1957-02-27

CANADIAN WHEAT BOARD ACT


Mr. E. G. McCullough (Moose Mountain) moved: for leave to introduce Bill No. 179, to amend the Canadian Wheat Board Act (flax and rye).


Mr. Knowles:: Explain.


Edward George McCullough: Mr. Speaker, the purpose of this bill is to bring flax and rye under the jurisdiction of the Canadian wheat board so as to end speculation with respect to these grains on the Winnipeg grain exchange. As is well known we now have wheat, oats and barley under the jurisdiction of the wheat board. This amendment would end all gambling and speculation in western grain.
Motion agreed to and bill read the first time.



STARRED QUESTIONS


Mr. Pearkes: 1.	How many children, sons and daughters of exservicemen, reaching the age of 16 years during the months of July and August in the years 1954, 1955 and 1956, and who have subsequently returned to school and have had their pensions reinstated, have been deprived of their pensions during the vacation period?
2.	What sum of money would be involved to make retroactive payments to these children who have lost pensions during the past three years because their birthdays happened to fall in the vacation period, and who have subsequently returned to school, and are making satisfactory progress, and have had their pensions reinstated after the commencement of the new school year?
3.	When pensions are reinstated, after a child who is over 16 years of age returns to school, are deductions made for holiday periods in subsequent years?
He said: Mr. Speaker, I am informed that in order to prepare an answer to this question a great deal of work is involved, and as the purpose for which the question was put on the paper has now been resolved I request that it be withdrawn.


Mr. Speaker:: Dropped.


PUBLIC SERVICE INSURANCE-ISSUE OF CERTIFICATES
Mr. Knowles: 1.	Has consideration been given, since the indication on July 25, 1956, that such would be done, to the issuing of a card, certificate or other form of evidence to civil servants and other government employees who are participants in the life insurance or death benefit scheme under part II of the Public Service Superannuation Act, so that such employees might have a document to show that they are covered by such protection?
2.	If so, what is the result of such consideration?
3.	Will the issuing of such a document be effected soon?


Hon. W. E. Harris (Minister of Finance):: Mr. Speaker, the answer is that this question has been under discussion by the advisory committee to the minister on the Public Service Superannuation Act and by the superannuation branch of the Department of Finance.
The answer to No. 2 is that because of the changes that take place from time to time in an employee's status and salary level with resulting changes in the amount of the death benefit available it is considered impracticable to issue any certificate which would state what his death benefit would be. As a result consideration is now being given to issuing a statement which would indicate that the employee is at that time required to contribute under part II of the Public Service Superannuation Act.



QUESTIONS PASSED AS ORDERS FOR RETURNS


SAINT JOHN HARBOUR AREA


Mr. Michaud: What expenditures have been made in dredging in the vicinity of piers, channels, Courtenay bay, in Saint John harbour area, during the years 1953, 1954, 1955 and 1956?



PORT BURWELL, ONT.  LAND OWNERSHIP

Mr. McBain: 1.	Is any land at Port Burwell, Ontario, owned by the- Department of Public Works or the Department of Transport?
2.	If so, how extensive are these property holdings and how are they defined?
3.	How much of this property, if any, is leased to any municipality or individuals or businesses, and who are the holders of such leases?
4.	For how long are such properties leased and on what terms?

Orders for Returns



CROWN ASSETS DISPOSAL CORPORATION

Mr. Hahn: 1.	Have any assets given to the Crown Assets Disposal Corporation been returned by them to any department of government and later either sold or given to a province or municipal government to be used for a specific purpose within the jurisdiction of such province or municipality, in the years 1954, 1955 and 1956?
2.	If so, what are the instances?


Mr. Dickey:: Mr. Speaker, with respect to question 179, the hon. member for New Westminster has asked that it be dropped.


Mr. Speaker:: Dropped.



MANUFACTURING


Mr. Balcom: How many people were engaged in manufacturing (a) during the calendar year 1945; (b) during the calendar year 1956;	(1) in the province of
Nova Scotia; (ii) in the province of New Brunswick; (iii) in the province of Prince Edward Island; (iv) in the province of Newfoundland (1950 and 1956)?



LEGAL SERVICES, CHICOUTIMI COUNTY, QUE.

Mr. Gagnon: 1.	What are the names of the lawyers and notaries residing in the county of Chicoutimi, who have acted as agents for the different departments or boards of the federal government, during the calendar years 1953 to date?
2.	What amount of fees has been paid to each of them, and in what case?



AVRO, A. V. ROE AND ORENDA ENGINES   PAYMENTS AND COMMITMENTS

Mr. Michener: 1.	What was the total amount paid by the Department of National Defence to each of the following: Avro Aircraft Ltd., A. V. Roe, Canada, Ltd., and Orenda Engines, Ltd., since 1949?
2.	Included in these payments, what was the total amount paid by type of aircraft including engines, spares, overhaul and maintenance?
3.	For what amount are the Department of National Defence and the Department of Defence Production committed to each of these companies for uncompleted projects?
4.	What capital assistance has been extended by the government to these companies since 1949, and of this amount how much has been recovered?



LEGAL SERVICES, BEAUCE COUNTY, QUE.

[Stage Direction]
Question No 188-Mr. Poulin:
1.	What are the names of the lawyers and notaries residing in the county of Beauce who have performed services for the federal government or any of its departments, boards, commissions or crown corporations or companies during the calendar years 1953, 1954, 1955 and 1956?
2.	What amounts have been paid to each of them for each year, and for what services?


[Stage Direction]
Motion No. 10-Mr. Knowles:
For a copy of the prospectus of Trans-Canada Pipe Lines Limited, dated January 1, 1957, as

filed with the Secretary of State of Canada, in accordance with the requirements of the Companies Act.


[Stage Direction]
"magnificent"
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to address a question to the parliamentary assistant to the Minister of National Defence. Will the parliamentary assistant inform the house as to the disposition or the intended disposition of the aircraft formerly attached to H.M.C.S. Magnificent?


Mr. Paul Hellyer (Parliamentary Assistant to the Minister of National Defence):: Mr. Speaker, I shall have to take this question as notice.



POSTAL SERVICE


[Stage Direction]
On the orders of the day:
Mr. F. G. J. Hahn (New Westminster):: Mr. Speaker, I should like to direct a question to the Postmaster General, notice of which I gave him yesterday. What provision, if any, is made in the Fraser valley for the pick up of mail in the event a slide maroons a truck which normally carries the mail from a point above the Hope slide area on the trans-Canada highway to New Westminster, as occurred on February 20 of this year?


Hon. Hugues Lapointe (Postmaster General):: Mr. Speaker, the district officials in that area, just as anywhere else in Canada, have complete authority to make whatever arrangements are necessary to maintain postal services when they are interrupted by accidents such as the one mentioned by my hon. friend. Directly upon being advised that such an emergency has arisen they are authorized on their own to take whatever means are necessary to reroute the mails to their destination. I have asked for a report on the particular incident that the hon. member mentions but I have not received it yet.



REFERENCE TO STATEMENT BY U.K. CHANCELLOR OF THE EXCHEQUER

[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinion):: Mr. Speaker, may I ask the Minister of Trade and Commerce if the Canadian government shares the view expressed yesterday at Westminster by the Chancellor of the Exchequer that the proposal of six western European

countries to include all colonial areas within a common trade zone is a breach of the provisions of GATT?
If so, has the Canadian government studied the proposal and made any representations on the subject?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: The Canadian government is studying the relations between the area in question and GATT very carefully and will have representations to make at the next meeting of GATT. At the moment I am not prepared to answer the question beyond saying that.



CHINA-REPORTED PRESSURE BY UNITED KINGDOM TO RELAX RESTRICTIONS

[Stage Direction]
On the orders of the day:
Mr. Colin Cameron (Nanaimo):: I should like to direct a question to the Prime Minister. I regret I was not able to send notice but perhaps he will be good enough to take this as notice. Has the Prime Minister's attention been called to a statement of Mr. Ian Harvey, joint foreign undersecretary in the British parliament, as reported in the Christian Science Monitor of February 8, that the British government has been pressing its allies week by week in attempts to win relaxation of restrictions on western trade with communist China? Can the Prime Minister tell the house if Canada has been one of the countries so pressed by the British government and, if so, what has been the response of the government of Canada?


Right Hon. L. S. St. Laurent (Prime Minister):: As the hon. gentleman suggests, I will take his question as notice.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. H. A. Bryson (Humboldt-Melfort):: Mr. Speaker, I should like to direct a question to the Minister of Finance. Has the government given consideration to introducing legislation during this session giving credit unions the authority to make farm improvement loans on the same terms and with the same protection and privileges as are now given to the chartered banks?


Walter Edward Harris: Mr. Speaker, I made it clear in the budget speech last year that we hoped to come to an agreement with the credit unions with respect to certain government legislation such as the Farm Improvement Loans Act. Up to the present they have been unable
Inquiries of the Ministry to bring themselves within what we think are the terms necessary to meet the requirements of the various statutes. Only recently we had another meeting with them but we are not yet satisfied that we can introduce legislation and I doubt that it will be possible during this session.


Mr. H. R. Argue (Assiniboia):: Mr. Speaker, a supplementary question. Can the minister say whether consideration was given during these discussions to extending the guarantee on bank loans on farm-stored grain?


Walter Edward Harris: No, I do not think I ought to disclose any conversations.



NATIONAL PARKS


[Stage Direction]
On the orders of the day:
Mr.  C. E. Johnsion@Bow River: Mr. Speaker, I should like to direct a question to the Minister of Northern Affairs and National Resources. I have not given him notice of this question but I hardly think he will need notice in order to answer it. If he does he can take this question as notice. Is the minister informed that tenders for the construction of chair lifts on Sulphur mountain in Banff and Marmot basin in Jasper, and also on Mount Norquay in Banff, will be called before February 28, and that these tenders are to be let as a package deal and not on an individual basis? Will the minister tell the house if this is the government's policy, which would thus prevent many individuals from participating in these projects?


Hon. Jean Lesage (Minister of Northern Affairs and National Resources):: Mr. Speaker, if I understand the question correctly the hon. member is implying that the invitations to tender which he mentions were in the form of a package deal. That is not the case, as each invitation to tender is separate and will be dealt with separately. There has been no invitation to tender for a chair lift on Mount Norquay; the only project is .n Mount Sulphur in Banff.



ALLEGED SHORTAGE OF BOX CARS

[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Leader of ihe Opposition):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce arising out of a series of messages received during the last few days from various marketing points in western Canada to the effect that there is again a very pronounced shortage of cars needed

Inquiries of the Ministry to move wheat. Would the minister say what has been done recently to remove any discrimination as between marketing points and to assure reasonable equality of opportunity to all marketing points to dispose of their wheat?


Clarence Decatur Howe: Mr. Speaker, I hardly
believe there can be a shortage of box cars. However, there is a limitation on shipments to the lakehead, as is usual at this season of the year, for the reason that the storage space at the lakehead is filled to capacity and cars can be unloaded only as all-rail shipments from lakehead elevators are made to the east. However, the port of Vancouver is working to capacity and its elevator capacity is only about half filled. The difficulty there has been to get the grain forwarded rapidly enough to load the boats that have been offering. I think the railroads have done exceptionally well, although there was a serious interruption early this week when a snow slide cut off movement of grain on both railroads to the Pacific coast.
The wheat board is charged with the responsibility for these movements, and I have received no reports that there has been any deterioration in the situation. However, in view of the question asked by the Leader of the Opposition I will make inquiries of the wheat board to make sure that the operation is proceeding normally for this time of year.


Hazen Robert Argue: Can the
minister say whether special consideration is being given to the supplying of box cars to points with a one or two-bushel quota, or if he would consider this question as well in his discussions with the board?


Clarence Decatur Howe: To clear up that situation, first of all, I can say that there are at this time no points on a one-bushel quota in western Canada. There are a number of points on a two-bushel quota

not too many. But the situation as compared with that of a year ago is some 65 million or 70 million bushels better as far as the forwarding of grain from country points is concerned.
Every effort is being made to bring delivery opportunities up to a position of equality, and I think considerable progress is being made in that direction. When the one-bushel quota points were eliminated, the five-bushel quota was opened. There are now a considerable number of points on the five-bushel quota. The intention of the board has been to give preference to points that did not deliver an eight-bushel quota last year. I understand that a real effort is


being made in that direction, but I am not able to tell the house how successful it has been.


Mr. W. G. Weir (Poriage-Neepawa):: Did I
understand the minister to say that special consideration was being given to those points, in their delivery quotas, which had been unable to deliver the crop last year or the year before?


Clarence Decatur Howe: Yes, Mr. Speaker, priority has been given to those points. That was my instruction to the wheat board, and I know that the wheat board has been attempting to carry out that instruction. It is not as easy as it sounds, owing to the quality of the grain offered at certain points, but in general, points which did not ship their full quota last year have been receiving preference this year in the supply of box cars.



DOMINION-PROVINCIAL RELATIONS TAX RENTAL AGREEMENTS    INQUIRY AS TO ACCEPTANCE BY PROVINCES

[Stage Direction]
On the orders of the day:
Mr. Roland Michener (St. Paul's):: I wish to direct a question to the Minister of Finance. Can the minister inform the house which provinces have indicated their position with respect to acceptance of the tax rental proposals which the federal government has made?


Walter Edward Harris: No, Mr. Speaker, but I hope to be able to do so fairly shortly. A number of the provincial governments are considering an explanatory letter which went out just recently. There have been no answers received yet in reply to this.


Daniel Roland Michener: Would the minister say whether in his recent speech in Toronto he intended to imply that the province of Ontario would be $40 million worse off by taking the course it did than by accepting the full tax rental agreement?


Walter Edward Harris: No, Mr. Speaker, I did not, by any means. I said that the province of Ontario is going to be $40 million better off and is, in addition to that, adding taxes of its own.


Donald Methuen Fleming: Would the minister be willing to table in the house the explanatory letter to which he has just referred?


Walter Edward Harris: I assume that in the end, Mr. Speaker, we will table a good deal of this correspondence, and that letter will probably be included.



HIGHWAYS


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I am comforted by the fact that I believe that some day the last shall be first.
I would like to direct a question to the Minister of Northern Affairs and National Resources. In view of the federal government's decision to assist further in the development of northern British Columbia and the Yukon by sharing in the cost of the construction of a highway linking Stewart and Cassiar, B.C., would the minister inform the house as follows: first, does this include a sharing of the costs incurred by the Wells & Wade Construction Company on this project to date; and second, whether this project will be undertaken by public tender and contract, or by day labour?


Jean Lesage: The answer to the first part of the question is in the negative. We will contribute only with regard to work which has not been started. As to the second part of the question, I might reply that we will share in the cost of construction awarded after public tender.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I should like to direct a question to the Minister of Justice. Has the attention of the minister been drawn to a two-page story in the Vancouver Sun of February 21 written by James Carey, now under sentence of death, to the effect that from September, 1954, until December 7, 1955, he was working as an undercover agent for the R.C.M.P. and was instructed to stay close to Joe Gordon, who has now been named as the slayer of a Vancouver policeman and is under sentence of death? Will the minister comment on the statement or, failing same, assure the house that the facts are being ascertained and will be included in the report of the remission service to the Solicitor General, upon whom rests the responsibility-


Mr. Speaker:: Order.


Harold Edward Winch: -of reporting to the governor in council?


Hon. Stuart S. Garson (Minister of Justice):: The answer to the first question is no, and in reply to the second question may I say
Inquiries of the Ministry that I will be glad to look at the report and take such action as may be considered advisable.


Harold Edward Winch: Would the minister allow me to send him now the paper to which I have referred?


Stuart Sinclair Garson: Yes, I would be very glad to have it.


Harold Edward Winch: It will be sent right away.



REQUEST FOR CORRECTION OF ANSWER TO QUESTION

[Stage Direction]
On the orders of the day:
Mr. J. A. Smith (Baffle River-Camrose):: I should like to address a question to the Minister of Public Works. Would the minister instruct the officials of his department to reconsider the answer given to my question No. 106 as found in yesterday's Hansard with a view to correcting certain obvious errors?


Hon. Robert H. Winters (Minister of Public Works):: I will take a look at that.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, may I ask the parliamentary assistant to the Minister of National Defence if he has a reply to my question of yesterday?


Paul Theodore Hellyer: No,
Mr. Speaker. There is certain additional information I have. Perhaps I could speak to the hon. member personally after the orders of the day. I hope we will have further information available to pass along shortly.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I should like to direct a question either to the Prime Minister or to the Acting Secretary of State for External Affairs. Has the government any up to the minute information on developments at the United Nations concerning the situation in the Middle East? Can we be told what progress is being made with the proposal put forward by the Secretary of State for External Affairs?

Fisheries


Hon. Paul Marlin (Acling Secretary of Slate for External Affairs):: There is nothing further to add to what the Prime Minister said yesterday.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, the other day the hon. member for Oxford asked the following question of the Minister of Transport and I undertook to get the answer:
Does the government intend to take any steps to intervene or mediate in the strike that is holding up construction on the St. Lawrence seaway at the present time?
The hon. member's question is in rather general terms but if he has in mind the dispute which involved 400 employees of the Iroquois Construction Company Limited at Iroquois that dispute has been settled. However, there is a strike involving some 40 employees of the MacNamara Construction Company at Cornwall island. This strike is still going on. The officers of the Department of Labour have been and still are in consultation with the seaway officials, the company and the union in an effort to reach a settlement of the dispute. This is the only strike on the seaway operations and it is not holding up construction in any serious fashion.


Wallace Bickford (Wally) Nesbitt: I might say that at the time I asked the question I had reference to the strike involving 400, and I am glad to hear it is settled.



FISHERIES


[Stage Direction]
The house resumed, from Tuesday, February 26, consideration in committee of the following resolution-Mr. Sinclair-Mr. Robinson (Simcoe East) in the chair:
That it is expedient to introduce a measure to implement a convention between Canada and the United States of America for the protection, preservation and extension of the sockeye salmon fisheries in the Fraser river system, signed at Washington on the 26th day of May, 1930, and a protocol thereto signed at Ottawa on the 28th day °f December, 1956, and for carrying out Canada's obligations under the said convention and protocol.
Frederick George Hahn: Mr. Chairman, last evening at the conclusion of my remarks I was drawing to the attention of the committee some of the problems with respect to conservation that confront the fishermen on the Fraser river itself. However, before continuing

from where I left off at that time, I wish to review some of the discussion that took place yesterday with respect to what the minister had to say as reported at page 1688 of Hansard with regard to this motion. The minister said:
We are anxious to have this bill approved as soon as possible in order that the salmon commission can begin to exercise control over these fisheries during the coming season. I might add that President Eisenhower has asked his congress to give speedy approval to the bill which he has submitted to congress.
Mr. Chairman, we in this group are extremely anxious to have this resolution carried as quickly as possible and to have the bill brought before the house for its considered attention as well. However, there are certain factors which require some clarification and it is my intention to deal with some of those very shortly.
As I mentioned yesterday, the salmon fishing industry in the province of British Columbia is a vital one to the province, and more particularly to my own area. The potential which the Fraser river as such offers to the people of British Columbia is not to be underestimated. It might well be compared with the Nile river and what it means to Egypt, in fact. Certainly the Fraser river means just as much to my own province and the people within it.
Yesterday the hon. member for Comox-Alberni drew what he considered to be a bit of unfinished business to the attention of the minister. I would certainly concur with his remarks to the effect that the original protocol and the subject matter thereof should be included with this bill as well as the present protocol that we have under consideration.
As reported at page 1688 of Hansard the hon. member for Esquimalt-Saanich, in speaking of Canadians out-fishing Americans, had this to say:
In order to get ahead of the United States fishermen in Puget sound our fishermen had to go farther and farther out to sea. The result of this move was a need for bigger and more expensive equipment, bigger and more expensive gear and longer hauls. It was an uneconomic process, because not only did larger fishing vessels have to be provided, but floating camps had to be sent out to service that fishing fleet.
In drawing this matter to the attention of the minister the hon. member for Esquimalt-Saanich failed, I think, to bring out certain other factors which possibly are not so obvious to him as they would be to the fishermen on the Fraser river but which are of great import to the people in my riding whom it is my privilege to represent.
The fact is, Mr. Chairman, we are given to understand that the fishing fleet that goes out to sea catches fish that are smaller than those

that can be caught along the seacoast. I would ask the minister, in his consideration of this question, to rectify the thinking of some of these fishermen of the Fraser valley, or prove to their satisfaction that such is not the case. They question, and I think rightly so, whether the fish which are caught at sea are of better quality than the ones which are caught, let us say, near the coast line. They also question whether there is not a greater loss by spoilage of the fish which are caught far at sea and brought to the canneries by refrigeration ships. We are given to understand now-it may be a rumour; I am not sure whether it is or not; the minister may be in a position to answer it-that quite a number of the fish which are caught at sea, in fact more than among those which are caught along the seashore, are spoiled in transit and that whole shiploads have to be dumped back into the sea. It is debatable, too, whether, so far as the industry is concerned, the quality of these fish is better for human consumption purposes. Then, a question that comes to my mind is the tonnage of the fish that is caught. If the statement is true, which the gill net fishermen tell me, that the fish at sea are smaller, and you catch more of them, are you going to have more food value so far as tonnage is concerned than you would have if you caught a bigger fish near the seacoast, but caught fewer of them?
I consider that preservation of fish is complementary to their consumption. Let me use relative figures. If the fish which are caught, let us say at sea-I know this could be wrong but I will use it as an example- numbered 2 million, and if they weighed five pounds each, what is the difference if we caught 10-pound fish along the coast and took a million of them?


Mr. Sinclair:: Pink salmon, 10 pounds?


Frederick George Hahn: I am using the figures merely to indicate that the tonnage of fish would be the same.


James Sinclair: Sockeye salmon, 10 pounds?


Frederick George Hahn: No.


James Sinclair: You had better get your figures closer to the salmon.


Frederick George Hahn: Very well; if the minister wishes I will let him use his own figures. He can use the actual weight of the average salmon to illustrate this. The reason I am asking my question is that I want him to give me the proof and prove to the gill net fishermen that the actual tonnage is sufficient to warrant our increasing the expenditure for fishing gear to go out to sea. The question is, which is the greater in value so far as consumption is concerned? Certainly it would
Fisheries
be ridiculous for me to suggest that the weight of a salmon at sea is only one-half of the weight of that caught along the seacoast.
The minister is capable, as I said earlier, and is familiar with the subject matter. I am only anxious that he explain to the gill net fishermen, a number of whom I represent, that the tonnage of the fish caught at sea is at least equal to or greater than the tonnage that would be caught in the Fraser river itself, or along the seacoast within the three-mile limit.
The gill net fishermen particularly protested quite vigorously, as did the hon. member for Fraser Valley and I, when the minister first announced closure of the Fraser river fishing above the Pattullo bridge in certain seasons of the year. In his explanation the minister told us that the quality of the fish was poorer and I dealt with that to some extent at the time. However, I have a communication from a Mr. Rolley, secretary of the Pacific fishermen and allied trades union, who raises the question again. This is his statement and perhaps the minister would like to elaborate on this. He says in his communication of January 12:
I have ascertained that the entire pack of Johnston Fishing and Packing Company is again all "A" grade quality with no "B" grade fish.
This will indicate to them that the fish that they catch in the Fraser are all "A" quality fish. If they are to be graded "B", then let us go ahead and say that they are not all "A" quality and do not stand up, and let us mark them "B". Why continue grading them grade "A" fish if they are not grade "A" fish?
In this instance the hon. member for Comox-Alberni and the hon. member for Esquimalt-Saanich drew to our attention, as I intend to do, the question of artificial spawning grounds in the Jones creek area. That is what it amounts to. He says with respect to that, in the same communication:
We have watched the results of this closure for two years now, but have so far failed to see any improvement in the spawning of fall fish after September 15 which could be a result of the closure.
One other item that I believe is worth comment is the fact that about 2,600 pinks hatched from eggs planted in Jones creek spawning bed in 1954 returned this year during the last part of the open season while we were fishing sockeye. I found upon inquiry that the total catch of these pinks in the Fraser river was 2,012 or less than 50 per cent of those entering the river, and remember that this was while fishing was in full swing above New Westminster bridge. Therefore you will see that the minister's claim that it is necessary to close the area for conservation does not seem to hold water as an escapement of 2,600 out of 4,612 that entered the river is much better than most spawning returns.
Possibly the minister would like to comment on that, as he undoubtedly will, and

Fisheries
explain to me and to the individuals in so doing just how the change of conservation plans has increased the number of fish that have gone up the Fraser river to spawn and actually increased the stocks, because that is the purpose behind conservation measures as such.
Last year I asked the question and for some reason or other the minister failed to answer it. I should not like him to fail to do so this year. Certainly, I am satisfied, whether I am entitled to an answer or not, that the gill net fishermen within the area that it is my privilege to represent have the right to receive an answer to that particular question.
In his excellent address last evening the hon. member for Esquimalt-Saanich showed from the salmon plan report that there is a serious decline in the chum run. There again we have a question which is automatic. If we have changed, as we have, our conservation methods in respect of the Fraser river, is it an indication that our conservation measures on the Fraser have paid off? There may be other extenuating circumstances that the minister is in a position to explain to us, but certainly we should have the right to know what they are. He owes it to the house and he owes it to the fishermen themselves to give a complete report.
There is one other question which arises in connection with artificial spawning grounds and fish farming and it relates in an indirect way to a problem that is probably more properly dealt with at another time. I do not intend to debate it at this time but a question will arise concerning damming the Fraser river. Concerning the question of artificial spawning grounds I have in my hand a copy of a letter which was addressed to the Hon. James Sinclair, Minister of Fisheries. The letter is dated February 23 and comes from Innisfail, Alberta. The hon. member for Red Deer was kind enough to give me a copy of this letter which is signed by a Mr. N. Kvisle.


James Sinclair: I received it myself this morning.


Frederick George Hahn: Possibly the minister will not mind if I put a portion of this letter on the record at this time. I hope he will find time to comment on the facts as he understands them in relation to the suggestion contained in this letter. One portion of the letter reads as follows:
Now the fact is that the Fraser system does not provide ideal spawning conditions for salmon. As a matter of fact nature in the raw seldom provides the best habitat for wildlife. We must give our conservation scientists increased opportunity to improve such habitat. Why should a sockeye salmon have to fight his way up the Fraser canyon, and up the rapids of the Thompson to reach favourable gravel beds in the Adams river when artificial spawning beds could be constructed

and maintained much nearer to the sea? At present there is much evidence to indicate that there is food available in the ocean off the coast of British Columbia for much greater numbers of salmon than at present can be hatched in available spawning beds. May I suggest that we can harvest five times as many salmon annually as we do today and still utilize fully the available hydroelectric power if we construct spawning beds according to the following plan:
From the high dams on the Fraser and Thompson a small per cent of the total flow of water could be diverted laterally into adjacent side valleys where perhaps small creeks now flow, to reach the main river further down. In such artificial side streams gravel beds and resting pools could be provided, and the precise flow desired by spawning salmon maintained with insignificant loss of flow in the main power plants. Initial steep gradient would assist in oxygenating the water, while gentle gradient nearer the main stream would facilitate the construction of pools and gravel beds. I grant that the initial cost of constructing aqueducts of diversion would be high, but we must remember that the economic benefits derived would be vastly higher.
I do not have record of it' but it occurs to me that I did read of a program along somewhat similar lines which has already been instituted in my province. The minister indicated that he intends to comment extensively when he introduces the bill and possibly he will make some comments concerning this suggestion. The letter goes on to say:
You are no doubt familiar with the procedure used to establish spawning populations of salmon in such side streams and thus divert future generations from the main stream:	Mature salmon are
stripped of roe and milt below the high dams. The eggs are fertilized and placed in the side stream. Four years later the salmon thus hatched return to the side stream to spawn.
An advantage to fishing in general of high dams is that erosion and therefore silting are eliminated, thus making it possible for the salmon to travel through clean water in its ascent from the ocean, and make the lakes created by the dams suitable habitat for trout and kokanee.
I am sure that the Minister of Public Works will be very happy about preventing erosion and it will certainly make the people of New Westminster happy if they are no longer subject to erosion down stream.
The author of this letter is a naturalist in his own right and, although the proposal he offers may have been considered by fishing experts and possibly has been instituted in certain places, I think the minister owes it to the house to explain at some point during this debate exactly what stand if any has been taken concerning this particular subject.


Mr. Green:: Mr. Chairman, as I understand it the bill which will follow this resolution will in effect carry out the terms of the protocol between the government of Canada and the government of the United States to the convention with respect to the protection, preservation and extension of sockeye salmon fisheries in the Fraser river system signed

at Washington on May 26, 1930, nearly 27 years ago. This protocol was signed at Ottawa on December 28, 1956. I understand that the intention of the protocol was to extend the original convention to cover pink salmon whereas at the present time it covers only sockeye salmon. I agree with the others who have spoken that this is a wise move but I would like the minister to tell the committee certain things.
I obserye that the minister has some helpers who are sitting right behind him chatting among themselves.


James Sinclair: I am ignoring them, so you should ignore them too.


Mr. Cardiff:: Get the caucus over with and continue. If they would sit in their own seats they would not be so troublesome.


Howard Charles Green: I would like the minister to tell the committee whether there were any discussions with the representatives of the United States in the course of negotiating this protocol concerning the question of power developments on the Fraser river. It seems to me that the greatest threat to the salmon industry on the Fraser river is not by reason of what has been going on but will be what might take place if there are dams constructed on that river. I am sure the minister will agree with me that in the long run it is far more important to decide what is to be done about the construction of dams on the river.
The Fraser river, of course, is a Canadian river. It rises up in the Yellowhead pass and empties into the sea at Vancouver just below New Westminster and one would really think that only Canadians would be involved and that we would have to decide ourselves just what was to be done in connection with that river. However, as the minister has explained on many occasions, a large portion of the salmon when they go back up the river to spawn return through United States waters and in order that there might be a fair distribution of the catch this original convention was entered into in 1930. Therefore the United States is very directly concerned with the Fraser river in that way and from the point of view of the division of the fish it could almost be called an international river.
As far as the people of British Columbia are concerned, well over half of them live in the area which is drained by the Fraser river and are vitally interested in what is done on that river. Actually over half the people of the province live in the lower mainland, from where the Fraser river runs into the plain to the coast. When you add to the number of people in the lower mainland those living further up the Fraser and those
Fisheries
living on Vancouver island who are concerned too because the fish pass the island, you have a large percentage of the total population of British Columbia who are very directly interested in these Fraser river problems; not only because of the commercial fisheries but also because of the sport fisheries.
I suggest to the minister that when he replies today he deal at some length with the question of sports fishing. As the population increases in the larger centres it becomes more and more important that these sport fisheries be retained and built up. Sometimes people are apt to forget that it is not only the commercial fisheries that are at stake in the development of this river but also the sport fishery. In Vancouver I find that more and more people are beginning to ask questions about what is to happen to the Fraser river. They do this because of their interest in sport fishing.
The minister will have seen the interim report of investigations into measures for flood control in the Fraser river basin which was published last year. Among those who signed the report were T. M. Patterson, director of the water resources branch, Department of Northern Affairs and National Resources, and A. J. Whitmore, chief supervisor of fisheries, Pacific area, Department of Fisheries. The other two signatories were representatives of the provincial government. That report contains some quite startling statements about what might happen to the Fraser river fisheries. For example, we find this warning on page 54:
The Fraser river is the world's greatest spawning river lor salmon. Present knowledge indicates that salmon and steelhead trout are unable to pass a number of low dams or even one high dam without losses occurring as a result of delay. In addition the mortality to young salmon migrating to the sea over a series of low dams or an individual high dam would probably be very heavy. Any system of reservoirs such as would be required to provide an adequate degree of flood control and afford reasonable protection to the lower Fraser valley would introduce a large number of obstructions which would have a serious effect on the successful reproduction of the Fraser river salmon and steelhead trout. This reduction in the number of salmon would impose a very serious loss upon the British Columbia fishing industry.
The reference there to the system of reservoirs might also include the building of power plants. Apparently there is as yet no way in which the fishing industry can be saved if dams are put in on the Fraser river as proposed. This will mean that the people of our province and of the whole of Canada will have to face the necessity of making a decision as to whether they are willing to see the salmon industry on the Fraser river system ruined in order to have power dams installed. I believe that question is so serious

Fisheries
that it cannot be aired too much. Now is the time to have the public thoroughly informed of the pros and cons so that they can make an intelligent decision as to which policy they will favour.
I must admit that personally it seems to me unwise to wipe out an industry which is one of the most important in British Columbia, which provides a living for thousands and thousands of our people. Perhaps when the minister replies he can give us the number involved. This industry has been operated in a most efficient manner and to have it destroyed would be one of the most far-reaching and I think sad developments in the whole history of Canada. It just seems impossible to me that a course would be adopted deliberately which would bring about that result. In addition to the men who make their living in the fishing industry, and their dependents, there are the thousands and thousands who are interested in sport fishing. It would be most serious if they were to be deprived of an opportunity to indulge in that fishing.
As the minister knows, heavy pressures are being brought to bear from the other side. There has been a lot of discussion about the development of power on other rivers in British Columbia, notably the Columbia river system. Certainly this situation calls for an early start on the development of power on the Columbia river in Canada. I do not think anyone can quarrel with the suggestion made by different bodies in British Columbia, and in fact by the Minister of Fisheries himself, that the Columbia river must be developed first for power purposes because the salmon industry on that river has been destroyed already by power dams erected by the United States below the boundary. There cannot be very much difference of opinion in this house on that particular feature, that the Columbia river should be developed first, before the Fraser river fishing industry is placed in jeopardy.
I hope the minister will go further today and tell us the view of his department. This whole question may end up in an argument between the Minister of Fisheries and the Minister of Northern Affairs and National Resources, or in an argument between the dominion government and the provincial government, or it may end up iri a violent argument between the fishing industry and the power industry. Certainly it has to be faced and I do not think we can begin too soon to focus public opinion on' the whole question.
May I repeat that from my own personal point of view I would have to be shown very
[Mr. Green.l
clearly that it was in the interests of the people of British Columbia as a whole before I would agree to any plan which would wipe out an industry such as the salmon industry on the Fraser river system.


Mr. Goode:: Mr. Chairman, I am not going to take up much time just now because I am going to wait until I have a look at the bill. All hon. members have endorsed the actions of the Minister of Fisheries in connection with this matter. The people of my constituency are perhaps the most concerned as we have the greatest collection of fisheries there are in the country, the largest fish cannery in the commonwealth as well as the greatest number of fishermen in Canada.
We have heard about the gill netters on the Fraser river and their problems in getting outside coastal waters to catch fish, and I suppose I have made as many representations to the minister with regard to that as anyone in this house. But what I want to say today, Mr. Chairman, is that although the minister in his introductory remarks gave the credit for this great step forward to the Pacific salmon fisheries commission, I doubt whether at any time in the history of this house any minister has introduced as many forward looking proposals over a number of years as has the present Minister of Fisheries; and I think that what he has been able to do for the fishermen of British Columbia and elsewhere is also a reflection of the position of Canada in international affairs, because I doubt whether 20 or 25 years ago Canada would have received the consideration which the Minister of Fisheries has been able to obtain in relation to this protocol.
I think the fishermen of British Columbia will approve what is being done. It means that there will be more money going into my riding; that retail merchants will receive increased income, and that there will be greater prosperity in the greatest fishing community in Canada. I rise, now, only in order to reflect my thinking with regard to what the Minister of Fisheries has done. He is a young minister who is representing Canada in a most effective way, not only in this case but in many others, and one who has proved a true friend to the fishermen and a true friend to the fishing industry, these being two different things. He compromises in his views with regard to the gill netters on the river, and also takes into consideration the export potentialities of the great industry represented in my riding. And on behalf of the fishermen of Burnaby-Richmond, who compose the majority of the fishermen of British Columbia, I wish to thank the minister for what he has done.


James Sinclair: Mr. Chairman, I said at the beginning of this debate on the resolution that I would make my remarks quite brief because I felt I could give a better explanation when the bill, together with its schedule, was in the hands of hon. members.
I must, first of all, thank hon. members of the opposition and hon. members on our own side who have spoken in approval of the work which has been done by the officials of my department and the international salmon commission in conserving and expanding the salmon fisheries of the west coast. They have done an excellent job, and I am very glad to be associated with that work. I will touch upon only one or two of the points which have been raised today, because the purpose of this resolution is to decide in principle whether it is advisable to introduce a measure to include pink salmon under the control of the international Pacific salmon commission.
Every hon. member who has spoken thinks it is a good thing to do. When the bill is before the house for second reading I will answer at length most of the questions which have been raised today, but there are one or two which I think should be answered now in order that the replies will be contained in the same copy of Hansard as the question.
The hon. member for Esquimalt-Saanich, who has always taken a great interest in the fisheries of British Columbia, suggested, in approving of this measure, that we should also consider exercising similar control over the other three species of Pacific salmon-cohoe, spring and chum. We, of course, in our own Department of Fisheries, do exercise very close control over those fish which are entirely Canadian. An unusual feature of the sockeye and pink salmon runs heading for the Fraser river is that they come from the high seas through the outside Canadian waters, then through American waters in Puget sound, where they could be completely intercepted by American fishermen, then back into Canadian waters outside the estuary of the Fraser. Afterwards, of course, they pass up this allCanadian river.
It is because of this international aspect of the question that the negotiations in this international commission have concerned sock-eye salmon and pink salmon. This agreement provides for an equal sharing of the catch, and, as the hon. member for Esquimalt-Saanich pointed out, we do not admit for one moment that we should share any fish which come from the high seas, enter Canadian waters and pass then into Canadian streams.
As far as the Fraser runs of sockeye and pink salmon are concerned, they do follow the international route I have indicated, but a very substantial portion of the chums heading for the Fraser river follow an all-Canadian 82715-108
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route. Naturally, it is not considered advantageous for Canada to include these fish under a sharing agreement.
As the hon. member pointed out, there has been a rather alarming decline in the returns of chum salmon to our British Columbia fisheries in the last two years. I say "alarming" because there are fluctuations in many fisheries. This is alarming because we had good spawning; our scientists watched the escape into the sea of the small fry, and there was good spawning. We have tightened up our conservation regulations because of the extra efficiency of our modern fishing fleet and gear, but we think that the major part of the mortality must have occurred during the three years which the salmon spent in the sea. That theory is corroborated by the fact that a similar decline has been noticed on the Siberian side by Russian and Japanese fisheries. It is one of those things about which our scientists still do not possess a great deal of information. Their knowledge of the behaviour of the fish during the time they spend in inland waters and in the rivers is improving all the time, but it is only in the last two or three years that they have acquired much knowledge of what happens to the fish out in the middle of the Pacific ocean.
The hon. member for Comox-Alberni commented on the peculiarity of the pink salmon run, pointing out that we have enormous runs during the odd-number years and very small runs-in the Fraser-in the even years. I was again interested to find out that in the great Siberian fisheries they experienced exactly the same fluctuations in these runs. Pink salmon are only two-year old salmon, so it seems difficult to explain why a stream which has produced 30 million fish in an odd year should, with the same food resources and the same beds for spawning, produce only one million in the following year.
Our scientists, in addition to Japanese, Russian and American scientists, have all been working on this problem, trying to build up the off year run. We have sought to do so by transferring fish from those streams-we have very few-in which there is a good run in the off year. The Queen Charlotte islands are one source, because there we have rivers which support a good run in the even years as well as in the odd years. The Jones creek experiment, which was commended by the hon. member was constructed by our department and the British Columbia electricity company, creating an artificial spawning bed in an effort to build up even-year pink runs.
The hon. member for Comox-Alberni also mentioned the protocol. The protocol will be attached as a schedule to the bill when it is brought forward for first reading.

Fisheries
The hon. member for New Westminster mentioned the Gordon commission report on fisheries. This was, I think, an encouraging report, because it pointed out the fact that food is becoming more and more important in the world because of the ever-increasing world population which is growing, now, at the rate of about 50 million people a year. Fifty million more mouths to feed.
Most of the suitable agricultural land in the world is already very heavily under cultivation which is why more and more the nations of the world are turning to the sea to find the extra food their people want. That is why we Canadians are especially fortunate because we are at the front door of the two greatest fisheries in the world, the north Atlantic and the north Pacific, and over the years we Canadians have done a pretty good job of conserving our own fisheries because both the total catch and total value are steadily increasing. That is in contrast to the experience of many other nations which have depleted their fisheries and now must send their fleets thousands of miles to secure the fish their people need.
The Gordon commission forecast that there would be increased production but a decreasing number of fishermen. That is all to the good too. Unfortunately, in some parts of Canada there have been marginal fishermen who fished only because there was no other occupation for them. On both coasts we have highly skilled full-time professional fishermen who can fish in any sort of weather and it is these men who will continue at the fishing. As other opportunities for employment develop in Canada we will find that these marginal fishermen will move into shore occupations, so we see a smaller number of much better fishermen sharing a bigger catch which, of course, means a higher standard of living for them.
That was particularly marked in the last season in British Columbia. Our salmon fishery out there has a four year cycle, one very big year, a second high year, a medium year and one low year. All these years are improving, but we still have a low year, which was last year. Because of that knowledge in advance over a thousand fishermen left the fishing industry for employment ashore. The catch was a small one but the price was extremely good, the best price ever paid for salmon on the west coast, and the smaller number of fishermen enjoyed larger catches and higher prices and had a very good year.
The hon. member for New Westminster wanted me to discuss in detail the growth of fish caught off the shores of the ridings of the members for Esquimalt-Saanich and

Comox-Alberni and off the estuary of the Fraser river. The average pink salmon is about 5 pounds. It may take 10 to 12 days to move from the west coast into the Fraser. I do not think there is much of an improvement in size in that time. The sockeye salmon moves even quicker. It is after all a 4 year mature fish when it comes back, and I think there will be a barely appreciable increase in growth.	.
Both the sockeye and pink salmon pretty well give up feeding when they come even close to fresh water. It is very rarely, for example, that either a sockeye or a pink salmon is caught by a lure in the territorial waters off British Columbia.


Frederick George Hahn: May I interrupt at this point? I was not referring to the fish caught right along our coast. I was referring to the deep sea fish caught by the Japanese.


James Sinclair: Of course. The Japanese are on the other side of the ocean.


Frederick George Hahn: I realize that but I think our tagging has shown that they are getting some of them.


James Sinclair: Our tagging has not shown that at all. There may be some mingling of sockeye in the centre of the Pacific ocean some 2,000 miles out to sea but the little pink salmon are so small there is not much possibility of their being out in the centre.
The Jones creek spawning experiment, which was also mentioned, is going very well. The hon. member said I had not answered the gill net fishermen about closure above the Pattullo bridge for the late runs, which was brought in two or three years ago on the advice of my scientists and officers. If there is one thing I have explained at great length to the annual convention of the fishermen's union, the officers of the fisheries association and in the House of Commons it has been that closure, and when the international salmon commission takes over the management of the pinks I am quite sure they will certainly maintain that closure on the late runs.
I was very interested to receive the letter from the man in Alberta, from which the hon. member read excerpts. It does show the very great interest there is in our fisheries when a chap from Alberta will write me a long letter giving his views on how we should preserve the salmon run against the threat of power dams. Unfortunately there are quite a number of people in this country who feel that the Department of Fisheries has done nothing about the matter, that this is some new problem suddenly emerged. Our department has been working on the problem of the movement of salmon around dams on

both coasts for at least 30 years. Our colleagues on the American side have been working on it for an equal number of years. In Scotland, Norway, Japan and Russia their scientists have been working on it, but all to no avail. It has not been through any lack of work by the most highly qualified scientists and engineers that a solution has not yet been found.
The gentleman who wrote the letter has the idea that all we have to do is to build artificial spawning beds below the last dam and our problem is solved. In his speech the hon. member for Esquimalt-Saanich pointed out that the valuable fishery in the Fraser is the sockeye salmon fishery, and the sockeye salmon after having hatched in the spring in the gravel beds of these little creeks, drift down and spend one year or sometimes two in a lake.
Take the Adams river run. A short 7 mile stretch of this river in the Kamloops riding produces in its peak year 12 million sockeye salmon for the commercial fishery, each worth about $2 apiece. These 12 million adult salmon came from probably 200 million salmon fry which spend a year down in Shuswap lake living off the plankton food in that lake. If we are going to hatch sockeye salmon just to replace the Adams river run alone by building a hatchery below the last power dam, construction of which is being contemplated near Hope, we would have to build as well a lake the size of Shuswap lake and see that it is filled with the necessary food.
That is why the problem of the sockeye salmon is such a difficult one. It is quite true that the moment the little pink salmon is bom it heads for the sea, uses the river only as a means of transport to get to the sea and then lives on the very abundant food resources in the sea. In the case of the pink salmon we can build, and are building, spawning beds. But that is no solution for the very difficult problem of the sockeye salmon.
The hon. member for Vancouver-Quadra, who has also shown great interest in the fishing industry, asked whether when we were discussing this new treaty with the Americans the matter of fish and power had been discussed because, of course, no matter how good a job we do in international cooperation and conservation of the sockeye and pink salmon of the Fraser river system that will all be ended if a series of ten low level dams up to 100 feet high are built on the lower Fraser and on the Thompson and an enormous 750 foot high dam is built on the upper Fraser at Moran. We did not discuss it because the Americans appreciated that this was entirely a Canadian problem 82715-1084
Fisheries
since this is a Canadian river, and power developments are in the hands of the provincial government and control of the fisheries is in the hands of the federal government. I am sure, however, that our American colleagues in the fisheries field, with whom we have worked very closely, are aware of the fact that the fisheries department is doing everything it can to ensure that we are going to continue to have this great and valuable fishery resource.
I was asked by the hon. member for Nanaimo if, when I spoke on second reading, I would give the house some details of what our officers have done in trying to solve the very difficult problem of fish and power on the Fraser and on other salmon streams. I would be very happy to do that then in detail but, because the hon. member for Vancouver-Quadra has also raised the matter, I think I should summarize the problem briefly and the attitude our department takes and, for that matter, the fishing industry of British Columbia.
We have a salmon industry out there worth an average of around $50 million a year. It gives employment to 12,000 fishermen, 6,000 shore workers and a very considerable number of workers in auxiliary industries. The salmon industry of British Columbia, for example, has been worth more to the province than all the gold mined since the days of the earliest gold rush. As a food resource it is a resource which is becoming more and more important in the world.
The salmon commission has shown that it is able to expand these resources. In some ways in fishing we are far behind farming. I suppose that originally the farmer was a hunter who trapped wild animals and only later found it easier to raise wild animals and breed them more successfully. Up to now our fishing has largely been in the trapping stage. The salmon commission has taken us quite a bit further in improving on nature in by-passing falls with fish-ways; for example; in opening up areas for spawning which have been inaccessible for salmon; the general control and management of river systems to increase production and we have seen the production steadily rise. Dams in a salmon river system are a hazard in many ways. When I speak on second reading I will deal with the problem in more detail. The best scientists in the world are agreed that the proposed dams in the lower Fraser and the big single dam on the upper Fraser will completely end salmon fishing on the Fraser in just one cycle. It will not be a matter of diminishing over the years. In just one four-year cycle we will have no salmon industry. The proof is the evidence given by

Fisheries
the hon. member for Vancouver-Quadra. There was a day when the Columbia river was even a greater salmon stream than the Fraser river. But the Columbia river, to all intents and purposes, is through as a salmon stream now because the Americans built the six big dams in the state of Washington and on the Washington-Oregon boundary. There are no salmon above the last dam and there are very few salmon between the first dam and the top dam. What salmon are left on the Columbia system are spawned below the lowest dam. It is pretty good evidence, as far as the people of British Columbia are concerned, of what happens to salmon streams when dams are placed on them.
The attitude of the Department of Fisheries and the fishing industry is a simple one. We know that British Columbia, because of its rapid expansion, is hungry for electrical power which, after all, is the sinews of industry. We feel that no salmon stream should be dammed until every non-salmon stream has been fully utilized. We have already carried that policy out. When the great aluminum company project was first discussed in British Columbia they wanted to go to the Chilko lake in the Cariboo, the second greatest source of salmon on the whole Fraser system. It was the fishing industry that forced them out of that project and farther inland up to Tweedsmuir park to the present Nechako-Kitimat-Kenamo site, an area in which there are no salmon. Today in British Columbia we have both the great fisheries resources from the Chilko lake system and the great power development at Kitimat.
In British Columbia today, as the hon. member for Vancouver-Quadra has stated, there is one enormous source of untapped power, namely the Canadian section of the Columbia which this parliament protected by Bill No. 3 of some years ago. There are no salmon in the Canadian part of this river today because of the United States dams south of the line. If the next gig dam in British Columbia is built at Mica creek on the Columbia instead of on the Fraser, we shall have enough power for at least the next ten years if not fifteen years if that power is spread through a grid to all southern British Columbia. If however that power is to be swallowed up by a single aluminum plant at the site of the dam, then we are no further ahead as far as power needs are concerned. Instead of exporting electricity through power lines, we are going to be exporting packaged electricity in the form of ingots of aluminum. Hence we feel very strongly that the British Columbia Power Commission or the British Columbia Electric

Company or some other agency should develop the power in the Canadian section of the Columbia and before the Fraser is touched.
There is a second development in British Columbia in the power field, and that is because of the rapid growth of the oil and gas business. Today we have the West Coast Transmission Company pushing its line down to Vancouver. We have both the public utility, the British Columbia power commission and the privately owned company, the British Columbia electric company, building enormous gas turbines to produce power for Vancouver and for Vancouver island. The cost of electric energy produced from thermal sources-that is from coal or oil or gas-must be getting fairly close to the cost of new water installations in British Columbia because the hydro installations which are left are the most expensive ones. The easy, cheap, accessible ones have long since been built.
There is a third thing in which we are all interested. Canada is now the second producer of uranium in the world and very shortly is expected to be the greatest producer of uranium in the world. The British are first in the commercial use of uranium for the production of power. They now have two commercial units in operation at Calder Hall producing a total of 92,000 kilowatts at a price very slightly above the price of power produced from coal in Britain. After all, Britain was built on her coal resources. We, of course, are building our first commercial plant in conjunction with the province of Ontario and the Canadian General Electric Company up near Chalk River. Since we are just on the horizon of this atomic age it would be a tragedy if we dammed the Fraser for power and so lost our salmon industry and then in the end found that atomic energy was cheaper and more practicable than hydro power. That is again why we feel very strongly that the Mica creek development must be gone ahead with as quickly as possible because it will take the entire pressure off the Fraser river for at least ten years.
I must say that so far we have had good co-operation from both the British Columbia electric company, the British Columbia power commission and every other industry in British Columbia which uses water. Up to now we have shown that we can have fish and power and we hope to continue to be able to do that.
One group that we cannot deal with very co-operatively is a group of United States promoters with no interest in our province other than to make a fast profit out of power

development and who are using a local college professor and a local lawyer as their spokesmen. These laymen blandly assert that the problem of moving fish over dams could be very quickly solved if we just put our minds to it. I mentioned the point that it is difficult to co-operate with a group like that because they have no real interest in our province. They do not appreciate, as do all members from British Columbia, the very real value of this great salmon industry to our province. Nor do they realize that that value is going to steadily increase over the years.
The hon. member for Vancouver-Quadra mentioned one other point which is perhaps not directly relevant to this discussion, namely the value of our sports fishery in British Columbia. We British Columbians are, of course, accustomed to comparisons made by Atlantic members with regard to the superiority of the Atlantic salmon as a sporting fish over our western salmon. I, as Minister of Fisheries, responsible for both these groups, will not make any comment on that matter.


An hon. Member:: You know where your heart lies.


James Sinclair: The fact remains that we have salmon sport fisheries out on the west coast. We have probably 50,000 people who are sports fishermen on the west coast and who pursue the spring and the cohoe salmon. These sports fishermen are our greatest allies in this battle between the fish interests and the power interests. It is hard to place a dollar value on the pleasure that our Canadians get from fishing, without licences, in our seas for these salmon. We made a report a year ago. We think that probably about a quarter of a million salmon and grilse are caught by our sports fishermen each year in our waters.
As I say, this matter is not quite relevant to this resolution, which is concerned not with spring and cohoe salmon but with sockeye and pink salmon, neither of which will take a lure. But the whole salmon fishery is knit together to conserve our fisheries resources against the pressure to develop salmon streams for the production of power.
I have not covered all the points raised by hon. members when they spoke for I think we all want the bill to come forward as quickly as possible. When we are on the bill I intend to give a review of what the salmon commission has done in the last 20 years, what it has meant financially to our province to have that expansion in the fisheries. I will indicate the type of program I think they will be able to carry out in
Fisheries
conserving and restoring the pink salmon fisheries and what the cost of that program will be.


Mr. Barneit:: Mr. Chairman, in his speech the minister made some reference to the question I raised last night about the protocol. Apparently he must have misunderstood the purport of my remarks last night, because I said I assumed that the protocol which has to do directly with inclusion of the pink salmon would be attached as a schedule to the bill; but the protocol to which I had particular reference and which I suggested should be considered also for inclusion as a schedule at this time was the protocol of the exchange of ratification of July 28, 1937.
In his reference to my speech the minister, as I understood him, referred only to the protocol with respect to pink salmon. He gave no indication as to what his reaction was to my proposal of last night in regard to doing what I called tidying up our last arrangement with respect to this protocol of the exchange of ratification. I had hoped that he might give some indication at least that when the bill comes forward provision will be made for consolidating that protocol of exchange of ratification in a way that it would intelligently be part of the general documentation of the treaty.


James Sinclair: I think the hon. member will find that the amended protocol, which is in the schedule, covers both the original protocol of 1937 and the agreement signed last December between the two governments.
I might point out that as far as the parliamentary procedure which was followed in 1937 is concerned, it is not necessarily the custom of this house to ratify every international treaty. In this case we bring it before the house for ratification because we intend to take legislative action on it. The custom in recent years has become more common to bring most treaties before the house, trade treaties and other treaties, for ratification by resolution. That is probably why in 1937 the actual protocol was not ratified in the house; but if the hon. member is interested I will certainly get our copy on file in the department copied and it will be made available at least to the members when they meet in the standing committee on marine and fisheries to discuss the bill clause by clause.


Mr. Pearkes:: I make just one observation regarding the run of chum salmon to which I referred. I am, of course, fully aware that the major run comes around the northern side of Vancouver island and down through the Johnstone straits. Chum salmon are caught on both sides of the strait of Juan de Fuca, on the Canadian and on the United

Fisheries
States sides. I do not know the extent, and I do not think anybody knows, of the chum run through the strait of Juan de Fuca, and I was only suggesting that during the next six years study be made of that run through those straits in order to see whether it is perhaps a larger run than we anticipate or know of at the moment. At that time, after further study, it could be considered whether a further protocol ought to be added and chum salmon considered by the commission in the future.


James Sinclair: Yes. That is a very sound suggestion, because now the salmon commission will be doing these very extensive studies, tagging and catching the fish for research purposes in this whole convention area. They will incidentally catch a fair number of springs, cohoes and chums, and that is why in the protocol there is this thought that in the six-year study period the commission will also devote attention to these three types. It may well be that they should be included six years from now in a general protocol covering all the salmon fisheries of the Fraser.
On the other hand, if it turns out that at least half the chums come down the Johnstone straits to the Fraser in Canadian waters all the way, it would be difficult to include the chums for this reason. Our fishery agreements are built upon the principle of an equal division of the catch. We have openings and closings in the United States waters and in the Canadian waters from day to day to try to get the catch as equal as possible; but if in the Canadian catch are included fish that came all the way in Canadian waters, then obviously we are not going to get our full share of the fish which came through international waters.
That is why we want to be very certain of our next step. But as to the suggestion, because of the new powers that are given to the salmon commission they will be doing such a study on the other three species and will be in a pretty good position, I think, six years from now to say whether they can exercise such a control and still manage a fifty-fifty division of the catch.


Frederick George Hahn: The minister made one or two observations on which I should like to comment. First, there is the fact that he indicated to the fishermen's union and other associations that conservation had paid off with the closure of the river above Pattullo bridge during certain seasons of the year. I am not a member of the fishermen's union. If the minister has a copy of the address he may have given on that occasion I would very much appreciate it if 1 could get that information for myself so I would be familiar with
[Mr. Pearkes.l
how it had been determined that conservation has paid off better with the closure as it is instituted today as compared with three years ago before we had the change.
There is another matter to which the minister referred, and that is the question I raised earlier with respect to mid-ocean fisheries. I am not sure whether the minister misunderstood me, but the information I have comes from the submission of the united fishermen and allied workers union to the royal commission on Canada's economic prospects.
I am quite sure the minister is familiar with it. On page 7 of this submission they say:
There would be little point in fishing closures to permit escapement of salmon to the spawning grounds in British Columbia if a major part of both mature and immature fish are caught in midocean before returning to our waters.
Our fishermen are thus faced with a double handicap. First, in the interests of conserving and developing this resource we are properly restrained from excessive fishing in our own waters, but the Japanese deep-sea fishermen are under no such restraint and are in a position to cancel out the benefit of our conservation measures.
That, of course, is part of what I had specifically referred to. I realize 1 had to make interjections to make myself somewhat clearer, but that specifically was what I was referring to. At page 8 the submission goes on:
Secondly, the unrestrained fishing of the Japanese results in a curtailment of our markets and lowering of the prices received by us.
Farther on in the submission, at the same page, the united fishermen and allied workers union indicate more specifically what I possibly had in mind. The minister spoke of the fish possibly weighing slightly better than four pounds just off the coast as compared with a lesser weight on going into the river. He did not think there was too much difference in the weight of the fish at sea and in the river or in Hecate strait, let us say, or in Johnstone strait itself.
Paragraph 3 on page 8 reads as follows:
In principle, we are opposed to a mid-ocean salmon fishery which will open the salmon runs to exploitation by all nations to the detriment of those nations which maintain the spawning grounds. Also such fishing presents a major threat against any program of rehabilitation and conservation.
Paragraph 4, which is a follow-up to paragraph 3, reads:
A large proportion of salmon taken by Japanese expeditions in the mid-Pacific are immature, i.e. there is indiscriminate fishing of all age groups. Convincing proof is given by the fact that an average of 21 sockeye are needed to pack one case of salmon, 48 pounds, in the mid-ocean fishery as compared to 11 fish in the Alaska and British Columbia fishery.
In submitting my case I am fully aware that the figures I used were simple arithmetic. I used the figures 5 and 10 and here the figures 11 and 21 are used. I realize they

are not exactly the same figures in respect to the fish, but my figures serve the same purpose and can be worked out more rapidly. I feel the minister must have misconstrued my remarks, and I should like to have him elaborate further on this suggestion which the fishermen have made.


James Sinclair: I would be very happy to do so. Concerning the first point, I said closure was made because of conservation and quality, and this was done on the advice of our scientists and officers there. If it had not been for that conservation our decline in the chum salmon run, for example, would have been still greater. However, that is a question you can raise to your heart's content when we have our scientists before the fisheries committee.
As far as the other question is concerned I assumed, as I am quite sure other hon. members assumed, that the hon. member for New Westminster was speaking of the outside Canadian fleet, because he mentioned the observation made by the hon. member for Esquimalt-Saanich about how foolish it was to send a fleet off our shores with bigger boats and more expensive gear that was more likely to be damaged when if we were just to wait the fish would turn up themselves in our inside waters. The only reason we did it in this case was to get our share ahead of the Americans as long as they would not agree to share the whole catch.
I remind the hon. member of the treaty that was signed by the United States, Japan and Canada after the war for the very purpose of ending the situation which he has described. Before the war Japanese factory ships did lie off the coast of Alaska with 30 or 40 attendant catcher boats and with many miles of gill nets spread across the ocean picking up both mature and immature fish, either mature fish heading for spawning streams in Alaska or immature fish simply spending that part of their life in that part of the ocean. The fishermen of the United States suffered far more than we did, but unquestionably we suffered too because some of those fish off the Alaskan shore were moving down toward British Columbia streams, especially the Skeena and the Naas. We signed this treaty under which for 10 years the Japanese agreed to stay in their half of the ocean that is west of the 175th parallel, and we agreed to stay in our half of the ocean for any type of fish which was under scientific study which had been fully exploited, conserved and protected.
The three main fisheries of British Columbia, the salmon, herring and halibut, of course all met those specifications, so we have
Fisheries
not had any Japanese factory ships on our side of the ocean exploiting our fish. It may be that there is some slight mingling in the centre of the ocean-it is a very big ocean- between the salmon which have left the Siberian streams and the salmon which have left our British Columbian and Alaskan streams.
As far as the pink salmon is concerned it is highly unlikely, because they are only a small five-pound fish at maturity and they cannot go that far. The sockeye are out there for four years and the springs may be there for five years, so it is possible that the big ones may get that far. Some of the Siberian fish may turn up over here and some of our fish over there. We have no evidence of that, because it is only in the last three years that we have begun this high-seas tagging. The three nations had 25 ships out during the past year doing the high-seas tagging to see where these fish would turn up.
That was one of the main reasons I was so anxious to have the contact with the Russian scientists on the occasion of my visit there, because they have major salmon streams on that side and they did not belong to this international commission; yet unless they reported that our tags had turned up and unless we could report to them on their tags we would be blank in that field of knowledge. They have integrated their tagging program with ours, so we will have an answer to that problem within the next three or four years. It takes four years for the sockeye cycle and five years for the spring salmon cycle in order to get any substantial evidence.
However, I had some very striking evidence myself of the value of the north Pacific treaty to Canada and the United States during the time I lay in the little fishermen's hospital in Petropavlost on the Kamchatka peninsula. That is the centre of the major Russian salmon fishery. I had with me the deputy minister of fisheries for Russia. Every day he would fly away to take a look at the canneries and come back in the evening feeling more and more annoyed because they had the poorest catch in many years. Just over the horizon this enormous Japanese high seas fleet was lying with miles and miles of net intercepting the salmon returning to the Siberian rivers.
It was pointed out to me that the result of the action of Canada in signing this treaty had been to force the Japanese to operate entirely on the Asian side of the Pacific, working on Russian salmon. It was no great sacrifice to us to abstain from fishing in that half of the ocean because we had never

Exchequer Court Act
fished there, nor had the United States. We have now begun to accumulate sufficient tagging information so that we are going to be able to substitute a better line than just the 175th parallel. We will be able to say exactly where this line of demarcation between fish spawned in Japan or Siberia- mostly Siberia-and the fish spawned in North America stands, and how far out they go and then come back; and that line will be the boundary.
Some of the leaders of the fishermen's union have taken a curious stand in consistently opposing this treaty. It has been extremely difficult to understand that opposition if you base your thinking simply on fisheries facts; nevertheless that north Pacific treaty has been a great aid to the Canadian and United States fisheries in confining this very large and successful Japanese fleet to the other side of the ocean.
As far as high seas fishing is concerned, in the treaty we undertake to abstain from high seas fishing for salmon. We have never done it, nor have the United States. We feel it is very much more economical to wait until the salmon are mature, as was suggested by the hon. member for New Westminster, at which time they come into our own zone where they can be caught and quickly transported to the canneries.
Resolution reported and concurred in.
Mr. Sinclair thereupon moved for leave to introduce Bill No. 180, to implement a convention between Canada and the United States of America for the protection, preservation and extension of the sockeye salmon fisheries in the Fraser river system, signed at Washington on the 26th day of May, 1930, and a protocol thereto signed at Ottawa on the 28th day of December, 1956.
Motion agreed to and bill read the first time.



EXCHEQUER COURT ACT


Stuart Sinclair Garson: the second reading of Bill No. 160, to amend the Exchequer Court Act.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Applewhaite in the chair.
On clause 1-Registrar, tenure of office and salary.
Donald Methuen Fleming: I am sure it requires no explanation to convince the committee that the present limitation on the residence of the registrar of the exchequer court ought to be

removed in these days of motor cars. There certainly is not, if there ever has been, any justification for the limitation imposed by the statute upon the residence of the registrar of the exchequer court.
However, the amendment introduces one other change. Hitherto the salary of the registrar has been fixed by the statute at a maximum figure of $7,500. The amendment now before the committee will have the effect of removing that limitation and allowing the salary to be determined and fixed by the governor in council. This is in keeping with a trend which has appeared in many amending bills in recent years. There have been occasions when we of the official opposition have taken issue with this trend. There have been many cases where it was felt that it was sound legislative practice to name the salary in the statute itself.
One does not wish to be dogmatic about matters of this kind, because it is not every individual in the public service in the largest sense whose salary should be rigidly fixed by statute. However, I think the committee is entitled to a word of explanation from the Minister of Justice as to why this change is being made by this bill.
hflr. Garson: Mr. Chairman, hon. members will recall that formerly a similar ceiling was placed upon the salary of the registrar of the supreme court, but that was removed last year by legislation. The hon. member for Eglinton is quite right in saying that was the fact for quite a long period of time, and it so continues in relation to certain officials of the government. For example, the Governor General of Canada, the provincial lieutenant governors, members of the cabinet, members of boards like the income tax appeal board, transport board and so on, all have their salaries fixed by statute.
It was felt that in connection with the registrar of the Supreme Court of Canada and the registrar of the exchequer court that their duties were more analogous to those of other civil servants than to those of the dignatories to whom I have just referred. On that account the simplest and most satisfactory thing to do was to remove this statutory ceiling; then their registrar's salaries could be dealt with by the governor in council in the ordinary way that salaries of civil servants are adjusted from time to time.
Clause 1 agreed to.
Bill reported.


The Acting Speaker (Mr. Applewhaite):: When shall this bill be read the third time?


Some hon. Members:: Now.


Stanley Howard Knowles: By leave.


Stuart Sinclair Garson: the third reading of the bill.
Motion agreed to and bill read the third time and passed.



EXPORT CREDITS INSURANCE ACT


James Sinclair: the second reading of Bill No. 46, to amend the Export Credits Insurance Act.


John Horace Dickey: Mr. Speaker, the purpose of this bill is to amend the Export Credits Insurance Act in two respects; first, to authorize the corporation to provide insurance for certain transactions which it cannot now cover-this is an amendment for which there has been considerable demand on the part of Canadian exporters -and, second, to allow the corporation to deduct for income tax purposes amounts required by the corporation for the setting up of reserves for possible losses in accordance with the requirements of its act of incorporation.
With respect to the first of these two purposes, I might say that at the present time the corporation insures exporters of goods shipped from Canada against losses occasioned by non-payment by foreign buyers due to credit and political risks involved in foreign trade. Some of the risks covered are the insolvency of a foreign buyer, cancellation of import licences in the buyer's country and the risk of delay in the transfer of funds due to foreign exchange difficulties.
Under the proposed amendment the corporation will be able to provide insurance to cover various types of export business for which there is an increasing demand in Canada, and which is available to exporters in other countries through the various types of export credit insurance organizations which are active in those countries. If this amendment is approved by the house the corporation will be authorized to provide insurance in connection with goods shipped abroad for exhibition purposes in other countries, or on consignment for sale. The corporation will also be authorized to insure sales made abroad by foreign subsidiaries of Canadian companies. Protection will be available to Canadian companies in connection with the rendering of engineering construction, technical or similar services performed in foreign countries or in connection with the supply of goods to foreign buyers, and the corporation will be authorized to provide insurance in connection with such expenses abroad 82715-109
Export Credits Insurance Act for installation, servicing, procurement of materials and labour as may be incurred by Canadian exporters of capital goods or services, expenses which form a minor but integral part of this type of business.
It might be of interest to hon. members if I were at this stage to say a word with respect to the experience of the Export Credits Insurance Corporation since it first issued a policy in September, 1945. During the 11 years of operation up to September 30, 1956, the corporation insured export sales amounting to $350 million for which it charged premiums of $3.2 million. This is an average premium of less than 1 per cent. Gross claims paid to policy holders total $7.7 million, and recoveries of $4.3 million have been obtained. Write-offs amount to only $176,000, so there are outstanding claims totalling $3.3 million in connection with which substantial recoveries are hoped for. However, since the bulk of these claims represent blocked funds held abroad, there is no means of knowing when recoveries may come in or the rate at which they may come in when some recovery is possible.
The corporation is, under its act, intended to operate on a self-sustaining basis, and at the end of September last the premiums and interest on its capital after paying net claims and operating expenses resulted in a balance held in the underwriting reserve of $1.5 million.


Donald Methuen Fleming: What date was that?


John Horace Dickey: I believe these figures are all as of the 30th September, 1956.
In keeping with sound insurance practice, the corporation maintains an underwriting reserve against future losses. The act of incorporation provides that the entire excess of the corporation's premium income and interest on investments over expenses and losses is to be credited to the underwriting reserve until such time as the reserve reaches the figure of $5 million. The corporation is a proprietary crown company listed in schedule D to the Financial Administration Act, and as such is subject to income tax. The Income Tax Act does not make any provision for the corporation setting up reserves for future losses, and the proposed amendment under this bill will authorize the corporation to deduct amounts credited to the underwriting reserve in calculating its income tax for the taxation year 1957 and thereafter.
As I pointed out to the house a moment ago, these credits will be made in accordance with the provision of the act until the underwriting reserve, which now stands at about $1.5 million, reaches a total of $5 million, which is the maximum provided for under the act of incorporation.

Export Credits Insurance Act


Donald Methuen Fleming: Mr. Speaker, often it is not easy to isolate or define the principle of a short bill to amend an existing statute, and in this particular case where we have before us a bill which offers two amendments to the act, the two being quite dissimilar and unrelated in their nature, it is more than normally difficult to define the principle of the bill. And because these two matters do involve detail, and will call for an extended discussion and the asking of many questions, no doubt, in the interests of seeking adequate information, it seems to me that consideration of the measure can best proceed in committee rather than that the debate on second reading should be extended.
May I say briefly, however, that with the purpose of the act itself we have been in sympathy so far as it helps, on fair terms, our Canadian exporters to expand their sales abroad.
The business that has been transacted by the Export Credits Insurance Corporation in the 12 years it has been in existence is substantial. The last time the measure was before the house was three years ago, at the 1954 session, when a number of amendments were made to the act, one of them relating to this underwriting reserve which is one of the subjects that arises again in the bill now under discussion.
The widening of the scope of the insurance which the corporation is permitted by the statute to write will have the effect, if the amendment is adopted, of bringing our act into line to a greater degree with the provisions of the British legislation and also the Australian legislation which, I understand, has been amended in recent times to bring the scope of the insurance that may be written under its terms into line with that which may be written under the British legislation. The credit and political risks involved in foreign trade, let us hope, are not going to be as great as they used to be, although the volume of trade in the world may be expanding.
In general, one may say that if there is to be an Export Credits Insurance Corporation engaged in the business of insuring sales by Canadian exporters against these credit and political risks, then the expansion that is proposed in this measure is a reasonable enlargement.
As to the other subject matter of amendment, I think in the committee we shall seek a good deal more information to justify the proposal to exempt from taxation that portion of the income of the Export Credits Insurance Corporation which would otherwise be taxable under that act. That there

should be an underwriting reserve no one can question. It would be impossible for the Export Credits Insurance Corporation to make any pretence of adherence to sound insurance business principles did it not attempt to create and maintain such a reserve.
The original legislation pertaining to the Export Credits Insurance Corporation did not make any explicit provision for an underwriting reserve, but the corporation had set up that reserve itself. In the amendments of 1954 legislative recognition was given to the existence of the underwriting reserve and the amendment now embodied in section 11A of the act provides that the underwriting reserve which had been created by the corporation should be continued and also that the corporation at the end of each fiscal year, if the amount standing to the credit of the underwriting reserve is less than $5 million, should credit to the reserve the excess, if any, of its revenues over its disbursements in that fiscal year or so much of the excess as is required to increase the amount of the reserve to $5 million.
The parliamentary assistant has stated that the amount standing to the credit of the underwriting reserve at September 30, 1956, was $1.5 million. That figure, sir, is lower than the figure standing to the credit of the reserve at December 31, 1955. We have not yet, of course, the annual report of the corporation for the fiscal year ended December 31, 1956, but the annual report of the corporation for the fiscal year ended December 31, 1955, shows at page 6 that the balance at the credit of the underwriting reserve at December 31, 1955, was $2,819,326. Therefore it is evident that in the first nine months of the calendar year 1956 the underwriting reserve was drawn upon by the corporation to the extent of approximately $1,319,000.
We shall be looking for some justification of the proposal to grant exemption from income tax to the credits to be placed each year out of the earnings of the corporation in the underwriting reserve. We shall require justification, sir, because we consider the principle that was recognized by the house in 1952 in providing that these proprietary crown corporations should be equated with privately owned corporations so far as income tax treatment is concerned is a sound principle and should be adhered to.
In his statement the parliamentary assistant has indicated that the effect of the present bill, if adopted, will be to relieve the corporation of income tax on that portion of its income that it places to the credit of the underwriting reserve until that reserve reaches the statutory figure of $5 million. He

has stated that that will be the result. He has given no reason to the house to justify this departure from the principle that was recognized by the house in reference to the taxation of proprietary crown corporations.
May I remind the house, Mr. Speaker, of the statement made by Mr. Abbott as minister of finance when in 1952 he introduced the present provisions of the Financial Administration Act applicable to proprietary crown corporations or operating crown corporations such as the Export Credits Insurance Corporation. At page 1253 of Hansard of April 8, 1952, we find that Mr. Abbott said:
An interesting change I am proposing under the corporation income tax is that those crown corporations of the federal government which are designated as proprietary corporations, and hitherto have been exempt from tax, will in future pay corporate income tax to the federal government in the same manner as any privately-owned corporation. "Proprietary corporations" are those so designated under the Financial Administration Act, and generally speaking are companies which are carrying on business operations similar to and in competition with private business. One desirable result of this proposed action will be to make the financial statements of these crown companies more comparable with private industry, and make it easier to assess the relative efficiency of their operations. I do not expect this change to have appreciable net revenue effects. It will increase our tax receipts and reduce our non-tax revenue.
And further:
All crown company profits eventually find their way into the treasury, and many of them already remit all or the greater part of their profits year by year.
There the minister was stating the principle that proprietary crown corporations should be subject to income tax just like any privately owned corporation. The Export Credits Insurance Corporation is one of these proprietary crown corporations. It is so designated in schedule D of the Financial Administration Act. Having regard to the fact that the principle enunciated by the then minister of finance in 1952, which I have quoted, was recognized by the government then as sound and was approved by the house, I think without objection, and certainly has been given full approval by the house from that time to this, why that principle should be departed from in this instance has not been explained by the parliamentary assistant.
I am saying now, Mr. Speaker, that when we go into committee of the whole on the bill we shall require ample justification before we are satisfied that there should be any departure from the sound principle that was enunciated and adopted in 1952. I think this matter will warrant extended discussion in the committee. As much of the discussion will depend upon the information to be supplied to the committee and will be the 82715-1094
Export Credits Insurance Act occasion of question and answer, I do not think I can add anything useful at this stage. As far as this measure proposes an extension in the scope of the insurance which the corporation is authorized to transact, it appears on the surface to be reasonable, at any rate sufficient to warrant the bill going to the committee.


Hazen Robert Argue: Mr. Speaker, I think the Export Credits Insurance Act, since it came into operation in 1945, has served a useful purpose. The parliamentary assistant outlined to us the details of its operation. He told us that the Export Credits Insurance Corporation had underwritten some $350 million of Canadian exports and that this was done for a very small sum of money, namely a premium of 1 per cent. In spite of that fact the company had collected only $3.2 million in premiums; and in spite of the very great risks attached to the export business in this day and age he told us there were no losses or no substantial losses, I take it. In the statement made a year ago, in fact, it was stated that at that time there'had been a net profit of something over $100,000.
The hon. member for Eglinton has outlined the amendments that are contained in the bill and has made some comment on them. One of the amendments provides that from here on in moneys paid into the underwriting reserves will no longer be subject to income tax. The hon. member for Eglinton seemed to take a good deal of objection to that change on the ground that in 1952 the government had enunciated a principle, namely that proprietary crown corporations should pay income tax in the same way as do similar corporations privately owned and doing business in a similar field.
I have no objection; in fact I support the principle outlined in 1952. But any reading I have done on insurance in this field leads me to the conclusion that there are no private companies underwriting comparable risks in the export field, and that this is in fact a crown corporation which is providing a service in the export field which is not provided by any privately owned company. Hence I take it this is not, in the sense of the definition of 1952, a company that is competing with private companies. It would therefore seem to me that it at any rate could follow that an exemption might be made in this case and that money paid in to the underwriting reserve might not be subject to income tax in the same way as are profits made by other companies.
While this corporation has done a useful business I believe it could be used a great deal more than it has been used in the past. This corporation, operating successfully in a limited

Export Credits Insurance Act field, is another demonstration to members of the house and to the country that crown corporations can and do play a useful part in the economic life of this country. We hear members in parties other than the C.C.F. apparently saying that crown corporations are a bad thing, that goverment mixed up in enterprise or business is a bad thing, and they seem to come to the conclusion that the government should get out of all business. But if I judge correctly the trend of all parties in this house-from the things they say, the things they support and the way they vote-they are in fact, year after year, getting the country and parliament more and more involved in publicly owned corporations. This is another example of a crown corporation-public ownership-that, according to the hon. member for Eglinton and the members on the government side of the house, has performed a useful function and at least with regard to certain of the amendments which are expanding the scope of the company 1 understand they will receive support from the two parties to which I have referred.
It seems to me that we should judge the effectiveness of this company in the light of the Canadian trade picture at the present time. I think it is well known to hon. members in the house that Canadian exports today are falling far short of Canadian imports, that we have a substantial trade deficit, and that this trade deficit is causing concern to well-informed Canadians everywhere. Because it is necessary for Canada to increase its exports I think we should give consideration to an expansion of the provisions of the act and of the work of the Export Credits Insurance Corporation in order that some of this deficit may be overcome.
In order to show how substantial is the deficit at the present time, I have in my hand figures supplied to me this afternoon from our library, which indicate that in the ten months ended in October, 1956, our exports totalled $3,967 million as compared with imports of $4,781 million; so that within the first ten months of 1956 we were running the very substantial trade deficit of some $814 million.


Donald Methuen Fleming: It was $1,290 million for the full year.


Hazen Robert Argue: Apparently there are later figures actually published, Mr. Speaker. I am informed that the total for the full year is some $1,290 million. In the light of that very substantial deficit I suggest that the government should be giving consideration to using the Export Credits Insurance Act in a much wider field than that in which it is at present being used.

In the last two years this act has been of advantage in the selling of some of Canada's primary products. In the sales of substantial quantities of wheat to eastern European countries this act was used as the instrument to provide the necessary credit. The section of the act which allows that to be done is section 2. It is not possible for the Export Credit Insurance Corporation itself to engage in the underwriting of some of these extremely large sales, but the governor in council may authorize the Export Credit Insurance Corporation to underwrite such sales and provide the funds to enable the corporation so to do.
Those sales that were underwritten last year were of substantial advantage to Canada and to prairie grain producers. One of the reasons I am afraid we are in some difficulty in this field is the fact that, as far as eastern European countries are concerned, we have not imported from them goods of anywhere near the value of the goods they have purchased from us.
The figures I have for the first nine months in 1956 show that within that period countries in eastern Europe purchased in Canada goods to the value of $60 million. We purchased from those countries goods to the value of just $6 million. It seems to me it is impossible for us to hope to continue very substantial exports if we are unprepared at the same time to do better than to purchase merely 10 per cent of the value of the goods that have been purchased from us. That is another aspect of the trade picture.
I believe that section 21 of this act should be used right now to provide for the export of a very substantial quantity of wheat to Poland. I hold in my hand the Regina Leader Post of Thursday, February 21, and I see by a Canadian Press dispatch that Poland is engaged at the present time in negotiations for the purchase of a substantial quantity of wheat. Apparently those negotiations are turning on the need of Poland to obtain long-term credit. This report states that Poland is asking for credit for a five-year term. I do not know whether that is the state of the negotiations at the present time, but it seems to me that if that is all that is necessary in order to sell large quantities of wheat to Poland'-and she purchased 13 million bushels from us last year-parliament should have no hesitation in providing through the Export Credits Insurance Act the funds and the guarantee necessary to provide this very important credit so this greatly needed sale might be made.
Therefore I suggest to the parliamentary assistant that he bring to the attention of the minister the opinion of the members of this group, and I would hope of the members of

other groups in this house, that the Export Credits Insurance Act should be expanded at this time in the way I have outlined, and more particularly that credit, in whatever amount may be necessary, should be provided at this time, over whatever period of time may be necessary, in order that Poland may buy a substantial quantity of wheat from us.
The disturbing part of this dispatch, along with a dispatch on the following day in the same paper, written by the Ottawa correspondent, Robert Moon, is that the Polish trade delegates are probably going from Canada to Washington. According to this report, if a wheat deal is not made in Canada then there is a real possibility that a wheat deal may be made between Poland and the United States. I believe that Canada and the members of this house generally would support the government in providing whatever credit may be necessary for whatever period, up to a term of five years as suggested in this report, in order that such an important transaction might be made.
We in this group support the provisions of the bill, Mr. Speaker. We hope the government will use this public instrument as a means of effectively expanding Canada's export trade.


Mr. J. H. Ferguson (Simcoe North):: Mr. Speaker, the bon. member who just preceded me brought out some very interesting facts, but nothing more than I expected when he rose. He wants more public ownership by the government and more government interference. He perhaps doubts the fact that Canada has reached the stage in which it now finds itself, financially, prosperity-wise, and so on. He is quite willing to forget the fact that private industry ever had anything to do with the building of Canada. That is the tone of the C.C.F. all along the line. They cannot ever miss an opportunity to take a whack at private industry, insurance companies or any other kind of company. They say, give it to the government and we will make the same kind of mess out of it as we did in Saskatchewan.
Now, when he knows as well as he does, since he is a resident of Saskatchewan, the mess that his government, the C.C.F. government in that province, has made out of its industries-


Mr. Nicholson:: What about government
insurance?


Hazen Robert Argue: A net return of 9 per cent on all capital invested.


Julian Harcourt Ferguson: I am sure the hon. member knows a great deal about the insurance business. I would ask him one question. How many millions of dollars worth of insurance
Export Credits Insurance Act did Lloyd's write in this country? How old is the oldest insurance company in Canada? It is over 100 years old. How many millions of dollars has that company paid out to beneficiaries in this country? What would happen tonight if the private corporations said they would not insure any building in Canada? I have confidence in the people of Canada. I am sure they would not insure in a Saskatchewan insurance company. The people of Canada are not crazy. If the hon. member is so confident, does he think they would all insure with insurance companies owned by the government of Saskatchewan?


Alexander Malcolm Nicholson: What about automobile insurance in Ontario?


Julian Harcourt Ferguson: That is just the usual silly question. I would expect the hon. member to ask that question. Don't you think the hazards in Ontario are 20 times as great as they are in Saskatchewan? What you people have is just a handful of automobiles. You are not selling on better automobile experience. Let me say this to the hon. member. On the average the insurance companies insuring automobiles in Ontario last year lost at least $5 on every $100 they took in. In other words, they paid out $105 for every $100 they took in.


Alexander Malcolm Nicholson: What was the charge?


Julian Harcourt Ferguson: It has nothing to do with the charge. The rates went up this year in order to enable the companies to carry on the insurance business in a proper manner, which is something you people in Saskatchewan never learned anything about. You are infants in the business. This country could never have reached the place it is today if it had not been for men putting their hands in their pockets 100 years ago and founding the old Halifax Insurance Company, which is over 100 years old. It has stood the test of time and has paid every loss. It has satisfied policyholders. They never needed men like you to run that company. I venture to say there is not a man in your group today who could run an insurance company.
The members of the C.C.F. group are advocates of the government taking over something they know nothing about. If the insuring of the commodities which are being exported was handed over to the legitimate insurance companies-they have the reserves; they do not need to build up reserves since they have them available, made through their actual business experience-we would not need this act. When we hear men like you talk glibly about these things and about the government taking over industry 100 per cent,
I say God help the people if they take over any more.

Export Credits Insurance Act


Hazen Robert Argue: How are you going to vote on the bill?


Julian Harcourt Ferguson: That is a silly question. It embodies many things. I say to the hon. member I would not be a hypocrite. I feel like telling him why I would not vote for the bill. I would not vote for things I know nothing about. I do know something about this bill. I do know I am sorry to see the government in business. If the hon. member had stood in his place today and told the government what they should have done to avoid the crisis he would have done a lot better for the country, if the government had listened to him.
This government, Mr. Speaker, has put this country in the position in which it finds itself today with our imports and exports out of balance. That is what has caused it. It is not simply because the government have not run the business; it is that they have not run the government.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Applewhaite in the chair.
On clause 1-Repeal.
John Horace Dickey: Mr. Chairman, on clause 1 I should perhaps deal briefly with some of the points that were raised by those hon. members who were good enough to take part in the debate on second reading.
The hon. member for Eglinton raised the question of the principle of the bill. The principle of the bill of course is simply to improve the ability of the Export Credits Insurance Corporation to serve Canadian exporters and to make Canadian exports more competitive in foreign markets, where they are finding that the exporters of certain other countries are achieving some advantage by reason of the wider coverage that is available to them through the various types of insurance arrangements provided for the exporters of those countries by their government corporations.
The hon. member also raised the question of the principle of the amendment to the Income Tax Act in 1952 providing for the payment of income tax by proprietary corporations, and how we can justify the proposal in this bill to provide for exemption from income tax for this corporation with respect to their payments into the underwriting reserve-


Donald Methuen Fleming: Perhaps I may interrupt for just a moment. Does that not arise on clause 2?


John Horace Dickey: Yes. I just wanted to say that I agree with the hon. member that this

could be expedited by dealing with the questions as they arise in committee.
Concerning the matter of principle, I would point out to the hon. member that the statement of the then minister of finance at the time this policy was introduced related specifically to corporations carrying on business operations which were similar to and in competition with private business. As we go along we may be able to satisfy the hon. member that in this case there is no element of competition with any firm in private business, because these particular risks are not covered by any private insurance organization either in this country or in any country, to the best of my knowledge. That point was raised by the hon. member for Assiniboia as well.
The hon. member for Assiniboia also raised two questions relating to trade with eastern European countries. He laid some stress on the lack of purchases by Canada from those countries. That of course is not strictly relevant to this particular legislation, but since he mentioned it I think in fairness I should point out to him that the Canadian market is an open market. It is open to any exporter in any country to come to Canada and do business and sell his products. There is no restriction imposed by the Canadian government on imports from any part of the world, and it is up to those countries to bring their products here and sell them. I may say that the facilities of the Canadian government have been made available to these countries to assist them wherever that has been required.


Hazen Robert Argue: I wonder if I might ask a question at this point. Would the parliamentary assistant say whether the efforts of the government and the trade commissioners are resulting in an increase in imports from those countries? Is the situation improving?


John Horace Dickey: Well, Mr. Chairman, the
facilities are there and they have been used and have produced some satisfactory results. I think, however, the main responsibility rests with these countries to make their products available to Canadian buyers, and I am sure if they are competitive in price they will find a satisfactory market.
The hon. member also raised the question of section 21 of this act, and indicated that he felt it should be used to facilitate the export of wheat. As the hon. member knows and as I am sure all hon. members of the house know, this section has been used substantially over the past few years to facilitate the export of Canadian wheat to a number of markets. I think the satisfactory volume of exports we have had to some extent at

least has been as a result of these activities. The hon. member mentioned the current negotiations with representatives of the government of Poland. Those representatives are here and negotiations are proceeding, and I can only assure the hon. member that everything possible will be done to try and work out some arrangement whereby we will sell just as much wheat as we possibly can to Poland or any other purchaser-


Hazen Robert Argue: Hear, hear.


John Horace Dickey: -and that the best possible credit arrangements that can be justified in the circumstances will be extended under section 21.
The hon. member for Simcoe North was very much concerned about the question of public ownership. The point that was made earlier in connection with the fact that this corporation provides insurance coverage that is not provided by any private insurance company in Canada or elsewhere in the world I think disposes of the question which he sought to raise.


Mr. Quelch:: Could the parliamentary assistant say what percentage of our exports last year was insured under this act?


John Horace Dickey: Mr. Chairman, we do not insure exports to the United States; therefore the field for insurance is restricted to exports to other markets. We insured about Pi per cent of our total exports last year, involving a total amount of insured risk of $55 million. The corporation calculates that it insures about 50 per cent of the total exports eligible for insurance. About 50 per cent of the exports that would qualify for insurance receive it.


Victor Quelch: Do we insure exports to Britain?


John Horace Dickey: Yes.


Mr. Macdonnell:: Just a moment ago the parliamentary assistant used the phrase, "50 per cent of the total available exports that would qualify for insurance," and I would like to have him explain that.


John Horace Dickey: Exports that are made on letters of credit or cash in advance, for instance, do not require insurance and therefore there would be no need to make any application for them to be covered. No export to the United States would qualify, and under the act as it is at the present time certain services and other things that are provided are not covered. It is the intention of a portion of this amending bill to extend the coverage of the act to enable the corporation to extend insurance to certain aspects of trade that are not now covered.
Export Credits Insurance Act


James MacKerras Macdonnell: We are told that exports to the United States are not insured. Is that because every person in the United States to whom we export is sure to pay, or is there some other reason?


John Horace Dickey: There is commercial insurance in that field, so the corporation does not cover it.


James MacKerras Macdonnell: And there is no commercial insurance elsewhere?


John Horace Dickey: No.


Donald Methuen Fleming: The statement made by the parliamentary assistant raises the question of rejections. He stated that in 1956 the corporation issued insurance to the extent of approximately $55 million. What proportion was that of the total insurance applied for?


John Horace Dickey: I am told that the corporation does not keep statistics which would give an exact answer. The practice is to insure every risk which can be considered as a proper insurance risk under the circumstances. The percentage of applications turned down because of those considerations is very small in comparison with the total amount.


Donald Methuen Fleming: I think we are all familiar with the two considerations that enter into insurance transactions by this corporation, the matters of credit risks and political risks involved in foreign trade. I should be interested to know from the parliamentary assistant-this prompted my last question- what attempts are made on the part of the corporation to investigate credit. As far as political risks are concerned, I presume that is a matter of general knowledge having regard to changing conditions, but to what extent does the corporation endeavour to investigate creditworthiness in the case of individual applications for insurance?


John Horace Dickey: I am advised that in the case of an application for insurance up to $2,000 the corporation permits the exporters to present evidence of the creditworthiness of the risk based on at least two credit reports secured by the exporter. In the case of an application involving an amount over $2,000 the corporation itself conducts a credit investigation, getting reports from trade commissioners, chartered banks or mercantile agencies. The corporation keeps a file of credit information relating to particular areas and that sort of thing.


Donald Methuen Fleming: I am sure that is sound practice as far as it can be applied, but there must be many countries where it would be difficult to obtain adequate reports of that nature. This stemmed from my earlier question about the percentage of applications

Export Credits Insurance Act which are rejected by the corporation. I gathered from what the parliamentary assistant said that in the absence of any records it is difficult to do more than generalize, but is the committee to understand that there are very few unsuccessful applications?


John Horace Dickey: Yes, that is true. The committee should understand that the exporters exercise judgment in connection with the proposals they have for purchases from foreign countries. They exercise that judgment before they come to the corporation. It is only after the exporter is satisfied to a large extent with the creditworthiness of the risk that he comes in with his application.


James MacKerras Macdonnell: I confess I am surprised that there is no record of applications turned down. I would have thought that would be almost routine.


John Horace Dickey: I am advised that it is not so much a matter of not keeping records, it is simply that statistics are not kept on that basis. I am advised that in only a few cases is there a complete rejection of an application. An exporter will request coverage of a risk say up to $50,000, and after examination the corporation may come to the conclusion that it is justified in covering only up to $35,000 or $40,000. That is the only statistic that is kept, the actual coverage that is issued.


James MacKerras Macdonnell: I do not want to press the matter unduly, but I confess I find myself puzzled beyond words that those figures should not be readily available.


Donald Methuen Fleming: Dealing with the last answer of the parliamentary assistant, in the case where the corporation agrees to insure for an amount smaller than that applied for, is that course dictated by concern for the creditworthiness of the applicant involved, or is it a matter of trying to achieve a higher premium rate in the result?


John Horace Dickey: It is related only to the credit standing of the buyer.


Mr. Monieiih:: I understand that the insurance policy is for only 85 per cent of the selling price; in other words, it is a coinsurance arrangement with the exporter carrying 15 per cent?


John Horace Dickey: The maximum is 85 per cent; that is the general rule.


Victor Quelch: I was somewhat puzzled by the statement of the parliamentary assistant that no insurance is written on exports to the United States. Is that because they do not consider there is sufficient risk there to justify insurance being written?


John Horace Dickey: The reason is that there is a commercial firm handling risks of that kind, and the corporation does not get into that field.


Victor Quelch: Are there any countries in connection with which you will not write insurance? Are there any countries that are what you might call blacklisted?


John Horace Dickey: The corporation will insure exports to any country in the world so long as it is satisfied with respect to the credit terms and other circumstances of the transaction.


James MacKerras Macdonnell: Did the parliamentary
assistant intend to say what I understood him to say, that the corporation would insure in connection with any country in the world?
I think he said that in the case of the United States it did not insure. There is another question I want to ask, and perhaps the parliamentary assistant can answer it as well. How are the rates fixed? Is an attempt made to measure the risk and fix the levy accordingly, or are these rates to some extent arbitrary? Is there, in other words, an effort to "make the punishment fit the crime"?


John Horace Dickey: The rates are fixed by the corporation using its best judgment in each individual case depending upon the commodity involved, the country to which the export is being made and the credit terms, that is, the length of credit which is requested by the importer from the exporter.


Donald Methuen Fleming: Is there any schedule in existence in the nature of a tariff which is open to inspection and which would apply universally to all risks?


John Horace Dickey: No, there is no published schedule of rates or anything of that kind.


Donald Methuen Fleming: What assurance is there of any uniformity in the calculation of premiums? How is one to understand that there is no discrimination in the writing of risks?


John Horace Dickey: Mr. Chairman, the assurance with respect to that is that the corporation attempts to do the maximum amount of business it can, and to provide the maximum amount of protection for Canadian exporters consistent with reasonable standards of safety, good business and insurance practice.


Donald Methuen Fleming: That is very interesting as a general statement, but I think the committee needs to know how this works out in practice. Do two or three men sit down to establish the rate with regard to each application? What assurance has the house that there is any uniformity in the treatment of applicants in comparable circumstances? How are we

to know that applicant A is charged the same rate on the same type of risk as applicant B?


John Horace Dickey: Mr. Chairman, I am informed that in this field policies are issued to individual exporters on a blanket basis for a period of one year; that the risks are assumed under that policy in accordance with applications by exporters in respect of individual exports to various countries, and that the rate is fixed in connection with each of these applications in accordance with the considerations which I have explained, namely the commodity involved, the country to which it is destined and the credit terms proposed between the importer in the foreign country and the exporter. The rate is thus fixed with the idea of attempting to provide coverage for that particular export in a way which will assist the exporter in securing the business for his company.
These are decisions which, naturally, have to be made in the ordinary course of an insurance business of this kind. These matters are not only considered by the operating head of the corporation and his officials, but are reviewed by the board of directors and the advisory board.


Donald Methuen Fleming: Do members of the board and the advisory board review the rate that is established with regard to every risk?


John Horace Dickey: Yes, they are reviewed at each directors' meeting, Mr. Chairman. I am advised that there is a tariff schedule which is not published but which is approved by the board of directors as a general tariff schedule for the guidance of the staff of the corporation and that the rate to be applied with regard to a particular application is considered in relation to that norm.


Daniel Roland Michener: I wonder if the parliamentary assistant could say whether every application is accepted or whether some applications are considered too risky and are rejected altogether; and, if so, what proportion of the applications for insurance have been turned down?


John Horace Dickey: Mr. Chairman, I am afraid we have no exact statistics regarding the number of risks turned down. Hundreds of applications are received every month, but I am informed that there are few which cannot be arranged in some way or other by the corporation so there would be some sort of insurance coverage given to the exporter.
It might be of interest to the committee to learn that of the blanket policies issued by the corporation since its inception, only 212 have not been renewed. Of this number, 184 were not renewed because the exporter
Export Credits Insurance Act went out of the export business, and 11 were not renewed because the exporter wished to select certain risks for coverage and exclude others. Seven only were not renewed because the corporation refused to renew them.


Jay Waldo Monteith: May I ask the parliamentary assistant whether the majority of these policies are placed with the corporation by export agencies on behalf of manufacturers, or do they purchase the goods directly and export them themselves, or does the manufacturer place the policy?


John Horace Dickey: Approximately 75 per cent of the policies are issued to the manufacturers of the goods to be exported; the balance to others.


Jay Waldo Monteith: Export agencies?


John Horace Dickey: Yes.


Victor Quelch: I am still puzzled about the fact that insurance is not written on exports to the United States although it is written on exports to the United Kingdom. The reason given for insurance not being written on exports to the United States is that there are commercial companies doing that type of business. Would that not also be true with regard to Britain? Surely there must be companies writing such insurance in the case of the United Kingdom. For instance, would Lloyd's not write that type of insurance?


John Horace Dickey: I am advised that this is one type of business that is not written by any commercial company or any private company, and if there is to be any insurance it has to be written by this corporation. The only reason we write it is that exporters apply for coverage on these exports.


Julian Harcourt Ferguson: Have the private companies ever been asked whether they would write this insurance for you?


John Horace Dickey: I am advised that it is known that many private companies have looked into the possibility of covering risks of this kind, but they have all decided not to enter the field because of the risks involved and the impossibility of dealing with the matter from a strictly actuarial point of view.


James MacKerras Macdonnell: The parliamentary assistant said there were three things taken into consideration in arriving at the rate; first, the commodity; second, the country concerned; and third, the nature of the credit arrangement made. Taking the question of the country concerned, one of the things that arises is the very hazard which has arisen in the case of Turkey, the matter of exchange. How is that assessed in fixing the rate? Does the exporter have to assume what is assessed
1722	HOUSE OF
Export Credits Insurance Act as the proper rate to take care of a possible advance in exchange or depreciation of exchange?


John Horace Dickey: I am advised that the corporation does not insure against depreciation of exchange. It insures against non-payment of the amount owing by reason of exchange difficulties, and it calculates the premium on the basis of its assessment of the possibilities of non-payment coming about by reason of exchange difficulties during the length of time the particular transaction is to be covered. That is a matter of judgment based on all the information the corporation can secure with respect to balance of payments and the state of the currency of the particular country.


James MacKerras Macdonnell: Are all sales made payable in dollars?


John Horace Dickey: Canadian dollars, United
States dollars or sterling.


Donald Methuen Fleming: Before we leave clause 1, I have a question or two. I drew attention to the fact that between December 31, 1955, and September 30,	1956, the corporation
evidently found it necessary to dip into the underwriting reserve to the extent of more than $1,300,000. Has the parliamentary assistant the figures up to December 31, 1956, and will he explain shortly why there was this substantial diminution in the reserve in 1956?


John Horace Dickey: The figure for the underwriting reserve at December 31, 1955, was $2,819,326. Between that date and September 30, 1956 claims paid amounted to $1,479,133. The corporation also paid income tax of $282,631, leaving a balance in the underwriting reserve of $1,507,119.


Donald Methuen Fleming: What was the position at December 31? Are those figures available?


John Horace Dickey: I am advised that they are just being prepared. The final figure for December 31, 1956 is not yet available but it should be available within the next few days.


Donald Methuen Fleming: What specifically caused the substantial losses in 1956? Were they all the result of Turkey's shortage of foreign exchange?


John Horace Dickey: It was principally blocked exchange in Turkey and Colombia.


Julian Harcourt Ferguson: Are you aware of the fact that all insurance companies in Canada must file their annual statements for the period up to the end of December by tomorrow? Yet this great, efficient corporation of the government is not going to have its statement in until three or four days later.


I wish every private corporation had that much leeway. That shows the efficiency of the government. This very government demands these figures from other insurance companies operating in Canada by the 28th day of February; yet they come in here and glibly say to the House of Commons that they will be ready three or four days later.


John Horace Dickey: As a matter of . fact the requirement applying to this corporation is March 31, 1957.


[Stage Direction]
Clause agreed to.
On clause 2-Deduction, for income tax, of credits to underwriting reserve.
Donald Methuen Fleming: I indicated when speaking on second reading that we would require on the part of the government ample justification for the proposed departure from the principle laid down by the government itself in 1952. This is the clause under which the corporation is now to be exempted from income tax until the underwriting reserve has been built up to a total of $5 million. I remind the house again that the principle was clearly laid down by the then minister of finance in 1952 that crown corporations designated as proprietary corporations, and up to that time exempt from income tax, should in future pay corporation income tax to the federal government in the same manner as any privately owned corporation.
All that the parliamentary assistant has been able to say to us by way of justification is that this corporation is engaged in insurance in a field where it is not competing directly with privately owned corporations. But, sir, that is not a sound basis of distinction. The government itself initiated the statutory designation of the Export Credits Insurance Corporation as one of the proprietary corporations under schedule D of the Financial Administration Act. That showed quite clearly their estimation of what should be the application of the principle laid down by Mr. Abbott in 1952 with respect to this particular corporation. If there is any justification for this departure from a sound principle recognized and accepted by the house then and ever since, we are interested in hearing it, but we have not heard any justification yet for this proposed departure.


John Horace Dickey: I can assure the committee that there is sound justification for this amendment, and that there is no attempt to derogate in any way from the principle laid down in 1952, which the hon. member was good enough to describe as a sound principle. The fact is that all private insurance companies are entitled under the Income Tax Act to set up reserves free of income tax. The purpose and effect of this clause is

simply to extend the same privilege to this company which, under the wording of the Income Tax Act, is not entitled to the privilege which is extended to other insurance companies. It is simply to place this company under the same requirements with respect to income tax and the setting up of reserves as those which apply to insurance companies generally under the legislation that is applicable to them.


Donald Methuen Fleming: That is an interesting statement. I point out that it is diametrically opposed to what the parliamentary assistant himself said just a few minutes ago on this very same subject. If there is ample opportunity afforded to private insurance corporations to set up comparable reserves and to enjoy exemption from income tax in respect of them, then I fail to see the necessity for special legislation such as is proposed in this particular clause. It is evident that the Export Credits Insurance Corporation, as a crown proprietary corporation, is entitled to all the benefits of the Income Tax Act, as is any private insurance company. We shall now need some explanation to reconcile two statements by the parliamentary assistant that are directly contradictory of each other.


John Horace Dickey: Mr. Chairman, I do not think there is any requirement for reconciliation. I think the hon. member and I both agreed that this was a matter that could best be fully discussed at the committee stage. But in my opening remarks I referred to the particular wording which the hon. member himself had quoted from the statement by the minister of finance in 1952, and I simply contented myself with pointing out to him the distinction which applies in this case but which is not the full explanation which has now been given to him. I assure the hon. member that the state of the law now is that the provisions of the Income Tax Act which permit private insurance companies to set up their reserves free of income tax-


James MacKerras Macdonnell: Has the parliamentary assistant the reference? Can he give us the clause which is referred to?


John Horace Dickey: I have not the act with me. I think it is section 87, but I am not sure. In any event, the Department of National Revenue have ruled that this exemption does not apply to this particular company, while it does apply to private companies. The purpose of this amendment is simply to put this corporation on an equal footing with other insurance companies, and to give them similar treatment with respect to income tax.
Export Credits Insurance Act


Jay Waldo Monteith: Does the parliamentary assistant mean that the usual reserve for unexpired premiums that is allowed in a private company would not be allowed in this particular corporation?


John Horace Dickey: No, Mr. Chairman. This is not a premium reserve. It is an underwriting reserve to cover possible losses and has nothing to do with a reserve such as that mentioned by my hon. friend. I presume you mean the reserve for unearned premiums?


Jay Waldo Monteith: Yes.


John Horace Dickey: No, this is not that type of reserve at all. It is simply the underwriting reserve which was originally established by the corporation as a reserve account and which in 1954 was set up by the amending bill that session as a statutory underwriting reserve with a maximum of $5 million.


Jay Waldo Monteith: Is it not true that the Department of National Revenue will allow this company to write off losses if, as and when they actually occur?


John Horace Dickey: Yes, that is correct. Losses of about $176,000, approximately, have been written off in that way.


Jay Waldo Monteith: Is it not also true that the Department of National Revenue, if you can show a risk account receivable-that you have a risk that you are going to face-will allow the corporation to set that up as a reserve, deductible for tax purposes the same as any account receivable in ordinary business if it is proved bad?


John Horace Dickey: I am advised that this corporation is not in a position to take advantage of that kind of an arrangement because of the long period of time over which a risk is carried and the fact that the loss may occur, for example, at the end of a five-year period of the policy. There is no way in which they can judge in the first year of the policy whether or not any reserve should be set up for that particular possibility of loss.


Jay Waldo Monteith: Mr. Chairman, in the
December 31, 1954, statement I notice at the back the analysis by countries of the actual risks underwritten during 1954. I notice $5,800,000, approximately, to Turkey. Is it part of that amount that it is now being proposed to take care of?


John Horace Dickey: Yes. At least part of these risks is included in the payments that have been made this year under the loss payments.


Jay Waldo Monteith: You paid out $1,479,000, not necessarily all of it applying to Turkey. But has the balance from Turkey been collected?

Export Credits Insurance Act


John Horace Dickey: No. So far there has been no recovery under the loss payments in respect of Turkish risks.


Daniel Roland Michener: Before we call it six o'clock, Mr. Chairman, I should like to get one point clear. I understood the parliamentary assistant to say that the corporation was now in a worse position than is a private insurance company. As I read section 2, it seems to me that it will put the corporation in a better position than a private company, in that it may credit to the underwriting reserve any amount it wishes to credit to that reserve and that amount will all be tax deductible. Certainly that is a privilege no private insurance corporation would have. In other words, the discretion as to how much will be tax deductible is left entirely with the corporation. I should like to know whether the amendment does not put the corporation in a better position than the private company.


John Horace Dickey: Section 11 (a) of the act of incorporation requires the corporation to credit to the underwriting reserve the entire excess of its revenues over its disbursements in a fiscal year. Hence the corporation has no discretion at all. It is required by statute to credit the entire excess to the underwriting reserve until the underwriting reserve reaches the maximum set out in the statute which is $5 million. There is no possibility of the corporation exercising any discretion

with respect to that matter. It all has to go into the underwriting reserve.


Daniel Roland Michener: Perhaps before resumption of discussion of this matter the parliamentary assistant would consider what the answer would be to the question whether that does not put this corporation in a better position, taxwise, than the private corporation.


Edward Turney Applewhaite: It being six o'clock, I do now leave the chair.


Donald Methuen Fleming: Before you rise, Mr. Chairman, may I ask the parliamentary assistant when the committee next sits on this bill, to bring to the committee the ruling of the Department of National Revenue to which he referred.
Progress reported.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we shall continue with this debate; then take the bill with respect to the sockeye salmon fisheries in the Fraser river system; then second reading of the Merchant Seamen Compensation Act; and then, Mr. Speaker, go into supply and take the estimates of the Post Office Department.


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

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


[Stage Direction]
Question No. 171*-Mr. Balcom:
1.	What is the total working force of Canada?
2.	Of these workers how many are covered by unemployment insurance?
Answer by: Hon. Milton F. Gregg (Minister of Labour):
1.	Total paid workers October 20, 1956- 4,583,000.
2.	Workers covered by unemployment insurance as at October 31, 1956-3,647,000.

Mr. Balcom: What have been the annual maintenance costs of the national harbours board. Halifax, for the years 1954, 1955 and 1956?
Questions
Answer by: Hon. George C. Marler (Minister of Transport):
1954		 $241,400.69
1955		 $314,567.58
1956		 $310,863.53



AMMUNITION WORKERS, RENOUS, N.B.

Mr. Knowles: 1.	Has a committee been established for the purpose of reviewing the present arrangements for determining wages for ammunition workers at Renous, New Brunswick?
2.	If so, has such committee visited Renous, and when?
3.	Has such committee visited any other ammunition depots in Canada? If so, which depots, and when?
4.	Has such committee finished its work and/or has it made a report? If so, what are the terms of such report?
Answer by:	Mr. Hellyer, Parliamentary
Assistant, for the Minister of National Defence:
1.	Yes.
2.	Yes, in January, 1957.
3.	Yes, the naval ammunition depot at Kamloops, B.C., in January, 1957.
4.	No.

Thursday, February 28, 1957