1955-04-20

PRIVILEGE


Mr. M. J. Coldwell (Rosetown-Biggar):: Mr. Speaker, I rise on a question of privilege which I think affects the privileges of all members of the house and the members of the other place. There has been placed on my desk a copy of a letter to the Clerk of the House from the Canadian Pacific Railway which I should like to read. It is dated April 15, 1955, and is as follows:
Dear Mr. Raymond:
As you know, Canadian Pacific on April 24 next will, through the Canadian, trains 1, 2, 11 and 12, inaugurate a new standard of passenger transportation in Canada. The reception of this new endeavour of Canadian Pacific by the travelling public has been most gratifying and advance reservations indicate that the demand will often exceed the space available.
In light of the large investment of the company in the new equipment and the demand for space, it has been decided that where possible the Canadian will be used exclusively for revenue passengers. Restrictions are being placed on all passes issued by Canadian Pacific.
Under section 351 of the Railway Act, the company is required to honour free transportation issued by you pursuant to that section on any trains of the company. Canadian Pacific cannot, therefore, restrict free transportation issued to senators, members of the House of Commons and members and staff of the board. We would, therefore, ask your co-operation in bringing to the attention of all to whom you issue free transportation certificates the necessity as far as possible of ensuring that the train be made available for revenue passengers. This co-operation by members of the Senate, House of Commons and by the board will not impose too great an inconvenience in that the present transcontinental train, the Dominion, which is designated Nos. 7 and 8, will continue to operate on a high standard of service providing an opportunity for a comfortable and enjoyable journey across Canada.
Sincerely yours,
N. R. Crump, Vice-President.
I raise this as a question of privilege, Mr. Speaker, because the Railway Act is quite clear. The Canadian Pacific Railway, in common with other railways, receives certain concessions from parliament, and to send a letter of this description to the Clerk of the House of Commons to be conveyed to members of the house is in effect an attempt to infringe upon the right which we have under
the Railway Act. I respectfully suggest that the Clerk should ignore the contents of the letter.



MRS. FAIRCLOUGH  REFERENCE TO STATISTICAL INFORMATION RELEASED TO THE PRESS

Mrs. Ellen L. Fairclough (Hamilton West):: Mr. Speaker, on a question of privilege, in the newspapers today there appears certain statistical information with reference to the employment situation in Canada which is released jointly by the Department of Labour and the dominion bureau of statistics. These releases come out each month and those members of the house who have indicated their desire to have the information usually receive it in due course. It seems to me, Mr. Speaker, that surely such releases could be put in the hands of members of parliament at the same time that they are released to the press. Right up to this present hour I have not received this information which I feel I have a right to have as a member of the house. The matter has been referred to and is now a topic of comment, but up to the present time I have not received a copy of the release. I feel that every member of the house who has signified that he or she wishes to receive this information should have it at the same time that members of the press gallery are given copies.



LABOUR CONDITIONS


Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, I am pleased to inform the house that a settlement of the dispute affecting terminal elevator employees at the lakehead was reached this morning. I know that our news service is so efficient that this information has reached hon. members before now, but I think in closing this matter I should place upon the record the terms of the settlement.
The terms tentatively agreed upon yesterday in the negotiations between the parties conducted before the industrial inquiry commissioner, Mr. Eric Taylor, who was appointed by my department last week, were approved by the members of the brotherhood at a meeting held this morning. The terms of settlement are as follows:
Period of Contract: January 1, 1954, to December 31, 1956.

Labour Conditions
Wages: Effective January 1, 1954, 5 cents per hour additional.
Effective October 1, 1954, 3 cents per hour additional.
Effective January 1, 1955, 2 cents per hour additional.
Effective January 1, 1956, 2 cents per hour additional.
Statutory Holidays: Two extra days with pay if not worked, making a total of eight such holidays in the calendar year.
Health and Welfare: Blue Cross medical plan on a 50-50 basis, effective May 1, 1955. The monthly contribution by the employers to this fund is $3.50 and the same amount by the employees.
The new contract will contain the following additional provisions: (a) a provision setting out the rights of management; (b) a provision prohibiting strikes or lockouts during the period of the contract; (c) a provision for a more modern procedure with respect to the settlement of grievances; (d) a provision defining probationary employment.
I should like to express appreciation for the sensible and sincere manner in which, in the last 48 hours, the two parties to the dispute have dealt with this matter, resulting in this settlement, which enables the movement of a particularly sensitive product of Canada at this time. I also wish to pay tribute to the mediator and to the senior officials of my own department for their work in connection with the case.


Mr. Daniel Mclvor (Fort William):: Mr. Speaker, on a question of privilege, on behalf of the people of the lakehead we wish to thank the minister for the speed-


Some hon. Members:: Order.


Daniel (Dan) McIvor: -with which he appointed the mediator, Mr. Taylor, and for a job well done.



REPORTED UNEMPLOYMENT CONDITION AT SEVEN ISLANDS, QUEBEC

[Stage Direction]
On the orders of the day:
Milton Fowler Gregg: Mr. Speaker, on Monday, the hon. member for York South (Mr. Noseworthy) asked me a question regarding the assembly of new Canadians who are unemployed at Seven Islands, Quebec. At that time I gave him an immediate reply based upon my memory of a tentative report we then had. I should like now to make some correction in the reply I gave on that date. I am particularly speaking of this matter again in view of a dispatch which appeared in this morning's Gazette.

Since seeing that dispatch I have asked our director of employment to get in touch with the situation directly and immediately, and this is his report to me at noon today. He
says:
I got in touch with Mr. Simard, local office manager, unemployment insurance commission, by telephone.
Following our investigations last week he made a thorough study of the situation and he reported to me there are 448 unemployed people registered in his office. Of this number, 120 are designated by him personally as immigrants.
That is the special correction I wish to make with regard to my own statement. I said the other day that it was 80, as it appeared to me to be at that time. He goes on to say:
He had no easy way, of course, of ascertaining whether or not these workers were immigrants but he used this method. He had the leaders get together the various ethnic groups and they came to his office and registered. These were as a consequence designated by Mr. Simard as the immigrants under discussion.
It developed that there were a total of 120. This is an increase over the figure of 80 that was at first estimated. However 50 per cent of the 120-again this is an estimate-are former iron ore company employees who would ordinarily be called back on a seniority basis. They returned to Seven Islands earlier without being called back and as a consequence are still out of work and may be until May 15.
Twenty-three of the 120 are of Greek origin and were brought to Seven Islands by a Greek society. Of this group, only one has been in Canada less than a year.
Mr. Simard reports further that of the 120 about 60 of them are drawing unemployment insurance benefits.
He emphasizes the fact that there are not 600 immigrants involved in this problem and actually the 23 Greeks are the only ones that seem to be short of funds and steps are being taken to see that they do not suffer hardships.
Mr. Simard emphasizes that there is no crowding around the unemployment insurance commission office and that everything is completely under control.



COMBINES INVESTIGATION ACT


Hon. Stuart S. Garson (Minister of Justice):: I wish to table the report of the restrictive trade practices commission of an inquiry into loss-leader selling.
Hon. members will remember that, when legislation forbidding the practice of resale price maintenance was recommended by the MacQuarrie committee and enacted by parliament, fears were expressed in some business quarters that the abolition of resale price maintenance would lead to an increase of so-called loss-leader selling. It was feared that this would have certain harmful effects both on retailers and on manufacturers. The MacQuarrie committee therefore recommended that an inquiry be made into the prevalence and effects of loss-leader selling with

a view to recommending suitable legislation, if any were considered necessary, to deal with it. The government, also, when the legislation forbidding resale price maintenance was being debated, promised to give close attention to its effects and to any practices which might develop as a result of it to any further legislative action that might, therefore, seem appropriate. The inquiry into loss-leader selling was in pursuance of these considerations.
The report, which the government is now engaged in studying, expresses the opinion that the practice of loss-leader selling does not call for legislative action at the present time.
Copies of the report in English are being distributed to members by the joint distribution branch. Owing to the length of the report, the French edition is not yet ready. Translations of the introductory and conclusion chapters are available and are being distributed by the joint distribution branch. The complete French edition will be distributed at the earliest possible date.



QUESTION


CENTRAL MORTGAGE AND HOUSING


Mr. Balcom:: 1.	What amounts were shown under the heading of administration costs of the Central Mortgage and Housing Corporation, during each of the following years: 1950, 1951, 1952, 1953, 1954?
2.	Are carrying charges on properties used in connection with Central Mortgage and Housing Corporation?
3.	If so, what amount for each of the above periods?
He said: May I ask permission to withdraw this question for redrafting?


Some hon. Members:: Agreed.


Mr. Speaker:: Question withdrawn.



QUESTIONS PASSED AS ORDERS FOR RETURNS


PUBLIC SERVICE


Mr. Cardiff:: 1.	How many public servants under the superannuation act have been retired between the ages of 60 and 65 pursuant to subsection 11 of section 16 of the regulations made pursuant to order in council P.C. 1954-673?
2.	How many civil servants were retained after the age of 65 years under regulations made in pursuance of the said order in council?



SAINT JOHN, N.B., IMMIGRATION BUILDING

Mr. Bell:: 1.	What was the total cost of the new immigration building at Saint John, New Brunswick?
2.	How many immigrants was this building designed to accommodate per day?


Mr. Pinard:: Return tabled.
Motions for Papers MOTIONS FOR PAPERS



C.P.R.-&quot;ROYAL CANADIAN&quot;

Mr. Hodgson:: For a copy of all telegrams, letters or other communications or correspondence exchanged between the Department of the Secretary of State and the Canadian Pacific Railway, with reference to the proposal that a Canadian Pacific Railway continental train be named "Royal Canadian".
He said: Dropped.


Mr. Speaker:: Dropped.



USE OF TITLE &quot;ROYAL&quot; ETC.

Mr. Diefenbaker:: For a copy of all correspondence directed to any minister or department of government since the 1st day of January, 1950, and replies thereto, which relate to applications made for permission to use the expression "royal", "queen", or any other title or word, which law, tradition or practice requires must have the consent of the crown before same may be used as part of the name of any corporation, partnership, institution or thing.


Roch Pinard: I should like to ask my hon. friend if he would allow this item to stand a few days because I am collecting information which will make it possible for me to deal with the matter later.


Mr. Speaker:: Motion stands.



CANADIAN BROADCASTING CORPORATION ACCOUNTS

Mr. Fulton:: For a copy of all correspondence, memoranda, etc., exchanged between the office of the Auditor General and the Canadian Broadcasting Corporation and/or the Minister of National Revenue, since January 1, 1950, relating to the accounts of the said corporation.


Mr. McCann:: I would ask the hon. gentleman if he would allow this motion to stand.


Mr. Speaker:: Motion stands.



CITIZENSHIP AND IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. J. H. Ferguson (Simcoe North):: I should like to address a question to the minister of immigration. Did he enjoy his trip with his family to British Columbia in his private car during the Easter recess despite the fact that the words "Dominion of Canada" were painted on the car in which he travelled?


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: I enjoyed it very much.

Inquiries of the Ministry NATIONAL DEFENCE



INQUIRY AS TO FIRE AT ROCKCLIFFE BARRACKS

[Stage Direction]
On the orders of the day:
Hon. George A. Drew (Leader of the Opposition):: I should like to ask the Minister of National Defence if he has received a report from the Ontario fire marshal in connection with the fire at Rockcliffe air station last Saturday? If so, is he in a position to convey the contents of that report to the members of this house?


Hon. R. O. Campney (Minister of National Defence):: I have not received, as yet, any report from any of the investigations which are being made, including the one which the Leader of the Opposition has mentioned. I therefore cannot make any statement at this time.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Hon. George C. Marler (Minister of Transport):: On Monday, Mr. Speaker, the hon. member for Eglinton asked a question with regard to employment in the car repair shops at Leaside. The hon. members for York-Scarborough, Spadina and York East have also discussed the same matter with me. After receiving these inquiries I obtained from the management of the Canadian National Railways the following information:
In examining maintenance requirements for rolling stock the management came to the conclusion that substantial economies and greater efficiency of operation could be realized by transferring car repair work to other railway shops with modern equipment and plant lay-out already available and currently not used to capacity. Accordingly they decided that the Leaside shop should be closed. The shop at Leaside, originally designed for engine repairs, is one of the smaller car repair shops and has a staff of approximately 270. It is expected that 150 of them will be given employment in other shops of the company probably at Toronto, London or Montreal.
In taking this step the management was careful to ensure that the interests of the employees affected are properly protected in accordance with the governing wage agreements and the matter was discussed with leaders of the labour organizations concerned.
While I am on my feet-


Mr. Donald M. Fleming (Eglinion):: Before
the minister goes on to another matter, may I ask him why more notice was not given 
to the employees affected of this intended closing of the shop? Why was the notice so short?


George Carlyle Marler: I am unable to state what
notice was given, and therefore cannot express an opinion whether or not the notice was short.


Donald Methuen Fleming: It was very short.



STATEMENT ON LAY-OFFS AT WINNIPEG

[Stage Direction]
On the orders of the day:
George Carlyle Marler: If I might deal with another question, Mr. Speaker, on Monday the hon. member for Winnipeg North asked a question concerning the Canadian National railway shops at Winnipeg. In this connection the management of Canadian National Railways have supplied the following information:
The increasing use of diesel motive power has resulted in a lesser need for steam locomotives and in a reduction in their maintenance.
After studying the position in western Canada the management came to the conclusion that substantial economies and greater efficiency of operation could be realized if the shop repairs to steam locomotives heretofore done in the main shops at Fort Rouge and Transcona were carried out entirely at Transcona and if the shop work on diesel locomotives and repairs to car equipment were consolidated at the Fort Rouge shops.
The management also advises that they propose to carry out at the Fort Rouge roundhouse the work on steam and diesel switch engines now performed at the Winnipeg east yard roundhouse.
It is estimated that as a result of these changes there will be a reduction in staff of approximately 100. In all of these changes the interests of the employees affected are properly protected in accordance with the governing wage agreements and the matter was discussed with leaders of the labour organizations concerned.
The hon. member for Winnipeg North Centre yesterday referred to staff reductions by the Canadian National Railways at Winnipeg and other places and put the following question to me:
How does he square the lay-offs now taking place with his statement in the house on February 7 that no further staff lay-offs were anticipated?
If the hon. member will reread Hansard of February 7 he will find the opinion there given was that of Mr. J. R. McMillan, vice president of the railway in Winnipeg, and not that of the Minister of Transport.


Mr. Knowles:: But the minister put it on
the record.


George Carlyle Marler: I think if my hon. friend
would read my statement in Hansard he would find that it is perfectly in conformity with the facts.



STATEMENT ON LAY-OFFS AT BROCKVILLE

[Stage Direction]
On the orders of the day:
George Carlyle Marler: Yesterday the hon. member for Leeds (Mr. Stanton) asked a question concerning reductions in the staff of the Canadian National Railways at Brockville.
The management of the railways advise that after examination of the situation at Brockville they reached the conclusion that it would be in the interests of economy to eliminate Brockville as a through-car inspection point, and pursuant to this decision 26 car men were laid off on April 15.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Donald Methuen Fleming: Mr. Speaker, now that the Minister of Citizenship and Immigration has seen the press report to which I referred yesterday, may I ask him if he is now in a position to answer the question I put at that time, namely as to what right Premier Smallwood of Newfoundland has to say that certain persons giving certain information would be given the "bum's rush", and if they were Germans they would be deported.


John Whitney Pickersgill: Mr. Speaker, I
will leave it to hon. members opposite to make comments on press reports which may or may not be accurate.


Donald Methuen Fleming: May I ask the Minister of
Citizenship and Immigration if Premier Smallwood of Newfoundland has any authority to announce the intention of deporting anybody in Newfoundland.


An hon. Member:: Yes or no.


Some hon. Members:: Answer.


John Whitney Pickersgill: The hon. member for Eglinton is a lawyer, and is just as familiar as I am with the Immigration Act.


Julian Harcourt Ferguson: You are not very familiar with it. You don't know anything about it. He knows nothing about it.


Donald Methuen Fleming: May I perhaps assist the minister to be more communicative by asking him
Inquiries of the Ministry if he, as Minister of Citizenship and Immigration, has given any authority to Premier Smallwood of Newfoundland to announce deportation of persons in that province?


John Whitney Pickersgill: It is not the function of my department to exercise censorship of the free speech of any Canadian.


Donald Methuen Fleming: The minister did not answer the question, or even come close to it. May I ask him if he, as Minister of Citizenship and Immigration, has given any authority to the premier of Newfoundland to make an announcement of his intention to deport any person from Newfoundland.


Some hon. Members:: Answer, answer.


John Whitney Pickersgill: I will be delighted to answer the hon. member. The hon. member, who helped to frame the Immigration Act, knows what powers the Immigration Act gives to the minister and he knows perfectly well that it gives the minister no power to authorize any person, except a person in the employ of the department, to act for the department.


Donald Methuen Fleming: May I ask the Minister of Citizenship and Immigration if he has had a communication in any form from Premier Smallwood of Newfoundland in reference to the premier's threat to deport certain persons from that province?


John Whitney Pickersgill: The answer is "no".


Donald Methuen Fleming: I hope this will be final.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. Alistair Stewart (Winnipeg North):: Mr. Speaker, I should like to ask a question of the Minister of National Defence. Since 19 lives have been lost in 20 crashes of T-33 aircraft during the last year in Manitoba, is the air force contemplating grounding T-33's pending an investigation as to whether the aircraft is to blame, or the methods of training. Are any changes in administration contemplated in Manitoba stations?


Ralph Osborne Campney: Mr. Speaker, I thank the hon. member for having given me notice of his question. May I say at the outset that I do not agree with the suggestion contained in the latter part of his question, that either lack of airworthiness of the aircraft or the method of training is responsible for the accidents which have taken place.
2994	HOUSE OF
Inquiries of the Ministry Naturally the Royal Canadian Air Force and the department are very much concerned with any accidents which result in loss of life. But, as I said, in answer to a question placed on the order paper by the hon. member, the answer to which appears at page 2431 of Hansard for March 28 last, our aircraft accident rate in Canada compares very favourably with those of the United States and the United Kingdom.
With respect to the T-33 crashes which have taken place in Canada, I may say that it is routine practice for expert R.C.A.F. accident investigators to investigate each specific accident thoroughly. This has been done in respect of each T-33 crash. After a careful reconstruction of each crash, in so far as it was possible, the Royal Canadian Air Force is convinced that no pattern has emerged from these accidents which would indicate any structural defects or any lack of airworthiness in the aircraft. There is therefore no appreciable reason why the aircraft should be grounded. As a matter of fact the T-33 has had a long and very good record of service both in the United States and in Canada.
Instructional techniques employed by the Royal Canadian Air Force have gone through a long and gradual evolution and are similar to and in some respects are considered superior to methods employed by other major air forces.
I might also add that the concentration of T-33 accidents in Manitoba is probably not unrelated to the fact that practically all T-33 flying training and weapons training in the Royal Canadian Air Force is being carried out in Manitoba. The scope of this training can be judged when I mention that there are several hundreds of T-33's involved.


Alistair McLeod Stewart: May I ask
a supplementary question? Are any changes being contemplated in the administration of the stations in Manitoba?


Ralph Osborne Campney: Not that I am aware of.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. F. G. J. Hahn (New Westminster):: should like to direct a question to the Minister of National Revenue, notice of which I did not send him. He may wish to take this as notice. Will the minister tell the house why such a well known and respected firm as Southam Press company was denied the right to the


transfer of the application for control of radio station CKNW, New Westminster, by the Canadian Broadcasting Corporation board of governors, as announced in this morning's Montreal Gazette?


James Joseph McCann: I shall have to take this question as notice.



POLIOMYELITIS


[Stage Direction]
On the orders of the day:
Mr. John B. Hamilton (York West):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare, which is a follow-up to my question to him on March 7 last. Has the government, in cooperation with the provinces, any plans to take over or take part in the distribution of the proven Salk poliomyelitis vaccine, which is shortly to be available on the Canadian market through commercial drug houses, in the same manner as it is doing with the supply of the Connaught laboratories of Toronto?


Hon. Paul Martin (Minister of National Health and Welfare):: Mr. Speaker, the hon. member for Mackenzie has given me notice of a question which I think in some particulars is the same as the question which my hon. friend has just asked me. The hon. gentleman who has just put his question did not give me notice of the specific question and consequently in fairness I feel that I should refer to the hon. member for Mackenzie.
The federal government, of course, has no control in so far as control of the distribution of products of any commercial organization is concerned. It is true that the Minister of National Health and Welfare did give a licence to two commercial companies, but that licence had to do with the testing of the potency and the safety of the particular vaccine. It will be a matter for provincial action as to whether or not there should be in any way control directed over the distribution in a province of a company. However, I think the question presupposes facts that are not really the case. It should be understood that the only sources of supply of the vaccine in the United States will be the commercial companies. That is not the case in Canada. The main source of supply for some time will be the Connaught laboratories at the University of Toronto, and within a very short time as well the institute of microbiology at the University of Montreal. I cannot say exactly when the commercial product

will be available, although perhaps one company now is in the process of distributing, in certain parts of Canada, some small quantities of the vaccine.
Whatever control is being arranged has already been provided for as a result of a decision made by the ten provinces and the federal government last fall before the full value of the vaccine was made known. As a result of those prearrangements, I believe there will be in Canada as great a measure of control providing for the availability of this vaccine as exists in any other jurisdiction in the world at the present time. Much credit for this should go to the provinces and to the federal government who were able to make this arrangement, and I should like to say particularly to the Connaught laboratories who have played such a distinguished role in this very important matter.
As I have said publicly, great credit for the vaccine must go primarily to Dr. Salk, but if it had not been for the role of the Connaught laboratories, success in Canada would not have been attained so early. In view of the historic character of this particular discovery, I thought I should in this house mention particularly in grateful acknowledgment the services of Dr. Defries, of the Connaught laboratories, and particularly the researches of Dr. Rhodes, Dr. Joseph Morgan, Miss Helen Morton and Dr. Parker, all of the Connaught laboratories.
I am happy to say, Mr. Speaker, that Dr. Morgan, who was a member of the research team that discovered medium 199, which is so essential to the preparation of the vaccine, is at the present time, along with Miss Morton, a valued servant of the Department of National Health and Welfare.
This vaccine will be available in Canada in as great a quantity during the next two or three months as will be the case anywhere in the world. I expect that one-


Mr. Macdonnell:: Time.


Paul Joseph James Martin: My hon. friend says "time". I think the people of Canada want nothing but the fullest information.


Mr. Sinclair:: Hear, hear.


Paul Joseph James Martin: And I take advantage of the very kind question put by my hon. friend to provide this information. We expect that as a result of the preparatory arrangements which I have indicated it will be possible to provide inoculations for possibly 1,500,000 individuals in Canada by July 1.


James Sinclair: Have you any more questions?


John Borden Hamilton: I have a supplementary question, Mr. Speaker.


Some hon. Members:: No.
Inquiries of the Ministry


John Borden Hamilton: However, I hope that I do not get a supplementary speech. Is the minister aware that already there are rumours of a grey market or a black market in the product he spoke about?


Paul Joseph James Martin: Mr. Speaker, the Minister of National Health and Welfare is aware of every rumour, unfounded and founded. I may say that we anticipated this one, too. As a result of the arrangements that we have made with the heads of governments in all the provinces, including the province from which my hon. friend and I come, I am sure that if there are any dangers of that kind they will be effectively dealt with by the provincial governments, the constitutional authority concerned.


Mr. A. M. Nicholson (Mackenzie):: Mr. Speaker, there was one section of my question that the minister did not touch on. My speech will be very short. Will the minister indicate what percentage of the available serum will be distributed through local public health authorities and what percentage through firms like Parke, Davis and the other company the minister mentioned? What percentage of the serum will be free through public health services?


Paul Joseph James Martin: All the supplies that are now in existence in Canada, enough for 750,000 individuals at the moment and for 1,500,000 by July 1, we expect will be provided through the Connaught laboratories. I cannot state now precisely what will be the percentage emanating from commercial sources, since I have not been told that yet, but I expect that by July 1 it will be negligible.


Major James William Coldwell: May
I ask a question with regard to the 1,500,000 dosages? Can the minister tell us whether there will be sufficient dosages for the followups? I understand there are three stages. Will these use all the vaccine available, or will there be sufficient available to follow up these 1,500,000 cases with further inoculations at the right time?


Mr. Marlin:: It is not 1,500,000 doses; it is 1,500,000 individuals. It will be up to the provinces to decide how many dosages they will want to give. In most provinces I have just been advised-I have not had a chance to peruse the reports of the provinces that have sent in their reports, but all provinces at this time are going to use two instead of three shots with the exception of Nova Scotia, Alberta and British Columbia. Of course that will not take care of the vaccinations which will be required by the whole country, but the Connaught laboratories and the institute of microbiology at

Inquiries of the Ministry Montreal will be working day and night to take care of Canadian needs.


Daniel (Dan) McIvor: Mr. Speaker, I should like to ask a supplementary question. Will the children of parents who do not believe in the use of this vaccine be compelled to take it?


Paul Joseph James Martin: Of course the actual responsibility in that regard is not mine, but knowing the provincial governments as I do I do not believe that anyone would be forced to do anything which a Liberal government would not agree to.


Mr. E. G. McCullough (Moose Mountain):: Mr. Speaker, I should like to ask a supplementary question. Can the minister give assurance to the house that all the vaccine from the Connaught laboratories, which I think he indicated would equal 1,500,000 doses, will be made available free of charge to the people of Canada? I think that that is the crux of the situation.


Paul Joseph James Martin: Perhaps my hon. friend would want to consider reframing his question and putting it to me again.


Edward George McCullough: I think I can make it just as clear as the minister's answers have been to date. Will the serum amounting to 1,500,000 doses which the minister has indicated will be available by July be given free to the people of Canada?


Paul Joseph James Martin: With all respect to my hon. friend, I did not say, what he has indicated in his question I said. It is not 1,500,000 doses but 1,500,000 individuals. That is the number of persons whom we hope it will be possible to vaccinate by a stated date. Under the terms of the national health program we have, in accordance with arrangements made last fall, offered to the provinces on a 50-50 basis money which we hope, in view of the character of this particular illness, will be used for inoculations and immunizations for an unstated number of individuals throughout this country. If an individual wants to go and pay for it through a commercial house, that will be up to him; but in accordance with the arrangements which I mentioned earlier and which I announced last week the answer to my hon. friend's question is basically "yes".


Major James William Coldwell: May I ask a supplementary question? Do I understand that arrangements have been made for a 50-50 division of the cost and that this is in addition to the health grant?


Murdo William Martin: It is under the terms of the national health program.


Major James William Coldwell: That means that if a province has not used its health grant it will be in a favoured position as compared with those which have carried out their obligations and used the health grant.


Murdo William Martin: I do not think that it will work out that way. I think every province will be treated equally.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Prime Minister. In view of the decision in Ontario to have a committee of the legislature study the question of radioactive fall-out in that province, will the government consider setting up a committee of this house to make a similar study with respect to the whole of Canada?


Right Hon. L. S. Si. Laurent (Prime Minisier):: Mr. Speaker, the government will give consideration to the suggestion made by the hon. member and, if it is found that there would be any real service to the Canadian public by the establishment of such a committee, will not hesitate to recommend it.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, April 19, consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Mae-donnell, and the amendment to the amendment of Mr. Coldwell.
Mr. F. S. Zaplilny (Dauphin):: Mr. Speaker, this afternoon I wish to speak to two specific subjects, one having to do with the Department of Agriculture and one having to do with the Department of National Revenue. Before proceeding to deal with those matters I should like to make a few general comments with respect to the budget which is now before us.
On careful reading of the budget speech of the Minister of Finance (Mr. Harris) one is struck almost immediately with the number of "ifs" contained in the budget. For this reason it could be called the "if" budget, and therefore I think hon. members generally will find it rather difficult to discuss the budget. A great number of unknown factors were contained in the analysis and

proposals of the minister. However, there were some things specifically stated and I should like to draw attention to one or two of these.
In my opinion one of the glaring omissions from the budget proposals is the almost complete lack of any provision for the primary producers of this country. With the exception of a few minor changes in the tariff structure having to do with certain equipment imported for farming purposes, there is almost a blank-out of any reference to any change which would be of benefit to agriculture generally. The few changes which are provided in the tariff structure for the benefit of agricultural producers I think are more than offset by one provision which will be included in the budget proposals if the minister carries out his expressed intention of increasing the tariff on ethylene glycol.
If as a result of the study made by the tariff board the government goes through with this increase it will do more harm to agricultural producers than the total of the concessions which have been made through the reduction of the tariff on certain items. I certainly hope that the minister will not recommend to this house any increase in the duty on that commodity because the differential between the Canadian and United States prices is already considerable and the only effect of any increase would be to increase the price to the consumer in Canada. As the minister knows, with mechanized farming this is a commodity which enters definitely into the cost of production.
The other matter to which I want to make reference is the reducing of the tax on corporations. The minister was only carrying out a broad hint which he made last month in Montreal, in which he indicated that the tax on corporations was too high, and he therefore took steps to reduce it in the higher brackets. But I cannot be too enthusiastic about the reductions in the individual income tax, because it seems to me that the reductions in dollars are being made for those who least require them; in other words, the ones who needed the relief from taxation the most got the least consideration.
If I read correctly the table placed on record by the minister in regard to single taxpayers, table III at the top of page 2736, I find this. If he is earning $1,500 he will pay $5 less in 1955 than he paid in 1954. If we jump to $3,000, we find he will save $20 in taxation. If we jump to $10,000 income, he will save $90. If we jump further to $50,000, he will save $490. Then if we jump to $400,000, he will save $3,990. In dollars and cents, that means that a person with an
The Budget-Mr. Zaplitny income of half a million dollars will get as much tax relief as 800 single persons earning $1,500 a year. In my opinion that is going about it in altogether the wrong way. If it is the intention of the minister in making these tax reductions to increase the purchasing power of the Canadian public-I would assume that would be the chief consideration, as I can think of no other one which would be more valuable-then by relieving the person with an income of half a million dollars by almost $4,000, he is not increasing his purchasing power in the normal sense, because that person is already able to buy everything he requires with the income he has. He is giving him a tax reduction equal to that of 800 persons in the $1,500 bracket. In my opinion, the more equitable way to have done it would have been to raise the exemption level and make the necessary adjustments in the rates in the higher brackets in order that all the benefit of the raising of the exemption level would come to the persons in the lower income groups. Not only would that provide them with a greater amount of purchasing power generally, but it would also save the Minister of National Revenue a great deal of headaches and administrative expense, because he would have immediately perhaps tens of thousands less income tax forms to process; if you raise the exemption level, there will automatically be a large number of persons who have no longer to be taxed.
I think that would be a fairer and more effective method of providing tax relief for those who need it most, and it would be of benefit to the whole economy if it were done that way. However, the minister has chosen this way, and quite obviously it is a shift to the right: reduction in taxation for the big corporations and big reductions in income tax for the people with big incomes, but practically peanuts for the ones in the lower income groups.
While there has been some relief from taxation for certain groups, there is one group, as a matter of fact, which as a result of the budget proposals is facing a serious loss, and I wish to say a word on that today. I refer to the automobile dealers who are stocked now with new cars, for which they have already paid, including the excise taxes. They should receive some consideration with respect to a refund on the tax they have paid, to the extent of the reduction of the excise tax. Perhaps the government is not aware that in the last few years the automobile dealers have been put into an entirely different position from that which they used to occupy with respect to the automobile manufacturers. It used to be possible for an

The Budget-Mr. Zaplitny automobile dealer to obtain a number of new cars on what was known as consignment. In other words, he did not have to pay for them in cash; the cars were shipped to him, and if he was able to sell them he paid the company within a certain length of time. Now the situation is different. Owing to the credit restrictions which have been imposed in recent years on the dealers, the dealers are now obliged to pay cash on delivery for the automobiles they order. Automobile dealers who now have new cars in stock will have to pay for them, including the tax. There is no provision for them to return these automobiles to the manufacturer; they are bought and paid for. They are in the position of having to lose between $135 and $150 per unit, at a time when they have had a few years of not very active business. I would hope that the government would reconsider the decision announced the other day by the Minister of Finance and endorsed by the Minister of National Revenue yesterday. I think that is one group which will face serious loss unless some consideration is shown.
Now I come to the particular matters which I wish to discuss today. The first one has to do with the question of public investment. I am going to narrow down the subject in this case to the Prairie Farm Rehabilitation Act. I do that for a particular purpose. This house has debated on one or two occasions resolutions moved by the hon. member for Kootenay West dealing with the national conservation program, and in my opinion it would be very desirable. Until we are prepared to make such a move there is now on the statute books an act enacted in 1935 and amended in 1937 and again in 1951, known as the Prairie Farm Rehabilitation Act, which has to do with the three prairie provinces and the Peace River block in British Columbia. Now under section 4 of this act the minister is given certain authority with the advice of the advisory board to do certain reclamation work, drainage, reforestation, and so forth, in order to prevent soil erosion. In another part of the act, under section 9, the minister is given conditional powers under which he can enter into an agreement with prairie provinces and municipalities in order to do special projects in those areas outside of the area designated in the act.
I should perhaps point out that under the act now the prairie farm rehabilitation board has jurisdiction in an area roughly known as the Palliser triangle, which takes in the southwest portion of Manitoba, more than half the province of Saskatchewan, and the southeast portion of the province of Alberta with a strip going north on the west side.

That leaves out of the jurisdiction of the board a large portion of the province of Manitoba particularly.
We have found that over the years efforts have been made to have the provisions of that act applied to all settled areas in the three prairie provinces, and as a matter of fact in the four western provinces. In May of last year the four ministers of agriculture of the four western provinces had a joint conference dealing with this matter, and in a Canadian Press dispatch dated 10th May, 1954, the following news item appeared, and I quote:
Regina. A recommendation that the prairie farm rehabilitation administration's area of operations be extended to cover all agricultural lands in the four western provinces has been made by the agriculture ministers of these provinces.
Referring to the four provinces.
The recommendation was contained in a joint statement released by Saskatchewan agriculture minister, I. C. Nollet, at the end of a two-day conference of the ministers here Friday. The statement said the conference agreed "the work of the P.F.R.A. has been an important factor in helping stabilize agricultural production in the areas where it has been applied.
The ministers noted that many of the areas outside of the P.F.R.A. boundary in Manitoba, Saskatchewan, Alberta and British Columbia were in similar need of the P.F.R.A. policies.
That was on the 10th of May. In another dispatch of the same date which appeared in the Winnipeg Free Press reference is made to a statement made by the minister of agriculture of Manitoba, the Hon. R. D. Robertson. The article reads in part as follows:
This decision was made at the conference of provincial agricultural ministers and their deputies in Regina last week.
The reference is to the decision to ask the government to extend the provisions of the act.
"The fact that we're all agreed P.F.R.A. should be extended strengthens all our hands." ... At present the P.F.R.A. area coincides approximately with the Palliser triangle and in addition there is the Peace river block.
On the 7th of June last year I wrote a letter to the Minister of Agriculture following a number of conversations we had had about the matter in which I asked whether any action would be taken last year to carry out the requests of the ministers of agriculture of the four western provinces. In his reply dated June 9 he had this to say:
The only area which has been singled out for activities under the Prairie Farm Rehabilitation Act is what is fairly well defined as the Palliser triangle. Anything which is done in the areas outside the Palliser triangle, which is similar to the work done under P.F.R.A., is provided for under special votes which appear in my estimates each year.
Then he ended with this paragraph, and it is rather important:
It has not been thought advisable to assume what the constitution attributes to the provinces, at

least until a final and permanent agreement has been reached between the federal and the provincial governments with regard to financing in general. It is therefore not the intention to introduce legislation during this session.
That was last year. The reason I bring up the matter now and treat it as one of importance is in view of the fact that a dominion-provincial conference is to be held very soon, and it is quite possible this is one of the matters which may be considered. I think it is time that some decision was arrived at because repeated requests have been made by these provinces. We have in the prairie provinces a soil erosion problem which is far more urgent than anywhere else in Canada. It is partly due to the type of farming carried on and partly to the climatic conditions. Soil erosion, resulting in some cases from not enough rain and in other cases from too much rain, is causing damage and loss of fertility running into millions of dollars, and I think it is certainly time to apply public investment to a wasting asset which cannot be replaced.
Once the topsoil is washed down streams or blown away by the winds we have lost the most fertile and valuable part of our farming land. That is a process which has been going on for some time. I speak particularly about the province of Manitoba. If I were to say in the house that the government has discriminated against the province of Manitoba with relation to this act I might be accused of being partisan about the question, but I am going to quote the words of Liberal members of the Manitoba provincial house. Certainly the government would not accuse them of being partisan to their disadvantage. For example, on the 18th of January of this year a report appeared in the Winnipeg Free Press concerning a discussion by Mr. Hill-house, the Liberal member for St. Andrews, of this very question of the application of the rehabilitation act in Manitoba. He had some rather strong criticisms to make of the federal government and particularly the Minister of Agriculture. The article reads in part as follows:
He said, during the Selkirk federal by-election last fall, Right Hon. J. G. Gardiner, Minister of Agriculture, had promised $1 million in federal aid for flood alleviation in the interlake area. However, Mr. Hillhouse said, the amount Ottawa was offering had now shrunk to $125,000 . . .
As a matter of fact, up till now no agreement has been signed between the federal government and the province of Manitoba for any amount of money. These are the kind of things about which we are complaining. When a senior minister of the crown like the Minister of Agriculture goes to a point in Manitoba to speak at an important
The Budget-Mr. Zaplitny public meeting and makes the statement there that he is willing to recommend to the government that $1 million be granted, and nothing is done about it, we have reason to complain. As a matter of fact, it was $1,500000 to start with, then it came down to $1 million and then all the way down to $125,000.
There is an article in the Winnipeg Free Press of March 8 dealing with the remarks of another Liberal member of the provincial house, Mr. Gildas Molgat, member for Ste. Rose. That happens to be part of my federal constituency and I know him very well. The article reads in part as follows:
Earlier Gildas Molgat, Liberal, Ste. Rose, said his area had been hard hit by floods since 1947 and that the P.F.R.A. "is not doing its job".
This is a Liberal member of the legislature making this statement. Then the article continues:
He charged the federal government with "discrimination" against Manitoba in framing the act. and urged that the province "put more pressure on" for amendments to P.F.R.A. so that it would cover all settled areas of the west and place "proper responsibility" on the dominion for damage done by drainage from federal park areas.
He was referring there of course to the Riding Mountain national park which is one of the sources of many of our flood problems in that part of Manitoba. So it goes all down the line. Again, in an article in the Winnipeg Free Press of March 8 you will find the following report of what the minister of agriculture of Manitoba, Mr. Robertson, had said. The article reads:
Mr. Robertson admitted that Mr. Gardiner may have made such a statement-
He was referring to the promise of $1 million.
-but that the deal had not been settled and that the province had insisted that any work affecting the level of the lakes was 100 per cent federal responsibility.
There you have a situation where Liberal members in the provincial house of Manitoba, including cabinet ministers, stand up and say that it is the responsibility of the federal government to carry out these over-all projects which would prevent the flood situations we have had. Yet the Minister of Agriculture states in this chamber that he will not recommend legislation because-and I quote from his letter-"it has not been thought advisable to assume what the constitution attributes to the provinces".
We cannot have it both ways. Either it is the responsibility of the provinces or of the federal government, and if there is any doubt about it then the dominion-provincial conference is the proper place to settle these doubts so that agreement can be reached. I think it is time some action was taken instead of having a lot of promises made at strategic

The Budget-Mr. Zaplitny times, usually when there is an election somewhere in the offing. I leave it at that. I regret that the Minister of Agriculture is not present today but I am sure that my comments will be brought to his attention.
The other matter to which I want to make reference today has to do with the Department of National Revenue. As my text for what I wish to say I want to take a statement made by the Minister of Finance in his budget speech which will be found at page 2739 of Hansard of April 5. At that time he stated:
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. 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.
I have no objection whatever to one minister of the crown paying a compliment to a colleague. It is only a matter of professional courtesy that he should do so. I am not quite sure that he was not a little premature in his congratulations because frankly I am not impressed with some of the methods the Department of National Revenue has employed in the collection of taxes. I raised this question, which I am going to raise today, on another occasion, on March 4, in a debate in this house. While I set out the facts as I have them, and repeatedly asked the government to make some statement about them, when the Minister of National Revenue (Mr. McCann) replied in that debate he made no reference whatever to the statement I had made. Now, either he was not aware of those statements or he chose to disregard them. Whichever was the case, I am going to give him another opportunity today or during the course of this debate to explain the situation which I brought before the house at that time.
I am referring again to the matter of tax remissions made under the authority of the Financial Administration Act, and on the recommendation no doubt of the Department of National Revenue or the treasury board, to four corporations, namely the Aluminum Company of Canada Limited, which received a remission of $549,000, in round figures; the Gatineau Power Company, $496,000; the Saguenay Power Company Limited, $576,000; and the Bell Telephone Company, $371,000. The exact total of these remissions is $1,992,728.11, or very close to $2 million.
Now, the circumstances under which these remissions were made appear to me to be quite unjustified. I stated the facts previously, and I am going to state them again. As a matter of fact, on the basis of another

return which has come to my hand since then, I find that the information contained in the original return or sessional paper No. 99-B in reply to my question of February 14, was not correct. I am not going to accuse the Department of National Revenue of deliberately making a false return because they are very insistent that taxpayers should not do that. There are penalties provided for the making of false returns. But I do say the department made a quite inaccurate return; whether or not it was deliberate I cannot say. The facts stated in the first return do not agree with the facts stated in the later return on the same subject which came to my hand on March 28, 1955. I shall point out the differences in a moment.
When I raised this matter before, I pointed out that the dispute between these four companies and the department arose over a tax liability which the companies claimed they should not pay. The question arose as a result of the Quebec education tax which was imposed in 1946. The four companies which I have mentioned claimed that they should receive a deduction with respect to the education tax they paid to Quebec. The Department of National Revenue held that they would have to pay their full liability. In my opinion the department was quite justified in their attitude. If we refer to the Income Tax Act, section 12, we find the following:
In computing income, no deduction shall be made in respect of
(g) a corporation tax, as defined by regulation, paid to the government of a province or to a municipality . . .
Well, th.ere is not much doubt as to the meaning of that. On the basis of that section the department, I think quite properly, turned down the claim of the four companies and insisted that the tax be paid. The companies decided to appeal to the income tax appeal board, and here is where we find one of the differences between the two returns that are received. The original return stated that the matter was submitted to the income tax appeal board and the board decided that the tax in question was deductible. Then the return states that on appeal to the exchequer court the board's decision was reversed. All this information refers to these four companies.
Upon looking at the second return I find that, as a matter of fact, two of the companies did not even appeal to the income tax appeal board and that with respect to them, there was no appeal made from that board to the exchequer court. Those companies were the Aluminum Company of Canada

Limited and the Bell Telephone Company.
I quote these words from the second return:
Regarding the Aluminum Company of Canada Limited and the Bell Telephone Company of Canada it may be said that these two companies filed appeals from the disallowance of the Quebec education tax as a deduction from income.
The question in issue was similar to the one raised in the appeals of Gatineau Power Company and Saguenay Power Company Limited. In view of the fact that these latter appeals had previously been heard by the income tax appeal board and by the exchequer court, the Bell Telephone Company of Canada and the Aluminum Company of Canada Limited requested, and the crown agreed, to a stay of proceedings awaiting the decision of the exchequer court.
Then this important paragraph follows:
Subsequently a settlement having been made with these companies, the appeals were withdrawn and as a result they were heard neither by the income tax appeal board nor by the exchequer court.
In the original return, I am informed by the same department, in all four cases the appeals were heard by the income tax appeal board, which ruled in favour of the company and then on appeal to the exchequer court that court ruled in favour of the government and reversed the decision of the appeal board. There, you have a discrepancy in the information and-


Mr. Harris:: Would the hon. member permit a question? I must say that I am seeking information because I am not too familiar with the subject matter. Is it not a fact that the settlement which was made would be recorded in the higher courts as a settlement, and to that extent the return would be correct?


Frederick Samuel Zaplitny: To which court does the minister now refer?


Walter Edward Harris: The court that my hon. friend said had not passed on this?


Frederick Samuel Zaplitny: With respect to two of the companies the matter went as far as the exchequer court but with respect to the other two it did not go to the exchequer court because their appeal was not made.


James Joseph McCann: But the principle involved was the same.


Frederick Samuel Zaplitny: That may be correct, but the information is not stated in that way.


Walter Edward Harris: It is quite customary to stay one action while another is being heard.


Frederick Samuel Zaplitny: I am not quarrelling with what was done in that respect. I am pointing out that the information given in the first instance was not correct and does not agree with the information later given concerning two of those companies.
However, the remissions were made to these companies under the terms of the 50433-190
The Budget-Mr. Zaplitny Financial Administration Act, section 22. In that section permission is given to the governor in council to make such remissions but there is a very important proviso to the effect that it must be in the public interest. The government is not permitted to just throw the public's money away any time they feel like it. They must justify that remission by proving it is in the public interest to do so.
In attempting to justify these remissions the Department of National Revenue stated two reasons in the original return. I quote:
Taking into consideration the uncertainty of the outcome of the pending appeals to the supreme court and of the effect of the new legislation, it was considered advisable to accept the offer of the settlement made by the company.
The appeal referred to is the one which two of the companies made to the supreme court after the exchequer court had ruled in favour of the government. The appeals were never heard but the actions were started. The effect of the new legislation referred to here is the fact that in 1953 the paragraph in section 12 to which I have referred earlier was repealed by section 4 of the amending act, so that subsequent to 1953 that paragraph no longer applied. But it is stated plainly in the amending act that the section is applicable to 1953 and subsequent taxation years.
In other words, that amendment had no legal effect whatsoever on the taxation years 1946 to 1952. And yet, let us examine these two reasons given to prove that it was in the public interest for the public treasury to hand back $2 million to these four companies, sums which they held in trust for Canada. One reason given was the uncertainty of the outcome of the pending appeals to the supreme court. That is a strange reason to give, in view of the fact that the exchequer court had ruled in favour of the government and stated their reasons for doing so. I have their judgment before me.
Surely, after having referred the matter to a court of proper jurisdiction, the government should have some confidence in the decision handed down by that court. There was no reason why there should have been any uncertainty as to the outcome of the appeal made on behalf of two of these companies. The other two did not even make their appeal to the supreme court. But the one that really strikes me as being strange indeed is the other reason in which it is said that the effect of the new legislation was considered. As I said, the new legislation was passed in 1953, and was to come into effect only for 1953 and subsequent years. It had nothing whatever to do with the case in dispute. If the legislation was valid constitutionally up to that time and was changed in
3002	HOUSE OF
The Budget-Mr. Zaplitny
1953, then by its own laws the government was bound to proceed to collect taxes which under its own legislation became due.
Surely they would not introduce a principle that would leave the door open to any corporation in Canada to put pressure upon the government to change the Income Tax Act in its favour and then say, "Now that you have changed the act, let us go back to 1945 or 1944, and hand us back some of the taxes you took from us under previous legislation." In his budget speech the Minister of Finance (Mr. Harris) was very careful to guard against that kind of thing when he said that certain provisions come into effect on July 1 or January 1, or that they would became effective immediately, as the case may be. None of these things is made retroactive, unless so stated. And it is stated here, plainly, that it is not retroactive, and that it is to take effect from 1953, on. So when one analyses the two reasons given he finds that neither is a valid one. And since neither is a valid reason there must have been others that are not stated. Certainly, in the light of the discrepancies in the return thus far, as time goes on I would not be surprised if we got a third answer. The situation is simply this: that, on the very weak pretence that the effect of amending the Income Tax Act in 1953 in some mysterious way had something to do with tax liability accrued from 1946 to 1952, and on the other flimsy ground that, owing to the uncertainty in the government's mind as to the outcome of the appeal to the supreme court, they felt that it was in the public interest to refund $2 million to these four corporations.
That is a very strange procedure, indeed. Because if the government proceeded by the proper methods, and if they felt that the treasury was entitled to the money they had received, they should have proceeded with the appeals to the supreme court and obtained a ruling in the matter. Then we would know where we stand. If they were not entitled to the money, then they should not have assessed it for liability.
As it now stands, the government has given a concession amounting to $2 million to four companies, and under circumstances which to me appear to be of a very suspicious nature. Until we have an explanation in the *house, and until we are told how the government can justify its action under section 22 of the Financial Administration Act, then we have every reason to continue to be suspicious and to believe that the Minister of Finance was rather optimistic when he congratulated the Minister of National Revenue (Mr. McCann) upon the efficient and impartial method used in collecting taxes.


James Joseph McCann: Is the hon. member aware that the remission of tax liability was only to the extent of 50 per cent?


Frederick Samuel Zaplitny: Exactly.


James Joseph McCann: Then put it on the record.


Frederick Samuel Zaplitny: That is what I referred to. But it still amounts to $2 million. The question is not one as to whether it was 50 per cent, 25 per cent or 10 per cent; the question is: Was it justified in the public interest; and, if so, on what basis can the minister justify that remission?


James Joseph McCann: I shall reply either during the budget debate, or more probably when my estimates are under consideration. I believe I shall be able at that time to answer all the hon. member's complaints. The submission was a joint one by the minister of finance of that time and the Minister of National Revenue, and was concurred in by the government. It was not a departmental order, entirely.


Mr. David A. Croll (Spadina):: Mr. Speaker, I intend to stay away from that aspect of public affairs discussed by the hon. member who just sat down. Rather it is my intention today to discuss the guaranteed annual wage, the related problem of automation and the manner in which it may affect the economy of this country. Up to the present time the surface of the implication has scarcely been scratched; today I intend to do a little scratching at it. Most people ask, what is it all about? The workers say that if it is good for management to be paid by the year, then it is also good for the workers. The employers say it is illogical and uneconomic to pay wages to people who are not working.
I wish first to deal with automation. This is a new word used to describe the replacement of manpower by automatic machinery. Frequently this is described as the second industrial revolution, brought about by electronics. Let me place before the house a few examples of automation. The dial telephone is one; the machine in the telephone company which dials long distance calls, records the time and computes the cost is another; the electronic mail sorter is another. The machine in government offices which prints old age pensions and family allowances cheques by the thousands, and records them, is another; the machine that sends out premium notices from the large insurance companies is another. We are told that the Ford Motor Company has a new engine plant in Cleveland where six-cylinder engine blocks are turned out by an electronic brain which controls 42 automatic machine units. All that is done in 15 minutes. Formerly

it took nine hours to do that operation. The Toronto Star on April 19 carried a report from St. Catharines as follows:
The age of automation in Canada has been ushered in at a modern new plant of McKinnon Industries Limited, the one-time Canadian supplier to the saddle and buggy trade which now provides powerful engines for General Motors of Canada cars.
In the new plant in Grantham township near here, which was designed and built solely for the production of a new V-8 type of engine, mechanization has been advanced until a single operator monitoring panels of flashing lights can now control the continual flow of engine blocks through a 140-foot monster machine that performs hundreds of operations without the touch of a human hand.
There are many other instances, too many for me to mention here. As a result of those improvements no one is sure whether automation will merely jeopardize or destroy jobs. But one thing I think is certain, that automation will bring about some job dislocation which will require the shifting of workers to new jobs and to new employers. It is quite possible that if we find more ways to do more work in fewer man hours there will be more work to do, and thus it will increase employment. That of course has been the historic position of industry; we can go back to the time of the invention of the loom which could weave six webs at one time.
The workers are not fighting automation, but they want to cushion its effects and they want to share in its fruits. The guaranteed annual wage is the workers' concept of wiping out the insecurity of lay-offs and loss of wages. They look upon it as a challenge to management. Labour is asking management to guarantee to workers an annual wage in the same way management is now provided. They ask to share in the abundance. Labour does not ask that management subsidize idleness. They want less idleness; that is their chief complaint. They believe that the genius of management, under free enterprise, can help solve and destroy the evils of unemployment as they now resolve the problems of production and distribution. Nothing can be settled by ignoring this problem or by calling it names, so we might as well start discussing it.
The words "guaranteed annual wage" are something of a misnomer, since they do not quite mean what they say. Theoretically it could mean a guarantee of some wage for 52 weeks; practically it means a guarantee of some income or period of work. It has as its purpose two main objectives, the elimination of the short work week and the elimination of seasonal slack time lay-offs.
The arguments used by business today are the same ones that were advanced against the minimum wage law, workmen's 50433-190J
The Budget-Mr. Croll compensation, old age pensions, unemployment insurance, the eight-hour day and industrial pensions. The historic position of business has been that the guaranteed wage will bring on inflation, force bankruptcies and make workers lazy. We have heard all that before and it just did not happen. I ask this house whether all these improvements I have mentioned, and collective bargaining, holidays with pay and health benefits have harmed the economy or the people of this country.
My purpose in bringing this to the attention of the house is not to recommend a blind rush into guaranteed annual wage agreements. I do recommend to this house a very thorough examination. Job security and security of wage income have always been matters of great concern not only to the workers but to the employers, to the labour unions and to the governments. Thus guaranteed employment or wage plans have gained widespread support amongst wage earners, reflecting a very deep-rooted desire for steady jobs and steady incomes.
Let me be more explicit. A guaranteed employment, or a guaranteed wage plan, is a formal commitment by an employer to provide for all or some of his employees a stipulated amount of work or wages during the year. Under guaranteed employment a certain amount of work is guaranteed. Under the guaranteed wage plan income is guaranteed. The difference between the two forms is largely one of emphasis. Many employers have voluntarily attempted to provide year-round employment, not only because of such intangible but important benefits as better labour relations and the good will of the community, but also because of the savings to be derived from reduced turnover of personnel and the improved employee morale which result from eliminating the workers' fear of unemployment.
Employers in the main have been unwilling to commit themselves to guaranteed annual employment, fearing that seasonal or cyclical fluctuations, or both, may make fulfilment of that impossible. Some experts do say that stabilization of the workers' income, or lessening of the effect of unemployment, can be brought about to a certain extent through seniority rules, work sharing in slack seasons and dismissal pay.
These measures all help to bridge periods of unemployment or idleness. They do not provide security of income or employment. Seniority rules merely determine which employees are to be laid off. Sharing work also means sharing unemployment. Dismissal pay only softens the blow from the loss of

The Budget-Mr. Croll the job. Although unemployment insurance provides some income during slack periods, payments are comparatively small and continue for a short time. There is no doubt that unemployment insurance is helpful, but it is not a satisfactory substitute for regular and steady employment, and it was never intended to be that.
Let us for a few moments examine in a general way what are the implications of an annual wage guarantee. Of course many questions come to mind when considering a nation-wide application of a guaranteed annual wage. If we consider the feasibility of a guaranteed annual wage in the steel industry, and I use this only as an example, we are concerned immediately with the problem of synchronizing demand and employment with those of other interdependent industries.
Two questions undoubtedly arise in the minds of those who are giving this matter some thought. First, would the commitments of an individual firm under a general industry agreement for a guaranteed annual wage need to be reinforced from a more general pool of resources? The second question of course is whether such an undertaking would require government participation in the pool to take care of cases where a whole industry is in a depressed state.
Some of these questions may be answered by the fact that if a guaranteed annual wage plan were undertaken during present high employment, a fund of purchasing power in the hands of the consumer could be assured. This in turn would increase demand for new investment to match a sustained consumer market. The possibility of failure to meet commitments would thus be reduced to a minimum. Of course there is the further possibility that with the aid of unemployment insurance an annual wage program could become a reality.
It is axiomatic, and it has been so stated by many hon. members in the house, that where workers are assured of full employment and economic security they furnish a background for that mass of purchasing power so essential for the continued turning of the wheels of industry. The production of steel depends entirely upon the wheels of industry turning, which in turn depends upon both the purchasing power of the people at home and the demands of foreign markets. If the steel workers, and I again use them as an example, as a group are guaranteed an annual wage thereby assuring continuity of full employment, they have a stability which permits them to go out and purchase automobiles, refrigerators and the thousand and *one articles which require steel.

I intend to discuss for a few moments some of the arguments which have been presented from time to time in favour of an annual wage, and some which have been presented which are unfavourable to it. Let us examine the advantages of a guaranteed annual wage. The worker's feeling of security is increased; his morale is strengthened and maintained. Partially employed workers find it difficult to recognize the need for increased production when the results of their efforts are likely to result in lay-offs. Under a guaranteed wage the worker feels free to exert the maximum effort. He knows that increased effort on his part does not mean that he will lose his job.
Surveys indicate that many workers would prefer regular employment at moderate wages to irregular employment at high wages. Increased security would result in greater cooperation between labour and management. The worker's efficiency is likely to be improved. There will be less incentive to make work last. The sense of responsibility will be increased, resulting in less breakage and less faulty work.
The labour turnover may be reduced. Irregular employment often results in a high labour turnover, which increases costs because of the loss of trained men and the expense entailed in continually hiring new workers who have to be trained and whose initial efficiency may be low. The existence of an annual guaranteed wage plan will stimulate management to find ways and means to regularize production. Since workers will have to be paid whether or not there is work for them to do, every effort will be made by management to find something for them to do by trying to smooth out the variations in demand for the products of the industry and in the supply of its raw material, and by improving the organization of production and distribution.
To the extent that a guaranteed annual wage serves as a stimulus to the stabilization of production, unit overhead costs will be reduced because the same volume of production will be obtained with less capital, machinery and floor space, and a smaller labour force may well be needed. The stipulation that the guaranteed annual wage will not apply in certain specific instances might bring about a reduction in absenteeism, which would increase industrial output and thereby reduce costs. It is quite possible that there would be a beneficial effect on the economy as a whole. Other manufacturing industries and the retail trade would experience a greater stability of demand as a result of which consumption would be likely to be stimulated and investment in new undertakings encouraged.

Let us examine for a few moments some of the disadvantages which are from time to time put forward in opposition to a guaranteed annual wage. Those who are opposed say that if only a portion of the workers in a plant receive an annual wage the workers may be divided into two antagonistic groups resulting in a lower plant efficiency. The expense of operating a guaranteed wage plan may be greater than is justified by the benefits. This is particularly the case if work has to be done which involves increased variable as well as semi-variable costs. Greater stability may make it difficult for seasonal industries to acquire the temporary labour necessary to meet peak demands or to process raw materials available only at a particular season or time of the year.
The adoption of a guaranteed wage plan may force a firm to diversify its production, thereby increasing costs through a reduction of the economies which may be obtained from specialization. Further, a company may attempt to produce for stock when demand falls off, and this may prove to be a risky and costly undertaking which may outweigh any savings to be derived from operating at full capacity in a specialized industry. Business risks may be increased, and the entry of new firms may be discouraged.
A guarantee of wages would have the effect of converting some variable and semi-variable costs into fixed costs. This increased rigidity of the cost structure may make it difficult for a company to meet changing conditions successfully. The effect of this in any particular industry depends on the proportion which labour costs form of total costs. Another argument often heard is that it may have the effect of freezing the worker in his job and thus ending his mobility.
Those are some of the arguments pro and con which I have been able to marshal. There are many others. I felt the house was entitled to have both sides of the story now, since this will be a matter for discussion for some time yet.
I am going to be more specific now and deal with one particular problem. How would the guaranteed annual wage affect the automobile industry? Press reports indicate that it is now breathing down their neck. It is my own theory that the guaranteed annual wage is tailored for that industry and fits it like the paper on the wall. What is more, the industry by its very method of operation has been asking for it for a very long time. The constant and persistent lay-offs in that industry serve to spur the workers to obtain an income sufficient for 12 months. They and their families cannot be expected to go on
The Budget-Mr. Croll short rations from the day of the lay-off until the day the call to return to the assembly line is sounded.
No one denies that a corporation has a duty to its stockholders to see that its operations are efficiently run and make a profit, but there is another duty which must be harmonized with that responsibility for making profits. That is the duty to the men who make the profits possible, a clear recognition of their right to be freed from the spectre of constant and persistent lay-offs. By countenancing the valleys and peaks in their industry, they have indicated that the methods which in their fathers' day were best are not good enough today. These times demand new methods, new approaches and a clear grasp of what is right, proper and just.
The automobile industry operates under a high protective tariff which limits competition. It is controlled by the big three, General Motors, Ford and Chrysler, who take full advantage of the tariff. It is true that the industry has made great contributions to the economy and well-being of this country. They pay good wages, but for too short a time. High wages are not a substitute for employment.
It must also be said that the industry has grown in importance and influence, and in the process has become rich in business and fat in profits. It is about time the rules were revised, because the industry has turned a bad habit into a practice, by producing at a very high rate for nine or ten months and then turning the workmen out to fend for themselves or become a charge upon the municipality until they are once again needed. With the advent of unemployment insurance workers collect benefits during unemployment, but these are still much less than normal pay. They now ask that work be spaced so they can work regularly in order that they may eat regularly.
The pattern of the industry is about as follows. They have six months of concentrated production, followed by four months of normal production which tapers off to a trickle, and then a two-months' lay-off. This is usually done under the guise of stocktaking, retooling for new models, renovating, repairing and maintenance, which is done with minute and tender care for the plant and the machinery. During that period the workers must look out for themselves; there is no maintenance for the workers as such.
The record of the industry is very interesting. During the years 1924 to 1928 the employment variation in the industry was 27'4 per cent. During the years 1947 to 1951 the employment variation was 4-7 per cent-
3006	HOUSE OF
The Budget-Mr. Croll these were years of great shortages and great demands, and there was very little competition.


Mr. Rowe:: Did you say 4 per cent variation?


David Arnold Croll: Yes, that is what I said.


William Earl Rowe: You also said 27 per cent?


David Arnold Croll: I said that the variation between 1924 and 1928 was 27-4 per cent. The variation in employment from 1947 to 1951 was 4-7 per cent. Now, once again the industry is being subjected to sharp short-term lay-offs which are increasing in number and severity. In the face of competition the employment variation now is almost three times what it was in the 1947-1951 period. It is rising again. Thus by the failure of the industry to correct the pattern which I have indicated, it has for the present time lost the initiative by default.
I do not think the guaranteed annual wage will affect industry adversely. I think it will provide it with an exercise in planning and economics which it can solve in the same way it has solved other very difficult problems. If they must find work for their employees on a year-round basis they will learn to make cuckoo clocks, and they will make them better than anybody has made them before. They will sell more and more, and sell them on the time payment plan in order to provide employment and profit. It is not good enough for industry to say that they have to meet consumer demand, for it is well known that they not only stimulate but they create consumer demand.
It must be said in fairness to them that industry is not unaware of its shortcomings and has attempted to meet the situation by bringing out new models in the fall rather than in the spring, and thus have a winter selling season. That is a laudable effort to stabilize the industry, but in the face of competition they are reverting to the old practice and the old pattern once again, and that is a dangerous one. The industry-and I think I know it well-is fortunate in that it has not only genius but talent within its ranks. The genius has been devoted to engineering, mechanization, production, distribution and automation; the talent to the human problems, the workers and labour relations. That is not good enough. It is time they applied the genius where they now apply the talent.
The guaranteed annual wage is not revolutionary; it seems to me rather evolutionary.
I believe that the companies are hungry for a solution, but are fearful of breaking new ground and fearful of letting the team down. They can meet the challenge if the big three will undertake to do it collectively. Here is a great opportunity for them to give leadership by doing away with these periodic and 

what appear to be totally unnecessary layoffs. The guaranteed annual wage has been operated chiefly in the United States, where only a small portion of the workers have been covered, and the same thing is true of Canada.
In replying to a question by the hon. member for Winnipeg North Centre on February 14, the Minister of Labour said in effect that no study was being made by the department of the guaranteed annual wage. In answering the question he also had something further to say. He said that in 1953 there were two guaranteed annual wage plans in manufacturing industries in Canada and three guaranteed annual plans in nonmanufacturing industries, the total number of employees covered being 1,900. One plan has since been discontinued.
In 1954 there were eight guaranteed annual wage plans with a total number of employees of something like 1,050. To bring the house up to date, my information is that in 1955 we must add to that number the John Labatt Company of London which employs 500, the Pert Hosiery company of Montreal which employs 60, and the Eaton Knitting Company of Hamilton which employs 150. Some other countries have recently introduced guaranteed wage plans, but they have generally restricted them to a certain limited number of hours of work per week.
My purpose in rising today was to anticipate a measure such as this which can have a healthy effect upon our economy. Just as many of us have envisaged and fought for measures of social and labour betterment, minimum wages, workmen's compensation, the eight-hour day and 40-hour week, unemployment insurance and so on, so we have to give thought now to the guaranteed annual wage. While we have a high level of employment at the present time, we must maintain that condition by all the devices at our disposal. I do not regard the guarantee of wages as a panacea, but I do think it is a tool which can be put to work to round out a program of greater security, and which will make for harmonious industrial relations and a more lasting prosperity. At least we can give some study to advance the frontiers of knowledge in this particular field. This would give us a chance to bone up in order to create a climate of understanding and informed opinion with respect to what appears on the horizon.
Before the great debate, which may give off more heat than light, becomes one of great contention, we should give it study. In the light of the minister's answer to the hon. member, to which I have already

alluded, it is my suggestion that the department make a careful and minute study of the implications of the guaranteed annual wage, and when it is completed turn over the report to the committee of this house on industrial relations for study and understanding. That would have the beneficial effect of creating a more thorough understanding by members of the House of Commons and the country generally.
This is no time to stand aloof. It will be on us before we know it. I think we should study the problem before it becomes a labour issue. In that light I present the matter to the government for consideration.


Mr. George H. Hees (Broadview):: Mr. Speaker, in examining the budget I think we must look first to see what is in it and, second, find out, if we can, why this particular budget was presented. First of all I am going to examine the budget and then a little latter I shall describe why I think it was presented.
In examining the budget, may I say that I think it has failed in the main purpose of a budget brought down in a period like this, which should be to provide the stimulus necessary to restore the pace of industrial production, trade and employment.
The first point is the reduction in the income tax. It amounts to 27 cents a week for a married man with two children earning $3,000 a year, which is considerably above the average for Canada. It amounts to 50 cents a week for a married man with two children earning $5,000 a year. That kind of tax reduction is not going to give anybody the incentive to go out and buy a television set, a washing machine, a refrigerator, a stove, a suit of clothes, or any of the things produced by the industries that are hardest hit today. It is going to create very little stimulus to sales in those industries, and I think it has failed in that regard.
The 2 per cent reduction in corporation tax was welcomed by industry but, Mr. Speaker, how much of that 2 per cent is going to be passed on to the consumers in the form of lower prices aimed at stimulating sales? I think very little. It will also do very little to stimulate plant expansion, because it will merely mean a saving of $10,000 to a company earning a profit of $500,000 before taxes. That is not enough to cause most companies to embark on a capital expansion program.
The third thing the budget did was to introduce a 5 per cent reduction in the excise tax on new cars. What does that amount to? It amounts to a saving of $75 on a new popular priced car. But the great majority of Canadians buy new cars on time, and the
The Budget-Mr. Hees great obstacle in their path is the down payment. Therefore the 5 per cent reduction is not going to help them very much.
Although the budget has undoubted political appeal, it does not do the job required of a budget brought down in a period of economic slow-down, such as we are experiencing today. It is a superficial budget, aimed at taking people's minds away from the fact that the government has no plan for counteracting our basic economic ills.
By the announcement of the appointment of a royal commission to study our economy the government has recognized the need for such a plan. But I want to ask the government this question. What has it been doing in the ten years that have intervened between 1945 and now, since the introduction of the famous white paper in 1945 which recognized this need? During those ten years the various departments of the government should have been collecting the kind of information which the royal commission will collect in the next few years. The royal commission will require several years to collect the information, and several more years will probably be required then before the government gets around to formulating an economic plan.
If the government had had its various departments gathering the information which the royal commission will now gather, a plan for industrial expansion could have been put into operation some time ago, and we would not be experiencing the economic slow-down which we are experiencing today. For 15 years the government has been content to ride the crest of an economic boom which it was convinced would never end, but it did end in this past year. Now they have suddenly come to realize that this country is facing economic problems for which they have no answers. In desperation they have turned to the appointment of a royal commission to do the job they should have been doing for the past ten years. The problems we are up against today, Mr. Speaker, are simply the problems which were bound to present themselves when the nations devastated by war got on their feet, and when countries like the United States started looking around aggressively for markets into which to dump their surplus production. They certainly found one in Canada.
So today, Mr. Speaker, this government is trying to cover up its incompetence by turning to the device of appointing a royal commission to obtain information which they should have been collecting during the past ten years. There is no excuse for them not having obtained that information. They recognized the need in the white paper of 1945, and then went completely asleep and did

The Budget-Mr. Hees nothing about it. The government realize they have no information upon which to formulate an economic plan, and the country is taking the rap.
I suppose that in the meantime, until this royal commission reports, this government is going to be quite content to sit back and do nothing. During the next four years, while this investigation is under way, the government will pursue its usual policy of hope and grope, somehow expecting that something is going to turn up-the something that just does not seem to turn up. I do not believe the average Canadian considers that kind of approach good enough. This government is caught badly off base, and it is making no attempt to do anything about it except admit it has no information on which to formulate a plan, and admit it is not going to do anything until this royal commission reports. The government knows quite well it will be several years before the commission can report. I think this is a disgraceful situation for any government to have to admit, but this government is admitting it today because it has no alternative.
Now, although the government cannot come up with any suggestions or any plan, and even though this government is too autocratic, too dictatorial, too self-satisfied to ever accept suggestions from the opposition, it is still our responsibility, failing any suggestions from the government side, to make suggestions concerning what we feel has to be done to pull our economy out of the doldrums in which it finds itself today.
I am going to make a few suggestions. I think what we must do first is try to formulate a plan which will start industrial expansion in this country and will provide steadily increasing employment, a steadily increasing standard of living. That is the only positive approach to this problem of unemployment and lost markets which this government is doing nothing to meet. To do this I believe we must achieve two important aims. The first is to improve the design and lower the cost of the products we manufacture. It is only by so doing that we can protect and improve our competitive position against the products which are made outside of Canada, and which are giving us such severe competition today.
Second, I believe we must greatly expand our secondary industries within this country so we can process a far greater proportion of our primary products than we are doing today. When we do that we will provide jobs for Canadians instead of simply providing the raw materials with which workmen in other countries will turn out finished materials, many of which we buy back.


The steps which I believe we must take to accomplish these objectives are five in number and I should like to deal with each in turn. First, in order to develop new and better designs and more efficient methods of production, we must undertake a greatly expanded program of industrial research, based on the programs which have proved so effective in Great Britain, the United States, Germany and several industrial countries in Europe. Unless our efforts in this regard can match theirs at least on a per capita basis, then we must expect to have their products continue to beat ours in price or design or both. Such a program, Mr. Speaker, has made it possible for Great Britain to announce, on the same day we announced our highest unemployment figure here, their second lowest. Under that program Great Britain's unemployment has continued to decrease and ours has continued to grow. I feel that is a rather astonishing state of affairs for this country to have to admit.
Now, what is needed to achieve that end is for the government to call a conference of the representatives of management, labour and the educational institutions, who will produce most of the research staff, to discuss the best methods for getting a program of this kind under way. Such a program would include the pooling of technical information to be used by those engaged in an industry to compete, as an industry, against foreign competition. I believe that only by so doing can we compete successfully against the competition which we are receiving from other countries, and which gives every indication of continuing to increase rather than to decrease.
Second, I believe that in order to expand our secondary industries we must take steps which will make it attractive for new industries to become established and for existing industries to expand. I think we must remember that this is a free country, and unless conditions are sufficiently attractive to invite the expansion of established industries they are not going to expand, and new industries are simply not going to become established. One step I think we should take in this direction is to double the rate of depreciation on plant and equipment, and by so doing reduce the risks to those investing in new enterprise. Spread over the original depreciation period this move will cost the government absolutely nothing.
Another step I think we should take to encourage new industries to become established is to make it easier for them to show their first net profit. I believe a move we could make in this direction would be to

reduce the rate of taxation on small businesses from the present 18 per cent to 15 per cent, and raise the ceiling from $20,000 to $25,000. I believe that in addition to this, in order to encourage these small industries to expand into large industries consideration should be given to the advantages of increasing the tax at a steady rate from the top of the lowest tax bracket up to a profit of say $50,000 a year before taxes. I think the sudden jump from the present 18 per cent on up to $20,000 to 47 per cent on the next $1,000 of profit is a deterrent to expansion today. I feel the government should give serious consideration to a steady increase in the rate of taxation rather than a sudden jump. If that were done it would give small industries, at present established and remaining small, an incentive to expand into large industries of the kind we need.
While the move I have suggested, of reducing the corporation tax, would reduce the income from that source for the time being, I believe the additional taxes which would accrue in the future from new enterprises which would be encouraged to start up and expand with the aid of this move and double depreciation would very soon, in my opinion, make up any deficit.


Walter Edward Harris: What will the deficit do in the meantime?


George Harris Hees: I shall deal with that later. From then on taxes on new enterprises, plus income tax which would be paid by people who are not now employed but who would then be employed in such new enterprises, would be found revenue for the federal treasury.
A third move I believe the government should make to stimulate sales is to reduce the sales tax by 25 per cent. This would greatly reduce the cost of things we have to sell and would place our products in a far better competitive position as against those from other countries competing with them today. It would be an important stimulus to sales, because it would make it possible for those in the lower income groups to buy more goods, and after all, they are the ones who are in greatest need of such goods and who will be most ready to buy. They are the ones who are hardest hit by the tax, because it is a tax which is applied without any consideration for ability to pay.
I believe a reduction in this tax would not necessarily mean a reduction in the sales tax total, because the greater volume of goods which would be sold because of lower prices, multiplied by the factor of the lower unit tax, would easily equal or exceed the present 50433-191
The Budget-Mr. Hees tax total. An excellent example of this was the government's experience with the cigarette tax two years ago.


Walter Edward Harris: That was smuggling.


George Harris Hees: The fourth move I suggest the government should make to stimulate our trade is that of bringing the value of the Canadian dollar down to parity with the United States dollar. This would make it more attractive for people from outside to buy Canadian goods, and would attract more tourists to this country.
As I have said, I believe these tax reductions would only temporarily reduce total tax receipts. A temporary deficit in my opinion would be well worth while if, by so doing, trade were stimulated and there was a stimulation of production to the point where in the near future it would be greater than it is at the present time. This would increase the tax totals the government would receive, because it would increase greatly the sources from which taxes come. I believe the minister will agree that, after all, that is the desirable end.
If in the meantime the government did make an all-out effort to streamline its operations, something it has made no effort to do up to this time, the savings which could be brought about in government operations would more than offset any temporary deficit which would be caused by tax reductions. In the long run I believe the moves I have suggested would substantially increase our tax revenue by increasing the sources from which taxes come, and for that reason I say these moves should be given serious consideration by the government.
In conclusion let me say that because the government has been lethargic in the past ten years and has collected no information upon which to base an economic plan, the establishment of a royal commission is a very necessary move indeed. In the meantime there is a big job to be done in facing the severe competition we are up against right now, a condition the government is making no attempt whatever to meet. Upon our success or failure in meeting that competition depend the jobs of our workmen and the standard of living of our people. I believe the steps I have suggested would help materially in meeting this challenge, and I urge the government to give these matters serious consideration.
As I said earlier, it is interesting to diagnose what has been the purpose of the government in producing a budget of this kind. It is certainly clear to me that the budget does nothing to stimulate sales or production, so why was it brought in? I think those of us

The Budget-Mr. Hees who gathered here on the night of April 5 to hear the budget speech were rather surprised, when finally we had a look at the baby, to see that it had draped over its shoulder a banner upon which were written the words, "Liberal convention, 1956; vote for Walter Harris". And if there was any doubt in anyone's mind that that was the purpose of the budget, that indeed it was a convention budget, all he had to do was to look at the faces of the other six hopefuls. Each of them, Mr. Speaker, looked like a man who had just received news that his mother in law was coming to spend six weeks with him.
The one who really looked as though he was suffering most was fisherman Jack from Twillingate. He was really suffering. I thought he was choking on a piece of herring bait. He looked as though his rubber boots were a couple of sizes too small, and he actually felt so badly that he had to pull his sou'wester halfway down his face, during the speech, to hide the tears running down his cheeks.


An hon. Member:: What nonsense.


George Harris Hees: There is no doubt in my mind that this is the first move in the campaign to build up an Uncle Walter myth. Because after all, Mr. Speaker, it is understandable that this should be done, particularly when the minister has seen what success the boss has met with in the last seven years in handing out this kind of malarkey.


James Sinclair: Envy will get you nowhere. You are the malarkey man in the house right now.


An hon. Member:: How is your campaign coming on?


George Harris Hees: The minister said to himself, no doubt, "If it works for him, why should it not work for me?" So he set himself the task of schooling himself to fill this particular role. And, Mr. Speaker, those of us who have observed the minister closely in the last couple of weeks have noticed that very often he has had a sort of dreamy, far-away look in his eye, the look of a man who sees thousands of little children gathered at whistle stops all across the country. As he walks down the corridor you often notice him now- you people in the House of Commons just watch him and see if this is not true-no doubt it is quite unconscious, but you can see the movement of his hands as he walks along the corridors, patting countless little tousled heads as he walks through the crowds and hands out the soothing syrup to the mothers of babies. Yes, the minister is working very 

hard at this, and more power to him. It worked for the Prime Minister (Mr. St. Laurent), and no doubt the Minister of Finance has set his sights on the job.


James Sinclair: You certainly tried to make it work from coast to coast last year.


George Harris Hees: The minister has not got away with it in the past, because the minister of citizenship and propagation, of course, has said himself that babies are his business. He is not going to let the Minister of Finance muscle in on his racket. So what did he do? As soon as the blow fell on the night of April 5 he went out and arranged for one of those new private cars the government sends around the country with its ministers, and he did not take just an ordinary trip. He took a real trip away across the country out to Victoria to make a political speech. And did he make a political speech? Out there he told the mothers of the country that they must produce more babies for him to pat. He is coming around and he wants to have them there, and he wants to be able to pat them.
After all, you cannot blame him for not taking this thing lying down, because this minister was told by the Prime Minister, when he was brought out of the back room and set so uncomfortably on the front bench, that he was the heir apparent. He does not like this kind of a budget being brought in by the Minister of Finance because it is a direct threat to him, and he is not taking it. Therefore he went out and made a speech. It was not a bad speech either, Mr. Chairman; it was fine, except that he made the great mistake of antagonizing every Canadian citizen who did not happen to be born in Canada. He told them in effect that they are second-class citizens and that they can never acquire the status of those of us who were fortunate enough to be born in Canada.
It is amazing to me how a minister who has his foot in his mouth for 95 per cent of the time can manage to make so many political speeches. It seems to me the only answer is that he is a contortionist and is able to do it. It is amazing that every time he makes a speech he pulls off one of those masterpieces. I do not know how he does it, but he certainly does it.
Now, Mr. Speaker, let us get back to the budget. It was not produced without a lot of trouble. During the nine-month gestation period, which lasted from the time the minister was promoted early in July until early in April, there were several very anxious moments. One of them came at the four-

months' point. It was a very critical time in Montreal, last November, and for a while it looked as though there had been a premature birth, but the minister straightened that out and everything was all set. Then the seven-months' stage was reached, and his old department came up for scrutiny. Normally he would be expected to be on hand to defend his old department, but the government felt that would be a little too trying at this particular time, so they called in the hon. member for Bonavista-Twillingate (Mr. Pickersgill) to take on those noble knights, Sir John of Prince Albert and Sir Davie of Kamloops. The hon. member did very well, but of course he was no match for the two great debaters and they demolished him.


Walter Edward Harris: Pretty weak at this moment.


James Sinclair: To use a fisheries expression, he is floundering.


George Harris Hees: It all adds up to the fact that
this is obviously a convention budget, Mr. Speaker, one that is intended, as I see it, to build up the minister as a successor to the Prime Minister. The objective is to build up an Uncle Walter myth in the same way they built up the Uncle Louis myth, and that is about all it is accomplishing.
In the meantime the country is forced to suffer. There are no economic plans; there is nothing to stimulate production; there is nothing to stimulate sales, and there is no indication that there is to be any plan from the government for at least three or four years, or until the royal commission reports. In the meantime the country is going to be left to flounder. We are going through the same process of hope and grope, and to me it is a sad commentary on a government to bring in a budget at this time with no indication of any plan to overcome any of our economic ills. All they can do is to appoint a royal commission to do something which they know perfectly well they should have been doing for the past ten years and have simply failed to do. The country and the people have to take the rap for this government's lethargy, and that is about the saddest commentary one can make on any government's budget.
(Translation) :


Mr. Gustave Roy (Labelle):: Mr. Speaker, I am happy to join the great majority of Canadians who, through the newspapers of this country, have expressed their approval and satisfaction about the budget recently submitted by the Minister of Finance (Mr. Harris).
50433-191*
The Budget-Mr. Roy
When the budget was brought down last year, we were urged to be hopeful, and we have not been deceived because this year we are feeling the good results.
True, there is nothing to make us hysterical, but it is a first step which has started the wheel turning and we have reason to believe in the enthusiastic optimism of the Minister of Finance, who assures us that the wheel will keep on turning, and that every future budget will bring a gradual lowering of taxes, for the greatest benefit of the various classes of Canadian taxpayers.
Mr. Speaker, the economic situation of the country has been fraught for the past few months with thorny problems which, from certain points of view, have a tendency to upset the sustained equilibrium that has been enjoyed these past years. That is why, more than ever, business activity must be held at a stable level, and in order to prevent economic stagnation or a serious recession, the government must take the necessary means to preserve this stability which has been the basis of our prosperity in the last fifteen years.
Particularly in the last ten years, the government has remained faithful to a policy of gearing expenditures to the economic situation. We had come to believe that it was necessary to ensure budgetary surpluses and, on no account, to accept deficits. It is only at this time that we are realizing the wisdom of the present government which has been adhering to the principle that surpluses must be accumulated in times of prosperity, the longterm view being that we must be prepared to sustain a deficit without too much trouble should national interest so require, in order to ensure the soundness of our economy.
The Canadian people have approved this policy of accumulating surpluses in order to improve our position in case we have to resort to deficit financing and have judged it a wise and farsighted policy. Our budget accounts show that, last year, Canada had started a gradual climb toward a more rational economic stability. Past records indicate that the figures pertaining to the gross national product, employment, income, manpower and economic trends in most sectors of our economy seemed to stabilize at a slightly lower level, when they did not decline.
These facts moved the government, in order to curb any tendency toward a radical and highly dangerous recession, to use the accumulated reserves for the purpose of

The Budget-Mr. Roy
maintaining stability and preventing everywhere any overly unfavourable effects. We are beginning to notice that we are entering a period of readaptation which may entail some slight changes in the level of our economic activity. Taking heed of these indications, the government has shown in the budget its readiness to take the necessary steps and the people of Canada are happy to see the foresight of the present administration. The government did not remain idle, did not count only on the hope of a probable business pick-up on a world-wide scale. On the contrary, it went to work and made concessions to individual and corporate taxpayers. It is about to allocate more money for public works, to make it easier for people to get credit in order to speed up home building. It has seen to it that the seaway works are carried out without delay, that the buying power is increased through higher unemployment insurance benefits, quite apart from the numerous other moves it has made to stimulate employment and to maintain a sound business activity.
That is why the Canadian people were very pleased with the last budget. The Minister of Finance has gained the esteem of all Canadians, who are praising his remarkable financial talent and his deep understanding of our Canadian economy.
Mr. Speaker, on behalf of my constituents, I wish to sincerely thank the government for certain generous moves it has made:
First of all, the continuation for another year of price support for butter gives respite to most of my farmer constituents. In my district, more than in any other, there is an urgent need for such price support, because the dairy industry is in a less favourable position than elsewhere in the province, due to various factors peculiar to that district.
As a matter of fact, production is limited, both in its intensity and variety, by insufficient means of production, and the volume of any particular product seldom reaches a high enough level to be marketed at a profit. Therefore, as the farmer in my constituency is unable both to produce and to dispose of his production as economically as most farmers in other districts of the province, and, besides, as he has to face market fluctuations with prices falling sometimes below basic price, he finds it hard to make ends meet, when he does not suffer a loss.
Dairying accounts for 85 per cent of farm production in my county and with such an uncertain revenue, our farmers are obliged to ask the government to stabilize the industry by preventing the importation

into the country of vegetable oils for the manufacture of margarine, which competes unfairly with butter on the market.
I might, moreover, recommend to the right hon. Minister of Agriculture (Mr. Gardiner) a substantial increase in the subsidies for the transport of grain to our district, so as to allow the farmers to stabilize their production cost at the same level as in the other districts of the province.
I associate myself with the hon. members from New Brunswick in supporting their request to the government of price support on potatoes, for this is an important industry in my county, and introducing such a measure would be a valuable contribution to the stability of farm revenues in that district.
Mr. Speaker, income from the agricultural industry provides a livelihood for 10 per cent at the most of the farmers in my district. To supplement their income and balance their budget, they have to work in the lumber industry. In this case, our farmers are deprived of a reasonable income because of the unfair practices of the buying companies that collude to purchase wood from farmers at ridiculous prices. I am happy to have cooperated with my colleague, the hon. member for Gatineau (Mr. Leduc), in bringing about the federal inquiry now being made. I hope the provincial government will co-operate sincerely to compel the guilty companies to pay reasonable prices to our farmers and settlers for the wood purchased from them.
In addition to being forced to sell their wood at a loss, our farmers find their wood-lots being practically depleted. They are thus deprived of a necessary source of income. The leaders of our farm industry are anxious to see our governments take the urgent steps necessary to cope with this problem, which is of vital importance for our farmers. I will therefore make so bold as to suggest to the government that it should put this very important question on the agenda of the next federal-provincial conference. Of vital interest to our farmers and colonists is this matter of reforestation of their lands in co-operation with the province. Already many farmers are quitting the land because of the loss of revenue caused by this depletion of their woodlots. A survey carried out by agricultural officials has shown that a very large percentage of the total farming population will follow suit in the next ten years. I urge the government to give this matter its most earnest consideration. The solution of this problem is highly important.

One last suggestion, Mr. Speaker. The government should do away with middlemen in the contacts between Central Mortgage and Housing and the home builder. Since the state would appear to maintain and increase its guarantees in the home-building field, it would seem only fair for it to ensure that the credit it extends be as inexpensive and as easy as possible to obtain throughout this country. Many contractors have complained to me that banks and other lending institutions show little inclination to lend money in connection with buildings erected away from heavily populated centres. That gap should be filled in the best interests of the many people who wish to build a home.
Finally, Mr. Speaker, may I commend the government for its decision to grant a pension to disabled people. The citizens of Canada deeply appreciate such a move, which constitutes one more step toward social security.
This year again, I wish to convey the general opinion of the people of Canada that the government should now implement a health insurance plan in Canada. This useful step would relieve the constant pressure towards an increase of family allowances, would complete the social security legislation of the country, would maintain the economic effects of family allowances, whose value has been reduced to less than half their former worth, and, through a higher level of health among the people, would contribute to the establishment of a strong, spirited and productive nation.
(Text) :


Mr. Clarence Gillis (Cape Breton South):: Mr. Speaker, in rising to address this large and enthusiastic house this afternoon I feel greatly inspired. It is so quiet that it is more like a cathedral. I listened with a great deal of interest this afternoon to the discourse by the hon. member for Spadina (Mr. Croll) on the guaranteed annual wage. I compliment him upon the presentation he made. It was a good speech, and it enabled him to avoid talking about the budget. Therefore his speech served two purposes. However, as I say, he did make a good speech on that subject and I am not going to repeat it.
I mention it merely because the potential leader of the opposition, according to the press, who followed him in the debate failed to make any comment on this matter of a guaranteed annual minimum wage, which is a most important subject at this time to organized labour on the North American
The Budget-Mr. Gillis continent. He may have been so preoccupied with his notes that he missed making any observation on this most important question.
If one sits here for two or three days and listens to the speeches made in most debates, one begins to wonder what is the subject matter before the house. I try to be realistic; I generally try to talk on the subject under discussion. As I understand it, the subject before the house at the present time is the budget presented by the Minister of Finance in a very well considered and excellently delivered speech. Many proposals are contained in that budget speech, tax relief to the income taxpayer, relief for corporations, and so forth.
Nov;, I am not going to take the budget and make any analysis of it, because I do not have to. The hon. member for Rosetown-Biggar (Mr. Coldwell), who is the chief spokesman for this group, in consultation with all other members of the group has done a first-class job in analysing the budget in all its aspects. He raked it over and turned, it over and made an excellent presentation,, and I agree with everything he had to say-on the budget as such.
In addition to the budget, with its many proposals, there is an amendment moved by the Conservative party, the official opposition. I am going to put it on the record again, because I am going to talk about these amendments in their relationship to the budget. The official opposition spokesman, at page 2954, in moving his amendment, worded it as follows:
That all the words after "That" to the end of the question be deleted and the following substituted therefor:
"this house regrets that in its budget proposals the government has failed:
(a)	to give effective stimulus to Canadian enterprise to create employment and opportunity;
(b)	to reduce taxation affecting those on lower incomes and allowances;
(c)	to curb its own extravagance and inefficiency;
(d)	to recognize the serious position in which the Canadian farmer and other producers now find themselves".
The leader of this group, at page 2958, moved that this amendment be amended byadding at the end thereof the following words:
"(e) to provide assistance to the provincial governments, in order to enable them to plan their financing in such a manner as to relieve the people of this country from the crushing load of heavy municipal taxation."
Now, I want to make it quite clear, in so far as the budget is concerned, that all the economic, social and financial problems of this country today are not the product of the government as such. They are the product of a system, and the government which is in

The Budget-Mr. Gillis
power has to play the rules of the game as they are laid down. While the official opposition makes speeches and criticizes the party in power, in my judgment after sitting in this house for some considerable time there is only one motive for that criticism. There is never any suggestion as to what they could do themselves to change the system to bring relief and alleviation for the economic and social problems which are a product of this system and not the product of the government as such.
In their amendment I see nothing by way of a program, a policy or a criticism that would change the situation one iota. Asking the government to curb their own inefficiency and that kind of thing does not mean anything. In the face of a bad unemployment situation, all it means to me is that you should fire a lot of people who are now employed by the government, but that adds to the unemployment problem. There is nothing in their amendment that suggests that they would do anything different from what the government is doing at the present time. In fact they could not do anything. If they are going to follow strictly the lines of free enterprise as administered today by those outside of this house who control the economy, they could not do anything other than what is being done over there at the present time. Someone has to get on that side of the house who believes in taking the courageous stand of retaining what is good in the system of the past and purging it of the things that are evil; and I do not see the official opposition taking that stand, either in their amendment or in their speeches in this house.
The amendment of the C.C.F. party is merely tacked on. The rules of the house prevent us from laying down the kind of amendment we would like to move. We merely add that the government should take some action in regard to assistance to provincial governments whereby those governments may be in a position to relieve the heavy burden of municipal taxes which are charged against property exclusively. Property in the municipalities across Canada today is taxed to the hilt; it cannot go any higher.
It is at the lower level that assistance is needed. I do not say that it should be uniform or could be uniform. Some of the provinces, such as Ontario and Quebec and maybe British Columbia, which have large provincial incomes, are in a better position to help the municipalities-and they are doing so in many cases-than other provinces I know of, such as the maritimes and to some extent the prairie provinces, where they are not able to achieve uniformity in education IMr. Gillis.]

and many other things provided in the provinces which have incomes enabling them to do such things.
I think that is one of the most important matters for the federal government to consider. I know a dominion-provincial conference is being held shortly, and there is no doubt that will be part of the agenda. There is a need today particularly to take care of the employable unemployed. While we have revised unemployment insurance, and it helps those who are receiving unemployment insurance, thousands of men who have run off the unemployment insurance rolls are now considered as charges on the municipal governments, who are unable to do anything for them. That is a question which has to be handled, and handled soon.
With respect to the budget itself, the hon. member for Rosetown-Biggar has, I think, pointed up two very important questions which should be considered by the Minister of Finance and his advisers. I agree with him that the proper place to give relief, in so far as income tax is concerned, was the lower income groups. Increasing the exemptions rather than cutting taxes at this time was the line of action the minister should have taken. The exemptions should have been lifted high enough so that married people on $3,000 income and single people on $1,500 income would be taken out of the income tax brackets altogether. If you are going to put purchasing power in the hands of the people of this country so they can buy and help break the jam of unemployment, then these are the groups to which that relief should have been handed out, because the people in those income brackets are the people who spend about 90 per cent of their income on fuel, clothing, shelter and food.
As to the people earning over $3,000, it would not matter to me if the minister had increased the rates. It is not what you pay in taxes that counts but what you have left after you have paid the taxes. I think the hon. member for Rosetown-Biggar was absolutely right when he suggested that is what the minister should have done in order to make up for the revenue he would lose by granting income tax exemption to the people in the low income brackets up to the level I have mentioned.
In the time at my disposal this afternoon I am going to talk about economic matters, but before I do so may I say that in listening to the hon. member for Broadview (Mr. Hees) I was at a loss to understand his logic in his criticism of the budget. First he set out to prove that the budget was no good, that it was

a bad budget, offered no relief and did nothing for anybody. Then in the next breath he said it was a convention budget, a budget to build up the Minister of Finance as the next prime minister.
If it is a bad budget it is not going to do the Minister of Finance any good, or enhance his popularity at the convention. The hon. member for Broadview cannot have it both ways. First he says it is no good; then he says it is a good budget and is going to make the Minister of Finance the next prime minister. As far as I am concerned he has to straighten out his logic on that point to prove to me that he actually was criticizing the budget honestly, because his afterthought was that it was an excellent budget and was going to build up the Minister of Finance.


Stanley Howard Knowles: He is a Progressive Conservative. He goes both ways.


Clarence Gillis: Well, you could perhaps have a worse prime minister than the present Minister of Finance. We know him pretty well. You see, Mr. Speaker, I am never particularly anxious to throw someone out of a job in order to get it myself, and I have not seen very much of a threat from the official opposition in the time I have been in the house or anything to indicate that they would bring about any great improvement if they were on the other side. It is better to hang on to the fellow you know who is at least trying to do a little bit than the fellow who just wants to get over there for the purpose of being on the front benches and being called a minister.


James Sinclair: The hon. member for Broadview.


Clarence Gillis: I think the present condition of the country and the international situation call for more serious thought than that. Of course we are fortunate because during war we are always very lucky. We have a lot of sensible privates who win the war despite the generals, and the same thing applies to governments. I think we underestimate the intelligence of the people in making their selection of those who are to represent them in the House of Commons. I believe we can pretty well depend on their judgment to do things right. That is why I am reasonably sure the C.C.F. is going to be pretty close to the government after the next federal election.


Mr. Hamilton (Notre Dame de Grace):: You
are pretty close to the government right now.


Clarence Gillis: At least there would be this much improvement. We tell you in the house
The Budget-Mr. Gillis what we would do. We do not take the position in the house of hammering at the government for a lot of things they are not doing, knowing at the same time that if we were over there we would take exactly the same position. That is what the Progressive Conservatives would do but they would be a little worse than the present government. If we are ever fortunate enough to sit on the front benches and run the affairs of the country we will have no hesitation in telling you what we will do.


Mr. Trainor:: God forbid.


Clarence Gillis: If we were over there now we would have stepped up the exemptions and we would have increased the taxes of the fellow who has the money. We would have got a lot of money by imposing a capital gains tax on the coupon clippers, described so well by the hon. member for Rosetown-Biggar, who can have an increase of $10,000 or $15,000 a year from the stock market without paying a cent of income tax on it. That is a nice exemption. We would have done something like that.
There is another thing we would have done. We would have been a little tougher on these fellows from outside the country who virtually have control of our economy through leases and so forth. We would see that their business was conducted along a little more honest lines than it is today. There would not be the same manipulation. We would not be selling the country down the river by admitting United States capital and giving these fellows leases for the next thousand years on the resources of the country.


Owen C. Trainor: Who would you get to
develop them?


Clarence Gillis: Who would you get to develop them? That is a very courageous question, isn't it?


William Earl Rowe: Take them over.


Clarence Gillis: You would not have to take them over. You would finance and develop them in the same way we fought and financed the last war. We did not have to go outside the country to borrow money. The Bank of Canada was designed to do that very thing. Where private enterprise fell down the government could institute a public investment program and develop the resources of the country, just as little Joey Smallwood is doing today in Newfoundland.


Owen C. Trainor: You are talking like your friends to your left.


Clarence Gillis: No, I am not. That was Mackenzie King's idea. He practically told us when the Bank of Canada was established

The Budget-Mr. Gillis that he who controls the credit and currency of the country controls the country, and that the Bank of Canada was being established so the government would have some control over currency and credit in the event of Canada having to develop its own resources. We should never have sold our iron ore deposits and the future of steel down the river for the rest of our natural lives to a few monopolists in the United States. But that is what we did, and I did not notice very much opposition from the official opposition. The only opposition came from this corner.
We could have developed those resources ourselves. We could have farmed them out, held 51 per cent of the shares in the right of the Canadian people and given free enterprise the opportunity to get in on it if it wanted to do so. We could make it a partnership deal, but why sell out 100 per cent and lose control of the future of steel on the North American continent? That is exactly what it meant.
I want to say something about what is going on today in the maritime provinces. Economic conditions in that part of the country are anything but good. In making his speech the Minister of Finance stated that he was taking a gamble at this time. He said he was budgeting for a deficit in the face of a 2 per cent drop in our gross national product for the past year, but in taking that gamble he figured that the gross national product was going to increase this year by maybe 5 or 6 per cent. I hope it will, but I can tell him that if he is expecting any of that increase to take place in the maritime provinces he is going to be disappointed. The economic trend in that part of Canada today is just the reverse. Established industries that were producing in 1954 are not producing today.
Let me deal with the question of coal mining. That, of course, is the basic industry of the province of Nova Scotia, and to some extent it was a substantial industry in New Brunswick. The provincial government of Nova Scotia hired an outstanding firm in the United States to make a survey of their whole economic set-up. They recommended a lot of things, but they pinpointed the fact that in Nova Scotia the coal industry was the base of the economy. They pointed out it was in difficulties at the present time and that a lot of things had to be done if it were going to survive.
If Canada was a country that was exporting coal, if we had a big outside market, were producing a lot of coal and were not importing any, I would say that if there were any difficulties the cause would perhaps be faulty development and the fact that the mines were


not operating properly, but in a country like Canada that could not be so because at the present time we are importing around 24 million tons each year from the United States. A large percentage of that is imported by the Canadian National Bailways. We only produce around 16 or 17 million tons of coal ourselves. On many occasions in this house I have asked why a country that is importing that amount of coal should have no market for its own coal. I have never got an answer to that.
It is the same old story. In the area represented by the hon. member for Pictou (Mr. McCulloch) in the last four years the coal industry has been wiped out. Four fairly large collieries were operating and they have folded up. What happens to the people in those communities when an industry is lost? Nothing is put in to replace it, so those people pack up and get out. They are displaced persons. They are not even considered by the immigration department. Perhaps they have an investment of $10,000 or $15,000 in the community, own their own home and so on. They sell out at fire sale prices and wander up into Ontario or into the United States looking for employment. No effort has ever been made by the provincial or federal governments to take a further look at that problem.
I have a telegram here from the secretary of one of our industrial development boards, in the town of Glace Bay. It indicates that another large mine will be closing by the end of May. There are 720 people employed by that mine, the backbone of the whole community. There is a lot of investment based on that mine. It is closing, and there is no social responsibility on the part of that company which has taken millions of dollars of wealth out of this community. The company says the mine will close and that is the end of it. This is a huge corporation with all kinds of research facilities. You would imagine that if that kind of catastrophe were about to take place in such a community the corporation would have been doing some thinking about how the industry could be replaced. They say that is not their problem; they have no responsibility to the human being. They are in business to have figures on the right side of the ledger, so that community is being allowed to fold up.
I have said this a good many times. First the provincial government has to be persuaded that the right to preside over the liquidation of the coal industry should be relinquished. That is all they are doing, presiding over its liquidation. I have been connected with the coal industry for a long time. The only time it ever functioned

properly was during the last war, when the federal government took over the regulation and marketing of coal. It functioned very well and there was no trouble. A lot of standards were raised, pension plans were established, vacations with pay and so forth. When the war was over these things were lost and conditions returned to what they are today.
There is only one answer, Mr. Speaker, to the future of the coal industry. I do not want to be too long about this, but if you read the material that is available concerning what coal may mean to the future of this country, you will be amazed. Remember that natural gas and oil resources are expendable. We have no guarantee how long they are going to last. People who are looking a long way ahead claim that in the final analysis we will have to go back to the coal industry, even as a source for gasoline and a lot of other ingredients that are in that fuel.
For a long time the argument has been that this should be a national industry. Someone will say that under the British North America Act the resources belong to the provinces. That is quite true. At the same time, under the British North America Act the federal government has the power to declare any work in Canada a work of national importance, and they can take over that industry and make it a national industry. Even the little mine at Flin Flon, Manitoba, because it was half in Saskatchewan and half in Manitoba, was taken over by the federal government. The federal government even assumed jurisdiction over labour relations.
People like the Minister of Labour (Mr. Gregg), the Minister of Mines and Technical Surveys (Mr. Prudham), as well as other people on the front benches, if they have taken any kind of look at all at the operation of the coal industry in Nova Scotia, must have concluded that it has been a faulty operation over the years. I do not think myself that the corporation-actually it consists of about 36 other subsidiaries, many of which are bigger than the coal industry-ever seriously considered trying to market the coal. Marketing is the big problem. The only agency in Canada that can arrange for the marketing of that coal outside of Canada is the federal government. It is beyond the jurisdiction of the provincial government.
A few days ago I asked the Minister of Mines and Technical Surveys why the consumer subsidy of $2.40 per ton on coal going into Newfoundland had been discontinued. If applied to 250,000 tons of coal it would mean about half a million dollars. At that time the minister kind of shrugged it off.
The Budget-Mr. Gillis Since then 1 have seen statements in the newspapers by coal dealers in Newfoundland which indicated that the company was not trying to hold that market at all. Here is a clipping dated April 5 which indicates that Herbert K. Wyatt, managing director of the Wyatt Coal and Salt Company, gives the company a terrific beating. He says they had no marketing facilities and no storage facilities for the coal when it went into the car 90 miles away. Their loading facilities were such that they had to drop the coal 80 feet down into the car so that it was pulverized. It is stated that because of the lack of facilities for getting the coal into Newfoundland and marketing it, $3 per ton was added to the cost. Since the consumer subsidy is not being paid, you are not going to market that coal.
The point I want to make is this. This mine that is being closed now employs about 720 people and produces about 700,000 tons of coal. About 250,000 tons of coal should have been kept going across the gulf into Newfoundland. The general manager gave as his reason for closing the mine that they had lost a market for half a million tons of coal and they had not been able to make it up in the past year. At the same time he has a market for 250,000 tons of coal at his back door which he has thrown away because he will not market the coal properly in competition with United States coal.
These are matters that are the responsibility of the government. They are the responsibility of the provincial government first, and second, of the federal government. Every year the federal government puts a substantial amount of money into that industry by way of subvention. Under the Atlantic coal operators' loan arrangement, which went through this house, $10 million was made available and Dosco got $7 [DOT] 5 million to put into a mechanization program. I said ten years ago that so far as mechanization was concerned, and putting heavy electrical equipment in these mines, it was a lot of nonsense and amounted to throwing money down the drain. This contention has proven correct. It has added to the difficulties, in my judgment, and has been largely responsible for the closing of some of these mines. Nevertheless they went ahead with it, and the federal government has that investment.
A lot of the money you lent Dosco under that bill went into its 1-B colliery. It is the one they tried to test that equipment in, and the one they are closing at the present time. So I say the federal government has an investment in it, and I say that investment was not properly looked after, because under the terms of the bill under which they

The Budget-Mr. Gillis received $7,500,000 three specific things were mentioned. First of all it had to be sound from an engineering standpoint and, in my judgment, it was not. Secondly, it had to be economically sound. Well, facts have proven that it was not. And, third, it had to be in the best interests of the community. The mine is being scrapped, and the interests of the community are shot.
The provisions of that bill were never enforced, so far as the federal government is concerned. The dominion coal board have competent engineers who should have watched that project. The federal government should have intervened before these mines were wrecked. That is another responsibility of the federal government.
This Dominion Coal Company, which is supposed to be producing Canadian coal for sale in Canada or anywhere else, is one of the largest importers of United States coal in this country. They have a wholly-owned subsidiary in the city of Montreal known as the Dominion Coal Import Company. This same company which is alleged to be operating coal mines in Nova Scotia, taking out coal to be marketed in Canada, has that big import company which is importing United States coal and filling the markets in the Montreal and Ontario areas that should have been filled with their own coal.


Owen C. Trainor: Perhaps the market likes that coal better.


Clarence Gillis: Well, if they cannot get any other they have to take it. But why should those people who operate coal mines in this country import United States coal and sell it in the Canadian economy, while they use the community as a pressure machine against the government to get more assistance?


Owen C. Trainor: Surely they would sooner sell their own coal.


Clarence Gillis: But they are not. I can tell you this. You are a medical doctor; what do you know about coal?


Owen C. Trainor: I know the Montreal market.


Clarence Gillis: You stick to your pills.


Owen C. Trainor: What do you know about it, for that matter?	.


Clarence Gillis: What do I know about coal? Well, I worked many years underground in those collieries.


Owen C. Trainor: That doesn't matter.


Clarence Gillis: I know as much about coal as you do about the amputation of a leg, and I would not argue with you about surgery.


Owen C. Trainor: The digging of coal does not make you an expert on the marketing of it.


Clarence Gillis: I know a lot about marketing it, too. I have had to go into that angle of it. I am trying to show you that the people who have it, and who take government money, are not looking after it. This is free enterprise.


Owen C. Trainor: You don't talk sense.


Clarence Gillis: It is all balled up under your system.


Owen C. Trainor: You don't talk sense.


Clarence Gillis: The only time it functions is during a war, the same as the rest of your economy. It always amuses me to hear members of the Conservative party, particularly, get up in the house and talk about unemployment. Why, today you are just getting back to normal. What we have now is normal during peacetime. There is not a thing wrong that a little war would not cure, not a thing. That is all that is needed. But you never have been able to make this system work, at least during my lifetime, except when there has been a war.
Take a look at the years between 1918 and 1939, and from 1945 to date. It is the same old system: no profits, no work. The solution you offer to get rid of your piled-up inventory is to put the poor men on the street and then come in and say to the government, "You can feed them", after they have broken their backs producing food for somebody else.
I say the federal government granted permission to the Dominion Steel and Coal company to set up a subsidiary in Montreal to import United States coal, and that that permission should be withdrawn. They should be forced to market their own coal in their own market. That is the responsibility of the federal government.
Recently when the Minister of Trade and Commerce was in Nova Scotia he said there was little hope held for a national coal policy. Well, I think that is pretty shortsighted. Today we have oil, natural gas, atomic energy and coal, all competing with one another. And you mark what I am telling you; just leave them alone for another ten years and you will have neither gas nor oil nor coal, because they will kill one another.

Just take a look at the pipe-line situation- just a stock market promotion, with somebody else paying for it. They are not interested in supplying coal, gas and oil to this country in the future. It is just something to make money out of at the present time.
If we are going to plan the future fuel requirements of this country, then in the light of the situation today a national body should be set up, composed of competent people who know marketing conditions and who are familiar with these fuels, so that the future of Canada in the matter of fuel supplies may be protected.
Just take a look at what happened during the last war down in the Windsor area, where they were receiving natural gas from the United States. When the Yanks needed it they just shut it off, and you had that whole area running around looking for coal-burning equipment and trying to get coal supplies. That can happen again. The main lines from which we are pumping oil today are in the United States; they are not in this country. It often amuses me to hear people talk about the United States, and the possibility of war with us. They do not have to have a war with us; all they have to do is shut off the fuel supply and we are finished. Industries and everything else would stop.
It is time we began to take a square look at this question. I know they are doing what they can in the maritime provinces, but geography is against them. A development is taking place there today that will pay dividends. The formation of the Atlantic economic council is something that should have been done 25 years ago, because the answer to the maritimes' problem is in the interprovincial marketing development and complementing the economy of each part of that section of the country. Following that is the development of industry in the communities, where they are taking advantage of the research being done at the provincial level. They are setting up funds, not to bring money in but to create it in the communities and to control it there. If that development continues, then in my judgment in five or six years you will not be sending very much to the maritime provinces from Ontario and Quebec. They will be supplying you.
That is the kind of job that has to be done. But at the present time, and until such time as they can get something done for themselves, the federal and provincial governments at the next dominion-provincial conference should take a look at the coal
The Budget-Mr. Gillis industry, because much of it can still be salvaged. In my judgment, however, it has to be taken out of the hands of people who merely use it as a means of pressuring the federal government into sending them out more money. That is the way it has been working in that industry as long as I can remember.
Let me conclude by saying this, that so far as the budget is concerned, it is as good as I expected it would be.


William Earl Rowe: Perhaps you did not expect much.


Clarence Gillis: It is as good as I expected. The hon. member for Rosetown-Biggar (Mr. Coldwell) offered the criticisms on behalf of this group, and I do not wish to take time to repeat them. He did it better than I could. But I think the time is coming in this country when there should be two budgets. First of all the Minister of Finance should do the sort of thing he did on April 5. He should give us a bookkeeping review of the year's activities, and a statement as to what he thinks his deficit or surplus will be in the next year. He could also give a forecast of what he would expect in the following year.
In addition to that there should be a capital budget. What is wrong in this country today is that we have no objectives. We have nothing to work for. If the Minister of Finance could bring in a capital budget and say, "Our objective next year is to clean up the slums of Canada so far as it is possible in each and every city, and also we are going to establish a system of low-rental subsidized housing to that end," in a very few months time you would have unemployment licked, and you would have every honest member in the house out working for you to complete that program and attain that objective.
This is not the way to build a country. I hope the next time the minister brings in his budget he will also have a capital budget. He is pretty realistic and I would hope he might do this, so that he would be able to tell the house, as his white paper said in 1945, "These are our objectives for the building of industry, the development of our resources and the housing of our people. If we cannot find risk capital to do this during this year, we shall do it ourselves by using the facilities that we have in the Bank of Canada." I hope we shall be able to do that at the next session.
On motion of Mr. Hahn the debate was adjourned.

Business of the House BUSINESS OF THE HOUSE


Walter Edward Harris: Mr. Speaker, tomorrow we shall begin with the external affairs debate, and when it is concluded we shall take the following items in the order I indicate: Bill No. 182, to amend the Historic Sites and Monuments Act; Bill No. 261, to amend the National Parks Act and to establish a national park in the province of Newfoundland; Bill No. 282, to amend the Territorial Lands Act; Bill No. 257, respecting the Canadian forces; Bill No. 278, to amend the Veterans Benefit Act, 1954; Bill No. 192, to amend the Library of Parliament Act; and Bill No. 350, to amend the Blind Persons Act.


Stanley Howard Knowles: When is it intended to resume the debate on the budget?


Walter Edward Harris: On Friday, unless it happens that external affairs runs over into Friday. If external affairs runs over we shall continue that debate, but if it is disposed of tomorrow I propose this other legislation for the remainder of the day, and on Friday we shall continue with the budget debate.


William Earl Rowe: You are not going to deal with all these other matters before the budget debate?


[Stage Direction]
It being two minutes after six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Thursday, April 21, 1955