1956-07-24

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of Transport. Is the minister aware that the Canadian National Railways is again letting out to private contractors some of its work normally covered by union agreements, with the result that the employees concerned are having to take lower wages? Will the minister look into this practice of by-passing collective agreements to see if it cannot be brought to an end?


Hon. George C. Marler (Minister of Transport):: Mr. Speaker, the hon. gentleman did not give me notice of his question and consequently I am not in position to make any statement with regard to the statement he has made. I am not sure just how far his assertion or the implication of his statement would be borne out by the facts, but I shall make inquiries to see what report I can get from the railway company in that connection.


Stanley Howard Knowles: May I ask a supplementary question. When the minister is making his inquiries will he inquire also into a similar move made by the Toronto Terminals Railway Company, a subsidiary in part of Canadian National Railways, with respect to the restaurant in the union station at Toronto?


George Carlyle Marler: I am not sure that I can accept the suggestion of the hon. member with regard to the Toronto Terminals Railway Company which is not a railroad coming under the Department of Transport, but I shall see what are the facts.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Mr. Colin Cameron (Nanaimo):: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs. In view of Sir Anthony Eden's statement in the British House of Commons yesterday that his government is prepared to negotiate with the Soviet
union for the limitation of further thermonuclear tests, can the minister tell the house if the Canadian government is prepared to use its good offices to persuade the United States government to adopt a similar course?


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, the hon. gentleman's question suggests that there is a difference in the positions of the United Kingdom and the United States on this important matter. There was no such difference at the session of the disarmament commission of the United Nations which has just concluded its hearings. However, this matter of the limitation of nuclear tests, which is so vitally important, will be considered again by the subcommittee of the disarmament commission when it meets, and before that time there will be discussions in which the Canadian representative will participate with United States, United Kingdom and French representatives.
ILater :1
On the orders of the day:


Colin Cameron: I should like to ask a supplementary question of the Secretary of State for External Affairs, arising out of his answer to my first question. Are we to understand that the minister has information that the United States government now takes the same position as that announced by Sir Anthony Eden yesterday in the House of Commons?


Lester Bowles Pearson: I merely said that at the last meeting of the United Nations commission on disarmament when this matter was discussed, the United States and British positions were substantially the same; and I have no reason to believe from Sir Anthony's statement yesterday that those positions are different now.



YORK SOUTH-INQUIRY AS TO DATE OF BY-ELECTION

[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglintori):: Mr. Speaker, may I ask the Prime Minister when the government will muster the courage to call the by-election in York South?


Right Hon. L. S. St. Laurent (Prime Minister):: When the by-election is called it will be announced in due course. I can

Inquiries of the Ministry assure the hon. gentleman that it is not a question of courage but a question of general convenience.


Donald Methuen Fleming: Whose convenience? The riding has been vacant for four months now.


Louis Stephen St-Laurent: The convenience of the public.


Donald Methuen Fleming: Of the government. It seems to be more convenient to deny the people their representation in the house to suit the convenience of the government.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. C. E. Johnston (Bow River):: I should like to ask the Minister of Veterans Affairs a question which concerns me because one of my constituents is involved. As a consequence of the distressing incident disclosed in the Calgary Albertan of July 19, 1956, would the minister explain to the house why it was that the officials of the Colonel Belcher hospital in Calgary, Alberta, took the inhuman attitude of refusing admittance to a young Strathmore mother who was forced to give birth to her baby on the cement steps of the hospital?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: As the reports which appeared in the newspapers in Calgary were contradictory and did not coincide with the reports I received from the departmental officials in Calgary, I have given instructions to convene an independent board of inquiry, which I believe will be meeting this week to investigate the matter and report to me.



THE MINISTRY


[Stage Direction]
On the orders of the day:
Mr. George H. Hees (Broadview):: May I
ask a question of the Prime Minister. Now that it has become clear why the portfolio of Postmaster General has been left open, does the Prime Minister not feel that two ministers from Saskatchewan would offset the geographical balance of his cabinet, and would it not be preferable now to give consideration to long overdue cabinet representation to the great industrial belt of southern Ontario?


Louis Stephen St-Laurent: The hon. gentleman's very wise remarks will be given all the consideration they deserve.	i
[Mr. St. Laurent (Quebec East).}



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: I should like to address a question to the Minister of National Defence. Could the minister give the house a report on the condition of a seaman from the destroyer Crescent reported shot at Hawaii and on the circumstances surrounding the incident, following which according to reports certain United States marines were detained? If the minister has not the information here, perhaps he could bring a report to the house later.


Hon. R. O. Campney (Minister of National Defence):: No, I have no detailed information here, but I shall be glad to take the hon. member's question as notice.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: should like to ask the Minister of Citizenship and Immigration whether or not it is intended to proceed at this session with the Indian Act.


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: Certainly, sir. I hope we shall be proceeding with it before this day is over.



NATIONAL REVENUE


[Stage Direction]
On the orders of the day:
Mr. J. H. Blackmore (Lethbridge):: May I
ask the Minister of National Revenue when the house might expect his answer to the last question I asked him concerning the matter of the Lethbridge district income tax office?


Hon. J. J. McCann (Minister of National Revenue):: I expected to be in a position to answer that today, but unfortunately it will have to be postponed for a day or two owing to the absence of one of our officials who was dealing with the matter.



TAXATION


[Stage Direction]
The house resumed, from Monday, July 23, consideration of the motion of Mr. Harris [DOT]for the second reading of Bill No. 442, to authorize the Minister of Finance to make

payments to the governments of the provinces and to authorize the government of Canada to enter into fiscal agreements with the governments of the provinces.
Mr. F. G. J. Hahn (New Westminster):: Mr. Speaker, at the time of adjournment last evening the hon. member for Burnaby-Rich-mond (Mr. Goode) had raised the question whether or not I agreed with the statement made by General Simonds. This matter was discussed to a certain extent on the estimates of the Department of National Defence. I began to explain to him that I agreed that a special committee should be set up for the purpose of studying the estimates of the defence department, and I indicated that I would be prepared to determine following such an investigation, before which I hope General Simonds would be asked to attend, whether any credence should be given to his remarks. I would then determine exactly what stand I would take at that time. In the meantime, such a committee not having been set up, I find it impossible to determine whether or not his statements are accurate.


Mr. Goode:: Would the hon. gentleman say that he would be favourable to conscription?


Frederick George Hahn: I would say that would depend entirely on what the general had to say and could prove to us.


Tom Goode: Has the hon. member no mind of his own on the question?


Frederick George Hahn: With respect to conscription or any other subject, the decision depends entirely upon the authority with which a person speaks in dealing with defence needs, the information he is able to present and the charges he is able to prove. I would certainly let the hon. member know my stand then. I would say that defence spending should not be cut down but rather should be decentralized and more money should be spent on buildings and so on in the poorer provinces so they would be able to improve their position and would not have to suffer the stigma of being referred to as the poorer provinces.
If certain provinces have not progressed as expected since the time of confederation, then the fault lies not only with the Liberal party but also with the Conservative party because they are the parties that have held office from time to time and have governed the country. Any development that has not taken place in the maritimes is of course the fault of the policies these two parties have had from time to time, and they are equally to blame.
It is not my intention to discuss the virtues or ill effects of the adoption of the Rowell-Sirois commission report. That has been
6349
Federal-Provincial Financial Arrangements done on more than one occasion since the report was made, but I would say that so far as dominion-provincial fiscal arrangements are concerned we have actually two alternatives. One is to come to an agreement with respect to the equalization of taxation as is proposed by the minister at this time. Alternatively, and I favour the plan that we should bring about the development of the non-industrial areas of Canada so we will not have such a thing as poorer provinces.
Since 1945 the federal government has been able to look after peacetime, wartime and defence needs. It has reduced the national debt. It has also reduced the income tax level by some 19 per cent since preKorean war days. Yesterday the Minister of Fisheries asked where the money was coming from for the increases we propose with respect to the equalization grants. I think he would agree in this instance that these tax cuts, which were made for election purposes, most notably to serve his own party's ends, certainly did not help the Canadian public very much as such but particularly helped those areas where they had heavy income taxes. These were not the poorer provinces, so it was a case again of giving income tax cuts to those provinces that were not in need of money.
If we are going to follow through the plan of equalization, I feel that it would have been more proper to have kept the rates as they were and to have passed on increased assistance to the provinces through municipal aid and otherwise. As long as private and public investment continues its expansion in this country I contend that the federal government will gain more revenue. That expansion, of course, will increase the gross national product, as I indicated yesterday, and so the government through taxation will feel the effects in its coffers of this increase in the gross national product.
The provinces, of course, have their headaches and I shall probably deal with some of them shortly. The federal government gets the major share of the profits from industrial development through the expansion of corporation taxes and otherwise, and leaves the provinces and more particularly the municipal districts to supply all services such as communication and conservation and development. It is only logical, Mr. Speaker, that the federal government should shoulder a substantial portion of that cost. I would say there is no need for a change in the British North America Act as such. What we need actually is mutual agreement with respect to fiscal responsibility. If we should have a reassessment of responsibility I feel that we could
6350	HOUSE OF
Federal-Provincial Financial Arrangements reach a mutual agreement between the provinces and the federal government, something which is lacking today.
I am one who is opposed to the federal government becoming the caretaker of the provinces. I absolutely disagree with the principle that is involved, namely that the federal government should collect all the taxes and hand them out to the provinces and to the municipal districts to do with as they wish. I say that for the following reason. From time to time we find that those who are given money very freely, as this would apparently be given, have become irresponsible in their methods of handling those funds. While I recognize the fact that the federal government, through the collection of these taxes, simplifies collections and that therefore the Canadian taxpayer will get more for his dollar in so far as the government will receive more, at the same time that advantage would be lost if any irresponsibility were to set in. The proper answer would be the development of the poorer provinces in an effort to bring them up to the standard of the richer provinces.
I contend that the unity of Canada will depend not on non-interference by the federal government in provincial affairs but rather upon federal participation in the development of these provinces. Under the circumstances, because of the lack of development in this country on an equal basis from the maritimes to British Columbia, I must accordingly agree that the need exists for an equalization in taxation to assist these poorer provinces. At the same time I must favour the money being spent for the development of those areas that are not being developed today.
I would say that from an equalization of grants to those provinces it does not necessarily follow that we shall have an equalization of expenditures in those provinces, by reason of the fact that each province has different problems. We have welfare differences in each province. My own province, by way of example, has a health and welfare program which includes a form of health insurance. We also have additional assistance to old age pensioners or senior citizens, whichever you wish to call them, who are in need. We have in the provinces problems that are peculiar to each, such as road building in British Columbia which is much more costly than it would be in Saskatchewan or Prince Edward Island. Each province has the problem of education and the municipal problems peculiar to that province.
There is one place where the federal authority might be of assistance in taking the load from the provinces in this field of


education. If the government were to listen to its member from Victoria, British Columbia, who has from time to time expressed the view that a greater expenditure on technical training would be of inestimable value to the provinces, it would be of assistance. I would say that none of that load ought to be carried by the provinces. The federal authority would not be interfering with education by developing the field of technical training, in view of the fact that there is such a need in this country today for such trained people. We have the problems of conservation peculiar to each province, such as the forest production in my own province as compared with other provinces such as Prince Edward Island. We have the agricultural problems in Saskatchewan and Prince Edward Island as compared with the manufacturing production of Ontario, Quebec and British Columbia. There is the problem of resource development, and the lack of natural resources which is apparent in some of these poorer provinces. We do have specific centralization of population and industry in certain provinces which causes an imbalance, as I see it, within the nation itself. This makes it impossible for these poorer provinces to develop as I feel they should develop. We have the problem of marketing as it applies to each individual province.
Now, Mr. Speaker, I maintain it is a responsibility of the government of Canada to develop Canada on a more equitable basis and so prevent the federal government from becoming a caretaker government. It is my contention that if this government were to expend some of its surplus in the development of areas that are today considered the poorer provinces, eventually those provinces would reach a point where they would no longer be so considered, thereby doing away with the need for this parliament to continually revise the tax agreements with the various provinces. The equalization grants as I consider them, mean that a certain amount of this money is being poured down the drain. As I have indicated at other times, there are only so many dollars available from the Canadian taxpayer, and those dollars should be utilized to the greatest advantage of each province in Canada.
In closing I can only urge that this government use some of the surpluses it has from time to time through the growth of the country and the increase in the gross national product for the extension of technical training, for industrial development and to make funds available through the industrial bank to secondary industry to a greater extent

than it is today; to develop power and resources in the various provinces that have no such resources and power available, and to the utilization of our natural resources to the absolute maximum.
If this government follows through with the tax agreement program I am satisfied that five years from now we shall be asked to discuss once again a program of equalization grants for the provinces. In any event this bill should not be passed until such time as we have some indication from the provinces that they are prepared to accept it.


Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, if I needed any excuse for intervening in this debate on second reading I think possibly the references that were made by certain maritime members of parliament to conditions in the maritimes would be that excuse. I refer to government maritime members of parliament, who talk about the good conditions that prevail in the maritimes today. They have been called-in particular the member for Shelburne-Yarmouth-Clare (Mr. Kirk)-the Pollyannas of this parliament. If you look at the word "Polly-anna" I think you will find that it is the name of the heroine in a novel who was accused of pure, blind optimism.
In this connection, editorials have appeared in the maritime provinces dealing with the utterances of this member and some other maritime government members. I would point out, Mr. Speaker, it is not very often that we have harsh editorials in the papers in the maritimes. Whether that be good or bad I do not know. I should like to refer briefly to the first paragraph of an editorial in the Moncton Transcript.
Strange indeed are the utterances of some of the members of parliament who, while representing constituencies in the maritime provinces, persist in painting a more roseate picture of conditions here than the facts warrant. Latest Pollyanna seeking to convince the maritimes that all is well and that this section of Canada is enjoying the same degree of prosperity that prevails in other parts of the nation, is T. A. M. Kirk, parliamentary assistant to the Postmaster General and Liberal member for Shelburne-Yarmouth-Clare.
There were some others from the maritimes, Mr. Speaker, who looked at this new legislation through rose-tinted glasses and, as I say, if I wanted an excuse for my brief remarks I can say it was the remarks of those hon. members. But I would prefer simply to say that this is a last ditch appeal to see whether New Brunswick and the maritimes can possibly have one or two somewhat larger crumbs from the plentiful and bounteous table that is Canada.
Whether we be federal politicians, provincial politicians or poor Canadian taxpayers, 67509-403i
24.	1956	6351
Federal-Provincial Financial Arrangements Mr. Speaker, we have two duties to perform in looking at Bill 442. First of all we have to consider the constitutional aspect of it. I am not qualified, and I do not have the time, to go into its details. Whether one is from a poor or a rich province I feel that one also has to consider the bill from the historical and constitutional angle. We have the history of dominion-provincial relations and the various agreements already on the record. The tendency toward increasing centralization is something that has to be watched, but I shall leave that to the experts. However, the second point-and this is the point we actually have to face up to-that I should like to touch on is what, for want of a better name, I have called the dollars and cents aspect of it.
This legislation has been said to be necessary, of course, to provide a reasonable level of provincial services without an abnormal burden of taxation. I think those are the words of the Prime Minister in letters to the premiers, and they are also already on the record.
I want to take a minute to indicate some of the onerous taxation burdens borne by the province of New Brunswick. I think these are facts and figures which have not yet been brought to the attention of this house. First of all I should like to refer to our problem in connection with education, and the financing we must do in New Brunswick. A royal commission sat last year which dealt quite extensively with the problem of school financing. It was found that the people of New Brunswick spend a higher proportion of their personal income on education than do the people of any other Canadian province, 3-9 per cent in the last recorded year as against 2-7 per cent for Ontario and 2-8 per cent for Canada generally. Of course I could go on to point out how that disparity is increased because our personal income is lower.
This royal commission noted that whereas New Brunswick has 4-4 per cent of Canada's school enrolment it has only 2-2 per cent of Canada's income. Ontario with 32 per cent of the total school enrolment has 40 per cent of Canada's income. New Brunswick lacks educationally because it lacks economically. Then we are faced with the shocking fact that although New Brunswick is making the biggest effort of any province to provide proper educational facilities, it falls far short of the mark.
In that respect I should like to refer to sets of figures which have already been put on the record. First of all is the statement by the leader of the C.C.F. party, the hon. member for Rosetown-Biggar (Mr. Coldwell), who gave the per capita personal income by provinces. It was shown that in 1954 New
6352	HOUSE OF
Federal-Provincial Financial Arrangements Brunswick had a per capita income of $795, which was a little over half that of Ontario which was the highest with $1,470. The average for all Canada was $1,193.
The third set of figures I should like to place on the record deals with the debt of the provinces. The heavy financial burden of New Brunswick has now reached the stage where our per capita provincial debt is $332.07 as against the national average of $238.57, and a low of $99.22 in the case of Alberta. We have the highest provincial debt of any province in Canada. I have already indicated that we carry the highest educational burden of any province in Canada.
The next set of figures which I wish to place on the record was mentioned briefly by the premier of the province at the conference held on March 9. They are significant figures which were advanced as the basis of the formula proposed at that time by the province. They indicate the percentage of provincial and municipal revenue from all local sources paid out of personal income, and the percentage they bore to the total personal income of the province. New Brunswick Was highest again with 11-24 per cent, the lowest being Newfoundland which was nearly half with 6-22 per cent. At that conference the premier made this statement:
The burden of taxation in New Brunswick is very onerous indeed-for the year 1953, it took 41 per cent more of the personal income of the pleople of New Brunswick than of the average Canadian, and this too out of a personal income only two-thirds of the Canadian average.
Now I should like to refer to the recognition that has been given by certain people in this country to the perilous condition existing in New Brunswick and the Atlantic provinces generally. First of all we had the statement by the financial critic of the Conservative party, the hon. member for Greenwood (Mr. Macdonnell), during the budget debate. He referred to the serious condition which exists in the maritimes and the need for more consideration in the budget and at a later time. It was a straightforward, frank appraisal of the situation. I think it was one of the first national recognitions of the problem facing our province.
Next was the statement made by Mr. Walter L. Gordon in connection with the early sittings of the Gordon commission, who said:
Canadians need more appreciation of the problems faced in other parts of their country. For instance, New Brunswick is faced with a shortage of cheap electrical power.
Mr. Gordon was very careful to be impartial, but the fact is that there was a further recognition of our problem. Then followed a statement made by the Prime
IMr. Bell.J

Minister on April 24 at the labour convention in Toronto, when he recognized the peculiar problems which exist in the Atlantic provinces and perhaps mistakenly said it was essential that we should come up with some initiative ourselves in order to receive consideration.
The next important recognition of the growing problem is to be found in a meeting at Sackville sponsored by Mount Allison University and attended by the premiers of the three maritime provinces. This has been referred to before, but I think the statement by Premier Matheson of Prince Edward Island bears repetition. He reiterated his view that Prince Edward Island had not in any way, shape or form got a fair deal out of the federal-provincial conference, that Prince Edward Island probably got the worst deal of all. Premier Hicks also referred to some of the problems down there and guessed that the project would be more harmful than helpful. Those are statements by Liberal premiers of two provinces of Canada.
Then, probably as a culmination of our fears and indignation, a meeting was held on July 9 in Fredericton of the four premiers of the Atlantic provinces. That was a significant meeting. It was unusual that they should sit in that way. I believe it was an omen for the future. It was an indication that we are beginning to co-operate. I could refer to some of the statements made there, but I believe certain of them are already on the record. Surely the Prime Minister and this government will take some recognition of this meeting. It always amuses-perhaps I should not use that word-or delights me to hear Premier Smallwood speak. He is in the unfortunate position, perhaps, of having to speak last at these conferences, due to the fact that Newfoundland came into confederation in the tenth position.


An hon. Member:: What is wrong with the last word?


Thomas Miller Bell: Premier Smallwood was very critical of this government and their attitude toward conditions in the Atlantic provinces. Another meeting of this group is to be held in Halifax in the near future. Although I do not have any say as to who is to be invited, I should like to see members of parliament invited, particularly the three cabinet ministers from the maritimes. I do not know what the hon. member for Shel-burne-Yarmouth-Clare (Mr. Kirk) or the hon. member for Charlotte (Mr. Stuart) would say if they were invited after what they have said in this house, but they might attend such a meeting and say some of the things they have said here. I do feel

it would be an advantage if federal members, particularly cabinet ministers, were invited to this conference.
Now we come to the proposals that were made by New Brunswick, and I think the ones from Nova Scotia were similar or at least they arrived at similar demands; they were the same in principle. We asked in the province of New Brunswick that special recognition be given to our fiscal needs. We suggested a fiscal need factor. It is in our statement. I shall not bother the house now with the details, but it was based on the request that we be allowed to bring up our income to 85 per cent of the national average. That is not too much to request. We did not go to 100 per cent. We did not say we wanted as much as the rest of the people of Canada. We only said in our modest way that 85 per cent would be good enough.
So we had the suggestion made of a fiscal need factor, some sort of adjustment that would help the poor provinces. Of course it has been said that the result of the proposals made today will be to make the poor provinces poorer and the rich provinces richer.


Mr. Harris:: To the contrary.


Thomas Miller Bell: That is true. There have been some contradictory remarks in that respect about this, but the actual fact, and the figures that we have-


Walter Edward Harris: Who said that they would make the poor provinces poorer?


Thomas Miller Bell: For one I shall quote Mr. Harvey Perry. He does not use that exact quotation here, but I think his words will convey the same impression, and he has expressed it better than I can. He says this:
In principle the new oiler comes within shooting distance of the sort of solution the more needy provinces have proposed at the federal-provincial conferences. They argued that their low-income status should be recognized through grants which would bring their means up to the level of the wealthier provinces. The combination of "standard tax yield" grants and "equalization" grants is in essence a concession to this approach. However, it is less favourable than the formula they proposed.
That is significant.
Furthermore the relative improvement in the position of the four Atlantic provinces (taking these as the more needy provinces) is less marked under the new scheme of "equalized tax potential" on a per capita measurement than would be expected, because under the tax rental agreements these provinces were receiving a relatively higher per capita payment than most other provinces.
Then he deals with the question of statutory grants, to which I shall come in a minute. That is a statement that was made at that time, and it is made by an expert on this. I shall not go on and explain in my plain English just what has happened to these
24, 1956	6353
Federal-Provincial Financial Arrangements grants, but I think that it is significant that the premiers themselves-the Liberal premiers too-are dissatisfied with these new terms. I am asking here today when we are going to get this recognition that everybody inside and outside this house has been talking about.
Now I come to the important part of my few remarks, and I hope the Minister of Finance will reply. It was said-I do not have the exact quotation here-that we should be given some further statutory grant that would compare with the grants set out by the Duncan and White commissions. We came up with our proposals for equalization payments on fiscal need. Evidently they have been turned down, but I should like to know what the position is going to be now that the alternative demand has been made by New Brunswick-and I think the other provinces also referred to it in their briefs-for some sort of new statutory grant that would be similar to the Duncan commission grant of 1926 and the White commission grant of 1934. They would now have to be scaled upward with reference to our present provincial budgets, and it is estimated that we would want about $20 million to bring us up to the demands that we felt were reasonable. I feel that the minister owes it to the maritimes to very sincerely reply as to what is going to be the fate of that proposal.
Mr. Perry goes on to say:
One of the elements under the tax rental agreements which produced this relative advantage was the statutory subsidies. No mention is made in the Prime Minister's letter of the manner in which they will be treated under the new offer. They no doubt will be continued to be paid-
I hope his optimism is not unfounded.
-but whether they are paid in addition to the amounts offered or are offset against them will be of very material consequence. In total they amount to about $20 million, of which $6 million goes to the Atlantic provinces.
I was more optimistic.


Walter Edward Harris: There is nothing whatever in this bill about statutory subsidies.


Thomas Miller Bell: I realize that, but I think this is important because it affects our consideration of it. I looked through the bill and I went through every speech the minister has made.
I feel he owes it to us to say what the future policy is going to be in this regard. This is all part of the proposals. He has either to dismiss it or mention it in some way. If we are going to get those statutory grants, I am not saying that I would support the legislation, because it has too many other undesirable factors, but it certainly would cut down my criticism if we could have a frank statement about what the future is going to be for those grants.

Federal-Provincial Financial Arrangements


Walter Edward Harris: I can make a statement now. As I say, there is nothing in this bill that affects the subsidies and grants; therefore they are going to continue to be paid.


Thomas Miller Bell: Are they going to be given the new consideration that was asked for in our proposal regarding the tax rental agreements?


Walter Edward Harris: The answer to that is that we are dealing with the division of the three particular tax fields at this time. Other matters are matters of consideration separate from those.


Thomas Miller Bell: It will be the same old story, as far as I am concerned. It is the same old eyewash, whether it comes from the Prime Minister or the Minister of Finance. These smokescreens do not mean anything to me. When the government is again considering the position of Newfoundland in confederation, as is provided under their agreement, under the royal commission that will be set up, I would suggest very seriously that the three maritime provinces be included in that reference. It would save money and it would be worth while. It would give the government a way out to save face, and that is what it is after now.
It is amusing to me. The Minister of Finance spoke in the pipe-line debate. I said he made a good speech and I enjoyed it, but as he developed the picture throughout Canada he talked of pipe lines and seaways and this and that, and then he stopped. I suppose he would say that he was only getting his breath, but I know he was going to go on to something else. We asked, "How about the maritimes?" The only thing he could think of was some of the old public works hand-outs in the ports of Saint John and Halifax and a few other post-election promises-


John George Diefenbaker: Pre-election promises.


Thomas Miller Bell: Some of those pre-election promises that turned out to be post-election corpses. I suggest very seriously that consideration be given to the inclusion of the maritime provinces before this royal commission. We are seriously dissatisfied with the treatment we have been given under this new legislation. We are disappointed in the Liberal members from the maritimes who had the temerity to get up in this house and talk about the promises and the hand-outs that have been given to the maritimes.
When it comes to talking about the maritimes I have no pride left. I do not care whether it is crumbs we are looking for or assistance that will give us a little more wealth or what it is; we have to have consideration, and I think the minister realizes

it now. The only problem is, how is the minister going to get out of the hole he is in? He knows the result of the New Brunswick election and the impending result in Nova Scotia, which the Liberals fear very much. All will bear out the tale that this government has forgotten the maritime provinces. They played on the sectionalism of this country, one area against another. We came up here with our proposals in a sensible, nonpartisan way. When the Beechwood proposals for hydro development were presented to the legislature of New Brunswick the opposition agreed to those proposals both times. That is a point I should like you to note. Why is it that the Liberal opposition in New Brunswick agrees to our two major demands, yet the hon. member for Charlotte (Mr. Stuart) gets up in the house and says something entirely different?
These are my thoughts, Mr. Speaker. I hope the next time we come up here with a carefully laid out plan for the consideration of the Minister of Finance, the Prime Minister and others, the Minister of Finance will not sit back and smile and say that it is an ingenious plan, as he is supposed to have said. I hope he will definitely give it the consideration that is its due.


Mr. A. W. Stuart (Charlotte):: Mr. Speaker, it is quite apparent that the hon. member for Charlotte is not too popular with the Tory members from the province of New Brunswick. I believe that may be a result of my speaking-


Thomas Miller Bell: Is this going to be another personal attack?


Andrew Wesley Stuart: I did not interrupt you. Why don't you sit there and take it?


Thomas Miller Bell: I just want to know whether it is going to be sensible, so I can decide whether to stay.


Andrew Wesley Stuart: Don't get angry; sit there and take it for a minute. The hon. member who has just resumed his seat wondered what I would do if I were called into one of these meetings of the governments of the maritime provinces. Let me say at the outset that if I were called into such a meeting, and particularly if I were the premier of any one of the maritime provinces, I certainly would not bite the hand that is trying to help me. That is my first suggestion. Take that down, the exact words I have used, and I will tell you why I use those words. I should like the hon. member for Saint John-Albert (Mr. Bell) and some of the other Tories to get up and show me where any Tory government since confederation ever made a subsidy payment of any kind to any one of the maritime

provinces, just once. I lived down there when we had a Tory government-


Mr. Nowlan:: That is untrue.


Andrew Wesley Stuart: -and I should like them to show me when any Tory government ever made a subsidy payment of any kind to any one of the maritime provinces at any time other than this.


Some hon. Members:: Oh, oh.


Andrew Wesley Stuart: 
Donald Methuen Fleming: Yes.


Andrew Wesley Stuart: If you are gullible enough to accept that, don't try to push it down my throat, because I do not think Premier Frost has any interest other than the province of Ontario.


Donald Methuen Fleming: That is silly.


Andrew Wesley Stuart: I have heard enough silly remarks from the hon. member who has interjected. Let me give you one he made yesterday. He insinuated yesterday that the Minister of Finance was playing politics with these agreements, and that he wanted to able to declare a great surplus next year because it was going to be an election year.


Mr. Rowe:: That is obvious.


Andrew Wesley Stuart: If ever I heard politics played since I came into the House of Commons the hon. member for Eglinton (Mr. Fleming) played politics yesterday. In his closing remarks he named the ten provinces in succession. He said that Prince Edward Island was not satisfied. Whoever heard of any provincial premier being satisfied with any sort of agreement where there was any hope of getting more? That is just crazy, and we all know it. The hon. member started with Prince Edward Island and Newfoundland and ended up with British Columbia. He made a plea to the voters. Yet he will accuse someone else of playing politics with this issue.


An hon. Member:: To whom is your plea
made?
6356	HOUSE OF
Federal-Provincial Financial Arrangements


Andrew Wesley Stuart: I am just stating the facts and my appreciation for what has been done for my people. That is what I am doing.


Thomas Miller Bell: What about the last election in New Brunswick?


Andrew Wesley Stuart: My statements are based on facts and not on rumours, because I have lived there for quite a long time. As I stated a few minutes ago, I lived there when we had a Tory government at Ottawa and I know what we can expect again if that happens.


Mr. Montgomery:: A lot better times.


Andrew Wesley Stuart: I remember when people were selling potatoes for 10 cents a barrel in your riding and no one but a Tory could sell them. We all remember that. We all remember that not one barrel could be sold by a Liberal.


An hon. Member:: Not a five-cent piece.


Mr. Speaker:: Order.


Andrew Wesley Stuart: I am stating the facts.


Mr. Hamilton (Notre Dame de Grace):: Would the hon. member permit one question?


Andrew Wesley Stuart: Definitely.


William McLean Hamilton: He has just suggested that if a Conservative government were in office it is conceivable that Ontario and Quebec might have received more than under the present agreement. Does he therefore suggest that under the existing agreement they are receiving less than they might under other circumstances?


Andrew Wesley Stuart: I did not say anything of the kind. I referred to the plea that Premier Frost was making, with the assistance of the Ontario Tories. God knows it would never elect a Tory government here, but if that should happen do you think for one minute Premier Frost would be as generous with Ontario revenues as far as the maritime provinces are concerned as this government is?


Donald Methuen Fleming: More so. He has said so.


Andrew Wesley Stuart: If he is going to be more generous-


Donald Methuen Fleming: His plea has been for all the provinces.


Andrew Wesley Stuart: -then his generosity is much greater than the generosity of the leader of your party.


William Earl Rowe: He did the same thing.


Andrew Wesley Stuart: I can remember when these agreements were under discussion in 1945 and the leader of your party put his portfolio under his arm, scuttled the conference and went home, so don't tell me about your generosity.


William Earl Rowe: We all went home last time.


Andrew Wesley Stuart: The leader of the Conservative party scuttled that conference.


Donald Methuen Fleming: It was the leader of the government that scuttled that conference, and you know it. It was adjourned sine die and they were to be brought back, but this government never called them back.


Andrew Wesley Stuart: There are some of the greatest dreamers in the Tory party that I ever heard of. I was here at the time and I watched the conference that took place and I know exactly who scuttled that conference. I know why it was scuttled. It was scuttled because George Drew did not want to share any part of the wealth of Ontario with anyone else-


Donald Methuen Fleming: That is as false as anything can be.


Andrew Wesley Stuart: -and I do not
believe that his generosity would extend one bit further if he were prime minister of this country.


William Earl Rowe: You know you are not telling the truth there.


Andrew Wesley Stuart: That is my opinion.


William Earl Rowe: That is your opinion, but it is not the truth.


Andrew Wesley Stuart: It is my opinion.


William Earl Rowe: It is just an opinion and it is false at that.


Andrew Wesley Stuart: I have heard lots of false things here. The hon. member who has just interrupted me has never made a sensible speech since he has been here. They have all been full of humour but nothing else.


William Earl Rowe: That is another one of your opinions.


Andrew Wesley Stuart: Yes, that is another opinion. I do not know why it is that when a Liberal member gets to his feet to express his views he is continually interrupted. The hon. member for Saint John-Albert spoke for 20 or 25 minutes. I did not interrupt him at any time. I sat in my seat quietly knowing that two-thirds of the remarks he was putting on the record were crazy. However, I still sat there and said nothing. I had nothing to say. But the very moment I get

to my feet he gets up in that snarling way, then changes his mind and resumes his seat.


Mr. Hodgson:: You are not snarling, are you?


Andrew Wesley Stuart: No, I am keeping very cool and I hope to be able to say what I want to say, because I believe it should be said.
There is another thing that I want to say at this point. I believe that when the time comes that we are through debating this subject, we should know exactly where the members of this house stand. I should like to know whether the hon. member for Saint John-Albert will get to his feet and vote against the subsidy payment of $20 million to our province, and then explain to the people what we would do without it. I hope he has the opportunity of doing that, because if the proposal were defeated we would be without $20 million this year. With a total revenue of only $50 million, where would the province of New Brunswick go if that $20 million were taken from it?


Clayton Wesley Hodgson: They would get some help.


Andrew Wesley Stuart: It would not come from the Tories.


William Earl Rowe: That is your opinion.


Andrew Wesley Stuart: It never did come from the Tories. I will go that far.


William Earl Rowe: That is another opinion.


Andrew Wesley Stuart: There is no question in my mind that there are many things we need in the maritime provinces, and there is no doubt that there are many things we will receive in the maritime provinces, but I assure you that no appreciation is shown by the Conservative members for that province of what has been done. I have heard references made to the Liberal premiers of the other provinces. I do not hesitate for one moment in criticizing the Liberal premiers of the other provinces because I believe that they are unfair in the statements they have made. I have never hesitated to say that. I refer to the premier of Nova Scotia, the premier of Prince Edward Island and the premier of Newfoundland. I do not agree with what they have said.


Thomas Miller Bell: How about the Liberal leader in New Brunswick?


Andrew Wesley Stuart: I will say this for him. He has never said that we had too much revenue and then come begging for more. The premier we have now did not need the revenue we had in 1952. That has increased by $7 million, and he still says it is not enough.
Federal-Provincial Financial Arrangements


Thomas Miller Bell: Do you agree with his stand on Beechwood and on the tax proposal?


Andrew Wesley Stuart: I do not agree with him at all on the Beechwood project. I have stated that.


Donald Methuen Fleming: Do you agree with his stand on the tax proposals?


Thomas Miller Bell: Do you agree with anybody?


Andrew Wesley Stuart: Yes; I agree with the Minister of Finance sitting there on the opposite side of the chamber, in what he is trying to do for my province. Just before I resume my seat may I say that the hon. member for Saint John-Albert has brought up another matter that I want to mention. He speaks about the way in which we have been treated. There is a section of the trans-Canada highway that is being built in my province. This government is paying 90 per cent of the cost of that highway, but we never get any credit. The hon. member would come here and say we should pay 103 per cent of the cost of that trans-Canada highway. Two friends of mine wanted to get a job there last week. They could not do so. Any man who works on the highway must get a certificate from a Tory M.L.A., yet we pay 90 per cent of the cost. Deny that statement if you wish to do so, and I can bring the proof.


An hon. Member:: It is the same in Quebec.


Andrew Wesley Stuart: Yet the federal government is paying 90 per cent of the cost of it.


Gage Workman Montgomery: Would the hon. member name the man from whom they must get certificates?


Andrew Wesley Stuart: Yes; any Tory in the province of New Brunswick, or the minister of public works. I am just putting the facts on the record. The $20 million that will be paid to our province by the federal government is used for one purpose only; that is, to take care of the friends of the premier. But I still support the proposal. When the cheque comes to Fredericton, as I submitted on one other occasion, instructions have been given by our premier that not one single dollar of that money that comes from Ottawa can be of any benefit to a Liberal. It must be used for his own friends.


Clayton Wesley Hodgson: Mackenzie King said "Not a five-cent piece to a Tory province".


Andrew Wesley Stuart: I still support the proposal, because I know we cannot get along in the province of New Brunswick without it. It is a measure that was fought for by Hon. J. B. McNair, who was premier of New
6358	HOUSE OF
Federal-Provincial Financial Arrangements Brunswick at the time. He stood in the Senate chamber in this building, and when the then prime minister said it would be impossible to renew the agreement unless all the provinces agreed-and I think the Minister of National Health and Welfare (Mr. Martin) will agree with me-he said "Regardless of whether we all agree, we must have it in the province of New Brunswick". If it is such a bad deal as these premiers say it is, why do they all want to make it a statutory matter instead of having to come back every five years and renew it? I just cannot understand the approach they take. They tell us it is not a good agreement but they want it made final and definite for ever more. It is quite evident, in so far as I am concerned, that it is most beneficial to every one of the maritime provinces and in fact to at least seven out of the ten provinces of this country of ours.
I am now going to resume my seat, and I hope the hon. member for Saint John-Albert will not suggest on another occasion that the Liberal members from Nova Scotia and New Brunswick get up here trying to play politics on some measure.


Thomas Miller Bell: I did not say that.


Andrew Wesley Stuart: You suggested that, because you said I was not stating facts. If I thought you were not stating facts I would think you were playing politics.


Clayton Wesley Hodgson: You did not state any facts; you just stated your opinion.


Andrew Wesley Stuart: I have stated facts. The figures prove it. The taxes raised by the province would provide a revenue of about $7 million. They rent the field to the federal government, and in place of that $7 million they are paying the province of New Brunswick over $19 million. Judge for yourself whether or not it is a good measure.


Donald Methuen Fleming: It is not good enough.


Andrew Wesley Stuart: It would not be good enough for a Tory unless he was doing it; and if he was doing it, it would be nothing.


Donald Methuen Fleming: It would be a great deal more.


Andrew Wesley Stuart: If there were a Tory government sitting here, no one can convince me that they would try to distribute anything that would be of any benefit to anyone other than themselves.


Donald Methuen Fleming: Your mind is closed.


Andrew Wesley Stuart: My mind is closed so far as Toryism is concerned, because I have gone through it. I have gone through enough Toryism to know exactly the extent to which their generosity extends. I know it completely.


Donald Methuen Fleming: What about the five-cent piece attitude of Mackenzie King?


Andrew Wesley Stuart: I can tell you that
there is not much difference between the five cent frame of mind and the 20 cents a day in a work camp for young men all over this country. I am sure no one could call that generosity.


An hon. Member:: Nineteen cents.


Donald Methuen Fleming: You know what the people of New Brunswick said last month by their ballots.


Andrew Wesley Stuart: Nineteen cents a day is correct.


Donald Methuen Fleming: You know what the people of New Brunswick said last month.


Andrew Wesley Stuart: Yes, and I know what the people of New Brunswick said in the federal election in 1935, what they have continued to say ever since then, and what they will continue to say in the next election.


Donald Methuen Fleming: Why not bring on that next election very quickly instead of putting it off?


James Joseph McCann: Oh, you don't want it at all.


Andrew Wesley Stuart: I will say this to the hon. member for Eglinton. The time may yet come when I will have the flag draped over my desk. All we can do is wait and see. Before I sit down I just wish to add another remark. I feel it is a good agreement. I believe sincerely that it will be most helpful to every citizen in the province of New Brunswick, along with the other social services that have been provided, but not by the Tories. Each and every one of the social services they have enjoyed was provided for them by this government. I do not doubt that some of them might be taken away by a Tory government, but I assure you that they will never be added to by such a government.


Donald Methuen Fleming: That is the same old story.
It is false Liberal propaganda of the most shameful variety.


Andrew Wesley Stuart: I know the hon.
member dislikes me-


Donald Methuen Fleming: I do not dislike you, but
I dislike falsehood.


Andrew Wesley Stuart: I will say this in
all sincerity, the hon. member is one of the old, dyed in the wool, flag-waving Tories in this country. There are not many of them left, but he is an honest, sincere, flag-waving Tory.


Clayton Wesley Hodgson: What are you, an old flagstomping Grit?


Andrew Wesley Stuart: I am a Grit.


Mr. Ferguson:: I am proud to wave it on
all occasions; are you?


Andrew Wesley Stuart: Not when it is used for deceitful purposes, as it was used for deceitful purposes in 1911. When it is used for political purposes I have not any use for it.


Julian Harcourt Ferguson: Use it on every occasion.


Andrew Wesley Stuart: It should not be
used for draping desks.


Julian Harcourt Ferguson: It is the greatest flag that
has ever flown in the world. Wave it on all occasions.


An hon. Member:: Who is the stranger we have?


Mr. Deputy Speaker:: Order.


Andrew Wesley Stuart: I agree it is the
greatest flag. I believe, Mr. Speaker, it is useless; apparently I have touched on a very sensitive subject. I realized it was sensitive when I mentioned it, because it has been used on so many occasions for that one purpose only.


Clayton Wesley Hodgson: By the Grits.


Andrew Wesley Stuart: The hon. member
behind says, "By the Grits". Any time I have ever seen a Grit use a flag it was used for a noble purpose. I have yet to see it used in an election campaign to try to deceive the people; never in my memory.


Julian Harcourt Ferguson: Any time is the time to
wave the flag. Wave it on every occasion. The flag can never be waved on a wrong occasion.


Mr. Deputy Speaker:: Order.


Andrew Wesley Stuart: I guess I have
created a lot of heat. I appreciate the opportunity of expressing my views. Again I would say that I believe my views will be endorsed by the great majority of the citizens of the country.


Donald Methuen Fleming: When?


Andrew Wesley Stuart: Now and at the
time of the next election.


Donald Methuen Fleming: When will that be?


Andrew Wesley Stuart: My guess would
be about June, 1958, because I think nothing would please the hon. member for Eglinton more than to see it delayed for a couple of years to see if the Tories could riot make some gains.


Donald Methuen Fleming: What rot! Why do you not bring it on now if you are so confident?
4. 1956	6359
Federal-Provincial Financial Arrangements


Andrew Wesley Stuart: I am going to
suggest that date, but nothing would please the hon. member more than the opportunity to delay it for three years because their chances of getting anywhere today are nil.


Donald Methuen Fleming: That proves you are crazy.
All doubts are removed.


Andrew Wesley Stuart: I may be crazy,
but I could never take any satisfaction out of having a flag draped over my desk and, like a soldier, marching out through the door. I have never played politics to the extent that I wanted that sort of publicity, publicity apparently of which the hon. member for Eglinton is very proud, as are some of his friends. It is publicity that I would not want. I thank you, Mr. Speaker.


Stanley Howard Knowles: I rise to say a few words, Mr. Speaker, on behalf of the forgotten Canadian so far as this bill and these taxation arrangements are concerned. The Minister of Finance and other government spokesmen speaking in support of this legislation contend that it is designed to meet the need for some reallocation of revenues, and to assist the various governments to meet their financial responsibilities. Other members of this party, and other members in the house, have dealt with the question as to whether or not this bill goes any distance in enabling the various governments to cope with those responsibilities. It seems to me, as one who has listened to this debate both at the resolution stage and on second reading, that there is a forgotten Canadian so far as this bill and these arrangements are concerned. I refer to our old age pensioners.
I make no apology, Mr. Speaker, for mentioning old age pensions in connection with this bill; for government spokesmen themselves, in their effort to persuade parliament and the country that the federal government is doing something magnanimous toward the provinces, have drawn attention repeatedly to the amount of money that goes from the federal treasury toward old age pensions and other forms of social security.
We in this group are proud of the extent to which Canada has moved in the direction of social security. We are proud of the fact, and we believe we played some part in it, that some of our social security at any rate has been established on a basis of universality. We hope the day will come when we will have an over-all social security program based on that principle of universality, so that all Canadians will have certain guarantees which we believe are their right because of the contribution that all Canadians make to the economy and well-being of this country.
6360	HOUSE OF
Federal-Provincial Financial Arrangements Nevertheless, Mr. Speaker, it seems to me most regrettable, in fact so far as 1 am concerned it is quite unforgivable, that in these times when the federal government has been entering into new taxation arrangements; in these times when the government claims to have been facing up to the financial responsibilities of the federal government and the various provincial governments, it has apparently given no consideration to the financial needs or the plight of our old age pensioners.


Walter Edward Harris: How would you do that in this bill?


Stanley Howard Knowles: The Minister of Finance and others on his side of the house, as I have already said, have made reference to what the government is spending on old age pensions as part of the total relationship between the federal government and the provinces with respect to the sharing of the revenues of this country.


Mr, Pickersgill:: I am rising on a serious point of order.


Stanley Howard Knowles: May I ask the minister why he did not rise on the same point of order yesterday when the Minister of Fisheries was talking about old age pensions.


John Whitney Pickersgill: No, you may not. I have the floor. I rise on a point of order. I have sat and listened patiently hour after hour throughout this session to the hon. member for Winnipeg North Centre, and he has spent very little time listening to me. I suggest that he really sit down in his seat and allow me to say what I have to say on the point of order.
I believe that it is not an exaggeration to say, and I am speaking directly on the point of order, that there has not been one speech made in this debate yet relating to the bill except the speech made by my hon. friend the Minister of Fisheries, who did deal with the bill. But most of the members do not pretend to know the rules, certainly most of the members do not set themselves up as experts on the rules. The hon. member for Winnipeg North Centre has bored this house hour after hour since January on points of order.


William Earl Rowe: What is your point of order?


John Whitney Pickersgill: My point of order is that the principle of this bill has to do with certain tax arrangements between the provincial governments and the federal government, and with nothing else; and that it is quite proper for my hon. friend the Minister of Finance to point out that he can afford only so much for this purpose because he is spending money for other purposes, and that it is quite proper for my hon. friend the Minister of Fisheries 

to do the same thing. But it is an abuse of the rules, and a gross abuse of the rules, for hon. members, under the colour of talking about this bill, to rise in their places and make a plea for something entirely different. I would ask, sir, that you make a ruling on this point of order.


Stanley Howard Knowles: Mr. Speaker, may I speak to the point of order? The Minister of Citizenship and Immigration contends that it is quite proper for the Minister of Finance to refer to old age pensions and that it is quite proper for the Minister of Fisheries to refer to old age pensions, but the moment the member for Winnipeg North Centre refers to-


John Whitney Pickersgill: Starts to make a speech about them.


Stanley Howard Knowles: -old age pensions he raises a point of order. Mr. Speaker, my contention is that this debate, and properly so, if one will look at the explanatory notes with reference to the bill, has ranged over the whole field of financial arrangements between the federal government and the provinces. Government spokesmen themselves have introduced time and again the question of old age pensions and the money paid out in old age pensions as part of the over-all fiscal arrangements between the federal government and the provinces. Other members have been permitted to discuss not only this question but all kinds of questions, such as the discussion we had today between the hon. member for Saint John-Albert and the hon. member for Charlotte. We have had questions affecting the economy of the country in all its aspects; but it remained for the Minister of Citizenship and Immigration to suggest that the member for Winnipeg North Centre should not talk about old age pensions, the expenditure of money on which is definitely a part of the fiscal arrangements between the federal government and the provinces.
I suggest, Mr. Speaker, the ruling that you should make is that there should be no discrimination against the member for Winnipeg North Centre that has not been practised against the Minister of Fisheries, the Minister of Finance or any other government spokesman.


Mr. Deputy Speaker:: Order. The Minister of Citizenship and Immigration has raised a point of order which I believe is only partially justified.


George Harris Hees: That is more than usual.


Mr. Deputy Speaker:: It seems to me that many speakers in the debate have referred to the aggregate of payments being made to provinces and in provinces and that they

have quite properly done so. I therefore feel that the reference to payments in a province in respect of old age pensions is quite proper and, as I said, hon. members have done that. At the same time, I do not believe that on a bill with regard to fiscal arrangements with the provinces one should make an entire speech on old age pensions. I think there is a dividing line, and I feel sure that the hon. member for Winnipeg North Centre can see the dividing line. I am certainly not going to prevent him from referring to old age pension payments, but I believe he will agree that he should not devote a whole speech to old age pension payments.


Stanley Howard Knowles: Mr. Speaker, I agree
thoroughly with your ruling.


John Whitney Pickersgill: So do I.


Stanley Howard Knowles: It is not my intention to make the whole of this speech on old age pensions. When I wish to make a speech entirely on old age pensions I shall make it on the estimates of my friend the Minister of National Health and Welfare, or on some other appropriate occasion.
I might point out that there have been speeches in this debate devoted wholly to education; speeches, incidentally, with which I agree, but a point of order was not raised on those occasions. My point is this, and I urge it upon the Minister of Finance and the government as a whole; that at a time when the government is allegedly considering the financial needs and the financial capacity of the country, when the government is in a sense realigning the distribution of revenues, and when it, as part of that picture, claims credit for what it is doing for old age pensioners, it should consider their situation as well. I submit, Mr. Speaker, in view of the increased gross national product, the increased base that there is for taxation on the basis of which the government boasts that next year there will be a larger payment by $115 million a year to the provinces, it should consider what its responsibilities are to the senior citizens of this country.
One of the arguments the government makes, either directly or by implication, is that these arrangements will put the provinces in a position to discharge more adequately their responsibilities. There flows from that implication a view which has been expressed on occasion by the Minister of National Health and Welfare, and also by others, that the provinces have some responsibility in this field of old age pensions. The fact of the matter is that some of the provinces are doing their best to make supplementary payments to old age pensioners; but it seems to me, Mr. Speaker, that that is
24. 1956	6361
Federal-Provincial Financial Arrangements getting away from the very excellent principle which this parliament supported when it passed the Old Age Security Act and provided for old age pensions on a basis of universality. I contend, Mr. Speaker, that the very considerations that have prompted the government to revise its formula so far as federal-provincial taxation arrangements are concerned, considerations which include a greatly increased gross national product in this country, call for a change being made at the same time in the amount paid to our old age pensioners.
The present amount of $40 a month was set back in 1949, when our gross national product was something of the order of $16-4 billion a year. It has risen now-


Mr. Marlin:: I think there must be some fairness in this matter. My hon. friend has been anxious for my estimates to come up this week. I am here now, as my hon. friend knows, at considerable personal inconvenience. I have sat around here now hoping that we might get on with my estimates today, or at least not later than tomorrow. My hon. friend wants to go to Winnipeg, and quite properly, on Saturday. I think there is such a thing as fairness and 1 would ask him if the appropriate place to discuss what he is now discussing is not on my estimates when I will have the opportunity of replying. I would think, in the face of all the facts, my hon. friend is taxing the quality of fairness to a very great extent. In view of all these considerations and in view of what he and I discussed the day before yesterday about my estimates, I would ask him whether that is not the appropriate place to make the speech he is now making, and to which I would have an equal opportunity of replying in kind.


Stanley Howard Knowles: Mr. Speaker, first of all may I say to the Minister of National Health and Welfare that he does put me at a slight disadvantage when he discusses any personal conversations we have had. It puts me in the position where I have no alternative but to remind him that he told me he was leaving town tonight and would not be here for his estimates during the remainder of this week-


Mr. Martin:: And I am going to leave tonight if my hon. friend does not change his attitude.


Stanley Howard Knowles: If he now tells me that he will remain for his estimates any day this week I certainly will oblige him and leave any discussion of details of the old age pension situation until those estimates; but apart from the kind of considerations that we shall present to the Minister of National Health and Welfare, the human considerations that
6362	HOUSE OF COMMONS
Federal-Provincial Financial Arrangements
call for an increase in the old age pension, I say to the Minister of Finance, to the Prime Minister who is now in his seat, and to the government that in the context of the federal-provincial taxation arrangements that are being made, this is an issue that should be considered.
On that basis I shall hold off the remarks I intended to make even in this context with regard to old age pensions. My feeling and the feeling of this group is that they should be increased at this time to a figure of not less than $60 or $65 a month. I shall hold those arguments and details until we get to the estimates of the Minister of National Health and Welfare. But I do press upon the Minister of Finance and the government as a whole the contention that in the context of these agreements, to be talking about meeting the financial responsibilities of the country by making arrangements that do not take into consideration these forgotten old age pensioners is not fair. Some of the benefits of these agreements or these arrangements, whether they are adequate or inadequate, will get through to many of the people of this country, but none of the benefits from these arrangements will get through to our senior citizens. That is wrong. I contend that the question of old age pensions should be dealt with in this context.
Since I now have the word of the Minister of National Health and Welfare that he will remain for a day or so-


Paul Joseph James Martin: I did not give you any such undertaking at all. I think it is about time this government ordered its business in accordance with the wishes of the government, and not to permit certain members to attend a party convention.


Stanley Howard Knowles: I suggest that when one starts discussing any personal arrangements that have been made he gets into difficulty. I am prepared to assume that the estimates of the Department of National Health and Welfare, having been announced for this week, will be proceeded with as publicly announced the other day by the leader of the house.
May I get back to saying just a brief word about the agreements themselves, or rather the arrangements envisaged in this bill. As members of this group have indicated already, we are disappointed. We feel that the government is departing from the principles laid down originally in the green book proposals. We feel that the government is departing from the principle of fiscal need and of trying to achieve a Canadian standard as set out in the tax rental agreements. We would rather see tax rental agreements than what are called in this legislation tax-sharing arrangements.

We hope that even after this bill receives second reading, as it probably will, further consideration of the whole matter will be given and that even yet there will be further discussions with the provinces as to the possibility of achieving something better than is provided in this bill. We of this group recognize that not to have this bill and these arrangements, not to have anything in this field, would be a more retrograde step, and on that basis we shall probably have no alternative but to accept the bill on second reading. But we urge that even after second reading, even if the bill passes, the government consider the extent to which it has retreated from the position it took and the position the Minister of Justice argued for so strongly in Manitoba during the last federal election, when he contended that the tax rental agreements must be preserved and saved. We regret that there is a retreat from that position.


John Whitney Pickersgill: This is an advance from that position.


Stanley Howard Knowles: Is this a point of order?


John Whitney Pickersgill: I say that this bill is an advance from that position.


Stanley Howard Knowles: The Minister of Citizenship and Immigration is entitled to interpret the position in that way. I do not know whether the literature used in Manitoba during the last federal election by the Liberals was also circulated in Newfoundland. If not, the minister could probably get from the Minister of Justice some of the literature which was circulated in our province, and then I suggest he will have to reconsider the statement he has just made.
Nevertheless it is my plea to the government that it not take the approval of this bill on second reading as the end of the story. I hope that even when this bill passes it will be just a peg to make sure that the fiscal arrangements with the provinces will not be any less or any worse than they are in this bill, but that real improvements will be made. We hope that consideration will be given to taking further steps in the direction of building a stronger and more united Canadian nation.


John Horne Blackmore: Mr. Speaker, we were wondering why the Minister of Finance did not make a statement in moving second reading of this bill, and we wondered also whether we were given a suggestion of an explanation when the Minister of Fisheries rose yesterday and gave the house in his entertaining way a speech which was in large measure shot clean through with errors. In the light of that fact we

were somewhat surprised to have the minister tell us that was the best speech which had been delivered up to the present time in this debate. There is just one thing we hope, that this speech of the Minister of Fisheries is not an indication of the kind of campaign the Liberals will be conducting the next election. We hope there will not be a deliberate attempt to mislead the people by making it impossible for them to know the true issues.
We listened with great interest to the exchange between the hon. member for Charlotte (Mr. Stuart) and certain members of the Conservative party. Those people were telling each other just exactly what they thought of each other. They were honest and clean about it. They were stating facts. If there is anything I absolutely despise when I am dealing with anyone it is to have him misrepresent the position which he knows I take. If there is anything I would despise in myself it would be just exactly that very thing. If the thing I stand for is unworthy, then the mere fact that it is unworthy ought to be sufficient to condemn it. It does not need to be misrepresented. If the case of my opponent is worthy, he does not have to misrepresent my case in order to advance his own.
Perhaps the Minister of Fisheries is wondering just what I have in my mind. I propose to deal with one or two passages in his speech. One is to be found on page 6313 of Hansard of July 23 and reads:
There is only one Canadian government in history that ever repudiated interest payments on government bonds. I refer to the Social Credit government of Premier Aberhart, but even they would not do that today, I think, so there is no hope of a reduction in this field.
The Minister of Fisheries has been in Canada long enough to know better than to make a remark of that kind. The government of Premier Aberhart did not repudiate the interest on bonds, it did not repudiate its bonds. There was every reason why it was put in such a difficult position that the measures it took were about the only ones it could possibly take.


Mr. Sinclair:: What were those measures?


John Horne Blackmore: I will give them. I shall be glad to do that. I am happy to see that the Minister of Fisheries is apparently aware now that what he said was not the truth. Let me give the house the facts, which I hope all Liberal members will get accurately and will not try to misrepresent the Social Credit position by saying things which are half truths or absolute falsehoods.
In the first place, let us consider the position faced by Premier Aberhart when he
24, 1956	6363
Federal-Provincial Financial Arrangements went into office in Alberta. Let us remember that Alberta was in an absolutely hopeless financial position when Premier Aberhart took over. This is something which no Liberal ever makes allowance for at all. In the spring before the Social Credit party was elected in Alberta the U.F.A. government had tried to float a loan and failed, and had to withdraw the bond issue. This meant that they simply could not by borrowing meet the commitments with which they were confronted. What does this mean in the minds of all members, including the Minister of Fisheries? It means that the province had got into a hopeless position financially. We never hear anything about that. It is very true.
It is important to note that because of policies that were adopted either in Ottawa or in Washington which brought on the depression in 1929-30, the province of Alberta was forced into debt-$50 million-during the depression years. The U.F.A. government, which up to that time had done a good job in Alberta, was simply forced into the position in which it was unable to raise the money it needed.
This is the next important thing to get in mind. The U.F.A., as part of what they thought a good method of financing, had adopted the policy of selling Alberta savings certificates. You are not dealing with the Social Credit now, so don't lie about it. The U.F.A. had sold these savings certificates. A savings certificate was a promise on the part of the government to pay a certain amount of money on demand with interest at 4 per cent. Just get what I am saying. It is not easy to get these facts, anyway. The province of Alberta would borrow $100 from a man just as though he put $100 on deposit in the provincial treasury. It would agree to pay that $100 back when he demanded it, and would agree to pay him 4 per cent interest on that money until he demanded it. That is simple; anybody can see that. It was good business, because 4 per cent interest was a great deal less than Alberta had to pay for money on the money market. Altogether the U.F.A. had borrowed from the people of Alberta $10 million in that form. In other words there was outstanding $10 million of Alberta savings certificates. Once more remember that Social Credit had not come in at that time.
The next important thing is this. The member for Peace River reminds me of it. The member for Peace River was provincial treasurer in the Social Credit government of Alberta, and he knows. There was not a dollar of reserve on hand to meet those demands. In other words, there was a $10 million debt against Alberta with no reserve whatsoever,
6364	HOUSE OF
Federal-Provincial Financial Arrangements no sinking fund. That was a very serious situation. I ask the Minister of Fisheries what he would have done about that if he had been premier of the government of Alberta in the place of Premier Aberhart.


James Sinclair: I shall answer that right now.


John Horne Blackmore: Do so.


James Sinclair: If I had been premier of
Alberta I would have done what the premiers of the other eight provinces did at that time. They honoured their obligations. Alberta was the only government that did not honour its obligations.


John Horne Blackmore: I am glad the minister
raised that. It indicates that he is honest in this matter. What would he have done had he been Premier Aberhart, if he was given control of a province that was $167 million in debt, with $10 million of that particular kind of debt, and he knew he could not borrow money on the world's markets, because the U.F.A. had failed?


James Sinclair: I should be very happy to answer that.


John Horne Blackmore: I shall make it a little more difficult first. The first thing I think the Minister of Fisheries would have done would be to go to Ottawa and ask for advances of money to help the province of Alberta meet its commitments.


James Sinclair: Why not let me answer what I would have done, instead of putting words in my mouth? I repeat that I would have done what the other eight provincial premiers did and managed to meet my obligations, but one reason Premier Aberhart was unable to raise the money was that nobody in North America had any faith in lending him money. They had faith in the other premiers.


John Horne Blackmore: Then why did they not lend money to the U.F.A. government when they asked for it in the spring? Why would they not lend money to Alberta in the spring?


Mr. Low:: Why did the U.F.A. government have to withdraw their loan?


James Sinclair: They repudiated.


John Horne Blackmore: They did not repudiate the debts. We want to get the facts straight. We do not want the political answers of the Minister of Fisheries. The important thing is that there was only one place where Premier Aberhart could have got the money, and that was Ottawa. He certainly had a right to expect that he could borrow that money, because he had inherited a situation for which he had no responsibility and which he was trying to clear up. He was trying to


solve the financial problems of Alberta. The Alberta Social Credit league was a league of ordinary citizens of Alberta-* Liberals, Conservatives, C.C.F. and every other kind politically-formed together to get the province out of a mud hole from which it looked impossible to get out. Certainly the efforts of a group of people like that ought to have been looked on with sympathy by Mr. Mackenzie King, and would have been if he had been a real prime minister instead of a politician. There is no answer to that at all.


John Whitney Pickersgill: May I ask the hon. member a question?


John Horne Blackmore: Let me get the facts on the record first, not interspersed with a whole lot of political nonsense. These are the facts. Have you not honesty enough to recognize facts when you hear them? The next important thing is that he sought assistance from the Bank of Canada, but he was refused. Then, what could be do? When Manitoba and Saskatchewan went to get assistance with their loans, they were given the assistance that Alberta was refused.


James Sinclair: They had good stable governments.


John Horne Blackmore: Don't say foolish things. Face the facts. What could a man do? What could any government do? The next important thing was this. The U.F.A. government before it left office was trying to keep up the payments on those Alberta savings certificates. They were trying to pay the 4 per cent interest so there would not be a run on the province to get the $10 million, which would make the situation much worse. However, in so bad a condition did the U.F.A. government find itself that on August 27th, 1935, five days before the Social Credit government of Alberta took over, which happened on September 3, 1935, after the election had occurred on August 22, 1935-before the Social Credit government could take over at all, the U.F.A. refused to pay the interest on this $10 million of savings certificates. There is no answer to that. They had refused to pay when the demands for deposits were made.
Considering the loan which the U.F.A. government of the province of Alberta sought to float in the spring of 1935, and considering the fact that these $10 million demand savings certificates at 4 per cent had to be met, and that all those things happened just as they did, there was not even a shred of credit for the Alberta government in the markets of the world. They could not borrow a dollar from the banks.

Federal-Provincial Financial Arrangements


Solon Earl Low: 
John Horne Blackmore: That is another thing the U.F.A. government had done. Furthermore, here is another thing the U.F.A. had done. They gave a postdated cheque for $500,000 coming due in October, just after the new government would take office, and this $500,000 was spent in building roads. William Aberhart said that financially in Alberta the bottom was scraped out of the barrel. Not only was there no money in the treasury but the bottom was scraped out of the barrel. Now, then, I wish the Minister of Fisheries would do a little thinking, and with him the Minister of Citizenship and Immigration, and tell me what you would have done if you had been premier of Alberta. You could not have done anything.
You would have had millions and millions of dollars coming due, because loans had been contracted at intervals of probably four months, six months and so forth. Alberta's bonds were coming due and had to be renewed but they could not be renewed because Alberta had no credit, not because of any fault of Aberhart, not because of any fault of the Social Credit government. The reason there was no confidence in Social Credit in Alberta all over the country was the infernal lies that had been told by the very people represented by the Liberals in this house, just as lies are now being told about the people who were in charge of Alberta at that time.
There was the interest on Alberta's debt. If I remember correctly, the average interest on Alberta's debt was 4 [DOT] 98 per cent, and on some of it the rate went up as high as 6 per cent. Let us say one of those loans came due in January, 1936. I ask the bright men who have had so much to say what they would have done about it. Just wait until I am done. I am going to stay right here and I will answer every single question every one of these apologists for Liberalism asks, and I will answer him until he will be ashamed he asked it, because I know. I was there. The hon. member for Peace River was in the cabinet. He knows. He lived right through it. We can bring the records to prove every single thing I have said.
The important thing is that Aberhart took over an impossible situation in Alberta, and when he died he had Alberta pretty nearly "sitting on top of the world", the envy of everyone, and that change took place in just a few years. He died in 1943. He had only eight years in which to govern the province, but by that time the province's credit was wholly restored. In a very few years
Alberta's bonds were gilt-edged, as they are today. There are no finer bonds in the world.


An hon. Member:: Everything was "oil" right.


John Horne Blackmore: How was that achieved?


An hon. Member:: Oil.


John Horne Blackmore: If Aberhart was so bad a man as some of the simply dishonest people in this country would represent him to be, tell me how he accomplished that objective and still provided a great many fine services such as roads and all that kind of thing, roads superior to any that had been built before by any Alberta government. There was no major oil field at that time. There was no source of income at all, except what could be taken out of the very much impoverished people of Alberta.
Bond issues came due and the province of Alberta knew perfectly well that they could not pay the interest, but they were anxious to be square and do something like the right thing. That is what they tried to do. They talked with the people who held Alberta savings certificates and said, "If you will give us a ghost of a chance we will clear the whole thing up, but you have got to give us a chance." Where is there in this house a member who on occasion has not been in the position where he simply could not meet his commitments and had to go and deal with those he owed and say, "If you will just give me a chance I will clear this up."
That is what Premier Aberhart did, and the only people who would not listen were the bondholders. Some people will say there was a reason, but there were members who have sat right in this house who were involved. Anyway, what did the Alberta government do? They said to the people whom they owed, "We simply cannot possibly pay you the full interest rate. If we pretend we can we will only drive our province into a deeper and deeper morass of debt and make the situation more impossible all the time. Therefore we are going to cut the interest rate by 50 per cent for the time being, and we are going to put at your disposal 50 per cent of the interest. If the rate is 4-9 we will pay to your credit 2-5, or whatever the fraction is and you can take that and in due time, if the Lord blesses us so we can get out of debt, we will pay you back every cent of interest we ever owed you." That is what they did. Let the Minister of Fisheries tell us how that could be surpassed. I assume that is what he was referring to when he spoke about Alberta defaulting on the interest rate.


Solon Earl Low: He said "repudiate".
6366	HOUSE OF
Federal-Provincial Financial Arrangements


John Horne Blackmore: See how very, very wrong that word "repudiate" is. Alberta has never repudiated a dollar. It paid one-half the interest until such time as by dint of the tremendous efforts of the hon. member for Peace River, acting as provincial treasurer, and others, they were able to refund Alberta's debt at an interest rate that ought to have applied in the beginning, and to get themselves on a firm financial basis such as they are now on. Then in 1945 they began to pay back the other half of the interest rate which my hon. friend said they repudiated.


James Sinclair: Only to those who held on.


John Horne Blackmore: You could not expect anything better.


James Sinclair: The people expected fulfilment of their contract.


John Horne Blackmore: Why did they not go and ask for it?


James Sinclair: What I said on page 6313 has been substantiated by the hon. member. They did repudiate their contract to pay full interest, but you have learned your lesson and you now tell us you will never do it again, for which I thank you.


John Horne Blackmore: We have said nothing of the kind.


James Sinclair: You are going to do it again?


John Horne Blackmore: The simple fact is that anyone who gave up-


Solon Earl Low: There is quite a difference between "default" and "repudiate".


James Sinclair: Who is making this speech, the hon. member for Lethbridge or the hon. member for Peace River?


John Horne Blackmore: He should be able to make a few remarks when the Minister of Citizenship and Immigration has so much to say.


Stanley Howard Knowles: As long as the Minister of Citizenship and Immigration does not object it is quite in order.


John Horne Blackmore: Mr. Speaker, may I call it one o'clock? I have some more talking to do to these men.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
John Horne Blackmore: Mr. Speaker, before the house took recess I had been considering a remark made by the Minister of Fisheries, in his speech yesterday as reported at page
(Mr. Low.]

6313 of Hansard. The net result of my examination of that subject seemed to be that we showed that when the minister said, or implied, that Alberta had "repudiated interest payments on government bonds", while he might have used the expression very innocently, it certainly did not in reality mean anything like what it looks to mean as it appears in the speech. We found out that Alberta did not repudiate the interest on its bonds, but that it did cut the interest on those bonds in half. Then, after it had recovered its financial position in 1945, refunded its debt and got on its feet so it could go forward, it began paying back that interest which had accrued from the other half of the interest rate which had been cut in two by the government back in 1936 when it found itself in such severe straits that it was simply unable to pay the full interest rate. Such having been made quite clear, I think we shall just leave that aspect of the question.


James Sinclair: I wonder whether the hon. gentleman would permit one question.


John Horne Blackmore: I shall be glad to do so.


James Sinclair: I think most of us perhaps had not realized quite how bankrupt the U.F.A. government was before the election of 1935, but the hon. member has made it quite clear that not only had they no money but that they were hopelessly in debt. That was before the Social Credit government took over. Then do you not think it was perhaps politically dishonest, in view of that situation, for Aberhart to promise the electors of Alberta that if he were elected he would pay them $25 a month?


John Horne Blackmore: I do not think so. The important think to bear in mind in this connection is this: That is a very honest question, but the important thing to bear in mind that Aberhart talked about over and over again was this: He said "There is no area I have ever seen on the face of the earth where there exist such bountiful resources. No one can tell me that in any province where there are such resources of such variety, people need to be in poverty".


James Sinclair: Why didn't he pay his interest?


John Horne Blackmore: He was not able to do so until he got on his feet. He did not say he would start to pay $25 the day after he got in power.


James Sinclair: He gave that impression.


John Horne Blackmore: That was not his fault. The next important thing is this: The resources and the productive capacity of a province or any other area are the things

that ought to determine how well off the province is or how well off the people are. To go back to the Indians in former times, if there were plenty of buffalo, plenty of fish and firewood and of every other thing the Indians needed to have, in order to live up to a high standard, the Indians were intelligent enough to live up to that standard. It took the white man to say men could not live well in the presence of great resources and abundance. Aberhart saw that it was possible to use the resources of Alberta to give the Alberta people a high standard of living.
If Aberhart could have lived for 15 years he would have shown that could be done, even under the present orthodox financial system. But he was contemplating the introduction of the Social Credit system under which the government would monetize the goods which were produced by the province and use the money resulting from that monetization in order to distribute the goods among the people of Alberta in the form of dividends and in the form of compensated discounts. Social Credit maintains that can be done today and that anyone whosoever who looks at realities as they are must confess that it can be done. If it can not be done it must indicate a bankruptcy of intellect on the part of those who are administering the affairs of the country.
I think I have answered the question my hon. friend asked. Aberhart knew how serious the situation was. There was no man in Alberta and probably no man in the country who had greater skill in managing finances than had Aberhart himself.
I go on from that point. There is one matter that one of my colleagues mentioned; that is, there have been some people over here on the opposite side who made some remarks about oil. Those people undoubtedly implied that Alberta had plenty of oil and that this fact got us out of the difficulty. That is not what got Alberta out of her difficulty. The major oil discovery was not made until 1947 in Leduc, and Aberhart died four years before that occurred. Yet he had the province of Alberta on a fine standing of living already when he died.
When I finish this talk we will ask the minister of lands and mines in Alberta, if he feels so disposed, to tell us whether or not what I have said is correct about the first major oil well in Alberta being in the Leduc field in 1947. It is true that in Alberta oil had been discovered. There was discovery of oil in Alberta as far back as 1914, but not in any such quantities as to give the government a revenue of any considerable proportion at
24, 1956	6367
Federal-Provincial Financial Arrangements all. Hence the profit from the oil in Alberta came only as a result of the discovery of the Leduc field.
Maybe I might just say another word while I am on that subject, since the question has been raised. Alberta has made money from the oil by selling the right to drill on crown reserves. What that means is this! If we had the land laid out in the form of a checkerboard and if a company discovered a major oil deposit in one of the blocks of the checkerboard, the province of Alberta would reserve to the crown the blocks on all four sides of the square on the checkerboard. Then in due time, when the demand became strong for the right to drill on those reserves, Alberta offered a given reserve for sale at auction. That is, Alberta offered to sell the right to drill.


John Whitney Pickersgill: Mr. Speaker, in fairness to the hon. member for Winnipeg North Centre I am rising on a point of order.


John Horne Blackmore: If the hon. gentleman will just listen to what I am saying-


John Whitney Pickersgill: I am rising on a point of order.


John Horne Blackmore: If the hon. member will get what I am saying I should be obliged. I would ask him not to break into what I am telling him.


John Whitney Pickersgill: I am rising on a point of order.


Mr. Deputy Speaker:: Order. I understand that the minister is rising on a point of order.


John Horne Blackmore: All right.


John Whitney Pickersgill: My point of order is this. I raised a point of order with respect to the hon. member for Winnipeg North Centre (Mr. Knowles) who certainly was not any further from the subject under consideration than is the hon. member for Lethbridge, for whom I have the greatest respect. But I am sure that he would at once agree that talking about the method by which Alberta manages its oil resources really has nothing to do with the matter before the house.


Mr. Nicholson:: The Minister of Fisheries asked him the question.


John Horne Blackmore: Mr. Speaker, I admit the validity of what the Minister of Citizenship and Immigration has said, but I think he would consider that I had done just a little less than my duty if I did not answer questions raised in the course of the discussion, and I have answered those questions.
Just in order to cover what the minister has broken into, may I say this: When the province would offer for sale the drilling
6368	HOUSE OF
Federal-Provincial Financial Arrangements rights on a quarter section adjoining a quarter section on which an oil discovery had been made, there was a time when they received as much or more than $3 million for the right to drill on that quarter section. It was the profits which were made toy selling the right to drill on crown reserves which gave to Alberta the great amount of revenue. The mere fact that oil was in existence in Alberta and even had been developed in Turner valley did not give the government a chance to make money from the sale of drilling rights on crown reserves. I hope that fact is perfectly clear to everybody so they will not carry away erroneous ideas about how Alberta could get money out of oil. Some of them act as though they thought $5 gold pieces were floating in the oil or something of that sort.
There is another matter to which I should like to direct attention. I go on with another subject. I hope the Minister of Citizenship and Immigration will be able to feel at ease in his mind now for a time at least.


An hon. Member:: That is a lot to expect.


John Horne Blackmore: I have faith in the minister. I think he is a downright honest fellow.
I wish now to refer to one more passage in the fine speech made by the Minister of Fisheries, and I quote again from page 6313 of Hansard:
A final suggestion was just lightly touched upon in the third speech made by the hon. member for Lethbridge (Mr. Blackmore) during the resolution stage. He reminded us that the Minister of Finance has the power to print money.
I certainly did that.
Well, there may be some old line Social Crediters who think that is the solution, but I am sure that orthodox Tories like Premier Bennett, attorney general Bonner and Mr. Gunderson of British Columbia would be horrified at the thought of turning out a flood-
Heavy on the "flood".
-of printed money here to help them, because they know it would hopelessly debase the currency they already have.
There is no Social Crediter on earth who would not be horrified at contemplating a "flood" of printed money, and no responsible Social Crediter on earth ever advocated such a thing. All that Social Crediters have advocated is that enough money be created to make up the difference between the amount Of goods ready for sale on the market and the money which is in circulation.


James Sinclair: Mr. Speaker, may I-


John Horne Blackmore: Just get this straight. What Social Crediters have advocated is to create enough money and put it into circulation in the right places to enable the purchasing


power of the people to equal the amount of goods on sale on the market. Now, that does not mean a flood.


An hon. Member:: A steady stream.


John Horne Blackmore: Of course there is a steady stream of goods, too, but it depends on the size of the stream. You could have a steady stream which would be only a trickle in a brook.
Having said that, I think I will just leave the minister for the time being. Before noon I promised that before I closed I would answer any questions any hon. member wanted to ask of me. I am just concluding my remarks with enough time to answer questions they may wish to ask in order to elucidate what I have said, or anything else that may be in their minds.


Mr. Herridge:: Would the hon. member for Lethbridge permit a question? I respect his convictions in this matter. Would he say that Mr. Gunderson, who is a prominent Social Crediter in British Columbia and at the same time a director of the Canadian Bank of Commerce, would subscribe to the monetary theories he has just expounded?


John Horne Blackmore: It generally works out that the man who works most with banking is most in favour of Social Credit, because he can understand just how Social Credit could work.


John George Diefenbaker: Today, Mr. Speaker, we have had a very enjoyable debate. I was particularly impressed with the contribution made by the hon. member for Charlotte (Mr. Stuart). He certainly lightens up any serious discussion in this house. However, I must say that he did not answer the arguments advanced by the hon. member for Saint John-Albert (Mr. Bell), and in particular those to the effect that under this bill the maritimes will And themselves in a position less than fair, less than reasonable and less than just.
I do not want to involve myself in any maritime argument, but I would say this. There is one difference between the members from the maritimes and those from the western provinces, and it is this. While we from the western provinces do disagree, sometimes on the basis of partisanship, nonetheless when the welfare of the western provinces is being discussed and in particular when our major subject, agricultural production, is being discussed, we bury our disagreements and unite for the common benefit of the western provinces. Sometimes, as I listened to my hon. friends from the maritimes upholding those things which they themselves assuredly cannot support other than vocally, I wonder

whether a similar united front analogous to that being formed today by the premiers of the maritime provinces would not have a most beneficial effect upon the economy of the maritimes, especially if that analogy were continued and extended into the House of Commons. Certainly the hon. member for Saint John-Albert has strong arguments in support of the stand he has taken. I thought it was a remarkably effective and objective presentation of the situation that this house listened to this morning when he delivered that address.
I do not want to go far afield in order to call evidence in support of the strength of the arguments he advanced and the power of the analogy he drew as to the differences between the maritimes and elsewhere, but I think I should call as evidence an editorial in the Toronto Daily Star of last evening, a newspaper which throughout the years has never been too prone to criticism of the government except during the present session in so far as the preservation of the parliamentary system is concerned. Yesterday the Daily Star dealt with thi; question at length, and no one supporting the government will be able to say I am quoting from a newspaper that at any time has shown antagonism to this government. The subject of the editorial is, "Why Dominion-Provincial Tax Fight is Your Business". It sets out in detail quite a lengthy analysis of what actually is the essence of this bill, and it ends up in this way:
Is there any satisfactory alternative to double taxation in Ontario and perhaps other provinces?
It is generally following the viewpoint of Ontario in that question, but it mentions other provinces. The answer it gives is, I think, an effective argument in support of what the hon. member for Saint John-Albert said this morning, and an equally effective answer to the arguments advanced by the hon. member for Charlotte. The answer given is as follows:
The only alternative is for Ottawa to allow the provinces a larger share of income and corporation taxes. In the Star's opinion this is not only desirable in the case of Ontario but is essential in the case of the maritime provinces particularly.
I once more underline and emphasize those words; an increased amount of income and corporation taxes made available to certain provinces, and in particular in the maritime provinces, is essential. It refers to the maritime provinces particularly, and generally to the other provinces.
Unless they receive a larger share of the national wealth they will continue to be second class Canadians, economically speaking.
That editorial, and in particular its concluding paragraph, summarizes the arguments
24, 1956	6369
Federal-Provincial Financial Arrangements we in the opposition have been advancing in recent days. I am not going to say that the terms offered by the Minister of Finance under the present plan are not an improvement over the previous system, but I am saying that in the present bill and under the proposed plan the provinces will be shortchanged by the dominion government. As an analogy, if a person receives 45 cents out of a dollar he has exchanged, and receives 55 cents on the next occasion he exchanges a dollar, while on the second occasion he is better off nonetheless that person is still short-changed.
In my opinion, in so far as these agreements are concerned, the provinces are being short-changed, having regard to the fact that this bill will be effective for five years and a tremendous change can develop-it is taking place-which places an undue load upon the provinces and in particular upon the municipalities. I wonder often why this government has not taken the provinces into its confidence. Why these short-term meetings; why these gatherings of a day or two? Why do we not have a meeting of the federal authorities, the provincial authorities and the municipalities? Call it a constitutional convention, if you like, without the power of amendment of the constitution in respect of those fundamental rights which are inherent in the constitution, but why not have a gathering designed to bring about the reconsideration of a problem which for the last 13 years or so has become increasingly complex?
When I go back to 1945 I remember the great hopes that were held; and I am in agreement with my hon. friend the minister in this regard that the matter is complex. It is one of the most difficult problems that parliament, or the government, can be called upon to deal with, because there are so many facets, so many difficulties and so many situations that demand not an arbitrary attitude but a compromising and a considered one.
Sir, go back to 1945 and look at the green book. It was a step, but as we look at it today it was also merely an event out of which nothing effective resulted. I remember so well in 1945, in the latter days of March, when the question of the green book came up, now mildewed and disused. The question was asked of the Prime Minister, do the recommendations or suggestions in the green book exist anly longer? The answer was no. The Prime Minister went on to point out that the government had been fortunate that the provinces had refused, because it had saved the federal government from embarrassment since in the interval defence costs had mounted. But,
6370	HOUSE OF
Federal-Provincial Financial Arrangements said the Prime Minister, the government would renew the 1945 green book offer il it thought all the provinces would accept. It is simply a case of pay your money and take your choice. "We are glad, having regard to subsequent events, that the offer of 1945 was not accepted; otherwise we would have been embarrassed." It has been withdrawn, but if all the provinces would accept its terms, then there would be a restoration of the offer made therein.
I believe this. I think it is fair to say that the attitude taken by the government at the last conference was an arbitrary one. The government simply said, "These are the terms".	No opportunity was given for
amendment or for amelioration of any term. The recipe for a division of taxation was as final as the laws of the Medes and Persians; and how similar that attitude was to the attitude of the government in this house, which is that power makes perfect anything they do. There was no opportunity for negotiation; there was simply the attitude of a feudal lord bringing into being a modern feudalism and laying down the law to the vassals.
That is not the attitude, that is not the consideration to which the provinces are entitled under a constitution which allocates powers as between the federal and provincial governments. That is not an attitude which will remove the road blocks which today deny Canada the development which should indeed be hers. I feel that even yet if there were an attitude on the part of the federal government to negotiate, terms could be achieved which would be acceptable and which would go a long way toward solving this difficult and complex problem.
Somebody has said, "Well, they do not have to take the offer." What is the alternative? Even though the provinces realize that what is being offered is less than sufficient for their needs they are powerless to resist, believing as they must that half a loaf is better than none at all.
Whoever drafted this bill deserves high commendation for his powers of draftsmanship. The terms are difficult and intricate. This bill and the offer made by the government at the last conference constitute a political mixture. We have the carrot and the club. The government is dangling before the provinces less than is needed by the provinces, less than they can possibly and justifiably carry out their responsibilities with, and on the other hand is saying, "If you do not take it, then what?" It is the carrot and the club. That is not the attitude that brought about confederation; that is not a concept


of mind which will achieve that greater measure of Canadian unity which all of us hope will be achieved.
I am going to deal with the situation from the point of view of the provinces other than Ontario and Quebec. Quebec stands to gain very materially, as it receives immediately an assured $40 million. The arguments on behalf of Ontario will be put up by Ontario. I should like to think of the other provinces, at the same time keeping before me the national viewpoint.
What is going to happen to the provinces? What of education? What of increased demands for highways and other development in the various provinces which inevitably bring benefit to the dominion government? The attitude of the dominion government toward the municipalities has been unfair and unjust. I have only to go back to a motion which was before this house on April 30 and May 1 providing for something for which the municipalities have been asking, that the dominion government should follow the lead of two provincial governments and pay taxation upon its own industries and upon its own public buildings in the various municipalities. The government went part of the way but did not go far enough.
Why should the municipal authorities be required to provide the necessary services in the way of roads and so on for federal government institutions without that government paying full taxation? Why should the municipalities be required to pay 10 per cent sales tax on their needs, apart from the exceptions in connection with fire and road machinery costing over $1,000 per unit? Why should the federal government lay burdens upon the municipal governments in that way? The hon. member for Moose Jaw-Lake Centre (Mr. Thatcher) has now joined the supporters of the government. I ask hon. members to read the speech he made in May with regard to this matter, when he pointed out how necessary it was that changes should be brought about.
We are asking for a measure of development in Saskatchewan, and we look with some degree of hopeful expectation that this may be possible now that we have one Liberal on the government side of the house who has voted in favour of the South Saskatchewan dam. Every other one has voted against it. Now that he is over there I hope one of the major contributions he makes will be to convert the unconverted in regard to this matter and to change the adamant attitude of the Prime Minister, who throughout the years has stood firmly against this necessary work for the national benefit of Canada.

What is the situation with regard to the municipalities? I am not going into details other than to say that all over Canada the municipalities are finding it almost impossible to carry on. Real property cannot carry the load any more. Some of the provinces have a sales tax, but where are the provinces to get the rest of their revenue? Are they to get it out of liquor? In Saskatchewan the profit the government makes on liquor varies from 76 per cent to 94 per cent, so they cannot go much higher. We already have a sales tax. What other source of revenue is there?
Is Saskatchewan satisfied? In an interview the other day Mr. Fines, the provincial treasurer, pointed out that province is going to get more than it got before from the federal government, a greater share of taxes, but he said they were still being shortchanged. He went on to say:
While at first sight this appears generous, the increasing cost of government, municipal and provincial, makes this amount look very small.
He pointed out how the municipalities are asking for assistance in connection with highways, education and the like. He concluded by saying that having regard to the responsibilities which face the municipalities and the province the amount is negligible, if the provinces and the municipalities are to be able to carry out their several responsibilities.
I have before me a table showing the increases in expenditures by municipalities for education and for general services. All these are eastern municipalities, but we in the west find ourselves in the same position. The percentage of increases as between 1951 and 1954 are as follows:
	Total	Schools
	per cent	per cent
Scarborough 	
62 07	42-78North York 	
29 05	25-33East York 	
7-14	28-88Ottawa 	
11-83	44-50Windsor 	.... 4-92	Kitchener 	
49-11	77-33Sault Ste. Marie 	
74-69	47-28Barrie 	
28-71	15-53Oakville 	
104-92	57-73Kenora 	
17-49	9-43
There must be some responsibility upon the federal government in regard to this problem. This matter was dealt with at some length the other day by the hon. member for York-Humber (Miss Aitken), but I intend to go a little further today. Recognizing as we all do that education is a provincial responsibility I think the time has come, if the offer contained within this bill is the final offer, for the federal government to act in order to preserve and increase the amounts available for expenditure upon education within this country. The government says, "This is final.
24, 1956	6371
Federal-Provincial Financial Arrangements You take it or leave it." This is the law of the feudal lord to the vassals. The vassals must accept because of the exigencies of the financial responsibilities which exist.
In this changing world in which we live, wherein the communists place their emphasis on scientific training and technological education, there must be some responsibility placed on the federal government if Canada and the other free nations are to be able to take their place in our world today. Let us deal for just a moment with what has happened in the last five years in connection with primary and secondary education. The school population of Canada has gone up from 2-5 million to 3 [DOT] 5 million, and there are 97 per cent more pre-school age children today than there were in 1941. The provinces cannot discharge their responsibilities in assisting the municipalities in this regard. If you are going to leave that responsibility on the municipality and no change is made in the content of this bill, the result will be that in the very near future you will have a strong dominion government with bankrupt municipalities. If the government will not listen to this argument which I am advancing, will they listen to the hon. member for Moose Jaw-Lake Centre if he whispers that to them today? That view has been expressed by the hon. member over and over again.
What about the universities? What about the salaries paid in the universities? The Secretary of State for External Affairs (Mr. Pearson) is the chancellor of one of our great universities and no doubt has had experience with the magnetic pull by industry, government and business in so far as his teaching staff is concerned. Other universities have felt this. Dr. Smith of the University of Toronto has pointed out the great difficulty there is in this regard.
What assistance has been given to university education? There have been a few scholarships, a few research scholarships. The extent of assistance to the universities has been insufficient to meet the completely changing conditions that prevail today. You will not achieve the success with your five-year plan that Stalin had in mind when he instituted his five-year plan. You will have bankruptcy at the end for the municipalities of this country unless some assistance is forthcoming.
What about university salaries? President Sidney Smith has stated that the University of Toronto is losing personnel to government, industry and research because the salaries are two or three times what the university can afford to pay. Do you realize that the average Canadian worker has increased his wages two-thirds over the past generation,
6372	HOUSE OF
Federal-Provincial Financial Arrangements but the salary oi the average teacher and research worker has remained unchanged?
Those are not my views. Those are the views of the Canadian association of university teachers. Thousands of the mentally gifted youth are barred from higher education by financial limitations. Are we going to restrict our universities by the financial assistance extended to the provinces today, or are we going to realize now that the U.S.S.R. has departed from its old policy of being a stolid introvert and has become a smiling extrovert that goes all over the world expanding its technological and educational system? Are we in the free world going to fall behind? Are we going to deny admission to the universities to all except those who are well to do? That is what is going to happen.
The United States sends to university seven times as many, in proportion to population, as we do. The U.S.S.R. sends far more than we do to that type of education, which is necessary in the world today as we enter this new atomic era. There is no way whereby the vast demand for engineers, scientists and mathematicians can be met other than by this dominion government extending itself as it has not done before and providing grants in aid, while maintaining the constitutional position whereby the provinces are in charge of education.
Sir, all you have to do is look at the record, the roster of engineers and scientists iri the U.S.S.R. Do you say that they lag behind us and we do not need to increase our efforts? Within the past few days on July 19, John E. Bird, Canadian Press staff writer, referred to an interview he had with Dr. Lloyd G. Elliott, director of the physics division of Atomic Energy of Canada Limited, following the latter's return from a conference in the Russian capital May 14 to 22. This is what Dr. Elliott said:
We In Canada knew very little about what Russia was doing in the field before the conference. We came away realizing that Soviet scientists are making real progress. . . . They are very serious and their plans are very extensive for placing large numbers of highly technical people in basic research.
We go on in the same old way, with 290 or so scholarships. What does the U.S.S.R. do? Here is the latest record. The United States has 108,700 engineers; the seven countries in western Europe making up NATO have 111,000; the Soviet union has 540,000. All over the world today they are loaning these technical advisers who, through the knowledge they possess, infiltrate in those countries and thereby secure an exchange, on the part of the freedom-loving people of those countries, of their freedom


for all time in return for basic technical knowledge. The United States has 4,200 agricultural scientists; the seven countries in western Europe have 21,245; the Soviet union has 190,000. The United States has 6,100 mathematicians; the Soviet union has 160,000.
Make all due allowances, Mr. Speaker, for the impelling virtue that freedom gives to men and women, whether it is in the ordinary field of life or in science. The universities face a serious crisis and this bill in no way meets the situation. It simply places upon the provinces the handcuffs of five years of inaction in this direction, for they have gone as far as they can. I say to you, sir, and to the Prime Minister through you, that this is a field that must be entered by the dominion government as part of our national defence, failing which we shall lose the next five years under this five-year plan. We shall unless something else is done. We must act now if we are to maintain and preserve our position as a freedom-loving nation in the world. We must also accelerate our contribution to scientific technology and mathematical knowledge and technique everywhere in the world.
How far they have gone in the U.S.S.R. is shown by one other statistic. It was brought to Canada by Mr. James S. Duncan of the Massey-Harris company, when he said that so intent has the U.S.S.R. become on increasing the sum total of scientific knowledge that of the 40,000 workers in the Stalin works in Moscow, 10,000 in their after hours are taking courses which in five or six years will graduate them as engineers.
I do not want anyone to say that I want Canada to borrow the means of communism in order to defeat communism. However, I believe that if we in this country on the national level will give to the various universities not the paltry sums advanced today but sums in keeping with the responsibilities that rest upon those universities in this new world we shall not only ensure Canada's contribution to the maintenance of freedom, but we shall also make possible a university education for many tens of thousands of young people in our country who otherwise would be denied the opportunity of a university education which their ability and capacity would merit and which only their inability to finance would deny.
That is one phase of the picture; another phase is in connection with national development. I am not going to go extensively into that-it has been covered over and over again during the progress of this debate-but I wish to point out two matters of national import which we in Saskatchewan believe are deserving of, and indeed demand, dominion support. One of them, which was

dealt with by several hon. members, is the need to realize that whilst highways are under the constitution a matter of provincial administration, to a greater degree than heretofore there must be grants in aid; for the present bill, if implemented, will make it impossible for provinces to expand their necessary highway development.
We have recognized the principle in connection with the trans-Canada highway, although the rate at which the trans-Canada highway is being built shows a pedestrian drive behind that worthy objective. Through the municipalities my own province of Saskatchewan, as well as other provinces, is asking that there be a realization that while at the time of confederation east and west roads were of first importance, today in the national interest there must be highways for defence in the various provinces. To that end federal assistance must be given. The provinces will never discharge their responsibility in this regard if hemmed in, as they will be, by the ambit of the terms of the present bill.
The demand for highways of that kind has some foundation in history. In 1912 both Sir Wilfrid Laurier and Sir Robert Borden supported federal aid to highways necessary for development. In 1920 the government of Right Hon. Arthur Meighen brought into effect a system of assistance which, as I recall it, involved the spending of some $20 million. There must be some assistance in this regard. Who gets the benefit of the highway into the north? As soon as the highway is built and minerals are found, mines are opened and smelters are constructed, the dominion government immediately takes its Cut. It takes it before in the sales tax. It achieves dividends immediately.
These highways are necessary for development. Indeed, I believe that a roads to resources program of assistance by the federal government would meet with general approval across the country, roads to resources, the opening up of the country, and those roads available later as defence highways if and when needed. I know that such a program would meet with approval in the western provinces. The United States has launched one of the greatest highway programs in all history. It is one that requires co-operation on the part of the states of the United States. In it the federal authority, with the administration resting upon the states, has launched one of the greatest moves in all history to assure that development which highways permit and, indeed, encourage.
Those are but two fields: education, highways and encouragement of national development, which will not be encouraged to
24, 1956	6373
Federal-Provincial Financial Arrangements the degree that they should be if the provinces are manacled by the bill now before the house. I said a moment ago that it is better than what has been given previously but it still constitutes a failure to realize that under our constitution the provinces were never intended to be beggars. The provinces have responsibilities, the provinces have fields of action, and the concentration of power and authority in the federal government with respect to taxation has had an adverse effect.
The bill will go some way toward removing those adverse effects, but unless the amounts to be paid to the several provinces are materially enhanced by grants in aid of education and by a system whereby the municipalities may be assured of a reasonable opportunity to discharge their responsibilities, then indeed, looking ahead five years, the provinces having to accept the terms of the bill will mean that the bill will have an adverse effect on the municipalities and their responsibilities and will adversely interfere with Canada's international responsibilities in the field of technical education to a degree that can never be gained back.


John Whitney Pickersgill: Mr. Speaker, this, I believe, is the first occasion on which I have ever spoken in the house on any matter which was not directly related to my own ministerial responsibilities. It is in a sense a maiden speech, and I crave your indulgence accordingly. It is a very hard thing to be asked to follow so eloquent and persuasive a speaker as the hon. member for Prince Albert (Mr. Diefenbaker). I have no eloquence. I can only try to deal with facts, and I intend to do two things that have been conspicuously absent during most of this debate. I intend to deal as far as possible with facts, and I intend to deal with the bill.
The hon. member for Prince Albert talked about the arbitrary attitude of the government, and several members of the opposition have said the same thing. I think perhaps it might be worth while to take just a minute to consider what really has happened with respect to these proposals. Nothing would have been simpler than for the government to go on as we did in 1952 and recommend that we continue the tax rental agreements, perhaps with some slight change in the formula, and continue the situation which had persisted since 1945, a situation which I submit was not good for this country and which could not much longer continue, whereby the benefits of this legislation were going to two-thirds of the country and not to the other third. That is no way, if we can find a remedy, to allow things to continue.
6374	HOUSE OF
Federal-Provincial Financial Arrangements
What did the Prime Minister do? He said that we were going to stick to our one objective that was paramount above all others, and that was to put the provinces on a basis of relative equality, but that we were not at all wedded to the means of tax rental agreements if something better could be found. It was suggested to the provincial governments that if any of them could suggest something better we would be only too happy to consider it. Four conferences were held to discuss various phases of this question, three before an offer was made and one after the offer was made. That was the conference in April which several hon. gentlemen opposite have sought, perhaps unwittingly, to give the impression was the only conference held. It was not.
The views of all the provincial governments were very carefully considered in one stage or another for over a year before these proposals were finally made. If there is going to be legislation there does have to be a point where something becomes final. You cannot bring in a bill that has nothing in it. You have to take a position; and the moment you do take that position it is, of course, very easy for someone else to call it arbitrary. But that does not make it arbitrary at all. The question is this. Does it accomplish what it sets out to accomplish? As I apprehend it, the purpose of this bill is to do two things, and two things only. It is to bring the income of the rest of the provinces up to the level of the combined income of Ontario and British Columbia in three tax fields, or rather the average of the combined revenues of those provinces. That is the prime purpose of the bill. What the government has said is that we feel that all the provinces are entitled to derive in one way or another as much revenue as they would get if they had a taxable capacity comparable to the taxable capacity of the two wealthiest provinces combined. With a scheme like that, it is not intended to raise money for provincial purposes generally. It is only intended to bring the less fortunate provinces up to the level of the more fortunate provinces. This bill does not purport to do anything else and it has nothing to do with anything else, except one thing, and that one thing is an extremely important thing too.
During the war we had the experience of having the wartime tax agreements and I think most Canadians came to the conclusion that it was much more convenient to have only one income tax and only one income tax collector. We are proposing to make that possible if the provincial governments want that; they do not have to take it at all; there is no "take it or leave it" business about it
[Mr. Pickersgill.l

at all; the provincial governments can do exactly as they please about having a single income tax. That is true of every province, and no province loses its equalization payment by doing so. If they want to impose a standard tax, we are prepared to collect it for them. If they want to make a tax rental agreement and accept the yield of the standard tax, we are offering them that. If they prefer to have nothing to do with us and to collect their own taxes at any rate they like, they are still entitled to the equalization payments. It is very hard for me to conceive-and it was evidently quite impossible for any of the provincial governments to conceive-any further modification of this scheme that could have been put into effect; and indeed none of them suggested any. It seems to me that there is a great deal of validity in what Mr. Mackenzie King said in 1935 in that quotation which the hon. member for Eglinton cited yesterday. I do not think there would be any argument at all; not the slightest argument; that not one five-cent piece-and I use the term advisedly-should be collected by the federal treasury in order to be handed over to any provincial government if all the provinces had an equal taxable capacity.


William Earl Rowe: That is not what he said at all.


John Whitney Pickersgill: I did not say it was what he said at all. The hon. gentleman misunderstood what I was trying to say.


William Earl Rowe: I did not misunderstand what he said, though.


John Whitney Pickersgill: What I was trying to say was this. I think it is far better for the government which is spending the money to collect it. If we had a situation in those provinces where the taxable capacity-and in Newfoundland it happens at the present time to be the lowest of any of the provinces- was near the taxable capacity of Ontario and all the others were uniform, I would say we should have no bill of this kind at all; that the provinces should collect their own taxes and spend them; that we should collect ours and spend ours; and that we should not turn anything over to the provinces. But we do know this, and none know it better than do those who represent the Atlantic provinces. We know that is not the situation in which we live. But there is no excuse whatsoever, in so far as equalization is concerned, for the Minister of Finance (Mr. Harris) to raise any money to be spent for provincial purposes in Ontario except one, and that is an extremely important one, namely that it is convenient to the taxpayers of Ontario to be obliged to pay only one income tax instead of two taxes. That is all that we should properly do. As far as the wealthiest provinces are concerned, they themselves should

raise for provincial purposes what they need. If we want to change the constitution and transfer those powers, that is another matter. But it is not the business of this parliament to raise revenues for these provincial purposes, except for the one purpose of establishing equalization across the country. That is what the fundamental purpose of this legis-'ation is.
There is only one other point I want to deal with, and it was also raised by the hon. member for Prince Albert (Mr. Diefenbaker) and in a somewhat different fashion by the hon. member for Saint John-Albert (Mr. Bell). I took down as completely as I could the words used by the hon. member for Prince Albert. He said that under this bill the maritimes- and by that I assumed he meant the Atlantic provinces-will find themselves in a position less than fair, less than reasonable and less than just. He then suggested that in some way those of us who represent the Atlantic provinces are less good at "ganging up" on the federal treasury than are the gentlemen who represent the western provinces. I do not know whether or not that is true, but I know this. We from the Atlantic provinces do not fill as many pages of Hansard as do members from some of the western provinces. But I do not think that is necessarily a proof that we do not represent our constituencies just as well. In support of his contention the hon. member for Prince Albert quoted an editorial in yesterday's Toronto Star. He quoted particularly the last paragraph, which reads as follows:
The only alternative-
I am not going to say to what.
is for Ottawa to allow the provinces a larger share of income and corporation taxes. In the Star's opinion this is not only desirable in the case of Ontario but is essential in the case of the maritime provinces particularly. Unless they receive a larger share of the national wealth they will continue to be second-class Canadians, economically speaking.
I am not saying anything about that reference to second-class Canadians. As far as I am concerned, the larger the share of the national wealth we can get for the Atlantic provinces, the better pleased I shall be; and I will do everything I can that I think is effective and that I think is fair to get a larger share of that wealth for the Atlantic provinces. But certainly the recipe suggested by the hon. member for Prince Albert is not going to do it.
The whole purpose of this bill and of this scheme is to achieve equalization. The larger the share of the field that is given to the provinces to tax, the better it is for Ontario but the worse it is for the poorer provinces.
I think the hon. member for Prince Albert 67509-404J
24, 1956	6375
Federal-Provincial Financial Arrangements who represents a constituency from Saskatchewan had better think this matter out again before he endorses the Toronto Star merely because it happens to be a Liberal newspaper and once in a while disagrees with this government.


William Earl Rowe: He is not endorsing the Star but the Star is not endorsing you.


John Whitney Pickersgill: No; the Star is not endorsing us. The Star is endorsing the premier of Ontario; and that brings me to the real point- if there is any point-to what I have to say here today.


William Earl Rowe: You are extremely modest this time.


John Whitney Pickersgill: The real point is this. It was said by the hon. member for Eglinton yesterday, with his usual grace and refinement when I attempted to correct him; he was his usual polite self and showed the respect he usually shows for other members, for the chair and for the institution of parliament generally. As I say, when the hon. member for Eglinton made a statement yesterday I attempted to correct him and I finally succeeded, by being pertinacious, and by objecting not at all to what he thought was abuse which did not bother me a particle;-


George Clyde Nowlan: And by being out of order.


John Whitney Pickersgill: -I managed to get inserted into Hansard what I want to insert at greater length today, namely that there was one provincial premier who accepted and endorsed this scheme at the meeting in April; and he did it for reasons which are extremely important to all the Atlantic provinces and which I should like to put on the record. The Minister of Finance points out that it was in March, not April; it was on March 9. This is what Mr. Smallwood says, and I make no apology whatever for quoting it and saying I endorse everything in it.


George Clyde Nowlan: Whose is the voice of Jacob, and whose the hand of Esau in this case?


John Whitney Pickersgill: I do not believe anyone who has heard the premier of Newfoundland speak will feel he needs to have words put in his mouth by anyone else. As a matter of fact I could bore the house with some anecdotes about having to follow the premier of Newfoundland three years ago when I had even less experience in public speaking than I have now. I did not like the competition; I am not equal to it. Here is what Mr. Smallwood said:
The government of Newfoundland is just as anxious as any other provincial government to secure the maximum revenues that we can get out of federal-provincial arrangements for sharing income and corporation taxes.
6376	HOUSE OF
Federal-Provincial Financial Arrangements
I am sure every other provincial premier would say the same thing. Until the chips are down-that is a phrase people use who gamble and I do not know what it means but perhaps the hon. member for Winnipeg North Centre (Mr. Knowles) could enlighten me.


Stanley Howard Knowles: I was just saying that it was very apt in this case.


John Whitney Pickersgill: Until the chips are down you could not expect any of the provincial premiers to say he was satisfied with the amount he was going to get. Mr. Smallwood continued:
No other province needs them more for provincial purposes.
I echo that, and I believe we need them in Newfoundland even more than New Brunswick does.
We entered confederation in 1949 on the understanding that we could share on a fair basis the proceeds of income and corporation taxes and succession duties collected all over Canada.
The only way we can share these proceeds on anything iike the same basis as Canadians in the wealthier provinces is by sharing them through the federal treasury.
And that is true of every one of the provinces, except possibly British Columbia and Ontario.
The income and corporation tax fields in Newfoundland, no matter how assiduously we cultivate them, cannot be made to yield the kind of revenues that are secured by the wealthy provinces like Ontario and Quebec.
And yet the 400,000 additional consumers in Newfoundland, who buy nearly everything they consume from the mainland of Canada,-
I might add, mostly from Ontario.
-are contributing every day to the incomes from which income and corporation taxes can be collected in the other provinces, particularly Ontario and Quebec.
It is, therefore, in our provincial interest in Newfoundland and it is in the provincial interest of all the provinces where the tax potential is low, to safeguard the federal share of these tax fields, so that the federal government will be in a position to share them with us. That is the only way all Canadians can finance something approaching provincial services that Ontario can provide out of taxes collected within the province.
The premier of Ontario, at these conferences, has said a good deal about the immense demands for provincial services resulting from the vast industrial expansion of Ontario. Of course, these demands are very large, but the capacity to pay for them grows even faster. I can assure the premier of Ontario that all of us in the Atlantic provinces-
I am sure the hon. member for Saint John-Albert (Mr. Bell) will agree with this, -would be glad to take on these new provincial liabilities along with the even greater new assets that come with them.
The premier of Ontario and the provincial treasurer have, at these conferences and elsewhere, hinted that Ontario is approaching the end of its fiscal resources. I am sure they don't really expect


the premiers of some of the other provinces to be greatly impressed by their parade of poverty.
The provincial services in Newfoundland, measured in terms of roads or schools or health facilities, or by almost any other standard, do not compare at all with those in Ontario, and it will take many millions of dollars, as our brief to the Gordon commission showed, to bring them up to anything like a comparable basis.
And yet to pay for what we now nave, we in Newfoundland have to impose a gasoline tax of 17 cents, compared with a tax of 11 cents in Ontario. We also have a 3 per cent social security tax on retail sales in the province-and that's on all foodstuffs, too.
I asked our officials to calculate how much more revenue Ontario would be able to collect if the people of Ontario had to pay, for provincal services, taxes which Canadians in the province of Newfoundland have to pay for services which are not nearly as good. I am told that, if Ontario raised its gasoline tax to the rate we have in Newfoundland, it could have collected in 1955 at least an additional 50 million dollars, and that a 3 per cent tax on retail sales in Ontario would have produced at least 150 million dollars in 1955.
That, I might say, is about five times the total budget of Newfoundland.
The fact is that, even with the proposed equalization payments, almost every province in Canada is going to have to continue imposing upon its people much heavier provincial taxation than is borne by the people of Ontario.
As I understand it, under the new tax sharing proposals, Ontario, with standard rates of taxes, will derive substantially more revenue than it would under a continuation of the present tax rental agreements. In other words, the new arrangement will give Ontario a proportionately higher gain than any other province will have.
If the equalization payments were based on the average of the four highest provinces instead of the basis proposed by the federal government,-
That was what Mr. Frost suggested should be done.
-the effect, as I understand it, would be that tax rates would have to be set which would give Ontario a still larger share of the yield from these taxes in order to give the other six provinces payments equal to those proposed in the present federal scheme.
In other words, averaging the top four provinces instead of the top two would give far greater advantages to the wealthy provinces than it would to those with smaller tax potentials.
It is impossible for us from Newfoundland to see how this could possibly be in the national interest, and we cannot help but feel that, by reducing drastically the share the federal treasury would get out of these national tax fields, we would be weakening its capacity to help provide reasonably equal provincial services right across Canada.
And that, sir, is what we understood we would get when we entered confederation in 1949.
And that is what this bill is seeking to continue on a much better basis than we have had it before. That is why I, sir, am only too happy to be supporting it.
I say, therefore, that from the point of view of Newfoundland, and I believe in the interests of at least all the people in the six provinces which the premier of Ontario would not include in his

averaging, his suggestion is much less satisfactory than the suggestion put forward by the federal government.
I feel, to, sir, that we should not forget that the federal government is providing millions for costly services, not merely in Newfoundland and Nova Scotia, but also in Ontario and British Columbia.
That is why we have come to the conclusion-
I wish the hon. member for Eglinton (Mr. Fleming) were in the house to hear this.
-that, pending the readjustments which we hope may be made as a result of the work of the royal commission on the revision of the terms of union we are prepared to support the basis of the present proposals of the federal government.
Now, sir, since the premier of Ontario began to change his tune-at first, he said that this plan was some improvement on anything that had been suggested before, and I do not think he has ever taken that back-he has been asking for more money for Ontario because of their new poverty-


Mr. Lennard:: On a question of privilege, the hon. member for Eglinton is not here because at the moment he is in the banking and commerce committee, and I want that understood.


James Sinclair: So what?


Mr. Weir:: So what?


John Whitney Pickersgill: I have no objection if the hon. member is in the banking and commerce committee; I am not hurt.


John George Diefenbaker: You are lucky, that is all.


William Earl Rowe: You are happy.


James Sinclair: There is a little more decorum and a little more dignity in debate when he is not here.


Mr. Harkness:: You are lucky he is not here.


John Whitney Pickersgill: Is there anything wrong in mentioning that it is a fact? I said I was going to deal with the facts. I cannot rise to the eloquence of the hon. member for Prince Albert.


Mr. Fulton:: Is there anything wrong with putting all the facts on the record?


John Whitney Pickersgill: No, but I have time for just a few. I will have lots more for the hon. member for Kamloops in another debate.
Since there was some hope of stirring up a little politics about this question, the Ottawa Journal said on July 17:
The idea that Mr. St. Laurent has solved dominion-provincial difficulties, an idea seemingly accepted by some, has no basis in fact whatsoever; all Mr. St. Laurent has done is to come up with a formula or prescription that has created a new crop of headaches, left the provinces more dissatisfied and frustrated than ever.


William Earl Rowe: Hear, hear.
24. 1956	6377
Federal-Provincial Financial Arrangements


John Whitney Pickersgill: Yes. That is what the Ottawa Journal said on July 17; but what did the Ottawa Journal say on January 13 when these proposals were brought before parliament before they saw any possibility of making any party politics out of them? An editorial from the same paper on January 13, 1956, had this to say:
Whatever happens, Mr. St. Laurent must be commended for having made a patient and sincere effort to find some just and workable formula, one which recognizes that Canada is a federal state in fact and should be one in spirit. If it is not the last and best word it is at least an honest attempt to solve a vexatious problem.
I must say, sir, that I prefer the Ottawa Journal sober to the Ottawa Journal drunk.
(Translation):


Mr. Raoul Poulin (Beauce):: Mr. Speaker, I do not propose to take up too much of the hon. members' time, but I want to express my personal opinion on the bill before us.
It was the aim of the confederation to unite the provinces, but without unifying them. It seems, moreover, that the fathers of confederation did not so much seek to unite the provinces themselves. Beyond the provincial borders of the day and those that would be established thereafter, they could see the two great races that formed Canada's population at that time and which make it up now, to a considerable extent. They wanted to bring together, not so much the political frameworks as the two ethnical components within those frameworks, to enable them to strive together more efficiently towards a common goal, while satisfying themselves that each of the two would conserve its own identity and would pursue its development according to its own racial characteristics.
In support of this contention I would like to quote an important statement which can be found in the brief presented by the University of Montreal to the Tremblay commission, in February 1952.
There are some who take no pleasure in hearing it said that confederation was a compact between two races .	.	. Any objective and unbiased
examination of the Canadian constitution immediately points to the peculiar status granted to Quebec. Section 133 could hardly be clearer. Provisions relating to language and to the right to the use of it . . . show that the act was really a compact between two racial groups differing in language, religion and traditions, which both were bent on preserving.
Here is, moreover, a statement made at the time of confederation by an expert who, speaking from a neutral point of view, was no doubt in a position to express an objective and unbiased view. This view was
6378	HOUSE OF
Federal-Provincial Financial Arrangements expressed by Lord Carnarvon and may be found in the proceedings of the imperial parliament for 1867, page 568:
Lower Canada is deeply attached to its particular institutions and it will join the union only on the clear understanding that it will keep them . . . It is in that spirit and at those conditions that Lower Canada now agrees to enter confederation.
Well, what are those particular institutions, if not our language, our faith, our traditions, our way of thinking, our way of life, of looking after our educational and health needs, and so on?
There is no doubt that the fathers of confederation took a right view of things, even though the means they put at our disposal to achieve their objective were not perfect and have thus, in time, given rise to the difficult situations that are facing us today.
However, because the Canadian nation has developed and progressed to a point that could no doubt be envisioned 90 years ago, and because of a similar change in the economic and social conditions under which this progress is to continue, it might be time to revise this agreement of 1867. It would be advisable to amend it, to clarify it and to adapt it to the new conditions, to draw from it certain practical conclusions which are potentially to be drawn from it and to interpret some of its clauses. Of course, this should be done at a round table discussion to which all interested parties would be invited, namely, the ten provinces and the central government. In other words, it would be the revival and the continuation of the federal-provincial conference held in Quebec in the fall of 1950. That conference, opened and adjourned under the most favourable auspices, had given rise to the fondest hopes. It was to have been resumed and, without blaming anyone in particular, I am very sorry that it was not and that we missed this splendid opportunity to streamline a constitution which no longer answers the needs of the institutions it governs. A further conference could have reassigned to each interested party its own field of taxation, and could have done this more adequately than by the bill now under review.
This task is an essential one, one which will have to be undertaken some time, to bring order and good understanding into intergovernmental relations in Canada. It is in that spirit, no doubt, that the Quebec chamber of commerce, in its submission to the royal inquiry commission in January 1954, made this statement:


In order to amend the British North America Act and to provide Canada with a new constitution, the proceedings of the federal-provincial conference held in Quebec in September 1950 should be resumed as soon as possible.
Such a conference could also settle the equalization problem for which a one-sided solution is offered in Bill 442. I say it is a one-sided solution because there is no evidence that the provinces, which are at least as much interested in this as the central government, were in a position to have their views accepted, even if they were consulted. I do not object on principle to the richer provinces helping the poorer provinces, but I doubt that the way which is contemplated is the best.
Why, for instance, would the central government not encourage each province to levy its own tax on individual and corporation income, by granting not a uniform and partial deduction of 10 per cent of the federal tax, but rather a deduction equal to the full amount collected by the province? Each province would establish its own tax according to a schedule which would best meet the needs and wishes of its people. Such amount being fully deducted from the federal tax, the taxpayers would, in the end, pay the same amount of tax, whatever the variations may be between two provinces. In that way, for instance, the autonomy of Quebec would be preserved. The government of that province has found it advisable to set at a higher level than that of the central government the basic income above which taxes begin to be levied, thus protecting in a more equitable and social way, I think, the family group.
It is obvious, I think, that in such a way the spirit and the word of the constitution would be complied with as far, at least, as paragraph 2 of section 92 is concerned.
I foresee serious objections to the suggestion I am making but, nonetheless, I hold that a conference such as the one held in 1950 would be capable of dealing with those objections, by setting, for instance, a maximum which the provinces could not exceed for a certain period of time.
The constitution irrevocably assigned to the provinces certain fields in which they have the exclusive right to legislate, and that right implies the right to administer. Now then, administration requires the levying of taxes.
Among the fields assigned to the provinces, there are those, among several others, of education and health. Those are, of course.

sacred fields to which the problems of money must be adapted, and not vice versa.
At present, the central government is offering provinces a joint health plan.
In all earnestness, I believe that the province of Quebec should not be put in a position where it should have to accept such a plan. Legislation of this type should be enacted by its own legislature. However, to achieve this object, the bill now under discussion should go even farther than it does, and should allow full deductibility with regard to the amount of the provincial tax, instead of allowing only 10 per cent of the federal tax.
In the field of education, the same situation prevails. In spite of considerable improvement over the last few years, there is still a great deal to be done. We need more revenue. We intend to preserve control of these sources of revenue and be free to use them in the way best suited to the mentality, habits and customs of our people.
We fear that some day the intrusion of the central power in this field may bring about a situation dangerous to our racial group.
I wish to repeat here what I have already said many times before this outside the house. I am not worried about the intrusion or the activities of the present government, headed as it is now by the present Prime Minister (Mr. St. Laurent). I am not worried either by the possible influence of a government which would be headed by the present Leader of the Opposition (Mr. Drew). But who knows what the future holds in store?
What will be the intentions of the men governing the Canadian nation 25 or 50 years from now?
I therefore believe that it is essential today to prepare for the future and to protect it against possible dangers in this field. That is why we should strive to protect and guarantee provincial autonomy.
It seems to me that this measure, imperfect though it is, is a step in the right direction. I feel bound to support it and, in so doing, I believe I interpret the opinion of the truly nationalist independents of the province of Quebec.
(Text):


Mr. Hamilton (York West):: Mr. Speaker-


Walter Edward Harris: Mr. Speaker, on a point of order: I had understood that certain arrangements had been made, if not formally at least understood, perhaps to the detriment of the hon. member for Mackenzie (Mr. Nicholson),
24, 1956	9379
Federal-Provincial Financial Arrangements who had risen earlier. I know hon. members would like to continue the debate, either here or in committee, but it had been suggested that we might reach the committee stage before five o'clock and then certain hon. members who had indicated a willingness to speak might do so in committee. If that is the choice of hon. members it would be desirable that we have second reading now; if that is not the choice, then of course we would have to proceed.


Alexander Malcolm Nicholson: I was on my feet before the other hon. member started but I am quite prepared to wait until we go into committee to make my remarks. However, if the debate is going on I shall want my turn later on.


John Borden Hamilton: I thought the debate was continuing when I saw the hon. member for Mackenzie (Mr. Nicholson) rise, although I was aware that an arrangement had been made. I am quite satisfied to wait.


Mr. Speaker:: I declare the motion carried.


Mr. Wylie:: Mr. Speaker, I was paired with the hon. member for Algoma West (Mr. Mr. Harris: On that point I think the hon. member for Eglinton is quite right, but I would suggest to you, sir, and to the house that we continue with the proceedings on this particular bill. Then at five o'clock you will go into the chair for private bills hour and the matter that has arisen in the banking and commerce committee can be disposed of.


Donald Methuen Fleming: On the point of order, Mr. Speaker, this was a government bill, not a private bill, and I wonder why the matter should not be dealt with now while you are still in the chair rather than wait until five o'clock for the hour reserved for private bills. All that is required is for the chairman of the committee to make his report now and have it disposed of because once the house has disposed of the appeal there still is the question of resumption of the committee sittings, and time is precious.


Stanley Howard Knowles: How can there be a point of order when there is nothing before the house?


Mr. Speaker:: That is exactly what I was trying to say a moment ago. I have no report and until I have one I cannot act on something that does not exist.


James Sinclair: Study the rule book.
The house went into committee, Mr. Robinson (Simcoe East) in the chair.
On clause 1-Short title.


William Alfred Robinson: Shall this clause carry?


Some hon. Members:: Carried.


William Alfred Robinson: Clause 2.


Some hon. Members:: Carried.


Mr. Dinsdale:: Mr. Chairman,-


William Alfred Robinson: On clause 2?
Nixon). Had I voted I would have voted against second reading.


Mr. Speaker:: Is it agreed that I do now leave the chair for the house to resolve itself into committee of the whole?


Donald Methuen Fleming: Before you leave the chair, Mr. Speaker, is there not a matter to be referred to the house from the banking and


Walter Gilbert Dinsdale: On clause 1, Mr. Chairman.


An hon. Member:: It was carried.


John George Diefenbaker: Carried by whom?


An hon. Member:: It was not carried.


John George Diefenbaker: We had an agreement that there was to be latitude on the clause.
commerce committee? The committee adjourned about 20 minutes ago on an appeal from the chairman's ruling, and our understanding was that it would come before the house now.


Mr. Speaker:: I am not a member of the banking and commerce committee. If anything has happened there, it will have to reach the house through a report.


Walter Gilbert Dinsdale: Mr. Chairman, like my fellow Manitoban, the Minister of Citizenship and Immigration, I have been somewhat reluctant to inject myself into this debate. It seems that all Manitobans have that certain deference or reticence-


Some hon. Members:: Carried.


William Alfred Robinson: Order.


Walter Gilbert Dinsdale: If the hon. gentlemen
opposite want to make a speech, I wish they would wait until I get through.


Mr. Habel:: We are listening. Go ahead.


Mr. Boisvert:: If you have nothing to say, sit down.


Walter Gilbert Dinsdale: The Minister of Citizenship and Immigration describes his remarks as a maiden speech. But I would suggest that, if his was a maiden effort, he is a pretty tough old maid because I noticed some interesting Machiavellian twists in some of the observations he made-


John George Diefenbaker: "Newfoundlian" twists.


Walter Gilbert Dinsdale: -with regard to this
extremely important bill we have before us.
The reason I hesitated, Mr. Chairman, when there was so much noise coming from across the way, was that I feel that it is unfortunate that we are forced to discuss what I consider to be the most important subject in Canadian public affairs today under the kind of pressure that has been coming from the government benches just a few moments ago. It is unfortunate too- as I said in my opening statement-that we have to have that feeling of reluctance to make some small contribution to the consideration of this important topic. After all, we are here on the nation's business. We are not the only house that is still sitting or the only parliamentary body that is still sitting in various parts of the democratic world. I think the United States congress is still in session. Certainly, the parliament of the United Kingdom is still in session. If there is still that reluctance with regard to complete discussion of this important matter, the blame of course arises from the fact that we have delayed consideration of such an important subject to the dog days of the present session.
I am not going to make a maiden speech on this subject. I think the points that could be made concerning the technical details have been well made by the speakers who have already made their contribution at the various stages of the debate proceedings, particularly the Leader of the Opposition who, in my opinion, at the resolution stage of the bill made an excellent survey of the subject at hand. Also I thought the Minister of Finance in a succinct way helped to throw some light on the subject. I mention him particularly because I feel that he justifies a stand that we of the opposition have been making down through the years when the subject of dominion-provincial tax agreements has been before the house at earlier times in 1947 and 1952.
24, 1956	6381
Federal-Provincial Financial Arrangements


Walter Edward Harris: Why did you vote against it a few moments ago?


Walter Gilbert Dinsdale: I am coming to that in just a moment, Mr. Chairman. The opposition have always taken the stand on earlier occasions that there was a fundamental flaw in this method of handling an extremely complex and difficult subject. In reference to the earlier tax rental agreements, we have always maintained that they were of a temporary nature only and that they have in them a fundamental flaw in that they invade the rights of the provinces to an unnecessary extent. That flaw arises from the fact that there are no distinct and separate taxation rights that are reserved for the provinces. This has been the fundamental weakness of all our attempts to get around the vexing problem of the relative areas of jurisdiction for provincial and federal governments in this matter of fiscal relations.


John Whitney Pickersgill: May I ask the hon. gentleman a question?


Walter Gilbert Dinsdale: Certainly.


John Whitney Pickersgill: My question is this. Does Mr. Roblin take the same view?


Walter Gilbert Dinsdale: I would suggest that the
minister direct his question to Mr. Roblin and not to me. I have no authority to speak for Mr. Roblin.


John Whitney Pickersgill: I know very well that he does not.


George Carlyle Marler: I take it that the hon. member does not endorse what Mr. Roblin says.


Edmund Davie Fulton: Mr. Chairman, these men are all gazing into a crystal ball again. The Minister of Trade and Commerce has found it.


Mr. Howe (Port Arthur):: The funny boy from Kamloops is back.


Walter Gilbert Dinsdale: The contention of the Minister of Finance is found at page 5988 of Hansard where he says this:
While the tax rental agreements now in their tenth and final year have gone a long way toward meeting these objectives,-
The series of objectives which the minister outlined earlier in his speech.
-in some ways they do not meet all the criteria to which some provinces attach particular Importance. The proposals Incorporated In this bill are designed to reconcile as far as possible these various conflicting points of view.
I quote that particular section because there has been on the part of the government a tendency to fail to appreciate the argument that we of the opposition made respecting tax rental agreements. We have put up a strenuous fight for an equitable reallocation of taxing and service responsibilities between
6382	HOUSE OF
Federal-Provincial Financial Arrangements the various levels of government. It is a source of encouragement to note that that fight has had the effect at least of carrying the government thus far in changing its mind. By continuing the fight we hope that we might be able to bring the government to a full sense of appreciation of what the essential nature of this difficulty is. In his remarks the Minister of Finance has suggested that he is almost on the point of seeing the light. I quote, for example, the portion of his remarks where he emphasizes the principle- and I am dealing with principle now-of this legislation. The Minister of Finance used the phrase that men and times change. That is quite true, change is a continuous process in the affairs of men. But I should like to add to that phrase used by the minister that principles never change, in this case, principles as they are related to our federal structure of government in Canada. It is a fundamental principle that there must be autonomous areas in both levels of government if our federal system is to survive.
The Minister of Finance (Mr. Harris) seems to have an appreciation of this because in his statement at the resolution stage he said, as reported on page 5987 of Hansard for July 16, 1956:
The federal government is not the creature of the provinces, nor are the provinces creatures of it. Each has its own assigned responsibilities,-
It seems to me that there is the fundamental point of objection, at least it is a fundamental point of objection to the present measure so far as my own personal viewpoint is concerned.
I could quote from authorities other than the Minister of Finance in support of this essential principle. The late Mr. Mackenzie King was also a great exponent of the same principle, and in Hansard for 1930, volume II, page 1237, when this matter of giving assistance to the provincial governments was a burning issue because of the depressed economic conditions prevailing, Mr. King had this to say:
When on a previous occasion we were discussing this matter of grants from one treasury to another, I said I thought it was an unsound principle; in fact, I think I used the expression that it was a vicious principle-
I underscore that word "vicious".
-to have one body raise the taxes and another body spend the people's moneys thus raised.
So we have it from the responsible minister in the current Liberal government as well as the gentleman who was the leader of that government for so very long that they recognized the principle that is at stake in this particular issue.
Now, the reason I am taking the trouble to raise this point at the present time is that in


certain quarters of the Liberal party, particularly in Manitoba, there is a failure to appreciate the issue which is at stake. I recall when we were discussing the renewal of the tax rental agreements in 1952 and particularly during the election in 1953, the opposition's stand was misunderstood or misinterpreted deliberately in relation to this problem. I repeat that our stand on that occasion has been vindicated now by the Minister of Finance in the quotation I read where he says that they were merely temporary, that they were merely a passing solution to a very grievous and difficult problem and something better would have to be found. That is precisely the point we, as an opposition, made at that time.
A pamphlet that was circulated in Manitoba, and to which I took rather forceful exception, presented our stand on this matter in 1953 as an election issue. I think I could best bring it to the attention of the house by quoting from the interpretation that was given by the Manitoba Liberals to the Conservative stand at that time. I take the trouble to deal with this subject because I am quite sure that the same misinterpretation will be made of the present stand of the official opposition. The pamphlet, which is a rather rare pamphlet now because I think it must have found its way into the waste-paper basket as fast as it was delivered to those to whom it was directed, is an election pamphlet and it says something to this effect: The Liberal candidate supports the tax rental agreements but his Conservative opponent for Brandon-Souris supports Mr. Drew in his opposition to the dominion-provincial tax agreements and voted with Mr. Drew on his motion of censure reported in unrevised Hansard page 881, December 17, 1952.
Now, I turn to that Hansard and this is what I voted for, and I leave it to all hon. members whether it was a fair interpretation of the stand we took at that time. It was a Conservative amendment to the speech from the throne and there were several sections. Section (e) under question said the following as reported in volume I, page 33 of Hansard for 1952-53:
(e) to reach agreement with the provincial governments in regard to a clearly defined reallocation of taxing powers so that the provincial governments and municipal councils may have adequate financial resources to carry out their rapidly increasing responsibilities.
There, we have it. It is not an attempt to deprive the provinces, such as Manitoba, of their legitimate share of tax resources. It is an attempt to provide additional access to those funds and the government, in this present measure, has gone some farther step

along the road to recognizing that the members of the official opposition were correct in their analysis of the problem at the time. In his remarks at the resolution stage the Leader of the Opposition (Mr. Drew) has this to say, as reported on page 5593 of Hansard for July 16, 1956. He had criticized the general principle of the bill being brought before the house, and he carries on in the following words:
Now, in saying these things following the speech of the Minister of Finance, I wish to make it quite clear that the present formula has some merits in the acceptance of certain very important principles.
Principles are of the utmost importance in this whole business. Skipping a few lines, the Leader of the Opposition said as follows:
The acceptance by the federal government of the place of the provinces and the right of the provinces in the field of income tax, corporation tax, succession duties and other direct taxes is, in itself, a welcome evidence of a return to the position which was always accepted without question over the years between 1867 and 1941, when the wartime tax agreements were signed.
As a result of prodding by the opposition, we have at least made the point that there is this fundamental principle of federalism to be preserved.
Now, I can go farther than the authority of members of parliament and current members of the government in demonstrating this point. Dr. MacGregor Dawson, one of our outstanding constitutional authorities, has on various occasions stressed the importance of maintaining this principle of giving the provinces their rightful prerogatives in the federal scheme of thing?. For example, on page 135 of the revised edition of his book, "The Government of Canada", he says:
If the Canadian plan is to succeed provinces must be given certain minor tax fields over which they have complete control so that their structure will retain a degree of elasticity and they can enjoy some measure of fiscal independence.
That statement coming from a very eminent authority on Canadian constitutional matters is the point that I am trying to emphasize here. The opposition opposes this measure because, like the old agreements, it misses this fundamental point. The minister recognizes its necessity but does not quite implement it in the bill that we have before us.
I do not have to emphasize the importance of retaining the integrity of local government. That has been done over and over again in this debate. If we fail to give the provinces their rightful place it means that an increase in dependence upon the federal government causes a growing loss of power and prestige so far as the provincial government is concerned as a separate government entity and the same process carries over to the municipal governments as well. It is a fundamental 67509-405J
24, 1956	6383
Federal-Provincial Financial Arrangements condition of any healthy democracy that we must preserve the principle of division or distribution of powers. Without a doubt the tragedy that occurred in this house in early June would not have occurred had it not been for the fact that the prestige, the influence and the power of the lesser levels of government-and I use the phrase "lesser levels of government" in the geographic sense-had been undermined as a result of the increasing encroachments which arose primarily during the wartime conditions and which unfortunately have been perpetuated endlessly into the post-war period. Let me repeat, this is the principle the opposition is fighting for and it is a fundamental principle if we are to avoid what has unfortunately happened in this house, a situation that has been decried by the press from one end of the country to the other, and if we are to preserve a healthy state of democracy.
Let me come back to the sort of propaganda that caused me to rise on this occasion. I think it is absolutely unfair, and it is not in the best interest of national unity, to come out with the sort of propaganda which states that the reason we of the official opposition take this position is that we are favouring one section of the country against the other. As far as I am concerned, we are fighting for the fundamental principle of federal democracy. I could have read further from this pamphlet, but perhaps if I read the sort of publicity that tries to arouse regional passions over this important issue that appears from time to time in Manitoba it might make more effectively the point I am trying to make. Here is an advertisement which appeared in the Elkhorn Mercury around August 8, 1953:
Manitoba now receives $23 million yearly under the dominion tax agreement. Drew would scrap this to fatten the money bags of Ontario and Quebec. Dare we take a chance?
That is the sort of propaganda we are up against in Manitoba and I think that what has happened as a result of the stand we took at that time when we were criticized so severely by the government for our unreasonableness is more than justified by what has happened in the changes in the bill now before us. We are hoping that in taking just as adamant a position in dealing with the inadequacies of the present measure before the house, in so far as they fail to include this fundamental principle of federal democracy, we will have some beneficial effect in helping to restore a balanced democracy in Canada. I do not want to go into that any farther. I wanted to be a little more positive and constructive in so far as the areas in which the lower levels of government might

Procedure in Committees be relieved of certain service responsibilities, and thus be in a position to cope more adequately with the tax resources already allocated to them, are concerned. I refer in this regard especially to the tax on real estate at the municipal level of government. But just in passing, since time does not permit me to do more, I would mention that expensive modern road construction-the hon. member for Prince Albert dealt with this at some length-might quite easily under the British North America Act be carried on by the federal authorities if they so desired, and that is one of the expenses that fall heaviest upon the provinces and upon the municipalities. Under the peace, order and good government section of the British North America Act this responsibility could quite easily be delegated to the senior level of government.
There is one more point that Dawson makes that I should like to touch on before I conclude my remarks and it relates to the statement I have just made. Canada in 1956, because of the failure of the federal government to give leadership in highway construction, does not yet have an all-weather road from the east to western Canada. As a westerner, if I want to travel to Manitoba, I must pass through the United States of America, if I am going to have reasonable driving conditions, and this leads me to an item from book 1 of the Rowell-Sirois report.


William Alfred Robinson: Order. It is five o'clock.
Progress reported.


Mr. Speaker:: Private and public bills.



RAILWAY ACT


[Stage Direction]
On the order:
Second reading of Bill No. 4, an act to amend the Railway Act.-Mr. Deschatelets.
Mr. Speaker:: Stand.



BANKING AND COMMERCE


Mr. John Hunter (Parkdale):: Mr. Speaker, it is my duty to refer to you an appeal from my ruling as chairman of the banking and commerce committee. Mr. Knight has stated that in his view the banking and commerce committee should immediately report Bill No. 51 to the House of Commons, even though the Canadian Consumer Loan Association has only started making its representations, and he accordingly moved, seconded by Mr. Regier:
That the banking and commerce committee immediately report Bill 51 to the House of Commons.

I, as chairman of the banking and commerce committee, ruled that the motion was out of order since Bill 51 had not yet been carried by the committee section by section, nor had the title been carried nor the bill carried. Mr. Regier appealed my ruling.


Mr. Speaker:: This is a matter of rare occurrence. As you may have noticed, the Clerk and I have just had a consultation over the matter. As I understand the situation, standing committees, special committees and committees of the whole house, that is committees to study money resolutions, committees to study ways and means, committees to study supply or committees to study bills are all agencies of the house. According to the authorities the rules of the house are to be followed in committee as far as it is possible and in committee of the whole house an appeal under standing order 59 is allowed from any ruling made by the chairman upon report to the house.
If the rules to be followed by standing and special committees are to be the same as those followed in the committee of the whole we can assume that a member of a committee may appeal the ruling of the chairman, and the chairman of the committee, the same as the chairman of the committee of the whole, would report to the house to have the appeal satisfied by the house pronouncing upon it by way of a vote. That was always my understanding and I was just about ready to put the report to the house.
However, the Clerk has a different opinion on the matter and the argument he puts forward is rather cogent. He submits that the assumption that the rules to be followed by standing and select committees are similar to those followed in the committee of the whole house is based on the English rules and in the United Kingdom there is no such thing as an appeal, either in committee of the whole or in standing and special committees. They settle their own affairs without making a report to the house. If that is so, and if I were to present this report to the house, I am told that we would be initiating something which has never happened. The Clerk and the two deputy clerks have looked for a precedent but they cannot find a single case where an appeal from the ruling by a chairman of a committee has been reported to the house in the fashion which has just been followed today.
As I said a moment ago, I thought there was a possibility that this could be done but after having heard the argument which the Clerk made to me a moment ago it seems to me that the house would want to be most careful as to what precedent would be established if it were to insist upon having this

report placed before it. If committees are to communicate with the house, under the rules there is only one time when the house can accept a report from a committee and that is at the beginning of the sitting under the heading "Presenting Reports by Standing and Special Committees".
This report is no different from any other report by a committee. In the first place, according to standing order 15 this .would be the wrong time to receive a report. It is not a report in the sense that a committee would report a bill or recommendations about a matter which had been referred to it. The house may dispense with the rules on certain occasions. In this particular case the appeal was made by the hon. member for Burnaby-Coquitlam (Mr. Regier) who is now in the house. Would the hon. member not be satisfied to have the matter dealt with in the committee on banking and commerce so we could avoid establishing a precedent about which we might perhaps feel sorry later on?


Mr. Erhart Regier (Burnaby-Coquillam):: Mr. Speaker, I would be only too happy to comply with your suggestion. I simply wanted to impose closure on the lobbying of the finance companies. That was my sole purpose and I think we can settle the matter in committee.


Donald Methuen Fleming: Mr. Speaker, on a point of order; I should like to make this brief observation. Standing order 59 states:
The standing orders of the house shall be observed in the committees of the whole house so far as may be applicable, except the standing orders as to the seconding of motions-
Then clause 4 reads:
The chairman shall maintain order in the committees of the whole house, deciding all questions of order subject to an appeal to the house;
Citation 428 of Beauchesne's third edition reads:
From the chairman's decision no appeal should be made to the Speaker.
In case of an appeal to the house, it is the duty of the chairman to leave the chair immediately and report in writing the point of order which he has decided. The Speaker must then submit the matter to the determination of the house in the language reported to him and put the question, "That the decision of the chairman be confirmed." No discussion is allowed on the appeal. Should the Speaker be absent, the chairman takes the chair of the house and another member makes the report of appeal to the acting Speaker who will at once submit the question to the house for its decision.
Under the practice followed in connection with appeals from a ruling of the chairman of the whole house, once an appeal has been taken against a ruling the chairman simply rises and makes an immediate report to the
Procedure in Committees Speaker. That does not give rise to the difficulty which you have mentioned of perhaps creating an interruption in the business of the house which might be the case if a select committee were making such report. Nevertheless citation 428 is in broad enough terms to include an appeal from the decision of a chairman of any select committee.
Personally I do not recall any appeal to the house in a situation of this kind, but I do remember an occasion some years ago when an appeal was taken from a chairman's ruling and he ruled that there was no power in the select committee to entertain the appeal and that the appeal must be taken to the house and that he must make a report to the Speaker.
The Speaker does not rule on the appeal. He simply puts the question to the house, and in the light of citation 428 I should have thought that was clearly the proper practice.


Stanley Howard Knowles: Mr. Speaker, I wonder whether I might say a word in support of the arguments which you say have been made to you by the Clerk of the house. It seems to me that the Clerk is quite right in suggesting that this would be a new precedent if the house were to consider the appeal from the ruling of the chairman of the banking and commerce committee. The hon. member for Eglinton has drawn your attention to citation 428. I suggest, however, that citation 428 clearly relates to what happens when there is an appeal from the chairman of the committee of the whole house. I draw the attention of the hon. member for Eglinton to citation 534, which is under the chapter in Beauchesne's third edition having to do with standing committees, in which it says:
Committees are regarded as portions of the House and are governed for the most part in their proceedings by the same rules which prevail in the House.
In both instances "House" is spelled with a capital "H". I suggest that this is clear. The next sentence is:
Every question is determined in a committee in the same manner as in the House to which it belongs.
"House" is spelled with a capital "H" again. I suggest that that makes it clear that the proceedings of a standing committee are governed by the rules and the practices that prevail in the house, not in a committee of the whole house, and in the house we would deal with an appeal from the Speaker's ruling, if such were sought, by a vote of the members of the house. Similarly, I think we would be not only meeting the request of the member for Burnaby-Coquitlam but we would be doing the right thing if we referred

Procedure in Committees this matter back to the committee on banking and commerce and let the members of that committee make the decision as to whether or not they support the ruling of the chairman. In addition to citation 534 in Beau-chesne's third edition, may I refer to certain citations in Beauchesne's second edition? First of all, there is citation 602, which is substantially the same as citation 534 in his third edition. Then on the next page I note citation 607, which states:
Committees are governed in their proceedings by the same rules which prevail in the House and which continue in lull operation in every select committee. It is upon this principle, that the practice appears to be founded, of consulting the Speaker, in reference to points of order and the forms of proceedings, by select committees.
There^ is quite a difference between the provisions in standing order 59 for an appeal to the house from a committee of the whole house and what is spelled out in citation 607, namely, consultation with the Speaker. In the other case, on which Your Honour had occasion to rule some weeks ago, the Speaker does not come into the picture at all; he merely puts the vote. So far as these standing committees are concerned, is it not quite clear from citation 607 that if the hon. member for Parkdale is in doubt as to what he should do he can have a consultation with Your Honour, but that that does not need to be in the house? I submit that we would be doing the right thing if we met the request of the hon. member for Burnaby-Coquitlam and referred the matter back to the committee. I think the Clerk of the house has given Your Honour good advice in this respect.


Mr. Charles Cannon (Iles-de-la-Madeleine):: In regard to what the hon. member for Eglinton (Mr. Fleming) has said, the procedure on appeals from a decision of the chairman of the standing committee should be similar to the rule applying to an appeal from a decision of the chairman of the house when sitting as committee of the whole. I thought it might help Your Honour to come to a decision if I cited from Bourinot's third edition, which I happen to have here, pages 519 and 520:
If a question of order arise the chairman will decide it himself, unless it be deemed more advisable to refer the matter to the Speaker in the house itself. Rule 76 provides:
"Questions of order arising in committee of the whole house shall be decided by the chairman, subject to an appeal to the house; but disorder in a committee can only be censured by the house, on receiving a report thereof."
In case of an appeal to the house it is the duty of the chairman of the committee to report in writing the point of order which he has decided. The Speaker must then submit the matter to the determination of the house in the language reported


to him, and put the question-"That the decision of the chairman be confirmed." No discussion is allowed on the appeal.
I respectfully submit that, our two authorities on parliamentary procedure, Beauchesne and Bourinot, not forgetting the hon. member for Eglinton, being of the same opinion, there should be no discussion on that.


Edmund Davie Fulton: Mr. Speaker, it is interesting to find the hon. member for Iles-de-la-Madeleine (Mr. Cannon) taking the view that he does. Just as he rose I was about to rise and direct your attention to at least two precedents on which I have been able to put my hands in regard to appeals from chairmen's rulings. This is in regard to a special committee, it is true, not a standing committee, but I think the procedure is the same whereby appeals from chairmen's rulings were decided by a vote of the committee. The hon. member was a member of that committee and voted to sustain the chairman's ruling in each case. It was not referred to the house, and nobody suggested that it be referred to the house.
I must confess I am surprised that the point should have arisen, because I have served on numbers of committees, both standing and select committees, where the chairman's ruling has been appealed and the matter has been settled by a vote of the committee without any suggestion being made that the appeal should be referred to the house. I refer to these two examples. In the special committee on estimates last year, you will find in the reports of Wednesday, March 2, and Friday, March 11, appeals from the chairman's ruling on that committee. I think we had more than two such appeals, but those are the two I have been able to turn up quickly.
I recall that in another select committee, it is true, the committee on veterans affairs in 1945 and 1946, there were a few occasions when there were appeals from a chairman's ruling. I also recall that in the special committee on defence expenditures we had appeals from the chairman's rulings, and they were decided in the committee.
Those committees to which I have referred were under experienced chairmen: in two cases the hon. member for Rosthern (Mr. Tucker) and in another case the former member for Spadina, now a member of the Senate; and that is the practice that was followed almost automatically. It did not occur to any member of those committees for a moment that it would have to be referred to the house. I should think that is because of a provision in a citation to which my hon. friend from Winnipeg North Centre has

referred, that the proceedings in committee, meaning the standing and select committees, are governed by the proceedings in the house, spelled with a capital "h", meaning therefore the house in a technical sense, where an appeal from the Speaker's ruling would be decided by a vote. So in committee an appeal from the chairman's ruling, I suggest, should be decided by a vote of the members of that committee. Otherwise there will be, as somebody has pointed out, constant interruptions to the proceedings of the house.


Charles-Arthur Dumoulin Cannon: As the hon. member has referred to me, I might be allowed a word in reply. I have sat on several of the committees of this house where there was an appeal from the chairman's rulings to the committee itself, but I have always understood that the rule was the one I had mentioned in citing Bouri-not and in citing Beauchesne but that the appeal from the decision of the chairman to the committee itself was done by the unanimous consent of the committee every time to get the matter over with rather than come to the house and go through the whole procedure. It is by unanimous consent of the committee in question if an appeal is made from the chairman's ruling to the committee.


Edmund Davie Fulton: I suggest to the hon. gentleman that the citation he read from Bourinot applies exclusively to the committee of the whole house and that in this connection the proceedings in a standing or special committee of the house are different from the proceedings in committee of the whole; that in a standing or special committee the proceedings are governed by the same rules that apply in the house itself, so that an appeal from a ruling in a standing committee should be decided by the members of that body.


William Gilbert Weir: Mr. Speaker, my recollection goes back some years when there was quite a heated discussion in the same banking and commerce committee at the time that our friend, W. H. Moore, was chairman of the committee. There were several occasions when points of order were raised and he ruled on them and there was no appeal made to the house from the chairman's ruling on points of order at that time. I think I once had the same experience in the committee on agriculture and colonization. At that time the vote was taken in the committee to sustain the chairman's ruling.


Walter Edward Harris: 
Mr. Speaker:: I have heard several opinions and I should like to dispose of this matter but I should like to do it to my own satisfaction. If I go one way or the other I want to be satisfied. I do not know that the committee can function without having a ruling immediately. I would hope that it could function without having a ruling immediately because I should like to study the points raised by members on both sides of the question. Since the matter has been brought up I should like to study it very carefully. It may be that at times I have rushed into giving rulings. Citation 107 indicates that the Speaker may reserve his decision, and that is what I should like to do now. Can the committee function without having a ruling now?


John William Gordon Hunter: Mr. Speaker, you will notice that citation 428 says that it is the duty of the chairman to leave the chair immediately and report in writing the point of order which he has decided. That I have done, and actually I would assume that whether the

Procedure in Committees committee can sit while you are making your decision would depend on what your decision might be.


Mr. Speaker:: I might say that it is music to my ears to hear hon. members plead that when an appeal is made from the chairman's ruling the Speaker must put the report immediately to the house and, according to citation 428, have it disposed of. I could not agree more with the opinion of the hon. member for Eglinton and the hon. member for Winnipeg North Centre on that score. I am only sorry that I did not adhere to those opinions at all times. It is almost with tears in my eyes that I recall the experience that cost me so much.
If we are to assume that the rules are to the effedit that the rules in committee of the whole apply to the proceedings in standing committees and if in consequence of that the chairman, having received an appeal, acted upon the wording of citation 428 of Beau-chesne, third edition, he had no alternative but to leave the chair and do as he has done. It appears to me that in the first place this is not the proper time to present such a report because, according to standing order 15, it should be done at the beginning of our proceedings.
In the second place, the practice has been ascertained both by the Clerk and by experienced members of the house and, as particularly pointed out by the hon. member for Kamloops, who said he had found two examples where appeals had been settled within the committee itself. I would gather that the practice with respect to appeals in standing and special committees is to have them settled by the committee itself.
Third, I think the house should consider the point raised by the Clerk which is to the effect that our practice is based largely on what happens in the United Kingdom. There appeals are not settled by the house. As a matter of fact, they have no appeals in their committees. They take the decisions made by the chairman without appealing.
I also go along with the remarks made by the hon. member for Kamloops to the effect that if we were to initiate this procedure of having appeals heard by the house there would be no end to the disturbances which might thereby be created, and I do not think that we create committees to study special matters that we refer to them merely for the purpose of having the chairman come back here and interrupt our proceedings in order to take a division on every one of the appeals which may be taken from the rulings of a committee chairman.


As I have said, it is against my own preference to make a ruling now but I am informed, and I know that it is so, that the committee cannot continue to function unless and until I give a ruling. I would have much preferred to study the matter more carefully and give a ruling later. In making a ruling now, however, I will enter this caveat, that I will study the matter further and should I find that I am wrong I will come to the house and say so. I have to rule now that the appeal from the chairman's ruling should be settled in the committee on banking and commerce and not reported to this house.



CRIMINAL CODE


[Stage Direction]
The house resumed, from Tuesday, February 28, consideration of the motion of Mr. Diefenbaker for the second reading of Bill No. 66, to amend the Criminal Code (nuisance).
Hon. Stuart S. Garson (Minister of Justice):: Mr. Speaker, when the hon. member for Prince Albert (Mr. Diefenbaker) moved the second reading of this bill on February 28 last, I was not able to rise to reply to his case until just a few minutes before six o'clock. In those few minutes I pointed out that we in the government were deeply sympathetic with the objectives which my hon. friend had in mind, but that we gravely doubted the efficacy of the method he proposed to use to achieve them.
The whole question here, of course, is as to what is the best method of solving this problem of pollution. As I have stated on previous occasions on which we have considered this matter, I do not think a satisfactory solution to this problem can be found by proceedings in the criminal courts. That, of course, has been the view of the government all along and it is still our view.
The impression I gained from these remarks of the hon. member for Prince Albert is that the supposed need for his introducing this amendment to the Criminal Code arises from what, in my opinion, he mistakenly regards as a defect in the existing law.
I think he is also mistaken in that, if such a defect existed,-and I do not think it does exist-the amendment which he has moved would not remedy this alleged defect. That is my submission, and I will now attempt to show that it is well founded.
Now, it may be that I do not understand correctly the case of my hon. friend from Prince Albert. In order to make sure that we are ad idem-that we understand one

another-I should like to attempt to recapitulate his case in the hon. member's presence and to ask him to correct me if, at any stage, I state his position wrongly.
First, he made the plea, on the basis of a quotation by the mayor of Prince Albert of an opinion obtained from Mr. McCuaig of Edmonton, that there was "the legal difficulty of a city in one province obtaining an injunction against a city in another province and stated that as yet he has found no legal method by which this "can be accomplished", that is to say there was no legal method by which an injunction could be obtained in Alberta in respect to a common nuisance which had been created in Prince Albert in Saskatchewan. Then having pointed out that that civil remedy was not available, the hon. member for Prince Albert went on to say this, and I am now quoting from page 1633 of Hansard of February 28, 1956:
Having first pointed out that the person has no civil rights on an interprovincial river whose water supply has been polluted. I am now endeavouring, following that, to show that the only means is to put teeth in the criminal law so that wrongdoers who would take advantage of the situation and thereby destroy this bounty of nature shall be severely punished.
Then my hon. friend goes on to say what his conception of the law is at the present time, a conception with which I shall in due course take issue. He states it in these terms on page 1634 of Hansard:
As the law stands today there is no right under section 165, the present nuisance section, or any other section of the Criminal Code, to prosecute wrongdoers on interprovincial rivers. All that section will do is to cover the individual who dumps a bit of stuff into a river within the province in which the prosecution takes place. But nowhere and under no authority can anything be done by people living in provinces adjoining the province in which the pollution has taken place.
At that point I intervened with this question:
Under the amendment to the code which he proposes,-
That is the hon. member for Prince Albert (Mr. Diefenbaker).
-if someone in Edmonton were guilty of an offence under it. which offence caused difficulty in Prince Albert, would he not agree that the prosecution of that offence would have to be conducted by the Alberta law enforcement authorities?
To that question my hon. friend from Prince Albert replied in part as follows:
I do not have before me the section of the Criminal Code that covers exactly that type of thing where an offence happens affecting two jurisdictions.
Later, Mr. Speaker, I will cite that section to which the hon. gentleman was presumably referring and will endeavour to show that it completely covers the problem that he had in mind. He continued as follows:
Criminal Code
One of the earlier general sections of the Criminal Code provides for eventualities similar to that; but whether or not my hon. friend is correct, suppose the pollution took place in the province of Alberta: all that would need to be done would be for a charge to be laid in the province of Alberta and the witnesses transported to the place of trial within Alberta.
In other words, in those remarks my hon. friend from Prince Albert indicated that he had the impression, in perhaps a somewhat inchoate form but nevertheless a correct impression, of what the law is at the present time. Then I asked this question:
May I ask my hon. friend another question? If that be so, then would not the same condition of affairs and the same reason apply to a charge for committing a common nuisance which had been committed in Alberta, which caused a bad effect in Prince Albert and which could be prosecuted in Alberta by taking Saskatchewan witnesses to Alberta for that purpose?
My hon. friend's reply to that question was this:
With that general proposition I am not in agreement. In making pollution on interprovincial rivers a criminal offence I think the prosecution could be taken in either place where the pollution actually took place or in the province in which the effects of that pollution were felt.
Then after quoting from the definition of what is a common nuisance under law as it is now, the hon. member for Prince Albert goes on to say this:
If the section as it now stands covered such cases as this, then a person in Prince Albert or any other place in Saskatchewan affected by the pollution would be able to take a prosecution against the Alberta company. But as the law now stands there is no provision whatsoever.
That is the point upon which I take issue with my hon. friend. The hon. gentleman from Prince Albert continued:
That is not my opinion, although I entirely concur in it: that is the opinion of counsel. Under the law as it now stands, there is nothing that can be done by a resident in one province to meet the nuisance of pollution in an adjoining province.
Then I again intervened with a question as follows:
Would he-
That is the hon. gentleman from Prince Albert:
Would he point out in his amendment the provision therein which makes it possible for a person in Saskatchewan to prosecute an offender in Alberta? What language in his amendment provides for that possibility?
That is to say, if the supposed defect in the existing law is that a man who suffers a nuisance in Prince Albert cannot prosecute in Alberta, I was asking my hon. friend what it was in his amendment-that is the one that is now under discussion-that would remedy that defect. My hon. friend's reply thereto was as follows:
Just wait a minute. I have already said that under the section as it now stands proceedings

Criminal Code
could be taken in Prince Albert if the present nuisance section covered the situation. I say that it does not cover that situation because pollution of an interprovincial stream does not come within the law as it is now constituted. It is because of that fact that I want this amendment added so as to cover interprovincial streams. Then immediately there will be available the right of action and there will also be teeth in the law.
So, Mr. Speaker, upon that point, the question of whether or not my hon. friend has a case depends upon whether he is right in his statement that there is no provision in the law to enable a person suffering from a nuisance committed in one province to prosecute in another. I would refer him in that connection to section 419 of the Criminal Code. I think this is the one that he had in mind when he said that there was a provision in the code covering cases "where an offence happens affecting two jurisdictions". Section 419 reads as follows:
419. For the purpose of this act,
(a)	where an offence is committed in or upon any water or upon a bridge, between two or more territorial divisions, the offence shall be deemed to have been committed in any of the territorial divisions;
(b)	where an offence is committed on the boundary of two or more territorial divisions or within 500 yards of any such boundary, or the offence was commenced within one territorial division and completed within another, the offence shall be deemed to have been committed in any of the territorial divisions.
Now, Mr. Speaker, I apprehend that where, in the province of Alberta, a company or companies or municipality, under the existing criminal law, discharge a polluting effluent into the Saskatchewan river which going down that river constitutes when it reaches Prince Albert, a common nuisance within the meaning of the relevant section of the code, that is a case which clearly falls within section 419(b). There is, therefore, no necessity for my hon. friend to move his present amendment for the purpose of clearing up that difficulty. It is already cleared up in this section 419 of the code. But if it had not been cleared up already in the code, then my hon. friend's amendment would not have had that effect in any case; because if this difficulty had existed the mere reference in my hon. friend's amendment to an interprovincial river would not have the effect of meeting this alleged difficulty.
Then, my hon. friend from Prince Albert goes on; and this is his next objection, as set out at page 1635 of Hansard for February 28, 1956:
As the matter stands today the maximum penalty-even if the present section applied-on indictment is two years or the matter could be proceeded with by way of summary conviction in which case the maximum penalty would be $500. But $500 penalties, even if they were applicable,
[Mr. Garson.1
would be simply nothing to corporations which wantonly and wilfully pollute these waters.
I go back to this principle and I am trying to make it clear to my hon. friend. As the law is now, or as the section reads now, there is no right of action for the pollution of international rivers. The amendment will make it an offence.
Now, with regard to this matter of penalties, I would refer my hon. friend to section 623 of the code which reads as follows:
Notwithstanding subsection (2) of section 621-
A reference which has no bearing upon the use of this section in the present context.
-a corporation that is convicted of an offence is liable, in lieu of any imprisonment that is prescribed as punishment for that offence,
(a) to be fined in an amount that is in the discretion of the court, where the offence is an indictable offence,-
So that the whole of my hon. friend's argument that the penalties under the relevant section of the Criminal Code are inadequate for the type of offence that was envisaged here is quite unfounded. If an accused were a corporation and were found guilty of this offence, which is an indictable offence, then there is no limit at all to the amount of the penalty which the court could impose.
Now, Mr. Speaker, my hon. friend's position it seems to me is that he wants an amendment to the law because he is under the impression, which with respect I think is an incorrect impression, that the present law is not effective or not applicable. He says he has an opinion to that effect, but he did not table it or quote it except in very general terms. In my judgment that opinion is wrong. It may be that I am wrong in this matter; and if that were so then until these points are decided by the courts we would not know which of the two views was correct, although in the face of these clear provisions I have just quoted it does seem to me that the matter is not susceptible of very much doubt.
But I would state this, that both in provincial legislatures and in this house where a given law seems to require some reform the practice is the one which we followed in the revision of the Criminal Code, to have the need for reform studied, to draft legislation, to enact legislation with such amendments as may be made by committees of the house or by the house itself, and then when the law has been passed not to amend it further until it has been interpreted by the courts in a way that for example in the present case would afford my hon. friend some legitimate foundation for his suggestion that the law should be further changed.
Until the sections of the code which I have quoted today, which seem to me to be crystal clear, have been held by the courts not to mean what they say, I do not think my hon.

Criminal Code
friend should come to this house with the suggestion that it be changed upon the basis of the sort of argument he has made in support of the change or of the information he has collected in support of this argument.
As I have said on previous occasions, we on this side of the house do not think a solution of this problem of the contamination of the waters of the country can be reached by any kind of criminal court method. I am not suggesting we should repeal any of the existing provisions which have stood the test of time, but I think if we are thoughtful we all realize that pollution is going to be cured by doing away with it by concerted efforts upon the part of the responsible governments concerned.
In order to inform the house as to steps that have been taken during this past year since the last time I made a report in this regard in relation to the North Saskatchewan river-


John George Diefenbaker: Before the minister goes on to deal with these generalities I should like to ask him one question. Could he tell me of one case of a successful prosecution under the section in question where an offence was committed on an interprovincial river? I simply ask him that one question because if what he says is correct, and it is so easy to take these prosecutions, you would think that with the vast amount of pollution that is going on in this country and the ruination of the rivers, that section would have been used.


Stuart Sinclair Garson: My hon. friend is a very clever counsel and the question which he has just asked me reminds me of another series of three questions.


John George Diefenbaker: I have asked a very
simple question.


Stuart Sinclair Garson: I should like to illustrate this, and then I shall be glad to answer the question after that. An eminent counsel in the United States was examining a medical expert of national standing before a jury. He said to the medical expert, "Do you know Mr. Jones?" "Yes." "Were you his medical attendant?" "Yes." "Where is he now?" "Oh, he is dead." He said, "Do you know Mr. Smith?" "Yes". "How long did you attend Mr. Smith?" "Oh, for 12 years." "Where is he now?" "He is dead." "Did you know Mr. Brown?" He went through the same process with regard to Mr. Brown and others with unfortunate consequences upon the minds of the jury. Now, my hon. friend asks me the question as to whether I know of any case in which this particular section of the Criminal Code was invoked for the purpose
of prosecuting a nuisance in an interprovincial river in one city which began in another. I do not know of any such case.


John George Diefenbaker: No, certainly not, because it has not arisen.


Stuart Sinclair Garson: No.


John George Diefenbaker: It cannot be done.


Stuart Sinclair Garson: This is an intelligent gathering.


John George Diefenbaker: You would not think it was from this sort of discussion.


Stuart Sinclair Garson: I am suggesting that in this intelligent gathering hon. members will probably think that there has never been any occasion previously for anyone even to commence a case in respect of a nuisance within section 169 of the Criminal Code which arose on an interprovincial river in one province and was completed in another.


John George Diefenbaker: What about the Ottawa river? There was a prosecution in Quebec, but what happened? The court said no.


Stuart Sinclair Garson: A prosecution in Quebec?


John George Diefenbaker: Yes.


Stuart Sinclair Garson: A prosecution in Quebec with respect to the Ottawa river but, if I mistake not, the Ottawa river is the boundary between Quebec and Ontario over a considerable part of its length, so that if someone in Quebec were polluting the river, we will say, at Campbell's Bay and some person else in Quebec was complaining about that he would not have to leave the province of Quebec in order to prosecute for this pollution. In any event, the mere fact that no occasion of this sort has arisen does not establish my hon. friend's point that the existing legislation would not be effective if it did arise; nor does it support my hon. friend's case that the present law should be changed simply because no person has as yet invoked it, or had any occasion to invoke it. But as I see it, Mr. Speaker, the important thing in this matter-


John George Diefenbaker: Pretty evasive.


Stuart Sinclair Garson: -of preventing pollution is to prevent it and I have had this report from the Department of National Health and Welfare of progress in preventing pollution on the North Saskatchewan river during the past year.
During routine sampling carried out by the provincial department of health of Alberta in the early months of 1956, odours which were described as stale or septic were noted. This condition was quite distinct from that which gave rise to complaints during the winter of 1953-54. This condition was attributed to lack of oxygen resulting

Criminal Code
from the pollution originating in and near Edmonton and aggravated by the fact that the stream was ice-covered.
In an attempt to correct the situation, the Alberta health authorities instituted mechanical aeration of the stream, some 60 to 80 miles below Edmonton. Owing to difficulties of a mechanical nature and the lateness of the season, this experiment could only be continued for about three weeks. Consequently, only a slight increase in the oxygen content of the river was obtained. The equipment used in this experiment was supplied by the city of Edmonton and had been out of service for several years. When the electric motors were put into service, they burned out and some time was lost in replacing them. Comparatively mild weather during the experiment resulted in the ice remaining open at the points where it had been broken to instal the aeration tubes. Consequently, much of the air escaped through these openings.
Carbon filter studies carried out at the same time and with the assistance of the United States public health service and the Ontario department of health were designed to identify the pollutants responsible for odours. Examination of the extracts obtained from the carbon filters are now being conducted in the laboratories of the Alberta research council.
It should be noted that by means of observations and analyses conditions in the North Saskatchewan river are being checked constantly by the Alberta health department. It it our understanding that the oxygen content of the North Saskatchewan river has returned to normal as a result of the spring breakup with no complaints of odour.
The available information indicates that water treatment plants taking water from the North Saskatchewan river were able to produce water of satisfactory quality during the past several months.
Industries in the Edmonton area are continuing to maintain effective control of their wastes. For example, it is known that certain procedures, such as the following, have been instituted: burning of high-odour wastes, using combustible wastes as fuel and the retention of potentially offensive wastes which are checked prior to release to the river, or discharged to holding ponds if they are found to be objectionable. Storage ponds are used extensively to retain and dissipate wastes which might contribute unsatisfactory conditions in the river. Thus it can be noted that the industries of the Edmonton area have been active in providing treatment facilities for the control of taste and odour-producing wastes capable of producing objectionable conditions in the North Saskatchewan river. Results have been gratifying.
The city of Edmonton has been actively engaged in providing treatment plants for its municipal wastes in order to comply with the requirements of the provincial health department. A sewage treatment plant to provide primary treatment for part of the city's sewage was put into operation in 1955. Secondary treatment facilities are presently being provided at this plant. A second sewage treatment plant is now under construction and this will provide primary treatment for the balance of the city's wastes. These facilities should be in operation in the autumn of 1956. It is understood that this program will be continued so that secondary treatment of all the city's wastes will be achieved within the near future. This will obviously improve conditions in the river to a marked degree.
I think, Mr. Speaker, that my hon. friend himself will agree there is more in that one statement in the way of progress in the control of the pollution of the North Saskatchewan river than my hon. friend can achieve in

a dozen criminal prosecutions, whether under the existing law or under the amendment which he has moved and which I think is totally unnecessary.


John George Diefenbaker: You seem awfully afraid of the amendment.


Mr. Deputy Speaker:: Does the house agree that we should go into committee before we rise?



TAXATION


[Stage Direction]
The house resumed consideration in committee of Bill No. 442, to authorize the Minister of Finance to make payments to the governments of the provinces and to authorize the government of Canada to enter into fiscal agreements with the governments of the provinces-Mr. Harris-Mr. Robinson (Simcoe East) in the chair.
William Alfred Robinson: Since it is six o'clock, I do now leave the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Walter Gilbert Dinsdale: Mr. Chairman, I think I can conclude very quickly the remarks I was making. When the committee rose at five o'clock I was making a point which relates itself to a statement in the report of the Rowell-Sirois commission, page 43, and I quote:
National security, national development and the fostering of trade and commerce by appropriate regulation were regarded by the fathers-
By that they mean the founding fathers. -as the great functions of government. They were also the functions which they thought likely to expand in the future. When these had been transferred to the federal government, the provinces were left with functions, the burden of which was not expected to grow.
I think that gets us to the main part of our problem. The federal government assumed the major responsibilities of national security, national development and the fostering of trade and commerce. As the committee rose at five o'clock I was stating that notwithstanding the rapid development in this country in the past two decades, particularly since world war II, we have not yet built an allCanadian highway from east to west. That is symptomatic of general neglect of the functions of national development allotted to the federal government.

One reason for the necessity of tax rental agreements, equalization payments and so forth arises from the neglect of the development of national economy in various parts of the country. I decided to raise this point because in the house today we heard some statesmanlike utterances concerning depressions and such like and the responsibilities pertaining thereto. Such speeches are often made in this house and there is not always a strict regard for historical accuracy.
If there is any cause for complaint concerning the progress of the development of the nation it certainly does not fall upon the shoulders of Her Majesty's loyal opposition, because since 1896 we have had the privilege of holding office only for some sixteen years. The Liberal party has carried the burden of responsibility for most of that entire period. Therefore if there is any criticism as to the state of the development of our economy it rests squarely upon the shoulders of that party.
Accusations are made concerning depressions and 20 cents per day. That was a measure adopted to meet an emergency problem in connection with young men who were unemployed during that period. I left college in 1937 two years after a Liberal administration had been returned to power and we were still in the depths of very serious depression. In fact the depression combined with the drought in 1937 brought us almost to the lowest level of that dark and bleak period.


John Horne Blackmore: There was no 20 cents a day either.


Walter Gilbert Dinsdale: That is just the point I was going to make.


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


Walter Gilbert Dinsdale: May I have time for one sentence to make my point?


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


An hon. Member:: One sentence.


Some hon. Members:: Agreed.


Walter Gilbert Dinsdale: With the kind permission of the chairman and the committee I will continue with the point that I was trying to make, that in 1937 when there were no other job opportunities and because of the continuing bleak conditions in this country, notwithstanding the fact that a Liberal administration had been returned, I went into social work in an effort to do something toward solving the problem and my work was mainly among the unemployed employables and the charge they made at that time
24, 1956	6393
Federal-Provincial Financial Arrangements was that in the period 1930-35 they had 20 cents per day from the government but after 1935 they had only highways to pound.


John Borden Hamilton: Mr. Chairman, I cannot guarantee to give my whole speech in one sentence even if it be as long as the one the hon. member for Brandon-Souris has just used.


An hon. Member:: Try it.


John Borden Hamilton: It would be a pretty tough job.


Walter Edward Harris: It might be more effective.


John Borden Hamilton: I do not know. I used the illustration a little while back that there seems to be only one effective weapon to use here and that is to repeat over and over the problems that face any particular part of our population. That seems to be the only way we can get these problems across to the treasury benches.
I should have spoken this afternoon and I hope I will be given a little leeway. I went along with the Minister of Finance in connection with the suggestion he made. I should like to start by using this sentence: The parties shall bargain in good faith. That is a simple sentence and is one which appears in almost every collective bargaining agreement I have ever seen. It appears in almost every piece of collective bargaining legislation we have on the statute books of this country. Yet it seems to me that we are going through the motions of dealing with the most important domestic contract that has faced this country since confederation and I see no signs from the government benches of the good faith which I submit should be present in any negotiations of this type. There seems to be more grasping than good faith; there seems to be more manoeuvring than good faith; there seems to be more politics than good faith.
As long as we continue this type of bargaining there will be no progress along the line of a true rapprochement among the various taxing powers of this country, and I may say that that is badly needed. I am not going to spend a lot of time quoting figures, although I may quote a few.


John Whitney Pickersgill: May I ask the hon. gentleman a question. The hon. gentleman is a lawyer and I am only a simple layman.


An hon. Member:: Simple is right.


John Whitney Pickersgill: The hon. member has been talking about contracts. I have always understood that in any contract there was a consideration given on each side. I wish the hon. member would explain what consideration the provinces are giving in return for these payments.
6394	HOUSE OF
Federal-Provincial Financial Arrangements


John Borden Hamilton: I think that is a very easy answer to give. The provinces are giving up to the dominion fields of taxation to which they had equal right and which they gave up during a time of crisis and now the dominion government is trying to hold them ad infinitum.


John Whitney Pickersgill: That is completely incorrect.


John Borden Hamilton: The minister had an opportunity to speak on second reading and I am sure he will have plenty of opportunities to speak at this stage and express his views again and again. He has a double advantage over the rest of us in that he has moved from one place to an adopted part of the country and he knows the problems of each. Most of us have not been that fortunate in our method of getting here. I may say that if we want evidence as to there being a serious problem I would read from Canadian Tax Paper No. 10 by J. Harvey Perry, in which he said this:
Important as are these regional disabilities a far more universal problem arises from the seamstretching strains on all provincial and municipal governments caused by a snowballing population and a booming economy. Provincial and municipal politicians, trapped between mounting requirements for essential facilities and services on one side and the impenetrable wall of federal taxation on the other, have been howling in frustrated wrath. And well they might, too, for theirs is a serious predicament.
There is a statement from one of the most prominent economists in the country, which indicates the position in which the provinces and the municipalities find themselves at the moment. If we need any proof about the politics that enter into this discussion, I might read from the same report. Further down in the report this is stated:
No doubt in a sense it also marks a resurgence of political criteria over the predominantly economic evaluations of recent years. This is evidenced by the application of political tests to the tax agreements, which were designed by economists for economic ends, by the apparent assumption of the initiative in federal-provincial negotiations by the Prime Minister in place of the Minister of Finance, by the strong role played by the privy council officials in the negotiations with provincial officials, and in many other subtle ways.
That is an indication that here is a situation where politics instead of cold basic economics is playing by far the most important role. I might say to the Minister of Citizenship and Immigration that I was amazed today to hear, after all the talking that we have done, that the only situation that confronts us now is an equalization of welfare in the provinces.


John Whitney Pickersgill: The yield from taxes.


John Borden Hamilton: Surely there is the additional major problem of the balancing as between the provinces and the dominion, as well as that equalization required as between province and province. If we continue along the lines suggested by the Minister of Citizenship and Immigration, we shall end up by rationing poverty instead of equalizing prosperity.
There are many ways of proving to you the situation that faces the municipalities and the provinces, but I cannot pass this opportunity without referring to the brief prepared by the Canadian Federation of Mayors and Municipalities, covering the period 1930 to 1951, which at pages 31 and 32 says the following:
Between 1939 and 1951, federal government revenues per capita rose from $45.33 to $270.68. In the same interval, provincial government revenues per capita in Canada rose from $21.10 to $65.68, while municipal government revenues rose by a lesser amount from $28.07 to $45.49.
This is an indication that this government during this period has increased its take of the taxpayers' dollar by nine times. The provinces have been able to do it by multiplying it three times. As far as the municipalities are concerned, they have been very fortunate to get a 50 per cent increase. Further on it says:
Municipal governments, relying upon less flexible revenue sources than the federal and provincial governments, have become increasingly dependent on grants and subsidies of other governments; otherwise they will be unable to finance the local services and responsibilities traditionally falling within their jurisdiction.
Surely something must be done for these people. There have been many suggestions, but it is still not too late to ask that this tax group be brought together once more. There is still time. These agreements do not run out until the spring of next year. Let us see whether we cannot approach this problem in good faith. I do not think that anyone can honestly say that there has been an attempt to negotiate a fair and proper deal. As a matter of fact, we have listened to and heard about labour negotiations that may last six or seven months, called to work out a solution satisfactory to both parties. What has this group done? How much time have they spent on this problem?


Walter Edward Harris: More time than any other previously.


John Borden Hamilton: I do not know what the Minister of Finance may think about it, but they got together for a couple of days, they fixed some type of agenda and they had a few of the subcommittees get together for a few days. Then they came back for four days, to do what? To consider

a set formula of this government. There was no negotiation, on this phase and as a matter of fact I might say that about six days spent, all told, is proof that good faith did not enter into this deal.


Walter Edward Harris: Who does the hon. member suggest did not have good faith?


John Borden Hamilton: I would suggest that this government was not in good faith when it presented after only two or three days-


George Carlyle Marler: How do you get six days down to two or three?


John Borden Hamilton: If the Minister of Transport will take his time, I shall get it down to two or three. After two or three days of what might be called negotiation, a firm proposal was put forth to these people on a "take it or leave it" basis. To me, as I say, that does not indicate good faith. So I say, as a first point, let us reconvene this group before it is too late. There is still time to do something about it.
As we have gone through this session, we have heard from all sides various suggestions as to what might be done to assist the municipal taxpayer. First of all, I have heard it said that there should not be the levying of a sales tax on municipal purchases. There is an opportunity there to assist the hard-pressed municipal taxpayer in that connection.
I might say that the Minister of Finance has been urged strongly several times that we have now reached the stage where the federal government should not expect to have its buildings free from municipal taxation. That is another way in which equality could be given to the real property taxpayer.
As a third method-I think this was referred to by the previous speaker-I recall that some $15 million or so has been spent annually on the trans-Canada highway. At the same time sales and excise taxes collected on automobiles, rubber tires and accessories bring this government well over $200 million per annum, and it is returning approximately $15 million. If it had the welfare of the people at heart, the least that could have been done was the complete payment for that road and the maintenance thereof. As a matter of fact, I might say that one of the reasons why I voted against that bill was that quite obviously in principle it was a responsibility that this government should have taken completely.
For a fourth point-there has been no indication of a basic, progressive plan of spreading out our industrial base. If there were some indication from the government that it
24. 1956	6395
Federal-Provincial Financial Arrangements was interested in such a plan, then we should not have the same complaints emanating from various parts of Canada, there would not be the same reason for the maritimes to say they were the poor cousins. It is time the government gave some leadership in that connection as well.
Finally, if the indications now are that the government is not going to reconvene this tax parley then as far as the municipal taxpayer is concerned it is time that he was allowed some deduction from his income tax for the payment that he is making towards education costs. If that were done it would provide a broader base for the municipal authorities to collect their revenues. If you do not do this, if the government does not attempt these things or see that they are done they will end up by having created to the detriment of the Canadian taxpayers simply 10 moneychangers' pockets of varying physical sizes, of varying degrees of prosperity, of varying degrees of narrow provincial nationalism. You will make a shambles of confederation. The responsibility for this will rest firmly on the treasury benches. It will rest more so on the Minister of Finance and in the end it will really rest on the shoulders of the Prime Minister. Let me repeat, with one change, my opening sentence: The parties must bargain in good faith.


Mr. Patterson:: Mr. Chairman, it is not my purpose to take very much time on the first clause but there is one matter especially to which I should like to draw the attention of the government and the house. First ot all I should like to refer to one statement made yesterday in the debate by the Minister of Fisheries. I think he has been dealt with fairly adequately by some of the other members of this group but he said one thing which has not been referred to by either of the members of this group who have taken part in the debate and I should like to refer to it. As found at the bottom of page 6313 of Hansard of yesterday, the Minister of Fisheries said:
A very curious attitude is held by the premier of British Columbia and his Social Credit colleagues in the house. When facing British Columbia they declare that British Columbia has never been more prosperous.
As found in the second paragraph on the following page he went on to say:
But when they face Ottawa they have a very different story to tell. They tell us that British Columbia is poverty-stricken and must have more money. They tell us Ottawa must help not only with tax dollars but that we must move into purely provincial fields such as education, highways, toll bridges, flood relief on a minor scale, and even assist their provincial railways. They tell us Ottawa has to help poor poverty-stricken British Columbia.
6396	HOUSE OF
Federal-Provincial Financial Arrangements
I would not refer to this, Mr. Chairman, except that there may be some people who, without thinking the thing through, would believe the Minister of Fisheries.


An hon. Member:: That would be a catastrophe.


Alexander Bell Patterson: I think it would be a tragedy if anybody did believe what he said in this connection as well, of course, as some of the other matters to which he referred. However, I should like to say that neither the premier of British Columbia nor the members of the Social Credit group from British Columbia have ever stated that British Columbia is poverty-stricken. I should like to refer to the speech of the hon. member for Macleod in which he called attention to an issue of the Financial Post, the entire third section of which was devoted exclusively to the marvellous and outstanding developments in the province of British Columbia. When I had the opportunity to participate I referred to the same issue of the paper and quoted the writer of the front page article in that particular section of the paper. He said that the government, with a new boldness of concept, was directing record outlays.
I think that the Minister of Fisheries is going beyond the realm of fact and truth when he states boldly that we tell a hard luck story and present British Columbia as a poverty-stricken province. It is far from that, but no thanks possibly to the Minister of Fisheries. What British Columbia wants is justice and fairness. When the Minister of Fisheries refers to the fact that we want the federal government to move into purely provincial fields such as education, highways, toll bridges, flood relief, assisting the provincial railway and so on, may I just say that many of these things refer to the development of the province of British Columbia and it is through the development of the province that the federal government can draw from it the vast amount of revenue they are taking from it at the present time. We only say that if they are going to reach in with both hands and take as much money as they can out of the province because of the development they certainly should be ready to invest a little bit in that development. That is all I am going to say in this connection. I am sorry the Minister of Fisheries was not able to be in his seat tonight, but I wanted to put that on record.
I think the views of this group have been set forth very clearly and conclusively in the debates at the resolution stage and on second reading and it is not necessary for me to restate our position tonight. I only say again that we believe that the provinces should


be taken into the confidence of the government, that the government should have been willing to sit down with the provinces and work out a proposal, agreement and formula that would be satisfactory at least to some of the provinces instead of just going ahead, setting it out and saying, "All right, here it is, do what you like with it."
I believe that the provinces are vitally interested in this proposition and they should have a better opportunity of presenting their views, entering into the discussions and formulating a plan because if we want to secure co-operation in the working out of a plan I believe it is absolutely essential that there be co-operation in the drafting of the plan and the proposals.
I should like to refer now to some communications. I have here a telegram dated July 10,	1956, addressed to the queen's
printer, Ottawa, Ontario, from J. V. Fisher, deputy minister of finance of the province of British Columbia. The telegram is as follows:
Ref Hansard June 25, 1956 page 5327 as soon as bill is presented to provide agreements with provinces please send three copies and bill undersigned.
If we refer to page 5327 of Hansard we find that it has to do with the resolution preceding the introduction of the bill. Here we have the deputy minister of finance requesting three copies of the bill. I also have here a mimeographed form letter which the deputy minister received from C. A. St.-Arnaud, superintendent of publications, the last paragraph of which reads:
The large number of orders and letters of inquiry received each day by this office makes it impossible for us to write you a personal letter. We hope this reply is satisfactory and that you understand that we value your inquiry nonetheless highly despite the necessity of our answering in this form.
I now go back to the top of the page and read as follows:
Mr. J. V. Fisher,
Deputy Minister of Finance,
Government of B.C.,
Victoria, B.C.
This will acknowledge your recent communication requesting Canadian government publications. We regret that we are unable to supply the following for the reason checked below:
Instead of being checked it is written in, and this is what I should like to call to your attention especially:
Re your telegram of July 10, 1956, returned herewith. We regret to say it is not expected that the bill you refer to will be presented during the present session.


Mr. Dufresne:: They are pretty well informed!


Walter Edward Harris: All I can say at this point is that if the inquiry had been directed to me,

as I would have supposed it would have been, that answer would not have been made.


Alexander Bell Patterson: We will just go a little further into the matter. Here we have it stated that they are not expecting the bill to be presented during the present session; and as far as we know the government of British Columbia has never yet received the copies of the bill.


Stanley Howard Knowles: Can you not send them one?


Alexander Bell Patterson: Yes. We could send it.


John Horne Blackmore: Why should he?


Alexander Bell Patterson: The question is this, Mr. Chairman. Is the printer in league with the government on this thing?


Walter Edward Harris: Don't be silly.


Alexander Bell Patterson: I am not silly.


John Whitney Pickersgill: There is some doubt about it, anyway.


Alexander Bell Patterson: That is one man's opinion. Another man's opinion is as good as yours.


Walter Edward Harris: With my hon. friend's consent, may I say this. This legislation has been mentioned, I think, five times during the course of this session and on every occasion it has been stated that we intended to proceed with it during the present session.


Alexander Bell Patterson: Then why was this communication sent to the deputy minister of finance of the province of British Columbia saying that it was not expected that this bill would be introduced during this present session?


John Whitney Pickersgill: People make mistakes.


Alexander Bell Patterson: That is a question that perhaps can do with more explanation than has been given by the Minister of Finance. I just say again: What goes on anyway? They are wanting the co-operation of the governments of the provinces. They want them to co-operate in the drafting and the execution of the plans and so on. Yet when they ask for these bills they are not forthcoming.


Charles Edward Johnston: Why does not the government send them out voluntarily?


Alexander Bell Patterson: That is another question. The hon. member for Bow River asks why the government does not send them out to the provinces.


Charles Edward Johnston: They don't have to be requested to do it.


Alexander Bell Patterson: All these things enter into it. Once again we say this. In view of this incident and some of the other things that have happened, and the attitude of the government down through the past, we think it
24, 1956	6397
Federal-Provincial Financial Arrangements would be a good idea even yet to get the provinces together and to make another try at getting an understanding on something that is mutually agreeable, and working out a solution and a formula that at least some of them would be satisfied with. We therefore just place these things on record, Mr. Chairman, as another reason why the suggestion that our leader put forward should be acceded to, namely that even yet another conference be called to discuss the proposition.


William Alfred Robinson: Shall the clause carry?


Thomas Miller Bell: Mr. Chairman, I just want to take this opportunity of recording the fact that I would have voted against Bill No. 442 on second reading this afternoon if I had not been making a radio speech at the time. Frankly, I did not think that the persuasive methods of the Minister of Finance would have been so successful and that he would have been able-perhaps rightfully-to talk us into continuing discussion at this stage. I had gone off for 15 minutes and missed that, but as my remarks certainly indicated previously, I was opposed to that particular stage of the bill.


William Alfred Robinson: Shall clause 1 carry?


[Stage Direction]
Clause agreed to.
On clause 2-Definitions.
William Alfred Robinson: Shall the clause carry?


Some hon. Members:: No.


William McLean Hamilton: On
this clause, which contains the definitions of the bill, it is possible to make certain remarks I have in mind concerning the department to which is to be assigned the responsibility for implementing the provisions of the bill. We find-


Walter Edward Harris: Mr. Chairman, I rise on a point of order. I can assure you that I do not agree with the statement of facts given to the hon. member. If there is a complaint against the Department of Finance it is surely a complaint to be made on my estimates and not on any bill that I may present.


William McLean Hamilton: the minister will bear with me for just one or two sentences more until he sees where I am going instead of stopping me before I have even got started, I think we will both be in agreement, Mr. Chairman. The responsibilities for implementing these provisions are left with the Minister of Finance. That is probably necessary at the present time because among all the cabinet members the Minister of Finance is the one most directly concerned with provincial-federal financial problems, However, in the course of the
6398	HOUSE OF
Federal-Provincial Financial Arrangements debate which has taken place on this bill it has become apparent that the present legislation is merely the culmination of relationships between the provinces and the federal government which have been in the process of evolution since confederation. At the time of confederation these things were reasonably well set out and reasonably established. Since then, changing conditions, the changing economy of this country and changing world conditions have caused many changes in the relationships between the provinces and the federal government. We find today that the affairs of the provinces and those of the federal government impinge not only in matters of finance but at innumerable other points. Only a couple of weeks ago the Minister of Northern Affairs and National Resources went out to British Columbia for a discussion which affected the water resources and power resources of that province.


Walter Edward Harris: Now I know I was right.


William McLean Hamilton: The
Minister of National Health and Welfare is continually in contact with the various provinces and we often hear of his travelling across this country for meetings with officials of those provinces. The affairs of the Department of Labour, or of the Department of Justice and of almost every other department of this government, in addition to the Minister of Finance are interrelated to those of the provinces.
Having said that, Mr. Chairman, I come to the particular point which, regrettably I find in clause 2 of this bill, namely that it assigns the responsibility for carrying out the provisions of this bill to the Minister of Finance rather than to someone who perhaps might best be called secretary of state for provincial affairs. At this particular moment we have not a secretary of state for provincial affairs. As I think you would infer from my remarks, Mr. Chairman, to me that is unfortunate. I have pointed out how relationships between the provinces and the federal government are being carried on in a number of fields by a number of different ministers. There is no correlation. There is no force in the federal government which binds these various gentlemen together and relates their activities one with the other, save perhaps the force of a prime minister who is already over-age and over-burdened.


John Whitney Pickersgill: Has the hon. gentleman never heard of the cabinet?


William McLean Hamilton: The
cabinet, Mr. Chairman, has hardly been a cohesive force in recent months, as has been evident on more than one occasion.
[Mr. Hamilton (Notre Dame de Grace) .1


Mrs. Shipley:: Consider the comment, where it comes from.


William McLean Hamilton: Despite the provocation, Mr. Chairman, I shall respect the hon. member for Timiskaming and restrain the obvious comment which springs to mind.


Mr. Langlois (Gaspe):: It is the first time you have restrained yourself.


William McLean Hamilton: As
we look back over the history of the development of the cabinet, we find that until recently certain cabinet posts, such as Secretary of State for External Affairs, did not exist. The portfolio was carried on by the Prime Minister as one of his many activities. From time to time other ministers would be delegated to undertake certain responsibilities in connection with our affairs with other countries. But, as I have said, recently that responsibility has been laid directly on the shoulders of one responsible minister. While we may not always agree with the policy carried on by that minister, I think we can say that it has been more convenient in this house to have an official responsible in that field, and with the exception of perhaps a little misunderstanding which arose early in this session it has usually been possible to get some form of information which was reasonably accurate from that minister because it was his job, as Secretary of State for External Affairs, to keep himself conversant with the day to day happenings in that field.
But my suggestion-


William Alfred Robinson: Order. I fail to see how a discussion of the duties of the Secretary of State for External Affairs can possibly come within the scope of this clause. The hon. member did preface his remarks by mentioning the Minister of Finance, who is defined in the clause, but it seems to me we must keep our discussion to the exact terms of this clause which is, after all, merely an interpretation clause.


William McLean Hamilton: I am
in complete agreement with you, and the interruption with reference to the Minister of Finance comes at just the right time to point up the statement I was going to make. You will recall that I was interrupted just as I said, "Now my suggestion is-that is the point at which you rose. Let me now proceed.
My suggestion is that, rather than the responsibility for this legislation being submitted to the Minister of Finance, it should be delegated to an officer, a member of the cabinet, who might very well be called the secretary of state for provincial affairs or, in

the alternative, the minister for provincial affairs. I assume, Mr. Chairman, you are satisfied I am now back on the bill because that is extremely pertinent to this piece of legislation. If it is to be implemented by a minister who has all the other responsibilities of the Minister of Finance of this government, who is fundamentally and foremost responsible for the financial affairs of the federal government, it is in the first instance going to be difficult to get a completely unbiased approach to the problem by the minister concerned. Secondly, even if we accept the fact that the approach will be unbiased, it will be difficult for the matters contained in this bill to get the most adequate study and supervision.
I suggest that this might be a very good point for the government to consider the departure I am suggesting, and go forward from here with the thought in mind of the establishment of a department of provincial affairs, one very similar to the Department of External Affairs, which would not infringe the rights of the provinces any more than the Department of External Affairs infringes the rights of other nations. But it would devote its entire attention to legislative matters such as this, and to the ever more increasingly complicated matters which lie between federal and provincial authorities.


Walter Edward Harris: I would say just a brief word about this, Mr. Chairman. It is not a new proposition. It has been advanced at one time or another in the house by the hon. member for Prince Albert. We had a secretary of state for the provinces from 1867 to 1872. We abandoned the post. I think nearly everyone, except those who now advocate it and they are very few, would expect that the provincial government and the federal government would have direct access on those problems that are required to be solved between them, and the more direct the better because there is more possibility of a good solution.
I appreciate that the hon. member for York West has argued that we are similar to trade unions and employers because under these arrangements the provinces appear to be working for us and therefore ought to have the right to bargain collectively with us. I do not approve of that and I do not agree with it. I think the appointment of a separate minister for the purpose of dealing with provincial governments would only aggravate the problems that we have rather than aid in solving them.


William McLean Hamilton: May
I just ask the minister a question about this? Does he then believe that the Secretary of State for External Affairs has aggravated
24, 1956	6399
Federal-Provincial Financial Arrangements relationships between our country and the other nations with which he deals, because the situation is very similar?


Walter Edward Harris: I think perhaps the inquiry answers itself.


John Borden Hamilton: I do not think I likened the two parties to trade unions and employers other than to mention the good faith which was required ordinarily in entering into contracts of that kind.
I should like to ask a question about section 2. This may be defined in the Interpretation Act, I am not sure; but I wondered if the minister might define, "permanent establishment within the province on the last day of its taxation year"? I had in mind a problem of this kind. A company, such as an operating air company, has a place of business where letters may be received, correspondence answered, but it may be operating in a province with a contract and have its facilities merely in tents, and then at the end of the contract those aircraft may be back in hangars in the province from which the company originally operated. Now, in the contemplation of the definition of this section, how would it apply to a situation of that kind?


Walter Edward Harris: It is defined in the regulations. I have a copy, and I will send them to my hon. friend.


Mr. Michener:: The discretion which is given to the minister under the act is, of course, a necessary feature of legislation of this kind. It crops up not only in the interpretation section but throughout the bill to the extent it is quite conceivable that the effect of the legislation will depend a good deal on the way in which the minister's discretion is exercised, and I should like to ask a question on that subject. Before doing so, just let me indicate the extent of the discretion in clause 2 which deals with interpretation and definition. The first definition in which there is a discretion is that of standard corporation income tax, which means the amount as determined by the minister. I appreciate the fact that there are factors which are not definite statistical calculations. For example, the permanent residence of a corporation might be subject to differences of opinion and so things might might fall on one side rather than on the other, depending on the exercise of opinion. I do not complain of the granting of the authority to determine matters, but I do point out that it is a very wide authority which the minister would have to exercise. There is the first example of it in this section, and it comes in other sections of the
6400	HOUSE OF
Federal-Provincial Financial Arrangements bill. I might just as well deal with the point now, with your consent, Mr. Chairman.
There is discretion in various definitions throughout section 2, in subsection 1, paragraphs (d), (f), (h), and then in subsection 3 of section 2, and again in sections 4, 5, 8,
9 and 10. I will not take the time to say to what all of these discretions relate, but finally we have the regulation section which says that the governor general in council may make regulations respecting:
The determination of any matter that under this act is to be determined by the minister.
This seems to be a fairly comprehensive provision; but the effect, as I say, might be substantial on the results of the legislation, and I wonder whether the minister would give us an estimate of the variation in the payments which are to be made under this clause as between a restrictive interpretation by the minister and an expansive interpretation of one of these definitions, such as the definition of standard corporation income tax? It might run to very substantial sums.
I wonder whether the minister has thought about that and could give us some information regarding the discretion of the minister in carrying out these sections?


Walter Edward Harris: As the hon. member for St. Paul's has indicated, I doubt whether it would be possible to have a bill of this kind without ministerial discretion so that the house would, to some extent at least, have to put some faith in the minister and the regulations he may make under the bill. On the other hand, we have had the authority to make regulations under the Income Tax Act since there was an Income Tax Act, and also under the Tax Rental Agreements Act we have had authority to make regulations and in effect to exercise discretion. I must say that in the course of all the conferences we have had I have not had any complaints from provincial representatives that any dispute of substance between the federal government and the provincial government in connection with the regulations had not been more or less amicably settled after negotiation and consideration.
I must add, however, that on occasion provincial governments have felt strongly about a matter of principle and when that has come to be decided it has been decided on the ministerial level. But as regards the discretion, for example, to arrive at the standard rate and the like and what it means in one province and in another, there has been remarkable co-operation and understanding between the provinces and the federal government in working out minor matters that may arise for ministerial discretion. I have not made a calculation of how much would

be involved if I took a lenient view and how much would be involved if I took a restrictive view. I do not think that question would arise particularly because my recollection is that I have had only two problems arise during the two years that I have been minister. I suppose I should not confess it at this time but I think that in both cases we finally agreed with the provincial point of view on each of them.


Daniel Roland Michener: Mr. Chairman, may I ask the minister this question? I appreciate it is difficult to arrive at the differences which might result from a lenient and a broad interpretation but, as I understand the bill, the payments are based on a calculation of the tax collection for the three different taxes in Ontario and British Columbia and one very easy sort of difference of opinion would be a decision as to the province to which the tax on a particular corporation should be attributed. May I ask the minister whether in these conferences the figures which the federal department has produced as the amount of corporation tax levied in a particular province have varied very substantially from the figures produced by the provincial statistician to the point where there was real difference of opinion?


Walter Edward Harris: There is no difference of opinion, sir, because the provincial governments did not question the figures we gave in the sense that my hon. friend has mentioned. They understand quite well the method we use in attributing payments to one province or another, and, while there are minor matters of detail that are discussed from time to time, they did not, as I say, present figures nor, so far as I know, up to the present time have they questioned the figures that we issued to them in October by way of illustration or those that were sent with the offer in January, or those which we are now circulating.


George Clyde Nowlan: Mr. Chairman, this is a very complicated bill and one hesitates to ask any questions with respect to it at all, because one can get involved in all sorts of legal difficulties which undoubtedly will be resolved some day, possibly by the courts or, as the minister said, by a compromise, and it is always in favour of the provinces, I trust, rather than in favour of the federal department. I think he will admit there are more slight differences now between the provinces and the federal government than there were before because there has to be an absolute apportionment of corporation taxes, income taxes, and so on earned within the provinces, and therefore these questions may be of more importance today than they were heretofore when the tax rental agreements have been in
TMr. Michener.]

effect. At least, there are some who profess to be authorities and who have written brochures on this matter which certainly indicate that and therefore the question raised by the hon. member for York West and to which the minister replied a moment ago, "I understand it is covered by the regulations and I am sending you over a copy of it" could be of some importance to a province, particularly one outside of the central provinces, as to just what is included in this definition of permanent establishment in the province. I think the minister said it was covered by the regulations, or he was presuming to accept the regulations under the Income Tax Act for that. In order to avoid discussion which might arise later on with respect to this, and disputes, it might be better for the minister to clarify that now rather than send over a copy of the regulations to one hon. member, which is an act of courtesy which we can appreciate, but which does not help anyone who may look at Hansard one year, two years or three years from now as to just what is involved in this. For instance, one can easily understand the case of the Canadian General Electric, shall we say, who operate a branch office in Halifax which has a sales manager and salesmen. Is that a permanent establishment under this definition or is it not? I can think of a dozen other minutiae like that that are going to determine how much each province gets, particularly from the corporation tax. Perhaps the minister should clarify that a little more clearly than he did in his answer to the hon. member for York West.


Walter Edward Harris: I shall read the regulations in a moment, sir; but in the meantime may I just add this? I know my hon. friend does not anticipate any real difficulty, but it should be borne in mind that at the earliest conference we had in April and the conference we had again in June it was decided to have our officials consider with the officials of the provincial governments various matters that might arise in connection with this proposal. Those of you who may have read the record will remember there was a meeting of officials in February of this year. These regulations are fully understood and appreciated by the various officials in the several governments. As I say, so far I have not had any complaints about them.


Thomas Speakman Barnett: Subclause 3 of clause 2, which relates to individual income tax, reads:
Where from time to time by reason of a change in the rates of tax or in personal exemptions or allowances for dependents as defined in the regulations, the effective rate of individual income tax or of succession duty differs from the corresponding effective rate applicable
(a) in the case of individual income tax. on the 6th of January. 1956,
Federal-Provincial Financial Arrangements the minister shall alter the standard individual rate or the standard succession duty rate, or both, as the case may be, in relation to the corresponding effective rate, so that the ratio of the new standard rate to the former standard rate varies inversely with the ratio of the new effective rate to the former effective rate; and for the purposes of this subsection the minister shall determine the effective rates.
Could the minister translate that into more intelligent English for those who like me find their mathematical understanding a little bit rusty?


Walter Edward Harris: That is very simple; it means just what it says. This is the guarantee to the provinces that if this parliament were to reduce the tax rate or the personal exemptions or allowances referred to, it would nevertheless compensate the provinces for that reduction by paying them at the rate existing on January 6 regardless of any change we might make. That is all it amounts to.
I might translate the effective rate in this way. Supposing one had an income of say $10,000 on which his tax was $2,000. The effective rate then would be 2 as to 10; the effective rate is not the percentage which he pays, be it 22 per cent or 30 per cent or 35 per cent income tax, it is related to the actual tax he pays on his taxable income. We say that if the rates are reduced by 10 per cent the standard rate is increased proportionately for the benefit of the provinces. They will not have any reduction because of our reduction.


Thomas Speakman Barnett: I had come to the conclusion that probably that was the gist of it. I should like to ask one further question by way of clarification. I notice that there is no reference in subclause 3 to corporation income tax. In subclause 1 (d) a definition is given of standard corporation income tax and a rate of 9 per cent is set out. Can the minister explain why there is no corresponding provision in respect to any change in the rate of corporation income tax?


Walter Edward Harris: It is 9 percentage points of the corporation income tax. That is, the standard rate remains constant and will always accrue to the provincial government at that rate. If we happened to reduce our rate of tax, which will be 38 points after this 9 per cent is taken off, if we were to reduce it to 33 per cent, it would make no difference to the income of the provinces because they would still be getting the flat 9 percentage points which we have established in this bill.


Thomas Speakman Barnett: Supposing the dominion government was to change the basis of corporation tax? That is not something that is likely to happen, I agree.
6402	HOUSE OF
Federal-Provincial Financial Arrangements


Walter Edward Harris: It does not affect the provinces. In the case of personal income tax we are giving a percentage of the yield to the province; in the case of corporation income tax we are giving 9 percentage points of the return regardless of our total return.


Daniel Roland Michener: On that same point. If the federal government were to increase the corporation income tax rate, something to which we would not look forward with any pleasure, would it not be proper to have the standard rate increased by reason of the increase in the corporation tax so the province would get some benefit from the extra use of that field by the federal government?


Walter Edward Harris: I have been listening all day to hon. gentlemen opposite, and particularly those of the Conservative party, and I have assumed that that question would be asked because every one of them has urged upon me an increase in federal taxes to take care of the provinces to a greater extent.


An hon. Member:: Distribute the surplus.


William Earl Rowe: Nobody asked for an increase in taxes.


George Clyde Nowlan: The minister had better take that off the record or he will never get this through tonight.


Walter Edward Harris: I have heard half a billion surplus spoken of. I gather then that hon. gentlemen opposite were only arguing in the light of the fact that they assumed there would be a surplus this year and that that surplus might be used. I have never heard anyone with any knowledge of the subject say that the surplus was going to be that amount. In any event let me point out that f am delighted to note this change in viewpoint because I take it that throughout the five-year period if there is no surplus the argument they have made today will be left for another occasion. To answer my hon. friend's question directly, he would not expect the answer to be yes.


Daniel Roland Michener: Why not?


George Clyde Nowlan: Let me simply say that there has been a recent anticipated surplus. Every responsible person in Canada expects that there will be. Of course the minister has to hide behind his official responsibility. Officials of the tax foundation and publications such as the Financial Post-the minister will not look down his lorgnette at them-and former officials of his department who have left to go into private business have made these predictions. They are the ones who have made estimates from $500 million up. We do not know whether that is the case and certainly we cannot do anything but guess


at this time. But barring some debacle, which of course could always happen under this government but which is not probable, I am sure the Minister of Finance is going to have to work awfully hard to bury the surplus he will have at the end of this fiscal year.
We have assumed that there would be a surplus from which further distribution could be made to the provinces. More than that, the minister would not deny that under his beneficent reign and that of his government there has been an era of prosperity for 20 years and the gross national product is bound to increase from year to year. Therefore we are going to have large and more bounteous revenues from our tax yields without increasing the burden of taxation. I think the minister had better keep these matters in mind when he suggests that we have been advocating an increase in corporation taxes in order to pay these grants to the provinces, which certainly we have been urging during the last two years and which we will continue to urge and which ultimately the minister will accept if he happens to be there long enough. We will see them carried into effect.


Daniel Roland Michener: The minister's answer does not really satisfy me. Apart altogether from the question, the matter we are dealing with here is the rate of corporation taxation. That rate is now 47 per cent and under this arrangement the provinces may tax 9 percentage points and that amount will be credited to the provincial taxpayers. It is quite appreciated that, if the federal government reduces its corporation tax rate, that is not to reduce the field in which the provinces can tax. That is proper, and there is no objection to that, but it seems to me it is a one-way street as it stands. In the case of the personal income tax and succession duties, if the federal rate goes up or down, the minister will then adjust to keep the rate the same, but if the corporate tax rate goes up that is a greater occupation of the field by the federal taxing authorities. It seems to me that it would be proper then to raise the standard rate so that the province has a proportionately larger field of taxation and so that it is not a one-way street in changes in the corporation tax field.


[Stage Direction]
Clause agreed to.
On clause 3-Payments to provinces.
George Clyde Nowlan: I think there is one matter that should be cleared up now. As a matter of fact it probably was cleared up, or may have been cleared up, in the letter of the Prime Minister of February 18, which appears at page 1458 of Hansard, but which certainly was very indefinite and inconclusive. I think

it would be well tor the Minister of Finance to deal with that question now and say whether the provisions of that letter apply. Clause 3 is headed "Payments to a province". That covers, of course, payments for stabilization and equalization and all the other payments to the provinces. The question in my mind-I think it was probably answered by that letter but I would like that clarified- is this. What is the position of the provinces which have been receiving statutory subsidies up to the present time? The matter was raised by the hon. member for Saint John-Albert, and I think I know why he raised it. It is based on a paper written by Mr. J. Harvey Perry for the Canadian Tax Foundation. Apparently it was written before the Prime Minister's letter of February 18, because in this paper Mr. Perry raised that question and said it would not look nearly so good for the "low income provinces." He said:
One of the elements under the tax rental agreements which produced this relative advantage was the statutory subsidies. No mention is made in the Prime Minister's letter-
I presume that is the January letter.
-of the manner in which they will be treated under the new offer. They no doubt will be continued to be paid, but whether they are paid in addition to the amounts offered or are offset against them will be of very material consequence. In total they amount to about $20 million, of which $6 million goes to the Atlantic provinces.
I should like a definite statement from the minister at this time that any payments which it is proposed to make or which will be made under this legislation will be in addition to and will not be offset against any statutory subsidies or other subsidies presently payable to the provinces under existing legislation.


Walter Edward Harris: The statutory subsidies are incorporated in the British North America Act, either originally or by amendments. Nothing in this bill could affect them in any way, and does not.


George Clyde Nowlan: They will not be offset?


Walter Edward Harris: That is right.


[Stage Direction]
Clause agreed to.
On clause 4-Tax equalization payment.
Thomas Speakman Barnett: I feel I should like to say a few words on clause 4 because in the discussion that has so far taken place in the various stages of this bill it has become clear that the provisions set forth in clause 4 are of very great importance.
As far as I am concerned, I think it is worth reminding those members in this house who voted against second reading of this bill this afternoon that clause 4 is in the
24, 1956	6403
Federal-Provincial Financial Arrangements bill, and I for one find it difficult to see how any Canadian could object to the principle that is therein set forth. I feel that perhaps I can say this because I happen to be a member from one of the two provinces mentioned in this clause as having the highest per capital income. Whilst it is perfectly true that the province of British Columbia does stand to gain in a very minor way from the provisions set forth in this clause, nevertheless it is a very minor gain as far as British Columbia is concerned.
This afternoon the Minister of Citizenship and Immigration, quite rightly, focused our attention on the principles that are set forth in this clause. Whilst I must confess that I do not share the almost lyrical appreciation he apparently has for the premier of the province of Newfoundland in some of the statements he makes, nevertheless I confess quite freely that, being a resident and citizen of one of the wealthier provinces, such as British Columbia is today, it was for me a very salutary experience to spend some weeks in the province from which the Minister of Citizenship and Immigration derives his representation in this house. I might perhaps interject here that I was thinking that he might have been well advised, in view of the remarks he made about the oratorical abilities of the premier of the province, to have one of his platters here this afternoon and play to us the statement from which he was quoting. He may perhaps have listened to one or two of the platters which I understand were circulated to the candidates supporting Premier Smallwood in the provincial elections. However, that is merely an aside from the point I am trying to make.
In this connection, as I listened to some of the exchanges that took place between the Minister of Fisheries and the member for New Westminster, both fellow British Columbians of mine, I could not help thinking that it might be a rather salutary experience for the premier of British Columbia to spend a few weeks in a province like Newfoundland or even perhaps if he were to return for a few weeks to his native province of New Brunswick, where I understand he once took school lessons from the member for Royal. It might perhaps serve to give him a little greater appreciation of the value of the provisions set forth in this clause than he appears to have at the present time.
I do not intend to speak at length on this clause. I have refrained from participation at the previous stages on this bill, but before I sit down I should like to tell the house that as I have listened to the debate I have been
6404	HOUSE OF
Federal-Provincial Financial Arrangements reminded more than once of one of the old nursery rhymes. Listening to some of the more eloquent spokesmen on behalf of some of the exaggerated provincialisms that appear in this house, I have thought of the nursery rhyme that goes like this:
Little Jack Horner sat in the corner
Eating his Christmas pie.
He stuck in his thumb and pulled out a plum
And said, "What a good boy am I".


Daniel Roland Michener: This is the important clause which provides for the fiscal needs of those provinces which do not share the benefits of confederation as fully as some of the others. That is a principle which has been generally endorsed by all parties. Certainly our opposition to the bill did not indicate in any sense opposition to the principle of equalization payments. I think it would be well to point out as this clause is being considered that this formula which has been developed is a pretty rough measure of the fiscal needs of a province. In fact, it is not a formula based on fiscal needs at all. It is a formula based on the difference between the value of three taxes to a province compared with the value of those same three taxes in the provinces of Ontario and British Columbia at this time. Therefore it is really a formula which provides for payments based on the means of a province rather than on its needs, if I may make that distinction, and although it undoubtedly equalizes the revenues in these three tax fields among the provinces and to that extent does meet fiscal needs I do leave the thought with the house that this is not a scientific method, if I may say so, of arriving at what has been generally subscribed to as the necessity for equalizing payments among the provinces to enable them to provide a minimum or average standard of services to their people throughout the country.


[Stage Direction]
Clause agreed to.
Clause 5 agreed to.
On clause 6-Tax rental agreements.
Stanley Howard Knowles: May I-


Walter Edward Harris: I should like to move an amendment.


Stanley Howard Knowles: Maybe that will answer my question.


Walter Edward Harris: In the 20th line on page 6 are the words "in this section." I move that those words be changed to the words "in section 7."


The Deputy Chairman:: Has the minister that amendment?


Walter Edward Harris: I beg your pardon. I am told there has been a reprint. I am sorry; I did not realize that. What has my hon. friend got?


Stanley Howard Knowles: My copy reads "as authorized by section 7."


Walter Edward Harris: That is all right. They had not favoured me with the latest printing.


Stanley Howard Knowles: You are as badly off as the deputy minister of finance of British Columbia. The question I wish to ask is this. If a province does not enter into an agreement for a full five year period as set out in this clause but later wishes to enter into an agreement for the four or three years that remain in the period, would that be possible under the legislation?


Walter Edward Harris: We have discussed this with the provinces during the course of our conferences and discussions, and I always indicated that we would hope that we would have an early decision from the provinces with respect to- an agreement because there are certain administrative difficulties in undertaking an agreement. Therefore it would depend on how soon after the act became operative whether or not we would enter into an agreement. One could appreciate that it would hardly be likely that one would want to enter into an agreement in the last two years and perhaps not even in the last three, but I should think that a period of at least three years could be considered favourably.


Daniel Roland Michener: Mr. Chairman, looking at subclause 3 of clause 6 we find that it says:
The minister, with the approval of the governor in council, may, on behalf of the government of Canada, enter into an agreement, not inconsistent with the provisions of this act, amending the terms and conditions of a tax rental agreement.
I call attention to that power because of the history of previous tax rental agreements and to say that I hope that this is not looking forward to a series of bargains different one from the other in which one province may obtain an advantage which then is requested by other provinces and the agreements then cease to follow a pattern which at least holds an even balance but change from time to time.
I recall to the minister the sequence of events immediately after 1946 when Mr. Ilsley's budget gave authority somewhat similar to this and three provinces entered into agreements. I think they were Alberta, Saskatchewan and one of the maritime provinces. Then, British Columbia, presenting some very powerful arguments, secured what were undoubtedly much better terms from the federal authorities. That, of course, set


the whole thing off again and there was a clamour from those who had signed wanting the same terms, and so the process of bargaining went on.
I am not sure what the purpose is of this provision which permits amendment in the course of the five years. Presumably the agreements will be made according to the terms of this legislation, that is, according to the formula which has been devised, and will be the same for all of the provinces and devised to do substantial justice at this level of tax sharing for which the legislation provides. If that is so, perhaps the minister would indicate what he has in mind in taking the power to amend uniform agreements which he looks forward to signing with a number of provinces in the course of the five year period.


Walter Edward Harris: The purpose is not that which the hon. member had in mind with respect to the negotiations that followed the 1946 budget. It is to take care of any minor matter that may arise either by inadvertence or by a peculiar condition in any given province which has no relation to any other, although one would not expect that to be very frequent, or it may take care of a real change in principle in which event, of course, the change in principle would be applicable to all the other agreements.
I believe that since 1952 we have only amended one agreement once and that was with respect to certain logging taxes in British Columbia. The other provinces, of course, were aware of this and they felt as we did, that it was a problem peculiar to British Columbia and that, if we felt so, it was a proper way of amending that particular agreement. It is not intended that there should be a period of bargaining. Indeed, the whole purpose of the bill is to have as much uniformity as possible.


Daniel Roland Michener: One other feature of this clause to which the minister has just referred, and that is the one which permits a province to levy profits taxes on mining and logging, commends itself as a very distinct improvement over the former arrangements which did not permit the deduction of certain provincial taxes in the natural resources field. I only wish to say that it is a disappointment that the principle of exempting provincial profits taxes on certain companies operating in the field of natural resources has not been carried further.
In speaking at the resolution stage I gave figures indicating the great disparity between the returns to the province and the returns to the federal treasury in profits taxes from such things as mining and lumbering, and 67509-406
24, 1956	6405
Federal-Provincial Financial Arrangements there is no doubt that the provincial expenditure in that field produces substantial returns to the federal treasury out of all proportion to what the provinces are able to collect. I bring it up because of my feeling that there is an area in which substantial justice has not been done to the provinces in restricting the exemptions which are permitted in that field of taxation.


Walter Edward Harris: Carried.


Edward Turney Applewhaite: Shall the clause carry?


George Clyde Nowlan: Before the clause carries may I say this. I think what the minister said a moment ago about the uniformity of the agreements would be somewhat disappointing to some premiers of whom I have heard at least indirectly if not directly, who suggested that there would be fairly ample scope for bargaining when these agreements were entered into. We all realize, of course, that there are individual taxation problems such as the one the minister referred to a moment ago affecting lumbering in British Columbia. After confederation there was one in New Brunswick where, on account of some difficulty in the industry, a set customs duty on lumber was omitted in some of the agreements for several years thereafter. I should just like to get a definite statement from the minister that, subject to these individual problems which are localized in particular provinces, he is telling this committee that the tax agreements negotiated will be on a uniform basis other than for those individual circumstances.


Walter Edward Harris: Quite so.


Edward Turney Applewhaite: Shall the clause carry?


[Stage Direction]
Clause agreed to.
Clause 7 agreed to.
On clause 8-Tax collection agreements.
Daniel Roland Michener: I think it would be useful if the minister would explain to the house the principle on which the federal government will collect the taxes of the provinces which see fit to levy their own taxes under this taxsharing proposal, so that we may understand just what scope there is and also so that we may understand in what circumstances the federal government will not collect a provincial tax.


Walter Edward Harris: I am sorry, but I did not hear my hon. friend's final sentence.

Federal-Provincial Financial Arrangements


Daniel Roland Michener: I asked the minister for the circumstances under which the federal government would collect, and also the circumstances under which they would not collect, provincial taxes in these three fields.


Walter Edward Harris: In the first place, Mr. Chairman, the provincial government would have to impose the tax in question; in the second place, it would have to be a tax with respect to which the definitions and exemptions were substantially the same as our own; and in the third place, they would have to agree to pay us a modest fee for collecting.


Daniel Roland Michener: What is a modest fee?


Walter Edward Harris: We have made no arrangements, of course, because up to the present time no province has indicated anything more than academic interest in this proposal, and we have not suggested any particular fee. It would be negotiated with the provincial government. During the conference we made it clear that it was not our desire to make any profit out of this matter but that we would want to retain out of the tax about the cost of collecting. While I would let the provincial premiers speak for themselves on this matter, I think that most of them felt that we could collect probably as cheaply as could they. I think the house will understand that if the tax law happened to be substantially different from our own there would be a great many difficulties in collection and therefore we would not undertake it.


Daniel Roland Michener: If the province has tax laws substantially the same, its variation in rate from the standard rates permitted in the act will not prevent that province from having its taxes collected by the federal authority? For example, what I have in mind is this. Under the arrangements which existed before the war I think the federal government collected personal income taxes for the province of Ontario and also for the province of British Columbia, with the result that the taxpayer had only one return to file, the taxes were paid to one authority and then distributed, and the province was free to levy whatever rate of tax it saw fit to levy. Will that flexibility exist under this legislation, Mr. Chairman? For example, can a province levy an income tax which is more than the authorized ten percentage points and still have it collected by the federal authority if the terms of exemption and so on of the taxing statute are substantially the same?


Walter Edward Harris: No. It would have to be at the standard rate.


Daniel Roland Michener: Is the minister willing to reconsider that position so that if a province wishes to undertake the hazard of taxing in excess of the allowed rate and therefore imposing a duplicate tax, its citizens may still be spared the necessity of filing two income tax returns?


Walter Edward Harris: I know my hon. friend would not want to impose on me any greater embarrassment than he thinks I ought to bear. But I think it would be almost impossible for this government to collect the tax other than at the standard rate. I think he would appreciate the reasons why. But as I said at the resolution stage of this bill, five years is a long time, although not nearly as long as the 20-year period to which some hon. members kept referring in the course of the debate; and one never knows what will come out over a period of time as a result of consideration by the various governments. But at the moment we have concluded that we ought not to accept responsibility for collecting for a province other than at the standard rate.


Daniel Roland Michener: I hope the government has not come to any final decision in these matters because it seems to me-and this opinion has been expressed by various speakers on the other side-that there is a real advantage in not requiring duplicate sets of returns. It seems to me to be consistent with the principle of freedom of a taxing authority among the provincial authorities that the federal government should act as an agent where the tax laws are substantially the same except in the matter of rate. After all, that is the point we have been arguing. The decision as to the rate of tax in these fields is the responsibility of the province as an autonomous government with an equal authority in that field. I now express the hope that the government will show that degree of co-operation which is essential in a federal system in working out arrangements to meet the circumstances which arise in the future where there are differences as to the rate of tax to be collected and where provinces see fit to go their own way within the reasonable limits of this taxsharing proposal.


Edward Turney Applewhaite: Shall the clause carry?


[Stage Direction]
Clause agreed to.
Clauses 9 and 10 agreed to.
On the title:
William Alfred Robinson: Shall the title carry?


Solon Earl Low: 
Edward Turney Applewhaite: Is the committee ready for the question?
Amendment (Mr. Low) negatived: Yeas 7-nays, 64.	'


[Stage Direction]
Title agreed to. Bill reported.


John Whitney Pickersgill: the second reading of Bill No. 439, to amend the Indian Act.
He said: I have no intention of speaking at any great length on the second reading of this bill. There was considerable debate at 67509-406$
Indian Act
the resolution stage and a number of points were raised which I think could perhaps, more appropriately in most cases, be dealt with on my estimates, if and when they are reached. Most of them had very little relationship to the contents of the bill. I make no pretensions for this bill. I did not at the resolution stage, and I do not now. My hon. friend the Minister of Finance (Mr. Harris), when he had the portfolio I now have the honour to have, brought before this house a complete revision of the Indian Act. After two years' experience as minister, it is my opinion that this parliament did an excellent job in revising that act and that several years should go by before any major revisions are made.
The hon. member for Prince Albert, speaking at the resolution stage, suggested that the time had come to establish a royal commission to consider the future of the Canadian Indians. I would not say, out of hand, that I was opposed to that recommendation but I would say that I think it is a little too soon to do it. I think we need a few more years' experience with the kind of limited self government for the Indians that was instituted when the act was revised in 1951, and that produced the results which I attempted to describe to the house at the resolution stage of this bill.
Now, one purpose of this bill is to tidy up a few points that, in the course of administration, proved not to be quite as well drafted as perhaps it was thought they were when the act was passed in 1951. These are what I would call housekeeping amendments, and I do not really intend to say anything about them on the second reading. I will be quite prepared to explain any of them that do not explain themselves, and I think most of them do, when we get into the committee.
There are a number of clauses verifying Indian status, the two most important of which relate to children. There is some importance in them, and they do recognize a new principle and I think a good principle. It is unfortunately true that all too frequently Indian women have children before they are married. Some of these children are children whose paternity seems to be in a good deal of doubt. Up to now, the law has provided that an effort must be made to establish their paternity before they can be put on the rolls of the band. This has caused some hardship which I think has been unfortunate. I found at the meeting with the representatives of the Indians in December that there was not universal agreement, but that the overwhelming majority of the representatives felt that these children ought to be put on

Indian Act
the band lists and be subject to protest within a certain period. It seems to me that is a much more humane way to deal with the problem.
There is another section dealing with the children of Indian women who marry non-Indians. As the law stands at present, Indian women who marry non-Indians are iinmediately-I should not say immediately but as soon as the governor in council can get around to it-enfranchised and cease to have Indian status. It has been the custom, and it is indeed the law, to enfranchise compulsorily the minor children of Indian women who marry non-Indians. That is quite all right in most cases where the children go to live as non-Indians with the stepfather. It works no hardship and it is indeed probably the right thing in most cases to do that. But in some cases these children remain on the reserve with grandparents or other relatives and live as Indians. It is the intention in the future that the enfranchisement of these children will not be compulsory but will be optional, depending Upon the circumstances.
At the resolution stage I dealt at some length with the revolving fund which is, of course, the only section of the bill which has any financial implications, and I see no need to repeat anything I said at that time.
There are certain other clauses in the bill which have economic but no financial effects. There are clauses for the facilitating of the leasing of Indian lands where the Indians want to lease them. There are clauses making it easier to use the capital of bands for housing, to permit the pledging of band credit for housing loans and to authorize borrowing by bands for band projects and housing.
Now, I found that there were a minority of the Indians, a quite substantial minority, particularly those who were engaged in farming in western Canada, who felt that it would be desirable to go quite a lot farther and give them exactly the same rights as other people to pledge their lands and their other possessions in order to get credit. I must say I had a good deal of sympathy for the point of view they expressed; but it was quite clear that the majority of the Indians at the conference were not in favour of doing that. They feared it meant that something was going to be taken away from them, and we came rather reluctantly to the conclusion that this was such a step that, although some of the Indians were ready for it, they would have to wait for another occasion.
I have not any doubt-although I wish it were not so-that the parts of this legislation
[Mr. Pickersgill.l
which will be debated most, both in this chamber and outside, are those clauses relating to the proposed changes in the law with respect to intoxicating beverages, and perhaps I might explain very briefly, first, what the present situation is and then what is now proposed.
A really fundamental change was made when the act was amended in 1951 and when for the first time it was left to any provincial authority which wished to do it to take certain initiatives which would result in permitting Indians in that province to consume alcoholic beverages in public places, but no other aspect of the provincial liquor laws could be made to apply to Indians. Several of the provinces have taken advantage of that provision of the law: British Columbia, Nova Scotia, Ontario, the Yukon Territory, and, most recently of all, the province of Manitoba. In fact, I think it was only one day last week that the provision came into effect in Manitoba.
What we are proposing at this time in this legislation is to extend the law in two directions. We are providing for a provincial initiative which would make it possible for the Indians in a province to be brought under all the liquor laws of the province, but the initiative would have to be taken by the provincial government. There is this further proviso, that any band which by a majority of its membership decides not to come under the general law could establish a form of local option on the reserve.
Then, we are also proposing, because I have been advised that there are one or two provincial governments which take the view that they would not object to having this discrimination done away with, though they do not feel they ought to take the initiative, for the initiative to be taken by the band on a particular reserve. In that case we would carry out their wishes only if the provincial authorities, having been apprised of their views on this subject, did not object. We feel that, since the provincial authorities have the responsibility for the administration of the liquor laws in the province, we should not go the whole length of abolishing the present law and imposing an entirely new regime without some measure of provincial consent. I suppose there will be members of the house who will say we should have gone the whole hog and had complete non-discrimination and there will be others who will say-in fact some hon. members have said to me privately-that they object to our giving liquor to the Indians. On that point I want to say just a word.
There is no intention on the part of the government of giving any liquor to the

Indians or to anybody else. All this bill will do is to enable some Indians in some parts of Canada, after certain initiatives are taken, to buy liquor legally instead of doing as I am afraid is the fact, as I know-let us not pretend about this-far too many of them do now, that is buy it illegally.
There is another provision in the bill which I think I ought to refer to briefly and that is the section in regard to education. This section gives the minister the authority to require, rather than to permit, Indian children to go to school. I think this is something on which there would be unanimity in the house.
Really, sir, I would not have said anything else about this bill had not a point been raised at the resolution stage which I feel it is necessary for me to refer to. I refer to the fact that at four or five places in this bill the word "minister" is substituted for the words "governor in council". Because of that, an attempt was made by several members of the official opposition at the resolution stage to suggest, because evidently they had heard some rumours about what was likely to be in the bill, that this in some way was an attempt at self-glorification by the minister or an expansion of his powers, at whose expense I was not quite clear. Now, sir, I think it would take me 10 or 15 minutes to complete what I have to say and I am willing
Indian Act
to go ahead if hon. members wish me to do so, or I am willing to move the adjournment of the debate.


John Horne Blackmore: We have had a long day. Take it up tomorrow.


John Whitney Pickersgill: It will not be tomorrow; it will not be for at least 10 days.


John Horne Blackmore: We shall be here for two weeks.


John Whitney Pickersgill: Shall I continue?


Edmund Davie Fulton: I think it should be a continuous debate. When the minister has finished I rather feel there should be an immediate follow-up of the debate. Perhaps the minister would not mind adjourning the debate.


John Whitney Pickersgill: I am quite prepared to adjourn the debate.
On motion of Mr. Pickersgill the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we shall take third reading of the bill we have just passed with respect to fiscal arrangements, and then interim supply and the estimates of defence production and northern affairs.


[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. Balcom: What payments have been made to veterans In
Nova Scotia during the last fiscal year ending March 31, 1956 in: (a) war veterans allowance: (b) war veterans assistance; (c) war veterans disability pensions?
Answer by:	Mr. Benneil, Parliamentary
Assistant, for the Minister of Veterans Affairs:
Halifax D.V.A. district (province of Nova Scotia), (a)	$2,489,023.71;	(b)	$26,990.48;
(c) $7,238,679.78.

Wednesday, July 25, 1956