1956-07-31

Mr. Speaker:: I have the honour to inform the house that I have received the following communication:
Chief Justice's Chambers, Supreme Court,
Ottawa, July 31, 1956.
Sir:
I have the honour to inform you that the Honourable Mr. Justice C. H. Locke, acting as Deputy of His Excellency the Governor General, will proceed to the Senate chamber today, the 31st July, at 9.45 p.m., for the purpose of giving royal assent to certain bills.
I have the honour to be, sir.
Your obedient servant,
W. Kenneth Campbell, Private Secretary to the Chief Justice of Canada.



PRIVILEGE


Mr. T. H. Goode (Burnaby-Richmond):: Mr. Speaker, on a question of privilege: As reported at page 6625 of Hansard I mentioned, during an exchange with the hon. member for Prince Albert (Mr. Diefenbaker), that the hon. member for Eglinton (Mr. Fleming) had spoken for one hour in this house last Friday night. I was in error; he spoke for only 30 minutes.



CRIMINAL LAW


Mr. D. F. Brown (Essex West):: Mr. Speaker, I have the honour to present the fourth and fifth reports of the special joint committee on capital and corporal punishment and lotteries. The fourth report constitutes the final report on the lotteries question. The fifth and final report of the committee is principally a summary of the committee's activities. No motion will be made for adoption of these reports at this time.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I would like to direct a question to the Prime Minister or to the Secretary of State for External Affairs respecting the permits for the export of Sabre jets to Israel. Does not the recent and present truculent attitude being exhibited by Colonel Nasser underline the need of an early decision in this regard, and what is the present position of the consideration being given by the government to this matter?


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, as the hon. gentleman knows the Prime Minister announced in the house some days ago that discussions were taking place among certain governments, in addition to the Canadian government, concerned with this matter. It had been hoped, Mr. Speaker, that those discussions would have been completed by now and that an announcement in regard to Canadian policy on the matter could have been made. However, there has been a delay, so that not only this government but the other governments could consider the effect if any of recent developments in relation to the Suez on this other problem. It is hoped that this delay will be very short and that an announcement can be made in a few days.


Mr. G. R. Pearkes (Esquimali-Saanich):: Mr. Speaker, may I ask a supplementary question. Was the original order for Harvard training planes for Egypt ever completed, or are there still three more Harvards to be sent?


Lester Bowles Pearson: My impression is that the order has been completed, but I had better look into the matter to make sure that my impression is correct.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Clarence Gillis (Cape Breton South):: Mr. Speaker, may I be permitted to direct a question to the parliamentary assistant to the Minister of National Defence. I sent him

Inquiries of the Ministry notice, though with the present hours he may not have received it until a few moments ago. Is it correct that the Department of National Defence has called for tenders to convert the coal-burning equipment at the R.C.A.F. station at Greenwood, Nova Scotia, to oil for 100 married persons' quarters?


Mr. Paul Hellyer (Parliamentary Assistant to the Minister of National Defence):: Mr. Speaker, I have not received the notice to which the hon. member referred so perhaps I can take his question as notice.



WHEAT-REPORTED SHORTAGE AT ONTARIO FEED MILLS

[Stage Direction]
On the orders of the day:
Mr. A. M. Nicholson (Mackenzie):: Mr. Speaker, in the absence of the Minister of Trade and Commerce I should like to direct a question to his parliamentary assistant. Has a telegram been received from the president of the Ontario farmers' union claiming that Ontario feed mills are having a great deal of trouble securing western wheat? Would the parliamentary assistant comment on this situation?


Mr. J. H. Dickey (Parliamentary Assistant, for the Minister of Trade and Commerce):: Mr. Speaker, the telegram referred to has been received, but I am not in position to comment upon it. The allegations contained in the telegram are being investigated by the Canadian wheat board, and any comment would have to wait until that investigation is complete.



INQUIRY AS TO QUOTAS IN NEW CROP YEAR

[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: In the absence of the Minister of Trade and Commerce, I should like to direct a question to the parliamentary assistant. My question arises out of the grave injustice caused to producers-


Some hon. Members:: Question.


Hazen Robert Argue: -at the 50 per cent of the marketing points still on the low delivery quota, and the minister's announcement the other day that shipping orders currently in effect at those points will be continued into the new crop year. My question is this. Will deliveries made at the low delivery points in the new crop year be made against current marketing quotas? In other words, will producers at marketing points have the right within the next few weeks to deliver on old quotas rather than on new?
[Mr. GiUls.l


John Horace Dickey: That question will be taken as notice.



APPLICATION OF RAILWAYS TO CHARGE DEMURRAGE ON BOX CARS

[Stage Direction]
On the orders of the day:
Mr. G. H. Castleden (Yorkton):: I should like to direct a question to the Minister of Transport. Could the minister inform the house as to the result of the application of the railway companies for the right to charge demurrage on box cars on track at elevator terminals?


Hon. George C. Marler (Minister of Transport):: The only source of information I have at the moment is this morning's newspaper. I understand that a hearing took place yesterday and that the board set September 10 for a further hearing in the matter. In the meantime the charges have been suspended.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. William Bryce (Selkirk):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare (Mr. Martin) or his parliamentary assistant. When Peter Thom, treaty Indian, was admitted to Fisher River reserve hospital, was a third-year medical student the only person available to treat him?


Hon. W. E. Harris (Minister of Finance):: Mr. Speaker, I regret to say that I did not hear the question, but I shall take it as notice.



PASSAMAQUODDY PROJECT


[Stage Direction]
On the orders of the day:
Mr. A. W. Stuart (Charlotte):: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs. Has the minister anything further to report in connection with the proposed international survey of the Passamaquoddy tidal power project?


Lester Bowles Pearson: Mr. Speaker, I can
report that the terms of reference to the international joint commission governing this matter have been agreed on here and have been submitted to the United States. We expect agreement on these terms within

the next day or so. I shall be glad to announce that to the hon. gentleman and to the house as soon as agreement has been achieved. At that time the matter will be referred at once to the international joint commission.



PARLIAMENT HILL


[Stage Direction]
On the orders of the day:
Mr. George H. Hees (Broadview):: Mr. Speaker, I should like to direct a question to the Minister of Public Works. Could the minister advise the house what steps his department has taken to clean up the disorderly area north of the parliament buildings and make it an area of which this parliament can feel proud instead of ashamed?


Hon. Robert H. Winters (Minister of Public Works):: May I ask the hon. member if this is the same area about which he inquired before?


George Harris Hees: I inquired about it a week ago and the minister said he was going to give consideration to getting it done right away. I think I have given him sufficient time.


Robert Henry Winters: I think perhaps I should
thank the hon. member for his generous extension of time. The situation is that there is a committee sitting to consider certain aspects of the application of the federal district plan. _ Among other things they have been discussing parking on parliament hill. I have been reviewing this matter with the federal district commission, and I intend to await the committee's report before determining what final action shall be taken in that area.


George Harris Hees: I should like to ask a supplementary question. In the meantime, would he have his department have men go out with scythes and cut down the very thick weeds which are over a foot high?



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. J. W. Murphy (Lambion West):: I should like to direct a question to the Secretary of State for External Affairs. In view of the recent announcement that the diversion of the waters of lake Michigan to the Chicago drainage canal will be increased by 1,000 cubic feet per second, could the minister tell the house whether lake Michigan comes under the joint commission and whether Canada has to sanction additional water going through that canal from lake Michigan; also whether that is the minimum amount that Canada has agreed to be permitted to go, over and
Telegraphs Act
above what has been going hitherto, through that drainage scheme?


Lester Bowles Pearson: I am not certain as to the exact legal status of lake Michigan in regard to boundary water matters, but I should be glad to look into it and make a statement tomorrow or the next day on that and also on the action taken in the United States congress.



TELEGRAPHS ACT


[Stage Direction]
The house in committee on Bill No. 212, to amend the Telegraphs Act-Mr. Marler-Mr. Robinson (Simcoe East) in the chair.
On clause 1-"External submarine cable" and "telecommunication" defined.
Mr. Green:: Mr. Chairman, when this bill was up for second reading I explained the position being taken by the official opposition in the following words, as found at page 5617 of Hansard of July 3:
We in the official opposition are curious about some aspects of this particular bill and while we are not opposing it at this stage we are reserving our right to do so in the event that the examination by the committee reveals the bill has features which in our opinion would justify opposition to it in the subsequent stages.
In the interim the bill has been considered by the standing committee on railways, canals and telegraph lines, and as a result of the deliberations of that committee we believe that the government should take another look before insisting on, the passage of the bill. To us it appears to be designed to stifle competition with the crown company known as Canadian Overseas Telecommunication Corporation, and we believe that Canadians are entitled to the benefit of competition, between this crown company and the private companies which are operating in the same field.
Furthermore, we are afraid that the enactment of this legislation and the policy behind the legislation will in due course lead to the crown company, Canadian, Overseas Telecommunication Corporation, having a monopoly in the field of external submarine cable service from Canada.
The bill will give the government a licensing power over outlets from these external submarine cables. In, addition it will give a licensing control over the routing of cable messages within Canada. The minister really explained that in his speech on second reading. I am referring to page 5616 of Hansard of July 3, where the minister said the following:
The government believes that by establishing a licensing system it will be in a better position to

Telegraphs Act
deal more flexibly with applications for permission to land cables, to control the opening of circuits into Canada, and to regulate increases in the capacity of cables; and the amendment before the house has been drafted with these objects in mind.
That goes further than the law at the present time. The Telegraphs Act, chapter 262 of the Revised Statutes of Canada, 1952, does give the government very wide control over the landing of cables in Canada. I do not believe any wider control would be possible, and we were told in the committee that in practice such control has always been recognized by the existing companies. But now the government is seeking to go further and take this licensing control over the circuits that come from the cable head. Also, as the minister said, as reported lower down on page 5616-


George Carlyle Marler: I think the hon. member is mistaken when he speaks about licensing control over circuits coming from the cable head. I think the hon. gentleman should recall that the bill deals only with the cables themselves, not with the circuits in Canada.


Howard Charles Green: No. In the paragraph I have just read the minister himself explained the purpose of this bill. He said they were going to establish a licensing system under which:
. . . the government . . . will be in a better position to deal more flexibly with applications for permission to land cables-
They already had power to deal with the landing of cables. He then went on to say this:
-to control the opening of circuits into Canada, and to regulate increases in the capacity of cables: . . .
Further down on the same page we find this:
. . . but I think 1 should point out that the proposed licensing system would enable us to exercise some measure of control over the routing of traffic originating in Canada.
In the committee it was admitted by the minister that the main purpose of this amendment is to control competition from a reliable and long-established private company known as the Commercial Cable Company of Canada.


George Carlyle Marler: I think the hon. member is putting a very broad interpretation on what I said.


Howard Charles Green: I do not think I am putting a broad interpretation on it at all. I could quote half a dozen places in the evidence where the minister made it perfectly clear that the reason this amendment was being brought in was in order to permit him to control the outlets which the Commercial Cable Company of Canada would have.

That brings me to the plans of this private company. It has been in business in Canada since 1884, a period of 72 years. It is a United States company authorized by special statute of the parliament of Canada in 1884 to carry on this cable business in this country. It is a highly efficient organization. I am told by people who use the cable services of this company that it is the most efficient one in the field operating from the shores of Canada, and that when they wish to get fast service they mark their cables "via Commercial Cable".
This company have not laid a cable for about 33 years. Now they desire to lay what is known as a coaxial cable. I am not very well versed in the technical language of this business, Mr. Chairman; hence I may not get the accurate description in some cases. But evidently this is a modern, up to date type of cable. It is to extend from the United States through Canada, thence I think to Greenland and Iceland and then either to the United Kingdom or some country on the continent of Europe. There are to be what are known as 120 outlets.


George Carlyle Marler: Duplex circuits; 120 duplex circuits.


Howard Charles Green: I thank the minister for his correction. Of that number, 24 are to be made available in Canada if this company is allowed to proceed with its plans. The company is trying to modernize its service. For example, one of the officials told us in the committee that the company had a request from a large firm in Vancouver for a direct service which could be given only if this coaxial cable is laid, something which would put Vancouver on a competitive basis with Montreal in so far as cables to the United Kingdom, for example, are concerned.
I personally see no reason why the businessmen of the west coast should be denied that advantage, or should be forced to do business with the Canadian Overseas Telecommunication Corporation, which is what will result if this bill goes through and the government does not change its policy. It was also said that there were demands for leased wire service from Vancouver which could not be met unless this cable could be laid. The same thing applies to Winnipeg, where the Winnipeg grain exchange is in direct competition with the Chicago grain exchange. The men in business there want to have this fast service. Apparently they have applied for such service, and can only get it through Commercial Cable if that company is allowed to lay this modern cable. Otherwise they too will be in the position of being forced to do business,

whether they wish to do so or not, with the Canadian Overseas Telecommunication Corporation.
Now, Commercial Cable told the committee that as far back as 1950 they decided that they had to lay a modern cable. They gave evidence that in 1953 they had discussed this whole question with the officials of the Department of Transport. I have here a copy of their brief, from which I shall quote.


George Carlyle Marler: Was it not 1954?


Howard Charles Green: No, they say here that they reported their intentions to the Canadian government officials in 1953.
There were delays caused by extensive surveys, plans and specifications, arranging for cable ships, arranging the $25 million financing and by change of route requested by government and other matters so that it was not until September of 1954 that all the plans, maps, specifications, financial arrangements, etc., were complete and filed with the Canadian government in a well prepared and complete application covering practically every detail. The Commercial Cable Company was to have 24 outlets in Canada available in this cable as needed over the years to come, to take care of the business from the Canadian Pacific Telegraph Company and clients of the Commercial Cable Company.
I should explain that this Commercial Cable does not send messages over land in Canada. They are carried by the Canadian Pacific Telegraph Company. This application was considered by the department for some time and in February, 1955, the minister wrote a letter to the solicitor for the company which 1 propose to read because it sets out the stand taken by the Department of Transport at that time. I think the same stand is being taken by the government today. The letter reads:
Dear Mr. Maclaren:
I refer to your letter of January 28, 1955, and previous correspondence in connection with the application of Commercial Cable Company to land on the coast of Canada a new trans-Atlantic coaxial cable.
The government is prepared, subject to compliance by the company with all statutory requirements, to grant authority for the landing of the proposed cable, subject to certain technical and related stipulations the details of which are now being worked out; and subject to the conditions-
This is the part of the letter that is significant and to which I wish to draw attention. -that no circuits shall be terminated in Canada except for:
(1)	Purposes of defence communication from Canada to points outside Canada, so far as other available circuits are insufficient,
(2)	Commercial purposes in respect of circuits leased to Canadian Overseas Telecommunication Corporation.
In other words, this company could lay their cable in Canada and could have circuits in Canada only if those circuits were either for purposes of defence or were leased to
Telegraphs Act
this crown corporation. That tells the whole story right there. Are we in Canada to be put in this position with regard to external submarine cables? Then the letter went on:
The nature and extent of defence communications permitted under (1) above will be defined specifically following further consideration of defence needs.
As soon as the details of the above mentioned technical and related stipulations have been worked out, an order in council will be prepared to implement the foregoing.
The company were unwilling to comply with that letter, and frankly I do not blame them a bit. I think there are many hon. members in this house on the government side as well as in opposition parties who would not blame the company for being unwilling to lay a cable subject to those conditions.
They have complied with the law during the whole 72 years they have been doing business in Canada. They went to the government about this new cable landing and about their plans for circuits in Canada. Apparently they have always gone to the department about any rates that were to be charged. Whether or not they were under obligation to do so, the evidence showed that this had been their practice. They have done everything possible to co-operate with the government, but they now run up against this snag in that seven years ago the government set up a crown corporation and has apparently decided now that this government child, Canadian Overseas Telecommunication Corporation, is to be shielded and protected from competition.
Evidence was given by the officials of the company to the effect that they have no objection whatever to a licensing system provided that the rights given them under their original incorporating bill are not nullified, and that the system is not exercised in favour of the crown corporation. They said furthermore that they have no objection to the control of cable rates. So much for Commercial Cable.
Then I come to the Canadian Overseas Telecommunication Corporation. It was set up in 1949 as the result of an agreement among different commonwealth companies. Canada took over the assets of two private companies; I think they were Cable and Wireless Limited and Marconi. Part of the agreement among the commonwealth companies was that those countries would resist -and that is the important word-the authorization or opening of new circuits which would be detrimental to Cable and Wireless Limited or its associates in the British empire.

Telegraphs Act
Those words appear in the agreement preceding the setting up of the Canadian Overseas Telecommunication Corporation. They seem to indicate that the policy of the government was to be one of monopoly or in any event of hamstringing the private companies, and that point was raised during the debate in this house in 1949. I will not quote again the extracts from Hansard which I read on July 3. There were also extracts from the proceedings of the committee, the same standing committee which dealt with the bill in that year. The then minister of transport, Hon. Mr. Chevrier, made it clear there was to be no interference with competition and that this crown company was not to have a monopoly.
But now after these intervening years we seem to have arrived at the point where that policy has been thrown overboard, and the government is adopting a policy which at least is severely restricting competition and which may result in monopoly, because if the private companies cannot modernize their systems it is only a matter of time until they will be out of the business as serious competitors.
The C.O.T.C. also felt that its facilities should be modernized, and this crown company made an agreement with the British post office and with another private United States company, the American Telephone and Telegraph Company, which as hon. members know is a very powerful United States utility. Another party to the agreement was the Eastern Telephone and Telegraph Company, which is a subsidiary of the American Telephone and Telegraph Company. If hon. members care to check that agreement they will find a reference to it in chapter 77 of the revised statutes of Canada, 1953-54.
That is described as an act respecting the Eastern Telephone and Telegraph Company. The recital sets out the various changes in the share capital of that company, and then the following recital appears:
.	.	. whereas the company pursuant to its
statutory powers is a party to a contract executed on the 27th day of November, 1953-
This was about the same time that Commercial Cable were talking with officials of the department.
-with Canadian Overseas Telecommunication Corporation-	.
That is the crown company.
-American Telephone and Telegraph Company, and the Postmaster General of the United Kingdom of Great Britain and Northern Ireland for the construction and maintenance of a transAtlantic telephone cable system for service between Canada and the United Kingdom and between the United States and the United Kingdom, the execution of which contract by Canadian Overseas 
Telecommunication Corporation was approved on November 26, 1953, by order of the governor in council.
I am not quarrelling with the C.O.T.C. for making a contract of that kind. By the way, this new cable system is to be in operation this fall. I have in my hand the annual report of the Canadian Overseas Telecommunication Corporation for the year ending March 31, 1956, and on page 6 I find the following reference to transatlantic cables:
The installation of the trans-Atlantic telephone cable, in which the corporation is a joint owner with the British post office, American Telephone and Telegraph Company and Eastern Telephone and Telegraph Company, should be completed and its services in operation by the end of October next-some few weeks earlier than originally anticipated. We look forward to its inauguration with considerable enthusiasm as we believe it to be the most important overseas telecommunication development since the laying of the original telegraph cable over ninety years ago. Our share in this cable will provide for Canada services and facilities for which there has been a steadily increasing need during recent years. In addition to high quality telephone service, we shall offer picture transmissions-broadcast programs- customer-to-customer teleprinter services-leased telegraph circuits for the use of private customers and we shall also introduce a multiplicity of new telegraph circuits in sufficient numbers to meet adequately the needs of Canadian users for some years to come. We are confident that the services so being provided will take care of foreseeable public demands and that the users will be completely satisfied with the quality and quantity of service available to them.
The question we ask is why should the other company be prevented by means of a government licensing system from inaugurating a service of that kind.
The minister explained in the committee that this new transatlantic cable would provide six new circuits for Canada. He indicated that number would be adequate for Canadian needs. He went on to say that the C.O.T.C. now has 40 per cent of the Canadian cable business and he wants it to get more, and that is one reason that this licensing control over the private companies is being taken. The minister said he objected to any more facilities; that these six circuits are ample, and he objected to any more circuits of that kind. He claimed further that his department should have the power to decide whether there was or was not any duplication of services, and whether this private company should be able to establish service of the kind I have just mentioned.
He said also that the department wanted to control the routing of cables in Canada. I think that would be a pretty tough job, because a company could send its cables via the United States. For example, a firm in Vancouver might be forced to send its cables across the United States. The minister is trying to force business into the hands of

C.O.T.C. The Vancouver Province summed up the situation very neatly on July 21, just a few days ago, in the following editorial: Mr. Marler's Blackjack is Showing
Despite the federal government's efforts to conceal its growing autocracy under a cloak of benign and democratic tolerance, the bulge of the government's blackjack can be glimpsed at unexpected moments.
We had such a glimpse last week when suave and friendly transport minister Marler was explaining to a parliamentary committee that his legislation to control operation of overseas cable service in Canada is not aimed at pushing out the private companies and creating a monopoly for the government-owned operation.
Why, said Mr. Marler, if we wanted to do that we could simply expropriate their property and close them out.
This is quite true. But it might have been better if Mr. Marler's frankness had not been carried quite so far.
Canadians have had a convincing demonstration this year of how a top-heavy majority in the House of Commons has encouraged the government to do all sorts of things, including forcing a Speaker to stay in office after he had resigned. Such shows of power can be frightening.
Furthermore, the C.O.T.C. has been not only a competitor but a judge in this whole matter. I should like to refer to page 6 of the brief submitted by Commercial Cable. In describing a meeting which took place in the offices of the Department of Transport in September, 1954, they say:
At the meeting there were some 16 men, four delegates from the Department of Transport, four from the Commercial Cable Company, one, who acted as secretary, from the privy council as the application was necessarily addressed to the governor general in council. Among the others, it is interesting to note that there were three representatives from Canadian Overseas Telecommunications Corporation (C.O.T.C.), including its president, to whom nearly everything said was referred for his comment or approval. There was also a representative, a Lieutenant Colonel Read, from the B.P.O.-Cable and Wireless (of Great Britain). C-O-T.C. and Cable and Wireless are direct competitors of the Commercial Cable Company and they were sitting in judgment upon this application.
Then further down:
Mr. Bowie, president of C.O.T.C., the crown corporation which is a competitor, undertook to look over the application and give the Department of Transport his opinion.
That sort of interference must be stopped if there is to be competition in this field.


George Carlyle Marler: Those are wholly unsupported statements, are they not?


Howard Charles Green: I do not believe these men are lying; there is no evidence to show that the men who drew up this brief are not telling the truth.


The Chairman:: I am sorry to interrupt the hon. gentleman, but it is my duty to advise him that his time has expired.


George Carlyle Marler: Might the hon. member go on?
Telegraphs Act


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


Some hon. Members:: Agreed.


Howard Charles Green: The C.O.T.C. is both competitor and judge. That is the key to the situation. That is a picture which should make hon. members pause and consider before allowing this bill to go on the statute books.
The minister argued in the committee that Commercial Cable was a United States concern and that he was all for Canadian companies. That was a somewhat surprising argument after the pipe-line debate; however, it was made. I merely point out that Commercial Cable is not obtaining any financial support from the government. It intends to build the cable with its own money. That was not the position in the pipe-line situation.
It was said also that this new cable proposed by the private company was to be subsidized in part by the United States defence department, which was to pay annually $1,600,000. I have no way of checking that, but I doubt very much whether American Telephone and Telegraph Company has not received the same or perhaps greater assistance in the way of fees from the United States department of defence. Certainly you have on the one side Commercial Cable and, on the other side, American Telephone and Telegraph Company. If the argument is to be based upon whether the company is a United States company then the department is not in any better position than the private company, because it is involved directly and very heavily with this other large United States corporation.
I suggest that the department take a second look at this whole policy. I see no reason why competitors should be hampered in this way. I think it is to the detriment of the Canadian people. The businessmen of Canada are entitled to the best service they can get. If companies put in too many circuits or more circuits than can be used now, no one is going to be hurt except those companies, and it certainly will not do any harm to Canadian businessmen. This policy adopted by the government seems to me to be far removed from what we have been led to believe was Liberal policy.
I hope the minister will not try to force this amendment through at the present time, but will take another look at it. Certainly the arguments against it are strong. It may be that as the result of a second look some policy can be worked out which will bring about a position where there is fair competition. Surely that is not going to do any harm to this crown company. There is no

Telegraphs Act
reason why here in Canada we should be loading the dice for crown corporations. This is similar to the situation that would have been created if the government had taken licensing power over the railroads and then had said to the C.P.R., "You can run a railroad but you cannot have any diesel locomotives." That would be a similar situation, and for the life of me I cannot see any reason for a policy of that kind.


Alexander Malcolm Nicholson: My colleagues and I who were on the committee went to that committee with an open mind. The hon. member for Comox-Alberni intimated that we would listen very carefully to the arguments put forward by Commercial Cable, Western Union and all the members of the committee. After weighing the evidence very carefully, we decided that on balance we would support the government position rather than the position outlined by the hon. member for Van-couver-Quadra.
Before the committee during our last sitting, the hon. member for York West said he wished to deal with one point because he knew he would be confronted with it by the time this bill got into the house and that someone would say, "You are going to see that a big United States company is favoured in connection with a Canadian enterprise. I think if this were a Canadian enterprise working as I know it can, there would be no problem such as we are faced with today; there would be no need to come into this room." But the members of this committee are in the position that a powerful United States corporation is challenging the right of the Canadian parliament to make regulations that will affect the operation of this company that was granted a charter some 72 years ago.
Counsel for Commercial Cable seriously claimed that because they were given these privileges as far back as 1884, they would be permitted now in 1956 to do exactly as they choose in this important field. They are questioning the right of the minister to interfere with their plans in any way. Since the people of Canada are interested in C.O.T.C., I do not believe we can be asked to put this very powerful United States corporation in a preferred position.
I think the minister did a very good job in committee. He listened very patiently for long periods when able counsel for Commercial Cable presented a brief and made some arguments which appeared fairly convincing. They took us back to the famous trans-Canada pipe line and reminded us that we were prepared to offer a subsidy to this corporation. As a matter of fact they claimed

they were prepared to go into this deal without any subsidy from the Canadian taxpayer.
But the Minister of Transport drew our attention to something which did not appear in the brief. He reminded us that this company has a guarantee from the United States government of $1,600,000 per year for the next ten years, with an option to have that guarantee extended for a longer period. The minister quite correctly said, I think, that when one examines the situation with regard to cables, the word "subsidy" could be loosely applied to the proposed cable to a much greater degree than to any other project that has come before the parliament of Canada this session. The minister did not argue that this $1,600,000 was a subsidy, but counsel for Commercial Cable did not deny the fact that because this could be considered partially as a defence project, Uncle Sam's government was prepared to put into the exchequer of this company $1,600,000 per year for the next ten years.
That becomes a matter of concern to Canadian taxpayers because, as the hon. member for Vancouver-Quadra pointed out, we have a considerable investment in the Canadian Overseas Telecommunication Corporation, and the last annual report we have had shows a net profit for the period of $217,000. I think we should have a very good look at proposals which will turn that profit into a very large deficit, since the people of Great Britain and the people of Canada are interested in this corporation. It is true that there is a United States privately owned corporation interested, but the facts are that the two crown corporations, the British and the Canadian crown corporations, are interested in this field. To place Commercial Cable in a preferred position so that as a result of receiving $1,600,000 from Uncle Sam's treasury they can put-


An hon. Member:: It is not a complete subsidy.


Alexander Malcolm Nicholson: It is not a complete subsidy, but it is being made available for services-


Mr. Low:: Why don't you say so?


Alexander Malcolm Nicholson: 
Howard Charles Green: May I ask the hon. member if he is not overlooking completely the fact that in the next two or three months the C.O.T.C. will have six of these brand new, modern circuits?


Alexander Malcolm Nicholson: I am quite aware of that, but the Canadian taxpayers have already made an investment in this new service which is to be available this fall. C.O.T.C. is to have this very modern service which has been mentioned by the hon. member for Vancouver-Quadra. I cannot go along with his proposal that because C.O.T.C. is to have this service, we should consider that an 1884 charter should give this private company the right to do as they please in Canada for all time to come.
I found that I had some helpful advice from the late R. B. Bennett when a proposition in this general field was before parliament back in 1932. Right Hon. R. B. Bennett, as he was then, said as recorded at page 3035 of Hansard for May 18, 1932:
Secondly, no other scheme than that of public ownership can ensure to the people of this country, without regard to class or place, equal enjoyment of the benefits and pleasures of radio broadcasting. Private ownership must necessarily discriminate between densely and sparsely populated areas. This is not a correctable fault in private ownership; it is an inescapable and inherent demerit of that system. It does not seem right that in Canada the towns should be preferred to the countryside or the prosperous communities to those less fortunate.
I think if the late Mr. Bennett were describing the present situation he would consider that it is not fair to a sparsely populated area-


Howard Charles Green: May I ask the member a question on that point? Was Mr. Bennett not referring to radio services and not cable services?


Alexander Malcolm Nicholson: Quite so, and I said "If he were." I had better finish my quotation:
In fact, if no other course were possible, it might be fair to suggest that it should be the other way about. Happily, however, under this system, there is no need for discrimination; all may be served alike. Equality of service is assured by the plan which calls for a chain of high power stations throughout Canada . . .
I believe that there is no government in Canada that does not regret today that it has parted with some of these natural resources for considerations wholly inadequate and on terms that do not reflect the principle under which the crown holds the natural resources in trust for all the people.
Telegraphs Act
It is quite true that the late Mr. Bennett was discussing radio at that time, but we are discussing Bill No. 212 which does give to the appropriate authority answerable to parliament the right to decide what limitations will be necessary in this important field. The minister made it very clear that if Commercial Cable wanted to build a line for American purposes there would be no objection whatever to them being granted landing licences. There was some discussion with respect to whether appropriate authorities in Greenland and in the United Kingdom had been more unreasonable than we were in Canada, and again it was admitted that although negotiations had been under way for some considerable time the appropriate authority in Great Britain has not been willing to grant the request made by Commercial Cable. After some discussion it was also disclosed that the appropriate authorities in Greenland were certainly not more co-operative than the Canadian Minister of Transport.
Therefore, Mr. Chairman, I think we cannot deny the appropriate minister in Canada who is responsible to parliament, who must come to us year after year to get his estimates approved and to justify every act of his department, the right to decide whether a powerful United States corporation that is getting $1,600,000 a year from its government should be placed in a position where it can force the Canadian people to incur huge deficits in connection with the operation of Canadian Overseas Telecommunication Corporation, an organization in which we are interested along with the taxpayers of Great Britain and a United States owned private company. I see no reason why the minister should not be given the powers that he seeks under Bill No. 212.


Mr. Leboe:: Mr. Chairman, I have a few
remarks I should like to make in connection with the bill before us. First of all I should like to refer to the remarks of the hon. member for New Westminster, as found on page 5620 of Hansard of July 3, when he stated our position. In that connection he said:
I feel that possibly its objective is to limit the field of communications to government-owned enterprises. We in this group cannot go along with what the hon. member for Comox-Alberni just suggested with respect to communications when he said that they should be handled by a public utility and therefore should come under public ownership.
Further on in his remarks he had this to say:
We look forward to the government being in this public utility field only for the purpose of operating a cable where other private enterprises are not prepared to give service at a reasonable

Telegraphs Act
rate. The minister is sending the bill to the standing committee on railways, canals and telegraph lines, and I am sure that there he and his officials will be able to explain more fully the purpose behind the bill and possibly allay our fears concerning it. I hope that is so because I cannot see this group being in harmony with the setting up of a monopoly that would not give us the full advantage of the technological advances I spoke of earlier.
That is the position we take with regard to the bill. Before I pass on to the other remarks I wish to make, I should like to refer briefly to the remarks of the speaker who has just taken his seat, the hon. member for Mackenzie. He suggested that his group approached the problem with an open mind. I think that is true of anyone who takes part in the work of a committee on behalf of the people of Canada. I do not think anybody has any monopoly on approaching any problem with an open mind.
The hon. member also placed great stress on the fact that this was a United States company and that $1,600,000 of government business had been allocated to it under contract. The hon. member suggested in his speech, I would say in an evasive way, that this was a subsidy or a grant or something that this company could use to give it an advantage over the Canadian Overseas Telecommunication Corporation, but I do not think that is so because as far as business all over this country is concerned, and it does not matter what business it is, businessmen seek to get contracts well ahead of production. It does not matter what it is. I think it is only good business. Business people carry on that practice throughout the world in all types of manufacturing and other endeavours.
With respect to the fact that these are United States interests, I should like to point out that if we are going to start that type of thinking we must remember that foreign investment in the Canadian Pacific Railway amounts to 88 per cent, with only 12 per cent of the total investment being from Canada. Then there is the Aluminum Company. According to the last figures I saw that company is owned outside of Canada to the extent of 75 per cent. One could name hundreds and hundreds of large corporations in Canada that are controlled to a great extent financially though not physically by outside monetary sources. I do not think we need to worry too much about that in this regard. It is just one more situation which is normal. I cannot see anything abnormal about it.
I think that anyone who may read the hon. member's speech must come to the conclusion, as we in this group have; that the reason for the bill is to protect a government crown corporation from competition. Anyone reading the hon. member's speech will realize that

is the essence of it; that he is afraid competition will enter into the field of telecommunications and, having done so, will bring about a deficit so far as the operations of Canadian Overseas Telecommunication Corporation are concerned.


Alexander Malcolm Nicholson: If I might say so, I think $1,600,000 per year for ten years would be considered as unfair competition to Canadian public investment.


Bert Raymond Leboe: That all depends on what profit is made in giving that service. They may lose money on the service. No question was asked and no answer was given in the committee or elsewhere as to what the possibilities are in connection with that service. This company has contracted to give that service and it may cost them more. We do not know. That is hypothetical as far as I am concerned.


Alexander Malcolm Nicholson: If C.O.T.C. had that sort of guarantee they would be in a very favourable position.


Bert Raymond Leboe: I do not think there is any reason why they cannot have a guarantee under competition. I do not think that has any effect on this thing at all. I do not want to get into any controversy as far as any cable corporations are concerned. This matter must be dealt with on the basis of principle, and in that connection I should like to refer to certain statements made by the minister as found at page 5614 of Hansard of July 3. At that time the minister said:
The fact that there has been no change in the formalities to be followed is, I believe, explained by the way in which improvements in the general field of communications have developed.
As I progress with the few remarks I wish to make I wish to point out that this seems to be the whole case the minister is putting forward, namely that there is a great deal of development in telecommunications from Canada and perhaps the United States across salt water. But as I pointed out in committee, we have thousands of openings that cross into foreign lands on dry land, and it is extremely difficult for me to see the difference between telecommunications that travel over salt water and those that travel over land, as long as they are going to a foreign country. I do not think there is any real meat in the statement of the minister in that regard.
I should like to read again what he said in his statement. It will be found at page 5615 of Hansard of July 3. As reported there he said:
I regret that it has seemed necessary to deal with these somewhat technical matters which, at first sight, seem perhaps not to be entirely relevant to the bill in order to stress one point in particular, and that is through improvements, installed in the cable itself or elsewhere, the capacity of most if

not all of the trans-Atlantic cables has been increased over that which they originally had when the formalities prescribed by the Telegraphs Act were accomplished and when the requested approval of the governor in council was given.
Here again we see that the minister has gone out of his way to stress the volume of traffic that is now provided for through technological advances in the cables that exist today. Further on in his speech as reported on the same page we find this:
However, I must admit some concern that as the act now stands, once the requested permission to land the cable has been granted its capacity may be changed, perhaps quite substantially, without either the knowledge or consent of the government.
Here again we find that the same thought is in his mind, namely that here is a great increase in the telecommunication facilities. I fail to see where an increase in facilities is going to hurt anyone. After all, that is what is wanted by an individual such as myself who comes from the northern areas, where we have been stifled in our growth by lack of communications all through the years. My feelings can be imagined when I see a situation where, in principle, we are now trying to block additional facilities in order to protect a crown corporation,
I should like to make this statement. As far as I am concerned I do not believe that any crown corporation should be protected from competition by legislation of any parliament or any legislature. I believe they should be out in the field of open competition.


Mr. Ellis:: Does that apply to post offices?


An hon. Member:: Don't be silly.


Bert Raymond Leboe: I guess you have your freedom; that is, you can put a five-cent stamp on a letter at any time and you can send it anywhere you want.
Here again, as reported at page 5616 of Hansard, the minister said:
In fact, however, the matter cannot be resolved in such a simple way; first, because the problem does not always arise in a way that admits of a yes or no solution; and, second, because under the present act there is no continuing control or regulation of the actions of a company with regard to the cable itself.
When the minister speaks, I should like him to enlarge upon that statement and tell us what he means when he says he wants control of the cable itself, and what he is referring to in that statement. It seems to me that once the cable is laid its only purpose is for telecommunications, and that the feeder lines that go into it have an influence on its work as have the feeder lines that lead out of it at the other end. On the same page 5156 of Hansard the minister is reported as follows:
Telegraphs Act
I feel sure the various companies operating cable facilities share this view and that so far as this is not now being done they will co-operate in helping us to achieve this objective; but I think I should point out that the proposed licensing system would enable us to exercise some measure of control over the routing of traffic originating in Canada.
In that connection, when the minister speaks I should like him to enlarge upon that statement as to how the cable companies today are not co-operating in the regulation of traffic within the boundaries of Canada.
I understand that all the feeder lines in Canada are those of Canadian Pacific Telegraphs and the Canadian National Telegraphs. If there is some rerouting that is taking place through the United States, it must be done by them. I think I have the minister's answer. It is to be found at page 193 of the minutes and proceedings of the standing committee on railways, canals and telegraph lines, No. 4. I spoke at this point as follows:


Bert Raymond Leboe: There is a question in my mind that with the teletype service which we have, between Canada and the United States, as I understand it, it is an unregulated teletype service between Canada and the United States at this moment.


Hon.   Mr. Marler@: That is not affected by this bill.


Bert Raymond Leboe: Supposing the cable is landed into the shores of the U.S., there is nothing to prevent the teletype relaying that message from a United States centre and travelling on the United States lines?


Hon.   Mr. Marler@: No. I think there is not. as a matter of a fact. Of course, if the situation became confused it would be possible to enact the legislation to cover it.


Bert Raymond Leboe: In other words, to prevent the teletype transmissions?


Hon.   Mr. Marler@: Yes. if that was thought desirable. I am not suggesting that I do think it is desirable. When we are talking about a hypothetical situation. I do not like to predict hypothetical actions.
I want to point out, Mr. Chairman, that what the minister had in mind is expressed in the speech from which I quoted a few moments ago, namely effective control. While he suggested that this was a hypothetical situation and something that would possibly not be anticipated, nevertheless I say that according to the evidence it is my belief that the minister anticipated such a thing and that he does anticipate a measure of control that is going to direct telecommunications traffic within Canada by law. Maybe the minister says that is not so. But as the minister pointed out, things that are said in committee-promises made or anything else- have no effect in point of law or in the interpretation of the act and its regulations.
In closing I should just like to refer back to the $1,600,000 of guaranteed business that was made so much of in this debate by the hon. member for Mackenzie. I should like to emphasize the point that business today

Telegraphs Act
operates continually on the basis of production contracts. The Minister of Defence Production, in bringing down his estimates the other day, pointed out all the things that were being done to bring about a situation where the confidence of the producer was brought in hand by assistance by his department.


Mr. Hosking:: I should like to speak on this bill for just a moment or two, Mr. Chairman. First I should like to ask the committee what are the reasons for this bill. There must be some reason which the government have in mind in introducing an amendment to change the legislation so they would have some means of knowing what was taking place with regard to communication cables laid to another continent.
In 1884 we find that the Commercial Cable Company applied to this parliament for a permit to lay a cable from here to England. That permit was granted. At that time they felt it wise to have certain powers, and one of them was the control of the price of the services rendered by these cables. The price was set at 25 cents per word. Let us look at the price paid for service over this cable today. The price is 15 cents per word. We have been paying some 5 or 6 cents less per word than the cost of sending a word from the United States on the same cable. I should like to suggest to the committee that one of the main reasons for Canadians getting that advantage of 5 or 6 cents per word is that we formed the Canadian Overseas Telecommunication Corporation back in 1949 and because of the control the Canadian government had over sending messages, by means of competition, thus keeping the price to Canadian users at 5 or 6 cents per word less than people in the United States pay.
In my opinion this is a good thing. However, so far as the powers of the government to control are concerned in relation to the agreement made in 1884, they are of very little value. The price which was set at that time, 25 cents per word, is now unrealistic. How did that come about? Well, I think it would be wise to look through the brief and the minutes of the committee to find some of the reasons. In 1884 this company asked for permission to lay cables, and in that year laid two cables. In 1894 they laid another one; another in 1904; a fifth in 1905 and a sixth in 1923. Then we were told in the committee that one of these cables went out of commission, so at the present time they have only five cables.
We are informed that these five cables have some 91 duplex channels. I think at this time it would be well for me to say what a duplex channel is. It is a circuit which provides for

the transmission of two messages simultaneously, one in each direction. Now, how do they get 9i duplex circuits available in five cables? In the past 10 or 11 years there has been a great deal of experimental work done with communications. It has been found that by putting undersea repeaters on these cables they could double the capacity of the cables; by putting on tandem repeaters they could square the capacity. There is no doubt that with further experimentation the time will come when they can cube the number of messages on a single cable.
Has our government any knowledge of the increased capacity that has taken place in these cables that this company was given permission to lay years ago? That they have no knowledge of what these increases are, and they have no way of finding out other than through the willingness of the company to give them that information. I would point out the embarrassing position in which our minister found himself, as shown by the committee evidence at page 206 when, after having made a statement to the committee from his official record of the number of circuits, the companies communicated with him during the night and informed him that they had many more circuits than he had put on the record. He had to come back to the committee and say:
I would like to express my regrets to the committee for having misled them about the number of duplex channels. Mr. Henderson is quite right when he says the number is not 181-
He was referring to these 18J channels as the total number of channels, according to the record, from Canada to the continent.


Alexander Malcolm Nicholson: That is both the United States and Canada.


Henry Alfred Hosking: It is the total number of channels landed in Canada connecting this continent with Great Britain.
-but I would like to perhaps endeavour to excuse myself by saying, that at the time that figure got into the file that was our information. But information more recently was supplied from Western Union substantiating what Mr. Henderson has said in respect to the total number being 68 simplex circuits or 34 channels.
Here we find our minister with the only source of information at his command being well out of date because of these additions to these cables which have doubled or trebled the number of channels. I think that is a very bad position for the Canadian government to be in. I feel that if we give permission to these cable companies to land cables in our country we ought to have the right, by right and not by favour, to know just how many channels they contain. It seems to me like a reasonable position.

What caused this bill to be brought here? I think it was the application of Commercial Cable for 24 outlets in a new coaxial cable which they proposed to lay from Canada to Greenland, to Iceland and to Great Britain. This cable, being a coaxial cable, will have 120 circuits. It was rather interesting to hear from Mr. Henderson, the company's witness, some information concerning this cable. I would refer this committee to what he said at page 204 of the evidence.


Howard Charles Green: On which day?


Henry Alfred Hosking: Minutes and proceedings of evidence No. 4. He had this to say:
There has been a lot said with respect to the lease which we have from the government-
He is again referring to the United States government.

if this cable is landed which provides for an annual rental of $1,600,000 per annum. I might add that that lease is not going to go on forever. All government-
He is again referring to the United States government.
-leases can be terminated. The annual operating expenses of this cable will be in the neighbourhood of $2-5 million which is far in excess of the $1,600,000 from the government.
He is again referring to the United States government. So we see the United States government is going to enter into a contract for 10 years at $1,600,000 per year to partly cover the operating costs of $2,500,000.
Let us look at the use of his cable. I think that is shown on page 209 of the same minutes of evidence. I come back to this question of cable again, and I should like to remind the committee that there are 120 circuits, and that they have requested that 24 be given to Canada. I think I should say at this time that it is the opinion of the minister that if we give this cable company the right to make one outlet from this cable available in Canada, the company then has the right to as many outlets as they wish. Under the existing law they could put the whole 120 in Canada if they wished to do that. The thing we see as unfair competition is that the United States government is paying $1,500,000 a year towards the operating costs of the cable-


Alexander Malcolm Nicholson: 


Henry Alfred Hosking: -$1,600,000, toward its operating cost. Let us see how they have dispersed the circuits of this cable. As I read a moment ago, Mr. Henderson's answer was:
I say we have a need for 86 channels.


Henry Alfred Hosking: And if there are 24 of these channels available for Canada you would have only 10 spare channels to take care of any growth which might take place in the United States.
Telegraphs Act
He had told us previously that the United States government was going to take so many of them and they had a certain number of channels already sold, and that would have left 10 channels available for growth. Mr. Henderson replied:
That is right.


Henry Alfred Hosking: And you are saying to us that in the light of that situation it would be uneconomic to start to build this cable if you do not have any more outlets in Canada?


Mr. Henderson:: We would not want to operate the cable unless we had more outlets in Canada.


Mr. Herridge:: Is your loan predicated on your obtaining the Canadian business?


William James Henderson: No.
This tells me that the cable company can build this cable without any outlets in Canada at all; it does not require them. The loaning people are willing to loan the money to them to build this cable without having any outlets in Canada. The United States government is willing to finance this cable to the extent of $1,600,000 per year for ten years against an operating cost of $2,500,000, so the cable can be built whether or not we give them permission to have any outlets in Canada. We are not restricting in any way the operations of this company. This bill merely asks that we be permitted to say how many outlets come into Canada, and I can see no objection to it.
I would like in closing to make one more point. It was very interesting to hear Mr. Henderson tell us just what this company was willing to give to the country of Denmark for rights to land on Greenland. They were willing to give to the Danish government complete ownership of all the cable in Greenland's territorial waters and of all establishments on Greenland's soil. Surely we should be entitled to the same kind of rights in Canada. In fact, the bill being presented here does not ask for anything like the agreement this company was willing to give voluntarily to Greenland.
I point out to the committee that the government should have the right to know how many circuits there are between Canada and the continent of Europe. It should have the right to know of any change in the number of circuits that may develop due to engineering research. The government should also have the right to say how many outlets come into Canada from any of these cables.
I can see nothing wrong with this bill, and I would ask the committee to seriously consider if we should restrict our government in view of the fact that this company is willing to say to the government of Denmark, "We will give you all the cable in your territorial waters and complete ownership of everything we have in Greenland."

Telegraphs Act
All we are asking for is the right to know about circuits and to license the outlets that come into Canada.


Mr. Nesbitt:: Mr. Chairman, the whole problem presented by this bill is very complicated, as I think the minister and all hon. members who sat on this committee would agree. We heard a great deal of evidence in the committee dealing with a highly technical subject which naturally for the layman was difficult to follow; but having had the opportunity to read over the evidence which was given before the committee and having had some time in which to consider it, I find there are certain points that make themselves evident.
There is a fear in the minds of at least some hon. members of the opposition parties that despite what the minister said concerning monopoly, such a situation will develop. I believe the minister referred to this four times. At page 202 of No. 4 of the minutes and proceedings of the committee the minister used words to the effect that the government had no intention whatever of setting up any kind of monopoly, either directly or indirectly. While the minister may have said that, and no one would question his integrity, there no doubt will be other ministers of transport after the present one, and they may have a different view; and the cabinet may, of course, change its opinion in this respect from time to time.
It is the fear of certain hon. members of the opposition that the powers under this act would enable the government, if it desired to do so, to set up a monopoly for the Canadian Overseas Telecommunication Corporation, which many of us would not like to see happen. We have seen government monopolies in the C.B.C., Trans-Canada Air Lines and in other fields. Although I know some hon. members feel these are perfectly all right there are a great many people, and I would be almost inclined to say a majority of the people in this country, who do not favour government monopolies of this type. It is exactly because of this fear that another government monopoly may be set up or may be experiencing birth at the present time that we raise objection to this particular piece of legislation.
The situation at the present time seems to be somewhat as follows. The present cable companies such as the Commercial Cable corporation and Western Union may replace existing outlets-


George Carlyle Marler: Existing cables.


Wallace Bickford (Wally) Nesbitt: -may replace existing cables. Thank you, Mr. Minister. I understand they may not put down any new ones. The minis-

ter has just said that they may replace existing cables, and I know that in the committee we had a great deal of discussion about just what the word "outlet" means. As I understand the position at the present time it is that these companies may replace existing cables but they may not replace these cables with a new kind of cable. As the hon. member for Vancouver-Quadra pointed out in his remarks, I think it is very much the same as allowing the railways to replace wood-burning locomotives with diesels, because the new coaxial cables will apparently carry a great many more messages than the old type of cable that was laid down 50 or 75 years ago, when these cables were originally put down.
While the minister has just said that the government has no desire to regulate the additional number of outlets, I would like the minister to think over that statement because I am not certain that is exactly what he meant.
One objection to the minister's remarks that he heard throughout the committee proceedings was that the minister had indicated he was worried over the fact that the Commercial Cable corporation would have 24 additional outlets if these coaxial cables were laid down, and the minister felt this might endanger competition with the C.O.T.C. and even with Western Union.
Those hon. members of this house who were on the committee will recall that the witness for the Commercial Cable corporation pointed out that the reason they were making these additional outlets available for Canadian business was because they felt from their experience and as a result of investigations that the cable business in Canada would warrant these additional outlets within the next few years because Canada is a large and expanding country. We have certainly heard from hon. members in this house and particularly those on the government side about what a large and expanding economy we have, that things are fine and business is good. One witness for Commercial Cable pointed out that Canada had become a great commercial nation, and that to meet the needs of this modern and speedy world it was necessary to get in bids in order to purchase goods abroad in a hurry, and that service was demanded to meet these needs. Reference was made to many new types of service, the names of which I cannot recall, but I do remember reference to teletype and that sort of thing. For this reason it was felt that additional outlets would be necessary in the immediate future to carry on Canadian business.

The minister seemed to be concerned during the debate as to the effect of these outlets, and contended that they were not necessary at the present time. He seemed to be worried about the effect these additional outlets would have on the cable business. I was curious about that and asked him to explain, and I should like to quote from page 189 of the proceedings of the standing committee on railways, canals and telegraph lines. I asked the minister if the government had the power to control the rates on telecommunications, and the minister replied, as reported on page 189 of the proceedings, as follows:
There are some provisions in the Telegraphs Act, but I am told there was a question as to whether they are effective inasmuch as they do not seem in their terms to extend beyond the territorial limits of Canada. There is also a provision in the Railway Act which would give jurisdiction to the board of transport commissioners over cable rates. My understanding is that that section of the act has not been proclaimed.
The minister has expressed doubt as to whether the government has authority to regulate rates for telecommunications at the present time, but I would think from the minister's statement that there would be no doubt that the government has authority. Last evening we heard something about jurisdiction over territorial waters. A cable must touch the mainland of Canada and to do so must come through Canadian territorial waters. In order to touch down at a mythical point, as we used to say in geometry, it would have to pass through at least three miles of Canadian territorial waters. Therefore the government would certainly have the power to legislate as to rates to be charged.
Then the minister said that the provision in the Railway Act which gave the board of transport commissioners power to regulate rates had not been proclaimed. I asked the minister whether it was intended to proclaim that section of the act, and he replied that they were quite satisfied that competition was keeping rates down at the present time.
Speaking of competition, the minister seemed to be concerned over the fact that Commercial Cable would receive an annual rental fee of $1,600,000 from the United States government, apparently for the carrying of defence messages or something of that nature. The minister felt that this would act as an indirect form of subsidy to that cable company which would put Commercial Cable in a better position than either C.O.T.C. or possibly Western Union. That seemed a little incomprehensible to me so I asked the minister certain questions about it, and I quote again from page 189 of the proceedings:


Wallace Bickford (Wally) Nesbitt: I would say in that connection, since you are in doubt as to whether any existing regulation would regulate rates by either the
Telegraphs Act
board of transport commissioners or anybody else, that there is a possibility; and one of the things which worries the government would be that because of the form of the subsidy to the Commercial Cable Company, that they might be able to engage in a rate war or something like that.


Hon.   Mr. Marler@: Perhaps I should put it to you this way-that while the rates may be uniform the amount which might be spent to attract business might be greater in one case than another.


Wallace Bickford (Wally) Nesbitt: I see, you mean for advertising?


Hon.   Mr. Marler@: Yes, or the amount paid under the traffic agreements might be greater in one case than in another. I am not suggesting that the company would do these things, but there is the possibility which I think should be considered at the same time that one talks about rates.
I think that shows quite clearly that this indirect form of subsidy to the Commercial Cable Company would not put them in a better position to operate in Canada, in other words to give unfair competition to C.O.T.C. or to Western Union or whoever may be their successors. I am afraid I cannot quite follow that line of reasoning, because cable messages are handled in this country by either Canadian National or Canadian Pacific telegraphs. If a message is sent by Canadian National I understand it is transmitted by Western Union; if it is picked up by Canadian Pacific it is sent either by Commercial Cable or Canadian Overseas Telecommunication Corporation. When the average person goes to send an overseas cable he goes to the telegraph office with which he is accustomed tc deal. If he usually deals with the C.N. he goes to the C.N.; if he usually deals with the C.P., he goes there. The average person in this country does not know how his message is transmitted overseas. I doubt very much if hon. members of this committee, with the exception of those who happened to be on the standing committee, know that Commercial Cable Company carry Canadian Pacific messages and Western Union carry Canadian National messages.
To say that advertising done by Commercial Cable Company in Canada is going to encourage people to go to the C.P. office and say, "I want my message sent by Commercial Cable," or to go to the C.N. office and say, "I do not want to deal with the Canadian National because I want my messages to go by Commercial Cable," is rather hard to believe when the rates are the same. It does not make any sense. Sending a cable is somewhat like making a telephone call; provided the rates are the same you send it from the most convenient place.
If there is any fear in the mind of the minister that rates would not be kept the same by competition because of this indirect subsidy, control over rates could be exercised by the means mentioned by the minister. If it were thought that the amounts paid

Telegraphs Act
under traffic agreements were greater in one case than m the other; it either of these companies started to do that; if Commercial Cable started to do that, I submit that the board of transport commissioners could easily be given the power to control cable rates. Freight rates are controlled and nobody objects or considers it improper. If similar action appeared to be necessary in connection with telecommunications rates, similar action could be taken. We have never had evidence in the past that such action was necessary.
Changing the subject slightly, I should like to suggest that the purpose of these regulations is simply to protect the Canadian Overseas Telecommunications Corporation. One does not like to make statements when they are based on meagre evidence, but I have made inquiries at various telegraph offices and the information I have received is that at the present time-I am not saying that the service may not be improved in the future-the service provided by C.O.T.C. is not quite as good as that provided by Commercial Cable.
I asked what they meant by that. They said, "The message is sent and we have to follow it up" or "It has gone to the wrong address." "If we are dealing with Commercial Cable corporation we have no difficulty in following up the matter, but if we are dealing with C.O.T.C. it is difficult to trace the messages, and the service generally does not seem as good." This is a matter that can easily be corrected. It may be only a temporary thing. It may only have been the experience of the particular people I have asked about this, but it is indicative and it is something that is worth considering.
Because of the fact that the government apparently does not intend to allow these other companies to have additional outlets, I feel that this cannot but protect the C.O.T.C. Even if it is not a government monopoly at the moment, I cannot see how anything but this can result. If a company which has cables that have been laid 50 or 60 years ago, as the case may be, is going to replace these cables and it can only replace them with the same kind of cable, it is not very economical to do so. I think the old example of the replacement of the wood-burning engine with the diesel applies. I do not think it is reasonable for the government to expect that any commercial cable company would replace an old, antiquated type of cable with the same type. No doubt the cable company would simply say, "If we are to replace our 1883 cable with the same type of cable, when science has advanced so much since 1883, we are simply not going to do it." If these companies cannot put down modern cables when

the time comes to replace them, I doubt very much if they would do anything else. Eventually a government monopoly would be set up.
There are one or two other matters which I would like to touch upon briefly. As indicted at page 202 of the report of the committee's proceedings the minister stated very clearly and without reservations that the government had no intention of setting up a monopoly. I was glad to hear that. However, as recorded at page 143 of the same report, I asked Mr. Corlett, who was the counsel for the Commercial Cable Company, the following question:


Wallace Bickford (Wally) Nesbitt: You fear possibly that the regulations set out in section 42 might even go to the extent that they would favour one company as against another because the conditions under which different companies operate are naturally different?


Mr. Corlett:: In answer to that question that could be the result because the language of the classes prescribing the duration, terms and conditions of licences and the fees for the issue thereof could be construed by the department in that way.


Wallace Bickford (Wally) Nesbitt: They might very well be so drawn up as to favour the C.O.T.C. as against any other company, and in fact become a discriminatory type of regulations?


Malcolm Mercer Hollett: I would say. theoretically, that is quite possible.
The minister made a reply to that, as recorded on page 180 of the proceedings. It reads as follows:
Now, somebody seemed to think this morning that it would be possible that we might introduce discriminatory regulations. AH I can say is: I do not think that in the whole of the history of Canada there has ever been a government which has so abused the power to make regulations as in fact to discriminate against one corporation in favour of some other corporation. I think it is perfectly clear that, if any such action were taken by any government, it would not long command the respect and support of the majority of the members of the House of Commons. I say that, regardless of which party may be in power. I fully realize that in theory one may adopt what would appear to be discriminatory provisions in the regulations but I cannot believe that the present government, or any future government, is going to adopt that action under this legislation.
That sounds very well, but when one considers that statement by the minister, while it is not exactly the same situation, one cannot help thinking of the C.B.C. and possibly certain other crown companies. Possibly Trans-Canada Air Lines has a somewhat preferred position over certain other air lines. Those are not exactly analogous, but they are close enough to bring the thought to one's mind. It may not be the intention, and since the minister has said so I am quite willing to accept his word that it is not the intention to do so at the present time. One cannot help feeling that in the future, once the pattern is set for legislation of this kind, the opportunity is there for somebody else to

do it in the future, and the present government certainly has the idea in mind of indulging in, we should say, the luxury of crown corporations. We have seen plenty of evidence of that, and I think that is one reason a number of the members of this house, including myself, are worried and suspicious about this legislation.
Finally, the hon. member for Wellington South in his remarks, which were in many ways enlightening and interesting, said he thought the reason for this legislation was that the government had the right to know how many cable outlets there were in and out of Canada. No one would quarrel with the hon. member in that statement. Of course the government has the right to know that, and I do not think anybody would disagree with him about that, but is that the whole intention of this?


Henry Alfred Hosking: May I ask the hon. member a question? Have they that information now?


Wallace Bickford (Wally) Nesbitt: They have-


Henry Alfred Hosking: Perhaps they could give it to us, but we do not have it.


Wallace Bickford (Wally) Nesbitt: Nobody would have any objection to the government having the right to know how many cables come in and go out of Canada. It is something the government should know, and some future regulations might be necessary, but it is the question of the restrictions and laying down the terms and conditions that are the cause for worry. As shown on page 142 of these proceedings, I asked the minister in the committee whether the department would have the authority to refuse a licence if the terms and conditions as laid down in the regulations were fulfilled. I quote from page 142 as follows:


Wallace Bickford (Wally) Nesbitt: What we would like to know is this: do the Department of Justice officials feel under these provisions here that there is the absolute right of refusal notwithstanding compliance with the mechanical form of the application?


Hon.   Mr. Marler@: An application of what kind?


Wallace Bickford (Wally) Nesbitt: For this type of licence?


Hon.   Mr. Marler@: We shall try to answer that Question.
I do not think we have had an answer to that as yet. Perhaps when the minister makes his statement he might be able to inform us what opinions the Department of Justice officials have eventually arrived at.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Wallace Bickford (Wally) Nesbitt: Mr. Chairman, to finish the remarks I was making before we adjourned for the noon recess, I should like to close
Telegraphs Act
with a thought I have already mentioned several times, namely that the minister seemed greatly concerned and, in fact, his chief reason for refusing permission to the Commercial Cable corporation to land its proposed coaxial cable was the fact that the company was to receive an annual guaranteed rental of $1,600,000 a year for 10 years from the United States government. As I have already mentioned, the reason was given that this was in effect a form of subsidy which would give the Commercial Cable corporation a possible advantage over Canadian Overseas Telecommunication Corporation and even Western Union. I think I have touched on the various reasons why I do not agree with the minister that this is correct, but there is one more point I should like to make in this respect before I take my seat.
It was suggested in the committee that the minister would certainly be able to call into being the section of the Railway Act which would enable the government to control rates for overseas cables. I have not the quotation in front of me and if I am wrong I am quite sure the minister will correct me, but at that time the minister implied that he thought competition was a better way than regulation to deal with the rates.
I mentioned earlier in my remarks that I do not think that necessarily follows, because Canadian railway rates are regulated and no one has any complaint about that. But even in the event that the board of transport commissioners do not want to take the power to regulate overseas telecommunication rates I think that the Commercial Cable corporation is in no better position than C.O.T.C., let us say, because of the $1,600,000 a year for 10 years by way of guaranteed rent that they are to get from the United States government.
The answer is this. Canadian Overseas Telecommunication Corporation undoubtedly and unquestionably has government loans or funds at its disposal if necessary. Last year C.O.T.C. received a loan of $6 million. As the minister pointed out at page 198 of the report of the proceedings of the committee, C.O.T.C. paid interest on the loan. That is quite true. We would expect they would. But if C.O.T.C. were faced in the future with a rate war or needed money for capital expansion or anything else, I have very little doubt that they would get any loan they required to carry on business and meet any competition.
As I pointed out to the minister in the committee, knowing that it is very doubtful if any private company in its right mind

Telegraphs Act
would attempt to start a rate war with the financial power of the Canadian government behind C.O.T.C. It was mentioned in the committee that we would not want to subsidize C.O.T.C. in order that it could give cheaper rates. I do not think that will ever be necessary. No private company, no matter how big it may be, is as big as the government. Commercial Cable or Western Union or Western Union's successor would never attempt any kind of rate war with C.O.T.C., because the boards of directors of those companies know perfectly well what would happen and would never set out on such a course. I think it is ridiculous to suggest that they would. I bring that last thought to mind in answer to the minister's objection to granting a landing licence for the proposed new cable of Commercial Cable corporation.
To sum up, in the first place the fact is that C.O.T.C. could, if necessary, get whatever loans it required. Second, the board of transport commissioners could regulate the rates if there were any question of a rate war. Third, even with the advantage that the minister suggests Commercial Cable would have because of this form of subsidy from the United States government, I do not see how that could be used to channel all the business into the new line of communication that Commercial Cable proposes, because in sending cablegrams advertising would have very little effect for the reasons I pointed out earlier. For the reasons I and my colleagues have set out we cannot agree to this legislation.


Mr. Mclvor:: Mr. Chairman, I shall be brief. I was a member of the standing committee and I think it is one of the best committees of the house. I admired the way in which the hon. member for Vancouver-Burrard-*


Howard Charles Green: No.


Daniel (Dan) McIvor: Well, some place in Vancouver-presented his case. He did it intelligently, but he did not take as much time as he has taken today. If we want legislation of this kind to go before the committee, then surely the committee has some weight. We passed the bill when it was before the committee. Of course I admit there were enough intelligent members of the house on the committee to pass the bill. I do not think we should take any more time with the bill, because I am one of those who were members of the committee and I have not changed my mind and I doubt if anybody else on the committee has.


Mr. Howe (Wellinglon-Huron):: Mr. Chairman, I too was a member of that committee, but my mind is in the same state as that of

the hon. member for Vancouver-Quadra. I should like to say a few words on this simple little bill amending the Telegraphs Act which apparently involves a controversial subject. I should like to read the new section 41 set out in clause 1 of the bill. It is in these words:
41. No person shall in Canada
(a)	operate an external submarine cable; or
(b)	construct, alter, maintain or operate any works or facilities for the purpose of operating an external submarine cable
except under and in accordance with a licence issued under this part.
No doubt there are not too many in the house who have too much intimate knowledge about the matter of submarine cables. However, many of us have read accounts of the hazards encountered by those early adventurers who laid the first submarine cables across the vast expanses of the Atlantic and Pacific oceans. The first of these cables was laid between England and France in 1850, and after several attempts were made the first submarine cable was laid across the Atlantic in 1856. By 1928 there were 21 submarine cables spanning the Atlantic ocean.
We might think that with the advent of radio and radio communication around the world, submarine cables would have become obsolete. However, with the increase in international trade and the development of diplomatic services throughout the world there is an indication of a necessity for more submarine cables.
There have been a great many changes made in the types of cable used since the first cable was laid and also in the techniques that can be used to increase the efficiency and capacity of the cables already laid. The latest type seems to be the coaxial cable, which will take not only cable messages but telephone voice conversations, television pictures and so forth. However, although there are 21 or more of the older types of cables across the Atlantic, there are only a limited number of companies that will be affected by the new amending bill, No. 212.
All these companies have been operating for many years under special charters given to them by this parliament under the provisions of the Telegraphs Act, which was brought into force in 1875. Therefore in the first place it is rather hard to understand why the bill is necessary, when the companies have had to comply with all the terms of their own charters as well as with the terms of the Telegraphs Act, one provision of which reads as follows:
22. The company shall not exercise any of the powers by this part conferred until
(a) the company has submitted to the governor in council, a plan and survey of the proposed

site and location of such telegraph and its approaches at the shore, and of its stations, offices and accommodations on land and of all the intended works thereto appertaining, . . .
Let us look into the history of one of these companies that will be affected by this bill. Probably the one with the most business is the one owned by the government themselves, namely C.O.T.C. This was a government company that was formed as a crown corporation by act of this government in 1949, which brought about the amalgamation of two companies, one called the Marconi Company and the other Cable and Wireless Limited. I should like to say that the move that was made at that time to nationalize commonwealth telecommunication services resulted in control of the cable system to the extent of some 80 per cent by the British government-this was brought out in the evidence in 1949-a fact which would certainly strengthen the position of the crown corporation; and it is understood that at the present time they control 40 per cent of the Canadian business.
In 1953 this crown corporation began plans which will be finished in 1956 for the laying of one of the most modern and most efficient types of coaxial cables across the Atlantic. No doubt this will increase and speed up the service they are able to give, and will give them a decided advantage over other companies in the business.
Enough for the government crown corporation. Let us look for a moment at one of the private companies affected, namely Commercial Cable company. This is a company which has been in business for many years in Canada, since they were given a charter in 1884 by the government. No doubt they did much of the spade work in making available to all the people and corporations in Canada the advantage of overseas telecom-munciation services. Their cables were laid, one in 1884, one in 1894, one in 1900, one in 1905 and the latest in 1943. I might say that this company is manned and managed in Canada entirely by Canadians.
Back about 1950 the Commercial Cable company, having great faith in the possibilities of Canada as the fastest growing nation in the world, realized it needed new cables of the improved coaxial type in order to take care of the increased demands upon its services. In 1953 they reported their intentions to the Canadian government. But according to section 22 of the Telegraphs Act which I just read they had to submit all their plans and specifications to the governor in council for his approval.
This they did in September, 1954, after extensive delays caused by extensive surveys, change of the route requested by the
Telegraphs Act
government, financing and other matters, in a well prepared and complete application covering practically every detail. They were to have 24 outlets in Canada available as needed over the years to come. All such new business as was obtained would be at rates controlled by the transport department of the government of Canada. A meeting was arranged at which the cable company would present their case. They were told by the chairman, even before the application was considered, that they could not do what they wanted to do. At this meeting the advice of the president of C.O.T.C., the crown corporation which is in competition, was asked. Nothing further was decided at this meeting.
After six months of argument, permission was given to land on the coast of Canada and to pass through, but the Commercial Cable company was denied outlets in Canada except those requested by the crown corporation or those that were necessary for defence. This was a company that was willing to risk its own capital and which would leave hundreds of thousands of dollars in Canada annually. Some reference was made in the committee to the point that this was a wholly controlled United States company. I wonder why the Minister of Trade and Commerce does not rise in their defence. This is a United States company willing to provide service in Canada for Canadians at no cost to Canadian taxpayers, with no request for any loans or assistance from the Canadian government. Yet its application is being denied because the minister believes it will create unnecessary duplication of telegraph facilities. In this connection I should like to quote from a recent letter in the Globe and Mail which reads as follows:
This is the situation:
A new cable is being laid now-it will be ready in a matter of months-by the British government and American Telegraph and Telephone, primarily for telephone use, but with some telegraph circuits. Canadian Overseas Telecommunication Corporation will get the use of six of those circuits. Transport Minister Marler said there is no demand in sight for any more.
Commercial Cable company says there is. It says it has five customers anxious to get leased circuits-private lines, in effect-and business on hand for seven to ten more. It doesn't think any of the 24 would go begging for traffic. Mr. Marler says that any more than the six the crown company is to get would mean unnecessary duplication of facilities.


George Carlyle Marler: Mr. Chairman, I very much
object to the reading into the record of this letter attributing to me statements that were made neither in the House of Commons nor in the committee. It seems to me that it is a most unsuitable way of putting on Hansard opinions attributed to me but which I have never expressed.

Telegraphs Act


Clarence Decatur Howe: As reported in the evidence, the minister said he believed it would create unnecessary duplication of telegraph facilities. The letter goes on to say this:
The phrase has a familiar ring. A couple of years ago when Canadian Pacific Air Lines wanted to enter the trans-continental air freight business -it did not think Trans-Canada Air Lines was fully exploiting the field-the government decided that to grant the application would be to create unnecessary duplication of facilities.
I do not think this is the case. It almost looks as though the government owned crown corporation cannot stand competition. Competition is the life of trade, and hence should be sponsored on every hand. Back in 1949 the then minister of transport insisted that this would not create a monopoly. I sometimes wonder when I hear the Minister of Justice so many times speaking about monopolies. Here is an article in the Globe and Mail entitled "Monopolistic Act". It reads in part as follows:
Anchor man of this team is the Hon. Stuart Garson, who joined the Ottawa circuit after a long run in Manitoba. Whenever the act seems to be flagging, Mr. Garson can be counted on to rush in from the wings, holding up some business group as a horrid example of the evils of monopoly.


George Carlyle Marler: Mr. Chairman, this is all very interesting but it has nothing whatever to do with the bill about which we are talking. I suggest that the hon. gentleman should address his remarks to the bill and not talk about other matters that are extraneous to it.


William Alfred Robinson: I agree that the extract
which the hon. member is now reading has no apparent reievancy to this bill. I must ask mm to confine his remarks to clause 1 of Bill No. 212.


Clarence Decatur Howe: Mr. Chairman, I was just trying to indicate that this bill is an indication that the government is creating a monopoly in this field, when C.O.T.C. is given special privileges and these same privileges are denied to other private companies to such an extent that C.O.T.C., by the addition of their new, more efficient coaxial cable can squeeze out by reduced costs and hence reduced rates, fair and just competition.
In the evidence given in the standing committee on railways, canals and telegraph lines we have from Mr. Alistair Macdonald, counsel and solicitor for Western Union Telegraph Company, a statement which shows just how they feel about this matter.
At the outset, may I state that Western Union feels that the language of the pending bill appears to be plenary and, enabling in nature and is so broad that if enacted could establish the means through its licensing power to obstruct, and even

destroy, the present lawful international telegraph operations of Western Union; and, in fact, such power could be used to effect a confiscation of Western Union's existing contract rights and legislative grants, thus, additionally, rendering valueless all plant, equipment and other assets validly established in Canada under applicable law stretching back over decades.
I think that sums it up, Mr. Chairman. I feel that this enabling bill is unfair to private corporations that have been in the business for many years. So I go along with my colleagues who have already spoken on this measure, in registering my objection to the passage of this bill.


George Harris Hees: The aim of this measure is obviously the protection of another crown corporation against competition.


An hon. Member:: Who wrote that for you?


George Harris Hees: I wrote it myself, just a few minutes ago. The policy the government is putting forward in this regard is simply consistent with the policy it has always adopted toward these crown corporations. For instance, T.C.A. has always refused to allow competition in both freight and passenger services. The C.B.C. television has refused to allow competition in television services in the large cities.
Now, Mr. Chairman, competition produces greater efficiency, resulting in lower prices to the consuming public and in better service. Monopoly produces just the reverse. It produces higher prices and inferior service to the public. What this parliament should be endeavouring to do is get the best possible deal for the consuming public of Canada, and that can only be done by enabling private corporations to compete with crown companies if those private corporations wish to enter the field and take a chance of making a success in that particular line of business. If the private company cannot make a go of it and fails, the only loser is the company itself. The taxpayers of Canada are not affected in any way at all. If, on the other hand, the crown corporation cannot get sufficient business to keep it going by offering lower prices and better service, then I think it is obvious the crown corporation should leave the field to those companies that can.
For that reason, Mr. Chairman, I strongly object, as do my colleagues who have spoken on this matter, to one more move toward establishing another government monopoly.


Mr. Small:: I shall not take very much of the time of the committee. I was glad to be a member of the committee and to have been included in that select coterie by the hon. member for Fort William as one of the intelligent members of the committee. I am not a technical man or an engineer,

but it appears to me that a company that has been in operation for some 72 years, which received its charter from this parliament and has given reasonably good service, should be allowed to continue. There has been no complaint about the company up to the present time. In fact they have done more than they were asked to do under their charter. The rate was set at 25 cents per word but, as the hon. member for Wellington South has said, they reduced it to 15 cents. In view of all these facts we should like to know the reason for the proposed change.
The purpose of the amendment is set forth as follows:
The purpose of the proposed new part is to provide for the control of submarine cables terminating in or passing through Canadian territory.
Under the terms of the charter the company obtained they were allowed to land cables and operate telegraphs and telephones, but they decided that the part of the business they wanted to operate was the cables. Up to the present time they have complied with all the regulations set out under the various acts passed by this parliament. There was one act which applied to cables, and there were regulations in connection with telegraph lines. The company kept its plant and system up to date and, as was stated, laid six new cables. Then they reached the point where they wanted to apply the advances that had been made in that particular phase of the business, so they took the usual procedure of applying to this government for the right to replace the worn out part with moder equipment. The government said no, that could not be done.
If the government wants to go into public ownership-I have no objection and I think it is a good thing for the government to go into public ownership in some things-they should do so only if there is some reason for it, such as exorbitant prices being charged or lack of service. It is for those reasons that governments go into public ownership. However, those reasons are not present in this case. For example, the city of Toronto took over the Toronto street railway because they were not giving service, would not expand and the people of Toronto were dissatisfied. At the time the franchise was to be renewed the city refused to renew it, so the case was taken to court and settled agreeably to both parties concerned.
The same conditions were present in the case of Ontario hydro. The residents of Ontario were being charged exorbitant rates for electricity and they were not getting the service. The power barons of those days
67509-428J	.
Telegraphs Act
were mulcting the people of Ontario in that area around Niagara so it was decided, under Adam Beck, to go into the field of public ownership. I could cite other examples showing the reasons for going into public ownership, but in this particular case there is no reason.
As I have explained, the company has not charged high rates and has given good service. It has given as good service as any, other company operating in the field. Perhaps if I read from the brief of the Canadian cable company you would see why this amendment has been introduced. The company went through the usual form in making a request to replace the cable, as they had every right to do under the, charter. As I have said, the government said no, they could not put in anything new; u must be the same as was there already.


George Carlyle Marler: I do not want to have such a statement attributed to me by the hon member, and I am sure he will not find anything in the committee evidence to support it. I do not think he really wishes to sa., that, either.


Robert Hardy Small: The impression I received when the minister was explaining it before the committee was that if they wished to replace one of the existing cables they could do so; but they could not put in the coaxial cable which they were requesting at that time. I think the members of the committee will bear me out on that.


Henry Alfred Hosking: Do you not mean that they could go ahead and build the coaxial cable from New York to St. John's, Newfoundland.
I think it was, and from there to Greenland, Iceland and England, but we would not give them permission to have one outlet because if they had one they could have 120?


Robert Hardy Small: As far as the government were concerned the situation was that they would allow them to put the cable down but they were not to have an outlet; and obviously if you are not going to have an outlet there is no use to have a cable.


Henry Alfred Hosking: It was to run from New York, remember.


Robert Hardy Small: I understood too that if they were going to replace the cable they would have to replace it as it was before.


Henry Alfred Hosking: No, no.


Robert Hardy Small: Well, that may not be your impression, but it was the impression I got.


An hon. Member:: Why do you not go over with the minister?


Robert Hardy Small: However, we will leave that for the time being. The fact is that they

Telegraphs Act
want an outlet in Canada and they want to put down the coaxial cable. That is the point at which they were stopped, because it is going to interfere with a company that has been in operation since 1949.
The point I want to bring out will be best illustrated if I read from the minutes of proceedings and evidence of the standing committee on railways, canals and telegraph lines for Wednesday, July 11, 1956. I propose to read from the brief presented by the Commercial Cable Company as reported at page 73 of the proceedings:
Now it is a fact that the Telegraphs Act, section 22, does speak in terms of applying to the governor in council and actually I believe that is the practice that this company has followed in connection with all the cables which have been laid to date-all six of them. It is a matter of interest that in 1923 when an application was made to the then secretary of state, the late Senator Copp recited the statutory authority we had under the 1884 statute and the regulatory provisions that existed under what is now section 22 of the Telegraphs Act, and the company was officially advised by the secretary of state that in view of these provisions it was not necessary to apply to the governor in council at all, as long as a landing licence was obtained from the then minister of marine and fisheries, but the practice and policy of the company has always been to co-operate with the proper authorities of the federal government whenever possible and it is a fact that an application was made in every instance although, as I say, there is some legal doubt as to whether the company is obliged to do so or not.
I do not want to go into that particular phase of it, because the lawyers can argue *concerning that matter; but the company *does have a point there. What I want to arrive at is that there were certain transactions which took place in the years preceding this, and they date back to 1937. I shall read some more of the evidence that was submitted in the brief:
As far as any licensing provision is concerned I would say that the company has no objection to being subjected to a licensing system as such, provided that in exercising such a licensing system the statutory rights of the company as expressed in the statute of 1884 are not nullified. And. secondly, that any system of licensing that does exist will not be exercised in favour of Commercial Cable Corporation's big competitor, about which I will have something to say in a minute, namely, the C.O.T.C.-the Canadian Overseas Telecommunications Corporation, which is a crown company and the hon. members will remember that it was created by a statute of this parliament at the second session in 1949.
This is the part which I think is the nub of the question as to why the amendment was brought in. The brief continues:
Now, to complicate things-I am giving this to you as background in order that you can perhaps better understand the plea which we are putting forward today-the background of cable communications is confused, I might say, by a series of commonwealth communication agreements. The various self-governing countries of the commonwealth have entered into a series of agreements dating back over a number of years. There was

one in 1928, the imperial wireless and cables conference, and if you look at the statutes of 1929 you will see that the parliament of Canada implemented part of the report of that imperial conference with reference to the Pacific cable.
Coming down to 1937, there was another commonwealth empire-I think it was called-rate conference in 1937. As a result of that conference, a number of things were agreed upon by the participants including Canada. Canada had a delegate at that conference. Now, it is not possible at this date to obtain a copy of the report, if there was ever a copy made for public distribution; but reference is made to this by Mr. Connelly of the Department of Transport when he was testifying before this committee when the C.O.T.C. bill was before this committee on November 8, 1949. He gave a review of what happened.
Dealing with this 1937 conference, he stated on page 13 of the proceedings of evidence of that day, that it was agreed by the commonwealth government that:	They would "continue the policy of
resisting the authorization or opening of new circuits which would be detrimental to Cable and Wireless Limited or its associates in the British empire.


Henry Alfred Hosking: Does it say anything there about coaxial cables?


Robert Hardy Small: The building of coaxial cables and reference to other equipment does not get away from the point I am trying to bring out. In my opinion the amendment to the bill has been brought down for the sole purpose of implementing something that has already been agreed upon but which has never been presented to this house for approval or disapproval and for a proper understanding. I am referring to the agreements with other participating countries in the commonwealth. I think it would suffice if I were to read one more paragraph from the evidence. The following appears on page 76:
Our whole case is presented, and who is there, sitting in judgment, but none other than our competitor C.O.T.C. and their English counterpart the British post office. We submit that that is not a good thing or fair from the standpoint of a private company. The upshot of that application was that on February 9, 1955, a decision was made and we were advised by the minister that in so far as through coaxial cable-that is a cable coming from Europe to the United States-was concerned it was in order to be landed at Newfoundland or Nova Sctoia but that no local outlets would be allowed to Commercial Cable Corporation in Canada, notwithstanding the fact that since 1886, Commercial Cable Corporation never operated land lines but entered into an interchange agreement with the Canadian Pacific Telegraph Company and have been working with them by agreement ever since.
This reputable company has been in operation for 72 years. If the government is not receiving from Commercial Cable Corporation a sufficient return under the agreement and if it needs more, it should charge more or work out some basis of operation to incorporate them into their plan instead of going about it in this way.

The minister said something to the effect that if they so desired they could expropriate this company but they chose not to do so. The method they are presently adopting may be all right according to their way of thinking, but they are not even attempting to expropriate the company; rather they are trying to exterminate the company completely. If the company is not given an opportunity to expand and apply present day technical advances to its business what is the company going to do? If that is the minister's intention it should be revealed to the house. But if he wants to tie the C.O.T.C. in with the British commonwealth agreements, then he should bring in a proposal which we could understand and pass upon; but if it is the intention to double-shuffle this company out of the vested interests it has had for 70 years, to my way of thinking that is not a fair deal.


Mr. Barnett:: Mr. Chairman, I had not intended to take part in this debate until I listened to the hon. member for Broadview. I shall not comment upon the last speech, but I would like to say that as far as I am concerned-and I think I speak for other members in this group-as long as our friends in the Tory party engage in constructive criticism of government policy we are all for it, but when they start putting out a line of balderdash as the hon. member for Broadview did a few minutes ago I do not see why we should have to sit here and listen to it.
I have one or two questions I should like to put to the hon. member and some of his colleagues. First, I should like to ask them who does the 60 per cent of the overseas cable business that C.O.T.C. is not handling today? Second, I should like to ask if the government were creating a monopoly, publicly or privately owned, why they should be worrying about a bill to provide for the licensing of companies? It seems to me that the very terms of this bill are the best possible refutation for some of the arguments being put forward. There would not be any need to license companies if there were going to be a government monopoly in operation. That would be under the direct control of the government and therefore under the control of this parliament.
If we were having a debate on the merits or demerits of having our cable communications handled by a publicly owned monopoly, that would be legitimate; but I listened for four days to the discussion in the standing committee during which time we heard many objections and listened to a lot of extraneous matter. But everyone was given a hearing, and I see no point in coming back to this committee and reading into the record long excerpts from the minutes of the standing
Telegraphs Act
committee, attempting to create the impression that what was done in the committee was something different from what actually happened. We had all that out in the committee pro and con, and it is there on the record for hon. members to examine.
The particular licensing bill now before us has nothing to do with the creating of a monopoly in the C.O.T.C., nor has it anything to do with the application being made by a cable company for permission to instal another cable. As was clearly brought out, that is a matter which comes before the Minister of Transport under an existing section of the act. I am not going to say any more, but I do think we should try to consider this matter in some sort of proper perspective.


George Carlyle Marler: Mr. Chairman, at the outset I should like to say that I think there is a great deal of confusion in the minds of members of the Progressive Conservative party as to the purposes of this bill. As I listened to the comments made this morning and this afternoon one could almost imagine that the bill had as its object the dealing with the application of Commercial Cable company for the right to lay another coaxial cable in the North Atlantic.


Robert Hardy Small: You mean another one?


George Carlyle Marler: I mean just what I said.


Robert Hardy Small: You said another.


George Carlyle Marler: 
Howard Charles Green: May I ask the minister whether those circuits correspond with the 24 circuits proposed by Commercial Cable?


George Carlyle Marler: Perhaps the hon. member will permit me to answer that question in just a minute. I was in fact just coming to that point. This trans-Atlantic telegraph cable to which I have just referred will, as has been stated earlier, be finished early in October, and I think it will be going into service at approximately that time. It was in the light of those facts that the application of the Commercial Cable company had to be considered.
I wish to emphasize particularly that the proposals of the Commercial Cable company contemplated the laying of a cable which would have a capacity of 120 duplex circuits. So far as we understood the matter, whilst it was possible that two voice circuits would be used, which would take up approximately 24 of the duplex circuits, for telephone purposes, we have been inclined to consider it as a cable project rather than as a telephone project. Of the 120, 24 of these duplex circuits were to be terminated in Canada.
I should like hon. members to appreciate exactly the significance of that figure of 24. The capacity to which I have been referring and which is being used. The 34 existing duplex circuits carry all the present cable business between the United States and Canada at the western end and the continent of Europe at the eastern end. I should like hon. members to note that here we have 34 circuits to carry all that business, and now the Commercial Cable company asks that we should permit it to terminate in Canada 24 more duplex channels, which in itself is almost as much-not quite as much-as the whole of the present installed cable capacity in the north Atlantic.
The information I have is that the Canadian business of Commercial Cable can be carried fairly efficiently on one duplex circuit. That may be too conservative an estimate, and it may be that two duplex circuits are required. It may be the fact that it can route messages down to New York and put them on the cable at the New York end. This perhaps means that one duplex circuit, strictly speaking, takes care of what might be called the strictly Canadian traffic that moves on to the cable, but whether it is one or two is, I think, not material. I wish to point out that the application of Commercial Cable is to open 24 circuits in Canada, in addition to the 11 duplex circuits that C.O.T.C. will be putting into operation in October of this year.
Before I finish with the Commercial Cable application, I should just like to mention one
Telegraphs Act
or two factors that were, let us say, glossed over this morning by the members of the Progressive Conservative party. The fact remains that this 120 duplex channel cable, which Commercial Cable proposed to lay if its application were granted, was to be in receipt of $1,600,000 per annum for circuits to be rented to the United States government. The project was strongly urged upon us as being necessary for the defence both of the United States and Canada and of the United Kingdom. Had it not been for that fact, I think it would not have gone as far as it actually did go. But, as was pointed out this morning, this cable was to start from the United States, touch in Canada, first in Nova Scotia and then go across to Newfoundland, then go to Greenland, then to Iceland and then to the United Kingdom. Consequently, there were a number of governments whose approval and consent had to be obtained.
I am not in a position to divulge all of the information we received in that connection, but I should like to emphasize first of all that all of the governments were impressed with the desirability of the cable for defence purposes and for that reason gave, somewhat unwillingly, I think, a limited form of approval to the project. So far as Canada is concerned, the reply which the hon. member for Vancouver-Quadra read into the record this morning shows that the government, feeling that there was a defence need, agreed to the cable being laid by Commercial Cable Company and to defence circuits being terminated in Canada if our existing facilities were not sufficient for defence needs.
We did say, and I shall not attempt to gloss over the matter, that if any commercial circuits were to be opened they would have to be leased to C.O.T.C. I make no apology for that, Mr. Chairman. I think that was an arrangement which accorded to the project the importance it had as a project for defence. But the truth of the matter is that the company was not satisfied to go ahead with the project unless it had these 24 circuits that would terminate in Canada. In other words, it was not sufficient for this company to have all of the business that the government of the United States was prepared to pay for, all of the United States commercial business that was there and all of the business that there was in prospect, as described in very glowing terms by Mr. Henderson, vice-president of the Commercial Cable Company, but they must also have 24 more duplex circuits terminating in Canada.
As Minister of Transport, Mr. Chairman, I have the responsibility of recommending to my colleagues in the cabinet the action that ought to be taken in that particular field of activity, and I may assure members of the

Telegraphs Act
house that I could not see my way clear to recommending the unqualified acceptance of the application of Commercial Cable to open 24 duplex circuits in Canada when the company was in receipt of a rental of $1,600,000 which represented somewhere around 65 per cent of the total operating cost, including interest. The hon. member for Oxford and others who spoke this morning suggested that there was no particular danger that might result from the fact that the Commercial Cable Company might receive $1,600,000 from the United States government. What disturbed me was that that was perhaps just the beginning of what the company might be receiving and that in the event that other circuits would be leased the amount that would be paid by the United States government would represent an unduly high proportion of the operating cost, including interest, and in effect that would mean that the facilities that the Commercial Cable Company would be providing in Canada through the 24 circuits to be terminated there would be cable service provided as a by-product of a large project financed by United States government funds.
I did not feel that I could recommend the granting of a landing permit to Commercial Cable for that particular project. As I said in the committee, I feel that we should have the opportunity to see what need there is for additional circuits when those to be opened by C.O.T.C. are made available some time in October of this year.
I should like to deal very briefly, because I do not think it is necessary to say very much about it, with the question of trying to make a monopoly of C.O.T.C. I ask hon. members to consider this simple fact. It is not necessary for the government to introduce Bill No. 212 in order to refuse applications for the landing of further cables. It is sufficient to read the express terms of section 22 of the Telegraphs Act which I should like to put on the record. Section 22 reads:
The company-
At this point I am referring to marine electric telegraph companies, the name by which these cable companies are known in the statute.
-shall not exercise any of the powers by this part conferred until
(a)	the company has submitted to the governor in council, a plan and survey of the proposed site and location of such telegraph and its approaches at the shore, and of its stations, offices and accommodations on land and of all the intended works thereto appertaining,
(b)	such plan, site and location have been approved by the governor in council, and
(c)	such conditions as he thinks fit for the public good to impose touching the said telegraph and works, have been complied with.

When we received the application of the Commercial Cable Company the deputy minister of justice was asked his opinion as to whether or not the granting of a landing permit, which is the name commonly applied to the form of permit that is given under section 22, was mandatory or not. The deputy minister replied that the question of whether the approval required by this statute is to be given by the governor in council or withheld is one to be determined by the governor in council as a matter of policy. He said that he did not find in the act any provision, express or implied, that fetters the discretion of the governor in council and that he could in his view refuse to approve the plan, site or location of the proposed cable on any ground that he considered to be in the public interest.
In other words, if, as was suggested by some of the members of the Progressive Conservative party this morning, the government desired to prevent any expansion by either Western Union or the Commercial Cable Company it would not be necessary for us to introduce Bill No. 212. All that would be necessary for us to do would be to resist, if I may use the word that the hon. member for Vancouver-Quadra quoted from one of the agreements, and to refuse to grant under any conditions any applications that might be made for landing permits.


Howard Charles Green: That is what you are doing now.


George Carlyle Marler: I know that the hon. member for Vancouver-Quadra cannot wait to get it out-and provided that the decision is taken for the public good. Is that what the hon. gentleman wanted to say? I am quite sure that the hon. member for Vancouver-Quadra, who has practised law a long time, will not deny the fact that it would be very easy to find reasons for the public good that might be invoked as a ground for the refusal of almost any application that might be made for a new cable.


Howard Charles Green: You have done pretty well at digging up grounds for refusal yourself.


George Carlyle Marler: Well, I think the difference between us is that my hon. friend has no responsibility for his recommendations whereas I have.


Howard Charles Green: You are not showing any though.


George Carlyle Marler: If I am not showing any sense of responsibility it is perhaps because I am coming under the influence of my hon. friend. But, Mr. Chairman, it seems to me that it is perfectly obvious that the Telegraphs Act as it now is enables the governor in council to say no and also enables him to say yes. I think, however, that one of the crucial questions-and this in my view is the principal

purpose for introducing this bill that is now before the committee-is to be found in the reading of section 22 of the Telegraphs Act which I have just quoted and which enables the governor in council to impose such conditions as he thinks fit for the public good touching the said telegraph and works. That section I think clearly implies that those are conditions that should be accomplished before the laying of the cable is completed. In other words, Mr. Chairman, they are not of the kind that I might describe as being of a continuing character, the sort of thing that happens from day to day after the cable is laid.
Let me give to the committee an example of the sort of thing I have in mind. As the situation is at present, all of the cables that have been laid-perhaps I should not say all of them but should say many of them-or many of the cables that have already been laid had a much lesser capacity for the transmission of messages than they now have. As was said by the hon. member for Wellington South, I think it was this morning, it is quite possible by the incorporation of electronic repeaters into a cable to increase materially the message carrying capacity of the cable. It could be doubled, trebled or quadrupled.
But today we do not think very much in terms of doubling the duplex circuits because the factor involved is so small. The important situation, Mr. Chairman, is this. Today we may lay a coaxial cable having a capacity, say, of 120 duplex circuits. But what is there to tell us that tomorrow or next year there may not be some developments in the equipment or in something that can be incorporated into the cable itself which will materially increase the messagecarrying capacity of that cable and create an entirely new situation, particularly in these days where governments, because of their interest in defence or world affairs, can upset the normal economics of the situation by renting-usually at fairly generous rentals-circuits.
At all events, Mr. Chairman, so far as I am concerned it seems to me that it is desirable that we should have the right, by this licensing system which is contemplated, to control the development of additional outlets. Perhaps I should not call them outlets. Perhaps I should call them additional circuits. If, for example, we start off with 24 today, as the company requested, perhaps by tomorrow that might be 120. I think that the government, speaking for the people of Canada, should have the right to decide Whether this multiplication of facilities is to take place with or without its approval.
Telegraphs Act
The bill which is before the committee will enable the government to control the development of new circuits and the increase of existing circuits so that when approval is given for the laying of a cable it will be possible to prevent the capacity of the cable from being unduly increased, at least without the government being consulted.


John George Diefenbaker: Would the minister allow a question there?


George Carlyle Marler: Of course.


John George Diefenbaker: I have been following him very carefully. As the law now stands, under section 22 is the authority not there for the control of the multiplication of facilities?


George Carlyle Marler: Personally, I do not think so, Mr. Chairman, If one studies section 22 in the context of the statute as a whole, I think one is almost certainly drawn to the conclusion that these conditions are of a kind that are accomplished, let us say, once and for all before the cable comes into operation. Why do I say that? Mr. Chairman, the very language of section 22 suggests it. It reads:
The company shall not exercise any of the powers by this part conferred until . . .
It says that the company shall not exercise -that is the very start of operations, namely exercising their powers until the conditions have been complied with. To my simple mind that suggests that when the conditions have been complied with, then everything is all right; then you go on and you start exercising your powers at that stage. In other words, the conditions must be accomplished first and then you start to exercise your powers afterwards.
What I am saying here is this. Under this system of licensing it will be possible to grant the landing permit and then to provide-as I think it is an essential part of the licence-that the licensee will be permitted to operate, let us say, 100 duplex circuits or 24 or whatever the number is; but they may not afterwards, by the installation of some form of equipment, turn 100 into 200 or into 400.
I have not asked the Department of Justice to confirm this opinion but, personally, I think it is fairly clear that that is the sort of condition that it is very difficult to provide for in section 22. One thing I think is perfectly clear, namely that it would not be possible to revoke the landing permit because, in spite of the prohibition, the company had increased the capacity of its cable. That is provided for in the bill and, as I say, that is one of the main purposes of it.

Telegraphs Act


John George Diefenbaker: I should like to ask the minister one question there. He said that he did not know whether the matter had been submitted to the law officers of the crown. I understand that is what he said a moment ago.


George Carlyle Marler: Just on that particular question-


John George Diefenbaker: Did the minister not make some submission to the law officers of the crown in order to ascertain whether or not section 22, as it now exists, did not require that any conditions that are imposed should be those in the public interest or with the public interest in mind? The change that you now bring about by this amendment does away with the necessity of any regard being had for the public interest. If this bill is passed in its present form, the only regard that needs to be had is at the caprice, if you will, of the order in council, regardless of the public interest. I am asking for information.


George Carlyle Marler: I will try to answer the hon. gentleman. The question that I referred to earlier was as to whether or not it was mandatory for the governor in council to grant a landing permit under section 22. The opinion, of which I read an excerpt, was from the deputy minister on that particular question as to whether or not the issue of the permit was mandatory. That is the first one. The second point is that we are not changing that situation at all. We are merely providing that there may be conditions of a continuing character as part of the condition of a licence which the company would require to have. I hope I have answered the hon. gentleman's question. I am not trying to sidestep it.


John George Diefenbaker: There may be conditions beyond the public interest that require you to make an order in council? Is that what the minister mean's?


George Carlyle Marler: No. I am not suggesting that for an instant, Mr. Chairman. I may say quite frankly that I cannot conceive of a licensing system of which the conditions were not intended to be in the public interest. I am not trying to conceal anything from the committee on that score. I think that the legislation is perfectly clear. I think we have quite wide authority to make regulations under the proposed bill in connection with a licensing system. When we get to the clause by clause study of the bill I am sure the hon. gentleman will see that. But I take it that these regulations must not, in all decency, be framed except having the public good in mind. I cannot help thinking

that, after all, the government must be responsible to parliament for the regulations that it enacts pursuant to this bill.
I should just like to say one further word, Mr. Chairman. I may not have answered all the questions that were raised. If not, I should be glad to endeavour to do so. But as I said at the second reading stage of the bill, it seems to me that it enables the government to have more flexibility in the administration of section 22 of the Telegraphs Act. As I see it now, we are faced with the necessity of choosing between a pure and simple yes or no answer to an application that may be made. I think it is very difficult for us to attach qualifications to the response that we give to an application for a landing permit. I think that the licensing system adds more flexibility and will enable the government to attach to the granting of a landing permit conditions that are of a continuing character and that extend beyond the pure operation of laying the cable and bringing it into operation.
There are just one or two things upon which I should like to touch. I think it was the hon. member for Vancouver-Quadra, or perhaps some other hon. member who seemed to attach great importance to the fact that, when this application was considered first of all by my department officials, Mr. Bowie, the president of C.O.T.C., and I think two or three other officials of C.O.T.C. were present at the meeting. They seemed to see something almost sinister in that. I should like to assure them there was nothing sinister about it. The rather curious point in connection with this application of Commercial Cable was that we had believed, up to that time, that the route across Newfoundland to be followed by the T.A.T. cable was known only to a very restricted group. I am not suggesting it was secret or that it had to be a secret, but we did not believe that anybody else knew about it apart from those concerned with the laying of the T.A.T. cable.


Howard Charles Green: Which cable was that, to which the minister referred?


George Carlyle Marler: I am talking about the transAtlantic telephone cable. When this application of Commercial Cable was received, it was a real surprise that they were proposing to follow the same route. Consequently, it was a matter of great importance to C.O.T.C. to see that the cable that was described in the application of Commercial Cable was not laid in such a way as to interfere with the T.A.T. cable. Their participation in the meeting was not only because of that fact but also because of the fact that they are

the most experienced people connected with my department in the field of cable operation.
Now, I should like to say one word about rates. No effort has been made up to the present by the government to control cable rates. As I said in the committee, the rather happy situation that exists now is because there is competition between these three companies. There has been no great difficulty about having to control rates or keeping them down. I should like to repeat, as I said in the committee, that C.O.T.C. has been a factor which has enabled us to keep the rates for cables down. There have been suggestions made at earlier dates by the two United States companies that cable rates should be increased, but C.O.T.C. has refused to accept the suggestions for increases in rates. As hon. members know, C.O.T.C. has managed, I think through the good management of Mr. Bowie and the directors and officers of the company, to operate for six consecutive years with a surplus after paying taxes and interest on the government's investment in the company. In fact, the rates which apply to cables are actually four cents per word lower on cables transmitted from Montreal than on cables transmitted from New York. I have no doubt whatever that if circumstances were such that, because of the fact that new circuits were being opened and were being, let us say, provided with ample funds by the government of the United States, they would be creating the kind of competition that would be exceedingly difficult to meet and C.O.T.C. would have a very difficult time.


Wallace Bickford (Wally) Nesbitt: Would the minister permit a question?


George Carlyle Marler: Perhaps the hon. member would wait just a minute.
It has been suggested we are trying to protect C.O.T.C. If there had been another Canadian cable company, I would have been very happy about it. But if there is any protection that is being given as a result of our refusal of the Commercial Cable application or in the policies that we have discussed here I think, if anything, it has been to see that Canadian telecommunications operations are not snowed under in a field which is highly competitive and in which the competitive forces are very powerful, very large corporations with very substantial sums of capital at their disposition.
I think, Mr. Chairman, I have dealt with all the questions. There is just one it is suggested that I perhaps should touch upon and that is whether or not the issuing of licence under the bill now before the committee would be mandatory. I do not think 67509-429J
Telegraphs Act
it would be mandatory. I may say I have discussed the question with Mr. Driedger of the Department of Justice. It is naturally difficult for him to give an opinion which arises with respect to regulations which have not yet been drafted, but I have tried to assure the members of the committee that there was no intention on the part of the government to interfere with the operation of existing cable companies. I think it is very unlikely that the regulations will be drafted in such a way or that any government would administer a licensing system, so that it could arbitrarily refuse an application from any of the cable companies. I have tried to answer most of the questions, but if some of the hon. members would still like to have an answer I shall do my best to give it.


Wallace Bickford (Wally) Nesbitt: The minister has answered a number of questions that have been put to him, and I realize there were a great many. Naturally he could not answer them all at one time. There is one question.,that is still not clear to me with regard to rates. The minister has pointed out he is not very much alarmed by the $1,600,000 a year rental, which is in effect a type of subsidy, the United States government will give to Commercial Cables. But his alarm in the future might be raised-


George Carlyle Marler: I am alarmed even by the $1,600,000.


Wallace Bickford (Wally) Nesbitt: If the minister is alarmed by that, he would be more alarmed if it were increased.


George Carlyle Marler: My alarm would increase as the amount increased.


Wallace Bickford (Wally) Nesbitt: In view of this very handsome assured income for at least 10 years, in the event that Commercial Cable Company started some kind of rate war which would involve C.O.T.C. and Western Union, what would then prevent the minister from invoking a section of the Railway Act in bringing the regulations of these telecommunication rates under the minister in the same way as railway rates are? Apparently in the past these rates have always been settled amicably by discussion, but if a rate war did start, what would then prevent that action?


George Carlyle Marler: Mr. Chairman, I thought that in the committee I had almost reached the point of convincing the hon. member for Oxford.


Wallace Bickford (Wally) Nesbitt: You had for a while.


George Carlyle Marler: I think he had slipped away from me in the committee, Mr. Chairman,

Telegraphs Act
but for a while I thought I had almost convinced the hon. member it is not just a question of the rates but that there was also the collateral question of what might be paid out to get the business, what might be paid out to advertise a particular company's advantages.
The hon. member spoke this morning about sending cables. Most of us know perfectly well that if you go to send a cable most people do not know what company it is going by. You go into the Canadian Pacific Telegraph or Canadian National Telegraph office and ask them to send your cable for you but if one of the companies receives a higher percentage of the cost of the message if they send it via Commercial or via Western Union than they do via C.O.T.C. then I think human nature being what it is the telegraph company will send it by the route which attracts the most dollars to its own treasury.
I do not think that condition existed formerly because everybody was on his own when the number of circuits in a cable was small. I think I mentioned before that the maximum was 8 simplex circuits. We are now talking about a large number of circuits of which a small proportion are going to be rented to the United States government for a rental which represents something like 65 per cent of the operating expenses of the cable.
The hon. gentleman may not be concerned by that but I think all I can say to him is that not having the responsibility for what happens to C.O.T.C. he may be indifferent as to whether it is $1-6 million or $2-6 million or $3-6 million; but having that responsibility I cannot be indifferent. As I said a moment ago my concern increases as the amount increases over $1-6 million.


Wallace Bickford (Wally) Nesbitt: Mr. Chairman, I certainly appreciate, as I think all members do, the minister's high sense of responsibility and I warmly commend him for it. I am trying to establish in my own mind and for at least some hon. members of the house what the reason is.
I am now beginning to get back a little more into line with the minister's thinking again in view of his explanation in this regard but there are two things about which I am still a little unclear in relation to the subsidies. The minister said that because of this indirect form of subsidy and because of other things such as advertising and through other means business might be channelled into the Commercial Cable Corporation.


George Carlyle Marler: Or Western Union.


Wallace Bickford (Wally) Nesbitt: Yes. But at the same time is it not a fact that there are only the two companies in Canada which pick up telegraphs, the Canadian National Telegraph Company and the Canadian Pacific Telegraph Company? It is my understanding, and I am open to correction on this, that Western Union carries all the messages picked up by the Canadian National Telegraphs whereas the Commercial Cable Corporation and the C.O.T.C. divide the messages that are picked up by Canadian Pacific Telegraphs.


George Carlyle Marler: That is assuming there is no designation by the sender of the message.


Wallace Bickford (Wally) Nesbitt: I think some of us are a little unclear on this matter. If you send a telegram in a Canadian National Telegraph office and specifically designate that it should go via Commercial Cable Corporation is it possible it would be sent in that way? I realize it is highly unlikely that a sender would designate.


George Carlyle Marler: I not only think it is possible, I believe that is actually what is taking place.


Wallace Bickford (Wally) Nesbitt: I see. I have one further comment. The minister is alarmed not so much by the fact of the control of rates but by what might be done through this more direct method of channelling business between the companies. I believe the point I tried to make this morning was that if this took place none of these companies, no matter how large they might be, would be foolish enough to try and engage in some kind of rate war with a crown corporation because of the loans that would be possible. I do not think any sensible private company would attempt to engage in a rate war either directly or indirectly with a crown company knowing that the resources of the Canadian government were behind the crown corporation.


Howard Charles Green: Mr. Chairman, dealing first with this question of rates, the impression I gained in the standing committee was that these companies including the crown company have a pretty neat little arrangement which, if it were within Canada, would probably be considered as a combine in so far as rates are concerned. I would be very much surprised if that picture does not continue into the foreseeable future. They will get together and agree upon the rates that are to be charged and then they will all charge the same rates, which is what they are doing today.
Even if the Commercial Cable company should attempt to reduce the rates, surely the Canadian businessman who uses cable services should receive the first consideration. There has not been a word said here about

the benefit to him as a result of getting a cheaper rate. The minister seems to be concerned about only one factor and that is that the crown company shall be protected.
The minister stressed that his objective was to protect this crown company and actually he is not only protecting the crown company but he is protecting its partner, the American Telephone and Telegraph Company, and its subsidiary the Eastern Telephone and Telegraph Company by his actions.


George Carlyle Marler: I do not think the hon. gentleman should make that suggestion because the Eastern Telephone and Telegraph Company and the American Telephone and Telegraph Company are not in the cable business.


Howard Charles Green: They are not in what?


George Carlyle Marler: They are not in the cable business; they are in the telephone business. The transatlantic telephone cable is primarily a telephone operation. It is only a telegraph operation so far as half a voice circuit is concerned which I believe may be used by the United States government or others. The point I want to emphasize is that the American Telephone and Telegraph Company, and the same applies to Eastern Telephone and Telegraph Company, are not in the cable business and are not competitors of any of the cable companies.


Howard Charles Green: The crown corporation is in partnership with the American Telephone and Telegraph Company and its subsidiary the Eastern Telephone and Telegraph Company and with the British post office. They are all in the bag together. The minister's policy obviously is to protect that group. He is stretching our credulity rather far when he asks us to believe he is only trying to protect the crown company.
The minister gave the impression today that what is proposed is a licensing system. One would think to hear him speak that it was to be an impartial licensing system under which the department would weigh the scales and see that the crown company was treated in exactly the same way as the Commercial Cable Company and Western Union and that this nice new licensing system would be just a general control system which would apply in the same way to everyone in the business; but unfortunately the facts are just the opposite.
The minister himself in his statement today has made it perfectly clear that the government plan is a plan to prevent up-to-date competition from the Commercial Cable Company and Western Union. Of course, Western Union does not enter into the picture so much because it is not trying to lay
Telegraphs Act
a coaxial cable and I believe an order has been made in the United States courts to the effect that they must divest themselves of this cable business. They are not interested in keeping up to date in the same way as is the case with the Commercial Cable Company, the other private company. What is the minister doing under this policy? Here you have his own child, the C.O.T.C., as a result of the first coaxial cable getting the equal of eleven duplex circuits. I may be wrong in those figures.


George Carlyle Marler: That is correct.


Howard Charles Green: That is what I understood the minister to say. The C.O.T.C. is to have that type of equipment in October of this year. Commercial Cable are still asking for permission to lay a cable of that type. It will take them probably several years to lay such a cable. The minister does not say, "It would be fair for C.O.T.C. to have eleven circuits and Commercial Cable to have eleven circuits," he says, "Oh, no, Commercial Cable will not have one circuit in Canada; we will not allow them to have one circuit in Canada; if they lay this coaxial cable they must continue to do business with their old cable in so far as Canada is concerned." The minister made that very clear on more than one occasion in the committee and I would refer hon. members to page 185 of the proceedings. Incidentally this is a confirmation of the stand taken by the minister in the letter which he wrote in February of 1955. I quote from page 185 of the proceedings:


Howard Charles Green: You say that so far as the Canadian government is concerned they cannot have a coaxial cable or system, whatever it is called or described. Is that possibly the view your department is taking?


Hon.   Mr. Marler@: The approach which the department is taking is that the Commercial Cable Company asked for a permit to land a coaxial cable of 120 duplex circuits, and we said you may use them for defence purposes and make a connection in Canada for defence purposes, where existing facilities are not adequate, but if you open any circuits for commercial purposes you must do so by leasing them to C.O.T.C.
The minister has not varied that stand one iota; he skated all around it by talking about a licensing system but he is still standing on the policy that if these people lay a coaxial cable and place any circuits in Canada those circuits must be used for defence purposes or be leased to the C.O.T.C., which is their competitor. How that can be considered as fair is completely beyond me. One would have thought that the Department of Transport would be impartial in this matter and would have allowed each group to have an equal number of circuits, or at least to have some of the circuits. But that is not to be the case. Commercial Cable, and no doubt Western Union would be treated the same way,

Telegraphs Act
are faced with this government policy. They have been told that they cannot have any of these up-to-date circuits, that they must carry on with the old type equipment. I do not see how the minister can justify a policy of that kind. In effect it means a monopoly for the crown corporation because if these other companies cannot modernize why should they try to hang on in Canada. It certainly means that the Canadian businessman will lose the benefit of that competition.
Even if rates are the same they might be able to get better service from one company than from another. For example, I am told that in the case of a cable message from Vancouver to Japan, if it were sent by Commercial Cable it would go to Seattle and thence to Japan, whereas if it were sent by C.O.T.C. it would go across Canada to Montreal, thence to London, and thence right around the world to Japan. It takes some time longer to reach Japan going that way than it would if sent over the other system. In so far as cable service from the west coast to Australia and New Zealand is concerned, C.O.T.C. give the better service, and more credit to them for that.
Surely the businessman in Vancouver is entitled to choose the way in which his cables are to be sent. If this government policy is carried out the only service available will be by a crown company. I suggest That that is entirely unfair. Will the minister indicate who is going to be hurt by there being too many of these circuits in Canada? He seems to be greatly worried about there being more circuits than are necessary. He seems to think that somebody is going to be badly hurt if that is the case. It seems to me that the people who would not be hurt are those who send the cables. Certainly it would not do any harm to them. Just who is it that is going to be hurt if these eleven circuits belong to C.O.T.C. and 24 circuits belong to Commercial Cable or eleven circuits belong to Commercial Cable? Who is going to be hurt if there are more circuits than are required? Will it not be the companies that would suffer rather than the Canadian people? Those who are doing business would benefit.
This policy seems to be contrary to the whole trend of development in Canada. This country is opening up from coast to coast and surely the demand for this service is increasing. We were told in the committee that it was increasing very rapidly. Why should these restrictions be placed upon this development? Mr. Henderson of the Commercial Cable Company gave evidence about the business they had in prospect for the

new circuits. This will be found at page 205
of the proceedings, and I quote:
Now, with respect to Canada, we did not feel that it was necessary to make a survey here. The minister has stated that he is going to have six telegraph channels when this transatlantic cable is in operation and he has half a voice channel at his disposal. We have a demand now. in the Commercial Cable Company for five leased channels across the Atlantic, and that is even without going out trying to sell channels. We believe the people of Canada should have the opportunity to lease channels direct through to a customer in London, Paris, or wherever it may be. If you are able to dial on your telephone to London, you should be able to dial on your telegraph to London. We believe at some future time that the teleprinter will be out of date.
The minister stated that if we had made an application for a cable of two circuits, that his answer may have been different. If I had made that application I think that my board of directors would have fired me.
Will the minister please explain just who it is in Canada who is going to be hurt if there are more circuits than seem to be required at the present time?


Alexander Malcolm Nicholson: Before the minister replies I should like to say a word. I should like to say that two months ago the hon. member for Vancouver-Quadra and I were on the same side in connection with a very important matter when we were trying to save Canada from the evils of turning over to powerful American-controlled corporations certain important national resources. It is somewhat embarrassing for me today to find a colleague of a few months ago on the wrong side of an important matter affecting the future of Canada.
We had a very long discussion in the committee, and there were at least three divisions. The hon. member for Hamilton West and the hon. member for Saint John-Albert, who are not here this afternoon, tested the opinion of the committee, and on the first vote there were four yeas and 19 nays, as shown on page 223 of the record. In the next vote, as shown on page 227, there were three in favour and 17 opposed. The final vote was an interesting one. The following amendment was moved:
This part does not apply in respect of a company which is already operating external submarine cables under the authority of an act of the parliament of Canada.
Had that amendment carried, it would have committed this parliament to the proposition that we are not permitted to have anything to say about the operations of Commercial Cable, as a result of certain privileges they were given 72 years ago. This motion was presented to the committee, and it is recorded:
Motion defeated. The Clerk counting.

I do not recall whether he saw any who voted for it, but there is no record as to whether or not anybody voted for this. I think that we cannot accept that proposition. The minister went over the matter very fully in the committee and again this afternoon, and I am not going to repeat it, but I think that it cannot be established that he is guilty of trying to establish a monopoly. He pointed out correctly that, because C.O.T.C. is in this field, everyone who uses cable services in Canada is able to send a cable from Canada to the United Kingdom for four cents a word less than people in New York.
The last time I was in Europe, I sent a cable home from the publicly owned post office in London and I was surprised to find that when I reached New York I had to pay more for a telegram over privately owned telegraph companies from New York to my home in Saskatchewan than I paid over the publicly owned cable and telegraph system from Canada. In other words, I spent less for that cable from London to Sturgis, Saskatchewan, than for a telegram from New York to Sturgis, Saskatchewan. So I think it cannot be argued that we have not competition in that field. We are still going to have at least Western Union, the Commercial Cable Company and C.O.T.C. I think the minister has made a convincing case that he does require the legislation that is proposed in Bill 212.


Mr. Nowlan:: I cannot agree with my hon. friend when he says he thinks the minister has made a convincing case. The minister always speaks with a degree of conviction and with something which appears like logic, in such a way that it does carry, not conviction but perhaps an appearance of it, to one who has not studied his statements too carefully. I must admit that I have not studied them too carefully on this occasion. I was not in the committee when the hearing was conducted on this bill, as I perhaps should have been because I was a member of the committee. However, I was not here at the time and therefore did not hear the evidence, although I have read it since. Incidentally, my hon. friend referred to the votes in the committee. I think that means very little as to the number of members that may be present, because when that committee was sitting, Mr. Chairman, as you know, there were four or five of the committees sitting at the same time.


An hon. Member:: Your party was represented.


George Clyde Nowlan: It may have been that certain people who were not present were in other committees who otherwise would have
Telegraphs Act
been there and voted for or against the amendments that were proposed. I go back again to the case the member for Vancouver-Quadra has made, which I think is a convincing case. If the minister has made one to the satisfaction of the hon. member who has just spoken, I think that the member for Vancouver-Quadra has made a more convincing one. The hon. member who preceded me has admitted that the minister made a convincing case for a monopoly. I think that was the tribute he paid to his logic, and if the minister is prepared to accept that accolade, then I shall not argue too strenuously that my hon. friend is convinced at any rate of that.
I think it is section 22 of the Telegraphs Act which at present creates powers under which the minister will have to act until this bill is passed. It refers to the public good, and any action taken under that section would have that connotation. There are no such words in the present bill, and obviously a minister can pass such regulations as are approved by his colleagues. The effect of those regulations, I think the minister will admit, would be to create a monopoly. He said a while ago, in reply to the member for Prince Albert, I think, that of course the government would be motivated by what was in the public good, but of course-


George Carlyle Marler: I think that would apply to governments of all parties, even the one my hon. friend represents.


George Clyde Nowlan: That goes without saying, but that would be something we have not had an opportunity to demonstrate at the moment.


An hon. Member:: Because of the ideas you are propounding now.


George Clyde Nowlan: The expression "public good" as contained in the legislation has a specific meaning, as the minister knows, as interpreted by the courts through many years of experience. I am afraid that the expression "public good" as in the minister's mind is a much looser expression, and he qualified it afterwards by saying that he felt that his responsibility was to the C.O.T.C. Apparently his impression of public good is something which will protect the C.O.T.C., because he said that is his responsibility.
I think the member for Vancouver-Quadra emphasized another matter. I am sure the minister would not deny, although it perhaps has escaped his attention for the moment, that he also has a responsibility to the public as a whole, and what might possibly infringe upon the C.O.T.C. might conceivably be in

Telegraphs Act
the public interest. I personally cannot accept the proposition that by creating a government monopoly you are thereby promoting the public interest. After all, it was only two or three years ago that the C.P.A. made application for certain rights for carrying freight. They were denied them because apparently it was not considered in the public interest and the T.C.A. had to be protected. I am sure if that matter had been discussed years before, when T.C.A. was first incorporated or first developed and the present minister had been the minister in charge, I can see him, in a smooth, convincing manner assure one that under no circumstances was there any thought of creating a monopoly and that it would be in the public good and only in the public good.
The suggestion was made in the committee that if the regulations had to be passed the matter should be referred to the board of transport commissioners and the power vested there rather than in the minister's own department. The minister's reply to that was that he had qualified men in the department who knew of the administration of cables, that the board of transport commissioners was not qualified to handle that, and therefore it would not be in the public interest to have this matter referred to the board and dealt with by the board of transport commissioners.
If some such reservations are necessary, it is highly desirable that they be administered by an apparently independent and responsible body rather than by the minister's department itself. I think that the hon. member for Mackenzie who preceded me expressed it very succinctly when he said that the minister had made a forceful case for a monopoly. Personally I am not prepared to accept that as a desirable thing and in the public interest. There are many arguments which one could use. I could advance a local one. I noticed in the evidence that Commercial Cable suggested that if the license were granted and they laid the new cable they might operate a cable ship out of Halifax which would result in the spending of large sums of money on the east coast, up to $800,000 a year and another $250,000 a year in Newfoundland.
That is a very commendable reason and one good reason why I would be in favour of the minister reconsidering the matter and would be in favour of Commercial Cable Company being given the privileges it seeks. They are really not privileges for after all this company has been in existence since 1884. They have been carrying on since then and have given good service. They have somewhat of a vested interest in this business. Perhaps that is a disreputable term

today but I do not think it is. I think there is a responsibility on the government to protect that interest to a certain extent and at least not bring in an act that may result in forfeiture, with apologies made in the committee for having used the word "forfeiture".
No one suggests for a moment that this minister would ever engage in anything which would savour of or result in forfeiture but the passing of this legislation accomplishes the same thing. Why would anyone engage in further financing? How can you finance undertakings, how can you assure your bankers of a future in this business when you have hanging over you the fact that this legislation is there, legislation of such a nature, whether it is intended so or not, which will result in forfeiture if it is exercised?
I think that this is one of the more important pieces of legislation. True, it deals with a private company in one sense of the word. Actually it deals with it very effectively. This is a type of legislation which should have been brought into the house earlier, should have received even more careful consideration in this committee and for which more time should have been available for discussion. I am quite sure when the public realize all the implications of the legislation and what is involved in it there will be a reaction such as will surprise the minister and will result, if he insists on the legislation being passed, in his exercising the authority which will then be vested in him under it much more carefully perhaps than some other ministers with less sense of responsibility would.
The present minister certainly will not be there all the time. We do not know who will be exercising the responsibilities under this legislation. I think it is not in the public interest. I think it is unfair to those who have been engaged in this business in the past. Perhaps the minister will say: Well, let us get off the first section and give me a chance to bring forward some amendments. I hope that at least he is prepared to entertain reconsideration of some sections so as to provide for the protection of the public interest rather than leaving everything to himself and his department.


Bert Raymond Leboe: Since I entered the debate earlier I should like to make one observation now. It was stated here this afternoon that C.O.T.C. had been responsible for keeping the rates down. There seems to be a strange paradox in arguments. On the one hand we have the statement that C.O.T.C. is responsible for keeping the rates down and on the other hand we hear the plea that any more outlets in Canada will certainly lead to the

bankruptcy of C.O.T.C. I do not see the relationship. Either one or the other must be right, and which one is it?


Howard Charles Green: Will the minister please answer my question as to who is going to be hurt if there are too many circuits in Canada?


George Carlyle Marler: All I can say, Mr. Chairman, as 1 indicated in the committee, is that I think the situation today is that with the coaxial cable it is no longer the simple matter that it used to be. I do not think that anyone with the responsibility for taking the action that the governor in council must take under section 22 when an application for the laying of a new cable is received could think otherwise than that the laying of cables in the future will probably be a matter for intergovernmental discussion.


Howard Charles Green: For which?


George Carlyle Marler: Intergovernmental discussion. The hon. member has rather suggested that our action in connection with Commercial Cable seems to be wholly unjustified, but the fact does remain that the United Kingdom has not given its approval to the Commercial Cable Company and the somewhat optimistic evidence on the subject given by the vice-president of Commercial Cable Company is, I think, not justified by the facts. I do not think he has any reason to be as optimistic as he seems in saying "we have not had a final turn-down from the United Kingdom government." That may be so. It may not have been final. It may not have been said in very positive terms, but I should be much surprised if the United Kingdom grants permission for the landing of this cable in that country.
The point I should like to emphasize, particularly for the benefit of the hon. member for Vancouver-Quadra, is that this company already has nine and a half duplex circuits which serve Canada. There is nothing whatever to stop the Commercial Cable Company from laying a 120 duplex circuit cable when they wish to, but the difficulty seems to be that they do not want to lay it unless they can have one-fifth of the circuits terminating in Canada. I cannot see why, having regard to the existing facilities that Commercial Cable Company has, it cannot go ahead and lay the cable as it wishes without having to insist upon reliance upon Canadian business to justify that project.
The hon. gentleman asked who will be heard on applications. I take it that will depend on who makes the application, when it is made and what the circumstances are at that time. I think I should say to him that I think the Department of Transport will do its best to assess the situation at the
Telegraphs Act
time the application is made. We have been,
I think, very much handicapped by the fact that we have had so little knowledge of the activities of the cable companies that have been going on up to the present. As the hon. gentleman knows, I told the committee at the outset of my remarks that we had thought that there was a capacity of 18J duplex circuits in the Atlantic at the present time. Yet we found that the number was 34. That was not because we were unable to check the original applications. It was because there had been changes which took place without any knowledge of the government or without its approval. All I can say is that in the future applications will be looked at on their merits and having regard to what the attitude of other governments will be and what the need is for additional service.


Howard Charles Green: The minister has not answered my question. I asked him who would be hurt if there were more circuits available to Canadians than are actually needed. Does he claim that the business community of Canada will be hurt? Who will be hurt unless it is C.O.T.C. itself? The minister has [DOT] not answered that question. He dodged all around it. I think we are entitled to know who is going to be hurt because the minister has taken the position that only C.O.T.C., this crown company pet of his, can have access to a coaxial cable. He will not allow Commercial Cable to have any duplex circuits on their coaxial cable. He says that they can lay it and use it for defence purposes in Canada but apart from that they have got to lease it to C.O.T.C.
I should like to know who is going to be hurt if there are more circuits than the minister believes are needed. He has taken the stand that it is his responsibility to decide whether there are more circuits in Canada than are necessary and he wants this legislation so that if he does decide that there will be more than are necessary he can prevent them being opened up. It is going quite a long way, quite regardless of any other powers the minister has taken, that he should be the arbiter of what constitutes too many of these circuits in Canada. Is anybody else going to be hurt, except perhaps this crown company, if more circuits are available in Canada than are actually required?


George Carlyle Marler: I am afraid that the difficulty in answering my hon. friend's question is that we do not seem to be able to come down to talk about the same terms. We are not attempting to cut out existing circuits. There are not too many circuits at the present time having regard to the volume of United States business that now moves over the

Telegraphs Act
cables. As to the question of whether 11 more telegraph circuits will be too many or not, how can one tell until the circuits are open and we have the experience to be able to tell whether they are too many or not? All I can say is that the review on the part of the government will come when an application is made for additional circuits in a new cable. That is where the question is going to arise. All I can say to my hon. friend is that I cannot tell who will have to be consulted at that time until I know what is the situation that prevails at the time the application is made.


Howard Charles Green: Will it hurt anybody in Canada if there are more circuits than can be used? Who is going to be hurt if that is the position?


George Carlyle Marler: Mr. Chairman,-


Howard Charles Green: May I explain it in this way. Here is a private company which is prepared to spend $25 million or $35 million-I think that is the latest estimate-to put in a coaxial cable, and is proposing to have 24 of those [DOT] outlets in Canada. Who is going to be hurt if those 24 outlets turn out to be 10 or 15 too many?


George Carlyle Marler: Mr. Chairman, I do not see how it can be said they are going to prove that there are going to be 10 or 15 too many. That an application may be made by, let us say, Commercial Cables Company and that they wish to open 24 new duplex circuits in Canada, I thing we would be inclined to take a look and see what was the then existing capacity. When somebody comes along and tells us that what he wishes to do is to instal 24 duplex circuits, financed largely with moneys coming from a contract with the United States government-


Howard Charles Green: They are financed by loans. They have to borrow money. They gave evidence to that effect in committee.


George Carlyle Marler: Let the hon. member place his own interpretation on the facts and let me place my interpretation on them. But I say that when a company comes along and asks for permission to open in Canada 24 duplex circuits, supported by a lease agreement providing for approximately 65 per cent of the operating expenses, including interest, and when those 24 duplex circuits represent approximately 12 to 20 times the amount of capacity that company is now using in Canada, I would naturally question the desirability of adding so many circuits to the existing facilities. I think the hon. gentleman would have exactly the same feelings if he had the responsibility for his actions.


Howard Charles Green: Then are we to believe that the minister is trying to prevent Commercial Cable Company from wasting their money? Is he trying to help them save some money by not letting them have any of these outlets in Canada? If the minister thinks they are very foolish to put in the new cable and to open 24 circuits in Canada, why should he worry about that matter? Why not let them go ahead and do it? If they have not sufficient business to use those circuits, surely nobody is going to be hurt; but the Canadian business man is going to have just that much more chance to get a direct service, for example, from Vancouver to London or from Winnipeg to London. As the situation is now, the minister has said that, by his policy, no one but this crown corporation can have access to one of these coaxial cables in Canada. The crown corporation has not a cable. It is only leasing what cables it is using at the present time. Surely nobody is going to be hurt if the Commercial Cable Company go ahead and put in these outlets. Is the minister willing to give them permission to open any number of these outlets, even less than 24, if a coaxial cable is laid?


George Carlyle Marler: When it becomes likely that the United Kingdom will grant a landing permit for the Commercial Cable Company in the United Kingdom, I would be perfectly prepared to review, in the light of circumstances that exist at that time, just exactly what policy I should follow in recommending that the company be allowed to terminate additional circuits in Canada.


Howard Charles Green: In the committee evidence was given that the company was negotiating with continental nations to land the cable there. If it can be landed elsewhere than in the United Kingdom, does that make any difference in the attitude of the minister?


George Carlyle Marler: No.


Howard Charles Green: The minister would still be willing to consider allowing them certain circuits in Canada?


George Carlyle Marler: Mr. Chairman, I think that we are now in a field which is purely hypothetical. All I can say is that it depends entirely on where the cable is going to go.


Some hon. Members:: Carried.


Mr. Fulton:: A few moments ago there was an argument used by the minister as to why he felt that he would be justified in refusing a licence-if I followed him correctly-and in which he said-


George Carlyle Marler: No; not a licence; a landing permit.


Edmund Davie Fulton: I am sorry; I should have said a landing permit. He said that when he saw a company proposing to instal 24 duplex circuits, which would give 12 to 20 times the amount of capacity they are now using, he would feel inclined to question the necessity for or the appropriateness of that application. May I enter into an argument with him on this basis. When he rests his case on that position, is he not arguing on the basis of the old-style circuit and basing a judgment with respect to the use that will be made, can be made and will be desired to be made of the new facilities on the experience with old and obsolescent if not obsolete facilities? My information is that if the new facilities became available, the demand for them would be there and would greatly outstrip the demand for or the use that is now being made of the old facilities.


George Carlyle Marler: I thought that this morning or perhaps early this afternoon I had tried to make it clear that when we were talking about the duplex circuit it did not make any difference whether you had one duplex circuit out of 120 in a coaxial cable or one duplex circuit out of an existing cable that has a capacity of 4 duplex circuits, we still come down to the same units. The only question is what they are going to be used for. I am not a technical person. I am afraid that is all too obvious. All I can say is that I think you can put the telex circuit just as well in one of the existing cables as in a coaxial cable. I know that you cannot put a voice circuit in a cable that has a capacity of only 8 simplex units.	.


Some hon. Members:: Carried.


Edmund Davie Fulton: A statement has been made that 15 out of the 24 proposed circuits have already been spoken for. Of course that is an indication that 15 out of the 24 would be used if a permit were given and the cable installed.


George Carlyle Marler: That was not made clear until we met in the committee the week before last.


Edmund Davie Fulton: It is a fact, is it not?


George Carlyle Marler: No. I am not saying it is a fact. I admit that it was said in committee.


Edmund Davie Fulton: Does the minister know what the situation is? What is the minister's information as to the indicated demand for these circuits.


George Carlyle Marler: All I can say, Mr. Chairman, is that when the company made its application in September, 1954, in their application they said that they had not made any survey of the Canadian market or of Canadian requirements. In other words, I think
Telegraphs Act
the clear implication of that is that at that time it was not a factor as to whether or not the project should go ahead. What has happened is, as time has gone by the company has become more and more insistent that the Canadian traffic they wished to carry over this proposed cable has become increasingly important. If the hon. gentleman had participated in the discussions he would have found that the emphasis had changed from one of meeting a defence need to the point that we must have a better commercial service for Canadians. I leave it to the hon. gentleman to form his own conclusion as to why that change was made.


Edmund Davie Fulton: This is a commercial company and I am asking what is the most recent up to date information as to the extent to which the potential cables have been spoken for?


George Carlyle Marler: I have no information on that subject.


Edmund Davie Fulton: So, we have no reason to disbelieve then that the 15 out of 24 were not already spoken for?


George Carlyle Marler: My information, Mr. Chairman, is that my officials consider that is a very optimistic assessment of the possibilities.


Howard Charles Green: Mr. Chairman-


Mr. Lesage:: Carry on the filibuster. Now, we can see the pattern.


Howard Charles Green: As long as I feel this question should be discussed. Is the minister not able to say whether the claim made by Mr. Henderson, which I read a few minutes ago from page 205 of the committee record, is accurate or inaccurate? Here is a man who is the executive vice-president of a very old and efficient company. He came before that committee and made this statement of the business they expected to do in Canada. Is there any real reason to question the accuracy of that statement?


George Carlyle Marler: I think the hon. gentleman should be able to answer that question himself.


Howard Charles Green: The answer is obvious, that there is no good reason to question it. How is this company to furnish these services if this veto which has been placed upon their expansion by the Department of Transport is to be continued. Is there any possible way that the company can provide that service for which they have a demand?


George Carlyle Marler: I think there is a very simple way. The company can lay a coaxial cable to serve its United States traffic, without landing that cable in Canada. It has got already


Howard Charles Green: We had evidence, if I remember correctly, that they did not have the facilities now to do this business, and they would require this new cable in order to do it.


George Carlyle Marler: 
Howard Charles Green: But they cannot do business in Canada.


George Carlyle Marler: 
Howard Charles Green: All of this is done to protect a crown company, Canadian Overseas Telecommunication Corporation. Will the minister tell us how much money it is going to cost this crown corporation for their share of this partnership cable which is being opened in October?


George Carlyle Marler: When the C.O.T.C. estimates are before the committee or when my estimates are before the committee I would be glad to do that, but that is not relevant to this bill.


Howard Charles Green: The minister has explained, as the basis for the need of this bill, that the Canadian Overseas Telecommunication Corporation is going to be able to provide sufficient service to last Canada for an indefinite period.


George Carlyle Marler: No, no.


Howard Charles Green: That is the basis on which he is refusing to let these people open the new cable. How much is it going to cost the Canadian people to have this partnership service which has been undertaken?


Jean Lesage: What are you trying to do, protect the Americans against the Canadians?


George Carlyle Marler: As I said, that is not material to the bill and I do not propose to deal with that aspect of the question now.


Howard Charles Green: I submit it is material to the bill because it is involved directly with this whole issue. How much money is it going to cost? The annual report of the Canadian Overseas Telecommunications Corporation shows that there have already been advances from the government about $8,050,000; their capital budget for the financial year ending March 31, 1957, at page 5, shows terminal equipment for trans-Atlantic telephone cable and then says that this equipment is not included in the total estimated expenditure of $4-5 million in the T.A.T. cable project and that the $4-5 million represents the corporation's expected payment as a party to the trans-Atlantic cable construction and maintenance contracts. Then, we have in the estimates this year an item for $4,506,725, as a loan to this C.O.T.C. and in the supplementary estimates there is a further loan of $1,908,256. Now, surely the minister can tell us how much money this corporation is going to have invested in this transAtlantic cable plan.


William Alfred Robinson: Order. It being five o'clock, the house will proceed to the consideration of public and private bills.



PRIVATE BILLS

Mr. Deputy Speaker:: The items under
public bills having been exhausted, the house will resume the business which was interrupted at five o'clock.



TELEGRAPHS ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. 212, to amend the Telegraphs Act-Mr. Marler-Mr. Robinson (Simcoe East) in the chair.
On clause 1-"External submarine cable" and "telecommunication" defined.
Howard Charles Green: Mr. Chairman, now that the private members' hour is over, perhaps the minister could give us those figures.


George Carlyle Marler: I do not have the figures with me. I think it is about $4J million but I am relying entirely on my memory. As I say, I do not think the investment of the C.O.T.C. in the new trans-Atlantic telephone cable is really pertinent to the purpose of the amendment to the bill we are discussing at the moment which is as to whether or not we should have a licensing system for the operation of submarine cable communications. I think it would be just as appropriate

if the hon. member were to ask me what was the total investment of Western Union and the answer is I do not know.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: Shall this bill be now read the third time?


Howard Charles Green: No, at the next sitting.


George Carlyle Marler: Why at the next sitting? Second reading was two weeks ago.


Howard Charles Green: I submit it is not in order to do that.


Jean Lesage: Of course it is in order; second reading was before yesterday.


George Carlyle Marler: It was two weeks ago.


Howard Charles Green: The committee stage is a part of the second reading. There can be only one stage carried on at the one time. Surely there is no intention to try to force this through in that way. The minister has his bill through the committee.


George Carlyle Marler: Mr. Speaker, this bill has been on the order paper since May 12. A debate occurred on second reading some weeks ago. The bill then went to the committee on railways, canals and telegraph lines where the committee spent parts of three days, Wednesday afternoon, Thursday morning, afternoon and evening and Friday morning and afternoon going through the bill from start to finish with the benefit of evidence from the two cable companies, Western Union and Commercial Cable. A whole week has gone by since the report of the committee. We have spent virtually the whole day going through the bill in committee. There have been no amendments made in committee and I believe that under the rules when no amendments have been made in committee a motion for third reading is perfectly in order. The alternative would be that it would be put off until next Monday.
Surely the hon. gentleman has nothing further to add on the motion for third reading that he has not already said today. It seems to me it is perfectly reasonable that I should ask for third reading


Mr. Deputy Speaker:: Order. I am, of
course, governed by the provisions of standing order 75 and standing order 78, sub-paragraph 2.
Standing order 75 reads:
Every bill shall receive three several readings, on different days, previously to being passed.
Telegraphs Act
The latter part of sub-paragraph 2 of standing order 78 reads:
When a bill is reported without amendment, it is forthwith ordered to be read a third time at such time as may be appointed by the house.
The minister having moved third reading I have no recourse other than to put the motion, of course.


Howard Charles Green: Mr. Speaker, it is very unusual for the government to follow a course of this kind; however, if it sees fit to do that I suppose we just have to make the best of things.
The official opposition are very much concerned about this bill because we believe a step is being taken which is very unsound. We believe the bill should have been stood over and further consideration given to it so that some plan could be worked out under which there would be full, free and unrestricted competition between the crown company, the Canadian Overseas Telecommunication Corporation, and the private cable companies.


Mr. Pickersgill:: The Americans.


Howard Charles Green: In Canada we have worked out a system of that kind in connection with our railways which I think has been very satisfactory. In this case, for some reason or other, the government is taking the position that a private company must be curbed; it must not be allowed to have a coaxial cable with outlets in Canada unless those outlets are used for defence purposes or leased to the crown company.
As a party we, of course, believe in competition. It seems to me it is so advantageous to have both of these companies with this modern service. This would be advantageous to the people of Canada and certainly would be of great benefit to my own city of Vancouver and the other western cities. It would enable them to operate on the same basis as Montreal in so far as cable service to Europe is concerned.


Mr. Langlois (Gaspe):: They are now.


Howard Charles Green: In order to take advantage of the most modern service they are now going to be forced willy-nilly either to deal with the crown company or to send their messages through the United States.
I can see no reason why the minister should have taken the stand he has and I am quite confident there are many supporters of the Liberal party in the house today who are dubious-


Henry Alfred Hosking: There is not one.


Howard Charles Green: -about a step of this kind being taken. I know that the hon. member for Wellington South is not dubious. He is

Telegraphs Act
never dubious about anything the government tells him. In fact, it seems to me he sometimes goes overboard far in advance of the government and dives into deep water with his mouth wide open-


Henry Alfred Hosking: I hope I never make any more mistakes than the government.


Howard Charles Green: -without the slightest hesitation. In any event I am quite sure there will be supporters of the government across the country who will not be in sympathy with this move. It is not a very far step from a move of this type to a restriction of the freedom of the press. These cable services are primarily of use to the press of Canada and to the business community yet the government is stepping in and saying, "You have to do business through our nice little crown company; you cannot give your business to companies having the most modern equipment and providing the best service possible because that competition might be too much for our crown company." When you have a government with a mental attitude of that kind it will do the same thing in other fields. It is just one more step on the road downhill to dictatorship in Canada.


John Whitney Pickersgill: It is nice to see the Tories so concerned over a United States company.


Howard Charles Green: We hear a chirp from the official squirmer of the house. We have this step and no doubt there will be other steps following until eventually the Canadian people will realize what is going on in this house and throw out this government. It is strange to have the Minister of Citizenship and Immigration (Mr. Pickersgill) raising the question of United States companies because-


Some hon. Members:: Oh, oh.


Howard Charles Green: Let us have all the heckling we can on that. This is a very good place to have it. What is actually being done is that this crown company is in partnership with a large United States company, the American Telephone and Telegraph Company. That is the only way in which this crown company will be able to get service through the coaxial cable system. They have this agreement)with the American Telephone and Telegraph Company. So far as United States companies are concerned we are both in the same position.


Henry Alfred Hosking: Except that we are tied in with the British government.


Howard Charles Green: 
Thomas Speakman Barnett: Mr. Speaker, I did not expect that there would be any discussion on third reading. I am inclined to agree with the hon. member for Vancouver-Quadra (Mr. Green) when he says that the hon. member for Wellington South (Mr. Hosking) is perhaps never dubious as to the policy of the present government. However, I think the hon. member for Vancouver-Quadra will agree that that cannot be said about me. The thing which has surprised me about this whole matter is that apparently the Conservative party has been as gullible as the hon. member for Vancouver-Quadra accuses the hon. member for Wellington South of being. By that I mean to say that they seem to have swallowed holus bolus the attempt which was made by the Commercial Cable Company-I do not blame them for doing it-to use this bill as a vehicle for introducing the subject matter of a certain application they had made to the minister under the Telegraphs Act.
If there has been any debate on the merits of socialism, or public ownership versus private ownership, it has been introduced by the hon. member for Vancouver-Quadra and his colleagues. Certainly as far as I am concerned this is not a socialist bill and certainly I am not supporting it on the ground of being a socialist.
As far as I can see, this bill is simply a licensing bill to give the government certain powers to regulate public utilities having to do with telecommunications. We do that same sort of thing in other fields and nobody has suggested that that involves socialism. I think it is confusing the issue to attempt to create the impression that the government of Canada

has suddenly swallowed holus bolus the philosophy which some of us in this corner of the house espouse simply because they have introduced this bill.
I do not think I need to say any more. I made some few remarks on second reading when the principle was under discussion and I think it was made clear at that time that we are sympathetic to the purposes of the bill. I think we have made it quite clear that as a result of the detailed and thorough discussions which took place in the committee we are now satisfied that this bill, properly administered, will be in the interests of the Canadian people.


George Carlyle Marler: Mr. Speaker, I have listened with a great deal of interest to what has been said, particularly by members of the Progressive Conservative party. I have been interested in knowing their position and to say the least I think it has been somewhat confused and confusing. The principal ground of complaint is that because we are providing for the establishing of a licensing system for external submarine communications we are thereby attempting to turn the C.O.T.C. into a monopoly. Nothing has been said by them here today that has suggested they are in favour of a licensing system of any kind. I do not want to speak at great length, but I think the house should understand just what is the position of the Progressive Conservative party in connection with this matter.
I do not think that any member of the Progressive Conservative party, either in the standing committee or in the committee of the whole house, has failed to raise the question of the monopoly of the C.O.T.C. I want to point out briefly just what is the situation. There are 34 duplex circuits now available in trans-Atlantic cables and those 2 are operated by C.O.T.C. To speak of a monopoly when there are 2 circuits out of 34 certainly goes far beyond my understanding. What is the monopoly position of C.O.T.C. so far as Canadian business is concerned? It has 40 per cent of the business while the two United States companies have the remaining 60 per cent. Does that sound like a monopoly, when you have even less than half of the traffic? It certainly does not. My suggestion is that, whenever the name C.O.T.C. is mentioned, there is immediately from the Conservatives a response "monopoly"; but I say that the facts do not justify any such contention as that.
What have we heard today about establishing a licensing system? Nothing whatever. Yet when we were in the committee the hon. member for York West, who seemed not to be disposed to disagree with the idea of a licensing system, moved that the bill be amended and that, in place of having the
Telegraphs Act
regulations made by the governor in council, they should be made by the board of transport commissioners. So at that particular moment the Progressive Conservative party was in favour of some form of licensing, and the same clauses and conditions were set forth and the same language was used, in effect, for the amendment as will be found in subparagraphs (a) to (e) of clause 42 of the bill. At that particular moment the Progressive Conservatives were in favour of licensing. Today there has not been one word about licensing.
All that has been said has been with the object of making sure that under no circumstances whatever should anything be done that might possibly curtail the activities of Western Union and of Commercial Cable, so far as Canadian business is concerned. Nobody has suggested for a minute that the bill was to be used to interfere with Commercial Cable dealing with the business that properly belongs to it, with the United States business originating in the United States and put on the cables in New York. Nobody has ever suggested that that was going to be interfered with, but throughout the long discussion in committee what have we heard? Nothing but "For goodness' sake, do not do anything which would affect these two United States companies."
Mr. Speaker, that is not all. After having suggested a form of licensing, but under the board of transport commissioners, the Conservative party, the hon. member for York West speaking for it, then moved that a clause 3 be added to the bill. That was, of course, in the standing committee. He moved an amendment to the effect that this part of the act shall not apply in respect to a company which is already operating external submarine cables under the authority of an act of the parliament of Canada; in other words, that nothing whatever must be done to regulate the activities of the two United States companies.
I think that the great difference of opinion arising between the Progressive Conservative party and the government is that the Progressive Conservative party can think only in terms of monopoly. We have seen that there is no monopoly, and I do not think that there is any likelihood of there being one. We find that one day they are in favour of licensing; but that the next day they are not in favour of licensing. Then they conclude by saying that they do not want this to apply to the two United States companies. I leave to hon. members the task of forming their own conclusions as to the attitude of the opposition.

Telegraphs Act


Mr. Speaker:: I declare the motion carried.
Bill read the third time and passed.



ST. LAWRENCE SEAWAY AUTHORITY ACT AMENDMENT PROVIDING AUTHORITY TO CONSTRUCT AND OPERATE BRIDGE

George Carlyle Marler: that the house go into committee to consider the following resolution:
That it is expedient to amend the St. Lawrence Seaway Authority Act by repealing subsection (1) of section 14A thereof as enacted at the present session of parliament and substituting the following subsection therefor:
"14A. (1) The authority may, alone or jointly or in conjunction with the St. Lawrence Seaway Development Corporation of the United States, construct, maintain and operate, either
(a)	a bridge over Pollys Gut in the St. Lawrence river for the passage of pedestrians, vehicles, railway trains and for other like purposes, with all necessary approaches and facilities, from Cornwall island in the county of Stormont in the province of Ontario to Massena point in the state of New York, or
(b)	a bridge over the south channel in the St. Lawrence river for the passage of pedestrians, vehicles and for other like purposes, with all necessary approaches and facilities, from Cornwall island in the county of Stormont in the province of Ontario to the United States mainland in the state of New York."
Motion agreed to and the house went into committee, Mr. Robinson (Simcoe East) in the chair.


Wallace Bickford (Wally) Nesbitt: Will the minister be good enough to give us a statement as to the purpose of this resolution?


George Carlyle Marler: Mr. Chairman, hon. members of the committee will probably recall that earlier this session we adopted chapter 11 of the statutes of the present session for the purpose, among other things, of authorizing the St. Lawrence seaway authority, either alone or jointly or in conjunction with the Saint Lawrence Seaway Development Corporation of the United States, to construct, maintain and operate a bridge over Pollys Gut. Since then there have been discussions
++NAYS
Messrs:
Bell	Casselman
Blackmore	Charlton
Cardiff	Churchill


and negotiations between the Saint Lawrence Seaway Development Corporation and the New York Central Railway which have made it possible to consider what in the mind of Canadians is, I think, a much more satisfactory alternative to the bridge over Pollys Gut. I think that perhaps I might stick more closely to a memorandum I have here on the subject and perhaps, if necessary, supplement it with a few additions.
I should like to say that after considerable negotiation, and at the request of the Canadian government, the United States Saint Lawrence Seaway Development Corporation agreed to reroute the highway and New York Central Railway in the United States by means of twin bridge facilities at the Grass river lock and bridges over the Grass and Raquette rivers in order to provide uninterrupted facilities.
It was desirable to retain as short and direct a route as possible for highway traffic coming to the Cornwall area from the east by the south shore of the St. Lawrence and particularly to provide as short a route as possible for the St. Regis Indians living in a small section of Canadian territory on the south shore of the St. Lawrence that is entirely surrounded by United States territory. These Indians come to Cornwall for supplies, schools, hospitals, employment, et cetera.
During the current session, parliament passed an amendment to the St. Lawrence Seaway Authority Act to authorize the St. Lawrence seaway authority to join with the U.S. Saint Lawrence Seaway Development Corporation in the construction of a low level highway and railway bridge over Pollys Gut, over the western end of Cornwall island and the United States mainland.
Just at this point, Mr. Chairman, I should like to interject that it was possible to build a low level bridge over Pollys Gut because no navigation was to take place in that part of the river. Hon. members who are familiar with the geography will realize that this plays an important part in the power development but no part whatever in the development of navigation facilities.
The proposed bridge was to replace the existing span of the Roosevelt bridge over the south channel of the St. Lawrence river which has to be removed so as to allow shipping to have access to the new 27-foot Long Sault canal. At that time it was understood that the New York Central Railway would not abandon its line between Ottawa and Helena, New York. As the only possible location for a combined low level highway and railway bridge was over Pollys Gut,
31, 1956
St. Lawrence Seaway Authority Act the amendment to the St. Lawrence Seaway Authority Act was drafted in restrictive terms accordingly.
Within the last few weeks the New York Central Railway has let it be known that a large industrial corporation is interested in acquiring as a plant site some 2,000 acres of land in the vicinity of the proposed relocated highway and rail line on the United States south shore of the St. Lawrence river to the east of the Grass river lock. The industrial corporation in question objects-and I think quite understandably-to having the railway and highway pass through the plant area. The New York Central Railway, accordingly, proposes to abandon its line between Cornwall and Helena, New York, and to service the industry by a spur line from one of its other railway lines in that area.
The U.S. Saint Lawrence Seaway Development Corporation suggested that the highway be relocated in a westerly and a southerly direction; that is to say, west of the plant area to which I have just referred. This, however, would aggravate the problem of the St. Regis Indians who would have to travel an additional six miles to Cornwall. Furthermore, it would be much more inconvenient for all traffic travelling south and east of the international boundary.
At this point, Mr. Chairman, I should like to emphasize that the proposed diversion which would have brought the highway across twin bridges at the Grass river lock on to United States territory and then crossing Pollys Gut to meet the western end of Cornwall island would have materially added to the length of the trip that Indians living in the St. Regis reservation would have to take in order to get to Cornwall, and that the proposal to which I have just referred would have added an additional six miles to a trip that was already quite long.
At this stage the St. Lawrence seaway authority, having regard to the proposals to abandon the railway line, suggested that it would be more practical and economical to build over the south channel a high level highway suspension bridge a short distance west of the site of the present bridge. This is by far the most sensible and uncomplicated approach. It is cheaper, in that the total cost to both entities would be in the neighbourhood of $8 million against more than $9 million for the original plan. It is more direct by far and generally follows the present north-south international highway route at Cornwall. It is best for the Indians and for the traffic coming to Cornwall from the east by the south shore of the St. Lawrence.
Obviously participation by the St. Lawrence seaway authority in the construction of this
6760	HOUSE OF
St. Lawrence Seaway Authority Act bridge-which of course is an international bridge-would have to be authorized by parliament, and preferably at this current session, as work should be commenced during the present construction season. The proposal which is embodied in the resolution is to amend the St. Lawrence Seaway Authority Act to provide that the authority would share in the cost of construction and in the building of either the low level highway and railway Pollys Gut bridge, or the south channel high level highway bridge, in the event that some unforeseen development makes it necessary to return to the idea of the bridge over Pollys Gut.
Mr. Chairman, I do not think that anybody who is familiar with the geography of this particular part of the river and the surrounding country would have any doubt whatever that the high level bridge for highway traffic over the south channel south of Cornwall island has many obvious advantages, apart from the fact that it means a lesser cost to provide these facilities than that of those which were contemplated at Pollys Gut. I have no hesitation in urging the committee to adopt the resolution to the end that, as soon as possible, we can introduce the requisite legislation based on the resolution. In that connection I should like to tell hon. members that the bill itself will contain nothing more than the strict terms of the resolution which is now before the committee.


Wallace Bickford (Wally) Nesbitt: In view of the minister's statement, Mr. Chairman, there are just a few brief questions 1 should like to ask him. The first one is this. It is indicated in the memorandum to which the minister was referring a few minutes ago that in future there will be a high level bridge-I presume it will be a highway bridge only-over the north channel. Is that contemplated in this resolution?


George Carlyle Marler: I do not think I mentioned that, Mr. Chairman. I notice that the newspapers have mentioned the possibility of a bridge over the north channel. I did not remember that I had mentioned it. I will say this, however. I think it is a perfectly logical development, although when it will be undertaken is an entirely different matter. I think it is a logical development for one to expect to take place in due time.


Wallace Bickford (Wally) Nesbitt: The only reason I asked the question is this. It is my understanding that in the north channel there is not likely to be any shipping of any kind. I was wondering just what was the purpose of building a high level bridge over there.


George Carlyle Marler: I should not like to dismiss, quite as simply as that, the possibility that there would be no navigation in the north


channel. If my hon. friend will look at the plan of the seaway he will see that the channel for navigation is to be dredged in the south channel, that is in the waters to the south of Cornwall island, and will lead directly to the Grass river lock which is being built by the United States seaway corporation. It may well happen at some later date that Canada will decide to construct locks on its own side of the international boundary line and in that event the channel to the north of Cornwall island, the so-called north channel, would have to be used in order to provide access to the lock which I think would be located just about-I do not know if my hon. friend is familiar with the work, but at the point where there is to be what is called a structure in the dam. So ultimately if there were duplicate facilities provided for shipping it would necessitate a high level bridge over the north channel, if one is to be built.


Wallace Bickford (Wally) Nesbitt: I take it from the minister's comments that there is no additional high level bridge contemplated over the north channel in the immediate future. I believe the present bridge, which is called the Roosevelt bridge, over the north channel will be used in the meanwhile.


George Carlyle Marler: Yes, that is correct.


Wallace Bickford (Wally) Nesbitt: There are only one or two other questions I should like to ask. In the last few days there has been considerable criticism in the press from Mr. Robert Moses, chairman of the New York power authority, claiming that if this bridge is constructed it will result in a delay of one year in the construction of the seaway. I have a number of press clippings in front of me to that effect, but I have not been able to find in any of them any reasons given by Mr. Moses for this suggested delay of a year. Nevertheless, I ask the question because a person with Mr. Moses' knowledge of the subject must know what he is talking about, and he is chairman of an important New York state authority. I was wondering if the minister would care to comment on that?


George Carlyle Marler: I should like to dispose of two points. With regard to the north channel bridge, I think the hon. gentleman will find, if he rereads the amendments which were adopted earlier this year, that they contain the necessary authority for the St. Lawrence seaway authority to build the north channel bridge if it were considered desirable that it should do so.
The second point is that I know Mr. Moses has said the building of the bridge in this new location, that is over the south channel as opposed to Pollys Gut, would have the

effect of delaying the opening of the seaway. All I can tell the committee is that the Hon. Lionel Chevrier, who is president of the St. Lawrence authority, has assured me that the question has been given most careful consideration by their technical advisers and they do not subscribe to the view which Mr. Moses has expressed that a high level highway bridge over the south channel will delay the opening of the seaway. I believe that opinion is likewise shared by the officials of the United States Saint Lawrence Seaway Development Corporation.


Wallace Bickford (Wally) Nesbitt: Apparently the officials of Ontario hydro have not expressed views similar to those of Mr. Moses, nor have the other two authorities concerned with the building of the seaway, but in view of the fact Mr. Moses holds a very important position can the minister give us any idea as to the type of objection Mr. Moses made and why this delay would occur? Were any suggestions ever forwarded to Mr. Chevrier?


George Carlyle Marler: I do not believe Mr. Chevrier has received any communications from Mr. Moses. I would merely suggest to the hon. member for Oxford that if he were interested in the development of the park and parkways in the state of New York, he would be delighted if this bridge were going to be built over Pollys Gut thereby bringing into the United States parkways system, and to the development that will probably take place in and around the United States portion of the seaway, all of the traffic that would be crossing from Cornwall. I think if I were in the position of Mr. Moses I would probably be most anxious to have the bridge built over Pollys Gut. But as I have no responsibility for parks or parkways in New York, I should like to see it where it would do the most good for the Indians on the St. Regis reserve.


Wallace Bickford (Wally) Nesbitt: After having heard the comments of the minister and having taken a good look at a map of the area, I think I see what he means.
There is one other question I should like to ask. In the memorandum to which the minister referred, it was stated that this proposed new high level bridge over the south channel would cost $8 million whereas the other one over Pollys Gut would cost $9 million. In other words, the second one would cost about a million dollars less even though one would normally think a high level bridge would cost more. However, this proposed high level bridge only involves highway traffic, whereas the first bridge involves railway traffic as well as highway traffic.
31. 1956	6761
St. Lawrence Seaway Authority Act


George Carlyle Marler: Yes, that is quite right.


Wallace Bickford (Wally) Nesbitt: Are there any additional
amounts for which the authority would be responsible besides the $8 million to be expended on the bridge?


George Carlyle Marler: The $8 million and the $9 million to which I referred were the over-all costs. I believe our own technical people consider the $8 million figure, if anything, a trifle high. There are greater savings, however, than the $8 million or $9 million figures would seem to indicate. If the hon. gentleman is speaking particularly about the original plan, I think the amount of highway relocation that is involved in bringing the traffic from the bridge over the north channel to the new bridge over the south channel is less and, inasmuch as there is no railway relocation, there are some substantial advantages.


Wallace Bickford (Wally) Nesbitt: The only comment I had on that, Mr. Chairman, was apart from the $8 milion as set forth by the minister, there will be no additional amount to Canada.


George Carlyle Marler: I do not know whether an exact distribution has been worked out between the two parties of this sum of $8 million to which I referred, but that is not to be paid solely by the St. Lawrence seaway authority. The costs are to be divided between the two authorities. I know of no other costs in connection with this particular aspect of the seaway construction program than are covered by the $8 million.


Wallace Bickford (Wally) Nesbitt: I have one more question. Since the New York Central railway line between Ottawa and Cornwall is apparently to be abandoned-I understand this railway in the past has normally carried wood products from Ottawa and coal-what will the effect be on the upper end of the Ottawa valley of an arrangement of this sort?


George Carlyle Marler: The first point I should like to emphasize is that the abandonment of that section of line can only be undertaken after an application has been made to the board of transport commissioners and approved by the board. The second point I should like to make is that there has been no passenger service provided over that portion of the line for a very long time. There is, I understand, a very small volume of freight carried over it. My understanding of the matter is that it has been an uneconomic line so far as the New York Central is concerned.


Wallace Bickford (Wally) Nesbitt: In other words, there will be a substitute service.
6762	HOUSE OF
St. Lawrence Seaway Authority Act


George Carlyle Marler: I take it certainly that the Canadian railways would be glad to have any alternative business that may be around. After all, it is principally a matter of moving traffic from Cornwall to Ottawa.
Resolution reported and concurred in.
Mr. Marler thereupon moved for leave to introduce Bill No. 447, to amend the St. Lawrence Seaway Authority Act.
Motion agreed to and bill read the first time.


Mr. Deputy Speaker:: When shall this bill be read the second time?


Howard Charles Green: Mr. Speaker, if we could have a look at the bill during the dinner recess it probably could be dealt with at eight o'clock.


George Carlyle Marler: Mr. Speaker, I much appreciate the offer of the hon. member for Van-couver-Quadra and I will see if it is not possible to send him a copy of the bill. As I said, the bill is in the same terms as the resolution itself.


Mr. Deputy Speaker:: Second reading will take place later this day.


Some hon. Members:: Agreed.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
George Carlyle Marler: Mr. Speaker, I move that this bill be read the second time.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Robinson (Simcoe East) in the chair.
On clause 1-Authority may construct bridge over Pollys Gut or over the south channel.
Wallace Bickford (Wally) Nesbitt: Assuming that this legislation passes, as would appear will happen, can the minister tell us when a decision will be arrived at to commence either one of the two bridges proposed?


George Carlyle Marler: Last Thursday there was a meeting between the Hon. Mr. Chevrier and the other members of the St. Lawrence seaway authority and Mr. Lewis Castle, president of the United States Saint Lawrence Seaway Development Corporation, at which it was agreed that they should proceed with the building of the high level highway bridge over the south channel if parliament took the necessary action to approve this change in


the powers of the St. Lawrence seaway authority. I know of no reason to believe that there has been any change in the thinking either of the St. Lawrence seaway authority or of the United States Saint Lawrence Seaway Development Corporation.


Wallace Bickford (Wally) Nesbitt: Will any legislation be required to be passed by the United States government?


George Carlyle Marler: My understanding is that no legislation is required.


[Stage Direction]
Clause agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
The house resumed, from Monday, July 30, consideration in committee of Bill No. 418, to amend the Income Tax Act-Mr. Harris- Mr. Robinson (Simcoe East) in the chair.
On clause 1.
Mrs. Fairclough:: Mr. Chairman, last night when we were discussing this clause the minister answered a question with regard to uniforms and stated that uniforms for firemen and policemen were not considered by the tax department. I wonder if he would tell us what other classifications of employees are allowed uniforms other than the armed forces?


Walter Edward Harris: I am not aware of any persons other than those in the armed forces who are given clothing as part of their payment and who are charged for it.


Ellen Louks Fairclough: There are other persons who obviously must wear uniforms in the performance of their duties, such as waiters, waitresses and musicians. Why are those people not given consideration with regard to uniforms when firemen, policemen and members of the armed forces are?


Walter Edward Harris: I suppose this is one of those questions the hon. member has in mind with respect to so-called self-employed persons as compared with those who are employed by others?


Ellen Louks Fairclough: Not necessarily.


Walter Edward Harris: Where an employer provides clothing and it is on a minor scale such as we have discussed it would not be a matter of concern in taxation. On the other hand, if an employer who was the owner of a restaurant required that the waiters wear a certain kind of clothing while working in his restaurant but did not provide it, I presume that that person would be a free agent to take the

employment or not as he chose. He would know that the cost of providing that particular clothing would be part of his cost in taking the job in question.


Ellen Louks Fairclough: Of course anyone in this country is pretty well a free agent with regard to the type of employment he takes. The minister will recall that in recent years quite a few cases have gone to appeal, mostly concerning self-employed persons. Many of these cases had to do with musicians. One man may form a band and employ a dozen men to work for him and the clothing they are required to wear on the job is of no use anywhere else. Yet they are told that those are working clothes. But the clothes worn by the policeman or fireman or the member of the armed forces are also working clothes. Why should there be any distinction between one class of employee and another?


Walter Edward Harris: When I became a minister of the crown I found that on occasion I had to wear a silk hat. I had to buy it and I did not claim a tax deduction.


Ellen Louks Fairclough: Would the minister consider that as part of his working clothes?


Mr. Fleming:: Mr. Chairman, just at the close of the discussion last evening I asked the minister if he would reconsider this clause, particularly the words "of any kind whatsoever". The explanation given by the minister for seeking such an amendment certainly does not justify words as wide in their application as these. Surely the matter warrants some reconsideration.


Walter Edward Harris: I have given some consideration to it. It is not intended of course to use these words to extend the present tax which is imposed under certain conditions. Two cases were heard by the income tax appeal board and in one instance it was held that these words did not restrict the benefit that might be taxed to board and lodging and in the other case it was decided that they did. Rather than wait until we find we have lost the assessments in connection with a particular class or group of taxpayers it was decided to provide in the law that the present assessments which were of the kind I mentioned last night, that is gifts of furniture and matters of that kind, would continue to be assessed with the sanction of the law.
I am free to admit that if one could draft a clause which would set out all the known kinds of benefits that are given by employers it would be more desirable, but these fluctuate from time to time and are very numerous. I suggest to the committee that we do this on the basis that I have suggested, namely that
Income Tax Act
we do not intend to extend the present practice of assessing every kind of benefit I described last night, and then if at a later time it is brought to my attention that there has been an increase in the class of gifts or benefits provided for I will agree that that was not intended and we would then have an amendment to provide for it specifically. If we tried to define the several kinds of gifts we would only end up as we are now with having to have some general clause which in itself would be just as broad and as indefinite as the present words in this.


Mr. Monleiih:: I am very pleased that the Minister of National Revenue is here tonight to hear the Minister of Finance's words because after all he has gone on record as saying that he follows the letter of the act. This states "of any kind whatsoever". I am afraid that it will instil in the minds of the tax collection department the idea of doing exactly that. No matter what the intention of the Minister of Finance may be tonight, it is set out very clearly that this is going to authorize the Minister of National Revenue to collect any kind of such benefit, no matter what it may be.


Donald Methuen Fleming: I have just this concluding word to say. We are quite prepared to examine any situation to arrive at a decision as members as to whether it is fair that such benefits should be included within the scope of taxable income or not. The minister has said it is not intended to go beyond the present administration in seeking to define the inclusive nature of certain benefits. If that were all the government wished to do then I do not think there is any case for introducing these words, but, as I say, where there are individual situations we are quite prepared to examine them on their merits.
However, what is proposed in this amendment is that everything imaginable that can be classified as a benefit passing to an employee as a term or incident of his employment shall be construed to be income and therefore taxable. It seems to me the wrong place to put the generalities. Parliament should know with some regard for detail and specific application what kind of taxes it is applying, and not enact this broad omnibus provision when all we have put before us to justify it is in essence one particular situation. If there is nothing more than that by way of protection for the individual in this country then we cannot support the addition of those words of wide and sweeping scope to the present definition.


Jay Waldo Monteith: May I ask a further question of the minister? Is he in a position to define just what value might be put on board and lodging in any certain circumstances, or is

Income Tax Act
that left entirely up to the Minister of National Revenue and his department to make up their minds on, as occasion arises?


Walter Edward Harris: I do not put the valuation on it. The Minister of National Revenue does.


Mr. Fraser (Peterborough):: Just within the past year, the teachers in private schools have had their board and lodging graded a little differently. Why was that done? I understand that is a new ruling on the teachers in private schools.


Walter Edward Harris: None of the officials are familiar with the case. If my hon friend will let me have details, I shall be glad to look into it.


Ellen Louks Fairclough: As I have said before, I am perturbed about the inequality of these provisions. I cannot see why one group of citizens is taxed in a different manner from another. That goes all the way down the line. It is not only a matter of the articles covered in clause 1, although that is rather wide.
It is all very well for the minister to say, "It is not our intention to go beyond the practices that have been established already by the department", but some of the district offices have varying practices. As a matter of fact, when we were considering in the estimates committee the estimates of national revenue, we had the minister and the deputy minister denying that certain practices took place, practices that we knew were in effect. Obviously the higher officers of the departments themselves do not know what takes place in the district offices and, unless specific cases are called to their attention, would never know.
The assessors go by the book. They must go by the book. You cannot give too wide a latitude at that level. Ministerial discretion is another thing, but if you are going to put these words into this act, then perhaps every assessor in the country will interpret them to mean that every child who walks into his father's store and takes a box of candy for his own use is going to have that added to his father's income. The minister will say that is ridiculous. I shall too, but I have seen instances where just such trivial things were charged to a person as added income. They add up over a period of time. I have heard assessors say, "You must take certain things," or "It stands to reason you would take certain things." They may say, "You must supply yourself with tobacco from the store"; but perhaps the man is a non-smoker. The imagination of these people sometimes makes one gasp. Yet trying to refute the statements of these assessors is a difficult matter. I have every sympathy with them because I know there are a great many people who make a habit of evading whatever they

can. It would be natural if these assessors should be suspicious on occasion, but I do not know why they should be suspicious of everyone in general until they have had some cause to be. This is a situation which obtains in every tax division office of which I know. If you are going to put these words into this act you are going to open the floodgate for all sorts of assessments against taxpayers who are not in a position to defend themselves.


Mr. McCann:: I cannot agree with the hon. member for Hamilton West when she states that the officers in the head office do not know what is going on in the district offices.


Ellen Louks Fairclough: All you have to do is to read the proceedings of the estimates committee.


James Joseph McCann: No. The directives are sent out from the head office to all of the district offices, and there is a uniform interpretation which exists from coast to coast.
With reference to the amount which is regarded as income for board and lodging, that is fixed largely by the current rates in the community. For instance, there are some mining communities where they pay a wage, and a man has to make his own arrangements for board and lodging. In a mining camp I was in only a few weeks ago in the Blind River district, the rate is $2 per day because that is the current rate in that community for board and lodging. So I think it is hardly fair to state that we do not know what is going on in district offices, because we do. We would not have much of a head office if we did not know. As I have said, directives go out which interpret the law according to the law, and those directives are the same in every district office.


Jay Waldo Monteith: Mr. Chairman, I do not know whether this is quite in order or not, but I know you will certainly correct me quickly enough. I wonder whether I might put a question through you and through the Minister of Finance to the Minister of National Revenue. I should like to have the Minister of National Revenue go on record as agreeing with the Minister of Finance to the effect that they would not fulfil this wording suggested, that is, "the value of board, lodging and other benefits of any kind whatsoever".
The Minister of Finance has said that it is not the intention to collect on every item there is and actually to enlarge on the present situation at all, but I should like to hear the Minister of National Revenue agree that that will not be the intention of the Department of National Revenue despite the fact

Income Tax Act
that he has gone on record as admitting that they followed the letter of the law in all their collections.


James Joseph McCann: That is quite true. We do follow the letter of the law. That is the reason that the law is made. We have something that is a yardstick by which we can measure cases generally or any particular case, and if a person receives a benefit that has a monetary value it is taken into account and is regarded as income which is taxable.


Ellen Louks Fairclough: Mr. Chairman, that fixes it.


Jay Waldo Monteith: May I put another question in this roundabout way and ask the Minister of National Revenue if it is his intention not to make any change in the present procedure?


James Joseph McCann: I think I can safely say that there is no particular change contemplated.


Donald Methuen Fleming: Oh, that is a mouthful, because we had a good deal of discussion about this last night, and the whole case made out by the Minister of Finance is that there is a need for enlargement of the definition of "benefit" in this section. If there is no need for enlargement then there is no occasion for bringing this clause before the house for enactment. Presumably some change is sought and the change must be sought for a purpose.
I must say to the Minister of National Revenue that I think he is perfectly right in saying that it is the duty of his department to enforce the law according to its terms. I do not see how he could do anything else or how it would be proper for the department to take any other position.
But when the Minister of Finance throws out the bait tonight that even if the amendment is passed and the scope of the definition of "benefit" is enlarged it is not the intention of the government to expand the present operation in this respect, then I think he is taking in a lot of territory tonight. I do not see how he can give an undertaking that will have any binding effect in any situation that may arise. He did offer the house a statement that if situations arose that may not have been within present contemplation he would give consideration to them, but I am suggesting that is the wrong way to go about this and it is putting the cart before the horse.
Surely the proper way to proceed is not by a blanket definition to include within the scope of taxable income everything that can
by any stretch of the imagination be construed as a benefit under the words "of any kind whatsoever". Surely the proper procedure is for the government, in asking parliament to impose taxation, to bring forward and make out a case for it. The case that has been made out by the minister is in a particular circumstance only, not a case for a wide inclusive extension of the definition. May I say to the Minister of National Revenue that if this section were put into effect I think he would have no alternative but to enforce its full effect. It would be his duty, charged with the administration of the act, to find any benefit of any kind whatsoever that an employee receives as a term or incident of his employment, and, regardless of what the Minister of Finance has said, it would be the duty of the Minister of National Revenue to go ahead and assess. That is why I think we are being asked by the government tonight to take an altogether wrong procedure in enacting a definition of such a widely inclusive effect when no case has been made out for it and, Mr. Chairman, we in this part of the house cannot support it.


Ellen Louks Fairclough: The minister made quite a case for these words, saying that it was not the intention to enlarge their application, as has been suggested, and the Minister of National Revenue stands up and says just the opposite-


James Joseph McCann: How?


Ellen Louks Fairclough: -that the department must go by the book, that they are going to enforce this according to the words which are in the act, which is the very thing we told the Minister of Finance would happen. But quite apart from whether or not the Minister of Finance and the Minister of National Revenue can come to an agreement at this time, which they probably could do, these words are going to be in the act for all time or until such time as the act is amended and they are taken out. In that connection I draw to the minister's attention that the senior officials in his own department have a rather deplorable record for accepting jobs elsewhere and it could very well be that in a few years the people who have listened to him will no longer be in positions where they will be administering the act. The same holds true of the Department of National Revenue.
In any event, whatever the causes may be, it is quite within the bounds of reason that within a very few years we will have new people in these departments administering the act who will have no recollection of any agreements or undertakings made with the Minister of Finance or the Minister of

Income Tax Act
National Revenue with regard to the interpretation of these words. I think the words are dangerous. It is dangerous to put such broad terminology in the act, and personally I cannot support it at all.


Mr. Hahn:: There is another factor that I think is fairly important and that is the interpretation that might be put on this clause by an individual filling in his own income tax return who feels that it is his responsibility to make a note of any and all funds that he receives by way of benefits of any kind whatsoever. Let us say that he includes them in his return and pays his income tax. He has only a matter of one year in which to ask for a rebate when he finds that his neighbours did not include such items and did not have to. I am wondering whether the finance department will take it upon itself to notify these people immediately that their contribution in that regard was not necessary and therefore they are entitled to a rebate.


Walter Edward Harris: Mr. Chairman, if we get to that point I am going to move that the one year become two years.


Bert Raymond Leboe: Mr. Chairman, I am still opposed to this clause being as wide open as it is, and I think it is only in the interests of the administration that the gap be closed a little bit. I can recall a situation where used equipment was classed as secondhand equipment but when the time came that it was convenient to enlarge the interpretation of the act it actually happened that new equipment was classified as secondhand equipment because it had gone into the possession of a second party. The Minister of National Revenue has said that he is going to implement the act as it stands. He has no alternative but to do so, and I think that the Minister of Finance is letting himself in for a lot of grief here. I think we in the opposition are really trying to help him a whole lot. I have in my pocket a letter that reached me today and it has to do with a case where an arbitrary assessment has been made already. In these cases the onus is on the individual to prove that the money is not owing. If a man is faced with such an assessment and has no money, what happens? He is placed in an impossible position.
All the assessor has to do is to say, "I am assessing you so and so", and that is it. There is an appeal, of course, and if the person has enough money to go ahead and appeal the case he may get some redress, but the onus is on the individual. If the onus were on the taxation department to prove the assessment first it would be a different situation, but that is not the case.

I think it is going too far to leave this clause as it is. If there are two or three cases, as the minister said, that need to be covered, surely they can be spelled out.


Jay Waldo Monteith: I am going to suggest that the Minister of National Revenue change places with the Minister of Trade and Commerce temporarily and that the Minister of National Revenue and the Minister of Finance get their heads together and see if they can come to some agreement. The Minister of National Revenue says that he has to follow the letter of the act. If this amendment goes through the letter of the act will read, "the value of board, lodging and other benefits of any kind whatsoever." The Minister of Finance says that that does not mean certain things, that there will be no change from the situation that exists at the present moment. I certainly think some definite understanding should be given to the house so that the people of Canada will know where they stand.


George Harris Hees: I think the hon. member has made a very constructive suggestion. Unless the Minister of National Revenue gets over where he can listen to the Minister of Finance tell him how he is to administer the act which the Minister of Finance is passing for him, how in the world are we ever going to get any sense out of this thing?


William Alfred Robinson: Is the committee ready for the question?


Wallace Bickford (Wally) Nesbitt: No. Mr. Chairman, I was a member of this house who sat on the special committee on the estimates which inquired into the activities of the Department of National Revenue. Like the hon. member for Hamilton West, the hon. member for Perth and other hon. members, I cannot help but feel that these words "of any kind whatsoever" will give a great deal of scope to some of the junior individuals in the various tax offices of the Department of National Revenue. As the minister told us in committee with respect to the senior officials, they knew what was going on in every branch of the department. They may send out regulations. That is quite true. But these regulations are interpreted differently in different offices. As I recall the hearings of that committee, evidence was presented-I know it was presented by myself, and as I recall it it was presented by several other members-to the effect that some of the junior officials in the branch offices of the Department of National Revenue, albeit succession duty offices or income tax offices, certainly seemed to have the attitude-or at least we were certainly led to believe that they had-of "get all you can". If words like these are put in

the act I cannot see how some of these overzealous types in that department will not just try to do that and get all that they can. I think we must be very careful before these words are passed by this committee.


William Alfred Robinson: Is the committee ready for the question?


Mr. Churchill:: No, Mr. Chairman. I should like to protest with the others who have protested against these words. I have been examining what was said last night by the minister in connection with the matter. I am surprised that in the interval he did not think up and make some modification. Last night the committee suggested that he think the matter over and modify the present wording. He has not done that. Now he is just sitting there in that determined fashion, resolved that no change shall be made. I suggest that is not good enough. Study of a bill in committee serves an extremely useful purpose. Already today and yesterday we have had bills studied in committee, with changes made and alterations accepted. It is in committee that there are pointed out inaccuracies in drafting, in wording or something like that. It is quite customary for ministers to recognize the fact that they themselves have not seen every aspect of a situation and that perhaps other minds applied to the same problem had something to contribute. I think something has been contributed to the discussion last night and tonight with regard to this wording. But what is contributed by the minister? As reported at page 6707 of Hansard, when he was dealing with this matter in the first instance, in reply to a question he said this:
With respect to the other question, we have in mind other forms of benefits that might be derived in the normal course of employment other than board and lodging.
I draw attention to that expression "might be derived". I do not know just who is going to make that decision. Then, as reported at the bottom of that page, the minister goes on to say this:
. . . whereas there might be a benefit in connection with the employment quite apart from board and lodging which ought to be taxed, . . .
If it ought to be taxed, this is the institution that should say it ought to be taxed, which should do it in clear words and not leave the matter open as it is here. If the minister wants to leave the matter wide open, why did he ever bother to put in "board and lodging"? Why not just say "any benefits of any kind whatsoever received or enjoyed in respect of the course of employment"? If you are going to spell out things that should be taxed, include them all and name them. But this wide open phrase merits all the criticism 67509-430
Income Tax Act
that has been offered to it tonight. It is not beyond the capacity of the minister to let this clause stand and go on with other clauses. In the interval he might try to come up with some specific wording. I do not think it can be argued that those who have spoken before me have not shown quite clearly that there is a danger of abuse in wording of this nature. Who is going to make the decision? Will it be the Minister of National Revenue or will it be some junior officer going about the country? Who is going to say that something is going to constitute a benefit and that it has been derived in the normal course of employment, and that it ought to be taxed? If it ought to be taxed, parliament should say what should be taxed. Surely it is clear that over the years taxation measures must be amended from time to time. Evasions of taxation laws have occurred in the past. Loopholes must be plugged. This process goes on continuously. It may well be that next year it will be necessary to bring in some amendment. But let us not bring in a carelessly worded phrase such as this one which puts the discretion, so far as we know, in the hands of very junior officials to determine what tax a person is going to pay. The voice of the taxpayer must be heard in the land, and this is the place for it to be heard. We suggest to the minister to let this clause stand for further consideration.


Mr. Zaplitny:: Mr. Chairman, I have been
trying to look at this section objectively and perhaps the question I intended to ask would be better addressed to the Minister of National Revenue. Has the minister or have his officials experienced any particular difficulty in administering the act as it stands without these words being added "of any kind whatsoever", or in other words with the wording "the value of board, lodging and other benefits"? I think that the committee might be assisted if the minister could give us some concrete examples of the kind of difficulties he may have had, if any. Of course, if there have not been any difficulties, I see no reason at all for having these words added.


Walter Edward Harris: Mr. Chairman, might I answer that question? If my hon. friend will read the record of last night's proceedings, he will see that I referred to the case of refrigerators. That is the kind of thing that has been given' by employers to an employee, which we have been taxing and which we should continue to tax.


Frederick Samuel Zaplitny: Mr. Chairman, I see no
difficulty at all there. The act reads "the value of board, lodging and other benefits". Certainly if it is considered that the gift of

Income Tax Act
refrigerators was a benefit or an additional benefit, where does the difficulty arise?


Walter Edward Harris: As I have already said three
times, the difficulty arises in that the income tax appeal board has thrown doubt on the use of the words "or other benefits". They have suggested that these words relate only to board and lodging or something like board arid lodging and not to refrigerators or something completely different from board and lodging.


Wallace Bickford (Wally) Nesbitt: In view of what the minister has just said, would he say that the suggested wording of the act would go so far as to say that employees in factories and so on would be charged income tax on their Christmas turkeys or something like that?


Walter Edward Harris: Of course not.


William Alfred Robinson: Is the committee ready
for the question?


Some hon. Members:: Question.


Frederick Samuel Zaplitny: I want to ask one other
question. Further down in the same clause we read these words "received or enjoyed by him in the year in respect of", and so on. What is the distinction between the words "received" and "enjoyed"?


Walter Edward Harris: I have only a layman's knowledge of this matter. These words have been part of the act for some time. I think "received" arid "enjoyed" are synonymous terms that have been part of the taxing statute since I have known of it. But I will look up the definition in order to see whether there is anything unusual in it.


William Alfred Robinson: Is the committee ready
for the question?


Some hon. Members:: Question.


William Alfred Robinson: Those in favour of clause
1 will kindly rise.
Clause agreed to: Yeas, 59; nays, 26.


Jay Waldo Monteith: Just in passing, I wonder if the Minister of National Revenue would now send a directive to all his district offices instructing them not to change their present method of assessment in any manner whatever?


James Joseph McCann: We will wait until the act is passed.
On clause 2-Supplementary unemployment benefit plan.


Ellen Louks Fairclough: I wonder if the minister would give us an example of what is meant in clause 2, paragraph (1), with specific reference to the term "with whom the taxpayer does not deal at arm's length". In what way

would an employee's profit sharing plan benefit the employee through-I suppose it is a subsidiary corporation that the minister means?


Walter Edward Harris: Yes, there are other references later in the bill to a situation in which one corporation might make a contribution to a subsidiary corporation and that is described in the words, not being at arm's length.


Ellen Louks Fairclough: For the purpose of profit sharing?


Walter Edward Harris: For the purpose of the pension only.


Ellen Louks Fairclough: But this says profit sharing.


Walter Edward Harris: And profit sharing, yes.


Ellen Louks Fairclough: Does the minister have a specific instance in mind? Could he describe one?


Walter Edward Harris: If a parent company established or had a profit sharing plan and desired that a subsidiary would also have such a plan, it might find it convenient to make a contribution to the fund in the first place, and the purpose of course of this clause is to tax the amount received should that fund pay money back to the taxpayer which, when it had been paid in, was tax exempt.


Ellen Louks Fairclough: Well, the taxpayer would not pay anything into a profit sharing plan.


Walter Edward Harris: That is the point; if you had an employee's profit sharing trust, and out of that trust moneys were paid back to the taxpayer-we do not anticipate it, but if it were it should be taxable then because it was non-taxable when it went into the trust fund.


Ellen Louks Fairclough: Taxable in whose hands?


Walter Edward Harris: In the hands of the corporation.


[Stage Direction]
Clause agreed to.
On clause 3-Employer's contribution to pension fund.
Donald Methuen Fleming: May I make a request on a matter of procedure? Clause 3 has 10 subclauses to it and I wonder if, for convenience, seeing they relate to such a wide variety of matters and many of them quite dissimilar, you would call the subclauses in order? I think that will make for a more orderly procedure.


Walter Edward Harris: I agree because I have a number of amendments to move to the various subclauses.


William Alfred Robinson: That will be for the purpose of discussion only, and then the whole clause will be carried at once?


Donald Methuen Fleming: There will be amendments to some of the clauses and I do not know whether it would be more convenient to vote, if necessary, on the subclauses. I think it would make for more orderly procedure.


Some hon. Members:: Agreed.
On clause 3-Subclause (1).


Donald Methuen Fleming: While this does not directly involve the matter of deductions and contributions to pensions by self-employed persons in well recognized groups, I think it would be desirable if, after the discussion there has been on that particular subject, the minister had something to say about it. It was mentioned on second reading and in the general discussion on clause 1. This particular clause does relate to the same section of the act, section 11, in relation to deductions and pension contributions. I wonder if the minister would not say something on this subject because it is a matter, as he well knows, of widespread interest. There have been many representations made to him by well recognized professional groups and others, whose pleas have been before the department for some years, and I would respectfully suggest there should be some statement from the government at this time.


Mr. McMillan:: I want to deal with this for a minute. Earlier this session I had a notice of motion on the order paper, but it could not be reached. It had to do with the vesting of pension rights in the different pension plans presently in vogue in Canada. I am concerned about Canadians who, by their work, have built up an equity for later payment to themselves and who cannot or are unable to meet the number of years of service required or are unable to work to a certain chronological retiring age, or both. The two pension plans are contributory or non-contributory on the part of the employee.
In the latter case, the employers pay the contribution for their employees. These arrangements, of course, are generally the result of a contract or agreement between management and labour. The requirements to meet a pensionable retiring age are necessarily based on a certain number of years of service. I am not concerned with those who are able to meet those requirements but with those who through their service have built up an equity in the non-contributing pension fund or the non-contributing part of a pension fund, who, for one reason or another, have failed by not more than a year or so
67509-430i
Income Tax Act
to meet these requirements. I realize that the employee in a contributing plan can recover his own contribution, but I am not aware that any employee ever recovers any money paid into the pension fund on his behalf by employers. The amounts of money involved are large and vary, of course, with the different pension plans.
Now, as an example, an employee in a non-contributing plan who just falls short of being eligible for a pension of $100 a month at 65 years of age misses a capitalized pension of something over $13,000. This capitalized amount, of course, varies with the type of plan, the age at retirement, and in a contributing plan of course would be less. I realize that pension plans were started by companies to provide an incentive for their employees to remain in their employment for a number of years and to reward their employees for a lifetime of service. I have nothing but praise for the companies who so reward their employees. You might ask why the government of Canada should be interested in these pension plans.
First of all, the contributions made toward these plans are free of income tax. Our federal treasury forgoes large sums of money by way of income tax collections in respect to the non-contributory plans and the non-contributory parts of plans. In recent years the income tax on the net earnings of large corporations has been in the neighbourhood of 50 per cent. The people of Canada are therefore subsidizing the various pension plans to the extent that income tax is now collected in respect of the contributions toward these plans. The government of Canada should therefore see that pension plans are put to the best possible use for all Canadians generally.
There are various reasons why a workman might not be able to complete his service up to retiring age and thus qualify for a pension. I can think of different medical reasons. One very common reason is coronary insufficiency. A man might be able to do a very light job but if it requires sudden expenditure of energy he will develop cardiac pain and be forced to quit work. Also in industry we get workers with allergies of the skin and of the respiratory system. I have seen workers in a plant where they have changed their process and used different chemicals and gasses develop respiratory allergies or irritations. These men are not actually sick but they are too miserable to continue at their work and they have to quit.
A man might lose his job because of an altercation with his boss. I have also seen a case in a rather small plant where they had a pension plan and when they sold out

Income Tax Act
to new owners the new owners brought in their own workmen and many of the old workers were discharged and therefore lost out on the pension plan. There are many other examples I can think of where employment is terminated particularly for medical reasons.
Often these terminations of employment come after the age of 45 at which time the worker is too old to find other insurable employment. He cannot go to another factory because in most cases their pension plans are such that it would not be economical to hire him. These workers when they are laid off obtain seasonal employment. They work at a multiplicity of jobs in the summer time and they frequently do not earn enough to keep themselves and their families during the winter. If sickness comes to them or to their families they fall back on the provinces and the muncipalities to pay the cost of their sickness. I have seen various workers who have fallen on the local authorities for relief.
Under the regulations of the Income Tax Act a worker would have a vested right in a pension after 20 years of service. This worker, however, has been helping to build up the equity in that pension plan from the early years of his service in the company.
I would like to ask the Minister of Finance if some means could not be found whereby a worker would have some fractional interest in the equity of a pension plan in the later years before it matures at 20 years. For instance, he would have some financial interest after 15 years or something of that nature. I would like to see this apply as a matter of right particularly in those cases where the workman's case is just and the termination of service is quite beyond his control.
Practically all our Canadian companies and particularly our large ones with which I am familiar are very generous with their workmen in this respect. However, some of our smaller companies that have pension plans cannot be so generous because they do not have a multiplicity of light jobs which they can give to men with certain disabilities particularly if they have to stay on light jobs permanently.
Although I do not think it comes under this section, while I am on the subject of pensions I might say in a sentence or two that there are many Canadians who cannot avail themselves of a pension plan in which contributions would be exempt from income tax. Many of these people have very modest incomes, as was pointed out last night by the hon. member for St. Paul's. I think the hon. member included doctors. I believe these

individuals should have the same right as their fellow-Canadians in this respect.


Herbert Wilfred Herridge: Mr. Chairman, I was most interested in the remarks made by the hon. member who has just taken his seat and I was extremely pleased to note that he has given some consideration to a problem that is concerning thousands of industrial workers in Canada.
I rise at this time because this is a problem that concerns thousands in my constituency and I know that other hon. members in this house are also concerned with this question. I am aware that the hon. member for Kootenay East is concerned, as I am, about the matter and I have worked with him on this question during the last session and this one.
For many years industrial workers have been interested in some form of industrial retirement pension to give them some measure of security in their old age, and in response to that even prior to the war many of the larger companies established pension plans, particularly companies like the Consolidated Mining and Smelting Company, the International Nickel Company, the railway companies and other large companies. Since the second world war, however, interest in these plans has developed, so far as I can see, by leaps and bounds and particularly since what I consider the very favourable exemptions on account of investment in pension plans.
I think it is because of that investment, as the hon. member who spoke prior to me referred to, that the governments have a considerable interest in the terms, provisions and operation of these pension funds. This interest was indicated, I think, when the Department of National Revenue issued a blue book dealing with taxation and pension plans over the signature of the Minister of National Revenue, who I am pleased to see is here this evening. However, from what I understand, this booklet was never widely circulated. In fact, few unions had knowledge of it although the union which is the largest one in my constituency, the International Union of Mine, Mill and Smelter Workers in both Kootenay West and Kootenay East, was well acquainted with it. The union to which I have referred used the provisions of part 10 (b) of these regulations published over the minister's signature in submitting the union's case before a conciliation board in Vancouver in 1953. I just want to briefly refer to this booklet because I do not intend to take the time of the house at any great length.

In the foreword to the booklet of principles and rules issued by the taxation division, the Minister of National Revenue states:
The approval of employees' superannuation or pension funds or plang will be governed by the principles and rules published herewith. These will extend and apply to the continuing approval of plans now operating as well as those which may be established in the future.
The next clause in the minister's regulations, which concerns a number of industrial workers, is clause 10(B), which reads:
The right provided by employer contributions must vest in the employee with a determinable period, and particularly on the attainment by the employee of an age which would prejudice him in the event of severance from the employment. Therefore, vesting should be absolute upon attaining age fifty subject to a minimum period not exceeding twenty years of service or participation.
Those regulations indicate that the department considers it has a responsibility to approve pension plans as against the explanation given by the minister last evening. I think it is quite right to say that this thing certainly gave a strong impression of having the force of law, especially to a layman like me and a good many other people. Mr. Lowery, chairman of the conciliation board which dealt with the union's problems in 1953, a retired civil servant who had been a collector of customs on the Pacific coast and who was also a qualified lawyer, held that the booklet was binding on the government as a statement of policy. As a result this conciliation board ruled that the pensions were negotiable and that pension vesting was a binding commitment as established under part 10(B) of the rules and regulations as put out by the Minister of National Revenue.
I might say that the International Union of Mine, Mill and Smelter Workers was the first and only union to appeal to the government to enforce its own declared policy by giving approval to pension plans set up according to the blue book issued by the Department of National Revenue. However, other labour unions have become interested in this problem and this year a special resolution was introduced at the recent merger convention which formed the Canadian Labour Congress by the Vancouver street railway employees' union. This resolution was widely supported in the convention and was approved by the resolutions committee, but because of insufficient time with which to deal with it it was referred to the new executive along with a number of other resolutions.
At the request of the membership of the union in Kootenay East and Kootenay West the co-ordinating committee of the union representing the union negotiating committee, prior to negotiations with the Consolidated
Income Tax Act
Mining and Smelting Company, met with the Minister of Fisheries-I must say that they spoke highly indeed of the careful consideration and attention given by the Minister of Fisheries to their representations of the problem that concerned them on this occasion- and other members of the house as well as two officials of the Department of Finance on May 11, 1955. The union representatives presented their case, they had a good hearing and the matter was thoroughly discussed.
On July 26 last year I raised the matter in the house at the request of the organizations in my district. In reply to my representations the minister quoted the closing paragraph of his latest letter to the union. The union had written to the minister what I considered to be a very excellent letter in connection with this matter and this is what the minister quoted:
I should advise you, however, that early in this year I gave instructions to my staff to prepare a study of pension plans in so far as the Income Tax Act is concerned having in mind possible amendments to the act, and regulations, and this is proceeding. No change in present practice will occur until this study has been completed.
Then the minister went on to say:
So the matter is under advisement and consideration at the present time.
Representatives of the union met the Minister of Finance and other members of the house this spring and again urged the department to enforce the regulations with respect to pension plans. When the union negotiating committee for the Consolidated Mining and Smelting Company employees in British Columbia met with the company officials to consider a new contract this spring the committee refused to negotiate on other matters until the company had agreed to establish vesting rights in the pension plan, and only when this was done by the submission of a letter to the presidents of locals 480 and 651 did negotiations proceed to a settlement. I am going to put that letter on the record because it is the first letter of its kind in connection with negotiations between a company and union in Canada. The letter reads:
Trail, British Columbia,
9th May, 1956.
Mr. A. King, President,
Trail and District Smelter Workers' Union,
Local 480, I.U.M.M. & S.W.,
Trail, B.C.
Mr. R. C. Thompson, President,
Kimberley Mine and Mill Workers' Union,
Local 651, I.U.M.M. & S.W.,
Kimberley, B.C.
Dear Sirs:
This will confirm that it is Cominco policy to grant leave of absence to an older employee of long service who is obliged to discontinue his

Income Tax Act
active employment for a reason beyond his control. The granting of such leave is not confined to any specific age or service requirements but subject to the leave being for an acceptable reason, an older employee whose age and service reaches a total of 80 or more is automatically granted this privilege and any older employee whose service is of the order of 20 years is also generally given favourable consideration.
Leave does not extend beyond the employee's 65th birthday, and in any case leave is not granted if the reason for discontinuance of employment is discharge for cause or voluntary severing of employment.
Yours truly,
E. Benson.
Mr. Benson is one of the senior officials of the company. It was fortunate that the company recognized the concern of its employees in this matter and-I have discussed this at length with the hon. member for Kootenay East who is just as concerned about this matter as I and who has a closer relationship to the actual conditions under which the men are working as he has worked as a miner-the terms of the blue book part 10(B) are largely carried out by the leave of absence provisions included in the letter from the company to the union.
However, while the employees are glad to have this further measure of security they are still waiting for the government's decision after this very lengthy consideration of this issue because they believe that under present circumstances vesting rights should be assured by law. The group of which I am a member have for years recognized the increasing necessity for a national industrial pensions policy and plan and have urged the government repeatedly to take steps to implement such a scheme. As the years go by the government and the public and the employees concerned have an increasing stake in these pension plans because of the great investment of public funds by virtue of income tax exemptions.
The letter of the Consolidated Mining and Smelting Company is a concession by the company in the matter, and other companies I am told are beginning to recognize that the present piecemeal industrial pension arrangements in Canada are not adequate. I should like to read from an article which appeared in Motor Carrier of June 1956 dealing with industrial pensions in Canada and reading as follows:
"Mobile Pensions" Scheme Creeps Closer to Canada
"Mobile pensions" a scheme whereby a worker whose employer sets aside pension money for him can carry his accumulated pension credits from job to job, got a significant boost this month when 1,500 employees of Libby, McNeill and Libby went back to work at five west coast (U.S.) canneries after a two-week strike. They voted approval of an agreement between the big canning company

and a Teamster affiliate, the Western Council of Cannery Workers, which provides a transferable form of retirement pay.
Retirement counsellors claim the notion of mobile pension benefits is "the coming thing". (Like unemployment insurance reserves, they're paid into a worker's account and if the worker moves to a new job, his built-up reserves move with him.)
I mention that to indicate the 'increasing interest of industrial workers in some mobility of pension plans and some development of law in relation to public investment in these schemes. I know that the officials of the Departments of Finance and National Revenue have been making a study of pension plans, in so far as the Income Tax Act is concerned, for about 18 months. Both employers and unions have made representations to the ministers and to officials. But, in my opinion and in the opinion of the members of this group, under present conditions this is a totally inadequate approach to this important and growing problem.
We believe that, in view of the public investment in industrial pension plans, it is the responsibility of the government to recognize the fact that the time is ripe for the development of a national industrial pension policy and plan so that in the future it will be part of our whole, shall we say, pension scheme structure in this country.
I am just going to make one brief suggestion before concluding. Because of the present conditions and our understanding of them, we suggest that a special parliamentary committee should be established at the next session to study this question, to hear evidence from employers and employees' representatives and others concerned, and to make recommendations for the bringing into effect of a national industrial pension scheme that will provide the security that the workers of this country are entitled to in this era of expanding production and increasing wealth.
I have hurried through what I have to say as quickly as possible in order to detain the house no longer than is necessary, but this is a much larger problem than rendering a verdict on a book of rules published by the Department of National Revenue. I think we have to face this thing. I am sure that if the government were able to get the employers and the unions of this country to get together and make recommendations that would make it possible for this house to establish a national industrial pension plan, it would not only benefit the employees concerned but would benefit the people as a whole, because we would then have a rationalized and established system of retirement allowances that would place on individuals some responsibility for looking after their future.


Mr. Cavers:: I should like to support the proposition put forward by the hon. member for Welland earlier in this debate. In our district in recent years, pension plans of this kind have been most popular where employees and employers have, to the benefit of both entered into pension plans. Within the past month or six weeks, I have had two cases brought to my attention; one where an employee was obliged to leave his employment because of illness, as suggested by the hon. member for Welland. The employee had built up a considerable equity in his plan. It was necessary for him to waive payment of the whole of the equity that had been contributed to this plan. Then in another instance an employee had felt that he might benefit to some extent by leaving the employment of his former firm and taking a position with another establishment. In that instance he informed me that after 20 years' employment with the original firm he was obliged to forgo payment of the equity which he had built up.
I urge the minister to work out some better system of proportionate vesting of the equities of these employees. I am sure it would be very helpful to the employees and that it would meet with the approval of the unions and various industries in which these pension plans are popular. I know it would do a great deal not only to provide for a more steady employment among the employees, but the employees would feel that when they become associated with a firm they are not necessarily obliged to stay with that firm during the continuation of the plan. It would do a great deal to assist in industrial husbandry throughout the country.


Mr. Sinclair:: I rise to speak very briefly on this issue, one reason being because of the reference made to me by the hon. member for Kootenay West, in which he referred to my interest in this matter as Minister of Fisheries. It is not as Minister of Fisheries but rather as a minister representing British Columbia and, even more important, perhaps, as the member for Coast-Capilano.


Herbert Wilfred Herridge: I should have pointed that out.


James Sinclair: I have been interested because my riding has one of the large mines of the nation, Britannia mines, in which before the war I worked as an employee. As a minister, of course, I made my representations on this matter privately to the Minister of Finance. However, I am rising to speak on behalf of my friend and colleague, the hon. member for Kootenay East, to whom the member for Kootenay West has very generously referred. I think members will agree that there have been few more diligent and attentive members in discussions this
Income Tax Act
session than the hon. member for Kootenay East, who has been here from the beginning of the session long ago in January. Unfortunately, for a day or two he has been back in British Columbia because of family responsibilities, but as a miner himself and as one time president of the International Union of Mine, Mill and Smelter Workers in the great mine of Kimberley, I cannot think of any issue which he has pressed more consistently and more vigorously with the Minister of Finance, and myself as minister for British Columbia, than this issue.
I am sure that the minister wants to be reminded of that fact and the responsibility he has about this apparent inconsistency between this book of instructions which the member has mentioned and the law as it stands. I should just like to remind the house, since the member is not here, that this has been one of the issues he has stressed very vigorously because his feelings in this matter are like those of the hon. member for Kootenay West.


Donald Methuen Fleming: I should like to ask whether the minister will give us the information he was asked to give us earlier.


Walter Edward Harris: We might as well dispose of both points on paragraph one. The first is with respect to the deduction for income tax purposes of moneys that may be paid by the self-employed by way of annuities and the like. As the hon. members for Eglinton and St. Paul's said, not only in this debate but in the one a year ago, this is a problem which is becoming more acute, and was becoming a year ago more acute, both in the United States and in the United Kingdom, and is a matter of great study in Canada. In the meantime, as the hon. members have said, the chancellor of the exchequer in the United Kingdom has introduced a bill providing for certain deductions by the self-employed where they invest money in annuities under certain circumstances; within certain limits they may then deduct the money for income tax purposes. My understanding is that a somewhat similar plan, though different in many details, is being considered by congress.
In my case, I said a year ago it would be my intention to study not only the representations made but also the plans that might be worked out by the two other governments. I have been doing that, but unfortunately I am not yet in a position to suggest to my colleagues, and consequently to parliament, any change in the law, at least at this session.
The problem is one not only of income but, of course, of trying to balance the benefits that would accrue to the self-employed from the deduction with the benefits which

Income Tax Act
are granted to the other group of people. In so far as the revenue is concerned, I have been told that even those who advocate the plan cannot think of one which they would regard as reasonably adequate, that would not cost the treasury of Canada at the present rates something of the order of $60 million. Other plans are more expensive than that. However, I assure my hon. friend that the study we have been making will be continued in the hope that we may find it possible to consider favourably some of the suggestions that have been made.
With respect to the arguments that have been advanced by the hon. member for Welland, the hon. member for Kootenay West, the hon. member for Lincoln, and also the arguments so generously put forward by the hon. member for Kootenay West on behalf of his colleague from Kootenay East, may I say that I do not think there has been a real misunderstanding about the booklet issued by the Department of National Revenue. At the time the booklet was issued it was a booklet designed to cover by regulations the practice up to that time and to project for the future the regulations covering the practice of deductions by employers and employees for pension funds.
As the hon. member for Kootenay West has said, the income tax provisions have been generous-I think that is the word-so that employers could set aside money for pension plans not only for the welfare of the company in its relations with the employees but also for the welfare of the employees themselves, and since pension plans have grown in popularity and as part of the requirements of modern day union bargaining it would only be proper that the government should recognize that in its tax laws. Perhaps the committee would be interested to know that in the last taxation year for which we have figures over $120 million was set aside by employers for pension purposes and was for that reason an expense of business and not subject to taxation. At the same time individuals set aside about $135 million in the same manner. This indicates that something over a quarter of a billion dollars is being saved for the purpose of retirement and the like in industry today, a remarkable achievement and one which I think will be of great benefit to the economy from time to time. Therefore the government is bound to look upon these plans not only with interest but with encouragement.
In so far as the particular matter is concerned, I think we might just say that both from the standpoint of the employer and the employee there is a desire to have a pension plan that would be within the purview
CMr. Harris.]
of the Income Tax Act, that would be of benefit to the employee as well as the employer, and that as a government we should not take any action which would prevent the normal growth of understanding between the two in the working out of pension plans which are of great variety and differ from industry to industry and within an industry. Therefore I think it would be unwise for us to lay down too rigid rules which might not be such as could be conformed to by either a union or an employer if they felt that some other form of pension plan would be more desirable.
I do, however, admit that the question of vesting of a pension is one in which I think most employees would feel they had a particular interest and, as my hon. friend has said, we have been studying this for quite some months. We have not been able to suggest anything more with respect to the pension legislation generally than what I have suggested here for the moment, but I do assure my hon. friends that we are looking forward to a general revision of the Income Tax Act in due course, and whether or not that is within the next two years we will continue to study the pension side of the act, particularly having in mind the booklet and having in mind the desire that we have to encourage employers and employees to get together on a pension plan for the benefit of the employees and the employer.


Ellen Louks Fairclough: I wonder whether the minister would say how they arrived at the figure of $60 million. Would that be on the assumption that every self-employed person who is a taxpayer now would take full advantage of the $1,500 exemption?


Walter Edward Harris: I have not carried the details in mind but I think it is assuming that the tax law is made available to every selfemployed person and that something like about two-thirds of them take advantage of it to about the maximum.


William Alfred Robinson: I take it that subparagraphs 1 and 2 are completed. Subparagraph 3? Subparagraph 4?


Walter Edward Harris: I have an amendment to be moved to subparagraph 4.


James Joseph McCann: I move:
That Bill 418, an act to amend the Income Tax Act, be amended by deleting the words "in Canada" where they appear in line 45 on page 2 thereof.


Ellen Louks Fairclough: May I just say that this is an amendment of which we heartily approve. As a matter of fact, we already had an amendment prepared along the same line, and we are very pleased that the minister has stolen a march on us and presented

it first because we know that when he presents an amendment it has a much better chance of being accepted. We agree wholeheartedly with this suggestion.


[Stage Direction]
Amendment agreed to.
William Alfred Robinson: Does that complete the discussion on subparagraph 4?


Frederick Samuel Zaplitny: This deals with deductions allowed to persons who attend conventions and I am wondering how universal the words "business or profession" are. For example, do they include farmers who belong to a farm organization?


Walter Edward Harris: At the resolution stage I answered that question by saying yes.


William Alfred Robinson: Then I take it subparagraph 4 is completed. Subparagraph 5?


Walter Edward Harris: I have an amendment to be moved to subparagraph 5 and it is a rather lengthy one.


James Joseph McCann: I move:
That Bill 418, an act to amend the Income Tax Act, be amended by deleting lines 4 to 22 on page 3 thereof and substituting therefor the following: "(q) where a taxpayer is a member of the clergy or of a religious order or a regular minister of a religious denomination, and is in charge of or ministering to a diocese, parish or congregation, or engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination, an amount equal to
(i)	the value of the residence or other living accommodation occupied by him in the course of or by virtue of his office or employment as such member or minister so in charge of or ministering to a diocese, parish or congregation, or so engaged in such administrative service, to the extent that such value is included in computing his income by virtue of section 5, or
(ii)	rent paid by him for a residence or other living accommodation rented and occupied by him, or the fair rental value of a residence or other living accommodation owned and occupied by him, during the year but not, in either case, exceeding his remuneration from his office or employment as described in subparagraph (i);"


Donald Methuen Fleming: Does the minister intend to explain his amendment? Reading it over quickly, I gather the only change he has made is to include ministers and clergy engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination? Is that correct?


Walter Edward Harris: Yes, Mr. Chairman. The intent of the amendment as in the printed bill was extended for the purpose of clarification to a slightly different wording but the effect of the amendment will simply be this. Up until a recent decision by the income tax appeal board it was thought by the government that only those clergymen who were actively engaged as being in charge of a church or 67509-431
Income Tax Act
a parish and conducting services accordingly were entitled to the deduction that has been in the act. However, in the income tax appeal board there was a decision which held that the clergyman who was a professor at a theological university would also be entitled to the deduction and it was not the intention of the government to permit the deduction to extend that far. The present amendment provides that any clergyman, whether he be in fact a pastor in charge of a congregation or a member of the church body in the higher level, if I may put it that way, who engages in church work exclusively including acting as pastor from time to time, would have the benefit of the deduction. On the other hand, it does not extend to the clergyman who is a professor and whose occupation is that of a professor in a college.


Donald Methuen Fleming: Mr. Chairman, I think the amendment that the minister has introduced is an improvement on the clause as printed in the bill in that it includes those who are engaged in administrative duties on behalf of churches, religious orders or religious denominations. They were certainly entitled to consideration and I am glad to find that the amendment extends the consideration to the point of equalizing their position with that of the clergy engaged directly in parish work.
But the minister has pointed out that the benefits that are extended by this section to clergy in general are denied to clergy who are engaged in teaching in theological colleges. The fact that the minister has seen fit to introduce an amendment which will now include those clergy who are engaged in administrative duties it seems to me weakens his case for denying similar consideration to clergy engaged on the teaching staffs of theological colleges. Why should they be denied the consideration of this provision when it is extended to clergy in all parochial service or administrative work on behalf of either religious orders or religious denominations?
The appeal that I am making tonight is that the section should be further enlarged so that its benefits may be extended to clergy engaged, as I have indicated, in teaching on the staffs of the theological colleges. This point has already been the subject of representations made to the government. A letter was written to the Prime Minister when the bill was first printed and published. With the permission of the writer I should like to read it now because it states very clearly the case for the clergy engaged on the teaching staffs of the theological colleges.

Income Tax Act
The writer of this letter is the Rev. R. S. K. Seeley, who is the Provost and Vice-Chancellor of Trinity College, Toronto. His letter to the Prime Minister is dated June 19, 1956 and it reads as follows:
Dear Mr. Prime Minister:
It has been brought to my attention that legislation is being introduced to reverse the decision of the Department of National Revenue that professors of theological colleges have the same status as the parochial clergy in that they are entitled to exemption from income tax on the rent which they pay for their houses and living accommodation.
As president of the conference of heads of Anglican theological colleges in Canada, I respectfully request that this legislation be not introduced, since it would bring about an injustice to a group of people, small in numbers but of great importance to the community.
Theological professors are in a peculiar position among the clergy. While they in general receive a slightly higher cash salary than most of the parochial clergy, they do not receive free living accommodation nor do they receive the revenue from fees and Christmas offerings which almost all parochial clergy enjoy. Their actual or real salary, therefore, is usually lower than what they would be receiving in parochial work. They have far heavier expenses in the purchase of books, and recent legislation has removed the privilege of obtaining income tax exemption through the contractual expenditure plan. Moreover, they are frequently engaged in work of a parochial nature for which they seldom receive remuneration or travelling expenses. It is also true to say that their houses and quarters are in frequent use for pastoral care of the students whom they teach.
I am sure you must also be aware that the proposed legislation would engender disharmony among the churches, since it would discriminate against those churches which permit the marriage of the clergy.
While I am writing primarily as the representative of the Anglican theological colleges, I know that I can say that such legislation will be looked upon with great disfavour by the Anglican house of bishops and by the authorities of other denominations.
I am convinced that the government of Canada regards the clergy as a body of men who, in the discharge of their vocation, contribute inestimably to the well-being of our country and, since their financial rewards are so scanty, they are deserving of such consideration in the tax field as can be given to them. I know also that you personally and your government are concerned about the plight of our institutions of higher education. Among such institutions our theological colleges can least afford to pay adequate salaries. Such small relief, therefore, as the present exemption provides means a very great deal to those who are responsible for the spiritual leaders of the future.
I am confident that, when these facts are considered, the government will deem it wise to suppress the proposed legislation in the interests of the public good, and I respectfully request that careful consideration be given to this matter and to the distress which such legislation would bring.
I remain.
Yours sincerely,
R. S. K. Seeley,
Provost.
Mr. Chairman, it seems to me that that is a fair and comprehensive presentation of the case of the clergy engaged on the teaching

staffs of the theological colleges of this country for the same kind of consideration as this bill has proposed to give to the parochial clergy and as the minister's amendment proposes to enlarge so that clergy engaged on the administrative staffs of religious orders or religious denominations may also enjoy it.
The enlargement I propose would not cost the treasury of this country very much. Unless some provision of the kind I have suggested is made, I think we are going to be legislating to create a discrimination. I do not believe that is the wish of members of this house. The importance of the clergy engaged on the teaching staffs of the theological colleges I am sure is not underestimated by any hon. member in this house. I make this plea in all earnestness now for that group of men who, if they are not included in the benefits of the section, I think will be entitled to feel that they have been discriminated against.


Mr. Michener:: I should like to endorse what has been said by the hon. member for Eglinton. The amendment appears to have been the result of a decision within the department which was perhaps not in accordance with the government's view of the meaning of the section. For that reason and for the reasons which have been advanced, it seems to me that there is no sound distinction between a man engaged entirely in related work in an administrative capacity and one who is teaching theology exclusively. If the minister would accept that viewpoint and add to his proposed amendment the words "in teaching theology" so that the amendment would read as follows:
... or engaged exclusively in teaching theology or in full-time administrative service by appointment . . .
and so on, it would cover the point which we wish to make. It seems to me to be a matter of simple justice to a small number of men who are equally devoted in a fulltime capacity to the same causes which occupy the time of those who are parochial or administrative officers in the churches. I would urge the minister, even at this point, to reconsider the amendment which he has made. It does not affect many people, but it is an important matter for those it does affect in the everyday considerations of their inadequate financial remunerations in that high calling.


Walter Edward Harris: Mr. Chairman, I think if I was to judge the Income Tax Act solely on my own sentiment I would be obliged to accept the arguments that have been advanced. But when my hon. friend says there is no sound

reason for the distinction between a clergyman who is in charge of a church and one who is in the administrative activities of the church, he may also agree with me there would be no sound distinction to be drawn between a professor in a theological college and a professor in any other college-


Donald Methuen Fleming: Would the minister permit a question? Is there not a difference in the salary scales?


Walter Edward Harris: I am afraid I cannot take into account the difference in salaries.


Daniel Roland Michener: Is there not a very distinct difference in the ordination of one?


Walter Edward Harris: I was just going on to state that I think now clergymen ought to be exempt from income tax to the extent of a certain benefit for lodging and the like-


Daniel Roland Michener: That is the basis of this section.


Walter Edward Harris: No, this relates to a number of the clergy, not to the whole clergy. My hon. friend is arguing that because a man is a clergyman and engaged in teaching in a college he ought to have a certain exemption. May I point out to the committee that if there had been any virtue in the exemption that was granted originally, there may be something to be said for the fact we have departed from that in admitting to the exemption certain members of the clergy who are not actively engaged in pastoral work. But we have not done this without consulting the persons who are interested in this. There is a committee known as the inter-church legal committee who have been consulted not only in the past but at the present time on the amendment, and that committee has recommended the amendment that I have moved to the bill.
So, while I accept the responsibility for excluding those members of the clergy who are in the teaching profession in theological colleges, I may also add that the interchurch legal committee has wired me to say that they would prefer to have the amendment in the words that I moved.


Donald Methuen Fleming: The minister asks about the difference between clergymen engaged in teaching in the theological colleges and persons engaged in teaching in the non-theological colleges. I think he has overlooked the fact that all of the clergy on the staffs of the theological colleges are expected to go out and take preaching duties, relieving duties, A7J509-431J
Income Tax Act
for the benefit of the parish clergy; that is expected of them. They are out doing that kind of work all the time. I am sure there is no professor on the staff of a college who is not taking teaching duties on Sunday and relieving the burden of the clergy in all the manifold situations that arise in the ordinary course of parish duties. That was one of the considerations that was pointed out in the letter from Provost Seeley.
It does seem a very hard line to draw between the man who is lecturing to theological students for five days a week and then is going out and preaching on Sundays, and say he shall not have the benefit of this clause, whereas the man who is engaged in parish duties during the week and preaching on Sunday is entitled to the benefit of it.
I would urge the minister to give further consideration to this before we come back to it again. It is not a concession that is going to be costly. The minister's argument seems to be that there is going to be some discrimination created by the kind of amendment I have suggested.


Walter Edward Harris: All I was saying was that I would have great difficulty in refusing a similar exemption to all professors at colleges.


Donald Methuen Fleming: Well, Mr. Chairman, the Income Tax Act has recognized the position of the clergy in this clause. Hon. members will recall that this was introduced a few years ago and there was much discussion about it. The introduction of this provision followed discussions over several sessions on this subject. The policy has been adopted by the house of giving a special form of consideration to the clergy because of the nature of their work.
Now, that principle having been recognized in the act, and now the matter coming to us on a question raised by the income tax appeal board, and the minister having seen fit to introduce a bill reasserting the position of the parish clergy and making sure that same provision is to be extended now to clergy engaged in administrative duties on behalf of their religious order or denomination, then surely it is not the creation of a new principle that the consideration should be extended as well to the clergy engaged on the theological college staffs.
As for the difficulty the minister foresees of denying similar consideration to professors engaged on the teaching staffs of other colleges, all I have to say is that this consideration is created for the benefit of ordained clergy and for them alone.

The Royal Assent



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy of the Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate chamber.
And being returned:
Mr. Speaker informed the house that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bills:
An act to amend the Foreign Insurance Companies Act.
An act to amend the Canadian and British Insurance Companies Act.
An act to amend the National Parks Act respecting the boundaries of Cape Breton Highlands
national park.
An act to authorize the Minister of Finance to make payments to the governments of the provinces and to authorize the government of Canada to enter into fiscal agreements with the governments of the provinces.
An act for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1957.

[Stage Direction]
The house resumed consideration in committee of Bill No. 418, to amend the Income Tax Act-Mr. Harris-Mr. Robinson (Simcoe East) in the chair.
Progress reported.

Walter Edward Harris: Tomorrow we shall take the estimates of external affairs, northern affairs, agriculture and transport.


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