1956-07-17

[Stage Direction]
On the orders of the day:
Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, the hon. member for Prince Albert made an inquiry yesterday about the aircraft used by His Excellency the Governor General on his recent flight from Ottawa to Calgary as part of his western tour. I agreed with him that Her Majesty's representative should always have the best means of transportation available for any of his official tours. The Ottawa Journal said yesterday:
When Prime Minister St. Laurent checks into the reason why the government's far-travelled luxury aircraft, the C-5, wasn't available to take the Governor General west, he will find that he himself was responsible.
That is probably true. I was on the C-5 returning to Ottawa on July 7 and reached Ottawa about 45 minutes after His Excellency had taken off for Calgary in the North Star aircraft No. 17520, which he had used for his northern trip. I can assure the house that when it was decided it would be preferable for me to travel to and from London by air for the prime ministers' conference in London so as to be away from the house as short a time as possible, I was somewhat disappointed because I had hoped earlier that it would be possible for me to travel by sea.
I was quite unaware that making the C-5 available to take me to and from London would interfere in any way with any plan for a flight on an official tour that His Excellency might wish to make. I was informed that when inquiry was made whether the C-5 would be available my office was informed that it would be available, that before giving that answer there had been communications with His Excellency's secretary, and that His Excellency had expressed the desire that the C-5, which is the only government plane that is proper for a transAtlantic flight, be used for that flight. Had I known that it was going to interfere with any plan that had been made for His Excellency's own flights on an official tour in
Canada I certainly would have insisted that other arrangements be made, because I think these tours of His Excellency as Her Majesty's representative are extremely important.
It had been suggested to His Excellency that the Viscount, which is the only other pressurized plane in the government service, be placed at His Excellency's disposal. But His Excellency felt-and quite properly, in my opinion- that because there was going to be a guard of honour to receive him at Calgary it would be preferable for him to arrive there in an R.C.A.F. plane rather than in a plane in the service of the Department of Transport. But it certainly would have been possible for me and my department to make other arrangements and I would have insisted that they be made. I know it is difficult to secure accommodation on commercial lines without long notice with regard to reservations, but I am sure it would have been possible to have those arrangements made. I certainly would have endeavoured to avoid a situation, though I was unconscious of it, which would allow any newspaper to say that I myself was responsible for the fact that this plane which His Excellency had used for his northern flight-and which was the only one that was appropriate for the flight and which he had found very comfortable-would be used for this flight to Calgary.
I am sorry the incident occurred, because I quite agree with the hon. gentleman and I feel that hon. members of the house will agree that these official tours are an extremely useful part of the way His Excellency is carrying out his duties and responsibilities as Her Majesty's representative in Canada.


Mr. Diefenbaker:: Mr. Speaker, I should like to ask a supplementary question, and it is this. How many aircraft are available to members of the government? Is there not a Viscount used by the Department of Transport?


Hon. George C. Marler (Minister of Transport):: Mr. Speaker, the answer is that the Department of Transport has a Viscount among thp aircraft operated by the department. In the case to which the Prime Minister has just referred the use of the Viscount was offered to His Excellency but, for the reasons which the Prime Minister has just given, he preferred to use the North Star.

Inquiries of the Ministry ATOMIC ENERGY



CANADIAN VIEW OF RUSSIA'S SUGGESTION TO END EXPERIMENTATION

[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roselown-Biggar):: should like to direct a question to the Secretary of State for External Affairs. What is Canada's view of the extremely interesting announcement made by Mr. Shepilov yesterday with regard to the banning of experiments with nuclear weapons? He gave three alternatives that I think would appeal to people who are asking for the banning of this bomb. What is the government's position with regard to these three proposals?


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, we are studying with great interest the speech given yesterday by the Soviet foreign minister which dealt with this matter, but have not yet come to any conclusions with regard to it. As my hon. friend knows, the disarmament commission has been meeting in New York. It concluded its meetings last evening. At this session my friend and colleague the Minister of National Health and Welfare (Mr. Martin) made a statement on Canada's policy in this matter. Whether as a result of the statement made in Moscow yesterday by the Soviet foreign minister our position should be revised in any way is a matter we are now considering.


Major James William Coldwell: May I ask the minister
whether the representative of Canada at the United Nations recently stated the attitude of Canada toward the Krishna Menon proposals before the disarmament commission? Did Canada make a statement at that time, and if so what was our position?


Hon. Paul Martin (Minister of National Health and Welfare):: My colleague the
Secretary of State for External Affairs has suggested that I might supplement what he has said in answer to the question just now put. Canada was one of the two nations that suggested Mr. Menon should be allowed, although not a member of the disarmament commission, to make representations on behalf of his government with regard to the question of the banning of nuclear tests. Canada was the country that yesterday suggested that when the subcommittee of the disarmament commission resumes its sittings at a date not yet decided, special note should be taken of the representations made by the delegate for India.
Canada has taken the position in the disarmament commission that it was in favour of the cessation of nuclear tests when this

cessation could take place at a time, and under conditions, that would not prejudice the security of the nations concerned. We did indicate our sympathetic interest in the suggestion that a committee of experts might be designated to consider a limitation on the number and nature of test explosions. We asserted that we would give consideration as well to the banning of explosions for military purposes, to be closely coupled with a controlled ban on manufacturing for military purposes. But it must be clear that if there was not agreement on this subject it was not because of any action taken by any western nation. This ban could take place if the Soviet union would agree to the kind of controls which are desirable and necessary in this situation.


Major James William Coldwell: May I ask a further question. Do I understand that Canada does not require that this shall be a part of a general disarmament agreement? Is that right?


Paul Joseph James Martin: Canada's statement was that we would agree to such a cessation in the context of an agreement on disarmament. This does not mean that there must be a comprehensive state of disarmament. We would agree to such cessation, within the context of an agreement on disarmament, effective at an appropriate stage and under conditions that would assure our security.



REPORTED DECISION OF RAILWAYS TO CHARGE DEMURRAGE ON BOX CARS

[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: I should like to direct a question to the Minister of Transport. Has the minister been made aware of the announcement by the railways that beginning August 1 it is their intention to charge demurrage on box cars of grain at terminals that are not unloaded within a 48-hour period? Does the minister know whether or not, on the basis of this year's experience, such a charge would cost the grain producers of western Canada a sum in. excess of $4 million? If this has now been approved by the board, will the minister use the power of disallowance provided under the act to see that this grave injustice is not inflicted on the wheat producers of western Canada?


George Carlyle Marler: I have not seen the announcement. I shall have to make inquiries in order to be able to comment on it.

Inquiries of the Ministry HOUSING

On the orders of the day:


John George Diefenbaker: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. It arises out of a question already asked by the hon. member for Assiniboia. Will the minister, as the minister under whose administration the wheat board operates, do what he can to prevent this very unjust further exaction being imposed upon the western farmer? The penalty will be from $3 to $7 per carload of wheat. Will the minister consider doing his part to suspend the operation of any such exaction at this time?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, like my
colleague the Minister of Transport I know nothing about this proposal that demurrage will be charged on cars loaded with wheat. Offhand I cannot think how it would be brought about, but in any event I shall take the matter up with the wheat board and see what are the facts. Certainly we shall endeavour to avoid any further charges on wheat.


John George Diefenbaker: Has the minister any knowledge of it at all?



AVAILABILITY OF BOX CARS IN INTERLAKE REGION, MANITOBA

[Stage Direction]
On the orders of the day:
Mr. William Bryce (Selkirk):: I should like to direct a question to the Minister of Trade and Commerce. The transport controller, Mr. Milner, said he would do everything he could to see that those points where producers are unable to deliver an 8-bushel quota by July 31 were given a larger proportion of box cars in the new crop year. Will the minister see that this concession is granted the marketing points in the Manitoba interlake country, where little or no grain was marketed last year because of crop failure?


Clarence Decatur Howe: Mr. Speaker, 1 will draw this question to the attention of the wheat board. I am sure they will take a sympathetic view of the situation in the interlake country, which has not had a crop for two years. I think my hon. friend will find that if that area has a crop this year it will get a movement that will supply ready cash at the earliest possible time.



INQUIRY AS TO REDEVELOPMENT IN MONTREAL

[Stage Direction]
On the orders of the day:
Mr. Claude Richardson (St. Lawrence-St. George):: Mr. Speaker, may I direct a question to the Minister of Public Works. Has the government of Quebec indicated its approval of the proposed housing redevelopment project in Montreal, and will it be prepared to enter into an agreement with the federal government providing for the housing project on the cleared site?


Hon. Robert H. Winters (Minister of Public Works):: Mr. Speaker, from conversations I have had with Mr. Duplessis I understand the government of Quebec is prepared to approve the entry of the city of Montreal into a slum clearance agreement with the federal government.
As to the subsequent housing development, I believe it is the intention of the Quebec government to designate the city of Montreal as its agent. Nevertheless, under section 36 of the National Housing Act it will be necessary for Quebec to become a party to an agreement with the federal government. In a telephone conversation yesterday the premier of Quebec informed me that the principle of entering into a formal agreement with the federal government for this purpose was acceptable to the government of Quebec. The signing of an agreement will be subject to the various aspects and details being acceptable to all three parties concerned: that is, the city of Montreal, the government of Quebec and the federal government.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Robert Henry Winters: Mr. Speaker, I should like to give a further reply to the question asked yesterday by the hon. member for Vancouver-Quadra (Mr. Green) about the progress of work on False creek.
The situation is that the work there is in four stages: stage 1, road construction; stage 2, bulkhead, road and shed; stage 3, dredging; stage 4, wharf and floats. Stage 1 was completed this spring, and stage 2, that is the bulkhead, road and shed, has just been completed. The next stage is the dredging, and plans and specifications are ready but before tenders can be called it is necessary to obtain a spoil area from the Granville Dry Kilns. This area has not yet been obtained, but the matter is being processed through legal channels now.

Inquiries of the Ministry


Mr. Green:: Can the minister tell the house how long a delay will result?


Robert Henry Winters: I should think it would be a very short time, Mr. Speaker.
(Translation):



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. J. Wilfrid Dufresne (Quebec West):: 
George Carlyle Marler: Mr. Speaker, the question of building an airport at Riviere du Loup-the locality mentioned by the hon. member for Quebec West, was it not?-is under consideration, and I understand that the municipal authorities of Riviere du Loup are investigating the possibilities of acquiring the land required for that airport.
(Text):



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
J.-Wilfrid Dufresne: Mr. Speaker, I would like to direct a question to the Minister of Public Works. Have the Department of Public Works and the Canadian National Railways reached a final agreement leading to an exchange of properties to provide for the construction of the new post office in Quebec city?


Robert Henry Winters: No, Mr. Speaker. The situation there is that the mayor of Quebec undertook to arrange a meeting of all parties interested in any proposed exchange of property. I have not heard from the mayor. I told him that officials of the Department of Public Works would be prepared to attend any such meeting, and within the course of the past few days I wrote the mayor again reminding him of the long delay that had taken place and urging that he assemble the meeting at the earliest possible date.


J.-Wilfrid Dufresne: Who would represent the
federal government at a meeting such as the minister referred to?


Some hon. Members:: You.


J.-Wilfrid Dufresne: I have no objection at all.


An hon. Member:: That is not unanimous.


Robert Henry Winters: The officials of the Department of Public Works, amongst others. I cannot speak for my colleagues.



COMMUNICATIONS


[Stage Direction]
On the orders of the day:
Mr. T. G. W. Ashbourne (Grand Falls-White Bay-Labrador):: Mr. Speaker, I would like to direct a question to the Minister of Transport. In view of the fact that the Canadian Overseas Telecommunication Corporation has shown a surplus for six consecutive years, is it the intention of the company to improve service and reduce rates for long distance telephone conversations to and from Newfoundland?


George Carlyle Marler: Mr. Speaker, in reply to the question which the hon. gentleman just asked I would say that when the new trans-Atlantic telephone cable is completed later this year six additional circuits will be put into service by the Canadian Overseas Telecommunication Corporation. It will then be possible to introduce substantially reduced telephone rates for long distance service with Newfoundland. I am advised by the C.O.T.C. that the new rates will be in line with the trans-Canada and Canada-United States rate schedules for person to person, station to station, and night, Sunday and holiday rates.



ROYAL CANADIAN AIR FORCE

[Stage Direction]
420 SQUADRON, LONDON-REQUEST FOR STATEMENT ON REVISION OF DUTIES
On the orders of the day:
Mr. H. O. While (Middlesex Easi):: Mr. Speaker, I should like to direct a question to the Minister of National Defence. On June 29 the minister replied to a question of mine referring to 420 squadron at London, Ontario. In his answer as reported at page 5516 of Hansard, he said:
I believe it was felt the activities of those who are air-minded in the London auxiliary-and there are some very good people-could be better tied into the Royal Canadian Air Force organization in the way which is proposed under the revision of duties which has been worked out.
Would the minister now indicate what this revision of duties comprises and what the plans are, in order that those who are vitally interested in this 420 squadron will know what will likely be done?


Hon. R. O. Campney (Minister of National Defence):: Mr. Speaker, I would like to take the hon. gentleman's question as notice and refresh my memory concerning the details before I answer.



REPORTED POSTPONEMENT OF DECISION TO DISBAND MOUNT HOPE STATION

[Stage Direction]
On the orders of the day:
Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, further to a question which I asked the Minister of National Defence yesterday, can the minister make any statement with regard to a report in yesterday's Hamilton Spectator that the disbandment of 424 squadron of the R.C.A.F. auxiliary at Hamilton has been postponed by order of the department?


Ralph Osborne Campney: Mr. Speaker, the position is that the decision was taken to disband this squadron, and that decision still stands. After the decision had been announced representations were made to me personally and by letter from Hamilton, as I indicated yesterday, and to the chief of the air staff by officers of the auxiliary squadron. These representations naturally will be considered, as will further representations which I understand officers of the auxiliary wish to make.
Perhaps I might also deal with the question asked by the Leader of the Opposition yesterday with regard to resuming auxiliary flying at Hamilton. As I indicated I would, I discussed the matter with the chief of the air staff, who informs me that at the meeting he had with the auxiliary officers it was mutually agreed that flying having been stopped it should not be resumed unless and until any changes were made in the decision.


George Alexander Drew: Mr. Speaker, do I understand from the statement just made by the Minister of National Defence that it has been agreed by the officers of 424 squadron that they shall not continue flying for the time being?


Ralph Osborne Campney: That is the advice given me this morning by the chief of the air staff.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Hon. Stuart S. Garson (Minister of Justice):: Mr. Speaker, yesterday the hon. member for Victoria, Ont. (Mr. Hodgson) asked me the following question:
I should like to bring to the attention of the Minister of Justice the back pay of the mounted police. I understand that in Newfoundland they are behind some three or four months and the 67509-384
Inquiries of the Ministry
amounts run from $43 to $55 a month for these constables. Will the minister look into the situation and give us a reply tomorrow?
Mr. Speaker, as would be indicated by the amounts of $43 and $55 per month, this is not back pay. There has been no delay in issuing the regular pay cheques to members of the Royal Canadian Mounted Police in Newfoundland. Members of the force stationed at St. John's, Corner Brook and Grand Falls, however, were in receipt of special Newfoundland allowances ranging from $25 to $45 per month. The authority for these allowances expired on March 31, 1956. At that time, due to an increase in the differential between living costs in certain areas of Newfoundland and other Canadian urban centres, a recommendation was made for an increase in the allowances. The authority to increase these allowances was granted by order in council under date of May 17, 1956. The new allowances, effective April 1, 1956, range from $30 to $35 per month. Cheques having been made out are in the mail, and will be received in due course.



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Stuart Sinclair Garson: Mr. Speaker, I am now in position to make a statement with regard to a matter which was raised yesterday by the hon. member for Vancouver-Quadra (Mr. Green) and the hon. member for Kootenay West (Mr. Herridge), and which was raised with me some weeks ago by the hon. member for Skeena (Mr. Applewhaite), concerning the issuing of permits to trappers and prospectors in the northern area of British Columbia to enable them to carry pistols and revolvers in connection with their work.
Section 90 of the Criminal Code makes it an offence for a person to have a pistol or revolver elsewhere than in his dwelling house or place of business unless he has a valid permit. Section 94 of the code authorizes the commissioner of the mounted police and the attorney general of the province to issue such permits. Since section 94 places the authority for the issuance of permits within the province in the hands of the attorney general of the province, the commissioner of the mounted police confines his authority to issuing permits to those of an interprovincial nature, such as permits to express messengers.
In those provinces such as British Columbia, in which the government of Canada has entered into an agreement with the provincial government to make available the services of the Royal Canadian Mounted Police to discharge provincial police duties, it is the

Inquiries of the Ministry provincial attorney general who controls the policy under which those authorized to issue permits, including officers of the Royal Canadian Mounted Police, must issue them. Moreover, the officers of the Royal Canadian Mounted Police, in the issuance of permits for pistols and revolvers in such a province, are, pursuant to the police agreement, under the direction of the provincial attorney general. I suggest, therefore, that my hon. friend's question might be more appropriately directed to the attorney general of British Columbia.


Howard Charles Green: I have a submission from the British Colum-bia-Yukon chamber of mines on this question which I should like to place before the Minister of Justice. In view of the fact that these men were permitted to carry revolvers for many years up until this year, will he not make some effort to see that they are allowed to have revolvers this year, even though it means making representations to the provincial government?


Stuart Sinclair Garson: I have no hesitation in agreeing to do anything that is reasonably within my power in that connection; but I must say that where we have a police agreement between a province and the dominion we do make a special effort not to appear to take advantage of that fact to impose anything more than suggestions upon the provincial attorney general in respect to matters which fall within the jurisdiction of the province. It would really be much more appropriate, if I may say so, if my hon. friend would raise this matter with the Hon. Mr. Bonner, whose responsibility it is, and have him do it. I do not like, as a co-signer with Mr. Bonner of the British Columbia police agreement, to be suggesting to him how he should handle his end of that.


Howard Charles Green: Is it not a fact that the basic trouble is the terms of the Criminal Code itself, and that that is a matter for amendment here?


Stuart Sinclair Garson: No, not at all. I think there would be general agreement in the house that so far as the discretion in the issuance of permits of this sort is concerned, it can be far more appropriately exercised by the provincial or local authorities than by myself or my officials in Ottawa. It would not be reasonable that a man in northern British Columbia wanting to carry a revolver should have to write to the Minister of Justice; and if he did, what would we know about the circumstances under which he was going to carry it?


Howard Charles Green: Why should the code not permit the carrying of a revolver by this type of person?


Stuart Sinclair Garson: For reasons that were gone into at length at the time this particular section was debated, i do not want to review them now, but I would point out to my hon. friend that if we did not have a restriction of this kind on the carrying of revolvers by people circulating around the country, everybody could carry them, with consequences that I feel he might deplore.



PRESENT SUPPLY POSITION


[Stage Direction]
On the orders of the day:
Mr. J. A. Charlton (Branl-Haldimand):: Mr. Speaker, I wonder whether the Minister of Defence Production could give the house a statement as to the present steel situation in Canada, how long the stockpile will last and if the United States steel strike has had any effect on Canadian industry yet.


Clarence Decatur Howe: The situation in Canada is that our steel mills are producing to capacity, as they have been for some time. Imported steel is cut off completely. Warehouse stocks are being depleted. I dare say we will feel the pressure there in time, but I can assure my hon. friend that the Minister of Defence Production can do nothing about it.


Mr. Michener:: I understood the powers of the Minister of Defence Production had been extended for three years. Has he terminated them voluntarily?


Clarence Decatur Howe: I found they were so distasteful to some hon. members that I have not exercised them.


DUNN ESTATE
[Stage Direction]
On the orders of the day:
Mr. W. M. Hamilton (Notre Dame de Grace):: Mr. Speaker, I have a question for the Minister of Defence Production. Has the minister received an indication from any of the executors that the holdings of the Dunn estate in Algoma Steel are about to be sold to others?


Clarence Decatur Howe: Mr. Speaker, the answer is no.


TAXATION
[Stage Direction]
The house resumed, from Monday, July 16, consideration in committee of the following resolution-Mr. Harris-Mr. Robinson (Sim-coe East) in the chair:
[Stage Direction]
That it is expedient to introduce a measure to provide that the Minister of Finance may pay to a province, out of the consolidated revenue fund, in respect of any fiscal year in the period commencing on the first day of April, 1957, and ending on the 31st day of March, 1962
(a)	a tax equalization payment with respect to individual and corporation income taxes and succession duties;
(b)	a provincial revenue stabilization payment with respect to such taxes; and
(c)	a tax rental payment in accordance with a tax rental agreement that may be entered into by any province as an alternative to levying such taxes on its own behalf;
and also to authorize tax collection agreements with the governments of the provinces.
Daniel Roland Michener: Mr. Chairman, when I began last night I suggested that an appropriate test by which this resolution might be judged was whether or not it tended to maintain the federal system or even to reduce the overcentralization which has been a continuing legacy of the war. I suggested that there was one bright ray appearing, in that the new arrangement seems to leave in an equal position a province which wishes to rent its tax fields and a province which wishes to collect its own taxes, in other words to share its foimer tax fields with the federal government, and that the proposal would be equally beneficial, if you want to put it that way or would be equally harmful, if you want to put it the other way.
The minister's assessment of the provincial attitude toward his proposals is contained in his remark that not one province over a period of 15 months, I think he said, had said that the new plan was not as good as the tax rental agreements. It strikes me that is pretty faint praising by the minister of his own proposal and of the provincial reaction to it. It seems clear to me that the provinces have not reacted favourably to the new proposals. They have recognized an advance, as we do, in the respect which I have mentioned. They have also recognized that there is more money for them. I think the minister estimates that there is 20 per cent more money.
It is perhaps significant to note that the corresponding grants from the province of Ontario to its municipalities have increased in the last five years by something like 190 per cent. I think that is approximately the figure, but I will get the exact figure. In any event there is a 20 per cent increase under the resolution and bill, and that is not to be overlooked. But notwithstanding the two things that can be said and which I have said, it seems clear that the provinces are dissatisfied. They have spoken for themselves, and it is not necessary for us to speak for them today. But I think it is desirable that this committee should have the provincial viewpoint expressed very clearly, because to my
67509-384J
17, 1956	6055
Federal-Provincial Financial Arrangements, mind it would be an unsatisfactory thing iff this house passed a bill which had the unanimous approval of the house and which was presented to the provinces as the only course open to them; in other words an offer which they must either take or get along with, having no choice in the matter. If it were presented to them as the unanimous decision of the house it seems to me that would impair the bargaining position of the provinces and, as the minister knows, these matters ultimately have to be settled by agreement if they are to be settled satisfactorily..
I should like to suggest to the committee-that the provinces have very little to hope for from this government, and I should Kit-c to take a minute or two to explain why that is so. For 17 years this government have been going in one direction, to the extent that they have lost their brakes and they have no reverse gear. They have been going in the direction of centralization of authority in Ottawa. Seventeen years is a long time, long enough for most ministers to form habits!
There is no question but that the government enjoys the position it holds in confederation. The members of the government have even, I think, attributed to themselves a certain indispensability which is not calculated to improve relationships between the central and the provincial governments. If I may say so, they have the attitude that no one can do it like we do, that we are the best spenders Canada has ever had. There is no question but that they are the biggest and the fastest spenders.
Mr. Chairman, it began with the Rowell-Sirms commission report. That report planted the seed of an idea. It did more than plant it; it expounded a theory that full employment could be maintained in Canada if the great progressive taxes, namely the income tax and the corporation tax, were centralized m the hands of Ottawa. I think that report could not have been more satisfactory to Mr. King if he himself had written it. In any event he seemed to accept, as have his successors, the central theme that if we are' to have no more unemployment-and all governments have made that one of their objectives-the more centralization control of the economy there is in Ottawa, the better it is for everybody.
That is the thesis I want to challenge. That is where it began. The provinces would have none of it. However, the war came to the rescue of the government and under the real and grave necessities of the war and the essential need for a unified command, we had a centralized authority and centralized tax collection, and all the provinces entered into agreements

Federal-Provincial Financial Arrangements which handed over completely to the federal government their right to levy personal incomes taxes and corporation income taxes. That was a complete vacation of a field which the provinces enjoyed under the constitution equally with the federal government. They were joint tenants, if I may put it that way; and my conception of a joint tenancy is one in which each party has a fifty-fifty interest, in the absence of other arrangements.
That was the position. They had equal rights in that field, and I do not believe anybody would deny that as a constitutional and legal concept. In any event, the provinces, with very strong assurances that they would be restored to their former rights, gave up completely their taxing authority in those two fields for the duration of the war.
Then after the war, in the 1945 and 1946 dominion-provincial conferences, called the reconstruction conferences, the provinces were presented with the green book which was an ambitious scheme to continue the effect and carry on the general ideas of the Rowell-Sirois commission's report and to continue the centralized authority over and control of the economy which was the basis of that recommendation. At that conference the provinces were anxious to agree, but they were unconvinced and they were divided, and in the end they were forced to accept.
The next event was the budget of Mr. llsley, brought down in 1946, which to some [DOT]extent resembles the proposals under which we still are obliged to work, an arrangement by which those who were unconvinced, and unwilling to leave their birthright in the hands of the federal government, would be obliged to continue on their own, with such abatement and recognition as Ottawa chose to give. Quebec and Ontario undertook to maintain their independence and go their own way and for the next few years they levied corporation taxes at the rate of 7 per cent, although the federal government's allowance to their taxpayers was only 5 per cent. They did not levy personal income taxes; that field was left entirely to the federal government.
Then in 1950 there was a further conference. The first agreement had been a three-year agreement and obviously was only a stop-gap agreement pending some more comprehensive solutions of these matters. In 1950 there was a conference in the shadow of the Korean conflict, and as a result of that conference new agreements were made in 1952. At that time Ontario joined in the agreement to rent these tax fields for a period of five years, leaving Quebec as the only province which remained outside the agreement; and until this day Quebec has stoutly maintained its independent position.
[Mr. Michener.l
I think those who believe that the federal system means something in this country and should be preserved owe a great deal to the fortitude of the people of Quebec, who have maintained that position throughout the last ten years since the war. But even Quebec felt the pinch of the conditions with which they were confronted, and in 1954 and 1955 met something of a crisis which required the province to levy income taxes of their own, something which proved to be an embarrassment to them, and certainly to the federal government, and which resulted in a concession from Ottawa, namely a 10 per cent abatement in the personal income tax field.
I think that is probably the genesis of the new agreements or the new arrangements which are now under consideration.
These agreements which were made in 1952 run out in 1957. The opportunities to provide a more satisfactory and comprehensive arrangement to meet present day needs are also running out. No solution has been found. The minister has propounded a principle to which I subscribe, namely that the provinces' revenues should be consistent with their responsibilities, but that result has not been achieved. The revenues which the provinces might enjoy have been rented under the circumstances I have recounted. They have been withheld; some say they have been filched away from them by the overweening central authority which does not wish to return those taxing powers to the provinces.
I suggest that the position today can be readily appreciated by looking at a table showing a comparison of the spending by the federal government and by the provincial and municipal governments over the last few years and by seeing how the balance has shifted toward the central authority. I am quoting from table 7 in the Canadian Tax Foundation's review entitled "The National Finances", 1955-56. It appears at page 12. The comparison is between the expenditures, which I think is the true basis rather than the revenues. The revenues are even more in favour of the federal government, but they do not take into account intergovernmental payments.
The expenditures in 1929 by the central government were $323 million and by the provincial and municipal governments, $600 million. I see that the minister has the table before him. To express it in percentages, the federal government was spending 5-2 per cent of the gross national product and the provincial and municipal governments were spending 9-7 per cent or almost twice what the federal government was spending. In 1933 the provincial and municipal governments spent 16-5 per cent of the gross

national product as against 8 [DOT] 5 per cent spent by the Ottawa government. Those were depression times, and the weight of the depression on the municipalities was extremely heavy. In 1945-and this is the next comparison I should like to make-we find that a complete reversal had taken place. In that year we find that the central government was spending 34-6 per cent or more than one-third of the gross national product, and the provincial and municipal governments were down to 6-8 per cent, a smaller proportion than they had spent at any time previously.
We now come up to date. In 1954, which is the last year for which figures are given, the amount spent by the federal government was $4,142 million and that was 17-2 per cent of the gross national product; the provinces and municipalities combined spent $2,447 million, which was only 10-2 per cent of the gross national product. If one quoted the figures for collections for the same year one would find that in 1954 the federal government collected 19 per cent of the gross national product and that the provinces and municipalities combined collected 8-5 per cent.
That is a complete reversal in the short period of one generation and all of it has taken place under the aegis of this government. It is for that reason I say the provinces have little to hope for from a government that has that record and that background. They have been conditioned, as the psychologists say, to the belief that the welfare of Canadians stems from what is done in Ottawa rather than what is done by local governments.
I have been speaking about revenues, and now let me say one word about the responsibilities of different levels of government. There has been no determined effort to resettle their responsibilities, either in line with this sharing of revenues and expenditures or on any settled principle. Here again there has been an encroachment by the federal authority, partly I suppose because it has had the funds with which to meet the needs. The provincial governments, as I say, have been occupying a lesser position throughout. This point was well expressed by Mr. Hicks, the premier of Nova Scotia, when he spoke to the Canadian club in Toronto on January 25 of last year. He said that without the people knowing it or deciding it, the basis of the constitutional relationship was being changed and that the federal government was encroaching in almost all fields, agriculture, fisheries, transport, finance, education, labour, health, pensions, highways; all those provincial fields had been encroached upon by the federal government.


Mr. Harris:: And every one of them you
support.
17, 1956	6057
Federal-Provincial Financial Arrangements


Daniel Roland Michener: Every one of them has been done, as Mr. Hicks indicated, without any arrangement. This has resulted, no doubt, because the resources were available to the central government. That is demonstrated by the fact that the clamour for money is directed to Ottawa, and for many things which are purely provincial in their concern. This is particularly true of education and highways. There is a path worn to the minister's doorstep in connection with all these matters, which are matters of provincial concern. The reason is that Ottawa has money to burn. I do not know what the minister's surplus will be this year, but I suggest to him it may run as much as $750 million. I hope it will. With a surplus of the kind which he will have to present, if he is not able to conceal it. he is not going to be very popular with the provincial finance ministers in endeavouring to settle their problems on the basis he is proposing to this house today.
What is needed, Mr. Chairman, is a new look, because the war has been over for some years and the cold war, while it is making constant demands, is taking a secondary place to the industrial growth and peacetime development of this economy. I suggest that our expanding economy is soundly based on the possession of resources that the world needs, and that the main problem is to create a condition in which those resources can be used and developed. Wealth, Mr. Chairman, is not created at Ottawa. It comes not from Ottawa, but from the ground and from the work of the people of this country. Ottawa has failed, I suggest, to see that there is a change; that what was desirable 15 years ago and what was represented by the Rowell-Sirois commission is no longer appropriate to meet the needs of the time.
The truth of this assertion can be readily demonstrated by the condition of the municipalities and provinces and the services they have to perform. This expansion of our economy rests on the services which are provided locally. It rests on a grass roots development throughout every part of Canada. The municipalities are struggling with a problem which they are unable to meet. I should like to cite one or two examples to demonstrate to the house how, in a few short years, the responsibilities of the municipalities have changed. The city of Kitchener is a typical example of an expanding city. Its total debenture debt in 1951 was $6-8 million. By 1954 it was over $10-25 million. Its school debt in 1951 was $1,169,000. In 1954, it was $2 million.
This rate of increase in the school debt amounted to 77-3 per cent in four short years, and that is not unusual. There is one municipality in the province, Dundas, where
6058	HOUSE OF
Federal-Provincial Financial Arrangements school debt increased by 813 per cent in the same period. Throughout the whole of Ontario the municipalities-and they are the ones I naturally would use to illustrate this point-were faced with an enormous increase in their responsibilities, an increase in debt and in the levy of taxes for schools and other municipal services. In Toronto the increase in the school debenture debt in that same period was 165 per cent.
Now let me further illustrate by levies in some of these centres. The tax levy in Kitchener increased from 1951 to 1954, for all purposes by 55 per cent and for school purposes by 57 per cent. In a smaller community like the township of Toronto, where there is a great deal of activity resulting from the industrial development in the Toronto area, the total tax levy increased from 1951 to 1954 by 121 per cent and the total school levy by 165 per cent. Those are only figures, but what do they mean to the ordinary person who lives in the township of Toronto and pays his taxes there? They are a staggering burden for the home owner, and it cannot be tolerated for long. Yet there is no visible end to this problem short of some general readjustment which will give the provinces greater financial resources.
There is one other illustration.


The Chairman:: I am very sorry to interrupt the hon. member, but I am obliged to advise him that his time has expired.


Daniel Roland Michener: If the committee does not
mind my finishing, which I can do in about three minutes, it will avoid the necessity of my making a 30-minute speech later.


William Alfred Robinson: Has the hon. member
unanimous consent to proceed?


Some hon. Members:: Agreed.


Daniel Roland Michener: Thank you, Mr. Chairman.
The provincial problem is of the same order. I should say that these levies made by the municipalities for school purposes are made after the provincial grants to the municipalities which this year in Ontario for all purposes, including education, are $184 million or 40 per cent of the total Ontario provincial budget. If one can imagine such a transfer of funds, that is what is taking place. Ontario's total budget of over $400 million has to be paid over, to the extent of 40 per cent, to the municipalities.
The provinces have their own part to play in maintaining our prosperity. This results mainly from their control and direction of our natural resources. The provinces must plant, but Ottawa reaps the harvest. This situation cannot go on. I should like, Mr. Chairman, to use the figures for Ontario


forests and mines to show exactly how the federal government benefits from the developments which are mainly made at the expense of the provincial governments. In the forestry department the Ontario government revenues, made up of timber dues, fire tax and other department of lands and forests receipts, totalled $20 million. The treasury department receives a logging tax of $800,000, making total revenues to the province of Ontario from these lands and forests of $20,800,000. The total federal tax declared by Ontario's forest-based industries was $39-3 million, that is just about twice what the province received from industries working in this natural resource and which depend on the province and municipalities for services that sustain those industries, and without which they could not operate. Yet Ottawa, as I say, reaped a harvest of approximately $40 million, twice as much as the province, in the same field.
In mining the contrast is even more striking. If the government were at all receptive to the importance of the activities of the municipalities and the provinces in these fields they would appreciate that this condition cannot continue. From mining the Ontario government receives a total of $5-2 million, whereas the total federal tax taken from the Ontario mining industry is $27-4 million, or more than five times the amount which the provincial government receives in taxes from its mining industry.
This situation can be very simply illustrated by the kind of development we see going on everywhere in Canada. At Bancroft, in Ontario, one of the uranium mines is making an expenditure of $10 million in a mill and mining plant. That involves the province in the construction of roads; it involves the municipalities in building schools to house the children of a community of 5,000 people, and all the incidental services that are necessary to establish a community without which a mine cannot function. These miners begin to pay taxes to the federal government from their very first pay cheques; while the mill is in the process of building, the federal government draws excise and sales taxes and that sort of revenue, and as soon as the plant begins to operate the profit tax begins to roll into Ottawa.
Up to the present time the federal government has not expended one cent in the ground work which makes the industry possible. It is true they have, under their direction, arranged for the sale of uranium, which they control. To that extent they have a part, but there has been no cost to the federal government. The cost of all of this is on the

municipality and the province, and the disproportion of the resulting revenues for government purposes is five to one in favour of the federal government. Now, Mr. Chairman, that is a condition that I say cannot continue. The clamour at the door of Ottawa is the proof that there is an imbalance which is of serious proportions. A broader conference is needed, Mr. Chairman, and a resettlement of the responsibilities and revenues.
The minister has said that time and men both change and our problems change with them. There is no hope of a broad federal solution from this government, with the background I have illustrated. Change is taking place, and a change in the approach to these problems is needed. If the government will not change, Mr. Chairman, I suggest it is time to change the government.
I wish to close, Mr. Chairman, with one more quotation from a man who was quoted with considerable relish by the other side of the house not so long ago. Mr. Frost, the premier of Ontario, in speaking about these negotiations in the Ontario legislature on March 12, 1956, said, as reported at page 929 of the Ontario Hansard:
I tell this house today that the federal government has deplorably failed to assess the needs of the provinces and their municipalities which are the right arm of peacetime development and expansion. They are as wrong In this as they were in the attitude of 1945 and 1950. The unfortunate part is that this matter is urgent, that our taxpayers are being overwhelmed because they are being deprived of their fair share of the revenues which come from the very production which causes our problems. That the federal government will be proved wrong again I have no doubt, but it is my hope that it will not be too late, before they find they are wrong, unfair and unjust to the provinces.


Mr. Kirk (Shelburne-Yarmoulh-Clare):: Mr. Chairman, I should like to speak briefly in this debate. I do so because of some of the comments that were made yesterday afternoon and evening. I should like to make particular reference to the maritime provinces, and particularly again to the province of Nova Scotia of which I am one of the representatives.
Statements were made yesterday that the maritime provinces in general are being treated unfairly by the federal government; that the federal government was doing nothing, or at least was not doing nearly enough, to assist in the economy of the maritime provinces; that there was a lack of defence expenditures in the maritime provinces; that the present proposed tax rentals, including the tax equalization payments, were not large enough, and so on. In doing so, one or two of the speakers made slight reference to other expenditures which are made by the federal government, and I do feel that if
17, 1956	6059
Federal-Provincial Financial Arrangements one is going to look at the proposal as set out in this resolution, one must in fairness look at other expenditures being made by the federal government.
I should like to speak briefly of three of our main industries in Nova Scotia, our three primary industries, mining, fishing and agriculture. I do not think it is generally realized by Nova Scotians, and I am sure it is not by many members in this house, that in so far as the mining of coal, for example, in Nova Scotia is concerned, five federal government assistance grants are received. I am sure that no one has any idea, or very few have any idea, of the magnitude of those grants. For example, from the transportation subvention, which is to overcome to some extent the handicap of the distance of the coal mines from the main markets in the central provinces of Ontario and Quebec, in 1954-55, the last year for which final figures are available, the province of Nova Scotia received $8,689,000. Since this subvention assistance was put into effect in 1929 the province of Nova Scotia has received over $55,600,000.
Another form of assistance is the subsidy payments on coal which is used in the manufacture of iron and steel. This goes back to the coke bounty act of 1930. Under this act and under the Canadian Coal Equality Act of 1952 Nova Scotia, in 1954-55, received $224,600. Since that act has been in effect, from 1931, Nova Scotia has received almost exactly $7 million.
The third form of assistance for the coal industry is the coal production subsidies, the loans and the rentals. Under this plan there are long-term loans made for the purpose of increasing efficiency of production through modernized mechanization. Nova Scotia has received under this plan over $30 million; to be exact, $30,863,000 over a period of five years.
Then there is the coal production assistance loan under which we have received in the last six years $7,600,000 and, of course, the export subsidy on coal which brought us in the last year $300,000. I mention these, Mr. Chairman, just to show that in coal alone, not only recently but over the last few years, Nova Scotia has received very large sums to assist its mining industry.
We do hear a little more in the house about the freight assistance under the Maritime Freight Rates Act, which provides a reduction of 20 per cent on all freights charged on certain traffic originating and terminating within certain designated areas. Unfortunately, at the moment I have not the exact figure for the last year for Nova Scotia, but the maritime provinces and the Atlantic
6060	HOUSE OF
Federal-Provincial Financial Arrangements provinces were referred to yesterday. In the Atlantic region the freight assistance amounted to $10,590,000 in 1954-55, and within the last nine years it has amounted to over $77,500,000.
In so far as fisheries are concerned, there are many avenues in which the federal government is assisting the fisheries in the maritime provinces. For example, there is the fishing bounty which is to aid in the development of the sea fisheries of Canada. In 1954-55 Nova Scotia received approximately $85,000, and within the last 10 years $839,300. There is assistance in the form of educational service for fishermen, which is to extend the educational work in co-operative producing and selling among fishermen. The maritimes received last year, under this item $46,000, and in the last 10 years the maritimes received in round figures $460,000. There is also assistance in the form of industrial development to provide for expenditures in so far as technical service to fishermen is concerned, and in that regard the maritimes in 1954-55 received nearly $250,000 and in the last three years received about $370,000.
There is construction assistance for fishing vessels, which is of great value particularly in my own province of Nova Scotia in so far as the construction of draggers and the long liner type of vessels are concerned. In this case the subsidy payments are made through the fishery loan agencies, and in the maritimes they amounted to almost exactly $114,000 during the year 1954-55 and during the last eight years have amounted to approximately $658,000.
Still another form of assistance is that given to bait freezers. That is of particular interest to my own constituency, where several have already been built and others are under construction. In the last seven years that has amounted to $65,000 for Nova Scotia and a large part of that has gone into the constituency of Shelburne-Yarmouth-Clare.
In so far as agriculture is concerned I think one of the best moves made in recent years was the passing of the Maritime Marshland Reclamation Act. Under this act Nova Scotia received $733,000 in 1954-55, and in the last seven years it received nearly $2J million. That program has gradually been developed, and each year the expenditures increase and doubtless will continue to increase for a few years until the program is still further developed. This program provides for the construction of dikes and aboiteaux to reclaim the marshlands. This is a co-operative arrangement between the federal and provincial governments and the marshland owners.


There is another form of assistance which goes to maritime farmers, namely the agricultural lime assistance program. Under this program in the last nine years Nova Scotia has received over $500,000.
In addition to the freight assistance I mentioned earlier, which applies to all traffic moving in certain designated areas, there is freight assistance on western feed grains which represents a considerable amount and makes a vast difference in the economy of the farming areas of Nova Scotia. In 1954-55 Nova Scotia received $1,600,000 under this form of assistance, and has received in the last nine years over $13 million.
One could go on in great detail, Mr. Chairman, and one could quote a great many figures, but I think I have perhaps given enough figures concerning mining, fishing and agriculture to show that there are a great many forms of assistance and a number of ways in which the maritime provinces in general and Nova Scotia in particular receive funds from the federal government in addition to the proposal we have in this resolution today.
To give another example, there are the general health grants under the Department of National Health and Welfare. In 1954-55 in Nova Scotia these amounted to $2J million, and over the last seven years since they were inaugurated they have amounted to over $8J million.
So much for the general forms of assistance. In Nova Scotia we have also had a great many individual development projects over the last few years, many of which have been discussed in the house. I think it might perhaps be just as well to mention four or five of them. For example, there was the development of the North Sydney terminals, which in the last few years amounted to approximately $3J million. In the last ten years the expenditures of the national harbours board amounted to over $6,300,000. The general vote for harbours and rivers varies from year to year, but in 1954-55 it was over $3 million in Nova Scotia.
There are also three ferries, two of which have been completed and one of which is now being built. I refer first of all, of course, to the Bluenose which operates between Bar Harbor, Maine and Yarmouth, Nova Scotia. This was built by the federal Department of Transport and the province of Nova Scotia, the Department of Transport paying something over $4 million and the province of Nova Scotia paying $1J million. This motor vessel has been in operation since last January and traffic is increasing very rapidly. During the last week, for example, there were over 6,000 passengers carried between Yarmouth and Bar Harbor. Over 3,200 coming


Mr. Brooks:: Mr. Chairman, may I ask the hon. member what camp he refers to in Victoria-Carleton?


Mr. Kirk (Shelburne - Yarmouth - Clare):: Camp Gagetown.


Alfred Johnson Brooks: That is not in his constituency.
17. 1956	6061
F ederal-Provincial Financial Arrangements


Thomas Andrew Murray Kirk: I
believe I said in his area. It is not in his particular constituency but it is in his general area.


Alfred Johnson Brooks: It is a good many miles from his area.


Mr. Sinclair:: You are the lucky man with all the construction.


Thomas Andrew Murray Kirk: Perhaps when the hon. member for Royal speaks he will be able to tell us how happy he is to have so much of that expenditure being made is his particular constituency.
As far as direct payments under the tax rental agreement in the province of Nova Scotia within the last few years are concerned, I would just like to put on the record in round figures the payments for the past five years. These are direct payments to the provincial government of Nova Scotia. In 1949-50 it was $12J million; in 1950-51, $14J million; in 1951-52, $15| million; in 1952-53, $23-8 million and in 1953-54 it was nearly $24-4 million.
Under the new proposal which is before us today it is estimated that the equalization payment to Nova Scotia for the fiscal year 1957-58 will be $17,130,000, and the standard taxes plus the equalization payment are estimated to be $26,855,000. In other words the total revenue available to Nova Scotia in 1957-58 under this tax-sharing agreement will be $27,635,000, which will represent approximately 45 per cent of the total budget of Nova Scotia. Under the present agreement we would receive $22,865,000, so the new agreement represents an increase of $4,770,000 over what we would have received under the old agreement in so far as 195758 is concerned. That is an increase of 20-9 per cent.
A little earlier I gave the details of the direct payments to Nova Scotia for the last five years and indicated the amount that would come to that province under the present plan, but when we are considering those two sets of figures we should bear in mind that the amounts have been increasing from year to year. At the end of each five-year period the proposals have been revised, and in every case the revision has been upward. In so far as the proposal for the next five years is concerned no one can predict exactly what will happen, but I do feel that what has happened in the past and what is happening at the present time give a fair indication that at the end of another five-year period there will be a further study made and a revision if necessary.
According to the figures I have given the position of Nova Scotia compares most favourably with that of the other provinces of

Federal-Provincial Financial Arrangements Canada. This is an excellent tax-sharing proposal. It has been brought up to date, and it is my personal feeling that it is the best we can expect under present conditions, especially when one considers all the other amounts being spent by the federal government, which I mentioned earlier. Personally I am only too happy to support the resolution, and I firmly believe the vast majority of the residents of Nova Scotia feel that the new tax-sharing proposal is an excellent one and will be of great benefit to our province.


The Deputy Chairman:: Shall the resolution carry?


Mr. Churchill:: Mr. Chairman, I had generously agreed to give the floor to another hon. member, but I am sure the Minister of Finance would not want this resolution to pass without further discussion.


Walter Edward Harris: Just a moment, please.


Gordon Minto Churchill: I noticed that yesterday the minister was a little plaintive when referring to the short time which had been given to the resolution in 1952. I looked that up and found that only about an hour and a half had been spent discussing it. The minister should not complain because in 1952 our war troubles were still alarming and the tax agreements were just a continuation of those of 1947. The major advance in Canadian life had just begun four years ago, and the tax rental agreements of that time were carried on without too prolonged a discussion.
But the situation has changed materially. We have reached a stage where the pressures or fears of a world war have diminished. They are still present to a certain extent but they have diminished, because the possible destruction resulting from a thermonuclear war has alarmed even the most aggressive of nations. Although we have to make preparation for war in the future, the fact is that we are not in the same state of despondency regarding the world as we have been for the last few years. That has eased the pressure to a certain extent and has given us a chance to look at other matters within the state. Hence the more prolonged discussion at this time with regard to dominion-provincial tax arrangements.
I think that is the sensible way to look at this matter, because we are now on the threshold of great advances in Canada and there is no reason why we cannot look forward to a period of peace, a reduction in armaments and a general easing of tension. Under those circumstances the reasons which kept the wartime tax rental agreements in

operation in Canada must be considered as having ceased to exist, and a new look should be taken at the problem.
As I see the situation at the moment, the minister has taken a new look at the pressure exerted upon him by the provinces, but it is not a very broad view. He has made modifications of the earlier agreements, but they are only modifications. I had hoped that a much larger view of the whole problem would have been taken and that the minister would have come forward with a more comprehensive suggestion. I realize that he has been patting himself on the back for the additional grants which are going to be made available to the provinces, the higher ceilings on the grants which will protect the provinces in case there is a turn for the worse in our economic conditions and the 8 per cent increase, as he puts it, in the revenues of the various provinces as a result of the increased amounts being available. The minister seems to be satisfied on that ground, but I must admit that he expressed some doubt that this plan will last without modification. I am sure it will have to be modified before too many years have gone by, because it is not possible to foresee all the problems which will arise.
I am always interested in the approach of cabinet ministers to the problems placed in front of them. A study of their speeches and expressions gives an inking of their philosophy. I should like to give three examples of this. In introducing the resolution yesterday the Minister of Finance seemed to be extremely hurried. It was difficult for us on this side to follow his remarks. I have just read them in order to get their full gist. The minister seemed to be a little anxious to get his resolution passed, or was not altogether satisfied with the proposition he was putting forward and hence was extremely hurried in his remarks. I should like to quote one sentence which he used, which appears on page 5987 of yesterday's Hansard:
The payments were on a more generous scale than before.
I notice the word "generous". That is the great white father making generous payments to those beneath him.


Walter Edward Harris: May I interrupt just to say that I used the word "generous" to indicate "greater", not in that sense at all.


Gordon Minto Churchill: All right; the minister has now corrected that. Then as found at page 5988, the minister used this expression:
We have tried in every way to be sympathetic to the many legitimate provincial claims and at the same time reconcile them with our national responsibilities.

"Sympathetic"-another word that indicates that avuncular view of life. Why not simply say, "We have tried in every way to balance the legitimate claims of the provinces with the national responsibilities"? Let us not have this sympathetic attitude. Let us deal on a basis of equality. Similarly I notice that in the report of the proceedings of the federal-provincial conference of October 3, 1955, the Prime Minister used an expression which seems odd coming, as I think it did, from a prepared manuscript. It is to be found on page 15 of the proceedings, and the Prime Minister had this to say:
These advantages are of real value, but they are net benefits for which we must ask federal taxpayers to pay too high a price . . .
I did not realize that we had a particular class in our society who were federal taxpayers alone. I thought the taxpayer was just that chap who paid municipal taxes, provincial taxes and federal taxes all from the same pocket. If the thinking of the government is that there is a special class in the community called the federal taxpayer, I suggest that thinking should be revised.
The Minister of Finance doubted that the present proposal would last for all time, and with reason, because I am sure he has looked back at what has transpired in the past concerning the relationship between the dominion government and the provinces in connection with the division of their responsibilities and in connection with the amount of money available for each level of government to carry out its functions. Last year, speaking in the budget debate, I dealt with the subject of dominion-provincial conferences and traced the history of those conferences and the purpose for which they were devised. I noted that in the first 20 years following confederation there had been no interprovincial or dominion-provincial conferences, not that there was not dissatisfaction on the part of the provinces with regard to the financial arrangements made at the time of confederation but because no one took the initiative until about 1887.
For a period of 39 years from 1887 to 1926 there were a series of conferences called on the initiative of the provincial premiers to discuss matters of concern to them. There were seven of those conferences. I omit reference to the one called in 1918 by the then prime minister, Sir Robert Borden, in order to stimulate the war effort. The other conferences were called on the initiative of provincial premiers, and the subject matter of those conferences was very largely the question of financial assistance and a revision of the subsidies paid by the dominion government to the provinces under the terms of the confederation agreement.
67509-385J
17, 1956	6063
Federal-Provincial Financial Arrangements
So the problem is far from new in Canadian life, and the fact that it was not solved in those early years led us into the extreme difficulties of the depression years and resulted in the Rowell-Sirois report and finally in the tax rental agreements. But unless we are careful for the future we may again run into difficulty, and once again in Canadian history perhaps some of the areas of Canada will find themselves in an extraordinary depressed state and increased assistance will have to be given.
At some stage in Canadian history this matter must be grappled with, and though it cannot be settled in final terms improvements can be made. It is rather astonishing that 89 years after confederation there should be areas in Canada which are economically depressed in relation to other areas. The tempo of advance has not been the same all along the line, and apparently this has not been recognized from time to time. We have reached a period in national development when I think a much greater effort can be made to correct the disparities in our national life.
Ever since I have been here I have been hearing legitimate complaints from various areas of Canada with regard to the restraints that have been placed on their economic development, and I had hoped that now, having reached this stage, having to revise the tax rental agreements, a much greater effort would be made on the part of the government to correct these errors in our national life.
I spoke about the earlier conferences up to 1926. From that time to the present there have been another seven or so conferences called at the instance of the dominipn government, and called for a variety of purposes. A year ago last May when I was criticizing dominion-provincial conferences I objected to the nature of some of those conferences in the past and hoped that in the future the conferences would not take that turn. I pointed out that at one of the dominion-provincial conferences the delegates were advised that the purpose of the conference was to provide material for legislative programs for the legislatures as well as for the dominion. I recall that last year I objected to the Prime Minister announcing to the dominion-provincial conference the policy of the government with regard to unemployment, when it might better have been announced here in the House of Commons.
However, these later conferences, though dealing with a wide range of subjects, have nevertheless been compelled to deal with the same problem that affected the premiers in the earlier interprovincial conferences; how to solve the problem of meeting provincial

Federal-Provincial Financial Arrangements responsibilities with the funds that were available to the provincial governments. That problem remains at the present time. In the conference that was assembled here last October the premiers in turn made their statements, and once again their recurring theme throughout the proceedings of that conference was that provincial responsibilities exceeded provincial sources of revenue, and the premiers asked that something be done about it.
Now we have the proposal of the Minister of Finance in order to come to grips with that problem. I think he is rather disappointed that his solution has not received wide acceptance, but it has not received wide acceptance because it has not gone far enough.
I think any solution evolved by dominion-provincial representatives will have to go much further than the one now before us. On its face it looks attractive. There is more money available for the provinces. There is greater protection offered to the less well off provinces. But the root of the matter has not been attacked, and that is the division of responsibility between the dominion government and the provincial jurisdictions. I note that last year I concluded my remarks in this way:
I will conclude with this statement. Dominion-provincial conferences may continue to be a necessity for Canada. If so, they should be restricted to the core of the problem, the division of administrative responsibility between the dominion and the provinces, and the division of fields of taxation.
That remains the core of the problem. The only way in which to approach that problem is by a conference which would deal with that crucial matter and deal with it not in 24 hours or in 48 hours but over a lengthy period. I believe we have reached the stage where we must reassess the effects of confederation and re-examine the responsibilities assigned to the various governments. We cannot continue on this basis of the dominion government putting forward, in the interests of the general advancement of Canada, various schemes which involve provincial participation on a financial basis, thereby increasing perhaps the load on provincial resources, without the assumption of full responsibility on the part of the dominion.
To my mind the best example of that, or perhaps not the best example but an easy example, is the question of the trans-Canada highway. On the surface it looks to be a fine scheme for the dominion government to say, "Canada is interested in communications. The trans-Canada highway, after the fashion on the great highways that criss-cross the United States, would be a good thing for

our country. This matter of highway construction is a provincial responsibility but the dominion government will assist. Let us now get together with the provinces and determine some plan of action." I do not know how many years it has been going on but it is a good many years, and we still have not completed the trans-Canada highway.
That is an example of the faltering steps this government has taken toward the solution of problems that happen to cross over into the provincial field. Why could it not be determined that the dominion government would accept full responsibility for something which has a national aspect of that character and which would be agreeable generally to the people of Canada? Why could the federal government not accept full responsibility for it and put that trans-Canada highway through? Have the provinces ever suggested that they would be opposed to having a first-class highway put through their territory without having to bear half the cost of construction of that highway? I think not.
I was interested in the October federal-provincial conference and in the remarks made by the premier of Manitoba, who is a good Liberal and who is, I think, sympathetic
__and I now use that word "sympathetic"
properly-to this dominion government because he has troubles somewhat similar to those of this government. I think he would like to help them out as best he could if they will help him out. Being in that frame of mind, he nevertheless was not too enthusiastic about some of the government's proposals, and he set forth very clearly the situation with regard to Manitoba. I thought some of these things might have been referred to by the Minister of Finance when he was introducing his resolution.
The premier of the province of Manitoba, as found at page 59 of this report, points out that the increase in government expenditure- and he is comparing the years 1945 and 1955 -was, for the federal government, 5-5 per cent whereas for the provincial governments the increase was 291-9 per cent and for municipal governments it was 276 per cent. Then the premier of Manitoba dealt with the question of capital investment and he showed the extent of the investment by the provinces and the municipalities. I quote his words as found at page 62:
Over the past five years, the provinces and municipalities between them have been spending nearly a billion dollars per year on capital projects of all kinds. The federal government has been spending perhaps half this amount annually. It is noteworthy that, in these post-war years of prosperity, the indebtedness of the provinces, municipalities and their agencies has risen from

$2-977 billion in 1945 to $5-715 billion in 1953-an increase of 92 per cent, while the federal government debt has actually been reduced from $18-438 billion to $18-276 billion.
So you have there a provincial premier pointing out the tremendous increase in the indebtedness incurred by those other governments, provincial and municipal, and the more satisfactory situation of the federal government. Then, dealing with that very matter, as found at page 63, he went on to say this:
This gives rise to the grave question of how the provinces and municipalities can hope to support much greater indebtedness in the next few years- an indebtedness which may well reach about $10 billion by 1961.
In other words the provinces see a great increase in their costs; and it is for that reason that they are not satisfied with the modest increase in their revenues which will result from the proposal of the Minister of Finance.
Earlier I mentioned the cross purposes which we sometimes find in Canada because of the overlapping of the dominion and provincial fields of activity. The premier of Manitoba gave an instance of that situation in dealing with what are called shared cost programs. He points out that although the provinces are appreciative of the initiative of the dominion government in putting forward these ideas concerning shared cost programs, nevertheless they create quite a burden for the provinces. He lists 15, I think, of these shared cost programs covering the fields of health and welfare, education and labour, public works, agriculture and natural resources. I quote his words as found at page 65:
In our fiscal year 1954-55 these programs involved expenditures amounting to more than $8,500,000. For the year in question this figure represented an amount equal to 15 per cent of Manitoba's budget.
In the list of these shared cost programs he queries the dominion's attitude toward an item such as civil defence, which apparently he would be happy to see taken over entirely by the dominion authorities.
He goes on, of course, to deal with the problem of education and the increasing burden on provincial and municipal resources as a result of the increased enrolment that is foreseen in all the schools and universities. Then he suggests, not an increase in the financial contribution from the dominion government of $115 million but that something in the nature of $200 million or $300 million a year would be a satisfactory increase. For example, he says this:
We think then, that the constructive approach to federal-provincial fiscal problems is to substantially expand the federal tax rental payments in the order of $200 million to $300 million a year. Further, if we are to rid ourselves of some of the
17. 1956	6065
Federal-Provincial Financial Arrangements.
clutter, uncertainty and inevitable interference' of the many shared cost programs, then the tax: rental payments should be increased by an additional $100 million to $150 million annually.
Now, Mr. Chairman, this sets out the problem rather briefly. The provincial governments and the municipalities are carrying: a greater share of the load in Canada than they are able to bear. Obviously if you study the statements by these various provincial premiers you will see that they feel there must be greater revenues available to the provinces. The method by which these revenues are made available, I concede, is something that can only be hammered out during long drawn out investigations and', studies. We have one method put before- us-now by the minister, and although that method in itself seems acceptable, the amounts involved are under criticism and properly so, because the real problem has not been approached; that is the division of responsibility in accordance with the change in our life in Canada. It is the responsibilities of governments in this country that require careful study.
Yesterday the Minister of Finance was telling us that over the last 20 or 25 years some progress has been made. One method has been tried out, tax rentals, and here is another method. I do not know whether he was implying that this should go along for another 20 years and then we should take another look at it. That is rather slow progress in 20 or 25 years, just one method being tried out. Now we have found that faulty and surely the present approach should be toward an investigation of the division of responsibility as between the dominion and provincial authorities. Can we suggest that a solution has been arrived at by way of this resolution and the bill that is going to follow it? It is a stop gap. to a certain extent, and it is a bit of a dole to-those provinces who have no bargaining power. Really, some of the poorer provinces have no bargaining power as against this strong dominion government. Fortunately there are in Canada some provinces which have bargaining power, and they have assisted their junior brethren by standing up to the dominion government and insisting on a better deal.
I do not like the idea of the dominion government taking the stand that they are handing out charity to the poorer provinces or taking this sympathetic approach to their problems or things of that nature. I think it is a question of sharing equally in this great country of ours, giving each part of it a fair share of the national wealth that is being produced, not by the dominion government and its policies so much as by the
6066	HOUSE OF
Federal-Provincial Financial Arrangements actions of the provincial and municipal authorities. The real work of the country is being done down at that level. The profits accruing from that work are being taken into the coffers at Ottawa. Then the authorities here seem to think that having received the profits from those activities, they were the producers of those profits.
That is not the view that is taken by the provincial and municipal authorities who have to provide the means by which the general industrial growth of this country takes place. They have to provide all the services that are ancillary to the development of industrial centres. They build access roads to develop our mines in the northern part of this country. They provide educational facilities and things of that nature. The profits come down to the central government, and then the central government thinks it has created all this wealth.
I suggest, Mr. Chairman, that a dominion-provincial conference be called devoted to the task of solving the division of responsibilities as between the dominion and provincial governments. It would have to continue for a considerable length of time because it is a difficult problem, but that is the only way we can reach a solution of this problem which has beset Canada ever since confederation.


Mr. Blackmore:: May I call it one o'clock?
.At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
John Horne Blackmore: Mr. Chairman, having in mind the considerations which I put before the committee last evening, as recorded on pages 6025 to 6028 of Hansard, considerations, including such matters as the moves already made in Canada, apparently directly aimed at weakening and ultimately destroying the British North America Act; having all these things in mind, one can be pardoned if he is tempted to wonder what the Minister of Finance is up to, he and the interests directing him from behind the scenes, granting there are such. Naturally we people in the opposition have to be aware of possibilities every time a move is made.
To the casual onlooker the resolution before the committee is innocent looking, innocuous in appearance, but this resolution could be, and probably is, designed to be a blank cheque in favour of Marxism. One of the great characteristics of Marxist philosophy is that very exacting taxation might be


applied. This will help to explain why I used the expression I have just used.
Most hon. members do not need to be reminded that there are evil forces abroad in the world. To those I referred last evening. That the agents of evil have manoeuvred themselves into high places is well known. From such agents of evil Canada is probably by no means free. Evidence of designing mischief-makers has been apparent in times past in Canada, more times than a few. Ours are days demanding the utmost vigilance because so many are talking centralization, as I pointed out last evening.
Let us look back over the past 30 years of our history. Thirty years ago it seems the efforts of the evil powers in Canada began to intensify. Consider briefly the passage of the Bank of Canada Act and events leading thereto. According to the testimony so ably and emphatically set forth by Sir Thomas White and Mr. Beaudry Leman in their memoranda of dissent, as they appear in the report of the Royal Commission on banking and currency for Canada, published in 1933, at pages 83 to 84 and 85 to 91 for Sir Thomas White, and at pages 95 to 97 for Beaudry Leman-according to these great Canadian authorities, Canada had about as much use for the Bank of Canada as a beaver would have for an extra tail. Why, then, was the Bank of Canada apparently forced upon Canada, and by whom and for whom and by what means?
More than a little light is thrown upon the situation by a more or less casual reference in a paragraph occurring in a letter dated January 14, 1941, by Hon. W. R. Motherwell, outstanding Saskatchewan statesman and at one time a member of this house. The letter was published in the Western Producer of January 23, 1941. In the letter Hon. W. R. Motherwell criticized the Sirois report. The passage in the paragraph to which I particularly refer reads as follows:
As the date of the dominion and provincial conference on the report of the Sirois commission draws nearer, the signs of systematic and increasing propaganda on behalf of the acceptance of this report becomes more and more bold, insidious and emphatic, e.g. that, as per press report, unless the seven or eight provinces that are said by the secretary of this commission to be bordering on defaulting on their bonds, accept this Sirois report, something "villainously destructive of our war efforts" is going to happen.
When the press of January 7 carried this remarkable statement by R. W. Fowler one of the secretaries of assistant secretaries of the Rowell-Sirois commission on dominion-provincial relations, it became quite apparent to even a blind man, that some one must have instructed him to make this, to me, quite unwarranted prediction and for the seeming purpose of coercing the Canadian provinces into the acceptance of this report by the application of stimulating doses of familiar propaganda dropped at appropriate times, places

and occasions to check a growing suspicion that to use an old adage "all was not gold that glitters'' throughout this much-lauded report. Mr. R. W. Fowler should remember that it is surely in vain for the fowler to spread the net in the sight of any bird (the Canadian provinces).
I understand from press dispatches that Premier Hepburn surmises that it was Ottawa (presumably the federal steering committee) that gave Mr. Fowler the tip what to say, but he denies it. Of course no one would expect the propagandist-inchief would admit this, even if it were entirely correct as a "safe" man would never admit anything like that or his name would be Dennis the next time a "safe" man's services were in demand.
Evidently a further study of this voluminous, potentially well seasoned with dynamite report, was desirable before accepting it blindly in wartime at the instance of one commission assistant secretary, while another had been busy filling up our magazines and press with even more alluring and seductive descriptive dope, than that which preceded the launching of that other anticipated farmer cure-all-the Bank of Canada.
. Hon. members who have heard that passage read I am sure will be impressed by such relics as those which are hidden away and which are to be found only in collections like the one which I happen to have been successful in accumulating a number of years ago.
But see now what is indicated by what this man says concerning the way in which the Bank of Canada was foisted upon the Dominion of Canada. There was an attempt to deliberately build up a public opinion in favour of the Bank of Canada. Now, if the Bank of Canada had been in demand by the people of Canada there would have been no need for the propaganda especially alluring, seductive and deluding such as occurred.
The reason I look upon this letter as being of more than usual significance is the fact that Hon. W. R. Motherwell was one of the finest public men, one of the finest statesmen who ever occupied a public position in the Dominion of Canada, either in a province or in the dominion, and he occupied both. He lived right through this period of which we are talking; he lived right through world war I; he lived right through the whole period during which the Bank of Canada was set up, and was living right through the time when the Rowell-Sirois report was being prepared to put before the people. He wrote this letter in the open forum of the Western Producer to draw to the attention of the people who might read it in western Canada the seriousness of the situation which was confronting the people at that time.
That passage from the pen of one of the really great Canadians merits most careful study and consideration. Notice the words "filling up our magazines and press with", and so forth, down to "Bank of Canada". You know, you do not get free access to our magazines and to our press so you can fill them up
17. 1956	6067
Federal-Provincial Financial Arrangements unless there is a lot of money behind you. And when a lot of money is behind anyone it is likely that he is not working for the welfare of the people; that has been proved over and over again. The Bank of Canada was represented-and I quote again the passage I read-as an;
. . . anticipated farmer cure-all.
The men who were advocating the Bank of Canada then knew perfectly well that the Bank of Canada would not cure the troubles of the farmers any more than it has done since. Our farmers are simply being crucified today, and what is the Bank of Canada doing? It is sitting with its hands serenely folded, incapable of doing anything about it and apparently not desiring to try to do anything about it.
Just imagine propaganda going out through the press in article after article after article assuring the farmers that once they got the Bank of Canada their troubles would all be ended. Just imagine what that means, Mr. Chairman. And then, after the propaganda had been going on long enough, when those who were engaged in sending out the propaganda thought they must have convinced the people, do you know what they began to do? They began to lie to the people in the maritimes, telling them that all the people out west were demanding this measure. Then they began to lie to the people in the west, telling them that all the people in the maritimes were demanding it, when the people had nothing to do with it at all. That is the sort of thing that went on in connection with the Rowell-Sirois report. Anyone who remembers those days will recall the coloured headlines an inch high which appeared in various newspapers all across the country.
The Bank of Canada was presented as a desirable institution, presented with-
. . . alluring and seductive descriptive dope.
-to use Mr. W. R. Motherwell's expression- in magazines and the press.
Somebody other than the common Canadian very much wanted the Bank of Canada, somebody with more than a little money and with quite above average influence with the press! There must be a good many hon. members in this house who know quite well who it is that exercises the greatest control over the daily press in our country. I have made references to that sort of thing in times past.
Now, the same or a similar somebody wanted the Rowell-Sirois report accepted. I think hon. members will find interesting an editorial which appeared in the Western Producer in the January 23, 1941, issue. I shall quote a number of small passages from

Federal-Provincial Financial Arrangements that editorial; they are revealing to all who wish to get something resembling a comprehension of the kind of thing that was going on there. Here are some statements from the editorial. It is headed "The Interprovincial Conference". Remember that the Rowell-Sirois conference between the premiers and the prime minister of Canada had by that time been held. The article says:
The collapse of the dominion-provincial conference was the signal for the release in the press of western Canada of a flood of special dispatches and editorial comment, hysterical in tone and viciously mischievous in content. This would have been discreditable in peacetime; in wartime it is disgraceful and highly alarming. The dictionary is scoured for adjectives to damn the three premiers who refused to proceed with the conference on the terms laid down. They are treated as if they were rebels against constituted authority and the least of the accusations levelled at them is that they are archfomentors of disunity.
May I break in here to comment that these three men, Premier Hepburn of Ontario, Premier Pattullo of British Columbia and Premier Aberhart of Alberta were the three greatest figures of their time working for unity. I proceed with the editorial:
Be that as it may, it is our considered opinion that rarely in the history of Canada have the fires of disunity been more feverishly and effectively stoked than by the press of western Canada during the last few days. Throwing away all sense of restraint, without the shadow of an effort dispassionately to assess the merits of the disagreement, with an irresponsibility unmatched in the annals of journalism, the newspapers of western Canada-we have not yet seen those of the east-set themselves deliberately to fan the flames of discord by pouring contumely on provincial governments who dared disagree with them, and voicing open and convert threats of what is to happen to all the provinces from now on. All in all, in these days of travail, a sorry spectacle.
Having heard that passage I think the minister will forgive me if I have implied that he might be under the influence of people who are not working for the benefit of Canada. Here is another passage:
To those who followed the course of the Sirois commission since its appointment there should have been little cause for surprise in the final denouement. Mr. King's first announcement of his purpose was greeted with almost overwhelming criticism. Mr. Bennett-	'
Mr. Bennett was the leader of the Conservative party in the years following 1930, and I think he was one of the greatest figures who ever occupied a position in Canadian public life, notwithstanding what a good many people like to say about him. The article continues:
Mr. Bennett marshalled all the powers of his invective in his attack upon it-on the terms of reference, the method adopted and particularly the personnel selected. It was charged at the time that the common qualifications of the members of the commission were that they were all

staunch Liberals and that they shared the doubtful honour of being highly acceptable to the Canadian institute of international affairs.
Anybody who knows anything about the Canadian institute of international affairs knows that any person intimately connected with that organization is open to very definite suspicion indeed.


Some hon. Members:: Oh, oh.


John Horne Blackmore: Of course there will be light laughter because there are people who are intimately associated with that organization who are just plain dupes and who do not know they are being led down the garden path, and there are others who are willing dupes and quite prepared to sell their country for less than a mess of pottage, and there are some who just do not know what they are about. Notice how significant that passage is. I continue:
Many of the provinces protested because they had not been consulted. Mr. King, however, as was his right, refused to budge and the commission proceeded with its work.
You see how widely that differs from the principle I laid down last night in the case of William Lyon Mackenzie King. If the Rowell-Sirois commission was necessary, and if it was necessary that a division of taxation should be accomplished in Canada for the benefit of all the people of Canada, why were the provinces not called in in respect of this matter? Why were they not called into council before the Rowell-Sirois commission went to work? Well, the obvious reason was the Mr. King knew that almost to a man the provinces would resist the idea of doing the thing the Rowell-Sirois commission set out to do, and they would have objected to some of the personnel of the commission.
I might mention briefly John W. Dafoe, who was the editor of the Winnipeg Free Press. Perhaps I had better stop talking about him because I do not have a great deal of respect for him. At the present time I cannot think of any thing that man did which was in the interests of Canada, either in his newspaper or anywhere else; yet he was a prominent member of the Rowell-Sirois commission.
Here is another passage:
Those who remember the reception the commission received at some of the provincial capitals, particularly at Toronto and Edmonton, surely could not have been taken by surprise at what happened last week. Mr. King himself admitted that he personally was not in favour of calling the conference at this time, but that he changed his-mind as the result of the representations of the financial advisers of the government as conveyed to him by Mr. Ilsley.
Financial advisers of the government? Whom were they thinking of, and what interests did they represent? What were they-

moving for? Those are all matters that need to be examined with the utmost care, but it is very difficult to examine into them because the information necessary is not now readily available to us. Here is another quotation:
Then as to the conference Itself. The press focuses attention on three provinces. They might with equal justice have emphasized the fact that only three provinces, and these by no means the strongest, favoured the terms of the report in large part. It is assuming altogether too much to take it for granted that Quebec, Nova Scotia, or New Brunswick would have adopted an attitude greatly different from that of Ontario, British Columbia, and Alberta. They did not, as It turned out, find it necessary to give voice to any opposition; they could afford to sit back, as they did, in the knowledge that the three openly dissenting provinces would do all the opposing necessary, and, incidentally, bear all the odium resulting from their stand.
I commend those quotations to hon. members and to the people throughout Canada who are trying to feel their way through the dangerous times in which it is our lot to live. The same or similar persons are probably behind this resolution, and I say: Watch your step, Canada.
Who might those hidden people be? I find a clue to that in the setting up of the Bank of Canada, to be found in the report of the royal commission on banking and currency in Canada which sat in 1933, which report I commend to the reading of hon. members of this house. That report is a perfect storehouse of information which bears most importantly upon us in these days.
Consider for a moment the members of that royal commission on banking and currency in Canada, 1933. I shall give their names so that hon. members can judge whether they would be men who would do a job for Canada. The first was Right Hon. Lord Macmillan, P.C., K.C., of the city of London, England. The city of London, England; what does that stand for? It stands for the concentration of financiers in England. In a very large measure those financiers are men of a blood which is alien to that of Anglo Saxon Celts, and they certainly are men who in no way are interested in the welfare of Anglo Saxon Celts. That has been proved over and over again, and it is still true.
The next member was Sir Charles Stewart Addis, K.C.M.G., of the city of London, England. I ask you who in his right senses in Canada would select two men from the city of London, England to come and sit in on a matter pertaining to the vital interests of Canada unless he were under pressure which he was unable to resist at the time.
The next member was Right Hon. Sir William Thomas White, P.C., K.C.M.G., of
17, 1956	6069
Federal-Provincial Financial Arrangements the city of Toronto, an eminently successful Canadian minister of finance during world war I. This man I regard as probably the greatest financial statesman in the whole history of Canada.


An hon. Member:: What are you kicking about?


John Horne Blackmore: I will tell you in a minute what I am kicking about. This man and Beaudry Leman the other great Canadian authority sitting on that commission were smothered before the commission started its work by the bringing in of the two men I have mentioned already. The fourth member was Hon. John Edward Brownlee, K.C., of the city of Edmonton, who at that time was the premier of Alberta and whose major concern was to stop the growth of Social Credit in Alberta. There are people who think it is of great interest to Canada that Social Credit go forward. I tell you there is no doubt in the world that the only solution for our financial problems lies through Social Credit. If hon. members do not know that, it is time they learned.


Mr. Hansell:: They will some day.


John Horne Blackmore: Let us hope it is not too late. The fifth member was Beaudry Leman, B.Sc., C.E., of the city of Montreal, a man eminently fitted for the position he was in. I shall not take the time to give his many qualifications, but certainly he was a very great authority on monetary matters. These men White and Leman in their dissenting memoranda to the report of the commission made it perfectly clear that in their judgment Canada had about as much use for the Bank of Canada as a beaver had for two tails. They proved their words thoroughly.
I happen to know quite a little about John Edward Brownlee, K.C., M.L.A., of Edmonton. I have no desire to cast any reflection upon him, but I believe that if he were in this house he would not hesitate to say that he had not done anything in his long life that would give him any right whatsoever to sit in on anything pertaining to banking. I say that whatever else he may have done during the course of his life as a lawyer, that would be the case.
This commission was set up with a majority against Canada before the commission heard a single word of evidence. I would wager that the commission knew exactly what it was going to find before it ever sat at all. There was no doubt in the world what the two men from the city of London would find. There was no doubt in the world which way J. E. Brownlee would go. The two men
6070	HOUSE OF
Federal-Provincial Financial Arrangements who were probably the greatest authorities in Canada at that time were completely smothered.
What was the purpose of establishing the Bank of Canada? The main purpose of establishing the Bank of Canada, I submit, was to strangle and abolish the Finance Act of 1923, as well as to destroy the whole Canadian financial system as that system had been set up and developed by the fathers of confederation and succeeding Canadians under the British North America Act. In other words, the aim of setting up the Bank of Canada was to hew out a vast proportion of the foundation of the British North America Act by sweeping away at one fell swoop a financial system which had functioned with such admirable and enviable success up to and through world war I-I referred to this last night-and on down through the reconstruction period until the United States dragged Canada into the great depression of 1929 and the 1930's. Before I finish my speaking on this measure I am going to read from the evidence to show how splendidly Canada had done up to the time the Bank of Canada was established.
Why establish the Bank of Canada if thought was given to Canada's welfare? The commission was set up on July 31, 1933, as is indicated at page 5 of the report, and its devastating and sweeping recommendation was submitted on September 27, 1933, as indicated at page 82 of the report. In other words this body of men determined in so short a period, as I have indicated by these dates, upon a recommendation that went far toward undermining the British North America Act. The Balfour declaration of 1926, which said that members of the British commonwealth now were equal in every aspect of their internal and external affairs, was undermined by the setting up of the Bank of Canada; and the statute of Westminster of 1931 was also undermined all by reason of the fact that the Bank of Canada brought Canada's financial system in indefinite measure under foreign, if not alien control.
There are those who say that this is not the case. All you have to do is read the evidence recently given by the governor of the Bank of Canada at the hearing we had before the standing committee on banking and commerce. You will see how very cagey and cautious he was, and how he replied once or twice to the effect that if the government asked certain things the bank simply would not agree. Look at what happened to our price structure.


William Alfred Robinson: I am sorry to interrupt the hon. member, but I am obliged to advise him that his time has expired.
[Mr. Blackmore.l


John Horne Blackmore: Thank you, Mr. Chairman.
I have no desire to infringe. I shall be back again.


Miss Aitken:: Mr. Chairman, in speaking on the resolution today I want to take one phase of dominion-provincial relations, education. This is supposed to be a very delicate subject because we are told, especially by the government, that any grants to the provinces in aid of education would be an invasion of provincial rights. I believe we have reached a very real and very serious crisis in education. To say that federal aid would be an invasion is like a fire chief telling an Englishman that he cannot go into his house to put out a fire because an Englishman's home is his castle.
It is true that under the British North America Act the provinces have exclusive jurisdiction over education. That is the way it is and that is the way we want it, but it seems to me that does not stop the federal government from giving a helping hand this year anyway, from the large estimated surplus of money that has already been paid by the taxpayers. Health is another item under provincial jurisdiction as set out in the British North America Act, but you do not hear the Minister of National Health and Welfare being particularly quiet about the grants he is giving to the provinces to help them to build hospitals, and there does not seem to be any undue modesty or embarrassment about the suggested health scheme which would be contributed to both by the provinces and the federal government. Certainly there have been no complaints from the provincial governments with regard to the grants that have been given for hospitals.
Therefore I do not believe it would be an invasion in any way, because education has gone far beyond the lower levels of government. When the British North America Act was drawn up children were educated and trained for life in their own local communities, but today children must be educated and trained for life in the whole country, in fact for life in the whole world. In a book published earlier this year entitled "Canadian Education Today" there is this observation:
Education is a function of the province, a responsibility of the community and the concern of the whole nation.
I believe that education is an essential social service today. It is just as essential to the federal government as it is to the local or provincial governments. After a survey by the Canadian school trustees association last year, this statement was made:
Much of the cost of the local school is due to national requirements. National defence demands that the basic education in all parts of the

dominion be thorough and extensive. Canada's development as an industrial nation can continue as it should only if local schools provide the basic education for scientifically trained personnel. Technical education must be provided for an increasing percentage of youth.
Education has taken on a national significance since the fathers of confederation drew up the British North America Act. The type of schooling that was adequate 50 years ago is no longer good enough. I believe that our education is falling below acceptable standards. The criterion, unfortunately, is dollars and cents, and it certainly is a wrong criterion. If our educational standards are falling below acceptable levels, then not the least of the sufferers will be the federal government. As the trustees association said, the federal government is dependent upon the provinces and the municipalities for the basic general education of the people it needs, including engineers, civil servants, armed forces personnel, scientists-yes, and cabinet ministers too. Education is of such national importance that the federal government should make certain that it is not allowed to fall below acceptable standards. I think we all feel that education is becoming a grave national problem, and no small part of local school costs is due to national requirements. Indeed, schooling has taken on a national significance.
Earlier this year the President of the United States called in representatives of some 300 organizations to participate in a conference on education. I think that would be a good idea for us to follow. The vice president of the United States recognized at that conference the national importance of education when he asserted that it was education that determines the quality of our statesmen who are endeavouring to keep peace. It is education that determines the character and leadership of our religious men who are responsible for our spiritual standards. It is education that determines the character and leadership of management and labour, of our cultural life and of those who will determine this nation's future, the electors themselves.
Vice President Nixon said at that time: We should recognize that some additional federal activity and responsibility is inevitable and necessary in the field of education.
I believe that Canadians must recognize this realistic fact too, and I do not believe that education grants from the federal government would in any way threaten provincial rights in education. Canada is richly endowed with great natural and human resources. It has been pointed out by many of our intellectual leaders that we are concerned more with our natural resources than we are with our human resources. Education is the main tool necessary for developing a country's
17, 1956	6071
Federal-Provincial Financial Arrangements human resources, and I believe the time has come when the federal government must help fashion that tool and then the provincial governments will finish the job.
My interest in the problem of education is not purely academic. In the House of Commons I represent a suburban constituency where education is becoming an ever-increasing burden. We have a shortage of classrooms and a shortage of teachers. Communities are springing up overnight and schools are too small even before their construction is finished. Classrooms are so crowded that the hours have to be staggered so that all children in the communities can go to school. This is true of my constituency, and I am sure it is true of many parts of Canada. The school population is increasing at the rate of 150,000 a year. In 1951 there were 2| million school children in Canada. Today there are 3| million students enrolled in the elementary and secondary schools. Five years from now this situation will be even more complex and certainly the schools will be more crowded. As of June 1, 1956, there were 97 per cent more children under the age of five years than there were on June 1, 1941. Every one of those children must be given a good education; every one of them must be given a good education free. We believe that is the right of every Canadian child.
Even today education is one of our biggest problems, and it will become greater in the future. I believe it must be faced by all levels of government. Up to date the federal government just shrugs it off with a holier than thou attitude on the basis that it would be interfering with provincial rights if it were to do anything. Local governments are the poor relations with respect to the tax dollar, yet local governments carry most of the education burden. Municipalities are paying 65 per cent of education costs and the provinces are paying 35 per cent.
This really means that the home owner is carrying almost the complete tax load with respect to education, yet education goes far beyond the local community. Young people, wherever they are from Newfoundland to British Columbia, are being educated not for one municipality or for one province but for the whole of Canada. But it is the home owner who is paying two-thirds of the school costs.
Then, too, this system of financing education at the local level certainly fosters inequalities in education. Some communities have more tax resources than others, and some communities can have better teachers and better schools. At the present time there are 5,142 untrained teachers teaching in our

Federal-Provincial Financial Arrangements schools and 3,744 partially trained teachers. It seems to me that this is a very bad situation, and one which is going to get worse. We boast of equal educational opportunity for all Canadian children; but again, because of dollars and cents, the opportunity is not equal.
A few years ago there came out a little book by George Orwell called "Animal Farm" and in it he made this sardonic observation:
All pigs are equal but some are more equal than others.
So it is with respect to our educational opportunities; some are more equal than others across Canada. The trustees association has stressed this fact by pointing out that all children do not have equal opportunities to get an education and that they are dependent on the taxpaying ability of the district in which they live. It is true that money cannot buy education. However, it can supply the tools; and the quality of education depends upon the teaching or upon the quality of those tools. The highest quality of teaching should be and could be available to all Canadian children. If the federal government would assume its share of educational costs, there would be equal opportunities for all children to get an education.
I have dealt only with the elementary and secondary school education because they are of vital concern to the people in my constituency. But as everyone knows, higher education is shaping up as an even greater problem for us to face in the future. In the past young people could earn enough money during the summers to put themselves through university. Today such a thing is impossible. If they earn enough to pay their fees they are lucky.
In May of this year the University of Toronto was obliged to raise its fees by 11-2 per cent and Dr. Sidney Smith, the president of the university has indicated that it probably will not stop there. Higher education should be available to all who have ability, and not just to those who have the ability to pay for it. At the rate we are going, higher education may well become just a rich man's privilege in this country. In a brief presented to the royal commission Dr. Sidney Smith summed up the situation in these words:
University courses are still much too expensive for a great many of our population. Equality of opportunity is a fine-sounding phrase; it will not be a fact in our democracy until the universities can enrol able students irrespective of the financial situation of their parents.
Tuition fees have been raised repeatedly in recent years . . . We have not been receiving from governments financial support that is worthy to be compared with what universities receive in Great Britain or the United States.

Mr. Chairman, I believe the time has come when the federal government must find a means of paying its share of the cost of this essential service, namely education.


Ernest George Hansell: Mr. Chairman, one of the particular reasons we oppose this present resolution was expressed by the leader of our party the other day, when he stated that this bill is being passed without receiving the approval of the provinces. The government is now proposing to write into legislation something which the provinces may not accept. By doing so they are contributing to what we regard as an undesirable principle, namely the principle of the centralization of government or the centralization of power. That is a principle that is contrary to what we deem to be our free democratic way of life.
I think I can say that this central government now seated at Ottawa has become extremely powerful over the last few years with all the legislation it has been able to build up around it. Almost all the legislation which it proposes has the effect of solidifying its policies not only in the industrial world but in the economic and monetary fields. The more power that is given to governments, the less power remains in the hands of the people. We believe that a government should give a lead but that it should never impose its will. This resolution which precedes a bill has all the earmarks of attempting to impose the will of this government upon the provinces.
Once again I say that for democracy to function properly a government should lead, not impose its will. We in the Social Credit movement believe in the autonomy of the provinces. We do not believe we can go wrong in attempting, at every hand, to protect the rights of the provinces. One reason we believe that is that the provinces are nearer the individual than the centralized government at Ottawa. Once again I say I do not believe we can go wrong in principle by protecting the autonomous rights of the provinces.
I do not think we need to go very far abroad to recognize that this principle of the autonomy of the provinces is acceptable to the people of the provinces and the people of Canada as a whole. I think Mr. Duplessis is an example of that, for he has had remarkable success in winning elections on the basis of his determination to protect the autonomy and rights of his own province. Whether or not we agree with his platform in provincial elections is another matter. I am only saying this to illustrate that the people themselves are supporters of provincial autonomy. They do not like the central

government, living a long way from them, dictating what their particular provincial government should do.
I believe that is where we differ with our C.C.F. friends. I listened very carefully to the speech given the other day by the leader of the C.C.F. party. In my opinion it savoured of centralization. He indicated that this government must have the power to do certain things. Our position is that this government should be in a position to lead the provinces in such a way that the provinces can do certain things for themselves.
This government has boasted of the high economic level that presently exists in Canada. They boast of their surpluses. They say that Canada has never had it as good as it is today. They appear to me, at least, to take all credit to themselves for what we will admit is a fairly high economic level.
Let me remind you, Mr. Chairman, that the provinces have been largely responsible for this high level of economic activity in this country. It is the provinces who have encouraged investment in business enterprises within their boundaries. I say, therefore, that the provinces have been largely responsible for the high level of business activity in this country. Ontario and Quebec are the two mainly industrial provinces of Canada. They have so managed their affairs that perhaps they have attracted industries over the years. Nevertheless those two great industrial provinces are managing their own industrial expansion. This central government has very little to do with the encouragement of business enterprise in the various provinces, unless of course it is in the awarding of certain defence contracts to certain Arms who may operate within those two particular provinces.
Let us take Alberta as another very prosperous province. What has this government done to actually encourage the development of that province? Surely some credit is due to the present local administration in Alberta for the high economic level we find in that province. Well, so far as I am able to observe many of our Liberal friends have gone out in an attempt to destroy the policies of that government, which in the last couple of decades has virtually built that province into a new economic power. Therefore surely the provinces have some credit coming to them for the high economic level which Canada is enjoying today. My leader says, "the major part of it". I should not depreciate my remarks by saying the Alberta government have some reason to take some credit. I think they deserve practically all the credit,
Federal-Provincial Financial Arrangements for they are the ones who encouraged investment in business expansion and in the exploitation of their natural resources in order that the province may benefit thereby.
Let us take British Columbia, for instance, and the great expansion that has taken place there over the past few years, and I am bold enough to say since the election of the present Social Credit government of that province. I picked up the Financial Post of March 17 and found one section in that paper devoted to the great expansion that is going on in the province of British Columbia.
Let me ask what part this central government at Ottawa has been playing in that respect. Here I find a full page of articles headed, "Prancing prosperity of Canada's west coast". I like that caption. It is prancing like a healthy steed, ready to win a race; and it is going to win, believe me. That is the first page. Here is the second page, "How and where B.C. industry is going". The third page heading is, "Why B.C. may stir some of the hottest future mine news". The heading on page 4 is, "Bustle and boom in B.C. towns". On page 5 the heading reads, "Here is how B.C. industry will grow"; a whole section devoted to it. The heading on the next page is, "Here is how west coast communities are growing". Another page reads, "What gas line will mean". The next page reads, "The fight about the B.C. forest future". Another page says, "Here's how B.C. fisheries can grow".


Mr. Gauthier (Portneuf):: 


B.C., B.C.
Ernest George Hansell: No, it is "B" as in boy, not "P" as in that word that means nothing progressive. Here is another one in big headlines, "They're Betting $180 Millions More on B.C. Bush". Here is another one, "Here's Growth Record of B.C. Towns". Here is still another one, "Here's Key Asset For Future"; and still another one, "B.C. Farm Cash Income Near Record '51 Level". Here is another one, "The Big B.C. Electric Plans for Gas". On the next page we find the following, "B.C. Oil, Gas Hunt Keeps Up". Here is another page, "B.C. Growth Communities".
There is a whole section of the Financial Post devoted to these matters. Now, the Financial Post does not write up news of that kind without having some foundation for it. British Columbia is becoming a powerful province. The high economic level that is experienced there is due almost entirely to the social credit government of British Columbia which is encouraging industry in that province.


Mr. Fulton:: I must say that that is absolute nonsense. I never heard such rot in my life.
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Mr. Hansel!: I say once again, Mr. Chairman, and I am using these illustrations as illustrations to prove the point, the high economic level that is being experienced in Canada today is almost entirely due to the provinces themselves encouraging the expansion of industry.
Now, Mr. Chairman, there is one policy over which this government has almost complete control, and that is the monetary policy of the country. Those provinces have been able to expand not because of the monetary policy that this government is pursuing but in spite of the financial policy this government is pursuing. If this government were pursuing the right and proper financial policy, those provincial governments could expand industry in the provinces without a terrific trail of debt and excessive taxation.
The municipalities in those provinces find it very difficult to get through without excessive taxation which is almost breaking the backs of the taxpayer. The other day I had a letter from a group in the town of Nanton, an average-size community in my own constituency. They had set up a committee to investigate the possibility of bringing industry to that little town. Why? Because they felt that in order to relieve the tax burden of the people the town would be better off if it could have some industries established there. Let me ask what this government has done to encourage the establishment of small industries in any small communities? Why, they hardly know that those small communities exist until it is income tax collection time, and then they know because they send their inspectors around to see that the individual taxpayer is not beating the government out of a few dollars of taxes. In saying this, I am not countenancing for one moment the idea that anyone should evade the just laws of the country. When municipalities find difficulties in getting through without imposing almost unbearable taxation upon the people it is because the individual taxpayer himself has difficulty in getting through. And here is where we come to the monetary policy which this government is pursuing. Not only does it leave the provinces in a difficult financial position to get through, but it leaves the municipalities in a difficult position to get through, and it leaves the individual taxpayer in a very difficult position in order to make both ends meet in his common, ordinary everyday spending for the necessities of life.
If this government were pursuing a proper economic policy, the people would not have to go so heavily in debt and mortgage the future in order to live. Let me put it to you in this way, Mr. Chairman. These

provinces have encouraged industry to-develop within their own boundaries. Industries have developed; industries have produced the goods. They go on sale and people buy those goods. Coming from the process of industry is a certain amount of money that is distributed to the people in the form of wages, in the form of profits,, in the form of dividends, and so forth. Since the provinces have encouraged industry, and by reason of that encouragement, the national income has reached a certain level.
This government then comes along and capitalizes on the effective operation of provincial governments in encouraging industry, and this government then receive their revenues from that prosperity which has been mainly due to some of the provinces-encouraging industry. Very well; not only is this government enabled thereby to build up surpluses in their treasury, but let it be remembered that the individual taxpayer who buys the products of industry finds that he has not enough money to be able to buy those products of industry. The result is that if they want to acquire the products of industry they have to go into debt to acquire them. We find that instalment buying in Canada today has reached almost $2J billion. I have the exact figure here somewhere. It does not make any difference; it is well over $2 billion. Just what does this mean? It means that where the taxpayer has gone into instalment buying to the tune of over $2 billion he has mortgaged his future income to that amount. It means that his future income is not then able to buy the products of industry that are now coming off the assembly lines because his income has been hypothecated to pay for something that came off the assembly lines a year or two years ago. Of course, it leaves the taxpayer that much short in his present income to buy the products of industry today. Why is he left short? He is left short by reason of the fact that the monetary policy of this government is of such a nature that it never provides the consumer public of this country with the purchasing power to buy back the products of industry. So here we have the taxpayer short in his income, owing bills for things that he has bought on the instalment plan, and he also finds himself with his nose to the grindstone in order to get enough money to pay the various taxes that are imposed upon him. It is most improper to tax everything the wage earner has to buy. Regardless of what he wants to do he has to pay a tax on it. If he wants to get married he has to buy a licence; that is a tax. If he wants to own a dog he has to pay a dog tax.


Mr. Pickersgill:: Not to the federal
government.


Ernest George Hansell: If an individual wants to buy anything he has to pay a sales tax. Regardless of what he wants to do or buy there is a tax somewhere which he must pay and what he has left to live on is very little. Surely in a country the size of this with its vast wealth of natural resources and industrial production the people should have incomes sufficient to permit them to pay their way.
I picked up a paper the other day and I have brought it with me with a view to referring to it by way of comparison. The material on the front page struck me rather forcibly. On the front page of the Ottawa Citizen of Saturday, July 14, 1956 is a large aerial view photograph of a highway which is being built in Germany. The picture is captioned "This is not Carling Avenue" and beneath the caption the following appears.
An eye-catching pattern is formed by the new Autobahn highway junction, Germany's biggest and most modem, outside Frankfurt. The clover-leaf in the background connects the Berlin-Munich, Cologne-Nuernberg and Munich-Kassel-Hamburg highways. The junction in the foreground serves traffic to and from Frankfurt. The circle in the lower right is in front of the Frankfurt airport entrance. Built in a year, the giant junction was opened to traffic on July 10, closing the link in Germany's vast Autobahn system.
I mentioned that picture today simply to indicate what has been done in a country that was supposed to have been dead broke. Germany went through a war and was overwhelmingly defeated, its industries were destroyed and its cities demolished. I was in Germany not too many years ago and I took a trip to some of the devastated cities which had been levelled to the ground. Within the space of a few years Germany has been able to build up its industrial cities to a point where it has now become a strong competitor in the markets of the world.
I realize that I cannot deal with the work of the federal district commission here but I would like to mention that I have been sitting as a member of that committee and we have been told that their plans will be finalized 25 years from now. Surely there is something wrong with the management of the affairs of this nation as compared to some other nations when a country as well equipped as ours requires 25 years to complete a project and yet a nation that was supposed to have been dead broke following an ignominious defeat in war was able to complete a project such as this within a few months. It is time that the government accepted a little advice from some other people and some other parties in this country, and I am bold enough to say it
17, 1956	6075
Federal-Provincial Financial Arrangements should accept some advice from this party because we must recognize the fact that no government knows it all.


Mr. Dupuis:: Only the Social Credit party.


An hon. Member:: Well, we come closest to it.


Ernest George Hansell: As we sit here in this house what do we find? The government brings down legislation; they know it all and that is it. The opposition tries to point out the weaknesses in it and proposes certain remedies; but, oh no, if it is proposed by any member of any opposition party it is never acceptable to the government. This government assumes that it knows it all. Here we have before us a resolution preceding a bill which once more indicates that the government thinks it knows more about it than the provinces. The government is prepared to write into legislation the principle of centralization. It is about to write into legislation something which it does not even know is acceptable to the provinces.
I would like to know if this is acceptable to the provinces. Which province has indicated that it is willing to go ahead with this matter now? The minister said the other day that several provinces have indicated they have no objections. Well, it is one thing to express something negatively and it is another thing to express something positively. Let us know what province has written to the government and said, "Here, we favour that resolution; go ahead."


Hector Dupuis: That would never happen.


Ernest George Hansell: That would never happen, of course not, and I do not blame the provinces if they do not permit it to happen.


Hector Dupuis: Even if you gave them the moon.


Ernest George Hansell: What should happen is that the provinces themselves should be called together in the first place.


Lester Bowles Pearson: And given everything they want.


Ernest George Hansell: I would have no objection if the government were to initiate a conference and then say to the provinces, "We will now step out of the picture and you provinces can put your heads together through your premiers and finance ministers and the other members of your cabinet to see just what can be done in coming to some mutual agreement, and whatever you decide then propose your plans to us and we will attempt to meet them."
I know that the minister may smile and say, "Of course, that is not very practical." I will therefore tell him something that is
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Federal-Provincial Financial Arrangements extremely impractical and that is to line something up, have it written into the law and then call the provinces together and say, "There you are, boys, that is it; take it or leave it. That is what we are prepared to do and nothing more". That is extremely unsatisfactory. It is undemocratic and against all the principles of the free way of life which we believe governments should sponsor.


Edward Turney Applewhaite: Order. I am afraid I must inform the hon. member that his time has expired.


Ernest George Hansell: I am very glad, Mr. Chairman, that you informed me my time has expired because as I look at the notes I hold in my hand I see the word "conclusion" and I am forced to sit down. I repeat, Mr. Chairman, that we are opposed to the principle of centralization as depicted in this resolution.


Mr. Hamilton (York West):: Mr. Chairman, first of all let me assure you that I have no newspapers to read to tell you about the wonderful expansion that is taking place in the province of Ontario and I have no notes here indicating when I should conclude my remarks, and therefore it may well be that I shall ramble a little bit today. Perhaps one of the reasons I might ramble will be explained by my initial comment in that I feel there is very little new which I can offer in this debate. I have no apologies to make for that because it seems to me that the only way to get across to the government the plight of the provinces, and more particularly the plight of the municipalities, is to repeat over and over the situation which confronts those levels of government. As a matter of fact I am surprised that more attention has not been paid to some of the problems which affect our municipalities. As I said once before, I have noted in the Parliamentary Guide the wide municipal and board of education experience which a great number of hon. members possess. However, once they arrive here the great federal problems that confront them apparently bury in their minds the real problems which they left in their municipalities.
It has been emphasized before, but I want to say again, that during a period of stress and strain of war we expect a trend, in these days at least, toward centralization, and I might use the term autocracy, in government. This method has been used in order to get things done. It is not a method, but rather an excuse to get things done. As a result many of the problems facing the municipalities and provinces are submerged in the over-all attitude that is adopted.


But when peace comes-I say this advisedly, notwithstanding the great problems which face the Minister of National Defence at the present time-there is a great necessity to return to a system of government which is more decentralized, which comes closer to the people, which gets down to the grass roots and enables the municipalities and the provinces to provide an expansion of services for industry which in effect will raise the standard of living and make the tax load easier as far as all levels of government are concerned.
I think that one of the major problems facing us right now in connection with this legislation is the difficulty of convincing the government that the stage of centralization and autocracy which found its place in a period of emergency is over, and it is about time we returned to the people who are closest to the tax dollar sufficient tax revenue to enable them to expand their economy.
This is a serious problem and I am not going to deal with it at length because we are going to have an opportunity to look at the legislation during its subsequent phases. However, I was most impressed with the remarks of the hon. member for York-Humber who said she represented a suburban constituency which was part of metropolitan Toronto and that the great problem which was confronting that area was the one having to do with education. I think that that represents one of the major problems in so far as the obtaining of necessary tax funds is concerned. The hon. member mentioned in that connection that 65 per cent of the amount required came from real property with 35 per cent coming from the province. The major load falls upon the home owner and this creates a major problem.
Just the other day I received as a taxpayer a letter from the clerk's department of the township of Etobicoke, which is one of the three municipalities which make up the constituency of York West. This letter is written in a rather apologetic manner but it points out the problem that is created by educational costs and what the municipality is running up against. The letter reads:
This letter is written to bring the matter of multiple occupancy in single family areas to the attention of all home owners and explain as clearly as possible the scope of the zoning by-law in respect to occupancy and the necessity for the enforcement of said provisions.
I skip a few words.
1. Scope: The township building and health regulations provide further that no cellar shall be used as habitable space and this restriction applies to all cellars regardless of zone.
The contravention of these by-laws by a minority of the property owners affects not only

the adjacent properties but also the economy of the township as a whole in many ways including the following:
The letter goes on to set out the ways in which this affects the standards of the community, and then there is this paragraph:
(3) Additional families in a dwelling require additional services such as sewage disposal and garbage collection which obviously must be paid for. In this respect, however, the financial effect is most apparent when educational costs are considered which at present are approximately $225 per pupil in public school and $425 in secondary school.
The Minister of Finance may say that that is a particular problem affecting a small part of my constituency, that if there are people living in a zoned area which does not permit multiple occupancy that is no concern of his. But I would point out that from the municipal standpoint it is absolutely essential that every person be accounted for in connection with this requirement of $225 per pupil in our public schools and $425 per pupil in our high schools. Unless everyone is accounted for the money for educational purposes is not going to be available.
What will happen is that many of these people who might be quite happy to contribute their share of the educational costs are going to have to go out on the housing market. We will be confronted with a situation which is entirely different from the attitude taken in connection with financial responsibility. The government has been telling us that housing is going along fine, but the fact is that we are faced with a restriction in the granting of credit for the building of houses. Regardless of what is said by those who sit on the treasury benches, it is quite obvious to anyone who is close to the market that it is becoming more and more difficult to build necessary houses. In fact at the present time it is almost impossible to build houses that people can afford to buy.
Here is a situation where people are being put out of housing accommodation because of the necessity of eking out the last dollar which the municipality can make available for educational purposes. At the same time they are being told that there is no place for them to go. That indicates how serious the situation is at the present time. Unless more attention is paid to an equitable distribution of the tax load in connection with education we are going to be faced with a lowered standard of education. That is the last thing we want to have happen in this country.
What do we do about it? I do not know. We have had conference after conference in connection with the distribution of taxes and we do not seem to be accomplishing very much. I am wondering whether the
Federal-Provincial Financial Arrangements people from the federal government who sit around that table realize that they are continuing the grasping attitude which they adopted during a wartime economy. It seems to me it is about time that they approached it in a new way or it will be too late to assist these people at the level of municipal taxation. The last time I spoke about this I mentioned that the situation was serious because we can get back to the position we were in during the depression when municipalities could not meet their obligations and there was default. As a matter of fact, I have read several headlines in local newspapers indicating that people were already being put in a position where they were forced to sell their homes and move farther and farther afield to escape this type of taxation.
Therefore I think my leader was quite right when he suggested that there should be a reconvening of this dominion-provincial group and that a new approach might be made to a more permanent type of solution. For my part I have said before that I do not think we will have a true attack on the economy of government until the time when the people who actually spend the money collect it. I do not mean by that that they must set up the mechanical means of doing it, but I think that somewhere along the line when collection is made it must be obvious that the money is being collected for certain purposes. Someone will say that the dominion government has always been in that position. Fortunately for them they are in the happy position of always being able out of their revenues to balance any detrimental effect on the public by saying we have got a new deal for you, we have got an increase of some kind in some type of allowance, we are going to introduce a new type of pension or we have got up our sleeve a new type of health insurance. In that way they are able to get a shot in the arm because the people say that they are collecting these taxes for purposes that are very good for the country. But along the line there will have to be a solid approach to the basis of collection of moneys and the spending by the same agency. Let us hope, as I said before in paraphrasing Mark Twain, that we will not all continue to talk about municipalities and do nothing about them.


Mr. Patterson:: Mr. Chairman, in taking part in the debate on the resolution now before us I should like to begin my remarks with a paragraph from a history book entitled "Building the Canadian Nation" by George W. Brown. The paragraph is as follows:
I see in the not remote distance one great nationality bound, like the shield of Achilles, by the blue rim of ocean. I see it quartered into
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many communities, each dispensing of its internal affairs, but all bound together by free institutions, free intercourse and free commerce. I see within the round of that shield the peaks of the western mountains and the crests of the eastern waves, the winding Assiniboine, the fivefold lakes, the St. Lawrence, the Ottawa, the Saguenay, the Saint John and the basin of Minas. By all these flowing waters, in all the valleys they fertilize, in all the cities they visit in their courses, I see a generation of industrious, contented, moral men, free in name and in fact, ever capable of maintaining in peace and in war a constitution worthy of such a country.
Those were the words, Mr. Chairman, of D'Arcy McGee on the day when Canada was born. I am sure that those words expressed not only the hopes and the views of D'Arcy McGee but the hopes that were in the minds of all those great Canadian statesmen who, beckoned on by that glorious vision, cast aside their prejudices and worked together to achieve union of the provinces into the federal state as we now have it. We are privileged to view their labours from the vantage point of history. We can appreciate the prophetic vision which inspired them. We can share in the fulfilled dreams of a united Canada and we can also contribute something to the enhancing of those ties which bind together those of varying racial origins, religious beliefs and political persuasions.
As we turn back to history we find that some of the factors which were instrumental in the bringing together of the nation into confederation are outlined. I have read, for instance, of the civil war in the United States. Following the victory achieved by the northern forces some of the extremists expressed the view that their next objective should be the conquest of Canada and the freeing of the entire North American continent from British domination. Because of the expression of those views the early statesmen believed that in order to maintain an effective defence it was necessary that the provinces of Canada bind themselves together in union. One of these men, George Etienne Cartier, said:
If we desire to obtain England's support for our defence we must help ourselves. When we are united the enemy will know that if he attacks any province he will have to deal with the combined forces of the empire.
Defence was one of the factors that inspired these men to work towards the achievement of the union of the provinces. Trade was another factor. A crisis in government affairs more or less brought the whole situation to a head. Then we find in subsequent pages of history how the maritime provinces gathered together and had a conference to discuss the question of maritime union. At that conference some delegates were present from the Canadas, and as the discussions


progressed they had a vision. A vision was born of something greater than maritime union, and that was the union of all the provinces of Canada.
The result was that a further conference was held in Quebec when resolutions were drawn up with the aim of providing a strong national government while at the same time leaving the provinces free to control matters within their own borders. We are all acquainted no doubt with the history of what happened and how that conference led to the London conference attended by 16 delegates. They used the resolutions drawn up at the Quebec conference as their working papers. They presented their findings, and the result was that the British North America Act was passed by the British parliament. So we find that through a process of negotiation, conferences and finally agreements Canada as a federal state was brought into being.
I think we should have appreciation for the achievements of the past. Just a short time ago we saw portrayed on television the history of confederation, and I am sure that we shared some of the pride of belonging to such a country as ours. I believe that the preservation of confederation is a matter of primary concern at the present time. Because of that belief I would sound a warning, as other speakers have sounded warnings, that the procedures followed by the present administration are tending towards a breakdown of that very same confederation that we so much cherish. By legislation, by practice, by economic pressures-in all of these ways-I fear that we are coming to the place where confederation may be getting into a rather shaky position instead of being strengthened with the passage of the years.
We find that the provinces themselves are taking a very dim view of many of the activities of this present administration. I have here in my file a number of newspaper clippings. I am not going to take time to read them all, but I am just going to refer to them because I feel that they indicate some of the feeling of the provinces with regard to the attitude of the federal government toward the provinces and toward provincial autonomy.
I have here a clipping from the Ottawa Citizen of February 24, 1955. I know we do not like to be reminded of these things, and I know some would say the very fact that we express these thoughts and refer to them tends to aggravate the situation. However, I am not in agreement with that deduction. The title of this article is "Overtones of secession in Angry P.E.I. House" and it reads in part as follows:

An angry murmur of maritime discontent with overtones of secession sounded Thursday in the legislature of Canada's tiniest province.
Opposition leader R. R. Bell told the Prince Edward house the province is getting "a miserable deal from Ottawa". If it continues unity would be undermined. He said that since 1873, the year the province joined confederation, "we've had nothing but blood, sweat and tears."
Then further on in the article, referring to the Minister of Citizenship and Immigration and one of his statements, Mr. Bell had this to say:
If he-
That is referring to the Minister of Citizenship and Immigration.
-was to come over here and say we couldn't leave confederation, I'd tell him "who is going to stop us."
That, I must say, is by the Canadian Press.
The Ottawa Journal of June 21, 1955, contains large black headlines "Smallwood Would Secede", under which appears an article which reads in part as follows:
Premier Joseph Smallwood threatened last night to lead Newfoundland out of confederation with Canada unless the federal government stopped discriminating against the four Atlantic provinces, including his own .	.	. His threat of quitting
Canada was given added weight by the presence of Premier Henry Hicks of Nova Scotia, a Liberal, and Premier Hugh John Flemming of New Brunswick, a Conservative. Flemming introduced Smallwood in glowing terms and Hicks praised him for "talking the way we should in the Atlantic provinces".
Then I go to a brief paragraph further down in the article where I find the following in quotation marks indicating that they are Mr. Smallwood's own words:
"Before we become second-class citizens of Canada, we will show the other maritime provinces how to get out of confederation." There was a storm of applause from the audience.
Mr. Chairman, it does not look as though the foundation of confederation were being strengthened very much when provinces and provincial premiers would give expression to such views and would threaten, if the situation continued, to lead their provinces out of confederation.
I have before me a clipping from the Ottawa Journal of Saturday, April 14, 1956. It is headed "Maritime premiers critical of Ottawa". I am just going to read one or two very brief statements:
Premier Flemming said as far as New Brunswick is concerned the new agreement is worse for the province than the old one.
Another paragraph reads as follows:
Mr. Matheson said his province probably fares the worst of all under the new scheme. Premier Hicks said if his province's proposal to equalize taxation payments had been accepted all three maritime provinces would have benefited.
Federal-Provincial Financial Arrangements
Again I say, Mr. Chairman, that when we have expressions like that, where we find that people are not only thinking in this way but are voicing the opinions that the province could probably secede, we have evidence that the proposals themselves which have been presented to the governments were far from satisfactory. I would suggest that right across Canada there is a growing feeling that the dominion government are not playing fair with the provinces. They are centralizing more and more power and authority here in the federal government; they are assuming more power; they are trying to wield greater influence. All this is far from bringing comfort to the provinces in their particular situations.
I think that this resolution and the draft agreement that we have tabled some time ago indicate a failure on the part of the federal government properly to assess the position of the provinces in these proposals. During the course of the debate reference has been made to a number of important factors indicating the ever increasing demands that are being made on the provincial and municipal authorities. Reference has been made to education. A number of members have spoken of this particular phase of our national life. The leader of the official opposition stated that the situation could possibly result_ in tragedy. So as we face that particular issue and as we see the ever-increasing demands being made upon the provincial and municipal authorities with regard to education, we can see that the proposals that are being presented to the provinces are far from adequate to meet the challenge of these increasing costs.
Reference has been made to road cons;ruction. I know that the Minister of Finance referred to the fact that $82 million had been paid out thus far as the federal government's share of the cost of construction of the trans-Canada highway. In view of the fact that every province is facing the tremendous program of expansion and in view of the importance of adequate roads and transportation facilities, I would suggest that the $82 million is a very small part for the federal government to pay toward these increasing costs. I would also suggest that because of the building of roads-access roads to the natural resources, and roads of every description-the country is being opened up with the result that great new sources of revenue are being opened to the federal government. Yet, in spite of that fact, the federal government refuses to assume the additional cost or to share the additional cost so that the provinces can continue to develop in the way they should develop. As to the development of national resources and the cost of health
6080	HOUSE OF
Federal-Provincial Financial Arrangements and welfare, I know that the federal government has assumed some share, but I suggest that that share is extremely small indeed in comparison with the needs that exist.
Another problem that we face to quite an extent is that of conservation. I know that in British Columbia, in my own riding to a great extent, we are faced with a problem of trying to save for agricultural purposes what little arable land we have. The rivers are gradually eating it away. Yet when we present the matter to the federal government, what do we find? I know we received some assistance in the past.
I was rather disconcerted the other day to receive a letter from one of the municipalities saying the federal government had refused to pay anything towards the cost of protection there this year. I have not had time to discuss it with the Minister of Public Works, but I certainly will. Let me just refer to one particular section to which I have referred earlier. I see the Minister of Northern Affairs and National Resources is in his seat and he will recall my reference to this matter on a number of occasions. It concerns the flood danger existing in the Vedder river area. I have made repeated requests and my predecessor made repeated requests; the provincial minister of agriculture has been down here presenting the matter and showing aerial photographs, but yet the federal government cannot see its way clear to assuming any responsibility. They say it is not within their jurisdiction but let me state that according to the information we have the section up above where this particular situation exists was, up until about 1930, part of the federal railway belt. The federal government up until 1930 received in excess of $400,000 by way of stumpage and royalties from timber removed from that area. This does not take into consideration what the government received through income tax and corporation taxes. They received revenues, Mr. Chairman, but when it came to the matter of assuming responsibility they said, "We have not any responsibility; that is something the provinces have to face." Certainly, it is resented.
In 1953 the province of British Columbia presented to the government of Canada a brief on federal-provincial co-operation in economic development. It is a very interesting brief and covers many of the great problems and projects that faced the provincial government in those days just after they had taken office. The premier, minister of finance and the attorney general came to Ottawa and presented the brief. What was the result, what were the effects? Well, we have not seen them. I suppose the cabinet listened to it all right, but as for responding and


assisting in the development of British Columbia, they have refused.
Let me call attention to another field. I have referred to taxation and some other fields, but here is an illustration. It may seem strange that I should choose a subject such as this; I assure hon. members that I am not full of my subject. The total federal government revenue from the sale of alcoholic beverages in the year 1954-55 amounted to $176,963,000. The provincial revenue amounted to $159,873,000. I would call attention to the fact that the difference in the federal revenues was $17,090,000. Let me further state that the federal revenue includes the total identifiable taxes but does not include general sales tax on materials used in the manufacture of alcoholic beverages. The provincial revenue is for the 10 provinces and the figure includes not only the direct taxes but also receipts from permits, fines, confiscations, etc. I would suggest, Mr. Chairman, that here we have a case where the federal government received over $17 million more than the provinces did in revenue from alcoholic beverages, yet the provinces were saddled with the cost of administration. They were responsible for alcoholic research and for the rehabilitation of those who had become addicted to alcohol. They were responsible for providing housing for those who were put in prison because of this thing. The provincial governments had to assume all the responsibility, including the criticism attached to this type of business, and now the federal government comes along and takes $17 million more than does the provincial government. I cannot see any sense of justice or fairness in a situation like that. I am not speaking for the alcohol industry. So far as I am concerned, we would be better off without it. I believe that the revenues are far offset by the cost to the nation. But there is the picture. So I say, Mr. Chairman, the government is indicating a failure to properly understand and estimate the expenses the provinces have.
I know the federal government thinks their expenditures are increasing. They talk about defence and all these other things that have increased. I remind you again that according to the figures put on the record just the other day by the hon. member for Okanagan-Revelstoke, the increase so far as the provinces and municipal authorities are concerned is far in excess of that in the federal field. Government expenditures for 1954 compared with 1955 show the increase in the federal field was 5-5 per cent; provincial, 292 per cent and municipal, 276 per cent. We see, therefore, just where the increase in costs exists. It is at the provincial and municipal levels and not so much on the federal level.

The supercilious attitude taken by this government is being resented by the provinces. I wish they would forget this attitude, "We will allow you", and get down to business and work out an agreement that would be mutually satisfactory. I can somehow smell a carryover from Bill No. 3 of last year when this government thought they had to safeguard the rights of the people of Canada and protect them against the poor judgment or perhaps the vicious schemes of the provincial authorities. I am inclined to think this is somewhat of a carryover.
I took note, Mr. Chairman, of the retort of the Minister of Finance to the statement made by the leader of this group when he referred to the proposals as niggardly. The minister said he could not understand that type of language. He could not see where it fitted into this particular type of thing. Then, he went on to refer to the increase that would accrue to the provinces from contributions under this new proposal. It is something like the children who come to the father and say, "Dad, look at our shoes. They are just in tatters; the soles are worn out; our toes are sticking out; the laces are gone and the heels are worn out. We need some new shoes." The father, even though he can see it, says, "I see that; I understand. I tell you, we will put new heels on those shoes." He thinks this should satisfy the children. I would suggest that the Minister of Finance should take a look at the thing, and this is somewhat comparable. He should look at the increase and not say, "We are going to put new heels on the shoes". Bless my soul, he ought to buy new shoes. When you think of the budgetary surplus to which the leader of our group has referred, and when you think of the surpluses that are building up, he could well afford to buy them new shoes and not just put heels on the old shoes.
The Fraser Valley Record of Wednesday. July 11, has an editorial entitled, "Time For Tax Cuts". I shall read the first sentence of the editorial:
In the first two months of this fiscal year, ended May 31, the Canadian government showed a surplus of $274 million.
Further down we find this paragraph:
There is a theoretical limit, declares the Financial Post, to this intelligent paternalism. If there were no limit, the government would be right to bag all the money and then spoon it out; and that would be the end of economic freedom.
I was going to refer to the remark of the leader of the C.C.F. party regarding natural resources. He said that some provinces were more greatly blessed than others and therefore they should be willing to share. Well, we agree in that; we believe we should share.
17, 1956	6081
Federal-Provincial Financial Arrangements But, as the hon. member for Okanagan-Revelstoke said the other day, we should grade the others up and not grade the top ones down. May I suggest that the extent of the natural resources in any given province is of great importance, but there is something of greater importance, and that is how the natural resources of a province are conserved and developed. I would suggest that every province has deposits of natural resources, but to a substantial degree it depends upon the vision, the wisdom and the initiative of the provincial administration to develop those resources or to have them developed in the interests of the people of the province.
The hon. member for Macleod referred to the Financial Post. I want to quote just one sentence from the same article to which he referred:
Government-with a new boldness of concept-
I wish the hon. member for Kamloops were here. He rather snorted when the hon. member for Macleod was reading this. I continue:
Government-with a new boldness of concept-is directing record capital outlays to push communication and transportation services into all parts of the country, to facilitate the big undertaking, bring a new degree of cohesion to the province and all that is taking place therein.
I would suggest, Mr. Chairman, that if the members of this house, the Liberals, the Conservatives, the C.C.F.'ers were as great statesmen as those who founded confederation they would cast aside their prejudices as the fathers of confederation did at that time, they would throw their political philosophies out the window, and they would join with Social Credit and march with us toward that great new era that lies before us under a Social Credit administration. I believe, Mr. Chairman, you are attempting to rise.


Edward Turney Applewhaite: I am afraid the hon. member's time has expired.


Mr. Yuill:: Mr. Chairman, I realize that in rising to speak to this resolution I am doing si m rather a dual capacity. I have the honour to represent one of the finest constituencies in Alberta, but at the same time I have been the mayor of one of the finest towns for almost 12 years. More than that, I view this resolution with some concern.
I have had some nine years' experience as a board member of one of the large school units and I know the problems that prevail there in so far as administration is concerned. I should like to say this. Never in the history of our province, to my knowledge, have we been handed a package deal which we must accept whether we like it or not. It is the responsibility of this government to sit in conference with the provincial levels of
6082	HOUSE OF
Federal-Provincial Financial Arrangements administration and discuss the merits of this new tax agreement. After all, what is government but the manager of our biggest business, namely, the business of government? How does the authority become vested in this federal government ruthlessly to walk over the rights that were handed down at confederation to the leaders of the provinces? Where does the revenue come from that they are going to dole back rather niggardly to the people who earn it and who pay it out of their own pockets? Where have they the right to sit in judgment and dictate what shall be done with the revenues accruing within the provinces of this country?
We can see the tendency to centralize, as has been indicated several times. More and more the rights and the autonomy of the people of the provinces have been filched away from them and I think it would be fitting if this federal government set aside this resolution or this bill at this time and called into conference the premiers and their respective ministers and sat down and discussed this thing once again and tried to come up with at least a better solution to our over-all problem.
I know that some people say that the time element is of the essence. We have been sitting here for almost seven months. Not a bit of legislation has come up so far that is comparable with this or as far-reaching. This is a measure that is going to affect not only federal economy but provincial economy. I believe we have a very serious responsibility here to see that what the fathers of confederation fought so hard to establish shall not be ruthlessly thrown out the window. I know that we in Alberta are perhaps more privileged than many other provinces. For the last 20 years we have been blessed with a government that has a heart, a government that has vision, a government that realizes that our God-given natural resources are not there for the purpose of feathering the nest of political opportunists, but to be developed and the proceeds accruing put in trust and then handed back in terms of doing the most good for the most people, according to the best collective thinking of those charged with that responsibility. It is because of that that in a matter of 20 years our province has come from a state of bankruptcy to solvency. We were $167 million in debt. It required 51 cents of every revenue dollar to pay the interest on the debt alone. We have come from a state of bankruptcy to a state today where we have an over-all surplus of $180 million after our provincial debt is retired. It is the only province in Canada, or the only state on the North American continent, where half the revenue involved in our budget, which incidentally is $242 million, comes from
[Mr. Yuill.l

the development of our natural resources and the profits accruing from them. It only requires roughly 50 cents on every tax dollar to be raised in the accepted tax medium. We have had demonstrated time after time that our government is a government with a heart, one that has taken the responsibility of providing for its people.
Concerning the resolution that is presented here I do not think any one of us-feels there should be dual taxation; I do not think it is either desirable or necessary. But I do think that those who are charged with the sacred responsibility of administering the affairs at the provincial level should be shown the courtesy and granted the right-of sitting in conference and endeavouring with the advice and co-operation of the federal government to come up with an answer that will be the right answer.
I am afraid that if this resolution is passed it will be altogether too rigid, and I certainly hope it will not be passed. I think there should be at least some measure of flexibility so that in the future, if it is demonstrated that this is not a satisfactory or efficient agreement, the provinces will not be pushed aside when they ask for a new deal or a new look at the existing agreement. I am inclined to the belief that if and when they come they will be told, "We are hewing to the line; that is the letter of the act and consequently we cannot do anything to help you."
As I said a moment ago, Mr. Chairman, we in Alberta have come a long way in the last 20 years. We have been able to provide benefits to the people of Alberta far beyond those provided in any other province of Canada. British Columbia is fast approaching the standard established in Alberta, but of course there is a reason for that: it is because they have a Social Credit government.
As is common in all provinces, we have a need for roads, we have needs in education and needs in the field of health. I think those matters are surely a part of the responsibility of the major government. It is true that in a sense it has been contributing in some way, but basically only to health and welfare, and I think the share that is put up is not over generous.
Let us take the case of education, for example. In Alberta, when our government took over 20 years ago, the best education standard we could expect to find anywhere outside the cities and some of the towns was grade 8. The government of that day seemed to think that was the height of its responsibility. When our government took over, it definitely declared itself in favour of the equalization of educational opportunities. It decreed that any child regardless of

who he was or where he lived should not be denied anything short of a grade 12 education.
In order to make that possible it was necessary to centralize, from an educational point of view. I happened to be one of the original members of the divisional board in our part of the country at that time and I can tell you something about the position we were in then. This was back in 1939, of course, right after the hungry thirties, and the members of the teaching profession were in the worst plight they have ever experienced in all their lives. We had teachers working for as little as $300 a year. The best teachers and the principals of high schools earned the glorious salary of $750 a year.
When we took over the administration of some 105 schools we found even at that low level of pay some $20,000 was owed in back pay. In some cases we found that some teachers were owed salaries by as many as five different schools. It is recognized across the country that in Alberta today we have the highest standard of education. With the possible exception of British Columbia, the salaries of our teachers are higher than anywhere else in Canada.
In order to make grade 12 education possible to students it was found necessary to set up centralized units. It was also necessary to provide modern transportation and, further, it was deemed necessary to hire special teachers to teach such special subjects as home economics, shop, agriculture, music, art, business and many of these subjects that in some quarters are perhaps looked upon as frills but which are nevertheless within the orbit of a normal grade 12 education.
All of these things cost money, and the job of the school board was a pretty tough one, as we soon discovered. Our government realized it was necessary to give more and more assistance. In the last ten years the outright grants on a per pupil basis have jumped from $19 to approximately $120. In round figures this represents an increase in the last ten years of $100 per pupil. Naturally there has been a boon in the management of school affairs. The demand for new buildings, modern transportation and added services increased and the fact that grade 12 education was established meant that the school population increased at a rapid pace. Those who in most cases moved out following grade 8 stayed and received grade 12 education. All of these things are characteristic of all the provinces and they are not peculiar to our own community. These things posed an almost impossible problem to the administrative board.
17, 1956	6083
Federal-Provincial Financial Arrangements
The government has increased its assistance. Last year it provided more than $38 million for education alone. It realized that in spite of its ever-increasing generosity the problem would continue to exist and enlarge because of the increased demands through larger enrolments. The government realized this was posing a problem for the direct school taxpayer. A year ago the government pegged the school mill rate and provided $6,600,000 as a subsidy. It discovered that $7,108,000 was required to pull up the slack this year.
In the reshuffle that is apparently going to come about I think it would be possible for this government out of a budget of better than $4f billion to provide, over and above the specified terms of this formula, not less than $250 million in order to provide the provinces, irrespective of their location, with at least the minimum or the bottom of the barrel in services. Speaking strictly from the municipal point of view, I think it must be agreed that the problems are much the same wherever you go. Out of a budget of $242 million my province has seen fit to set aside $71.5 million for direct and indirect financial assistance to municipalities.
The city of Edmonton perhaps offers the best illustration of the need for quite considerable financial assistance, far beyond the ability of the province to render. Thanks to the generosity of the provincial government in the last five years Edmonton has received $40,942,541 in the way of direct and outright cash assistance. In the same period it has had the opportunity to borrow at interest rates as low as 2 per cent and not more than 3J per cent a total of $57,292,900. Out of the surpluses accruing from the development of natural resources our province has set aside a revolving fund which has made it possible for municipalities of all sizes to borrow at that low rate of interest, thereby saving over $2 million a year in interest rates alone. Believe me, a dollar saved is a dollar earned.
If this government would just hold its shot a little bit and not be too anxious to railroad this thing through, if it would just take another look and take the various leaders of the provinces into its confidence, if it would agree to talk over this thing sensibly and in the spirit of the fathers of confederation, I am sure they all would come up with a more lasting and more satisfactory answer to our problems.
I am not going to take up any more time, but I should like to say that in my little town of only 2,000 population we received direct cash assistance amounting to $14,000 which came out of the provincial gasoline tax. Half of the 10-cent tax, or 5 cents a gallon, was

Patent Act
set aside and divided across the board according to population. In that town we have sewers, natural gas, cement sidewalks and everything you could expect in a small town. Our debenture commitment is around $13,000 per year. As a consequence of this grant we were able to turn around and pay back the government in its own coin. We were able to show a substantial cash surplus and also enjoy a revenue accruing from the utility itself. There are not many cases where you can have your cake and eat it too from the municipal point of view. We have been able to reduce our tax rate by 19 mills, which does not alter the fact that in spite of that generosity we are momentarily faced with a tax rate of 48 mills.
I think it would be in the interests of humanity and everyone concerned from the federal government down to the smallest province if a more realistic view of this thing were taken. We should take another look at it and see if we cannot come up with a better and more satisfactory solution.


Edward Turney Applewhaite: It being five o'clock, the house will proceed to the consideration of private and public bills.
At five o'clock the Speaker resumed the chair.


PATENT ACT
Hazen Robert Argue: the second reading of Bill No. 292, to amend the Patent Act.
He said: Mr. Speaker, this bill deals with a subject which I believe is very important to the welfare of Canada. It deals with an aspect of control over our industrial life which throughout the years has become most involved and intricate. It seems to me that it is important to the industrial future of this nation that the way in which patents have been used, in many instances to restrict competition, to restrict production and in fact to restrict the general development of the arts of production, is something which should be looked into, and for which a solution is required.
In the past patents were valuable to the nation to the extent that they created an incentive to invest and resulted in reward for invention in a fair and reasonable way. However, with growing industrialization and the increasing size of corporations, with the growth and development of international cartels, the old concepts in relation to patents are to a large extent no longer valid and it is essential that a new look be taken at this whole field.

Hon. members are aware that by order in council of June 10, 1954 the government appointed a royal commission to inquire into this general field and I am pleased that as chairman there was appointed a man of the ability and integrity of Chief Justice Ilsley. If there is any man in the nation whom I have known rather intimately and who I believe is a conscientious person, one who will do his best to see that a fair solution is obtained, it is Chief Justice Ilsley. Quite a number of members of the house had the privilege of serving in parliament when he was minister of finance or occupied other portfolios in the government. We came to respect him. We are confident that the work he is now doing in this field will be important to Canada and will add to our material welfare in the years ahead.
It is a very complicated study. When I first looked into the matter I thought that perhaps the solutions would be very obvious and that with obvious solutions the government should act immediately. I still think there are some obvious steps that should be taken but I am quite prepared to say that many eminent people have spent a lifetime studying in this field and that among the experts there is not always agreement. Therefore one may say: Why do you have the temerity to advance a private members' bill? I do so not because I say that the provisions of the bill will remedy the situation and solve all the problems. I do so because I feel there should be an increasing amount of attention and consideration given throughout the nation to this very important question.
I believe there is no more appropriate place to discuss this general field than the parliament of this nation. By introducing the bill at this time I am hoping to have the matter aired, to give it some further publicity throughout the nation and to help in a small way to bring attention to the problem in the hope that solutions will be found in the not distant future. I hope that the government will study the suggestions made here along with any other suggestions that may be brought to them from time to time. I ask the government to look at the whole problem objectively and to act in the interests of the whole Canadian nation.
Before the Ilsley commission have appeared a number of eminent witnesses. I happen to be a resident of Saskatchewan and I suppose if I am acquainted with problems discussed in a public way more in one area than in any other it would be in that province. The daily newspaper to which I subscribe is the Regina Leader-Post. That newspaper has not always agreed with me. As a matter of fact if a census were taken I suppose it would show that it usually disagrees with

me. No matter, I will say that the Regina Leader-Post and the Saskatoon Star-Phoenix, acting in this general field under the direction of the publisher, Clifford Sifton, have done and are doing an excellent public service.
I notice that they have been questioned as to the reason for their general interest in this field. They have said that they are interested not because anything that has been done has affected their business particularly but rather as newspapers who feel it is a public service to take into account the interests of their subscribers, the interests of consumers generally. Having that public spirited attitude, they obtained the services of three very eminent persons qualified in this field. Those persons made presentations to the commission and were subject to cross-examination and general discussion.
The first I shall mention is a Canadian, Ian Malcolm MacKeigan, who for many years was a public servant of this nation. In the fall of 1941 the combines organization took over the supervision of the law enforcement work of the wartime prices and trade board for the next five years, during the latter part of which Mr. MacKeigan was deputy enforcement administrator of the board. Mr. MacKeigan's special responsibility in this field was that of supervising the enforcement of food rationing, gasoline and tire rationing and related black market activities. He went from this position to the Combines Investigation Act administration and was appointed deputy commissioner. He served in that position until 1949 when he resigned. He has certainly studied this field very carefully.
The second person who appeared on behalf of the two newspapers to which I have referred was Judge Thurman W. Arnold, a noted and very competent expert in the United States. For years he was assistant attorney general in charge of the justice department's anti-trust division. He engaged in many suits in this field and became known as a rather famous trustbuster, to use a common term. He is a recognized international authority in the patent field.
The third person was Walton Hale Hamilton who has spent many years on the staffs of many prominent universities in the United States and who for a number of years was special assistant to the attorney general of the United States dealing with this general field. I believe that the knowledge they bring to this question and the evidence they have placed before the commission are valuable and I am sure will result in benefit to this nation.
We need to look at this field more today than we have in the past because the whole 67509-386
Patent Act
pattern of invention has been changing. When patent laws were first considered and enforced hundreds of years ago it was because some individual had invented some device and people thought it was fair to give him a reward for his invention. It was also thought necessary to hold out the promise of a reward in order to entice the individual to make his invention public. For these reasons the whole patent system was established. Today the role of the individual inventor, the single person who comes up with an idea and turns it into a practical device, is diminishing. There are few individuals who alone play an important part in this field. The whole general field of invention has been taken over by big industries, by the great laboratories. Giant corporations will hire many of the best brains in a certain field, place these people in a laboratory, give them an assignment, and ask them to inquire into a particular field of science in the hope that they may come up with some useful innovation.
It is important to us that we remove the restrictions that have been provided by patents not only because we need to increase the production of this nation to the fullest possible extent but for another major reason. It is being impressed upon me more and more that there is in this world a nation that, in industrial techniques is making rapid strides, sometimes frightening strides. We read statements of many high placed persons who have toured the U.S.S.R. We have been told by such a prominent person as James S. Duncan, president and general manager of the Massey-Harris Company, that in the U.S.S.R. there are being trained today from two to three times as many scientists as are being trained on this continent. He pointed out that they are using their human resources in a determined drive for ever-increasing production. In certain fields we have been hearing of late that they may be ahead of us.
We need to free inventions not only to increase production so that we ourselves in this nation may have a higher standard of living but for this other reason. I think it is imperative that we do everything that is in our power as a parliament to see that free institutions are more effective in providing an increased standard of living and increased production than any other system in the world. If we are to make certain to stay ahead-as I am certain all of us wish we can-in the production field, we must give more attention to the problem that I have been discussing.
Often in the past patents have been used not in order to add to knowledge, not to bring forward new inventions and new products, but rather to restrict the field so that those who can occupy it by the patent device

Patent Act
are able to make extremely large profits. The illustration that has been used over and over again is what happened when it became known that a sulfa drug could be useful in treating certain diseases. The main sulfa drug at the time was sulfanilamide. It was a dye. The patent covering this material had long ceased to exist. The process had reverted to the public domain. When it was discovered that sulfa could be used in the medicinal field, a certain company found a derivative which they called sulfathiazole and applied for a patent. Soon after they applied for a patent it was learned that another company was applying for a patent for the very same material. It was not a case of judging which company had the patent, either by a patent commissioner or by the courts. The two companies got together. One said, "You have better marketing facilities than we have". The other said, "You have better production facilities". So they said, "Rather than compete, we will work together to maintain prices and to assure high profits for both firms". When they looked further into the matter they found that there were other companies working along the same lines. They therefore decided that one company would obtain the patent and that then they would licence other companies which had made certain progress in this field. Finally nine companies got together and controlled the production, distribution and sale of sulfathiazole and sulfa drugs generally. In my opinion, no one can defend the use of patents in this way. No one can say that by this use the public was being benefited. As a matter of fact, the patent system or the licensing system was used for one purpose only, namely to restrict competition and to make extremely large profits for the companies involved.
A little bit earlier I said that large corporations make most of the new inventions and that for the individual there is no longer any great place in the field of invention. The experience of Sinclair Oil Company serves to substantiate this claim. The company sent out a questionnaire asking for suggestions for improvements in petroleum products that might be adopted and that it received 6,000 replies. Among the 6,000 replies, the Sinclair Oil Company found only 400 ideas of any substance. Of the 400 ideas they found only 30 to be in the general field of petroleum products. Out of the 30 they found only 3 that made any industrial sense. Of the 3, only one was capable of production, but it was uneconomical and impractical. Hence, making a general inquiry among individuals in a particular field may not be very remunerative. If invention takes place and is accomplished, it is now done by vast teams

of scientists, in modern laboratories, with adequate equipment and working together. They produce inventions.
The General Motors Corporation, which I believe is the world's largest corporation, has pointed out that the inventions so obtained are not obtained by individuals but are obtained in the General Motors research laboratories, and that once an invention is obtained in the laboratories credit is not given to a specific person or even to a number of individuals. Rather, they say that the fact is that a great number of people in the laboratories have contributed to the final invention and that the idea of remunerating the individual for an invention is obsolete since it has been brought about by a modern laboratory of a large corporation.
A large corporation can then produce the invention. It can obtain the patent. After it obtains the patent on an invention it does not say, "We will wait 17 years and after the 17-year period we will allow the invention to revert to the public domain". Oh, no. They usually say, "We will spend time, energy and money in order to dream up all sorts of variations of the invention, all sorts of tiny amendments to it, so that if anyone challenges the invention we shall have such a conglomeration of inventions in this field that we shall declare that some of them are being infringed". They go further. As a large corporation controlling a huge number of inventions, if any other company wants to use one of its inventions they say that, in obtaining a licence, it must agree that it will never at any time challenge the validity of the patent held by the patentee. This means in effect that a giant corporation can control a large area of the industrial art and that new companies coming into the field, if they know what is good for them and if they want to exist in a commercial way, will accept the facts of life by going to the company that has control of this huge number of patents, applying for a licence, paying the royalties, agreeing to its terms, and hoping thereafter to make a profit on its production.
If a smaller new company believes that the patents held by the giant company are weak and cannot be maintained in the courts, history shows that the company is probably still well advised to do nothing about its conviction, to spend no money challenging the patent, but obtain a licence and meet the conditions. A classic example often used is that of Eastman Kodak Company versus the Boston Camera Company. The Boston Camera Company needed a certain number of licences for patents. They believed that the Eastman Kodak Company was controlling very weak patents, and that in fact most of

the patents controlled by the Eastman Kodak Company would not be held valid if challenged in the courts. So, the Boston Camera Company began production on its own. The Eastman Kodak Company instituted a long series of suits against the Boston Camera Company. The Boston Camera Company won every court case, but used all its money and soon became the property of the Eastman Kodak Company. Here is an example of patents being used in a rather predatory fashion to control the whole field of the industrial art.
Another classic example of patents being abused and used for purposes against the public interest is the use Standard Oil made of its patents for butyl rubber. Butyl rubber was the forerunner of modern synthetic rubber. This company did not develop its patents but decided to restrict them and allow their use only for the production of a very expensive product. The Standard Oil Company agreed with the I. G. Farben Company that it would not develop butyl, and the I. G. Farben Company agreed to keep out of the general territory of the Standard Oil. Prominent people have come to the conclusion that the role Standard Oil played in preventing the development at an early date of synthetic rubber was very expensive and costly, and proved a menace to the very existence of democracy in the war with Germany. Here is another classical instance of patents being used as a method of restricting and preventing production.
Now, may I refer to an example a little closer to home. It has been pointed out that the Fairview Chemical Company Limited of Regina, a very small company, decided a few years ago to produce a dust treatment for the control of smut in grain and for the control of wire worm. It decided, on the work done by Dr. A. P. Arnason whom I knew personally in Saskatoon that it had arrived at a good formula for mixing the two main components going into this chemical for the treatment of smut and the prevention of wire worm damage. The two chemicals were mercury and benezene hexachloride. Mercury had been used for many years in one form or another as a fungicide to control smut and other harmful seedborne spores. Benezene hexachloride had for some time been used in the control of wireworms. This company decided that if it could mix mercury and benezene hexachloride it could obtain one substance that could be used by the farmer to control both smut and wire-worms. They decided they would go into the production of this chemical. They learned however that another company had applied for a patent. It was pointed out 67509-386J
Patent Act
that the patent was granted on a so-called invention that was just as simple as mixing flour and sugar, and because this company obtained a patent the Fairview Chemical Company Limited of Regina decided, being a small company, that it could not afford to contest the patent. Instead it would either cease to produce this chemical substance or would pay a licence fee.
It was pointed out that the patent given in this instance was very costly so far as agricultural producers were concerned. The consumer wishing to obtain the patented article had to pay $7 per pound, whereas this company could easily have sold the mixture for $5.25 per pound. On the potential market available for that year, it was estimated that agriculture producers lost $17,500. This is another example of a patent being abused.
Now, Mr. Speaker, I wish to refer to the general suggestions contained in this bill. The first one is the suggestion that the provision which now allows for free licensing of any invention used in the production of food or medicine should be extended. It should be extended not only to include the method of production but the end products themselves, namely the foods or medicines and also include other articles in the field of health such as optical goods, dental goods, dental and surgical instruments and equipment and devices such as wheel chairs and artificial limbs. I suggest that is a reasonable provision, and if it were placed in the law it would allow, consumers of many of these goods to obtain them at lower prices.
The second main suggestion is for amendments to the general abuse section in the patent act. It is suggested that the Attorney General of Canada or any person who, at any time after the expiration of three years from the date of the grant of the patent, applied to the commissioner alleging in the case of that patent that there has been abuse of the exclusive rights thereunder, could ask that a license be issued.
At the present time the interpretation is based on the word which is being deleted, the word "interested" before "person", which has been defined as a person who is in the field already and is associated with the production of those articles. A further suggestion is that not only if the demand for an article is not being adequately met can a licence be granted as of right but that this should be extended to include any potential demand so that any potential demand for a cheaper model of the same article may result in a licence for production being granted. Butyl rubber, the example I used a few moment ago, might apply here. The invention was used

Patent Act
in the production of a very expensive commodity only. This new provision would allow a licence to be granted on the ground that while the invention was being developed it was not being developed to take care of potential demand for a cheaper article.
It is further suggested that licences should be granted not on the narrow basis of the interest of the person concerned or about to be concerned in the production itself, but the provision should be extended to include considerations of the general public interest. If this were done a licence would no doubt be granted in many more additional instances.
It is further suggested that a licence should be granted when the establishment of any new trade or industry has been prejudiced so that patents may not be used to restrict the establishment of new trade and industry in this nation. A further important suggestion is that the commissioners should be given the right to issue a licence if an applicant for a licence to a patent can show that the said patent is part of a portfolio which is being used to lessen competition in the field they control.
It is further suggested that if an applicant for a licence can show that the patent is part of a portfolio substantially controlling an industry in Canada, then the commission should be given the additional power to grant a licence for the import of the article into our country. An example was the Arvin radio case. The suggestion here is that a licence could be granted if it could be shown that a portfolio is not only being used to discourage production but also to limit the field of consumption.
A further suggestion is that the owner of any substantial accumulation of patents, in either a portfolio or a pool, must register with the restrictive trade practices commission, a statement of their patents, a statement of their patent policy in enforcing them, a justification for the royalties, and so on. It is believed that if such a declaration is made public policy there will be less chance of companies using their patent system in order to prevent competition or control production.
I see that I have taken almost the whole of my allotted time, Mr. Speaker. I did not expect to take so long this afternoon. I want to conclude by saying, as I did when I began, I fully realize that this field is very complex; that over the years many experts have given a great deal of attention to it. There has been much genuine and conscientious difference of opinion as to what should be done in the national interest; but I am fully convinced that a new attack must be made on the restrictive use of patents in this country so that in the years to come production may be raised to the highest level.


Hon. Roch Pinard (Secretary of Slate):: Mr. Speaker, I have listened with great interest to the remarks which have been made by the sponsor of this bill. The general remarks he made before getting down to explanations about the proposals themselves were indeed quite interesting, and I am sure that the Ilsley commission will be quite interested in reading those remarks which deal with the general subject itself.
The hon. gentleman also gave illustrations of some of the facts which he thinks should should be corrected in this inquiry which is now going on and which is headed by Chief Justice Ilsley. He referred to the chairman of the commission, Chief Justice Ilsley, in terms with which I think everyone in this house will agree. We know that this commission is doing an excellent job at the present time. The assistants to the Chief Justice, namely, Mr. Buchanan and Mr. Favreau, are giving considerable assistance I should also mention the fact that they are being given great help by the secretary of the commission, Mr. Laidlaw. I had occasion to meet the members of the commission to discuss some of the matters which were brought to my attention, and I may say I am fully convinced the report that they intend to bring down-and, as I indicated, this report will probably be brought down in the spring of next year-will be a report which will, I am sure, satisfy most people interested in that field. When I say that, I should also add that everybody should take interest in this matter. It is, as the hon. gentleman said, a very complex matter, in which one has to have special qualifications to be able to deal with it in a manner that may be as constructive as one would wish.
I should like to take a few minutes, if the house will allow me, to give some of the background of the legislation itself. Patents have been granted in Canada since 1824; that is, in Lower Canada, at the time, and in Upper Canada from 1826 up to the time of confederation. Shortly after confederation, that is in 1869, the first act was passed under the authority of the British North America Act, which gives full jurisdiction to the federal government in the matter of patents of invention. The Patent Act, which was passed in 1869, has often been amended but it is in its broad terms essentially the same.
The basic feature of the legislation is that it provides for the grant of an exclusive right for a limited time, 17 years in this case, to an inventor in return for the disclosing of his invention to the public. The purpose of this is to stimulate the making of inventions and the advancement of science and technology for the welfare and economic

benefit of the people of the country. It is an exclusive privilege but it is not absolute.
The statute contains certain provisions intended to ensure that the grant of such privilege-which is a definite privilege for a period of 17 years-will promote not only the making of new inventions, but also their early working on a commercial scale in Canada wherever possible.
During the life of the patent, the patentee is required to supply the public demand for the patented article in Canada to an adequate extent and on reasonable terms. At the expiration of the patent the invention becomes public property. Those provisions of the act which aim at safeguarding the interests of the public are the ones involved in the bill presented by the hon. member. In other words, the bill would tend to extend the nature of those licensing provisions that are provided for under the act.
The hon. gentleman referred to the first clause of the bill in which there is a proposal which would add to the licensing provisions in the case when they are granted immediately upon demand. We are concerned with patented inventions relating to food, and medicine, and the other articles that are mentioned in this clause including articles vital to health, such as optical goods, dental goods, dental and surgical instruments and equipment, et cetera.
As I have already said, the statute presently provides for compulsory licensing in the case of a patented chemical process for the production of food or medicine, even in the absence of any proven or alleged abuse of rights and this at any time after the issuance of the patent. In the case of any other invention, the patentee is given three years within which to start working it in Canada on a commercial scale. If at the expiration of that period of time he does not supply the public demand in Canada on reasonable terms and to a reasonable extent, the commissioner of patents may grant one or more compulsory licences to others to manufacture and sell the article in question, or even revoke the patent if no other means of relief can be found.
The hon. member said there were many such abuses and he cited examples. Nevertheless the fact remains that during a period of 35 years I am informed that only three applications for licences concerning chemical processes for the production of medicine have been granted and only about three dozen applications for licensing other patented inventions. In other words, that might indicate there may have been abuses which were not brought to the attention of the commission. The fact remains, however, that
Patent Act
during the long period of 35 years licences for the manufacture of medical articles were granted in only three cases and there were about three dozen applications for other articles. It may be that abuses have increased in number. But it remains a fact that during the long period of years I mentioned only those cases to which I referred were brought to the attention of the commission.
In connection with inventions pertaining to the field of health, the bill proposes that the compulsory licensing provisions be extended to articles vital to health, such as optical goods, dental goods, and surgical instruments. There may at first sight be much merit in that proposal. However, this whole subject is a very complex one and a proposal of this nature should not, I suggest, be adopted without careful analysis and expert advice as to all its angles and implications. The results obtained under the present provisions must be weighed against those sought to be achieved through the amendment. For instance, if generic terms are to be used together with an enumeration of specific items as illustrations of the scope and meaning of the generic terms, great care must be taken that, in the net result, some important item might not turn out to have been inadvertently excluded or omitted.
With reference to the second part of the proposals which my hon. friend made, he stated that in order to be considered as a person "interested" who can apply to the exchequer court for invalidating or voiding a patent or to the commissioner of patents for a compulsory licence under the existing provisions, one must be already in active competition with the patentee, which condition, he pointed out, often cannot be fulfilled in the case of a new product.
I submit that is not exactly the case. In fact, under the act as it now stands there is a provision under which a person who simply proposes to make, sell or use an article may apply to the court for a declaration that this will not constitute an infringement of a particular patent. In other words, he does not have to be in active competition. He simply has to declare that he intends to manufacture an article. Surely that does not mean he is in active competition at the time, and he can ask the court for a declaration that this will not constitute an infringement of a particular patent.
As to the nature and extent of the interest required to obtain a compulsory licence from the commissioner of patents, my information is that it has not been considered necessary for an applicant to be already in active competition with the patentee in order to qualify for a compulsory licence. I think that is only

Patent Act
normal. The commissioner will, however, require the applicant to show that he intends to use the patented process or to manufacture the patented article and that he has the financial means to do so. In other words, he satisfies himself that the applicant is serious and is a bona fide applicant. Otherwise anyone could challenge whoever has obtained a patent of invention and there would be no protection for the patentee.
I would like to deal now with what I consider to be the more important part of the proposals involved in the bill. These are the proposals that deal with the abuses of patent rights and compulsory licensing. Perhaps one feature of those provisions which should more particularly be looked into by the commission is the primary requirement of manufacture in Canada and the bar indirectly placed against importations.
If one reads section 67, subsection 2, paragraph (b) of the act, one may feel that these provisions, indirectly at least, contain a bar against importations into Canada of an article that is being manufactured here when there is already in Canada a holder of a patent for a similar article. I am informed that this matter is being studied very carefully and numerous representations have been made to the commission in that respect. I am convinced the commission will give this matter a very thorough study and will investigate it fully.
The suggestion has been made that lists of patents be registered in some cases with the restrictive trade practices commission by the owners of any substantial accumulation of patents, in either a portfolio or a pool. The first remark I would like to make on this subject is that there would surely have to be a definition of what is meant by the words "a portfolio or a pool" in order that there would be no misrepresentation of the meaning. I do not think my hon. friend would subscribe to the practice of preventing an individual from holding more than one patent.
As far as the supplying of that list of people holding more than one patent to the combines investigation people is concerned, the powers under the Combines Investigation Act are already wide enough for the officials of that department to have full access to the patent division. They can obtain any information they feel they need if they wish to proceed with a prosecution or investigation. I consider it would be a wasteful duplication of records if this proposal were implemented.
The Combines Investigation Act also empowers the exchequer court to make one or more orders declaring void, in whole or in part, patent agreements, arrangements or licences, prohibiting the carrying out of any
[Mr. Pinard.l
or all of their terms or provisions, directing the grant of licences under patents or revoking patents where patent rights have been used in restraint of trade or to lessen competition. In my opinion that covers the proposal that has been made in that report. In other words, the powers are already available under the Combines Investigation Act to bring about the type of investigation to which my hon. friend has referred.
I think I should at this time give the reason why I will oppose this bill if it comes to a vote. I consider the bill as being premature. My hon. friend has referred to the fact that work is now being done by a royal commission and it would appear to me

and I think he will share my views-that to legislate at this time would be an indication on our part that we have not enough confidence in the commission to allow it to proceed with its work. It is true that that work is going to take some more time before it is completed. As I said before, I have been informed that the report will be presented in the spring of next year.


Hazen Robert Argue: Can the minister say whether there is any likelihood or possibiilty that legislation will be presented to parliament next session as a result of that report?


Roch Pinard: I think my hon. friend will appreciate that I would have to know first what the report will contain. If the recommendations of that report justify legislation that would be something to be considered by the government. I am sure that action will be taken in due course, as is always the case with this government. I am sorry not to be able to give a more encouraging answer to my hon. friend. However, I think I can go this far. If the report contains recommendations which justify the bringing down of legislation those recommendations will be studied carefully by the government and I am sure that the necessary legislation will be suggested to parliament.
I do not want to take a rigid stand against the proposals because, as I indicated to my hon. friend, I think they deserve to be studied carefully because they have merit. I think the hon. member should be commended for having brought this matter before parliament and no doubt his remarks will be scrutinized and studied by the Ilsley commission. I think my hon. friend has made a contribution to the work of the commission in bringing this matter before parliament at this time.
While I am not in full accord with all the proposals which he made, some of them I believe are worthy of study and I am sure they will be studied by the Ilsley commission. One of the more important proposals is that

Federal-Provincial Financial Arrangements
which concerns importations. This is one oi people. The total of all direct municipal the most serious problems which the com- assistance will amount to over $64 million mission has	to face at	the moment and	I am	this year paid out for	local governmentsure that its	report will deal with that matter,	operations, almost half of	the budget, and inOn motion of Mr. Pinard the debate was the. past seven years direct and indirect adjourned.	assistance to the various local governmentshas amounted to over $311 million. This Mr. Deputy Speaker: Is it agreed that I substantial sum in my opinion gives ample resume the	chair in	committee since	it is	evidence of our treatment	of our junior govclose to six	o'clock?	ernments and is in sharp contrast to the


Some hon. Members:: Agreed.	niggardly treatment proposed in the measure
before us at this time.


TAXATION
[Stage Direction]
measure to provide for agreements

[Stage Direction]
The house resumed consideration in committee of the following resolution-Mr. Harris-Mr. Robinson (Simcoe East) in the chair.
That it is expedient to introduce a measure to provide that the Minister of Finance may pay to a province, out of the consolidated revenue fund, in respect of any fiscal year in the period commencing on the first day of April, 1957, and ending on the 31st day of March, 1962
(a)	a tax equalization payment with respect to individual and corporation income taxes and succession duties;
(b)	a provincial revenue stabilization payment with respect to such taxes; and
(c)	a tax rental payment in accordance with a tax rental agreement that may be entered into by any province as an alternative to levying such taxes on its own behalf;
and also to authorize tax collection agreements with the governments of the provinces.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at eight o'clock.
Mr. Holowach:: Mr. Chairman, I wish to make a few remarks at this point in the resolution's progress and I assure you I shall not detain the house unreasonably. Yesterday the leader of the party to which I have the honour to belong spoke at some length and clearly enunciated the belief of all members of this group. He clearly stated that in our opinion the measure now before us is in no way adequate nor is it fair nor does it provide fair treatment with respect to the fiscal requirements which the various provincial governments have at this time if they are to discharge properly their responsibilities to the people in the respective provinces.
One could elaborate on his statements but may I just say that in Alberta this year our budget reached $242 million. This amount is required to provide social services for a population of a little more than a million
In the interests of time I intend to confine my remarks to one single aspect of the problem, namely, the economic consequences that will result if the federal government continues with its present taxation policies, and I would particularly draw to the attention of the minister the fact that in this measure and through these taxation policies we are missing the very heart of the principle of fiscal need. I refer to the fiscal need of the people themselves and the concept that while various provincial governments are indeed desperately in need of financial assistance it is the people themselves who need help most at this time.
We are discussing a measure which is designed to provide equalization payments to the respective provinces with respect to income taxes, corporation taxes and succession duties. This measure, which is the product of various conferences and negotiations as well as the attitude of the government, misses the essential point, namely, that banc to the well-being of the nation and our people is the need to restore to the people themselves their earnings in order that they can provide those things which they are unable to afford at this time and consequently turn to the various governments to provide for them. I believe that reductions in income taxes, corporation taxes and succession duties are badly needed today and could help considerably.
As I see it, the removal of the impediment to more friendly fiscal relations between the federal government and the various provincial governments lies not only in the federal government adopting a more generous attitude toward the provinces but also in policies that will help to alleviate and remove the tremendous pressure and the demands being made at the present time on the various provincial governments. I believe that the proper way to do this is to allow the people to retain more of their earnings so that they have the facilities to meet their local levies, retain their independence and provide for their stability and growth.
Today this is virtually impossible by reason of our taxation laws under which the
6092	HOUSE OF
Federal-Provincial Financial Arrangements federal government makes it impossible for people to save or to pay cash for the things they require in their everyday life. This has resulted in the inability of small businesses to borrow and municipalities to provide services. Let us examine some of the actual evidence. There are many signs indicating that there are sags in our economy which belie the claim of a booming prosperity and in many instances could well mean the beginning of a recession.
What about instalment buying in our country? This has reached the highest peak in the history of the nation. In an article appearing in the Ottawa Citizen of May 23, 1956 we have information which shows that the bills that the people of Canada owe total $2,193 million. The article goes on to say:
The amount of money Canadians owe for the things they buy on time rose to a new high of $2,193 million at the end of 1955. This was an increase of $134,900,000 in the last three months of 1955 and a rise of $327 million over the year, one of the largest increases in the post-war era, a quarterly Bank of Canada survey showed today. With the steady 1955 rise, the consumer credit bill had more than doubled over a four year period, increasing from $973 million at the end of 1951.
At the end of 1955, unpaid bills in charge accounts had increased to $376 million from $330 million at the end of September and $363 million at the end of 1954. Total instalment credit had risen to $987 million from $942 million in September and $822 million in the previous year, while personal loans had swelled to $830 million from $779 million in September and $661 million in 1954.
The significance of these figures, Mr. Chairman, strikes home when compared with the total amount of income tax collected by the federal government during the fiscal year 1954-55 for all of the provinces of Canada, namely, $2,412,197,266.67. The significance of the large amount of personal borrowings and instalment credit lies in the fact that it is nearly equal to half of the yearly budget of the government. If this instalment debt were to be paid off in one year then on the basis of the disposable income of the Canadian people for the year 1955 it would require practically 12 per cent of that amount. Quite obviously we must give the people the right to keep more of their earnings and a reduction in income taxes would help considerably.
What about the people's personal savings? In the year 1939 personal disposable income of the Canadian people totalled $4,208 million of which 7-2 per cent was savings. In 1943 it totalled $7,478 million with 23-4 per cent being savings. In 1944 it totalled $8,164 million. In that year savings were 24 [DOT] 2 per cent. It is evident that there has been a steady decline in the annual rate of savings. Let us look at the last three years. In 1953, with disposable income of $16,725 million, only 9-6 per cent was savings. In the year 1954


disposable income reached $16,747 million with 6-4 per cent being savings. During the year 1955, which incidentally was the most prosperous year in the history of Canada, the estimated disposable income was $18,285 million and the people of Canada were only able to save 8 [DOT] 1 per cent.
The telling point is the extreme drop from the year 1944 comparing it with the peak year of prosperity, 1955. I submit that a choice has to be made whether to continue with the centralizing of power vested in the federal government or to restore quite rightly some of that power over the purse to the people of Canada. Finally, I should like to say this and I say it in good faith. I venture to suggest to the Minister of Finance that the foundation for the well-being of the people of Canada and the confidence which the people of Canada have in our free way of life and in our economic system is less firmly established in the measure now before us than it would be if the Minister of Finance were courageous and bold enough to review the entire situation, overhaul the entire tax structure of this country with a view to simplification and to removing all those taxes that are crippling to the people's savings or ability to pay cash for the things they need and in the case of small businesses, to restore to them the power to acquire credit at reasonable rates of interest. I believe that is one reform that is most necessary. In doing that I believe that the Minister of Finance would not only do a good stroke of business and increase the volume of revenue required for government expenditure but at the same time would earn the gratitude of the people of Canada and the co-operation, I am sure, of every member of this house.


John Horne Blackmore: Mr. Chairman, this afternoon in a talk which I delivered I indicated the reasons for supposing that the Bank of Canada was forced on Canada by alien influences operating from the city of London. I suggested that the main reason the Bank of Canada was forced upon Canada was that the powers in London desired to take away from Canada the finance act of 1923.
The important element in the finance act of 1923 was that under that act the Minister of Finance could create money and spend it into circulation or lend it into circulation or otherwise use it as he felt the economy of Canada demanded, just as the Minister of Finance under the finance act of 1914 in the year 1917 printed and spent into circulation $50 million in buying Canadian goods and sent those goods over to Great Britain as a loan; and just as in that same year he created 26 million other dollars and spent them into circulation for the conduct of the war.

There are people who still persist in saying that action of that sort means that it will cause inflation. The whole secret is this: what is the definition of inflation? Inflation is a rise in prices which results from a scarcity of goods in relation to the amount of money in circulation. Consequently if money is created by the Minister of Finance and spent into circulation in such a way that it does not cause a rise in prices because of a shortage of goods, then that created money will not cause any inflation or any other undesirable condition in the economy. It was of that power that the city of London wished to deprive Canada. Why? Because that power is the power that makes the nation financially free. The minister has been sitting here and listening patiently to a great deal of talk about reducing taxes and that sort of thing. The minister himself knows, as does every person in this house, that if he taxes this nation to the very limit of its endurance he still is not able to get enough money to satisfy the needs of the various provinces in this dominion.
What is to be done about the matter? Are we to go on depending entirely on taxation, or are we going to go back and take the power the minister had under the finance acts of 1914 and 1923 and employ that power as a means of supplementing the money which is in circulation in the country, thereby enabling the people as a whole throughout the dominion to buy the goods which the dominion is able to produce and thereby raise the standard of living in less fortunate areas without deducting from the standard of living obtaining in the other provinces?
It must be quite obvious that it is not fair to Ontario or to Quebec, each of which requires all the money which they can collect within their own boundaries, if money is taken away from them to be distributed in Nova Scotia, New Brunswick and Newfoundland, no matter how much the people of Ontario and Quebec may desire to help those other provinces. But if the money could be created, based on the goods and services which those two central provinces can produce, and then that money distributed in Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland, that would enable those provinces to buy the goods from Ontario and Quebec and would in no way detract from the amount of purchasing power or revenue available in Ontario and Quebec. Without that device, I submit that it would be impossible for us to finance the affairs of this nation in a way satisfactory and fair to the people throughout this country.


Hector Dupuis: What about the dividend?


John Horne Blackmore: The dividend is possible. The dividend can be paid by the same means.
17, 1956	6093
Federal-Provincial Financial Arrangements


Hector Dupuis: Why not pay it?


Mr. Low:: You fellows recognized the principle in your family allowances.


John Horne Blackmore: Just as soon as I am finished I should love to have questions from my hon. friend. But the simple fact that I am laying down is this. It is going to be absolutely impossible to enable the people generally throughout the Dominion of Canada to enjoy the high standard of living which the productive capacity of the Dominion of Canada would justify unless we adopt the principle which was written into the finance act of 1914 and into the finance act of 1923. We saw the performance throughout world war I. We have no excuse whatever for disregarding that performance.
I submit that the whole purpose of the financial interests in London in putting the Bank of Canada into this country was to deprive us of the finance act of 1923 which meant freedom financially.
Did the same city of London influence, motivate and dictate in relation to the Sirois commission? I promise to have something to say about that matter in this talk.
What was the nature and what were the recommendations of the Rowell-Sirois report? Over all, there are several essential recommendations, of which I am going to mention two which are, in my opinion, quite undesirable. The first one was that the provinces were to vacate personal income tax, corporation income tax, and succession duties fields. This procedure removes from a province most of its capacity for improving itself economically by developing industry which the province could otherwise do to raise its standard of living. Suppose we go on with the proposals which are now being used. Of what advantage is it to a province like Ontario, Quebec, British Columbia or any other province to expend great effort in developing industry within that province, if the more industry they develop the more they are taxed and the more money is taken away from them to go into the hands of other provinces? How can they get ahead? How are they motivated? There is the main difficulty when we suggest that the power to tax in those three fields of taxation shall be taken away completely from the provinces.
Another very important recommendation was that the dominion was to assume and carry provincial debts and to set up a finance commission to see to it that the provinces did not go into debt any further. It may be said that it is sound to put a limit on the amount that a provincial government can borrow but-

Federal-Provincial Financial Arrangements


Hector Dupuis: May I ask the hon. member a question?


John Horne Blackmore: Just as soon as I am finished my hon. friend may ask questions and I will answer him during all the time remaining this evening. But I would ask him please not to interfere with me while I am talking. I say that not because I cannot answer his questions; answering his questions is just child's play to me.


An hon. Member:: He might ask a sensible one for a change.


John Horne Blackmore: The point I was making is this. If we are to enable a province to build itself up or if we are to encourage it to build itself up to become great and strong and a real advantage to the nation, we must give it every advantage from the industry which it develops within the province.
May I now summarize and quote certain passages from an article by A. W. Roebuck, who now is a member of the other place, in the Labour Review. It is an address delivered in Toronto, January 3, 1941, and entitled "The Other Side of the Rowell-Sirois Report". I summarize this article in order to show what this eminent gentleman thought concerning the Sirois commission matter back there in those days while it was in the heat of discussion.
Who was A. W. Roebuck? In order that we can evaluate his judgment, I read from the Canadian Parliamentary Guide of 1951 a passage which is quite enlightening regarding the standing of this gentleman:
A barrister, K.C., and bencher Law Society. Member of Granite, Thornhill golf clubs.
Life member of Toronto Liberal association. Was candidate for Ontario legislature at general elections 1911 and 1914; for the House of Commons in 1917. Elected to Ontario legislature at general election 1934. Sworn as attorney general, minister of labour and member of hydro-electric power commission, 1934.
Now, this man had quite a lot of experience, and beyond any question his words are worth listening to.
Resigned portfolio, 1937. Re-elected at general election 1937. Resigned from the Ontario legislative assembly to be candidate for House of Commons. Elected to House of Commons at general election 1940. Summoned to the Senate of Canada, April 18, 1945. Party politics, Liberal. Religion, Anglican.
Now, this indicates we are not listening to just any idle talker when we listen to this man's speech. May I just summarize the article which was printed, as I have said, in the Labour Review? I am going to give the headings, and then there are two or three passages from which I should like to quote. The headings in this article, "The other side of the Rowell-Sirois Report" are as follows: First, "Confederation, a defence measure";

second, "Division of powers"; third, "Unity with diversity"; fourth, "The commission's work"; fifth, "Changes since 1867"; sixth, "B.N.A. Act has not held us back". And consequently there is no reason to change the B.N.A. Act or abolish it; seventh, "The Sirois Proposals"; then I propose to read from that division so that members may get this man's view of what the Sirois report proposed:
The Sirois report is a monumental document, but you will find its main recommendation stated with reasonable conciseness as follows:
(a)	The dominion government is to become solely responsible for direct relief to unemployed employables, all other relief and public charities to be borne without dominion aid by the provinces and municipalities, with the exception only of old age pensions to which the dominion will continue to contribute 75 per cent as now.
(b)	The dominion is to assume and pay the principal and interest of all the provincial debts (including both direct obligations and those guaranteed by provinces), the dominion to have the benefit of all interest collected by each province on its investments, a single exception being made of the province of Quebec where the dominion will assume 40 per cent of both provincial and municipal debts.
(c)	In return the provinces and the municipalities are to hand over all personal income taxes, corporation taxes and succession duties to the exclusive taxing power of the dominion, with the exception that a portion of the corporation tax collected from mining and oil producing companies (10 per cent is suggested) is to be returned to the provinces in which the mine or oil well is located.
(d) The subsidies guaranteed by the British North America Act from the dominion to the provinces amounting to $21,000,000 are to be cancelled.
(e)	The dominion is to pay to some provinces which are alleged to be in need an irreducible aggregate amount of $14,900,000 per annum in what are to be known as adjustment grants, to be supplemented to all provinces by emergency grants when necessity can be shown to the satisfaction of a dominion board to be appointed.
Such are the recommendations, simplified to the extent of my ability, and raising, as you may suppose an infinite series of questions.
Now, continuing with the divisions: division No. eight is, "Unemployment relief a diminishing factor;" No. nine, "Rescuing shipwrecked bondholders",-which may indicate one reason for the Sirois report; No. 10, "Centralizing financial power"; No. 11, "Poor bargain for provinces"; division 12, "Hurtful tax changes"; division 13, "Arbitrary handouts". Now, from this division, "Arbitrary handouts", may I read one paragraph?
The difficulty of determining degrees of need is obvious but the Sirois commission, whose chairman was from Quebec and upon which there was no Ontario representative, has discovered a method of calculation which to them seems satisfactory, for the commission recommends to Quebec a permanent annual grant irreducible in amount of $8,000,000 (page 96, Book II) and to Ontario the sum of nothing (page 97, Book II), and this notwithstanding that Ontario loses its confederation subsidy of $2,941,000. The grants are supposed to be made on basis of need and yet Alberta and British Columbia also lose their subsidies and get

nothing. Quebec with its irreducible grant of $8,000,000 per annum apparently has $1,100,000 greater need than all the rest of the provinces of Canada put together.
Continuing with the divisions, division 14 is, "Summing up". I should like to read the last section of 14:
(e) Recommendations which tend to destroy the basis of confederation by curtailing the sovereign power of the provinces in the management of their local affairs or placing them in financial leading strings to the dominion should be rejected.
The last division, No. 15, is "Canada has done well". May I read this one:
Political leaders may confer, newspapers pronounce, and interested parties continue their propaganda, but nevertheless public opinion will decide whether or not Canada is to be melted down and recast in some new mould; whether the Sirois commissioners are to be "Fathers of Modern Confederation" or whether their report shall be buried like many another of its kind and forgotten. We have had some most unhappy experiences of late of nations changing constitutions over night, especially so in those instances where the changes involved a concentration of power. Canada has done well and been happy in the very wide distribution which she has enjoyed in governmental authority. Let us keep it that way.
To these words I enthusiastically say, "Amen". I should like, however, to go back a little farther than we are at the present time before I say that. Obviously, from this and from other considerations, Canada had done well, and done well without the Bank of Canada. This is important.
I was arguing this afternoon as to what good the Bank of Canada has been. I believe I can challenge anyone in this house or in this country to cite one single, solitary instance in which the Bank of Canada has been of benefit, or to cite one benefit that was not enjoyed by the Dominion of Canada before the depression set in in 1929.
Evidently Canada got along very well without the Rowell-Sirois report. It was argued that the Rowell-Sirois recommendations were necessary as a war measure. Evidently from what I have already said during this afternoon, Prime Minister King did not think so. May I refer to the passage from the editorial which I quoted this afternoon from the Western Producer of January 23, 1941. These are the words:
Mr. King himself admitted that he personally was not in favour of calling the conference at this time but that he changed his mind as the result of the representations of the financial advisers of the government as conveyed to him by Mr. Ilsley.
Who were those financial advisers and how closely were they attending to what was being whispered over across the water in the city of London?
Apparently Mr. Ilsley himself had not thought Canada's war effort required the
67509-387i
17, 1956	6095
Federal-Provincial Financial Arrangements Rowell-Sirois recommendations. Evidently premiers Hepburn, Pattullo and Aberhart did not think so. Neither did the other premiers think so. The Hon. Mr. Motherwell did not think so. The Hon. A. W. Roebuck did not think so. The Right Hon. Sir Thomas White and Beaudry Leman would not have thought so. All Canada needed to fight world war II successfully was a re-enacted Finance Act of 1923 under the Dominion Notes Act of 1868; and Canada's Bank Act in force as it was before the Bank of Canada Act modified it.
There is one matter which I think will be quite interesting to the Liberals in the house. That is the opinion of Premier Hepburn at the time when he resisted so violently and determinedly the proposals of the Rowell-Sirois commission. The opinion which Premier Hepburn held is recorded in the Western Producer of January 23, 1941. We find the article is entitled, "Hepburn Urges Money Reform; Urges Action to take Care of Expanding War Effort". The article reads:
At Toronto last weekend, following an Ontario cabinet meeting, premier Mitchell Hepburn issued a 700 word statement urging the dominion government "to make available sufficient new currency in order to take care of the expanding requirements of wartime."
He warned that a serious crisis was fast approaching and said "Canadians will look to the Bank of Canada, which must not be operated for gain or to serve selfish interests but should rather aid primary producers and which should assist in the solution of the financial problems of the provinces and municipalities of the nation.
I presume through granting loans. I go on with the news item report of Mr. Mitchell Hepburn's statement:
The statement said: "My first proposition is that the authority for creating money now vested by the constitution in the dominion government should not be delegated to any authority, public or private.
Now, Mr. Chairman, I think I have said what I had intended to say on this occasion in the various debates on this measure. It will help us greatly when we see what kind of bill the minister has to follow this resolution; but I feel that up to the present time the things which I have said were things which the nation and parliament need very much to know.
As I said this afternoon, some of these things are hidden away in remote places. Most of them have been destroyed, things which gave us an idea of how our fathers felt about the situation when the Rowell-Sirois commission was set up, was functioning and was making its recommendations and the premiers of the provinces in 1941 were deciding what they would do about those recommendations.


Solon Earl Low: Mr. Chairman, I do not intend to take very long to sum up the position which
6096	HOUSE OF
Federal-Provincial Financial Arrangements we take on this whole matter. I think this has been a good debate, but it has not been anything more than could be expected or ought to have been expected by the House of Commons or its committees on a measure as important as this one. We look upon it as a very important measure, one that affects the provinces, the municipalities and the Dominion of Canada, not only this year but for a good many years ahead. We believe that the purpose of the debate has been served quite well. It seems to me that enough has been said at this stage to bring home to the government the feelings of the members of the house as well as the feelings of many of the governments of the provinces. We do not intend, therefore, to carry the debate any further at this stage. The resolution ought to pass and the bill be introduced so that we can have a look at it. We will take a look at the bill, Mr. Chairman, and decide what is best to do in the light of the terms and the provisions that are set out in that bill.
We thought we might influence the Minister of Finance and his colleagues to try once more to gather the provinces together in a conference with the object of working out a formula that would be more acceptable to them in the light of all of the conditions, as I said yesterday. We had no thought or desire to try to destroy the chances of getting this measure through. Frankly, we feel that the government is trying to reach some sort of solution of the financial difficulties that have arisen throughout Canada as between the provinces and the dominion and frankly between various areas of the country and the federal government. We give them credit for having made a try, and I wish to tell the minister that we look upon this tax-sharing proposal as being superior in many ways to the tax-rental scheme that has been in effect for the past ten years. I think that this proposal will mean a better deal for most of the provinces, although I must say there are some of them that will find a very slim improvement. I could name some of those, but I do not need to. The minister knows them quite well. To others, this is going to mean a considerable improvement, and I am very happy when I see what change it will make in the maritime provinces in the stabilization of their revenue. There is not any question about that, and we all rejoice in that because they have not had a decent deal. We all recognize it. They have not had their proper share of industrialization, and if they do not have some sort of balance between industrial and agricultural activity I do not see how in the world their standard of living can ever
[Mr. Low.f

be brought up to anything like the level it has reached in other parts of Canada.
So far so good; but there is still evidence that the people of the maritime provinces are not at all happy, and the best evidence that one can cite, of course, is the conference that was held in Fredericton the other day when a permanent organization was set up for the purpose of attempting to get a better deal for the maritimes. We all sympathize with them and mind you, Mr. Chairman, there are others of us who have been in a similar position in times past. I can remember when our own province was the poor relation. It is spoken of today as the Cinderella province, having come out of the kitchen and the ashes and is now dressed in slippers and beautiful evening dress. It is quite true, but that was not so long ago. We suffered the same things essentially that the maritimes suffer, but we did get a break and we have brought ourselves up through some good luck, of course, but some very good management, through the development of our resources. But some of those opportunities the maritimes have not had, and they deserve them, and every effort ought to be made to see that they do get them. I only cite these things to show that one of the purposes behind our debate thus far has been to impress upon the government the need of pausing for just a little while, thinking over the situation and giving proper weight to the conditions of the provinces and the municipalities throughout this country.
I think, without exception, the provinces find themselves unable to cope with the needs and the demands for service and for development and so on in the municipalities. And so, I thought we might be able to get the minister to call a conference once again and to make that final effort which I still think ought to have been made. I believe he is a reasonable man, and I believe that he could persuade the provinces to go along with him if he would get them together and show them that he is anxious to help them to meet their problems and to try to solve them more or less on a permanent basis. I agree with him in what he said yesterday that you cannot sit down now and draft up any scheme or proposal for tax-sharing that will stand for, well, anything more than a few years. We realize that, but I still believe that what I said yesterday is true, that he failed in drafting up the proposals he now places before the provinces to give the proper weight to the circumstances under which the municipalities and the provinces are trying to carry on.
I cannot help feeling that there should have been that one last effort to meet the

provinces, to look the facts in the face and try to carry them along with him, which he could have done. We feel perfectly satisfied on that. How much happier he would have been if he could have felt that what he proposed to the provinces would have been accepted wholeheartedly and in good spirit, and I am sure they would have gone with him.
I remind the minister that back in 1940 and 1941 when the government first negotiated the tax transfer arrangements the provinces recognized the case that was put up to them by this government. They recognized the force and the logic behind their claim that during wartime there should not be double taxation, the confusion attendant on so many different tax agencies trying to get revenues from the people, and they quite readily agreed that this government must have the wherewithal to put on a real war effort. They went along with the minister then and I am sure they would be just as reasonable now if they felt that the minister and his colleagues in the government had given sufficient consideration to the problems of the municipalities and the provinces and their circumstances. T-hey do not, and that is their unhappiness today. That is why they feel the way I said yesterday they felt.
I hope we have at least impressed upon the minister the effect on the municipal and provincial situation. We think that when he drafted the proposal that is now before us he should have taken more fully into consideration what the municipalities and the provinces will have to carry in the future. I must say to him that he could very well have lifted some of the nightmares from the provincial and municipal authorities as they look ahead into the future and see little or no hope for a solution to their terrible problems of taxation, revenues and stabilization.
You know, Mr. Minister, there are a lot of municipalities today which are saying to themselves, "I wonder what kind of burden this is going to place on us when the federal government announces its national health scheme". I am satisfied that they are going to say to themselves, "Whatever is done by the federal government, the provinces are going to try to shift a share of that on the municipalities and how are we going to meet it with the slender resources we have?" That is the thing they are thinking about extremely seriously today.
It seems to me that here was a very good chance to do something of a more or less permanent nature to help both the local governments to find a solution to their problems.
It is true that the plan we are about to consider in the bill that will be introduced does
17, 1956	6097
Federal-Provincial Financial Arrangements provide something better than the tax rental plan of the past five years, but it still fails to meet the immediate needs of both local governments. I said yesterday that the proposal was niggardly and my hon. friend the minister contended that I was rather harsh when I said that. Let me explain, Mr. Chairman, that any new proposal is niggardly if it fails to do what is possible to be done.


William McLean Hamilton: Physically possible.


Solon Earl Low: What was that?


William McLean Hamilton: Everything that	is physically	possible is
financially possible.


Solon Earl Low: Everything that is physically
possible and desirable should be made financially possible. You are becoming a good Social Crediter over there.


John Borden Hamilton: Those were not my words.


Solon Earl Low: It will sink in after a while if we keep on. There is no question about it and I think the minister realizes that is so. I am not digressing at the moment from the thing I wanted to tell the minister. I said that any attempt to solve the problem that faces the local governments today has to be considered as niggardly if it fails to do what it is possible for us to do.
I am just as certain as I am that I stand here that if the minister had called the provinces together, even if it meant an increase of $100 million or $150 million or $200 million a year to carry them along with him in a happy mood, and had given them some hope that they could help their municipalities to solve their problems, it would have been a splendid investment and would have been possible. The minister himself knows that it would be possible. He knows full well that any time a proposal of that kind is made to help the provinces and the municipalities they are going to spend that money in development and the minute the development starts to occur taxes roll into this government, the gross national product increases and the minister's tax base is broadened. He knows that.
I want to know where the minister's faith is. He is a man of faith but it seems to me that his faith has been weak this last while. When he looks to the years ahead he must realize that his gross national product is going to continue rising and he will have a much better chance of meeting the needs of the provinces and the municipalities as well as his own needs for defence and all the other things that are demanded of him provided we get the development; but we

Supreme Court Act
cannot get that development unless the municipalities and the provinces are prepared to go along and unless they have the wherewithal with which to go along. Therefore, Mr. Chairman, I think we have missed an opportunity.
I had thought that the minister would yield and perhaps say, "We will hold this over; we will call a conference and after the conference has reached a decision we will bring in the legislation." That would have been much better and everyone would have been much happier about it. Those are the reasons we feel the debate has been worth while. We tried to drive these things home to the minister.
While I was speaking yesterday I mentioned something about the various problems the municipalities and provinces have. One matter I did mention briefly was that the province of Ontario as well as others faces the problem of cleaning up its rivers. Water pollution has gone so far that it is going to cost the province an estimated $120 million a year for the next 10 or 15 years. I said $120 million a year yesterday but evidently Hansard did not catch the phrase "a year" and just recorded "$120 million during the next 10 or 15 years". It will cost well over $1 billion to clean up the rivers in this province alone. I emphasize that for the reason that there was a mistake made in Hansard yesterday. It may have been my own fault. I am not blaming the boys because they do a very good job, but I just wanted to say that by way of correcting the mistake.
As far as we are concerned, Mr. Chairman, having said what we have said and having done our duty as we have seen it, we are prepared to wait and see what the bill provides for, and I ask the minister before he brings it in for second reading to just get off by himself and take a most careful look at it through the eye of faith in this country. I have faith in this country and I am sure the minister has too. I would like him to take a look at it through the eyes of faith with a little sympathy and understanding for the problems that are so critical in the provinces and municipalities. I urge the minister to please not bring in a bill for us to consider on second reading that is rigid in its terms. Have it so flexibly worded that if there are negotiations between the dominion and the provinces that may result in a change being required it can be changed without having to come back to parliament for a change in the act.


William Alfred Robinson: Shall the resolution carry?


Some hon. Members:: Carried.


William Alfred Robinson: Shall I report the resolution?


Some hon. Members:: Agreed.


Some hon. Members:: No, no. On division.
Resolution reported and concurred in.
Mr. Harris thereupon moved for leave to introduce Bill No. 442, to authorize the Minister of Finance to make payments to the governments of the provinces and to authorize the government of Canada to enter into fiscal agreements with the governments of the provinces.
Motion agreed to and bill read the first time.


SUPREME COURT ACT
Stuart Sinclair Garson: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Supreme Court Act and the Criminal Code to provide for certain changes in connection with appeals to the supreme court; and also to establish the office of deputy registrar of the supreme court.


[Stage Direction]
Motion agreed to, resolution considered in committee, reported and concurred in.
Mr. Garson thereupon moved for leave to introduce Bill No. 443, to amend the Supreme Court Act.
Motion agreed to and bill read the first time.

John Whitney Pickersgill: the second reading of Bill No. 437, to amend the Foreign Insurance Companies Act.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Robinson (Simcoe East) in the chair.
On clause 1-For life or fire insurance.
Mr. Benidickson:: Mr. Chairman, this bill and the bill which will follow come from the Senate. They do not involve any complicated amendments but provide for an increase in the amount of deposit required by an insurance company doing business in Canada. The bill now before us refers to foreign insurance companies and it is proposed that before a company is permitted to do life or

fire insurance business in Canada the deposit will be $200,000, which is an increase from the present deposit of $100,000. The last time a change was made in the amount of deposit required was in 1927 and hon. members will realize that over the years there has been a great increase in the volume of business and consequently the liabilities incurred as well as a change in the purchasing power and the value of money.
The second portion of the bill contains a relatively minor amendment dealing with some awkwardness which has been experienced in connection with the date for filing reports. It is now suggested that in the case of foreign insurance companies, which are not required within their own country to file a report of a certain date they will be required to file a report in Canada not within a certain time following a meeting of the shareholders, as is now required by the act, but within six months after the annual balancing of its affairs.


John Borden Hamilton: Is this increase tied particularly to any volume of business being done by a company in Canada or is it simply tied to the fact that there has been an inflationary period and this is to keep the deposit in line with the value of the former amount?


William Moore Benidickson: 
John Borden Hamilton: I understand that this is an initial deposit. The parliamentary assistant has indicated that as a company continues to do business a larger deposit is required, which I understand would be for the protection of creditors in Canada. Can he state what is the largest amount now on deposit by any company?


William Moore Benidickson: I do not think I can answer that offhand. I have in front of me the annual report of the superintendent of insurance for the year 1954 which is the
17, 1956	6099
Foreign Insurance Companies Act latest report tabled here. This large report is in two large volumes. One refers to the business done by fire and casualty insurance companies and the other by life insurance companies and fraternal benefit societies. These reports of the superintendent of insurance analyse the position in Canada of each registered company, foreign, British or Canadian, and full details are given of the amount of deposit in each case, the amount of insurance done in Canada, etc.


John Borden Hamilton: Has the parliamentary assistant not some idea of the amount I am talking about in connection with companies which have been operating for several years? Is it a matter of $500,000, $1,000,000 or an amount like that? I might relate my remarks further to this problem and ask the parliamentary assistant if this deposit is in the form of cash or government bonds, or just what form does it take?


William Moore Benidickson: The act sets out the type of securities which will be acceptable when placed with the Minister of Finance on a basis of trust for this purpose. It can include government bonds of this country, provincial and municipal bonds and then there are some special stipulations with respect to preferred and common stocks that these must be of companies which have a record of paying dividends over a certain period of years.


John Borden Hamilton: I think the parliamentary assistant is getting to the question that I wanted to ask. We are always accused of being short of common stock capital or venture capital in this country and apparently it is necessary from time to time to go outside. If there are large amounts of money involved affecting several companies I am hoping that, whatever the terms are, this money is not allowed to lie idle when it is put on deposit with the department and that it may be made use of for investment in common stocks of the nature that he has said. I do not think we have any money to spare from the standpoint of capital and we should be making use of it as long as it remains within the category of investment which in the ordinary course of events would be treated as substantial enough to protect creditors. I certainly should like to have confirmation that that type of investment is allowed.


William Moore Benidickson: It is not prohibited, and there are a great number of insurance companies. We are dealing now with the foreign companies. There are 34 with deposits with respect to life and casualty business. There are 185 with respect to fire or fire and casualty and there are 32 foreign fraternal organizations. Therefore quite a substantial

Foreign Insurance Companies Act amount of money becomes available for investment for purposes of deposit.


Mr. Nowlan:: The parliamentary assistant has said that the initial deposit is $200,000 and then he has told us, as we know, that there are further deposits afterwards depending upon the business which is done. Is there any difference in the allocation of these deposits with respect to the purpose for which they may be used or are they treated as a composite deposit in balance? Is one held for one purpose and one held for another depending on the fate and success of the particular insurance company?


William Moore Benidickson: It is a composite fund. It is a growing or diminishing amount related to the amount of business that is being done.


George Clyde Nowlan: How many times have the deposits been called upon? Is there any record in the last few years of these deposits having been called upon because of companies getting in trouble of any kind?


William Moore Benidickson: I am not able to give that information readily to my hon. friend. I think he knows that the superintendent of insurance is elsewhere before the banking and commerce committee at the present time I could call him and get that information if it would not delay the committee.


William McLean Hamilton: Can
the parliamentary assistant tell the committee why both foreign insurance companies and British insurance companies are making exactly the same deposit? What I have in mind is that under the existing act and under the two acts as they will be revised Canadian companies are required to make a deposit which is one-half of the amount envisioned in this bill. In other words, if a foreign company is required to deposit $100,000 a Canadian company is required to make a deposit of $50,000.
However, exactly the same treatment is meted out to foreign companies and to British companies. They are put on an equal basis. Inasmuch as this country has for a good many years given a preference to the empire and commonwealth in connection with its tariffs, it would seem to me that on exactly the same basis preference should be given to British insurance companies over foreign companies. I do not propose to debate that point here because it comes up under the next bill. But the reverse situation is certainly a proper question to be raised at this point. Why should no extra charge be levied against a foreign company compared with a British company?


Mr. Boisvert:: All on the same footing.
[Mr. Benidickson. 1


William McLean Hamilton: You
would put all foreign nations and Britain on the same footing? From some point in the house, Mr. Chairman, there came the interjection-I think perhaps it was from the direction of the hon. member for Nicolet-Yamaska that all these companies should be on the same footing.


Maurice Boisvert: The law is the same for everybody.


William McLean Hamilton: That interjection having been made, I want to make it quite clear at this point that there are those on this side of the house who are definitely opposed to such a course of action. While Canada has achieved nationhood, we feel that we have ties within the empire and commonwealth that we value and want to keep and for that reason we want to give preference. This recurrent desire, so well illustrated both by the bill and by the interjection by the hon. member I have mentioned indicating that he wants to put Russia, China, Japan and most of the 80 other countries in the world on exactly the same basis as England, Scotland, Wales and Australia, is one which is personally very repugnant to me.


Maurice Boisvert: To answer my friend's question, within the country the law is equal as it applies to all the citizens of the country and as it applies to all people outside Canada wishing to do business inside our country. There is no doubt about that. The law has to be equal in the case of everyone coming into this country or living within the country wishing to do business. If it were otherwise I think it would be very bad for a country like ours to try to bring about discrimination. This bill has the purpose of developing business within the country. If we consider the law, I think that everybody wishing to do business in Canada should be equal, and the law provides that if people from some foreign country have the intention of doing business in this country they should follow the law that we are trying to pass now.


William McLean Hamilton: I do
not know what kind of Speaker the hon. member for Nicolet-Yamaska would have made but in my estimation he would certainly make a very poor minister of finance.


George Clyde Nowlan: May I ask the parliamentary assistant this question? How many new foreign insurance companies have registered within Canada within whatever period he has there, if he has the information available? We have heard a great deal and read a great deal in the press in the last year or so about new companies coming into Canada. I realize that the parliamentary assistant may not have the information for the reason which

he gave, but if he has can he tell the committee how many foreign insurance companies have registered in Canada within the last year or two?


William Moore Benidickson: I have a table here. Would my hon. friend like me to read it or would he consent to having it placed on Hansard? It shows the number of companies registered as at December 31, 1935, 1945 and 1955 and the companies are divided into Canadian, British and foreign.


Edward Turney Applewhaite: Is it agreed that this table be put on Hansard?


Some hon. Members:: Agreed.


William Moore Benidickson: The table is as follows: Number of companies registered as at December 31
	1935	1945	1955
Life or Life and Casualty			
Canadian 	27	27	31British 	7	5	5Foreign 	20	17	34-	-	-Totals 	54	49	70Fire or Fire and Casualty	Canadian 	60	64	81British 	71	77	95Foreign 	159	176	185-	-	-Totals 	290	317	361-	-	Fraternal	Canadian 	8	16	17Foreign 	26	30	32-	-	-... -Totals 	34	46	49


William McLean Hamilton: Mr. Chairman, despite the momentary diversion of a few moments ago I have yet to get an answer as to why this particular amount, which is exactly the same as the amount applicable to British companies, was set in the case of foreign companies.


William Moore Benidickson: I draw my hon. friend's attention to the short title of the Foreign Insurance Companies Act. It reads:
This act may be cited as the Foreign Insurance Companies Act. 1932 . . .
My hon. friend knows that this act was not introduced by this government.


William McLean Hamilton: Mr. Chairman, the bill is, and because the bill is being presented by this government the answer to the question should come from the government.


[Stage Direction]
Clause agreed to.
On clause 2-Date of filing.
Mr. Monteith:: Could the parliamentary assistant explain exactly what is meant in the new section 4 (b) by the words, "in the case of a company holding a certificate of
17, 1956
Foreign Insurance Companies Act registry limited to the business of reinsurance"? Are there any companies doing insurance business in Canada limited to reinsurance only?


William Moore Benidickson: Yes, Mr. Chairman. Each company indicates in its application for registration its purpose in the insurance field. Particularly since the end of the war and as a result of the increased volume of insurance business, a number of companies have come forward and, following their manner of doing business in other countries, have indicated that they do not propose to do any direct writing of insurance with individual people in the country. Their sole business function would be that of reinsuring companies who had direct writing with the public. In that case their reports and returns come to them at the conclusion or end of the year of the companies that they have reinsured. In consequence this bill proposes to give them another two weeks in which to make their report to the superintendent of insurance.


William Alfred Robinson: Shall the clause carry?


John Borden Hamilton: Is this extension of time simply the result of business practice which indicates that these companies cannot conform to the standard practice required by the department?


William Moore Benidickson: That is correct. The acts have provided a rather heavy penalty for late reporting. It is found these reinsurance companies have difficulty in performing according to the present statute.


Jay Waldo Monteith: Then I understand that
clause 2 deals only with the statement of the Canadian business of these foreign companies?


William Moore Benidickson: That is correct.


[Stage Direction]
Clause agreed to.
On clause 3-Time for filing general statements.
Jay Waldo Monteith: From reading the clause I believe it is a general picture of the company's over-all business to which reference is made, no matter where its head office may be. It may be in Madrid, Spain, but they still must file, within six months of the end of the year, a statement of their over-all picture. Is that correct?


William Moore Benidickson: That is correct. A Canadian company files one combined statement. In the case of British and foreign companies, they usually file two statements, one with respect to business done in Canada. Then within six years after the balancing date of the company they are required to file a statement of their entire business.


An hon. Member:: Six months.
6102	HOUSE OF
Foreign Insurance Companies Act


John Borden Hamilton: That was six months, I understand, and not six years.


William Moore Benidickson: Yes; six months.


John Borden Hamilton: The "six years" startled me a bit. Is there a situation here that such a foreign company might have several years in which they could comply with this section? I do not think it is beyond the stretch of imagination. As an example, we do not know what the requirements in the foreign jurisdiction may be. Under this section they have one month after the requirement in their own domestic jurisdiction. There may be places of business that do not require to file for a couple of years. Under this section the company would have one month after that time. Under the circumstances surely there should have been an over-all limitation to six months, regardless of what the requirement of the foreign requirement might be.


William Moore Benidickson: That is the purpose of the amendment. I think that is what we are achieving. Under the existing law a foreign company is required to provide this general statement. It is tied up to two things. It is tied up with either the date on which it submits this annual statement to the foreign country from which it derives its charter; or, alternatively, if it is not required to do that, then it must do so within a certain period of time after this meeting of shareholders. Administratively the superintendent of insurance finds difficulty in checking up on the date of an annual meeting of shareholders of a company whose head office is abroad. So he says that he proposes-and we accept that advice-that administratively it would be much more convenient to forget about any meetings of shareholders and simply say that under any circumstances the statement must be filed within six months after the balancing date of the company, whether or not there was a shareholders meeting or whether or not a general statement was required to be filed in that jurisdiction.


John Borden Hamilton: I may be
wrong on this, but it seems to me that you are not accomplishing what you are setting out to do because the wording of the section is not "and in any case within six months". It is "within six months" provided there is a failure to bring it in within one month of the filing date in the domestic jurisdiction. The domestic jurisdiction might require this return two years after the close of the fiscal year, in which case we would have to wait for two years and one month. This is not a limitation to the six months that you have led me to believe was the reason for the change in the statute. I am suggesting that the [Mr. Benidickson. I

wording should be something like this: "and in any case within six months after the balancing date of the company in each year". I would respectfully submit that the parliamentary assistant might take a further look at this wording before we pass the clause, or he will not be carrying out what the superintendent of insurance desires.


William Moore Benidickson: I tried to make it clear that we are not interfering with the date of reporting in Canada, if there is a requirement for filing a statement in the country abroad. What we are doing is eliminating the necessity of concerning ourselves with whether or not there was an annual meeting of shareholders. That matter has been found inconvenient to supervise. If no date for filing is required in the other jurisdiction, then we will henceforth require that a statement be filed with us six months after the annual balancing date. I point out to my hon. friend that we are rather in the driver's seat because the registration could be withdrawn.


John Borden Hamilton: Surely, Mr. Chairman, we do not want to find ourselves in the position that we are dependent upon the law in a foreign jurisdiction for obtaining the report that is required by our department. I think the matter simply boils down to that. If the situation should be that the superintendent does not get his report within six months, he should be in a position to call for it. Under this legislation I say that there can arise a condition in which he cannot do so, and he may be hung up for two years, three years, or whatever the law in the foreign jurisdiction may be. It may be all right to say, "Oh, in these foreign jurisdictions their requirements are as stiff as are our own in connection with insurance matters". But as a matter of fact, I have had a little bit of experience in connection with this type of work, and it seems to me that what should be in here are the words that I have indicated. If the parliamentary assistant will read that paragraph over again, I think he will see the wisdom of my suggestion and will agree that the final words should have been "and in any case within six months".


William Alfred Robinson: Shall the clause carry?


Some hon. Members:: No.


Jay Waldo Monteith: Is that not the actual intent of the clause, namely, that in any case the statement should be filed within six months?


William Moore Benidickson: No, Mr. Chairman. If in the foreign jurisdiction there is a date with respect to the filing of a report of a foreign insurance company, we are not proposing to change our requirements in that

respect. If my hon. friend looks at the explanatory notes on the right hand side of the page and reads there the existing law he will see that at the moment it is as follows:
The statement of general business required to be made under section 21 shall be deposited in the department within one month after it is required by law to be furnished to the government of the country in which the head office of the company is situated. . . .
We are not changing that. We are changing only the portion that hitherto has had the filing in Canada in the alternative tied up with the date of the holding of a shareholders meeting in the foreign jurisdiction.


Jay Waldo Monteith: Would it not be preferable to the superintendent of insurance actually to receive these statements at the end of six months rather than to look for them at the end of ten months, twelve months or fifteen months?


William Moore Benidickson: This bill has his approval. He reports he has had no difficulty administratively with respect to these reports, except in the circumstances where he is obliged to inquire about when an annual meeting was called in the foreign country. Under those circumstances, he has had difficulty, and he thinks this is an improvement.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported.
The Acting Speaker (Mr. Applewhaite):: When shall this bill be read a third time, now?


Mr. Knowles:: By leave.


Walter Edward Harris: the third reading of the bill.
Motion agreed to and bill read the third time and passed.


CANADIAN AND BRITISH INSURANCE COMPANIES ACT
Walter Edward Harris: the second reading of Bill No. 438, to amend the Canadian and British Insurance Companies Act.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Applewhaite in the chair.
On clause 1-
Jay Waldo Monteith: A few moments ago, Mr. Chairman, the hon. member for Notre Dame de Grace mentioned that British and foreign
Public Service Superannuation Act companies' deposits were to be increased to $200,000. This bill increases the deposits of Canadian companies from $50,000 to $100,000.
I understand this is to put Canadian and British and foreign companies more or less on the same footing, and I wonder if the parliamentary assistant would mind explaining how that would come about.


William Moore Benidickson: A Canadian company, Mr. Chairman, first of all must seek an act of incorporation from parliament. In that connection today, in order to get the recommendation of the superintendent of insurance before the bill is presented here and before it is considered in the banking and commerce committee a company is required to put up an initial capital of $200,000 as a minimum if it proposes to do business in the life or fire insurance fields. It is for that reason the Canadian deposit requirement is less than that of the British or foreign companies, because a Canadian company has the additional requirement of having minimum capital that has to be put up by the shareholders in Canada.


[Stage Direction]
Clause agreed to.
Clauses 2 to 5 inclusive agreed to.
Title agreed to.
Bill reported.
The Acting Speaker (Mr. Applewhaite):: When shall this bill be read a third time? Now?


Stanley Howard Knowles: By leave.


Walter Edward Harris: the third reading of the bill.
Motion agreed to and bill read the third time and passed.


PUBLIC SERVICE SUPERANNUATION ACT
[Stage Direction]
Hon. W. E. Harris Minister of Finance) moved the second reading of Bill No. 440, to amend the Public Service Superannuation Act.
Stanley Howard Knowles: Is the minister going to make a statement at this time or would he rather speak when it is time to end the debate?


Walter Edward Harris: I would rather speak later, sir.


George Alexander Drew: Is the minister not going to make any statement as to the stage at which he is going to take into consideration any of the proposals that were put forward on an earlier occasion?


Walter Edward Harris: The proposals that were put forward on an earlier occasion, Mr. Speaker, had to do with some action the government
6104	HOUSE OF
Public Service Superannuation Act might take outside the terms of the bill, and I thought I would deal with that at the conclusion of this debate.


George Alexander Drew: I had hoped, Mr. Speaker, that since this subject was raised we might have had the assurance that the government will take action to deal with the very serious plight of many superannuated civil servants, members of the armed forces and members of the Royal Canadian Mounted Police who received their pensions at a time when the dollar was worth a great deal more than it is today. Just a few nights ago, I was looking at a television broadcast which compared the cost of living in Canada in 1936 with that in 1956, as well as comparing some other events. It brought home very vividly the tremendous difference in the amount of money that is required to give even a minimum of living standards.
Now, whether it is possible to deal with this subject within the framework of the bill now before us, at least it does seem to me it would be appropriate at the time when we are dealing with the public service superannuation that we should have a statement that there will be at this session something done to rectify an injustice which has continued far too long. We are not making any suggestion that is unrelated to reality. We are not making any rash proposals. As has been indicated, already in the United Kingdom there have been several progressive changes in the superannuation payments to a wide list of those who depend upon the government of the United Kingdom for their pensions. The last of those was during the spring of the present year. At that time it was pointed out that this is something that cannot be measured on a contractual basis. It was pointed out, as it has been pointed out on other occasions, that the civil servants, members of the armed forces and others, who received payments of that kind, accepted and received for many years payments which were far below the level of payments for corresponding activities in private occupations.
I must say that there has been a satisfactory improvement in the situation within the civil service here and in the provincial governments of Canada in recent years. Undoubtedly the gap between the amount received by civil servants and those doing similar work outside has been narrowed. We must recognize that the gap was very great indeed in earlier years. Pension payments were related to the amount they had received. Nevertheless, they were supposed to provide a minimum decent standard of living for those who were superannuated. I submit that this cannot be dealt with on a contractual basis


like an insurance policy, or something of that kind. The test is a very simple one. Do the payments they now receive provide an adequate amount to give a decent minimum standard of living to those who served their country well in those various services? An attempt has been made to meet this situation upon that basis in the United Kingdom and in the United States. They have dealt with it on more than one occasion.
It must be common knowledge to every hon. member in this house that there are many splendid citizens of advanced years who served this country, either in the civil service, the armed services or the Royal Canadian Mounted Police, who are living in really desperate circumstances because of the inadequacy of the pension they receive.
If no other jurisdiction similar to ours had dealt with this subject, then it perhaps might be argued that this is one of those unfortunate instances where a contract has been made and that the contract must stand. However, in the United Kingdom, in other nations of the commonwealth as well as in the United States a real attempt has been made to meet this situation in a spirit of justice and humanity. I do not think it is possible to put into words the anguish of many of the people who are trying to eke out an existence on the pitifully small pensions that were fixed many years ago. I do not intend to put them on record, but I have received many letters, as I am sure other hon. members have, that tell the heartbreaking story of the struggle merely to survive with the amount of the payments they receive.
I would hope that since we are dealing with civil service superannuation, and since I am sure there will be general approval of such a plan, the minister will state now that steps will be taken to provide an over-all increase in the amount of pension. That could be done immediately. Then, more elaborate procedure could be followed to examine this subject thoroughly, as it has been examined in the United Kingdom, in the United States and elsewhere, and basing the adjustments upon the time at which the payments were made and upon the very real need of those people who have given great service to Canada, this situation could be dealt with in a way that I am sure would meet with general satisfaction. I find it difficult to believe that there would be opposition from anyone if such a proposal were made.
I hope the minister, even at this stage of the session, will make an announcement that justice to those superannuated civil servants, members of the armed forces and members of the Royal Canadian Mounted Police will

be meted out at this session. In that way, hope, encouragement and some faith in their prospects for the future will be given to many deserving people who are in desperate circumstances today.


Stanley Howard Knowles: Mr. Speaker, it seems to me that this is an appropriate occasion-and I gathered from what he said a moment ago that he intends to do it-for the Minister of Finance to make the statement which he promised on February 21 of this year he would make regarding this question. I refer in particular to the plight of superannuated civil servants, namely, those already retired who are on pensions in the lower brackets.
The fact that we are saying very little about what is in the bill that is now before us is a recognition of the fact that the steps proposed by this bill seem all to be good. As far as I can ascertain from my study of the bill, they are all steps in the right direction. They meet problems that have arisen in the administration of the Public Service Superannuation Act. Our complaint, however, is that once again the government is dealing with superannuation matters so far as our civil servants are concerned without touching this problem that faces so many of our older employees who are already retired and are having to exist on very small pensions.
I shall not take the time of the house to repeat the material in the speech that I made on February 21 of this year, as found in Hansard on pages 1415 to 1420. Neither will I attempt even to summarize the many speeches that I have been making on this subject during the regime not only of the present Minister of Finance but also of at least two of his predecessors, namely Mr. Abbott and Mr. Ilsley. I mention that fact simply to underline the situation with which we are confronted, namely, that for a long time some of us have been pleading for a measure of justice for our retired civil servants. Perhaps I might take just a moment to point out that the figures that have been given this year, as may be found on page 785 of Hansard for February 1, 1956, show that there are 2,710 retired civil servants whose pensions are less than $50 a month. That figure is included in a total number of retired civil servants of 13,022. On that same page it will also be seen that there are 4,196 widows of retired civil servants on pensions of less than $50 a month. That figure of 4,196 represents almost two-thirds of the widows of retired civil servants who are on pension. The total number of such widows is 6,459.
It is on behalf of all retired civil servants who find their pensions inadequate as the
17, 1956
Public Service Superannuation Act cost of living goes up that we plead with the minister, but we plead in particular on behalf of these folks in these lower pension brackets. As has been pointed out to the minister from this side of the house time and time again, we are not asking the government to break new ground when we ask that something be done for persons already retired, despite the argument the government continually throws at us about contractual relationships.
The Leader of the Opposition has just mentioned, as indeed I have put it on the record time and time again, that this has been dealt with by the government of the United States and by the government of the United Kingdom. It has been dealt with by the governments of a number of the states of the American union; it has been dealt with by two or three provinces of this country; it has been dealt with by private organizations like the Canadian Pacific Railway and International Nickel. In the case of the Canadian Pacific Railway the supplement which is given to certain pensioners is, I admit, cut off at age 70 when old age security comes into effect, and there are other complaints in that connection which we have already registered. But the fact is that quite a number of employers and jurisdictions have recognized that they have a moral responsibility to their former employees with respect to their standard of living after their days of active service to their employers are over.
We have made the argument time and again, and I refer to it again tonight, that the rise in the cost of living is something that has to be faced by these people and we feel a greater responsibility in this regard rests upon the government than on private employers because the government has some control over the economy of the country and some control over the cost of living.
I submit, Mr. Speaker, that not only does the government owe consideration to these people because the cost of living has gone up and because they cannot get by on their small pensions but I submit also that the time has come for the government to recognize with respect to its own retired employees that people who have served their day and generation and are living in retirement have a moral right to share in the improved conditions that are achieved even after they retire.
I am sure it is not inappropriate to draw a parallel between this situation and what one would do in any ordinary decent family. I am sure any family that had its parents living in the family home and was able to improve its standard of living, if the time came when the old folks were no longer working the younger members of the family

in asking the government to do that we are asking them to do only what other governments, other jurisdictions and in many instances other employers have done already.
In addition to that I invite the government to give serious consideration to the principle or the philosophy suggested in the bulletin by William M. Mercer Limited, which I read, namely that a pension fund must be a means not just of storing up dollars based on one's past earnings but rather a means of providing employees with an equity in the future productive capacity of Canada.
Just to underline still further my contention that what we plead for is not only humanitarian, although surely that should be sufficient, but is also something to which people are giving thought in academic terms may I remind the minister of something that he probably knows, namely that this matter is being studied by experts in the professional institute which represents employees in the public service of Canada.
I have before me a very interesting article on this subject which makes a number of suggestions. The article is academic in nature and in my view is particularly well done, but because it is academic perhaps I can sum it up and give some of its suggestions to the minister just to indicate what some other people have thought about this problem and the solutions they offer. For example, it is suggested that one way to deal with the plight of superannuated civil servants whose pensions are inadequate is to supplement those pensions out of general revenue. So far as the immediate situation is concerned I think that is the only answer, but that is not a permanent answer because to do that today is to admit that 10 years from now it is going to have to be done again. In other words, the act is not completely satisfactory.
Another way to deal with this matter would be to put actuaries to work-this is suggested in the article to which I have made reference-to compute what is likely to be the rise in the cost of living, the rise in the standard of living and the rise in the productive capacity of Canada year by year during the years that lie ahead. It is difficult perhaps to be a prophet in this field, but actuaries have been able to achieve some rather accurate predictions with their research and study. It is suggested that it probably could be ascertained what additional premium or payment into the fund would be necessary by civil servants so as to provide an automatic increase in the pension after retirement of, shall we say, 2 per cent per year or whatever figure might
17. 1956
Public Service Superannuation Act be arrived at to compensate for the increased cost of living, on the one hand, and on the other hand to give to retired civil servants their share of the increased productive capacity of Canada.
That is one way it could be done and I suggest that it merits active consideration by the government. An amendment could be made to the act to provide for a slightly higher payment into the fund the purpose of which would be to guarantee to civil servants on retirement that although their pension at retirement would be at the figure arrived at by the computation set out in the act, it would go up by a fixed percentage each year from then on so that they would not have to worry about losing out in the scramble created by an increasing cost of living.
Another way, and this also has been suggested, in which this could be dealt with is by arranging for a special fund separate from the normal fund provided for by the Public Service Superannuation Act, and patterned something after the way in which supplementary unemployment insurance benefits were first brought in. I remind the minister and the government that when it was first decided to have unemployment insurance benefits of a supplementary nature for seasonal unemployment it was decided that there would be a slight extra contribution to provide for those supplementary benefits.
Similarly I suggest that it would be feasible to have a fund into which the working civil servants would contribute a small additional amount to make possible supplementary payments to those now retired. The return or quid pro quo to those now working for making that payment would be the knowledge that when they reached retirement the civil servants of that day would pay into a fund to provide whatever supplement was necessary for them. In that way our retired civil servants would continue to get their share of the increased productivity of the nation just the same as we contend that those working at any one time are entitled to an increasing share of the country's increasing productivity.
There is another suggestion which could be made in connection with this matter but which perhaps is a little more difficult to work out in connection with a government scheme. Investments might be made of certain kinds with regard to these funds so that the amount of money in the fund would reflect the increased earnings of the country at any time.

Public Service Superannuation Act
I could go into further details of these various plans but I need not do so because I think I have made my point that thought has been given to this, not just in terms of a humanitarian approach, although that should be sufficient, but also in terms of an academic approach. There are people who are studying this question because they realize the difficulties that exist. Although the government may think that the Public Service Superannuation Act is perfect, it has one sharp deficiency which is felt by hundreds or indeed by thousands of people right now and which will be felt by thousands more in the years that lie ahead.
Therefore it does seem to me that the statement which on February 21 the minister promised to make is one that should be made in the light of its importance. I hope he will arrange the business of the house tomorrow so that this can be dealt with without having another break. This matter has been interrupted time and time again during the session and I hope arrangements can be made so that he can deal with it in the morning and let the house know that the government is at last becoming aware of the seriousness of this problem, is at last becoming aware of the fact that something has to be done about it. I hope that the minister in his statement will not just repeat the negative answers which Mr. Ilsley and Mr. Abbott gave, but rather that he will indicate that the government knows that the time has come to do something about his problem.
I do no know just what the plans are for the moment, so I suppose I had better play
safe and move the adjournment of the debate.


Walter Edward Harris: There is no possibility of going on with this debate tomorrow if that is what the hon. member had in mind.


Stanley Howard Knowles: That being the case I had better move the adjournment of the debate, unless the minister is prepared to answer right now.


Walter Edward Harris: I am.


The Acting Speaker (Mr. Applewhaite):: There are two things which I think should be pointed out. If the minister speaks now he will close the debate and we would have to have consent for the minister to speak, it being after ten o'clock. Order. I hear several members saying "ten o'clock". Has the Minister of Finance permission to speak now?


Some hon. Members:: Agreed.


Stanley Howard Knowles: Yes.


An hon. Member:: No.


The Acting Speaker (Mr. Applewhaite):: 1 hear "no".
On motion of Mr. Knowles the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, the business tomorrow will be as agreed upon, namely, the estimates of national defence, followed by defence production and northern affairs.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, July 18, 1956