1957-12-12

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I ask
the Minister of Transport a question. Have tolls for the St. Lawrence seaway been established pursuant to the St. Lawrence Seaway Authority Act, and if not will he tell the house how it is that a member of the United States tolls committee announced in Washington recently that tolls had been fixed at 50 cents a ton for bulk commodities and $1.25 a ton for general cargo? What I should like to know is whether or not the Canadian seaway authority was consulted and agreed to this announcement?


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I want to thank the hon. member for his courtesy in advising me of his intention to ask this question. There has been no agreement as yet as to tolls as provided for in the St. Lawrence Seaway Authority Act. The seaway authority is not aware of any official announcement from Washington as to the setting of seaway tolls, although references have been made recently in speeches by United States officials to evidence given at congressional hearings when the Wiley-Dondero act was under study. I can assure the house that in so far as the seaway authority is concerned, the quantum of the tolls is still under study. It is not anticipated that the studies can be completed for several months.


Lionel Chevrier: I hold in my hand a press statement announcing the amount of tolls in Washington. I simply ask this supplementary question. Does the minister not think that announcements of this character should be made jointly by the Canadian and United States committee on tolls appointed for this purpose?


George Harris Hees: Yes, I certainly do. I agree with the hon. member.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
George Harris Hees: There seemed to be some confusion about the answering of starred question
No. 48 yesterday. Since that question requires an answer from several departments it is, of course, the responsibility of my colleague the Secretary of State. I know she intended yesterday, had she been here, to ask that it stand. Since it is not possible for her to be here today I thought I would give this explanation to the house.



HEALTH AND WELFARE


[Stage Direction]
article in "Canada's health and welfare"
On the orders of the day:
Mr. F. G. J. Hahn (New Westminster):: Mr. Speaker, I should like to address a question to the Minister of National Health and Welfare. Has the minister's attention been drawn to an article in the publication Canada's Health and Welfare, November issue, entitled "Myopia" written under the direction of J. H. Grove, M.D., in which the position of the optometrist is degraded? If so, does he feel that it is the responsibility of his department to promote one profession as against another?


Hon. J. W. Monieilh (Minister of National Health and Welfare):: I should like to thank the hon. member for having given me notice of his intention to ask this question. The article on "Myopia" in Canada's Health and Welfare, November issue, has been drawn to my attention. I can assure the hon. member that the definition of "optometrist" given in this article is essentially the same as previous definitions given in pamphlets issued by the department in 1947, 1952 and 1955. These definitions were approved by optometrists and officials of associations of optometrists. It is not considered that optometrists have been degraded by these definitions, which are in accord with the facts; nor does this department promote the interests of one profession as against another.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roselown-Biggar):: should like to direct a question to the Secretary of State for External Affairs. Since we have already agreed to supply Western Germany with uranium for peaceful purposes, does the minister believe it to be wise to support the rearming of Western Germany

Inquiries of the Ministry with atomic weapons, or more particularly the stockpiling of guided missiles in that area?


Hon. Sidney E. Smith (Secretary of State for External Affairs):: I should like to take this question as notice.


Major James William Coldwell: Mr. Speaker, may I ask a question supplementary to the previous question I asked. The Secretary of State for External Affairs said he would take my question as notice, which notice I am sorry I did not have time to give him.
May I say this matter has been before the country for some time. Have the government therefore considered these two problems of atomic weapons for West Germany and the stockpiling of guided missiles, and have they come to any conclusion with regard to them in view of the serious nature of these questions?


Sidney Earle Smith: With respect to the placing of nuclear warheads in Western Germany, that matter has been under consideration but as yet we do not clearly know what the position will be at the NATO meeting in Paris. It would therefore be inadvisable and incorrect to make any conjecture as to what our stand would be at that time.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a supplementary question to the Secretary of State for External Affairs. Did I understand him to say the government could not conjecture what its position would be at NATO with regard to the important issue referred to by the hon. member for Rosetown-Biggar? Does this mean that the Canadian delegation is going to the meeting at Paris without its mind made up on this issue?


Sidney Earle Smith: I did not
mean to give that impression. I had in mind that we have not all the papers, nor received all the representations and demands that will be made.


REQUEST FOR RE-EXAMINATION OF MIDDLE EAST PROBLEM
[Stage Direction]
On the orders of the day:
Mr. Alan Macnaughion (Mount Royal):: May I direct a question to the Prime Minister. Will the Prime Minister at the forthcoming meeting of the NATO council include in Canada's general objectives and urge a re-examination of the Middle East problem?


Right Hon. J. G. Diefenbaker (Prime Minister):: I thank my hon. friend for having given me notice of this question. There is

going to be a re-examination of the Middle East problem, I hope, at the NATO council meeting. Naturally all problems that are concerned with the assurance of peace and its achievement will receive attention. I feel confident that I can assure my hon. friend that the Middle East problem will receive every consideration.


PROPOSED U.S. TARIFF ON LEAD AND ZINC- REPORTED REMOVAL OF NICKEL DUTY
[Stage Direction]
On the orders of the day:
Mr. J. A. Byrne (Kootenay East):: Mr. Speaker, I should like to direct to the Prime Minister a question of which I have sent him notice only since I came into the house, for which I sincerely apologize. A New York Times report indicates that the United States may remove the 1J cents per pound tariff on nickel imports in order to mollify Canadians should the proposed lead and zinc tariff be recommended by the President. Will the Prime Minister inform the United States state department that this action could serve no other purpose than to assist the United States consumer, and would in no way compensate for discriminatory action against the base metal industry?


John George Diefenbaker: The hon. gentleman said that he just sent the notice over to me. Attached to it is the press report in question. In reply to my hon. friend I should like to say that after the implications connected with this prospective step have been considered by the government, provided the step is to be taken, the necessary representations will be made to the United States government; and if in essence my hon. friend's conclusions are correct, they will certainly be brought to the attention of the government of the United States.


James Allen (Jim) Byrne: I have a supplementary question. Would the Prime Minister warn the state department of the United States that Canada may be compelled to take drastic retaliatory action if this discriminatory action is taken?


Mr. Speaker:: Order. I doubt whether that question is seeking a clarification of the answer which the hon. member has already had.


URANIUM
[Stage Direction]
On the orders of the day:
Mr. E. G. Hansell (Macleod):: May I direct a question to the Prime Minister. I am sorry I have not given him notice, but perhaps he

could take this question as notice. The Gazette this morning carries a picture of the signing of the trade agreement which was referred to this morning by the hon. member for Rosetown-Biggar (Mr. Coldwell). The caption is:
German ambassador Hazzo von Etzdorf signs a 10-year agreement for the purchase of 500 tons of Canadian uranium to be used as fuel in nuclear power plants. External Affairs Minister Smith looks on.
I have two questions which I would like to ask. First, has this trade agreement been signed without first having been referred to parliament? Second-and this question is based on a contention I have had over the years that one department should not take the responsibility of another-is the Department of External Affairs assuming the responsibility of the Department of Trade and Commerce?


John George Diefenbaker: Mr. Speaker, as far as the general practice is concerned, the government assumes responsibility at all times for the affixing of signatures to trade agreements on behalf of the people of Canada, and that was the course followed in connection with the agreement in question. Any action taken by the Secretary of State for External Affairs represents the opinion, as would naturally be the case, of the government of the day.


Lionel Chevrier: May I ask
the Prime Minister, will this agreement be submitted later on to parliament for approval?


John George Diefenbaker: I think that procedure represents the course that is generally followed, that parliament has an opportunity of giving the fullest consideration to any agreements entered into.



AUTOMOBILES


[Stage Direction]
On the orders of the day:
Mr. D. F. Brown (Essex Wesi):: Mr. Speaker, I have a question for the hon. the Minister of Trade and Commerce, but in his absence I could probably direct my question to the genial acting minister. I do not expect an immediate answer, and perhaps he would take this as notice. Is there any prohibition on the export from Canada of automobiles of Canadian manufacture to communist China or to other Asian countries?


Hon. J. M. Macdonnell (Acting Minister of Trade and Commerce):: Mr. Speaker, I have taken that question as notice.
Inquiries of the Ministry



STATEMENT ON REPORTED EXPANSION OF CANADIAN SALES BY ROLLS-ROYCE COMPANY

[Stage Direction]
On the orders of the day:
James MacKerras Macdonnell: Mr. Speaker, on December 10 the hon. member for Essex West referred to an article in the Globe and Mail of December 6 reporting that the Rolls-Royce company planned to triple their sales target for Canada next year. He asked whether this was a result of the Canadian trade mission to the United Kingdom.
I have now had an opportunity to make some inquiries and to look at the article in question. I understand that the Rolls-Royce company started to intensify their North American sales efforts several months ago. According to the Globe and Mail story the total number of cars which the company hopes to sell in Canada next year is 100. In other words it would appear that they have been selling cars at the rate of about 33 a year. No automobile in this luxury class is manufactured or even assembled in Canada, though several types are imported from the United States. As the Minister of Trade and Commerce has explained to the house on several occasions, the purpose of this mission is to find sources of supply in the United Kingdom for goods now imported from noncommonwealth sources.
To sum up, these plants of the Rolls-Royce company are not directly related to the trade mission, and even if carried out will not have the effect of reducing the production of Canadian-made automobiles to any appreciable extent but will replace imports from other countries.



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, in my continuing search for explanation, inspiration and confirmation I address a question to the Acting Minister of Northern Affairs and National Resources.
In view of the recent statement of the British Columbia provincial leader of the Progressive Conservative party to the effect that the offer made by the federal government to aid British Columbia in the development of Mica creek still stands, would the minister confirm that this represents government policy?


Hon. D. S. Harkness (Acting Minister of Northern Affairs and National Resources):: Mr. Speaker, in view of the fact that I have not seen the statement which is referred to

Inquiries of the Ministry I am not in a very good position to make any comments upon it. I would, however, point out to the hon. member that when the government has an announcement of government policy to make it will be made here '.n this house.


Mr. Pickersgill:: On television.


Douglas Scott Harkness: And not to confirm or deny newspaper reports.


Herbert Wilfred Herridge: As the minister apparently wants time to meditate on the question, may I ask a supplementary question? Does he agree with the statement made by the leader of the Progressive Conservative party in British Columbia to the effect that if the Wenner-Gren development of the Peace river is realized it will be necessary to cast aside the development of the Columbia?


Mr. Speaker:: I think if the hon. member wishes to ask for information as to government policy he ought to ask directly, rather than seek confirmation of a statement made by someone for whom the government has no responsibility.


Herbert Wilfred Herridge: Mr. Speaker, may I explain that I ask these questions because the Minister of Northern Affairs and National Resources was also in the habit of making similar statements when he was a political Elijah wandering in the wilderness.


Douglas Scott Harkness: Mr. Speaker-


Mr. Speaker:: I disallowed the question, and I ask the minister not to deal with it.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Solon E. Low (Peace River):: Mr. Speaker, I want to address this question to the Prime Minister, not that I wish to add to the burdens on his shoulders before he leaves for the NATO conference but because I want to ask him if he will deal with the matter before he leaves.
There is every indication that the inclement weather conditions have brought about a crop situation in the Peace river area which can be described in no other way than as disastrous. The farmers in the area are grateful for what the Department of Agriculture is doing to speed up inspections under the Prairie Farm Assistance Act, but it is now clear that P.F.A. payments will be far short of what will be required as even a minimum of assistance to prevent widespread suffering among the people this winter.
Will the government of Canada join with the province of Alberta in a speedy, thorough

study of the facts of the situation with a view, possibly, to declaring the Peace river district a disaster area, so that adequate help may be advanced to prevent what looks now to be a threat of real want and suffering among the people?


John George Diefenbaker: The government fully realizes what the situation is in northern Alberta and the degree to which that situation has brought grave discomfort and even worse among those living in that area, and I can certainly give the hon. gentleman an assurance that a full investigation into the situation will be made in co-operation with the government of Alberta, to the end that as a result of such an investigation such action shall be taken as will be necessary to meet the position, consonant, of course, with federal responsibility for problems such as this.


Mr. B. R. Leboe (Cariboo):: A supplementary question to the Prime Minister. Does this situation not obtain in the Peace river area of British Columbia as well?


John George Diefenbaker: I was thinking of the Peace river area in general. In so far as the Peace river area in British Columbia is concerned, naturally the government of British Columbia will have to be consulted and its decisions given the fullest possible consideration.



PATENT ACT


[Stage Direction]
On the orders of the day:
Mr. A. B. Macdonald (Vancouver-Kings-way):: Mr. Speaker, I should like to direct a question to the Secretary of State or, in her absence, to the leader of the house. May I ask when the report of the royal commission on patents, copyrights, trademarks and industrial design, relating to copyright only, will be available? I ask this in view of the fact that we were advised on October 28 it would be available in about two weeks, and because this is a matter of concern to some publishers.


Hon. Paul Comtois (Acting Secretary of State):: I will take notice of the question, Mr. Speaker.



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. Ambrose Holowach (Edmonton East):: Mr. Speaker, I wish to direct a question to the Minister of National Defence. Could the minister give information to the house with respect to the fire which destroyed No. 5 hangar at the Edmonton municipal airport

Tuesday evening, the extent of the loss, and what steps are being taken to investigate the cause?


Hon. G. R. Pearkes (Minister of National Defence):: Mr. Speaker, a fire occurred at the municipal airport in Edmonton on December 9. The fire took place not in the hangar but in a building which was used by the air cadets. The building was completely destroyed in spite of the efforts made by the Edmonton fire brigade. There was no loss of life and no personal casualties, but a certain number of uniforms and training aids were lost. The building had been originally constructed by the United States air force during the war, and I understand it was a frame building. The amount of the loss has not yet been determined, but a board of inquiry has been set up.



PIPE LINES


[Stage Direction]
On the orders of the day:
James MacKerras Macdonnell: Mr. Speaker, yesterday the hon. member for Port Arthur asked the following question:
Has the minister received any representations on the price offered subcontractors for clearing work on the right of way of the Northern Ontario Pipe Line Crown Corporation, and if so, what is the subject matter of such representations?
The answer is that I have received no representations myself, and I am informed that no approach has been made to the officials of the Northern Ontario Pipe Line Crown Corporation on this subject. I also understand that the Minister of Trade and Commerce himself has not received any representations regarding the matter.



CANADIAN NATIONAL STEAMSHIPS


[Stage Direction]
On the orders of the day:
Mr. C. E. Johnston (Bow River):: Mr. Speaker, I would like to direct a question to the Minister of Transport. I have not given him notice of the question, but I am sure he is so conversant with the topic that he will not need any notice in order to answer the question.
It was stated over the radio the other day that the officers in charge of the eight C.N.S. ships which are finding things difficult lately have refused to operate the ships if they are manned by scab crews. Will the minister make a statement and tell us exactly what is the situation now regarding those ships?
Inquiries of the Ministry


George Harris Hees: Mr. Speaker, I have not the further newspaper report which appeared, I believe, the following morning under the heading of the Canadian Press, and which was completely opposite to the original report. It stated that those officers were quite willing to sail under foreign registry.


Lionel Chevrier: May I ask
the Minister of Transport a question supplementary to the one asked by the hon. member for Bow River. In view of the statement by the minister on November 11 that in transferring the flags of these ships from Canada to Trinidad, and in the consent which the government gave to the transfer, it was thought that would be the best method by which to administer the service to the West Indies, and in view of the fact it is over a month now since this has taken place, has the minister any idea as to when the service will be administered or restored?


George Harris Hees: The answer, Mr. Speaker, is no.



PENSIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Transport. Has the minister had an opportunity to read the letter he received from the Canadian National Railways veterans association of Vancouver concerning the need for an increase in the pensions of retired C.N.R. employees? Can the minister say whether his department is reviewing, digesting, studying and working on this material, in the same way the Minister of Finance said his department was working on the suggestion for an increase for retired civil servants?


George Harris Hees: I have not yet received that letter, but I know the management of the Canadian National Railways is always studying any possibilities there are for bettering the rates of pay or pension conditions for their employees.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Hon. Paul Martin (Essex East):: Mr. Speaker, I should like to ask the Minister of Justice whether, in view of the fact that the chief justiceship of Ontario has been vacant now
2246	HOUSE OF
Canada Savings Bonds
for a number of months, he is in position to say whether we may expect an announcement as to who shall occupy that position, and whether that announcement may be made at an early date?


Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, the hon. gentleman will, I am sure, realize that appointments of chief justices are within the purview or prerogatives of the Prime Minister; therefore I cannot make any statement on that matter. Any definite statement must come from the Prime Minister; but I know I am safe in saying that the hon. gentleman and the house may expect that appointment to be made just as soon as possible.



PRAIRIE FARM REHABILITATION


[Stage Direction]
On the orders of the day:
Mr. F. S. Zaplitny (Dauphin):: Mr. Speaker, I should like to address a question to the Minister of Agriculture. I have not given notice, and he may wish to take this as notice. Has the minister received any requests from the government of any of the prairie provinces for an extension of the designated area under the Prairie Farm Rehabilitation Act? If so, has the minister taken any action to meet such request?


Douglas Scott Harkness: Mr. Speaker, I do not recall that I have received any representations from any of the governments of the three prairie provinces in this regard. I have received requests in regard to it from various individuals, boards of trade and other organizations.



FINANCE


Mr. Speaker:: Has the Minister of Finance leave to revert to motions?


Some hon. Members:: Agreed.


Hon. Donald M. Fleming (Minister of Finance):: Thank you, Mr. Speaker. I am sure the house will be pleased indeed to know that the sale of Canada savings bonds in the twelfth Canada savings bonds series has reached by far an all-time record. Sales recorded up to the 10th day of December stood at $1,169,421,000. It has, therefore, been decided that the bonds should be withdrawn from sale on December 31. Applications for purchase made prior to that date on arrangements for deferred payment will not be affected by this withdrawal.


An important part of the Canada savings bond sales and an increasingly important component of new cash sales arose from the operation of the payroll savings plan. Indeed, sales under the payroll savings plan in the present series, Mr. Speaker, reached an all time record. They now touch the figure of $215 million.
I wish to take this opportunity to acknowledge the service rendered by thousands of Canadian employers who provide the leadership and meet the accounting expenses involved in the pay deductions through sales to 700,000 Canadian employees. This all but unanimous support from business circles for Canada savings bonds reflects a high and farsighted sense of community and national interest.
I wish to acknowledge also the energetic effort of investment dealers, banks, trust and loan companies and many other savings institutions in pushing series 12 sales to a new peak; and to newspapers and other mediums of information for their support of the campaign.


Major James William Coldwell: May
I ask the minister a question. In view of the very satisfactory results nationally, would it be possible for him to give us a breakdown of these sales by provinces? This would give us, I think, some indication of the distribution of wealth in the country, and some idea of the strength of the economy in the various provinces of the dominion.


Donald Methuen Fleming: Mr. Speaker, perhaps my hon. friend would be content to leave that matter until the closing of the campaign on December 31. I shall be very glad then to furnish any information on breakdowns that may be available and that may be desired by hon. members.


Mr. Speaker:: Hon. members may be interested in knowing, in this connection, that the employees of parliament have oversubscribed their objective.


Hon. George C. Marler (St. Antoine-West-mount):: May I direct a question to the Minister of Finance. Could he tell us how much of the total he mentioned a moment ago as subscribed represents new money, and how much represents the proceeds from other Canada savings bonds that have been turned in for conversion?


Donald Methuen Fleming: Perhaps my hon. friend would allow me to give this figure precisely at the conclusion of the campaign. The present bond attracted, naturally, a substantial volume of trade-ins. There have always been trade-ins, and it is not always possible to segregate the particular amount because these trade-ins

go on throughout the whole year. It is not possible, therefore, to segregate any amount and attribute it particularly to the new campaign. If my hon. friend would wish it, I could give a breakdown of that information at the conclusion of the campaign, giving the figures on trade-ins of the old series say for the last three months of the present calendar year.


George Carlyle Marler: I was hoping the minister might be able to give at least an approximate idea. Otherwise there would be a rather false impression created by the amount of sales he has just given, unless we knew approximately vhat was the proportion of conversions.


Mr. C. A. Cannon (Iles-de-la-Madeleine):: May I ask a question of the Minister of Finance. Is it not a fact that the regulations concerning the sale of these bonds have been changed, and that the amount one individual can purchase has been increased? It seems to me I saw that somewhere.


Donald Methuen Fleming: Yes, I announced that in the house at the opening of the campaign. The maximum permissible subscription by any one individual was raised from $5,000, as in the last several campaigns, to $10,000.


Charles-Arthur Dumoulin Cannon: That probably had some influence on the fact that sales have increased?


Donald Methuen Fleming: It may have. I do not believe anyone could give a categorical answer to that until we have a breakdown, at the conclusion of the campaign, of those subscriptions that were in excess of $5,000.


Charles-Arthur Dumoulin Cannon: Is the minister thinking of increasing the maximum amount to $20,000?


Donald Methuen Fleming: Mr. Speaker, the minister is thinking of closing the present campaign.



CANADIAN AND BRITISH INSURANCE COMPANIES ACT


[Stage Direction]
The house in committee on Bill No. 169, to amend the Canadian and British Insurance Companies Act-Mr. Fleming-Mr. Rea in the chair.
On clause 1-Provisions applicable to all companies.
Donald Methuen Fleming: Mr. Chairman, perhaps I might say very briefly that on second reading in the house I explained the purposes of the bill. Following second reading the bill was referred to the standing committee on banking and commerce, where the clauses were reviewed in detail and the bill reported
Insurance Companies Act without any amendment. Before the committee the superintendent of insurance, Mr. MacGregor, was present and answered questions of hon. members. Counsel was present for the life insurance companies, although he made no representations to the committee. I think I am correct in saying, Mr. Chairman, that the bill was reported by the committee with unanimous approval.


Mr. Benidickson:: I made some comments with respect to this bill at the second reading stage, and those remarks can be found at page 1865 of Hansard for December 4. As the Minister of Finance has stated, I would say this bill was given careful consideration by the committee on banking and commerce, clause by clause. While the committee was sitting I asked the superintendent of insurance, Mr. MacGregor, if the department had heard from the insurance companies with respect to the terms of this bill. He said, as reported at page 27 of the minutes and proceedings of evidence of the banking and commerce committee:
My advice from the industry, Mr. Benidickson, is that they give this bill complete support, and I can say that we in the department have not received a single complaint either from a company or the industry as a whole, or anyone else.
The terms, as hon. members realize, are, with slight exception, permissive terms which permit a discretion with respect to changes in the law, and are not mandatory. There was no dissent in the banking and commerce committee, and I have no remarks to make beyond those I made on December 4.


[Stage Direction]
Clause agreed to.
Clauses 2 to 6 inclusive agreed to.
Title agreed to.
Bill reported, read the third time and passed.


Donald Methuen Fleming: the second reading of Bill No. 194, respecting the Buffalo and Fort Erie Public Bridge Company.
He said: Mr. Speaker, I think the house would probably wish to have a very brief word of explanation of the bill. I should like to stress in the first place that this is an urgent bill, it is not a routine bill by any means. The urgency arises out of the fact that under legislation of the state of New York the United States representation on the bridge authority will become five members effective as of January 1 next, that figure
2248	HOUSE OF
Buffalo and Fort Erie Bridge having been in effect a reduction from six under legislation that was introduced and passed in the legislature of the state of New York without reference to Canada.
Following representations that were made, further legislation was passed by the legislature of the state of New York reducing the United States appointees from six to five in number effective as of January 1, 1958. Canada has had three representatives on this authority up to this time, and it is necessary to enlarge Canadian representation from three to five in order to bring it into equal numbers with the United States representation on the authority. There are, of course, other provisions in the bill.
May I say also that it is my intention to propose that following second reading, the bill be referred to the standing committee on railways, canals and telegraph lines.
May I indicate to the house some of the circumstances which have led to the introduction of the bill. Briefly, it proposes to amend an act which was passed by parliament in 1934 concurrently with United States legislation to establish an authority to operate a bridge constructed in 1927 between Fort Erie and Buffalo, known as the Peace bridge. The 1934 legislation permitted refinancing, and provided that when the existing indebtedness was repaid that part of the bridge lying within the territory of Canada would revert to this country. A similar provision in the New York legislation provided for the reversion of the property in the United States to the state of New York.
Since 1934 this authority has had a highly favourable record in financial terms and in terms of service performed, and I think it can be said that there was considerable satisfaction, from the Canadian side at least, with the record and performance of the authority. However, by 1962 the retirement of the bonded indebtedness would, under the terms of the 1934 legislation, force the wind-up of the existing authority. Accordingly, some consideration of the future management of the bridge was bound to arise.
In addition, from the Canadian point of view, Canadian representation on the bridge authority was a minority position consisting of three members out of a total of nine. In the normal course of events these matters would not have been expected to arise until sometime in the 1960's, just prior to the normal expiration of the present arrangement. However, about 1955 the city of Buffalo and the adjoining counties were much concerned about the development of the port of Buffalo to take advantage of the increased shipping anticipated as a result of the St. Lawrence seaway development.


A scheme to apply the net profits of the bridge for Buffalo port expansion was proposed, and this resulted in enactment by the legislature of the state of New York in 1955 of a statute creating the Niagara frontier port authority. Of interest to Canada was the fact that this statute placed the Peace bridge and its revenue under this authority. The statute also provided that out of a 12-man authority three would be Canadians, with the right to participate in matters affecting the bridge only. Canada was not consulted concerning this enactment.
Almost immediately following this enactment this oversight was appreciated within the state of New York, and an opinion by the attorney general of the state was given to the effect that such changes could not be effected without the consent of congress and the parliament of Canada. This, of course, was also the position of the Canadian government.
Following this, representatives of the government of the state of New York and the city of Buffalo, with the support of the United States embassy, sought the approval of Canada for the proposed changes. It was stated that the port authority could not function unless it included the bridge project. It was also stated that the terms of the trust indemnity which accompanied the issue of the bridge bonds made it necessary that the bridge and the port be included under one authority if the New York share of the bridge revenues was to support the project.
This request was considered and, while there was a desire to maintain the tradition of co-operation between the two countries, the conclusion was reached that the New York state proposals, as embodied in the Niagara frontier port authority statute, were unacceptable. It was, however, recognized that the United States did have a half ownership interest in the bridge, and therefore had the right to request an alteration in the status of the bridge if they so wished. It was also recognized that because of the reversionary clause some new arrangements would have to be worked out for the period subsequent to 1962, as I mentioned earlier, and that Canada would want action to increase the Canadian representation on the authority from the present position of three members out of nine. Accordingly, the United States embassy was informed that while the proposal was unacceptable, Canada was prepared to discuss appropriate alternative arrangements for the future.
Discussions at the official level followed, and on November 23, 1956, in a further note to the United States embassy, Canada outlined certain principles which it felt should

govern any future arrangements for the operation of the bridge. These were:
1.	The control and management of the bridge should be vested in an international commission composed of equal representation from Canada and the United States, with the chairmanship alternating between Canada and the United States from within this membership.
2.	The control and operation of the bridge should be kept separate from any other Canadian or United States interest.
3.	The first charge on all revenues of the bridge must be the normal operating costs, the amount required annually for normal maintenance of the structure and its auxiliary buildings on both approaches, and the annual cost of such capital works as are required from time to time to accommodate the traffic seeking to use the facility.
Canada also stated its view that any excess or net revenue, after the charges referred to in (3) above had been met, should be divided equally as between the two countries, to be paid to agencies designated by the appropriate legislative bodies.
These principles were ultimately agreed upon, and it was further agreed to retain the existing authority, with suitable alterations, as the best means of implementing the principles. The most important alteration, from the Canadian point of view, was an increase in Canadian membership on the commission to five, or a position of equality, with the additional provision that the chairmanship would alternate annually between a Canadian and a United States member of the commission.
Other arrangements were to provide for the control of increases in tolls, in Canada to be subject to the authority of the board of transport commissioners, and the purposes for which tolls were to be levied. The current and future capital needs of the bridge were to be provided for by the creation of a capital improvements reserve fund into which would be paid a rising percentage of the gross receipts of the bridge up to 14 per cent per annum.
Finally, in accordance with the principles outlined earlier, it was agreed that it would be provided that any net revenues would be distributed in equal shares between Canada and the United States.
These agreed changes were embodied in amendments to the existing New York state act which created the Peace bridge authority. These were passed by the New York state legislature at its last session, and the first version of the Niagara frontier port authority act suitably amended to remove provisions
Buffalo and Fort Erie Bridge touching on the Peace bridge. A concurring resolution approving the arrangements has been passed by the United States congress.
The bill before this house will, if enacted, complete Canada's part in the arrangements by amending the existing Canadian statute to provide for increased Canadian membership from three to five, for the receipt of 50 per cent of the net revenue from the operation of the bridge, and for extension of the life of the authority until January 1, 1992. This date will provide a period which, taking into account the time necessary for legislative passage and suitable terms of bond issue, and so forth, has been agreed as a suitable period to provide a reasonable life for the authority and yet provide an opportunity for review by both countries in the future.
This bridge, as members will appreciate, is important to Canada because of its role as an economic artery, as a link between Canada and the United States, and as an important customs port of entry. It is also, of course, of considerable direct importance locally as a large employment factor in the town of Fort Erie and surrounding municipalities, in addition to its transportation value.
In this connection the capital works program of the bridge is of considerable national and local importance. A number of important projects, on the Canadian side particularly, require completion. It will be the policy of the Canadian government, through its representatives on the authority, to ensure that the capital works required by the bridge are completed within a reasonable period of time. The capital improvements reserve fund, to which I have made reference, will ensure that not only these works but any others that might be required in the future can be financed either on a cash accrual basis, which has been the policy of the present authority up to now, or by a new loan in one form or another when the existing bond issue has been recalled, whichever in the opinion of the new authority members seems to be in the best interests of the bridge, taking all factors into account.
Finally, the 1934 statute, which this bill proposes to amend, provides in section 11 that the bridge and its real property in Canada shall be subject to assessment and taxation by local authorities. I understand that a satisfactory arrangement for taxation, worked out between the town and the bridge authority, has been in effect for several years and will run into 1962, when it is presumed new arrangements would be worked out. I am sure the house will be pleased to know that it is not proposed to disturb this situation,
2250	HOUSE OF
Buffalo and Fort Erie Bridge and nothing in the amending bill before us will limit or affect this liability to taxation. It has been provided, however, that an amount equal to any amount which may be paid in the way of taxes to a Canadian government entity will be paid to an entity designated by the state of New York.
I should like also, on this occasion, to comment on the spirit of co-operation exemplified by these arrangements. While there were earlier misunderstandings that might have produced more serious problems, these did not long survive once discussions between representatives of both countries took place. From that point on one cannot speak too highly of the attitude taken by the United States representatives, both at the federal and at the state level.
In conclusion, therefore, I would like to say that taking into account the international character of the situation, the arrangements for the future of the bridge appear to be reasonable and efficient and in the interests of Canada. If of course, any problems arise in the operation of the bridge when the new authority has been constituted and has taken office, those matters can be considered and discussed. Any that involve international negotiations can be considered in the light of the circumstances arising from time to time.
May I remind the house, Mr. Speaker, that following second reading it is proposed to refer the bill to the standing committee on railways, canals and telegraph lines.


Mr. W. L. Houck (Niagara Falls):: Mr. Speaker, may I at the very outset compliment the Minister of Finance on his very fine presentation of the contents of this bill. I want also to say that last night, when the leader of the house announced the legislation which would confront us today, somebody said "important legislation!". The Minister of Finance very rightly answered that it was very important and as he has so correctly pointed out in his introductory remarks, it is particularly important because it goes into effect on January 1, 1958.
Naturally, as the member for that riding which represents Fort Erie in this house, I am vitally interested in this measure, so I hope hon. members will bear with me, as I am not a time waster, if I take at least a few minutes in making some remarks about this bill which is before us at the present time.
I would like first of all, Mr. Speaker, to say that because I am the member for this riding I have had many talks with the ministers of the previous government and of this government, especially the two ministers


most vitally concerned, the Minister of Finance and the Secretary of State for External Affairs, the ministers of the Canadian government who dealt with the proposal to place the Peace bridge under the control of the Niagara frontier port authority.
When this port authority was set up, as the minister so rightly said, it was intended to go ahead with this measure without much consultation with the Canadian government, and I want to say that the action of the Canadian government has cemented the friendship which now exists between the state of New York and the province of Ontario and indeed between the United States and the Dominion of Canada.
I have repeatedly seen reports in the press that the Canadian officials felt resentment over this proposal and the way it was raised, but I can assure the members of this house that this is not so. The Canadian ministers in the previous government and in this government as well, in addition to their officials, recognized the right and propriety, and if you like the duty, of the officials of the city of Buffalo and the state of New York to anticipate the day when the state of New York would obtain title to that portion of the Peace bridge which lies within New York territory. The approach of the Canadian ministers was one indeed of complete good will but, of course, being servants of the Canadian people, those officials had to bear in mind the requirements of public opinion in that part of Canada which is most closely affected.
Unrestricted good will could not, therefore, be their only consideration. May I say that plans for a bridge were made during the first great war, but in 1920 the United States congress appointed a commission to inquire into the possibility of building a bridge across the Niagara river. That commission found at that time that the bridge could not be financed by government appropriation, as the citizens' committee had originally hoped. Consequently a private company with a capital of $4 million was formed in New York in the year 1920 by an act of the state legislature to build such a bridge.
The parliament of Canada passed a similar bill in 1923 incorporating a Canadian private company with a capital of $3 million, and gave it permission to amalgamate with the New York company. In the discussions in parliament at that time Mr. McGiverin, who was one of the principal supporters of the bill, emphasized that the company was to be one of public enterprise, an enterprise undertaken by public-spirited citizens in both countries, with the idea that the state of New York and Canada would eventually take over the assets of the company.

As was anticipated when the legislation was passed, the two private companies did amalgamate in 1925 into one company with a total borrowing power of $6 million. Each of the directors subscribed to $50,000 of the capital stock of the amalgamated company, and the public bought about $5 million of bonds, which at that time were paying interest of 7 per cent and 8 per cent. This rate of interest naturally appears high at the present time but was presumably in accordance with the prevailing rates at that time.
The company experienced considerable difficulty in getting started. Its first plans calling for a low level bridge were not approved, and it had to prepare fresh plans to provide for clearance for shipping at the New York end. It then had to secure the consent of the international joint commission. This was given, and construction got under way in 1925. The bridge was opened for traffic on June 2, 1927, and was dedicated on August 8, 1927, by distinguished personages from each country; the vice president of the United States and the Prince of Wales.
During the great depression the bridge company began to run into financial difficulties and was unable to try to attract increased traffic by lowering its tolls because of the high rate of interest on its bonds. The company therefore sought new legislation in New York and Canada to create a public bridge authority which would take over the obligations and assets of the company, carry out a financial reorganization, and provide for the retirement of further debt. The legislature of New York passed such an act in 1933 and the parliament of Canada in 1934. The congress of the United States passed legislation required under the constitution of the United States, as it had done in 1923, to consent to what amounted to a compact between the state of New York and a foreign country.
This legislation of 1933-4 is the legislation under which the present Buffalo and Fort Erie public bridge authority operates today. It is therefore worth some examination. Six of the nine members of the authority are appointed by the governor of New York and three by the Canadian government. The legislation of 1933-4, like that of 1922-3, provides for the day when the indebtedness of the bridge shall have been paid off, by creating reversionary interests in the bridge for the state of New York and Canada respectively.
People in Canada have, by and large, been happy with the way the Buffalo and Fort Erie public bridge authority has carried out its duties. The gentlemen who have served on this authority during the last 22 years 96698-143
Buffalo and Fort Erie Bridge have served without salaries. They have maintained the bridge in first-class condition. They have improved the facilities tremendously, and are still carrying out improvements. They have refinanced the bridge at a very low rate of interest, and they have paid off all but a million dollars of debt.
I want to say now, Mr. Speaker, that a little less than a year and a half ago I accompanied a delegation from Ottawa of which the chairman was the hon. member for Kenora-Rainy River (Mr. Benidickson), the then parliamentary assistant to the minister of finance, along with officials from the Department of Finance and the Department of External Affairs, and I am sure they found their two days' visit to Fort Erie and the surrounding district pleasant beyond their expectations. I am also sure they found that the commission was carrying on the running of the bridge in a fine, orderly way, the way in which Fort Erie would wish it to be run, in the best interests of Canada. The delegation met at that time the chamber of commerce and other organizations vitally interested in the operation of the bridge. That committee left a very fine impression on the vicinity of Fort Erie.
Mr. Speaker, I should certainly at this time be remiss if I did not acknowledge a debt of gratitude to John MacDonald of the Department of Finance who, I think, did a tremendous job in conducting these talks between New York state and the Dominion of Canada. When dealing with international subjects one has to be very careful. I found that out myself, having burned my fingers a couple of times in dealing with this bill. But Mr. MacDonald was always most helpful and well informed, and I wish to say to his credit that he achieved practically everything we wanted as far as the Peace bridge is concerned, so that we in Fort Erie owe him a debt of gratitude. He carried out a difficult job in a fine manner, and we appreciate it.
If there has been any quarrel in Canada with the present bridge authority it has been the result of the improvement of the bridge's facilities. Many people have felt that less should have been put into improvements and more into retiring debt in order that the tolls on the bridge might be reduced or abolished.
When copies of the Niagara frontier port authority act were received in Ottawa, they were considered first by government officials. To consider the matter intelligently they had to dig into old files to learn the legislative history of the Peace bridge. They had to look into the circumstances surrounding the legislation. They had to try to understand the Niagara frontier authority act, which is written in a different style from Canadian

Buffalo and Fort Erie Bridge laws and which contains many technical expressions which are not used in Canada. A deputation of officials, elected and otherwise, from New York state and the city of Buffalo visited Ottawa and at an informal meeting explained the act.
I referred earlier to the belief of some people that the present bridge authority ought to have concentrated on paying off the bridge's indebtedness rather than on improving its facilities. Certainly there are many people who would like to see the present scale of tolls reduced, and there would be virtually universal opposition to an increase in tolls. The possibility that tolls would be increased in certain circumstances if the bridge came under the control of an organization created for non-bridge purposes has been a source of worry to many organizations in Canada. The town of Fort Erie has been concerned in this regard, and so have trucking associations, to name only two.
I may say, Mr. Speaker, that we were concerned, as the Minister of Finance has said, about the buildings on this side of the bridge. Years ago we received many complaints about conditions on the United States side because they could not handle the traffic adequately. I have seen that bridge on many a day, especially at week ends and on holidays, so crowded that traffic was backed up for a mile or two in Fort Erie because of the inability of United States officials to handle the traffic as far as customs and immigration were concerned. Within the last two or three years the United States has spent $1,500,000 in correcting that situation, and we feel that in order to escape criticism which, indeed, would be justifiable criticism, we should go ahead to make necessary alterations on the Canadian side to enable traffic to be handled in the best possible way.
You will realize, Mr. Speaker, that when traffic has been tied up for an hour or two people get excited, and once they have succeeded in getting through the traffic they try to make up for lost time with the result that accidents often occur. I am sure that with the facilities and the protection provided by this bill we will be able to go ahead with the necessary alterations on the Canadian side. In fact some of the most important works are under way right now.
Hon. members may be inclined to ask what more the Canadian government could want than an equal voice in running the bridge, an equal share of the profits, and the knowledge that its expectation of future clear ownership of the portion of the bridge situated within Canadian territory is completely guaranteed by Canadian law.
There was, however, one additional factor which weighed, I think, very heavily. The

present bridge authority is a corporation created by the laws of the state of New York and given certain powers and privileges- and, I might add, duties-within Canada by Canadian law. It is, however, essentially a private company and one which confines itself to providing an international service, namely a means of crossing the Niagara river through which the international boundary runs.
The Niagara frontier port authority, on the other hand, is a corporation created for a public purpose essentially of a municipal nature. It is designed to improve the port of Buffalo. This is a very worthy purpose, but it is not an international purpose.
The Canadian government considered that it would be unsuitable for it to appoint members to the governing board of a corporation which is designed to serve the municipal purposes of the city of Buffalo and neighbouring communities. The Canadian government clearly understood that the members it might appoint would be serving solely with respect to the Peace bridge, but the fact remained that they would in law be members of a corporation the purposes of which were municipal, not international.
I think it is hardly necessary to explain why the Canadian government was not prepared to agree that the Peace bridge as a whole should be managed and operated by the Niagara frontier port authority. The Canadian government would not have been able to explain to the Canadian people why it had abdicated its duty to protect Canadian interests in this important international facility.
From the foregoing review it would be reasonable to assume that when it had decided that it could not agree to the proposal to place the whole Peace bridge under the Niagara frontier port authority, the Canadian government might have been content to leave the present law to run its course. I am not in a position to interpret the laws of New York state, but I know the attorney general of the state of New York was of the opinion that the present status of the Peace bridge cannot be changed by action of the New York state legislature alone; action by the parliament of Canada and the congress of the United States is said to be required. I believe there is no doubt that under Canadian law the status of the bridge cannot be altered without fresh legislation by parliament. It would therefore have been possible in theory for the Canadian government to content itself with a negative answer.
In practice the Canadian government was not ready to do this, because it would have been an unneighbourly act. The city of Buffalo and surrounding municipalities have

indicated their wish to create the Niagara frontier port authority. The state of New York, acting through its legislature and its governor, has approved their wish. Obviously if they want one thing and we want another we must as neighbours living side by side, reach some compromise which will permit them to have the essential part of what they want without substantially injuring Canadian municipalities to which the bridge means so much.
Consequently the Canadian government offered a compromise, as it said in its official reply, "in a spirit of co-operation". The Canadian government would probably have been content to let the law take its course and operate the bridge under some future agreement on a toll system designed to pay the cost of maintenance, operation, improvement, and replacement. It has expressed its readiness instead to co-operate with New York state in paying off the outstanding indebtedness of the bridge out of accumulated surpluses, in terminating the present bridge authority, if that turns out to be desirable, and in operating the bridge thereafter under either one of two systems. Either the bridge could be operated by a fresh bridge authority, or by some modified continuation of the present bridge authority, which would devote itself to the bridge but divide the profits equally between the two countries to use as they please, subject to the requirements of the bridge itself; or, and this might be less practicable, it could be operated on two halves under some sort of working agreement under which of course they would have control of their share of the profits for the maintenance of the bridge and other purposes.
Representing the riding I have the honour to represent, naturally I have had many talks and conferences not only with the chamber of commerce but with the Fort Erie council as well, who are vitally interested in this project and in this bill. I am very happy, as the Minister of Finance explained so well, that the new bill does provide for equality of members on the board. I believe this is provided in clause 1, subclauses 1 and 2.
I think it is only right that we should have equal representation. The Rainbow bridge, which is the bridge between Niagara Falls, New York and Niagara Falls, Ontario has a commission of six members, three of whom are from the state of New York and three from the province of Ontario. This has worked out exceptionally well since it inception. Since the opening of the Peace bridge in 1927 I felt strongly that it had been wrongly set up in having a commission of six members from the United States side and three from Canada.
Again I pay my respects to Mr. MacDonald, through whose wonderful diplomacy when 96698-H3J
Buffalo and Fort Erie Bridge conferences were taking place regarding equal representation on the commission we were able to get the New York state authorities to agree to the establishment of a commission consisting of ten members, five from either side of the border. By his splendid arguments before the New York state authority he was able to obtain an agreement that the chairmanship would alternate between the Canadian and United States sides every year. Ever since the inception of the Peace bridge we have had a permanent chairman from the United States and a vice chairman from Canada, whereas at the Rainbow bridge they have always alternated in drawing their chairmen from New York and Ontario. I am sure the arrangement under this new bill will work out very effectively not only for Fort Erie but for Canada as well, with the alternation of the chairman and vice chairman.
The Peace bridge in 1955 carried almost 4 million cars; almost 40,000 buses passed over the bridge, and 156,000 trucks. The capacity of the bridge is approximately 75,000 vehicles per 24-hour day, and during the tourist, race track and commuter season the bridge operates at about 55 per cent of its capacity. May I just add that one day last July we had an all-time record for traffic crossing the Peace bridge between Buffalo and Fort Erie of more than 43,000 vehicles during the 24-hour period.
I know the government will accept my next comment in the spirit in which it is made. The expansion program, designed to improve facilities and the capacity of the bridge, means the creation of more jobs for customs department men, immigration officers, bridge maintenance staff and allied customs brokerage firms and transport company men. This additional employment will be welcomed in Fort Erie.
Now just a word concerning the fact that this bill increases the membership representing Canada on the commission from three to five members. I definitely feel that the five Canadian appointees to the board should be strong personalities, closely identified with the economic welfare of the Peace bridge area in addition to the over-all Canadian interest in the Peace bridge. I well realize that the present government has the power to appoint these five commissioners, and when visiting my riding over the week ends I hear wild rumours as to who are to receive these appointments.
Might 1 say here, and I think I should say, that never once, at least to my recollection, did the Liberal party ever attempt to remove any man from the Peace bridge commission because he was not an adherent to our party. I think the present three commissioners, and

Excise Tax Act
I will admit they are Liberals, are three strong men who have served for years without remuneration and have as well served to maintain for the Peace bridge a mighty fine reputation of fairness. It is a commission that has always done its best to handle traffic in the way it should be handled.
Years ago during the inception of the bridge a very strong Conservative from Welland was the solicitor; it is not my intention to mention any names. Upon his death another strong Conservative from Welland was appointed solicitor for the bridge, and upon the unfortunate death of this solicitor we then had appointed a solicitor from Niagara Falls who was known as an adherent of the Liberal party. However, the two former solicitors were very strong Conservatives, and no attempt was made to remove them before they had been called to their just reward. A very fine Conservative member of the Ontario legislature also served on that commission, and no attempt was made to remove him until he passed away. It is my firm belief that if this new government attempted to remove these three commissioners they would be starting a patronage machine in a field where the Bennett government, the King government and the previous Liberal administration never interfered.
Again, Mr. Speaker, I pay my respects to the previous government, to the officials of the previous government and to the officials of this government, the Minister of Finance and his parliamentary assistant, for the very fine way they have handled an international subject of vast importance to Fort Erie. Because of that exceptionally fine handling they have increased that splendid spirit of good will which exists between our two countries.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on railways, canals and telegraph lines.

Donald Methuen Fleming: the second reading of Bill No. 231, to amend the Excise Tax Act.


Donald Ferguson Brown: 
Donald Methuen Fleming: Mr. Speaker, I am rising on a point of order. This is not the first time this matter has been raised in the house. It will be recalled that the same statement has been made-


Paul Joseph James Martin: Mr. Speaker, this is not a point of order.


Donald Methuen Fleming: -and it will be recalled that when this statement was made in the house the Prime Minister rose in his place and denied he had said it.


Paul Joseph James Martin: I rise on a point of order-


Donald Methuen Fleming: He denied he had said the tax would be removed.


Paul Joseph James Martin: Mr. Speaker, I rise on a point of order.


Donald Methuen Fleming: The hon. member should not repeatedly attribute something to the Prime Minister which the Prime Minister has said he did not say.


Paul Joseph James Martin: Mr. Speaker, the hon. member for Essex West was speaking when the Minister of Finance said he had a point of order to raise. The minister made a statement, and it was not a point of order. It was a comment on what the hon. member for Essex West had said. I do not think he should have been allowed to make that statement.


Donald Ferguson Brown: The Minister of Finance and I have one thing in common, in that neither of us was at the meeting and therefore we have to depend upon what other people tell us took place there. What I have said is what I have been told was said by the Prime Minister at the meeting.


Donald Methuen Fleming: On a point of order, Mr. Speaker, the rule of this house is quite clear that the statement of an hon. member in this house as to what he said must be accepted. The Prime Minister has made a statement in this house as to what he said, and it is not open to the hon. member to question that statement.


Paul Joseph James Martin: I would ask Your Honour to be very strict in this matter toward the Minister of Finance, who has no right-
225S

Excise Tax Act
and he has done it the second time on the pretext of rising on a point of order-to make a comment on the speech made by the hon. member for Essex West. The suggestion he has made that an hon. member has not the right to refer to observations made by one other hon. member outside of this house is without any serious hope of being accepted by even the hon. gentleman himself.
The hon. member for Essex West was quoting what the Prime Minister is reported to have said during the course of the last election campaign, and it is not open to the Minister of Finance in any way to question the veracity of those reports. The Prime Minister himself can get to his feet in the house and say afterwards that he denies the reports that have been made. Then he will have to be confronted with the reports in the newspapers. But I suggest to you that the hon. member for Essex West, in making the quotations he is making from these various papers of what the Prime Minister said, is perfectly in order, and that the Minister of Finance should not seek to be intervening in this important statement that is being made by the hon. member for Essex West.


Donald Methuen Fleming: Mr. Speaker, the hon. member has not grasped the point of order. The point of order is that this matter has already been dealt with in this house.


Mr. Sinclair:: When?


Donald Methuen Fleming: It was dealt with a week ago last Monday, I think it was, when this same statement the hon. member for Essex West is now making was made in the house and the Prime Minister made an emphatic assertion at the time that he did not make that statement. It is an order of the house that statements of an hon. member under these circumstances must be accepted. What we have now is, in my submission, a violation of an order of the house, when an hon. member now comes forward and seeks to repeat that statement.


Mr. Deputy Speaker:: Order. If the Prime Minister has said in the house that he did not make the statement, we must accept the word of the Prime Minister.


Paul Joseph James Martin: Mr. Speaker, with great respect I would submit that that is not a ruling which, on reflection, Your Honour would want to make. The Prime Minister may say that a statement made on a certain day, as reported by a newspaper, is inaccurate. He may say that, but it is open to any hon. member to read those statements, as I propose to do when my turn comes. I suggest to you that the hon. member for Essex

West is perfectly in order and that this ruling you have now made is one that would stifle debate in the most serious way.


Some hon. Members:: Oh, oh.


Mr. Mariin (Essex Easi):: In 22 years in this house I have never heard that kind of ruling made. The Prime Minister has a right to say, "I did not say that".


Mr. Bell (Carleion):: And his word must be accepted.


Murdo William Martin: Only in so far as
things he said in this house are concerned. As to reported statements outside this house, any hon. member has the right to refer to those statements.


Donald Ferguson Brown: I think we may call the matter closed now, Mr. Speaker. The people of Windsor and the people of Canada, those who were in attendance at the meeting, know what was said. They recall what was said. I will leave it to their good judgment and that of hon. members.
That is as reported in the Windsor Daily Star. Then of course my friend the Prime Minister went on to Oshawa and made a similar speech. At each place he went the promise fitted the constituents. He made a promise there as reported in the Toronto Telegram, and I do not think my friends would question what appeared in that paper. According to the Toronto Telegram this is what he said:
He told the automotive town audience his party would lift luxury taxes from cars because they are "an essential part of public and private transportation. There is no more justification for a luxury tax on automobiles than there would have been for one on the horse and buggy 50 years ago".
When those statements were made by the then leader of the opposition, who was the leader of the Conservative party during the last election campaign, we believed him. We felt that these statements made by the leader were sincere. We believed that he had an honest intention to be of assistance to the automobile industry. We believed he meant what he said, and that this was not showmanship to try to sway the multitude and to gain votes.
Then much to his surprise he became Prime Minister. Then we had scurrying to and fro and, as I recall it, the Minister of Finance made several comments on the promises that were made not only through the press but by radio and by television, to the effect-and he can contradict this if he likes- that these promises would be carried out and that they would be carried out expeditiously.


Donald Methuen Fleming: I think my hon. friend will agree that that was a statement made with

regard to all campaign promises. This particular matter of excise tax was not mentioned specifically.


Donald Ferguson Brown: We are assuming ihat this is one.


James Sinclair: On May 30.


Donald Ferguson Brown: I took my hon. friend's word when he indicated that the promises would be carried out. We had a session of parliament open not in September but in October. At that time, although it was rather unusual, in the throne speech as delivered by Her Gracious Majesty the Queen reference was made to financial matters. While it was most unusual, in the speech from the throne which had been prepared by the government of the day, which is the present government, this was said:
Changes in certain of the taxing statutes will be submitted for your approval.
Then again, as hope springs eternal in the human breast, we looked forward with anticipation to the time when this industry would get some relief from this tax of 10 per cent, which had been a luxury tax, a scandalous, unjust tax, to quote the Prime Minister. But what happened? Instead of a "sputnik" or even a "muttnik" with a little meat in it, this tax reduction could be referred to, I presume, as the excise "dudnik" fired by the Minister of Finance. I say it is a "dudnik" because it had a great deal of publicity. There was a great deal of fire and smoke, but it just fell flat and the people of my constituency so considered it.
We think this measure is wholly insufficient. True, it is a crumb, but it is just a crumb. We feel that it is not at all sufficient, and that it will be of no help to the automobile industry. It will do nothing toward putting the thousands of unemployed back to work in that area or throughout other parts of Canada. We feel that it is an abortion in the excise field. It is of no value whatsoever. While, as I say, 2J per cent is better than nothing, it is far short of the promise which we had believed in and the action which we had expected to come from the Prime Minister.


Stanley Howard Knowles: Mr. Speaker, the bill now before us has just one purpose, namely to implement the announcement which the Minister of Finance made on December 6 that the excise tax on automobiles would be reduced from 10 per cent to 7J per cent. As the hon. member who spoke previously has indicated, even though this reduction is very slight at least it is in the right direction, and of course we shall therefore vote for the bill.
Excise Tax Act
Nevertheless we confess that we were amazed, after all the fanfare that has gone on with respect to this matter, that the reduction proposed by the government is so small. As everyone knows, the total return from a tax of any kind is not necessarily in proportion to the rate of that tax. There are times when a tax at a lower rate will produce a greater return than if it were the other way around. We suggest that if this tax had been reduced a little more it might have resulted in a greater volume of sales and therefore a larger return. By reducing the tax a little more or by wiping it out altogether it could have resulted in an increase in employment, with resulting increases in revenue from other taxes, which would more than offset an apparent loss from reduction in the rate of the tax.
Frankly we do not quite know what prompted the minister to bother with so small an amount. We feel that if he was going to deal with this matter at all he should at least have gone to the 5 per cent figure, if not more, and we urge him even yet to consider the desirability of a lower rate. If it is because there were reports going around of what looked like leaks as to the reduction to 5 per cent and he felt, therefore, that he could not come down to that figure perhaps, after the house has pressed upon him the desirability of a lower rate, he might consider that rate being reduced to 5 per cent.
While I am on my feet, Mr. Speaker, I might say just a word with respect to the context in which the minister announced this reduction last Friday evening. He made some general remarks leading up to the announcement, near the beginning of which he did me the honour of referring to something I had said at a meeting in Hamilton on Wednesday night, December 4, to which reference was made in the Toronto Telegram of December 5. I quote this paragraph from the minister's speech as recorded at page 2002 of Hansard for December 6, 1957:
The Toronto Telegram on December 5 ascribes to the hon. member for Winnipeg North Centre a statement made, I believe, in the city of Hamilton the previous night. The article says he accused the government of: "Hiding the books from parliament until after the next election." I doubt if any of the members of the audience who heard the hon. member make that statement, if he did make it, would be so gullible as to believe it. There will be an opportunity of judging shortly whether that is a responsible or an irresponsible statement.
I wish to assure the minister that I did make that statement, and that developments since then have indicated the responsibility of it. The minister in this bill and in other measures which he has presented to parliament has asked for tax changes in the same session in which parliament has agreed to

Excise Tax Act
increase expenditures. Yet we are not being given a proper balance sheet; we are not being shown the books of the country so we might ascertain the state of our national finances. The minister himself says he did not present a budget the other night, although we suggest it is a budget and should be treated in that manner. However, he comes back and says it is not a budget. The Minister of Justice on another occasion has said it is not necessary in proposing the reduction of a tax to present the whole ambit of the financial affairs of the country.
I suggest, Mr. Speaker, that what is happening is that the minister is asking parliament to make a change here and a change there, but that the full impact of those changes on the finances of the country is being withheld from parliament. There have been some transfers of moneys back into consolidated revenue which had been credited to certain accounts. There are these tax changes, some of which are effective from December 7, like this one, and others which are not effective until January 1.
We have therefore no picture as to what these changes really do to the finances of this country. We have had no report as to any change that might have taken place in our gross national product. We have had no report on the revenues that flow from trade. In other words we simply have not got the picture, and it is my suspicion that we will not have such a picture before this country is called upon to have another federal election. Therefore what has been happening is exactly what I stated at Hamilton last Wednesday evening, and my comment at that time was a responsible statement, in contrast to the irresponsibility of the Minister of Finance in presenting budgetary changes without giving to this country a real and proper budget showing the state of our finances.
It is not too often that I find myself in complete agreement with a certain Liberal newspaper in my city, the Winnipeg Free Press, although we are very grateful for the help we receive because of the criticisms of that paper so far as we in this corner of the house are concerned. I am aware that the Free Press is critical of the present government, but I must say that I feel that its editorial on Monday, December 9, concerning the budget, in that it was notable for its dishonesty, is well put; because the Minister of Finance is not taking the house or the public into his conference so far as the financial situation is concerned.


Donald Methuen Fleming: On a point of order, Mr. Speaker, the word "dishonesty" is of course clearly an unparliamentary word; and whether my hon. friend is coining it on his

own behalf or quoting it as attributed to somebody else, under the rules of this house it cannot be uttered in this house concerning any hon. member, and I would ask that it be withdrawn.


Stanley Howard Knowles: am not using the word dishonesty in any personal sense, Mr. Speaker. I am not suggesting that in his personal capacity the minister is doing anything which is subject to indictment in the courts of law, but I am suggesting that he is being unfair and dishonest with parliament when he does not give us the whole picture so far as our finances are concerned.


Donald Methuen Fleming: On a point of order, Mr. Speaker, my hon. friend has used a word, no matter how he may seek to qualify it, which is an unparliamentary word. There is only one course open when an hon. member uses a word which is clearly and completely unparliamentary, and that is to withdraw it. I therefore ask that my hon. friend withdraw it; and if he is not prepared to do that I ask you to direct him to do so, Mr. Speaker.


An hon. Member:: Before one o'clock?


Stanley Howard Knowles: One
o'clock Mr. Speaker.


James MacKerras Macdonnell: Mr. Speaker, may I be allowed to say a word, with the consent of the house?


Some hon. Members:: No; it is one o'clock.


James MacKerras Macdonnell: My point is this. I believe that the hon. member for Winnipeg North Centre, if he considers what he has said, will withdraw the word "dishonest".


Stanley Howard Knowles: Mr. Speaker, I feel the word is appropriate, and I think I have just as much right to use it as has the Winnipeg Free Press, with which publication I agree.


Mr. Deputy Speaker:: Order. I do not think the hon. member for Winnipeg North Centre did intend to insult the Minister of Finance and, if he did so, I think he will drop his word "dishonesty".


Stanley Howard Knowles: Mr. Speaker, I am pleased to state that I have no intention of insulting the Minister of Finance and certainly, in using that word, there is no intention on my part of casting a personal reflection upon him in respect of what he did. The sense in which I used it is that it is unfair for the government to treat parliament or the people of Canada in this way, by giving them a budget which is not a complete picture.


Donald Methuen Fleming: Mr. Speaker, the hon. gentleman has not withdrawn the word. He can argue to his heart's content whatever he

chooses to say about "unfair". That is not an unparliamentary word. But the word "dishonesty" and the word "dishonest" are both words which are clearly unparliamentary. They always were and they still are, and there is no way in which the hon. member can skate around and qualify and change the meaning of those words. Those words are unparliamentary. They cannot be used in this house under the rules of this house; therefore they must be withdrawn in their entirety, and if the hon. gentleman is not prepared to do so then I would ask you, Mr. Speaker, to be good enough to instruct him to withdraw those remarks.


Stanley Howard Knowles: Perhaps we could both have the noon hour in which to look and see whether there is anything in the rule books about the word in question. It might be there; I have not been able to find it. But I was prepared to meet Your Honour's request to withdraw and remove completely any reflection on the honesty of the Minister of Finance.


Mr. Deputy Speaker:: I understand that the hon. member for Winnipeg North Centre has changed the word "dishonest" to the word "unfair", and I will accept that.


Donald Methuen Fleming: May I ask you, Mr. Speaker, whether the hon. member has done that? I did not understand him to withdraw the word "dishonest" in favour of the word "unfair". If he will do that it will be perfectly satisfactory, but he must withdraw the word, and I do not understand him to have done so.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Stanley Howard Knowles: Mr. Speaker-


Donald Methuen Fleming: Mr. Speaker, on a question of privilege, just before the adjournment at one o'clock-


Mr. Speaker:: Order. I happened to be in my seat and not in the chair at the time and heard the discussion which occurred before the luncheon recess. I think the hon. member for Winnipeg North Centre may have something to say which will clear up the objection taken by the minister, so perhaps we had better hear him first.


Stanley Howard Knowles: Mr. Speaker, during the luncheon recess I made it a point to read carefully the Hansard record of what I said when I was quoting the comment that had been made about the budget 96698-144
Excise Tax Act
by the Winnipeg Free Press, and I found that I very carefully made no reference to the minister personally but rather expressed as my own view the opinion of the Winnipeg Free Press that the budget was characterized by one thing, namely its dishonesty.
I am the last man in this house to want to insult anyone. I thought I had made it clear before one o'clock that I cast no reflection on the honesty or personal integrity of the Minister of Finance, but that I used the word "dishonesty" in the same sense that the Free Press used it, in that the budget as presented to the house was misleading and did not give the complete picture or the full facts to the country. At the request of His Honour the Deputy Speaker who was in the chair at the time I withdrew-I think unnecessarily, because I had not made it-any reflection on the minister himself.
I would say that the only possibility of any reflection being there would be on the basis of what the minister read into my words. I did not intend it and if even my tone of voice implied such a reflection 1 readily withdraw any comment that might seem to reflect upon the personal integrity or straightforwardness of the Minister of Finance.


Donald Methuen Fleming: I thank my hon. friend, Mr. Speaker.


Mr. Speaker:: I wish to express my appreciation of the withdrawal on the part of the hon. member for Winnipeg North Centre and the attitude expressed by the member now.


Stanley Howard Knowles: Mr. Speaker, I hope what I now say will not be construed as reopening that question, because as far as I am concerned it is closed; but I must point out that some of us agree with the position taken by the Winnipeg Free Press and other newspapers in this country that the Minister of Finance in his budget, a portion of which we are now discussing, has failed to give us a picture of the present rates of taxation and the present rates of expenditure carried forward into a number of months ahead. The failure of the Minister of Finance to answer questions when he was interviewed as to what would be the financial situation at the end of a full year at the present tax and expenditure rates has been characterized by some newspapers as misleading, as spurious and as deceptive. These are not comments on the minister in his personal capacity, but they do characterize this budget in the terms in which it strikes some of us.
We feel that with a new government coming into power, with changes taking place in our economic and financial situation and with all the changes of expenditures and rates of

Excise Tax Act
taxation, it is unfair and misleading to the Canadian people for the Minister of Finance not to give us a full budget. I am not going over the argument now as to whether or not we should have had a full-dress debate on the motion to go into committee of ways and means with the Speaker in the chair. If we had done that we could have had a full statement on these matters. I wish to make the point that even yet, either on this bill or the next one, or on some one of these taxation measures, or on a motion to go into committee of supply or to go into committee of ways and means, the Minister of Finance should stand up and honestly tell the country what these changes of taxation rates, changes of expenditures, changes in the gross national product and in our foreign trade mean in terms of the nation's balance sheet.
It is in the light of that situation, that unfairness to the Canadian people on the part of this budget, that I made the statement which is now past and gone. I feel very strongly that this matter should be cleared up by a full and proper statement by the minister.
To get back to the bill that is before us, I urge the minister to reconsider the amount of the proposed tax reduction. I will not go over the argument he had with the hon. member for Essex West as to what the Prime Minister said in various places during the election campaign. It seems to me that the Minister of Finance finds points of order to raise in every speaker's remarks today, but surely he will recognize that even after the thought had been dispelled that the excise tax on automobiles would be wiped out altogether, there still remained a general belief in the country that it would be reduced to 5 per cent.
I still contend that we should have some explanation about those reports that looked like a leak as to the intention of the government in this respect. In any case if that is the reason, if it was because of those leaks that the minister felt he had to come down with some figure other than 5 per cent, I urge him to reconsider the matter now and do it if he wants to in response to a request made on the floor of the house.
In other words, Mr. Speaker, as we have already said this is a step in the right direction and therefore we shall support the bill. But we feel that the government should at least have measured up to the reports that were circulated a few days before this bill came in, that the tax would be reduced to 5 per cent.


Paul Joseph James Martin: Mr. Speaker, as one of the members of parliament in this house from a city where

automobile production is the mainspring of the economic life, I naturally would be expected in a discussion of this sort to have something to say, and of course I seize the opportunity at once to do what I believe is my duty not only as a member of this house but more particularly as a member representing a portion of the city of Windsor, the constituency of Essex East.
I am sure we all listened with great interest to the speech made by the hon. member for Essex West, who outlined the position of the automobile industry not only with respect to our own community but with respect to the economic life of Canada generally. The automobile industry received its initial important impetus in that area of the United States and Canada from which we come and the progress that has been made in the automobile industry in both countries is such as to create in the mind of any government the realization that its policies, particularly its taxation and fiscal policies, must bear in mind the great potential growth of this industry and what it has meant to the economy of Canada in the past.
The hon. member for Essex West took advantage of the opportunity to point out not only what the industry means to the city of Windsor, or what I might add it means to the other major centre of production, the city of Oshawa, represented by my hon. friend the distinguished Minister of Labour, but also what it means to many other communities where there are assembling units, parts plants and a whole series of subsidiary industries in which thousands of Canadians make their livelihood. These are the direct corporate relatives, as it were, of the automobile industry.
In addition to that, of course, as we all recognize, through the interdependence of economic action there are literally thousands of other individuals and many hundreds of companies whose existence depends upon the existence and prosperity of the automobile industry itself. The construction of highways, the sale of gasoline, and other examples are so obvious as not to require extended emphasis on the part of any other hon. member. The fact is that the automobile industry, directly and indirectly, is now one of the major factors in the economic life of our society on this continent and, in this particular instance, as our concern is Canada, in Canada itself.
As the hon. member for Essex West pointed out the total dollar value of automobile wages and salaries in Canada in 1946 was somewhere in the neighbourhood of $43 million or $44 million. In 1956, as an evidence of the growth that had taken place, the figure reached $170 million; and I have had an

estimate made which shows that as of today it would reach something close to $250 million. That does not take into account, as I say, all the indirect operations that flow from the automobile industry.
Therefore, for these and other reasons, this particular measure, this proposal by the Minister of Finance, must be regarded by the house as a matter of the greatest importance. But it is not only because it involves the integrity of the automobile industry that we are concerned. As the result of a number of circumstances, at the present time the unemployment situation in the automobile and related industries is such as to disturb us all. It involves the fact that thousands of men are out of work, thousands of Canadian citizens are denied the opportunity to work and receive income, which is an essential requisite in the maintenance of family and individual life. When we in this house deal with matters of policy in one form or another, when we quote figures, whether of dollar or another equivalent value, we sometimes possibly are inclined to overlook the social implications of what is involved.
I am sure the Minister of Finance, who is a very understanding human being, appreciates the consequences that flow from anyone being out of work in our country. The fact is that this particular industry at this moment is not in a prosperous condition. I cannot help but remember the incidents which attended the period between 1930 and 1935 in my own community. Anyone who went through that period will never forget the conditions when well over half the population of our community was on relief and out of work. The consequences of those days in the formation of political judgments of more than a partisan character are such as never to be freed from one's mind. If we ever reach the stage again where the unemployment rolls of our country are anything like what they were during that period, those of us who regard the particular economic and social system that we possess as the most desirable will find ourselves confronted with as serious a challenge in that particular as has confronted us in domestic matters since that time. Therefore the problem of unemployment in any aspect is something that gives us all the greatest concern.
I think it can be argued without much difficulty that one of the reasons-and I do not say it is the only reason-for the present situation in the automobile industry arises clearly out of the uncertainty of government policy in the matter of this particular tax. The government, and the Minister of Finance in particular, on whose shoulders rests the very difficult assignment, has come to the 96698-144J
Excise Tax Act
conclusion that the greatest reduction he could make in this tax was one of 2J per cent.
As those who have preceded me have indicated, this reduction, apart altogether from whatever reasons the Minister of Finance may have had in his mind, has satisfied no one. It has satisfied none of the automobile manufacturers although, in that particular, I must be fair and say that the president of General Motors, Mr. Walker, has expressed some satisfaction with the reduction. The vice president in charge of production of the Ford Motor Company, the president of the Chrysler Corporation and others, but these two in particular, have expressed the greatest measure of dissatisfaction. Likewise, the community from which I come, through its municipal bodies and the men who work in these factories, has expressed its great disappointment and dissatisfaction. All over Canada, as the Minister of Finance well knows from editorial opinions that have been expressed, there has been the greatest dissatisfaction noted on the part of the people of Canada generally.


Donald Methuen Fleming: No.


Paul Joseph James Martin: My hon. friend says "no". He and I must read different papers. I would refer him to papers published right in his own city of Toronto, all three of them. I would refer him to the papers-


Donald Methuen Fleming: They do not bear you out.


Paul Joseph James Martin: Excise Tax Act
budget, he has, on that account, been precluded from giving an explanation or a reason for this particular reduction.
Can there be any doubt in the minds of hon. gentlemen, can there be any doubt in the mind of any of us that, rightly or wrongly, long before the election on June 10 last we were led to believe that this 10 per cent excise tax on automobiles was going to be removed if the present government were entrusted, as it now has been, with the responsibility of directing the affairs of this nation? Reference has been made by the hon. member for Essex West, by the member for Coast-Capilano and by the member for Winnipeg North Centre to statements that justify my contention that the country was led to believe that if the present government were entrusted with the responsibility of office it would remove this scandalous tax, to use the words of the Prime Minister.
This question was very much in the mind of the preceding government. I know that because, coming from the city of Windsor as I do, I was naturally interested in making sure that we would do everything we could to further the prosperity of an industry that meant so much to the people of my city. This was a question that had concerned us not only within the last period but in 1951 and in 1955.
This particular bill provides an amendment to an act that came into being as a result of the necessity of Her Majesty's government receiving financial resources to carry on the very difficult prosecution of the war, and the obligations that existed in this country as a result of the war during the days of peace. At the beginning it was, admittedly, a war tax measure. The government, however, did effect a reduction in this tax, first from 25 per cent to 15 per cent, and later on the occasion of the last reduction in 1955 to 10 per cent. At the time this tax was reduced the understanding was that this reduction would be passed on to the consumer, the theory behind that action being that this kind of gesture would promote the sale of automobiles and thus contribute to a higher level of employment.
It is true that during the course of the last session of parliament, and indeed in the session, before in 1955, several hon. members on both sides of the house sought to impress the then minister of finance with the desirability of abolishing this tax. Amongst those who took this position was the present Minister of Finance who was, perhaps, louder than anyone else in his denunciation of the iniquity of this 10 per cent excise tax on automobiles.


Thomas Miller Bell: What position did the hon. gentleman from Essex East take?


Paul Joseph James Martin: The hon. gentleman has asked me what position I took. I was a member of the government. The hon. member knows that what is said in the cabinet is secret, but I am now out of the cabinet.
I can say frankly that I took the position that if there were any evidence that the 10 per cent excise tax was in any way causing any unemployment-


Thomas Miller Bell: Was it?


Murdo William Martin: I will deal with
that, but let us take one question at a time. Let us deal with the question of abolishing the tax. I might say that was the position taken by my colleague the present Leader of the Opposition (Mr. St. Laurent). With the characteristic frankness and courage that have attended most of the things he has done in public life, when speaking in the city of Windsor about four or five days before the election he said that if he were satisfied the existence of the 10 per cent excise tax was in any way holding up or preventing a high level of employment in the automobile industry, he would see to it that consideration was given to the elimination of this tax. He did not use the word "reduction", but he would see to it that consideration would be given to the elimination of this tax. He was on very strong ground, because for the quarter preceding his statement the sales of automobiles in Canada, in 1957, were up 18 per cent. He was in a position of being able to argue, as he did in my own city four days before the election, that the evidence at that time did not demonstrate that the existence of the excise tax had resulted in a deterioration in automobile sales. The fact was that for the first quarter of the year sales were up.
However, that is not the situation now, and that is the important fact for the parliamentary assistant to the Minister of Finance and the minister to bear in mind. This was not the fact confronting the Minister of Finance on December 6. The fact confronting the Minister of Finance on December 6 was that sales of automobiles were down very considerably, in fact to a greater degree than they were up in the first quarter of 1957. In addition there was an increase in unemployment. We may argue whether or not my contention in this regard is valid, but the fact is that the government headed by the Leader of the Opposition at no time said it would eliminate the tax, except under the circumstances he mentioned.
This is not the situation confronting this government at the moment, and it is not

the situation confronting the Minister of Finance in the very embarrassing position in which he appears to find himself at this moment. When he was on this side his voice, more than any other, was directed against the government for not eliminating the tax on automobiles. This, too, was the view of my old friend the hon. member for Greenwood (Mr. Macdonnell), who was amongst those who took a strong position with regard to this tax.
It is true also that many others who sit on your right at this moment, Mr. Speaker, charged the previous government with not having an appreciation of the problem because the government did not eliminate the tax. But whether that was or was not the case, the fact is that in addition to these requests, these demands, these denunciations against the government over the elimination of this tax, the leader of the government, at a time when he was making an appeal to the Canadian electorate for support, came into the city of Windsor on May 10; and whatever he may say now there is no doubt that as a result of his speech, to which I will make reference, the impression was left with the Canadian people and the citizens of Windsor that he was going to see that this tax was abolished. That was the impression. I want to be fair to the right hon. gentleman who is Prime Minister. In the report of that speech in the Windsor Daily Star he said this was a scandalous tax which he thought should be removed, and he would either eliminate it or see that it was removed. That I must say in fairness to him.


Donald Methuen Fleming: Removed?


Paul Joseph James Martin: Yes. I am coming to that; would either be eliminated or removed. But while that was what he said in the city of Windsor, in other places, if the reports of his speeches are correct, he did not talk only of the elimination of the tax; he talked of abolition.


Donald Methuen Fleming: Mr. Speaker, this matter was raised this morning and, as you will recall, had also been raised previously. My hon. friend is not contenting himself now with stating that a particular remark was ascribed to the present Prime Minister in the speech or speeches to which reference is now being made. My hon. friend has gone further. He has now gone beyond saying what was the impression that some people formed. He has now gone further and said that the present Prime Minister on that occasion said the tax would either be eliminated or removed, both of which terms mean the same thing.
The Prime Minister, sir, when this question was raised on December 2, made a clear
Excise Tax Act
and categorical statement on that point; and with great respect I submit that it is not within the order of this house for any member now to make a statement contradictory of what the Prime Minister has stated in this house he said on the occasion in question. Let there be no doubt about what was said. At page 1738 of Hansard-


Paul Joseph James Martin: Mr. Speaker, I rise on a point of order. I do not mind my hon. friend raising a point of order or asking a question, but he has no right to speak.


Mr. Speaker:: I understood the minister was speaking to a point of order.


Donald Methuen Fleming: Yes.


Mr. Speaker:: I will hear the hon.
gentleman.


Donald Methuen Fleming: The point of order is that when a member of this house makes a statement in the house as to what he said, that statement must be accepted. It cannot be challenged. That is the rule of the house. When this same matter was raised on an earlier occasion that is precisely the position the Prime Minister took. If you look at Hansard of December 2, at page 1738, you will find that this same remark was made attributing to the Prime Minister the statement that he proposed to eliminate the tax. As reported in the first column of that page the Prime Minister said this:
That is not correct. At no time directly or indirectly, did I say that. What I said was-and I repeated it throughout the campaign-that this tax had an effect and that consideration should be given to its reduction in any event.
You will find a similar statement on the same day by the Prime Minister, Mr. Speaker, as reported at pages 1727 and 1747 of Hansard. As reported at page 1727, the Prime Minister asked for the withdrawal of a similar remark because he had not made the statement that was then being attributed to him. Again as reported at page 1747, where the hon. member for Coast-Capilano was suggesting that the Prime Minister was saying he had been misquoted, as recorded at the top of the second column, the Prime Minister said:
No, I did not say "misquoted". I said there was no statement that it would be removed wholly. I have never said that.
An hon. member of this house having made that statement, Mr. Speaker, it is a breach of the order of this house for any hon. member from that point on to proceed and say that the Prime Minister made a statement which the Prime Minister has said in this house he did not make.

Excise Tax Act


Paul Joseph James Martin: Mr. Speaker, I regard this as an important matter, and I hope the Clerk or whoever looks after the time will have noted the interruption, to which I did not take exception, so I can be allowed to make an argument which I believe is very important to the people I represent in this house.
What I had said was this. I had been fair to the Prime Minister. I had said that in the city of Windsor he was not reported as having said that he would abolish the tax. I said that he was reported in Windsor, on May 11, with regard to the speech he made on May 10, as having said that he would either abolish or reduce the tax. That is what I said.


Donald Methuen Fleming: Oh, no.


Paul Joseph James Martin: Yes.


Donald Methuen Fleming: No. That is a very different matter.


Paul Joseph James Martin: I will come to that.


Mr. Speaker:: If I may intervene here, although I do not wish to prevent the hon. member from continuing, may I say that my recollection is this. Perhaps he made an error in what he said about the Windsor statement.


Paul Joseph James Martin: No.


Mr. Speaker:: He said "Either eliminate or remove".


Paul Joseph James Martin: No, Mr. Speaker.


Donald Methuen Fleming: He said it twice.


Mr. Speaker:: If the hon. member for Essex East intended to say the other-


Paul Joseph James Martin: No.


Mr. Speaker:: I think he slipped and perhaps we can now take it that that was what he intended to say.


Paul Joseph James Martin: No, Mr. Speaker. I think that Your Honour, who was preoccupied, did not follow me. I was very careful with regard to the Windsor statement to say that in fairness to the Prime Minister he did not say that he would abolish it. I said that he was reported as saying that he would either reduce or abolish the tax.


Donald Methuen Fleming: No.


Paul Joseph James Martin: Yes.


Donald Methuen Fleming: I rise on a point of order. My hon. friend did not say "eliminate or reduce"; he said "eliminate or remove". He said it twice.


Mr. Speaker:: We had better let the hon. member for Essex East continue his statement. I interrupted him because that was my recollection of what he said, but he said he intended to say the other. If that is so, then we must accept that statement.


Paul Joseph James Martin: I do not want any confusion on this matter. I am not agreeing-


Some hon. Members:: Oh, oh.


Murdo William Martin: I am not agreeing for a moment with the point of order. I am simply stating that I am building my case bit by bit to establish what I believe is a very important situation in so far as political morality in this country is concerned.
I have said that in Windsor the Prime Minister made the two statements, but I am not agreeing that it is a valid point of order that any hon. member of this house should be precluded from referring to reported statements made outside of this house by any other hon. member. The rule is clear that any hon. member has the right to deny that he said in this house a particular thing, and that once the denial has been made the hon. gentleman who has made the charge must recognize the statement made by the objector. But no hon. member has the right to preclude another hon. member from referring to quoted statements made outside of this house. That is another point altogether. I have dealt with the situation in Windsor-


Mr. Speaker:: I should like to say something on this point of order, because it is an important matter. The rule of the house is clear:
A statement made by a member in his place is considered as made upon honour and cannot be questioned in the house or out of it.
That is Beauchesne's third edition, citation 241. All hon. members are familiar with that rule. The question is what is the consequence of that rule with respect to debate. The hon. member for Essex East, in his remarks as I have followed them, is really seeking to challenge the statement made by the Prime Minister in his place that he did not promise that he would eliminate the tax in question, that the statement went only so far as promising a reduction of the tax.
I think the point of order is well taken that the hon. member should not, in debate, pursue a line which is challenging the statement made by the Prime Minister in his place on his honour. To that extent I think the hon. member has been out of order in pursuing this course of endeavouring to show that if the newspaper reports are correct, then the Prime Minister did not make a true statement. There is, of course, a way of

challenging a member's statement or conduct, and that would be by substantive motion; but this is a debate, and the rule seems to me to apply to what is said in debate.


Murdo William Martin: I am not going to question Your Honour because I have such great confidence in Your Honour's deliberations.


Some hon. Members:: Oh, oh.


Murdo William Martin: Hon. members may not share that confidence in the Speaker, but I have that confidence.


Thomas Miller Bell: We have confidence.


Murdo William Martin: I am not sure that on another occasion I will be prepared to accept such a ruling, but I am very anxious to establish my case and not to have my time run out while we are engaged in discussion in respect of these important points of order in themselves. But whether or not my hon. friend agrees, the fact is that the Prime Minister did make a statement in Windsor to which I have referred, and he has not denied the story.


Donald Methuen Fleming: Mr. Speaker, are we having a repetition of the very thing which you have ruled to be an offence against the order of the house?


Murdo William Martin: My hon. friend has not denied the statement made in the Ottawa Journal on May 30, 1957. That is a journal that does not always support those of us who sit on this side of the house. It says:
In Oshawa, a city of car production, Mr. Diefen-baker said that if he becomes prime minister a special fall session of parliament would be called to reduce taxes, including the 10 per cent excise tax on cars which would be removed in whole or in part.
That statement was made on May 30, and then there was a statement reported in the Toronto Telegram, also on May 30:
He told the automotive town audience his party would lift luxury taxes from cars because they are "an essential part of public and private transportation. There is no more justification for a luxury tax on automobiles than there would have been for one on the horse and buggy 50 years ago."
And then in the Ottawa Citizen-


Donald Methuen Fleming: On a point of order-


Mr. Speaker:: I submit that what the hon. member for Essex East in effect, is doing with respect to the last citation from the newspapers, is drawing statements from the press to contradict what the Prime Minister said in the house, and I consider that he is out of order in doing so. If he wants to read quotations which state that the Prime Minister promised to reduce this tax in
Excise Tax Act
whole or in part I do not object to that, but the quotation from the Telegram definitely seems to me to be a contradiction of the statement the Prime Minister made in the house and I do not think it is in accordance with the rules of debate to challenge a member's own statement in the house.


Paul Joseph James Martin: Well, Mr. Speaker, I bow to your observation, but I do feel that as the statements speak not of abolition but of an alternative of reduction or abolition, I am not out of order. Am I precluded, for instance, under the rules from referring to the story in the Ottawa Citizen of the same day?


Mr. Speaker:: To make it clear, I do not object to the quotation from the Ottawa Citizen, but I do think the hon. member should not endeavour to cite in the house as true statements newspaper reports that the Prime Minister said he would abolish this tax. That is the point.


Paul Joseph James Martin: I appreciate that, Mr. Speaker, but the Prime Minister did not deny that. He said he would at least offer to reduce or abolish. What he denied was that he said he would abolish the tax, and I think the Speaker agrees with me in that connection. The Ottawa Citizen says:
John Dlefenbaker last night promised that a Conservative government would abolish the excise tax on automobiles and eliminate "in the whole or in the main" all discriminatory excise levies.


Donald Methuen Fleming: Mr. Speaker, on a point of order, it is perfectly apparent that the hon. member is just seeking to ride roughshod over the ruling you have so clearly made. It is a most palpable and obvious attempt to defeat the ruling of the chair-


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: -when the Speaker rules the remark of an hon. member completely out of order and he then attempts to-


Some hon. Members:: Sit down.


Mr. Speaker:: Order.


Paul Joseph James Martin: I will leave it to the Speaker to decide as to whether my conduct in this house deserves the very generous and extravagant tribute just paid to it by the Minister of Finance. I would say to my old friend, and he is a very old friend, that if he would follow the same course in debate in this house he would not get himself, day after day, into such repeated difficulties. Surely it is clear that the Prime Minister did indicate to the Canadian people that he would at least reduce the tax. He went further than that according to these quotations-

Excise Tax Act


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order.


Donald Methuen Fleming: Again we are just seeing your ruling, Mr. Speaker, defeated in the most palpable way.


Mr. Speaker:: We are all conscious of the problem which exists. I think the hon. member for Essex East is also aware of the situation, and until he finishes his statement I do not propose to intervene. He has gone part way and I take it he will observe my ruling.


Paul Joseph James Martin: Thank you, Mr. Speaker. I do not want to excite the Minister of Finance; I realize he has his problems. I should have thought, as the hon. member for Coast-Capilano said in that very outstanding speech of his the other night, that if objections were to be taken to these statements, undoubtedly the Prime Minister during the course of the election, with the entourage of newspaper men with him, and his coach of newspaper comment, must have seen these articles. I would like him to have denied them at that time.


Mr. Speaker:: I think the hon. member would do well to pursue his argument, because the line he is following now is really an attempt to assert the truth of the newspaper articles which have been denied by the Prime Minister. I would ask him to be a little careful in pursuing his argument.


Paul Joseph James Martin: I have a distinct recollection of what these words of the Prime Minister meant to the people of my community, and I know what the people of Windsor think of this particular situation. They were given the impression at that time that there would be a reduction and then, shortly after he became Minister of Finance, my hon. friend who understandably was not too well acquainted with the techniques and outside relations was embarrassed by a statement attributed to him by the Canadian Press, when without referring to excise taxes specifically he did refer to the budgetary intentions of the government. He, too, in that statement, written by Mr. Harold Morrison of the Canadian Press, did give the Canadian public every reason to believe there was going to be a very important reduction in taxes, and indeed-


Some hon. Members:: There has been.


Paul Joseph James Martin: Then we had in the speech from the throne on October 14 last another statement in this connection. The reason there is this particular situation in the automobile industry is because of the uncertainty and the expectancy which was allowed to be dragged on from May 10 during
(Mr. Martin (Essex East).]
the course of the summer, punctuated by this reference in the speech from the throne which says:
Changes in certain of the taxing statutes will be submitted for your approval.
If anyone reads the press of October 15 he will see the big headlines which forecast reductions in certain taxes including the excise tax, all of which add up to this feeling of expectancy which existed in the country about the likelihood of a reduction in this particular tax. The reason we have heavy unemployment in the automobile industry and its subsidiary industries is the whole spirit of uncertainty which has prevailed since May 10, when the statement was made in the course of the election by the Minister of Finance-


Some hon. Members:: Oh, oh; the car
dealers.


Paul Joseph James Martin: I know the hon. gentlemen do not like this, but it is our duty to state these things.


Donald Methuen Fleming: It is most entertaining.


Murdo William Martin: If they do not want to adopt an indirect form of closure all they have to do is listen to what I have to say.


Mr. Speaker:: Order.


Murdo William Martin: A short while ago in the press of this country, including the Toronto Telegram, there were stories written right across the front pages which intimated, rightly or wrongly, that there was going to be a 50 per cent reduction in this tax. Under our system of government, certainly as practised in the United Kingdom, there is a clear duty on the part of the Minister of Finance under such circumstances. The minister denied that there was a leak. I am not saying there was a leak because I do not know-


Donald Methuen Fleming: You had better not.


Murdo William Martin: But I do know there were statements made by responsible newspaper writers in journals which have a status of importance in this country. Why, then, were there no denials of these statements from the Minister of Finance in the house the next day? Was there any denial in this house by the Minister of Finance the next day about this statement?


Donald Methuen Fleming: There was.


Murdo William Martin: The hon. gentleman says there was. There was no denial made by the Minister of Finance. I should like to ask the minister this question, and I am not speaking about him personally, because while I think sometimes he does make



22S7

[Stage Direction]
mistakes in his method of presentation, the last thing I would ever suggest is that he does not possess the fullest sense of responsibility. But I ask him this: Has he fully inquired into the reasons why these stories appeared in the papers? The hon. gentleman does not say anything; nevertheless I ask him whether he has fully investigated the reason and the provocation for these articles?
The Minister of Finance does not answer my question. Perhaps he wishes to reflect on it.
Donald Methuen Fleming: No, he does not need to reflect on it. He will deal with it.


Paul Joseph James Martin: Before this session is over he will be asked to give a reply to this question, because that story created the uncertainty that existed, as well as the other statements which have appeared over the last four or five months. In our practice, if a story like that appears the Minister of Finance takes the responsibility at once of approving or denying the validity of the reports. That is the practice under our system of government. I will say no more about this aspect of the matter at this time, but I think upon reflection the hon. gentleman will recognize the validity of what I am saying.
Now the Minister of Finance has brought about a reduction of 2J per cent which, admittedly, is not sufficient. It is regrettable that he cannot explain why it should be 2-J per cent. If he had given the house a budget statement he could have explained why, in the face of all the various obligations facing the government, the reduction could be no more than that figure. This 2J per cent reduction will, I understand, amount to about $2i million in this calendar year, and in the course of a full year to $20 million.
Does the hon. gentleman seriously suggest that this particular reduction is capable of stimulating automobile sales to the point where we will be able in the foreseeable months ahead to have a level of employment in the automobile industry consistent with what is undoubtedly one of the objects the minister had in mind? I can only say this to him; that he has done himself little justice in not prefacing this particular tax change by a statement which would outline to the country the economic position of the nation as the hon. gentleman sees it in terms of the additional social expenditures which have been made, in terms of possible expenditures that may be made, for instance, in hospital insurance, and so on.
Is it because the hon. gentleman has embarked upon a program that is away beyond what he considered possible that he found it difficult to take advantage of the traditional
Excise Tax Act
practice of prefacing tax statutes by a review of the financial state of the nation? Until the minister does that he will satisfy no one in this country that this particular reduction was the reduction the government really had in mind, and he will not remove the concern which many people feel as to why the reduction should be 2J per cent and not complete abolition or at least a reduction of half the total amount.
The Minister of Finance has the opportunity now of giving us an explanation of this. He has the opportunity now of indicating why he could not, or did not, effect a greater reduction; and if he takes advantage of it he will be contributing in a very constructive way to the solution of a problem which affects thousands of people in my constituency and other constituencies in Canada, who as a result, in the main, of the policies of this government are out of work.


James MacKerras Macdonnell: Mr. Speaker, I am intervening for a few moments in this debate only because of the fact that the hon. member for Essex East did me the honour of calling me as an involuntary witness to support his argument. I was very surprised when he stated that I had taken a vigorous part in debates on this excise tax earlier in the year, and while my memory is not infallible I thought he was wrong. I have since searched the Hansard index, but I could not find that I had anything to say on this subject.
I suppose when one is in difficulty any port in a storm will do and the minister's roving eye just caught me, as I say, as an involuntary witness; and I think I should just explain that I wish to be excused.
I should like now to say a word about the hon. member for Winnipeg North Centre (Mr. Knowles), for whom I have a very great respect and whose arguments I have always thought worthy of respect even while I disagreed with them. But today, if I understood the hon. member correctly, he advanced a proposition which seemed to me one of the most extraordinary ever advanced in this house, and certainly a very extraordinary one to come from him. If I understood him correctly, he practically said that because there had been a newspaper report saying there was to be a 5 per cent reduction, there was therefore an obligation on the government to do that very thing. That is all I could make out of what he said. He may correct me if I am in error, if he wishes to do so, but it seemed to me that was what he said.


Stanley Howard Knowles: Will the minister permit a question? Did I not say that if this was because of newspaper

Excise Tax Act
reports, which some people regarded as having been leaked, that it was to be 5 per cent; if that was the reason the minister felt he could not give that figure and made it 7-| per cent, would he not-


James MacKerras Macdonnell: There we seem to have
two things mixed up, one the newspaper report and the other the allegation of a leak. First may I say that I personally think there was no leak; and the suggestion that the government in trying to exercise sound discretion is to be considered responsible for a statement in the press which is alleged to be on the basis of a leak seems to me just as preposterous as what I commented on a few moments ago.


Stanley Howard Knowles: Will the minister permit a question on that point? Does he know whether there has been any investigation by the government to ascertain whether or not there was a leak?


James MacKerras Macdonnell: I know the government believes, and has reason to believe, there was no leak, and that is all I can say or anyone needs to say.
Now I wish to say a word on the merits of this matter. Of course we should have liked to wipe off the whole of this tax. We should like to wipe off all taxes tomorrow, but we had to consider, in somewhat limited circumstances, how much tax relief should be given. We should have liked to give far more. Incidentally, I would remind the house again that there was no reduction given last year.
Second, we have the hon. member for Essex East tossing about figures of unemployment and saying there were thousands and thousands of men unemployed. I notice he did not get down to details in his speech, and I hope and believe the figures are not as bad as he suggested.


Paul Joseph James Martin: Ten thousand in Windsor.


James MacKerras Macdonnell: The figures given at the time in newspaper reports were tremendous, and I am inclined to think they were exaggerated. I hope when the final words are spoken we will find that the position is not as bad as the hon. member for Essex East appeared to think.
Another thing I wish to remark on is that he apparently attributed the present position very largely to uncertainty. Well, there is no uncertainty now. The tax reduction has been announced. I just wish to say that I think the hon. member for Essex East has tried in every way to make this appear as a tremendous disaster in the body politic, while I do not think it is.


Bert Raymond Leboe: Mr. Speaker, I intend as usual to take only a few minutes in which to make a brief comment on this bill. Undoubtedly buyers of automobiles throughout the country will welcome the small amount of relief that is given in the reduction of excise tax but I think the very fact that this small reduction is welcome points up the economic position of a great many people in Canada. The few dollars represented by the reduction in this tax will be diminished by the reduction in trade-in value of the automobile which is traded in on the new vehicle. The amount of benefit through the reduction of the tax will be diminished according to the age of the particular automobile that will be traded in on the purchase of a new car.
I think we must consider the individual in the low-income bracket who sees little or no relief whatever in this reduction. I think I may properly question whether a reduction of 24 per cent in the price of an automobile is going to have any effect on the employment situation. I say believing it to be true that the reduction of 2\ per cent will bring no relief to the unemployment situation to any degree that would be satisfactory to those in that industry.
I also think that if the government were sincere in trying to help those in the low-income bracket a reduction in the sales tax would have been a much more effective way of bringing about that relief. The present reduction is not going to help the people in the low-income bracket in any way and it is that group who would benefit most greatly by an increased reduction. I think we should have gone further and reduced the sales tax or not have bothered with a reduction at all.
As far as the situation regarding the comparison between the tax is concerned it is known that this tax does not affect the householder or the individual who has perhaps just married and is setting himself up in a home in that it offers them no relief whatever. The beneficial results from the present reduction are very meager indeed and will not really be considered by the people of this country as having any material effect upon their lives.


Frederick Samuel Zaplitny: Mr. Speaker, I believe that hon. members of this house and the public are trying to seriously assess just what it was that we had brought into this house last week. It has been described as a budget which the Minister of Finance (Mr. Fleming) strenuously denies it is. It has been described as a financial statement but as such, of course, it is quite incomplete. My

own view is that the only thing we could call it is a "budgie" because it is strictly for the birds.
There has been some argument as to whether a resolution should have preceded this bill. 1 do not intend to rehash that argument because it has now been settled by a ruling but I would point out to you that on the very wording of the bill I think it can be very strongly argued that this is a measure to impose a tax rather than to eliminate or reduce the tax because if you will examine the bill it begins in clause 1 by saying that-


Mr. Speaker:: Order. I think my hon. friend will appreciate that he is contravening the rules in two respects; one, he is challenging a ruling I have already made and, two, he is proceeding to examine the bill in detail when we are only at the second reading stage.


Frederick Samuel Zaplitny: I bow to your ruling, Mr. Speaker, and I will not pursue that argument any further but I wish that the Minister of Finance some time during the course of this debate or as we proceed with a clause by clause examination of the bill would give us some information as to whether the pledges made by the present Prime Minister (Mr. Diefenbaker) are being fulfilled by the statement the Minister of Finance made the other day.


Donald Methuen Fleming: I can answer that right now. They are, yes.


Frederick Samuel Zaplitny: The Minister of Finance says they are. If that is his statement then he will have to repudiate a great deal of what the Prime Minister said during the election campaign and before. There has been some question as to what the Prime Minister did say but I have not heard this minister or the Prime Minister deny the widely reported statement made during the election campaign to the effect that it was the plan of the Prime Minister if his party was elected to power to call a session of parliament in September in order to reduce taxes. That is not being denied, as I understand it, and to that extent the minister certainly cannot claim that the government is fulfilling its pledges.
The Prime Minister then went on to say that the average Canadian family is overtaxed by $120 a year. Rough calculations would show that in dollars this would mean that in his opinion the public was overtaxed by an amount in the neighbourhood of $500 million per year. The results of the statement of the Minister of Finance to the house about tax changes would appear to add up to approximately $178 million. Again the pledges of the Prime Minister are falling short by something
Excise Tax Act
like $300 million. Surely in the face of that the Minister of Finance will not claim the government is fulfilling its pledges.
Before this debate concludes I would also like to have the minister give some information as to the reason for the singling out of this particular tax. The hon. member for Winnipeg North Centre (Mr. Knowles) has already made the case for a further reduction in this tax or the elimination of it but there are other articles on which there is an excise tax and I wonder if when he is replying at the end of this debate the minister would give us a list of the articles on which there is an excise tax comparable to that on automobiles and give us the reasons why this particular one was singled out.
It has been suggested, and again denied by the Minister of Finance, that the reason this particular tax was singled out for reduction, slight as it may be, was because the government was put on the spot by certain newspaper reports which made it appear as if some advance information had got out to the effect that there would be a reduction in this particular tax and as a result of that there were large-scale lay-offs in the automobile industry. The government has assured us that there has been no leak. Of course we can only surmise as to how this information got out and at the moment we have to accept the government's assurances that there was no leak, although there might have been a drip. I would like before this debate ends to have the minister point out to us why this tax was singled out for reduction and why other articles subject to excise tax were not referred to, touched upon or the tax not reduced. I would also like to have him explain why the sales tax was not considered for reduction.
I agree thoroughly with the hon. member for Cariboo (Mr. Leboe) who has just taken his seat, that if it were the desire to spread the benefit of tax reduction as widely as possible among the Canadian people and to give the greatest measure of relief from taxation to those in the lowest income brackets, then certainly the proper way to do it, the proper place to begin, would have been with the sales tax which now stands at 10 per cent and applies to a great many articles which definitely could be classed as necessities or essentials.
I am not discounting the value of an automobile. To many people in Canada it is a necessity; but one must remember that there are still a great number of families in this country who are not in a position to drive an automobile, have not the finances with which to purchase or to maintain one, even if they could purchase one. If the proposal was to give tax relief on that level

Excise Tax Act
to incomes where there is the greatest need, -and that is the lowest level of income- certainly a cut in the sales tax would be much more equitable and effective than this particular bill which we are now considering.
I hope the minister will take advantage of the opportunity to inform the house on the thinking of the government which led them to believe that a tax cut of 2J per cent on automobiles was a step toward fulfilling the pledge made by the Prime Minister, along with his thinking that the average Canadian family was being overtaxed by $120 a year, because this does not begin to fulfil that pledge and, in my opinion, it does not even begin in the proper place where it could have the most beneficial effect.


Mr. R. D. Thrasher (Essex South):: Mr. Speaker, since I come from one of the ridings of Essex county, and from an area which is adversely affected by the drop in the production of automobiles in Canada, I would not want to overlook this opportunity to say a few words. As one who was formerly an employee in the automobile industry, I think I do have some knowledge of this situation. I might say that I was on the platform on May 10 when the Prime Minister (Mr. Diefenbaker) made his statement in the city of Windsor with regard to the policy of the present government and the way in which they were going to handle this matter of excise tax on automobiles.
I should like to assure the hon. members who are present here today that this government has given more than the Prime Minister told the citizens of Windsor on that particular day they would be given. Less than two weeks ago the Minister of National Revenue (Mr. Nowlan) assured the automobile dealers across Canada that they would not suffer any losses if there was a reduction in excise tax. He assured them in such a way that they could continue to carry on their business without having to worry about the consignment policy or the legislation which was brought in by the previous government some time ago, which was not practicable or acceptable to that industry. It did nothing for the dealers of Canada at that time.
It is well known to hon. members that the dealers in Canada did suffer substantial losses in the past as a result of reduction in the excise tax. I might say there is another matter that I should like to refer to, namely the fact that many dealers across the country have substantial inventories of used cars, and any substantial reduction in this tax, of course, would lead to a substantial loss on the part of those dealers. There would be no

way in which to reimburse them for those losses that they would take on their used cars.
There is another matter to which I would like to refer. The hon. member for Essex East (Mr. Martin) for whom I have a great deal of respect-


Paul Joseph James Martin: It is mutual.


Richard Devere Thrasher: -made a suggestion here today. And I would like to suggest to the house that he was making a little bit of political hay because a week ago last Monday the hon. member referred to the fact that all that was necessary for the government to do was to make a statement concerning this tax and indicate their intention with regard to it and it would cure all the evils in the automobile industry. In view of what he said at that time I am sure all of us will recognize that his remarks here today were made for no other purpose than that of making political hay.


Some hon. Members:: Order.


Donald Methuen Fleming: Hear, hear!


Mr. Bell (Carleton):: The hay will spoil, too.


Paul Joseph James Martin: I hope he did.
Hon. Donald M. Fleming (Minister of
Finance): Mr. Speaker,-


Mr. Speaker:: If the minister speaks now he will close the debate.


Donald Methuen Fleming: Mr. Speaker, I welcome this opportunity to deal with some of the statements that have been made here today in the course of this debate.
One thing should not need to be made clear again but the hon. member for Winnipeg North Centre (Mr. Knowles) insists on referring to what I had to say in the house last Friday evening as the introduction of a budget. Let me make it quite clear that it was not a budget; it was a statement of the financial policies of the government and it was a statement of the financial position of the country. I had given the house on earlier occasions an undertaking to do that and that undertaking was fulfilled.
But we have this extraordinary proposition put forward by several speakers in the opposition that the country and the house were not given a financial statement. It is evident, Mr. Speaker, that hon. members making that statement have not taken the trouble to pay the slightest attention to what I had to say about the financial position as detailed at pages 2002 and 2003 of Hansard on Friday evening. I went over it in detail, pointing out that we were operating within the limits of the budget introduced by Mr. Harris on behalf of the former government last March

and that within that limit we were assessing now the changes that were evident both in contemplated receipts and contemplated expenditures. I went into that in full detail, Mr. Speaker, and then I finished up by putting a table on Hansard.
Now, giving those hon. members opposite who have spoken in the way they have today full credit for intelligence and sincerity, I say that there can be only one inference and that is they did not listen to what was said on Friday night, and they have not taken the trouble to refer to Hansard since. What I said on this subject of the financial position, operating within the limits of Mr. Harris' budget, is this, as reported at page 2002 of Hansard:
My predecessor, in presenting the budget for the current fiscal year last March, forecast revenues of $5,170 million; expenditures of $5,018 million and a surplus of $152 million. We have now reasonably complete figures for eight months of the year and thus are able to make revised estimates which reflect both the changes in economic development and changes in government policies.
On the revenue side of the accounts I am prepared to accept the forecast which was presented to the house last March.
I went on to point out that there were some variations with respect to the yields of particular taxes that are evident now and I said:
At present it seems probable that receipts from income taxes will be somewhat above the forecast and revenues from customs duties and some commodity taxes will be somewhat below the earlier anticipations, but, on balance, I expect that the various increases and decreases will just about cancel each other out, leaving the total revenue figure unchanged at $5,170 million.
What more could be said about the revenue picture than that, Mr. Speaker? Then, I turned to the expenditure side and I said:
On the expenditures side of the accounts my predecessor had forecast a total of $5,018 million. Since then there have been substantial increases in expenditure arising in part out of changing economic developments and in part from new policies which we have recommended and which parliament has approved.
And, then, sir, I went on to catalogue in detail those changes and the amounts which were reflected in consequence in the balance of ways and means. I said:
For example, we are having to find an additional $25 million for interest and other charges on the public debt as a result of the sharp increase in interest rates which occurred during the spring and summer months.
The second change was this:
Then I am advised by the management of Canadian National Railways that reduction in the volume of rail traffic and higher costs of operation will mean that we shall have to meet a deficit in the railway's operation of about $28 million.
Then, the third change I pointed out was this:
On the policy side. hon. members will recall that increases in public service salaries and in the
Excise Tax Act
defence services pay and allowances have been approved in an amount which will total about $100 million for the 11 months of the fiscal year commencing May 1, including statutory matching payments into the superannuation account.
Then, I took the fourth matter:
The increase in old age pensions is responsible for most of the increased deficit in the old age security fund of $50 million.
Then, I took the fifth matter:
Increases in our contributions to old age assistance and to the blind and disabled persons allowances will cost the federal treasury an additional $1 million this year.
Then, I took the sixth matter:
Increases in veterans benefits will add a further $3 million to this year's expenditures,-
Here is the seventh matter:
-and the recent agreement with the provinces to eliminate the ''threshold" on unemployment assistance will also cost us $3 million in this fiscal year.
There are seven matters referred to in detail, just as much detail as any minister of finance could give in bringing in a budget. Then, I tallied them up and said:
All these increases add up to $210 million.


Stanley Howard Knowles: Would the minister permit a question?


Donald Methuen Fleming: Yes.


Stanley Howard Knowles: Would he tell us where he itemized what it will cost to make payments under the hospital insurance act, or under the agricultural legislation before parliament or under the new federal-provincial fiscal arrangements?


Donald Methuen Fleming: Those items are not here because they are not yet in effect. I dealt here with those that have been brought into effect by parliament on the recommendation of the government, and also that one which was specifically announced by the Prime Minister (Mr. Diefenbaker) recently. We are dealing here with expenditures up to next March 31, the next three and a half months.
Then I went on to deal with the way in which we were going to take care of the additional commitments which I had just catalogued. I pointed out that this figure of $210 million would be met, in large part, by three particular things that the government had chosen to do. I pointed out, first of all, we had achieved savings by reductions in estimate expenditures of $64 million. I also referred, sir, to our intention with respect to two items of $50 million each. Here, I read my remarks from page 2003 of Hansard of December 6, 1957:
Finally, I do not propose to adopt the practice of my predecessor to transfer large lump sums of $50 million each into what he called "the reserve against assets" and to reduce the unamortized deficit in the superannuation account. I consider it quite unnecessary to do so.

Excise Tax Act
The hon. member for Winnipeg North Centre on the strength of that statement talked about juggling and used other equally erroneous and misleading phrases. The hon. member has evidently forgotten, Mr. Speaker, the way in which Mr. Harris dealt with this matter in his budget on March 14. Here is what Mr. Harris had to say as recorded in Hansard of that date, page 2221:
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.
Now, Mr. Speaker, that is all that Mr. Harris had to say in a very lengthy budget presentation about his intention to credit $50 million to the reserve against assets. What did he say about the other $50 million item? This is all he said:
I am also proposing to appropriate another $50 million to reduce the unamortized deficit in our superannuation account to $89 million.
That is all Mr. Harris had to say about the second $50 million. The way the former government brought these into the budget was not by way of an item in the estimates; far from it. What the minister of finance at that time, March 14, indicated it was his intention to do in this respect, following his own example in the fiscal year ended March 31, 1957, so far as the first $50 million item is concerned, was simply by government decision to put that sum into the reserve against assets, an executive decision. As to the other $50 million, all he was indicating here was that he would ask parliament to appropriate $50 million for that purpose. We do not consider either of these items necessary or proper to transfer or to set up in the way in which the former government proposed to do, as items charged against the current year.
In this respect, sir, we have said nothing new so far as our position is concerned. When the former government proposed to secrete, to hide these items which otherwise would have gone to swell their surplus still further, we made our position abundantly clear. We disapproved of this way of hiding the extent of the overtaxation.


James Allen (Jim) Byrne: Mr. Speaker, would the hon. member permit a question?


Donald Methuen Fleming: Will the hon. member permit me to make my speech, and I shall be only too happy to answer the questions when we are in committee of the whole later on.


James Allen (Jim) Byrne: Mr. Speaker-


Donald Methuen Fleming: We were completely consistent on that. Those who are now talking about juggling or sleight of hand should actually direct those remarks to the methods of the

former government which resorted to these expedients to hide the extent of the overtaxation.


James Allen (Jim) Byrne: Would the hon. member permit a question on that point?


Donald Methuen Fleming: We have given to the house a statement that we do not propose to follow the intentions of Mr. Harris in this regard. Mr. Harris had stated his intention to set up these two $50 million items, and presumably he would have done that some time during the course of the year. He had not yet done it, Mr. Speaker, when that government went out of office. We are not undoing something that was done; we are not taking something out of a reserve, but we are simply saying that what Mr. Harris said he was going to do and did not do, we are not going to do because we do not believe it is sound.
In saying what I said on this subject on Friday evening I believe we Progressive Conservatives are completely consistent with what we have said on this subject in the past. There could have been no surprise on the part of any member of this house who was aware of the facts or who had taken the slightest trouble to inform himself of the position of this party on this matter in times past. I would say if hon. members will read further in my speech they will find the amounts all set out in the tables. They were given a full statement of the effect upon the balance of ways and means of the changes we were inviting the house to make in the two bills that are now before the house, the present one and the one to follow to amend the Income Tax Act.
Having disposed, I trust, of that most misleading charge that was made against us and having shown that we have given a full accounting to the house of the financial position of this country, within the limits of the budget under which we have had to work, the budget of the former government, and having shown very clearly and precisely how the changes we are now inviting the house to approve will affect the balance of ways and means, let me now deal with some of the observations that have been made concerning the present measure and the reduction that it will effect in the excise tax on motor cars.
This tax, of course, has been in effect for a very long time. At the present time, the 10 per cent tax is yielding in revenue $80 million for a full year. The present reduction of 2 J per cent, which is a 25 per cent reduction in the existing rate of tax, will involve a loss of revenue to the treasury of $20 million in a full year and the sizeable amount of $8 million during the present year.

The hon. member for Essex East (Mr. Martin) did his ingenious best to persuade the house to believe, even in the face of the ruling by Mr. Speaker, that the Prime Minister had said something which the Prime Minister made it quite clear in this house he did not say. The Prime Minister has made it abundantly clear for all who recognize and observe the rules of this house that at no time did he say that the tax would be removed or that the tax would be eliminated. He did indicate, as we have done in years past, that we do not like this tax, that we do not like the way the sales tax has operated, that we do not like the way in which the full burden of many of the other taxes is operating. We have already effected a substantial reduction in taxation, infinitely more than hon. members opposite ever thought we would be able to do. I hope that if I hold this portfolio long enough I will have opportunities of proposing to this house other reductions in the burden of taxation. I have not at all forgotten-nor have I departed in thought or intent one iota from it-what I have had to say in times past about the burden of taxation upon the Canadian people and the dangers of that heavy burden blighting incentive in this country.
Therefore let it be quite understood, Mr. Speaker, within the limits in which the government had to operate-a partial year; a budget that had already been adopted; spending and taxation programs already committed on the part of the former government before it went out of office-that the wonder of it all is that we have been able to propose reductions as high as those we have proposed.
Never at any time in his references to the excise tax on motor cars in the election campaign did the Prime Minister mention any particular percentage of reduction. Never did he do that. We are giving fulfilment in the present bill to the Prime Minister's declared wish to bring about a reduction in this tax.
Mr. Speaker, I will not express surprise at some of those very irresponsible things that were said by the hon. member for Essex East (Mr. Martin): I will never express surprise at irresponsible statements coming from my hon. friend. In one of the series of innuendos with which he, with not too great courage, larded up Hansard today, there was one in which he sought to leave the impression that notwithstanding denials in this house on behalf of the government, there had been some leak with respect to the government's intention to reduce this tax. I say here today, Mr. Speaker, as I said in the house on December 3 in categorical terms,
Excise Tax Act
that there was no leak. I do not know how much more plainly I can put it than that. There was no leak.
Having made my statement last Friday night and having placed this bill before the house I can make some statements now that I was not free to make up until last Friday night. I can say that there could not possibly have been a leak because this matter had not been discussed with any of the officials up to that time. There were two men and two men alone in the government who had discussed what possibly might be done in that respect. They were the Prime Minister and the Minister of Finance and no one else. How could there be a leak?


An hon. Member:: One-man government.


Donald Methuen Fleming: No; it is not one-man
government.


An hon. Member:: Two-man government, then.


Donald Methuen Fleming: In due time this matter was discussed and the appropriate decision arrived at and that decision is now placed before the house. But I am glad to be able to put that statement on the record, Mr. Speaker. I was not able to do it at that time because it would have given rise to more newspaper speculation, and speculation had already done a good deal of harm in the motor car industry. I was therefore not going to say anything in this house that could give any occasion whatever for speculation on the subject. The statements I made in this house from the time I was first asked a question on this matter by the hon. member for Acadia (Mr. Quelch) on November 28 adhere strictly to that responsible course of giving no countenance whatever to these speculative rumours; no countenance whatever.


Stanley Howard Knowles: Would the minister permit a question?


Donald Methuen Fleming: Yes.


Stanley Howard Knowles: On
what date was the cabinet decision taken with regard to this matter?


Donald Methuen Fleming: The decision was taken-


An hon. Member:: By the minister.


Donald Methuen Fleming: No.


Mr. Gauthier (Portneuf):: Not the cabinet; two men.


Donald Methuen Fleming: The decision was taken following, not before, this rash of rumours that came out.


An hon. Member:: When?

Excise Tax Act


Donald Methuen Fleming: The government had no responsibility whatever for any such rumours. The government had no responsibility whatever for the speculation that was indulged in and which some hon. members in this house, with scant regard for the rights and interests of the automobile industry and those employed in it, chose to magnify and give currency to. On some occasions, Mr. Speaker, after listening to the hon. member for Winnipeg North Centre you would have thought that he measured his responsibility as a member of parliament in terms of the extent to which he could turn the House of Commons into a rumour factory.


Paul Joseph James Martin: I rise on a point of order, Mr. Speaker. I disagree with the political philosophy of the hon. member for Winnipeg North Centre and with many of the things that he does,-


Stanley Howard Knowles: Oh,
not so many.


Paul Joseph James Martin: -but as a member of this house I will not agree that it is in order for the Minister of Finance (Mr. Fleming) to make that kind of observation against the hon. member for Winnipeg North Centre.


Mr. Ellis:: We consider where it comes from.


Donald Methuen Fleming: The hon. member for Essex East in another of his irresponsible statements this afternoon, undertook to say-


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order. May I ask what sort of language these two gentlemen would use against each other if they were not old friends?


Donald Methuen Fleming: I will let my hon. friend in on an old secret. My friend the hon. member for Essex East and I first made the acquaintance of each other as freshmen students at the University of Toronto in 1921.


Stanley Howard Knowles: You
are still pretty fresh.


Donald Methuen Fleming: It happened that on the curriculum for the honour matriculation in this province in the previous year there was in the German course a book entitled "Paule Poppenspaler". If my hon. friend would be interested in following the matter, as a term of endearment applying to my hon. friend opposite, I dubbed him by the English equivalent of that title, namely Paul, the puppet player. While we have strong differences in the house and I have no doubt will continue to do so-


Stanley Howard Knowles: What was your name?


Donald Methuen Fleming: I suppose if I were not so fond of the hon. member for Essex East I would really sometime expose his irresponsibility in the house. It is only this deep affection that I have for him that imposes such a severe restriction on me.


Paul Joseph James Martin: I cannot take all this, Mr. Speaker.


Donald Methuen Fleming: To come back to my hon. friend for Essex East, he had something to say this afternoon about unemployment and about dropping production in the motor car industry. The drop in production in the motor car industry in this country, as compared with 1956 figures, did not begin later than June. The turn in the trend came at the beginning of April this year. What kind of course would that have dictated on the part of a responsible government had there been a responsible government in office at that time? What course of conduct would that have dictated to the hon. member for Essex East, as a member of the government of that time? Do you not think, Mr. Speaker, that his concern for that industry would have been reflected in something that he had to say or, better still, in something that he would have done? I have listened to a good many speeches by my hon. friend-


Paul Joseph James Martin: Not enough.


Donald Methuen Fleming: -but this is the first time that I recall hearing the hon. member for Essex East in this house advocating a reduction in the excise tax on motor cars. I think the best test of his earnestness in this respect is his record and, Mr. Speaker, that record is not only a record of utter silence on the subject, that record is a complete blank.
We do not even have to go back to former sessions for proof. When the hon. member was speaking in this house on this very subject but a few days ago-to be exact on the 2nd day of December, with the full knowledge of the harm that was being done to the automotive industry by the rash of rumours that was going about with reference to the supposed reduction of 5 per cent; and while steps were being taken in the face of withdrawal of orders to close and curtail operations in some of these industries-did the hon. member even then ask for reductions in income tax? No, he did not. Here are his words as recorded on page 1728 of Hansard in the second column-


Murdo William Martin: What page?


Donald Methuen Fleming: 1728.


Murdo William Martin: The softness of voice.


Donald Methuen Fleming: He said:
The Prime Minister knows that this situation of unemployment in the automobile industry can be cured tomorrow if this government would simply make an announcement one way or another as to the course it proposes to follow.


Paul Joseph James Martin: That is right.


Donald Methuen Fleming: One way or the other; either tax reduction or no tax reduction. He was not asking for a reduction in tax; all he was asking for was a statement on the part of the government as to whether they would or would not reduce the tax, because that is enough to meet the problem of unemployment in the light of the curtailment of production which had then been inaugurated by the motor car industry in the light of the rumours that were going about at that time.


Murdo William Martin: On a point of order, Mr. Speaker, as my hon. friend has done me the honour of quoting my words perhaps he will also look at page 1728 where I said in answer to a question in the following words: "What matter?" the following:
The hon. member asks "what matter?" The matter of the elimination or reduction of excise tax on automobiles.
I regret that I have to announce to my hon. friend that I now have to leave to go to the city of Windsor because of the situation there.


Some hon. Members:: Oh, oh.


Thomas Miller Bell: Which situation?


Donald Methuen Fleming: Mr. Speaker, my hon. friend is only making things worse for himself, because he has indicated what he had in mind at that time. He has attempted to attribute various remarks to the Prime Minister-quite improperly I might say and without any foundation-but at that time the best thing he could call upon the government to do, having as he had full knowledge of the situation, was to say whether or not it was going to propose a tax cut-either one would be sufficient to put an end to unemployment in the industry in Windsor.


Murdo William Martin: My hon. friend is bound under the rules to quote a member correctly. Because of the ruling of the Speaker up until that moment I had not referred to the excise tax. The Speaker had said that any direct reference to that subject at that time would be out of order. It was only because of the great help given to me by the hon. member for Notre Dame de Grace (Mr. Hamilton) when he asked me this question:
What matter?
Excise Tax Act
That I said, having been invited by the hon. member for Notre Dame de Grace to explain to what matter I was referring:
The matter of the elimination or reduction of excise tax on automobiles.
Those are my very words and that was the matter to which I referred. I was telling the Prime Minister, as I tell my hon. friend now, that the responsibility for tax policy is not upon the opposition but is upon my hon. friend.


Donald Methuen Fleming: Mr. Speaker, did you ever hear a more laboured explanation than that?


Mr. Lesage:: What about your own?


Donald Methuen Fleming: All the hon. gentleman does is to get himself in deeper and deeper. I have quoted his words and they will dog him to the end of his political days.
Now I was asked a question as to how it was that we chose this particular tax for a reduction. The answer is that we thought a fair tax

to the extent to which we were able to act-would be reflected by the 21- per cent reduction. At this point, Mr. Speaker, may I wish good luck in his hopeless undertaking to my hon. friend the member for Essex East upon his departure.


Some hon. Members:: Oh, oh.


An hon. Member:: There is no flag on his desk.


Donald Methuen Fleming: I am afraid it is hopeless; I am going to give him my full backing, but I think he is going to need more than that.


An hon. Member:: You can say that again.


Stanley Howard Knowles: You should know.


Mr. Robichaud:: You might once again say tomorrow that you did not say it.


Donald Methuen Fleming: No, I have never denied having said anything that I did say, and I would commend that example to the member who has just interrupted me.
I say that we thought this was a suitable tax to be reduced to the extent to which we did reduce it. That is the position; we had to take a look at the whole field of taxation. We would have liked to have made other changes but we had to operate within the limits of a budget which had been bequeathed to us by the former government. In that respect may I remind hon. members that Mr. Harris last March, with the opportunity of a full 12-month year before him in which to make whatever changes he thought were warranted and justified, found it, within his charitable intent, and within the means of this country to bring about a reduction of $128 million. That was for a full 12-month

Excise Tax Act
period while we, I hope with a full sense of responsibility, have asked this house to put into effect reductions in taxes-on top of his reductions-which will bring about relief to the Canadian people for a similar 12-month period in the amount of $178 million.
Let it not be forgotten that we did one thing which ought to have been done by that former government when, two years ago, it proposed to this house a reduction in the tax from the then rate of 15 per cent to a rate of 10 per cent. They left the full burden of the tax to be paid on cars purchased before the date on which the reduction came into effect to be borne by the dealers of this country.
Hon. members who were in the house in 1955 will well remember that cases were put before the house-actual cases in the experience of dealers in Canada-where they suffered losses running into thousands of dollars just because of that callous action on the part of the party opposite when they were the government. We on the other hand have taken steps which that government said were impossible in order to guarantee to the dealers of Canada, who already have cars on their floors and in their stock upon which they have paid the tax, that they will be able to obtain a refund of tax already paid by them. None of them will, therefore, suffer a loss of a five cent piece as a result of this reduction in taxation. We have also put on record undertakings which we have received that the benefit of the reduction will be passed on forthwith and that the public will receive the benefit of it.
Mr. Speaker, we are growing accustomed to the sort of theatrical exhibition we have seen here today and which we saw here on Friday night. Hon. members opposite delight in delivering themselves of bitter denunciations. Mr. Speaker, in a leading Canadian newspaper last week there is a delightful cartoon. Here is a picture, Mr. Speaker, of a scene outside the front door of the parliament buildings, and here are two hon. gentlemen, obviously members of parliament, obviously members of the opposition, walking down the steps, and one of them is saying to the other: "That was a slashing attack you made on the government just before we voted unanimous confidence".
Well, Mr. Speaker, we have heard the slashing attacks. There will be opportunity now to determine whether there will be on the part of hon. gentlemen opposite a vote of unanimous confidence in the government, because I am telling them now that they will have the opportunity, after their slashing attacks, to vote on the second reading of this measure.

And so, Mr. Speaker, I close with some words which were uttered by Sir Winston Churchill. I think however apt they may have been as applied by him to the people to whom he intended they should apply at the time, he could not have foreseen how infinitely apt they would be as applied to hon. gentlemen opposite. Here are his words:
So they go on in strange paradox-decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent.


Mr. Deputy Speaker:: Order. The question is on the main motion. All those in favour will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: All those against, will please say nay.
I declare the motion carried.


Some hon. Members:: The motion is carried.


Donald Methuen Fleming: Mr. Speaker, may I bring to your attention the fact that there are more than five members who have risen.


Some hon. Members:: It has been carried.


Pierre Gauthier: Nobody rose.


Stanley Howard Knowles: Mr. Chairman, as is now very clear, there is unanimous support in this house for the proposal that the excise tax on automobiles should be reduced. It is also unanimous that it should be reduced at least as far down as to the rate of per cent. Some of us still feel that it should be reduced still further.
Excise Tax Act


William Moore Benidickson: Try a vote on that.


Stanley Howard Knowles: And
I propose in a moment to make a motion to that effect.
Hon. members can see, if anyone questions the validity of my motion, that my desk is loaded with the authorities. There are those who might argue that this tax should be wiped out altogether and I think there is a good case to be made for the fact that automobiles are not today the luxury they used to be. They are, to a great many people such as farmers and workers, a necessity. Indeed, even to those who use them for pleasure, they are a necessary part of life as we live it today. Nevertheless, Mr. Chairman, we in this group feel, as has already been indicated by the hon. member foi Dauphin as well as by others, that there are other places where a tax reduction should be effected. Therefore, we are at this moment proposing that the excise tax on automobiles be reduced to 5 per cent. We suggest that figure as a mark of responsibility. We also feel that it comes a lot closer to the figure that the government would like to have moved itself.
Now, Mr. Chairman, I doubt whether it is necessary to speak at length to make a case for the reduction of this tax; therefore, I conclude my remarks by moving my amendment. I move that:
Clause 1 be amended by deleting from line 8 the words "seven and one-half" and by substituting therefor the word "five".
The clause would then read:
Automobiles adapted or adaptable for passenger use, with seating capacity for not more than 10 persons each . . . five per cent; the tax on automobiles applies on the total price charged for such automobiles, which price shall include all charges for accessories, optional equipment, or any other charges contracted for at the time of sale, whether charged for separately or not; the tax does not apply to automobiles imported under Customs Tariff items 702, 705a, 706 and 707.
I trust, Mr. Chairman, that the committee will accord to this further reduction of the excise tax on automobiles the same unanimity that we were happy to give to the proposal that was before us on second reading.


The Acting Chairman (Mr. Rea):: All those in favour of the amendment-


Donald Methuen Fleming: Mr. Chairman, on a point of order, I submit to you that the amendment is out of order and should be so ruled. This is an amendment introduced by a private member, which has the effect of increasing the proposed reduction in taxation and would thereby remove from the revenue of this country an additional $20 million in a full year and an additional $8 million in the remainder of the present fiscal year. In my

Excise Tax Act
respectful submission no amendment to that effect can be introduced by a private member.
The rule in this respect is clearly established, Mr. Chairman, and there is nothing in the ruling made by Mr. Speaker on Monday that reduces in any particular the full weight of the well-established rule which the present amendment seeks to violate. There are many authorities that can be pointed to. My hon. friend says he has his. I draw your attention to a passage in May's fifteenth edition, a well-known and standard work, which Mr. Speaker declared on Monday to be fully authoritative in relation to the rules of this parliament. There is a passage at page 683 which says:
Hence, on the analogy ol a financial resolution, but without the royal recommendation, the motion by which a tax is proposed in committee of ways and means is now treated as the effective expression of the financial initiative of the crown, and therefore as the standard in relation to which the admissibility of amendments is determined.
We are not in committee of ways and means, Mr. Chairman, but we are in committee of the whole, and in my respectful submission there is no difference.
This matter has been before our own house on previous occasions. On the 2nd day of March, 1936, there was before the house a motion by a private member in the following terms:
That, in the opinion of this house, all rural telephone companies should be exempt from federal income tax.
In the journals of the house of March 2, 1936, volume 74, at page 90, you will find this paragraph:
Mr. Speaker ruled the said proposed motion out of order for the reason that it is not framed in such abstract or general terms that it can be entertained by the house. The proposal made therein is for a special reduction in the public revenue. The item to be struck out is mentioned, namely, the income tax levied on rural telephone companies. Such a proposal can only be entertained in the committee of ways and means, and, as May says, page 544, "these proposals must be grafted upon the financial scheme submitted by the government and it must not affect the balance of ways and means voted for the service of the year." True, the motion says that the exemption of the tax "should" and not "shall" be made, but even at that I think the proposal ought to be considered in the committee and not by the house, for it is essentially a ways and means resolution.
The fact that the present amendment is introduced in the committee of the whole does not in any sense take it out of the terms of the ruling there made by Mr. Speaker Casgrain. On that occasion he was saying that if the amendment is not one framed in abstract or general terms, but is one for a special reduction in the public revenue, then it must be ruled out because any such proposal must be grafted upon the financial scheme submitted by the government and it

must not affect the balance of ways and means voted for the service of the year. It is quite obvious, judged by that, this present amendment is clearly out of order.
There is a more recent example, Mr. Chairman. On May 3, 1951, the house, in committee of ways and means, was dealing with the first in a series of resolutions. The first resolution proposed an increase in the sales tax from 8 per cent to 10 per cent and it was strenuously resisted by all parties in the opposition at that time. First of all, there was one amendment introduced by Mr. Thatcher in the following terms:
That clause 4 of the proposed resolution be deleted and that the following be substituted therefor:
That it is expedient to introduce a measure to impose taxation on capital gains to the extent of $16 million so as to maintain the balance of ways and means.
The purpose of Mr. Thatcher in introducing the amendment in that form was to avoid interference with the balance of ways and means. It had been estimated that the result of carrying into effect the resolution then before the house would have been to increase the revenues by $16 million and therefore Mr. Thatcher, in seeking to eliminate that proposal, felt that in order to preserve the balance of ways and means he had to propose an alternative tax to yield revenue of an equal amount. This amendment was ruled out of order in committee, there was an appeal to the house and the ruling that the amendment was out of order was sustained in the house.
Then, there was a second amendment attempted. In this case, Mr. Shaw moved the following amendment in committee of ways and means:
That clause 1 of the proposed amendment to the Excise Tax Act be deleted and the remaining clauses be renumbered accordingly.
This amendment was ruled out of order by the chairman. There was an appeal to the house and the ruling of the chairman was sustained. It seems to me, Mr. Chairman, that the amendment now submitted by the member for Winnipeg North Centre is absolutely on all fours, for the purpose of your determination, with the second amendment, the amendment of Mr. Shaw, because it has the effect which I have cited in May. The ruling that was then made was not popular with the opposition at that time, but it was nevertheless the ruling of the chairman of the committee of ways and means who was also chairman of the committee of the whole, and that ruling was sustained. It is, in my respectful submission, a binding precedent, and therefore I submit to you that this amendment, which

would have the effect I have indicated, is clearly out of order and should be so ruled.


Stanley Howard Knowles: appreciate the attention the Minister of Finance has given to the question as to whether or not this amendment is in order. I have taken notes of the points he has made and I shall answer each one of them. First of all, I should like to make the case for the validity of my amendment on the basis of my own study of this situation. May I point out that Mr. Speaker did make a very clear-cut ruling on Monday of this week. He ruled that the bill which we are now discussing did not come under the usual requirements regarding ways and means resolutions. He based that ruling on a citation in May's 11th edition, to the effect that when a bill seeks merely to reduce a tax it does not require the royal recommendation and the prior committee stage.
Now perhaps at this point I have to deal in part with what the Minister of Finance has said. On Monday Mr. Speaker put this bill in that section of the rule books that deals with exceptions to the requirement that there be the royal recommendation and the prior committee stage. I might say that the main citation from which the minister has read just now comes from those sections in May which deal with the kind of bills where the royal recommendation and prior committee stage are necessary. May distinctly separates the two kinds of bills. May says that when a bill does provide for the imposition of taxation or an increase in taxation, then it has to have the royal recommendation and the committee stage. There follows from that, on bills of that kind, the citations about the balance of ways and means which cannot, in those instances, be disturbed.
I tried my best, Mr. Chairman, both on Friday and Monday to persuade the government that in this instance they should not follow May for the reason that May is based on the practice of the British house, and also to get the government to follow the practices in this house which were followed, for example, last March and April by Mr. Harris when he introduced ways and means resolutions prior to the budgetary bills he brought in at that time, all of which made reductions in taxation.
I ask the Minister of Finance to follow me closely on this. On Monday Mr. Speaker, urged to do so by the Minister of Justice and others on that side, quoted from May at page 572, this sentence:
Hence a bill for diminishing or repealing a tax or other public burthen, unless the imposition of a new tax is proposed by way of substitution, needs no royal recommendation or preliminary committee stage, and is brought in upon motion.
Excise Tax Act
Now, Mr. Chairman, one should take the trouble to look at May. May I draw your attention to the fact that beside that citation is a marginal note which says "Reduction of duties, see page 565; of charges, see page 601". I would think that anyone studying procedure, when he sees a note like that, would turn to those pages to see what they say. I will not take time to read what is said on page 565 because that page refers to duties and we are now on taxes, but I do draw the attention of the committee to page 601, as suggested by the marginal note on page 572, and here is what it says:
Reduction of Charges.-Proposals to reduce a burthen upon the people may be made in the house or in committee, no special form of procedure being prescribed for such a motion, or for the introduction of bills which are strictly confined to the reduction of a tax or charge upon the people.
Now note this next sentence. This is what follows from the ruling made by Mr. Speaker on Monday. This is what follows from Mr. Speaker's use of the citation which I felt should not be used but which was used. This is what follows:
It follows that amendments for the reduction of charges, such as of taxes, rates, salaries, tolls, and penalties, can be moved when a bill is considered upon report; and this has been permitted even when, by indirect effect, an amendment created a certain amount of charge.
That is the position in which the government has put this matter. The government asked the house to rely on May. The government asked the Speaker to rule in keeping with May that this was not the kind of bill requiring the royal recommendation, not the kind of bill requiring prior committee stage. The government having requested it to be done in that way, I submit that the government must be consistent and follow through.
In that sentence which I just read, where it says that an amendment can be made in a case like this for a further reduction, there is a reference to a footnote. The footnote at the bottom of page 601, namely footnote 3, refers one to the British House of Commons for a very interesting date, namely July 1, 1853. I have here the Hansard of the British House of Commons of July 1, 1853. I find that on that date the then chancellor of the exchequer, who at that time was the Right Hon. W. E. Gladstone, brought in a resolution for the reduction of a certain tax. The tax, oddly enough, was one on advertisements in newspapers and other periodicals upon which up to that time there had been a tax of one shilling and six pence. Mr. Gladstone moved that that tax be reduced to six pence.
I may say that I wondered a bit, when I first saw this citation at page 601 of May's 11th edition, whether this reduction that

Excise Tax Act
could be made by way of amendment in committee was one that could be made only by a minister of the crown or whether it could be made by a private member. The very first instance that I turned to, simply following through what May tells you to do, is this instance in which Mr. Gladstone was met by an amendment by a private member, Mr. Milner Gibson, who moved an amendment that the tax on advertisements in newspapers and periodicals be reduced from six pence to zero. There was debate. Mr. Gladstone opposed it vigorously, contending for his proposal that the tax should remain at six pence. There were two or three votes in line with the procedure that they have in the House of Commons at Westminster, at the end of which the amendment carried and the tax was wiped out altogether.
Mr. Chairman, the matter is just as clear as that. The citation Mr. Speaker read on Monday, on the basis of which he made his ruling, is clear-and it is the government's ground, not mine-that this was to be regarded as a bill not requiring royal assent, not requiring prior committee stage. May says that in such circumstances when we are in committee on the bill, an amendment can be moved reducing the tax still further; and the instance that May gives, as I say, was on July 1, 1853, in the British house where the government proposed a reduction of a tax and on a private member's amendment like unto the one that I have now moved the tax was reduced still further.


Mr. Maloney:: May I ask the hon. member a question?


Stanley Howard Knowles: Yes.


Arthur Edward Martin Maloney: Would the hon. member inform the committee whether or not objection was taken by way of points of order in the case he cited in the house in Great Britain?


Stanley Howard Knowles: Objection was not taken in that case. I am glad the parliamentary assistant to the Minister of Labour raised that point because that is exactly what I was coming to, namely another instance a few years later where objection was raised by way of a point of order. I came upon this instance by following through the citation which the Minister of Justice gave when he was speaking to his point of order on Monday. He read from a little later edition of May, namely the 15th edition, and he quoted from page 764. Hon. members will recall this sentence that he read;
Provisions for the alleviation of taxation are not subject to the rales of financial procedure. The repeal or reduction of taxes, for instance, by the finance bill, is sometimes preceded by a specific ways and means resolution but this procedure is neither necessary nor usual. Thus, provisions for
[Mr. Knowles (Winnipeg North Centre).)
the repeal or reduction of taxation, the granting or extension of exemptions, the creation or increase of drawbacks, etc., may be presented in bills or inserted by amendment without the preliminary sanction of a ways and means committee.
What I will never understand, Mr. Chairman, is why the Minister of Justice stopped there. Surely in his study he must have noted that there was just one more sentence in that paragraph. He did not read it to us. He must have read it when he looked this up. That one more sentence says this:
The effect of this principle on the power to move amendments to bills will be stated on page 777.
I would think that the Minister of Justice, with his knowledge of how you must follow these things in procedure through to their logical conclusion, would have looked over to page 777 in order to see where he was being taken by his insistence that in this house the government has the right, as in the parliament at Westminster, to introduce a bill such as this without a committee of ways and means resolution. If you do exactly what May says, namely turn over to page 777, you find this paragraph:
Provisions Reducing Existing Charges
The rule that the repeal or reduction of an existing tax, though it may be embodied in a ways and means resolution, is not subject to the rules of financial procedure, applies to the committee and also to the report stages of bills. Hence at these stages amendments are in order to reduce or omit drawbacks or other alleviations of existing taxes proposed by the bill.
There are more sentences in that paragraph but I am sure that I am not leaving out anything that is pertinent to the argument. The point is that at page 777 the logical conclusion to what the minister took from page 764 is stated, namely that if you are going to contend-and I did not take this ground; I wanted the government to do it the other way and the hon. member for Coast-Capilano wanted the government to do it the other way-or if you are going to take the ground that this is the kind of bill concerning which you do not need the royal recommendation or a prior committee stage resolution, then it follows that in committee on the bill amendments can be moved raising or lowering the taxes proposed in the bill.
In this instance at page 777, if one looks to the footnote that is referred to in that paragraph, he finds that he is taken to the House of Commons debates for 1917-18; and on that occasion he will find that there was a proposal to make provision for a reduction in the amount of abatement on the liquor tax levied under United Kingdom legislation. I may say to the parliamentary assistant to the Minister of Labour that points of order were raised as to the propriety of such an amendment being moved by a private member, but the chairman ruled that since this was the kind of bill

that was being proceeded with outside of the financial regulations, since this was the kind of bill that was being proceeded with in committee of the whole without a prior ways and means resolution, it was appropriate for a private member to move an amendment reducing the tax or an amendment restoring a tax that was being reduced to a higher level, provided it was not made higher than it was originally.
I may say there was another instance which was referred to in these various notes which take you to the British Hansard, namely one in 1868 and on that occasion also the propriety of the motion was questioned by a member on the government side, but the chairman ruled-and as a matter of fact he referred back to the case in 1853-that this was in order so long as you were working, not within the framework of the kind of bill that requires royal approval and the prior committee stage, so long as you were working within the framework of the kind of bill which is merely for a reduction of a proposed tax.
Mr. Chairman, I am asking this house to be consistent. I am asking the house to do the same thing which was done on Monday, to treat this as a bill, not in the terms in which we wanted it to be treated, but in the terms of the Speaker's ruling, namely that it was the kind of bill that was only for a reduction and therefore did not require a ways and means committee resolution in advance.
As I say, Mr. Chairman, that was not my position, but when the Speaker ruled that way I accepted the ruling and I would like a ruling to be made today consistent with the ruling which was made on Monday. If you look at the citations in our own books which support the position I am now taking, you will find for example in Beauchesne's third edition, citation 502 which reads:
A private member may move that certain specified taxes be readjusted and that the scope of tax exemptions be enlarged.
Now that refers to a ruling that was made by Mr. Speaker Lemieux on April 28, 1924, by a coincidence, on a motion by my predecessor, the former hon. member for Winnipeg North Centre, Mr. J. S. Woodsworth. It was a motion put when the Speaker was in the chair; it was not a proposal in committee, but Mr. Speaker Lemieux, despite the fact that there were strong objections to Mr. Woodsworth's amendment and having taken the matter under consideration over the week end and having come back with a lengthy ruling, ruled in part,-and I will only read a sentence or two of it, recorded
Excise Tax Act
at page 1533 of Hansard of April 28, 1924. After having quoted Mr. Speaker Rhodes he said:
The private member's right to move for a reduction of taxation suffers no limitation under our parliamentary rules and usages.
Then Mr. Speaker Lemieux went on to quote May at page 469 and at page 506 and so on, and also to give an instance of something which Mr. Fielding had done-which gentleman he described as one of the oldest members of the house and as a very eminent authority on parliamentary procedure-with respect to the moving of an amendment on the motion for a committee of ways and means.
Mr. Speaker Lemieux then declared Mr. Woodsworth's amendment in order and it is on the basis of that ruling that Beauchesne wrote his citation 502 that a private member may move that certain specified taxes be readjusted and that the scope of tax exemptions be enlarged. May I also draw your attention to citation No. 497 of Beauchesne's third edition as follows:
No member other than a minister of the crown may introduce a bill for the reduction of duties.
That is clear, and no one is arguing otherwise.
The government must take full responsibility for the taxation levied to provide the revenue. But the house enjoys complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility.-
Now listen to this:
[DOT]-This duty the members may perform by moving amendments to reduce the taxes proposed by the administration.
Now, Mr. Chairman, that citation No. 497 is a companion one to citation 484. We are all familiar with the terms of citation 484 which permits members to make motions reducing, in committee of supply, the amount of a grant. By the same token, citation 497 gives to members the right, in a committee on a taxation bill, to move the reduction of taxes levied by that bill.
Now I turn to some of the arguments advanced by the minister. He talked about the balance of ways and means, but the Minister of Justice the other day said that this is not a budget and we are not called upon to go through the whole ambit of the financial affairs of this country. This is just a reduction in taxes-it is as simple as that. The Minister of Finance also said today that this is not a budget; we are just working within the framework of the budget that was brought down by the former minister of finance, Mr. Harris.
Well, Mr. Chairman, what right has he to say that his tax changes do not represent

Excise Tax Act
a budget and yet to deny to us the right to propose a further tax reduction by saying that such a reduction might upset the balance of ways and means, or in other words upset the budget? Here we are, with reference to the minister's quotation from page 683 of May's 15th edition, in the position where the minister when quoting from this page is actually quoting from the section in May which deals with a proper budget or with bills that have had royal recommendation and have been preceded by a ways and means resolution.
When it is done that way it is a different proposition. If you look at page 683 you will see that it does come within the section on the financial procedure when bills are brought in under a proper budget, as we wanted this one to be brought in. If it is done that way then no one can move an amendment to those bills except a minister of the crown.
But the minister did not bring in this bill under that section. He brought it in under the provisions quoted by the Speaker, for example, at page 764. That is in the section of May headed "Matters not Requiring a Ways and Means Resolution". Now when you are dealing with matters not requiring a ways and means resolution you are under a separate set of rules which includes a clear-cut statement that a private member in committee on the bill can move to reduce the tax. It gives three examples, one which happened in the United Kingdom and which was passed and the other two, while they were not passed, neverthless were ruled in order, debated and voted upon.
So I say that is the answer to the attempt of the Minister of Finance to quote May's 15th edition at page 683. When he speaks about not upsetting the balance of ways and means he is quoting from that particular section which applies to a bill brought in in the proper way as a budget bill, with a ways and means resolution in advance of it. This bill has been brought in under the excepting paragraphs that apply to a bill which has the effect of only reducing taxes.
The Minister of Finance quoted the instance on March 2, 1936, where a motion to reduce or eliminate the taxation on rural telephones was proposed by a private member and ruled out of order by the Speaker. Of course it was out of order because the citation I read a moment ago from Beauchesne's third edition says that a private member cannot bring in a bill for the reduction of taxes but a private member can move for a reduction in a tax proposed by the government.
In the case of the motion on March 2, 1936, it was not an amendment to reduce a tax
[Mr. Knowles (Winnipeg North Centre) .1
proposed by the government; it was a substantive motion by a private member and I agree it was out of order.
As for the other two instances to which the Minister of Finance referred-the one where Mr. Thatcher moved an amendment for a reduction in a tax and the other where the member for Red Deer moved a similar amendment-may I point out that in both of those cases those were amendments moved to taxes that had been brought before the house through the medium of going through the committee of ways and means. That brought those measures within the framework of the sections in May which deal with the proper and normal financial procedure.
Mr. Chairman, the government sought to take this out of the section having to do with normal financial procedures. The government asked the house to deal with this bill as one of these exceptions; one of those cases where because there is only a reduction in taxation one does not have to go through all that procedure. But we cannot have it both ways. You cannot take this outside the normal procedure and then try to get back to the normal procedure because it proves more convenient, or because my amendment creates an inconvenience.
I say to hon. members opposite very earnestly that they will remember certain things which happened in this house in days gone by. They will remember black Friday, June 1, 1956. I know that what made that day black was that as the hours went on members were denied the right to speak. What started it? What was the genesis of black Friday? It was that one decision was made on Thursday, May 31, and another decision, the reverse of it, was made on Friday, June 1. That change of decision was supported by the government which was in the majority at that time.
I recognize that this is different. In this case it is not the Speaker making his decision and reversing his decision the next day. But we had a clear cut ruling on Monday-and I did not challenge it-that this bill, since it only has the effect of reducing taxation, was not to be regarded as coming under the normal financial rules, but that it should be regarded as coming under that section of May which provides for exceptions. I hope, Mr. Chairman, that we are not to have a ruling today that puts it back into those other sections; I hope we are not going to have one ruling when the government wants to bring in this bill in a way we do not think should be followed and an opposite ruling when a member of the opposition seeks to take advantage of the section under which we are operating, and moves an amendment.

I suggest that this is a very serious matter; I knew of this when I raised the point of order I did last Friday and when I raised it again on Monday. I thought then that the government was making a very serious mistake to bring in this bill without a prior ways and means resolution. I was prepared then to give ground on the argument that we had to have an eight day debate before getting into committee of ways and means, but at least for the sake of maintaining government control over financial policy, subject to approval by parliament, the government should have insisted on a ways and means resolution before this bill was brought before the house. The government chose to do it this way. The government chose this method of procedure, and opened the door to the right of private members to move amendments. That is set out clearly in Erskine May, 11th, 13th and 15th editions if hon. members will follow through these citations which have been read by speakers from the party opposite. Having done that, having opened that door of their own choice and obtained a ruling in their favour, I hope the government is not now going to press the point of order which was suggested by the Minister of Finance.
I submit to you, sir, that the case is eminently clear. We are operating under this special section and if the government had the right to bring in under this section a bill only reducing taxation and therefore not requiring a ways and means resolution, we have the right to move the kind of amendment I have placed before the committee, and I hope consideration will be given not only to the amendment now before you, Mr. Chairman, and to the question as to whether or not it is in order, but as to the seriousness of the whole position bearing in mind the need for maintaining the rule of law, and for not changing the rule in the middle of the game but carrying through once a decision has been made to a logical and consistent conclusion.


Edmund Davie Fulton: Mr. Chairman, the point made by the hon. member for Winnipeg North Centre would indeed be a difficult one for any one of us here to follow, and ask you to rule against, Mr. Chairman, were the position exactly as the hon. member has stated it to be. But I submit to you in all seriousness that he has not stated the position correctly. If we were asking Your Honour to do what the hon. member says we are asking you to do, then we would deserve a great deal of censure, but because he has, I submit, misunderstood the implication of what is meant by the committee of ways and means and the necessity for a committee of ways 96698-145
Excise Tax Act
and means, and what is meant by the assertion that whether or not you have a committee of ways and means the initiative with respect to taxation rests with the government; because he has misapprehended the significance of this proposal he has been led into error and has imputed to us motives and conduct which are quite inapplicable.
As I say, the situation presents two distinct propositions. One is, that a budget requires a committee of ways and means and a ways and means resolution. It is accepted that when you have a bill based upon a ways and means resolution you cannot move amendments in the committee on the bill which go outside the terms of that resolution. Not even the government could do that. The government cannot move an amendment to a bill based on a ways and means resolution if that amendment departs from the terms of the resolution.
But there is another quite separate proposition applicable here, and that is that the initiative with respect to taxation rests with the crown and can only be set in motion by a minister of the crown, and that proposition applies whether or not you have had a ways and means resolution, in my submission.


Stanley Howard Knowles: Not
according to May.


Edmund Davie Fulton: I should like to start with the authority for the proposition that only the government can make specific proposals with regard to taxation and altering the incidence of taxation or affecting a reduction of taxation. I admit at once that any hon. member can make a general proposal or move an amendment in general terms asserting the desirability of such a proposition, although I should say that even this process has been discouraged and is open to some question. But that is quite different from moving an amendment which would specifically reduce a particular tax, and I submit that no member except a minister of the crown can move such an amendment. I see that a Canadian authority, Bourinot's fourth edition, says this at page 432:
Though there is no rule to prevent private members moving abstract resolutions proposing changes in the scheme or distribution of taxation, or the imposition of new duties, "yet they have been uniformly resisted by the government in the English House of Commons as inexpedient and impolitic".
This is a general statement of the proposition. I think there is a more specific statement of the proposition in the next sentence which I now read:
All proposals for the imposition of taxes belong peculiarly to the crown, and custom, as well as sound policy, has long ago devolved upon ministers the duty of submitting such questions to the consideration of parliament.

Excise Tax Act
I do not want to give words an improper meaning or weight, and I admit it says "All proposals for the imposition of taxes belong peculiarly to the crown," but I would submit that the words are wide enough to include proposals regarding the reduction of taxation, and it follows from that that the succeeding words, which I quote again, "and custom as well as sound policy has long ago devolved upon ministers the duty of submitting such questions to the consideration of parliament" support the proposition that only a minister of the government can make a specific proposal for the variation of the rates of taxation.
Then, Mr. Chairman I come at once to the question raised by the hon. member who suggested that I had not done my reading. I read May at page 777 which the hon. member quoted and I was not in the least put out by what I found there because it fits in perfectly with the argument I had in mind last Monday and that I now advance. The argument I made last Monday and which was upheld by the Speaker was that this is not the type of tax measure which requires a committee of ways and means and a ways and means resolution. That was the only point I made and it is perfectly consistent with the point I am making.
The point I am making is that this being a taxation measure and the bill now involving the rate of taxation, only a minister of the crown can move a specific amendment to alter that rate of taxation. It is true that here at page 777 May says:
Hence at these stages-
Referring to the committee stage which we are now in-
-amendments are in order to reduce or omit drawbacks or other alleviations of existing taxes proposed by the bill.
But May is silent upon the point, and I submit silent because the point is self-evident, as to who may move an amendment and my point is that only a minister of the crown may move such an amendment.


Stanley Howard Knowles: Mr. Chairman,-


Edmund Davie Fulton: If I might just complete the point, this is again consistent with my argument that if this bill had been founded upon a ways and means resolution not even a minister of the crown could move an amendment because the bill and all parts of it and therefore all amendments must conform to the authority of the ways and means resolution. All that May is pointing out here is that where you do not have a bill based on a ways and means resolution then you can

move amendments. That is all he is pointing out. He is not saying that private members can move amendments because earlier he said that the initiative with respect to taxation rests with the crown.


Stanley Howard Knowles: Mr. Chairman, would the minister permit a question at this point. Does he not agree that the point where he made the other statement earlier is in the section dealing with bills that come under normal financial procedure and will he not also agree that footnote (t) on page 777 refers one to the United Kingdom House of Commons Debates of 1917-18. If one looks up the reference to column 829 he will find that it was a private member who moved the amendment referred to in that citation just as it was a private member on July 1, 1853, and again in 1868?
It seems to me that what the minister is failing to realize is that May clearly differentiates between the two classes of bills. When it is a bill under the normal financial procedure it has to have a ways and means resolution and only a minister can move it or move amendments but when it is a bill not within the ordinary financial procedure, when it is a bill the purpose of which is to reduce taxation, May says you do not require a royal recommendation and in committee of the whole it can be amended up or down and he gives as an example private members having moved such amendments.


Edmund Davie Fulton: Mr. Chairman, I do not fully accept the hon. member's argument because-


Stanley Howard Knowles: Will you accept the facts?


Edmund Davie Fulton: Well, the facts are incontrovertible but the point I am making is that the initiative of the crown with respect to taxation measures is separate and distinct from the proposition that bills based on ways and means resolutions cannot be altered unless they are submitted back to the committee of ways and means for the purpose of authorizing the alteration and although it is true that May at page 682 is dealing with the question of bills which do require ways and means resolutions nevertheless I think the passage relevant there in which he traces the relationship of the crown to the initiative in taxation is a general rather than a particular proposition and that passage which was the next one to which I was going to refer you, sir, does I submit establish as a general proposition that the crown has the exclusive initiative with regard to proposals for taxation.
I think I should read the whole paragraph:
The view which made the proposal of taxes dependent upon the demand for supply prevailed

at the time when it became necessary to find a procedure which would protect the financial initiative of the Crown from being infringed by amendments.


Stanley Howard Knowles: Quite.


Edmund Davie Fulton: It continues:
It tended to connect the royal Initiative exclusively with the amount of revenue which it was the object of a tax to raise. Hence, in early editions of this book it was stated that "the Crown has no concern in the nature or distribution of taxes" (t). Hence, also, amendments were at first permitted which proposed the substitution of a different tax for a tax proposed by the government (provided that both were estimated to yield an equivalent amount) on the ground that the necessity of new taxation to that extent had already been declared on behalf of the Crown (see page 769). In modern practice this view is regarded as incomplete, and as requiring to be supplemented by the view that the royal initiative in taxation implies the exclusive right to define the incidence as well as the amount of burdens to be placed upon the people, and that an amendment which transfers a burden to taxpayers not previously liable is an infringement of this initiative (see page 769).


Stanley Howard Knowles: But what happens in the case of an amendment which does not transfer a burden to the taxpayers?


Edmund Davie Fulton: I submit that what I read is a general proposition. It is a general discussion which occurs in a section of the book it is true dealing with committees of ways and means and bills based on the resolutions of such committees but it is tracing the historical development. What I say is that the historical development makes it clear that the initiative with respect to taxation belongs to the crown and that the royal initiative in taxation implies the exclusive right to define the incidence as well as the amount of burden to be placed upon the people.
When we come down to our own practice, it is true that the hon. member has referred us to a ruling by Mr. Speaker Lemieux in 1924 where an amendment with regard to taxation was held to be in order but I would point out that as appears at page 175 of the Journals of the House of Commons for that year this proposed amendment was in completely general terms. It was resolved:
That the best interests of Canada will be served by an immediate and substantial reduction of the tariff on the necessaries of life including foodstuffs, clothing and building materials;-
There is not a rate stated. And again:
And further that it is desirable
(a)	That the income tax should be readjusted as to bear more heavily on unearned incomes;
(b)	That unimproved land values including all natural resources should not be exempt from taxation; and
(c)	That a graduated inheritance tax on large estates should be considered.
96698-145J
Excise Tax Act
There is not a specific proposal in the whole of that amendment and that is why that amendment was held to be in order but when we come to a case where an amendment would have had a specific effect, namely the amendment of 1951 moved by a then colleague of my friend the hon. member for Winnipeg North Centre, we find that that specific proposal was ruled to be out of order. Let me read again the proposed amendment as found at page 335 of the Journals of 1951:


Mr. Shaw moved: the following amendment:
"That clause 1 of the proposed amendment to the Excise Tax Act be deleted and the remaining clauses be renumbered accordingly."
That amendment would have had a specific result. It would have reduced the tax and wiped out the provision in that clause for the imposition of that tax and being a specific proposal it was ruled out of order on the grounds and in line with the principle that the crown has the exclusive right-the government has the exclusive right-to initiate with respect to specific taxation proposals.
This leads me back to the proposition I made earlier, that there are two distinct branches which are being discussed and I submit with respect that the hon. member for Winnipeg North Centre has confused them and has intermingled them in a way in which they should not be intermingled.
One is the question of ways and means resolutions on the occasions when a committee of ways and means is required and then it is clear that not even the government can bring in an amendment to a bill which goes outside the ambit of the resolution authorizing that bill. But in a case such as the present, where you have a bill which did not require a ways and means resolution, then you are left, on the basis of the other proposition, in the position that only the crown can initiate specific proposals with regard to taxation. I submit, to be consistent, that the minister could move an amendment, or have one of his colleagues move an amendment, because there was no ways and means resolution; but it is not open to a private member to assert the privilege or initiative which belongs exclusively to the crown in this field of making specific proposals with regard to taxation.
I point out to you, Mr. Chairman, that the last time when such a matter came before the house in a conclusive manner was in 1951 when a specific amendment was rejected; whereas, in 1924, when the amendment was ruled to be in order, it was an amendment in general terms. If the hon. member had framed his motion in such general terms as it would be desirable to consider, without

Excise Tax Act
expressing a final opinion, I suggest that, apart from other matters of relevancy, it might be in order. Whether it would be relevant or not I express no opinion; but having made it as a specific proposal, which will have the effect of reducing the tax proposed by the government, I submit that it is out of order for a private member to do that on this or on any other taxation bill.


Mr. Mclvor:: Mr. Chairman, I am not a parliamentary lawyer but I do not think it is fair to ask you to rule on this question now. It has given me a great thrill to hear these two stalwarts, and I must say I have not heard anything to compare with the submission of the hon. member for Winnipeg North Centre. I think you should have time to consider this and not be asked to give a decision now.


Stanley Howard Knowles: May
I say a word with respect to what the Minister of Justice has said? It seems to me that the Minister of Justice has to do more than just assert that the statements in the general rules of financial procedure in May's fifteen edition, starting at page 662, also apply when May gets to the portion of his book where he deals with matters which are not covered. All of the material the minister read from page 682 is in the chapter entitled "General Rules of Financial Procedure". Then, later on, starting at page 763, we have a chapter entitled "Matters, Akin to Charges Upon The People, Not Initiated By Ways and Means Resolutions". He says:
The rules of financial procedure do not apply to the receipts of local authorities, when they form the subject of legislation, unless, of course, they are in the form of grants from the exchequer.
Then, he goes on to these other things, local loans, taxes payable to local funds, and finally he comes down to alleviation of taxation, the paragraph which was the whole basis of Mr. Speaker's ruling the other day. That paragraph leads to the further statement that when you are dealing with a bill which is not under the general rules of financial procedure it is open to any member in committee on the bill to move further amendments.


Edmund Davie Fulton: He does not say that.


Stanley Howard Knowles: He
says it may be amended in committee. I do not know why the Minister of Justice tries to check me on this one.


Edmund Davie Fulton: I am not, but you should reproduce it accurately.


Stanley Howard Knowles: He
says on page 777 it is open to the committee to have amendments:
-to reduce or omit drawbacks or other alleviations of existing taxes proposed by the bill.
There is in that sentence a footnote (t). The "t" is in italics inside parenthesis. If you refer to the footnote at the bottom of the page you find that it refers to the House of Commons debates, 1917-18, volume 95, column 829. And, on that page of Hansard, you have the case of a private member moving an amendment to a bill in committee. Now, if that is not May saying that a private member can do it, I do not understand the English language. Similarly, the footnote in May's eleventh edition, where he says that an amendment may be moved in committee on the bill, takes one to 1853 and 1868, two instances where private members moved amendments to proposals that had been brought in by the government.
Mr. Chairman, the same thing applies to the repeated reference of both ministers to an amendment made by the hon. member for Red Deer when we were in committee on the resolutions of the budget of 1951. That was a budget brought in under the general rules of financial procedure. It was preceded by a ways and means resolution. Of course, it was not open to a private member to move a specific change under those circumstances, but in the case that is now before us we are asked to operate at the request of the government outside of those general rules. We are being asked to operate under the terms of an exception. That exception has been clearly stated by May to be one under the terms of which we can move an amendment to a bill in committee, either reducing a tax or raising it, provided we do not raise it higher than the point at which it stood before.
I submit, Mr. Chairman, that the line of demarcation has been drawn clearly by May and that Mr. Speaker on Monday clearly accepted the proposition that what we have before us now is not a bill imposing a tax, but a bill of tax alleviation and therefore we operate under different rules.
The Minister of Justice likes to read and re-read page 682 of May's fifteenth edition because it is there we find the suggestion that this can be done only on behalf of the crown; but, Mr. Chairman, what is it that can be done only on behalf of the crown? It is the right of dealing with the incidence and the amount of burden to be placed upon the people. I quote as witnesses the Minister of Finance, the Minister of Justice and His Honour the Speaker, all of whom on Monday said that what we have here is not a bill imposing burdens, not a bill imposing taxation, but a bill taking taxes off.

This whole measure is so completely taken out of the general rules of financial procedure that I confess one wonders why it has to be argued. I have the greatest respect for the ruling the Speaker made on Monday. I accepted it because I think one should accept the Speaker's rulings if at all possible, but apart from that, I would say that there were arguments on both sides. I am not one of those who say that there is not an argument on the other side. Let us say the argument was 50-50 or 51-49. Take your choice. At any rate, Mr. Speaker was faced with the fact that the bills were printed; they were inscribed on the order paper. There would be the implication that somewhere along the line there had been advice, perhaps from the draftsmen in the Department of Finance; somewhere along the line there had been advice to the government that these bills were in order in this way. I think the Speaker, when he was faced with a very difficult decision, might have taken that as a consideration. In any case, the Speaker having ruled that this bill does not come under the general rules of financial procedure since it is not a bill imposing a burden, since it is not a bill imposing a tax, since it is a bill of relief that does not need a committee of ways and means, I say, Mr. Chairman, that we cannot possibly get away from these citations that follow that position and make it clear that it is in order for amendments to be made in committee and that the instances noted in the British house, on which all of this is based, make it clear that such amendments reducing a tax can be made by a private member.
I may say, Mr. Chairman, that I rather agree with the suggestion made by the hon. member for Fort William, and probably you agree with it yourself, that if there are not others who wish to take part in the discussion you might like the supper hour to think about this point of order.


Charles Edward Rea: I was going to make that suggestion. There are so many references here that it is difficult to read them and listen to what hon. members are saying. This is quite an important ruling, so I would like very much to go over it during the dinner hour and report back at eight o'clock.


Stanley Howard Knowles: Unless anyone else wishes to speak, may I suggest we call it six o'clock?
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Charles Edward Rea: When the committee rose at six o'clock there was a
Excise Tax Act
point of order before the Chair to the effect that the amendment proposed by the hon. member for Winnipeg North Centre was not in order since it was not open to a private member to propose a reduction in a taxation bill. Meanwhile I have had the opportunity to read the comments of the hon. members who have participated in the debate on the point of order and also to read the authorities bearing on the point raised.
It is not my intention to deal at length with all the points raised. However, the Minister of Finance referred to two rulings, one known as the one in 1936 and the other in 1951. In checking the record of the one referred to in 1936 I find that the motion attempted to initiate in general terms a tax reduction but no bill was before the house. This was a private member's motion. In 1951 the amendment was moved in committee of ways and means and not in committee of the whole on a bill, and accordingly it is my opinion that these references are not in accord with the situation now before us. I should like to refer to Campion, page 280, which says in part as follows:
The principle that taxation requires the sanction of the Crown applies not only to the imposition but also to the increase of taxation, and to any variation in its incidence. All such proposals can only be initiated in committee of ways and means and by a minister acting on behalf of the Crown. The proposals which must be so initiated include proposals:-
(1)	to impose a new tax;
(2)	to continue an expiring tax;
(3)	to increase a permanent tax;
(4)	to continue a temporary (and expiring) addition to a permanent tax; and
(5)	to pay any sums into the Exchequer-
I also want to refer to May's 15th edition which was read previously but which I should like to read in part now, at page 777:
The rule that the repeal or reduction of an existing tax, though it may be embodied in a ways and means resolution, is not subject to the rules of financial procedure, applies to the committee and also to the report stages of bills. Hence at these stages amendments are in order to reduce or omit drawbacks or other alleviations of existing taxes proposed by the bill.
I may also refer to another one in Beau-chesne's third edition, citation 497:
497. No member other than a minister of the Crown may introduce a bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the house enjoys complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility. This duty the members may perform by moving amendments to reduce the taxes proposed by the administration.
In my opinion the amendment before us does not initiate the imposition of any taxation and in accordance with the authorities I have just cited. I must rule that the amendment is in order.

Excise Tax Act


Daniel (Dan) McIvor: I congratulate you, Mr. Chairman, on your honesty. The two hon. members last year were on the same side of the house and they tried to prove that a thing that was wrong was right. It was my duty to show that they were both wrong last year.


Charles Edward Rea: I must ask the hon. member to direct his remarks to the amendment. Is the house ready for the question on the amendment?


Some hon. Members:: Question.


Donald Methuen Fleming: I have a word to say on the amendment now that you have ruled it to be in order. It must be clear to all hon. members that if the government and the house are to proceed with some regard for the balance of ways and means, the government must take responsibility in reference to proposals that are made for variation in the rates of taxation. Notwithstanding what my hon. friend has said several times already in the course of this debate about needing more information, he has nevertheless chosen, with the information that he has, to move an increase in the reduction in this particular tax. The result would be to change the basis of the government's financial proposals as outlined last Friday night for the balance of this fiscal year. For that reason the government has no alternative but to oppose this amendment. If business is to be done in this way in the House of Commons, the effect could only be financial chaos.
Amendment negatived: Yeas, 30; nays, 70.


Charles Edward Rea: Shall
clause 1 carry?


Mr. McMillan:: I might say that I am in favour of this bill but I think as members of parliament it is only fair that we should have a clear financial picture of our position before voting to increase or decrease taxes at any time. I should like to ask the minister one question. How is it that the Minister of Finance reported a deficit of $50 million under the Old Age Security Act in his statement on Friday evening in view of the fact that the former minister of finance on March 14, as reported at page 2226 of Hansard of that date, reported that there would be a deficit of $50 million in that account to be voted in the 1957-58 estimates and when recent increases in benefit payments under that act, it seems to me, will add a further $40 million to $50 million to the fund by the end of next March?


Donald Methuen Fleming: If my hon. friend will look at page 2003 of Hansard of December 6, he will see that the item of $50 million is the increase in the old age security fund deficit. It is the increase in the deficit over and above
[The Acting Chairman (Mr. Rea).]
what was previously estimated and which arises from the increase in the pension payments that have been authorized by parliament.


William Hector McMillan: Is that the total increase for the year?


Donald Methuen Fleming: For this fiscal year.


William Hector McMillan: The $6 and then the $9?


Charles Edward Rea: Shall
clause 1 carry?


Donald Methuen Fleming: I am sorry but I did not hear the hon. member's question.


William Hector McMillan: Did that include the $6 increase plus the $9 increase in November?


Donald Methuen Fleming: It includes everything to March 31.


Mr. Deniset:: Mr. Chairman, I should like to state that I am in favour of the bill. However, I think the house should realize that the amendment which was proposed by the C.C.F. was strictly a political manoeuvre and it should be recognized as such.


Charles Edward Rea: Order. I must tell the hon. member that the amendment has been disposed of and therefore his remarks must not refer to it.


Louis Deniset: I am sorry, Mr. Chairman. So far as the bill is concerned, I should like to point out that the reason I am in favour of it is that it is a restriction of tariffs and I believe we should always work towards the goal of free trade. It is for that reason I rise, so that my opinion on this matter will be on record.


[Stage Direction]
Clause agreed to.
On clause 2.
Frederick Samuel Zaplitny: Before the clause carries there are two matters I should like to have the minister explain at this time. This reduction involves two matters to which the minister made reference this afternoon. One of them has to do with the arrangement announced last week whereby dealers in automobiles will not be penalized by the reduction in the tax. In other words, they will receive a refund of tax with respect to those automobiles they may have had on hand at the time the change went into effect. I should like the minister to explain what method and machinery are going to be used to administer any refunds that may be requested.
The second matter has to do with a statement the minister made this afternoon to the effect that the purchasers of automobiles will have the reduction in the tax passed on to

them. I listened very carefully but the minister did not indicate in what manner the government is prepared to guarantee that the consumer will get the benefit of this tax reduction. Personally I do not see at the moment how the government is going to do it. The minister made the pledge today by way of a general statement that the government will see to it. I think the words he used were, "the government will see to it that the consumer receives the benefit of this tax reduction".
It is well known that we do not have a system of price control in this country any more, which would be the only way I can see whereby the government could make good on that statement. However, if the government has any other method in mind by which they are going to see to it, as the minister said they would, that the consumer gets the benefit of the tax reduction, I should like him to tell the committee how he intends to do it through governmental action.
I should like an explanation of both these points. First, how is the dealer to be compensated for any loss he may sustain as the result of this reduction? Second, how is the tax reduction going to be passed on to the consumer?


Donald Methuen Fleming: Mr. Chairman, the matter of making refunds to the dealers will, of course, be handled through the Department of National Revenue and a system has been worked out by the customs and excise branch of that department whereby these refunds will be made on proof. I cannot now attempt to give the hon. member the full details of the method, but proof will be required. That involves some identification of the vehicle. That, we are given to understand, can be arranged without too great difficulty with the co-operation of the manufacturer and it is hoped that these refunds can be put through without long delay. It may take time in some cases where the checking of the identity of the vehicle has to be done in very remote localities, but the system devised by the officials of the Department of National Revenue is one that they are prepared now to stand by and apply to the entire situation.
As to the second question, I draw my hon. friend's attention to what I did say on this subject on Friday evening as found at page 2006 of Hansard:
The government has received assurances given on behalf of all automobile manufacturers that the benefit of this reduction will immediately appear in the manufacturers' wholesale prices and suggested retail prices. The government will expect this tax reduction to be reflected at once in the price of new cars to the public.
The assurance to which I referred here was given on behalf of the Canadian automobile
Excise Tax Act
chamber of commerce by the secretary-treasurer of that organization which embraces all of the Canadian automobile manufacturers. Similar undertakings were given to the government or offered to the government last summer when the manufacturers, dealers and others first began making their representations to the government.
My hon. friend asks about enforcement. The government can give no guarantee as to what will happen in every case. It must be recognized at once that the undertaking given by the manufacturers applies to the wholesale prices and to the suggested retail prices. I think we can depend upon an interested and vigilant public to make very certain that the benefits of the tax deduction are actually reflected in the price that the consumer pays when he purchases his new car.


Frederick Samuel Zaplitny: I thank the minister for the explanation as to how the refunds are going to be handled. Although it is not too clear yet, I realize that perhaps the department does not have the machinery all set up for that purpose. But I want to make reference to the second question which the minister answered and with respect to which he now tells us that the only guarantee, if you can call it that, the only prospect of the tax reduction being passed on to the consumer is the undertaking given to the government. I am pretty sure I am quoting the minister correctly when I say that this afternoon the minister used these words-


Donald Methuen Fleming: Could the hon. member speak up a bit?


Frederick Samuel Zaplitny: In taking part in the debate this afternoon the minister used the phrase, "We will see to it that this reduction is passed on to the consumer." The minister still has not told us how the government is going to see to it. It is one thing to have an undertaking on the part of the automobile manufacturers that they will pass on the reduction to the wholesaler and eventually to the consumer. It is another thing for the minister to say in the house that he will see to it that that is done. I think we need a further statement from the minister in order to inform the committee as to what the government is prepared to do if they find that the tax reduction is not being passed on to the consumer.
Second, when the minister speaks of the undertaking given by the automobile manufacturers I should like him to tell us to what extent that undertaking is valid. For what period of time was the undertaking given? Is it an undertaking which binds the automobile manufacturers for 30 days, 60 days, six months or one year? What is there to prevent the automobile manufacturers from increasing

Excise Tax Act
their prices three months from now to the extent of the tax reduction or more? I think we need a firmer statement on the part of the government as to what method they intend to use in order, to use the minister's own phrase, to see to it that the consumer gets the benefit of this tax reduction, because that is the statement which he made this afternoon.


Donald Methuen Fleming: Mr. Chairman, in answer to the first question asked by the hon. member, the forms of application for remission of excise tax have now been prepared in the Department of National Revenue to be signed by the dealers and a memorandum has gone out already to all the manufacturers acquainting them with the procedure to be followed in that respect.
On the second question, Mr. Chairman, I did not say this afternoon that the government would undertake to see to it that in every case the retailer would pass this tax remission on to the consumer. That would be going beyond the power of the government to supervise. What I indicated in this house this afternoon, in repetition of what I said on Friday night, was that we already had this complete assurance from the manufacturers, who are the people upon whom the tax is levied, this being a tax collected at manufacturers' level, that the reduction of the tax will be reflected at once, that is to say, from midnight on Friday night, by them in the wholesale prices charged to their dealers and also in the suggested retail prices, that is, the prices they suggest that the retail dealers should charge for the cars.
With some scores of thousands of cars being sold, I do not know how the hon. member could expect the government to see to it in every case, particularly in cases involving trade-ins, that it would be possible to measure precisely the values concerned, and see to it that in every case the reduction was passed on. We have gone as far as we can to see to it that the benefit is passed on. I believe it will be. If cases are found where it is not passed on I hope such cases will be brought to our attention, because I am sure the manufacturers, in the light of the undertaking they have given to the government, are not going to tolerate failure on the part of their dealers to pass on the benefit of the reduction to the consumer.
It is to be borne in mind also that we are speaking here of authorized dealers. These are all dealers who hold appointments from the manufacturers, and it seems to me that with such a relationship it is going to be very difficult for any dealer to refuse to pass on the benefit of this reduction to the consumer.

Now there is one other fact which I am sure will be in the mind of the hon. member. It is very difficult, where a person is trading in a car, to balance off whatever the effect of the price reduction on his car may be against the effect of the tax reduction on the price of the new car he is purchasing.


Mr. Stuart (Charlotte):: I should like to ask a question of the minister. Is it not a fact that the only person who will benefit by this reduction in excise tax is the one buying a new car for the first time? In the case of another car being traded in, the amount would be deducted from the price of the secondhand car exactly in line with the deduction from the new car. I can see no problem there at all. The only person who can benefit from this reduction in excise tax is the person who is buying a new car for the first time, because in the case of a man trading in a used car the same reduction would be taken from the price of that car as would apply to the new car.


Donald Methuen Fleming: The man who is making a cash purchase of a new car will obviously receive the full benefit of the reduction. I do not think the hon. member is right in saying that a man trading in a car will receive no benefit from the reduction in tax. It may be that the reduction in tax will have some effect on the trade-in, but he would still derive some benefit, I think, from the reduction of the tax on the new vehicle.


Andrew Wesley Stuart: I will not press this point, other than to say that if the automobile industry were to let it be known tomorrow that they were reducing the price of their new cars by $100 a car, a car being traded in would automatically be reduced in value by that same amount. If a secondhand car was worth $1,500 today, then after the manufacturer had reduced the price of his car by $100 the price of my car would automatically be reduced by the same extent.


An hon. Member:: No.


Andrew Wesley Stuart: Well, you don't have the same type of dealer in Oshawa, then, as in other parts of the country.


Mr. Maclnnis:: What are you worrying about, are you thinking of buying a new car yourself?


Andrew Wesley Stuart: I have one, but if I were to exchange it I would not feel I was getting any benefit under this reduction. I have listened to you yapping now for three or four weeks and one day someone is going to put you in your place. The first opportunity I get I will make every effort to put you in your place, because you are too noisy. Sit there and listen to someone else talk.


Charles Edward Rea: The hon. member for Charlotte has ti^e floor.


Donald MacInnis: Better take advantage of it.


Andrew Wesley Stuart: I will take advantage of it. I can take care of myself. I will say this and resume my seat: I still think that the only man who will benefit from this is the person buying a new car with no trade-in, since dealers trading in secondhand cars will naturally take full advantage of this reduction.


Donald Methuen Fleming: The hon. member will have his opinion on that point, and I will have mine. I do not think the man who trades in a car is going to receive no benefit. There may be some proportionate effect on the reduction of the value of his used car, but it is only a proportionate effect and he will undoubtedly have some benefit from the reduction when he buys a new car.
I wish to make quite clear what I said on this matter of the undertaking. I think that if the hon. member for Dauphin looks at what I said this afternoon he will find it was quite different from what he is attributing to me tonight. I said this afternoon that I wished to put on record the undertakings received that the benefit of the reduction would be passed on forthwith and that the public would receive the benefit from it, and that is precisely the undertaking which was given on behalf of the manufacturers to us, both individually, when they came to see us last summer, and jointly on their behalf by the Canadian automobile chamber of commerce.


Frederick Samuel Zaplitny: Is the Minister of Finance now denying that he said this afternoon that the government will see to it that the benefit is passed on to the consumer?


Donald Methuen Fleming: No, I did not say that.


Frederick Samuel Zaplitny: If he says that he did not, I will have to accept it, but I believe that is exactly the phrase he used.


Donald Methuen Fleming: I wish to make it clear at once that I did not say that. What I did say this afternoon was in repetition to what I said on Friday-that I wished to put on record the undertakings given to the government that the benefit of the reduction would be passed on forthwith to the public.


Frederick Samuel Zaplitny: Well, I am not going to argue that point with the minister. I think a reference to Hansard tomorrow may show that at another point in his speech he did say what I think he said. However, I accept his version of it for the moment.
I wish now to bring up another matter. The Minister of Finance made two statements in reply to my question. First, he 96698-146
Excise Tax Act
said that if any person felt he was not obtaining the benefit of this reduction as a consumer he should notify the government. And then he said that he feels sure that the manufacturing firms will not tolerate a situation in which the dealer would not pass on this tax reduction. But with regard to that, I should like to know why he wants the consumer to notify the government, because unless the government has some authority to do what it is undertaking to do I see no value whatever in the consumer getting in touch with the government.
If he feels the government does have some authority, that is precisely what I am trying to find out. What authority does the minister think he has to make sure that the benefit of this reduction will be passed on to the consumer?
Secondly, he stated that no automobile firm would tolerate having the dealer fail to pass on this price reduction to the consumer. I am afraid that involved in that statement is an invitation to break the law because the minister knows that in 1951 or previous to that year this house passed an act which prohibited price maintenance. He is now stating that no firm would tolerate a certain action on the part of a dealer. The law itself states that the manufacturing firm or the wholesale firm concerned has no right to interfere whatsoever in the price which the retailer or dealer as the case may be sets on the sale of his product. If the minister inferred that automobile manufacturing firms could order their dealers to do something then he is inviting the automobile firms to break a law passed by this house.
If he says that these firms will not tolerate something that the dealer may do or fail to do the inference is that the automobile companies are in a position to dictate to the dealer as to what he must do and they are specifically prohibited by law from doing that by the resale price maintenance act which prohibits the supplier from interfering in any shape or form with the person at the retail level in setting the price on the product they have supplied. This is the law of the land. The minister is now inferring that the automobile manufacturing firms are interfering with what the dealer does. He cannot have it both ways; either the government has the authority to do it-and if it has I would like to know what that authority is-or on the other hand if he is going to suggest that this authority be assumed by the automobile companies then he is inviting them to break an act passed by this house.


Donald Methuen Fleming: Mr. Chairman, if my hon. friend is going to deal with my statements I wish he would quote them accurately. In the

Excise Tax Act
second place I have only this comment to make on his resale price maintenance argument. It is one thing for a manufacturer to attempt to impose the selling price at retail on his dealers but it is a very different thing for that manufacturer to indicate to his dealer that he has given an undertaking to the government so far as he is concerned to pass on the benefit of this reduction to the public and to expect the dealer to do as much. That certainly is no invitation to break the law.


Frederick Samuel Zaplitny: No, Mr. Chairman, the minister cannot get away with that. He may claim all he wants that he was misquoted but certainly he will not deny now that he did say only a few minutes ago that the automobile firms would not tolerate a situation where the retailer would not do what they have undertaken with the government to do. What is apparently meant by saying that the automobile companies would not tolerate a failure on the part of the dealers to pass on these benefits is that the companies are in a position to force their sale by the dealers at a reduced price. If it means anything else I say the minister should say so.


Mr. Regier:: 
Donald Methuen Fleming: Order.


Erhart Regier: The minister did not see fit to offer an explanation to this house-


Some hon. Members:: Order.
The Aciing Chairman (Mr. Rea):	Order.
We sire still discussing the bill to amend the Excise Tax Act and I must ask the hon. member to bring his remarks into line.


Erhart Regier: Mr. Chairman, I was directing my remarks to clause 1. I take it that we are still on clause 1.


Charles Edward Rea: Clause 1 has been carried. We are now on clause 2.


Erhart Regier: No, Mr. Chairman, I humbly submit that the discussion that has occurred for some considerable time has all been directed to clause 1.


Charles Edward Rea: Clause 1 is carried.


Charles Edward Johnston: Mr. Chairman, I would like to ask the minister a question on this clause. Does he know what percentage of new cars purchased involve trade-ins and what percentage are new cars paid for by cash with no trade-in involved?


Donald Methuen Fleming: I have no figures on that point, Mr. Chairman.


Charles Edward Johnston: Then I take it, Mr. Chairman, that the minister would have no idea as to what proportion of the consuming public is going to benefit as the result of the reductions in the excise tax. I would venture to say that on an average there would not be one car in a thousand sold with no trade-in attached to the purchase. Even supposing that the ratio were one in 100-I am very conservative with a small "c"-that tax is not going to be as beneficial for the general consuming public as the minister would like us to believe. I am not saying that with a view to casting any reflection on the minister at all but it is a statement of fact that very few cars are bought today with no trade-in involved.
I can see that the minister's desire is to have this reduction passed on to the consumer but what assurance does he have from the automobile companies or the dealers, particularly where a trade-in is involved, that the benefit of this reduction will be passed on? If he has such an assurance, what proportion of the reduction does he estimate will be passed on? That is something I feel we should be concerned about. If we are going to attempt to lower the tax with a view to benefiting the consumer then certainly

we should have some concrete idea as to what proportion of the consuming public will benefit as the result of the tax reduction. Otherwise it might be a greater service to the general public if he were to bring in a reduction in the sales tax in which case the consumer would receive a direct benefit. That is something for the minister to consider and I hope he will make some reply to my questions.


Donald Methuen Fleming: Mr. Chairman, by having given this bill second reading the house has expressed itself finally on the subject of whether there should or should not be this reduction in taxation, so the point raised by my hon. friend is, I am afraid, quite out of order now.
I do not know where the hon. member gets these estimates of his, one in 1,000 or one in 100 being a straight purchase of a new car without a trade-in. I do not suppose any member of this committee has figures on this but I would be very much surprised if that is not a very wild guess.


Charles Edward Johnston: What would be your guess?


Donald Methuen Fleming: My guess? I do not care to guess.


Some hon. Members:: Oh, oh!


Donald Methuen Fleming: It would be only a small fraction of the figure my friend is using. I think, if I may say so, in his approach to the question my hon. friend is making the same mistake that I undertook to say I found in the remarks of the hon. member for Charlotte. It should not be assumed that it is only in the case of the purchase of a new car without any trade-in that any benefit flows from the reduction in tax to the consuming public. I believe that in all of these cases where there is a trade-in there will be benefit to the public.


Charles Edward Johnston: Is there any method or any way by which the minister can find out whether there is a share of this being passed on to the consuming public where there are trade-ins involved? I do not know whether he has at his disposal any way of checking that up for us or not.


John Whitney Pickersgill: A Gallup poll.


Donald Methuen Fleming: The newspapers these days are filled with advertisements of dealers indicating the reductions that they are making in their prices to the consuming public.
I would think the public would very soon find out where any dealer is not passing on the benefit of the reduction. They are going to go to the dealer who is passing on the reduction.
96698-146J
Excise Tax Act


Mr. Stefura:: Is the minister aware of any increase in the 1958 models which came out this year just before this bill was introduced in the house? I refer to the increase over the 1957 model prices. In whatever increase has been put on these new models the companies have already taken advantage of any reduction that this tax will bring about. Is there any way the minister can furnish us with information on this?


Donald Methuen Fleming: Mr. Chairman, whatever were the prices in effect last Friday night are the prices upon which the manufacturers have agreed to reduce their prices to the extent of the reduction in tax.


Erhart Regier: Mr. Chairman, what I have to say now applies to clause 2 as well as to clause 1. The minister told us some hours ago that there could not possibly have been any leak and the reason he gave that there could not be either a leak or a drip was that only two men, the Prime Minister and himself, were aware of these changes.


Donald Methuen Fleming: I did not say that.


Erhart Regier: That rang an alarm bell in my mind. I wondered what kind of a government we have today. Does the minister mean to say that he-


Richard Albert Bell: Good government.


Erhart Regier: I hope the minister will teach some of his backbenchers a few of the things he had to say about trained seals about a year ago. Does the minister mean to say that only he and the Prime Minister made this decision, or is he willing to admit that this is the decision of the government? I should like to know exactly how it is the decision of the government if only he and the Prime Minister knew. And when I am saying this, Mr. Chairman, I am saying it in all honesty and in all sincerity because I do not lightly forget the reference the other day of the Prime Minister to his government. I always thought that this was Her Majesty's government and yet this very afternoon the Minister of Finance said there could not possibly have been a leak because other members of the government knew nothing about it. I would like him to explain that situation.


Donald Methuen Fleming: Mr. Chairman, I wish my hon. friend would get his facts straight and follow accurately what is said in the house by hon. members before he undertakes to rise in his place and introduce a new version of what has been said. What I said this afternoon is a matter of record. It was that up to the time this matter became the subject of newspaper speculation it had not been discussed with officials; it had not been a matter of discussion within the government. There

Excise Tax Act
was no decision and no possibility of a decision on any rate of reduction. The decision of the government was taken subsequently.


Erhart Regier: Mr. Chairman, in that case would the minister care to comment on the report that this action, both with relation to clause 1 and clause 2, was forced upon the government by the automobile manufacturers in their dismissal of some 16,000 men immediately preceding his announcement and the vast newspaper publicity that somebody or other, heaven only seems to know who, was responsible for, and that these two factors combined were weighty enough to force the hand of the government and that, regardless of the economic soundness of it, they decided that they had to do it.


Donald Methuen Fleming: Mr. Chairman, the hand of the government was not forced by the manufacturers. The government took this decision in the light of all the circumstances and nobody forced the hand of the government.
My hon. friend, continuing the inaccuracies that he has been uttering, says that 16,000 employees of the automobile industry were dismissed. They were not dismissed. In the face of the results of the speculation that appeared a week ago Thursday in the newspapers there were some layoffs. Fortunately, those layoffs were very temporary, in most cases two days or, I think, at the very most, three days.


Erhart Regier: They were effective, though.


Mr. McCullough:: Just one question; can the minister say whether or not 1957 model cars will be included in clause 2 of this bill?


Donald Methuen Fleming: Any car that comes within the scope of the act will be subject to it. It is not a question of the model of the car; it is a question of the sale by the manufacturer, whether it is a 1957 or a 1958 model. In the case of the dealer who has on his lot or in his dealer's rooms cars on which he has paid the tax and which have not been sold, then if they are new cars he will be eligible to apply for the remission of the tax.


Mr. Aiken:: I do not like to hold this up for long but I am one of those backbenchers who have just been referred to as trained seals.


Jean Lesage: You will get used to it.


Gordon Harvey Aiken: I have sat here for a few minutes listening and I have never heard such a lot of nonsense as has come from the corner over there.


Charles Edward Rea: Is the
hon. member going to talk about Bill No. 231?


Gordon Harvey Aiken: Yes, Mr. Chairman. The point on which I wish to make a comment is this. There has been a suggestion that because the government has reduced the tax the people of Canada are too stupid to take advantage of it. The arguments that have been put forward are that the people will be taken in by the dealers. I think everyone knows there has been a reduction in the tax and if they are prepared to pay the same old price they paid before, then they are not being very bright. If the hon. members who spoke on that point talked to the dealers as much as they talk in the house they should not be taken in.


Edward George McCullough: I have one short statement. I wish to say to the hon. member who has just taken his seat that he certainly has shown quite a considerable amount of ignorance in respect of the retail sale of cars in this country.


Mr. Montgomery:: Shame on you.


Edward George McCullough: In the first place he should know, as the Minister of Finance well knows, that there is a suggested price at which the dealer offers cars to the public. I want to say that there probably is no consumer in Canada who goes to buy a new car knowing the wholesale cost of that car. He knows the suggested price, but the relationship between that price and what the prospective customer pays for a new car is between him and the dealer. If there is a trade-in there is negotiation on the price of the trade-in and the price of the new car, and a deal is made between the prospective customer and the dealer. I want to say that we on this side of the house have been trying to find out by what mechanism the Minister of Finance is going to carry out the assurance he gave the public this afternoon, to which the hon. member for Dauphin and myself listened carefully, namely that the government would see that the consumer would benefit from this tax reduction.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall this bill be read a third time?


Stanley Howard Knowles: Next sitting.


Some hon. Members:: Now.


Stanley Howard Knowles: Nobody suffers as a result of laying it over for another day, Mr. Speaker.


Mr. Speaker:: Next sitting.



INCOME TAX ACT

Donald Methuen Fleming: the second reading of Bill No. 232, to amend the Income Tax Act.


Jean Lesage: Is the minister going to make a statement?


Donald Methuen Fleming: I do not think any is required.


Jean Lesage: Mr. Speaker, I am really sorry that the financial critic of the official opposition, the hon. member for Coast-Capilano (Mr. Sinclair) is prevented from participating in this debate because of acute laryngitis.


Some hon. Members:: Hurrah.


Jean Lesage: I am sure that the only people who are happy about this are the Tories, and especially the Minister of Finance (Mr. Fleming). We are all disappointed, and everybody in this house should be disappointed. Certainly, sir, the hon. member for Coast-Capilano is disappointed. I shall try not to add too much to his disappointment because of my performance. The hon. member has been sitting in this house since eleven o'clock this morning,-I know he must have been suffering the tortures of death because he could not even make an interjection.
I was surprised that the minister did not make a statement on second reading. I was sure, knowing him pretty well, that he would take advantage of the occasion to boast about the great reductions in taxes he is offering the people of Canada through this bill. I was sure he would like to compare the promises that he and his colleagues of the Conservative party, especially his leader, had made during the last campaign about the famous reductions they were going to make in income taxes with the little things that he is offering the people of Canada at this time. Of course, I can understand why he would rather remain seated. He must feel like the elephant who has just given birth to a mouse. In his place I would remain seated.


An hon. Member:: Is that the best you can do?


Mr. MacDonald (Aniigonish-Guysborough):: That is second hand.


Jean Lesage: I never heard the hon. member, who is a parliamentary assistant, say anything that was not third hand. I shall use another phrase that is second hand. It was used by the hon. member for Rosetown-Biggar (Mr. Coldwell) when he said that this government and the Minister of Finance have a queer way of doing business. We did see some of the consequences of this queer
Income Tax Act
way of doing business this afternoon and tonight on the other bill which has just been reported by the committee of the whole.
When we have a normal budget presentation we have a general debate in which it is possible to have a view of the over-all economic and financial situation in Canada. Hon. members from all parts of the country take part in the debate and we can ascertain the reactions of the country as a whole to the budgetary situation. It has happened often in the past that a Minister of Finance, with the consent of his government, has amended the resolutions he was proposing for tax changes after that general debate. Then in the normal course after the general debate we have a discussion of the resolutions in committee of ways and means. Again, this is very useful. This procedure offers an opportunity for more technical discussion, and it has happened that the bills that have been prepared have been changed by the Minister of Finance and his colleagues following the discussion that has taken place in the committee of ways and means.
There are very good reasons for following that procedure which has been followed every time in this house according to our practice. It is a useful procedure, not only for the various reasons I have just given, but for other reasons. We have these income tax proposals before us, and yet only four members of the house have participated in any kind of budget debate which occurred on the first item of the estimates of the Department of Finance. This debate will continue later, but what purpose will be served by that? These bills will have been passed. Only four members have participated in the general debate, so it will not be possible to secure from every corner of the house the reactions to the proposals of the minister. Again, I say this is a queer way of doing business, and it has led to some misunderstanding of the proposals the minister has made for tax cuts.
Previous ministers of finance made arrangements for the press to know in advance, but in secret, what the provisions of the budget were before they were announced in the house. This time the minister did not choose to make any arrangement of that kind. In the past ministers of finance had the courtesy to send copies of their speeches, when the speech was being delivered, to the leader of the official opposition and the leaders of the other parties. This time the minister did not extend such courtesy to the leaders of the various parties in the house, not even the Leader of the Opposition (Mr. St. Laurent). This new way of doing business,

Income Tax Act
this new method, has caused some misunderstanding. Even a good Tory paper like the Ottawa Journal could not understand the proposals made by the minister on Friday of last week. I quote from the Ottawa Journal of December 7:
All businesses showing more than $25,000 profit will have their taxes reduced by $1,350. All under $25,000 will be exempt.
Note that "will be exempt".
The previous minimum was $20,000.
This goes to show how wrong the approach of the Minister of Finance has been to the whole process, and how queer his way of dealing with budgetary matters is.
I believe that it is only fair now to study the amendments that are proposed in this bill in the light of the promises that were made by the Minister of Finance and by the Prime Minister during the last election campaign and even prior to that time. During the last election campaign and prior to that time the Minister of Finance and the Prime Minister were all the time making the declaration that the previous government was overtaxing the people of Canada at the rate of half a billion dollars or $500 million. If there was overtaxation of $500 million, how is it that the tax reductions proposed for this year amount to the sum of $26 million only, 1/20 of the supposed overtaxation of the previous government?


Donald Methuen Fleming: Would it not be fair to state the annual rate?


Jean Lesage: Here is what the Halifax Chronicle Herald had to say about the matter, always comparing the action with the promises that were made. I quote from the editorial in the Halifax Chronicle Herald of December 9:
The tax reductions which Canadians had been led to expect from the new federal administration have turned out to be little more than a nibble.


John Whitney Pickersgill: Not even a mouse.


Jean Lesage: No; not even a mouse. I mentioned a mouse a moment ago. This editorial is entitled, "Mr. Fleming's Nibble". The reduction can be expressed in terms of money-


Richard Devere Thrasher: Tell us what you did in 1956.


Jean Lesage: I am not talking about what we did. What the previous government did-


An hon. Member:: Was nothing.


Jean Lesage: -was not as a result of any promise it had made; it was as a result of sound administration of the country.


Some hon. Members:: Oh, oh.


Jean Lesage: What we did, we did because in our conscience, as administrators of the country responsible to the people of Canada, we believed that we were obliged to present the budget that we did present last spring. This administration said over and over again during the budget debate last year, in previous budget debates and during the election campaign that we were overtaxing the people. We have not said that; they have said that. Those who are now hollering must be the first ones who said in their own constituencies we were overtaxing by half a billion dollars a year.


An hon. Member:: Weren't you?


Jean Lesage: You made that promise and how far do you go to make it good? You go to the extent of 1/20 or $26 million reduction in taxes. To give an example of the importance of this $26 million reduction in taxation, I will use a device that was used by the hon. member for York West (Mr. Hamilton) last spring when the old age security payments were increased by $6 a month. He never mentioned that this increase would cost the treasury $60 million a year; he just said that it meant two cups of coffee a day.


Mr. Hodgson:: Sure.


Jean Lesage: Sure; it meant only two cups of coffee a day. Tax cuts of $26 million to 16 million Canadians for the period from June 21, 1957 to March 31, 1958 work out to $1.60 per capita or a cup of coffee every 18 days. A cup of coffee every 18 days is a long way from $500 million reductions that were supposed to be made by the present administration. The Prime Minister during the election campaign repeatedly asserted that every Canadian family was overtaxed by a sum of $120 a year.


An hon. Member:: By a Liberal government.


Jean Lesage: Here is the gospel, and believe me, Mr. Speaker, it is a Conservative gospel.


An hon. Member:: Liberal propaganda.


Jean Lesage: It has turned a nice red colour, to the Liberals use and advantage and I am afraid that my friends will take note of that in the near future. As reported in the Vancouver Sun-


An hon. Member:: You never read a better book.


Jean Lesage: We all have one.


Richard Albert Bell: Is the hon. gentleman predicting an election now?


Jean Lesage: No. I have been listening to your predictions. As reported in the Vancouver Sun of May 23, 1957, the Prime Minister at Courtenay, British Columbia, on May 22, said this:
Every Canadian man, woman and child had their pockets picked by $30.


An hon. Member:: A month?


Jean Lesage: By $30 a year. Not only does the present Prime Minister's government continue picking the pockets of the 16 million people of Canada of $30 a year, according to his own words, but of course he consoles them by giving them a cup of coffee every 18 days.


Mr. Small:: A wonderful analysis.


Jean Lesage: It is an analysis that I have taken from the hon. member for York West of whom I am sure my hon. friend is extremely proud and I am sure he could not find words of praise high enough for him. I am just following his trend of thought.


An hon. Member:: You will learn.


Jean Lesage: I have learned. You will learn too.
May I deal more especially for a few moments with the personal income tax and remind my Tory friends opposite of a few promises.


George Carlyle Marler: Not all of them.


Jean Lesage: No; only a few. It would take days to recall all of them. In 1949 the Tory platform was to raise the basic exemption from $1,000 to $1,250 and from $1,500 to $2,500. In 1953 they raised the ante-I believe that is the word you use-and then the proposition was to raise the basic exemptions from $1,000 to $1,500 and from $1,500 to $3,000.


An hon. Member:: What year was that?


Jean Lesage: Or from $2,000 to $3,000. It is all right.


George Carlyle Marler: It was not carried out in one case any more than in the other.


Jean Lesage: There is no proposal for a change in basic exemptions this time. After the ruling that we had this afternoon, I do not know how many private members will move amendments to this bill and of what nature they will be. But again the Minister of Finance-


Donald Methuen Fleming: You will not support them, whatever they are.


Jean Lesage: The minister can see what kind of bed he has prepared for himself. He will not be able to sleep because he will be kept awake by the difficulties.
Income Tax Act


An hon. Member:: He works so hard he has no time to sleep.


Donald Methuen Fleming: As long as I have my hon. friend's support in the votes I am not going to lose any sleep.


Jean Lesage: There is nothing in the bill to raise the basic exemptions.


An hon. Member:: Move an amendment.


Jean Lesage: Well, sir, there is one thing I want to say-


Mr. Hamilton (Notre Dame de Grace):: You
are going to say something now.


Jean Lesage: I am not like the Postmaster General (Mr. Hamilton) who usually aligns his words to say nothing. There is one thing I want to say and I am sure I am going to get applause from the other side. I am sure the $100 increase in the exemption for children is most welcome. But, sir, may I say again that that is not where help is most needed so far as children are concerned.


Some hon. Members:: Where?


Jean Lesage: What is most needed for children is an increase in the family allowance because families who are too poor, who do not earn enough to pay income tax, would benefit also.


Mr. Brooks:: Did they need it last spring?


Jean Lesage: I can still hear the present Minister of Finance on February 18 of this year, with his great voice of the grand days, asking for the removal of the 3 per cent floor on medical expenses. Where is it in the bill? There is nothing about that. I read it again this afternoon and I can still hear him speaking with all his convictions and asking that in the list of exempt medical expenses there should be included spectacles, premiums for medical and hospital insurance and even provincial taxes paid for hospital insurance plans. But nothing is done in the bill either to remove the 3 per cent floor, according to the promise made, or to add to the list of things which should be included as deductible. The Minister of Finance complained in 1955-


Mr. Cardiff:: Wind him up again, boys.


Jean Lesage: Wind up the Minister of Finance? It does not take much. In 1955 the Minister of Finance said that the government of the day was abstracting-I like the word -almost half the profits of the corporations. Nothing is done in the bill to reduce the rate of income tax on corporations. There is only the increase from $20,000 to $25,000 with respect to the application of the lower rate but there is no reduction in the full rate

Income Tax Act
about which the present Minister of Finance complained so bitterly. Nothing is done.
Now, let us go to the Prime Minister's promises.


An hon. Member:: Get back to your gospel.


An hon. Member:: Why don't you stay
around and vote when there is an amendment?


An hon. Member:: Why don't you shut up?


Clayton Wesley Hodgson: He stayed around; he was outside the curtains.


Jean Lesage: Mr. Speaker, I cannot distinguish what member it is who is shouting all the time. I would certainly be glad if Your Honour would help me to identify him.


Mr. Speaker:: Order. I am on my feet at the moment, and if the hon. member who is speaking will permit, may I say that I find it difficult to hear what is being shouted and I doubt whether hon. members can hear. There are so many engaged in this bypassing of the Chair that I feel rather isolated up here.


Mr. Fraser:: It is very much like a television program. We cannot help but laugh.


Jean Lesage: Well, sir, in Montreal on February 19, 1957, when speaking to the Montreal chamber of commerce, the Prime Minister (Mr. Diefenbaker) had this to say about the alleged discrimination against Canadian companies under the Income Tax Act.
Canadian companies are not asking for special advantages for foreign investment but have the right not to be discriminated against under Canadian taxation laws, which in several ways deny Canadian companies competition on equal terms with foreign corporations or their subsidiaries operating in Canada.
The present tax laws in this country, which are restrictive when compared with the United States, the United Kingdom, France and other countries with which we must compete in world markets, prevent secondary industry in this country developing to the extent that our resources and ingenuity of the Canadian people warrant.
Where in this bill is there anything to take care of this alleged defect in our Income Tax Act? Nothing is done again. What about the other promise which was made with respect to oil taxation? On April 25, 1957, when speaking in Toronto the Prime Minister said:
We believe that the discriminatory method of taxing Canadian oil companies should be changed so that Canadians are not at a disadvantage in competition with foreign investors.
There is nothing done in the bill to implement this promise of the Prime Minister. During his opening campaign speech at Massey Hall in Toronto he promised an incentive to Canadian investors. This was on April 25, 1957 and he said:
We believe that there should be some incentive in the Income Tax Act for Canadians to invest in Canadian equity stocks.

This was promised so often by the Conservatives during the campaign. What is being done? Again nothing. On the same occasion, when opening his campaign at Massey Hall on April 25, the Prime Minister also promised tax deductions for research purposes. Here is what he said:
We believe that tax deductions should be permitted in research in order to encourage Canadian research in every field.
But there is nothing in the bill. The Prime Minister also promised special tax inducements to firms to process raw materials in Canada. Here is what he said at Campbellton, New Brunswick, on May 4, 1957:
And in order to persuade business firms that it is to their advantage to process our raw materials here in Canada, we must show them by tax and other inducements that they will save money by processing these materials here in Canada. And I say this to you that, if we form a government, we will introduce legislation which will provide such inducements for we intend to see that Canada shall become the great industrial nation which her raw materials make possible.
What do we have under this bill? Nothing. Nothing in the bill to meet these promises of the Prime Minister. Again, empty promises, unfulfilled promises; a government of words, of promises, of postponement.
Now, sir, we had a lot of promises. We had a promise that there would be an imme-date session of parliament to reduce taxation. We had the promise of the Minister of Finance that there would be a budget.


Donald Methuen Fleming: No such promise at all.


Jean Lesage: We had that grave declaration by the Minister of Finance last June, and all that emerges in performance are the small changes in this bill regarding living costs to construction workers. By the way, if there is to be this change allowing a deduction with regard to construction workers' living expenses, why not do the same thing for our loggers, our wood cutters and our bush workers? Surely this would be only right if the government thinks it fair in the case of construction workers.


Stanley Howard Knowles: Will the hon. member permit a question?


Jean Lesage: Yes sir.


Stanley Howard Knowles: Will he vote for an amendment to this effect if one is brought in.


Jean Lesage: If the amendment is in order, and if it covers the bush workers and loggers to the same extent as it covers construction workers.


Donald MacInnis: Would the hon. member
permit a question? Would he take a few

minutes out to explain why he and his colleagues are so sincere in voting for empty promises and empty legislation?


Jean Lesage: When have we voted for
empty promises? We voted for the very few things which have been done by this government which are of value; things which are only extensions of the measures which were brought forward under a Liberal government. There is nothing new in all that this government has done since it assumed office. It has only been carrying on an extension of the policies which have been put forward and initiated by the previous Liberal governments. Whenever they have a grave problem, whenever they have something important to cope with-such as unemployment or the rising prices-they have just sat there and done nothing. Whenever they have had to deal with other important problems they refer them to a royal commission. They do not take action themselves. As I said on the debate on the speech from the throne, they call conferences to prepare other conferences.


George Harris Hees: I can see Mike is going to have some competition.


Jean Lesage: Mr. Speaker, the Minister of Transport (Mr. Hees) has always been one of my very good friends, and I thank him for that very high compliment he has just paid me, but I am too humble to accept it. I know too much my own value to accept it. But it is the compliment of a friend, and I appreciate it.


Peter Stefura: Will the hon. member allow a question? He said that all the Conservative party is doing is carrying on the policies of the Liberals. But can he tell us what difference there is between Liberals and the Conservatives?


Jean Lesage: Oh yes. Conservatism has always been based on the philosophy of privilege, while Liberalism has always been based on the philosophy of freedom, equality and unity.


Mr. Speaker:: I recognize that the hon.
member was speaking under the provocation of the question but he is wandering from the subject matter of this bill.


Jean Lesage: Sir, I have to follow the wanderers over there, but unlike them I do not get lost.
The Canadian people have had their appetites whetted by so many election promises. They expected an immediate session of parliament to cut taxes by $30 per capita because the Prime Minister had said that the pockets of every citizen of Canada had been picked to the amount of $30 a year. What do we have? A figure of $26 million-$1.60 per year
Income Tax Act
between June and March. This appetite which has been whetted by the Conservatives will not be satisfied with the present crumbs or the present nibble. Perhaps instead of saying crumbs and nibbles I should use the elegant statistical style employed by the hon. member for York West and say that the appetite of the Canadian voter will not be satisfied after he has been promised a cut of $500 million, with a cup of coffee every 18 days.


Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I think at this moment it is only right to turn to the memory of one of the patron saints of this house, Sir John A. Macdonald, to whom it always seems acceptable to refer, and to say that 103 years ago he began to forge the alliance of two parties known as the Liberal-Conservative party. And it seems to me that the speaker who has just sat down has fairly laid the background for a new alliance by proving there is little difference between the two. I wish to turn now to a point I first raised the other day, and one which has a specific connection with the bill now under discussion. I wish again to urge upon the government the desirability of extending these allowances beyond the construction workers to workers in the forestry industry.
The reasons why an extension has not been given to the forestry workers are not clear at the present time. It seems to me, looking at the matter from the outside, and not being able to understand the reasoning of the Minister of Finance (Mr. Fleming), that either there is too much revenue involved to enable this privilege to be extended to forestry workers; or that it would be too intricate and costly to check and document such an extension; or perhaps, and this is a more practical view, that there has not been strong enough pressure put forward by groups supporting the loggers and bush workers to make this matter become regarded as urgent.
Whatever may be the reason, the bush worker today is in an inferior position in relation to the railroad workers or, when this legislation comes into effect, the construction workers. The bush worker today must invariably provide himself wth a car and a power saw, the total cost of which is quite high. Moreover, today he operates within a framework which is strictly regulated by a union. The places where he can work are to a great extent fixed. There is no longer the situation in the logging industry, connected with the great and growing pulp and paper industry, which prevailed in the past; the bush worker is confined a great deal more to one area, and he no longer goes foot-loose from job to job.

Income Tax Act
The companies are not in a position-and this is understandable-to provide municipal facilities except in rare places where there might be an improvement district, though they locate their camps in places from which they plan to operate for many years.
The present state of the roads does not allow commuting between the communities and the actual bush operations except in extremely rare cases and so you have a situation where the very best of men in bush work, those who stay in the bush for a number of years, are penalized when it comes to having any family life. In addition to being penalized by having to have their families in town and having to educate their children away from where the parents are working they have no opportunity of taking advantage of the expense allowances that are extended to railway workers and now to construction workers.
It seems to me to be just a matter of fairness rather than a partisan attitude that the same privilege should be extended to bush workers. The hon. member for Comox-Alberni (Mr. Barnett) is going to refer to the situation as far as bush workers in the west are concerned but looking at the situation that prevails in Ontario and Quebec we can be sure that in the foreseeable future the bush workers will be in the invidious position of being unable to have their families with them where they work and having to keep their families in town. It is difficult to understand from the point of simple justice why they should not be granted the exemption that is now being extended to construction workers.
At the same time the point could be made that they should be allowed deductions for their expenses in connection with their power tools. A power saw does not represent a small expenditure and a conscientious bush worker spends a fair amount of money on the maintenance of his equipment during the year. Because of the services that have been extended in the bush camps in recent years it is quite easy to keep a record of the expenses in connection with the maintenance of power tools. In other words a bush worker could prove what he pays for a power saw and what he expends on repairs and new parts. There seems to be no valid reason why he should not be included in this exemption if it is being extended to other classes of workers. I am prepared to grant that the transportation costs of the bush worker in terms of travelling to visit his family would be practically impossible to keep track of fairly under the present circumstances because most of them have their own cars but the fact remains that the woods worker is

in an inferior position in relation to the general railway and construction worker.
One other point in connection with income tax changes which I have always considered unjust relates to the fact that if I have a son going to university and I am paying part of his fees I can receive a deduction for those expenses-


Ernest George Hansell: No you cannot.


Douglas Mason Fisher: Yes, to a certain extent.


Ernest George Hansell: No. I tried it.


Douglas Mason Fisher: The point I wish to make is that if I decide to take a graduate course myself I am required to pay income tax on the money I spend in taking those courses because according to the theory of the department I am improving my ability to increase my income. That may be fine as a stand to be taken by the Department of National Revenue in approaching the problem but in so many cases you take courses that have no possible chance of improving your ability or opportunity to increase your income. It occurs to me that this is one section of the Income Tax Act in respect to which we could have looked forward to seeing some amendments made as well as an increase in the amount of money that may be earned by a dependant who attends university.
I wish now to deal with one other point touched upon by the previous speaker. Naturally I have looked at the speeches made by the present Minister of Finance in the past in relation to income tax matters. I am too frightened to quote them here for fear of being labeled absolutely or utterly incorrect and I do not wish to place myself in the position of having an accusation of that kind thrown at me. However, from my examination of his previous speeches on the subject it appears to me that the gist of several of his remarks in the past have been to the effect that deductions for medical expenses should be extended and that it is a pity that at the present time the allowance for drugs is extended only to five or six categories instead of to the whole field. Since these two points are known to have been close to the minister's heart, judging from his past comments, it occurred to me that he might have considered bringing in enabling legislation at this time but perhaps he is considering it for the future. We would certainly like to hear whether it is his plan to do this in the future.
With reference to the stand of organized labour in relation to the Income Tax Act I think it is worth while pointing out that while they looked forward to alleviations in terms of personal income tax exemptions the

brief presented by the Canadian Labour Congress stated that organized labour would like to have an increase in the basic taxation exemptions to $1,500 for single persons and $3,000 for married persons. They would also like to see the exemptions for dependent children raised to $500 regardless of the family allowance. We readily concede that the minister has made a slight move in this direction but I thought it important to note that these are the requests of organized labour as contained in the brief of the Canadian Labour Congress.
In concluding my remarks I wish to return to the bush worker and to ask the minister and his assistants to give serious consideration to the question of extending the exemption to them or, failing that, to present a clear explanation as to why it is impossible to do so at the present time. I am not attempting to gain any advantage in asking this question and I would genuinely appreciate receiving some information which I could take back to these people who at the present time, especially in communities where railroad workers live adjacent to bush workers, the bush workers feel they are in an inferior position in relation to the other group in terms of this act.


Frederick George Hahn: Mr. Speaker, this so-called budget has frequently been referred to as a small budget, a small mouse budget and a baby budget but after listening to the flaming fury and the pyrotechnics that occurred today I confess I am rather inclined to call it a flaming budget.


Clayton Wesley Hodgson: Did you see the red book?


Frederick George Hahn: Income Tax Act
commodity, plus what the distributor gets, plus what the wholesaler gets, plus what the retailer gets, will spiral the figure of $178 million to a total of $400 million or $420 million, as the case may be. That would be of a great deal more benefit to everybody in the country. Every man, woman or child would benefit from that particular change and it is the type of tax alleviation that the country requires, more so than this. I suppose if I had the gift of language that the Minister of Finance has I could find some adjective that would describe it better than a puny amount. But I am not as familiar with the language as is the minister. However, I would say, that this is the type of reduction the people of this country expect.
However, I recognize, as does every hon. member, that it is only by a direct change in taxation that the people become aware of the over-all picture. By changing the sales tax and bringing it down we would in effect also be reducing our cost of living by that same percentage, not possibly by the full 2J per cent because I realize full well that all commodities are not subject to the sales tax. I know, in fact, that food does not come under the sales tax. It is a recognized fact that the people of this country have complained for the past several years about the increased cost of living. This suggested change might not be felt immediately but it would certainly be felt in the long run, and it would have a material effect upon the cost of living. The percentage cost which is published every so often would be materially reduced and instead of having $178 million left in the hands of the taxpayers in a year's time we would have a total of at least $400 million to $450 million, as the case may be.
That reduction in sales tax would have one other effect. The retail price being what it is, we would be able to take advantage of the reduction in the export of our goods by having our mark-up cost reduced by the 2| per cent.
In British Columbia particularly we find ourselves in the position of having a surplus amount of lumber on our hands and we have difficulty in selling it. I am satisfied that if the lumber merchants of my province did not have to pay the full 10 per cent sales tax the effect might be such that they would not find it quite so difficult to get some of the foreign market.


Mr. Broome:: May I ask a question? Is the hon. member not aware that export sales are not subject to sales tax?


Frederick George Hahn: That is a very fine argument except that when we manufacture the lumber into furniture or some other commodity that We have to sell we do pay the sales tax on it.

If the sales tax were reduced it would make it possible for us to sell our manufactured products.


Ernest James Broome: Not for export.


Frederick George Hahn: It would reduce the price and assist our people. There are other products that go into the manufacture of commodities, the glue and all the other essentials that are required, and a reduction in the sales tax would make a difference.


Mr. Speaker:: I remind hon. members that we are dealing with the income tax bill and not with sales tax or excise tax bills. I really think it is out of order to suggest that the government should have included in this bill a sales tax remittance.


Frederick George Hahn: I thank you, sir, for your ruling in that regard. I was using it as an example in trying to point out to the ministry how they might have saved the taxpayers the same amount of money, and it would have been a little more advantageous to the people and to the nation as a whole.
One of the other questions that is dealt with in this bill is the change in the corporation income tax to assist the small corporations. I fully agree with the ministry in this. For some years past I have been one who has been clamouring, I might say, for the government to give some alleviation and some assistance to the small corporations and business houses of the nation. I trust this will be of sufficient assistance to them to enable them to carry on an expansion program in the years to come to help them out.
Then, one other question is dealt with in this particular bill, namely the cost of living expenses of construction workers supporting dependants, which is to be allowed. I feel, as does the hon. member for Port Arthur (Mr. Fisher), that this particular amendment should also be extended to include the loggers not just in my province or in his province but throughout the dominion. It is a fact that it is just as difficult for these people in the logging industry to carry on and get by. They have the same difficulty as construction workers and, in a sense, this might be termed as discriminatory in its nature. The same regulations and the same law should apply to each one in the various fields.
I refrain from making any further comments at this time, Mr. Speaker. I trust, though, the minister will in the future, in considering taxation, see what can be done to assist the taxpayers as a whole to a greater degree, as I said earlier, by introducing changes in the sales tax which I feel will assist the people of this nation more materially than the changes we have before us.


Alexander Barrett Macdonald: I do have a few comments about the proposed changes in the Income Tax Act. I listened with great interest to the remarks made by the hon. member for Montmagny-L'lslet (Mr. Lesage). While I cannot put too much stock in what we might have expected from a Liberal government had they continued in office I think that his criticisms were very cogent indeed. I do not know whether the smiles, the interjections and the concern exhibited by those on government benches when he was speaking were an indication that they realize just how serious the breach of faith with the Canadian people has been. Surely if there ever were income tax changes or a baby budget which could be characterized as one of great expectations and dashed hopes so far as the people of Canada are concerned, this is it.
The hon. member for Montmagny-L'Islet mentioned something which I recalled having happened during the campaign. He referred to the remarks of the Prime Minister (Mr. Diefenbaker) to the effect that the pockets of every man, woman and child were being picked to the extent of $30. I recall, too, that the general impression throughout the country, as a result of Conservative electioneering, undoubtedly was that personal exemptions would be raised to $1,500 single and $3,000 married. That is what you have given out to the people of Canada.


Donald Methuen Fleming: No, we did not.


Alexander Barrett Macdonald: That is the impression they have had.


Stanley Howard Knowles: The Minister of Transport (Mr. Hees) at Gananoque on May 23.


Alexander Barrett Macdonald: It
is a great pleasure to be backstopped so thoroughly by the hon. member for Winnipeg North Centre (Mr. Knowles). Too often during election campaigns candidates and political leaders have given to the people of Canada words which promised much more than they actually contained. Sometimes they have proven themselves to be good lawyers by leaving themselves escape hatches. Perhaps that could be said as something that is true of the present Prime Minister (Mr. Diefenbaker). There can be no doubt that during this campaign, and as a matter of fact continuing up to the time the Minister of Finance announced these changes, the people of Canada expected these personal exemptions to be raised, and their hopes have been dashed.
Income Tax Act
I feel, Mr. Speaker, that these exemptions could have been raised. I believe that if the government will only reorganize the tax structure which has been set for so many years by Liberal governments and which could be expressed in the words, "taxation on the basis of the rich man's budget" and which could be characterized by the phrase "taxation policies where those who have too much pay too little and those who have too little pay too much", they would find that additional revenues are available. If the government would break away from that philosophy which is embodied in our taxation statutes they would find that additional revenues are available, not only to meet social security needs but to raise income tax exemptions.
I want to refer to some of the specific instances in the Income Tax Act where that could and should be done, and to methods whereby we could bring taxation in Canada back to a basis of fairness, equity and even-handedness, and where taxes would be really based on ability to pay. Mr. Speaker, in view of the fact I was going on to three distinct proposals, may I call it ten o'clock and move the adjournment of the debate?
On motion of Mr. Macdonald (Vancouver-Kingsway) the debate was adjourned.



BUSINESS OF THE HOUSE

George Carlyle Marler: What will be the business of the house for tomorrow?


Mr. Green:: Tomorrow we shall commence with the third reading of item No. 12 on today's order paper, an act to amend the Excise Tax Act; we will then continue with item No. 13, which is second reading of an act to amend the Income Tax Act; then take the resolution No. 16 on today's order paper concerning a measure to provide a loan to New Brunswick; then, item No. 11, an act to amend the Export Credits Insurance Act; then, item No. 21, which is the resolution concerning guaranteed prices for agricultural commodities.


George Carlyle Marler: Is it the intention to go on with the same program or so much of it as is unfinished on Saturday?


Howard Charles Green: I am not in a position to say definitely this evening. We may go on with estimates on Saturday.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to the order of the house passed on December 2, 1957.
[Stage Direction]
Questions