1956-04-30

Hon. Hugues Lapointe (Minister of Veterans Affairs):: Mr. Speaker, I wish to announce the policy of the government regarding the selection of a repository for the world war II Book of Remembrance and a site for the national cenotaph to honour Canada's youth who have given their lives in the cause of freedom. In my statement, which appears on page 2122 of Hansard of March 14, 1956, I informed hon. members that an advisory committee had been established to consider these matters and that the committee's report was receiving the attention of the government.
The government has accepted the unanimous recommendation of that committee and has decided that a national memorial, to honour our fallen of all conflicts and to house the world war II Book of Remembrance, shall be constructed on Nepean point in the city of Ottawa where an area shall also be provided for the erection of a national cenotaph and for the holding of national commemorative services. This memorial will take the form of a structure of a design appropriate to keep alive the remembrance of all those who have given their lives for Canada. The focal point within the memorial will be the Altar of Remembrance. The matter is now in the hands of my colleague, the Minister of Public Works (Mr. Winters), who is proceeding with the preliminary arrangements and planning for the construction of the memorial and the cenotaph.
Besides serving as a repository for the world war II Book of Remembrance, it is intended that the memorial shall also house a copy of the world war I book. It is not the intention to move the world war I Book of Remembrance from the memorial chamber in this building which, as hon. members know, in its decorative treatment, refers specifically to that conflict. However, relatives of the fallen and citizens at large who visit the national memorial in the future may wish also to see the world war I Book of Remembrance and it is thought appropriate that a copy should repose there.
The committee in its report considered the possibility of the preparation of books of
remembrance for those who lost their lives in other conflicts such as Korea and those previous to world war I.
The world war II Book of Remembrance will be completed in the autumn of 1956, and it was therefore necessary for the committee to consider a temporary repository for the book until such time as a permanent repository could be constructed. The government has accepted the committee's recommendation that the book be placed in the houses of parliament, and it has now been decided that a temporary base, on which the book will rest, shall be placed in the memorial chamber. This will have the advantage of having both books of remembrance in the same location until the national memorial is ready.
In its annual brief to the cabinet last November, the Canadian Legion recommended that a national cenotaph be erected and suggested that it be situated in the grounds in front of the peace tower. However, after much consideration, the advisory committee concluded that the most suitable location would be found in the area near the proposed national memorial where there would be ample space for national commemorative services, with parades of service personnel and veterans, and a large gathering of the public. I might say that it is not the intention to move the world war I national memorial from its position in Confederation square where it is perhaps the most conspicuous monument to meet the eye of the visitor approaching this capital city by the driveway from the south.
[Later :1
On the orders of the day:


Mr. D. S. Harkness (Calgary North):: Mr. Speaker, I should like to address a question to the Minister of Veterans Affairs consequent upon the statement he made a few minutes ago. I understand from that statement that the new veterans' memorial is to take the form of an altar. Is that altar to be of the same nature as the altars found in the war graves areas maintained by the imperial war graves commission? If I may, I should like to say that I am very glad to hear that this memorial is to be constructed, as I am sure the veterans of Canada will be.


Hugues Lapointe: Mr. Speaker, as I mentioned in my preliminary statement, the plans of

Proposed Legislation
this memorial are being prepared by the Department of Public Works. I am afraid I cannot give a specific answer to my hon. friend's question with regard to the details of the altar.



CANADIAN CITIZENSHIP ACT


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration) moved: the first reading of Bill No. 256 (from the Senate), to amend the Canadian Citizenship Act.
Motion agreed to and bill read the first time.



CANADIAN NATIONAL RAILWAYS


Hon. W. E. Harris (Minister of Finance) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to make capital expenditures in the year 1956 not exceeding $233,564,000 and to make certain capital expenditures and enter into certain contracts prior to July 1, 1957; to authorize the national company to issue securities to provide amounts required for the authorized expenditures; to provide that, except as expressly provided, the aggregate principal amount of securities outstanding at any time shall not exceed $203,994,000; to authorize the governor in council to guarantee the principal and interest of securities issued by the company for the purpose aforesaid; to authorize the Minister of Finance to make loans to the said company secured by such securities and not exceeding $203,994,000 in principal amount to enable the said company to meet such expenditures and with authority to give financial aid and assistance to other companies of the national system.


[Stage Direction]
Motion agreed to.


Walter Edward Harris: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to amend the Tariff Board Act to increase the membership of the board from three to five members and to provide for the salaries of the new members.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Motion No. 72-Mr. Dinsdale:
For a copy of all letters, telegrams, memoranda and other documents, in possession of any department of the government, relating to the expropriation of the farm of August Fontana, of Virden, Manitoba, by the federal government, in 1940, for the purpose of establishing an airfield.
Hon. George C. Marler (Minister of Transport):: Mr. Speaker, there is no objection to the adoption of this motion on the understanding that it does not extend to include interdepartmental correspondence or other privileged communications of that kind.


Mr. Speaker:: Motion carried, subject to the reservations made by the Minister of Transport.



MANITOBA


[Stage Direction]
On the orders of the day:
Hon. George A. Drew (Leader of the Opposition):: I wish to direct a question to the Prime Minister. In view of the very serious damage already caused in rural Manitoba as a result of the flooding of the Assiniboine river, will the government consider having steps taken to have the public works department do such dredging or other construction as may be necessary to prevent a recurrence of this condition, and also might I ask if the government has given any consideration to taking steps to see that those farmers and others who have suffered damage by reason of this flood will be compensated?


Right Hon. L. S. St. Laurent (Prime Minister):: I do not think we should take the initiative in seeking out claims for damages to be paid by the taxpayers of Canada generally to those who suffer from floods. There are some disasters that are of such magnitude that the public opinion of the nation is moved and it is felt that there should be some assistance given. But I think it would be quite a wrong attitude to take that the taxpayers of the nation generally are the insurers of each other against damages that do happen every year in very many places throughout the nation.
I have been receiving communications that would imply that there is a responsibility for any flooding from a stream that at any time was regarded as a navigable stream. Of course, where there are really navigable streams there are efforts made to keep them as free from obstructions as possible and to

do that which will minimize the possibility of floods. Now, with respect to the first part of the hon. gentleman's question he will remember that after the flood of 1950 there was a joint commission set up to examine the measures that might be taken to minimize the dangers of these floods, and a very intensive study was made of the situation. The costs of the measures suggested were indicated and some time ago the premier of Manitoba, to whose government the report had been submitted, wrote suggesting that we should take the initiative in setting up another commission to determine whether the economic value of the diminution of the danger would be anything like the cost of providing these works. We wrote back suggesting that our personnel was always ready to co-operate with them, but that was something the initiative for which should be taken by the government of Manitoba itself. I can assure the hon. gentleman that if there was any thought that by some dredging of the Assiniboine river these dangers could be overcome, that would be done at once.
I am not an engineer, but I understand that it would require very extensive engineering work to have any effect upon that area because there are floods that come from not only the Assiniboine but the tributaries to the Assiniboine, the Red river and also from the lakes into which these rivers flow. The whole matter is one of very serious concern to the people of that area and I am sure that the hon. gentleman was delighted, as we all were, to hear these reports that the weather we have been having over the last few days has diminished very substantially the fears that were entertained about the flood possibilities this year.
There have been some floods from the Assiniboine and from the LaSalle and I know that everything that can be done at this time is being done. As to the ultimate solution, it will require further studies before any conclusion can be reached because I understand that the Assiniboine now flows through dikes that are much higher than the level of the surrounding plains. These are matters of great concern, but there are these cycles. It is not so very long ago that there was concern expressed about the sufficiency of water, and now the concern is about the possibility of providing ways through which these abundant waters can reach the northern seas. The subject will have to receive further study. We cannot take the position that it is the responsibility of the federal government to take the initiative for these problems which arise in all of the ten Canadian provinces.
Inquiries of the Ministry
The hon. gentleman realizes, as I do, that there are still Canadian provinces and that they have jurisdiction over their local affairs, but there are matters which require the cooperative efforts of the federal government representing the taxpayers of the whole nation. The problems have to be studied and examined and recommended upon by the local authorities. Up to the present time I think the federal government has, whenever there has been a major disaster that was looked upon as such by the Canadian public generally, recommended to parliament such measures as were acceptable to the Canadian public generally.


George Alexander Drew: Mr. Speaker, merely to clarify one point, I. of course would emphasize as well as accept the proposition that there are provinces, whose rights must be very carefully recognized in a matter of this kind; but my question was premised on the proposition that the Assiniboine river is a navigable river and therefore under the jurisdiction of the federal government to that extent. My question was related to that. I would simply express the hope that as a result of what has taken place consideration will be given to the possibility of dredging and of other work from the point of view of control over a navigable stream.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I ask the Prime Minister a supplementary question? Despite the reports of good weather to which he referred, is he not aware of the fact that the floods from the Assiniboine already constitute a major disaster for many of the farmers in Manitoba? Has this government not already received a request from Premier Campbell for assistance from the Prairie Farm Rehabilitation Act authorities of the federal government?


Louis Stephen St-Laurent: There have been requests for assistance in work that might be done to minimize the effects of the floods but no request from Premier Campbell for damages resulting from the floods-


Stanley Howard Knowles: He is always slow.


Louis Stephen St-Laurent: -has yet
been received. The hon. gentleman will remember that when those floods are raging they look much worse than fortunately they turn out to be when the season has advanced.
That has been the experience in the past with these floods that affect farm lands although I do know that floods are affecting the very valuable farm land which is part of the portage plains. Consideration will

Inquiries of the Ministry have to be given to the construction of permanent work that will perhaps require cooperation between the federal government and the government of the province of Manitoba. To effectively control floods, reservoirs would have to be provided. Attention has been given to the question as to whether the benefits would be sufficiently larger than the damage caused by taking what are now agricultural lands for the construction of the reservoir beds. That question is being studied.


Stanley Howard Knowles: Mr. Speaker, may I ask another supplementary question? When this present disaster is over may we expect more effective action on this question in the future than we have had in the interval since the flood of 1950 from the federal and provincial governments and the international joint commission?


Louis Stephen St-Laurent: I am not
sure what the international joint commission could do about it. As the hon. member knows, a detailed report was prepared as much as three years ago which has been receiving consideration since that time. It was only within the last few weeks that there was this request for a commission to seek to make an appraisal of the economic benefits as compared with the costs of the work suggested in any of the alternatives reported upon by this joint commission.
[Later:!
On the orders of the day:


Mr. G. K. Fraser (Peterborough):: Mr. Speaker, I would like to direct a question to the Prime Minister with regard to the Winnipeg floods. Can the Prime Minister say what happened to the surplus money that was turned back after the relief funds were collected in 1950? Could that be used for any relief at this time?


Louis Stephen St-Laurent: Well, Mr. Speaker, I would have to make inquiries. There was a body incorporated by parliament to receive in trust what was left from that fund. I have not had notice of this question and 1 am not in a position to say exactly what is the state of the fund at the present time.


Mr. William Bryce (Selkirk):: Mr. Speaker, I should like to ask a supplementary question or add to the previous question. I have just come back from that area and people who have had no crops for two years are likely to have no crops this year. I hope when they are looking over the Assiniboine valley they will do something for the interlake country where they have had no crops for two years.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mrs. Ellen L. Fairclough (Hamilton West):: Mr. Speaker, I should like to address a question to the Minister of Labour. Will the minister inform the house if he has yet received word from the railway companies with reference to their decision in the dispute which is now being conciliated? Is it true that the railway companies have refused to accept the recommendations of the conciliation board?


Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, a letter written on behalf of the railway companies arrived at my office on Saturday afternoon and came to my desk this morning. It is a rather long letter and, after setting out quite strong disagreement with some phases of the majority report and also pointing out the difficulties with regard to financing, the letter concludes- and I can do no better than to paraphrase the last paragraph of the report:
However, the acceptance by the unions of the majority report based on a contract term in excess of one year creates a new situation in which the railways are prepared to do everything possible consistent with their responsibility to the public to reach an equitable settlement of this dispute. They will be glad therefore to meet the unions for negotiation looking to the development of such a satisfactory basis of settlement.



DOMINION-PROVINCIAL RELATIONS AGRICULTURE  REPRESENTATION AT RECENT MARKETING CONFERENCE

[Stage Direction]
On the orders of the day:
Mr. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture. Can the minister give the names of the representatives of the farm organizations who took part in the agricultural marketing conference held in Ottawa on April 16, 17 and 18 and as referred to on page 2774 of Hansard of April 10, 1956?


Mr. Speaker:: Should not this question be placed upon the order paper? The hon. member would get an answer, I am sure, with no delay.


Walter Gilbert Dinsdale: Mr. Speaker, on a question of privilege-


Mr. Speaker:: If the question is such that the country might collapse if an answer was not given I suppose I should not be so severe, but the question should be one of great urgency.


Walter Gilbert Dinsdale: It is rather urgent to the parties concerned.


An hon. Member:: To know whether they were there?


Walter Gilbert Dinsdale: Organizations were not aware that they were at the conference.


Right Hon. J. G. Gardiner (Minister of Agriculture):: Mr. Speaker, I shall have to take the question as notice because there were at least 19 representatives there, or entitled to be there. I was not there all the time myself and am not certain whether they all attended. I shall have to get the record to find out who was there and answer later.


Mr. Argue:: Why did you not invite the farmers?



CANADA EVIDENCE ACT


[Stage Direction]
On the orders of the day:
Hon. Stuart S. Garson (Minister of Justice):: Mr. Speaker, on Thursday last the hon. member for Peterborough (Mr. Fraser) asked me this question:
Has any consideration been given to amending the Canada Evidence Act so that microphotographic film would be taken as proof of records of municipal governments?
I do not think there is any great urgency to this question, so as the answer is rather lengthy I suggest that I be permitted to place it on the record.
Our files indicate that this question has been considered on at least three occasions upon the basis of representations by or on behalf of municipalities in Ontario. On each occasion we have refused the requests of the municipalities upon, amongst others, the following grounds:
1.	As I have already indicated, the Canada Evidence Act applies only to criminal prosecutions and proceedings in the Exchequer Court of Canada. It would therefore seem that an amendment along the lines proposed, to the Canada Evidence Act only, would be of little assistance to municipalities. For them, amendment of the provincial evidence act would seem to be more appropriate.
2.	Whether under such a provincial amendment municipalities should be permitted to destroy documents and rely for evidence on photographic copies thereof is a decision which we think should be made by the provincial authorities which created the municipalities and clothed them with their present powers and responsibilities.
3.	If provision were made in the provincial law of evidence for proof of municipal records by production of photographic copies,
67509-216J
30. 1956	3393
Proposed Tax Relief for Municipalities such provision would apply to criminal proceedings and proceedings in the exchequer court by virtue of section 36 of the Canada Evidence Act, R.S.C. 1952, chapter 307, which provides that in all proceedings over which the parliament of Canada has legislative authority the laws of evidence in force in the province in which such proceedings are taken apply.


Walter Edward Harris: that the house go into committee of supply.



TAXATION


George Alexander Drew: Mr. Speaker, in accordance with the custom that has been established upon the presentation of this motion I am availing myself of this opportunity to bring up a subject which has assumed increasing importance throughout the whole of Canada. It has been discussed here before, it has been dealt with by many public bodies, but it assumes today a sense of urgency which calls for consideration here and in every part of this country. I am referring to the plight of the municipalities, caught as they are by the withdrawal of taxing powers and with the enormous increase in expenditures with which they are confronted.
We read constantly about the crisis in education. We read a great deal about the demands in the field of health. We read a great deal about the need for improvement in the general structure of our highway system throughout the country. We read a great deal about the need for modernization of our facilities for handling the highway traffic of this country. All these and other similar problems must be faced in varying degrees to an extent never before contemplated by the municipal governments of Canada.
Those municipal councils, whether they be urban councils or rural councils, must deal with the wholly basic requirements of the daily life of our people. Through the school boards which are associated with the municipal councils in the local activities, they must deal with problems of education as well as public works, public investment, streets, sewers, water supplies, light, unemployment relief, housing, health, welfare, their portion of the main provincial and county highways and many other services which are more intimately associated with the daily needs of each one of us than many of the very important things that we are called upon to deal with here.
3394	HOUSE OF
Proposed Tax Relief for Municipalities
The costs and responsibilities of local governments have soared beyond belief and they show every sign of increasing enormously within these next few years. The resources available for municipal governments are neither adequate nor flexible enough to produce the revenue which they need. As we think of this problem and as we consider the ways in which it does fall within the possible action of this parliament to do something about it, we should project our minds forward to what is going to happen in the years very soon ahead of us in order to contemplate what may happen unless something is done and done very soon. By 1975 or quite soon after that date there are reasonable prospects that this country will have a population of 30 million people. We see evidence of an increasing movement of population to the urban or suburban areas. We see the increased need for internal transport facilities within municipal areas that are expanding rapidly into the suburban areas as well as part of an integrated plan of development.
In addition, there are many new needs which will arise. Already it has been necessary for some of the provinces to consider the need for special supplies of water to meet the domestic requirements because of the enormous demands on the ordinary water supply which is not adequate to meet the greater size of the urban communities. It is simply beyond the ability of municipal governments to meet these responsibilities within the limits of their present revenue resources.
Some new methods must be found. There must be some adjustments to ease the burden. There must be some adjustments to facilitate their work. As the Prime Minister (Mr. St. Laurent) mentioned before, repeating what I had occasion to say not long ago elsewhere, we must remember at all times that there are the provinces and we must remember that the municipalities, to use the classic expression, are the legal creatures of the provinces. We must recognize that under our federal system the laws governing the provinces in relation to their municipal activities are provincial laws. Nevertheless there are ways in which things can be done by this parliament at the instance of the government of Canada which would assist them greatly at this time.
We have been told publicly as well as in presentations to the federal government that the government must take a more realistic view of the present situation and the new situation with which the municipalities will be confronted. The offers that have already been made for financial adjustment between the Canadian government and the governments of the provinces have been described
[Mr. Drew.)

as unrealistic. They have been described in other terms in different parts of Canada. One of the things that is certainly clear, and clear beyond all question, is that the present proposals which have been made in that field will not meet this urgent need of the municipalities.
One of the places where the parliament of Canada can do something effective is with regard to sales taxes and other excise taxes on purchases by municipal governments. There is something that is the direct and exclusive responsibility of this government and of parliament. Having regard to the fact that it involves a money problem, any move to solve this question must come from the government. They must be prepared to indicate their willingness to deal with it if it is to be dealt with at all.
Then there is another matter that comes entirely under the jurisdiction of this parliament and of the government. That is the situation created by the increasing area of land that is held by the government in the various municipalities and which is therefore exempt from taxation. There is a long history in regard to this situation which need not be repeated at this time. Naturally the municipalities welcome the services which are given by many of these crown corporations or other crown bodies. The fact remains, however, that as the land area taken over in this way increases, it does also accentuate the problem and the difficulties faced by the municipalities themselves. One of the things which most strongly emphasizes the unreasonable nature of this tax is the fact that where the very same things are bought by the provincial government they are exempt from taxation. I know there are certain exemptions. I know that there are exemptions under certain conditions in the case of road-making machinery and equipment of that kind. But generally and with very few exceptions the municipalities are taxed for all the equipment they buy which is needed for the people of Canada.
After all, nearly all the people of Canada live within the boundaries of some municipal body. Nearly all the people of Canada are greatly concerned at the present time with the rapid increase in the level of taxation. Nearly all Canadians are therefore directly affected by taxes on things which they need for their own daily use and which are not in any way part of ordinary daily trade or in any way luxuries or things that any of these people can do without. The municipalities require them for the actual needs of the people themselves.
I believe it is contrary to the whole principle underlying the imposition of sales

tax and of excise taxes that they should be imposed upon equipment, machinery and things of that kind or supplies of any kind bought by the municipalities for the use of the people themselves. Unless this were contrary to the underlying principle which guides governments in the imposition of taxes of this kind, there surely would have been no reason for exempting the provincial governments from the application of these provisions. The very fact that provincial governments were exempted emphasizes the acceptance by this government of the proposition that these taxes would not normally apply to things of this kind. Why should municipalities and the school boards within municipalities be called upon to pay sales tax and excise taxes on school equipment used exclusively for education as well as on equipment which is required for the service of these schools?
Certainly the government of Canada and the parliament of Canada must not invade the field of provincial jurisdiction where it is exclusively conferred upon any province under our basic constitution. This, however, is something very different. The government is constantly asked to help in education. Here is one way in which it can do so without any question of jurisdiction arising at all. By exempting school equipment, school supplies and the things that are needed for our schools there is given a direct and immediate assistance in the field of education and entirely within the realm of federal jurisdiction. When the provincial governments are exempted from these taxes, it seems strange that you should come to the boundary of the municipality and find that, just outside, exactly the same activity can be carried on with equipment or machinery that pays no tax of this nature whereas right inside the boundary the same machinery or equipment must pay this tax. All these people live within the provinces and they all live under provincial laws, whether they be laws applying to the activities of the province as a provincial body or to the activities of the municipalities as bodies set up in law by the provincial legislatures. Surely here is one case where we may well ask why this unfair tax is imposed.
There has been much discussion here about the cost of health. This government has been discussing ways in which it can assist in the field of health. Surely there can be no reason of any kind for medical supplies used by the health services in the municipalities being called upon to carry sales tax and excise taxes. It is imposing a senseless and onerous burden upon the municipalities in their carrying out of an essential and necessary responsibility.
30, 1956	3395
Proposed Tax Relief for Municipalities
Then let us examine the case of crown properties. These have been expanding constantly. With new types of construction, and with new development of the activities of the Canadian government, the area occupied by the Canadian government in many fields has expanded enormously. Whatever method may be devised, there should be adopted some method which will make available to all municipalities the equivalent of the local taxes on the property taken over in this way by the government of Canada on behalf of the people. It is no answer to say that these services are for the general welfare of Canadians. They are. But this is a type of tax that was intended for some entirely different purpose. This is a type of tax that was intended to apply to things that people themselves as individuals buy and sell. I can only repeat my argument that had that not been the case there would have been no reason whatever to have exempted the provincial governments from the application of these taxes.
It is quite true that if the government should give favourable consideration to this proposal-and I would strongly urge the favourable consideration of a proposal which has been put forward on a number of occasions and which I put forward very earnestly today-that action still would not meet the immense needs of the municipalities at this time. Nevertheless, it would be a positive start. It would be evidence of the intention of the government of Canada and the parliament of Canada to recognize within the field of its own jurisdiction the needs of the municipalities and what should be done.
This is not a subject which we raise here for the first time, Mr. Speaker. This is not a subject which we alone have raised from time to time. It is a subject that is being discussed in every part of Canada. It is particularly a subject that is being discussed by the municipalities right across Canada. This year there was presented to the government of Canada by the Canadian Federation of Mayors and Municipalities a brief which sets forward the needs of the municipalities in a comprehensive, understandable, reasonable and very moderate manner. One of the points raised in this brief suggests another place where the government of Canada might give a lead in dealing with these problems. It asks that consideration be given to making operative again the Municipal Assistance Act of 1938.
I am not going to argue whether that act, in detail, should be made fully operative today.
I mention merely that the very responsible body which is described as the Canadian

Proposed Tax Relief for Municipalities Federation of Mayors and Municipalities had this to say on page 9 of the brief:
Another resolution of the federation's 1955 conference calls upon the federal government to again make operative the provisions of the Municipal Assistance Act, 1938, in order that funds may be made more available to municipalities at low rates of interest for the construction of self-liquidating projects.
This act, Mr. Speaker, provided for finances from the government of Canada to municipalities for self-liquidating projects such as water works, sewage disposal systems and things of that kind. The act called for the co-operation of provincial governments, and under that act certain sums of money were advanced in different parts of Canada prior to the outbreak of the second world war. Under that act money was made available at 2 per cent interest for these self-liquidating projects. I am not going to argue today what the interest rate could be or should be in such an act.
I point out that here again is an example of the way in which the government of Canada can take steps to assist the municipalities within their constitutional jurisdiction in matters of this kind. Certainly it would greatly help municipalities at this time if funds were available at substantially reduced interest rates for public development.
In any event, whether or not that particular act be considered, the very fact that this recommendation is made by the Canadian Federation of Mayors and Municipalities is in itself evidence of the urgent demand they are making for assistance and co-operation at this time. As I have said before, exemption from the sales tax and other excise taxes, payment of the equivalent of municipal taxation on crown property, and the introduction of legislation such as that to which I have referred, would not in itself solve this tremendous problem. It would, however, greatly help. It would end the plundering of the municipalities, and it is nothing less than that, under a tax which was meant for an entirely different purpose from that which is under consideration here. I think it is of immense importance at this time that we devote our attention in every way we can, within the limits of our fullest jurisdiction, to the needs of the municipalities.
I think it is also vitally important that in the arrangements that may be made with the provincial governments consideration should be given to the position of the municipalities and the need for opening wider areas of taxation for municipal councils than are now available to them. There is certainly nothing imaginary about this problem. It is being discussed right across Canada; it is being considered, and it is causing very

great concern. We have had reason, in these last few days, to think a great deal about the strength of our own free system of government. We have seen emphasized in different ways the distinction between our democratic system and a system which is entirely contrary to that under which we live. One of the things, it seems to me, that could well be borne in mind in considering this tremendously important subject is that the municipalities are, in fact, the places where democracy finds its greatest strength. The municipal body is, in fact, the cradle of democracy. Municipal government existed before national governments. Municipal government is closest to the people. Municipal government should be free in every way that is possible from any restraint upon the exercise of the judgment and good common sense of those who are elected to deal with municipal affairs in the various municipal councils. The strength of our democracy in Canada will be measured to a great extent by the extent to which we preserve the flexibility, independence and financial strength of these municipal organizations.
It was with that thought in mind, as well as the urgent and compelling needs that have been expressed by representatives of the municipalities, that I brought this subject before the house. I therefore move, seconded by the hon. member for Dufferin-Simcoe (Mr. Rowe):
That all the words after "That" to the end of the question be deleted and the following substituted therefor:
"this house is of the opinion that immediate consideration should be given to measures to assist the municipalities of Canada to meet their mounting financial problems, and in particular the immediate introduction of legislation which will provide for the exemption of all municipal councils and school boards from the payment of excise taxes including the 10 per cent sales tax. and which will further provide for payment to municipalities of the equivalent of full municipal taxes."


Mr. M. J. Coldwell (Roselown-Biggar):: There are many members of this house, Mr. Speaker, who have been members of municipal councils and I think, therefore, that many of us will have complete sympathy with the representations made by the mayors and municipalities to the Gordon commission and elsewhere, and indeed with the Leader of the Opposition (Mr. Drew) and the suggestions he has made for the relief of the municipalities. It is incongruous that the central government of Canada should tax the junior governments for supplies they need to carry on their activities in the municipal and provincial fields. The suggestion contained in the proposal of the Leader of the Opposition as outlined in the amendment to relieve them

of such imposts, is one which should command the attention of the Minister of Finance and the support of all hon. members; therefore, I am very glad indeed to support it.
The other proposal that the federal government should pay to the cities amounts equivalent to the tax-free buildings and properties in the various cities is also one which we can consider favourably. I would suggest, however, that in many instances the municipalities themselves should reconsider their own position regarding the tax-free properties in their own areas. Many of the municipalities, in order to entice business and sometimes to compete with other municipalities in the acquisition of new industries in their areas, have made very substantial exemptions. If the federal government is asked to review its position regarding tax-free properties now owned by the federal authority, the municipalities should be expected also to consider their own position regarding the tax-free properties in their areas. Not only have they tax-free property, but in some areas municipalities have given very favourable rates, renewable from time to time, in electric power, in water supply and in other respects. All these grants which they have made in order to obtain industries have complicated the question of municipal financing. The whole problem of tax exemption of industrial properties, of federal properties and of the concessions that have been made from time to time by the municipalities themselves should be very carefully reviewed. To the extent that the review relieves the local taxpayer in the municipalities of the heavy burden which he now carries, to that extent will the municipal finances be strengthened.
As a matter of fact, in recent years the municipalities have been called upon to carry tremendous burdens of expenditures. Thirty, forty or fifty years ago there was no heavy trucking, for example, and the cities did not need to maintain the kind of streets they now have to maintain, nor did the provinces have to maintain the kind of highway systems they now have to maintain in order to carry the heavy loads and so oh. Our cities have grown and so have the problems of water, the problems of sewage and the problems of health. When we think of the problems of sanitation-I am not going to say very much about that this afternoon- we think of the Ontario rivers and the way in which they are polluted. More particularly in my mind at the moment is the pollution of the great river which flows right beside where we are this afternoon in this parliament building, where the sewage from 230,000 people on this side and about 50,000 on the other side of the river empties in a raw state
30, 1956	3397
Proposed Tax Relief for Municipalities along this river all within four or five miles of this parliament building site. Many cities have tackled this problem; this city has not. Others have sewage disposal works. All of this has increased the burden of taxation. I suppose the capital city of Ottawa is waiting for this parliament to dispose of its sewage for it, but that is by the way. The suggestion is made that if the sewage gets very much stronger it might dispose of parliament. There is more truth than fiction in that because one of the embassies here has to keep its windows closed on hot summer afternoons now because of the stench arising from the river. It is an impossible situation and one which I hope that the city of Ottawa itself will be inclined to tackle.
But what I was going to say is this. When we think of the expenditures that the municipalities have to make for sanitation, for roads, and so on, not forgetting of course the tremendous expenditures that have to be made for education we begin to appreciate their problem. We realize that the provinces have increased their grants very substantially to the municipal councils in the field of education; but the provincial governments are strained to the very limit in that respect and the municipalities are finding it almost impossible to provide all the facilities that should be provided in modern communities and to meet adequately the costs of education.
When we think of the various federal, provincial and municipal authorities' expenditures, exclusive of defence and veterans' expenditures, which can be placed in a separate category, we find that the municipalities collected only 17 per cent of the taxes-and I am using the 1951 figure taken from Dr. LaZerte's report on educational costs in Canada. Included among their expenditures were 65 per cent of the local education costs; 88 per cent of the gross expenditures for public welfare, which came out of the municipal pot; and 72 per cent of the cost of roads, highways, bridges at the local level. When one thinks of that one can see how these necessary services to the people of the municipality and indeed to the people of the country inflict a tremendous burden upon the local taxpayers. Then, we have to remember also that most of these municipal taxes are collected on real property, with the result that taxes on real property, on homes and the lots on which the homes stand, have reached a very high level indeed; so much so that the taxes alone today are equivalent to what was a fair rent for a house say 30 or 40 years ago, when some hon. members like myself set up a home in this country.
Taxes on real property have increased by leaps and bounds. The limit of taxes on real
3398	HOUSE OF
Proposed Tax Relief for Municipalities property has not only been reached, it has been passed. The municipalities have nowhere to look for increased revenues. In some of the cities and in some of the provinces sales taxes have been introduced. The sales tax is a most unfair sort of tax even when it is earmarked for a specific purpose, we will say, for education or for health; but the provinces have been driven to it; they could find no alternative. In some of the provinces of course the sales tax now reaches 5 per cent or more on a long range of articles to supplement provincial and, as I have said, in some cities even municipal taxes. For example, in the city of Montreal there is a city sales tax, with the result that when you add it to the provincial sales tax you have a very high sales tax indeed. That sort of tax, of course, hits the family man very hard indeed because, with his larger family, he must buy more of the things the family will need in the way of clothing, and so on. Therefore, the discussion now before the house is one that is very worth while.
I would hope that within a measurable period more of the burden of health and of education would be assumed by this parliament. When I say education I know I am going to be immediately accused by some people of wanting to exercise federal control over our educational system. I see nothing incompatible with making grants for educational purposes to the provinces and through the provinces to the municipalities and provincial control of the curriculum, teachers' qualifications, complete control of education facilities, and the courses of studies and so on used in the schools in the various provinces.
As the days pass I think local authorities will expect us to assist in the field of health and education to a greater extent than before because after all health and education are not matters purely of local concern. I think the health of the nation is a national concern. A healthy population means that we have young men and women and people in middle life who are able to produce efficiently and continuously. Ill health not only means that we have to carry a heavy burden of hospitals and sanatoria but it also means that we have thousands of men and women who are out of production in what should be the prime of life and the economic loss to the country is very great indeed. The municipalities that are now bearing a considerable proportion of the cost of health services will properly, I think, seek relief through the provinces and the provinces will seek relief through the federal parliament of Canada in order to meet the heavy but vitally necessary burden of health services. The same is true


regarding education. Education is no longer a matter of local concern. I suppose that 40, 50 or 60 years ago a young lad going to school probably thought of settling down in his home community and spending the rest of his life there; very large numbers of them did just that. Today, however, it is different. Communications enable people to travel. Opportunities occur for the abilities of people outside of their old community and they tend to move in that direction. Education becomes not a matter of local concern but a matter of national concern.
We are told that we are faced with the competition of new nations that are promoting education and perhaps particularly scientific education. May I say immediately that I am not one of those who believe that scientific education should be the sole aim of our schools and universities. I think scientists should have a good grounding in the humanities if they are going to be good citizens and indeed if they are going to be successful scientists. When we think of the competition we are going to face in future years we realize that we have to provide more and better educational facilities. The municipalities and the provinces have a right to look to the central government of Canada for assistance in carrying this load and I hope that ere long the nations of the world will agree to measures of progressive disarmament.
When we have progressive disarmament and less expenditure in that particular field, I hope we shall be able to continue our level of revenue to the federal authority. I hope also that our increased output, our increased gross national product, the application of automation in our industries and the further increased output in that respect will mean that we may have larger revenues available to all levels of government. These will be largely available to the federal authority because of the manner in which the field of taxation is allotted in this country so that greater revenues will accrue to the parliament of Canada. Consequently ways and means should be found in which to assist both the provinces and municipalities in carrying the tremendous load which is imposed upon them because of the nature of our society at the present time and the nature of the activities in which our society is engaged.
Without taking more time I wish to say that as far as I am concerned I support the idea behind this amendment. I am not sure that it is as comprehensive as I would like to see it and I am not sure whether it is feasible in all respects. Articles that are

necessary for the municipalities, educational institutions and the provinces should be tax free. We should not have excise tax, sales tax or tariffs on goods that are going to be used by our public bodies and public institutions. As I said earlier, I think the municipalities as well as the federal authority and the provinces should consider the effect of the tax exemption policy that the municipalities and provinces have followed and the parliament of Canada has demanded.
We have tremendous tax exempt properties, some of which are railway properties. The Canadian Pacific Railway, for instance, is the beneficiary of tremendous tax exemptions in this country and they are in perpetuity. I do not say whether or not as time elapses the recognition of something given in perpetuity under entirely different financial and economic circumstances should be reviewed by the authority which first granted those exemptions. After all, a life sentence imposed upon a criminal does not always mean a life sentence; often it can mean less than 20 years with good behaviour. Perpetuity should also have some determination as the society in which it was granted under different circumstances develops and grows and the burden becomes a heavy one; therefore, I am supporting the amendment.


Mr. Solon E. Low (Peace River):: Mr. Speaker, in raising this question the Leader of the Opposition (Mr. Drew) has done a service. We feel that it is a timely question, one which should be given every consideration by the hon. members of this house.
I believe, as was expressed by the hon. member for Rosetown-Biggar (Mr. Coldwell), that the amendment is perhaps not as comprehensive as it could have been but it is in terms which we can support and I rise at the moment to place our position on the question before hon. members in the hope that we might be able to obtain some sympathetic consideration of the problems of the municipalities and the provinces by this government at a time when it is giving careful consideration to the whole field of taxation and the division of taxation powers as between the federal government and the provinces.
I am not going to repeat the things which were said by the two previous speakers, but I do agree with them when they say that one of the great problems facing every province today is the deteriorating condition of the municipalities. Taxes levied against property by the municipalities have reached the point where they have become expropriatory, and I do not think I can describe them in any other way. As the hon. member for Rosetown-Biggar (Mr. Coldwell) has said, we are
30, 1956	3399
Proposed Tax Relief for Municipalities away beyond the point where property in a country like Canada should be expected to pay. It simply means that in most municipalities taxes are so high that one must consider handing over to the municipal authorities the whole of his property every 20 years, and oftentimes more than that. That is a rather serious condition. Property cannot continue to bear the weight of taxation which it is now bearing in many provinces. Provincial governments have become increasingly aware of the seriousness of the situation and some of them are trying to do something about it. There are various things which the federal government could do to help this whole situation. I am not overlooking the fact that already something has been done, but in my judgment it does not go far enough to relieve the situation to the extent to which the federal government could do so.
May I outline about six or seven things which in my opinion could be done. When I mention these things I am fully aware of my responsibility in this house. Further I want it known that we are not simply talking about things when we mention these, for we have done something about this in my province. In my province we are trying to practise what we preach. As I go along I shall illustrate the things which I think the federal government can do by showing what we have done in my own province to relieve the terrible burden of taxation and debt which is now upon the municipalities.
First, it seems that many years ago the federal government put through legislation known as the Municipal Improvements Assistance Act under which municipalities were enabled to borrow under what were called successive guarantees granted by the provincial and federal governments at the rate of 2 per cent. Those loans were mainly for self-liquidating projects and were made for a period of several years. The act worked well and there are still some outstanding accounts, but I believe they are up to date. Every one is current and the government has not lost a penny through the operations of this act. I believe it has proved itself to be an effective piece of legislation in every way. I can recall my experience as provincial treasurer in the province of Alberta in dealing with loans under that act. I know the great good that we were able to do with the assistance of the act.
With the onset of world war II the act was suspended and no further loans were made. I submit that there is no reason in the world why that act could not be revived and operations under it continued. If there ever was a time when it was needed it is today. Municipalities are hard pressed to
3400	HOUSE OF
Proposed Tax Relief for Municipalities get money to carry on the vital services of the municipalities as well as money with which to finance the expansion of services occasioned by the large increase in population which many of them have experienced over the past few years. Consequently it would seem to be only logical that where they are forced into the field of borrowing we should do something about reviving the Municipal Improvements Assistance Act and grant the municipalities the right to borrow with provincial-federal assistance at a lower rate of interest.
I do not say that it would be possible to lend money to them at 2 per cent as we did prior to world war II, but certainly we should lend them money at a much lower rate of interest than they are having to pay when they go into the money markets of the world and compete against one another for the sale of their debentures. There is no sense or rhyme or reason in forcing municipalities to pay 51, 6 or 6J per cent on money that they must borrow. Normally they cannot sell their debentures at a figure less than 6 or 6J per cent. I would certainly urge the federal government to consider reviving that act.
There is another thing I would mention. Much has been said here about federal assistance in the building of roads. I did not speak when the trans-Canada highway bill was being considered, but I had in my mind some things that could have been said but were not said. One thing I should like to draw to the attention of the Minister of Finance (Mr. Harris) is that his department and other departments of the government are taking large sums of money in the form of taxes from the automobile industry of this country. If the figures which I have been able to gather for 1954 are correct, and I think they are, in that year the federal government collected $257 million from the automobile industry in the form of excise, sales and other taxes.
It then becomes a question of considering how much was spent in the building of roads. If the minister will go into the record he will find that less than $20 million was spent in the building of roads in Canada in that year. That seems to me to be a pitifully small percentage of the income derived from the automobile industry which wears out the roads. It seems to me that the responsibilities borne by the municipalities of this country are so great that the federal government could well afford to turn back in some way through the building of roads or a network of highways, or in the form of assistance to the provinces in the building of highways other than the trans-Canada, a larger proportion of


the income from the automobile industry. That seems to me to be the only logical thing to be done.
I think a tremendous weight of evidence has been presented here in the past week or two since I came back to my work to bolster up the contention that the responsibility of the federal government in this field of highway building is very great. I would suggest that here is one field that could be explored to good advantage. Perhaps the minister and his colleagues could get their heads together and find out how they could return to the municipalities a greater portion than the $20 million as compared with $257 million of the taxes taken out of the automobile industry. So much for that.
May I say just a word about the amendment moved by the Leader of the Opposition which asks for the removal of the sales and excise taxes applied against the things purchased by municipalities and school divisions. I can recall years gone by when members of all parties on this side of the house urged the government to do just that. We presented arguments which it seemed to me were logical in favour of the removal of these taxes. I stand today where I stood when I first mentioned this seven or eight years ago. I believe the time is long past due for the removal of these foolish taxes.
For example, take a school van operated by a school division for the purpose of carrying children to school. When a school division buys such a van they must pay a fairly substantial amount of money in the form of excise and sales taxes. When a municipality buys a bulldozer or a caterpillar tractor for the purpose of building roads-


Walter Edward Harris: They do not pay any tax.


Solon Earl Low: They do not now? How long is it since that was removed? It must have escaped me.


Walter Edward Harris: About three or four years ago.


Solon Earl Low: That was one of the onerous items for a long time. Then we have building supplies. There is one example with respect to which there is, of course, no question that they do pay. These municipalities and school divisions are having to spend huge sums of money to provide buildings for the increasing population of the country. I see no logical rhyme or reason why these people should have to pay sales and excise taxes on building materials. It seems to me that a 10 per cent sales tax in the case of that sort of thing is like exacting from one of your children a 25 cent fee to enable him to come to the dinner table or the breakfast table. I think it is quite comparable, and

it seems to me the tax should be removed entirely so as to give these people a chance. At least that is one item that the federal government can consider with some sympathy, and if they would see fit to remove these taxes it would certainly be a great help to the municipalities. It would help them to avoid any further onerous taxation against property or the imposition of sales taxes.
There is one other thing I think the government can do. One could talk for the whole of one's allotted time in a debate like this on the decentralization of industry. Over the years we have watched a centralization of industrial activity in the larger cities. These industries pay taxes there and, of course, they create problems, including the problem of the fouling of water and all that sort of thing. But there are many municipalities where you find no industry at all.
If the government were to follow the advice of General Worthington, who is in charge of civil defence, it would take the lead and would assist the provincial governments in trying to work out some systematic pattern of industrial development so that there would not be this dangerous centralization. If that could be done it would help the municipalities of the provinces to a very remarkable degree. This government can take the lead. There are many ways in which it can take the lead. By wise direction from here I am certain that a movement towards the decentralization of industry could be worked out which would benefit the municipalities to a tremendous degree.
Let me say a word about education. I support what the hon. member for Rosetown-Biggar said. In spite of the fact that there are those who feel that when anyone here mentions federal aid for education they are trying to interfere with provincial autonomy, I still think that there are ways by which the government can advance substantial aid to education that would assist the municipalities in no mean degree. I think the time is long past when that should be done.
I was taking a look a few minutes ago at the terrific cost of education in the provinces, and I want to say that when one contemplates not only what the school divisions in the provinces are having to pay today to educate children but also what they are going to have to pay in the next few years when the full force of the post-war population begins to have its impact upon the schools, believe me, they are going to face an almost overwhelming problem. It seems to me, without going into a dissertation on federal aid to education, that there is another field in which the federal government can help to relieve the terrible burden
30, 1956	3401
Proposed Tax Relief for Municipalities upon the provinces and municipalities, particularly the municipalities. They are the ones I am thinking of at the moment because they are the ones who have to carry the great burden of costs for education.
Taking a look at the seven fiscal years ending March 31, 1951, through to March 31, 1957, I notice that in my own province the provincial government over those seven years has made operational grants to the schools totalling $104,641,791, construction grants to schools totalling $22,871,929, and grants to the teachers' retirement fund amounting to $4,333,739. That is just in seven years. But that does not, of course, account for the full cost of education by any means. As I have already said, with the tremendous number of boys and girls who are now just about ready to enter our schools following the postwar upsurge in population, the municipalities and school divisions are going to have a pretty tough time.


Major James William Coldwell: What about our universities in future years?


Solon Earl Low: Yes, in another ten or twelve years the universities are going to be in exactly the same position. In fact, they are feeling the impact right now. Certainly we should be forward looking and make provision ahead of time for these heavy burdens that will have to be carried.
May I say a word about another way in which the federal government can certainly be helpful to the municipalities. The other day my hon. friend, the usually forthright Minister of Finance (Mr. Harris), was asked a question concerning the rediscount rate, and I was surprised that he did not give us more information than he did. I thought he evaded the question and I was sorry because, as I say, he is usually a pretty forthright fellow. There must be some reason behind the increase in the rediscount rate to 3 per cent. If there is not, bless my soul, why let it take place then? Surely this is the sovereign body and the Bank of Canada is not our sovereign master. At least, I do not look upon it as such and we ought to be laying down the policy for the Bank of Canada and not the Bank of Canada for this house and the country.
It is all very well to get the advice and counsel of the Bank of Canada. That is fine. But let me show you what they have done. By increasing the rediscount rate to 3 per cent they have put an almost impossible burden upon the municipalities and school districts that have to borrow. They are forcing these people to have to go out in the debenture market and sell their debentures at a great discount and at an effective interest rate that will run to 6, 6J or 7 per
3402	HOUSE OF
Proposed Tax Relief for Municipalities cent. If, Mr. Speaker, the government really wants to do something to help the municipalities it will take hold of that rediscount rate and see that it is not used as a means to bolster up the interest rates charged by the banks in this country for the simple reason that the municipalities cannot pay it.
The municipalities have to finance in some way. In order to help to relieve that situation in my own province, the provincial government decided we would have to get into the field of lending and so we set up just last year a new corporation which is called a municipal financial corporation. It is a co-operative composed of membership from the cities, towns, the rural municipalities and the government. They each buy shares. The corporation then manages pretty well the distribution of financial assistance to the municipalities in the province. Whenever any municipality requires to borrow, an application is made to the corporation. The corporation does the investigating, decides on the terms and that sort of thing, and eventually out of a reserve fund set up by the province loans are made to these municipalities and school divisions with government backing at no higher than 34 per cent.
We have successfully obviated the necessity of our municipalities going into the money markets of the world and selling debentures there during the past few years because of the fact that they could not possibly pay the rate of taxes they have been bearing and at the same time carry the interest rate that would be charged for such debentures in the money market. We have saved them many thousands of dollars by that means. So, Mr. Speaker, as I said to begin with, I am not just talking one way and watching my own people in the province of Alberta act in another way. We are practising what we preach. I suggest that the Minister of Finance take under very serious advisement the whole question of the bank discount rate and do something to make it possible for our municipalities to borrow their needs at a rate of interest that will certainly not be 6 or 6J per cent.
The final point is this. Quite a number of years ago we recognized that if we were to be of any help to our municipalities in the province, one of the things we would be obliged to do would be to agree to pay taxes in full on provincial property in the towns and cities of that province; and that is what we have been doing. We have been making a grant that was not only equal to but in excess of the full amount of taxes which those municipalities would have charged against the provincial property at the usual assessment rate. I think the minister could take that as a good example. When he contemplates all


of the things that have been said here today with respect to help to the municipalities, I think he would be well advised to resolve to bring in a change to his act under which he would pay full taxes to every municipality in this country where there is federal property established. By doing so, he would be doing something worth while.


Mr. Macdonnell:: He will probably say he is not as fabulously rich as you are.


Solon Earl Low: Maybe not. But it seems to me that he has plenty. I do not think he is in rags and tatters, by any means.
In conclusion, Mr. Speaker, I would say that this amendment is timely. It would direct attention to the terrible condition in which many of our municipalities labour today. I certainly suggest that all the minister needs to do is to ride up and down some of the streets of Ottawa-


Stanley Howard Knowles: "Up and down" is right.


Solon Earl Low: That is what I mean, up and down; more up than down.


Major James William Coldwell: More in than out.


Solon Earl Low: If he would do that, he would see something of the need. I pay taxes in this municipality. I am obliged to contemplate handing over the full value of my property to the city every 20 years and then to start all over again trying to accumulate something with which to comfort my old age. I think I have said enough, Mr. Speaker, to draw attention to at least six or seven things that the federal government could do.


Walter Edward Harris: Mr. Speaker,	may I	begin	by	expressingmy gratitude to the hon. member for Peace River for his kindly suggestion that, under normal circumstances, I have been fairly forthright in	dealing	with	the	House ofCommons. May I also advise him that I was not conscious of any effort to avoid any answers the other day with	respect to thediscount rate	of the	Bank	of	Canada. I
made it clear the week previous, when I was questioned on this point, that I did not think -and this is still my opinion-that in answer to a simple question on the orders of the day one could do justice to an answer on monetary policy of the Bank of Canada or of the government of Canada, for that matter.
I am quite prepared to debate the matter at whatever length hon. members may feel would be suitable on an occasion when it would be desirable to do so. I rather fancy that the hon. member for Lethbridge (Mr. Blackmore) is waiting for that opportunity, when the time comes.


Mr. Blackmore:: Hear, hear.


Walter Edward Harris: I will just repeat what I have said. I gave a short answer to a question which I thought was directed solely to that short answer on the occasion, being under the impression that I was not expected to state at any length whatever the present monetary policy, particularly having in mind that-as I have said already three times, I think, Mr. Speaker-as before parliament opened we knew there would be questions about this matter, we made suitable arrangements and gave suitable notice that we would discuss this matter in the banking and commerce committee. I regret that that discussion has not yet taken place but that situation has been brought about owing to the fact that I personally desired that some of the legislation which had been sent to that committee should come back here to be passed on to the Senate for further consideration before we went into a subject which did not require their consent at a later date. As a matter of fact, some of the legislation is already out of date and is not renewed unless the legislation we have before the committee and before the house is passed.
On the main point at issue in this amendment, there are of course a number of features that ought to be discussed. First I will touch on the suggestions that have been made by all three of the hon. members who have spoken previously, namely that we ought to bring the Municipal Improvements Assistance Act into use at the present time. The Municipal Improvements Assistance Act was passed in 1938 as an unemployment measure designed to stimulate employment in Canada. It was intended as a bonus, if you will, to municipalities in order that they might undertake self-liquidating projects at that time, but always having in mind unemployment. I do not think anyone in this debate will suggest that 1956 is a year in which we need bonus the putting of people to work in Canada.


An hon. Member:: We hope not.


Walter Edward Harris: Up to the present time there are no signs that that is so. In any event, it would be quite impossible at the moment to find many municipal corporations which would use the act even in its present form. I make that statement for this reason. On both occasions when the provincial premiers were here last year and once again when they were here this year this question arose. On each occasion I told them that if they had any instances of municipal corporations not being able to borrow money for needed municipal purposes, I should be glad to investigate the reference they would make. To this date I have not been given the name
30, 1356	3403
Proposed Tax Relief for Municipalities of a single municipality in this country that has not been able to borrow money for its purposes. It may well be that there are some municipalities which are obliged to pay more interest than they think they should pay on money borrowed for local improvements. I have no doubt that all of us would like to borrow money at a lower rate than that which we think we are going to be obliged to pay when we set out to borrow. The higher the rate, the more likely it is that the municipal corporation will give serious consideration to priorities in the municipality with respect to expenditures of the taxpayer's money. I would not want to express any opinion about that matter, however, because I do not think it is our duty-nor is it a privilege of ours-to express opinions about municipal expenditures. I merely urge again that unless municipal corporations find it impossible to borrow money or find it possible only on extremely difficult terms, there is no point in reviving the Municipal Improvements Assistance Act at least until another occasion when we may desire to stimulate employment by having public works at all levels.
The hon. member for Peace River described in some detail the arrangements that are being made in the province of Alberta with regard to the municipalities. I share the view that I thought the hon. member for Greenwood (Mr. Macdonnell) expressed by interjection, although I am not sure that I heard him correctly, namely that perhaps the province of Alberta was better off than I am. If that is what it was, may I say that I am inclined to think maybe that is so.


James MacKerras Macdonnell: I said I thought you would perhaps say that.


Walter Edward Harris: Then I have done so.


John Whitney Pickersgill: The hon. member is not disappointed.


Walter Edward Harris: The province of Alberta is now in a position to make with its municipalities almost any arrangements that it might desire to make. They have the money in the bank and may do so. But the problem that faces the Minister of Finance (Mr. Harris) here at the moment is this, and it is always the same one that is presented by all opposition members. It would be utterly impossible to raise, by the present tax rate, sufficient revenue to carry out the proposals that they bring forward in the house.


Solon Earl Low: We will have something to say here about that matter later.


Walter Edward Harris: I will come to that. It may well be that the whole suggestion here might
3404	HOUSE OF
Proposed Tax Relief for Municipalities not amount to $20 million. I do not know. I have not the figures available.


Major James William Coldwell: It would amount to more than that.


Walter Edward Harris: That may be so, if you include the sales tax. I have not the figures at hand. But let us suppose the figure is $30 million or $40 million. It may be said that there is a surplus this year of $115 million and therefore one could do this. But the fact of the matter is that at every session of parliament hon. members opposite present proposals which run into the hundreds of millions of dollars rather than the tens of millions and the Minister of Finance is always in the position of having to say that it is not possible to implement them without an increase in the tax rate. At the same time hon. members opposite deplore the high tax rate and leave the minister in a position where his general approach to this problem is, I think, that he would rather not spend the money and reduce the tax rate instead of spending the money and maintaining the rate at its present high level. There are some exceptions and the hon. member for Rosetown-Biggar (Mr. Coldwell) has drawn my attention to the fact he has always indicated, and he is quite correct, that he believes this parliament could make greater expenditures and find the money available through the good offices of the Minister of Finance.
The hon. member for Peace River spoke of the wise direction by this government in decentralizing, I take it, the functions of government. Coupled with that, I might point out that the Leader of the Opposition said that the municipal corporations were the cradle of democracy and existed long before national government. I think perhaps on second thought he would agree that it was just the reverse in Canada. We had national governments of one kind or another and municipal corporations grew up afterwards as a result of various statutory enactments. It is true that municipal corporations, in any matter whatever affecting municipal corporations, are entitled to make representations to us. They are entitled to make representations to us to remove the tax burden on them, as they have done in the brief of the mayors and reeves, and we should give consideration to that. However, in the direction of their affairs or in anything whatever connected with them, I think every provincial government of this country would expect this parliament to adopt a hands off attitude.


Stanley Howard Knowles: And hands out of their pockets, too.


Walter Edward Harris: The leader of the Social Credit party also spoke of a figure of $250 million
[Mr. Harris.)

received from the motor car trade of Canada by way of taxes. My recollection of the figure with respect to the special excise tax only would be something of the order of $80 million or $90 million. I am not sure what the balance is, unless it happens to be the corporation income tax.


Solon Earl Low: The 10 per cent sales tax.


Walter Edward Harris: Ten per cent sales tax is about the same as the special excise tax, but for the moment I will accept this figure.


Solon Earl Low: There would be the corporation tax in addition, of course.


Walter Edward Harris: I might point out that we seem to be considering taxes by the source rather than the purpose. This government, if it did not need the money for its general purposes, would no doubt be doing away with a great many taxes about which it could be said, as my friend has said, you should use them for purposes connected with the base of the tax. We are not taxing motor cars in order to build highways; that was not the purpose of the tax in the first place. The purpose of the tax was to pay for the war effort and subsequently to pay for the additional cost of defence and such matters as have been imposed upon us.


Solon Earl Low: The municipalities have to pay for roads, and they wear out.


Walter Edward Harris: The municipal corporations have to pay for roads, and so do the provincial governments. I am not even going to suggest that they ought to spend the precise amount of money they collect from motor cars, by licence fees, the gasoline tax or anything like that-


Solon Earl Low: The Liberal opposition in the province says they should.


Walter Edward Harris: That may be, and that is their business in the provincial field. I am not going to argue here whether or not the proceeds of the tax ought to be spent precisely on the subject matter from which one gets the tax. Indeed, if that were so we would have a lot fewer taxes than we have.
Now, the leader of the C.C.F. party made a statement with which I think we can all agree, namely that health and education are not solely of local concern. Stated in that manner it only means that all of us are desirous of having a higher standard of health and education throughout Canada. Nothing that I would say at any time would indicate dissent from that view. But once again, sir, and especially with respect to education, there is no point in repeating what has been said so many times by this government. It is not our view that we should

raise money in parliament here for the purpose of paying it out for education in the provinces or in the municipalities. We do spend money for the education of Indians, and we do make grants to higher learning. We have not taken the view that we should impose taxes to make grants in this field, with the exception of the two items I have mentioned and vocational training.
The real purpose, I take it, of the motion is covered by the complaint that municipal corporations are losing money by reason of the operations of this government in the various municipalities, in that the municipalities have to provide services, lose the assessment and do not get grants in lieu thereof. Now, there are two problems to be borne in mind here. Once again the general problem, sir, is that if we were to pay out a greater sum of money we should have to take in a greater sum of money through the tax rate. It is a matter of opinion whether all the municipal corporations or the individuals comprising those corporations would prefer to have a lower federal tax rate or whether they would prefer to have the grants. I believe that is a matter on which there would be perhaps 200 different opinions in the house.
Let me point out what is done in another field. So far as I have been able to determine there are only two provinces which make anything like the type of payment it has been suggested this afternoon we ought to make. If the provincial governments, in their relations with the municipalities, their own creatures, do not feel justified in paying the municipal corporations it seems to me that there are some arguments why such payments are either unnecessary or undesirable.
I would not suggest, however, that our own views here would be coloured particularly by what the provincial governments might do because they would have perhaps different reasons for doing that from what we could advance to parliament.
But may I point out that Ontario, while it does pay the general rate on its property, does not pay the school rate. The Ontario hydro does pay the general and school rates, but not on buildings for operational purposes. The provincial government does not make a payment on behalf of the educational institutions. In Manitoba the provincial utilities pay the equivalent of both taxes on land and buildings, and the province pays full taxes on land but not on buildings. In Saskatchewan the provincial government pays full taxes, including business tax, on all the properties of crown corporations except the Saskatchewan power corporation and the Saskatchewan government telephones. In
30, 1356	3405
Proposed Tax Relief for Municipalities Alberta the province pays the full tax equivalent for properties of the liquor control board and of Marketing Services Limited or on properties occupied by any person or crown agency who pays the rent to the province. In British Columbia, the power commission pays 3 per cent of its gross revenue and the provincial liquor board pays what it believes its actual taxes might be. There is a provincial grant to the city of Victoria. In Quebec the provincial government pays the water rates and certain maintenance charges on certain crown properties.
In New Brunswick there is quite a complicated system of payments, but that is not to suggest that it is not fair in any way. They pay half the cost of snow plowing or a dollar a head, and they reimburse the municipalities by paying about two-thirds of the cost of renewing the main trunk highways through municipal corporations. They contribute to certain bridges, to the repair of main highways and they pay certain costs for local improvements in local improvement districts which I suppose have no municipal governments. Nova Scotia pays to the municipalities containing land under timber lease 5 per cent of their dues, and the liquor commission pays tax equivalents. In Prince Edward Island no payments are made in lieu of taxes. This would indicate that the payments by a senior body to a municipal corporation are not by any means regular or uniform except in so far as it would appear that the provincial governments do not make payments themselves on the general rate except, as I have said, in the case of Ontario.
It was suggested by the Leader of the Opposition, perhaps unintentionally, that municipal corporations are losing a great deal of income by reason of the crown agencies of this government. It might be that in some cases that is true, but most of them make their own arrangements with the municipal corporation in which the property is situated. For example, defence production, central mortgage and atomic energy pay full or very close to full taxes to the municipal corporations in which the property is situated. The Polymer corporation gives a grant of approximately full taxes. In every case these arrangements are negotiated with the different municipal corporations concerned. In the case of Canadian Arsenals, the board of grain commissioners and the national harbours board, they pay less than full taxes, probably in the neighbourhood of one-half. Therefore, the chief complaint, I am sure, is that this government pays taxes only in those municipal corporations where the Municipal Grants Act applies.
3406	HOUSE OF
Proposed Tax Relief for Municipalities
May I point out, sir, that this history of payment by the federal government is now only six years old and that it was this government and this party which began paying to municipal corporations in 1950, and for a particular reason. That reason may not be valid at the moment. It is a matter of opinion which I know will be argued later on in this debate; but it was advanced as an argument at that time that because of the great concentration of federal property in certain municipalities it was unfair that they should bear a burden that ought to be borne by the general taxpayer of Canada. The formula of making a grant in lieu of taxes, where the assessment of the federal government in any municipality exceeded 4 per cent of the total, was devised. That was clearly understood for the reasons I have given, namely, that because of national purposes we had to place certain federal property in that municipality and that, for national purposes, the general taxpayer might be expected to contribute some of the cost rather than have the local municipal taxpayer pay the whole cost of the services and the assessment of that property.
You may recall, sir, last year we introduced an amendment to the act which reduced the 4 per cent to 2 per cent, during the course of which we would extend the payment of taxes from something like 50 municipalities to almost 150 municipalities in Canada in which we have federal property. We have had less than a year's experience with the act and I would suggest, sir, that on that basis we ought not to extend its provisions further at this time.
I doubt whether I have covered all the points that have been raised by hon. members opposite, but there is one point made by the Leader of the Opposition which requires an answer, namely, that it is not by any means surprising or unusual that a local purchase by a provincial government should not bear a tax when the same local purchase by a municipal corporation should. It has been a principle of our constitution for as long as I can remember that one does not tax the crown in the right of the province, but that principle never extended to a municipal corporation or indeed to any other form of corporation. The distinction is there and has been recognized since confederation.
Perhaps I should add one word further about the sales tax on purchases by municipal corporations to remind hon. members that we also require a good deal of experience in this field. We have been collecting taxes for some time, sir, and on the basis of the experience which we had up to that time my predecessor introduced an amendment to the act three years ago in which he provided that


there would be exemption for certain road machinery and the like over $1,000 in value. It must be evident that one of the reasons why we were able to make that amendment was that items of this kind were clearly defined and could be clearly recognized as such. But I do not think, sir, that we should extend exemptions to all purchases made by municipal corporations for the quite obvious reason, which may not commend itself to hon. members but does commend itself to a minister of finance, that exemptions generally are undesirable.
The best form of taxation is a tax which requires no exemptions, not because one receives more revenue that way, but because in fact with exemptions you always have the argument that the exemption is discriminatory against someone else in a like position _ who ought to have the exemption as well. The whole basis of taxation is to find one in which you are not subject to any of these arguments. Because you gave an exemption to A, logically you must give it to B, and if you go on in that way long enough you find there is no basis whatever for the tax in the first place and you have to start all over again.
I am not trying to magnify the difficulties of the Minister of Finance because I suggest, Mr. Speaker, our tax system is reasonably good and does not create too many difficulties.
However, sir, I would like to conclude by saying that, as I promised the hon. member for Greenwood (Mr. Macdonnell) and other hon. members a year ago when we were discussing the Municipal Grants Act and the amendments I brought forward at that time, this subject is under constant review and will be considered not only at the moment but throughout the coming year. However, it is not the intention of this government to introduce any amendments to the Municipal Grants Act at this session.
May I just make this final point? These motions to go into supply do give an opportunity to all hon. members to debate a good many subjects and do give and are intended to give the opposition an opportunity to present an argument in most cases against the shortcomings-that is the omissions rather than the commissions-of the government; but at the same time it should not be overlooked that these motions are in themselves a statement by the opposition that this government has failed and ought to be dismissed from office, because that would be the result of the motion carrying. For that reason I feel just as firmly as the hon. member for Winnipeg North Centre (Mr. Knowles) does that this government ought to remain in office and for that reason I am going to vote against the amendment.


Hon. W. Earl Rowe (Dufferin-Simcoe):: Mr. Speaker, the issue that is before the house is, as the hon. member for Peace River (Mr. Low) has said, a very timely one. It has been the concern of many people from coast to coast in this dominion. It has been moved again today by the Leader of the Opposition, who has had a wide experience on different levels of government. He has had experience as an alderman and mayor and also in local council work and realizes the tremendous burden that is being carried by the municipalities of this dominion. The mayors, school boards, reeves, aldermen, controllers and councils have had a most difficult time, and their future looks very alarming to them from day to day.
I listened with interest to the hon. member for Rosetown-Biggar (Mr. Coldwell) and the hon. member for Peace River, and I was not surprised but glad to hear that they intended to support the amendment. As the hon. member for Rosetown-Biggar said, many of us in this house have had experience in other levels of government, provincial and dominion. As I recalled the years that I spent in municipal affairs I could not help but think of the vast changes that have taken place during those years.
I have also listened with keen interest to the Minister of Finance (Mr. Harris). I noticed that he searched the provinces, the hydro commissions, the liquor commissions and every other level of authority he could think of to find an anaemic excuse for not accepting the motion; however, he finally concluded by saying the chief reason for not doing so was to keep this government in power. Before he said that I knew that neither he nor his colleagues want to lose power, though if they were not jolted occasionally they would ride along in their smug complacency and do nothing for anybody other than themselves. They are the world's greatest optimists; one can imagine that they do not care what happens so long as it does not happen to them.
The federation of mayors, reeves and councillors throughout the country have been pleading with every hon. member of this house for many years, and I am sure they have not missed government members. I will venture to say that the Minister of Finance's wastepaper basket is full of petitions from coast to coast pleading with him for some assistance.


Walter Edward Harris: No, I keep them; I do not throw them away in the waste basket.


William Earl Rowe: Well then, that old pigeonhole must be chock full of dust and petitions, because you certainly have not done anything about them.
30, 1956	3407
Proposed Tax Relief for Municipalities
This is a problem which is common to all. Mr. Speaker. The changing times have placed tremendous burdens on the municipalities, burdens that were not thought of 25 or 40 years ago, as hon. members have already pointed out. I can remember years ago when I was in the county council. It is because of these increased burdens that the municipalities are in their present plight.
Even farmers buy new automobiles occasionally. A farmer buys a similar licence to that purchased by a city dweller, but the man who lives on a provincial highway has to pull his car with his tractor through a foot and a half of mud down the side road to get it on to the highway. He has to keep his hogs until they are too fat and no longer select because he cannot get a truck in to get them out. At various times he cannot get his cattle to market. These are problems which exist in many places; the municipalities cannot keep pace with the times. This is a real problem in rural municipalities, and it involves not only the standard of living but many marketing dollars.
Despite all these things we are given excuses concerning what can and cannot be done. We hear the constitution referred to, and we are told that it is the responsibility of the provinces or the municipalities. It is not entirely a case of jurisdiction, and I think an over-all revision of our revenue system and a new look at responsibility in view of the rapid growth and expansion of this country are long overdue. The provinces and the dominion should sit down together with the municipalities and attempt to work out an over-all agreement.
We realize that the municipalities are the creatures of the provinces and the provinces are the creatures of the dominion. The Leader of the Opposition said the municipalities are the real cradle of democratic freedom, because a great many people have gone from the municipal level of government to other fields of government.


Walter Edward Harris: I graduated after you did.


William Earl Rowe: Yes, I was looking at you. I noticed you too, and I recall that you graduated from a neighbouring county. I am amazed that you have so little regard for the municipalities after having been a county councillor, because any one who has spent some years on a county council usually develops an affection for it, not only for the duties performed by councils but for the pleasant social occasions which form a part of their activities.
Never before have the municipalities faced greater responsibilities, and never before have they received a smaller portion of the
3408	HOUSE OF
Proposed Tax Relief for Municipalities national revenue with which to meet them than is the case today. The Minister of Finance says they were given a little bonus in 1938 because of unemployment, but he is optimistic now and says there is not going to be any unemployment, and apparently he thinks that is ample excuse for not giving the municipalities any help today. He said it would not amount to very much if the sales tax were taken off and they paid the tax they should pay on their federal property.


Walter Edward Harris: I excluded the sales tax from that. I was thinking of municipal councils.


William Earl Rowe: In fairness to the minister I could agree with him, but this government has always said, "What is a million?" and now it says, "What is 20 million?" The government sits quietly by and does not even attempt to offer the relief that could be given under our present jurisdiction. The minister has pointed out that the liquor commissions and the hydro commissions pay the municipalities only a certain amount, but in most cases his government pays them nothing. It levies a sales tax on much of the equipment they buy and they are even taxed on municipal printing. The government takes all the tax it can from the municipalities and gives as little back as possible.
The government does not seem to take into account the growth and expansion of this country. With respect to all this national expansion and industrial development we must keep in mind that it is this forgotten level of government, the municipal level, which has such tremendous responsibilities at the present time. The development of industrial expansion, the building of industries in different places, the standards of services in the municipalities, all have a great bearing on the attraction of foreign capital and the location of industries in the respective districts. More and more the municipalities are becoming the cradle of our whole national industrial development.
As has already been pointed out, the municipalities must provide services for housing developments, educational institutions, must provide roads and so forth. Many other matters enter into this field including traffic congestion, the safety of children and so on. When you drive along the highway in this country you can always tell when you are at the edge of a municipality because you are likely to break a spring on your old Ford car or blow out a tire in the municipal pot holes. The municipalities are more or less curtailed in their ability to collect revenues.
I can well recall that when I belonged to the government that was in power many of the hon. members who are absentees today used to chide us for not being fair to the


municipalities. They said the municipalities were having a hard time. I can recall that the circumstances were difficult in those days because there was a world-wide depression, but at that time the government of Canada took only 40-5 per cent of the total revenue of the dominion. In 1951, 20 years later, the dominion's take had increased from 40 [DOT] 5 per cent to almost 71 per cent. At that time the provinces took 20-2 per cent, today they take only 17-2 per cent. In 1930 the municipalities had 39-3 of the total tax revenue, today they have only 11-9 per cent. Never has their responsibility been so great and never has their portion of the total revenue been so small. Yet this government sits smugly by and quietly and complacently takes a greater share of the revenue while at the same time enlarging its share of power.
We had a conference, a dominion-provincial conference. All these have been very nice parties. Everybody talks about a new approach and then they call a conference. It takes them a long time to decide to call it and it takes them a long time to assemble. Not long ago the federation of mayors were greatly encouraged when they were told that while they would not have much authority at the conference, they could come to it. They attended with a watching brief and were greatly encouraged as they thought something was going to happen, that the provinces and the dominion would make over-all federal-provincial agreements by which some relief would be given to the struggling municipalities, and a broad national policy might be inaugurated to provide some uniform assistance to them.
The federation of mayors may have had only a watching brief, but they certainly looked and listened and watched. They watched the slow assembly and they heard the quick adjournment. Nobody made anything or got anything. Nobody gave anything away. They were told quietly to go back home. Seldom in history had so many come so far for so little. There was no real effort, no new agreement; it was a mere mockery. No wonder municipal officers in places like Toronto were disappointed. They had wanted to have a conference a few months ago, and asked the Prime Minister to hold such a conference, but the answer they got was that even the Minister of Finance was too busy. Later on the Minister of Finance did send for them and brought them down.


Walter Edward Harris: On the contrary, I went to see them.


William Earl Rowe: For all the good it did, it did not make any difference whether you went to them or they came here. That illustrates the whole attitude of the government. It

is not the letter of the constitution, it is the spirit of the government. This tired old government is just the same on everything; it is just smug and complacent about everything. They are the greatest optimists in the world. They think it does not matter what happens as long as it does not happen to them. It is not a matter of this resolution, it is simply a matter of this government being so complacent. They fail to grasp the problems that confront us.
I do not mean to say that anyone who has any knowledge of all levels of government would say that the constitution could not be considered at all. We know there are the provinces and we know there are the municipalities. This present government seem to be interested in the provinces and apparently that is the reason only about half the government are here today. It must be because they are interested in provincial as well as dominion affairs.
I think there are ways under their present constitution that something could be done. As I say, the letter killeth but the spirit giveth. There are ways under their present jurisdiction that would permit them to do a great deal. This government taxes even municipal printing. They have been asked to relieve the municipalities of that tax. This government imposes the sales tax. They have been asked to relieve the municipalities of that tax. This government does not pay taxes on most of its properties. They have been asked to do so. The sales tax paid by some municipalities amounts to as much as $800,000. That may not seem much to the government here but it is something to the municipality, especially when the government pays nothing on its principal government buildings.
There are certain inequities in the grants that have been given in lieu of taxes under the Municipal Grants Act, which has been amended. I believe that about 100 municipalities receive a total of about $6 million.
I notice the minister is strong about no exemptions, fair play and equal rights for all, special privileges to none and so forth, but if he wants to put those principles into practice may I suggest that there are about 750 other municipalities which would get about $12 million if he treated them as he treats the other 100.
Then there is the unemployment problem, which has been mentioned before. This is not a tremendous problem at the present time, but for the man who has exhausted his coupons or who cannot qualify for relief unemployment presents a real problem. I suggest that unemployment should be considered as a national responsibility, and the dominion government should pay 100 per cent
30, 1956	3409
Proposed Tax Relief for Municipalities of the cost. We must not forget the benefits this government derives from our industrial development, for which services must be provided by the municipalities.
This government is taking almost double the percentage of total taxes paid in Canada that was taken when this party was in power in 1930, while the municipalities take only
11-9 per cent today as compared with 39-3 per cent at that time. In other words in 1930 the provinces got almost 40 per cent of the total tax revenue in order to provide these services, while today this government takes over 70 per cent-


An hon. Member:: Nearly 80 per cent.


William Earl Rowe: No, it is nearly 71 per cent, 70-9 per cent to be exact. They have gone from almost 40 per cent up to 70 per cent, almost double, whereas the municipalities are taking less than one-third of what they took of the take at that time. Who must bear the brunt of this? It is the home owner, the man who has a mortgaged house in the municipality. It is the head of the household who is trying to get his house paid for in order to have a home for his family. It is the working man. Those are the people who are doing it.
There is a limit to the amount of taxes that can be paid. A tremendous portion of our national production is being paid in taxation. I know it is argued by many economists, and sometimes just as vigorously by politicians who think they are economists, that still more can be taken because everything is sound. However, the problem of the municipalities is a growing one, it is a real one, it is a difficult one, it is one which must be solved for the health and prosperity of this dominion. The municipality may not be the cradle of democracy in the sense of being the cradle of parliamentary practice, but it is the cradle of industrial development. It is the cradle of the homes of this country, and the happiness and the family life of this country depend on the standard of living, to which reference has been made this afternoon.
Many more services are required. Streets in many municipalities are unsafe. You see children on their bicycles bumping over the holes in municipal streets and automobiles going by within inches of them. You see automobile tires blown out because of the condition of municipal streets. As has been mentioned this afternoon, right in this capital city we can see the evidence within ari eighth of a mile of this building. I notice that the way is fairly smooth from here to the Chateau Laurier, so that none of the government will be hurt. I am glad of that, because I walk that way quite a bit myself. But you
3410	HOUSE OF
Proposed Tax Relief for Municipalities do not need to go much farther down Rideau street before you find that you might as well walk as drive an automobile.
These are problems that concern the lives, the happiness and the homes of the people of Canada, and the municipal officers are confronted with these burdens. They are only receiving about one-third of the share of the national revenue they received 20 years ago, yet they are asked to provide many more services. This afternoon the hon. member for Peace River and the hon. member for Rosetown-Biggar emphasized the growing numbers of school children and what is required for educational services in the public and technical schools, indeed every branch of education from the kindergarten right through the university. We find that in rural municipalities the farmers are taxed almost double for the building of high schools and colleges that are being enlarged almost every year. Small municipalities within a few hundred miles of this city with a population of around 3,000 have spent as high as $1 million on educational services.
We are approaching 1958, 1959 and 1960 when, with the present rate of immigration and taking into account the birth rate and the increasing population, the requirement for educational services will be still greater. There is not one hon. member in the house who has not talked to municipal officers and been told about the ever-growing problem and the services that are going to be required. In view of the fact that the government's own revenues, their own taxes, depend to no small extent on the services provided by the municipalities and the condition of the municipalities, the government should reconsider its policy.
There is the question of the municipalities being able to attract new industries, and in that regard we should examine what the municipalities in the United States have done. We need policies in Canada to encourage the development of our resources and to enable our municipalities to attract industries. When these people from the United States come here to look at a municipality they are not encouraged to build in it if they see that it is short of schoolrooms for children, if they have to bump up and down the main street and pretty nearly break their Cadillac cars in which they drive over here to carry on their inspection. The revenue received by the Minister of Finance is affected accordingly.
Therefore I urge the government, and especially the Prime Minister, whether or not his luck has been bad, to try to get back to the days when his party talked about the great happy family of provinces. I remember


the billboards in years gone by:	"Vote
Liberal, one happy family, nine happy provinces."


Mr. Gauthier (Portneuf):: That is still so.


William Earl Rowe: They are pretty unhappy children now in many respects. The hon. member says they are still as happy.


Pierre Gauthier: You cannot see it.


William Earl Rowe: I have heard some speeches in his province that did not indicate they were very happy. However, I urge the government in all sincerity, even if they have had a conference that has not accomplished anything, to sit down again with the provinces and discuss the matter. There may still be hope. If you cannot change the letter of the constitution you can change the spirit of your attitude and see the problem that is almost screaming at you so far as the municipalities are concerned. The municipalities are in distress. They are in a state where their progress is going to be hampered. The municipalities are asked to do more with less.
I have pleasure, Mr. Speaker, in seconding the amendment and supporting it. I am glad we have had the support of those to my left. I am sorry that so many to your right, Mr. Speaker, who would like to vote for this measure to help the municipalities are going to be forced to vote to save a tired old government from retirement.


Mr. Daniel Mclvor (Fort William):: Mr. Speaker, I should like to refer to the last words of the hon. member for Dufferin-Simcoe (Mr. Rowe), namely that we are forced to vote for the government.


Mr. Hodgson:: You know you are.


Daniel (Dan) McIvor: If that is the type of speech he is going to make, then I can tell him that he is far from being right.


Clayton Wesley Hodgson: Sure you are. Toe the party line.	'


Daniel (Dan) McIvor: I want to get down to earth, and I have two questions that I would ask the Minister of Finance to answer. Before I put them, may I say that I listened very attentively to the hon. member for Dufferin-Simcoe and his description of the time when the party in power took 40 per cent of the nation's revenues, compared with the 70 per cent that we now take. Boy, Mr. Speaker, those were the golden days! Those were the prosperous days, were they not? I can tell you that I happen to know that, so far as our cities and municipalities are concerned, they do not compare with today.
At that time I could go to our schools, see how the children there were dressed and tell the brand of flour that was used in their

homes. We have better times today in our cities and all over Canada than we had in 1930 or later. I have two questions to ask the minister. If this amendment passes, you will have less money to spend, will you not? Therefore I ask the ministers, where are you going to get the money to replace the money you lose? What other taxes are you going to levy? If you do not levy new taxes, where are you going to cut down? I can tell you that you dare not cut down on veterans' pensions. Will you cut down on family allowances? Will you cut down on old age pensions? Will you cut down on unemployment insurance? Where are you going to cut? That is the question that bothers me.
I know that the mill rate has something to do with the taxes we pay in Fort William, but a whole lot of the success of the cities in which we live depends upon the city council. We have a city council in Fort William that watches finances closely. They watch spending. I do not know whether that is because there are three ladies on the council, but we have a council that watches spending closely. The amount of taxes I pay in Fort William depends on the mill rate, and if the mill rate goes up I pay more.
As far as the amendment is concerned, I just want to have these questions answered. Where are you going to levy any new taxes? Where are you going to make cuts? I do not want to see family allowances or old age pensions reduced, and certainly you cannot cut the veterans. As far as our veterans are concerned, there are some increases they should get and we are going to fight for them to the limit.
That is all I have to say. As far as my vote is concerned, nobody has told me how I am going to vote and nobody ever did. Perhaps they did that in former days, but they do not do it today.


Mr. Clarence Gillis (Cape Breton South):: Mr. Speaker, I am going to be brief and explicit in what I have to say. I think the amendment is very important, and deals with a very important question. I do not think it has anything to do with cutting any of our social service expenditures and I do not think it has much to do with dominion-provincial relations. I think it is a straight matter of proving to ourselves or some of the people to whom it still has to be proven that under the present scheme of things municipalities across the country are not able to carry the responsibilities fixed on them by the constitution.
In my judgment, if the amendment that has been proposed passes it will give very little relief to the majority of municipalities
30, 1956
Proposed Tax Relief for Municipalities throughout Canada. For a start, the resolution asks for the elimination of the excise tax and the sales tax on equipment and so forth purchased by municipalities. Most of the heavy equipment purchased by municipalities is now tax exempt. With regard to the other materials which they purchase, if the figures were worked out I do not think it would be found that the suggestion would give the majority of municipalities much tax relief. At the conclusion of the resolution we find these words:
. . . and which will further provide for payment to municipalities of the equivalent of full municipal taxes.
I assume what is meant by that wording is that in any municipality where the federal government has property, the full tax rate shall be paid. The wording is also subject to many other interpretations, but I think that is what is meant. If so, I want to say that 89 per cent of the municipalities across Canada would not receive any relief whatsoever, although some relief would be received by the larger centres where there is a concentration of federal property. I do not think the resolution offers much, Mr. Speaker. Before I sit down I intend to tell you what I think should be done instead of adopting the suggestions contained in the resolution.
I think we all must agree that the burden which cripples the average municipality across this country is the cost of education. That is the main problem. I know it exists in my own community to a great extent. For the first time in the history of the country, about three years ago we had a teachers' strike that spread fairly well over that whole community. Things are getting rather bad when people like teachers, with the qualities they have, find it necessary to strike in order to bring to the people who should know the situation a realization of the inadequacy of salaries. Right at the present time in that same area the teachers are demanding a commission to sit down with a school board in one municipality and try to work out more adequate salaries.
Being on the outside and not on the inside doing the fighting, one can see both sides of the argument. I recognize the problem faced by the municipality of which I am speaking in connection with meeting the demand for more adequate salaries. In that particular community a total of about 60 cents of every dollar collected in taxes goes into the schools, with the resultant crippling of other services. However, the municipality tries to carry that educational burden. Having 60 per cent of their total revenue going into schools is a terrific problem. Right at the present time they are in an extremely bad spot. Education

Proposed Tax Relief for Municipalities is the crux of the problem as far as the municipalities are concerned and tax relief as suggested in the resolution will not help a great deal, except in the larger centres where there is a concentration of federal government property. The answer to the question of relief for the municipality in the field of education is federal aid to education.
I do not think it is necessary to sell that idea to any of the members of this house, regardless of the side on which they sit. However, the idea must be sold to the provinces. There are in Canada provinces which jealously guard their right to have complete supervision in the field of education. Unless you can get unanimity in the provinces I realize that the federal government is in an awkward position with respect to granting relief. If we do not give relief in the field of education, in my judgment any other gesture we may make will be only a palliative and will certainly not touch the crux of the problem.
Another way in which the federal government could help would be by accepting full responsibility for the employable unemployed. The 89 per cent of the municipalities that will not benefit under the formula proposed in the resolution are not in a position to carry the employable unemployed. I know that most of us who represent ridings away from Toronto, Montreal, Vancouver and the larger centres find that when we are at home most of our time is occupied in trying to find employment for people who are unemployed and whose insurance has run out. There is no employment in the community and you spend day after day talking to them and listening to the sad stories; and they are sad ones.
There is nothing the town can do. The municipality has not the necessary finances and, as I said before, it is already staggering under the burden of trying to pay the bills for education. By accepting full responsibility for the employable unemployed the federal government would be making a gesture to the parts of the country in which revenues are the smallest; I refer to the municipalities. Of course in 1945 that offer was made by the federal government at a dominion-provincial conference that did not finalize any of the suggestions or offers made in the green book proposals at that time. The federal government, without changing the constitution, can help in that field of the employable unemployed.
The municipalities also have another burden, and it has to do with the field of health. That burden arises in connection with the indigent people of the community who cannot afford hospitalization or medical attention of
[Mr. Gillis.J

any kind. Most of the municipalities I have in mind have their own social service set-up in which people are paid to investigate and write little orders, which run into a great deal of money, without having complete responsibility for the indigent poor. They run into large hospital bills. Many of these people must be sent to other parts of the province. Then there is the matter of transportation, ward costs, nursing services and doctor bills. All that runs into a staggering figure in a municipality that has a population of 40,000,
50,000	or 60,000.
I have reference to the maintenance of the social service centre, the hospital ward costs, doctor bills and transportation for the indigent poor of the community. These are spots where neither the provincial government nor the federal government give any help. It is considered to be the burden of the municipality. The great majority of them, at least 89 per cent, are not in a position to meet those bills. That, of course, is something that should be taken care of through the Department of National Health and Welfare.
Most of the provinces are in this position; at least it is the position of the one in the end of the country from which I come. There is money available in the Department of National Health and Welfare provided they can match the grants, but it is the matter of matching the grants that deprives them of the opportunity of getting anything from the federal government. They have not the money with which to match the grants. I believe some formula should be worked out by the Department of National Health and Welfare with provincial governments to at least help in that field of providing social services and taking care of the indigent poor. That is another way in which the federal government could help by making use of the machinery that is already set up; and it would be some considerable help.
In that field of education also you run into the whole question of vocational training. That is something that is badly needed today. The press indicates a shortage of engineers, technicians and trained workers, that there is great need for them and all that kind of thing. There are in existence between the federal government and the provinces agreements that are very good, and a good job is being done where they can be applied. But in the end of the country about which I am thinking the difficulty is this. In order to get a vocational school started, a great deal of work and money is necessary. The federal government will pay 50 per cent of the capital cost of starting a vocational high school, but the province and the municipality between them must raise the other 50 per cent.

There are many municipalities that would have a vocational high school doing that kind of academic and vocational training if they were in a position to make their contribution; but many of them are not able to do so. I know centres in which they have studied the problem over the last 15 years and in which they have been willing and anxious to have these vocational schools. What has stopped them from getting them? The province is willing, the federal government is willing, but the municipality has not the money to pay their share of either the capital cost or the maintenance after the school is set up. They admit that quite frankly. I think, in time, the minister's department should sit down and take a square look at the equality of opportunity that exists in the field of education across this country, including these vocational training schools.
Now, Mr. Chairman, the hon. member for Rosetown-Biggar has already indicated that we intend to vote for this resolution. Personally I go along with him, and I will vote for it. However, I do not think it means very much. I am convinced that if the resolution were adopted it would mean very little to 80 per cent of the municipalities across the country, because in asking for tax relief mention is made of the sales tax and taxes of that kind. These things have been taken care of fairly well. We threshed that out for a number of years. The heavy equipment, like fire engines and bulldozers, purchased by municipalities is exempt from sales tax.
As I said before, wherever there is a concentration of federal property the municipality benefits considerably. Such municipalities are not the ones who need to benefit. The communities that need to benefit are those that are staggering under the load of education costs. Then there is the question of matching grants that are available providing the community has some money. The terms of this resolution would mean very little to those municipalities. However, in consideration of the little it does mean, I will go along and vote for it.
I would suggest the three things I have mentioned; federal aid to education; the federal government taking responsibility for the employable unemployed; and a square look at the whole field of matching grants by the Department of National Health and Welfare to see if something cannot be worked out under the present system to assist municipalities with their heavy load in connection with indigent people and social services.


Mr. W. Ross Thatcher (Moose Jaw-Lake Centre):: I, too, shall be brief this afternoon.
I do feel that the amendment which the Leader of the Opposition has put forward
30, 1956	3413
Proposed Tax Relief for Municipalities today is the best of the four which have been advanced so far this session by the Conservative party. I think this particular amendment is timely. I think it is fair and I think it is reasonable. Perhaps, as the hon. member for Cape Breton South suggests, it has not gone as far as some might like, but it is a motion which I think would be of tangible assistance to the municipalities.
In recent years, as every hon. member knows, most Canadian cities and towns have had ever greater difficulty in balancing their budgets. Since the war municipal taxes have been increased year after year. They have become so high in many localities that they are almost unbearable, yet the costs of municipal government continue to outstrip the revenues which municipalities are able to collect.
I must say that this afternoon I was not very satisfied with the reply the Minister of Finance made to the Leader of the Opposition and other members who have spoken. 1 feel that, in very polite language, he has given the municipalities the brush-off for another year. As I say, his language was courteous but it was a very firm brush-off nevertheless. I say the minister is once again refusing to recognize this very real problem, at least to the extent of giving tangible assistance.
I think this is to be regretted, because part of the difficulties under which municipalities are labouring has been caused by the fact that the federal government is taking such a huge proportion of the over-all tax dollar. Most of the new taxes which have been imposed since the war by municipalities have been on real property. As a result, in many areas of Canada today the burden is becoming so intolerable that the wisdom of even owning a house is becoming questionable. There are many people who say, in effect, "Taxes are so high we might as well rent."
A number of factors have been responsible for high municipal taxes since the war. There has been the inflationary period which has made the purchasing power of the municipal dollar dwindle. There has been the huge increase in population in our cities and towns, which has meant new streets, sewers, sidewalks, traffic lights, hospitals and so on. Moreover the increased population has meant that every city has needed more policemen, firemen, garbage collectors and so on. Most civic employees have demanded, and rightly so, fairly substantial wage increases in the past 10 years.
As has been already pointed out, the municipalities have been expected more and more to absorb certain welfare expenditures, such as costs for the employable unemployed, the costs of taking care of the aged, the costs of
3414	HOUSE OF
Proposed Tax Relief for Municipalities taking care of neglected children. All these costs have been increasing. Hon. members will have noted that since 1945 municipalities have frequently been called upon, in co-operation with the provinces and the federal government, to pay part of the cost of providing low-cost housing. It seems to me that these really are not expenditures for which municipalities should be responsible. Surely the senior governments should bear the full costs of these items. In any event these factors have stretched the credit of many municipalities in Canada to the very limit. In many localities they have pushed real estate taxes beyond reasonable limits.
What can be done? We have heard a good many suggestions this afternoon. Personally I think it is reasonable to ask the federal government to take the initiative in calling a dominion-provincial conference to discuss this whole financial problem of the municipalities. We could then see what could be done. I am absolutely convinced today that sooner or later the senior governments must explore the possibility of giving the municipalities a wider tax base.
In the second place, I think such a conference could consider relieving the municipalities of certain obligations which they have now, which are not particularly related to property ownership. Why for instance should the municipalities today be paying the costs of relief for the employable unemployed? Nor can I see why they should be forced to look after sick people, the aged and the like. As I said a moment ago, I feel these are responsibilities of the senior governments. Can anyone tell me why municipalities should have to look after civil defence? Surely that is an item which would fall within the jurisdiction of the federal government.
In the third place, and this has been mentioned already, I feel very strongly that the federal government should pay a normal taxation on all federal property in municipalities. The government has gone a long way in recognizing such a principle in the last few years, but many of the provinces still shirk their responsibilities. I think the provincial governments, as well as the federal government, should pay fair taxes on all their properties in municipalities.
The point has been made this afternoon that the government should exempt the municipalities from the payment of the 10 per cent sales tax on purchases they make. I certainly sympathize with such a proposition. It does seem ridiculous, as has been emphasized, that school boards and municipalities should have to pay a 10 per cent federal sales tax.


James MacKerras Macdonnell: Mr. Speaker, I wish to take part in this debate because this amendment deals not merely with $10 million, $20 million or $30 million but goes beyond that and suggests that consideration should be given to measures to assist the municipalities of Canada to meet their mounting financial problems. That to me is the real question and, like the hon. member who has just taken his seat, I feel it is a question which the minister has brushed off.
I noted some of the answers the minister gave, particularly to the hon. member for Peace River. In answer to something the hon. member for Peace River had said the minister expressed his view that the municipalities could still borrow. Well, I am not arguing against that, but to me that is not an answer to the question at all. To me it is not enough to say that the municipalities can borrow. What I am interested in is that

the municipalities should be put in a position to pay their own way. Borrowing just seems to me to be a palliative; it is just putting it off.


Walter Edward Harris: I was discussing that part of his speech with reference to the Municipal Improvements Assistance Act.


James MacKerras Macdonnell: I realize that, but I still think my comment is fair.
Second, the minister said-and I would agree with him-that there would be a great deal of questioning raised if the federal government stepped in to give directions to municipalities. I would agree with that, but that does not seem to me to enter into the matter at all. I agree that the municipalities are the creatures of the provinces, but I still feel the government is faced with a problem which is not met entirely by just holding back and taking a negative attitude.
My third point is that the minister answered the suggestion that the federal government should pay their taxes by pointing out that in some of the provinces that was not done; in some others it was only partially done. I have no doubt he was right, but I find that very unsatisfactory for two reasons. First of all, those other legislative bodies have limits as to their taxing powers. Second, I do not think this small and to me rather niggling excuse dealt with the main problem.
It is a long time, Mr. Speaker, since W. S. Gilbert wrote this little verse; it is close to 75 years ago:
Every boy and every gal,
That's born into this world alive,
Is either a little Liberal,
Or else a little Conservative.
I suppose some of us feel the political world would be a simpler place if that were still true; but it still is true that every boy and every gal born into Canada alive has the privilege of three forms of government to live under. Nominally, of course, all these forms of government are his servants. They are supposed to serve him, the taxpayer. Nevertheless it is a fact that they do not' always get on too well together. They do spend a good deal of the taxpayer's money in legal battles with each other, though not as much as previously. It would be interesting if we could find out just how much of the taxpayer's money has been spent by the various forms of government which he has set up in carrying out contests with each other. There was a period in the 1870's and the 1880's when one of the great industries of Canada apparently was litigation between the provinces, particularly Ontario and the dominion. Sir Oliver Mowat and Sir John A. Macdonald carried on continual controversy in those days, and of course we all remember occasions when
Proposed Tax Relief for Municipalities there was not always the fullest co-operation between the dominion and the provinces. We all remember that in the year 1930 the late prime minister of this country, in his famous five-cent speech, said, as reported at page 1227 of Hansard of 1930:
With respect to giving moneys out of the federal treasury to any Tory government in this country for these alleged unemployment purposes, with these governments situated as they are today, with policies diametrically opposed to those of this government, I would not give them a five-cent piece.
Those were some of the difficulties that we had, and it seems to me that we are dealing with this situation in what I find is a very disappointing way. We are not really looking at the matter with a broad enough view.
Let us agree that the municipalities are the children of the provinces. Sometimes they may feel like stepchildren; nevertheless the provinces have had to do and have done a great deal to recognize their needs and to support them. I find it difficult to describe actually the attitude of the federal government toward the municipalities. Perhaps one might say that they look on them as poor relations. My colleague the hon. member for Queens (Mr. MacLean) quoted from Charles Lamb a while ago to describe poor relations. I shall read one or two extracts from his remarks, as quoted at page 2871 of Hansard:
A poor relation is ... a drawback upon success-a stain in your blood-a blot on your escutcheon-a death's head at your banquet.
I do suggest very seriously that there should be and needs to be an entirely different approach to this matter. As I see it, plenty of evidence has been given in this debate this afternoon to show that the municipalities are really in a kind of impasse; and to say that it is to be left entirely to the provinces I find very unrealistic. The Prime Minister in his opening speech of the session said, and I quote from page 49 of Hansard:
In general, we did not see any need to share In the normal costs of growth of provinces and municipalities.
The word "normal", of course, is a word that could be debated a good deal; nevertheless I find that a very disappointing statement. I continue to quote from the Prime Minister:
The financing of this growth presented problems, but they did not seem to us to require a federal solution.
I shall try to argue later on that they do very much require a solution where all three forms of government come in, because if we have reached, as I suggest we have reached, an impasse so far as the municipalities are concerned, then what other course is
3416	HOUSE OF
Proposed Tax Relief for Municipalities there? Surely we are not going to regard the present situation of the municipalities as a normal feature of growth. Surely it is abnormal. Surely we do not believe we are in a constitutional straitjacket; surely we do not believe that it is impossible, if the need arises, to make some change whereby the municipalities will be able to live.
I suggest again that the attitude taken by the Minister of Finance this afternoon, following what the Prime Minister had said earlier in the session, is practically saying, "Now, there is a problem here but we are not going to have any part of it". I do not believe that can be the final word. I just cannot believe it and that is the reason I want to make whatever contribution I can to this discussion.
Here we have a taxpayer who is paying taxes to the municipality and to the federal government, leaving the province out for the moment. As the Leader of the Opposition outlined earlier, the taxpayer receives from the municipality a great many things including streets, education, sanitation, street lighting and police protection. I could go on and add to that. The federal government pays huge sums for defence, in which the taxpayer is concerned. It also provides family allowances when his children are young and an old age pension when he is old. Through the Minister of National Health and Welfare it provides circulars telling him what to take when he goes on a picnic and how to deal with baby talk and other things contained in various publications.
If the taxpayer is going to be put in the position where he finds that notwithstanding that he has to pay so much money to his federal tax collector there is not going to be enough coming to his municipality which is so close to him to enable it to do the things which are necessary, then he will very properly think we have reached a constitutional impasse.
I do not intend to dwell on the figures which have been given as to the extraordinary change which has come about in the last few years, but I shall just mention those figures briefly. In 1930 the municipalities collected $306 million and the provinces collected $157 million. It is difficult for us to realize that the provinces collected so much less then. The federal government collected $315 million in 1930; provincial governments, $157 million and the municipalities, $306 million. In 1951 the figures were: federal $3,791 million; provinces, $918 million; municipal, $636 million.
That is before the transfer of funds. Those figures represent the actual collections made by the three bodies. The result is that from


1930 to 1951 the municipal revenue had doubled, the provincial revenue had multiplied about six times and the federal revenue had multiplied about 12 times, increasing from $315 million in 1930 to $3,791 million in 1951.
I think we must all agree that this leaves the municipalities in a very difficult situation. The municipal burdens have multiplied and, as has been pointed out, we have the irony that by reason of exceptional activity and tremendous industrial growth the various municipalities which are experiencing this activity in its most extreme form and which are providing huge amounts of taxes for the federal government and are also providing in large measure the gross national product from which the federal government derives buoyant taxes, are having great difficulties in providing their necessary services. If some of the calculations now being made prove to be correct I gather that the federal taxes this year may be so buoyant that the minister's estimate of his surplus may look like small potatoes next December; however, that is in the future, and it is just a matter of gossip.
I suggest that this municipal situation is an urgent problem and that nothing is being done to grapple with it. We are really pretending that it does not exist. I agree with what the minister and someone else said, that even if this resolution were adopted the amounts involved would not go a very great way toward solving the problem; that is why I took great pains to read the broader words which I think are most important:
.	.	. immediate consideration should be given
to measures to assist the municipalities of Canada to meet their mounting financial problems.
I am not fooling myself that those sums will actually make a tremendous difference. What I am interested in is this broad problem of taxing power, to create a situation where those who spend the money shall as far as possible be able to raise it.
I have already tried to say that the things which come from the municipalities are the things of every day importance, things we need and which enter into our lives more closely than anything else. The dominion takes enough money to get along. I can imagine the Minister of Finance saying to a hard-pressed treasurer of a municipality, "How are you getting along? I am all right. I have a nice big surplus." And I can imagine the treasurer of almost any of the thousands of municipalities across Canada saying, "How I envy you; that is not my position." Then he might go on and remind the minister that the reason the minister has this surplus is

because he is taking so much from the citizens of that municipality who usually contribute to him vastly more than they do to their own treasurer.


William Earl Rowe: They might get some back next year.


James MacKerras Macdonnell: My colleague has suggested that there might be a method in the minister's attitude. We have already mentioned that, and of course next year is next year with its various possibilities which have not yet been finally declared but upon which we are all reflecting.
I am not going to spend much time in talking about the actual plight of the municipalities. Ottawa has already been referred to, and anyone who drives along the streets of Ottawa must get a terrific object lesson as to what is happening here.
I would like to quote one or two short passages from the remarks made by the premier of Ontario and also the metro chairman. In quoting the premier of Ontario I would like to remind hon. members that he has been a man of moderate statements. I do not think anyone can suggest that moderation is not his characteristic, and when he speaks as strongly as he does I for one feel he is entitled to be taken very seriously indeed. It is not as if someone who has been in the habit of indulging in wild and extreme statements were saying these things; it is quite the contrary.
The other day Mr. Frost felt it necessary to warn the municipalities, and these were his words:
The provinces and its municipalities face the immediate prospect of financial belt-tightening and doing without the roads, sewers and schools and other services which make this province so attractive to industry.
I find that a very disturbing statement. I think we have quite enough knowledge to know it is not an exaggerated statement. I know that two or three years ago the then superintendent of education, Mr. J. G. Althouse, made a comment with regard to the next three years which he described as crucial years. That took place in 1953, and he was right. He was apprehensive of a situation wherein we might not be able to give adequate payment to school teachers. He felt we would have to pay so much for physical things needed in education that we would have to pinch in teachers' salaries which I submit, and I know the minister would agree, is the last place in the world in which we should have to pinch.
At the same time, in speaking of the difficulty of this ironic but real situation, Mr. Gardiner, the metro chairman said:
We have to finance too much expansion in too short a time.
67509-217J
Proposed Tax Relief for Municipalities
Then he went on to explain that the municipalities are poor because of their sudden prosperity. I quote again from Mr. Frost, who in speaking of Ontario's needs said:
They were not imaginary needs and we would not be victims of our own prosperity if we had a realistic share of the tax revenue the producing of which is causing our troubles.
I have taken the people in Ontario to begin with. We are in the midst of great industrial activity which is stimulating a business boom and providing, incidentally a large amount of taxes. I want to refer briefly to Winnipeg, too. An article appeared in the Free Press the other day pointing out the problems the people there are facing. They are looking forward, as is everyone else, to an increase in population. The Free Press had this to say:
Acre upon acre of now undeveloped ground will have to be subdivided, sidewalks and roads will have to be planned, water and sewer lines laid These lines will have to be serviced. A heavier suburban population will complicate traffic to and from the downtown area. This will require new bridges, arterial highways and perimeter roads. There will be many other problems-shopping and industrial districts-parks and schools.
I repeat that I do not believe that anybody looking at the situation as it is thinks the municipalities unaided can take care of this situation for the next few years, and indeed indefinitely into the future. I come back again to what I have said more than once; what I think should happen and what I think is necessary above all things is a frank realization of this and an utter abandonment of the attitude of the Prime Minister, as indicated by the words I quoted a little while ago, when he said he did not see any need to share in the normal cost of the growth of the provinces and the municipalities.
I want to say a word about what has happened elsewhere. In the United States they have roughly the same kind of situation that we have except that there the residue of power is in the state and not with the federal government as in our case. I have here a report which I think is worth putting on the record, although I do dislike reading anything. This is a recommendation to the president's commission on intergovernmental relations in the United States, and I am quoting from section O, page 13 of the brief submitted to the Gordon commission by the Canadian Federation of Mayors and Municipalities:
The committee recognizes that intergovernmental fiscal relations in a federal system have never been, nor can remain static. A neat allocation of functions to be performed exclusively by each level, a complete separation of revenue sources by levels of government, and a dedication of particular revenue sources to the financing of particular governmental activities-these are no
3418	HOUSE OF
Proposed Tax Relief for Municipalities longer workable approaches, even though logically appealing. In their stead must be adopted a new theory of parallel interests, a parallelism in both revenue sources used and in functions performed, Some governmental activities, once local, are now tinged with a strong state and federal interest; and some revenue sources, or the proceeds therefrom, which were once the property of only one level have now become common property. This more flexible approach permits collection of revenues by those governments better able to collect certain revenues, and transmission of portions of the receipts to governments better able to carry out the governmental activities, but with changing concepts of which governments are "better able" in both areas.
There has been certain progress made here in Canada, and of course I am not overlooking that. I am not suggesting that what has been done in the United States could or should be done here in any detail. All I am saying is that there is a problem and that the attitude which the Prime Minister and the minister have taken to date seems to me to brush it aside and to give no effect to its reality.
Let me interject one thing before I forget. The action of the federal government has vastly increased this municipal problem. The buildings erected under the National Housing Act and the activities of Central Mortgage and Housing Corporation have laid tremendous burdens upon the municipalities. Payments have been made from time to time-I can recall a small payment made to Toronto in connection with slum clearance-but by and large I believe the approach to this problem has been largely on the basis of allowing the municipalities to carry on as best they can on the principle, "Root, hog, or die".
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
James MacKerras Macdonnell: Mr. Speaker, when the house rose at six o'clock I had been discussing the question raised by the amendment of the Leader of the Opposition. I had confined myself in the main to urging that the broad problem of the mounting costs of municipal administration should be considered, and had said a good deal less about the actual taxes mentioned in the amendment. But the more I think about it the more it seems to me that there is something almost preposterous when one thinks of the situation. Here is the federal government taxing in a good robust way the individuals who are comprised in the municipality. Then when the federal taxpayer has digested the amount of his tax and borne it with as good a grace


as possible, he finds he is attacked from a different direction; that is to say, he is going to be taxed through the municipality to which he belongs. I suggest, as I said a moment ago, that there is something almost preposterous in that.
He pays huge sums to the dominion and then he finds that the municipality to which he has paid his taxes, by reason, as I say, of a situation which I think has reached the impossible, is not able to carry out what he expects it to carry out. I gave an illustration this afternoon, a quotation from Mr. Frost of the restrictions, the drawing in, the retreat which is going to have to be made in the Toronto area, and that is only one of many hundreds of cases across the dominion where no doubt there will be exactly the same kind of difficulty. I suggest that there is bitter irony in it, and that this is something that should be taken seriously.
I am not prepared to offer any facile offhand suggestions as to exactly how the matter should be dealt with. I think it is very difficult. I think it demands great study. But of course the first prerequisite of all is that the government should admit that there is a problem; and as I read twice from the Prime Minister's speech on the address this afternoon the government has clearly announced to us that it apparently does not think there is a problem with which the government should concern itself so far as the municipalities in what is called their "normal" operations are concerned.
Though I am not going to attempt to lay down the detail as to how it should be done, I am going to refer very briefly to a document which contains some very interesting suggestions and which I am sure the minister has seen. It is a document entitled, "Urban Growth and Municipal Finance" prepared by Professor D. C. Corbett of McGill University. I propose to refer very briefly to certain suggestions he makes in the section he has entitled, "The Problem Today", that is, the problem I have been endeavouring to discuss. He says:
What can be done about it? There seem to be two courses open. Either municipalities must be relieved of some of their present responsibilities, and these be taken oyer by senior governments; or the municipalities must find more funds.
There are some who advocate the first approach. They point out that education, health and welfare are national problems, not local ones, and they argue that senior governments should pay for them.
Then he goes on to point out what I think we all recognize, that there are serious dangers in turning over municipal functions to senior governments. It means increased centralization. It means the lessening of a sense of individual responsibility at the stage where it

ought to be strongest, where individual supervision can be most effective. He goes on to say:
The fewer important functions local governments have to perform, the less vital will local democracy be, and the more apathetic will be its electorate and representatives. Strong local governments, doing significant work, are worth preserving . . .
Then he goes on to the second alternative and says:
The second alternative before our municipal governments is finding more revenues. How is this to be done? Some advocate increased provincial grants or even federal grants . . . The scheme is very attractive, has much to recommend it, and under certain conditions may be the proper solution.
But then he raises the objection to that. He says:
A relationship of financial dependency between local and senior governments will inevitably result in increased power for the senior governments.
Much more is said on that but I do not propose to quote it. What I have read raises the points very clearly, and I think we all recognize their importance. Then he goes on to make comments which are especially relevant to what we are considering in this resolution. He says:
. . . there is one form of senior government payment to municipalities which is free from these objections.
That is the objections of centralization and so on. Then he goes on to refer to the payment by senior governments of their municipal taxes on crown property. Later he goes on again to say:
Another way in which the federal and provincial governments could come to the assistance of local governments would be to relieve them from payment of federal or provincially imposed taxes.
He says that a case in point is the federal sales tax. Again I skip. Finally he comes to a point which should not be ignored, and which in itself demands a great deal of study. He says:
The one remaining way to increase municipal revenues is to raise local taxes.
Under that heading he goes on to speak about the real property tax and he says what I think we will all agree with:
But there is no escaping the conclusion that the real property tax has, in genera], failed to keep pace with cost rises and urban growth.
I am not going further into that, Mr. Speaker. I commend this memorandum to the study of everyone who is interested in the problem. I say again that I hope with all my heart the government will abandon the attitude it is taking now, because I believe that here is a very important matter. I believe the analysis of the problem contained in this memorandum goes to the very root of
30, 1956	3419
Proposed Tax Relief for Municipalities the matter, and I feel very deeply that if this situation is allowed to go on without being firmly grappled with, without a recognition of its importance, without a real attempt to bring all levels together and to find a solution which will carry the judgment of sensible and sincere men, if that is neglected then we may come to realize before very long that the grave words which the premier of Ontario used were none too strong and were only too true.


Mr. Erhart Regier (Burnaby-Coquillam):: Mr. Speaker, I was very interested today to hear the reply given to the opposition by the Minister of Finance. I realize he did his utmost to find arguments as to why the amendment should not be adopted by the house. After analysing them I have come to the conclusion that of all the arguments he presented the only one that had any substance to it was that a vote in favour of the amendment was a vote to unseat the Liberal government now in office. When a minister of the crown has to resort to an argument as weak as that he is, in my opinion, on very poor ground indeed.


Walter Edward Harris: That was an argument on my own behalf, as to why I was going to vote against it.


Stanley Howard Knowles: That makes it weaker still.


Erhart Regier: Mr. Speaker, I heard the minister's interjection. I also know full well enough the workings of the Liberal party to know that it takes only a statement such as that on his part to make all the rest of the boys fall in line.


Mr. Ellis:: Toe the line.


Erhart Regier: The only hon. member on the government side of the house who has seen fit to come to the defence of the government in opposition to this resolution is the hon. member for Fort William. The hon. member said in effect what a wage earner receiving about $500 a month would say to his family if they asked him to buy some milk for the family from the milkman. This man receiving $500 a month would say to his family, "Boys and girls, I love you all very dearly. However, if I must buy milk for you, you will understand that I can no longer afford to pay the rent and you will be compelled to live out on the street".
For the hon. member for Fort William even to indicate that if the modest request of the resolution were met it would mean that we would be obliged to reduce any of our welfare measures is simply too ridiculous for any of the intelligent people of Canada who know
3420	HOUSE OF
Proposed Tax Relief for Municipalities anything of the resources available to the government here in Ottawa. The minister himself admitted that it might cost $20 million or possibly $40 million to implement this resolution; yet only a few weeks ago in the budget debate he prophesied a surplus of over $100 million. Hence the argument that if this resolution passes we shall be obliged to reduce veterans' pensions or any other pensions is just too silly for the people of Canada to consider at all seriously.
I feel that the minister was also rather ill advised when he informed this house that municipal government came after the senior forms of government. I am sure the minister did not really think of what he was saying, because I know that he knows enough of the history of the democratic world to know that municipal government preceded national government by hundreds if not by thousands of years.


John Whitney Pickersgill: Not in Canada.


Erhart Regier: I am sure the minister has heard of the city states that were in existence long before such things as provinces or nations were heard of. The root or the heart of democracy is in our local forms of government at the present time. I believe even the minister himself, when he was a municipal councillor or discharging his duties in whatever local office he held, at that time rendered as great a service to the nation in the long run of things as he is now rendering as Minister of Finance for the Dominion of Canada.
I have an extremely high regard for our local school trustees, our local aldermen and our local municipal councillors. Those people receive practically no remuneration. Let me assure you that they are engaged in the wear and tear of practical democracy such as we, sitting up in our wonderful offices in Ottawa, have little appreciation of. If these people fail in their task, then our pretence to be living in a democratic country means nothing whatever.
As usual, in the minister's reply I noticed once again the efforts of the Liberal party to hide behind the skirts of the British North America Act. May I say to the minister that the people of Canada have taken to heart the intention and the real meaning of the British North America Act. The Liberal party have never yet taken to heart what the fathers of confederation really meant when they founded this nation. Ever since that time the Liberal party have used the British North America Act as an excuse to cover their inability to face a problem squarely when they met it.


I should like to say that all the means we have advocated in this house whereby this government might help the lower levels of government, including municipal government, have already been adopted by this Liberal government, and in adopting those measures they have never said that they were violating the spirit of the British North America Act. By the minister's own admission the federal government make funds available for education. They give grants to the universities of Canada. In essence, Mr. Speaker, there is not a particle of difference between giving grants to universities and giving grants to the elementary schools of the nation. Since this government has adopted the principle of some responsibility in some matters in Canada, all we are asking is that they assume sufficient responsibility to enable our lower levels of government to do a job.
In the field of civil defence this government have assumed some responsibility, yet they insist on unloading the major portion of the burden on the lower levels of government. I am not one who for one moment will advocate that this government should assume the entire cost of those functions that are assigned, and wisely so, to the lower levels of government. I think one of the fundamental elements of democracy is that those who administer should also be responsible. In all these measures, therefore, I am advocating only that a larger measure of responsibility for the cost be carried by this government. If we want responsible government, I maintain that those who administer government should be responsible for some share of the cost. However, I feel that at the present time our local governments are asked to assume an undue responsibility when it comes to sharing the cost.
After all in 1867, at the time the fathers of confederation formed Canada, we had an entirely different situation throughout the nation. The major source of revenue to any government at that time was taxation of real estate or taxation of property. At the present time the major sources of revenue are such things as income tax, sales tax, tariffs, duties and so forth. The revenue resources now available were not even visualized or imagined at that time.
In the field of health this government have assumed responsibility. They have never yet said they were violating our constitution when they agreed to pay, in effect, $1,000 per bed as a federal grant for the construction of hospitals. What we complain about is that the lower levels of government which have not had these additional sources of revenue are being asked to pay the remaining $19,000 of the cost of these hospital beds. It simply breaks my heart when I see these

kind, willing and loyal citizens, these ladies of Canada, standing out on the street corners in Canada with their tin cups pleading with you please to buy a tag, or to donate 25 cents to the cancer fund, the heart fund, the Victorian Order of Nurses or what have you.
Here we have this federal government paying just a minute share of the cost of health. They are willing to assume credit and win elections on the basis of having assumed responsibility. Yet when it comes to paying a reasonable share in relation to their income, to their share of the national tax dollar, they hide behind the cloak of the British North America Act and say that after all health is a matter for the provincial and municipal governments.


John Whitney Pickersgill: Mr. Speaker-


Erhart Regier: The Minister of Citizenship and Immigration-


John Whitney Pickersgill: I am rising on a point of order. I wonder how the hon. gentleman relates this interesting constitutional discourse to the very limited and restricted motion of the Leader of the Opposition.


Erhart Regier: I am not in the fortunate position of having the exact wording of the amendment before me, but as I recall it it calls for greater federal aid to municipal governments. I feel, therefore, that the financial relationship of these senior governments to the municipal governments are very much at issue before the house at the moment.
In the field of welfare this federal government has assumed responsibility, and makes no bones about the matter. I should like to compliment them on having gone as far as they have gdhe. However, they still leave a great deal of the onus on the local municipal government. In the matter of unemployment they were unable to see their way clear to assuming the major share of that responsibility, and even yet the major share is left on the shoulders of the municipal government. In the matter of slum clearance, even today the onus is left on the shoulders of the municipal government, though this government in more ways than one has admitted responsibility. This admission of responsibility, Mr. Speaker, is only for election purposes and does not mean too many dollars and cents to the taxpayers back home. Even in such a relatively minor matter as law enforcement, in my municipality at least that is carried out by the R.C.M.P. They do a magnificent job. We realize that this force is subsidized, but the major portion of the cost is once again put upon the municipal taxpayer.
30, 1956	3421
Proposed Tax Relief for Municipalities
In the matter of sales taxes, this government have already made a concession. They have exempted some municipal purchases from the sales tax. If they have adopted the principle, may I ask what is there in the British North America Act to prevent this government from going the whole hog and exempting all municipal purchases from the sales tax? There is no constitutional argument. I came to only one conclusion from the minister's reply and that was that the only valid reason the minister had for voting against the amendment was that he looked upon it as a vote of want of confidence in the government. I presume he was hoping that his followers would adopt the same course.
Since we have a Department of National Defence it is only natural that civil defence should always be thought of as a national responsibility, but the federal government is unwilling to assume the major share of that responsibility. The Minister of National Health and Welfare goes about the country bragging about the arrangements that have been made for civil defence. Everybody who knows anything about civil defence knows they are a farce. If the minister or the government would call it a civil disaster program they might win some public support. As it is they call it civil defence, which puts the responsibility on the shoulders of this government, yet this government fails to meet that financial responsibility. I should like to ask the Minister of Finance how he can expect municipal governments to provide bridges out of our major cities for civil defence purposes if civil defence is the responsibility of the federal government. They have admitted it is, because they assume responsibility for at least a portion of the cost.
In the field of education, our municipalities do not know where to turn. When I see that the average home owner in some Canadian cities has to pay a municipal tax levy of about $400 per year I am simply flabbergasted. If my people back home would realize that unless some remedy is found the average home owner in Burnaby will be faced with a tax levy of $400 by his municipality, I can assure the minister that not one Liberal would be returned from British Columbia at the next election. There are Canadian cities now where the average home owner has to meet a levy of that sort. How is the man on a fixed income supposed to manage that type of levy?
I believe it was the Rowell-Sirois commission report which many years ago had this comment to make, in effect; that if the federal government had exercised the same prudence in the expenditure of money that the municipal governments have for years been forced to exercise, things would be quite different in
3422	HOUSE OF
Proposed Tax Relief for Municipalities Canada. A million dollars here means nothing, as has been expressly stated by one of the cabinet ministers, yet a couple of thousand dollars means a lot back home. In the matter of highways, once again the government cannot hide behind the British North America Act because they have already assumed responsibility for a national highway. They are unwilling to assume enough responsibility, however, to relieve the lower levels of government. In the field of town planning this government has assumed responsibility, yet it is unwilling to institute some form of national town planning whereby the municipal governments might get relief. In the matter of slum clearance this government would be able to do a great deal in relieving some of the burden of the local governments.
I have read several articles by the hon. member for Vancouver South, who is quite a columnist, in which he blames the local municipal governments for failure to take the initiative in connection with slum clearance in Canada. We cannot expect municipal taxpayers to agree to the sale of debentures for slum clearance purposes. Obviously this is a problem that is of greater significance than the local municipality in which a ratepayer lives. I understand that some time last year the Prime Minister made a public statement to the effect that he was opposed to the federal government subsidizing the rate of interest at which municipal governments might borrow money.
I would be all for the federal government subsidizing the interest rate, but I should like to ask the Prime Minister if he would at least agree to make funds available for self-liquidating projects in municipalities at a rate of interest that will not involve subsidization. Will he agree to make this money available to the municipalities at the same rate of interest at which his government is able to borrow money? This might mean 3-5 per cent instead of 2-5 per cent, but even that would be going a long way toward meeting the problem.
I think the Prime Minister is interested only in turning back the clock in Canada, and in using the British North America Act to retrace some of the progress the Canadian people have made since the days of William Lyon Mackenzie King. I am convinced of that, and the more of his too few speeches I read the more firmly I am convinced that this is his determination, that this is his policy. I therefore plead for the reopening of the operations of the Municipal Improvements Assistance Act. According to the Minister of Finance, the government used it as a means of relieving unemployment in the hungry 1930's. I would recommend to him that he reopen and greatly expand the operations of that act in
rMr. Regier.]

the matter of capitalization in order to relieve the growing burden of taxes on the homes of the people of Canada. He has it within his power to do so if he but will.
I am afraid he is more interested in seeing available capital in Canada being freed for H. R. MacMillan, the Bell Telephone Company and all the other monopolistic enterprises in Canada that are forever seeking the loose investment money that happens to be floating around. This government is not interested in laying its hands on some of that investment money that is available and making it available for the social needs of the Canadian people as a whole.
In the matter of the sales tax the minister says if we grant further exemptions it will be too difficult to administer. I have heard other members of the government, or supporters of the government, give other reasons throughout the country as to why the government did not allow a 3-ton gravel dump truck to be exempt from the sales tax. After all, you cannot trust these municipal councils and aldermen, they argue. They might buy this 3-ton dump truck for purposes of gravelling their roads, and for all we know the next minute they might turn around and sell it to some pal of theirs. They have not the confidence in these thousands of men and women across Canada who are the bulwark of democracy in the country. They think some municipal officer might do the federal treasury out of some revenue by turning around and using his municipal office as a bootlegging place. I resent the insinuation very much. I know the minister did not use that argument. He simply said that the technicalities involved would make it more difficult to implement the act.
With respect to taxation of federal property, only this morning I replied to a letter received from a ratepayers' organization. This letter asked me to do what I could to influence the federal government to pay its full share of local taxation on any and all property it might own within the municipality. The minister cannot again use the British North America Act, because already the government is granting recognition to some municipalities to a limited extent for purposes of making allowances or grants on any real estate or property that is owned within a municipality. We are asking the minister to go the whole hog in this respect; we are asking him to pay the full amount of taxation on any property the federal government owns in any municipality of Canada.
I would also like to put in a word on behalf of decentralization. Surrounding the major municipalities there are the suburban municipalities, yet practically every department Of

this government is concentrated in the larger cities, and every civil servant who is responsible for the administration of a department of government within the larger city resists any decentralization of his department within the province. This is only natural. The more the province grows and his department grows with it the higher is his rating in the civil service, the higher is his prestige and influence and the higher is his own personal salary. I feel this government should set an example to industry and should decentralize its own departments in the suburban municipalities. In that way many of the suburban municipalities would be entitled to some tax relief or grant, call it that, from the federal government.
Another little thing I would like the minister to do to help the local governments is to rid the municipalities of the substandard homes owned by this government in the municipalities of Canada, or homes privately owned that exist on land or water under the jurisdiction of the federal government. We have them in Burnaby; we have had them for years. Those people live on the water; they live on the flats, on land owned by this federal government. The taxpayers must pay for the education of the children of those families; the taxpayers must pay for the social needs of those families, and those social needs are usually greatest among those families. Yet for years the municipalities have endeavoured to have the federal government assume its proper responsibility in this regard, but it does absolutely nothing.
These people live there. Call them squatters, if you like. I do not wish to. I wish them only well. However, this government has it within its powers to at least relieve the municipal governments of the financial responsibilities, especially in regard to education and welfare, in connection with the people who live on federal property and in many instances in houses owned by the federal government.
I realize, and I hope some day this government will realize, that in 1867 the major share of revenue was available to local forms of government, and the major share of responsibility was laid on local governments. In 1956, almost 100 years later, the major share of revenue, the lion's share in fact, is in the hands of the federal government, yet the lion's share of the burden has been left on the shoulders of the municipal governments and responsibility has been assumed by this Liberal federal government only to the degree they thought it necessary to assume it for the purpose of winning elections.


Mr. R. W. Mitchell (London):: Mr. Speaker, I have heard an expression used on more 67509-218
30, 1956	3423
Proposed Tax Relief for Municipalities than one occasion which struck a chord in my mind. That expression consisted of the words "brushed off". They were used with reference to the attitude of the Minister of Finance toward the pleas which have been made to him by officers of the municipal governments over the years. I attempted to find out where I had heard those words before. I found that those exact words had not been used, but words which might equally apply came out of the minister's own mouth in his reference to the Minister of Trade and Commerce. On March 20 I heard him say-he was talking about the well-known quality of optimism of the Minister of Trade and Commerce-as reported at page 2325 of Hansard:
I would be happy if other qualities of the Minister of Trade and Commerce were also to rub off on me.
I would hope, Mr. Speaker, that some of the observations made during the course of the debate today, and some of the representations that have been made over the past few years would also rub off on the Minister of Finance. I prefer to use another expression in so far as the minister's attitude toward the municipalities is concerned. I would prefer to say that he has enjoyed kicking that ball around more than any other thing since his tenure of office as Minister of Finance commenced.
I suggest, Mr. Speaker, that one has only to read any newspaper on almost any given day in almost any town, city or village in this country to realize there is a crisis at hand. In recent weeks and months municipalities from one end of this country to the other have been giving urgent and serious consideration to their budgets. They have been striking tax rates, and in each and every case I submit they are having a hold the line battle which this government in many ways has failed to win itself. They are having to cut where they should expand; they are having to cut down on essential works, many of which have been mentioned this afternoon, simply because there is not enough of the tax dollar left to provide them with the means of producing the services which each and every municipality needs.
I amongst many others, Mr. Speaker, have welcomed this debate for the purpose of pointing up the problems which municipalities have attempted to meet, with apparent lack of interest on the part of the government, and of pointing out certain remedies many of which have already been suggested this afternoon.
I have heard it said that municipalities have to buckle down and start being careful about their dollars. It has been said they
3424	HOUSE OF
Proposed Tax Relief for Municipalities have to start cutting out the frills; they have to cut their sail to fit their cloth. I agree that in some cases frills have crept in. The minister himself is well aware of many demands which he considers to be of the frill nature. I must agree with him in respect of some of them, but I wish to state most emphatically that the average municipal government is doing its utmost to provide essential services. The great majority of municipal governments find themselves completely unable to do so with the share of the tax dollar which is left to them.
Just a year ago we had introduced in this house an amendment to the Municipal Grants Act. That amendment was supposed to be the cure-all of municipal troubles. I had occasion, Mr. Speaker, to refer to this nibbling government not more than two weeks ago, and the amendment which was introduced to the Municipal Grants Act last year was nothing more than a nibble. It was typical of the approach which this government has taken to almost any problem with which it has been confronted. It was nothing more than a half measure. I suggest there is only one conclusion to which we can come, and that is this government has become so old that it has lost its teeth and can no longer take a good healthy bite at anything.


An hon. Member:: Fluoridation.


Robert Weld Mitchell: It continues in its toothless, gum-filled fashion to attempt to meet the problems of the day in what I can only describe in parliamentary language as half-way measures.
The minister this afternoon brushed this problem off or kicked it about, whichever expression you may want to use. As evidence of the fact that there is a problem I could refer to a resolution passed by a municipality which I must confess is not conspicuous for following the Conservative party. The municipality to which I refer is represented by the Minister of National Health and Welfare- there is no greater protagonist of the art of the grant-and the hon. member for Essex West, who is an able student of the minister.
That municipal council represented that there is a problem. The Minister of Finance referred to it today I thought in rather a sneering vein. I am only sorry that the Minister of National Health and Welfare did not hear the minister's reaction to what his own municipal council had produced. That council passed a resolution this year which I propose to read. It refers to the question of borrowing money which the minister frowned upon this afternoon by saying, "Well, all they want is to get cheaper money". Nevertheless

last year it did not benefit under the Municipal Grants Act, but as a result of that amendment it did. The problem may be briefly stated, as it has been stated already. The limit of taxation on real estate has been reached, in fact in many cases it is already over the top. For a city which is confined within certain limits, which is growing and in which federal services are continually being added and increased, the share of federal government holdings of total assessable property is constantly increasing.
These municipalities still have to come here as nothing better than beggars, with their hats in their hands. The government finds itself in the happy position, which it apparently is determined to maintain, of being able to make hand-outs on any given occasion rather than put itself in the position where as a matter of right, according to a formula which has been previously agreed upon, certain payments shall be made.
The minister made much of his statement this afternoon concerning payments by various provincial governments of allowances in lieu of taxes. I would point out to him that in most of the municipalities which were listed last year in the proceedings of the banking and commerce committee there are few if any provincial buildings. In fact I challenge the minister to produce evidence of anything in the city of London in the nature of provincial buildings to the extent that there is in the way of federal buildings.


Walter Edward Harris: I did not suggest that every municipality in Ontario had provincial buildings.


Robert Weld Mitchell: The minister was making the point that the provinces did not make any specific allowances in lieu of taxes, and therefore why should the federal government do so.


Walter Edward Harris: No; I made the point that provincial governments, with the exceptions I mentioned, were not making payments on the basis of the general tax rate. I suggested that there must be reasons for that, but I did not draw any conclusion that we should not do so.


Robert Weld Mitchell: I still make the point that the problem of provincial buildings, for example in London, does not by any stretch of the imagination compare with the problems created by the assessed value of federal buildings in the same locality. So we find ourselves with the government in the happy position where it is handing out this largesse as and when it sees fit to do so, when in fact it is doing nothing more than return to the municipalities money which it has raised from those municipalities.
67509-218J
30, 1956	3425
Proposed Tax Relief for Municipalities
I do not propose to comment on the constitutional problem which the minister loves to raise, that the payment must be as a matter of grace and not as a matter of right. I submit that this government should be in the same position money-wise vis-a-vis the municipality as any other taxpayer who is carrying on business or living in that municipality.
So we go on with no solution. The Minister of Finance is doing his best to perpetuate a position which he obviously enjoys with relish. In the meantime the municipalities are suffering. We have heard that $12 million to $14 million is involved. We have heard that there was some $6 million involved in the amendment brought forward last year. We have also heard the figure of the surplus which has been "guesstimated" from time to time during this fiscal year.
I suggest that the hon. member for Greenwood and the hon. member for Dufferin-Simcoe put their fingers on the very heart of the matter when they pointed out the percentage of the tax dollar now being received by the three levels of government. I suggest that the federal government is doing nothing more than compounding a felony by accepting a greater percentage of the tax dollar and then refusing to take its full part in the payment of taxes within the municipalities.
There is another benefit which I suggest would arise under prudent management, as a result of the federal government taking on its full tax responsibility in the municipalities. As time goes on we find that more and more of the most valuable downtown properties in our cities are being held by the federal government in order to provide service in one way or another to the public of the city and district served by those particular buildings. I suggest to the minister that prudence would dictate that many of those buildings be removed to less valuable sites. If the dominion government were paying full taxes such as business and industry would normally pay, they would move to less valuable sites. Such a move would not only assist the municipality but would enable it to obtain full taxation from business or industry which might occupy that building, which at present may be more valuable than is required by the federal government to carry on its operations.
I commend the government for one move it made last year, when naval headquarters in London was moved from one of the most valuable pieces of property in the very heart of the city to a site which, while not unanimously agreed upon, is at least suitable for the operations of a naval establishment. Thus valuable property has been released for business and industrial purposes.
3426	HOUSE OF
Proposed Tax Relief for Municipalities
Another matter which has been brought forward in the amendment is the sales and excise taxes. The manner in which these are levied provides certain queer anomalies. Some have been referred to already, and I will be the first to admit that others have been extinguished. But it is not so long ago that a fire engine purchased by the city of London bore full sales and excise taxes; yet its first duty was to fight a fire at Wolseley barracks, upon which the federal government pays no real estate tax to the city.
In so far as these sales and excise taxes are concerned, once again I take the city of London as an example. I am informed that the amount paid, and I would assume this was in the year 1955, was $150,000. There again, Mr. Speaker, I must point out that the members of the city council of the city of London are not conspicuous by their conservatism, but on the 24th of May, 1955, they passed a resolution which I propose to read:
That, whereas this municipality contributes in sales tax, annually, an amount totalling approximately $150,000, which is equivalent to one mill in the municipal tax rate;
And whereas it is considered inequitable that the municipality should be required to raise moneys through taxation in order to pay them out again to a senior government in the form of sales tax;
And whereas this problem has been drawn to the attention of the dominion government on many occasions and, notwithstanding assurances that the submissions of this and other municipalities would be studied during the preparation of the annual budget of the dominion government, no action has been taken to afford relief to the municipalities of Canada by way of exemption from sales tax;
Therefore be it resolved that the city of London again place itself firmly on record in favour of early action by the dominion government to exempt municipal purchases from sales tax; and that the major cities of Canada, together with the Canadian Federation of Mayors and Municipalities and the local members of parliament be requested to support this resolution.
We have now heard, Mr. Speaker, from the federation of mayors and we have heard from the local levels. Surely it is time the minister took this problem to heart and stopped brushing it off. The minister among others has said that the municipalities are the creatures of the provincial governments. I may say, and I think with fairness, that the minister has been hiding behind that cliche for much too long, and at the same time has been increasing taxes and putting a squeeze in a two-way fashion on the municipalities. I suggest to him that it is time we tackled the problem realistically and put an end to it before the expansion which is going on so rapidly now makes the situation much worse.
The minister said this afternoon that it had been a principle ever since confederation not to tax the crown. In that statement he admits that the crown may be in the right of the dominion or in the right of the province.


I simply point out to the minister, and with apologies to some of our smaller provinces for whom I have every sympathy, that today many of our municipal governments are bigger operations than some of the provincial governments. If it is true that sales and excise taxes should not be levied against the provinces, it is equally true that they should not be levied against municipalities which at the present moment are undertaking the local government of considerably more people than the smaller provinces.
So, Mr. Speaker, I suggest that the government had better consider getting out of this tax field. Despite the minister's statement to the contrary, I suggest that they are getting further into the tax field because by their methods of taxation they have rendered the municipalities impotent as far as raising the required amount of money in the normal course by real estate taxation is concerned. The amount of the grants which they love to make-and, as I mentioned before, the Minister of National Health and Welfare is one of the prime exponents-plus the economies which could be made by permitting the spender to be the taxer, would go a long way to make up to the federal government the loss in revenue which would result from withdrawal from the sales and excise tax field so far as municipalities are concerned, and through payment of the full taxation equivalent on real estate.


Mr. O. L. Jones (Okanagan Boundary):: Mr. Speaker, this afternoon I was both surprised and pleased in listening to the Leader of the Opposition speak on the need of help for the municipalities. I was surprised and pleased because on April 12, as found at page 2865 of Hansard, you will find certain remarks of mine which are practically word for word the same as the Leader of the Opposition had to say today. They follow the same theme and the same arguments pretty well. Naturally I was pleased to find that someone else had taken up the cudgels.
I do not intend to repeat what I said on that occasion. As I have just mentioned, my remarks were substantially the same as those of the Leader of the Opposition today. Therefore it naturally gives me a great deal of pleasure to support the amendment.


Mr. Fulton:: We all know a good thing when we see it.


Owen Lewis Jones: Thanks. It deals with the most pressing and difficult problem facing the municipalities, the junior members of our governing bodies, that of raising revenue without further direct imposition on the hard-pressed municipal taxpayer. That is the problem.

As the Leader of the Opposition pointed out, the cost of education is a most onerous burden. As I pointed out in my previous speech, this could be relieved by a per capita grant to the various school districts. I do not think aid in this way should offend the provincial governments, who are very jealous of their provincial rights. I would simply point out that the municipalities also have certain rights, one of them being a return of part of the taxes collected by the federal government within municipal limits for municipal use to assist in meeting the cost of education, which I can frankly say is getting worse and worse each year in Canada. Before we have perfection in the field of education the problem will be still more intense. Therefore the federal government should step in now before we are in too deep and it is too late.
I would also remind the minister that I mentioned the sales tax in my previous talk.
I am convinced that this tax is very unfair. It puts a heavy burden on the municipalities, and their purchases should immediately be placed on the same basis as purchases made by provincial governments. Municipalities should be treated as another form of government, because in fact they are. Therefore they should receive the same treatment as the second level of government, the provincial. I hope the minister will give consideration to this matter because I know he has been appealed to by different municipalities and organizations representing the regional municipalities.
Another thing I bring up again, and I have raised the question every year for the last eight years, is the reopening of the municipal assistance act with its provision for 2 per cent money. I know that pressure has been brought to bear on the minister by different groups and by provincial governments. As I understand it, there are two pressure groups. One represents the taxpayers in demanding the reopening of the act and access to 2 per cent money. The other pressure group represents those who are presumably interested in government bonds, the banks and financial houses, who are not anxious to see the act reopened because it enters into a field in which they claim the sole right to operate.
I would disregard those views entirely. I think it is time the government had a policy of its own regarding financing, and not a policy dictated by the Canadian banks. Under this legislation the government did have a policy of lending money at 2 per cent for self-liquidating projects. That was an excellent financial scheme. It was excellent in the results it obtained and excellent in the investment it turned out to be, because every
30, 1956	3427
Proposed Tax Relief for Municipalities penny was paid back to the government including the interest. With such a fine record of operation I cannot understand the hesitation of the Minister of Finance in reopening this excellent means of assisting the municipalities in their present plight.
I would also remind him that the high record under that act was made during a time when we had a depression in Canada. All the municipalities that borrowed money, or practically all of them, were in a depressed state. They were poor risks. They could not borrow from the orthodox financial houses. But, poor risks as some of them were -and I know some of them-they were able to borrow at 2 per cent; and even those poor risks, the very poorest of risks, have all paid back in full. They were able to do that because the burden of 2 per cent did not cripple them entirely.
I think the new town planning proposed by the government and the health schemes to clear up slum areas and all that call for a great deal more in the way of expenditures by the municipalities for new facilities. I find that most of them are experiencing difficulty in raising the money at a rate that will allow them to give the services at a price the people can pay. The other day I referred to Summerland which had this very problem.
Many cities are in the some unfortunate position, even Ottawa. When they are obliged to run services miles outside their limits into new areas, it is far more costly than it is to extend them within the tightly-packed limits of the town. Those are problems facing every municipality in Canada. The municipalities should be assisted by getting 2 per cent money for these very things, namely to extend sewerage, water services, sidewalks and roads to these areas that the government itself is helping to build up through assistance under the National Housing Act. Hence they have a responsibility if they are to succeed in getting what they hope to get, namely a better form of homes for the people of Canada, in better conditions and better surroundings.
I would also again urge the government to pay taxes on all federal properties and just to forget the formula. It is time it was forgotten. I would urge the government to pay taxes to the 89 per cent of the municipalities now getting nothing in the form of taxes on federal property. I refer particularly to post offices. Every one of them in my riding shows a profit. They are a very profitable undertaking. There are some businesses in my riding that do not show a profit, but they pay licence fees to the municipalities in order to carry on business. However, the
3428	HOUSE OF COMMONS
Proposed Tax Relief for Municipalities post office does not pay for a licence. It does not give a hoot. It does not pay tax. It does not pay anything. It just takes the profits and sends them to Ottawa. I think it is time some of these profits were paid out either in the form of taxes or licence fees or both; probably the foremost would be the fairest way to do it.
Another federal building is the armoury.
I am not saying it should not be there; I am all for it; we have them in every town in Canada, where reserve army men are trained within city limits. They usually have several lots on which no taxes at all are paid. The presence of those armouries in a city causes a hardship on the city. In Kelowna, Vernon and Penticton the troops have not sufficient grounds belonging to the federal government on which to train, so they are trained on the municipal streets. They take up the sidewalks and they take up the roads, and traffic must be governed accordingly. But the government pay nothing for it. They never ask the city whether they can make use of the streets. They just take possession of them as though they belonged to them.
This unit to which I refer happens to be a unit with tanks, jeeps, heavy trucks and guns. All these are dragged over the city's paved streets without a by your leave, or without rectifying any damage done to the streets. Throughout the whole of British Columbia that has been the general complaint during the war years, namely the damage done by army vehicles. They do not object to it provided the government pay a fair share of the costs of rectifying the damage done by these vehicles to municipal streets, or pay their fair share of taxes as they should on the armouries.
I am not quite sure of the exact figure, but I believe that during the last 10 years the revenue of the federal government derived from municipal limits-that is, from the taxpayers and from industries, in duties collected and taxes paid-have risen by about 1,000 per cent. That is a tremendous increase. One would think the government would feel some responsibility to return some of that revenue. But while the revenue of the federal government obtained from the municipalities increased 1,000 per cent, the contribution of the federal government to the municipalities remains the same now as it was 10 years ago, namely nothing at all. I think that is a shame.


Walter Edward Harris: I hope my hon. friend will permit me to ask him this question. Surely he is not suggesting that the revenue derived from taxes on municipal corporations has increased 1,000 per cent in 10 years?


Owen Lewis Jones: No. I am referring to the total amount of money collected from corporations,

from industry, from individuals and all who live within the municipal limits.


Walter Edward Harris: The income of the government of Canada in 1946, as I recall it, would not be much more than 10 per cent or 15 per cent less than it is now; perhaps 20 per cent or 25 per cent.


Owen Lewis Jones: I do not think the minister understood me correctly. I mean that the total income of the government is now coming more from the organized units of the municipalities than it ever did before. It is concentrated through industry.


Walter Edward Harris: Our tax base now is practically the same as it was 10 years ago.


Owen Lewis Jones: But your revenue is not the same. It is your revenue that is different.


Walter Edward Harris: Our revenue now is about $4 billion. I will not interrupt my hon. friend again, but I am sure it was not much less than that in 1945 and 1946.


James MacKerras Macdonnell: On a question of privilege may I make an interruption? I am confident that the minister's predecessor in 1945, 1946 or thereabouts referred to his take or income as $2,400 million.


Owen Lewis Jones: The tax is not ten times as much. Probably the minister misunderstood me.


Walter Edward Harris: That is all right.


Owen Lewis Jones: But the collection of moneys by the federal government from municipal limits is ten times as much. That is the figure I tried to give. I am sorry if I misled the minister. In return the contribution of the government to the municipalities is the same as it ever was, namely nil.
If we are to have a progressive and beautiful city as the town planners predict and as the citizens would welcome, I think the federal government must face their responsibility in a practical way, shoulder their rightful burden of taxation, contribute their share toward the cost of services, and abolish the present formula. In order to find an illustration of the difficulties faced by municipalities I think you have only to go to your own town of Ottawa, where they apparently have not sufficient money to build decent roads. I have not travelled over such bad roads in many years as those you find today in Ottawa. I feel that some assistance should be given to the city in order that it may provide decent roads for its citizens.
I also think we are afraid of suggesting anything by means of which the municipalities could break new ground by way of getting revenue. I am going to make one suggestion, however. I made it many years ago to the municipalities of British Columbia,

and I make it again. It seems to me that the municipalities have a right-and these are personal views, not party views-to at least 10 per cent of all fire insurance premiums. Municipalities are called upon to provide expensive fire protection and to perform duties in connection with the elimination of fire hazards and all that kind of thing, at tremendous cost. The only people to benefit are the insurance companies, whose premiums are thereby strengthened. It seems to me that every insurance company should return to the municipality at least 10 per cent of the premium on every policy for this service. I do not know whether or not that is feasible, but it has always appeared to me to be unfair to ask the people in the municipalities to pay a high rate on fire insurance premiums and then have these companies demand that the municipalities provide the fire protection.


Walter Gilbert Dinsdale: I
was interested, Mr. Speaker, in the opening observations of the previous speaker, the hon. member for Okanagan Boundary. He suggested that the amendment we have before us was very much the same as material he had presented to the house on an earlier occasion. I believe that only tends to underline the fact that we are facing a real problem, one of the basic problems in Canada, in this matter of municipal tax resources and municipal services.
Ever since I came to this chamber one of the subjects that has been aired repeatedly has been the increasing difficulties that municipalities have in facing their responsibilites in the changing Canadian economy. The problem can be stated very simply, but while the problem can be stated simply unfortunately there is no easy solution. I do feel, however, that it is a difficulty that demands the immediate and earnest attention of government at the federal level. Municipal governments, of course, are very much smaller in their geographic areas and very much restricted when compared with provincial and federal governments. It is for this reason I think we sometimes fail to appreciate the relative importance of the three levels of government.
While it is true that municipal governments seem to be restricted in their authority and the number of people concerned is not too great, I should like to suggest that they are dealing with issues that are of the greatest importance to this country. While as individual units they are small, we must remember that in terms of the over-all national picture we have some 4,000 municipalities and municipal councils; and again
30. 1956	3429
Proposed Tax Relief for Municipalities thinking of that other important local government body, the school board, I suppose we have three times as many school boards as we have municipal councils.
We must not be twisted in our thinking regarding the importance of municipal governments. It has been said today, as it has been many times, that a nation is only as strong as the local level of government. I think it was de Toqueville who said that a nation may establish a system of free government, but without municipal institutions it cannot have the spirit of liberty. It has become a truism to conclude that the real source of democratic government, the real source of liberty, arises on the level of local government. Unless we have a thriving, vital, active local government, we are not going to have a vital democratic government either at provincial or federal levels.
One of the problems of local government today is the great apathy toward responsibility at this level on the part of the individual citizen. Year after year when we come to the time of local elections we are faced with a situation in which it is very difficult to inspire any enthusiasm for the issues at stake. This lack of enthusiasm, this apathy, is indicated by the reluctance of citizens to allow their names to stand for local office. While we sometimes decry the lack of interest in federal elections as represented by the relatively small turnout of voters, certainly the record for both federal and provincial elections is away ahead of the record for local elections. It is not the exception to discover that in municipal elections we have as small a percentage as 35 per cent of the electorate turning out to support a panel of candidates.
This apathy on the local level, I suggest, does not augur very well for the continuing survival of a vital democracy at the higher levels of government. I would further suggest that one of the reasons-there are several reasons-for this failure on the part of citizens to present themselves for service on the local level is the difficult situation confronting municipalities in the changing economic circumstances of the country. The municipality is burdened with services far beyond its capacity to cope with adequately. Anyone who has had any service on the local level of government will realize that life can be one series of problems that are unsolvable; of irate taxpayers waiting on the doorstep and constantly trying to get action; of the local councillor or mayor being only too willing to act but prevented from doing so because of inadequate financial resurces. It is a problem that has to be faced. It is a problem that, while the solution is not easy, certainly a nation such as Canada should endeavour to deal with directly and as quickly as possible.
3430	HOUSE OF
Proposed Tax Relief for Municipalities
As these discussions have illustrated, the federal government attempts to cast off responsibility for the difficulties by referring back to the responsibilities of the provincial government. Unfortunately, in most of the difficulties facing Canada at the moment this tendency for buck-passing has become the chief technique of dealing with problems. The dominion government refers back to the provincial government. If you go to the provincial government they, in turn, say, "Sorry, it is not our responsibility. The federal government will have to deal with this matter." Somebody has to take responsibility for the tax situation that has developed in Canada, particularly since world war II. Certainly the federal government has to take the major responsibility in this regard.
The federal government has moved into the available tax areas to a rapidly expanding extent in recent years. For example, the statistics for 1952 show that the federal government collected $3,792 million; the provincial governments collected $918 million; and the municipal governments, $636 million. The tendency toward centralization of responsibility, largely resulting from the demands of war, is the reason for the pattern indicated by those statistics. Yet notwithstanding those trends the service responsibilities of municipalities have remained largely unchanged; in fact, they have expanded very rapidly in recent years.
It is a well-known fact that those service responsibilities involve the types of government service that have become most expensive in our modern twentieth century civilization; education, health and welfare matters, roads and similar responsibilities. Here again the federal government hides behind the constitutional problem. Admittedly the control of these matters of education, health and welfare and roads has to remain largely in the hands of the local levels of government. That is particularly true of the matter of education, because local control must rest with the municipal governments. The federal government hides behind those constitutional difficulties and professes that nothing can be done by way of sharing responsibility for the increasing financial load.
We have before us an amendment which does not profess to solve the whole difficulty, but it certainly is a gesture in the right direction. Perhaps that is the way we have to move; perhaps this difficulty cannot be solved in one magic wave of the wand. It is a matter of gradual adjustment, a matter of changing circumstances. We have the suggestion that the privileges of exemption from excise and sales taxes might be passed along


to the municipal governments, the same privilege that is also extended to the other level of government, and also the other solution that has been placed before the house.
A few moments ago, Mr. Speaker, I mentioned that the demands in the service areas of education, health and welfare and roads had to remain within the control of local governments, and also that these service demands were expanding very rapidly. The irony of the situation is that the principal reason for the rapid expansion in those service areas has resulted from the actions of the top levels of government provincially, but especially the federal level of government. As Canada moves toward nationhood, as we move into the industrial revolution of the twentieth century, as we move toward a more complex kind of life, the educational facilities, the health and welfare program have to be expanded far beyond the wildest imagination of the founding fathers.
These pressures, as I have indicated, come from the highest level of government, namely the federal government. Today education is a national responsibility. At the time of confederation the financial responsibility for education could be left safely to local levels because it was a matter of reading, writing and arithmetic so the citizenry of a democracy might be able to meet the ordinary demands of communication; but today education has become a terrifically complex and expensive proposition. The matter of national survival is intimately tied up with the kind of educational program we carry on in Canada today. The servicemen serving in the defence of Canada require a relatively high level of general education as well as technical education if Canada is to meet the challenges from any potential aggressor.
In recent days we have heard rather ominous observations to the effect that other nations are away ahead of us in the development of technical skills that would prepare the youth of those nations to play their adequate role in a technological civilization. That is a national responsibility. Certainly it has not very much to do with the local responsibilities which were envisaged at the time education was originally placed in the hands of local government. Then there is the matter of providing education for our new citizens, the immigrants to Canada, which in the post-war years has presented quite a problem to certain communities in which the new Canadians have tended to concentrate. Again this lies within the area of federal responsibility. We are faced with this problem, and maybe there is no absolute solution of it. Education has today moved toward a national perspective, while at the same time

we have to preserve the local responsibilities and the provincial responsibilities under the British North America Act.
I could go on and deal in detail with certain other areas of service responsibilities that fall upon the local levels of government. For example, there is this matter of flooding that we hear about these days, particularly in reference to the perennial difficulties that we have in the province of Manitoba. I attended a meeting of farmers just a couple of weeks ago, a group of farmers and representatives of local municipalities, who have banded themselves together in a voluntary association of municipalities to see whether they cannot come to grips with the question of who is responsible for the control of flood conditions and for looking after the compensation when floods occur.
There the problem was to try to pinpoint where the financial responsibility lay. Provincial authorities say it is with the federal government. Federal authorities say they cannot do anything unless provincial authorities take the initiative. We had another interpretation at this rally, to the effect that if action is required by way of flood control it will be necessary for the local municipalities to approach the authorities and present their case in clear-cut terms. Well, that was a new interpretation, but at least it tended to pinpoint the situation so that some concrete action might be taken.
I listened to the Prime Minister's remarks on this matter when the house opened today, and it seemed to me he was suggesting that this problem of control had become an annual difficulty and that some over-all conservation measures, flood control measures, were urgently required. If we need an overall conservation program I think it is obvious that the municipal and provincial governments cannot be made responsible for it. It seems to me that the federal government must take the initiative for the general wellbeing of Canada, and must deal with matters pertaining to water and soil conservation and the growing problem of flooding which arises from those two difficulties.
Since the depression years of the thirties there has been an attempt to shift the rather heavy financial responsibility concerning health and welfare matters to the higher levels of government. For example, the local municipalities no longer have any financial responsibility for providing old age pensions. There is a movement in a more reasonable direction in the light of prevailing conditions in regard to welfare matters. Despite this fact, with the growing pressure from the senior levels of government the municipalities have
30, 1956	3431
Proposed Tax Relief for Municipalities found themselves confronted with an increasing load for casual or transient relief, a financial burden which cannot be handled today with the limited resources of the municipal governments.
A concrete example of the increasing demand for services that has largely arisen from the growing intervention by the federal level of government in health and welfare matters is the disability pension that was approved by this house only two years ago. As you examine the statistics the picture becomes clear. I do not have the figures across the country at my fingertips, unfortunately, but in the province of Manitoba approximately 200 disability pensions have been approved since the bill was first passed. The passing of the legislation has drawn attention to the fact that such a pension is available and people who formerly got along financially as best they could following disability have applied to the local welfare authorities by the dozens, only to discover that the definition of disability is so narrow that very few can actually qualify. You have to be totally and permanently disabled in order to qualify for the pension, and the words "totally and permanently" are rigidly interpreted by the examining board.
When the local welfare service becomes aware of the problems of people who are living in extremely difficult circumstances they are forced to take some financial responsibility for them. It has been especially difficult in the case of mentally retarded people; people under the mental age of seven, for example, who have been sheltered within the family unit, and have reached maturity without achieving a mental capacity which permits them to cope with the problems of life. I do not think anyone can deny that an adult with a mental age under seven is totally and permanently disabled so far as being an adequately functioning social individual is concerned. When these problems come to the attention of the municipalities they have to assume responsibility, and the pressure has come from action on the part of the senior levels of government.
These matters are well known to all municipal officials, and of course they have been presented in this house on a great many occasions in the past. There is no need to re-emphasize them at great length tonight.
In winding up this particular part of my observations I would like to suggest that one of the curses on municipal finances has been this technique of matching grants, under which the federal government says, "We-will give you such and such a service if you will agree to equal the amount, or accept a sizeable portion of the financial responsibility." Most
3432	HOUSE OF
Proposed Tax Relief for Municipalities-of the measures arising at the federal level now are presented to both the provinces and the municipalities on the basis of this matching grant technique until the municipalities are not in a position to do any more matching. They have exhausted all their financial resources and have overextended themselves. Sometimes the federal government is surprised when the municipalities appear to look a gift horse in the mouth and will not accept the prizes in the form of the various services which are dangled at the end of the federal government's fish pole.
The matching grant system is certainly not an unmixed blessing. I think that technique lost its usefulness long ago. The municipalities have reached the end of their financial resources and some other solution will have to be found. The most obvious solution, of course, is to have a comprehensive transferring of service responsibility, but we come back to the inevitable conclusion that constitutionally much of this transferring of services is prohibited under our British North America Act. As I said earlier in my remarks tonight, this certainly applies to education.
There are two specific areas in municipal finances that provide some leeway for shifting financial responsibility. The authorities on municipal financing point this out in all the briefs they prepare on the subject. They point out there are services to persons and services to property, and inasmuch as the local tax revenue derives largely from property on real taxes by definition-


Stanley Howard Knowles: Taxes on real property.


Walter Gilbert Dinsdale: Well, I guess that is a real tax. Inasmuch as the municipalities derive their tax revenues from that source, they should only be responsible for property services if we are going to be consistent. Such services would include police and fire protection, sidewalks, roads and so forth. If their service responsibilities were limited to that relatively narrow field no doubt the municipalities could cope with the situation. It is when they get into the matter of services for persons that they spill over into the national level of responsibility, and I refer to education, recreation, welfare and so forth. They then find themselves in difficulty. Either we have to have a transfer of services, which will require a great deal of thought and consideration and deliberation on the part of all concerned, or some other solution will have to be found.
We certainly have enough evidence before is in the briefs which have been filed. Most irovincial governments right across the country have made exhaustive analyses of this difficulty. The evidence is there; it is just a question of the federal government


taking responsibility for initiating some positive action to meet this important problem.
Other solutions have been put forward in limited terms in the resolution we have before us, and I refer to the finding of some new tax resources or some new tax techniques which will ease the burden of the local levels of government. Here the possibilities are limited, but we have two simple solutions which have been presented to the house and I am quite happy to support them.
I should like to relate one personal experience in regard to the excise and sales tax situation. Like all municipalities the city of Brandon in recent years has been engaged in extensive public works in the form of the paving of roads, the building of sidewalks and so forth. They had to invest rather heavily in the necessary equipment to carry out this particular work. They obtained the latest type of equipment for the construction of sidewalks and curbs, and were under the impression that as the expenditure was more than $1,000 it would be free from excise and sales taxes. However, they were told that the $1,000 must be considered on a unit basis. The equipment necessary for this particular job did not contain any one unit which involved an expenditure of $1,000. We argued backward and forward with the revenue department for some time, but finally lost because of a regulation which seemed fairly difficult to understand.
The problem which the municipalities are facing may not seem large when measured against the abundant wealth in taxes possessed by the federal government, but when it is measured against the limited revenue of the local government it is large indeed. The total budget for the current year for the city of Brandon is slightly over $1 million. We have the famous phrase, "What is a million dollars?" but the fact is that that is a lot of money to a local municipality. We ran into the same problem in the construction and equipping of a home for senior citizens. There was some technicality which ruled out the remission of the sales and excise taxes because the application had not been made before a particular date.
These may be small things when compared with the total problem represented by the amendment we have before us. As I have indicated, perhaps we will have to move toward the main solution by a series of short steps rather than one panacea which will solve all our difficulties in one stroke.
To bring my remarks to a conclusion, let me say that this problem is felt particularly severely by the rural municipalities. I do not think anyone has spoken today on behalf of

those municipalities. We think of great metropolitan areas like Toronto and Montreal having financial restrictions because of their broad service responsibilities, but in some respects they are better off than the local rural municipalities. The local rural municipality has absolutely no other tax revenue than the tax on real property.
I do not have to draw a diagram in order to point out that our rural municipalities, particularly in western Canada, are not in a very healthy condition. They are financially unsound; they are socially unsound; they are economically unsound. The continuing drift from rural to urban areas has deprived the rural community, which carries an important responsibility in keeping culture and liberty alive, of considerable financial resources. These difficulties represent one of the major problems facing Canada at the present time. I urge the federal government, which does have responsibility in these matters, to give attention to this one.


Walter Edward Harris: Mr. Speaker, I rise on a question of privilege. A short time ago while the hon. member for Okanagan Boundary was speaking I referred to the budgetary expenses of some ten years ago. As a result of remarks made by the hon. member for Greenwood I looked them up, and I find that the actual income of ten years ago was between $2,700,000,000 and $2,800,000,000. Even with the most generous use of my statement
Administration of Justice that they could not be more than 25 per cent less than they are now, I find I am out by about $300,000,000.
On motion of Mr. Van Horne the debate was adjourned.



ADMINISTRATION OF JUSTICE


Stuart Sinclair Garson: Mr. Speaker, with the permission of the house I should like to revert to motions.


Mr. Speaker:: Has the hon. minister the consent of the house to revert to motions at this time?


Some hon. Members:: Agreed.


Stuart Sinclair Garson: This is the first opportunity I have had since 4.30 this afternoon to announce that at that time in my office in the building here Mr. Justice Fauteux delivered to me in person one copy in English of the report of the committee appointed on December 11, 1953, to inquire into the principles and procedures followed in the remission service of the Department of Justice. The translation of this report into French and its printing is already in hand, and the report will be tabled in parliament as soon as that printing and translation are completed.


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

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


Mr. Diefenbaker: 1.	Has the wheat board given instructions to elevator companies on the prairies that their agents are not to buy wheat produced in the year 1954 or prior thereto?
2.	It so, why were such instructions given?
3.	Do private elevator companies refuse to accept deliveries of wheat produced in the above-mentioned year, or prior thereto?
4.	If so, on what authority?
Answer by: Mr. Dickey, Parliamentary Assistant, for the Minister of Trade and
Commerce:
1.	No.
2.	See answer to No. 1 above.
3.	The receipt of grain into country elevators is subject to the provisions of the Canada Grain Act, which does not distinguish between grain produced in one year and that produced in any other year. Producers' deliveries are, of course, subject to delivery quotas as established from time to time by the Canadian wheat board.
4.	See answer to No. 3 above.

Tuesday, May 1, 1956