1956-04-17

[Stage Direction]
On the orders of the day:
Hon. J. J. McCann (Minister of National Revenue):: Mr. Speaker, yesterday the hon. member for Kent, Ont. (Mr. Huffman) asked a question with reference to the broadcasting of Allan cup games. The Canadian Broadcasting Corporation advises that it is not planning to carry the Allan cup series on a full national network, but has offered a network line free to bring broadcasts of the games from Vernon, B.C., to station CFCO, Chatham, Ontario.



PIPE LINES


[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I should like to ask the Minister of Trade and Commerce whether it was he who gave the United States ambassador the misinformation and conclusions regarding Trans-Canada Pipe Lines which found themselves translated into that gentleman's speech yesterday.


Right Hon. C. D. Howe (Minister of Trade and Commerce):: I gave no information on the subject.


John George Diefenbaker: You were on a trip together.



SEARCH AND RESCUE


[Stage Direction]
On the orders of the day:
Hon. George C. Marler (Minister of Transport):: Mr. Speaker, the hon. member for New Westminster (Mr. Hahn) inquired last Friday about a press report that the rescue service on the west coast may be disbanded. This report relates to a letter sent by the British Columbia towboat owners' association to my department which, however, reached it only after the report in question had been
published. The letter contains representations as to a small radio station on the second narrows bridge in Vancouver, and raises the question of financial assistance for the work of marine assistance carried out by the association.
I should explain to hon. members that last October a number of proposals regarding marine search and rescue in British Columbia were made to the officials of my department by the association, which operates a most useful volunteer search and rescue organization on the west coast. At that time it was pointed out to the association that some of the matters covered by its proposals did not come under my department, but an assurance was given that the suggestions put forward would be brought to the attention of the proper authorities. This has been done, and the Department of National Defence, which has the responsibility for co-ordinating the actions of the various agencies concerned, has accepted and given effect to some of the proposals made, while others are still under consideration.
Following the discussions with the association last October a number of changes and additions have been made in order to provide improved communication facilities for search and rescue. My department has installed a new multi-channel radio telephone transmitter at the Point Grey coastal radio station operated by it, and this new transmitter is now in service, together with a stand-by transmitter. Though at present the Point Grey station communicates with the rescue co-ordination centre by means of ordinary telephone circuits, the Department of National Defence is setting up a direct telephone circuit to be used exclusively for this purpose and other telephone circuits to enable the rescue co-ordination centre to communicate directly with the ships through our coastal radio station. The present transmitters and the new telephone circuits will, beyond any doubt, provide communication facilities for search and rescue far superior to the limited facility of the radio on the second narrows bridge and other facilities previously available.
To avoid the confusion that would result if several unco-ordinated agencies participated in search and rescue operations, it was decided by the authorities concerned with search and rescue-and not only by my

Inquiries of the Ministry department-that the radio station on the second narrows bridge, which was established for the control of shipping passing the bridge, should, if it intercepted any distress signal, relay it to Point Grey radio station by land telephone, and thereupon the rescue co-ordination centre would exercise its responsibility for search and rescue and communicate with the vessel in distress through the coastal radio station.
So far as the question of financial assistance is concerned, I should like to say that this aspect of the matter is receiving careful consideration, and I hope it will be possible to announce the decision of the government at an early date.
The press report to which the hon. member referred attributed to a representative of the British Columbia towboat owners' association the statement that the fishing boat Zorina had recently sunk because of the decision or order as to the use of the radio station on the second narrows bridge. I am informed that the Zorina did not make use of the international distress frequency reserved exclusively for distress messages which command the help of any ship in a position to afford assistance, although the Point Grey coastal radio station made repeated attempts to communicate with it on that frequency.



BRIDGES


[Stage Direction]
On the orders of the day:
Mr. Leon Balcer (Three Rivers):: I should like to ask the Minister of Transport if and when his department, the St. Lawrence seaway authority and the C.N.R. will accept the suggestion of the city of Montreal and other municipalities of the metropolitan area and name a board of independent engineers to end the confusion created by the local lack of planning in regard to Victoria bridge on the St. Lawrence seaway.


George Carlyle Marler: I would repudiate at once any suggestion that there was any confusion with regard to the planning of the seaway, and I would also repudiate any suggestion that the agencies of the federal government which come under the Department of Transport have not been fully cognizant of the problems of providing accommodation for highway traffic across the St. Lawrence river.
Additional facilities have already been provided on Victoria bridge; additional facilities have been provided on Jacques Cartier bridge, and the government last

August announced its intention of building a third bridge across the river at Nun's island. When the municipal authorities and other authorities' which have the primary responsibility for dealing with problems concerning automobile traffic have done as much, I will then be prepared to pay more attention to the criticism that has been forthcoming.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. E. D. Fulton (Kamloops):: I should like to direct a question to the Minister of National Defence, based on press reports appearing in Sunday's New York Times and this morning's Gazette. I should like to ask the minister why-and I find it difficult to believe that the Canadian government is doing this-


Some hon. Members:: Question.


Edmund Davie Fulton: I should like to ask the minister why the Canadian government is financing and encouraging, through the national research council, research in brainwashing.


Hon. R. O. Campney (Minister of National Defence):: No research in that connection is being conducted at the present time and, so far as I know, none has been conducted since I became minister. I understand upon making inquiry that in 1951 and 1952 certain experiments were conducted at McGill University to see whether and to what extent men could be affected, short of the application of any physical duress, torture, or anything of that nature, by purely mental methods.
These experiments evolved from a theory held by one of the very learned professors at McGill, and some students at McGill volunteered their services. Certain experiments were made which demonstrated pretty conclusively, I understand, that purely by mental suggestion people could be reduced to a certain state of mind and that while in that state of mind you could get them to accept any suggestion and assert it as the truth. They became like some members of the opposition; they accepted anything and even believed it to be true. In any event, when the experiments were completed, which I think was in 1952 or early 1953, the exercise came to an end and there has been no further investigation since.


Edmund Davie Fulton: May I then take it for granted, as appears to be obvious, that the results
APRIL iy, 1956
of the research were made available to and were used by the Liberal government? Second, why was it that it was left to the Canadian parliament to learn of this experiment and research through reports of proceedings in a United States congressional committee?


Mr. Martin:: They are more vigilant than the opposition perhaps.


Mr. MacDougall:: Do you want 'to be a guinea pig?


Edmund Davie Fulton: No; there are enough of them On your side, so I do not need to volunteer.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mrs. Ellen L. Fairclough (Hamilton West):: I should like to address a question to the Postmaster General. In view of the fact that the misunderstanding with letter carrier Erskine in Hamilton apparently has now been ironed out and the department has agreed to pay him the overtime he claimed, will the Postmaster General say whether the department is also prepared to reimburse him for the four and a half days of lost time which he suffered by reason of his suspension?


Hon. Hugues Lapointe (Postmaster General):: Mr. Speaker, I did not have notice of my hon. friend's question, but from what I recall of the facts the employee of the department to whom she referred was suspended for a breach of discipline, I believe, or for some other reason. The suspension was made in a regular manner and, as takes place when an employee is suspended, his salary was withheld. There is no intention of changing that decision.


Ellen Louks Fairclough: May I ask a further question of the Postmaster General? Will he look into this matter to determine that the suspension was made because of the very circumstances with respect to which the department has now admitted it was in error?


Hugues Lapointe: The department has never admitted anything of the sort. I have looked into the matter personally and I am satisfied that the report made to me was a true report of the facts of the case. The man was suspended for slowing down on the job. He was suspended for four days, I believe.


Ellen Louks Fairclough: He was suspended because he would not admit it.
Inquiries of the Ministry


Hugues Lapointe: My hon. friend may think she knows the facts better than I do, but I am telling her the result of the inquiry made by the investigators of the department whom I sent to Hamilton.



POSTAL SERVICE


[Stage Direction]
On the orders of the day:
Mr. R. R. Knight (Saskatoon):: I should like to ask the Postmaster General a question of which I sent him notice yesterday. In view of the recent amalgamation of the town of Sutherland with my own city of Saskatoon, has the minister considered mail delivery for that new section of the city? If so, what has been the result of such consideration?


Hugues Lapointe: I take it that my hon. friend refers to letter carrier delivery. Consideration has been given to extending letter carrier delivery to Sutherland following its amalgamation with the city of Saskatoon. However, the situation is complicated by the fact that there is a considerable undeveloped and unbuilt area between the limits of the letter carrier service of the city of Saskatoon and the compactly developed section of Sutherland. However, the whole situation is under review at the present time.



EXTENSION OF MAIL DELIVERY TO REXDALE, ONT.

[Stage Direction]
On the orders of the day:
Mr. John B. Hamilton (York West):: I should like to direct a supplementary question to the Postmaster General. In view of the answer given to the hon. member for Saskatoon and the statement about the extension of metropolitan postal service, does that mean we may have letter carrier delivery to the Rex-dale area, a very large area in Toronto, sooner than we were advised?


Hugues Lapointe: There is no relationship between a situation that might exist in one particular area and any desire that might exist in the area referred to by my hon. friend, but the department is always conducting surveys of these fringe areas which lie close to large centres with a view to extending letter carrier service as soon as the circumstances permit.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Edmund Davie Fulton: Mr. Speaker, may I ask the Minister of Citizenship and

Inquiries of the Ministry Immigration whether he is in a position to report to the house-and if so, whether he would so report-on the incident involving officials of his department at Quebec city which was the subject of an editorial in today's Gazette and which I believe was reported upon in the news columns yesterday.


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: Mr. Speaker, I think this is a typical example of the kind of thing that is bound to happen once in a while when 50 million people cross the border both ways every year. I believe it falls within the ruling which you made the other day, Mr. Speaker.


Edmund Davie Fulton: Mr. Speaker, of course we know that the minister does not like to be obliged to answer questions of this sort. If the minister will not answer that question, may I ask him whether he has decided to drop his persecution of Mrs. Ingall?


John Whitney Pickersgill: Mr. Speaker, I have not decided to stop beating my wife.



INCOME TAX ACT


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: May I direct a question to the
Minister of Finance, who I do not believe ever did beat his wife. When will the minister be filing his budget resolutions having to do with amendments to the Income Tax Act?


Hon. W. E. Harris (Minister of Finance):: Mr. Speaker, there are not very many, as a matter of fact, and I had thought I would be able to file them in two or three days' time, before we took them up. But if my hon. friend is thinking of proceeding on the present resolutions, may I say that I had intended to go on with the resolutions that appear in Hansard and then to allow a suitable time after I table the income tax resolutions before discussing them.


Stanley Howard Knowles: As a supplementary question may I ask the minister whether the delay in filing these resolutions means that there will be any changes in them from the announcement made by the minister on the night he gave his budget speech?


Walter Edward Harris: Mr. Speaker, the usual secrecy obtains with respect to those resolutions.


Stanley Howard Knowles: As a further supplementary question may I ask whether this house is not being called upon to debate a budget the full terms of which we do not yet know?
[Mr Fulton.]


Walter Edward Harris: No more than is customary in any budget, Mr. Speaker.



MANITOBA-REQUEST FOR COMPENSATION TO FARMERS IN INTERLAKE COUNTRY

[Stage Direction]
On the orders of the day:
Mr. William Bryce (Selkirk):: I should like to direct a question to the Prime Minister. In view of the statement made recently by the premier of Manitoba to the effect that crop losses from floods are the responsibility of the federal government, what action does this government propose to take to compensate farmers in the interlake country of Manitoba for crop losses sustained in 1955?


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, I do not know of any such statement by the premier of Manitoba, nor do I admit there is any responsibility on the federal government for crop losses other than that responsibility which was established in a limited way by that act of parliament which is known as the Prairie Farm Assistance Act. The government does not propose to take any other action than to administer properly the provisions of the Prairie Farm Assistance Act.


William Scottie Bryce: May I ask a supplementary question? Will the Prime Minister see to it that the people who have paid into the fund under the Prairie Farm Assistance Act and have never received any benefit, because the law says they cannot get any, will be given some recompense for what they have paid in under that act?


Louis Stephen St-Laurent: I think the Prairie Farm Assistance Act is being administered according to its terms as determined by parliament.


William Scottie Bryce: It should be changed.



INDUSTRIAL RELATIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I should like to direct a question to the Minister of Labour. In view of the meeting that will be taking place in Toronto next week of the new Canadian Labour Congress, will the minister soon be in a position to answer my question of February 10 as to whether steps will be taken to make provision for the continuation of all certifications under the Industrial Relations and Disputes Investigation Act despite any changes in names arising out of the merger?


Hon. Milton F. Gregg (Minister of Labour):: I shall try to bring in a report on that question this week.



THE BUDGET


[Stage Direction]
The house resumed, from Thursday, April 12, consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. H. M. Batten (Humber-St. George's):: Mr. Speaker, in continuing this debate on the budget I should like to state that in my opinion the budget presented to this house on March 20 by the Minister of Finance was one that, in view of present conditions, is responsible and economically sound. It may well be that it was not the budget that many people in Canada would have liked, but I think it is only human and understandable that people look forward to the budget with hopeful expectation that there will be some tax reduction, and that at the same time our economy will continue to boom. Upon reflection, however, I believe there are many people in this land who realize that the budget must not only deal with the wishes of the present but also with the needs of the future. Fancy must not be allowed to outrun wisdom.
I believe, too, that budgetary and monetary policies must be such as to curb inflation and at the same time create that climate which is conducive to our economic growth. Recent budgets have been such as to offer stabilizing controls, while at the same time gradually and effectively reducing taxes, particularly in the personal income tax field. The budget of 1955, described as courageous and optimistic at the time, did what it was designed to do. It gave to our economy the required boost and at the same time enunciated policies that were complementary to the confidence which Canadians have in the future of this country. The present budget is such that many will agree with the approach which it makes to the problems facing those who have the responsibility for their solution.
True it is that our Canadian economy is booming; true it is that people across this land recognize the future possibilities of the development of this country; but I believe, too, they are not unmindful of the many dangers that lurk in the path to progress. More and more money to buy less and less is not an ingredient of prosperity. Inflation can destroy the real aim of prosperity. I am sure that all across this land workers realize that their personal prosperity not only
The Budget-Mr. Batten depends upon the size of their pay envelopes but also upon the capacity of those pay envelopes to provide for themselves and for their families the things that are required.
Plenty is not the product of money; plenty is the product of production, production in an atmosphere of prosperity and stability. I believe that as we look over the size of our national debt, the amount we have to pay for national defence, the cost of our social services, the increased payments for the civil service and the cost of the proposed hospital plan, we could not realistically expect major tax reductions at this time. But while there are no major tax reductions, there are tax reductions of some importance.
I should like to make a comparison between the taxes paid in 1955 by a Canadian whom I shall describe and the taxes paid by him in 1952 under similar conditions. Let us take a married taxpayer with two children and therefore having an apparent exemption of $2,300. If his income in 1952 was $2,500, then his taxable income was $200. In 1952 he paid $35 income tax. In 1955 he paid $28, a reduction of $7, or 20 per cent. If his income were $3,000, his taxable income was $700. In 1952 he paid $123. For the tax year 1955 he paid $98, a reduction of $25, or slightly over 20 per cent. If his income were $3,500 his taxable income would be $1,200. In 1952 he paid $215. For the year 1955 he paid $172, a reduction of $43, or 20 per cent. If his income were $4,000 his taxable income would be $1,700. In 1952 he paid $313. In
1955	he paid $252, a reduction of $61, or again approximately 20 per cent. If his salary were $4,500 his taxable income would be $2,200. In 1952 he paid $417. In 1955 his tax was $336, a reduction of $81, or 19 per cent. If his income were $5,000 his taxable income would be $2,700. In 1952 he paid $529. For the tax year 1955 he has paid, or will pay, $426, a reduction of $103, or again approximately 19 per cent. I submit that in the three years since 1952 personal income taxes have been reduced by approximately 20 per cent. This reduction has been for those in income brackets up to $5,000, which includes over 80 per cent of the taxpayers of Canada.
One asks, "What will happen next year? Will there be a tax reduction?" Yes, of course there will. There will not be a tax reduction due to the rate being lowered, but there will be a tax reduction because the reduction announced last year by the Minister of Finance will be operative for the whole year.
Taking the categories which I have just mentioned, if we were to carry out the calculations we would find that for the tax year
1956	the tax in the first bracket would be

The Budget-Mr. Batten reduced by another $2, making a total reduction since 1952 of 26 per cent. In the $3,000 class the reduction will again be 26 per cent from the year 1952, and so on up to incomes of $5,000. Again I submit that by the end of this year, when taxes will be paid for the tax year 1956, personal income taxes will have been reduced by approximately 25 per cent of the tax paid in the year 1952.
I should now like to make a few remarks with reference to regional development, citing a case from my own riding. There are indeed many factors upon which substantial tax reductions would have to depend, and not the least of these is a continuing rise in our national productivity. In an economy such as ours, efforts to increase our national productivity are left largely to the initiative and drive inherent in the free enterprise system, but at the same time subject to the checks and balances dictated by current conditions. In certain areas conditions are such as to attract private enterprise, and very often there is sufficient economic fertility to sustain and maintain industries which are thriving and prosperous. In other areas the economic climate is not so conducive either to new development or to the expansion of the development already existing, not because the potential is not present but because of changing conditions over which the residents of the area have no control.
May I draw for you a mental picture. Imagine for a moment the west coast of Newfoundland as a line running approximately northeast 300 miles long. Beginning from the southern extremity of this line and going northeast for about 100 miles, there is a parcel of land shaped like an equilateral triangle with its base running due east and west. If the base of this triangle is produced to connect this parcel of land with the mainland of Newfoundland you have what is known in Newfoundland as the Port au Port peninsula.
Years ago this area could have been described as having a farming-fishing economy. During the 1930's the commission government endeavoured to increase the productivity of this area by initiating a scheme of land settlement. In this area, and on the mainland island, there are 30 settlements, including two or three larger settlements and the very progressive town of Stephen-ville. The population of this area totals over 10,000.
Time was when there was a most prosperous scallop industry in Port au Port. This industry was still thriving in the early 1940's, when under the agreement between the United Kingdom and the United States a very large air force base was built on the


outskirts of Stephenville. Over the years the construction program which has been carried on there has provided a large amount of employment for the residents of the area. Since 1949 large draggers have been coming into Port au Port and the scallop beds have been depleted. Today the construction program at Harmon air force base is gradually nearing completion, and there is a fear on the part of some of us that there will be an increase in unemployment in the area.
People feel that there is no reason why there should be unemployment in this area. I believe that with the proper governmental action we could have in the Port au Port area and the offshore limits a greatly improved fishing industry. The proper action would give a boost to the decreasing regional economy and would begin a development which with the present potential would create one of the finest fishing centres on the Atlantic seaboard.
I mention this, first because it is important in my own riding and, second, because I believe in the full development of this land which we call Canada. Sometimes I think of confederation as an experiment in faith. It is an experiment in the faith that people of different racial backgrounds, of different languages, of different creeds, of different physical backgrounds, of different needs and with different problems can by a common aspiration weld unity out of those diversities. I believe the experiment will be successful, but I believe it will be successful only when the development of each area can be raised to that level which is limited only by the extent of the natural resources with which the area has been endowed.


Edmund Davie Fulton: Mr. Speaker, in taking part in the budget debate this afternoon I shall not have very much to say about the budget itself. I make no apology for that, because I have made it a rule which I have tried to follow in this house not to talk, at any rate at any length, about nothing. If I were to be compelled to talk about the budget I would be compelled to break that rule, because never in the history of this parliament since I have been here, and I believe never in the history of the country, have we had a budget so empty, so negative in its approach and so lacking in solutions or even suggestions of solutions for the many pressing problems which confront the Canadian economy.
But I do intend to talk this afternoon about a basic issue, an issue upon which the budget is completely silent, an issue which I believe is the fundamental issue facing Canada today.

It calls for a solution, and it requires government action which would follow from a policy decision which it is imperative to make. I refer to the issue presented by the increasing measure of control and domination of the Canadian economy by United States interests. In no sphere is the government so derelict in its duty to give a lead, to reach a decision and then take the necessary action to remedy the situation as it is in this particular sphere.
The present trend which we see unfolding before us in Canada is a trend which, if allowed to continue, will lead to complete outside domination, certainly of the more important segments of our economy, and probably of all the important segments of our economy. I state as a fact that if this process is allowed to continue, and if it is carried to its logical and ultimate conclusion, the seriousness of the situation will be revealed. History shows us that economic domination, if not resisted, if not altered, inevitably leads by a process of absorption to ultimate political domination as well. So the trend we now see unrolling before us in Canada, as' we analyse the situation, and the lack of action on the part of this government to deal with it, is a trend which evokes the most stringent criticism of the government because it results in developments which work to the detriment of Canadian workmen, which work to the detriment of Canadian business and which in the long run must inevitably work to the detriment of Canadian political integrity itself.
I intend in the course of my remarks, if time permits, to suggest some measures which can and should be taken-measures, it is true, which would involve some difficulty, but all these important matters involve the making of difficult but essential decisions. I do not for a moment suggest that the decisions and the implementation of the policy behind those decisions will not be beset with some difficulties. but I do intend now or on another occasion to suggest some measures which can and should be taken to remedy the situation and to halt the trend that we see developing before our eyes.
Before coming to the main subject of my remarks this afternoon I should like to suggest that this matter should be examined in the light of the background which is presented today. There are two particular features of that background that I intend to mention. The first is the background presented by the speech made in Vancouver yesterday by the retiring United States ambassador, Mr. Douglas Stuart, and the second is the picture painted by a booklet released
The Budget-Mr. Fulton at the beginning of this month by the dominion bureau of statistics, entitled "Canada's International Investment Position, 1926 to 1954."
To deal first with the extraordinary and unprecedented statement made yesterday by the United States ambassador, Mr. Stuart, I would say that it seems to me that his speech and the implications of that speech present in the clearest possible light a measure of the seriousness of the situation we now face. We have here an unprecedented example of conduct on the part of a man whom we have always regarded as a responsible and friendly man, a man who has had many friendly relations with Canadians at all levels, governmental, political, business and in the sphere of the general community. The fact that this responsible and friendly man, this ambassador of a friendly country, would intervene directly in an issue which is now being discussed as a domestic issue in Canada, is itself a measure of the seriousness of the situation. That he would regard it as his right and his duty to do so shows how far things have gone along the line of acceptance of American domination, and how far the relationship between our two countries has progressed that it would lead this man to believe that he had the right to intervene in domestic affairs in Canada in this way.
I was and am amazed that he could do so. I am extremely disturbed that he should do so. I am reluctant, I am almost unwilling, to believe that matters have got to the point between our two governments that it would have been suggested to him by his own government that he should thus intervene. I find it, therefore, extremely difficult to believe that his remarks were inspired from Washington, and that leaves me with the assumption, of necessity, that his remarks must have been inspired from Ottawa. This conclusion is the more compelling because we have this situation; that with a domestic controversy going on here, a fundamental difference of political opinion between the government and the opposition, a matter obviously reserved to discussion and decision here in parliament, we have the United States ambassador going to Vancouver expressing exactly the sort of criticism which the government is expressing, in an attempt to becloud the issue and misrepresent the stand the official opposition is taking. It seems to me that this must be regarded as the action of a government here in Ottawa which has so debauched Canadian politics that it uses the United States ambassador as a tool to advance its own political interests.


Mr. Philpoii:: What about the magazine tax?
2996	HOUSE OF
The Budget-Mr. Fulton


Edmund Davie Fulton: If the government deny this- and I do not hear any hot denial springing to their lips-and whether they deny or not-


Mr. Pearson:: It is too ridiculous.


Edmund Davie Fulton: -the fact that the United States ambassador would intervene in the discussion of a domestic issue is a measure of the seriousness of the situation, the seriousness of the pass to which we have been brought, and an indication of the urgent necessity of taking action to end the trend. It illustrates more clearly than anything else could illustrate that things have arrived at such a point that the United States government, if we are to believe that this speech represents their views, would see nothing extraordinary, would see no reason for concern by Canadians-according to the ambassador's remarks-when they wake up to a realization of the extent to which the control of the Canadian economy has passed into United States hands. That is what the United States ambassador was saying. His words are as follows-I am reading from the Globe and Mail of this morning:
"The problem of alleged domination by U.S. capital-"
Alleged domination, mind you.
-of Canadian industry and natural resources is in some respects unique," Mr. Stuart said. "It is general rather than specific, it is being discussed emotionally perhaps more than logically,-


An hon. Member:: Hear, hear.


Edmund Davie Fulton: His master's voice. Do I understand that the hon. gentlemen opposite accept the suggestion that they have inspired these remarks? He goes on:
"-it is being discussed emotionally perhaps more than logically, it is one for which some of those who raise it do not appear to be seeking a solution but rather the creation of an issue."
That, of course, is exactly the attitude of the government, which refuses, in keeping with the traditional Liberal attitude, to see any issue involved in the domination of the Canadian economy by United States interests. It has got to the point that the United States ambassador, the emissary from the government at Washington, says he finds it extraordinary that Canadians should be concerned over the extent to which this development has been taking place. He finds it extraordinary that Canadians should be concerned when they awake to the realization that nearly 50 per cent of their manufacturing industry is under the control of United States interests, that over 50 per cent of their mining industry is under the control of United States capital, and that nearly 70 per cent of their petroleum industry is under the control of United States capital. He finds it extraordinary that we


should be concerned about these developments. The article continues:
Mr. Stuart suggested that some of the phrases and questions emanating from those critical of U.S. investment in Canada are being used deliberately to create a maximum of suspicion and rasp the pride and self-respect of any Canadian-and risk, for sometimes selfish motives, the raising of a barrier between the two countries.
The Globe and Mail article reporting his speech goes on to say:
Recalling a recent speech by a person he described as a prominent Canadian, Mr. Stuart said, "This speaker had warned, in a somewhat emotional appeal, that we are not going to be treated as though we were the 50th state of the United States ... We are not going to be hewers of wood, drawers of water, and diggers of holes for any other country, no matter how friendly that country may be."
In the same speech, Mr. Stuart continued, the speaker readily conceded that investment from the United States and elsewhere has been largely responsible for the pace of Canadian expansion within these past few years.
We have no quarrel with Mr. Stuart that Canada is dependent in large degree upon outside capital for help in the development of our resources. We and the prominent Canadian to whom it is apparent that Mr. Stuart was referring, and whom we know and respect as the Leader of the Opposition, have always recognized that it is essential to have outside capital to help in the development of our resources and have in fact taken positive steps to encourage and support that trend. But the fundamental difference between ourselves and the government and apparently the fundamental difference between ourselves and Mr. Stuart is that we say that the processing must take place under Canadian control, Canadian regulation and in the interests of the Canadian economy and development rather than that of the United States.
There, of course, there is a fundamental difference; and there, of course, we are entitled to say that when a United States ambassador states that he finds it extraordinary and believes there should be no concern on the part of Canadians that in fact our resources have passed from under our own control he is, of course, illustrating the seriousness of the situation and demonstrating positively that this is the feeling of his government and of the government here, which does not quarrel with his statements and is espousing a policy which is diametrically opposed to the best interests of Canada.
Since the speech of this gentleman has raised, by its direct intervention in the discussion of Canadian domestic affairs, the question of the attitude and position of this party, let me say at once in order to set the record straight that never has our leader

or the party which he leads suggested at any time that anything should be done in Canada to discourage the investment of United States or any other capital in Canada to assist us in the development of our resources. In fact we have encouraged it and say it should be encouraged. We say that as the result of such investment they should share in the benefits and advantages we will receive but that the direction, policy, control and a share of the advantages should be reserved for the benefit of Canada.
I have but to remind the house and you, sir, of the record of my leader in this regard when he was premier of Ontario and when, as a result of the actions he took as premier, he was successful in having invested in Ontario some quarter of a billion dollars of United States capital to the advantage of the economy of that province, particularly in the northern and hitherto undeveloped areas, and was almost exclusively responsible for the tremendous development in the pulp and paper industry, the erection of those huge plants in northern Ontario under Canadian direction and regulation, contributing advantages and benefits to the Canadian economy which were shared by the Americans on terms which the Americans were glad and happy to accept.
That is the policy which we adopt here. I should like to read into the record a press release issued today by the leader of this party, in order to contrast the policy of our leader as I have outlined it and as set forth in this press release with the sort of statements Mr. Stuart and his government have been making. This is a press release issued today, April 17, by the Leader of the Opposition (Mr. Drew), and it reads as follows:
It is unfortunate indeed that Mr. Stuart, whom we had all regarded so highly as such an understanding friend of Canada, should have chosen to give as his farewell message so inaccurate an interpretation of Canadian sentiment toward investors from the United States. So far as I am aware, no responsible Canadian has suggested that we do not welcome such investment. Many have urged, however, and will continue to urge, that the Canadian government take appropriate steps to encourage Canadian industry to process a larger proportion of our raw materials for the employment of a greater number of Canadians here in Canada. That is something very different from the interpretation given to quotations which have been removed from their context and their meaning.
I should also like to set alongside that, as a proper statement of the attitude which should prevail in Canada and in contrast with the sentiments expressed by the United States ambassador, some extracts from an editorial which appeared in the April 14 issue of Business Week, one of the most influential of United States magazines. This editorial establishes clearly that thoughtful Americans
The Budget-Mr. Fulton and thoughtful American industrialists recognize that Canada has justifiable cause to be concerned about the trend which is now taking place, of the passage of control of substantial segments of the Canadian economy directly into the hands of United States interests. The editorial has this to say:
When two nations are so deeply involved in each other's economic and political destinies, and when one of the two is larger and wealthier than the other, occasions for conflict will never be lacking. At present, Canada has a long list of concerns about the United States, including:
Heavy United States investment in and control over a significant portion of Canada's oil, mining and manufacturing industries. Fear that United States interests may gain control of the proposed trans-Canada gas pipe line is a particular irritant.
United States tariff and customs policies, which Canadians feel discriminate against their processed and manufactured goods and which worsen Canada's chronic imbalance in her trade with us.
The United States way of disposing of surplus farm commodities . . .
Then I am omitting some words.
The enormous flow to Canada of United States consumer goods, movies and publications . . .
United States unwillingness to be limited by provisions of a 1909 treaty in the dispute with Canada over access to hydro power on the Columbia river. Canadians say we accepted these provisions so long as they worked in our favour but now want to ignore them when they seem to give Canada an advantage.
I express the hope that in the forthcoming negotiations forecast by the Prime Minister, Canada will do nothing to retreat from or to sabotage the position adopted on behalf of this country under which we stand firm on article 2 of that treaty which now works to our advantage and without which we would be unable to develop the tremendous potential hydro resource of the Columbia river. Then the editorial goes on to say:
We don't expect those Canadian grievances that have a real basis to evaporate. Nor do we deny Canada the right to regulate its own affairs, even when we doubt the wisdom of the methods it chooses.
Finally they say:
We won't attempt here to judge the merits of the specific Canadian grievances against us. All we want to emphasize now is our hope that the grievances will stay specific, will not degenerate into that emotion which could more properly be called "anti-American". We both have too much at stake in our partnership to endanger it by a general and irrational hostility.
With that last sentiment we here in this party in the official opposition thoroughly agree. We have specific causes for concern, and it is those specific matters which we wish to discuss and upon which we wish to see the government take specific action. Instead of washing their linen over the back fence by speeches made by the minister in Chicago and in other places which can have
2998	HOUSE OF
The Budget-Mr. Fulton no good purpose, we wish to see these problems resolved by specific decisions by the Canadian government within our own jurisdiction and proper to our own political integrity and independence. We wish to see action taken so the development of Canada can remain under Canadian control and be carried on in the interests of Canada generally. I therefore ask you, Mr. Speaker, to contrast that responsible and thoughtful editorial, which was a proper statement of the position, with the complete and deliberate misrepresentation-I must unfortunately describe it as that-made by the retiring United States ambassador.
I suggest there should also be a contrast between the timorous attitude of this government-that you cannot take any measures that will insist on Canadian regulation, direction and control of our resources because it may hurt or offend United States investors- with the attitude of responsible American commentators and businessmen who say they would be willing to accept proper Canadian policies and actions designed to preserve the integrity of the Canadian economy and to ensure that it would be under Canadian direction, and that they would be willing to invest in Canada subject to those conditions. All I can say there is that the timorous attitude of this government and its refusal to take the necessary action contrasts ill with the realistic and friendly approach of responsible American businessmen themselves.
I should now like to turn to the second feature of the background of the situation as contained in the dominion bureau of statistics release. It is going to be necessary for me to place several quotations on record from their introductory comments, which are based upon the statistical tables which they have themselves compiled. This is the result of a survey of Canada's international investment position from the year 1926 to the year 1954. On page 9 they say this:
Non-resident ownership of Canadian manufacturing now amounts to about a half of the total capital employed and to well over a half in the case of mining, smelting and petroleum. These proportions of ownership have risen rapidly since 1948 as shown in statement 18. Likewise the proportions of these Canadian industries which are controlled abroad have been increasing even more as shown in statement 19.
Then they point out that there is a significant change in the trend, and that while it is true that in the over-all picture Canadian investment now represents a larger proportion of the total capital invested in Canada than was the case in the past, Canadian investment in what they describe as the dynamic field of development is in fact shrinking whereas the Canadian investment that is increasing is in


the more static fields of residential property and related fields. They say:
The nature and distribution of Canadian savings and the opportunities open for individual and public investment have had the effect of concentrating much of Canadian investment in less dynamic forms than some of the investments by non-resident concerns . . .
Then again on page 10 we find this:
A highly significant aspect of the rapidly increasing foreign investments in Canada is their concentration in direct investments in Canadian industry which carry with them control and ownership of equities in areas of Canadian mining and industrial production undergoing accelerated Canadian development. In the field of industry which includes manufacturing, mining and petroleum nonresident controlled companies represent more than half of the estimated total capital invested. In manufacturing alone excluding petroleum refining, the non-resident controlled portion in 1953 was some 47 per cent, and in petroleum 70 per cent, and in other mining 55 per cent.
Let me emphasize the words "non-resident controlled." Finally they say this:
Most of these concerns were controlled in the United States.
Again on page 13 they say:
And the form has also changed, more now being for direct investment in economic development while less represents investment in new issues of bonds than in the 1920's.
There they are again emphasizing the fact that the form of American investment is now in equity capital giving direct control rather than in the borrowed capital which would be more by way of pure assistance. Then at page 25 they give the number of foreign-controlled concerns, which in 1954 amounted to 3,361. Finally I would direct attention particularly to the table found at page 84 which shows that in 1953 less than one-third of the petroleum companies operating in Canada were controlled in Canada and that more than two-thirds were controlled in the United States.
That is the background, and it establishes two things; first, things have got to the point that the American ambassador thinks it proper to intervene in Canadian domestic issues, and finds it extraordinary that Canadians should be concerned over the extent of American control; second, the figures contained in this bureau of statistics survey which show that in manufacturing, mining and petroleum, which are the three areas of most rapid development in Canada, from one-half to two-thirds is now under American control. It is with that background that we must assess the situation and on the basis of which we charge the government with most serious dereliction of 'duty.
Mr. Speaker, it is perhaps not surprising that the government should be open to this charge because, after all, they are but continuing in the present the pattern which they

have followed over many years. Let us look at that pattern for a moment. I should like to spend rather more time than I have at my disposal in tracing the pattern of American thought and their attitude toward this problem, not on the basis of hostility to them but because I believe it is essential to take a calm and dispassionate look at the trends which are revealed by the developments of history.
It is a fact that the Americans have, by and large over the years, almost unconsciously adopted the attitude that the North American continent belongs to them. They are friendly with us; they want to see us co-operate, but always in the back of their minds has been the thought-and I believe it is still there- that by some sort of predestination they are ordained to be the controlling factor forever. That is not just by virtue of their position south of the 49th parallel, but by extension of their influence, directly and indirectly, north of the 49th parallel. They believe that they are to control the North American continent.
We have seen in the past the attempts they have made to control Canada. There were military attempts starting back with the raiding parties in the days of the American revolution. Then there was the war of 1812, when they made an attempt at military conquest. There were the Fenian raids of the 1850's and 1860's. Then having abandoned military attempts, they undertook political attempts. We from the west remember the slogan "54-40 or fight". Had it not been for those who believed in the preservation of a Canadian nation north of the 49th parallel, British Columbia as it now exists and parts of the other provinces would be part of the United States.
Then there followed exertions and activities in the economic sphere. There were attempts looking toward commercial union in the 1880's. There was the attempt by blackmail to acquire control of the Canadian Pacific Railway. One has only to read that chapter of Creighton's recent biography of Sir John A. Macdonald to appreciate that the Americans, knowing a good thing when they saw one, were attempting to gain control of the Canadian Pacific Railway and resorted even to blackmail in an attempt to do it. In spite of the efforts by the party of which my hon. friends opposite are the successors to hand over the control of that great enterprise to the United States, it was Sir John A. Macdonald and his dedication to the idea of a Canadian nation that was successful eventually in resisting these economic attempts, which even resorted to blackmail.
The Budget-Mr. Fulton
There are some interesting bits of history in this connection. I should like to place before the house some quotations which one finds in a very excellent book compiled by Mr. Hamilton of our own library staff, entitled "Canadian Quotations and Phrases". On page 3 of that book one finds the following quotation:
AH Americans are unfortunately possessed with a vague notion that Canada is somehow or other to fall into their hands without a war.
These words were spoken by Henry S. Fox, the British minister to Washington in November, 1838.
Coming a little more up to date, on page 4 we find this:
Nobody who has studied the peculiar methods by which elections are won in Canada-
I ask my hon. friends opposite to consider this and its implications.
-will deny the fact that five or six million dollars, judiciously expended .	.	. would secure the
return to parliament of a majority pledged to the annexation of Canada to the United States.
This quotation was taken from the New York World of 1890.
On the same page we find this quotation:
I am for it (the Reciprocity agreement) because I hope to see the day when the American flag will float over every square foot of the British North American possessions clear to the north pole.
This statement was made by Champ Clark, Speaker of the House of Representatives in Washington in 1911.
It is not strange, Mr. Speaker, that the Liberal party here which contemplated commercial union in the 1880's and reciprocity in 1911 should now view with equanimity the process in 1956 whereby the United States will take us over through economic control, without having to traverse any obstacles whatever. That is the danger, unless the trend is checked and reversed, which requires a fundamental decision and positive government action.
One might come a bit closer to home, to our own political history, and refer to a quotation from Sir Wilfrid Laurier found on page 25 of this book as an indication of the attitude of the party opposite. Remember this was in the context of 1891, when we had not yet developed a full sense of Canadian nationality. This is the quotation:
I am a subject of the British crown, but whenever I have to choose between the interests of England and Canada it is manifest to me that the interests of my country are identical with those of the United States of America.
This was from a speech by Sir Wilfrid Laurier delivered in Boston in 1891. Here is a final quotation from Sir Wilfrid, found on page 230:
We are living beside a great neighbour who. I believe I can say without being deemed unfriendly

The Budget-Mr. Fulton to them, are very grasping in their national acts, and who are determined upon every occasion to get the best in any agreement which they make.
That is looking back into history and that is the attitude honestly and conscientiously adopted by my hon. friends opposite, and it is the policy which we see revealed today in their attempts to discredit those who say that the Canadian government must make the simple fundamental decision which will have the result that control of the Canadian economy and the direction of Canadian development is going to remain in Canadian hands.
There are many other contrasts which I should like to draw between the attitude of the government as we see it now, as it unfolds before our eyes, and the attitude which should be adopted. As one of the most outstanding events, I should like to refer to the historical position of this party as revealed in connection with the Canadian Pacific Railway. During the 1870's and 1880's when this country was faced with the superhuman task of building a railway to unite Canada and start a nation north of the 49th parallel, there was only one place to go to get the capital. We did go to the foreign capital markets of London and, to a lesser extent, New York. Today we recognize, as I have said, that for Canadian development to take place at the pace we would like to see it take place, we must invite and welcome outside capital. But in those days the Canadian government did not hesitate to say, "You may come in; you are welcome and you can share in the advantages and benefits, but you will remain under Canadian control."
I have referred to the attempt, even going so far as blackmail, by the United States to get control of the Canadian Pacific, which we resisted. In 1881 when the statute incorporating the Canadian Pacific Railway was passed there was written into that statute a provision that the majority of the directors, of whom the president shall be one, shall be British subjects. Bearing in mind the historical and political realities of that day, there being no such thing as a Canadian citizen, that was equivalent to saying that the majority should be Canadian and the majority of the directors of the Canadian Pacific Railway have been and are to this day Canadian. As a result of that simple decision made in 1881 the policy, control and direction of that company remains responsive to and primarily concerned with, the interests of Canada and not any foreign country. This government refuses steadfastly, stubbornly, narrowly and unimaginatively to take such simple measures.
There is, I think, another matter which should be borne in mind. We look at things

that have happened in other countries, and we sometimes offhandedly dismiss countries such as Mexico and the Argentine as being somewhat less stable than our own. But remember these countries woke up one day to realize that the control of vital segments of their economy had passed entirely into foreign hands. They were left with two simple alternatives; one, to accept the inevitable consequence which would be eventual political domination as well by outside interests; the other, to take some action to deal with it. What action was left open to them? There was only the extreme, violent and nationalistic action of expropriation.
We all remember when Mexico expropriated the tremendous oil industry, which at that time was virtually a United States monopoly in that country. We must take thought of these matters in Canada. We must not allow the situation to develop to the point where we wake up suddenly one day to find that is the only recourse that is left open to us, either political annexation as the inevitable consequence or some drastic, violent action which we would not like to contemplate upon sober reflection.


Mr. Deputy Speaker:: I am sorry to interrupt the hon. member, but it is my duty to advise him his time has expired.


Edmund Davie Fulton: I might just say it is for these reasons that we say this issue must be faced now and the government must accept its responsibility.
(Translation) :


Mr. J. E. Lefrangois (Laurier):: The general public is perhaps not always aware that, each year, the government pays out millions to the hospitals of the various provinces.
This is probably due to the fact that these grants are not surrounded by election talk, as it is done in other quarters. The federal government is decent enough not to have any underlying political motives when it is granting those subsidies. There are no strings attached to these grants with regard to the choice of such and such contractor, architect or engineer, a practice to which we have become accustomed in a certain province. I think the government is to be commended in this respect.
Unfortunately, some people are seen to take advantage from a moderation that is all to the government's credit, creating the general impression that the construction of these hospitals or the enlargement of existing facilities is entirely due to them.
It is therefore to be hoped that this discretion on the part of the government is not such as to help his opponents and does not become a political argument that they could use against it.
I was very pleased to see the government provide a pension for the disabled. I am convinced that, in this field, this is just a beginning and that the legislation setting up this pension will be gradually improved so as to increase the number of disabled people who can take advantage of it.
I am happy also to notice that bilingualism is making substantial progress in this house as well as in this country as a whole. We must however work relentlessly to make bilingualism a general practice in this country. Much is left to be done. National unity, however, can only be achieved on such a basis.
Until the time when every member in this house is able to use both languages with equal ease, I suggest that it is necessary for everyone to have a full understanding of parliamentary debates and for that purpose a simultaneous translation system should be established as soon as possible.
In December 1952 I had expressed the wish that this system be established. I hope that before too long the necessary equipment will be installed in the house.
We have just finished discussing the budget.
I wish to avail myself of this opportunity to congratulate the Minister of Finance (Mr. Harris) for having managed to balance his budget in spite of the ever increasing demands facing the government.
In the field of taxation, I hope that the last plan submitted to the provinces will ultimately result in some tax relief. At least
17, 1956
The Budget-Mr. Lefrangois indirectly. A few years ago, the government of one province introduced a provincial tax which, according to its allegations, was supposed to bring in $25 million a year. It was said then, to justify that new provincial tax, that the province did not get its share of revenue.
Under the new plan that province, without signing any agreement, will receive almost twice the amount she anticipated from the provincial tax. It would therefore be in order to drop that provincial tax and thus relieve the population of that province from that burden.
As far as the federal income tax is concerned, I hope that a deduction of 5 per cent of the taxable income will soon be allowed, without the necessity of producing a receipt for gifts to charitable institutions.
I believe indeed that, as a general rule, few people in this country, as taxpayers, contribute less than 5 per cent of their income to charity.
I do not mean thereby to deny to those who donate more, the provisions of the act as it now stands, allowing deductions up to 10 per cent of the taxable income on production of receipts. In other words, I hope the act will authorize all taxpayers to deduct automatically 5 per cent of their taxable income without receipts. If, on the other hand, taxpayers who contribute more wish to deduct the full amount of their donations up to 10 per cent of their taxable income, they should be able to continue to do so, provided however that they submit receipts for the full amount of their deductions with their return.
I believe that system would be fair to all and would spare, to income tax services as well as to those who have to issue receipts, the great complications involved in the present system.
Mr. Speaker, may I be allowed, in conclusion, to express the respect and admiration of my constituents for the members of the cabinet, this magnificent team which, under a true leader, the right hon. Prime Minister, presides with such obvious success over the destinies of our country.
The development this country is undergoing at the present time is without precedent in its history. Never before have Canadians enjoyed such a high standard of living, never before has this country been more powerful nor more respected and esteemed.
The more we move through the chapters of the history being written at this time the more grand and glorious becomes the title

The Budget-Mr. Castleden of Canadian. Every day brings new reasons to boast of this title and to feel how good it is to live in a wonderful country such as qurs.
So let us stop sometimes and think that these last pages of history have been written at the dictation of our present Prime Minister, the Right Hon. Louis St. Laurent.
(Text) :


Mr. G. H. Castleden (Yorkton):: Mr. Speaker, it is my intention this afternoon to deal with two aspects of the present situation in Canada with regard to our budget, and to mention the things that are in a very real way affecting, not only the Canadian people of today very greatly but will have, I believe, an even greater effect on the Canada of tomorrow.
The budget which was brought down in the house a few weeks ago showed that we were continuing to tax the Canadian people to the extent of about $4 billion a year on an increased national gross product, and that we intend to expend under that budget almost $2 billion for national defence.
The members of the House of Commons have termed this budget a "do nothing" budget and I think rightly so, because the serious defects of the budget of a year ago have not been rectified in this one, and the same glaring shortcomings in Canada's part in the international picture and in the pursuit of peace in the world are not being made effective. I refer to the fact that Canada expends almost $2 billion, or almost half her total tax revenue, on national defence, on guided missiles, jet planes and the most modern weapons of warfare. In its effort to promote peace in the western world Canada provides a miserable pittance of about $30 million for such things as the Colombo plan and economic aid. This country spends almost $1,700 million on national defence and only one-sixtieth of that amount on economic aid. Under such circumstances Canada is not pulling her weight or doing her part in trying to establish peace in the world.
Here is a Canada overburdened with surpluses, unable to use our potential production to provide the things the world needs so much and which could be used to such great advantage in bringing peace to the world, in helping backward areas of the world and feeding nations which are hungry, nations which tomorrow will decide whether the western world and western ideas of democracy shall succeed. The government


says nothing about this in the budget; therefore I submit it can properly be termed a do-nothing budget.
Surely our attitude toward the world situation should not be so pagan and outworn as to believe that we are going to conquer the world or win it to our way of life, with a show of strength or of apparent superiority; that fear is going to cause these people to look up to us and say that democracy as exemplified by the west is the best for the world.
Is there a country with a greater potential for helping the world toward democracy? We could not only help the world abroad, we could help our own economy. We could help to balance our own Canadian economy and provide some economic security to those people in our midst who are trying to do their bit by producing food, grain, meat and other things which the world needs so badly. Here is this government with one of the largest surpluses we have ever had. The Minister of Finance boasts about the great surplus that he has provided for Canada at this time.


Walter Edward Harris: I did not boast at all about it; I reported it.


George Hugh Castleden: The Budget-Mr. Poulin
Of course the budget is a do-nothing budget. It is a do-nothing budget because it has done nothing about taxing the kind of capital gains which attract these people here to take Canada's resources and assume control of our interests. What is the future of Canada with this kind of policy? It is time for every Canadian who believes in Canada for Canadians to make his voice heard in protest.
This issue is of the greatest importance. It is the culmination of what threatened the Canadian people in 1911 when they threw out reciprocity and said they wanted Canada to be developed for the Canadian people. Now, without even an election, the government, making use of the majority given the Liberal party in 1953, is carrying out the very thing which the people do not want. I maintain the people of Canada do not want it in 1956. They just do not realize what is going on in Canada. They are told that everything is fine.
I think what is happening in Canada today should be made known to all the people of Canada. In recent months I have talked to people from the east and west of Canada, and I have been astounded at the lack of even an elementary understanding or knowledge of what is happening even with respect to the trans-Canada pipe line. When people find out they are astounded and awakened. Unfortunately information is not reaching the public as it should.
I maintain that the people of Canada should be made aware of the situation. I appeal to those members sitting on the government side to search their hearts and souls very deeply, because they are responsible for what is happening in Canada today. If, knowing what is happening, they remain silent and say nothing, if they fail to raise their voices, they will be derelict in their duties and future generations will condemn them. I hope the people of Canada realize what is happening before it is too late.
(Translation):


Mr. Raoul Poulin (Beauce):: Mr. Speaker, my contribution to this debate will be limited to a few minutes.
Last year I voted in favour of the government budget proposals. I considered then that the hon. Minister of Finance (Mr. Harris) had at least made a step in the right direction and I felt that we were bound to show him our appreciation.
This year I will have to vote against the budget, as I feel that the hon. minister has made no further progress in the direction which he took last year.
For instance, as far as the income tax is concerned, it seems to me that the basic

exemption should have been raised to $2,000 or at least to $1,500 for unmarried people, and to $3,000 for heads of families.
Moreover, the 8 per cent sales tax should have been reduced and family allowances should have been readjusted so as to raise their real purchasing power to its level of ten or eleven years ago.


Mr. Dufresne:: They will do that next year, just before the election.


Raoul Poulin: You have to admit that these three suggestions are made with a view to giving a special protection to family heads, and more particularly to the heads of large families.
Even with a rate increase of 50 or 60 per cent, family allowances would cover but a small fraction of what it costs to support a child. If you add to that the 8 per cent sales tax, the cost of which is multiplied by the number of consumers in the household, you have to conclude that in our modern society it has become a luxury to have a large family and to maintain a decent home where it is good to live. Indeed, it is absolutely necessary that the home be so organized that it will appeal to the child. Such being the case he will be in a position to receive an education and upbringing which he would be unable to find anywhere else.
It does seem to me, though, that the head of the family cannot organize such a home if his salary, which is no more than adequate at the present time, is further reduced by the encroachments of an overly burdensome tax system.
It should not be necessary to insist once more upon the fact that the greatest of modern sociologists, whatever their race, religion or country, continue to state that the family is the basic element of society and that the latter will be what the former will make it. However, families, like individuals, must enjoy that modicum of well-being necessary to the full flowering of moral and spiritual values.
That is why I urge the Minister of Finance, if he is unwilling to change his present budget, at least to see to it that next year's brings about the changes I have just indicated.
I wish to add a few words in conclusion with regard to the pension paid to disabled people.	.
I may be wrong but it seems to me that any person exercising a trade or occupation who, following sickness or accident, can no longer fulfil permanently the position formerly occupied in this same trade, or a closely related position, any such person should be considered as a disabled person.

As regards those who, from birth or from early age, were never able, because of mental or physical deficiency, to integrate themselves in a class of employment allowing them to earn a major part of their living expenses, they should also be considered as disabled persons.
It matters little whether or not these people can dress and walk by themselves, as stated in the application forms, whether or not they are capable of climbing stairs without difficulty, that is secondary.
Besides, at the rate of things, with modern progress in material things and the setback of morals, the day is not far away when there will be no more stairs to climb or when we shall no longer have to dress as, having shown all that there is to show, we shall have nothing left to conceal. Nevertheless we will still have to work in order to earn a living, and this is the only thing-I mean on a material basis-which seems essential to me. When such a possibility exists no longer, and when there is no other source of income to compensate for work, then I feel that the government ought to step in.
I am far from asserting, however, that the hon. Minister of National Health and Welfare (Mr. Martin), and the provincial ministers co-operating with him, have grasped nothing of the problem; quite the contrary.
From the meetings of experts representing both sides, since the act has been in force, a substantial improvement has resulted in so far as the understanding of the problem and the means of solving it are concerned. However, we must go farther. It would be better perhaps to give less importance to the wording of the regulation forms and leave the experts -in the case the examining doctors-with more freedom in the way they may establish, for all practical purposes, the degree of disability of any particular individual.
I trust however that within a few years we will have a disabled persons pension act such as to meet the needs of our people. I quite understand that this cannot be achieved at the first strike; that is why I ask the hon. Minister of National Health and Welfare to keep on doing his best, in co-operation with the various provincial authorities who seem to me equally well disposed, in order to improve this legislation the principle of which is excellent, but the working of which is still not perfect.
(Text):


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, we have now reached the concluding day of the budget debate. In spite of the
The Budget-Mr. Patterson many criticisms that have been voiced and the inadequacies that have been outlined it is possible that the Minister of Finance (Mr. Harris) is still of the opinion that he brought down a satisfactory budget. If he will not be convinced of the contrary, perhaps he could at least find standing room halfway between the criticisms of the amendment which refers to it as empty, negative and partisan and, on the other hand, the laudatory remarks of the hon. member for Northumberland (Mr. Robertson) when he stated that the budget was realistic, responsible and encouraging. I would suggest that even there the minister might find the ground rather shaky. Perhaps it could be said, however, that within the inadequate framework of the present monetary and fiscal policies of the government he is doing a fair job. Nevertheless, having regard to the possibilities were the government to adopt policies suitable to the age in which we live, the accomplishments are far from being satisfactory.
Not only in Canada, Mr. Speaker, but in other countries of the commonwealth and of the world sincere men are beginning to realize that something must be done if all the people are to be assured of a share in the country's production and are to maintain and enjoy the standard of living possible in an age of plenty. I am sure that hon. members will be aware of the fact that in New Zealand a royal commission on banking, credit and currency was set up last year to study the entire matter of monetary reform. Since that time the hearings have been brought to a conclusion. I have in my hand a booklet entitled, "Royal Commission on Banking, Credit and Currency." The monetary royal commission commenced the hearing of evidence in Wellington on April 28 and concluded on September 30, 1955.
This booklet is made up of excerpts from the official verbatim report and reprints from the Mirror published in Auckland, New Zealand. On page 10 of this particular booklet we have a reference to the review of evidence. I might say that this is published by the editor of the Mirror, Mr. H. J. Kelliher. In this review of evidence we read this statement:
There has been a substantial measure of agreement between the people who have appeared before the commission as critics of the present banking procedure. On the main and basic issues, the federation of labour, the social credit association and Mr. Kelliher form a united front. They contend-(1) that the banks do not lend their deposits: (2) that the banks create monetary credit and charge interest on this created money; (3) that all moneys should be issued by the state in accordance with its sovereign prerogative; (4) that the booms and slumps which New Zealand has experienced and which have been a feature of British economic history during the past century
3008	HOUSE OF
The Budget-Mr. Patterson
have been accentuated by the expansion and contraction of bank credit; (5) that as a first step towards economic stability the banks must be deprived'of the power to create and destroy money which they should never have been allowed to exercise.
I just give that to call to the attention of members of the house that the federation of labour, the social credit association and Mr. Kelliher all agree on these basic and fundamental points.
In a covering letter that was sent out with this booklet, Mr. Kelliher states:
Democracy's greatest need today is a monetary system under which neither booms nor slumps will recur, and inflation will not again break through and steal the earnings and savings of the people. It is the sovereign duty of every government to issue money and regulate its value-ensuring at all times an adequate but not excessive money supply. Thus the purchasing power of the people's earnings and savings will be safeguarded.
We have also information indicating that in the United Kingdom there is a realization on the part of a great many people that something is radically wrong with the present monetary situation. Representations have been made to Mr. Harold Macmillan, chancellor of the exchequer, and he apparently agreed to meet with a delegation of those who were concerned about this matter.
I again refer to the royal commission on banking, credit and currency set up in New Zealand. There is another section which is called, "The Case for Social Crediters". Let me emphasize again that the man who makes this statement is not a social crediter. He does differ from Social Credit in some particular respects. On page 18 we read these words:
I don't know whether the commission reached, or can reach, any conclusion after its many days of probing into the Social Credit ideals of Mr. Young and the gracious educated lady from Dunedin. But I doubt if any conclusion could be reached other than that Social Credit correctly diagnoses the cause of our present troubles, but the main proposals for its remedy are somewhat nebulous.
I give that to call attention to the fact that he agrees Social Credit has pinpointed the problem and diagnosed the situation, pointed out the weaknesses of the present system. With reference to the royal commission currently sitting on Canada's economic prospects, we regret that there is nothing in the terms of reference authorizing that commission to study proposals for monetary reform. The commission can look into the prospects and consider all these other angles, yet their terms of reference do not include the study of monetary reform proposals. We in the Social Credit movement consider that such investigations are of the utmost importance. When we consider the whole financial picture of Canada, consider our taxation


structure, the tremendous volume of our national debt and the cost of financing that national debt, then certainly we say that something should be done to face this matter realistically and bring some alterations that would put us on a more substantial and more favourable financial foundation.
However, Mr. Speaker, we are still struggling along under the old, outmoded financial system and therefore we must consider the budget, I suppose, in the light of that fact. I want to refer to a number of matters which come very close to the people of Canada. First of all, I should like to say how disappointed we are to find that in the budget presentation, and considering the matters that the government is introducing at this session, no mention is made of the position in which our senior citizens still find themselves. I recall referring to this particular matter in the budget debate last year and pointing out the serious situation that our senior citizens are facing. I joined with many other members in the house in requesting that something be done to alleviate their difficult situation and bring some increase in their pensions and in their allowances. I read the reply that the Minister of National Health and Welfare (Mr. Martin) gave to the hon. member for Winnipeg North Centre (Mr. Knowles) as recorded, I believe, on page 184 of Hansard for January 17, 1956, and I felt at that time that his response was very inadequate and certainly did not indicate the concern he should have felt for the people in this particular category. I would say that his argument was very inconclusive because no one can question the fact that our senior citizens are in a desperate plight at the present time.
We do not have to labour that point because I am sure that when one considers the allowance that the senior citizens are receiving one will fully realize that in no way is it adequate to meet the cost of living at the present time. They are just barely getting by and stretching the very last cent to the maximum. But a great many of them are finding that before the next cheque comes in there are several days during which they have nothing with which to purchase food and carry them through until the cheque arrives. It is not as if Canada was not in a position to do something further in this regard. When we think of the expenditures, when we think of the wealth of Canada, when we think of all these things, then there is absolutely no reason why we could not give some added assistance to our senior citizens to make life a little easier for them, a little more comfortable, and show them that we are at least thinking about them and are concerned about their welfare. When we think of their contribution to Canada, in service,

in sacrifice and in money, let me say that these people deserve a better deal than they are getting from the federal government.
Let me refer to a resolution which was passed at the second annual convention of the Marpole community centre in Vancouver in June of last year. In article 11 the senior citizens' association of British Columbia said:
Whereas Canada was one of the most enthusiastic advocates of the universal declaration of human rights passed by the United Nations: and
Whereas this declaration guarantees freedom from want to people residing in nations signing the declaration; and
Whereas hundreds of thousands of pensioners in Canada are trying to live on a totally inadequate pension and are in want of the sheer necessities of life;
Now therefore be it resolved that this convention of senior citizens' association of British Columbia calls on the government of Canada to implement its own signature to the declaration of human rights by providing a pension sufficient to ensure that pensioners are not in want.
Now, Mr. Speaker, I would like to add my voice to the pleas of other hon. members in asking that the pensions of our senior citizens be raised, or at least their value be restored to the level enjoyed when those pensions and this system were first instituted. I should also like to again request that the senior citizens' pensions be paid regardless of where the pensioners may choose to spend their declining days. I have received a letter dated January 9, 1956, from a resident of Vancouver. The letter reads as follows:
Dear Sir:
Being a member of the federal house of parliament, could I ask a favour of you concerning the old age pension?
I am receiving the $40 a month pension and my relations in England have asked me to finish my days with them.
I have lived in British Columbia since 1908 and have no relations or ties in this country, and would like to go to England. But I do not wish to be a burden on them if my savings run out.
Is there any way that I can have the pension transferred to England?
I am informed I can leave the country for six months and on return get three months pension. That is not what I desire. I think, there are so few people that would leave the country that the point has not been considered.
Could you in any way help me in this matter of getting the pension transferred?
Thanking you in anticipation, I am,
Yours truly,
W. T. Seagrief.
Perhaps the last part should be directed to the Minister of Finance (Mr. Harris). I would be happy to pass the appreciation back to the minister if he would make that possible. I feel there are many other ways, Mr. Speaker, in which our senior citizens could be provided with further assistance. I am not going to refer to them this afternoon
Private Bills
because they have been mentioned in previous debates, but certainly action with respect to these matters is long overdue. On behalf of those who exist in straitened economic circumstances I would request the sympathetic and the favourable consideration of the minister and of the government.
I am not a member of the estimates committee but I was interested to read an account in the paper of part of the sessions of the estimates committee in regard to old age pensions. The Globe and Mail of April 13, 1956, carried the following heading:
$40 Old Age Allowances Won't Be Increased. Martin Tells Commons.
The opening paragraph reads as follows:
Health Minister Martin made it clear today that the federal government has no intention of increasing the $40 a month old age pension. He said any further assistance for Canada's 1,217,000 citizens of pensionable age would have to come from the provinces, Ottawa has discharged its responsibility in full.
I am glad that statement is not in quotation marks, because I would not like to think that the Minister of National Health and Welfare made the statement that Ottawa has discharged its responsibility in full. I ask, how much longer are our senior citizens to be consigned to penury? How much longer are we to finance our economy with such lavish expenditures while leaving the builders of our nation to struggle on in poverty? Some of the provinces at least are doing what they can, and certainly the federal government should take some action and raise the old age pension allowances and make them payable anywhere the pensioners choose to spend their declining days, and* also give them consideration in other respects as well. Do you wish to call it five o'clock, Mr. Speaker?


Mr. Deputy Speaker:: It being five o'clock, the house will proceed to the consideration of private and public bills.



PRIVATE BILLS


[Stage Direction]
The house resumed, from Tuesday, April 10, consideration of the motion of Mr. Le-frangois for the second reading of Bill No. 160, respecting Personal Finance Company of Canada, and the amendment thereto of Mr. Coldwell.
Mr. Deputy Speaker:: Is the house ready
for the question?
The question is the following one. Mr. Lefrangois moved, seconded by Mr. Deslieres, that Bill No. 160, respecting Personal Finance Company of Canada, be now read the second time. Mr. Coldwell, seconded by Mr. Argue, moved in amendment thereto, that the word

Private Bills
"now" be left out, and the words "this day six months hence" be added at the end of the question. The question is on the amendment. Those in favour of the amendment will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: Those opposed to
the amendment will kindly say nay.


Some hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the
"nays" have it.


Mr. Speaker:: Is it the pleasure of the house to adopt the main motion?


Some hon. Members:: No.


Mr. Speaker:: Those in favour will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion, the yeas have it. Call in the members. Do hon. members consider that they have been called in for the purpose of this division? Would the whips be kind enough to indicate that their members have been called in for the purpose of this division?
++NAYS
Messrs:


Mr. Speaker:: I declare the motion carried.
Motion agreed to on division, bill read the second time and referred to the standing committee on banking and commerce.



SIGNATURE LOAN AND FINANCE COMPANY

[Stage Direction]
The house resumed, from Friday, April 13, consideration of the motion of Mr. Richardson for the second reading of Bill No. 166, to incorporate Signature Loan and Finance Company.
Mr. Erhart Regier (Burnaby-Coquitlam):: Mr. Speaker, at this time I should like to say a few more words in an effort to persuade, if possible, the members of the house that Canada does not need another finance company. We feel that for reasons of consumer purchases there are already sufficient credit facilities available to the Canadian people. There are credit facilities available that are much more in line with the needs of the people than those facilities offered by the existing finance companies. Therefore we believe it is our responsibility not to lend a hand to foster the growth of Canadian finance companies.
In our efforts on this bill I was rather disappointed to find that few of those members who, rightly or wrongly, are regarded by many Canadian working people and farmers as being in sympathy with the welfare of the ordinary citizen have helped us in this

Private Bills
debate. Very often we read of the Minister of National Health and Welfare (Mr. Martin) expressing great concern for the well-being of the ordinary Canadian people. He did not see fit to rise in his place and put up a battle on behalf of the common people in order to protect them from another finance company.
The hon. member for Fort William (Mr. Mclvor) and the hon. member for Vancouver South (Mr. Philpott) also did not see fit to rise in their places and plead in the interests of the people in an effort to avoid another finance company being established. I can understand the position of the Prime Minister (Mr. St. Laurent), who is often advertised as the kindly man of Canada. I can see that with the president of the Liberal federation interested in this particular measure the Prime Minister could not very well make a speech on behalf of the working people of Canada.
We are convinced, Mr. Speaker, that there is absolutely no need for this additional company to be organized. I am glad that there are at least two members on the Liberal side of the house who agree with us, and I should like to mention them again. The hon. member for Burnaby-Richmond (Mr. Goode) has once again shown his integrity when he feels that the people of his riding are vitally concerned in an issue. The hon. member for York Centre (Mr. Hollingworth) has also indicated that he is concerned about the welfare of the people who elected him to the high office that he now holds.
I think a great deal of credit is also due to the newspapers of Canada for their efforts to help us to make the Canadian people aware of the high interest rates they are paying, the evils that exist in the operations of finance companies and their recognition of the efforts we have made here. I note with some concern the absence of publicity given to this whole subject by the newspaper operated by the Southam Press. I am just wondering whether Mr. MacTavish, being a director of the Southam Press, might have something to do with the almost blacklisting of this subject matter by newspapers operated by that organization. In this morning's Globe and Mail I noticed a letter attacking the position I have taken in this house and pointing out how respectable finance companies are in their dealings with the people. On mentioning this letter to one hon. member I received this reply: Yes, the hangman always wears a nice uniform and is always very formal and very respectable. That is the attitude we take to these unnecessary organizations and we again intend to oppose the formation of another such organization.


Mr. H. R. Argue (Assiniboia):: This bill, Mr. Speaker, would incorporate in Canada another wholly-owned subsidiary of a United States company. If the discussion that has taken place in this house from time to time about the danger of United States capital on coming into Canada controlling industry and controlling various fields of endeavour in this country means anything at all, it means that this is precisely the kind of measure to which this house should give careful scrutiny. In the small loans field today the twc>
largest companies, both wholly-owned by parent United States companies, control 83 per cent of the field. The Conservative party have made reference, as have we, to the fact that certain industries in this country are gradually coming under the domination of United States capital. Various percentages have been pointed out to show the extent to which some industries have come under the control of United States capital. In the publication that was referred to earlier today in this house and the publication referred to by the Financial Post of April 14, two aspects of the petroleum picture are shown. With regard to exploration and development, United States control is 59 per cent; in refining, it is 71 per cent and in transportation, it is 100 per cent.


Mr. Speaker:: Order. Perhaps the hon. member had better stick to the subject of small loans. We have a specific bill before us. Latitude has been given in order to allow discussion of small loans legislation generally. But let us leave petroleum out of this discussion for the time being.


Hazen Robert Argue: That comment, Mr. Speaker, is more of a defence than I might have expected to hear from a member of the Conservative party. However, I shall drop that particular reference right now. What I am saying is this. If the attitude that is being taken by many members in this house with regard to the need to look carefully at allowing United States capital to control further large segments of Canadian industry and Canadian business means anything, this is the type of bill and the type of company which every hon. member of this house who is in any way questioning the intrusion of United States capital into this country should vote against. I am surprised that members of the Conservative party, who have taken their stand with regard to other measures such as the question of United States capital buying up Canadian industry, have seen fit to support by their vote the incorporation of a Canadian company which will be a wholly-owned subsidiary of one of these United States companies. .


Mr. Speaker:: Order. The hon. member must not anticipate the vote that will be given

on this measure. This measure is up for discussion now. The house has not yet voted on this measure. I do not see how he can analyse the attitude of hon. members before they have decided on it.


Hazen Robert Argue: I think I can analyse it quite accurately from their own remarks recorded in the debate on this bill on Friday last as found at pages 2933 and 2934 of Hansard. At that time the hon. member for Greenwood (Mr. Macdonnell) and the hon. member for Digby-Annapolis-Kings (Mr. Nowlan) made it perfectly clear that the position of the Conservative party was to support the passing of this bill and its referral to the banking and commerce committee. If one of the members of that party wishes to say that I am wrongly interpreting their position, I shall be most happy to correct that interpretation. But I feel that it is a correct interpretation on the basis of the statements of the hon. members themselves.
We in this group are opposed to this bill for a number of reasons. We are opposed to it for the reason given by the superintendent of insurance, Mr. MacGregor, namely that it would not be a service to ordinary Canadians and to potential borrowers to have another company incorporated and to see further companies participating in this field; that by an extension of the number of companies in this field, and with many small companies in the field, you will have inefficient companies operating and the battle to get lower interest rates will be made more difficult. We are further opposed to the passing of this bill because we believe that the huge interest rates that are being charged by small loans companies are wrong and that we should not, by supporting this measure, incorporate another company that will occupy this field and will charge such gigantic interest rates. I believe we should oppose this bill because the company is a wholly-owned subsidiary of a United States company and this field is already fully occupied, I believe that there is no reason why we should be giving approval to the passage of this bill.
I am amazed at the stand that has been taken by the Conservative party in connection with the passing of this bill. On looking over the bill itself I note that it is a bill to incorporate a company that will be wholly owned by a United States company, namely the Massachusetts Acceptance Corporation, and that two of the directors of the parent company are to act as directors of this company. In their battle against having United States capital come into this country and against having United States capital in the business of constructing and operating pipe lines, the Conservative party have been 67509-1914
Private Bills
extremely vocal. They have been very strong in their statements. The hon. member for Prince Albert (Mr. Diefenbaker) in his speech in Saskatoon as recently as April 6 is reported in the Saskatoon Star-Phoenix of Saturday, April 7, as saying that his party is opposed to Texas buccaneers coming into Canada to operate this particular project. The article reads in part as follows:
John Diefenbaker Thursday evening promised that "Texas buccaneers" would not get control of the natural gas outlet from western Canada. The M.P. for Prince Albert told a Saskatoon constituency nominating meeting that the Progressive Conservatives were preparing a fight in the House of Commons on the proposed trans-Canada pipe line that would make the recent filibuster on the Defence Production Act look like a mere skirmish.
If the hon. member for Prince Albert (Mr. Diefenbaker) is to be consistent, if the speech made this afternoon by the hon. member for Kamloops (Mr. Fulton) means anything, surely it means that the Conservative party should be opposing the intrusion into Canada of Massachusetts marauders who are being incorporated by this bill just as strenuously as they are opposing United States capital coming in here and labelling it, as they do, Texas buccaneers. We in this group are being completely consistent in opposing this measure. We regret very much that' the support we have obtained has not been unanimous, and particularly has not been unanimous so far as all opposition members are concerned.
The hon. member for Digby-Annapolis-Kings and the hon. member for Greenwood said that they were going to support the passing of this bill because by that means they would allow it to be referred to the banking and commerce committee for study. Since when does a member of parliament have to support the second reading of any bill merely to have the details of that bill discussed before a committee? I say we should state whether we are for or against the principle of the bill. If we are against the principle of the bill then we should not take into account at all whether we are going to have an opportunity of considering the details in a committee of this house. In order to be consistent we should, if we are opposed to the measure, vote against it on second reading.
The Conservative party used to do that. I can remember so well that on so many occasions the hon. member for Vancouver-Quadra (Mr. Green) opposed the incorporation of certain pipeline companies. He was anxious that a Canadian route should be followed. In discussing these private bills for the incorporation of private companies the Conservative party did not say, we are going to have to vote for them on second reading in order to have a chance to discuss the details in a committee.

Private Bills
No, they said the bills were wrong and they did not want those companies incorporated, at least until they would agree to follow a Canadian route. Until that was done they were going to oppose them on second reading. They opposed them by proposing a six months' hoist and they used another weapon that is really more effective. They talked them out for a whole session and they killed at least one bill by that method. I suggest that instead of taking this wishy-washy attitude and saying they are going to have to vote for second reading in order to have a detailed discussion, they should be consistent. They should do as the Leader of the Opposition said they were going to do as a party; they should do as the hon. member for Prince Albert says they are going to do; they should do as the hon. member for Kamloops this afternoon said they were going to do, namely to protect the Canadian nation from this tremendous, overbearing intrusion of United States capital in the small loans field. The Conservative party is once again riding two horses with great ability, but the horses are going in opposite directions. They are able to stand up and say they will vote for the incorporation of another company with United States capital to occupy a field that is now dominated by United States companies. But when it comes to United States capital in the pipeline field, they are against it.
I suggest that the Conservative party should take another look at its attitude. If it wants to oppose the further encroachment of United States capital into various industries, even at this late time they should join with the C.C.F. group in opposing the passage of this measure. Therefore, Mr. Speaker, we shall, when the opportunity arises, call for a recorded vote and shall vote in opposition to this measure.


Mr. A. H. Hollingworlh (York Centre):: was going to make a few observations about this bill, Mr. Speaker, but since the hon. member for Assiniboia (Mr. Argue) has been rather lengthy I shall make a very brief comment because I feel hon. members would like to vote on this measure this afternoon. As I said last Tuesday, I am going to vote against this bill because to me it is a matter of substance and not procedure.
I do not believe that at this time, while Bill No. 51 is being considered by the banking and commerce committee, any finance company should be allowed to incorporate, and particularly a United States finance company. We have heard it observed in the house that United States companies own about 83 per cent of the business of this country. If we permit more companies to come in, that will not lower the interest rate. I feel this bill is

ill-timed and I say that with the greatest deference to my hon. friend, for whom I have the highest regard and respect, the hon. member for St. Lawrence-St. George (Mr. Richardson), who is sponsoring this bill. With these observations, Mr. Speaker, I am stating that I am going to vote against this bill.


Mr. T. H. Goode (Burnaby-Richmond):: Mr. Speaker, I shall only take a few seconds. I cannot support the remarks of the hon. member for Burnaby-Coquitlam (Mr. Regier) when he spoke about the Prime Minister (Mr. St. Laurent). I do not think that is true, but I am not voting against this bill because of that. I have no complaints against United States capital coming in here and performing any service that they see fit if Canadian capital will not support the service. However, I am a little worried at seeing the great growth of these loan companies, particularly in British Columbia, that are coming in to Burnaby and Vancouver. It seems to me they are on every street corner. I honestly believe we should stop it now and I am going to vote against the bill.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Alexander Bell Patterson: Mr. Speaker, before leaving the subject with which I was dealing at five o'clock, I would just like to commend to the attention of the Minister of Finance a letter, a copy of which I have received-and I believe all other members from British Columbia have received it-from the old age pensioners' organization. It is signed by E. A. Griffin, provincial secretary. The copy I have is endorsed by John Campbell, president, and Mrs. Edith Wallace, secretary of the Mission City, B.C., branch. The letter states:
I have been directed by the board of directors of the British Columbia old age pensioners' organization to forward to you the accompanying facts and petition to ask that your honourable house take immediate steps to insure that all old age pensioners throughout the dominion receive sufficient income, adequate housing, home nursing care and nursing homes for those needing such accommodation and hospitals for chronic cases.
I have been asked to remind your honourable house that little has been done by the federal government since 1927 to improve the lot of the old age pensioners throughout the dominion and any increase in the federal old age pension since that date has only been secured as the result of pressure brought to bear on the federal government by the provinces.
Moreover the amount of such increase in the basic pension bears no relation whatever to the tremendous increase in the cost of living as compared to the cost of living in 1927.
I would like to call the attention of your honourable house to the fact that the age at which the basic pension of $40 per month is granted is the highest in the world. The age at which the old age pension is granted in other countries ranges from 50 years of age in Uruguay to 67 years in Iceland and Sweden.
We therefore humbly pray that your honourable house take immediate steps to raise the basic pension of $40 per month to $60 per month to be paid to women at 60 years of age and to men at 65 years of age.
We also ask that the Department of National Health and Welfare or such other authority as may be deemed necessary undertake the immediate survey of the housing needs of every locality throughout the dominion and adequate provision be made for low cost housing for old age pensioners, hospitals for chronic cases among old age pensioners, nursing homes for those needing such accommodation; also homes for the infirm where such attention as may be needed may be given.
3016	HOUSE OF
The Budget-Mr. Patterson
We also humbly pray that the taxable limit oi $60 per year for old age pension purposes be abolished and every income be taxed for this purpose on a pro rata basis.
I would like to place that on the record because it represents the views of the old age pensioners organization of British Columbia.
With respect to health and welfare programs, I also wish to support the request being made on behalf of our blind friends for a grant, free from the means test, to cover the cost of guiding services. I received a considerable number of requests that we give our support to this particular project. I am not going to take time to read them but I have a list here of at least 13 different institutes and organizations of various kinds in the province of British Columbia, most of them in my own riding. I feel that this is a worthy cause. It has been mentioned by different members in the house. I would ask that the matter receive the sympathetic consideration of the Minister of Finance.
There is another matter that I called to the attention of the minister last year. This has to do with deductions permitted for income tax purposes on contributions for charitable, educational and religious purposes. I indicated, I believe, last year, and I would just like to state again, that in the United States of America up to 20 per cent of the individual's gross income paid to charitable and religious organizations can be exempted from income tax when making returns.
I have also made some inquiries regarding the United Kingdom and find that there is there a system of covenanting, by which means a person is able to give the religious society the advantage of the income tax paid on the money. For example, the religious society reports these gifts, along with copies of the actual covenant forms signed by the donors, and then is able to reclaim the income tax paid by the individual to add to the society funds. In this particular instance, it is not the person himself who benefits from the income tax deductions for these purposes but the organization to which his contributions are made. As far as the Department of National Revenue would be concerned, there would not be any difference in this particular respect. I believe that increases in these deductions would be beneficial. It would give recognition to the work that such organizations are doing, as they are in a large sense providing the very foundation of our free democratic way of life. I believe it would encourage giving to these various purposes.
There are a considerable number of people in Canada who feel conscience bound to contribute at least ten per cent of their income to the church of their choice. Some, of course,


give more; some give less; and I suppose some do not give any. Nevertheless, some feel, as 1 have said, conscience bound to make that contribution of at least ten per cent to the church of their choice. In that case it does not allow for any contributions whatsoever to educational and to charitable organizations. I should like to emphasize that again. I thought the minister evidenced some slight interest in this matter last year when I called it to his attention. I should like to think it was an oversight rather than deliberate intent that explains the absence of any reference in the budget to increased allowable deductions in this respect.
There is one other matter I should like to deal with very briefly at this time. We have had considerable discussions, and no doubt we shall have further discussions, relative to the supposed United States domination of the Canadian economy through increased and constantly increasing investment. I am sure we have all read glowing reports of Canadian resources. We can turn to magazine or newspaper articles and we can listen to public speeches and find so many people referring constantly to the tremendous resources that are ours in Canada. Referring to the prospects for the future, these same writers and speakers paint in glowing terms the possibilities of future development in our great nation. We all realize, of course, that capital is required for these developments.


An hon. Member:: Hear, hear.


Alexander Bell Patterson: You had better wait. You may not say "Hear, hear" later on. Up to the present we have been rather pleased and proud that outside capital has been invested in our great and growing nation. But now apparently we have reached the crossroads, and there is an ever-increasing crescendo of opposition to the fact that United States investment is continuing and increasing in our Canadian economy. I would just like to say this, I feel we ought to beware of going to the extent of building up unnecessary- let me emphasize that "unnecessary"-resentment against our great neighbours to the south. I should say that I hold no brief whatsoever for the big United States interests. I just want to say that down through the years, by written 'articles and by public statements, our communist friends have been singing this song of the ever-growing threat of United States control of the Canadian economy. Then we found the C.C.F. party joining in that refrain. Now we find the Progressive Conservative party, of all people, joining in the chorus and swelling that chorus of anti-Americanism. I know they will contradict that but nevertheless I put that on record because I believe that is what is happening

even although it may be unintentional. I know they are opposed to the so-called control exercised by United States capital, but I say again that it is going to result in growing resentment and antagonism between our two nations.


Hazen Robert Argue: Read Leboe's speech in Saskatchewan.


Alexander Bell Patterson: I do not need to read anybody else's speech with regard to that matter.


Hazen Robert Argue: It was the opposite of yours.


Alexander Bell Patterson: I have heard some of yours and those of some of the other members and I am expressing my own opinions in this regard.


Mr. Fraser (Peterborough):: Your opinions are wrong.


Alexander Bell Patterson: In the Toronto Globe and Mail of April 16, 1956 there was an article headed, "U.S. Students are Surprised by Antagonism", which reads in part as follows:
Biggest surprise to University of Rochester students is Canadian antagonism to Americans.
I am not going to read any more because my time is almost gone and I have one or two other things to say. I say that it seems as though there are a great many more who are joining in the chorus of anti-Americanism and I ask the question: What is behind it all? We hear a great deal about the development of the Soviet economy and the tremendous strides being made in that country, and it would appear that the attitude that so many are taking today would have the effect of sabotaging our own development in Canada. I do not think that is what we want at all. I do not believe it is what we desire.
Of course we prefer that Canada be developed by Canadians and by Canadian capital, but let me say again that the government consistently refuses to adopt policies whereby the nation's credit could be used for these purposes. Nevertheless, development there must be. We have had it pointed out that Canadians will not invest. The hon. member for Macleod (Mr. Hansell) referred to proceedings in the railway committee where it was learned that only $2 million out of $143 million was offered by Canadian insurance companies for the financing of a railroad construction project.
If Canadians will not invest, if the government will not act, then what is the alternative? I believe that continued development is both desirable and essential and, as I said, much as we prefer Canadian development of Canadian resources, if that is not possible and the government refuses to adopt policies that will encourage Canadian investment then
The Budget-Mr. Patterson I believe that we should be prepared to welcome foreign capital in Canada.
I should like to call attention to the Financial Post of March 17, 1956. Here on the front page of one of the sections of that paper we find the following under the heading "The Prancing Prosperity of Canada's West Coast":
A $220 million expansion program in the pulp and paper industry.
First full year's construction on the $152 million Westcoast Transmission gas pipe line.
Record exploration and development program getting under way in the Peace river gas and oil fields.
One of the biggest prospecting drives in the province's colourful mining history.
A stepped-up flow of foreign capital into the province with U.K., German, French and Italian moneys leading the parade.
A $100 million road and railway building program.
An $85 million power development program.
Further $55 million expenditure on the expanding aluminum development at Kitimat-Kemano.
$15 million construction program on the province's first two major chemical plants.
The article is by W. L. Dack and reads in part as follows:
Government, with a new boldness of concept, is directing record capital outlays to push communication and transportation services into all parts of the country, to facilitate the big undertakings, bring a new degree of cohesion to the province and all that is taking place therein. Foreign investment capital, more aggressive now than at any time since end of world war II, has eager eyes on the fast developing British Columbia scene. U.K., German, Swiss, French, Italian, Belgian interests all see investment opportunities developing here that couldn't be paralleled anywhere else in the world.
That is under a Social Credit government. Because of the confidence that business has in the Social Credit government all these industries are entering into the picture and making these tremendous investments. I should like to call attention to an article in the Montreal Gazette of Tuesday, April 17, 1956, headed "Foreign Money Welcome Here, Beaulieu Says". The article reads in part as follows:
"We have not enough venture capital in Canada to develop our resources. We welcome capital from abroad. It gives us employment which we would not otherwise have. Foreign capital, in fact, represents our livelihood", said Mr. Beaulieu.
He said foreign investment is becoming more diversified, both in its source and in the type of investment. "We used to get our foreign capital from the United States in the form of investment in our resources industries", he said. "Now we are getting capital from Britain for a new aluminum company and from Belgium in the refining industry and now the tobacco industry."
This indicates, Mr. Speaker, that we are receiving capital not only from the United States of America but from the European countries as well. Finally, I do not say that we should not consider the other side of the

The Budget-Mr. Decore picture. I do not say that Canadian industry and resources should be turned over to foreign interests.


An hon. Member:: That is what is happening.


Alexander Bell Patterson: I do say that in the development of our resources the value of past foreign investment should be borne in mind and that with adequate safeguards future foreign investment should be welcomed.


Mr. John Decore (Vegreville):: Mr. Speaker, first of all I want to compliment the Minister of Finance (Mr. Harris) on having brought down for the benefit of the people of Canada a budget which is not only sound but realistic. I have listened with a great deal of interest to what has been said by the hon. member for Fraser Valley (Mr. Patterson) and I share his desire. I should like to see increases made in old age pensions and our other social security benefits. I should like to see a widening of our social security benefits. However, there is always a limiting factor and that factor is the ability to pay. There is no magic formula by means of which the money can be raised. In spite of all the fancy theories we hear as to how the money can be raised, we know that the money can only be raised by taxing the people of Canada and there is a limit to how far you can go in taxing the people.
I am sure that the minister would like to see a reduction in the taxes imposed at the present time if that were only possible. But let us not forget that this year, as we have in the last number of years, we are appropriating nearly $2 billion of our budget for national defence or, in other words, more than 40 cents out of every dollar raised through taxation from the people of Canada by the government goes for national defence. We must be realistic. In view of the international situation, we must take these steps in order to preserve peace. Once we feel that we can safely reduce our expenditures on national defence then, of course, we can very easily reduce taxes and at the same time widen the benefits in the social security field.
I am hopeful that the time will soon come when, without endangering our national security, it will be safe to reduce our expenditures on national defence and thereby to reduce taxes while at the same time increasing our social security benefits. I believe we have in this country one of the finest programs of social security in the world. That this government is social security minded is indicated by the fact that, apart from other social security measures, in 1948, a program of national health was commenced. Now the

federal government, in conjunction or cooperation with the provinces, is endeavouring to introduce a health insurance scheme.
At this time, Mr. Speaker, I should like to draw to the attention of this house and especially to the attention of the government a matter which I consider to be of great concern in the prairie provinces, especially Alberta, the province from which I come. I wish to make reference to the freight rate structure and to some of the recent manipulations of the railway companies which, in my opinion, have had an adverse effect on our Alberta economy. Hon. members will recall that in 1951 the royal commission on transportation known as the Turgeon commission, after sitting for some two years, came out with a 200,000-word report. This commission was concerned mainly in reporting on methods for equalizing freight rates in all parts of Canada. The reason that the government decided to have this commission appointed was mainly the complaints that were made from the maritime provinces and the prairie provinces. The prairie provinces and the maritime provinces felt that there was unfair and unjust discrimination with regard to freight rates. Among other things, the recommendation of this commission had the effect of creating a new deal in rail freight rates throughout Canada. There was wide equalization with the aid of a $7 million a year subsidy. It was felt that rarely if ever have complainants under confederation won so notable and justifiable a victory as did the prairie and maritime provinces under the Turgeon report. I feel that such a victory could hardly have been possible without the silent acquiescence of the two central provinces, namely Ontario and Quebec. They did not even appear before this commission or give evidence. If they had appeared before it they would have had to defend the recognized discrimination in their own favour. Hence this recommendation of the Turgeon commission was hailed in many quarters throughout Canada as a great step towards national unity.
We realize that the geography of this country provides an extremely difficult problem with regard to national transportation. It is difficult to overcome all the disadvantages or to eliminate all discrimination. The three prairie provinces in particular suffered a great deal because of their geographic position, their distance from markets, their distance from manufacturing centres and a small population. We in the three prairie provinces have hardly a self-sustaining population. Of the several complaints that were made by the prairie provinces before this commission made its report-especially by the

province of Alberta-the most bitter complaint was with regard to this old rate system. Under that old rate system it cost far more to ship many classes of goods to Edmonton or Calgary than it did to ship them an additional 600 miles through the extremely difficult terrain of the Rocky mountains to Vancouver. The railway companies gave special low rates to the Pacific coast ostensibly to meet water transport competition. It was felt that the particular loss of revenue which the railway company sustained had to be borne in large measure by the prairie provinces, because in the prairie provinces the railway companies had few agencies that were able to compete with them with regard to traffic. Hence the Turgeon recommendation endeavoured to do away with this abuse.
This commission recommended what was known as the one and one-third rule. Under this one and one-third rule the railway companies were forbidden to impose for shipments to Alberta a charge of more than one and one-third times the corresponding rate to the Pacific coast. This recommendation of the Turgeon commission was subsequently implemented by legislation in this parliament. In spite of this legislation and in spite of this recommendation by this commission it would appear that the railway companies were able to find a loophole in the legislation. They took the stand that the one and one-third rule applies only to general tariffs but does not apply to the so-called agreed charges. By agreed charges is meant special arrangements that are made with particular persons or groups. We now see that for some months the railway companies have been entering into agreements with eastern Canadian manufacturers whereby they allow special low rates to the Pacific coast. The result of this procedure is simply to by-pass the Turgeon commission recommendation which endeavoured to bring about this equalization of freight rates on a more equitable basis and once again we see this wide gap between the costs of shipment of certain goods to Vancouver and the costs of shipment to Alberta points.
I have here some figures that have been prepared by the Alberta Freight Bureau. Some of these give examples of how freight rates from the central provinces to Edmonton and to Vancouver compare. Of course these rates to Vancouver are all based on these agreed charges. Here are some of them. On pig iron, from Sault Ste. Marie to Vancouver, the cost is $21.80 per ton; to Edmonton the cost is $33.59 per ton. On paint and varnish ingredients, from Montreal to Vancouver the rate per hundredweight is $2.25; to Edmonton it is $3.35. On cast iron pipe, from Toronto to Vancouver the rate per hundredweight
17, 1956
The Budget-Mr. J. B. Hamilton is $1.10; to Edmonton it is $2.44 or more than twice as much. On wire rods, from Hamilton to Vancouver the rate under these agreed charges is $1.20 per hundredweight; to Edmonton it is $2.80 per hundredweight; sheet metal from Hamilton to Vancouver, $1.10 per hundredweight and to Edmonton $2.30 per hundredweight; steel bars from Hamilton to Vancouver $1.30 per hundredweight and to Edmonton $3.23 per hundredweight. This is nearly three times the rate to Vancouver and yet there is this additional 600 miles through difficult terrain, the Rocky mountains.
As the Edmonton Journal in its editorial of March 16 puts it, in part:
It will be seen that this new type of discrimination applies particularly to materials and semi-finished goods used in manufacturing. The effect is to hamper Alberta's developing industries in competition with those in eastern Canada, especially in their efforts to obtain access to the big British Columbia market. A.part from the injury to existing firms, there is no doubt that the freight rate situation has helped to discourage a number of concerns which had planned to establish new industries in Alberta.
My concern, as well as the concern of the people of Alberta, is how far this is going to go and how wide a gap is going to be opened up. The one and one-third rule which has been recommended by the Turgeon commission is now becoming meaningless by virtue of the position taken by the railway companies. We in Alberta feel that this is downright discrimination; it is both unfair and unjust. It is my submission, Mr. Speaker, that every consideration should be given to bringing the so-called agreed charges now established by the railways under the one and one-third rule.


John Borden Hamilton: This
afternoon, Mr. Speaker, I was approached by the hon. member for Waterloo South (Mr. White) who asked me how long I was going to speak tonight and I was reminded of my experience in the courts and the frustration of waiting for cases to be heard. I was thinking though, Mr. Speaker, if I might make a suggestion, that certainly we have all felt that the rules in connection with the debate on the address in reply to the speech from the throne and the budget address have been a great improvement over the rules in previous years. However, I am wondering if instead of allotting the number of speakers by parties it might not be an improvement if each party were allotted a specified amount of time and given the privilege of working out within that amount of time the number of speakers who desired to take part in the debate. I feel there are a great many of us who would be quite content to speak for 15 or 20 minutes

The Budget-Mr. J. B. Hamilton and in that way enable perhaps 15 or 20 more speakers to participate in this most important discussion.
I am not going to take very long tonight and there is a reason for that. I think you are all waiting to hear the first effort of the new member for Temiscouata (Mr. St. Laurent). Let me say that since I am not following him in the debate I will not be able to congratulate him on his effort, but I can say that I sympathize with him at this time because everybody has had to go through this ordeal at some time or other in his career. I should like to say as well that it would give me a great deal of pleasure tonight to make one of those speeches that are sure to catch the headlines. Like the hon. member for Fraser Valley (Mr. Patterson), if I could not stop all the money that is going to the Minister of Finance (Mr. Harris) I should like to give it all away after it gets there. Unfortunately, it is not possible for me to say I should like to double all the social security features. I cannot talk tonight about planes for Israel, magazine taxes or United States investment, but I do believe I have something to say about a problem which exists at the grass roots level. It is one which is being studiously avoided by this house, and that is the problem facing municipalities in connection with their financing. You know, this comes as a surprise to me because if one looks at the parliamentary guide one finds so many members in this house who have had lengthy experience on municipal councils, but apparently when they get to this lofty position in the senior government they forget all about the problems that they left at home.
I think perhaps I should not use the expression "senior government" because that does not give a true picture of the spot these municipal councils occupy in our governmental setup. The members of these municipal councils, in their sphere, are just as capable and as well qualified to deal with those problems as we are to deal with ours. They face the same number of problems and just as great problems as we do here. However, to paraphrase Mark Twain I would say that everybody talks about the municipalities but nobody does anything about them. The hon. member for York Centre (Mr. Holling-worth) spoke to me just a few moments ago and said he was going to look after the interests of that particular part of the province. I am quite sure I can say to the hon. member tonight that anything I say about York West is equally applicable to his riding, and his problems there are just as important as ours. When I talk about these problems tonight I do not want to restrict myself in any way to the particular riding I represent 

because I feel if you do that in this debate you are abusing the privilege of taking part in it.
Municipal governments as we know them in this country, and perhaps particularly in Ontario, have reached the breaking point, yet the higher levels of government appear totally unconcerned. The chief occupation of the higher governments at the moment appears to be to hold conference after conference, issue statement after statement, but not to do anything while allowing the municipalities to continue sinking. The plain truth of the matter, Mr. Speaker, is that realty taxes cannot begin to cope with the demands made upon municipal treasuries. This is most important in connection with education costs. In an expanding economy in which it is called upon to provide increasing services the municipality, with its narrow tax base, simply cannot perform its proper functions. The responsibility for applying remedies lies with the senior levels of government, and when I say that I mean provincial governments as well as the federal government.
It is cold comfort for the municipal taxpayer, saddled as he is with these crippling taxes, to listen to his representatives in the provincial house or this house extend condolences and drip crocodile tears while doing nothing to ease the strain. The home owner has had to foot the bill just like a milch cow, and up to now he has been an uncomplaining animal who gives and gives because that is what he has always done.
The federal government brings in hundreds of thousands of newcomers to this country. We all agree that we need them; but immediately they step off the boat and immediately they get their first pay cheque this government takes a big bite for its own tax purposes. The federal treasury receives the revenue and the municipality gets the headaches. It is high time that all governments took a long look at the problem of education costs and divorced them entirely from real estate taxes. The cost of education should be redistributed on a more equitable basis in order to get the home owner off the hook. Buck-passing has become a fashionable pastime, Mr. Speaker, in this connection but the time may not be far off when an aroused public will demand more than talk. Municipal governments need help, and they need it desperately; but there seems little awareness of the gravity of the situation on the part of this government or of other senior levels of government. Municipal governments are the poor relatives trying to exist and provide for a family that grows and grows and whose wants become greater and greater. Unless there is help, the education system in

Ontario, Mr. Speaker, particularly in the metropolitan area of Toronto, faces a breakdown.
I am not going to quote from any lengthy articles or editorials, Mr. Speaker. I am sure that you have been subjected to enough quotations today. I saw a couple of articles just the other night in the Evening Telegram. One article was written by Arthur Spence and appeared in the Toronto Telegram entitled, "Fight About Schools". In the same paper there was an editorial entitled "Frills and Essentials". But, Mr. Speaker, it is boiling down to this. The provincial treasury does not have the money to pass on to the municipalities. It has had to provide some cuts in expenditures in order to carry on on an equalized basis from one municipality to the other. In order to do that, such items as domestic science classes, gymnasiums, manual training rooms, are now required to be dropped from school plans if there is to be any new school building in the area of greater Toronto. I leave it to you, Mr. Speaker, and to hon. members, to consider whether items such as these can be classified as frills. And yet, if the financial problem is left the way it is those types of facilities may be dropped from new school construction.
Is there an answer in increased realty taxes? I doubt it very much, sir. This problem exists all over, but I should like to illustrate it to you tonight to indicate to you the seriousness of the situation. I hold in my hand the New Toronto Advertiser, a paper with the largest weekly circulation in the province of Ontario. I should like you to look at these headlines. "Frustrate Tax-Control Bid". The following week this headline appeared "Fight 30 Per Cent Tax Hike". "Widow Urges Tax Strike, Many Consider Selling". If the people at this level are beginning to talk about tax strikes, then I think we should realize the situation. The following week this headline appeared: "Tax Prospects Frightening". The heading on the inside part of the paper is as follows: "Higher Long Branch Taxes Force Widow to Sell. Can't Pay Extra 10-Mill Boost to Improve Roads".
I do not know about the Minister of Finance, Mr. Speaker; I do not know whether he has all the money which he should have to meet all of the new types of requests that we are going to make if the suggestion of the hon. member for Fraser Valley (Mr. Patterson) is acceded to, but if the tax structure breaks down at the base, then the welfare payments are not going to be forthcoming at the top.
Our party has considered and has made recommendations at various times as to what
17. 1956
The Budget-Mr. J. B. Hamilton might be done in connection with this situation. As far back as 1952, in our amendment to the address in reply to the speech from the throne, the following words were included:
To reach agreement with the provincial governments in regard to 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.
A clear measure of the responsibility and the necessity of help which is required by the municipalities. I am wondering whether any honest approach has really been made to this problem? Is it a continuation of this taxing authority saying to the provinces, "That is your responsibility", and the provinces saying, "We need more money from you in order to do the job."
I do not think I need to apologize in connection with this suggestion because I understand it was made by the premier of Manitoba. He said, in connection with the negotiations which took place here most recently between the provinces and the dominion, that around the conference table there should have been another chair for a representative of those municipalities. There is no use our saying that the municipal government is the creature of the province. There is only one dollar to be extracted from the taxpayer, and there will have to be a new method of dividing it.
A year ago in this chamber we discussed the question of changes in the Municipal Grants Act but I am sorry to say, Mr. Speaker, we did not get very far. The federal government thinks that apparently it is a pleasure for most municipalities to have federal buildings located in their districts, and that those districts should get down on their hands and knees and thank this government for being so kind. But I say to you, Mr. Speaker, that that type of construction requires the same services and requires all of the help from the municipality to maintain that any other type of construction requires. As a matter of fact, when we discussed this last year-and I think it is contained in the legislation passed in connection with the grants that were given-this government wanted to remove any assessment dealing with ornamental features on the building. I may say that the amount of money that we spend on some buildings approximates $22.50 a square foot and there must be an awful lot of ornamental features, when we talk about that amount.
I was talking to the president of one of our home and school associations, and as I walked into one of our school buildings I saw some marble walls and terrazzo floors. I said: "This looks a little nicer than when

The Budget-Mr. J. B. Hamilton I went' to school". The president of that association turned to me and said: "Mr. Hamilton, if all the public buildings in Canada can have marble entranceways and terrazzo floors and all the carved features, then surely it is not too good to provide the same thing for the students going into our institutions". Therefore, if we are talking about economy, if we are talking about removing the frills, then we should take into consideration the removal of some of the frills from some of our own activities. What might we do? What might be the solution of this problem? First of all, I think that this government should consider paying in full on a full assessment its share of the taxes wherever it has buildings in any municipality. It seems to me that that is only right, that that is a step in the right direction.
I think we have advocated before, and we should continue to advocate, the complete removal of sales and excise taxes on purchases by municipalities. I do not know how far you can carry this, I do not know how much you want the taxpayer to pay. I mean, it is his own material going into his own institution and yet you are asking him to pay two or three times before it gets into the bricks and mortar.
Then I submit we have to do one further thing as a temporary solution in an effort to broaden the tax base. We have had a lot of suggestions-I have made a couple myself on previous occasions-as to what we might do for the real property taxpayer. I can see some reason for burdening real estate with the costs of police and fire protection, garbage collection and the provision of various services, but I cannot see the necessity of burdening it with almost the total cost of education.
One way to broaden the tax base is to allow that part of real property taxation applicable to schools or school purposes as a deduction from federal income tax. Someone may well say that we would then have to increase the federal income tax. That might be true, but at the same time it would broaden the tax base and ensure that all of those who are subject to this particular type of tax are paying their fair share. As I look at the various activities of the government I am quite satisfied that if this course were taken the Minister of Finance (Mr. Harris) could probably make sufficient saving in his expenditures to provide that type of relief without additional taxes.
It may be said that this would be only a temporary solution, and that might be so, but there is a permanent solution. The federal government in co-operation with the provinces should take over the tax situation in connection with education. Someone will say that


that would be infringing on provincial rights, but this government never hesitates to move forward when it is something which politically suits its purpose. I am quite sure that it could do the job in this instance as well.
The things which I have said do not apply only to my particular area, although the problems there are great. I am sure that within the next year we will have 140,000 people living within the confines of York West. The burden of providing for institutions of education and similar facilities is becoming almost unbearable. When I refer to the problem of frills and essentials which are arising here, similar problems are arising in other ridings. I picked up a little pamphlet with reference to the election which is going to take place in Saskatchewan, I understand some time this year, and noted that they are considering the same things there. They talk of reduced taxes on property, the paying of 50 per cent of the local educational cost, the exempting of the municipalities from sales and excise taxes. I say to the Minister of Finance that these things do not apply to any particular area in Canada, they apply to Canada from one ocean to the other.
In conclusion-I understand you are not supposed to use that expression-it seems that everyone has said that there is nothing surprising about this budget. But in my very short tenure in this house I find something surprising about it. The Minister of Finance said that he hoped some of the optimism of the Minister of Trade and Commerce (Mr. Howe) would rub off on him. The surprising thing about this budget to me is the fact that it was brought in by the Minister of Finance when it might have been brought in by the Minister of Trade and Commerce because he does everything else around here.
(Translation) :


Mr. J. P. St. Laurent (Temiscouata):: Mr. Speaker, last fall, after the resignation of Mr. Jean-Frangois Pouliot, as member for Temiscouata, upon his elevation to the Senate, I sought election in that constituency as the official standard bearer of the Liberal party.
Since the 26th of September 1955, I have had the honour to represent the constituency of Temiscouata in the parliament of my country. My first words are therefore an expression of deep and sincere gratitude to the electors of Temiscouata for their unequivocal show of confidence in me and for whom, since then, I feel an ever growing esteem because, more than ever, I have occasion to see them at work. In return for this mark of great confidence which they have shown me I promise to serve, as their member, with all the devotion of which I am capable.

Some time ago in this house, the hon. member for Quebec West said something about me. Having neither the ability nor the competence to discuss matters which may properly be classed as garbage, I am constrained, with deepest regret-and I apologize for it to the members of this house-to refrain from any comment regarding the speech of the hon. member.


J.-Wilfrid Dufresne: It has been done already. (Text):


Jean-Paul Stephen St-Laurent: Mr. Speaker, today the red shadow of communism casts its grim light over humanity and even in the drama of party battle, political leaders- unless they are to betray the trust of the people-must talk and act with a new degree of maturity. It is just not good enough for any political leader of any party in any part of Canada to sit back and enjoy the luxury of condemning what Canada is doing to help fight communism in the North Atlantic alliance or in southeast Asia.
I am not a separatist and the people of Quebec are not separatists, even though we assert with persistence the rights which were guaranteed us under the constitution. The best proof that we in Quebec are not separatists is that since confederation the majority of the members of parliament elected from Quebec have almost always been on the government side, even when the great Conservative leader, Sir John Macdonald, was prime minister of this country, which means that they have almost continually been in agreement with the majority of the members elected throughout the country.
As a Canadian citizen living in Quebec, I believe it is my duty to condemn in this house any effort to create the impression throughout Canada that Quebec is not a loyal part of the Canadian confederation. I believe that all members of this house have a right, if not a duty, to take as active a part as they can to ensure the best possible government in Canada or in their own provinces.
One of the questions that is now being asked in my province is this: "Why do we sell western surplus grain at ridiculously low prices to communist countries rather than to Quebec livestock men?" The short answer is that Quebec livestock men can buy grain cheaper in Quebec than the price charged for any Canadian grain to any other country, communist or otherwise, and Quebec livestock men do not think it is ridiculously cheap. Canada is not giving any of her surplus grain to the communist countries, nor is she selling them any bargain-priced grain that she denies her own people. We are selling our wheat at good prices, thanks to the good sense of this government.
The Budget-Mr. J. P. St. Laurent
The people of my province have been asked about gifts to other countries. There have been no gifts to any countries, apart from the Colombo plan and the United Nations technical assistance, and a few very small amounts for relief of disasters in friendly countries, some of which have helped us when we had disasters.
Another question we are being asked is, "Why do we give half a billion dollars of our income tax money to Colombo?" It is even said that nearly half a billion dollars has been thrown away on the countries of southeast Asia. To the members of this House of Commons who have voted the Canadian contribution to the Colombo plan countries during the past half-dozen years, it is not necessary to say it was no half billion dollars. The total amount voted since the inception of the Colombo plan in 1951, up to 1956, is $127,900,000.
All members of this House of Commons have agreed, as have the Canadian people, that it is necessary that Canada should join with other fortunate nations of the free world to help create conditions in these southeast Asian countries so that communism will not get control of that area with its strategic supplies.
The blunt fact is this, that in southeast Asia today there is a battle for the hearts and minds of one-quarter of mankind. The kind of world we and our children will live in may well be determined by the events in southeast Asia. The fight for the control of the world is between the communist nations and the free world. Canada has sent her dollars out to this vital economic battleground. She has sent her scientists, her engineers, her technicians out there in one of the greatest crusades in history.
Today, Canada is helping to write one of the most glorious chapters in the history of man, and yet there are a few irresponsible critics who think that this does not matter to our people. Last Saturday, April 14, the editor of the French newspaper Le Devoir, Mr. Gerard Filion, who visited the areas benefiting from the Colombo plan, had this to say about this great humanitarian effort:
(Translation):
The Colombo plan is a joint assistance scheme of the commonwealth countries, to enable India, Ceylon and Pakistan to feed their undernourished men, women and children, who are exposed to every deficiency disease and to all epidemics that undermine the peoples of Asia.
Contrary to general opinion, Colombo plan funds are not used to provide foodstuffs but to pay for the necessary equipment which will enable Indians, Pakistanians and Cingalese to produce their own food. The Canadian contribution has been used to build an irrigation and power dam north of Calcutta, to purchase farm tractors and
3024	HOUSE OF
The Budget-Mr. J. P. St. Laurent buses for public transportation in the province of Bombay. Each country tries to safeguard the identity of the achievements made possible by its contribution.
Altogether foreign assistance, either under the Colombo plan or under Mr. Truman's point four, has allowed India to reach the objective of her first five-year plan and to launch a second one. Of course, the objective of the first plan was a modest one: restore the Indian's diet to what it was in 1939. Now that diet amounted to 1,800 calories a day, whereas at least 2,700 calories a day are required to keep the human body in good health.
In India, 85 per cent of the population, i.e. about 300 million people, are undernourished. The everyday care is to keep body and soul together. When famine strikes in one area and public authorities lack the means or the time to send supplies, thousands of deaths occur each day. In our American cities, each morning the garbage collectors pick up the leftovers from our tables: in an Indian city struck with famine, the collectors pick up, each morning, the bodies of people who, during the night, died of starvation.
Only those who have seen India can realize to what depths of misery humanity can sink. The poorest among our poor are millionaires compared to the 60 million untouchables of India.
(Text):
No true Canadian will forget or forgive the way communists in Canada tried to sabotage the Canadian war effort in the days before Russia was attacked. Well, attempts to weaken the efforts of the free nations are just as truly attempts to sabotage a great economic and social crusade against communism.
Today the hot hells of hydrogen bombs are just 26 minutes away from places like Quebec city. Today human life is probably less secure collectively than at any time in history. Today, as never before, we need clear vision and a firm will if we are to avert the dangers that threaten us.
So today, as a very junior member of this house, and as a father who loves his children,
I express the hope that all Canadians in Quebec, and in other provinces as well, measure up to the challenge of these times. In these days, when human life is probably less secure than at any time in history, surely we can all unite to support Canada's sincere efforts to build up the united strength of a free world so that it can be strong to defend itself against communism.
(Translation):
I believe that, so far, my constituency has been the only one where two prime ministers of Canada, Sir John Macdonald, and the present Prime Minister (Mr. St. Laurent), have had their summer residence. The former premier of Quebec, the Hon. L. A. Taschereau, also used to spend the summer months there.


The Right Hon. Ernest Lapointe and the Hon. Adelard Godbout were born in Temiscouata. Thus Temiscouata is well known for its prominent men, but, unfortunately, it is not so well known to Canadian industrialists.
This is why, Mr. Speaker, many business men of my riding supported my campaign last fall, outside of any political considerations, hoping that I might be able to interest some of my business friends to visit our area, and perhaps convince them to settle there. During my campaign, I promised the voters- and it was the only promise I made to them- that I would do my utmost to have industrialists visit my riding, in the hope that they might see the advantages of settling there: a large, experienced and orderly labour force; an excellent geographical location; a link between Canada and the United States, and between upper and lower Quebec; transport facilities by sea, by land and before long, I hope, by air.
Possibly the Temiscouata electors were not entirely wrong in giving me their support, for I am happy to tell you, Mr. Speaker, that, starting in 1956, our county will share in the economic development about which the minister waxed eloquent in his budget speech of March 20 last, inasmuch as an industry which will employ between 250 to 300 people within two years is about to start operating in my county any day now.
I hope, Mr. Speaker, to deserve the confidence of my electors, of the greater majority of the members of this house, and of my party as well.
(Text):


Mr. J. W. Monteith (Perth):: Mr. Speaker, I should like to take this opportunity to congratulate the hon. member for Temiscouata (Mr. St. Laurent) on his maiden speech. I should also like to state that I envy him his ability to speak in both official languages. I should really like very much indeed to be able to address the house in both languages with the facility that he possesses. Unfortunately, sir, I cannot repeat these congratulations with respect to the Minister of Finance (Mr. Harris) on his recent effort in the budget debate. In sitting back here and watching various members get up to speak in the budget debate it seems to me that we have a strange situation. Every government member seems to feel that he has to commence his speech by congratulating the Minister of Finance on a wonderful effort. I cannot quite agree with that. To me it seems to be praise that is falsely placed.
Last year, as I recall, various government speakers congratulated the Minister of

Finance on the fact that he was able to provide tax reductions. This year they seem to find room for praise in the simple fact that he did not provide any tax reductions. To me the budget is simply an unimaginative budget. It is a political budget. There is no doubt that the Minister of Finance might well have made some tax reductions this year but has seen fit to save them until some future time.
I should like to make a few remarks about my own riding. First of all, I should like to mention the plight of Ontario farmers. That has been referred to several times this session but I would repeat that I think the government should give grave consideration to remedies for the situation with which the farmer is faced. Any industry as basic as agriculture whose net income decreased 28 per cent in the period from 1951 to 1953 and a further 12 per cent in 1954 requires a great deal of consideration. This decrease, of course, has been suffered in a period when all other income has been undergoing a great growth.
When the hon. member for Oxford (Mr. Nesbitt) spoke in the debate a few days ago he dealt with this problem in great detail. I do not propose to go into the detail that he did but I would suggest that the government give close study to his remarks. I believe they require a great deal of study. On this subject I would recommend, however, that the importation of skim milk powder and cheese be allowed only on such a basis as will guarantee our producers a fair return.
I have another matter affecting my riding that has to do with C.N.R. pensions. As we all know, the C.N.R. employees have at times suffered lay-offs. These employees while suffering a lay-off are always subject to recall and if they do not respond they lose their job seniority and all other privileges. This means they cannot improve their pension position during the period of a lay-off because of course any jobs they may take have to be of a temporary nature. They cannot withdraw their pension except on complete severance from employment. These employees have a complaint and in that regard I should like to refer to page 25 of the official text of the Canadian National Railways pension plan. I should like to read clause 201 (d) which defines "allowable service" as follows:
"Allowable service" means (i) service prior to July 1, 1942, computed and converted into months of service in accordance with the company's regulations pertaining thereto; (ii) service on or after July 1,	1942, on the basis that one month's
service shall be allowed for any month during which any service has been rendered to the company in respect of which salary or wages have been paid; and (iii) such other service as may be recognized under these rules or as may be specially authorized by the directors hereafter, converted into months of service.
The Budget-Mr. Monteith
In conjunction with that I should like to read the applicable part of clause 205 which is found on page 27 of the same booklet. That part reads as follows:
205. (1) Every member who entered the service before attaining age forty-five and who remains in the service until normal retirement date under these rules shall be granted a pension, payable monthly, the annual amount of which shall be his average annual salary or wages for the five or the ten years of his allowable service next preceding retirement, whichever is the larger, multiplied by the following percentages:
One per cent for each year of allowable service up to 20 years.
One and one-quarter per cent for each year of allowable service during the next ten years;
One and a half per cent for each year of allowable service over 30 years.
Twelve months of service computed as mentioned in clause (d) of rule 201 shall constitute a year of allowable service, and part of a year shall be computed proportionately.
It is my understanding, Mr. Speaker, that if an employee is laid off in that last five or ten years, after having had many years' service, it can well mean a reduction in the percentage applied to average salary or wages to arrive at his pension. I understand the employees would like the opportunity of personally making up their contributions to the trust fund during any period of lay-off. This request does not seem at all unreasonable to me, particularly as during any lay-off period the employees are handicapped in securing other employment. I would simply suggest that the Minister of Transport look into this matter and advise correction of any injustice there may be.
I should like to return to the budget for just a moment. The Minister of Finance said that he was proposing to make deductible for tax purposes the expenses of professional people and others incurred in attending two conventions annually in Canada. I cannot agree that this is reasonable. I do not see any reason why one of these conventions at least should not be outside of Canada. I am simply going to take the case of a doctor, and I am assuming that this legislation is probably being brought forward as the result of a tax appeal board case some few months ago. I am thinking of a doctor who, for instance, goes to New York to attend a convention. I have known such instances where doctors have gone to conventions there and have attended study classes eight hours a day for a whole week. They may have gone to a musical comedy at night. I do not doubt that they did, but I do not think they have tried to charge those expenses.
However, I feel that when the doctor comes back to Canada he is in a position to earn more income on which he is going to pay taxes. On top of that, I think he is much better prepared to look after the illnesses
3026	HOUSE OF
The Budget-Mr. Monteith of Canadian citizens. It only seems reasonable to me that he should at least be allowed one convention in the United States. The minister's proposal definitely stipulates two conventions annually in Canada. I suggest that the minister give that matter consideration.
Incidentally, Mr. Speaker, I understand from an answer by the Minister of Finance on the orders of the day today that income tax amendments are going to be brought down shortly. I may have more to say about income tax at that time, but at this moment I should like to mention the proposed magazine tax. I think it should not be considered at this time. It is discriminatory. If these magazines should add to their advertising rates the 20 per cent tax that has been suggested I see no reason why advertisers would not in turn reduce their advertising budgets or have less money left to spend on strictly Canadian magazines. It seems very logical to me.
Furthermore, Mr. Speaker, I do not believe in trying to legislate as to what people should read except that I too believe that some of the trash on our newsstands should be done away with. This tax appears to me to be a special tax on a special group. It is a special form of government interference in the magazine business. Mr. Speaker, I recall that during my first session, or at any rate during my first period in the house during which there was a budget debate, the spring of 1954, Hon. Douglas Abbott, when he was minister of finance, proposed a tax on farm mutual fire insurance companies. Before the debate was concluded he saw fit to reverse his opinion on that matter and withdraw the proposal. I am suggesting to the Minister of Finance (Mr. Harris) that it is not too late to withdraw this proposal of the suggested 20 per cent tax on advertising in certain magazines, which might well be the forerunner of a tax on free speech.
I just wish to say a word about direct investment in Canada by foreign capital. To use the words used in Vancouver yesterday I believe this has been "definitely beneficial rather than detrimental" to Canada. Is it not time, however, to consider ways and means of providing for greater participation by Canadians in the expanding economy of our country? Let me point out that we have no capital gains tax in Canada whereas there is such a tax in the United States. I think this is quite an encouragement in itself to United States capital investment in Canada. The Security Analysts Association of Toronto presented a brief to the royal commission on Canada's economic prospects. They point out that section 106 of the Income Tax Act appears to be the crux of the matter. I would also mention, of course, that the reciprocal


tax convention of 1951 enters into the situation. Those two matters, section 106 of the Income Tax Act and the reciprocal tax convention of 1951, amply illustrate that if a foreign corporation operates a subsidiary and allows no Canadian shareholders, the withholding tax on dividends going out of Canada is 5 per cent. If it permits less than 5 per cent ownership by Canadians, the withholding tax is still 5 per cent. If it permits more than 5 per cent participation by Canadians, the withholding tax jumps to 15 per cent. That simply means that the withholding tax is three times as great if more than 5 per cent of the ownership is Canadian.
I should like to review briefly the four types of companies to which I am going to refer. I could give examples actually of these types of companies but I do not think that is necessary. First there is type 1. This type of company has been founded as a branch of a foreign corporation. There is no Canadian interest. Canadians can invest only by buying shares of the parent foreign corporation. They would then have only a small interest in the Canadian operations as compared with the over-all operations. Dividends to Canadians from holdings of the parent company would suffer withholding tax by the foreign country. Canadians would also lose the 20 per cent credit for tax purposes on these dividends from foreign holdings. To me, Mr. Speaker, this is not altogether an attractive proposition.
Then there is type 2. These are companies in which Canadians held minority interest and have been bought up by foreign parent corporations. This to me seems like the wrong trend. It has the effect of reducing former joint undertakings to the stature of branch plants. The tax situation is the same as that in type I.
Then there is type 3: These companies were at one time largely Canadian owned companies and were bought out by foreign interests. The tax situation in this type 3 is the same as that in type 1 after this move has been taken. There is not any new industry but the tax laws have encouraged this move.
Type 4: Companies whose voting stock is owned by foreign interests but whose senior financing is done in Canada. If senior financing takes the form of debentures or bonds the interest on such is deductible from company earnings for tax purposes. Income from such interest to Canadian holders is not subject to the 20 per cent dividend credit. Actually the dividend tax situation is the same. The withholding tax situation is the same as that in the other types.
I understand a brief has been presented to the royal commission on Canada's economic prospects, the so-called Gordon commission, pointing out that there are certain

foreign corporations carrying on their entire business in Canada whose profits are taxed in a manner similarly to that in which the profits of Canadian companies are taxed but there was no withholding tax on the movement of profits out of Canada. I should like to point out that I welcome foreign investment in Canada but that there appear to be certain inequities. I would suggest a full review of the withholding tax structure in order to determine the volume of Canadian investment in Canadian corporations. I would hope that this review would result in ownership securities being available to Canadian investors. Instead of the withholding tax becoming lower as Canadian investment decreases, it might well be the other way. The present withholding tax structure encourages more and more foreign domination. From a straight dollar point of view the present withholding tax structure discourages United States corporations from permitting Canadian participation and our national revenue department receives only one-third of what it might receive on dividends going out of Canada. I suggest that a real study should be made of the problem as the tax structure may not be the only angle to be taken into consideration.
I should like to bring to the attention of the house the situation with regard to Aluminium Limited. The Canadian shares were purchased by the United States parent company and were issued to United States shareholders. Eventually some of these shares were in turn purchased by Canadians and Canadian interests now hold some $300 million of the equity stock of this company. It seems to me that a worthy thought might develop if a study is really made of the whole situation.
I have made some calculations here. They are based on the figures taken out of this booklet entitled "Canada's International Investment Position, 1926-1954" and issued by the dominion bureau of statistics. I should like to point out that at page 75 of this book the direct investment of the United States in Canada is given-that means investment in equity holdings; it does not mean in government bonds or that sort of thing-as $5,740 million. At page 73 the direct investment of Canada in the United States is given as $1,256 million. I am reducing that $1,256 million by approximately one-third as at page 50 of this book it is stated that the equity of Canadian residents in the direct investment abroad at the end of 1954 was less than two-thirds of the total investment from Canada. I am taking the United States position but it is less than two-thirds of the total investment from Canada. In other words, some of these Canadian holdings
17, 1956	3027
The Budget-Mr. A. W. A. White abroad are in turn owned by foreign investors. As a result there is estimated to be one-third off total holdings of Canadian investment to arrive at the net Canadian picture abroad. So reducing the $1,256 million by $416 million in round figures we come to a net investment by Canadians in the United States of $840 million. I am going to deduct that $840 million from the figure of $5,740 million mentioned previously as United States direct investment in Canada. This gives you a net figure of excess investment by the United States in Canada of $4,900 million. I am presuming that there is probably a 5 per cent dividend paid on this $4,900 million which would equal $245 million; that is a dividend paid on this excess $4,900 million invested in Canada. A 15 per cent withholding tax on that would amount to $36,750,000. A 5 per cent withholding tax would amount to $12,250,000. In other words, as between a 5 per cent withholding tax and a 15 per cent withholding tax there is a difference of $24,500,000. I simply present these figures, Mr. Speaker, to indicate that we may be losing out on some tax revenues as well as discouraging the participation of Canadian industry. Incidentally, this $24,500,000 approximately equals our donation to the Colombo plan-at least up until this year.
In closing, sir, I would repeat that foreign capital investment in Canada's future has been definitely beneficial rather than detrimental. But let us examine the situation as it exists today quite closely. Surely, it is time we took a look at this picture. I know that time is running short and there is a member on the government side who would like to say a few words. I understand that actually he is supposed to be making a Tory speech. I hope that in the very few moments left he does not change his mind and vote for the government.


Mr. A. W. A. White (Waterloo South):: In
rising to take part in this debate, Mr. Speaker, I would first like to congratulate the Minister of Finance (Mr. Harris) on the very able and realistic manner in which he has handled his department. The year 1955 was undoubtedly one of Canada's most prosperous years, and in my mind there is no doubt that the tax adjustments made by the minister last year, the effect of many of which will not be felt until this year, were responsible in no small way for the economic recovery that took place in this country. However, in spite of this great national prosperity there were some sectors of industry and agriculture which did not fully share in that prosperity. If Canada is going to maintain its present level of prosperity, then this increased business activity must accrue to the benefit of all sectors of the economy or else those sectors
3028	HOUSE OF
The Budget-Mr. A. W. A. White which did not share in it must be assisted by government intervention.
It was for that reason I had no hesitation in supporting government legislation introduced at this session to assist western wheat farmers. It is also for that reason that I congratulate the Minister of Agriculture (Mr. Gardiner) and the government on maintaining and continuing floor prices on butter, which I feel have helped the Canadian dairy industry. I should, however, like to draw to the attention of all hon. members of this house, and particularly the Minister of Finance, the depressed condition of the wool cloth industry in Canada. It is one of those industries in which I believe government intervention is not only necessary but justifiable.
The wool cloth industry is one of the oldest industries in this country and a large number of factories are located in small towns and villages where they are the main source of employment. A good example of this is Dominion Woollens and Worsteds plant in Hespeler, a town of approximately 3,600. Up until the year 1950 this factory employed over 1,300 persons, whereas today there are only 552 people employed and some of them are on short time. Between the years 1949 and 1950 employment in the Canadian wool cloth industry dropped from 10,500 to 6,000, a reduction of 43 per cent, and 17 factories closed their doors. Between 1954 and the present time five more textile mills, two of which were wool cloth factories, have ceased operations. The chief factor which seems to be slowly but surely eliminating the wool cloth industry in Canada is competition with imported fabrics from the United Kingdom where wage rates are substantially lower than in Canada.
There may be some who have the idea that the Canadian wool cloth industry is over-expanded and inefficient. In answer to that let me say that between the period 1945 and 1949, with full employment, the Canadian wool cloth industry was only able to supply 68 per cent of the domestic market. In the postwar years the industry spent over $35 million in plant and equipment. A recent survey indicates that there is a greater percentage of automatic equipment in use by the industry in this country than there is in the United Kingdom, so the industry is modernized and efficient. According to the latest information available the Canadian wool cloth industry is paying 2J times the wages that are paid in the United Kingdom. Since the cost of raw material is basically the same in both countries, as it is controlled


by world prices, and since Canada has a higher productivity now through the use of a greater percentage of automatic equipment, we are forced to the conclusion that the wide differential in wages is the major factor contributing to the loss of the domestic market by the Canadian wool cloth industry to British imports. There does not seem to be any immediate likelihood of narrowing the gap in the wages paid unless the value of the pound improves in relation to the Canadian dollar, and the possibility of that happening is very remote because England deliberately devalued her currency to gain access to world markets.
One must, therefore, look to some other solution to the difficulties that are besetting the Canadian wool cloth industry. In May 1954 Mr. Abbott, the then minister of finance, as a result of numerous representations made by the Canadian wool cloth industry, directed the tariff board to make a study of all relevant information concerning the Canadian wool cloth industry. He particularly directed them to examine tariff item 554b, with particular reference to the maximum under that item. I should now like to give to the house an outline of the background of tariff item 554b, which undoubtedly is one factor which has enabled the United Kingdom to take over the wool cloth market in Canada.
In the year 1935 there appeared for the first time a maximum British preferential duty on wool cloth coming into Canada. The particular tariff item provided for an ad valorem duty of 27J per cent and a specific duty of 17 cents per pound, with the proviso that the sum total of these two duties was not to exceed 65 cents a pound. The establishment of British preferential maximum duty of 65 cent's per pound was the result of a recommendation of the tariff board, based on its findings that cloths, both woollens and worsteds, selling in England at a price of $2 or more per pound, were not within the range of economical manufacture in Canada. In other words, the tariff board recommended that a ceiling be placed on the duty for high-priced specialty fabrics such as those used by custom tailors, and in this way restricted Canadian production to a range of cloth in which it was most efficient.
Raw materials and conversion costs were much lower in 1935 than they are today, and the average price of imported fabrics was only $1.02 a pound. Therefore, it can be readily seen that the maximum duty applied to only a very limited and special range of cloths.
This tariff item was revised in 1937 and again in 1948, and the duties were reduced

from 27J per cent to 20 per cent ad valorem. The specific duty was reduced from 17 cents to 12 cents per pound and the maximum was reduced to 50 cents per pound. The conversion costs of raw materials were much lower in 1935 than they are today.


Mr. Speaker:: The Clerk has just informed me that it is is now 9.45 p.m. In compliance with the provisions of standing order 58, paragraph 6, it is my duty to interrupt the proceedings and forthwith put the question on the main motion.
The main motion is the following one:
Mr. Harris, seconded by Mr. Pearson, moves that I do now leave the chair for the house to resolve itself into committee of ways and means.
Those who are in favour of this motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those who are opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas
have it.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Robinson (Simcoe East) in the chair. Progress reported.

Walter Edward Harris: Mr. Speaker, tomorrow we shall take the resolution with respect to the trade agreement with Russia and then the trans-Canada highway.


[Stage Direction]
It being five minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.

Questions
ANSWERS TO QUESTIONS	blindness allowances
The following answers, deposited with the Clerk of the house, are printed in the official report of debates pursuant to standing order 39:

Mr. Purdy: 1.	Has consideration been given by the government or the Canadian National Railways to making the pensions of retired male Canadian National Railways employees covered by the Intercolonial and Prince Edward Island railways employees' provident fund act applicable to their widows?
2.	If so, what decision has been arrived at?
3.	If not, will the matter be studied and reported upon?
Answer by:	Mr. Langlois, Parliamentary
Assistant, for the Minister of Transport:
Consideration has been given, and action has been taken to accord contributors to the Intercolonial and Prince Edward Island railways employees' provident fund the opportunity to transfer to the Canadian National Railways' pension plan and thus place themselves in the same position with respect to pensions and survivor benefits as other Canadian National Railways employees, but no such action has been taken with respect to pensions of retired male employees of the Canadian National Railways covered by the provident fund.



INCOME TAX


Mr. Knowles: 1.	For the latest year for which the information is available, what was the total amount of money for which deductibility from corporation income tax was claimed by corporation income tax payers with respect to donations, contributions to approved charities, and similar claims?
2.	For the same year, what was the total amount allowed as deductible? If a precise figure is not available, what is the estimated figure?
3.	For the same year, how much less money was received by the federal treasury from the corporation income tax than would have been the case if such deductions had not been allowed?
Answer by: Hon. J. J. McCann (Minister
of National Revenue):
1.	No statistical information is available as to the total amount of charitable donations claimed by corporations as a deduction from income in any recent taxation year. However, in respect' of 48,350 corporation income tax returns analysed for the 1953 taxation year, it has been ascertained that 33,972 profit corporations have reported total charitable donations of $24,632,000 and that 14,378 loss corporations have reported total charitable donations of $1,695,000.
2 and 3. No statistical information available.

Question No. 324-Mr. Van Horne:
What action, if any, has been taken by the government to provide handicap allowances, without a means test, for our blind people?
Answer by: Hon. Paul Marlin (Minister of
National Health and Welfare):
Since January 1, 1952, blind persons over the age of 70 years have been entitled to receive federal pensions under the Old Age Security Act without a means test. As of that date persons over the age of 70 years receiving pensions in respect of blindness under the Old Age Pensions Act were transferred to the administration of the Old Age Security Act. Other blind persons over the age of 70 who were not eligible to receive pensions in respect of blindness under the Old Age Pensions Act on account of the means test in that act could qualify for pensions under the Old Age Security Act by making application to the proper federal authorities.
The Blind Persons Act provides for the payment of allowances, subject to a means test, to persons who have attained the age of 18 years. Since the Blind Persons Act came into force on January 1, 1952, the maximum amounts of income allowed have been increased from $840 a year to $960 a year in the case of an unmarried person and from $1,320 a year to $1,560 a year in the case of a married person. Where both spouses are blind the amount has been increased from $1,440 a year to $1,680 a year.
When provision was first made for pensions in respect of blindness by an amendment to the Old Age Pensions Act in 1937, the maximum income allowed in the case of an unmarried person was $440 a year and in the case of a married person, $640 a year. These amounts were increased in 1944 to $500 and $700 a year. By amendments to the Old Age Pensions Act in 1947 the maximum amounts of income were again increased to $720 in the case of an unmarried blind person, $1,200 in the case of a married blind person with a sighted spouse and $1,320 in the case of a married blind person with a blind spouse. As explained above these amounts were increased by the Blind Persons Act to $840 a year in the case of an unmarried person, to $1,320 a year in the case of a married blind person with a sighted spouse and to $1,440 a year in the case of a married blind person with a blind spouse. The various increases in the maximum amounts of income allowed have had the effect of relaxing the means test very considerably over the years since blind pensions were first established in 1937. These

Questions
progressive changes are shown in tabular form below:
	1937	1944	1947	1952	1955
Unmarried					
person	$440	$500 $ 720	$ 840	$ 960Married (1 blind) ... Married	640	700	1200	1320	1560(both blind)	1320	1440	1680



MOTOR VEHICLES-USE OF OIL

Mr. Argue: 1.	How many (a) automobiles; (b) tractors, were there in Canada in the last year for which statistics are now available?
2.	What was the quantity of lubricating oil used in that period?
3.	What are the terms of the licence issued from the national research council for the manufacture and sale of the oil-saving device that the council developed?
Answer by:	Mr. Dickey, Parliamentary
Assistant, for the Minister of Trade and Commerce:
1.	(a) Registrations of motor vehicles in
Canada, 1954:
Passenger cars	 2,688,465
Commercial vehicles	 918,459
Motor cycles	 37,665
Total motor vehicles	 3,644,589
(b) Information not available. The 1951 census reported 399,686 tractors on farms.
2.	Sales of lubricating oils in Canada during 1954 amounted to 80,429,979 gallons of which 49,636,054 gallons were for motor transport and tractor use.
3.	This is a non-exclusive licence, and as current negotiations are proceeding with other prospective licencees, it is not in the public interest to disclose the details of the current licence at the present time.



T.C.A., MANITOBA  SERVING OF LIQUOR

Mr. Knowles: 1.	Did Trans-Canada Air Lines request the Manitoba liquor inquiry commission for approval of the serving of liquor by the glass on scheduled passenger flights?
2.	If not, did Trans-Canada Air Lines make such a request to some other body which in turn placed it before the said Manitoba liquor inquiry commission?
3.	On whose responsibility was such a request made?
4.	Was the making of such request in line with government policy?
Answer by: Mr. Dickey, Parliamentary Assistant, for the Minister of Trade and Commerce:
1.	Yes.
2.	Answered by No. 1.
3.	The management of Trans-Canada Air Lines.
4.	No question of government policy is involved as the request was made by the company on the advice of counsel who were of the opinion that such a request should be made to avoid the possibility that the company might be debarred indefinitely from serving alcoholic beverages.



C.N.R., NEWFOUNDLAND  LAY-OFFS

Mrs. Fairclough: 1.	How many employees of the Canadian National Railways have been laid off since January 1, 1955, in the province of Newfoundland?
2.	For what reason?
3.	What was the length of service in each case?
4.	How long a period of employment has each to work until retirement with pension would have occurred?
Answer by: Mr. Langlois, Parliamentary
Assistant, for the Minister of Transport:
The management of the Canadian National Railways advise as follows:
1, 2, 3 and 4. Seasonal employment and resultant lay-offs at termination of seasonal programs have a substantial effect on figures relating to the strength of working forces, and the assembling of information as to layoffs would necessitate the assignment of special staff to examine numerous staff records. It is not ascertainable if employees have had their employment permanently severed, because there are employees on seniority lists who are recallable as required. Such employees may also exercise their seniority to take positions on other parts of the system to the extent the labour agreements permit. Lay-offs, when made, are strictly in accordance with the seniority principles prescribed in the agreements with the various employees' organizations.
The average level of employment in the Newfoundland district for the month of January, 1955, was 4568, whereas the average level in February, 1956, was 4916, the latter being the latest figure available.
Eligibility for pension under the Canadian National Railways pension rules depends on the attainment of a certain age and the accumulation of a certain number of years of service.



CANNED MEAT IMPORTS

Mr. Fraser (Peterborough): 1.	Was any canned meat imported into Canada during (a) 1954; (b) 1955?
2.	If so, from what countries?
3.	What quantities in dollars and weight?
Answer by: Mr. Dickey, Parliamentary Assistant, for the Minister of Trade and Commerce:
1. (a) and (b). Yes.

Questions
2 and 3. Imports by countries of canned meat into Canada during years 1954 and 1955:
Year	1954	Year	1955	Country	Lb.	Value	Lb.	ValueUnited Kingdom 	
423,166	$ 94,384	188,149	$	52,638Australia 	
7,483,425	2,341,750	8,648,085	2,713,037New Zealand 	
490,925	188,598	246,000	109,688Argentine 	
3,192,602	950,944	3,864,596	1,284,433Brazil 	
18,000	5,946	367,496	109,453Denmark 	
74,796	44,804	48,882	37,738France 	
24,999	20,736	Germany West	-	202	81Netherlands 	
45,816	23,061	45,608	17,252Norway 	-	643	276Paraguay 	
1,314,015	426,340	-Switzerland 	
148	116	Uruguay 	
489,919	143,043	-	-Ireland 	360	159United States 	
2,420,988	866,997	2,218,868	663,499Totals 	
15,978,259	$ 5,106,719	15,628,889	$	4,988,234
Wednesday, April 18, 1958