1957-03-21

[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: Mr. Speaker, I should like to direct to the Prime Minister a further question about the meeting in Bermuda between himself and Right Hon. Mr. Macmillan which is to take place the first of next week. Will not the Prime Minister reconsider the position which he took on March 19 that he himself would not raise the question of holding a conference of commonwealth prime ministers? Will the Prime Minister not go further and extend an invitation to hold the next commonwealth conference in Canada?
Right Hon. L. S. St. Laurent (Prime
Minister): Mr. Speaker, I think it may be that my language was not sufficiently clear, but I think the hon. gentleman rather misinterprets it. I did not say I would not raise the question, because I expected that question would be discussed. What I said was that I would not take the initiative in calling a meeting of the prime ministers. If the question is discussed we shall certainly discuss where the next meeting will be held, and I am sure we in Canada would feel honoured if the next meeting were held in Canada.


Howard Charles Green: May I point out to the Prime Minister that his words on March 19 were as follows:
That is possible; but I am not going to take the initiative of requesting that there be a prime ministers' conference.
This of course did not indicate, as the Prime Minister said today, that he would not take the initiative in calling the conference.


Mr. Si. Laurent (Quebec East):: I don't know whether there is any difference-and if there is I don't appreciate it-between calling a conference and requesting that there be a conference.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Michael Starr (Ontario):: I should like to ask two questions of the Minister of Fisheries about the seal hunting now going
on off Newfoundland and Labrador. Is this operation really necessary, and is it conducted in a humane manner? Second, is the rate of killing so high that the seals may soon become as extinct as the buffalo?


Hon. James Sinclair (Minister of Fisheries):: Mr. Speaker, this is a question which is often asked at this time of the year. As far as necessity is concerned, this is a commercial operation which has been carried on for over 300 years. The adult seal hides make good leather, the blubber is reduced to seal oil, the pelts of the baby seals are used as fur in the garment industry, and the sealers take the flippers home to Newfoundland to make that unique Newfoundland delicacy known as seal flipper pie.
As to whether it is a humane operation, if the hon. member is referring to the crews all I can say is that it is the most dangerous and disagreeable work done by any men in the fishing industry in Canada. The ships are small and many of them have been crushed in the pack ice; many of the hunters have been lost on the ice floes. If the hon. member is referring to the seals, as I suspect he is, with regard to the humane aspect of his question, I may say that the adult seals are killed by high powered rifles. Occasionally some of them are only wounded and escape, but that of course happens in any kind of hunting. The baby seals, who are not very mobile, are killed instantly by a heavy blow on the neck.
The rate of killing is a matter of agreement between Canada and Norway. I can, however, assure the hon. member that it is not such as to lead to any likelihood of the seal herds becoming extinct. In the last century we used to have as many as 400 ships and
10,000	men killing 750,000 seals each year, but last year we had just three ships with 120 men out there and they and the Norwegians killed a total of about 200,000 seals. The present size of the herd is about 3 million, and a lot of the fishermen in the Atlantic provinces think those 3 million seals eat too much fish.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Miss Margaret Aitken (York-Humber):: would like to ask the Minister of Justice a question. In view of the fact that practically all the news media in Toronto are to be prosecuted under the Lord's Day Act, which

Inquiries of the Ministry was created by this dominion government, would the minister say whether the federal government will take part in the court action either in defence of the act or as an observer?


Hon. Stuart S. Garson (Minister of Justice):: I do not ordinarily raise any objection to the almost universal practice of members of the opposition not giving the notice required by the rules of the questions they ask, but on the present occasion I must raise that objection and take the hon. member's question as notice, instead of giving an offhand opinion on the matter she has raised.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough):: Mr. Speaker, can the Minister of National Health and Welfare say whether the Indian health branch of his department intends to increase its fees to the medical profession for visits to Indians from the present rate of 50 cents in some cases and $1 in others? I have a case before me where an average payment of only 67.5 cents a visit was made to a physician for visits to Indians. Does the minister not agree there should be a standard rate?


Hon. Paul Marlin (Minister of National Health and Welfare):: Mr. Speaker, if my hon. friend will kindly let me see the letter he has and will discuss the matter with me personally I will be glad to look into the merits of the particular case.


Gordon Knapman Fraser: I should like to address a further question to the Minister of National Health and Welfare. He said he would look into the particular case. I understand these are the rates right across Canada for visits by physicians to Indians. I will show him the particular case I have in hand, but I hope he will look into the matter from the point of view of the service right across Canada.



STATEMENT ON RESEARCH INTO RADIATION AFFECTING URANIUM MINERS

[Stage Direction]
On the orders of the day:
Mr. F. G. Roberison (Parliamentary Assistant to the Minister of National Health and Welfare):: Mr. Speaker, on Thursday, February 14, the hon. member for Kootenay West asked the Minister of National Health and Welfare the following question:
Has the minister heard any suggestions that miners working in uranium mines may be subject to radiation? If so, is any research work being done to establish the facts in this matter?

At that time the minister said a more detailed answer to the question would be given later. I now propose to give that answer.
It has been recognized for some years that uranium miners may be exposed to radiation because the ore being mined contains radioactive material. Studies in Canadian mines have shown that standard mine safety practices, particularly ventilation, can reduce radiation exposure below levels which have been declared safe by international radiation protection authorities.
Provincial authorities and crown companies have investigated mines under their jurisdictions and have instituted appropriate safety measures and continuing programs of health supervision. The Department of National Health and Welfare, in conjunction with Atomic Energy of Canada Limited, took part in a survey of a crown-operated mine in 1954, and is maintaining close liaison with provincial and other groups in efforts to ensure continued safe working conditions.



POSTAL SERVICE


[Stage Direction]
On the orders of the day:
Hon. Hugues Lapoinie (Postmaster General):: Mr. Speaker, yesterday the hon.
member for Moose Mountain asked whether any complaints had been received about the postal facilities in the post office at Weyburn. A report was received a few weeks ago that due to the heavy load on general delivery and lock box sortation at the post office there was a shortage of lock box facilities, and arrangements were made immediately with the Department of Public Works to add more lock box facilities until the new federal building is completed, in which sufficient facilities have been provided.



REQUEST FOR ANSWER TO QUESTION ON ORDER PAPER

[Stage Direction]
On the orders of the day:
Mr. E. D. Fulion (Kamloops):: Mr. Speaker, may I ask the Minister of Citizenship and Immigration what progress his department is making in answering question No. 170 which was placed on the order paper over a month ago?


Hon. J. W. Pickersgill (Minisier of Citizenship and Immigration):: I shall endeavour to find out, sir.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. Carl O. Nickle (Calgary South):: should like to direct a question to the Minister of Public Works. What is the current status of negotiations for the acquisition of a new post office site in Calgary? If these negotiations have been concluded, can we expect a start on construction in the current year?


Hon. Robert H. Winters (Minister of Public Works):: We have had some problems there about property. Speaking from memory I think they have been pretty well overcome, but I had better take the question as notice and answer more fully at a later date.



DISABLED PERSONS


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to address a question to the Minister of National Health and Welfare. Is the minister in a position today to make a reply to the question I asked him yesterday?


Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, the question addressed to the Minister of National Health and Welfare happens to come under the vocational training agreement between my department and a department of the provincial government of Ontario. Since the item has been brought to my attention, and since the statement by the minister of welfare of Ontario was given a good deal of publicity in the press, I think the best thing I can do is to quote from a letter I have addressed today to the Hon. Mr. Cecile:
Yesterday I read with some concern and no little surprise certain statements in a news article of the Globe and Mail allegedly taken from a speech made by you in the legislative assembly.
You are quoted as having said that the province was told that professional training in a university Is not covered by the terms of schedule "R", and that "we are constantly running into these negative attitudes and frustrations in every one of the programs in which we share expenditures with the federal government, etc." I hasten to assure you that not only has provision been made for sharing in the costs of professional training in universities, but special arrangements were made in the province of Ontario for having such cases approved without direct referral to Ottawa in order to avoid misunderstanding and delays when dealing with individual cases.
In the cases to which you referred the delay in approval has been due to genuine doubt on the part of the federal district treasury officer regarding eligibility of the claim and failure on the part
Inquiries of the Ministry of provincial officials in notifying the federal director of vocational training that approval has been granted by Mr. Moon on his behalf.
That is one of the provincial officials.
We have made inquiries and find that the claim to which you refer is now in process of payment.
I sincerely trust that the statements printed by the Globe do not represent your personal feelings and opinion regarding our mutual efforts to provide suitable satisfactory training programs for disabled civilians under the provisions of the vocational training agreement and schedule "R". If so, I can assure you that, in so far as I know, there has been no reason for such accusations and I sincerely hope that you will never have just cause for such opinion.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Howard Charles Green: Mr. Speaker, will the Secretary of State for External Affairs tell the house the function of the United Nations emergency force in the Gaza strip in view of recent developments? As you will remember, I asked him this question two days ago. He said he expected to be able to answer either yesterday or today.


Hon. L. B. Pearson (Secretary of Stale for External Affairs):: Mr. Speaker, I said I would answer that question to the best of my ability, I thought either today or tomorrow, but perhaps it was yesterday or today. I would prefer to postpone my answer until tomorrow in the hope that I shall be able to obtain some information from Cairo about the results of the secretary general's visit to the Egyptian government. However, I will try to answer the question tomorrow.



SUEZ CANAL


[Stage Direction]
On the orders of the day:
Howard Charles Green: There is one other question I asked yesterday about the memorandum from the Egyptian government concerning the use of the Suez canal. Can the minister give us that answer today and in particular let us know what provision there is that all tolls must be paid to Egypt?


Lester Bowles Pearson: Mr. Speaker, perhaps I could make a short statement on that question now. Last summer, July I think it was, the government stated its position in this house regarding the nationalization of the Suez canal company. At that time we indicated our view that Egyptian rights in regard to the operation of the canal, derived from the sovereignty of Egypt because the canal goes through Egyptian territory, must be

The Budget-Mr. Zaplitny reconciled with the international interest in the canal recognized, among other things, by the Constantinople convention of 1888.
We have also expressed our support for the six principles agreed on by the security council last October to govern the operation and control of the canal and any arrangement for that purpose which might be made.
As my hon. friend will know, one of those principles was that this international waterway was to be "insulated from the politics of any one state". Mr. Speaker, we have not weakened in any way in our support for these principles. As I stated the other day in the house, proposals have now been made by the four powers probably most concerned with passage through the canal to the Secretary General of the United Nations for the operation of the canal when clearance is completed. I indicated then what those proposals were. They have been passed by the secretary general to the government of Egypt.
The day before yesterday, I think it was, an Egyptian memorandum was circulated to all governments represented in Cairo with certain proposals governing this matter. This memorandum was tabled this morning, Mr. Speaker.
The memorandum, as we understand it, is not a reply to the four-power proposals I have mentioned, but was presumably issued at this time for negotiation purposes on the eve of the secretary general's visit and indeed on the eve of the opening of the canal.
Since receiving this memorandum, Mr. Speaker, we have discussed the significance of these proposals, which the Egyptian government itself has indicated are not final proposals, with other friendly governments more concerned than Canada is with navigation through the canal. While these exchanges of views are going on, and while the secretary general is negotiating in Cairo on this subject, we do not feel it would be wise or desirable for Canada alone, and before any other country has done so, to make any formal diplomatic protest as was suggested. Such a protest at this time would not appear to us to be either sensible or effective.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, March 19, consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the

amendment thereto of Mr. Macdonnell, and the amendment to the amendment of Mr. Cameron (Nanaimo).
Mr. F. S. Zaplitny (Dauphin):: Mr. Speaker, when the debate was adjourned on Tuesday evening the hon. member for Kenora-Rainy River had just completed an address in defence of the budget. It is not my intention to follow to any great extent the remarks he made, but there were two particular remarks to which I should like to make reference.
First of all, in his speech which in my opinion exposed rather serious inconsistencies in what was advocated by the official opposition, he made an assumption of his own which I think was rather noteworthy, when he stated that in his opinion the government had endeavoured to do most for the people who, to use his own words, suffer most under present conditions of inflation. It seemed to me that after having gone to quite an extent to try to prove there was no inflation or no great danger of inflation, he ended up by admitting that the majority of the people in this country are suffering from conditions of inflation brought about by his own government.
The other statement to which I want to make particular reference is, in my opinion, his unfortunate remark toward the end of his speech when he accused the hon. member for Greenwood of attempting to stab in the back, as he called it, the governor of the Bank of Canada and the institution itself. It is well known that I disagree most thoroughly with the economic theories of the hon. member for Greenwood. But, sir, even so, I have known him for the past 12 years and many members of this house have known him for many years longer than that, and if there is any phrase or language that cannot be applied to the hon. member for Greenwood it is that phrase, "stab in the back". It is simply not part of his character and certainly not his reputation to go about things in that manner. What he had to say he said in a forthright way, and whether he was right or wrong I do not think it was fair to describe his effort in those words, particularly when one looks at the record of the government itself to which he referred a little later.
The hon. member for Kenora-Rainy River also seemed to take great delight in pointing out, or making reference to the fact, that on this occasion the official opposition had not brought any quotations, editorials or news items to bolster their arguments. The reason he gave for that was that in his opinion the press had been almost unanimous in praising the Minister of Finance and the government for this budget. Well, I do not know just what

press he reads, but I have two clippings of the remarks of two spokesmen who are representative of a very large group of Canadians. One of the articles which appeared in the Winnipeg Free Press consists of a statement attributed to the president of the Canadian Federation of Agriculture, Mr. Hannam. The title of this news article reads, "Harris Squeezed; H. H. Displeased". In reference to the minister's prediction with regard to the income of agriculture in 1957, the article says:
"There is nothing we see which could justify such a prediction", he said, "although some increase may occur."
Even if the minister's prediction were accurate that would still mean that farmers are not sharing in the growth of the nation's prosperity since 1951- which has been considerable.
He also said that the minister's estimates, so far as agriculture is concerned, were almost certainly too optimistic. His intention may have been to damn the minister with faint praise, but he seems to have praised him with faint damns instead; because it indicates that in the opinion of the president of the federation of agriculture, even if the minister were right that this year's agricultural income would reach the 1951 level, the farmers would not be participating to the extent they should in the increased income of Canadians generally.
I have another clipping which is a little more forthright. It is a statement by the director of the united automobile workers. The united automobile workers' union represents 70,000 workers. I shall quote the item, which also appeared in the Winnipeg Free Press:
The united automobile workers Sunday termed the new federal budget "measly" and described its $6 old age pension increase as "an insult to the old and to the Canadian labour movement which has been demanding decent pensions."
Here are two statements, one by the leader of a farm organization and the other by the leader of a labour movement, which certainly are not complimentary and which express general disappointment with the budget.
The budget has been described in some of the press at least as an election budget, and a great deal has been said about the concessions that have been made in order to attract voters in the forthcoming election. But a close reading of the budget raises some doubts as to whether that is really meant, or whether it is going to be effective in that respect; because if it was meant to be a budget to attract voters, then the most that can be said about it is that it is a mighty small piece of bait to be placed in such a large trap. When you take the benefits that are contained in it and compare them with what was expected by the people at this time it certainly does not constitute a great attraction.
The Budget-Mr. Zaplitny In fact as one reads it over in the quiet of his office, away from the animation of the house and the pounding of desks which surrounded its presentation, it reminds one of the description of a soap opera that was given at one time by a gentleman who was not particularly fond of that type of entertainment.
He said there were two sobs and a commercial. In my opinion this budget is made up of a maximum of platitudes and a minimum of benefits, with a political speech tacked on at the end.
First let us take a look at the general record of the government. If the Minister of Finance were personally responsible for what has gone on in the government since 1935 when they came into power I would begin to feel rather apprehensive, because he could be accused of a very serious offence. I hasten to say that the Minister of Finance cannot be held personally responsible for what has transpired, but there is a law in this country which makes it an offence to debase currency. That is exactly what this government has done over the last 22-year period.
If one looks at the wholesale price index contained in the bureau of statistics figures he will find that the general index, taking 1935-39 as 100, reached the figure of 229.4 in 1957, in other words about two and a quarter times as high. The only way that can be interpreted in terms of purchasing power is that the 1935-39 dollar which we assume was worth 100 cents would be worth approximately 45 cents today.


Mr. Harris:: Do you want to go back to 1935-39?


Frederick Samuel Zaplitny: The minister asks if we want to go back to 1935-39. I am simply pointing out that the government has pushed us back further than 1935-39 by debasing the dollar to the extent of 55 cents. They have reduced the value of the dollar by 55 cents in their 22 years in office. They cannot get away from that, because that is indicated by figures published by the government. Everything that is quoted today in the way of statistics, every statement the minister makes with regard to benefits, taxes, gross national income and so forth, when given in dollars must be measured in relation to the value of the dollar as it now is, in other words as being worth only 45 cents. This is the result of 22 years of Liberal administration.
This is one reason I cannot take too seriously the concern the government expresses once in a while with respect to inflation. Every once in a while, particularly this year with an election facing them, they indicate a great deal of concern and anxiety

The Budget-Mr. Zaplitny about inflation and they indicate they are really going to do something about it. They talk in terms of credit restrictions, raising interest rates and so forth; all the ineffective measures they can think of, and they leave the impression that something is really going to be done to arrest inflation.
That is a lot of malarkey. The 22-year history of this government has been one continuous round of inflation, and no one is going to believe them now after 22 years when they say they have at last discovered a formula by which they are going to reverse the whole process and bring back the purchasing value of the dollar.
The government have used inflation or the effects of inflation or the inflated dollar as a means of making themselves politically popular. They can point to dollar increases in pensions, dollar increases in this and that, in expenditures and revenues, but all the time they forget to tell the public that the dollar of today is worth only 45 cents as compared with the dollar of 1935-39. These are facts which have to be faced; this is the criterion by which we have to measure every statement in the minister's budget speech. We must always bear in mind when he is talking in terms of dollars that he is referring to a dollar which has lost 55 cents in its purchasing power in the last 22 years.
One of the greatest disappointments in the budget is that so far as agriculture is concerned it seems to be the forgotten industry. It is true that in the last part of his speech, in the political addendum, the minister made a few references to what the government allegedly has done for agriculture, but he did not have one word to say anywhere in his budget about what were the intentions of the government or what were the plans of the government with respect to agriculture and the present price-cost squeeze which is being faced by that industry. There was not one word about parity prices.
Everyone knows, and surely this parliament must know by now, that today this is the first and foremost objective of organized agriculture across Canada. Hon. members from the prairies are perhaps a little more vocal with regard to agriculture than the average member, and the impression may be left that it is only the farmers in the prairie provinces who are interested in the principle of parity prices. Nothing could be further from the truth. Organized farmers from coast to coast are interested in the principle of parity prices, because they can see no other way by which this industry can be stabilized, thus assuring themselves and their children a future in agriculture. If there is ever going to be

hope for the family farm, if there is ever going to be any stability in agriculture, sooner or later this parliament will have to accept the principle of parity income for agriculture and proceed to put legislation on the statute books step by step in order to bring that principle into reality.
It is hard to believe that a question as nationally important as the question of parity income for agriculture should receive not one word of mention in the budget presented by the Minister of Finance. If he did not agree that agriculture should have parity income then it was his duty as a responsible minister speaking for the government and setting out government policy to have expressed his disagreement and told the house why he disagreed. But no, there was not one word about it. The minister seemed to pretend that the whole issue did not exist.
The minister and his supporters are going to find in very short order how wrong they are. That issue does exist, and in agricultural communities it is going to be a topnotch issue in the next general election. Liberal candidates, whether in the east or west, representing agricultural constituencies, are going to have to take their stand on this question and make up their minds and let their constituents know whether they stand for the principle of parity income for agriculture. Neither the Minister of Finance nor the Minister of Agriculture nor any combination of ministers are going to be able to dodge that issue this time. The farmers have waited a long time for an opportunity to place before candidates in a general election this question of parity prices, and they are going to do it this time. Candidates representing the Liberal party are going to have to take their stand on this question.
Any farmer or farm leader reading the present budget and finding not the slightest reference to parity prices can only assume that either the government has absolutely no concern about agriculture or that the government is anxious to avoid that issue entirely and therefore has made no reference to it in the budget.
There is not a word in the budget about any program which would bring price supports, even under the legislation that now exists in the form of the Agricultural Prices Support Act, to the producer. The discussions we have had in this house, both yesterday and at other times during this session, indicate the difficulty in bringing so-called floor price legislation down to the producer level. We have tried again and again to impress on the government, particularly upon

the Minister of Agriculture, the serious weakness which exists in the present method of applying these floor prices, pointing out that these price supports on agricultural products are at the present time at the level of the dealer or processor; that there is no guarantee and no machinery whatever to ensure that the price supports placed on the statute books of this house will be reflected in the price the producer receives for his product, eggs, butter, cream or whatever else it may be.
Surely it is time the government should have something to say about that. We have been carrying on this discussion for the last four years in this house. The Minister of Agriculture is himself firmly convinced that the present system is not working properly in the interests of the producer. But the budget has not a word to say about it. So far as the Minister of Finance is concerned the problem does not exist.
I understand that a large part of his own constituency, if not the whole of it, is an agricultural area, one of the finest in the province of Ontario. As a matter of fact I had the opportunity to discuss this very matter with some gentlemen from that constituency only a few days ago, and I can assure him they were very concerned about this question of bringing to the producer the benefit of the prices established under the Agricultural Prices Support Act. Unless before this session is over the minister shows a little more interest in this question than he has shown in his budget, I am sure the farm leaders in his constituency are going to have a few things to say to him at election time.
Another thing which is completely lacking in the budget is any reference to a national grain policy. Over and over again members from the western provinces have emphasized that if we are to have any kind of long-term stability and security for the grain producers of the prairies the government will have to establish some sort of national grain policy, in order to assume responsibility for the marketing and storing of Canadian grain in such a way that the Canadian farmer may receive something comparable with what is being received by his competitors in the United States, who have the benefit of a national grain policy. However, the only thing which has come before this house so far this session is a bill to extend the provisions with respect to bank loans guaranteed by the government.
This milk and water proposition has never had any appreciable effect on the situation. Apart from that nothing has been done, and the budget proposes nothing. In effect the budget says, "You will have to continue to
The Budget-Mr. Zaplitny worry about surpluses, about shortages of box cars, about quotas and about markets. We are going to leave you in the same position you have occupied since 1953. After four years of government we have found no solution, and we have no proposals to make; we can give you no hope whatsoever". That is the record of the government, and that is the kind of hope they extend to grain producers.
The Minister of Finance must realize that the production of grain in this country is one of the most important and basic industries carried on within this nation. To a very great extent Canada's prosperity depends upon the prosperity of the grain producers of this country, along with that of other agricultural producers, and it is not reasonable that a budget which in all likelihood will be the last budget of the present parliament should completely ignore the whole question and pretend there is nothing to be done in so far as a national grain policy is concerned.
Does the Minister of Finance think the farmers of western Canada are going to feel satisfied that the government is doing any thinking about this question when the whole budget contains not one word about it except, as I said, in the political appendix at the end of the minister's speech, where he gives himself a pat on the back to the extent of saying the government had at least guaranteed to the banks that if they made a few loans on grain they would not lose any money? Outside of that the government proposes nothing whatsoever in this budget for grain producers.
There is another matter to which I want to refer, and that is the question of this $6 increase in old age pensions. Many people have been wondering since the budget was brought down just how the government arrived at this figure of $6.


An hon. Member:: Fifteen per cent.


Frederick Samuel Zaplitny: I wondered about it myself, because it seems rather an odd figure. It is not a nice, round figure like $10, $20 or $30; it was not even a round figure like $15. It happened to be $6. One hon. member suggests $5, and I will come to that in a moment.
I did a little deducing with regard to it. I cannot say I had my eye at the keyhole of the minister's office, but I just projected my imagination a bit, and I think I have the solution to what happened on that fateful day. I think the explanation is something like this. The C.C.F. amendment calls for an increase in old age pensions based upon the physical increase in our gross national product over the years.

The Budget-Mr. Zaplitny
That is a logical amendment to ask this house to adopt, because we feel that even assuming the old age pension rate in 1949 was adequate, every increase in the gross national product should be reflected in the allowances made to our senior citizens first and foremost, because the whole possibility of the increase in the gross national product arises as a result of the sacrifices and labours that our older citizens have put into this country. They should have first call on the national treasury when there has been an increase in the gross national product. So from that point of view our amendment sets out a logical contention. But by what logic did the government arrive at the figure of $6?
I think the hon. member for Winnipeg North Centre, who is unusually assiduous in these matters, had sold the idea to the Minister of National Health and Welfare that the increase should be $35 a month. Knowing, of course, the sympathetic nature of the Minister of National Health and Welfare I am sure he immediately recommended that figure to the Minister of Finance, and knowing his great persuasive powers I am also sure that he sold the proposition to the Minister of Finance. So in the first draft of the budget there was an item of $35 a month increase in old age pensions. There it stood, and as a matter of fact I think the Minister of National Health and Welfare rather slyly already had feelers out among the various Liberal members to say that the great moment had arrived, that the strategic moment had come to announce that there was to be a very substantial increase in old age pensions.
But on the last day, just before the budget came down, along came the Minister of Trade and Commerce and said to the Minister of Finance-I take them in order to precedence-"What is this I hear about a $35 increase?" The Minister of Finance replied. "Well, there it is; it is written in the book". Then the Minister of Trade and Commerce said, "Look, you have to remember that the trans-Canada pipe line has not even reached Winnipeg. It is an awfully long way from Montreal, and there is going to be many a dip into the public treasury before we get it as far as Montreal. I have some ideas of my own right now. It would be impolitic to do it before an election, but I am going to make a call on you after the election, so you had better have something in reserve."
Well, the minister had to do some quick calculating, so he decided that he would have to deduct $10 from the $35, which left him with only $25. Then along came his parliamentary assistant. Judging by his speech of Tuesday evening he has a rather


soft spot in his heart for corporations, because he seemed almost to weep for the poor corporations. He persuaded the minister that this would not be a good year in which to reduce corporation taxes because it might prove to be very unpopular in an election year, but that after all, for services rendered, right after the election something would have to be done for these poor corporations in the next budget. So logic is logic, and the minister took off another $10 bringing it down to $15.
Then along comes the Minister of National Revenue (Mr. McCann). Of course he is a senior member of the cabinet, his word is weighty and he has to be listened to. He says, "Now, Walter, do you remember when we had the debate last year about the kickbacks we had to make to certain power corporations in the province of Quebec after they had paid their taxes into the national treasury? They took us to the appeal board and we took them to the exchequer court and we won the case. It was decided we had the right to tax and the money was in the treasury, but somehow we made a deal and we kicked back to them half the money they had paid, amounting to around $3 million. The same kind of thing is going to happen again. Obviously we cannot do it this year, but it will have to be done right after the election." The Minister of Finance had to make allowance for that, so he did a little calculating and knocked off another $3.
And so it went on until the bank conference that took place on the same day. The bank managers served notice on the minister that if he wants more housing he is going to have to be prepared to pay higher interest rates. The minister knows very well that it would not only be a matter of higher interest rates on housing loans. If interest rates are increased it is going to cost more to finance all our public borrowing. Therefore the minister had to make some allowance for that so he reached the stage where he had to cut down his increase to $9 a month.
He was willing to settle for that, but along came the member for Moose Jaw-Lake Centre (Mr. Thatcher) at that particular moment. As we know, the member for Moose Jaw-Lake Centre has a reputation to live up to. He has been rather consistently opposed to any increases in social security payments because he is a great believer in the virtue of poverty. Perhaps he could be used as a horrible example for those who do not possess that virtue. He persuaded the minister that he simply must reduce the increase by another $4 to bring it down to a nice round figure, the $5 which the hon.

member for Qu'Appelle (Mr. Mang) was advocating a few minutes ago. Down it comes to $5 and the minister puts down his pen and says, "That is that; I am not going to touch it any more."
But he had not taken into account one more member of the cabinet, because just at that moment the Minister of Citizenship and Immigration (Mr. Pickersgill) comes along wearing his short pants and boy scout hat and says, "Just remembered it is a long time since I have done my boy scout good deed. I have not done my good deed for this week." Under his arm he has a whole pile of letters which he has borrowed from the Minister of National Health and Welfare. They are heartrending letters from poor pensioners across the country describing the almost indescribable conditions under which they have to live, with higher rents, higher costs and pensions of only $40 a month.
So the Minister of Citizenship and Immigration, who is a master of histrionics, reads these letters very dramatically to the Minister of Finance; and before he is finished they are in each other's arms sobbing away with tears streaming down their faces. The Minister of Finance says, "Oh, my, John, you have saved me from making a terrible mistake. You have convinced me that it would have been heartless and cruel to do what I have been doing, knocking these amounts off the increase step by step. I owe you a great debt for what you have done. You have completely converted me, and I shall make the pension not $5 a month more but $6 a month more." That is how we got the $6.
This, of course, is all hypothetical, but it is the only kind of logic I can imagine by which the government arrived at that figure. It is not based on the increase in the gross national product, it is not based on the increase in the cost of living, it is not based on anything I can see except the pressures exerted upon the minister by lobbyists and others.


An hon. Member:: And the effort to buy a few votes.


Frederick Samuel Zaplitny: If it were based on the cost of living index, then taking the increase from 1949 to 1957 alone the old age pension would have had to be increased to not less than $50 a month, as a matter of fact to a little over $50 a month. If it were based on the increase in the gross national product the old age pension should be $75 a month. But it is based on nothing but this type of lobbying and chiselling going on behind the scenes. That is how they have arrived at $6 a month.
Another matter which is a great disappointment to the taxpayers of Canada generally,
The Budget-Mr. Zaplitny particularly those in the lower income groups, has to do with the exemption levels. The present exemption levels of $1,000 for a single person and $2,000 for married persons have been in existence for quite a number of years. During that time the cost of living has gone up steadily year after year. If any logic whatsoever is to be applied to the existing exemption levels, in other words if they were based on any logic or justice when they were set at $1,000 and $2,000 on the basis of the cost of living at that time, then certainly in establishing any sort of justice today we should take into consideration the increase in the cost of living, and the exemption levels for single and married persons should bear some relation to that.
I do not know what the exact figures would be. They could have been $2,500 and $1,500 or $3,000 and $1,500, but no one can argue that an exemption level of $1,000 for a single person, which was considered logical and just four or five or six years ago, is still logical and just today. By leaving the exemption figures at the same levels the minister is actually dipping his hand into the pocket of the taxpayer to the extent that the cost of living has increased through inflation.
If the minister wanted to do anything at all to help the small businessman, who is up against a real problem these days, in my opinion the easiest way he could have done so would have been to increase the personal exemption level, because the average small businessman is running a family establishment. The average small grocery store or any other small establishment is a family business. It is not a huge corporation. It is not run in the same way as a corporation. It is a family business in which the husband, the wife and quite often some of the adult children lend a hand. The easiest and surest way in which the minister could have provided some relief for the small businessman from the taxpaying point of view would have been to raise the exemption level and give these people the opportunity to benefit to that extent, but nothing whatever was done.
I want to say something about the whole question of inflation. Most of the debate up to this point has revolved around the question of inflation. First of all, I think the word "inflation" is not an accurate description of what is going on. We are told there are too many dollars chasing too few goods, but no one in the debate so far, either on the government side or in the official opposition, has taken the trouble to tell us what the goods are that they describe as being too few. In other words, of what goods are we in short supply in this country? What kind of goods are being chased by too many dollars? No one has said.

The Budget-Mr. Zaplitny


Walter Edward Harris: I did in my budget speech.


Frederick Samuel Zaplitny: Perhaps the minister did, and perhaps he will indicate which shortages he had in mind.


Walter Edward Harris: Read it.


Frederick Samuel Zaplitny: If I remember correctly
there was some reference to steel and building materials, but I recall no reference to anything else. What is actually going on is not inflation in its theoretical sense. What is really going on and what is causing the trouble today is profiteering. It is because too much is being taken out for too little service rendered. When you look at the figure of the consumer debt, which has now reached the figure of something like $3 billion in this country, certainly it does not indicate that those people who owe the consumer debt of $3 billion are the ones who possess too many of those dollars which are theoretically supposed to be chasing too few goods, because if they had too many dollars they would not be borrowing them; they would be spending them instead. But people are spending money they do not have.
Then when you look at the other side of the picture and you look at the profits of the huge corporations in this country you find that the record since 1946 has been almost unbroken, year after year, with increases of 30 per cent, 40 per cent, 30 per cent, 25 per cent. Year after year the huge corporations have been taking money out of the hands of the people at a faster and faster rate. So on the one hand you have profiteering, with huge accumulations of profits. On the other hand you have a $3 billion consumer debt. Surely it can now be said, in the words of the famous statesman of England who applied it to a different situation, that never have so many owed so much to so few.
Here you have a huge mass of the people owing $3 billion, and a small group of corporations increasing their profits by leaps and bounds. That is the kind of situation that is going on. That is the real thing that is causing the hardship. It is not a question of too much money chasing too few goods. It is a question of not enough money in the hands of the people who need it chasing goods which are in the hands of the people who have too much money to start with. That is your situation. If the government are going to do anything effective about it, they are going to have to take steps other than those they are taking.
What are the steps they are taking now? They are increased interest rates which slap everybody across the board, whether they deserve it or not.


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


Mr. A. M. Fraser (St. John's East):: Mr. Speaker, in rising to take part in this debate I should like at the very outset to add my congratulations to those which have already been expressed to the Minister of Finance for bringing down this excellent budget. I should like to congratulate him first of all on the courageous action he has taken in the measures adopted to combat inflation, which is the greatest danger point in our economy at the present time. I think the measures he has taken are all the more to be commended because they have been taken at this particular time.


An hon. Member:: What measures?


Allan MacPherson Fraser: The minister has decided to use approximately half the surplus that he would otherwise have had in order to reduce the public debt. At the same time, however, the minister has found it possible to reduce taxes and to increase certain social security benefits. I am sure these measures will be welcomed across the country, particularly the reductions in sales taxes and excise taxes which will be of benefit to the housewife, and the increases in the social security benefits in the form of old age pensions, disability pensions, veterans allowances, family allowances and others. These will afford real relief to those who need that relief most.
Furthermore, I think it should be pointed out that many of these increased benefits will go almost immediately into the money stream for purchasing consumer goods, and consequently will not drive up to any marked extent any inflationary demand for capital goods, which has been one of the principal causes of the present inflation. It will also be noted by the house that some of these benefits will not come into effect immediately but will come into effect later in the year, by which time there is reason to believe that some part of the inflationary pressures will have moderated somewhat.
There is one particular measure to which I should like to refer at a little greater length, namely the tax postponement provision with regard to retirement annuities. This is a measure which I think has commended itself to the entire country. This provision will provide needed relief for the professional and commercial classes, for the small businessman. At the same time it will provide a direct encouragement to private saving and is therefore definitely anti-inflationary. That may perhaps help to answer the question

proposed from the other side of the house a moment or two ago as to what measures have been taken. That is one that could be mentioned, among others.
I should now like to turn to another aspect of the minister's speech. I was glad to notice his promise of co-operation with the recently-appointed royal commission on the revision of the financial terms of union with Newfoundland, a commission whose appointment was provided for under section 29 of the terms of union concluded in December, 1949. At this point I should like to congratulate the Prime Minister and the government on the appointment of three such distinguished Canadians to be the members of that commission. They are all men eminently qualified for the highly responsible task which has been entrusted to them. We in Newfoundland have the utmost confidence in their ability, and we look forward with keen anticipation to their report.
Perhaps I might add that we in Newfoundland feel that an upward revision of the financial terms of union is urgently required if Newfoundland is to maintain the standard of public services which it has established. The Newfoundland provincial government has undertaken a program of expansion in social services and public works which is of great dimensions, having regard to the resources of the province. A great deal of progress has been achieved in the past few years since we entered union, but a great deal remains to be done before we can attain the average Canadian standard of public services.
Newfoundland is in many ways a special case because of the scattered nature of our population, the difficulties of communication, the overhead in connection with education, medical services, the provision of roads, and various other public services. Consequently the provision of an improved standard-and it has been greatly improved-has required heroic measures of taxation.
The taxes in Newfoundland are very high. Our gasoline tax, for example, is 17 cents a gallon. There is a sales tax of 3 per cent on all articles including foodstuffs. I commend these taxes to the attention of the house, because they show the steps our provincial government has had to take in order to raise our provincial services to a level which is still far from being what we would desire to have it.
Perhaps I might bring this point home if I were to point out that if the same rates were applied in Ontario, for instance, it has been estimated that the gasoline tax would bring in an additional revenue of about $50 million annually, and that the sales tax would bring in an extra revenue of $150 million annually. In this connection I was glad to hear the
The Budget-Mr. A. M. Fraser minister's comments on the recent statement made by the provincial treasurer of Ontario. As the minister has said:
Every dollar of federal revenue comes from Canadian taxpayers and every dollar paid in stabilization or equalization payments is contributed by Canadian taxpayers.
Newfoundland's contributions to the federal treasury are much greater than might appear at first sight because of sales made in Newfoundland of goods produced on the mainland. Part of the corporation taxes paid by mainland companies, whose sales include the Newfoundland market, is due to profits made by those companies on sales in the Newfoundland market. This is true also of the personal income taxes and succession duties paid by the proprietors of these firms and their staffs. Part of these is due to the business which they do in Newfoundland. Federal excise taxes and sales taxes are paid on goods produced on the Canadian mainland and sold in Newfoundland, but when the proceeds from these taxes come into the federal treasury they come not from Newfoundland but from the provinces where the goods originate. The same is true of customs duties on goods entering other provinces from abroad and subsequently sold in Newfoundland.
I wonder if the house always appreciates that Newfoundland has become Canada's fastest growing market. Even prior to union, Newfoundlanders bought a good deal from Canada. They bought a great deal also from other parts of the world, particularly from the United States and the United Kingdom, because in those days the Newfoundland consumer could buy in the cheapest market. Now, his freedom to do so has been limited to some extent by the Canadian tariff system. In the year 1947-48, just before union, Newfoundland exported to Canada goods to the value of $11 million, but imported from Canada goods to the value of $55 million. So even before union Canada enjoyed a very favourable balance of trade with Newfoundland in the ratio of almost five to one. In those days, of course, separate trade statistics were kept for Newfoundland. Since union that practice has been discontinued, so I cannot quote official figures to show the direction of Newfoundland's external trade today. But there can be no doubt that our imports from Canada have greatly increased. A reliable, perhaps even a conservative, estimate has placed them as high as $150 million a year. Now, no doubt part of this increase has been due to the improvement in Newfoundland's prosperity which has been continuous ever since 1940 or 1941 and has accelerated since union. Our purchasing power is now greater, and consequently we buy more.

The Budget-Mr. A. M. Fraser
Part of it is due also to a marked diversion of Newfoundland purchases, since union, from other countries, notably the United States, to the Canadian mainland. Unfortunately, however, there has been no corresponding increase in Newfoundland's sales to the mainland. I admit that is perhaps inevitable in the economic circumstances because the Newfoundland and mainland economies are competitive rather than complementary. This is especially true of two of Newfoundland's three stable exports, namely fish and newsprint, in which we compete with Canada. The only important exceptions are iron ore and, to a lesser degree, fluorspar. I think part of the reason is due to this competition, but I think it is partly due also to high freight costs.
I was, therefore, pleased to hear the minister's announcement of the government's decision to increase the subsidies on outgoing freight from all the Atlantic provinces from 20 per cent to 30 per cent. This is a step in the right direction and it will undoubtedly improve somewhat Newfoundland's competitive position. But of course, this increase applies only to outgoing freight. Welcome as it is, it would be a much greater boon to the people of Newfoundland if the government could see its way to making a similar upward adjustment of the subsidy on incoming freight. Newfoundland suffers a great deal from high freight charges. She is at the end of the line, and moreover has to import almost all of her consumer requirements. It is these factors that force up the cost of living in Newfoundland and limit the purchasing power of the dollars of our Newfoundland people. Lower incoming freight rates are absolutely essential, in my opinion, if Newfoundland is to have equality of opportunity with the rest of Canada. That is one of the reasons why I welcome the minister's assurance that the government is going to make a fresh and comprehensive examination of the transportation problems of the Atlantic provinces. I trust that when this thorough survey is completed, the result will convince the government of the need to increase the subventions in incoming freight.
The recent action of the government in increasing the freight subventions so as to enable the Atlantic farmers to obtain cheaper supplies of western feed grains has been enthusiastically received in Newfoundland. I wish to thank the government for that very fine step. I hope that before too long a similar increase in subsidies will be granted on all incoming goods.
There is another reason, too, why I look forward to this survey and it is because I hope it will lead to an improvement of our railway services. I referred a few minutes ago
[Mr. Fraser (St. John's East).!
to the greatly increased volume of imports from the mainland of Canada into Newfoundland. Now, much of the increased volume comes across our railway system in Newfoundland. This increased volume has placed an intolerable burden on our narrow gauge single track railway. The more I study this problem, the more I am convinced that Newfoundland's transportation difficulties can never be satisfactorily solved until we have a standard gauge railway. The Canadian National Railways has just reported a substantial operating surplus. I believe now is the time when sympathetic consideration should be given to providing a standard gauge railway in Newfoundland, thus removing what I consider to be the greatest single obstacle to Newfoundland's progress.
In conclusion, may I refer just for a moment or two to one or two matters in connection with my own riding. I hope that when the transportation survey is made it may lead the government to consider doing something to improve the transportation facilities between Newfoundland and Bell island, which has been aptly called an island within an island. Bell island, as hon. members are well aware, is a very important industrial centre on the Atlantic seaboard. It has immense iron mines and is a community of 12,000 people. Unfortunately, the communications with the mainland of Newfoundland have been far from satisfactory. If I may, with all respect, I should like to propose to the government that it might consider, in co-operation with the provincial government, the extension of the trans-Canada highway, beyond St. John's to Portugal Cove, Portugal Cove being the terminus on the Newfoundland mainland for the ferry service to Bell island. If it were possible, I should like to ask the government to give consideration to the possibility of co-operating with the provincial government to provide a better ferry service between Portugal Cove and Bell island, which is a great and growing community providing some of our industrial sinews. It is, I think, very necessary and timely that these problems should be considered, in view of the forthcoming survey of transportation problems, as a whole.
Before I sit down, Mr. Speaker, I should like once again to congratulate the minister upon the very fine budget which he has brought down. It has been given several names, some complimentary and others the reverse. I think it is, in a way, every man's budget because it has brought benefits or will bring benefits to everybody. It is a sound, sensible and businesslike budget. I like best to think of it as the budget of "golden mean",

striking a proper balance between debt reduction, tax relief, and progressive improvement of our social services and other public services.


Mr, Donald M. Fleming (Eglinton):: Mr. Speaker, the budget is always a subject of major interest in a session, and not least of all in a pre-election session. This year, a desperate government, well aware of the political erosion it has suffered in the last two sessions as a result of its haughty contempt for parliament and its unbridled lust for power, has staked all its chances on the budget. It is the kind of budget that might be expected under those circumstances.
It is a budget full of pretence. It claims to be anti-inflationary, according to the words of the parliamentary assistant. It is nothing of the kind.
It is a delusive budget. It seeks to make people think that they will be taxed less when the fact is that they will be required to pay more in taxes. It seeks to make people think that the government is holding the line against inflation when it is not.
It is a cynical budget. It contradicts what the government has been saying and doing.
It is an opiate budget. The government openly boasts that the public has a short memory and can be made to forget the past as well as the present welter of the government's own contradictions.
It is a transparent budget. Its pose cannot hide its timing and purpose in this election year. It is the latest example of cyclical budgeting, strictly on the election cycle.
It is an illusory budget. It proposes changes, large in number but small in individual extent in every case, and seeks to create the impression of importance by their mere multiplicity. The banquet table is long. It is well dressed. The best silver and china are used. The lackeys are well-trained. But the fare is thin. The guests have left unsatisfied.
Typically, this government unctuously takes full credit for the accomplishments of the Canadian people, reflected in the increases in the gross national product, production and savings. These are created by the industry, thrift, skill and enterprise of the Canadian people, not by this government.
It is typical also that this budget bears no relationship to the previous budgets introduced by the same Minister of Finance. It is the product of a hit-and-miss approach. There is no long-range policy, no fixed objective in the government. There has been no forward planning, no thinking ahead. The horizon of this budget and of the government is set on a day in June and not beyond that. Therefore, this budget is circumscribed by
The Budget-Mr. Fleming expediency; therefore it is partisan. The Prime Minister can admonish business in Canada, as he did at Hamilton last Monday evening, to plan far ahead. This government plans three months ahead.
And now, sir, a word about the budget changes. What was intended to be the trump card in this budget, of course, consists of the increases in the social security payments, but I draw the attention of the house to the fact that these proposals are actually not part of the budget at all; they are simply the dressing that has been added to the budget. They are not in the budget proposals at all.
Why was the Minister of National Health and Welfare (Mr. Martin) not permitted to announce these increases in the social security payments, as might have been expected? Was he too modest, too retiring, too coy, too self-effacing? Why was it that he shunned the limelight on budget night? Did he, when he took a look at the crowded galleries, turn to the Minister of Finance and say, "No, you go ahead, my colleague; you make those announcements"?
The government has been indifferent to the growingly serious plight of those dependent upon pension payments, and as the value of those payments has steadily melted under the hot rays of inflation condoned by the government and intensified by its own policies. These good people have waited long for redress at the hands of the government. They would still be waiting but for the extremities in which this moribund government finds itself. These good people are in fact still waiting. They will wait, according to the government's proposals, for some months yet; for many of these increases do not become effective until July 1, and others not until September 1 next.
Sir, there is no justification for this further deferment. We call upon the government to bring in at once legislation to make these increases effective now. We offer to co-operate in expediting the passage of legislation at this session to make these increases effective forthwith.


Walter Edward Harris: That is the way you fight inflation.


Mr. Fleming:: And these have nothing to do with the budget as such, and the bills could be proceeded with even though the government never permits the budget debate and the consequent bills to follow their full normal course. There is no need for any further delay in the introduction of such measures to increase those payments and to make them effective now. As a matter of fact, such bills could have been

The Budget-Mr. Fleming introduced weeks ago. They did not need to wait for the budget because they have nothing whatever to do with the budget. I wish to make this abundantly clear, Mr. Speaker. If this parliament is dissolved without these belated increases being fully enacted and made fully effective the full responsibility for that fact will rest upon the shoulders of the government.
The other sugaring of the budget pill was intended to be what are called the tax reductions. One needs to spend but little time on this subject, indeed, Mr. Speaker, because the so-called reductions are so minor in nature. Indeed, any of the proposals that have the effect of lessening the burden of taxation upon the people were, I think, well described by an eminent tax authority in Canada who was quoted in the press of last Friday as saying that these constitute "mostly modified technical changes". Technical changes, indeed, sir, and these very widely scattered! We approve of most of them. Indeed, we are responsible for nearly all of them by our efforts and our advocacy in this house session after session.
In general, these modifications come too late and are too little. But let us see them in their true perspective because then we shall most accurately estimate their true value. They mean, or would mean, in a full 12-months' period but $128 million, according to the estimate of the Minister of Finance. They will mean but $55 million in the present fiscal year, and they will amount to less than that in this present calendar year. But take them on the basis of the present fiscal year. They amount to the handsome figure of 1 per cent of the tax bill the people of this country are being called upon to pay this year. One per cent, sir! That cannot be seriously considered as a tax reduction. Let us understand this. All that the minister has done in that regard is simply to introduce certain technical modifications.
Sir, let us go farther in relation to these technical modifications. The Minister of Finance will still collect more money in taxes this year than ever before, $21 million more than last year. The tax load that the Canadian people are being called upon to bear this year is an all-time record.
Now, let us just briefly look at some of the specific modifications that have been proposed. First of all, of course, there is the proposal to reduce the excise tax on such things as chewing gum, but the Minister of Finance has done nothing to reduce the sales tax on clothing, boots and shoes, the necessities of life. They escaped his notice while he reduced the tax on such things as

bubble gum. A sort of Marie Antoinette mentality is exhibited here on the part of the Minister of Finance. The government has overlooked the necessities and has concentrated on some of the things which in the view of many people do not rank as necessities. Remember that Marie Antoinette when the hungry populace of Paris were storming the gates of the palace and she was told that the people were without bread made the answer, "Let them eat cake." So the Minister of Finance, apparently with a similar mentality, says that the people can go on paying the same high sales tax on their clothing and on their boots and shoes; let them be satisfied with the reduction being made in their chewing gum.
There is the proposed elimination of the sales tax on certain prepared foods and confectionery. We have been demanding this for years. This has been raised by some of us in the opposition session after session. This proposal is indeed a most gratifying victory for our efforts. I ask the house to recall that whatever has been done in this respect has been done in the face of government resistance expressed session after session. So we do not offer any thanks to the government for opposing our proposal for so long. Indeed we are distrustful of its deathbed repentance.
The same applies to such other proposals as the deduction from taxable income of annuity contributions on the part of selfemployed persons. The government's record on this subject has been one of long and unabated resistance. I think I was probably the first one in this house to introduce this question. I looked up the record and found that on April 10, 1953 I first raised this question in the house. I did so again on May 18,	1954 and during every session since.
Others have done the same. This is the fifth session during which this subject has been raised, and the government up until now has adopted an attitude of hostility and resistance. You will remember what the former minister of finance, Mr. Abbott, said when I raised the question first on April 10, 1953. This was his comment, to be found at page 3704 of Hansard of that year:
The difficulties, the inequities, still appal me.
That is the attitude which the government has taken up until now when we are on the eve of an election. As my colleague, the hon. member for Dufferin-Simcoe (Mr. Rowe), intimated the other night during the budget debate, we may well thank Providence that we do have elections from time to time to arouse the government to face up to what appear to them to be such appalling difficulties and inequities until they reach the eve

of an election. We hold the government responsible for the long delay in putting into effect a sound idea, Conservative idea. This government has cynically held back. How can parliament trust them at any time in the future when they offer their objections to sound proposals?
Then there is the minute proposal for infinitesimal assistance to municipalities in the elimination of the tax on certain municipal purchases.


Mr. Rowe:: Not one cabinet minister left.


Donald Methuen Fleming: No, there is not one cabinet minister now left in the House.


William Earl Rowe: The hon. member for Fort William (Mr. Mclvor) is still here.


Donald Methuen Fleming: This indeed is an infinitesimal measure of delayed and needed relief which again smacks of a deathbed repentance. I trust the electors will see to it that the Minister of Finance wishes that he had repented more and sooner.
Then there is the proposal for what is called the "standard deduction", the $100 deduction for charitable donations and medical expenses. The house should understand the real reason for this proposal. It is put forward by the government solely for the purpose of relieving the Department of National Revenue of the clerical checking of vouchers and receipts. What strikes me is that this kind of proposal is going to hurt charitable institutions because the man who gives nothing to charity will be entitled to precisely the same deduction as the man who does give up to $100 per annum to charities, church and other worthy causes.
Then there is the proposal to increase the permissible earnings of dependents under the Income Tax Act. I wonder why the minister has proposed nothing in connection with the wife of the taxpayer.
I welcome the return now of one cabinet minister to the chamber.


An hon. Member:: Here is another one.


Donald Methuen Fleming: That makes two; things are
looking up.
I come now to the failure of the government to provide needed tax reductions.
When I refer to ministers I do not include the voluble parliamentary assistant to the Minister of National Defence (Mr. Hellyer), who is not a substitute.
We submit that tax reductions in the case of persons with small incomes are needed, particularly those with small fixed incomes. The house has recognized the need of increases in social security payments. Those in receipt of small incomes who are finding
The Budget-Mr. Fleming the burden of taxation very heavy under the pressures of rising costs of living are also entitled to consideration. If the idea being put forward by the Winnipeg Free Press is sound, that there should be no tax reductions, then surely they ought to be claiming at the same time that there ought to be increases in taxes for the same reason. Let me give you the opinion expressed on this budget and on the need of tax reductions by Mr. R. M. Sedgwick, Junior, secretary of the Canadian Tax Foundation, who in last Friday's paper, was quoted as saying:
The government could have gone a little further without getting into trouble over inflation.
I commend that to the Minister of Finance. Indeed it is an understatement. A measure of tax reduction for persons on small incomes could have been brought about within next year's estimated surplus. That could have been done and still left money to provide for fiscal adjustments for the benefit of the provinces and municipalities.
We wish to see a balanced budget because we believe in balanced budgets. When the minister is budgeting for a surplus of $152 million next year, if the margin of error in his calculation is as great as it was this year then I say that the taxpayers of this country, particularly the group I speak of on small fixed incomes, are going to need even moie some measure of tax relief.
If savings will help to defeat inflation then we say the people should be allowed to save out of their own money. This government does not trust the people with their own money. They seem to think they have a higher claim upon the money of the people than the people themselves who have sweated to earn it. We have had another repetition of overtaxing by the government. This overtaxing is for what purpose? It is not to save; it is not to increase savings in Canada; it is overtaxing for the purpose of spending. We of Her Majesty's loyal opposition say: Trust the people. We believe that the people are more intelligent and responsible in the use they make of their own money, than is the government in the use it makes of the money it takes from them.
Then there is the matter of indirect taxes. If inflation expresses itself in high prices then surely the government ought to have reduced the sales tax on those necessities of life to which I referred earlier, such as boots, shoes and clothing.
When I refer to the need for a reduction in excise taxes let me remind the house of the experience of this country two years ago when the government brought in a then belated measure of reduction in the tax on motor cars and found that the yield in the following year from the reduced rate of tax

The Budget-Mr. Fleming was greater than had been the yield from the higher tax the year before.
Before I leave this subject of indirect taxes, sir, may I say that I regret greatly to hear the Minister of Finance say, in effect, that the recommendations in the report of the sales tax committee headed by Mr. Kenneth Carter are apparently about to be embalmed. Its recommendations are evidently to be absolutely ignored, the report is to be shelved. I for one deplore that treatment of an important report by several very eminent persons.
And now, sir, a word about the surplus. The surplus for the present fiscal year is the direct result of overtaxation. I do not need to repeat what I said in this house yesterday on the subject. The people of Canada were overtaxed last year, and in the present budget the people of Canada are going to be overtaxed this year. Yesterday we discussed the government's action in salting away $100 million in its "piggy banks" in order to hide the true surplus-a true surplus that is not less than $382 million and which is probably a good deal more than that. We of Her Majesty's loyal opposition demand more careful budgeting; secondly, we demand a balanced budget; and, thirdly, in the matter of debt reduction we say that debt reductions should be carefully and systematically planned, not left to be dealt with by the hit-and-miss method which this government employs.
As to next year's surplus, let me say that the Minister of Finance has estimated it will be $152 million. We had better measure that against his record this year, for this year he budgeted for a surplus of $112 million and arrived at a surplus of at least $382 million. Since he is budgeting this year for a surplus of $152 million, then on the same absolute basis of error the surplus can be expected to amount to $422 million. If it is worked on a proportional basis, then it could be expected to amount to something over $518 million- and it could be that much if the minister or his successor in office so wished.
And now, a word on the subject of inflation. We have inflation in Canada today. We have had the elements of it for some time. It is all a question of degree. The Minister of Finance has been very coy about using the word "inflation". He showed a great reluctance, during the session last year, about using it; particularly in the debate we had on the eleventh day of August last year one would think that word had a plague attached to it. Well, sir, one can test the existence of inflation in Canada on the basis of the simple fact that in the lifetime of the Liberal government the Canadian dollar has depreciated in value by one-half. That has been reflected in what amounts to defrauding persons of part of their

savings, the value of their insurance, the value of their bonds and the earnings of those on fixed incomes. The minister's parliamentary assistant (Mr. Benidickson) was a little more frank when he spoke the night before last and said this was "an anti-inflationary budget". He was wrong about the budget, but he did recognize the existence of the danger, and that is something new.
I ask these questions, Mr. Speaker. How has this condition arisen? Could it have been prevented or moderated by government action? What does the government now propose in order to combat or curb it?
We have heard much, sir, about the so-called "eight best years". These are supposed to be the years since the present Prime Minister (Mr. St. Laurent) took office. There are several facts about these eight years that might well engage the attention of the house. I do not begin with the fiscal year 1948-49, because the Prime Minister came to office in the middle of that year. I begin with April 1, 1949, and I bring these figures down to March 31 this year. The government in those eight years has collected from the Canadian people $32,103 million. It has expended $31,345 million. It has built up in the net form of so-called surpluses, usually as a result of overtaxation of the people, $758 million. In that eight-year period the consumer price index has risen from 100 to 120.3 in January of this year, and the purchasing power of the Canadian dollar has correspondingly been reduced from 100 cents to 83 cents.
The gross bonded debt (exclusive of treasury bills) of provincial governments from 1949 to the end of 1954, which is as far as the figures now go, increased from $1,955 million to $2,552 million, and Canada's foreign indebtedness has increased by leaps and bounds. I leave out of consideration the forms of equity investment, but I draw to the attention of the house the fact that Canada's net foreign liabilities rose from $3.7 billion at the end of 1949 to $7.8 billion in 1955, and that figure will undoubtedly rise to well over $9 billion by the end of 1956 when the figures become available.
Now, sir, in the face of that situation and that record, let us ask what are the means by which governments can tackle the problem of inflation. The minister said in his budget speech, "The fiscal policy of the government has worked toward restraint." Sir, the government cannot justify that claim. No such claim or statement on the part of the government will bear close examination. The minister is right to recognize that there is a responsibility upon the government, but I say that that responsibility has not been discharged.

Inflation is indeed a pitfall for a minister of finance because it adds to his revenues. Many a minister of finance likes it for that reason.
The people of this country, and we in this parliament, had a right to expect this government to set an example, to practise what it preaches. Of the panaceas which are offered, let us consider two-the matter of savings and the matter of reducing expenditure.
On the matter of savings, the minister said in his budget speech, "I earnestly hope that Canadians will themselves save more and invest it profitably in their own future." That, sir, was sound advice. But high taxes make saving on the part of the people difficult. The government believes it can spend the people's money best. We do not.
"Father knows best" is the epitome of the attitude adopted by the government and supported by their followers in this house. The expression was actually used by a Liberal member in a speech in this house last year. We say: let the government do some of the saving it calls upon the people to do; let it set an example.
On the other aspect, expenditure, care is needed in the matter of spending if the desired goal of saving is to be achieved. Again, the government ought to be setting an example. The government this year is proposing to spend more money than any government has ever spent before in this country except in the one year of peak expenditure during the war in 1943-44. And if the government continues in the way it has been going on in the past it will, no doubt, before the end of the year exceed even the expenditure of that year. The Governor of the Bank of Canada has appealed for the curtailment of expenditure, but his recommendation has gone unheeded by the government. I am not saying, of course, that some large government expenditures are not necessary; we have been dealing with some of them here today in what we have approved in recognizing the need of the pensioners to some additional increase because inflation has destroyed, in part, the value of their pensions. But there is a great deal of government expenditure that could be, under careful examination, reduced.
And so I say in conclusion on this subject: let the government first cast out the beam from its own eye and then it will see clearly to pull out the mote from the eye of the individual Canadian.
And I may add this-that the Minister of Finance, as far as we are concerned, is not going to hide behind the policy of the Bank of Canada. He is going to bear his own responsibility.
The Budget-Mr. Fleming
On this subject of expenditure, sir, while I hesitate to spend any time on matters of a personal nature I think I must say something in reply to statements made concerning myself and my position in this house by the parliamentary assistant to the minister two nights ago. The parliamentary assistant in his speech on March 19 was completely wrong and muddled in his thinking, but I will say that so far as his presentation of that muddled effort is concerned it was an able effort and I told him so at the time. But I regret that in the closing moments of that able effort he spoiled it by the aspersion he cast upon the hon. member for Greenwood (Mr. Macdonnell). That was unworthy of the parliamentary assistant. Everyone in this chamber knows that the hon. member for Greenwood is incapable by nature of stabbing anyone in the back. Speaking now not as a political adversary but as a friend of the parliamentary assistant I must say that I regret that he marred an otherwise capable speech by an aspersion of that kind.
Let me come now to what the parliamentary assistant had to say about myself. As found at page 2495 of Hansard of March 19, he said:
Time after time I have heard him claim that he never advocates extra expenditures, that he is one of those who are economy minded and who are constantly urging the government to reduce its expenditures.
What were the examples he gave, intending apparently to put me in a different light? Well, sir, it is quite evident that the muddled parliamentary assistant sees no difference between expenditures on the one hand and tax reduction and capital investment programs and transfer payments on the other. They all look alike to him somehow or did the other night. The instances he referred to were these. First of all, he referred to my advocacy of an increase in the exemptions under the Income Tax Act. Yes, I have advocated increases in the exemptions. This party has. Last year i urged the Minister of Finance (Mr. Harris) at least to take a step in that direction. Sir, these are not expenditures. When we advocate this we are advocating reductions in taxes, not expenditures, but the parliamentary assistant evidently did not understand that.
The next example he gave was assistance to the unemployed. We have said it is inadequate and we stand by that charge. If the government had not attempted to throw that burden on the provinces and municipalities, had not attempted to shirk its own responsibility, had not retreated from its own 1945 proposals, if it had measured up to its duty it would thereby have lightened

The Budget-Mr. Fleming the tax burden upon the provinces and in that way not have increased the total burden of expenditure but assisted in holding it down.
The third instance he gave was my advocacy of federal assistance in the development of the Beechwood project in'New Brunswick. I have advocated federal participation and I shall continue to do so. I shall continue to deplore the fact that the government has wasted opportunities there and I shall denounce the government at every opportunity for its obstinacy and blindness in failing to participate in that project which would have brought such general benefit to the Atlantic area. But the parliamentary assistant does not distinguish between capital investment on the one hand and government expenditure on the other.
The fourth example he gave was my advocacy of aid to the municipalities. Well, sir, apparently he does not understand the effect of the transfer payments. I simply mention that it seems to me that to lighten the burden on the municipalities is a contribution to total reduction of taxes in Canada.
Finally, his last reference was to our fiscal relations with the provinces. I have said and I repeat that it will be a healthy thing and a contribution to the reduction of total government expenditure if the federal government will not continue to grasp the lion's share of the revenue from the joint fields of taxation, denying to the provinces their share of that revenue that is needed if development in the provinces is not to be stifled.
In short, Mr. Speaker, the parliamentary assistant was all jumbled up. He evidently did not know or did not see the difference between expenditure on the one hand and tax reduction, capital investment programs and fiscal adjustments with the provinces and municipalities on the other. All I can say is that the next time he goes agun-ning I hope he will come back with more game.
I have this further word to say about the provinces. If the minister would approach the problem of inflation in Canada constructively and seriously he must regard the total scene in Canada, including the provinces, municipalities and business in general. It is no help in seeking to combat the forces of inflation to force the provinces and municipalities into courses which are leading to increases in costs which the minister should be aiming to help them to reduce. The stiff-necked, unyielding and blind attitude that the minister and the government have taken to the needs of the provinces has been reflected in rising costs to them.

It is a narrow and partisan approach that has characterized the federal government in regard to dominion-provincial fiscal relations.
The provinces are suffering today the crippling effect of the federal government's grab-all policy. Many of them have now become obliged in consequence of these policies to increase taxes or arrest the very development which is sustaining the federal government's revenues. The federal government enjoys a swollen surplus today while the provinces and municipalities, lacking the revenues they need to discharge their constitutional responsibilities, are now compelled to increase both debt and taxes.
What would that estimated surplus of $152 million do for the provinces if the federal government would enter into a new and fairer fiscal deal with them or if it were used in partnership with the provinces in aiding the development of resource? Such a new tax deal would be anti-inflationary. The provinces and the municipalities, according to the minister's own statement in his budget speech, were forced in 1956 to borrow $772 million through the sale of net new bond issues, and that borrowing was 68 per cent greater than 1955.
Sir, we hold the federal government responsible for the tax increases which certain of the provinces have been compelled to impose. We hold the federal government responsible because they are retaining the lion's share, far beyond their needs, of the revenues from the joint fields of taxation.
I have not time to mention three subjects of importance more than to say this, that the budget does nothing for agriculture which needed special attention.
Then there are the maritime provinces. As far as the maritimes are concerned, the minister has suddenly discovered the maritime provinces. The government has acted hitherto as though it was unaware of the existence of the maritime provinces. The budget proposals in this regard are dressed up. What they mean in essence is that the maritime provinces are to be asked to accept more promises and these promises all wrapped up with conditions. The people of the Atlantic area so far as this government is concerned over its 22 years of history are the most promised people in all creation. The government has shown its indifference and unsympathetic attitude to the problems and the needs of the Atlantic area.
Sir, the other night the minister finished the presentation of his bubble gum budget with a peroration of a political nature, a highly partisan effort. It was an interesting flight of fancy. It was indeed an exercise in

fiction. Baron Munchausen at his best never excelled it. I ask the house to look at the facts, the true record of this government. Parliament degraded and humiliated, bent to the will of the government and its promoter friends; the people of Canada bearing a crushing tax burden, condemned to pay a record tax total this year; Canada with a record trading deficit last year of $848 million; a record deficit of $1,400 million on international current account; its trading eggs increasingly placed in one basket, the United States; a record trading deficit with that country in 1956 of $1,298 million; agriculture, the basic industry of this country, excluded from the vaunted national prosperity; the provinces and municipalities denied the revenues necessary to meet their heavy and important constitutional responsibilities and obliged to increase taxes while the federal coffers are filled to overflowing; federal-provincial relations in probably their most difficult condition in our history, with more sand in the constitutional machinery poured there by this federal government than ever before; monopoly thriving under government protection whether in air transport, television broadcasting or a good many other things; confusion on the part of the government in not knowing whether it supports free competitive enterprise or whether it regards socialists still as merely "Liberals in a hurry"; a stealthy weakening of our institutions under this government; a government stooping to divisive appeals to maintain itself in office; a government publicly affronting and denouncing the best friends this country has overseas; the ownership of our resources passing to a hitherto unparalleled degree into foreign hands; a government floundering in the welter of its own incompetence, error, contradictions and arrogance! These are the fruits of this government; and in the words of Holy Writ, ye shall know them by their fruits.


Stuart Sinclair Garson: Mr. Speaker, we have just listened to a speech which in the severity of its polemics and the extravagance of its language is quite up to the par that we usually expect from my friend the hon. member for Eglinton (Mr. Fleming).


William Earl Rowe: We now expect a unique
contrast.


Stuart Sinclair Garson: But, Mr. Speaker, when the speech is carefully examined-and I refer not only to that of the hon. member for Eglinton but to that of the hon. member for Greenwood (Mr. Macdonnell)-I think we can probably agree with the former that they are incapable not only of stabbing us in the 82715-162i
The Budget-Mr. Garson back; and also of stabbing us in the front either. Upon careful examination I think it will be found that both of these speeches can be regarded, properly considered, as an endorsement of the budget.


Some hon. Members:: Oh, oh.


Mr. Casselman:: What an imagination you have!


Stuart Sinclair Garson: I would point out that they have overlooked one or two rather elementary facts. They have overlooked the fact that a budgetary surplus means that money has been taken from the pockets of the taxpayer rendering him unable to spend it; and the fact that it is a surplus indicates that it has not been spent by the government. Since it is spent by neither the taxpayer nor the government, it does not add to the fires of inflation which I am glad to know that both of these hon. gentlemen deprecate as much as does the government.


Mr. Macdonnell:: Will the minister permit a question?


Stuart Sinclair Garson: Yes.


James MacKerras Macdonnell: What does the minister think happens when government obligations are paid off? Does he think the money with which the government pays them off is impounded? Does he think that the money is then sterilized? The money simply goes into the hands of other people who are capable of spending it.


Stuart Sinclair Garson: Mr. Speaker, what I said was that when the government has a surplus, that surplus represents money which is not spent in an inflationary manner either by the taxpayer or by the government. If my hon. friend thinks otherwise, I will challenge him to quote a fiscal expert or an economist who agrees with him. In due course I shall quote a man whom I regard as an expert in these fields-


An hon. Member:: Who is that? Is it John Blackmore?


Stuart Sinclair Garson: No. I think perhaps I had better make the quotation. Then my hon. friend will know that it is not John Black-more. It is a gentleman whom, in recent months, my hon. friends of the Conservative party have on occasion been known to quote themselves. It is the editor of the Winnipeg Free Press.


Donald Methuen Fleming: Oh, oh!


Stuart Sinclair Garson: His views upon this budget are quite different from those of either of the two hon. gentlemen who have so far taken part in this debate on behalf of the Conservative party. He says this, and he
25G0

The Budget-Mr. Garson says it as a man who upon occasion is not incapable of criticizing the government when he thinks that government policies are in error. He says that the budget is pretty good.


Donald Methuen Fleming: I rise on a point of order, Mr. Speaker. Is it permissible for a member to read an editorial concerning a matter which is actually under debate in the House of Commons?


The Acting Speaker (Mr. Applewhaite):: I must confess that I was not following the debate as closely as I perhaps should have been following it. But my understanding of the situation is this. I understand that an editorial cannot be read if it reflects upon or criticizes the proceedings in the house. But I think that on all sides of the house, in many debates, we have had introduced editorial opinion on the issue, but not on the issue as handled by members of either side of the house within the house.


Donald Methuen Fleming: I think I know the editorial to which my hon. friend intends to refer. If so, it will prove to be very misguided. The purport of it is to reflect on the position taken by Her Majesty's opposition on this issue. As I understand the rule, the minister cannot stand up today and quote as an authority, as he is proposing to do, an expression of opinion on this issue now under debate in the house, which comes in the form of a newspaper editorial.


William Earl Rowe: We have been reprimanded for the same thing many times.


Stuart Sinclair Garson: Speaking on the point of order, Mr. Speaker, many I say this. Surely it is possible to quote editorial opinion in this country upon an issue with which this house is dealing. What I would suggest, Mr. Speaker, is that I proceed to make my quotation and if my hon. friend can, at any stage, in relation to the actual quotation itself, successfully maintain that there is any reflection upon the house, then from that point on and without difficulty I am quite prepared to paraphrase the editorial and to express it as my own opinion. I am sure my hon. friend will not go to the length of objecting to my expressing such an opinion.


Donald Methuen Fleming: Mr. Speaker, let us understand the situation.


The Acting Speaker (Mr. Applewhaite):: Before the minister proceeds and under the circumstances prevailing, as I have done previously-perhaps the table should take note of the time-perhaps I should say a word. I put my hand on citation 264 of Beauchesne's third edition which reads as follows:
[Mr. Garson.l
264. It is out of order to read extracts in a debate if they: . . . (b) reflect upon any proceedings or any determination of the house;
. . . (d) refer to, comment on, or deny anything said by a member; . . .
As I understand it, we are debating the merits of the budget. Editorial opinion, either commending or criticizing the budget or any of its provisions, is, in my opinion, perfectly in order. But editorial opinion quoting or referring to or commenting on a speech made by any member on either side of the house in this debate would, of course, not be iri order under the citation. I have not had the privilege, which apparently both hon. members have had, of reading the editorial that is about to be read or not be read; but, as I understand it, that is the situation.


Stuart Sinclair Garson: Mr. Speaker, when the hon.
member for Eglinton rose to make his point of order I was in the process of quoting this editorial concerning the budget. The quotation started out with the statement:
The budget is pretty good. It falls, admittedly, a long way short of the sternest standards of financial wisdom. But it towers miles above the irresponsible standards of political profligacy which,-
I will have to stop there. I will not identify whose profligacy is referred to.
By the rough test of practical politics, the budget is excellent and it is certainly courageous. Warm praise is due to Mr. Harris for it.
Then further down some further comments are made about the budget:
Mr. Harris has chosen a half-measure between that and the dissipation of the surplus, which would have earned more immediate political dividends. The half measure must be counted, just before the elections, as courageous.
Once he had decided on a middle course, Mr. Harris had about $150 millions to dispose of. The ways he has chosen for the disposal may not be ideal but they are not at all bad. The main tax cut, indeed, is highly commendable. It applies to everyone the principle of tax deduction for pensions which hitherto has been restricted to employee pension-plans.
Everyone will now be freed from taxation on all payments, up to 10 per cent of income, which he puts into genuine provision for his income on retirement. This will be a powerful stimulus to private saving, of which the country badly needs more. It is the very best sort of tax cut, and Mr. Harris is to be warmly commended for preferring it to any of the flashier kinds-


Donald Methuen Fleming: Why does he wait four years to do it?


Stuart Sinclair Garson: My hon. friend should not interrupt. Just a short time ago my hon. friend expressed approbation of this particular measure, as did the hon. member for Greenwood the other night. I hope that they do not object to my quoting them in that connection. The editorial continues:
Naturally, we would all have liked more income tax reductions as well; but the good sense of the

Canadian public can be relied on to see that what Mr. Harris has done is the best and fairest thing that, on a small scale, he could do.
The reductions in sales and excise taxes, especially on tea and coffee, will afford a welcome offset to the rising cost of living; they are the most direct way of helping people with small incomes. The other measures in this field are more questionable.


An hon. Member:: Applesauce.


Stuart Sinclair Garson: I know my hon. friends of the Conservative party, when they disagree with an editorial in the Free Press, call it "applesauce". On other occasions I have heard Free Press editorials quoted as if they were the words of the oracle of Delphi. It depends upon whose ox is gored.


William Earl Rowe: They have been goring yours for many years.


Mr. Harkness:: It seems to me they are damning the budget with faint praise.


Stuart Sinclair Garson: I am sure that for the members of the Conservative party, to whom the budget brings cold comfort, that is about the best outlook my hon. friends can take. I would leave it to the people of Canada whether he is right or whether they, as they will think, will be right.
The final paragraph is, after indicating some of the minor shortcomings of the budget, as follows; They refer to these as departures from wisdom:
These are departures from wisdom. But it would be churlish to criticize them severely when the alternative is that sketched, to the pain and surprise of his admirers, by Mr. J. M. Macdonnell.


Donald Methuen Fleming: Now, Mr. Speaker-


The Acting Speaker (Mr. Applewhaiie):: think I have endeavoured to explain my understanding of the rules. I think it was a fair and comprehensive one. It may be a rule which, perhaps, has been by tacit consent broken on several occasions, but the rule being there and the objection having been taken the Minister of Justice (Mr. Garson) should be able to make his remarks with that in mind.


Stuart Sinclair Garson: I bow to your ruling, and the remarks which I am now about to make are my own. I would suggest something of which I think most hon. members of this house are aware. If the Conservative party, as the last pillar of financial orthodoxy-


Douglas Scott Harkness: May I ask, if these remarks are the minister's own, why is he reading them from the Winnipeg Free Press'?


Mr. Bell:: He reads everything.


Mr. Gauthier (Porineuf):: It hurts.


Stuart Sinclair Garson: My hon. friend, on occasion, when he is in his best form, reads many
The Budget-Mr. Garson things to the house himself. I am taking the responsibility for the statement which I am now about to make.


Donald Methuen Fleming: Let us be quite clear on the point of order because I think we want to get this cleared up. The minister is entitled to say whatever he wishes as long as it is parliamentary and relevant, but he is not entitled to read from an editorial in a newspaper which comments on the proceedings in this house and refers to what has been said by an hon. member of this house during the course of a debate. I know the editorial, and I know it constitutes a very unfair, biased reflection. According to the rules of this house it cannot be read into the record by any member of this house.


Stuart Sinclair Garson: My hon. friend is under quite an illusion if he thinks I had in mind reading this editorial to the house, but I am sure as a reasonable man he will agree that there is no law in this country and there is no rule of this house which prevents me, as a free citizen, from having an opinion which happens to coincide with that of the editor of the Free Press.


Donald Methuen Fleming: But under the rules of this house a member cannot refer to the editorial and the opinions of the editor. The minister can state his own opinions but he cannot put the opinions of an editor on the record in this matter.


The Acting Speaker (Mr. Applewhaiie):: both the hon. gentlemen will resume their seats for a moment, I think this is really quite simple. The Minister of Justice when I have stopped him has said from now on, or words to this effect, the following remarks are my own. We have to accept those remarks as his own because the minister states they are his own. If they happen to coincide, word for word, with an editorial which might have been appearing somewhere there is, so far as I know, no rule of the house which stops him providing he puts them before the house as his views and does not put them before the house as the views of some editorial writers.
In other words, I think-and this is not a prepared judgment-I think the rule is there in order that members shall be responsible for the opinions and the statements that they make and shall not be allowed to make statements referring to or commenting upon previous occurrences in a debate, and then hiding behind those statements by saying they are the editorial opinions of a certain newspaper writer. The minister is doing what perhaps, if I may say so to the house, I have done on occasion. I have run across what I thought was a very well written paragraph, have learned it by heart and said it to the

The Budget-Mr. Garson house as my own. I do not think I was breaking a rule by doing so.


Donald Methuen Fleming: I do not question that for a moment, Mr. Speaker. What I do question is a statement by the minister that he agrees with the editorial opinion expressed in the Winnipeg Free Press and then goes on to set it forth.


Stuart Sinclair Garson: I begin to understand what my hon. friend is driving at, and it is very simple, as I believe I might expect from him. He wants me, while I am expressing these opinions, to do like the little girl who says, "See, I am riding my bicycle without my hands", and put the paper aside. If this satisfies my hon. friend, I am quite prepared to do it. But that does not in any-


William Earl Rowe: Have you memorized it?


Stuart Sinclair Garson: No, I do not have time to do those things.


An hon. Member:: Then, you will make a botch of it.


Stuart Sinclair Garson: This does not in any way, I think, detract from the force of the argument, and it will not detract in any way from my hon. friend's understanding of the argument, because the argument is an exceedingly simple one. It is that when, upon the premises stated by my hon. friend, we are in danger of serious inflation in Canada and it is essential that we take whatever steps we can to retard that inflation or to prevent that inflation, then in such cases, on the facts that were presented in the budget, the action that was taken by the Minister of Finance (Mr. Harris) in paying back to the people of Canada limited social welfare benefits and in tax cuts, was a courageous and proper action for him to take. I suppose, in the minds of some purists, he might have gone even farther in that direction than he did. But in contradistinction to the position which was taken by the Minister of Finance is the position taken by that pillar of orthodoxy, the hon. member for Greenwood (Mr. Macdonnell), who says that a proper financial policy undersuch circumstances is to give back more money in tax cancellations and pay out more money in social welfare benefits. That is the policy of my hon. friends. It has been called a policy of complete irresponsibility, that puts them and their party on a par, in the opinion of some, with the Social Credit party in matters of finance.


James MacKerras Macdonnell: Will the hon. member permit a question?


Stuart Sinclair Garson: Yes.


James MacKerras Macdonnell: The minister did not answer my previous question. There is the
[The Acting Speaker (Mr. Applewhaite).]
usual begging of the question with regard to the word "irresponsibility".


Stuart Sinclair Garson: What is my hon. friend's question?


James MacKerras Macdonnell: My question is, does the minister agree that when the Minister of Finance explained that he had paid off some hundreds of millions of dollars of debt, that that money went into the hands of people who could spend it just the same as the money that would have come from a reduction in taxes?


Stuart Sinclair Garson: No, Mr. Speaker, for reasons which will take too long to explain to my hon. friend, and have nothing to do with the proposition I am making to the house which is that if the government has a surplus which has been taken in the form of taxation and revenues of one kind and another from the pockets of taxpayers who might otherwise be in a position to spend it and is retained as a surplus and not spent-it is just the a.b.c.'s of public finance-


James MacKerras Macdonnell: But it is not retained; it is used to pay the debt. It goes into the pockets of other people.


Stuart Sinclair Garson: No. I am making this speech. If my hon. friend does not understand this point I will be glad to explain it to him privately at some time.


Donald Methuen Fleming: Such arrogance, utter arrogance!


Douglas Scott Harkness: Read editorials; you are better at that than you are at the a.b.c.'s of finance.


Stuart Sinclair Garson: The proposition is very simple. A budgetary surplus like this one we have been discussing, obtained and maintained in the way in which it has been, corrects inflation. It does not add to inflation.


Donald Methuen Fleming: May I ask a question? On that theory, is the minister going to go farther and advocate increases in taxes in order that the government can take more money out of the pockets of the people?


Stuart Sinclair Garson: Well, Mr. Speaker, that is not a very sensible question because what we are talking about

at least I have been under the impression that what we are talking about-is the existing budget, whether it is a good budget or a bad budget.


Donald Methuen Fleming: I am applying your argument.


Stuart Sinclair Garson: My remarks are confined to that, and are relevant to that, and there are no implications that are intended as the advocacy of more taxation. We have not imposed more taxation. If we had imposed it,

then my hon. friend's question would have been in order; otherwise it is not.


Donald Methuen Fleming: The point you are arguing for takes you that far whether you realize it or not.


Stuart Sinclair Garson: Mr. Speaker, we have in this debate, however, got one or two admissions from our hon. friends of the Conservative party which are very revealing, very illuminating, and, for our party, very gratifying.
In recent years we have heard a good deal from time to time about the centralizing characteristics of the Liberal party.


Wallace Bickford (Wally) Nesbitt: Hear, hear.


Stuart Sinclair Garson: I hear my hon. friend saying, "hear, hear". This fable has been one of their chief electoral stocks in trade. I hope the hon. member for 'Greenwood does not mind my quoting what he said in the house in this debate on March 19, 1957.


Donald Methuen Fleming: If you quote him correctly.


Stuart Sinclair Garson: The hon. member said, as reported at page 2468 of Hansard:
The dominion-provincial controversy has been a long and painful process. If we carry our minds back to confederation we will remember that the "fathers", and particularly Sir John A. Macdonald, expected the provinces to play a very minor part.
As a matter of fact, I suggest that the real policy of the Conservative party, every time it has had a chance to demonstrate it, has always been a very good exemplification in practice of these ideas of Sir John A. Macdonald, who was not successful in introducing them into the confederation legislation which we have; but which ideas, nevertheless, have been sometimes put into effect by the policies of a Conservative federal government, but have not been put into effect at any time by the policies of the present Liberal federal government.
In that connection, sir, we have had some statements by our hon. friends and by their political ally, Premier Frost of Ontario, to the effect that in view of the large budgetary surpluses of Canada, the provinces of Canada have not been fairly treated. I should like to take a few moments to deal with those statements. The newspaper reports, if I may mention them without quoting them, have attributed to Premier Frost the contention that our surplus of nearly $300 million or, as he suggested, it might be as high as $500 million, is too large at the present time and that the province of Ontario and the other provinces have been treated in a niggardly fashion in the light of this budgetary surplus. He and members of this house-and, if I am not mistaken, I think the hon. member for Eglinton-said it just a few moments ago,
The Budget-Mr. Garson referred to the difficulties of the various provinces. Certainly Premier Frost referred to the $4 million deficit which apparently is now in the making under the new Conservative government in Nova Scotia at the present time, and he referred to the difficulties which are being experienced by the province of New Brunswick. Let us look at his statements for a moment.
To the extent that they were intended as a criticism-and they can have no other meaning-of the dominion-provincial tax rental arrangements at the present time with Ontario, amongst other provinces, they are to me not especially convincing. Presumably it was upon Mr. Frost's authority and advice as premier of Ontario that that province signed the tax agreement with Canada in relation to the personal income tax which is now in force. Doubtless it was because he thought that Ontario could do better by imposing double taxation itself in the corporation income tax field that he refused to take up the federal government's offer, which was accepted by most of the other provinces which are in this arrangement, of substantial payments to the provinces if they would forgo their right to impose double taxation in the corporation income tax field.
Now, sir, if Mr. Frost's argument is that he was unwise and wrong when, on his advice, Ontario signed this agreement and that he was unwise and wrong in not having the agreement cover corporation income tax as well as personal income tax, then I suggest, sir, that the further question arises as to whether Premier Frost is wise to criticize himself in this way. I do not think he is. I prefer the wisdom of Mr. Frost as a statesman to the wisdom of Mr. Frost as a self-critic. I suggest that Ontario, like the other provinces, has done very well indeed under these tax agreements, as the figures which I shall place before hon. members in a few moments will show.
If Mr. Frost, in addition to his complaints about his own predicament, goes on so eloquently to state or imply that the Conservative government of Ontario, the Conservative government of Nova Scotia and the Conservative government of New Brunswick are all in financial troubles at the present time in spite of the substantial sums which they are drawing under these tax-rental agreements, the explanation for these budgetary difficulties, I suggest, can be found in causes other than that the federal government has a large surplus, or that the payments to the provinces under these tax-rental arrangements are inadequate or unfair to anyone or to any province.
Manitoba, for example, under a Liberal government and under the same tax-rental

The Budget-Mr. Garson agreement, has been able in part with the payments which it has received under the agreement to accumulate a sufficient sinking fund completely to retire all the dead-weight debt of that province.
Indeed, the more one examines the arguments and the complaints of the Conservative premiers and the Conservative provincial treasurers, the more the suspicion grows that perhaps the budgetary problems and troubles that they seem to be afflicted with are the occupational diseases of Conservative governments. Prime Minister Bennett was always having budgetary trouble. The Hon. Mr. Stanfield hardly gets his premier's chair warm before he, according to Mr. Frost, is in such serious difficulty that he is anticipating a $4 million deficit in the current year.


Donald Methuen Fleming: That is under a Liberal budget which he took over.


Stuart Sinclair Garson: I welcome my hon. friend's interjection but point out, however, that if this be so, one of the factors that brings that about is the rate of provincial expenditure, and even if these be in order, the approximately $6 million which Nova Scotia will now draw as an increase in these agreement payments will more than cover this deficit of which Premier Frost has spoken.
As a matter of fact the government of Canada is providing under these new financial arrangements a total of about $640 million to the provinces, an amount 25 per cent greater than was available in the previous year and close to double of all the provincial expenditures in 1945. In order to get these substantial sums of money the provinces do not have to levy a single penny of provincial taxes. Indeed in recognition of their need for tax equalization they get this money by agreeing not to impose taxes in the fields covered by fiscal arrangements. Moreover the amount paid at least to the provinces lacking this taxable capacity is in most cases very much in excess of what they themselves could realize from these fields. But any province that feels the need, and this apparently includes Ontario or Nova Scotia or New Brunswick, of more revenue may obtain it by raising whatever provincial taxes it has not rented or, if it does not wish to rent, by imposing its own taxes on incomes and successions, as Premier Frost has chosen to do in connection with corporation income tax. There is no coercion in these arrangements and a province is free without penalty to make use of its own taking powers in any way it sees fit.
I suggest that one reason why Manitoba and other provinces like Manitoba have done so well under these present and past

tax agreements is that they were wise enough to be a party to them from the very start. Because her Conservative politicians were slow to understand and appreciate the value of these agreements, Ontario for several years passed up hundreds of millions of dollars in rental payments that would otherwise have been available and which only in part were replaced by its own taxes in these fields. Even yet Mr. Frost seems unsure in his own mind as to his proper course. While he is willing to rent the field of personal income taxes, which he apparently regards as less popular, he is unwilling to continue to contribute his help to maintaining a stable system of single corporation income taxes. He intends to impose additional income taxes on Ontario corporations rather than sign a rental agreement with the government of Canada.
It is under these circumstances that objection is taken to the federal government surplus. It is in the light of these facts and figures which I have placed before hon. members that the suggestion is made that the federal government help to the provinces is niggardly. The clear implication is that there is no particular objection to a substantial budget on the part of the Dominion of Canada provided a more substantial portion of it is handed back to the provinces in the form of revenue which they do not have to take the responsibility of imposing a penny of provincial taxation to raise.
That raises the question of whether these fiscal payments are adequate. Of course I do not believe there is any final answer to this with which every person is going to agree. But some interesting comparisons throw light on the considerable magnitude of the provincial payments. As I have pointed out already, they are nearly double the total provincial revenues from all sources in 1945. They exceed all provincial tax sources at the present time by a very substantial amount. They provide about $40 for every man, woman and child in the provinces in which they are made. While it is true that in some provinces capital expenditures must to a greater or lesser degree be financed by borrowing, surely this is not an unusual or abnormal state of affairs. As a matter of fact it is quite in accordance with standard practices, especially in times of very substantial growth such as the present. Certainly it can be shown that provincial services have not been hindered but have been aided substantially by these federal-provincial payments.
I should like permission to table a statement showing the amount of provincial expenditures in 1945-46 and from 1951-52 to
1954-55.


Donald Methuen Fleming: figures?
What is the source of the


Stuart Sinclair Garson: The Department of Finance.
The Budget-Mr. McLeod Mr. Speaker: Is it agreed?


Some hon. Members:: Agreed.
: Finance.	Mr. Garson: The table is as follows:		
Education	Highways	Health and	Total NetBudgets, etc.	Welfare	Expenditure($000)	($000)	($000)	($000)78,253	84,790	393,061301,459	265,542	1,138,591369,778	286,659	1,295,673355,273	313,743	1,311,022371,339	358,526	1,380,795
This table shows that provincial expenditures upon education, which were $70 million in the provinces in 1945-46, had increased to $196 million in 1951-52 and had increased further to $274 million in 1954-55.
Provincial expenditures on highways in 1945-46 were $78 million; in 1951-52, with the assistance of the tax rental agreements, they had gone up almost four times to $301 million-odd, and in 1954-55 had increased to $371 million.
Provincial expenditures on health and welfare were about $85 million in 1945-46; in
1954-55 they had gone up to $358 million.
The total of all net provincial expenditures was $393 million in 1945-46, and these had increased considerably over four times to $1,380 million in 1954-55.
I suggest that in the face of these figures there is no possible basis whatever for Premier Frost's claim, or the claim of the hon. member for Eglinton (Mr. Fleming) or of the hon. member for Greenwood (Mr. Macdon-nell), that the development and progress of the provinces have been hindered by these fiscal arrangements which have been entered into freely by all the governments concerned. I suggest that the tax agreements and their most recent development under the Federal-Provincial Tax-Sharing Agreements Act have proved among the most beneficial and outstanding of state documents that have ever been produced in this country.


Mr. G. W. McLeod (Okanagan-Revelsloke):: Mr. Speaker, we have listened this afternoon to quite a lot of newspaper comment in connection with this budget, especially during the past few minutes. I can assure you that whatever ideas I put forward will be my own.
A week ago tonight we heard the Minister of Finance describe in glowing terms the great wealth producing era we have gone through, especially in the past year, and in some such words as these he said: "The farmers also shared in the general properity. Better crops and greater sales and deliveries have greatly improved the farmers' income." 82715-163
We take no exception to that, Mr. Speaker, because it is a fact, but we note in table two of the budget that was presented to us, where the inventories of the farms are given, that the goods on the farms have decreased by $42 million, showing that the increased income is due in large measure to selling, or to a decrease in the assets of the farms; and I would like to ask the minister if this is a sign that the farmer is making more money. After all, income, or the amount of dollars that comes in, is not necessarily a gauge of the profit being made by farmers, or of the earning power of farmers in a particular area.
The big problem facing the farmer today is to bring the cost of production and the value of the goods produced to such a ratio as will permit a profit, and I am sorry to see that in the budget which has been presented to us there is no sign of assistance and no policy or suggestions of policy set forth that would assist in solving this problem. The hon. member for Acadia (Mr. Quelch) has spoken at length on this subject, and he has set forth policies and suggestions which I am sure would help solve the difficulties which farmers are facing today if the government would heed and follow that advice.
In this budget I do notice one thing, however, that will be of assistance to a certain class of farmers in my own province of British Columbia, and I refer to the fruit and vegetable growers. It is a promise, nothing more than that, but I do hope the consideration that is to be given to the question of tariffs and dumping duties on fruit and vegetables coming into this country from the United States will prove to be advantageous, and I hope the decisions reached will be brought down in the very near future so that any benefit, if there is to be a benefit, will accrue to our growers in that part of Canada in time for the coming crop year.
I am glad to see that a committee has been set up to study land use in Canada. I hope it will gather information quickly and present its findings this year so that

The Budget-Mr. McLeod the next government of Canada will be able to deal with it in the coming year. I am sure we shall find, as a result of the study of that committee, that thousands of acres of land are being cultivated that should be used for grazing and ranching. We shall also find, I am sure, that good land where rainfall and climatic conditions are suitable for grain growing could be opened up in our central and northern areas. I believe we shall also find, Mr, Speaker, that thousands of acres of arid and semi-arid land can be made productive by irrigation, and would provide homes for thousands of new Canadian farmers. I am not forgetting, when I refer to this, the large area that could be watered by the south Saskatchewan river; but I am thinking more of the thousands of acres in my own province that could be made highly productive.
Since coming to this house I have advocated on many occasions a national system of federal-provincial assistance for irrigation as carried on under P.F.R.A., and I would say: why not amend this act by striking out that word "prairie" and substituting therefor the word "national", making it truly national in its scope? I hate the discriminatory policies and the sectionaliz-ation that apply to so many of the projects of this government. Let us get away from this, and foster a spirit of co-operation and fair play from one side of Canada to the other wherever a problem may exist.
Then, our great supply of water in British Columbia, Mr. Speaker, which makes irrigation possible and profitable, also creates the serious problem of erosion. I am thinking of the great damage that has been done in my riding by the Columbia river. This river flows through the city of Revelstoke where old protective walls have rotted or been worn away, and I noticed very recently that a representative of that riding in the provincial legislature in Victoria claimed it was even possible that in the not too distant future there would be a danger that the court house in that city would sink into the Columbia river. He referred to an old wing dam erected by the federal government in 1907 which has rotted away and which was no longer serving any useful purpose.
To the south of Revelstoke we have a serious problem where, slowly but surely, another small townsite, the townsite of Arrowhead, is disappearing beneath the waters of the river. Here a retaining wall which had been built by the federal government has been destroyed by the water and ice of the river during the past several years, and the river has cut a second channel as it enters into the Arrow lake, as a result

of which it is flowing back and slowly damaging the townsite of Arrowhead.
At the present time the Department of Public Works refuses to accept responsibility for this. 1 have brought this matter to their attention on several occasions, and have tried to get their co-operation, but so far the effort has been without avail. However, I would mention the fact that in former years they did assume the responsibility for erecting retaining walls, dams and other protective measures on that river, and the responsibility which they assumed in 1907 has not, I say, lessened since, and I maintain that it is the duty and responsibility of this government to maintain and keep in order these preventive dams or other structures which they have created in past years.
But this is just one more example of the need for a national policy on erosion-a policy that will apply to all parts of Canada. I am in complete agreement, Mr. Speaker, with the planning of measures to reclaim and protect the marshlands of New Brunswick, because I realize it is in the national interest.
At the same time I am, as I said, violently opposed to any policies that discriminate between different parts of the nation and I simply stress the fact again that it is high time that the government placed the whole problem of erosion and reclamation on a national basis.
I am glad to see that the government has decided to assist the Atlantic provinces to overcome the problems of excessive freight rates, lack of transportation facilities and lack of electric power. This is long overdue and such action is needed if this part of Canada is going to take its rightful place in the development of our country. But why just the Atlantic provinces? Again I say, why not look at the problems as they exist from a national point of view, and again I come back to my own province of British Columbia. We have our excessive freight rates. We have our long hauls of manufactured goods from the east. Then we have the excessive mountain rates. We have excessive freight rates in shipping British Columbia fish, fruits, vegetables and lumber to the prairie and eastern markets. Why forget the British Columbia manufacturers and producers as they struggle to overcome the high freight rates that face them in their efforts to enter the markets of Canada?
We also have our transportation problem. We have a growing need for trunk roads. We have a great need for access roads to our undeveloped forests, our mines, our agricultural lands and our power sites. But here I would be remiss if I did not express my

appreciation of the fact that the Department of Northern Affairs and National Resources has agreed to come to the assistance of the province and share part of the cost of the development road in the northwestern section of the province. However, we know that road construction in our province is far more expensive than anywhere else in Canada. Yet the returns for every dollar spent in developing the natural resources of that great part of Canada will pay large dividends to our national economy.
We need railroads. The provincial government is alive to the need and the P.G.E. now connects Prince George to the coast. In less than two years' time the line will be extended 360 miles farther north. The cost will be about $135,000 per mile. Do you know what the federal government has decided to contribute towards the cost of the road? $25,000 a mile and not for the full length but for a mere 50 miles north of Prince George. That represents a total of approximately $1J million for a project that will cost the province of British Columbia $48J million. Again I say that we need a national policy on freight rates and transportation that will apply to the west coast as to the east and to all points in between.
What about power? Industries looking for power have their eyes on the province of British Columbia. I need not tell you what opportunities we have for power development. I think all members are aware of the potential that exists in that province. In fact engineers have not yet been able to assess the true power potential in that part of the country. Again I understand that the Department of Northern Affairs and National Resources is doing something about surveying and making a preliminary examination of the rivers in that part of Canada, and we appreciate that.
We are also glad to know that the international rivers problem is being studied. I trust that the proposed discussions between the Canadian and British Columbia governments on the one hand and the government of the United States on the other will take place in a spirit of friendly co-operation to resolve the many vexing problems. When the discussions are completed I trust that the same friendly co-operation will prevail between the government of British Columbia and the government of Canada to see that the rich power resources of that part of our country are properly developed.
Like most Canadians, Mr. Speaker, I am concerned about the growing deficit in our international trade. It is true that this has been caused in large measure by purchases of steel and heavy equipment not produced in 82715-1631
The Budget-Mr. McLeod Canada. But why have they not been produced in Canada? Why has the government not given encouragement to many of our plants that a few years ago were looking for avenues in which to expand after the end of the war? Why was encouragement not given to them at that time to enter these fields? Why have steel and rolling mills not been established in Canada to process our vast stores of iron ore that are now being sent across the border? Would not encouragement and leadership by the government in the years not too far behind us have paid great dividends to our economy at the present time and thus have prevented in large measure the deficit which we now have?
As the hon. member for Acadia (Mr. Quelch) pointed out the other night, there is one redeeming feature about the deficit, namely, that foreign investors are pouring their money into this country thus offsetting the millions required to meet the deficit. But when I hear discussions about the high interest rates rampant in the country today I sometimes wonder whether there is not method in the madness of our financial and government leaders who are encouraging the high interest rates that we face at the present time. I am satisfied that these investors who are seeking to place their money in this country are doing so in large measure because they are lured by the high interest rates that are available to them here, and I think it is possible that that is the thinking of the government of the country when they encourage high interest rates at the present time.
But our trade deficit is not alone due to the purchase of heavy goods. It is also due in great measure to our failure to sell a fair share of goods in the markets of the world. There must be a reason for this. It is not that Britain and Europe do not want our lumber, bacon, cheese, fruits, fish and raw materials generally. The reason they are not able to buy is simply that they cannot find the dollars with which to pay the price tags we have on our goods. Therefore they are buying where their own money is accepted and where the exchange rates are more favourable.
Years ago, Mr. Speaker, we started to build a curtain around this country when we signed the Bretton Woods agreement. The curtain is getting harder and harder to penetrate as the premium on our dollar rises. That is a problem we must face, and I maintain that we should start now to consider ways and means to promote the freer exchange of the pound sterling and other European currencies for Canadian dollars. We read about the iron curtain around Russia and the bamboo curtain around China that hamper international


An hon. Member:: Not at all.


George William McLeod: When the Minister of Finance (Mr. Harris) finished his presentation the other night, the words of that great master of expression, Sir Winston Churchill, came to my mind: Never was so much owed by so many, to so few. Slightly altering it, I would say: Never has a nation owed so much to its people and done so little to repay the debt.
(Translation):


Mr. Paul E. Gagnon (Chicoutimi):: Mr. Speaker, the eloquence of the Minister of Finance (Mr. Harris) and the learned report he submitted to the attention of the hon. members last Thursday have not met with as enthusiastic a reception among the Canadian people as he might rightfully have wished on the eve of an election. I would like to spend a few moments to give the house my impression of certain figures quoted by my hon. friend.
For instance, early in the new fiscal year the government will pay over to the Canada Council $100,000,000 to be used in further widening the existing breach in our national constitution. This amount of $100,000,000 is meant to further enthrall and enslave the provinces. It will be handed over to a chosen few who will be able to rule the roost in the field of Culture (with a capital C) and whose dictates will set the standards of thought and of science in this country.
To be up to date in matters artistic we will henceforth have to bow to the rulings of these gentlemen designated by the gov-
The Budget-Mr. Gagnon ernment as beacons on the course of higher learning. They will point the way and steer us clear of the rocks. This is what caused the newspaper Le Soleil, a Liberal party organ, to write as follows on November the 22nd 1956:
It is therefore proposed to set up a new commission, with a chairman, a vice-chairman, a secretary and a host of civil servants, yet another administrative bureau which, each year, will eat up a goodly portion of the budget placed at its disposal. It will be readily understood how things cannot be otherwise since we must needs have somebody who will control the administration of the funds set aside for the enrichment of our cultural life. Inevitably-
Mind you I am quoting from Le Soleil- -a few friends of those in power, a few obscure persons will thus be provided with the fairest of havens. This is the inevitable consequence of each new step taken by our governments, with this result that even the most praiseworthy of these cannot always be unreservedly accepted by public opinion.
And so it is that each year sees the growth of its privileged castes, its jobholders-or plain civil servants.
Today, alongside the legislative executive and judicial powers, the civil service constitutes the administrative power, often more important than the others. Civil servants represent the element of stability in government. Ministers come and go but civil servants remain. They exert a daily influence on the destinies of the nation and the mentality of our people. They are all the stronger for their being constantly behind the scenes, reaping no glory for the good that they do, nor shame for the wrongs laid at their door. Their work, always done on behalf of someone else, is seldom known to the public. If they are stupid their errors vanish under mountains of papers and, if they are brilliant, the details of an anonymous, complicated and elusive administration allow them to achieve only partial usefulness.
Fifty million dollars will go into the superannuation fund of these gentlemen, and a like amount into the reserve. And so a hundred million dollars are being camouflaged so as not to display an exorbitant surplus of nearly 400 million dollars. The tax is off on bubble gum but not on children's shoes. Crumbs are handed out to the small fry, in a would-be Santa Claus gesture, while on the q.t., a slice is taken off the parents' pay cheque.
The government, while appearing to fight inflation is actually favouring it by its mania of accumulating surpluses, of forcing the Canadian citizen to tighten his belt and of extracting from the worker taxes which allow the government to indulge in expenditures and gifts which are often extravagant.
Whether it is the people who have too much money or the federal treasury which

The Budget-Mr. Gagnon collects so much that it does not know what use to make of it, the result is the same. There is danger of inflation one way or the other.
But in the mind of our administrators as in the opinion of our centralizing experts, money must be drained away from the taxpayer so that he will be left without anything, if possible. Especially must the income tax never, on any account, be reduced. Everything must be retained, everything must be set aside so that our leaders may be considered cautious and able, be looked upon as philantropists, munificent dispensers of grants and subsidies.
The state has confidence in no one but itself to "develop" the national economy and to direct it along proper channels. We are all aware of the success it has obtained in the field of international trade. We know what markets it has lost and how our export trade deficit is growing constantly.
In spite of promises of financial assistance extended to the Maritime provinces, promises which are meant to correct the unfortunate impression left by the Gordon commission report, in spite of subsidies to fishermen and farmers, and expressions of friendship for everybody, the budget introduced on the 14th of this month is not even a good election budget.
It is the budget of an administration forever surprised by events, whether in the national field or in the international field, as is evidenced by inflation and the Middle East crisis at this time.
Having lacked foresight, having failed in its primary duty, having been unable to foresee the effects which its shortsighted policy was sure to bring about in due course, the government at this time seems utterly at sea.
It is largely responsible for our financial troubles, and the credit restrictions it has seen fit to impose are the result of its record in the past.
What prosperity this country has enjoyed since the war is far more attributable to the vast natural resources of our country and to the work of our people than to the party which governs our destinies. The bounties of Providence must not be ascribed to our present leaders.
The fact that the old age pension has been raised from $40 to a mere $46 shows with what parsimony public monies are being used to relieve public hardship. Millions have been spent for the Colombo plan, for the police operation in Egypt, for the purchase of paintings for the gallery, for television programs, but mere pennies are set aside for the poor, for those who are suffering.

The average increase of $1.40 per month in the family allowance is also quite inadequate. It answers neither the demands of the people nor their needs. It corresponds neither to the unceasing rise in the cost of living nor to the social ends towards which it was originally instituted.
With a surplus of $282 million and a prospective surplus of more than $300 million for the next fiscal year, the government should have been more generous to the mothers of this country, fairer in its estimation of the means and the rightful demands of the people.
The small cuts in indirect taxes announced by the Minister of Finance will be of no benefit to most of our people. These cuts will be absorbed by the wholesaler or lost en route between the manufacturer and consumer.
We are told that each year Canadians spend more than 2 billion dollars on superfluous goods or amusements such as alcoholic beverages, tobacco, horse races, etc.
It would be closer to the truth to say that Canadians are spending part of their revenue on these luxuries and are paying a tremendous amount in taxes for the privilege of doing so. Everybody knows, for instance, that the extremely high cost of any bottle of alcoholic beverage is explained by the fact that on each drink absorbed by the customer, the federal government levies a profit which puts it in a position to be the main beneficiary of this highly dangerous business. The same holds true for the cigarette smoker who pays 17.7 cents tax on each pack of 20 cigarettes, that is 54 per cent of the usual retail price, 117 percent of the retail price minus taxes, and 192 per cent of the manufacturer's price. In the United States the tax is only 8 cents per pack of 20. The smoker is better treated south of the border, and there is no cigarettesmuggling there.
On the other hand I am not convinced that, as stated by the Minister of Finance in his speech, the farmer has benefited from the general rise in national revenue. His bank account, if we are to go by the reports of agricultural groups, has not appreciably increased in 1956, at least not in eastern Canada.
The government is now proposing nothing tangible to put the eastern farmer on a par, financially, with his western counterpart.
One word in passing on a subject which is of particular interest to my constituents.
The dairy industry is the very basis of our agriculture. It represents more than one third of the revenue of the farms of the province of Quebec. It is the main occupation of more than 100,000 farmers. The government should

therefore be most mindful of the security of this industry which is vital to the future of our country.
Millions of Canadians are dependent on its prosperity for their own. Everybody uses its products in one way or another.
In order to protect it adequately and to allow farmers and breeders to make ends meet, the federal government should have appreciably increased the tariff on powdered milk and cheese from Australia and New Zealand.
A revision of the 1931 and 1932 agreement and a substantial increase of tariffs would be helpful to the agricultural class which today, because of the high cost of feed, labour and equipment, is in a deplorable position.
The average income of farmers is not on a par with that of other groups of workers. Their loss of buying power is one of the weak spots of the Canadian economy. A sustained attention and a wise and far-sighted agricultural policy should maintain the existence of our farmers on the same level as that of city workers, tradesmen and professional men.
Apart from measures taken in fields of provincial jurisdiction, the St. Lawrence seaway project and some more or less fortunate contributions in international affairs, it is regrettable that the government should have revealed itself so much of an opportunist, so unmindful of the welfare of the working classes, particularly with regard to the unemployment prevailing to an alarming degree every winter.
Jobs must be found for seasonal workers who are idle during off seasons.
Unemployment means the loss of considerable production which impoverishes the victims and upsets our economic system. I urge greater respect and more consideration for workers, farmers and taxpayers, a good will expressed not merely in words but also in concrete deeds.
When it is suggested to the Minister of Finance bilingual cheques should be mandatory, he protests and talks of the expense which such procedure would involve. Does he not think that with the surpluses he boasts about this year he could have agreed to that justified claim? Does he not think that he should have announced a reduction of the income tax, which heavily burdens so many people?
I hope that the next time the Minister of Finance will remember the needs of the people and that he will evidence more generosity towards the Canadian taxpayers.
The Budget-Miss Aitken
(Text):


Miss Margaret  Aiiken@Y ork-Humber: Mr. Speaker, will you call it six o'clock?
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Miss Margaret  Aiiken@Y ork-Humber: Mr. Speaker, there are three things about which I should like to speak briefly. First, I believe that thousands of Canadians were bitterly disappointed in the meagre increase in pensions. My particular interest is in old age pensions because there are many older citizens in my constituency. Since becoming a member of this house I have received scores of letters containing personal stories and highlighting the hardships of trying to live on $40 a month. I do not believe $46 a month is going to do much to relieve these hardships.
During this debate we have heard a great deal about tight money, about credit restrictions, about inflation and about income taxes, but those are mere words to pensioners trying to live on $40 a month. Some time ago I attended a meeting of old age pensioners and one gave me a pitiful list of figures which comprised her budget and which I want to put on the record. To me those figures were far more startling than the $5,170 million the Minister of Finance (Mr. Harris) is demanding this year from the Canadian taxpayer.
Her budget for one week was $3.69 for food, which included 67 cents for meat; two loaves of bread totalling 38 cents; 41 cents for tea; 20 cents for sugar; 1 bunch of carrots at 15 cents; and then followed a list of other grocery purchases. She had an amount of $2.90 for drugs which included things like aspirin and a doctor's prescription. Then as extras she showed a pair of shoes at $3.45 and a pair of stockings at 79 cents. This meagre budget totalled $10.83 for the week, or $43.32 for the month, and this did not include shelter or rent.
I shall never understand why the Minister of Finance was so parsimonious with his pension increases. Apparently the minister had to do some pretty fast financial manipulating to reduce that embarrassing surplus. He allocated $50 million to bolster the civil service superannuation fund; $50 million to

The Budget-Miss Aitken create a new reserve account to meet possible future losses on government assets and $100 million for culture. There have been increases for practically every government department with an over-all budget increase of more than $400 million over last year.
This government has produced a budget indicating the biggest peacetime spending spree in Canadian history, but all that it can do for old age pensioners is to provide an increase of 20 cents a day in their pensions. The Advertiser, a weekly newspaper published in Toronto, last year carried a series of articles on the plight of old age pensioners. Case histories were reported to show the difficulties of trying to live on $40 a month. An extra 20 cents a day or $6 a month is obviously not going to do anything to help these people. There was one rather ironical paragraph in this series which I should like to place on the record for all hon. members to digest. It reads:
How to live on $40 a month in four easy lessons. Don't eat. Don't go anywhere, because that will wear out your shoes. Sit around and read, if you have anything to read. Go to bed early so that you don't get hungry.
While still on the subject of pensions, may I say that I am disappointed the government did not include a guiding allowance in the blind pension. Representations have been made more than once in this regard by the Canadian Council of the Blind and the Canadian National Institute for the Blind. I should like to indicate one or two of the pleas made by these organizations. The first one is:
In addition, there should be a special cost of blindness allowance free of the means test paid by the federal government to all Canadians.
The next one is:
Basically, an allowance which would assist blind people in meeting the expense of their blindness would help to equalize their position in society with their sighted competitors.
There are 21,000 blind persons in Canada and I do not believe any group of citizens command greater respect from the rest of us because of their courage, their independence, their self-reliance and their determination to be useful citizens in their communities. The very least a rich and prosperous country like Canada can do for such worth while citizens is to give them a helping hand toward greater independence. The one point program of these two organizations representing the blind states that a special government allowance can provide this assistance. By providing this assistance the government would be giving these people a helping hand toward their own assistance. The program also contains this:
Blindness is serious enough, the blind should not pay for the handicap they carry.


It would take only a small part of the government's vast surplus to implement this humane suggestion. My final point has to do with succession duties. In his budget speech the Minister of Finance said that he hoped to be able to introduce a bill to amend the Dominion Succession Duty Act. I do not know what stopped him from introducing such a bill because there is certainly one gross injustice or more, in the act. During this session representations have been made by several responsible groups urging that changes be made in the succession duty act. I have a brief here from the Weston auxiliary of the local council of women containing the following four suggestions:
1.	That the exemption of $50,000 on estates be made a true exemption deductible from the value of the estate before the calculation of duties.
2.	That a wife's contribution in the marriage partnership and to the building of the family estate be recognized by exempting from succession duty up to one-half of a deceased husband's estate passing to his widow; likewise, that only one-half the value of a gift from a husband to his wife be subject to gift tax.
3.	That a life interest or pension be not subject to succession duty, as this results in double taxation-succession duty and income tax on the same money.
The Canadian Federation of University Women with a membership of 7,000 women has also presented a similar brief to the government, and the Canadian chamber of commerce similarly protests against the federal government levying succession duty not only on the amount in excess of $50,000 but on the initial $50,000. The chamber of commerce describes this as inequality of exemption, and the setting up under the Succession Duty Act of a discriminatory provision. I hope the Minister of Finance will heed these protests and adopt the suggested changes, not at some nebulous future date but now.


Mr. G. T. Purdy (Colchesler-Hanis):: Mr. Speaker, in rising to take part in this debate I am reminded that this will be the last opportunity during this session, in fact, during this parliament, when one will be able to discuss matters not definitely related to the problem under review. Today, therefore, I propose to deal with several matters of interest to my constituents and to my province in addition to the budget.
The press has already dealt extensively with the proposal submitted by our Minister of Finance on March 14, and I wish to associate myself with the many who have congratulated him on what his address contained and the manner in which he delivered it. While the proposals did not offer a great deal to any specific section of our population, there is something for almost everybody, in addition to special benefits to the Atlantic provinces,

fully in keeping with the slogan of the Liberal party-Unity, Security, Freedom.
Is it any wonder, therefore, that the official opposition, try as they may, from their financial critic to those who have most recently spoken, have been exceedingly weak in their criticisms and lacking in constructive alternative proposals. Again they have adopted the old line of trying to make the people believe that if put in power they would pay out more and collect less and still present a balanced budget, or even reduce the debt as the present administration has done. To my way of thinking, such claims are absurd and I am satisfied that the intelligent electors of our country agree with my views.
The hon. member for Greenwood (Mr. Macdonnell) has accused the Minister of Trade and Commerce (Mr. Howe) of having a war mentality. I am sometimes of the opinion that the hon. member for Greenwood must have a worm mentality. As regards the C.C.F. party, I do not believe that our people want state controlled industry or dictatorship such as would, of necessity, come out of such control.


Some hon. Members:: We cannot hear you.


Gordon Timlin Purdy: You can read it tomorrow.


An hon. Member:: Bad enough hearing it once.


Gordon Timlin Purdy: You can make your speeches, too.


Mr. Crestohl:: It would make no difference to them if they did hear it.


Gordon Timlin Purdy: Thank you for the interruptions. I did not interrupt you.


Mr. Hamilton (Notre Dame de Grace):: You
were not here.


Gordon Timlin Purdy: If you had been in the house as much as I have, you would know more of what is going on.


William McLean Hamilton: don't have to be here to know more than you about what is going on.


Gordon Timlin Purdy: If you listen for about three minutes you will hear what the people think of the block down there.


An hon. Member:: Is the hon. member addressing the Chair?


Gordon Timlin Purdy: I do not believe people want state-controlled industry. The "funny money" ideas of the Social Credit party have been washed out, and while they still try to fool the people, the facts are that in the provinces where they are in control the present economy is the result of a tremendous expansion and development of Canada's natural resources due largely to the policies of this government.
The Budget-Mr. Purdy It would be just as sensible to credit the Social Credit movement for the development taking place in northern Quebec, or the tremendous expansion in the gypsum production in Nova Scotia, as to give them credit for similar developments in Alberta and British Columbia.
It is all very well for the provinces with immense natural resources to speak of the maritime provinces as "have not" provinces, but I would again remind the house that at one time the maritimes had a very definite stake in a large portion of the areas which are now bringing great wealth to the provinces to which such areas have been allotted, and it is only fair, therefore, that they should share in the distribution of this wealth.
This brings my thought to the Atlantic seaboard, and gives me the opportunity of expressing my appreciation of the special recognition given in the budget to the problems of our provinces down by the sea. These problems are not new, and have been presented from many angles. The preliminary report of the Gordon commission focussing public opinion on our situation is a milestone in our history, and the appointment of this commission will stand as a memorial to the wisdom of the present administration.
It will be appreciated that with the continuation of the present administration we can look forward to many more similar projects and proposals aimed at the development of the Atlantic provinces. It was most surprising to me that some of our people failed to realize that the final report is still to be made public. Others, for political purposes, are attempting to draw attention to a single paragraph in the preliminary report, and are trying to make the public believe that a forecast made, as to what might be necessary 30 years from now, should it not be possible to keep our development in line with our increase in population, is present government policy.
I can understand why such a statement could be made immediately following the release of the preliminary report, by people who had not had an opportunity to study it or to assess the general opinions as expressed by the press. However, I feel that at this date I should take exception to the remarks being made insisting that the report means that it is government policy to move our people out of the provinces.
In this connection I note from a recent issue of the Truro News that the Hon. Mr. Ferguson, minister without portfolio in the Stanfield cabinet, had this to say, and I quote from the newspaper report:
He said the suggestion that 4,000 maritimers be "displaced" is something to cause concern.
"I can't see why anyone would misinterpret the statement" he said. It seems quite plain that

The Budget-Mr. Purdy another 4,000 are to be displaced. If they are not, then I hope the commission will explain just what it did mean.
My reply is, that in my opinion, the hon. gentleman should pay more attention to his reading and less attention to trying to play politics. My feeling is that should he do this, he will have less to he sorry for when he has occasion at a future date to review the beneficial effects to the Atlantic provinces arising from this report, and I may say that I feel that the hon. member for Digby-Annapolis-Kings (Mr. Nowlan) is equally at fault in this respect.
The news letter published by the Canadian chamber of commerce in its March 1 issue reviews the report, and amongst other complimentary remarks has this to say, and I quote:
The preliminary report should be required reading for every thinking Canadian. It has brought together a mass of extremely valuable and, in many cases, startling statistics. It gives to those who read it a fine sense of accomplishment and a tremendous feeling of optimism. Much has been accomplished, but much more remains to be done in this great and growing country of ours. The picture which has been drawn has been done in broad strokes, but we can't help feeling, as individuals, a thrill at being provided with the opportunity of helping to fill in the details over the next few years.
I prefer to take this view which is similar to that expressed by the Halifax Chronicle Herald in several editorials since the publication of the preliminary report. In fact, our premier, loath as he apparently is to agree that any good can come out of Liberal action, concluded a prepared statement at the time the report was issued as follows:
.	.	. the commission is to be commended for
"seeking answers to our problems and not sops to pass to us."
I wish now, Mr. Speaker, to refer specifically to my own constituency, that of Col-chester-Hants, stretching as it does from the placid waters of Northumberland straits with their sandy beaches and perfect summer bathing conditions to the waters of Cobequid bay and Minas basin to which I will refer later. At this point I could exhaust the balance of my allotted time in describing the attractions of the north shore of my constituency on the Northumberland straits. These are centred around the village of Tatamagouche which is the headquarters of a large dairy industry and an educational centre. I could also take you to the adjoining community of New Annan, home of the famous Annie Swan, the Canadian giantess, 8 feet, 1 inch tall and with other measurements in proportion. It is interesting to note from the local press that recently twin relatives of this famous lady who are still living in my constituency celebrated their 94th

birthday and are probably Canada's oldest twins. French river running into Tatamagouche bay was one of the terminals of the Chignois trail or portage used by the Acadians in supplying the needs of the fortress of Louisburg.
There are many other historical features centred around the area. For example, there was the naval battle of Tatamagouche bay which was probably the forerunner of the downfall of the fortress of Louisburg. But I must hurry on and can but again urge our fellow Canadians to make a visit to the Atlantic provinces a must in arranging their future holidays. All in all, we present a reasonable cross-section of the economy of the province. In fact, geographically we are the centre of the mainland. To confirm this I would point out that our boundaries meet those of six of the other seven constituencies on the mainland.
According to the last census our population is roughly 60,000, an increase of almost 5,000 during the past five years. This has occurred in spite of the fact that in common with almost every constituency in the province we have lost a considerable number of our good citizens to Ontario and Quebec. We do not benefit very much from the influx of immigrants. However, I am happy to say thal during the past few years, thanks largely to the efforts of the government, we have been able to attract a considerable number of Dutch farmers to our area. They have as a whole proven to be good citizens and I was very pleased indeed to learn from the press the other day that our Truro Rotary Club had selected as its representative for the adventure in citizenship trip to Ottawa this year a young Dutch student who has only recently arrived in this country.
I believe that one reason why the Dutch settlers are attracted to our community is due to the fact that the North Nova Scotia Highlanders played a very important part in the campaign in that country, and I should like to stress again my strong objection to the name of this famous fighting unit having been lost sight of in the reorganization of our militia. To me it seems most unfortunate that the Minister of National Defence (Mr. Campney) did not make use of some other body to advise him in this matter than the one he did.
Census figures will show that about two-thirds of our population is rural and one-third urban. As a matter of fact, however, as a considerable portion of our so-called rural population is more urban than rural in its way of life, I believe that a fifty-fifty split is more accurate. Our rural people depend for a livelihood on agriculture and lumbering. Basically, however, agriculture in its various

phases from livestock to apples is the means of livelihood of a large percentage of our population because the economy of our urban centres as well as our rural areas depends to a great extent on the situation in our agricultural areas.
Therefore I make no apology, while thanking the government for its recognition of the problems of our farmers and for the assistance given them in many ways, the most recent ones being the reduction in freight rates on western feed grain and our outgoing products, for pointing out that the present government and the Liberal party which will form the next government have some way to go yet in order to place the economy of our farm population on an equal basis with those in industry. To this goal I pledge my wholehearted support.
The maritime marshlands rehabilitation program has been of great assistance to our farmers. It is with some pride that I recall that I was a member of the special committee which in its report of more than 20 years ago proposed this program to the government. It is my hope that when the Senate committee on land use presents its report it will concur in the views I have expressed for years with regard to the extension of the provisions of the Maritime Marshland Rehabilitation Act to cover fresh water erosion and that we will see this assistance made part of government policy. The efficient staff built up by this organization would be available with the know-how to continue the job with the minimum of expense.
For a moment may I turn to the urban centres of my constituency. Truro, Windsor, Stewiacke and Hantsport are manufacturing centres, with Truro a transportation centre, both railway and highway, for the province. It is truly the hub of Nova Scotia. Windsor occupies the same place as regards the Annapolis valley. The whole area is steeped in historic lore. For instance, at Windsor we find the site of the first agricultural fair held in North America and at Fort Edward overlooking the harbour we have one of the remaining blockhouses of pioneer days. This area along with the Truro area and many other parts of the constituency played a very important part in the historic days both prior to and after the expulsion of the Acadians.
In Windsor the provincial government maintains Haliburton house to commemorate the memory of Thomas Chandler Haliburton, Sam Slick, the author of "The Clockmaker" and many other publications. Between Windsor and Halifax, still in my constituency, the provincial government has Uniacke house reminding visitors of the early days of this family who played a very important part in the building of Nova Scotia.
The Budget-Mr. Purdy
Our manufactures cover a large list of items. Textiles are, however, the most important, Truro, Windsor and Stewiacke having plants devoted to this type of work. Our chief claim for special recognition in this line is in Truro, the home of a nationally known brand of underwear, which name now heads the government of our province. I question, however, if the portion of a recent article in Maclean's magazine which could be taken to indicate that the trade-mark of this famous industry is now the emblem of Nova Scotia is correct. While I do not approve of many of the policies of the present provincial government, I have no such misgivings with regard to the manufactured product produced under the trade-mark previously referred to and I would commend the use of this famous brand to you, Mr. Speaker, as well as to other members of the house, both ladies and gentlemen.
Earlier in this session the junior member for Halifax (Mr. Balcom) took me to task for what he claimed was an attempt on my part to move the capital of Nova Scotia from Halifax to Truro. So far I have not been successful, but I would point out that our new government had to come to Truro for approximately 50 per cent of its cabinet members. In spite of the objections of my hon. friend I still propose to keep on trying to impress on the Minister of Finance (Mr. Harris) and his parliamentary assistant that the proper location for the headquarters of the Canadian farm loan board is in the centre of the agricultural area and adjacent to the agricultural activities of both the federal and provincial governments. May I here be permitted to look into the future and say that while possibly Truro will never be the capital of Nova Scotia yet should it ever happen that the four Atlantic provinces join in one government Truro, which is the geographical centre of the four maritime or Atlantic provinces, would no doubt be the place selected as the capital.
I have previously referred to the preliminary report of the Gordon commission. I have also in past sessions endeavoured to impress on the Minister of Northern Affairs and National Resources (Mr. Lesage) the advisability of assistance to our province in developing our tourist industry. I was rather surprised that the commission report above referred to did not refer specifically to our tourist potential. However, this may appear in the final report. It is true that the minister did not respond too favourably to some of my suggestions. However, I will now quote certain excerpts from the preliminary Gordon report. The first one is as follows:
What is required is a positive and comprehensive approach to the problems of the Atlantic region. With this as the objective, it is suggested that the

The Budget-Mr. Purdy people of Canada as a whole might be willing to assist the people of the Atlantic provinces in discovering, developing and making the best use of resources in that area.
A second excerpt as follows:
Any serious attempt to raise income levels in tb* Atlantic provinces will soon break down into consideration of a series of problems which must be dealt with separately and individually. These include problems of transportation and communications.
The final one reads as follows:
On the other hand, the desirability of granting some measure of capital assistance towards the construction of public projects, including improved transportation facilities, in the Atlantic provinces is apparent.
Mr. Speaker, armed with this report I make bold to ask the Minister of Northern Affairs and National Resources to take a new look at the proposals I made with respect to the construction of a replica of an Acadian village as a tourist attraction, and also a survey of the Shubenacadie estuary in order to ascertain whether a causeway is feasible at that point with the four-fold object of providing a highway crossing, railway crossing, power development and reclamation of lands now out to tide. This would also enable us to develop the tourist attractions of the Cobequid bay and Minas basin shore rich in history and possessing many historic features and favourable for summer recreation.
I appreciate the fact that the minister suggested that, if as a result of a preliminary survey, the provincial government were able to show that the proposal is a feasible and economic one, he would be prepared to give further consideration to joining with the provincial government in defraying the cost of an extensive survey. I understand that the preliminary survey is now being carried out by the provincial government. I would point out to the minister that even if this survey suggests that the only answer to our problem at this point is a bridge, he should not, having regard to the quotations from the Gordon report which I have previously given and to his responsibility in connection with developing the tourist industry, fail to give favourable consideration to a request for financial assistance should it be made.
May I point out that from the time of confederation up to a few years ago the federal government accepted the responsibility of assisting in maintaining a direct road connection between Truro and Windsor by way of a ferry subsidy and the maintenance of the ferry docks at Black Rock and Maitland. This to my mind is an added reason why the federal government should give further consideration to assisting in a crossing at this point as part of the Truro-Windsor road.

Under the heading "Did you Know?" the Eddy Match Company recently published on the back of one of its boxes the following:
"Burnteoat Head, Nova Scotia, is famous for the world's highest tides, rising 46 to 54 feet above low water."
Burnteoat is but a few miles from the mouth of Shubenacadie river. My impression is that the differential between the high and low tide is at times as much as 62 feet. However, we will not quarrel with our friends over a mere eight feet of tide which is the maximum in many places.
I am afraid that my good friend the Minister of Northern Affairs and National Resources has failed to realize that the mouth of the Shubenacadie is a far different problem from that involved where preliminary surveys on the possibility of using tidal power have been made. I think he will find that our tides are about twice as high as they are further down the bay.
I am not discounting for a moment the fact that under present conditions and the present know-how it is possible to produce energy from coal and oil more cheaply than from tidal water. However, a few years ago, Mr. Speaker, anyone who suggested that atomic power could be made commercial use of would have been considered very visionary. We are now realizing too late that our forest resources are not inexhaustible. Might I suggest that the future generation may have to face the same problem as regards coal and oil. The tides of the bay of Fundy go in and out twice a day with the force of many millions of horsepower behind them. Three hours each day before high tide without mechanical aid the bore appears.
I could continue, Mr. Speaker, for hours discussing the features of the Maitlands, the Selmas, the Noels, the Waltons, the Kempts, the Burlingtons, Cogmagun and many other settlements along this shore all waiting for tourists. I am afraid that if I did this I would be out of step with the bore which I have just mentioned and I fear that it would bore my listeners.
Hantsport, Windsor and Walton are important deep water ports. From their wharves each year hundreds of ocean-going steamers carry the produce of our quarries, lumber and pulp mills to the markets of the world. While I appreciate the assistance of the Minister of Public Works (Mr. Winters) in maintaining reasonably good shipping facilities at these points, yet encouraged by the reference in the Gordon report to improved transportation facilities I would urge his full co-operation in meeting my requests for further improvements at such points.

In closing, Mr. Speaker, as this will no doubt be my swan song in this parliament, I commend my remarks to the government and particularly to the minister of northern affairs, the Minister of Agriculture (Mr. Gardiner) and the Minister of Public Works for their consideration when they return to take up their duties following the next election in which our beloved Prime Minister will again lead the Liberal party to victory. I consign my political fate to the hands of my electors with the assurance that while the hour-glass may have started to run a little low there is plenty of sand left and that I will, God willing, continue to serve them to the best of my ability as I have in the past.


Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, before I attempt to discuss some of the contents of the budget speech made by the Minister of Finance (Mr. Harris) there are two or three matters with which I should like to deal briefly that are not mentioned in that speech, at least in the way in which I should have liked to see them mentioned.
I think it is perhaps hardly necessary for me at this stage of the debate to go into much detail with regard to the position the C.C.F. group takes on the increase proposed in relation to the old age pension. I think that position is made abundantly clear by the amendment which was moved by my colleague the hon. member for Nanaimo (Mr. Cameron) when he suggested that the old age pension should be increased at this time to an amount commensurate with the increase in the gross national product since 1949, which would call for a pension of approximately $75 a month. Arguments in favour of that proposal were advanced this afternoon by the hon. member for Dauphin (Mr. Zaplitny) and therefore I think that I need not expand upon them at this time. However, there are two points which are not mentioned in the proposals for changes for social security legislation which perhaps may not loom large on the national scene in respect of the number of voters that are involved but nevertheless are ones which I think rightly should have been brought forward at this time.
One of these matters which has been raised many times by some of my colleagues who speak on occasions when we are discussing veterans affairs is the idea of including as eligible for war veterans allowance first world war veterans who were not in what has been termed a theatre of war. I have had one or two cases brought to my attention quite recently of what seemed to me to be needless hardship imposed upon people who did render honourable service in that war, yet are unable to qualify for war veterans allowance benefits.
The Budget

Mr. Barnett
The other matter which I regret has not been taken care of in the proposals advanced by the minister is a matter which has been put forward as a single point program, jointly by the Canadian National Institute for the Blind and the Canadian Council of the Blind, over the last two years, for a specific allowance free from the means test for the blind persons of Canada. I have spoken on this matter on two or three previous occasions in earlier sessions of this parliament, and I must say I was very much disappointed that the consistently reasonable request which those who speak on behalf of the blind have made to the government has not been acted upon. I am sure that the blind people who are in the position of having passed the means test will welcome the small increase which is going to be allowed to them. I must say I cannot understand why the government did not see fit to accede to that request which has been, as the Minister of Finance (Mr. Harris) and other members of the government well know, put forward consistently, not only to the government but to the members of this house.
There is a third point which I wish to raise at this time. It is also a matter which I have raised on a number of previous occasions. As a matter of fact, the Minister of Finance may recall that shortly before the end of the last session I said that I intended to raise this every year as long as I was a member of this house until something was done about it. I am referring to the continued discrimination against the wage and salary earners of this country under section 5 of the Income Tax Act. I have, on occasion, gone into some considerable detail with respect to the manner in which the application of this section of the act discriminates against many of the workers in my constituency, the loggers in particular. I have outlined the anomalous position in which skilled tradesmen find themselves when they are working for wages in contrast to the man who may be, for the time being, selfemployed. I have attempted to put forward the position that has been advanced from time to time by the various workers' organizations in this respect.
As members of the house will recall, Mr. Speaker, last year an amendment was made to the Income Tax Act which had to do with those things which must be included in respect of taxable income. We passed an amendment which, as I recall it, was phrased something like this:	that any
benefit of any kind whatever must be included. Then when we found that an information bulletin, which has become quite well known in trade union circles as information bulletin No. 10, was issued under date

The Budget-Mr. Barnett of July 10, 1956, we began to wonder if this was not a further implementation of the idea that was put forward in that amendment. This bulletin attempted to clarify the situation to employers in respect to including allowances, particularly for those who were construction workers and who were away from their homes in the course of earning a living.
The bulletin says, on page 2:
This bulletin is being issued at this time because it is believed that there may be employers who have been unaware or uncertain of their responsibilities in the matter of tax deductions at the source. Any employers who have, for the present time, neglected to take these elements of income into account for the purpose of tax deductions should make immediate arrangements to do so.
So far as I can understand, that was simply serving notice that the practice, which was fairly well known and had been carried on over a long period of time, was suddenly going to be brought to a stop. In other words, instead of moving in the direction of removing this discrimination the government seems to be tightening up on the wage earners. The Canadian Labour Congress, in their brief to the government this year, brought this matter to the attention of the government. It has been brought to the attention of individual members. I know I have had letters from a great many trade union organizations in my area such as the building trades council, Vancouver and District Labour Council, the brotherhood of carpenters and joiners and a large number of other groups.
Now, sessional paper No. 105A, moved by the hon. member for Winnipeg North Centre (Mr. Knowles), made some inquiries on this subject and the answer was given by the Department of Finance. He asked whether or not representations had been made to the government on this subject, and the reply says that such representations had been made and had been received from a number of labour organizations. Then, it goes on to say that careful study is being given to these representations and the matter was still receiving consideration. I can only assume that the consideration has come to a conclusion and, because of the absence of any reference to this matter in the budget speech, that the government is no longer giving consideration to it.


Walter Edward Harris: That is incorrect; it is not concluded.


Thomas Speakman Barnett: There does come a time when we have concrete evidence as to whether consideration has or has not been given by the government by the results that consideration produces. However, I can still hope perhaps, from the interjection the minister made, that this is a matter which will be

rectified, because I think the discrimination becomes all the more clear in the light of the situation set forth by the hon. member for Nanaimo (Mr. Cameron) in respect of those deducting income from corporation dividends from the taxes payable by people whose income is from that source.
Now, Mr. Speaker, I realize that in the budget speech the minister made some reference to the topic of inflation; certain other references have been made from time to time to this subject by other speakers. I thought perhaps the minister might be interested in the impression which was given by his colleague the Minister of National Defence (Mr. Campney) on this matter during a recent visit he paid to the coast of British Columbia. According to the report I have here from the Comox Free Press the minister met the Liberal executive in the Comox-Alberni federal riding.
I assume that this was not a meeting attended by the press. Therefore, I imagine this is someone else's impression of what the minister said. It is not put in quotation marks. The report in the Comox Free Press reads as follows:
Mr. Campney said that the federal government is at present endeavouring to develop trade, secure full employment and also create prosperity in Canada.
Apparently, we are still a long way from these objectives, according to the Minister of National Defence. Then, he goes on:
One million homes have been built and the gross national product is nearly $30 billion this year, but inflation threatens. Inflation could easily destroy prosperity and result in depression as has happened in the past. The federal government has two ways of controlling inflation; either to reintroduce the direct and unpopular controls of credit and instalment buying of the wartime, or the indirect way of control by discouraging borrowing by means of increasing the interest rate, which is the only measure used at present. Whether the policy is at all effective or ineffective it is well-intentioned.
Well, Mr. Speaker, I leave the minister to draw his own conclusions as to where he is paving the road and taking his colleague with him as he goes.


Mr. Knowles:: Bent for an election.


Thomas Speakman Barnett: In his budget speech to the house on March 14 the minister did have some rather interesting things to say. I think that when my colleague, the member for Nanaimo (Mr. Cameron), referred to the budget as essentially a stupid budget, the minister understood that my colleague did not imply that the minister himself could be described by the use of that word.


Walter Edward Harris: It would be all right if he did; I sometimes think so.


Stanley Howard Knowles: The minister has to be right once in a while.


Thomas Speakman Barnett: The minister apparently does recognize, as he pointed out in his speech, and reminded us, that he had spoken on it in his previous budget speech, and I quote briefly from page 2314 of Hansard of March 14:
I was careful, however, to point out that we were becoming subject to inflationary pressures and that both fiscal and monetary measures would be needed to restrain the upward thrust upon prices.
I think the only quarrel that some of us have with the minister is that, having recognized that there is a problem, he does not seem to have done very much about it. On page 2216 of Hansard he had this to say:
I am sure that most thoughtful people know that a condition of "tight money" and higher interest rates is not the wilful creation of the government or of the banks or of the Bank of Canada. It is true that the Bank of Canada could have further increased the supply of money and credit. Such action would have given greater leeway for inflationary pressures to push up prices and costs to the great disadvantage of export and domestic industries alike, and indeed of all sections of the community.
I do not quarrel too much with this statement of the minister because I think he is attempting to give us, as far as he is able, an honest picture of the situation. But on the same page of Hansard he says:
The monetary policy of the Bank of Canada has been one of restraint, and the fiscal policy of the government has worked in the same direction.
Well, we have been hearing quite a bit about the monetary policy of the Bank of Canada; but when we start thinking about what the fiscal policy of the government has been which would assist in controlling this situation, then I think I might say, at the risk of being accused of coining a phrase, that we had much too little too late, because on page 2221 of Hansard the minister is recorded as having said:
I have already explained my reasons for believing that the severe inflationary pressures, which we have resisted so far with a high degree of success, are still with us to a considerable extent.
Much as I might like to do so, I cannot recommend to this house any major reductions in the general level of taxation.
Now, I may be wrong, but that is the only place in the minister's speech where I can find a direct reference to what he calls the fiscal policy of the government. In other words, apparently the fact that he has not cut taxes is the main method that the government is using to approach dealing with the inflationary pressures as far as policy is concerned. The only other thing I can think of is, as I understand it, in the estimates
The Budget-Mr. Barnett which he has tabled this year there are a few places where there has been some chopping and cutting of the construction program of the government which, if I may say so, in many cases is resulting in a real hardship through the lack of services to the Canadian people. These are the only two points I can think of to explain the minister's statement that the government is working with the Bank of Canada through fiscal policies. However, as I said at the outset, at least the Minister of Finance does recognize that there is an inflationary problem.
When I left the Pacific coast in January I came here from the province of British Columbia, but apparently while I have been away some things have been happening out there. Apparently, from reports I have heard, when I go back I am going to be returning to the province of Wenner-Gren land, as it is being called out there now. In Wenner-Gren land, which is being hailed as a paradise for Swedish multi-millionaires, we have a premier by the name of the Hon. W. A. C. Bennett. I do not know what Mr. Bennett is talking about these days, but when I left the province, when it was still British Columbia, Mr. Bennett was going around shouting at the top of his lungs that there was no such thing as inflation; that it was all the figment of somebody's imagination.


Mr. Johnston (Bow River):: The Social Credit governments have done something to lower taxes that no other government has done.


Thomas Speakman Barnett: All was grand and fine. I am drawing this to the attention of the Minister of Finance because, as far as I am concerned, in British Columbia we have a situation at the present time that illustrates better than the situation in any other part of Canada some of the things that my colleague, the member for Nanaimo, was trying to drive home in his speech when he was pointing out what happens when we attempt an over-expansion in capital expenditures.
As I look forward into the vistas of the future in Wenner-Gren land I can see this great premier of this province setting out on a monorail which leads away through the future right past the north pole and right on to the moon, and in its trail is a continuous expansion program of multi-billion dollar projects. That is the sort of thing that the Hon. W. A. C. Bennett talks about when he is speaking as the premier of this newly-named province. Of course, when he is talking in another capacity as the minister of finance of the province-


Mr. Patterson:: You have been reading Barry Mather.

The Budget-Mr. Barnett


Thomas Speakman Barnett: I may say I find Barry Mather better reading than this budget speech of the Hon. W. A. C. Bennett. We have some unpleasant responsibilities as members of parliament in the reading we have to do. As I was saying, Mr. Bennett also made a budget speech not long ago when he said:
British Columbia can be proud of her achievements in 1956.
And again:
Over one billion dollars was invested in the construction of new plants and in the expansion of existing ones.
Again:
-and that our population rose to a total of some 1,398,000. If this is so, an increase of 20 per cent has been experienced since 1951, which is greater than that of any other province in Canada.
Then on page 6:
Also of deep concern are the consequences that could result from current national credit policies. Rising interest rates can only go so far; after that they either compel the shelving or the cancellation of projects related to economic expansion.
Under normal conditions any slackening in industrial expansion is balanced by a rise in capital expenditure by provincial and local governments. The backlog of that type of expenditure in British Columbia is so great that normally expenditures of this kind would provide constant buoyancy to our provincial economy for many years to come.
And a little later on:
In British Columbia, where economic growth in relation to ultimate potential is still fractionally small, we are concerned mostly with the long-term factors of a continuing growth. Our natural resources are so great and varied as normally to attract large and highly diversified kinds of private enterprise. We know from experience that such enterprise, by its own accord, periodically takes the steps necessary for a consolidation of gains. We, therefore, become justly apprehensive of artificial distortions, and short-term consideration which may either retard of prevent economic growth.
That might all sound very tine but I think the $1,000 million investment which Mr. Bennett talks about should be related to some of the matters which have been brought up in this house by the hon. member for Nanaimo, who suggested that of the total expansion program since 1949 of $24 billion, a total of $18 billion had come from the retained earnings of corporations.
As everyone in this house realizes, one of the main factors in the economy of British Columbia is the forest products industry. I come from an area on the coast of the province which is one of the great lumber and forest products producing areas. A good many millions of this billion dollar expansion have been spent in that area and by and large I am quite ready to admit that that expansion has been welcomed by a great many people who live there. Up to a point it has been a good thing, but a situation appears to be developing which some of us have been concerned about for quite a long time.

I am reminded of a headline which appeared not long ago in the Financial Times which indicated the Minister of Trade and Commerce (Mr. Howe) saying to the lumbermen: Get back to normal. In my opinion that headline was a number of years too late. The booming economy upon which Mr. Bennett and his supporters have been riding, as on a bubble, may not be too secure and I think Mr. Bennett is becoming a little jittery. One of these days he will have to think about getting back to normal.
The Minister of Trade and Commerce should have told the lumbermen back in the booming period of the second world war to remain normal as far as their prices were concerned. If we had in the field of lumber exports something similar to the Canadian wheat agreement with Great Britain the situation which some lumbermen of British Columbia fear is about to happen might not happen. I shall not go into the details, but by way of illustration I would like to point out that the last table of wholesale price indexes, contained in the weekly supplement to the Canadian Statistical Review of March 12, 1957, indicates the average wholesale price index as standing at 229.4 compared with 100 for 1935-39, whereas the index for lumber and timber stands at 441.8. As far as I can see, there is only one other item in the index higher than that and that is scrap iron and steel, which stands at 447.4.
It might be noted that British Columbia produces something like three-quarters of the lumber produced in Canada, and that may have something to do with the situation which is giving concern to the Minister of Finance and those like myself who realize that there are inflationary pressures. This has created some concern in the mind of the minister of finance of British Columbia even though he is not prepared to admit it.
As far as he can see, the only solution seems to be to go on spending and spending in the field of capital construction without giving any thought to what may happen if that capital spending should stop. When he talks about industry adjusting from time to time and taking the steps necessary for the consolidation of gains, the only meaning I can take from that is that sooner or later industry is going to stop this rapid expansion of plant and equipment.
Once that is done, then some of these thousands of people who have been attracted to our province may not be such welcome citizens as they are at the present time.
I notice a dispatch in the press-hon. members may have noticed it in the eastern papers .-in which the secretary of the British Columbia Lumbermen's Association is reported to have been painting a rather gloomy

picture of the prospects in the lumber market for the year that lies ahead. I think that anyone who is familiar with the situation in British Columbia knows that this is a time of year when conditions quite often become gloomy in the lumber industry. Another headline in last Tuesday's Vancouver daily Province-the same paper which carried this report from the secretary of the British Columbia Lumbermen's Association-said that the negotiations which are going on between the union and the bargaining organization of the big employers were increasing in tempo.
But even if one were to discount the propaganda element in stories of the present decline of the lumber market, this situation is one which some of us who have worked in the lumber industry have been afraid might come one of these days. If one is working for one of these large corporations, one is not supposed to worry about anything more than whether or not there is going to be a large wage increase as a result of the next negotiations. But there are a good many workers in industry who are concerned about the broader picture of the welfare of the industry and who can, I think, understand that this process of having allowed our export production of the principal basic commodity of the province to rise to the figures indicated in this index of wholesale prices which has resulted in the large corporations being able to retain for expansion purposes tremendous profits of millions of dollars each year must, sooner or later, bring about a situation where these few large corporations are simply going to be expanding in an attempt to get a larger share of the existing market. Sooner or later this program of rapid capital expansion will have to come to an end, and when that happens, particularly if it should be that the existing market has temporarily or permanently declined, then our province is going to be in a very grave situation, and many thousands of workers who have been working at what, compared with the national average, are quite good wages, are no longer going to have that sort of job.
So, Mr. Speaker, I think the hon. member for Nanaimo, when he drew to the attention of the house and of the government the view that the real cause of these inflationary pressures is overspending in capital construction, was simply making a realistic appraisal of the situation as it exists, certainly, in the province from which he and I come.
From time to time we have the opportunity of seeing the reports of some of these large organizations which operate on the coast. The last report which has come to my attention is the annual report of Crown Zellerbach, Canada, Limited. This is one of the large and efficiently run corporations, part of whose
The Budget-Mr. Montgomery operations are in my constituency, which has been welding together the component parts of various former companies into an integrated forest products industry. The company has been undertaking a very substantial program of capital expansion, a large part of which is in one of the centres of my community, and I would like simply to bring to the attention of the house one or two figures drawn from this statement. The company's net income for 1956 was $1.32 per share on ordinary stock outstanding, on which they declared a dividend of 50 cents and retained 82 cents in the business. The company's total profit for the two years 1955 and 1956 was $19,810,450, of which they retained $15,870,266 in the business, and if we analyse the statements made in the other sections of the report we find that all of that money has been spent in additions to property. In this past year, according to this statement, that is, the year 1956, they spent on additions to property the sum of $23,630,611. And one can examine the statements of any of the other of these corporations and find the same thing taking place.
One of these large corporations in my area, which is conducted on an even larger scale, namely the MacMillan-Bloedel Corporation, has certainly been expanding out of retained earnings at a terrific rate over a period of a considerable number of years. I know that one can argue pro and con as to the effects that this is having on our economy, but I think what is going on at the present time in our basic forest products industry in British Columbia certainly bears out the thesis of inflationary danger that was put forward by my colleague the hon. member for Nanaimo when he opened the debate on behalf of the C.C.F. party in this house.


Mr. G. W. Montgomery (Victoria-Carleton):: Mr. Speaker, I want to say a few words on this extraordinary budget, but before I do I must say I gathered from the speech by the hon. member for Colchester-Hants (Mr. Purdy)-I do not know whether I understood him correctly or not-that he was speaking in favour of Stanfield underwear.
I want to congratulate him on advertising that Nova Scotia product, which is very popular in Nova Scotia today.
I said that to my mind this was an extraordinary budget. I have read it once or twice, and it seems to me it tries to be a lot of things to a lot of people; the coating is very sweet, but I think the frosting is very thin. Before I forget it, in all fairness I think I should congratulate the minister upon his delivery of his address. His debonair manner at least gave the appearance that he knew what he was doing and I am sure


Walter Edward Harris: It depends on where you breathe.


Gage Workman Montgomery: That is certainly illuminating. There may be a great many concessions in it. But by the time the small business man employed a bookkeeper to work out the system in order to get the benefits, he would find that the expense of determining the amount of his saving would be far greater than the amount of that saving.


An hon. Member:: It is just hocus-pocus.


Gage Workman Montgomery: It is just like the position of the poor mother. When she takes the family down to the shop, she gets a little bit off on tea, coffee, pop and bubble-gum; but what she saves there she is going to have to put in the parking meter in order to keep
The Budget-Mr. Montgomery her car from being tagged while she is shopping, and it will not any more than do it.
Laying all jokes aside, Mr. Speaker, I do not think there is too much happiness over this budget right in this house. In view of the increased cost of living, the decreased purchasing power of the savings of the people in such forms as insurance, investment, bonds and whatever you like, which have been considered to be safe over the years, the value of those savings has gone down, when you are considering the purchasing power of them now in comparison with the purchasing power of the money at the time they were purchased. No, Mr. Speaker, I think that this is not too much of a sunshiny budget.
I just want to pass on to another point. I do not want to take very much time; I will not take any more than I can help. However, I turn to the problems of the maritimes. These are not new. For years the difficult economic position of the maritimes has been recognized. I am going to recall to the minister tonight that it was recognized-and well recognized-by the Liberal party, the party that has formed this government. Back in 1949 and prior to that time they told us that if they came to power they would take steps to correct the policies that were compelling our people to accept less than the national average for our industry and labour; that the maritime freight rates would be adjusted; that policies would be instigated that would assist in supplying cheap electrical power. If any hon. member does not believe me, let him look up their own charter. It is there.
The people in the maritimes, being fairly honest and trusting citizens, accepted the Liberal party's word for it. They fairly well supported the Liberal party and assisted in putting them back in power. Then along came 1953 and again some other promises were made. But this time they had hooked on to them excuses. There was the Korean war. There was this and there was that, and they could not get anything started. The people in the maritimes then commenced to wonder. But at least they gave them another chance. But the sun commenced to come out and the clouds commenced to roll away in New Brunswick and when the people had the opportunity there, so great was their wrath that they turned out the old regime in the province. Things have commenced to look better. We cleaned house down there. We have a government with new ideas. It came out with honest, able and economic policies. Industry and agriculture have been revitalized. People are encouraged. Our standard of living is getting better. Our young people are more inclined to stay at home. It may be that the

The Budget-Mr. Montgomery members of this government in Ottawa who come from the maritimes will try to take some credit for that improvement. Very well. Go out and talk to your people. Let them decide who is going to get the credit.
This new look in New Brunswick and in the maritimes is more attributable to an able and energetic administration working for the advancement of the people of New Brunswick and of the maritimes in general than this government would like to admit. We have there a government that is respected by other provincial governments and it is making its influence felt throughout the nation. In view of that fact, is it any wonder that the people of Nova Scotia began to be restless? Having seen their sister province commence to prosper with new ideas and a new government, is it any wonder they did likewise when they had the opportunity? In addition to that, they had not forgotten that the promises of this government in 1948 and 1949 and again in 1953 were falling by the wayside. Nothing was being done by this government. Ottawa seemed to have two deaf ears to the pleas down there. I think now the handwriting is on the wall. I think that this government see it and are rushing out now, like a government in its last days, trying to do something to retrieve some of that support which they certainly have lost. I am not going to find fault with that attempt.
The Gordon report came out and it contained many recommendations; I refer to the preliminary part. I am not going to repeat the things that might have been left out. I prefer to take that report as I find it. Let us take hold of the best part of it and let us try to use it. What have this government done? They have taken hold of the maritime transportation part of it. They have given us a raise of 10 cents in freight assistance, and a promise. Oh, yes; there is a promise. They are giving us the promise that they will appoint a commission and go into this whole transportation problem. That is fine. The Minister of Agriculture (Mr. Gardiner) has given us $1.10 a ton on moving feed grain in from the west. That is fine. But it had to be pinched out of him in the face of an election. Then they came through with another promise, namely that they will connect up the hydro systems between Nova Scotia and New Brunswick.
Then it is said one of the ministers will be prepared to recommend to the government that they build thermal stations. This is good, and I am not condemning it. However, Mr. Speaker, I want to point out that in two elections the government has made promises which they never carried out and I do not think they can come back and fool
[Mr. Montgomery.)
the people of the maritime provinces by giving them 10 cents on one matter and $1.10 a ton on another, which is less than one-half a cent a pound and two promises which may or may not be carried out.
I say to this government that if they come back in power we are going to hold them to that. We do not want to hear any stories about the provincial government not agreeing to this or that. We need that power, whether it is thermal power or hydro power. There is no reason in the world why this government could not have assisted in the development of the St. John river and by so doing they could have saved the power users of New Brunswick considerable money, and without risking one cent. This would have been a great inducement for industry. I am not going any further with that now. I am just telling you that $2 million, two promises, a 10 cent piece and half a cent a pound is not good enough.
The next thing I want to take up is the tariff on potatoes. I do not think I need to say very much. I do want to remind this government and the Minister of Finance (Mr. Harris) in particular that this matter has not received the attention from this government that it should have received. It is in the same position as the maritime freight rates. The subject of freight rates has been brought to the attention of the government by the provincial governments, the maritime transportation commission, industry, private citizens and members of parliament. It was one of the first tasks I had when I came here. All you have to do is go back to Hansard of 1953 where I pointed out to this government that it was important they tackle the problem. Up until now no attention has been given to it. I have been talking, along with other members in this house, about the potato situation for three or four years. I am not going to take the time to read too much from Hansard about it, but in April 1955 the minister promised to refer this matter of the tariff on potatoes to the board. He promptly did so.
On April 18 he made a submission to the tariff board. On November 5, 1955 the tariff board completed its findings and filed a report with the government. This was about 16 months ago. At the time the minister said they were going to seriously consider the report. I asked a question of the minister as reported on page 6922 of Hansard for August 3, 1956. I said:
Will the minister make a statement indicating the government's intention with reference to tariffs on United States potatoes entering Canada on and after September 1 next.


Walter Edward Harris: I never refuse.


Gage Workman Montgomery: Here is what he said,
as reported at page 2400 of Hansard:
No, there is nothing further on that, and I do not think I ought to add anything at the moment. But I assure the house that as soon as I have information I will communicate it.
I asked him whether there was any further information and whether there were any negotiations. I would like the minister to tell us before this debate is over whether any negotiations are going on and whether they are proceeding satisfactorily?


Walter Edward Harris: Will the hon. member permit
me to tell him now, as part of his speech, or does he wish to go on?


Gage Workman Montgomery: I am about through. If
the minister would be good enough to answer at the end of my speech I would appreciate it because I want to finish to give another hon. member an opportunity to get started.
I just wish to end up by saying that this government has been dilatory not only to the potato producers but they have been dilatory to the maritime provinces. It is not something new that has taken place overnight. They have had this information from

The Budget-Mr. MacEachen members in this house for seven or eight years and now just before the election they come up with the promise of a little bit of money to boot. I am not condemning that. All I am saying is that that is a poor way for a government to act. I am saying that the government does not deserve the support of the people whom they have fooled for eight or nine years. Thank you.


Mr. A. J. MacEachen (Inverness-Richmond):: Mr. Speaker, I listened with great interest to the hon. member who has just taken his seat and while I know he is a sincere advocate of the cause of the maritimes I want to assure the house that I certainly do not agree with his interpretation of the effect of this budget upon the maritime provinces and upon the province of Newfoundland. I believe that a serious study of the budget, and particularly of its application to the maritime provinces, shows that this budget is one of the most important budgets, if not the most important, in so far as the provinces of the eastern part of Canada are concerned.
I find that several hon. members in the official opposition find the budget very scant and disappointing in so far as its application to our provinces is concerned.
Yesterday the leader of the official opposition did my constituency the honour of appearing at a Progressive Conservative convention to nominate a candidate in that riding, and in the course of his remarks, as reported in the Chronicle-Herald, Mr. Diefenbaker charged that the Liberal government at Ottawa had ignored the demands of the Progressive Conservatives for 22 years, but suddenly, almost on the eve of the election, had dusted them off and presented them as their own. Therefore, I would conclude from this report of the remarks of the leader of the official opposition that he certainly takes paternity for the maritime proposals, and looks on these as proposals advocated by his own party, but finds fault with them only because they have been delayed.


Thomas Miller Bell: They do not go far enough.


Allan Joseph MacEachen: I would suggest that
probably the Leader of the Opposition and some of his chief spokesmen in the house like the hon. member for Greenwood (Mr. Mac-donnell) and the hon. member for Eglinton (Mr. Fleming) should compare notes of their appreciation of this budget and its application to Nova Scotia. But, of course, the Leader of the Opposition had the opportunity to sense the feeling in the province of Nova Scotia, and he knew very well that the feeling in our province is that this is an important budget,

a budget that will have fundamental and far-reaching consequences on the economy of the province of Nova Scotia. Because he realized this fact he was desirous of keeping within the atmosphere that this budget created in the province of Nova Scotia and I agree with his appreciation of the application of this budget as I interpret his words as reported in the Halifax newspaper. But, as I would like to show in the course of my remarks, I do not share his view that the paternity of the proposals in this budget is the Progressive Conservative party because I believe an examination of both the transportation proposals and the proposals for power indicate that various sources, and in particular the federal government, on the power problem, initiated the studies which finally resulted in this proposal on power in the maritime provinces.
However, before dealing with the problem of transportation and the problem of power development in the Atlantic provinces, I just wish to say a word about the budget itself and its role in the modern political community.
In his statement on the budget the hon. member for Greenwood quoted Philip Snowden to the effect that if any government took half a crown more than it needed it was guilty of getting money under false pretences. Now, I consulted my historian friend from St. John's and he confirmed my view that Philip Snowden was a chancellor of the exchequer in the United Kingdom before the modern revolution, as I would term it, had occurred in public finance. I believe that if the hon. member seriously subscribes to this view of the labour chancellor of the exchequer he has overlooked perhaps a most important development in modern fiscal policy, namely, that a budget is not solely to collect taxes or to estimate expenditures and to balance the same, or nearly balance the same, but a budget is also a powerful instrument to determine the level of employment and income, and a very necessary instrument to control inflation and deflation.


Stanley Howard Knowles: The hon. member means that is what it should do.
On motion of Mr. MacEachen the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: We shall continue with this tomorrow.


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