1957-03-19

[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: Mr. Speaker, may I direct a question to the Secretary of State for External Affairs. Will he tell the house whether or not the reports in the press this morning are accurate, which are summed up in the heading in the Globe and Mail, as follows:
Move To Armistice Line
U.N. Agrees to Move Troops From All Gaza Strip Towns
The report says that an agreement has been reached between the Egyptians and the officials of the United Nations emergency force to this effect.


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, I saw the story to which my hon. friend refers, and I have been assured by the office of the Secretary General of the United Nations that there is no truth whatever in it. It is a story that originated in Cairo, and I think we can assume by now that a good many of those stories that originate there are without foundation; certainly this one is.


Howard Charles Green: I understand the minister
attended the meetings of the advisory committee of the United Nations emergency force over the week end. Can he tell the house what is to be the function of the emergency force in the Gaza strip in view of the developments last week?


Lester Bowles Pearson: Mr. Speaker, I do not think I can do that on the orders of the day today. There is another meeting of the advisory committee going on at the present time. After that meeting the secretary general is leaving for Cairo to conduct negotiations in the Middle East with a view to clarifying the resolutions of the United Nations assembly laying down the functions of this force. I think that perhaps tomorrow or the next day I will be able to make a statement when I have heard the results of his talks in New York and perhaps in Cairo.



GULF OF AQABA


[Stage Direction]
On the orders of the day:
Mr. Carl O. Nickle (Calgary South):: Mr. Speaker, I should like to address a question to the Secretary of State for External Affairs which is supplementary to the one directed to him yesterday. Now that the Saudi Arabia government has announced that it considers the gulf of Aqaba its own territorial waters and that it is intended to bar the gulf of Aqaba to Israeli shipping, what steps does the Canadian government intend to take to implement the clear statement of government policy which the minister announced yesterday in reply to a question on this matter?


Lester Bowles Pearson: I assume the government of Israel will take its own steps to protect its own shipping in international waters, and I assume also that disputes as to whether those waters are international or territorial will be decided in the proper international tribunal. Meanwhile it will have been noted by my hon. friend that an Israeli ship, I think named The Queen of Sheba, went through these waters yesterday and through the straits of Tiran without any interference by anybody. That ship went through the gulf on the way to Eritrea, I think, which at least is an encouraging sign for the future.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. Solon E. Low (Peace River):: Mr. Speaker, I would like to direct a question to the Prime Minister, notice of which I sent to his office and I hope he received it. Has the government received any reply to the aide memoire that was sent to Washington some time ago relative to the Premium Iron Ores tax case, and does the minister not think the Canadian government should now lodge with the United States government a much stronger protest than was contained in the aide memoire against this attempt on the part of American authorities to impose income taxes on a purely Canadian company?


Right Hon. L. S. St. Laurent (Prime Minister):: To the first question the answer is yes. A reply dated December 3 was received, and we were informed that the

Inquiries of the Ministry views set out in the Canadian aide memoire were communicated to all appropriate United States government authorities.
In response to the second part of the question no facts have developed since that aide memoire was submitted and the views of the Canadian government were fully made known to the United States in the aide-memoire.
The hon. gentleman's question contains these words, "impose income taxes on a purely Canadian company". Of course we have to realize that it is not as a Canadian company that these proceedings have been instituted against that assumed taxpayer, but the attempt to assess and collect taxes from that taxpayer is because of the assertion that it has a permanent establishment in the United States.



REQUEST FOR CLARIFICATION OF GOVERNMENT ANNUITY EXEMPTION

[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough):: Mr. Speaker, I should like to address a question to the Minister of Finance. I would like to ask if payments to the Department of Labour annuities branch upon annuities issued by that office will quality for deduction under the proposed amendment to the Income Tax Act? I should also like to know, if they will not, will the Department of Labour annuities branch issue annuities payments of which will qualify for deduction?


Hon. W. E. Harris (Minister of Finance):: Yes, Mr. Speaker, it was my understanding in the meeting we held prior to the budgetary announcement that the annuities would of course comply with the provisions, unless there is some most unusual provision in the annuities themselves; and I doubt that very much because the intention was that the annuities should qualify.


Gordon Knapman Fraser: Another question I should like to ask is this. If they do qualify will consideration be given to raising the maximum monthly annuity to amounts in excess of $100?


Hon. Milton F. Gregg (Minister of Labour):: Not this session, Mr. Speaker.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to my hon. friend the Minister of National Health and Welfare. By what amount will the income ceilings of recipients of old age assistance, the blind persons' allowance and

the disabled persons' allowance be raised consequent upon the increases in rates of benefit announced in the budget speech of last Thursday night?


Hon. Paul Martin (Minister of National Health and Welfare):: Well, Mr. Speaker, I think that information could appropriately be given when the matter is discussed in the house.


Stanley Howard Knowles: Mr. Speaker, may I ask a supplementary question. Is the minister aware of the fact that his colleague the Minister of Veterans Affairs has issued a press release indicating the ceiling changes with respect to veterans legislation? I am sure my hon. friend is not going to lag behind his colleague.


Paul Joseph James Martin: Mr. Speaker, as my hon. friend knows, the Minister of National Health and Welfare rarely issues a press release.


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: The minister should sing that one.


Stanley Howard Knowles: Mr. Speaker, may I ask another question of the Minister of National Health and Welfare. Now that his colleague the Minister of Veterans Affairs has not only issued a press release but has stated in the house today the figures of the new ceilings with respect to the war veterans allowance, will he reconsider the answer he gave to my question a little while ago?
Is it possible to record the minister's affirmative nod?


Paul Joseph James Martin: Mr. Speaker, I think my reply was comprehensive.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. A. J. Brooks (Royal):: Mr. Speaker, in view of the press release by the Minister of Veterans Affairs, I should like the minister to indicate what increase in permissible income will be made under the proposed changes in the scale of benefits under the War Veterans Allowance Act, and also whether there will be an increase in the allowance to single recipients as well as to widows?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: Mr. Speaker, the permissible income ceilings are being raised in the case of single recipients to $960 and in the case of married recipients to $1,620. It is not proposed to have any increase in the single rates, as I pointed out the other day that at the present

time the single rate is $60 which was the amount asked for by the various organizations throughout the country.



ROYAL VISIT


[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinlon):: Mr. Speaker, may I ask the Prime Minister if he would comment on a press release of today to the effect that the Queen and Prince Philip, Duke of Edinburgh, are likely to visit Canada this coming autumn?
Right Hon. L. S. St. Laurent (Prime
Minister): No, I cannot comment on these speculative stories, and I think it would be quite improper to make any statement about them until a formal decision has been reached, which will then be announced.


Mr. Speaker:: The hon. member for
Broadview.


Mr. Hees:: The hon. member for Eglinton just beat me to it.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. E. G. Hansell (Macleod):: Mr. Speaker, may I ask the Prime Minister if he can confirm the report which came over the air at noon that the Fowler commission report would be presented to parliament within the next 24 hours?


Louis Stephen St-Laurent: No, I cannot. My latest information, and I hope it will be possible that the expectations that have been raised in my mind will be fulfilled, is that the report might be tabled on Thursday, March 28.



IRRIGATION


[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Prime Minister. Has the premier of Saskatchewan requested a meeting with the federal government to discuss the building of the South Saskatchewan dam and, if so, will such meeting be held?


Louis Stephen St-Laurent: No, Mr. Speaker, the premier of Saskatchewan has not requested a meeting. The premier of Saskatchewan has said that
Inquiries of the Ministry when we inform him that we are ready to proceed with the undertaking he will be glad to meet us to discuss the distribution of the cost of the project.


Hazen Robert Argue: Mr. Speaker, since the government has made the welcome announcement that it is prepared to assist in electric power development in the maritimes, is the government prepared now to assist the South Saskatchewan river project in order to increase power development on the prairies?


Louis Stephen St-Laurent: The
announcement with respect to the maritime provinces concerned the establishment of something that was looked upon as an undertaking that would be self-supporting, and there is no such element involved in the project concerning the South Saskatchewan dam.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, I wish to direct a question to the Minister of Transport. Is the department considering the use of an icebreaker convoy this year to force open the port of Montreal early, and, if so, will the cost of that convoy be met by the shipping companies or by the federal treasury?


Hon. George C. Marler (Minister of Transport):: Mr. Speaker, I have heard nothing
which would provide any foundation for the report which the hon. gentleman has just given the house.


Alfred Johnson Brooks: I should like to ask the Minister of Transport a supplementary question with reference to the question asked by the hon. member for Saint John-Albert. Is he aware that officials of the transport department have suggested that it may be necessary to use an icebreaker convoy for ships coming through the gulf of St. Lawrence because of the ice situation? I should also like to ask him how many icebreakers have been employed this season in the St. Lawrence river clearing the channel for the opening of the port of Montreal, how long it has taken and by how many weeks it has advanced the opening of that port.


Some hon. Members:: Oh, oh.


Alfred Johnson Brooks: Hon. members may laugh, but it is a very important matter, and I should like to have an answer from the minister.


An hon. Member:: How many questions in one?
2456	HOUSE OF
Inquiries of the Ministry Mr. Marler: Mr. Speaker, I have some difficulty detecting much urgency in giving a reply to the hon. gentleman.


Alfred Johnson Brooks: It seems to be urgent for
Montreal.


George Carlyle Marler: It would seem to me that the subject could be much more fully discussed on my estimates and when they come up-


Donald Methuen Fleming: When?


Alfred Johnson Brooks: We hope you will know more about it.


George Carlyle Marler: -I shall be glad to reply to the implications of the hon. gentleman's question. Actually, however, two icebreakers have been engaged in the task just as they were last year and just as they have been in the past. A further icebreaker was delivered to my department about a week ago, and I think it is probably engaged in work in the neighbourhood of Quebec at this time.
With respect to the story that a convoy was being organized, the hon. member for Saint John-Albert sent me the clipping from the Montreal Gazette, and if the hon. gentleman who has just put the question would read the clipping I think he would see that it definitely has the character of what might be described as speculative information.


Alfred Johnson Brooks: It was officials of your department who speculated.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. R. W. Mitchell (London):: I wish to ask the Minister of Northern Affairs and National Resources a question. Has the minister received representations from the city of London and surrounding municipalities since he refused the petition of the upper Thames valley authority for additional grants to develop the conservation measures in that area and, if so, what action has been taken?


Hon. Jean Lesage (Minister of Northern Affairs and National Resources):: Under the Canada Water Conservation Assistance Act the federal government can contribute to water conservation projects at the request of the provinces. I wrote some time ago-and I mentioned it in the house-to the appropriate minister in Ontario giving the reasons why it was not possible to contribute to the upper Thames conservation scheme. According to my memory I have received no further representations from the minister.


Robert Weld Mitchell: A supplementary question, Mr. Speaker. Does the minister not agree that the construction of the Fanshawe dam was only the first step in the over-all conservation plan for the area?


Jean Lesage: I do not know that the Fanshawe dam might not be considered as a separate project, standing by itself. I believe it could.


Mr. W. B. Nesbitt (Oxford):: I would like to direct a supplementary question to the Minister of Northern Affairs and National Resources with regard to the work of the upper Thames valley authority. Would the minister tell the house what cost-benefit ratio is expected by the federal government in order to justify federal participation in this conservation project?


Jean Lesage: A reasonable ratio, sir.


Mr. J. W. Monteith (Perth):: I would like to ask the Minister of Northern Affairs and National Resources if he would explain how he deems a contribution of less than $4 million unjustified in the light of the fact that millions in property loss would be prevented, while at the same time the counties of Perth, Oxford, Middlesex and Kent would benefit directly from the conservation project?


Jean Lesage: The hon. member is trying to give a resume of the brief I received, which was about 50 or 60 pages long. He is not even doing justice to the brief. I, in turn, on the orders of the day, could not do justice to the lengthy reply I gave.


Wallace Bickford (Wally) Nesbitt: May I ask the Minister of Northern Affairs and National Resources one further supplementary question. Having regard to his answer to the question just asked him, what does he consider a reasonable cost-benefit ratio?


Jean Lesage: It would be difficult on the orders of the day to give a course in economics to the hon. gentleman.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. John B. Hamilton (York West):: Mr. Speaker, I would like to direct a question to the Minister of Citizenship and Immigration. In view of yesterday's newspaper reports of complaints of overcrowding on the immigration airlift, has the minister considered, with the Minister of Transport, whether the seating arrangements on these planes have been approved by that department?


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: No, sir, I have not, but I intend to do so. I must confess I was not greatly impressed by the newspaper reports. If I could get a passage from London to Vancouver for $200 I would think I was doing pretty well.


John Borden Hamilton: Mr. Speaker, I might direct the minister's attention to the question on the basis of the safety of the passengers rather than the air fare.


John Whitney Pickersgill: I will take note of the hon. gentleman's observation.


George Carlyle Marler: Mr. Speaker, I should like to supplement the answer given by my colleague the Minister of Citizenship and Immigration to the question of the hon. member for York West. When I saw the report this morning that there had been alleged overcrowding on this aircraft I took the precaution of making inquiries in my department whether there was anything unsafe in the operation that was described in the press, and I was told by my officials that it was not considered unsafe though it might be uncomfortable.


John Borden Hamilton: Does the minister's department permit Canadian operators to fly under the same circumstances with the same seating arrangements in their planes?


George Carlyle Marler: A good deal depends on the service they are being called upon to carry out. Offhand I am not able to give the requirements of my department with regard to similar operations being carried out by Canadian operators.



THE CANADIAN CONFEDERATION


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Prime Minister. In view of news reports of the speech made by the Prime Minister in Hamilton last evening, may I ask whether the government will now give consideration to my resolution asking for a federal-provincial committee to plan Canada's progress and development so we will be in a position to celebrate appropriately our one hundredth birthday on July 1, 1967?


Louis Stephen St-Laurent: That will be given consideration at the appropriate time, Mr. Speaker.
Inquiries of the Ministry COMMONWEALTH RELATIONS



BERMUDA MEETING


[Stage Direction]
On the orders of the day:
Howard Charles Green: Mr. Speaker, is the Prime Minister yet in a position to tell the house what subjects will be discussed during his conference next week with the Prime Minister of the United Kingdom? If not, when will it be possible for us to get that information?


Louis Stephen St-Laurent: I am not sure that I will be at liberty to disclose the confidential correspondence I have had with the Prime Minister of the United Kingdom. I can say that we have suggested to the Prime Minister that we wish to discuss the trade situation between Canada and the United Kingdom. We will, of course, express our satisfaction at the fact that the United Kingdom has been able to increase its exports to Canada and that it has been able to make it possible for us to increase our exports to the United Kingdom. We will wish to discuss quite frankly the future possibilities of further substantial increases in that trade. We will certainly also discuss the situation which may arise in connection with this European market arrangement and free trade area. We have already had some discussions about that matter with Mr. Mollet, especially in relation to agricultural products.
There are other matters of particular concern to Canada that will be under discussion. There have been negotiations in respect of the quite long-term future requirements of the United Kingdom for uranium for the development of power and no doubt we will find it of advantage to inform the Prime Minister of the United Kingdom of what the situation is apt to be here in Canada. We will also be very much interested in finding out what the progressive requirements of the United Kingdom will be.


Howard Charles Green: For uranium?


Louis Stephen St-Laurent: For
uranium. I think those are the matters of special concern to Canada. But of course we are all very much concerned in the international situation generally and in the developments which are taking place, and which are not always being reported accurately in the newspapers, in the Far East.


Howard Charles Green: The Far East or the Middle East?


Louis Stephen St-Laurent: I mean the Middle East. I have always found that these frank exchanges of the information we get

The Budget-Mr. Macdonnell from sources other than newspaper reports have been helpful in enabling us to try to co-ordinate our actions in the manner that will best serve our common objective of trying to achieve a more settled situation in that area.
There are also other parts of the world where there are problems that give some anxiety in respect of world conditions, and no doubt they will be quite thoroughly reviewed. As to the matter which was alluded to by the hon. member for Eglinton (Mr. Fleming) this afternoon in a question based upon a news report in the newspapers which we have ascertained is inaccurate, we will no doubt take the opportunity of trying to ascertain just what the prospects are with respect to the matter referred to in that news report.
There are no doubt also other questions that will arise. We will try to convey to the Prime Minister all such information about what is taking place here as might be of interest to the United Kingdom government; and we will try to ascertain, without being indiscreet, everything the Prime Minister can inform us about that could be helpful in maintaining the effective pursuit of common objectives.


Howard Charles Green: Is there to be any discussion concerning the calling of a commonwealth conference?


Louis Stephen St-Laurent: That is possible; but I am not going to take the initiative of requesting that there be a prime ministers' conference.


Howard Charles Green: Why not?


Louis Stephen St-Laurent: Because I do not think that at this time we wish to lend support to these newspaper stories- and there have been some of them-that the lead in commonwealth affairs is passing from the United Kingdom to some other member of the commonwealth.



THE BUDGET


[Stage Direction]
The house resumed, from Thursday, March 14, consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, of course it goes without saying that we expected the Minister of Finance would do his best to please, or partially please, the largest number of taxpayers, and verily we have not been disappointed. Many things are in there, cocoa, pickles, ketchup, meat

extracts, candies, soft drinks are to be tax-free. As one commentator put it, "He nibbles away here and there at the vast load of taxation upon the Canadian people". "Nibbles", I think, is the right word. The great news, according to one of the newspapers in the province of Quebec, is that the minister has decided to do away with the tax on bubble gum. There seems to be some doubt as to whether this will decrease the price but at any rate it is easy to see what the minister was aiming at.
It is true that some practical people will complain that it would have been better to reduce the tax on, say, children's shoes than on chewing gum, but the minister's scatter-gun tactic was designed to cover a wide range and he presumably decided that it was wise to spread the jam as far as possible, however thin.
There are some glaring omissions. The minister is to spend some tens of millions of dollars on assisting the self-employed in the setting up of pension funds to protect themselves, with which we fully agree, but he does virtually nothing for the whole class of small taxpayers, to whom I shall refer later. The truth is that the government ignores the fact that the Canadian people are taxed too heavily; and while much of the taxation is concealed in deductions at the source, the great danger still remains that high taxes and high prices could seriously affect our competitive position.
Meanwhile the spending spiral goes on rising and rising. Take the results for 195657. The expenditures, together with the last supplementary estimates now total $4,867 million. This means $434 million more than the preceding year. Further, the minister tells us that he had a surplus of $282 million, to which should be added $100 million by reason of certain reserves which he set up.
Let us consider for a moment the effect of this large surplus, actually $382 million, against an estimate of $113 million. If it were caused by reduced expenditures, that would be a different story. But of course that is not so. Expenditures and taxation are both up. The minister has taken away from us nearly $400 million more than he budgeted for, but, of course, he has also spent over $200 million more than his estimate. The confessed surplus is $282 million but that is not the whole story. The minister, as I said, has tucked away two amounts of $50 million.
This means that the government has taken an extra $382 million from the Canadian people. Philip Snowden used to say that if any government took half a crown more than it needed it was guilty of getting money

under false pretences. But today the government has no hesitation in taking hundreds of millions extra from the taxpayer.
The minister explains this on pages 2317 and 2318 of Hansard. He says that this amount of $282 million was used, along with $110 million from various government accounts and $131 million from cash balances and that the total of $523 million was used, in the minister's words, "to reduce the unmatured debt held outside these government accounts". This means that this money went into the hands of banks and other holders of government bonds.
Discussion of these financial operations naturally brings me to the burning question of inflation or, as I prefer to call it, high prices. I like better the plain English words. High prices bear very unevenly on the community. Those who are able to gear their income to rising prices are usually able to come out even or perhaps a little ahead. Of course, those who are buying and selling find rising prices to their advantage. To the well to do high prices are not a vital matter. Perhaps it means a motor car or a television set less, but to those near the bottom of the income scale, those whose incomes are derived from old age pensions, those on fixed incomes, the mass of white collar workers, etc., the question is not of a motor car less but a loaf of bread or a pound of butter less.
I suppose that of all the devices which have assisted human beings to live together in an orderly society, nothing has played a greater part than stable money. We of this generation have every reason to know what happens when money loses its value and when we have what is called "galloping inflation". In Germany, after world war I, a bushel of bank notes was needed to purchase a loaf of bread. Between January, 1920, and November, 1923 wholesale prices in Germany rose more than 7 trillion times. Instances could be multiplied without end. Perhaps one of the most homely is the story of the Mississippi captain during the civil war who came to a wharf to load cordwood fuel and was told that the price was "cord for cord", a cord of wood for a cord of confederate notes.


Mr. McCann:: Why did they not burn the notes?


James MacKerras Macdonnell: Coming to our own situation, let me give some figures. A dollar which was worth 100 cents in 1946 was worth only 66 cents in 1956. In other words, the consumer price index rose by an average of 4.3 per cent. In other words, a man who retired in 1946, having made what appeared to be adequate provision for his old age, may now
19. 1957
The Budget-Mr. Macdonnell be in dire want. Yet, we are facing a situation where some people are saying that nothing can arrest the rise of prices and government expenditures so that we might as well relax and enjoy it. Some people are even so foolish as to conclude that the best way is to take satisfaction in the growth of nominal income and find ways, legal no doubt, around the income tax.
The National City Bank's comment on this is as follows:
This is a fool's paradise . . . the unequal distribution of the cost of inflation brings social discontent . . . retired people on fixed incomes get hurt . . .; demands arise for price controls, government intervention and destruction of individual freedoms and opportunities. The history of great booms is that they inevitably collapse. The history of inflation is that in the absence of firm restraints it tends to accelerate.
The National City Review goes on to say:
Once under way it is hard to stop an accelerating rise of public expenditure and prices.
In an article entitled "The Age of Inflation", the London Economist says:
The chief social objection to inflation is that it is unfair. In effect it defrauds-for the benefit of the rest-all those people whose claims on the community are at present fixed or nearly fixed, in money terms. It defrauds that is to say, pensioners, holders of fixed interest securities of every kind, creditors in general, most people who save, people who insure themselves, many salary earners and those wage earners whose bargaining strength is relatively weak.
Yet once it is generally believed that continuous inflation is inevitable . . . then that belief automatically makes inflation worse. In a moderate inflation the fraud works by money losing its value when people expect it to remain stable. If they start expecting prices to rise then the fraud must work by prices rising faster than they expect . . . this is the galloping inflation familiar enough in countries hitherto less fortunate than Britain.
Those are the words of the Economist.
There are certain accidental matters which are in danger of causing us to take inflation lightly. The fact that our currency has been at a premium has I fear puffed us up a bit and made us feel rather proud and superior. But what good is that if it merely means that we and the United States are going hand in hand down the slippery slope of inflation?
We must not be led away by the fact that a good many people-those who are able to keep their incomes level with rising prices and those who are buying and selling-find rising prices not unsatisfactory.
I said a few moments ago that stable money is the greatest support of orderly human society. We may, therefore, fairly ask the government what they have done to prevent currency being debased.
Prices had been controlled during the war, but consumer prices rose 25 per cent from 1946 through 1948. We had a sort of breather in 1949 and 1950 when galloping inflation

The Budget-Mr. Macdonnell slowed down to a walk and prices rose only about 3 per cent in each of these two years. In 1951, with the war going on in Korea, prices jumped up about 10 per cent. Then from 1952 to 1955 we had a period of relative stability; the only period since the end of the second world war. Then in 1956 prices rose by 3 per cent and they are continuing to rise at an alarming rate.
Now what has the government been doing about all this? In the spring of 1955 evidence of renewed inflationary pressures was mounting and most governments of the western world took prompt monetary action to stem the rise in prices. But the Canadian government stood idly by until the inflationary pressure had gathered so much headway that they could not stop it. While American and United Kingdom monetary authorities had adopted policies of tight money by the spring of 1955, the Bank of Canada failed to take any resolute action until the autumn.
In 1955 the annual report of the federal reserve system of the United States reads in part as follows:
. . . beginning in February (1955), however, and for the remainder of the year, as overall demands mounted, as industrial output approached capacity and inflationary pressures appeared, measures were adopted to moderate the pace of credit expansion.
As for the United Kingdom, they may be said to have officially adopted a policy of tight money in January of 1955 when the bank rate was raised to 3J per cent.
In the face of all this evidence the Bank of Canada lowered its interest rate in February of 1955 and the minister's budget of the spring of 1955 provided for a deficit. Both these actions were perfectly designed to aggravate the situation.
By the autumn of 1955 the Canadian government seems to have been in something of a panic. They now realized the inflationary forces they had released and the Bank of Canada called in the chartered banks and stiffened up the reserve regulations and took other steps of an extreme and high-handed nature. The Bank of Canada, on November 21, called in the chartered banks and made three requests: one, to cease making long-term loans to business in excess of $250,000 and to refrain from direct purchases of corporate securities; two, that application for increased loans and for renewals of existing lines of credit be carefully reviewed with a view to maintaining control over their growth; three, to maintain a secondary reserve of liquid assets-treasury bills and day to day loans and cash-equal to 7 per cent of deposits. This was to be an addition to the legal cash reserves of 8 per cent.
I believe that the first and third of the requirements mentioned above were beyond 
the powers of the bank. At this point I wish to make it clear that I regard the Department of Finance as finally responsible for the actions of the bank and, therefore, my criticism is directed at the minister.
Nevertheless the finance department is trying to stand from under. Take for instance the question of instalment buying. Years ago when action was taken with regard to this, the government acted directly through parliament under special powers then in existence. But now apparently we have to have indirect action through the Bank of Canada. The bank has been exercising certain influences over methods of investment and loans to certain types of business which, so far as I am aware, it has no authority to do. As I have said, I hold the minister responsible for making use of the bank in this way and I assume he is supporting the governor of the bank in going beyond his powers which are to control the quantity of money, but not to interfere with the manner in which it is to be used.
The attitude of the minister toward the situation has been quite incomprehensible to me. To use Churchill's phrase about Russia, the minister has been a "riddle wrapped in a mystery inside an enigma". He has persisted in either a wilful misunderstanding or a downright incorrect statement with regard to the way in which the Bank of Canada interest rate is established. On February 8, in answer to the following question: "Will the minister tell the house why this government maintains such a high rate on 91-day treasury bills", the minister replied in part:
We do not maintain a high rate of interest, this is a matter of public tender weekly and the tender system establishes the rate for that week.
To this I could not resist replying:
Does the minister think it is fair to try and make the members of this house believe that the Bank of Canada has nothing to do with the level of interest rates when everyone in the business world who is old enough to come in out of the wet knows that they have?
This was made clear to the banking and commerce committee last year when the governor of the bank came before the committee and it was made clear in the governor's report for 1956 at page 25. I quote:
The maintenance of orderly conditions in financial markets, and the avoidance of a serious disruption of the flow of funds from savings to investment, is a responsibility of a central bank, both in the interests of economic growth and in the interests of government finance and the government securities market through which (by buying or selling securities) the central bank is able to regulate the money supply. Accordingly, at times when selling appeared in volume in the government securities market and bond prices were falling, the bank purchased securities to moderate the rate of movement in prices and yields.

Could there be anything in the world more clear than that? The report continues:
At other times, when there was buying demand in the market, securities were sold with a view to offsetting the increase in money supply occasioned by the previous purchases , . . The bank's participation in the market for government securities, in conjunction with the retirement of debt by the government, had the effect of moderating the rise in interest rates so that the level reached was lower than would otherwise have been reached under the pressure of demand.
These words of the governor of the bank are surely clear beyond doubt and I hope we will have no further question raised on that point.
There is one aspect of high interest rates which has been very hard on one section of the community; I mean small business. Banks have had to regard existing businesses and to protect their long established borrowers. This has meant that a special pressure has come on small business and new business.
This was no doubt accentuated by the delay in applying the curb. No doubt this delay meant that those who were enjoying liberal credit made use of it as long as they could and when the curb came down sharply there was less for the newcomers. I shall have more to say about that later.
Up to the present I have been referring to credit control through the application of monetary policy. But monetary experts unanimously agree that the job cannot be done without assistance from government. The National City Bank speaks of "the major role that government must play if inflation is to be contained. Government is responsible not to any one group but to all the people-the shareholder, the worker, the consumer, the retired person living on a fixed income or savings."
To hold inflationary forces in check government must be prepared, as emphasized earlier, to adopt appropriate budget and credit policies.
This means holding back on its own spending to avoid competing in the markets for scarce goods and services, thus setting an example of frugality. Here I would point out that it is to its credit that the Bank of Canada set an example in the case of its building in Toronto.
How does our own government measure up to this test? The answer of course is not at all. They have been spending more and more and more. The minister asks for restraint while he himself does nothing. Perhaps he believes that the electors like expenditures.
It is a terribly irresponsible attitude on the part of the government and if one could only make the electors feel the true extent 82715-156
The Budget-Mr. Macdonnell of the danger they would demand that it be taken seriously. Take the results for the year 1956-57. The expenditures with the last supplementaries now total $4,867 million. This means $434 million more than last year. This means that the government themselves are raising prices by the pressure of their own spending. The governor of the bank spoke of the difference it would have made if there had been one billion dollars less expended during the past year, but the answer of the government to that was $434 million additional expenditure. Perhaps we should sympathize with the minister because of divided counsels. There is a cartoon in the Winnipeg Free Press of February 19, showing the division of the cabinet. It shows the minister sitting as an arbiter. On the one hand is the Minister of Trade and Commerce saying "inflation is not serious". On the other hand is a group headed by the Minister of Fisheries and the governor of the bank saying "inflation is serious". The minister says, "Do the noes have it?" and so you see what a host in himself is the Minister of Trade and Commerce. He outweighs all the others.
I can best sum up the government's failure on the fiscal side by quoting from the president of the Bank of Montreal at the last annual meeting. After pointing out the other measures that could be taken he came back to suggest strongly that without the co-operation of the government everything else would fail. He then goes on:
-It goes without saying that governments at all levels should not press their claims on national resources at a time ol excessive demand.
As I have stressed, our government has done exactly the opposite.
I have stressed the evils of high prices which bear down particularly on those with low incomes, but as I have pointed out the government by its inaction has aided and abetted these high prices and has failed to do its part to cure the evil by fiscal policy, notably by failing to cut down and delay some of its own expenditures and those of some of the crown companies. More might have been done to follow the example of the Bank of Canada, as I said a moment ago.
The result is that there are some taxpayers in the lower groups who are the special victims of these high prices and who are bearing, in an acute form, the burdens of us all. Among these are pensioners, holders of fixed interest securities, people who save, people who insure themselves, many white collar earners and those wage earners whose bargaining strength is not great enough to enable them to keep abreast or anything like abreast of the rise in the cost of living.
2462	HOUSE OF COMMONS
The Budget-Mr. Macdonnell These people have been condemned to bear the burden of inflation to an entirely disproportionate extent.
In the case of some of the sufferers, I mean especially the old age pensioners and those to whom the government has given concessions in order to set up pension plans -both of these I approve-the budget gives modest relief, but it does virtually nothing for the other classes I have mentioned, whether wage earners or self-employed. Those whose incomes have fallen away behind the rise in prices-wage earners, white collar workers and the others I have mentioned, have been given practically nothing to compensate them. We in this party are not prepared to stand by and see these taxpayers victimized when there is a real surplus of $382 million.
I should point out also that the use of this surplus or any part of it for the payment of government obligations does not sterilize the money but only puts it into other hands. For all these reasons we advocate some measure of equitable income tax relief, either by way of exemption or otherwise, which will assist these hard pressed taxpayers. It could be moderate, and when added to other tax reductions in the budget could be well within the confessed surplus for this year and the surplus budgeted for next year.
On Thursday last I referred to the meeting which took place on that day between the chartered banks and the governor of the Bank of Canada. The first report was apparently exaggerated but considerable alarm was caused in many quarters by what appeared to be the suggestion of a radical change in our banking system. This alarm was not confined only to members of the public but was felt by some well-informed financial experts based on the first report which appeared. The minister should make it clear that if any change is proposed in the banking system it will be dealt with in the usual manner by the House of Commons. Further I would repeat my suggestion of last Thursday that the matter should come to the attention of the banking and commerce committee as soon as possible in order that hon. members may have a chance to talk with the governor of the bank.
The great American boom, assisted by our own armaments boom, has kept our trade at a high level. The United States is becoming a have-not nation in respect of many things, notably base metals, and we are supplying them with large quantities of these metals. It would perhaps be more correct to say that they are supplying themselves with large quantities from their Canadian properties because they have acquired large

holdings and not infrequently control of our natural resources. I have the figures for the last few years covering exports and imports and I wonder if I might have the consent of the house to have these figures put on Hansard rather than reading them.


An hon. Member:: They are already there.


Mr. Deputy Speaker:: Would the hon.
gentleman indicate the source of the figures?


James MacKerras Macdonnell: The dominion bureau of statistics.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.


James MacKerras Macdonnell: The figures follow:
Exports of Canadian Produce ($ Millions)
To All	To United	To UnitedCountries	States	Kingdom1954 	3881	2317	6531955 	, 4282	2559	7691956 	4790	2819	813Imports for Consumption	($ Millions)	From All	From United	From UnitedCountries	States	Kingdom1954 	, 4093	2961	3921955 	, 4712	3452	4011956	(11 months)	5307	3865	455
What does this add up to? It is clear from the above, from the enormous deficit that we have in our trade with the United States, that we may be facing a real problem. It is just a little more than a century ago that we had a reciprocity treaty with the United States, and 13 years after that the Dominion of Canada was formed. One of the chief reasons for that was the fear that we might be overwhelmed economically by the United States. John A. Macdonald used to remind people that it was not British colonialism which was so much to be feared as American colonialism, not in the sense of military domination but economic.
Let us consider our trading position at the moment. The United States is our chief export as well as import market and we have every reason to know that if ever there is a let-down in the United States there will be a strong tendency to exclude many of our products. I think this is a most important point. In the case of Canadian subsidiaries of United States companies we often find that it is the parent company in the United States which does the exporting and not the Canadian company. A writer in the Atlantic Monthly of March says:
What dams up Canadian exports to the United States is not only tariffs and quotas but the policy decisions of the American owners of so large a segment of Canadian industry.

So many Canadian companies duplicate machinery and methods used in the United States. This raises questions of personnel and it is interesting to find the Minister of Trade and Commerce (Mr. Howe) suggesting that places be opened at the policy level for Canadian employees. The minister also said:
Too often I regret to say our trade representatives abroad turn up export opportunities for a subsidiary company operating in Canada only to find that the United States parent company does not permit the export business to be done from the Canadian plant.
We have no reason to doubt that in the event of any setback in the United States their tariff attitude will become stiffer.
Now let us turn to Europe. What do we find in Europe? We find that the continent of Europe is making a tremendous effort to provide an answer to the mass production market which has been the secret of American success. Practically the whole continent seems likely to join in one huge market of 302 million people. Faced with the possibility of exclusion, of being a little island commercially ostracized by Europe, Great Britain is seriously thinking of joining. This raises the question of commonwealth trade.
At the present moment the figures of commonwealth trade are not impressive. There was a time when the preference enabled Canadian subsidiaries of American motor car companies, for example, to do a thriving export business with other parts of the empire, notably Australia and New Zealand, but that day is past. Nevertheless, we should not ignore the possibilities of commonwealth trade, even though at the moment they do not seem to be very important.
Under these circumstances, are we wise to go on giving the cold shoulder to any suggestion of a commonwealth conference, and to rely on a virtual Washington-Ottawa axis in the matter of trade? When the Prime Minister (Mr. St. Laurent) came back from the last commonwealth conference the report he gave us was, to put it mildly, not exhilarating. I felt he was not very much interested in it, and I must say I was singularly unimpressed by what the Prime Minister said this afternoon. I do not think we are any blushing violets, and that we need feel it would be taken amiss if we tried to take the lead in this matter. I think the great danger is that we are doing nothing about it.
I think it is fair to say that there has been very little real sympathy in the government about commonwealth trade. But with this new danger that if Canada is not watchful the European free trade area may become a regional trading bloc with little inclination to liberalize existing restrictions on dollar 82715-156J
The Budget-Mr. Macdonnell imports, should we not prick up our ears and take a new look at the situation? Might not a commonwealth conference be one way of obtaining from Britain assurance that our interests would be safeguarded in whatever steps she takes, and might it not on the other hand strengthen her position?
Up to the present time Britain has made only limited headway in removing restrictions on the entering of imports of manufactured goods from the dollar area. Some hope has existed hitherto that eventually Britain would remove more of these restrictions, but if over the next 12 or 15 years Britain has to make substantial readjustments on account of having joined the free trade area, will she not likely be less receptive to pleas that further progress be made in easing restrictions against these dollar imports?
No doubt we have been making representations to Britain on these points; nevertheless, a conference with clear signs that the British commonwealth means business would have its effect both in the United States and in Europe. The possibility of being ground between the upper and nether millstones-the United States and a European free trade area-is enough to give occasion for serious thought.
In 1956, Canada ran up a deficit in its current payments with the United States of $1,659 million. In 1955 the deficit was $1,041 million. In the two preceding years the result was a deficit of $904 million in 1953, and $807 million in 1954. Canada has a favourable trade balance with most other countries, but the large American deficit was reflected in a current deficit overall. In 1953 this amounted to $443 million; in 1954, it was $432 million; in 1955, $692 million and in 1956, $1,398 million.
These figures look formidable, and indeed they are formidable. The only reason, of course, that we have been able to meet the situation and that we even have our money at a premium is the amount of foreign investment, largely American, which has been made. Between 1951 and 1955, there was a net movement of United States capital into Canada of $1,283 million; in 1955 the amount was $405 million; and when 1956 figures are available the amount will be substantially increased. Much of this money is invested in bonds, in other words, lent to us, but much of it is in ownership, usually shares of incorporated companies. In either case we have a bill to pay for interest or dividends, although we must not overlook the fact that much of this is being reinvested. One writer asks the question: "What happens to Canada's foreign trade when the inflow of capital stops and Americans start taking their earnings home instead of reinvesting them?" The

The Budget-Mr. Macdonnell writer's answer is that we will face "the worst exchange problem in history, with political implications impossible to predict".
I am not able to believe that Americans will stop investing here. We are a natural place for them to invest. We live the same kind of lives, we speak the same language, we move freely across each other's borders, we nearly all have relatives in each other's countries, we have the same institutions, and Americans believe in the stability of our governmental institutions-for these and other reasons I believe we shall continue to be a natural investment ground for the Americans. That does not mean that our dollar will always be at a premium-in the thirties it was at a discount for a considerable period. In 1932 the discount was as high as 23 per cent, and we must not expect that our dollar will never again be at a discount.
Notwithstanding the strength of our position, which I have tried to outline, we should not take our investment problems lightly. United States investment in Canada is now $13 billion, as compared with $3 billion before the war and $4.5 billion in 1945. It has doubled in the last ten years and is now increasing by almost $700 million a year, half of which is accounted for by capital inflow and the rest by reinvested profit. I was discussing this matter the other evening with some senior civil servants, and I was interested to find that while they agreed with my general feeling about the certainty of continued United States investment, they were deeply concerned about the rapid increase of United States ownership, with every sign of its increasing further.
The dominion bureau of statistics, in a special study of foreign investment, has shown us that the motor vehicle industry is almost entirely United States owned and that in a number of industries, notably the petroleum industry, the smelting and refining of metals other than iron, and the household, office and store machinery industry-over half of the value of production is produced in mediumsized or large firms controlled in the United States. The report shows that the electrical appliance manufacturing industry is half United States owned, and more than one-third of the output of the pulp and paper and chemical industries in Canada comes from plants which Americans own. Large United States firms are prominent in the asbestos, nickel and glass industries. In addition, United States firms have substantial interests in many other industries.
The Gordon report has serious things to say about this situation. It makes suggestions as to taxation changes. It is of the greatest importance for us to consider this matter and take action before it is too late.

However pleasant it may be to have hundreds of millions of dollars of United States capital coming into this country, we should stop, look and listen about the end result. How far can this go without having political consequences?
I do not mean anything sudden or dramatic, but let us face fairly and realistically what happens if we have United States control to such an extent that they will even be able to influence governments. Elsewhere in this speech I have referred to the fact that Canadian industries are dominated by United States parent companies. The former leader of the opposition in my opinion did inestimable service to this country when about a year ago he underlined the situation, but it is there staring us in the face in respect of many industries.
Our party feels deeply concerned about the problem. We cannot believe that it should be left for the private consideration of a few people. We believe it should be brought out into the open. We believe that public opinion should be thoroughly roused about it while there is still time.
At the present time, United States prospectors-in the oil industry, for example-as we all know, have a great advantage over Canadians, because of the taxation laws of their own country. I know that it is not a simple matter to deal with it, but I feel sure that every man in this house, regardless of party, will agree that the time has come when there should be some attempt to deal with this all-important question in a practical manner.


Mr. Rowe:: No wonder they look to
Washington so much.


James MacKerras Macdonnell: I am not going to weary you with a long dissertation on government spending. Everyone who is not a moron knows that it could be cut down. It is like the weather. Everybody talks about it but nobody does anything. Spending is much nicer than saving and incidentally, of course, it is too much to expect, things being what they are, that economy can possibly be in the air when there is a huge surplus. We all know that spending is in the air when there is a huge surplus. As I said, I am not going into this in detail although, of course, in these inflationary days government expenditure is far more important than usual because, as every banker is emphasizing, government expenditures bring heavy pressures to bear on the credit structure and do much to hamper the working of the credit controls which the financial authorities are trying to make effective.
I shall content myself with a classic illustration of what happens to expenditure in the

civil service. I have mentioned this on a previous occasion. I mention it because not only is it costly to the public and to the taxpayer but it is unfair to those who are in the civil service. I wish to emphasize again that it is unfair to those who are in the civil service. The report to which I wish to refer comes from the pen of Mr. Grant Dexter of the Winnipeg Free Press. It gives the key to the whole attitude towards government expenditure. Writing in the Winnipeg Free Press of December 30, 1954, after setting out that the federal government had then been engaged for months in a reform trying to control the growth of the federal civil service, Mr. Dexter said:
Careful study of the federal civil service indicated that the cause of the hitherto uncontrollable growth was simple-whenever there was a need for expansion, the departments expanded. They did not search within themselves for surplus personnel and meet the need for expansion by making better use of their existing staff. They invariably added to it. To illustrate, if a bridge is built across the St. Lawrence there would have to be a customs house at the Canadian end of it, staffed by customs and immigration officers. The opening of the bridge would greatly reduce the number of people entering the country by ferries. But instead of transferring men from the ferry ports to the bridge, the tendency would be to add to the payroll by appointing additional staff at the bridge.
Again in July, 1956, Mr. Dexter reverted to this topic and gave figures showing that in 1934 the civil service in round figures numbered 47,000, in 1938 51,000, in 1945 138,000, and that it increased from then on until it reached 181,000 in 1955. Mr. Dexter adds:
The civil service expands in depression (1934), in normal times (1938), in war (1945), in peace (1945-50) and in times of plenty (1951-55).
As I said before, this is unfair not only to the taxpayer but even more unfair to the civil servant who by reason of the bringing in of outsiders is often denied the promotion to which he is entitled. The lesson of this is surely plain for all to see. How can we expect a government which can be so blind and reckless as to what is going on under its very eyes to exercise economy about the general burden of expenditure which is not under its eyes?
This leads me to mention one piece of what seems to me outstanding folly in that the government has refused to have the work of the departments reviewed by competent outside experts. We have brought this up again and again. I can see any number of arguments for it. I cannot see a single argument against it except one which I do not like to believe and yet I can see no other argument, viz., that the government hesitate to let the light of day in on what they are doing. In private business there is no question that it would be done, and in the one or two cases where it has been done, I think
The Budget-Mr. Macdonnell the film board and the post office, I do not think anyone will suggest that such a situation was shown there as to make people believe that the inquiry should not go any further. So I say that I can imagine no reason that this is not done except for the fear that it would show up waste and extravagance in the public service.
The government are fond of stressing the fact that they are strong supporters of private enterprise. But what is the evidence of this? In 20 years they have gone further and further into government activities of all kinds. The extent to which we have been developing government activity including big business, in other words, the extent to which the government has extended its operations more and more, is well set out by J. J. Deutsch, formerly of the Department of Finance. Writing in the Canadian Journal of Economics and Political Science for February, 1957, he draws attention to the astonishing changes of 20 years of Liberal rule. He says that during those years the average rate of increase in the civil service has been 7 per cent that during the same period the average rate of increase in national production has been 5 per cent and the average rate of growth of total population has been 2 per cent.
Nothing could better illustrate the increasing growth and power of government through the civil service in our society. The change has come about, of course, mainly by the increase of welfare activities, defence services and by what is called "big government". Writing in the Queen's Quarterly, winter, 1957, Mr. Deutsch said:
In order to help provide an ever-widening horizon of economic opportunity the federal government nowadays conducts investigations, studies and research into a vast number of problems.
Mr. Deutsch refers to:
. . . such diverse efforts as those being made to improve the techniques of farming, forestry, mining and fishing. ... In the field of direct service and production the federal government operates gigantic transportation and communication systems, huge mortgage and credit schemes, marketing facilities for one of the country's basic exports and a large complex chemical plant. Each of these is among the biggest businesses in the country. Related to all this is an extensive organization for the gathering, compiling and the publishing of facts and statistics . . .
He goes on to say:
Parliament, as a result of these developments, is suffering an ever-deepening sense of frustration. This is especially so when one recalls the enviable circumstances of earlier periods during which the functions of government were far simpler. One of the basic reasons for this situation is . . . the fact that parliament is not a technical body. While the functions of government have become increasingly technical .	.	. parliament has maintained its
ancient ways. . . . Parliament is not a gathering of experts. Its members are for the most part representative men and women . . .
2466	HOUSE OF
The Budget-Mr. Macdonnell
One incident of this development is, of course, the creation of crown corporations. We now have 26 crown corporations and their total assets in 1955 were $4,458 million. The government through these agencies is reaching into fields where it is in competition with private industry. For example, by reason of the ownership of Trans-Canada Air Lines it is in active competition with other airlines and, of course, through the ownership of the Canadian National Railways it is in competition not only with the Canadian Pacific but with other means of transport.
It is naturally hard for government to compete on an even basis with private enterprise. For example, crown corporations are inclined to seek an advantage in the matter of taxation. Another familiar feature of crown corporations is the tendency to maintain a monopoly. The Minister of Trade and Commerce (Mr. Howe) is a great individualist and for that reason one might expect him to believe in and practise one of the great principles of individualism, namely, competition, freedom. But sometimes there are sad lacks. It would appear that the minister's individualism leads him into strange courses. Sometimes I think his mentality is a war mentality. In war we all accepted controls. The voice of criticism was largely silenced. Achievement by the quickest and most direct method was what we all believed in. The minister lived in this atmosphere for years. Management became largely subservient to him and we have reason to know that the minister found it very hard to give up the almost unlimited powers which he had. We are apt to forget that all we extracted from him by all our efforts two years ago in the defence production debate was a shortening of the duration of his power.
It is not unnatural, therefore, that the minister should have this appetite for power which shows itself constantly and which is particularly apparent in the case of monopolies. T.C.A. is a good case in point. Year after year we hope that T.C.A. will be considered strong enough to come out and face competition. Year after year the minister continues to protect it. The Winnipeg Free Press on March 1 had an interesting comment on this monopoly. I quote:
Mr. Pickersgill supplied an ironic little footnote to the air bridge. Although he described it as the largest airlift of its kind ever undertaken by the Canadian government, no Canadian planes are involved. The aircraft that will fly the immigrants to Canada are owned by five United States air lines.
That was somewhat corrected later. The Free Press goes on to say:
That is embarrassing to a nation which prides itself on being one of the most airminded in the


world. But this is part of the price we are forced to pay for the government's air policy, which hampers the proper development of private companies by refusing to allow them to compete with Trans-Canada Air Lines.
Since this article was written the Minister of Citizenship and Immigration has stated that there have been flights arranged with Canadian Pacific Airlines, so perhaps a dint has been made in the monopoly.
Churchill, who has a word for every occasion, once said something to the effect that government should "get out of the way" and let private industry do the job. Let us hope that this spirit may begin to animate our own government authorities. The results will be beneficial for everybody.


William Earl Rowe: Not till after June anyway.


James MacKerras Macdonnell: One would expect, of course, that credit curbs would bear most heavily on the small business and new business. How could it be otherwise? Big business and business not so big, with long established credit, will inevitably come first. The banks will do their best to expand their loans. An expansion of loans of $1,669 million in the 18 months ended December last is evidence of this, but even then there were those who felt pinched. Branch managers of banks will do their best for their customers and this is a guarantee that the need for small businesses will not be ignored, but when all is said and done there is a serious problem. One might go further and say that the government does not help the situation when it practises monopoly and makes it extremely hard for new enterprises to get into the field in certain industries.
Consider how unfortunate it will be if, over a period of time, there is a falling off in the formation of new business. Even with the huge business combinations of today, many of the important production units are still quite young and it will be a sad day for the future if new businesses cannot be freely formed. As I said, they have their difficulties. In the first three-quarters of 1956, 2,103 businesses were into bankruptcy in Canada. The average liabilities of those up to September were $22,000. This shows how small they were. Nearly one-third of these failures were small stores-general stores, grocery stores and clothing stores. What is being done about it?
In the United States there are definite provisions for the assistance of small business but in Canada, apart from some income tax easement, there is none.
In the United States the government has established a small business administration, which assists the banks in making loans to small firms and provides small businessmen

with advice and information on problems of incorporation, taxation, the obtaining of government contracts in competition with larger firms. Small business advisers are appointed by the government in the various defence departments of government to ensure that a fair proportion of their business is directed to small firms. Why cannot we do as much for small business here? If we run into a period when we suddenly find that there is a dearth of enterprise due to the fact that in these inflation years nothing was done for small business, we shall deeply regret it.
I now wish to say a few words about the maritimes. Last year I presented some figures showing how unfairly the maritimes had been treated. I called for a new approach to the situation. Let us now look at what has been done.
In 1946 the average personal income per capita in the three maritime provinces was 77.7 per cent of the average for the country as a whole; the difference was $116. In 1955 the average personal per capita income in the maritimes was only 69.3 per cent of the average of the whole country; the difference had risen to $387.
Let us now look at the employment figures for January 1957. Those without jobs and seeking work accounted for 8.4 per cent of the labour force in the maritimes compared with 5.3 per cent for Canada as a whole. Live applications for employment accounted for 13.8 per cent of the labour force in the maritimes compared with 9.2 per cent for Canada as a whole.
What has the federal government done in the past year to reduce this imbalance? Another study has been made, this time by the Gordon commission. It is a staggering fact that one of the alternative recommendations of that commission with regard to the maritimes amounts to a proposal that the area be partially evacuated. The preliminary report of the commission states:
If it should turn out that there is not the necessary combination of resources in sufficient quantities to permit a substantial rise in living standards in the Atlantic region, generous assistance should be given to those people who might wish to move to other parts of Canada where there may be greater opportunities.
That may be found at pages 99 and 100 of the report. True, the Gordon commission has discussed some of the concrete problems of the area, but their other recommendations amount to little more than proposals that further studies be made.
What then was in the budget for the maritimes? Judging by the applause which greeted it from the Liberal benches, one might have thought that here at last was the bold new approach. Yet a closer look
The Budget-Mr. Macdonnell reveals very little. The government has decided to tinker with freight rates again to the tune of a paltry $2 million in additional subsidies. The Minister of Finance has dressed this up by adding the following statement which may be found at page 2219 of Hansard:
It is therefore the government's intention to launch an immediate review of the maritime transportation problem in general, and thereafter to put forward proposals as soon as feasible.
Another study, another carrot which the government hopes will get them safely past the next election.
Then there is the announcement regarding electric power in the maritimes. It is all very vague. No details whatever have been provided. Aside from interconnecting the electrical systems, the government says it will build thermal plants "should efficiency so dictate". No help there for the Beechwood project because that is a hydro development. Yet here in the Saint John river basin was a golden opportunity for the federal government to show that it really was interested in helping the maritimes to help themselves. Here was an aggressive provincial government with a sound plan for development, requesting a very modest measure of federal support. What did the federal government do?
The story goes back some years, at least to 1953. In that year the province of New Brunswick submitted to Ottawa a brief outlining the Beechwood project. The province did not ask for any hand-out from Ottawa. All they asked was that the federal government advance capital for the project at a lower rate of interest than the province was capable of obtaining by itself. No cost to the taxpayers would have been involved. All that the request amounted to was that the federal government use its preferred borrowing position to obtain money for the project at a more favourable interest rate than the province could obtain by itself. Small though the request was, it was very important to the province, because high interest charges can mean the difference between profit and loss in a power project.
Surely New Brunswick was justified in expecting this much of Ottawa. As General McNaughton said in connection with federal aid for this project: "After all, what have we got confederation for"?
One would expect the federal government to have taken the same attitude, if only in view of some of the proposals it made at the dominion-provincial conference in 1945. The following is a quotation from "The Proposals of the Government of Canada" dated August, 1945:
(b)	Activities for which the provincial governments are responsible and which the dominion is

The Budget-Mr. Macdonnell prepared to consider assisting provided specific arrangements can be reached. (1) Assistance to raise provincial standards in the general national interest in respect to the conservation, protection and development of provincial natural resources.
That will be found in chapter III, section Bl, page 24.
Yet, despite detailed submissions and repeated requests, the federal government has refused any support for the thoroughly sound Beechwood project.
An illustration of the impossible attitude of the federal government is contained in the following exchange which took place in this house on January 16, as reported at page 296 of Hansard:


Thomas Miller Bell: . . . May we expect a decision on this before the next election?


Louis Stephen St-Laurent: You can expect a decision on it just as soon as there is put before us by the government and people of New Brunswick a scheme that can be studied as to its economic merits.


Thomas Miller Bell: Does the Prime Minister deny the fact that on at least three occasions we have put forward such schemes?


Louis Stephen St-Laurent: I do most positively deny that there has ever been put forward the kind of scheme that could be implemented along the lines I have mentioned. There have been general suggestions that they should get aid, and with those general suggestions we agree, but there has never been put forward any specific proposition that could be recommended to parliament as one that would really stimulate the economy of the Atlantic region in a fashion that would be beneficial to the whole economy of Canada.


Mr. G. W. Montgomery (Victoria-Carleton) :: . . . Do I understand the Prime Minister to say that the development of the Beechwood proposition on the Saint John river is not a sound and economic proposition, and one that does not stimulate the growth and prosperity of Canada?


Louis Stephen St-Laurent: On the contrary, it has been found sufficiently sound to be financed without assistance from the federal treasury.
This seems to imply that the federal government will not provide assistance unless a project is sound; and the proof of soundness is the ability of the provincial authorities to finance it themselves. Heads I win, tails you lose.
The same failure of the federal government to act is found in other matters relating to the maritimes. I should have liked to mention other things but time forbids.
What about coal? While the government has been building the St. Lawrence Seaway and helping the United States pipe line interests to bring western gas to Montreal, nothing has been done to assure maritime coal its proper place in the national energy picture. This and other things cry out for attention.
Finally, a word about dominion-provincial relations. I can imagine that the Minister


of Finance realized when he produced a budget with nearly $400 million of surplus that it was not going to be particularly popular with the people of Ontario and Quebec. Let us consider the case of the province of Ontario. It has just produced a budget in which it has been obliged to raise its taxes for the first time in a good many years. Considering that Ontario is the centre of the Canadian boom and is enjoying unprecedented expansion, it is not unnatural that the provincial government should be unhappy about a situation like this.
The Minister of Finance has been bargaining like Shylock with the provinces and one fact stands out clear as crystal, that because of the dominion's centralizing actions the stream of revenue is flowing, so to speak, around the provinces to the dominion and putting the federal government into a position where it can pretend to be a charitable institution for the provinces;-of course, all at the expense of the provinces themselves.
The dominion-provincial controversy has been a long and painful process. If we carry our minds back to confederation we will remember that the "fathers", and particularly Sir John A. Macdonald, expected the provinces to play a very minor part. Incidentally, we should remember that at that time revenues were raised almost wholly from customs and excise taxes, licences for businesses of various kinds and taxes on real estate.
As time went on, the provinces, largely through the effect of the stubborn attitude taken by the provincial governments, were enabled, mainly by judgments of the privy council, to expand the scope of their activities far beyond what had been intended at the time of confederation. Shortly before Macdonald's death the independent and almost separatist attitude of several of the provinces gravely weakened the whole structure of confederation. Then came more prosperous years and the tide of immigration and for a good many years matters seemed to have more or less settled down.
There were, however, always latent difficulties and these became accentuated by the depression and, as a result, in 1937 the Rowell-Sirois commission was appointed. The recommendation of this commission recognized for the first time that in some areas of the country the economy was not so adapted for high taxation rates as other areas and that some effort should be made by wa of adjustments to put each part of the dominion in the position where it could provide the social services in the same manner as other parts.

The second war had begun before the report was completed and the force of events had brought about a centralized situation which, though in a very different way than Macdonald had expected, had put the dominion in a position of central authority as to the collection of taxes and consequent centralization along the lines that he had contemplated.
Following the war arrangements were made from time to time by which most of the provinces, indeed at one time all but Quebec, had come to a tax arrangement with the dominion which, with certain qualifications in the province of Ontario, left the dominion in the position of collecting personal and corporation income tax and succession duties. At the present time Quebec stands wholly clear of any arrangement, and Ontario has refused to sign a new agreement on the basis offered by the federal government.
And now comes along the federal budget with a large surplus. It has evidently upset the premier of Ontario. Having had to submit a budget in which he had to raise taxes it was not surprising that Mr. Frost was intensely irritated when he found that the federal government had a huge surplus. Mr. Frost is usually the most moderate and conciliatory of men and this adds force to the words which he has used. In the first place, Mr. Frost did not accept the figure which the Minister of Finance gave as final. He said that instead of the surplus of nearly $300 million "the actual budget surplus is probably well in excess of $500 million". In this Mr. Frost is clearly justified to a substantial extent because it is now admitted that the $282 million originally mentioned by the Minister of Finance should have added to it another $100 million. Mr. Frost might further suggest, and many people would agree with him, that in all probability there are further reserves tucked away here and there which would add still further to the surplus.
With these and no doubt other things rankling in his mind the moderate Mr. Frost spoke out in the legislature. He referred to the fiscal policies announced by the Minister of Finance last Thursday as a "disgrace". He said that the federal government had achieved its announced surplus after "stuffing $50 millions into a reserve account to protect against loss in government inventories and an extra $50 million into the civil service superannuation fund". He went on to say that these were just bookkeeping entries in no way required by law, and in his words, "can only be defended on the grounds of reducing the surplus". Again, Mr. Frost said, "and this is done by the same government which adopts such niggardly tactics in the tax fields which belong as much to 82715-157
The Budget-Mr. Macdonnell Ontario as to the Federal government and to make ends meet here we have to impose a form of double taxation on our people".
The premier went on to say that it was "shameful" that this was going on at the same time that Nova Scotia had announced a deficit and New Brunswick was in serious financial plight. The premier further said, "Is it any wonder that we protest? Is it any wonder that we doubt the sanity of this type of thinking, and say it is a crying disgrace?"
I hope these words coming from such a source will make an impression even on this government which becomes more and more every day like a government in a one-party state. Apparently they are always right. Apparently they will go undisturbed on their own way regardless of the feelings of others.
What does this all add up to? I accuse the government of failure to deal with the problem of high prices and indeed of making the situation worse by their own swollen expenditure. They glibly advise other people to show restraint in expenditures but they themselves utterly fail to do so. Their failure is made all the worse by the stubborn refusal to have their expenditures reviewed by outside experts.
They have failed to do anything for small business. They have failed to take any steps by taxation or otherwise to preserve the ownership of Canadian resources by Canadian citizens. They have interfered with free enterprise by the maintenance of government monopoly.
They have thrown a sop to the maritimes in the matter of freight rates but it is only a sop and apart from that they have done nothing for the maritimes except arouse vague hopes for the future.
Finally, they have neglected to give any income tax relief to a large body of citizens whose incomes have risen little or nothing and on whom the burden of high prices has fallen with special weight.
These are some of the many failures which the taxpayers will have to judge when the election comes. They are enough, in all conscience, to spell the doom of this government.
I move, seconded by the hon. member for Winnipeg South Centre (Mr. Churchill):
That all the words after "that" to the end of the question be deleted and the following substituted therefor:
"this house regrets that the economic policy of the government fails, despite a very large surplus, to meet the needs of the Canadian people and in particular
(a)	does not provide adequately for old age and other pensioners;
(b)	does not propose a reduction in the personal income tax;

The Budget-Mr. C. Cameron
(c)	does not assure to the provinces a larger share of the revenues from federal-provincial fields of taxation; and
(d)	ignores the problems and needs of agriculture."


Mr. Colin Cameron (Nanaimo):: Mr. Speaker, I want first of all to congratulate the minister on his speech of the other night. I say "on his speech", not on his budget. I want to congratulate him particularly on the matter of fiscal achievement, sir, one that few ministers of finance have been able to manage and perhaps very few would wish to. I cannot myself think of any other instance in which there has been a budget which has been politically inept and at the same time economically unsound. We have had a lot of budgets in the past and in fact it is the usual thing for governments to bring in budgets which are politically wise and economically unsound and again we have had instances when budgets have been brought in which were politically unwise and economically sound although I can only think of the one instance and that is the austerity budget of Sir Stafford Cripps in Great Britain.
One is tempted to pause at this moment and speculate on the ironic fact that it appears to be only those who have a grasp of socialist economics who understand capitalist economics. However, as I say, this budget is politically unwise because it has disappointed the hopes of the most helpless and underprivileged of our population who I think surely have a right to expect more generous treatment from the government.
I think it is worth noting, sir, that in 1949 when the old age pension was placed at $40 the gross national product stood at $16.4 billion. In 1957 when the old age pension after July 1st is to be $46 a month the gross national product is expected to exceed $31 billion. There has been in fact an increase of 83 per cent in the gross national product and we are proposing to give old age pensioners a 15 per cent increase in their pensions. It would appear that in 1957 we are not as generous as we were in 1949. We are not prepared to give the older citizens of this country such a large share of the national wealth production as we were at that time.
If we were to estimate the old age pension on the same ratio to gross national product as the $40 was in 1949 then today the minister should have announced a pension of $73. In fact, I think this is a point that should be borne in mind, Mr. Speaker, with respect to an increase in the old age pension; there has in fact been no increase. Not only that, the minister has even failed to
[Mr. Macdonnell.l
bring the pension up to the same purchasing level that it was in 1949 because the $46 which we are now offering in 1957 is equivalent only to $38.17 in the terms of 1949 dollars.
Now, of course, it may be claimed-and I have no doubt the minister will claim- that he has been exercising a commendable sense of public responsibility in refusing to yield to the pressure for more generous treatment of old age pensioners. I suppose we can consider that he has lent at least one ear to his economic advisers, possibly the advice that has been tendered in the report of the governor of the Bank of Canada, and that the harsh realities of economic life have curdled the milk of human kindness that usually runs so freely in his veins. But the trouble is that he has only lent one ear to his advisers. The thought just occurs to me that perhaps like his colleague the Minister of National Defence (Mr. Campney) the Minister of Finance suffers from the disease of one-earness and that he has had only one ear to lend to his economic advisers.
Had he been able to use both ears in listening to advice what would he have heard? Well, he might have listened to no less a person than Walter Harris in the role of the statesman as reported at page 2214 of Hansard of March 14, 1957, in which he says, referring to his speech of the year before:
I was careful, however, to point out that we were becoming subject to inflationary pressures and that both fiscal and monetary measures would be needed to restrain the upward thrust upon prices.


Walter Edward Harris: Hear, hear.


Colin Cameron: I observe that
the minister is applauding that statesmanlike statement of Mr. Walter Harris.


Mr. Barnett:: Somebody has to.


Walter Edward Harris: Yes, somebody had to.


Colin Cameron: The odd thing
is that he confines himself to applause and refrain's from any action.
When we come to consider the remarks of one of his advisers-at least I presume that the governor of the Bank of Canada can be classified as one of the economic advisers of the government of Canada-we find that Mr. Coyne has this to say on page 15 of his annual report:
The inflationary pressures that were at work in 1955 and 1956 were not the result, at least in North America, of those dynamic factors which have been most apparent in other inflationary periods. They did not arise from war or the aftermath of war: defence expenditures, though large, have not increased in recent years . . .
Rather, the dynamic factor, the factor showing the greatest change over the past two years, and the cause of the recovery turning into a boom, has

been a tremendous upsurge in the rate of capital investment, that is, of expenditures for capital goods and for construction of all kinds, but mainly for the expansion of industry and the development of resources.
Mr. Coyne tells us that the major inflationary problem arises from vast capital investments and he has this to say:
Although certain forms of consumer expenditures financed to an increasing degree by a particular kind of credit expansion have contributed to the inflationary pressures, consumer expenditures in total have not been a major factor.
Now that being the case, sir, I would suggest that the Minister of Finance could have been perhaps a little more generous than he has been, instead of which of course he has been cautious to the point of shivering timidity with regard to those in receipt of old age pensions, war veterans allowances and blind disability pensions.
I think we should inquire as to what he has done about these inflationary pressures that Mr. Coyne has been warning us about. Has he done anything whatever to control the level of capital investment in this country? Has he followed his own advice or the advice of his predecessor in office who some years ago cited the necessity for curbing this vast expansion?
I have here, drawn from the statistics of the dominion bureau of statistics, the figures for certain major sources of corporation funds in Canada available for investment and I find that from 1946 to 1955 undistributed corporation profits increased more than 100 per cent. They were $411 million in 1946 and in 1955, the last year for which figures are available, they reached $905 million. Corporation depreciation allowances, sir, went up even more remarkably. In 1946 they amounted to $511 million and in 1955 they had more than trebled to $1,828,000,000.
Again I refer to the dominion bureau of statistics. In the 10-year period from 1946 to 1955 inclusive corporate investment in fixed capital goods and in inventories came to nearly $24 billion. Of this total sum $18 billion or about three-quarters of corporate investments were from retained profits and depreciation allowances. It would seem to me when we consider that in conjunction with the advice of Mr. Coyne then we had a right to expect that the Minister of Finance was going to do something about this very dangerous situation, but we find of course that he has done nothing about it. There is to be no increase in the corporation income tax, there is to be no revision of the depreciation allowance regulations and in particular, sir, there is going to be no repeal or revision 82715-1571
The Budget-Mr. C. Cameron of the iniquitous 20 per cent tax rebate on income derived from Canadian corporation dividends.
I want to put on the record at this point some figures with regard to this because I have had great difficulty in persuading those citizens of Canada who I have had the opportunity to address that the government is actually doing what it is doing.
I have no doubt the Minister of Finance will be very pleased to know that the average Canadian citizen whom I have encountered virtually refuses to believe me when I recite the facts of the 20 per cent dividend income rebate. I have been told repeatedly by audiences that I must be confused, I must be wrong, that no government would do such a thing. I want to put this on the record and if my calculations are incorrect I hope the Minister of Finance will take the opportunity to deny the correctness of these figures, and to do so immediately.
I want to take two hypothetical income tax payers and contrast their tax payments. One person receives his income from corporation dividends and the other is a salaried person. Both are married and with no children. Each has a gross income of $11,133. In the case of the man who gets that $11,133 from dividends from Canadian companies his income tax would be $1,877.24 before the rebate is given, plus a surtax of 4 per cent on investment income over $2,400, or $349, making the total tax $2,226.56. That man would get a tax credit of 20 per cent of $11,133, his gross income, which would amount to $2,226.60. If it were not for the fact that he has to pay the maximum $60 social security tax he would not only be completely free from tax in regard to that income, the Minister of National Revenue (Mr. McCann) would owe him 4 cents.


James Joseph McCann: Which would be paid immediately.


Colin Cameron: He would need it. Let us now turn to the other Canadian citizen who earns his $11,133. He would have a total income tax of $1,877.24 and would have no surtax to pay because he has no investment income. The total amount payable by that person would be $1,877.24 plus the social security tax.
When the government introduced this I believe it was on the ground that it would help to avoid the charge of taxing income twice and there was also a suggestion that it would provide an inducement and incentive for the accumulation of savings for investment in the development of the Canadian economy. I wonder why it is the minister has done nothing about this in view of the

The Budget-Mr. C. Cameron fact that it has been actually one of the sources of the dangerous booming capital investments from which Mr. Coyne says we are suffering.
Why is it that certain classes of our community are treated in this manner while another class is treated entirely differently? It is interesting to note that those in our community who receive less than $4,000 a year receive one-half of one per cent of all dividend income. Those who are in receipt of incomes of less than $4,000 a year comprise 77 per cent of the income earners of this country. So the government by maintaining this is maintaining legislation which will be of benefit to 23 per cent of the people of Canada, or of the income earners or receivers of Canada, and in doing so is not only treating the Canadian people inequitably, it is contributing to the danger of which they have been warned in no uncertain terms in the last few days.
There is another matter which should be considered at this time. Mr. Coyne tells us in his report about the effects of inflation; he tells us of some of the results of inflation; he says:
Inflation forcibly restricts consumption by exacting the greatest sacrifice from those least able to bear it. It sets up many social and economic stresses, and it feeds on itself-the so-called spiral of inflation of prices and costs.
I ask myself why the Minister of Finance with that advice before him has taken not one step to curb inflationary pressures. I ask myself the reason for that and the only conclusion I can come to is that while the minister is able and feels he is willing to endanger the support for his government by such elements of the community as old age pensioners, he is not prepared to risk and endanger the support of those who supply the sinews of war. There can be no other explanation for this inane refusal to heed the advice of the government's economic advisers. I strongly suspect that the Minister of Finance considers that it is safe enough to gamble with the welfare of the Canadian people for another few months, that by the time the effects of inflation, of which Mr. Coyne warns us, become too evident the people of Canada will have been deluded into re-electing the government.
There is another very important feature in the Coyne report, and that is that part that deals with the Canadian banking system. I have been interested this afternoon to hear from the official opposition the same sort of criticism of these proposals that has come from some of the more economically illiterate journals of the province of Ontario. A famous newspaper in Canada carried an editorial the other day entitled with dramatic

brevity, "No." The writer took Mr. Coyne to task because he was preparing to deal in a most cavalier manner with the savings of the Canadian people.


Walter Edward Harris: Better put that in quotes.


Colin Cameron: Oh yes, this is in quotation marks as far as he was concerned.
I wondered, when I read this editorial, whether the writer really thought that at the present time those who have money in savings accounts in chartered banks have any control over it whatever. I wondered if in the citadel of the Canadian dollar, to which the dollars generated in western Canada flow like homing pigeons, perhaps down there they have different banking practices, and the good burghers of Toronto, when they go in to deposit money, tell the bank manager, "You are not to invest any of that in government bonds because we don't trust that Minister of Finance in Ottawa; it has to go into housing, or perhaps into oil shares."
No, sir, it was rather fantastic, the criticism we heard this afternoon; and it was the same criticism we heard a year or two ago when we amended the Bank Act. We had ruined the banking system then when we suggested they should go into the mortgage field. While all this howling has been going on-and directed at the wrong thing- there has, of course been a very reasonable excuse for howls from Bay street, because there is a significance in the suggestions of Mr. Coyne which has perhaps escaped many people. I do not think they have escaped the notice of the people who are behind these illogical howls. I think they are quite content to have an illogical howl of rage go up as long as some sort of howl goes up. I believe they know that Mr. Coyne's proposals, if adopted, will be the first step toward some rational control and direction of investment in Canada and, quite logically, the people who view such a development with alarm are determined not to take the first step because they realize that it will be followed inevitably by a second and a third step. Perhaps they have in mind the old German proverb that "he who says 'A' must say 'B'".
Now I think, sir, that those who have been damning the governor of the Bank of Canada have actually been doing it on that basis, and I don't blame them because their interests are actually opposed to those of the people of Canada, while Mr. Coyne's suggestions are in line with the interests of the people of Canada. I was interested to see that Mr. Coyne has been obliged, however,

to submit to agreeing to a certain measure of further inflation in order to persuade the chartered banks to re-enter the mortgage field and overcome the situation which has been so steadily and gallantly denied in this house day after day and week after week by the Minister of Public Works, who has been standing in his place, and uttering fatuous nonsense to the effect that the housing situation is perfectly all right and that there had been no dangerous decline whatever. Of course, it has since been revealed that there has been an alarming slump, a decline which is particularly alarming in view of the stepped-up policy now being adopted by the Minister of Citizenship and Immigration.
Today we heard something about that, and Mr. Coyne had to agree to a certain measure of inflation. And now, sir, I would like to read to you a short paragraph from an article which appeared this week in a United States periodical. It says this:
It has in fact been admitted that the plan was wrong. The admitted errors consist briefly in this: the plan, it is said, was not based on a realistic assessment of available resources; it included overambitious schemes for capital investment threatening to freeze too much capital in too many longterm construction projects, and it did not allocate adequate resources for solving the housing problem.
Now, Mr. Speaker, you might imagine that is Coyne on Canada, but it is not. It is an American economist on the Soviet economy. So we find that the totalitarians in the Kremlin and the latitudinarians in Ottawa have reached the same disastrous impasse, though by different routes. And the root cause is the same. In the Soviet union there has been a grave error of judgment, and because they have a totalitarian government there has been no means by which the ordinary Russian citizen could make his views felt with regard to the division of investment in his country. In both countries we have had an irresponsible group not susceptible to public control. But there is one difference, sir. In Canada we have, or have always assumed that we have, a government that is subject to public control. And I suggest to you, Mr. Speaker, that if and when the government of Canada takes the first step recommended by Mr. Coyne, and finds it will afterwards be obliged to take a second, a third and a fourth, and begins to assume responsibility for the direction of investment in Canada, then the people of Canada will have some means of controlling the direction in which their investment is to take place.
It might not be sufficient, Mr. Speaker, to control inflation by directing investment, by curtailing depreciation allowances, by repealing the 20 per cent tax dividend income
The Budget-Mr. C. Cameron rebate, by perhaps increasing the corporation income tax. All these measures may prove ineffective in the face of another situation which confronts us in Canada today, and that is the enormous power of certain basic industries to make their own decisions with regard to prices relatively free of any competitive control.
I have some figures here drawn from dominion bureau of statistics publications which indicate the way in which some of these price increases have been made, and how little relation they bear to the actual economic facts governing the industry. We have, for instance, the mining, quarrying and oil wells group, and we have figures for the increase in sales and the increase in profits, in this particular case between 1954 and 1955. Mining, quarrying and oil wells increased their sales by 24 per cent and increased their profits by 63.8 per cent. Iron and steel did even better. Iron and steel sold 10.5 per cent more in 1955 than in 1954 and took 48.7 per cent more in profits. Petroleum and coal products increased their sales by 11.3 per cent and increased their profits by 27.1 per cent. Chemical products increased their sales by 12.1 per cent and increased their profits by 33 per cent.
I suggest to you, sir, that these large basic industries which are, after all, the economic foundation of the Canadian economy, cannot be allowed indefinitely to upset the whole economic applecart and to introduce even more inflationary pressures than those that have been generated already. These increases in profits are, of course, reflections of increases in prices.
I want to make it quite clear, sir, that I am not advocating anything in the nature of price control. I am well aware of the difficulty of administering that.
I am well aware of the fact that there would always be appeals from such controls and you would finally have a complex and inequitable structure very costly and very difficult to administer. But I do suggest to you, sir, that if we are going to deal with the problem of inflation, before long we are going to have to embark on a measure of control that will go far beyond what is suggested in Mr. Coyne's report, and that these basic industries in Canada which are now in a position to inflate the economy almost on their own will have to be brought under public ownership and control if we are to have some stability in our economy. I want to remind you, sir, that the governor of the Bank of Canada tells us that not only do the people of Canada suffer from inflation as it is developing, but that there is an inevitable end result to an inflationary period and that is depression.

The Budget-Mr. C. Cameron
I have often heard it said that members of this group are forever crying blue ruin, and there has been the suggestion sometimes that we would welcome another depression. I want to say, Mr. Speaker, that anyone who has himself endured the heart-sickening experience of being unable to supply his children's needs is not likely to wish to see another depression; and if some of us in this chamber suggest that there are dangers on the horizon it is because we see ominous signs and speak from bitter experience.
I would suggest, sir, that we should pay attention to what the economic experts of the central bank have been telling us in the last week. A dangerous inflationary situation exists which, if unchecked, will inevitably lead to another depression. The workers of Canada need to have it driven home to them that they are in a very precarious position no matter how seemingly prosperous they may be at the present time, and that unless this expansion can be stretched out so as to become virtually permanent and stable, then they will be trading a fictitious prosperity of today for a very definite misery of tomorrow.
I think, sir, and I do not think it is too harsh to say so, that this budget has been cruel and heartless to many of the people of Canada who deserve better at the hands of the government. In addition, it has been frivolously reckless in failing altogether to make any provision to control the inflationary pressures in our economy. I challenge the Minister of Finance to point to one spot in his budget which can be classified as a control over the situation pointed up by the governor of the Bank of Canada. The minister has disregarded the advice of these economic advisers and I suggest, sir, that the only reason he has disregarded it is that those who are interested in the re-election of the Liberal party were determined that their interests would not be subjected to the economic necessities of today.
The government yielded to those pressures. They yielded to the pressures from those who provide the sinews of war, some of the 23 per cent of Canadian income receivers who are the active force in the ownership of Canadian industry. Because of rational and sensible policy of inflation control would have worked an immediate hardship on such people, no such steps were taken. I think, sir, that while the government will in all probability again persuade the people of Canada to send them back to office, the time is not far off when members of the Liberal party are going to have to make up their minds. They are going to have to decide whether they are going to move over into the mists of antiquity with our friends in the official opposition, or whether they are going to move into the


twentieth and twenty-first centuries by means of a reorganization of our economy.
I suggest to you, sir, that within the next three or four years members of the Liberal party supporting the government will have to decide on which side of the fence they are going to stay. It may very well be that this budget, which with all deference to the minister I would describe as essentially a stupid budget, will be the watershed from which the Liberal party will divide. That there is going to be a realignment of political forces in this country no political observer, of course, can escape knowing. The Minister of Finance has shown us by his budget on which side of the watershed, which side of the fence, he lives, because he has prepared a budget to protect the interests of the well to do in Canada and to give contemptuous negligence to the welfare of the ordinary common or garden Canadian citizen.
So, Mr. Speaker, before 1 sit down I wish to move as a subamendment to the amendment of the offical opposition, seconded -by the hon. member for Winnipeg North Centre:
That the amendment be amended by changing the semicolon at the end of subparagraph (a) thereof to a comma, and by adding immediately thereafter the following words:
"by increasing the old age pension to an amount commensurate with the increase in the gross national product since 1949, which would call for a pension of approximately $75 a month."


Mr. Victor Quelch (Acadia):: Mr. Speaker, I should imagine that all ministers of finance must get quite a thrill when they deliver their budget speeches amidst the thunderous applause of their party. On the other hand, I always feel that they must experience somewhat of a let-down when everybody in the country starts to pick holes in it and even some of the members who were so enthusiastic at the time the budget was delivered seem to lack some of that enthusiasm in the days that follow.
My main criticism of the minister's budget proposals is that while the minister expressed some concern over the rising costs of living, his proposals do very little either to reduce those costs or to relieve the burden they place upon the people in the lower income brackets. Later in my remarks I will have some specific proposals to make in regard to that question.
First of all I want to turn to the minister's comments on the present economic situation in Canada. The minister emphasized the strength of the Canadian economy, and I want to turn to page 2214 of Hansard of March 14. After pointing out that the gross physical output was about 7 per cent higher than in 1955 he had this to say:
This 7 per cent increase in real terms is about double the average annual increase which we

might normally expect. It represents not only more employment, higher wages, and improved standards of living, but also a greatly improved and increased stock of capital goods and equipment which can promise still higher production in the future.
It is the last sentence that I think is of special interest, that is, that it can promise higher production in the future. I think we can all take great pride in the accomplishments of the Canadian people, of our engineers, our scientists and our workers in accomplishing what has been done to date. I think also a certain amount of credit will have to be given to governments at the various levels, municipal, provincial and I suppose I should even say federal.
I sometimes think some of our great accomplishments today are made almost in spite of government policy rather than necessarily as a result of it.
This picture the minister has drawn shows very bright possibilities for the future. I note that according to the report of the Bank of Canada at page 37, assets in plant and equipment have expanded by more than 25 per cent over 1955, and that expenditures on resource development expanded by 60 per cent over 1955. This expansion of plant and equipment and development will provide the means for an even greater expansion of consumer goods in the future. The problem in the future will no doubt be that of finding markets for this ever-increasing supply of consumer goods coming from this expanded plant and equipment. There is no question but that the great problem we will face in the future will be the problem of maintaining an effective demand against that great volume of production.
Today the money required for this development is financed in part, and to quite a considerable part, by the expansion of credit. That procedure in itself helps to maintain active demand for consumer goods. Then in addition, effective demand of course is bolstered by a very heavy volume of consumer credit, which has reached the figure of $2.4 billion. But in spite of that, as the hon. member for Peace River pointed out when he spoke in the debate on the speech from the throne, inventories of consumer goods today are at high levels. Nobody finds any trouble, in so far as consumer goods are concerned, in buying the goods he wants. Consumer goods are in good supply. In Canada we hear that the increase in the cost of living is due to the fact that too many dollars are chasing too few goods. I will admit that the picture may be somewhat different in so far as our heavy equipment and capital goods are concerned.
I think we would all agree that if United States investment were to fall off in this
The Budget-Mr. Quelch country, and if steps were taken to bring about too great curtailment of credit expansion so that capital investment were to fall off, then we in this country would very rapidly lack an effective demand for the production of consumer goods flowing from this expanded plant and equipment. Of course if steps were not taken to expand that purchasing power, if it were not bolstered, we would very quickly go into a depression. That fear, of course, is always present.
People ask what would happen if the United States went into a depression. They say we could not insulate the Canadian economy from what might happen in other countries. They ask what would happen if capital investment fell off. We in this group argue that it must be the responsibility of the government at all times to equate the purchasing power

that is the effective purchasing power-of the people with the production of consumer goods. We realize, of course, that if there were a depression in the United States we could not expect to escape some of the consequences of that depression. But on the other hand, we argue that just because there might be a depression in some other country is no reason why the people of Canada should not be able to continue to enjoy the production of their own country to the highest degree that it is possible to carry out that production. Unfortunately that has never been the case in the past. When we have suffered a depression in this country, we have had people on the verge of starvation whilst at the same time our plants were running at less than 50 per cent of their capacity.
We therefore believe that now, whilst the Canadian economy is in high gear, the government should set up a monetary commission, and that it should be the responsibility of that commission to scrutinize closely at all times the relationship between supply and demand, having in mind that our objective is to maintain the optimum development of the resources of this country in order that the people of Canada may enjoy the highest standard of living the country is capable of supplying, and also of course bearing in mind the fact that we have a certain responsibility to help backward nations.
It should be the responsibility of this commission to report to parliament at the start of each session, to make specific recommendations as to the amount of new money that might be needed to make up any deficiency in effective demand, and to make specific recommendations as to the method by which that money might be made available. Whatever steps were taken in that regard, we would favour the view that the first step

Private Bills-Divorce
should be a substantial reduction in sales tax and its eventual elimination. Then, if effective demand continued to lag, we believe that money should be paid out for the purpose of financing a discount in the prices of commodities. In that way I think we could go a long way to help shorten up the lag between demand and supply.
Many people are concerned over our imbalance of trade. We continually hear people refer to the fact that we have an imbalance of trade today of about $1,400 million. But that is largely the counterpart of foreign investment and should not in that way be looked upon as overspending, because when money is invested in this way by any country for the purpose of developing resources, and that money is used to bring in plant and equipment-I refer to heavy plant and equipment-then I think it is an entirely different situation from when money is being borrowed abroad merely for the purpose of getting cheaper capital for development by local concerns.
That foreign investment, of course, steps up the tempo of development in the country, and in some cases it actually sparks it. On the other hand, you hear people say: Why not leave something to posterity? Why this big rush? Why not slow down and just develop the resources of this country at the rate we are able to accomplish their development without having to use the resources of other nations and have an imbalance of trade?
I used to feel that way myself some years ago. I did not consider that a nation was justified in going outside the country to borrow capital in order to try to expand the rate of development. But I think the situation today has changed completely. There is a cold war on. The western world today is competing with Russia, and we cannot afford to lag behind that country. I believe that everything possible should be done at the present time to speed up the development of the resources of our country. I think we must recognize the fact that if a third world war came the North American continent would stand as represented by Canada and the United States. These two nations will in the future, in the case of war, stand or fall together. Hence there is bound to be the closest of co-operation between those two nations in the future.


The Acting Speaker (Mr. Applewhaite):: It
being five o'clock the house will proceed to the consideration of private and public bills.



PRIVATE BILLS

The Acting Speaker (Mr. Applewhaite):: There are some 17 divorce bills on the order paper in this group to be committed. Is it

agreed that they shall ail be referred to the committee as one under standing order 54 (1).


Some hon. Members:: Agreed.



CONSIDERED IN COMMITTEE


[Stage Direction]
Bill No. 44, for the relief of Francoise Yip Lim Lesage.-Mr. Henderson.
Bill No. 83, for the relief of Lorna Charlotte Brooks McConnery.-Mr. Henderson.
Bill No. 212, for the relief of Thomas Jeremie Foulds.-Mr. Henderson.
Bill No. 213, for the relief of Evelyn Gladys Douglas Fox.-Mr. Henderson.
Bill No. 214, for the relief of George Johnstone Gray.-Mr. Henderson.
Bill No. 215, for the relief of William Ross Macdonald.-Mr. Henderson.
Bill No. 216, for the relief of Marie Therese Ibbotson Collins.-Mr. Henderson.
Bill No. 217, for the relief of Donna Ruby Stallworthy Black.-Mr. Henderson.
Bill No. 218, for the relief of Mildred Edith Shaw Boulard.-Mr. Henderson.
Bill No. 219, for the relief of Shirley Edythe Fairlie Scarff.-Mr. Henderson.
Bill No. 220, for the relief of Lily Stall Dixon.-Mr. Henderson.
Bill No. 221, for the relief of Hazel Gladys Rees Webb.-Mr. Henderson.
Bill No. 222, for the relief of Violet Kert Hausman.-Mr. Henderson.
Bill No. 223, for the relief of Angelina Szpilakowska Rzasa, otherwise known as Angela Szpilakowska Rzasa.-Mr. Henderson.
Bill No. 227, for the relief of Ludmila Eremeeff Mazaraky.-Mr. Henderson.
Bill No. 228, for the relief of Mary Elizabeth Williamson Miller.-Mr. Henderson.
Bill No. 229, for the relief of Phyllis Shirley Moore Lariviere.-Mr. Henderson.
Mr. Gauthier (Portneuf):: It is understood that these bills have received third reading on division.


The Acting Speaker (Mr. Applewhaite):: It is understood they were carried on division.
Orders No. 52 to 58 inclusive, being divorce bills, are set down for second reading.


Stanley Howard Knowles: Would you call these bills one at a time, please.



GRZEGORZ NISKI, OTHERWISE KNOWN AS GREGORY NISKI

Mr. W. J. Henderson (Kingston) moved: the second reading of Bill No. 231, for the relief of Grzegorz Niski, otherwise known as Gregory Niski.


Mr. Erharl Regier (Burnaby-Coquillam):: Mr. Speaker, on this particular bill I move, seconded by the hon. member for Comox-Alberni (Mr. Barnett):
That Bill No. 231 be not now read the second time, but that the subject matter thereof be referred to the standing committee on miscellaneous private bills.
Private Bills-Divorce
Stuart (Charlotte)
Thatcher
Tucker
Tustin
Weaver
Weir
White (Hastings-Frontenac)
Wnite (Middlesex East) White (Waterloo South)-88.


Mr. Speaker:: I declare the amendment lost. Shall the main motion carry?



JOHN MASSON GARLAND

William James Henderson: the second reading of Bill No. 232, for the relief of John Masson Garland.


Mr. Claude Ellis (Regina City):: Mr. Speaker, this bill contains some rather unusual evidence obtained in a rather questionable manner.
If one were to read the evidence submitted to the committee one would learn that most of the evidence was obtained by wiring a room through the use of a tape recorder or dictaphone equipment of some type. Under these circumstances I feel that this bill should go to the committee before second reading and therefore I move, seconded by the hon. member for Humboldt-Melfort (Mr. Bryson):
That Bill No. 232 be not now read a second time, but that the subject matter thereof be referred to the standing committee on miscellaneous private bills.


Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Yes.


Mr. Speaker:: Shall the main motion carry?


Stanley Howard Knowles: On division.
Motion agreed to on division, bill read the second time and referred to the standing committee on miscellaneous private bills.


Donald Methuen Fleming: Mr. Speaker, may I ask the unanimous consent of the house to call item 84 on the order paper. It is a short bill which it is desired to send to the committee. Otherwise we may be some time with divorce bills today.


Mr. W. G. Weir (Parliamentary Assistant to the Prime Minister):: I would point out that there are a number of other bills in much the same position as the one to which my hon. friend has referred, and if a concession is going to be granted in connection with one bill I do not see how we can deny the same privilege to the others at this stage. While I am not raising a point of objection on that ground, none the less I point out this would be quite a departure and would hardly be fair to other hon. members of the house who have bills which are in exactly the same position.


Donald Methuen Fleming: Let them ask the same thing in connection with items 61, 62 and 63.


Mr. N. C. Schneider (Waterloo North):: Mr. Speaker, I must oppose this request and insist that item 63 on the order paper be dealt with first.


Mr. Fairey:: I have three bills which are in exactly the same position, and I cannot give my consent.


Mr. Speaker:: We must follow the established order of the order paper, and we can only depart from it by unanimous consent being given. Since that does not obtain, I am afraid we will have to carry on-


Donald Methuen Fleming: In the circumstances, would the house be prepared to give unanimous consent to these particular bills, apparently four in number, and non-controversial, being passed and sent to the committee? The problem seems to be over the divorce bills. These are bills that would take only a moment, I understand, in each case. Perhaps we could have unanimous consent to these bills being taken now?


William Earl Rowe: Maybe they don't want them passed.


Francis Thrower Fairey: Mr. Speaker, I am a little confused as to the position in which that would leave me. Does that mean that we are proceeding with these three bills, leaving No. 59 to be taken up immediately after the disposal of the three bills to which the hon. member for Eglinton refers?


Mr. Speaker:: We were talking about the order paper. If order No. 59 were not there I would assume we could proceed with all the other orders without too much difficulty. Let us be frank about this. Is the hon. member for Victoria (B.C.) agreeable to giving his consent to the suggestion made by the hon. member for Eglinton which, apparently, is assented to by all other hon. members, and that is that we stand orders 54, 55, 56, 57, 58 and 59 inclusive? And I would think the hon. member for Winnipeg North Centre would like to stand over the divorce bills which follow.


Stanley Howard Knowles: I would agree to that, Mr. Speaker. If we stand the orders you have named and stand the other divorce bills, we could proceed with orders Nos. 61, 62, 63 and 84.


William Gilbert Weir: And 85 and 86.


Stanley Howard Knowles: Yes, 85 and 86 could be added to that list.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


William Gilbert Weir: Do you mean, Mr. Speaker, we would proceed to deal with Nos. 61, 62, 63,

84, 85 and 86 and then revert to the divorce bill we are now dealing with?


Mr. Speaker:: That is my understanding. The other bills would stand until later this day.


Francis Thrower Fairey: On that understanding, Mr. Speaker, I will agree.



THE WESTERN ASSURANCE COMPANY

Francis Thrower Fairey: the second reading of Bill No. 241, respecting the Western Assurance Company.


Stanley Howard Knowles: Would the hon. member give us an explanation of this bill?


Francis Thrower Fairey: Mr. Speaker, I suppose I should be very careful not to say this is a very simple bill. Nevertheless that is so. The Western Assurance Company is one of the oldest assurance companies in Canada, and at the time of its formation a shareholder to be eligible to be elected as a director of the company was required to hold 250 shares, which at that time were issued at $10.
The company wishes to change that provision and to require that a shareholder, to be eligible for election as a director of the company, should be obliged to own only 100 shares. The reason is that at the present time the shares are valued at in the neighbourhood of $65, and so it is felt that the ownership of 100 shares would place a prospective director in the position of having a substantial financial interest, and would therefore warrant him being elected as a director of the company.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Francis Thrower Fairey: the second reading of Bill No. 242, respecting the British America Assurance Company.
He said: The British America Assurance Company works in very close co-operation with the Western Assurance Company with which we have just dealt, and this bill contains in section 2 a similar provision with regard to qualifying shares for a director, in the same terms as those contained in the other bill.
There is a second point, dealing with the day upon which the company shall hold its annual meeting. Under the present statute, in the present charter the company is enjoined to hold the annual meeting on the last day of the month of March in each year, and the company finds that very inconvenient because of the close relationship between the two companies, both of which share the same offices. They wish the act
Private Bills
to be changed to give the directors the opportunity to name the day of the annual meeting and set a date at a more convenient time to suit the directors.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Norman C. Schneider: the second reading of Bill No. 243, to incorporate the North Waterloo Farmers Mutual Insurance Company.
He said: The North Waterloo Farmers Mutual Insurance Company is one of the oldest and largest of its kind in Canada. It has a fine reputation, and is a financially responsible company. I am personally acquainted with many of the officers, and vouch for their honesty and sincerity.
This is a simple bill requesting permission to change the name of the company by eliminating the word "fire" in the title and designating the company as "The North Waterloo Farmers Mutual Insurance Company". This old company finds itself at a disadvantage in not being able to sell a composite policy covering a number of risks such as windstorm and lightning; it would also like the advantage of a dominion charter. A composite policy could effect a saving to the policyholders of approximately 10 per cent in premium rates.
The superintendent of insurance has discussed this bill with the Senate committee and has given it his full approval. He approves of the proposed changes, and I therefore recommend this bill to the house.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Donald Methuen Fleming: the second reading of Bill No. 264, respecting the Bishop of the Arctic.


Stanley Howard Knowles: Is the hon. member prepared to give an explanation of this bill?


Donald Methuen Fleming: Mr. Speaker, the purpose of this bill is to vest in the Bishop of the Arctic certain lands which are actually registered in the name of the Bishop of Mackenzie River. The diocese of Mackenzie River ceased to exist in 1933, and consequently there is now no Bishop of Mackenzie River to make the formal conveyance of the land to the Bishop of the Arctic.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.
[Stage Direction]
Private Bills

Mr. Maurice Boisvert (Nicolet-Yamaska) moved: the second reading of Bill No. 265, respecting Equitable Fire Insurance Company of Canada.
He said: Mr. Speaker, the purpose of this bill is twofold. First, it is to obtain permission to get a certificate of registration according to section 4 of the Canadian and British Insurance Companies Act and, second, to change the name of the company.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Mr. G. J. Mcllrailh (for Mr. Richard, Ottawa East) moved: the second reading of Bill No. 266, respecting Les Reverends Peres Oblats de lTmmaculee Conception de Marie.


Stanley Howard Knowles: Will the hon. member for Ottawa West explain the bill?


George James McIlraith: 
[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.
William James Henderson: Mr. Speaker, it seems that the bill under order No. 59 on the order paper is the stopping point as far as progress is concerned. Having in mind the amount of work coming from the other place and the proper functioning of our committee, as the sponsor of the other divorce bills following order No. 59 I would ask that unanimous consent be given in order that they may be treated in the same way as other bills have been treated today.


Stanley Howard Knowles: Mr. Speaker, I think it was understood that the extent to which unanimous consent was given did not go that far.


Mr. Speaker:: No, but I understand the hon. member was asking again for unanimous consent. However, you are not giving it.


Stanley Howard Knowles: That is right.



JAMES FREDERICK GREENGRASS

William James Henderson: the second reading of Bill No. 233, for the relief of James Frederick Greengrass.


Stanley Howard Knowles: Mr. Speaker, I happen to have read the evidence taken in the other place with respect to this bill. There are a number of factors with regard to that evidence that lead me to feel that the house should not be asked to give approval to the principle of the bill before it has been studied by a committee of the house. There are a number of children involved, one of them being still quite young. There is also the fact that certain payments from the husband to the wife are involved.
For these and other reasons I feel that a committee of the house should look at the subject matter of the bill before we are asked to give the approval that is implied by second reading. Therefore I move, seconded by the hon. member for Moose Mountain (Mr. McCullough):
That Bill No. 233	be not now read a second
time, but that the	subject matter thereof be
referred to the standing committee on miscellaneous private bills.	
The house divided on the amendment (Mr.	
Knowles) which following division:	was negatived on the
 YEAS Messrs:
Argue	Knowles
Balcer	McCullough (Moose
Barnett	Mountain)
Bryson	Patterson
Cameron (Nanaimo)	Poulin
Campbell	Quelch
Ellis	Regier
Gagnon	Smith (Battle River-
Girard	Camrose)
Herridge	Yuill
Johnston (Bow River] Jones	I Zaplitny-21.
 NAYS Messrs:
Applewhaite	James
Ashbourne	Lusby
Balcom	MacNaught
Batten	Macnaughton
Bell	McCulloch (Pictou)
Bennett	Mcllraith
Brown (Essex West)	Mclvor
Buchanan	McMillan
Carter	Mang
Cavers	Matheson
Charlton	Mitchell (Sudbury)
Churchill	Monteith
Decore	Nixon
Fairclough, Mrs.	Philpott
Fairey	Pickersgill
Fleming	Purdy
Follwell	Rea
Gregg	Richardson
Harrison	Robinson (Simcoe East)
Hellyer	Schneider
Henderson	Simmons
Hosking	Sinclair
Huffman	Stanton

Stick	White	(Hastings-
Stuart (Charlotte)	Frontenac)
Tucker	White	(Middlesex East)Tustin	White	(Waterloo South)Weaver	Winters-56.
Weir


Mr. Speaker:: I declare the amendment lost. I would remind hon. members that standing order 12, paragraph (2) reads as follows:
(2) When Mr. Speaker is putting a question, no member shall enter, walk out of or across the house, or make any noise or disturbance.
Bill read the second time.


Mr. Knight:: Mr. Speaker, I rise on a question of privilege. I am not acquainted with the rule of the house as to the length of time the bell is supposed to ring. However, I assure you that I was in my office when that bell rang. I went to the elevator. There was no elevator available immediately. After a moment or so it came up. I came down here and found that the bill was ready to be called. I made no attempt to vote. I draw the matter to your attention, Mr. Speaker. Several of my colleagues were in the same position as that in which I found myself. We did not reach the house in time to vote.


John Whitney Pickersgill: That shows the unwisdom of calling for unnecessary votes.


Victor Quelch: Mr. Speaker, I should like to support what the hon. member for Saskatoon has just said. I was in my room at the time the bell rang. I left my room, and if it had not been for the fact that I used the stairs instead of the elevator, I would have missed being in the chamber.


Mr. Speaker:: As hon. members know, the interests of hon. members are taken care of by whips. There are two sides. There is the side to my right which has a whip and there is the side to my left which has a whip of the official opposition. Whenever I say, "Call in the members", those two whips go out in the lobby. The Sergeant-at-Arms, who gives me the nod when it is time to put the motion to the house, will never enter the house unless and until the two whips on the two sides have walked into the house and indicated that their members have been called in for the purposes of the division. Then the Sergeant-at-Arms walks in. Whenever I see him walk in and make his little salute to me,
I take that as being my signal that it is time for me to put the question.
I am sure the remarks of the hon. member for Saskatoon and the hon. member for Acadia will have been noted by the two whips who, I am sure, are just as much interested as anybody else that all members cast their votes.


Robert Ross (Roy) Knight: Mr. Speaker, might I ask one further question?
Private Bills-Divorce


Some hon. Members:: No.


John Whitney Pickersgill: You may not ask questions of Mr. Speaker.


Robert Ross (Roy) Knight: I rise on a question of privilege.


John Whitney Pickersgill: I rise on a point of order.


Some hon. Members:: Sit down.


John Whitney Pickersgill: My point of order is that it is a well-known rule of the house that questions may not be put to Mr. Speaker.


Thomas Miller Bell: What is its number?


Robert Ross (Roy) Knight: Mr. Speaker, I also rise on a question of privilege. I submit that I raised my question of privilege before the minister raised his.


John Whitney Pickersgill: Mine was a point of order.


Robert Ross (Roy) Knight: My question of privilege is this. The minister made a remark as to what my course of action should have been in regard to this vote. He made some assertion in my hearing about whether or not we should call votes.


Mr. Speaker:: Order. The remark of the minister to which the hon. member refers was not in my hearing. I think we might as well leave things as they are. I now say that this bill is referred to the standing committee on miscellaneous private bills, and I would ask the deputy clerk to read the next order.
Bill referred to the standing committee on miscellaneous private bills.



JEANNE D'ARC OUELLETTE MARTIN

William James Henderson: the second reading of Bill No. 234, for the relief of Jeanne D'Arc Ouellette Martin.


Mr. Speaker:: Is it the pleasure of the house to adopt the motion?


William James Henderson: Mr. Speaker, I should like to move, seconded by the hon. member for Lincoln (Mr. Cavers):
That the subject matter of Bills Nos. 234 , 235, 236 and 237 be referred to the standing committee on miscellaneous private bills.


Mr. Speaker:: I am afraid that the hon. gentleman is premature, to say the least, in moving this motion. I must take these bills one at a time. The order that has just been read is for the second reading of this bill entitled "An Act for the relief of Jeanne D'Arc Ouellette Martin". The reference of the subject matter is in the form of a subsidiary motion or of an amendment.

Private Bills-Divorce
If the hon. gentleman is the sponsor of the motion for second reading of this bill, as I take it he is, he cannot at the same time move the reference of its subject matter that he has suggested in this motion. It would be necessary for it to be moved by somebody else. The motion before the house is that this bill, entitled "An Act for the relief of Jeanne D'Arc Ouellette Martin" be now read the second time.


Thomas Speakman Barnett: Mr. Speaker-


Some hon. Members:: Six o'clock.


Thomas Speakman Barnett: -I will be quite willing to help out the hon. member who attempted- although he was apparently out of order-to move an amendment, by moving that the bill be amended-


Some hon. Members:: Six o'clock.


Thomas Speakman Barnett: Some of my colleagues say it is six o'clock.


Some hon. Members:: No.


Thomas Speakman Barnett: I will move the adjournment of the debate.


Mr. Speaker:: Is it the pleasure of the house to adopt the motion?


Some hon. Members:: Yes.


Some hon. Members:: No.


Mr. Speaker:: Those who are in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those who are opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.


Some hon. Members:: Six o'clock.


Mr. Speaker:: Do I see five members rising?


Some hon. Members:: Yes.


Some hon. Members:: No.


Mr. Speaker:: Perhaps hon. members, when they wish to rise for the purpose of asking for a division, should realize that they should do so immediately and not have an afterthought, then change their afterthought and have another one. Now that it is six o'clock I think the house will revert at eight o'clock to the business which was under consideration at five o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


[Stage Direction]
The house resumed consideration of the motion of Hon. W. E. Harris (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell, and the amendment to the amendment of Mr. Cameron (Nanaimo).
Victor Quelch: Mr. Speaker, just before the hour was called for private bills I had been emphasizing that I did not think we could afford to slow up on the development of our resources. Today foreign investment is matched by imports, and these imports help to ease the pressure on the price level. The policy of the Bank of Canada has encouraged foreign investment in this country.
I am quite well aware of the fact that Mr. Coyne has stated that he tries neither to encourage nor to discourage foreign investment in this country. Be that as it may, the effect of the policy of the Bank of Canada has been to encourage foreign investment; that is, it has curtailed the expansion of credit, which pushed up interest rates, which encouraged foreign investment and which brought about the appreciation of the Canadian dollar. Therefore I suppose we can take for granted that the government is in favour of the Canadian dollar being at the present appreciated level.
The minister's budget has been termed by some as a scatter-shot budget. Well, unfortunately it did not cover all sectors of the economy. I would say it missed agriculture completely. Not only that, but actually the financial policy of the government today has the effect of penalizing agriculture. I say that because the appreciation of the dollar does very seriously handicap agriculture. It is true the minister might say it handicaps all exports, but agriculture is especially penalized because the domestic price is subject to the export price, and with the Canadian dollar at $1.04 in United States funds we find that today the grain grower is losing approximately 7 cents a bushel as a result of that appreciation.
When you think back to what you might call the good old days, when the Canadian dollar was at 90 cents in comparison with the United States dollar, then in terms of the 90 cent dollar the farmers today are losing 27 cents a bushel as a result of maintaining the dollar at $1.04. Therefore, while

the minister may say that the appreciation of the dollar does help the Canadian economy, does help to reduce prices, it nevertheless does severely penalize the farmers who are trying to export their products in competition with those countries whose currency is depreciated.
If the policy, or perhaps I should say the effect, of appreciating the dollar is considered beneficial to the Canadian economy, then I think those who are being penalized by it should be compensated in one form or another. Today production, employment and income are undoubtedly at a very high level. Therefore I think now is the time to assess the effect of government policies upon the various parts of this economy. I believe when the minister brings down his budget he should be guided by the way different parts of the economy have been affected by government policy.
The minister disclosed in his budget a surplus of $282 million in 1956-57. He proposes to use this $282 million to pay off a part of the national debt. No doubt that is a very worthy objective, to reduce the debt by $282 million, but we consider it more important at this time to combat high prices; that is, to reduce the cost of living and make our prices more competitive with those of other countries. It is the only way to do it. Therefore we believe we could have used that surplus of $282 million for the purpose of bringing about a reduction in the sales tax. After all, the only way you can reduce taxes for people in the low income brackets is by reducing the sales tax. I am not suggesting that we disturb the 2 per cent sales tax for old age pensions.
For 1957-58 the minister estimates a surplus of $305 million. It actually could have been $500 million if it had not been for the $50 million to be credited to reserve account assets, the $50 million to reduce the amortized deficit in the superannuation account, and the $100 million paid out for the Canada Council. I quite realize that the first two of these three payments may be fully justified; it may be considered sound procedure, but I do not consider the practice of taxing $100 million from the taxpayers of this country in one year in order to invest it so that certain organizations may receive the interest on it is sound.
If the desire is to invest $50 million and give the interest on that amount to the arts and humanities, and to use another $50 million for capital expenditures over a period of 10 years, then surely the logical procedure should have been to vote $2,500,000, the equivalent of 5 per cent on $50 million, and pay that to the council, and then pay them
The Budget-Mr. Quelch another $5 million representing one-tenth of $50 million. In other words we could have taken this year just $7,500,000 out of the taxes of the people instead of $100 million as has been done. It almost looks as though the minister was anxious to hide away $100 million in some form or another.
I know it would be out of order to criticize that measure now because it has already passed parliament; but I would suggest to the Minister of Finance that in order not to penalize the taxpayers by taking $100 million away from them we should just charge them with $7,500,000 this year, and then obtain $92,500,000 from the Bank of Canada and pay that to the council. That would have this effect. That $92,500,000 would increase the cash reserves of the chartered banks, thereby providing a cash basis for expanding their funds for mortgage loans up to around $1 billion. In that way we would ease the shortage of mortgage funds and at the same time reduce taxation on the people to the extent of $92,500,000.
However, let us consider the minister's figure of $305 million. As I say, I do not think it should have been $305 million. I think it should have been at least $405 million or $505 million, but we will take the minister's figure of an estimated surplus for 1957-58 of $305 million. He proposes to use $93 million to expand social services; he proposes to use $55 million to reduce taxes, or a total of $148 million, leaving an estimated surplus of over $150 million. We fail to see how the government can justify the meagre increase in old age pensions, old age assistance and pensions for the blind of $6 a month. The figure of $40 a month was low in 1949, and the proposal to increase it by $6 does not begin to cope with the increased costs of living.
Some time ago the western provinces realized that $40 a month was totally inadequate; therefore for a number of years they have been paying supplementary allowances. We believe the increase should be at least $20 a month, with authorization for $20 in the form of old age assistance.
I may say that as far as the C.C.F. amendment to provide $75 is concerned, if the government is prepared to pay $75 we will be quite prepared to support it. I am suggesting that at the present time there should be an increase of at least $20 a month. What would that cost? The total cost on the basis of participation by provinces in 1957-58 would be old age security, $150 million; old age assistance and pensions for the blind, $15 million, or a total of $165 million. This would raise social security payments to $208,500,000, and with tax reductions of $55 million it

The Budget-Mr. Quelch would make a total of approximately $263,500,000, still leaving an estimated surplus of $40 million.
Actually we believe the federal government should pay the whole amount of the old age assistance, because even if the government were to authorize an increase of $20 for old age assistance tomorrow, how many provinces would be in a position to pay $10 of that? There would be very few. If the provinces were capable of making such a contribution they would be paying a supplementary allowance today. The mere fact that the majority of the provinces are not paying a supplementary allowance at this time proves conclusively, I think, that if the government did authorize an increase of $20 a month the majority of the provinces would not be able to take advantage of it. It would be all right as far as western Canada is concerned, because those provinces are already paying anywhere from $15 to $20 a month in supplementary allowance; therefore it would just mean that the federal government would pay part of the cost of the present supplementary allowance, unless of course the western provinces increased the pensions by the amount of the increase the federal government now authorizes.
I want to say a few words now concerning disability pensions. First of all I may say that we are very glad to see the increase in the family allowance, and we are also glad to see an increase in the disability pensions. We are also glad to note that the war veterans allowance for married veterans has been increased to $120 a month and that the ceilings on permissive income for single veterans have been raised from $840 to $960 and for married veterans from $1,440 to $1,620. However, whilst we are glad to see these things, we still think the government should carry out the recommendations of the Legion and raise the ceiling on permissive income for single veterans to $1,200 and $2,000 for married veterans.
We are very fond of saying what good veterans legislation we have in this country, but let us not forget that under the legislation in the United States that is very similar to our war veterans allowance a single veteran is allowed to have $1,400 in addition to his pension or allowance, and if he is married he is allowed $2,700 in addition to the amount of the allowance that is paid. That is a far cry from placing the ceiling at $1,620, as we are proposing at the present time.
There is a very good reason why we should raise the ceiling on the war veterans allowance to $2,000 for married and $1,200 for single veterans. If a veteran is able to work I do not think there is any reason to 
complain, because he is allowed to have $600 a year casual earnings; but what about the disabled veteran who is not able to work? He is not able to take advantage of casual earnings. Suppose a veteran has a small disability pension or an annuity of $600 a year, an amount equal to the casual earnings. What happens to him? That amount will have to be deducted from the ceiling, he will not be able to have it in addition to the ceiling, as in the case of a veteran who is able to work and has casual earnings. A veteran who is disabled and unable to work has no supplementary allowance that he may have in addition to the permissive income. He is allowed only the amount of war veterans allowance that would bring it up to the amount of the ceiling, so the disabled veteran is in a very unhappy position as compared with a veteran who is able to do some light job which entitles him to casual earnings.
I want to turn from that to the subject of agriculture. The minister was very optimistic in his assessment of the condition of agriculture. Certainly none of the farm organizations agree with him. I see that the federation of agriculture have already criticized his statement as being altogether too optimistic. They have pointed out that since 1949 farm prices have dropped by 6 per cent while farm costs have risen by 20 per cent, and though farmers represent 15 per cent of the national population farm income represents only 6.9 per cent of the national income. I think the minister will agree that this is not a very rosy picture.
We believe that a sound, long-term agricultural policy is in the interests of all the people, in order that there may be ample supplies of food available at all times. I think most people would agree that this is absolutely essential, particularly when you recognize that 50 per cent of the world's population today are still hungry. That has been stressed time and time again by the food and agricultural organization and by Dr. Keenleyside.
Therefore, in order that farmers across Canada may be afforded the opportunity to obtain a fair and just share of Canada's national income, we advocate the following agricultural program:
(1)	Low cost and long-term credits to farmers and cash advances against grain stored on farms;
(2)	A two-price system for the sale of farm products. Products would be sold at parity prices on the domestic market, and those exported abroad would be sold at the best price obtainable, preferably under international agreement, but supported at levels

that would assure that the aggregate of sales in the domestic and export markets would return to the farmer his fair share of the national income.
(3)	Continuation of the wheat board as the sole marketing agency for wheat, oats and barley, with the inclusion of flax and rye.
(4)	Expansion of terminal storage for grain so the desired reserve of grain might be carried without interfering with the normal handling of the current crop.
(5)	An all-risk national crop insurance act, along similar lines to that in the United States.
(6)	The expansion of markets for farm products-(a) in the domestic market by the equating of effective purchasing power with the aggregate of prices of goods available for sale; (b) externally by making surplus products available to all nations that are unable to obtain them through the normal channels of trade by acceptance of foreign currencies, barter deals and, in cases of extreme distress, by gifts.
I do not think it is necessary to comment on any of those points at this time, with the exception of the last one. I want to say a few words regarding section 6(b) of the proposal.
We have consistently urged in this house since 1944 the need for nations to be willing to accept the currency of the nation that accepts their exports. The reason for that of course is obvious. What is the real purpose of international trade? The real purpose of international trade should be the exchange of goods and services on the basis of mutual advantage, and provided you are going to carry on trade on that basis the only currency you really need is the currency of the importing nation.
In 1953 we drew the attention of the government to the proposal of the United States to accept foreign currency. I remember that at that time the Minister of Trade and Commerce and the then minister of finance, Mr. Abbott, tried to ridicule the idea, and suggested they did not think any country in the world would be willing to buy more food from us if we were to accept their currency. They expressed the opinion that the United States would not get very far with their program; yet today, month by month we are losing markets to the United States. The United States program in regard to the acceptance of foreign currency in making their surplus goods available to other nations is proving to be highly successful. I should like to quote briefly from the Western Producer of January 31, as follows:
U.S. News and World Report, under the heading "One Farm Policy" that's beginning to Work" does to a certain extent outline what is being done.
The Budget-Mr. Quelch
Again:
In a year of record crop production, more commodities have moved out of the storehouses than have moved in as a means of supporting prices paid to farmers.
And again:
In effect, a two-price system has been set up. There is the domestic price at which government supports farm products. Then there is the second price, set at the level needed to move the surpluses into consumption abroad. Immense sales abroad have followed the decision to use the two-price policy.
And again:
Under this law, farm products worth $2,800,000,000 have been sold-at world market prices-to other nations for their currency. The U.S. uses this currency, which can't be converted into dollars, to pay expenses it incurs in these countries. Much of the money, around 50 per cent thus far, has been loaned back to the purchasing countries for economic development-building of dams for power and irrigation, construction of roads and similar projects.
In barter deals under this same 1954 law, $800,000,000 of surplus has been traded to other nations in return for strategic materials.
And again:
The government's salesmen of surpluses, however, are optimistic, says Earl L. Butz, assistant secretary of agriculture:
"We are learning to use these surpluses as a positive factor in our foreign policy. These donations to other countries for relief of famine, flood and other disasters, plus the sales for foreign currency, are making friends for us in many countries that we're trying to keep from slipping under Russian domination.
And the fact that our dollar sales not only are holding up but increasing shows that these donations and foreign-currency sales aren't just taking the place of deals that could be made for dollars."
And finally:
The mood of agricultural department officials and of congress indicates that the government's surplus policy is to continue. The demand for U.S. surpluses indicates, too, that there's a vast overseas market to be tapped as long as U.S. taxpayers continue to foot the bill and make the price right.
If the government hope that the United States are going to discontinue that program they are evidently going to be badly disappointed, because today they are finding that surpluses are moving out of their warehouses at a faster rate than they are moving in. The United States are making food available to hungry people under a variety of measures, and with those measures are creating a great deal of good will in the world. The farmers are paid a support price. The treasury foots the bill and it is considered sound business.
I do not think anyone in this house will suggest that generally speaking Americans are not good businessmen. They consider that policy to be good business. It is good for the farmer who can get rid of his products and who is paid a satisfactory price. It is good for the country because it is making friends with foreign countries. It is good
2486	HOUSE OF
The Budget-Mr. Balcom for foreign countries because those nations which are not otherwise able to obtain the food they need are able to get it under a measure of this kind.
Unfortunately in Canada, despite the promises made by the then prime minister during the latter years of the war that the prices of the main farm products would be stabilized, nothing has been done so far to stabilize the price of wheat. Surely no one will suggest that wheat is not one of our main farm commodities. As I say, despite the promises by the then prime minister, the farmers of Canada have had to foot the bill. I would say that is definitely a breach of faith.
Not content with making the farmer compete with the United States treasury, the government places the farmer under a further handicap of having to sell under an appreciated dollar which makes it that much more difficult for him to compete in foreign countries. The farmers of this nation have no reason to thank this government for the treatment accorded them.


Mr. S. R. Balcom (Halifax):: Mr. Speaker,
I seem to be looking at this budget through different eyes than those of hon. members who have spoken previously. I believe that most hon. members were prepared to be given a very gloomy budget, but instead we find it full of many gratifying surprises. We have had budgets known as sunshine budgets and share the wealth budgets, but this is a combination of them all. It has been labelled by some as the maritimes or Atlantic budget. It might best be termed a sound, common sense budget, because it will benefit all Canadians, especially those who need assistance most. Truly the forgotten man has been remembered as well as the little man on the street who is so often depicted in the newspapers as being clothed in a barrel with a bowler hat on his head. He will now be able to afford a new outfit.
Through this budget the war veteran with a disability receives a very substantial increase in his pension. The married burnt-out veteran also has a nice increase in his war veterans allowance. Then the blind have not been forgotten, nor have the disabled, the retarded children and the families drawing the family allowance. Several nuisance taxes have been removed, as has the special excise tax on soft drinks, candy and motorcycles which will be much appreciated by these industries and the public.
If the concessions given to the maritimes turn out as we hope they will, and they should-for the results depend very largely on us who come from the Atlantic provinces-then the two measures designed to stimulate the economy of the Atlantic provinces will, in one instance, have the federal


government pay an additional $2 million annually in freight rate subventions on goods moved out of the maritimes into central Canada. Second, we have the proposition to provide interconnection facilities between Nova Scotia and New Brunswick for the integration of our electrical systems, for which Ottawa is prepared to build and operate thermo plants. This will be of inestimable value.
The intention of the government to take action immediately to alleviate the special difficulties of the Atlantic provinces caused by railway freight rate increases in the last decade will reflect quickly and positively on our economy. I can assure the minister and his colleages that Nova Scotia appreciates the consideration we have received. Nevertheless, the opposition has said that the budget proposes nothing by way of aid to the Atlantic provinces. However, the budget speech does not pretend to cover all Canada's problems, regional and otherwise. There have been other federal proposals that help those areas of Canada which are in fiscal need, and indeed the principal proposal was referred to in the minister's speech. I refer to the federal-provincial proposals.
Through the new fiscal arrangements proposed by the federal government a considerably greater amount of money will be available to the provincial governments, including and especially the Atlantic provinces. During the first year of operation under the new arrangements this increase would amount to about 20 per cent over and above what would be available to the provinces as a whole if the present tax rental agreements were renewed. One of our major aims in making these proposals has been to assure as far as possible to all provincial governments access to revenues consistent with their responsibilities. The Atlantic provinces would share fully in the advantages of the proposed fiscal arrangements and, more than any of the other provinces, the proposals go a long way in providing for their fiscal needs.
The new proposals provide unconditional equalization grants and on a per capita basis these are highest for the Atlantic provinces, amounting to $27.58 for Newfoundland, $29.84 for Prince Edward Island, $23.90 for Nova Scotia and $24.95 for New Brunswick. The only other province which comes close to these figures is Saskatchewan, where the proposed equalization per capita grant would amount to $23.48. By comparison, per capita equalization payments to the other provinces would be lower, ranging from $16.24 for Manitoba to zero for Ontario.
Within the framework of the proposed fiscal arrangements it is clear, therefore, that the

federal government has recognized the special needs of the maritime provinces, and I would like to add that the method by which these federal payments are made will leave the provinces entirely free to use the funds as they see fit.
In addition, of course, the federal government is continuing to pay coal subventions to Nova Scotia and New Brunswick at the same level as last year, despite the lessening of United States competition in coal. Similarly, feed grain freight assistance is to be continued, and this support works more to the advantage of the Atlantic provinces than to other provinces in terms of freight subsidy per ton of the grain shipped from the west.
Last year, Mr. Speaker, I was fortunate enough to be selected by the Minister of National Health and Welfare and by our own minister in Nova Scotia to join the delegation attending the ninth world health organization in Geneva, Switzerland. Canada was well represented at this meeting by the most zealous of delegates. The delegation was happily headed by Dr. G. D. W. Cameron, deputy minister of national health and welfare, who was a splendid choice for he is well-versed in this work. Dr. Cameron is a tireless, conscientious worker who gives inspiration to his colleagues. Alternate delegates attending were Dr. Burns Roth, deputy minister of public health of the province of Saskatchewan, who possesses exceptional ability and has a fine background in health work, and Hector Allard, the permanent representative to the European office of the United Nations in Geneva.
Those who accompanied us as advisers and counsellors were Dr. Emil Blain of Montreal, president of the French association of medicine in Canada and an outstanding physician with a national reputation; Miss Dorothy M. Percy, R.N., chief consultant in nursing, Department of National Health and Welfare, Ottawa, who gives all her strength, knowledge and ability in service to her country, and Mr. Melvin G. Clark, of the Department of Finance, a member of Canada's permanent mission to the European office of the United Nations in Geneva. Mr. Clark has vision, and through his diplomacy and that of our chief all the major difficulties which are bound to arise when one is dealing with the representatives of over 80 nations were smoothed out to the satisfaction of everyone.
It is encouraging and reassuring to me, sir, to realize that the government of Canada has such employees as Dr. Don Cameron, Miss Percy, Mr. Allard and Mr. Melvin Clark. The government of Saskatchewan must appreciate the splendid work of Dr. F. Burns Roth.
Over 80 countries were represented at this meeting, and your Canadian delegation played
The Budget-Mr. Balcom an active part in the deliberations. Recognition was given to Canada by the general assembly appointing Dr. Cameron to the executive of the world health organization. The fine work being done by the WHO knows no boundaries. Some 400 million people, one-sixteenth of the world's population, have already benefited from modern methods of controlling malaria, tuberculosis, yaws, and other death-dealing diseases. Since the start of mass campaigns against yaws and other treponematoses, 50 million people have been treated, and through modern methods and efficiency the cost per treatment has been brought down to 75 cents, and 10 cents per examination.
Before making any further remarks may I commend the Minister of Agriculture and, of course, in association with him the Minister of Transport, for the prompt action taken in implementing the federal grain freight system, which practically offsets the cost of the 1956 freight rate boosts to users of feed grain. A short delay in implementation might have cost the farmers of the maritime provinces well over $400,000, and those of Nova Scotia in particular over $170,000.
I would like to commend the maritime transportation commission for their effective action in presenting a brief to the minister outlining the need for quick action in this case. I would also like to commend the Minister of National Health and Welfare and offer him our sincere thanks for his action in bringing into the house legislation to provide a national health insurance scheme for the people of Canada. While Nova Scotia has not entered into the scheme yet, I feel sure that in its wisdom the provincial government will soon elect to be a party to this very worth-while plan.
Mr. Speaker, one of the most important sections in the preliminary report of the Gordon commission deals with transportation in the Atlantic provinces. The report has two important suggestions to make in this field. One is for a re-examination of the effect of the Maritime Freight Rates Act. As I made a statement about that in the early days of this session and referred to it earlier tonight I will not deal with it now. A scheme which is broader in scope and which in fact embraces the above is a recommendation for an early inquiry into the whole transportation system. The budget introduced by the Minister of Finance assures us that action is forthcoming. This will, I presume, involve all the different means of transportation, and will therefore touch the jurisdiction of the provinces as well as that of the federal government.

The Budget-Mr. Balcom
I wish to speak now of one particular phase of federal responsibility in this field, namely that which concerns the port of Halifax. Since the administration of the port of Halifax was taken over in 1935 by the national harbours board, commendable progress has been made. Facilities have been improved by the replacement of structures in use in the 'thirties'; new sheds have been built on piers 26 and 9B which have added 20 per cent to the effective shed area, and a modern large pier to replace the old pier 3 has been constructed. The improvement in facilities has permitted the handling of a larger volume of general cargo. Grain handling facilities have also been increased, with the doubling of the elevator storage space.
Further, there are substantial additions now under way. Shed 27 and the new pier A-l with its two additional sheds will go a long way toward meeting our current needs. This new pier and its sheds will cost well over $5 million. But in a growing country like Canada we must not think only in terms of this year's needs; we must plan for five years from now, yes, for 25 years in the future, as the Gordon commission was asked to do.
Two events in the present shipping season which, as hon. members know, are the winter months in Halifax, have directed attention to our port facilities. I refer to the strike on the Canadian Pacific Railway and to the recent tie-up of United States Atlantic ports. Both brought increased business to Halifax at the height of its busy season and created some problems. Although the facilities were taxed by this additional business, the experience of those affected directly proved both the suitability of the port for such traffic and the quality of the service that could be rendered.
Nevertheless, the evidence pointed to the need for a close look at the situation. In order to have first-hand knowledge I asked responsible people in the shipping industry, both business and labour, for their views on desirable improvements.
The answers I received, although not unanimous as to details, expressed the need for the addition of facilities such as piers, sheds, grain berths and a heavy crane capable of lifting 200 tons. It is not my purpose to go into the details here. I shall pass them on to the national harbours board management, where I know they will receive proper consideration, but I do want to deal with some general considerations which involve long-range policy.
It takes more than physical facilities in the shape of piers, sheds and machinery for an efficient port. The most effective use


of these facilities requires not only good organization within the port authority but co-operation and good relations with the shipping companies and the men who work on the waterfront, the stevedores and the freight handlers. The high reputation of Halifax could not be attained if any one of these fell short in their responsibilities. The signal success that has been achieved must be judged in the light of the particular difficulties faced by all agencies concerned.
The short season is perhaps the fundamental problem. A second factor is that Halifax is a port of call for many ships and not a terminal port, which results in many small cargoes instead of fewer larger ones. This means that the services of many different shipping companies, the railway, the stevedores, the freight handlers and the trucking firms must all be co-ordinated. To make the best use of the physical facilities, superior organization and the good will of all parties are required.
Turning again to the long-range planning the situation demands, I, suggest that first the federal departments and agencies involved should review their requirements with the object of defining an integrated plan of development. To have an integrated plan I would say it is about time the Canadian National Railways did something to improve their facilities in Nova Scotia, not just at Moncton, Truro and outside stations but in Halifax itself. A particularly bad spot at this time is Deep Water, where since the war the new pier 3, costing well over $3 million, was built through the efforts of the national harbours board, whereas the railway entrance to pier 2 and pier 3 has received little if any attention and is very inadequate. From pier 9 to Deep Water terminals there is only one rail line in and one rail line out. When they are servicing the local freight shed piers 2 and 3 have to wait, and I am informed that on occasion it takes 24 hours to get a car placed in this area.
We would recommend that it is high time the local freight shed was moved from its present location and the land and tracks used to service piers 2 and 3 for import and export cargo. A suggestion has been made that some exchange of properties between the harbours board and the Royal Canadian Navy would provide easier rail access for commercial shipping. If such is desirable, the Canadian National Railways should sit down with the other two departments to determine the best course of action.
If we are to proceed with plans that will facilitate the development of the industrial mile on the shores of Bedford basin, the city

of Halifax will certainly be a partner. Here is a golden opportunity to combine desirable industrial development with the provision of alternative housing for the residents of Africville. The federal government has made provision for dealing with such situations by providing 50 per cent of the cost of acquiring and clearing the land, 75 per cent of the cost of new housing construction, and an equivalent share of operating costs if there should be a deficit.
Now that the province of Nova Scotia has stated its intention to participate in housing developments, it should be easier for the city to proceed with a much needed project for better housing for the residents of that section on Bedford basin known as Africville. For many years the welfare agencies have tried to interest public and private groups in such a project, not only in the name of humanity but in the interests of good business. These are fine people living on the Bedford shore, and not only should be but must be assisted substantially in a rehabilitation program.
Before leaving the matter of port development I want to re-emphasize the need for immediate improvement in the over-all railway facilities-trackage for marshalling of cars and storage and availability of rolling stock. I should also speak again of the need for additional hotel accommodation, and I urge the Canadian National Railways to proceed with an addition to the Nova Scotian hotel. The high occupancy rate of hotels in Halifax and the demand for convention space suggests that the business is there. Further, it is entirely probable that enlargement of the hotel would enhance its profit position by spreading the overhead. In any case, even on its present scale the hotel has just completed a profitable year, and conventions planned to be held in Halifax in 1958 cannot get accommodation.
There are other things in the preliminary report of the royal commission on Canada's economic prospects on which I should like to comment and commend the government for its prompt action. While the Senate investigation of land use may not be a direct result of the commission report, nevertheless the approach reflects similar thinking on the part of the government. In the absence of the discovery of spectacular new resources in the Atlantic provinces, the only way we can expect economic progress there is to make better use of what we have. Federal assistance toward this end represents constructive action.
The first step required is to know what we have. In addition to investigation of land use as outlined, more intensive geological
The Budget-Mr. Balcom work on mineral possibilities and better knowledge of our forest resources to promote better utilization would be helpful. These are not just broad generalizations or empty phrases. Just to make them specific and meaningful I can refer to the several thousand acres of land along the Musquo-doboit river in Halifax county that could yield so much more if it were properly drained and not subject to floods. We have a forest industry now supporting a ground-wood pulp operation at Sheet Harbour in Halifax county that could yield a lot more wealth to that community with better forest management which could bring a paper mill to this locality. If there is any way in which the federal authority can assist such a project at Sheet Harbour, early action would be appreciated by the people of the eastern shore of Halifax county.
Also of vital concern to Nova Scotia is the controversial question of fishing limits on our coast line. The government has already brought this matter before the United Nations, and it is good to know that a strong case for Canada will be made. I know there will be representations from the Department of Fisheries for the 12-mile fishing limit so we may have fairness in the treatment of fishing trawlers of all nations. The idea of the Minister of Fisheries to stress the fishing limit and not a territorial limit is smart and practical.
We must also be concerned with conservation aspects of this matter. While conservation and the 12-mile limit are of immediate interest to the inshore fisheries, they are also of equal importance in the long run to the fisheries industry generally. Many communities on St. Margaret's bay and along the eastern shore of Halifax county depend for their livelihood on the inshore fisheries, and this industry accounts for an estimated 20 per cent of Halifax city's economy.
It was a great satisfaction to me, as to many others in the house, to vote for the passage of the legislation authorizing the payment of full municipal taxation on federal property. The importance of this to my own constituency is indicated in the amounts which the federal government will pay in lieu of taxation, probably $1 million or more to Halifax city, $100,000 to the town of Dartmouth and over $70,000 to Halifax county.
This liberalization of policy in respect of federal property comes at a particularly opportune time for the local governments concerned. There is always great pressure on governments at all levels to find the money with which to pay for the services demanded.

The Budget-Mr. Balcom This is particularly true of growing municipalities at this time. Real estate taxes, the backbone of municipal revenue, do not increase as quickly with economic growth as do income or sales taxes. Furthermore, the problem of financing the services demanded has been accentuated in areas where there is a large proportion of tax-exempt property. However, I must acknowledge the fact that this has not led to any reluctance to have federal property in our constituency.
It is a rewarding thing in political life to feel that you know and understand the problems and views of your constituents, and also their needs. For some years an airport was needed to round out one phase of our transportation system. Shortly the Halifax international airport will be an integral part of the transportation facilities in our riding, and we are most gratified at the progress that is being made. The statement by the Minister of Transport that discussions concerning the road to the airport had been held with the premier of Nova Scotia indicates that there are no obstacles to the orderly development of related facilities. However, there are some problems on the Dartmouth side of Halifax harbour which the government should review.
Without going into the matter at length, Mr. Speaker, I am going to make a few specific suggestions. The docking facilities of Dartmouth are inadequate for the fast-growing demands. In particular, the lumber wharf should be replaced by a modern pier, to be part of a great over-all development. The need for a new marine and fisheries building is apparent, and the work of that important department would be greatly facilitated thereby. The Canadian National Railways facilities that service the town and the eastern side of the harbour are inadequate. They look out of date and they are out of date. The trackage and marshalling yards are inadequate and need extensions.
Mr. Speaker, the trend of our manufacturers to ship their products through United States ports is still disturbing to me. It is next to impossible to understand why companies receiving the benefits of high protection should ignore our Canadian ports. How can we expect to develop our ports unless we receive the loyal support of our manufacturers? We in the maritimes pay through the nose for everything that is manufactured in Canada, and by companies receiving tariff concessions.
May I cite a few cases only. First I mention that of the automobile. We in the maritimes have little manufacturing, but we do not squawk too much about the difference in price as between a car purchased in the United States and one bought in Canada nor,

the difference between one bought in Ontario and one bought in Nova Scotia. In this latter instance, on an automobile we buy in the maritimes we pay an added freight charge of about $100. This is due, of course, to the centralization of industry in Ontario. An automobile should sell for the same price in Halifax as it does in Oshawa or Windsor. The over-all freight charges should be worked out so the charge should be a Canadian-wide average. It is not a greatly involved problem but one which the manufacturers could solve with little difficulty. It is true the population living near the plants would pay more, but this consideration would be offset by the benefits to the population in the fringe areas.
But to come back to the use of our ports, may I say this. We cannot be very happy when we see such a large proportion of our automobiles shipped through United States ports. I believe that one Canadian automobile company has changed its policy and is making greater use of our facilities. The car industry is not the only offender. Machinery, except agriculture, is shipped through foreign ports to the value of millions of dollars, to the extent of nearly 50 per cent of the total exports in this commodity; and of all things, 86.6 per cent of the farm implements travel through United States ports, leaving 13.4 per cent, the crumbs, to be divided among Halifax, Saint John, Quebec and other Canadian outlets.
I have dealt in the main with matters of particular consequence to the constituency I represent, or with national policies in their local application. I have left the international issues to be dealt with by those more directly concerned with the development of policy. However, I would not resume my seat without some reference to certain aspects of these questions on which I feel I must express a point of view.
Because of the sustained efforts being made to construe Canada's role at the United Nations as being hostile to our British connection, I think government spokesmen should re-emphasize the fact that the unity of the commonwealth is a primary objective of our foreign policy. There may well be differences of opinion on how that objective is to be served, but there should be no question of the objective itself. At the same time, I am shocked at the line of thought that whatever Britain does in international disputes, Canada should do likewise. This is as much as to say that the particular British government in power must necessarily be assumed to be right by Canadians even though it may not have the full support of the British people themselves; and that whether right or wrong, wise or unwise,

Canada should support British policy. If such an attitude were to prevail, commonwealth solidarity would long since have melted away.
My contention is that the greatest tribute we can pay to Britain or to France is to apply the principles of democracy and respect for law, nurtured by those great countries, as we in Canada see them in making our decisions on international affairs. The best support we can give the commonwealth will come from respect for law and our commitments in accordance with the British tradition. As a nation, Canada must apply these principles as we see them. If we do so, our associates within the commonwealth and the United Nations will know what they can expect of us as an independent nation.
In this vein, I believe, the stand that Canada took on the Suez crisis was decided upon. I should like to commend the government and the Secretary of State for External Affairs in particular for the leadership given on that occasion. Our representatives had not only the will to seek but the wisdom to devise an arrangement which commanded the support of most countries in the Suez crisis.
Let us proceed with the same courage and imagination in dealing with the continuing problems in the Middle East. Having demonstrated our maturity in international affairs we shall find ourselves with more and more responsibility; but I feel confident that with its present leadership in that field, Canada can meet the challenge.


Mr. H. O. White (Middlesex East):: Mr. Speaker, in rising tonight to take part in this budget debate may I say this. It seems to me that as the years go on the business of the nation becomes more and more involved. The presentation by the Minister of Finance of Canada's budget last Thursday bears out that statement. For a nation of 15 million or 16 million people, we are spreading ourselves fairly well all over the world. I sometimes wonder whether or not it is with good results.
The budget presented by the Minister of Finance was, in my opinion, a budget of contradictions, a budget of pretence. To individuals it said, "Spend less and save more". To the government it said, "Spend more and save less". For the hand-outs that are to be given to the public they will have to wait until next July. There was a little for everyone but practically nothing of consequence for anyone. It was a Suez budget, a retreat. There was $1 million for Nasser to clear his canal, and $6 a month for the aged of Canada.
All kinds of suggestions have been made as to what should be done as far as pensions, pensions for the aged and so on, are concerned. Time after time I have urged that
The Budget-Mr. H. O. White it would not be too difficult for the economists and mathematicians to work out a scheme whereby as the cost of living increased so would the pensions, and we would not have this recurring bid for the people's votes every four years. No consideration was given down through the years until we came to an election year; then all of a sudden a large number of people in the country seemed to become of great importance to the government. I am amazed that the government would have the idea that the people could be influenced by an increase of $6 a month.
I was rather amazed to find on reading the press the other evening that the rank and file of the Liberal party were more or less agreed that $10 was the amount they felt would be about in line with the increased cost of living, and that was the amount by which the pension should be increased; but it did not turn out that way. Surely, Mr. Speaker, in a country like Canada, with the vast resources we possess and the prosperity the government have been boasting about, we can afford more generous treatment of the aged and the needy. The cost of living has certainly gone up for those couples raising families. It has gone up more than has the amount of the allowance. There is an age group between six and eight years who have been forgotten entirely.
Much has been said about inflation. The Gordon report envisages continuing inflation; and if the people get the idea that the dollars they save for pension plans and other schemes for the years when they are not going to be profitably engaged are going to shrink, as they have been doing in the last few years, there will be no incentive for our people to save at all. The continuing inflation, which the government would like us to believe they are trying desperately to stop in a futile way with rather futile results, does rob those on fixed incomes and on pensions. As I said before, it is a very serious threat to those people who are trying to provide for their own future. Yet we could not help but commend the long overdue concession in the budget whereby those who are self-employed can provide for pensions, as can those on salaries.
For agriculture there was lots of consideration but no action. Inflation has priced Canadian farmers out of overseas markets. To give you an idea, Mr. Speaker, of what is going on, I noticed in today's Gazette that
12,000	farmers went out of business in the province of Quebec in the last five years. I think that gives a pretty true picture of what is going on in the other provinces as well. Agriculture was promised at the eleventh hour that there would probably be negotiations with Australia, and also with the United States, regarding imports of products into Canada.

The Budget-Mr. H. O. White
There was no relief whatever in the budget for small enterprises, small businessmen, who are actually the backbone of this country. By reading between the lines one could gather that there seemed to be a certain amount of assurance to big business that they could carry on. They were not affected in any way. Apparently also it is good for the federal government to have surpluses, but for the provinces and the municipalities there is deficit financing.
There is no doubt the day is coming when some arrangements will have to be made whereby the municipalities and the provinces will have a greater share of the tax dollar. Their necessities are still taxed. Some luxuries were excused in the budget. I do not think the rank and file of Canadians can take a great deal of satisfaction from the fact that gold and silver plate, crystal and motorcycles are going to be excused in this budget from the excise tax, but there was no relief for the motorists. Probably the motorist is the most heavily taxed individual in this country, yet an automobile is a necessity in our country of vast distances and for transportation to employment. I would venture to say, without going into exact figures, that probably on an average each new automobile is assessed $500 in taxes, and every time a motorist drives up to the gas tank there is another tax.
While I am dealing with the taxes on motor cars, I notice that Mr. William A. Wecker, president of General Motors of Canada, had something to say regarding the tight money policy. He said:
The curbs are one sure road to depression and unemployment.
Ron W. Todgham, president of Chrysler Corporation of Canada, said:
Certain businesses and industries are being singled out to bear the full brunt of a policy of credit curtailment.
In other words the motor car industry is certainly not convinced that this tight money policy is the way to beat inflation, and this budget policy and the credit restrictions are certainly discouraging housing, especially the high interest rates. At the very same time we are told by the Minister of Citizenship and Immigration that he hopes this year will see a greater flow of immigrants to Canada than any previous year. As far as I can see from the budget there was no thought for tomorrow as to what would happen as far as housing is concerned. The only thought for tomorrow was for election day, and not beyond that.
I notice also the government feels that it cannot trust the people with their own money, as it has this policy of draining off money that has been saved and put into the banks, by wage-earners and people who earn their


money in other ways. The government is now taking 31 cents of every dollar the wage-earner and worker in Canada receives, yet back in 1929 only 17 cents of every dollar was taken in taxation. Inflation was not going on at that time. So it is not the amount of money that is left in the hands of the workers that is the cause of inflation.
I suppose there is no doubt in the world that this was an election budget. I hear on very good authority that the next election is going to be fought on a constituency basis, and that the government have prepared for every constituency a statement of the amount of money they have put into it. Well, Mr. Speaker, I will be glad to fight the next election on that issue if that is what the government wants. For every dime they have put into Middlesex East they have taken out a dollar; and what have we to show for it? Not a great deal.


An hon. Member:: You.


Harry Oliver White: I hear also that the government have a fairly substantial fund with which to fight the election. No doubt it will interest the aged and those in need to know that the government have millions of dollars with which to fight the next election but only $6 a month to give to those in receipt of old age pensions.
The payment of $1 million to assist in clearing Nasser's canal sort of gets under my skin. We can build a seaway on the St. Lawrence river for foreign ships, but we do not have a Canadian merchant navy. All the ports along lake Erie-I am thinking particularly of Port Stanley, but this also applies to all ports along lake Erie including the port of Windsor-could use some of the money that has been spent clearing Mr. Nasser's canal, and to much greater effect; and probably it would have been appreciated a great deal more than is the case where it has been spent.
Some time ago a question was raised concerning the amount of foreign control of Canadian resources that has come about. The Minister of Trade and Commerce rather pooh-poohed the idea. He said it was a healthy sign; that we would be developing our resources, and the money would flow back to us. I am not at all certain that this will be the case. The dominion bureau of statistics reports that in 1955 some 47 per cent of the manufacturing in Canada was owned and controlled by foreign capital. In the oil industry it was 70 per cent, and in the mining industry 55 per cent was under foreign control. Some firms from the United States have established themselves in Canada for the sole purpose of participating

in commonwealth trade and commonwealth markets. Some came here and established themselves with a view to partaking of Canada's natural resources because the parent company at home could see that in the not too distant future their resources would be depleted or exhausted.
While I am talking about foreign control of resources I want to give just one example. Not too many years ago Spain was the greatest power in the world, controlling all South America and the Indies, and had what was probably the greatest proportion of the world's natural resources at that time, a greater proportion than any nation has had since. What happened? Spain exported her raw resources and permitted the other nations of the world to process them into finished goods. She had resources of gold, silver, copper and iron, to say nothing of the resources of soil, forest and stream. What actually happened was that those nations which imported the raw materials became the wealthy nations at the expense of the raw materials Spain controlled, and today Spain is a fifth rate world power.
The labour of individuals plus the raw material resources we possess can make Canada a still greater world nation, and when you think we imported into Canada last year $3,600 million worth of goods, a large part of which could have been produced in this country by Canadian labour, you can only come to the conclusion that the policy followed by this government is improvident and shortsighted. It is not looking to the future when we as Canadians fail to do everything humanly possible in the way of developing our own natural resources.
I was interested in noting a statement made in Montreal about a year ago by Mr. Charles St. Pierre, president of the Banque Cana-dienne Nationale. He said:
Canada's exports are declining relatively at a time when the rest of the world is enjoying an expansion of world trade.
I have here the British food fair catalogue of 1956. A personal friend of mine who was a visitor in Britain at the time reported that practically all the commonwealth countries and European nations had exhibits at the trade and food fair held in Britain in 1956, but not one exhibit and not one advertisement of Canada or Canada's products was in evidence at the fair or could be found in the book. On page 12 of the catalogue the following appears:
America Comes to the Fair-The participation is part of a broad program of United States representation in fairs which President Eisenhower has called "of personal concern" to himself, a program through which America hopes "greatly to increase the two-way movement of international commerce".
The Budget-Mr. Benidickson
That is how the United States is stealing away from us some of our traditional markets. The booklet then goes on to say:
The domestic costs of United States foods, because of abundant production resulting from improved methods of cultivation and distribution, have remained low as America's "real wages" have risen. In 1954, one hour's average "take home pay" for the average United States worker brought twice as much food as it did in 1930.
It then goes on to tell about sampling United States foods which were priced in United States dollars and in United Kingdom pounds, shillings and pence. The United States went all out to capture a portion of that market, yet Canada was not even represented. It seems to me we are spending a lot of money on our embassies and representatives abroad, and what are they doing?
There is another contradiction in the budget. A great deal has been said about the Bank of Canada, the control of inflation and the increase in interest rates. It is amazing to observe what happens. As I understand the Bank of Canada it was established to be a servant of the people, but today we find it is a servant of this government. In my opinion the resignation of Mr. Graham Towers presaged a new era of high interest rates and high costs which are detrimental to productive enterprise and are curtailing the supply of the country's goods. It is as much a shortage of goods that causes inflation as an excess of money. So while the experts are telling us that the high interest rate is going to do away with inflation, in many cases it will actually be found to create hardship and a scarcity of goods, and defeat the very purpose which the high interest rate was supposed to accomplish.
I think the most alarming situation we face, among all others, is the fact that last year we had a current account deficit of $1,398 million. There are those who make excuses for that, but I do not think a nation is any different from an individual. An individual cannot go on indefinitely spending more money than he takes in, and the same is true of a nation. It seems to me that it is a very alarming situation to have this huge trade deficit of 848 million, which is growing year by year. Actually what we are doing is employing people in other lands to do our work, and they are collecting the wages rather than our own people.
I intend to support the amendment moved by the hon. member for Greenwood.


Mr. W. M. Benidickson (Parliamentary Assistant to the Minister of Finance):: Mr. Speaker, as we listened this afternoon to the criticism by the financial critic of the opposition I am sure we all thought the proximity to St. Patrick's day had rather got his Irish

The Budget-Mr. Benidickson up, because it was obvious that he seemed to be ag'in everything. I have had a look at the style adopted by the hon. member in criticizing budgets in years gone by and I find that he just seems to have an automatic reaction. If the government are reducing taxes, he says that is a mistake; if they are increasing taxes, that is a mistake, and so on. I think it is rather deplorable and unfortunate for the hon. member that with the growth and development of this country in recent years, year after year he is disappointed that his advice is not taken; yet Canada has been making new records during the time he has been offering contrary advice.
This year the Minister of Finance had the pleasure of reporting the most spectacular economic year in our history. There have been enormous increases in wealth and welfare for most Canadians. More people are at work at higher pay, and I think by every test it has been a year of great advance. None the less the financial critic of the official opposition continues to say that things are being done wrongly.
I was rather surprised at his criticism this year, and his reference to the fact that an election cannot be far removed. I looked up to see what he had said the last time there were similar conditions in so far as election prospects were concerned, and I found the following on page 2147 of Hansard of February 19, 1953, where the hon. member is reported as follows:
-and we are around again to tax reductions which of course, as we know, means an election year. I have tried in this house to speak with moderation, but I confess that when I find this old game worked again it fills me with a great deal of questioning, not to say indignation.
Then what did the hon. member say the other night? When there are no substantial tax reductions the hon. member for Greenwood refers to the trivial reductions, and he wonders how the minister got himself into the position where he could convince himself he could not reduce taxes. He has completely changed his mind. Hon. members can just imagine what the criticism would have been had the Minister of Finance brought in substantial pre-election tax reductions.


James MacKerras Macdonnell: Changed circumstances.


William Moore Benidickson: Another change in circumstances. I was also rather surprised to find that unlike almost any other budget speech the hon. member for Greenwood has made, there was a complete absence this year of quotations from editorials across the country. I have looked fairly carefully at the comments of newspaper observers since the budget was announced, and I think I know the reason for this absence of any reference this year to editorial comment. I find almost

invariably running through these editorials reference to the Minister of Finance in words such as courage, honesty, conviction, restraint, soundness, sticking to his guns, resistance to temptation, things that we cannot help but admire; indeed everything one would expect in connection with an anti-inflationary budget.
But despite some admissions that this is the economic situation facing the minister we had partisan voices raised this afternoon urging heavier tax cuts and higher pensions. These surely have the ring of vote-seeking. I notice that while the amendments moved by both the Conservative party and the C.C.F. suggest further expenditures, they refer only to increases in pensions. There is no advocacy whatever of increases in family allowances beyond those recommended by the minister. It is most peculiar that this government gets condemned by the opposition for spending too much, and then in the next breath they condemn the government for not spending enough.
I should like to refer to some of the suggestions made during the last session of parliament by members of the opposition. This afternoon their spokesman criticized the government for inadequate curbing of spending. I have referred to family allowances, and I was not surprised that the influence of the president of the national Progressive Conservative association did not seem to exercise itself in the phrasing of their amendment this afternoon. Last year the hon. member for Three Rivers (Mr. Balcer) had a resolution on the order paper suggesting that family allowances be increased proportionately with the cost of living as it had increased since 1944. That would have probably involved an increased expenditure in the nature of $255 million.
Recently our hon. friends of the official opposition had a national conclave. Some of the resolutions which seemingly were adopted at that time did not escape national notice. MacLean's magazine had this to say:
But to judge from the resolutions passed by their convention, the Progressive Conservatives oppose big government for only one reason: It isn't big enough.
They proposed to add nearly two hundred million dollars a year to national spending on social benefits. The fact that they proposed at the same time to cut taxes may be dismissed as more or less innocent maundering induced by mike fright. The important thing is that, as of now, the most striking thing about the PC program is that it sounds like the Liberal program, only more so.
Of course I would not agree entirely with that editorial, but in so far as spending is concerned we certainly have plenty of evidence as to the aspirations of our hon. friends. Again referring to last year, and keeping in mind what the treasury board might have

done had it been operating under the advice of my hon. friends in the opposition, I would refer to what the hon. member for Kamloops had to say last year involving expenditures. He also had a resolution on the order paper urging that there should be more than one east-west trans-Canada highway as well as several north-south highways, and he said this project should be financed jointly by the dominion and the provinces.
These were his words, when it came to regard for cost; he said the federal contribution at the present time was "so insignificant as to amount to practically nothing." When he refers to "nothing" he is of course referring to an expenditure to date of about $100 million, an expenditure in the year of which he spoke of $20 million, and this year, as hon. members know, there is $30 million in the estimates for federal contribution to trans-Canada highway.
Another hon. member of the official opposition, the hon. member for Victoria, Ont. (Mr. Hodgson) had this to say; that only "a measly $27 million" was being spent last year by the dominion government with respect to the trans-Canada highway.
Now I see that the hon. member for Eglinton (Mr. Fleming) is in the house. Time after time I have heard him claim that he never advocates extra expenditures, that he is one of those who are economy minded and who are constantly urging the government to reduce its expenditures. In the budget debate of last year he made a speech that would have proved very costly indeed if action were to be taken on the suggestions he advanced. At page 2648 of Hansard he indicated that he would raise income tax exemptions to $1,500 in the case of single men and $3,000 in the case of married men. Worthy and desirable as this might be it would, of course, simply mean that revenue would be reduced on the present tax scales by about $450 million, and probably another reduction in the old age pension fund of $45 million.
The hon. member complained that assistance to the unemployed was inadequate, though a new vote last year provided $25 million for this purpose. He complained that there was nothing by way of assistance to meet the staggering cost of education. He referred to the Beechwood hydro proposal in New Brunswick. He said there was nothing for the municipalities. Hon. members know, of course, that as part of the increase in the expenditures this year this particular vote has been increased by 82715-158J
The Budget-Mr. Benidickson $8,500,000, and I am sure there will be no objection to that on the part of the hon. member for Eglinton.
The hon. member for Restigouche-Mada-waska (Mr. Van Horne), speaking even in the city of my hon. friend from Eglinton to the Spadina Conservatives the other day seemingly referred to the Colombo plan, and damned it by saying that while there was not too much the matter with doing what we could for people abroad, money of that kind should not be put out until we had looked after Canadians in our country first.
But the hon. member for Eglinton had something different to say last year. He said, "The increase was $8 million"-I am speaking of last year-"but it seems to me that for some time there has been more support for extended aid under the Colombo plan in this house than the government has been prepared to advocate." That was despite last year's increase of $8 million to about 34 million dollars.
Then with respect to tax agreements, my hon. friend put on record as involving this government in an expenditure this year of $115 million more than last year, or an increase of about 20 per cent, he said this was "better but, sir"-referring to you, Mr. Speaker-"we must go further and ask ourselves if it is good enough." And, as you recall, he found ten good reasons, with his well known humour, for objecting to the proposal made at that time.
The first reason he gave was that it was not enough for Newfoundland; the second reason that it was not enough for Nova Scotia and so on, ad finitum setting out each of the 10 provinces until reaching the Pacific coast. That was a very costly speech indeed too. Yet these are the same gentlemen who have been condemning this government-and I am sure that later in the debate they will continue to do so-for the size of its estimates, though year after year in the same sessions they are all telling us with regard to so many items that we are not spending a sufficient amount of money.
I take it that the real burden of the amendment that has been proposed this afternoon is that despite the inflationary danger that we have in this country, which the Minister of Finance has pointed to, hon. members opposite seem to think that taxes should be further reduced. As I say, that is something that would please all of us if we felt, in all responsibility, that it could be recommended. But let us just look at the tax rate even as it is at the present time. In the last five years over 80 per cent of the taxpayers of
2496	HOUSE OF
The Budget-Mr. Benidickson this country have had cuts in their personal income taxes that will total at least 25 per cent, and those who benefit the most are of course those in the lower income brackets.
I will just give an illustration of how that is worked out. In this period of five years a person in the income bracket of $3,000 has had a tax reduction amounting to 25.6 per cent; in the $5,000 income bracket, 24.5 per cent; in the $20,000 bracket it is not as substantial, but it is 19.9 per cent; in the $50,000 bracket it is 17.4 per cent, and in the $100,000 bracket the tax reduction amounts to 10.6 per cent. The well known financial and tax publication put out by the tax foundation this year has this to say at page 16:
The rates for 1955 and 1956 In Canada represent the lowest level reached since 1940 and for many taxpayers a level even below that of 1940 has been reached.
Mr. Speaker, I have here a table that takes account of the recent resolution proposed in the budget by which there would be a $100 deduction allowed every taxpayer in lieu of claiming deductions for medical expenses, charitable donations, etc., and these figures compare the tax rates payable in Canada with those payable in the United States based on similar income levels. In computing United States taxes there is an assumption that married taxpayers there would take advantage of the privilege of splitting their incomes, and I think hon. members will find that in every way it is fair. These figures are rather extensive. I can read the document or give illustrations from it, but I think having regard to the new element of the $100 deduction it would be rather useful to have it in Hansard, and I wonder if I may have the permission of the house to file it?


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


William Moore Benidickson: The source of the figures are officials in the income tax department who have been making these calculations recently taking account of the new $100 exemption factor in our tax proposals.


Mr. Deputy Speaker:: Has the hon. gentleman leave to place this table on record in Hansard?


Some hon. Members:: Agreed.


William Moore Benidickson: These figures will show separately the Canadian method of charging for old age security, and they will show separately United States practice. The tables are as follows:


1957 Personal income taxes payable in Canada and U.S.A.
Single taxpayer-no dependents				
Incomes	Tax in Canada	Tax in U.S.A.	1,000	< ->	60	(22)1,200	13	( 4)	96	(27)1,500	52	(10)	150	(34)2,000	117	(20)	240	(45)3,000	265	(40)	422	(67)5,000	603	(60)	818	(94)10,000	1,752	(60)	2,096	(94)20,000	5,537	(60)	6,412	(94)50,000	20,077	(60)	25,668	(94)Married taxpayer-no	dependents	Incomes	Tax in Canada	Tax in U.S.A.	2,000	-	( -)	120	(45)2,500	52	(10)	210	(56)3,000	117	(20)	300	(67)5,000	433	(60)	660	(94)10,000	1,476	(60)	1,636	(94)20,000	5,107	(60)	4,532	(94)50,000	19,547	(60)	19,002	(94)Married	taxpayer with two	children eligible	in	Canada for	family	allowances	Incomes	Tax in Canada	Tax in U.S.A.	2,500	13	( 4)	-	(56)3,000	78	(14)	60	(67)5,000	382	(34)	420	(94)10,000	1,404	(60)	1,372	(94)20,000	4,978	(60)	4,124	(94)50,000	19,388	(60)	18,294	(94)
Amounts shown in brackets are payable in addition to the income taxes shown. These amounts are the old age security tax of 2 per cent with a maximum of $60 in Canada, and the old age and survivors insurance contribution of 2\ per cent with a maximum of $94.50 in the United States.
The calculation of these taxes takes into account the $100 deduction allowed to every taxpayer in Canada in lieu of claiming deductions for medical expenses, charitable donations, and union dues, and the optional standard deduction, of 10 per cent of income with a maximum of $1,000 allowed to every taxpayer in the United States in lieu of claiming medical expenses, charitable donations and a number of other deductions.
In computing the United States taxes it is assumed that married taxpayers take advantage of the privilege of splitting incomes.
The taxes shown for each country are federal taxes only. The federal income tax paid by taxpayers residing in Quebec is 10 per cent less than the amounts shown. The Quebec provincial tax has higher exemptions than the federal tax but may go almost up to 15 per cent of the federal taxes shown. In the United States about 30 states levy personal income taxes which are in addition to the federal taxes. (In the United States state taxes are deductible from income in computing federal income tax if the taxpayer does not take the optional standard deduction. The state taxes are not deductible from the federal tax).
The tax paid by taxpayers with children in Canada is usually larger than the tax paid in the United States but the Canadian taxpayer receives family allowances of $72 or $96 per child. Such payments are not received in the United States.
Now similarly, in so far as corporation taxes are concerned, we sometimes think that our rates are high, but probably Canadians do not know their good fortune until they compare what they are paying with what is being paid in certain other countries which can easily be compared with Canada.

I think, generally most of us believe there is no country with which a comparison is more fitting than the United States. I do not know whether it is generally understood that so far as corporation taxes are concerned, our taxes in Canada are much lower than those in the United States. The Canadian rate for small businesses, that is businesses with a profit of $20,000 or less, is only 20 per cent, and then our tax rate is 47 per cent on the excess over $20,000. This 47 per cent includes, of course, the 2 per cent for old age security. The rate in the United States is 30 per cent on the first $25,000 profit and 52 per cent on the excess over $25,000. In addition, corporations in the United States employing people would have to pay besides as the employers' share for the equivalent of our old age security arrangements, though I will confess that while these security premiums are more than in Canada the benefits under their pension schemes are higher than in this country.


Mr. Palletl:: What	about	the	basis	for
arriving at the taxable income? You had better enlarge on that to give a true picture.


William Moore Benidickson: I	think	you	will	findthat the authorized deductions for expenses are very similar. I will also remind my hon. friend that there is only one province in Canada, and very recently so, that proposes to extract a corporation tax of 2 per cent beyond the rate of 47 per cent that is payable to the federal government in most provinces. In the United States there are 33 states that levy taxes	on the	income of	corporations. The rates	go as	high	as 8	per
cent, but I will say that from 3 to 5 per cent are the most common rates of state tax.
I find that when it comes to spending my hon. friends opposite, particularly in the official opposition, take a completely different attitude to an increase in the annual estimates in the case of the federal government to their attitude when there is an increase in the estimates of Conservative governments in the province of Ontario and in the province of New Brunswick. Both these governments under Conservative administrations are proposing to their legislatures spending at all-time highs. I do not think any of my hon. friends can suggest that any Conservative government in office has given any demonstration of being able to trim its expenditures, except one; and I think we all recall that when they last formed a federal administration there was a great deal of trimming done and a great number of poor individuals thought they were the ones who got most of the trimming.
Even some of their journalistic friends seem to look through one pair of glasses
The Budget-Mr. Benidickson when they are looking upon federal estimates and another pair of glasses when it comes to the administration in Toronto. I am thinking here of the comment that was made by a well-known Toronto paper, the Toronto Globe and Mail, when the provincial administration under Conservative leadership recently submitted its new budget for the coming year. This was the editorial comment on February 22:
The extraordinary record of constructive expenditure which the Frost administration has established over the years has reached new levels of generosity in the new budget presented yesterday by provincial treasurer Dana Porter. The government's proposals increase grants in almost every field, in total to a sensational degree.


Donald Methuen Fleming: Do you disapprove of its grants to the municipalities?


William Moore Benidickson: This is in reference to the total budget, and these are the opening words of a long editorial of great praise for the budget which increased to all-time highs the provincial proposals for expenditures.


Donald Methuen Fleming: Does my hon. friend disapprove the record grants to the municipalities and for education?


William Moore Benidickson: No. I am just saying that no Conservative government that I know of has been trimming its expenditures, yet my hon. friend continually asserts that this government should be reducing its expenditures and at the same time and in the same session, as I have said, he is advocating increased expenditures of the widest possible nature and extent. I have indicated what the thought is of a well-known Conservative paper when it comes to increased expenditures on the part of the Conservative administration in Toronto. Yet the other day in an editorial comment on the new federal government budget it used such words as "extortion", "grab", "squandering" and the like. Quite a contrast.


Donald Methuen Fleming: Hear, hear.


William Moore Benidickson: I find that my hon. friends seem to do just about the same.


An hon. Member:: They are all tarred with the same brush.


William Moore Benidickson: I made some notes of
some of the things the hon. member for Greenwood said this afternoon. He made some references that require a little comment. Very early in his remarks he made the statement that there was nothing in the budget for the ordinary taxpayers. It is true, as I have pointed out, that the Minister of Finance had to use restraint and responsibility, and I think Canadians generally across the country have given him credit for doing these things. But none the less with the amount of tax

The Budget-Mr. Benidickson revenues he felt he could forscKe I think it is generally agreed that he usta mat forsaking of tax or distribution of revenue to the greatest possible advantage of the section of the people who would suffer most under present conditions of inflation. Indeed, he did so to the extent that it is estimated that some 4J million people in Canada will get some benefit from the increased welfare payments that have been provided by the budget.
I felt that the hon. member used another striking phrase. I have the idea that my hon. friend in introducing it very early in his speech may have thought it would get some attention and probably publicity. He made the statement that it was better to take off the tax on children's shoes than on chewing gum. If the public generally does not know, I think members of the house know that we have no excise tax on children's shoes. What was taken off was the excise tax on chewing gum, but chewing gum continues to bear a sales tax.
Another statement made by the hon. member for Greenwood this afternoon was that too much was deducted in concealed taxes by the practices of this government. I think my hon. friend did not go back far enough historically before he made that statement, because he is pretty vulnerable. The last time there was a federal Conservative administration, in 1935, when the finance minister was Mr. Rhodes, I believe, $76 million out of $336 million were direct taxes, or only 22.6 per cent. But you will find that in the current estimates for 1957-58 some $2,910 million out of $4,835 million are direct taxes, and that the percentage is up to 65 per cent.
Much was said this afternoon about the surplus. I have no doubt that public memories are short and there is an effort being made to forget that it is quite possible to go from the black to the red. Indeed, this is the third budget of the present Minister of Finance and I remind the house that in the first two budgets presented by him there were deficits. Those deficits amounted to $185 million. The present surplus is $282 million. Over the three year average the surplus only amounts to a little more than $30 million a year. Every finance minister will realize that any sudden or unusual increase in the gross national product is reflected very rapidly in tax revenue but, of course, the reverse is also true.
I noticed that my hon. friend put, as he should, considerable emphasis on the inflationary situation in the country. He quoted from the Bank of Canada report, from the Bank of Montreal report and from the National City Bank of New York report, and pointed out that all assert that inflation is an enemy to be fought, that it defrauds savers, pensioners and wage earners who cannot bargain freely, and so on. But as in many other
fMr. Benidickson.]
budget speeches of my hon. friend, I have come to the conclusion that very early he had looked at a well known definition of politics, which states that politics is the art of constantly looking for trouble, generally finding it, diagnosing it incorrectly and applying to it the wrong remedies.


Donald Methuen Fleming: That is the budget, all right.


William Moore Benidickson: Sometimes I felt that my hon. friend would have a full score in his budget speeches. I will not say that this time. I think probably he has found some trouble and has diagnosed it. I believe he must have diagnosed it incorrectly. Certainly he is applying the wrong remedy, because I do not think he could find an economist anywhere who would suggest that the remedy for the condition in which we find ourselves today is an increase in payments and a reduction of any great consequence in taxation.
Then again he made quite a point this afternoon about inflation. I think we all felt that he surely must be one who was seeking to be a soldier in the fight against inflation. But if we examine very carefully not only what he said the other night but what he said two or three times this afternoon, I think we shall find that at the same time he was saying that he wants to join this army fighting inflation, he was quite prepared to stab in the back the institution and the individual who more than anyone else is probably charged by parliament with responsibility for fighting inflation and maintaining the value of our dollar.


Donald Methuen Fleming: Why do you spoil an able speech with a very nasty smear like that?


William Moore Benidickson: If my hon. friend was in the house he should understand my point. I will give him illustrations of the arguments used by the hon. member for Greenwood.


Donald Methuen Fleming: I was speaking about the expression "stab in the back." There is no occasion for charging any stabbing in the back. Why make a smear like that?


William Moore Benidickson: My hon. friend made a great and strong attempt to say he was prepared to be in this army fighting inflation. At the same time he went on to say that as to this institution the central bank, which has been fighting this enemy valiantly, as I think all will agree, he thought it was beyond their power to do all they attempted to do with respect to banking reserves. He went on to say that he thought it was beyond the powers of the Bank of Canada to call in people who are involved in instalment credit, and so on. Surely my hon. friend cannot have it both ways.


James MacKerras Macdonnell: May I say this. That was my honest opinion. Why is that a stab in the back? I resent that phrase very much, especially coming from you.


William Moore Benidickson: Shall I say this then, Mr. Speaker? At the same time he was saying that this inflation should be fought he, shall I say, seems to be doing everything possible to weaken the activity and the attempts of the central bank to defeat this enemy he mentioned.


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


William Moore Benidickson: Yes.


James MacKerras Macdonnell: I was not so dense that I did not realize that there was an apparent contradiction.


Some hon. Members:: Question.


James MacKerras Macdonnell: But I ask the hon. gentleman whether he does not think there comes a time when justice has to be done, and when there are certain people who cannot be asked to bear the load for the rest of us without some assistance.


William Moore Benidickson: I certainly do not think my hon. friend was offering very much assistance when this afternoon he was doing everything possible to try to reduce the authority of the bank, admittedly, in merely calling conferences and in doing things to try to persuade people to reduce the rate of lending of money. Whether or not it was specifically within the powers outlined in the Bank of Canada Act, it was recognized that in so far as instalment credit was concerned, it was a voluntary conference. It was an attempt to talk things over. It was an attempt to see whether some co-operation should not be given, and so on. Similarly, I think many of the conferences with the commercial banks have been on that same basis.
There has also been some criticism that the effect of tight money does not apply equally. That, of course, is to be admitted. I think that was mentioned in the central bank's report. Admittedly, higher interest rates are not painless. But I think there
The Budget-Mr. Benidickson will be fewer casualties this way and less social stress than with unrestricted competition for goods with higher price tags on them. In the kind of boom which we have been having, where the characteristic feature is an extraordinary increase in the volume of new capital investment by private business, it is inevitable that some people, some businesses and some institutions should find themselves losing out in the competition for what must in any event be a limited supply of resources.
The influence of the central bank is, however, necessarily directed to the over-all credit situation. There is no way open to the central bank to have a special monetary policy for particular classes of borrowers, particular industries, or particular geographical areas. Such selective action or discrimmination lies beyond the scope of monetary policy.


Donald Methuen Fleming: Mr. Speaker, I move the adjournment of the debate.


Stanley Howard Knowles: Order.


Mr. Speaker:: Order. The hon. member for Dauphin (Mr. Zaplitny) was on his feet, and I recognize the hon. member.


Mr. Zaplitny:: Mr. Speaker, may I move the adjournment of the debate.
On motion of Mr. Zaplitny the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we shall return to the further supplementary estimates we were discussing yesterday. After they have been carried we shall take the following bills: the house in committee of the whole on Bill No. 157, to amend the Prairie Farm Assistance Act; then second reading of the bill to amend the Prairie Grain Producers Interim Financing Act, the bill to amend the Royal Canadian Mounted Police Act and the bill to incorporate the Windsor harbour commissioners.


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