1956-05-01

MANITOBA


[Stage Direction]
On the orders of the day:
High! Hon. L. S. St. Laurent (Prime Minister): Mr. Speaker, yesterday the hon. member for Peterborough (Mr. Fraser) asked what had happened to the surplus money which had been collected for relief purposes following the heavy floods in Manitoba in 1950. We all, of course, recall that a corporation had been set up by our parliament in 1953. The hon. member also wanted to know if this surplus could be used for relief purposes at this time.
In 1953, when the Canadian Disaster Relief Fund Corporation was set up by act of parliament, the surplus amounted to approximately a little less than $1| million. The legislation setting up the fund expressly provided that:
The corporation may make payments out of the fund for the purpose of meeting emergencies and needs arising in Canada from flood, fire, tempest, earthquake, pestilence or other disaster, mitigating loss and suffering caused thereby assisting in repairing damages resulting therefrom, and rehabilitating persons who have suffered injury or loss by reason thereof, when in the opinion of the corporation the implementing of such purposes is beyond the reasonable capacity of the area affected.
As of December 31, 1955, the balance of the fund was $1,337,310.83.

[Stage Direction]
On the orders of the day:
Hon. Hugues Lapointe (Minister of Veterans Affairs):: On Friday last the hon. member for Royal asked me certain questions concerning promotions and seniority in the protective staff of the House of Commons. I have ascertained since through inquiries I made that the information I gave the house at that time was correct.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. E. D. Fulton (Kamloops):: May I ask
the Minister of Citizenship and Immigration whether the department has concluded its
consideration of the situation which arose as a result of the decision of the Supreme Court of Canada in the Brent case? If so, is the minister in a position to say whether any legislative changes will be introduced or whether it will be confined to administrative changes?


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: The department is still giving consideration to the effect of the decision of the supreme court in the Brent case on the state of the law. As soon as any conclusion is reached that may be embodied in any regulations, a copy of the regulations will be tabled immediately.



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Mrs. Ellen L. Fairclough (Hamilton West):: I should like to address a question to the Minister of Defence Production. In view of the article which appeared in the current issue of the Financial Post with reference to guided missile contracts, can the minister make any statement to this house with reference to any decision, if one has been reached, or give any other information concerning the electronics contract in connection with this missile?


Right Hon. C. D. Howe (Minister of Defence Production):: Mr. Speaker, no Anal decision has been reached by the defence department as yet as to the particular guided missile that will be manufactured. Certain exploratory efforts have been undertaken in connection with two different missiles, but no decision can be made about any component of either missile until a final decision is received from the Department of National Defence.


Ellen Louks Fairclough: Can the minister give the assurance that no commitment has been made to the Bendix-Eclipse Company?


Clarence Decatur Howe: I should like to correct a suggestion contained in the Financial Post article that I was pressing for a contract with the Bendix company. The opposite is the case. It happens that the Bendix company is the developing contractor for a particular electronics component of one particular missile, and my efforts have been directed toward getting a clean right to manufacture
3436	HOUSE OF
Inquiries of the Ministry that particular component in any way that Canada might decide. I am happy to say that has now been arranged.



PIPE LINES


[Stage Direction]
On the orders of the day:
Hon. W. Earl Rowe (Dufferin-Simcoe):: In
view of the fact that the agreement between the government and Trans-Canada Pipe Lines ceased to be effective yesterday, would the Prime Minister tell the house if a new agreement has been made and, if so, what it is?


Right Hon. L. S. St. Laurent (Prime Minister):: There was an agreement extending the date from May 1, 1956, to November 1, 1956, and I understand that was tabled the other day. There has been no other agreement but that one.


Mr. Green:: Is that agreement between the government and Trans-Canada Pipe Lines?


Louis Stephen St-Laurent: Yes, sir.


Mr. J. G. Diefenbaker (Prince Albert):: should like to ask a question supplementary to the one asked by the hon. member for Dufferin-Simcoe. Will the Prime Minister say whether or not there is any basis for the allegation in the press that the government is to advance or lend to Trans-Canada Pipe Lines some $70 million or more; and, second, upon what constitutional basis can such an arrangement be made without legislative authority of parliament?


Louis Stephen St-Laurent: No such arrangement could be made without legislative authority of parliament, and when there is anything of substance it will be communicated to parliament instead of parliament being apprized of it through the press.


John George Diefenbaker: That is a welcome announcement. May I ask the Prime Minister this. Is there any foundation for the statement which emanated from an authority in the government, according to the Canadian Press?


Louis Stephen St-Laurent: Mr. Speaker, the government will welcome as much as the hon. gentleman or any member of parliament the freedom to make its own announcements to parliament instead of having them made in that speculative way.


William Earl Rowe: This is a supplementary question. The report in the paper is not true, or is it?


Louis Stephen St-Laurent: I am not
going to say anything one way or the other to encourage such speculation in the newspapers.


John George Diefenbaker: That is the usual report t.o parliament.


Mr. Knowles:: Mr. Speaker, may I ask a supplementary question. If the government is going as far as is suggested in the Canadian Press dispatch, why not go a step farther and build the line under public ownership?


Louis Stephen St-Laurent: These hypothetical questions are based on newspaper speculation. When there is anything firmer for them to be based upon, answers will be given to the questions asked in parliament.


Howard Charles Green: Mr. Speaker-


Mr. Speaker:: Order. May I intervene at this moment just to say that we have had about four questions on this newspaper report, and there are 264 members besides myself.


Howard Charles Green: Your Honour, my question has nothing to do with the newspaper report. Arising out of the first answer the Prime Minister gave concerning an agreement extending the time, may I ask whether there has been any agreement between the dominion government and the government of Ontario with regard to that extension or, if no agreement, has there been any undertaking given between the two governments?


Louis Stephen St-Laurent: Mr. Speaker, I have had no communication with any of the members of the Ontario government, but I have been informed that there have been communications between the Minister of Trade and Commerce and members of the Ontario government.


Edmund Davie Fulton: To what effect?


Howard Charles Green: Has the Ontario government also granted an extension?


Louis Stephen St-Laurent: Mr. Speaker, I would not like to make commitments in the House of Commons as to the future conduct of the government of Ontario,


Howard Charles Green: I asked the Prime Minister whether there had been any agreement reached or any undertaking given; not what was to be done in the future but whether or not it has already been done?


Mr. St. Laurenl (Quebec Easf):: I told the hon. gentleman that I have had no communication from any member of the Ontario government.


Howard Charles Green: The Prime Minister said the Minister of Trade and Commerce had had communication. Perhaps the minister can answer the question?


Clarence Decatur Howe: Mr. Speaker, I discussed the matter with both Mr. Frost and Mr. Porter. Mr. Porter made a public statement which was quoted over the radio this morning and which I took to be his view. My view is that when we have something definite to suggest to the province of Ontario we will write to them. That has been agreed. They will reply and as soon as the reply is received the correspondence will be tabled here in the House of Commons.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Roland Michener (St. Paul's):: Mr. Speaker, may I direct a question to the Minister of National Defence. Is it correct that tenders have been called for a 20-year bonded roof for the university armouries in Toronto and, if so, does that mean the government has put aside any consideration of the possible sale of that property to the city or the metropolitan municipality?


Hon. R. O. Campney (Minister of National Defence):: Mr. Speaker, I am very glad to have an opportunity to answer this question, the substance of which I noticed was the subject of some misrepresentation editorially in one of the Toronto newspapers.
The facts are that negotiations are still in progress with respect to the possibility of the armoury site being acquired by the metropolitan commission. The fact also is that for a number of years past we have been repairing each year a portion of the roof of the armouries, because we must keep the building watertight. The contract called for this year covers the last part of this rejuvenation. Incidentally, it is a small contract.
If our negotiations with the metropolitan commission lead to a deal being made with regard to the site it will still be necessary for us to retain the armouries for probably two years until we get other facilities, so I can assure the house that the money that will be spent to complete this roofing job will be spent in accordance with the needs of the situation.



PRIVILEGE


Stanley Howard Knowles: Mr. Speaker, this is either a request for a correction in Hansard or a question of
Inquiries of the Ministry privilege. On page 3406 of yesterday's Hansard, at the foot of column 2, the Minister of Finance (Mr. Harris) is quoted as saying:
For that reason I feel as firmly as the hon. member for Winnipeg North Centre (Mr. Knowles) does that this government ought to remain in office-


Some hon. Members:: Hear, hear.


Stanley Howard Knowles: -and for that reason I am going to vote against the amendment.
Mr. Speaker, I had said, "Hear, hear" to the minister's previous sentence, but that "hear, hear" is not included in the Hansard record. I can say to the Minister of Finance that if he is only as firm as I am in the opinion that the present government should remain in office, he had better get out of the Liberal party.


Hon. W. E. Harris (Minister of Finance):: On the question of privilege, Mr. Speaker, I did make a statement, that was not read, to the effect that this was a want of confidence motion and would mean the downfall of the government, at which time I heard a "hear, hear" from the hon. member and I drew the proper conclusion myself.


Stanley Howard Knowles: Wrong again.



DOMINION-PROVINCIAL RELATIONS AGRICULTURE  REPRESENTATION AT RECENT MARKETING CONFERENCE '

[Stage Direction]
On the orders of the day:
Right Hon. J. G. Gardiner (Minister of Agriculture):: Mr. Speaker, the hon. member for Brandon-Souris (Mr. Dinsdale) asked me a question yesterday which I took as notice and to which I now wish to give the answer. This is the question, Mr. Speaker:
Can the minister give the names of the representatives of the farm organizations who took part in the agricultural marketing conference held in Ottawa on April 16, 17 and 18 and as referred to on page 2774 of Hansard of April 10, 1956?
I have the names of the members of that group, but I would like to make a correction in the question. The meeting was not a marketing conference meeting. The meeting on those three dates was a meeting of the advisory committee. The marketing conference met the following day, April 19. This committee is advisory to the minister and the agricultural prices support board. The chairman of the committee is Mr. H. H. Han-nam, president of the Canadian Federation of Agriculture. In addition to Mr. Hannam there are as members the deputy ministers of agriculture of the ten provinces. I think all of them were present.

Inquiries of the Ministry
In addition to Mr. Hannam there are representatives of farm organizations who have been recommended by the farm organizations as members of that committee. The recommendation is made to me as minister and they are appointed by order in council. Most of them have been members of the committee for some time, and as one withdraws from the committee a new member is appointed in his place.
The first member of that group is Erie Kitchen, Ontario, secretary of the Dairy Farmers of Canada. The second member is W. J. Parker, Manitoba, president of the Manitoba wheat pool. Mr. Parker was not present during the three days of this meeting but he is usually present. Then there is Mr. H. B. Crandlemire, the maritimes, New Brunswick potato growers; Karl Kapler, Alberta, farmers' union of Alberta; R. B. Warnica, Ontario, Ontario beef cattle producers' association; George Wright, Saskatchewan, Saskatchewan federation of agriculture. Mr. Wright was not present this year. At the time he was recommended the farmers' union operated as a member of the Saskatchewan federation of agriculture and he was satisfactory to and recommended by both organizations as their representative on the committee. Then there is J. B. Le-moine, Quebec, Catholic farmers' union, and V. E. Ellison, British Columbia, British Columbia federation of agriculture.
That makes a committee of 19 members which we think is representative of the farm organizations right across Canada, even if there is not a representative on the committee from each of the many farm organizations. As a rule there are two or three recommended by the different organizations and the selections were made to cover as nearly as possible the livestock, agricultural, dairying and fruit growers' organizations.



FINANCE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I would like to direct a question to the Minister of Finance, and ask him whether or not the recent increase directed by the Bank of Canada to the chartered banks, a one-half per cent increase in interest, will apply to loans already made in connection with guaranteed loans on farm-stored wheat?


Walter Edward Harris: I think, Mr. Speaker, my hon. friend misapprehends the situation. The only change

in the interest rate the Bank of Canada has effected lately has been an increase in the discount rate to their banks, the banks that do business with them. It had nothing to do with the interest being charged by the banks to borrowers.


Mr. Lennard:: Oh, yes, it did.


John George Diefenbaker: That is not correct.


Ellen Louks Fairclough: Mr. Speaker, may I address a supplementary question to the Minister of Finance. Does not the minister know that the chartered banks have advised their borrowers of an increase in interest rates?


Walter Edward Harris: Yes, Mr. Speaker. That was
discussed in the house last week.


Edmund Davie Fulton: Mr. Speaker, may I ask a question arising out of the answer given to the hon. member for Prince Albert. Does the minister's answer mean that the discount rate charged by the Bank of Canada has no bearing or influence upon the interest rates charged by the banks to their borrowers?


Walter Edward Harris: I did not make that answer. My answer was that the Bank of Canada increased its rate. I think the question asked of me was what the Bank of Canada had done with respect to certain other rates over which they have no influence, except the results which might occur from an independent decision made by another body.


Edmund Davie Fulton: And were intended to occur.

The house resumed, from Monday, April 30, consideration of the motion of Mr. Harris for committee of supply, and the amendment thereto of Mr. Drew.



TAXATION-REQUEST FOR RELIEF FOR MUNICIPALITIES

Mr. J. C. Van Horne (Resligouche-Madawaska):: Mr. Speaker, I am indeed pleased to have the opportunity to speak on this occasion in support of my leader's amendment demanding financial assistance for our municipalities. As this government pursues its wayward and merry and sinister course of greater and greater centralization of power, our municipalities have become more and more forgotten governing bodies in Canada. Yet their historic and traditional functions, honoured over the years, are well defined and have been well established in the history of this country. The duties of our municipal governing bodies increase from year to year,

but as these duties increase steadily and continually, bringing in their train ever-increasing financial burdens, the necessary finances to meet these burdens become harder and harder to obtain.
It is apparent lor all to see, and we all know, that our municipal bodies-our counties, our cities, our towns, our villages, our local improvement districts, our school commissions-fulfil functions and duties of government which at the local level overshadow in importance many of the needs of those foreign nations which Canada has been anxious to gratify. In saying this I hasten to add, lest my Liberal friendly enemies on the other side of the hall should twist and turn my remarks, that I am in favour of proper foreign aid commensurate with Canada's responsibilities as a nation of the free world; but I believe the horse should go before the cart, and that charity begins at home, in one's own kitchen.
Our municipalities care for fundamental and basic needs; education, police, water, streets, sewerage, electric power, recreation, slum clearance and charity-a very important function of municipal governments today-to mention only a few. To my mind these needs and these functions must be fulfilled and met first, not last. These are basic, primary, fundamental needs which to an ever-increasing degree, the federal government is denying to our people because of its policy of refusing to assist adequately our municipal bodies.
I was astonished to note the figures tabled in the house recently by the Secretary of State for External Affairs regarding financial assistance for various projects which this government is giving outright to foreign countries; while it is in the same breath denying the very same kind of projects to our own people in New Brunswick, for instance; and to the people who live within the confines of our municipal governments. In the past very few years, Canada has given or lent- mostly given-$4,044,200,000 to foreign countries. Of this amount reconstruction loans totalled $1,767,200,000, and most of these loans are still outstanding. Military relief took up $105,200,000. United Nations agencies received $215,100,000. The Colombo plan got $162,300,000 outright, much of which was for the development of hydroelectric power. And this at a time when Canada's government refused a loan of $46 million to develop hydroelectric power at Beechwood, New Brunswick, a loan which my province would have fully repaid, for our people pay their way, with interest, with certainty and on the due dates. To international organizations
1. 1956	3439
Proposed Tax Relief for Municipalities outside the United Nations went $367,900,000 and to Canada's friends in NATO went $1,417,900,000.


Mr. Nesbitt:: Don't forget the Prince of Liechtenstein.


Ralph Byron Horner: Most of this money was in outright gifts. In the face of these facts, can there be a legitimate excuse by this government for its de facto policy of no help and no assistance to our municipal bodies? I was delighted to hear the Prime Minister the other day agree with me and all the other members on this side of the house in his admission that the government had, in effect, permitted the maritime provinces to become economically speaking and development-wise, the forgotten provinces of Canada.
Mr. Speaker, the government's confession should have included as well its neglect of our municipal bodies. I admire the spirit of contrition on the part of the government in their admission of guilt, for by logical implication the Prime Minister's statement was precisely an admission or confession of guilt for so misgoverning the affairs of this country that our Atlantic provinces flounder in the sea of Liberal indifference and neglect while the government sits, and has been sitting idly by on the fence, twiddling its thumbs.
The Prime Minister now asks for proposals and suggestions. I ask what happened to the proposals we made for Beechwood. I ask what assurance we have that our future proposals will not meet the same sorry fate that has been met by the proposals we have been making to this house and to this government for the past 20 years. Let us not lose sight of the forest for the trees. If the Prime Minister thinks he can sway a few stray votes in the coming election in New Brunswick by suggesting that proposals be made to the government, he and his government are mistaken. Since 1952 New Brunswick and the four Atlantic provinces have been making proposals, demands and suggestions-lifesaving proposals-basically required for the progress of New Brunswick and therefore of Canada as a whole, proposals backed by facts and figures, sound and solid.
What happened? Nothing happened. What happened to the proposals, suggestions and demands on behalf of our municipalities made by the premier of my province at the last interprovincial conference? What happened to the proposal for Beechwood? What happened to the proposal and demand to build the Chignecto canal? What happened to our proposal and demand that you quit killing us in the maritimes with your choking
3440	HOUSE OF
Proposed Tax Relief for Municipalities freight rates? What happened to our proposal and demand for the Campbellton-Cross Point bridge?


Mr. Robichaud:: Where were you last
Friday?


Ralph Byron Horner: What happened to our proposal that you pay the cost of the trans-Canada highway in New Brunswick? I ask this question: Whom is the government trying to fool when it asks for proposals? Since 1952 the government of my province has been making proposals; and scarcely a month goes by but that a proposal is made. But every time a proposal is made it meets the same sorry fate of indifference and neglect. Never have so many proposals been turned down so consistently by the same tired crew that runs this country.
I mention these facts to provide a background for my proposals in connection with financial assistance to our municipalities. Let no one ever try to tell this house that this government did not receive our proposals and suggestions. The government should tell the truth and say that it has been, is and will continue to be too lazy to put our proposals and suggestions into operation and to grant our legitimate rights and requests.
At the time of confederation the sources of taxation were limited almost entirely to taxes on real property. The municipalities obtained their fair share for the functions they had to accomplish and perform at that time. But today, nearly a century later, the real sources of taxation have been gathered unto the federal government, which has not given to the municipalities their fair share commensurate with their duties.
Municipalities are prevented, prohibited and stopped from fulfilling their functions and duties. Let me give you an example. Three hospitals in my riding of Restigouche-Madawaska are unable to collect 40 per cent of their accounts receivable. Forty per cent of all hospital accounts in my riding come from charity cases, and the legal responsibility for these bills must fall on the municipality. They readily admit and are willing to accept their legal responsibility, but in Restigouche county alone it would require the entire annual budget to take care of the charity cases connected with our hospital. Our municipalities simply cannot pay for these cases. So what happens? Our hospitals are faced with the problem and are obliged to shoulder the crushing burden of subsidizing the municipalities by hundreds of thousands of dollars per year, precisely because the federal government will not give adequate assistance to the municipalities.
Another proposal voiced from every corner of this house is that federal property located
fMr. Van Horne.]

in the municipalities-the counties, cities, towns, villages, local improvement districts or, where these do not exist, within the borders of school districts-should be assessed and taxed. In the city of Edmundston and the town of Campbellton the tax rate and the tax burden are to a large extent determined and necessitated by the services required because of government property located within those two localities. In Campbellton the Canadian National Railways makes up a full third of the total valuation of the town, but not a cent in taxes is received to compensate for the services that are required because of this federal government property. Yet the services must be provided, including streets, police, water, sewers and education. Who pays? It is the hard-working small property owner who pays. Thus we are obliged to pay $700 in annual town taxes for an ordinary new house. Let the government property in the municipalities be taxed, and let the government pay its share.
Another proposal is this. Let this government make loans available to all municipalities at low interest rates. Interest rates in every municipality in the Atlantic provinces are high and represent an enormous factor in the taxes which property owners must pay. It is always the struggling property owner who gets it in the neck when it comes to municipal taxes. Let these loans be made available by adopting standard minimum requirements and by making them available for specific purposes in all municipalities.
Another proposal is to exempt municipalities from federal taxation. It is contrary to all the rules of law for any kind of government to be taxed. Remove this burden from our municipalities, and that alone would ease their difficulties and allow them to purchase their machinery and equipment without sales tax or other taxes.
Another proposal is to set up a system of effective grants for our municipalities. We merely demand that whatever, in the opinion of our municipalities, is materially desirable and possible should be made financially possible by the federal government so that the needs of our municipal bodies at all levels may be met. It is the sacred responsibility of the federal government to take the necessary steps to attain these ends. Good government is nothing more than the means to an end, and that end is fulfilling the needs and wants of our people. Today the means must be provided our municipal bodies to permit them to fulfil the functions which have been bestowed upon them by law and tradition over the years.
,| My counties of Madawaska and Restigouche
'represent, a large section of the total area of



New Brunswick. At the moment in New Brunswick we have 6,000 people who should be getting invalids' pensions, yet only about 600 have succeeded in qualifying for them. This results from the fact that the government's definition of "invalid" is a person who is so close to death he cannot move. In our municipalities we have seen cases in which people with both legs off at the hips or with both arms severed have been unable to get an invalid's pension because they could still talk or because they could still see. I ask you, what do you want in order to qualify for invalid's pension? What happens is this. These people who cannot qualify for invalids' pension have to rely upon the municipalities for aid. The municipalities simply do not have the means to provide that aid. Here again we have an example of the federal government coming in, appropriating the credit for establishing invalids' pensions, yet doing almost nothing except creating chaos within the confines of our municipalities.


Mr. Martin:: Why not talk about something you know something about?


Ralph Byron Horner: This two-bit publicity seeker, the Minister of National Health and Welfare (Mr. Martin)-


Some hon. Members:: Hear, hear.


Ralph Byron Horner: -would do well to wipe this chipmunk smile from his photoflash-tanned face and sit down rather than talk about invalids' pensions. Look at the poor people in my riding who have to depend upon the municipalities, without any help at all from the federal government.
I should like to speak for a moment about schools. Don't let the Minister of National Health and Welfare tell us we do not know anything about invalids' pensions. If he only took the time to come down to my riding and look at some of the cases his regulations have forced officials to turn down; he would change his tune and his ideas.


Paul Joseph James Martin: May I ask my hon. friend a question? Is he not aware that the disabilities pension act is administered in every province by the provincial government in respect of regulations drawn up by all the provincial governments as well as the federal government? Has my hon. friend addressed himself in the same respectful way to the government of the province of New Brunswick?


Ralph Byron Horner: Mr. Speaker, yes, I have; and the answer I was given was that the Minister of National Health and Welfare held the whip and the provinces had to agree.


Mr. Pearkes:: Not another speech.
1, 1956	3441
Proposed Tax Relief for Municipalities


Some hon. Members:: Sit down.


Paul Joseph James Martin: May I ask the hon. member who in the government of New Brunswick gave him that information, so I can check on its accuracy?


Mr. Nowlan:: A confidential communication and not for publication.


Ralph Byron Horner: I shall be very happy to do so. 1 should like to deal with schools for a few moments. We have been approached time and again by people from other provinces who point to the inability of our municipalities, and especially our school commissions, to deal adequately with the problem of education. What happens throughout the whole province of New Brunswick is this. We maintain an excellent system of education, but the minute our people are educated they are forced to leave our province to find a living elsewhere. The burden of education becomes heavier and heavier upon those who are left. Our municipalities have received the utmost in help from the governments both Liberal and Conservative, in the four Atlantic provinces to assist them in maintaining high standards of education and excellent buildings. However, the problem is beyond the capabilities of the municipalities even with the help they are receiving from the provinces. Tremendous strides have been made in the past few years in New Brunswick in connection with education, but the work that remains to be done falls, to a large extent, upon the shoulders of the municipalities who are unable to pay their share.
Let us remember that when it comes to poverty, disease, unemployment, those conditions do not ask to what party you belong before they strike. I can assure you that we in New Brunswick have known nothing but a state of full depression or semi-depression. Our municipalities have to bear the cost of unemployment as the result of a silly regulation in our unemployment insurance system by which people who have been out of work during the winter months are unable to obtain benefits. The Minister of Labour knows quite well that the last changes in the law worked to the detriment of the worker. Before the change a man could work 180 days in two years to qualify, and if he had days left over from the previous year he would be entitled to those days.


Mr. Gregg:: Mr. Speaker-


Ralph Byron Horner: Under the new regulations he can-


Milton Fowler Gregg: May I interrupt my hon. friend? He called me as a witness in the course of his speech, and I just had to bear witness

Proposed Tax Relief for Municipalities to this. It is completely untrue that all sections of New Brunswick could be classified as depressed areas or as having depressed centres. I should like also to point out to my hon. friend that during the depression of the thirties the provincial government of New Brunswick did not, as did so many provinces, have to issue relief moneys to those who lived therein.


Ralph Byron Horner: Don't forget that in the 1930's we had a good Conservative government. Quite apart from these jokes we make with each other, the Minister of Labour knows, I know, and we all know that there was real hardship in the 1930's in New Brunswick as in every other province in Canada.


Milton Fowler Gregg: I agree.


Ralph Byron Horner: There was no area where prosperity ran. There is more poverty today in northern New Brunswick than in any other part of Canada, and these facts can be well-established.


Hédard-J. Robichaud: Flemming would not say that. Point that out to Flemming.


Ralph Byron Horner: This puffed-up member for Gloucester can interject a few things in anybody else's speech, sit back there and laugh and ape. He should recognize that his duty here is to bring about better conditions for the people he is paid to represent.


Hédard-J. Robichaud: That is what this government is doing.


Ralph Byron Horner: When I think of the sabotage efforts the hon. member for Gloucester is carrying on because the people of his county are trying to get a bridge across to Shippi-gan island I feel sorry for the poor people of Gloucester county who are saddled with such an utterly worthless gentleman.


Mr. Speaker:: Order. The hon. member for Restigouche-Madawaska will have to revise his sentence.


Ralph Byron Horner: It is not completed.


Mr. Speaker:: The words that have been used are quite complete. Perhaps he could eliminate that sentence or revise it.


Ralph Byron Horner: I am very glad to withdraw it; everyone knows it is true.


Hédard-J. Robichaud: On a question of privilege, Mr. Speaker, the hon. member has just said-*


Mr. Speaker:: Order.


Ralph Byron Horner: In closing my remarks-


Mr. Speaker:: Will the hon. member for Restigouche-Madawaska remain seated while the hon. member for Gloucester states his question of privilege?


Hédard-J. Robichaud: On a question of privilege, Mr. Speaker, the hon. member who had the floor said, after your remarks, "Everyone knows it is true". I wish he would withdraw those words.


Ralph Byron Horner: All right; I will withdraw them.


Mr. Speaker:: The hon. member said that. It is not an unconditional withdrawal. That is what the rule calls for.


Ralph Byron Horner: Mr. Speaker, I withdraw; I am very happy to do that.


Mr. Speaker:: The hon. member withdraws but should not add, "Everyone knows it is true". As long as we understand that it is an unconditional withdrawal everybody is happy.


Ralph Byron Horner: In closing I wish to
mention one other proposal. We have a problem in regard to the children of unknown parents. I have been approached by hospital staffs and hospitals in the province of Quebec and elsewhere to the effect that they are not getting for these children family allowances or help of any kind. This problem is a very serious one, because these are mostly religious institutions that have to depend for a livelihood on donations received through charity. These children get no help of any kind. You would think that at least family allowances would be paid to the institutions caring for those children. This is a problem that does not lead to any suggestion of frivolity that some hon. members are prompt to take advantage of. This is a problem that demands action by the Minister of National Health and Welfare.
Before closing I wish to praise the work of all those who are connected so intimately with the governments of our municipal bodies. Our county councils demand from their members long hours of assiduous work to stretch a dollar bill, making it do the job of a $10 bill. They do not have the advantage, which hon. members across the way have, of turning the crank and putting the squeeze a little harder on the poor taxpayers of Canada. In many instances they have to do with next to nothing. Local improvement districts have to undertake the building of schools and, once those schools are built, they have to provide for the management and servicing of those buildings. They are unable to do so from their ordinary sources of taxation.

We have problems which are concrete and real which the federal government should take time to study. You should come down from your high horse and look at what goes on in this country. I suggest that steps be taken and that these proposals that we have been making over the years should not be set aside. In one breath we are asked to make these proposals but in the next breath we are slapped in the face by the indifference and neglect of this government.


Mr. A. W. Stuart (Charlotte):: Mr. Speaker, I have listened to a good portion of this debate so far. Knowing that the hon. member for Restigouche-Madawaska was to speak today, of course I had to sit here to hear what he had to say. I do feel that he has a job to do, and he should get about doing his job right away. I can assure him that the report we get from the premier of our province with reference to conditions there and the report he has given us here today contrast greatly.
The premier of our province informs us that we were never so fortunate since we have been the province of New Brunswick. We have just passed through the greatest era in our history and the future is bright indeed. I can assure the hon. member who has just resumed his seat that the report we have heard from him today does not coincide with the one that is being given by the premier of our province. I do feel they should get together and do something about this.
The hon. member made one remark with reference to one of my colleagues from New Brunswick. He said he believed that the hon. member for Gloucester is paid to represent his county. I want to say I believe that the hon. member for Gloucester is doing a much better job than the hon. member for Restigouche-Madawaska is doing, for at least he is here in Ottawa and this is the first time I have seen the hon. member for Restigouche-Madawaska for several days.


Ralph Byron Horner: He was here yesterday.


Andrew Wesley Stuart: There is an advantage in being at home. He has had several days to sit down and write the speech which he read so well today.


Ralph Byron Horner: That is another lie.


Andrew Wesley Stuart: It provides time to get together the few remarks which he comes to the house and delivers and then goes back home again.
He made one remark today about requests of our provincial government to build the Chignecto canal. I have been here 11 years and I have seen requests from organizations of different kinds to build the Chignecto
1. 1956
Proposed Tax Relief for Municipalities canal, but in my memory there has never been at any time a request that has come from the provincial government to build the Chignecto canal. If I am wrong I stand to be corrected. In my memory the provincial government has never suggested the building of the Chignecto canal.


Ralph Byron Horner: I never said it did.


Andrew Wesley Stuart: The hon. member's remarks are on Hansard. I think I took them down very carefully. Another thing most noticeable in the hon. member's remarks was this. He was most generous with federal funds.


Ralph Byron Horner: What is that again?


Andrew Wesley Stuart: A great many in the maritime provinces and in other parts of Canada have come to the conclusion that the federal members who sit here and the federal government which we have here at the present time are nothing more nor less than a tax-collecting agency for the provinces. That is the idea that they hold out, and it is growing very rapidly. I can assure the hon. member who has just resumed his seat that never in his time or mine and never since confederation has any federal government been more generous to the maritime provinces than the one of which I am a supporter.
When the provincial government took over in 1952 in New Brunswick the federal payment under the tax rental agreements was between twelve and thirteen million dollars. This year they are going to receive nearly $20 million. Why does not some of that go to the municipalities?
They are going to discard the sales tax, so they still have that to give to the municipalities. Why all this generosity on the part of the federal government? Why do they not loosen up the provincial purse strings and help the municipalities as they should help them? When the next election takes place and the change has occurred you will have a more generous group to deal with the people of New Brunswick than you have right now.
The hon. member also strongly recommended that public buildings which belong to the federal government and everything in which it is interested should be taxed in the towns, villages or wherever they may be located. I just want to give my hon. friend a little tip. If he will drop a line to our premier and suggest that the provincial government do exactly the same thing in connection with our liquor store it will be appreciated in the town of St. Andrews from where I come. The liquor store there does the biggest business of any organization in town, and they have never paid a single
3444	HOUSE OF
Proposed Tax Relief for Municipalities dollar by way of tax since they were established there. This generosity must work both ways. The hon. member should not suggest to us what we as federal members should do and neglect his duty as a provincial member-


Wallace Bickford (Wally) Nesbitt: We are not provincial members.


Andrew Wesley Stuart: -because you cannot have it work only one way, it must work both ways.
The hon. member was very critical of loans and gifts which this country has made to countries which are less fortunate than we are. Since we came here in January I have heard several of his group rise in this house and suggest that if there is any possible way in which we can increase the amount of our contribution to the Colombo plan we should do so. I quite agree with that. Surely the hon. member's own colleagues cannot agree with him when he gets up and criticizes what we are doing today under the Colombo plan and other plans to assist underdeveloped countries.


Ralph Byron Horner: Mr. Speaker, I rise on a question of privilege. I am not criticizing that at all; I merely say the horse should go before the cart.


An hon. Member:: You did.


Mr. McCann:: Where else would you put the horse?


Andrew Wesley Stuart: Mr. Speaker, the hon. member certainly said what I said he said. It is only a few weeks ago that he bitterly criticized the gift we made to Britain-


Ralph Byron Horner: That is not true.


Andrew Wesley Stuart: -and in the same statement he said they were foreigners.


Ralph Byron Horner: That is another falsehood.


Andrew Wesley Stuart: It is on the record and I can find it within five minutes if he wants to read it. Those certainly were his words.
The hon. member today in his generous mood has suggested that the federal government should pay the complete cost of the trans-Canada highway. He suggested on other occasions and I think again today that we should increase if not double the family allowance and old age pension. His last remark was particularly interesting. He said in reference to the government that it wants to squeeze the poor taxpayers of Canada. If there was ever a squeezer of the poor taxpayers of Canada he sits in that seat over there. If all the suggestions the hon. member has made in the short time he has been here were put into effect, income tax, sales tax


and every other tax that we collect would have to be doubled to take care of it. Then he talks about the government squeezing the poor taxpayers. Since I have been here I have never heard anyone who has criticized the government for not spending money to the extent my hon. friend has criticized it.
I do not know if the hon. member realizes that to double the family allowance would cost the taxpayers of this country, if I remember correctly, between $350 million and $400 million and to double the old age pensions would cost about the same. You could soon pile them up and have a billion dollars. There is only one place from which that money can come, and that is from the taxpayers of this country of ours. The hon. member said we are squeezing the taxpayers of Canada.


Ralph Byron Horner: Are you against increasing family allowances?


Andrew Wesley Stuart: I am not against any increase for any purpose which the taxpayers of this country can afford to pay.


Ralph Byron Horner: Do you not think that better management could bring those things about?


Andrew Wesley Stuart: You will never produce that management if you carry on in the way in which you have been carrying on.


Ralph Byron Horner: Wait until the next election and you will see who produces it.


Andrew Wesley Stuart: The better management you are looking for will never come from the source you suggest, I can assure you of that.


Hédard-J. Robichaud: He is thinking of his other leader.


Andrew Wesley Stuart: The hon. member mentioned the Campbellton bridge. It is to be regretted that he was absent the other day when the minister made a statement concerning that bridge. Perhaps the hon. member has not had time since his return to read the statement but I would suggest that he should read it, because the minister spoke in some detail concerning that particular question.
The hon. member made one other statement with which I must deal for a moment before resuming my seat. He suggested today that the Minister of Labour knew that the regulation in connection with unemployment insurance would be harmful at the time the act was amended last year.


Ralph Byron Horner: No.


Andrew Wesley Stuart: Those were the words you used. Before it became law that bill was before a committee of this house

on which were labour experts of the Progressive Conservative party, and they were provided an opportunity to go into it as far and for as long a time as they liked. We have been given to understand that there are labour experts in the Tory party. I fail to understand how this ever slipped by all the experts they had on this committee. I would say it is an acknowledgment of neglect on their part. At the same time I can assure the hon. member that the Minister of Labour had no idea that the amendment would be harmful in any way to any Canadian. I am sure the citizens of Canada will agree with that statement.
Before resuming my seat I am going to suggest that the hon. member get in touch with the premier of our own province and suggest to him that he put into effect some of the generous ideas which the hon. member would like to turn over to the federal government. I would ask him again to go over the records carefully to see if he can convince himself that the generosity extended to the provinces of Canada by this government is beyond reproach. There has never been a time since confederation when such an effort has been made to distribute the wealth of this country fairly and honestly, and any fair-minded Canadian will acknowledge the truth of that statement.
I would remind the hon. member of all the social services that have been provided and the tax rental agreements without which we could not get by in the province of New Brunswick. The man who fought for that was Hon. J. B. McNair, premier of our province at that time, but the hon. member gives no credit where credit is due. The only thing we hear is criticism which is always aimed at the federal government. I cannot sit here as a federal member and take that kind of stuff from the hon. member for Restigouche-Madawaska, and I do not intend to. I would suggest to him that he direct some of his criticism where it belongs, and that is to the provincial government in the province from which he comes.


Mr. R. R. Knight (Saskatoon):: Proposed Tax Relief for Municipalities well-I say this with regret-with that existing in many other countries which I could mention.	t
What is the present situation? The latest statistics I have for 1952 and 1953 show that with our small population we had 5,142 substitutes in our schools, people without any professional training at all. I ask the individual members of this house if you would like to have your child sitting on a bench in front of one of those so-called teachers. There were 5,142 substitutes without any professional training and 3,744 with only partial or substandard training.
Those two problems, the building of schools and the maintenance of proper staff, are major problems. If teachers are paid sufficiently no doubt they will be trained. The result of the situation I have described is widespread irregularities or inequality of educational opportunities for children throughout different parts of the country. This problem has been solved by many provinces on a provincial basis by increasing the size of the unit of administration. There may be districts, particularly farm areas, where there is a high assessment and where the people can contribute to the education of the children of their less fortunate brethren. As far as I am concerned and as far as this group is concerned that is the ideal at which we should aim.
I maintain that some remedy should be forthcoming in the federal field. As I said before, I grant that under our constitution education is a matter for the provinces, but I submit that the federal government has a duty to see that education be not allowed to fall below a certain acceptable standard in any province. I submit that is within the competence of the federal government without any interference with the administration of education by the provincial departments.
It is well known that in certain provinces a classroom can be maintained at the expenditure of $5,000 yearly, but in certain other districts or in certain other provinces to maintain a classroom at an expenditure of $5,000 a year would require twice the sacrifice and twice the financial effort.
I should like to deal now with the importance of education to Canada, which after all is simply made up of a group of municipalities. Our position in world affairs, our position in the world depends upon the education of our people. Our scientific progress, the maintenance of social and cultural levels in Canadian life, the ability of our armed services to function, the standing of our diplomatic corps, all depend upon education. When a Canadian goes out into the world he is not

thought of as being the product of the educational system of Prince Edward Island, of British Columbia or of Saskatchewan; he goes out bearing the insignia of the maple leaf. It is as Canadians that we must face the world, not as provincial people.
What about the cold war? We have had a lot to say about the cold war. There are some startling comparisons that could be made, but I have not the time to make them today. We have all been reading articles and documented reports and statements dealing with world affairs. If we think of Russia, for example-I am not advancing this as an argument that we should do the same thing- we must face the fact that in that country there is a higher percentage of people attending the universities than there is in Canada or for that matter in the United States. If you will read the statistics dealing with the number of people engaged in engineering-


Walter Edward Harris: Percentage or numbers?


Robert Ross (Roy) Knight: I have forgotten what I was talking about.


Walter Edward Harris: The hon. member said there was a larger percentage attending universities.


Robert Ross (Roy) Knight: There are larger numbers of people attending universities in Russia than there are in the United States. That must mean something. Many people are worried about the progress of communism across the world, and sometimes I am inclined to think that the very same people who are worrying most about the progress of communism are those who are standing in the way of progressive education in this and in other countries, progress which would enable us to compete with those people behind the iron curtain in the economic and cultural fields.
So much for the need for education. I turn now to the constitutional question. I have already said that I am all for the control of education, so far as administration and curricula are concerned, by the provincial governments. But the fathers of confederation in 1867 certainly could not foresee the crisis with regard to education that we are in today. They could not foresee that through shifts in taxation it would become increasingly difficult for the municipalities to meet their bills in regard to education. Sometimes I think the constitutional question is a little overdone.
Now I must-mildly at least-attack this government in this regard. We have a situation in which the left hand does not know what the right hand is doing, and vice versa. We have a good deal of pussyfooting and a good deal of rationalization. When the Leader of the Opposition mentioned yesterday

that the first need was for some federal assistance to the municipalities for education, the Minister of Finance was very careful to remind him, and the Leader of the Opposition was very careful to admit, that of course provincial autonomy was one of the sacred things.
I have thought about this left hand and right hand. That was the left hand speaking, but the Minister of Finance with his right hand is giving educational grants to a dozen parts of this country, and pouring money into them. I could read you lists of them. What about the great D.V.A. scheme; what about scholarships to university students, university grants, technical aid and vocational aid? What about the field of health? Surely in 1867 health was one of those sacred things that was within the prerogative of provincial jurisdiction. My hon. friend who is not here, the Minister of National Health and Welfare (Mr. Martin) is boasting all across this country that he is paying half the cost of building hospitals in the various provinces and giving direct grants to the provinces for the purposes of health.
Look up the British North America Act about that one thing. Nobody seems to be too much worried about that. They have their left hand out for the money while they are disowning it with the right hand. I am a little fed up with that pussyfooting, that criticizing with one hand and taking the money with the other. "Rationalization", I think, is the correct word for it. That is a type of rationalization to which we have become accustomed in this house ever since I have been here.
Then there is this matter of the left hand and the right hand in reverse. What about UNESCO? We signed the treaty, but what do we ever do about it? This time it was the left hand that came into operation. They said, "We must not do anything about that. We are all for it; it is a fine educational thing; but we had better pussyfoot a little on that. Don't touch that."
What about the Canada Council? One of the finest speeches-probably because I agreed with it-I have heard the Prime Minister make was the speech he made on the humanities at the Chateau Laurier hotel. We were a group interested in the humanities and interested in the Canada Council, and we met there after a two-day session at a banquet. After the banquet the Prime Minister made his speech. Was it the left hand or the right hand? It was the hand of bounty this time that was in operation. That speech was as close to a commitment that any man could go without making a definite commitment, that there would be, in the next
1. 1956	3447
Proposed Tax Relief for Municipalities speech from the throne, notice that this would form the subject of legislation at the following session. Afterwards one of my friends, a professor from Saskatoon, clapped me on the back and said "It's in the bag." I said, "Yes, I would think it is."
Was there a word about it in the speech from the throne? No. Somewhere there was a little something that stopped that. When the next session came along a few months later I asked the Prime Minister if it was his intention this session to initiate the Canada Council as recommended in the famous Massey report. He said "No." "No" is one of his favourite words. Then he modified it, as always, by saying, "Not at this time."


Stanley Howard Knowles: The Minister of Finance is holding the bag.


Robert Ross (Roy) Knight: I can assure you that this "no" will some day be changed to "yes" and "not at this time" will be changed to "now". That is what I mean by pussyfooting. I do not know whether I have made myself clear. I think the Minister of Finance understands fairly well what I am talking about.


Walter Edward Harris: I certainly do.


Robert Ross (Roy) Knight: It is wonderful what you can do under the constitution if you want to do it. These hospital grants are fundamentally opposed to the idea of the constitution. It is disgraceful, taking away from the province their sacred jurisdiction in the matter of hospitals, but that is what is being done. I see no reason why the system that is being applied to the capital expenditure in building hospitals could not be applied to the building of educational institutions without interfering one iota with provincial jurisdiction over education.
I have not heard one criticism from any province that the federal government or any of its departments is in any way interfering with, say, technical training, vocational training, or any of the other things I have mentioned. With regard to education, the federal government, if not up to its neck is at least up to its waist, and I should like to have it up to its neck. But I have not heard that one of these things has been anything but beneficial to the people of this country. That is my case for the municipalities.
Some time ago the members of the Canadian School Trustees' Association-and surely they are men who are interested in the municipalities of this country-got together and instituted a research project. The head of that research project was Dr. LaZerte, formerly of the university of the province of Alberta. They obtained all the facts and figures necessary to implement the machinery

Proposed Tax Relief for Municipalities that would do what I want the government to do. But it seems strange to me, when these municipal men, these trustees from all over Canada, came to a certain conclusion on a certain thing and then appointed a delegation to interview the Prime Minister on this matter, that they received from the Prime Minister presumably-I do not know, but I suppose it was-a letter refusing any such interview. Why? I have in my hand a letter on the letterhead of the Canadian School Trustees' Association, signed by the secretary treasurer. He is speaking about this lengthy report on school finance which they had prepared. He says this:
This year a delegation proposed to present a brief to the cabinet based on that report. Unfortunately the Prime Minister has declined to receive the delegation-
He declined to receive a delegation composed of respected men from all over the country. Why? The sacred cow; the old left hand. The Prime Minister, just like the Minister of Finance yesterday, did not-and he dare not-advocate this thing. They both know it. The writer of this letter says that unfortunately the Prime Minister has declined to receive a delegation as he contends that education is a provincial matter. Sir, I could have told those people before they attempted to send their delegation that they would get no welcome at Ottawa on the basis upon which they wished to come.
Mr. Speaker, I think that is the finish of my argument. Now what I have to do, as T said I would a moment or two ago, is move the following amendment, seconded by the hon. member for Dauphin (Mr. Zaplitny):
That the amendment be amended by Inserting therein immediately after the words "introduction of legislation which will provide for" the following words:
"federal aid to education, without interfering with provincial control thereof, and for".
The amendment as amended would then read as follows:
This house is of the opinion that immediate consideration should be given to measures to assist the municipalities of Canada to meet their mounting financial problems, and in particular the immediate introduction of legislation which will provide for federal aid to education, without interfering with provincial control thereof, and for the exemption of all municipal councils and school boards from the payment of excise taxes including th'e 10 per cent sales tax, and which will further provide for payment to municipalities of the equivalent of full municipal taxes.


Mr. A. H. Hollingworth (York Centre):: Mr. Speaker, the hon. member for Saskatoon was talking so much about right hand and left hand that it reminded me that tomorrow is the day of the opening of the baseball season in Toronto. I guess my thoughts were wandering, in view of the beautiful weather

and so on, and I was thinking of left-handed catchers in left field in Maple Leaf stadium.
I am not going to get into any discussion with my hon. friend about education. He knows how strongly I feel about education. However, I will say this with all deference, Mr. Speaker. I do not think he really appreciates the fact that the prerogative of education is so strongly held by people in the provinces in this country that I do not think any government has even suggested that grants be made for education to those governments. I do not think my hon. friend would go that far.


Robert Ross (Roy) Knight: Mr. Speaker, may I ask the hon. member a question? Does he not know that both Hon. T. C. Douglas, premier of Saskatchewan, and Mr. Campbell, premier of Manitoba, and certainly the premier of one of the maritime provinces-I can get his name without any difficulty-have directly asked for federal aid to education and have suggested that the matter be discussed at the dominion-provincial conference here?


Allan Henry Hollingworth: To me that is extremely interesting information, Mr. Speaker. I certainly know that the province of Ontario would be most reluctant to participate in any scheme whereby it would get a direct grant from the federal government for primary education.


Stanley Howard Knowles: Tell us where you stand.


Allan Henry Hollingworth: I think it should be pointed out, and I know it has been pointed out in this house ad nauseam, that in the matter of municipal affairs the responsibility of the provinces is paramount. Naturally we in North York are interested in this whole problem of municipal taxation. I need only quote a few figures to show why it is a matter of such great importance in my riding. For example, the building permits in 1955 amounted to $78,504,000. Permits this year from January 1 to March 31 are up from $10,965,000 to $13,760,000. Furthermore, 3,940 houses were erected in North York in 1955 and the rate has been going up every year so that for the seventh year in a row more houses have been built in North York than have been built in any other part of Canada.
That fact, of course, points up one thing and one thing only, Mr. Speaker. If there is any municipality in this country which needs some assistance from senior governments it is the township of North York. But, as I say, it is primarily something that comes within the ambit or under the jurisdiction of the provinces concerned.
I am going to take advantage for a few minutes this afternoon of the opportunity of pointing out where I think both the federal

government and the provincial governments can assist, keeping in mind all the time that it is primarily the province of Ontario to which the municipalities in Ontario should look.
The township of North York municipal council has requested me to point out in this house that they are of opinion that this grant on. the 2 per cent assessment should be revised, and that the municipality should receive grants on crown lands notwithstanding the fact that they do not have crown lands comprising 2 per cent of their assessment. From the opinions I have received this restriction would seem to be anachronistic and illogical. It is a hangover from the days when the crown could do no wrong. I think it would be desirable at an early date, if possible, to have this restriction abolished.
I have only one other thing to say about the federal government in connection with municipal affairs and that is that it is the feeling of the township of North York, and I suppose that of other municipalities, that they are not consulted sufficiently in the whole area of planning. For example, when Downs-view airport was extended and one of the streets was cut off, no notice was given to the township of this action until one of the councillors-actually he was the reeve at the time-tried to go along the street and was prevented from doing so by the Department of National Defence. If the federal government could consult with the municipalities in the whole general area of planning-for example, in the extensions of airports which are so important in my riding-it would certainly be desirable.
I now come to this matter of the provincial governments and municipal taxation. It is my submission that the present government in Ontario can deal with the matter in two ways. One way is to distribute some of its surplus to the municipalities in the form of grants. The second way is to revise the whole basis of municipal taxation.
I shall deal with the first matter first. As I understand it, the Ontario government last year had a surplus of $50 million. It is my further understanding that of this $50 million surplus, $30 million was put into a highway reserve fund. If those moneys had been paid to the municipalities in the form of educational grants I do not think we would hear this continued cry from Queen's Park that they are not getting enough money from the federal government.
A select committee of the Ontario legislature decided that toll roads would have to be instituted, and so on. For example, on No. 401 highway the daily increase in traffic was from 67509-219i
1. 1956	3449
Proposed Tax Relief for Municipalities 1,500 cars in 1954 to more than double that in 1955. I think this committee has finally come around to the point of view that we certainly need toll roads in Ontario. In view of the prodigious amounts of money being expended on roads throughout Ontario, it would seem to me that toll roads might be the answer. I would think that if the government of Ontario would look into the matter of toll roads and implement some legislation in that connection, then they could turn over some of these badly needed moneys to education instead of to highways. Last year the Ontario government spent more money on highways and public works than on education. It is, therefore, a moot point as to whether or not the provincial government has to increase taxes. It would seem to me that if they were to distribute moneys as they should, the people of Ontario would have education paid for by means of grants from the provincial government.
My second point, Mr. Speaker, is this. I submit that if the grants for educational purposes are not sufficiently great, then the whole basis of municipal taxation should be changed. The municipal act in Ontario was originally passed in 1837, I believe, under the Baldwin-Lafontaine administration, which of course preceded confederation. I am informed that the last revision of any importance was made in the year 1911. The municipalities in Ontario have very restricted rights of taxation. For example, they can levy a tax on realty; they can levy a poll tax and they have certain licensing powers. They have practically no other taxing powers.
Now of course, Mr. Speaker, with the tremendous growth in housing and the consequent development of schools, the realty tax payer in Ontario has been burdened tremendously. In my municipality of North York 55 per cent of the tax dollar goes to education and 45 per cent covers all the other municipal services. It would appear to me that the whole basic concept of taxation must be changed to meet the real problems that exist at this time. It would seem to me that, from the municipal point of view, taxes might well be considered on the basis of ability to pay, like the income tax. For example, consider the position of a gentleman who lives in a lavish apartment, and compare that with the position of a man raising five children. The man living in the apartment may be a millionaire but he pays only a small part of the realty tax in his rent, whereas the man who has five or six children has to pay an abnormally high tax proportionately. If it were based on ability to pay, then the whole basic concept would be changed-
3450	HOUSE OF COMMONS
Proposed Tax Relief for Municipalities
Of course, there is also another field which has not been tapped adequately I think by the province of Ontario, and that is the field of direct taxation. I believe Ontario has the constitutional right to tax directly. It could levy a sales tax or an income tax. Quebec has levied an income tax and the provinces of Alberta and British Columbia have levied sales taxes.


Mr. Blackmore:: We have no sales tax.


Allan Henry Hollingworth: I thought you did.


Mr. Low:: No, we abolished that many
years ago.


Allan Henry Hollingworth: The province of British Columbia has a sales tax, then. In other words, other provinces have sales taxes and income taxes. I think Ontario should also explore that matter. I am not saying, Mr. Speaker, that there should not be a tax on property. I think it is fitting that the realty tax should cover such things as local improvements, sewers, roads and things like that. It seems to me that the realty taxpayer should not have to bear the disproportionately high educational costs which are facing the people of Ontario. I think we have come to the point where the Ontario government has to face up to this matter of municipal taxation. Last week I saw a headline in the Toronto evening Telegram to the effect that somebody advocated a march on Ottawa because of municipal taxation. I feel that is typical of the distorted thinking which is taking place now, and the propaganda being put out by the government of Ontario. The province of Ontario has to face up to this fact; it has to be realistic. The people of Canada, the people of Ontario, the people of North York and the other municipalities of metropolitan Toronto, should know that it is the Ontario government which has the first responsibility. It is my respectful submission that Ontario has failed, and is failing, to live up to its primary obligation to its citizens.


George Clyde Nowlan: This problem which we are discussing today, Mr. Speaker, is an old one. I suppose it is true of all democratic processes that we involve ourselves in long discussion over many years before finally coming to a decision. Certainly, there has been enough discussion on this matter. There have been resolutions galore from every organization in the country, municipal and otherwise; there have been submissions made to royal commissions. I suggest that the time has come now when action should, and in fact must be taken.
The municipalities, as has been pointed out by others, and I am not going to repeat the

arguments which others have advanced, have pretty well reached a dead end street in the matter of taxation and some action must be taken. That is not to say for one moment, of course, that this government has not done some things in connection with municipalities. We have had the Municipal Grants Act, to which the Minister of Finance (Mr. Harris) paid tribute yesterday afternoon. We can appreciate everything he said in that connection. There have been, too, certain adjustments, as he pointed out, in connection with the sales tax on goods sold to municipalities. But actually, Mr. Speaker, these are only palliatives and do not deal with the situation as it confronts many municipalities today, particularly the rural ones. Although the Municipal Grants Act has helped certain municipalities, particularly those with a large concentration of government buildings, it only applies to a limited number of communities. It does not help some communities at all. In any event the increasing burden placed upon municipalities is such that even with the assistance of that act they still cannot carry on in these modern times.
The municipality is the creature of the horse and buggy age. It was evolved at the time of confederation. Under the British North America Act the provinces were given the power of direct taxation and also the power to create municipal institutions. Time has gone by and today we are long past the horse and buggy age, yet the municipality is still acting with a tax base which was envisaged in those old days. The hon. member for York Centre (Mr. Hollingworth) who just preceded me spoke for his own province-far be it from me to discuss matters affecting provinces other than my own-and suggested perhaps Ontario could amend its Municipal Act so as to give the municipalities a wider basis of taxation. I presume it is possible for a province to do that but I would be rather surprised if any provincial legislature would want to impose a sales tax if that could be avoided, or would want to impose an income tax in addition to the federal income tax.
I was rather intrigued by the suggestion that a province should impose an income tax when the government of which he is a supporter has urged that there should be an avoidance of double taxation and that taxes of that nature should be imposed only by the federal government. I cannot envisage a provincial government adopting such a measure unless it were a matter of absolute desperation.
I think the amendment which we are urging here this afternoon, and which was moved yesterday by the Leader of the Opposition (Mr. Drew), is a much more practical

approach to the problem than any involved legislation such as that suggested by the hon. member for York Centre. As I have said, this government has stuck its finger in the dike and kept the water from running in, like the little boy in the story which we read many years ago but in that case there were no other holes appearing in the dike. But in this case the dike is being punctured on all sides and the municipalities are going to be submerged unless some action is taken. When the municipalities were created, as I said a moment ago, they were the creatures of the horse and buggy age. I think that is an apt description. What were the responsibilities envisaged for the municipalities at that time? They had to look after the little red country school house; they had to provide dirt roads for the horse and buggy, literally and physically; and they had some responsibility in so far as poor relief was concerned. Other than that there were very few responsibilities for the municipalities. Certainly the fathers of confederation thought and believed-and they were right, in view of the situation prevailing at that time-that that source of taxation would be enough to enable the municipalities to carry on. But today the situation has changed so rapidly that real estate is being burdened with a crushing load of taxation.
I noticed that yesterday afternoon the hon. member for Peace River (Mr. Low) said that once every 20 years the farmlands in his constituency were virtually sold to the government. In other words, as I take it, the taxation over a period of 20 years would be equivalent to the value of the farm properties, and that is a terrific price to pay, Mr. Speaker. We realize that these problems are increasing from day to day. There is the problem of education, for instance, on which the hon. member for Saskatoon (Mr. Knight) made such an eloquent speech a while ago. We all know that, according to the bureau of statistics the school population of this country will increase 100 per cent between 1955 and 1960, thereby imposing a terrific burden on the municipalities. My own small town recently had to spend $200,000 in building additions to the schools, and we are now told that before 1960 they will have to expand those schools still further. It is true that we get some assistance from the provincial government, but primarily and fundamentally that burden is carried on the real estate property and on taxes on real estate. It is true that the municipality can impose licence fees and poll taxes, and some municipalities have imposed a sales tax. But they certainly are taxes which are difficult to administer and in many instances, certainly
1. 1956	3451
Proposed Tax Relief for Municipalities in a small municipality, they would not return anything like enough to solve the problems they are supposed to meet. Therefore, we bring this amendment before the house at this time because we think, as I said, the time has come when some concrete action must be taken.
In opening the debate at the beginning of this session the Prime Minister said, as reported at page 49 of Hansard:
We did not see any need to share in the normal costs of growth of provinces and municipalities.
He was speaking for the government. The trouble, Mr. Speaker, is with the word "normal". What is normal? As I said, what was envisaged by the fathers of confederation as normal is absolutely abnormal today. The cost of streets, sidewalk maintenance, the cost of police and all these other costs which are incidental to our modern twentieth century were never foreseen at all. The government says, we did not see our way clear, or did not think that we should share in the normal costs of growth. I say when they say that they are shutting their eyes to the progress which has taken place and are refusing to face the realities of this problem.
When the Minister of Finance dealt with this matter yesterday afternoon he said, well, of course, this is a vote of confidence and I believe the government should be maintained and therefore I am going to vote against the amendment. Of course, that implied that all hon. members on the other side of the house would vote against it also. I think it is possible for the government to announce that an amendment of this kind need not be taken as a vote of confidence. They could recognize the principle of this if they believe the situation is as serious as I believe it is. I think the minister would be surprised to find how many of the members on his own side of the house also recognize the seriousness of this problem, because it is a most difficult one, and particularly, as I said, those who come from rural constituencies can appreciate it much more than others. The Minister of Finance came originally from a rural community in Ontario. Certainly he must realize the seriousness of it. As with so many other problems which are confronting the government today, the minister has pulled down the blinds, put out the cat and gone to bed to sleep on it. There are some problems he can sleep on, but this one is of such a pressing nature that I do not think he can afford to do that any longer.
I do not think I would have intervened in this debate today if it were not for the fact that it is of special interest to those of us from the maritime provinces. We have had the anomalous situation of an hon. member
3452	HOUSE OF
Proposed Tax Relief for Municipalities coming from one of the wealthiest municipalities of Canada, the hon. member for York Centre, suggesting that something should be done, followed by me, coming from one of the "have not" provinces of Canada. This amendment is of particular importance to us.
In looking over the briefs submitted by the organization of municipalities some time ago I was surprised to note that the three maritime provinces are the only provinces in Canada which are 100 per cent organized on a municipal basis. We were, of course, among the older provinces. Our municipalities were organized in some instances even before the provincial governments were organized. Take Ontario for instance. The brief says that slightly more than one-tenth of the area of Ontario is municipally organized and about one-tenth in Quebec, and so on and so forth with respect to the other provinces of the country. I am not sure of the basis on which those local governments are carried on in those areas which are not organized municipally. I presume there would be some basis of local taxation imposed, through the provincial government, by a local authority. The fact is that in every one of those other provinces the provincial government exercises direct responsibility all the way from 50 per cent to nine-tenths of the provinces. Certainly, so far as we are concerned, those other provinces are in a slightly different position from most of us in the maritimes. Every square foot or square mile of our province is organized within an existing municipal organization, and the municipal government is responsible for carrying on much of the expenditure.
The second reason, of course, is an obvious one. In the maritime provinces we have not had the tremendous influx of population and the great increase in values of real property which has taken place in some parts of Canada. I realize, of course, that an increase in population also brings an increase in expenditure. Municipalities are complaining of the great degree of prosperity with which they are confronted. Because of the increase in population they have had to provide serviced land. In a few years' time they may be over the hump, so to speak, but at the moment those municipalities have these pressing and urgent financial problems because of this prosperity. Nevertheless, when you do get a continually expanding population and a continual increase in real estate values and an influx of industry and all those other factors which have been attendant upon at least so many parts of Canada, it does, I suggest, make the problem of municipal taxation an easier one than it does in other provinces which have not had that situation
IMr. Nowlan.]

prevailing, or at least have had it to a very limited degree. I am not suggesting we have not had an increase in values; I am not suggesting we have not had some increase in population, but it has not been at all in keeping with the tremendously rising scale of municipal costs and therefore our municipalities are probably in a worse position than those in other parts of Canada.
In the third place, as the municipal government is the creature of the provincial government and is a legal creation by statute, dependent upon the provincial government to a certain extent for revenues, the provincial governments in the maritime provinces, as they admit themselves in their briefs, are not in a position to make the contribution to the municipal organizations which other provinces might do.
The hon. member for York Centre said a few moments ago that Ontario, out of its surplus this year-he did not say they should have, but they could have, given $50 million to the municipalities of Ontario. Certainly, no maritime province could give $50 million or one-tenth of that or any proportion of it whatsoever. It is true that they have a small surplus, yet it is because they had to starve practically their own provincial services, and they had no money left for the assistance of the municipalities on the basis which should be recognized today. As a result, in those provinces and elsewhere too, the tax on real property is increasing and increasing. The tax on the farmer is particularly onerous. The farmer's revenue has been falling during the past several years and in many cases farm values have been falling. There are many places in my own province where if it were not for the building on the farm which constitutes the home the farm could not be given away. Farm values are down and will continue to depreciate still further before we get out of the present agricultural problem with which we are confronted, and yet it is the farmer in the rural community who is carrying the burden of increasing taxation.
In my own province we have had a new act brought into effect this year which has imposed a terrific burden of taxation for education. I am not discussing the merits of it but I do know it is causing the farmers in my constituency a terrific problem. In fact it was a shock to them when they realized the increased burden of taxation they would have to meet in order to equalize the educational system throughout the province of Nova Scotia. Of course the farmers are carrying the burden in more ways than one.

I said originally that the municipality is a creature of the horse and buggy days. What is the situation? We have young men working in the city today who are establishing their homes in the country, perhaps building or renting. They are young married couples for the most part and they have two, three or four children. Those families are living in the rural municipalities which must provide schools and other services for them, and yet the revenues derived from the new homes they build are not at all in keeping with the increased costs which are confronting scores and hundreds of municipalities alongside towns and industrial areas in various parts of this country. As I say, the burden is a heavy one on the rural municipalities.
What do you do about it? The shift in taxation has been an amazing one in the last few years. There was a time when the moneys derived from the municipalities were sufficient to look after their services. Some of these figures have already been put on the record but I would like to repeat one or two of the figures to show the situation today as compared with a few years ago.
In 1930 the municipalities collected $306 million, the provinces collected only $157 million and the federal government collected $315 million, just a little more than the figure collected by the municipalities. In 1951 the revenue of the federal government had increased to $3,791 million, the revenue of the provinces increased to $918 million and the revenue of the municipalities increased to only $636 million.
In other words, the municipal revenue over the last 20 years has doubled, the provincial revenue has increased six times and the federal revenue has increased 12 times. I suggest that a substantial part of the doubling of the municipal revenue has been at the expense of the real property owners.
An argument could be made, and has been made, concerning the centralization of taxes by the Minister of Finance (Mr. Harris) and others and I am not debating the philosophy of that at the moment. I do say, however, that to centralize the collection through the federal treasury also envisages an increased responsibility on the federal treasury for various responsibilities of government that were formerly looked after by local taxing authorities.
I said that I thought the time had come, and I know it has come, when if this government does not make a fresh approach to this problem some other government will do so because it has gone just about as far as it can possibly go.
1, 1956	3453
Proposed Tax Relief for Municipalities
Various suggestions have been made. The resolution which was moved by my leader yesterday suggested the abolition of the sales tax on all purchases by municipalities. The Minister of Finance said, "Well, that is going to involve tremendous administrative difficulties and if you repeal it for one person then you have to repeal it for another." He said it was a difficult task to accomplish. He shrugged his shoulders and regretted its difficulty and implied that it just could not be done.
I point out to the minister that by his own admission he has made alterations in that tax and the imposition of it. He told us yesterday that road machinery amounting to over $1,000 in value purchased by municipalities would not bear a sales tax. If it is possible to remove the sales tax on road machinery it is also possible to remove the sales tax on any machine which is bought by a municipal government.
The anomaly of the situation was pointed out by the hon. member for Brandon-Souris (Mr. Dinsdale) last night when he said that a municipality might buy a large number of machines under $1,000 in value and not receive the removal of the sales tax but if the unit purchase had been over $1,000 in value there would have been an absolute forgiveness of the sales tax.


Walter Edward Harris: There are not very many of them under $1,000 in value.


George Clyde Nowlan: There would not be today with rising costs, that is true, but it is all the more reason that the municipality which is faced with expenditures should be given some assistance, and this is one field in which it could be given assistance.
The minister realizes the problem and smiles benignly at the suggestion. He says: After all, the municipality is the creature of the province. We have always recognized the fact that the crown should not tax the crown and therefore you do not tax the provincial government but it is all right to tax the municipal government. I would point out that the municipality is also a creature of the crown. Whatever the legal situation might be, I say that for all practical purposes the municipality is a creature of the provincial government. The provincial government delegates certain responsibilities to the municipality.
As far as principles of taxation are concerned I would remind the minister that several years ago-I imagine the minister was a practising barrister at that time-it was a recognized principle of taxation from the year 1867 forward that judges were sacrosanct and it was impossible to impose income tax on

Proposed Tax Relief for Municipalities judges because their independence must be preserved. It was constitutionally impossible to tax judges.
Well, what happened? The government of the day rightly or wrongly, and I think rightly, decided that taxation should be imposed on the judges. It was felt that the independence and integrity of the judiciary could be maintained despite the imposition of taxation. That was a fundamental principle but' it was overcome at the time. I suggest to the minister that there is no fundamental principle involved here which he cannot overcome by simply bringing in an amendment to the sales tax system during the present session, and abolishing entirely the sales tax charged on all goods sold to municipalities.
It is true that this is not going to cure the problem but at least, instead of a little boy holding a little finger in the hole in the dike, we would have a bigger boy holding a big finger in the dike and he would therefore be able to keep out a little more water.
We had an interesting situation in my own town last year. We have a post office there which was built in 1911. Two years ago the Department of Public Works decided to renovate the building and they did a remarkably good job. As a matter of fact, they did so much renovating that they spent almost $200,000 as a result of the repairs which they effected on the building. The town in which I live was able to come within the provisions of the Municipal Grants Act and we received a fairly substantial contribution from the federal treasury on that score. It would be a lot cheaper for the government if they would allow taxes to be paid on every building in a municipality rather than spending $200,000 on repairs before the town could secure any tax on it. That was the situation in our town.
There is no reason why the principle of not taxing crown property, which we recognize as a valid constitutional argument, should apply if the value of that property is less than 2 per cent of the assessment but should i not apply if the valuation is less than 2 per cent.
Then there is the suggestion made in the amendment moved by the hon. member for Saskatoon (Mr. Knight) and also by the Leader of the Opposition (Mr. Drew) yesterday in connection with education, which constitutes probably the most vital problem confronting our municipalities today. Something will have to be done about this in the near future. It is not for me this afternoon to make concrete suggestions as to how this problem should be met, but I do say that if it is not met there will be many municipalities in this country faced with bankruptcy.
[Mr. Nowlan.J
In the past we have urged that the government should assist with education, but I doubt if that will go far enough. If we are going to centralize more and more money in the federal treasury then the time is rapidly approaching when through the medium of dominion-provincial conferences with the municipalities sitting in and consulted, some mechanism should be evolved whereby more of that money shall be made available to the provinces for direct municipal purposes. I do not see any other way in which that problem can be met.
We have carried on for more than three-quarters of a century under the old constitutional tax basis, but we have outgrown that. We have reached an absolute stalemate with respect to this problem and a solution cannot be deferred any longer. I urge the government to take this matter into consideration and to see that steps are taken whereby this fundamental section of our economy, the local governments, be given the financial means to maintain a decent standard of government which they find impossible to do today.


Mr. F. G. J. Hahn (New Westminster):: Mr. Speaker, I was surprised to hear the reaction of the hon. member for York Centre (Mr. Hollingworth) to the amendment moved by the hon. member for Saskatoon (Mr. Knight), especially when it urges federal aid to education without interference with provincial control thereof. I am satisfied that what this means is that grants would be paid by the federal authority to the provincial governments to be used as they saw fit for educational purposes. My reaction to a question such as this is to wholeheartedly support it.
This is only one of the many factors which have been brought into this discussion from time to time which indicate the plight in which municipalities find themselves today. On examining certain resolutions moved in the past having to do with education, and amendments asking for federal assistance, my analysis of the situation is that frequently financial governments or institutions have indicated that they do not desire such assistance because they fear the motive behind the proposal on the part of any federal government to assist in a particular field of education. Possibly that is why some of the educational grants which are in existence today are not used to the optimum as we would like to see them used.
I have noticed that the field of discussion has been quite broad. Reference has been made to aid to the municipalities in connection with hospitals. That in itself is art

indication of the federal government's inability to recognize that there has been a change since the time the provincial governments and the federal government reached an agreement under which the federal authority would donate $1,000 per bed toward the cost of construction of hospitals. Since that time the cost of building hospitals has increased from $5,000 to $11,000 per bed, and that in itself is indicative of the fact that the federal government in recognizing that there was such a need before is not carrying its proper proportion of responsibility at the present time.
One or two speakers have referred to civil defence, and the fact that this government has a certain responsibility in respect to assistance in the building of bridges so that the population of our cities may be evacuated. On examination I would definitely accuse this government of using the prerogative given under section 92, subsection 10, paragraph (c) of the British North America Act. The government is always ready to take advantage of that section and call certain works as being in the interests of Canada whenever it suits its convenience, but when it comes to the responsibility of financing some of these things they contend that they are not to the general advantage of Canada and therefore they should have no share in them. That in itself is indicative of the general thought in the minds of the government today. The expenditure of money is an entirely different matter and therefore the government insists that it must protect provincial rights, that it must not help them in any way because by so doing they would be invading that field. I feel as did the hon. member for Saskatoon that such assistance could be given, as it has been given in the past, without actually injuring the rights of the provinces. Certainly the amendment moved by the hon. member is quite in order and therefore I feel that we should support it.
There is one problem in my own riding which specifically illustrates how simple it is for this government to decide that it has a responsibility in some instances and not in others. I am pleased to see the Minister of Agriculture (Mr. Gardiner) in the chamber because I should like to refer specifically to the application of the Prairie Farm Rehabilitation Act. I am quite aware that this act is applicable at the present time only to the Palliser triangle, but it has been the contention of many hon. members of this house that its application should be dominion-wide. A special committee was set up to deal with this matter and it recommended that the provisions of the act be extended to 67509-220
1, 1956	3455
Proposed Tax Relief for Municipalities all provinces. However, the Minister of Agriculture and the government decided that they would review their responsibility in respect to this particular matter and then they said that the rights of the provinces and the municipalities under the constitution must be respected.
I must say that I am rather at a loss to understand that attitude. We have had the proposal made from time to time that this is not just a provincial responsibility, and it is recognized as such in certain sections of the country. It is contended that the provisions of the act should be applicable to all Canada, but the government still insists upon keeping its application local.
By way of an example I have here a brief submitted by the Surrey diking district, Cole-brook diking district and Mud bay diking district to the Minister of Agriculture and setting out a problem which exists in that region. Many years ago these people diked the river to the extent of their financial capabilities to rectify that particular condition. However, the population on the upper reaches has grown and the slopes have been denuded of trees and today it is found that the facilities which were built some years ago are not adequate. They made representations to the provincial government which in turn made representations to the federal government asking that the engineers and officers operating under P.F.R.A. examine into and report upon what works are necessary in order to make this district safe. These people realize that in a period of ten years they are going to be in exactly the same position as they were in 30 years ago. However, the easy way out is to say, as the Minister of Agriculture wrote to the secretary of the Surrey diking district, that this is completely under the jurisdiction of the provincial and municipal governments and the diking authorities.
This suggestion of passing the buck, but not the one that the farmers want or the people need, is not the proper way to carry on business. We feel that it is wrong for our governments to continue telling each other, "This is your responsibility. If you check that in the British North America Act, you will find your responsibility is there."
My observations in this house up to this time and the conclusions I have drawn from them would indicate that it is the responsibility of the governments to get together to establish once and for all where their responsibilities begin and where they end and where they must co-operate to the greatest extent in order to give the people of this country the answer to the problem that they have the right to expect. It is completely wrong for
3456	HOUSE OF
Proposed Tax Relief for Municipalities us to have to read articles in our press to the effect that the farmers blame the higher-ups, while actually the people that are to blame are the government of this country or the provincial government as the case may be. Or we ourselves, because we are not ready to face the task of establishing whose right it is and whose it is not. If it is the responsibility of the federal authorities to help municipalities and to help districts within this country as such, such as in the Palliser area, that same responsibility is with us today in so far as the rest of Canada is concerned.
The hon. member for Okanagan-Revelstoke (Mr. McLeod), some time ago, called for a national farm rehabilitation act instead of a Prairie Farm Rehabilitation Act. I would strongly urge this government to go into the need for an extension of that particular act.
We get all kinds of criticisms from the Liberals about what our government is doing or is pretending to do, that is, the government in British Columbia. I must say it is mostly criticism that they try to heap on it, but that government is trying to be realistic in this particular matter. They have a diking problem before them, and so they make representations, as we would naturally expect them to do, to this government. When they find it is denied them, they realize that in a period of ten years something very drastic is going to happen in that area. The fact is it will all be a lake unless something is done very soon. The responsibility rests with the province, they are told, and they have to try to find means of rectifying it. Then, when they do it, they are accused of playing politics. That has not happened in just one instance. It happens in the case of the building of bridges. Just the other day we were discussing in this house the building of bridges. We tried to find exactly what responsibility the federal government has in the building of bridges. It was quite impossible to find out exactly where this responsibility ends and where it begins in the building of bridges. I tried to ascertain from the Minister of Public Works when it was federal responsibility to do certain rock work in the Canoe pass. There again I found it was quite impossible to discover that, because certain degree of navigation entered into the question. Even though it was a navigable stream, even though these things are true, we run again into the same question of responsibility. It becomes too convenient too often to pass along the responsibility to the federal government to the provincial governments and to the municipalities themselves.
The hon. member for York Centre, in speaking, suggested that we had not exploited every means of taxation in certain provinces today,


and he pointed with some glee to the fact that the province of British Columbia had a five per cent sales tax. Certainly it has a five per cent sales tax, but it has to have that because there is no means whereby it can get the wherewithal in order to operate its government as efficiently as we expect it to, and to carry on without that at the present time. Undoubtedly it will dispose of it within a very few years, but the fact nevertheless remains that we have to recognize a specific factor here. As the hon. member for York Centre suggests, certain provinces have not dipped deep enough into the bottom of the tax barrel as yet, and so we should force them to do that so that they become practically bankrupt.
The Minister of Finance himself, discussing this particular question, in reply to the hon. member for Peace River (Mr. Low), with regard to municipalities that might have been refused moneys by banks, had this to say, as recorded on page 3403 of Hansard. He was referring to the two federal-provincial conferences:
On both occasions when the provincial premiers were here last year and once again when they were here this year this question arose. On each occasion I told them that if they had any instances of municipal corporations not being able to borrow money for needed municipal purposes, I should be glad to investigate the reference they would make. To this date I have not been given the name of a single municipality in this country that has not been able to borrow money for its purposes. It may well be that there are some municipalities which are obliged to pay more interest than they think they should pay on money borrowed for local improvements.
I should say that the latter part of that statement is possibly the understatement of the year for the Minister of Finance to make. Certainly every municipality feels it is being charged too high a rate of interest, for obvious reasons, because we have instituted a Bank of Canada which through discount gives to the other banks money at a charge of three per cent. This money is made available to them; why not make it available at the same rate to the provincial governments, keep it out of the hands of the banks and let it work its way back into their hands, and make them quadruple it or issue 12 times or 15 times the amount of currency they would ordinarily distribute? The suggestion that the provincial government should be given the right to get this money for municipal purposes and pass it on to the municipalities, is, I think, quite sound. There would be no more currency in the country than there would be ordinarily except that, instead of the banks being used for that purpose, the municipal government would have the money at a nominal rate.
Certain provincial governments recognize their responsibilities with respect to the

municipalities. I am satisfied with what the hon. member for Peace River, my leader, had to say in respect to what they were doing in his province. I am just as satisfied that the province of British Columbia is also doing something to help its particular municipalities. Before I deal specifically with that, however, I think that we should recognize certain fundamental facts in respect to the increase of expenditure by federal, municipal and provincial governments. I find on examining the statistics that in 1945 the federal government's expenditure was some $4,527 million. In 1955 the expenditure was $4,773 million. That represents an increase of approximately 5 * 5 per cent in expenditures in that 10-year period. In 1945 the provincial government expended $384 million but that figure showed a tremendous increase to $1,505 million in 1955. In other words, the provinces increased their expenditures by 292 per cent while at the same time the federal government increased its only by 5-5 per cent. The municipalities increased their expenditures from $334 million in 1945 to $1,293 million in 1955. That represents an increase of 276 per cent in the expenditures made by municipalities in the 10-year period from 1945 to 1955. That is a tremendous increase. According to my computation, if the municipalities of this country could get money for 1 per cent less than the rate they are paying today, they would save $12,930,000; on 2 per cent the saving would amount to well over $25 million. If instead of paying, let us say, 5 per cent, they could borrow money for 3 per cent, we could save the municipalities some $25 million a year in this country.
Yesterday, in reply to some of the questions asked, I believe the minister stated that the sum total of the savings proposed by the amendment of the Conservatives would amount to something like $25 million. Later he was corrected and someone suggested $40 million. If the municipalities could have their interest rate cut by a matter of 3 per cent,- if the average rate is 6 per cent; I do not believe it is that high, but if it were 6 per cent and it were reduced to 3 per cent-they could save that $40 million by utilizing the Bank of Canada to make funds available to the provincial governments and then passing them on to the municipalities. It would be a guaranteed loan by the provincial governments themselves. The minister would still be privileged to collect his taxes on these other two items, although I would personally favour the Conservative amendment that the sales tax and the excise tax be eliminated, for that in itself would amount to only some $40 million or so.
In my discussion I said that the province of British Columbia recognized the need for
I. 1956	3457
Proposed Tax Relief for Municipalities cheaper money for its municipalities and so had gone out of its way to guarantee school district debentures. In the budget speech for 1956 of the Premier of British Columbia, who was at the same time the acting minister of finance, I find the following at page 11: School Districts Debentures
On May 6,	1955,	$7,500,000 of 31 per cent
debentures-maturing annually over a period of 20 years-were sold to a syndicate headed by A. E. Ames and Co. Limited (syndicate managers) who submitted the highest bid of $100-277 for each $100 representing a cost to the seller of 3-215 per cent.
Possibly this would have been the answer as to provinces helping municipalities out in respect of costs of education, namely that they should guarantee the loans of municipalities. But I find that later in that same year the province again tried to interest financiers in taking bonds for the same purpose and guaranteed by the provincial government but they could not find any takers at that rate of interest. Therefore the government did what I think every self-respecting government should do. It used the pension funds that had accumulated and invested those savings in the purchase of bonds at that rate of interest. That action in itself helped to a marked degree the school districts in that area. That is to say, a provision was made whereby these school districts could borrow the money and make certain savings. Later in the same budget address, at pages 22 and 23, I find certain other recognition that the provincial government had given in respect of municipal grants. They were proposing to increase the rate of payment-and these proposals are now instituted-on a per capita basis to cities and towns and various municipal areas as follows:
. . . from $14 to $16 per capita to a municipality with a population up to and including 3,500 persons
from $9 to $12 per capita for the number of persons in excess of 3,500 up to 8,000 inclusive
from $5 to $8 per capita for the number of persons in excess of 8,000 but not in excess of 50,000
from $4.25 to $6.50 per capita for the number of persons in excess of 50,000
That automatically meant a large increase of some $5 million to the municipalities over and above what they had in the previous years. Comparing that with the year 1943-44, this is what we find from the figures at page 23 of this report. In 1943-44 the actual figure of the amount expended was $3,526,000. In 1956-57 it is estimated that the government will be giving to the municipalities $43,829,000. That is $40 million more than they received just 10 years ago or thereabouts.
That is an indication of the feeling of the province or the provinces. I am satisfied that certainly that one is not by itself. Every province realizes that it has a direct responsi-
3458	HOUSE OF
Proposed Tax Relief for Municipalities bility to the municipalities. But in many instances because of the present tax agreement and for other reasons-such as the fact that during the war years all the services that the government and the municipalities had to maintain had fallen off badly and that they are being built up today-the fact that the federal government does not seem to want to recognize its responsibility makes it most difficult for some of these municipalities to continue operating. The provincial government in British Columbia, through the premier, just the other day recognized that further assistance was required. Hon. members might recall that many of the speeches in the housing debate had to do with aged citizens in these communities and those on a low income requiring help. On April 24 of 1956-that is this year-a proposal was made by the premier of that province whereby the provincial government plans to pay a municipal tax on the first $1,000 or $2,000 assessment of residential property for every home owner in British Columbia. That proposal in itself will certainly lighten the load of the owner of a small property. If it amounts to $1,000 a home-that is, if the assessment is $1,000-it will automatically mean that a city such as Vancouver will receive a net return of some $3,200,000 in lieu of tax collections that they would have been forced to make themselves. I think that every government in this country, be it federal, provincial or municipal, must recognize the need and must recognize what its responsibility is. Then, it should do something about it.
In conclusion, Mr. Speaker, I would say that the Conservative amendment with respect to financial assistance to municipalities is a step in the right direction but it does not go nearly far enough. The hon. member for Saskatoon (Mr. Knight) has taken one particular phase and accentuated it. I would agree with him that it is an important one, and I would go along with him. I would suggest, too, that the Bank of Canada be used to make funds available to the provinces at its discount rate, on the understanding those funds must be passed on to the municipalities. I did not deal with this specifically, but I would take issue with the Minister of Finance (Mr. Harris) with respect to the fact that the purpose of the Municipal Improvements Assistance Act was to create employment. I just cannot understand any government suggesting that the purpose of an act is to give people work. My land, I cannot think of anything in the world more horrible than to say we are going to pass an act to make it possible to give work in any municipal district. The purpose of this particular act should have been rather to create public works, to build the things the people


in the area require. This reminds me of the thirties when the late prime minister, Mr. Bennett, suggested we should build a trans-Canada highway and give people a wheelbarrow and a teaspoon or something like that to keep them working. In my opinion the objective is wrong. The objective should be to build works by using the machinery that is available for that purpose.
Then, I would propose in all seriousness that a common-sense body of civic minded men and women study the whole field of municipal, provincial and federal responsibility in respect to the division of the taxation fields as they apply in Canada today.


Daniel Roland Michener: This amendment, Mr. Speaker, both before and after the subamendment, calls attention to one of the most important and best recognized problems in the field of government financing today, namely the mounting financial problem of Canadian municipalities. It condemns the government for its failure to do any of the several things which are open to the government, and within its competence, to assist the municipalities. Two particular measures are mentioned in the amendment. The first one is to exempt municipalities and school boards from the payment of excise taxes and the 10 per cent sales tax. This aspect has been discussed sufficiently. The government recognized its duty in that respect as recently as the last session, and went a little farther towards doing complete justice to the municipalities with respect to this item.
In his remarks yesterday the minister sought to differentiate between the position of the municipality and that of the province by saying that in one case the crown was carrying on the government and in the other case it was not. He endeavoured, I think, to hide behind that legal fiction or technical objection in his approach to the relief of municipalities from sales tax. It is well known that under the federal system we have two major ranks of government. It is true that in this sphere government is carried on in the name of the crown, and in the provincial sphere as well. However, we have a third rank of government, which is the municipal range, and as has been pointed out by the hon. member for Digby-Annapolis-Kings (Mr. Nowlan), their responsibility emanates from the provincial government. The municipalities are sovereign in some respects, although their powers can be withdrawn. They have the right to tax, and the responsibility to tax, in exactly the same way as the other two ranks of government have. It seems to me that any effort to dodge this issue by such a fiction, that is that we have only two ranks

of government under the federal system, is not very realistic or very worthy of the minister.
Now, the other suggestion which has been discussed also to some extent in the course of this debate is that a payment equivalent to full taxes on crown property should be made to the municipalities. In Toronto, and hon. members will understand I am speaking of the municipality in which my riding lies as I am sure we all relate this matter to our own localities, there are some 25 departments of government represented by offices and buildings of greater or less extent. If one looks at the Toronto telephone directory under the government of Canada, one will find that, beginning with agriculture, which has several offices, there is the board of transport commissioners; civil service commission; customs and excise as well as income tax division; defence production; finance department; labour department and so on down to veterans affairs. All of the major departments of this government are represented and necessarily have their local offices.
It is with respect to these properties of the federal government in the cities and municipalities that these grants equivalent to proper taxes should be made. As has been very clearly demonstrated in the course of this debate, the government has recognized this responsibility with some timidity and, as one hon. member properly expressed it, in a nibbling way. I have no doubt that in due course the government will go the full way. In fact, supporters of the government today have been advocating that the government recognize this problem. I hope that when the time comes for a vote the hon. member for York Centre (Mr. Hollingworth) will cast his vote in accordance with the sentiments which he expressed because he clearly admitted that the government did have a responsibility to compensate the municipalities for services received in common with other taxpayers.
Those two are not the only measures which could be taken. This amendment is in general terms, with two particular measures specified, but there are many other measures I am sure which hon. members will be able to specify. They will be able to enumerate ways in which the federal government, within its competence and jurisdiction, could properly help the municipalities with their very serious and mounting financial responsibilities.
One that I call to the minister's attention as a possibility deserving very serious attention is that of exempting the residents of municipalities from payment of income tax on the money which they pay in the form of taxes to their own municipalities. The property owner and the tenant have to pay
1956	3459
Proposed Tax Relief for Municipalities taxes to the municipality, and that tax which is a tax, as I say, to a government with jurisdiction in its own field, is not allowed as a deduction when that same person computes his taxable income, and the effect is that he pays income tax on the money which he has earned with which to pay his property tax so that he pays a tax on a tax. That seems to me to be a very inequitable principle of public finance wherever it occurs.
We have good precedents in other jurisdictions for the allowance of exemption from taxable income of all taxes paid to other governments in the United States, and I should like to refer briefly to their method of dealing with this situation. The taxes paid to state and local governments are generally allowed as deductions from income which is taxed by the federal government. I quote briefly from the Canadian tax foundation tax memo of March of this year. While I am using their material I should like to commend this tax foundation, which is entirely nonpartisan in its operation, which studies tax laws and their effect on a community from a scientific point of view with the idea that they shall be just and equitable and bear as x lightly as possible. They say with respect to these taxes which are exempt:
This by Canadian standards is perhaps the most unusual of the deductions available to individual taxpayers in the United States.
Approximately two-thirds of the states as well as a number of major cities levy personal income taxes and the taxpayer is entitled to deduct these taxes in calculating net income.
Other taxes levied by state and local governments are generally deductible only by the person upon whom they are imposed by the taxing statute but where such taxes are passed on to the consumer, the latter is usually permitted to deduct the tax. As a result state and local gasoline taxes, sales taxes, user taxes, property taxes-
And that is what I am speaking about.
-property taxes whether levied by a state or by a local government, are regarded as deductible.
It is true that would cost the federal treasury some money. Earlier in this session I endeavoured to get an estimate from the minister as to the amount which would be lost by the federal treasury if real property taxes were allowed as a deduction from taxable income. As I recall it, I also tried to get an estimate of the amount which would be lost if school taxes only were allowed as a deduction from taxable income; but the minister did not see fit to estimate or to hazard a guess. Perhaps it is just as well, because, as I read the debate of last night, at one stage the minister was attempting to minimize the increase in the last 10 years of the federal government's take from the people of Canada in the form of taxes, and he allowed himself a margin of from 10 per cent to 25 per cent, and later had to admit that he was $300 million on the short
3460	HOUSE OF
Proposed Tax Relief for Municipalities side. In any event, all of this money which is taken from the municipal taxpayer and which is taxable in the hands of the municipal taxpayer has been paid by him to the municipal government by way of property taxes and then he has to find additional money to pay the tax on that tax. The effect is that since most city and municipal taxpayers are also income taxpayers, from 16 per cent to the upper bracket of our income taxation, which is between 80 per cent and 95 per cent-I am not just sure where it stands now because it is not a consideration for most of us-is paid twice to different governments, and yet it is not earned twice. If that is too costly a deduction, it seems to me that, in line with what has been said here about education today, the federal government might very properly consider allowing the school tax at least as a deduction from taxable income in the federal income tax field. That undoubtedly would cost some money. It would have the effect of leaving in the hands of the city taxpayers money which they do not retain now, and it would make it much easier for them to bear the burden of mounting city taxes, and there is no question that city taxes and municipal taxes generally are mounting.
This problem is one part of a broader problem which I do not propose to discuss at this time, namely, the fiscal relationships between the federal government and the provinces and, through the provinces, of course, the municipalities are affected. However, to keep the matter in perspective, I would like to state the problem as I see it; it is very neatly stated in a recent publication of the Canadian tax foundation in better words than I can pick at random. Therefore, I take the opportunity of quoting from the federal-provincial tax negotiations, an interim report, published by the Canadian Tax Foundation.
In the background are the inequalities of government financial resources which reflect the imbalances of the Canadian economy and terrain.
After dealing with these inequalities these words are said about this particular problem:
Important as are these regional disabilities a far more universal problem arises from the seamstretching strains on all provincial and municipal governments caused by a snowballing population and a booming economy. Provincial and municipal politicians, trapped between mounting requirements for essential facilities and services on one side and the impenetrable wall of federal taxation on the other,-
And I think these words are particularly apt.
-have been howling in frustrated wrath. And well they might, too, for theirs is a serious predicament. It is amply evident even to the casual observer that the stagnation of the depression and the immobility of the war period left the junior governments in poor shape to cope with the volcanic eruption of the postwar years. A decade of striving since 1945 seems only to have


revealed the magnitude of the job yet to be done. Given peace and prosperity the provinces and municipalities will henceforth bear the brunt of the cost of providing expanded government services and facilities for a rapidly growing country, whereas their revenue sources, being less elastic, will rise more slowly than those of the federal government.
That is the problem which is the subject of negotiations not yet terminated, negotiations which have been renewed every five years since the war and are a perennial problem of our federal system. This resolution suggests there is something the government can and probably should do until an interim solution to that problem is reached.
I want to add a few figures to those which have been given here. Several sets of figures have been given to show how the taxation of the federal government has risen during the past 15 or 20 years in comparison with expenditures of provincial and municipal governments. I should like to relate the tax receipts of these governments to the gross national product because, after all, that is the important thing. How much of the gross national product, the sum total of goods and services available in the country, is being taken by the respective governments? I will give figures for two periods, 1929 and 1954.
In 1929 the government of Canada took 6-4 per cent of the gross national product and the provincial and municipal governments together took 8-7 per cent, slightly more than what was taken by the government of Canada. Now, the figures for 1954 are quite different. In 1954 the government of Canada took 19 per cent of the gross national product and the municipal and provincial governments jointly took 8-5 per cent, less than half as much as was taken by the federal government.
It is true that these figures do not take into account federal transfers and the minister can properly correct them to the extent of the transfer payments which are made under our present system. The figures do illustrate very graphically and emphatically, I think, the change which the years have brought.
It has been suggested that the responsibility and need is swinging the other way apart from depression or war and perhaps the governments concerned will find a means of revising our fiscal arrangements to give effect to that when these negotiations are concluded; but in the meantime the problem remains and it is an immediate and pressing problem, one which this resolution suggests should be given attention today and not when the fiscal relations between the governments have been settled.
If any emphasis were needed to bring this matter home it is to be found in a good many

places. The Ontario government a few weeks ago in its submission to the royal commission investigating the economic future of Canada has two very emphatic paragraphs which relate the concentration of industry and population in the province to the costs of the province in carrying out its operations. The first paragraph reads as follows:
Because of the concentration of our industry and population, it costs us as a province a great deal of money to operate. There are times, with the present distribution of tax revenues, when the province is obliged to make a substantial outlay for services which earn a large federal revenue but yield a very small return to the province. Often we are faced with deciding on an expenditure to stimulate expansion and development, when in fact it does not pay us as a province to spend the money, owing to our small return from corporation and personal income taxes.
This is not a satisfactory situation. It is one of the anomalies of our tax system that the federal government derives by far the larger proportion of tax revenue from our natural resource industries though these resources are vested in the province, which is committed to very large expenditures for their conservation and development.
The premier of Ontario in the legislature on March 12, 1956, expressed the same idea a little more emphatically in these words:
I tell this house today that the federal government has deplorably failed to assess the needs of the provinces and their municipalities which are the right arm of peacetime development and expansion. They are as wrong in this as they were in the attitude of 1945 and 1950. The unfortunate part is that this matter is urgent, that our taxpayers are being overwhelmed because they are being deprived of their fair share of the revenues which come from the very production which causes our problems. That the federal government will be proved wrong again I have no doubt, but it is my hope that it will not be too late, before they find they are wrong, unfair and unjust to the provinces.
Now, making due allowances, that is a very clear and emphatic statement from the provincial point of view.
The solution of this particular problem is a pressing responsibility. Perhaps the problem of the provinces may be left to another time but I submit that this house is not justified in any such complacency.
The scale of assistance which is given by Ontario to its municipalities, for example, is perhaps worth noting. Again I say that I use my own province and city to illustrate these points and I am sure hon. members will bave equally useful examples in their own experience and from their own localities.
The assistance to municipalities, school boards and other local agencies will be $185 million, which is $21-5 million or 13 per cent more than in 1955-56. This is from the budget recently presented in the Ontario legislature which calls for an expenditure of $420 million. Of that amount $185 million is to be paid to municipalities, school boards and other local
Proposed Tax Relief for Municipalities agencies. This gives point to the adjective "mounting" financial problems which appears in the resolution.
The hon. member for York Centre criticized the provincial government in its dealing with the problem of municipalities. He does not suggest any means by which it can do better than that amount. He criticizes the division of the provincial grants as between roads and education but it is apparent that the limits of taxation of the province are very nearly reached if duplication is not to occur.
I have just one other illustration of this problem. My illustration is drawn from the metropolitan budget for this year. It requires a levy of $44 million on taxpayers of which almost 68 per cent will be devoted to education and social services. In addition there are other sources of revenue amounting to approximately $30 million making up the total of metropolitan Toronto's expenditures. I shall now read an extract from an article which appeared in the press recently:
Finance commissioner G. Arthur Lascelles described the amounts for education and social services as inequitable and burdensome. The need for increased provincial financial aid in these fields is apparent, he contended.
That is the situation confronting the metropolitan council in Toronto. We have a fourth range of government, the city of Toronto council, and their problem is very similar. In their budget this year they are faced with the necessity of increasing taxes and it is due to what has been so well described here as the insufficiency of their tax resources as compared to their mounting responsibilities.
The inaction of the government in the face of these facts is the subject of this resolution. For some years the government has been developing a centralism-or an "ego-centralism" if I may coin a word-in its general approach to the local governments, and that attitude is a sufficient basis for this motion of criticism and censure. It is only one of many bases which make us question and which destroy our confidence in the government's efforts to solve the problem.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, a good deal has been said on this motion and I am going to be quite brief in my remarks in support of the amendment and the subamendment. We in this group intend to support the amendment as indicating interest and concern over this pressing problem, but in our opinion its proposals are not definitive enough. That is one reason why the hon. member for Saskatoon (Mr. Knight) moved a subamendment, to at least pinpoint one of the major issues surrounding this problem. In other words, we support
3462	HOUSE OF
Proposed Tax Relief for Municipalities the spirit and purpose of the amendment and welcome the opportunity to discuss this problem which is of such growing importance to municipalities across this country.
Before going on with my few brief remarks may I say that I enjoyed the speech of the hon. member for Cape Breton South (Mr. Gillis). I think he made a solid contribution to the debate. He did particularly well in focussing attention on the hard core of this question, which in the opinion of this group is the increasing cost of education, of maintaining the unemployed employables and of health and welfare services.
I think all of us in this group agree with him when he says that it is a thoroughly unsound principle for governments to be taxing one another. In our opinion the elimination of the excise and sales taxes would not provide any substantial or worth-while relief to municipalities, nor would the payment by the federal government of full municipal taxes on federal properties be much of a contribution to the exchequers of the municipalities. It must be remembered that a great majority of the municipalities in this dominion would not receive any extra assistance in that way. While we support the proposals as offering some minor relief to the municipalities, we in this group think they are totally inadequate in providing a solution to the problem.
We support the representations made by hon. members in support of reviving the Municipal Improvements Assistance Act. I cannot understand why the government does not revive this legislation which would permit municipalities to borrow at low interest the money necessary to undertake self-liquidating projects.
I know in some of the municipalities in the constituency which I have the honour to represent there are a number of projects which could be undertaken if money could be borrowed under the terms of that legislation. In Trail there is a necessity for the lengthening and extension of the river wall for protection against floods. An undertaking of that sort would be most expensive and could be financed by the city only under such arrangement as this act. Then there are necessary improvements to streets and the provision of required drainage in the main part of the city. I know the city of Nelson has certain public works and improvements in the form of roads and things of that sort under consideration which could be undertaken if this act were re-introduced.
My ebullient and effervescent and effusive friend-I think I am safe in terming him that-the hon. member for Digby-Annapolis-Kings (Mr. Nowlan) suggested that our


constitution and our present financial arrangements were brought about in the horse and buggy days. I think it is the extension of communications, particularly the automobile, which has created many new problems for our municipalities. As the hon. member mentioned, there are many people living in one municipality but who are creating costs in another municipality because of the attendance of their children in school there.
I might say that I have always had a lot of trouble with my false teeth since I left the Liberal party. They seem as if they always want to fall out when I get on certain subjects. I am having difficulty just now and I apologize for the trouble 1 am having in speaking.
Other costs borne by the municipality have increased substantially because the increase in educational standards, health and welfare standards and the wider acceptance of social responsibility for the maintenance of the unemployed. But the main problem of the municipality, as stated by the hon. member for Cape Breton South, is that created by educational costs, increased health and welfare costs and the increased cost of maintaining the unemployed employables. We believe that that is the core of the situation. Those are important services which must be maintained but which cannot be maintained on an adequate basis by the municipalities if they do not receive some additional assistance from the federal and provincial governments.
I believe in orderly democratic procedure. We hear some hon. members speaking as though this government should make direct grants to the municipalities. I do not believe in that sort of thing. I believe in the continued acceptance of the established chain of responsibility from the federal government to the provincial government and from the provincial government to the municipality. In my opinion if the federal government started to tinker around with plans which meant dealing directly with the municipalities without the co-operation of the provincial governments or through the provincial governments the whole financial situation could become chaotic. I believe further in the administration of government at the lowest level of government capable of undertaking the task. I think that is how a sound democracy is maintained.
If we believe in these principles, and knowing what the problem is today, I think we will realize that it is only a financial problem. I do not mean that it is a problem which is going to be solved by crackpots or jackpots; it will have to be solved as the result of sound procedures on the part of the governments concerned. I think the members

of all governments, whether federal or provincial, should continually bring to the attention of the public the fact that no government gives anyone anything without first taking it away from the people.
It is simply a question of the scientific redistribution of the taxes collected from the people as a whole. In my opinion grants that are earmarked for educational purposes, health and welfare purposes and the maintenance of unemployed employables should be made to the municipalities through the provincial governments. To me it is simply a question of federal-provincial-municipal co-operation and agreement in the allocating of financial responsibility for the various services performed by the several levels of government.
I want to make this point because I believe that success in solving the problems of the municipalities depends upon the honesty of approach by all the governments concerned. It should be a strictly non-partisan approach. If the problem is not faced in that way by the provincial and federal governments then the municipalities are not going to be rescued from their present financial difficulties for a long time to come. I strongly urge all governments associated in dealing with this problem to face it on a strictly non-partisan basis in the interests of the people we are all trying to serve.


Walter Edward Harris: Mr. Speaker, I know that the hon. member for Kootenay West would forgive me for making a personal remark about himself, since he did so. He spoke of the difficulty that he has when he comes to speak about the Liberal party, in that his false teeth tend to fall out at that particular moment. It may well be that the false teeth are pure gold and know what they are doing and that they object to my hon. friend speaking against the Liberal party.
There seems to be a misapprehension as to the real purpose of the amendment and the subamendment. I take it that the hon. member for Greenwood (Mr. Macdonnell), in his speech yesterday, tried to bring the discussion back whence it had gone, even in my speech, pointing out that the real kernel of the resolution is in the opening words rather than the final words, and that this is a request that we should do something to assist the municipalities of Canada to meet the mounting financial problems. That is a generalization, and the point was made that this is a much broader problem than merely a question of whether the government should pay taxes on property held in municipalities or whether we should tax them for sales tax on their purchases and so on.
1, 1956	3463
Proposed Tax Relief for Municipalities
Yet the final speaker, the hon. member for Kootenay West, said he believed in the chain of command, that he did not believe in the federal government intervening with the-municipalities except through the provinces. Under those conditions he would probably agree that he should not support this motion, because it does request this government to do something other than what is being done at the present time in the chain of command.


George Clyde Nowlan: Could that not be done through the chain of command in the provinces?


Walter Edward Harris: As I had occasion in my budget speech to say, more conferences with the provinces were held in the past 12 months than in almost as many years before that.
Mr. Pallet!: At whose instance?


Walter Edward Harris: 
Stanley Howard Knowles: Is it not possible to do both?


Walter Edward Harris: The purpose of the Municipal Grants Act surely has been gone into at sufficient length to indicate that the intention was to share the burden in those municipalities where there was a great concentration of
	.

federal properties, so much so that it would be unfair in those municipalities to have the local taxpayer pay the full cost of federal services.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Walter Edward Harris: Mr. Speaker, I have the great pleasure of addressing two of the hon. members in the opposition at least and you as well. At six o'clock I was referring briefly to the Municipal Improvements Assistance Act. I want to make only one more reference to it. In the cost of all projects, whether they be part of a municipal, provincial or federal spending, there should be an item of relative need having regard to other items before the taxing bodies. Municipal corporations, if subsidized in this manner, would perhaps engage in activities which they would feel they ought in fact to carry out at that time rather than later, to make sure that the subsidy limit was available. Indeed, some of our provincial premiers-and I think what they have said has been repeated in the house by opposition members-have complained of features of our offers to the provincial government as being conditional and that these imposed upon them the choice of rejecting much-desired projects or of accepting them at a time when they really otherwise would not carry them out because of their financial position. For these reasons, and bearing in mind the fact that if one subsidizes a municipality I presume one should subsidize a provincial government,-at any rate, there is no logic in doing the one and not the other- I think we ought to go back to the first principle of the Municipal Improvement's Assistance Act which was to stimulate employment at a time when public works was the recognized method of doing that. That was the reason at that time and it would still be the reason for the use of this particular statute.
The hon. member for St. Paul's (Mr. Michener), as I recall it-although I was not able to listen too directly to what he said- made some passing reference to the possibility of deduction of municipal taxes from federal taxes. This, I take it, was an argument that property taxes ought to be a credit on federal income tax or something of that kind. This proposal has not been brought forward in this session previously, as I recall it, although we have had it at other sessions. I have often wondered why it has been recommended because obviously it must be to the great advantage of those of our citizens who have substantial incomes. Surely the tax deduction

for income tax purposes of a person whose municipal taxes would run to $1,000 because he lived in an expensive home is of greater advantage as compared to the deduction which would be available to the modest householder whose tax would be $100, $200 or perhaps $300.
I think the hon. member for Cape Breton South (Mr. Gillis) probably made the speech that I might have made, although he came to a different conclusion than I would have come to. His criticism of the main amendment was that the real advantage to the municipal corporations is not by reason of tax exemption with regard to sales tax nor by reason of this government paying full taxes on its property but rather because of the relative advantage to be gained by municipal corporations by welfare services which are being provided by this government. If one thinks of the period we are talking about and the Municipal Improvements Assistance Act, 1938, and recalls that the amount paid by the federal government at that time to a municipal corporation was I think $20 for old age pensions and that today it is $40;-


Mr. Macdonnell:: Its income was then one-tenth as much as it is today.


Walter Edward Harris: -and if you recall as well that we now pay family allowances; and if you recall as well that we offer-and the provincial governments accept-certain grants to hospitals and the like which are a great aid to municipal corporations; and if you recall as well that on the order paper, in the name of my colleague the Minister of National Health and Welfare (Mr. Martin) there is a motion which would provide for even greater assistance to the provinces in certain needy cases which would undoubtedly remove some of the cost of providing these services which is borne by the municipal corporation, it must be evident that this government is doing a great deal to aid municipalities.
There is little that I can add, Mr. Speaker, except to say that the question of sales tax is always being considered by the Minister of Finance (Mr. Harris) in order to see that, first, the tax is properly based; and second, that if there are exemptions, those exemptions extend within the proper area. We shall continue to consider the sales tax from time to time.
I should also say what I said last year with respect to the Municipal Grants Act. The experience we gained as the result of paying in to these municipal corporations where the assessment was over 4 per cent of the total, was useful in deciding that we could reduce that percentage to 2 per cent.
1, 1956	3465
Proposed Tax Relief for Municipalities At the time I said that I should like to have experience at the 2 per cent level before deciding what other step might be taken. Since I cannot go any further than that, I shall content myself by saying that it seems to me that the hon. member for Kootenay West (Mr. Herridge) and I might have been a little bit unfortunate in our use of the phrase "chain of command". There is no chain of command from Ottawa through the provincial governments down to the municipal corporations. On the contrary, I rejected the suggestion of the hon. member for Peace River (Mr. Low) that there ought to be direction from this house to the municipal corporations. What we have in Canada, Mr. Speaker, is a constitution which wisely divides the taxing powers between the federal government and the provincial government. I think we would all get along a good deal better if we did our utmost to observe those rules as best we possibly can.


Stanley Howard Knowles: Would the minister permit a question?


Walter Edward Harris: Yes.


Stanley Howard Knowles: Before his time runs out will the minister tell us where the government stands on the subamendment having to do with federal aid to education?


Walter Edward Harris: Mr. Speaker, the question of federal aid to education has been discussed in the house almost every session since the war. I think we have made it clear that we make substantial contributions in the direct field of Indian education as we are obliged to do. In that connection I may say that my colleague the Minister of Citizenship and Immigration (Mr. Pickersgill) is making great strides in making arrangements with provincial governments for the teaching of Indian children in the provincial schools of the provinces. I think we ought to encourage that procedure. The hon. member for Saskatoon (Mr. Knight) raised the subject. I point out that we make grants to vocational training. We make grants of scholarships, bursaries and the like. We vote some $7 million to higher education. Those are all grants which I think the house has supported; indeed I think it has perhaps criticized them for their not being sufficient.


Mr. Speaker:: Order. As it is ten minutes after eight,-


Stanley Howard Knowles: Saved by the clock.


James MacKerras Macdonnell: Saved by the bell.


Mr. Speaker:: -under the provisions of standing order 56, I must forthwith put the question on the following amendments.
3466	HOUSE OF
Proposed Tax Relief for Municipalities


Mr. Speaker:: I declare the amendment to	
the amendment to the main motion lost. The	
question is now on	the amendment to the
main motion.	
The house divided on the amendment	
(Mr. Drew) which	was negatived on the
following division:	
YEAS	
Messrs:	
Argue	Johnson (Kindersley)
Balcer	Johnston (Bow River),
Barnett	Jones
Blackmore	Knight
Blair	Knowles
Bryce	Lennard
Bryson	Macdonnell
Cameron (Nanaimo)	MacLean
Campbell	McBain
Cardiff	McGregor
Castleden	McLeod
Charlton	Michener
Churchill	Mitchell (London)
Coldwell	Nesbitt
Diefenbaker	Nicholson
Dinsdale	Nowlan
Fairclough, Mrs.	Pallett
Fraser (Peterborough)	Pearkes
Fulton	Poulin
Gillis	Quelch
Green	Rea
Hahn	Regier
Hamilton (Notre Dame	Robinson (Bruce)
de Grace)	Smith (Battle River-
Hamilton (York West)	Camrose)
Hansell	Stanton
Hees	Starr
Herridge	Stewart (Winnipeg
Hodgson	North)
Holowach	Thomas
Howe (Wellington-	Tustin
Huron)	Van Home

White (Hastings-	Yuill
Frontenac)	Zaplitny-64.
White (Middlesex East)
NAYS Messrs:
Anderson
Applewhaite
Arsenault
Ashbourne
Batten
Benidickson
Bennett
.Blanchette
Boisvert
Bonnier
Boucher
Bourget
Bourque
Brown (Brantford)
Brown (Essex West)
Bruneau
Buchanan
Byrne
Cameron (High Park)
Campney
*Cannon
Cardin
Caron
Car rick
Carter
Cauchon
Cavers
Cloutier
Dechene
Decore
Denis
Deschatelets
Deslieres
Dickey
Dumas
Enfield
Eudes
Fairey
Follwell
Forgie
Fraser (St. John's East)
Gardiner
Garland
Garson
Gauthier. (Nickel Belt) Gauthier (Portneuf) Gingras Goode
Gour (Russell)
Gourd (Chapleau)
Gregg
Habel
Hanna
Hardie
Harris
Harrison
Healy
Hellyer
Henderson
Henry
Hollingworth
Hosking
Houck
Howe (Port Arthur)
Huffman
Hunter
James
J utras
Kickham
Kirk (Shelburne-Yarmouth-Clare) Laflamme Lafontaine Langlois (Gaspe) Lapointe Lavigne
Leduc (Jacques Cartier-Lasalle)
Leduc (Verdun)
Lefrangois
Legare
Lusby
MacDougall
MacEachen
MacKenzie
Macnaughton
McCann
McCubbin
McCulloch (Pictou)
Mcllraith
Mclvor
McMillan
Maltais
Mang
Marler
Martin
Masse
Menard
Meunier
Michaud
Mitchell (Sudbury)
Monette
Philpott
Pickersgill
Pommer
Power (Quebec South)
Power (St. John's West)
Prudham
Purdy
Ratelle
Reinke
Richard (Ottawa East) Richard (St. Maurice-Lafleche)
Robertson
Robichaud
Robinson (Simcoe East)
Rochefort
Rouleau
Roy
St. Laurent (Quebec East)
St. Laurent (Temis-couata)
Schneider Shipley, Mrs.
Simmons
Sinclair
Stick
Stuart (Charlotte)
Studer
Thibault
Tucker
Weaver
Weselak
White (Waterloo South) Winters-132.
Motion (Mr. Harris) agreed to and the house went into committee, Mr. Robinson (Simcoe East) in the chair.
Farm Improvement Loans Act
The estimates of the following departments were first taken up and entered for consideration:
DEPARTMENT OF FINANCE General administration-
116. Departmental administration, $2,035,230.



DEPARTMENT OF NORTHERN AFFAIRS AND NATIONAL RESOURCES

[Stage Direction]
292. Departmental administration, $543,934.

[Stage Direction]
Privy council office-
328. General administration, $405,184.
Proceedings reported.


[Stage Direction]
The house in committee on Bill No. 208, to amend the Farm Improvement Loans Act- Mr. Harris-Mr. Robinson (Simcoe East) in the chair.
Clause 1 agreed to.
On clause 2.
Some hon. Members:: Carried.


Mr. Charlton:: Is the minister suggesting any change in this clause?


Walter Edward Harris: I understand that the clause extends the time in which applications can be made for three years. It was not my intention to suggest an amendment to the bill.


[Stage Direction]
Clause agreed to.
Clauses 3 and 4 agreed to.
On clause 5-False statement in application for loan or misuse of loan.
Some hon. Members:: Carried.


John Alpheus Charlton: This clause provides a penalty of $500 upon conviction for the giving of false information with regard to a loan. This seems to me to be rather severe. Can the minister state whether there have been convictions under this clause?


Walter Edward Harris: I was not a member of the banking and commerce committee, as I believe my friend was, but my recollection is that there have been no convictions although I would not be sure as to that. I would point out that the penalty clause states "not more than five hundred dollars" and I doubt if a magistrate would impose the maximum penalty.


Mr. Pallell:: This clause reads:
Any person who makes a statement in an application for a guaranteed farm improvement loan that is false in any material respect-

Farm Improvement Loans Act
My understanding is that in order to obtain a conviction in criminal proceedings intention must be shown, but under this section it would be possible for a person to be convicted for a mere inadvertence in making a statement. I suggest that it should be necessary that intention be proved.


Walter Edward Harris: Intent to deceive is always part of any crime of this kind. If the magistrate found that in fact there was no such intent I doubt if there would be a conviction.
Mr. Pallet!: The magistrate might not have any option under this legislation. This is not the Criminal Code where there would be the benefit of such protection; this is a separate act and if the prosecution insisted the magistrate would not have any alternative. I think this clause should be reconsidered before it is allowed to pass in its present form.


Walter Edward Harris: With the exception of the
underlined words this is the form in which the clause has been for some time and I have not heard of any complaints in the house about prosecutions under it.


Edmund Davie Fulton: Why is the time for prosecution extended? Has there been any experience which indicates that the government or the minister with all the resources at their command have not been able to prosecute within the time now provided?


Walter Edward Harris: I do not understand.


Edmund Davie Fulton: If the minister will read the explanatory note he will see that one purpose is to extend the time for prosecution; it provides that prosecution may be brought within a year.


Walter Edward Harris: We are extending the act for three years and we are extending the time for prosecutions under the act for the same period of time.


Edmund Davie Fulton: You are extending the time within which a prosecution may be brought to one year. You are not extending it to three years. I wonder if the minister has read the act any better than his colleagues who are shouting "Carried, carried," before they have even brought it out from under their desks. Has the minister any explanation of the reason why the time within which the prosecution shall be brought shall be extended to one year?


Walter Edward Harris: As I understand it, the proceedings must be brought within 12 months of the alleged offence. The 12-month limit dates from the time the offence is committed.


Edmund Davie Fulton: What is the reason for the extension?
[Mr. Pallett.)


Walter Edward Harris: The reason is that we are extending the act for a three-year period of time and we want a penalty clause for that three-year period of time, and we have a
12-month period after the time of the alleged offence.


Edmund Davie Fulton: That is the extension of time, surely, because there is no other extension of time provided for in that section, but you are saying that the whole section with regard to the time limit is amended, and it is now provided that the proceedings for the offence may be commenced at any time within 12 months from the day on which the evidence comes to the knowledge of the minister. It is stated in the explanatory note that it is an extension of the time in which prosecutions may be brought. I am asking the reason for that extension. Is it the experience that some lesser period was not sufficient to enable some prosecutions to be brought?


Walter Edward Harris: Perhaps I have not understood my hon. friend's objections. The act would come to an end on March 31, 1959, and we should have a period in which to prosecute after that. There should also be in the act, I should think-and I think my hon. friend will agree with me-a period of time beyond which the minister is not in a position to prosecute. That is fixed by the act, being 12 months after the minister becomes aware of the alleged infraction of the regulation.


Mr. Hamilton (York West):: I should like to refer to that point which the minister seemed to pass over very quickly here, and that is that the time limit provided is not 12 months after the commission of the offence. It is provided here that it is 12 months from the time that the evidence comes to the attention of the minister.


Walter Edward Harris: That is right.


John Borden Hamilton: In this case there could be no limitation whatsoever on the time within which a prosecution might be launched. In addition, the act further provides that a secondary type of evidence will be satisfactory to prove that date. I think this is a very serious matter. If it is the intention to allow an unspecified time, which in fact is being done, for launching this prosecution, then surely the court should require, or this regulation should provide, that the court should give primary evidence as to the time when the evidence was available to the department to launch the prosecution. I do not think it should be done on a simple signature of the minister as saying at which time it was brought to his attention. It seems to me that evidence of this kind

snould be available in a department for several years before it might come to the attention of the minister. It might be available to senior officials in his department, and nothing might be done about it. If there is to be a blanket period allowed, then in the best principles of justice primary evidence should be required that someone in the department should be available in court to indicate when that evidence first became available to the department to launch the prosecution.


George Clyde Nowlan: I would support what the hon. member for Peel said a few moments ago. It is true, as the minister points out, that the section is relatively in the same wording as heretofore, to the effect that any person who makes a statement that is false in any material respect is guilty of an offence, and so on. But I suggest that the mere fact that we have been wrong, or this parliament has been wrong, in passing legislation before is no reason why we should be wrong again. I should think the Minister of Justice, with his experience in dealing with the Criminal Code and the administration of justice generally, whatever he may be constrained to say or not to say when this particularly is before the house, would feel it should be a matter of knowingly making a false statement. What is meant by a false statement? Is it an incorrect statement? There is no definition. If it means that there is something maliciously or misleadingly wrong, that is one thing, but it states here:
Any person who makes a statement . . . that is false in any material respect . . .
I suggest that that is going much further than the law should go in dealing with an offence such as this. I am sure the Minister of Justice has read the statement made by the attorney general of Nova Scotia in the legislature two weeks ago in which he deplored the action of this parliament in reversing the old doctrine. He said that in dealing with matters of that kind the common law and the old principles on which our law is based have been largely abrogated, and he suggested that this House of Commons had been more delinquent than any other parliament in that respect. Although the Nova Scotia legislature was responsible for some of the legislation, he also inferred, and I do not know how he justified it, that it was wrong in principle and something should be done about it. It is still in this section. If a man makes a loan of $500 and he uses $15 for something else, is he going to be liable to prosecution or liable to a fine of $500 a year or ten years after the loan was made? I think this section is going much further. It is part of a trend in statutory law to shift the burden of proof so that it is possible
Farm Improvement Loans Act to convict on less substantial evidence. I want to register my protest. I think the minister should reconsider it and take it up with the Department of Justice to see if some amendment, without interfering with the principle, could be incorporated in the section that would safeguard the rights of the individual for fair trial, and one which does not abrogate all the principles of criminal law and quasi-criminal law on which our courts have operated in the past.


Edmund Davie Fulton: I wanted to discuss further the point I had raised with the minister, because apparently he and I are not talking about the same point. I appreciate that, if the operation of the act is to be extended in time, then obviously all the provisions of the act have to be extended; but, if I understand the explanatory note correctly, this is not merely a provision of that nature. This is a change of law. It is a change the effect of which is to provide that a prosecution may be launched at any time within 12 months after the evidence upon which that prosecution is based has come to the attention of the minister.
According to the notes to the bill, it is an entirely new provision, not merely extending the time, which already exists; but it is adding a new provision to the act. I do not know the purpose of it. The minister has not yet been able to satisfy us that there is any purpose for it because, as I say, he has not been discussing it on the basis which I now suggest is the basis upon which it rests, and which I question.
Further, it is provided by a new proposed subsection that a document purporting to have been issued by the minister or by any person on his behalf shall be received in evidence without proof of the signature or of the official status of the person purporting to have been acting under the minister- again, a very considerable extension of the law, and a new one in so far as this act, the Farm Improvement Loans Act, is concerned. What is the reason? Is it that the government has cause to believe that there have been numbers of frauds in connection with this act in the past which they have not been able to prosecute effectively? Or have they just dreamed up some idea in accordance with some theory of their own that they are going to strike terror into the hearts of all potential wrongdoers and incidentally to discharge people from making applications for loans under this act because of the extremely stringent provisions that are now being included in the act for the first time? What is the purpose of these two new sections which are proposed to be added by this section 5? We have had absolutely no explanation of that matter.

Farm Improvement Loans Act


Walter Edward Harris: My friend the hon. member for Kamloops seems to suffer from nightmares *more than most of us.


Edmund Davie Fulton: I am obliged to look at what is opposite me. You can hardly blame me.


Walter Edward Harris: He can imagine every form of discreditable thought that I have heard *expressed in this house with regard to the intentions of the government in what, after *all, is advantageous legislation for the farmers of this country. The purpose of these *sections is self-evident to anyone even without legal training such as that which my hon. friend has. They provide that the minister in charge of this act may certify, and that the certificate may be received in evidence, that knowledge of the offence, namely wrongful expenditures of the proceeds of the taxpayers' money used for this purpose or a declaration made falsely-and not anything short of falsely, may I point out-in a material point has come to hand at a particular date; and the minister then has 12 months from that date in which to launch a prosecution. I cannot paraphrase the words any more plainly than that. So far as I know,-and as I said, I am not certain of this-we have not had prosecutions under the act; certainly we have not had any that have been brought to my attention.


George Clyde Nowlan: Would the minister comment on how that affects the statute of limitations so far as ordinary prosecutions are concerned? Does this not extend it much beyond the limit?


Walter Edward Harris: I think I will ask the Minister -of Justice to answer that question. But the 12 months' restriction on the minister concerned is surely a restriction in favour of the applicant and not something in favour of the minister.


George Clyde Nowlan: It is 12 months from the time he gets the information. That might be two -or three years.


Walter Edward Harris: That is quite correct. I can assure hon. members opposite that in all of the representations that I had on behalf of this bill, there was expressed the most *earnest desire that we should make additional benefits available to the farm community. I do not recall anyone's saying that the administration of the act had been harsh, repressive or anything like that. Indeed, I received a good many compliments with regard to it.


Edmund Davie Fulton: That is exactly why we want to know why these new and unusual provisions are added. The minister has not explained that point. He has not said a word


about it. He and I may spar and duel. I will try not to be too provocative in what I have to say. If I have been provocative previously, I shall try to change my tactics. I am at a loss to understand why it is considered desirable to add these sections. Surely the government must have some purpose in mind or must have had some experience on the basis of which it thinks that these sections are desirable. They are new, they are unusual and they are different. They are entirely out of keeping, as I understand it, with the previous provisions of the act which is now being amended. What experience has given rise to these sections or what purpose is intended to be accomplished by these sections? Why are they necessary?


Walter Edward Harris: Mr. Chairman, I will try once again. In every statute in which there must be penalties, I suggest that good draftsmanship would require a limitation of time on prosecutions under the act. We have here a statement that the minister cannot, after he comes into possession of information which would lead him to suppose that there has been a violation of the act, allow time to run indefinitely. He must launch his prosecution within 12 months. That provision I think is advantageous to the borrower. I cannot see why it is not. It should be pointed out that the new sections that we are talking about are just two in number, namely the 12-month period and the question of certificate of proof. In this kind of statute it is not uncommon to provide that the certificate of a minister will be taken for what, after all, is a relatively minor point and one on which the prosecution would fall from the point of view of the time limit but for no other reason. I cannot suggest to my hon. friend-and I think he perhaps expects that I should-that some minister in the past has launched a prosecution after a period of five or six years and has been criticized by the courts for doing so, because I have no knowledge that such a thing has occurred. Neither have I any knowledge that we have lost a prosecution because a certificate of a minister has not been present. I regret that this is so because I am sure it would help my hon. friend in concluding that these provisions were required and desirable. If my hon. friend will seriously consider the fact that one always tries to make a bill as complete as it should be, I think he will agree that provisions of this kind ought to be imported if they were not imported previously.


George Clyde Nowlan: Mr. Chairman, I do not think we should follow the minister's argument in this respect. I say that with all due respect to him. The minister said it is possible that some time somebody has lost a prosecution.


Walter Edward Harris: I did not say that. I do not know that.


George Clyde Nowlan: I understood that he suggested the possibility that it might have happened and that was the reason why this amendment was being introduced at this time. If a prosecution was lost under circumstances such as those suggested, I suggest that it should have been lost. Through you, Mr. Chairman, I ask the minister if this is not the situation now with respect to ordinary criminal prosecutions. I see that we have sitting on the front bench four lawyers who have had a great deal of experience in administration of the law in this country. Let us consider the situation with regard to our Criminal Code and criminal cases. I refer to actual criminal cases, not quasi-criminal cases. I have not the code in front of me and I have been away from it for so long that with the advent of the new code, I am not as familiar with it as I might be. I am not trying to suggest that it does not contain time limits. But I know, for instance, that there is in the limitation act a section which says that prosecutions must be commenced within six months. That is with reference to a certain type of criminal offence. In other cases it is within a year and in others within two years. In other words, there you are dealing with specific criminal offences under the Criminal Code. Yet you have a specific time within which the prosecution must be launched. If it is not launched within that time, it is not started; and if it is started, naturally it fails.
The unique thing about this section, as I read it, is that it provides that prosecutions may be launched within 12 months after the information came to the attention of the minister, or after the minister was satisfied that there was evidence upon which he could launch a prosecution. It might be 10 years after the commission of the offence before something comes to the attention of the minister. Then all he is required to do is to certify under his hand in writing that he obtained this information at such and such a date and, forsooth, we have a prosecution launched although perhaps except for murder and some of the most serious offences under the Criminal Code it would be impossible to do it in connection with any known criminal offence such as those we have defined today.
I make this suggestion seriously to the minister. I know he is dealing with this thing and is trying as best he can to explain the situation. I think possibly he himself is finding some difficulty in rationalizing it. I think there is altogether too much of a tendency to enlarge the law and to make prosecutions easier. Without meaning to cast
Farm, Improvement Loans Act any reflections on anyone, I think possibly there are in certain government departments those who have responsibility for draftsmanship who feel that it is their bounden duty to do everything they can to make it easier for the prosecution and that, having done that, they have fulfilled their duty to their Queen and country and have earned their salaries. Personally I do not agree with that point of view and I do not think the country generally agrees with it. I am asking that the minister hold up this section to consult with the Minister of Justice to see if this section should not be deleted or at least whether some safeguarding amendment should not be brought into it so that we would be within the framework of the provisions for crimes under the Criminal Code.


The Chairman:: 
William Alfred Robinson: I declare the amendment lost. Shall the clause carry?


Edmund Davie Fulton: I regret that there are so many in the committee who are prepared to provide in legislation of this kind, which is not even, criminal legislation, that the ordinary safeguards afforded under the criminal law shall be removed. I hope that my hon. friends opposite will reconsider their position, especially with respect to subclause 2 of clause 5 of the bill now before us. In spite of what the-minister has said I suggest, with the utmost earnestness, that in this bill to amend the Farm Improvement Loans Act we are introducing a new quasi-criminal principle which extends far beyond anything which now exists in the Criminal Code for a similar offence punishable on summary proceedings. We are

Farm Improvement Loans Act introducing this principle into a bill in which it has no place, and on a basis which has so far been entirely unjustified.
I am satisfied, Mr. Chairman, that we should not enact legislation of this far-reaching effect unless it has been amply justified. I refer to legislation which changes principles which have been established in the criminal law for a long time, protections and safeguards which have existed for many years. We are asked to set these aside by introducing a principle which not only runs counter to the safeguards that existed before but also asserts such a diametrically opposed principle it should not be adopted except after the most careful consideration and ample explanation. We have had no such justification. I appreciate that the Minister of Finance is considerably embarrassed because, in fact, there is no justification in practice or in experience for this proposal. There is nothing to support it except the idea of some draftsmen in the department that it might be a good idea to write it into the law. I submit, in fact I state positively, it is not a good idea in the absence of some basis of experience which shows it should be put in there.
If the Minister of Finance, the Minister of Agriculture or the Minister of Justice could come before us and say: We have had experience with cases under the Farm Improvement Loans Act where loans have been applied for on the basis of the most fraudulent statements, but because of the complicated nature of the transaction the fraud has not come to light until long after the transaction has been closed; after all that time we find that this fraud has been perpetrated on the government and the people of Canada but because of the passage of time we have been unable to secure a conviction; in fact, we have been unable to even launch a prosecution; if they could tell us that, or anything approaching that, then they would have made a good case for the inclusion of a section such as this.
But without such a case, let us look at what we are asked to do. I think that for the record, Mr. Chairman, perhaps the new subclause should be read out:
Section 8 of the said act is further amended i>y adding thereto the following subsections:
"(3) Proceedings for an offence under this section may be commenced at any time within 12 months from the day on which evidence, sufficient in the opinion of the minister to justify prosecution for the offence, comes to his knowledge."
So, Mr. Chairman, it is not going to be just 12 months after the offence. The offence could have been committed many years ago. It is 12 months after knowledge of the alleged offence comes to light, which extends beyond the bounds of all reason the time

within which prosecutions must be brought under the ordinary provisions of the Criminal Code.
Subsection 4 is even more far-reaching. It would read as follows:
"For the purposes of subsection (3), a document purporting to have been issued by the minister or by any person purporting to be acting on his behalf, certifying as to the day on which the evidence referred to in that section came to the knowledge of the minister, shall be received in evidence as conclusive proof of such fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof."
So that you have a provision which allows some departmental official, far removed from ultimate responsibility in the matter, to launch a prosecution long after the alleged offence has taken place, long after the facts in the possession of the accused have faded from memory, long after the evidence which would otherwise have been available to the accused has been lost, long after the persons who would otherwise have been available to give evidence have moved away: in other words, long after any opportunity to the accused to defend himself has gone by. This prosecution may be launched on the basis of a document signed by such an official who, as I say, is far-removed from ultimate responsibility in the matter itself. The document purporting to be signed on behalf of the minister requires neither proof of the signature nor of the official character; that is to say the appointment of the person who is purported to sign it on behalf of the minister. Well, nothing could be more radical in the context of the ordinary safeguards of the criminal law which, after all, is designed to secure conviction of criminals but also to provide proper safeguards. Nothing could be more radical than this amendment to the criminal law in the disguise of an amendment to the Farm Improvement Loans Act.
After all, there are reasons why it is provided in the criminal law that prosecutions must be launched within a certain time, because evidence does have a habit of disappearing and accused persons are prejudiced thereby to an equal if not to a greater extent than the crown. The crown has tremendous facilities at its disposal to gather in evidence, to seek out persons who have moved away and to bring them back, facilities out of all proportion compared with those available to an accused person, a person accused 12 years perhaps after the event. It could be possible for that to happen under the provisions that we are now asked to enact. Perhaps I should emphasize that. It might be 20 years after the offence. The 12 months apply only to the time within which the prosecution must be brought after the evidence of the alleged offence has come to the

attention of the minister. That is the reason for those safeguards of those time limits in the criminal law within which prosecution must be brought. An offence of this nature under the Criminal Code, triable under the summary prosecutions section part of the code, must be brought within six months of the date of the offence. I speak subject to correction by those who are more versed in the criminal law than I; but certainly it is a time far more limited than the time which would be available here.
Here we are, sir, in this house, asked by the government to accept legislation of this nature for which not one shadow of justification has been presented to us. We are asking, as the hon. member for Digby-Annapolis-Kings pointed out, four experienced lawyers sitting on the front bench. We admit that this matter has come up somewhat by surprise for the government. Perhaps the Minister of Finance has been shocked to the same extent that we were because of the circumstances under which this matter has come before us, but he has three illustrious colleagues there who are not demanding that he himself give us the answer. There is the Minister of National Defence, who was solicitor general for a time; there is the Prime Minister one seat away from him whose record as a lawyer in Canada requires no illumination or elaboration by me; there is the Minister of Justice sitting a little farther down the row. I am not allowed to impute motives, but if I were, sir, I would suggest that the Minister of Justice wishes he were somewhere else even farther removed from the Minister of Finance. But here are all these lawyers plus others, ;such as the parliamentary assistant to the Minister of Finance, sitting beside him pretending-


William Alfred Robinson: Order. Before the hon.
member proceeds to flatter all the lawyers in the house I wonder whether he might return to the principle of the clause?


Edmund Davie Fulton: Well, sir, we laugh. Perhaps it is a good thing that we can laugh sometimes, but actually it is a serious matter because we are asked now without a shadow of justification to enact this clause. That is what I was attempting to emphasize by my reference to the illustrious lawyers and learned gentlemen who sit opposite, not one of whom can volunteer an explanation or a justification for this radical departure that we are asked to write, in effect, into the criminal law of this country under the guise of a simple amendment to the Farm Improvement Loans Act. I therefore move that section 5 be amended by striking out subsection 2 thereof.
1. 1956
Farm Improvement Loans Act


James MacKerras Macdonnell: Mr. Chairman, I am sure you are as surprised as I am myself to find me undertaking to speak about a matter of the criminal law, but I have always been told by those who know more about it than I do that it is supposed to be a matter of common sense and also that it is supposed to embody high principles of conduct. I believe that one does not need to be a skilled lawyer to be shocked, as I am shocked, by reading this and I propose to read it now and then I propose to ask the Prime Minister whether he will tell me if he thinks it is justice. I will read it now.


Louis Stephen St-Laurent: If it is only for the purpose of asking me that question the hon. gentleman can dispense with reading the section.


James MacKerras Macdonnell: I shall read it, anyway. It was not only for that purpose but I shall read it and I shall ask the Prime Minister-


Louis Stephen St-Laurent: The Prime Minister will not answer the question.


James MacKerras Macdonnell: I cannot force the Prime Minister to answer. We have regretted in this house for months that we have heard so little from the Prime Minister and this will only be an additional occasion; but I do propose to read this because I think there may be many members within earshot who have not read it.


Edmund Davie Fulton: We thought today we had an undertaking from the Prime Minister to break his self-imposed silence.


Walter Edward Harris: Every time he does talk you wish he had not.


Edmund Davie Fulton: No.


Walter Edward Harris: Oh, yes.


Edmund Davie Fulton: No, we are very glad.


An hon. Member:: Amen.


An hon. Member:: Do you want me to read it for you?


James MacKerras Macdonnell: I propose to read this now:
(4) For the purposes of subsection (3), a document purporting to have been issued by the minister or by any person purporting to be acting on his behalf-
That broadens it out a bit.
-certifying as to the day on which the evidence referred to in that section came to the knowledge of the minister, shall be received in evidence as conclusive proof of such fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.
In other words, it does not need the minister; it simply needs somebody purporting to be acting on his behalf. It does not necessarily mean that the person should actually

Farm Improvement Loans Act be acting on his behalf but merely purporting to be acting on the minister's behalf and apparently even though it should be done without proper authority the wording of this section is such as to give validity to the act.


Walter Edward Harris: Only with respect to the one thing, the date.


James MacKerras Macdonnell: That may be a very important matter, I submit, Mr. Chairman. Nobody who reads this who has any common sense will feel that that is justice; and again, although without expectation of reply, I ask the Prime Minister if he considers it is justice.


William Alfred Robinson: Order. The hon. member for Greenwood had risen before I received the amendment of the hon. member for Kamloops which I think I should now read and with his permission I will change the word section to the word clause:
I move that clause 5 be amended by striking out subsection 2 thereof.


George Clyde Nowlan: Mr. Chairman, before the question is put I would just like to emphasize again for the information of those hon. members who perhaps have not been following this section exactly what is involved in the amendment moved by the hon. member for Kamloops. Subsection 1 says:
Any person who makes a statement in an application ... is guilty of an offence and liable on summary conviction to a fine of not more than five hundred dollars.
Therefore we have brought into this prosecution, by the enactment of subsection 1, the provisions of the Summary Convictions Act. I think everyone will agree to that. By adopting this amendment we are not doing away with any possibility of a prosecution nor are we abrogating any criminal machinery. One is brought, as one should be brought, under the provisions of the Summary Convictions Act, which is the general act governing all prosecutions in Canada.
What the hon. member for Kamloops has done by his amendment is to suggest that in this prosecution as in virtually all others we should be confined to the provisions of the Summary Convictions Act and not be brought under this startling-and I use that word advisedly-subsection which he is suggesting should be struck out.
If this means anything, Mr. Chairman, I think it means this. If I should make an application today under the Farm Improvement Loans Act and by some strange misfortune the present Minister of Finance should still be in office 20 years from now-


Walter Edward Harris: Heaven forbid.


George Clyde Nowlan: That would be a horrible misfortune, almost in keeping with the enactment of legislation such as this-


Walter Edward Harris: Hear, hear.


George Clyde Nowlan: -but if that were the case and he found out about it he would then have 12 months after that in which to certify in writing that I was guilty of this particular offence on such and such a date in 1956.


Walter Edward Harris: No, no, Mr. Chairman. My hon. friend is surely wrong.


George Clyde Nowlan: If I am wrong this section does not mean what it says.


Walter Edward Harris: The certificate has to do with the certificate of the date on which I find it out and not with the date of the offence.


James MacKerras Macdonnell: The whole thing hangs on the date.


George Clyde Nowlan: It says:
... at any time within twelve months from the day on which evidence, sufficient in the opinion of the minister to justify prosecution for the offence, comes to his knowledge.
And that may come 20 years from now.


Walter Edward Harris: But the certificate I grant is the certificate as to the date on which it came to my attention.


George Clyde Nowlan: Yes, and then he has 12 months after that in which to issue a certificate. I suggest to the minister that if he can find a comparable piece of legislation which has been enacted by any parliament in the British commonwealth or elsewhere I would like to know where it is because I do not think there have been very many of this nature where there is such an unlimited time in which to institute a prosecution particularly in view of the fact that we have the summary convictions provision which is the general statute of Canada.
I would hope that the committee and the minister would be prepared to accept the amendment moved by the hon. member for Kamloops and that in the future we will operate as we should operate under the Summary Convictions Act rather than under this strange section.


Mr. Nicholson:: Mr. Chairman, before the question is put I would like to express my thanks to the lawyers in the committee. They have demonstrated to me that they not only perform a valuable service when you are in trouble but they can also help you to keep out of trouble.
I do not believe we had any lawyers on the committee which examined this bill and certainly the points brought up tonight were not brought to the attention of the committee.

In view of the fact that this legislation has been in effect now for quite a number of years without any wide attempt on the part of the farmers to abuse it and without the government or the banks having to resort to legislation of this sort, I think it is unfortunate that we are asked to incorporate this section.
As has been pointed out, the wording is:
Proceedings for an offence under this section may be commenced at any time within twelve months from the day on which evidence, sufficient in the opinion of the minister to justify prosecution for the offence, comes to his knowledge.
It appears to me that this is a very vicious clause. As was pointed out, if information is brought to the attention of the Minister of Finance 20 years from now and if he happens to be the minister at that time it will still be possible to go back all those years.
As the hon. member for Digby-Annapolis-Kings pointed out, section 1 appears to give the crown very complete protection. In view of the fact that this legislation has been so well received I think the penalties imposed in the first clause are quite adequate. I believe the motion which is before us now should be supported.


Wallace Bickford (Wally) Nesbitt: Mr. Chairman, prosecutions which go back into the past have usually been laid at the door of the Department of National Revenue, but if this section were allowed to go through without the amendment moved by the hon. member for Kamloops the board would be able to go far beyond anything ever envisaged by the Department of National Revenue in the income tax business.
In fact, it would seem to me that whoever drafted this legislation must have been reading the very famous novel by Victor Hugo, "Les Miserables", the night before. Hon. members will recall that the hero of that novel, Jean Valjean, who had stolen a loaf of bread, was chased around and hunted by the police years and years later when he had become a respectable citizen, and that is exactly the sort of thing that would take place under this section as it stands at the moment. I cannot really understand what possible objection the hon. members of the government could have to the amendment of my colleague the hon. member for Kamloops.


John Borden Hamilton: Mr. Chairman, this certainly has become a field day for the lawyers-


An hon. Member:: God help the country.


Mr. Mclvor:: They are mixing it up.


John Borden Hamilton: -but I would like to say that I do not wish to disillusion anyone who has spoken about this type of
Farm Improvement Loans Act legislation. It so happens that I have defended people under legislation of a very similar or an almost identical character. The thing which worries me here tonight is that we seem to have slipped up in the past. This type of legislation has become almost commonplace.
As I listened to the minister's speech I thought that this was the dangerous point in his little talk. It occurred to me that here was something that was ordinarily found in the draftsmanship of legislation of this type designed to cover situations of this kind. It seems to me it is time we did something about this kind of legislation. If secondary evidence of this kind is going to be admitted in our courts then we will be going back to an autocratic system which is entirely false to the ideals of British justice as we understand them. I might say that it is a fairly frightening experience in a court room to have the prosecutor produce many papers with various seals. I think at this time we should strike a blow and place back in the hands where it belongs the administration of justice.
If this amendment is not acceptable to the committee then I feel that we will be going one further step down the line in connection with the administration of law. If the minister is to be considered a satisfactory person to stand in and complete documents which may in fact convict a person after many years, then I think we will be going beyond the ordinary principles which we should follow in this house. This is not the first time that legislation of this type has been passed by this house, so let us put a stop to it now.


Mr. Churchill:: Mr. Chairman, I cannot claim the wide experience in our courts which some of my legal friends have mentioned tonight, but it is easy to see where an error has crept into this particular bill. Someone with a frightfully tidy mind has attempted to bring this bill into line with others of perhaps a similar nature. My understanding is that amendments to statutes are made when there is need to correct something that is wrong, but in regard to this Farm Improvement Loans Act we have not had one bit of evidence that there has been anything seriously wrong in the functioning of the act. Is the implication being made that people who have benefited from this act in the past have taken advantage of it? Have there been a number of loan defaulters? Have there been a number of people who have made false statements on the application forms? That would seem to be implied in the type of amendment which is introduced and which provides such a stringent penalty. Unless the government is prepared to produce

Farm Improvement Loans Act evidence to that effect I do not think the committee should be asked to pass legislation of this character.
If in the past legislation of this nature has been placed on our statute books, this is a good time to call a halt. I certainly would support the amendment moved by the hon. member for Kamloops that this section be stricken out. Obviously this calls for second thought. The act has been on the statute books for a considerable length of time and as far as I know the section has proved equal to the problem it is supposed to meet.
Now suddenly an enlargement is placed before us in order to make it easier for the prosecution as opposed to defaulters under the act. We feel that there is no need to do that as it leaves a loophole for bad action on the part of someone who might have an evil intent some time in the future. I would not expect the Minister of Finance to misuse this particular power, but why place temptation in the way of anyone, particularly when it provides that someone may act on behalf of the minister and sign a document which would be accepted in court as evidence of the transaction. There would be no supervision on the part of the minister with regard to that. In the course of his multifarious duties he might not have time to delve into the matter and all he would know would be that there was an alleged infringement of the provisions of the act and some documents were being forwarded to the proper authorities.
Let us not make the mistake of making it too easy for someone to get someone into trouble. As the hon. member for Digby-Annapolis-Kings pointed out, this might go on for a number of years and evidence be held in abeyance as far as being complete was concerned and then revised at some time in the future in order to embarrass someone who had perhaps made an innocent mistake at some earlier time. As the hon. member for Peel pointed out, intent to defraud may not be present at the time the application was made. In view of the discussion we have had tonight it would appear that this is unwise and unnecessary legislation and this section should be stricken from the bill.


Mr. Hees:: I think the clearest indication of the unsoundness of the government's position on this measure is the fact that the Minister of Justice has taken the opportunity to quietly slip out of the chamber.


Some hon. Members:: Oh, oh.


Mr. Mcllrailh:: On a point of order, the hon. member has no right to impute motives to any other private member.


George Harris Hees: I just pointed out a fact.


George James McIlraith: No.
[Mr. Churchill.l


George Harris Hees: I believe it is also indicative-


William Alfred Robinson: The hon. member apparently rose to discuss clause 5 of this bill and the absence or presence of hon. members in the chamber at the time in my opinion has no relevancy whatever to this clause. I would ask the hon. member to confine his discussion to the clause.


George Harris Hees: As a layman, having listened to this discussion, there seems to be no justification for the government's stand on this matter. It is also rather hard to understand why the former minister of justice, the present Prime Minister, has refused to answer a very straight question which was put to him by the hon. member for Greenwood as to whether he thought it a proper stand for the government to take on this matter.


Walter Edward Harris: May I point out that the hon. member for Broadview did in fact impute motives. I am just wondering what he would have said if anyone on this side had said this afternoon that both the mover and the seconder of the amendment had quietly left the house before the vote.


An hon. Member:: You asked for it.


James MacKerras Macdonnell: I do not think the Minister of Finance would willingly be unfair to the Leader of the Opposition-


Walter Edward Harris: I am not being unfair, I am just pointing out that unfairness is not expected on this side.


James MacKerras Macdonnell: The Leader of the Opposition-


William Alfred Robinson: Will the hon. member for Greenwood kindly resume his seat. The hon. member for Broadview had an opportunity to comment about the presence or absence in the chamber of the Minister of Justice, and the Minister of Finance has had the similar privilege. I think we might consider the incident closed.


James MacKerras Macdonnell: Do you rule that I am not allowed to explain the absence of the Leader of the Opposition who is in Toronto fulfilling a speaking engagement?


William Alfred Robinson: I rule that we are presently discussing clause 5 of this bill and that we should limit our discussion to clause 5 of this bill.


James MacKerras Macdonnell: I now have a question to ask on clause 5.


Mr. Garson:: Before my hon. friend puts his question I should like as a question of privilege to inform you, Mr. Chairman, that in relation to the comments that were made about my absence, I was out of the chamber-for a very temporary and private reason.


James MacKerras Macdonnell: I think it would be relevant to ask the Minister of Finance if he could tell us in how many cases false statements were made and in how many cases proceeds of loans were used for purposes other than that stated in the application.


Walter Edward Harris: No, I am not in a position to give that information. I regret it, but I cannot.


James MacKerras Macdonnell: Has the minister no idea at all?


Walter Edward Harris: No, I have not.


James MacKerras Macdonnell: Does the minister know whether there were any false statements, or any moneys used for wrong purposes?


Walter Edward Harris: I explained some time ago in answer to a similar question that I did not have that information. I shall be glad to supply it, but I do not have it yet.


James MacKerras Macdonnell: Does the minister think we should vote on this section before we have that information?


Edmund Davie Fulton: Whatever may have been the reasons for anybody's absence, I am delighted that the Minister of Justice is in his seat, because there are certain facts I should like to bring to his attention and also to the attention of the Minister of Finance. As the hon. member for Digby-Annapolis-Kings has pointed out, by subsection 1 of the new section 8, it is provided that if there is an offence under the act the proceedings shall be heard under the summary conviction section of the Criminal Code. Section 693 of the Criminal Code provides as follows:
(1)	Except where otherwise provided by law, this part applies to proceedings as defined in this part.
(2)	No proceedings shall be instituted more than six months after the time when the subject matter of the proceedings arose.
So, by the ordinary provisions of the criminal law, proceedings cannot be brought for an offence more than six months after the offence was committed. The minister has just told the hon. member for Greenwood that he has no knowledge of whether there have been serious offences under the Farm Improvement Loans Act. If we were to be told that there had been such serious offences and that the greatest of difficulty had been found in launching prosecutions because of the time limit of six months that would ordinarily prevail, then we might be disposed to consider whether we could extend this time; but without any such information we are asked to extend the time, almost without limit. Now it may be alleged at any time after the loan has been granted that the
Farm Improvement Loans Act minister has found evidence of an offence; and then he has 12 months after that, himself or through any subordinate official in his department, to bring in prosecution.
So it must be surely a very serious matter that would warrant the departure from the ordinary six-months rule and the extension of time without limit. How serious can it be? Is an offence against the Farm Improvement Loans Act so serious, does it involve the safety and welfare of the state, that this unlimited time should be extended? May I ask the Minister of Justice, are such offences as serious as the offence of treason, for instance? The minister smiles. Of course, he would agree. That suggestion does not hold water that an offence against the Farm Improvement Loans Act would be comparable to the offence of treason. I take it the minister agrees with me, and I am sure the Minister of Finance would agree with me.


Walter Edward Harris: Very seldom do I agree with you.


Edmund Davie Fulton: Now let me point out that under the criminal law, for the most serious offence known to the law in so far as the safety and welfare of the state is concerned, that is, the offence of treason, the time limit in which prosecutions must be brought is three years, under section 48 of the Criminal Code, which states:
No proceedings for an offence of treason as defined by paragraph (d) of subsection (1) of section 46 shall be commenced more than three years after the time when the offence is alleged to have been committed.
It is three years in the case of treason. But by this section, not only the Minister of Justice or the Minister of Agriculture but anyone in his department, without proof of the responsibility or the authority of that person, is given the right to commence prosecution for an offence at any time, provided only that he brings the proceedings within 12 months after he says he has discovered the evidence. That time may be any time up to 20 years or even longer. So we are in the ridiculous position that without a shadow of justification we are asked to enact with all solemnity-with all this battery of legal experts opposite, not one of whom can give any justification for it-a provision in a little innocent bill to amend the Farm Improvement Loans Act, which has all the implications that an offence against that act is regarded as more serious than the crime of treason. We have been asked to swallow many ridiculous things by this government, but I really do not think they will expect this house to swallow such a mockery as that.

Business of the House I am confident, therefore, that the committee will vote for the deletion of that section. Clause stands.
Progress reported.
BUSINESS OF THE HOUSE Mr. Harris: Tomorrow we shall take second reading of the bill on the St. Lawrence

Seaway Authority Act; second reading of the bill with respect to the branch line of the C.N.R.; and second reading of the bill with respect to the Department of Transport Act.


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