance	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Office of the Comptroller of the Treasury-administration expenses	150	13-7	1-3Grants to universities	5-4	5-2	0-2Grants to municipalities in lieu of taxes on federal property..	3-3	30	0-3Government contribution as an employer to the unemployment insurance fund	10	1-1	-0110	10Implementation of guarantees-Ming Sung Industrial Co., Ltd	1-5	1-6	-0-1Administration and general	e-3	5-6	0-733-5	30-2	3-3
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys are estimated at $43 million for 1954-55 compared with $39 million in 1953-54. Of this increase of $4 million, $1 million is attributable to the increased expenses in connection with the movement of coal under the Dominion Coal Board and $2 million to increased outlays on surveys and mapping services.

The Budget-Appendix
A comparative summary of expenditures for the last two fiscal years is shown in the following table:

[Stage Direction]
(In millions of dollars)
Mines and Technical Surveys	Fiscal Year Ended March 31	Increase1955 (Estimated)	1954	Decrease (-)15-3	15-2	0111-3	10-3	1-09-4	7-1	2-32-9	2-6	0-32-2	1-9	0-31-4	1-4	
42-5	38-5	4-0
National Health and Welfare
Family allowance payments constitute a major item of expenditure of the Department of National Health and Welfare and, because of their importance in relation to the total government expenditures, have been dealt with under a separate heading in preceding paragraphs. Other expenditures of the department are estimated at $86 million for 1954-55, an increase of $6 million compared with $80 million in 1953-54.
The following table presents a comparative summary of these other expenditures of the department for the last two years:

[Stage Direction]
(In millions of dollars)
National Health and Welfare	Fiscal Year Ended March 31	Increase1955 (Estimated)	1954	Decrease (-)31-7	29-2	2-521-6	20-3	1-32-9	2-9	16-0	14-3	1-76-2	5-8	0-43-9	40	-0-14-3	3-9	0-4
86-6	80-4	6-2
General health grants to assist the provinces in hospital construction, general health services and the control of diseases are estimated at $32 million for 1954-55 compared with $29 million in the previous year.
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 are 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
[Stage Direction]
The Budget-Appendix government reimburses the provinces for allowances paid to eligible blind persons in need over the age of 21, but under this Act, the federal reimbursement is 75 per cent of the total payments.
Payments by the federal government in respect of old age assistance were $21 million in 1954-55 compared with $20 million in 1953-54. Payments on account of allowances to blind persons amounting to $3 million for 1954-55 are unchanged from the previous year.
The following table presents an estimated distribution of these payments by provinces for the fiscal year 1954-55:

[Stage Direction]
(In millions of dollars)
General Health Grants and Federal Share of Old Age Assistance and Allowances to Blind Persons	Fiscal Year Ended March 31, 1955 (Estimated)		
General health grants	Old age and disabled persons assistance	Allowances to blind personsNewfoundland	0-	9 1-	6 0-2 1-4 100 8-3 1-	9 2-	2 2-1 30 (*)	0-	9 1-	1 0-1 1-3 7-4 51 1-2 11 1-3 21 C)	0-1 0-2 (>) 0-	3 1-	2 0-6 0-1 01 0-1 0-2 (>)Nova Scotia	Prince Edward Island	New Brunswick	Quebec	Ontario	Manitoba	Saskatchewan	Alberta	British Columbia	Northwest and Yukon Territories	
31-7	21-6	2-9
0) Less than $50,000.
Expenditures relating to Indian and Eskimo health services are estimated at $16 million for 1954-55 compared with $14 million in the previous year. Expenditures for other health services at $6 million were slightly greater than the total spent in 1953-54.
Civil defence programme expenditures at $4 million were also practically the same as for the previous fiscal year.
National Research Council
Expenditures of the National Research Council are estimated at $16 million for 1954-55, only slightly higher than in 1953-54. Salaries and other expenses at $14 million are $1 million greater than the total of $13 million for 1953-54, while the cost of construction or acquisition of buildings, works, land and new equipment was $2 million in 1954-55, a decrease of $1 million from the total of $3 million in the previous year.
National Revenue
Expenditures for the Department of National Revenue are estimated at $55 million compared with $50 million for 1953-54. Increases of $2 million for the customs and excise division and $3 million for the taxation division account for the $5 million increase.

The Budget-Appendix
The following table presents a comparative summary of the expenditures for 1954-55 and 1953-54:
TABLE XXIII (In millions of dollars)
National Revenue	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
29-5	27-0	2-525-6	22-8	2-80-1	01	
55-2	49-9	5-3
Northern Affairs and National Resources
Expenditures in 1954-55 for the Department of Northern Affairs and National Resources are estimated at $20 million, an increase of $1 million over the total of $19 million in the previous year. Of this net increase, $1 million is attributable largely to expenditures for the national parks and historic sites services of the National Parks Branch. A small increase in the northern administration and lands branch services is offset by a similar decrease in the forestry branch services.
The following table presents a comparative summary of expenditures for the department for the last two years:
TABLE XXIV (In millions of dollars)
Northern Affairs and National Resources	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
8-5	7-4	M1-7	1-6	0-14-2	3-5	0-74-0	4-8	-0-81-5	1-4	0-10-5	0-4	0-1
20-4	19-1	1-8
Post Office
Gross expenditures of the Post Office Department for 1954-55, including payments from revenue, are estimated at $145 million, an increase of $13 million over the total of $132 million for 1953-54. Remuneration of postmasters and staffs at revenue and semi-staff offices, commissions at sub-offices and certain other authorized disbursements, are paid from revenue. These payments, included in the total of $145 million, are estimated at $21 million for 1954-55 compared with $19 million for the previous year. Disbursements charged to budgetary expenditures are estimated at $124 million for 1954-55, an increase of $11 million over the previous fiscal year.
[Stage Direction]
The Budget-Appendix
The following table presents a comparative summary of expenditures for the department during the past two years:
TABLE XXV (In millions of dollars)
Post Office	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Charged to budgetary expenditure- Operations-salaries and other expenses of staff post offices, district offices and railway mail services and supplies, equipment and other items for revenue post offices	74-6	65-0	9-6Transportation-movement of mail by land, air and water	46-1	450	1-1Financial services	2-5	2-3	0-213	13	m-B	US-6	10-9Charged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-offices and other disbursements	20-5	18-8	1-7145-0	132-4	12-6
Public Works
Expenditures for the Department of Public Works for 1954-55 are estimated to total $138 million compared with $115 million in 1953-54, an increase of $23 million.
In 1954-55, expenditures of the architectural branch were $79 million or $17 million greater than the total of $62 million for the previous year. Of this increase, $14 million is attributable to the acquisition and construction of and improvements to public buildings while the operation and maintenance of public buildings and grounds accounted for a further increase amounting to $3 million. Expenditures of the engineering branch are expected to show a decrease of $1 million.
The Government's contribution to the provinces in connection with the Trans-Canada Highway Act is estimated at $20 million for 1954-55, an increase of $7 million compared with $13 million for 1953-54.
Expenditures under housing legislation are estimated at $3 million for 1954-55 compared with $2 million for the previous year. The increase of $1 million is attributable mainly to payments in 1954-55 relating to grants to municipalities for slum clearance.
The following table presents a comparative summary of expenditures for the department in the past two years:

The Budget-Appendix

[Stage Direction]
(In millions of dollars)
Public Works	Fiscal Year Ended March 31	Increase1955 (Estimated)	1954	Decrease (-)Architectural branch- Public buildings and grounds- Operation and maintenance- Ottawa	13-9	12-7	1-2Other centres	20-9	19-1	1-8Acquisition, ronstruction and improvements- Public buildings	43-8	29-7	14-1Other expenditures	0-7	0-5	0-279-S	62-0	17-3Engineering branch- Acquisition, construction and improvements of harbour and river works	19-6	21-9	-2-3Harbours and rivers-repairs and upkeep	3-1	2-6	0*5Dredging	4-6	3-9	0-7Engineering services and other works generally	5-9	5-9	-i-iss-s	SJ,S	Contributions to the provinces under the Trans-Canada Highway Act	200	13-4	6-6Housing	2*5	1-7	0-8Administrative and general expenditure	30	3-6	-0-6138-0	115-0	23-0
Royal Canadian Mounted Police
Expenditures for the Royal Canadian Mounted Police are estimated at $36 million for 1954-55 compared with the total of $34 million for 1953-54. The increase of $2 million is due mainly to an increase in land and air services. 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 1954-55 and 1953-54:

[Stage Direction]
(In millions of dollars)
Royal Canadian Mounted Police	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Land and air services	25-0	23-1	1-9Marine services	1-3	1-1	0-2Headauarters administration	7-0	7-1	-0-1Government contribution to the Royal Canadian Mounted	Police pension account	0-7	0-7	Other administration and general	2-0	1-9	0136-0	33-9	2-1
Trade and Commerce
Expenditures for the Department of Trade and Commerce are estimated at $18 million for 1954-55, an increase of $1 million over the total of $17 million for the previous year.
[Stage Direction]
The Budget-Appendix
The following table presents a comparative summary of expenditures for the department for 1954-55 and 1953-54:

[Stage Direction]
(In millions of dollars)
Trade and Commerce	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Dominion Bureau of Statistics	5-6	5-3	0-3Canada Grain Act	5-1	4-7	0-4Trade Commissioners service	2-4	2-4	Standards division	1-6	1-4	0-2Administration and general	30	2-7	0-317-7	16-5	1-2
Transport
Expenditures of the Department of Transport are estimated at $159 million for 1954-55 compared with $118 million in 1953-54, an increase of $41 million as shown in the following table:

[Stage Direction]
(In millions of dollars)
Transport
Air services-
Telecommunications division,
Meteorological division....
Civil aviation division....
Administration	
Canal services	
Marine services	
Railway services-
Maritime Freight Rates Act-
Difference between tariff and normal tolls
Other railway services	
Maintenance of trackage	
Canadian Maritime Commission	
Government owned enterprises-
Net income deficits-
Canadian National Railways	
Other	;	
Non-active advances	
Administration and general	
Fiscal Year Ended March 31		Increase or Decrease (-)
1955 (Estimated)	1954	
14-2	13-7	0-57-4	6-7	0-723-5	20-7	2-80-2	0-2	46-8	41 -8	4-08-0	8-4	-0-421-9	20-3	1-610-7	10-5	0-219-6	13-4	6-27-0	7-0	87-8	80-9	6-44-3	4-2	0-128-8	28-84-4	4-5	-0-14-0	4-2	-0-24-8	4-2	0-6158-8	118-0	40-8
Expenditures of $45 million in 1954-55 for air services are $4 million higher than in 1953-54. Of this increase, $3 million relates to the civil aviation division, $2 million of which is attributable to the cost of construction or acquisition of buildings, works land and new equipment in connection with airways and airports.

The Budget-Appendix
Expenditures for marine services were $22 million in 1954-55. The increase of $2 million is due largely to an increase of $1 million in expenditures for the administration, operation and maintenance of marine service steamers and $1 million for the construction or acquisition of vessels and equipment.
Railway services expenditures were $37 million compared with $31 million in 1953-54. Of this increase of $6 million, $4 million is on account of Strait of Canso transportation improvements and facilities; $1 million relates to the construction of new dock and terminal facilities at Port-aux-Basques, Newfoundland, and $1 million to the construction or acquisition of auto-ferry vessels. Payments covering net operating deficits of and non-active loans and advances to certain government owned enterprises were $37 million in 1954-55 compared with $9 million in the previous year. The increase of $28 million is more than accounted for by the operating deficit of the Canadian National Railways which was $28-8 million for the calendar year 1954. In 1953 the Railway had an operating surplus of $244,000.
Veterans Affairs
Expenditures for the Department of Veterans Affairs for 1954-55 are estimated at $242 million, an increase of $3 million compared with the total spent in the previous year. Increases of $1 million in pensions, $1 million in treatment services, $2 million in war veterans allowances and other benefits are partially offset by a decrease of $3 million in war service gratuities and re-establishment credits.
Expenditures relating to the administration of the Soldier Settlement and Veterans' Land Acts reflect an increase of $1 million while the provision for the reserve for conditional benefits under the Veterans' Land Act at $9 million for 1954-55 is slightly greater than the provision of $8-5 million for 1953-54. These 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 expenditures during 1954-55 under this heading covers one-tenth of the conditional benefits included in sales to veterans prior to April 1955.
The following table presents a comparative summary of expenditures for the department for the past two years:

[Stage Direction]
(In millions of dollars)
Veterans Affairs	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
128-9	127-6	1-343-6	42-2	1-431-8	30-3	1-52-6	2-5	0-16-2	8-9	-2-7Soldier Settlement andVeterans' Land Acts-Administration	6-7	5-3	1-4Provision for reserve for conditional benefits, Veterans Land	8-9	8-5	0-4Departmental, district and pensions administration and mis-	13-5	13-4	0-1
242-2	238-7	3-5
[Stage Direction]
The Budget-Appendix All Other Departments
Expenditures of the departments not dealt with in the preceding sections amounted to $61-3 million in 1954-55 compared with $61 million in 1953-54. The table which follows presents a comparative summary of the expenditures for the past two years:

[Stage Direction]
(In millions of dollars)
All Other Departments	Fiscal Year Ended March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Auditor General	0-7	0-6	01Chief Electoral Officer	0-3	5-5	-5-2Civil Service Commission	2-4	2-1	0-3Fisheries	11-2	9-3	1-9Governor General and Lieutenant-Governors	0-4	0-4	Insurance	0-5	0-5	6-0	5-8	Office of the Commissioner of Penitentiaries	10-9	9-2	1-7Labour	9-8	9-6	0-2Legislation	6-7	5-6	1-1National Film Board	3-4	30	0-4Privy Council	3-8	3-7	0-1Public Archives and National Library	0-4	0-4	Public Printing and Stationery	2-1	2-0	01Secretary of State	2-7	3-3	-0-661-3	610	0-3
Decreases of $5 million in the expenses of the Chief Electoral Officer (the 1953-54 accounts included the costs of the 1953 federal election) and $0-6 million for the Department of Secretary of State are more than offset by increases in expenditures of other departments, chief of which are $2 million for the Department of Fisheries; $1-7 million for the Office of the Commissioner of Penitentiaries and $1 million for legislation reflecting increased sessional indemnities to members of the Senate and the House of Commons.

The Budget-Appendix
4.	SUMMARY OF ASSETS AND LIABILITIES OF CANADA AT MARCH 31, 1955
The estimated balances of the asset and liability accounts as at March 31, 1955, the comparable balances at March 31, 1954, and the changes in each category during 1954-55 are shown in the following table:

[Stage Direction]
Summary of the Assets and Liabilities of Canada (In millions of dollars)
Liabilities
Floating debt	
Deposit and trust accounts	
Insurance, pension and guaranty accounts.
Deferred credits	
Sundry suspense accounts	
Province debt accounts	
Unmatured debt	
Active Assets
Cash and other current assets	
Loans to, and investments in, Crown agencies	
Other loans and investments	
Sinking fund and other investments held for the retirement
of debt	
Province debt accounts	
Deferred charges	
Sundry suspense accounts	
Total Active Assets	
Less: Reserve for possible losses on ultimate realization of active assets	
Net Active Assets	
Net Debt (excess of liabilities over net active assets)..
Balance at March 31		Increase or Decrease (-)
1955 (Estimated)	1954	
825-8 201-7 1,977-7 145-7 293-5 11-9 14,487-8	868-5 204-1 1,772-9 151-3 338-2 11-9 14,576-2	-42-7 -2-4 204-8 -5-6 -44-7
		-88-4
17,944-1	17,923-2	20-92,416-1 1,776-8 2,331-6 187-3 2-3 256-2 206-0	2,514-3 1,795-1 2,437-9 101-9 2-3 259-9 192-3	-98-2 -18-3 -106-3 85-4-3-7 13-77,176-3 496-4	7,303-7 496-4	-127-46,679-9	6,807-3	-127-411,264-2	11,115-9	148-3
Liabilities
The gross liabilities of the Government as at March 31, 1955, are estimated at $17,944 million, an increase of $21 million over the total of $17,923 million at the close of the previous fiscal year.
Unmatured debt outstanding, including bonds and treasury bills, amounted to $14,488 million at March 31, 1955, or approximately 81 per cent of all liabilities. Of the total outstanding unmatured debt, $14,096 million or 97 per cent was payable in Canada and the balance of $392 million was payable in foreign currencies-$341 million in United States dollars and $51 million in pounds sterling. A complete statement in tabular form of the Government's unmatured debt as at March 31, 1955 with details of interest rates, dates of maturity, annual interest charges and amounts of principal outstanding for each loan is presented at the end of this Part.
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The Budget-Appendix
The Government's liability as at March 31, 1955 in respect of insurance, pension and guaranty accounts is estimated at $1,978 million. Floating debt, including outstanding cheques, miscellaneous accounts payable (cheques issued in April, 1955, in payment of accounts relating to the fiscal year 1954-55) and notes and other obligations payable on demand, is expected to total $826 million.
The other liability items are: sundry suspense accounts (where some uncertainty as to disposal exists), $293 million; deposit and trust accounts (consisting of moneys deposited with or held by the Receiver General for various purposes), $202 million; deferred credits (consisting of balances whose ultimate accounting treatment is known, but which are held until certain cond'tions are fulfilled), $146 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 has been incurred on account of 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.
The total active assets at March 31, 1955, are estimated at $7,176 million, a decrease of $127 million from the total at the end of the previous year. The totals of the various active asset categories as at March 31, 1955, were: cash and other current assets, $2,416 million; loans to, and investments in, Crown agencies,,$1,777 million; other loans and investments, (consisting of loans to provincial, municipal and national governments, subscriptions to international organizations and advances to veterans and others) $2,332 million; deferred charges, $256 million; sundry suspense accounts, $206 million; sinking fund and other investments held for the retirement of debt, $187 million and province debt accounts $2 [DOT] 3 million.
The reserve for possible losses on ultimate realization of active assets amounting to $496 million, is shown on the statement of assets and liabilities as a deduction from the total active assets, bringing the net active assets total to $6,680 million.
A.	Changes in Principal Liability Classifications During 1954-55
The gross liabilities of the Government are expected to show an increase of $21 million over the total at the close of the previous fiscal year. An increase of $205 million in insurance, pension and guaranty accounts is partially offset by decreases of $88 million in unmatured debt, $45 million in sundry suspense accounts, $43 million in floating debt, $6 million in deferred credits and $2 million in deposit and trust accounts.
Floating Debt
It is estimated that floating debt decreased $42 million during the fiscal year. Increases of $9 million in miscellaneous accounts payable and $13 million in outstanding cheques and warrants are partially offset by decreases of $43 million in notes and other obligations payable on demand, $20 million in matured debt outstanding, $1 million in interest due and outstanding and $0-2 million in post office account.

The Budget-Appendix
The estimated changes in floating debt during the fiscal year 1954-55 are shown in the following table.

[Stage Direction]
(In millions of dollars)
Floating Debt	Balance at March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
48-6	68-2	-19-6225-3	268-7	-43-455-0	56-3	-1-3262-0	249-2	12-8211-4	202-4	9-023-5	23-7	-0-2
825-8	868-5	-42-7
Deposit and Trust Accounts
Deposit and trust accounts decreased by 12 million during the year. The major changes in this category were an increase of $13 million in the Colombo plan fund, representing the difference between the amount of $25 million credited to the fund out of moneys voted by Parliament for assistance to countries in South and South-east Asia and disbursements from the fund, and a decrease of $14 million in the prairie farm emergency fund, representing the difference between the total of $20 million paid as awards under the Prairie Farm Assistance Act and $6 million collected as levies.
Insurance Pension and Guaranty Accounts
The increase in insurance, pension and guaranty accounts during the fiscal year is estimated at $205 million. The changes in the various accounts for the fiscal year are shown in the following table.

[Stage Direction]
(In millions of dollars)
Insurance, Pension and Guaranty Accounts	Balance at March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Unemployment insurance fund	853-0	892-3	-39-3Less: Investment in bonds and accrued interest	838-0	878-7	-40-715-0	13-6	1-4Government annuities	862-5	798-5	64-0Superannuation account	732-7	656-7	76-0Permanent services pension account	278-5	217-2	61-389-0	86-9	2-11,977-7	1,772-9	204-8
The decrease of $39 million in the unemployment insurance fund, representing the amount by which benefit payments totalling $255 million during 1954-55 exceeded contributions by employers, employees and the government, income from investments, and other miscellaneous revenue credited to the fund is reflected in a reduction in the investments of the fund; the cash balances held for the fund by the Receiver General at March 31, 1955 increased $1 million from March 31, 1954.
[Stage Direction]
The Budget-Appendix
The increase of $76 million in the superannuation account is attributable mainly to the Government's contribution of $37 million equal to the estimated current and prior service payments of individuals in 1953-54, and $28 million interest credited to the account. The remainder of the increase is due to the excess of employees' current and prior service contributions over benefit payments.
The Government annuities account is expected to show an increase of $64 million and the permanent services pension account an increase of $61 million. The increase in the permanent services pension account represents the Government's contribution of $37 million (which is made at the rate of one and two third times the current contributions and contributions for arrears), interest on the account $9 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 an increase of $2 million for the year.
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 and over without a means test from the old age security fund. During the fiscal year payments from the fund amounted to $353 million while 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 $291 million. Under the authority of section 11 of the Old Age Security Act, the Minister of Finance made a temporary loan of $62 million to the fund to cover the deficit resulting from these transactions during 1954-55. This amount, together with the loan of $46 million covering the deficit of the fund for 1953-54, brings the temporary loans made by the Minister of Finance to the fund to $108 million.
The following table shows the transactions in the old age security fund for the last two years:
TABLE XXXV (In millions of dollars)
Old Age Security Fund	Fiscal Year Ended March 31	
	1955 (Estimated)	1954
Pension payments			 353-2	338-9 146-8 90-7 55-6 293-1
Tax receipts- 2 per cent sales tax		144-0 		
	101-0 		
	460 291-0	
Excess of pension payments over tax receipts covered by temporary loans from the Minister of Finance			
		 62-2	45-8 99-5 -99-5
		 45-8	
		
Outstanding at end of fiscal year			
		 108-0	45-8
		

The Budget-Appendix
A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table:

[Stage Direction]
(In millions of dollars)
Old Age Security Payments by Provinces	Fiscal Year Ended March 31	Increase1955 (Estimated)	1954	Decrease (-)7-5	7-2	0-318-2	17-7	0-53-2	3-2	13-0	12-6	0-474-8	72-0	2-8130-4	125-8	4-621-0	20-1	0-921-1	20-1	1-021-4	20-1	1-342-4	39-9	2-50-2	0-2	
353-2	338-9	14-3
Deferred Credits
The decrease in deferred credits is estimated to be $6 million. The more important changes in this category are decreases of $5 million in accrued interest on public debt and $1 million in 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.
The decrease in balances receivable under agreements of sale of Crown assets reflects the repayment by A. V. Roe Canada Limited of $8 million of the amount due by them under an agreement of sale offset by certain new balances of agreements of sale totalling $7 million, including $2 [DOT] 6 million with Canadian Pratt and Whitney Aircraft Limited and $1-9 million with English Electric Company Limited.
Sundry Suspense Accounts
Sundry suspense accounts show a decrease of $45 million. The major changes in the accounts in this category are decreases of $32 million in the defence equipment replacement account and of $16 million in the replacement of materiel account and an increase of $3 million on account of the railway grade crossing fund. The transactions in the defence equipment replacement account reflect a reduction in the undisbursed balance 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 terms of the Act, the value of defence materials and supplies acquired prior to March 31, 1950, and 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. Disbursements from the account are estimated at $79 million, and credits for equipment transferred at $47 million.
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
[Stage Direction]
The Budget-Appendix the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for the procurement of replacement materiel. During 1954-55 disbursements from the account exceeded credits by $16 million.
The amount of $3 million for the railway grade crossing fund reflects the setting up in the accounts of the undisbursed balance of moneys appropriated by the Railway Act for the purposes of the railway grade crossing fund up to the close of the fiscal year 1954-55.
Province Debt Accounts
There were no changes in the province debt accounts during the fiscal year. The amounts have remained unchanged for many years.
Unmatured Debt
The unmatured debt outstanding at the close of 1954-55 was $14,488 million, a reduction of $88 million for the year, all of which is reflected in debt payable in Canada. 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".
B.-Changes in the Principal Active Asset Classifications During 1954-55
It is estimated that active assets decreased by $127 million during 1954-55. Decreases of $106 million in other loans and investments, $98 million in cash and other current assets, $18 million in loans to, and investments in, Crown agencies and $4 million in deferred charges were offset in part by increases of $85 million in sinking fund and other investments held for the retirement of debt and $14 million in sundry suspense accounts. There was no change during the fiscal year in the reserve for possible losses on ultimate realization of active assets which stood at $496 million at March 31, 1955.
Cash and Other Current Assets
The changes in the various accounts in this category are shown in the following table:
table xxxvii
(In millions of dollars)
Cash and Other Cdrrent Assets	Balance at March 31	Increase1955 (Estimated)	1954	Decrease (-)Cash in current and special deposits (including blocked currency of $1-2 million at March 31, 1955, and $2 million at March 31, 1954)	206-0	359-9	-153-9Cash in hands of collectors and in transit	96-0	123-6	-27-6Other liquid assets- Exchange fund account-advances represented by cash and securities	1,769-5	1,763-8	5-7Securities investment account	45-7	18-0	27-7Working capital advances- Crown corporations	22-5	22-7	-0-2Defence production revolving fund	75-0	80-2	-5-2Temporary loan to old age security fund	108-0	45-8	62-2Departmental	51-3	42-5	8-8Miscellaneous departmental imprest and advance accounts	23-6	35-2	-11-6Other current assets	18-5	22-5	-4-02,416-1	2,514-3	-98-2
The principal changes in this category were decreases of $154 million in cash in current and special deposits, $28 million in cash in hands of collectors

The Budget-Appendix
and in transit and increases of $6 million in the exchange fund account, $62 million in the temporary loan by the Minister of Finance to the old age security fund, and $9 million in departmental working capital advances.
Advances to the exchange fund amounted to $158 million while repayments were $138 million. However, the fund's revaluation deficit which stood at $191 million at December 31, 1953 and $205 million at December 31, 1954, is recorded under sundry suspense accounts. Consequently the net increase for the fiscal year was $6 million, reflecting additional advances of $20 million less the transfer of $14 million to the revaluation deficit account.
The decrease of $5 million in the Defence Production revolving fund represents the amount by which credits to the account from the sale of essential materials and defence supplies exceeded the cost of acquiring, storing, maintaining and transporting such materials.
Departmental working capital advances increased by $9 million, the chief of which is the increase of $9 million in the agricultural prices support account reflecting the difference between the credit to the account of $3 million, representing the loss on operations for 1954-55, which is included in the year's expenditures, and the net debit of $12 million to the account representing the excess of purchases over sales during the year by the Agricultural Prices Support Board.
The increase of $62 million in the temporary loan to the old age security fund represents the advance made by the Minister of Finance to cover the deficit of the fund for the year 1954-55. This advance together with the advance of $46 million to cover the deficit of the previous year brings the total temporary loan to $108 million at March 31, 1955.
Loans to, and Investments in, Crown Agencies
It is estimated that loans to, and investments in, Crown agencies decreased by $18 million during the year. The more important changes during the year are a decrease of $93 million in loans and advances to the Canadian National Railways and increases of $49 million in loans to Central Mortgage and Housing Corporation and $16 million in advances to Atomic Energy of Canada Limited. The changes in this category are shown in the following table:

[Stage Direction]
(In millions of dollars)
Loans To, and Investments In, Crown Agencies
Atomic Energy of Canada Limited	
Bank of Canada-capital stock	
Canadian Broadcasting Corporation	
Canadian Farm Loan Board	
Canadian National Railways	
Canadian National (West Indies) Steamships, Limited Canadian Overseas Telecommunication Corporation- Central Mortgage and Housing Corporation-
Capital advances	
Loans	
Eldorado Mining and Refining Limited	
Export Credits Insurance Corporation	
National Harbours Board	
Northwest Territories Power Commission	
Polymer Corporation Limited	
St. Lawrence Seaway Authority	
Other Crown agencies	
Balance at March 31		Increase or Decrease (-)
1955 (Estimated)	1954	
32-4	16-0	16-4
5-9	5-9	
19-0	16-0	3-036-8	32-6	4-2934'2	1,027-4	-93-23-7	0-1	3-640	3-8	0-2250	25-0	555-8	506-3	49-58-2	8-2	50	5-0	107-2	106-2	1-07-8	8-1	-0-330-0	34-0	-4-01-3	1-30-5	0-5	
1,776-8	1,795-1	-18-3
[Stage Direction]
The Budget-Appendix
In the fiscal year ended March 31, 1955, the government advanced $119 million to the Canadian National Railway Company for capital purposes and the retirement of funded debt in the hands of the public. A portion of the proceeds of a $250 million 2f per cent bond issue sold to the public in December 1954, was used to repay $219 million of government advances then outstanding. In addition, a temporary loan of $12 million outstanding at the beginning of the year together with $16 million advanced during the year for income deficit was paid off from an appropriation in the Further Supplementary Estimates. The consequence of all these transactions was a net reduction of $112 million during the fiscal year in advances to the Company.
In addition, the government purchased $19-3 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 operating revenues of the Company.
Loans to Central Mortgage and Housing Corporation during the fiscal year amounted to $53 million, of which $45 million was for lending purposes, $1 million for construction and $7 million for federal-provincial housing projects. Repayments of $3 million on account of house construction and $1 million on federal-provincial housing projects bring the net increase for the fiscal year in loans to the Corporation to $49 million.
Other increases in loans and advances to Crown agencies during the year were; $16 million to Atomic Energy of Canada Limited, $4 million to the Canadian Farm Loan Board, $3-6 million to the Canadian National (West Indies) Steamships Limited, $3 million to the Canadian Broadcasting Corporation, $1 million to the National Harbours Board, and $1-3 million to The St. Lawrence Seaway Authority.
Polymer Corporation Limited reduced its indebtedness to the government by $4 million during the year and Northwest Territories Power Commission by $0-3 million.
Other Loans and Investments
Other loans and investments decreased by $106 million during the year. The balances of the main accounts in this category together with the changes during the year are shown in the following table:

[Stage Direction]
(In millions of dollars)
Other Loans and Investments	Balance at March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Loans to United Kingdom and other governments. .	1,700-7 293-4 70-9 79-8 162-6 24-2	1,772-3 322-5 70-9 83-6 162-0 26-6	-71-6 -29-1
Subscription to capital of International Monetary Fund . Subscription to capital of International Bank for Reconstruction and Development				
Loans to provincial and municipal governments				-3-8 0-6 -2-4
Advances under Soldier Settlement and Veterans' Land Acts. Miscellaneous loans and investments				
			
	2,331-6	2,437-9	-106-3

The Budget-Appendix
The loans to the United Kingdom and other governments are estimated to total $1,701 million, a decrease of $71 million from the total at the close of the previous year. The changes in these loans are shown in the following table.

[Stage Direction]
(In millions of dollars)
Loans to United Kingdom and Other National Governments	Balance at March 31		Increase or Decrease (-)
	1955 (Estimated)	1954	
Loans to United Kingdom- The War Appropriation (United Kingdom Financing) Act 1942 	112-5	142-5	-30-0The United Kingdom Financial Agreement Act, 1946...	1,127-3 1,289-8	1,142-1 1,284-6	-14-8 -44-8Loans under the Export Credits Insurance Act, Part II-	50-8	53-1	-2-349-4	49-4	9-9	9-9	192-5	200-8	-8-33-1	6-2	-3-1101-0	105-6	-4-G10-5	15-8	-5-3417-2	440-8	-2S-6Miscellaneous loans and advances- France-Military reliefcredits settlement	3-0 19	3-5 2-0	to 1-H oo 1 16-5	6-5	Netherlands-Military relief and currency credit settle-	4-0	4-6	-0-624-3	24-3	3-6	5-4	-1-80-1	0-6	-0-243-7	46-9	-S-21,700-7	1,772-3	-71-6
During the year the Government of the United Kingdom reduced the balance of the $700 million interest free loan granted under the provisions of the War Appropriation (United Kingdom Financing) Act, 1942, by $30 million as arranged under the terms of an agreement entered into on August 13, 1953 between the Governments of the United Kingdom and Canada. The balance outstanding at March 31, 1955 was $112 million. Under the terms of the agreement the loan is to continue to be free of interest until December 1958.
The Government of the United Kingdom also repaid $15 million on account of the $1,185 million loan made under the $1,250 million credit authorized by United Kingdom Financial Agreement Act, 1946, reducing the unpaid balance to $1,127 million at the close of the fiscal year.
Advances under Part II of the Export Credits Insurance Act to certain foreign countries to assist them in purchasing goods and services in Canada were reduced by $24 million during the year. Repayments by the various countries during the year are shown in the preceding table. All payments of principal due during the fiscal year 1954-55 were made in accordance with the agreements entered into by the Governments of the various countries and the Government of Canada with the exception of those owing by the Governments of China and Czechoslovakia.
Miscellaneous loans and advances to foreign governments were reduced by $3 million, of which $1 -8 million was received from the Government of the Union of Soviet Socialist Republics.
[Stage Direction]
The Budget-Appendix
The subscription to the capital of the International Monetary Fund was reduced by $29 million during the year. This decrease represents adjustments occasioned by the increased value in terms of Canadian dollars of Canada's subscription to the fund.
Loans to provincial and municipal governments decreased by $3-8 million during the year. Repayments by provinces amounted to $3-4 million and by municipalities to $0-4 million.
Advances under the Soldier Settlement and Veterans' Land Acts increased by $9-1 million, However, as $8-5 million was added to the reserve for conditional benefits under the Veterans' Land Act, the net increase was only $0-6 million.
Miscellaneous loans and investments decreased by $2 million during the year. A decrease of $3 million in balances receivable under agreements of sale of Crown assets was offset by increases in other items in this category totalling $1 million.
Sinking Fund and Other Investments Held for the Retirement of Unmatured Debt.
There was an increase of $85 million in these assets during the fiscal year 1954-55 due mainly to the purchase of bonds of various Government of Canada issues payable in United States dollars.
Province Debt Accounts
There were no changes in the province debt accounts during the fiscal year. The amount resulting from financial adjustments with certain of the provinces at Confederation have remained unchanged for many years.
Deferred Charges
Deferred charges decreased by $4 million during the fiscal year. There was no change in the unamortized portion of the superannuation account liability during the year but payments of $19 million for commissions and discounts on new loans were more than offset by the annual amortization charges of $23 million applicable to 1954-55 included in the year's expenditures.
Sundry Suspense Accounts
The increase of $14 million in sundry suspense accounts during the year is mainly due to the fact that the deficit arising from exchange revaluations of the assets and liabilities of the exchange fund was $205 million at December 31, 1954, compared with $191 million at December 31, 1953.
Reserve for Possible Losses on Ultimate Realization of Active Assets
There was no charge or credit to the reserve for possible losses on ultimate realization of active assets during the year. It is shown on the statement of assets and liabilities as at March 31, 1955, as $496 million, unchanged from the end of the previous year.
C.	Increase in Net Debt
The estimated deficit for the fiscal year of $148 million resulted in a corresponding increase in the net debt of Canada, increasing it from $11,116 million at March 31, 1954 to $11,264 million at March 31, 1955.

[Stage Direction]
_______BILLiONS OF DOLLARS___
riSCAL YEARS ENDED MARCH 31
1948	49	50	51	52	53	54	55*

[Stage Direction]
The Budget-Appendix NET DEBT AS AT MARCH 31

[Stage Direction]
15[

1948	49	50	51	52	53	54	55*
5.	THE CASH POSITION
While a substantial part of all government activities is directly reflected in the budgetary accounts, it is important to note that in addition to collecting revenues and making expenditures in the strict budgetary sense the government's financial operations include many transactions which involve the receipt and disbursement of large sums of cash which lie outside the budget proper.
In preceding sections of this survey the budgetary revenues and expenditures for the fiscal year 1954-55 have been described and analyzed in some detail. Although these budgetary transactions resulted in a deficit of $148 million, unmatured debt in the hands of the public was reduced by $202 million while cash balances declined by only $154 million. It is apparent that in considering the full scope of the government's financial operations and measuring their impact upon the nation's economy, non-budgetary as well as budgetary transactions must be taken into account.
The non-budgetary transactions are those 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 loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments and other borrowers, and investments in government securities.
On the liabilities side, the transactions relate mainly 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 statement summarizes these non-budgetary transactions for 1954-55 and indicates how, together with the budgetary transactions, they affected the government's funded debt and cash position. For purposes of comparison, the corresponding figures for 1953-54 are also shown:
2842
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(In millions of dollars)
Non-Budgetary Transactions and Changes in Cash Position	Fiscal year ended March 31	
	1955 (Estimated)	1954
Non-Bddgetary Receipts and Credits (excluding unmatured debt transactions) _ Repayments of loans, investments and working capital advances- Loans to, and investments in, Canadian National Railways	93-2	18-1Advances to defence production revolving fund	5-2	21-9Subscription to capital of International Monetary Fund	
1942 loan to United Kingdom	29-	1 30-	0	53-61946 loan to United Kingdom	14-8	14-6Loans to other national governments	26-8	24-3Loans to provincial and municipal governments	3-8	3-7Other loans, investments and working capital advances	190	5*4221-9	141-6Net government annuities account receipts- # Premium receipts less payments to beneficiaries	31-9	32-5Government contribution to maintain reserve	0-5	0-1Interest paid by government	31-6	29-364-0	61-9Net insurance and pension account receipts- Employee contributions less payments to beneficiaries	27-0	19-6Government contributions	74-9	90-8Interest paid by government	37-5	31-8139-4	142-2Net increase in Colombo plan fund	13-5	18-7Net increase in cash balances of unemployment insurance fund	1-4	1-6Net increase in reserve for conditional benefits-Veterans Land Act....	8-4	8-5Net reduction in unamortized discounts and commissions on loans	3-7	-10-3Net receipts in sundry other accounts	35-8	20-4488-1	384-6Non-Budgetary Disbursements and Charges (excluding unmatured debt transactions)- Loans, investments and working capital advances- _ Loans to Central Mortgage and Housing Corporation	49-5	98-8Temporary loans to old age security fund	62-2	-53-7Loans to, and investments in, Atomic Energy of Canada, Limited.	16-4	7-4Advances to agricultural prices support account	9-1	-55*4Advances to exchange fund	200	-15-0Loans under Soldier Settlement and Veterans Land Acts	91	7-8Other loans, investments and working capital advances	13-3	27-8179-6	17-7Other non-budgetary disbursements- Net decrease in defence equipment and materiel replacement	48-4	-33-8Net decrease in prairie farm emergency fund	13-7	-7-4Net decrease in interest accrued on public debt	50	-12-0Net decrease in matured debt, and other demand liabilities	42-7	-4-6Net disbursements from sundry other accounts	2-8	1-9Net decrease in provincial 5 per cent corporation income tax suspense	47-9Net decrease in reserve for possible losses on ultimate realization	49-5292-2	59-2Net amount available from non-budgetary transactions	195-9	325-4Add, Budgetary Surplus, or Deduct Budgetary Deficit (-)	-148-3	45-8Overall cash available for debt reduction	47-6	371-2Net increase or decrease (-) in unmatured debt outstanding in the hands of the public-	-88-4	-234-4-85-4	-74-2Securities investment account	-27-7	41-5-201-6	-267-1Net increase, or decrease (-), in cash balances	-153-9	104-1
The Budget-Appendix
As the table indicates, non-budgetary receipts and credits (excluding unmatured debt transactions) were $488 million while non-budgetary disbursements and charges (also excluding unmatured debt transactions) were $292 million resulting in a net amount available from non-budgetary transactions of $196 million. This latter amount less the budgetary deficit of $148 million made $48 million available for debt reduction. In 1953-54, the excess of nonbudgetary disbursements over receipts made $325 million available which, with the budgetary surplus of $46 million, made a total of $371 million available for debt reduction.
Non-budgetary receipts and credits for 1954-55 amounted to $488 million. Repayments of loans, investments and working capital advances totalled $222 million due mainly to net repayments of $93 million by Canadian National Railways (loans of $154 million during the fiscal year were more than offset by repayments totalling $247 million), a reduction of $29 million in Canada's subscription to the capital of the International Monetary Fund, and repayments of $72 million by the United Kingdom and other national governments. Other non-budgetary receipts and credits included $64 million on government annuities account, $139 million in respect of the several insurance and pension accounts which the government administers, $13 million representing the excess of credits over disbursements from the Colombo plan fund, and $49 million in respect of various other accounts.
Non-budgetary disbursements and charges amounted to $292 million during 1954-55. Loans, investments and working capital advances amounted to $180 million and included $49 million loaned to Central Mortgage and Housing Corporation for housing construction and loans, $62 million in temporary loans to the old age security fund to finance the amount by which pension payments exceeded tax receipts, $16 million advanced to Atomic Energy of Canada, Limited, for working capital and to finance the construction of the new reactor and other buildings and works at Chalk River and Deep River, $20 million to the exchange fund for the acquisition of gold and foreign exchange and $32 million for miscellaneous loans, investments and working capital advances (including $9 million for loans to veterans). In addition, $154 million was loaned during the year to Canadian National Railways for additions and betterments, the acquisition of new rolling stock and equipment and for additional working capital but these loans were more than offset by repayments totalling $247 million. Other non-budgetary disbursements and charges amounting to $113 million, include net disbursements of $48 million from the defence equipment and materiel replacement accounts, $14 million from the prairie farm emergency fund and $51 million from various other accounts.
By using the amount of $48 million available from budgetary and nonbudgetary transactions and by allowing cash balances to run down by $154 million, unmatured debt in the hands of the public, after taking into account sinking fund purchases and transactions in the securities investment account, was reduced by $202 million during 1954-55.
6.	THE PUBLIC DEBT
While the unmatured funded debt of Canada decreased by $88 million during the fiscal year, other liabilities increased by $109 million. Consequently, the gross public debt of Canada increased by $21 million from $17,923 million at March 31, 1954 to an estimated total of $17,944 million at March 31, 1955. During the same period the net active assets decreased by $127 million, with the result that the net debt-which is the gross debt less the active or revenue producing assets-was increased by $148 million.
2844
[Stage Direction]
The Budget-Appendix
The following table shows the relationship between the gross public debt, the unmatured funded debt and the net debt at the end of each fiscal year, March 31, 1948 to 1955 inclusive:

[Stage Direction]
Statement op Public Debt, Unmatured Funded Debt, Active Assets and Net Debt
of Canada
(In millions of dollars)
Gross Public Debt	Less Active Assets	Increase (-) or Decrease in Net Debt during Fiscal YearAs at March 31	Unmatured Funded Debt	Other Liabilities	Total	Net Debt	1948	15,957-4 15,585-0 15,188-1 15,026-8 14,695-4 14,810-5 14,576-2 14,487-8	1,239-9	17,197-3	4,825-7	12,371-6	676-11949	1,365-4	16,950-4	5,174-3	11,776-1	595-51950	1,562-7	16,750-8	5,106-1	11,644-6	131-51951	1,896-5	16,923-3	5,490-0	11,433-3	211-31952	2,562-3	17,257-7	6,072-4	11,185-3	248-01953	3,108-0 3,347-0	17,918-5	6,756-8	11,161-7	23-51954	17,923-2	6,807-3	11,115-9 11,264-2	45-83,456-3	17,944-1	6,679-9	-148-3
Unmatured Funded Debt
It is estimated that the unmatured funded debt of Canada totalled $14,488 million at March 31, 1955. This is $88 million less than at the close of the previous fiscal year and $1,470 million less than at March 31, 1948. However, during the same eight year period while interest charges declined by approximately 6 per cent from $432 million in 1947-48 to $406 million in 1954-55 the gross national product rose from $13,768 million in 1947 to $23,985 million in 1954, an increase of approximately 74 per cent. Consequently, the relative burden of the funded debt, measured in terms of interest charges as a percentage of the gross national product, declined from 3-1 per cent in 1947-48 to 1-7 per cent in 1954-55.
Summary of Security Issues and Redemptions during the year
During the fiscal year 1954-55 the Government issued securities payable in Canadian dollars in the principal amount of $4,607 million (excluding the refunding of treasury bills which mature periodically) and redeemed maturing issues in the amount of $4,695 million, all of which was payable in Canadian dollars. There were no issues or redemptions in foreign currencies.
The redemption of the Third and Fourth Victory Loans, which together were outstanding in the amount of $1,967 million, involved the two largest refunding operations in Canadian financial history. Net sales of $767 million of Canada Savings Bonds Series 9, while lower than those of Series 8 by nearly $100 million, were nonetheless the second highest ever recorded for issues of this type.
The amount of treasury bills outstanding at the end of the fiscal year was $890 million, $240 million greater than on March 31, 1954. This amount was equally divided between three-month bills and nine-month bills. Since March 31, 1952 treasury bills outstanding have risen by $440 million, a growth which reflects in part the Government's increasing interest in developing an active Canadian market for short-term securities.

The Budget-Appendix
The financing of redemptions was effected as follows:
(in millions of dollars)
By proceeds of new issues:
Canada Savings Bonds Series 9 (net)	 766-5
Three month, Twenty-Three day Loan	 200-0
Increase in Treasury Bills	 240-0
[Stage Direction]
	1,206-5
By refunding or conversion into new issues	 3,400-0
By available cash (payable in Canada)	 88-3
4,694-8
As a result of these transactions the net decrease in funded debt is estimated at $88 million.
Interest Rates
The average interest rate on the Government's outstanding unmatured funded debt as at March 31, 1955 was 2-74 per cent a slight decrease from the rate of 2-86 per cent at the end of the previous fiscal year. This is the first decrease recorded since the fiscal year 1949-50, when the rate was 2 * 60 per cent.
Interest rates generally fell sharply during the year. The last public issue during the year with a term of more than 10 years, the Canada Savings Bonds Series 9, was sold to yield 3-25 per cent, while the yield on a similar issue in the previous fiscal year was 3-75 per cent.
Treasury bill yields also declined noticeably. On the three-month bills the average yield on the issue sold March 25, 1955 was 1 [DOT] 130 per cent against 1 * 585 per cent for the last issue sold in the previous fiscal year. The average yield on the issue of nine-month bills made March 25, 1955 was 1-342 per cent compared to 1-903 per cent for the last issue sold in the fiscal year 1953-54.

[Stage Direction]
Details of redemptions and new issues of securities during the fiscal year are set out in the following tables.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Redemption op Funded Debt Dueinq Fiscal Year Ended March 31, 1955
Maturity Date	Interest Rate	Where Payable	AmountMay 1,1954	2} 2 2 h li 2 2 li 3 3 3 2j-3i	Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada	200,000,000 100,000,000 550.000.	000 200.000.	000 200,000,000 150.000.	000 395.000.	000 550.000.	000 855,607,410 1,111,261,650 88,200,000 294,700,000
May 1, 1957 (2)				
June 1, 1958 (5)				
Canada Savings Bonds Series 1-8				
			
			4,694,769,060
			
0) Third Victory Loan-called for redemption June 1, 1954.
(2) Fourth Victory Loan-called for redemption October 1, 1954. (*) Called for redemption December 1, 1954.

[Stage Direction]
New Security Issues During Fiscal Year Ended March 31, 1955
-	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%	%	i	$	$Issued to Bank of Canada- Six. Months Treasury Notes	May 1, 1954	Nov. 1, 1954	ii	100-00	1-75	200,000,000	200,000,000	Loan, Three Months, Twenty-Three	July 23, 1954	Nov. 15, 1954	u	99-97	1-59	50,000,000	50,000,000Sept. 1, 1954	Mar. 1, 1955	H	100-00	1-50	550,000,000	550,000,000	Nov. 1, 1954	May 2, 1955	i|	100-00	1-375	200,000,000	200,000,000	Two Month Treasury Notes	Mar. 1, 1955	May 2, 1955	U	100-00	1-125	500,000,000	500,000,000	1,500,000,000	1,450,000,000	50,000,000Issued to Chartered Banks-	Loan, Three Months, Twenty-Three	July 23, 1954	Nov. 15, 1954	li	99-97	1-59	150,000,000	150,000,000Issued to General Public-	Loan, Two Years, Six and One-Half	June 1, 1954	Dec. 15, 1950	2i	99-50	2-46	550,000,000	550,000,000	June 1, 1954	June 1, 1976	Si	98-25	3-36	300,000,000	300,000,000	Oct. 1, 1954	Oct. 1, 1957	2	99-50	2-17	700,000,000	700,000,000	Oct. 1, 1954	Oct. 1, 1979	3i	99-25	3-29	400,000,000	400,000,000	Nov. 1, 1954	Nov. 1, 1966	Si	99-25	3-33	766,500,000	766,500,000Increase in Treasury Bills	Various	Various	Various	Various	Various	240,000,000	240,000,0002,956,500,000	1,950,000,000	1,006,500,0004,606,500,000	3,400,000,000	1,206,500,000
to

The Budget-Appendix
2848	HOUSE OF COMMONS
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), 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, insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, and 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 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 $250,000,000 2f per cent guaranteed bonds of the Canadian National Railway Company. The proceeds were used to repay interest-bearing capital advances from the Government of Canada and for capital expenditures of the Company.

[Stage Direction]
Bonds and Debenture Stocks Guaranteed by the Government as at March 31, 1955
Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
June 15, 1955			41 4* 4i	48.496.000 67.368.000 64.136.000 5,636,506 35.000.	000 550,727 3,597,518 26,465,130 7,999,074 250.000.	000 35.000.	000 50.000.	000 70.000.	000 40.000.	000 200.000.	000 6,000,000 98,706 3,407 71,817
Feb. 1,1956				
July 1, 1957				
July 20, 1958				
Jan. 15, 1959			3	
May 4, 1960			31 3$ 3	
May 19, 1961				
Jan. 1, 1962				
Jan. 1, 1962			4	
Feb. 1, 1963			n 3	
Jan. 3, 1966				
Jan. 2, 1967			21 21 2 i 3! 21 5	
Sept. 15, 1969				
Jan. 16, 1971				
Feb. 1, 1974				
June 15, 1975				
Perpetual				
Perpetual			5	
Perpetual			4	
			
			$910,422,885

The Budget-Appendix

[Stage Direction]
Other Outstanding Guarantees and Contingent Liabilities
Estimated
Amount
Outstanding
Deposits maintained by the chartered banks in the
Bank of Canada (February 28, 1955)	$ 503,841,332
Province of Manitoba Treasury Bill (March 31, 1955).	750,000
Loans made by chartered banks under the Farm
Improvement Loans Act (December 31, 1954)....	35,804,794
Loans made by chartered banks under the Veterans'
Business and Professional Loans Act (December
31, 1954)	 2,225,796
Guarantees under Part II of the Export Credits Insurance Act (March 31, 1955)	 7,650,000
Loans made by approved lending institutions under Dominion and National Housing Acts (December 31, 1954)	Indeterminate
Guarantees of land assembly projects under National
Housing Act (December 31, 1954)	 Nil
Loans insured under the National Housing Act, 1954
(December 31, 1954)	 121,571,940
Loans made by approved lending institutions under Part IV of the National Housing Act, 1944, for home extensions or improvements (December 31,
1954)	 7,483
Loans made by chartered banks under The Prairie Producers' Interim Financing Act, 1951 (February 28, 1955)	,	 3,450
Loans made by chartered banks to Canadian Wheat
Board (February 28, 1955)	 95,899,203
181

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES
Revenues
Expenditures
Loans and Advances and Investments Unmatured Funded Debt
50433-181J
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (thousands of dollars)
-	1950-51	1951-52	1952-53	1953-54	Estimated 1954-555	$	$	$	*Tax Revenues-	Income tax-	Personal (*)	652,329	975,676	1,180,026	1,187,656	1,176,000Corporations ([DOT])	799,197	1,130,680	1,240,090	1,191,187	1,008,000On dividends, interest, rents and	royalties, going abroad	61,610	55,017	53,674	53,761	61,00010 141	2,365	Succession duties	33,599	38i208	38,071	39,138	42,000Customs duties	295,722	346,365	389,442	407,312	393,000Excise duties-	Spirits, malt and beer	129,390	120,851	127,684	133,036	131,000Cigarettes, tobacco and cigars	114,486	100,711	116,914	96,970	99,000Licences	38	36	38	37	37Less refunds	-2,868	-3,658	-3,276	-3,311	-3,037Hit, 046	217,940	241,360	226, 732	227,000Excise taxes-	Sales tax (l) (!)	470,627	587,194	566,233	587,332	576,000Other excise taxes-	Automobiles, tires and tubes	70,841	100,904	89,883	106,097	84,000Beverages (soft drinks)	7,212	19,230	12,481	11,691	8,200Candy and chewing gum	10,880	11,531	12,391	12,813	10,0007,734	423	Cigarettes, tobacco and cigars....	85,199	106,354	102,645	113,161	114,000Electrical appliances	2,080	4,893	4,305	5,101	400Furs	4,509	4,793	5,710	3,751	100Jewellery, watches, ornaments etc.	6,459	9,714	7,488	7,256	4,800Matches and lighters	1,161	1,855	1,394	1,370	1,000Stamps on cheques, money orders,	10,945	11,346	10,561	Stoves, washing machines and	10,923	1,546	Television sets, radios, tubes and	phonographs	5,548	8,252	10,706	16,771	21,900Toilet preparations	4,551	8,467	7,195	7,103	5,500Trunks, bags, luggage, etc	2,604	3,969	3,603	3,478	500Wines	2,225	2,167	2,216	2,231	2,300Sundry commodities	4,327	7,173	5,964	6,443	2,200Licences, interest and miscellaneous	372	463	461	396	400Less refunds	-10,506	-13,723	-2,892	-1,637	-1,000216,141	298,734	276,657	296,025	254,300Tax on insurance premiums	4,228	4,753	12,361	13,756	14,600Miscellaneous tax revenue	710	843	679	686	900S,785,360	3,667,776	3,997,693	4,003,685	3,762,800Non-Tax Revenues-	Return on investments	89,529	117,622	116,906	151,858	133,70017 5fi2	17,697	1,467	838	Post Office-net postal revenue	90,443	104,610	111;905	110,953	130,140Bullion and coinage	4,708	4,838	4,386	4,241	1,483Other	31,106	37,205	45,471	50,297	55,285233,348	281,972	280,135	318,187	320,608Special Receipts and Ceedits-	Central Mortgage and Housing Cor-	poration-	Profits paid to Receiver General	2,862	3,144	2,054	(s)	(5)Proceeds and depreciation reserve	with respect to the sale of wartime	housing properties	4,351	9,843	6,701	5,234	4,545Refundable portion of income tax and	excess profits tax-Transfer to reve-	nue of excess reserves set up in pre-	25,000	7,367	Transfer to revenue of provincial 5 per	cent corporation income tax suspense	account pursuant to the 1952 tax	45,000	46,786	Proceeds from the sale of Crown assets	i9,6i3	14,712	7,638	17,222	24,657Transfer to revenue of Canadian Wheat	Board suspense account	6.325	
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1950-51	1951-52	1952-53	1953-54	Estimated 1954-55Special Receipts and Credits- Concluded Surplus of Canadian Arsenals, Limited Write-up to active assets-Atomic En-	%	$	3 6,114 4,794 4,469 83,095	$ (*)	$ (*) 1,437 3,089 88,738
42,012 98,888	6,096 41, m		5,306 74,548	
					
	3,112,536	3,980,909	4,360,823	4,396,320	4,107,136
					
(*) Excluding tax credited to old age security fund-
1951-52	1952-53
Estimated 1953-54	1954-55
2% personal income tax	
100	45,250	90,700	101,0002% corporation income tax	
2,000	36,850	55,600	46,0002% sales tax	
24,298	141,558	146,833	144,000
(*) The total for 1950-51 represents gross collections; for 1951-52, gross collections less transfer to the old age security fund, and in subsequent years the totals are net after deduction of refunds and drawbacks as well as transfers to the old age security fund.
([DOT]) Included in Return on Investments.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(thousands of dollars)
-	1950-51	1951-52	1952-53	1953-54	Estimated 1954-55S	$	$	%	$Agriculture-	Administration and general	692	733	824	852	987Science service	6,685	6,992	8,136	8,909	9,367Experimental farms service	7,140	7,729	8,272	8,574	9,888Production service	9,182	9,335	9,337	9,555	10,324Marketing service	4,936	4,555	4,780	4,212	9,532Rehabilitation and reclamation projects	13,212	11,813	13,852	14,683	13,067Freight assistance on western feed grains	15,638	14,999	20,661	16,999	19,000Premium on hog carcasses suitable for	export to United Kingdom	5,100	5,374	6,405	4,679	5,034Advances to prairie farm emergency	fund	4,304	Payment to Canadian Wheat Board for	65,000	Net operating loss-Agricultural prices	support account	3,485	1,743	32,533	37,759	3,211Other expenditure	7,411	3,861	1,911	2,079	2,925142,785	67,134	106,711	108,361	83.335Auditor General's Office	574	601	576	615	676Canadian Broadcasting Corporation	2,405	8,301	8,235	8,259	8,479Payment from the consolidated revenue	fund of amounts equal to taxes collected	under the Excise Tax Act in respect of	radio and television sets and equipment	16,737	21,80024,996	30,279Office of the Chief Electoral Officer	278	368	465	5,527	292Citizenship and Immigration-	Administration and general	531	1,114	1,399	1,657	1,651Immigration branch	5,578	8,073	7,063	7,313	8,420Indian Affairs branch	14,564	14,054	15,184	16,511	18,043SO, 678	23,241	23,646	25,481	28,114Civil Service Commission	1,580	1,692	i,9io	2,051	2,370Defence Production-	8,284	9,738	10,074	9,418Capital assistance to defence industry.	22,695	79,079	37,825	10,13730,979	88,817	47.899	19,555External Affairs	7,654	8,225	9,146	10,249	12,285Membership in commonwealth and	international organizations	2,962	2,724	3,477	3,522	4,332Assistance to other countries and inter-	national organizations	11,464	26,634	26,628	31,948	27,48322,m	37,583	39,251	45,719	44, 100Finance-	Departmental administration and gen-	eral	7,354	8,361	9,425	9,402	9,524Office of the Comptroller of the	Treasury	11,345	12,554	13,310	13,713	15,045Interest on public debt	425,217	432,423	451,340	476,062	478,188Additional amount required to place	interest on public debt on accrual	87,510	Cost of issuing new loans and annual	amortization of bond discounts and	commissions	13,354	10,717	13,072	19,062	23,728Servicing of public debt	449	385	508	604	760Subsidies to provinces	18,735	20,108	20,108	20,108	20,353Compensation to provinces-	94,123	96,868	23,795	1	Tax rental agreements, 1952 Act	284i 778	309,227	327,445Transfer of certain public utility tax	receipts, under tax rental agree-	ments	4,565	3,732	4,370	6,831	6,750Transitional grant to Newfoundland...	6,500	6,500	5,650	4,800	3,950Government contributions with respect	to the superannuation account-general	6,831	12,911	13,802	16,451	37,382-special	75,000	98,000	25,000	38,000	Grants to universities	6,993	5,115	5,244	5,390Implementation of guarantees (Ming	Sung Industrial Co. Ltd.)	1,346	1,695	1,563	1,524APRIL 5/ 1955 2855 The Budget-Appendix STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES [DOT] FOR THE LAST FIVE FISCAL YEARS-Con/inued (thousands of dollars)	-	1950-51	1951-52	1952-53	1953-54	Estimated 1954-55$	$	$	$	3Finance-Concluded	1,015Wartime Prices and Trade Board	1,599	155	Commodity prices stabilization cor-	50	308	6412,500	1,000Provision for reserve for possible losses	on ultimate realization of active	75,000	75,000	75,000	50,000	752,572	87S, 61S	946,968	971,376	932,118Fisheries	8,904	8,733	10,777	9,255	11,218Governor General and Lieutenant Gov-	ernors	244	275	397	399	403Insurance	344	377	414	431	477Justice	4,609	5,103	5,606	5,822	0,039Office of the Commissioner of Peniten-	tiaries	7,798	8,936	9,303	9,195	10,87912.407	14,05!)	14,909	15,017	16,918Labour	9,030	9,503	10,OSS	9,524	9,272Government annuities-amount re-	quired to maintain reserve	060	940	744	99	500Unemployment Insurance Act, 1940-	Administration and general	20,805	23,919	25,051	26,116	28,499Government contribution	26,133	29,940	31,139	31,822	31,67962,628	64,302	67,022	67,561	69,950Legislation-	House of Commons	3,332	4,302	4,528	4,053	4,823Library of Parliament	137	153	231	2S2	291Senate	976	1,227	1,103	995	1,299General	266	263	295	270	2904,711	6,945	6,157	5,600	6,703Mines and Technical Surveys	10,442	10,779	12,027	13,047	15,859Dominion Coal Board	3,561	5,132	6,484	10,339	11,299Emergency gold mining assistance....	7,114	11,841	11,147	15,151	15,30021,117	27,752	29,658	38,557	42,458National Defence-	General	901	277	295	320	360Defence forces, army, navy and air	services	545,738	1,217,579	1,557,660	1,424,245	1,326,440Mutual aid to NATO countries	195,417	126,416	235,053	2S9.708	257,448Defence research and development	23,415	35,394	42,989	40,807	44,362Pensions-	Payments under defence services	pension act	5,011	5,096	5,110	5,100	5,156Government contribution to permanent	services pension account	11,975	30,712	30,009	35,214	36,732Contribution towards military costs of	NATO	11,302	10,521	6,842782,457	1,415,474	1,882,418	1,805,915	1,677,3402,308	2,662	2,920	2,90S	3,431National Health and Welfare	17,344	21,098	22,935	28,034	30,368General health grants	18,875	24,322	27,333	29,184	31,725Family allowances	309,465	320,458	334,198	350,114	366,501Old ago pensions including pensions to	103,169	80,206	Old age assistance, blind and disabled	2,999	22,099	23,202	24,49049,669	448,855	498,752	406,565	450,534	453,084National Research Council and Atomic	Energy Control Board	18,014	25,080	28,343	28,100	30,742National Revenue including taxation	division	46,056	45,763	47,313	49,938	55,196Northern Affairs and National Resources	20,764	17,423	19,500	19,242	20,362Post Office	91,781	97,973	105,553	113,582	124,540Privy Council including Prime Minister's	Office	4,362	4,097	3,767	3,733	3,855Public Archives and National Library.	206	251	307	347	423
The Budget-Appendix STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1950-51	1951-52	1952-53	1953-54	Estimated 1954-55$	5	%	$	%Public Printing and Stationery	706	1,103	1,607	2,037	2,055Public Works	74,483	79,086	83,941	101,515	118,000Trans-Canada highway contributions.	7,205	12,792	13,953	13,379	20,00081,688	91,878	97,894	114,894	138,000Royal Canadian Mounted Police	19,801	27,341	31,14i	33,845	36,030Secretary of State	2,065	2,399	2,201	3,278	2,643Trade and Commerce	23,443	21,817	16,503	16,526	17,732Deficits incurred by the Canadian	Wheat Board covering operations for	2,536	Deficit-Trans Canada Air Lines	1,325	27,304	21,817	16,603	16,626	17,732Transport-	Administration and general	2,534	3,195	3,171	4,216	4,698Canals service	8,284	7,975	9,905	8,400	8,006Marine service	17,187	17,465	21,679	20,259	21,912Railway service	1,981	2,306	10,562	20,352	26,566Maritime freight rates act	8,475	10,030	10,130	10,481	10,696Air services	33,553	36,298	39,171	41,367	45,504Canadian Maritime Commission	5,899	4,461	3,984	4,202	4,303Deficits-	Canadian National Railway	3,261	15,032	28,758Canadian National (West Indies)	Steamships Limited	1,029	467	4	650	628Prince Edward Island car ferry and	terminals	1,267	1,365	1,520	1,603	1,514North Sydney-Port aux Basques	1,846	2,236	2,242188	55	57	Non-Active assets-	National Harbours Board	1,465	1,252	1,877	4,247	3,93186, its	99,901	103,906	118,013	168,758Veterans Affairs-	Administration and general	2,385	2,513	3,627	2,256	2,283Pensions	95,577	103,703	127,053	127,580	128,930Treatment and after care of returned	soldiers and allowances to dependents	71,646	76,097	78,541	79,470	82,702Hospital accommodation, additions,	alterations and improvements	3,008	3,758	3,990	4,151	3,985Post discharge rehabilitation benefits.	13,502	6,594	3,790	2,518	2,575War service gratuities and re-establish-	ment credits	16,868	9,826	10,737	8,916	6,167Soldier settlement and veterans land	acts	6,296	5,935	5,645	5,353	6,698Provision for reserve for conditional	benefits under veterans land act	7,110	7,600	8,042	8,471	8,890216,392	216,026	241,425	238,715	242,230Total expenditure	2,901,242	3,732,875	4,337,276	4,350,522	4,255,387
The Budget-Appendix

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(thousands of dollars)
Fiscal Year Ended March 31
1952
1954
Estimated
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	
2,500
6,500 Cr. 296
Cr. 1,500
Cr.
Cr.
45
Cr. 1,215
Cr.
1,000
6,109
Cr. 1,215
Cr.
Loans to, and Investments in, Crown Agencies
Atomic Energy of Canada, Limited... Central Mortgage and Housing Corporation-
Loans	
Canadian Broadcasting Corporation....
Canadian Farm Loan Board	
Canadian National Railways	
Canadian National (West Indies) Steamships Limited	
National Harbours Board	
Polymer Corporation Limited	
St. Lawrence Seaway Authority	
Other Crown Agencies	
79,389 650 1,900 19,888
300 1,004 Cr. 1,886
73,624 850 1,300 139,998
Cr. 150 997 Cr. 3,000
8,802
72,561
2,000
1,600
141,822
Cr.
7,197
98,815
4,750
3,700
18,092
Cr. 127 Cr. 1,000
Cr. 631 Cr. 3,000
1,046
2,608
6,812
Cr. 2,845
Cr.
Cr.
Cr.
102,291
215,457
232,470
89,894
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
Aet, 1946	
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	
Cr. 3,180
Cr.
Cr.
40,567
20,000
22,935
Cr. 4,129
Cr. 31,092
Cr. 3,782
Cr. 24,282
Cr. 3,669
Cr. 53,616
Cr.
Cr.
14,010
20,657
5,461
Cr.
Cr.
Cr.
14,290 20,599 1,602
Cr.
Cr.
Cr.
14,576
19,439
4,915
Cr.
Cr.
Cr.
Cr.
Cr.
7,515
1,043
Cr.
1,521
2,957
Cr. 1,259 Cr.
Cr.
256
8,503
Cr.
212
16,437
49,500
3.000 4,150
93,210
3,600
1,064
4.000 1,300
Cr. 18,259
Cr. 3,792
Cr. 30,000
14,868
23,613
3,145
Cr. 29,107
3,110
Cr. 40,120
Cr. 60,715
Cr. 65,170
Cr. 88,203
Cr. 106,333
Sinking fund and other investments held for retirement of unmatured debt___
5,499
3,201
1,722
74,226
85,400
Net total of changes in loans and investments	
68,670
164,052
169,022
74,702
Cr. 39,404
[Stage Direction]
The Budget-Appendix UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31, 1955 AND THE ANNUAL INTEREST PAYABLE THEREON
Date of maturity
1955,	May 2	
May 2	
July 1	
July 1	
December 15	
1956,	July 1	
November 1	
1957,	October 1	
November 1	
1958,	May 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	
November 1	
1968, June 15	
1974,	September 1	
1975,	September 15	
1976,	June 1	
1978,	January 15	
1979,	October 1	
Perpetuals	
Various, three months treasury bills.
Various, nine months treasury bills...
Payable in Canada____
Payable in London____
Payable in New York
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Rate
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Where
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Amount
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Annual
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per cent
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payable
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of loan
[Stage Direction]
interest charge
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$ cts.
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$ cts.
[Stage Direction]
ii
[Stage Direction]
Canada
[Stage Direction]
200,000,000 00
[Stage Direction]
2,750,000 00
[Stage Direction]
H
[Stage Direction]
Canada
[Stage Direction]
500,000,000 00
[Stage Direction]
5,625,000 00
[Stage Direction]
2i
[Stage Direction]
Canada
[Stage Direction]
200,000,000 00
[Stage Direction]
4,500,000 00
[Stage Direction]
2i
[Stage Direction]
Canada
[Stage Direction]
400,000,000 00
[Stage Direction]
9,000,000 00
[Stage Direction]
2i
[Stage Direction]
Canada
[Stage Direction]
550,000,000 00
[Stage Direction]
12,375,000 00
[Stage Direction]
2\
[Stage Direction]
Canada
[Stage Direction]
400,000,000 00
[Stage Direction]
9,000,000 00
[Stage Direction]
2i
[Stage Direction]
Canada
[Stage Direction]
*70,000,000 00
[Stage Direction]
1,925,000 00
[Stage Direction]
2
[Stage Direction]
Canada
[Stage Direction]
700,000,000 00
[Stage Direction]
14,000,000 00
[Stage Direction]
21
[Stage Direction]
Canada
[Stage Direction]
*37,300,000 00
[Stage Direction]
1,025,750 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
300,000,000 00
[Stage Direction]
9,000,000 00
[Stage Direction]
2|
[Stage Direction]
Canada
[Stage Direction]
*34,500,000 00
[Stage Direction]
948,750 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,197,324,750 00
[Stage Direction]
35,919,742 50
[Stage Direction]
2\
[Stage Direction]
Canada
[Stage Direction]
*50,700,000 00
[Stage Direction]
1,394,250 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,165,300,350 00
[Stage Direction]
34,959,010 50
[Stage Direction]
2f
[Stage Direction]
Canada
[Stage Direction]
*46,500,000 00
[Stage Direction]
1,278,750 00
[Stage Direction]
3i
[Stage Direction]
New York
[Stage Direction]
(i) 47,040,000 00
[Stage Direction]
1,528,800 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,315,639,200 00
[Stage Direction]
/39,469,176 00
[Stage Direction]
3j
[Stage Direction]
Canada
[Stage Direction]
*150,000,000 00
[Stage Direction]
5,250,000 00
[Stage Direction]
3i
[Stage Direction]
London
[Stage Direction]
(2) 1,950,100 06
[Stage Direction]
03,37S 25
[Stage Direction]
3
[Stage Direction]
London
[Stage Direction]
(2) 49,121,189 12
[Stage Direction]
1,473,635 67
[Stage Direction]
3
[Stage Direction]
New York
[Stage Direction]
(>)147,000,000 00
[Stage Direction]
4,410,000 00
[Stage Direction]
3!
[Stage Direction]
Canada
[Stage Direction]
*168,600,000 00
[Stage Direction]
6,322,500 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,295,819,350 00
[Stage Direction]
38,874,580 50
[Stage Direction]
3!
[Stage Direction]
Canada
[Stage Direction]
*706,000,000 00
[Stage Direction]
26,475,000 00
[Stage Direction]
3i
[Stage Direction]
Canada
[Stage Direction]
54,703,000 00
[Stage Direction]
1,777,847 50
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,691,796,700 00
[Stage Direction]
50,753,901 00
[Stage Direction]
3* *
[Stage Direction]
Canada
[Stage Direction]
*7G6,500,000 00
[Stage Direction]
24,911,250 00
[Stage Direction]
2\
[Stage Direction]
Canada
[Stage Direction]
350,000,000 00
[Stage Direction]
9,625,000 00
[Stage Direction]
2|
[Stage Direction]
New York
[Stage Direction]
(>) 98,000,000 00
[Stage Direction]
2,695,000 00
[Stage Direction]
2|
[Stage Direction]
New York
[Stage Direction]
(i) 49.000,000 00
[Stage Direction]
1,347,500 00
[Stage Direction]
3i
[Stage Direction]
Canada
[Stage Direction]
300,000,000 00
[Stage Direction]
9,750,000 00
[Stage Direction]
3f
[Stage Direction]
Canada
[Stage Direction]
100,000,000 00
[Stage Direction]
3,750,000 00
[Stage Direction]
3i
[Stage Direction]
Canada
[Stage Direction]
400,000,000 00
[Stage Direction]
13,000,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
55,000,000 00
[Stage Direction]
1,650,000 00
[Stage Direction]
(3)1-130
[Stage Direction]
Canada
[Stage Direction]
445,000,000 00
[Stage Direction]
5,028,500 00
[Stage Direction]
(3) 1-342
[Stage Direction]
Canada
[Stage Direction]
4^5,000,000 00
[Stage Direction]
5,971,900 00
[Stage Direction]
14,487,794,039 18
[Stage Direction]
397,829,221 92
[Stage Direction]
14,095,683,350 00
[Stage Direction]
386,310,908 00
[Stage Direction]
51,071,289 18
[Stage Direction]
1,5S7,013 92
[Stage Direction]
341,040,000 00
[Stage Direction]
9,981,300 00
[Stage Direction]
14,487,794,639 18
[Stage Direction]
397,829,221 92
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* Estimated.
0) Conversion rate estimated at S0.98 Can. to the U.S. dollar (2) Conversion rate estimated at $2.76 to the pound sterling.
(*) Rate of discount on bills sold March 25, 1955.
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Wednesday, April 6, 1955