1956-05-08

Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, I should like to make a short statement regarding plans for the building of an all-Canadian natural gas pipe line.
In the government's opinion it is of the utmost urgency that the all-Canadian pipe line should get under way at once, and that the section between the Alberta-Saskatchewan border and Winnipeg be completed during the 1956 season. I believe that this opinion is shared by all parties in the house.
The resolution now before the house proposes that the government, in co-operation with the province of Alberta, build the northern Ontario section-with the province of Ontario. Did I say Alberta?


Mr. Knowles:: Wrong again.


Clarence Decatur Howe: -in co-operation with the province of Ontario, build the northern Ontario section of the all-Canadian line and lease it to Trans-Canada Pipe Lines Limited. Both the federal and Ontario governments continue to support this proposal. It has always been understood, however, that the construction of this section will not begin until Trans-Canada is in a position to finance and build the remainder of the line between Alberta and Montreal.
During recent weeks the government has urged upon Trans-Canada the desirability of a start on the construction of the western section in 1956. The Trans-Canada company replied that they are ready to start as soon as they can arrange the necessary financing. They have all the necessary permits from Alberta and from Canada; they have gas purchase contracts with gas producers in Alberta; they have contracted for the sale of gas to consumers in Canada and the United States; and they have an option on pipe of the required 34-inch diameter, which is presently being stacked outside the pipe mills in the United States.
In spite of their best endeavours, however, they have not been able to obtain guarantees
that the money necessary to finance either the whole of the line, apart from the northern Ontario section, or the western section, would be forthcoming in advance of approval by the federal power commission of their contract for the sale of gas into the United States.
What was to be done?


Some hon. Members:: Oh, oh.


Clarence Decatur Howe: Should the government in effect abandon Trans-Canada by failing to extend the contract to construct and lease the northern Ontario section? In the first place this would have been unfair to the Trans-Canada company, which had just satisfied both the Alberta conservation board and the board of transport commissioners that its permits should be renewed for a further six months. In the second place, such action would have added to the delays in obtaining approval of the export of gas to the United States, which is apparently essential to the economic operation of the proposed pipe line, at least in its early stages.
Apart altogether from these important considerations, it became evident to the government that to abandon Trans-Canada now was to give up any hope of starting the western section this year and perhaps next year. The most important reason for this is that Trans-Canada has an option on the only adequate supply of 34-inch pipe available for delivery in time for laying during the 1956 construction season. My officers inform me also that the earliest delivery date for orders for 34-inch pipe placed now would be not earlier than the fourth quarter of 1957. Therefore, to abandon Trans-Canada in favour of any other private group was to abandon any hope of a start on the western section of the pipe line in 1956 and perhaps in 1957.
On the other hand, it seemed equally clear that even the government itself, if it chose to build and obtained parliamentary authority, could not get under way this year or perhaps next year unless it could reach some sort of agreement to take over Trans-Canada as a going concern, compensate the shareholders and agree to continue in effect the contracts for the sale of gas into the United States, which are related to the option on the 34-inch pipe.
After careful and prolonged consideration the government therefore asked Trans-Canada

Pipe Lines
whether it would be prepared to construct the western section in 1956 if the government would advance a substantial portion, not to exceed 90 per cent, of the cost of construction, at an interest rate of 5 per cent per annum for a short period. I emphasize that the approach came from the government, not Trans-Canada. Trans-Canada was not in default. It was prepared to wait another year, if necessary, although it was anxious to get started in 1956 if that was possible. The company was unable to proceed with the construction simply because of the fact that the federal power commission had not yet approved the importation of Canadian gas into the United States, and consequently the company was unable to prove to the financial institutions that it had a financeable project.
As security the government asked the Trans-Canada company to mortgage and pledge all its properties, assets and undertakings. It also asked the shareholders of the company to give the government an option on all their shares at a price representing paid-in value less the amounts provided by Trans-Canada for the construction of the western section and interest on the government advance. In the event of foreclosure the government would have the option of taking over Trans-Canada as a going concern or of returning the shares and the assets not related to the western section or the northern Ontario section and proceeding independently of Trans-Canada.
I am pleased to be able to report that the company has agreed to this proposal and that the shareholders, all of whom have agreed in principle, are now in the process of signing the necessary documents. This proposal, if ratified by parliament within a reasonable time, means:
(1)	that the western section of the allCanadian pipe line will be built in 1956;
(2)	that, if Trans-Canada is successful in financing the whole line by the date of repayment, namely March 31, 1957, the advance will be repaid and the construction of the remainder of the line will proceed as originally planned;
(3)	if, on the other hand, the advance is not repaid by the due date or there is any other default, the government can take over the line and be in a position to take whatever other steps are necessary and approved by parliament to ensure speedy completion.
By this action we will free ourselves not from the assistance of United States capital and know-how, which are valuable ingredients in the building of a natural gas pipe line, but from having to await the decisions of the United States federal power commission.
TMr. Howe (Port Arthur).]
This proposal offers an opportunity for an immediate start on construction. It gives the Trans-Canada company an adequate opportunity to demonstrate that it can finance the whole of the line. It ensures that the completion of the all-Canadian pipe line will not be further delayed by uncertainties about the decision of the federal power commission. It does not commit us to public ownership, but it recognizes that if there are too many handicaps in the way of private enterprise, the government may have to take over and construct the whole of the line as a national enterprise.


Mr. Coldwell:: Do it now.


Mr. Fulton:: You are the biggest handicap.


Clarence Decatur Howe: Is the young man from Kamloops being very funny?


Edmund Davie Fulton: Here he is.


Clarence Decatur Howe: I am trying to make a serious statement here. It is a pity that I am not given the opportunity to do so.


Edmund Davie Fulton: You are not succeeding very well.


Mr. Speaker:: Order.


Clarence Decatur Howe: In my view the prospect of public ownership of a natural gas pipe line is not one that should arouse enthusiasm. On the other hand, if public ownership is the only way in which this great national enterprise can proceed, we should not refuse to grasp the nettle. In a country like Canada it is of the greatest importance, however, that private enterprise should be given an adequate opportunity and every reasonable facility to do the job.


Mr. Ellis:: With government money.


Clarence Decatur Howe: There is still a good chance that the obstacles in the way of private financing will be cleared away before the proposed advance falls due. I believe, in particular, that the United States authority understands the importance to Canada of an early decision with respect to the application now before it for the import of gas from Canada.
I have therefore tabled a resolution in somewhat broader terms than the resolution already on the order paper, although within the same over-all financial limits. As soon as they have been signed, I shall also table the relevant agreements with the Trans-Canada company and its shareholders.
The building of the trans-Canada pipe line is a great national project, comparable in importance and in magnitude to the building of the St. Lawrence seaway. Hon. members will recall that Canada waited for many years for action by the United States that would

permit the seaway project to go forward as a joint undertaking. It was only when Canada announced that this country would build the seaway independently of the United States that the project took definite form. The action proposed today is another declaration of independence by Canada, affecting the building of an all-Canadian pipe line.


Edmund Davie Fulton: It is a treaty of surrender.


Clarence Decatur Howe: The resolution now being introduced is notice to all concerned that the all-Canadian pipe line will proceed without awaiting the action of any agency of another government.


Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, my first comment in regard to this truly fantastic announcement is to urge the Prime Minister (Mr. St. Laurent) to reconsider now, immediately, the proposal made at the beginning of this session that this whole subject be referred to the standing committee on railways, canals and telegraph lines, or in the alternative to a select committee so this subject may be examined at once.


Mr. Bennett:: Another delay.


George Alexander Drew: Talk about delay comes strangely from anyone sitting on the other side behind a government which has had this chosen instrument under its control for over five years and has warned off private investors who would have undertaken, and were prepared to undertake, the development of this pipe line.


Some hon. Members:: Oh, oh.


George Alexander Drew: Now, Mr. Speaker, the proposal before us is one which I submit should call for consideration because this certainly, so far as the recipient is concerned, is a case of "heads I win, tails you lose". The Minister of Trade and Commerce (Mr. Howe) tells us that the Trans-Canada Pipe Lines company has been prepared to graciously accept an offer to receive 90 per cent of the cost of construction of the easiest portion of this pipe line. The reason I am making this request in all earnestness to the Prime Minister at this point is that I do not think there is an hon. member in this house, including the Minister of Trade and Commerce, who is not quite certain that there were Canadians who would have been ready to go ahead on the same basis. In fact we have before us now, belatedly, the evidence that there were at least two responsible Canadian groups ready to proceed without any such encouragement as 90 per cent of the actual cost of construction.
What is being proposed today is that this government arrange the majority financing
Pipe Lines
of this venture. We have been told, without any evidence from Trans-Canada, that Canadians could not finance this. We are now told by the Minister of Trade and Commerce that Canadians are going to finance it through the channel of the government, but it is Canadian money just the same.	If
Canadians are able to finance it this way, they could finance it the other way if they had half a chance under this government.
I therefore do submit that the Prime Minister should immediately take steps either to refer this to the standing committee on railways, canals and telegraph lines, which is a standing committee and could act immediately, or that a select committee be set up so that amongst others Mr. McMahon and Mr. Gaird-ner could be brought before that committee to explain their proposals, and also offer the opportunity to others to come forward and see what could be done.
We have the statement, which has not been satisfactorily challenged, that there are others ready to proceed without government intervention, and now the Canadian taxpayers are told that, to the extent of 90 per cent of the cost of the easiest portion of this whole line, Canadian taxpayers' money is going to do the financing. And that, of course, is going to be done to build a pipe line which will be under an organization which is 83 per cent owned by investors in the United States.


An hon. Member:: What about the C.P.R.?


George Alexander Drew: Mr. Speaker, I heard the question asked, "What about the C.P.R.?" The C.P.R. was financed by money from outside of Canada; it was financed by money mainly from Britain. May I make it clear, in spite of the misrepresentation which has been made by certain hon. members sitting opposite, that we have at no time objected to investment from the United States.


Some hon. Members:: Oh, oh.


George Alexander Drew: Mr. Speaker-


Mr. Speaker:: Order.


George Alexander Drew: Mr. Speaker, the anvil chorus is following instructions; the trained seals have now learned to make a sound in unison.
One of the provisions in connection with the financing of the Canadian Pacific was that the majority of the directors and the president at all times must be British subjects. That was incorporated in the statute. At that time there was no separate Canadian citizenship, and it was clearly understood that that related to Canadian citizenship. That has always been observed, and the hon. member who interjected the question about

Pipe Lines
the C.P.R. might well point out to his colleagues that if any similar method of financing is to be employed by private investment in this way it would be well for the government to introduce into the legislation a similar provision that the president and a majority of the board of directors must at all times be citizens of Canada. That certainly will be particularly true if the taxpayers' money is to be used to finance this venture, as is now suggested.
The Minister of Trade and Commerce, with that facility that he has in offering promises which are not subsequently fulfilled, has said, "We free ourselves from the necessity of having to wait for the permission of the federal power commission." They free themselves from no such necessity whatever. Hq has made it clear again today that the eastern part of this line carrying the gas into Ontario and Quebec is dependent upon the permission of the federal power commission. They free themselves in no way from that permission. In fact they make it much more likely that the decision will be delayed and that it will be very strenuously fought, because one of the arguments that has been put up is that this is a government-subsidized venture which they do not want to have competing with their lines in the United States. Here certainly will be subsidy on a grand scale, 90 per cent of the cost.
When the Minister of Trade and Commerce says, "What were we to do?" I say, "Well, months ago they could have invited, as we suggested in this house, the proposals by others, or even by the Trans-Canada itself, under an appropriate organization, to do this job as a Canadian job and with the assurance that the president and a majority of the directors at all times would be Canadians."
Do not let anyone pretend for a moment that the fact that a majority of the directors at this time are Canadians has anything whatever to do with the control of this company. Those directors hold one share each. The real holdings in this case are in the hands of large organizations which undoubtedly are perfectly legitimate organizations in their own field. Make no mistake about it, however. We have the anomaly here that we have been told that Canadians cannot finance this, and now the government says, whether you like it or not, you Canadians are going to finance it, but you are going to finance it in the way that the government deems best.


Mr. Diefenbaker:: By bailing them out.


George Alexander Drew: What this really amounts to
is that the government, and now the caucus

of the Liberal party, as indicated by their trained applause, have agreed to bail out the Minister of Trade and Commerce from the confusion into which he got himself by the course he has followed. The present Minister of Trade and Commerce can be too expensive a luxury for Canada under circumstances of that kind.
The interesting thing, Mr. Speaker, is that all those who have so roundly applauded this strange and unique proposal for making Canadians finance a United States-control-led venture did not know about it until late this morning. It is wonderful that they were able to come to a decision so much more quickly than the government as to the correctness of this proposal.
I repeat, Mr. Speaker, that this proposal is one which calls for examination. It is not going to delay the building of this pipe line. This can be done speedily. There is a standing committee which could be set up tomorrow to start this inquiry. Let us have the facts; we have not the facts now.


Colin Emerson Bennett: I,'ll say you haven't.


Mr. Rowe:: You got them only this morning.


George Alexander Drew: The hon. member for Grey
North very wisely says, "You haven't got the facts". He did not have them until this morning, either.


Colin Emerson Bennett: Mr. Speaker, on a question of privilege, I did not say that. The Leader of the Opposition said, "We haven't got the facts", and I said that was obvious.


George Alexander Drew: Mr. Speaker, the remark stands exactly as it was put on the record. The hon. member for Grey North who now suggests that others should have had this information is one of those who came to such a speedy decision when the whip was cracked this morning in the Liberal caucus.
Now, Mr. Speaker, the Minister of Trade and Commerce said that he was trying to make a serious statement. It is a serious statement, one of the most serious that has been made in this house. What this amounts to is an invitation-


An hon. Member:: Why don't you try one
some time?


George Alexander Drew: -to investors in the United
States to come to Canada and be financed to the extent of 90 cents of every dollar, and still retain control over the investment under terms that would be entirely satisfactory to them. Now, let us by all means have investment from the United States-


Some hon. Members:: Hear, hear.


George Alexander Drew: It was not so loud this time.


William Earl Rowe: They are quietening down; they are beginning to learn.


John George Diefenbaker: It is a little different
kind of applause this time.


George Alexander Drew: -but let us have that investment under terms which assure effective supervision and control for Canadians in relation to one of the most important of our resources, and by all means let us have this investment on a basis that represents real investment from the United States. Let us not be told that we are gaining some advantage when the government announces that Canadians are going to finance this through the channel of the government and then, if the company can go ahead, get control of the whole venture after the pipe line has been completed with Canadian public money; a strange way indeed of financing a venture of this kind. This is surely very attractive to everyone but Canadian investors. Where is there a single group of Canadian inyestors who have been offered such attractive terms as these?
I am making a serious statement, just exactly as the Minister of Trade and Commerce did, and I am saying that in relation to such a unique and fantastic proposal it is the obligation of the Prime Minister to avail himself of the machinery already set up by parliament and refer this for immediate consideration to the standing committee on railways, canals and telegraph lines so the facts may be obtained from Mr. McMahon, from Mr. Gairdner and from others, and that we may learn what actually lies behind this strange proposal.
It would, I submit, be a strange thing, after more than five years' delay, if we were called upon to deal with this matter without referring it to the committee set up for that purpose in the usual way.


Major James William Coldwell: The
Minister of Trade and Commerce, in introducing this proposal into the house this afternoon, has called this a great national undertaking-


John George Diefenbaker: Disaster.


Major James William Coldwell: -and as such I and many others in this house and in the country regard it. As a great national undertaking it is being undertaken today, if this proposal is approved by the House of Commons, by corporations which to the extent of 83-5 per cent are under the control of powerful United States gas and oil companies. How can that be a great national undertaking? As such I want to regard it.
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The minister also said that private enterprise should be given an adequate chance to carry out this great proposal. Private enterprise? When we agree that the government of Canada and the government of Ontario, if the government of Ontario still agrees, will finance the undertaking of the unproductive area of the line from Ontario to Manitoba? Now we have this strange proposition of the government coming before this house and telling us that not only shall we finance with Ontario the whole of that pipe line through that region, but we are also going to finance, indirectly or directly, 90 per cent of the western portion of this line.


Stanley Howard Knowles: Private enterprise!


Major James William Coldwell: Private enterprise? Abracadabra! What do we find? I shall take a rough average. At the moment we find that 95 or 96 per cent of the construction of this Canada gas pipe line is to be undertaken, one way or the other, by the public of Canada. How ridiculous can this House of Commons become? How great a sell-out can the government make of the people of Canada? I am convinced that if they placed this proposition before the people of Canada, either by plebiscite or in a general election, it would be turned down completely.
I have been in this house for 20 years. I have read the history of Canada from confederation. I remember the great attempts that were made by the predecessors of this government to retain the integrity of this country economically, socially and politically, and I want to say to my hon. friends that never in the history of this country has there been a proposal before this house which would tend to defeat the independence and economic integrity of this country as this one does.
I say to the government and to the Minister of Trade and Commerce, let them go before the people of Canada at this time to see what will happen to them. I am convinced, from correspondence and from people with whom I am in contact, that there was never a more unpopular proposition put before the people of Canada than this.
Ladies and gentlemen, I want to say that the opposition-


Some hon. Members:: Oh.


Major James William Coldwell: Very fortunately for this parliament, I can say "ladies and gentlemen." I wish we had more ladies in this house. But, hon. gentlemen, if this were placed before the people of Canada I am certain that the people of Canada would return a verdict of no confidence in the government.

Pipe Lines
The Minister erf Trade and Commerce indicated very clearly that under certain circumstances it might be essential to take this over as a public undertaking. If we are going to finance, through the province of Ontario and through this parliament of Canada, some 95 or 96 per cent of the cost of this undertaking at the present time, why not do it as a completely public undertaking? Why not go back to the original proposal of the premier of Ontario that the government of Canada and the governments of the provinces concerned should together build this pipe line, and that each province should distribute the gas under an organization which it cares to set up?
In Ontario we have the power commission of this province, of which every Ontario member of parliament or of the legislature is very proud indeed, distributing electric power. In my province of Saskatchewan we have a similar power commission distributing electric power, and the province of Saskatchewan already has taken up the option granted by the Manyberries field owners of gas in Alberta and of gas within the province of Saskatchewan, so they are going to build their own pipe line and distribute gas in that province to their own people under their own authority, the provincial power commission. So I say to my hon. friends that we have in Manitoba, in Saskatchewan and in Ontario the machinery ready to distribute the gas.
My hon. friends on the other side of the house say this government does not wish to be involved in negotiations with various municipalities, and with various cities and towns in the distribution of gas. The federal government does not have to be involved in that respect. Already the machinery has been set up in several of our provinces. Instead of providing the finances for United States corporations controlling 83 [DOT] 5 per cent of this particular project, why not do this as a Canadian undertaking, under Canadian auspices, with Canadian ownership, with Canadian guidance, and serve the Canadian people without building enormous profits for private United States economic buccaneers?


Mr. Victor Quelch (Acadia):: Mr. Speaker, I would just like to say that the members of this group are glad the decision has finally been made to make an immediate start on the western leg of the pipe line. We reserve any further comments until such time as the measure comes before the house.
[Mr. Coldwell.l



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Mrs. Ellen L. Fairclough (Hamilton West):: May I address a question to the Postmaster General? Can the Postmaster General tell me when the motion that was adopted as an order for the production of papers on April 16 will be tabled? That was No. 58.


Hon. Hugues Lapointe (Postmaster General):: I shall look into the matter. I thought it had been tabled. I know it was prepared.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Labour. In view of the breakdown of this morning's discussions between the railway companies and the union representatives, will the government hold a conference with the railway companies so as to impress upon them the desirability of accepting the majority report of the conciliation board?


Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, I have been advised that the meeting in Montreal this morning was discontinued. I have also been informed that I shall be hearing from the two parties concerned later. Until then I have no comment to make.
[Later:!
On the orders of the day:


Stanley Howard Knowles: Mr. Speaker, I wish to direct a question to the Prime Minister supplementary to the question I asked of the Minister of Labour. In view of the compulsion imposed upon railway workers in 1950 and threatened by the government once or twice since, just what attitude does the government take toward the railway companies in the light of their refusal to go along with the report of the conciliation board? Does responsibility not now rest with the government itself?


Right Hon. L. S. Si. Laurent (Prime Minister):: The responsibility does not rest with the government itself, legally or technically, but the government does feel that this parliament has a responsibility to the Canadian people in respect of the operation of transportation services.


Stanley Howard Knowles: Will the Prime Minister look into the desirability of impressing upon the railways the importance of accepting the report of the conciliation board?


Mr.   Si. Laureni@Quebec Easi: Well, Mr. Speaker, no decision has been reached on that point, but I can assure the hon. gentleman that we have been giving earnest consideration to the problem and we still hope there will be no interruption in transportation services.



STATEMENT REGARDING IMPENDING SEAMEN'S STRIKE ON GREAT LAKES

[Stage Direction]
On the orders of the day:
Mr. G. D. Weaver (Churchill):: I should like to address a question to the Minister of Labour. In view of the importance to western Canada of the movement of grain at this time, would the Minister of Labour make a statement regarding the reported shipping strike on the great lakes?


Milton Fowler Gregg: Mr. Speaker, I thank the hon. member for Churchill for sending me notice of his question. As this dispute has reached an interesting stage in its development, I should like to take advantage of this opportunity to give the house a fairly full account of the background of the dispute.
On December 14, 1955, the association of lake carriers representing Canada Steamship Lines Limited, Colonial Steamships Limited, N. M. Paterson and Sons Limited, Upper Lakes and St. Lawrence Transportation Company Limited, Hall Corporation of Canada, Mohawk Navigation Company Limited and Beaconsfield Steamships Limited, served notice on the seafarers' international union of North America, Canadian district, requesting the union to commence collective bargaining.
On January 12, 1956, the seafarers' international union of North America, Canadian district, requested the services of a conciliation officer and listed the issues in dispute which were: (1) A change-over from the traditional system of payment by the month to payment by the hour and also an increase in wages. The union asked for a schedule of hourly rates ranging from $1.50 per hour to $2.03 per hour, depending on classifications. (2) Fourteen days annual vacation with basic pay to be computed on a daily basis, vacation pay to commence on the first day for which wages are paid and conclude on the last day for which wages are paid. (3) Eight statutory holidays to be paid for at the rates established for work performed on Saturdays and Sundays. (4) Normal work week shall be the five week days of eight hours per day, Monday through Friday. (5) There shall be paid to those whose work exceeds 40 hours payment of double the basic hourly rate. (6) A company contribution of 20 cents per day per man to the welfare plan.
Inquiries of the Ministry
On January 16, 1956, I appointed a conciliation officer. On January 27, 1956, the conciliation officer reported to me that he was not able to bring the parties to a settlement, and he recommended that a conciliation board be established. On January 31, 1956, a conciliation board was established. The board was under the chairmanship of His Honour Judge Walter Little of Parry Sound, Ontario. The other two members were J. Clifford Adams, Q.C., and John Raymond, nominees of the companies and union respectively.
The board met in Toronto on March 14 and in Montreal on March 28 and 29 and submitted its report on April 17, 1956. The report of the board stated that there were three issues between the parties which offered difficulty of settlement, these being:
(a)	The schedule of hourly rates involving a shift from a monthly basis of payment to an hourly basis of payment, and calling for substantial increases in rates of remuneration.
(b)	Limitation on hours of work.
(c)	Increased payment for overtime work.
The board attempted to persuade the parties
to enter into negotiations with respect to these major items with the following results:
(a)	The union representative insisted that the companies concede the hourly method of payment instead of the monthly method before negotiations could commence.
(b)	Counsel for the companies stated that they were prepared to offer a reasonable increase and suggested that consideration of the hourly or monthly method of remuneration should be deferred without prejudice pending determination of the amount of wage increase acceptable. The wage increase would be tabled before the board if the union would admit that some substantial reduction in the total increase demanded would be acceptable.
(c)	The union would not agree to defer consideration of the method of payment, and would not, the board said, indicate even privately to the board what modifications, if any, in its original proposal it was prepared1 to accept.
The board in its report said in part:
The union appeared to be under the impression that it would seriously prejudice its position if it were to discuss the amount of total increase without first having obtained the agreement of the companies to an hourly basis of payment. Without such prior commitment the union did not appear to be interested in finding out what amount of increase the companies thought was reasonable.
Under these circumstances the board could not make any progress towards conciliating the dispute and, therefore, feel obliged to conclude the proceedings by making this report.
With respect to most of the issues, as indicated above, we do not believe that the parties would have any difficulty in resolving them, and probably any comments from this board would not assist

Inquiries of the Ministry the parties. With respect to the three major items referred to above, the material filed with us does not establish any basis upon which we could make specific or positive recommendations.
These parties have been in contractual relationships for several years and the present remuneration, working conditions and methods of computing pay are all the result of previous collective bargaining between these parties. It would require the most cogent and compelling evidence to justify changes in these arrangements which would amount to approximately 98 per cent of the present labour costs of the companies involved. We are unable to find such evidence in the material presented to us. On the other hand, the companies appear disposed to make a reasonable increase. Under the circumstances we do not think it proper to press the companies to disclose the amount of increase which they consider reasonable.
It is obvious to us that these parties must resume direct negotiations at some time in the near future, and that it is probably better for all concerned if any offer of increase which the companies might wish to make should be withheld until such time as there is reasonable prospect of direct negotiations being resumed on a normal and usual basis.
On May 7, which was yesterday-


Mr. Speaker:: Is there not some other way to get this information on the record? I see there are two more pages. Perhaps the minister could summarize, or perhaps he could ask for the unanimous consent of the house to place the material on the record.


William Earl Rowe: Take the brief as read.


Milton Fowler Gregg: I should like to have this statement complete because I do not think the information is within the knowledge of most hon. members. However, if it is the will of the house I would be quite willing to have the three telegrams I was proposing to quote, and which are dated yesterday, placed on the record.


Mr. Speaker:: I take it that hon. members would like to have the information. I am sorry I interrupted. The minister may go ahead and complete the statement. I take it that the hon. member for Winnipeg North Centre would like to see the end of the statement.


William Earl Rowe: Everybody would.


Mr. Brooks:: We all would.


Stanley Howard Knowles: On a question of privilege, I think that might be misunderstood. I should like to hear the whole of the statement.


William Earl Rowe: Answer the question fully.


Milton Fowler Gregg: Yesterday, May 7, I received the following telegram from Mr. Hal C. Banks of the union.
Regret to inform you that the unlicensed personnel employed by N. M. Paterson and Sons Limited and Upper Lakes and St. Lawrence Transportation Company Limited have voted on a referendum ballot by a majority of 98 per cent to withdraw from the service and call a legal strike on the

above companies to commence noon Thursday May 10th, 1956. The above companies are the only lakes companies that will be affected at this point in so far as this union is concerned. Respectfully offer our wholehearted support and assistance in any efforts that you may deem necessary to avoid this very serious development.
On the same day-that is yesterday, May 7-I received from Mr. T. R. McLagan for the employers the following telegram:
The negotiating committee of the Association of Lake Carriers met with the bargaining committee of the Seafarers International Union at Montreal today as arranged. During the course of the meeting the association made an offer of settlement of the dispute which the union rejected. The union maintains its original position and informs the association that the unlicensed personnel employed by N. M. Paterson and Sons and Upper Lakes and St. Lawrence Transportation Company Limited would strike at noon on tenth of May. This association through its bargaining committee stands ready to continue negotiation with a view to effecting a settlement of the dispute and avoiding a major transportation crisis.
Late yesterday, May 7, to the telegram received from the representative of the union I replied as follows:
I have your wire of this date advising of the union's intention to have the unlicensed personnel represented by your union employed by N. M. Paterson and Sons and Great Lakes and St. Lawrence Transportation Company Limited embark upon a strike effective at noon tenth May. I appreciate your offer to co-operate in an effort to effect settlement of the dispute. This dispute is one between your union and the Association of Lake Carriers comprising seven great lakes shipping companies including the two companies upon whom strike notices have been served. In circumstances there is serious danger that the result of action you are proposing to take would be the tie-up of all shipping operated by the companies comprising the Lake Carriers Association. This development would bring serious economic loss to many Canadian industries and to their employees as well as to western farmers in preventing the movement of grain from western Canada to eastern Canadian ports. I am advised that the bargaining committee representing the association at its meeting with your union today made a definite proposal for a settlement which your union has rejected while not moving from its original demands. In my view this dispute should be capable of peaceful settlement and to this end I am prepared to provide mediation service to your union and the association but the strike deadline which you have set does not permit sufficient time for adequate mediation. In the circumstances I would appreciate your agreement to postpone strike action pending mediation which I am prepared to arrange forthwith.
To that wire I have had no reply.



PIPE LINES


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I should like to direct a question to the Prime Minister. Now that he has been let in on the secret by the Minister of Trade

and Commerce (Mr. Howe), is he in a position to say whether or not the canonized promoters of Trans-Canada Pipe Lines have advised the government that they cannot complete that portion of the line from Winnipeg to Ontario and Quebec unless they have the consent of the federal power commission of the United States to the exportation of gas to the United States? If so, is he in a position to say when it may be expected that the power commission in the United States is going to give Canada permission to do with its own resources what should be done?


Louis Stephen St-Laurent: Mr. Speaker, I think the hon. gentleman's question is framed in such language that I cannot make an adequate reply on the orders of the day.


John George Diefenbaker: Mr. Speaker, if I have not made my question clear, I shall restate it. I asked the Prime Minister this question. Have the promoters of Trans-Canada Pipe Lines advised the government that they cannot proceed from Winnipeg on unless they have the permission of the federal power commission of the United States? That is a question to which the people of Canada have a right to know the answer. I also asked when it might be expected that that decision will be made.


Louis Stephen St-Laurent: Mr. Speaker, the promoters of Trans-Canada have given no such information to the government. I am not in a position to say when the decision of the federal power commission will be made. It is because of that uncertainty that the arrangement announced by the Minister of Trade and Commerce today was made, in order to ensure the start of construction this year and to provide for that start no matter when or what kind of decision the federal power commission gives.


John George Diefenbaker: Mr. Speaker, I have another question. Has Trans-Canada Pipe Lines given to the government the assurance that, regardless of the decision of the United States federal power commission, it will not only start the 180 miles for which it has ordered the necessary pipe but will go ahead to Winnipeg and on?


Louis Stephen St-Laurent: Trans-Canada Pipe Lines could not give any other assurance to the government than by demonstrating to the government that it had completed the financial arrangements that would provide for the construction of the whole pipe line.


John George Diefenbaker: What are those arrangements?
Inquiries of the Ministry


Louis Stephen St-Laurent: The arrangements that they can obtain the finances required to pay for a line that is estimated to cost something like $375 million.


John George Diefenbaker: From whom? From whom will they get it? From the government of Canada?


Louis Stephen St-Laurent: I do not
know. They are not going to get it from me.


Major James William Coldwell: May I ask a supplementary question-


Mr. Speaker:: I see there are now on their feet four hon. members who rose at the same time. I presume they all wish to ask supplementary questions. I merely want to ask hon. members to consider the fact that in the last few days we have had several questions asked on the measure about which a statement was made today. A statement was made today and a spokeman for each party spoke in reply to the statement, commenting upon it. That statement was an announcement that in Votes and Proceedings there is to be placed a new resolution. On that resolution we shall, as hon. members know, go into committee of the whole where hon. members may stand up and ask questions, may speak for 30 minutes at a time, and may speak as often as they wish. Do they wish me to leave the chair now on the resolution that is on the order paper?


An hon. Member:: Surely.


Mr. Speaker:: Yes; that is what they would like to do. Can they not wait until that resolution is before us in committee of the whole? What are they going to do when they are in committee of the whole? They will not have any more questions to ask.


Stanley Howard Knowles: What a hope!


Edmund Davie Fulton: Yes, they will.


An hon. Member:: They will have plenty of questions.


Mr. Speaker:: Having said that, I will allow the hon. member for Rosetown-Biggar to proceed but I will just say this. Let us not abuse the rules. There are many other subjects about which we may ask questions. Why duplicate the work? Why not wait until the house is in committee of the whole on the resolution? Then all hon. members will have every opportunity to ask questions.


Major James William Coldwell: My
question is a simple one. I was going to ask the Prime Minister whether, the government having approved of the initial step to build the trans-Canada pipe line by agreeing to the financing of the western end, there is any time limit placed on Trans-Canada Pipe

Inquiries of the Ministry Lines as to the conclusion of the entire project? I think that is an extremely important matter.


Louis Stephen St-Laurent: At the present time the only extension they have obtained is to November 1. Under the resolution that has now been placed before the Clerk to be printed in Votes and Proceedings the amounts advanced for the construction of the western section would have to be repaid by March 31, 1957.


Major James William Coldwell: What I am interested in is this. When will the entire project be completed if this is the initial step?


Louis Stephen St-Laurent: The other agreement which was tabled in the house on January 11, I think it was-


Major James William Coldwell: Yes.


Louis Stephen St-Laurent: -is not
changed otherwise than as expressly provided in the new agreement which will be tabled as soon as it has been signed. There is no arrangement for any further extension. But as the hon. gentleman knows, the pipe situation is an extremely tight one. It was felt that if we did not make arrangements that would allow advantage to be taken of the provisions that have been made for obtaining pipe this season, it might not be until the fourth quarter of next year or early in 1958 that this kind of pipe could be obtained.


John George Diefenbaker: From uncertainty to uncertainty.


Edmund Davie Fulton: May I ask
a question of the Minister of Trade and Commerce, if he will accept a question from the young man from Kamloops.


Clarence Decatur Howe: The comedian from Kamloops.


Edmund Davie Fulton: In view of the terms of the statement the minister has made, and in view of the stand taken by Trans-Canada Pipe Lines Limited-


Some hon. Members:: Question, question.


Edmund Davie Fulton: -is not the fulfilment of the government's scheme for a trans-Canada pipe line owned by Trans-Canada Pipe Lines Limited made entirely dependent on approval of Washington of the application now before the federal power commission?


Clarence Decatur Howe: Not at all. The possibility of an all-Canadian pipe line owned by Trans-Canada Pipe Lines Limited depends wholly upon the ability of the Trans-Canada company to refund the government's advance


prior to March 31 next year; otherwise Trans-Canada Pipe Lines Limited will have no further association with the project.
[Later:!
On the orders of the day:


Mr. J. M. Macdonnell (Greenwood):: I wish to ask a question of the Minister of Trade and Commerce. In view of the fact that the loan about which we have been informed this afternoon is repayable by March 31 next, can the minister suggest any other way in which it can be repaid except by the completion of the whole financing by Trans-Canada Pipe Lines?


Clarence Decatur Howe: Yes, it could be repaid by the financing of the western portion if that were possible.



EDUCATION


[Stage Direction]
On the orders of the day:
Alfred Claude Ellis: I should like to direct a question to the Prime Minister arising out of a question asked by the hon. member for Burnaby-Coquitlam yesterday. In view of the fact that within less than 24 hours five additional Canadian universities have announced an increase in student fees, will the Prime Minister assure the house that the government will give immediate consideration to an increase in university grants?
Right Hon. L. S. St. Laurent (Prime
Minister): The government is always prepared to give consideration to anything that is of public interest, but I cannot give any more specific assurance than what I have just said.



SHORTAGE OF ENGINEERS AND SCIENTISTS


[Stage Direction]
On the orders of the day:
Mr. Michael Starr (Ontario):: I should like to address a question to the Prime Minister. In view of the shortage of scientists, engineers and technicians in Canada which was revealed when the estimates of the Department of Labour and the Department of External Affairs were under consideration, can the Prime Minister advise the house what steps are being taken by the government to ascertain how great this shortage is? What is being planned by the government in order to increase the output of these qualified people in Canada?


Louis Stephen St-Laurent: There is nothing being planned at this moment in order to have a greater output from our Canadian institutions of learning, which institutions, of course, are under provincial jurisdiction.



IRRIGATION


[Stage Direction]
On the orders of the day:
Mr. Alistair Stewart (Winnipeg North):: I should like to direct a question to the Prime Minister. Since the government is prepared to subsidize foreigners in building pipe lines


Some hon. Members:: Oh, oh.


Alistair McLeod Stewart: -is the government prepared to subsidize Canadians to build the Saskatchewan river dam project?


Louis Stephen St-Laurent: I am sorry; I was not able to hear the hon. gentleman's question.


Alistair McLeod Stewart: I am happy to repeat it. The question 1 asked was this. Since the government is prepared to subsidize foreigners to build pipe lines, is the government prepared to subsidize Canadians to build the Saskatchewan river dam project?


Louis Stephen St-Laurent: The government has no knowledge of any proposal by Canadians to build the South Saskatchewan dam project.


Mr. Argue:: The people who live in Saskatchewan are Canadians.


Major James William Coldwell: The Saskatchewan government is a Canadian government.


Louis Stephen St-Laurent: The Saskatchewan government is a Canadian government, but the government of Saskatchewan would like the government of Canada to build the South Saskatchewan dam. I am not prepared to admit that the government is ready to subsidize foreigners to build pipe lines.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Edmund Davie Fulton: May 1 ask the
Minister of Finance, in his capacity as leader of the house, whether the placing on the order paper, and particularly proceeding with the debate thereafter, of the resolution to which the Minister of Trade and Commerce referred today will necessitate withdrawal of the resolution on pipe lines now on the order paper.


Hon. W. E. Harris (Minister of Finance):: My understanding is that the present resolution may be proceeded with despite the fact there is another resolution on the order paper having to do with part of the matter covered by the new resolution. It is perhaps a matter 67509-2334
Inquiries of the Ministry of opinion whether or not the former resolution ought to be disposed of at the same time, but in my own opinion it is not necessary as long as you call the one and deal with it.


Mr. Hees:: Could the minister indicate to the house when one of the pipe-line resolutions will be brought forward for debate?


Walter Edward Harris: Yes, Mr. Speaker, we intend to bring it forward at the earliest possible moment. I am not sure yet whether that will be Thursday or Friday.


Mr. Fleming:: May I ask the minister which of the two resolutions it will be the intention of the government to proceed with first in relation to Trans-Canada Pipe Lines?


Walter Edward Harris: The one that was tabled today, sir.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
John George Diefenbaker: should like to direct a question to the Secretary of State for External Affairs. I should like him to say whether there is any foundation for the report in the New York Post that the Canadian government has agreed to the shipment to Israel of 24 Sabre aircraft for which the sale price is said to be $11 million.


Hon. L. B. Pearson (Secretary of State for External Affairs):: No, Mr. Speaker, there is no foundation for that report.



MANITOBA


[Stage Direction]
On the orders of the day:
Mr. F. S. Zaplitny (Dauphin):: May I direct a question to the Minister of Agriculture? Has the minister's attention been drawn to a recent press dispatch referring to a statement by the premier of Manitoba to the effect that most of the cost of repairing the dikes along the Assiniboine river will be paid by the federal government? If this report is correct, will the same consideration be given to other areas in Manitoba where flood damages have occurred this year?


Right Hon. J. G. Gardiner (Minister of Agriculture):: Mr. Speaker, in answer to the first part of the question my attention has been drawn to a news item which appeared in the Winnipeg Tribune on May 2, 1956, that was somewhat along the lines of the suggestion made in the question. The P.F.R.A. has been rebuilding dikes originally built by the Department of Public Works along the Assiniboine river near Portage la Prairie. The work

Inquiries of the Ministry is not yet completed. I instructed the P.F.R.A. to be on hand when floods were possible to protect the work already done and prevent, so far as possible, any extension of any break which already may have developed in the dike. The necessary work is being charged up to the Assiniboine river vote No. 43.
With regard to the second part of the question, I do not know of any similar circumstances in other areas in Manitoba. We do protect work undertaken under P.F.R.A. until that work is completed.



BEECHWOOD PROJECT, NEW BRUNSWICK   REQUEST FOR RECONSIDERATION OF FEDERAL AID

[Stage Direction]
On the orders of the day:
Alfred Johnson Brooks: In view of the fact that the federal government intends to lend money for the building of this trans-Canada pipe line, which I am sure will be of no help to the maritime provinces, would the government reconsider its refusal to guarantee the bonds of the province of New Brunswick for the development of the Beechwood project on the Saint John river, which would be of great benefit to that province? I was directing the question to the Prime Minister.


Louis Stephen St-Laurent: The Beechwood project has been financed on the credit of the province of New Brunswick, which I think both the hon. gentleman and I are happy to see is as solid as it proved to be when that loan was undertaken.


Alfred Johnson Brooks: It was done after the refusal of the federal government to assist.


Louis Stephen St-Laurent: There
seemed to be no need of financial assistance. There was co-operation between the provincial government and the experts, I think, of the Department of Finance as to the way in which the financing of that project could be most conveniently arranged. I think there are other projects now that will have to be considered, and if there are projects that seem to be really sound and helpful they will be given very sympathetic consideration.


Edmund Davie Fulton: And the reason there was not any need for financial assistance was that in this case they were Canadians.


Louis Stephen St-Laurent: Probably they were such Canadians as enjoyed the credit that enabled them to obtain on the financial markets the amounts that were required for the enterprise they had in view.


Stanley Howard Knowles: Unlike the trans-Canada pipe line promoters.


Alfred Johnson Brooks: I should like to ask the Prime Minister a supplementary question. Did not the province of New Brunswick ask the federal government for assistance in constructing the Beechwood project, and at that time did they not feel they needed assistance in the matter of backing their bonds, and it was only when this was refused-


Louis Stephen St-Laurent: I saw a
very voluminous report that was sent to this government by the government of the province of New Brunswick, but it did not to my lay mind seem to contain any project that it would be proper to recommend to the house to make appropriations for. It was a preliminary survey, but there was nothing concrete that could be dealt with at that time. I have had several interviews with the premier of New Brunswick and I understood that the Beechwood project was proceeding in a satisfactory way, but it was the hope of the government of New Brunswick that much more power than would be available from the Beechwood project could be economically developed in some part of the Saint John river basin.


Alfred Johnson Brooks: There is another question I should like to ask. I do not want a false impression to be left in this house. The reason the province of New Brunswick asked for assistance was that they could get cheaper money if the federal government backed their bonds.


Some hon. Members:: Order.


Mr. Speaker:: Order. May I ask hon. members to give the hon. member for Royal a chance to be heard.


Alfred Johnson Brooks: My question to the Prime Minister is this. Was not the reason for asking the federal government to assist that the province could not borrow money as cheaply as could the federal government. If they borrowed it from the federal government it would mean cheaper power for the province of New Brunswick. The reason was not that it was not possible for them to raise the money.


Louis Stephen St-Laurent: Well, I frankly would not want to deny the implications of the hon. gentleman's question, but from memory I would not want to confirm them because I have no recollection that there was the suggestion made by the government of the province of New Brunswick that they would thereby obtain money at a cheaper rate. There have been suggestions that there should be money provided by the federal government for all kinds of provincial undertakings at low rates of interest, not just the rates at which the money could be obtained by the federal government itself

but such rates as were in force, for instance, when the Municipal Improvements Assistance Act was in force.


George Harris Hees: I should like to ask the Prime Minister a question. Did the government of New Brunswick not specifically ask the federal government to back its Beechwood project bonds so it could obtain money considerably cheaper than otherwise?


Louis Stephen St-Laurent: I do not
think that is so, Mr. Speaker. I would not want to be positive, because there have been so many different forms of requests for assistance that from memory I would not want to be absolutely positive; but I have no recollection that there was any suggestion at any time that the federal government, to use the expression of the hon. gentleman, back the bonds of the province of New Brunswick.



INDUSTRIAL DEVELOPMENT BANK ACT


[Stage Direction]
The house resumed, from Monday, May 7, consideration in committee of Bill No. 165, to amend the Industrial Development Bank Act-Mr. Harris-Mr. Robinson (Simcoe East) in the chair.
On clause 5-Loans, investments and guarantees.
Mr. Hamilton (York West):: Mr. Chairman,
I wonder whether the minister, or the parliamentary assistant, could inform the committee if it is the intention under this amendment, which reads-
-where in the opinion of the hoard or of an officer authorized for that purpose by the board . . .
-that such an officer would be designated at each of the offices of the company in Canada.


Mr. W. M. Benidickson (Parliamentary Assistant to the Minister of Finance):: My hon. friend knows that under the present legislation each and every loan must be approved by the board of directors. It is thought that, as is the custom in the making of commercial bank loans, local offices should now be able to make the complete applications up to certain limits. Now, this legislation will permit the board to send down to its district offices directions as to the limits of their local lending authority. After they have completed a loan it will, of course, be passed on from the district office to the general manager and in turn to the board of directors.
Industrial Development Bank Act Mr. Hamilton (York West): Does this mean that each local office manager will have a certain amount of discretionary power to approve a loan application at his level without submitting it to the head office?


William Moore Benidickson: That is correct, within certain limitations to be fixed.


John Borden Hamilton: Can the parliamentary assistant give us any idea as to the limits which are allotted to the sub-offices of the bank? It seems to me that this amendment might be to no purpose whatsoever if in fact the discretionary limit of the bank branch manager were so low that there would be very few loans that he could actually make himself?


William Moore Benidickson: No. The act provides that this will be left to the discretion of the board of directors. My information is that they have not yet drafted their instructions in this respect. Naturally, they are awaiting the decision of this house as to their right to delegate.


John Borden Hamilton: I should like to leave this thought with the parliamentary assistant, Mr. Chairman. Unless an adequate limit is allotted to the branch manager then we are going to be right back in the same position that existed before, and very little benefit will be obtained from this section. Certainly, if some of the limits that I have heard about, $5,000 or something like that, are to be continued in the future, then obviously we shall get no benefit out of this part of the section whatsoever.


James MacKerras Macdonnell: Will the parliamentary
assistant not agree that the tenor of the conversation which took place in the committee was that it was recognized that there should be real delegation and that it was thought we may expect it will be done in such a way as to give real power, not just a trivial delegation to the local representatives.


William Moore Benidickson: Would my hon. friend care to give us his own judgment as to the amount of delegation that he thinks would be appropriate in the circumstances? We have, of course, available to us the report of the bank. We know that 240 loans were authorized under the amount of $25,000. That gives us a bit of a guide. In the loan area of $5,000 and under only eleven credits have been authorized to date, so that an authorization limited to $5,000 is not very important. Authorization in the area from $1 to $25,000, as I say, would have involved about 240 loans.


James MacKerras Macdonnell: I will give my opinion in general terms. I would have thought it should

Industrial Development Bank Act be substantially more than $5,000; I would have thought that $25,000 would have been not unreasonable. I do not know if that will please my colleague the hon. member for York West.


Mr, Hamilton (York West):: I do believe that the larger branches of the chartered banks, that is the main branches in the large cities, have provided discriminatory powers up to $25,000. My contact with the personnel of the I.D.B. indicates that these men are of the highest calibre. I do not think there should be any doubt about an authority granted to them up to $25,000. I think it would be a source of a great deal of satisfaction knowing they are going through under the direction of efficient men.


William Moore Benidickson: I do not think any member of the banking and commerce committee was quite so specific and I am sure the board of directors will be grateful for the comments of the hon. members for Greenwood and York West on this point.


Ellen Louks Fairclough: Mr. Chairman, these
figures may have been given in the committee but since I am not a member of that committee perhaps the parliamentary assistant would say how many loans are presently operative under sub-section 2 in excess of $200,000 each?


William Moore Benidickson: As I recall it, the total authorization was approximately $35 million or $38 million and of course since the authorization some have been paid. I think the present outstanding for loans above $200,000 would be in the neighbourhood of $25 million.


Ellen Louks Fairclough: Well, Mr. Chairman, that is not precisely my question. My question was how many individual loans are there. It would be quite conceivable that the whole amount could be one loan. How many loans are there under that section?


William Moore Benidickson: At the end of the fiscal year 1955, which is the last official report, there were 62 loans over $200,000 had been authorized.


Mr. Cameron (Nanaimo):: Mr. Chairman, during the hearing before the banking and commerce committee I asked the president of the bank about this increase in the total of loans over $200,000 which were to be permitted and asked him if he expected that the bulk of the increase in their activities would take place within that scope. He was not able to give me a very conclusive answer in that regard but it occurred to me at the time that the reason the limit has been raised to $75 million must surely be because there is an anticipation of more demands for loans of $200,000 or more.


That brings me to the point I want to make, Mr. Chairman, and it is this. It seems to me regrettable that this section did not include either an increase in the bank's power to loan in relation to its capital stock and its reserves or an increase in the capitalization of the bank. I was disappointed that that was not done particularly in light of the statements the president has been making in various places where he has regretted the hesitation of Canadian investors to get into productive enterprise.
When I read those statements it occurred to me that this was the logical instrument by which to accomplish that. I had hoped that when the bill came before us there would be some amendment which would increase the total lending capacity of the bank.
I noted in answers to questions that Mr. Coyne told us to this date none of the bank's debentures have been sold on the public market; they have all been sold to the Bank of Canada. While the operations of the bank are sufficiently confined in size, that procedure makes very little monetary effect on the economy, of course, but if the industrial development bank were to be enlarged to perhaps fulfil what Mr. Coyne apparently considers-in speeches outside the house and not in speaking in the capacity of president of the industrial development bank-would be a rechannelling of Canadian investment, it would seem to me that the bank would have to follow another policy which it is empowered to do but which it has never done and that is to place its securities on the market, in order to be effective. It seems to me to need a much larger scope.
We have had a lot of discussion and this afternoon reference was made to the desirability or otherwise of United States investment in connection with the industrial development bank and the role it plays in our economy. It might be worth while to point out the nature of much of this United States investment about which there has been so much talk.
It has often been argued, of course, that we should welcome United States investment on the analogy of the development of the United States in which British capital invested in very large quantities in the early days of that country when it was developing its economy, but there has been a very different type of investment taking place in Canada.
The volume of United States investment that is equity investment is far in excess of the volume of British capital in the early days in the United States that was equity investment. The vast bulk of British investment was in the form of portfolio investment

and as a consequence United States financiers as their economy expanded were able to assume control of the enterprises that had been started by British investment. That is not the case so far as we are concerned.
In 1926, of the total of United States investment in Canada 44 per cent was direct investment carrying control and 56 per cent was portfolio investment carrying no control. At the end of 1954 the position was reversed and we had 60 per cent of all United States investment in Canada direct and involving control and only 40 per cent consisting of non-control, portfolio investment.
On the basis of that, I do not think we should attack our United States neighbours for having been a little more enterprising and courageous than those who are in control of the Canadian pools of investment capital. I would suggest, sir, that the government has the opportunity in this development bank to cope with that situation and to cater, if you like, to the cautious nature of Canadian investors by presenting them with debentures backed by the government of Canada and to channel those funds into the sort of industrial development we require here and in the form of the equity investment which will leave control in the hands of Canadian nationals.
By the time the next session rolls around I hope the government will give some consideration to this. I deplore the undiscriminating attacks on United States investments unless we are offering some constructive proposal to offset the obvious danger. I think we all recognize that there are dangers; we may feel they are exaggerated sometimes but there are dangers there and we should have some constructive policy.
The appeals of such people as Mr. Coyne and various bankers in Canada to Canadian investors do not seem to have been very effective. They are still determined to confine the major part of their operations to the safer type of portfolio investment so I think we have to face that situation and seek some other means to channel investment into productive enterprises that will be owned by Canadian nationals and will be in the control of the nationals of this country.
I do not know whether there is any plan in the minds of the bank's management to use the larger powers they have for placing investments in different fields to accomplish that purpose on a small scale, but I would point out that no matter what they decide under the present legislation their power to do anything very effective is severely limited. I can, think of no better way in which the government of Canada could cope with this
Industrial Development Bank Act problem of United States equity investment. One could, of course, this afternoon draw some rather striking contrasts between the manner in which government agencies finance one type of proposition and are prepared to finance other types of proposition but I shall forbear from doing that and conclude by saying that I hope that the possibilities of the industrial development bank will be realized by the government before we meet in the next session of parliament.


Mr. Holowach:: There is one comment I should like to make on this item, and I should like to stress its importance to the minister. Can the minister assure us that in future, whenever a question of priorities or preference arises with respect to applications for loans, it is the small businessman who will get the credit? The reason why I say that is this. When we consider the large amounts that are made available and the increase in the amount of loans over $200,000 that are to be made, I am afraid we are drifting away from the initial intent for v/hich this industrial development bank was created.
I have no beef against the large corporations being allowed to use the bank for loans, but it seems to me that we are moving away from the initial intent as set out in the preamble to the act when we allow big business to use the services of the industrial development bank to become bigger yet and at the same time we ignore the problem of the small businessmen who face a staggering credit problem at the present time. I should like to stress that point and bring it to the minister's attention, because it seems to me that the small businessman today has no other place to turn, with the tightening money policy of the government, except to the industrial development bank.


Ellen Louks Fairclough: Further to the question I asked previously, I wonder whether the parliamentary assistant would have a record of the amount of the largest single loan presently outstanding.


William Moore Benidickson: No, I cannot give information as to the largest amount presently outstanding. I can say from memory of the testimony of the president before the committee that the largest loan ever made was $4 million, which was made at the time of the outbreak of the Korean war and was for a particular defence promotion object. My recollection is that, apart from that, we had evidence that there were probably only five or six loans that had ever been made over $1 million, but I do not have the figure of what is outstanding at the present moment.
3678	HOUSE OF
Industrial Development Bank Act


Ellen Louks Fairclough: I would point out that the total amount under subsection 2 is presently some $38 million, I believe the parliamentary assistant said. If this covers 62 loans, then the average is over $600,000, and certainly a great many of those must be in the $200,000 to $500,000 category. It would look as though there must be some very substantial loans, certainly hovering around the $1 million mark. As a matter of interest, I wonder if the parliamentary assistant could supply that information.


William Moore Benidickson: No, I have not that information, but I think I could get the statistics for my hon. friend.


Ellen Louks Fairclough: As a matter of interest, I would appreciate that.


John Borden Hamilton: I have one further question on this clause. I know it was referred to in the committee. It is with regard to the amendment to "or from a shareholder of the corporation." I understand it is not good banking practice to take as security shares from a shareholder of a company to whom the credit is going to be advanced. Is this going to be restricted solely to a situation where there has been default of some kind and the necessity arises for the bank taking over control of a company, or is it the intention to use the shares of an individual in the company as collateral to loan to the company?


William Moore Benidickson: I think the most likely use of this new provision would be under circumstances where there were not treasury shares to be sold. As you know, the bank has the right to participate in equity holdings. It might be in the best interests of a company, if desirable, that an individual should retire, who probably had got beyond the best productive stage, and it would be in the interests of reorganization of the company that the person be financed to withdraw from the company, and his shares could be taken as security. There might not be treasury shares to make reorganization possible otherwise.


John Borden Hamilton: This is a
method then, in the illustration you have given, of actually buying the shares and retiring the person from active management in the company. Is that the position?


William Moore Benidickson: It might be necessary in order to have the proper security to attain the purposes. It might be necessary for the bank actually to have a transfer of the shares. The president said that it was not in the business of permanently owning securities but it felt that, when they provided a substantial amount of the necessary capital


to enable the business to function properly the bank should not be debarred on occasion from probably participating in the equity capital and the profits that result from equity ownership.


John Borden Hamilton: The only thing I would like to say in that connection is that the illustration given, of course, does not put any more money at the disposal of the company. If it was an issuance of treasury stock, naturally the funds would go into the company operation. I can see that perhaps this could be used if along with it a collateral agreement of some kind were provided between the shareholder and the bank whereby the shareholder agreed to re-loan the money immediately to the company treasury. If that is the purpose for which this amendment is designed, I can see that it will serve a very useful purpose.


Ellen Louks Fairclough: Did the parliamentary assistant intend to give the impression that a loan would be advanced for the purpose really of purchasing the interest of a principal who wished to retire or whose associates wished him to retire? In other words, would the money be put up for the purpose of financing the remaining directors or executives of the company to buy him out?


William Moore Benidickson: I should not think that would be the original purpose of the application for loan, but I would think that, either because a company had got into difficulty, and the difficulties might be due to management, or where it was necessary for reorganization to take place, in order to make the investment of the bank more secure, something of this kind should be possible. Under the previous legislation the only shares that could be bought were treasury shares from the company. This gives the bank more freedom in certain circumstances to buy also shares that are in the hands of a shareholder, already issued.


Ellen Louks Fairclough: It would seem to me that, unless the company was in such bad straits that it was almost bankrupt, the shares of that company would themselves constitute good collateral for the ordinary lending institutions.


[Stage Direction]
Clause agreed to.
Clauses 6 to 12 inclusive agreed to.
Title agreed to.
Bill reported, read the third time and passed.


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration) moved: the second reading of Bill No. 256, to amend the Canadian Citizenship Act.
He said: Mr. Speaker, I think I should make a few very brief observations about this bill on the second reading. It in no way purports to change anything fundamental in the Canadian Citizenship Act because the government does not feel that anything fundamental needs to be changed in that act. In fact, we feel that the act as it was conceived in 1946 and placed on the statute books by a previous parliament has worked extraordinarily well. But from time to time it has been necessary to make what I would describe as housekeeping amendments, amendments that are required because of certain special circumstances that arise.
The bill contains two types of such amendments. There are three sections dealing with matters of substance, but I intend to ask one of my colleagues to have one section stricken out because I have changed my mind about the advisability of proceeding with it as a result of the deliberations in another place.


Edmund Davie Fulton: Would you tell us which one?


John Whitney Pickersgill: That is section 2. The first of the other two sections has to do with a very limited number of Indians and Eskimos who many years ago moved from Alaska into the adjacent parts of the Arctic coast of Canada and have been residing there ever since but who, because there were no immigration officers, were never landed and therefore have never properly become Canadian citizens. This sad state of affairs came to the notice of the department recently and we came to the conclusion that everyone in the house would feel that something ought to be done about it.
The other section has to do primarily with Canadians who, living outside the country and being in the service of the country, either in the armed forces, in the federal public service or in the service of the provinces, contract marriages and have children, one or both, and whose status we feel should be recognized somewhat differently from the way in which it is recognized at the present time.
There are five other sections of the bill which are procedural and have to do with the providing of somewhat more convenient
Canadian Citizenship Act facilities for the acquiring in Canada, and in one case abroad, of Canadian citizenship. We have found as a result of the experience of the last two or three years, since there have been a considerable number of immigrants who have been in the country long enough to have acquired domicile to qualify for that citizenship, that many people living in remote parts of the country have found it very difficult to make three separate visits to the courts that are appointed under the present act, and the purpose of these procedural changes is primarily to deal with that situation. There are some further details in the bill that I can explain very much better, if they need any explanation, in committee, sir.


Edmund Davie Fulton: Mr. Speaker, the bill now before us was discussed quite fully in the other place earlier this session, the report of their proceedings being contained in the Senate Hansard for Wednesday, April 18. After the bill received second reading in that house it was referred to their standing committee on immigration and colonization and, as the minister has pointed out, it was as a result of the deliberations both in their house and in their committee that the minister was led to recommend the deletion of section 2 of the bill.
As he himself has said, the bill is more by way of a tidying up process than by way of introducing any change in principle, so that we feel there is really nothing that requires to be said on second reading as to the merits of the bill itself. There are one or two comments we wish to make in committee and a consideration we shall be advancing as to a suggested change and the reason therefore in one of the sections, but we will deal with that when we are in committee.
The only general observation I should like to make now is that we are glad to note that progress is being made in providing a satisfactory and speedy method. When I say "speedy" I mean a satisfactory and efficient method of dealing with applications for citizenship, one which produces the result without undue delay but not one which de-emphasizes the solemnity of the occasion. The most outstanding examples, of course, are the recently constituted special courts in Toronto and Montreal. Having said that, however, I would make the general observation that, as one never achieves perfection, we believe there is still room for more to be done in connection \yith emphasizing the solemnity of the occasion, the desirability of obtaining Canadian citizenship and the advantages and duties which follow from that process. I recognize that
3680	HOUSE OF
Canadian Citizenship Act the occasions when these ceremonies take place are by and large under jurisdictions other than the immediate jurisdiction of the federal government, but I still think that something can be done and no effort should be overlooked in trying to impress upon local communities and the courts, which are the agents of the government in that respect, the desirability of a solemn and suitable ceremony when citizenship is granted.
Anything that we on this side can do to assist in this effort by our speeches in the house and out of it or in any other way, by making suggestions to the government and to local organizations, I can assure the minister and the house we will be glad to do because I think this should be a cooperating effort, not a competitive one. In that spirit we are glad to see these further housekeeping improvements which will better facilitate the application for and the granting of citizenship.


Mr. R. R. Knight (Saskatoon):: Mr. Speaker,
I should like to corroborate what has just been said by the hon. member for Kamloops (Mr. Fulton). In our city we have been fortunate in having one or two of these ceremonies which I think have had a considerable amount of success. We have an active citizenship council in that city. That reminds me that this very month-I think on the 18th-we are to have another one of these ceremonies to which I was pleased to be invited but which I cannot attend. One of the features of these ceremonies is that people are invited in a spirit of friendliness. They are brought to the attention of the community and the community feels some responsibility for their treatment. On that basis I am sorry that I am obliged to raise a grievance in connection with this particular matter. I have found the minister himself to be extremely co-operative when I have drawn to his attention one or two cases of what I have called injustice and; he ha? remedied it. But I think this one is important enough that it should have some public notice and discussion. I am referring now to a proposal that I would have by which there should be some amendment of or some addition to one of the clauses of the Citizenship Act. I have noted here subsection 6 of section 110. I should like to state this case briefly and to suggest to the minister that something might be done.


John Whitney Pickersgill: Did the hon. gentlemen mention section 110?


Mr.   KYiighl@: I have it noted as subsection 6 of section 110.


John Whitney Pickersgill: There appear to be only 44 sections in the act.


Robert Ross (Roy) Knight: I may have been mistaken in the number. In any case we can easily identify the section. I could do it here in a minute if I had time to look at these notes.


Mr. Deputy Speaker:: Order. For my benefit might I ask the hon. member to identify the clause to which he intends to refer as one which is now being amended because, as he well realizes, it is the principle of the amending bill with which we are dealing.


Robert Ross (Roy) Knight: Yes. It is subsection 6 of section 10. I was in error. It is subsection 6 of section 10 of the act. I think it could be related to a clause in this particular bill.


Stanley Howard Knowles: Section 10 of the act is being amended by this bill.


Robert Ross (Roy) Knight: Yes. The question is this. This is the case of a British subject who came to this country. As a matter of fact, he is a Scot. He came to this country and after five years he would automatically be qualified for Canadian citizenship. He was here for five years and then he made his application. He sent in his fee, whatever that may be,-I think it is $10-and obtained a receipt for it. I am not sure what he said in that first letter, but at any rate he was informed by the department that his citizenship could not be granted because he had been out of the country for some seven months. He wrote back and explained why he was out of the country. He had been out of the country because he had been in the employment of the government of Canada, or of one of the provincial governments. He had also been directly under the sponsorship of the dominion government which had shared in the giving of a scholarship to this man in order that he might improve himself in his profession, which has something to do with the medical profession. At any rate he was informed that he could not have his citizenship.
The point that I want to make and the point that I made as I rose is this. It is important that these people should be made welcome in the country, that there should be a feeling of cordiality,-and I am sure the minister would agree with me-a feeling that we are glad to get these people into the country, that we are glad to welcome them here and to make it easy for them. I do not know what the disposition of this man is, but at any rate he certainly felt a sense of injustice having regard to the way in which he had been treated.
His main complaint was this. In the first place, his citizenship was not granted to him when he made the application. The department contended that he had not thoroughly explained the reason for his temporary absence from this country. I shall say this.

When that absence was explained and was certified by the department of the provincial government in question, this citizenship certificate was forthcoming. Then there was the problem of his wife, and that is where I think this particular section of the act should have some amendment. This gentleman-


John Whitney Pickersgill: May I interrupt the hon. gentleman, Mr. Speaker? In the bill, as the hon. gentleman will find if he has considered it carefully, we are making provision for that very thing. Perhaps if the hon. gentleman could defer this matter until we reach the clause in the bill, it could then be explained.


Robert Ross (Roy) Knight: Now that I have gone so far, Mr. Speaker, and have only another minute or two to go, I think I had probably better state my case. Then the whole case can be replied to by the minister, if he sees fit to do so, when we are in committee. The thing that bothered my acquaintance so greatly was this. This is the type of person who attaches some value to a certificate of Canadian citizenship. I think the very fact that he applied for it is a proof of that statement. He is a family man with a wife and two little children. Let it be right or let it be wrong, and let anyone who likes to do so sneer at it as a piece of sentimentality, but he wanted the date of his citizenship to coincide with the date of citizenship of his wife and his children.


John Whitney Pickersgill: We always do our best to oblige.


Robert Ross (Roy) Knight: Whether it be sentimentality or not, that is the way he wanted it; and he saw no reason why the department should apply red tape to the extent that he would not be able to get it that way. It was not as though there was anything against the man. Nevertheless he felt that he had been treated like someone, as it were, outside the pale, someone who had to be watched, about whom one had to take care, and that sort of thing. For a man who has been a British subject all his life and who has spent five years in Canada, it is not a pleasant feeling to have around his new home.
He applied for citizenship for his wife and he reasonably thought that it might be granted at the same time as his own citizenship but from the minister's department he had a blunt refusal on the ground, forsooth, that he had gone to Britain to do some studying; that he had taken his wife and his little family with him. While he comes under this clause which allows a man to be out of the country in the service of the country, that clause did not apply to his wife because she accompanied her husband. I understand that is not the sort of thing we want to do. What 67509-2341
Canadian Citizenship Act do we want to do? If this man had forced the department and said that he was going to insist that his wife get her citizenship at the same time as he did, what would it involve? It would involve leaving his wife and family here in this country. I think that is a perfectly stupid regulation. I think it is a regulation which would be more honoured in the breach than in the observance. In that particular case surely the department could have said: It is perfectly natural that this man leaving the country for seven months should take his wife and family with him. I do not see what reason in the world the department could give for not granting that woman's certification of Canadian citizenship so that the two of them could have gone up there together on the 18th day of this month before the public at Saskatoon where there is going to be constituted a court where citizenship could have been granted. They should have gone up there together and received their citizenship on that date. Is there any reason in common sense why that could not have been done? There may be in the regulations. I understand the difficulties that civil servants have. "There is the regulation", they say; "We must interpret the law". But if that is the law, in a case like that the law should be changed.
I think that is the main part of my argument. I could go on and be indignant about it. I may say the gentleman in question was indignant. As a matter of fact, he requested the department to take back his citizenship certificate and withhold it so that those two certificates could be issued on the same day and they would have them together. Sentiment-all right, but a lot of us are sentimental and that is the way the man felt about it. That is the plea I am putting before the minister, that to cover that particular section of the act a change should be made so that when a man takes his wife with him on these government jobs which entitles him to a certificate even if he is absent from his country, his wife could share his fate, shall I say, in that as well as other respects.
I have not mentioned the man's name. I do not think it is necessary for me to do so. If the minister, out of the kindness of his heart, wants to take this up as an individual case and look into it, even at this late date, I would suggest that would be a good course to adopt. I have made my protest to the minister, without wearying the house about the details and reading various letters, the tone of some of which is not too cordial or too friendly. The attitude is: here are the regulations, you take them or leave them. They have to take them. They do not like to take them. I would not have liked to

Canadian Citizenship Act take them myself. I am not blaming the minister and I am not actually blaming the department because if they have got to follow the regulation, then they have got to follow the regulation. But my suggestion is that the regulation should never be in there. It is a stupid regulation if it is there. As a matter of fact, it is not there at all. The positive thing is there, but there is no provision made for the wife of an immigrant such as I have described.


Michael Starr: I had no
intention of saying anything about the amendments to this bill, but since the hon. member for Kamloops (Mr. Fulton) and the hon. member for Saskatoon (Mr. Knight) have made a reference to the necessity for proper procedure in the issuance of naturalization certificates, I felt motivated to say a few words on this subject. A few weeks ago I had the privilege of being present in the county court of the county of Ontario when some 74 citizens of this country received their citizenship certificates. They appeared before His Honour Judge Pritchard of the county of Ontario in an atmosphere that I felt was a model to indicate to those people the value and dignity of Canadian citizenship.
His Honour Judge Pritchard gave a very well thought out address in which he pointed out to them the advantages that would be theirs on becoming citizens of this country. This was followed by the participation of one of the chapters of the I.O.D.E. in Whitby who presented certificates of their own to each of the applicants and also presented, on behalf of the Canadian Bible Society, a bible to each one of these people. Then the applicants were entertained at tea by two chapters of the I.O.D.E. from the city of Oshawa. All in all, I felt satisfied that this was the sort of procedure that should be followed in the courts of Canada and was a model for others to follow. In my own estimation it would certainly leave an impression upon these people of the value of their citizenship in this country.


Mr. Deputy Speaker:: If the minister speaks now, he will close the debate.


John Whitney Pickersgill: I did not intend to say anything until I heard the remarks of the hon. member for Ontario (Mr. Starr). I know I would be completely out of order if I attempted to say what I want to say in committee. I agree with what the hon. member has said, and I want to say how much I appreciate and how deeply the members of the government appreciate what is being done to make these ceremonies more 

appropriate. It is not really within our jurisdiction, but we certainly do our best to give them every encouragement.
I should like to say a word about what the hon. member for Saskatoon (Mr. Knight) has said. I do not say this in a carping way at all. He talked about the regulations, but it is not the regulation, it is the law. It is not a law I had any share in making. It was made before I became minister. It is a law that I am proposing, in this very bill, to have changed, as I attempted to point out to the hon. gentleman when I raised my objection a moment ago. I think the case will be met by the amendment. Until it is met, the minister has no discretion, and judging from the suggestions that are so often made by members opposite about ministers taking unto themselves powers they do not have, I am sure the opposition will be pleased to hear that this is one case where there are no powers to be taken. The minister is completely bound by the law.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Robinson (Simcoe East) in the chair.
Clause 1 agreed to.
On clause 2.
John Whitney Pickersgill: I wonder if I could ask the Minister of Finance to move that this clause be stricken out and that the following clauses be renumbered accordingly.


Walter Edward Harris: I move:
That clause 2 be deleted and the succeeding clauses be renumbered accordingly.


Edmund Davie Fulton: Would the minister say a word about the reason for this. Unfortunately, the other place does not keep a record of the proceedings of all committees. I have read the record of the discussion in the house, and while there was some question as to the advisability of including the clause it seemed to me that the question was resolved rather in favour of its retention. So far as we are concerned, no great importance attaches one way or the other but we would like to be satisfied that it should be taken out and the reason for doing so, before agreeing.


John Whitney Pickersgill: I think when I have given my explanation the hon. gentleman will agree with me it is one of those cases where you could toss a coin and decide one way or the other. As the section as it now reads, if you just look at the capital (A), (B) and (C) parts of it, you will find that (A) and (B) are the present law. All that is being suggested in part (C) is that if a Canadian citizen who is abroad has an illegitimate

child and subsequently marries the mother of that child, then that child becomes a Canadian baby.


Edmund Davie Fulton: That is an unfortunate phrase.


John Whitney Pickersgill: Since it is the case that if a Canadian citizen who is a woman goes abroad and has an illegitimate child that child is a Canadian born citizen, it was felt that perhaps this was a case for equal or almost equal rights for men. It did seem to me on further consideration that this amendment might have the effect-it would have some good effects I am sure-of creating a lot-no, I should not disparage the Canadian people-a small number of Canadian born citizens who had never been in Canada in their lives and who never would be in Canada in their lives and ultimately perhaps in the year 2050 might create a Don Pacifico incident such as the hon. member for Kamloops no doubt remembers caused Lord Palmerston some pain in the year 1850.
After considering the pros and cons of this matter very carefully-I must say I was never terribly enthusiastic about the amendment-I came to the conclusion that the cons were stronger than the pros, particularly as it was pointed out to me by one of the lawyers that the courts might not interpret subparagraph (c) in the way in which it was intended to be interpreted. An amendment was made in the Senate committee which seemed to make it clearer, and one of the legal advisers of the government said he still had some doubts as to whether it was really clear. I came to the conclusion that it was a dubious thing to do at best, that it seemed to be exceedingly difficult to do and that we had better give it up.


Edmund Davie Fulton: I appreciate the minister's explanation. Since the reference to Canadian babies at home has caused the minister some embarrassment, if this is going to save him some embarrassment by avoiding the possibility of having Canadian babies overseas, then we are glad indeed to accept the amendment.


John Whitney Pickersgill: The embarrassment would have been the embarrassment of the Secretary of State for External Affairs. I have nothing to do with Canadian babies abroad.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
William Alfred Robinson: It may be more convenient to hon. members if I read the numbers of the succeeding paragraphs as they appear in the bill itself to avoid confusion, although they will be renumbered in accordance with the amendment.
Clause 3 agreed to.
Canadian Citizenship Act
On clause 4-Certificate for minor children.


Edmund Davie Fulton: We are glad to note that there has been an amendment now which must have been effected in the other place subsequent to the introduction of the bill, because there was originally a proposal in this clause that after 1961 a person who could not speak adequately either English or French but had been in Canada for 20 years might be granted his citizenship certificate notwithstanding his inability to speak the language. That provision has been removed, I presume on the motion of the hon. senators in their committee. I think it is a sensible thing because there are bound always to be a few elderly people who while their hearts and souls are in Canada and their lives are here are not able to acquire an adequate knowledge of the language. I think they should always be able to acquire citizenship notwithstanding that. My main purpose in rising in connection with this clause, however, is to ask the minister a question with regard to subsection 3 thereof. The effect of this subsection-


John Whitney Pickersgill: If we are going to take up the subsections separately, would the hon. gentleman permit me to ask the Minister of Finance first to move an amendment to subsection 1 and clear it out of the way. This amendment to subsection 1 is simply for the purpose of making clear what paragraph (d) beyond peradventure really means. It now reads:
A British subject under the Naturalization Act . . .
What I am asking to have substituted for the word "under" isby virtue of a certificate of naturalization as defined in . . .
I will send the hon. gentleman a copy of the amendment.


Walter Edward Harris: I so move.


William Alfred Robinson: Mr. Harris moves:
That the word "under" in paragraph (d) of subsection (1) of section 4 be struck out and the following substituted therefor:
"by virtue of a certificate of naturalization as defined in ... "
Does the committee agree to this amendment?


[Stage Direction]
Amendment agreed to.
Edmund Davie Fulton: I should now like to ask the minister a question about subsection 3. As I understand it, the effect of this subsection is to take care of people who have been admitted to Canada, with the acceptance of the country generally and under the authority of the government, but in fact have no regular
3684	HOUSE OF
Canadian Citizenship Act status. They are not here as landed immigrants, nor are they here on visitor's visa, as students, or any of the recognized categories, because of an amendment made in 1953. Now, when they come to apply for citizenship, they are under a disability which this amendment is designed to remove. But, sir, you will observe that the amendment reads in part-perhaps I had better read the whole thing. Subsection 1, paragraph (c) reads:
Subparagraph (i) of paragraph (c) of subsection (1) does not apply to a person who has resided continuously in Canada for a period of one year immediately preceding the 1st day of June, 1956, and had been admitted to Canada for permanent residence prior to that date . . .
It is those last words that I am concerned about. They mean that the status of a person first having been admitted to Canada for permanent residence must be established prior to that date; that is, prior to the 1st day of June, 1956. I understand that the majority of these cases are already known because most of those people have made application for citizenship, and it is as a result of that application that the difficulty has been revealed. Therefore, in nearly every case it will be possible to say, or it may indeed already have been said: you are now granted the status of having been admitted to Canada for permanent residence prior to June 1, 1956. But there may be a residue of cases where either the circumstances have not come to light or the person has not brought his own case to the attention of the department by making application, and therefore those cases are not as yet dealt with.
You will appreciate, Mr. Chairman, that the 1st day of June, 1956, being the deadline, is only a matter of three weeks from now and that seems to me to be crowding it a little bit. If I have stated the case correctly,
I want to ask the minister whether he does not think it would be advisable to extend the deadline by a few months, say to December 31, 1956. I am not referring to the place where it is first mentioned but where the words "that date" occur. Would it not be advisable to substitute for those words such words as "December 31"?


John Whitney Pickersgill: I think the hon. gentleman is anticipating what I was proposing to do, anyway. Perhaps it could be done a little more neatly and meet the point if we simply struck out the word "immediately" in line 20, and also changed "1956" to "1957" in the following line. I think that gives a little longer period than the hon. gentleman asked for. That would postpone the time to 1957. If I made the one change I would want to have the other.
When this bill was drafted I did not anticipate-perhaps I was mistaken-that hon.


gentlemen would be so loquacious, and I expected we would have reached it early in March. I would ask the Minister of Finance to move these two amendments.


Edmund Davie Fulton: Just before the minister does so, may I ask the hon. gentleman whether his remarks are not a reflection upon the hon. gentleman of the other place whose loquacity I have not heard criticized before?


John Whitney Pickersgill: I withdraw any such
reflection.


Edmund Davie Fulton: However, this bill was passed by the Senate and we have not had it, to my knowledge, for more than a week.


Robert Ross (Roy) Knight: Mr. Chairman, I did not think that the fact that one was loquacious could be counted as the subject of reflection in this house where, as I understand our duty, we should be permitted to take all the time that we require to deal with a subject.


John Whitney Pickersgill: I did not suggest that for a minute.


Robert Ross (Roy) Knight: I shall now deal with my
specific case. I take it-it is under subsection 3 to which the minister has referred-that when this becomes law the lady in question, the one to whom I referred, will immediately be granted her certification. In other words the small period of time, the six or seven months that she spent in England with her husband, will not be counted against her, and she will be assumed to have been a resident of Canada for the purposes of this act.
I have a second question. What about the minor children? Is there something in this act which covers their situation?


John Whitney Pickersgill: I think the minor children would be covered automatically, sir. That is within the discretion of the minister and they can be added; if the parents qualify they can be added to the certificate.


Robert Ross (Roy) Knight: How soon after this act has
been proclaimed, if that is the word, would it go into effect?


John Whitney Pickersgill: I do not believe there
is any provision for proclamation. I understand this bill goes into effect as soon as it receives the royal assent.


Edmund Davie Fulton: 
John Whitney Pickersgill: I sought advice on that
point, sir, because it seemed to me that if the word "immediately" was left in that would be the fact, but that the words "one year preceding the first of June 1957" can terminate at any time before the first of June.


Edmund Davie Fulton: Provided that there is a year.


John Whitney Pickersgill: Yes, provided that there
has been a year.


Mr. Pearkes:: Mr. Chairman, may I ask
a question? Could that year run concurrently with the four years in the six-year term?


John Whitney Pickersgill: Is the hon. gentleman
suggesting that I am doing more than I intended to do?


George Randolph Pearkes: I am rather wondering if
you are not reducing the total period from five to four years?


John Whitney Pickersgill: Well, it is just possible.


George Randolph Pearkes: Do you want to do that?


John Whitney Pickersgill: No, I do not.


George Randolph Pearkes: Then I have a feeling that
the amendment suggested by the hon. member for Kamloops is perhaps a little tidier than your own.


Edmund Davie Fulton: I am not trying to get myself into the position where my amendment is accepted rather than the minister's-


John Whitney Pickersgill: No, no.


Edmund Davie Fulton: -but my suggestion is simply to take out the words "that date" in line 22 and substitute the words "31st of December, 1956". I realize that that would postpone its effect until December 31st next, but I wonder if that is not ample time rather than postponing its effect until June?


John Whitney Pickersgill: I do not think there is
much in that; it will be quite well known by that time. If that commends itself to my colleague the Minister of Finance I would be prepared to ask him to move that instead of the amendment I suggested.


William Alfred Robinson: Order. May I point out
that I have not yet received any amendment whatsoever.


Walter Edward Harris: We have not been able to
agree on it yet, sir.


Edmund Davie Fulton: I have it drafted and will
send it over so that you can sign it.


William Alfred Robinson: Order. Mr. Harris moves: That sub-clause 3 of clause 4 of this bill be amended by deleting the words, "prior to that
Private Bills
date" at line 22 thereof and substituting therefor the following words, "the 31st day of December, 1956".


Edmund Davie Fulton: Mr. Chairman, I am terribly sorry. This is my draftsmanship. Instead of deleting the words, "prior to that date" delete only the words "that date" and substitute "the 31st day of December, 1956". I apologize to the minister.


William Earl Rowe: We will get it yet.


William Alfred Robinson: Is that agreeable?


John Whitney Pickersgill: That is quite agreeable.


Stanley Howard Knowles: Does everybody know what we are doing? I mean does anybody know what we are doing?


Walter Edward Harris: Perhaps, Mr. Chairman, you might read over the paragraph as amended by this motion.


William Alfred Robinson: Perhaps I had better read the amendment once more. Mr. Harris moves:
That sub-paragraph 3 of clause 4-
That is old clause 4.
-of the bill be amended by deleting the words, "that date" at line 22 thereof and substituting therefor the following words, "the 31st day of December, 1956".


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
Clauses 5 to 8 inclusive agreed to.
Title agreed to.
Bill reported.
William Alfred Robinson: Shall this bill be read a third time now?


Stanley Howard Knowles: By leave.
Bill read the third time and passed.



PRIVATE BILLS


[Stage Direction]
Bill No. 209, respecting the Pension Fund Society of the Dominion Bank.-Mr. Hunter.


[Stage Direction]
Bill No. 251, to incorporate the Fellowship of Evangelical Baptist Churches in Canada.- Mr. Cameron (High Park).
The Acting Speaker (Mr. Applewhaiie):: There are several divorce bills on the order paper for second reading today, Nos. 48 to 79. Is it agreed that second reading be taken in one motion?


Stanley Howard Knowles: I wonder if you would separate order No. 56, Bill No. 266, from the mass of these bills?

Private Bills


The Acting Speaker (Mr. Applewhaiie):: Is
that proposal agreeable to the house?


Some hon. Members:: Agreed.



SECOND READINGS-SENATE BILLS

[Stage Direction]
Bill No. 258, for the relief of Audrey Joan Atkinson Hanson Hanson.-Mr. Henderson.
Bill No. 259, for the relief of Marie Eglantine Victoria Laurenza Gagne Holowaty. -Mr. Henderson.
Bill No. 260, for the relief of Barbara Helen Major Kaye.-Mr. Henderson.
Bill No. 261, for the relief of Hazel McJanet Thompson Stewart.-Mr. Henderson.
Bill No. 262, for the relief of Patricia Marion Cook Townsend.-Mr. Henderson.
Bill No. 263, for the relief of Helen Joan Franks Manley Sellen.-Mr. Henderson.
Bill No. 264, for the relief of Lily Kite Herscovitch.-Mr. Henderson.
Bill No. 265, for the relief of Mary Bagdonas Roselle.-Mr. Henderson.
Bill No. 267, for the relief of Marjorie Pennell Robinson.-Mr. Henderson.
Bill No. 268, for the relief of Joseph Henri Andre Lessard.-Mr. Henderson.
Bill No. 269, for the relief of Sheila Joan Mencher Morantz.-Mr. Henderson.
Bill No. 270, for the relief of Frances Marie Ware Ami.-Mr. Henderson.
Bill No. 271, for the relief of Shirley Field Schleider.-Mr. Henderson.
Bill No. 272, for the relief of Jeannine Cecile Marie Tessier Davies.-Mr. Henderson.
Bill No. 273, for the relief of Madeline Mclasac Metayer.

Mr. Henderson.
Bill No. 274, for the relief of Gloria Ann Hazelton Stewart.-Mr. Henderson.
Bill No. 275, for the relief of Clifford Acland Barber.-Mr. Henderson.
Bill No. 276, for the relief of Hilda Louise Prewer Shaver.-Mr. Henderson.
Bill No. 277, for the relief of Gertrude Earle Bell.-Mr. Henderson.
Bill No. 278, for the relief of Leba Lee Black Lichtenstein.-Mr. Henderson.
Bill No. 279, for the relief of Helen Walker Seivewright Edwards.-Mr. Henderson.
Bill No. 280, for the relief of Gertrude Hayes Renaud.-Mr. Henderson.
Bill No. 281, for the relief of Isabell Jones Page.-Mr. Henderson.
Bill No. 282, for the relief of Joyce Burgess Lewis Cloutier.-Mr. Henderson.
Bill No. 283, for the relief of Marie Yvonne Blais Leger.-Mr. Henderson.

Bill No. 284, for the relief of Jeanne Fleury Touchette.-Mr. Henderson.
Bill No. 285, for the relief of Doris Cammy Lapkoff.-Mr. Henderson.
Bill No. 286, for the relief of Thea Anna May Laskowski.-Mr. Henderson.
Bill No. 287, for the relief of Thelma Barton Taylor McPhee.-Mr. Henderson.
Bill No. 288, for the relief of Olga Pritula Memi.-Mr. Henderson.
Bill No. 289, for the relief of Ethel Elizabeth Margaret Ritchie Campbell.-Mr. Henderson.

Mr. John Hunter (for Mr. Henderson) moved: the second reading of Bill No. 266, for the relief of Arthur Telford Bates.


Stanley Howard Knowles: Mr. Speaker, I should like to say just a few words with regard to Bill No. 266. Hon. members should be aware of the kind of job that we are sometimes called upon to undertake in view of the way in which these divorces come before parliament. As I understand it from first noting this case when it was listed in the Canada Gazette some time ago, the petitioner was listed as having his residence in San Francisco, California. His wife from whom he is seeking a divorce was listed as having her residence in Jacksonville, Florida. I must say that it struck me as rather strange that the parliament of Canada was being called upon to divorce people living in San Francisco, California, and Jacksonville, Florida.
I	find also that they were married in Washington, D.C. They lived while they were together in various countries throughout the world, and more recently the wife has obtained a divorce in the state of Florida and has remarried and is living in that state.
I understand that the reason why this divorce comes before us is that, by one of those fine processes that only the lawyers can weave, the domicile of this petitioner is in the city of Montreal in the province of Quebec. It appears that this gentleman, though he has already been divorced by his wife according to the law of the state of Florida, wishes a Canadian divorce. It puzzles me a bit since in fact, he was married in the United States, but at any rate these are the facts of the case as set out in the evidence that has been communicated to us by the other place.
1 must say in all fairness that Their Honours in the committee in the other place went into these angles to which I have referred and satisfied themselves that on a legal basis

the domicile of the petitioner is Montreal and that therefore it was in order for the case to be dealt with by the parliament of Canada. However, I did feel that we should be aware of this rather strange case that we here are being called upon to deal with, and hon. members know what I think is the logical conclusion to which parliament should come.


[Stage Direction]
Motion agreed to, bill read the second time, and referred to the standing committee on miscellaneous private bills.


[Stage Direction]
Bill No. 192, for the relief of Mary Valerie Dorothy Johnston Bromwich.-Mr. Henderson.

[Stage Direction]
The house resumed, from Friday, May 4, consideration of the motion of Mr. Henderson for the second reading of Bill No. 257, for the relief of Islay Isobel Campbell Jones.
The Acting Speaker (Mr. Applewhaiie):: Is
the house ready for the question?


Some hon. Members:: Question.


The Acting Speaker (Mr. Applewhaite):: Is
it the pleasure of the house to adopt the motion?


Stanley Howard Knowles: On division.
Motion agreed to on division, bill read the second time and referred to the standing committee on miscellaneous private bills.



CIVIL SERVICE ACT


Mr. Fernand Girard (Lapointe) moved: the second reading of Bill No. 159, to amend the Civil Service Act.
He said: It is a recognized fact that bilingualism is the chief factor which ensures understanding and protects true national unity between the two great peoples who share the noble task of developing our country and making it prosperous.
To have a true appreciation of the great cultural and social contribution made to Canada by our English-speaking compatriots, one must understand their mentality, one must be familiar with their literature and one must have exchanged ideas with them. The best way in which French Canadians may achieve these ends is to learn their language.
The same rule applies in the case of our English-speaking compatriots. If they wish to understand us and appreciate the value of our mentality and of our French culture, they
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must recognize that they too must practise bilingualism. True bilingualism is the straight-est road to understanding, and it cannot be a one-way road.
Bilingualism in Canada is not a conciliatory gesture to ensure understanding; it is not even a question open to discussion. It is our historical vocation; it is a constitutional fact, the principle at the base of confederation. It is not a matter of choice but a constitutional duty to fulfil.
The bill which I am now submitting for the approval of the house does not require that all Canadians be bilingual; it only tends to grant a preference to bilingual applicants in civil service examinations. It would, moreover, fill a need, that bilingual qualifications would henceforth be established by means of examinations. This bill is an invitation to those who enter the Canadian civil service to better adapt themselves to the bicultural character of our Canadian mentality. Such a preference would in no way interfere with the veterans preference now granted by the act but would take second place to it and add a national unity factor to our civil service which is the lifeblood of the nation.
To vote against this bill would be to deny the existence of the two official languages of Canada. To vote against this bill would be to give official approval to the unfortunate slogan: Be bilingual in Quebec and unilingual in the rest of Canada. To vote against this bill would be to strike a hard blow against national unity and force Quebec into isolationism. To vote against this bill would be tantamount to saying to French Canadians that they have made a mistake in learning English and that their group is merely tolerated within confederation.
The growth of true bilingualism among the two main racial groups of Canada has been impeded by the habit of considering these groups on a provincial basis and of wrongly repeating that there are nine English provinces and one French province. This has all too often prevented many of our English speaking compatriots who are well disposed from admitting the necessity of learning French. Such an idea is contradicted by the facts. French-speaking Canadians are distributed in all provinces and in the country as a whole in almost equal number to English speaking Canadians.
According to the most recent government statistics, racial groups in Canada are distributed thus: Canadians of English origin, 47-9 per cent, Canadians of French origin, 30-8 per cent, and Canadians of various other races having emigrated to Canada account for the rest. Canadian unity will be a fact when there are no longer French

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Canadians or English Canadians but Canadians, period. But this can only be attained when the word "Canadian" encompasses the aspirations of each of the two racial groups which form our country. To act otherwise and to relegate bilingualism to Quebec only is to divide the two great races historically united in the foundation of the great Canadian family.
(Translation):
Mr. Speaker, if it be granted that bilingualism is the main instrument of good understanding and if, on the other hand, we look into the government's attitude and behaviour towards the two racial groups which make up our country, and more particularly into the attention it has given to those who have made an effort to achieve bilingualism, we are faced with a genuine national scandal.
In a speech I made on this matter last year, using figures taken from the public accounts, I compiled a comparative table showing how the two racial groups have shared in the appointments to the higher positions in the federal civil service, namely those over $5,000 per year. I shall not repeat those figures, but I would like to repeat the final result. French Canadians who are bilingual in a proportion of 77 per cent hold but 13 per cent of the higher positions. Even if they had never made their generous effort to become bilingual, in proportion to their numbers, they should have been entitled to at least 30 per cent of the higher positions. Although I sincerely wish to avoid using harsh words, faced with such figures I feel compelled to say that we have been shamefully victimized and that, unless a drastic change comes to pass, we shall have to check this one-way trend towards bilingualism, which can only lead to assimilation.
On one occasion during the last session, before the orders of the day I asked the Minister of Citizenship and Immigration (Mr. Pickersgill), who was then secretary of state, to give figures showing the racial representation of the Canadians in the civil service, according to whether or not they were bilingual. The hon. minister replied that it was not possible for the civil service commission to determine whether an employee was bilingual or not. I was astounded by this reply. In a bilingual country, so proficient in the matter of statistics, it was not possible to determine who was bilingual and who was not! I took the matter up again this year and put to the new Secretary of State (Mr. Pinard) the following question, which appears on page 1881 of Hansard:

1.	Has the civil service commission ever asked for a report on the bilingualism of civil servants of the various departments of the government?
2.	If so, on what date?
3.	What departments have answered?
4.	What is the result of this inquiry?
The hon. minister replied that an inquiry had been made, that certain departments had been unable to give complete answers but that he had obtained them at a later date. As for his reply on the result of the inquiry here it is:
A number of departments indicated that information of a reasonably accurate nature was not available; others based their reports upon unverified claims as to language qualifications. It should be pointed out that it is not easy to know whether or not an employee is bilingual. In a number of cases, it is impossible to answer such a question by an unqualified "yes" or "no" because it is a matter of degree requiring a qualitative evaluation. In the light of the information obtained, the commission concluded that it would not be possible to arrive at any reasonably accurate figure as to the proportion of bilingual civil servants.
But, Mr. Speaker, if it was impossible to arrive at exact figures, we would surely have liked to obtain at least the figures which had been given to the hon. minister.
The hon. minister assures me that he has requested that such an inquiry be made, but we are still waiting for the figures. If the delay is due to the fact that the Frenchspeaking ministers have been too generous towards their own compatriots, I understand why the hon. Secretary of State hesitates to supply the figures. However, on the basis of the minister's statement, one thing stands out clearly, and it is this:	the civil service
commission has no accurate way of determining what civil servants are bilingual.
Mr. Speaker, the bill now before the house would correct that serious anomaly, since it will permit, in the future, to determine who is bilingual. In fact, subparagraph (c) of the bill states that those who will be entitled to benefit from the privilege provided in the bill are:
. . . those who have qualified, by examination, in the knowledge and use of the two official languages of Canada, being the English and the French languages.
Has the minister considered that his reply to my question is not only a serious admission, but confirmation of the fact that the French-Canadians are victims of gross discrimination. In fact, the civil service commission which, by two ministers' own admission, does not know who is bilingual has nonetheless prescribed bilingualism as a prerequisite to employment in the province of Quebec, except in a few rare instances.

I shall mention only the case of the stenographers and typists who must be bilingual if they are French-speaking, but who receive the same salary as their English-speaking fellow workers who are not bilingual. The bill would recognize the merit of our Englishspeaking fellow citizens who have learned French, and would do away with such discrimination.
I could quote innumerable instances of injustices done our compatriots, who have been told and repeatedly that they should learn English to be promoted.
Hundreds and hundreds of instances show with a pitiable truthfulness that the French language is treated as a poor relation, not only in business but more particularly here in the government, which was set up by the constitution as the guardian of the indefeasible rights of the two racial groups.
Even in this house, the French language is looked upon as a poor relation, for even though according to the letter of the law it enjoys the same privilege as the other language, in practice it is but rarely spoken and those who use it are sure not to be understood by the majority of the representatives of our bilingual country.
Those who are primarily responsible for that anomaly, although I do not wish to accuse anyone, are the French-speaking Canadians themselves, because they seldom speak French in the house during the debates.
An English-speaking colleague recently told me that he took exception to Frenchspeaking members always speaking English, thus depriving the English-speaking members of the opportunity of learning our language.
I particularly blame the French-speaking ministers who, except for the Speaker, speak French only when they reply to a question from a Quebec member, but never do so in their official statements. They will perhaps reply to that serious accusation that they do so because it is the only way to be understood.
Every time our French-speaking ministers use that good excuse for not speaking their own tongue, our English-speaking colleagues will surely contend that they do not need to learn our language.
In all governmental agencies, and more particularily the Canadian National, with the possible exception perhaps of the St. Lawrence seaway authority as far as its cheques are concerned, the French language is treated as a poor relation.
My hon. colleague, the member for Beauce (Mr. Poulin), embodied in a bill the magnificent principle he has upheld for years in order to obtain bilingual cheques. We have here another proof that French is treated as
8. 1956	3689
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a poor relation in a manner which cannot be explained. We have come to the point where we must submit bills to have our most elementary rights respected. And this happens in a country which boasts of promoting unity, peace and concord among foreign nations.
Every time the French-speaking people ask that some of their prerogatives be respected, they are told, as was done for the flag and other similar matters, that they should proceed step by step, that we must not wound the feelings of others, that something has been gained here or there and so forth. By acting thus we again admit that the French people are really treated as poor relations, that their rights have never been truly recognized throughout the nation, but are granted small parcels of those rights with a measuring cup, by the side door, and as a result of persistent struggles.
If the confederation pact had intended to give to the French language the status of a poor relation, the fathers of confederation would never have agreed to it; besides, if that were the case, the constitution would have been drafted otherwise. There is one section only of the British North America Act which mentions languages, and it is section 133, which reads as follows:
Either the English or the French language may be used by any person in the debates of the Houses of Parliament of Canada and of the Houses of the Legislature of Quebec; and both those languages shall be used in the respective records and journals of those houses.
A list is then given of the official records which must be bilingual.
Therefore, both languages are on equal footing. If the intention had been to rank the French language below the English language, instead of saying "Either the English or the French language may be used", it would have been stated that "French may be used". On the contrary, the text is clear: "Either the English or the French language ....".
The remainder of that section deals with compulsory bilingualism in official documents. Commenting on a speech I made last year on bilingualism, the Star Weekly, in its edition of February 19, 1955, contended that there is nothing in the constitution to indicate that both languages are on an equal footing. According to the writer, one of the two languages enjoys a privileged status. Under what section of the constitution? I should like to know, since the only reference to languages which may be employed applies equally to French and English.

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I know, Mr. Speaker, that a real and commendable movement is under way and gaining momentum among our English-speaking fellow citizens in favour of exchanges between the two racial groups; this necessary effort is more commendable than that of the government, since it is not made compulsory by the constitution.
In the name of national unity, which they must bring about by deeds and not by words, the government is bound to approve this bill and thus show their good faith. They have no reason to reject it since, by this bill, the preference already given to veterans is widened and the inalienable rights of five million Canadian citizens are confirmed. So far, it must be confessed, we have been treated as a conquered race, but if one goes back to the establishment of our government it must be admitted that two-way bilingualism has become the indispensable confirmation of an honourable compromise between two great ethnical forces which, until then, had been facing each other.


Hon. Roch Pinard (Secretary of State):: Mr. Speaker, I have listened with a great deal of interest to the remarks made first in English and then in French by the hon. member for Lapointe (Mr. Girard) in connection with the bill he has introduced in the house today.
In the course of his remarks, he referred to an answer given to him by my colleague, the Minister of Citizenship and Immigration and by myself this year about the number of bilingual employees in the civil service. While dealing with this subject, he charged me and my colleague and, in fact, the government we are representing in these matters, with failure to give an adequate reply to his question. In his view, we failed to give an adequate answer because we had found it impossible to supply the figures requested in his question. Yet, in the answer we did give, we pointed out why it had proved impossible for the civil service commission, to whom I had referred the question, to give a complete answer to the question. It is because the civil service commission, this being a matter of degree and requiring a detailed analysis, is unable to tell whether an employee does or does not speak both languages. I felt that the hon. member would not be satisfied with information dealing merely with civil service positions requiring a knowledge of both languages. I am confident he will agree that very many people in this country speak both languages. He will also admit that there are a great many civil servants who, while they speak rather

fluently both languages, did not have to qualify as bilingual when they entered the civil service. Therefore, an answer dealing only with those employees who had to qualify as bilingual would have been inadequate.
He then pointed out that the Frenchspeaking ministers in particular did not avail themselves often enough of the opportunities they may have to speak French in this house. Yet he himself behaved no differently, finding it convenient and useful, if not indispensable, to speak English at the beginning of his remarks. He thus answered his own question.
In fact, I do believe that, in spite of the good will shown by the hon. members generally, there are many whose knowledge of a second language is not sufficient to allow them to understand the remarks made by members of the government; when, for instance, an English-speaking member who does not speak French and understands it but imperfectly puts a question to a member of the cabinet, I do not believe it is logical to answer him in a language which is not his own, which is not his mother tongue.
Mr. Speaker, I think I should add-and I feel sure I am expressing a wish which is shared by the hon. member-that, as long as the majority in this house do not speak both languages and understand them adequately, it will be quite difficult-the hon. member will agree with me if he is sincere, and I believe he is-it will be extremely difficult to suggest to the members of the government that they should answer in French in such circumstances.
(Text) ;
Mr. Speaker, both as the minister responsible to parliament for the civil service commission and as a French-speaking Canadian representing a constituency mostly composed of Canadians of French extraction, I feel it is my duty to express this government's opinion as well as my own views on this proposed legislation which would have the effect, if enacted, of bringing about a very substantial change in our Civil Service Act.
I wish, first of all, to commend the hon. member for Lapointe (Mr. Girard) for his remarks. After hearing them I feel that he has done his job in all sincerity and that his intentions are to see to it that the principle of bilingualism, which I share with him, be applied as generally as possible in the federal

administration. Although the immediate objective sought through this measure is to grant preference to bilingual competitors in civil service examinations, this legislation presents at the same time another very important feature. The provisions of the amendment tend to reaffirm the principle of bilingualism and have it recognized in the federal administration everywhere in Canada. Even if I intend to oppose the measure for reasons which I will explain later in my remarks, I wish to emphasize immediately that I am in full agreement with the principle of bilingualism this measure contains. In other words, the principle as laid down is undoubtedly sound, but the method of its implementation as suggested in this bill, at least in my opinion, is wrong.
The proposition which I have just stated is twofold and I intend to deal with each part separately. In the first place, I have just affirmed my belief in complete bilingualism and in the use of the two official languages of Canada which I believe must be recognized as the normal method to be used in our relations together. It must be accepted as an historical and constitutional reality, and it is also essential to our peaceful and orderly growth as a nation.
Without claiming to be an expert on constitutional matters or on the interpretation of our laws, customs and practices as they now exist, I should like the house to bear with me for a few moments while I try to analyse, as objectively as possible, our position and status as a bilingual country.
Although there are a number of countries where more than one language is officially spoken, it is difficult to determine in each case the extent to which actual constitutional or legal dispositions have given recognition to the use of different languages. In more than one country a spirit of understanding and a growing practice have gone further than precise legal and constitutional definition in establishing the rules of application of this principle. In Switzerland, for instance, where a multiplicity of languages prevails, the constitution itself recognizes four languages as national languages and three as official. But the constitution does not go further than that and leaves it to practice itself to lay down the rules of application of this government policy of equality of languages. As a Swiss jurist recently wrote about the problem of languages in this great united country:
This small neutral country has proved that, given good will, understanding, welfare and loyalty are not only possible among people speaking different languages, but that those languages themselves mean an enrichment of life.
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In another country, Belgium, two languages are recognized. But again in so far as languages are concerned in that country, the constitution is very brief and simple. Section 23 of the Belgian code reads as follows:
Use of the languages current in Belgium is optional: it can be regulated only by law, and only for public documents and judicial matters.
That is all the constitution of Belgium says on that matter. In that country also experience has demonstrated that this great people, although speaking two different languages, has always been inspired in peace as well as in war by only one purpose, that of upholding its fine, generous traditions of courage, industry and determination.
I think in Canada the situation is the same. I think that the mere mention of section 133 of the constitution is not enough to determine whether or not this country of ours is* a bilingual country. Here also the nature of our constitutional pronouncements, which have been more numerous because of more frequent changes in the constitution itself, is not sufficient to determine the degree of bilingualism which Canadians have accepted and recognized. Here also there has been, and there is, besides such legal and constitutional dispositions, the unwritten law based on usage and practice which has served us in the implementation of that principal of bilingualism which today has become more than ever one of the important governing factors in our development and progress as a nation.
As I have indicated before, the constitutional position in Canada has often been modified with respect to languages; indeed, the constitution itself had to be modified with changing conditions. The situation has changed with the constant demographic, political and economic variations which this country has known in her yet short but dynamic history. In a little more than two centuries Canada, from the status of a French colony and later that of a British possession, has grown gradually and step by step to the full stature of a free and sovereign nation and member of the commonwealth. With these gradual changes in its political status, our country has also experienced, as a result of its great development, very serious changes in both the demographic and economic fields. Our system of government, in order to adapt itself to such important variations and trends, has seen its constitution modified often to meet the challenge of such ever changing conditions.
It is interesting to follow the effect of each of these political changes on the progressive recognition of the principle of bilingualism as it is being accepted now in Canada. At the beginning, under the royal proclamation

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in 1763 which had to serve as the new colony's constitution, no reference was made to the use of the two languages, French and English, by the new government of Quebec which was created by the crown. Three other similar governments were created under the same proclamation for these other new British possessions covering a vast territory in all of North America which France had ceded to Great Britain. This was, of course, as indicated in the proclamation itself, a temporary arrangement to be applied only until a local system of government could be properly organized and functioning in each of these new British possessions.
Under the Quebec Act, religious privileges and others were officially recognized but no direct reference was made yet to the use of the French language in the administration of th* country. Of course, it is not necessary for me to say that obviously ever since 1759 the French language continued to be used in practice and also both in the legislative council and the assembly. But later in 1791, at a time when there was still a large majority of Canadians of French origin, Canada obtained from the new mother country her first real constitution, which was in fact the original authority to organize a responsible government.
The principle of bilingualism is to be found in the terms of that first constitution under which both the people and those whom they chose to elect as their representatives in the legislative council and assembly were given the privilege of taking the oath in the English or French languages as the case required. In 1840, when it was considered advisable to unite into one the two provinces of upper and lower Canada, this privilege of bilingualism was denied. It was then enacted that the English language alone was to be used. This is not the occasion to comment on the wisdom of the change made at that time but it will be recalled that Louis Hippolyte Lafontaine, in a declaration full of dignity and pride, at that time expressed his disagreement with the new provision of the union act.
Our country, which had already known and lived through difficult times, was again put to the test and again tolerance and understanding were to prevail over hatred and prejudice. If such a process may appear at times to be much slower, it does achieve much more efficient and durable results.
Finally, in 1867, when confederation was established as the system of government which was to endure and become the charter of our rights, the principle of bilingualism was again reaffirmed by the four provinces which decided to unite themselves into that dominion to be known as Canada.

As the hon. member indicated, section 133 defines in very clear terms the nature of such bilingualism by proclaiming the French and English languages as the official languages of the parliament of Canada.
Although the section is quite clear, the provision could lend itself to different interpretations which would have the effect of either restricting or extending its terms. But again I say that, in Canada, bilingualism is a matter where legislation alone is not sufficient to determine what the legislature at that time had in mind and what in the country is the position of bilingualism.
Many other factors have to be analysed if one wishes clearly to ascertain whether Canada can rightly claim to be a bilingual country. This again is a matter of degree, as is bilingualism itself. There is bilingualism in theory, of course, as there is bilingualism in practice. If by bilingualism we mean that everyone in Canada must speak both languages, then, of course, Canada, no more than Belgium or Switzerland, is a bilingual or a multi-language country. But if the two languages may be spoken in every province, although the practice may not have been considered necessary in all the legislatures, if the two languages are generally used by a great number of people in all spheres of activity, if it is the overwhelming wish of all Canadians to consider the other language as their second language, these facts must of course be taken as convincing evidence of bilingualism as it exists today in Canada.
I could add a number of other instances which would substantiate such a contention. Let me read, for instance, a few remarks made by the Prime Minister in 1943 when he was then the Minister of Justice and was dealing in the house with a proposed amendment to our constitution:
Section 133 of the constitutional act deals with the matter of languages. It provides for bilingualism in this house, in this parliament, in its journals, in its records and acts, and in the pleadings and processes of the courts of Canada established under the act, to the same extent and just as fully as it provides for bilingualism in the proceedings of the Quebec legislature and the Quebec courts.
I am satisfied that the day will come when, if not all those who sit in this house, at least its leaders and those who grace the treasury benches and those who sit immediately opposite, will find it to their advantage to be bilingual. I do not suggest that we from the province of Quebec are going to try to impose our language upon anybody, but I do suggest that the time will come when those whom I have indicated will find it to their advantage to learn and to understand and to use the French language as we from Quebec have found it to our advantage to learn and to understand and to use the language in which I am speaking at this moment.

These were remarks made by the Prime Minister at the time and I think that I expressed those sentiments when a few moments ago I said that it is not always possible and I should think advisable to answer questions that are being put to the ministers by the members of this house in one language that will not be the language that the hon. member putting the question will understand; and it is to be hoped, as I said earlier, that the day will come when the majority at least of the members of this house will be able to speak fluently both languages, the result being that at that time it will be possible for each minister to answer in either of the two languages.
If the principle of bilingualism has been recognized, as I said, in our British North America Act, if it has also been recognized by custom and practice, if it has been recognized by a greater number of people using both languages in business as well as in other kinds of transactions, I say that it has also received the support of constant action by the government and also by definite corroborative legislation.
The terms of section 133 of the British North America Act have been extended to a great number of administrative measures by the successive governments: two of the most striking examples have been the adoption of bilingual postage stamps and paper currency. When these two decisions were taken by parliament they were not to be termed as concessions by the English-speaking majority to the French-speaking element of our country. It was simply the result of good faith on the part of all the different ethnic groups in Canada, and of parliament's understanding and harmony between the races of the country; it was simply, in effect, the recognition of bilingualism as an essential right of the Canadian citizen.
This right of bilingualism was recognized in that way by parliament in the two precedents to which 1 have just referred; that is, in the use of postage stamps as well as in paper currency, but it was also strongly supported, I believe, by a growing practice both in the House of Commons and outside of a greater number of people accepting the use of the two languages on an increasing number of occasions.
This growing tendency, this definite trend, is to me stronger evidence than words of law of the bilingualism of the land at the moment. But if I have decided to oppose this bill I must say that I do so with some regret. If the proposed measure was only another way of reaffirming my belief in this principle of bilingualism, with which I have already expressed my agreement and with which I believe everyone in this house is in agreement
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also, I would gladly support it, but I think we are concerned with something quite different when we accept the change of policy contemplated by this proposal.
What is involved in the amending legislation is the granting of a preference to bilingual competitors who wish to enter the civil service of Canada. It may not be necessary to underline as a preliminary remark the very great importance of our civil service in the administration of a country such as ours. Under our democratic system it forms part as an essential entity of one of the most important branches of the government. What the legislature chooses to enact for the good functioning of our democracy, the civil servants must put into application. What parliament decides, the civil service must apply, in other words.
It follows as a result that if we are to have a healthy nation, we must have a competent civil service. I think it can safely be said that parliament could not properly discharge its obligations to the people without the benefit of a competent body of civil servants. Democracy could not operate without the assistance of those who are called upon to apply the measures which the elected representatives of the people have decided to adopt.
Canada prides herself, and should be allowed to continue always to do so, on one of the most efficient of civil service organizations. This is more important today than ever with the ever-increasing commitments which our country must face to keep its place in the forefront. But I believe that what we are concerned with today is something different from what the principle of bilingualism implies. What we are concerned with is to decide whether or not competence should give place to bilingual qualifications in the civil service. I am in favour of as many bilingual civil servants as possible, and I believe I may have the right to say that I have had some humble share in that respect, but I cannot accept that bilingualism should take the place of competence in the choice to be made of our civil servants anywhere in Canada.
Under the act as it now stands, preference is given to war veterans, and the hon. member has made an allusion to that preference which is given to war veterans. The principle in that case is not to be compared, I believe, with that of a preference to be granted to bilinguals.
More than one reason justifies such a policy of preference to apply with regard to those who have served their country in war.
In the first place it is only just and fair to give to those who have been away from the

Civil Service Act
country during a certain period of time and who, in order to accomplish their duties on the battlefields, had to leave their civilian occupations, a treatment similar to that which is afforded to those who have remained in civilian life. The experience of which they have been deprived due to their absence should not, in this case, be a reason for their failure to integrate themselves in the community after their return.
I should say also, and this in my opinion is the real underlying motive for this preference to overseas veterans, that the least a country can do to honour those who have risked their lives to protect and defend it is to assure them of an even chance to re-establish themselves in civil society.
There are no similar considerations, I believe, of national interest involved in the present case which are strong enough to prevail, in my opinion, over the requirement of competence to which I have already referred.
If the provision as advocated under this amending bill was enacted, it would in practice mean that any bilingual candidate although less competent would qualify over other applicants for any position within the civil service.
To illustrate this, it would mean that even where bilingualism will not be needed by a civil servant in the performance of his duties to the public, a bilingual applicant would be preferred to others who would be more competent but would not enjoy the privilege of being bilingual.
(Translation):


Fernand Girard: Will the hon. Secretary of State allow me a question?


Roch Pinard: Certainly.


Fernand Girard: Is the hon. Secretary of State suggesting that when a veteran lacking proper qualifications applies for a job, it is the minister's duty to give it to him?


Roch Pinard: No. I think I have made my position clear enough on that point. The thing that justifies the preference given to veterans before all else is the fact that, since they had to give up their civil occupation and were thus deprived of the experience which otherwise they would have acquired, they have lost all contact with civil life. When the veteran comes back after one or several years, he is in a position where, in order to re-establish himself in civil life, he has lost the experience which otherwise he would have acquired if he had stayed here.

That is what I tried to explain. I believe it is only fair that the government should make up for that period of time when the civil servant went and fought for his country, and during which those who joined the armed forces lose the benefit of the time they were away. I added that one of the reasons which, I think, justify the preference granted veterans, and it may be the main reason, is that they had to go away for a certain time, and it is therefore necessary to make up for their years of absence, so that they can reestablish themselves in civil life and be on an equal footing with others.
It is my belief that this principle does not likewise apply to preference with respect to bilingual people; that is what I attempted to demonstrate.
I believe that, in the civil service, what should count first and foremost, is ability. In my opinion, if, only because he is bilingual, a candidate should obtain preference over someone else who is not, for any position, whether the two languages are needed or not, that would be a danger. I don't think it could be said, for instance-and the problem must be considered in two different lights to a competitor in a constituency where the great majority of the population is Frenchspeaking that whoever speaks both the languages, though he might have got only 70 per cent of the marks in the examination, will obtain preference over a competitor whose sole language is French, even though the latter might have got almost one hundred per cent of the marks. The same kind of reasoning Could be resorted to in the case of a competitor in a constituency overwhelmingly English-speaking.
I think that we would thus agree to and confirm the principle of bilingualism, but we would at the same time very seriously affect the competence of our civil servants. I wonder whether my hon. friend has clearly understood the remarks I just made.
There is no doubt that the fact of bilingualism must be stressed and that the knowledge of both languages is an advantage. Besides, I trust it is admitted and applied by the civil service commission when establishing a competitor's marks. However, I believe, we must not, by adopting the provisions of this bill, recognize the principle that a bilingual candidate would eliminate another who, knowing but one language, would have obtained higher marks at a civil service examination. I think this would be the main danger to which the bill would expose the government and the civil service commission. And that is the main reason why I cannot agree with the proposed legislation, and why I shall vote against it.


Mr. Adrien Meunier (Papineau):: Mr. Speaker, I have listened to the remarks of the hon. member for Lapointe (Mr. Girard) on bilingualism. I share some of the opinions he expressed, which tend to summon the idea of a heaven on earth, but I must say that the principles he outlined and his bill could hardly be accepted, as the Secretary of State (Mr. Pinard) just pointed out.
If we were to employ bilingual civil servants exclusively, it could happen that a bilingual candidate obtaining only 70 per cent of the marks on some examination would be preferred to a unilingual candidate who might have obtained most of the marks and would deprive the latter of the position he was seeking. My hon. friend should know that such principles are inapplicable to a certain extent. I might point out to him that bilingualism did progress in the past 25 years. Today a greater number of Canadians speak both languages. Greater insistence on bilingualism would be detrimental to many officers and employees of the civil service commission in the province of Quebec.
(Text) ;
On motion of Mr. Meunier the debate was adjourned.



TARIFF BOARD ACT


Walter Edward Harris: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Tariff Board Act to increase the membership of the board from three to five members and to provide for the salaries of the new members.
Motion agreed to and the house went into committee, Mr. Applewhaite in the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
William Alfred Robinson: Shall this resolution carry?


James MacKerras Macdonnell: Is the minister not going to say something about it?


Walter Edward Harris: The resolution, I think, explains itself. However, I think I ought to add that the purpose of the resolution, that is, increasing the membership of the tariff board, is brought about by the increased work that the board is doing and has to do under the appeals with respect to both the Excise Tax Act and the Customs Tariff, and also because of the present government
Tariff Board Act
policy of referring more items for consideration to the tariff board so that it might report to us.
We have found that the present membership is not sufficient to discharge these duties as quickly as we would prefer to have them done. As I think there will continue to be an increasing load upon them to deal with the appeals that are being made from the decisions of the deputy minister of customs, and since I think that is the proper thing to happen in our taxing law, I am suggesting to the house that we should increase the membership to five and break down the board, if necessary, into two groups to deal with these things. I am not suggesting that we are dividing the jurisdiction between two parts of the whole but that there may be two committees which could work on different things at the same time.


James MacKerras Macdonnell: I was rather hoping that the minister might go into the matter at somewhat greater length. I might perhaps be allowed to make a personal reference at the outset, to express the regard I have for the present chairman of the board and also to recall that I knew very well the Hon. George Sedgewick, who was, I think, the first chairman and who also was a very highly regarded chairman.
The minister has told us in a general way about the increased work and, in particular, about the number of appeals which come to the board and which, I suppose, are a special aspect of this work. I should like him to give a little further indication as to just how the work will be divided. He spoke about working in more than one group. I wish he would also say something in more detail about the nature of the inquiries that are now being made. Perhaps, if there is nothing confidential about it, he will give us a list of the examinations that are being made.
I should also like to know how they are initiated. Are they initiated by the minister or do they arise from the initiative of the members of various industries? I would like the minister to go into that at some length because, after all, I think the tariff is becoming more and more a matter of importance. We had about 15 blessed years when we seemed to be able to live without tariff questions being projected at us constantly, but it looks now as if perhaps that time was over.
I read with considerable concern in the New York Times of Sunday, April 22, of the large number of appeals for increased tariff assistance that are being made in the United States. Some of them affect us very closely. I read that the wool manufacturers are planning a drive to get the tariff raised. The

Tariff Board Act
same applies to fish products, of which we have heard before, to wood products and others. I mention this because, as I say, these questions are urgent. We know that, in spite of the general over-all prosperity, in spite of the large gross national product, we have areas of distress. I should be glad if the minister would say something at more length than he has on the problem as he sees it and as to the way in which he means to deal with it.
I have in my hands a copy of Foreign Affairs for October 1955, with an article by the principal of Queen's University, Dr. Mackintosh, who worked here as a special member of the finance department for years. I should think that, if there is anyone who by nature is not only in favour of multilateral trade but would look with great aversion on tariffs as a kind of natural enemy, it is he. Nevertheless, I read here in this article statements of concern and of anxiety by him as to the situation, not merely caused by the actual United States tariff but perhaps even more by the customs regulations, which of course we have heard referred to very often here. In particular, he raises the question of the difficulty in which the United States administration finds itself, whereby it is often not able to carry out its contracts. He says, on page 123 of this article:
There are signs that we are entering a period when other countries may press American representatives to produce evidence that the United States is able to make a dependable agreement. To say this is not to discount the ingenious and sincere efforts which have been made by two administrations in Washington to further the aim of larger and more competitive trade in the western world. In future, however, if agreements are to be subject to the heavy discount of escape clauses and modifying legislation, a much greater consideration may be required.
I have made these two references merely to suggest to the minister that these matters are acquiring an importance which probably he and I both deprecate. This party has made perfectly clear its disposition in the matter of trade by the way we have gone along with the various agreements under GATT, but on the other hand we have to face the fact, as Dr. Mackintosh says, that the professions and desires of the United States government are not always backed up by the performance of the officials who administer the law. Having said that, I wish the minister would speak to us and give us a picture of the situation as he sees it, of what the tariff board is doing now and what plans he has, and in general take us a little more into his confidence.


Stanley Howard Knowles: There are one or two questions I wish to ask, but they are on a different

matter. Perhaps the minister would rather reply to the hon. member for Greenwood at this time.


Walter Edward Harris: The tariff board is presently almost fully engaged in the consideration of the tariff items with respect to primary iron and steel. That was a reference which was made to them some months ago, and I must say it is a long and quite cumbersome procedure to cover all the ground that has to be covered, having in mind that the particular tariff schedules had not been dealt with in any general sense since 1907. This in itself would be sufficient work for a board of three at the present time. In addition, however, I was hoping to have the board, as I said we proposed to do in the budget address a year ago, consider the tariff schedules on chemicals, and I think perhaps that has been done recently. If not, it is going to be done at any time now. In the budget address of this year I also referred to the possibility of asking the board to report to us on the radio and television business. It would seem, in my view at least, that there will be considerable work of this kind which will require lengthy and full-time consideration for at least a period of time. But in between all this the tariff board has to deal with appeals from decisions of the deputy minister of customs with respect to various interpretations placed upon the customs tariff and the Excise Act.
While I would not like to use the word "law", because as a matter of fact it is usually fact, nevertheless the results of the decisions of the board in these matters are either accepted by the government as being the interpretation of the appropriate customs tariff item or possibly legislation is brought forward to change it if in the view of the government the decision does not reflect the policy of the government in this particular regard. Many persons who are subject to these imposts are using the appeal system, and I look forward to the work increasing from time to time. Indeed, as I said a moment ago, I think it is the best way in which law can be made. Parliament should do its best to pass law which is understandable and under which traders can conduct their business with confidence, but if there is any doubt in their mind or if in accordance with well established practice they feel they can escape an impost or tax there ought to be a body to which they can go and seek to obtain the interpretation they place upon the particular statute that is causing them difficulty.
For these reasons I am sure that hon. members will agree that at least at the moment, and as long as the government follows the practice of referring questions for report

under the Tariff Board Act, it would seem likely that the board would not be able to keep abreast of its work. I must say that they are doing very well, but at the same time in this particular field no one wants delay in knowing what the law or tax may be. As I personally feel that this work will grow and, indeed, I hope it will grow for the reasons I have given, that we want an established law in this field, I think we ought to increase the number of members in order that no one will be delayed in his ordinary business transactions.
In the very general sense that my hon. friend asked me, may I point out that these inquiries are directed by the minister under section 4 (2), I believe, of the act by virtue of which the minister may ask for information or a report on any given subject. In the course of the period of time that I have been Minister of Finance we have had two reports, one on the textile trade and one on potatoes. I have also indicated the other items that are being considered at the moment.
If the hon. member for Greenwood will forgive me, I would prefer not to say very much about the general world trade and tariff situation because I think he may have seen in the papers there is a report, which the government has not confirmed but which I will confirm now, that certain negotiations have been going on and have been completed at Geneva. I fancy that the results of those negotiations will be made known to the house by my colleague, the Minister of Trade and Commerce, probably in the course of two or three weeks, and it may be that on that occasion or on his estimates or at some other time we might choose to have a debate on GATT and allied subjects. I would be glad to say something then because personally I disapprove of the use of escape clauses except under the most urgent need. But I do not think that our neighbours to the south have perhaps been accurately dealt with when some people say that they have used the escape clauses to a greater extent than they might. I think there is a case to be made for our trade relations with the United States and the results under GATT with respect to that country have been reasonably good over the last six or seven years. I would be glad to make that case if it is not made by someone else.
At the same time I am quite satisfied that the longer we continue the present policy of having frequent meetings, having understandings on frequent occasions and having bindings of our tariff schedules for a period of time-in this case I think it has been two years-the better it will be for everyone
Tariff Board Act
concerned. I am quite satisfied that as time goes by this process will be accepted by the nations of the world and there will be a greater opportunity for a firmer view that trade after all should not have very many restrictions against it. I need not make the qualification that all of us do have tariffs of one kind or another. Presumably every country will always have a tariff of some kind or another, but I do feel that GATT was a great step forward and I do feel that this government is quite proper in its support of it. Indeed, I think all members of the house have supported it at one time or another and in fact, I do not recall that very many exceptions have been stated at any time.
If the hon. member for Greenwood will permit me I will leave the matter that way because I do think there is this other opportunity to discuss it and it would be a better opportunity because under the Tariff Board Act hardly any of the activities of the board have to do with tariff matters in the sense of external relations except those reports I call for. It may be that a tariff board decision would render the admission of an item free of duty whereas the government may have thought that it was subject to an impost. There may also be the opposite case where the government thought that an item was free of duty and a decision was made that it was dutiable. But the number of occasions on which there would be any great variation would not be so great that the activities of the board itself would be a matter which in this manner would affect our trade relations with another country.


James MacKerras Macdonnell: If the hon. member for Winnipeg North Centre will allow me to ask a supplementary question, I do not imagine there will be much difficulty agreeing with the minister that it is desirable to extend the membership of the board. Indeed, my query is really almost in the opposite direction. I inferred from what the minister said that the inquiry into the chemical industry which he forecast a year ago has not been made. I assume, therefore, that the board has had too much other work and I raise the question whether, in view of the appeals which I gather are increasing in number, the minister is going to be able to have these inquiries completed fast enough for his purposes. That is a matter on which he will have to reach his own conclusion, but it would be a pity if important information was not available to the minister in time. After all, I take it that the making of tariffs depends primarily on knowing your case thoroughly, and I raise the question whether the government is keeping a close watch to

Tariff Board Act
see that this information is coming forward fast enough and, if not, taking steps to that end.
I suppose it is conceivable that they might farm out some of these inquiries as they have done in other cases, but I am making the point merely because I gathered when the minister was speaking that the board has not been able to proceed with the inquiry into the chemical industry and I was struck by that fact. I think it would be a pity if the government found itself in a position where it was not able to act without substantial delay by reason of the necessary research material not being available.


Stanley Howard Knowles: Mr. Chairman, there are one or two questions I should like to ask. I suppose the answers to some of them are obvious but it is always good to get them on the record. First of all, can the minister tell us what will be the amount of the salaries of the two additional members? I believe there are three different salaries for the three present members of the board, including one salary for the chairman, another for the vice-chairman and another for the third member of the board. What would be the salaries of the two additional members? Also, can he say whether the other conditions that obtain, such as the ten-year tenure of office, the age of retirement and so on, will apply to the two new members?
My other question relates to the statement the minister made that it was his thought that the board would divide into two parts so that two investigations or two inquiries could be under way at the same time. In that connection I should like to ask him whether any change is to be made in subsection 2 of section 5 of the act which already gives two members of the board power to conduct an inquiry under certain subsections of section 4. It does not include subsection 2 which is the subsection under which the minister makes references to the board. In this connection there are one or two points that strike me. It seems perfectly proper that, when you have a board of three, two of them-who after all constitute a majority of the board-should be given the powers of the board. But when you have a board of five is it appropriate that two-who would constitute only a minority of the board- should be given the powers of the board? Will there be some arrangement whereby a decision or a report arrived at by two members of the board will be submitted to a meeting of the full board? It is fairly obvious that it would not seem to be a report of a board of five if that report is made by only two of its members.


Walter Edward Harris: To answer the first question first, may I say that there is no change in the salaries. We shall have three salary levels, namely that of the chairman at $16,500; the vice-chairman at $14,500 and ordinary members at $13,500. However, we shall have two vice-chairmen. At that rate we shall have two paid at $14,500.
With respect to the other question, I suppose one ought to answer

and the time was not so long ago when at this stage on a bill this was the answer made-"wait until you see the bill", but we seem to have grown out of that practice.


Stanley Howard Knowles: I think my question was more germane than were some of the others that have been answered.


Walter Edward Harris: I am not disputing that statement. As a matter of fact, we are contemplating a situation where we may have two vice-chairmen and appropriate members of the board working on different things at the same time, either completing a report while another investigation is beginning or having hearings going on at the same time on different subjects. That is the purpose of having two vice-chairmen. The appropriate amendments which would give power to a certain number to have a hearing and make a report are included in the bill.


Stanley Howard Knowles: I am not sure whether or not I heard the minister correctly, but I thought he said the chairman's salary was $16,500. According to the estimates I believe it is $16,900.
Resolution reported and concurred in.
Mr. Harris thereupon moved for leave to introduce Bill No. 290, to amend the Tariff Board Act.
Motion agreed to and bill read the first time.



WAYS AND MEANS

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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, among other things:
1.	That for the 1956 and subsequent taxation years in the taxation of employees who are beneficiaries under an employees profit sharing plan, (a) gains and losses of the trustee under the plan in connection with investment transactions shall not be taken into account in calculating the income of the employee; (b) such part of any amount received by the trustee as a dividend from a taxable corporation as is taken into account in calculating the income of the employee shall be deemed to have been received by the employee as such a dividend for tax credit purposes; and (c) there shall be excluded in calculating the income of an employee

for the period of his first three years as a beneficiary under the plan any amount contingently allocated to him if, within that period, the employee does not become entitled to receive that amount upon his withdrawal from the plan.
2.	That for the 1955 and subsequent taxation years a deduction shall be allowed for expenses of attending in Canada not more than two conventions annually relating to the business of the taxpayer.
3.	That for the 1956 and subsequent taxation years uncertainty regarding the applicability of outstanding regulations respecting depletion allowances be removed.
William Alfred Robinson: The house again in committee of ways and means on a certain proposed resolution respecting the Income Tax Act. Shall this resolution carry?


James MacKerras Macdonnell: Mr. Chairman, it is difficult to make a great story about the changes in the Income Tax Act this year. We said we found little in the budget and this is a small fraction of even that budget. With respect to the employee's profit-sharing plan, I wonder whether we might ask for some explanation with regard to the kind of transaction which would be involved in this legislation? In particular will the minister go through (a), (b) and (c) and just expound the situation?


William Moore Benidickson: Mr. Chairman, the special provisions with respect' to profit-sharing plans are set out in section 79 of the Income Tax Act. As hon. members know, under this section if a trustee is appointed to receive profits set aside for the benefit of an employee, regardless of whether or not he receives those profit's for probably a considerable number of years, they are considered to be income within the year in which they are allocated. However, representations have been made that even though the employee does not receive the benefit of the income and has to pay a tax on it, which in itself is sometimes objected to but is considered to be a benefit and therefore taxable, there are other factors that do permit income tax concessions that have not been utilized when the income is paid to the trustee of a profit-sharing plan. One, of course, is the matter of capital gain or losses. If there was a capital gain in the hands of an individual, as hon. members know, there is no capital gains tax. With respect to gains or losses on the funds that are handled by the trustee, these will not be taken into account in calculating the taxable income of the employee. What he will pay income tax on will be simply the amount that has been allocated to him in that year by the employer. Then under (b) the complaint that has been received that the trustee is not entitled to take advantage of the dividend tax credit provision is corrected. This would be available for an individual receiver of a dividend from a corporation that has paid Canadian taxes. The
Income Tax Act
trustee will be able to deduct the usual dividend tax credit and the income will not as formerly be fully charged to the employee as taxable income. Then, under clause (c) it has been found that sometimes income has been allocated to an employee, but under the terms of the plan he has no vested interest in this allocation unless he stays in the employment of that particular employer for a certain period of years. Now, this provides that if the employee leaves that employer's employment within three years before he has received the vesting of his interests, a refund of taxes that have been charged to him will be arranged.
Those are the three features that are involved. They are all relieving sections, even in so far as participation in a profit-sharing plan is concerned, and they all have counterparts in income tax privileges on income if it went directly to the individual.


Mr. Harkness:: May I ask what loss or gain to the treasury is expected to accrue from these changes?


William Moore Benidickson: It is a very difficult thing to estimate, Mr. Chairman. Profit-sharing is a practice that is growing. There are not too many of these plans, but they are becoming more common. We have no real statistics as to the actual amount of taxes represented by (a) (b) or (c); I think my hon. friend can realize that it is difficult to have statistical information as to what income tax we have placed, say on capital gains that have developed upon funds that were in the hands of the trustees of a profit-sharing scheme.


Douglas Scott Harkness: As I understand these provisions I am sort of agreeable to them. I think they will probably be to the advantage of the taxpayer. The general purport of my question was to find out how much they were to the advantage of the taxpayer, if my assumption they were to his advantage was correct.


William Moore Benidickson: They are all relieving features.


Douglas Scott Harkness: The parliamentary assistant apparently cannot give any figures, but can he assure me all these features accrue to the benefit of the taxpayer?


William Moore Benidickson: That is right.


Douglas Scott Harkness: There is one other question I would like to ask which arises out of the preamble:
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, among other things-
What is the significance of the "among other things"? Are there some other income tax amendments which are not included in

Income Tax Act
this particular paper we have before us and which will be subsequently introduced?


William Moore Benidickson: The introduction of these budget resolutions is always followed, after they are passed, by the introduction to the house of a fairly substantial bill amending the basic Income Tax Act. A majority of the changes in this rather bulky amending bill are always of the technical type, administrative changes and interpretations, matters of that kind, and that is largely what is referred to in the "among other things".


Douglas Scott Harkness: Do I understand from that remark that the income tax bill which will be brought in will have a considerable number of other changes, some of which, so far as the regulations are concerned, might constitute more important changes than the three provisions which we have in this resolution before us?


William Moore Benidickson: Regulations, of course, are usually made by executive action and not by parliamentary action. I can assure the hon. member that it is expected that the amendments to the Income Tax Act this year will certainly be considerably less than the rather, as I said, large amending bill that was presented last year.


Stanley Howard Knowles: There is one point I should like to make, but before I do so I might perhaps remind the parliamentary assistant that, although regulations are made by executive authority, they are made only by such authority as the executive receives from parliament. The regulations cannot go beyond whatever basis is laid down in a statute.
But, Mr. Chairman, with regard to the question raised by the hon. member for Calgary North, is it not true that any changes in the bill to amend the Income Tax Act which involve any change in the balance of ways and means would have to be referred to in this resolution? Is it not true that though there may be other changes they could be only of an administrative character and could not involve an upset in the balance of ways and means?


William Moore Benidickson: I think that is an interpretation that could be used.


Stanley Howard Knowles: Can there be any other?


William Moore Benidickson: Well, over-all upset of balance of ways and means, I think my hon. friend is referring to. Administrative changes that involve leniency or the opposite in interpretation and so on, I suppose, have degrees of effect upon tax collections, but so far as the general basis of income tax resolutions are concerned, any substantial effect upon ways and means is referred to in the resolutions that follow the budget.
rMr. Harkness.]


Stanley Howard Knowles: Can we not have it clear? Has the government anything up its sleeve in the bill?


Walter Edward Harris: No.


Stanley Howard Knowles: You could have said that the first time.


Walter Edward Harris: You should not have thought we did.


Stanley Howard Knowles: Oh?


George Randolph Pearkes: There is one small group of taxpayers upon whose behalf I should like to make a plea and ask whether they will receive benefits under these provisions. I refer to those who make their sole income or augment their income by painting and who may be generally described as artists. Very frequently this group of men have to spend a long time in preparing their particular pictures. Frequently they have to take photographs of the area they want to paint and they may have to visit the area a couple of times. Then, quite often, they have to wait for two or three years until they have accumulated enough paintings to hold an exhibition.
At the time the exhibition is held they may have a considerable sale of their canvases. This means that although they have accumulated expenses over a number of years, their income is restricted to one particular year, the year in which they have the exhibition. I understand that some benefits are granted to authors who take some considerable time in assimilating the material for their book. I should like to ask the minister or the parliamentary assistant whether any consideration should be given to this other group of professional men who are in a position not unlike the position of the author.


William Moore Benidickson: My hon. friend and I had a conversation on this point either just before the night of the budget or very shortly afterwards, and I explained to him that requests of this kind, when submitted either by letter or other forms of representation, are carefully considered by quite a large committee of officials of the government and then the ministers chiefly concerned, prior to the bringing down of the budget. He did compare the situation of the artists with the authors. I made inquiries and found that no such request had come to the attention of the government either this year or could we find one in previous years. I invited my hon. friend to continue his argument and further elaborate on the analogy and assured him that it would be considered by the budget committee in another year.


George Randolph Pearkes: Will you take this as further representation and give it consideration for the future.


Mr. Nicholson:: I would like to ask a question based on what is in this particular clause. I wonder whether the minister's parliamentary assistant has given consideration to the revenue that might be available on capital gains items? For example, there was an item in the paper the other day to the effect that former Premier Henry of Ontario sold his farm for $2 million. I understand this farm came into the family for about $200 originally. It seems to me that because of the policy of building up our cities people are making fantastic profits on capital gains in land and they should pay some return back to the treasury.


Mr. Nesbitt:: Succession duty gets it.


Alexander Malcolm Nicholson: Not in the form of income tax. It seems to me that here is a field where a lot of revenue would be available. From time to time members of the opposition make requests as to expenditures, and this evening the minister or the parliamentary assistant might indicate what consideration has been given to this important sector of the Canadian economy that certainly in the last 10 years could have provided substantial revenue for the country. The gains which have come to individuals as a result of government policy, but not as a result of any improvements they have made upon the lands, have been fantastic. For example, in the city of Ottawa if you want to get a decent piece of land on which to put a very small house you have to pay a very high price for it. Twenty years ago this parcel of land was worth very little. As a result of the people of Canada participating in building up this capital city those who sold lots have made fantastic returns. Can either the minister or the parliamentary assistant indicate what amount of revenue may be tapped from this field?


William Moore Benidickson: Mr. Chairman,-


William Alfred Robinson: Before the parliamentary assistant replies, may I say it seems to me we are wandering rather far afield from this resolution, which, to my reading, is very much confined. Perhaps this might be dealt with on other occasions. Shall the resolution carry?


John Borden Hamilton: Mr. Chairman, I have a question but it is not along the line of the questioning of the hon. member for Mackenzie because his intention is to remove all types of incentive in this system of ours. My question has to do with paragraph 1(a). Does this paragraph mean that all transactions
Income Tax Act
carried out by a trustee are going to be ruled as capital gains or capital losses transactions?


William Moore Benidickson: The proposed amendments refer only to the taxation that might apply to the individual to whom is allocated a share of the fund. It simply says that the gains and losses of the trustee operating the plan will be ignored in so far as the individual is concerned.


John Borden Hamilton: Is the trustee himself to be taxed on any of those transactions?


William Moore Benidickson: No.


John Borden Hamilton: So, in effect, the parliamentary assistant is answering my question in this way-


William Moore Benidickson: The trustee does not pay tax because of the special provisions of section 79 which provide that the employee will pay on the allocations credited to him in the fund.


John Borden Hamilton: In effect, the parliamentary assistant is answering my question in this way. No matter what the transaction may be that the trustee carries out, there will be no income tax payable or passed through to the employee. I should like an answer to the question.


William Moore Benidickson: The trustee does not pay the tax. The trustee would pay tax if it were not for the special provisions of the profit sharing section, section 79 of the act. This now is a tax relieving provision for the employee. Previously, employees did have to pay on their portion of a capital gain that might have been made in connection with the investments made by the trustee in operating the fund. From now on he will not be taxable for his individual share of a capital gain in the fund in the hands of the trustee.


John Borden Hamilton: May I proceed with the question? There may be two types of transactions carried on here by a trustee, and I would like to have this cleared up. A trustee might have a transaction as an individual transaction which would be considered very definitely as a capital gains transaction; but if he were engaging in certain types of investments regularly I am sure the Minister of National Revenue would probably say that he had engaged in that and was doing it for a specific purpose, and he would be looked upon as earning income because of those activities. Do I understand from this section that no matter what his activities may be there will be no taxation from the income point of view either of the trustee or passed on to the employee who gets the benefit of it?

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Mr. McCann:: No matter what his activities as a trustee may be?


William Moore Benidickson: My hon. friend must remember that these trustees of profit sharing funds do carry on as trustees. They are not traders and they are not operating especially to do trading. They are investing the funds that are put in their hands, and they carry on under the normal rules that are consciously in the minds of trustees of all kinds of trust funds of this nature.


Mr. Johnston (Bow River):: Do I understand we have not passed on to No. 2? Is that right?


Douglas Scott Harkness: No; we are on No. 1.


Charles Edward Johnston: What is it, Mr. Chairman?


William Alfred Robinson: Order. We are considering this resolution with regard to the Income Tax Act. There has been no agreement that we should discuss one paragraph or another.


Charles Edward Johnston: I should like to ask a question-


Donald Methuen Fleming: We had better do it in that way. There will be confusion otherwise.


Charles Edward Johnston: I should like-


Donald Methuen Fleming: Mr. Chairman, I understand my hon. friend's question is on the second paragraph. I am suggesting that since the discussion was not completed on paragraph one we should remain with that paragraph until it is completed; otherwise we are going to be very confused in our discussion.


Charles Edward Johnston: I would have thought that was in the discretion of the chairman. He has said we are discussing no particular paragraph.


James MacKerras Macdonnell: On a question of privilege-


Charles Edward Johnston: How many chairmen have we?


James MacKerras Macdonnell: On a question of privilege-


Charles Edward Johnston: There is no question of privilege.


William Alfred Robinson: The hon. member is rising on a question of privilege.


James MacKerras Macdonnell: I wish the privilege of having you rule, sir, as to whether it would not be sensible and avoid a great deal of confusion to take this seriatim. I believe my hon. friend will agree with that and everyone will agree if we would just take the time to consider the convenience which it would give us.


Charles Edward Johnston: I am not the
chairman, and neither are a few others. The chairman has just told us we were-


William Alfred Robinson: Order. I have no authority to rule that we should deal with any part of this resolution in a particular order. However, if the committee by unanimous consent agrees to discuss paragraph one first it is quite within the powers of the committee to do so. Does the committee wish, for purposes of discussion, to deal with paragraph one first?


Some hon. Members:: Agreed.


Walter Edward Harris: Mr. Chairman, we have been through this every year that I have been around here and we always seem to have the same difficulty. Surely, hon. members opposite had completed their questioning on the first paragraph.


Donald Methuen Fleming: No.


Walter Edward Harris: I did not see anyone rise.


William Earl Rowe: No, they had not completed their questions.


Walter Edward Harris: Just a moment; will you tell me who rose?


Douglas Scott Harkness: I attempted to rise and the Chairman gave the floor to the hon. member for Bow River.


Walter Edward Harris: I beg your pardon. I am afraid my eyesight must be leaving me. I saw the hon. member for York West remain in his seat and I did not see anyone rise. Let us get on with it.


Donald Methuen Fleming: He is not through.


Walter Edward Harris: Now let us get on with it, because as I understand the questioning of the hon. member for York West we are trying to do here what he wants us to and he is holding us up.


Donald Methuen Fleming: That remark should be
resented.


John Borden Hamilton: Mr. Chairman, I think that is very unwarranted. I think I am entitled to an explanation here, and as far as I am concerned, to date I have not received it.


Walter Edward Harris: Let us get it clear; my hon. friend wants to know whether the transactions of a trustee with respect to the trust fund are going to be taxable and by any plain reading of the resolution before you it is an effort to remove from taxation the gains and losses in that fund.


John Borden Hamilton: Well, Mr. Chairman, I believe that for the first time I have received a straight answer to that particular question.


An hon. Member:: For the sixth time.


Walter Edward Harris: The parliamentary assistant made that answer three times.


John Borden Hamilton: I was told that the trustee had certain types of transactions and therefore he was not going to be taxed but certainly a profit can come in different ways. He might be in the business of investments and in the ordinary course of events his activities might be interpreted as such and might be taxed. Now the minister has definitely answered and said that under no circumstances will he be taxed and that is the answer we want.


William Alfred Robinson: The hon. member for Bow River.


Douglas Scott Harkness: Mr. Chairman-are you on the next point?


Charles Edward Johnston: Yes.


Douglas Scott Harkness: I am still on this point.


William Alfred Robinson: Order. I invited the committee to give unanimous consent to dealing with paragraph 1 first for the purpose of discussion. So far as I know the committee did not extend such unanimous consent. I had recognized the hon. member for Bow River and as I see it he has the floor.


Donald Methuen Fleming: Mr. Chairman, on a point of order, the committee gave unanimous consent in order that we might have an orderly discussion in the interests of all concerned; there was no dissent.


William Alfred Robinson: Does the committee give unanimous consent to dealing with paragraph 1 of this resolution for the purpose of discussion in priority to paragraph 2?


Some hon. Members:: Agreed.


Douglas Scott Harkness: From what the minister has said, Mr. Chairman, I understand that a trustee can invest money in any way which is allowed by the law and in any way he sees fit. Any profits he might make from that are not going to be taxable. That brings up the general question then of the position of the ordinary individual.
I am all in favour of putting the trustee in that position but I would like to see the ordinary individual put in that position also.
Apparently under the change which will be made by this resolution we are going to have the trustee in the position where if he buys three or four pieces of real estate in the course of a year and makes a reasonable amount of profit or even a big profit it is not going to be taxable, but if I as an individual do the same thing the profit in my hands will be taxable according to the interpretation of 67509-235
Income Tax Act
the Income Tax Act which the Minister of National Revenue's officials put on the matter and I will he assessed for it. .
After we have passed this the trustee will be in a certain position and the ordinary individual will be in a different position so far as taxation is concerned or as far as capital gains are concerned.
In other words, it comes back to the general matter that the Department of National Revenue will in effect be taxing capital gains although the law does not provide for the taxation of capital gains.
We now have one particular type of person, a trustee, exempted from that and I think it is a good thing but could we not have the law applicable in the same way to all individuals so there will be no taxation of capital gains more or less at the discrimination of the officials of the Department of National Revenue?


William Alfred Robinson: Have we concluded the discussion on paragraph 1?


Some hon. Members:: No.


James MacKerras Macdonnell: I want to ask the parliamentary assistant if he will read subsection
(c)	with a view to seeing whether there is a possible conflict by reason of the last two lines. Let me read them:
(c) there shall be excluded in calculating the income of an employee for the period of his first three years as a beneficiary under the plan any amount contingently allocated to him if, within that period, the employee does not become entitled to receive that amount upon his withdrawal from the plan.
Is there any possible inconsistency in the event of any withdrawal?


William Moore Benidickson: No, Mr. Chairman, it is quite a common thing in these plans that while there is an allocation under present law in the eyes of the taxation authorities, no benefit is paid when any employee leaves his employment within a certain fixed number of years because according to the arrangements under the plan, in that particular industry there has been no vesting.


Douglas Scott Harkness: Mr. Chairman, I would like an answer from the minister with regard to the general question of the taxation in effect on capital gains although it is not permitted by the taxation law of this country.


Walter Edward Harris: Well, Mr. Chairman, in this resolution capital gains refers only to capital gains made in one of these employee-employer funds.
On the general subject of capital gains I have said every time I have been called upon to say it that there is no taxation of capital gains in our income tax law.

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Douglas Scott Harkness: That is my very point, Mr. Chairman. There is no provision for taxation of capital gains but in effect they are being taxed.
To my knowledge at the present time there are before the officials of the Minister of National Revenue a large number of cases of assessment of people who put in their income tax returns completely convinced that the money they made on a particular transaction was a capital gain. Two or three, five or six or even ten years afterward the thing is assessed as income although the taxpayer was perfectly clear in his own mind that it was a capital gain and should not be taxed and then the man is taxed on it as income and is also assessed interest on the amount he should have paid. In effect, as I say, we have a tax on capital gains which in my opinion is contrary to the law.
My essential question to the Minister of Finance is this. Is he prepared to have anything done in order to put an end to this anomalous situation?


Walter Edward Harris: Mr. Chairman, the trouble is that the income tax appeal board holds that these are not capital gains. This is a question of whether parliament ought to legislate that they are not and ought not to be taxed or whether we ought to leave it with the income tax appeal board.
I have heard my hon. friend and other hon. members of the opposition suggest- and I am sure if I were there I would argue the same-that if you have an income tax appeal board you ought to leave it to their jurisdiction to determine the cases which come before it. If, however, they make a decision which is contrary to government policy, the government will bring back before parliament and seek to have passed an amendment to the law. But so long as we do not have a tax on capital gains, and so far as the appeal board is concerned, it says it is not taxing a capital gain but is taxing income, I do not see that my hon. friend can expect any other result than what he gets.


Douglas Scott Harkness: This has produced a very inequitable situation. A man is assessed on one of these things which he thinks is a capital gain if it is a large amount involved-


Stanley Howard Knowles: Mr. Chairman, on a point of order, how is this discussion in order if the discussion my colleague the hon. member for Mackenzie sought to raise was ruled out of order?


Walter Edward Harris: It is not in order at all.


Douglas Scott Harkness: Mr. Chairman, if I may speak to the point of order I would say I think it is in order because this resolution

concerns the taxation or non-taxation of capital gains and therefore it is in order.


William Alfred Robinson: I think the hon. member for Winnipeg North Centre is quite right in rising to his point of order. I interrupted the hon. member for Mackenzie when he was speaking of a similar matter a short time ago. The hon. member for Calgary North commenced to speak of capital gains in relation to trustees, under paragraph 1 of this resolution, and by almost imperceptible degrees commenced to speak of capital gains-


Stanley Howard Knowles: Quite perceptible.


William Alfred Robinson: Almost imperceptible to the chair, shall I say. He proceeded to discuss capital gains as applied to individuals. It is quite true that this resolution deals only with gains and losses of the trustees under the plan, so that a discussion of capital gains other than that is not in order. Have we completed our discussion of paragraph 1?


Some hon. Members:: Agreed.


William Alfred Robinson: Paragraph 2.


Charles Edward Johnston: I should like to ask the minister to define, if he will, what he means by "conventions" in paragraph 2. Are we to understand that any taxpayer who attends a convention has the right to deduct that from his income tax? For instance, if a farmer attends an agricultural convention, if a teacher attends a convention or if anybody else attends any convention which is part of his business, will he be allowed an exemption on this? Will the minister define what he means by "convention"?


William Moore Benidickson: Without anything overly direct or specific in the Income Tax Act, up until a court decision of 1955, taxpayers in business were allowed tax deductions with respect to expenses attending conventions under section 12, which refers to deductions of expenditures made in order to earn income. In 1955 a court decision held that, as the law was written, convention expense was not an expenditure necessary for the purpose of earning that income, and therefore the convention expenses of that taxpayer who appealed were disallowed.
It is proposed here to restore more or less the administrative practice that had been in existence prior to 1955, when that court decision was rendered. I draw to my hon. friends' attention the word "business". This would apply to a person who was attending a convention in connection with his profession or his business, and it was considered to provide benefit to him in earning his income.


Stanley Howard Knowles: I must express amazement that this change has been brought in. The parliamentary assistant says that it is an attempt to restore the administrative practice, but it reminds me of a chapter in income tax history which, I am sure, is still in the memories of a good many who are here in the house.
A number of years ago there was general provision that the membership fees that certain people paid could be deducted for income tax purposes. Apparently it was intended by the government at that time that the deductibility of those membership fees should apply only in the case of persons who were on gross income, the kind of income that doctors and lawyers obtain by receiving fees and paying out certain expenses, in other words selfemployed persons.
However, as hon. members recall, there were, once upon a time, a couple of trade unionists who sought the same deductibility for their trade union dues. They took their case right to the Exchequer Court of Canada, which ruled that, under the law as it formerly read, they were just as much entitled to that deductibility as were doctors and lawyers. The government, shortly after that, following the course of procedure to which the Minister of Finance referred a moment ago, brought in an amendment to the act to change it and make it clear that people on net salaries or wages would not have the privilege of deducting their dues to the organization with which they were connected.
So for a number of years we had the situation under which lawyers and doctors as professional people who received fees and were allowed to deduct expenses, were permitted to deduct their dues to the bar association or the medical society. On the other hand, during that same period, trade unionists on wages and school teachers on salaries were not permitted to deduct their membership dues to their trade unions or their teachers' associations. The same limitation, I may say, was imposed on any doctors or lawyers who were on staffs of various institutions and, consequently, on salaries.
Despite the fact that, to the income tax authorities and to the Minister of Finance at that time, this line of distinction seemed to have some sense, it did not have sense in the eyes of the general public. It certainly did not appeal to the trade unionists of this country, who were denied the right to deduct their trade union dues, whereas most doctors and lawyers were being allowed to deduct their dues to the bar association or the medical society. Consequently, as members will recall, a few years after the period to which
67509-235J
Income Tax Act
I have been referring, and after many amendments and speeches from this part of the house, the government brought in at long last another amendment to the Income Tax Act permitting the deductibility of trade union dues and fees to other professional organizations to which people belong in connection with the work they do in earning their living. In other words, that story, which indeed had several chapters, finally came out more or less all right. There is one qualification with which I could deal on some other occasion, but it came out more or less all right, in that a result was achieved whereby all these people -doctors, lawyers, trade unionists, teachers and professional people-seemed to be put on the same basis. They were all-and they still are all-permitted to deduct their membership dues to the bar association, the medical association, teachers' societies, trade unions, or what have you.
I think the government learned a good lesson from the debates that took place on that issue, and the government did well eventually to come out where it should have come out on the matter, but now we are starting all over again. Now a proposal is being made which, though the distinction, as set out in the resolution and as underlined by the parliamentary assistant, may seem clear to the government, nevertheless will again create a sense of discrimination.
Again we are going to have the situation that certain people in the country will be able to attend conventions, two of them a year, and be allowed to deduct their expenses from their taxable income. But, in order to qualify for that right to deduct these convention expenses, you will have to be the kind of person who receives gross income, again like doctors and lawyers, against which you are permitted to charge the expenses that you incur in connection with earning that income. In other words, you will have to be self-employed. In the case of the teacher, as my hon. friend from Bow River used to be, or in the case of trade unionists who work for wages, they will not be allowed this right to deduct expenses of attending conventions.
I want to be perfectly fair about this and admit that there is a difference with respect to conventions, one that did not apply with respect to membership dues and fees. As far as membership dues and fees are concerned, they are paid by the individual himself in practically all cases. When it comes to conventions-let me refer to medical and bar conventions on the one hand and trade union conventions on the other-I recognize that in the case of medical conventions, such as my hon. friend who sits at my right may attend, undoubtedly he will pay his own expenses.

Income Tax Act
and those, therefore, will be expenses that he incurs out of his own: pocket in connection with the earning of his livelihood as a doctor,
I recognize that in the case of most trade unionists who go to conventions their expenses are paid for them by the union they represent, although there are some exceptions to this general rule. Nevertheless, these same trade unionists will see, in addition to the same discrimination that applied before cropping up again, that the justification for convention expenses being allowed as deductible is that those expenses relate to the business of the taxpayer. To the average wage earner this paragraph means that the expenses that are recognized are those that relate to the earning of a livelihood by a doctor or a lawyer. That raises in the minds of the average wage earner the question that he has been asking for many years. Why can he not get a deduction for some of the expenses he has to incur directly in connection with earning his livelihood?
That raises the whole question of the special tools that some workers have to purchase. It raises the question of the special clothing that workers in some industries have to buy. It raises the question of special expense in connection with travelling great distances to places of employment. All of these requests that have been made from time to time to the government on behalf of workers are made under the general thought that money that you expend in order to earn your livelihood should be allowed as a deductible item. I think of the position of married women who go out to work and find it necessary-


Douglas Scott Harkness: On a point of order, similar to the point of order which the hon. member raised against me a short time ago, are we not considering now only expenses which may be deducted for attending conventions and not the type of clothing that people may wear in the occupation they pursue or anything else along that line? Therefore the hon. member for Winnipeg North Centre is out of order.


Stanley Howard Knowles: I do not blame the hon. member for trying to get back at me but he had better wait until he has a much better case than he has now.


Douglas Scott Harkness: Mr. Chairman, I ask you if my point of order is not well taken.


Stanley Howard Knowles: On the point of order, I submit-


Edward Turney Applewhaite: The hon. member does not need to justify his position. I think the hon. member for Winnipeg North Centre is perfectly in order in outlining an analogous and comparative case. I have been sitting
[Mr. Knowles.J
here attempting to listen to him very carefully and prepared to call his attention to the fact when I thought that he was arguing the merits of the analogous case and not the merits of the resolution before us, but I do not think he has reached that stage.


Douglas Scott Harkness: Still on the point of order,
I see there is a different chairman in the chair. As I was doing the same thing and was ruled out of order, may I now come back to my original point?


Edward Turney Applewhaite: For the benefit of the record, I think that perhaps it might be stated here that I heard the ruling made by the previous chairman. I think that he and I are endeavouring to follow the same line of reasoning. I feel he would have come to the same conclusion as I have at the moment just as I would have come to the same conclusion that he did at the time he considered it necessary to interject. The hon. member for Winnipeg North Centre will continue. Of course, any member has the right at any time to raise a point of order. I, unfortunately for me, have the responsibility of deciding them.


Stanley Howard Knowles: Mr. Chairman, I appreciate the analysis you have made of the argument
1	was trying to make and, if I may say so, your analysis was perfectly correct. By making these other references I am trying to persuade the government that it should do either one of two things. Either it should not go ahead with the proposal in paragraph
2	or it should broaden what it proposes to do in paragraph 2 and allow all people deductibility for moneys that they expend in relation to the earning of their livelihood. If I may complete what I was saying, I was referring to one more example when I was interrupted by my good friend, the hon. member for Calgary North. I was referring to the case of married women who go out to work, find it necessary to hire someone in the home and feel that the money they spend on that is just as much an expense in relation to earning their income as is the money that a doctor or lawyer spends in going to a convention. I see that you are shaking your head, Mr. Chairman. I do not know whether you disagree with my argument or whether you think that I have strayed too far. At any rate, I will not go any further. I think I have made my point.
In fact, I must say that I was thinking of this the other day when the Minister of Finance laid down the dictum that it is not a good idea to introduce too many exemptions in the income tax law. He said that every time you introduce an exemption you have a clamour for some other exemption and this thing goes on and on. Now in paragraph

2 of this resolution, he is doing the very thing that he argued against when he was speaking the other day. I feel that the government appears, by its decision in respect of this matter, not to have learned its lesson from its long experience with relation to doctors' and lawyers' fees to their societies on the one hand and the dues of trade unionists, teachers and other professional people on the other hand.
I realize that the hon. member for Bow River was hopeful that this resolution meant that people who attend the kind of conventions that he goes to would get deductibility for those expenses. I think he now knows that is not the case and that this is limited simply to people like doctors and lawyers who make their income in a particular way and that is not one of those general exemptions for convention expenses as people might have thought it to be. In my view the government should reconsider its position with respect to this proposition. Either it has gone too far or it has not gone far enough.


Wallace Bickford (Wally) Nesbitt: In view of the wording of this part of the resolution I submit that it was ill thought out when it was drafted. I refer to that part of paragraph 2 reading:
... a deduction shall be allowed for expenses of attending in Canada not more than two conventions annually . . .
And so on. Since this session started we have heard on numerous occasions from members on all sides of the house about the shortage of engineers and scientists in the Western world compared with the Soviet union and her related countries. We have not only heard about it in the house but we have heard about it from the Department of Labour in the committee on estimates. We heard about it the other day from Mr. Cavell in the committee on external affairs. We have also read about it in magazines and all sorts of authoritative publications.
I think there is little doubt that the countries of the western world, nations such as the United States, Canada, Great Britain and so on, are desperately short at the present time of needed trained scientists and engineers compared with the Soviet union. In fact, in this country in particular we are very short indeed. We only had to listen to the evidence in the external affairs committee the other day to emphasize that point.
It is quite impossible to produce a great number of highly trained scientists and engineers in a few days, but what we can do is to try to assist the scientists, engineers and doctors that we have in our country at the present time to enlarge their knowledge in their own fields. One of the very good ways
Income Tax Act
of doing so is to allow them to attend conventions of scientists, doctors and engineers in other countries such as the United States, the European countries and so on. I think it is quite ridiculous that they should be limited to attending conventions in Canada. I am sure that whoever drafted the resolution did not think about it very much because I point out, as I have already said, that if you cannot get more of these people you can at least improve the quality of the ones you have, and the best way to do that is by an exchange of ideas with scientists, doctors and engineers of other countries. I hope that the minister will reconsider this paragraph of the income tax resolution and make some changes.


Mr. Thomas:: I should like to ask the minister to be a little more specific on the point raised by the hon. member for Bow River and to ask him whether or not under the terms of this amendment a farmer would be considered a businessman and would be allowed to deduct his convention expenses incurred while attending a farm union convention.


William Moore Benidickson: That farmer would be so entitled, Mr. Chairman.


Mr. Monteith:: The hon. member for
Oxford covered I think what should be changed in this section. However, I should like to point out that any businessman in Canada can have his expenses paid to go to the United States or to go to Europe on business. Why should not the same consideration be accorded to a professional man who is also laying out money to increase his earned income on which he is going to pay taxes?


Ellen Louks Fairclough: Mr. Chairman, I agree with remarks made by the hon. member for Oxford and the hon. member for Perth but I should like to go a little bit further. With regard to this clause 2, I think the minister has said that this provision relates to business or profession. I think that he should be a little bit more definite on that point. It actually does say "business"; and in a good many persons' minds there is a distinction between a person engaged in a business and one engaged in a profession. In the minds of a good many of the assessors in the income tax branches throughout the country, I know that what appears on the book is law and what does not appear there is something they find extremely hard to interpret. With that consideration in mind, I would think that the minister might be a little bit more explicit in this regard and broaden the field to business and professions. I also think that he might drop from this section 2 the words "in Canada". Such action would meet the

Income Tax Act
objections which have been raised with regard to conventions which are held elsewhere than in this country.
Since the chairman has permitted the hon. member for Winnipeg North Centre to explore the field of allowable deductions, I might say that I have some sympathy for the views which he has expressed, particularly with regard to deductions allowed to married women who are working. I have particular sympathy for them because I have had personal experience with that particular phase over many years and have been in the unenviable position-as have a great many other working women in the country-of having the statutory exemption reduced from $2,000 to $1,000 and then having to expend in addition the amount that was laid out to secure the services of a person to do the work which a housewife would ordinarily have done in her own home and for which there was no basis for deduction under the Income Tax Act. I have long felt that it was a grave injustice because it is a fact that most of the women who work outside their own homes do not do so from choice; they do so from necessity. Consequently it is a great hardship for them that they should be forced to expend money for the hiring of household help in order that they may augment the family income and that they or their husbands at the same time are penalized by being placed on single status in so far as statutory exemption is concerned.
In considering this point and in view of the point which was raised by the hon. member for Winnipeg North Centre I feel strongly that consideration should definitely be given to the situation which exists in Canada today and that the statutory exemption for married persons should be allowed to the spouse who is the recognized breadwinner for the family and that the statutory exemption for single persons should be allowed to the other partner in that marriage if he or she should likewise be earning an income outside the family. If you are not going to allow these exemptions on that basis, then definitely the point raised ny the hon. member for Winnipeg North Centre becomes pertinent, and the expenses which are laid out by the person who is forced to seek some sort of earning capacity outside the home should be allowed as an expense.


Alexander Malcolm Nicholson: The hon. member for Winnipeg North Centre made a good argument but there are two or three points I should like to raise. First of all, I note that this amendment includes the year 1955. It would appear to me that that is an unnecessary provision to make. We are now well into May of 1956. A citizen who incurred expenses in
fMrs. Fairclough.]
1955 in connection with attending conventions had no indication then that he would get any such provision made. It is now past the time when income tax returns can be filed. Since this deduction is not allowed now, it would seem to me that it is unfortunate to have that provision in legislation we are discussing at this stage.
I wonder whether the minister or his parliamentary assistant could estimate what this change is going to cost the treasury? Some estimate must have been made before this change was brought in. I think we should have some information about that matter. I wonder whether the parliamentary assistant could give an indication of the situation with regard to what now is considered to be an extremely important item in connection with these conventions? I do not attend conventions of this sort myself but when I go to the Chateau Laurier and see the conventions that are held there nearly every day I find that the liquor bill that somebody must pay must be terrific. I wonder whether this provision has been made so the taxpayers of Canada will be asked to foot the liquor bill that seems to be so important in connection with most conventions that are now held?


Some hon. Members:: Oh, oh.


Alexander Malcolm Nicholson: I wonder whether the minister can tell us what the cost to the treasury will be and whether this amendment is providing that the liquor expenses that are involved will be included?


William Moore Benidickson: Mr. Chairman, this has been a deduction, as I say, that has been allowed for some considerable number of years. It was interrupted in 1955 by a court decision. It is not unusual to restore by new law what has been administrative practice. As it was a deduction under a general section of expense in connection with the earnings of income, we would have no statistics of the actual total sums deducted in this category alone. I can assure my hon. friend that vouchers and receipts in detail indicating the nature of the expenses for conventions are required by the officials in the Department of National Revenue examining the tax returns; and he can be sure that certain items such as those to which he referred would be disallowed.


William Earl Rowe: You should not charge for your liquor anyway; pay for it yourself.


Mr. Herridge:: I wish briefly to support the excellent argument made by the hon. member for Winnipeg North Centre. If we allow for a very few people in Canada these expenses for travelling in connection with

attending two conventions a year, I think we should allow other even more legitimate expenses.
I refer again to a matter I have raised on five occasions during the last five years and that is the abnormal travelling expenses of industrial workers who, because of the circumstances under which they work, must live 15 to 35 miles away from their place of occupation. I could never see why a traveller could charge up his expenses for selling bubble gum, no matter how far he travelled, while an industrial worker was not allowed exemption for abnormal expenses. I am not suggesting anything like 10, 15 or 25 cents. I am thinking of some of the workers of consolidated mining and smelting company who pay all the way from $15 to $35 a month in abnormal travelling expenses because they have to live long distances away from the plant in order to acquire living accommodation.
Before I sit down, and I think I am in order -in fact I am always in order-I want to deal with another matter which is really the inverse of what I have been talking about. We have a lot of volunteer fire departments in British Columbia. These volunteer firemen are allowed a little money for travelling to and from their homes when fires occur. This is added to their income, and in some cases these volunteer firemen who risk their lives in fighting fires are put into a higher income tax bracket and have to pay a higher tax. This has been brought to the attention of the minister on numerous occasions and I think it is unfair. There should be some consideration given to these men who render a community service by fighting fires in the communities in which they live.


Jay Waldo Monteith: I wonder if the parliamentary assistant or the minister could give me an answer to my previous query as to why a businessman or a government member on the front benches who wants to go to the United States will be allowed his expenses on a business trip when he is going to earn income on which he is going to pay taxes. Why should not a professional man be allowed to go to at least one convention in the United States or Europe or wherever it may be?


William Moore Benidickson: My hon. friend has a background, I think, as an auditor and I am quite sure he would never indicate to a businessman client that he would be able to deduct travelling expenses abroad unless he could relate those expenses very directly to the matter of earning profits or income in that business.
Income Tax Act


Jay Waldo Monteith: Quite right, but would not attending conventions improve a doctor's or a lawyer's qualifications, and as a consequence make him better able to earn income, more income?


Colin Cameron: I should like to follow up what the hon. member for Kootenay West said just now about some of the workers in his constituency. In the lower coast areas of British Columbia there has been a development in recent years in the logging industry whereby some of the major corporations are now abandoning residential camps. This has resulted in most of the workers having to travel, in some instances up to 25 or 30 miles a day. In some cases the corporations for which they work provide transportation for which the corporations make a charge. In other instances the men have to provide their own transportation and bear the cost of running a car. It does seem to me they should be put on all fours with a businessman who makes deductions for necessary and legitimate expenses incurred in the course of earning his livelihood.


Mr.   Nesbill@: I should like to add something to the remarks I have already made. I am rather surprised that neither the minister nor his parliamentary assistant has attempted to give some attention to the remarks that have been made by me and the hon. member for Perth as well as the hon. member for Hamilton West. Now, it is a matter of allowing scientists, engineers and doctors to go to conventions in other parts of the world, be it the western world or even behind the iron curtain, to acquire certain knowledge. This goes beyond the matter of earning income because presently it is a matter of acute national importance to every country in the western world that scientific knowledge be allowed to spread. I should like to hear what the minister or the parliamentary assistant has to say about removing the two words "in Canada" in this paragraph, even if it is only in so far as scientists, engineers or doctors are concerned.


John Borden Hamilton: Before the parliamentary assistant answers, I do not want to adopt the attitude of the hon. member for Winnipeg North Centre, that if I cannot have it nobody else should have it. In this case I should like to make a special plea for the medical profession. I think that in my profession we can probably get along without attending the bar convention in Washington or London and still make a very good living. On the other hand, I do not believe the medical profession recognizes any international boundary. The work they are

Income Tax Act
doing will certainly be improved if they are allowed free communication from one end of this world to the other.
I do have a great number of friends in that profession and they tell me that some of the most important conventions they have- perhaps the Minister of National Revenue, who is looking at me, can confirm this- take place in various parts of the world. It would certainly improve the practice of their profession if they were able to attend these conventions and gain the knowledge which is being produced in other parts of the world. I should like, therefore, to make a special plea on behalf of that profession. If the parliamentary assistant is at all inclined to make any type of revision in this piece of legislation before it is brought into the house I certainly believe some thought should be given to the position of the medical profession so that expenses of attending conventions in various parts of the world may be deductible. I say to him it is easy to ask for reasonable proof of the attendance at these conventions, whether they be in Canada or outside, under the practice we have at the present time. I am sure the department could ensure that if anyone is asking for a deduction of that kind he actually did attend such a meeting. If we are going to go forward in the practice of medicine, then I think we should make every effort to assist these people to improve their own position in the country.


James Joseph McCann: I am glad to hear a champion of the medical profession, although I cannot agree with him. I may say that it is exemptions that are the curse of the national revenue department on its administrative side. It was because of abuse by the members of some professions that it was necessary to put in a law restricting the deductible expenses to those connected with attendance at conventions in Canada.
Now, the very case that brought this about concerned a man of my own profession. In order to give himself and his wife a holiday, he took a trip to Europe. It is true that when he was there he did attend a meeting of the profession and he called that a convention. The department found it necessary to disallow these expenses and he appealed to the income tax appeal board. The income tax appeal board threw out the case and commented to the effect that they thought all these exemptions were irregular. It is on that account that this section is put in, to regularize what had been the practice for a number of years and which we regarded as within the law. By this section this will become regular and professional groups may

claim as an offset to their income the cost of attending two conventions a year in our own country.
I can well understand that it might work hardship on some people in any of the professions. For instance, a man is practising down in the Niagara peninsula. There may be a convention in Buffalo. Costs are not very high, but just the same under the law -the law has to be regular-he cannot claim a deduction there but he can claim a deduction for attending a convention in the city of Vancouver or in Montreal. Therefore, I state again that it is all these exemptions that make so much difficulty in the transaction of business. I say, furthermore, that professional men who can go to Europe and attend a convention are probably men who are making big fees, and they can well afford to pay their own expenses rather than have you and me and the other taxpayers pay, because that is what we are doing. We want to collect X dollars in a year, and if we are collecting them from 4 million people they will work out at a figure, but if we are giving all kinds of exemptions to certain taxpayers, then the same number of taxpayers have to make up that amount and that is one of the reasons why taxes in Canada are as high as they are. If there were no exemptions and if there were a uniform rate the tax rate in Canada would be lower.


Douglas Scott Harkness: The minister has provoked a lot of discussion there.


Mr. Barnett:: Mr. Chairman, I was very interested in the remarks just made by the Minister of National Revenue and in his reference to an appeal before the income tax appeal board. I have a reference to such a case that I intend to bring out in a moment or two. At the outset I should like to make it clear, however, that I wish to support the remarks made a few minutes ago by the hon. member for Winnipeg North Centre with respect to a question that is brought forward by this resolution. My position, like his, is that in the circumstances the proposal here advanced is not expedient, as the resolution suggests, as long as it is going to be a narrow class piece of exemption. It is going to leave out of its provisions a vast majority of the people of Canada. I might perhaps remind you, Mr. Chairman, and through you the minister, that this very point is not a new one for me to rise on. During the last few sessions I know that I have participated in several discussions along the same lines. While the resolution does say, among other things, that it is expedient to do this, there has been no indication on the part of the government that among those other things there is going to be the removal of certain

other very discriminatory sections in the application of exemptions in our income tax law. I could very easily go along with the position taken by the Minister of National Revenue in so far as one can agree that what is sauce for the goose should be sauce for the gander. But nevertheless the fact remains that the government of which he is a member is bringing in this restrictive form of exemption in regard to conventions, and that the same situation in respect of people whose incomes are earned through wages and salaries is going to apply in this case as applies in certain other examples, one of which was mentioned by my colleagues, the hon. member for Kootenay West and the hon. member for Nanaimo in regard to the deduction of expenses of workers.
I have in my hand a copy of the judgment contained in tax appeal board cases, volume 10, 1954. It is the case of John Leonard McLeavy v. the Minister of National Revenue, which was heard before W. S. Fisher, Q.C., on February 19, 1954. This document states that:
The appellant, an aircraft maintenance engineer, . . . was required by the terms of his employment to supply his own small tools.
He claimed a deduction under section 11 (10) (c) of the 1948 Income Tax Act. The minister disallowed the deduction on the ground that the appellant's income was from salary and as such could not be reduced by any deductions other than those specified in section 5. The finding makes it clear that the judge was quite sympathetic to the position in which this aircraft maintenance engineer found himself because at one point he does say:
Indeed it would appear that the appellant's claim was a reasonable one in the circumstances.
He goes on to make it clear that the only reason he is disallowing the appeal is that of the existing terms of the Income Tax Act. As he points out in the finding:
The appellant's income is obtained as an employee and his salary, as such, comes within the provisions of section 5 of the 1948 Income Tax Act under which income from an employment may not be reduced by any deductions other than those specifically provided for in the said act. There is no provision in the act, so far as I can discover, under which the appellant, as an employee, could obtain a deduction in respect of depreciation on the small tools owned by him.
Now, Mr. Chairman, under the proposal which the government is here advancing in this resolution the discriminatory features of the Income Tax Act are going to be extended that much farther. I would suggest that unless the minister is prepared to indicate that he will bring in some modification of the act to remove this discrimination against people whose incomes are from wages or salaries 47509-236
Income Tax Act
so that such people can claim expenses incurred in the matter of earning a livelihood on the same basis as professional people, then I suggest this resolution is not one which should receive the support of this committee.
I know that this is a matter about which there is widespread and growing concern among the organized workers of Canada. I know from my own knowledge of the organized workers of British Columbia that they are becoming increasingly concerned over this discrimination. The particular case to which I have made reference arose I believe from a worker who was employed in the city of Saskatoon. I would suggest to the minister that if he is going to bring in recommendations such as this, allowing deductions of expenses for such things as conventions, he should give serious consideration to a suitable amendment to the act which will put the wage and salary earners of Canada on the same footing as professional or other people as far as deductions of the same type of expenses are concerned.


James MacKerras Macdonnell: Mr. Chairman, the stony countenances of the minister and his parliamentary assistant do not give much encouragement to making requests. I have, however, a very small request to make and I might say I hope I am supported by the Minister of National Revenue. I do want to raise one question about terminology. I have heard nothing said by the minister or his assistant to indicate that the word "business" was to have any unusual connotation. I am assuming that it does not, nor is it intended to include "professional". Now, if I am right in that, then I think it certainly does raise a very serious question. I would think, for example, it is much more important for a doctor to be able to attend a convention than for an ordinary businessman. Quite frankly I am not greatly impressed with the need for an ordinary businessman to attend a convention, but for a doctor who is engaged in a scientific profession I can greatly appreciate the need for his attending. I therefore suggest that we must be clear as to what this word ."business" means.


William Moore Benidickson: Mr. Chairman, could I explain to my hon. friend? The interpretation section of the Income Tax Act and in particular section 139 (1) (e) defines "business" and says it includes a profession, calling, trade, manufacture or undertaking of any kind whatsoever, and so on. It is spelled out in the interpretation section.


William Earl Rowe: What about a farmer?


William Moore Benidickson: It is there.


James MacKerras Macdonnell: Then I come to my second point. I suggest that the minister might look

Income Tax Act
at the words "in Canada". I suggest it might be extended to include Canada or the United States for the reason that it should not necessarily mean any greater expense and it might have a tremendous balance of convenience. Take for example a doctor living in Vancouver with an important scientific convention he wishes to attend being held, let us say, in Seattle and another one being held the same year in Montreal. Obviously there is a balance of convenience that he should be able to go to the one in Seattle, and therefore I do suggest that the words "in Canada" might be extended to read "in Canada and the United States". It should not cost any more, and to me it would be facing much more realistically the facts of the situation.


Stanley Howard Knowles: Mr. Chairman, it seems to me that the parliamentary assistant, if I understand the matter correctly, should have said a little more when he was saying that a business by the interpretation of the act included a professional person. Does it not also depend on whether that person is in the selfemployed group or on wages or salary?
If I understand it correctly a doctor who is a self-employed person, who collects fees from his patients and pays out office rent and secretarial help and so on will be able to deduct the money he spends out of his pocket to go to a convention. On the other hand a medical doctor on the staff of one of our great institutions who is on salary from that institution would not be entitled to deduct the money he might pay out of his pocket to go to an important medical convention.


James Joseph McCann: It is often paid by his employer or should be included in his salary.


Ellen Louks Fairclough: No.


Stanley Howard Knowles: I recognize that that happens in some instances but my point still holds that if he were to pay his expenses out of his own pocket he would not be able to deduct them from his own taxable income and the Minister of National Revenue is saying yes to that which means that it is not a sufficient answer just to say that a business includes a profession. The real distinction is not whether you call yourself a business person or a professional person. The real distinction is the nature of your income, whether it is from self-employment or whether you are on salary or wages.
In that connection, Mr. Chairman, it seems to me that here within the group which it is supposed is getting this deductibility there is an element of discrimination. I am not concerned about the charge the hon. member for York West made against me when I complained that some were not getting this and others were. After all; that is the argument

we are always making when we ask for equity in tax matters. But even within the group of doctors themselves the fact is there are some doctors, those who are self-employed, who are getting this deductibility and there are other doctors on the staffs of our great institutions-as a matter of fact, I have some doctors and some institutions in mind-who gain just as much medically and professionally and for the good of the country by going to these conventions but will not get this deductibility. In my view those hon. members, who tonight have said that this matter has not been thought through sufficiently by those who have presented it to us have been quite correct.


Ellen Louks Fairclough: Mr. Chairman, I have to support the remarks made by the hon. member for Winnipeg North Centre. I think anyone who has ever been involved in municipal affairs realizes that very often because it involves the expenditure of public funds municipalities do not pay the expenses of their professional people who attend conventions where the professional person acquires considerable knowledge and from where he brings back to his job the advantage of the knowledge acquired.
That is not the reason I have risen at this time. I would like to ask the minister a question. I was somewhat intrigued by the case put forward by the Minister of National Revenue with respect to who should and who should not be permitted to deduct expenses for attending conventions, and from long years of experience in attending conventions, mostly at my own expense, I do know that there is a vast difference between the representation at those conventions by individuals and the attendance by employees of large corporations.
What I want to ask the Minister of Finance is this. Does the word "taxpayer" mean corporation? If that is true, when the minis-er interprets this clause and says that expenses shall be allowed for not more than two conventions, does he mean for one person to attend two conventions or does he mean that a corporation may send up to 25 people to a convention and still deduct the expenses of plush suites and liquor and all the things that go toward entertaining clients-


Stanley Howard Knowles: Ellen, where have you been?


William Earl Rowe: Speak for yourself!


Ellen Louks Fairclough: -at these conventions.


William Earl Rowe: C.C.F. conventions!


Ellen Louks Fairclough: As a person who has suffered considerably on my own account and

on account of clients by having had tax returns revised by reason of conventions and other things, I might say that it has always irked me somewhat to have my clients penalized if they happened to be proprietors or professional people operating on their own account and to know full well that large corporations were deducting precisely the same expenses manifold and getting away with it all the way down the line. As a matter of fact, under the act it is quite all right-


Stanley Howard Knowles: It is all behind the veil of secrecy, too.


Ellen Louks Fairclough: I do not think it is necessarily behind the veil of secrecy.


Edward Turney Applewhaite: I am sorry to interrupt the hon. member but it is ten o'clock. Shall I report progress and ask leave to sit again?
Business of the House


Some hon. Members:: Agreed-
Progress reported.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we
shall continue with the income tax resolution, the customs tariff resolution and the bill in committee of the whole with respect to the branch line of the Canadian National Railways.


James MacKerras Macdonnell: May I ask the minister when he expects to take the excise tax resolution?


Walter Edward Harris: After we have made more
progress than we have tonight, sir.


Stanley Howard Knowles: That is a cheerless note on which to end.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
67509-236J
[Stage Direction]
Question

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

Mr. Dinsdale: 1.	How many former school teachers are serving in the dominion civil service?
2.	How many from each province?
3.	How many former school teachers are serving in Canadian armed forces?
Answer by: Hon. Roch Pinard (Secretary of State):
1.	Information as to the number of former school teachers now employed in the civil service is not available from the records of the civil service commission.
2.	Answered by No. 1.
3.	770.

Wednesday, May 9, 1956