1956-03-23

[Stage Direction]
Fourth and fifth reports of standing committee on miscellaneous private bills.-Mr. Henderson.


[Stage Direction]
On the orders of the day:
Mrs. Ellen L. Fairclough (Hamilton West):: I should like to address a question to the Minister of Labour. Can the minister tell the house whether or not he has investigated the conditions under which Indians and Eskimos will be working on the distant early warning line? Can he say whether or not the rates of pay they will receive will be comparable to rates paid other workers doing comparable work?


Hon. Millon F. Gregg (Minister of Labour):: Mr. Speaker, I should like to take notice of the question in its detail but I can assure the hon. member that in connection with the employment of workers on the D.E.W. line, the Department of Labour and the national employment service work in close co-operation with the other departments concerned. However, I shall bring down an answer in detail to the question.


Ellen Louks Fairclough: Perhaps the minister
would permit a supplementary question. While he is investigating this condition, would he also get information with regard to unemployment insurance coverage for these workers?


Milton Fowler Gregg: I will do that, Mr. Speaker.



THE VICTORIA CROSS


[Stage Direction]
On the orders of the day:
Mr. John M. James (Durham):: Mr. Speaker, I should like to direct a question to the Minister of Veterans Affairs. Is the minister in a position to give the house a progress report on the proposed trip of the Canadian Victoria Cross holders and their relatives to
the Victoria Cross centennial to be held in the United Kingdom this year?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: Mr. Speaker, to date 36 Canadian holders of the Victoria Cross out of a total of 38 have signified their intention of attending the celebration this year. The department has not heard from the other two veterans. In addition, there are four British Victoria Cross holders who also signified their intention of making the trip. To date, 32 relatives of Victoria Cross holders and also 17 next of kin in connection with posthumous awards and 10 in connection with deceased awards have also notified the department they intend to make the trip. This, therefore, makes a total of 99 persons. Approximately one-half of the above noted persons will be travelling by air and the others by sea.



SUGGESTED SETTING UP OF COMMITTEE TO STUDY RULES

[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinion):: Mr. Speaker, may I ask the Prime Minister if, in view of what might be described as some spirited discussion in the house of late on the matter of rulings, the government would consider setting up a committee on rules with a view to giving study to some of the problems that have arisen in recent days?


Right Hon. L. S. Si. Laurent (Prime Minister):: Mr. Speaker, a similar question was asked a few days ago. I do not think it is necessary at this time to set up a committee to give further consideration to the rules that were adopted after very lengthy discussions last year.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of National Health and Welfare. Has the minister received a request from the minister of public welfare in the province of Ontario for a reconsideration of some of the legislation administered jointly

Inquiries of the Ministry by this government and the provincial governments in the social welfare field? Will consideration be given to this request?


Hon. Paul Martin (Minister of National Health and Welfare):: Mr. Speaker, I did see the story in the morning paper, and I must say that I was a little surprised at what the minister is reported to have said. I would want to make sure that he really in fact said what he is reported to have said.



OLD AGE PENSIONS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, I should like to make a correction in a reply which I gave on Tuesday of this week to a question put to me by the hon. member for Peterborough (Mr. Fraser). The question was about the latest supplemental allowance recently announced by the government of Ontario.
I stated in error that this allowance is provided wholly by the provincial authority. My hon. friend will remember he asked me that question and I said it was provided wholly by the province. In fact, I find now that the allowance is provided in the initial instance by the municipal authority which determines the amount to be paid, and the province reimburses such payments to the extent of 60 per cent up to a maximum of $20 in any one case. This means that the municipality bears the remaining 40 per cent.
I might add that there are 21,790 old age assistance cases in the province of Ontario, 7,464 disability allowance cases, and 1,723 blindness allowance cases. Not all of these cases, however, receive the supplemental allowance. The latest information is that the number receiving the supplemental allowance totals approximately 2,000 in the entire province, with about 1,200 of these being centred in Toronto.
I said the other day that 90 per cent of the cost of the assistance given to the aged of our country was borne by the taxpayers of Canada through recommendations made by this parliament. - Obviously, I was in error; the amount is a much higher percentage.


Mr. Fraser (Peterborough):: Mr. Speaker, there was something else the minister did not say when he mentioned there were three other provinces that paid more than Ontario. He did not say that those were not Liberal provinces.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I would like to direct a question to the Prime Minister. Has the government received representations from a special committee of the Whitehorse board of trade complaining of a disregard of Canadian sovereignty, of Canadian law and also of Canadian contractors in the construction of the D.E.W. line and, if so, what action is the government going to take to investigate these complaints?


Louis Stephen St-Laurent: Mr. Speaker, if there have been complaints they have not yet come to my attention. I will make inquiries and give an answer after I have secured the information.



MANNING AND OPERATION OF EARLY WARNING LINES

[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I would like to direct a question to the Prime Minister. Is the Prime Minister in a position as yet to answer the questions that were asked on Tuesday last by the hon. member for Rosetown-Biggar (Mr. Coldwell) and myself in respect to working conditions and unemployment insurance coverage on the D.E.W. line?


Louis Stephen St-Laurent: No, Mr. Speaker. I have not yet all the information gathered together. I inquired about it this morning and it is progressing. I hope to have it at an early date.



CANADIAN PACIFIC RAILWAY


[Stage Direction]
On the orders of the day:
Mr. Carl O. Nickle (Calgary South):: Mr. Speaker, I would like to direct a question to the Minister of Trade and Commerce. Has an application been received from the Canadian Pacific Railway seeking authority to construct a 22-mile branch railway line to link its Crowsnest pass line with the Pincher Creek gas field where large volumes of sulphur and liquid by-products of gas are expected to be made available for shipment by rail to various markets in Canada and elsewhere?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, I think that question should obviously have been addressed to the Minister of Transport (Mr. Mar-ler), but he tells me that the answer is no.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: Mr. Speaker, I would like to address a question to the Minister of National Defence. I wonder if the minister is in a position to answer my question of March 13 as to whether the Canadian government has been invited by Washington to send observers to the forthcoming United States hydrogen bomb tests in the Pacific and, if not, has the Canadian government considered making such a request?


Hon. R. O. Campney (Minister of National Defence):: No, Mr. Speaker, I am not yet in a position to give an answer to the question. I have just returned to the house after a few days absence and shall be glad to look into the matter and deal with it shortly.



CUSTOMS TARIFF


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Finance. Would the minister be prepared to table the judicial decisions of the tariff board relating to parts for agricultural machinery to which he referred on Tuesday night.


Hon. W. E. Harris (Minister of Finance):: do not think that is necessary, Mr. Speaker. I shall be glad to provide a copy of the judgments for my hon. friend.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, March 20, 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.
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, we have now had some days in which the public has been able to take stock of the budget presented by the Minister of Finance on Tuesday night and it seems to me there has been a singular unanimity with
23, 1956
The Budget-Mr. Macdonnell regard to it. The unanimity was perhaps best expressed by a sports broadcaster, I believe, who said on the air last evening that in the budget the score was 0-0. I hope, Mr. Speaker, it will be realized that this fact makes my task difficult. It is difficult to make a dent in a rubber ball and it is difficult to make bricks without straw; but I must simply do my best.
It is, of course, obvious to everyone, and indeed I am not sure it has not already been said, that this is not a budget at all but a prologue to a budget. This is merely holding the line. Of course next year we will hear the story. We are all familiar with the saying of the great French king who said, "L'Etat, c'est moi." However, I doubt if he ever carried it quite so far as this government carries it. It seems to me that what is happening now makes it clear that in the minds of the government they believe that their remaining in office is a matter of supreme importance, not only to themselves but apparently somehow or other they have made themselves believe that it is important to Canada as well. I do not know how they do that.
In effect what they do is to come to the taxpayers and say, "We are in a very comfortable position, thank you; we have $26 billion gross national product and that leaves us in a good position because it means that taxes have rolled in abundantly, beyond what we could have asked or thought; so we are able to tell you the taxpayers, that there is no need to increase your taxes; however, on the other hand you realize that to lower your taxes now would be quite childish foolishness; what is the use of our lowering them now, the time to lower them is next year."
Admittedly the minister cannot say that and I have to say it for him. There are a lot of people saying it for him and I would like to associate myself with them. He is in a difficult position. I suppose if he had had his own way he would not have made a speech at all, he would have just made a little announcement as to one or two changes. However, you cannot do that very well. After all, the minister has to have his flower in his buttonhole, he has to make an entry into the house, he has to be received, he has to be photographed; that is all part of the performance, that is all part of public relations and nobody should complain.
What did we have? We had some amiable generalities about the economic position. I think the minister was a little cramped by the fact that the Gordon commission has been asked to become the brains of the government and therefore he had to be a little cautious about what he said. Then we

The Budget-Mr. Macdonnell had an apologia for the arrangement with the provinces, but I am not going to go into that. I am only going to quote the homely words of the premier of Ontario which seemed to me to be an apt commentary on all the philosophical hair-splitting that we had from the minister the other day. I liked what the premier of Ontario said, that the government had just rolled over in bed and given us what we were entitled to. That seemed to me to put it most tellingly. Perhaps if the minister had thought of those words he would have used them himself.
I just want to make one other comment on dominion-provincial relations. It is of course quite clear that we are still in the realm of doles, that we have not yet grappled with the problem which is not to make grants to the provinces but to set up the provinces on their own feet and give them a chance to be self-sustaining. I see the Minister of Finance (Mr. Harris) shakes his head.


Walter Edward Harris: I was just hoping my hon. friend would go on and explain how that could be done.


James MacKerras Macdonnell: I shall have a word or two to say about that. It could only be done if there were an entirely new approach to the whole thing. I agree that there has to be something done that has never been attempted in the philosophy of this government, particularly vis-a-vis the maritimes. I agree with the minister on that, and I shall say more later. I shall say no more about dominion-provincial relations. I just repeat that unfortunately we are left in the position where we can conclude that the government had concentrated on their own affairs and not on those of the community, particularly those elements in the community which, as I shall point out, are in distress.
I should think that private members on the government side, who came down here, I am sure, with the idea that they were serving the public, must be taken aback by that. On the other hand, of course, they no doubt are getting the one-party mind. They are reminded they have been here 20 years. It is wonderful how often we have to go back to the Minister of Trade and Commerce, but then he says so many interesting things. It is rumoured that the Minister of Trade and Commerce has told them that if they are good boys there is no reason why they should not be down here for 50 years.
We must be fair. We must admit that the government has not always been as inefficient as it has been in the last couple of months. We have to admit that they do show a certain efficiency in approaching the election issue. So the people of Canada must wait, and then a new light will appear, probably from the


Minister of National Health and Welfare, and they will be offered new inducements paid for with their own money.


Mr. Marlin:: You seem to be worried about the Minister of National Health and Welfare.


James MacKerras Macdonnell: I have known the Minister of National Health and Welfare a long time and I have watched with great interest his progress in different ways, and I am sure he will not mind my commenting on it. These electoral inducements are interesting, and I hope both the electors and the press will pay great attention to them. We discovered a year ago, what perhaps we were in danger of forgetting, how powerful the press can be. And I hope they will show themselves powerful again.
As I listened to the minister and his explanation of the income for this year and next year, I was reminded of a remark that I think his predecessor made once, to the effect that government receipts and disbursements were flexible things and that it mattered a good deal whether a payment or a disbursement was made just before or after the end of the fiscal year. I wondered whether perhaps the minister had that in mind and whether in his innocent way, because after all he is innocent, he might have done something in the way of accelerating or delaying payments. I wonder if the minister thought of that. I wonder if perhaps he made this empty budget still a little more empty in order that there might be a larger and more fertilizing flood to be let loose next year.


Walter Edward Harris: Perish the thought.


James MacKerras Macdonnell: At any rate this is an empty budget. Somebody has called it a Mother Hubbard budget, and certainly I think the cupboard is bare enough as far as the taxpayers are concerned this year. But that is because the government must have glittering prizes next year. Health is often mentioned as the ace of trumps for next summer. But there are reassuring signs of criticism in the press, signs that these slick tactics are not wholly approved.
I think I would have taken all of this more or less in good part, and I would not have felt indignant about it, as I do feel, if in fact throughout Canada we had no elements among the taxpayers who were suffering, but I believe we have and I believe there has been a notable failure on the part of this government to attempt to deal with what I would call the soft spots.
Although they have a roaring boom in the United States they are trying to deal with the soft spots, but I want to put a word in here as earnestly as I can for the hundreds of thousands in Canada who are not getting

a fair share. There is not a word of cheer for them in the budget, not even a recognition of their problem. They are the forgotten men and women. What about the unemployed? What about the maritimes? What about the textile workers? What about the rapid buying up of Canadian companies which is causing serious alarm in many circles? These problems are not dealt with. They are not even recognized. Why the neglect? Well, it might be answered that the Gordon commission is going to settle everything, but after all, all that the Gordon commission can do is make a report. In all likelihood, what it will do is to touch off more political discussion, and to say that those who need adjustments are going to wait for months and months while that is done is to talk political nonsense.
No doubt the report of the commission will be made before the election. No doubt it will be regarded as another trump card, but that is not to say that the things which should be done are going to be done in a hurry. At the present time the commission is head over heels in work. It has received, of course, scores and scores of briefs and it is now employing probably scores of economists who are working for it and producing further material.
The budget was not an interesting budget but there were one or two interesting things in it. I want to mention one in particular. One thing I liked very much was that the minister went out of his way to make flattering remarks about certain of his colleagues and really tried to create the impression that the cabinet is now a band of brothers. One does not know whether that is true. Rumours do get about, but at any rate I should like to draw attention to the fact that the minister rather went out his way, I thought, to refer to some of his fellow members of the cabinet. I did not know whether he was preaching for a call. I did observe that those who were referred to were, if I may venture to say so, not very likely contestants at the next party convention. At any rate, I do not want to impute any motives to the minister and I will simply read the references and let them speak for themselves.
The first one was with regard to the Minister of Trade and Commerce (Mr. Howe). As I said a few minutes ago, how we do come back to the Minister of Trade and Commerce! I hope he does not mind.


Clarence Decatur Howe: I am neutral in this debate. Why pick on me?


James MacKerras Macdonnell: I know the minister does not approve of many debates and maybe he does not approve of this one, but I know he will forgive me for any references I may
23,	1956	2543
The Budget-Mr. Macdonnell make to him. It is only because one meets him going and coming and one gets very familiar with him. The Minister of Finance (Mr. Harris), in referring to his own optimistic predictions of a year ago, said, as found at page 2325 of Hansard of March 20:
As a matter of fact, at a later time during the year, someone wrote that he could only conclude that some of the optimism of the Minister of Trade and Commerce had rubbed off on the new Minister of Finance. I would like to say that I would be happy if other qualities of the Minister of Trade and Commerce were also to rub off on me.


Stanley Howard Knowles: Which ones?


James MacKerras Macdonnell: This is a pleasant compliment but it also imposes a heavy responsibility on the minister if he is going to become a model to all the younger men in the cabinet. Of course it made me think, what would the cabinet be like if it were full of C. D. Howes? That is a very interesting question to me. I remember somebody saying years ago, would it not be a wonderful thing if you could have the 265 ablest men in Canada all elected to the House of Commons. Some other man, shrewder and wiser, said that it would make government absolutely impossible because each one would want to be the leader. As I say, what kind of a cabinet it would be I do not pretend to guess. I would be inclined to say, what price democracy if you had a cabinet full of masterful people like the Minister of Trade and Commerce (Mr. Howe), but that is as it may be.
Now then, next we have a reference to the Minister of National Revenue (Mr. McCann). The Minister of Finance says, "May I express my appreciation to the Minister of National Revenue and his staff for collecting such a tremendous sum of money." The minister does, indeed, collect a tremendous sum of money, but of course he does this as the agent of the Minister of Finance. I repeat what I said the other evening that the minister who 18 months ago expressed awe at the power he had has quickly got used to it. It gets them all, this spending habit.
Now, the Minister of Finance went on to speak about the Prime Minister (Mr. St. Laurent) and the Minister of Justice (Mr. Garson). We were told the Prime Minister has lived with the problems of dominion-provincial relations for some 18 years, ever since he became counsel for the Rowell-Sirois commission. I have no doubt the Prime Minister was a very able counsel to the Rowell-Sirois commission, but I am quite confident that the Prime Minister had many other things on his mind, if not then certainly since that time. It seems to me a rather pleasant exaggeration to say that he has lived with these problems, because after all he was at

The Budget-Mr. Macdonnell one time minister of justice and at another time secretary of state for external affairs. Then, we have the reference to the Minister of Justice. As to that, I would say that since he left Manitoba I think we have come to regard him as one of the great centralizers.
Now, Mr. Speaker, I hope I may be forgiven, but this handing out of bouquets turns my mind back two or three years ago to a very interesting incident in this house when, for some reason that I have never found quite clear to my mind, the Minister of Agriculture (Mr. Gardiner) launched out in praise of the Prime Minister, the Minister of Trade and Commerce and himself. He enunciated a theory which may be interesting even now, because after all the reference to the Prime Minister made then may still be very much in point. I think if we look back to what has happened during this session we may hope very much that it is in point. The Minister of Agriculture said this as far back as 1951, as reported at page 2046 of Hansard for April 16, 1951:
As long as the three of us-
That is the Minister of Agriculture, the Minister of Trade and Commerce and the Prime Minister.
-remain where we are I think it will be fairly generally agreed across the country that we have an exceedingly good government.
Now, I envy the minister for being able to say that. I wish I were able to feel as pleased with myself as that. At any rate, there it is and it speaks for itself.
Then, he goes on to make what to many of us may seem an even more interesting comment. He said, "One of the reasons why we are satisfied to be where we are is because we both know we can afford to make statements, knowing that we might be incorrect, because we have a leader who does not make many mistakes." I was very interested in that because it seemed to indicate a situation where it did not matter very much what the other members of the cabinet did so long as there was a Prime Minister there who did not make many mistakes. This seemed to me to be a kind of blessed irresponsibility which I think is very comforting to the other members of the cabinet.
I come now to speak about some of the forgotten men and women. I wish to say a word about unemployment. Everyone will remember, I think it is less than two years ago, September, 1954, in fact, when the Prime Minister launched out and made a statement which sounded like a kind of clarion call. He said, "We have a country where there should be work for everybody and if we are not smart enough to organize

the economy of the nation to provide work for everybody we are incompetent-"


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: He goes on to say, "I cannot give details but I am convinced that if my colleagues and I cannot organize economic controls in such a way that there will not be any long periods of loss of work for those who want to work, then throw us out and put in our place people who can do better." That was the Prime Minister's statement. As I say, it was a kind of clarion call but the voice of the trumpet was not so clear when the Prime Minister got back to the House of Commons. In January, he was not quite taking the same line. In January, 1955, he said this, and this seems to me like rather the feeble voice of the flute as compared with the trumpet. "There is some unemployment in Canada. There has been some unemployment in Canada every year. That situation has eased as the season advanced and there is reason to expect that it will do so again." Now, that seems to me a very disappointing outcome.
I shall quote a few figures to show what the situation is this year. It is bad enough, but not as bad as a year ago. The figures this year are, however, in all conscience, bad enough. In February, 1956, unplaced applicants were 515,000, almost 100,000 less than 1955 but 113,000 more than in 1953. Those without jobs and seeking work numbered 308,000, almost 70,000 less than a year ago but approximately the same as 1954. No one could be happy with those figures, but what is being done about it? Here are the words of the Minister of Labour: "I hope and believe we are learning many things which will be useful to us in the future."
It is interesting to note that in the United States they do not act in this negative manner. They really try to do something. They have soft spots there. They use various means to deal with chronic unemployment. Incidentally, they have been trying to help small businesses, too, which has an impact on unemployment. They have an organization that does that which has made 1,645 loans in the last period with an expenditure of $83 million. Now, that is the attitude which they have and so far as we are concerned it seems to me we must call the government back to duty. We must remind them that these are fellow citizens who are entitled to be considered, and that it does not help them very much to be told that we expect this year a G.N.P. of $28 billion. They are not interested in billions, millions, thousands or even hundreds. What they are interested in is being able to earn their day to day living as self-respecting men and women.

I wish now to say a word about the maritimes and I wish to stress that as strongly as I can. I feel very deeply about it. Here again we need an entirely new approach. It is not surprising that people from the maritimes say that when they come up to a meeting in central Canada they feel like poor relations. They feel they are not wanted. One of them said he felt almost as though he got a slap in the face. Here again, so far as I can see, there is no intention of grappling with the problem seriously. All that is being done is that the maritimes are being given a subsidy to put them off, to keep them quiet. This has been the case, notwithstanding the years of huge expenditures. If ever there was a time when industries could have been set up in the maritimes it was within the last few years. What we want is a new look, not palliatives and not one commission after another, each doing a little tinkering and recommending concessions in railway rates or other concessions. We want a new approach.
After all, confederation was a great act of faith and imagination but it did not, in itself, assure an adequate and effective economic background for the federal system. It was clear from the outset that the maritimes were taking far more risk than the rest of us. They were jeopardizing their north and south trade to a far greater extent than the rest of Canada was. Happily, in the early years, there was prosperity, which helped confederation on its way. Britain was booming; the United States was undergoing great railway expansion and there was for a few years satisfactory prosperity. The people of the maritimes look back on that now as a kind of golden age that they can hardly remember, and especially when times are prosperous in central Canada and the rest of Canada. They feel, and let no one be surprised, that they have not had a fair deal.
I have known this, of course, but it has been rubbed into me; it has been impressed on me far more than ever before by things which have been used in this House of Commons recently. The member for Queens (Mr. MacLean) said a thing a few weeks ago which startled me. He said, as reported at page 378 of Hansard'.
For more than 80 years confederation has hung like a killing blight over the economy of the maritimes.
A killing blight, Mr. Speaker.
Now, he might soften that remark a little; he might lessen the 80 years a little because the first few years were prosperous, but when a serious man who has served his country both in peace and war can use language of
23, 1956	2545
The Budget-Mr. Macdonnell that kind, then I say it is time for the rest of us to have a new look.
I shall now give a few figures as to the economic position, but before I do that I want to remind the house that not so long ago, I think it was the hon. member for Cape Breton South (Mr. Gillis) who said that men had gone from the maritimes to New Zealand looking for work. That is a thing which every hon. member should regard as a personal responsibility of his own to prevent.
Let me give a few figures as to the economic comparison. In the three maritime provinces in 1946 the income per member of the labour force was $307, or 15 per cent below the national average. By 1949 the difference was $573, or 23-1 per cent. By 1953, it was $770, or 22-7 per cent. If we took this percentage at so much per head the disparity would be greater than that.
Let me give one or two figures as at the present moment. If we take unplaced applicants as the percentage of labour supply in February, 1956, we find that the percentage for the whole of Canada is 11-7. For the three maritime provinces it is 17-5 per cent, and for the four Atlantic provinces it is 19 per cent. The figure for persons without jobs and seeking work as a percentage of labour supply for the whole of Canada is 7 per cent; for the three maritime provinces it is 11-1 per cent; and for the four Atlantic provinces it is 10-8 per cent. These are figures, Mr. Speaker, which should strike every one of us and which should be intolerable for us to hear. We should never rest until we have remedied the condition.
There was an excellent debate in this house the other night, and I should like to paraphrase one or two of the things that were said because, happily, during the debate views were expressed on all sides of the house. Maritime members on all sides of the house stood up and expressed themselves. The hon. member for Inverness-Richmond (Mr. Mac-Eachen) had something like this to say. He said that he believed we were really following a great historical tradition when we talk about policies which may serve to build up areas of Canada which up to the present time have not participated in our prosperity in the manner that we all desire. Later on, the hon. member said-and I commend this especially to members of the government:
It is through acceleration, with present government services directed with greater intensity to what might be called special areas that much can be done.
How true that is, and how absent we find any suggestion of intensity. That is what we need. As I say, we need a new look.

The Budget-Mr. Macdonnell
I am happy to say that the premier of Ontario has expressed himself in no uncertain way in this matter. It is a question for this house, and I hope the debate will continue as a top priority problem, and that hon. members on all sides will express themselves. That will be the only way to cure the lethargy, to inspire the indifference, and to show the government the way to action.
The minister asks me for a way to do it. I have no detailed plan of how to do it but what I am saying is this. The first prerequisite as to how to do it is to believe it is necessary that it should be done, and I am quite satisfied there is no such belief in the government at the present time.
Now, let me give a word from Mr. Frost. I am quoting from the Globe and Mail of March 10, and this is a Canadian Press report:
Mr. Frost was particularly concerned about the future of New Brunswick and Nova Scotia.
I was glad to read that. I am afraid that sometimes in Ontario we do not appear as interested as we should be; therefore, I was glad to read this from Mr. Frost. I continue:
For these two provinces Mr. Frost had earlier urged an annual federal subsidy of $10 million each.
This amount, really very little by comparison with what the federal government takes out of the provinces, spells the difference between prosperity and depression for these maritime provinces.
It will not be too long before the federal government regrets the action it took today.
Added to this comment is a further one from Premier Frost which represents an overall expression of the premier's position with regard to the federal government's proposal:
They were wrong in 1945; they were wrong in 1952, and they are wrong today.
Not only the premier of Ontario, but another provincial premier has expressed his alarm at the way the shoulder of the federal government is turned to the maritime provinces. There was a Canadian Press dispatch of March 13, but I have not it here. It was a statement by the premier of Saskatchewan also agreeing that the maritimes should be more fairly dealt with.
In his report to congress of last November the president, among other things, said that much had been done to improve and stimulate the United States economy. He referred to the curtailing of government activities that could be handled as well or better by private enterprise. He is following the advice that Churchill gave not so long ago in telling the govern-to "get out of the way". In that connection, I want to say a word about Trans-Canada Air Lines. I want to do this because it is clear that there is a widespread feeling across Canada, as shown by the press, that this

monopoly should come to an end. It really has become a case of the Minister of Trade and Commerce (Mr. Howe) v. Canada. I wish to put in several quotes from the press across the country. We have heard a great deal from our government about preserving private enterprise and competition, but let us look at their actions. Here is what the Winnipeg Free Press has to say:
It is high time that the government's policy on transcontinental air service was changed so that Canadians from coast to coast may enjoy the benefits which would accrue from T.C.A. having a little competition.
Arthur Blakely, writing in the Montreal Gazette, said:
It is quite clear that trade minister C. D. Howe who maintains a fatherly interest in all crown corporations will fight tooth and nail for the preservation of the monopoly. He would, if that were possible, be even less enthusiastic about any proposal to sell T.C.A. on the open market for a price however reasonable.
Not all of Mr. Howe's cabinet colleagues, it is reported, are as disturbed at the thought of breaking the monopoly. But unless parliament forces a showdown no such development is likely to take place while he remains in the cabinet.
A similar view is expressed by the Vancouver Province:
In theory it is that all transcontinental flying shall be reserved for Trans-Canada Air Lines but in practice it is that T.C.A.'s monopoly shall cover all east-west flying whether it is a through transcontinental run or not.
As we have argued before in these columns the theoretical policy may be defensible but the practice is not.
Its result was to prevent Canadian Pacific Airlines from supplying a freight service which T.C.A. did not then offer. Its result now is to deprive a number of cities of a low-cost short haul passenger service which T.C.A. does not now offer.
In theory the policy is protective, in practice it is restrictive.
And, finally, a quotation from the Ottawa Citizen:
There was good reason lor the T.C.A. monopoly when it was granted 18 years ago . . .
But in the intervening years T.C.A. has grown and prospered to the point where it is now scarcely able to handle the demand. Air traffic will most certainly continue to increase in the years to come and in the citizens' view it is time another carrier helped with the load.
It is interesting to note that the Minister of Finance was quoted the other day as saying in Brantford that "in a free enterprise economy it is not the function of the government to interfere actively with the natural direction of economic development."
I wish to say a word about commonwealth trade. On various occasions this party has tried to bring this to the attention of the house. We have made motions which have always been turned down. We have tried our best to keep this before the government but without much success. One would think

that now, with the hundreds of millions of deficit, with the $840 million deficit on current account which we had with the United States last year, the desire to explore every avenue of trade would be strong in the government; and yet, in answer to a question asked by the hon. member for Eglinton (Mr. Fleming) on this point, the Minister of Trade and Commerce, to our amazement, said that the Department of Trade and Commerce was doing nothing about it. Can anyone tell why? We certainly need external markets. Is there some fatal lethargy?


Walter Edward Harris: I do not think that is quite
fair. The question did not ask what we were doing about trade but what we were doing about the adverse trade balance with the United States.


James MacKerras Macdonnell: I will accept the minister's correction, but what we are talking about is certainly concerned with trade and I want to be fair. Is it because we do not want to play ball with the other members of the commonwealth? Surely they could do more business with us and surely it should be explored in every possible way. There has never been a satisfactory answer. We are just left to suppose that everything that can be done is being done by an allwise government, but it is not as simple as that.
Not long ago we moved a resolution to the effect that this house is of the opinion that the government should consider the advisability of inviting the nations of the commonwealth to a conference to be held in the immediate future for the purpose of working out arrangements to preserve and enlarge those traditional markets on which jobs and opportunities for Canadians very largely depend. In that connection I would like to quote from that well-known authority, Dr. W. A. Mackintosh of Queen's University, who, when writing of the United States performance under GATT in the Foreign Affairs Quarterly of last October, said:
There are signs that we are entering a period when other countries may press American representatives to produce evidence that the United States is able to make a dependable agreement. To say this is not to discount the ingenious and sincere efforts which have been made by President Eisenhower to further the aim of larger and more competitive trade in the western world. But Congress rules. In future, however, if agreements are to be subject to the heavy discount of escape clauses and modifying legislation a much greater consideration may be required.
Dr. Mackintosh also points out that the most moderate restriction of trade in the United States, having regard to the enormous size of their business, may be of decisive importance in Canada in respect of Canadian exports. When he said that, he was speaking
23. 1956
The Budget-Mr. Macdonnell of cereals; but it applies right across the board as well. We know perfectly well that the United States has not fully grown up in respect of its economic responsibility, at any rate not in tariff matters. We know they will put up tariffs as soon as anyone at home is being hit. I remind you of what I said a moment ago concerning Dr. Mackintosh's query about a "dependable agreement." We also have to remind ourselves that, the United States not being under a responsible form of government, their executive cannot deal firmly and decisively and cannot make agreements which they are perfectly sure of being able to carry through.
There is another problem I wish to raise and that is a problem which is coming more and more to our minds particularly by reason of recent United States legislation. I refer to the invasion of United States shareholders. Indeed, there is now a new phrase, "Dollar colonialism", which has crept into the language. We welcome United States capital to Canada, of course, but it must be brought here on some fair basis. Recent events have caused great heart searching. United States investment in Canadian companies has grown very rapidly. It is pointed up by recent action in five of the states where they have sought to exclude a Canadian company, although happily in one state the governor has vetoed it.
This matter has been of serious concern to the business world in Canada and we get no lead from the government. What it really means is that Canadian investors are being frozen out in respect of United States companies. One-third of the investment in Canadian manufacturing is in companies controlled outside of Canada, United States companies. Some of them are wholly owned, there are subsidiaries in many cases, and the Canadian investor has no chance to invest. The number of companies controlled has grown from 1,985 at the end of the war to 3,235 in 1953. And do not let us imagine that these are small companies. Most of them are large and some of them are huge. A good many of our commodities are now controlled by the United States. A partial list includes iron ore, nickel, aluminum, oil, copper and asbestos, all of which are under effective United States control.
Is there any disadvantage to this? Yes, there is a very great disadvantage and it grows and grows and can become very acute if anything less than a roaring boom is occurring in the United States, because, as I said, they take immediate steps to protect their own people if there is any trouble at

The Budget-Mr. Macdonnell home. A witness appearing before the royal commission on patents said:
Canadian Industries Limited was not permitted by its U.S. and U.K. parents to export from Canada. Similarly Canadian radio manufactures, titanium processors, optical goods manufacturers, and many, many others, have been compelled in this way to refrain from assisting in the development of Canadian export trade.
That could toe expanded, but I shall not take up more time of the house in doing that. Why have we heard nothing of this? Why is it not stressed? Of course the Americans are within their rights in coming in and buying, but they are sensible people and there is no reason why that situation cannot be discussed with them. We could argue for good customer relations. After all, if Canadian purchasers came to know the situation they could easily lay off buying from these companies; nor is there any reason why there should not be fair regulation. Dr. Mackintosh, speaking of this, says:
Recently there have been some murmurs of complaint that certain areas of Canadian industry and finance are powerfully affected by United States subsidiaries in which there is no Canadian share in management . . . and no full reporting on the results of the Canadian sector of the enterprise.
Now I come to our old friend, the question of extravagance and waste. I remember several years ago, when our budget was about $2,400 million, the then Minister of Finance said to us that we could not expect to have the budget reduced as long as we wanted to have the services we were then getting. That was certainly a conservative statement. We must remember that was before the days of huge defence expenditures. Of course today we are having services we never dreamed of before. The Department of National Health and Welfare notably will not forget anything, because a vote is a vote. Incidentally, the independent health organizations, I think, find it hard, or believe it is hard, to get assistance from the Minister of National Health and Welfare (Mr. Martin). He prefers to dole out the money himself and I suppose his argument would toe, "Well, they are not looking for votes and I am, therefore it is so much better to have this go out with he slogan: This comes to you from the Minister of National Health and Welfare."
As I said the other evening, we have a pamphlet on baby talk and there is also one on jealousy. Then I am interested in noting that the minister is interested in the stage because there is a pamphlet, issued in connection with the stage, which so far as I can make out is produced by his department. Then when we come to the Department of Fisheries we find that they issue a pamphlet


on "ways to cook fish." Then there is one with the mysterious title "Oceans of Goodness". At any rate "oceans" fits in with the Department of Fisheries and I suppose it is all right.
But the Canadian taxpayer pays for all this. We can see that the Minister of Finance has given up. I said the other evening, and I shall not repeat, that he came to us recommended as a great, strong, rugged, unyielding, tough and unpleasant fellow who was going to crack down on all departments. But that has not happened and it will not happen. There is only one way that there will ever be any economy and that is for the minister to make up his mind as to how much a department should have and then tell them that that is all they are going to get and let them spend it as they see fit. I believe he would then see amazing instances of economy. As it is, the minister is beaten before he begins. Members of the department come all keyed up ready to prove that they need what they want to get. I suggest again to the minister that the present system is futile, that he could work miracles if he said to the department, "There is your allotment, if you want some special project you can make any economies yourself and get it." I believe that that could be done.
Of course the suspicion enters my mind that our ministers of finance themselves are not really crusaders for economy. I have never been able to believe that. After all, the expenditure of money makes them popular with a good many people, and large expenditures of billions help to increase the gross national product and help to create for the moment a buoyant situation. They help to add to the minister's taxes, and there you are. The merry-go-round goes on and on; some people think it can go on forever, but I am not one of those. I again put it to the minister with the greatest confidence that the only solution which will bring about economy is the one I have suggested.
I should like to give special mention again to the Department of National Defence with one or two words as to details. It cost $1,400,000 to wash the dirty linen of the Department of National Defence. The navy and air force come a little cheaper than the army, but I suppose that is because one of them lives in the air and the other lives on the water. I am interested in the telephone bill of $911,000 and would be interested in knowing in how many of those cases a letter with airmail and special delivery stamps would not have done just as well. Long distance telephoning is so easy: you just reach for the telephone and you do not have to pay for it yourself. I enjoy doing it, and I think

everyone in this house does also. But somehow or other I am sure that this figure could be reduced a lot.
Telephones, telegrams and other communications cost $6,248,000, although much of that is taken up in the form of leased lines for the air force. These fellows must be very loquacious when they spend over $900,000 on long distance telephone calls.
Another thing I want to stress is this amazing figure of $1,775 million, which is the same as for last year. When I first read that, I could not believe my eyes. Next I thought it must be a misprint. Then I thought that there must be some easy explanation that had not occurred to me. I went around looking for it, but I have decided that there is no such easy explanation. I have decided that what this really means is that there was no estimating in any real sense at all. No one out of a lunatic asylum could believe that, if all the various items were considered separately and added up, they would by some magic produce exactly the same figure as a year ago. I do not think that anyone will argue that.
It seems to me that that is a piece of extraordinary effrontery-I can only call it that- on the part of the department. It means that they were not taking us seriously. But worse than that, what about the Department of Finance? I think it is a worse offence on the part of the Department of Finance than on the part of the Department of National Defence. In effect, what is being said is this: "Do not bother about the House of Commons, this will do for them; they are only the elected members, do not bother about them as they do not matter".
That is the way it seems to me. I wish to remind the house that in spite of all we could do the defence estimates are not going to the estimates committee. I can only hope that when these come before the committee of the whole house in the ordinary way it will not be in the last days of the session but at a time that will permit us to go into these items with some care and get to the bottom of them.
There is one other thing I want to say about the Department of National Defence. It has the most extraordinary faculty of increasing its staff, which increased from 45,718 in 1954 to 53,909 in 1955. That seems to me almost incredible and the only way I can explain it is by reference to the theory which was put forward in the London Economist last autumn with regard to the growth of civil service staff. This is called "Parkinson's Law". Several people have seen
23, 1956	2549
The Budget-Mr. Macdonnell it, but I think it is worth putting on the record in part. It begins by saying:
It is a commonplace observation that work expands so as to fill the time available for its completion. Thus, an elderly lady of leisure can spend the entire day in writing and dipatching a postcard to her niece at Bognor Regis. An hour will be spent in finding the postcard, another in hunting for spectacles, half an hour in a search for the address, an hour and a quarter in composition, and twenty minutes in deciding whether or not to take an umbrella when going to the pillarbox in the next street. The total effort which would occupy a busy man for three minutes all told may in this fashion leave another person prostrate after a day of doubt, anxiety and toil.
Granted that work (and especially paper work) is thus elastic in its demands on time, it is manifest that there need be little or no relationship between the work to be done and the size of the staff to which it may be assigned. . . . Politicians and taxpayers have assumed (with occasional phases of doubt) that a rising total in the number of civil servants must reflect a growing volume of work to be done. Cynics, in questioning this belief, have imagined that the multiplication of officials must have left some of them idle or all of them able to work for shorter hours. But this is a matter in which faith and doubt seem equally misplaced.
Then we have an illustration of a case in which one official decides he needs an assistant, but he says he must not have just one assistant because that would mean that that man would argue with him. Therefore he would have to have two assistants, and it finally works out to the point where he needs seven officials. The Economist continues:
Seven officials are now doing what one did before. . . . For these seven make so much work for each other that all are fully occupied and A is actually working harder than ever. An incoming document may well come before each of them in turn. Official E decides that it falls within the province of F, who places a draft reply before C, who amends it drastically before consulting D, who asks G to deal with it . . .
I shall say no more about that, but I come back with confidence to my suggestion that this matter should be dealt with in one way, and one only-by allocating amounts.
I wish to speak only for a moment about trade and the balance of payments. After all, nations, like individuals, cannot live indefinitely beyond their means. The enormous deficit of last year has been much in the public mind but, as I have said, the responsible minister took it very lightly. But we cannot repay trade deficits with optimism alone. I was rather disturbed the other day that the Minister of Finance was apparently making light of our dependence on the United States. This was when he spoke in Port Credit. He went as far as to suggest that we might be able to avoid the effects of a United States depression if one comes. He said:
The time may be coming when we won't suffer the same as they do south of the border.


create the feeling in other people that it has created in me, a feeling of something approaching indignation, that when we think we are sitting so pretty we can ignore the welfare of our fellow citizens-if it creates that feeling-then it may eventually have been worth while.
This government is not primarily concerned about the welfare of the unemployed, about the welfare of the maritimes. They are primarily concerned with so arranging matters that they can win the next election. That is the plain, inescapable truth. Let the unemployed get on as best they can; let the people in the maritimes go on for decades more with insuperable handicaps; let the farmers in the west survey sadly their piles of unsold wheat. But let us get ready for the next election.
I fear I have not been as forceful as I would have liked in speaking for the hundreds of thousands of our fellow citizens who have been and continue to be, in so far as this government is concerned, forgotten men and women. I only wish that I could din my words into the ears of every serious, every generous, every responsible citizen of this country and that I might have the gift to persuade them that it is their duty to rise up and demand action.
Further, just as Abraham Lincoln said that a state could not exist half slave and half free, I would like to stress the fact that a state cannot prosper when an important section of its citizens, men and women of character and capacity, are left with inferior opportunities, with a sense of injustice and frustration. If any word of mine today has the slightest influence in bringing this state of affairs to an end, I shall be happy indeed.
I move, seconded by the hon. member for Eglinton (Mr. Fleming):
That all the words after "That" to the end of the question be deleted and the following substituted therefor:
"this house regrets that the budget is empty, negative and partisan; that the government shows no concern over either the serious problems of distressed groups and areas or the growing economic domination of Canada by United States interests; and that these and its other failures demonstrate the government's irresponsibility and unfitness to hold office".


Mr. M. J. Coldwell (Roselown-Biggar):: Mr. Speaker, first of all I want to agree with what the hon. member who has just taken his seat said the other evening about the budget having all the earmarks of a standpat budget marking time until we approach the election of 1957. I imagine that when the next budget is brought down about a year from now it will be a very attractive document. The minister will make a very interesting speech full of promises to the Canadian people and then, since Easter will come

about April 21, the house will probably be dissolved and about the middle of June, say the 17th of June, we shall find ourselves having a general election and a new House of Commons elected. I have no objection to that, of course.


Mr. Slick:: Are you telling us when the election is going to be?


Major James William Coldwell: No.


Leonard T. Stick: I was wondering what side you were on.


Major James William Coldwell: I am doing what is my right in a free democracy. I am expressing my own opinion, and in spite of the hon. gentleman's objection to it-


Leonard T. Stick: I am not objecting. I 'am only asking a question.


Major James William Coldwell: I am going ito express my opinions regardless of the hon. gentlemen who, as the Ottawa Citizen remarked last evening, may belong to the Liberal party but are not liberals. I want to say to the minister that I noticed a very marked difference between the budget this year and the budget last year. Last year the minister reduced certain taxes, particularly the income tax. This year there have only been a few reductions in excise and sales taxes. May I say immediately that, although they only amount to some $12 million, I think all of us welcome them because they effect certain adjustments and so on. I think that relief was needed with regard to the excise and sales taxes so as to bring them into line with what I believe is the policy of the government with regard to equipment for farms and other industries like agriculture.
I also noted that at last something which I have considered to be rather incongruous is going to be removed. I refer to the sales tax on antiques. The government is getting a bit antique itself and perhaps that is the reason that after 20 years the tax on antiques coming into this country is to be removed. As a matter of fact, I think one can commend the government for that.
With respect to the fact that there is no reduction in income tax this year, may I say that I do not know that even the reductions in income tax made last year affected materially an overwhelming part of our population. After all, a very large percentage of the population pay no income tax. They are not affected by any reduction. For the people in the lower brackets we found that the reduction last year, in the case of a married man with two or three children, for example, amounted to a little more than a few cents a week for such a man in what might be called the fairly low-middle bracket. Of
23, 1956	2551
The Budget-Mr. Coldwell course the people in the higher brackets received very substantial reductions.
I want to say to the minister that when next year comes and he has this surplus of $113 million, and if his outline of his expectations for the economy during the present year is borne out by the facts, I rather suspect that he will have far more than $113 million to play with provided he does not bring down what I hope he will bring down, namely, an estimate for a national health plan. I would rather see any surplus that is going to accrue during the current year used in bringing down a comprehensive national health plan, far more comprehensive than the minister has outlined to the committee, because I believe that would be the most beneficial thing that could be done by the government of Canada at this time.
Not only do I believe it is the most beneficial thing that can be done for the people generally but it also will be most beneficial for our old age pensioners. I should like to see them get an increase in their pensions. I hope that sooner or later the government will come around to giving them an increase, but I do not know of anything that would be more beneficial to them than a national health plan.
The Minister of Citizenship and Immigration (Mr. Pickersgill) is not in his seat but I should like to say to him that I think the introduction of such a measure will facilitate immigration into this country, particularly from northwestern Europe. When I was in Britain a year and a half ago I found there was a very general understanding that Canada had no national health plan. When I was there letters were appearing in some of the British papers from immigrants who had come to Canada pointing out that they had done pretty well for the first two or three years, but then a serious illness had attacked one of the family and the medical and hospitalization expenses had not only wiped out all they had been able to save but had put them into debt.
When one considers that in most overseas countries from which we like to get as much immigration into Canada as we can they have quite comprehensive plans, then I say to the government, and particularly to the Minister of Citizenship and Immigration, that Canada needs such a plan to attract immigrants. I believe that we want immigrants because our country is one that still has wide open spaces with plenty of opportunities for immigrants, far more so than when I came here just over 46 years ago. The future is very bright for those who come here, but today all the progressive countries have social security plans that are quite comprehensive. People who think of coming to this country look for

The Budget-Mr. Coldwell social security measures of the kind they would be giving up in leaving home.
May I say one other thing to the minister in this connection. I should like to see the countries of the commonwealth at least try to arrange their social security plans so that people moving from one commonwealth country to another would not lose any benefits. I am thinking particularly, of course, of the old age pensioners. Incidentally, today our old age pensions are on a contribution basis as old age pensions are in the United Kingdom. Our old age pensioners have made a special contribution of 2 per cent through the sales tax and consequently they have paid a premium. They should be entitled to their old age pension no matter where they may be, no matter whether a pensioner moves to Great Britain perhaps to stay with a younger sister after spending 30 or 40 years in Canada.
I have in mind at the moment a lady some 76 years old who is going to Britain to visit a younger sister. She must be back within three months. Yet I know perfectly well she could be cared for better over there provided she could get the old age pension in the same way that old age pensions are paid by some countries regardless of residence. So then I hope if the minister has a substantial surplus next year, that surplus will be used not to reduce corporation taxes, not even to reduce income taxes, but rather to bring our social security system up to the level it should be in order to give our people the kind of security they need and make the country more attractive to the kind of immigrants we want to get.
Then, too, I want to say to the minister that whether we have a surplus or not I would hope that we might use more of our revenue for the projects of the United Nations and our own Colombo plan, to assist in raising the standards of living across the world. On two occasions during the past week I have heard two competent observers who have been in the Soviet union. I heard Mr. Norman Smith on Tuesday evening, and he illustrated his lecture with pictures he had taken, mainly in Moscow. On Wednesday, of course, I listened to Mr. James Duncan of the Massey-Harris-Ferguson company. While listening to both of these addresses I realized what the challenge is that we are facing anew in the world today. Here we face a powerfully organized country. It is true it is dominated by a very small group of men and does not have the democratic procedures that we have. They are improving their output of material things every year and are now offering to assist the more underprivileged peoples of the world. These people who do not understand


what democracy means will, I think, be influenced by those who can assist them most rapidly in emerging from their underprivileged position. I think we have to do a lot more than we have been doing in support of the United Nations technical aid and the Colombo plan. As I suggested to the minister of external affairs the other day, we should give our support to the special United Nations fund for economic development which is known as SUNFED.
May I also add that another thing that impressed me in connection with these two lectures was the tremendous urge and the tremendous planning of educational activities in the Soviet Union. In spite of the dictatorship, its cruelty and all the rest of it-which I hope has now passed but I am not yet convinced of that-the extent to which the old Russian culture has been encouraged and brought up to date has been impressive. I was not here yesterday when there was some discussion about pictures for the national gallery. I want to tell the minister that so far as I am concerned I believe we are not doing enough in the way of encouraging culture in this country. I think when we acquire good art and have a proper national gallery in which to put that art, we are doing something of inestimable value for the future of our country. I am not going to enter into a debate as to whether or not commissions should be paid for buying those pictures, but I am very happy indeed to know the national gallery is acquiring some first class pictures, because to say that man does not live by bread alone is as true today as it was when it was said long years ago.
This brings me to the proposal in the budget to place a 20 per cent excise tax on certain magazines that are published in the United States, or elsewhere, I presume, and are brought into this country in which advertising is invited from Canadian advertisers. I am in complete sympathy with the object of that particular tax, but I am very doubtful as to its efficacy. I doubt very much that the 20 per cent excise tax will do anything substantial towards discontinuing the publication of those magazines in this country. What I think may happen is that the advertising rates may be increased by 20 per cent. If the circulation of Time and Reader's Digest is sufficiently attractive to the advertisers, we shall not achieve the objective the minister has in mind. I want to assure him, however, that I am in complete sympathy with the objective of the proposal.
I think a more positive approach would be to set up the Canada Council to carry out some of the recommendations that are found in the Massey report. I am not narrowing that

down to magazines, literature and so on, but I am thinking of the need for expansion in the field of education and for the building up of our educational facilities. I was impressed the other evening when I heard of the great university in Moscow, the thousands of students that are there and the numbers of highly qualified engineers and technical men that are being turned out, and I realized that our own universities have had to cut down on the number of students that they can accommodate. They have had to raise certain standards in order to keep students out. Now, those standards are not always the standards that are desirable. The fact that a student is proficient in one field on an examination paper and is not as proficient in another field may limit that student's right to enter a university. I know, both from my experience as a teacher and my experience as a student in the old days-I am not going to make any confessions-that there were one or two subjects I not only found very difficult but only as the result of considerable cramming did I manage to get the 52 per cent or 53 per cent that was required to put me through. Yet I am quite sure that in other fields I was fairly proficient. So, I think we have to pay much more attention to the recommendations in the Massey report. I believe the minister will have to provide from time to time, not only grants in aid to our universities but grants for the provision of scholarships for young Canadians who have the ability and the desire to go on with education.
Again may I point out that it is the boast in Britain today that no child with ability need be denied a university education if that child and the parents of that child desire the education. Through systems of bursaries, scholarships and nominations, today every child in the United Kingdom can attain a higher education. We have not reached that stage in Canada. I think probably the hon. member for Greenwood (Mr. Macdonnell) was right the other evening when he said we could look into our defence expenditures a little more closely. I would not like to rise in this house and move a motion to reduce defence expenditures under this budget by $200 million or $300 million. Yet in my own mind I am convinced that if this department were gone into very carefully, $200 million, $300 million, $400 million or even $500 million might be saved. Of course, you might have to spend it in certain other defence projects under circumstances that might arise. I do not know, but I am quite sure that there are unnecessary expenditures and extravagances that could be dealt with.
I listened to the hon. member for Greenwood (Mr. Macdonnell) this morning when
The Budget-Mr. Coldwell he talked about the encouragement of private enterprise. Well, I think there are some fields in which private enterprise can serve the nation. But when I hear criticisms, following a plea for private enterprise, of the manner in which, for example, the United States corporations and investors are entering the Canadian economy, I sometimes wonder what those who criticize the lack of encouragement of private enterprise have in mind, because if we are to have complete private enterprise, let us have it. If we have complete private enterprise, then there should be no let or hindrance of any person or any corporation coming into our economy and making out of it the best that he or it can possibly get out of it. I cannot go along with the idea that if we get rid of some of our enterprises that because of their very nature have to be public enterprise we would be performing any service to this country.
I noted the reference to the Trans-Canada Air Lines, a very efficient airway system, and I also saw-I have not got it with me; if I had known it was coming up this morning I might have had it-the figures that have been published regarding air traffic. The number of passengers carried between great cities like Chicago and New York and in our own country, although very much less impressive, if divided between two transcontinental air lines, would mean that neither of them could pay expenses. Therefore, we have to be careful when we talk of encouraging private enterprise to define what that encouragement should be, and how it should be undertaken.
As far as we are concerned, we criticize the alienation of our resources to foreign corporations because we believe that we should be planning the development of those resources ourselves. If we have to, why are all these things not public enterprises? I voted for a resolution introduced by the official opposition a short time ago. In the resolution the official opposition urged that the federal authority and the provinces should co-operate in the development of our resources. How? Well, as far as we are concerned we think that should be undertaken very largely by public enterprise because private enterprise has failed to do the job.
Those are some of the things that struck me. I say to the minister, I noted that he admitted in his speech that some sectors of industry and agriculture have not fully shared in the rate of progress which he outlined in his speech. He said there was some unevenness in the rate of expansion; and, of course, this implies that the condition of agriculture has been improving. As a matter of fact there was some improvement in
2554	HOUSE OF
The Budget-Mr. Coldwell agricultural returns in 1955 over 1954, but nothing commensurate with the need of agriculture. Agriculture has been steadily losing ground over the last number of years. For example, last year corporation profits climbed by almost 30 per cent in the first three quarters-I have not the figure for the fourth quarter'-as compared with the same period in 1954; but net farm income fell in the same period from $2,155 million in 1951 to $1,126 million in 1954, a decline of 47-8 per cent. But, as I said a moment ago, there was some improvement last year. However, 10 per cent or so increase in improvement last year will not compensate for the nearly 48 per cent decline in the period which I mentioned a moment ago.
Then, of course, we are all happy that we have not unemployment to the extent this year that we had a year ago, but there is still a considerable amount of unemployment, or at least there are large numbers of people who are seeking jobs. The last figure which I have seen indicates that there were 515,000 unplaced applicants. I will say immediately that they are not all unemployed, but they are unplaced applicants for jobs as at February 16 of this year. It is true that that is a better figure than the figure of a year ago, which I think was in the neighbourhood of 600,000; but it still indicates a very serious condition in the field of employment. It does not matter whether he is one in 100,000 men, 400,000 men or 500,000, it does not matter how many there are, the person who is unemployed suffers whether he is accompanied by a very large number or a very few people. Anyone who has had the experience of standing in a relief line, asking for a meal ticket and then going away and getting a meal on a meal ticket will know what it does to one. I did that once, not because I was unemployed but because I wanted to see what the treatment was, and I found it very much to my consternation. Fortunately, since those days-I refer to 1921-we have introduced unemployment insurance and we have other means to .assist the unemployed; but still there are those who suffer in the manner in which they suffered in 1921, a smaller number perhaps, but yet nonetheless the suffering is there.
I cannot deal with all the matters that I had in mind when I was thinking of what I would say in connection with this debate. But I do want to say to the minister that he still has in his budget and in his methods of collection of taxes tremendous loopholes which should be plugged. In the legislation there are loopholes under which rich and powerful corporations in many fields, and well-to-do individuals in those fields, can in various ways evade what I think is their fair


share of the burden of financing the public business of this country. We believe that ability to pay is of course fundamental and upon which we should base all our taxation. I think there is no fairer method of taxation than income tax, and it has the other saving grace that the person who pays the income tax knows that he is paying and contributing to the country. I am going to give the example that I have given before, and nothing that the minister or his predecessor has said has changed my opinion that it is wrong. At the present time a man can receive some $14,000 in a given year from dividends and so on and pay no income tax. A man with $3,000, if he has no children, will pay $150 income tax. The man with $14,000, similarly married with no children, if his income is derived, as I said, from dividends from a Canadian mining, oil or gas company, pays only his old age security tax of $60 and nothing more.
I would like to put on the record the method by which I worked that out in order that the minister and others in the house can see how it is arrived at and if they wish to try to explain it or criticize it they may do so. I took an actual amount because it comes out evenly. I used the case of a man with an income of $14,542 derived as I have just indicated. If we deduct tax exemptions of $2,000 for the taxpayer and his wife, that gives us a total deduction of $2,000. I then deducted 20 per cent depletion allowance, which is $2,908 and leaves a taxable income of $9,634. The old age security tax is, of course, $60. Income tax other than old age security tax is $1,957. The tax on investment income, which is 4 per cent on $9,237, gives $369. Tax payable before tax credit, that is apart from old age security tax, is $2,326. The taxpayer gets a tax credit of 20 per cent of $11,634, or $2,327. In other words, not only does he pay no tax but he has one dollar left over to come and go on. Of course, I took into account 20 per cent on income from dividends after depletion allowances are deducted.
I think that system should be changed. I think it is an injustice. It means there is a tax exemption of almost $14,000 for one couple and an exemption of only $2,000 for another. When a person who derives his income from dividends begins to pay income tax at all over and above the $14,000 he begins at a rate of 9-6 per cent instead of 15 per cent as in the case of the man who works for his money and who makes only $3,000. That is not fair and of course it has a fantastic result.
I could go on and deal at further length with this question but there is one other matter with which I want to deal and that is

the depletion allowance itself. I have only a few minutes in which to deal with this subject. Depletion allowances have become extremely important in our structure. Depletion allowances eliminate from corporation taxes 33J *per cent of profits in the case of oil and gas companies, companies operating base and precious metal mines and industrial mineral mines. Coal mine owners have a depletion allowance of ten cents per ton. In the case of oil and gas and mining companies this means that up to one-third of the public's share in our natural resources, and I regard them as such, is given back as a massive subsidy to those who are exploiting those resources.
I am not the only person criticizing the depletion allowances. We have another example in Professor F. E. La Brie, who, in his book "Introduction to Income Tax Law- Canada", published last year, wrote:
A deduction for depletion that is not limited to capital cost not only permits taxpayers to recoup capital expenditure tax-free but permits them to realize tax-free capital gain through an incomeearning process of exploitation.
"A" spends $100,000 in discovering an oil well. The potential yield of the oil well is $3 million. "A" through a depletion allowance of 331 per cent, may take $1 million worth of oil from the well tax-free. Does this not permit him a tax-free capital gain of $900,000?
I think it does. I think the answer is in the affirmative in the example which Professor La Brie gives. These depletion allowances are altogether out of line today and we should plug the hole and institute a capital gains tax in order that the country may receive something from these great inflated values which are often created.
I wish to cite another recent example before I conclude. On March 17 I read about Algoma Steel Corporation whose profits, according to the latest consolidated statement, were $10,400,000 in 1955 compared with $4,500,000 last year. The thing I particularly noticed was that stock exchange quotations on Algoma have climbed from $49 a share in January, 1954, to $121 as at March 15 of this year. What of the man who bought a thousand shares of Algoma something over two years ago? He makes an income of over $70,000, or a capital gain if you like, just for sitting and watching the ticker-tape in a broker's office, and yet this is tax-free and can be used as income.
I could give another and more striking example but I do not have time to do so today. I imagine it is deals of this description, however, which account for many of the new cars we see in such large quantities. I cannot understand how people with incomes ranging from $6,000 to $8,000 a year can buy new cars each year. We speak of inflation. One of the ways by which we could 67509-162
The Budget-Mr. Blackmofe stop this tremendous demand would be to put on a capital gains tax. The minister may say that it is difficult to do and I agree that this is so. It is difficult to know what capital gains should be taxed but I think that difficulty can be overcome. I believe that the people who are making large incomes by manipulation and speculation on the stock market should be called upon to pay part of their gains to the government and the people of Canada whose resources are the basis of exploitation and speculation.
I move, Mr. Speaker, seconded by the hon. member for Cape Breton South (Mr. Gillis):
That the amendment be amended by inserting therein immediately after the words "United States interests" the following words:
"that it has failed to reduce the burden of sales and income taxes on those in the lower income groups, while continuing to favour privileged interests and those with unearned incomes by maintaining the 20 per cent dividend tax credit and by refusing to impose a tax on capital gains."
The amendment as amended would then read:
This house regrets that the budget is empty, negative and partisan; that the government shows no concern over either the serious problems of distressed groups and areas or the growing economic domination of Canada by United States interests; that it has failed to reduce the burden of sales and income taxes on those in the lower income groups, while continuing to favour privileged interests and those with unearned incomes by maintaining the 20 per cent dividend tax credit and by refusing to impose a tax on capital gains; and that these and its other failures demonstrated the government's irresponsibility and unfitness to hold office.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, because of the unfortunate absence of the hon. member for Peace River (Mr. Low) and because of the fact that the Social Credit group in this house have conferred upon me the responsibility and privilege of being the chairman of the banking and commerce committee representing the Social Credit group, it becomes my duty to speak in relation to the budget speech which the Minister of Finance delivered in this house on the evening of March 20.
Before proceeding may I ask the Minister of Finance whether or not he believes that in Canada what is physically possible ought to be financially possible. I do not expect the minister to answer that, but I suggest that during the remarks which I shall make, he keep his mind concentrated on that question and on the marvellous physical capacities of Canada.

The Budget-Mr. Blackmore


Walter Edward Harris: If my hon. friend wants an answer, I have a firm belief that the Canadian people and the Canadian parliament are competent to do a great many things. I would not want to say that within the realm of human activity nothing is impossible.


John Horne Blackmore: I am glad the minister made that reply. He was straightforward and honest just as he is in everything else. I must say that he has committed himself to a considerable proposition. It is well that he said that, before I go forward now with what I have to say. I should like to quote from page 771 of the minutes of proceedings and evidence of the House of Commons banking and commerce committee for 1939. Mr. Jaques asked Mr. Towers, then president of the Bank of Canada, this question and received this answer:
Q. Would you admit that anything physically possible and desirable can be made financially possible?
A. Certainly.
No qualification to the answer at all. Under those circumstances I have the idea that we are justified in being a bit exacting in respect of the minister with regard to this budget speech. I have noticed that many newspaper reports throughout Canada have expressed disappointment relative to the budget, and some of them have expressed rather strong disapproval.
The minister is an honourable, conscientious and able man and he has to assist him in his department a staff of what should be highly trained and honourable, conscientious and able men. People in this house and in Canada generally are warranted in assuming that the minister and his department have produced what they conscientiously believe to be the best budget which could be produced for the year 1956 considering the many and varied circumstances confronting Canada.
If there are in the present budget unjustifiable deficiencies, as many people including Social Crediters think there are, then it is well that we ask ourselves who is to blame for those deficiencies. I have not seen one newspaper in Canada asking that question, not one. That is a remarkable thing. Is the minister to blame? Are his departmental advisers to blame? Or is the orthodox financial system to blame, the financial system under which the minister operates, the financial system under whose tenets the minister and the department and the government have been under the necessity of managing, or have thought they were?
What are some of the basic deficiencies in this budget? To help ourselves to more satisfactorily judge, may we ask ourselves,

and try to arrive at the answers to, certain fundamental questions. They are simple, almost childishly easy to answer. First, what is a financial system? Second, what are the functions which a financial system should perform? What have we in Canada the right to expect the Department of Finance under the minister's direction to do for Canada? Third, what is an economic system? Fourth, what are the functions that an economic system should perform?
May we answer those questions. Answering question No. 1, it might be said with a considerable degree of accuracy that the financial system of a community is the system by means of which that community provides money for the use of the community as a whole and as individuals. Answering question No. 2, it might be said that the functions of a community's financial system are three, namely, first, to defray the expenses of carrying on the work of governing the community; second, to render available to would-be producers the loans they need with which to produce adequate goods and services for the community; and third, to render available to the members of the community-I imagine a number will object to this one although it is unanswerable and inevitable-the money necessary to enable them to consume what they need, or their full equitable share of, the community's production. This is the point which Social Crediters particularly stress.
Expressing the answer in another way, we might with accuracy say that the function of a community's financial system is to make financially possible for the community and its members what is physically possible and desirable in the community, having regard to the community's resources, material and human.
Answering question No. 3, it might be said that a community's economic system is the system by means of which the community, either as a whole or as individuals, produces or produce goods and services and delivers or deliver and distributes or distribute those goods and services, either for consumption within the community or for exchange or trade with other communities for goods and services for consumption in the community. I think there will be hardly any argument regarding the answers I have given thus far.
Answering question No. 4, it might be said that the basic and essential functions of an economic system are to produce and to deliver goods and services, as required, when required and where required; and that the two incidental functions performed in the process of production are, first, to distribute among the consumers more or less the purchasing power with which those consumers

may buy and consume a portion of the products of the community and, second, to provide employment and jobs to members of the community from which they get purchasing power with which to obtain and consume a portion of the products of the community.
Many people go astray in their thinking in respect of these last two points which I have made. There are a good many people who think that unless business, unless the factories, unless the mercantile institutions, unless firms and other productive enterprises can hire all the people in the community, then those enterprises are failing in their functions. This is a serious fallacy.
Many people, and I fear most of my Liberal and Conservative friends are included, believe that as an industry such as a coal mine or a textile mill produces coal or textiles, it puts into the hands of the people enough money with which to buy that coal or those textiles. This is a complete and utter fallacy which leads the country far astray in its effort to think its way through the difficult economic situations that prevail and confront us.
Now I go on to another matter which indicates how responsible the minister before us is. The finance department controls the financial system and the economic system. The finance department in the government of a community is the department that directly controls and manages the financial system of the community and that at the same time indirectly controls and manages the community's economic system, since in our time, sustained production of goods is impossible without money, or at least credit, which is another form of money. Before long we will have the minister carrying plenty of responsibility. The community's minister of finance is therefore, in effect, likewise the community's economic minister, so that we are justified in saying the Minister of Finance is the minister of finance and economics.
The Minister of Finance, in his twofold capacity as Canada's minister of finance and economics, is responsible to this house and to the Canadian nation to see that, first, money is provided for defraying the expenses of governing Canada, as I said before; second, money is made available to Canadian producers and would-be producers adequately to enable them to produce whatever kinds and quantities of goods are necessary to provide all Canadians with abundant living, in so far as Canadian resources, material and human, permit.
I think: everyone in this house and in the country agrees that the resources of this country are such, and that the industrial equipment of this country is such, and that 67509-162J
23, 1956
The Budget-Mr. Blackmoi'e the transportation facilities and communication facilities of this country are such, and the human beings in this country are such, that there is no excuse whatsoever for this country producing anything short of abundant living for every person in Canada. If it is failing to do that, whose responsibility is it? It must be the Minister of Finance's responsibility, for he is the minister of the financial system and the economic system, as I pointed out.
Now we have a basis on which we can begin to criticize scientifically and intelligently the budget that has been placed before us. Criticisms of the budget commonly heard are so vague and rambling and piecemeal that it makes a person almost weary to think that that is the best people know what to say about a budget.
I have said it is the minister's business to make money available for two purposes: first of all, to run the country and, second, to provide money for producers so that they can get the money. The third responsibility is to provide money or make it available to all Canadians adequately to enable them to buy and consume the desirable goods which Canadians produce. If this is not so, then it makes no difference how much milk, cream, butter, cheese, fruit and other products the people of Canada produce, it will be impossible for the people of Canada to buy and consume them. Consequently, it is conceivable that people can be going in great misery in the presence of the most astounding abundance throughout the land. Here I believe is where the Social Crediters and other members of the house part company. If any member can find a flaw in that reasoning let him get up when the opportunity comes and point out the flaw and establish his case. I defy him to do it.
All of this means that in effect the Minister of Finance is responsible for seeing that money is made available for providing markets for Canadian producers. Generally the common talk about markets is so vague, inconsistent and unreasonable that we get nowhere. Few people seem to realize that in a country like this we can produce our own markets within our own country for all the goods our people are able to use. The person whose responsibility it is to produce those markets is the Minister of Finance. Has be done it? We can see now where we are approaching real deficiencies in the budget.
A fourth responsibility of the minister is to make money available, by reason of the foregoing, so that whatever is physically possible is financially possible, having regard to Canadian resources, material and human, as I have indicated by the passage I read not long ago from Mr. Graham Towers. When

The Budget-Mr. Blackmore Mr. Graham Towers was before the banking and commerce committee in 1939, he was honest and frank, he certainly knew his business, but he got so cagey after a few years that he did not dare to commit himself on anything. But you may be sure that what Graham Towers told us in those early days was fact, for when he took over he was qualified for his job.
I now turn to the budget speech, having referred to these standards by which to judge the budget speech. The budget speech is, or ought to be, in effect the minister's annual report in respect of the discharge of his responsibilities in relation to the functions of his department, both as Minister of Finance and as minister of economics, that is, as minister of production of goods and as minister of markets for goods.
Let us examine the budget speech, the report of the minister's performance. Has the minister performed these functions as Canadians have a full right to expect those functions to be performed? Before I say anything more, I suggest we give that matter a few moment's thought. Looking at the budget from this point of view, what are some of the deficiencies quickly discoverable? Let us review the minister's full responsibilities as to providing money, and see whether or not he has adequately discharged all those during the year 1955-56 and is prepared to discharge them in 1956-57.
Having regard to Canada's resources, has the minister been able to discharge his number one responsibility, namely, to provide the money to defray the expenses that ought to be incurred in carrying on the work of governing Canada? I believe that I cannot be successfully challenged when I say that except perhaps in the case of the Department of National Revenue alone, there is not one single department in the present government that has anything like the amount of money it needs and could spend without causing inflation, if only the minister could get the money. Now, he knows how true that all is.
Let us concentrate on the question of getting the money and leave aside all the foolish talk we often hear in the newspapers and elsewhere. He knows very well that there is not a department in the government that has not asked for much more money than he was able to give, and he knows they could use it.
Take, for example, the Department of Northern Affairs and National Resources. Think what the minister, energetic, able and idealistic and ambitious, could do in respect of our parks alone, if he just had the money. Think what a wonderland this country would be as an attraction to tourists, and how
[Mr. Blackmore.l

rapidly we would begin to do away with our adverse trade balance with the United States. But the minister is hampered and cramped in every direction because he just has not the money. That indicates that the Minister of Finance has fallen down with respect to that department.


An hon. Member:: Tell him how to get it.


John Horne Blackmore: I will come to that in due time. All things in season. Take the Department of National Defence. Nothing need be said in regard to money required for that department. The Minister of National Defence could probably use four times the amount of money he has at his disposal in respect of the Department of National Defence, and he has had to be limited by the Minister of Finance because the latter has said, "I cannot get the money." He has not told him whether or not the goods and the resources and the people of Canada can build the kind of organization that the Minister of National Defence wants. He just said, "I cannot get the money." Why could he not get the money? If what is physically possible can be made financially possible, then unquestionably the minister stands condemned for deficiency in performance with respect to the administration of the Department of National Defence.
Take health and welfare. Think what the Minister of National Health and Welfare (Mr. Martin) would do if he had plenty of money in respect of civil defence, which we all know we need, old age pensions, health insurance and all that sort of thing. You can just imagine what a happy land he would soon make this country if he only just had the money. He has all the human and material resources available. There is all the material in Canada necessary to build every hospital he wants. There are all the people necessary to train nurses and doctors and give every kind of service which is necessary in our hospitals. All the goods and services and the capacity to produce such are here to produce the perfect set-up for national health.


Mr. Campbell:: We would not be very happy very long if we did what you suggest.


Mr. Ellis:: Everybody is out of step but our John.


John Horne Blackmore: The fact is you never give us a constructive idea and yet you are always interfering with somebody else who is trying to help. Let us go forward. Let us go on with the next one. Will the hon. member who just interrupted me say* that we have not got the natural resources and the ability to produce the goods and services necessary to make a perfect health set-up?


Alexander Maxwell (Max) Campbell: I will say this. If you spent all the money you are talking about now the country would be broke.


John Horne Blackmore: That is an indication that the hon. member is blind in both eyes intellectually. He has not even begun to learn. He does not accept what Graham Towers said, that what is physically possible can be made financially possible. I suggest that the hon. member think that over for the next three or four days. Just think it over. Does he believe Graham Towers knew what he was talking about?


Alfred Claude Ellis: Is he a Social Crediter?


John Horne Blackmore: The point is that at that time Graham Towers was the president of the Bank of Canada, was in a position to speak with authority on the matter, and that is what he said. Let the hon. member explain that away and not get up and make a fool of himself by talking about things he does not know anything about.


Mr. Carrick:: Could I ask the hon. member a question?


John Horne Blackmore: Take transport-


Donald D. Carrick: Could I ask the hon. member a question?


John Horne Blackmore: Let me finish my speech and then ask your questions. I shall be glad to answer them all. Otherwise we just cannot go ahead in a straightforward manner.
I have already put questions to the hon. member and other hon. members. If he can answer them let him take the floor when I am finished. Take transport. Think of all the harbours, all the railroads and all that sort of thing the minister could build if he only had the money. Have we the goods with which to do that? Have we the means of fabricating the steel? Have we the means of supplying all the various kinds of things necessary to produce a perfect transportation system? Certainly we have. In Canada there is no lack of resources and no lack of physical capacity to build a transport system second to none in the world. What is the handicap? We have not got the money. We do not know how to get it. Obviously that runs completely contrary to Graham Towers' statement.
Take trade and commerce. We are worrying at the present time about a gas pipe line from Alberta to Ontario and Quebec to provide the great industrial areas of Canada with a safe fuel which they could use in time of need. Everybody recognizes that we ought to be able to build it and yet we have been worrying for about five years about financing the pipe line. We have not got it done yet and we will talk for weeks and weeks about
23, 1956
The Budget-Mr. Blackmoi'e it. Why? Because we have not got the physical capacity in Canada to build the pipe line? No. Because we have not got the money.


Alfred Claude Ellis: We are relying on free enterprise to do it. That is why.


John Horne Blackmore: We are relying on people who do not have any more intelligence than my hon. friend, people like him who do not know any more than he knows. If we had a man like Graham Towers managing affairs we would find the money because he said what is physically possible can be made financially possible. Now, let us go forward.


Stanley Howard Knowles: Mr. Ilsley said that too.


John Horne Blackmore: Take finance, the minister's own department. We are in the midst of very serious differences with the provinces. We call them together in conference time and again and all we do is argue and haggle with them about whether or not they will assume certain responsibilities which we would like them to assume. We act just as though it was not true at all that what is physically possible can be made financially possible. The provinces possess vast resources and have the people to process those resources into goods and services. The minister can very well do with a good many hundreds of millions of dollars to take care of the needs of the provinces and take the worries off his mind. It is not because we have not got plenty of goods and services. It is not because we have not got plenty of resources. It is because we have not got the financial intelligence to do what Graham Towers said could be done, and that is all.
In the light of what I have said, this budget stands condemned as utterly inadequate in this country at the present time.


An hon. Member:: Oh, oh.


John Horne Blackmore: If the hon. member will ask me questions when I am finished I will answer them just as long as he will give me the time.


Mr. Wylie:: He will forget them in the meantime.


John Horne Blackmore: If he forgets them they are not worth keeping in mind. Having regard to what is physically possible and desirable in Canada, has the minister been able to discharge his responsibility to provide the money to those who would produce? In order to answer the question, all we need to do is to look at the farmers in the three prairie provinces. Most of them have not the slightest idea where they are going to get the money to produce next year's crop. The minister does not know. I wouffl not

The Budget-Mr. BlackmoTe say that he does not care because he is too honourable a man not to care, but he does not know and cannot do anything about it. We have in the prairies tremendous wealth in goods, both actual and potential.
Take the Canadian oil companies. When Hon. N. E. Tanner set out to get the oil resources of Alberta developed he came down to eastern Canada. He went everywhere to see if he could find the risk capital to develop those oil resources but not a dollar could he get. He went over to Britain and tried every way to get the capital to develop that oil industry but not a bit could he get. When he came to eastern Canada did we lack the resources with which to develop that oil industry? Not at all. We had all the resources necessary. Why were we not able to make it financially possible to drill the wells and thus keep out the tremendous amount of United States capital which is now threatening to take control of the nation and is causing anxiety to every member of the house? Evidently the finance department of those days fell down in respect of being able to finance this development.
What about the gas wells? The same is true. You cannot even get risk capital to finance the gas pipe line to bring gas from Alberta to eastern Canada after private investors from the United States have come here and produced the gas. Is it because we ourselves have not the physical means to build the pipe line? Not at all. It is because we have not the financial intelligence.
Take the production of steel from our iron ore deposits. The other day a member of the Conservative party was wise in warning us against the fact that United States money was being spent in the development of great iron ore deposits in eastern Canada and railroads to those deposits. He was worried because United States capital was taking care of that. No wonder he was worried. So am I, but where can we get the money to finance such a development?


An hon. Member:: Print it.


John Horne Blackmore: Do we lack the physical means, do we lack the resources, do we lack the ability to develop that iron deposit, bring out the iron and process it? Not at all. We just lack the financial intelligence to make what is physically possible financially possible. There is no other answer.
Take such a thing as the dock services at Halifax to which I referred the other day. I mentioned the fact that Halifax had been promised a dock back in 1913 and is still waiting for it, while at the same time it is falling farther and farther behind in the competition to provide service for the great ocean going ships because it does not have


the facilities to compete. The minister has not shown up very brightly with respect to finding money to finance production.
Let us look at responsibility No. 3, to supply money to consumers to enable them to buy; in other words, provide markets in Canada for all the goods and services which the Canadian people can use.
Now, let us look at a few very concrete facts that every hon. member in this house will recognize. Is there any province in Canada in which they cannot produce-everyone coming from a province will know about his own province-enough wheat for the needs of its own people? I doubt it. Is there any province that cannot produce enough oats, enough barley, enough rye, enough flax, to satisfy the needs of its own people? I think every province is able to do that. Then, why does it not do it? Why cannot its people have all they want of these things? Something is wrong with the financial system. The physical capacity is there.
Now, turning to corn there are some provinces that cannot produce corn. However, there is sufficient capacity in other provinces like Ontario that can produce corn to give the people all the corn they need.
Is there any province that cannot produce all the honey it needs? I doubt it. Is there any province that cannot produce sugar? Probably there are some that are not able to produce sugar, but others like my province of Alberta can produce all the sugar Canadians can use two and a half times over, so there is not lack of the production of sugar and honey.
Is there any province in Canada that cannot produce all the dairy products that are needed such as milk, cream, butter and cheese? Is there any province that cannot produce all the beef and pork for its own needs? Is there any province that cannot produce enough potatoes, beets, parsnips, cauliflower, cabbage, onions, for its own needs? If every one of the provinces in Canada produced sufficient of these things so the people could get all they needed and all the people could buy them they would be pretty well off. You would not have the terrible suffering that is now being endured by the old age pensioners and so many of the others. It is not that the provinces cannot produce these things, but somehow or other they cannot finance the consumption. The dominion government cannot do that either- the poor people!-because they lack the financial ability to do what Graham Towers in his wisdom said could be done back in 1939.


An hon. Member:: Why did he not do it?


John Horne Blackmore: I suppose government policy interfered. He indicated as a result of some

questions asked at that time that government policy interfered. In other words, he meant that the Liberal party stood in his way and would not let him do it. Is there any province that cannot produce peaches, apricots, pears, cherries, grapes, apples, strawberries, raspberries, blueberries, gooseberries, rhubarb? There may be some that will not be able to produce some of these things like peaches, but certain provinces can produce all of these that the whole of the Canadian people could possibly use. People do not get them. In most cases the provinces do not produce these because they cannot sell them. What an unfair, what a fantastic situation that is. Evidently the minister has failed dismally in financing consumption in Canada, that is, in finding markets for the goods which people in every province in Canada can produce in sufficient quantities to make all people well off. In other words, these things can be produced in sufficient quantities to enable the people to enjoy an abundant life.
I shall deal now with the fourth of his responsibilities, finding the money which is necessary to make financially possible what is physically possible. In that respect today the Department of Finance of the Dominion of Canada has been a most dismal failure. It stands condemned. Now, it is high time something was done about reform. I am going to say the minister has done his best. I do not think any finance minister in charge of the affairs of Canada since I have been here did not do his best, but he was hemmed in, trammelled and hamstrung by the financial system under which he was trying to work.


Alfred Claude Ellis: The free enterprise system.


John Horne Blackmore: Nothing of the sort. The best each of these ministers has been able to do down through the years was not good enough, and it is not good enough now. The question is being asked, what should be done? I do not hesitate a minute to suggest to the minister that he adopt Social Credit.


Some hon. Members:: Oh, oh.


John Horne Blackmore: Now, those people who have no way in the world of answering the question as to why we cannot finance these things are the people who condemn Social Credit because they do not know what it is. I maintain that Social Credit will solve the problems.


Alfred Claude Ellis: You support the free enterprise
system?


Mr. Hansell:: Oh, shut up.


John Horne Blackmore: Anyone who thinks he can successfully answer me, just take his opportunity and get on the floor and try his skill, especially in committee so I can get back at
23, 1956	2561
The Budget-Mr. Blackmore him. The whole thing is that there is a whole new system of financing the country which hon. members just will not even consider. If we were getting along successfully in respect of financing every department, they could be excused. But when it is recognized everywhere that the financial system we know is a dismal failure, then surely you would think every hon. member in this house and every person in this country would be humble enough and responsible enough to try to find out the facts about Social Credit before brushing it off with some silly remark about funny money.
May I give some statements which I am sure hon. members would like to have, as well as the people out in the country. I am sure I will not be able to give all I wish to give. These are statements coming from Major C. H. Douglas who is the originator of the Douglas system of social credit.


Mr. Byrne:: Where is he?


John Horne Blackmore: He is dead now, but this was a long time ago. He left living records, and I am going to give you a few of his statements. Major C. H. Douglas, as recorded at page 97 of "The Douglas System of Social Credit", evidence taken by the agricultural committee of the Alberta legislature, session 1934, said:
Social Credit from the technical point of view is simply the power to monetize real wealth.
It means the power to create money to represent the physical realities which obtain in the state. That is all, and that is simple enough. Now, there are some more interesting comments on page 98 of this same document. He says-


James Allen (Jim) Byrne: A plus B over C.


John Horne Blackmore: That is just foolishness. The hon. member should listen to what I am going to give. The trouble is that members like the hon. member for Kootenay East have just learned two or three little superficialities and have never tried to learn the real facts concerning Social Credit. Now, I am going to give him the real facts. Now, listen-


James Allen (Jim) Byrne: I apologize.


John Horne Blackmore: That is good; that is a credit to the hon. member if he will just keep on in that vein.
On page 98 Major Douglas had this to say in reply to questions. He was thoroughly questioned and went into all the details which were necessary to explain his whole system. It looks as though I have not the time to give you the things I wanted to give. I was going to give some other quotations, Mr. Speaker,
2562	HOUSE OF
The Budget-Mr. Blackmore but I find I have not the time so I would much rather quit than leave the whole situation at sea.
I have quotations which would back up these general statements. The Social Credit financial technique consists of, first, the creation of debt-free money to represent the financial realities of the country, the goods and services. Bearing in mind that money is only a ticket to goods, wherever goods are, money can be, just as where street car seats are, street car tickets can be and where theatre seats are, theatre tickets can be. Bear in mind that money is only a ticket to goods. It is a man-made mechanism and any amount can be created at the will of man according to the goods and services, being sure that the goods are there.
The second principle is that if money is created it shall be used in bringing prices down. In other words, money is first of all used to bring about a compensation discount. If, for example, a pair of shoes were offered for sale at $10 and there were enough goods and services in the country to justify creating enough money, then the government could offer to give a 10 per cent disount on those shoes, enabling the man who buys the shoes to buy them at $9 instead of $10.


An hon. Member:: Oh, oh.


John Horne Blackmore: Now, just get this, you poor weakling.


An hon. Member:: Hear, hear.


John Horne Blackmore: All right. The man will get the goods for $9, but the merchant who gave the $1 discount would submit his bill to the bank and the banker would replace that $1 to him; that is, he would compensate him for the discount given. Everybody can see that if that principle were applied all across the country the prices of goods would come down and not go up. In other words, the very opposite of inflation would result.


Mr. Dupuis:: Would you cut wages?


John Horne Blackmore: No, we would not cut wages. The important thing, though, is that the hon. member just did not get what I said. If a pair of shoes were offered at $10 and there were enough goods and services in the country to permit the government to create enough money to offer a 10 per cent discount, an individual would get the shoes for $9. The merchant would take the bill of the man to whom he sold the shoes for $9 to the bank and the banker would give him $1 to make up for the $1 that he lost. In other words, the banker would give him compensation for the discount the merchant had given and then the banker would submit his records to the office which had to do with creating the 

money and be reimbursed himself. So that altogether there would be a compensated discount.
Now, this kind of thing occurred during the war. It will be remembered that we had a discount on milk so that the producer could get 13 cents a quart for his milk and the ordinary citizen paid 9 cents a quart. That was done by a Liberal government. If that was done by a Liberal government in those days using orthodox debt money, then I ask you why we cannot do it now using debt-free government-created money? If the government did that in accordance with the goods and services available, and if it were done all across the board, it would result in just the very opposite of inflation. That is the important thing to keep in mind.
The next important thing is that in addition to-


Mr. Speaker:: Order.


John Horne Blackmore: Mr. Speaker, I suppose I shall have to discontinue my remarks. I am very glad to do so.
(Translation) :


Mr. J. I. Rochefort (Champlain):: Mr. Speaker, last year after the Minister of Finance (Mr. Harris) had ended his budget speech, a whole series of opposition speakers, particularly Progressive Conservative members, rose to express their concern and complaints about increasing unemployment in this country. While expressing these fears the members of the opposition indicated that unrest was on the way. Deep in their hearts, though, they were happy over this state of affairs since they believed that some political advantage could be reaped from it.
The Prime Minister (Mr. St. Laurent) admitted that with five and a half million workers in this country, there could very well be some falling off in employment. He added, however, that this was only temporary and, along with the Minister of Trade and Commerce (Mr. Howe) went on to state that there would be an improvement in the economy and in the labour situation. Everything came out as had been predicted by the Prime Minister and the Minister of Trade and Commerce. Prosperity in this country in 1955 to 1956 was all but unexampled in the post war period. But it will be nothing compared to the prosperity we will enjoy in 1956. In fact Canadian industry throughout this country will have a greatly increased payroll to distribute amongst our working people. Workers' wages will go up because this boom will especially benefit the workers.

The Liberal party has but one concern, that of fattening this pay envelope year after year, and it is happy about it. Besides, the government should have no greater concern than this desire for greater prosperity in Canada, for well it knows that the workers are the ones who benefit most from it. This prosperity, which is a government responsibility, is far more important than the lowering of taxes even though, of course, everybody, myself included, would like them to be lower. In 1956, an amount of 12 to 13 billion dollars will be paid in salaries to the people of Canada. It should not be overlooked also that the Liberal party, which enacted social legislation for the people of this country, does not hesitate to expand this field of social legislation, family allowances, pensions, insurance of all kinds and so on. We are probably the most advanced people in the world, considering the ratio of population, in this field of social legislation. This year again, further benefits have been offered.
We want to go even further by offering you health insurance which will be particularly beneficial to the poor people of our country. Henceforth, through that legislation, the poor will be able to receive the same treatment as the rich as far as health services are concerned.
I also know that the Liberal party will not refuse to take any steps to improve the Family Allowances Act as soon as the situation permits. May I offer a suggestion to the hon. Minister of National Health and Welfare (Mr. Martin)? Why does not the government of our country, so largely represented by the Liberal party and headed by a leader who worked so hard to bring about that family allowance legislation, consider as soon as possible the payment of those allowances until eighteen years of age instead of sixteen, and increase that allowance to $10 per month during that period, in order to enable more of our young men and women to study an additional two years? We would thus implement one of the recommendations of the Massey commission, suggesting that our youth should keep attending school as long as possible. It is the Liberal party and the Liberal party only which enacted that social legislation for the benefit of the Canadian people and, let us not forget it, the Liberal party is the only one in a position to improve our existing social legislation and bring new measures into force.
However how can we meet the expenses resulting from that legislation? By means 67509-163
The Budget-Mr. Rochefort of taxes? Can we hope to see taxes removed and yet continue to receive more and more? It would be foolish to think so! Personally, I would like to see my income tax decrease, but I also want to see the small wage earner get a larger share of that revenue. In that connection we must congratulate the government because by levying taxes on people with large incomes, on corporations that make huge profits on manufacturing operations, it can raise the necessary revenue by means of taxes and distribute that money to the less privileged groups of our population. The Liberal party is the party of the people. Let the government continue to promote prosperity, to maintain employment, to find outlets for our agricultural and our manufactured products-


Stanley Howard Knowles: Mr. Speaker-


Joseph Irenée Rochefort: It will then have achieved a tremendous task for the benefit of the city workers and of the farm population of this country.


Stanley Howard Knowles: Mr. Speaker, the hon. member is reading his speech, is he not?


Walter Edward Harris: Yes.


Mr. Speaker:: It does seem that what is being claimed by the hon. member for Winnipeg North Centre (Mr. Knowles) is perfectly true. The hon. member for Champlain (Mr. Rochefort) should consider that, as much as possible, speeches must not be read. I take this opportunity to appeal not only to the hon. member who has the floor at the present time but to all those who might follow him.


Joseph Irenée Rochefort: Mr. Speaker, I submit that the Liberal party, aware of 'the first duty of a government, is doing a wonderful job in carrying out its duty in the social legislation field. Make no mistake about it, this government would be quite happy to lower taxes. The Liberal party will lower them as soon as it finds it humanly possible to do so. Defense production expenditures are tremendous. They have to be kept at this level, and I suggest that the world situation makes it now more imperative than ever.
However, I believe that civil defence leaves something to be desired in this country. If by misfortune our cities were subjected to a surprise attack, what means of defence would be available at the present time? And the people responsible for the delay are the municipal authorities who reject the co-operation offered them by Ottawa. Nevertheless they bear a very heavy responsibility towards the people they represent and they ought to show a greater understanding.
2564	HOUSE OF
The Budget-Mr. Rochefort
As far as federal-provincial relations are concerned, especially the tax rental agreements, every day we are surprised to find members of the Conservative opposition, particularly those from Quebec, who would like to see the central government revenues placed in the hands of the provinces. What would their attitude be if they were in office? But it is something they will never experience. Would they be ready to take a part of the revenue which a government needs so badly to govern the country, and channel it to the provinces? Is theirs a federal or a provincial mandate? It is enough to make us wonder if they are conscious of their responsibility or whether they are not rather talking just for election purposes. In this field, tax agreements are a necessity to prevent double taxation. Those who in the past rejected those agreements now look upon government proposals with envy and desire because the proposals have become so attractive. Personally, I believe the government cannot go beyond its present offers if it is to meet its obligations adequately and creditably.
Mr. Speaker, after those few remarks about the budget speech delivered by the hon. Minister of Finance, I wish to add a few words on the situation in my riding. The paper industry, with which my area is favoured, keeps paying its workers the highest wages in this country and I am happy to see that paper companies are willing to grant a further wage boost.
Bush workers who make up a large proportion of the people of my constituency, earn $15, $20 and even $30 per day, particularly those who use power tools. They now earn in a day what they used to earn in a month at the time when the Conservative party was in power.
Industries of my constituency are working at full speed. At Cap-de-la-Madeleine, the aluminum factory will have its employment capacity more than doubled as a result of large plant additions. Let us not believe however that everything is perfect in our country. I ask the government to amend the Unemployment Insurance Act as far as farmers employed away from home and forest workers are concerned. Those two groups should be placed on an equal footing with city workers, and seasonal regulations should be abandoned. The farmer who works away from home does so because he has to. He pays unemployment insurance contributions like other people but, when the time comes to 

draw benefits, he is subjected to special regulations which disqualify him for a certain period, if not indefinitely. Off-seasons are established for him, which complicates the situation and discourages him. Let the act be the same for those groups of workers as for city workers.
However, I must tell the house that the electors of Champlain county earned $35 million in wages in 1955, yet they paid only $2,500,000 in income taxes, that is one-seventeenth of what they earned.
When a government spends for social legislation over a billion dollars, more than 20 per cent of its budget, do you think it can easily eliminate or lower taxes? The government contributes to pensions for people of 70, and for those of 65, to pensions for the blind and the disabled, and contributes to the construction of hospitals. As recently as yesterday, the hon. Minister of National Health and Welfare (Mr. Martin) announced that a grant of $1,400,000 had been made by the federal government to Notre-Dame hospital in Montreal. Let us not forget its contributions toward the cost of laboratories, operating rooms, research centres, the construction of technical schools, arts and trade schools, bursaries for our young people, statutory grants and, finally, grants to provinces as a result of fiscal agreements.
Is there a single community in this country which does not receive help from one department or another?
Who would not be anxious to congratulate the right hon. Minister of Agriculture (Mr. GaTdiner) about the good news which he gave yesterday to the house and to the farm population of this country to the effect that the support price for butter will be maintained for a period of two years with a maximum of 58 cents a pound. The few million dollars spent by the federal government in connection with this support legislation will help provide additional millions to the Canadian farm population. This legislation will dispel their worries since the agricultural class has been the only one to be faced with financial difficulties in 1955.
I could extend the list of benefits obtained by the western farmer from the Department of Agriculture: subsidies, storage payments, bank loans guaranteed by the federal government, grain transportation, and so on and so forth.
And what about the Department of Defence Production which, to provide security for this country, awards contracts resulting in the

sale of millions of dollars of construction material and in millions of dollars in salaries for the workers of this country?
How could the federal government reduce taxes at this time? I do not think it is possible. What is most important at this time is to maintain prosperity.
Mr. Speaker, when the estimates are under consideration, I will have an opportunity to make known what the Liberal party has done for my riding. Great projects are under way for the year 1956 and I shall mention them in due time.
For the time being, I wish to thank the government and particularly to congratulate the right hon. Prime Minister and the members of his cabinet for their wisdom and the success they have achieved in the administration of this country. Let us wish that, for a long time to come, the Canadian people will have outstanding Canadians such as these continue to foster the development and prosperity of Canada for the benefit of all Canadians.


Mr. Robert Perron (Dorchester):: Mr. Speaker, on looking over some pictures printed in Wednesday's morning papers and taken when the hon. Minister of Finance (Mr. Harris) entered the house on Tuesday night, we see him shaping an "O" with his right thumb and forefinger. Yet, in spite of this nought, the minister's happy countenance and his broad smile did not lead us to expect such utter void in the budget. It was indeed a nought for Canadian taxpayers.
Since then, that is for the past two days, a unanimous opinion has been formed. Everybody agrees that the budget speech contained nothing new, nor useful for this country, nor any hope of any kind for the taxpayer. The press, whatever its political hue, seems to say, that, throughout the history of Canadian budgets, this year's budget is the emptiest.
When commenting on the budget, Mr. Speaker, the representatives of various manufacturers' and labour organizations, economists and those speaking in the name of provincial and municipal government, all begin their remarks with the same phrases which, on the whole, are similar to the comments which have appeared in the papers for the past two days: "It is unfortunate"; "It is inconceivable"; "It is economically unsound"; "It is unfair", etc.
Never has there been such unanimity and, though we were led to expect as much for the last month, I think we may say that, gen-
67509- 163i
The Budget-Mr. Perron erally speaking, the budget has been a disappointment to everybody.
The total tax reduction for this year amounts to $12 million, or 1/400 of the budget, or to put it in simpler terms, 75 cents a head; but, there again, the taxpayer will not benefit from these reductions, because they are, as the hon. minister said, of a rather particular and technical nature.
The reduction of $12 million in taxes is widely offset, of course, by an addition of $390 million to the revenues of the coming year. The table put on Hansard, page 2330, by the hon. Minister of Finance last Tuesday shows that revenues for 1955-56 amounted to $4,385 million and that the estimates for 1956-57 are $4,775 million, or a difference of $390 million.
All sources of revenue mentioned in the table show increases except the item for succession duties, which shows a decrease of $10 million.
As far as personal income tax is concerned, we see that in 1955-56 an amount of $1,180 million was collected and that $1,265 million will be collected next year.
Corporation income tax shows a much larger increase; in 1955-56 $1,035 million was collected from corporations while $1,315 million will be collected next year. The same thing is true concerning custom duties, excise duties, sales and other taxes, the taxation rate remaining the same.
Mr. Speaker, taking into account the increase in population, I believe that one can say without fear of error that the taxpayer will pay more during the next fiscal year than he paid last year. Fortunately he still has one hope, namely the next budget speech, because it is possible that there will be a general election next year.
Mr. Speaker, taxes are too heavy. Everybody says so and the honourable Minister of Finance admitted it himself recently.
This is particularly true with regard to low income groups and heads of families for whom the basic exemption still remains too low. An exemption of $1,000 for single people, of $2,000 for a married man and of $150 per child is far from adequate. This sounds more like ancient history than like modern history, especially if we take into consideration the steady increase in the cost of living on the one hand and present day living standards on the other.
Nobody can prove to me that the government's distinguished economists could not

The Budget-Mr. Perron have economized one or two per cent in certain departments, so as to lighten the load of those who are in no position to pay income tax. I suppose that this too has been put off till next year. However, I do hope it will be one of the first things that the government will improve when it brings down next year's budget.
Mr. Speaker, there is one point which the minister has stressed:	that of federalprovincial relations. From the point of view of the general economy of this country, I feel that that is the most important matter of all since it involves the very principles of the constitution. Having explained that, after protracted negotiations and bargaining, the federal government had at length increased its offer to the provinces to $109 million in February, when the last conference was held, from $65 million in October, the minister expressed his satisfaction. This increase of $109 million is calculated on the basis of estimated payments which would have been made in 1957-1958 under the present agreements, had these remained unchanged.
These new proposals are embodied in rather complicated formulas, upon which the minister did not enlarge at any length. These formulas are given at page 2328 of Hansard and I will not repeat them here. However, I wish to point out that the federal government is satisfied since the minister says so at page 2316 of Hansard:
Under all the circumstances we believe our offer is eminently fair and it is reasonable and realistic in the light of federal and provincial responsibilities.
However, Mr. Speaker, I believe that the provinces are not dancing to the same tune; in fact, I believe that their reaction is directly the opposite. As far as I know, no provincial premier has been able, upon leaving Ottawa in February, to tell the same thing as the Minister of Finance, that is:
Under all the circumstances we believe our offer is eminently fair and it is reasonable and realistic in the light of federal and provincial responsibilities.
I do not think that any provincial premier made a statement along the same lines. The statements issued since that time are unequivocal particularly the one made recently by the premier of Ontario (Mr. Frost), the day following the budget speech. "Ontario, he said, did not get a single cent out of the new proposals. We complain, but' Ottawa is playing deaf. We want to assume our responsibility, we ask for nothing new that does not belong to us. As I say, Ontario is only seeking to get a reasonable share of the tax fields granted

our province by the constitution." Since that conference was held, I believe that each of the premiers of the provinces of Canada has made a similar statement.
Mr. Speaker, the new proposals offer no solution at all in the matter of tax centralization, and as Canada keeps growing this is bearing more and more heavily on the provinces.
The development of our country imposes on provincial governments very heavy responsibilities which they have to meet under the constitution.
I would even say that the development of this country burdens the provinces with additional expenses while the benefits of our present fiscal system accrue to the federal government, since the amount of the budget is geared to the amount of the national income.
Mr. Speaker, sections 92 and 93 of the constitution, which it is well to recall from time to time, list the powers held exclusively by the provinces and the fields which are the responsibility of provincial legislatures. The ones concerning us as regards expenses are listed in paragraphs 6, 7 and 8. Paragraph 6 includes:
The establishment, maintenance, and management of public and reformatory prisons in and for, the province:
7.	The establishment, maintenance, and management of hospitals, asylums, charities, and eleemosynary institutions in and for the province, other than marine hospitals;
8.	Municipal institutions in the province;
And the tenth paragraph includes:
Local works and undertakings other than such as are of the following classes.
Then there is mention of public works within the limits of a province, highway construction in general, in short, all public works.
Section 93 gives provinces exclusive powers in the matter of education. Each province passes its own legislation concerning education. Add to that social legislation within the jurisdiction of the provinces. There we have an idea of the heavy obligations carried by provincial legislatures.
It is undeniable, Mr. Speaker, that the development of this country involves financial burdens for the provinces. Who will deny the urgent and heavy needs of education at all levels: universities, high schools, technical schools, primary schools, in all provinces? According to experts and to ministers responsible for education in all provinces, these burdens will increase further in the future and will become greater according to needs.

Provinces have the duty and the responsibility of providing for universities, technical schools, school boards and secondary schools. An examination of the financial statement of those institutions shows that their needs are urgent.
The same thing applies to municipal corporations. Most of those corporations, not to say all of them, are badly in need of health and social welfare services.
They must provide waterworks, sewers, sidewalks, streets, establish fire-fighting services and so forth. All those works are urgently needed as a result of the rapid development of cities and towns. The state of imbalance of municipal budgets shows that corporations are absolutely unable to cope even with essential works.
The same situation prevails in the provincial field of highways, public health, school legislation and public works. Each of the Canadian provinces cannot cope with essential needs because legislatures do not have sufficient revenues and they would not be able to do more as a result of the new offers now made by the federal government.
Mr. Speaker, the Canadian constitution gave the provinces the power to legislate in the field of direct taxation in order that they may have sufficient revenues to fulfil their obligations. Paragraph 2, section 92 of the British North America Act states that in each province the legislature has the exclusive right of legislating in matters of direct taxation within the limits of the province in order to raise the necessary revenue for provincial purposes. That section, Mr. Speaker, still appears in our constitution.
In 1942, in order to meet the needs of national defence, the federal government laid its hands on the provincial taxation powers but only after having undertaken to return such rights to the provinces at the end of the war. Eleven years later, after many conferences and bargaining sessions, the provinces have managed to recover a small part of what is rightfully theirs.
With the money obtained from provincial sources of revenue, the federal government has handed back a few millions in the overbearing manner of a millionaire throwing a few crumbs. This fiscal centralization allows the government to accumulate sums of five billions of dollars a year, an invitation to waste and extravagance as has been shown by the Currie investigation and the more recent evidence of retired officers. This hap-
23, 1956	2567
The Budget-Mr. C. Cameron pens when all other levels of government, provincial, municipal or educational, can barely get by and have not enough revenue to meet their needs.
There is enough taxation money in Canada to meet all needs. The taxpayer is bled to the limit on account of that centralization. It is a problem of distribution resulting from the fact that neither the spirit nor the letter of the Canadian constitution has been respected.
The budget brings no remedy. Inevitably this will lead, one day or another, to disastrous consequences for the federal system on which Canadian politics is based.


Mr. Lesage:: Mr. Speaker, would the hon. member for Dorchester (Mr. Perron) allow me a question?


Robert Perron: Certainly.


Jean Lesage: Is the hon. member for Dorchester opposed to the very principle of the formula which is the basis of the recent proposals made by the federal government to the provinces? I am asking him if he objects to the principle itself of the formula;
I am not talking about amounts.


Robert Perron: I am not too keenly interested in formulas. What I would like, is to see direct taxation rights given back to the provinces. That is what I said in my speech; let us give the direct taxation field back to the provincial governments to satisfy provincial needs, as has been provided by the constitution.


Jean Lesage: Then, the hon. member does not object to the formula?


Robert Perron: I do not object to that special formula; what I am opposed to is the limitation of amounts.


Jean Lesage: You are opposed to the limitation of amounts, but not to the principle; is that right?


Robert Perron: Of course, if a citizen from one province or another were to be permitted to deduct the direct taxes collected by that province, I would not object to it.
(Text):


Mr. Colin Cameron (Nanaimo):: Mr. Speaker, the Conservative amendment to this motion, I think, puts its finger on one of the oddities of this budget which has been presented and of the address given to us by the Minister of Finance. It was an address and a budget presentation singularly devoid of information. In fact, I begin to wonder whether in future we may expect to have
2568	HOUSE OF
The Budget-Mr. C. Cameron budget speeches as empty of content as the speeches from more august sources to which we have become accustomed, speeches that conceal more than they reveal.
However, the Minister of Finance did give us more information in another place, in the papers he tabled a day or two before the presentation of the budget. In those papers one can glean one piece of information that gives one some idea of just what is taking place in the Canadian economy at this time, the economy the minister referred to as so buoyant and optimistic.
I am always interested in the people behind the statistics. Sometimes we tend to lump human beings into columns of figures and call them so many of this and so many of that. I like to find out what is going on with the people themselves when we look behind the figures. On page 11 of the papers tabled by the Minister of Finance I find this:
In 1955	.	.	. improved business conditions
brought about a large increase in labour income and there was at the same time a substantial recovery in net farm income because of a better western grain crop. These were the major factors in the increase of $1,593 million or 9 per cent in total personal income. Labour income, which is by far the largest element in personal income, rose by $872 million or 7 per cent, and accounted for 55 per cent of the total increase.
When we read that, we feel that the ordinary Canadian citizen is probably doing fairly well with the buoyant economy which the minister boasts is actually here. But then when we turn back in the same document to page 6, we find some other information that reveals that there were other people in our economy who were doing very much better than those categorized as labour or farm. We find on page 6 the following:
In 1955 investment income increased by $756 million or by about one-fifth, and reached a total of $4,471 million.
There is rather a striking contrast between the increase of 7 per cent that was added to labour income and the increase of 20 per cent that was added to investment income. It is particularly striking in view of the fact that it does not actually reveal the whole of the tribute levied on the economy of Canada by those who own the means of wealth production, because I discovered this. Not only was there an additional $756 million distributed by way of dividends, rent and other forms of investment income, but I also find that there was a tremendous amount of money left in undistributed profits to Canadian corporations, amounting as a matter of fact to almost a billion dollars, $913 million which, in addi-


tion to the dividends distributed, amounting to some $727 million, makes a grand total of $1,640 million that went to the owners of corporation shares in Canada.
That does not tell the whole of the story, because the Minister of Finance tells us on page 14 of his white paper of certain other emoluments accruing to business, and he points out that business saving is composed of two principal items, depreciation allowances and undistributed profits. I have already pointed out that in 1955 undistributed profits amounted to $913 million, and I also find that there was some $206 million in depreciation allowances.
It is true enough that part of depreciation allowances can, I suppose, correctly be classified as depreciation costs. They do actually go to replace worn-out capital goods. But the very fact that the minister describes depreciation allowances and lumps them with undistributed profits as part of savings indicates what, of course, most of us have always known, that a very considerable part of what we know as depreciation allowances are in actual fact hidden and undisclosed profits.
I suggest, Mr. Speaker, that there is something a little odd about an economy which distributes its wealth in the way in which we do in Canada. I consulted the taxation statistics published in 1955 and based on the figures for 1953, and I found that those who are classified as being in receipt of investment income constitute only 5-75 per cent of the total of our taxpayers. When we take into account the fact that the taxpayers of Canada only constitute a proportion of the adult population, then we can see what a very small proportion of our population is receiving this enormous sum of money each year which accrues in the form of dividends, undistributed profits and depreciation allowances. They are only 5-75 of the total of income taxpayers, and they number some 62,320 people which, if one consults the census figures and the dominion bureau of statistics figures, one will find amounts to about 1 per cent of the heads of Canadian families. One per cent of the heads of Canadian families were in receipt of nearly $2,000 million in 1955.
Let us compare that with those who are receiving labour income, which was classified by the minister as the largest item of personal income. According to the taxation statistics, employees constitute 73-14 per cent of the total of income taxpayers. We have to remember that there are a great many people who not only are not in the 5-75 per cent of taxpayers who draw investment income but are not in the 73-14 per cent of taxpayers who constitute the labour force employees of

the country. There are a great many employees in the country who do not reach that category at all, which makes the proportion of those who are in receipt of investment income even more strikingly small.
Just what have we been doing with regard to this distribution of wealth in Canada? There are some very interesting figures to be gleaned from dominion bureau of statistics publications. I find, for instance, that it is estimated that in 1955 the amount of corporation taxes accruing to the treasury was some 17 per cent more than it had been in the previous year, 1954. I find also that the increase in corporation profits in that same year was 24 per cent. Most striking of all, Mr. Speaker, I find that the increase in profits after taxation was no less than 30 per cent.
When we are faced with this situation it is extremely difficult to understand the government's determined maintenance of the scandalous tax exemption accorded to investment income in this country. I know that the traditional and classical explanation of it is that we require to encourage savings in order to promote investment and thereby develop our economy. But I suggest to you, sir, that when the corporations of this country put aside $913 million in the form of undistributed profits and when in addition, due to the generosity of the government, they are also able to tuck away another $206 million in depreciation allowances, we do not need to worry very much about making sure that the people who are drawing investment money are going to have some savings in order to reinvest them.
I suggest that the situation we have to face is this. While there are 62,000 odd in receipt of investment income, among those 62,000 there will be many thousands whose personal share will be extremely small, a matter of $100 or $200 a year, if that much, and they are all lumped in with the 62,000. I suggest, sir, that if we could only find out just how much each one of the 62,000 was getting we would be able to narrow this down to a minute group of our population in control of this vast sum of savings that accumulate from the processes of industry.
Not only that, sir, but we have had plain evidence for some time past, and it has been stressed again and again in the house this session and mentioned outside the house, that the investment policy of those who now control the pools of wealth in this country is highly unsatisfactory both to financial and to political leaders. I suggest, sir, that we might do well to consider placing more in the hands of the ordinary Canadian citizen rather than continuing to place it in the hands of those people who are apparently reluctant to use the privileged position we have given
23. 1956	2569
The Budget-Mr. C. Cameron them for any consistent policy of development in this country, with the consequence that we hear on all sides, we heard it again today, cries of distress because of the influx of United States capital taking over the riskier and more adventurous types of development in Canada.
I suggest to you, sir, that not only is there something very unhealthy in giving special privileges to this already extremely privileged group, but there is something very dangerous about it too. While it is true that the increase in investment income did not quite reach the increase in wage and salary income, it came very close to it, and while it did not quite reach it, nevertheless the increase in wages and salaries does indicate a very serious situation in our economy when compared with the increase in investment income and the increase in undistributed corporate profits.
I do not think we need be surprised that this is the case. We have had evidence that there is something quite unhealthy in our economy. This session we have had some more strong evidence of it, because I cannot consider any society healthy in which there is a profitable field for loan companies' to lend at 24 per cent to enable people to pay their bills. There is something radically unsound in our methods of wealth distribution in this country. In fact I believe, Mr. Speaker, we could perhaps draw an analogy from the natural world. We all know that when the prospective victim shows signs of sickness and failing, the vultures appear. The vultures are appearing in great numbers on our economic horizon to take advantage of the straits in which a vast number of Canadian people find themselves, due in no small measure to the taxation policies of this government, taxation policies which are flagrantly designed to favour those who are already privileged at the expense of those who are reduced to borrowing from these vulture small loans companies.
Now, Mr. Speaker, if this is our situation at the present time, and no one can deny it is-certainly there would be no field of operation for these small companies if the ordinary Canadian citizen were getting a larger share of this increase in wealth production-then the situation tomorrow may be very much worse. It may very well be that the already inequitable and extremely dangerous economic division of wealth in Canada will be still further distorted by developments that are now taking place in industry. The other day I was interested to note that one of the contributions of the Department of National Health and Welfare to the health and welfare of the Canadian people was the installation of automatic machinery for calculating and making out

The Budget-Mr. C. Cameron cheques. It is a very efficient piece of machinery. It now requires only 286 man or woman hours in place of the 15,000 man or woman hours that were required by previous procedures in making out these cheques. I am not for one moment complaining of the department installing this modern equipment, but I do suggest we should be asking ourselves, what is to become of the people who are displaced? We should be asking ourselves whether the Department of National Health and Welfare is solving its problem by, shall we say, eliminating the necessity for family allowance cheques in the near future by eliminating the possibility of Canadian couples raising families.
This is one of the things that is going to increase this disparity, because the installation of equipment of this type in ordinary business enterprises is undertaken for one purpose only, and that is to cut down on the total disbursements in wages and salaries. There is no other purpose for it. The efficient and competent business manager is, of course, by the very nature of his position, bound to be looking around for means to reduce his payroll. He would not hold his job very long if he were not doing that. Ominously enough, today there is apearing on the scene an array of innumerable types of equipment which will enable the economical, the up and coming business manager, to reduce the total volume of wage disbursements. Then we may find the Minister of Finance introducing a budget and presenting us with a white paper that will no longer be able to say that the increase in labour income accounted for 55 per cent of the total increase in personal income. As a matter of fact I thought that was a scandalous enough admission to make when we consider that the employed class in Canada is by far the largest section of our community. Approximately 4 million people are engaged in working for wages and salaries, yet their increase in personal income only amounted to 55 per cent of the total increase in personal income in this country.
Those are some of the problems that are presented to us, and some future minister of finance is going to have to face them. I believe, sir, even our present minister may be going to face some more difficulties in the future, and I wonder if he perhaps has some uneasy inkling of it. I was very interested in finding that Canada's Minister of Finance, in introducing his budget, made no reference either oblique or direct by one single word to one item of budgetary expense in this country, an expense that constitutes, or did until recently, almost half our total government spending. I looked in vain through the minister's speech for any reference to the $1,775 million we are proceeding to spend on
[Mr. Cameron (Nanaimo) .1

defence again this year. I was interested, in looking at the estimates, to find that exactly the same figure is put down this year as was put down last year. Hitherto there have been some variations of a few hundred million, but now this figure of $1,775 million is put down in the estimates. I wonder, sir, if defence spending has become a sort of sacred cow at that particular figure, because of course there is nothing so easily defensible as defence expenditures and nothing so dangerous to criticize. But I suspect, Mr. Speaker, that even our present government in Canada has realized that we are moving into some sort of new era in the world, and that possibly the courses we have followed will be proven to be ineffective in protecting us from the sort of dangers our form of society presents.
The other day I was interested in reading an article by a distinguished British journalist. He pointed out that Great Britain, of course, is now facing the fact that it is not possible for her to develop effective defences. Her only hope is to develop a real and effective disarmament program in the world. I suspect that our Minister of Finance plunked down this nice round sum of $1,775 million for defence because that is the handy thing to do. I suspect he is well aware that in all probability before the next 12 months are out Dr. Solandt or some eminent person will put another banana peel underneath the defence program of Canada and reveal again to the astonished population that all these incredible quantities of money and labour that we have been dedicating to defence are, in fact, money and effort down the drain. The government will have to face the problem of either embarking on a larger, more expensive program of military defence, one which I think is beyond the capacities of a country of our size, or will have to abandon much of the present spending.
Now, of course, that cannot be done without some economic repercussions, and it would not do to have economic repercussions in 1956. But, Mr. Speaker, on the other hand, if in 1957 it were possible to make a good slash in the defence budget, and a corresponding election-pleasing tax reduction, then by the time the government was back again and the inevitable results of severely curtailing our defence expenditure became evident they would be safely back in office again to struggle with it for the next four years.
I remember once suggesting to the minister's predecessor that I thought before the year was out he would reduce defence expenditures by at least $200 million, but the hon. gentleman of course pooh-poohed the idea as ridiculous, as giving way in the face of the enemy. Curiously enough, by the time

that year had elapsed we did find that defence expenditures had been reduced by some $175 million. I shall not be surprised-in fact. I shall be surprised, Mr. Speaker-if next year the Minister of Finance does not place in the estimates a much more realistic and much more believable figure than $1,775 million, a repeat of last year and this year. I suspect we shall find a very large reduction, and we shall be told then, of course, that there has been a tremendous change in the international climate; we shall be told that the cold war is warming up.


Hazen Robert Argue: In case there might be a change in the climate at home.


Colin Cameron: Now, I do not object to that, Mr. Speaker, and I fully realize the difficulties of the minister's office; but I would suggest this to him. It would have been a little more convincing if, instead of having again just obviously taking the second sheet from last year's estimates to put in this year's estimates he had, for instance, put down a figure of $1,773,000,253.49, or something like that. We then might have believed that some real, serious thought had been given to our defence budget. I myself find it very difficult to believe in the reality of this very apt figure when I see it appearing again and again, and apparently assuming a' fixed place in our budgetary estimates.
I am prepared to agree that perhaps it is necessary, not merely from the defence point of view but from the point of view of defending the country and defending our economy from a serious reverse, because I always remember, Mr. Speaker, the word of warning that was given to the banking and commerce committee by the deputy minister of finance a couple of years ago. He warned us then that any severe cuts in defence spending would be bound to have very serious repercussions on the Canadian economy.
I will conclude with this, Mr. Speaker. Sooner or later these cuts will have to be made, because not for very much longer are we going to be able to justify these expenditures to the Canadian people. After all, they also read, just as members of parliament do. They read the things that Dr. Solandt tells us, which increasingly makes one wonder just what is happening up on the D.E.W. line, whether there is any purpose in going on with it. The Canadian people are reading these things and before very long they are going to ask for something more than the statement that it is going to cost $1,775 million to defend us from the Russians. They are going to want to know, for instance, whether there is any reasonable expectation that this expenditure can protect us from
The Budget-Mr. Bruneau the Russians, and whether there is any reasonable case to be made out for it.
I submit, sir, that the case is becoming shakier and shakier. Then this government will have to face a very difficult situation. They will have to face the curtailment of expenditures that have been a major factor in our economy in the post-war period.
I only hope, sir, that the Minister of Finance has some more detailed plans for dealing with that situation than by continuing to give tax exemption credits to dividends and by continuing to permit the piling up of profits to an extent that is unequalled in our history. I hope the minister is going to take some very definite and serious steps to redistribute income in Canada, not merely from the point of view of equity and justice but from the point of view of economic survival, because I suggest to you, sir, that the present income division and the present shaky foundation of our economic prosperity, based on this magic figure of $1,775 million, is far too dangerous for us to continue indefinitely.


Mr. Raymond Bruneau (Glengarry-Prescoit):: Mr. Speaker, the budget now under study and the tax policy proposed for the next fiscal year reflect, I am sure, a tendency toward a healthy economy and financial security for our country at large. With a gross national product yielding about $28 billion in 1956 and a tax structure which will bring in revenue of about $4,775 million and possible expenditures of about $4,650 million, we shall have a surplus of about $125 million. One will then readily understand that in these exacting times, with commitments under the NATO scheme and the Colombo plan, with our national defence preparedness and our schemes of social security, one would be justified in summing up the criticism regarding the present fiscal policy with the Shakespearean expression, "Much ado about nothing".
The economic stability toward which all government policies are directed can be considered, I think, as the cornerstone of our national life. The budget before the house leaves us with no doubt as to the good effects of the policies applied in every field by a wise government, and the people of Canada are also entitled to a share of commendation for these achievements.
As the Minister of Finance very justly pointed out in his budget speech, "Careful judgment and wise spending policies are not solely a matter of concern to public authorities. Those are responsibilities of each one of us, regardless of his role in the economy". As a rule we can say that the people of

The Budget-Mr. Bruneau Canada are co-operating fully with those they have selected to conduct the affairs of the country. Among other things, I noticed in the speech of the Minister of Finance the interest of the government in the credit unions and co-operatives, saving and lending societies. Important unions and co-operatives and companies of that kind are operating in my constituency, and I know what they mean to the average farmer as well as to the average citizen. I firmly believe that the intention of the government is to help these organizations to acquire an even more stable financial basis, and they have taken an important step in that direction. The extension to them of privileges and opportunities which were not open to them until now will surely greatly benefit the population at large.
Before speaking on other points arising from the budget speech and from the general financial position of the country, may I note with pleasure the hint given by the Minister of Finance as to the possible salary increases of the federal civil servants. If these increases are granted they will represent large sums of money, and together with other large additional expenses the government will have to face during the next fiscal year I think they will represent a considerable accomplishment in realizing the prospective surplus of $113 million especially if we consider that there will be a $12 million decrease in sales taxes assessed at the manufacturers' level, and also considering the fact that the provinces will receive much higher revenues guaranteed under the federal tax sharing offer.
I should like, Mr. Speaker, to touch upon a few subjects which are of particular interest to my constituents. I would feel guilty and my constituents would be justified in blaming me if I did not mention the interest we all have in the ways and means of assuring peace in the world. We are among those who believe that our country has really been working toward peace through the actions of this government. Canada has been and will continue to be one of the main supporters of the North Atlantic Treaty Organization. We believe the reason for the government's policy is that Canada cannot live as a contented nation if the peace of another important part of the world is in jeopardy from the forces that seek to bring about the destruction of civilization. In NATO we find the basic ideas of "Liberte, egalite, frater-nite" as they were laid down nearly 175 years ago, but there is something more. There is the survival of democratic ideals as they exist now, no matter how different from the original version they may be. Canada has


taken a definite stand to defend these principles and what has been acquired through them. We feel that NATO is the body that can do so.
The Minister of Finance has emphasized these basic concepts in his budget speech by asking parliament to appropriate important credits for Canada's participation in NATO and for the implementation of a strong national defence program. We must first secure peace for the people of the world and for ourselves as Canadians.
The reasons for which peace must be secured are obvious. There is scarcely any need to explain why Canadians want peace, aside from the fact that they are human beings. Canada knew prosperity in time of war; it remains that our well-being depends mainly on a sound normal economy. Moreover, peace cannot be preserved solely by force of arms. Canada has devoted much effort in helping the underdeveloped countries by participating in the Colombo plan. Many of my constituents have suggested that the government should allocate an extra amount of $9 million toward that end.
I would like to thank and congratulate the Secretary of State for External Affairs for having asked the house to vote an additional $8 million for the Colombo plan. Perhaps you would allow me, sir, to congratulate the various women's groups of Glengarry-Prescott for bringing to my attention resolutions to that effect.
Now, what about our economy? To obtain as high a degree of prosperity as possible, the government during recent years has adopted a series of measures aimed at achieving a fairer distribution of wealth amongst the various classes of our society and bringing a higher degree of well-being and security to all. In the economic field particularly measures have been implemented to increase production and dispose of our products on the markets of the world, as well as on our own markets.
Unfortunately there are still many sectors of our economy where there is over production, where the producers have to struggle hard in order to make a living and keep their industries alive. This government is fully aware of that fact and has proved it by asking this house to vote guarantees for bank loans to producers secured by their grain, in order to provide an immediate source of funds where they may be needed, and also by authorizing the treasury to bear the cost from August 1, 1955, of storage and interest charges on wheat held by the wheat board over and above its normal carryover levels.
I for one approved with pleasure such measures, but as the representative of a very

important dairy producing area of eastern Canada, I feel that the dairy industry should also receive help and protection by means of subsidies proportionate to the money spent to help the western grain farmers. It is not a case of saying, "They received an apple; we also want one." There is a real need for such help among the dairy producers.
Incidentally, on that matter may I draw to the attention of the Minister of Agriculture correspondence received from various agricultural organizations in my riding requesting that the present 58 cent floor price on butter be maintained. This is one of the measures for which the government is to be commended, and I wish at this time to thank the Minister of Agriculture for maintaining this policy in force.
I wish now to speak about the cattle breeders of eastern Canada. I need not emphasize here the difficulties met by these groups in finding markets for their production at reasonable prices and in meeting the competition from western Canadian producers as well as that from other countries. Like the wheat growers, the cattle breeders constitute an important part of the Canadian economy, and as such their industry should be kept healthy in the interests of the entire Canadian economy. For that matter I might mention that the hog producers of this part of the province are now operating at a not too encouraging profit.
In the agricultural field I am glad to note that' the government has asked parliament to increase the amount of loans which may be made by the Canadian farm loan board, and that it is seeking to amend the Farm Improvement Loans Act.
I have here, sir, a brief which was sent to me by the secretary of the Glengarry federation of agriculture, submitted by the Canadian Federation of Agriculture, in which it is stated that it is their hope that the government will encourage and assist financially the development of programs to regularly provide milk to children in primary and secondary schools. The brief also points out that it seems hardly reasonable that on one hand Canada should support all sections of the milk industry through its butter support program, and at the same time have in effect a special nominal rate of duty on imports of skim milk powder and cheese from what is perhaps the lowest cost producing area in the world, namely New Zealand. In order to permit Canadian producers to fully develop their home market the federation recommended that the special tariff agreement with Australia and New Zealand be revised to raise the present duty on cheese to an effective level, and to bring the duties on skim milk from those countries to 3J cents per
The Budget-Mr. Bruneau pound. Further, until such time as these duties are imposed, arrangements should be made to use the Export and Import Permits Act to control imports of cheddar cheese and skim milk powder.
The brief asked that the federal butter aid program for institutions be further explored and continued, and that a plan be established for distributing dairy products such as milk and butter to certain categories of needy people by the use of coupons which could only be used for the purchase of those commodities; and that adequate protection be provided against cheap imported edible oils and against products from which edible oils can jae obtained.
This brings me to the industrial problems our country is now facing. First may I say that the government was never so well advised as when it asked for an extension to the scope of the industrial development bank.
(Translation):
As our good friend, the hon. member for Bellechasse (Mr. Laflamme) has so rightly mentioned, when seconding the address in reply to the speech from the throne, the government, in widening the field of activity of the industrial development bank will certainly promote the development of lesser industries. I entirely agree with him when he stresses that increased government assistance to lesser industries would be of very great help in solving the problems of unemployment and housing. But I shall go further than that.
(Text):
The growth of small industries is necessary to the survival of older urban districts like the one I represent in this house, but in addition I firmly believe that the decentralization of industry is necessary if we are to solve the acute problems of unemployment and housing and secure stability for the Canadian economy. For instance, we all know that in eastern Canada the bulk of industry is centralized in the main cities, leaving dozens of other areas with a second-class economy and a rather lean population. Because of this situation I contend that a large proportion of the population of Canada situated in villages, towns and small cities is not getting a just share of the high standard of living which this country is now experiencing. In those villages, towns and small cities the income is generally lower and the incidence of unemployment is higher than anywhere else. In some cases these unemployed people probably find temporary or sporadic work in the large centres; but speaking as a human being, who would want to leave his own town and his family in order to go away and live sometimes under deplorable conditions in a strange city? In

The Budget-Mr. Bruneau any event the housing situation that exists in many industrial areas is enough to keep anyone away unless forced by starvation to make such a move.
It is all very well to attempt to encourage home improvement by increasing the amount of the loans available for this purpose, and to encourage the redevelopment of older sections of large cities, but the fact remains that many cities and urban areas are overcrowded and the general feeling is that no solution will be found for these problems until other areas and cities are thought of in considering the decentralization of industry.
For instance, in my own constituency of Glengarry-Prescott there are scores of communities possessing facilities for the establishment of new industries or the re-establishment of previously existing industries. Geographically speaking, we are located exactly halfway between Montreal and Ottawa. The lines of the two great Canadian railways cross the constituency, which is quite active economically. I submit that this would be an ideal spot for the establishment of new industry or the relocating of industries already established. We have unemployed people who would benefit from these new industries, and we also have the space available for the building of homes. The moving of industry to Glengarry-Prescott would certainly help our people, and it would also serve to assist the heavy industrial zones by freeing housing units and preventing newcomers worsening the housing situation in those cities and their suburban areas.
While I am speaking for my own constituency, I know there are dozens of other constituencies which could also offer good industrial facilities and which would like to have a fairer share of Canada's prosperity. I believe it is high time that industry should break the economic barrier of large cities where factories are clustered together, and migrate to the smaller places available in our spacious country.
However, this does not mean that the people do not appreciate the latest amendments to the housing act enacted by the government, which will permit them to borrow larger amounts for the making of payments on new homes. Every day more and more people are taking advantage of the provisions of the housing act, but it is our contention that the decentralization of industry would do much to alleviate this problem of home construction which Canada is now facing in the large as well as in the small communities.
Moreover, is it not recognized that the decentralization of industry is an important

asset to national security? According to studies in business policy as published by the national industrial conference board, many United States enterprises have followed this line. This publication quotes an executive of a big company as follows:
National security considerations have entered into our selection of new plant sites to a certain extent. Given the choice between two otherwise equal locations, we have chosen sites not too close to large centres of population or other possible targets.
The same publication states:
During world war II a decided shift in the sizes of towns chosen for increased industrial activity became evident. Almost half the factories of the large multi-plant companies co-operating in a conference board survey made in 1948 were situated, prior to 1940, in cities of more than 100,000 population. Only one-fifth are in towns of less than 10,000 and less than one-third were located in medium-size cities of 10,000 to 100,000 persons.
During the eight years 1940 through 1947, however, a radical change in the pattern set in. Small and medium-size towns became much more popular throughout the nation, to the detriment of the large urban centres, according to co-operating companies. As a result, by the end of 1947, large, medium-size and small communities each had accounted for an almost equal share of the reported wartime expansions involving construction and purchase of new plants.
Along with this may I point out that decentralization would also be to the advantage of the companies themselves. Finally, on the matter of national security as well as economic stability I should like to quote a representative of a big textile manufacturer, who says:
Decentralization spreads the risk of conflagration and catastrophe. Because we produce a national brand line, continuity of service is paramount in our company.
For the above mentioned reasons I should like to direct the attention of the right hon. Minister of Trade and Commerce to this problem, and make a suggestion to the government. My suggestion is that the government consider immediately the possibility of working out a master plan for the decentralization of industry. The problem is most urgent and wide-ranging. I would suggest the appointment during this session of a committee, independent of the commission on economic prospects, to investigate and study the situation and report to the government.
Among my reasons for speaking of a decentralized industry was the general welfare of the people. From that same motive I would like to point out the importance of establishing as soon as possible a health insurance scheme from coast to coast, in cooperation with the provincial governments. I know I do not have to convince the members of this house that such a plan is essential if we are to live up to the expectancies of our social standards. I wanted to stress our hope

that enough provinces will concur to implement the scheme put forward by the federal government so it can benefit as early as possible those who cannot afford the inevitable luxury of illness on an average salary.
I am happy to state here that I was in-, formed that 8,000 acres of peat bog land near Alfred, 40 miles east of Ottawa, are being reclaimed for a multi-million dollar development to supply eastern Ontario and United States markets with prepackaged and frozen produce. The development is expected to employ between 600 and 800 people, most of them on a year-round basis, and a good many more at the height of seasonal production. Trenching crews have been working this winter setting up drainage routes. Fourteen miles have been completed.
For the past 10 or 15 years the Alfred bog has been looked upon as useless, but now developments in horticulture have made its development look more feasible. There has been a peat development, but the market for the peat is small. There was a small experimental development in market produce at the Caledonia Springs end of the bog, but a peat fire ended this. Large amounts of capital on which there can be no return for three or four years are going into the development.
Before closing I would like to say a few words on a subject which I have always had at heart, that of the possible creation of a national department of youth. Nearly every session since I have been elected to this house I have advocated such a move by the government. I now feel it is more urgent than ever. Canada now has passed the crossroads of its destiny, but we must see to it that tomorrow will not force us to turn back. No matter how sound and healthy our policy is today, we are bound to a collapse if the young men and women of today are not adequately prepared to take over from our present leaders and tackle the problems that lie ahead of us. I am thinking, for instance, of extending to as many as possible a fair opportunity to go ahead in life. Without interfering with the provincial rights in education, through appropriate arrangements between governments a system of scholarships could be established on a national basis to help those who have talent but no money to take their full share of duties and advantages in Canadian life.
In this connection may I point out that the national federation of Canadian university students, which represents over 50,000 students at more than 20 Canadian universities, has been and still is conducting a campaign in that direction in order to help deserving university students. The students are seeking the payment of bursaries and scholarships in
23, 1956	2575
The Budget-Mr. Bruneau the form of 2,500 annual awards, each tenable for four years. Fully under way, such a program is estimated to cost approximately $5,500,000. The federation feels such an objective is broad enough to assist "valuable good students as well as the merely brilliant, but not so broad as to be revolutionary". Personally I think $5,500,000 is not an exaggerated sum to be devoted to the preparation of our leaders of tomorrow. Other countries are devoting much more money than that to the same purpose; and some of them, we must agree, do not have the same need for it as we have, being older and bigger countries than Canada.
This is only one point. As you know, there are many others that can be integrated in a homogeneous program to be administered by a new department of youth. Such a department, I understand, cannot be created from thin air, and would require a certain shifting in the present governmental departments and services. A thorough study should be given to the matter by government experts in cooperation with lay organizations specializing in the problems of youth, in order to define exactly which part of the administration should be entrusted to the new minister of youth. In order to prevent too great a disturbance in the present administrative services, I would suggest that to start with the new department could be entrusted to a minister already appointed. The hon. Secretary of State, for instance, would be a logical choice.
The government realizes fully, I know, the utmost importance of bringing our youth to the level of the heavy responsibilities they are to face in the future, and I am sure they will neglect nothing to reach that goal. The good administration of a country undoubtedly is to be found in healthy internal and external policies in the economic and diplomatic fields, but this cannot attain long-range success without adequate protection and development of the fundamental human values that are to be found in the younger generations.
Peace at any cost to preserve mankind and our Canadian way of life; a sound policy to spur our growing economy and secure a still happier life for our people, and the preparation for the future by adequate help to our youth-these are a few of the general ideas that in my estimation should be considered as paramount at the present time, and I hope the suggestions I have respectfully submitted to the government will be of some use.
While a budget may not always be to the liking of the cross-section of the people of Canada represented here in this House of Commons, one must not forget that a stable
2576	HOUSE OF
The Budget-Mr. Nickle economy is sometimes achieved at the price of cuts, trimmings and sacrifices. If one will glance at Hansard of less than half a century ago, the budget tabled in this very house had to do with expenditures of about $6 million, covering but a few federal departments and an administration that presented but very few intricate problems.
Today-and I am sure, sir, all the members in this house, including those of the various opposition parties, will agree the social and economic life of the country is very closely interwoven with the pattern of federal government, and my colleagues here will vouch to that by the innumerable problems brought to their attention in their relations with their constituents. While we would like to see more measures implemented and more schemes enacted, I believe the people we represent in this house will forgo some improvement for the time being in order to assure security and a more stable economy.


Carl Olof Nickle: Mr. Speaker, I intend to discuss today just one item among the proposals made by the Minister of Finance in his budget address. It is an item, however, of rather far reaching implications in what was an otherwise not too noteworthy speech on government policy.
I refer to the minister's proposal to impose a special 20 per cent excise tax on all revenues from advertising received by Canadian editions of foreign-owned publications. These include the Canadian edition of Time magazine, Reader's Digest, and several trade and women's shopping magazines. This proposal is, in my opinion, a proposal for an iniquitous and dishonest tax, discriminatory in its application and wrong and dangerous in principle.
I hold no brief for the American-owned publications affected. Of some I am a regular reader. Others 1 seldom if ever see. By the same token I am a regular purchaser and reader of a number of Canadian periodicals for whose particular benefit this proposed tax on certain of their competitors has been concocted. Some of them, like Maclean's, Saturday Night and New Liberty, occupy a notable place in the Canadian publication world, and are a part of Canadiana I would like to see continue; but not at the expense of imposing a tax on their competitors as unfair and unsound as that contemplated. Later in my remarks I will suggest some constructive alternatives to this tax proposal.
It is perhaps especially appropriate that I speak my mind on this issue, for in addition to being a Canadian with a strong desire to see our country grow soundly and well,
I am also a publisher and editor of certain Canadian-owned trade journals each of which


competes, and reasonably successfully too, against both Canadian and foreign publications, with many of these competitors enjoying greater advantages by way of financial strength, advertising revenues, circulation and printing facilities than do the publications in which I have a personal interest.
If the principles involved in the proposed excise tax were to be generally accepted by Canada, by their application to more than just the Canadian editions of certain United States-owned journals, there would be a sharp reduction in the advantages now enjoyed by competitors of the publications in which I have an interest, and thus potentially there would be financial gain and lessened competition for my publications.


Walter Edward Harris: I am not suggesting that.


Carl Olof Nickle: I would prefer to meet competition by continuing to try to persuade readers and advertisers of the merits of the publications themselves, rather than have my competitors handicapped by unfair restrictions imposed on them by government. The government's sole justification for its proposed tax is that this extraordinary step is necessary in order that Canadian magazines may successfully compete with Canadian editions of foreign-owned magazines. Actually it cannot be logically assumed that financial success and thus the continuance of Canadian magazines would automatically result by imposing a special and heavy tax burden on the competing United States-owned Canadian editions.
Some of these so-called "maple leaf" editions that would be hit by the 20 per cent tax levy might decide to call it quits, in which case scores of thousands of Canadians who now buy these magazines because of the added Canadian material content as well as the basic United States material would be the losers, and also the Canadian tax collector would be the loser. But it does not necessarily follow that the partial vacuum in places to spend advertising budgets would or could be filled by the Canadian magazines who have demanded this legislation. Advertisers put their money into media where they believe the best results can be obtained. They have a wide choice between Canadian and United States periodicals, newspapers, radio, television, direct mail, signboards and so on.
On the other hand, perhaps the publishers of some of these "maple leaf" editions might incorporate all or a large part of the proposed excise tax in their advertising rates, and thus force each Canadian advertiser to make his own decision. He would have to decide whether to carry on in the same publications by increasing his advertising budget or by cutting down his expenditures

in other media; or, in the reverse, by cutting out his advertisements in "maple leaf" editions and using his budget in other media. It is quite possible that Canadian magazines might lose advertising and thus worsen their revenue position if advertisers stick by higher cost "maple leaf" edition space.
On the other hand, there is no assurance whatsoever that a cut-back in "maple leaf" advertising would go to Canadian magazines rather than into newspaper, radio, television or other advertising media. Each medium has to sell its own case to advertisers on its own merits, and there is certainly no assurance that those who seek this restrictive excise tax can garner for themselves extra advertising revenue from its application to a limited few of their competitors.
May I call it five o'clock, Mr. Speaker?


The Acting Speaker (Mr. Applewhaite):: the hon. member can conveniently do so I think he should continue his remarks, as there is a time limit on this debate.


Carl Olof Nickle: Mr. Speaker, a third possibility if this excise tax is applied would be incorporation into reader costs, that is into the single copy sale price or subscription rates, of the tax or a large part of the tax. Under these circumstances scores of thousands of Canadians would be asked to pay the price of giving certain Canadian publishers the protection they want, or else readers could give up buying "maple leaf" editions for which they have developed a taste. Whatever decision readers may make would not guarantee even a single copy increase in the circulation of the Canadian magazines which seek this tax on their competitors.
The announced purpose of the special tax is to help keep purely Canadian magazines in business by imposing a special burden on certain of their relatively successful competitors, the Canadian editions of United States magazines. I submit there is no assurance that the tax can or will achieve its stated objective, nor has the Minister of Finance submitted any evidence that the publications for which he seeks help actually need it.
Are Maclean's, Saturday Night, New Liberty and other Canadian magazines making money or losing money? Have they done and are they now doing a good enough job in setting up their product in a format and with material sufficiently appealing to Canadian readers? Are they doing a good enough job in selling the merits of their publications to Canadian advertisers? If they are falling down on their job, there is even less excuse for imposing a discriminatory tax upon certain of their competitors.
If the proposed tax fails to give these Canadian magazines the kind of profits they would
The Budget-Mr. Nickle like to enjoy, then what would they seek next by way of cutting down competition for the advertisers' dollar? Well, Canadian daily newspapers, weekly newspapers, such weekly supplements as Weekend Magazine and the Star Weekly, Canadian radio and television stations, have sold advertisers on the merits of using their facilities. If Canadian editions of United States magazines are beaten down to size by the imposition of an excise tax on their advertizing revenue, why not push for the imposition of a similar kind of levy on one or more of the Canadian magazines' other competitors right within Canada? Or maybe we can dream up some kind of legislation to force Canadian advertisers to allocate their advertising budgets among specific media on a basis which will guarantee that Canadian magazines will get a big enough share.
Principal targets of the current special tax are the publishers of the Canadian edition of Time magazine and the publishers of the English and French language editions of Reader's Digest. Both of these are Canadian corporations, although owned by United States parent companies. Both have headquarters in Quebec province. Both pay full Canadian corporate income taxes on 100 per cent of their profits from circulation and advertising in Canada, together with Quebec local taxes. Their liability to tax collectors in Canada is exactly the same as that of the Canadian-owned publications.
Reader's Digest prints its two Canadian monthly editions in Montreal, providing a very sizeable addition to the earnings of its Canadian printer and his employees. Time prints its Canadian edition in Chicago, apparently because no Canadian printing company is at present in a position to meet the tight and fast Time schedule essential to a weekly news magazine.
These, then, are the principal targets of today. They are both United States-owned Canadian corporations which share the fruits of their successful enterprise with Canadian tax collectors on exactly the same basis as any other purely Canadian corporation. In addition, when and if they have dividends to pay to their United States parent, they leave an additional withholding tax levy with the dominion tax collector. Well over half their profits thus already wind up in the hands of government in Canada.
Now, in response to demands from Canadian magazines, the government would impose a stiff 20 per cent tax levy on their gross advertising revenue on top of levies already imposed, thus jeopardizing their successful continuance in Canada and perhaps even driving them out of Canada. Drive them out of Canada and they would presumably reach

The Budget-Mr. Nickle north to Canadian readers with regular American editions, on the same basis as the mass of United States publications which are not affected by the proposed excise tax. They would cease to be important contributors to Canadian tax collectors.


The Acting Speaker (Mr. Applewhaite):: Order, it being five o'clock, Mr. Nickle moves-


Walter Edward Harris: Before you put the motion, Mr. Speaker, I may say that I am quite interested in what my hon. friend is saying. I do not know how much longer he intends to continue, but if it is not very much longer I wonder if he might be allowed to complete his remarks so that they would all be on the record in one place.


Carl Olof Nickle: It would take about 10 minutes, sir, if I had permission.


The Acting Speaker (Mr. Applewhaite):: Has the hon. member unanimous consent to continue?


Some hon. Members:: Agreed.


Carl Olof Nickle: Mr. Speaker, with the excuse of trying to maintain profits for Canadian magazines, the government proposes a special tax of an entirely new kind on a limited few of the competitors for advertising revenue. This tax is discriminatory because it applies to just a few, not to all. It is a special kind of tax because it marks the first attempt to levy an excise tax on gross revenue from advertising. It is a dangerous tax because it could open the door to discriminatory levies upon other members of the publishing or other industries where competition is intense. It is dangerous also because the precedent established might well lead to the view that special federal taxes on advertising in all its forms is a legitimate source of revenue. It is dishonest because it provides no assurance that its purported objective can be achieved.
The proposal appears to accept the principle that the larger, more successful of competitors should be penalized by special taxes to prevent them becoming too successful against smaller, higher cost and perhaps less efficient companies in the same field. It is a principle that I find little to my liking if we are to have a free competitive society.
Recently Hamilton, Ontario, became a one-newspaper city when one daily newspaper folded up because it could not compete in circulation and advertising revenue with the Hamilton Spectator. If the principle in the new excise tax be right, would it not have been fair to impose a special tax upon the Hamilton Spectator to help its competitor? Might it also then be right to impose a special
[Mr. Nickle.1
tax on advertising revenue on the more successful newspapers in our own Canadian cities, where smaller competitors have rough going? Going further, we might tack on a special levy on the advertising budget of the more successful merchants in order to raise their costs in relation to their smaller competitors. We could, perhaps, have a lot of fun helping to create more chaos in Canada.
In my own field, as a publisher of trade journals in western Canada, we might then give serious consideration to trying to guarantee continuance of this small, healthy prairie province industry by levying a special tax on advertising revenue on the eastern Canadian publishers of somewhat greater financial strength, who compete with us with the aid of lower unit costs and bigger facilities. This Mr. Speaker, would be a levy against at least one of the Canadian publishers who want a special tax put upon certain of their United States competitors.
I do not seriously propose that last suggestion, of course. If I could not successfully compete by fair means, I would sooner go out of business than resort to demands that my competitors have their wings clipped by extraordinary taxes. However, my business like thousands of others in Canada is managing to successfully compete with larger and more powerful ones. I earnestly urge the Minister of Finance to scrap this discriminatory special tax, and advise the Canadian magazine publishers who sought it to find better and fairer means to compete with the "maple leaf" editions.
As the minister pointed out in his budget speech, it is important to Canada that Canadian publications, by Canadians, for Canadians, telling about Canadians, continue to thrive. Like him, sir, I would not happily contemplate a time when we would not have a Canadian magazine; when there would not be an opportunity for persons with the talent and the time to write and contribute articles on government, scientific matters or some other subjects. Like him, sir, I would not happily contemplate a time when our children could not read a magazine in which there would be Canadian stories based on Canadian history, or Canadian fiction. Certainly we all want purely Canadian magazines to continue playing a part in our Canadian culture. I believe they can, and without discriminatory taxes upon their competitors. I would earnestly suggest to the publishers of our Canadian magazines that they get out and do a better job of determining what Canadians find appealing in the periodicals they buy. They should revamp, where it seems necessary, the format, art work and editorial content to attract more Canadian

readers. They should get out and sell Cana-dianism to Canadians through more Canadian content in their magazines. If they sell Cana-dianism effectively, they will sell more magazines.
As to advertising revenue, the flow to Canadian publishers will grow as they sell the merits of their publications to readers. It can also, I am confident, be considerably expanded by a more intense job of selling advertising on the merits of building stronger, better, bigger all-Canadian magazines, and the competitive merits of ads in such publications as compared to all the other media available. If Canadian publishers cannot effectively sell the merits of their periodicals to Canadians readers and advertisers, then they do not deserve permanent existence.
It seems to me there is one way at least in which co-operation between Canadian government and publishers could now help build a sounder national magazine industry and encourage the development of more Canadian creative writing talent. What I have in mind might be called a Canadian creative writing fund, to which government and publishers would contribute each year an equal amount, perhaps $50,000 to $100,000 each. This joint government-industry fund would, under a board of qualified editors and authorities on Canadiana, disburse annual grants in monthly contests for fact and fiction articles, short stories and short novels, Canadian in theme and written by Canadians. I would envisage monthly awards for first, second and third best in each category of writing, being at least comparable to the fees now paid authors by the leading Canadian magazines. Such awards would be treated as payment for the title to the winning articles and stories. The Canadian creative writing fund award winning stories could then be allocated on an equitable basis to Canadian magazines, on the basis of their contribution to the fund, and each story would then become the property of and be published by that magazine.
This proposed measure of government subsidy in a joint effort with Canadian publishers to encourage Canadian writing talent would, I believe, be money well spent in the national interest. It would create a pool of Canadian stories and articles to supplement the editorial material acquired in the normal way by Canadian magazines and could, I believe, contribute substantially to awakening broader interest among the Canadian public and Canadian advertisers in supporting Canadian magazines featuring Canadian material designed for Canadian tastes.
In conclusion, and to get back to the special tax proposed in the budget, may I remind the government of the rightful indignation felt
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by Canadians a short time ago when the legislature of the state of Maryland passed a measure discriminating specifically against a Canadian company desiring to build a plant and compete with United States firms in that area. Like most Canadians, the United States state department found the discrimination distasteful and unwise, as did the governor of Maryland. This week the governor of Maryland vetoed the bill. I suggest that this government's proposed discriminatory excise tax on Canadian editions of United States magazines will rouse as much rightful indignation in the United States as the Maryland bill did here in Canada. Let us therefore take a leaf from the Maryland governor's book and kill an unfair measure before it ever becomes law in Canada.
On motion of Mr. Ellis the debate was adjourned.


The Acting Speaker (Mr. Applewhaite):: It
being past five o'clock the house will proceed to the consideration of private and public bills.



PRIVATE BILLS


Mr. Claude Richardson (Si. Lawrence-St. George) moved: the second reading of Bill No. 166, to incorporate Signature Loan and Finance Company.


Alfred Claude Ellis: Mr. Speaker, the other day the leader of this group, the hon. member for Rosetown-Biggar, referred to a report of Mr. MacGregor, the head of the department of insurance, dealing with the increased interest shown by United States loan companies in the very lucrative Canadian field. He pointed out at that time that there had been increasing United States interest in this field through the provincially incorporated subsidiary companies of United States loan concerns. It seems to me, Mr. Speaker, that this is a matter which deserves the very close attention of hon. members.
There have been a number of other events during the past year which have tended to point out the importance of a very close appraisal of Canada's economic position, particularly with respect to the growing United States control of Canadian business. Issues are before this house at the present time. There is the question of the gas pipe line. There are other instances which ought to be a clear warning to all Canadians' that we owe it to ourselves to give the closest attention to any proposal which might, even in the slightest degree, increase the extent of outside control over Canadian business.
The people of the United States are much more concerned about protecting their own

Private Bills
interests than we Canadians are in protecting our interests. We in this country have no watchdog such as the federal power commission to protect the consumers of natural gas in this country. In a previous debate an hon. member spoke of a recent event in the state of Maryland where, failing some regulatory body to protect a particular industry in that state, the state legislature had taken action to prevent a Canadian company from engaging in normal business there. In these circumstances I think we cannot allow a bill of this kind to go through this house without giving it our most careful consideration.
As the result of past indecision and lack of concern on the part of this government we have now arrived at the stage where some 83 per cent of the loan business of this country is controlled by two large United States corporations. These two large United States loan companies made profits last year of some $4,800,000. This is money, savings you might call it, which has been drained off to the United States, savings which might under normal circumstances have been available for investment in this country. Indeed, we have had ample indication in recent times of an apparent shortage of investment capital in this country.
These two large companies, having made just under $5 million of Canadian money out of Canadian citizens who had the misfortune to have to go to them and pay the exorbitant interest rates charged, have contributed what to the economy of this country? Have they assisted in the development of our natural resources? The answer is obviously no. Have they in any way contributed to the building up of the industrial capacity of this country? The answer again is no.


Mr. Trainor:: How do you know?


Alfred Claude Ellis: What have these companies done? They have come into this country; they have borrowed Canadian money from Canadian banks at lower rates of interest; they have lent this Canadian money to Canadian citizens at exorbitant rates of interest, and as a result of that operation they made profits last year of just under $5 million.
This company may argue that it is performing some service to the people of this country. Certainly it cannot argue that it is contributing to the economic well-being of Canada by preying on misfortune. They are not performing a service in any way. The loans they make are not contributing to the building up of Canada's industrial capacity. The argument is sometimes raised-it was raised in connection with another bill asking for a change in the name of a company-that they are performing some sort of service to the

man on the street. Well, in previous debates we have had the question of the profits of small loans companies discussed. It appears quite obvious that these companies are not in business out of a desire to help the people of Canada.
The small loans field is extremely lucrative. Mark this. Statements were made on previous occasions when private bills were brought in by the hon. member for Assiniboia, that if you go too far and reduce the interest rate too much you are going to drive these people out of business. Well, what is the situation? When the government at long last took some steps toward scaling down the burden on prospective borrowers, this company became anxious to get into the field, which certainly proves that at the present time the field is lucrative enough to attract outside firms to enter it.
In a previous debate some reference was made to the nature of the advertising carried on by those firms. I believe the hon. member for Assiniboia read into the record a number of advertisements. Of course, the most memorable was the one entitled, "You are my pal". The two companies I have referred to control 83 per cent of the small loans field in Canada, and they spent over $1 million on just that type of advertising. Hon. members will agree it is regrettable that any Canadian has to borrow money from a loan company, and that it is a matter of great misfortune. But when a firm, in order to make profits, will go out into the field and do whatever it can to sell the idea of going into debt, that makes the situation well nigh intolerable.
The position in which we find ourselves at the moment is simply this. No one can argue that there are not enough loan companies in the field in Canada today. No one can argue that this field is controlled by Canadian companies. It is not simply a question of having another firm coming in to do business. It is simply a question of adding to the heavy preponderance of this business which is being conducted by firms with headquarters outside of this country.
Of course when they come before parliament seeking incorporation they have very able and very influential people acting on their behalf. I have noted the names mentioned in this bill. One name which is mentioned is that of Duncan Kenneth MacTavish, the president of the national Liberal federation.


Hazen Robert Argue: "Two-per-cent" MacTavish.


Alfred Claude Ellis: I can readily understand the advantage in having this type of man serving as a front, but I would ask hon. members to remember that the firm which is asking

for incorporation at this time is a United States concern. Firms which are controlled outside this country already have a stranglehold on this particular field. I think the sponsor of this bill ought to be in a position to tell hon. members of this house why it should be necessary to pass this bill at this time. Is he going to argue that we have to have this small loans company and that Canadians are not now in a position to go into the market and obtain loans? Is this company offering advantages to Canadians which they do not presently enjoy?


Claude Sartoris Richardson: May I ask the hon. member a question? If the hon. member who is now speaking wants me to state the reasons I will be glad to do so, but if he proposes to put words into my mouth, then I decline.


Alfred Claude Ellis: Well, Mr. Speaker, I had expected that when the matter was brought before the house the sponsor would have made a statement. I was rather disappointed that the hon. member did not make a statement at the outset, and I think it is not too late to make a statement now. I suggest that after I resume my seat the hon. member might make his point. I was not attempting to put words into the hon. member's mouth. I was merely suggesting that when he makes his statement he should explain to us the necessity to pass this bill at the present time.
I can see no particular reason why this company should be incorporated at this time. I do not think the incorporation of this company is going to help any group of Canadians. I realize, of course, that it will help the directors and shareholders of the company; there is no question about that. There is not a company in this field that is not making plenty of money. I fully realize that this company is not coming into Canada and seeking incorporation if it does not expect to make money, and that is the sum total of it.
I suggest there is a more important principle than the mere passage of this bill. I suggest that at this time we should review our whole attitude toward this problem, which has been brought to the fore during this session to a greater degree perhaps than in previous sessions. Canadian industry today is becoming increasingly dominated by outside capital.
I suggest that my hon. friends on the other side of the house should read a speech made in the other place by a former member of this house, who had some extremely caustic remarks to make concerning this particular bill when it was before the other place. The situation was put quite clearly at that time by the hon. gentleman. He made
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reference to a statement by Dr. G. Edward Hall, president of the University of Western Ontario, on October 17 last, which appears at page 255 of the Senate Hansard of Tuesday, March 6, 1956. Dr. Hall said:
One so-called Canadian company sold, in one year, more than $210 million worth of goods to the Canadian public. Over 99 per cent of the stock of that company is owned by the parent company in the United States. The profits from this fairly substantial operation are simply lumped in with the profits of the total sales of the parent company. And Canadians, in order to participate in this company, are forced to purchase stock of the parent company in which they may have no specific interest. Another large and respected subsidiary operating in Canada for many years and completely owned and controlled by the parent U.S. company does not even release Canadian sale figures.
I commend this address to all hon. members of this house. Dr. Hall made this further comment:
Two-thirds of all motor vehicles sold to Canadians last year were produced by companies operating in Canada without Canadian stock. The profits, again, are lumped in with the profits of their giant U.S. parent companies. The dividends paid by the parent company do not reflect Canadian sales nor the position of that company in the Canadian economy.
In summing up later on, Dr. Hall said:
Canada produces 90 per cent of the world's supply of a certain mineral, yet where is the effective head office of that industry's largest company, whose mines are manned by Canadians, whose furnaces are operated by Canadians, and whose profits are made in Canada? Not in Canada, but in one of the cities of the United States. And the Canadian stockholders are paid, not in Canadian dollars, but in U.S. funds!
I maintain that insistence upon the fact that we Canadians should pay attention to this tendency is not expressed exclusively in this particular quarter of the house. I suggest that the former hon. member of this house to whom I referred a moment ago has made what is perhaps one of the best speeches that has been made on the subject, in which he pointed out the danger inherent in this practice. I hope that his colleagues in this house will read his speech and take it to heart. I also quoted from Dr. Hall's remarks. One could go on and quote a great many eminent Canadians who have brought to the attention of the public precisely the same problem.
I suggest that we should give extremely serious consideration to this tendency at this time. If we do not, what is going to happen? It is only a matter of time until not merely 85 per cent but 95 or 100 per cent of the small loans field will be controlled by outside companies. In other forms of economic development in this country we are going to have increasing United States control. The time is coming when the entire economy of Canada

Private Bills
will be controlled by the United States, and we will become simply an economic vassal of that country.
This is a problem which has to be met on a wide front, and I have mentioned merely one aspect of the problem. I do suggest, however, that we have here a specific instance in which we can do something to register our concern and our protest against this alarming tendency. For this reason I move, Mr. Speaker, seconded by the hon. member for Moose Mountain (Mr. McCullough):
That the word "now" be left out and the words "this day six months hence" be added at the end of the question.


Mr. Knight:: Is my hon. friend on the government side going to speak?


Claude Sartoris Richardson: Mr. Speaker, the bill which is presently before the house is relatively uncomplicated. May I say to the house before proceeding any further that if the hon. member who just spoke felt that I did not wish to stand up and explain the bill, he was wrong. The Speaker quite properly caught his eye before he caught mine. Because the hon. member has been in this house for a somewhat longer time than I have, I was prepared to yield to the normal demands of common courtesy.
As to the general argument which the hon. member has made about non-Canadian capital, I submit that there is a place where that might well be discussed. As a member of this house I would be prepared to discuss it at that time, but I suggest with all respect that that is not the point to be raised in respect to this particular bill.
May I say just a word or two in explanation of this bill. Hon. members of this house know full well that in the modern economy of Canada, business may be carried on by a sole proprietorship, by a partnership or, as is the case in a great many instances, by a corporation. Second, most of us here know full well that the great majority of federal corporations are incorporated under the Companies Act, a statute of this parliament, and we know also that certain types of business such as insurance, railway and loan companies must obtain special charters from this parliament, the latter under the Small Loans Act of 1939.
Most hon. members know that the Small Loans Act has been on the statute books of this country since 1939. We know also that there is before us Bill No. 51 to be considered at this session, under which the rates and certain clauses of that act will be up for review. Part II of that act invites any group of people of competence, of character and of experience to present a petition and

application to this house for incorporation as a small loans company. I submit that such a group has a right to be heard by this house.
The form of the bill is very simple, and is prescribed by part II of the Small Loans Act, 1939. Under that act a great many clauses of the Loan Companies Act are made applicable to the Small Loans Act. The majority of the directors of any such company must be Canadian citizens and residents. The overriding Loan Companies Act states that the administration of all these companies, including small loan companies, must be only by the board of directors, the majority of whom, as I have said, must be Canadian citizens and residents.
The bill provides for the incorporation of this company with head office in Ottawa. The company is to have a relatively modest capital in this field of $500,000, which may be increased to $1,000,000. There are to be five directors, the majority of whom will be Canadian citizens and residents. Reference was recently made in this house to the name of a small loan company. In the event that hon. members are anxious to know why this particular company has chosen this particular name, may I say that the sponsor of the bill is the Merchants' Acceptance Corporation, which has carried on business in the New England states since 1909. My understanding is that the sponsors of the bill would have preferred to use the name of the parent company, but the report of the superintendent of insurance states that there is already a company in Canada which uses the word "Merchants". Therefore the sponsors of this bill had to consider some other name and they chose a name which I submit is quite proper, Signature Loan and Finance Company.
This indicates that the person, unfortunately if you will, who needs to borrow $100, $150, $200 or $300, can go to this company for such loan on the basis of his personal character and financial integrity as represented by his signature, and as in the case of all of us that would be his warrant for such a loan. That is the explanation of this bill. As I said, the sponsoring company has carried on business since 1909, mainly in the New England states, and if it is incorporated it proposes to carry on business in Canada principally in eastern Canada.
I said I was not going to be drawn into the general discussion to which the hon. member who spoke last referred. Let me remind all hon. members that while the superintendent of insurance made reference to the growing interest of non-Canadians and Canadians in this field, there are only four small loan companies in Canada under

federal supervision. If the hon. member is sincere, as I expect he is, and if he would prefer that 83 per cent of the small loans business in Canada be not controlled by two of those four companies, I submit that here is an opportunity for another relatively small group to come into Canada. If they feel they can do business here, let them have that opportunity.
I speak only as a member of parliament who is sponsoring this bill on behalf of some of my friends. This is not by any manner or means a Liberal measure, a Conservative measure, a Social Credit measure or a C.C.F. measure. Having been asked by people whom I regard as competent and intelligent to stand up in parliament and sponsor a bill which is being presented because the Small Loans Act of 1939 invites people to come here and carry on business under our Canadian economy, I make this explanation. People in all parts of the world are being urged to enter our favourable economic climate, and it is no wonder that they want to come to Canada. They feel that they want to do business here.
As we know, the undertaker will come for all of us, but I am not for punishing undertakers. There are certain people in Canada who feel they must go to a small loan company for certain reasons, and I submit with great respect that this bill warrants second reading and consideration by the banking and commerce committee.


Robert Ross (Roy) Knight: Mr. Speaker, I have listened with the greatest interest to my hon. friend, as well as to the hon. member for St. Lawrence-St. George, for whom I have great respect. While the latter hon. member was speaking I was struck by the thought that perhaps he was protesting rather much in connection with one or two points he made. In the first place, I do not think anyone has asserted that this particular group of people have not a perfectly legal right to come to this house to seek incorporation which under the terms of the act is a perfectly legitimate thing to do. The only point I raise is whether or not this House of Commons should grant such incorporation at the present time.
I have just discovered that my hon. friend is the sponsor of this particular bill. I must admit that is my own fault, because I could have seen it if I had looked at the order paper. The hon. member said, forsooth, that he did not rise because the hon. member for Regina City had some sort of seniority or priority due to the fact that he had come to this house before my hon. friend on the Liberal side.
I do not think that argument is particularly well taken. Surely if there is in this house
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one thing that is accepted, it is that the sponsor of a bill is expected to make some explanation to the house as to the contents or purposes of the bill which he is for the moment sponsoring.
There is another point I should like to raise. It has been suggested again by my hon. friend that somehow or other that this was a partisan bill and that the opposition which we in this particular C.C.F. group were making to it was inspired by partisanship of some sort because Mr. MacTavish happens to be one of those who are seeking incorporation. I can assure you that we have no such thoughts whatever. I could, of course, express my opinions about a man of Mr. MacTavish's stature and standing in this country taking part in what I might call this rather shabby sort of "small potato" company business, but that is not for me to say. However, I can assure my hon. friend in complete sincerity that there is nothing partisan about the opposition I am putting up to this sort of thing.
So far I have not said anything about this bill. I am just coming to it. My interest was attracted to these businesses by one thing only, and that is the deceptive method of their advertising. I have always been greatly opposed to deceptive advertising. Some of my colleagues who have been in this house as long as I have know-and I think my hon. friend from Kamloops would give me credit for this-that I advocated first in this house the idea of preventing the use on bacon of deceptive wrappers with red stripes which made the bacon appear to be all lean when it was half fat. We had some success with that.	I have always
been interested in this from the point of view of the public. Unfortunately it is the people who are less protected educationally, shall we say, through a lack of knowledge of public affairs, who become the victims of this particular type of company.
Again today I would like to say a word about advertising. Sir, you would be greatly surprised to learn that a great deal of the advertising of these people in the local offices in Ottawa has suddenly disappeared. I would not like to say it was something like the government files that we cannot get at, but you cannot get at them today for some reason. A few days ago you could send your stenographer or a House of Commons messenger to the companies and they were delighted to send you literature. They sent some of this advertising to my partner, the hon. member for Assiniboia. However, when we requested another office to send some today they said, "Well, there is no literature available at the moment." However, I happen to
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have some advertising with which I was provided, I think, some months ago. I happened to find it among some old papers. I think even this bears out my assertion that the advertising is misleading.
I suggest that the particular type of advertising, with the picture of a little child at the foot of the Christmas tree and mother and father going off to Florida on money they get at 24 per cent per annum from these loan companies, is not too dangerous. Surely nobody in this world would be so simple or so naive as to believe that what this particular type of advertising conveys is anything like the truth. But there is a danger in the other type of advertising, and that is why this was first brought up in the house.
As a matter of fact I can tell the house in confidence that one of the first bills I proposed to place on the order paper of this house, a bill about which I consulted my hon. friends in the caucus, would have the effect of compelling any small loans company, or any outfit that insisted upon advertising its willingness to lend money, include in its advertising the amount of interest per annum or the cost per annum on a percentage basis. If that amount were clearly stated in the advertising, I do not think so many people would fall into the trap set for them by the small loans companies of this sort.
They do not know that. The people that are getting these small loans do not realize what they are up against until they are firmly inside the trap and are seekipg a way to get out. Through the urgency of the need for the money, the poverty, the misery and the fear of losing one's job, a man will pay 100 per cent if necessary, under certain conditions, and the people who give them these accommodations are well aware of that fact.
It has always been my plea that this advertising is deceptive, the advertising in which the rate of interest per annum is not stated. You are not told that, but you are told what you have to pay back each month. The average person-and I say this with some knowledge-who has come to me with his troubles did not realize what that rate of interest was when he borrowed that money. It is worded in such a way that it looks like 8 per cent or 11 per cent as the case may be; but the catch is, of course, that the borrower does not have the full use of the money, as advertised, for the complete 12 months. He has the full use of it only for one month, and the amount he has the use of steadily decreases as the months go on, while the monthly payment of interest is the same.
That is my plea. I think it is a good one. I think what these people say is deceptive. The particular pamphlet I have-as I say I do not know whether or not it is obtainable

today-is one that reached my desk some time ago but came to my attention today. It commences by saying:
Reputable lenders-
I presume these people are reputable; some of their competitors are not.
-have hundreds of unsolicited testimonials that tell the real story of the value of the lender to his community. Sometimes the stories are poignant . . .
"Poignant" is a good word. Not only are they poignant but they are tragic, some of the stories I have heard. I had a sheriff come to see me about the state into which these small people get who use these small loans. He sits down with them and tries to arrange a payment per month which seems to be reasonable, by which they can finally meet their obligations. I notice that this one piece of advertising attacks the credit unions. Any man who attacks credit unions, so far as I am concerned, has a battle on his hands, because I am a believer in the functions of the credit union. Anyone who lives in a province where the credit union and co-operative is used to the extent it is used in my province must agree it is a thing that is beneficial to the body politic. They attack the credit union because the credit union, they say, does not pay cash back into the treasury in the form of taxes, and it can only serve the people in the group.
However, it is easy to get into a credit union. All you have to do is borrow some money and you are in. In some of the cooperatives you only have to make a purchase and you are in. So, after all, I do not think their argument is valid. They do not point out that the credit union is a method of borrowing money at cost, in other words that when you go into a credit union, if you pay as high as 1 per cent per month, the profits made by the organization are not shipped out of the country to some corporation in the United States or some other country but are divided among the actual people who borrowed the money. By that method the interest rate they pay is reduced. To me that sounds logical and sensible.
As I have said, this kind of advertising is deceitful, although it is perhaps less deceitful than some of the things I have seen. I notice on the outside this pamphlet has the words, "From an All-Canadian Viewpoint." I expect these people are getting rather touchy about the talk that 83 per cent, or whatever it is, of the small loans field in Canada is controlled by two foreign corporations. I suppose this is that great old free enterprise and competition working about which we hear so much. So they are protesting just like my hon. friend over there has protested.

It seems to me they do perhaps protest too much. They do not state where the money comes from. They do not state, like my hon. friend, who the directors are; but this is the picture, according to them, from an allCanadian viewpoint. That makes us feel a lot better. They have an interesting explanation here of the rates they charge. Here is what they have to say and I want the house to notice this because, after all, my text in the beginning was deceitful advertising, advertising which misrepresents the facts. You know, if these people would come clean and state their case honestly and decently they would be out of business.


Donald D. Carrick: May I raise a point of order?


Robert Ross (Roy) Knight: No, you cannot.


Donald D. Carrick: I am rising on a point of order. We have listened to the hon. member talking to us for about ten minutes about advertising. Obviously it cannot be advertising put out by this company, because this company has not been incorporated.


Robert Ross (Roy) Knight: Is that a point of order?


Donald D. Carrick: I am raising a question of relevancy. The hon. member has been telling us about advertising for about ten minutes. It is obvious he cannot be speaking about advertising done by this company, because this company has not been incorporated.


Some hon. Members:: Order.


Donald D. Carrick: I am speaking to a point of order. It is on the question of relevancy.


Mr. Speaker:: It seems to me that the hon. member for Saskatoon is speaking to the general principles underlying the operations of these loan companies and I think his remarks, though perhaps wide, are relevant to the principle of the bill.


Robert Ross (Roy) Knight: Mr. Speaker, I thank you for your decision, than which you could have made no other. I had some occasion in committee the other day to rebuke my hon. friend. When I began talking about box cars and asked the president of Canadian National Railways a question-


Some hon. Members:: Order.


Robert Ross (Roy) Knight: -My friend reminded me that I was being political.


Donald D. Carrick: The hon. member made a very unjust remark. He indicated that I was not a regular attender in the house. I did not challenge him, but my hon. friend knows that is not right, and it was not a statement he should have made at that time.


Robert Ross (Roy) Knight: Sir, I quite realize I am now about to do something that is completely out
Private Bills
of order. I apologize totally and completely to my hon. friend for the remark which he taunted me into making in the railway committee the other day. Let me get back in order, Mr. Speaker. I am speaking on the principle of this bill, the principle of all these bills and on the principle of deceitful advertising in connection with all these companies. I do not expect that this company will be very different from the others. I am just going to quote one line here from this publication by this company, perhaps more innocent than the others. Listen to this:
The charge presently stipulated-
This may be semantics but I think I know my English.
-by our federal laws is 2 per cent per month on the outstanding balance of a loan to $500.
If my understanding of the word "stipulate" is correct, the statement is false. Then they proceed to say that their interest rate is not 24 per cent per annum, as some maintain. Oh, no; they would not charge so much interest. They say there are charges for expenses and service and profit charges. I am not interested to the extent of 5 cents in what they call them. I am interested in what these poor unfortunate people have to pay for the small accommodation they get from sources of this kind. Then they give us here what they call a "pie-chart". The only similarity I can see to a pie is that it is round and flat. Some pie! Some crust! They say this chart is an explanation of the fact that they really do not make any profits at all. Oh, no! They take the years 1950 to 1954, and they assert that their profit has been one-fortieth part of 1 per cent. I do not think even these supposedly kindly people would stay in business very long at that rate of profit.
I remember the time when the assertion was made that certain packing companies were making too great profits. The companies advertised all over Canada that on the handling of one pound of meat they only made just so much, a very little profit. Why, they do not have a single prune here in this pie. In this round pie there is only a tiny, infinitesimal little part for their profit. Do you know how they figure it out? That is the portion they get out of the money they lend. I suggest we are not interested in what they get out of the money they lend. We are interested in the net income the corporation makes on the capital invested. That is one thing about which this document, deceitful or otherwise, and you can judge for yourself, says nothing.
I shall merely conclude these few remarks because I see, Mr. Speaker, that it is six

Private Bills
o'clock, by simply saying it still is my hope that some day the situation will be such that if these people, whoever they are, honest, dishonest, deceitful or honourable, want to advertise the lending of money as a business, they will have to state clearly in their advertisements, so that he who runs may read, what the amount of interest will be in per
cent per annum, and the interesting and emphatic words are the last two, the percentage charge per annum.
On motion of Mr. Regier the debate was adjourned.


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

[Stage Direction]
The following answers, deposited with the Clerk of the house, are printed in the official report of debates pursuant to standing order 39:

Mr. Pallet!: 1.	Is rental income subject to a 4 per cent surtax under the Income Tax Act?
2.	Have the employees of the Department of National Revenue been instructed to collect a 4 per cent surtax on rental income received by beneficiaries through an estate?
Answer by: Mr. McCann:
1.	No.
2.	Yes; employees of the Department of National Revenue are instructed to assess 4 per cent surtax on all income received by beneficiaries from estates.


VETERANS LAND ACT
Mr. Brooks: 1.	How many veterans, in each province, holding land under the Veterans Land Act are in arrears of $200 or more on payments to the board?
2.	What percentage would this be of the total?
Answer by: Mr. Lapointe:
1 and 2.	i.	2.
		per cent
British Columbia 	3	[DOT]04(a) Alberta 	421	6-80Saskatchewan 	699	9-69(b) Manitoba 	394	7-70Ontario 	32	[DOT]17Quebec 	-	-(c) New Brunswick 	61	2-56Nova Scotia 	24	103Prince Edward Island	23	2-43Newfoundland 	-	-Total	1,657	3-02(a) Includes Peace river block	of British
Columbia.
(b)	Includes northwestern Ontario.
(c)	Includes Magdalen islands, Quebec.
Note: These figures may be misleading as to the complete situation. Where payment is on an annual basis, the number of accounts in arrears continually decreases during the collection year which commences each November 1. At the end of the collection year on October 31, 1955, less than 1 per cent of all accounts were in arrears of $200 or more.
Questions


DEFENCE PRODUCTION, SMALL INDUSTRIES   NOVA SCOTIA .
Mr. Balcom: What industries have been organized and are operating in Nova Scotia since 1951, through the assistance of the small industries division of defence production?
Answer by: Mr. Howe (Port Arthur):
The small industries division of the Department of Defence Production was created in 1951 to ensure that all segments of Canadian industry, particularly small industry, were given an opportunity to participate in the defence production program. Its chief function was that of a service division, to assist and advise those firms seeking either direct contracts from the Department of Defence Production or subcontracts from the department's prime contractors. In order to accomplish this, the small industries division until 1953 maintained representatives at various locations across Canada, including a representative in the maritime provinces who assisted a number of Nova Scotia contractors in the manner above outlined.


INCOME TAX RETURNS AND REFUNDS
Mr. Knowles: 1.	For each of the last five taxation years for which the statistics are available, how many persons from whom income tax was deducted at the source did not file an annual income tax return?
2.	By years, how many of such persons were found, or believed, to have a refund coming to them?
3.	To what extent were such refunds made?
4.	How much money, covering the last five years indicated above, received by the government as indicated above but belonging to individuals is still in the possession of the government?
5.	What steps is the government taking to get such money back to the persons to whom it belongs?
Answer by: Mr. McCann:
1.	No information available.
2.	No information available.
3.	Refunds were made only to persons who filed income tax returns to substantiate that they were properly entitled to a refund.
4.	No information available.
5.	The prompt issuance of refunds to all persons from whom overpayments of tax have been collected is a constant objective of the taxation division. This objective is one of the aims of an extensive annual publicity campaign employing newspaper, radio, T.V., newsreel and street car advertising. Persons entitled to refunds are advised frequently by such means to make application for their refund and to provide the department with the information necessary to enable a refund to be issued.
2589

Monday. March 26, 1956


MISCELLANEOUS PRIVATE BILLS
[Stage Direction]
Fourth and fifth reports of standing committee on miscellaneous private bills.-Mr. Henderson.