1957-03-14

COMMITTEES OF THE HOUSE


[Stage Direction]
Mr. W. J. Henderson (Kingston) presented the eighth and ninth reports of the standing committee on miscellaneous private bills, and moved that the ninth report be concurred in.
Motion agreed to.
Second report of standing committee on agriculture and colonization.-Mr. Jutras.


Hon. Paul Martin (Minister of National Health and Welfare) moved: the first reading of Bill No. 239 (from the Senate), to provide for the control of narcotic drugs.
Motion agreed to and bill read the first time.



POULTRY


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On the orders of the day:
Mr. J. A. Charlton (Branl-Haldimand):: Mr. Speaker, I should like to ask the Minister of Agriculture a question. Is the minister aware that a Canadian company is importing from the United States turkeys packaged under a Canadian brand name?


Right Hon. J. G. Gardiner (Minister of Agriculture):: No, Mr. Speaker, I was not aware of that. I will make inquiry.


John Alpheus Charlton: Does the minister not think it is about time our Canadian producers were given some kind of protection from schemes of this kind?


James Garfield Gardiner: Mr. Speaker, I shall have to find out whether or not there is any such scheme.



INCOME TAX


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On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct to the Minister of Finance a question based on a 82715-138
Canadian Press dispatch in this morning's Toronto Globe and Mail. Will the minister do something about the income tax provision which has denied a taxpayer deductibility for the remuneration paid to a full-time attendant for his wife because his wife was necessarily confined for the full twelve months of the taxation year to a bed and a rocking chair rather than to a bed and a wheel-chair?


Hon. W. E. Harris (Minister of Finance):: Mr. Speaker, I shall look at the report, I hope, before eight o'clock tonight.


Stanley Howard Knowles: Thank you.



T-4 SLIPS-STATEMENT AS TO DEADLINE DATE AND PENALTY

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On the orders of the day:
Hon. J. J. McCann (Minister of National Revenue):: Mr. Speaker, yesterday the hon. member for Winnipeg North Centre asked the following question:
By what date are employers required to furnish T-4 slips to their employees, and what penalty is there in the case of any employer who does not meet the deadline?
Under section 209 of the income tax regulations every person required to file a return referred to in section 200 of the regulations shall forward to each taxpayer, in respect of whose income the return relates, two copies of the portion of the return relating to such taxpayer by the last day of February following the end of the calendar year in which the income was earned. They may be delivered to him in person or they may be sent to his last known address.
Section 129 of the Income Tax Act provides that every person who has failed to make a return as and when required by regulation is liable to a penalty of $10 a day for each day of default, but not exceeding in all $2,500.


Stanley Howard Knowles: May I ask a supplementary question. In the case of employees of the Canadian Pacific Railway in Winnipeg who have not received their T-4 slips, or who had not done so up to a few days ago, will they be given an extension of time for filing their returns equivalent to the delay by the C.P.R. in giving them their T-4 slips?


James Joseph McCann: Mr. Speaker, the answer is no. They are not required to make a return until the end of April, and they have approximately six weeks from now in which to do so.

Inquiries of the Ministry BROADCASTING



INQUIRY AS TO REPORT OF ROYAL COMMISSION

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On the orders of the day:
Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, may I ask the Prime Minister if he will comment on the accuracy of today's press report that the report of the royal commission on broadcasting is expected to be tabled in this house about March 28?


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, no specific date has come to my knowledge from anyone in authority with that royal commission. I was told some few days ago that the report and the printing thereof were nearing completion, but I was given no more specific information than that.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Colin Cameron (Nanaimo):: Mr. Speaker, I should like to direct a question to the Minister of Citizenship and Immigration. Has the minister's attention been called to a letter, appearing in this morning's Globe and Mail and signed by one J. W. Pickersgill, in which reference is made to "travel documents"? If he has not already done so, will the minister contact the writer of the letter to ascertain the meaning of the term "travel documents", as on March 7 he informed the house that he did not know the meaning of the term?


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: Mr. Speaker, I regret to say that I have not seen the letter referred to in the Globe and Mail. I had heard that a certain J. W. Pickersgill had sent a letter to the Globe and Mail, but I have not yet seen the paper in which it appeared. I might add, sir, that I know perfectly well what I mean by "travel documents". What I said the other day, if my memory serves me, was that I did not know what the hon. gentleman meant by "travel documents".



NATIONAL DEFENCE


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On the orders of the day:
Mr. J. G. Diefenbaker (Leader of fhe Opposition):: The other day I asked the Prime Minister as to the situation relative to Canadian troops in the Middle East, and in particular the last contingent that was en route to Naples, as announced by him. I should


like to ask the Prime Minister, in anticipation of the debate tomorrow so the information will be available, whether or not Nasser has removed his veto on the use of Canadian troops in the United Nations emergency force, something the Prime Minister was going to ascertain and was unable to answer the other day.


Louis Stephen St-Laurent: I have no knowledge that Nasser imposed any veto on the addition to Canadian troops in the United Nations force. I have not seen the dispatches that may have come in overnight. We were meeting in council until rather late after the noon hour today, but I am sure if there is any information it will be supplied by the Secretary of State for External Affairs when he opens the debate tomorrow.


John George Diefenbaker: Yes, but would the Prime Minister say where the last contingent of Canadians, which left ostensibly for Naples, is now located? Is it still in Naples or has it gone beyond Naples? Possibly that question could be answered by one of the ministers.


Hon. R. O. Campney (Minister of National Defence):: The reconnaissance contingent, as I said the other day, was to go over in three flights. The first flight has arrived at Naples; the second flight was at Gander this morning, having been grounded by bad weather. I understand that the third flight left Uplands this morning.


John George Diefenbaker: Possibly the minister will be able to answer the question as to whether or not they are to be made immediately available to the United Nations force, or what is their destination?


Ralph Osborne Campney: When the troops arrive at Naples they come under the jurisdiction of the United Nations.


John George Diefenbaker: Does the minister know whether or not they are going to be made available to the force?


An hon. Member:: They are available.


John George Diefenbaker: Does he know what their role with the United Nations is to be? After all, he is in charge of the Canadian forces and he should be able to tell the house what their destination is. Is he unable to answer?


Ralph Osborne Campney: I am able to answer. I made it very clear the other day, I think on Tuesday, that when we send our troops over to the staging base at Naples they become part of the United Nations emergency force. From then on, the time and place with respect to their movements are under the commander in chief of that force.


Mr. G. R. Pearkes (Esquimall-Saanich):: May I ask a supplementary question. Are there any qualifications as to the handing over to the United Nations commander? Are there any restrictions or qualifications, or are they handed over entirely?


Ralph Osborne Campney: There are no restrictions or qualifications to my knowledge. They become part of the United Nations emergency force and subject to the direction of the commander in chief of that force.



SOUTH KOREA


[Stage Direction]
On the orders of the day:
Mr. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I should like to address a question to the Minister of National Defence. Under whose jurisdiction is the Canadian contingent now serving in Korea?


Ralph Osborne Campney: The small contingent still in Korea is under the United Nations as part of the commonwealth forces that still remain there. I think 20-odd medical personnel are all now serving in Korea and they form a small medical unit.


Gordon Minto Churchill: That constitutes another United Nations force, does it?


Ralph Osborne Campney: Yes; I think it is still a United Nations force, as it has been for a good many years.



FINANCE


[Stage Direction]
On the orders of the day:
Colin Cameron: I should like to direct a question to the Minister of Finance. Can the minister tell the house if he agrees with the statement appearing on page 32 of the report of the governor of the Bank of Canada that loans by governments to favoured borrowers financed from other sources than increased taxation would insulate such favoured borrowers from competition in the money market, but would render more intense the competition for remaining funds and thus cause interest rates to rise?


Walter Edward Harris: Mr. Speaker, I think the answer to the question ought to be the one I gave the other day to a question about another extract from the report, and that is that I could not be expected to agree with the whole of such a long report.
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Inquiries of the Ministry HOUSING



CENTRAL MORTGAGE AND HOUSING


[Stage Direction]
On the orders of the day:
Mr. Erhari Regier (Burnaby-Coquitlam):: Mr. Speaker, in the absence of the Minister of Public Works I should like to ask a question of the Minister of Finance. I assume he has noticed the report of the president of Central Mortgage and Housing Corporation that $200 million could be easily made available for housing if the green light were given by the government. When may we expect an early green light so this money might become available?


Walter Edward Harris: I did notice the report, Mr. Speaker, but I do not think I ought to comment on it at the moment.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough):: Mr. Speaker, I should like to address a question to the Minister of National Revenue. I have not given him notice of the question, but he may take this as notice. Has the minister received any letters or complaints about the Canadian Broadcasting Corporation television presentation "Perspective" which was presented on Sunday afternoon, February 10, and which gave the impression of trying to break down all respect for law enforcement? I ask the question because I have had a number of letters on it.


James Joseph McCann: Mr. Speaker, to my personal knowledge no letters have been received. However, I will inquire from the Canadian Broadcasting Corporation, since most of such correspondence is directed to it.



INQUIRY AS TO FURTHER IMPORTATION FROM NEW ZEALAND

[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. Can the minister tell us whether or not the government is contemplating allowing the importation of any more cheese from New Zealand in the foreseeable future?

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Right Hon. C. D. Howe (Minister of Trade
and Commerce): No, sir. We have received no suggestions that imports are desirable. We are not expecting imports from New Zealand.



PRAIRIE GRAIN PRODUCERS INTERIM FINANCING


[Stage Direction]
The house resumed, from Wednesday, March 13, consideration in committee of the following resolution-Mr. Howe (Port Arthur)-Mr. Robinson (Simcoe East) in the chair:
That it is expedient to introduce a measure to amend the Prairie Grain Producers Interim Financing Act, 1956 to enable the governor in council to extend the application of the act to authorize and govern guaranteed loans that may be made by banks in the period September 1, 1957 to June 1, 1958; to provide that the rate of interest charged by the banks on a loan shall not exceed a rate prescribed by the governor in council; and to increase the maximum amount of a loan from fifteen hundred dollars to three thousand dollars.
John George Diefenbaker: Mr. Chairman, the
amendments that are provided for in the resolution now before this committee were set forth yesterday by the Minister of Trade and Commerce in these words as reported at page 2161 of Hansard:
.	.	. that the maximum amount of loan to an
individual producer be raised from $1,500 to $3,000; second, that the rate of interest, which is 5 per cent at present, be left to the determination of the governor in council; and loans be extended by one month by moving the opening date forward from October 1 to September 1.
That in general represents the changes that are to be made when the bill is brought before the house. I believe that what is being done here represents a complete disregard of the wishes and requirements of all western farm organizations and of farmers throughout western Canada.
I am not going to refer to the several resolutions that have been passed by western farm organizations, because they have already been placed on the record and need not be repeated. However, I summarize them in effect by saying that all farm organizations in the prairie provinces have demanded cash advances, that in no case has there been the acceptance in whole or in part of a system such as is contemplated by this resolution, which continues the legislation passed last year.
The general attitude taken by farmers everywhere is that because of the fact that the wheat board is the sole purchaser of their wheat, the inability to market it is not their responsibility and therefore there is no reason why they should be denied their cash

advances as asked for. They deny particularly and categorically that they should be required to pay interest on what in effect is their income for the current year.
For several years we in this party have been supporting the need for cash advances. In 1952, as reported in Hansard for December 17 of that year, Hon. George Drew, then leader of the opposition, supported an amendment which had been moved recommending legislation providing for the payment to producers in respect of farm-stored grain of an advance equal to 75 per cent of the initial price established at August 1 in each crop year. Our only change over the passing years has been that while 75 per cent was the amount asked for at that time, the demand since has been generally that 50 per cent should be advanced. That demand has been universal, and in the face of that demand the bringing in of a loan system again is a denial of the wishes of farmers everywhere.
The last example, an epitome of the demands of farmers, was brought to the attention of the cabinet and members in all parts of this house by the council of farm unions, who demanded that as a matter of policy that cash advances be provided for. Two or three weeks ago when I was in Prince Albert I met with representatives of labour and agriculture.
The major demand made by them was that such a system should be brought into effect. It is recommended by the Gordon commission; it is demanded by various farm organizations other than the farm union; it is something which can be brought into effect without the possibility of loss, for there is only one market in which the farmer can sell his wheat. Last year when the matter was before the house we pointed out the general situation and the demand that had been made, and as far as I am concerned I am not going to repeat the arguments then advanced.
I summarize our attitude toward this resolution and the bill to be founded thereon as follows. What is being given to the farmer is a stone when he is asking for bread, and what is being provided under this resolution is something unwanted by the farmer, something totally ineffective to meet his needs, and something which in effect will be inoperative, as was the legislation to a large extent during the past year.
Last year when we discussed this matter there were all manner of excuses advanced by the minister as to why cash advances should not be substituted in favour of this general plan of farm loans upon which the farmer will pay interest. One of the major objections was that if such a plan were brought into

effect the members of the wheat board would resign. That was the answer given by the minister; that was the basic reason given why the general demand of the farmers could not be met. In the light of answers given subsequently to questions asked, that alibi of the Minister of Trade and Commerce has been proved to be without foundation. When that statement was made by the minister hon. members of this house actually concluded that the minister had been in communication with members of the wheat board. As reported on page 992 of Hansard for February 8. 1956, I asked this question:
1.	Did the chairman or any members of the wheat board notify the government at any time since July 1, 1955, that they would resign within a matter of days if loans on farm-stored wheat were brought into effect? If so, which of them did so?
That question embodied the statement that had been made by the minister. My question continued:
2.	What was the date or dates of said notifications and were same given verbally or in writing?
The answer by the Minister of Trade and Commerce was as follows:
1.	No.
2.	Answered by 1 above.
Then to overcome the possibility that some time the minister might say that question did not cover the statement he had made I asked a further question, as reported at page 1096 of Hansard for February 10, 1956, as follows:
1. Did the chairman or any members of the wheat board notify the government at any time since July 1, 1955, that they would resign within a matter of days if cash advances on farm-stored wheat were brought into effect?
The minister answered that question with a categorical "No". In other words, the basis of the opposition last year by the minister was that the wheat board would resign. There was no ground for that statement; it was a meaningless evasion of the situation and a denial of the demands of the farmers by an excuse which in the light of questions subsequently asked was proved to be entirely incorrect.
I have said before that the farmer demands action in this regard. The situation today in western Canada is that on every hand the farmers are pleading for cash.
In many parts they are unable to market their wheat. I do not have the exact figures available, but at approximately one-third of the marketing points the quota is 2 bushels an acre. Last year the farmers were promised that in those areas that had suffered discrimination in 1955-56 the situation would be remedied and larger quotas would be made available. In many cases such is not the fact.
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The first argument was that the wheat board would resign if cash advances were instituted. That was not true. The second argument was that there was a possible danger of loss. That argument is totally ineffectual, for the reason that there is no quota except for recognized farmers and each farmer has his quota book. The third argument was that it was not generally demanded. That argument was refuted at the time by bringing to the attention of the committee and the house resolutions passed in every part of western Canada.
The same situation prevails today. Without exception among the wheat pools, among the farmers' unions, among the members of the federation of agriculture, what they demand is cash advances. Here the farmers find themselves once more handed a proposition requiring them to pay interest on their earnings. I should like to know what would happen in this country if the government were unable to dispose of the product of the people who labour to produce it and were therefore unable to pay them their just due. What would happen if these people, in place of the payment to which they were entitled, were given the opportunity to go to the bank, get an advance and pay interest on what they had rightfully earned?
In addition to the general objection, there is also the further objection this year that instead of the interest rate being properly placed before the house and the country it is left with the uncertainty of fixation at some time in the future. While I realize that interest rates in general have been rising by reason of the actions of the government, nonetheless there can be no justification for any additional interest rate being paid by farmers on such advances. There was no justification for interest being paid in the first place, and there is no justification for an additional amount being paid.
Those in general summarize the arguments that we in this party have advanced through the hon. member for Calgary North and the hon. member for Brandon-Souris. They represent the stand we have taken since 1952. We believe that the only salvation for the western farmer, with his markets lost and his wheat therefore unmarketable, is that there should be cash advances. Second, we believe that every encouragement should be given to the farmer to provide his own storage, and that in the provision of such storage additional write-offs should be permitted when determining the amount of his income tax. We believe that under proper circumstances there should be provision for cash advances on farm-stored grain similar to the system in effect in the United States.

Grain
Those in general represent the stands taken by the official opposition. Repeating those stands is entirely unnecessary. Summarized, our attitude is that this is another makeshift, another postponement of effective action. This is another delaying action. The farmers today are asking for justice. They are not asking for measures such as this, which simply postpone the day when effective action must and will be taken.


Mr. Nicholson:: Mr. Chairman, I am sure that members who are concerned with the wheat economy of Canada are greatly disappointed that this legislation is the best the Minister of Trade and Commerce can present to the parliament of Canada at this time. Although there are about 200,000 wheat farmers interested in the legislation, the minister stated yesterday that limited use has been made of the facilities available under the act. The hon. member for Kindersley pointed out that the maximum number was 15,370. That is well below 10 per cent of the people in the area.
A year ago when we were discussing this matter members who were opposing the legislation stated that the fact that very few people would go to the banks to borrow money on their own grain would not indicate that the farmers involved were not in very difficult circumstances. The farmers have learned through bitter experience that they are not going to be able to borrow themselves out of trouble. The minister also pointed out that the volume of loans was less than $4 million. What a trickle that is when one considers the tremendous amount of money that has gone into production of wheat that is still on the farms and in country elevators in western Canada. The hon. member for Kindersley pointed out that the program to date has not cost the government of Canada a 5-cent piece and has not cost the banks anything. At the end of September, 1956, the amount outstanding was $140,000.
I admit that the minister has us at a bit of a disadvantage today, in that the leaders of the farm organizations apparently have come down on the minister's side. The minister said yesterday, as found at page 2161 of Hansard:
May I say, Mr. Chairman, that I have seldom brought before the house a bill which is unanimously recommended by every farm organization, but I think I can say this about the bill referred to in this motion. The three wheat pools, the Canadian federation of agriculture, the United Farmers and a great number of local organizations have asked that this bill be passed and have asked in the exact terms in which the bill has been drafted. I therefore think that hon. members will find it very simple indeed to accept this motion of the government without extended and involved debate.
My colleague the hon. member for Hum-boldt-Melfort pointed out that we are not

the servants of the wheat pool, the federation of agriculture or any of these other organizations, but are the elected representatives of the people in our various constituencies. I admit very frankly that on occasions we have found it most useful to use the opinions of these farm organizations in support of our claims, but the fact that apparently they are not concerned about this problem is not going to result in our failing to do our duty.
I have read with a good deal of care the submission of the Canadian Federation of Agriculture to the members of the cabinet on February 15 of this year. I have read and reread the section on grain and grain marketing, and I confess frankly that it is very difficult for me to understand why a farm organization would take the time to send representatives to the capital of Canada to discuss this most important matter without putting forward some of the fundamental problems and making some suggestions.
They are for the wheat board. Who is against the wheat board? Surely they did not need to come to Ottawa to say they were for the wheat board. They would like the board to be the sole marketing agency for grain in western Canada, including flax and rye. A great many people are in favour of that, but the government is not prepared to act in any great hurry.
The farmers want to do away with speculative futures for oats and barley. They would like the price for 1957-58 to be not less than the price last year. They would like to have extended storage facilities. They would like to have the bushel system discarded and to have it replaced by the hundredweight system. They would like to do something about eastern grain standards. But in the same brief they devote about as much space to the question of income tax and succession duties. I submit that no farm organization can have it both ways. They cannot argue that their industry is in a jam and then make representations that would cost the treasury so much money.
Their first proposal is to exempt estates up to $50,000. My information is that this first proposal would cost the treasury of Canada between $8 million and $10 million. Then they would like to have another $25,000 made available to the surviving spouse, which would cost another $2,500,000. In view of the fact that no farm organization that I know of in my constituency has ever become excited about the people in this category, I wonder why a farm delegation devotes so much time to getting this sort of burden placed on the taxpayers.
I have done a calculation on the position of a widow whose husband left an estate of

$100,000. It would appear that if she were the sole survivor there would be $11,760 paid as succession duties under prevailing rates. The federation of agriculture would like to have this changed so her tax would be reduced to either $2,500 or $3,700. It was not too clear exactly what they meant. But in either case I do not think there are many farmers in the prairie provinces who are excited about a poor widow who is left $100,000 who is going to have to pay $11,720 in succession duties to the treasury of Canada, or whether we should give her relief and reduce this amount to $2,500 or $3,700.
So, Mr. Chairman, in spite of the representations made by the federation of agriculture,
I maintain that the wheat farmers of Canada are facing the most serious crisis in Canadian history. We have had some discussions from time to time about the position of the farmers in the thirties. With the exception of 1932 and 1933 the farmers' share of the national income now is smaller than the farmers' share was between 1930 and 1940. The people of Canada cannot afford to see this important Canadian industry pushed to the wall and forced into bankruptcy, which will be the inevitable consequence if something is not done.
I think we should not be talking in terms of reducing production and abandoning markets. I wish the Minister of Trade and Commerce, in dealing with this responsibility of his, would exercise the same imagination he uses in connection with his responsibility as the minister in charge of T.C.A. I have read with interest the annual report that he made available yesterday. He has authorized the purchase of some 20 Vickers Vanguards, I believe, at a cost of over $5 million a plane. I read that these planes will carry 120 passengers. They will fly from Montreal to the United Kingdom and back every day if necessary. They will fly from Toronto to Vancouver and back twice every day. It is hard to figure out how we can spend $5 million for one plane and yet, according to the minister's evidence loan less than $4 million this year. All he could do to help the farmers meet the competition in their wheat marketing at the present time was to guarantee to the banks that they will not lose anything on loans.
The Minister of Agriculture is responsible for an interesting publication entitled Agriculture Abroad. I am glad the Minister of Agriculture is here in the chamber as well as the Minister of Trade and Commerce. This February number contains interesting comments on agriculture in Argentina, Australia, Belgium, Czechoslovakia, Denmark, Italy, the United Kingdom and the United States. I will not have time to refer to the reports on
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all these countries, but I want to point out that each one is using substantial amounts of public funds to bolster their agriculture economy. Yet our Canadian farmers are being given only the assistance which this legislation proposes, nothing from the federal treasury, but an opportunity to continue borrowing from the chartered banks for about 15,000 people, far less than 10 per cent of all the farmers. The average loan in the first period was $764.45; the average loan in the second period was $694.87. That is a mere drop in the bucket in contrast with the cost of production.
The first section in this publication Agriculture Abroad deals with Argentina. As a part of their program to assist their farmers they are increasing the storage capacity for wheat by about 202 million tons. If the government of Canada were prepared to embark on a program of terminal elevator construction instead of putting so much of our total resources into industrial expansion, it would be possible for more of our farmers to be able to market their grain.
In Austrialia they have been able to sign a new wheat agreement with the United Kingdom, and they have set up a fund under the commonwealth stabilization act. The cost of production in Australia is a factor, and they are introducing a two-price system, one price for local consumption and one price for the wheat that is to go into the world market.
As to Belgium, it is pointed out in Agriculture Abroad:
The farmers point out that when industrial firms are forced, through increased costs, to raise the selling price of their products, there is no outcry in the press, as this is found to be normal business procedure. However, when farmers find themselves in a similar situation and propose increasing their prices to compensate, they find almost the entire press, and public opinion in general, opposed to them.
Belgium has had a program to see that the farmers who remain on the farm get a larger share of the consumer dollar.
With regard to Italy we find this:
The system under which part of the wheat crop is compulsorily collected continued during the year. The price of the wheat to be handed over is fixed by the state in relation to production costs. This tends to ensure a fair profit for the farmers, and at the same time has a regularizing effect on the market for processed products such as pasta and semolina ...	.
Effective next year, the government has decided to reduce the amount of wheat for compulsory delivery to the state collecting pools . . .
In an effort to encourage farmers to store wheat on home farms, the government also decided to increase by 50 lire a quintal (2.1 cents per bushel) per month the price to be paid farmers for that portion of their wheat subject to compulsory pooling .	.	. Prior to the above-mentioned increase, the prices paid ranged from $3.25 to $3.55 per bushel for Durum and from $2.95 to $3.15 for soft wheat.

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If the government of Italy is putting into the pockets of the Italian farmer 2 cents per bushel per month for every bushel the farmer stores, and pays him an initial price ranging from $3.25 to $3.55 regardless of the world price of wheat, what a hopeless position our farmers find themselves in when this government refuses to spend a 5 cent piece to get money into the pockets of the farmers to enable them to meet their operating costs. The only course open to the farmers now is to go to the banks and pay a rate of interest that is a good deal higher than they paid before.
In the United Kingdom I find that the guaranteed price for any given commodity each year will not be less than 96 per cent of the price in the previous year. May I draw these figures to the attention of the committee. The value of the guarantees and production grants is at present $3,082 million and is to be maintained at not less than 97 i per cent of the total value of guarantees for the preceding year. Provision will be made for special price review in the event of sudden cost changes. In order to improve efficiency, they are voting another $134 million. How can Canadian farmers compete in the United Kingdom markets when the United Kingdom is using public funds to the extent of $3,082 million in price supports for the year.
Coming to the United States, where we have our real competition, we find that following four years of decline, net farm income rose in 1956 by some 4 per cent to reach $11.7 billion. Here is what is happening. As a result of having public funds available and government aids for export, agricultural exports during 1956 are estimated to have exceeded $4.1 billion, an increase of some $600 million or 30 per cent over the previous year. In the latter part of the year the export programs of the government were accelerated and accounted for a major share of the export activities.
Of the $4 billion worth of agricultural products exported, more than $1.6 billion or 40 per cent were exported under government disposal programs. The best customers for United States farm exports were Japan, United Kingdom, Canada, West Germany and the Netherlands. Canada placed third in the list of importers of United States products. Our Canadian farmers are meeting competition from the United States treasury on 40 per cent of their total exports and our Minister of Trade and Commerce, who is responsible for the operations of the wheat board, has the nerve to come to parliament in 1957 and offer this proposal as the very best that the treasury of Canada can do for this important industry.

Under public bill No. 480, in 1956 United States exports exceeded 4.5 million metric tons valued at over $550 million. Under the title P. L. 480, emergency and famine relief fund, agricultural commodities to the value of $98 million were exported, and close to $400 million has been expended for the procurement of agricultural exports under section 402 of the mutual security act.
Then this document says that during the year negotiations were concluded with India for the largest transaction ever undertaken under the title of P. L. 480. India is one of our former customers and a member of the commonwealth, but has just concluded with the United States the largest transaction in history, including a very large quantity of wheat. It is going to require 400 ships to move these commodities which are to be delivered over a period of three years. The second largest transaction was with Brazil. This agreement provides for the sale of $138.7 million, including certain ocean transportation costs, worth of agricultural commodities, of which $111 million will be wheat and flour.
On January 5 of this year the United States department of commerce announced that consideration would be given to applications for licences to export surplus agricultural commodities to Poland for United States dollars at world market prices. This change of policy applies, at the moment, only to sales for dollars. The policy regarding credit sales, barter, sales under P. L. 480, and donations to Poland by the commodity credit corporation is unchanged.
Another interesting part of their program to help the dairy farmer and agriculture in general has been in connection with the school lunch program. During the current fiscal year the United States made $100 million available for this program. They do require that state and local governments provide $4 for every dollar provided by the federal government for the purchase of farm and food products under this program. During 1956 purchases under the program included hamburger, lard, pork, eggs and turkeys, none of which is under price support. The government expended about $48 million to bolster prices of these products.
So, Mr. Chairman, a very discouraging picture is presented to the Canadian farmer. He is obliged to buy in the highest priced market in the world and he is forced to sell his products in competition with other countries every one of which is subsidizing in some way or other the production of food products.
I think the Minister of Trade and Commerce has a responsibility to come out to the prairie provinces before the summer is over and go

into the constituencies of some of the Liberal members who, incidentally have not had a word to say since this debate opened yesterday. I am sure the minister will find it difficult to convince the western farmer that he is so prosperous he is able to have a new car, a year's crop in the granary, all his debts paid and not a thing to worry about. I am sure the Minister of Agriculture will certainly not come up into the Mackenzie constituency and suggest that the farmers have been forced to sell their aeroplanes in order to get a little cash.
The position of the grain farmer is very critical. The fact that in my constituency during the last five years we have lost nearly 5,000 people, about 10 per cent of our population, when the over-all population in Canada has been increasing by nearly 15 per cent, shows that there is nothing wrong with the country except that the farmer cannot possibly continue to buy where prices are so high and sell at such low prices.
When I was home recently I called on one of the larger farm operators. A year ago the Minister of Trade and Commerce suggested that some of the men on smaller farms might have been having a little trouble but that the men on larger farms were in a very comfortable position. Well, I called on a man on one of the largest farms, consisting of two Sections of very good land. This man has established a reputation as a registered seed grower. He has sold a great deal of registered grass seed. He has a large dairy herd, but he just finds it impossible to get men who will work on the farm for the current wages. His eldest son is working in the Saskatchewan oil fields, while the second and third boys are going to school. They start milking at 5.30 every morning and they milk 13 cows. The milk is taken to town some seven miles away, on their way to school and then the boys repeat the same performance after school.
One of the boys is in his last year at high school. When his brother was home at Christmas time and told about the fabulous wages he makes in the oil fields, he said, "What is the use of continuing in high school; what is the use of staying on the farm?" There certainly must be something wrong when these two fine young Canadian boys decide not to stay on one of the finest farms in northern Saskatchewan where, if the farmer was getting anything like a decent break, they could look forward to a very interesting life.
Instead of bringing in legislation of this sort the minister should indicate that Canada wants to stay in the business of producing food for the hungry people of the world. I think it is a great reflection on our modern 82715-139
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society when, in a crisis like this, with half the people of the world going hungry, Canada is unwilling to lend support to the establishment of a world food bank.
I was interested in reading the minutes of the meeting of the economic and social council of the United Nations held in Geneva on July 11 and 12 last. The food and agriculture organization made representations to the United Nations to again carry on a study with a view to establishing a world food bank. I find that the Chinese delegate pointed out that 2,000 years ago China had embarked on a program with a view to building up reserves to prevent food prices from falling too low when harvests were good, and keeping them down in times of scarcity. This delegate seemed to be all for it, and the delegates from the Netherlands, from Pakistan and from Yugoslavia all spoke in the same vein regarding the world situation. Sixty-two per cent of the world's food was being produced by the industrial countries, but though there are surpluses in some parts of the world, in the underdeveloped countries, where consumption represented 21 per cent of total consumption before the war, they had been forced to reduce their percentage to 19 per cent. But, Mr. Chairman, I was disturbed to find that the Canadian delegate, the parliamentary assistant to the Secretary of State for External Affairs, stressed the obstacles in the way. There are real problems, but I think with such a large number of competent farmers available, with so much good land in the country, we should be willing to undertake some difficult assignments.
Rather than come to parliament in the year 1957 with legislation that offers so little to the wheat producers of our country, I believe the minister should be giving the wheat board some encouragement by indicating that Canada will continue to produce maximum quantities of food, and wheat in particular, since this commodity can be stored very easily. The wheat which was stored at Churchill for the entire war period was available nearly 10 years later in as good condition as when it left the farm, and we have large areas in Canada-


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


Mr. Shaw:: Mr. Chairman, yesterday my colleagues the hon. member for Battle River -Camrose and the hon. member for Acadia laid before the committee our views with respect to the legislation before us at the present time. For that reason I shall make my remarks particularly brief. While I realize, of

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course, that possibly one could travel far afield under a resolution of this kind, I shall not do so.
Last year when this program of interim financing first became known to the Canadian public, more particularly to the Canadian farmers, I was not privileged to be here in the house and was thus unable to either hear the debates or participate in them. However, the circumstances which caused me to be absent, on the other hand, put me within easy earshot of the farmers who were to be most vitally affected by this legislation.
It was rather amazing to me to find how instantaneous the response was, and it was also very interesting to me to find that the general attitude was very much in opposition to the proposed legislation. In fact the feeling was so strong that within a very short period of time protest meetings were called by the farmers themselves. I was not able to attend any of those protest meetings; therefore it could not be said that I may have been responsible for stirring them up.
However, I did secure reports in regard to the meetings, and this is what I discovered. Farmers themselves felt convinced that this offered no solution whatsoever to the major problem confronting the agricultural industry. They regarded it as a temporary expedient. They used the word "palliative". They also felt strongly that it offered no hope of assisting those most in need of assistance. They felt at that time that those farmers who could not secure loans without this legislation and the government guarantee could not secure it, or would not be able to secure it, after the legislation had become effective.
Time has proven that in their attitude at that time they were right, Mr. Chairman, because throughout the past year, under the operation of this act, they have come to the very definite conclusion that it is no solution; that it is nothing but an expedient; that it will not help those who are in dire need of help and, in a sense, it is something they could have got along very well without.
Only very recently I had another opportunity of discussing with certain farmers in my own area the present attitude with respect to the whole situation, and their attitude with respect to the proposal now before us. In the first place they said to me, "If we could not secure the $1,500, or any part of it, what good will $3,000 be to us? It will be worthless." Then, of course, they emphasized the fact that about the easiest thing anyone could do is to go into debt, and that is not what they wanted to do, particularly when they had the asset on their own farms which, If they could sell it, would result in there 
being no necessity for borrowing. That view is a very strong view and it was extremely prevalent.
They asked me about the proposed interest rate under this amendment to the Prairie Grain Producers Interim Financing Act of 1956. I said, "I do not know and I doubt if any other member of parliament knows except the Minister of Trade and Commerce unless he has intimated to his colleagues what the government would do". I said to those farmers, "If it was going to be less than 5 per cent the minister certainly would put it in this legislation". Psychologically that would seem natural. If it were going to remain at 5 per cent there would be no need of making reference to the interest aspect of the act. I told them that I could only conclude that it was going up; how far up, I did not know. Some might say to the maximum of 6 per cent now allowable to the banks, but when governments do things you cannot always count on their being governed by regulations which govern the activities of others and I told them I could not see anything to prevent them making it considerably higher than the 6 per cent which is allowable to other institutions today.
I said a moment ago, Mr. Chairman, a very unhappy situation prevails for a farmer who has assets which one would expect to be saleable, assets of good quality which are certainly required desperately by people in other places, to have to sit there putting up lots of money to create his own storage and then having to turn around and borrow and pay interest. The interest of course reduces the already low price which his product would normally command.
I saw an interesting sight the other day. A farmer who is not what I would call a large operator but one who is operating what I would describe as an economic unit told me he had to build 24 granaries. I would say off hand they were possibly ten feet by ten feet and possibly eight feet in height. In addition he had to build one quonset-type granary and all of this was done in order to hold the grain he has. We do not even have to guess in order to ascertain how much that farmer has had to put out in order to provide that storage. He asked, "What about next year"? He may well be confronted with the very same situation next year. He told me there were others who-to use his expression-"are rather handsomely rewarded for storing grain while here I must sit storing my own and possibly having to expand those storage facilities without being paid for it and at the same time I am being offered the possible

opportunity of going to borrow a loan which is guaranteed by the government and upon which I shall definitely have to pay 5 per cent and conceivably more than 5 per cent under the new amendments."
Farmers in my own constituency within the last ten days said to me, "Our whole problem is tied in with a lack of policy and our failure to market which results directly from the lack of an effective policy". We all know of course that loans are no substitute for sales and therefore when farmers spoke about this a year ago as being an expedient or a palliative, as nothing which could rightly or properly be described as a solution to the problem, they were correct.
We in this group have stressed in the past the need for cash advances on farm stored grain where it is approved storage and we still stress this need. My personal feeling is this-of course I must relay this view to others, and acting under its prerogative the government will probably soon put me in the position where I will have to relay it to a great many people-that I have not yet heard what I would consider a sound argument in opposition to cash advances on farm stored grain. It is true that arguments have been advanced in opposition to cash advances arid those who advanced them believe they are sound arguments, but their thinking so does not necessarily make them sound.
There has been very limited use of this act. I believe the minister indicated yesterday some $8 million had been loaned in the 195556 crop year and up to January 31, 1957 approximately $4 million had been loaned. Of course I realize that could increase as borrowings take place by farmers who are confronted with the regular necessity of seeding their crops in the spring.
First of all I say there has been limited use of this act and I am going to give one or two reasons for it. The first is the extreme difficulty that exists in securing loans. You run into situations where for some good reason or another a farmer has incurred a debt. This is usually not a large debt and I would say it is a relatively small one when you consider the size of his operation. The entire debt has not been paid and in many instances the farmer is told that he simply must repay what he owes and then some consideration-and not necessarily favourable consideration-will be given to his application under the act.
We also know that in many cases loans are definitely refused not because the farmer who desires to borrow is a poor risk but because he does not happen to do business normally with a particular institution. I think 82715-139J
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my colleague the hon. member for Battle River-Camrose referred to this situation yesterday. In the majority of our communities in my own province of Alberta we have branches of the provincial treasury department. Outside of acting as federal government agents the treasury branches do practically all the business chartered banks do and they do something else, too, in that they provide competition where the banks have almost eliminated competition against themselves.
We all remember the old set-up when two chartered banks already located in one community would put their heads together and one would agree to pull out of that community if the other would pull out of the next community. This situation was not peculiar to our province and it resulted in there being absolutely no competition for the bank in a community. For this as well as for many other reasons competition through treasury branches was eventually established.
I believe that most people who have a belief in democracy also believe in the private enterprise system and accept the fact that competition is a good thing. If we believe in democracy we also believe that there should be a substantial element of choice for the individual in the doing of his business. Well, of course, many of these farmers have exercised their democratic right to deal with their treasury branches.
I say that those branches, outside of activities as agents of the federal government will render all the services required. These farmers are forced to go to the branch of a chartered bank and in a great many instances they are asked where they do their business and when they reply that they do it at the treasury branch the answer often is, "You had better go down there to borrow your money". I do not say that all bank managers act that way, but it is certainly a common occurrence in some communities.
In other words, because a local citizen exercises his democratic right, as one should do in a democracy, he is being deprived of the benefits of legislation of this parliament of Canada. If you like to put it that way, there are being created various classes of citizenry, even among our farmers. This is the first time I have taken advantage of the opportunity to say this but I am wondering why it is the government could not give favourable consideration to permitting these treasury branches to serve as agents in this respect. There may be technical reasons for acting as they do, but if it were done I am sure it would eliminate a great deal of the criticism which has been directed toward the government and the Department of Trade

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and Commerce by these people who are treated in this way under legislation of this kind. It is not limited just to this particular piece of legislation; we find it under other federal legislation covering government guarantees such as the Farm Improvement Loans Act.
Yesterday someone indicated that we were trying to establish in Canada a stable agricultural industry. I think our goal should be the attainment of a policy which would bring about a condition of stability. Yet most of what we are doing is of a temporary nature and involves, as a speaker said yesterday, borrowing and debt. Reference was made to the Farm Improvement Loans Act, to this act and to others. It annoys a person when in the light of successful operations on his part in connection with an industry which is considered as important to the economy as the agricultural industry he should be put in a position where whenever he turns his head to try to get a breath of air he finds himself in the process of going into debt.
As we said yesterday, as we have said time and time again and as others have said, far more serious consideration should be given to this matter of advances against farm stored grain. That is the way the farmers feel and in fact I find that merchants are thinking just as keenly of these things as are the farmers. In an area such as the one I represent, as things go for the farmer so do things go for practically everybody in the community. It is not just a matter of somebody becoming concerned about some of these things and expressing his views, we hear the merchants expressing their views quite strongly as well.
We feel of course, and we have always said, that not only should there be provision for advances against farm stored grain provided the storage is proper-I would not ask for it under any other circumstances-we are thoroughly convinced that it would be in the best interests of this nation if immediate consideration were given to the provision of greater storage space. We read every day about the vulnerability of all nations to attacks of various types. I have often thought, and I thought so even during the last war, although thank heavens this nation remained free from attack, that it was most dangerous to have these non-perishable foods and things that might spell the difference between victory and defeat concentrated at the west coast, at the head of the lakes and at Churchill.
We should have a decentralization of storage facilities, and far more in the way of storage facilities. I have heard the hon. member for Peace River urging the necessity for the provision of inland storage in the

great north country. I feel personally concerned about the fact that so much of what we have could be quickly destroyed if the worst, as far as the international situation is concerned, came to pass. I am hopeful, as are all hon. members, that such things will never occur, but it is better to be prepared than to be sorry.
I am not going to take up more time of the committee. This legislation does not meet with the approval of the farmers in my area. In fact, I find they are resentful, they do not like the idea of being forced into debt in order to secure assistance. They would prefer to see the government adopt a long-range policy so that they could hope for some stability. We find the word "interim" in the title of the act which is to be amended, and that word suggests that it is temporary.
There has just been too much done of a temporary character in relation to agriculture. If Canada is to be strong, if this industry is to be made stable, we had better be thinking in terms of something other than the Prairie Grain Producers Interim Financing Act, 1956.


Mr. Howe (Port Arthur):: Mr. Chairman, there seems to be a misconception about what we are trying to do. It has been assumed that the bill to follow this resolution will change the complexion of western agriculture from being in the distressed state in which we are told it is now, to a state of great prosperity. This bill proposes nothing of the kind. We were asked to enact this legislation by every farm organization in western Canada. I had thought as a matter of fact that our grain legislation could very well be deferred until the autumn, when any steps we might take could be taken in the light of the coming season's crop results.
The Canadian Federation of Agriculture, western section, met in Winnipeg about two months ago to discuss what it wanted the government to do and out of that meeting came just one request, that we increase the amount of bank accommodation under the act which is in force at the present time. I indicated at that time the government had no objection to meeting that request.
There was a second meeting attended by representatives of every farm organization in Canada which was held in Saskatoon. The three wheat pools were represented, the federation of agriculture, the farmers' union and the United Grain Growers. From this meeting came just one request. These organizations wanted larger bank loans made available, $3,000 instead of $1,500, and they wanted the effective date of the loan put back to September 1 rather than October 1 as in the present legislation. At the time

we received that message there was a resolution on the order paper and it was necessary to withdraw it and replace it with the resolution we are discussing now.
Why did we not get other requests from these meetings? I am sure both meetings discussed cash advances. That is what both meetings were held for. We received no request for cash advances. Why? Because there was no agreement as to how such a plan could be administered. I am told there was the widest difference among various groups as to what they wanted by way of machinery for cash advances. I am not suggesting that if these meetings had brought forward a plan for cash advances the government would have accepted it holus-bolus but at least we would have looked at it very carefully. The point I am making is that the organizations themselves cannot agree.
Opposition members of parliament are very much wiser. A member of the opposition can get up here and say glibly that he has a plan for cash advances. One member said, "Let the wheat board handle the advances". Somebody else said, "Let the elevator agents do it", and somebody else has another plan. What is the government going to do? Is the government going to say that it will take all these plans and put them into effect at once? Be that as it may, this resolution just deals with one matter, and that is the matter of the unanimous request from every prairie farm organization.
We have had speakers say that these organizations do not represent the farmers. I suppose every farmer is a member of some organization that was represented at the gathering at Saskatoon, and I would assume that the organizations are supposed to represent their members. If not, I am sure the heads of the organizations will be changed whenever the next meeting is held. What do I now find? I come forward with a bill in the exact form in which I was asked to have it passed. We have had three speakers from the Conservative party say that they are opposed to the bill. We have had three speakers from the Social Credit party say that they are opposed to the bill. We have had four or five speakers from the C.C.F. party say that they are opposed to the bill.
I do not know how far I need to press this legislation. I am trying to be helpful, but I think I may have to accept the inevitable. At eight o'clock tonight we have the budget. Tomorrow we have a debate on external affairs. Then we have eight more days of budget debate, and then there will be on the order paper an accumulation of bills that will have to be passed. All I need to do to clear myself is to say that
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not only could I not get this bill passed but I could not even get the bill before the house. All I need to say is: "Here are two Hansards; read them and see who prevented me from placing the bill before the house." I can do that and if necessary I must do it. Of course, that is what I will do, but first I should like to let everyone understand what I am trying to do at this time.
I am not trying to solve the farm problem with this one bill. Of course I am not. I am trying to carry out the wishes of the farm organizations as they have been presented to me in resolutions from the meetings and by the delegates from the farm organizations who have been here. That is the position, and I do not know that I want to say much more about it. If we can get the bill before the house today, I will do my best to get it passed at this session, but if we cannot pass the resolution, what is the use? For two days I have been told that no one wants this bill. I will admit at once that I cannot get the bill through if it is fought for the time it was fought last year. At that time it took two and a half solid weeks to get the present act passed. We have not got two and a half solid weeks in this session to devote to this bill. That is the situation. Now, deal with it as you like.


Donald Methuen Fleming: Mr. Chairman, I do not intend to speak at length but I have a number of questions I should like to put to the minister. However, if the hon. member for Moose Mountain wishes to speak I think I should defer to him.


Mr. McCullough (Moose Mountain):: Mr. Chairman, first of all I cannot say that I share the enthusiasm of the minister about the legislation as expressed in his remarks in introducing the resolution yesterday or in the words he has uttered today which would lead the house to believe that the farm organizations are asking for this type of legislation. If the minister wants the co-operation of members of the C.C.F. group, all he needs to do is to bring into the house the legislation which the farm organizations have been asking for over the years and which they are still requesting.
This year we have had a whole crop of bills brought into the house which in my opinion are simply designed to extend more credit to the common people so that it will be a shot in the arm of a decadent system. I am convinced that the Minister of Trade and Commerce and the Minister of Agriculture have, either deliberately or otherwise, disrupted, confused and perhaps coerced the leaders of the farm organizations throughout

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the country in order to try to prevent them from asking for legislation to provide cash advances.


Clarence Decatur Howe: Mr. Chairman, I have just had an aspersion cast on my character by my hon. friend. He says that I have coerced the leaders of the farm organization in an attempt to avoid bringing legislation before the house. I deny it absolutely, and I ask my hon. friend to withdraw his statement.


Donald Methuen Fleming: It is not unparliamentary.


Edward George McCullough: Mr. Chairman, I am quite prepared to take the minister's statement and withdraw. I am simply saying that when the Canadian Federation of Agriculture had Mr. Benson come to Regina two years ago and he indicated to the federation that the system employed in the United States under the Commodity Credit Corporation was a failure and the government of that country was backing away from the program of giving cash advances to farmers, that in itself was the first step in trying to coerce the membership of farm organizations to move away from the demand for cash advances on grain properly stored on farms.


Clarence Decatur Howe: May I ask my hon. friend if he is suggesting that Mr. Benson was a party to his suggested plot to coerce the farmers of Canada?


Edward George McCullough: I am
convinced that there has been a plot on the part of certain people in Canada at least to undermine the concerted effort that has been made to obtain cash advances, and I am going to put on the record the demands of the farm organizations for cash advances on farm-stored grain. In his speech yesterday the minister said, as found at page 2161 of Hansard:
May I say, Mr. Chairman, that I have seldom brought before the house a bill which is unanimously recommended by every farm organization, but I think I can say this about the bill referred to in this motion.
I want to put on record what the farm organizations have been requesting. I have here the resolutions passed at the annual meeting of wheat pool delegates in 1955 and I am going to read some of them into the record because I think they are important. In part they have this to say:
2.	That we urge the government of Canada to make immediate provision for advances to farmers on farm stored grain.
3.	That advances to farmers on farm stored grain should be up to one-half the normal delivery expected and repayable on the basis of one-half of the value of each delivery made by the farmer.
4.	That advances on farm stored grain should be made by way of government guaranteed loans

to the Canadian wheat board; the Canadian wheat board to arrange with elevator companies to make the advances to individual farmers; and further,
That any interest involved in such loans should be absorbed by the federal treasury.
I think that is a far cry from what we have before the house today. They say further:
5.	Whereas deliveries of grain to elevators may be curtailed over fairly long cycles, due to congested handling facilities, and since these curtailments in deliveries will create a frequent need for short term credit;
Be it resolved that the board of directors give consideration to drafting a plan that will permanently meet the need for advances on farm stored grain, and that this plan be presented to the next annual meeting of delegates.
I now want to quote from a letter of the Saskatchewan Farmers Union of March 12, 1957 with respect to that Saskatchewan Farmers Union attitude towards cash advances. In this letter it is stated as follows:
The official policy of the Saskatchewan Farmers Union with respect to cash advances on farm stored grain remains as it has always been-that is for cash advances through the elevator companies advanced on the basis of half the expected delivery quota, interest free, to the Canadian wheat board.
I think that again contradicts the statement of the minister that the farm organizations are in any way whipped into accepting this iniquitous resolution now before us which is going to make the farmer practically get down on his knees before the chartered banks in order to get an advance on his farm stored grain.
I want to quote further from a letter of March 5, 1957 under the signature of Rudolph Usick who is an official of the farmers union of Manitoba:
Since the Prairie Grain Producers Interim Financing Act is up for amendment in the House of Commons I thought I should mention a meeting of ten organizations held in Saskatoon on Friday, March 1.
I might interject here, Mr. Chairman, in order to say that this reference is to the meeting to which the minister just referred before he left his seat. I continue the quotation from the letter:
At this meeting a resolution was passed and sent by telegram to Messrs. Howe, Gardiner, Harris and St. Laurent. No press release was issued because they wanted the government to have an opportunity to study the proposal.
This resolution was as follows, and I quote the telegram:
Resolved that while we do not agree that the Prairie Grain Producers Interim Financing Act is the most satisfactory method for making money available on grain that cannot be delivered however in view of the late date in having a more satisfactory plan for cash advances adopted at this session of parliament this committee recommends-
In connection with that, Mr. Chairman, I want to point out again that this resolution before us does not meet fully what is asked

for in this request because paragraph (d) of the request says this:
(d) that interest rates be as low as possible and in any event not higher than that paid by Canadian wheat board.
Under the resolution before us we have no guarantee of what the interest rate will be. I presume that the interest rate will be the prevailing interest rate which it is necessary to charge and it might very well be higher than 5 per cent.
I think that this fairly well proves conclusively that the farm organizations are accepting this as a third rate compromise. They are not accepting it as something that they want. They consider it to be unfair. Every single farmer in western Canada does not consider this justice by any means. I feel that it is in effect a brazen disregard of farm organization demands over the years. I should like to hear what the Saskatchewan backbenchers have to say with regard to this matter. When they go back to their constituents, Mr. Chairman, I am sure they are not going to be able to support this iniquitous legislation we have before this house. If we are obliged to accept it, then it is going to be as a deathbed acceptance. I want to say to the Minister of Trade and Commerce that if he wants the co-operation of this group- and I can speak only for the C.C.F. group-all he needs to bring in is some kind of legislation more in line with the demands of farm organizations in western Canada, and I am sure we will expedite that legislation passage through the house.
We have further, Mr. Chairman, the situation of the three western Canadian wheat pools which on March 9 of this year-just Saturday of last week-in a brief or submission presented to the federal cabinet said they wanted a reduction in the interest rate on grain loans. Again this legislation does not even meet this demand or submission to the federal government as of March 9 of this year.
The farmers in western Canada are in a cost-price squeeze. This legislation is going to mean that even those who get loans are going to have to go out and in effect borrow on their year's earnings and pay at least 5 per cent interest on their wages. That is exactly what it means. I do not think there can be an hon. member in this house who will support that proposal as being fair. So, as we have said time and time again, we support the idea of cash advances on farm stored grain, properly stored under a plan similar to that which they have had in the United States for some 17 years or more. I was down in the United States two years ago. I went there for the express purpose of finding out if this drive in the United States
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to try to discredit the United States program under the commodity credit corporation had any justification. I think hon. members will know that there was in the United States a drive by the United States government to move away from the plan under the commodity credit corporation. Mr. Benson, the minister of agriculture in the United States, was sent out to all the agricultural states in order to try to get the farmers to agree to a loan price formula or support formula for farm stored grain. At that time it was 90 per cent of parity. The intent was to try to bring in some type of flexible parity for farm stored grain. It is interesting to note that since two years ago the United States government has moved back to a greater rigidity in price support and closer to the 90 per cent of parity. But as I say, in this country there is no regard paid to the farmer's costs and the farmer finds himself in a cost-price squeeze. I do not share the minister's fears that this would in any way jeopardize the Canadian wheat board. I think it is in effect holding the big stick over the farm organizations when the minister gets to his feet in this house and says that if we had the Canadian wheat board implement ing a plan through which payment could be made to farmers on farm stored grain, it would jeopardize the Canadian wheat board. I think it is sheer nonsense because we have today in western Canada the plan whereby the farmers must, in order to sell their grain, deliver to the elevator under quota. At the elevator they have their quota books and each delivery is recorded in their quota books. Under the present plan, when that wheat is delivered, the farmer gets a payment on his delivered grain. Subsequently, he gets interim payments until the final payment is made. Under the plan which could be involved under payments on farm stored grain, the farmer would get an advance after the assurance was made by the elevator agent, municipal officials or somebody else, as to grain in store and he would be paid in advance on his farm stored grain. If this government was prepared to set up a treasury fund at the disposal of the Canadian wheat board, similar to the present system of payment for grain delivered, in order to pay for cash advances so that the Canadian wheat board could pay on farm stored grain, there would be no difficulty whatever in putting it into effect. The full responsibility lies on the treasury benches of this government. So I say that if any farm organization has agreed to accept this legislation, they have done so not because they agree with it but because the western farmers-some of them at least- are in dire straits and are needing cash.

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At this time, Mr. Chairman, the situation is that about one-third of the western marketing points are still on a two-bushel quota. How can a western farmer pay his fuel bills, his grocery bills and carry on in the face of a situation of that kind? In my constituency I have seen farmers selling cattle which should have been on feed and sold at a later time. These cattle have been sold simply because the farmer was forced to get some ready cash.
The hon. member who preceded me indicated that this is not only the problem of the farmer, it is the problem of everyone living in western communities. It is a problem of local financing. It is the problem of the merchant, the fuel dealer: all these people are up against the problem of trying to carry on and the members of the Liberal party have not seen fit to get up in this house and try to get this government to give the western farmers a better deal. I can only say again that I do not see any difficulty in the way of the Canadian wheat board being designated as the means through which advances could be made. I do not believe for a moment the statement made by the Minister of Trade and Commerce that these wheat board officials would resign if they were asked to do this job. I cannot conceive of it. I feel that there is really no problem there. I think it is just a bogey man put before this parliament. Of course, the leaders of farm organizations read what the minister says in this house and they are frightened away from asking for a better plan. I hope that even at this late date the minister will see fit to withdraw this resolution and bring in a resolution prefacing a bill which will meet the needs of western Canadian farmers.
I might point out that so far there have been no losses in connection with the operation of this program. There is approximately $140,000 outstanding, but I believe that is all receivable. If we have the sort of a program under which a farmer has to have wheat on his farm to the value of twice the amount of the loan he is requesting, then I think the government or the Canadian wheat board would be very safe indeed. I want to say further that any recommendations which farm organizations have made to this government have been made in addition to, and along with, other recommendations. Some of the recommendations go so far as to ask for better promotional deals in connection with the sale of wheat.
This government has put the responsibility for the sale of wheat on the Canadian wheat board. In other words, it says that the Canadian wheat board is responsible for the kind

of deals which we make with foreign countries. The program of this government so far has been cash on the barrel head. We in this group have advocated-I might say, Mr. Chairman, it is in conformity with resolutions which I could read into the record from the farm union, the wheat pools and the Canadian federation of agriculture-that this government should wake up and try to get some barter deals or some deals whereby we take local currency in line with the program developed in the United States under the commodity credit corporation. It is sheer nonsense for this government to think that trade is a one-way street. If we are not going to take imports from other countries but we expect them to buy our grain, then of course that situation cannot continue very long.
I was annoyed last fall, and I think a lot of western farmers were annoyed, when it was announced that the government criticized Washington because the United States had undertaken an agreement with Brazil for the sale of 1,800 tons of wheat over a three or four year period in return for goods from Brazil. Instead of protesting, I think this government should wake up and try to get some plan whereby we can sell Canadian wheat. It is quite evident that this can be done. No amount of protest is going to change conditions so that we can compete with other countries which are prepared to undertake deals of this kind.
Just about two weeks ago it was announced here that the Canadian farmer would be asked to aid Canadian millers in competing with the United States treasury. Today the western farmer is in a cost-price squeeze. He cannot accept the extra burden of trying to compete with United States millers. We have heard how the price of export flour would be lowered by 4.5 cents to eight cents and that is going to be paid by the western farmer. I think, Mr. Chairman, the time has come for a day of reckoning. It is true, as the hon. member for Mackenzie has indicated, that a number of farmers are leaving the farms to go into other occupations. I happen to live in one of the most favoured constituencies in western Canada, a very fine mixed farming community. However, I can quite honestly tell this house that just before I came down to this session I was talking with what I thought was one of the more prosperous farmers. This man farms on a big scale and has 15 or 16 quarter sections of land. He raises 200 or 300 head of cattle.
This farmer told me that his two sons have decided to take up farming but he wondered whether or not it would be advisable for them to do so. Here is a man who is coming to the conclusion that we cannot continue in this

cost-price squeeze in western Canada. Here is one of our better farmers wondering whether or not his own sons should stay on the farm. Now, we have this government once more placing the burden on the western farmer through this legislation.
I had hoped in all seriousness, Mr. Chairman, that this government might still see fit to agree to some of the things we in this group have advocated. I hope the minister will see fit to withdraw this resolution and bring in a resolution which will provide for cash advances to farmers in western Canada on farm stored grain. I feel that is not asking for anything unfair. The farmer has very little say today in the marketing of his wheat. He is quite prepared to market it through the Canadian wheat board. We in this group want orderly production, we want orderly marketing and we want legislation which will protect the farmer in carrying out his duties.
In conclusion, may I say that I do not think the minister can leave the impression in this house that there is any farm organization which accepts this measure. I do not think the curfew has been rung on this session of parliament. We still will have a couple of weeks. If this government were really sincere in trying to meet the wishes of the western farmer and were prepared to introduce such legislation, every member of this group would agree to expedite it through the house.


Donald Methuen Fleming: May I now put certain questions to the minister designed to elicit information which I think ought to be before the committee and has not yet been given to it. As I understand it, no report has been issued by the government as yet on the operations under this Prairie Grain Producers Financing Act which came into effect a year ago. In his opening statement yesterday, at page 2161 of Hansard, the minister gave some partial information and perhaps my questions could lead on from that point.
He said:
During the crop year 1955-56 producers borrowed a little less than $8 million. Practically all of these advances have already been repaid. Up-to-date records on the current year are not yet available from the banks, but as of January 31, 1957 the volume was less than $4 million.
Has the minister the figures for the number of loans in those two years?


Clarence Decatur Howe: Mr. Chairman, I am sorry I do not have that information. This act is administered by the Department of Finance, which is dealing with the banks. I have not an accurate report but I believe, speaking from memory and subject to correction, that the amounts borrowed in the
Grain
first year were something like $14 million. My hon. friend will realize that these grain loans have a fairly quick turnover. The amount of the borrowing is half the value of the grain that the borrower expects to deliver within that year. As he delivers that grain, the loan is repaid. The result is that on the first year's operation practically all the money has been repaid; within a few thousand dollars, I believe. This year the reports from the banks run about two months behind the month for which the reports are being made and I have no figures later than the end of January. At that time we were told the total borrowings were about $4 million. I cannot say how many borrowers were involved.


Donald Methuen Fleming: No doubt that information could be obtained-


Clarence Decatur Howe: I would be glad to obtain it.


Donald Methuen Fleming: -from the Department of Finance. It may be that the same fate will confront a number of other questions I have here. If the minister has not the information, perhaps he could arrange to obtain it before we come to a later stage of the measure.


Clarence Decatur Howe: Yes.


Donald Methuen Fleming: Perhaps I might just indicate the questions that I have as requiring information which I think ought to be before the house. If the minister has the information perhaps he would give it; if not, perhaps he would undertake to obtain it before we reach the next stage of the measure.
I should like to know the number of loans in each of the two years and their distribution by provinces, if information is available on that basis. Next, the average amount of the loans; a figure was given by one hon. member yesterday that $704 was the average amount of loan. I think we should have the official figure on that.
Next, I should like to know how many loans of the maximum permissible amount were made, and then whether any claims have been made on the government on the guarantees that have been given for the loans.
On the next matter, Mr. Chairman, I think the information is within the minister's knowledge now. May I take it that the proposed increase in the permissible maximum amount of $3,000 is not intended to have any effect on the permissible maximum guarantee permitted under section 4 of the act? You will remember that there are two forms of over-all guarantee applicable to the totality of operations under the act that were written into section 4 of the act. I take it there is no intention to alter this in the bill-

Grain


Clarence Decatur Howe: That is correct.


Donald Methuen Fleming: -because the amounts that have been guaranteed fall so far short in the past year of the $50 million maximum that there is no question, even with the proposed increase in the maximum individual loan to $3,000, of coming anywhere near the $50 million total maximum permitted.


Clarence Decatur Howe: That is correct, Mr. Chairman. There is no intention to enlarge the amount of the guarantee. This new maximum limit accommodates farmers who have a larger operation than those who have been taking advantage of the loan to date. A farmer must have $6,000 worth of grain deliverable in the year in order to borrow the $3,000, and there are not too many farmers who have that; that is, there is not a large proportion of the total who have that much deliverable grain.


Donald Methuen Fleming: The next question, Mr. Chairman, relates to the interest rate. May I take it, Mr. Chairman, that all the loans that have been made thus far under the act with respect to the two crop years 1955-56 and 1956-57 have been at the rate of 5 per cent?


Clarence Decatur Howe: Yes, that is correct. Unless the loan is made at 5 per cent or under it is not guaranteed by the government. That is inherent in the legislation.
I can now answer earlier questions. I have some new information. The loans in the first year of operation were 10,326 for an amount of $7,893,830.32. In the second year, up to January 31, 1957, the number of loans totalled 5,034 for an amount of $3,498,011.67.


Donald Methuen Fleming: I take it the minister has not it broken down by provinces?


Clarence Decatur Howe: No, I have not.


Donald Methuen Fleming: Let me come back to this matter of the interest rate, Mr. Chairman. It will be remembered that we had some spirited discussion a year ago with regard to the clause dealing with the interest rate, and the committee, I am sure, will not need to be reminded that the maximum rate set in the bill was 5 per cent. It is quite proper to guarantee a loan at a lower rate of interest if there were any such. The minister has indicated that all the loans under the act with respect to the two crop years have been at the maximum rate of 5 per cent.


Clarence Decatur Howe: Mr. Chairman, I am not sure of that fact. The act permitted loans to be made at a rate not higher than 5 per cent. I would not know whether there had been loans made a a lower rate than that. They would simply be reported as guaranteed loans. The matter of the interest rate is between the borrower and his bank, with 
the understanding that if the loan was not 5 per cent or lower it could not be guaranteed by the government; no recovery would be possible from the government guarantee.


Edward George McCullough: I would ask the minister to check the figures that he gave the committee a moment ago for the second year. I think he said 5 million.


Clarence Decatur Howe: In the first year, there were 10,326 loans; in the second year, 5,034. If I said 5 million it was a mistake.


Donald Methuen Fleming: I think it is very unlikely that there were any loans made below the permissible maximum of 5 per cent, but that information should be available and could be obtained.


Clarence Decatur Howe: I do not know that it is possible. I do not imagine that if loans were made at a lower rate that fact would be reported. We are not interested in the rate except that it must not be higher than 5 per cent.


Donald Methuen Fleming: I appreciate that. The
guarantee, under the act, cannot be given if the loan is at a rate in excess of 5 per cent, but as to whether all the loans were made at 5 per cent or less we have no information yet and I think it should be available. I think it is a pretty good guess on the part of any member of this house that no loans were ever made at a rate below 5 per cent.
Very little information has been given to the committee thus far by the minister with regard to that feature of the resolution that proposes to remove from the act the clear stipulation as to the maximum rate of 5 per cent per annum simple interest and to substitute for that a new power in favour of the governor in council to establish a maximum rate. I think the minister ought to give the committee information on this subject and indicate to us what has suggested the necessity for any departure from the present provision. Is the pressure on this interest rate upward, and where is the pressure coming from? Is there any indication that the banks are not prepared to lend at the 5 per cent so that loans made by them would not qualify for the guarantee under the act?


Clarence Decatur Howe: Frankly, the government feels that this is not the time to establish a maximum rate for a period that begins some months hence. I would remind my hon. friend that the rich and powerful province of Ontario paid something more than 5 per cent for its recent borrowing of, I think, $100 million.


Donald Methuen Fleming: 
Clarence Decatur Howe: Issued to the public at 5 per cent. The net to the province of Ontario must have been a figure that would cost the province something more than 5 per cent.


Donald Methuen Fleming: I saw it quoted yesterday at 4.96, I think.


Clarence Decatur Howe: To the province?


Donald Methuen Fleming: That is the going rate now; the effective rate of return.


Clarence Decatur Howe: You mean that is the over-all rate of return from the loan?


Donald Methuen Fleming: No.


Clarence Decatur Howe: I do not know; I do not want to argue that point. We are not far apart but I suggest the bonds cost the province something more than 5 per cent. In other words, they would be sold at a discount below the 5 per cent return to the brokers. However, I am just pointing out that if the rich province of Ontario at this moment is paying around 5 per cent for its money it is not a good time to make a deal with the banks as to what interest they will charge the farmers beginning next September.


Donald Methuen Fleming: Mr. Chairman, I think the minister might have come more directly to the point. We are dealing with loans that are going to have a dominion government guarantee attached to them.


Clarence Decatur Howe: Well, Mr. Chairman, is a dominion government guaranteed loan better than a direct obligation of the province of Ontario?


Mr. Rowe:: I do not think it is as good.


Donald Methuen Fleming: We are not talking about a dominion guarantee of a provincial government obligation but we are talking about a loan to be guaranteed by the dominion government. So far the dominion government has not paid a rate like that on any of its borrowings or on any borrowings that it has guaranteed.
Now, why do we not come to the point? Is it the conclusion of the government that the interest rate of 5 per cent which is now fixed by the act as a maximum is going to have the effect of discouraging the use of this act so there will not be loans guaranteed under the provisions because the bank would not be lending at a rate as low as 5 per cent?


Clarence Decatur Howe: I simply say that I do not think any man is wise enough to forecast what the interest rate situation will be in the autumn of this year and I think any man would be foolish to negotiate today for
Grain
a rate which will apply next autumn and which might be obtainable at a lower figure at that time.


Donald Methuen Fleming: What the minister is saying in effect is that the interest rate may be expected to go up before the autumn and that he wants to be in a position to deal with that likelihood; is that not about the way it stands?


Clarence Decatur Howe: I hope the interest rate will go down. If it goes up I would have been wiser to deal now. I believe interest rates are now at or near the peak. I am hoping we will get a lower interest rate by autumn. Remember this is a deal made between the government and the banks.


Donald Methuen Fleming: That is surely an astonishing answer for the minister to make, Mr. Chairman, because if the effective rate the banks wish to charge is going to fall then we do not need to interfere with the provisions of the act because the act simply stipulates a maximum below which a loan may be made without any offence at all to the act, and there is no need to take unto the governor in council power to fix the interest rate if it is likely to go down. What the minister in effect is asking is the removal of the ceiling imposed by the act on the effective rate.
Whatever may be the hope that the interest rate may go down, is it not a fact that the contingency which the minister contemplates and which he gives as the reason for the removal of the statutory maximum is that he expects the interest rate is going to go up?


Clarence Decatur Howe: Mr. Chairman, I would not attempt to deceive the farmers of western Canada. If the rate fixed under the bill is not a workable rate-in other words if the bank will not lend on that rate with a government guarantee-what good is the legislation?


Donald Methuen Fleming: We are getting closer to the point now, but I do wish to have this point clearly stated. The only basis the government has for asking the house to remove the maximum rate that is fixed by the statute on these loans is the contemplation of the government that the interest rate the banks are going to demand on loans to the farmers is going to rise.


Clarence Decatur Howe: We face that possibility but it is by no means the only possibility. If my hon. friend is endeavouring to tell me it will go up, I say I do not know. I have considerable confidence in the powers of persuasion of the federal government and they will be used to the utmost to hold the interest rate down to the level of the present bill. But to undertake to loan money to farmers at a maximum rate of 5 per cent

Grain
when the banks may not be willing to lend money at that rate is only deceiving the farmers and I am not prepared to do that. I am prepared for any eventuality.


Donald Methuen Fleming: It is not a question of deceiving the farmers but rather it is a question of being frank with the house as to what may be expected and what is the real reason for asking for the removal of the statutory maximum.


Mr. Johnson (Kindersley):: Mr. Chairman, is this not a "having regard to" clause for the banks? The minister is quite familiar with the meaning of that term from the United Kingdom wheat agreement.


Clarence Decatur Howe: I do not know anything about it.


Mr. Zaplitny:: Mr. Chairman, I understand that representations have been made to the minister to have the application of this act extended to provide the same guarantees to credit unions and treasury branches. There is no provision for that in the resolution and I wonder if the minister could explain to the committee first of all if such representations were made and, if there is no provision to be made for that, what the reasons are for excluding those two types of financing which are widely used in western Canada.


Clarence Decatur Howe: The reason is, Mr. Chairman, that we have no authority to deal through credit unions. The credit unions are not under the Bank Act and if the credit unions decide to pay us, all would be well. But there is no legal obligation on credit unions in any province in Canada to repay to the federal government loans made to them. My hon. friend can argue that all he likes, but that is the opinion of the Department of Justice. I am sure we would be delighted to deal with credit unions if we had the legal competence to do so.


Willis Merwyn (Merv) Johnson: Mr. Chairman, did I understand the minister to say that any farmer who has 6,000 bushels of wheat would be able to receive the maximum $3,000 loan?


Clarence Decatur Howe: No. What I intended to say was if he has $6,000 worth of grain deliverable in the year he would be able to borrow $3,000 and that applies not only to wheat but also to oats and barley.


Willis Merwyn (Merv) Johnson: That would mean the farmer would have to have a large enough crop to allow him to deliver $6,000 worth of grain in the year?


Clarence Decatur Howe: That is right.


Mr. Smith (Battle River-Camrose):: Mr. Chairman, would the minister tell the committee whether any losses at all to the federal government were incurred in the first year of operation of this act?


Clarence Decatur Howe: Well, Mr. Chairman, there is no time limit on the recovery period. I am told that there is a small sum outstanding from the first year of operation but that money is on someone's permit book and I assume it will be paid eventually. It is felt by the treasury that if there are losses under this act-and there may be-they will be very small indeed.


The Deputy Chairman:: Shall the resolution carry?


Some hon. Members:: No.
Motion agreed to: Yeas, 41; nays, 28.
Resolution reported and concurred in.
Mr. Howe (Port Arthur) thereupon moved for leave to introduce Bill No. 263, to amend the Prairie Grain Producers Interim Financing Act, 1956.
Motion agreed to and bill read the first time.


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


Stanley Howard Knowles: Next sitting.


Clarence Decatur Howe: Time presses, and as I say there is going to be a three-week interval before we can consider this legislation again. Why not pass the bill?


Donald Methuen Fleming: We have not even seen it as it has not been circulated.


Clarence Decatur Howe: It is exactly the same as the previous bill with two figures changed.


Willis Merwyn (Merv) Johnson: The minister has been wrong before.


Donald Methuen Fleming: We should not be asked to pass what we have not even seen.


The Acting Speaker (Mr. Applewhaite):: have been given to understand that despite the announcement as to government business made last night it has been agreed by the representatives of all parties that order No. 1 should now be called.



FISHERIES


Hon. James Sinclair (Minister of Fisheries) moved: that the house go into committee to consider 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.


[Stage Direction]
Motion agreed to, bill considered in committee, reported, read the third time and passed.
[Stage Direction]
The house in committee of supply, Mr. Robinson (Simcoe East) in the chair.

[Stage Direction]
334. Operations-including salaries and other expenses of staff post offices, district offices, railway mail service staffs, and supplies, equipment and other items for revenue post offices, also including administration, $93,819,562.
Mr. Hamilton (Notre Dame de Grace):: Mr. Chairman, when this item was last before the committee a few questions were asked of the minister and in one or two cases he indicated he did not have the information immediately at hand but would be glad to get it. There has been an interval of several days since then and I would appreciate it if the minister would give us the information we asked for at that time.


Hon. Hugues Lapointe (Postmaster General):: Mr. Chairman, the hon. member is referring I imagine to the question he asked concerning the possibility of a new postal station being established in the vicinity of Somerled and Walkley avenues in Montreal to cover that part of the riding of Notre Dame de Grace served by the Snowden postal station. I said at the time that I would ask for a report on the matter and I can now say that from a survey made of the region by the officials they are of the opinion that it is quite probable that a new postal station will be established eventually to serve that area.
However, it is felt that when the new station is established it should not be established in the location suggested by the hon. member but rather in the Cote St. Luc area to serve the western part which is progressing and developing so rapidly at the present time. We are now considering the possibility of establishing at an early date a letter carrier depot to serve the Cote St. Luc area to which would be transferred some of the routes now served by the Snowden postal station. This matter is being looked into at the present time by the postal authorities in Montreal.
The immediate result would be to transfer thirteen routes which now originate at the Snowden postal station to the new letter
Supply-Post Office
carrier depot thereby bringing the starting point of the carriers nearer to the area to be served and bringing about an earlier delivery of mail during the day.


William McLean Hamilton: Can
the minister tell us when that survey with regard to the location was made?


Hugues Lapointe: It was made last fall. The survey was started in December and the postmaster in Montreal did make one report which we discussed. Then on January 24 we asked for a final decision, which is what I have just told the hon. member.


William McLean Hamilton: These being the senior officials of the department now in front of the minister, I feel a little guilty because when we discussed the matter last Friday I suggested I had written to a senior official of the department and had waited four months for a reply, from the middle of November up to the present time. At that moment I was relying on my memory, but I went back to my office and looked at the original letter and I find that it was directed to the Postmaster General and that an acknowledgment came from one of the senior officials. Therefore it really is four months since the date of the original letter to the Postmaster General.
But I should like to point out to him that here is apparently a clear-cut case in which an inquiry was made in November, the information was available in January, as he has just told us, and it was necessary to wait until the Postmaster General came before the house with his estimates in order to pry it out. It has taken two sessions of the house to do that. I think that is a regrettable situation. Is there some explanation?


Hugues Lapointe: I do not think the situation is quite as the hon. member described it. He did write on November 12, and his letter was acknowledged. At that time I instructed the officials of the department to ask the officials in Montreal for a report on the matter. A preliminary report was made and was discussed among the officials of the department. I suppose they were not in full agreement on some of the points in the report and wanted further details from the Montreal officials so they communicated with them again. On the 24th of January we asked for a final decision on the matter, which is the one I have just reported and which we received after the 24th of January.


William McLean Hamilton: How
long after the 24th of January?


Hugues Lapointe: I have not got that date here. I have only got a resume of the report.

Supply-Post Office


Mr. Knight:: Mr. Chairman, first of all I should like to say to the Postmaster General that when I was home for a day or two I was very pleased to find that mail delivery in Sutherland on the outskirts of Saskatoon, or perhaps I should say now within the boundaries, is in operation and the people are very happy indeed. I should like to convey that message to the minister. They have some doubt as to the plans for the city of Saskatoon itself.
About a month ago I wrote to the minister and I sent a copy of my letter to the Minister of Public Works. At that time I asked the Postmaster General what the plans were for the city of Saskatoon. I understood that certain plans with regard to extension had been decided upon. The reply I received from the Postmaster General was that these plans-I am simply relying on my memory now-had been approved and that the matter was now within the jurisdiction of the Minister of Public Works.
Since the Minister of Public Works only received a copy of the letter perhaps I could not have expected a reply from him. I do not know what the convention is in that regard, but at any rate he did not reply. A week or two ago I wrote to him again and as yet I have had no reply. My first question is, what are the plans for the extension of the post office facilities in Saskatoon? Second, are there certain offices in the federal building in Saskatoon which are going to be used by the Post Office Department in the near future or is it the intention of the department to construct a new building in the near future? I think that covers it.
May I also draw the minister's attention to a public statement made by the postmaster of that city in which he stated that the post office officials would not be able to face another Christmas rush such as they had this year without further accommodation. I should like to get a preview of what is going to happen there and when.


Hugues Lapointe: I can add very little more to the information I have already given the hon. member. A new building is planned. We have approved the plans of the building which, following the usual procedure, were submitted to us by the Department of Public Works. The plans have been returned to the Department of Public Works with our approval and from then on we have to wait until the Department of Public Works goes ahead with the building. However, I understand it is in the course of planning at the present time in the Department of Public Works. We have recognized the need for new accommodation, we have asked for it and it has been approved by the Department of Public Works.
(Mr. Lapointe.]


Robert Ross (Roy) Knight: In other words, as far as the Post Office Department is concerned, a new building is necessary, the plans have been approved and it is a matter for the Department of Public Works to say how and when it should be built. That covers the situation.


Hugues Lapointe: Yes.


Robert Ross (Roy) Knight: Then, I expect I will receive information in that regard from the Minister of Public Works in reply to my letter. I see he is not in the house at the moment but I can address my question to him.


Erhart Regier: Can the minister inform the committee which two Canadian cities have postmasters in the class 18 category and which two cities have postmasters in the class 17 category?


Hugues Lapointe: The two with class 18 are Montreal and Toronto. I am afraid I do not have the information as to class 17 but I will get it and provide it to the hon. member.


Stanley Howard Knowles: Mr. Chairman, I should like to urge upon the Postmaster General that as the minister responsible for a very large group of the civil servants who work for the federal government he might have his department make its own study of the practice of collective bargaining, particularly in the United Kingdom. I raise this question because, as the Postmaster General is aware, the matter was discussed when the Canadian Labour Congress presented its annual brief to the government of Canada on January 23, 1057. At that time the Canadian Labour Congress had in its brief an important section dealing with government employees and it made a number of requests. I shall quote one sentence from page 30:
We ask you-
This was addressed to the government, of course.
-to establish a regulated bargaining procedure for these purposes-
For the purpose of setting wages and salaries and arranging for bargaining conditions. -and to provide for the settlement of differences between the government and representative organizations of your employees through conciliation and voluntary resort to arbitration when necessary.
What was interesting about the request of the trade union movement this year for collective bargaining for the civil service was the reply of the Prime Minister. That reply was reported in the daily press at the time but I should like to read a paragraph from Canadian Labour, the official magazine of the Canadian Labour Congress, as published in February of this year. The paragraph to which I refer reads as follows:

One of the most important comments made by the Prime Minister referred to the request of the congress for recognition by the government of the right of civil servants to bargain collectively regarding wages and working conditions. Mr. St. Laurent said, "As you know, we have been of the opinion that collective bargaining could not operate within the Canadian civil service, as public servants are not employees of the government as such, but of the people of Canada." However, he was surprised to learn that a system of collective bargaining exists for the civil service in Great Britain, and he had asked to have a full study made of the method by which it operates. The information obtained would be studied most carefully by the government, with a view to determining what could be done to maintain harmonious relationships within the civil service.
I recognize the fact that the Prime Minister made the promise that this information as to the practices in Great Britain would be studied with respect to the civil service as a whole. But I make the appeal to the Postmaster General that he have his department make its own study of this matter. I would suggest that he obtain such information as he can from his own opposite number in the government of the United Kingdom. I would also draw to his attention the fact that in the United Kingdom there are some rather large unions of postal employees that have collective bargaining arrangements with the post office department of that country. For example, I find that there are over 160,000 members of the Union of Post Office Workers. It is the largest group of postal employees. There are one or two other unions as well. In case I have persuaded the Postmaster General to take up my suggestion I would tell him that the secretary of the union is Mr. C. J. Geddes, C. B. E., U. P. W. House, Crescent Lane, Clapham Common, London, S. W. 4.
I should like to suggest that the Postmaster General communicate with the postmaster general in the government of the United Kingdom and also with the secretary of the Union of Post Office Workers in order to ascertain what their practices are, in the hope that the day may not be far distant when collective bargaining will be instituted in the postal service here.
It is well known to the Postmaster General that the post office employees themselves in this country have been seeking collective bargaining for some considerable time. In view of the promise made by the Prime Minister on January 23 I would hope that the government would study the whole question in relation to the civil service and that a particular study of this matter would be made by the Postmaster General.
Supply-Post Office (Translation):


Mr. Dufresne:: Mr. Chairman, last week I had occasion to point out to the Postmaster General (Mr. Lapointe) what I termed an injustice being committed in Montreal and which was to come into effect last week, that is to say last Sunday, March 10. The day after my intervention, the Montreal newspaper La Presse gave a fairly substantial account of the orders issued by the Montreal postmaster.
Convinced as I then was, and still am, that the minister was quite unaware of the decision taken, I should like to ask him this afternoon if he has instructed the Montreal postmaster to keep granting postal employees the time previously allowed them for the purpose of attending mass on Sundays, and on feast days of obligation when they are required to work.
Could the minister answer my question?


Hugues Lapointe: Mr. Chairman, first of all, I must point out that holidays and time off allowed on certain occasions are determined by the civil service commission. I must also inform the house that the regulation which governs the time allowed post office employees to attend religious services, of whatever denomination, is the same as in other federal departments. That regulation provides that sufficient time be allowed those who are normally called upon to work during hours when religious services are held, so that they may attend such services. However, time thus allowed is not taken off the eight hour tour of duty. In other words, if a man normally goes off duty at four o'clock in the afternoon, and took forty-five minutes' time off in the morning to attend mass during his working hours, his working time on that day will end at 4.45 p.m.
Time off allowed a civil servant to attend religious services is not taken off his day's work; such has always been the rule prescribed by the civil service commission.
I have ascertained that this practice would be followed in the Montreal post office as it is in any other post office in this country as well as other federal government departments.
This applies particularly in the case of attendance at mass on Sunday. As regards days of obligation, the department may, at its discretion, grant the necessary time to attend religious services, and this is standard practice.


J.-Wilfrid Dufresne: Does not the hon. minister recognize that there previously was a well

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established regulation or tradition in the Post Office Department, particularly in Montreal, tp the effect that, on the eight hour day's work of those employees, they were allowed three quarters of an hour to attend mass on Sunday?
I am referring to Sunday mass as it concerns Roman Catholic employees. However, I should not like to discriminate against anyone, and would be in favour of allowing other employees to attend religious services whatever their religious denomination.
Judging from the information published by La Presse on March 9, last I come to the conclusion that such time was taken from the eight hour day's work of postal employees.


Hugues Lapointe: I can assure the hon. member that at no time has the postmaster been authorized to grant such leave to postal employees, but he has always been free to allow them to attend religious services, provided such time be recovered in the course of the day's work. I do not know whether any tradition existed but there surely was no regulation to that effect. Consequently, if such had been the practice, it was being done without authorization. Whether it has been a tradition, I do not know, but I can assure the hon. member that this is the practice which has invariably been followed in the federal administration, in all departments, and that it is the practice followed in every other post office in this country.


J.-Wilfrid Dufresne: If the hon. minister will allow me, I shall quote from a report of La Presse of Saturday last-


Hugues Lapointe: Mr. Chairman, it is not necessary, I have read that article.


J.-Wilfrid Dufresne: Mr. Chairman, even if the hon. minister has read that article, I feel it is important that it be read to the house, as it contradicts the statements he has just made. The article is entitled:
Sunday work for postal workers.
The employees of the central post office will have to put in their eight-hour day.
From now on employees of the Montreal Central Post Office who work on Sundays, either regularly or irregularly, will have to attend mass on their own time. The formerly allowed forty-five minute period will be discontinued starting tomorrow, March 10.
Incidentally, Mir. Chairman, may I say that if time off previously allowed has been discontinued, this is clear inference that it existed. Therefore, if there was no definite regulation to that effect, as stated by the

hon. minister, there was at least a tradition which allowed time off to employees, or which perhaps gave the postmaster discretion to grant such time off.
I am not going to read the whole article, because it is not necessary, but I would merely point out that, at the close, it states:
It is felt, at the Post Office, that employees have ample opportunity to attend the early morning masses (i.e. at 6 a.m. in several churches) or even in the late afternoon (5.15 p.m.) at Notre-Dame.
I wonder, Mr. Chairman, why they specify Notre Dame church. To attend mass at 6 a.m., a postal employee who has to work right downtown, say at the corner of Craig and Windsor, and who lives in Ahuntsic, somewhere in northern Montreal, or again in Ville St. Laurent or Ville St. Michel, would then have to get up at five o'clock. If he has to report for work at 7.45 and doesn't want to be late-because everyone knows what happens to a postal employee in Montreal when he is late-he will have to wait till he is through, at 4.30 p.m., to attend mass at 5.15 at Notre Dame church. He will then have to travel from his place of work to Notre Dame church, spend there three-quarters of an hour or one hour at the religious service and take a further hour to get home.
I believe that the explanation given by the postmaster, and that given this afternoon by the hon. minister are anything but encouraging for the postal employees. In my opinion the statement by the minister to the effect that the regulations are the same in every department, is not quite accurate. It is well known that here in Ottawa, in the province of Ontario, on days of obligation, the various departments grant their employees one hour to attend religious services. If an employee starts working at nine, he is granted the privilege to report at ten, and I do not believe the hon. minister can deny that. If there has been a regulation established by the civil service commission, it certainly has not been followed in the past. May I say again that in Montreal, until March the 10th last, i.e. up until four days ago, on the eight hour period a postal employee was supposed to work, he was granted 45 minutes to attend religious services.
So I am now going to ask the minister whether he intends to take steps to grant Montreal postal employees the same privileges as are enjoyed by others, and to see that the postmaster of Montreal follows the same policy as is followed everywhere else.


Hugues Lapointe: Mr. Chairman, I have
already explained what is provided by regulations in this regard, and I can assure the house that no postal employee will be prevented by his work from attending religious services. Again I say that never has the Civil Service Commission authorized, as the hon. member contends, that a period of 45 minutes be taken off the eight working hours of an employee to enable him to attend religious services.
There has always been a rule, at least so I am told, whereby the employees could take that time off, but it was not to be taken off their eight hour day, and that is the rule applying to all postal employees, as well as to those of every other federal department from coast to coast.
I have insisted that this regulation be observed in Montreal and that each employee should have the opportunity of attending religious services if he so wishes, under the circumstances I have mentioned. Since such regulation is established by the civil service commission, I do not have the authority to establish the so-called tradition, to which the hon. member referred a moment ago, but I certainly have the authority to see that the regulation as established is observed. That, I have done.


J.-Wilfrid Dufresne: Then, judging from the statement the hon. minister made in answer to my own, from now on the postal employees of Montreal, on Sundays and days of obligation, will be permitted to disregard the orders of the postmaster, Mr. Rene Boileau, and take, from their eight working hours, the said three quarters of an hour to attend religious services. Is it what the hon. minister has just said?


Hugues Lapointe: Listen, I cannot state it more clearly, and I suggest that the hon. member read my remarks. I have nothing further to add. It is quite clear. I have explained What the civil service commission regulation provided in this regard.


J.-Wilfrid Dufresne: Supply-Post Office
I must inform you that if you again fail in your next examination or do not show up, steps will be taken to reduce your salary further at your next increase date or, if you have reached your maximum salary, at the date where you would have received such an increase.
Signed V. M. Chalin for Rene Boileau, Postmaster.
That is how the department deals with an employee of 35 years standing. He is required, after 35 years of loyal service, to pass, under the threat of a reduction in the salary he has earned for 35 years, an examination which he was able to write successfully 35 years before but which he is no longer in a position to pass with the same facility. He has to take other examinations; I have said and I repeat, Mr. Chairman, that this is foolish, ridiculous and simply leads to hardship toward devoted servants of the people. I suppose that steps should be taken, and will be taken I hope, to decide about the qualifications of employees when they pass their examinations but, for goodness sake, I wish the department would leave them alone for the rest of the time when they serve the state faithfully.
As proof of what I have said, Mr. Chairman, I have here some instructions cpming from Ottawa and dated July 1, 1956. They are called Operation Directives, No. 16 amended. They are sent to all Headquarters Directors, Regional Directors-
(Text):
For Insertion in all order books Operations Directive No. 16 (Amended) Headquarters Directors,
Regional Directors,
District Directors,
District Postmasters,
Postmasters, Staff Offices Departmental Examination Failures
(1) Employees are given two opportunities within their increase year to pass either one or two examinations as applicable.
(ii)	Employees who do not present themselves when listed or who have failed after two listings will not have a further opportunity until their regular annual examination date.
Salary Reductions
(c) who fail at an examination on two occasions for two consecutive years, regardless of the failure percentage obtained, will be considered for release from the service. If the employee is not released, the salary will be reduced one step in the salary range on his annual increase date. Each successive year from that point on, following two failures at an examination, a reduction in salary will be effected if the employee is not released from the service.
(iii)	Employees at the maximum salary who fail on two occasions during an increase year at an examination will be reduced one step in the salary range on their regular increase date.

(iv)	Repeated failures at required examinations even though not consecutive may result in release from the service.
I have known many people who have attended universities. When they got out of university, after passing their examinations, they were considered to be qualified lawyers, doctors or qualified in any other profession, and they did not have to pass examinations every year to find out whether they were still competent. We do not see any of these things in any other department of government. Right now we have to consider the fact that in one department, the Post Office Department, this is going on. I say that this should be stopped because a man with 30 years' or 35 years' service cannot be as good as he was 35 years previously when he passed his examination.
(Translation):
I repeat, Mr. Chairman, that, in my opinion, it is sheer cruelty towards postal employees to force them, under threat of a reduction in their salary or of dismissal, to take yearly examinations.
Those are the few comments I had to make, Mr. Chairman, I thank the hon. minister for the assurance he has given us a few moments ago to the effect that the situation which has existed in Montreal for a very long time will continue; I hope that he will take in very serious consideration, in the best interests of his department and of those who for many years have served it faithfully, the few observations which I have just submitted to the house.


Hugues Lapointe: Mr. Chairman, I would like to underline only one of my hon. friend's statements. He referred again to the situation in the Montreal central post office as regards attendance at religious services. He should read again the remarks I made when I explained exactly what the regulation was and gave him the assurance that this regulation would be observed.
According to the hon. member, I said that we would come back to the situation prevailing previously. I stated that every post office employee would have a certain time allowed to attend religious services in accordance with the civil service regulation.


J.-Wilfrid Dufresne: Does that mean, Mr. Chairman,-


Hugues Lapointe: Mr. Chairman, I do not propose to pursue that discussion any further. I have stated the situation quite clearly and I have nothing to add.


J.-Wilfrid Dufresne: In order to make all that definitely clear once again, I should like the minister to tell us whether the forty-five minutes to which we both referred would be taken on the eight hours to be worked by the post office employee on Sunday or feast days of obligation.


Hugues Lapointe: No. Here is what I said exactly. The employee has been allowed 45 minutes to attend mass or any other religious service. However, I did say that he had to fill in his eight hours work just the same.


J.-Wilfrid Dufresne: That is quite ridiculous. The minister's statement does not stand up. It is impossible to give an employee permission to do what he wants outside his working hours. That is his exclusive privilege, whether it be before or after his working hours. I said "during his working hours." If such is the minister's statement, it means that there is nothing changed in the instructions given by the Post Office Department in Montreal and which the minister himself seems to confirm here this afternoon. It means that, from now on post office employees in Montreal, who were entitled to and granted three quarters of an hour of their working time to attend religious services on Sundays and feast days of obligation will no longer have that privilege following the minister's statement.


Hugues Lapointe: I wonder if it happens sometimes that the hon. member can interpret anyone's words properly. What I said was, and I repeat it, that post office employees in Montreal, like those of all other post offices, are allowed to interrupt their work in order to attend religious services, on the condition that they come back and fill in the time they were allowed. That has always been the rule and that will continue to be the rule of the Post Office Department as long as I am in charge of it. That is a regulation which will be applied to all employees of the department whatever their religious denomination.


J.-Wilfrid Dufresne: Mr. Chairman, I thank the minister for being a little more precise than he had been and I conclude that from now on post office employees in Montreal will be permitted to take the time necessary to attend religious services provided at the end of their day's work they put in the time taken for religious services.


Mr. Bonnier:: Mr. Chairman, I do not know whether the members from Quebec city have the advantage of the same regulations as we
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have in Montreal concerning religious service hours, but I should like to point out to the hon. member that in Montreal we have masses at five o'clock and six o'clock in the morning. Moreover, we also have masses at seven o'clock and eight o'clock at night. Therefore, employees of the Post Office Department do not have to ask permission; they can attend mass at a time convenient to them. The hon. member should let us worry about what concerns Montreal and should concern himself with his own city of Quebec.


J.-Wilfrid Dufresne: Mr. Chairman, the hon. member for St. Henry (Mr. Bonnier), whom I have seen rise for the first time since I have sat in this house, just made a discovery. He imformed us that masses were being said in Montreal beginning at five o'clock in the morning and also in the evening. It is the same in other cities of the province of Quebec and there is nothing new in that.
Just now, we are considering the position of post office employees in Montreal. We are here to represent those who work in the various departments of the federal government and what I said about the post office employees of Montreal applies also to the electors I have the honour to represent and all those who work for the federal government.
I am quite willing to concern myself with the business of my electors. I have been doing that for the past four years. The hon. member for St. Henry could have risen more often. It might have been his best opportunity to prove that he was looking after the interests of the electors of Montreal.


Mr. Habel:: Mr. Chairman, I should like to ask a question of the hon. member for Quebec West.


J.-Wilfrid Dufresne: Go ahead.


Joseph-Alphonse-Anaclet Habel: It may be that the hon. member is more concerned with politics than with his religious duties. He may have forgotten that a church decree concerning observance of feast days of obligation allows people to work on such days without violating church commandments so long as they attend mass in the morning or in the evening. It may be that the hon. member had forgotten it.


J.-Wilfrid Dufresne: Mr. Chairman, I prefer my parish priest's interpretation and that of the archibishop's to that of the hon. member for

Supply-Post Office
Cochrane, and I think he is wrong when he says-


Mr. Gauthier (Portneuf):: Oh no.


J.-Wilfrid Dufresne: -that the fact of working on a feast day of obligation relieves us of the duty of attending religious services.


Pierre Gauthier: That is not what he said.


J.-Wilfrid Dufresne: That is precisely what he said.


Pierre Gauthier: Oh no, that is not what he said.


J.-Wilfrid Dufresne: At any rate, let us understand each other. Whenever I have to seek information on religious matters, I shall try to get it from the religious authorities or from my parish priest, instead of listening to rather fanciful explanations of the hon. member for Cochrane.


Pierre Gauthier: What a confused mind!


Mr. Michener:: Mr. Chairman,- (applause).


Some hon. Members:: Hear, hear.


Daniel Roland Michener: That has become a habit now. I do not intend to take part in this discussion-
(Text):
I am interested in a question that was asked a few days ago and wonder whether the minister could give the information now about the turnover in the letter carrier staff of the post office. Are there any statistics available to show the rate of resignation and hiring among letter carriers in the department?


Mr. Lapoinie:: I am informed that the general turnover throughout Canada is approximately 11.3 per cent. It is higher both in Vancouver and in Toronto as I mentioned the other day in answer to a question. In Vancouver it is 17.2 per cent and in Toronto 19.1.


Daniel Roland Michener: That is among the letter carriers rather than the entire staff?


Hugues Lapointe: Yes, but I am informed that the average is somewhat similar for all other employees.


Daniel Roland Michener: Has the minister any information about the number of letter carriers who have served the department a very long time? I recall that a letter carrier came with
the mail to my office for years and years and probably he had been with the department for 20 years or more. Are there any statistics concerning letter carriers who have 25 years' service?


Hugues Lapointe: I am sure I do not have that information but our turnover is higher amongst newly employed letter carriers or other employees than amongst older letter carriers and other employees.


Daniel Roland Michener: It was my impression that in recent years the turnover has been more rapid and that it has been increasingly difficult to keep the letter carrier staff complete.


Hugues Lapointe: Yes, it is, but of course it is higher among the younger people because of the higher level of employment and particularly where there is a tight labour market. That is why the average for Toronto and Vancouver is much higher than the general average throughout Canada.


Daniel Roland Michener: I have just one further question, Mr. Chairman. Has it ever been necessary to take letter carriers from one big centre to another because it was impossible to engage sufficient staff there?


Arthur-Joseph Lapointe: No, that has never been done.


Mr. Hamilton (Noire Dame de Grace):: Mr. Chairman, can the Postmaster General tell us what was the net increase in the number of letter carriers on the staff over the past year, let us say in the period from March 1, 1956 to March 1, 1957 or something of that nature?


Arthur-Joseph Lapointe: Yes, I have that information. The increase was 252. That is, the over-all number has been increased by 252.


John Borden Hamilton: In
other words, the engagements minus the resignations give a net increase of 252, which brings us closer to the figure in the estimate for last year. In his statement to the committee on the first item the Postmaster General told us that the increase in the number of householders served by letter carriers was 288,633. Later in answer to another question he told us that the average number of houses served by letter carrier was approximately 500. If we consider the 252 additional letter carriers as each serving 500 houses we come up with an increase in the number of houses served of approximately 125,000. How were the remaining 160,000-

odd houses served without increasing the burden on the letter carriers?


Hugues Lapointe: I suppose the loads of some letter carriers have been increased, but as I explained the other day the basis of the letter carrier's day is an eight-hour day. The routes are organized in order to permit him to do an eight-hour shift and no more than that. If the volume of mail increases and he cannot complete that route in eight hours, a rearrangement will be made. There is a constant reshuffling of these walks, particularly in the outskirts of Montreal, Toronto and other large centres which are developing quite rapidly. The number I mentioned is the net increase in letter carriers. I am informed that for the coming year we are providing for 506 more.


William McLean Hamilton: Am
I to understand from the Postmaster General's recent observation that the eight-hour days were somewhat longer in 1956-57 than they were in preceding years. Let us look at the situation. The Postmaster General says that we are not increasing the load, which was the impression given to us in answers to questions; that the average number of houses served by a letter carrier is about 500. He then comes to us today and says that this load is being distributed over an eight-hour day. He tells us also that if the volume of mail is not as great the letter carrier will not have as much to carry, yet the statistics show that this year the volume of mail carried is greater than any year before. I say to the Postmaster General in all fairness that we should have a more adequate explanation than has been given us to now.
It has been demonstrated by previous figures that the average number of calls handled by our letter carriers is increasing steadily and that their burden is also increasing steadily and it would appear that the officials of the department are not giving sufficient consideration to the representations of the employees in this regard. Some of us have talked to these men and have found out what they are thinking and how they are working and we have reason to know that what we say is based on the facts. We now have further proof of this from the minister.
Can the minister not give us a further explanation as to why the department finds it necessary to increase the length of route and the burden of the average carrier?


Hugues Lapointe: As I mentioned before, the routes are based on an eight-hour day. The number of calls made may vary, and
The Budget-Mr. Harris undoubtedly does, depending upon the volume of mail which a letter carrier has to deliver. When the volume is such that a letter carrier is not able to deliver his mail within eight hours an adjustment of the route is made. One letter carrier may have only 250 calls to make because he has a high volume of mail to carry, while another one may have 800 calls because the volume is not so great. That second letter carrier may be able to complete his route in eight hours.
That is the basis of the operation and all routes are adjusted on the basis of an eight-hour day.


John Borden Hamilton: Is
the minister telling us that in previous years the letter carriers were not working a full eight-hour day?


Hugues Lapointe: I did not make that statement at all. As my hon. friend knows, we introduced in the last years these call boxes to which a considerable part of a letter carrier's mail is taken.


William McLean Hamilton: You
had those before last year.


Hugues Lapointe: I said in the last years. Mail is taken to these relay boxes located in different sections of a route and the carrier is thus able to handle a heavy volume of mail without having to carry it all himself from the starting point.
Progress reported.
At six o'clock the Speaker resumed the chair and the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


Walter Edward Harris: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, hon. members will recall that a year ago I was confident that 1956 would be a year of further economic expansion. We have exceeded our expectations.
The budget white paper which I tabled yesterday afternoon provides a record of the economic trends and events of the past year. This evening I need only comment briefly upon them.
A year ago I budgeted on the basis of a 5 per cent increase in production, assuming, as

The Budget-Mr. Harris usual, normal crops and a stable price level. I was careful, however, to point out that we were becoming subject to inflationary pressures and that both fiscal and monetary measures would be needed to restrain the upward thrust upon prices.
As events turned out, we had considerably better than normal crops, and notwithstanding restraining influences the price level advanced about 4 per cent. The final result appears to be that the gross national product increased by nearly 11 per cent to a record total of $29f billion. Excluding the rise in prices, our gross physical output was about 7 per cent higher than in 1955, and the combined increase for 1955 and 1956 has established a new record for our expanding economy.
This 7 per cent increase in real terms is about double the average annual increase which we might normally expect. It represents not only more employment, higher wages, and improved standards of living, but also a greatly improved and increased stock of capital goods and equipment which can promise still higher production in the future. This rate of increase has, however, put considerable strains on our physical resources in manpower and materials, strains which have been reflected in a persistent upward pressure on prices.
The most striking feature of the past year was the extraordinary increase in capital investment. In 1955 total public and private investment was $6.3 billion. In 1956 the figure reached $7.9 billion. In dollar terms the increase amounted to 25 per cent. Inflationary cost pressures were, however, more pronounced in capital investment than elsewhere, and the increase over 1955 in terms of physical volume was about 17 per cent. It remains true, however, that 1956 was the greatest year of capital expansion in our recent history. We used more than 26 per cent of our total collective energies in building more, bigger or better mills and factories, power plants and mines, oil wells and pipe lines, roads, schools, hospitals and houses.
A good deal of this investment program was financed from outside Canada. The net inflow of capital into Canada was $1.4 billion. As a counterpart of this, a considerable proportion of the capital equipment put in place came in the form of increased imports of capital goods. In 1956 our total imports were up 22 per cent, but our imports of capital goods increased by 40 per cent. By contrast our imports of consumer goods increased by only 10 per cent.
A second important element in the high level of business last year was the further


growth in the demand for Canada's export commodities. The increase of 12 per cent in our exports was the result in large part of capital investment undertaken in earlier years in mining, pulp and paper, oil and power development, and similar resource industries; and this is an indication of what we may expect from our present capital investment program. We also had the benefit of a substantial recovery in our grain exports. The increased export demand for our products was the result of buoyant conditions in the United States and continued improvement of economic conditions in our overseas markets. About half of the increase in total exports went to the United States, but there was a relatively greater increase of 14 per cent in our overseas exports.
Much the largest element in total demand is, of course, the expenditure by consumers on goods and services. This showed an increase of 8 per cent in 1956-a reflection of higher employment and higher incomes. On the average there was an increase of 240,000 persons, or 5 per cent, at work in industry during the year, and wage increases were widespread. The increase in earnings for the average worker in industry was about 5J per cent-a larger gain than in any recent year. Since average consumer prices in 1956 were only 1J per cent above 1955, Canadian industrial workers, with average increased earnings of 5J per cent, undoubtedly achieved a significant improvement in real earnings.
Farmers also shared in this general improvement. Better than average grain crops and greater sales and deliveries have increased western cash income. Elsewhere the decline in prices has been halted and there has been some improvement in the prices of a number of farm products. If nature is kind and markets remain as good in 1957, per capita farm incomes could equal, or surpass, the all time record of 1951.
In round figures the personal incomes of Canadians rose by $2 billion in 1956. Of this large figure, $1.4 billion went in increased personal expenditures, $200 million in higher tax payments to federal, provincial and municipal governments, and $400 million in increased savings. For the nation as a whole, personal savings were $860 million in 1955, and $1,260 million in 1956. That is an increase of almost 50 per cent.
The various levels of government in Canada were also in the market for more goods and services. Total government expenditures for these purposes increased by 9 per cent over 1955. Purchases by the federal government of goods and services rose by 7 per cent, and those of the provincial and municipal governments by 14 per cent.

Hon. members will recall that I expressed some doubts a year ago-doubts which were widely shared-as to whether our economy possessed enough resources to meet all the demands that seemed likely to be made upon them in 1956. These doubts were particularly related to the capital investment program, as well as the expected increase in export demands and in consumer spending. Our capacity to cope with the situation was certainly strained, but the employment of a larger labour force helped to meet the situation.
Stimulated by the strong demand for manpower there was an increase of 4 per cent in the size of the total labour force. This is an unusually high rate of increase. A normal annual addition would be more like 2 per cent. Increased immigration helped in 1956, but the additional increase in the labour force, beyond the normal increment of younger people entering the market for the first time, came chiefly from retaining older people in employment, and attracting into industry more married women workers and younger people under 18 years of age-at least during the holiday periods-many of whom would not normally be looking for work.
This large increase in the number of people at work helps to explain how it was possible for supply almost to keep pace with demand, and why the gross national product could show an increase in real terms of 7 per cent in one year. In addition, of course, there was improved productivity resulting from new and better plant and equipment, and the increase of 3 per cent in average number of hours worked per week enabled the construction industry to come as close to its targets as it did. While Canadians did do extremely well in meeting the capital investment intentions, we did not wholly succeed. Pressures on manpower and materials pushed up construction and equipment costs by more than 6 per cent, so that in real terms we achieved about 93 per cent of the revised capital intentions for 1956. The balance is, of course, carried into 1957 and will create employment and incomes during the coming season.
A considerable part of the demand for goods and services was met, not from Canadian resources, but from external supplies. In brief, the great increase in commodity imports was directly related to our rapid economic expansion. Indeed, without most of these increased imports our 1956 expansion could not have been achieved. Imports increased by $1 billion. The big increase was in capital goods-machinery, equipment, structural steel, and so forth-and the additional imports were balanced by the additional inflow of capital from abroad.
The Budget-Mr. Harris
To complete my remarks on the balance of payments, we had a commodity trade deficit of $734 million compared with $208 million in 1955; and an increase of $180 million in the net deficit on non-merchandise account- freight, travel, interest and dividends, et cetera. In sum, the total deficit on international current account for 1956 was almost exactly $1,400 million. This is an inevitable accompaniment of our extraordinarily rapid rate of expansion. It is a feature of rapid growth which if long continued will raise real problems for all of us in Canada. It could be moderated by further increasing our own domestic rate of saving.
Perhaps I should add a few words on the nature of this capital inflow. Direct foreign investment in Canadian industry increased by more than $100 million to a total of $525 million; but by far the greatest increase was in portfolio investment, that is, in new Canadian issues sold abroad and in foreign purchases of existing Canadian securities. In 1955 there was a net outflow of $35 million in this form; in 1956 there was a net inflow of $750 million.
In 1956 the provinces and municipalities borrowed through the sale of net new bond issues a total of $772 million, or 68 per cent more than in 1955. Of this $772 million, $280 million was borrowed in the United States, and net sales in Canada were almost exactly the same as in 1955.
This increase in portfolio borrowing and investment was, of course, the result of a more intense level of economic activity in Canada, and a consequent demand for capital funds in excess of Canadian savings which was reflected in relative changes of interest rates at home and abroad. More borrowing abroad and more importing from abroad were both symptoms of the stresses and strains of a booming economy. At the same time, however, this increased reliance on imports relieved some of the pressure on Canadian prices.
Despite this, for the first time in about four years the general level of wholesale and consumer prices moved upwards, by 2J and 3 per cent respectively, and construction and equipment costs rose by more than 6 per cent. The major factor in the increase in the consumer price index was the recovery of agricultural and food prices, but practically every other item in the index edged up a little and we may not have seen the end of such increases yet. Not all of last year's cost increases in wages, freight rates and materials have had time to work through to the retail level. Consequently, it may well be that the full effects

The Budget-Mr. Harris of the heavy spending program of 1956 will only reveal themselves in the prices of finished goods during 1957.
I should add that Canadian prices would have risen by more than they did had it not been for the 4 per cent rise in the external value of our dollar which developed during 1956. This in itself served to keep commodity prices in Canada lower than they would otherwise have been. We can hardly count on a similar further rise in the external value of our currency in 1957, and the trend could be reversed.
The same excess of demand for goods and services was also reflected in a "tight" credit situation. The monetary policy of the Bank of Canada has been one of restraint, and the fiscal policy of the government has worked in the same direction. This is as it should be whenever the volume of spending in the country exceeds the capacity of the economy to produce the goods and services demanded. As I have said before, the aim of the government, and of the Bank of Canada, is to encourage economic growth at the highest rate which can be sustained over a period of years without endangering the stability of prices. The policy of resisting inflationary pressures when they appear is designed not to reduce economic growth but to increase it by stretching out the period in which conditions favourable to growth will continue without the development of unsound conditions and distortions which would interfere with adjustment and growth.
I am sure that most thoughtful people know that a condition of "tight money" and higher interest rates is not the wilful creation of the government or of the banks or of the Bank of Canada. It is true that the Bank of Canada could have further increased the supply of money and credit. Such action would have given greater leeway for inflationary pressures to push up prices and costs to the great disadvantage of export and domestic industries alike, and indeed of all sections of the community.
Money is "tight" in Canada because our great rate of expansion has brought about a great increase in the demand for borrowed funds. The supply of such funds increased very substantially: witness the fact that net sales of new bond and stock issues-excluding Government of Canada's-were 80 per cent higher than in 1955, and that total provincial, municipal and private debt outstanding in the form of bank loans, bonds, and mortgages rose by 15 per cent during 1956. But the demand for borrowed funds increased even more.
The capital market, like the market for anything else where demand was increasing


faster than supply, has reflected the relative scarcity of savings, and the price of credit has risen. Higher rates of interest have given encouragement to saving, have moderated a certain amount of spending and have caused some capital programs to be postponed. Although some potential borrowers have been disappointed we may be sure that most of the construction projects which have been delayed in 1956 will go forward in the year ahead of us.
Meanwhile, the economy has kept on a fairly even keel, despite the speed of its advance, and prices and living costs have advanced only moderately. To have achieved such expansion with so little disorganization is, I think, a source of satisfaction.
I come now to consider the economic prospects for the coming fiscal year. On the present evidence I think we can expect a continuation of the current high level of economic activity throughout the coming year. There may, as always, be some unevenness between industries and regions, but by and large I expect the momentum of expansion to continue, at a somewhat more moderate pace but strongly enough to ensure further increases in production and employment, and a continuation of rising standards of living.
I find support for this in the information released a few weeks ago by my colleague the Minister of Trade and Commerce with respect to investment intentions for the coming year. It will be recalled that this showed that total capital expenditures in Canada in 1957 are expected to increase by a further 8 per cent. Having regard to the condition of overstrain which characterized our economy in 1956, this indication of a more moderate rate of growth is to be welcomed. But even as it stands it will impose a substantial strain on our resources. An investment program of $8.5 billion will claim more than 27 per cent of our prospective national output at today's prices. If we are to succeed in an effort of this magnitude we shall either have to save a good deal more or borrow from abroad a good deal more even than we did in 1956. I earnestly hope that Canadians will themselves save more and invest it profitably in their own future. Later I shall be making a proposal which will lead in this direction.
Commodity exports should continue to increase in total through 1957. There will, of course, be some uncertainty as to the level of production in Europe. In the United States, business remains firm and there seems to be confidence in another year of steady growth. Most of our major export industries are therefore looking forward to a further increase in foreign demand. The increases

may not be as great as they have been these last two years, but they should still be considerable.
The total demand for goods and services by all three levels of government in Canada, which constitutes roughly one-sixth of all expenditures, seems likely to increase moderately. Consumer expenditures, which are responsible for nearly 60 per cent of all spending, should continue to grow in 1957 in line with the further expansion of employment and personal incomes. A considerable increase in wage rates is already built in as a result of wage agreements made last year or earlier. Farm incomes should be well maintained unless grain crops in the western provinces are disappointing. There is no guarantee of course that the sale of consumer goods will be easy or as profitable. Costs have been rising and in many lines competition will be strenuous. Corporate profit margins show some signs of narrowing, as both competition and consumer price resistance stiffen.
The probability that almost all types of demand are likely to increase suggests that the forces making for an upward pressure on prices are still present. Clearly, much will depend on the extent to which increased manpower and increased productivity can be brought into play.
I do not believe that we can count on obtaining as large an increase in the labour force this year as was experienced last year. Nevertheless, there will be a substantial addition by reason of the expected increase in immigration, an increase which appears likely to provide us with a greater percentage of workers than is usually the case. Further, while industrial capacity is continually growing, some industries may not have an increased requirement for manpower. All in all, I believe, there is a good possibility that the inflationary pressures which have been present throughout the past year may begin to moderate during the coming year.
For purposes of revenue forecasting I am assuming that the increase in the gross national product will be about 5 per cent, to reach a total of $31| billion. About one-third of this increase will be the result of higher prices, since my estimate is based on the present level of prices which is about 2 per cent above the average for 1956.



GOVERNMENT ACCOUNTS, 1956-57

[Stage Direction]
I should like now to refer briefly to the government's accounts for the fiscal year which will end on March 31. They are set out in detail in the white paper tabled yesterday and I do not propose to review them 82715-140
The Budget-Mr. Harris again at this time. 1 should, however, remind hon. members that these are interim figures and that the final figures will not be available until August.
The results for the year may be stated briefly. In my budget speech last year I budgeted for revenues of $4,763 million, expenditures of $4,650 million and a surplus of $113 million. It appears now that our actual revenues will be about $5,149 million, our expenditures about $4,867 million and our surplus about $282 million. This surplus of $282 million more than offsets the deficits of $185 million incurred in the two preceding years.
The increase in revenues of 8 per cent over forecast is a reflection of the high level of economic activity that prevailed throughout the year and which produced a gross national product 7 per cent higher than the $28 billion I had felt justified in assuming a year ago.
Expenditures are $217 million or about 5 per cent higher than forecast. Of this increase, one-half represents two charges of $50 million each, one for a reduction in the unamortized portion of the actuarial deficiency in the superannuation account and the other for an additional provision for the general reserve against our assets which have increased by more than $600 million in the past two years. Of the remainder, $15 million is due to higher charges for interest on the public debt and about $10 million more for larger payments to the provinces under the tax rental agreements. In addition there were other outlays, such as increased grants to universities and expenditures related to the recent tragic events in Hungary, which were not foreseen a year ago. Apart from these items which I have mentioned total expenditures were within 1| per cent of my original forecast.
As usual in addition to the expenditures for government services that are included in the budgetary accounts, we have made loans and advances and disbursed large sums for a variety of other authorized and essential purposes. During the fiscal year these outlays amount to $454 million. To meet them we will have substantial sums available from the repayment of loans and advances and from other non-budgetary sources. Details of all these are given in the white paper.
Although the budgetary surplus is about $282 million, our outstanding unmatured debt at the end of the fiscal year will be about $523 million less than a year ago. This has been achieved by using the $282 million available from our budgetary operations; together with the net sum of $110 million representing the excess of receipts over disbursements
[Stage Direction]
The Budget-Mr. Harris for our various loan, investment, insurance, pension and other non-budgetary accounts, and by drawing down our cash balances by some $131 million.
During 1956-57 a large volume of government securities was redeemed or refinanced. Net sales of Canada savings bonds series 11 are estimated at $790 million. In addition to the refunding of treasury bills which mature weekly, new securities amounting to $1,465 million were issued and we redeemed outstanding securities or acquired them for our sinking fund or securities investment accounts in the amount of $1,988 million. As a result, as I indicated a moment ago, we were able to reduce the unmatured debt held outside these government accounts by $523 million during the fiscal year.
There was a sharp rise in interest rates during the year, particularly on short-term securities. The average rate of interest on the government's unmatured debt will be about 3.04 per cent at the end of the fiscal year compared with 2.85 per cent at the beginning of the year.
At this point I should like to report briefly on the operations of the old age security fund during 1956-57. Pensions of $40 a month are paid from the fund and during the year these payments will amount to $379 million. Revenues of the fund which are derived from 2 per cent taxes on sales, corporation profits and personal incomes are estimated at about $373 million. The deficit for the year of about $6 million has been financed by a temporary loan from the Minister of Finance. In the supplementary estimates parliament is being asked for authority to charge this deficit to expenditures in the current year.

[Stage Direction]
A word, Mr. Speaker, about federal-provincial relations, the current tax rental agreements that were signed with nine provinces in 1952 expire on March 31 of this year. During the last session of parliament an act was passed authorizing the government to conclude new and more generous financial arrangements with the provinces for a further five year period. While at this date no formal agreements have been signed, we have been advised of the intentions of the provincial governments on this matter. All the provinces, with the exception of Ontario and Quebec, have indicated their intentions of entering into rental agreements for a further five years for individual income taxes, corporation income and corporation taxes, and succession duties. Ontario has decided to continue to levy its own succession duties, and to reenter the corporation tax field, but will rent

the individual income tax field. Quebec will continue to levy its own taxes in all these categories.
Agreement has been reached on all important terms of the proposed rental agreements and it is expected that these will be formally concluded in time for the first monthly payments which are due to be made on April 17. For the eight provinces which are continuing to rent all three tax fields the new scale of payments in 1957-58 are estimated to be $240 million which is $40 million, or 20 per cent, above the 1956-57 scale of payments.
In his budget speech three weeks ago the provincial treasurer of Ontario referred briefly to the federal-provincial tax-sharing arrangements. I do not intend to re-argue this matter, but I do want to comment on two statements. The Ontario treasurer referred to the prospective federal surplus adding that "nearly half this large surplus comes from Ontario taxpayers", and later he said that the $155 million of tax equalization payments to the other provinces "will come to a large extent from Ontario taxpayers".
My comment, Mr. Speaker, is that every dollar of federal revenue comes from Canadian taxpayers, and every dollar paid in stabilization or equalization payments is contributed by Canadian taxpayers.
Canadians living in Ontario pay exactly the same rates of tax as are applicable to all other Canadians, and Canadians living in Ontario derive their incomes in considerable part, directly or indirectly, from consumers and producers in other parts of Canada, just as Canadians elsewhere may derive part of their incomes from business activity that takes place in Ontario.
Three weeks ago the Prime Minister informed the house of the appointment of a royal commission to re-examine our financial relationships with Newfoundland in accordance with the terms of union of 1949. We shall be co-operating fully with the commission in their study of this most important matter.

[Stage Direction]
Two years ago I announced our intention to appoint a royal commission to conduct an inquiry and to make a report upon Canada's economic prospects over the next two or three decades. The commission have published a preliminary report which hon. members, I am sure, have read with great interest. In this report the commission have indicated some of their preliminary views and impressions on a considerable variety of topics in brief and summary form.	„	. j	j

The general picture they have developed of Canada in approximately 1980 has been most stimulating. Indeed, by the very fact of their public hearings and through the numerous briefs prepared and presented to them by a great variety of responsible organizations, one of the main objectives of appointing the royal commission has already been achieved. I refer to the fact that through these hearings and in the preparation of these briefs large numbers of Canadians have been thinking more imaginatively and more precisely about our longer term prospects and problems. Whether the particular views on particular questions developed in these briefs and reports prove to be completely accurate or valid is in one sense a secondary matter. The important thing is that thousands of Canadians in all walks of life are thinking and will continue to think more constructively about our long term future, as a result of the commission's work.
On the preliminary report itself I do not propose to comment at length, except to say that many of the views it expresses will command general assent, and that on the other hand it does not avoid a number of controversial questions on which differences of opinion are to be expected.
With respect to some of the matters referred to in it, however, may I say the government is already conducting further active studies on the possibilities of stimulating the development of the Atlantic region which has already been proceeding at a gratifying rate in recent years, but which we would all like to see accelerated further. To this matter I shall return in a few minutes. Our colleagues in the other place have already initiated a study of land-use questions, and the government had anticipated the report by announcing in November important additional assistance to our universities and institutions of advanced professional and technical training, through the National Conference of Canadian Universities, through the Canada Council and, in the coming year's estimates, through the Department of Labour.
But on most of the major issues we shall await the final and detailed report before reaching such definite decisions as may be required. It should be further noted that many of the commission's suggestions are addressed, not to governments, but to private or non-governmental persons and organizations.
In the meantime I want to record our appreciation of the great amount of thought and work given and still being contributed by these five distinguished Canadians and by the staff they have assembled for this task.
The Budget-Mr. Harris
One of the matters discussed in the Gordon report is the handicap which the Atlantic provinces have to contend with due to difficulties of transportation, and to post-war increases in railway freight rates. A good deal has been done in recent years in an effort to offset the higher costs of marketing the products of the Atlantic region caused by the long distances between the region and its markets in other parts of Canada, and to improve the means of communication within the region itself. For example, we have paid more in freight subventions so as to facilitate a greater movement of maritime coal to central Canada, and to enable maritime agriculture to obtain cheaper supplies of western feed grains. We have also spent substantial amounts for the improvement of shipping services and to meet the deficits incurred in coastal shipping.
In the view of the government we should now undertake a fresh and comprehensive examination of the entire transportation situation of the Atlantic provinces in order to determine what changes could contribute towards the economic welfare of the region. Among other questions, we should consider how best to supplement or improve some of the present means of transport in order to improve the transportation system generally. In this way it might be possible for the Atlantic region to get more value from the present level of federal expenditures in this field and from any increased funds that might become available.
It is therefore the government's intention to launch an immediate review of the maritime transportation problem in general, and thereafter to put forward proposals as soon as feasible.
In the meantime there is one matter on which it is possible to act immediately. I refer to the special difficulties of the Atlantic provinces caused by the various horizontal increases in railway freight rates over the last decade. These increases have fallen rather more heavily on the traffic moving from the Atlantic region to central Canada than on rail movements within the central provinces. As a consequence the competitive position of maritime products in the Montreal area and points west has been adversely affected.
A study of the average increase in freight rates since 1947 on this traffic, as compared with the increase in the rest of Canada, shows that an increase in the subvention paid under the maritime Freight Rates Act is justified. That is, an increase in the subvention from its present 20 per cent level to a level of 30 per cent in the case of outbound traffic will restore these rates to the position they occupied in relation to other Canadian rates at the end of world war II.
[Stage Direction]
The Budget-Mr. Harris
It is proposed therefore to provide for this increased rate of subvention. The additional annual cost to the treasury will be about $2 million. Of course, a change of this kind will only go part way towards meeting the transportation problems of the Atlantic provinces. Before making further proposals however we must first of all determine the most essential transportation needs of the region in the light of developments over the last decade or more.
Another matter affecting important areas of the Atlantic region is the relatively high cost of electric power as compared with most other parts of Canada. The government has had a number of proposals put before it, but has not as yet been able to satisfy itself that any of these projects are both technically and economically sound and at the same time beyond the financial capacity of the provincial government concerned. The government is continuing to examine some of these proposals in the context of the needs of the maritime provinces as a whole.
However, it is suggested by experts in the field of electric power that advantages would result for Nova Scotia and New Brunswick from the interconnection of their electrical systems. Such interconnection would reduce the requirements for standby capacity and would permit the most advantageous location of thermal plants and the building of larger and more efficient thermal units.
If the governments of Nova Scotia and New Brunswick agree and in order to help reduce the differential in the cost of power between those provinces and certain other parts of Canada, the federal government would be prepared to provide the main interconnection facilities within and between those provinces, and to build and operate such large thermal plants as may be needed either to replace existing ones, should efficiency so indicate or to meet the requirements of growth and industrial development.
William Earl Rowe: We should have an election every year.


Walter Edward Harris: Under this proposal, the transmission lines would be rented on a non-profit basis and the power would be sold at cost to provincial electric systems. The purpose would be that the plants and other facilities built under this program can be acquired by the provinces at any time on payment of their amortized cost.


William Earl Rowe: It is too late.


Walter Edward Harris: As I have said the relatively high cost of electric power in the Atlantic region as a whole will continue to receive careful study.



TAX POLICY

[Stage Direction]
I said earlier that assuming normal crops, no unforeseen adverse events and a normal rate of growth I would expect a gross national product in 1957 of about $31£ billion in terms of today's price level. Under these conditions, and having regard to other relevant factors, I would expect total revenues in the coming fiscal year of $5,225 million if no changes in our present tax laws were made. This forecast of an increase in revenues of $75 million, or only 1J per cent, requires a brief explanation.
First, in 1956-57 we benefited from a number of non-recurring items of revenue. There was an amount of perhaps $75 or $80 million of catching up in corporation tax revenues from the lower corporate incomes in 1954 to the higher corporate incomes of 1955, resulting as I explained a year ago in a certain amount of doubling up of corporate tax payments. In the coming year our corporate tax receipts are likely to be back to a normal flow; and on the basis of present data total corporate profits in 1957 seem likely to be about the same as in 1956. Last year nearly $30 million more was paid in succession duties than I can expect in the coming year, and we also received a special payment of $43 million from the Bank of Canada representing reserves which became redundant when the Bank adopted "amortized value" as the basis for valuing its security holdings. In this sense we received in 1956-57 about $150 million in non-recurring items of revenue.
In addition, under the new federal-provincial tax sharing arrangements, where a province decides to collect its own corporation taxes the federal rate of corporation income tax in that province is abated by 9 percentage points, instead of the previous 7 points. This means that in the province of Quebec we shall be collecting 2 percentage points less corporation income tax, and in Ontario, which had previously rented this field, we shall be collecting 9 percentage points less. This will reduce our collections under the corporate income tax by more than $100 million in the fiscal year 1957-58.
If I may have unanimous consent, Mr. Speaker, I shall place in Hansard at this point a table showing the details of our expected revenues of $5,225 million in 195758 if our present taxing statutes were unchanged.
Mr. Speaker:: Is unanimous consent given?


Some hon. Members:: Agreed.


Walter Edward Harris: The table is as follows:



TABLE I

[Stage Direction]
Revenues Before Tax Changes
Preliminary Forecast 1956-57	1957-58
(millions)
Personal Income Tax ..	$1,413	$1,570Corporation Income Tax ....	1,285	1,200Non-resident Tax 	77	80Succession Duties 	87	60Customs Duties 	565	590Sales Tax 	725	775Excise Duties and Taxes	537	558Other Taxes 	17	2Total Tax Revenue ..	$4,706	$4,835Non-tax Revenue 	443	390Total Revenue 	$5,149	$5,225Five billion, two hundred and twenty-five	million dollars is a	large	absolute	amount,but I should like to	point	out that	it is adecreasing fraction	of our gross	national
product. It is 16J per cent as compared with about 19 per cent five years ago.
Government expenditures also will reflect the rates of growth in our economy, but despite the increasing demands imposed by our expanding economy they will exceed those for the year now ending by only a modest margin. This is due to the policy of deferring all but the most essential public works and other capital projects and to the government's continued efforts to ensure the utmost efficiency and economy in all its operations.
During this session I have tabled main and supplementary estimates in the amount of $4,844 million. Since then the government of Ontario has announced its decision to levy its own corporation taxes, and that will reduce our payments to Ontario by about $132 million. On the other hand, I propose for the coming year that a further $50 million be credited to the reserve against assets, bringing it up to about $600 million against total assets of about $8 billion. I am also proposing to appropriate another $50 million to reduce the unamortized deficit in our superannuation account to $89 million. In addition early in the new fiscal year we shall be paying over to the Canada Council if royal assent is given to the bill the amount of $100 million. These additions and subtractions to the main estimates produce a figure of $4,912 million.
There will, of course, be the usual further supplementary estimates and I should expect about the normal volume of lapsings. I have concluded that further supplementaries, including the new items I mentioned a few minutes ago, are likely to exceed lapsings by about $8 or $10 million, so that all in all, I am budgeting for total expenditures of $4,920 million.
The Budget-Mr. Harris
With expected revenues on the present tax base at $5,225 million and expenditures at $4,920 million we would have a surplus in the coming year of $305 million, or slightly more than in the year now closing.
I have already explained my reasons for believing that the severe inflationary pressures, which we have resisted so far with a high degree of success, are still with us to a considerable extent. There are signs that these pressures are beginning to moderate, but it would not be wise to let down our guards of fiscal and monetary policy at this juncture. Too hasty action would imperil the success we have achieved so far, and an inflationary rise in prices could take away from our people far more in rising costs than they would benefit from even large reductions in tax rates. Much as I might like to do so, I cannot recommend to this house any major reductions in the general level of taxation.
We can, however, do something, and the government has decided to recommend to the house a combination of a moderate increase in certain benefit and other payments, tor gether with some measures of tax relief which will give immediate benefits to every family in Canada and some further reductions in taxes that will accrue to most taxpayers toward the end of the fiscal year.
My colleague the Minister of Agriculture announced two weeks ago an increase in the payments on the movement of feed grains, and earlier this evening I announced increased payments under the Maritime Freight Rates Act. I can now announce improvements in certain social benefit payments.
We propose to increase the scales of payments under the Pension Act and the War Veterans Allowance Act. In brief, the basic monthly scale for total disability under the Pension Act will be increased from $125 to $150, or if married from $170 to $200. The widow's pension will be raised from $100 to $115. Under the War Veterans Allowance Act the increase in the married rate will be from $108 to $120 a month. The increased payments will be as from July 1 and the total cost will be about $25 million in a full year and $19 million in this fiscal year.
In the case of family allowances, the present scale of payments is $5 a month in respect of all children under 6 years of age, $6 from 6-9 years, $7 from 10-12 years, and $8 for those 13 to 16 years old. We propose to raise the monthly payment in respect of the youngest age group, that is, those under 6 years of age, to $6 a month, and for those in the 10 to 12 age group to $8 a month. That is, in future, there will be only two age groups, those under 10 for whom we will pay $6 a
[Stage Direction]
The Budget-Mr. Harris month, and those from 10 to 16 years of age in respect of whom the allowance will be $8 a month.
This will cost $42 million in a full year. Because of the great amount of detailed clerical work in recalculating most of the payments due to 2 J million families, these increased payments will become effective on September 1, and the cost in this fiscal year will be about $24J million.
Effective July 1 we propose to increase all payments under the Old Age Security Act by $6 a month, that is, from $40 a month to $46 a month. This increase will cost $60 million in a full year and $45 million in the fiscal year 1957-58.
In respect of old age assistance and pensions to the blind and disabled, we propose to increase the maximum payments which we share with the provinces to the new old age security level, that is, $46 a month. This new maximum will apply from July 1 on. The cost in a full year will be about $6 million, and the cost in this fiscal year $4£ million.
I should add that the changes I have indicated in these scales of benefit will alsc involve some changes in the permissible incomes where the payments are related to the need of the recipient.
The total cost of these additional payments svill be about $133 million in a full year, and about $93 million in the fiscal year 1957-58.
The changed payments will be made to or on behalf of something over 4J million Canadians.
tax changes:

[Stage Direction]
Although the general level of income tax must for the time being remain unchanged, there are two new features for improving the tax system which can be introduced now.
The first of these innovations relates to tax postponement on income set aside for retirement. At present where, under a pension plan, the employer contributes to a retirement fund and withholds part of the employee's remuneration for the same purpose, tax is paid on the pension when received, that is on the cash income when the employee receives it for spending, and not on income flowing into the fund which the employee does not receive in that year. It is now proposed to introduce a general policy of allowing tax postponement on limited amounts of earned income set aside for retirement by any taxpayer whether an employee or not. This privilege will be of general application.
Donald Methuen Fleming: A Conservative victory!


Clarence Decatur Howe: The only one this year.


Walter Edward Harris: My hon. friend has made the remark "A Conservative victory." Earlier this evening the hon. member for Dufferin-Simcoe (Mr. Rowe) made the remark that it is too bad there is not an election every year. It has just occurred to me that if that were so his party would disappear completely.


William Earl Rowe: You mean you would give that much away every year?


Walter Edward Harris: To be eligible for income tax deduction a taxpayer will be required to file with his return a receipt for an amount paid towards the purchase of a particular kind of annuity. The annuity must be payable in equal annual amounts for the full life of the taxpayer and it may provide upon his death for annual payments to his spouse not exceeding those he was receiving. The annuity may provide for a term certain up to fifteen years. It may be arranged to commence at such time as the taxpayer wishes, but its commencement may not be postponed beyond age seventy. However, once the taxpayer starts receiving payments under an eligible annuity he may make no further income tax deductions for retirement income. These annuities will not be assignable and the person issuing them may not redeem the contract for cash or make any loan against them. With "inpayments" free from tax the "out-payments" under a registered retirement annuity will, of course, be fully taxable.
Payments toward the purchase of the type of retirement annuity just described will be deductible from income for tax purposes up to 10 per cent of the taxpayer's earned income, but the dollar amount deducted in any year may not exceed $2,500. If, however, a taxpayer is currently paying into a registered employer-employee pension plan, the dollar limit on his deductions for a separate annuity contract outside the registered plan together with his contributions already being made under the employee plan may not be more than $1,500 a year. If, for example, an employee is now contributing 6 per cent of his earnings under a pension plan he may, on his own account, use another 4 per cent of his earned income to purchase a retirement annuity supplementing the pension being built up in his employment, always subject to the maximum of $1,500.
It is probable that certain groups such as the professions may wish to arrange to manage the fund being built up by contributions of their members. To permit this to be done authority will be asked for governor in council to allow corporate trustees to accept funds and issue eligible receipts therefor provided that the funds so accepted are

subsequently used for the purchase of the approved type of retirement annuity for the contributing taxpayer before he reaches age 70. The funds accepted by a person eligible to manage or administer a retirement fund may not be returned in cash directly to a contributor but may be returned to his estate upon his death. The general rule is that the funds so built up must be used by the person managing the fund for the purchase of a retirement annuity for the contributor.
At the conclusion of this statement I shall be tabling a resolution to amend the Income Tax Act and in it will be set forth in some detail the essentials of the proposed legislation. Premiums in 1957 paid under new contracts for retirement annuities which conform to the conditions just set forth will be eligible for income tax deduction. Such new annuity contracts may be separate or they may be in combination with a new insurance contract. In the latter case the appropriate part of the combined premium for annuity and insurance will be eligible for deduction from income for tax purposes if the premium receipt shows separately the part of the premium paid for the annuity alone. Premiums paid under existing contracts for annuities, only where such annuity contracts comply with the terms set forth, may be eligible for deduction but only if the taxpayer elects in writing to the person who issued the contract, not to the income tax department, to have his annuity classed as an eligible retirement annuity for tax purposes. I am unable to state now whether it will be possible to work out arrangements whereby a part of the premium of other existing annuity and insurance contracts can be made eligible for income tax deduction upon an election by the policy holder to receive the endowment in the form of an approved retirement annuity. There are some real difficulties in the way of doing this, but the matter will be carefully considered with life insurance companies. Authority will be asked in the legislation to move in this direction by order-in-council if it is found that satisfactory arrangements can be worked out.
It is difficult to estimate what effect this proposal will have on the future yield of our income tax. The cash effects on our revenue in the coming year will be negligible, partly because it will take some time for insurance companies and others to design policies and organize plans, and partly because taxpayers will in many instances derive their benefit from a tax refund at the end of year. In subsequent years, if widespread use is made of the plan it is possible that the annual yield of the income tax may in future be reduced by as much as $40 million. Whatever the subsequent loss in revenue may be it can,
The Budget-Mr. Harris however, be regarded as an indication of the volume of provision being made by Canadians towards freedom from financial worry at a time when their earning power has lessened. To me, this policy makes good sense. Moreover, the broad effect of this new policy will be anti-inflationary since it will be an encouragement to increased immediate saving which will be productively employed. Encouragement such as that now proposed is, I think, amply justified and will, I believe, be well received on all sides.
The second innovation which is being proposed originated in a suggestion put forward by my colleague, the Minister of National Revenue, for eliminating a great deal of relatively unproductive paper work and for relieving taxpayers of considerable inconvenience in the preparation of their annual tax returns. At present claims for deductions on account of contributions to charities, large and small, must be supported by vouchers. The paper work, not only for the government but for taxpayers, doctors and hospitals, involved in claims for medical expenses is both costly and time-consuming. From a survey it has been established that for more than half of income taxpayers the combined claims for charitable contributions, medical expenses, union dues and professional fees of employees amount to less than $100 a year per taxpayer. In the light of this situation it is proposed to allow to every taxpayer the option of taking what might be called a "standard deduction" of $100 a year in lieu of claiming actual deductions for the items just mentioned. Of course if the claims for these four items add up to more than $100 the taxpayer may obtain a deduction in the future just as he has in the past. For the majority of taxpayers, however, the standard deduction will prove more advantageous and will, for all concerned, eliminate handling millions of pieces of paper. It is estimated that this simplification of income tax procedure will cost the treasury about $38 million in a full year. For this fiscal year the cost will probably not exceed $9 million, this being the estimated volume of resulting tax refunds which will be claimed a year from now.
In addition to these two important new features of broad application certain other desirable changes which are being recommended deserve mention. At present the cost of a full-time attendant for a person confined to bed or a wheel-chair is allowed to be included in medical expenses. In future, payments to a nursing home for care of such a person will likewise qualify. Also, an amendment will allow claims for the care of retarded children to rank as medical expenses.

The Budget-Mr. Harris
Contributions to assist in providing certain low cost housing projects as homes for elderly people will qualify for the charitable deduction.
In future where either an individual or a corporation makes charitable contributions in any year in excess of the percentage allowable the excess may be carried forward into the succeeding year.
Under an organized arrangement for the exchange of teachers within the commonwealth, Canadian teachers going abroad are required to give up $250 of their own salaries to supplement the income of those coming to Canada to take their places. These amounts required to be put in this fund by Canadian teachers may in future be deducted by them in computing their taxable income.
The requirement that membership dues in professional societies in order to be deductible for an employee must be paid by him as a condition of his employment will be eliminated.
At present $750 is the limit on income which may be earned by a dependent without being disqualified from that status. It is proposed that in future this figure be raised to $950. This should be of more than passing interest to those whose children are working to pay their way through school.
In future any company whose business includes the conversion of ore into prime metals will be eligible to claim expenses incurred in exploring for minerals. This, I think, will be of particular advantage to steel companies in Canada having an interest in the development of their own ore supplies.
Certain other amendments of a technical nature are contained in the income tax res-solution. It is estimated that these miscellaneous changes just mentioned will reduce income tax revenue in a full year by $2 million.



SUCCESSION DUTIES

[Stage Direction]
I had hoped to be able this spring to introduce a bill to revise our Succession Duty Act. It has been impossible for me to do this. This being so it becomes necessary to amend the existing act; in particular, to bring the existing provision for provincial tax credits into line with the undertaking given to the provinces during the recent conferences. Accordingly, I am giving notice of a resolution for an amendment which will provide for an outright 50 per cent reduction in federal rates in a province which continues to impose succession duties. This will replace the present provision under which the reduction may not exceed the amount of the provincial tax paid. This amendment will be effective for estates of persons dying

on or after April 1, 1957, which is the date of expiry of the present federal-provincial fiscal arrangements. A further amendment to the present law, effective the same date, will allow charitable gifts to be deducted from the value of the total estate in determining the initial rate of tax.

[Stage Direction]
Referring now to the customs tariff, I am proposing, as usual, to make changes of one sort or another in a substantial number of items. Such changes are needed in order to keep our tariff abreast of the times.
In the largest group, some 50 in all, there are no changes of substance; the alterations are formal and designed to give greater clarity or precision to particular tariff items in the light of experience or developments. In the second largest group, comprising 18 items, we propose to make statutory certain rates of duty which are already in effect under orders in council; these orders resulted either from past tariff negotiations or from requests by Canadian manufacturers who wished greater freedom to import materials or components.
In 15 items we are proposing new tariff reductions. All of these are in response to requests from the importers concerned. The total effect of these reductions on revenue will not be significant.
There are a number of Tariff Board references on which I want to report to the house; first of all potatoes. As hon. members are aware, the government has initiated the appropriate procedures under the General Agreement on Tariffs and Trade looking toward an upward adjustment in our bound tariff rate on potatoes. Before doing so, we had obtained the views of all concerned through our tariff board, had consulted directly with our potato growers, and had reached the conclusion that this special initiative was justified in their case. The United States, of course, were not in a position to start their procedures until ours were well advanced. Their public hearings concluded only last week and they are not yet in a position to indicate their attitude. Hence I am not in a position to make any further statement on this matter tonight.
As for tariff board reports on other products, I am told that three which I requested some time ago are now well on their way to presentation; I refer to the references on iron and steel, pipes and tubes, and rubber footwear. The important and extensive reference on chemicals has now been made public by the board and the many firms and industries concerned are thus in a position to prepare their submissions. In addition, only

last month I made two new but relatively limited references to the board, one covering zinc and manufactures of zinc and the other covering radio and television parts.
There are no extensive new rounds of multilateral tariff reductions in sight. There will, however, be a round of negotiations next autumn, in connection with the accession of Switzerland to membership in the General Agreement on Tariffs and Trade. At the same time there will be an opportunity to seek the international agreement for tariff re-adjustments; the sort of re-adjustments I have in mind are those that we might wish to seek after considering the reports of the tariff board that are presented in the meanwhile.
We have notified the government of Australia that we wish to have some trade discussions with them. We wish to discuss, among other things, the possible impact of the recently signed agreement between Australia and the United Kingdom on the position of Canadian exporters in the Australian market. Further, the government has been receiving many representations about Australian trade. Some of these come from Canadian exporters and relate to Australian import restrictions. Others come from Canadian producers, particularly of dairy products, and relate to special preferential rates of duty. The present treaty arrangements between our two countries are twenty-five years old. It would be our hope to achieve a higher level of trade on a broad and equitable basis.
Since my last budget there has been a new and important develoment in the field of international tariff arrangements. This month, I understand, six leading countries on the continent of Europe are signing, subject to ratification by their legislatures, an agreement to recast their tariffs and trade policies, within the coming fifteen years or so, in order to form a customs union. A larger group of European countries, including the United Kingdom, is planning over the same period to form a free trade area associated with the customs union within it. Canadian trade will undoubtedly be affected by these developments. It is too early to forecast what the effects may be. The government is, however, following these events with very active interest, both through our diplomatic and trade missions in the countries directly concerned and also at meetings of the contracting parties to the General Agreement on Tariffs and Trade, and of the Organization for European Economic Co-operation. We are also keeping in close touch with other commonwealth countries in these matters.
The Budget-Mr. Harris

[Stage Direction]
Mr. Speaker, the reasons given earlier for having to maintain income tax rates at present levels likewise must apply in general to sales and excise taxes. However, as in income tax, some relief in certain directions can be amply justified.
For example, there is still a number of grocery store items which are subject to tax and it seems to me we should now give some help to the housewife on her purchases of some widely used items. Commencing tomorrow morning tea and coffee will be exempt from sales tax.
Other additions of food items to the exempt list will include cocoa, pickles, catsup, sauces, meat extracts, baking powder and baking soda, salad oils, and prepared desserts.
In addition to these food items an exemption will be introduced for school desks and chairs when purchased by educational institutions. Also municipalities will be relieved of sales tax on all purchases of structural steel for bridges and precast concrete shapes for the same purpose when used on public roads and highways. At present road and fire-fighting equipment purchased by municipalities is exempt from sales tax if the items cost $1000 or more. In future the exemption will apply to such items costing $500 or more.
Mobile homes or trailers adapted for living purposes will be exempt in respect of 75 per cent of their value in order to place them on a basis of tax equality with houses.
The tax on florist products will be amended to exclude flowering plants, shrubs and bulbs.
Certain other minor amendments will be found in the resolution. It is estimated that the exemptions here proposed will result in a revenue loss for the coming year of about $19 million, approximately $10 million of which is accounted for by tea and coffee alone.
Careful study has been given in recent months to the various special excise taxes now being imposed, such as those on candy, chocolate bars and chewing gum. I am recommending that these be removed.
Stanley Howard Knowles: Will you now lower the voting age?


Walter Edward Harris: I have also been impressed with the increasing difficulties which hundreds of small soft drink bottlers appear to be facing from coast to coast. I trust that the house will approve my decision to act now in removing the special tax on soft drinks. The house may recall that when these taxes were reimposed at the time of
2226	HOUSE OF
The Budget-Mr. Harris the Korean crisis the sole purpose was stated to be for revenue only. Accordingly, I think their repeal now is justified. The 10 per cent excise tax on motorcycles will likewise be withdrawn as from tomorrow.
The removal of these three special taxes on candy, soft drinks and motorcycles takes off the books the last of the remaining special kinds of taxes imposed to help finance defence expenditure following the Korean outbreak. The special tax on fountain pens and desk sets will be dropped, as well as that on silver plated articles used in serving food. The removal of these special excise taxes will mean a revenue loss of about $20 million.
No changes are being proposed in the rates of tax on liquor, beer and tobacco products, except that the excise duty on raw leaf tobacco will be reduced to the pre-war level of 10 cents a pound.
All these reductions in taxes on commodities will be effective as from midnight tonight. My colleague the Minister of National Revenue has asked me to give notice that in accordance with standard practice no claims for refunds arising out of tax reductions in respect of goods on which tax has been paid will be entertained.
May I say at this time, as I have on former occasions, how much I appreciate the co-operation and assistance of the minister and his staff in collecting this tremendous sum of money.
In concluding my statement of proposed tax changes I should report progress on consideration of the report of the Sales Tax Committee. Careful study has been given to certain technical changes in the structure of the law and I am confident that some of the deficiencies in the existing legislation can be corrected. But I do not propose to recommend any changes in the direction of basing the tax on the retailers' purchase price.



CONCLUSION

[Stage Direction]
Having completed my outline of our budgetary proposals I can now summarize our over-all budget outlook for the coming year. The total reductions in taxation that I am recommending add up to $128 million in a full fiscal year's operation, and will provide a cash saving to taxpayers in this fiscal year of $55 million as shown in the following table which I ask leave to place on Hansard, as well as a table showing the details of the total revenue I expect in the coming fiscal year.
Mr. Speaker:: Is consent given?


Some hon. Members:: Agreed.


Walter Edward Harris: The tables are as follows:



TABLE II

[Stage Direction]
Effect of Proposed Tax Seductions
In
Personal Income Tax	 $10,000,000
Succession	Duty	 600,000
Sales Tax		 23,600,000
Special Excise Taxes and Duties	   20,800,000
In a full Fiscal Year $80,000,000 3,000,000
24.000.	000
21.000.	000
Total

[Stage Direction]
Forecast of Revenues for 1957-58 before and after Tax Change (in millions of dollars)
Before After
Personal Income Tax	
$1,570.0	$1,560.0Corporation Income Tax	
1,200.0	1,200.0Non-Resident Tax	
80.0	80.0Succession Duties	
60.0	59.4Customs Duties	
590.0	590.0Sales Tax	
775.0	751.4Excise Duties and Taxes	
558.0	537.2Other Taxes	
2.0	2	0Total Tax Revenues	
$4,835.0	$4,780.0Non-tax Revenues	
390.0	390.0Total Revenues	$5,225.0	$5,170.0
Since my earlier estimate of total revenues was $5,225 million, and I expect a reduction from tax changes of $55 million, my forecast of total revenue in the coming year is $5,170 million, or less than one half of one per cent higher than for the year now ending.
On the other hand, my budgetary proposals include $48 million additional benefit payments to be charged directly to the budget in this fiscal year, and $45 million additional disbursements to be charged to the old age security fund. The sales tax reductions will also involve a reduction of $5 or $6 million in the amount to be credited to the old age security fund. Without any tax changes or increases in rates of benefit payments I would have expected the old age security fund to have been about in even balance next year. The increased rates of payment and the reductions in sales tax revenue will now put it into about a $50 million deficit. Parliament will be asked a year from now to charge this to 1957-58 expenditures, or to deal with it otherwise as subsequent study of the fund experience may suggest.
Altogether, I am budgeting for revenues of $5,170 million, expenditures of $5,018 million, and a surplus of $152 million. I should like now to table the resolutions.
From the . viewpoint of a Minister of Finance the past four years have not been lacking in variety. We went through a moderate decline in business in 1954, and then moved rapidly through a period of recovery into a year and a half of the most

spectacular period of peaceful expansion that Canada has ever experienced. These years have produced some stresses and strains, but thanks to the energy and good sense of our people and our institutions- with an "assist", shall I say, from government policy-we have surmounted all the difficulties and the strains.
During the past four years, we have not had to impose any increased taxes, and in addition to taking care of the expanding needs of the country and the people, including very heavy defence expenditures, we have reduced tax rates which, applied to our current circumstances, amount to $475 million a year, and at the same time reduced our net debt by $165 million.
Apart from the normal increase in government services associated with a growing population we have not only reduced taxes by $475 million a year and reduced our debt by $165 million, but have also actively promoted both the expansion of our country and the welfare of its citizens. During these four years we have doubled our expenditures on the expansion and improvement of airports and air services; we have doubled our expenditures on the opening up of the northern territories; we have made substantial progress on the trans-Canada highway; through the C.N.R. we have inaugurated the first period of substantial railway building in this generation; we have built the Canso causeway; and we are well on our way to completing the St. Lawrence seaway.
By taking a vigorous initiative, which included a short term loan of $50 million which has been repaid in full with interest of over $880,000, we have assured the early completion of an all-Canadian gas pipe line.
For farmers we have maintained our price support policies and have greatly expanded our loans for productive purposes. We have assumed the burden of carrying abnormal supplies of grain in storage; we have arranged for loans for those farmers who had difficulty in marketing reasonable proportions of their crops; and improved the scale of assistance to those who have suffered crop failures.
For those who earn their livelihood in the fisheries we have introduced fishermen's improvement loans, an insurance plan for vessels and equipment (including lobster traps), unemployment insurance for those employed in the fisheries, and by improved international co-operation we are promoting the conservation of the resources upon which our fishermen depend.
In the matter of social benefit payments, on three occasions in the past four years
82715-141J
The Budget-Resolutions we have improved our assistance and services to veterans; we have inaugurated a new and highly successful program of low down-payment insured-mortgage housing; cooperated with the provinces and shared their costs in meeting their problems of assistance to the unemployed and other needy persons not fully covered by unemployment insurance; and we have improved and extended the unemployment insurance system itself. And now we are happy to be able to improve family allowances, old age security and other benefit payments.
We have doubled our grants to universities and we are more than doubling our grants-in-aid to the provinces for the improvement of technical and vocational training; and we are in process of founding the Canada Council on a secure financial and administrative base.
We have greatly improved both the basis and the financial benefits under our taxsharing arrangements with the provinces.
To have done all these and many other things in a four year period which was interrupted by economic recession, to have maintained high levels of employment and reasonably stable prices, and at the same time cut taxes and reduced debt,-is, Mr. Speaker, an achievement which speaks for itself.
resolutions:

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That for the 1957 and subsequent taxation years an individual be allowed to deduct, in computing taxable income, the amount of $100 in lieu of claiming any deduction for medical expenses, donations to charitable organizations, trade union dues and professional membership dues.
2.	That the amount of a taxpayer's donations to charitable organizations in a year in excess of the amount deductible under the act be allowed to be carried forward and included with his charitable donations for the immediately following year.
3.	That a taxpayer whose chief source of income is farming or fishing be allowed to appeal his assessment for a year of averaging even if no tax is assessed for that year of averaging.
4.	That the rule for the determination of the capital cost of depreciable farm property sold by a farmer, to his child be extended to include cases in which a taxpayer whose chief source of income is fishing sells a fishing vessel or a fishing vessel and other property used in fishing operations carried on by him to his child.
[Stage Direction]
The Budget-Resolutions
5.	That for the 1956 and subsequent taxation years, in computing income from an office or employment a taxpayer be allowed to deduct annual professional membership dues the payment of which was necessary to maintain a professional status recognized by statute, even although he is not required to maintain that professional status by his contract of employment.
6.	That for the 1957 and subsequent years the special deduction from income allowed to corporations whose principal business is mining or production of petroleum or natural gas for expenses incurred in searching for minerals in Canada or exploring or drilling for petroleum or natural gas in Canada be extended to corporations whose principal business is processing mineral ores for the purpose of recovering metals therefrom or a combination of processing mineral ores for the purpose of recovering metals therefrom and processing metals recovered from the ores so processed.
7.	That for the 1956 and subsequent taxation years payments made for the full-time pare in a nursing home of the taxpayer, his Spouse or dependent who was throughout the Whole of a 12 months' period ending in the taxation year necessarily confined by reason of illness, injury or affliction to a bed or wheel chair may be included in the medical expenses for which a deduction from income may be made for the purpose of computing taxable income.
8.	That for the 1956 and subsequent taxation years payments made for the full-time care in a nursing home of a dependent of the taxpayer certified by a medical practitioner to be a person who, by reason of lack of normal mental development, is and in the foreseeable future will continue to be dependent on others for his personal needs and care may be included in the medical expenses for which a deduction from income may be made for the purpose of computing taxable income.
9.	That for the 1957 and subsequent taxation years donations to certain corporations established for the purpose of providing low-cost housing accommodation for the aged may be included in the charitable donations for which a deduction from income may be made for the purpose of computing taxable income.
10.	That for the 1956 and subsequent taxation years a teacher be allowed to deduct, in computing income, an amount not exceeding $250 paid by him in the year to a fund established by the Canadian education association for the benefit of teachers from commonwealth countries present in Canada under a teachers' exchange arrangement.
.11. That for the 1957 and subsequent taxation years an individual be allowed to deduct, 
[Stage Direction]
in computing income, an amount paid by him as a premium under a registered retirement savings plan and, for this purpose, that the Income Tax Act be amended to give effect to the inclusion therein, following section 79A thereof, of a new heading and section as follows:
"Registered Retirement Savings Plan.
79B. (1) In this section,
(a)	''annuitant" means an individual referred to in subparagraph (i) or (ii) of paragraph (h) to whom, under a retirement savings plan, any annuity for life is agreed to be paid or is to be provided;
(b)	"benefit" means any amount paid or payable under a retirement savings plan, otherwise than as a premium;
(c)	"earned income" means earned income as defined in subsection (5) of section 32, plus any amount deductible in computing income under paragraph (i) of subsection (1) of section 11;
(d)	"maturity" means the date fixed under a retirement savings plan for the commencement of any annuity the payment of which is provided for by the plan;
(e)	''premium" means any periodic or other amount paid or payable under a retirement savings plan,
(i)	as consideration for any agreement referred to in subparagraph (i) of paragraph (h) to pay an annuity, or
(ii)	as a contribution referred to in subparagraph (ii) of paragraph (h) for the purpose stated in that subparagraph;
(f)	"refund of premiums" means any amount paid or payable under a retirement savings plan, on or after the death of the annuitant thereunder in the event of his death before maturity, as or on account of
(i)	a return of premiums,
(ii)	reasonable interest on premiums, or
(iii)	a share or interest in or a bonus out of profits or gains;
(g)	"registered retirement savings plan" means a retirement savings plan accepted by the minister for registration for the purposes of this act as complying with the requirements of this section; and
(h)	"retirement savings plan" means
(i)	a contract between an individual and
a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business, under which, in consideration of payment by the individual of any periodic or other amount as consideration under the contract, that person agrees to pay to the individual, commencing at maturity, an annuity for life, or

(ii) an arrangement under which payment is made by an individual in trust to a corporation resident in Canada of any periodic or other amount as a contribution under the trust, to be used, invested or otherwise applied by that corporation as trustee for the purpose of providing to the individual, commencing at maturity, an annuity for life.
(2)	The minister shall not accept for registration for the purposes of this act any retirement savings plan unless, in his opinion, it complies with the following conditions:
(a)	the plan does not
(i)	provide for the payment of any benefit
before maturity, except by way of a refund of premiums, or
(ii)	provide for the payment of any benefit after maturity, except by way of
(A)	an annuity to the annuitant for his life, or
(B)	an annuity to the annuitant for the lives, jointly, of the annuitant and his spouse and to the survivor of them for his or her life,
commencing at maturity and with or without a guaranteed term, not exceeding fifteen years, or, in the case of a plan entered into before the 14th day of March, 1957, not exceeding twenty years, commencing at maturity;
(b)	the plan does not
(i)	provide for the payment of any amount by way of annuity except
(A)	equal annual or other periodic amounts throughout the lifetime of the annuitant, and
(B)	equal annual or other periodic amounts (not exceeding the corresponding annual or other periodic amounts referred to in clause (A* throughout the period, if any, after the death of the annuitant, for which payment of the annuity is provided for by the plan,
(ii)	provide for the payment of any premium after maturity, or
(iii)	provide for maturity after such time as the annuitant attains seventy years of age;
(c)	the plan includes a provision stipulating that no annuity payable thereunder is capable either in whole or in part of surrender, commutation or assignment; and
(d)	the plan in all other respects complies with regulations of the governor in council made on the recommendation of the Minister of Finance.
The Budget-Resolutions
(3)	The minister may accept for registration for the purposes of this act any retirement savings plan notwithstanding that the plan
(a)	provides for any annual or other periodic amount payable by way of annuity to any person to be reduced by any corresponding annual or other periodic amount that is or may become payable to that person under the Old Age Security Act;
(b)	provides for the commutation of any annuity payable thereunder if the amount so payable, expressed in terms of a monthly rate, is less than $5;
(c)	in the case of an annuity for a guaranteed term, provides for the annuity to be assignable by will, or, in the event of the death of any person to whom any such annuity is payable, to be assignable by the heirs, executors, administrators or other legal representatives of such person in the distribution of his estate, so as to give effect to any testamentary disposition, or to the rights of any person on an intestacy, or to its appropriation to a legacy or a share or interest in the estate; or
(d)	contains such other terms and provisions, not inconsistent with this section, as are authorized or permitted by regulations of the Governor in Council made on the recommendation of the Minister of Finance.
(4)	No tax is payable under this part by a trust on the taxable income of the trust for a period during which the trust was governed by a registered retirement savings plan.
(5)	There may be deducted in computing the income for a taxation year of a taxpayer who is an annuitant under a registered retirement savings plan the amount of any premium paid by the taxpayer under the plan during the taxation year or within sixty days after the end of the taxation year (to the extent that it was not deductible in computing his income for a previous taxation year), not exceeding, however,
(a)	in the case of a taxpayer in respect of whom any amount is deductible under paragraph (g) or (h) of subsection (1) of section 11 in computing the income of any other person for that taxation year (or would be so deductible if that other person were a person taxable under subsection (1) of section 2), an amount that, when added to the amount deductible under subparagraph (i) of paragraph (i) of subsection (1) of section 11 in computing the income of the taxpayer for that taxation year, does not exceed the lesser of $1,500 or 10% of his earned income for that taxation year; and
(b)	in the case of any other taxpayer, the lesser of $2,500 or 10% of his earned income for that taxation year.
2230	HOUSE OF
The Budget-Resolutions
(6)	There shall be included in computing the income of a taxpayer for a taxation year all amounts received by him in the year as a benefit under a registered retirement savings plan, otherwise than by way of a refund of premiums.
(7)	Where an amount is received by a person in a taxation year under a registered retirement savings plan by way of a refund of premiums,
(a)	the amount so received shall be deemed not to be income of that person for the purposes of this part, and
(b)	there shall be added to the tax otherwise payable by that person upon his taxable income under this part for that taxation year an amount equal to 15% of the amount so received.
(8)	Where, at any time after a retirement savings plan has been accepted by the minister for registration for the purposes of this act, the plan is revised or amended or a new plan is substituted therefor, and the plan as revised or amended or the new plan substituted therefor, as the case may be (hereinafter in this subsection referred to as the "amended plan") does not comply with the requirements of this section for its acceptance by the minister for registration for the purposes of this act, the following rules apply:
(a)	the amended plan shall be deemed, for the purposes of this act, not to be a registered retirement savings plan;
(b)	there shall be included in computing the income of a taxpayer for a taxation year all amounts received by him in the year that, by virtue of subsection (6), would have been so included
(i)	if the amended plan had been a registered retirement savings plan at the time he received those amounts, and
(ii)	if those amounts had been received by him otherwise than by way of a refund of premiums,
and no deductions shall be made under paragraph (k) of subsection (1) of section 11 in respect of those amounts in computing his income for that year;
(c)	there shall be withheld or deducted from any amount paid to a person in a taxation year as a benefit under the amended plan, by the person paying that amount, an amount equal to 25 per cent thereof, and any amount so withheld or deducted shall forthwith be remitted to the Receiver General of Canada on account of the payee's tax for the year under this part;
(d)	where an amount is withheld or deducted under this subsection from any amount paid to a person as a benefit under an amended plan, it shall be deemed, for all
[Stage Direction]

purposes of this act, to have been received at that time by the person to whom the benefit was paid; and
(e)	where an amount is withheld or deducted under this subsection from any amount paid to a person as a benefit under an amended plan on account of that person's tax for a taxation year under this part, and the amount or the aggregate of the amounts so withheld or deducted exceeds
(i)	the amount of that person's tax, if any, for the year under this part before making any deductions under sections 33 to 41,
minus
(ii)	the amount that his tax, if any, for the year under this part before making any deductions under sections 33 to 41 would be if no amount were included in computing his income for the year by virtue of paragraph (b),
the amount of the excess shall be deemed, for the purposes of this act, not to have been paid on account of that person's tax for the year under this part, but as a debt due to Her Majesty.
(9)	For the purposes of subsection (8),
(a)	a reference to an amount paid as a benefit under an amended plan shall be deemed to include any amount paid under that amended plan, otherwise than as a premium or an amount that would, by virtue of paragraph (e) of subsection (1), be regarded as a premium if that amended plan were a retirement savings plan; and
(b)	an arrangement under which a right or obligation under a retirement savings plan is released or extinguished either wholly or in part and either in exchange or substitution for any other right or obligation or otherwise (other than an arrangement the sole object and legal effect of which is to revise or amend the plan) shall be deemed to be a new plan substituted for that retirement savings plan."

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Dominion Succession Duty Act and to provide:
1.	That in determining the aggregate net value of property subject to duty under the Dominion Succession Duty Act upon the death, after the 31st day of March, 1957, of a predecessor, there shall be deducted the dutiable value of any succession to a charitable organization in Canada operated exclusively as such and not for the benefit, gain or profit of any person, member or shareholder thereof.
2.	That where provincial duties have been paid in respect of property subject to duty

under the Dominion Succession Duty Act upon the death, after the 31st day of March, 1957, of a predecessor, the successor to that property may deduct from the duty otherwise payable under the Dominion Succession Duty Act in respect of that property, one-half of the duty otherwise so payable in respect thereof.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Excise Act and to provide, among other things:
1.	That the excise duty on Canadian raw leaf tobacco be reduced from twenty cents per pound to ten cents per pound.
2.	That any enactment founded upon this resolution be deemed to have come into force on the fifteenth day of March, nineteen hundred and fifty-seven.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, among other things:
1.	That the sales tax on the following goods be repealed:
(a)	certain building materials which are in addition to those already exempted, viz:-
chimney caps;
circulating pumps for use in forced hot water heating systems for the heating of buildings;
door and window screens;
precast concrete shapes when purchased by municipalities for bridges in public highway systems;
septic tanks;
structural steel when purchased by municipalities for bridges in public highway systems;
(b)	desks and chairs specially designed for use in class rooms when sold to educational institutions;
(c)	printing produced by a school or university when for its own use and not for resale;
(d)	gasoline powered self-propelled trucks, mounted on rubber tired wheels, for off-highway use exclusively at mines or quarries, and complete parts thereof;
(e)	seventy-five per cent of the sale price if manufactured in Canada, or seventy-five per cent of the duty paid value if imported, of trailers for use as homes;
(f)	potted, flowering or bedding plants, dormant flower bulbs and cut foliage;
(g)	geophysical surveying precision instruments and equipment as enumerated in Customs Tariff item 43 lh;
(h)	goods enumerated in Customs Tariff item 695d;
The Budget-Resolutions
(i)	tanks for collecting milk, not including chassis or cabs;
(j)	railway ties;
(k)	certain foodstuffs which are in addition to those already exempted, viz;-
baking powder; baking soda;
bases or concentrates for making beverages other than soft drink beverages; cocoa; coconut;
dessert powders; edible gelatine; flavouring extracts; gravies and meat extracts; meat tenderizers;
pickles, relishes, catsups, sauces, olives, horseradish, mustard, and similar goods; pie fillings;
prune juice, grape juice;
salad oils, mayonnaise and salad dressings;
sandwich spreads;
spices, condiments and seasonings;
tea, coffee and substitutes therefor;
vinegar;
2.	That equipment specially designed for use directly in road making, road cleaning or fire fighting, but not including automobiles or motor trucks, when sold to or imported by municipalities for their own use and not for resale, be exempted from the sales tax when the price is in excess of five hundred dollars ($500) per unit, instead of the present exemption for units priced in excess of one thousand dollars ($1000) per unit.
3.	That the excise tax on the following goods be repealed:
(a)	soft drinks and imitations thereof;
(b)	carbonic acid gas for aerating nonalcoholic beverages;
(c)	candy, chocolate, chewing gum and
confectionery;
(d)	motor cycles and all other two- or
three-wheeled motor driven vehicles including motors for attachment to bicycles;
(e)	ash trays and certain smokers' accessories, not to include tobacco pipes, cigar and cigarette holders and cigarette rolling devices;
(fl fountain pens; ball-point pens, ink pencils; propelling pencils, desk sets and all other desk accessories;
(g)	gold-plated or silver-plated ware for
the preparation or serving of food or drink;
(h)	articles of cut glassware, crystal glassware, cut or not, etched glassware, or metal decorated glassware;
(i)	articles of china, porcelain, earthenware, marble, stoneware, or other pottery ware;
(j)	Canadian raw leaf tobacco.
[Stage Direction]
The Budget-Resolutions
4. That any enactment founded upon this resolution be deemed to have come into force on the fifteenth day of March, nineteen hundred and fifty-seven. CUSTOMS TARIFF 1. Resolved, that Schedule A to the Customs Tariff be amended by striking out tariff items 9, 99d, 99e, 105c, 118, 118a, 118b, 118c, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 137a,	146, 147, 173(2), 180, 180b, 180c, 264, 296b, 312a, 348f, 354c, 409e(2), 409f, 409g, 409t, 410m, 4l0n, 414b, 423, 427h, 429(a), 431, 431a, 43Id, 436, 440j, 441e, 442d, 453a, 462a, 462b, 462c, 462d, 463, 511b, 519a, 519b, 569b, 597d, 659, 669, 674, 675, 682, 682a, 682b, 682c and 696e, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
	
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Rates in Effect Prior to
British	Most-	Rates Proposed in this Budget
Tariff	

 Preferential Favoured- General 
[Stage Direction]
Item	Tariff	Nation	Tariff	British	Most-Tariff	Preferential	Favoured-Nation	General TariffTariff	Tariff
9 Poultry and game, n.o.p., not including turkeys prepared by removal of the feathers, heads, and all or part of the viscera, with or without removal of the feet, but not cooked
or divided into portions	12$ p.c.	12$ p.c.	20 p.c.	12$ p.c.	12£ p.c.	20 p.c.9e	Turkeys prepared by removal of the feathers, heads, and all or part of the viscera, with or without removal of the feet, but not cooked or divided into portions	12$ p.c.	12$ p.c.	20 p.c.	12$ p.c.	12$ p.c.	20 p.c.9 9d	but not less than	per pound nor more than	per pound (1) Dates, unpitted, in bulk 	per pound	Free	5 cts. 10 cts. $ ct.	$ ct.	Free	5 cts. 10 cts. £ ct.	1 ct.(t) Dates, unpitted, n.o.p	per pound	$ ct.	} ct.	2$ cts.	$ ct.	$ ct.	2$ cts.99c	When in packages weighing two pounds each, or less, the weight of such packages to be included in the weight for duty. (1) Dates, pitted when in packages or containers weighing not less than ten pounds each	per pound	Free	Free	1 ct.	Free	Free	1 ct.(2) Dates, n.o.p	per pound	1 ct.	1$ cts.	2$ cts.	1 ct.	1$ cts.	2$ cts.105c	When in packages weighing two pounds each, or less, the weight of such packages to be included in the weight for duty. Olives, sulphured or in brine, not bottled	10 p.c.	17$ p.c.	30 p.c.	10 p.c.	17$ p.c.	30 p.c.t05j	Zucca melons, peeled or sliced, sulphured or in brine, for use in Canadian manufactures	10 p.c.	10 p.c.	35 p.c.	10 p.c.	10 p.c.	35 p.c.123	Fish, prepared or preserved, n.o.p.: (o) Kippered herring in sealed containers	17$ p.c.	17$ p.c.	30 p.c.	17$ p.c.	17£ p.c.	30 p.c.(6) Salmon	17$ p.c.	27$ p.c.	30 p.c.	17$ p.c.	27$ p.c.	30 p.c.to) All other fish, n.o.p	17$ p.c.	22$ p.c.	30 p.c.	17$ p.c.	22$ p.c.	30 p.c.
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The Budget-Customs Tariff

Tariff Item		British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff		Rates in Effect Prior to Rates Proposed in this Budget	
					British Most-Preferential Favoured-Nation Tariff Tariff		General Tariff
1*4	Shell fish, fresh, n.o.p	12J p.c.	171 P-c.	25 p.c.	121 p.c.	171 P.c.	25 p.c.l*4a	Shell fish, prepared or preserved, n.o.p	\1\ p.c.	221 P-c.	30 p.c.	171 P-c.	221 P-c.	30 p.c.It 4b	Squid	Free	Free	Free	Free	Free	Freeits	Oysters, shelled	Free	Free	25 p.c.	Free	Free	VariousItSa	Oysters, prepared or preserved; oysters in the shell	15 p.c.	15 p.c.	25 p.c.	15 p.c.	15 p.c.	25 p.c.m	Clams in sealed containers	171 p.c.	40 p.c.	40 p.c.	171 P-c.	40 p.c.	40 p.c.w	Crustaceans, fresh, n.o.p.; crustaceans, prepared or preserved, n.o.p	121 p.c.	171 P-c.	25 p.c.	121 p.c.	171 P-c.	25 p.c.its	Lobsters, fresh	Free	Free	25 p.c.	Free	Free	25 p.c.IS 8a	Lobsters, prepared or preserved	171 P.c.	221 P-c.	30 p.c.	171 P-c.	221 p.c.	30 p.c.1S9	Crabs in sealed containers	171 P-c.	30 p.c.	40 p.c.	171 p.c.	30 p.c.	40 p.c.ISO	Shrimp	10 p.c.	10 p.c.	25 p.c.	10 p.c.	10 p.c.	25 p.c.1S1	Turtles; leeches	Free	Free	Free	Free	Free	Free1SS	Oysters, seed and breeding, imported for the purpose of being planted in Canadian waters; live fish and fish eggs, for propagating purposes	Free	Free	Free	Free	Free	Free137a	Molasses powder, without admixture or with added colouring or anti-caking agent	35 cts.	45 cts.	50 cts.	15 p.c. 35 cts.	20 p.c. 45 cts.	25 p.c. 50 ets.147	Ale, beer, porter and stout	per gallon and in addition thereto, under all tariffs, 38 cents	15 cts.	15 cts.	35 cts.	15 cts. 15 cts.	15 cts. 15 cts.	35 cts. 50 cts.
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173	(2) Printed books, pamphlets and cards for use in intelligence testing and other articles and materials imported with and specially designed for use with such printed books, pamphlets and cards; cards for use in the teaching of reading or arithmetic	 Free
180 Photographs, chromos, chromotypes, artotypes, oleographs, paintings, drawings, pictures, engravings or prints or proofs therefrom, and similar works of art, n.o.p	 12} p.c.
180c (1) Decalcomania transfers of all kinds, n.o.p	 12 J p.c.
(2) Decalcomania transfers for use in the manufacture of vitreous enamelled products or of tableware of china, porcelain or semi-porcelain	 Free
180}	Blueprints, building plans, maps and charts, n.o.p	12} p.c.187c	Photographic dry plates	
12} p.c.197g	Heat sealable paper for use in the manufacture of teabags_ Free264 Essential oils, natural, namely: Bergamot, citronella, clove, geranium, lemon, lemon grass, mandarin, orange, rose, vetiver and ylang-ylang	
Free2966 (1) Magnesite, dead-burned or sintered; magnesite, caustic calcined; plastic magnesia	
15 p.c.(2) Magnesium carbonate, basic or otherwise, excepting crude rock, n.o.p	
20 p.c.312a Asbestos in any form other than crude, and all manufactures thereof, when made from crude asbestos of British Commonwealth origin, n.o.p	
Free348/ Copper covered steel wire not less than 0.1875 inch in diameter and copper covered steel rod, for use in the manufacture of trolley, telegraph and telephone wires, electric wires and electric cables	
Free350a Electric resistance strip, ribbon, wire and wire cold rolled after drawing, containing from nineteen per cent to twenty-six per cent chromium, three per cent to seven per cent aluminum, one-half per cent to four per cent cobalt, and remainder iron	
FreeFree	17$ p.c. Free	22$ p.c. Free	35 p.c. Free	22$ p.c.	12$ p.c.	20 p.c.	22$ p.c.	22$ p.c.	12$ p.c.	20 p.c.	22$ p.c.	12$ p.c.	Free	Free	12$ p.c.	22$ p.c.	12$ p.c.	20 p.c.	22$ p.c	2 >30 p.c.	12$ p.c.	20 p.c.	30 p.c.	25 p.c	Free	7$ p.c.	25 p.c.	51 o K7$ p.c.	Free	Free	7$ p.c.	H CO oi30 p.c.	15 p.c.	15 p.c.	30 p.c.	sj ►-a o30 p.c.	20 p.c.	20 p.c.	30 p.c.	CO Si eu <Q25 p.c.	Free	12$ p.c.	25 p.c.	r i CO o35 p.c.	Free	10 p.c.	35 p.c.	i CO p 335 p.c.	Free	Free	35 p.c.	2235

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Tariff
Item
Rates in Effect Prior to
British	Most-	Rates Proposed in this Budget
Preferential Favoured- General 
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Tariff	Nation	Tariff	British	Most-
Tariff	Preferential Favoured-Nation General Tariff
Tariff	Tariff
866b Metal alloy strip or tubing, containing not less than thirty per cent by weight of nickel and twelve per cent by weight of chromium, for use in Canadian manufacturers	
Free	Free406b	Furniture springs	
20 p.c.	25 p.c409e	(2) Combination bagging or boxing and weighingmachines, and grading, grating, washing and wiping machines for fresh fruit or fresh vegetables; high-pilers not including fork lift trucks, box dumpers, box or bag fillers, all for use in packing and storing fresh fruit or fresh vegetables; machines for making or lidding boxes for fruit or vegetables; machines for topping vegetables; machines for bunching or tying cut flowers, vegetables or nursery stock; egg-graders and egg-cleaners; silage caps; parts of the foregoing. Free	Free	Free Free 7J p.c. 35	p.c.Free	Free	Free
409/ Animal clippers:
Automatic stock watering devices;
Barn hay forks, carriage, pulleys and track;
Barn litter carriers and track;
Egg cooling cabinets:
Elevators (other than storage elevators);
Grain crushers;
Grain or hay dryers;
Grain or hay grinders;
Grain loaders;
Gravity discharge farm wagon boxes:
Hitches and couplings;
Hydraulic hoists for unloading vehicles;
Land levellers;
Machines and tools for use on tractors, including blades, loaders, rippers, rakes and related operating and controlling gear;
Milk coolers;
Sodium metabisulphite;
Sprinkler irrigation systems;
20 p.c.	Free	Free	20 p.c.30 p.c.	20 p.c.	25 p.c.	30 p.c.
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The Budget-Customs Tariff
Steel stanchions for confining livestock either in pens or individually, and complete equipment for milking parlors;
All the foregoing for use on the farm for farm purposes only;
Brooders;
Ensilage cutters;
Fodder or feed cutters;
Hay loaders;
Hay tedders;
Post hole diggers;
Potato diggers;
Potato planters;
Snaths;
Stumping machines;
All other agricultural implements or agricultural machinery, n.o.p.;
Parts of all the foregoing	 Free
409p Incubators for hatching eggs; poultry sex testers; parts
of the foregoing	 Free
409t Axles, belts and belting, bolts, chains, hinges, nuts, pulleys, rivets, screws, washers; all the foregoing when for use with the goods entitled to entry under tariff items 409, 409a, 4096, 409c, 409d, 409e, 409/, 409p, 4096,
409i, 409/, 409i, 409Z, 409m, 409n, 409o and 409a.... Free
410m Diamond drills and core drills, not including motive power; electrically operated rotary coal drills; coal cutting machines; all the foregoing for use in mining operations:
(1)	Of a class or kind made in Canada; parts thereof. Free
(2)	Of a class or kind not made in Canada; parts
thereof	 Free
4/0n Tubes or shells to be inserted in the coal face for breaking down coal by the release of carbon dioxide or compressed air, and parts thereof	 Free
4146 Dictating, transcribing and cylinder shaving machines, and cylinders, discs, dictating belts and unfinished wax blanks/or use therewith; parts of the foregoing	 10 p.c.
Free	10 p.c.	22} p.c.	35 p.c.Free	Free	FreeFree	Free	Free	FreeFree	Various	Various	VariousFree	Free	Free10 p.c.	Free	10 p.c.	10 p.c.Free	Free	Free	FreeFree	10 p.c.	22} p.c.	35 p.c.25 p.c.	15 p.c.	20 p.c.	30 p.c.10 p.c.	12} p.c.	25 p.c.
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The Budget-Customs Tariff

Tariff Item	British	Most-	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	Tariff	Nation Tariff	British Most- Preferential Favoured-Nation General Tariff Tariff Tariff	ms	Cash registers	20 p.c.	221 p.c.	30 p.c.	20 p.c.	221 p.c.	30 p.c.mo	Complete parts of cash registers, when imported by manufacturers of cash registers for use in the manufacture of such registers in their own factories	121 p.c.	121 p.c.	25 p.c.	12} p.c.	121 P-c.	25 p.c.ms	Carpet sweepers	20 p.c.	25 p.c.	30 p.c.	20 p.c.	25 p.c.	30 p.c.415g	Domestic clothes drying machines, and parts IhereoS	10 p.c.	22j p.c.	35 p.c.	10 p.c.	221 P-c.	35 p.c.4tsh	Domestic combination clothes washing and drying machines, and parts thereof	10 p.c.	221 p.c.	35 p.c.	10 p.c.	221 P-c.	35 p.c.Note: Since January 10th, 1957, by virtue of an administrative ruling-	Free	71 p.c.	35 p.c.423	Dental chairs; dental units; electric dental engines; dental cuspidors; parts of the foregoing	Free	Free	35 p.c.	10 p.c. Free	221 P-c. Free	35 p.c. 35 p.c.429	Cutlery of iron or steel, plated or not: (a ) Knife blades or blanks, and table forks of German silver or of iron or steel, in the rough, not handled, ground nor otherwise manufactured; spoon blanks of German silver or of iron or steel, not further manufactured than stamped to shape; blanks, of iron or steel, for scissors and shears, in the rough, not ground nor otherwise manufactured	Free	71 p.c.	10 p.c.	Free	71 p.c.	10 p.c.431	Shovels and spades, of iron or steel, n.o.p., and axes....	10 p.c.	15 p.c.	20 p.c.	10 p.c.	15 p.c.	20 p.c.4Sla	Web saws and parts thereoS	7i p.c.	20 p.c.	35 p.c.	71 p.c.	20 p.c.	35 p.c.2238	HOUSE OF COMMONS
The Budget-Customs Tariff
431 d Engineers', Surveyors' and draftsmen's precision instruments and apparatus, namely:
Alidades;
Altazimuth surveying instruments;
Aneroid barometers, engineering, military and surveying;
Boards, military sketching;
Clinometers;
Compasses;
Cross staff heads;
Curves, adjustable, irregular, railroad and ship; Curvimoters;
Dipping needles;
Drafting instruments of all kinds, including fitted cases containing the same;
Drafting machines;
Geodimetera;
Heliographs;
Integrators;
Levels, tripod and hand or pocket types;
Liners, section;
Meters, portable for hydraulic engineering; Pantographs;
Parallel rules;
Parallel ruling attachments;
Pedometers and paceometers;
Plane tables, military and topographic;
Planimeters;
Poles, ranging;
Prisms, angle;
Protractors;
Rods, levelling;
Scales, flat and triangular;
Sextants, box;
Slide rules;
Splines;
Straight edges, steel or wooden;
Tacheometers;
Tallying machines, pocket;
Tee squares, steel or wooden;
Telemeters;
Theodolites;
Transits, tripod and hand or pocket types;
Triangles of all types;
Tripods for use with any of the foregoing instruments; Parts of all the foregoing, finished or not	
10 p.c.
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The Budget-Customs Tariff

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Tariff
Item
British	Most-
Preferential Favoured-Tariff	Nation
Tariff
Rates in Effect Prior to Rates Proposed in this Budget
General 
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Tariff	British	Most-Preferential	Favoured-Nation	General TariffTariff	Tariff
436 Locomotives and railway passenger, baggage and freight cars, being the property or under the control of railway companies in the United States, running upon any line or road crossing the frontier, so long as Canadian locomotives and cars are admitted free
under similar circumstances into the United States,	.	.under regulations prescribed by the Minister	
Free	Free	
Various	VariousFree	Free
If such locomotives and railway rolling stock are used temporarily in the transportation of goods from a place in Canada to another place in Canada they are not entitled to free entry but are subject to duty on the rental value or charge made by the United States owner for their use in Canada, or equivalent thereof as determined by regulations prescribed by the Minister.
Notwithstanding the foregoing, duty shall not be assessed against a railway company operating in Canada in respect of any particular class of foreign freight car in any calendar year when the total use of foreign cars of that class by such company on railway lines in Canada is less than the total use of Canadian cars of that class owned by such company on railway lines outside of Canada; should such use of foreign cars exceed such use of Canadian cars, duty shall not be assessed on a greater number of cars than is represented by the excess.
440; Trawls, trawling spoons, fly hooks, hooks, sinkers, swivels, bait, sportsmen's fishing reels, fishing rods, and fishing tackle, n.o.p	
441e Guns and rifles of a class or kind not made in Canada; complete parts thereof	
Free	25 p.c.	30 p.c.	Free	30 p.c.	35 p.c.Free	25 p.c.	30 p.c.Free	71 p.c.	30 p.c.	Various	Various	VariousFree	71 p.c.	30 p.c.
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The Budget-Customs Tariff
442d Materials, including all parts, wholly or in chief part of metal, of a class or kind not made in Canada, when imported for use in the manufacture of goods entitled to entry under tariff items 410a (iii), 4100, 410Z, 410m,
410o, 410p, 410g, 410s, 410t, 410y, 410w, 410a:, 410z, 411,
411a, 4116, 4276, 427c, 427f, 428c, 428c, 440& and 447a, under such regulations as the Minister may prescribe.. Free
453a Metal parts, n.o.p., in any degree of manufacture but not coated, plated nor covered in any manner; hinges of any material finished or not; metal shells, not further finished than shaped; all the foregoing for use in the manufacture of spectacle cases or jewellery boxes	 Free
462a Cameras, n.o.p., of a cZass or kind made in Canada; complete
parts thereof	 7J p.c.
4626 Cameras, n.o.p., of a class or kind not made in Canada;
complete parts thereof	 5 p.c.
462c Cameras and parts thereof for making negatives or positives three and one-quarter inches by four and one-quarter inches or larger, including carrying cases therefor	 Free
462d Cinematograph and motion picture cameras for use by professional motion picture producers having studios in Canada equipped for motion picture production; parts of the foregoing	 Free
462e Lenses, shutters, and parts thereof, for use in the manufacture of cameras	 Free
462f Parts, unfinished, for use in the manufacture of cameras. Free
462g Accessories for cameras, namely: Backgrounds;
Colour filters and holders;
Diffusion discs and holders;
Exposure meters;
Flash guns;
Flash tubes for high-speed flash apparatus; Lantern slide attachments;
Lens hoods;
Polarizing screens and holders;
Range finders;
Stands;
Tripods and tripod tops;
Vignetters;
Parts of all the foregoing	
Free
10 p.c.	Free	Free	10 p.c.	35 p.c.	Free	121 P-c.	35 p.c.	30 p.c.	7} p.c.	20 p.c.	30 p.c.	30 p.c.	5 p.c.	15 p.c.	30 p.c.	3 >
IS)10 p.c.	Free	Free	10 p.c.	33 o X M [DOT]U15 p.c.	Free	9 p.c.	15 p.c.	1957 T30 p.c.	Free	Free	30 p.c.	to7} p.c.	Free	5 p.c.	71 p.c.	to £
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Free
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Tariff
Item
Rates in Effect Prior to
British	Most-	Rates Proposed in this Budget
Preferential Favoured- General 
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Tariff	Nation	Tariff	British	Most-
Tariff	Preferential Favoured-Nation General Tariff
Tariff	Tariff
J,62h Photographic equipment, namely:
Densitometers;
Ferro-type plates;
Film or paper processors for photo-finishing;
Film or print driers;
Mounting presses;
Negative or sheet-film hangers;
Print straighteners;
Print washers;
Printers, contact;
Printers, projection, commonly known as enlargers, for negatives or positives four inches by five inches and larger;
Printers, power driven, for photo-finishing;
Tanks or trays for negative and positive processing; Temperature controls or heaters for photographic solutions;
Timing devices;
Parts of all the foregoing	Free	Free	10 p.c.	Free	Free	10 p.c.463	Still picture projectors, and slides and film strips therefor,	Free	15 p.c.	25 p.c.	Free	15 p.c.	25 p.c.1,68a	Motion picture projectors, arc lamps for motion picture work, motion picture or theatrical spot lights, light effect machines, motion picture screens, portable motion picture projectors with or without sound equipment; electric rectifiers or generators designed for use with motion picture projectors; complete parts of all the foregoing, not including electric light bulbs, tubes, or exciter lamps	Free	15 p.c.	35 p.c.	Free	15 p.c.	35 p.c.506e	Curtain stretchers	15 p.c.	15 p.c.	30 p.c.	15 p.c.	15 p.c.	30 p.c.51S	Window cornices and cornice poles of all kinds	20 p.c.	25 p.c.	30 p.c.	20 p.c.	25 p.c.	30 p.c.517	Wire screens, wire doors and wire windows	20 p.c.	25 p.c.	30 p.c.	20 p.c.	25 p.c.	30 p.c.
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567b (S) Woven fabrics, containing figured designs not exceeding twelve inches in width, laces, embroideries, emblems and medallions, for use in the manufacture of church vestments	 10 p.c.
5696 Hat sweats, cap peaks, stiffening bands for the inside of hats and caps, hatters' tips and sides when cut to shape, and materials for use in the manufacture of such articles; all the foregoing for use in the manufacture of
hats and caps	 Free
580 Hair, spring and other mattresses	 20 p.c.
595 Tape or wire, coated or not, for use in the recording and reproduction of sound:
(1)	Of iron or steel	
10 p.c.(2)	N.o.p	
5 p.c.
596 Agraffes;
Bass damper parts;
Bolts-bracket, plate, bottom;
Brackets-brass, piano action, regulating rail;
Bridle leather and bridle straps;
Buckskin;
Casters-brass, for grand pianos;
Cloth-bushing, hammer rail, wipp, knuckle;
Damper sockets and damper screws;
Damper rods and damper rod nuts;
Felt-piano, piano action;
Hinges-brass top, desk end, butt; continuous, sectional;
Hammer heads uncovered and hammer head moulding;
Key bottoms and key covering materials;
Piano and organ sharps;
Pins-tuning, hitch, bridge, key, centre, brass;
Plates-brass flange;
Pressure bars;
Punchings-paper, felt;
Rail hooks;
Rods-brass pedal for grand pianos;
Screws-brass or steel capstan, regulating, brass flange; Sounding boards-spruce;
Spoons;
Springs-damper, jack, rail, repetition lever, bottom door, trap;
Wires-back check, bridle, damper, dowel, lifter, hammer;
All the foregoing for use in the manufacture or repair of pianos, organs, piano actions or piano keys;
Ivory and ivory nuts, piano key ivories and veneers of ivory unmanufactured	 Free
10 p.c
Free 25 p.c
10 p.c 10 p.c
Free
20 p.c.	10 p.e.	10 p.c.	20 p.c.Free	Free	Free	Free30 p.c.	20 p.c.	25 p.c.	30 p.c.35 p.c.	10 p.c.	10 p.c.	35 p.c.35 p.c.	5 p.c.	10 p.c.	35 p.c
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Rates in Effect Prior to
Tariff Item	British	Most- Favoured- Nation Tariff	General Tariff	Rates Proposed in this Budget	Tariff	British Preferential Tariff	Most- Favoured-N ation Tariff	General Tariff597d	Musical instruments, namely: autoharps, clavichords, harpsichords, recorders, xylophones	Free	Free	30 p.c.	15 p.c. 5 p.c.	17} p.c. 7} p.c.	30 p.c. 30 p.c.669	Emery, corundum and garnet, in bulk, crushed or ground	Free	Free	Free	Free	Free	Free682	Fish hooks, for deep-sea or lake fishing, not smaller in size than number 2.0: Fishing nets and nettings of all kinds; Metal swivels, of a class or kind not made in Canada; Net and line floats of any material except wood; Specially designed needles of a class or kind not made in Canada, for use in repairing fish nets; Threads, twines, marlines, fishing lines, rope and cordage, not exceeding one and one-haif inches in circumference;	All the foregoing for use in commercial fishing, under such regulations as the Minister may prescribe;	682a	Carapace measures of any material	
Materials for use in the manufacture or repair of the goods specified in tariff item 682	Free Free	Free Free	Free Free	Free Free Various	Free Free Various	Free Free Various69Sd	Engravings, etchings, lithographic prints, maps and charts, printed prior to January 1, 1900; artists' proof etchings unbound, printed by hand from plates or blocks etched or engraved with hand tools	Free	Free	Free	12} p.c. Free	20 p.c. Free	22} p.c. Free696e	Articles and materials designed for the training of mentally retarded children, when for the use and by order of any school, academy, college, seminary of learning, or any association, society or institution that trains mentally retarded children	Free	Free	Free	17} p.c. Free	20 p.c. Free	25 p.c. Free
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2. Resolved, that Schedule A to the French version of the Customs Tariff be amended by striking out tariff item 422a and the enumeration of goods and the rates
of duty set opposite that item, and by inserting therein the following item, enumeration of goods and rates of duty:
422a Machines pour le pavage en bfiton, automobiles, se chargeant par le bout, ayant une capacity de 21 pieds cubes ou plus de beton humide; machines & finir les chaussces en beton et asphalte; machines & profiler les chemins; regaleuses de fond; racleurs et excavateurs combines; betonnieres du type mobile; chariots k bascule ou remorques, non automobiles, d'une capacity de 10 verges (yards) cubes ou plus; machines et materiel pour le remblayage, montes sur roues auto-motrices ou chenilles, k elindes tournantes ou semi-tournantes et du type racloir; sonnettes ou extracteurs de pilots mus 4 la vapeur ou k l'air; pointes de tubes perforateurs, tamis et erepines pour puits; plaques tournantes pour camions; le tout d'une classe ou d'une espfece non fabriqu6e au Canada, et leurs pieces achev£es	 En franchise 10 p.c.	12$ p.c.	En franchise 10 p.c.	12$ p.c.
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3. Resolved, that Schedule B to the Customs Tariff be amended by striking out items 1029,1050,1052,1053 and 1071, and the enumerations of goods and the rates of drawback of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of drawback of duty:
Item No.	Goods	When Subject to Drawback	Portion of Duty (not including Special ' Duty or Dumping Duty) Payable as Drawback1050	Raw sugar, imported other than under the General Tariff.	When used by a recognized sugar refinery in the production of refined sugar used in the manufacture of wine	99 p.c.1052	Machinery; precision instruments and apparatus for heat treating, welding, sorting, testing, inspecting or correcting; control panels for use with the aforementioned machinery and precision instruments and apparatus; all the foregoing of a class or kind not made in Canada; accessories and attachments for use with the aforementioned machinery and precision instruments and apparatus; parts of all the foregoing, not including consumable tools.	When used in the plants of manufacturers of automobiles and motor vehicles or of automobiles or motor vehicle parts for the manufacture of automobiles and motor vehicles or of automobile or motor vehicle parts	99 p.c.1053	Machinery; precision instruments and apparatus for heat treating, welding, sorting, testing, inspecting or correcting; control panels for use with the aforementioned machinery and precision instruments and apparatus; all of the foregoing of a class or kind not made in Canada; accessories and attachments for use with the aforementioned machinery and precision instruments and apparatus; parts of all the foregoing, not including consumable tools.	When used in the manufacture of aircraft, aircraft engines, airborne aircraft equipment, or of parts of the foregoing-	99 p.c.1056	Materials, including all parts, wholly or in chief part of metal, of a class or kind not made in Canada.	When used in the manufacture of goods entitled to entry under tariff items ItlOa(iii), 410(1, 4101, 410m, 410°, 410p< 410q, 410s, 410t, 410v, 410W, 410x, 410z, 411, 411a, 411b, 427b, 427c, 427}, 428c, 428e, 440k and 447a	99 p.c.1071	Materials of a class or kind not made in Canada.	When used in the manufacture or repair of aircraft, aircraft engines, airborne aircraft equipment, or of parts of the foregoing	99 p.c.
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The Budget-Customs Tariff
4. Resolved, that Schedule C to the Customs Tariff be amended by striking out items 1205 and 1207 and the enumerations of goods set opposite each of those
items, and by inserting therein the following item and enumeration of goods'.
1220 Offensive weapons, as defined in the Criminal Code:
This item does not affect in any manner:
(a)	arms, implements or munitions of war, army, naval and air stores, and any articles deemed capable of being converted thereinto or made useful in the production thereof, imported under permit issued by the Minister of National Revenue pursuant to regulations made by the Governor in Council under section 279 of the Customs Act;
(b)	firearms imported by a person who holds a permit in Form $2, Form or Form 44, issued with respect	thereto,	under section	94 of the	Criminal Code;(c)	shotguns and rifles of the standard or auto-loading type and military type rifles, imported for sporting use	only;(d)	antique articles eligible for entry under tariff item 69S(i) or tariff item 69S(iii), and bona fide collectors' items, as determined by the Minister;(e)	arms, military stores and munitions of war eligible for entry under tariff item 708 or tariff item 708b; or(J)	arms, military stores, munitions of war or offensive weapons exempted from the provisions of this item	by a regulation	of the	Governor	in Council	in any
particular case or class of cases.
5. Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the 15th day of March, 1957, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously mported for which no entry for consumption was made before that day.
(See also Budget Papers, pages 2255 to 2347)
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The Budget-Mr, Macdonnell
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, I have listened with interest to the Minister of Finance and I thought he did a wonderful job of distracting your attention from the main point at issue. We have had a long list of the achievements of the government. Some of them are good. We are glad that at last the old age pensioners and family allowance children have been given an addition, however small. When we look at how the prices have risen over the years we think that they are going to be disappointed in what they receive; but we are glad that has been done. We are glad that the minister has a just sense of repaying debt. We approve of that; but nevertheless the fact is that the minister never got around to talking about the fact that with a surplus of $282 million he has not reduced taxes. I should not have said "$282 million"; I should have said $382 million.
The minister has given us a rather elaborate account of what is going to be done for this group and for that group and personally I approve of helping those who help themselves. Nevertheless, he has done nothing to satisfy me that this trivial reduction totalling $128 million in all categories, with a surplus of $382 million, is a responsible action, is fair to the taxpayers of this country. When I say "fair" I want to remind him that taxes have an important economic aspect, that they put up prices-at least, corporation taxes. It is not merely a matter of the welfare of the individual.
The minister, to my way of thinking, has given no real reason for this. He has given us a lot of details as to how he is going to spend money; he has given a lot of detail as to the various ways in which he could spend money. If we knew all about the various reserves that have been tucked away I wonder whether that $382 million is the whole story. But, at any rate, the minister has apparently satisfied himself that the ordinary taxpayer does not need any concession. I do not know how he satisfied himself of that. I read of the way prices have risen astonishingly in the last few years. In 1946 sirloin steak was 44 cents a pound; now it is 82 cents. Plain white bread was seven cents; now it is 13 cents. Butter was 43 cents, now it is 64 cents; milk was 12 cents, now it is 21 cents; and I wonder how the ordinary small taxpayer is getting along at all and I wonder how the minister ever got himself into the position where he could convince himself of that. If there were no other course we might be satisfied. Of course there is another course. The other course is that the minister should have found some way to reduce his expenditures.


He has taken about $10 billion from us in two years. This year he has taken $709 million more than the year before from the taxpayers-I think it is-more than last year. In my opinion it is just absurd to believe that it would not be possible to give relief to the taxpayers if he had really been seriously considering the question of economy.
I come back and ask, what about the taxes? In spite of all the applause I am quite satisfied that there were many people in this chamber disappointed when they found that the ordinary income tax payer is to get no relief, particularly when we face this situation with regard to high prices. We all know what that is. I shall have more to say on that when the debate continues after the adjournment. Prices bear heavily on the ordinary taxpayer, and I think when he finds that there has been a surplus of $382 million, of which only $128 million has been used for tax reduction, he will have more searching of heart.
The serious thing here, the thing for which I blame the government, is that while we have been fighting inflation; while we have been fighting high prices, we all know that there are two aspects to this. We all know there is the monetary aspect and the fiscal aspect. The fiscal aspect primarily is that the government should adjust its requirements-all authorities make that point-but I have seen no sign of it. Actually, we have a sign in the case of the Bank of Canada. They spread out their expenditure on the new building in Toronto; they slowed that up. That seemed to me to be a step in the right direction, but I have seen no sign that the government has done anything of that kind.
How are the small taxpayers to get along? Are they not a matter of concern? With these high prices, what are they going to think? Are they going to be satisfied with these arguments? I say again the minister tried to make us believe-and I hope he is right-that we are in sight, perhaps, of a reduction in high interest rates.
But there is no sign of that yet. Small businesses are still suffering and the government does nothing to help them. Well, I suppose I must congratulate the government on one thing in that they are ready-


William Earl Rowe: To go to the country.


James MacKerras Macdonnell: -to pay no attention to the wishes of the small taxpayer. I suppose I must congratulate them on that. In two years, as I have said, they have had that huge amount of money, about $10 billion, and I think the small taxpayer will have

great difficulty in understanding why nothing can be done for him; but the minister does not seem to be very interested in that.
Perhaps in a way I might have found some explanation for that and it may be contained in this interesting document I hold in my hand which is entitled "The Liberal".


Some hon. Members:: Hear, hear.


Mr. James:: Your reading is improving, anyway.


An hon. Member:: It is good reading.


An hon. Member:: Very interesting.


John Borden Hamilton: A phony
document.


Pierre Gauthier: It is good reading; learn it by heart.


Mr. Ferguson:: Does it list the horses on the Liberal payroll?


James MacKerras Macdonnell: On the outside cover, as you can see, is the heroic figure of the Prime Minister (Mr. St. Laurent)-


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: -and behind him appears the House of Commons; not very much of it though because it is almost completely obscured by the Prime Minister.


Mr. Fulton:: He has not left much of it after last year.


James MacKerras Macdonnell: And inside the booklet there is a picture of the Prime Minister riding in his go-cart, the go-cart he used when he was associating with the President.


An hon. Member:: Talk about the budget.


James MacKerras Macdonnell: Inside the document there are some highly noble sentiments-oh, so noble!-and there are also a lot of price tags. There is a price tag for every constituency. That interested me. Every Liberal candidate who goes out campaigning is going to be able to have a price tag on his constituency indicating how much has been spent in the way of old age assistance, etc.


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: Yes, I am not surprised at the applause because I think that is a Liberal technique; but at any rate the price tag of each constituency is contained in this book. On the back of the document a very interesting thing appears. There is depicted a family, a father and mother and three little toddlers; and below them are the noble words, "Unity, security and freedom".


Some hon. Members:: Hear, hear.
The Budget-Mr. Macdonnell


James MacKerras Macdonnell: I must say I was greatly touched to think that the little toddlers were being instructed in this and that they already were supposed to know the meaning of these great words.


James Joseph McCann: Get them young.


James MacKerras Macdonnell: Inside the document there is a slogan entitled, "Canada's best eight
years"-


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: -and the reference is to the period from 1948 to 1956. I was extremely interested in that. Of course I already knew that history began in 1921 when Mr. King came into power; I knew that was a new era.


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: I knew that nothing of consequence had happened in Canada before that.


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: But it is interesting to find that apparently Mr. King is now washed out. We have again entered a new era. We have now the era between 1948 and 1956, the era of King Louis.


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: We are not now in the
year of grace one thousand nine hundred and fifty seven; we are really in the eighth year of the reign of King Louis.


John Whitney Pickersgill: It is the ninth year now.


James MacKerras Macdonnell: That is the only explanation I can give for the minister setting at naught the feelings of the people of Canada. I suppose he will tell them that he knows better.


James Joseph McCann: Talk a little on the budget.


James MacKerras Macdonnell: I suppose he will tell them that we have entered a new era and that everything has changed. And now I would like to ask a few questions about this new era. As I have said, we know that history began in 1921 and then again in 1948; but what is this golden age? What has happened? What are we so happy about?
I would like to ask very briefly-for the sake of those who are in a hurry-a few questions, and the first is this. Have they succeeded in stopping the rising price level? And the answer is no. Have they done anything to provide for the appalling deficit in trade? And the answer is no. Have they done anything to help small business in its difficulties, as has been done in the United States?


Some hon. Members:: Yes.

The Budget-Mr. Macdonnell


James MacKerras Macdonnell: And the answer is no. Have they taken any steps to really deal with the question of commonwealth trade, which may be a serious matter in a few years?


Some hon. Members:: Yes.


James MacKerras Macdonnell: And the answer is no. Have they done anything for the maritime provinces? And the answer is-


Some hon. Members:: Yes.


James MacKerras Macdonnell: And the answer is-


Some hon. Members:: Yes.


James MacKerras Macdonnell: And the answer is-


Some hon. Members:: Yes.


James MacKerras Macdonnell: And the answer is-


Some hon. Members:: Yes.


James MacKerras Macdonnell: And the answer is very little and very late. Finally 1 ask:	Have
they done anything to alter the appalling situation whereby, as it was expressed by a friend of mine, we are selling our birth rate-


Some hon. Members:: Oh, oh.


James MacKerras Macdonnell: Birthright.


An hon. Member:: You were right the first time.


James MacKerras Macdonnell: -whereby our natural resources-specifically and particularly oil- are being alienated at a rate which, as someone said, is going to turn us into hewers of wood and drawers of water for foreign owners.


Mrs. Shipley:: Cliche.


James MacKerras Macdonnell: Has anything been done about that? And the answer is no. And so I say, Mr. Speaker, in spite of all these distracting thoughts which the Minister of Finance so cleverly expounded to us and which in the main are good and despite all the bits and pieces with which he tried to distract our minds the fact still remains that the ordinary taxpayer will ask why, when there was a surplus of $382 million, so little -in fact practically nothing-was done for the small taxpayer. A great deal of what has been done is for the benefit of the people who are able to help themselves.


Some hon. Members:: Oh, oh.


James MacKerras Macdonnell: I have referred to the old age pensioners and those who receive the family allowance and I have said we were all in favour of what was done for them. The only thing we complain about is that what was done is so little and so late. I am content to rest my case on the fact that a very


large number of ordinary taxpayers will not be satisfied with what is happening.
I have a matter now which I believe is relevant and which should be brought up. This is in connection with the Bank of Canada and therefore, I submit, has to do with the budget. A report issued today by the Bank of Canada at Ottawa referred to the fact that the bank had made certain representations to the chartered banks. The operative paragraph reads as follows:
The banks agreed in principle that they would approve new housing loans in 1957-
And again:
In recent months most banks had greatly slowed down their rate of approvals of housing loans owing to uncertainty as to whether they would have a growth in their total resources sufficient to enable them to finance an increase in the total outstanding amount of housing loans on their books. The Bank of Canada assured the chartered banks that as a group their total resources could be expected to increase during 1957 by an amount at least great enough to take care of their disbursements on mortgage loans, including those on loans approved prior to 1957 as well as on loans which would be approved this year in accordance with the above program.
I am now going to do a thing which I have never done before and which I hope I shall never do again. I feel constrained to say this. The governor of the Bank of Canada is reported to have said that he was sticking out his political neck-that was said in this house the other day and it is commonly believed to have been said, whether the words are exactly correct or not. It was used in this house the other day without question and it was repeated to me this afternoon from Toronto by a man who believed it.
I want to say that I consider that a most extraordinary statement for the governor of the bank to make. Frankly, I do not think it was made on his own initiative. Frankly I must say that I hold the Department of Finance responsible for that. I hope they are responsible because, if they are not responsible, they should be. I repeat I consider that a most extraordinary statement. It seems to me to run counter to what the governor of the bank has been saying.
I consider that that remark of his, whether exactly correct or not-nobody can doubt that the sense of it is correct-means that the governor considers that he has been put practically in the position of, what shall I say, a political partisan. The government is responsible for that. That is the only conclusion I can come to.
I consider it entirely improper. I want to ask the minister that there be a meeting of the banking and commerce committee as soon as possible at which the governor of

the bank should be present and other competent people should be asked to come because of the vast importance of the questions which are raised by the discussions which have taken place. I move the adjournment of the debate.


Walter Edward Harris: I wonder if the house-


Edmund Davie Fulton: Not after the disgraceful exhibition of your colleagues a few minutes ago.


Walter Edward Harris: Mr. Speaker-


Edmund Davie Fulton: No, the minister has completed his speech.


Walter Edward Harris: I was going to ask if the hon. member would permit me a question. I was also going to ask if I am to accept in all seriousness what he has said about the governor.


Some hon. Members:: No.


Walter Edward Harris: Mr. Speaker, I know that I was not going to be allowed to do that. So I come back to my first point and ask the hon. member if he will permit a question.


Some hon. Members:: No.


An hon. Member:: Ten o'clock.


Mr. Speaker:: Order.


James MacKerras Macdonnell: I will permit a question.


Walter Edward Harris: I wonder if my hon. friend would agree with me that honourable sentiments can only be expressed by those who feel them.


Donald Methuen Fleming: Smug hypocrisy!


William Earl Rowe: Rot. That is not a question at all; that is just an observation.


James MacKerras Macdonnell: The minister by his
question-


Some hon. Members:: Oh, oh.


Mr. Speaker:: I understand the hon. member is answering a question.
The Budget-Mr. Macdonnell


William Earl Rowe: It is not a question at all, it is an observation.


Mr. Speaker:: Why is he on his feet then?


James MacKerras Macdonnell: If the minister by his question was intimating that I was not sincere in what I said, that I did not believe I was fully warranted in what I said, he is wrong and further I considered myself fully warranted in saying the things I said.


Walter Edward Harris: I was not reflecting on my hon. friend.


An hon. Member:: Oh yes you were.


Some hon. Members:: Order.


William Earl Rowe: The minister rose to ask a question and concluded by making a speech.


Mr. Speaker:: I have a motion to put. The hon. member for Greenwood has adjourned the debate.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Are hon. members going to prevent me from putting the motion?


Some hon. Members:: No.


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Motion agreed to.

Mr. Speaker:: Is the leader of the house going to announce the business for tomorrow?


Walter Edward Harris: Mr. Speaker, I apologize. Yesterday I announced the business for tomorrow, but I will repeat that we shall go on as indicated with the debate on external affairs. I assume it will take all day, but if it does not we shall take the estimates of the Post Office Department.


Stanley Howard Knowles: Will the minister say what device will be used for the debate tomorrow? What kind of motion will be made?


Walter Edward Harris: I am sorry, I cannot.


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At ten o'clock the house adjourned, without question put, pursuant to standing order.
82715-142i
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Questions

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

Mr. Nesbitt: 1.	Have any Royal Canadian Navy ships been sold to any foreign government since January 1, 1955?
2.	Have any former Royal Canadian Navy ships, which have been declared surplus, been sold to any foreign government since January 1, 1955?
3.	If so, to what government, or governments, Were such ships sold?
4.	What was the class, or type, of ships sold?
5.	What was the price obtained for each ship or ships?
Answer by:	Mr. Dickey, Parliamentary
Assistant, for the Minister of Defence Production:
1.	No.
2.	No.
3.	Not applicable.
4.	Not applicable.
5.	Not applicable.


P.E.I. NATIONAL PARK-SALE OF TOURIST CABINS
Mr. MacLean: 1.	Have tourist cabins built by the federal government in the Prince Edward Island national park been sold?
2.	If so, have the furnishings also been sold?
3.	What was the cost to the government of these cabins and what was the cost of the furnishings?
4.	What was the selling price for the cabins and for the furnishings, and who was the purchaser?
5.	Were public tenders called or, if not, what was the method of sale?
Answer by: Hon. Jean Lesage (Minister of Northern Affairs and National Resources):
1.	Yes.
2.	No. The furnishings are owned by the
concessionnaire.
3.	Cost of complete development including 29 cabins, central building, water and sewage systems and landscaping-$79,699.
4.	$55,000. Furnishings not owned by department. Robert Scott Humphrey.
5.	No. Authority for sale by order in council P.C. 1956/1057 dated July 12, 1956.
Supplementary to question 5. Bungalow courts were constructed some years ago by the government not only in Prince Edward Island but in the three maritime parks. These courts were built by the department at a time when it was impossible to interest private persons in such construction. It was considered necessary for the development of the parks to have accommodation of this type available. The department therefore constructed these buildings.
Once the construction of the bungalow courts was completed, the department advertised these concessions by public call for tender. Mr. Humphrey was successful in obtaining the concession in Prince Edward Island and was granted a licence of occupation for a term of ten years, which would have expired April 30, 1960. In undertaking the operation of the concession, Mr. Humphrey provided all the necessary furnishings and other movable equipment. The concessionnaire also agreed to pay 20 per cent of the gross revenue derived from the rental of cabins. On the basis of revenues received under the licence, the crown sustained an annual loss of approximately $2,300 when maintenance costs, depreciation and interest on investment were considered, and the total loss between the date of sale and the expiry date of the licence would possibly exceed $10,000. The concessionnaire offered to purchase the said bungalow court buildings for the sum of $55,000. The Department of Northern Affairs and National Resources arranged to have qualified officers make an appraisal of the property. These valuators placed its present value at $54,150.
In view of the unexpired term of the licence held by Mr. Humphrey, it was not practical to call for tenders by public advertisement, and as it was considered that Mr. Humphrey's offer was fair and reasonable and that it was in the public interest to accept his offer, the Green Gables bungalow court was sold to Mr. Humphrey.



CIVIL DEFENCE


Mr. Cameron (High Park): Has consideration been given to the problem of evacuating hospital patients in the event of a national emergency?
Answer by: Hon. Paul Martin (Minister of
National Health and Welfare):
In the event of a national emergency, patients in hospitals in target areas would be evacuated to alternate facilities in reception communities. The evacuation of a modern hospital is a difficult and complex procedure and requires careful pre-planning.
The Department of National Health and Welfare has carried out intensive studies of the problems involved and has developed procedures designed to enable safe and effective hospital evacuation with minimum delay. These studies have proceeded further in Canada than in other countries. For the first time anywhere the techniques were recently subjected to practical test by a comprehensive time-motion study at Vancouver conducted by the officers of the civil defence health

services of the Department of National Health and Welfare in which the staff of St. Paul's hospital, working in collaboration with local and provincial civil defence people, successfully carried out a hospital evacuation exercise. About 100 simulated cases were removed from St. Paul's hospital and transported to alternate hospital facilities in the town of Burnaby, 15 miles distant. Corps of expert official observers appraised the procedures followed in each phase of the exercise. Recommended techniques will shortly be published for the use of hospitals generally in Canada under emergency conditions.




Mr. Cameron (High Park): Are plans being developed for the replacement of potential loss of hospital resources in large industrial cities in Canada in the event of an attack?
Questions
Answer by: Hon. Paul Martin (Minister of
National Health and Welfare):
The Department of National Health and Welfare shares the view held by planners for other western countries that improvised hospitals provide the best answer to this problem. The department has developed a prototype 200-bed improvised hospital which, functionally packaged, can be set up in two hours and if necessary repackaged in two or three hours for removal to an alternate site. Such hospitals would serve at least two purposes: as satellite hospitals established in reception communities to receive cases evacuated from target areas, and as independent units to provide for continuing casualty care. The Canadian prototype improvised hospital has been carefully designed for adaption to Canadian conditions. Its practicability and adequacy have been proven by field tests and its functional capacity has been proven by actual use in a recent time-motion evacuation study conducted at Vancouver.

The Budget-Appendix



BUDGET PAPERS

[Stage Direction]
presented by
the Honourable W. E. Harris, M.P., for the information of Parliament in connection with the Budget of 1957-58

The Budget-Appendix

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The purpose of these Papers is twofold:
1.	to present a general economic review of 1956, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government accounts for the
fiscal year ended March 31, 1957.
2258
[Stage Direction]
The Budget-Appendix

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Page
1.	National Accounts-
National Income and Product	 2259
National Expenditure	 2261
Personal Income and its Disposition	 2264
Source and Disposition of Saving	 2266
Investment and Capital Expenditure	 2268
Revenue and Expenditure of All Governments	 2270
2.	Balance of International Payments	
22753.	Employment and Earnings	
22784.	Monetary and Credit Developments	
22805.	Price Trends	
2284
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1956 estimates are preliminary and subject to revision.

The Budget-Appendix

[Stage Direction]
National Income and Product
During 1956 there was a continuation of the rapid increase in demand which had characterized most of 1955. The enlargement of demand was widely distributed and affected the export industries as well as those producing for the home market. The most striking increase was in business capital investment, and the point of greatest pressure was the construction industry where demand tended throughout the year to press against capacity. Although the pressure of demand was eased by the greatly increased flow of imports and restrained by tightness in the money market, price increases were more pronounced than in 1955.
Under the stimulus of increasing demand, there was a further large increase in the nation's total production. Gross national product for the year is estimated at $29.9 billion, an increase of 11 per cent over 1955. Since prices were on the average 3 to 4 per cent higher than in 1955, the gain in real output amounted to about 7 per cent. This large increase in real output marked an advance from a level of output and employment which was already high and differs from the situation in 1955 when the volume gain of 9 per cent represented to a considerable degree a recovery from the moderate recession of the previous year. The expansion in the nation's output was facilitated by the large rise in the labour force which grew at a faster rate than the total population of working age. There was an increase of 5 per cent in industrial employment and this not only absorbed the annual growth in the labour force and accommodated the transfer of workers from agriculture but in addition brought about a reduction of over one-fifth in the number of persons without jobs.
In physical terms, agricultural production rose by 8 per cent. This gain reflected primarily the increase in yield from the western grain crop which for the second year in succession was above average. Non-agricultural output rose by

[Stage Direction]
BILLIONS OF DOLLARS	1926	1956	*	BILLIONS OF DOLLARS
2260
[Stage Direction]
The Budget-Appendix a little more than 7 per cent during 1956. As in the previous year, the growth in the goods producing industries was somewhat larger than in the services industries. Output in the goods producing industries as a whole grew by 8 per cent while the output of services increased by close to 7 per cent. The most striking expansion occurred in construction, transportation and mining. Construction expanded by 15 per cent due to the large increase in non-residential building. The largest increase in the primary goods industries was in mining where output rose by 13 per cent. This was related to previous heavy developmental expenditures and indicates the continued buoyancy of export markets. The rise of 6 per cent in manufacturing output as a whole resulted from a high rate of activity in the capital goods sector, except for farm machinery, and a more moderate growth in the non-durable goods industries. In the services, the trade, transportation, storage and communication industries showed relatively large increases whereas financial, government and other services advanced at a somewhat slower rate.
Associated with the general increase in production there was a further and significant improvement in the earnings of Canadians and this improvement was widely distributed. Wages and salaries rose by $1,474 million or almost 12 per cent in 1956 compared with an increase of 7 per cent in the preceding year. In terms of real purchasing power this was the largest gain of the post-war period. Slightly more than half of the increase came about because of the exceptionally large increase in the number of paid workers and the remainder because of a substantial rise in the rates of pay. The average number of hours worked per week did not change appreciably.
In 1956 investment income increased by $443 million or 10 per cent and reached a total of $4,782 million. This increase, while substantial, was less than the rise of 19 per cent which occurred in 1955. Corporate profits is the largest and most variable component of investment income. In 1955 corporate profits turned sharply upward as a result of the rapid acceleration in business activity and the more intensive use of existing facilities. In 1956 further increases in output depended to a greater extent upon the expansion of productive capacity and the continued economic growth was accompanied by widespread increases in wage and material costs. These factors were instrumental in a slower advance


[Stage Direction]
-	1953	1954	1955	Prelim. 1956
		(Millions	>f Dollars)	
1. Wages, salaries and supplementary labour income..	11,715	11,994	12,810	14,2842. Military pay and allowances	309	367	394	4243. Investment income	3,782	3,661	4,339	4,7824. Net income of unincorporated business-	(a) farm operators from farm production*	1,652	1,147	1,404	1,608(5) non-farm unincorporated business	1,675	1,625	1,793	1,9515. National Income (1+2+3+4)	19,133	18,794	20,740	23,0496. Indirect taxes less subsidies	2,907	2,947	3,238	3,6017. Depreciation allowances and similar business costs	2,418	2,673	2,878	3,1518. Residual error of estimate	15	-78	60	659. Gross National Product at Market Prices (5+6+7+8)	
10. Index of G.N.P. in Constant Dollars	24,473 100	24,336 98	26,916 107	29,866 114
1 Includes undistributed Wheat Board trading profits, and inventory valuation adjustment on a calendar year basis for grain held by Wheat Board.

The Budget-Appendix
in corporate profits during 1956, particularly at points where competition was effective in checking increases in the price of finished goods. The rise in interest payments and rental income taken together was also somewhat less rapid than in the previous year.
Net farm income, which had declined by over 30 per cent in 1954, rose for the second year in succession and in 1956 reached a total of $1,608 million, almost 15 per cent above 1955. Despite this substantial improvement, aggregate farm income in 1956 was slightly less than it had been in 1953. However, in the same three-year period the number of persons engaged in agriculture declined by 10 per cent so that per capita farm income in 1956 was about 8 per cent above the 1953 level. In 1956, as in 1955, the major part of the recovery in farm incomes resulted from higher production, particularly the better than average western grain crops. Agricultural prices, which had been declining in previous years, rose during 1956 and this change in direction also had some effect on the improvement in farm incomes.
Net income of non-farm unincorporated business rose by 9 per cent in 1956 and amounted to $1,951 million. Gains were widely distributed with most of the increase accounted for in the major groups: construction, retail trade and services.
National Expenditure
The large expansion of economic activity in 1956 was supported by a high and rising level of demand for goods and services at home and abroad. In 1955 increases in capital expenditure and in exports were the major expansionary forces. The increase in housing expenditure was particularly rapid and accounted

[Stage Direction]
1.	Personal expenditure on consumer goods and
services	
2.	Government expenditure on goods and services....
3.	Gross domestic investment-
(а)	housing, plant and equipment-total1..
new residential construction	
new non-residential construction..
new machinery and equipment	
(б)	change in inventories-total	
grain in commercial channels3	
farm grain and livestock1 2	
all other inventories3	
4.	Exports of goods and services4	
5.	Imports of goods and services4	
6.	Residual error of estimate	
7.	Gross National Expenditure at Market Prices
(1+2+3+4+5+6)	
8.	Index of G.N.E. in Constant Dollars	
1953	1954	1955	Prelim. 1956
	(Millions of Dollars)		
15,112	15,881	17,139	18,5564,388	4,413	4,728	5,2094,840	4,666	5,275	6,6171,061	1,166	1,481	1,5561,706	1,659	1,847	2,5492,073	1,841	1,947	2,512591	-275	510	939146	-15	-20	2850	-115	211	169395	-145	319	7425,400	5,147	5,753	6,310-5,843	-5,574	-6,430	-7,699-15	78	-59	-6624,473	24,336	26,916	29,866100	98	107	114
1 Includes private businesses and institutions, and publicly owned public utilities.
3 Value of physical change.
3 Change in value. Includes privately financed industrial and trade inventories, m 4	^av,e been made to the figures of current receipts and payments shown in Table
10 and m The_Canadian Balance of International Payments, 1953 to 1956", Dominion Bureau of Statistics, to achieve consistency with the other component series.
[Stage Direction]
The Budget-Appendix for about half of the total increase in capital outlays. In 1956, however, housing expenditure showed only a modest increase while business capital outlays for construction as well as for machinery and equipment rose to very high levels and exerted a dynamic influence on economic development during the year. At the same time, rising incomes at home and prosperous economic conditions abroad brought about a further large increase in the demand for consumer goods and for exports. As a result, pressure on supplies developed in certain commodity markets, notably steel and cement, together with some seasonal shortages in skilled trades, particularly in the construction industry. Prices moved upwards in all major sectors, particularly in the investment field. However, expanding domestic capacity, the notably higher level of imports and some restraint on the expansion of credit combined to moderate the pressure on prices. The great increase in imports over the previous year was an important factor in supplementing the total supply of goods and services available in Canada. The rise in imports in physical terms was equivalent to the addition of 4 per cent to domestic production, an increase more than half as large as the growth in total Canadian production during 1956.
Consumer purchases absorb by far the greatest part of total national production. In 1956 personal outlays on consumer goods and services accounted for about 62 per cent of gross national expenditure. Throughout the post-war period consumption has risen each year and this upward trend has persisted despite temporary fluctuations in other sectors of the economy.
In 1956 as well as in 1955 consumer expenditures rose by about 8 per cent. The increase of $1,417 million in consumer expenditure for the year 1956 absorbed about one-third of the expansion in the overall supply of goods and services including imports. Whereas in the previous year there had been a very slight decline in the overall price level for consumer goods and services, in 1956 the larger expenditures were in part a reflection of rising prices. However, average prices for the year as a whole were only moderately higher, particularly in the consumer goods sector. It is estimated that the increase in real consumption during 1956 was quite large, amounting to 7 per cent or only slightly less than in the previous year. Per capita real consumption expanded by 4 per cent in 1956 compared with 5 per cent in 1955.
Government expenditures on goods and services rose during 1956 by 10 per cent and reached a total of $5,209 million. The increase of $481 million compares with an advance of $315 million or 7 per cent in the previous year. Prices rose at a faster rate in 1956 and the increase in volume terms was only moderately higher than in 1955. About two-thirds of the expansion in government outlays during 1956 was attributable to provinces and municipalities. Federal expenditures on goods and services, which had risen by 2 per cent in 1955, increased by 7 per cent in 1956 and reached a level of $2,631 million. The major part of the federal increase was in non-defence outlays. Higher defence expenditures accounted for 26 per cent of the total expansion in federal outlays. Federal Government defence expenditures, which had declined by $180 million in 1954, rose by $29 million in 1955 and by $44 million in 1956 but remained about 6 per cent below the peak reached in 1953.
In 1955 the rise of 13 per cent in capital expenditures played an important role in the vigorous economic recovery during that year. _The upturn in capital expenditures was still more pronounced in 1956. The increase amounted^ to $1,342 million or 25 per cent above the level reached in 1955. The rise in capital investment in 1956 absorbed about 32 per cent of the increase in the overall supply of goods and services including imports compared with 18 per cent in 1955. In contrast to 1955, when about half of the growth in capital investment came about as a result of the increase in new housing, the increase in 1956 was confined almost entirely to business capital expenditures.

The Budget-Appendix
Since 1952 the home building industry has expanded greatly due to favourable conditions both on the demand and on the supply side. The dollar value of residential construction rose by 35 per cent in 1953, 10 per cent in 1954 and 27 per cent in 1955. For 1955 the volume of home building was more than 75 per cent above the 1952 level and almost 50 per cent above the level of 1950. In 1956 residential construction increased only modestly above the high level reached in the previous year. The value of residential construction expanded by about 5 per cent but the increase in physical terms was insignificant since prices rose by almost 4 per cent. The number of housing units completed continued to rise and reached a level of 135,500 or 7,600 more than in 1955. The number of housing starts declined by 11,300 units to 127,000 but remained at a higher level than in any previous year except 1955. The downward trend in housing starts during the course of the year was due in part to a shortage of mortgage funds caused by the competition for funds exerted by investment projects in other fields; and in some areas the shortage of serviced land was probably a contributing factor. In recent years net family formation has amounted to 80-85,000.
New non-residential construction advanced by 38 per cent during 1956 and reached a level of $2,549 million. Over one-half of the total increase in gross domestic investment exclusive of inventories is accounted for by the rise of $702 million in industrial and commercial construction. Investment in new machinery and equipment followed a similar trend and expanded sharply to a level $439 million above the previous peak in 1953. Total outlays for machinery and equipment in 1956 amounted to $2,512 million or 29 per cent above the figure for 1955. Higher prices accounted for about one-fifth of the rise of $1,267 million in the value of total business capital investment. The great increase in business capital investment exerted considerable pressure on productive facilities at home and led to a large expansion in purchases abroad, particularly for steel and engineering products.
Inventories rose by $939 million in 1956 compared with the increase of $510 million in 1955 The larger inventory accumulation of 1956 was almost entirely the result of the growth in business inventories since additions to farm inventories were about the same as in 1955. During the past two years the addition to farm inventories has amounted to $388 million and this has been largely the result of above average wheat crops. Business inventory accumulation amounted to $742 million in 1956, $423 million more than in 1955. The greater part of the addition to inventories took place during the first half of 1956. Price changes were as important as volume changes. In physical terms, business inventories increased by about 6 per cent in 1956 and the increase in inventory accumulation accounted for about 15 per cent of the rise in gross national expenditure. Despite the steady accumulation in stocks, business inventories as a proportion of sales did not rise above the level of 1955.
Together with the large expansion in domestic demand during 1956, there was a further increase in the value of goods and services sold abroad. Exports of goods and services advanced by $557 million or 10 per cent during the year. Imports of goods and services increased even more sharply and reached a peak of $7,699 million or 20 per cent above the year 1955. As a result, the current account deficit for 1956 rose to $1,389 million or more than double the level of the preceding year.
[Stage Direction]
The Budget-Appendix
Personal Income and its Disposition
Personal income differs from national income in a number of ways although the components of these two totals are for the most part similar or identical. While national income is the total of the annual earnings of Canadian residents from the production of goods and services, personal income is the sum of the current receipts of income regardless of whether these receipts are earnings from production. For example, personal income includes only that part of corporation profits which is actually received by Canadian persons as dividends. On the other hand, transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations are part of personal income although they are not payments for services and, therefore, do not form part of national income.
All components of personal income expanded in 1956 and the total rose by $2,005 million or 10 per cent compared with an increase of $1,492 million or 8 per cent in 1955. The greater increase in personal income in 1956 was entirely due to the growth of the labour income component. Labour income, exclusive of employer and employee contributions to social insurance and government pension funds, rose by $1,433 million in 1956 compared with an increase of $789 million in 1955 and accounted for 72 per cent of the increase in total personal income compared with 53 per cent in 1955. Net income received by farmers showed a further gain of 15 per cent. The gain in incomes of non-farm unincorporated businesses was slightly less than in 1955. The rise of 7 per cent in investment income reflected higher dividend payments and rents, as well as some increase in interest rates. Government transfer payments, which had risen considerably in 1954, when personal income as a whole remained fairly stable, continued to move upwards in the succeeding two years but at an increasingly slower pace. Payments increased by $97 million in 1955 and by $34 million in 1956. The greater part of the increase in 1956 resulted from larger provincial and municipal disbursements.
In 1956 Canadians spent about 85 cents of each dollar of income on consumer goods and services, while 7 cents was added to personal saving and about 8 cents was paid out in direct taxes. Total personal direct tax collections rose by $229 million or 15 per cent and reached a level of $1,720 million. With no change in

[Stage Direction]
-	1953	1954	1955	Prelim. 1956
		(Millions of Dollars)		
1. Wages, salaries and supplementary labour income..	11,715	11,994	12,810	14,284
Deduct: Employer and employee contributions to				
social insurance and government pension funds.	-390	-396	-423	-4642. Military pay and allowances	309	367	394	4243. Net income received by farm operators from farm	production1	1,657	1,151	1,382	1,5884. Net income of non-farm unincorporated business...	1,675	1,625	1,793	1,9515. Interest, dividends and net rental income of persons2	1,649	1,783	1,957	2,0976. Transfer payments to persons (excluding interest)-	(a) from government	1,464	1,634	1,731	1,765(6) charitable contributions made by corpora-	tions	28	25	31	35(c) net bad debt losses of corporations	25	26	26	267. Personal Income (1+2+3+4+5+6)	18,132	18,299	19,701	21,706
Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board, includes all government debt interest paid to persons.

The Budget-Appendix
rates of taxation, personal income tax collections showed the effect of the sharp rise in personal income and increased by $198 million. Receipts from succession duties and other miscellaneous taxes rose by $31 million.
Personal disposable income or income after payment of direct taxes increased by 10 per cent in 1956 compared with the rise of 9 per cent in 1955. The gain in

[Stage Direction]
-	1953	1954	1955	Prelim. 19561. Personal direct taxes-	1,287 73 72	(Millions o 1,296 78 63	f Dollars) 1,297 127 67	1,495 146 79
1,432	1,437	1,491	1,720
2. Personal expenditure on consumer goods and services- Goods-				
	8,581 1,790 4,741	8,997 1,694 5,190	9,673 1,919 5,547	10,513 2,061 5,982
				
				
				
	15,112	15,881	17,139	18,556
3. Personal saving- (a) personal saving excluding farm inven-				
	1,538 50	1,006 -115	860 211	1,261 169
				
				
	1,588	891	1,071	1,430
				
	18,132	18,209	19,701	21,706
				
[Stage Direction]
The Budget-Appendix 1956 amounted to $1,776 million and Canadians had, therefore, considerably more money available for spending and saving. A relatively large proportion of this additional income was saved. The increase in personal saving exclusive of the change in farm inventories amounted to $401 million or almost one-quarter of the increase in non-farm personal income. There was a further increase in farm inventories, mainly because of the large wheat crop, but saving in this form was lower than in 1955. Exclusive of the change in farm inventories, personal saving from current income constituted 6.3 per cent of disposable income in 1956 compared with 4.7 per cent in 1955.
The only significant change in the overall pattern of consumer expenditures in 1956 was the lesser rate of expansion in expenditures on durable goods. Outlays on durable goods rose by 7 per cent in 1956 to a level of $2,061 million. Since prices were slightly higher the volume of durable goods purchases increased by 6 per cent compared with a rise of 19 per cent in 1955. An important factor in the further growth during 1956 was the record sale of motor cars. Major gains also occurred in the sale of house furnishings and home appliances. Expenditures on non-durable goods expanded by 9 per cent in value during 1956. However, when the price factor is taken into account, the increase in real terms was close to 8 per cent or about the same as in 1955. There were substantial increases in outlays on food and clothing. Consumer spending on services rose by 8 per cent, of which about one-third was due to higher prices.
Source and Disposition of Saving
Saving is the source from which investment expenditure is financed. In addition to personal saving, which is discussed in the preceding section, there is business saving and government saving.
Total saving from current income declined in 1954, but rose again in 1955 to a level about 2 per cent above 1953. In 1956 there was a further increase of $1,052 million or 21 per cent. About 37 per cent of the additional saving of $1,052 million in 1956 was provided by corporations. The personal and the government sectors contributed one-third and one-quarter, respectively, to the total increase in saving.

[Stage Direction]
-	1953	1954	1955	Prelim. 1956
		(Millions of Dollars)		
Personal saving	1,588	891	1,071	1,430Gross business saving-total	3,147	3,267	3,783	4,174(a) Undistributed corporation profits	754	624	910	1,030(b) Depreciation allowances	2,418	2,673	2,878	3,151(c) Net bad debt losses of corporations	-25	-26	-26	-26(d) Undistributed Wheat Board trading	profits and inventory valuation adjust-	ment on grain held by Wheat Board	-5	-4	22	20(e) Inventory valuation adjustment1	5	-	-1	-1Adjusted government surplus (+) or deficit (-)2	223	-38	135	432Residual error of estimate3	15	-78	60	65Total	4,973	4,042	5,049	6,101
1 The adjustment has been made only to grain held in commercial channels. * See Table 9.
' See Tables 1 and 2.

The Budget-Appendix

[Stage Direction]
-	1953	1954	1955	Prelim. 1956
		(Millions of Dollars)		
Gross domestic investment-		4,666	5,275	6,617
Housing, plant and equipment		4,840			
Change in inventories	591	-275	510	939Net increase in foreign assets (including foreign	-443	-427	-677	-1,389exchange) adjusted1	Residual error of estimate2	-15	78	-59	-66Total	4,973	4,042	5,049	6,101
1 Minor adjustments have been made to the figures appearing in Table 10. 5 See Tables 1 and 2.
Government saving is represented by the surplus of revenues over expenditures for all three levels of government combined. In the calendar year 1956 the surplus of revenues over expenditures as calculated for National Accounts purposes amounted to $432 million. This includes an adjustment of $103 million in the federal accounts to place corporate tax revenue on an accrual basis. Excluding the effect of this adjustment, which has no fiscal significance, government saving actually amounted to $329 million in 1956 compared with a deficit of $61 million in 1955. The surplus in 1956 was composed of saving at the federal level amounting to $486 million and an excess of expenditures over revenues amounting to $157 million for all provincial and municipal governments combined.
The largest contribution to the nation's total annual saving came from the business sector and saving from this source in 1956 accounted for 68 per cent of the total. Gross business saving rose by 10 per cent to a level of $4,174 million. Depreciation allowances, the largest component of business saving, rose by 10 per cent in 1956 compared with 8 per cent in 1955 and this increase accounted for 70 per cent of the rise in business saving. This is an indication of the large additions to physical plant and equipment during 1956. Saving in the form of undistributed profits rose by 13 per cent but this increase was much less pronounced than the 46 per cent increase of 1955. Undistributed profits are affected by the change in total profits, by the amount paid in direct taxes, and by amounts paid out in dividends. In 1955 undistributed profits rose very

[Stage Direction]
-	1953	1954	1955	Prelim. 19562,570 -1,216	(Millions c 2,350 -1,114	f Dollars) 2,872 -1,262	3,240 -1,410
1,354 -600	1,236 -612	1,610 -700	1,830 -800
				
				
	754	624	910	1,030
				
1	Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis.
2	Taxes paid or payable in respect of the calendar year's income (See Table 9).
Includes charitable contributions made by corporations (See Table 3 Item 6 (b)).
4 See Table 5.
[Stage Direction]
The Budget-Appendix rapidly, mainly due to the recovery in total profits from the decline in 1954. In 1956 undistributed profits reflected the more moderate rise in total profits as well as an increase in tax liability and in dividends paid out. Corporation profits are estimated to have risen in 1956 by $368 million or by $220 million after taxes. Dividends were raised by $100 million and there was consequently an increase in undistributed profits amounting to $120 million or 13 per cent. The rise in undistributed profits contributed about 31 per cent of the total increase in business savings during 1956 compared with 55 per cent in 1955.
In 1956 gross domestic investment inclusive of inventory changes amounted to $7,556 million. About four-fifths of this total was financed from savings generated within the domestic economy. The remainder resulted in an increase in net foreign liabilities as indicated by the deficit of $1,389 million in the balance of international payments on current account. The excess of Canada's total payments abroad over total receipts more than doubled between 1955 and 1956. This excess was balanced as in previous years by capital inflows and there was no significant change in Canada's reserves of foreign exchange. In contrast to 1955, when security transactions taken by themselves resulted in some net outflow of capital, Canadian borrowing abroad and other security transactions resulted in 1956 in heavy capital inflows. In fact, capital inflows from security transactions exceeded the value of direct investment which in itself showed a substantial rise over 1955. These transactions are treated more fully in the section on the International Balance of Payments.
Investment and Capital Expenditure
Ta,ble 8 gives the industrial distribution of business capital expenditures and brings them together with public capital outlays included in government expenditures on goods and services in Table 2. At the same time a reconciliation

[Stage Direction]
BILLIONS OF DOLLARS	BILLIONS OF OOLLARS

The Budget-Appendix
is provided between gross domestic investment in housing, plant and equipment as it appears in Table 2 and total capital outlays shown in Table 8.
In 1956 public and private capital expenditures increased by $1,550 million and reached a total of $7,900 million. The expansion of 24 per cent in capital outlays was the largest since the early post-war years. In terms of volume the increase for 1956 amounted to 17 per cent, about double the expansion of 8 to 9 per cent which occurred in 1955. Because of the limitation of resources, actual outlays fell somewhat short of investment plans which were progressively revised upward during the year.

[Stage Direction]
-	1953	1954	1955	Prelim. 1956Agriculture and fishing	
Forestry	546 34 257 969 548 661 91 526 301 1,084 824	(Millions 388 46 278 822 483 641 97 582 337 1,178 768	>f Dollars) 426 63 336 947 480 619 174 561 408 1,499 837	495 74 536 1,349 706 924 191 607 402 1,575 1,041Mining, quarrying and oil wells	
Manufacturing	Electric power, gas and water works	
Transportation, storage and communications	
Construction industry	
Trade, finance and commercial services	
Institutions	Housing	Government departments	
Total Capital Expenditure1	
Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in Constant Dollars	5,841	5,620	6,350	7,90023.9	23.1	23.6	26.5100	96	105	124
'For reconciliation with Gross Domestic Investment in housing, plant and equipment in Table 2, see below.
Public and Private Capital Expenditure-Table 8	
Deduct:
Provincial hospitals and schools, and municipal schools.
Government housing exel. C.M.H.C. rental housing	
Direct government department outlays	
Other	
Gross Domestic Investment in Housing, Plant and Equipment-Table 2	
1953	1954
5,841	5,620
151	169
23	12
824	768
3	5
4,840	4,666
Prelim.
1955	1956
6,350	7,900
214	218
18	19
837	1,041
6	5
5,275	6,617
All major industrial groups spent more money on investment undertakings in 1956. The most striking advances were achieved in mining, manufacturing and utilities. These sectors accounted for 44 per cent of total capital outlays but contributed 73 per cent of the increase in investment which took place in 1956. Agriculture, trade and the government sector showed more moderate increases although capital expenditures were substantially above the level in the previous year. Investment undertaken in the construction industry, in forestry and in housing was larger in total than in 1955 but there was a notable slowing down in the rate of increase.
Investment in manufacturing rose by $402 million or 42 per cent during 1956. In general, industries concerned with raw material processing led the advance. The biggest increase occurred in the paper products group with capital
[Stage Direction]
The Budget-Appendix outlays up by $124 million. The rise of $69 million in capital outlays in the jion-metallic minerals group was substantial and represented an advance of 145 per cent over the level of the previous year. Investment in plant and equipment for manufacturing iron and steel products rose by $63 million or 67 per cent. There was a comparable increase in capital investment in the chemical industry. The remaining groups accounted for about 20 per cent of the total increase in manufacturing investment.
More than one-half of the increase of $531 million in investment expenditures by utilities was the result of higher outlays for electric power generation and for railway improvements. Capital expenditures in 1956 also reflected the progress which was made during the year in building gas and oil pipe lines as well as major engineering works associated with the St. Lawrence Seaway. There was a further expansion of expenditures in most other fields including telephone facilities and municipal waterworks. Decreases were concentrated in capital outlays for broadcasting and in new investment by motor carriers.
Investment outlays by the trade, finance and commercial services group which had declined modestly in 1955, expanded in 1956 by about 8 per cent. Within this total, the individual components followed different trends. Increases in investment were widespread for the financial sector with expenditures up by 23 per cent. In the commercial services group there wras a relatively large increase in investment undertaken by hotels but this was partially offset by declines in capital outlays for theatres and laundries. In the trade sector, capital outlays were lower than in 1955 in all groups except the automotive and wholesale trades and new investment fell by $11 million or 3 per cent.
Capital outlays for hospitals declined in 1956 by $20 million or 14 per cent. Capital outlays on schools remained practically constant. Despite increased investment in churches and universities there was a slight drop in total new investment in institutions. Governments increased their capital outlays by $204 million or 24 per cent.
Revenue and Expenditure op all Governments
In Table 9 "Government Transactions Related to the National Accounts" an attempt is made to bring together in one statement and under uniform headings, the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the National Accounts, and consequently the surpluses or deficits shown here differ from those shown in the various public accounts. It has been necessary to adjust the governments' accounting statements of fiscal year revenue and expenditure to exclude certain transactions such as those relating to reserves, write-offs, amortization, and other similar items, as well as the purchase and sale of existing capital assets; and to include the transactions of extra-budgetary funds such as unemployment insurance, old age security, workmen's compensation and government pension funds. In addition, corporate taxes have been adjusted to an accrual basis in the federal accounts. Total expenditure includes both current and capital expenditure but government loans and investments and debt retirement are excluded. Municipalities are for the most part on a calendar year basis but the provincial and federal fiscal year figures are adjusted to the calendar year basis. Some of the more substantial adjustments to the federal accounts are shown in the reconciliation statement appended to Table 9.
The surplus or deficit as calculated for national accounts purposes is affected by the adjustment of federal revenue to place corporation taxes on an accrual

The Budget-Appendix
basis. In 1955 the adjustment was very large and increased revenues by $196 million. In 1956 the adjustment was more moderate though substantial in size and increased revenues by $103 million. Excluding the effect of this adjustment which has no significance from a cash standpoint, the surplus for all levels of government combined was substantial and amounted to $329 million in 1956 in contrast to the deficit of $61 million in the preceding year. The surplus was confined to the federal accounts alone and the deficit of all provincial and municipal governments combined amounted to $157 million. This change from deficit to surplus in the government accounts tended to act as an offset to the rise in demand for goods and services in other fields and contributed to the forces of restraint during the year.
Expenditures by provincial and municipal governments rose by $364 million or 13 per cent while revenues increased by $254 million or 9 per cent and the deficit more than tripled and reached a level of $157 million. In the federal accounts, excluding the adjustment for the accrual of corporation taxes mentioned above, receipts increased by $764 million or 16 per cent and expenditures rose by $264 million or 6 per cent. As a result, the 1955 deficit of $14 million gave way to a surplus of $486 million in 1956.
The economic effects of fiscal operations are not solely determined by revenues and expenditures. The expansionary or restrictive impact of governmental operations depends also on changes in loans and investments. The net effect of this factor was negligible in calendar year 1956 since receipts and payments in respect of loans and investments were almost in balance. The relationship between the surplus and changes in outstanding debt and cash balances is discussed in the section on Monetary and Credit Developments.
Expenditure on goods and services by all levels of government combined rose by $481 million or 10 per cent in 1956 and this increase accounted for 77 per cent of the growth in total governmental expenditures. The federal share was slightly more than one-half of the total outlay on goods and services and amounted to $2,631 million. Defence expenditure rose by $44 million in 1956 but remained


[Stage Direction]
0 1946
1947	1948	1949	1950	1951	1952	1953	1954	1955	1956
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	1953	1954	1955	Prelim. 1956
		(Millions of Dollars)		
Government Revenue-	1,491	1,720Direct Taxes-Persons	1,432	1,437	Income-	1,461 34Federal	
Provincial and Municipal	1,287	1,277 19	1,269 28	Succession Duties-	55	88Federal	40	41	Provincial	33	37	72	58M iscellaneous-	1	1	iFederal	2	Provincial and Municipal	70	62	66	78Direct Taxes-Corporations	1,216	1,114	1,262	1,410Income-	1,200	1,333Federal	1,140	1,050	Provincial	76	64	62	77Other Direct Taxes-	67	68Withholding taxes-Federal	54	58	Indirect Taxes	3,017	3,033	3,317	3,722Federal	1,697	1,612	1,744	1,972Provincial and Municipal	1,320	1,421	1,573	1,750Investment Income	565	595	641	711Federal	216	217	248	295Provincial and Municipal	349	378	393	416Employer and Employee Contributions to Social	396	423	464Insurance and Government Pension Funds	390	Federal	250	261	284	321Provincial and Municipal	140	135	139	143Transfers from Other Governments-	450	481Provincial and Municipal	412	430	Total Revenue	7,086	7,063	7,651	8,576Federal	4,686	4,517	4,868	5,539Provincial and Municipal	2,400	2,546	2,783	3,037Deficit (or surplus-)	-223	+38	-135	-432Federal1	-143	+57	-182	-589Provincial and Municipal	- 80	-19	+ 47	+157Total Revenue plus Deficit (or minus Surplus)...	6,863	7,161	7,516	8,144Federal	4,543	4,574	4,686	4,950Provincial and Municipal	2,320	2,527	2,830	3,194
*For reconciliation with Public Accounts Surplus, see next page.

The Budget-Appendix
TABLE 9-Concluded

[Stage Direction]
-	1953	1954	1955	Prelim. 1956
		(Millions	>f Dollars)	
Government Expenditure-				
Goods and Services		4,388	4,413	4,728	5,209
Federal-				
Defence	1,907	1,727	1,756	1,800Non-defence	631	688	705	831Provincial and Municipal	1,850	1,998	2,267	2,578Transfer Payments	1,953	2,172	2,259	2,333Federal	1,487	1,645	1,700	1,720Provincial and Municipal	466	527	559	613Subsidies	110	86	79	121Federal	106	84	75	118Provincial and Municipal	4	2	4	3Transfers to Other Governments-	Federal	412	430	450	481Total Expenditure	6,863	7,101	7,516	8,144Federal	4,543	4,574	4,686	4,950Provincial and Municipal	2,320	2,527	2,830	3,194Reconciliation with Public Accounts Surplus: Federal Government calendar year surplus for	1953	1954 1955 (Millions of Dollars)	Prelim. 1956national accounts purposes	
Adjustments:	+143	-57	+182	+589Difference between calendar and fiscal year	
Difference between corporation tax accruals and	+24	+ 195	-11	-305government receipts	+97	+7	-196	-103Revenue items omitted	
Reserves, write-offs and similar items omitted from	+92	+79	+21	+37expenditure	
Shipment of military equipment to NATO countries	-139	-145	-110	-134less replacement,	
Extra-budgetary funds for pensions and social insur-	-55	-5	+2	+22ance (net)	
Adjustment to place debt interest on a "due date"	-28	+45	+39	-60basis	-14	+23	+7	+8Other adjustments	-96	-96	-86	-87Federal surplus for fiscal year as per public accounts	+24	+46	-152	-33(1952-53)	(1953-54)	(1954-55)	(1955-56)
The Budget-Appendix 6 per cent below the peak level reached in 1953. Non-defence outlays, which contribute somewhat less than one-third to total federal expenditures on goods and services, rose more rapidly in 1956 than in recent years. The federal government's share in the overall use of goods and services during 1956 did not change appreciably from 1955 and accounted for about 9 per cent of gross national expenditure.
Provincial and municipal expenditures on goods and services rose by almost 14 per cent in 1956 as well as in 1955. The increase of $311 million in 1956 took place as a result of higher wages and salaries as well as greater investment in urban facilities and highways.
In 1956 transfer payments by all governments amounted to $2,333 million and accounted for 29 per cent of all government expenditures. Transfer payments continued to rise during 1956 but the increase of 3 per cent compares with an expansion of 4 per cent in 1955. The greater part of the increase in 1956 occurred at the provincial and municipal level. Federal transfer payments rose by $20 million or 1 per cent but the modest overall expansion hides diverging trends in the individual components. The rise in employment and the large western grain crop brought about a decline in unemployment insurance payments and in the payment of claims under the Prairie Farm Assistance Act. On the other hand, the number of persons eligible to receive old age pensions and family allowances increased as in previous years and this resulted in a further growth in federal disbursements. Transfer payments of provincial and municipal governments increased by $54 million or 10 per cent in 1956. The principal element in this increase was the growth in grants paid to private non-commercial institutions such as hospitals, schools and universities.
Federal subsidies increased by more than one-half to a level of $118 million. The main factor in the increase was the assumption by the government of the annual carrying charges on the Wheat Board's stocks of wheat in excess of 178 million bushels at August 1, the commencement of the crop year.
As indicated in the section on gross national expenditure, the yield of direct personal taxes rose by $229 million and reached a level of $1,720 million. Although there was no increase in tax rates, federal receipts from the personal income tax rose by 15 per cent or $192 million. The increase of 15 per cent in federal receipts from the personal income tax was considerably higher than the rise of 10 per cent in aggregate personal income. This was because individual incomes were higher on the average and a greater proportion of total income was therefore taxable, some of it at higher rates. There was also a rise in yield from the Quebec income tax. Federal collections from succession duties increased by $33 million in 1956 whereas provincial receipts fell by $14 million. Receipts from the federal tax on corporation incomes rose by $226 million or 22\ per cent during 1956. This is in contrast to the relative stability in receipts from this source in 1955. The trend in corporate tax revenues reflects to an important degree the delayed effects on revenue receipts of the recovery in corporate profits since 1954 and this lag came about because corporations are permitted to pay tax on the basis of the previous year's income.
Indirect taxes for all three levels of government rose in 1956 by $405 million or 12 per cent and this increase constituted 44 per cent of the advance in total revenues. Federal receipts from indirect taxes amounted to $1,972 million, a rise of $228 million or 13 per cent compared to an increase of 8 per cent in 1955. The very large increase in imports during 1956 led to a marked rise of about 21 per cent in customs duties and this increase accounted for about 41 per cent of the total increase in federal indirect taxes. The increase of $103 million or 10 per cent in sales and excise taxes reflected, in the main, the substantial growth in consumer expenditures. Provincial and municipal revenue from indirect

The Budget-Appendix
taxes rose by $177 million or 11 per cent. There were increases of $38 million in receipts from retail sales taxes and of $28 million from gasoline taxes. Receipts from natural resources increased by $17 million. Municipal revenues from the real property tax rose by $59 million during 1956.

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During 1956 Canada's international accounts reflected quite strongly the very high level of economic activity prevailing in the domestic economy as well as continued firmness in international markets, particularly that of the United States. Merchandise exports increased by more than 11 per cent over 1955 but this impressive growth was overshadowed by a 23 per cent rise in imports. These increases in merchandise trade include the effect of an increase of about 3 per cent in the prices of both exports and imports so that the terms of trade, or the ratio of export prices to import prices, in 1956 remained unchanged from the

[Stage Direction]
Estimated Current Account Between Canada and all Countries (Millions of Canadian Dollars)
-	1953	1954	1955	Prelim. 1956
Current Credits-				
Merchandise exports (adjusted)1	4,152	3,929	4,332	4,834Gold available for export	144	155	155	150Travel expenditures	302	305	328	335Interest and dividends	165	147	160	141Freight and shipping	318	313	385	439Inheritances and immigrants' funds	91	89	86	98Other current receipts	319	298	393	411Total Credits	5,491	5,236	5,839	6,408Current Debits-	Merchandise imports (adjusted)	4,210	3,916	4,540	5,568Travel expenditures	365	389	449	497Interest and dividends	404	423	477	530Freight and shipping	374	356	408	489Inheritances and emigrants' funds	91	94	101	107Other current payments	490	490	556	615Total Debits	
Net Balance on Current Account	5,934 -443	5,668 -432	6,531 -692	7,806 -1,398
1 Aid to NATO countries under Defence Appropriation Act has been excluded.
Estimated Geographical Distribution of the Net Balance on Current Account (Millions of Canadian Dollars)
-	1953	1954	1955	Prelim. 1956Between Canada and-	-904 +133 +83 +173 +72	-807 +229 +44 +93 +9	-1,041 +341 +60 +30 -82	-1,659 +251 +39 +16 -45
-443	-432	-692	-1,398
				
[Stage Direction]
The Budget-Appendix previous year. Since the increase in the value of imports was much larger than, the increase in exports, the deficit on commodity trade for 1956 rose to $734 million, more than three times the deficit of $208 million incurred in 1955. The increase in the trade deficit was accompanied by an increase in the deficit on non-merchandise transactions. Thus, the current account deficit for 1956 is estimated at $1,398 million compared with the deficit of $692 million for the previous year.
The total value of merchandise exports in 1956 was $4,834 million compared with $4,332 million in 1955, an increase of $502 million. The most notable development in the export picture during 1956 was the strong recovery of wheat exports after successive declines in the preceding two years. The value of wheat sales during the year under review was more than 50 per cent higher than in 1955. Also of significance was a threefold increase in the value of petroleum exports and a greater than 40 per cent rise in the value of iron-ore shipments. Newsprint, copper, and aircraft and parts w'ere other export items showing substantial value increases. Most other export commodities showed small increases and in the few cases where declines occurred they were small, with the exception of softwood lumber which showed a sizeable decline from the unusually high level of 1955.
Merchandise imports increased from $4,540 million in 1955 to $5,568 million in 1956, an increase of $1,028 million. While the sharp increase in imports was quite general, it was most pronounced in investment goods such as machinery and construction materials and this was a reflection of the dominant role of the capital investment programme in the current expansion.
The deficit on non-merchandise transactions widened by $180 million in 1956, growing from $484 million in 1955 to $664 million. All non-merchandise items, with the exceptions of gold available for export, and inheritances and migrants' transfers, showed larger deficits than in the comparable period of 1955. The largest debit increase occurred in the interest and dividend account.
The largest share of the increase in trade, in absolute terms, went to the United States which absorbed more than one-half of the increase in exports and supplied nearly three-quarters of the increase in imports. A notable feature of Canadian trade in 1956 was a marked increase in trade with the countries of continental Europe with exports and imports increasing by about 40 per cent and 50 per cent, respectively. While this increase reflects growing sales opportunities because of the sustained progress of import liberalization followed by many European countries, a large part of the gain was accounted for by very large wheat shipments, particularly to the U.S.S.R. and some central European countries. Exports to the United Kingdom and other Commonwealth

[Stage Direction]
(Millions of U.S. Dollars)
* -	1953	1954	1955	1956Exchange Fund Account and Bank of Canada- Gold	986.1 802.0 30.4	1,072.7 833.4 36.5	1,133.9 692.0 74.9	1,103.3 798.0 34.9U.S. Dollars	Other Government of Canada Accounts	
Total Gold and U.S. Dollars	1,818.5	1,942.6	1,900.8	1,936.2
The Budget-Appendix

[Stage Direction]
Prelim.
1954	1955	1956+392	+410	+525-81	-67	-100+129	+148	+196-66	-165	+12+331	+166	+681-203	-184	-140-24	-15	+14+72	+69	+69+34	+89	-24-124	+44	- 33-28	+197	+198+432	+692	+1,398
countries increased only moderately while imports from the United Kingdom showed a substantial rise. Total trade with all other countries as a group also experienced an upward movement with significant increases in imports from Mexico and Japan and a sizeable growth in exports to the latter country.
As a result of these developments, and comparing 1956 with 1955, the trade deficit with the United States increased sharply; the surplus with the United Kingdom and, to a much lesser extent, with other Commonwealth countries declined; and the trade surplus with all other countries showed a small increase.
The net inflow of capital into Canada in 1956 was almost double the inflow in 1955 and since it was more than sufficient to finance the deficit on current account there was a small increase in official holdings of gold and foreign exchange. The large increase in capital inflows was almost entirely due to longterm investment since short-term capital inflows were about the same as in 1955. While long-term direct investment showed a substantial increase compared with past periods, it was on portfolio account that the most striking change took place. During 1955, there had been a net outflow of funds from Canada through security

[Stage Direction]
SUMMARY OF CAPITAL MOVEMENTS (Millions of Canadian Dollars)
Direct investment in Canada	 +426
Direct in vest m ent abroad	 - 63
Canadian securities-
Trade in outstanding stocks	 +21
Trade in outstanding bonds	 -52
New issues	 +335
Retirements	 -146
Foreign securities	
Official Loan Repayments	 +87
Canadian dollar holdings of foreigners	 -18
Official holdings of gold and foreign exchange (increase, -)	+38
Other capital movements	 -185
Net capital movement financing current account balances...	+443
[Stage Direction]
The Budget-Appendix transactions because a relatively narrow differential between interest rates in Canada and the United States contributed to the sale of Canadian bonds by foreign investors, a lower level of new issues floated abroad, and the retirement of securities held outside Canada. Since the last half of 1955, however, interest rates in Canada have risen more sharply than in the United States, so that the differential has widened. This development reversed the outflow and has not only encouraged a very high level of foreign investment in outstanding Canadian securities but, coupled with the heavy demand for capital funds in Canada, has greatly increased the amount of Canadian borrowing abroad. It is estimated that the value of new issues floated abroad in 1956 rose by $515 million to a total of $681 million, thus accounting for nearly one-half of the total capital inflow. Official reserves of gold and United States dollars, expressed in U.S. funds, increased during 1956 and at December 31, 1956, were $1,936 million compared with $1,901 million at December 31, 1955.
Against this background of exceptionally high long-term capital inflows the exchange value of the Canadian dollar has shown increasing strength. At December 31, 1955, the United States dollar was $.9991 in terms of the Canadian dollar and at December 31, 1956, the exchange rate was $.9597.

[Stage Direction]
The large increase in production during 1956 was accompanied by a notable rise in employment. Employment was higher for each month of 1956 than it had been for the corresponding period of 1955. For the year as a whole the number of persons with jobs averaged 198,000 or 3.7 per cent more than in 1955. This was the largest gain in civilian employment since 1946 which was a year of demobilization and reconversion. There was also an unusually large increase in the labour force during 1956, partly as a result of the greater number of immigrants and partly because the abundance of employment opportunities drew larger numbers of housewives, older persons and persons of school age into the labour force. However, the exceptional rise in employment outpaced the growth in the labour force by a significant margin and there was, therefore, a large decline in unemployment.

[Stage Direction]
The Budget-Appendix
With the exception of 1954, the growth in employment in recent years has been concentrated in non-agricultural occupations. There has been a pronounced shift from rural to urban occupations and the average annual decrease in agricultural employment has amounted to between 3 and 4 per cent during the postwar period. In 1956 the same trend prevailed. Agricultural employment declined by some 5 per cent and an estimated 45,000 persons left the industry.
The number of persons employed in non-agricultural occupations in 1956 rose by 243,000, an increase of 5 per cent over the previous year. The seasonally adjusted index of non-agricultural employment increased rapidly for the first seven months of 1956 and reached a peak in July, about 7 per cent above the level at the start of the year. For the remainder of the year, the index remained relatively constant. All major industrial sectors contributed to this increase with the most pronounced expansion occurring in construction where employment rose by 20 per cent for the period January to December, 1956. Employment in mining and in durable goods manufacturing also rose significantly. In industries producing non-durable goods employment remained relatively stable during the first half of 1956 but showed increased strength in succeeding months.
The average number of persons without jobs and seeking work in 1956 was 179,000 or 51,000 less than in the preceding year. A twelve-month comparison indicates that unemployment in 1956 was lower each month than during the corresponding period in 1955. On a seasonally adjusted basis unemployment followed a declining trend for the first seven months of 1956 with some increase in unemployment towards the end of the year as the growth in employment levelled off. The number of persons without jobs and seeking work averaged 3.1 per cent of the labour force in 1956 compared with 4.1 per cent in 1955. The highest unemployment was reached in February, 1956, when there were 308,000 jobless persons. This compares with 401,000 unemployed persons during the peak period in March, 1955. The lowest level of unemployment during 1956

[Stage Direction]
THE CIVILIAN LABOUR FORCE Annual Averages
(Thousands of Persons)
-	1953	1954	1955	1956Civilian Labour Force	5,383	5,426	5,558	5,705Male	4,197	4,207	4,299	4,372Female	1,186	1,219	1,259	1,333N on-Agricultural	4,521	4,547	4,734	4,927Agricultural	862	879	824	'778Persons without jobs seeking work	137	232	230	179Persons with jobs	5,246	5,194	5,328	5,526In Non-Agricultural Industries	4,388	4,321	4,510	4,753Paid Workers	
Employers, own account workers and	3,853	3,802	3,996	4,237unpaid family workers	535	519	514	516In Agriculture	858	873	818	773Paid Workers	
Employers, own account workers and	113	120	106	101unpaid family workers	745	753	712	672
The Budget-Appendix occurred in September with 97,000 jobless persons looking for work or 34,000 fewer than during the seasonal low in the preceding year.
More jobs at higher pay brought about the large increase in labour income during 1956. The pronounced advance in average weekly earnings was almost entirely the result of a rise in rates of pay since the number of hours worked per week did not change materially. In manufacturing, average hourly earnings during 1956 rose by 5 per cent compared with an increase of 3 per cent in the preceding year. Average annual earnings per paid worker amounted to $3,293, an increase of $170 or 5| per cent over 1955. Although part of this gain was offset by the advance of If per cent in consumer prices, the improvement in real income of 4 per cent was double the advance in the preceding year.
Labour income rose continuously in 1956. On a seasonally adjusted basis, the movement throughout the year followed quite closely the pattern of 1955. The most striking increase in labour income took place in the second quarter, when it is estimated a rise of over 5 per cent occurred. For the second half of the year, the expansion in labour income became progressively less pronounced. All major industrial occupations participated in the advance in total earnings. As in the previous year, construction led all other industries, with an increase of 19 per cent in 1956 compared to 13 per cent in 1955. The expansion of labour income in the primary industries during 1956 was substantial and amounted to 13 per cent in contrast to the more moderate rise of 5f per cent in 1955. Total salaries and wages paid in all other major industrial groups, including manufacturing, finance and services, utilities, transportation, storage and trade, rose by about 11 per cent compared to an increase of 6 to 7 per cent in 1955.

[Stage Direction]
In 1956 the financial requirements of the investment boom and the intensification of general economic activity led to a strong and continuous growth in the demand for credit. To some extent the greatly expanded demand for funds was met by the growth in savings out of current income. At the same time, more active use was made of the total money supply as shown by the rise in the ratio of the value of cheques cashed to the total deposit liabilities. There was also a moderate increase in the supply of money as measured by the total of currency and bank deposits in the hands of the general public. However, with demand for goods and services pressing on the limits of physical capacity and with pressure at many points breaking through existing price levels, the operations of the Bank of Canada were directed throughout the year towards restraining the rate of growth in the supply of money and credit. The Bank of Canada's purchases of Government of Canada securities during the year were on a moderate scale and the increase in the cash reserves of the chartered banks was limited to $27 million or 3 per cent. Hence, in total the demand for borrowed funds was rising more rapidly than the supply and interest rates rose. At year end they were at the high point for the post-war period.
Although all interest rates moved up during the year, the rise in short-term rates was more pronounced than in long-term rates. For example, the Government of Canada fifteen-year theoretical rate rose from 3.41 per cent in December, 1955, to 3.97 per cent in December, 1956, whereas the three to five-year theoretical rate rose in the same period from 3.43 per cent to 4.51 per cent, and three-month treasury bills rose from 2.60 per cent to 3.59 per cent. In the early part of the year the yield on long-term bonds was higher than on shortterm bonds but at the end of the year the reverse was true.

The Budget-Appendix
A factor of importance in the general decline in bond prices was the large-scale selling of Government of Canada bonds by the chartered banks to finance loan expansion and to improve their liquidity; and by life insurance companies to provide funds for increased investment in mortgages and in provincial, municipal and corporate securities. During 1956 there was, however, a reduction of $780 million in the total amount of Government of Canada direct and guaranteed securities outstanding. This large retirement had the effect of moderating the upward pressure on interest rates in the securities market.
The rise in interest yields on Government of Canada bonds is indicative of the movement in interest rates generally. Yields on provincial, municipal and corporate securities were also sharply higher. The chartered banks' rate on prime commercial loans moved up from 4J per cent at the beginning of the year to 5 per cent in April and to 5} per cent in August and to 5| per cent in October. Throughout the year the spread between interest rates in Canada and the United States widened and this attracted Canadian borrowers to the United States market and encouraged the purchase of Canadian securities by United States investors, notwithstanding the decline in the exchange value of the U.S. dollar. Net new security issues by provinces, municipalities and corporations in 1956 amounted to $2.2 billion as compared with $1.2 billion in 1955. As indicated in the section on the Balance of International Payments about half of this large increase in new issues is accounted for by increased borrowing in the United States.
The Bank of Canada discount rate was raised from 2.75 per cent at the beginning of the year to 3 per cent on April 4, to 3.25 per cent on August 9 and to 3.50 per cent on October 17. On November 1 the Bank of Canada adopted a new policy by which the discount rate for the week following was established each Thursday on the basis of .25 per cent above the average tender rate for 91 day treasury bills.

[Stage Direction]
-	Long-Term Bonds 1	3-5 year Bonds 2	3 Month Treasury Bills 3	Bank Rate 4	Canada U.S. Spread	Canada U.S. Spread	Canada U.S. Spread	Canada U.S.	1954-	June	3.11	2.52	.59	2.62	1.78	.84	1.60	.63	.97	2.00	1.50September	3.01	2.51	.50	2.32	1.79	.53	1.21	1.02	.19	2.00	1.50December	3.05	2.57	.48	2.36	1.94	.42	1.08	1.25 -	.17	2.00	1.501955-	March	2.96	2.67	.29	2.21	2.33 -	-.12	1.20	1.29 -	.09	1.50	1.50June	2.94	2.75	.19	2.24	2.38 -	.14	1.34	1.51 -	.17	1.50	1.75September	3.14	2.88	.26	2.71	2.76 -	.05	1.78	2.10 -	.32	2.25	2.25December	3.41	2.88	.53	3.43	2.83	.60	2.60	2.59	.01	2.75	2.501956-	March	3.31	2.88	.43	3.23	2.81	.42	2.62	2.37	.25	2.75	2.50June	3.42	2.86	.56	3.52	2.85	.67	2.67	2.58	.09	3.25	2.75September	3.78	3.21	.57	3.94	3.48	.46	3.05	2.77	.28	3.25	3.00December	3.97	3.35	.62	4.51	3.68	.83	3.59	3.27	.32	3.84	3.00*	Canada-15 year theoretical 15th of each month. U.S.y, a of 67-72. Wednesday nearest 15th.*	Canada Average of 3-5 year theoreticals, 15th of each month* U.S.-Federal Reserve average of 3-5 year bonds, nearest mid-month.*	Average tender nearest 15th of month.
4 At mid-month.
2282
[Stage Direction]
The Budget-Appendix
Because of the relatively small increase in their cash reserves, the chartered banks could not expand their total Canadian assets and deposit liabilities by any large amount in 1956. However, under the pressure of a great increase in demand for credit the banks did add to their loans substantially in the first half of the year, accommodating the increase by selling Government of Canada bonds on a large scale.
General loans, which had risen sharply since the beginning of the second quarter of 1955 and had increased by 30 per cent in the twelve months ending May 31, 1956, stopped rising in June and apart from seasonal fluctuations there was little change in the total during the second half of the year. Of the increase in general loans in 1956 the largest part occurred in loans to industrial concerns and to instalment and other finance companies.
The chartered banks' holdings of corporate securities increased by $28 million in 1956. Provincial and municipal security holdings declined by $93 million while holdings of insured mortgages increased by $212 million.
The public's holdings of currency, bank deposits and Government of Canada securities rose by $92 million in 1956 compared with $1,100 million in the previous year. Holdings of currency and bank deposits increased by $311 million while holdings of Government of Canada securities fell by $219 million, this increase in the public's liquid assets developed solely from the operations of the banking system since the Federal Government had a substantial excess of receipts over outlays which amounted to $485 million. The federal excess of receipts over outlays takes into account both budgetary and non-budgetary activities as

[Stage Direction]
CHARTERED BANKS: MAJOR CANADIAN ASSETS AND DEPOSIT LIABILITIES
(Average of Wednesday figures)
-	Dec. 1953	Dec. 1954	Dec. 1955	June 1956	Dec. 1956
		(Million of Dollars)			
Chartered Bank Assets					
Bank of Canada deposits and notes	903	813	879	886	90481	57	78	70Treasury bills	234	350	375	760	747Sub-total	1,137	1,244	1,311	1,724	1,721Government bonds	2,497	2,946	2,721	1,932	1,70663	281	385	493Provincial and municipal securities	431	429	546	495	453Corporate securities	339	347	482	504	510Special categories of loans1	858	890	909	794	963General loans	3,263	3,277	3,988	4,538	4,512Sub-total	4,891	5,006	6,206	6,716	6,931Total of above Canadian assets	8,525	9,196	10,238	10,372	10,358Chartered Bank Deposits	Personal savings deposits	4,744	5,170	5,603	5,867	5,960-Government of Canada deposits	525	347	541	488	841All other (less total float)	3,064	3,395	3,746	3,653	3,669Total Canadian deposits (less total float)	8,333	8,912	9,890	10,008	9,970
1 Loans to provincial governments and municipalities, specially secured loans to grain dealers, invest* ment dealers and stockbrokers and loans to finance the purchase of Canada Savings Bonds.

The Budget-Appendix
well as changes in loans and investments. However, as mentioned above, there was a large retirement of Government of Canada securities and this helped to moderate the upward pressure on interest rates in the securities market.

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As at Dee. 31 1956	Increase during	Per cent Increase in 19561956	1955	1954	Genebal Personal (i) Fully secured by marketable bonds and	(Millions of Dollars)	stocks	324	-15	86	-16	-4(ii) Other	473	8	113	44	2Instalment finance companies	443	98	129	-40	28Other financial institutions 2	120	24	7	7	25Merchandisers	647	12	72	-21	2Farmers	357	-9	27	5	-aConstruction contractors	313	35	91	24	13Public utilities, transportation and communication	companies	152	11	74	7	8Industrial concerns	1,227	251	77	-47	26Other	375	37	67	39	iiTotal general loans	4,431	452	743	+2	n%Special Caxegobies	Provincial and municipal governments	272	65	43	7	31Investment dealers and brokers'	152	-27	36	-11	-15Grain dealers	373	12	-44	14	3For purchase of Canada Savings Bonds	169	6	16	-18	4Total special categories	966	56	51	-12	6%Total loans in Canada	5,397	508	794	-10	10%
' Excluding day-to-day loans.
* Includes small-loan companies.

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(Millions of Dollars)
-	1953	1954	1955	1956Currency-notes and coin	1,429	1,458	
Bank deposits- Deposits other than personal savings deposits	 Personal savings deposits		3,160 4,756	3,492 5,218	3,730 5,633	3,612-;
				
Total currency and bank deposits	9,345	10,168	10,913	11,224!Government Securities- Market securities-estimated par value	7,497 1,632	6,516	6,201 2,541Non-market securities	
Total government securities		9,129	8,606	8,961	8,742
				
Total liquid assets		18,474	18,774		19,966
				
1 Includes all holdings other than those of the banking system and the federal government and government accounts.	6
82715-144£
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The Budget-Appendix In 1956 the total amount of Government of Canada direct and guaranteed securities outstanding was reduced by $780 million and there was an increase of $27 million in the amount of these bonds held in government accounts. This was brought about by the use of the $485 million excess of receipts over outlays and a reduction of $322 million in the Federal Government's cash balances.
About three-quarters of the reduction in Government of Canada debt was reflected in reduced holdings by the chartered banks. However, there was also a substantial liquidation of Government of Canada market securities by the general public which includes insurance companies and other corporations and this amounted to $327 million. This was partially offset by an increase of $108 million in the public's holdings of Canada Savings Bonds, which are non-market issues.
Consumer credit continued to increase during 1956 but the increase was somewhat less than in 1955. In 1955 the increase was $340 million or 18 per cent and in 1956, $320 million or 14 per cent.

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Throughout 1956 prices, as measured by both the consumer price index and the general index of wholesale prices, moved upward. The consumer price index rose by 3 per cent in the course of the year and this increase contrasts with the comparative stability characterizing retail prices since 1952. The increase in wholesale prices in 1956 amounted to 2.7 per cent which is comparable to the increase which occurred in 1955.
Starting in January at 116.8, the consumer price index showed no appreciable change until June but thereafter rose steadily to reach 120.4 in December. The largest increase was in food prices which rose by more than 5 per cent during the year. All other components of the index, except clothing, continued to rise although at a smaller rate than food prices.

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1949=100	index

The Budget-Appendix
In the United States the trend in retail prices was parallel to that of Canadian prices. The United States consumer price index showed an increase of nearly 3 per cent and like the Canadian index was at record levels in the last six months of the year. As in Canada, food prices in the United States were higher during 1956 than in 1955.
The Canadian index of wholesale prices rose steadily in the first half of the year from 222.0 in January to 226.5 in June. It then levelled off until towards the end of the year when new increases carried it up to 228.1 in December and 229.4 in January 1957. While all group components of the index were higher in 1956 than in 1955, the trend of prices was in some cases quite different than in the previous year. For example, prices of non-ferrous metals and wood products which had risen substantially in 1955 declined from January to December by 6 and 2\ per cent, respectively. On the other hand, farm products prices, which had declined in 1955, strengthened in 1956. The greatest increase occurred in iron products which advanced 8 per cent during the year. Other components of the index increased at a rate comparable with the movement in the index as a whole.

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-	Canada	United States	Total	Food	Total	Food1949	= 100	1947-49 = 100	1939	63.2	50.2	59.4	47.11940	65.7	52.6	59.9	47.81941	69.6	57.9	62.9	52.21942	72.9	63.4	69.7	61.31943	74.2	65.2	74.0	68.31944	74.6	65.5	75.2	67.41945	75.0	66.3	76.9	68.91946	77.5	70.0	83.4	79.01947	84.8	79.5	95.5	95.91948	97.0	97.5	102.8	104.11949	100.0	100.0	101.8	100.01950	102.9	102.6	102.8	101.21951	113.7	117.0	111.0	112.61952	116.5	116.8	113.5	114.6115.5	112.6	114.4	112.81954	116.2	112.2	114.9	112.6116.4	112.1	114.5	110.9118.1	113.4	116.2	111.71956-January	116.8	111.5	114.6	109.2February	116.4	109.9	114.6	10S.8March	116.4	109.1	114.7	109.0April	116.6	109.7	114.9	109.6May	116.6	109.3	115.4	111.0June	117.8	112.5	116.2	113.2July	118.5	114.4	117.0	114.8August	119.1	115.9	116.8	113.1Septem ber	119.0	115.5	117.1	113.1October	119.8	117.4	117.7	113.1November	120.3	117.9	117.8	112.9December	120.4	117.5	118.0	112.91957-January	120.3	117.1	118.2	112.8
The Budget-Appendix

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(1935-39=100)
-	General Wholesale Prices	Fully and Chiefly Manufactured Goods	Canadian Farm Products99.2	101.9	92.6108.0	109.9	96.1116.4	118.8	106.6123.0	123.7	127.1127.9	126.9	145.4130.6	129.1	155.3132.1	129.8	166.4138.9	138.0	179.5163.3	162.4	192.2193.4	192.4	232.1198.3	199.2	228.7211.2	211.0	236.7240.2	242.4	268.6226 0	230.7	250.2220.7	228.8	221.6217.0	224.2	213.6218.9	224.5	209.7225.5	231.3	207.8222.0	227.3	196.7222.2	227.4	195.9223.3	228.3	197.5224.5	229.4	200.4225.3	230.3	207.7226.5	231.3	217.2226.6	231.6	226.6227.0	233.3	214.4227.4	234.3	209.8227.1	232.2	208.0226.6	234.6	209.4228.1	235.3	210.31957-	229.4	236.5	211.6
Note: 1956 indexes are preliminary. The Canadian Farm Products index is fully revised only up to July 1955 and does not reflect final payments on all grains for subsequent months.

The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	
22892.	Highlights of governmental financial operations during 1956-57	
22893.	Budgetary accounts	
2291A.	Revenues	
2291B.	Expenditures	
22994.	Summary of assets and liabilities at March 31, 1957	
2319A. Changes in principal liability classifications during 1956-57	
2321B. Changes in principal asset classifications during 1956-57	
2325C.	Decrease in net debt	
23315.	The cash position	
23316.	The public debt	
23337.	Supplementary detailed tables	
2341
The Budget-Appendix
Part II

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The figures presented in this Part for the fiscal year ending March 31, 1957, are preliminary and subject to revision. The fiscal year of the Government ends on March 31 but the books must remain open for several weeks after that date to record various adjusting entries and to take into account all payments up to and including April 30 made on account of expenditures originating in and properly chargeable to the fiscal year 1956-57. Final results for each year's operations are not available before some time in August. The figures used in this White Paper are based on ten months actual and two months estimated. The final figures when they become available next August will vary to some extent from those given in the following pages.
2. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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Budgetary transactions
Budgetary revenues of the government for the fiscal year ending March 31, 1957, are now estimated at $5,149 million. This is $386 million or about 8 per cent more than last year's budget forecast of $4,763 million and approximately $749 million more than the total of $4,400 million collected in 1955-56.
Budgetary expenditures for 1956-57 are estimated at $4,867 million. This is $217 million or about 5 per cent more than the budget forecast of $4,650 million and about $434 million more than the total spent in 1955-56.
Oil the basis of these figures the surplus for the fiscal year will be about $282 million compared with a budget forecast of a surplus of $113 million and a deficit of $33 million for 1955-56.
The most significant feature of the government's budgetary operations on the revenue side has been the continued buoyancy of the revenues. The general level of activity and production in the economy has been considerably above that which was the basis for the budgetary forecast of $4,763 million last March. Receipts from all sources except other non-tax revenue are higher than those of the previous year and when the books for the year are closed it is expected that all revenue categories except corporation income tax will have equalled or exceeded the budget forecast.
The most noteworthy feature on the expenditure side of the budget has been the continued importance of defence in the government's expenditure programme. Defence expenditures are expected to amount to $1,794 million in 1956-57, an increase of $25 million or 1| per cent over the preceding year representing 37 per cent of the government's total budgetary outlay. In 1955-56 defence expenditures amounted to $1,769 million and constituted 40 per cent of the total.
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Non-budgetary transactions
Although the budgetary surplus is $282 million the cash balances at the end of the fiscal year will be about $131 million less than a year ago. This is the net result of receipts of $564 million from annuity, insurance and pension accounts, repayments of loans and investments and other non-budgetary sources less $454 million paid out in loans, advances, investments and other non-budgetary disbursements, together with a reduction of $523 million in outstanding debt.
The following table summarizes the budgetary and non-budgetary transactions for the fiscal year and indicates how they affect the government's cash and debt position. For purposes of comparison the corresponding figures for 1955-56 are also given. In the section on "The Cash Position" a more detailed explanation of these transactions is presented.

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(In millions of dollars)
Summary or Budgetary and Non-Budgetary Transactions and Changes in Cash Position	Fiscal year ended March 31	
	1957 (Estimated)	1956
Budgetary transactions-		
	5,149	4,400
	-4,867	-4,433
Surplus or deficit (-)		282	-33
Non-budgetary transactions-		
Receipts and credits (excluding unmatured debt transactions)-		
Repayments of loans, investments and working capital advances	117	134Net government annuities account receipts	60	66Net insurance and pension account receipts	202	143Other non-budgetary receipts	185	111564	454Disbursements and charges (excluding unmatured debt transac-	tions)-	Loans, investments and working capital advances	-309	-260Other non-budgetary disbursements	-145	-36-454	-696Net amount available from non-budgetary transactions	110	158Overall cash available for debt reduction or increase in cash balances	392	125Net increase or decrease (-) in unmatured debt outstanding in the	hands of the public	-523	215Net increase or decrease (-) in cash balances on deposit to the credit of	the Receiver General	-131	340
Old age security fund
Pension payments from the old age security fund are estimated at $379 million in 1956-57 and tax receipts credited to the fund at $373 million, resulting in a deficit of $6 million for the year covered by a temporary loan by the Minister of Finance to the fund. During 1955-56 pension payments amounted to $366 million and tax receipts credited to the fund to $316 million, resulting in an excess of pension payments over tax receipts of $50 million. Under the authority of a vote of parliament, $50 million representing the deficit of the fund sustained during 1955-56, together with $6 million representing the 1956-57 deficit which were financed provisionally by temporary loans, are charged as budgetary expenditures in 1956-57.

The Budget-Appendix
Debt transactions
During 1956-57 it is estimated that the government will have issued securities amounting to $1,465 million (excluding treasury bills issued to refund maturing bills) and redeemed maturing issues to a total of $2,501 million, resulting in a decrease of $1,036 million in unmatured debt. However, as other liabilities are expected to increase by $211 million the government's gross public debt will have decreased by $825 million to $18,299 million at March 31, 1957. During the same period the net assets are expected to decrease by $543 million to $7,301 million. As a result the government's net debt at March 31, 1957, is expected to be $10,998 million, the decrease of $282 million being equivalent to the budgetary surplus for the fiscal year.
Cash position
Cash balances on deposit to the credit of the Receiver General are expected to decrease by $131 million during the fiscal year reflecting the decrease of $523 million in outstanding unmatured debt (after taking into account sinking fund purchases and transactions in the securities investment account) and the net amount of $392 million available from budgetary and non-budgetary transactions ($110 million available from non-budgetary transactions plus the amount of $282 million representing the estimated budgetary surplus for the fiscal year).
3.	BUDGETARY ACCOUNTS
Total revenues, estimated at $5,149 million for 1956-57, are $749 million more than the total for the previous fiscal year. Total expenditures are estimated at $4,867 million, an increase of $434 million over 1955-56. The surplus for the fiscal year is estimated at $282 million compared with a deficit of $33 million for the year ended March 31, 1956.
A summarized statement of the estimated revenues and expenditures and surplus for the fiscal year ending March 31, 1957, with the actual figures for the fiscal years ended March 31, 1950 to 1956 inclusive, is given in the following table.

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Budgetary Revenues, Expenditures and Surplus or Deficit (In millions of dollars)
Fiscal Year Ended March 31	Budgetary Revenues	Budgetary Expenditures	Surplus or Deficit (-)1950	2,580.1 3.112.5 3,980.9 4,360.8 4,396.3 4.123.5 4.400.0 5.149.1	2,448.6 2.901.2 3,732.9 4.337.3 4.350.5 4.275.3 4,433.1 4.866.6	131.5 211.3 248.0 23.5 45.8 -151.8 -33.1 282.51951	1952	1953	1954	1955	1956

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Budgetary revenues are expected to amount to $5,149 million in the fiscal year 1956-57. This is $749 million or 17 per cent higher than in the previous year. It is estimated that, of the total revenues for the year, $4,706 million or 91 per cent, will have been derived from taxes and $443 million or 9 per cent from non-tax revenues.
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The Budget-Appendix

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MILLIONS or DOLLARS	MILLIONS OT DOLLARS
I960	1951	1952	1953	1954	1955	1950	1957*


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The Budget-Appendix
A statement of estimated revenues for 1956-57 classified by major categories and the corresponding figures for the actual receipts in 1955-56 is given in the following table.

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Budgetary Revenues by Major Classifications (In millions of dollars)
Source
Tax revenues-
Income tax-
Personal*	
Corporation*	
On dividends, interest, etc., going
abroad	
Excise taxes-
Sales*	
Other	
Customs import duties	
Excise duties	
Succession duties	
Other taxes	
Non-tax revenues-
Return on investments.
Post office	
Other non-tax revenue..
Total revenues.
Fiscal Year Ended March 31
(Estimated)
Amount Per cent
1.413.0
1.285.0
77.0
725.0
267.0
565.0
270.0
87.0
17.0
4.706.0
202.0
147.3
93.8
443.1
5,149.1
27.4
25.0
1.5
14.1
5.2 11.0
5.2 1.7 0.3
91.4
3.9
2.9 1.8 8.6
100.0
Amount Per cent
1,185.0
1.027.7
66.2
641.5
260.7
481.2
249.4
66.6
16.8
3.995.7
149.3
137.4 117.6 404.3
4,400.0
26.9 23.4
1.5
14.6
5.9
10.9 5.7
1.5 0.4
90.8
3.4
3.1
2.7
9.2
100.0
Increase or Decrease (- )
Amount Per cent
227.4
257.3
10.8
83.5 6.3
83.8
20.6 20.4
0.2
710.3
52.7 9.9
-23.8
38.8
749.1
19.2
25.0
16.3
13.0 2.4
17.4 8.3
30.6
1.2
17.8
35.3
6.7
-20.2
9.6
17.0
1956-57	1955-56
Excluding tax credited to the old age security fund-
2% personal income tax	
2% corporation income tax	
2% sales tax	
125.0	102.5
67.0	53.3
181.0	160.4
373.0	316.2
(1) Tax Revenues
Tax on personal incomes
. The personal income tax (excluding the old age security tax) is expected to yield a total of $1,413 million in 1956-57 making it once again the largest source of government revenue. This yield is $227 million, or 19 per cent more than in the previous year despite the fact that rates for part of 1955-56 were about 10 per cent higher than during the year under review. This large increase in revenue is due to the rise in the total of personal incomes that took place in 1956.
In addition the 2 per cent tax on personal incomes levied under the Old Age Security Act is expected to yield $125 million during 1956-57 compared with $103 million in 1955-56. The maximum tax is $60 per person. This revenue is credited to the old age security fund.
Corporation income tax
Corporation income tax will be the second largest revenue producer in 195657. The yield (excluding the old age security tax) is estimated at $1,285 million, an increase of $257 million over the previous year. This increase of 25 per cent is entirely due to the increase in corporate profits in 1955 and 1956.
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The Budget-Appendix
In addition the 2 per cent tax levied on income of corporations under the Old Age Security Act is expected to yield $67 million during 1956-57 compared with $53 million collected from this source in 1955-56. These collections are credited to the old age security fund.
Taxes on interest, dividends, rents and royalties going abroad
Revenue under this heading is derived from taxes withheld on payments of interest, dividends, rents, royalties, alimony and income from estates and trusts made to non-residents. The total of $77 million estimated for 1956-57 is $11 million greater than in the previous year reflecting larger dividend payments from higher corporate profits in 1956 and the earnings on increased investments by non-residents in Canada.


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-TOTAL REVENUE FROM TAXES 91%

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4000
CORPORATION INCOME TAXt

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1950	1951	1952	1953	1954	1955	1950
+ INCLUDES EXCESS PROFITS TAX FOR THE YEARS I9SO, 1951 AND 1952 * ESTIMATED
Excise taxes
Included under this heading are the revenues from the general sales tax and the special excise taxes levied on a wide range of manufactured products. I otal net collections for the year are estimated at $992 million, an increase of $90 million or 9 per cent over 1955-56.
The sales tax, which from a revenue standpoint is the most important tax levied by the Excise Tax Act, is expected to yield a net revenue of $725 million in the year (excluding the 2 per cent old age security sales tax). This is $83 million or 13 per cent more than in the previous year reflecting the increased production and somewhat higher prices which prevailed in 1956.	_
Excise taxes other than the general sales tax are expected to yield appioxi-mately $267 million or $6 million more than in 1955-56. This increase is almost entirely due to the growth in revenue from the tax on tobacco products which yielded $135 million during the year compared with $127 million in 1955-56.
The excise tax on passenger automobiles is estimated to yield $77 million. This is almost the same as in 1955-56. The revenues from the taxes on soft drinks, matches and lighters, wines and sundry commodities are also expected to show little change from the previous year.

The Budget-Appendix
Candy and chewing gum, jewellery and toilet preparations are expected to produce slightly higher revenues than in 1955-56. On the other hand, collections from the 15 per cent excise tax on television and radio sets will drop nearly $4 million below the previous year reflecting a sharp reduction in sales of television sets.
The 2 per cent tax on sales levied under the Old Age Security Act and credited to the old age security fund is expected to yield $181 million in 1956-57 compared with $160 million in the previous year.
Customs import duties
Revenue from customs import duties is expected to be $565 million, an increase of $84 million or 17 per cent over 1955-56. This increase in revenue reflects the increase in the volume and value of imports during the year.
Excise duties
Excise duties are levied only on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act referred to above.) The revenue from excise duties for the year is estimated at $270 million, an increase of $21 million or 8 per cent over the previous year. The collections from the taxes on alcoholic beverages, before deducting refunds, are expected to be $151 million, an increase of $9 million over the previous year. The gross receipts from the taxes on tobacco products are estimated at $122 million, an increase of $12 million.

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900
300
Succession duties
Revenue from succession duties is expected to be $87 million in 1956-57, an increase of $20 million over the previous year. Most of this increase is attributed to collections from two unusually large estates.
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The Budget-Appendix
Other taxes
The principal source of revenue under this heading is the tax on the premium income of insurance companies which is expected to produce $16 million. Small amounts of revenue are also received from special taxes on the export of electrical energy from Canada and the tax on the export of furs from the Northwest Territories.
(2) Non-Tax Revenues
Non-tax revenues for 1956-57 are estimated at $443 million, $39 million greater than the 1955-56 total of $404 million. The following table presents a comparative summary of these revenues for the two fiscal years by principal classification.
TABLE IV (In millions of dollars)
Non-Tax Revenues	Fiscal Year Ended March 31	Increase or Decrease (-)	1957 (Estimated)	1956	Amount	Per cent202.0	149.3	52.7	35.3147.3	137.4	9.9	7.217.9	17.0	0.9	5.327.4	25.9	1.5	5.819.4	46.7	-27.3	-58.521.1	18.9	2.2	11.68.0	9.1	-1.1	-12.1
443.1	404.3	38.8	9.6
Return on investments
Return on investments is expected to yield $202 million in 1956-57 or $53 million more than the yield of $149 million in 1955-56.
Payments from Crown corporations are estimated at $149 million or $64 million more than similar payments of $85 million received in 1955-56. A large part of this increase is due to receipts from the Bank of Canada and reflects an increase of $9 million in the Bank's profits transferred to the Receiver General for 1956 over those for 1955 and a further $42 million paid over, consisting of inner investment reserves set aside out of past years' profits, which were no longer required when the Bank adopted amortized values as the basis for valuing its holdings of securities. In addition, it is expected that $27 million will be received by the Receiver General from the Canadian National Railways of which $25 million represents the 1956 surplus. The 1955 surplus of the company was $11 million.
Receipts from other loans and investments are estimated at $53 million, or $11 million less than similar receipts in 1955-56. Increases of $7 million in exchange fund profits, $2 million in the earnings of the securities investment account and $6 million in interest on interest-bearing deposits with the chartered banks are more than offset by the non-receipt of interest on the 1946 loan to the United Kingdom which last year amounted to $22§ million.
A comparative summary of the estimated receipts for 1956-57 and the amounts received in the previous year is given in the following table.

The Budget-Appendix

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(In millions of dollars)
Return on Investments	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	or Decrease (-)Loans to, and investments in, Crown corporations- Bank of Canada- Profits	47.3	38.3	9.0Inner investment reserves	42.6 2.0	42.6 0.6Canadian Arsenals	1.4	Canadian National Railways	27.0	11.9	15.1Central Mortgage and Housing Corporation	15.2	18.5	-3.3National Harbours Board	3.9	4.0	-0.1Polymer Corporation Limited	6.0	5.0	1.0Miscellaneous	4.9	5.9	-1.0H8.9	85.0	6S.9Other loans and investments-	United Kingdom	22.5 11.0	-22.5 -0.9Other national governments	10.1	Provincial governments	1.0	1.0	Soldiers and general land settlement loans and Veterans	Land Act advances	4.9	4.9 10.8	Exchange fund account	17.5	6.7Securities investment account	7.6	5.4	2.2Sinking fund and other investments held for retirement of unmatured debt	5.6	6.3	-0.7Interest-bearing balances with chartered banks	6.1	6.1Miscellaneous	0.3	2.4	-2.15S.1	64. S	-11.X202.0	149.3	52.7
Post Office
Net post office receipts credited to budgetary revenues in 1956-57 are estimated at $147 million or $10 million more than in 1955-56. Gross receipts are expected to total $169 million but authorized disbursements from revenues for salaries and rent allowances at semi-staff and revenue offices, commissions at sub offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., are estimated at $22 million. Last year, gross receipts amounted to $158 million and authorized disbursements totalled $21 million.
As costs of operating the post office during 1956-57 (excluding the $22 million charged to revenues) are estimated at $141 million, net revenue will exceed net costs by $6 million. However, in making this comparison, it is to be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
Privileges, licences and permits
It is estimated that revenues of $18 million will be received during the fiscal year on account of privileges, licences and permits compared with $17 million received last year. Included in the total for the current fiscal year is approximately $7 million for collections by the Department of Transport, mainly on account of aircraft landing fees, rentals of hangar accommodation, and other miscellaneous rental charges.
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The Budget-Appendix
Proceeds from sales
Receipts from proceeds from sales are estimated at $27 million for 1956-57 or about $2 million more than the total received in 1955-56. This amount includes $8 million from Crown Assets Disposal Corporation representing amounts realized from the disposal of surplus Crown assets (after deducting certain agency fees and transfers), $10 million under agreements of sale, and $5 million from Central Mortgage and Housing Corporation representing the proceeds from the sale of wartime housing properties, including depreciation provisions set aside by the Corporation in previous years on properties that have now been sold.
Refunds of previous years' expenditures
Refunds in the current fiscal year of expenditures made in prior years are expected to total $19 million compared with $47 million received last year. A large part of these refunds arise from previous years' expenditures by the Department of National Defence on contracts with the United States Government for the supply of aircraft, engines and equipment. The arrangement is that when Canada places contracts with the Government of the United States, payments of the estimated costs are made to the United States Treasury. If these estimated costs are revised, or if there are reductions in the contracts, the United States Government makes refunds of the overpayments. This year, refunds arising from this source are expected to total some $13 million whereas last year the total was $39 million.
Services and service fees
It is estimated that $21 million will be received during 1956-57 by various government departments for services and service fees, about $2 million more than the total received during 1955-56. This total includes $6 million received by the Department of Trade and Commerce, mainly for services in connection with the inspection, weighing, storage and elevation of grain and for electricity, gas, and weights and measures inspection services; $6 million received by the Royal Canadian Mounted Police, mainly for police services to provinces and municipalities; and $3 million received by the Department of Transport, chiefly for wharfage and other canal and marine service fees, steamship inspection, air-ground radio at airports, and government telegraph and telephone services.
Other non-tax revenues
Other non-tax revenues are expected to total $8 million in 1956-57, $1 million less than in 1955-56. This total includes $4 million for bullion and coinage receipts arising out of the operations of the Royal Canadian Mint.
(3) Comparison of Actual Revenue with Budget Forecast
Total budgetary revenues for 1956-57, excluding revenues from the old age security taxes, as now estimated are expected to be $386 million, or nearly 8 per cent, more than the forecast made in the Budget Speech of March 20, 1956. It is expected that when final figures are available revenue from all sources except the tax on corporation incomes and miscellaneous taxes will have exceeded the forecast made a year ago. This excess of receipts over the amount forecast reflects the fact that the general level of economic activity throughout the fiscal year has been considerably above the level which formed the basis for the budget forecast. This is illustrated by the fact that the gross national product for 1956 is now believed to have been $29.9 billion but the forecasts made in the Budget Speech a year ago assumed that this figure would be only $28 billion.

The Budget-Appendix
The following table shows the extent to which actual revenues for 1956-57, as now estimated, differ from the budget forecast.

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Comparison op Budget Forecast with Actual Revenues for Fiscal Year Ended March 31, 1957
(In millions of dollars)
Source of Revenues	Budget Forecast of Revenues	Actual Revenues (Estimated)	Increase or Decrease (-) compared with Budget Forecast	
			Amount	Per cent
Personal income tax	1,265	1,413	148	12Non-resident income taxes	70	77	7	10Corporation income tax	1,315	1,285	-30	-2Succession duties	65	87	22	34Customs import duties	485	565	80	16Excise duties	258	270	12	5Sales tax (net)	663	725	62	9Other excise taxes	265	267	2	117	17	Total tax revenues	4,403	4,706	303	7Non-tax revenues	360	443	83	23Total budgetary revenues	4,763	5,149	386	8
The estimated revenue from the personal income tax is $148 million more than the budget forecast. This is because the level of personal incomes for the year reached a level well above what was anticipated a year ago.
The revenue from the tax on corporation profits is expected to be $30 million less than forecast. The revenue from this source during 1956-57 was largely influenced by the level of profits in 1955. Actual profits for 1955 are now known to have been over $100 million below the estimate on which the budget forecast was based.
The revenue from succession duties has varied widely from the forecast in the past two years because of two exceptionally large estates and the difficulty of foreseeing exactly when the duties on these estates would be paid.
The extent to which the revenues from the taxes on commodities have exceeded the forecasts is a reflection of the extent to which levels of income and economic activity have exceeded expectations.
The non-tax revenue will be larger than the budget forecast due in part to a change in the method by which the Bank of Canada values its investments resulting in a very large additional amount being transferred to the government accounts as revenue.

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Budgetary expenditures for 1956-57 are estimated at $4,867 million, an increase of $434 million over the 1955-56 total of $4,433 million.
A comparative summary of estimated expenditures by departments and principal purposes for the fiscal year 1956-57 and actual expenditures for the preceding year is given in the following table.
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The Budget-Appendix

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Statement of Budgetary Expenditures by Departments and Major Classifications
(In millions of dollars)
Fiscal Year Ended March 31
1957 (Estimated)	1956	Decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centNational Defence	1,768.1	36.4	1,750.1	39.5	18.0	1.0Defence Production	21.0	0.4	16.1	0.3	4.9	30.4Civil defence	4.5	0.1	2.4	0.1	2.1	87.5tjas.e	S6.9	1,768.6	89.9	85.0	MPublic debt charges-	Interest on public debt	522.2	10.7	492.6	11.1	29.6	6.0Other debt charges	13.9	0.3	21.7	0.5	-7.8	-35.9686.1	11.0	614. S	11.6	81.8	J,.8Provincial subsidies and tax rental	payments (including transitional	grant to Newfoundland)	395.6	8.1	350.9	7.9	44.7	12.7Family allowances	397.7	8.2	382.5	8.6	15.2	4.0Unemployment Insurance Act-Admin-	istration and government's contribu-	tion	67.1	1.4	60.5	1.4	6.6	10.9Government contributions with respect	to the superannuation account	72.4	1.5	31.5	0.7	40.9	129.8Reduction in actuarial deficiency in the	50.0	1.0	50.0	Provision for reserve for losses on	50.0	1.0	50.0	Agriculture	85.0	1.7	88.2	2.0	-3.2	-3.6Atomic Energy	22.4	0.5	19.0	0.4	3.4	17.9Canadian Broadcasting Corporation. ...	39.3	0.8	31.2	0.7	8.1	26.0Citizenship and Immigration	47.9	1.0	32.3	0.7	15.6	48.3External Affairs	60.8	1.2	44.9	1.0	15.9	35.4Finance	49.5	1.0	34.5	0.8	15.0	43.4Mines and Technical Surveys	35.7	0.7	38.2	0.9	-2.5	-6.5National Health and Welfare	160.5	3.3	153.0	3.4	7.5	4.9National Research Council	18.5	0.4	16.1	0.4	2.4	14.9National Revenue	62.3	1.3	56.1	1.3	6.2	11.1Northern Affairs and National Re-	sources	37.2	0.8	24.6	0.6	12.6	51.2Post Office	141.5	2.9	127.4	2.9	14.1	11.1Public Works	162.4	3.3	142.1	3.2	20.3	14.2Roval Canadian Mounted Police	43.6	0.9	36.6	0.8	7.0	19.1Trade and Commerce	55.7	1.1	36.5	0.8	19.2	52.6Transport	158.3	3.3	132.0	3.0	26.3	19.9Veterans Affairs	252.1	5.2	248.5	5.6	3.6	1.4Other departments	71.4	1.5	63.6	1.4	7.8	12.3Grand total	4,866.6	100.0	4,433.1	100.0	433.5	8.9
Defence expenditures
Defence expenditures consisting of expenditures of the Departments of National Defence and Defence Production and outlay for the civil defence programme are again the largest category of government expenditure. The total of $1,794 million for the fiscal year is approximately 37 per cent of the aggregate budgetary expenditures of the government. This is an increase of $25 million or about 1 per cent over the 1955-56 total of $1,769 million when defence expenditures were 40 per cent of aggregate budgetary expenditures.
Expenditures of the Department of National Defence are estimated at $1,768 million and those of the Department of Defence Production at $21 million, while outlays in connection with the civil defence programme are expected to total $4 million. In 1955-56 expenditures were $1,750 million, $16 million and $2 million, respectively.

The Budget-Appendix

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MILLIONS OF DOLLARS	FISCAL YEARS ENDED MARCH 31	MILLIONS OF DOLLARS
Note: The light areas in the columns in the chart for Health, Welfare and Social Security represent pension payments out of the old age security fund.
A comparative summary of defence expenditures for 1956-57 and 1955-56 is shown in the attached table.
TABLE VIII (In millions of dollars)
Defence Expenditures	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Department of National Defence- Army services	394.2	406.9	-12.7Naval services	330.4	339.2	- 8.8Air services	773.8	705.1	68.71,498 4	1,451.2	47.2Defence research and development	70.3	64.3	6.0Mutual aid to NATO countries including contributions to military costs of NATO	
Government's contribution to the permanent services pension account	133.1	175.0	-41.946.4	40.1	6.3Administration and general	19.9	19.5	0.41,768.1	1,750.1	18.0Department of Defence Production- Capital assistance	10.3	6.5	3.8Administration and general	10.7	9.6	1.1B1.0	16.1	4.9Civil defence programme	4.5	2.4	2.11,793.6	1,768.6	25.0
Estimated expenditures for army, naval and air services amount in the aggregate to $1,498 million, $47 million more than the total for 1955-56. Outlay for army services is $13 million less than in the previous year, and that for naval
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The Budget-Appendix services is $9 million less, while that for air services is $69 million more. Expenditures for defence research and development are expected to amount to $70 million, an increase of $6 million over the 1955-56 programme.
Estimated expenditures of $133 million under the mutual aid programme and contributions to the military costs of NATO are $42 million less than the total of $175 million in the previous fiscal year. Under the provisions of section 3 of the Defence Appropriation Act, defence equipment and supplies may be transferred from Canadian stocks to other parties to the North Atlantic Treaty. The estimated expenditures of $133 million for 1956-57 include $58 million for transfer of equipment and supplies, and $61 million in outlays for costs incurred in acquiring and supplying military equipment for, and in the training in Canada of aircrews from, countries which are parties to the North Atlantic Treaty. The contribution of $14 million on account of Canada's share of the NATO military budgets and infrastructure costs which is also included in this total is $3 million higher than in 1955-56. The percentage share of these costs borne by each nation is established in the North Atlantic Council and is subject to ratification by the respective member governments.
The government's contribution to the permanent services pension account during 1956-57 of an amount equal to 1-2/3 times the contributions by permanent services personnel is estimated to be $46 million consisting of $41 million relating to current contributions and $5 million to contributions for arrears. This is $6 million more than the 1955-56 contribution of $40 million of which $36 million related to current contributions and $4 million to contributions for arrears.
The estimated expenditures of $21 million for 1956-57 for the Department of Defence Production reflect an increase of $5 million, mainly in respect of the programme under which capital assistance is given to private contractors, Crown plants operated on a management fee basis, and Crown corporations undertaking contracts essential to the defence programme. For 1956-57 this capital assistance is estimated at $10 million compared with $6 million in 1955-56.
Civil defence expenditures, estimated at $4 million, reflect an increase of $2 million over the 1955-56 expenditures.
In addition to these budgetary expenditures for defence, there are certain other cash outlays which must be considered in assessing the full effect of the defence programme on the economy of Canada.
The Department of Defence Production makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment, which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. It is estimated that, as a result of the transactions during 1956-57, the fund will be reduced by $2 million leaving an estimated balance in the account of $56 million at March 31, 1957.
As indicated above, defence equipment and supplies may, under the provisions of Section 3 of the Defence Appropriation Act, be transferred from Canadian stocks as mutual aid to other parties to the North Atlantic Treaty. For several years the estimated replacement values of equipment and supplies acquired by the Department of National Defence prior to March 31, 1950, and later transferred to NATO countries, were credited to the National Defence equipment account. These credits may be used subsequently to purchase equipment or supplies for the army, naval or air services, thereby involving cash outlays which are not reflected as budgetary expenditures. It was decided in 1956 to make no further credits to this equipment account and accordingly Vote

The Budget-Appendix
235 of Appropriation Act No. 6, 1956, provides that where any equipment or supplies are transferred as mutual aid, the estimated present value thereof is to be credited to this vote instead of being paid into the special equipment account, and when so credited may be expended for the purposes of the Canadian forces. Disbursements from the equipment account during the fiscal year are expected to total $49 million. The balance available at March 31, 1957, for disbursements in subsequent years is estimated at $233 million compared with $282 million at March 31, 1956.
Under section 11 of the National Defence Act there is provision for the sale of materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales are credited to a special account to be used for the procurement of materiel. Net credits to the account during 1956-57 are estimated at $2 million leaving a balance of $2 million at March 31, 1957.
The following table summarizes the cash disbursements for defence for the past two fiscal years.
TABLE IX (In millions of dollars)
Cash Outlays tor Defence
Budgetary expenditures-
Department of National Defence... Department of Defence Production Civil defence programme	
Less: value of military equipment and supplies transferred from existing Canadian stocks to NATO countries (included in budgetary expenditures)	
Disbursements from-
National defence equipment account (*)	
Replacement of materiel account-sec. 11 National Defence Act (net)	
Defence production revolving fund (net)	
Net cash outlay for defence
Fiscal Year Ended March 31		Increase or Decrease (-)
1957 (Estimated)	1956	
1,768.1	1,750.1	18.021.0	16.1	4.94.5	2.4	2.11,793.6	1,768.6	25.0-59.3	59.31,793.6	1,709.3	84.349.0	51.3	-2.3-1.5	-0.1	-1.4-1.9	-14.3	12.445.6	S6.9	8.71,839.2	1,746.2	93.0
f1) Gross disbursements less refunds of expenditures charged to account in previous years.
Public debt charges
Public debt charges for 1956-57 which consist of interest on the public debt, the annual charges for amortizing bond discounts and commissions, the cost of issuing new loans and other charges incurred in servicing the public debt are estimated at $536 million or 11 per cent of all budgetary expenditure, compared with a total of $514 million or 12 per cent for 1955-56. They are again the second largest item of budgetary expenditure.
Interest on public debt is estimated at $522 million or $30 million more than the expenditure of $492 million in 1955-56. Interest on unmatured debt is expected to amount to $432 million compared with $412 million in 1955-56. This increase is due to the substantial rise in interest rates during the year and occurred despite the fact that unmatured debt has been reduced by $1,036
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The Budget-Appendix million during 1956-57. Estimated increases of $3 million each in respect of the superannuation account, the permanent services pension account and the government annuities account bring the estimated interest on annuity, insurance and pension accounts to $87 million for 1956-57 compared with $78 million for 1955-56. Interest of $3 million on deposit and trust accounts is expected to be unchanged from the 1955-56 amount.
Other public debt charges, which include the cost of issuing new loans, the annual amortization of bond discounts and commissions, fees for the services of fiscal agents and registrars, commission for the payment of coupon and fully registered interest, and other costs of servicing the public debt are estimated to be $14 million compared with $22 million in 1955-56. The decrease of $8 million is due to a reduction in the annual amortization of bond discounts and commissions. In 1955-56 a new procedure was established whereby, in the case of general loans such costs are amortized during the period from the date of issue to the earliest call date, if one is specified, otherwise to the date of maturity of the loan; in the case of Canada savings bonds, which are redeemable at any time, on demand of the holder, the new procedure provides for amortization over a period of five years from date of issue. Consequently the 1955-56 expenditure included a non-recurring charge of $8 million to bring the amortization of then outstanding loans into line with the new procedure.
The table which follows presents a comparative summary of public debt charges for 1956-57 and 1955-56.
TABLE X (In millions of dollars)
Interest and Other Public Debt Charges	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Interest on public debt- Unmatured debt and treasury bills- Payable in Canada		422.3	400.5	21.8
	1.5	1.5	
Payable in New York	8.6	9.8	-1.2422.4	4U.8	20.6Deposit and trust accounts	3.0	3.1	-0.1Annuity, insurance and pension accounts	86.8	77.7	9.189.8	80.8	9.0Total interest on public debt	522.2	492.6	29.6Annual amortization of bond discounts and commissions -,	12.3	19.9	-7.6Servicing of public debt	0.5	0.6	-0.1Cost of issuing new loans	1.1	1.2	-0.1Total public debt charges	536.1	514.3	21.8
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1956-57 this income is estimated at $202 million as shown in the preceding section on non-tax revenue. This amount deducted from the gross total of $522 million for interest shown in the previous table leaves a net annual interest charge of $320 million compared with a net of $344 million in 1955-56.

The Budget-Appendix
Subsidies and tax rental payments to provinces
Payments to the provinces during 1956-57 for statutory subsidies, rentals under the tax rental agreements, the transitional grant to Newfoundland and the transfer of a portion of income tax receipts from certain public utility companies are estimated at $396 million compared with $351 million in 1955-56. Included in this amount is an estimated final adjustment due at the conclusion of the agreements amounting to $4 million.
A comparative summary of the payments for the two years is given in the following table.

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(In millions of dollars)
Subsidies and Tax Rental Payments to Provinces	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)Rentals under tax rental agreements, c. 49, Statutes of 1952..	365.0	319.6	45.4Statutory subsidies	20.4	20.3	0 1Transitional grant to Newfoundland	2.2	3.1	- 0 9Transfer of certain public utility tax receipts-Sec. 6, c. 49, Statutes of 1952	8.0	7.9	0.1395.6	350.9	44.7
Payments under the tax rental agreements in 1956-57 are $45 million more than in the previous year, reflecting an increase in gross national product per capita in 1955.
Statutory subsidies at $20 million in 1956-57 are unchanged from the previous year.
A summary of estimated payments, by provinces, during 1956-57 is given in the following table.

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(In millions of dollars)
Subsidies and Tax Rental Payments to Provinces
Newfoundland	
Nova Seotia	
Prince Edward Island	
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia	
Estimated final adjustment under 1952 Tax Rental Agreements Act (net)	
Transfer of certain public utility tax receipts
Fiscal Year Ending March 31, 1957 (Estimated)			
	Payments		
Statutory	under	Transitional	Subsidies	Tax Rental	Grant	TotalAgreements	1.6	14.3	2.2	18.12.1	22.2	24.30.7	4.2	4.91.7	18.7	20.43.3	3 33.6	156.8	160.41.8	28.9	30.72.2	29.0	31.22.2	35.7	37.91.2	51.3	52.53.9	3.9
20.4	365.0	2.2	387.6
			8 0
			395-6
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The Budget-Appendix
The amount of public utility tax receipts at $8 million transferred to the provinces in 1956-57 is expected to be unchanged from the previous year. Section 6 of the Tax Rental Agreements Act, 1952, authorizes the payment to the provinces, whether participating in the agreements or not, of a portion of the income tax collected from corporations whose main business is the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam.
Family Allowances
Family allowances are payable in respect of all children under sixteen resident in Canada, with minor exceptions. The monthly allowance is $5 if the child is under 6 years of age; $6 in the age group 6-9; $7 in the age group 10-12; and $8 in the age group 13-15. Children of immigrants are not eligible for family allowances during their first year of residence in Canada but receive family assistance of $5 per month from the Department of Citizenship and Immigration during that period if under sixteen years of age.
Family allowance payments are estimated at $398 million in 1956-57 representing 8 per cent of total expenditures for the fiscal year. The increase of $15 million over the corresponding 1955-56 outlay reflects the increase in the number of children in the eligible age groups.
The following table presents a comparative summary of payments by provinces.

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(In millions of dollars)
Family Allowance Payments	Fiscal Year Ended March 31	Increaseby Provinces	1957 (Estimated)	1956	12.8	12.4	0.418.0	17.6	0.42.6	2.6	15.8	15.4	0.4124.4	120.4	4.0122.5	116.6	5.920.0	19.4	0.621.7	21.4	0.328.1	26.8	1.331.0	29.1	1.90.8	0.8	
397.7	382.5	15.2
Unemployment Insurance Act administration and government's contribution
Expenditures in 1956-57 relating to the Unemployment Insurance Act (excluding the government's payment as an employer) are estimated at $67 million compared with $61 million spent in 1955-56.
Unemployment insurance benefit payments are not charged directly to budgetary expenditures but are paid from the unemployment insurance fund. This fund is financed by contributions from employees and employers, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of combined employer-employee contributions.

The Budget-Appendix
The government's contribution to the fund for 1956-57 is estimated at $38 million and administration costs are expected to total $29 million; the corresponding figures for 1955-56 were $34 million and $27 million.
Government contributions with respect to the superannuation account
The government's contribution to the superannuation account will be $72 million in 1956-57 compared with $31 million in 1955-56. This increase of $41 million is due to the additional liability created by the general salary increases to civil servants effective April 1, 1956. The government's regular contribution of an amount equal to the current and prior service payments of individuals is estimated at $31 million.
In addition to the above contributions, $50 million will be charged to budgetary expenditures as a reduction in the unamortized portion of the actuarial deficiency in the superannuation account reducing the balance in the account to $139 million as at March 31, 1957.
Provision for reserve for losses on realization of assets
The sum of $50 million has been credited in 1956-57 to the general reserve for losses on realization of assets with a corresponding charge to budgetary expenditure. This will bring the balance in the reserve at March 31, 1957 to $546 million, which is approximately 7 per cent of the total recorded assets.
Agriculture
Expenditures of the Department of Agriculture are estimated at $85 million for 1956-57 a decrease of $3 million from the $88 million spent in 1955-56.
As no deficit is expected in the prairie farm emergency fund in 1956-57 no charge will be made to budgetary expenditures comparable to the $8 million charged in 1955-56. This decrease of $8 million together with decreases of $1 million in administration and general costs and $1 million in the operating losses of the agricultural prices support board will be partially offset by increases of $1 million in freight assistance on western feed grains, $2 million in outlays for rehabilitation and reclamation projects, $2 million in the costs of experimental farms services and $2 million in the costs of science services.
A comparative summary of estimated expenditures for 1956-57 and actual expenditures for 1955-56 is presented in the following table.

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(In millions of dollars)
Agriculture	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)12.2	10 6	1 617.3	16 0	1.36.6	6 8	-0.2Operating losses of the agricultural prices support board	4.5	5.8	-1.38.4	-8.4Premium on hog carcasses including administrative costs...	5.6 11.5	5.9 10.3	-0.3 1.213.8	11.7	2.110.9	9.4	1.52.6	3.3	-0.7
85.0	88.2	-3.2
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The Budget-Appendix
Atomic energy
Expenditures of the Atomic Energy Control Board and payments to Atomic Energy of Canada Limited are estimated at $22 million for 1956-57 compared with $19 million in 1955-56, an increase of $3 million.
Administration expenses of the Atomic Energy Control Board and grants for research and investigations with respect to atomic energy are estimated at $0.3 million, the same as the 1955-56 expenditure.
Payments to Atomic Energy of Canada Limited, for its research programme, are estimated at $22 million compared with $19 million in 1956-57. Of the total $13 million is for current operations and maintenance and $9 million for the construction and acquisition of buildings, land, works and equipment.
In addition advances to Atomic Energy of Canada Limited to be covered by obligations or shares of the company are estimated at $9 million, for the construction or acquisition of buildings and equipment at Chalk River and Deep River and for the commercial products division at Ottawa. This brings the total of loans to the company to $53 million.
Canadian Broadcasting Corporation
Payments by the Government of Canada to the Canadian Broadcasting Corporation are estimated at $39 million for 1956-57 compared with $31 million in 1955-56. This increase of $8 million is due to a grant of $12 million toward the anticipated deficit in television service, for which there was no corresponding charge in 1955-56, and a decrease of $4 million in the payment to the corporation of an amount equivalent to the collection of the 15 per cent special tax imposed on radio and television sets and tubes.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.

[Stage Direction]
(In millions of dollars)
Payments to Canadian Broadcasting Corporation	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
	6.3	6.3	
20	1.8	0.2Payments to the corporation of amounts equal to tax collected under the Excise Tax Act in respect of radio and television	19.0	23.1	-4.1Grant toward the anticipated deficit arising from the oper-	12.0	12.0
39.3	31.2	8 1
It is expected that no additional loans will be made to the corporation in 1956-57, total loans remaining at $27 million at March 31, 1957. Interest at various rates is paid semi-annually and is included in non-tax revenues under the heading "return on investments".

The Budget-Appendix
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration are estimated at $48 million for 1956-57 compared with $32 million in 1955-56, an increase of $16 million. Of this increase, $10 million is due to the cost of bringing Hungarian refugees from Austria to Canada (of which $5 million represents advances to the provinces and to the intergovernmental committee on European migration) and $1 million to the provision of additional facilities for the movement of the refugees to Canada. Family assistance accounts for $2 million of the increase. This assistance, under which children of immigrants under sixteen in their first year in Canada are eligible for a monthly allowance of $5, became effective April 1, 1956. The remaining increase of $3 million is in Indian Affairs, mainly for increased costs in the outlay for Indian education.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.

[Stage Direction]
(In millions of dollars) *
Citizenship and Immigration	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Indian affairs	24.2	21.5	2.7Citizenship and citizenship registration	1.3	1.0	0.3Immigration	21.3	8.0	13.3National gallery purchase account	0.1	1.0	-0-9Administration and general	1.0	0.8	0.247.9	32.3	15.6
External Affairs
Expenditures of the Department of External Affairs are estimated at $61 million an increase of $16 million over the 1955-56 expenditures of $45 million.
The principal items causing this increase are the $8 million increase in the grant to the Colombo Plan fund, a $3 million increase in Canada's assessment for membership in international or commonwealth organizations (due mainly to a change in the effective date of payments), a $2 million increase in contributions to international organizations (due mainly to an estimated expenditure of $1 million in connection with Hungarian refugees) and a $1 million increase in assistance to other countries (due to a gift of wheat to Pakistan).
The following table presents a comparative summary of estimated expenditures for 1956-57 with actual expenditures for 1955-56.
TABLE XVII (In millions of dollars)
External Affairs	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)Assistance to other countries	1.5	0.1	1-4Canada's assessment for membership in international or commonwealth organizations	5.7	3.1	2.6Contributions to international organizations	4.9	2.5	2.4Grant to Colombo plan fund	34.4	26.4	8.0Representation abroad	8.7	8.2	0.5Administration and general	5.6	4.6	1.060.8	44.9	15.9
The Budget-Appendix
Finance
The major items of expenditure have been dealt with in previous paragraphs under the headings "public debt charges", "subsidies and tax-rental payments to provinces", "government contributions with respect to the superannuation account", and "provision for reserve for losses on realization of assets".
Other expenditures are estimated at $50 million an increase of $15 million over the 1955-56 total of $35 million. Increases of $11 million in grants to universities and $3 million in grants to municipalities in lieu of taxes are mainly responsible for the increase.
The following table presents a comparison of 1956-57 estimated expenditures with the actual expenditures for 1955-56.

[Stage Direction]
(In millions of dollars)
Finance	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Office of the Comptroller of the Treasury-administration	16.1 16.0 9.6 0.8 7.0	14.9 5.5 7.0 0.9 6.2	1.2 10.5 2.6 -0.1 0.8
			
Grants to municipalities in lieu of taxes on federal property.. Government contribution as an employer to the unemploy-			
			
			
	49.5	34.5	15.0
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys are estimated at $36 million for 1956-57, a decrease of $2 million from the expenditures of $38 million in 1955-56. Decreases of $2 million in connection with the movement of coal under the Dominion Coal Board and $1 million in the costs of surveys and mapping services are partially offset by an increase of $1 million in other categories.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.
TABLE XIX (In millions of dollars)
Mines and Technical Surveys	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)9.0	9.3	-0.39.5	11.3	-1.89.7	10.7	-1.03.3	3.0	0.32.5	2.4	0.11.7	1.5	0.2
35.7	38.2	-2.5

The Budget-Appendix
National Health and Welfare
Family allowance payments, estimated at $398 million for 1956-57, constitute the main item of expenditure for the Department of National Health and Welfare and have been dealt with under a separate heading in preceding paragraphs. Civil defence expenditures, estimated at $4 million, are dealt with under the heading "defence expenditures".
Other expenditures of the department in 1956-57 are estimated at $161 million, an increase of $8 million compared with expenditures of $153 million in 1955-56.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.

[Stage Direction]
(In millions of dollars)
National Health and Welfare	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Blind persons allowances	3.0	2.9	0.1Disabled persons allowances	7.0	5.7	1.3General health grants	36.4	33.5	2.9Indian and Eskimo health services	17.6	16.7	0.9Old age assistance	20.8	20.9	-0.1Other health services	7.6	6.0	1.6Reduction in the amount owing by the old age security fund.	56.0	63.3	-7.3Unemployment Assistance Act	9.3	Q 3Administration and general	2.8	4.0	-1.2160.5	153.0	7.5
In Vote 656 of Appropriation Act No. 6, 1956 Parliament granted authority to charge the 1955-56 deficit of $50 million in the old age security fund to budgetary expenditures in 1956-57. The deficit of $6 million for 1956-57 will be charged to the current year.
Expenditures for Indian and Eskimo health services are estimated at $18 million for 1956-57 compared with $17 million for 1955-56. Expenditures for other health services are expected to be $8 million in 1956-57 compared with $6 million in 1955-56.
General health grants to the provinces for assistance in hospital construction, general health services and the control of diseases are estimated at $36 million for 1956-57 compared with expenditures of $34 million in 1955-56.
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $40 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the Act may receive a pension of $40 per month from the federal government out of the old age security fund.) Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances to blind persons in need over the age of 18 by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $40 per month for allowances to disabled persons in need over the age of 18 years.
The Unemployment Assistance Act was assented to on July 11, 1956. Under this Act the federal government contributes up to 50 per cent of the cost of
[Stage Direction]
The Budget-Appendix unemployment assistance paid by the provinces, subject to certain deductions as set out in the Act. To date six provinces have signed agreements with the federal government. Expenditures under this Act are estimated at $9 million for 1956-57. This covers the period from July 1, 1955 (the effective date stipulated in the Act) to March 31, 1957.
The following table presents an estimated distribution of these payments to provinces for health grants, old age assistance, disabled persons and blind persons allowances and for unemployment assistance for 1956-57.
TABLE XXI (In millions of dollars)
General Health Grants and Federal
Fiscal Year Ending March 31, 1957 (Estimated)
Share of Old Age Assistance, Disabled Persons Allowances, Blind Persons Allowances and Unemployment Assistance	General health grants	Old age assistance	Disabled persons allowances	Blind persons allowances	Unem- ployment assistance1.0	1.0	0.1	0.1	2.91.9	1.1	0.3	0.3	0.3	0.1	0.1	(>)	0.11.8	1.3	0.3	0.3	0.19.8	7.3	3.5	1.0	10.9	4.8	1.8	0.6	2.5	1.1	0.2	0.2	1.42.2	1.2	0.2	0.1	0.92.7	1.2	0.3	0.2	3.2	1.7	0.2	0.2	3.90.1	(*)	C)	([DOT])	
36.4	20.8	7.0	3.0	9.3
0) Less than $50,000.
National Research Council
Expenditures of the National Research Council are estimated at $18 million for 1956-57, $2 million higher than the expenditures for 1955-56. Salaries and other expenses amounting to $16 million are $2 million more than the corresponding amount in 1955-56, and the costs of construction or acquisition of buildings, works, land and new equipment totalling $2 million are approximately the same as the corresponding outlay in 1955-56.
National Revenue
Expenditures of the Department of National Revenue are estimated at $62 million for 1956-57 compared with $56 million in 1955-56. The following table presents a comparative summary of expenditures for the two years.

[Stage Direction]
(In millions of dollars)
National Revenue	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)33.6	30.0	3.628.6	26.0	2.60.1	0.1	
62.3	56.1	6.2

The Budget-Appendix
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs and National Resources in 1956-57 are estimated at $37 million, compared with expenditures of $25 million in 1955-56, an increase of $12 million.
Of this increase, $6 million is attributable to expenditures by the national parks branch for construction or acquisition of buildings, works, land and new equipment; $5 million is due to an increase in expenditures for the northern administration and lands branch of which $4 million is for the construction or acquisition of buildings, works, land and new equipment, and $1 million for operation and maintenance; and $1 million in expenditures of the forestry branch.
The following table presents a comparative summary of estimated expenditures for 1956-57 with actual expenditures for 1955-56.
TABLE XXIII (In millions of dollars)
Northern Affairs and National Resources	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
National parks branch	16.8	10.3	6.5Engineering and water resources branch	2.1	2 1	Northern administration and lands branch	11.6	6.6	5.0Forestry branch	4.5	3.6	0.9Canadian government travel bureau	1.5	Administration and general	0.7	0.5	0.237.2	24.6	12.6
Post Office
Gross expenditures of the Post Office Department for 1956-57 are estimated at $163 million, an increase of $15 million over the 1955-56 expenditures of $148 million.
Remuneration of postmasters and staffs at revenue and semi-staff offices, commissions at sub-offices and certain other authorized disbursements are paid from revenue. These payments, included in the total of $163 million, are estimated at $22 million for 1956-57, compared with $21 million in 1955-56.
Disbursements charged to budgetary expenditures are estimated at $141 million, an increase of $14 million over expenditures in 1955-56. The main factor accounting for the difference is the increase in salaries which was effective April 1, 1956.
2314
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The Budget-Appendix
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.
TABLE XXIV (In millions of dollars)
Post Office	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)Charged to budgetary expenditure-	Operations-salaries and other expenses of staff post offices, district offices and railway mail services and supplies and equipment and other items for revenue	87.4	77.2	10.2Transportation-movement of mail by land, air and	49.9	46.5	3.42.6	2.3	0.31.6	1.4	0.2HI.5	1S7.4	u.tC harged to revenue-	Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-offices	21.8	20.9	0.9
163.3	148.3	15.0
Public Works
Expenditures of the Department of Public Works for 1956-57 are estimated at $162 million, compared with expenditures of $142 million for 1955-56, an increase of $20 million. Costs of the development engineering branch increased by $13 million of which $12 million is attributable to the trans-Canada highway; costs of the harbours and rivers engineering branch increased by $5 million due to the acquisition, construction and improvements of harbour and river works; and costs of the property and building management branch increased by $3 million, of which $1 million was for the operation and maintenance of buildings in Ottawa and $2 million for the operation and maintenance of buildings in other centres.
The following table presents a comparative summary of estimated expenditures for 1956-57 with actual expenditures for 1955-56.

The Budget-Appendix

[Stage Direction]
(In millions of dollars)
Public Works	Fiscal Year Ended March 31		Increase or Decrease (-}'
	1957 (Estimated)	1956	
Property and building management branch- Maintenance and operation-			
Ottawa	14.4	13.1	1.3.Other centres	24.2	22.7	1.5-Administration and general	0-2	0.1	0.188.8	S5.9	2.9Building construction branch- Acquisition, construction and improvements of public buildings-	Ottawa	7.8	7.6	0.2Other centres in Canada	36.8	37.9	-1.1Outside Canada	0.2	2.6	-2.4Administration and general	5.5	3.4	2.160.S	61.5	-1.&Harbours and rivers engineering branch- Acquisition, construction and improvements of harbour	and river works	22.2	16.6	5.$Harbours and rivers-generally	3.5	3.2	0.3Dredging	3.5	4.8	-1.3Administration and general	3.8	3.6	O.ZSS.O	28.2	4.8Development engineering branch- Trans-Canada highway division- Contributions to the provinces under the terms of the	Trans-Canada Highway Act	22.0	16.1	5.9Trans-Canada highway through national parks	10.5	4.5	6.0Administration and general	2.2	1.3	0.9Si. 7	21.9	12.8Housing	1.9	1.4	0.5Administration and general	3.7	3.2	0.5162.4	142.1	20.3
Royal Canadian Mounted Police
Expenditures for the Royal Canadian Mounted Police are estimated at $44 million for 1956-57, an increase of $7 million over the total spent in 1955-56. Increases of $4 million in land and air services, $1 million each in marine services, the governments contribution to the Royal Canadian Mounted Police pension account due to the salary increase effective April 1,1956 and headquarters administration and general, account for this difference. These amounts represent gross expenditures; payments received from the provinces and municipalities for police services estimated at $6 million are credited to revenue.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.

[Stage Direction]
(In millions of dollars)
Royal Canadian Mounted Police	Fiscal Year Ended March 31	Increase1957 (Estimated)	1956	Decrease (-)Land and air services	29.2	24.9	4.3Marine services	2.6	1.8	0.8Government contribution to the Royal Canadian Mounted Police pension account	1.7	0.9	0.8Pensions and other benefits	2.3	2.1	0.2Headquarters administration and general	7.8	6.9	0.943.6	36.6	7.0
2316
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The Budget-Appendix
Trade and Commerce
Expenditures for the Department of Trade and Commerce are estimated at $56 million for 1956-57 compared with $37 million for 1955-56. The increase of $19 million is due to increases of $13 million in respect of grain storage costs (the 1955-56 expenditure did not include payment covering a full crop year), $1 million in respect of the Canada Grain Act, $4 million in the costs of the Dominion Bureau of Statistics due mainly to the 1956 census and $1 million for administration and general.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.
TABLE XXVII (In millions of dollars)
Trade and Commerce	Fiscal Year Ended March 31		Increase or Decrease ( - )
	1957 (Estimated)	1956	
Assistance re storage costs of grain	31.8	18.9	12.9Canada Grain Act	5.9	5.1	0.8Dominion Bureau of Statistics	9.9	6.0	3.9Standards branch	1.9	1.7	0.2Trade commissioners service	2.9	2.G	0.3Administration and general	3.3	2.2	1.155.7	36.5	19.2
Transport
Expenditures of the Department of Transport for 1956-57 are estimated at $158 million, an increase of $26 million over the total of $132 million in 1955-56.
Expenditures for air services, estimated at $71 million, are $14 million higher than those for the previous year. This increase is attributable mainly to $3 million in the outlays of the telecommunications division chiefly for the construction and acquisition of new lines and $9 million in the outlay of the civil aviation division for the construction and acquisition of buildings, works, lands and new equipment including construction work on municipal airports.
Expenditures for marine services are estimated at $26 million for 1956-57, an increase of $5 million over the outlay of $21 million in 1955-56. This increase is mainly due to higher expenditures for the construction and acquisition of steamers.
Expenditures for railway and steamship services for 1956-57 are estimated at $21 million, an increase of $2 million over the previous year due principally to increased payments under the Maritime Freight Rates Act.
Estimated expenditures for the Board of Transport Commissioners at $13 million are the same as in the previous year.
Payments to cover the net operating deficits of certain Crown corporations are estimated at $7 million for 1956-57, an increase of $3 million over expenditures of $4 million in 1955-56. The increase is due almost entirely to the operation of the North Sydney-Port-aux-Basques ferry and terminals, the deficit of which was $3 million greater than in the previous year. "Non-active" advances to the National Harbours Board are estimated to be $4 million in 1956-57 compared with $3 million for 1955-56.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.

The Budget

Appendix
TABLE XXVIII (In millions of dollars)
T RANSPORT	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Air services-			
Telecommunications division	17.7	14.3	3.4Meteorological division	9.2	8.4	0.8Civil aviation division	42.1	33.1	9.0Administration	2.0	1.5	0.571.0	67. S	IS. 7Canal services	8.2	8.3	-0.1Marine services	26 4	20.6	5.8Railway and steamship services- Maritime Freight Rates Act-	Difference between tariff and normal tolls	12.5	11.0	1.5Straits of Canso causeway	1.1	2.9	-1.8Construction and acquisition of auto ferries.	3.2	3.1	0.1Other	4.0	2.3	1.720.8	19. S	1.6Board of Transport Commissioners-	7.0	7.0	5.0	5.0	1.0	1.0	1S.0	1S.0	Canadian Maritme Commission	4.8	4.3	0.5Crown Corporations-	Net income deficits	7.5	4.1	3.44 1	3.0	1 111.6	7.1	4-6Administration and general	2.5	2.1	0.4158.3	132.0	26.3
Veterans Affairs
Expenditures of the Department of Veterans Affairs are estimated at $252 million in 1956-57 compared with expenditures of $248 million in 1955-56. The estimated net increase of $4 million is due mainly to increases of $4 million in treatment services, $2 million in war veterans allowances and other benefits and $1 million for departmental, district and pensions administration and miscellaneous payments, offset in part by decreases of $2 million in provision for the reserve for conditional benefits under the Veterans Land Act and $1 million in war service gratuities and re-establishment credits.
Expenditures relating to the administration of the Soldiers Settlement and Veterans Land Acts are expected to amount to $5 million while the provision for the reserve for conditional benefits under the Veterans Land Act is estimated at $7 million. These conditional benefits are made to veterans who enter into agreements with the director for purchases of land and chattels provided they fulfil the terms of the agreements for ten years. The estimated amount charged to expenditures under this heading covers one-tenth of the conditional benefits included in sales to veterans.
[Stage Direction]
The Budget-Appendix
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.

[Stage Direction]
(In millions of dollars)
Veterans Affairs	Fiscal Year Ended March 31		Increase or Decrease (-)
	^ I957 (Estimated)	1956	
130.4	130.7	-0.347.0	42.7	4.344.5	42.3	2.21.2	1.8	-0.62.5	3.6	-1.1Soldier Settlement and Veterans Land Acts-	5.5	5.4	0.1Provision for reserve for conditional benefits, Veterans	6.8	8.8	-2.0Departmental, district and pensions administration and	14.2	13.2	1.0
252.1	248.5	3.6
All other departments
Expenditures of the departments not dealt with in preceding sections are estimated at $72 million for 1956-57 compared with expenditures of $64 million in 1955-56, an increase of $8 million.
The following table presents a comparative summary of expenditures for 1956-57 and 1955-56.
TABLE XXX (In millions of dollars)
All Other Departments	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
	0.7	0.7	
0.2	0.4	-0.22.7	2.4	0.314.0	12.4	1.60.4	0.4	0.6	0.5	0.17.1	6.6	0.512.3	10.7	1.610.1	9.0	1.17.1	6.8	0.35.0	4.1	0.93.9	3.9	0.6	0.5	0.13.3	2.2	1.13.4	3.0	0.4
71.4	63.6	7.8

The Budget-Appendix
4.	SUMMARY OF ASSETS AND LIABILITIES OF CANADA AT MARCH 31, 1957
The estimated balances of the asset and liability accounts as at March 31, 1957, the comparable balances at March 31,1956 and the changes in each category during 1956-57 are shown in the following table.

[Stage Direction]
Summary of Assets and Liabilities of Canada (In millions of dollars)
Balance at March 31
(Estimated)
Increase
or
Decrease (-)
Liabilities
Current and demand liabilities	
Deposit and trust accounts	
Annuity, insurance and pension accounts	
Undisbursed balances of appropriations to special accounts..
Suspense accounts	
Unmatured debt	
945.1
172.3
2,446.2
309.5
54.1
14,371.9
18,299.1
969.5 166.3
2,185.6
343.6 51.6
15,407.6
19,124.2
-24.4
6.0
260.6
-34.1
2.5
-1,035.7
-825.1
Assets
Current assets	
Advances to exchange fund account	
Sinking fund and other investments held for retirement of
unmatured debt	
Loans to, and investments in, Crown corporations	
Loans to national governments	
Other loans and investments	
Deferred charges	
Unamortized portion of actuarial deficiency in the superannuation account	
Suspense accounts	
Capital assets	
Inactive loans and investments	
Total assets	
976.2	1,591
2,000.0	1,950
211.4	210
2,238.7	2,007
1,479.0	1,549
645.5	647
63.3	56
139.0	189
5.0	50
*	*
89.5	88
7,847.6	8,340
0	-614.8
0	50.0
8	0.6
5	231.2
8	-70.8
2	-1.7
9	6.4
0	-50.0
0	-45.0
0	1.5
.2	-492.6
Less: Reserve for losses on realization of assets
Net assets	
Net debt (excess of liabilities over net assets)..
-546.4
7,301.2
-496.4
7,843.8
-50.0
-542.6
10,997.9
11,280.4
-282.5
'Shown at nominal value of $1.
Liabilities
The gross liabilities of the government as at March 31, 1957, are estimated at $18,299 million, a decrease of $825 million from the total of $19,124 million at the close of the previous year.
Unmatured debt outstanding, including bonds and treasury bills, is estimated at $14,372 million at March 31, 1957, or approximately 79 per cent of all liabilities. Of the total outstanding unmatured debt, $14,020 million, or 98 per cent, is payable in Canada and $352 million, or 2 per cent in foreign currencies- $300 million in United States dollars and $52 million in pounds sterling. A complete statement in tabular form of the government's unmatured debt as at
[Stage Direction]
The Budget-Appendix March 31, 1957, with details of interest rates, dates of maturity, annual interest charges and amounts of principal outstanding for each loan, is presented at the end of this Part.
The government's liability as at March 31, 1957, in respect of annuity, insurance and pension accounts, is estimated at $2,446 million. Current and demand liabilities, including outstanding cheques, accounts payable (consisting of cheques to be issued in April, 1957, in payment of accounts relating to the fiscal year 1956-57) and notes and other obligations payable on demand, are expected to total $945 million.
The other liability items are: deposit and trust accounts (consisting of moneys deposited with or held by the Receiver General for various purposes), $172 million; undisbursed balances of appropriations to special accounts (consisting of undisbursed balances of appropriations to special accounts for which moneys have been appropriated by Parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made), $310 million; suspense accounts (consisting of balances where some uncertainty as to disposition exists and balances whose ultimate accounting treatment is known but which are held until certain conditions are fulfilled), $54 million.
Assets
Offsetting the liabilities, and to some extent explaining their existence- as a large part of the total debt has been incurred on account of them-are the government's assets. For the most part these consist of assets which yield interest, profits or dividends, liquid assets such as cash and departmental working funds together with certain prepaid expenses and suspense accounts.
The total assets at March 31, 1957, are estimated at $7,847 million, a decrease of $493 million from the total at March 31, 1956. The asset categories are: current assets (including cash, departmental working capital advances and revolving funds and securities held in the securities investment account), $976 million; advances to the exchange fund account to finance the purchase of gold and foreign exchange, $2,000 million; sinking fund and other investments held for the retirement of unmatured debt, $211 million; loans to, and investments in, Crown corporations, $2,239 million; loans to national governments, $1,479 million; other loans and investments (consisting of Canada's subscription to the capital of the international monetary fund and the international bank for reconstruction and development, advances and loans to international organizations, loans to provinces and municipalities, veterans and miscellaneous loans, and balances receivable), $646 million; deferred charges (consisting of loan flotation costs in the process of being amortized), $63 million; the unamortized portion of the actuarial deficiency in the superannuation account, $139 million; suspense accounts, $5 million; capital assets (assets of the government such as land, buildings, works and equipment, etc., which are charged to budgetary expenditures at the time of acquisition or construction, are shown on the state-

The Budget-Appendix
ment, of assets and liabilities at a nominal value of $1); and inactive loans and investments (including loans and advances which are not currently revenue-producing or realizable), $90 million.
A reserve of $546 million for losses on realization of assets is shown on the statement of assets and liabilities as a deduction from the total assets, bringing the net assets total to $7,301 million.
A.	Changes in Principal Liability Classifications During 1956-57
The gross liabilities of the government are expected to show a decrease of $825 million from the total at the close of 1955-56. Decreases of $1,036 million in unmatured debt, $34 million in undisbursed balances of appropriations to special accounts and $24 million in current and demand liabilities are only partly offset by increases of $261 million in annuity, insurance and pension accounts, $6 million in deposit and trust accounts and $2 million in suspense accounts.

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Current and demand liabilities
It is estimated that current and demand liabilities will have decreased by $24 million during the fiscal year. Decreases of $12 million in non-interest bearing notes payable to the international monetary fund and the international bank for reconstruction and development, $10 million in interest accrued, $6 million in matured debt outstanding, $1 million in the post office account and $1 million in outstanding treasury cheques and in other current liabilities are partially offset by increases of $4 million in accounts payable and $2 million in interest due and outstanding. The estimated changes in the various accounts are shown in the following table.
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TABLE XXXII (In millions of dollars)
Current and Demand Liabilities	Balance at March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
292.7	293.2	-0.5206.9	203.0	3.9Non-interest bearing notes payable to the international monetary fund and the international bank for recon-	211.8	223.8	-12.025.7	31.9	-6.260.2	58.2	2.0119.8	129.8	-10.027.1	28.1	-1.00.9	1.5	-0.6
945.1	969.5	-24.4
Deposit and trust accounts
Deposit and trust accounts are expected to increase by $6 million during the year. The major changes in this category are increases of $4 million in the prairie farm emergency fund, $2 million in contractors holdbacks, $2 million in Indian trust funds and $1 million in national harbours board special accounts and a decrease of $3 million in the province of Newfoundland financial surplus. The expected increase in the prairie farm emergency fund is due to the amount collected during the year as levies exceeding award payments by $4 million.
Annuity, insurance and pension accounts
It is estimated that the annuity, insurance and pension accounts will have increased by $261 million during the fiscal year. The changes in the various accounts for the fiscal year are shown in the following table.
TABLE XXXIII (In millions of dollars)
	Balance at March 31		Increase
Annuity, Insurance and Pension Accounts	1957 (Estimated)	1956	or Decrease (-)886.8	865 6	21 2-875.1	-852.6	-22.511.7	13.0	-1.3Government annuities	990.0	930 2	59 8921.6	804 2	117 4427.1	346 4	80.7 4.095.8	91.8	
2,446.2	2,185.6	260.6
The unemployment insurance fund is expected to increase by $21 million during the fiscal year bringing the balance at March 31, 1957 to $887 million. Of this amount it is estimated that $875 million will be invested in bonds and

The Budget-Appendix
accrued interest and $12 million will be held by the Receiver General in the consolidated revenue fund. The increase of $21 million in the fund represents the amount by which contributions by employers, employees and the government, income from investments and other miscellaneous revenue credited to the fund exceed benefit payments totalling $214 million during 1956-57.
The increase of $117 million in the superannuation account is attributable mainly to the government's contribution of $31 million equal to the estimated current and prior service payments of individuals in 1955-56, the government's contribution of $41 million in respect of the civil service salary increase and $35 million interest credited to the account. The remainder of the increase is due to the excess of employees current and prior service contributions over benefit payments.
The government annuities account is expected to show an increase of $60 million reflecting the amount by which premium receipts, interest credited to the account by the government and the amount required to maintain the reserve exceed payments to annuitants and beneficiaries.
It is expected that the permanent services pension account will show an increase of $81 million, reflecting the government's contribution of $46 million which is made at the rate of one and two-thirds times the current contributions and contributions for arrears, interest on the account which is estimated at $15 million and contributions by permanent services personnel for current service and arrears less payments from the account.
Other annuity, insurance and pension accounts will show an increase of $4 million for the fiscal year.
Old age security fund
Under the Old Age Security Act pensions of $40 per month are paid from the old age security fund to all eligible persons seventy years of age and over without a means test. Payments from the fund during the fiscal year are estimated at $379 million while credits to the fund from the proceeds of the 2 per cent tax on personal incomes (maximum tax $60), the 2 per cent tax on corporation profits and the 2 per cent sales tax are expected to total $373 million. Temporary loans amounting to $6 million will be required to cover the deficit resulting from these transactions during 1956-57. Under the authority of Vote 656 of Appropriation Act, No. 6, 1956, the 1955-56 deficit of $50 million will be charged to expenditure in 1956-57.	The current deficit of $6 million will also be charged
to expenditure in 1956-57.
The following table shows the transactions in the old age security fund for the last two years.
TABLE XXXIV (In millions of dollars)
Fiscal Year Ended March 31
Old Age Security Fund	1957 (Estimated)	1956
	... 379.0		 366.2
Tax receipts-	181.0 		160.4 	
	125.0 		102.5 	
2 per cent corporation income tax		67.0 373.0	53.3 316.2
Excess of pension payments over tax receipts covered by temporary loan			 50.0
	... 6.0	
	... 50.0		 63.3
	... -56.0		 -63.3
Temporary loan outstanding at end of fiscal year				 50.0
82715-147i
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The Budget-Appendix
A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table.
TABLE XXXV (In millions of dollars)
Old Age Security Payments by Provinces	Fiscal Year Ended March 31		Increase or Decrease (-)
	1957 (Estimated)	1956	
Newfoundland	7 8	7.6	0.2Nova Scotia	18.6	18.4	0.2Prince Edward Island	3.4	3.3	0.1New Brunswick	13.5	13.2	0.3Quebec	79.5	77.1	2 4Ontario	139.0	134.6	4 4Manitoba	22 8	22 0	0.8Saskatchewan	23.3	22.3	1.0Alberta	24.0	22.7	1.3British Columbia	46.8	44.7	2.1Northwest and Yukon Territories	0.3	0.3	379 0	366.2	12.8
Undisbursed balances of appropriations to special accounts
This category is set up to record the undisbursed balances of appropriations to special accounts for which moneys have been appropriated by parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made. It is estimated that there will be a net decrease of $34 million during the year in these accounts, due mainly to a decrease of $49 million in the national defence equipment account and increases of $13 million in the Colombo plan fund and $2 million in the railway grade crossing fund.
The railway grade crossing fund is expected to show an increase of approximately $2 million for the year, representing the amount credited to this account and charged to expenditure less disbursements from the account.
The estimated increase of $13 million in the Colombo plan fund represents the amount by which the $34 million credited to the fund out of moneys voted by parliament for assistance to countries in south and south-east Asia exceeded disbursements from the fund of $21 million.
The transactions in the national defence equipment account reflect a decrease in the undisbursed balance in the account which was established under section 3 of the Defence Appropriation Act, 1950, and continued by subsequent votes of parliament for the same purpose. Under the terms of the Act, the value of defence materials and supplies acquired prior to March 31, 1950, and transferred to members of the North Atlantic Treaty Organization may be credited to the account and these credits may be used in subsequent years to purchase equipment or supplies for the naval, army or air services of the Canadian forces. Disbursements from the account during the fiscal year are estimated at $49 million. It is not expected that there will be any equipment transfers during the fiscal year; therefore, no credits will be made to the account.
Suspense accounts
Suspense accounts are expected to show a net increase of $2 million. The major changes in the accounts of this category are increases of $8 million in balances receivable under agreements of sale of Crown assets, and $2 million in the replacement of materiel account and decreases of $3 million in Crown Assets Disposal Corporation account, $2 million in international monetary fund- revaluation of Canadian dollar balance account, $1 million in military relief and currency credits and $1 million in paylist deductions.

The Budget-Appendix
The replacement of materiel account established by section 11 of the, National Defence Act is credited with amounts realized from the sale of materiel! that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for the procurement of replacement materiel. It is estimated that during 1956-57 credits to the account will exceed disbursements by $2 million.
The increase in balances receivable under agreements of sale of Crown assets reflects certain new agreements of sale, including $9 million with Orenda Engines Limited and $3 million with Avro Aircraft Limited.
The decrease in Crown Assets Disposal Corporation account represents a reduction in the government's equity in the agency account of the corporation.
Unmatured Debt
The outstanding unmatured debt at the close of 1956-57 is estimated! at $14,372 million, a decrease of $1,036 million from the previous fiscal year and is reflected entirely in debt payable in Canada.
B.	Changes in Principal Asset Classifications During 1956-57
It is estimated that assets will have decreased by $493 million during the fiscal year ending March 31, 1957. Decreases of $615 million in current assets, $71 million in loans to national governments, $45 million in suspense accounts, $50 million in the unamortized portion of the actuarial deficiency in the superannuation account and $2 million in other loans and investments are offset in part by increases of $231 million in loans to, and investments in, Crown corporations, $50 million in advances to the exchange fund account, $6 million in deferred charges, $2 million in inactive loans and investments and $1 million in sinking fund and other investments held for retirement of unmatured debt. It is expected that $50 million will be added to the reserve for losses on the realization of assets causing a decrease of $543 million in the net assets.
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The Budget-Appendix Current assets
The changes during the fiscal year in the various accounts in this category are shown in the following table.
TABLE XXXVI (In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
Current Assets	1957 (Estimated)	1956	Cash in current and special deposits	440.2	570.8	-130.6Cash in hands of collectors and in transit	193.6	151.9	41.7Departmental working capital advances and revolving funds-	33.1	-9.7Agricultural prices support account	23 4	Defence production revolving fund	56.5	58.4	-1.9Miscellaneous departmental imprest and advance	-1.5accounts	20.0	21.5	Other	24.7	22.1	2.6Securities investment account	207.8	721.5	-513.7Other current assets-moneys received after March 31 but	applicable to the current year	10.0	11.7	-1.7976.2	1,591.0	-614.8
The estimated decrease of $615 million in current assets is due to decreases of $514 million in the securities investment account (which records the government's temporary holdings of its own securities including those held for the government employees purchase plan), $131 million in cash in current and special deposits, $11 million in departmental working capital advances and revolving funds and $2 million in moneys received after March 31 but applicable to the current year, offset in part by an increase of $42 million in cash in hands of collectors and in transit.
Of the net decrease of $11 million in departmental working capital advances and revolving funds, $10 million is due to a net decrease in the agricultural prices support account, $2 million in the defence production revolving fund and $2 million in miscellaneous departmental imprest and advance accounts offset by an increase of $3 million in -other accounts.
The estimated decrease of $10 million in the agricultural prices support account reflects the credit to the account of $5 million, representing the loss on operations for 1956-57 to be included in the year's expenditures, and the net credit of $5 million to the account, representing the excess of sales over purchases during the year by the agricultural prices support board.
The decrease of $2 million in the defence production revolving fund reflects the amount by which credits to the account from the sale of essential materials and defence supplies exceed the cost of acquiring, storing, maintaining and transporting such materials.
Miscellaneous departmental imprest and advance accounts record accountable advances to departments held on deposit in various banks in the name of the department concerned, certain travelling and imprest advances to public [DOT]officers arid advance payments to contractors. During the fiscal year these advances are carried as charges to the relevant appropriations; if they are not repaid or accounted for at the year-end, they are cleared from the appropriation and debited to this account and at the beginning of the new fiscal year are cleared from the account and charged to the appropriation concerned until such time as an accounting is made.
Advances to the exchange fund account
Advances to the exchange fund are estimated at $107 million and repayments at $57 million, resulting in a net advance of $50 million during the year.

The Budget-Appendix
Sinking fund and other investments held for retirement of unmatured debt
It is expected that there will be an increase of $1 million in this account during the fiscal year 1956-57, due mainly to an increase in the holdings of bonds of various Government of Canada issues payable in United States dollars.
Loans to, and investments in, Crown corporations
It is estimated that loans to, and investments in, Crown corporations will increase by $231 million during the year. The most important changes are net increases of $154 million in loans and advances to the Canadian National Railways, $55 million in advances to The St. Lawrence Seaway Authority, $9 million in advances to Atomic Energy of Canada Limited, $9 million in advances to Canadian Farm Loan Board, $7 million in advances to National Harbours Board, $2 million in loans to Northern Ontario Pipe Line Crown Corporation and a net decrease of $7 million in loans to Central Mortgage and Housing Corporation.
The changes in this category are shown in the following table.
TABLE XXXVII (In millions of dollars)
Loans to, and Investments in, Crown Corporations
Atomic Energy of Canada Limited	
Bank of Canada	
Canadian Arsenals Limited	
Canadian Broadcasting Corporation	
Canadian Commercial Corporation	
Canadian Farm Loan Board	
Canadian National Railways	
Canadian National (West Indies) Steamships Limited...
Canadian Overseas Telecommunication Corporation	
Central Mortgage and Housing Corporation	
Crown Assets Disposal Corporation	
Eldorado Mining and Refining Limited	
Export Credits Insurance Corporation	
National Harbours Board	
Northern Ontario Pipe Line Crown Corporation	
Northern Canada Power Commission	
Polymer Corporation Limited-	
The St. Lawrence Seaway Authority	
Other Crown Corporations	
Balance at March 31		Increase or Decrease (-)
1957 (Estimated)	1956	
53.2	43.7	9.5
5.9	5.9	
7.5	7.5	
27.4	27.4	
5.0	6.0	-1.050.6	41.7	8.91,259.2	1,104.7	154.53.4	3.6	-0.213.2	8.0	5.2557.8	564.6	-6.86.5	9.0	-2.58.2	8.2	10.0	10.0	114.3	107.1	7.21.8	1.87.5	7.4	0.130.0	30.0	76.0	21.5	54.51.2	1.2	2,238.7	2,007.5	231.2
Advances to Atomic Energy of Canada Limited are estimated at $9 million for the fiscal year, resulting in an increase of $9 million and bringing advances to $53 million at March 31, 1957. The advances are to be covered by obligations or shares of the company in the same amount. The total for the year is for the construction or acquisition of buildings and equipment at Chalk River and Deep River and for the commercial products division at Ottawa.
It is not expected that any loans will be made during the year to the Canadian Broadcasting Corporation in respect of capital costs of television installations and the development of the service. The total loans to the corporation outstanding at March 31, 1957, are expected to remain at $27 million.
It is estimated that in the fiscal year ending March 31, 1957, the government will have made net advances to the Canadian National Railway Company of $130 million for capital purposes and retirement of unmatured debt in the hands of the public	 t ________ _______ ______________________________-...
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The Budget-Appendix
In addition, to assist the company to finance additional expenditures, the government will have purchased an estimated amount of $24 million of the four per cent preferred stock of the Canadian National Railway Company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to three per cent of the gross revenues of the company.
Loans to Central Mortgage and Housing Corporation during the fiscal year are expected to amount to $2 million, all for federal-provincial housing projects. Repayments are estimated at $9 million, of which $5 million is in respect of direct loans by the corporation and joint loans with lending institutions, $3 million on account of advances for house construction and $1 million in respect of loans for federal-provincial projects. The net decrease for the fiscal year in loans to the corporation is expected to be $7 million.
The net increase in advances to The St. Lawrence Seaway Authority during the year is estimated at $55 million bringing total loans at the close of the fiscal year to $76 million.
Loans to the Northern Ontario Pipe Line Crown Corporation during 1956-57 are estimated at $2 million; loans of $52 million during the year were largely offset by a repayment of $50 million in February.
Other increases in loans and advances to Crown corporations include $9 million to the Canadian Farm Loan Board, $5 million to the Canadian Overseas Telecommunication Corporation and $7 million to National Harbours Board. It is also expected that there will be a decrease in loans and advances of $1 million to the Canadian Commercial Corporation. A reduction of $3 million in the government's equity in the agency account of Crown Assets Disposal Corporation is also expected.
Loans to national governments
It is estimated that loans to national governments will total $1,479 million at the end of the fiscal year, a decrease of $71 million from the total at the close of the previous year. The estimated changes in these loans are shown in the following table.
TABLE XXXVIII (In millions of dollars)
Loans to National Governments	Balance at March 31	Increase1957 (Estimated)	1956	Decrease (-)Loans to United Kingdom- The War Appropriation (United Kingdom Financing)	Act, 1942	52.5	82.5	-30.0The United Kingdom Financial Agreement Act, 1946... Loans under the Export Credits Insurance Act, Part II-	1,096.6 1,149.1	1,112.1 1,194.6	-15.5 -46.5Belgium	46.1	48.4	-2.3Czechoslovakia	2.0	6.0	-4.0France	175.7	184.1	-8.4Netherlands	91.8	96.4	-4.6Norway	
Miscellaneous loans and advances-	7.9 SSS.5	10.5 S45.4	-2.6 -SI. 9France-military relief credits settlement	1.0	2.0	-1.0interim credit-consolidated interest	
. Netherlands-military relief and currency credit settle-	1.7	1.8	-0.1ment	
Union of Soviet Socialist Republics	2.9	3.5 1.8 0.7 9.8	-0.6 -1.8 0.1 -5-4Miscellaneous	0.8 6.4	1,479.0	1,549.8	-70.8
The Budget-Appendix
During the year the Government of the United Kingdom will have reduced the balance of the $700 million interest-free loan granted under the provisions of the War Appropriation (United Kingdom Financing) Act, 1942 by $30 million as arranged under the terms of an agreement entered into on August 13, 1953, between the Governments of the United Kingdom and Canada. The balance outstanding at March 31, 1957 is estimated at $53 million. Under the terms of the agreement the loan is to continue to be free of interest until December 1958.
The Government of the United Kingdom has repaid $15 million on account of the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the unpaid balance to $1,097 million at the close of the fiscal year. Intei'est of $22 million due on this loan December 31, 1956 has been deferred.
Repayments of advances under Part II of the Export Credits Insurance Act to certain foreign countries to assist them in purchasing goods and services in Canada are estimated at $22 million for the year, as shown in the preceding table.
Other loans and investments
Other loans and investments are estimated to decrease by $2 million during the year. The balances of the main accounts in this category together with the changes during the year are shown in the following table.
TABLE XXXIX (In millions of dollars)
Other Loans and Investments	Balance at March 31	Increase1957 (Estimated)	1956	Decrease(-)Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of- International monetary fund	1 293.5	299.7	-6.2International bank for reconstruction and development	70.9	70.9	International Finance Corporation	3.5	3.5Working capital advances and loans to international	organizations	2.7	1.7	1.0Loans to provincial governments- Alberta	S70.6	372.8	-1.79.6	10.0	-0.4British Columbia	18.6	19.4	-0.8Manitoba	15.6	16.2	-0.6Nova Scotia	0.1	0 1	Prince Edward Island	0.1	0 1	Saskatchewan	25.6	27.3	-1.769.6	73.1	-S.5Veterans Land Act advances	157.6	161.0	-3.4Miscellaneous- Acquisition of land to control properties in the vicinity of main terminal airports	1.9	2.9	-1.0Balances receivable under agreements of sale of Crown assets	26.6	18.6	8.0Construction of dock and rail facilities for Steep Rock Iron Mines Limited	2.4	2.5	-0.1Dominion Coal Company Limited	4.5	4.3	0.2Municipal Improvements Assistance Act, 1938	2.6	2.9	-0.3New Westminster Harbour Commission	2.4	2.4	Other	7.3	7.2	0.14 7.7	40.8	6.9645.5	647.2	-1.7
The Budget-Appendix
The decrease of $6 million during the year in Canada's subscription to the capital of the international monetary fund is due to the adjustment of the government's Canadian dollar equity in the fund.
Loans to provincial governments are expected to be reduced by the amount of $3 million reflecting repayments by the governments concerned.
Advances under the Veterans Land Act are expected to decrease by $11 million during the year. However, as there will be a decrease of approximately $8 million in the reserve for conditional benefits under the Veterans Land Act, there is a net decrease of $3 million.
Miscellaneous loans and investments are expected to increase by $7 million during the year due mainly to an increase of $8 million in balances receivable under agreements of sale of Crown assets and a decrease of $1 million in the holdings of land acquired to control properties in the vicinity of main terminal airports.
Deferred charges
Unamortized loan flotation costs are expected to increase by $6 million during the year to $63 million at March 31, 1957. Payments of $18 million for commissions and discounts on new loans are only partly offset by the annual amortization charges of $12 million applicable to 1956-57 included in the year's budgetary expenditures.
Unamortized portion of actuarial deficiency in the superannuation account
There will be a decrease of $50 million during the year in the unamortized portion of the actuarial deficiency in the superannuation account which amount is included in the year's budgetary expenditures.
Suspense accounts
The decrease of $45 million in this category is due to the 1955-56 deficit of $50 million in the old age security fund which was included as a charge to budgetary expenditures for 1956-57 under the authority of Vote No. 656 of Appropriation Act No. 6, 1956, offset in part by an increase of $5 million due to the adjustment of the government's Canadian dollar equity in the international monetary fund.
Capital assets
This asset category records on the government's statement of assets and liabilities, at a nominal value of $1, the capital assets that are charged to net debt at the time of acquisition or construction.
Inactive loans and advances
This category records those loans and advances which are not currently revenue-producing or realizable. The balance at March 31, 1957, is estimated at $90 million and includes the loan of $49 million to China under the Export Credits Insurance Act, loans of $24 million to Roumania and $7 million to Greece, made in 1919-20 and 1920-21 and $9 million due to the implementation of guarantee-(Ming Sung Industrial Company Limited).
Reserves for losses on realization of assets
The sum of $50 million will be added to the reserve for losses on realization of assets during the year, bringing the balance at March 31, 1957, to $546 million.

The Budget-Appendix
C.	Decrease in Net Debt
The estimated surplus for the fiscal year of $282 million will result in a corresponding decrease in the net debt of Canada from $11,280 million at March 31, 1956 to $10,998 million at March 31, 1957.
5.	THE CASH POSITION
Cash balances of the government on deposit to the credit of the Receiver General are expected to decline during the fiscal year by $131 million from a total of $571 million at March 31, 1956 to $440 million at March 31, 1957. This decrease is the net result of a reduction of $523 million in the government's outstanding unmatured debt (after taking into account transactions in the securities investment and sinking fund accounts) less the budgetary surplus of $282 million and the excess of non-budgetary receipts over disbursements of $110 million.
Although most of the government's financial transactions are reflected in the budgetary accounts, the government also receives and disburses substantial amounts of cash which are not recorded as budgetary revenues and expenditures. These other "non-budgetary" receipts and disbursements relate to transactions which result in increases or decreases in the government's assets and liabilities and they do not appear in what might be called the government's income account for the fiscal year nor do they enter into the calculation of the annual budgetary surplus or deficit. However, in considering the full scope of the government's financial operations and in measuring their effect on the government's cash position and their impact upon the economy, non-budgetary as well as budgetary transactions must be taken into account.
These increases or decreases in the government's assets and liabilities have been described in detail in the section entitled "Statement of Assets and Liabilities of Canada". On the assets side the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liabilities side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension funds held or administered by the government.
The following statement summarizes the estimated non-budgetary transactions for 1956-57 and indicates how they, together with the budgetary transactions, are expected to affect the government's unmatured debt and cash postion. For purposes of comparison, the corresponding figures for 1955-56 are also shown.
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The Budget-Appendix
TABLE XL (In millions of dollars)
Changes in Cash Position	Fiscal year ended March 31	
	1957 (Estimated)	1956
Non-Budgetary Receipts and Credits (excluding unmatured debt transactions) Repayment of loans, investments and working capital advances-		
Advances to agricultural prices support account	9.7	-1.4Equity in agency account of Crown Assets Disposal Corporation...	2.5	-9.0Subscription to International Monetary Fund	6.2	-6.3Loans to Central Mortgage and Housing Corporation	6.8	10.41942 loan to United Kingdom	30.0	30 01946 loan to United Kingdom	15.5	15.2Loans to other national governments	25.3	25.8Loans to provincial governments	3.5	3.6Advances under Veterans Land Act	10.9	-5.3Other loans, investments and working capital advances	6.1	19.2116.5	S2.2Net government annuities account receipts-	Premium receipts less payments to beneficiaries	23.8	31.60.2	Interest paid by government	35.8	34.159.8	65.7Net insurance and pension account receipts-	Employee contributions less payments to beneficiaries	30.5	26.8Government contributions	120.6	72.5Interest paid by government	51.0	43.6m.i	142.9Temporary loans to old age security fund	50.0	13.3Net increase in Colombo plan fund	12.5	1.1Net increase in prairie farm emergency fund	3.5	-4.8Decrease in unamortized portion of superannuation account liability....	50.0	50.0	Net receipts in sundry other accounts	19.2	20.8563.6	321.2Non-Budgetary Disbursements and Charges (excluding unmatured debt transactions) Loans, investments and working capital advances-	Loans to Atomic Energy of Canada Limited	9.5	11.7Loans to Canadian Farm Loan Board	8.9	4.7Loans to, and investments in, Canadian National Railways	154.5	170.7Loans to Canadian Overseas Telecommunication Corporation	5.2	3.9Advances to exchange fund	50.0	-30.03.5	Loans to National Harbours Board	7.2	-0.11.8	Loans to The St. Lawrence Seaway Authority	54.5	20.2Other loans, investments and working capital advances	13.6	26.9S08.7	208.0Net decrease in special defence accounts	47.5	-8.1Net decrease in current and demand liabilities	24.4	-25.5Net increase in unamortized loan flotation costs	6.4	-10.6Net decrease in reserve for conditional benefits, Veterans Land Act	7.5	-5.9Net disbursements from sundry other accounts	59.6	5.7454.1	163.6Net amount available from non-budgetary transactions	109.5	157.6Add Budgetary Surplus or deduct Budgetary Deficit	282.5	-33.1Overall cash available for debt reduction or increase in cash balances	392.0	124.5Net increase or decrease (-) in unmatured debt outstanding in the hands of the public-	Securities investment account	513.7	-675.9Sinking fund	-0 6	- 19 9-1,035.7 -522.6	911 1215. SNet increase or decrease (-) in cash balances on deposit to the credit of the	-130.6	339.8
The Budget-Appendix
As the table shows, non-budgetary receipts and credits, for 1956-57 (excluding unnaatured debt transactions) are estimated at $564 million while non-budgetary disbursements and charges (also excluding unmatured debt transactions) are expected to total $454 million, resulting in a net amount of $110 million available from non-budgetary transactions. As the budgetary surplus is estimated at $282 million, $392 million will be available for debt reduction or increase in cash balances. For 1955-56, the net amount available from non-budgetary transactions was $158 million which after deducting the budgetary deficit of $33 million left $125 million available for debt reduction or increase in cash balances.
Non-budgetary receipts and credits in 1956-57 are estimated at $564 million. Repayments of loans, investments and working capital advances are expected to total $117 million and include $45 million from the Government of the United Kingdom and $25 million from other national governments. Net government annuities account receipts are estimated at $60 million and net insurance and pension account receipts at $202 million. The net repayment of $50 million in temporary loans to the old age security fund reflects the charge to budgetary expenditures during 1956-57 of the temporary loans made to the fund during 1955-56. Temporary loans to the old age security fund in 1956-57 estimated at $6 million are also charged to budgetary expenditures in 1956-57. Net receipts and credits in various other accounts are estimated at $135 million and include increases of $13 million in the Colombo plan fund, an addition of $50 million to the reserve for possible losses on assets and a reduction of $50 million in the unamortized portion of the actuarial deficiency in the superannuation account.
Non-budgetary disbursements and charges are expected to amount to $454 million. Loans, investments and working capital advances are estimated at $309 million and include $9 million to Atomic Energy of Canada Limited to finance the construction of the new reactor and other buildings and works at Chalk River, Deep River and other locations, $155 million to Canadian National Railways for additions and betterments, the acquisition of rolling stock and equipment and the retirement of maturing debt, $50 million to the exchange fund for the acquisition of gold and foreign exchange, $2 million to Northern Ontario Pipe Line Crown Corporation (loans of $52 million during the year were largely offset by a repayment of $50 million in February), and $55 million to The St. Lawrence Seaway Authority for the dredging and construction of the seaway. Other non-budgetary disbursements and charges are expected to total $145 million and include net payments of $48 million from the special defence accounts and a net decrease of $24 million in current and demand liabilities.
In summary, unmatured debt after taking into account transactions in the securities investment and sinking fund accounts is expected to be reduced by $523 million during the fiscal year. As $392 million is expected to be available from budgetary and non-budgetary transactions, cash balances on deposit with banks will be drawn down by an estimated $131 million.
6.	THE PUBLIC DEBT
Gross and net debt
It is estimated that the unmatured debt of Canada will have decreased by $1,036 million and other liabilities will have increased by $211 million during the fiscal year. On this basis, it is expected that the gross public debt of Canada will have been reduced by $825 million from $19,124 million at March 31, 1956 to $18,299 million at March 31, 1957. Since the government's assets as shown on the statement of assets and liabilities are expected to decrease by $543 million during the same period, the net debt is expected to decrease by $282 million.
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The Budget-Appendix
1950	51	52	5 3	5 4	55	55	57*


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The following table shows the relationship between the gross public debt, the unmatured debt and the net debt at the end of each fiscal year, 1948-49 to 1956-57 inclusive.

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Statement of Public Debt, Unmatured Debt, Recorded Assets and Net Debt of Canada
(In millions of dollars)
As at March 31	Gross Public Debt	Less Recorded Assets	Net Debt	Increase or Decrease ( -) in Net Debt during Fiscal YearUnmatured Debt	Other Liabilities	Total	1949	15,585.0	1,365.4	16,950.4	5,174.3	11,776.1	-595.51950	15,188.1	1,562.7	16,750.8	5,106.1	11,644.6	-131.51951	15,026.8	1,896.5	16,923.3	5,490.0	11,433.3	-211.31952	14,695.4	2,562.3	17,257.7	6,072.4	11,185.3	-248.01953	14,810.5	3,108.0	17,918.5	6,756.8	11,161.7	- 23.51954	14,576.2	3,347.0	17,923.2	6,807.3	11,115.9	- 45.81955	14,496.5	3,455.0	17,951.5	6,688.4	11,263.1	147.21956	15,407.6	3,716.0	19,124.2	7,843.8	11,280.4	17.31957 (Estimated)	14,371.9	3,927.2	18,299.1	7,301.2	10,997.9	-282.5
Unmatured debt
It is estimated that the unmatured debt of Canada will total $14,372 million at March 31, 1957, a decrease of $1,036 million from the unmatured debt on March 31, 1956. However, during the same period the government's holdings of securities in the sinking fund and securities investment accounts are expected to decrease by $513 million, resulting in a net decrease of $523 million in the amount of outstanding unmatured debt.

The Budget-Appendix
Summary of security issues and redemptions during the fiscal year
_ It is estimated that during the fiscal year 1956-57 the government will have issued securities payable in Canadian dollars in the principal amount of $1,465 million (excluding the refunding of treasury bills which mature periodically) and redeemed maturing or called issues and converted others in the amount of $2,501 million, all payable in Canadian dollars.
Redemptions were financed as follows:
(In millions of dollars)
By proceeds of new issues:
Canada savings bonds, series 11 (net)	 790
Increase in treasur}' bills	 25
[Stage Direction]
 815
By refunding or conversion into new issues	 650
1,465
_ The net decrease in unmatured debt as a result of these transactions is estimated at $1,036 million. No change is anticipated during the year in the unmatured debt payable in U.S. dollars and sterling. As at March 31, 1956, the amount payable in New York was $300 million and the amount payable in London was $52 million.
Details of redemptions and new issues of securities during the fiscal year are set out in tables XLII and XLIII.

[Stage Direction]
Redemption of Debt During Fiscal Year Ending March 31, 1957
Maturity	Interest Rate	Where Payable	AmountMay 1, 1956	% 21 2i 21 3 31 2R3I	Canada Canada Canada Canada Canada Canada	$ 500.000.	000 400.000.	000 550.000.	000 250.000.	000 54,703,000 746.000.	000 2,500,703,000July 1, 1956	December 15, 1956	January 1, 19590)	June 1, 19660)	Canada savings bonds series 1-10 (net)	
0) Converted.
(2) Called March 31, 1956 for payment June 1, 1956.
Net sales of Canada savings bonds series 11, during the fiscal year are estimated at $790 million and the net redemption of Canada savings bonds series 1-10, (of which series 1 matured on November 1, 1956) is estimated at $746 million. The net increase during the year for all series is estimated at $44 million and the amount outstanding as at March 31, 1957 is estimated at $2,424 million compared with $2,380 million at the close of the previous fiscal year.
The amount of treasury bills outstanding at the end of the fiscal year is estimated at $1,625 million or $25 million more than at March 31, 1956.

[Stage Direction]
New Securities Issued During Year Ending March 31, 1957
-	Issue Date	Maturity Date	Interest Rate	Price to Govern- ment	Yield at Price to Government	Total Amount Issued	Renewals or Reconversion Included in Amount Issued	
[DOT] a o Amount Issued fl for Cash q ►nIssued to general public- Bonds	
Bonds	
Bonds	
Canada savings bonds series 11 (net).... Increase in treasury bills	Sept. 15, 1956 Dec. 15, 1956 Dec. 15, 1956 Nov. 1, 1956 Various	March 15, 1998 June 15,1957 Dec. 15,1957 May 1,1969 Various	% 3! 21 01 31 to 4 Various	96.25 99.00 97.75 99.25 Various	% 3.93 4.30 4.58 3.84 Various	$ 250.000.	000 150.000.	000 250.000.	000 790.000.	000 25,000,000	$ 250.000.	000 150.000.	000 250.000.	000	3 O O 	
s 	
£ 796,666,606 2 25,000,000 51,465,000,000	650,000,000	815,000,0002336	HOUSE OF COMMONS
The Budget-Appendix

The Budget-Appendix
Interest rates
Interest rates generally rose sharply during the year reflecting a tight money situation. The average interest rate on the government's unmatured debt at March 31, 1957 is estimated at 3.04 per cent compared with 2.85 per cent at the end of the previous fiscal year and 2.60 per cent at March 31, 1951.

[Stage Direction]
Treasury bill yields reflected the general rise in interest rates. The yield on the issue of three-month treasury bills sold on March 8, 1957, was 3.72 per cent compared with 2.64 per cent for the last issue sold in 1955-56.
The following table shows the high and low yields together with the yield on the last issue for the fiscal year 1946-47 to 1956-57 inclusive on three-month bills.
TABLE XLIV Treasury Bill Yields
Fiscal Year
1946-	47..
1947-	18..
1948-	49..
1949-	50. .
1950-	51..
1951-	52. .
1952-	53. .
1953-	54..
1954-	55..
1955-	56..
1956-	57(>)
Three-month bills		
High	Low	Last issueper cent	per cent	per cent.40	.37	.40.41	.41	.41.45	.41	.45.51	.49	.51.75	.51	.75.94	.75	.941.52	.96	1.521.97	1.51	1.591.62	.78	1.132.64	1.08	2.643.81	2.40	(*) 3.72
(') For the period from April 1, 1956 to March 8, 1957. (!) Sold March 8, 1957.
[Stage Direction]
The Budget-Appendix Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities the government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, or as to interest only, and a number of miscellaneous guarantees, the chief of which are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.
There is a large increase during the year in the government's liability under its guarantee of insured loans under the National Housing Act, 1954. This liability is estimated at $1,083 million at December 31, 1956 compared with about $122 million at December 31, 1954 and $529 million at December 31, 1955.
The following tables give details of the bonds and debenture stocks guaranteed by the government, and also indicate the nature and approximate extent of the government's other guarantees and contingent liabilities.

[Stage Direction]
Bonds and Debenture Stocks Guaranteed by the Government as at March 31, 1957
Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
.Tnlv 1 1957 .	41	64,136,000July 90 1958	31	5,500,208.Tnn 15 1959	3	35,000,00031	316,856Mnv 19* 1951	31	2,069,805.Tan 1 1959	3	26,465,130.Tnn 1 1959	4	7,999,074FpH 1 1958	2f	250,000,000Jfln 3 1955	3	35.000,000.Tnn 9.' 1957	2i	50,000,000Pppt. 15 1959	21	70,000,000Jpp 15* 1971	21	40,000,000Fph l' 1974	31	200,000,000.TnnP 15* 1975	21	6.000,0005	56,7904	11,068792,554,931
The Budget-Appendix

[Stage Direction]
Other Outstanding Guarantees and Contingent Liabilities	Estimated Amount Outstanding
	$
Province of Manitoba Treasury Bill (March 31, 1957).	250,000
Deposits maintained by the chartered banks in the Bank of Canada (February 20, 1957)		466,793,364
Loans maintained by approved lending institutions under National Housing Acts prior to 1954 Act..	Indeterminate
Loans made by lenders under Part IV of the National Housing Act, 1954, for home extensions and improvements (December 31, 1956)		2,815,000
Insured loans made by approved lenders under the National Housing Act, 1954 (December 31, 1956).	1,083,000,000
Guarantees under the Export Credits Insurance Act Part I (December 31, 1956)		42,547,636
Guarantees under the Export Credits Insurance Act Part II (March 31, 1957)		5,100,000
Loans made by chartered banks under the Farm Improvement Loans Act (December 31, 1956). . .	35,445,416
Loans made by chartered banks under The Veterans' Business and Professional Loans Act (December 31, 1956)		1,098,506
Loans made by chartered banks under the Prairie Grain Producers' Loans Act (December 31, 1956)	493,672
Loans made by chartered banks under the Fisheries Improvement Loans Act (Decmber 31, 1956)		42,239
Loans made by chartered banks under the Prairie Grain Producers' Interim Financing Act, 1951 (December 31, 1956)		454
Loans made by chartered banks to Canadian Wheat Board (February 15, 1957)		24,871,675

The Budget-Appendix
7.	SUPPLEMENTARY DETAILED TABLES
Revenues
Expenditures
Loans and Advances and Investments Unmatured Debt
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1952-53	1953-54	1954-55	1955-56	Estimated 1956-57$	$	$	%	$Tax Revenues-	Income tax-	Personal 0)	1,180.0	1,187.7	1,183.4	1,185.6	1,413.0Corporation 0)	1,240.1	1,191.2	1,020.6	1,027.7	1,285.0On dividends, interest, etc. going	abroad	53.7	53.8	61.3	66.2	77.0Excise taxes-	Sales taxes (<) (!)	566.2	587.3	572.2	641.5	725.0Other excise taxes-	Automobiles	78.2	94.7	73.2	76.2	77.0Beverages (soft drinks)	12.5	11.7	8.2	8.7	8.8Candy and chewing gum	12.4	12.8	9.9	9.2	10.1Cigarettes, cigars and tobacco	102.6	113.2	114.5	126.9	134.64.3	5.1	0.4	5.7	3.7	0.1	Jewellery, watches, ornaments, etc.	7.5	7.2	4.8	5.0	6.2Matches and lighters	1.4	1.4	0.9	0.9	0.9Stamps on cheques, money orders,	10.6	Stoves, washing machines and	1.5	Television sets, radios, tubes and	phonographs	10.7	16.8	21.5	22.8	19.011.7	11.4	<8.6	0.8	Toilet preparations	7.2	7.1	5.2	5.6	6.03.6	3.5	0.4	Wines	2.2	2.2	2.4	2.5	2.7Sundry commodities	6.0	6.4	2.3	2.1	2.2Licences, interest and miscellaneous	0.5	0.4	0.4	0.4	0.4Less refunds	-2.9	-1.6	-0.8	-0.4	-0.9275.7	296.0	252.0	260.7	267.0Customs duties	389.4	407.3	397.2	481.2	565.0Excise duties-	Spirits, malt and beer	127.7	133.0	130.1	141.9	151.0Cigarettes, cigars and tobacco	116.9	97.0	100.8	110.4	122.0Less refunds	-3.3	-3.3	-4.4	-2.9	-3.0241.3	226.7	226.5	21,9.4	270.0Succession duties	38.1	39.1	44.8	66.6	87.0Tax on insurance premiums	12.4	13.8	14.5	15.5	16.0Miscellaneous tax revenue	0.7	0.7	1.0	1.3	1.03,997.8	4,003.6	3,773.5	3,995.7	4,706.0Non-Tax Revenues-	Post office-net postal revenue	111.9	111.0	131.3	137.4	147.3Return on investments	125.5	152.1	134.0	149.3	202.0Other	125.8	129.6	84.7	117.6	93.8$63.2	392.7	350.0	404.3	443.1Total Revenue	4,360.8	4,396.3	4,123.5	4,400.0	5,149.1(') Excluding tax credited to the old age security fund-	1952-53	1953-54	1954-55	1955-56	1956-572% personal income tax	.. 45.3	90.7	100.9	102.5	125.02% corporation income tax	.. 36.8	55.6	46.0	53.3	67.02% sales tax	.. 141.6	146.8	143.1	160.4	181.0
(2) Net after deduction of refunds and drawbacks as well as transfers to the old age security fund.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
-	1952-53	1953-54	1954-55	1955-56	Estimated 1956-57Agriculture-	$	$	$	$	%Administration and general	0.8	0.9	1.0	1.0	1.3Science service	8.1	9.0	9.3	9.4	10.9Experimental farms service	8.3	8.6	9.6	10.6	12.2Production service	9.3	9.5	10.0	10.3	11.5Marketing service	
Rehabilitation and reclamation pro-	4.8	4.2	9.3	6.8	6.6jects	
Freight assistance on western feed	13.9	14.7	12.6	11.7	13.8grains	
Premium on hog carcasses suitable for	20.7	17.0	19.0	16.0	17.3export to United Kingdom	
Net operating loss-agricultural prices	6.4	4.7	5.1	5.9	5.6support account	
Deficit-prairie farm emergency fund Other expenditure	32.5	37.7	3.1	5.8 8.4	4.51.9	2.1	2.8	2.3	1.3106.7	108.4	81.8	88.2	85.0Atomic Energy	12.9	12.7	15.0	19.0	22.4Auditor General's Office	0.6	0.6	0.7	0.7	0.7Canadian Broadcasting Corporation	
Payment from the consolidated revenue fund of amounts equal to taxes collected under the Excise Tax Act in respect of radio and television sets	8.2	8.3	8.4	8.1	8.3and equipment	
Grant towards the anticipated deficit arising from the operation of the	16.7	20.8	23.1	19.0 12.0 39.38.2	25.0	29.2	31.2	Office of the Chief Electoral Officer	
Citizenship and Immigration-	0.5	5.5	0.3	0.4	0.2Administration and general	1.4	1.7	1.7	2.8	2.4Immigration branch	7.1	7.3	8.3	8.0	21.3Indian Affairs branch	15.2	16.5	18.0	21.5	24.223.7	25.5	28.0	32. S	47.9Civil Service Commission	
Defence Production-	1.9	2.1	2.3	2.4	2.7Adminstration and general	9.7	10.1	9.2	9.6	10.7Capital assistance to defence industry.	79.1	37.8	9.7	6.5	10.388.8	47.9	18.9	16.1	21.0External Affairs	
Membership in commonwealth and	9.2	10.3	11.9	13.2	15.2international organizations	
Assistance to other countries and in-	3.5	3.5	4.4	4.4	7.3ternational organizations	26.6	31.9	27.5	27.3	37.3 1 0Finance- Departmental administration and gen-	39. S	45.7	43.8	44-9	60.8eral	
Office of the Comptroller of the	9.4	9.4	9.3	13.7	17.4Treasury	13.3	13.7	14.9	14.9	16.1Interest on public debt	
Cost of issuing new loans and annual amortization of bond discounts and	451.3	476.1	477.9	492.6	522.2commissions	13.1	19.1	23.6	21.1	13.4Servicing of public debt	0.5	0.6	0.8	0.6	0.5Subsidies to provinces	
Compensation to provinces-	20.1 23.8	20.1	20.4	20.3	20.4Tax rental agreements, 1952 Act	
Transfer of certain public utility tax receipts, under tax rental agree-	284.8	309.2	327.4	319.6	365.0ments	4.4	6.8	7.3	7.9	8.0Transitional grant to Newfoundland...	5.6	4.8	3.9	3.1	2.2
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued
(in millions of dollars)
-	1952-53	1953-54	1954-55	1955-56	Estimated 1956-57$	$	S	$	%Finance-concluded	Government contributions with respect	to the superannuation account-	General	13.8	16.4	37.4	31.5	31.638.0	40.8Reduction in actuarial deficiency in	25.0	50.0Grants to universities	5.1	5.2	5.4	5.5	16.0Implementation of guarantees (Ming	1.7	1.6	1.5	3.8	Commodity Prices Stabilization Cor-	0.3	0.1	0.3	0.4	Provision for reserve for losses on	75.0	50.0	50-09J,6.9	971.3	934.0	931.2	1,153.6Fisheries	10.8	9.3	11.2	12.4	14.0Governor General and Lieutenant-Gov-	ernors	0.4	0.4	0.4	0.4	0.4Insurance	0.4	0.4	0.5	0.5	0.6Justice	5.6	5.8	5.9	6.6	7.1Office of the Commissioner of Peni-	tentiaries	9.3	9.2	10.5	10.7	12.314-9	15.0	16.4	17.3	19.4Labour	10.1	9.0	9.4	9.0	9.9Government annuities-amount re-	0.7	0.1	0.4	0-2Unemployment Insurance Act, 1940-	Administration and general	25.1	26.1	28.3	26.0	29.3Government contribution	31.1	31.8	31.7	33.9	37.867.0	67.6	69.8	69.5	77.2Legislation-	House of Commons	4.7	4.2	5.0	5.1	5.3Library of Parliament	0.3	0.3	0.3	0.3	0.3Senate	1.2	1.1	1.4	1.4	1.56.9	5.6	6.7	6.8	7.1Mines and Technical Surveys	12.0	13.0	16.4	17.6	17.2Dominion Coal Board	6.5	10.3	11.8	11.3	9.5Emergency gold mining assistance	11.2	15.2	15.5	9.3	9.099.7	38.5	43.7	SS.2	35.7National Defence-	General	0.3	0.3	0.3	0.5	0.5Defence forces, Army, Navy and Air	services	1,557.7	1,424.3	1,313.8	1,464.9	1,512.2Mutual aid to NATO countries	246.3	300.2	260.0	175.0	133.1Defence research and development....	43.0	40.8	50.0	64.3	70.3Pensions-payments under defence	services pension act	5.1	5.1	5.2	5.3	5.6Government contribution to perman-	ent services pension account	30.0	35.2	36.7	40.1	46.41,882.4	1,805.9	1,666.0	1,750.1	1,768.1National Film Board	2.9	3.0	3.4	4.1	5.0National Health and Welfare	23.0	28.0	28.6	29.1	32.5General health grants	27.3	29.2	31.6	33.5	36.4Family allowances	334.2	350.1	360.5	382.5	397.7Old age assistance, blind and disabled	persons allowances	22.1	23.2	24.2	29.5	30.89.345.8	63.3	56.0406.6	430.5	496.7	537.9	562.7National Research Council	15.4	15.4	15.7	16.1	18.5National Revenue	47.3	49.9	55.0	56.1	62.3
Ths Budget__Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS- Concluded
(in millions of dollars)
-	1952-53	1953-54	1954-55	1955-56	Estimated 1956-57$	$	$	$	$Northern Affairs and National Resources	19.5	19.3	20.2	24.6	37.2Post Office	105.6	113.6	123.6	127.4	141.5.Privy Council including Prime Minister's	Office	3.8	3.7	3.8	3.9	3.9Public Archives and National Library...	0.3	0.4	0.4	0.5	0.6Public Printing and Stationery	1.6	2.0	2.1	2.2	3.3Public Works	83.9	101.5	112.7	126.0	140.4Trans-Canada highway contributions..	14.0	13.4	18.1	16.1	22.097.9	114-9	ISO. 8	142.1	16?.4Royal Canadian Mounted Police	31.1	33.9	35.5	36.6	43.6Secretary of State	2.2	3.3	2.7	3.0	3.4Trade and Commerce	16.5	16.5	17.5	17.6	23 9Assistance re storage costs on grain....	1K Q	16.5	16.5	17.5	86.5	55.7Transport-	Administration and general	3.2	4.2	7.0	8.1	8.4Canal services	9.9	8.4	7.8	8.3	8.2Marine services	21.7	20.3	21.3	20.6	26.4Railway and steamship services	10.5	20.4	26.7	15.3	15.4Maritime freight rates act	10.1	10.5	10.5	11.0	12.5Air services	39.2	41.4	44.7	57.3	71.0Canadian Maritime Commission	4.0	4.2	4.2	4.3	4 8Deficits-	Canadian National Railways	28.8	Canadian National (West Indies)	Steamships Limited	0.6	0.6	0.1	Prince Edward Island car ferry and	terminals	1.5	1.6	1.5	1.6	1.8North Sydney-Port-aux-Basques	ferry and terminals	1.8	2.2	2.2	2.4	5.4Yarmouth-Bar Harbour ferry	0.3National Harbours Board	0.1	Non-active assets-	National Harbours Board	1.9	4.2	3.9	3.0	4.1103.9	118.0	159.2	182.0	158.8Veterans Affairs-	Administration and general	3.6	2.3	2.3	2.2	2.4Pensions	127.1	127.6	128.8	130.7	130.4Treatment and after-care of returned	soldiers and allowances to depend-	ents	78.5	79.5	82.2	92.5	98.4Hospital accommodation, additions,	alterations and improvements	4.0	4.1	3.9	3.5	4.9Post-discharge rehabilitation benefits.	3.8	2.5	2.6	1.8	1.2War service gratuities and re-estab-	lishment credits	10.7	8.9	6.0	3.6	2.5Soldier settlement and veterans land	acts	5.7	5.3	5.4	5.4	5.5Provision for reserve for conditional	benefits under veterans land act	8.0	8.5	8.9	8.8	6.8HI. 4	238.7	240.1	248.5	252.1Total Expenditure	4,337.3	4,350.5	4,275.4	4,433.1	4,866.6
148
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
1953-54
1955-56
Estimated
Loans to, and Investments in, Crown Corporations
Atomic Energy of Canada Limited	
Canadian Broadcasting Corporation....
Canadian Commercial Corporation	
Canadian Farm Loan Board	
Canadian National Railways	
Canadian National (West Indies) Steamships Limited	
Canadian Overseas Telecommunication
Corporation	
Central Mortgage and Housing Corporation	
Commodity Prices Stabilization Corporation	
Crown Assets Disposal Corporation....
National Harbours Board	
Northern Ontario Pipe Line Crown
Corporation	
Polymer Corporation Limited	
The St. Lawrence Seaway Authority.... Other Crown corporations	
8.8
2.0
7.2
4.7
16.0
3.0
1.6
141.8
Cr.
3.7
18.1
Cr.
1.6
72.6
Cr.
0.1
Cr.
Cr.
0.4
98.8
1.2
"oifi
4.4
93.4
3.6
0.3
43.7
Cr.
Cr.
Cr.
11.7
8.4
4.0 4.7
170.7
0.2
4.0 10.4
Cr.
Cr.
Cr.
1.0
Cr.
9.0
0.1
Cr.
Cr.
1.0
[Stage Direction]
Cr.
Cr.
3.0
[Stage Direction]
Cr. 4.0
1.3
20.2
232.5
88.7
Cr. 24.1
214.0
Loans to National Governments
United Kingdom-
The War Appropriation (U.K. Financing) Act, 1942	
The United Kingdom Financial Agreement Act, 1946	
Export Credits Insurance Act	
Other	
Other Loans and Investments
Subscriptions to capital of, working capital advances and loans to international organizations- Canada's subscription to capital of-
International monetary fund	
International Finance Corporation... Working Capital advances and loans to international organizations....
Loans to provincial governments	
Miscellaneous-
Balances receivable under agreements
of sale of Crown assets	
Veterans land act advances	
Other	
Cr.
Cr.
Cr.
Cr.
24.3
14.3
20.6
1.6
Cr.
Cr.
Cr.
Cr.
53.6
14.6 19.4
4.9
Cr. 30.0
Cr.
Cr.
Cr.
14.8
23.6
2.9
Cr.
Cr.
Cr.
Cr.
30.0
15.2
22.4
3.4
Cr.
Cr.
Cr.
Cr.
Cr. 60.8
Cr. 92.5
Cr. 71.3
Cr. 71.0
Cr.
Cr. 29.1
6.3
Cr.
Cr.
Cr.
3.5
0.9
0.5
1.3
Cr.
Cr.
Cr.
3.4
8.5
0.1
0.7
Cr.
Cr.
1.7
3.4
8.0
0.9
3.6
Cr.
Cr.
3.6
11.8
0.6
2.2
Cr.
4.4
4.3
Cr. 34.3
16.1
Sinking fund and other investments held for retirement of unmatured debt...
1.7
74.2
89.0
20.0
Net total of changes in loans and investments	
169.0
74.7
Cr. 40.7
179.1
9.5
"i.o
8.9
154.5
0.2
5.2
6.8
2.5
7.2
1.8
54.5
0.1
231.2
30.0
15.5
21.9
3.4
70.8
Cr.
Cr.
Cr.
Cr.
6.2
3.5
1.0
3.5
8.0
3.4
1.1
Cr.
1.7
0.6
159.3

The Budget-Appendix

[Stage Direction]
Date of
[Stage Direction]
Description
[Stage Direction]
Rate
[Stage Direction]
Annual
[Stage Direction]
maturity
[Stage Direction]
per cent
[Stage Direction]
payable
[Stage Direction]
of loan
[Stage Direction]
interest charges
[Stage Direction]
21 2
[Stage Direction]
$ 150.000.
[Stage Direction]
000 700.000.
[Stage Direction]
000 * 26,450,000
[Stage Direction]
$ 3,375,000 14,000,000 727,375
[Stage Direction]
Nov. 1. . .
[Stage Direction]
Canada savings bonds 1947
[Stage Direction]
2!
[Stage Direction]
Canada
[Stage Direction]
21 3
[Stage Direction]
Canada
[Stage Direction]
250.000.
[Stage Direction]
000 300.000.
[Stage Direction]
000 700.000.
[Stage Direction]
000
[Stage Direction]
5,625,000 9,000,000 14,000,000
[Stage Direction]
1958, May 1
[Stage Direction]
May 1....
[Stage Direction]
Loan of 1955
[Stage Direction]
2
[Stage Direction]
Canada
[Stage Direction]
Nov. 1....
[Stage Direction]
Canada savings bonds 1948.
[Stage Direction]
n
[Stage Direction]
Canada
[Stage Direction]
* 24,350,000
[Stage Direction]
669,625
[Stage Direction]
1959, Jan. 1
[Stage Direction]
Fifth victory loan 1943....
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
947,324,750
[Stage Direction]
28,419,743
[Stage Direction]
Nov. 1. . .
[Stage Direction]
Canada savings bonds 1949.
[Stage Direction]
2!
[Stage Direction]
Canada
[Stage Direction]
* 35,250,000
[Stage Direction]
969,375
[Stage Direction]
1960, June 1. ...
[Stage Direction]
Sixth victory loan 1944
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,165,300,350
[Stage Direction]
34,959,011
[Stage Direction]
Nov. 1.. .
[Stage Direction]
Canada savings bonds 1950.
[Stage Direction]
n
[Stage Direction]
Canada
[Stage Direction]
[DOT] 32,150,000
[Stage Direction]
884,125
[Stage Direction]
1902, Feb. 1....
[Stage Direction]
Seventh victory loan 1944..
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,315,639,200
[Stage Direction]
39,469,176
[Stage Direction]
Aug. 1....
[Stage Direction]
Canada savings bonds 1951.
[Stage Direction]
3*
[Stage Direction]
Canada
[Stage Direction]
* 118,100,000
[Stage Direction]
4,133,000
[Stage Direction]
1963, July 1....
[Stage Direction]
Loan of 1933/34
[Stage Direction]
3
[Stage Direction]
London
[Stage Direction]
(i) 49,833,091
[Stage Direction]
1,494,993
[Stage Direction]
July 1....
[Stage Direction]
Loan of 1938
[Stage Direction]
31
[Stage Direction]
London
[Stage Direction]
(>) 1,978,362
[Stage Direction]
64,297
[Stage Direction]
Aug. 1
[Stage Direction]
Canada savings bonds 1952.
[Stage Direction]
n
[Stage Direction]
Canada
[Stage Direction]
* 134,700,000
[Stage Direction]
5,051,000
[Stage Direction]
Aug. 1
[Stage Direction]
Oct. 1. ...
[Stage Direction]
3
[Stage Direction]
(U 150,000,000 1,295,819,350
[Stage Direction]
4,500,000 38,874,581
[Stage Direction]
Eighth victory loan 1945...
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1965, Nov. 1. . .
[Stage Direction]
Canada savings bonds 1953.
[Stage Direction]
3!
[Stage Direction]
Canada
[Stage Direction]
[DOT] 566,900,000
[Stage Direction]
21,259,000
[Stage Direction]
1966, Sept. 1 -
[Stage Direction]
Ninth victory loan 1945. . .
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,691,796,700
[Stage Direction]
50,753,901
[Stage Direction]
Nov. 1. . .
[Stage Direction]
Canada savings bonds 1954.
[Stage Direction]
31
[Stage Direction]
Canada
[Stage Direction]
* 341,600,000
[Stage Direction]
11,102,000
[Stage Direction]
1907, Nov. 1. ..
[Stage Direction]
Canada savings bonds 1955.
[Stage Direction]
3i
[Stage Direction]
Canada
[Stage Direction]
* 354,700,000
[Stage Direction]
11,577,750
[Stage Direction]
1968, June 15. ..
[Stage Direction]
Refunding loan of 1950
[Stage Direction]
2i
[Stage Direction]
Canada
[Stage Direction]
350,000,000
[Stage Direction]
9,625,000
[Stage Direction]
1969, May 1....
[Stage Direction]
Canada savings bonds 1956.
[Stage Direction]
31
[Stage Direction]
Canada
[Stage Direction]
* 790,000,000
[Stage Direction]
25,675,000
[Stage Direction]
1974,
[Stage Direction]
Sept. 1.... 1975,
[Stage Direction]
Sept. 15... 1976,
[Stage Direction]
June 1.... 1978,
[Stage Direction]
Jan. 15.... 1979,
[Stage Direction]
Oct. 1.... 1998, Mar. 15...
[Stage Direction]
21 21 31 31 31 31
[Stage Direction]
(2) 100,000,000 (2) 50,000,000 300.000.
[Stage Direction]
000 100.000.
[Stage Direction]
000 400.000.
[Stage Direction]
000 250.000.
[Stage Direction]
000 55,000,000 * 1,625,000,000
[Stage Direction]
2.750.000 1.375.000 9.750.000 3.750.000 13,000,000 9.375.000 1.650.000 59,442,500
[Stage Direction]
3			
	Three month treasury bills.	(s) 3.72	Canada		
					
				14,371,891,803	437,301,452
				14,020,080,350 51,811,453 300,000,000	427,117,162 1,559,290 8,625,000
					
					
					
				14,371,891,803	437,301,452
Estimated.
(') Conversion rate $2.80 to the pound sterling.
(') Conversion rate $1.00 Can. to the U.S. dollar. (a) Rate of discount on bills sold March 8, 1957.
[Stage Direction]
Friday, March IS, 1957