1958-07-29

MISCELLANEOUS PRIVATE BILLS

[Stage Direction]
Sixth report of standing committee on miscellaneous private bills.-Mr. McCleave.


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, I should like to advise the house that the United Kingdom government has announced today its decision to abolish restrictions on imports of industrial chemicals from Canada and other dollar countries. This major new measure of relaxation is to take effect on August 18. These discriminatory restrictions have been an impediment to the development of our trade in this field for many years.
With only a few exceptions, all Canadian chemicals and allied products of a kind used industrially will now be completely free of import controls in the United Kingdom. They include a number of important chemical products with respect to which we have been seeking improved access to the United Kingdom market.
Total Canadian exports of industrial chemicals in this field amounted in 1957 to some $130 million, of which about 10 per cent went to the United Kingdom. With the removal of restrictions our producers and exporters will be in a position to compete freely in the United Kingdom without quantitative limitation, and we are hopeful that this may lead to a substantial increase in our chemical exports to Britain.



NEW QUOTA ANNOUNCED BY UNITED KINGDOM

Gordon Minto Churchill: I should also like to take this opportunity to refer to the new quota arrangements announced recently by the United Kingdom for fresh apples, which should provide increased opportunities for sales of Canadian apples. The new apple quota which has been established on a weight basis amalgamates and replaces the former separate quotas for western Europe and certain other countries, and North America. The
new combined quota provides for total imports during the year beginning July 1, 1958, of 1,500,000 long hundredweights of which
300.000	long hundredweights may be imported in the period July to December, 1958, and
1.200.000	long hundredweights in the period January to June, 1959.
I am sure we all welcome this response by the United Kingdom government to the representations we have been making to them. These new measures are a major contribution by the United Kingdom toward providing new opportunities for expanding trade between our two countries.


Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, having reference directly to the information just given us by the Minister of Trade and Commerce, would he say whether or not these were unilateral concessions on the part of Great Britain? If not, what concessions did Canada give in return?


Gordon Minto Churchill: Mr. Speaker, we have been carrying on discussions with the United Kingdom for a considerable length of time with regard to these two matters to which I have now drawn attention. The one with regard to chemicals obviously will apply throughout the world, because they are clearing the import controls in the United Kingdom. The apple quota again is open to all, and not solely to Canada.

On the orders of the day;


Mr. H. W. Herridge (Kooienay Wesi):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce. Unfortunately I was unavoidably detained for a few minutes, and I did not hear the minister's statement on the apple quota allocated to the North American continent. But in any event I want to ask him this question.
As, according to newspaper reports, the meeting of the international apple association commenced in Montreal yesterday, and in view of the fact that a common marketing plan for apples is being considered, would the minister inform the house if the appropriate officials of his department will be in attendance at this meeting?


Gordon Minto Churchill: Mr. Speaker, this question, of which the hon. member gave me notice, was

Inquiries of the Ministry quite properly addressed to the Minister of Agriculture for whom I am substituting on this occasion.
The answer is that the meeting in question is being held by representatives of the apple industries of Canada and the United States. An officer of the Department of Agriculture is attending as an observer to obtain whatever information is available as to apple crop and market prospects, but he will not participate in decisions or recommendations, which are purely those of the industry representatives.


Herbert Wilfred Herridge: I am glad to hear that, Mr. Speaker.



REPORTED ARRANGEMENTS FOR SHIPMENT OF STRATEGIC MATERIALS TO COMMUNIST COUNTRIES

[Stage Direction]
On the orders of the day:
Mr. G. J. Mcllraiih (Ottawa West):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. I regret that I was only able to give him notice a few moments before the opening of this sitting, so he might wish to treat the question as notice. My question is based on a press dispatch from Washington to the effect that Canada has presented for approval in Washington a number of export cases for shipment of strategic materials including sulphite pulp to communist countries. Can the minister tell us how many cases have been presented for approval, what products they cover and whether or not any approvals have been granted?


Gordon Minto Churchill: Mr. Speaker, I have not had an opportunity to examine this press dispatch, but I will have an answer for the hon. member tomorrow.



REPORTED REDUCTION BY U.K. IN PROHIBITED EXPORTS TO COMMUNIST COUNTRIES

[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, may I ask the Minister of Trade and Commerce a question. Has his attention been called to a report in the press today to the effect that by unilateral action the government of Great Britain has reduced the list of goods prohibited for export to China, and does the Canadian government propose to take the same kind of action?


Gordon Minto Churchill: Mr. Speaker, that is another press report I have not seen, but I shall look into it and endeavour to have an answer for the hon. member tomorrow.



REPORTED PROPOSAL TO ABOLISH TARIFFS BETWEEN CANADA AND U.S.

[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce arising out of an U.P.I. dispatch dated Washington, wherein it states that Senator Neuberger today proposed abolishing all tariffs between the United States and Canada on a five-year trial basis. I am wondering if the government has given any consideration at all to the advantages or disadvantages of a free trade area between Canada and the United States, and whether any negotiations are taking place at this time revolving around this very important proposal put forward by Senator Neuberger?


Gordon Minto Churchill: Mr. Speaker, I have not seen the full text of Senator Neuberger's statement; therefore my answer to the hon. member is that no action is being taken by the government at the present time.


Hazen Robert Argue: I wonder if the minister could inform the house whether he or his department have considered in any way the implications of a free trade area between Canada and the United States? I would have thought some study would be going on in the department, even if merely on a routine basis.


Gordon Minto Churchill: Mr. Speaker, the Department of Trade and Commerce is very active at all times in its efforts-and they have been successful-to stimulate trade between Canada and other countries. The particular subject mentioned by the hon. member and which has been mentioned by Senator Neuberger is not under study at the moment.



FISHERIES


[Stage Direction]
On the orders of the day:
Hon. J. A. MacLean (Minister of Fisheries):: Mr. Speaker, over the past several weeks a number of questions have been raised in this house concerning the 1958 production and marketing of salted cod. This product is of major significance to the economy and the fishermen of Newfoundland, Quebec and the maritime provinces.
Much of the concern expressed by members of this house and by all branches of the industry arose from reports that from 1,500 to 2,000 additional fishermen would be operating in Newfoundland this year. There was also fear that above average stocks of 1957 fish would be carried over into the new marketing year.
The whole question was reviewed by the fisheries prices support board here in Ottawa

on July 22 and July 23. The board found that considerable improvement had occurred in the statistical position from a marketing point of view. It is now estimated that the 1958 production, even under most favourable conditions for the balance of the fishing season, will not exceed that of 1957. Furthermore, stocks have been reduced to normal levels for this time of year.
In view of these developments and bearing in mind that production in most competing countries is not yet known, the board decided to adjourn its meeting and will meet again early in September in Halifax and St. John's. At that time the board should be in a position to make a recommendation to the government based on more complete facts.
While prices to fishermen have not yet been set for the 1958 production, the board feels that in view of the reduced supply position commercial market prices will be established at much better levels than were previously anticipated. I have asked the board to watch the situation very carefully, and I can assure the fishermen that their interests will be constantly borne in mind.
In so far as the marketing aspect of the problem is concerned, the position is much improved over what it was a few weeks ago.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I would like to ask the Secretary of State for External Affairs whether the government is giving consideration to recognition of the new government of Iraq.


Hon. Sidney E. Smith (Secretary of Slate for External Affairs):: Mr. Speaker, in view of the fact that there is no mutual diplomatic representation between our country and Iraq, this is not a matter of urgent concern to Canada, but I can assure the Leader of the Opposition that the matter is under consideration.


Hazen Robert Argue: I wonder if the Secretary of State for External Affairs could tell the house what Canada's attitude has been toward seating a delegate to the United Nations from the new government of Iraq? Does the minister feel that a voice from the new government should be heard at the United Nations in the interests of clarifying the position taken by the new government with regard to the international crisis in the Middle East?
Inquiries of the Ministry


Sidney Earle Smith: That matter is under consideration now in New York by the delegates to the security council, and I give the same answer I gave before: the attitude of Canada in this respect is under consideration.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Sidney Earle Smith: Mr. Speaker, I desire to amplify an answer I gave to a question addressed to me by the Leader of the Opposition on Saturday last. The question asked was as follows:
In view of the Prime Minister's statement last night calling for an increase of $3 billion in the resources of the international monetary fund and a very large increase in the lending capacity of the international bank, can the minister tell us whether the Canadian delegation to the economic and social council of the United Nations, which is currently meeting at Geneva, has been instructed to pursue these important objectives and, if so, with what result?
The interim answer which I gave on Saturday last was in part as follows:
I am not clear that this is a matter for representation to the economic and social council. We are represented on the boards of the international bank and the monetary fund.
To this answer I would like to add the following statement. The annual reports of the monetary fund and of the world bank are considered by the economic and social council, as the hon. member knows. However, this item was on the agenda of the council at its 25th session in New York last spring, not at the current session. Normally, the affairs of these two bodies are not studied at the summer session, the meeting now under way in Geneva. In any event the membership of the economic and social council is such that no very useful purpose would be served by seeking to have these matters discussed in that forum.
It will, I think, be readily appreciated that the ideas put forward by the Prime Minister could more appropriately be explored in the first instance within the organizations involved, that is to say the international monetary fund and the international bank.
Canada is represented on the boards of those two organizations. Those meetings will be held in New Delhi beginning October 6.


Lester Bowles Pearson: Is it, then, the intention of the government to press this very important initiative which the Prime Minister announced the other night at the next meeting of the boards of the two organizations in question?
2808	HOUSE OF
Inquiries of the Ministry


Sidney Earle Smith: Instructions have not yet been formulated for the representatives of Canada at the meeting in New Delhi on October 6.



PENSIONS


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I
address a question to the Minister of Transport. In view of the statement made yesterday by the Minister of Finance concerning certain increases to superannuated civil servants and others, I should like to ask if similar action will be taken with regard to the retired employees of the Canadian National Railways.


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, that matter is under consideration, but no immediate action is planned.



COMBINES INVESTIGATION ACT


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I wish to address a question to the Minister of Justice. On Wednesday last I inquired as to the action being taken with respect to the possible prosecution of a sugar company in western Canada as the result of a report of the restrictive trade practices commission; and because my question was without notice the minister's answer at that time was somewhat incomplete. I wonder if he could complete his answer now?


Hon. E. D. Fulton (Minister of Justice):: Yes, Mr. Speaker. I apologize for the delay in completing my answer, and I am now able to report that instructions were given to Mr. F. O. Meighen, Q.C., of Brandon, Manitoba, on July 10, and that he has accepted those instructions. His terms of reference were to proceed with a prosecution and an application for an order dissolving the merger, unless he should come to the conclusion, in the course of preparing for trial, that the evidence is not sufficient.



CANADIAN NATIONAL STEAMSHIPS


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, may I direct a question to the Minister of Transport. Can he confirm or 

deny the report that the eight ships of the Canadian National Steamships have been sold to a Panamanian company, and whether or not two of his officers were in Panama to arrange for the transfer of the flag?


George Harris Hees: I have no knowledge of any
such sale, or any information about my officers being in Panama for such a purpose.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I should like to direct a question to the Minister of National Revenue in his role as spokesman in the house for the Canadian Broadcasting Corporation. The question relates to a story which appeared in the Ottawa Citizen on July 26 by Mr. Charles Lynch regarding question No. 92 on the order paper. Can the minister inform the house whether there are grounds for the implication contained in that story, to the effect that the writer has had fewer appearances on C.B.C. television as a result of the placing of this question on the order paper?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, I cannot give any definite answer to that question. I received no notice of the hon. gentleman's intention to raise it. I may say, however, I am quite sure that the C.B.C., being an independent crown corporation, is not motivated in any way by questions which may be asked in the House of Commons, and I am convinced that Mr. Lynch has not been prejudiced because of any question which has been asked. I must say, however, having read the story in the Citizen the other day, that I wondered if I should not allow the question to reach No. 1 on the order paper in order to give full recognition to what I assumed was the facetious article written by Mr. Lynch the other day.



CANADIAN FARM LOAN ACT


Hon. Donald M. Fleming (Minisler of Finance) moved: that the house go into committee to consider Bill No. C-38, to amend the Canadian Farm Loan Act.
Motion agreed to and the house went into committee, Mr. Rea in the chair.

On clause 1-Capital stock.


Hazen Robert Argue: Mr. Chairman, on clause 1, I wonder whether the minister would care to answer a question that has been discussed among farm organizations from time to time. As the minister knows, I was in Montreal last week and did not have a chance to attend meetings of the committee at which this question may or may not have been asked during the course of its deliberations.
There has been a feeling in farm organizations that the Canadian Farm Loan Act might lend itself to the administration of the Department of Agriculture perhaps more readily than it does to that of the Department of Finance. There are a great many people who feel that the knowledge of the agricultural industry which is possessed by persons attached to the Department of Agriculture would make the operation of this act more effective than under the Department of Finance, where, I am sure the minister will agree, there are not nearly as many people with a thorough knowledge of agriculture as there would be in the Department of Agriculture.
On an offhand basis it would seem to me a sensible suggestion. I do not wish the minister to take this as any criticism either of himself or of his department, but the minister well knows there are many instances when at times it is just a debatable point whether a particular act can be better administered by one department as compared with another. I wonder whether there is any intention to transfer this act to the Department of Agriculture?


Donald Methuen Fleming: Mr. Chairman, when I spoke in the house at the resolution stage on July 16 I had this to say, which is to be found at page 2297 of Hansard.:
The government is keenly aware of the importance of agricultural credit and finance for the prosperity of our farming community. There are on the statute books three important acts which deal with the capital need of farmers, namely the Canadian Farm Loan Act; the Farm Improvement Loans Act which deals with intermediate credit, particularly for financing the purchase of farm equipment; and the Veterans' Land Act administered by my colleague the Minister of Veterans Affairs. At the present time the government is engaged in a comprehensive study and review of all three acts with a view to determining where enlargement of scope, expansion of function or improvement in the methods of operation may be required.
Now, questions as to administration will naturally be included within the scope of questions that are under consideration, but I should like to state that I think it can be said that under the Department of Finance- I am speaking only for the last year; I make 57071-3-177
Canadian Farm Loan Act no comment as to previous times-the Canadian farm loan board has given very sympathetic administration to the provisions of this act. But the question my hon. friend raises is obviously for consideration in the wider context of the three measures I referred to. Two are administered under the Department of Finance at the present time and the other under the Department of Veterans Affairs.


Hazen Robert Argue: I wonder whether the minister would bring us up to date on the position the studies are now at regarding the plan of supervising agricultural credit, which relates to three avenues of credit. I am wondering whether any intensive study is being made toward providing supervised farm credit more in keeping with the activities of the Veterans' Land Act and bringing this act at a later date into such a plan.
The minister has said there has been a more lenient approach to farm credit to his knowledge as minister in charge of the present Canadian farm loan board. This is undoubtedly correct, but I do think the change took place following meetings of the banking and commerce committee back in 1956, and that this more lenient approach, for lack of a better term, was something that was started then. It has been accelerated in the meantime, and has come to the position now where the board looks more generously upon applications, so far as approval is concerned, than they did in the past. I would appreciate from the minister any information he can give on the progress of studies leading toward a supervised system of agricultural credit, perhaps along the lines of the well established credit system in the United States.


Donald Methuen Fleming: I think any comment on my part in connection with that subject would be premature now. Suffice it to say that the whole subject of farm credit is under review, and that review will likely continue for some time yet.


Hazen Robert Argue: Can the minister say whether or not some conclusion is expected within the next few months, and whether the government is going to move in this general field of farm credit now or at the next session? The minister knows his party has made a particular point of the importance of agricultural credit, and I think we would be all interested in learning whether the studies will have reached a point of offering the house certain recommendations for action at an early date?


Donald Methuen Fleming: It is fully expected
that the review will be completed before
the next session.

Canadian Farm Loan Act (Translation) :


Mr. Boulanger:: Mr. Chairman, I would like to say a few words in connection with this bill and express two opinions: first that we are in favour of this legislation and, secondly, that it is not quite the farm credit act wanted by the people of this country. Amendment of our farm legislation is indeed necessary to meet the requirements of farmers, and particularly young people who want to settle on their own but have little or no capital to do so.
We realize that very many farmers' sons, really cut out for this work, are only waiting for a chance to set up a profitable farming business. Today they lack this opportunity, and that is why they quit the farm and seek jobs in the cities, where they sometimes swell the ranks of the unemployed.
Another group of people who need more capital are the farmers whose borrowing power is limited. They need more funds to improve their farming methods, to buy more equipment and to produce more efficiently.
All farm organizations in Canada have agreed to petition the government for improved, more up-to-date legislation. Several hon. members have made similar claims in the house. The government recognized those needs and, before the election, made various promises; however it seems that in the meantime, hon. ministers have lost their memory. Indeed, we just need to recall statements by the Minister of Agriculture (Mr. Harkness), more particularly to the effect that our farm credit legislation should be amended. He said among other things that this legislation should be modified in order to improve the farmer's position by allowing him to buy new land and to have better machinery. Moreover, he repeated those statements in every part of this country.
At a recent meeting of the agricultural committee, government members put forward a number of very well taken points, stating that the basis for farm appraisals was not generous enough and that the maximum amount of loans allowed was not sufficiently high as yet. I hope that these same hon. members will have the courage to rise today and to repeat those statements.
In the province of Quebec we look to an improvement in loan conditions, so that those farmers who do not pay homage to the Union Nationale may be allowed to borrow-


Some hon. Members:: Oh, oh.


Samuel Boulanger: We know, Mr. Chairman, that the province of Quebec has an extremely generous farm credit act; unfortunately, it is of benefit only to people dominated by political organizations-[DOT]
[Mr. Fleming (Eglinton).l


An hon. Member:: Order!


Samuel Boulanger: At the risk of shocking certain hon. members I must say, in the light of what I have learned since I have been sitting in this house, that certain small farmers of my constituency were unable to obtain loans under provincial legislation because they refuse to kowtow to members of the Union Nationale.


Some hon. Members:: Order!


Samuel Boulanger: Regulations governing the granting of loans in the province of Quebec are not really administered by the provincial farm credit board but by parish politicians and members of the Union Nationale.
As at December 31, 1956, the province of Quebec had made 51,204 loans-


The Chairman:: Order! I am sorry to interrupt the hon. member, but he will admit that his remarks have nothing to do with the legislation under discussion. I would therefore ask him to be so kind as to keep to the provisions of the bill now before the house.


Lionel Chevrier: Mr. Chairman, may I draw your attention to the fact that when a bill is being considered, the debate on section one is of general interest, and the fact that the hon. member for Drummond-Arthabaska (Mr. Boulanger) is making general remarks, although of a political nature, is, in my estimation within the scope of the debate on this bill. I would ask you, Mr. Chairman, to kindly consider that aspect of the matter.


Joseph Pierre Albert Sévigny: I respect the opinion expressed by the hon. member for Laurier (Mr. Chevrier), whose remarks are fairly well taken. However, I would ask the hon. member for Drummond-Arthabaska to stick as much as possible to the terms of the bill now under study, without entering into any details of provincial politics.


Samuel Boulanger: Mr. Chairman, I was just about to say that on December 31, 1956, under the provincial farm loan program, 51,204 loans, totalling 143 million dollars, have been granted. I am inclined to believe that those loans were made to help the farmers.
My reason for making those remarks is to let farmers know, who cannot now secure a loan from the province of Quebec, that they can do so under the Canadian Farm Loan Act, while abiding by the rules governing that legislation.
At this point, I should like to congratulate the employees of the Canadian Farm Loan Board whose impartial decisions have made it possible for all Canadians to benefit from this act.

Mr. Chairman, I should also like to draw the attention of the hon. Minister of Finance (Mr. Fleming), to the importance of introducing, as soon as possible, a further amendment to that act. I shall have the opportunity of outlining the views of the Liberal party and my own, when a certain resolution is introduced, which will be shortly, I hope.
(Text):


Mr. Gour:: Mr. Chairman, I think I will speak in English in order to be better understood. I am much in favour of this resolution. I should like the amount to be more, because $120 million is not so much when it is a matter of lending money to all the farmers of this country.
There is one thing 1 am glad to note, namely that something may be done for the farmers who were promised so much during the 1957 campaign and the 1958 campaign. I am glad to find that something will be done before two years have passed. Up to now nothing has been done, except a little bit here and a little bit there that does not mean anything. I hope the loans under this act will be handled in somewhat the same way as loans are handled for housing purposes. As to the appraisers, they are very good men.
I am not in a position to comment on what was said by my colleague from Quebec. There are no politics in Ontario on the question of farm loans. The Ontario government has done enough bad things without that. Therefore we must give them credit. The Ontario government do not engage in politics in any way in that respect except that when they make a loan to the young people, they take only the cream of the young. Maybe a little bit of politics enters into the matter, but not enough to do any harm.
What we need in this country is a provision for farm loans up to at least 90 per cent of the appraised value. As the situation is at present in Ontario and part of Quebec -and I think the same is true to some extent in all parts of Canada-the appraiser appraises the buildings at nothing. He fixes the value at $8,000, and that is only on the house. If it were in a small village like my own or in a place like Eastview near Ottawa, that building would be worth $10,000, but it is on a farm and so the valuation is less. As for the big barn and the other buildings, they do not allow much; they just put on a small valuation.
57071-3-I77i
Canadian Farm Loan Act
Most of the appraisals are made by good, sound appraisers. But when the appraised value is only $8,000, and loans will be made up to only 60 per cent of the appraised value, therefore you could get a loan on 100 acres of $5,000 to $6,000. They cannot do anything with that when consideration is given to the cost of farm machinery and equipment, which is high. A good Liberal government introduced legislation providing loans for the purchase of machines and the repairs of buildings, but the Conservative government has done nothing up to now. The situation is worse now than it was before.
I shall be happy to see this bill passed as quickly as possible. I hope that my good friend the Minister of Agriculture will have a free hand to lend money through the Minister of Finance and through the cabinet, because right now the people need more credit than they ever needed it before. Machinery and things of that sort are very expensive.
As to the rate of interest it should not be a cent more than 4 per cent. If you want to help the farmer that is the only way to do it. Provision should also be made for loans up to at least 90 per cent of the first $10,000 of valuation. The rate of interest should be 4 per cent and repayment should be spread over 30 years, with the possibility of repaying at any time without notice. I will give full credit to the experts of the government, because we have good men in the federal Department of Agriculture, first class men, and we also have good men in the department of agriculture of Ontario. I am speaking for Ontario right now. We have good and clever people who carry on to the best of their ability.
What we need is the same thing we have for our veterans under the Veterans' Land Act. We need experts to go out to these farmers and tell them gently and quietly how best to carry on. Give a chance to these farmers to produce more. No doubt they will not say that because some are afraid of the vote, but for 50 per cent of the farmers I know, if they had these experts from the federal government and the provincial government they could be educated, if I may use that word. In French I will use another... (Translation):
-helping those people to improve their farming methods, to take better care of their livestock, they would, I believe, increase their income by 50 to 100 per cent.

Canadian Farm Loan Act
(Text):
I will not delay the bill. I should be more pleased if it provided for more, because after all we lend money to everybody. If there is a good place to lend money it is to those on the farm. If we do not keep our farmers prosperous the country will not be prosperous, and the government will go more deeply into debt. The more deeply the government goes into debt the greater the interest thereon and the less prosperity there will be. The thing to do is to help our farmers. By helping them prosperity will be maintained to some extent, even under a Tory government.


Donald Methuen Fleming: I
should like to draw the attention of the minister to a weakness that appears to exist, not so much in the Canadian Farm Loan Act itself as in the interpretation or administration of the act in the field at the level where an applicant first makes his application for a loan.
On the basis of complaints that have arisen among the farm organizations in my riding it would appear that those who first receive these applications in the department tend to find existing debt a deterrent to a loan, without sufficiently taking into account the ability of the farmer applicant to repay principal and interest. It would appear that the first consideration in dealing with an application would be ability to repay, yet on the basis of the experience of people at least in my own riding there is a hesitation to consider an application where debt exists and a tendency not to give sufficient consideration to ability to repay.
In many cases a farmer seeks a loan for the purpose of consolidating debts, to transfer or exchange short-term debt for long-term debt at a rate of interest and over a period of time more within his capability of paying. But so long as that debt exists apparently there is a hesitation on the part of the officials in the field to consider a loan. I know of cases where farmers have been told that when they have cleaned up existing debt the farm loan board will consider their application; yet if they were in a position to clean up existing debt there would be no necessity for an application in the first place.
Consequently I feel that possibly the intention of the act is not being fulfilled if officials do not give first consideration to ability to repay and only in that regard consider an application, and not permit themselves to be put off consideration by the fact that debt exists. Many farmers over a period of time,

particularly in recent years, have resorted to short-term borrowing at fairly high interest rates. The act provides them with the means of changing, but many of those who have sought to make the change have found that simply because of interpretation they have been unable to do so.
If that aspect of the administration of this act were given consideration, to see whether there is justification for perhaps a direction to officials to consider the aspect of repayment rather than the aspect of debt, a very great service may be done to many farmers without any change whatever in existing legislation.


William Moore Benidickson: Mr. Chairman, I did not speak on this bill on second reading. This was because I realized that it was going to committee, though to a committee of which I was not a member, and I was very pleased to hear the Minister of Finance say when he was explaining the bill that he attributed some of the accelerated lending and some of the present improved conditions to the very careful study which was given to this whole matter in 1956 by the banking and commerce committee.
Both the minister and I of course attended that committee. At the present time-and I do not quarrel with this-the discussion of the bill was before the agriculture and colonization committee, and it was not until noon that the second printed report of that committee became available to members. This makes it very difficult to keep up with the proceedings, but I did read with interest the first report of the committee, and I must say I was a little surprised that some of the members of the committee, who while they were on this side of the house had complained that there were a lot of inadequacies in the farm loan act, did not successfully recommend changes in the bill presently before us. I realize, however, that members were given some assurance that the general subject of agricultural credit is being carefully reviewed by the government.
I would like to point out, however, in view of the fact that such statements were made as long as a year ago, that this is an urgent problem and one which should be dealt with. I rather thought there would be more in the bill than simply a change of capitalization for the purpose of increasing the possible amount of borrowing from the government. I share the views of those who have spoken in that it is a fine thing to see additional credit facilities being developed, but I am sure the Minister of Finance himself would be the first to say that the actual extent of the rate of increase, either in the amount of new lending or the amount of the average loan, has been about the same between 1956

to 1957 and from 1957 to 1958. Those two years seem to be very comparable in regard to the percentage of increase over the previous year on both those counts, that is to say either the average amount of the loan or the total amount lent by the board.
We had some discussion about the possible rate of interest in the future when we were, I believe, at the resolution stage. The act says that the interest rate is not fixed under the act itself but is an interest rate which in the opinion of the board is sufficient to provide for the interest payable by the board to the minister's department plus the expenses of the board.
I noted that while one or two members of the committee advocated, as was also done in 1956, that this form of lending should be conducted at an interest rate which would involve a substantial subsidy from the taxpayers of the country, the Minister of Finance pointed out, as did the chairman of the board, that a very slight reduction in the present interest rate of 5 per cent would completely wipe out the surplus on the operations of the board. I believe the chairman of the board said that one-tenth of one per cent would be about the equivalent of the surplus for last year on the board's operations.
I am not going to criticize unduly the minister or anyone else but, while I was not a member of the committee, it did seem to me as I was reading the material we all receive that it was rather unfortunate that the actual printed report of the board was available or tabled in the house only a day or two after the committee on agriculture and colonization had concluded its sittings. I am not for one moment suggesting that the committee was denied any information, but I do suggest to the minister something to which I am sure he will give careful study, and that is that if the actual report is just about ready it would be so much more helpful if it could be made available to the house when legislation is in the resolution stage or on second reading, because of course there are a great number of members of the house who are not members of the committee which is going into the details of such matters, and I am sure that at this stage of the session it is the desire of all of us not to be unduly repetitious.
I notice that the present rate of administrative costs is at 1.22 per cent in relation to the total amount of loans. One can see that this does not give the board a great deal of margin over the cost of interest that seemingly now has to be paid by the government for its own borrowings. We know that on the conversion loan the government is prepared to pay on a 25-year term as much as 4J per
Canadian Farm Loan Act cent. The board, of course, gets its funds only from the government, and I presume the government makes available to the board funds either at the rate at which the government itself can borrow or something very close to that figure. I was wondering if the minister could indicate to the committee the rate of interest on the last borrowing from the government by the board, and the term of such borrowing.
We can immediately see that if it is costing the government 4J per cent for a loan over a period of 25 years, and if it is costing the board 1.22 per cent of the amount it loans to others in respect of administration costs, there is nothing there to give us much confidence that the present 5 per cent interest rate will be maintained unless the policies of the board are different from those outlined in the statute -and I imagine they cannot be different from what is there outlined-or the remarks made by the minister himself in committee warning against something in the nature of a subsidy.


Mr. Rapp:: Mr. Chairman, I rise to speak on this amendment to the farm loan act, and it is not my intention to cover what was said by the Minister of Finance when he introduced the amendment. I would, however, like to express my satisfaction and that of the people I have the honour to represent with respect to this amendment to the act and what it means to us. The change is long overdue, because since the bill was introduced some years ago conditions in our farm industry have considerably changed; methods of farming, the value of our farm lands, the price of our farm equipment and so on have all undergone changes.
By making it possible for the farm loan board to borrow another $40 million from the federal government it will mean that many more applicants will receive loans and, according to the chairman of the farm loan board, a greater demand for these loans in coming years is foreseen. At the present time there is a $15,000 limit upon the amount which a farmer can borrow from the board. Some are of the opinion that this amount is not large enough, and that it should be raised to $20,000. Others are of the opinion that it should be left at $15,000 because no farmer can borrow his way into prosperity, and because credit is not the cure for all our troubles.
However, I am confident that in due time this matter also will receive consideration by the government. I base this belief on what has happened here in the last few days. It is very significant that so many amendments have been introduced in the last few days to measures pertaining to agriculture. For instance, the Prairie Farm Assistance

Canadian Farm Loan Act Act was amended, with the result that many complaints will toe removed; the Animal Contagious Diseases Act was amended also, and only recently the act making possible cash advances to farmers was amended to give a better service to our Canadian farmers.
All these changes are an indication that our government is alert and that it is very interested in removing some of the troubles we have had to face out in the west. We will, I am sure, be very interested in the working of this act when it has been passed into law. I am in favour of the amendment, and will give it my support.


William Moore Benidickson: Is the minister not going to answer some of the questions which have been raised in the committee?


Donald Methuen Fleming: (Translation):
The hon. member for Drummond-Arthab-aska (Mr. Boulanger) will perhaps allow me to state that I do not claim this bill to be the key to all farm problems, to all farm credit problems, or that it contains the whole policy of the government in this respect; but I do say, Mr. Chairman, that this bill is urgently required, as I stated in this house on July 16, when I said:
The best estimate at this time is that loan commitments by the board, unless the present measure is adopted, must cease by about August 15 and available money for commitments made will be exhausted by about October 31. There is therefore urgency in this present resolution, Mr. Chairman.
(Text):
Reference was made by the hon. member for Kenora-Rainy River to the extent of the business which is being done by the board. May I draw his attention to page 14 of the proceedings of the committee, where Mr. Chester, the commissioner, has put on record some figures which illustrate the tremendous increase in the volume of the business which is being done. I shall not attempt to read into the record all the statistics which Mr. Chester gave in that context, but perhaps I might place several of them before this committee of the whole.
Mr. Chester in this table was dealing with the number of loans approved, accepted by the borrowers and placed with solicitors for disbursement in the first three months of the year. In 1956, to go back no further, the number in those first three months was 407; in 1957 it was 653, and in 1958 it was 1,236. Hon. members might care to hear the amounts of money involved in the first three months of those years respectively. In 1956 it was $1,940,000; in 1957 it was $3,900,000, and in 1958, $8 million in round figures. There has been a tremendous increase in the business the board is doing. The size of the loans has been increasing as well as their number.
With regard to the cost of doing this business, Mr. Chester was asked as to the possibility of reducing the cost of transacting the board's business, and he pointed out that the cost of doing business has not been increased within the past year or so despite the substantial increase in the volume of the board's business. He was asked as to the possibility of a reduction in the rate of interest and his answer, as reported at page 22, was that if you only lowered it by the amount of the board's surplus earnings you would not be lowering it by as much as one-tenth of one per cent.

The scheme under which the board operates is this. The board borrows its money from the Minister of Finance. The Minister of Finance is authorized to extend loans to the board of up to 20 times the board's authorized capital, and the minister is directed to extend those loans to the board at the current rates of interest. The hon. member for Kenora-Rainy River asked about the interest charged on the last loan by the government to the board. It was 4 per cent.


William Moore Benidickson: How long a term?


Donald Methuen Fleming: It was some months back-


William Moore Benidickson: I meant, how long was the term of the loan?


Donald Methuen Fleming: I am afraid I will have to get that information and give it to the hon. gentleman another time. But, Mr. Chairman, the board has to operate and pay all its expenses of doing business on a margin of 1 per cent. It now borrows at 4 per cent and lends at 5 per cent. That is the position at the present time.
With respect to the matter of interest rates, I may say that shortly after I became Minister of Finance the board felt it was being very severely squeezed between the rate of interest it had to pay and the rate of interest it was being permitted to charge, and felt that some increase in the rate charged by the board to farm borrowers was going to be necessary unless the board was to go into the red, but I declined to give approval to any such increase.
The hon. member for Assiniboia asked me on a previous occasion if I expected there would be any increase in the interest rates. At that time I said no, and that remains my opinion.
I believe I have reviewed the points that have been raised in the course of this discussion. This measure is urgently necessary in order that the board may be able to carry on its lending operations, for otherwise the funds at its disposal within the permissible terms of borrowing and relending will be exhausted about the middle of August.
I may add that I am now in a position to answer the question raised by the hon. member for Kenora-Rainy River. The term of borrowings is 25 years.


William Moore Benidickson: And what did you say
was the date of the last loan?


Donald Methuen Fleming: I did not say.


William Moore Benidickson: Do you recall?


Donald Methuen Fleming: No.


William Moore Benidickson: 
Mr. Brooks:: Does the hon. member suggest that it should be increased?


Lester Bowles Pearson: You have done that.


Mr. Pickersgill:: There was no suggestion of that from this side of the house.


Hazen Robert Argue: Mr. Chairman, I wonder if the minister could inform the committee about the cost to the board of doing business. He may have already informed the committee, but I missed the point.


Donald Methuen Fleming: It is 1.22 per cent. That figure was placed on record in the committee and referred to by the hon. member for Kenora-Rainy River.


Hazen Robert Argue: So on the basis of the board obtaining money at 4 per cent and lending it at 5 per cent, if there were no other factors the board would be incurring a net loss. With this net loss, at least on this particular amount of capital being made available to the board, is the minister still prepared to assure the committee there will be no increase in the 5 per cent being charged by the board?


Donald Methuen Fleming: I cannot foresee the course of interest rates for all time to come, but I did give my hon. friend an answer on that point as applied to the situation in which we find ourselves today, and I remain of that opinion. I reaffirmed the determination I have expressed in that regard. I do not know whether my hon. friend followed what I said a moment ago, but the matter of the narrow spread was a matter that did give concern to the board. Soon after I became Minister of Finance the board approached me and expressed its concern on this point. The board felt they were headed for a deficit unless the rate which they were permitted to charge borrowers was increased, but I declined to approve any increase.


Hazen Robert Argue: I thank the minister for his statement; I think it will be well received. On the basis of the minister's own record and that of the Conservative party the minister is being consistent, because no one has fought

Canadian Farm Loan Act harder against the so-called tight money policy and the policy of increasing interest rates than the minister himself. It would seem to me, however, that without any other additional facts the refunding procedure in which the government is now engaged is strengthening interest rates very substantially, and will make it more difficult for the minister to maintain his position that the 5 per cent rate will not be increased, unless he is prepared to see the Canadian farm loan board incur a deficit and pay the deficit out of the national treasury. But in spite of the fact that one aspect of the minister's policy seems to be working against the other aspect of it, we are all for keeping interest rates down.


Donald Methuen Fleming: Mr. Chairman, there will be a proper time for discussion of interest rates in connection with the Canada conversion loan of 1958. I do not share some of the views expressed by my hon. friend in that respect, but there will be a proper opportunity provided at which to discuss that subject.


William Moore Benidickson: Mr. Chairman, am I right in my recollection that in the past the board has been provided with up to $4 million of capital funds from the taxpayers of Canada, and that to date no dividends have ever been paid on that sum? As I recall it the government has to borrow the money it gives to the board, but so far the government has received no return on that sum. Is that still the situation?


Donald Methuen Fleming: That is my understanding, Mr. Chairman. Under the provisions of the act the government has extended $4 million to the board, which is the board's authorized capital, and the act bases the board's power to borrow from the minister and relend to those qualifying under the act in terms of 20 times the authorized capital of the board. The purpose of this measure is to increase the authorized capital from $4 million to $6 million, and consequently the borrowing and relending power of the board from $80 million to $120 million.


William Moore Benidickson: The board does pay interest on its borrowings but not on its capital?


Donald Methuen Fleming: Yes.


Herbert Wilfred Herridge: Just before the title carries. Mr. Chairman, I cannot resist an observation. I have had very little to say with respect to this act today because I intend to make my remarks concerning farm credit suitable to meet Canadian conditions under the appropriate item in the estimates of the Minister of Agriculture. But I was interested in the explanation of the Minister of Finance


as to the attitude of the board itself toward a possible deficit position owing to the present rate of interest being charged. I was very interested to note that even the minister is more tenderhearted than the board in that respect. His position fully affirms the opinion of this group and of farm organizations in Canada that the Canadian farm loan board is run on straight, hardheaded, businesslike and mortgage company principles, and it definitely supports our point of view that the legislation does not meet the requirements of Canadian farmers today.


Donald Methuen Fleming: Mr. Chairman, my hon. friend is usually very fair in his observations, but the remark he just made concerning the board and its attitude is, I think, not fair. The board was simply doing its duty in bringing to the attention of the Minister of Finance the fact that with the cost of operations, the cost of borrowing, and the rate at which the board was permitted to relend, the board was, it felt, headed for a deficit position. The board brought that fact to the attention of the minister as it was its function to do. That should not be a matter of reproach to the board.
Since the amendments that came into effect in 1956 and which have been referred to this afternoon by the hon. member for Assi-niboia and the hon. member for Kenora-Rainy River, the board has found the provisions of this act much more useful and the administration has been much more sympathetic. I do not think the impression should be left in the minds of hon. members of this house that this board has taken an unsympathetic attitude toward its responsibilities under the act, or that it has taken a hard attitude.
During the 13 months in which I have been dealing with the board in my present capacity I have found no evidence to warrant that assertion. On the contrary I believe the board is trying, within the limits set by parliament in the act, to give sympathetic administration to the legislation. Fortunately the amendments of 1956, which had the support of all parties in this house, have enabled the board to give an administration which has had the effect of making the act much more useful in meeting the needs that parliament envisaged in enacting the measure in the first place, and providing for its extension by amendments in succeeding years.


Herbert Wilfred Herridge: I was not wishing to reflect upon the individuals composing the board, but I just gave it more as an indication that the board was giving effect to what it considered to be policies of the government under which it has had to operate, past and present.


Donald Methuen Fleming: I wish to leave this ray of hope with hon. members; that naturally if the volume of business of the board tends to increase, particularly with this additional provision that parliament is being asked to make now, it may be that the cost of the board's operations as a percentage of its turnover will be somewhat reduced. That is our hope. The board has 1 per cent to work on. Naturally if its turnover is larger there is going to be, we hope, more business over which to spread certain factors in the cost of doing business.


William Moore Benidickson: I am very glad the minister made those comments with respect to the board, because I just wanted to point out to the hon. member for Kootenay West that no matter what harshness he may say there is with respect to rates, it is not a decision to be made by the board. Parliament has said that the interest rate must be a rate that, in the opinion of the board, is sufficient to provide for the interest payable to the minister and the expenses of the board, including reasonable provision for reserves against losses. I am not quarrelling with the minister. I quite appreciate that the only way out of this riddle at the moment would be a substantial increase in the volume of lending-if it is safe lending. It is possible increased volume of lending would not increase proportionately the administrative expenses; but in view of the statute and the fact that the minister is not proposing to amend it, I just wonder by what right he tells the board that they can ignore this statute.


Donald Methuen Fleming: Well, I told the board that I was not prepared to support any increase in the lending rate of interest to applicants for farm loans.


William Moore Benidickson: Did the minister indicate to the board for how long he was taking that responsibility notwithstanding what parliament had told the board to do?


Donald Methuen Fleming: As I said a moment ago, I cannot foresee the future concerning interest rates; but in the circumstances then existing and in the circumstances existing now that is the position I have taken.


William Moore Benidickson: The minister, of course, referred to the 1 per cent spread between the cost of borrowing by the board from the government at 4 per cent and the amount charged by the board to farmers at 5 per cent, but I point out to him that that last borrowing antedates by probably some period of time the actual present borrowings of the government itself on a 25-year period, where the rate has risen to 4J per cent.


Donald Methuen Fleming: No, no; there has
been no borrowing of new money in the
market at the figure my hon. friend men-
57071-3-178
Canadian Farm Loan Act tioned and the rate charged by the government, as he well knows from his experience in the Department of Finance in earlier years, is established every six months. The rate charged on the loans by the government to crown corporations is established in the light of prevailing market rates on moneys borrowed by the government at similar maturity plus one-eighth of one per cent, and this present rate of 4 per cent is the rate that was set for the six months ending September 30.


William Moore Benidickson: Surely my hon. friend has not agreed to borrow money at present from the public or convert bonds at the present time at a rate any higher than he feels is the proper and necessary rate that he has to pay, and the current rate is surely 4J per cent because that is the rate he will pay on a 25-year term on the conversion loan.


Donald Methuen Fleming: Mr. Chairman, as I said earlier, this is not a debate on the Canadian conversion loan. There will be a proper time to discuss that to the extent that is desired by any hon. member. But my hon. friend talks about borrowing. The fact is that the conversion loan is not a borrowing of new money at all; it is simply the conversion of existing obligations into obligations of a later maturity.
(Translation):


Samuel Boulanger: Could the Minister of
Finance tell us what was the net income of the Farm Loan Board for the financial year ended March 31, 1958?
(Text):
Can the minister tell us what was the net income of the farm loan board for the year ended March 31, 1958?


Donald Methuen Fleming: I will get that figure for my hon. friend and give it to him.


Samuel Boulanger: I see by the 1957 report that there were net earnings of $218,755. I am wondering whether a reduction of 1 per cent in the interest rate would be something that we could absorb out of this profit.


Donald Methuen Fleming: Mr. Chairman, I referred earlier to the answer given by Mr. Chester before the committee concerning what would happen if the board's surplus were applied to a reduction in the interest rate. At page 22 of the proceedings and evidence of the committee Mr. Chester's answer reads as follows:
If you only lowered it by the amount of our surplus earnings you would not be lowering it one-tenth of one per cent.
He was referring to the interest rate to
borrowers.
2818	HOUSE OF
Canadian Farm Loan Act


Samuel Boulanger: My question has to do with income tax of $40,000. I presume it would mean one half of one per cent on $218,755.


Donald Methuen Fleming: Oh, no. I have not worked the figure out but it would be a very small fraction indeed. I think one would be obliged to say it would be only a very tiny fraction, an insignificant fraction.


William Moore Benidickson: Mr. Chairman, I was wondering whether the minister, in advancing this amending bill in the house had given consideration to the position the board is in. It is their opinion that parliament is relying on and I wonder whether he gave consideration to taking over from the board this matter of opinion and taking it on himself, if he feels that even increased lending, contrary apparently to the opinion expressed by the board to the minister, might not rectify this situation. Did he not give consideration to taking that responsibility and recommending to parliament that the interest rate be as in the opinion of the minister instead of in the opinion of the board, if the opinion of the board is to be avoided?


Donald Methuen Fleming: Mr. Chairman, the government has taken the responsibility of submitting this legislation to parliament without proposing any increase in the interest rate to borrowers.


Hazen Robert Argue: Can the minister tell us whether the report of the board for the year ended March 31, 1958, is available?


Donald Methuen Fleming: If it is not it will be shortly. When Mr. Chester was before the committee a week ago we operated with the report for the year ended March 31, 1957, and Mr. Chester gave information to supplement that report with respect to the fiscal year that ended March 31, 1958.


Hazen Robert Argue: Will the minister answer this question. Does the minister know whether the board in its operation has, by means of a soil map, an economic survey map or some other means, stated that certain substantial areas of land in a given province will not be eligible for loans, or that farmers living within that area will not be eligible for loans?
Before the minister answers the question I want to tell him that in my experience in years gone by the board has just said, "Well, such and such a district is a high risk area, and applications coming in from that area will be turned down".
I think that such a decision could be justified on the economic return from grain. But these areas that I have in mind are areas where the production of livestock is a very important industry, and if the returns to the
[Mr. Fleming (Eglinton) .1

farmer on that kind of land were considered, I think the farmer in that area should be eligible for a loan.
My question is this. Is every single loan considered on its merits or does the board say certain general areas are of such high risk that the experience in the past has not been such as to warrant the granting of any loans, no matter what the individual circumstances of the farmer may be?


Donald Methuen Fleming: There is no such thing as a general exclusion. Naturally there are farms so located that their value for borrowing purposes is greater than others. But the policy of the board is to consider every application on its merits, having regard to all the circumstances that bear upon the application, including the capacity of the individual himself as a farmer, his record in the matter of credit and repayment and the type of land.
I may draw the attention of my hon. friend to page 21 of the proceedings of the committee where the hon. member for Acadia was asking Mr. Chester the following questions:


Mr.   Homer@Acadia: I have a question in
respect of the purchase of farm land. Is it strictly grass or grazing land?


Mr.   Chester@: Any land.


Mr. Horner (Acadia):: Does it have to be
cultivated?


Mr.   Chester@: No.
I am informed, Mr. Chairman, that the report of the farm loan board for the year ended March 31, 1958 has now been tabled.
I can assure my hon. friend there is no such thing as the exclusion of farm lands from the benefits of the act.


William Moore Benidickson: I have been reading this act further. Does the minister not think that he is telling the board to disregard what is laid down for the board if, in their opinion, they are doing something contrary to what parliament directed them to do? I can appreciate that he might say that if he were anticipating introducing an amendment to the bill in this session. He might state, "I am going to recommend to parliament a change in what parliament has determined and we, as a government, will take responsibility for operating on a deficit, if necessary, for public policy until the act is amended. But is there some section that I have overlooked that says that notwithstanding this obligation on the part of the board with respect to their conscientious exercise of opinion the minister can override them and tell them to disregard parliament?


Donald Methuen Fleming: This government will never be a party to any course that involves overriding parliament; I can assure my hon. friend of that. In this case, the board

did its duty in drawing attention, under the circumstances that existed when we came into office a year ago, to the fact that at that time it looked as though the board, if conditions continued as they then existed, would be faced with a deficit. In the following period, having regard to the fact that the interest rate on loans by the Minister of Finance to the board is determined in six-month periods, that interest rate was reduced in line with the reduction that was made in the interest rate charged by the government to all crown corporations. The board was, therefore, entitled to the benefit of that reduction.
As things now stand, I take the responsibility for saying that under existing circumstances I do not think there is any occasion for submitting an increase in the rate of interest charged by the board to agricultural applicants. I am taking the responsibility for saying in this house this afternoon that I certainly am not recommending any increase in the interest rate on loans made by the Canadian farm loan board to farmer applicants.


William Moore Benidickson: Where does the minister suggest he gets his authority? He talks about responsibility. I suggest to him his responsibility is to come before parliament at the present time and say, I am prepared to recommend that this section is not a fair impost on the board; I am prepared to change the provision respecting these matters from utilizing the opinion of the board to the opinion of myself.


Donald Methuen Fleming: My hon. friend keeps talking as though the Canadian farm loan board today were recommending an increase in the interest rate. That is an unwarranted assumption. I referred to the view that the board expressed to me a year ago, under the conditions then obtaining. The conditions that exist today have not led the board to renew any such expression of view.


William Moore Benidickson: I was coming then to the next question. As I indicated, the No. 2 minutes of the agriculture committee only became available about noon today, and I frankly confess I have not had time to read them. May I ask the minister whether or not any member of the committee did ask the chairman of the board when he was before the committee whether in his opinion, the interest rate on loans is sufficient to provide for the interest payable by the board or likely to be payable if they were to go into the market right away-the minister has indicated they do have to borrow right away because they are out of funds-and the expenses of the board, including a reasonable provision for reserves against losses.
57071-3-178i
Canadian Farm Loan Act


Donald Methuen Fleming: I do not think that question was specifically asked of Mr. Chester. There were questions asked of Mr. Chester concerning the rate, but the questions were directed not to the possibility of an increase in the rate but to the possibility of a decrease in the rate.


William Moore Benidickson: Does the minister then say that except for this expression of opinion on the part of the board to the minister a year ago the board has expressed no further apprehension about its obligation by statute under this section?


Donald Methuen Fleming: Yes. I have had no communication from the board on that subject since the time I mentioned in 1957. I will not say it was precisely 12 months ago, but it was in 1957. The board has communicated no view to me on that subject since. I think it is clear from the testimony that Mr. Chester gave that the position at the present time is more satisfactory, having regard to two factors; first, the reduction in the interest rate charged by the government to the board within the past year since the occasion I mentioned; second, the fact that the increase in the volume of business transacted by the board permits spreading certain factors of cost over a wider area, and that will help reduce the drain upon the spread between the four per cent that the board now pays and the five per cent it charges.


William Moore Benidickson: Has the board paid the government an interest rate beyond four per cent in the last couple of years?


Donald Methuen Fleming: Yes, Mr. Chairman, they paid that rate earlier. I cannot give the precise times, but this interest rate has fluctuated. If my hon. friend will look at the testimony of Mr. Chester he will see that the interest rate has fluctuated.


William Moore Benidickson: Has it ever exceeded four per cent in the last couple of years?


Donald Methuen Fleming: I cannot say precisely. I shall have to obtain that information if my hon. friend wishes it. May I remind my hon. friend of the testimony Mr. Chester gave at page 12 of the committee report:
When the board commenced lending in 1929, it was obliged to charge 6J per cent. In October 1934, the rate was brought down to 5J per cent. In May 1935, the rate was further reduced to 5 per cent and so continued up to April 1, 1945. From April 2, 1945, to March 31, 1952, the rate was 4j per cent and since that time the rate has been 5 per cent.
Now, that is the rate charged by the board on loans.


William Moore Benidickson: My question, of course, related to the cost of borrowing money from the government within the last two years.

Canadian Farm Loan Act


Lester Bowles Pearson: May I ask the minister this very simple question? Is he satisfied that, without raising his rates for loans-and nobody wants that to happen-and having regard to the likehood that it may have to pay a certain amount for the money it will get from the government in the weeks and months ahead, the board is now in a good position to discharge all its obligations under the act?


Donald Methuen Fleming: The board cannot possibly discharge its obligations under the act at this present time beyond another three weeks. This bill, if it is adopted, will permit the board to discharge its obligations for the foreseeable future in accordance with the terms of the present act. It has been indicated several times already that the whole subject of agricultural credit as available under this act, as available under the Farm Improvement Loans Act and as available under the Veterans Land Act is under review. That review will be completed before another session of parliament. If my hon. friend is asking me whether the board, if this bill is passed, will be in a position to discharge the responsibilities laid upon it by this act in accordance with its present terms, I say, yes, as long as this additional provision lasts.


Hazen Robert Argue: With interest rates at the level they are today and with the costs the board has to incur does the minister feel that the board can operate one further year and stay in the black?


Donald Methuen Fleming: I cannot be precise about that matter. One can only make the best judgment that one is capable of at this present time. If this bill is passed and if the rate of lending continues, and if the volume of business that is being done continues then the view that I put before the house in line with what I have just said now in reply to the question of the Leader of the Opposition is that the board will be able to discharge , its responsibilities under the act in accordance with its present terms. In another session the house will have before it, I have no doubt, the results of the study that is being conducted now into the operations of the three acts.


Hazen Robert Argue: Is it the opinion or the estimate of the minister that under all present circumstances the board is able to operate at a profit?


Donald Methuen Fleming: I will not say at
a profit, Mr. Chairman.


Hazen Robert Argue: With the surplus it has?


Donald Methuen Fleming: It has a surplus at the moment; a tenuous sort of surplus.

That may vary from time to time. I have given my answer in broad terms, Mr. Chairman.
I can be more specific now in reply to the question asked a moment ago by my friend the hon. member for Kenora-Rainy River as to the highest rates of borrowings in times past.


William Moore Benidickson: In the last couple of years.


Donald Methuen Fleming: 
Hazen Robert Argue: Can the minister tell the committee what is the average cost of money the board is now employing? In other words, is most of the money in use at interest rates lower than 4 per cent?


Donald Methuen Fleming: That would have to be calculated.


Hazen Robert Argue: I do not think the minister's answer to me a moment ago was entirely satisfactory, Mr. Chairman. He said he was not certain, as I understood him, that the board would be able to make a profit, but in future it might not be in particularly difficult circumstances. But I note that at page 16 of the evidence taken before the committee, the board for 1958 shows $235,534 under a column entitled "Profit on Operations before Income Tax".


Donald Methuen Fleming: What page is that?


Hazen Robert Argue: Page 16. I think this committee is entitled to know whether the officers in the minister's department feel that the board under present circumstances and foreseeable circumstances during the present year is likely to be able to operate at a profit. I do not suppose anybody can guarantee whether or not there will be a profit. But surely realistic estimates are made of the operation of this board and the operation of all aspects of the government's own department. The view of the minister on the advice of his officials as to whether or not the board, with present interest rates, can operate at a profit is important, and I think it is a reasonable question.


Donald Methuen Fleming: Mr. Chairman, to operate at a profit or to operate to break even are two different things. My hon. friend is asking whether there will be a profit. I cannot say whether or not there will be a profit. I know that the board, before income tax, in the past fiscal year showed a profit of $235,000. From what information has been given to me I have a reasonable expectation that the board will break even during this coming year. I think it would be quite improper on my part to hazard at this time

some estimate of the profit that may accrue from the board's operations. But having regard to operations in the past and the increased volume of operations during the fiscal year up to the present and the prospect that if this bill is passed the increase is likely to be maintained, it would appear that the board would be able to operate, as in the past, on a profitable basis. But I am not hazarding any indication to the house as to what the surplus might be. I think that it would be quite improper for me to attempt to do so.


Hazen Robert Argue: My question was merely
whether the minister expected that the board could operate at a profit, not make a quarter of a million dollars.


Donald Methuen Fleming: May I say that the view of the board is that they will be able to show a surplus on this year's operations but that they are not hazarding any indication of how much it might be. That is the position as it appears at the moment, that they will be able to produce a surplus for this year again, according to present indications.


Hazen Robert Argue: That would seem to be a full answer to the hon. member for Kenora-Rainy River who was asking whether the board was carrying out all its responsibilities under the act. The minister now says that even with the high interest rates prevalent in the country the board is likely to make some kind of a profit, certainly not a loss. That would satisfy the provisions of the act.


Donald Methuen Fleming: I now have the answer to the question asked by the hon. member for Assiniboia a moment ago. He asked for the average rate. I am informed that the average rate is less than 4 per cent. I cannot give him any very precise figure but it is less than 4 per cent. I think that is a factor to be taken into account. In assessing the board's operations at this present time, one should not treat the cost to the board of its aggregate borrowings to date as though that rate were the same as the most recent rate. The most recent rate is as I indicated 4 per cent; but the average rate on loans-


William Moore Benidickson: 
Donald Methuen Fleming: May I just finish what I was saying. The average rate is below 4 per cent. I will not be prepared to give the actual figure but it certainly would be as close to 3 per cent as it would be to 4 per cent; that is on the aggregate outstanding which is substantial. As hon. members will
Canadian Farm Loan Act see, if they will look at page 15 of the proceedings of the standing committee on agriculture, the principal of loans outstanding at March 31, 1958 was over $67 million.


Hazen Robert Argue: I thank the minister for his reply. I think it is a most significant one. It demonstrates to the house that because of low interest rates available to the board in the past during the years when the Liberal party followed a low interest rate policy, it is now possible for the board at this present time to operate at a profit in spite of the high interest rate policies now being followed by the government.


Donald Methuen Fleming: There are no high interest rate policies followed by the government today.


Hazen Robert Argue: Just high interest rates.


William Moore Benidickson: Let's consider the minister's last statement. He has informed the house and the committee that within ten days this board will have run out of money and will have to go to the government to borrow more money. Surely with a period of ten days in which to forecast he could without any crystal ball give to the committee an idea of what he would feel the government would be obliged to charge the board for a borrowing on a 25-year term.


Donald Methuen Fleming: As the hon. gentleman is well aware the interest rate is effective for the present six months' period and is therefore the rate which will be charged this board on all its borrowings from the government in this period. The rate of interest for the present six months' period to September 30 is 4 per cent. The interest rate is always set at the beginning of every six month's period. As my hon. friend knows, this was set by the government at April 1 and is applicable to all loans by the government to all crown corporations at the rate of 4 per cent.


William Moore Benidickson: So that if at the end of
the period of six months in September the government's experience is that it has to pay \\ per cent on its borrowings within the newest period it would not be government policy to charge any crown company less than it has had to pay to the public.


Donald Methuen Fleming: Mr. Chairman, my hon. friend, I am sure, will recall the way in which the rate is set. It is a rate that is established as the rate the government has to pay for money with a similar maturity plus an advance of one-eighth of one per cent as the cost of doing business. That is quite clear and when October 1 comes the interest rate to be charged to all crown corporations

Canadian Farm Loan Act will, as at all times in the past, be set in the light of that cost, whether it is larger or smaller than 4 per cent. The government has not borrowed new money in the market at 4i per cent.


William Moore Benidickson: The government at the present time is asking the public to convert bonds that have not yet matured and it has indicated that the government requires this money because it has a sufficient feeling of necessity that it is prepared on a 25-year basis to pay 4J per cent for it, plus bonuses and commissions and the other things involved.


Donald Methuen Fleming: That statement is about half true.


Lester Bowles Pearson: Which half is wrong?


Hazen Robert Argue: I think the discussion illustrates the very serious aspects of this matter with respect to the financial policy being launched by this government. It is a policy which means the strengthening of the interest rates; it is a policy which in fact means higher prices for loans to the ordinary people of this country; it is a policy which is the very antithesis and negation of the policy the minister advocated while he was in opposition for so many years; it is a policy which if pursued will result in either the Canadian farm loan board having a tremendous deficit-


Joseph Pierre Albert Sévigny: Order. I regret to interrupt the hon. member but we are not at the moment discussing the fiscal policy of the government. We are discussing the farm loan act.


Hazen Robert Argue: With great respect, Mr. Chairman, if the fiscal policy of the government results in higher interest rates for the money available to the Canadian farm loan board, it is the most pertinent thing one could imagine, because the cost to that board of money which is borrowed will decide whether or not the board can make a profit. The minister can say that there is not a word of truth in the statement but everything he has said this afternoon would demonstrate that interest rates are going up and it will be more and more difficult for this board to operate at a profit in the future.


Donald Methuen Fleming: I am quite sure my hon. friend will not find anything in my remarks to warrant the conclusion which he is attempting to draw.


Lester Bowles Pearson: If the board in October, when the rates for its borrowings will be established by the government, finds that the new rate of 4 per cent or more than 4 per cent-whatever it may be-is such that it would make


it impossible to carry out the specific obligations under section 7 (e) of the act, which is the requirement to establish an interest rate on loans sufficient to provide for the interest payable by the board to the minister and the expenses of the board plus reasonable provision for reserve against loss; if it finds that to carry out that obligation would require an increase in the rate for loans, is there any provision in this legislation which gives the minister any authority to overrule the judgment of the board in this respect?


Donald Methuen Fleming: My hon. friend can read the terms of the present legislation which proposes to amend clause 5 (1) of the act by changing the word "four" to "six" and the figure "40" to "60". That is the entire effect of this present bill; it does not purport to change any of the other terms of the act which will stand as they have existed since the 1956 amendment.


William Moore Benidickson: In other words, the short answer would have been no.


Lester Bowles Pearson: Yes. I was asking the minister for information in regard to other sections of the act which are not to be amended and I wished to know whether he had any authority to overrule the board if it desired to alter the interest rate charged by it on loans.


Donald Methuen Fleming: Neither the
minister nor the government nor the board has any power to override the terms of this legislation.


John Whitney Pickersgill: In other words the assurance of the minister is worth absolutely nothing.


Donald Methuen Fleming: Mr. Chairman, I think on reflection the hon. member will regret having made that statement which does not contribute anything useful to a discussion of this subject.


John Whitney Pickersgill: I would like to put a question to the minister. Did the minister not give the committee an assurance a few moments ago that this rate would not be increased? I ask this question because he is now saying that he has no authority to override the statute and therefore, as I said a moment ago, his assurance is worth nothing.


Donald Methuen Fleming: My hon. friend can put his own estimate on his conclusion. I have put my estimate upon it and our estimates are as far apart as the poles.


[Stage Direction]
Clause agreed to.
Bill reported, read the third time and passed.


Donald Methuen Fleming: that the house go into committee to consider the following resolution: That it is expedient to introduce a measure to amend the Financial Administration Act to authorize the deletion from the accounts of obligations or debts due to Her Majesty or claims by Her Majesty that do not exceed twenty-five dollars; to clarify the circumstances in which special warrants signed by the governor general may be issued; to permit a crown corporation to establish a receiver general account with ministerial approval and to authorize the payment of interest on money placed to the credit of such an account; and to provide for certain consequential changes in connection with the administration of the act.
Motion agreed to and the house went into committee, Mr. Sevigny in the chair.


Donald Methuen Fleming: Mr. Chairman,
the purpose of the bill to be founded upon the present resolution is to amend the provisions of the Financial Administration Act. The bill will be a quite short one and will have as its objects, first, to authorize the treasury board to make regulations for the deletion from the government's books of small debts of $25 or less; second, to clarify the circumstances under which special governor general's warrants may be used and to provide an opportunity for prompt parliamentary consideration of those warrants when they are used; third, to permit a crown corporation, with ministerial approval, to pay all or part of its money into the consolidated revenue fund to be held for it by the receiver general and to provide for the payment of interest on moneys so held, and, fourthly, to make certain other technical and consequential changes.
The operative provisions of section 28 of the act relating to the circumstances and conditions governing the use of special warrants restrict their use to cases;
(a)	where an accident happens to a public work or building for which an expenditure for the repair or renewal thereof is urgently required, and
(b)	where any other matter arises for which an expenditure not foreseen or provided for by parliament is urgently required for the public good.
Moreover, warrants may be used only in periods when parliament is not in session or when it is under adjournment sine die or to a day more than two weeks after the day the accident happens or the matter arises.
The wording of the act, which has remained virtually unchanged since provision for the use of special warrants was made shortly after confederation, has been found in some respects to be lacking in
Financial Administration Act clarity. Accordingly, these provisions have been rewritten in the bill to simplify the language and to clarify the circumstances in which warrants may be issued. I should like to stress that no change in substance has been made. As under the present act, warrants can be used only when parliament is not in session or is under adjournment, when there is no other appropriation for the service, and when expenditures are urgently required for the public good.
As I have indicated, it is also proposed to make provision to give hon. members an early opportunity for the consideration of special warrants when they are issued. There are now two requirements enacted by parliament to ensure that the existence of governor general's warrants may be made known soon after they are issued. These are to be found in sub-section (3) of section 28:
Every warrant issued under this section shall be published in the Canada Gazette within thirty days after it is issued, and a statement showing all warrants issued under this section and the amounts thereof shall be laid by the minister before the House of Commons within fifteen days after the commencement of the next ensuing session of parliament.
We are proposing no change in these requirements. However, we do propose to add a new provision whereby the amounts appropriated by a special warrant shall be deemed to be included in, and not to be in addition to, the amounts provided by the next appropriation act enacted by parliament. The effect will be that provision to cover all such warrants will be included in the first appropriation act submitted to parliament in the session following the period in which the warrants are issued, and the house will thereby be given a full and early opportunity to consider such warrants.
In addition to these amendments relating to the use of special governor general's warrants, there are three other amendments to the act, mostly of a technical nature, which I should like to mention.
The first relates to the deletion of certain small debts due to, or claims by, Her Majesty. Section 23 of the act now provides that the governor in council on the recommendation of the treasury board may delete from the accounts certain obligations or debts due to, or claims by, Her Majesty that do not exceed $500 and which have been outstanding for five years or more, or that do not exceed $1,000 and have been outstanding for ten years or more.
It is costly and uneconomical to continue to maintain records and to seek actively to collect very small debts for the period of five years now required by the act. Indeed in
2824	HOUSE OF
Financial Administration Act many cases the cost of administration and collection exceeds the amount of the debt, and it has become evident that there should be some procedure under appropriate circumstances for dealing more expeditiously with these small uncollectable debts. Accordingly, vote 689 was included in the further supplementary estimates (2), 1957-1958 to provide authority for the treasury board to make regulations for the deletion from the accounts of small debts that did not exceed $5. We do not propose to include this item in the final appropriation act for 1957-58. Instead, it is proposed that it be placed on a statutory basis by making suitable provision in the Financial Administration Act. At the same time it is proposed that the maximum amount that may be deleted under this authority will be $25. A report of all amounts deleted under this provision will be published each year in the public accounts.
The second amendment which I should like to mention refers to the making of regulations for the destruction of paid government cheques. Section 34(2) of the act now provides that the treasury board on the recommendation of the auditor general may make regulations governing the destruction of paid and cancelled cheques or similar instruments issued by the comptroller of the treasury for payments out of the consolidated revenue fund. I do not believe that the auditor general should be responsible for proposing regulations governing administrative action. On the other hand it is most desirable to ensure that cheques are not destroyed until they are no longer required by him for the purposes of his examination and audit of the public accounts. Accordingly I am proposing that the present section be amended to provide that in future regulations governing the destruction of paid cheques be made by the treasury board on the recommendation of the Minister of Finance with the approval of the auditor general.
There is one other amendment to the act which will permit a crown corporation, with ministerial approval, to establish a receiver general account. Section 81(2) now provides that a crown corporation, when directed by the Minister of Finance with the concurrence of the appropriate minister, shall pay all or any part of its money to the receiver general to be held for it in a special account in the consolidated revenue fund and such money may be paid out for the purposes of the corporation or repaid to it. It is proposed that this section be amended so that a crown corporation may on its own initiative but with the approval of the two ministers pay surplus money to the receiver general to be held for it in the special account. Specific 

provision is also being made in this section to make it clear that interest may be allowed and paid on such money.
These are the amendments which I am proposing. I believe that they will clarify and improve the provisions of the present legislation.


William Moore Benidickson: Mr. Chairman, I do not think this particular statute has been up for review for some time. It is a statute in which the public accounts committee usually takes an interest. In 1951 when there was a substantial overhaul of our financial procedures, and when this act was designed to consolidate a number of financial provisions the public accounts committee was given the bill for examination and study. I wonder if it is the intention of the minister to have this bill considered by the public accounts committee which I believe is in the process of organization.


Donald Methuen Fleming: I do not think there is any occasion to do that in this case. This is a very short bill. The hon. gentleman will find, if the committee permits the bill to be introduced, that it is very short, only two pages in length.


William Moore Benidickson: I hope that perhaps on further reflection the minister will reconsider what he has just said. I will speak to him about it privately. I do feel, particularly because governor general's warrants are of some consequence, that the public accounts committee might very profitably consider the significance of these changes.
With respect to this statute and some of the minor items, such as the amounts receivable, I may say that the work of any member of parliament has been greatly facilitated with respect to financial administration by an audit office guide, prepared in recent weeks, which came into my hands a few days ago. I know that it was designed to save the audit office itself the necessity of consulting a great number of authorities in connection with its own detailed work, but I can recommend this guide to all hon. members who find that some of these procedures are baffling. I may say that it has already been very useful. Even in reading this resolution I found very readily the references in the act. I found very useful the references to practices to which some of these proposed amendments have reference. The accounts receivable item is discussed. It is my impression that subject to section 23 which my hon. friend read it is not possible for the administration to eliminate a debt owed to the crown except by notice to parliament through an appropriation bill. I agree that while the limits now proposed are worthy of some consideration they may be just too much of a drop from the present provisions.


Donald Methuen Fleming: Mr. Chairman, will my hon. friend permit me to interrupt for one moment. We do not propose to eliminate the obligation. It is simply to provide that-


William Moore Benidickson: Yes. They will not appear in the public accounts.


Donald Methuen Fleming: In other words, that it may be deleted from the public accounts.


William Moore Benidickson: It would not be necessary in those circumstances to appeal to parliament to relieve the administration of what public servants might think was an obligation to continue efforts and expenditures with respect to collections that might be quite out of keeping with either the age of the account or its collectability and so on. I believe that has been given consideration for some time.
I must confess I am not too familiar with the reference to the receiver general accounts that will be established for crown companies. I believe it has a relation to section 16, subsection 2. I have no doubt that when the bill is presented by the minister we will be able to examine that. I know that a department is able to establish a receiver general account and funds are available to the receiver general for purposes as he sees fit and there is provision for crediting interest. I see that a crown company would similarly get some interest credited if an account were transferred with the permission of the minister.


Donald Methuen Fleming: The relevant section of the act is section 81, subsection 2.


William Moore Benidickson: I think most interest in the committee today at this stage will be with respect to governor general's warrants in view of the size of governmental financial operations today. We had an experience of governor general's warrants in recent times of most unusual dimensions.
I was very interested to try and find out from the minister just what technique might be utilized to carry out the commitments of the Prime Minister in the election campaign when he discovered the attempt on the part of the Minister of Citizenship and Immigration to depart from what had been standard custom with respect to governor general's warrants being included in the supplementary estimates for parliamentary discussion. There was an uproar in the country and we all know that the Prime Minister has a very keen ear to political discontent of that kind. He very quickly indicated that he was not going to support that kind of policy. A typical comment the other day when this resolution was introduced is that made by one of our
Financial Administration Act respected correspondents in the gallery. Mr. Norman Campbell writing in the Ottawa Citizen said:
A tradition cast aside by the Tories is now to be given statutory effect on second thought. It is a full retreat by finance minister Fleming.


Donald Methuen Fleming: There was never an article written with less of fact to substantiate it.


William Moore Benidickson: My hon. friend has said that several times today. The technique for parliamentary consideration seems to be a new one. If I understood my hon. friend correctly it would appear he is proposing to have references to governor general's warrants in the next available appropriation bill. That does not seem to be what was contemplated in the speech from the throne or what was suggested by the Prime Minister himself when he spoke in the throne speech debate. It seemed very clear to me when the Prime Minister addressed this house after its opening, when he was making reference to the setting up of new committees and particularly the public accounts committee, that he was making a commitment to the effect that it would be part of the function of this committee to discuss particularly the very substantial governor general's warrant and the amount of money that was so issued with respect to the fiscal year that ended on March 31. I refer to page 34 of Hansard of May 13, 1958 where the Prime Minister is reported as saying:
We intend to set up this committee: we intend to have an examination of the expenditures made under governor general's warrants.
One can only draw the conclusion that it was anticipated that these particular expenditures under governor general's warrant for the year that had just concluded would be given the careful attention of that committee. There is not so much difficulty with respect to the other two governor general's warrants that have relationship to the new fiscal year. They, of course, will be carried through in this year's estimates and we will have the usual right of debate but there is considerable concern on the part of hon. members of the opposition, and I am sure on the part of hon. members of the government as well as to the opportunities they lost by virtue of the hasty dissolution of the house last February. Through that action we were deprived of the opportunity to examine thoroughly all but five departments of the government. I think it is probably fair to say that five departments were fully considered and six were only partially considered and it so happens in that particular year that some of the departments

Financial Administration Act whose estimates the opposition were particularly interested to inquire into because of economic conditions were those that at no stage during that year came up for parliamentary review. I think of such departments as labour and public works. I would hope that there would be an opportunity to examine in considerable detail the policies of those departments in this very critical year 1957-58.
In addition to that there has been a request made of the Minister of Finance in the past and I repeat it now. When he was making his calculation as to the amount of funds that would comprise the total of the governor general's warrant for the year ending March 31, 1958 he found it possible in some slight measure to provide a figure that was under unvoted balance of the total in the blue book of estimates. He has never indicated to us what these items were except by comparing the totals department by department. We would very much like to have from the minister an indication of just how hon. members of this house are going to be able to examine these particular deletions that the minister decided were appropriate and not likely to be spent in the year ending March 31, 1957.


Donald Methuen Fleming: Would my hon. friend like me to clarify that now?


William Moore Benidickson: I know there were totals but my hon. friend must realize we still have not had any indication of detail to determine the merit or otherwise of those deletions particularly in the period of economic distress in which we were operating because at that very time the Minister of Finance was speaking in terms of certain savings and economies, other hon. members of the government were speaking in terms of an accelerated pace of public expenditure for the first quarter of 1958 which was the last quarter of the fiscal year. I have no doubt there will be a great deal of curiosity on the part of those who will have an opportunity of inquiring into those estimates as to just how one reconciles the bragging of some hon. members of the government about economies and savings and the similar boasts that were made by other hon. members of the government of a contradictory nature indicating that there was an accelerated pace of expenditure particularly in terms of public development, public works and so on and that a terrific pace of acceleration was being established in the first quarter of the calendar year.
I would very much like to hear from the minister a further explanation of the technique that he proposes for parliamentary

examination. He was very clear this session when he introduced the first interim supply bill. He indicated on May 13 and on May 14 that members of the House of Commons would have a full opportunity of examining the 1957-58 estimates. I will concede that something of this nature in the way of an undertaking was desirable because as far I can find out in the records-I have examined them for some 30 years back-I do not think that ever before did we have a situation such as we had in February when parliament was dissolved with a substantial amount of estimates not voted in the committee of supply.
The minister said on May 13, as reported at page 18 of Hansard:
It will be the intention of the government at a suitable time in the session to present to the house a measure in respect of the accounts for the year 1957-58 to deal specifically with these items, and on that occasion there will be accorded to the house, it is proposed, the fullest opportunity in committee of supply to discuss, to obtain information and to pass any judgments that may be required on the sums appropriated and expenditures made under the provisions of the governor general's warrants.
On May 14, in reply to the questions I advanced to him, he said this, as reported at page 70 of Hansard:
I thought I gave the house a clear assurance yesterday that in the provision which the governor general in council made in strict accordance with the provisions of the Financial Administration Act to meet the needs of government and provide the sums urgently required for the public good for the balance of the fiscal year to March 31, nothing had been done that was not included in the estimates, and that provision would be made this year at this session in due course for as much review as hon. members may wish of any appropriation made by governor general's warrant.
I am sure that in replying the minister will amplify on the technique that he proposes to utilize so that those commitments will be carried out with respect to the warrants applicable to expenditures for the fiscal year ended 1957-1958. Perhaps the minister might be prepared to amplify that now.


Donald Methuen Fleming: It is the government's intention to bring forward a resolution on that subject in the near future. It will contain the information my hon. friend requests and will afford to hon. members the fullest opportunity to discuss all of the items that entered into the expenditures for the year 1957-58.


William Moore Benidickson: My hon. friend, of course, is well aware that in every year, except perhaps 1926 when there was an unusual situation, two minority governments were defeated within a matter of a few weeks at that time and a portion of the warrants by one government was not subsequently adopted

in the parliamentary session that followed the election. We have had the opportunity. Apart from 1926 I cannot find that we ever lacked an opportunity in all those years to consider the expenditures under governor general's warrants in the form and with details just as they would be presented in a supplementary estimate. Is my hon. friend contemplating that similar details as to purpose and description as in a vote will be provided in the measure that he has in mind for our consideration later in the session?


Donald Methuen Fleming: This may not be in
order, Mr. Chairman, because it has nothing to do with the present measure at all. My hon. friend has asked the question and I will be brief about it. I think when my hon. friend sees what the government proposes to lay before the house he will be completely reassured in that regard.


William Moore Benidickson: Surely, Mr. Chairman, my hon. friend cannot again say that the discussion is not pertinent to the measure that he has described, because he himself said that he proposes to introduce an appropriation bill, or resolution, or something of that kind, that would relate to warrants. While we have the question and answer opportunity now I am curious to know whether or not the opportunities we will have under such a measure will be the equal of those parliament has always had when eventually governor general's warrants were discussed as supplementary estimates.
I am just going to say that in his opening remarks about the need for amending section 28 of the Financial Administration Act for the purpose of dealing with governor general's warrants and procedure thereunder the minister said that in the past they had been lacking in clarity. I think those were the words he used. I simply want to say that if they were lacking in clarity there was certainly nothing at any time ever lacking in past precedents.


Herbert Wilfred Herridge: Mr. Chairman, while I have not the close technical knowledge of the massive financial transactions that the hon. member for Kenora-Rainy River has I do want to say a few words on behalf of this group. I suggest, Mr. Chairman, that the clock now records five o'clock.


The Deputy Chairman:: It being five o'clock, it is my duty, pursuant to standing order 15, to leave the chair in order to permit the house to proceed to the consideration of private and public bills.
Progress reported.
Private Bills


Mr. Speaker:: Order. It being five o'clock, the house will now proceed to the consideration of private and public bills, the former having precedence pursuant to standing order 15(3).
Since there are a number of bills standing for consideration in committee of the whole, is it agreed that all these bills be referred to the committee of the whole in one motion?


Some hon. Members:: Agreed.



PRIVATE BILLS


[Stage Direction]
Bill No. S-7, respecting Canadian Pacific Railway Company and certain wholly owned subsidiaries.-Mr. Morton.
Bill No. SD-124, for the relief of Annie Allish Watson.-Mr. McCleave.
Bill No. SD-125, for the relief of John Spence Brown.-Mr. McCleave.
Bill No. SD-126, for the relief of Verne Alfred Freeman.-Mr. McCleave.
Bill No. SD-127, for the relief of Davina Betsy Snow Campbell.-Mr. McCleave.
Bill No. SD-128, for the relief of Jack Spinner.-Mr. McCleave.
Bill SD-130, for the relief of Claude Hector Proulx.-Mr. McCleave.
Bill No. SD-131, for the relief of Mary Florence McLelland Pringle.-Mr. McCleave.
Bil No. SD-132, for the relief of Robert Maurice Sherwood.-Mr. McCleave.
Bill No. SD-133, for the relief of Margaret Jeanette Young Warmington.-Mr. McCleave.
Bill No. SD-134, for the relief of Mary Isabella Cross Davidson.-Mr. McCleave.
Bill No. SD-135, for the relief of Rita Firestone Flax.-Mr. McCleave.
Bill No. SD-136, for the relief of Dorothy June Pearce Tribble.-Mr. McCleave.
Bill No. SD-137, for the relief of Anne Rottermund David.-Mr. McCleave.
Bill No. SD-138, for the relief of Gordon Edwin Limbrick.-Mr. McCleave.
Bill No. SD-139, for the relief of Helen Paperno Bogatin.-Mr. McCleave.
Bill No. SD-140, for the relief of Joseph Victor Cyril Goyer.-Mr. McCleave.
Bill No. SD-141, for the relief of Henry Joseph Haggett.-Mr. McCleave.
Bill No. SD-142, for the relief of Ethel Roe Emond.-Mr. McCleave.
Bill No. SD-143, for the relief of Frederick Wilson Abbott.-Mr. McCleave.
Bill No. SD-144, for the relief of Gilda
Rosen Silverman.-Mr. McCleave.
[Stage Direction]
Private Bills
Bill No. SD-145, for the relief of John Luczko.-Mr. McCleave.
Bill No. SD-146, for the relief of Anita Fischer Staub.-Mr. McCleave.
Bill No. SD-147, for the relief of Margaret Irene Dawe Mays.-Mr. McCleave.
Bill No. SD-148, for the relief of Janine Lafontaine Frost.-Mr. McCleave.
Bill No. SD-149, for the relief of Lydia Feodorovna Ovchinnikova Lipsman.-Mr. McCleave.
Bill No. SD-150, for the relief of Donald Malcolm Gangin.-Mr. McCleave.
Bill No. SD-151, for the relief of Marie Louise Plourde Auld Emard.-Mr. McCleave.
Bill No. SD-152, for the relief of Ralph Murrin.-Mr. McCleave.
Bill No. SD-153, for the relief of Bruno Giovanni Albertini.-Mr. McCleave.

[Stage Direction]
Bill No. SD-154, for the relief of Eileen Rose Brown Porteous.-Mr. McCleave.
Bill No. SD-155, for the relief of Anita Duguay Brais.-Mr. McCleave.
Bill No. SD-156, for the relief of Sydney Lesser.-Mr. McCleave.
Bill No. SD-157, for the relief of Stella Rachel Cater Harris.-Mr. McCleave.
Bill No. SD-158, for the relief of Samuel Jack Goldberg.-Mr. McCleave.
Bill No. SD-159, for the relief of Beatrice Claire Carmichael Glas.-Mr. McCleave.
Bill No. SD-160, for the relief of Francis Allan Quinn.-Mr. McCleave.
Bill No. SD-161, for the relief of James Ross MacLaren Paul.-Mr. McCleave.
Bill No. SD-162, for the relief of Barbara Golebiowski Lorens.-Mr. McCleave.
Bill No. SD-163, for the relief of Nicholas Vogel.-Mr. McCleave.
Bill No. SD-164, for the relief of Viola Mary White Witt.-Mr. McCleave.
Bill No. SD-165, for the relief of Joseph Lucien Roland Richer.-Mr. McCleave.
Bill No. SD-166, for the relief of Marc Baillargeon.

Mr. McCleave.
Bill No. SD-167, for the relief of Lucille Perrin Ballard.-Mr. McCleave.
Bill No. SD-168, for the relief of Barbara Rae Lynch Harding.-Mr. McCleave.
Bill No. SD-169, for the relief of Estelle Leblanc Hebert.-Mr. McCleave.
Bill No. SD-170, for the relief of Georgiu Panajtiotis Yarenis.-Mr. McCleave.
Bill No. SD-171, for the relief of Shirley
Watson Pennoyer.-Mr. McCleave.

Bill No. SD-172, for the relief of Anastasia Gorshko Hruby, otherwise known as Ann Gorshko Hruby.-Mr. McCleave.
Bill No. SD-173, for the relief of Edwin Showier.-Mr. McCleave.
Bill No. SD-174, for the relief of Nikolaj Kurdiaszow.-Mr. McCleave.
Bill No. SD-175, for the relief of Johann Schneider.-Mr. McCleave.
Bill No. SD-176, for the relief of Lise Beaudry Livingston.-Mr. McCleave.
Bill No. SD-177, for the relief of Beverly Georgina Berry Turpin.-Mr. McCleave.
Bill No. SD-178, for the relief of Shirley Eileen Ferris MacTavish.-Mr. McCleave.
Bill No. SD-179, for the relief of Maurice Turcotte.-Mr. McCleave.
Bill No. SD-180, for the relief of Christina Maxwell Biggs Sanderson.-Mr. McCleave.
Bill No. SD-181, for the relief of Thomas Patrick Heavers.-Mr. McCleave.
Bill No. SD-182, for the relief of Josephine Gertrude Rice Thornhill.-Mr. McCleave.
Bill No. SD-183, for the relief of Ruth Gruber Sosnowsky.-Mr. McCleave.
Bill No. SD-184, for the relief of Samuel Wasserman.

Mr. McCleave.
Bill No. SD-185, for the relief of Celia Bernhaut Jamensky.-Mr. McCleave.
Bill No. SD-186, for the relief of Mary Elizabeth Rainsborough Archer Rudner.- Mr. McCleave.
Bill No. SD-187, for the relief of Waldo John Brayton.-Mr. McCleave.

Mr. Hayden Stanton (Leeds) moved: the second reading of Bill No. S-12, respecting Ogdensburg Bridge Authority.
He said: This bill is similar to the bill passed in 1956. The Ogdensburg bridge authority was incorporated by private act of the parliament of Canada, being chapter 57 of the statutes of 1952. The purpose of the authority is to co-operate with a similar authority incorporated by the legislature of the state of New York in the building of a high-level vehicular bridge from the vicinity of Johnstown, Ontario, that is about two miles east of Prescott, to Ogdensburg, New York.
When the company was incorporated in 1952 it was estimated that the bridge would cost approximately $10 million to $12 million and accordingly the right of the company to borrow and to issue bonds, debentures or other securities was limited by sections 12, 16 and 17 of the act of incorporation. By the year 1955 it became apparent that the original estimates of the cost of the bridge

were low and accordingly at the 1956 session an amending act was passed, being chapter 65 of the statutes of 1956, increasing the amount of debentures or other securities which could be issued and the amount which could be borrowed to $20 million. It now appears that the bridge will in fact cost more than $20 million but less than $25 million, and accordingly the present application is to obtain authority to borrow or issue debentures or securities to an amount not exceeding $25 million. This is the sole and only purpose of the bill which follows the exact terms of the 1956 bill.
I should like to draw to your attention, Mr. Speaker, that the act of incorporation provides that when the cost of building the bridge has been retired, that portion of it over Canadian soil will revert to public authorities in Canada and that part of the bridge in the United States of America will revert to public authorities in the United States. In other words, this is not an undertaking for the financial gain of any private individual.
I might say, Mr. Speaker, that the tenders are practically all let for this bridge at the present time and the authority finds that the increase in the cost of labour from 1952 to the present time and the increase in the cost of materials used will mean that the bridge will cost in the neighbourhood of $22 million. It is for this reason the bill is being brought before the house and Senate at the present time, seeking authority to borrow or issue debentures or securities to an amount not exceeding $25 million. This is a very short bill. It has already passed the Senate. The construction work is proceeding rapidly, so it is the desire of those concerned that this bill be passed at the earliest possible opportunity.


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

Mr. M. D. Morton (Davenport) moved: the second reading of Bill No. S-13, respecting The Algoma Central and Hudson Bay Railway Company.
He said: If I may give to the house a brief outline of the purpose of this bill, Mr. Speaker, I would say that there is a rather lengthy explanation note contained in the bill. Primarily, this concerns a refinancing scheme of this company. The Algoma Central and Hudson Bay Railway Company was incorporated by chapter 50 of the statues of Canada in 1899. The company has constructed and operates a line of railway from
Private Bills
the city of Sault Ste. Marie to Hearst in the province of Ontario, and a branch line thereof running in a southwesterly direction to Michipicoten Harbour in the province of Ontario.
As I said, the purpose of this bill is to reorganize the capital structure of the company which has had a long and somewhat complicated history. In 1916 a compromise financial arrangement was made by the company, other companies and the bondholders, but the obligations of this scheme were not met in 1931, at which time a new scheme was arranged. At that time the scheme was confirmed by chapter 62 of the statutes of Canada. Under that scheme the bonded indebtedness of the company was to consist of $10,308,500, bearing interest at the rate of five per cent and being secured by first mortgage debentures on the stocks and bonds.
I might say a trust deed, and the usual type documents were made at that time to secure the interest of the bondholders. Also a second mortgage of $318,800, bearing interest at six per cent, was authorized, but this was paid off in 1937.
The company was further authorized to issue preference shares to the amount of $500,000 which provided 125,000 shares at $4 each. Under the present arrangement the proposal is to pay off the indebtedness which becomes due on December 31, 1959; to pay off the present preferred shares and to pay off the accumulated interest which, as at June 2, 1958, amounted to $5,729,808. Under a further scheme which was authorized in 1941 the company was authorized to allow the interest to accumulate provided that interest was paid when the bonds came due.
As a result of the scheme, when it is passed by the house, it will also permit the addition of further common shares. There will be a total capital authorized as follows: common shares to the value of $10 million, being 1 million shares having a par value of $10 each; preferred shares to the amount of $12,500,000, being 250,000 shares having a par value of $50; and the raising of $11 million by bonds and debentures. This procedure will completely reorganize the capital structure of the company. I may say at the present time all the said debenture stock and bonds and the preferred shares and common shares of the company have been issued and are outstanding except the $318,800, which I stated before were redeemed in 1937. I think that is a brief outline of what is to be done. If there are any particular questions of a complicated nature that might need to be answered, I may say that the officials will be present during the committee stage to answer such questions as hon. gentlemen might like to ask.

Private Bills


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


Mr. McGrath:: I wonder whether the hon. member would permit a question? I have two questions.


Mr. Speaker:: Order. Perhaps the hon. member, before he takes his seat, would permit a question or two. It is not the procedure on second reading to ask and answer questions.


Murray Douglas Morton: It is quite all right, Mr. Speaker.


James Aloysius McGrath: My questions are these. Are the majority of the shareholders of this company Canadians or non-Canadians? The second one is this. In view of the fact that this company appears to have had financial difficulties in the past, can the hon. member now inform the house as to the financial standing of the company at the moment?


Murray Douglas Morton: As to the first question, Mr. Speaker, I may say that the majority of shareholders are non-Canadians. However, I have here a letter dated July 11 from the general counsel and secretary of the company. It sets out in detail the shareholders, which information I can read to the house. I might say that under the arrangement all the shares of the company are held in trust under a trust agreement by the Royal Trust Company in Montreal; I refer to all the common shares and the voting shares. There are 2,221 holders of 420,755 shares divided as follows:
	Holders	Voting Trust Shares
Canada 			190,677
U.S.A	... 115	35,901United Kingdom ...	... 1,113	181,641France 	... 654	10,628Others	... 43	1,9082,221	420,755
As to the second question, I may say that I have the financial statement of the company for the year ended December 31, 1957. The net profit for the year was $1,495,775.58. The surplus balance of the company at the end of the same period, namely December 31, 1957 was $5,113,007.14. If any details are wanted, I can give them. However, that will give the house a general idea of the financial picture of the company.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on railways, canals and telegraph lines.
Mr. Speaker:: As there are a number of additional divorce bills standing for second reading, is it the wish of the house that these bills be dealt with in one motion?


Some hon. Members:: Agreed.



SECOND READINGS-SENATE BILLS

[Stage Direction]
Bill No. SD-188, for the relief of Jean-Paul Camire.-Mr. McCleave.
Bill No. SD-189, for the relief of Evelyn Zigayer Sedawey.-Mr. McCleave.
Bill No. SD-190, for the relief of Eleanor Wanda Leshynska Ross.-Mr. McCleave.
Bill No. SD-191, for the relief of Irene Rondeau Desbiens.-Mr. McCleave.
Bill No. SD-192, for the relief of Victor Petrashevics.-Mr. McCleave.
Bill No. SD-193, for the relief of Joseph Adrien Octave Guillotte.-Mr. McCleave.
Bill No. SD-194, for the relief of Jeannette Jaslow Feifer.-Mr. McCleave.
Bill No. SD-195, for the relief of Edith Rosen Browman.-Mr. McCleave.
Bill No. SD-196, for the relief of Paul-Emile Papineau.-Mr. McCleave.
Bill No. SD-197, for the relief of Joan Patricia Gatien Juzenko.-Mr. McCleave.
Bill No. SD-198, for the relief of Myrto Mona Diane Chevrette Cadieux.-Mr. McCleave.
Bill No. SD-199, for the relief of William Harrison Terry.-Mr. McCleave.
Bill No. SD-200, for the relief of Andrzej Skarzynski.-Mr. McCleave.
Bill No. SD-201, for the relief of Otto Zilkalns.-Mr. McCleave.
Bill No. SD-202, for the relief of Leo Milette.-Mr. McCleave.
Bill No. SD-203, for the relief of Angelina Di Battista Overland.-Mr. McCleave.
Bill No. SD-204, for the relief of Robert Herman Kashower.-Mr. McCleave.
Bill No. SD-205, for the relief of Evelyn Mills Miles.-Mr. McCleave.
Bill No. SD-206, for the relief of Margaret Alguire Kernaghan.-Mr. McCleave.
Bill No. SD-207, for the relief of Georges Albert Hetu.-Mr. McCleave.
Bill No. SD-208, for the relief of Francisca Catharina Sanders Simard.-Mr. McCleave.
Bill No. SD-209, for the relief of Yolande Robert LeBel.-Mr. McCleave.
Bill No. SD-210, for the relief of Joseph Anthime Roland Bock.-Mr. McCleave.
Bill No. SD-211, for the relief of Clarence Joseph Reilly.-Mr. McCleave.
Bill No. SD-212, for the relief of Elizabeth Christina Law MacNab.-Mr. McCleave.
Bill No. SD-213, for the relief of Frank Joo.-Mr. McCleave.
Bill No. SD-214, for the relief of Eileen
Annie Elizabeth Stonebridge Hopkinson.-Mr. McCleave.

Bill No. SD-215, for the relief of Giuseppe Fusari.-Mr. McCleave.
Bill No. SD-216, for the relief of Jean Adolphe Abel Mathys.-Mr. McCleave.
Bill No. SD-217, for the relief of Catherine Regina Hearn Cullen.-Mr. McCleave.
Bill No. SD-218, for the relief of Richard Cloutier.-Mr. McCleave.


Mr. Arnold Peters (Timiskaming) moved: the second reading of Bill No. C-19, to amend the Canada Elections Act (publication of straw poll results).
He said: Mr. Speaker, the purpose of this amendment is to prohibit and make punishable as an illegal practice the publication in any manner before election day the result of straw polls or polls on the political opinions of the electors. The proposed amendment does not prohibit the taking of such polls for private purposes and it should be pointed out that we in this group have no objection to the taking of polls of political opinions of the public. We have no objection to the taking of such polls in high schools or public schools or in any other places but what we do object to is the publication of the results of those polls to be used for purposes other than that for which they were intended when the poll was originally taken. Some consideration has been given to this matter by other countries and by certain provinces in Canada, which have passed legislation prohibiting such use of polls.
Something should, I think, be said with regard to what may be accomplished by the taking of polls and the results which sometimes may be found from the conducting of them. We all know of cases where questions are asked of the general public which are very innocent in nature but by the time the results of such polls are used by certain advertising agencies and implications are drawn from them, the information presented to the public does not necessarily represent the opinions expressed by the participants in the poll. There is actually no guarantee to the Canadian people that such polls are taken on a regular sample basis; the people who are asked questions may or may not be representative of Canadians as a whole.
One of the problems facing our people in respect to politics is the fact that an increasing number of people appear to be interested in or concerned with being on the winning side and when a poll is conducted they have a tendency to make the predictions made by a poll come true because they wish to be on
Canada Elections Act
the winning side and so vote in accordance with the indications of these polls. A good example of what can happen from the improper conducting of a poll was the case during an election in the United States. At that time a poll was conducted as to the public opinion with respect to whether the future president of the United States would be a Republican or a Democrat. The general result of the poll suggested the vote would be in favour of the opposition of Mr. Truman to the extent of 12 per cent. On page 663 of volume 2 of "A History of the American People" by Harry J. Carman and Harold C. Syrett, it says:
Throughout the campaign the so-called-and often self-styled-experts, the newspapers, and the professional poll takers were unanimous in their predictions of a sweeping Republican victory.
This volume continues on page 664 as follows:
On the day after the election Truman almost alone could take credit for engineering the most stunning upset in the history of American presidential elections.
This was one case where the poll in fact indicated an incorrect trend although it resulted in little change in the general attitude of the voting public of the United States. It does, however, point out that polls are not necessarily true expressions of opinion and therefore while we should allow them to be taken because they do serve a useful purpose, we should prevent their results from being made public during an election campaign.
We would like to extend this principle to the schools. The practice is becoming quite widely adopted of conducting polls in public schools and in my area the public school children are allowed to conduct an election on election day while they are not allowed to do so three or four days beforehand because this might have some effect on the opinion expressed on election day. In British Columbia some action has been taken on this matter and an amendment has been introduced to the elections act in that province, namely section 168, which reads as follows:
168. No person, corporation, or organization shall, after the issue of the writ for any election, take any straw vote which will, prior to the election, distinguish the political opinions of the voters in any electoral district.
This was passed in 1939 and has worked very satisfactorily in British Columbia and we are suggesting similar legislation be introduced by the government of Canada. I am quite sure there will be some expression of opinion on this matter and I will not now take any more time but will allow the house to decide whether it will vote on this bill today.

Canada Elections Act (Translation):


Mr. Maurice Allard (Sherbrooke):: Mr. Speaker, it is always interesting for a new member to examine bills introduced by opposition parties during a first session.
While we are considering the bill introduced by the hon. member for Timiskaming (Mr. Peters), I should like to say that in the first place, we should ask ourselves whether the action taken by the hon. member opposite has not been influenced by the results of the last federal election. While the result of the last election campaign was not very favourable to the party he represents, I trust the hon. member for Timiskaming is rather more interested in the principle at stake. I must therefore congratulate him on introducing this bill.
We must realize that the straw votes or public opinion polls conducted prior to election campaigns cannot indicate with any degree of accuracy the actual facts and the state of public opinion.
We know, and the hon. member did point that out at the beginning of his remarks, that in certain countries the results of public opinion polls conducted for the purpose of determining public feeling prior to voting day were not vindicated by the results of the vote itself.
We also are aware of the fact that election campaigns should be carried out in an atmosphere of calm and serenity. We see by the Canada Elections Act, particularly with ref-ference to those days which immediately precede voting day, that the lawmaker's intention was that the people be put in a position to analyse with as great a degree as possible of calm and serenity the various political platforms submitted to their approval as well as to judge at their proper value the men who are seeking to obtain endorsation through universal suffrage. That is why I feel convinced that the proposed legislation introduced by the hon. member opposite is very much in line with that atmosphere of calm, serenity and balance in which any election campaign should, in fact, take place.
It can be claimed that straw votes, public opinion polls are more likely to foster the ambitions of the various political parties than to enlighten public opinion to any substantial degree.
I remember, among other things, that in the province of Quebec, during the last election, a certain newspaper asked its readers to send in their opinions with regard to the probable outcome of the vote. This newspaper having compiled various letters and communications from its friends and subscribers proceeded to publish first rate articles -in large type, of course-in an attempt to

show that the views of those friends and subscribers were, in fact, a true indication of public opinion in a certain area, in the province or even in the country.
This shows that straw votes, or public opinion polls are not based on a fair sample of citizens, a representative cross-section of the people, but that on the contrary, especially when they are conducted by newspapers or propaganda agencies and involve friends and subscribers of those organizations, they provide results which have very little to do, if anything, with the current state of public feeling.
Indeed, we have seen that, in the course of history, some countries ruled by dictators, have benefited from such artifice. If we recall Hitler's career, we remember that he prepared his elections by resorting to such manoeuvres and that he did so with a great deal of acumen and flexibility, so that the voter was not left to himself facing his conscience, and weighing with a calm and balanced mind his final opinion of the actual value of party programs or candidates. Well, by such excessive campaigning, he influenced voters and public opinion single-mindedly as to the actual value of his political program.
Here in Canada political parties favouring the universal vote are placed in a position perhaps more peculiar than in other countries, for our economy varies according to the area where we live. Because of Canada's geographical conditions, Canadians face different issues. For instance those living in the west or in British Columbia have to solve problems relating to industry and fishing. In the more central part of the west we have the issues of farming and agriculture. In Ontario and in the province of Quebec there are problems concerning industry and labour, while in the maritimes the problems of thermal stations, of fisheries and of shipbuilding take the spotlight.
We see therefore that because of the geographical configuration of our country, the Canadian citizen who wants to form his own opinion and study the various policies, must first consider every issue from various angles, always taking into account the province or the area where he lives. Now those propaganda organizations talk only in figures, without giving any substantial or constructive idea. They are often content to publish figures in support of this or that party. Needless to say that when a survey is limited to a certain district, the citizens of that area, because of geographical differences will not always be able to share, with regard to our commonweal, the opinion of those other Canadians who live outside that area or at the other end of the country.

That is why we have witnessed during the last election a propoganda which did not adequately inform our people. I believe those publicity and propaganda agencies should rather try to explain the economic and industrial problems of Canada, instead of just luring people with figures which do not give a real picture of the Canadian way of thinking.
In the last election campaign-as would have been the case in any other-Canadian citizens should have been informed of the problems facing the country. This way, Canadians could have been told of the situation of the textile industry, which is vital for many cities in the province of Quebec. In fact, several cities of that province depend upon the textile industry, as it employs more than
47,000	workers. Those propaganda agencies could have provided our citizens of the areas concerned with interesting data, constructive ideas about that industry, explaining the origin, history and cause of the slump, while suggesting at the same thing the appropriate remedies to improve the situation in that field.
Mr. Speaker, I believe that during an election campaign, the propaganda organizations should endeavour to keep Canadians informed of the very basis of our government, its various fields of activity, as well as about the Canadian constitution of 1867.
I feel that several members of the house realized, during the last election campaign -as was the case in previous campaigns- that very few Canadians are aware of the provisions under which the Canadian constitution allows the federal government to exercise powers in certain fields, while granting provinces perfect freedom of action in others, and putting municipalities in a position to meet their respective obligations. Consequently, propaganda agencies should endeavour, during any election campaign, to inform the Canadian citizen, so that he may be aware of the industrial and economic problems facing his country, as well as of the constitution which governs him. He would then be in a better position to assess the political platform of the various parties because, after all, propaganda should seek to educate, and this it cannot do by merely showing figures that do not mean much for, while they might reveal trends or policies, they do not explain the various grievances upon which the Canadian population is called upon to decide.
That is why, Mr. Speaker, I take pleasure -as I said at the beginning of my remarks- in congratulating the hon. member for Timis-kaming, for raising, by means of his bill, a principle which is well in line with the general principles of the elections act, which demand that, during any election campaign, both male and female electors enjoy full
Canada Elections Act
freedom of thought and full liberty of conscience, in order that they may better understand the Canadian problems and the political platforms which are presented to them in those important circumstances.


Mr. Georges Valade (Si. Mary):: Mr. Speaker, by taking part in the discussion of this bill I shall most probably ruffle the feelings of my colleague from Sherbrooke (Mr. Allard).
If I correctly understand the purpose of Bill C-19, it merely consists in amending the Canada Elections Act by adding the following sentence:
After the issue of the writ for an election, or after the dissolution of parliament or the occurrence of a vacancy in consequence of which a writ for an election is eventually issued-
That, as I see it, is what the sponsor of this bill wishes to add to section 108, subsection 1, chapter 23 of the Revised Statutes of Canada, 1952, which at present reads as follows:
No person, company or corporation shall, in any province and before the hour of closing of the polls in such province, publish the result or purported result of a straw vote or poll of the political opinions of the electors or any of them in any electoral district or districts in Canada, whether such publication is by radio broadcast, or by newspaper, news-sheet, poster, bill-board, handbill or in any other manner; any person contravening the provisions of this subsection (and in the case of a company or corporation, any person responsible for the contravention thereof) is guilty of an illegal practice and of an offence against this act.
Mr. Speaker, if I correctly understand this bill, it seems to me superfluous because it makes no change whatever in the elections act; it merely adds a few words to the provisions of that legislation. I feel that our opponents will certainly not achieve their purpose by amending the act along the lines of the bill introduced by the hon. member for Timiskaming.
In any event, Mr. Speaker, we were happy to read in last week's newspapers that according to a poll conducted recently in this country, the Conservative party is increasingly popular. This has had no effect whatever on the results of the March 31 elections.
I think I have a pretty fair idea of the real purpose behind the proposed amendment. I wonder, not without some anxiety, if our hon. friends of the "group"-to use the words of the hon. member for Vancouver East (Mr. Winch)-are not somewhat afraid of public opinion. Knowing full well that they do not enjoy a great deal of popularity in this country, they obviously must make every

Canada Elections Act
attempt to limit, among the people of this country, the results of the very restricted popularity they enjoy.
I would feel remiss in my duty, Mr. Speaker, if I were not to pay some tribute to the value of public opinion polls. I am convinced that many of my colleagues in this house share my views on this matter. Public opinion polls are the basis of true democracy, devoid of any taint of socialism, whatever form this socialism may take. Moreover, Mr. Speaker, I believe that public opinion polls serve to prove the freedom of opinion enjoyed in a truly democratic country and that, further, it confirms the liberty of the press in this country.
Those, Mr. Speaker, are some of the reasons why I do not welcome the proposed amendment to the Canada Elections Act. By proposing such a legislation, it is obvious that certain political persons can gain a certain amount of newspaper publicity.
If our friends believe they are harmed by those public opinion polls, all they have to do is to ask for enforcement of sub-section 1 of section 67 of the Canada Elections Act. They will find there essential factors protecting their popularity, if they feel concerned.
I do not believe, Mr. Speaker, that by bringing this amendment to the Canada Elections Act there is any other purpose than to suggest very sincerely that those reports are liable to influence people. There certainly is no undue influence in those popular polls because section 67 provides for such cases during an election campaign, and could be invoked to forbid their publication. If my hon. friends of the small group of the opposition will allow me, I will read that section:
67. (1) Every person is guilty of the corrupt practice of undue influence and of an indictable offence against this Act punishable as provided in this Act, who, directly or indirectly, by himself or by any other person on his behalf, makes use of, or threatens to make use of, any force, violence or restraint, or inflicts, or threatens the infliction.
I will not read the rest of the section. I only wanted to draw a parallel between the provision of section 108 of the act and the undue influence to which my hon. friends seemed to refer.
Mr. Speaker, I do not see how those public opinion polls can in any way influence the vote. I have more confidence than that in the integrity of the Canadian electorate. I am convinced that nobody would let his vote be influenced by glancing, on occasion, with a
bit of discretion, at the results of those popular polls. People want to be informed, and I believe that it is the duty of the newspapers to inform them. A poll does not constitute propaganda. The report of a public opinion poll is only the announcement that, in some measure, a percentage of the population declared itself for or against a political party or politician.
I do not think that these polls can prejudice our friends in any way because people very often consider not so much the results of such popular polls but rather the programs and the candidates. That is why the Canadian people sent 208 Conservatives to this house in the last election. Therefore we see that the result of the public poll taken before the last election gave the facts and that the survey was neither inaccurate nor dishonest. I heard the hon. member who moved this bill talking of criticisms directed against the Gallup poll after the election campaign of Mr. Truman in 1948. However this just proves that such surveys of public opinion do not in any way change individual conviction, for even if those polls did not favour former president Truman, the result showed that the personal opinion of each voter was worth more than such public survey.
Mr. Speaker, I made these remarks because, though I am not opposed to this bill, I do not see any use in it. Without wanting to influence anybody, I believe this bill should not have been submitted to this house this afternoon.


Mr. Rouleau:: Will the hon. member who just sat down allow a question?


Georges-J. Valade: I will allow you many more than you would allow me.


Guy Rouleau: I did not quite catch the hon. member's answer but does he allow a question?


Georges-J. Valade: Yes.


Guy Rouleau: As the hon. member is in favour of public opinion polls, does he also approve the public poll with regard to what has recently happened in respect of natural gas in the province of Quebec?


An hon. Member:: Some of your friends have bought some.


Georges-J. Valade: I accept the hon. member's question. He might get information from Liberal members who have bought some of those shares.


(Text):


Mr. Heward Graffiey (Brome-Missisquoi):: Mr. Speaker, speaking in all frankness, at this very moment, I find myself sitting squarely on the horns of a triple dilemma. I do not know whether this bill has been prompted by a sense of seriousness, sour grapes or regret but, at any rate, we have to deal with it. I would like to point out, as previous speakers have done, that on two notable occasions, namely an election in the United States of America in 1948, and our own election on June 10 of last year, the public behaved in a way exactly opposite to that indicated in the Gallup polls.
I would like to submit very briefly, Mr. Speaker, that in my opinion this bill denotes more than a modicum of paternalism on the part of that group. It displays the C.C.F.'s normal lack of faith in human nature and it is an attempt to legislate on a quasi moral basis. Frankly, I find it very hard to believe that this bill is put forward in a spirit of real seriousness. I would only submit that, in my opinion, it constitutes a violation of our inalienable right of speculation and on this basis I would like to say in brief that I cannot support the bill.


Mr. R. J. McCleave (Halifax):: Mr. Speaker, this is one of five bills before us this session which I believe are legacies of the former member for Winnipeg North Centre and all dealing with proposed amendments-


Herbert Wilfred Herridge: Not this one.


Robert Jardine McCleave: -to the Canada Elections Act. I hear my hon. friend opposite say that this is not one of his legacies. I am very happy to hear that. I have always thought that Mr. Knowles was a man of great intelligence and to know that this was propounded by someone else confirms me in my original belief.
If the House of Commons were to accept Bill C-19 we would be striking a massive blow at the freedom of the press.


Mr. Winch:: Do you agree with the Progressive Conservative support of an election bill in British Columbia?


Robert Jardine McCleave: May I read an extract from the bill which is before us:
No person shall publish the result of a poll of the political opinions of the electors in any electoral district in Canada.
These are the words that are in the bill;
there are others in between them, but assum-
29, 1958	2835
Canada Elections Act
ing that this bill should pass the words I mentioned would make it impossible for the members of the press gallery, for example, to assert their right, as they have in the past, to travel about from one end of Canada to the other, to be wrong about the results of an election, or for that matter to be right. It would prevent them going forth asking questions, as is the normal custom of reporters, to find out how Canadians think about elections. I think it would be a very serious thing if we were to cramp these gentlemen of the press by passing such a measure as this. But, apart from the freedom of the press, there are other very grave objections to a bill of this kind.
Again, according to the subsection proposed, it would be an offence if any one of us were to write a letter to anybody else in Canada making some prediction or forecast about the result of an election. This brings me to a very grave form of objection. If we are to have a law we may as well have a law that can be enforced. It would seem to me to be a very difficult matter for the mounted police to run on the tail of all the reporters making the rounds to find out how they think the Canadian people feel about this, that or the other political party. As to the censorship that would be involved in the mail were you to send election guesses through the mail, it would be a terrific job. Under this section you would be committing an offence and we, of course, should not have the mails used for committing offences. Then, it would mean that almost every person in Canada would be up for violation of the section.


Herbert Wilfred Herridge: Will the hon. member permit a question?


Robert Jardine McCleave: Yes.


Herbert Wilfred Herridge: Does the hon. member repudiate the expressed views of the Progressive Conservative members of the legislature of British Columbia who supported this principle in a bill covering elections?


Robert Jardine McCleave: That is a fair question and if my hon. friend will send me over an exact copy of the bill that was passed by the British Columbia legislature I shall be glad to answer it.


Mr. Badanai:: You should know.


Robert Jardine McCleave: Since it is coming up to six o'clock, I shall be glad to answer him privately and put my views on paper before him. May I call it six o'clock, Mr. Speaker?
2836	HOUSE OF
Financial Administration Act


Harold Edward Winch: I am sorry, you cannot call it six o'clock.


Mr. Speaker:: The house does not agree to your calling it six o'clock.


Robert Jardine McCleave: Mr. Speaker, the question proposed by the hon. member for Kootenay West is whether I agree with the philosophy of the Progressive Conservative members who supported a similar bill in the legislature of British Columbia.


Some hon. Members:: Six o'clock.


Harold Edward Winch: It now being six o'clock, the hon. member can sit down.


Mr. Speaker:: It being six o'clock the house will revert to the business which was interrupted at five o'clock. With the permission of the house may we return to committee of the whole on the matter which was under consideration at five o'clock?


Some hon. Members:: Agreed.



FINANCIAL ADMINISTRATION ACT


[Stage Direction]
The house resumed consideration in committee of the following resolution-Mr. Fleming (Eglinton)-Mr. Rea in the chair:
That it is expedient to introduce a measure to amend the Financial Administration Act to authorize the deletion from the accounts of obligations or debts due to Her Majesty or claims by Her Majesty that do not exceed twenty-five dollars; to clarify the circumstances in which special warrants signed by the governor general may be issued; to permit a crown corporation to establish a receiver general account with ministerial approval and to authorize the payment of interest on money placed to the credit of such an account; and to provide for certain consequential changes in connection with the administration of the act.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at eight o'clock.
Herbert Wilfred Herridge: Just prior to five o'clock, Mr. Chairman, when the house considered private bills, I had given vocal indication I wished to say a few words on this resolution on behalf of this group. I might say that we support the resolution, in principle, and anticipate the bill. This resolution provides for the introduction of a bill to make certain amendments to the Financial Administration Act. I notice most of these amendments are somewhat minor in character, generally


speaking, but there is one amendment provided for that does interest this group particularly, and I judge from the remarks of the hon. member for Kenora-Rainy River interests his group also, and that is the amendment to clarify the circumstances in which special warrants signed by the governor general may be issued.
I cannot read the word "clarified" without thinking of the former member for Cape Breton South because that was a favourite phrase of his when he was in this house, when he was trying to get the government to clear up some misunderstanding with respect to legislation. I believe, from the point of view of this group, this is an important part of this legislation, particularly in view of the government's action last session and the large amounts that were passed under governor general's warrants and in view also of the failure of the government to include a certain warrant in the estimates of citizenship and immigration. I am sure the minister will recall the afternoon and evening debate that occurred on the estimates of the Department of Citizenship and Immigration because of the failure of the government to include in those estimates a certain estimate provided for by a governor general's warrant. I presume that while at the time the efforts of this group in that respect seemed somewhat futile, and the response from the government side of the house was negative, the introduction of this resolution would indicate that some afterthought caused the government to give a second consideration to their former actions.
As I said before, we are interested in this question of clarifying the circumstances in which a special warrant signed by the governor general may be issued. I think not only we in this group but a good many members of this house and, during the last year, a very great many people in the country, were seriously concerned about this matter. I am not questioning for one moment that the government did find itself in somewhat unusual and particular circumstances, and found it necessary on occasion to issue these governor general's warrants for very large sums of money. But the circumstances were such as to cause a certain amount of eyebrow raising and concern across this country by people who give consideration to the proper recognition of the rights of parliament, and a recognition of the proper procedures, and so on. We are very glad, therefore, the government has introduced this resolution.
However, to indicate the concern, I am simply going to quote from an article that appeared in one newspaper, and similar

articles appeared in newspapers across Canada. I should like to quote from the Ottawa Citizen, February 17,	1958, shortly after
parliament was dissolved and we had all gone home anticipating an election. The article is headed "Bypass Parliament with HalfBillion in Single Warrant". I should like to quote from it briefly:
Largest single governor general's warrant ever issued in Canada-$544,290,332.32-has been received by the Diefenbaker government.
By issuance of a warrant covering practically the full balance of the appropriations asked of parliament in the 1957-58 estimates, and the supplementary estimates to go with them, parliament is being bypassed completely.
The only way parliament will have to deal with this half-billion is when public acounts are presented more than a year hence, after all the money is spent, unless the government elected March 31 chooses to get parliamentary approval in some other way-
No additions to the estimates have been included in it but there are certain important deletions from them including one of $103 million which former finance minister Harris put in to cover the deficit on the old age security fund. This $103 million will not now show in the accounts for the current fiscal year and will either increase the surplus or reduce the deficit for the final accounting on the fiscal year.
The government is said to have decided that there was no precedent for covering such an expenditure by issuance of a governor general's warrant.
Then, there is one more short paragraph headed "Difference in 1940 Warrant":
One has to go back to 1940, the first full year of the war, to get a warrant of a size even remotely approaching the present one. But even there there was this important difference:
The 1940 warrant did not cover expenditures up to the end of the fiscal year which meant that when parliament was asked to vote the money for the last month it could examine every item in detail if it wished.
I quote that to indicate the criticisms that occurred in newspapers across this country and which I think did reflect the concern of thinking people with these procedures, and with the securing of governor general's warrants shortly after parliament had been dissolved for such large sums of money.
I said, Mr. Chairman, we were going to be very brief at this stage. We look forward to the bill, and we will reserve the greater part of our discussion until we have the bill in our hands, and after we have had an opportunity for close scrutiny of the proposals contained in this measure.


Lester Bowles Pearson: Before this resolution carries may I say that in so far as it deals with methods of tidying up some of the financial procedures that have been carried on in the past I think it is a useful bill and will be supported on this side. But as has already been indicated, we have a special interest in that part of the resolution which deals
Financial Administration Act with a very important, and certainly last January, a very controversial question, that is governor general's warrants.
We should like to be assured, and we hope the bill will give us that assurance, that procedures will be laid down which will ensure that these warrants can be given full parliamentary consideration in the future, and given the consideration which we felt was not given last January. I should add that this kind of consideration was always given when we were in office because I think we were scrupulous in insisting that when governor general's warrants were utilized there was a method adopted by which parliament could always consider and pass upon them. The hon. member for Kenora-Rainy River before six o'clock did suggest that perhaps it would be a good thing to have this bill go before the public accounts committee for scrutiny. No doubt the minister will be considering that suggestion.
But apart from that, Mr. Chairman, we remind the minister, as no doubt he was reminded before six o'clock, that there is a specific statement on the record by the Prime Minister to the effect that the committee on public accounts would be set up for the purpose, amongst other things, of considering governor general's warrants. I refer to page 34 of Hansard for May 13, 1958 where the Prime Minister said:
We intend to set up this committee;-
That is the public accounts committee.
-we intend to have an examination of the expenditures made under governor general's warrants.
He must have meant an examination before that committee. He went on to say this:
It is not a question of amount. There were governor general's warrants issued and passed and my reading of the record does not indicate that the stand we are going to take whereby the expenditures were made available to a committee of the house for complete examination was taken in the past.
Hence from that statement of the Prime Minister we have the right to assume that if and when this bill is passed the governor general's warrants with which we are concerned at the present time and which have not been considered by this house will be referred, as the first item or as an early item of business, to the public accounts committee as stated by the Prime Minister on May 13 last. We should like to get from the minister an assurance that this course will be followed.


Donald Methuen Fleming: Mr. Chairman, I am not prepared to confirm the precise reading that the Leader of the Opposition has put upon the statement of the Prime Minister
2838	HOUSE OF
Financial Administration Act on that occasion. He is reading that statement as saying that the warrants are going to be referred to the public accounts committee. If you will have regard to what was said on May 13 and May 14 by myself on the same subject, Mr. Chairman, you will see set out in some detail the procedure that is intended to be followed.
Any expenditure that is made, whether in pursuance of an appropriation by act of parliament or in pursuance of an appropriation by warrant, of course, falls within the ambit of review by the public accounts committee when reported to the house in the public accounts in the ordinary course. Certainly the expenditures made by warrant in the months of February and March as well as in April and the first half of May of this year will in due course fall within the ambit of the public accounts committee after the Auditor General has completed his normal audit. That is a different matter, however, from the task that will confront the house at the present session of dealing with warrants in a different context.
As was indicated by the hon. member for Kenora-Rainy River this afternoon, what is looked for and what I indicated in my remarks on May 13 and 14 as the intention of the government is to bring in a measure which will deal with the supply for the year 1957-58 including the warrants in a manner that will afford the house the fullest opportunity to go over the supply item by item. That is another measure. It is not the measure before us now.
What we are dealing with now is a resolution contemplating the amendment of the Financial Administration Act, for the future, dealing with the kind of situation we have encountered this year and to clarify the law in all respects so that in future neither parliament nor government will be left in any question as to what is the course that should be followed in a situation where it is necessary to provide for a needed expenditure under urgent circumstances by governor general's warrants. The situation about which the Leader of the Opposition was talking is one that is quite outside the scope of the present resolution. I expect within a few days to be bringing before the house a resolution which will deal with that subject and which will afford to hon. members an opportunity of reviewing the items that enter into the supply for 1957-58, including warrants.


Lester Bowles Pearson: Perhaps in a narrow, technical sense the point that I raised may not be related directly to the resolution which my hon. friend has introduced. But that


resolution deals with governor general's warrants; and it seemed to me to be appropriate to refer at this time to the statement of the Prime Minister which does not bear any other reasonable interpretation than the one I have given when he said:
We intend to set up this committee;-
That is the public accounts committee.
-we intend to have an examination of the expenditures made under governor general's warrants.
The only expenditures made under governor general's warrants about which he could have been thinking were those made by the government in the last twelve months. Those must have been the expenditures which he said would be referred to this committee which was about to be set up. My hon. friend said that he is going to introduce another resolution on this subject which will indicate how these governor general's warrants are to be dealt with in order to ensure that parliament will be given the full right of discussion. All I am suggesting-and perhaps he will bear this in mind-is that in that resolution we would expect some provision to be made for the discussion of these warrants in the public accounts committee because that is what we were led to believe would happen when the Prime Minister made that statement.


Donald Methuen Fleming: I think I should remind my hon. friend that accounts are referred to the public accounts committee under the procedures of this house only after they have been audited by the Auditor General. The public accounts that go to the public accounts committee are those which have been audited by the Auditor General and are accompanied by his report. They will be available in due course when he completes his audit of the accounts in question. However, I doubt very much whether they will be ready for this session, unless we are here for a very long time. I can give my hon. friend the assurance that the measure which, as I have indicated, I expect to be introducing in a few days will fully reserve the rights of the public accounts committee to review all expenditures when audited in the ordinary course by the Auditor General. That measure will take nothing away from the well-established rights of the public accounts committee.


Lester Bowles Pearson: I take it that my hon. friend is suggesting that provision will be made for discussion of these governor general's warrants in this session in an appropriate way by parliament.


William Moore Benidickson: The 1957-58 warrants.


Lester Bowles Pearson: Yes; the 1957-58 warrants.

Excise Tax Act


Donald Methuen Fleming: That is what I it is crystal clear. Now he is bringing in a have been trying to say for some time, Mr. bill in respect to a measure which he says Chairman.	lacks clarity.


Lester Bowles Pearson: Yes; but my hon. friend is also presumably suggesting that the governor general's warrants referred to by the Prime Minister on May 13 are governor general's warrants which will be available for discussion also in the public accounts committee when they become part of the public accounts. Presumably that means a year from now. By that does he mean that we shall have a chance to discuss these governor general's warrants now in the House of Commons and, if that is the case, that we shall have another opportunity to discuss them as part of the public accounts a year from now?


Donald Methuen Fleming: Yes, my hon. friend will have the double right. He will have his opportunities heaped up to the brim and running over. I wish to leave no doubt in my hon. friend's mind on that matter. The measure that will be brought in will undoubtedly afford the house an opportunity to discuss item by item the supply for 1957-58 that has not already been voted, including warrants for 1957-58.


Lester Bowles Pearson: That is the interpretation then that my hon. friend is giving to the Prime Minister's statement.


Donald Methuen Fleming: That is precisely what I said myself in reviewing this subject in greater detail on May 13 and 14. I dealt with this matter at some length and my friend the hon. member for Kenora-Rainy River this afternoon was referring to my remarks.


Joseph Pierre Albert Sévigny: Shall the resolution carry?


Some hon. Members:: Carried.


John Whitney Pickersgill: No, Mr. Chairman. I think the minister might take us a little bit further along the road and tell us precisely what technique is going to be followed in this measure that he is going to bring in to provide for the consideration of these warrants. It is an unusual thing the minister is doing. It is something that has never been done before. It is very closely related to this measure. The minister need not fall back on the strict rules because there are plenty of precedents in this house established by the previous administration for the government taking the house into its confidence in order to get one measure through quickly, and telling us precisely what the contents of another resolution are going to be. A great deal depends upon the technique. We were told on February 1 that the present Financial Administration Act was perfectly adequate, that no change was contemplated. In fact the minister's own words were that


Donald Methuen Fleming: You are talking about two different things.


John Whitney Pickersgill: No, if the minister will refresh his memory he will find it is precisely the same thing but, of course, as we know, the minister's memory has frequently failed him since he crossed the floor. However, I believe the passage of this bill might be expedited if the minister would take us into his confidence and tell us the technique which is going to be used in the measure he wishes to bring down.


Donald Methuen Fleming: I have already quite fully indicated to the house the steps which will be taken in order to ensure to the house a full opportunity to deal with the items in the 1957-58 supply, including warrants, in so far as those items have not already received the approval of parliament. We are dealing with a measure to amend the Financial Administration Act and it would not perhaps be proper on my part to go any further than I have already gone; in fact, I think I may have already gone further than is proper in indicating the steps the government proposes to take to ensure to parliament the full opportunities requested and of which the government gave assurance on May 13 and 14 and again today.
The details of the procedure will be clearly spelled out when the resolution is before the house, which I have already indicated we expect to be in a matter of a few days.
Resolution reported and concurred in.
Mr. Fleming (Eglinton) thereupon moved for leave to introduce Bill No. C-43, to amend the Financial Administration Act.
Motion agreed to and bill read the first time.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Sevigny in the chair.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, among other things:
1.	That the sales tax on the following goods be repealed:
(a)	certain building materials, as follows:
(i)	chimneys for buildings, not including fireplaces;
(ii)	cornice, frieze, pilasters and other units or members of wood milled for use as structural or architectural building components, not including assembled or unassembled cabinets, counters, cupboards, furniture, ironing boards, work benches and similar installations;
[Stage Direction]
Excise Tax Act
(iii)	ash handling and fuel handling equipment for use with furnaces for the heating of buildings, when connected directly to such furnaces and installed in the same building as such furnaces;
(iv)	fuel oil tanks for use with furnaces for the heating of buildings and connected directly to such furnaces;
(v)	latch sets, master key cylinder blocks, knobs and hinges;
(vi)	hard surface plastic laminated building materials;
(vii)	underlayment material for hard surface floor coverings for permanent bonding to floors;
(viii)	articles and materials to be used exclusively in the manufacture of the foregoing.
(b)	certain goods sold to or imported by municipalities for their own use and not for resale, as follows;
(i)	culverts;
(ii)	structural aluminum for bridges;
(iii)	fire truck chassis for the permanent attachment thereon of fire fighting equipment to be used directly in fire fighting;
(iv)	fire hose including couplings and nozzles therefor;
(v)	diesel fuel oil for use in generating electricity;
(vi)	goods for use as part of sewage and drainage systems;
(vii)	articles and materials to be used exclusively in the manufacture of the foregoing.
(c)	certain agricultural, horticultural and forestry goods as follows:
(i)	stock conditioners, condiments and food supplements for addition to poultry, cattle and other stock feeds;
(ii)	goods enumerated in Customs Tariff item 417:
"Machinery and apparatus and complete parts thereof and structural iron and steel, of a class or kind not made in Canada, when imported for use exclusively in the construction or equipment of factories for the manufacture of sugar from beetroot, or for receiving sugar beets, under regulations prescribed by the Minister;"
(iii)	individual tree guards and tree protectors not exceeding thirty-six inches in height;
(iv)	cut flowers;
(v)	materials to be used exclusively in the manufacture of grain or seed cleaning machines and parts thereof;
(vi)	rodent poisons.
2.	That the present exemption for fruit juices which consist of at least ninety-five per cent of pure juice of the fruit be extended to fruit juices consisting of at least eighty-five per cent of the pure juice of the fruit.
3.	That the wording of the exemption for "bases or concentrates for making beverages other than soft drink beverages" in Schedule III be changed to read:
"Bases, not including fruit or imitation fruit bases, for making non-alcoholic food beverages; fruit bases or fruit concentrates for making beverages, when sold in containers not exceeding ten ounces and consisting of at least eighty-five per cent of pure juice of the fruit."
4.	That the wording of the exemption for "flavouring extracts" under "Foodstuffs" in Schedule III be changed to read:
"Food flavouring extracts, emulsions and powders, not including those for beverages."
5. That the exemption for desks and chairs specially designed for class room use when sold to educational institutions be extended to apply to chalkboards, desks, tables and chairs, excluding upholstered chairs, without the requirement that they be specially designed for class room use.
6. That the exemption for fire brick, plastic refractories, high temperature cement, fire clay and

other refractory materials be extended by removing the present condition requiring them to be "for use exclusively in the construction or repair of a furnace, kiln or other equipment of a manufacturing establishment".
7.	That the exemption for materials consumed or expended directly in the process of manufacture or production of goods be clarified and brought into line with the exemption for fuel for lighting or heating, which excludes fuel for use in internal combustion engines.
8.	That advertising sheets, local bulletins, local circulars and similar publications be excluded from the exemption for newspapers unless they have qualified as a newspaper enjoying second-class mailing privileges.
9.	That certain goods enumerated in Customs Tariff item 848 continue to be exempt from sales tax by listing in Schedule III of the Act the following Tariff items under which these goods are being regrouped by Customs Tariff Resolutions:
399a, 399b, 399c, 848, 848a, 848b.
10.	That payments under section forty-seven of the Act to the institutions for children and aged, infirm or incapacitated persons to which that section applies, be increased
(a)	by enlarging the class of such institutions eligible to receive such payments by removing the present requirement that the shelter or care provided must be permanent or semi-permanent;
(b)	by including in the payments an amount equal to the taxes paid on purchases made within two years prior to certification by the Minister of National Health and Welfare, and made by or on behalf of the institution in the course of construction during that period.
11.	That the annual fee for sales and excise tax licences be abolished.
12.	That the excise tax on special editions of non-Canadian periodicals imposed by Part II of the Act be repealed.
13.	That any enactment founded upon this resolution be deemed to have come into force on the eighteenth day of June nineteen hundred and fifty-eight.
John Whitney Pickersgill: I just want to take about 30 seconds of the committee's time to make reference to a speech made the other evening, if you could call it a speech, by the hon. member for St. Hyacinthe-Bagot-and I will not say Baghdad. The hon. member, when he finally got the bubble gum out of his mouth and got the maritime provinces straightened out-


Some hon. Members:: Order.


Mr. Monteith (Verdun):: Do you think that is funny?


John Whitney Pickersgill: I do not think it is funny and I did not think it was funny when the hon. member for St. Hyacinthe-Bagot kept interjecting during my speech the other evening.


An hon. Member:: If you spoke as well in French as he speaks in English you would be doing all right.


An hon. Member:: Take your hands out of your pockets.


John Whitney Pickersgill: It is obvious that the hon. Minister of National Health and Welfare was

not present and has not read the proceedings the other evening because the hon. member for St. Hyacinthe-Bagot was very much obsessed with bubble gum and, as I say, when he finally got the bubble gum out of his mouth and got the maritime provinces straightened out he suggested that I was objecting during my speech to these tax reductions. I of course did nothing of the kind; I said that one thing which was apparent to me was that they all appeared to be good in themselves but that they were a paltry substitute for the removal of the excise tax on motor cars and I am still of that view.


Herbert Wilfred Herridge: Am I in order, Mr. Chairman, in making a few remarks-


Joseph Pierre Albert Sévigny: If the hon. member would not mind waiting a few moments I believe we were discussing paragraph 1 of this resolution. Shall we now discuss paragraph 2?


Mr. Ricard:: Before we proceed to paragraph 2, Mr. Chairman, I would like to refer to the remarks just made by the hon. member for Bonavista-Twillingate. I find that it took him a long time to stand up in the house and to say that what I pointed out was not correct. I think that he has been advised, because of the repercussions and the things which were said about the way he felt about tax reductions and about the way in which he was judged by the small people, to say such things in this house. That must be the only reason why he now stands up to say something. That is all I wish to say.


John Whitney Pickersgill: The hon. member flatters me.


Donald Methuen Fleming: I take it, Mr. Chairman, that we are now dealing with the resolution paragraph by paragraph. I make that suggestion as a contribution to an orderly discussion, and if that is the case, Mr. Chairman, as paragraph 1 is divided into three parts, (a), (b) and (c), perhaps you might wish to call them as 1 (a), then 1 (b) and then 1 (c)-if that meets with your approval.


Joseph Pierre Albert Sévigny: Is the discussion on paragraph 1 (a) complete?


William Moore Benidickson: Mr. Chairman, I would like to ask the minister a question or two. I recall a very interesting speech made by the hon. member for Rosthern the other night, and, in reading some of these items he gave me the impression that he thought practically all the articles referred to were for the first time becoming exempt from sales tax. That of course is not the situation. For instance, chimneys for buildings, not including fireplaces, have always been exempt for buildings on the site and I think if hon. members will look at the next subparagraph, 57071-3-179
Excise Tax Act
namely (ii), they will see that we are dealing with something very similar. It says:
Units or members of wood milled for use as structural or architectural building components, not including assembled or-
And the word I emphasize is the next one-
-unassembled cabinets, counters, cupboards-
And so on. I can understand that if cupboards and furniture and cabinets are manufactured off the site they might not be exempt from sales tax but I do not understand the word "unassembled" and my question is does the minister suggest that a cupboard cannot be built with lumber which is exempt on the site? If so we would not have any of these articles such as counters, cupboards, furniture, ironing boards and so on built from lumber exempt from sales tax if they were constructed on the site.


Donald Methuen Fleming: The ordinary rule is that if it is constructed on the site it is exempt but this new exemption excludes cupboards, cabinets and other things when they are prefabricated. They have not been exempt when prefabricated.


Herbert Wilfred Herridge: Before this clause is carried, I want to deal very briefly with (b) (v) which provides for the repeal of sales tax on diesel oil used by municipalities in generating electricity. Apparently it does not exempt diesel oil used by lumber companies or mining companies-


Donald Methuen Fleming: Has the hon. member read the amendment? If he will look at Votes and Proceedings of yesterday, he will see on the third page the amendment I propose to introduce. The new paragraph 7a reads as follows:
That diesel fuel oil when used in internal combustion engines used in logging operations and in the manufacture of rough lumber be made exempt.


Herbert Wilfred Herridge: Does that include mining operations as well?


Donald Methuen Fleming: Not mining operations; it applies to logging and lumbering.


Herbert Wilfred Herridge: The minister has anticipated my recommendations 50 per cent, but I would still like-


Donald Methuen Fleming: I wonder if the hon. member would mind waiting until we come to that particular item?


Herbert Wilfred Herridge: I will wait until that time.


William Moore Benidickson: On this item 1(b), before getting down to the details we had some interesting observations from members of this party representing Fort William and Outre-mont-St. Jean. I will not repeat their remarks but simply say that some of us are a bit surprised, in view of the all-out statements of

Excise Tax Act
the Minister of Finance when he sat on this side when he said all purchases of municipalities should be exempt from sales tax, that his proposals tonight are not broader.
I am concerned with this item of ordinary materials to be used exclusively for the foregoing, in particular the sewage and drainage system reference. We are all aware today that municipalities, of course, normally make expenditures of this kind, but frequently municipalities pass on to subdividers responsibility for putting in this type of municipal service, such as sewage and drainage systems. Of course, the cost of these is passed on to the home owners, either put on their original down payment, as is unfortunately the case in too many instances today, or amortized through the tax system. But I am wondering, when the municipalities, in their expenditures for sewage and drainage systems, are to be exempt from sales tax, whether or not the minister has considered, when the municipality imposes an obligation on the subdivider to undertake this service, the subdivider's expenditure will similarly be exempt from sales tax.


Donald Methuen Fleming: Where sewers are installed by subdividers or contractors they may enter into a contract under which the pipe and equipment are furnished by the municipality and the contractor does the work of installation; or the contractor on finishing a job for which he has furnished the pipe and materials as well as the installation work may invoice the municipality separately for the work done and for sewer pipe and equipment sold to the municipality. The contractor would then apply for a refund of sales tax on the pipe and equipment he has sold to the municipality.


William Moore Benidickson: This would require that subdividers who are now providing these services should carefully look at the new law proposed, and they would have to make arrangements with the municipalities different from which they have been accustomed to do.


Donald Methuen Fleming: In some cases that would be necessary.


William Moore Benidickson: On (c) this, of course, is an amendment to the farm and forest schedule of page 27 of the Excise Tax Act. I was wondering about the necessity for this amendment with respect to stock conditioners, condiments and food supplements for addition to poultry, cattle and other stock feeds. Does the administration consider that condiments and feed supplements are in addition to the item that already exists in the schedule for exemption, materials to be used exclusively in the manufacture of feeds

for cattle, poultry and other stock and furbearing animals? Why does the administration be so narrow sometimes? I am not suggesting this is anything new, but why would that wording not be adequate?


Donald Methuen Fleming: The act already provides exemption for poultry, cattle and other stock feeds, so these additives are already tax free when sold in manufactured feeds. That is the nub of the problem. This exemption is to cover these additives when sold direct to the farmer who mixes his own stock feeds.


Herbert Wilfred Herridge: I want to congratulate the minister on that amendment, because it is becoming an increasing practice in order to lower costs and if the minister had not introduced this amendment the farmer would not have received the benefit of the exemption.


Donald Methuen Fleming: I can assure the hon. gentleman that this government is the farmer's friend.


Mr. Nasserden:: Number five. Does that include the elevators, or are they dealt with separately? Most of these seed cleaning plants have a little elevator to run the seed from one to another.


Donald Methuen Fleming: I am sorry, but I did not hear the hon. member at all clearly. Did I hear him say that this was under number five?


Edward Nasserden: Under (c). The fifth one under (c). I asked whether the elevators are included with the seed cleaning machine itself.


Donald Methuen Fleming: Grain and seed cleaning machines and complete parts therefor are already exempt. Most farm machinery is also already exempt from sales tax and in their case the exemption also extends to the materials used in their manufacture. This change will place the exemption for grain and seed cleaning machines in line with the exemption for other farm machinery by providing that the materials used in their manufacture shall also be exempt.


Joseph Pierre Albert Sévigny: Shall we proceed to No. 2?


Donald Methuen Fleming: There is an amendment on 2 which I would ask my colleague the Minister of Public Works to move. It is an amendment of which notice has appeared already in Votes and Proceedings. It is to this effect:
That paragraph 2 of the Excise Tax resolution be amended by adding thereto the following words:
"and concentrates thereof."

It simply adds three words at the end of paragraph 2.


Mr. Green:: I so move.


William Moore Benidickson: What does this accomplish?


Donald Methuen Fleming: This amendment moves a reference to concentrates from paragraph 3 to the present paragraph. This is done because it is probably not accurate to speak of a concentrate consisting of 85 per cent pure juice of the fruit as paragraph 3 does at the present time. When the juice is concentrated it becomes something different from ordinary fruit juice. For example the water content is reduced. This amendment makes it clear that concentrates of tax-exempt fruit juice will also enjoy the exemption.


Joseph Pierre Albert Sévigny: Shall the amendment
carry?


Some hon. Members:: Agreed.


[Stage Direction]
Amendment agreed to.
Joseph Pierre Albert Sévigny: This completes the discussion on item 2. We will proceed to item 3.


Donald Methuen Fleming: On 3 there is an amendment which appears in Votes and Proceedings which I would ask the Minister of Public Works to move. The amendment reads as follows:
That the present paragraph 3 of the excise tax resoiution be deleted and the following be substituted therefor:
3. That the proposed wording of the exemption for "bases or concentrates for making beverages other than soft drink beverages" in Schedule III_
That is Schedule III of the act. I continue: -be changed to read:
"Bases or concentrates for making food beverages but not including bases or concentrates for making soft drinks or alcoholic beverages".


Howard Charles Green: I so move.


William Moore Benidickson: Mr. Chairman, I recall in the past that the committee sometimes has difficulty with these matters. I have heard one or two hon. members who sit near me ask where they can find the schedule. The schedule, of course, is in pamphlet form and is also to be found at page 1251 of Hansard of June 17, 1958. The amendments appeared yesterday and I compliment the minister for putting them in Votes and Proceedings. They appear on page 1 of yesterday's Votes and Proceedings. I have no other questions at the moment.


Joseph Pierre Albert Sévigny: The committee has heard the amendment. Is it the pleasure of the committee to adopt the amendment?


Some hon. Members:: Agreed.


[Stage Direction]
Amendment agreed to.
57071-3-179J
Excise Tax Act
Joseph Pierre Albert Sévigny: Does that complete the discussion of paragraph 3? Is there any discussion on paragraphs 4 or 5?


George James McIlraith: I have a question on paragraph 5, Mr. Chairman. I wonder if the minister would explain the requirement in paragraph 5:
-the exemption for desks and chairs specially designed for class room use.
Why must they be specially designed for class room use? Suppose they are of ancient design and it is not known why they were designed originally. What is the significance of that qualification?


Donald Methuen Fleming: Those are the words of the present statute introduced by our predecessors, Mr. Chairman. What we are seeking to do is remove those words in so far as they prevent the exemption from applying to desks and chairs with the exception of upholstered chairs which are purchased for educational institutions. I think my hon. friend will recall that when some of us were on the other side of the house we complained that the exemption introduced by our predecessors was too narrow in limiting the exemption to the case of furniture of this kind specially designed for class room use. That meant where school boards purchased such equipment they had no exemption unless the chair was of a kind virtually suitable only for class room use. This present resolution is designed to remove this very restrictive application that was introduced when the amendment was first brought in by our predecessors.


William Moore Benidickson: I see that the minister is still forsaking some of his convictions because he is saying that education must be followed the hard way and he is not prepared to exempt the school board that buys a chair that has any upholstering on it.


Donald Methuen Fleming: Yes. It was felt that that might leave the door open to purchases that would not be regarded by my hon. friend and me as entirely reasonable for use in connection with educational institutions. If you introduce the upholstered chairs it is hard to draw the line.


Lester Bowles Pearson: The farmer's friend but not the teacher's.


William Moore Benidickson: My hon. friend in days gone by was one of those who advocated that all purchases of school boards be exempted as did his colleague in those days.


Donald Methuen Fleming: Give us time.


Joseph Pierre Albert Sévigny: Is there any discussion on paragraphs 6 or 7?

Excise Tax Act


Donald Methuen Fleming: Following the
adoption of paragraph 7, may I ask my colleague the Minister of Public Works now to introduce by amendment a new paragraph, 7a which reads as follows:
That the following new paragraph be inserted in the excise tax resolution immediately after paragraph 7 thereof:
"7a. That diesel fuel oil when used in internal combustion engines used in logging operations and in the manufacture of rough lumber be made exempt".


Howard Charles Green: I so move.


William Moore Benidickson: Mr. Chairman, I had not realized we had passed paragraph 7 itself. I thought we had only passed paragraph 6. It may not be readily known to hon. members of the committee that paragraph 7, as I understand it, is not actually a resolution that is bringing tax relief but it was designed for the purpose of bringing certain things into tax that somehow by administrative ruling have recently escaped tax. I wonder if the minister would give us a thorough explanation of the purposes of paragraph 7?


Donald Methuen Fleming: Perhaps it is convenient for the committee to discuss paragraphs 7 and 7 (a) together. Paragraph 7 proposes that the exemption for materials consumed or expended directly in the process of manufacture or production of goods be clarified, and brought into line with the tax treatment of fuel for lighting or heating, which excludes fuel for use in internal combustion engines.
The wording of this portion of the schedule to the act is as follows-


William Moore Benidickson: What page, please?


Donald Methuen Fleming: It is in schedule III. It is under the heading "Processing Materials". It could be found on page 31 if my hon. friend has the same pamphlet copy I have.


William Moore Benidickson: I have the August 1957 consolidation of the Excise Tax Act and page 31 deals with schedule III not schedule I.


Donald Methuen Fleming: That is correct.
Schedule III appears on page 31 under the heading "Processing Materials". It is the only item under that heading. The language of this part of the schedule is as follows:
Materials (not including grease or lubricating oils) consumed or expended directly in the process of manufacture or production of goods.
This provision created an exemption for processing materials falling within these terms and it has been in the act for some time. The question concerns fuel used in internal combustion engines. It is obvious
[The Chairman.]
that fuel so consumed is consumed in production if the engine it drives is used in production but it was always construed that the fuel should be subject to sales tax and indeed until last October this clause was always interpreted as meaning that such fuel was made taxable by that part of the schedule that deals with lighting and heating because that section specifically excluded fuel for use in internal combustion engines. A situation arose last October which brought this matter into very direct focus. It concerned fuel oil used in internal combustion engines. At that time the view was expressed that if the fuel oil was used in internal combustion engines and consumed directly in production of goods it was not taxable under the present wording of the schedule which I have read.


William Moore Benidickson: Who reached that decision? What authority reached that decision?


Donald Methuen Fleming: The Department of National Revenue, on advice. There was nothing conclusive about it. There has never been a judicial determination on the subject. But that was the view that was put before the department and in the light of that view the department notified the logging and lumbering industry of the view that they had reached that if the diesel fuel was used in internal combustion engines of the kind that are in use in logging and lumbering it was exempt.
The situation also concerned municipalities and recently in preparing the budget we came to the conclusion that this matter should be clarified and not be left in any doubt. Therefore provision was made here in the sense in which the clause that I have read from page 31 of the act and schedule 3 has always been interpreted to mean, and then we proceeded to deal specifically by amendment with the cases that had tested the law as it had always been interpreted. In other words, we have introduced the amendment which the committee has already approved in clause l(b)(v), where the diesel fuel oil is being used in generating electricity and has been sold to or imported by municipalities for their own use and not for resale.
Paragraph 7(a), the new amendment, is designed to extend in clear terms the exemption to logging and lumbering. I think that is the whole situation, Mr. Chairman.


William Moore Benidickson: Besides the lumbering industry a number of producers have enjoyed an exemption from this tax since October. What is the situation, that the tax will be reimposed on them?


Donald Methuen Fleming: The fact is that they always had been understood to be not exempt, and this view that I have mentioned

was expressed in October last, a few months ago, in connection with-it started actually with a municipality, where the issue was tested and then it was made applicable for a time to logging and lumbering. There never was any thought of throwing this matter wide open because very substantial revenue was involved in this feature of the tax and it was a situation that arose, as I have indicated, just last October. This is the first opportunity there has been to deal with it. No one has acquired any rights to any exemption by any judicial decision. It was a situation in which a doubt was introduced into the minds of the Department of National Revenue as to the effect of the act. Now, we are simply clarifying the act to make perfectly clear what has always been understood to be the law, what has always been administered as the law; and to meet the situation of the municipalities and of logging and lumbering operations we are creating the specific exemption for those three.


Herbert Wilfred Herridge: Mr. Chairman, I was very pleased to see the minister introduce this amendment that exempts the logging operations and those persons engaged in the manufacture of rough lumber from this tax. I am rather pleased with the wording of the resolution because the rough lumber manufacturer is concerned. It will affect a lot of the smaller operators, people sawing rough lumber and using diesel engines to run their mills. They are the ones who are having the most difficult time under present conditions to continue in operation, and I can assure the minister from personal knowledge I have of a good number of small lumber operations who are in a touch-and-go position, not because of the lack of markets for lumber but because of what my friends from the prairies call the cost-price squeeze. I think that is the proper formula and every assistance in this way is of some value. I am very pleased to note this amendment on account of the number of small operators whom I know personally.


Donald Methuen Fleming: May I assure my hon. friend that the situation of the logging and lumbering industry at the present time was carefully taken into account in providing this exemption for them. One realizes that that industry, particularly in British Columbia, is experiencing difficulties and this exemption is now clearly provided by the statute to assist that industry in view of circumstances.


Herbert Wilfred Herridge: I am very glad the minister has taken an objective view of a very real situation so far as the lumber industry is concerned. However, I do want to say that
Excise Tax Act
after conversations with the operators of a number of small mines in my district I think the same complaint applies to other operations particularly those engaged in the production of lead and zinc and those minerals which are falling in price. I find that they are operating under very difficult circumstances indeed and particularly those who are trying to continue development in small mining properties and continue at least a limited production in order to keep their men engaged. The cost of transportation, the cost of operation generally is up. The price of their products, as the minister knows, like the price of lumber, has dropped very seriously. In this respect I am appealing on behalf of the small mining operators, of which there are quite a number in the interior of British Columbia, particularly those who are mining the metals which have recently fallen so seriously in price. To indicate the position I wish to read a letter which I have received from Mr. Doelle, whom I know very well, the managing director of Sheep Creek Mines Limited. This is what he has to say:
We are advised that implementation of budget excise tax resolution 1 (b) (v) will result in the re-imposition of sales tax on diesel fuel used by mining companies to generate electricity at their operations.
And their drilling and their compressors and things of that sort where, by using mechanical plants, they use diesel fuel. The letter goes on to say:
We are greatly concerned over the results that will ensue should the sales tax be again applied to diesel fuel.
Mining operations in the West Kootenay located in remote areas where hydro power is not available have to use diesel fuel for power generation.
Metal prices are depressed and costs continue to rise making it extremely difficult to continue to operate.
The re-imposition of the sales tax on diesel fuel will be another burden that will certainly discourage us in our efforts to maintain operations or develop new properties in the area.
We would solicit your support and co-operation with the hope that it will be possible to amend the resolution to maintain the exemption previously granted.
Yours truly,
H. E. Doelle,
Managing Director,
Sheep Creek Mines Limited
I read this letter, Mr. Chairman, only as a sample of a number I have received explaining quite clearly the difficulties that quite a number of those small operators are having, particularly those who are trying to continue to operate small mines in isolated places. Those people have unusual transportation difficulties compared with the larger owners and, shall I say, the larger and more highly

Excise Tax Act
developed properties where they have the capital and expend a lot on roads, tramways and things of that sort.
I was wondering whether the minister could give some consideration to amending the act so as to include, say, mining companies of a certain category or undertaking certain forms of development or operating under certain conditions; that is where they are operating at a loss or near loss in order to maintain employment and to keep the condition of the mine satisfactory until they can carry on with full development and full production. I would ask the minister whether he could give some consideration to an amendment that would meet the needs of those people. I am not making representation on behalf of those who are making profits and the larger corporations which are not suffering the difficulties of those small mining companies.
But in the interior of British Columbia we are very much dependent, so far as the mining districts are concerned, upon the continued operations of a great number of what are relatively small mining companies.


Donald Methuen Fleming: I think the committee will appreciate the difficulty, when you start introducing exemptions, of drawing the line. Here is a case where one has to be drawn somewhere. We have gone some considerable distance in creating exemptions for municipalities, for logging and lumbering operations. These exemptions are going to cost the treasury a substantial amount of money. I thought there was a special case for the municipalities, and I think there is a special case, which I believe my hon. friend himself sketched out, for the logging and lumbering industry, but as to other operations it is going to be extremely difficult to draw a line.
I must say to my hon. friend that the line cannot be drawn on the size of the mining company; that is not possible. It cannot be drawn, either, on the distance the mine is located from rail or anything like that. There are many, many complications in a situation of this kind. We looked at it very carefully, and we have not seen any basis on which we could, as yet, recommend an exemption for mines from the tax on this particular commodity. It is difficult, admittedly, but I think my hon. friend will appreciate the serious problem with which we were confronted. I must say to him that we did go a long way this year in creating these three specified exemptions.


Douglas Mason Fisher: I should like to ask the minister whether an internal combustion engine used to develop electricity for a logging camp would qualify for this particular exemption?
[Mr. Herridge.l


Donald Methuen Fleming: I am sorry, I did not catch my hon. friend's remarks.


Douglas Mason Fisher: In logging camp operations,
if a diesel engine is used to develop electricity to light the camp, will it be eligible for this exemption?


Donald Methuen Fleming: If it is in the
camp, and if the fuel is consumed in the camp in the course of operations of logging or lumbering, yes, it will be exempt. It has to be used in the camp, associated with the actual logging and lumbering.


Douglas Mason Fisher: That is fine, and it makes
good sense. However, I should like to point out that you will find mining camps within a few miles of a pulp and paper camp with a lighting system based on diesel machinery. It does seem regrettable that one operation wil benefit from the exemption, and the other will not.


William Moore Benidickson: Am I right in thinking
that since October they have probably both enjoyed tax relief, but the tax relief will only be continued in the case of the logging industry and will, from now on, not be continued in the mines who have enjoyed tax relief since October?


Donald Methuen Fleming: We are not aware of any case where mines have claimed exemption or refund and the claim has been acknowledged.


William Moore Benidickson: Exemption was provided to municipalities on the grounds that they were producing goods or electricity?


Donald Methuen Fleming: Yes, electricity.


William Moore Benidickson: In consequence of what
they have enjoyed you are allowing them to retain the tax exemption privilege?


Donald Methuen Fleming: It is not just on that basis. It is an exemption created for the municipality in respect of the fuel oil that is used by it in generating electricity, and has been introduced as part of the program of the government in this paragraph to assist the municipalities. I stress again that this was not a matter of judicial determination. There was no decision of a court that the tax was not exigible in the case where diesel fuel was used by municipalities in internal combustion engines. There has been no judicial determination. It is a situation in which doubt arose in the Department of National Revenue as to whether the interpretation that has been applied throughout the years was the correct one. This, in fairness, was made known, and in this present resolution we want to clarify the law and we have, for the special reasons I have given, proposed to the house three exemptions.


William Moore Benidickson: Apparently it was made known only to those people who were in the production of goods, such as logs and lumbering or producing electricity

I am thinking of municipalities. Are those the only segments of the community that learned of the new attitude?


Donald Methuen Fleming: I am told that the first to learn were the logging and lumbering operators.


William Moore Benidickson: My hon. friend says he does not think the mining industry has enjoyed this exemption, so he is not taking away anything from them?


Donald Methuen Fleming: The Canadian
manufacturers' association learned of this too, but I am informed by the officials of national revenue that no one has claimed the benefit of exemption or refund except the logging and lumbering operators; I should say claimed and acknowledged.


Mr. McQuillan:: I should like to ask if the diesel fuel used in logging truck engines would qualify for exemption?


Donald Methuen Fleming: If they are diesel engines that are used in logging operations, that will be exempt.


William Moore Benidickson: I hope that between now and the introduction of the next budget the minister will try to get an estimate of the loss of revenue that would be entailed in endeavouring to accede to the suggestion of the hon. member for Port Arthur that those engaged in the production of ores and minerals should similarly have an exemption from sales tax on this very important purchase that they have. As he says, they operate contiguously and there will be a sense of discrimination. I think there would be bad feeling if the matter is not given careful consideration.


Charles Edward Rea: Is there any further discussion on 7 or 7 (a)?


Donald Methuen Fleming: On No. 8, Mr. Chairman, there is the amendment of which I gave notice yesterday and which appeared in Votes and Proceedings. The effect of this amendment would be to strike out No. 8. I ask my colleague the Minister of National Revenue to move this.


George Clyde Nowlan: I move:
That paragraph 8 of the excise tax resolution which reads as follows:
"8. That advertising sheets, local bulletins, local circulars and similar publications be excluded from the exemption for newspapers unless they have qualified as a newspaper enjoying second-class mailing privileges."	*
be struck out.
Excise Tax Act


William Moore Benidickson: This amendment did not concern tax relief but introduced into the tax something that had not been taxed. I was wondering what type of paper the minister had in mind. I must confess that in my own riding in northern Ontario we have several very small newspapers. They are not the hand-out type of thing you often see in the cities to which nobody subscribes and the operator or editor of which receives his reward through soliciting advertising. The papers I had in mind were much simpler than the linotype production type, but they are produced and have good news value in the community. People subscribe to them.
Frankly, I was a bit alarmed when I saw this item in here because I had doubts that such papers would qualify, as do some of the weeklies with which we are more familiar, for the privilege of second-class mail rates. What was the minister aiming at when he put it in this resolution and what has prompted him to remove it?


Donald Methuen Fleming: This resolution was originally intended to clarify the provisions of the schedule. If hon. members will look at page 29 of the consolidation of the act, in the schedule they will find under the general heading of "Printing and Educational" about half way down, the one word "newspapers". This word "newspapers" has not been defined by the act. This resolution had been intended to assist the authorities charged with enforcement of the act by attempting to define "newspapers". The rule that is followed in the post office, I may say, in determing whether a publication is to have second-class mailing privileges is that if the advertising does not exceed 70 per cent of the space it is still classified as a newspaper. If there is less than 30 per cent of the space that is devoted to news, then the ruling of the post office is that it is not entitled to second-class mailing privileges.
In view of some misunderstandings that have arisen as to the purpose of the resolution, we simply dropped it. The situation will remain as it has been. The exemption created by the act is in favour of newspapers and it will have to be left to other means to define what is the meaning of the word "newspapers".


Herbert Wilfred Herridge: I just want to say, Mr. Chairman, that I am very glad to note that the minister has dropped this proposed resolution from his list. I am quite sure he has had a good number of representations from across Canada objecting to the inclusion of this resolution.


George Clyde Nowlan: No; not across Canada.


Herbert Wilfred Herridge: From British Columbia.

Excise Tax Act


George Clyde Nowlan: And Alberta.


Herbert Wilfred Herridge: Yes. We are more prone to take a progressive approach to legislation than are some of those who come from other parts of Canada.


Some hon. Members:: Oh, oh.


Herbert Wilfred Herridge: I received a number of representations, and I think they were based on very sound grounds. Some of what are called advertising or ad sheets are very useful little publications in small communities which in some cases could not support the regular type of weekly newspaper. In other cases they provide a sort of free enterprise competition for the local weekly newspaper that in some cases has adopted a Rip Van Winkle attitude to life, and things of that sort. I am pleased to see that the minister has recognized the value of these little ad sheets and mimeographed newspapers which on some occasions I find to be quite interesting. Many people have told me they were very glad to have them published in the communities. Once again I must say I am glad that he has listened to what appear to be representations from British Columbia.


Charles Edward Rea: The committee have heard the amendment. Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
Joseph Pierre Albert Sévigny: Is there any discussion on No. 9?


William Moore Benidickson: I wonder whether the minister would explain this item. It refers to schedules in the tariff with which very few of us probably have any familiarity.


Donald Methuen Fleming: This paragraph of the resolution is largely a technical amendment. The schedule of exempt articles in the Excise Tax Act now includes tariff item 848 which covers machinery and apparatus used in drilling petroleum and gas wells and in the exploration and operation of potash and salt mines as well as various kinds of drill pipe. The customs tariff resolution proposes that this tariff item be divided into six new items. That followed, as my hon. friend will realize, the report of the tariff board. Therefore if these articles formerly defined in tariff item 848 are to continue to be exempt, it is necessary to add the new item in the schedule of sales tax exemptions. Tariff item 848 and the new tariff items listed in this paragraph of the resolution are before hon. members. The six new tariff items contain everything that was formerly included in tariff item 848 except, and here I quote:
Seamless, lapwelded and electric welded iron or steel casing, tubing and drill pipe of a class or

kind not made in Canada for use in the exploration, discovery, development and operation of potash and rock salt mines or for use in the production of muriate of potash, or for use in the production of crushed and screened rock salt.
I may say that the customs officials of the Department of National Revenue have taken the position that the six new items cover everything that was formerly covered by item 848. In a word, this present provision is consequential; it is largely technical but it is intended to bring these benefits to the oil and gas and mining industries.


William Moore Benidickson: Do I take it that the exemption prevails for the salt and the potash mining although not mentioned in the resolution?


Donald Methuen Fleming: Yes; that is correct.


Mr. Smith (Calgary South):: In order to clarify the matter may I ask the minister this question? Is it not true that in the transfer from item 848 this just recategorizes the item under a different section from that under which they were formerly duty free? However, in the new category the duty now becomes 5 per eent, 10 per cent and 20 per cent. In other words, are these the items which come under what we generally refer to as oil country goods?


Donald Methuen Fleming: Yes; that is included here and that is I think the one on which I laid particular stress. However, it is quite obvious that this amendment has to be introduced into the Excise Tax Act in order to conform with the new numbering and the changed provisions to be brought about by the tariff resolutions in the Customs Tariff to which we will be coming shortly, I trust.


Arthur Smith: The point I am getting at is this. What is the relationship of this kind of item which is referred to as item 399a.


Donald Methuen Fleming: This present provision is introduced in order to preserve the exempt provision that has been enjoyed hitherto.


Arthur Smith: Surely the exempt position; but if you look at item 399a, I assume this has been recategorized as such and there is now placed on these items a tariff which hitherto did not exist.


Donald Methuen Fleming: We will come to the tariff resolutions in due course. This does not make any change in the tariff as such. It simply takes account of the change which the tariff resolutions are going to make in the tariff and seeks to preserve the exempt position under the Excise Tax Act that has hitherto been enjoyed with respect to these goods.


Arthur Smith: I understand, Mr. Chairman.


George James McIlraith: Am I right in understanding that this neither adds any new items to the exempt list or takes away any items from the present exempt list?


Donald Methuen Fleming: That is the view that the customs officials of the Department of National Revenue take.


George James McIlraith: That was my understanding of it.


Charles Edward Rea: Is there any discussion on No. 10?


Some hon. Members:: Carried.


Charles Edward Rea: Is there any discussion on No. 11?


Some hon. Members:: Carried.


Charles Edward Rea: Is there any discussion on No. 12?


Lester Bowles Pearson: Item 12 deals, as the committee knows, with a very important matter indeed. It is concerned with a problem that really transcends the particular item itself. I refer to the problem of maintaining in this country a Canadian periodical literature. I am not at all sure-and perhaps the minister will give us his views on this matter-that the particular method used by the previous government to deal with this problem was the right approach to it. I am not sure whether or not it would have solved the problem if it had been continued. But there is no doubt in the world that the problem remains. The repeal of this particular tax does not do anything to solve the problem one way or another.
This problem, I suggest, is unparalleled in any other country of which I am aware. I do not know of any situation similar to that which exists between our country and our neighbour, the United States, in so far as the influence of periodical literature of one country upon another is concerned. That problem of course arises from the fact that we 17 million Canadians live alongside a country of 175 million people who speak the same language as do most of us and with whom we have a very close, friendly and intimate relationship with them which we desire to maintain. Our manner of living is the same. All this encourages the entry of periodical literature into Canada from across the border. It has also encouraged in recent years the production in this country of what are called the Canadian editions of United States periodicals. The problem, of course, would not exist if United States periodical literature and other forms of literature from 57071-3-180
Excise Tax Act
that nation were printed in a language different from our own but that is not the case. The result is obvious if one looks at a bookstand in any Canadian town or city, but the common language manifests itself in this particular way I have just mentioned, the Canadian editions of United States periodicals.
This tax was meant to deal with that particular problem. I suggest that the increase of periodical literature from the United States into this country and the growing influence of that literature upon our people does have a relationship to our desires to develop a distinct and self-reliant Canadian identity- what we call Canadianism. The report of the Massey commission in 1951 had something to say on this subject, and this is a problem which I suggest is not being faced by the repeal of this tax. The Massey report had this to say:
Every intelligent Canadian acknowledges his debt to the United States for excellent films, radio programs and periodicals. But the price may be excessive-
The Canadian periodical cannot in its turn invade the American market; for Americans, it seems, simply do not know enough about Canada to appreciate Canadian material. Our periodicals cannot hold their own except in their limited and unprotected market, nine million English-speaking readers_
That was in 1951 but there would be more today.
It cannot be denied . . . that a vast and disproportionate amount of material coming from a single alien source may stifle rather than stimulate our own creative effort-
Officially we have no concern with newspapers or magazines . . . Nonetheless, it would seem to us incongruous ... to leave unmentioned the newspaper and periodical press of Canada which provides most of the reading matter of most Canadians and which is still probably the chief source of knowledge to Canadians of their country and of one another.
Now that is the situation which confronted the Massey commission in 1951 and the situation exists today in a new form through the development of this device-if I may call it that-of Canadian editions of United States periodicals. It was to deal with this problem that the tax was imposed two years ago and I suggest that while this may not have been the most effective way of dealing with the matter-and the minister might give us his opinion on that-the problem nevertheless remains and something should be done about it because it is not an ordinary form of competition. This tax was not meant to interfere and did not interfere in any way, shape or form with competition, in the ordinary sense of the word, between Canadian periodicals and United States periodicals. It was, as I say, to deal with the problem of Canadian editions of periodicals coming from across the border and that is a problem with which it was particularly difficult to deal. I presented

Excise Tax Act
special difficulties for Canadian publishers and it has been alleged-and a good deal of evidence has been brought forward to support this allegation-that these so-called Canadian editions could never have developed and flourished in Canada on the advertising rates which were in fact charged if it had not been for the parent magazines upon which they could lean. It appeared that part of the expenses of the Canadian edition had been met by the larger publication in the United States and in that particular sense-although I certainly would not want to push this parallel too far-it might be alleged that this was a form of journalistic dumping as it was an unfair advantage given to the Canadian editions and the United States magazines. However, as I say, I do not wish to push this parallel too far, but whatever the reason may have been these Canadian editions have occupied an increasing proportion of the reading time of the Canadian public over recent years. This has constituted a special threat to Canadian periodical literature.
So far as this tax is concerned, as I have said, it did not make the position of the Canadian magazine publishers any less competitive than in the past and it was not meant to have and has not had the slightest effect on the United States magazines coming into Canada. In fact the two Canadian editions which have most benefited from this situation -Time and Reader's Digest-have not lost any substantial volume of advertising but perhaps it is correct to say that it has prevented an increase in the volume of advertising and in the circulation of these magazines in Canada. Perhaps it is also correct to say that it has prevented the appearance in this country of new so-called Canadian editions of United States periodicals. If this were a question of straightforward competition between one Canadian magazine and another I do not think anybody would have any interest in defending the position of any one magazine against another, but this is a question of competition in Canada from so-called Canadian editions of United States publications, some of the expenses of which are met in the United States. That is a very special problem.
I am informed, furthermore, that since the announcement of the repeal of this tax in the budget speech two United States magazines have announced their intentions of, in one case publishing a Canadian edition and, in the other case, resuming the publication of a Canadian edition which had been suspended when the tax was put into effect a couple of years ago and that yet another United States magazine, which I believe was on the point of publishing a Canadian edition at that time, is

now reconsidering the possibilities in that regard.
Mr. Chairman, I merely call the attention of the minister and the government to this particular problem. Surely it is nothing that we can contemplate with any degree of equanimity, the disappearance or serious diminution of Canadian bona fide periodical literature. Surely the vision of Canada cannot include a periodical literature circulating in this country which is alien in spirit, in thought, in origin and indeed, perhaps, in some other respects. Therefore I ask the minister whether in repealing this tax as they are proposing to do in this particular resolution, the government is aware of this problem which I have attempted to outline and if he is aware of the problem, what steps does the government propose to take to meet it.


Donald Methuen Fleming: I can assure the hon. gentleman that the government was aware of this problem long before this evening. I yield to no one in my concern for the flourishing growth in Canada of a Canadian culture. The problem is a very difficult one in a country like ours with 17 million people alongside a country of 175 million and where the cultural influence of the United States is exerted with very great strength, persistency and constancy on the Canadian public in very many forms. I yield to no man in my desire to see a Canadian culture express itself in every reasonable form, and that will certainly include Canadian culture as reflected in Canadian magazines.
However, it is a far cry from a position of that kind, which I trust and believe is shared by all hon. members of the house, to defending this tax. This tax was brought forward two years ago in the guise of a measure that would assist in the preservation of the Canadian magazine industry. It never was a sound method of assisting the Canadian magazine industry. As a tax it was open to all of the criticisms that were levelled against it in all parts of Canada. It was an attempt to use the taxing power for a purpose for which, in my respectful submission, the taxing power ought not to have been used.
The problem was there before 1956. The government of that day had done nothing else about the problem. In 1956 it brought in the magazine tax. That tax was not a sound way of dealing with the problem, and we resisted it at the time. Nevertheless, the government of that day chose to impose this tax. What has happened in the two years during which this tax has been in effect has confirmed everything that we said about it at the time. What we indicated then might be expected to flow from the tax

has, indeed, been realized. We were given to understand that there were two United States magazines in particular, that had Canadian editions which were going to feel the weight of this tax. We said then that those magazines would not feel the weight of this tax but that it would be Canadian magazines that would feel its results. That has been proved to be the fact, because the revenues of those companies from their advertising sources in Canada have not been diminished, but evidently the total budgets of Canadian firms that are advertising, so far as their advertising expenditures have gone into magazines or other media which are strictly Canadian in their origin, have been abated accordingly.
And so this tax measure was not of benefit to those whom it was claimed it was going to help. In repealing this measure, as we invite the house to do, we are asking the house to deal with the tax measure on its merits. The tax measure was not sound in the first place, and it does not deserve to be continued.
The Leader of the Opposition asked what the government is going to do about the problem. I may say that the problem has not changed in its essential aspects from what it was when the hon. gentleman who now leads the opposition was in office, and from what it was before 1956 when this tax was imposed. We have received representations from the periodic press association and others in connection with this tax, and in every case we have tried to show an understanding of the problem and a sympathy with the difficulties that have confronted the Canadian magazine industry, and we have sought some other ways of meeting the problem. We have invited them to put forward suggestions for meeting the problem, but nothing has yet been forthcoming that will meet the problem without either creating other and exaggerated forms of the same problem, or discriminations that cannot be tolerated, or measures that are of the nature of the present tax and which therefore cannot be supported.
I would be happy to receive from the Leader of the Opposition, or from any hon. member regardless of party, any suggestions at all for measures that can be of assistance in relation to the larger problem of the position of media of Canadian culture in Canada. I draw a line here, Mr. Chairman. We are not prepared, as we made quite clear two years ago in the debate on this measure when the former government proposed to impose the tax, to entertain suggestions that contemplate any interference with the flow of ideas, and a great many of the suggestions that have been made, all of which we have 57071-3-180J
Excise Tax Act
carefully considered, have been suggestions that would interfere in some form or other, perhaps not altogether blatantly, with the free flow of ideas. Undeniably there is a problem, and we will be glad to have suggestions as to anything that is sound and acceptable in giving assistance to meet the problem. But so far as this tax is concerned, it never was any contribution in any degree whatever to assisting in this problem, and therefore on its merits this tax, in my respectful submission, should be abolished.


Lester Bowles Pearson: I am grateful to the minister for suggesting that members of the house should provide him with some ideas which may help him in the solution of this problem, the importance of which he said he recognizes, and I can assure him that any ideas which may come from this side of the house will not be such as to interfere with what he called the free flow of ideas across the border, because that is certainly not in our minds. If that were the solution to the problem, all we would have to do would be to put obstacles in the way of the admission of the United States magazines into Canada, and we do not want to do that. But the minister in his speech apparently did not make any distinction between news magazines as such coming across the border and United States magazines, news magazines like Time, putting a couple of Canadian pages on the front and a maple leaf on the cover and being sold in Canada as Canadian editions.


Donald Methuen Fleming: My hon. friend is aware about the printing in Canada.


Lester Bowles Pearson: Yes, I am aware of that but I am also aware of the fact-and the minister must surely recognize it-that the editorial comment and news and opinion-because it is a magazine of opinion-is United States opinion on all matters with which the magazine deals except in respect of two or three pages in the front of the magazine. Apart from that it is a United States magazine. I am not complaining about it being a United States magazine and in fact I read many such magazines but it does constitute a separate problem by calling itself a Canadian edition of a United States magazine.
Therefore, the problem we are faced with, as I see it, is not the admission into this country of United States magazines concerning which the minister asked us to address ourselves and provide any ideas we may have in connection with the matter. On the contrary the problem is specifically one of Canadian editions of United States magazines. He has not given us the benefit of his views as to that problem or as to whether it is

Excise Tax Act
serious and what perhaps might be done about it. He did say, however, that the problem existed before 1956 when this particular action was taken and that nothing was done about it until 1956. That is true, but the problem had not existed many years before 1956. The development of Canadian editions of United States magazines is a comparatively new growth in our periodical literature. I do not know exactly how far back it goes but I feel sure it does not go back much beyond 1956.
The minister in his statement said that this tax was not effective, that it was of no value or use. I am not defending the tax or attacking it. I am merely trying to elucidate the problem and get from the minister some appreciation of it and perhaps an indication that something will be done about it.
The minister said the situation is the same now as it was when the tax was imposed and that the tax had done nothing to help solve the problem. That, of course, is not the opinion of the periodical publishers in Canada of whom I have knowledge. They are of the opinion that this tax had been of some help to them. The figures reveal that in 1956 these two publications with Canadian editions, Time and Reader's Digest, had 49.9 per cent of the total number of advertising pages carried in all magazines published in Canada and a year later, in 1957, that had dropped to 49.5 per cent rather than increased. So perhaps the tax may have had that particular effect in stopping the increase in those two magazines so far as advertising pages are concerned. The same would not be true in terms of advertising revenue because the advertising rates were increased.
It also had another effect which I mentioned in my other statement. We are told that the imposition of this tax did prevent the appearance in Canada of additional Canadian editions of United States magazines since, in the last two years, none of these has appeared. We are informed now that two of them are forthcoming. One is to reappear and a third publication is contemplating a Canadian edition. While this tax may not have been the right way to deal with the problem perhaps it did have the particular result of precluding additional Canadian editions and if it is to be dropped I would hope something could be found to replace it which would make a contribution to the solution of this problem which is a very real problem affecting the Canadian nation.


William Moore Benidickson: Just for the record, Mr. Chairman, I should like to inquire if the situation has changed. My last information was to the effect that Reader's Digest is

printed in Canada but I understand that Time is printed outside of Canada.


Donald Methuen Fleming: Mr. Chairman,
Reader's Digest is printed in Canada and has been throughout the period of which we are speaking. As far as Time is concerned, I am not sure.


William Moore Benidickson: I do not think it is printed in Canada.


Douglas Mason Fisher: Is it a fact that one of the magazines involved has taken proceedings against the government concerning paying the tax? If so, which one?


Donald Methuen Fleming: Reader's Digest resisted the imposition of the tax and there is a case before the Supreme Court of Quebec awaiting adjudication on that question.


Douglas Mason Fisher: Does the government have every intention of proceeding with the case even if the tax is repealed?


Donald Methuen Fleming: Yes. The repeal of the tax will not affect the tax liability up to date of repeal.


Douglas Mason Fisher: I believe that the opinions of the minister and his concern for Canadian culture are more than merely pious expressions but I do feel that the Leader of the Opposition left with him a conundrum on which I hope he will exercise the government's initiative rather than taking a passive course. The remarks made by the minister sounded to me somewhat like the tradition established by William Lyon Mackenzie King of saying, "You bring your ideas to me". If this is a difficult problem, what do we have a government for if it cannot come forward with a proposal that will help the Canadian periodical press? It is too easy to say to hon. members of the opposition that they should come forward with their ideas. The people of Canada put these hon. gentlemen where they are because they were supposed to have ideas.


Lester Bowles Pearson: I do not share that criticism. I think it is a highly encouraging thing that the government realizes there are ideas on this side of the house and would like to take advantage of them.


Donald Methuen Fleming: I said the same thing to various groups whether on one side or the other who came to see me about this. We want their suggestions and the more helpful they are the more we are grateful.


Joseph Pierre Albert Sévigny: Is there any further discussion on paragraph 12? Is there any discussion on paragraph 13? Shall the resolution as amended carry?


Some hon. Members:: Carried.
Resolution reported and concurred in.
Mr. Fleming (Eglinion) thereupon moved for leave to introduce Bill No. C-44, to amend the Excise Tax Act.
Motion agreed to and bill read the first time.



[Stage Direction]
The house in committee of ways and means, Mr. Rea in the chair.

[Stage Direction]
1.	Resolved, that it is expedient to amend the Customs Tariff by striking out subsection (1) of section 2 and substituting the following:
2.	(1) In this act, and in any other act relating to
the customs,
(a)	"free" in any one of the tariff columns in schedule A means that the goods opposite which the word appears, and to which the tariff in the column applies, may be imported and taken out of warehouse for consumption in Canada, without duty;
(b)	"gallon" means an imperial gallon;
(c)	"hot-rolled" or "cold-rolled" when applied to shapes or sections, bars or rods, plate, sheet or strip, of iron or steel, includes shapes or sections, bars or rods, plate, sheet or strip that have been subjected to such further processing as annealing, tempering, pickling, liming or polishing;
(d)	"in diameter" when applied to pipes and tubes means the actual inside diameter;
(e)	"M ft." represents and has the meaning of the words "one thousand feet board measure";
(f)	"n.o.p." represents and has the meaning of the words "not otherwise provided for";
(g)	"p.c." in any one of the tariff columns in schedule A represents and has the meaning of the words "per cent, ad valorem";
(h)	"plate" when applied to iron or steel means a flat-rolled product of any shape, of the following dimensions: more than eight inches but not more than forty-eight inches in width and 0.2300 inch or more in thickness; more than forty-eight inches in width and 0.1800 inch or more in thickness;
(i)	"proof", "proof spirit" or "proof spirits" means any spirit having the strength of proof by Sikes' hydrometer, that is, spirit that at the temperature of fifty-one degrees Fahrenheit weighs exactly twelve-thirteenths of the weight of an equal measure of distilled water at the same temperature;
(j)	"rubber" includes synthetic rubber, which may be defined by regulations prescribed by the minister;
(k)	"sheet" or "strip" when applied to iron or
steel means a flat-rolled product of any shape, of the following dimensions:	"sheet":	more than
twelve inches but not more than forty-eight inches in width and 0.2299 inch or less in thickness; more than forty-eight inches in width and 0.1799 inch or less in thickness; "strip": more than eight inches but not more than twelve inches in width and
0.2299 inch or less in thickness; eight inches or less in width and 0.2030 inch or less in thickness;
(l)	"steel" means any metal or combination of metals containing fifty per cent or more, by weight, of iron;
(ml "ton" means two thousand pounds avoirdupois.
Charles Edward Rea: In looking over this resolution I find there are 13 paragraphs. Is it the pleasure of the house that we proceed as we did before and discuss this as one resolution?
Customs Tariff


Donald Methuen Fleming: In this case, Mr. Chairman, there is a difference in the form of the resolutions. In respect of the amendments to each of the other three acts there was one resolution with various paragraphs in them. In the case of the proposed amendments to the Customs Tariff, however, there is a series of individual resolutions. They were put in that form before the house because most of them arise out of individual reports of the tariff board. They are rather different in nature and it was felt this would be of assistance to the committee of the whole in dealing with them.
For instance, the first resolution is one simply dealing with amendments of definitions. The second resolution deals with certain amendments affecting zinc and zinc products which arise out of a particular report of the tariff board. The third resolution pertains to iron and steel products and the amendments arise out of another report of the tariff board. Resolution No. 4 also arises out of the tariff board report on iron and steel. No. 5 arises out of the report of the tariff board on pipes and tubes and so on. We are, therefore, dealing with a series of different subjects which are the occasion of proposed amendments to the Customs Tariff.
The Depuiy Chairman: Well, the first resolution is at the top of page 6 and continues down to (m). Shall the resolution carry?


William Moore Benidickson: Mr. Chairman, I think the minister in presenting these items in sections according to the tariff board recommendations and leaving to the last the miscellaneous items that we usually encounter is using a good system. At page 1247 of Hansard the minister made some reference to these resolutions that would come before us when he was delivering his budget speech. The first package group, if I may call it such, would be the zinc and zinc products group, and I find he had something to say about it rather different from what is referred to in any of the other groups. He was more positive. He said:
These proposed tariff changes constitute a balanced package. On balance the proposed changes do not involve any increase in the Canadian tariff on zinc and zinc products.
With respect to the other packages, I take it that on balance he could not go that far. I am speaking in a general way-I do not want to delay the committee-but I want to show the contrast. He said, with respect to pipes and tubes:
A major result of these changes will be to make more effective the protection which it affords to Canadian producers.

Customs Tariff
Then, with respect to the basic iron and steel products, he concluded his reference to that by saying:
I understand that Canadian steel producers consider the new schedule to be a decided improvement over the old one.
There is nothing that I think is more important to most members of the committee these days, Mr. Chairman, than the matter of trade. I think the expression of Sir Wilfrid Laurier is just as valid now as it was when he said it. He said:
Canada has need of three things. The first is markets; the second is markets and the third is markets.
I think most of us realize today that a number of our products are subject to the general agreement on tariffs and trade and we all very well realize that trade is a two-way street. I quoted the Prime Minister in my budget speech and he explained very carefully at Brantford that if we are cutting off trade in the nature of imports we are bound to find that some of our opportunities for exports will suffer, and that is what I think will concern the committee as we go through these items.
It is very difficult for the committee to determine, unless the minister will draw it to our attention, which items of the many that we have-several hundred of them-in front of us were bound items and have something to do with the trading that necessarily takes place when it is the intention of the government to increase the tariff on something that is bound under the GATT agreement.
The minister said on June 17 that there were other negotiations pending respecting GATT. We, I am sure, will be interested to know to what extent they relate to some of the items that we have in front of us, if they relate at all. I am thinking particularly of the negotiations that have been initiated with respect to fresh fruit and vegetables. The minister said: "Negotiations have been initiated." Again he said: "I hope that these will soon lead to an agreement on a more satisfactory schedule of duties." Well, as someone said, of course, the question is always, more satisfactory to whom? In all of these resolutions that we have in front of us I think that is the basis of the inquiry of the committee. What is the balance or is it more satisfactory to one segment of our economy than another.
I wonder whether the minister would care to tell us about the progress of negotiations with respect to fresh fruit and vegetables, particularly as it relates to the possibility of anything coming before the present session?


Donald Methuen Fleming: Let me say at once there is nothing in these resolutions that

touches on fresh fruit and vegetables and I do not think it is proper to lead off into a matter of that kind. It was mentioned in the budget speech; it was discussed in the budget debate. If my hon. friend wishes to ask me questions of that kind on my estimates I shall be glad to deal with them. I do not think it is proper in this series of resolutions to deal with something that is not touched on in them at all. I should be glad to deal with it on my estimates.


William Moore Benidickson: I would like to hear from the minister as to the progress. Certainly, it is appropriate on the bill, but without delaying the committee I think the minister might just save time by telling us. He lost time last week, I think, by being a bit truculent.


Donald Methuen Fleming: No, I was not
truculent at all; the committee lost the time.


Lionel Chevrier: There is no doubt about
that at all.


William Moore Benidickson: I intended to refer to it only as an illustration, that if we are negotiating to increase tariffs we are all practical minded and know that if we are dealing with items that are bound under GATT agreements some part of the economy has to be jettisoned and members of the committee want to know just who is being sacrificed if someone is being benefited and particularly in some of these agricultural items. If fresh fruit and vegetables get further protection than they have had so far is our principal supplier going to demand that they have their laws much more restrictive on some other product such as potatoes, apples, cattle or fish, or something of that kind.
On the zinc item I do not think that I have any questions. I accept the minister's statement that on balance this seems to be something that has not changed the general average of protection either up or down.


Donald Methuen Fleming: My hon. friend has no objection to the zinc item? Could we then deal with resolutions 1 and 2? Resolution 1 relates to definitions and there is an amendment to that resolution which I would ask my colleague, the Minister of Public Works to move. The resolution appears to be a lengthy one as set out in Votes and Proceedings. Actually, it is not a change in substance but there are some definitions which the draftsman in the Department of Justice felt that in the amended form now appearing in Votes and Proceedings it would be improved, but there is no change in substance in the amendment, Mr. Chairman.


Howard Charles Green: Mr. Chairman, I so move:
That resolution No. 1 of the budget resolution relating to the Customs Tariff be deleted and the following substituted therefor:

Resolved, That it is expedient to amend the Customs Tariff by striking out subsection (1) of section 2 and substituting the following:
"2. (1) In this Act, and in any other act relating to the customs,
(a)	"diameter" when applied to pipes and tubes means the actual inside diameter:
(b)	"free", when applied to any goods in the tariff columns in schedule A, means that the goods may be imported and taken out of warehouse for consumption in Canada, without duty;
(c)	"hot-rolled" or "cold-rolled", when applied to shapes, sections, bars, rods, plates, sheets or strips of iron or steel, includes shapes, sections, bars, rods, plates, sheets or strips that have been annealed, tempered, pickled, limed or polished:
(d)	"M ft." means one thousand feet board measure;
(e)	"n.o.p" means not otherwise provided for;
(f)	"p.c." in any one of the tariff columns in schedule A means per cent ad valorem;
(g)	"plate", when applied to iron or steel, means a flat-rolled product of any shape
(i)	having a width of more than eight inches but not more than forty-eight inches, and a thickness of 0.23 inch or more, or
(ii)	having a width of more than forty-eight inches, and a thickness of 0.18 inch or more;
(h)	"proof", "proof spirit" or "proof spirits" means any spirit having the strength of proof by Sikes' hydrometer, namely, spirit that at the temperature of fifty-one degrees fahrenheit weighs exactly twelve-thirteenths of the weight of an equal measure of distilled water at the same temperature;
(i)	"rubber" includes synthetic rubber, which may be defined by regulations prescribed by the minister;
(3) "sheet", when applied to iron or steel, means a flat-rolled product of any shape
(i)	having a width of more than twelve inches but not more than forty-eight inches, and a thickness of 0.2299 inch or less, or
(ii)	having a width of more than forty-eight inches, and a thickness of 0.1799 inch or less;
(k)	"strip", when applied to iron or steel, means a flat-rolled product of any shape
(i)	having a width of more than eight inches but not more than twelve inches, and a thickness of
0.2299 inch or less, or
(ii)	having a width of eight inches or less and a thickness of 0.2030 inch or less;
(l)	"steel" means any metal or combination of metals containing fifty per cent or more, by weight, of iron; and
(m)	a reference to a unit or standard measure of weight, capacity or extension means the Canadian unit or standard measure established by the Weights and Measures Act."


Charles Edward Rea: Shall the amendment carry?


William Moore Benidickson: Am I right in saying that the amendment really simply takes out certain definitions of measures and the plural is used occasionally where the singular had been used and there is a provision with respect to the plate matter and with respect to sheet?


Donald Methuen Fleming: And a rearrangement of some items.
Customs Tariff


William Moore Benidickson: It does not in any way
affect the impost of the duty?


Donald Methuen Fleming: No, not at all.


Charles Edward Rea: Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
Charles Edward Rea: Shall the resolution as amended carry?
Resolution as amended agreed to.


Some hon. Members:: Ten o'clock.


Donald Methuen Fleming: On the second one, which is the zinc item, my hon. friend has indicated there is no objection to it. Perhaps we can carry that one tonight?


Lionel Chevrier: If you are a good boy we will carry it.


Donald Methuen Fleming: I am always good.


William Moore Benidickson: I would be agreeable to that. I did not say and I probably should say that to the extent I have been able to compare the recommendations of the tariff board with the schedules in resolution No. 2 I find there has been no deviation, that the tariff board report has been accepted throughout, both in definitions and in rates. Is that right?


Donald Methuen Fleming: That is correct.


Hazen Robert Argue: Ten o'clock.


Charles Edward Rea: Shall resolution No. 2 carry?


Hazen Robert Argue: Ten o'clock.


Donald Methuen Fleming: May I ask if No.
2 was carried?


Charles Edward Rea: No.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: What is the business for tomorrow?


Howard Charles Green: Tomorrow, we shall commence with the second reading of the bill to amend the Excise Tax Act; then take the resolutions concerning the Customs Tariff; then the Estate Tax Act; the Income Tax Act; the bill to amend the Loan Companies Act; the bill to amend the Trust Companies Act. After that, we will take agricultural estimates.


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

[Stage Direction]

[Stage Direction]

' - [DOT]'
- -
" __
[Stage Direction]


Wednesday, July 30, 1958

[Stage Direction]
Sixth report of standing committee on miscellaneous private bills.-Mr. McCleave.