1958-07-30

[Stage Direction]
Third report of standing committee on railways, air lines and shipping owned and controlled by the government.-Mr. Rowe.


[Stage Direction]
Mr. Alan Macnaughlon (Mount Royal)
presented the first and second reports of the standing committee on public accounts, and moved that the first report be concurred in.
Motion agreed to.	.


Mr. Pickersgill: 1.	Have any changes been made in the regulations or the procedure for dealing with Chinese immigration applications since June 21, 1957?
2.	If so, when were the changes made and what is their effect?
3.	How many applications for the admission of Chinese were outstanding on June 21, 1957?
4.	How many applications have been (a) accepted; (b) rejected since that date?
5.	How many Chinese applications were outstanding at the latest available date?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, the answers to this question are as follows:
The answer to part 1 is yes, a change has been made in the regulations. No change has been made in the procedure.
The answer to part 2 is by order in council P.C. 1957-1675 effective December 20, 1957, paragraph (d) of section 20 of the immigration regulations was revoked and the following substituted therefor;
a person who is a citizen of a country other than a country referred to in paragraphs (a), (b) or (c) or in section 21, if such person is the husband, the wife or the unmarried child under 21 years of age, the father where he is over 65 years of age, or the mother where she is over 60 years of age, of a Canadian citizen or of a person legally admitted to Canada for permanent residence who is residing in Canada and who has applied for and is in a position to receive and care for any such person, but no such child shall be landed in Canada unless his father or his mother, as the case may be, is landed in Canada concurrently with him.
This change enables persons who have been legally admitted to Canada for permanent residence and are residing in Canada to apply for their dependants.
The answer to part 3 is 122 as of June 30,
1957.
The answer to part 4 is 1,844 accepted, 73 rejected.
The answer to part 5 is 119 as of June 30,
1958.


VICTORY BOND REPLACEMENTS
Mr. Benidickson: 1.	In dollar value what has been acceptance to date of the government's offer to replace all unmatured 3 per cent victory bonds?
2.	What amounts, applied for conversion, are in the per cent, 41 per cent, 32 per cent and 3 per cent interest rate categories respectively?


Hon. Donald M. Fleming (Minister of Finance):: I am very happy to report to the house in reply to the first part of the question that the volume of conversions yesterday passed the two and a half billion dollar mark. More than 40 per cent of all the outstanding victory bonds have now been converted.
The answer to question No. 2 is that the information is not available. The operation is so huge that it is not possible to collate, check and break down into these categories the information that is coming in from more than
5,000	reporting agencies now.



CONVERSION LOAN


Mr. Benidickson: 1.	What compensation in commission rates or otherwise has the government agreed to pay agents or brokers handling the Canada conversion loan of 1958?
2.	How does this commission rate compare with similar brokerage fees applicable to annual sale of savings bonds, during the last three years?


Donald Methuen Fleming: The answer to the first question is that, on the 3 per cent bonds for three and one-quarter years, the commission is one-quarter of one per cent; on the seven year 3| per cent bonds, one-half of one per cent; on the 14 year 4J per cent bonds, three-quarters of one per cent, and on the 25 year 4i per cent bonds, 1 per cent. The issuing fee on all maturities is one-quarter of one per cent.


Mr. Benidickson:: The issuing fee is in
addition?

Motions for Papers


Donald Methuen Fleming: Yes, they are
separate. I should add that no sales commission or issuing tee is payable in respect of bonds converted by the Bank of Canada, government accounts or chartered banks for their head office portfolios. Moreover, there is a list of about 2,500 names including all the large corporate investors in Canada who are being covered on a co-operative basis by the investment dealers under the direction of a national committee. In the case of conversions by these corporate investors, the rate of commission is one-quarter of one per cent on the three and one-quarter year 3 per cent bond, and one-half of one per cent on all other maturities. It will be seen that this is substantially reduced from the ordinary commission available.
The answer to the second question is that there have been savings bonds campaigns in the years 1955, 1956 and 1957. In every case the commission paid was three-quarters of one per cent. The issuing and redemption fee in all cases was one-quarter of one per cent.
It is quite clear that the average rate of commission paid in the total on the conversions on the Canadian conversion loan of 1958 will be less than that paid on the Canada savings bond issues in any of the years that are referred to in the question of my hon. friend.



MOTIONS FOR PAPERS


[Stage Direction]
Motion No. 30-Mr. Chevrier:
For a copy of all papers, affidavits, letters, photographs, and other documents, including all the evidence in the possession of the Minister or the Department of Agriculture, or any other department, leading to the dismissal of one Walter Mitchell as checker and fumigator at the port of Montreal.
Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, the documents asked for in this motion, I am informed, are interdepartmental reports and correspondence, reports and correspondence within the department, and correspondence which is marked personal or confidential. I am also informed it has never been the custom of the house to have documents of this nature produced. If there are any documents in addition to these I shall be glad to produce them.


Hon. Lionel Chevrier (Laurier):: Mr. Speaker, I protest the minister's decision. The minister will recall a debate which took place early last week in which he made it clear that there was no secrecy in connection with the dismissal of this individual.


Mr. Speaker:: Order. The motion is not debatable.



COMMONWEALTH AIR TRAINING PLAN AGREEMENT

[Stage Direction]
Motion No. 29-Mr. White:
For a copy of the complete agreement between the United Kingdom, Canada, Australia and New Zealand regarding the commonwealth air training plan, entered into in May of 1940.
Hon. G. R. Pearkes (Minister of National Defence):: May I have permission to revert to motion No. 29?


Mr. Speaker:: Does the house give permission to revert to item No. 29 under this heading, which was allowed to stand?


Some hon. Members:: Agreed.


George Randolph Pearkes: This motion can be accepted with a reservation which the Secretary of State for External Affairs wishes to make.


Hon. Sidney E. Smith (Secretary of Slate for External Affairs):: I should like to express a reservation-I am not debating the motion -by way of explanation. I assume that the matter to which the hon. member referred is the memorandum of agreement relating to the training of pilots and air crew in Canada and their subsequent service, dated December 17, 1939. There was no agreement entered into in May, 1940. Subject to the usual reservations, the motion is acceptable.
Inquiries of the Ministry


Mr. Speaker:: Is it the pleasure of the house to adopt the motion, subject to the reservations expressed?


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: I should like to direct a question to the Secretary of State for External Affairs. In view of reports that pressure is being brought on the United States government by domestic producers to limit the importation of aluminum into that country, will the government emphasize to the United States government the strong exception that would be taken in Canada to any such course, if they have not already done so?


Sidney Earle Smith: In order that I may discuss this matter with other departments I will accept the question as notice.



REPORTED ARRANGEMENTS FOR SHIPMENT OF STRATEGIC MATERIALS TO COMMUNIST COUNTRIES

[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I would like to ask the Minister of Trade and Commerce if he would care to say what progress is being made with the United States in the setting up of administrative machinery in that country through which to clear orders given to Canadian subsidiaries of United States companies with respect to trade with China, and whether there has been an order for pulpwood sent to the United States for clearance.


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, this question or one similar to it was asked yesterday by the hon. member for Ottawa West (Mr. Mcllraith), and perhaps my answer to that question will be sufficient for the hon. member who is asking this question.
The hon. member for Ottawa West yesterday referred to a press dispatch from Washington to the effect that Canada has presented for approval in that city a number of export cases for shipment of strategic materials, including sulphite pulp to communist countries, and his question was in part as follows:
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?
I am not aware of any press dispatch which fits the description given by the hon. member for Ottawa West, although there have

Inquiries of the Ministry been a number of press dispatches on this subject in somewhat general terms. There have also been reports of discussions in Washington in which officials, acting on the request of a Canadian subsidiary of a United States company, have put information before United States authorities in order to obtain release for the United States parent companies from the effects of the United States government foreign assets control in cases where the subsidiary wishes to export to China under a Canadian permit.
So far only one request for such assistance has arisen; it affects bleached sulphite pulp. I understand the United States authorities have this order under consideration, and I do not anticipate any difficulty in this case; in fact I understand that a licence is being issued to the United States company, but if the necessity should arise there would be a consultation in accordance with the understanding reached on the occasion of the President's recent visit.
We are prepared to continue our consideration of this general problem in accordance with the favourable attitude adopted in this matter by the President and by Mr. Dulles when they were in Ottawa.


Hazen Robert Argue: As a supplementary question, may I ask if the minister has any information which he feels would warrant a statement in a Canadian Press dispatch, as reported in the Montreal Gazette today, to the effect that United States officials said they expect to set up within the next few days the administrative machinery for handling requests from those United States-owned subsidiaries in Canada which wish to trade with red China. Does the minister know whether such administrative machinery is likely to be set up within the matter of a few days?


Gordon Minto Churchill: That, of course, is a matter for the United States. I did see that press report, but I have no further information.


Lester Bowles Pearson: Mr. Speaker, I would like to ask a further supplementary question. In view of the uncertainty which still exists in regard to this matter, can the minister now tell us what was the exact understanding reached with the President when he was in Ottawa, to which the minister referred in his statement?


Gordon Minto Churchill: The Leader of the Opposition refers to uncertainty. There was tremendous uncertainty with regard to this subject at the time my hon. friends opposite were in power, and nothing was done. We had a clear understanding with the President and Mr. Dulles that this matter would be given full and careful consideration. It is only a

matter of a few weeks since those distinguished gentlemen were here, and it is not possible at this stage to dot all the i's and cross all the t's with regard to these negotiations. We have made some progress, and I point to the fact that bleached sulphite pulp is now about to be shipped to China as a result of this arrangement. This is a step in the right direction, and we have every reason to hope that we will have a very clear and complete understanding on this subject in the very near future.



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

[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: Mr. Speaker, yesterday the Leader of the Opposition asked me a question with regard to a report in the press to the effect that by unilateral action the government of Great Britain has reduced the list of goods prohibited for export to China, and the hon. gentleman went on to ask if the Canadian government proposed taking the same kind of action.
I judge that the Leader of the Opposition was referring to current press reports concerning discussions which have been proceeding in Paris on the subject of the future of strategic controls. There has been no unilateral action to my knowledge. The conference has now concluded its discussion and a wide measure of agreement was reached regarding the form of controls on east-west trade in strategic materials which will be maintained by all participating countries. The results will be made evident as soon as possible by an amended version of the export control list, which will be published in the Canada Gazette in due course.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. J. W. Murphy (Lambton West):: I would like to direct a question to the Secretary of State for External Affairs. I am sorry I have not given him notice, and perhaps he will take the question as notice and answer it at a later time. The first part of the question is, what position has Canada taken regarding the proposed extra diversion of 1,000 cubic feet per second through the Chicago drainage scheme? Second, if this diversion is permitted what effect will it have on our hydro potential and the successful operation of the St. Lawrence seaway; and third, if this diversion is permitted will Canada apply the same

principle or doctrine with respect to boundary waters between Canada and the United States, and rivers with their headwaters in Canada but flowing into the United States?


Some hon. Members:: Order paper.


Sidney Earle Smith: I accept this question as notice.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Stuart Fleming (Okanagan-Revelsloke):: I should like to address a question to the Minister of Justice. In view of the fact that there have been three more bombings in the Okanagan valley by persons unknown during the past 48 hours, and in view of the fact that the lines of the Canadian National Railways have been attacked for the first time, could the minister state whether he is prepared to intervene in this matter and, by the implementation of more intensive police activity, seek to find an effective means of protecting the lives and property of Canadian citizens from further jeopardy?


Hon. E. D. Fulton (Minister of Justice):: thank the hon. member for giving me notice of this question. I am aware of the incidents to which he refers, and I wish to assure those whom he represents and this house that we are continuing to investigate these incidents with every resource at our disposal.
With regard to the specific terms of the question, I must point out that we could intervene with specific action only on the request of the provincial authorities, and that no such request, in that sense, has been received.
As the hon. gentleman knows, the whole matter of the Doukhobor problem has been under discussion recently between ourselves and the government of British Columbia, and it continues to be the subject of negotiation between the two governments. I might say that in regard to these discussions-and I do not think I am in breach of any agreement regarding the confidential nature of such discussions-satisfaction was expressed by the provincial authorities with respect to the efforts being made by the police with the resources at their disposal. There was no criticism of the police methods or activities or the interest or readiness of the police to co-operate with the provincial authorities and use every method at their disposal to investigate and identify the perpetrators of these outrages.
I should also say that the authorities of
the Royal Canadian Mounted Police here are
Inquiries of the Ministry maintaining constant communication with the officer commanding E division-that is, the contract division in British Columbia-with a view to ascertaining from him whether any further support or assistance is desired and, if so, to be in a position to furnish that assistance whenever it might appear that further actual strength is necessary.
I should point out further that while we are not as yet able to report any results of the investigation of these most recent bombings, which took place only within the last 48 hours, five arrests have been made as a result of the series of bombings which took place elsewhere in the Okanagan area within the last two weeks. Those cases have not yet come up for trial.
Finally, Mr. Speaker, I can assure the hon. gentleman and the house, as I have assured the government of British Columbia, that we remain ready at all times to consider sympathetically any specific requests which might be made for specific assistance in dealing with this problem.


Mr. H. W. Herridge (Kootenay West):: May
I ask a supplementary question. Would the minister inform the house if there have been any further developments with respect to the correspondence between the Canadian government and the government of British Columbia which he mentioned some days ago?


Edmund Davie Fulton: I have not checked on that matter today, Mr. Speaker, but as of yesterday I was informed that no further correspondence had been received. The hon. member will recall that the premier of British Columbia had said that we would be hearing from him in due course as to the specific proposal under discussion between the two governments, and nothing further had come in as of yesterday.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Lionel Chevrier: I have a question which I should like to direct to the Minister of Labour. I note that his office announced yesterday receipt of the report of the conciliation board in the dispute between the non-operating employees of the railways and the Canadian National, the Canadian Pacific and other railways. I am wondering whether the minister has any comment to make on the majority report, and whether he has any information to give to the house as to whether it will be accepted by the parties.
2862	HOUSE OF
Inquiries of the Ministry


Hon. Michael Starr (Minister of Labour):: The report has been received, that is both the majority and the minority reports. We have sent copies of both these reports to the interested parties in the dispute, but I have no comment to make at this time as to how the majority report will be received. I can only hope that it will be accepted.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Marcel Boivin (Shefford):: Mr. Speaker, I wish to direct a question to the Minister of Finance. Could the minister inform the house when he expects to table the report of the tariff board on rubber footwear?


Donald Methuen Fleming: Mr. Speaker, I have not yet received the report.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I wish to put a question to the Minister of Fisheries. Has the minister's attention been drawn to a report in a recent issue of Business Week to the effect that Japan had agreed with the United States to move her fishing boundaries five degrees to the west of the present boundary and, if the report is correct, was Canada consulted as a member, along with the United States and Japan, of the north Pacific salmon fisheries commission?


Hon. J. A. MacLean (Minister of Fisheries):: I have not seen the article to which the hon. member refers and I should therefore not like to comment on it at this time, except to say that all three countries referred to are members of the salmon fisheries commission which the hon. member mentioned, and that no official action would be taken unilaterally by any one of them.


Frank Howard: This was bilateral.



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. I apologize for not having sent him notice, but the question is the result of a sort of mental spontaneous


combustion. Anyway, I am sure the minister knows the answer to it, and has it on the tip of his tongue-


Some hon. Members:: Question.


Herbert Wilfred Herridge: In view of the announcement made yesterday by the Minister of Finance that the government is the farmer's friend, could the minister inform the house when this friendship will be further demonstrated by the making of deficiency payments to British Columbia fruit growers on certain 1957 tree fruit crops, to which they have been looking forward for some time?


Douglas Scott Harkness: The hon. member asked much the same question about 10 days ago, I think, and I told him at that time that we were giving consideration to this question and waiting for further information from the British Columbia tree fruit growers' association with regard to the 1957 apple crop. That information has come to hand, and I expect I will be in a position to make some statement about this matter in the very near future.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I rise on a matter which I believe to be a question of privilege. In the first column on page 7 of the Ottawa Journal of July 29, 1958, I am described as "Gordon Aiken, Liberal, Parry Sound-Muskoka." This is such a colossal misstatement of fact in a usually reliable newspaper that I believe the record should be kept straight.



PRICE SPREADS


[Stage Direction]
On the orders of the day:
William Moore Benidickson: Mr. Speaker, we all realize that the Prime Minister is, understandably, away on an errand which I am sure will give him much pleasure. Could I ask the Acting Prime Minister if he would take this question as notice. Would he give the house a progress report on the investigations being carried out by the royal commission on price spreads which was set up on December 10, 1957, under the presidency of Dr. Andrew Stewart of Alberta university? We all noted that Dr. Stewart was here last week, and I imagine he probably conferred with members of the government.


Douglas Scott Harkness: Perhaps I could reply to this question. Dr. Stewart and the commission have been carrying on an active investigation of this matter, as I think the hon. member knows. The commission held hearings in the western provinces first of all, and then moved to the maritime provinces. During the summer months they have been doing a considerable amount of investigatory work. The public hearings will be resumed this fall.



DEFICIENCY PAYMENTS


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce arising out of the very far-reaching and extraordinary decision taken recently by the Saskatchewan federation of agriculture, namely that a mass delegation be organized to go to Ottawa because of the failure of the government to make a statement on deficiency payments arising out of its promises in that regard.


Gordon Minto Churchill: I am waiting, because you have not put the question yet.


Donald Methuen Fleming: You have made your speech. Now what is the question?


Hazen Robert Argue: I thought the minister heard my question.


Gordon Minto Churchill: No.


Hazen Robert Argue: My question was whether or not the minister's attention had been drawn to a far-reaching and extraordinary decision taken a few days ago by the Saskatchewan federation of agriculture, namely to organize a mass delegation to go to Ottawa because the government had failed to announce its policy with regard to deficiency payments, particularly in view of the government's many promises in that regard. I asked for comment, but if the minister does not care to comment I ask him when the government is going to make an announcement on deficiency payments, and whether he has had any word of such a mass delegation being organized.


Gordon Minto Churchill: I have no hesitation about commenting on any proposition or question put forward by the hon. member for Assiniboia. I am quite prepared to deal with him on any occasion. This problem of deficiency payments has been drawn to my attention very forcefully by practically all the members of this house who come from western Canada. The hon. member for Assiniboia is certainly
Inquiries of the Ministry the last one to mention it to me today. He has sent me a clipping from the Moose Jaw Times-Herald of Saturday, July 26, which reports that the president of the Saskatchewan farm union described the discussions which the interprovincial farm union council held with the federal government and then, in quotation marks, follows the comment of the S.F.A. secretary:
Both farm officials concurred that promises of deficiency payments had been made, but apparently no action was forthcoming.
I submit that to my knowledge no promises with regard to deficiency payments were made, but a promise to consider the representations of the farm organizations was made, and great pains have been taken to consider fully all these proposals.
In reply to the final part of the hon. member's question, there will be an answer to this whole problem just as soon as it is possible for the Prime Minister to be back here in Ottawa. He has had other duties which have taken him afield. It will be just a matter of days before an announcement is made concerning this whole problem, and I think that announcement will clearly indicate to members of this house as well as to the people of western Canada that this government is fully aware of the problems affecting western agriculture and is quite prepared to take such steps as are necessary to assist the farming population of western Canada.


Lester Bowles Pearson: Has the attention of the minister been drawn recently to a statement made by the Prime Minister in Moose Jaw on March 15, 1958, to the effect that sympathetic consideration should be given to making deficiency payments to wheat, oats and barley growers so that their returns would bear a fair relationship to the cost of production?


Gordon Minto Churchill: My attention has been drawn to that statement. There is nobody in this country with more sympathy for the problems of the farmers than the Prime Minister of Canada.


Mr. Jack McIntosh (Swift Current-Maple Creek):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. I wonder if he is aware of a mimeographed letter that was sent to the residents of my constituency by the hon. member for Assiniboia in regard to deficiency payments?


Gordon Minto Churchill: Mr. Speaker, my attention has been drawn to the contents of that mimeographed letter in which the hon. member for Assiniboia offers some criticism of me-


Some hon. Members:: Order.

Excise Tax Act


Hazen Robert Argue: I think I will send out another one, because it is getting so much attention.



PUBLIC ACCOUNTS


Hon. Howard C. Green (Minister of Public Works) moved:: That public accounts, volumes I and II, and the report of the Auditor General of Canada for the fiscal year ended March 31, 1957, be referred to the standing committee on public accounts.


[Stage Direction]
Motion agreed to.
(Translation):

[Stage Direction]
On the orders of the day:
["If I may be permitted to do\nso, I will read the telegram. It was addressed to me and similar telegrams were sent to many other members of the House of Commons. It reads:\nNote first reading and passage of budget resolution re excise tax on diesel fuel used in generating electric power. As legislation now stands tax removed for municipalities and for logging and lumbering operations. After temporary suspension tax now reimposed on fuel used to generate electricity for mining operations. This measure greatly disturbing to mining industry which regards it as discriminatory and restrictive. Power for mines in settled areas supplied from established hydro stations not subject to tax. Present regulations impose great hardship on mining operations in remoter areas entirely dependent on diesel fuel for power and on new mines awaiting hydro power. To subject such mines to this tax appears discriminatory and not in keeping with government's declared intention of encouraging northern development. Trust careful reconsideration and revision will be given to the regulation by final passage by parliament.\nThis concludes the telegram, Mr. Chairman, but I wish to add to what has been said in this telegram. I suppose I shall have an opportunity later.\nProgress reported."]
Mr. Guy Rouleau (Dollard):: Mr. Speaker, I would like to put a question to the Secretary of State (Mr. Courtemanche).
To a question I had put on the order paper, the answer I received from the Minister of Defence Production (Mr. O'Hurley) was in English only. Can the Secretary of State tell the house if he is in a position to intervene with his colleagues so that regard may be had for the bilingual character of this country and that, accordingly, answers to our questions may be obtained in the two official languages of this country?
(Text):



Donald Methuen Fleming: the second reading of Bill No. C-44, to amend the Excise Tax Act.


Mr. Hubert Badanai (Fort William):: Mr. Speaker, because of the fact that this bill does not meet with the approval of what I believe is the overwhelming majority of the Canadian people who fully expected the elimination of the excise tax on automobiles, I therefore move:
That this bill be not read a second time until further consideration has been given to the repeal or reduction of the excise tax on motor cars.
And now, Mr. Speaker,-


Donald Methuen Fleming: Order.


Lionel Chevrier: You do not run the house.


Donald Methuen Fleming: Mr. Speaker, on a point of order may I ask, if my hon. friend has given the house the text of the amendment, that it be read, because I wish to make a submission to you to the effect that the amendment is not in order.


Hubert Badanai: With your permission, Mr. Speaker, I wish to say just a few words. I 
do not wish to take the time of the house unduly.


Mr. Speaker:: I take it that the hon. member is speaking on the principle of the bill on second reading?


Hubert Badanai: Yes, Mr. Speaker.


Mr. Speaker:: I have no power to direct that any amendments be filed.


Donald Methuen Fleming: I understood that my hon. friend had just read an amendment he was offering to the house. I believe he just read the text to you.


Mr. Speaker:: I am sorry; did the hon. member propose an amendment?


Hubert Badanai: Yes, Mr. Speaker, I have just read it and a copy has been sent to the Chair.


Mr. Speaker:: It has been moved by the hon. member for Fort William (Mr. Badanai):
That this bill be not read a second time until further consideration has been given to the repeal or reduction of the excise tax on motor cars.


Donald Methuen Fleming: Mr. Speaker, now that the amendment is before the house I submit to you that it is not in order. It has no relevance to the bill or to the principle of the bill. What is now before the house for debate on second reading is the principle of the bill. The principle of this bill is to amend the Excise Tax Act by certain designated amendments in accordance with the resolutions which were reported to the house by the committee of ways and means and approved by the house. There is not a word in this bill that relates to the excise tax on motor vehicles.
It is a well established principle that the opening of an act by an amending bill opens it only to the extent of the amendments proposed and only as to those clauses of the main act which the amending bill proposes specifically to amend. My hon. friend is now proposing to go completely outside the terms of the bill and introduce a subject that is foreign to the bill. In my respectful submission the amendment is out of order.
There is, of course, the further point directly associated with the principle of the bill. The amendment has no relevance whatever to the principle of the bill.
There is also the third point that an attempt was made in the committee of ways and means to introduce a similar amendment, in other words to amend the resolutions that were put before the committee of the whole in the ordinary course arising out of the budget resolutions, and that attempted amendment was ruled out of order in the committee of the whole by the chairman. This is an attempt to repeat the same tactic

and introduce the same amendment. In my respectful submission this amendment is completely out of order.


Mr. Speaker:: Would the hon. member be able to refer me to some authority to support his case, because I consider that different principles apply to debate on second reading than to debate in committee at the resolution stage, and I should be glad to have some authority if the hon. member has any to give.


Donald Methuen Fleming: If you will give me a moment I think I can find an authority. I quite agree, Mr. Speaker, that the context and scope of order in the debate on second reading are not the same as in the committee of ways and means, but what I have indicated in the third point I submitted to you was that the amendment was ruled out of order in committee on the ground of relevancy, and that ground in my respectful submission to you is equally applicable at this stage as in the committee of ways and means. If it had been on some other ground there might have been reason to say it had no application at this time, but it was on the ground of relevancy that the amendment on that occasion was ruled out of order.
If you are seeking specific citations I shall have to ask you to give me a moment in which to locate them.


Mr. Speaker:: Perhaps while the hon. member is looking that up I will hear the hon. member for Laurier.


Lionel Chevrier: I have an authority to submit on behalf of the amendment which has been moved by the hon. member for Fort William, but before doing so I should like to remind you respectfully that it has been the practice in this house over the years on second reading to move amendments of this nature that declare in principle against certain aspects of the attitude taken by the government with reference to a matter such as motor cars.


Mr. Speaker:: I presume the hon. member will be able to give me some instances of that.


Lionel Chevrier: I will do so at once in order to save the time of the house. I refer Your Honour to Beauchesne's Parliamentary Rules and Forms, fourth edition, at page 277, citation 382, where it clearly, in my opinion, sets out the position of the hon. member who has moved the amendment. It reads as follows:
It Is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill, or
Excise Tax Act
expressing opinions as to any circumstances connected with its introduction, or prosecution; or otherwise opposed to its progress; or seeking further information in relation to the bill by committees, commissioners, the production of papers or other evidence or the opinion of judges.
What the hon. member has done is to move this very simple amendment, which reads;
That this bill be not read a second time until further consideration has been given to the repeal or reduction of the excise tax on motor cars.
The language in citation 382 is broad enough, in my opinion, not only to include the amendment but to go away beyond the scope of the amendment which my hon. friend has read and because of this I submit with deference that the amendment is in order.


Donald Methuen Fleming: Mr. Speaker, there is of course the obvious other point that this amendment, if it were entertained, would have the effect of disturbing the balance of ways and means.


Mr. Mcllraiih:: No.


Lionel Chevrier: No.


Mr. Pickersgill:: It asks for consideration only.


Donald Methuen Fleming: If it is simply a matter of asking for consideration, in my respectful submission that is not an assertion of the kind of principle that is open to a private member in moving an amendment to the second reading of a bill.


Mr. Browne (Vancouver-Kingsway):: Mr. Speaker, on the point of order, I should like to refer you to a ruling which you made yourself, sir, on June 18, when I was speaking on the second reading of the bill to amend the hospital insurance act, in which you said, as reported at page 1400 of Hansard:
The principle that is being discussed is the principle of a rather narrow amendment to the Hospital Insurance and Diagnostic Services Act.
Which I took to indicate that that would not open up the whole act for discussion.


Mr. Speaker:: I would ask the hon. member for Fort William to defer his remarks until I have finished my ruling. I had some doubt as to whether this was not simply a negativing amendment and, as all hon. members know, amendments are not accepted which are simply negative, because a negative point of view can be expressed by voting against the motion. I think this is more than that at this stage of the bill. This is a bill to amend the Excise Tax Act in a number of particulars, and the principle that is before the house is how the Excise Tax Act should be amended. The government has indicated how it feels it should be amended by introducing this bill and this amendment indicates that

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it should be amended in some other respects, or should not be proceeded with until other considerations are given effect to and I am inclined to allow the hon. member to proceed.


Donald Methuen Fleming: Permit me, Mr. Speaker, to say a word. You asked to be given an authority. I have one now that I should like to cite before you give your ruling.


Mr. Speaker:: Yes, I shall be glad if there is any authority to be given.


Donald Methuen Fleming: In Beauchesne's Parliamentary Rules and Forms, fourth edition, at page 281, we find citation 393. This citation has to do with the procedure on public bills and the third section deals with motions for second reading and reads as follows:
An amendment which is not adverse to the principle of a bill but proposes that certain provisions be added to the bill cannot be moved on the motion for second reading.
I submit, Mr. Speaker, that the only purpose of this amendment is to say that in addition to the reductions created by the bill there should be another provision made by the bill, namely that consideration should be given to exempting motor vehicles from the present special excise tax. That, it seems to me with respect, comes clearly within the principle so stated that:
An amendment which is not adverse to the principle of a bill but proposes that certain provisions be added to the bill cannot be moved on the motion for second reading.
There is nothing in this amendment to say, as I take it, that the numerous reductions in the sales tax which are created by the bill shall not be made, but it proposes to add something to those provisions in saying that consideration should be given to a further exemption. That, with respect, Mr. Speaker, comes clearly within the provisions of the citation I have read.


John Whitney Pickersgill: If I may say a word precisely on that point-


Mr. Speaker:: I am not disposed to accept the argument just presented and suggest that the hon. member would save the time of the house by allowing me to proceed.


John Whitney Pickersgill: I do so with pleasure.


Mr. Speaker:: This amendment does not propose to add anything to the bill. It is not a motion to add to the bill; it is a motion to defer consideration of the bill on a basis which I am disposed to regard as a basis of principle such as can be put forward on second reading. What I suggest is that the house allow the hon. member to proceed at least on the interim basis that this is a

regular amendment. If I find good and sufficient reason to change my mind or to come to a different conclusion in the course of the debate I will advise the house accordingly. As presently advised it seems to me that the proper course for me to take would be to allow the hon. member to proceed.


Mr. Browne (St. John's West):: May I call Your Honour's attention to paragraph 660 in the third edition of Beauchesne.


Mr. Speaker:: I have made an interim disposition of the matter and I shall be glad to consider anything which any hon. member wishes to draw to my attention in the course of the debate. If the hon. member gives the citation I will look at it now.


Hubert Badanai: Thank you, Mr. Speaker. As I was saying when I was interrupted, I do not wish to take up the time of the house to repeat what has already been said in support of the intent of the amendment, but I do wish to read a number of extracts from a speech delivered by the Prime Minister in Windsor on May 9, 1957, as recorded in the Toronto Star, as follows:
John Diefenbaker last night promised a Conservative government will reduce the "scandalous" 10 per cent excise tax on autos.
Now, just bear in mind the word "scandalous". I continue:
The national Conservative leader told an audience of 450 in this motor capital of Canada that the tax on cars was an unjustified burden on workers and farmers to whom cars are essential.
"If we are elected" he pledged, "we will take from the shoulders of the taxpayers a portion of this taxation burden."


Donald Methuen Fleming: Which we have done.


Hubert Badanai: Yes, 2J- per cent. Relate the word "scandalous" to 2J per cent and 10 per cent and I do not think you will find that the relationship is what the Prime Minister meant when he made this statement:
This, he said, would stimulate auto sales and boost employment in the auto industry on which this city depends.
He told his audience auto workers were unemployed partly because of the Liberal government's discriminatory taxes on autos. Its unjust tax policies were pricing Canadian products out of the markets of the world and shackling municipalities with a desperate lack of revenues. This condition, he warned, would eventually tax real estate "right out of existence" because municipalities had no other revenue sources.
Here is an opportunity for hon. members sitting opposite to give tangible proof of their support for a measure which, as appears quite evident from the reported speech of the Prime Minister (Mr. Diefenbaker), was approved by him as far back as May, 1957. It is now more important than ever that

this measure should be adopted. I hope that the house will take a vote on this motion as soon as possible.


Donald Methuen Fleming: Mr. Speaker, I propose to be very brief on this matter. Reserving the submission I made to you on the point of order, Mr. Speaker, I remind the house that at the last session of parliament on the recommendation of the government parliament reduced the excise tax on motor cars by one-quarter. To introduce this amendment now, assuming for the moment that it is in order, would simply mean that the important reductions and exemptions provided by the bill and which are, I think, eagerly awaited by the Canadian people, will be postponed. That is the effect of the amendment. It would postpone the reductions under the Excise Tax Act that are provided by the bill. The Canadian people should not be denied the benefit of these reductions, nor should they be postponed. For these reasons I urge that the amendment should be defeated, its purpose and effect being simply to withhold from the Canadian people or delay their receiving the benefit of the important tax reductions and exemptions provided by the bill.


Mr. L. D. Creslohl (Carlier):: Mr. Speaker, I think the last statement of the Minister of Finance (Mr. Fleming) is rather ingenious, to say the least. I repeat that to say that to accept the amendment will delay benefits to which the people of Canada are entitled is a rather ingenious device to gain some favourable publicity which actually is not deserved. The minister knows perfectly well that the date of the coming into force of the bill can be regulated according to the date of his choice and not the choice of the house. Therefore to say that the bill cannot be made retroactive to whatever date the minister desires in order to give the people of Canada the benefits he intends to give them as of the date he intends to give them is not presenting the facts in their proper light.


Mr. Hamilton (Notre Dame de Grace):: Mr. Speaker, I presume in the course of the debate you are also taking representations on the point of order.


Mr. Speaker:: If the hon. member will permit the debate to proceed, I would prefer to have that done at one time. If I come to the conclusion that there is any doubt about the amendment I will give him the opportunity before the motion is put.
Excise Tax Act


Mr. Erhart Regier (Burnaby-Coquitlam):: Mr. Speaker, like the previous speaker I fail to see any validity whatsoever in the minister's argument because paragraph 13 of the resolution states very clearly that any enactment founded upon the resolution shall be deemed to have come into force on the eighteenth day of June, 1958. Therefore, provided that in the final analysis the resolution itself is carried, I fail entirely to see how the adoption of the amendment would have any bearing at all upon the effective date of the benefits that might accrue to taxpayers.


Donald Methuen Fleming: May I ask my
hon. friend a question? Is it not clear that that clause of the bill cannot be put until the present motion is carried? The whole point is that the amendment prevents the bill from being put and carried. When the bill is adopted that clause will have a retroactive effect but until we have the bill carried the clause is simply writing on a piece of paper that is before the house. That is the point involved.


William Moore Benidickson: Mr. Speaker, I think that the argument of the Minister of Finance (Mr. Fleming) is very technical and specious. An opportunity is provided to hon. members of the house by the rules to have reconsideration of things that are not covered by the minister in his bill. We are very surprised at some of the inadequacies of the bill, particularly because the minister has been a member of the house for a great number of years. During that time he was never hesitant about expressing his views, especially when he was on this side of the house.
I hope to have an opportunity at another stage in the debate to discuss in a broader way some of the views of the minister with respect to sales and excise taxes but at the moment I will simply confine myself to his views and those of his colleagues since they are now in power and have the opportunity to carry into effect their advocacy with respect to automobiles made over a number of years. I think the house had every reason to expect that the present administration, particularly when the automobile industry is admittedly in the doldrums, would have brought in something by way of legislation that would have been a stimulant to that industry and not only would have increased the opportunity for employment in the industry but would have encouraged people to purchase the product.
Over a year ago the present Prime Minister (Mr. Diefenbaker) was travelling up and down the land saying that the additional 10 per cent tax on automobiles over and above

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the sales tax was scandalous. That is the word he is quoted as having used. At Windsor, appealing of course to a particularly interested audience, he said on May 9 as reported in the Windsor Star:
The present 10 per cent excise or luxury tax on new cars is discriminatory to automobile producing centres. Its continuance brings unjustified unemployment.
In past years we heard the present Minister of Labour (M. Starr) say many times that this tax should be abolished. I am rather disappointed that his influence in the government has not been sufficient to bring that about immediately. I am not going to try to prolong the debate, but somebody may say, "Why did you not do it?" It must be remembered that at one time, by reason of the necessity of raising revenue for war purposes and to reduce production activity with regard to certain types of automobiles to some extent, the tax was as high as 35 per cent. It was reduced in several successive stages by the previous government, but at no time while we were in office was the industry in its present state of depression. I can confirm those statements by referring to page 18 of the Bank of Canada report for 1957, tabled in the house by the Minister of Finance. The governor of the bank, with respect to automobile production in 1957, had this to say:
In Canada, although 1955 was a record year, 1956 was still better and no significant decline in automobile sales occurred until well into 1957.
It is clear that my hon. friends were in charge of the administration of this country well into 1957-


Donald Methuen Fleming: No, that change-


William Moore Benidickson: -and therefore knew conditions.


Donald Methuen Fleming: If my hon. friend consulted the statistics he would be aware of the fact that the decline started in March, 1957.


William Moore Benidickson: Not in automobile
production.


Donald Methuen Fleming: In automobile production; it was at the end of March, 1957. We were all over this in the last session, and it was the end of March 1957 when the production figures on automobile production in Canada began to fall below those of 1956.


William Moore Benidickson: In any event, it was long after the February, 1957 budget. I am quoting from one of the most authoritative sources from which one can quote, a report which was submitted to this house by the minister himself from the governor of the

Bank of Canada. The governor of the bank states that automobile sales had not declined until well into 1957.


Donald Methuen Fleming: Yes, March.


William Moore Benidickson: That is not well into 1957, as my hon. friend well knows.


Donald Methuen Fleming: That is the fact. May I ask my hon. friend if he is not aware of the fact that it was at the end of March, 1957, that the turn came in the production of automobiles.


Lionel Chevrier: Why don't you make your speech later?


William Moore Benidickson: My hon. friend yesterday, and again today, is simply interjecting to deny certain statements made by others who have every right in this house to put forward their view.


Donald Methuen Fleming: Don't you want the facts?


William Moore Benidickson: I want you to give the facts to me in a speech. I want you to counteract, if you can,-


Mr. Speaker:: Order.


William Moore Benidickson: This interruption was not addressed to you, of course, Mr. Speaker. I suggest the minister can very well put on the record anything he suggests counteracts this authoritative statement I am presenting.
I say we have every reason to believe, particularly after that decline occurred in the production of this industry, that this administration, having regard to what its prominent spokesman said in years gone by, would have extended some relief. The Minister of Finance (Mr. Fleming) was one of those who consistently over the years said that even if one were to regard solely the matter of revenues to the crown, it was his opinion that a reduction in this excise tax would stimulate sales to the extent that the crown would lose nothing in revenue; that the crown would more than get back from this 10 per cent sales tax what it might lose on the extra 10 per cent excise tax by reason of the extra production that would result from this stimulus.


Donald Methuen Fleming: So we reduced it.


William Moore Benidickson: I suggest to him no better climate has ever been presented to a government for an opportunity to show to the people that they meant what they said at that time.


Mr. Speaker:: If the house is ready for the question, I will hear the Postmaster General (Mr. Hamilton) before putting the question.


William McLean Hamilton: The
proposed amendment, Mr. Speaker, is that this bill be not read a second time until further consideration has been given to a reduction in the excise tax on motor cars. I would refer you specifically to Beauchesne's fourth edition, citation 394, page 281, the first part of which states:
Nor may such an amendment deal with the provision of the bill upon which it is moved, nor anticipate amendments thereto which may be moved in committee, nor attach conditions to the second reading of the said bill.
It seems to me that this is specifically a condition which is attached to the second reading of the bill, that it be not read a second time until further consideration, and therefore the motion is directly contrary to this particular reference which says that such a motion shall not attach conditions to the second reading. I would, therefore, feel the motion is out of order.


John Whitney Pickersgill: May I say a word on the point the hon. member has raised? The hon. member has suggested that this citation 394 governs this case. Surely, the amendment proposed by the hon. member for Fort William (Mr. Badanai) does not propose anything that could be done in committee. It proposes that a delay should take place in the second reading of this bill until such time as consideration is given to the matter of the motor tax. It does not propose anything specific.
May I also draw your attention to the provisions of Beauchesne's parliamentary rules and forms, fourth edition, citation 265, which is in these words:
No member other than a minister of the crown may introduce a bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the house enjoys-
I stress this respectfully to Your Honour.
-complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility. This duty the members may perform by moving amendments to reduce the tax proposed by the administration.


Mr. Speaker:: I thank hon. members for the help they have given me. As I see this amendment, it really is a declaration of a contrary principle to that which is under debate. The principle under debate is an amendment of the Excise Tax Act as the government has proposed. Now, the view which is brought forward is that the government has taken a wrong line and should have adopted another principle in amendment of the Excise Tax Act, that of reducing excise taxes instead of the tax with which it has dealt.
This is clearly not a matter which can be introduced as an amendment to the bill in
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the course of its consideration in committee. I think that has already been decided. At the resolution stage an attempt was made to propose an amendment in this category, and it was properly ruled out. Nor can it be introduced into the bill when the bill is in committee of the whole, because the resolution does not cover an amendment of that kind. Here, where the principle on which the government has proceeded is under consideration, it seems to me this is a proper declaration of a contrary principle. I realize that there are some difficulties in accepting this point of view. Members may raise innumerable minor amendments to the Excise Tax Act as matters of principle, and of course that could not be acceptable to the house as it would delay proceedings endlessly. But in the view I take of it-I may not be correct in this but as advised I feel I am-I think I should put the amendment to the house. Is the house now ready for the question?


Mr. Speaker:: I declare the amendment lost. The question is now on the main motion. Is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Rea in the chair.
On clause 1.
William Moore Benidickson: Would the minister outline, generally, any additions to the act which 
are not referred to in the resolution? He will realize that we received the bill only this morning.


Donald Methuen Fleming: Mr. Chairman, the bill follows the terms of the resolutions that were approved in committee of ways and means last night. The provisions of the bill are confined to carrying those resolutions into effect, and anything of a consequential nature.


William Moore Benidickson: Is section 7 perhaps the only section that has reference to something of which we have not already had notice in the resolutions?


Donald Methuen Fleming: Yes. The other provisions are all incidental and consequential on the resolution, Mr. Chairman.
(Translation):


Mr. Dumas:: Mr. Chairman, I wonder if the remarks I am about to make are in order. They have reference to fuel oil for diesel engines used in generating electricity. If I understand correctly, the minister stated yesterday, in answer to a question put by the hon. member for Kenora-Rainy River (Mr. Benidickson), that only municipalities and those who are engaged in logging and lumbering were to be allowed to avail themselves of the tax exemption in this regard.
(Text):


Donald Methuen Fleming: Mr. Chairman, the point my hon. friend is raising has nothing to do with this clause. It relates to clause 8 of the bill which is the clause that has the effect of repealing the schedule and introducing the new schedule. The matter my hon. friend is speaking about is in the schedule. When we come to clause 8 of the bill there is something I have to say on that subject because the information that was given to me in respect of an answer I gave last night was not correct and I have something to say about that as applied to mines. That relates to clause 8 of the bill.


Armand Dumas: I am very happy, Mr. Chairman, to hear the minister say he has something to add because he may agree to what I was about to suggest. I am willing to wait until clause 8 is called but I want to make sure I can speak on that question on clause 8.


Lionel Chevrier: The point I was going to make was simply this. There are a number of hon. members on this side of the house who want to deal with this question. In order to assist the minister I was wondering if it would be possible to do it now and avoid a long discussion on clause 8. However, if the ruling of the Chair is otherwise I am sure we will be happy to enter the discussion at that time.


William Moore Benidickson: The only suggestion I would make is that if we had unanimous consent we could deal with schedule III with some slowness. Each of the bracketed materials in that schedule has a heading. I thought perhaps there might be an opportunity given for debate in committee or questions and answers in committee. Perhaps that does not agree with what my friend the hon. member for Laurier was suggesting but I think it would be a more systematic debate than if we were to deal with the items in the schedule simply because we happened to be dealing with schedule III. Perhaps the Chair would do what was done last night and call the items in schedule III seriatim. The headings are "Building Materials", "Charitable, Health, Etc.", "Coverings" and so on.


Lionel Chevrier: That is perfectly satisfactory to me.


The Deputy Chairman:: Is it the wish of the committee that when we reach the schedule we will call the various headings for discussion and when we have completed that we can ask if it carries?


Donald Methuen Fleming: Mr. Chairman, I take it that it is clear that any reference to the schedule must wait until we reach clause 8. The matter of dealing with the schedule is one of calling the amendments made in the schedule under convenient headings.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Licensed wholesaler or jobber.
Leon David Crestohl: Would the minister tell us whether the purpose of this amendment is merely to delete the prescribed fee of $2 in the old section?


Donald Methuen Fleming: Mr. Chairman, it goes a little farther than that. The old section prescribes two things: first of all that there must be an annual licence and, second, that there is a fee payable on the licence. The change that has been made eliminates the licence fee entirely and eliminates the provision that the licence must be annual. In other words, it rests then with the department to decide for what length of time a licence shall be issued. I expect the department hereafter will issue licences for longer periods than one year at a time.


Leon David Crestohl: One further question, Mr. Chairman. Today it is compulsory for a licensee to apply for a licence. Under the amendment will it be equally compulsory for the department or the minister to issue a licence when it is apDlied for? The language
Excise Tax Act
used is that a licence "may be granted" and that means it may not be granted, too.


Donald Methuen Fleming: The clause under consideration makes no change in the present provisions of the act in that regard. The language "may be granted" is the language the act has employed for a long time, as far as I am aware from the beginning of the act. That is the standard language of statutes in respect of the granting of licences and there is no change in that respect.


Leon David Crestohl: Can the minister tell us what has been the practice?


Donald Methuen Fleming: I am informed that the practice is that anybody who qualifies under the terms laid down receives a licence.


[Stage Direction]
Clause agreed to.
Clauses 4 to 6 agreed to.
On clause 7-Evidence.
Leon David Crestohl: Mr. Chairman, this is a new clause and I believe it poses a problem. If a return is purported to have been filed on behalf of some one that return is to be considered as prima facie proof. Can the minister tell us if it is intended that the prima facie proof be a rebuttable proof? When a return has been filed by an accountant or some one else on behalf of an individual or if a person has filed a return which is not signed by the individual involved will the person have the right to rebut that and say it is not his return?


Donald Methuen Fleming: Certainly, Mr. Chairman. Any prima facie presumption is always rebuttable.


[Stage Direction]
Clause agreed to.
On clause 8-Schedule III.
Charles Edward Rea: Is there any discussion under the heading "Building Materials"? Any discussion under the heading "Charitable, Health, Etc."?


William Moore Benidickson: Under this heading, Mr. Chairman, I would just remind the minister of the discussion we have had in previous sittings. I think particularly of the speech made by the hon. member for Welland when he said that probably the best relief, if one were thinking in terms of hardship for those who have ill health would possibly be the exemption of drugs from sales tax. The most needy people in the land do not have an income on which they pay tax and consequently the exemptions provided under the Income Tax Act do not apply. If in another year we could have a further look at the possibility of exempting drugs from tax as one of the necessities of life it would be a very

Excise Tax Act
worth-while effort on the part of the administration and the exemption. This is probably a new field and a widening in this regard would be commendable.
The minister of course will recall that when he and his colleagues sat on this side of the house and were free to speak frankly about these things some of his colleagues- I do not know if the minister did personally but I believe he did-advocated this and some of the rest of us who were at that time sitting on the government side were doing what some of my hon. friend's colleagues are probably doing at the present time, making representations to him about some of these matters.
Some of these drugs are extremely expensive and the list is probably not as large as it should be bearing in mind the new drugs that come on the market most of which, particularly in the initial stages, are exceedingly expensive. I myself, when assisting the minister of finance, did receive some information about the actual factory cost of some of those drugs. I was rather amazed to find that neither customs tax nor sales tax did have a particularly big relevancy in relation to the ultimate cost to the consumer. That, of course, does not come within the rules of debate when we are discussing this item here. But it is all related and I have thought that it is something that should probably deserve and receive from the officials of the departments of health and welfare, national revenue and finance very careful study. I feel that while we have customs duty on the import of some drugs and we have sales tax on some drugs that are very expensive there is still not a relationship between the actual cost in another country as compared with this country and I would hope that the minister and his officials might look at this. I myself gave it some consideration, as some of the gentlemen in front of the minister will remember, in the very recent past.


Charles Edward Rea: Is there any further discussion under this heading? Is there any discussion on the heading "coverings"?


William Moore Benidickson: This, of course, has no relationship to coverings of school desks or seats.


Donald Methuen Fleming: There is no amendment involved there, Mr. Chairman.


Charles Edward Rea: Is there any discussion on the heading "diplomatic"?


Lionel Chevrier: May I ask the minister whether there is anything new in this?


Donald Methuen Fleming: No, the amendments are underlined and there is no amendment under "coverings" or under "diplomatic"; there is nothing under "engines" and only

when we reach "farm and forest" are there some further amendments introduced into the schedule.


Charles Edward Rea: Is there any discussion on the heading "engines"?


William Moore Benidickson: Not having taken advantage of the opportunity to speak on second reading on this item, except on the amendment, may I say that I would like the minister and the department to consider very carefully here the possibility of exempting such things as Delco plants for the generation of electricity from sales tax. This is, I admit again, not a new request. It was considered by the previous administration; but we have been constantly extending some of these sales tax exemptions and I notice in the budget this time we have a relief with respect to the purchase of diesel fuel oil for the generation of electricity. That is a very essential thing in many parts of our northern areas which we are endeavouring to develop and I think should have another consideration. To an extent I am abusing the privilege of the committee simply because I know it has been in the past-and I assume it is now-the policy of the officials and of the minister to review very carefully the remarks which are made at this stage of the debate by hon. members from all parties. In the past it was the practice to prepare a memorandum during budget discussions for the consideration of the budget committee when there was a particular item or request for the reconsideration of the tax structure with respect to some of these things. I assume that practice is continuing. Without prolonging the debate I would just like to have that in that category for consideration.


Charles Edward Rea: Is there any discussion on "farm and forest"?


William Moore Benidickson: What is the estimated tax loss on the exemption of cut flowers as one of the major items?


Donald Methuen Fleming: As I stated in the budget speech, $1 million.


Charles Edward Rea: Is there any discussion on "fire brick, refractories, etc."? Is there any discussion on "foodstuffs"? Is there any discussion on the goods enumerated in Customs Tariff items?


George James McIlraith: I wonder whether the minister would mind clarifying a point here that seems to be bothering a great many persons, namely the reference to the new tariff items in the proposed tariff that will be before the house for discussion? There is a reference here to the goods exempt, giving the new numbers, and there seems to be confusion as to how we can legislate on new items that have not yet been enacted into law. If

the minister would just clarify that point we would appreciate it. An example of that will be found in item 848, oil country goods, which is in the present Customs Tariff item 848, but appears in the proposed tariff item as 399a. Would the minister just clarify that?


Donald Methuen Fleming: Yes. I explained last night that this reference to some half dozen new sections here, or a new reference to half a dozen sections, arises out of the amendments which are proposed in the Customs Tariff and we know now what these are going to be. They are set out in the resolution to which I trust we shall be coming shortly in the committee of ways and means. This measure of course, will not be coming into effect until the amendment to the Customs Tariff also comes into effect and the references are completely harmonized in that way.


George James McIlraith: Thank you. A few moments ago an hon. member questioned me about this. Perhaps I can ask a simple question here that would serve to dispose of the question that was in his mind. I take it that oil country goods or casing that goes into an oil well or a gas well is sales tax exempt but that transmission pipe or tubing, are not sales tax exempt.


Donald Methuen Fleming: That is correct.


Charles Edward Rea: Is there any discussion on machinery?


John Whitney Pickersgill: On this last point, Mr. Chairman, 1 would like to ask the minister whether I understood correctly what he said about this reference to changes in the Customs Tariff. Are we to understand that we are being asked in this bill to assume that the house is going to pass another measure that has not even been submitted yet to the committee of ways and means? Is this not rather taking parliament for granted?


Donald Methuen Fleming: No, I do not think so, Mr. Chairman. This was discussed last evening. The committee is well aware of the effect of the reference and the reference is to items that are already before the committee of ways and means. It is not a reference to something with which the committee is not already well acquainted. This has been before the house since June 17. The house knows precisely what they are and we shall be dealing with them further in committee of ways and means.


John Whitney Pickersgill: That is not my point at all.


William Moore Benidickson: I think the hon. member for Bonavista-Twillingate, who is usually fairly sharp in his observations, has a point 57071-3-181
Excise Tax Act
that while we have had notice of a consolidation of tariff items, we are assuming here that the new tariff items will be as in the schedule in the budget resolution but it is conceivable they will not be. That is the point.


John Whitney Pickersgill: The minister does not appear to have got my point. I can well remember when the previous prime minister sat in the seat next to the one the minister is in now he was most scrupulous never to assume, no matter how large a majority was supporting him, that anything would be passed by parliament until it had been passed. Here, it seems to me, we are going pretty far if we are going to put a section in this bill and the minister is going to proceed with it and pass it, making reference to something that is going to be in a bill that has not yet been introduced in the house. Many things might happen. The government might be defeated between the time of the passage of this bill and the passage of the next bill and the law would be in a terrible mess. Hon. members may laugh but we heard a lot of eloquent speeches from this side of the house in the last parliament but one about the rights of parliament. I would not object at all to the minister allowing this section to stand and deal with the rest of the sections and then the committee could rise and we could come back to this bill after the Customs Tariff had passed and thereby preserve the rights of parliament. I do think this is not just a technical point. This is a question of preserving the rights of parliament and of not passing a bill about an act that does not exist. If I am wrong about my facts I would be glad to be corrected.


William Moore Benidickson: I think the hon. member is perfectly correct because there would be new numerals in the customs tariff schedule to which we are now referring. I would think there would be no hesitation on the part of this group in passing the bill with alacrity with the exception of this point. We could rise, report progress and pass it after the other items are actual items in the new tariff schedule.


Donald Methuen Fleming: Mr. Chairman, surely it is quite clear that the bill would never be brought into effect unless parliament had also legislated in terms of the changes in the numbers. It is only a matter of changes in numbers. There is no change in the tax and no change in substance. It is simply a matter of the numbers. There is nothing else involved than that. Surely the proper course to follow here is to allow the bill to pass. If hon. members do not wish the bill to be given third reading until the amendment to

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the Customs Tariff has been dealt with in committee of ways and means, I have no objection to that. It is always possible at that stage, if the house did not approve the changes in the numbers that are proposed in the amendment to the Customs Tariff, to have the change made by amendment on third reading by referring the bill back to the committee.


John Whitney Pickersgill: I must say that I have not given the bill the same attention that the hon. member for Kenora-Rainy River has but I do not apprehend that the bill comes into force on proclamation. My understanding is that once it is given royal assent it is the law. Therefore it does seem to me that the minister is not factually correct in saying that if the bill passes it would not come itno effect until the other measure had come into effect.


Donald Methuen Fleming: We are talking about being passed by the house and what I have suggested-


John Whitney Pickersgill: I think, Mr. Chairman, that I have the floor. What I was pointing out was that once this bill is passed by the house we lose control of it. We have given up our rights as representatives of the people. This is a taxing statute, and while I admit that all the minister says about this being a purely technical point is true it does seem to me that it is by the preservation of these technical points that we have safeguarded our liberties and the right of the subject to consent to imposts upon him and that we should be extremely careful about these forms. Speaking for myself, I would feel much happier if we just allowed this section of the schedule to stand. We could come back to it, as my hon. friend says, and no one would be disposed to hold this up five minutes after the other measure had been dealt with. Of course, as the minister has pointed out, no time would be lost because this measure cannot come into effect anyway until the other one does.


Donald Methuen Fleming: I think my hon. friend is not aware of the fact that the number of the present item in the Customs Tariff is 848 and what is proposed in the resolution respecting the amendment of that item is that, in addition to its having No. 848, there be a number of other parts into which it is broken down and those are the underlined parts. If parliament did not see fit to enact the proposed resolution into law by amendment of the Customs Tariff then we would still have the law as at present because 848 is still there. There has been nothing taken away. There will be no change made in the law. You would have a reference to some nonexistent parts but that would not in any

way affect the operation of the law because 848 is still there and if it remains unchanged the law has its full application and the Excise Tax Act has its full effect. Therefore I think my hon. friend can see that parliament is not being asked to anticipate anything that is going to have the effect of tieing its hands in any way or preventing the operation of the law as parliament chooses to legislate.


John Whitney Pickersgill: I think the minister has satisfied me that instead of having the law in a state of chaos parliament would be merely making itself ridiculous, and if the minister insists on that I do not make any further objection.


Leon David Crestohl: I should like to ask the
minister this question. While the ultimate end will be the same, does the minister not think that it would be setting a rather unusual precedent to reach that end without following the proper sequence? I think the point made by the hon. member for Bona-vista-Twillingate is logical. I think we should reach the objective we are after in the proper sequence according to law and the rules of parliament.
The Depuiy Chairman: Is there any further discussion of that item? Is there any discussion of machinery and apparatus to be used in manufacture or production?


William Moore Benidickson: Mr. Chairman, I think it was under this section, was it not, that the hon. member for Villeneuve-


Donald Methuen Fleming: No. If I correctly apprehended the point made by the hon. member for Villeneuve, it has to do with the very last item of the schedule on page 12. I have some things I wish to say by way of correction of remarks made last night when we reach it.


Mr. Kennedy:: Mr. Chairman, at the present time there is a 10 per cent sales tax on power driven equipment used for clearing bush. This is used considerably in areas where the cultivation of blueberries takes place. Since this type of equipment is necessary in the production of the crop, I should like to ask the minister to bring it under agricultural equipment and to remove the tax at some future date.


Charles Edward Rea: Is there any discussion on marine and fisheries? Is there any discussion on mines and quarries? Is there any discussion on miscellaneous? Is there any discussion on municipalities?


Armand Dumas: Mr. Chairman, I have good reason to bring up the question of fuel oil under this item and I will explain the reason why I think I can bring it up under this

heading. In remote areas mining operations are carried on by companies which at the same time look after housing. In most cases they do not have any electric power and they have to use diesel motors.


Donald Methuen Fleming: If my hon. friend will permit me, the provision on page 11 which the chairman has called applies only to goods sold to or imported by municipalities. It has nothing to do with goods sold to or imported by mining companies. I understood that my hon. friend was going to speak about the use of diesel fuel oil in internal combustion engines when used for that purpose by mining companies. That arises under the heading "processing materials" on page 12. The heading that the chairman has now called simply pertains to goods sold to or imported by municipalities for their own use and not for resale.


Armand Dumas: Maybe the minister is right but I still think I am also right. There are many small communities not incorporated as municipalities where mining companies look after the housing for miners and other people in the community. The mining companies are called upon to look after this agglomeration of houses. I feel that we have many examples of that in northwestern Quebec, and the mining companies are going to be paying taxes on this fuel oil used in engines to produce electricity. I think this is discrimination against these mining companies. The minister should consider amending clause 7 of the act in favour of the mining companies, just as he did for the logging companies.


Donald Methuen Fleming: This brings us directly to the point I was raising, that the matter appears under the heading "Processing materials", on page 12 of the bill. It is the last item, and that is where the lumbering and logging companies are dealt with. That is the point in the schedule, as I understand it, where my hon. friend thought perhaps there should be an enlargement. It is not the provision we are dealing with under the heading of "Municipalities".


William Moore Benidickson: Coming from the north as I do, I can understand the point that has been raised by the hon. member for Villeneuve. There is a very close connection between the type of service rendered householders by certain mining companies in the matter of generation and so on, and the type of service that would be provided by an organized municipality. I think that having regard to the exemption that is provided here for municipalities he is making a very good point to which consideration 57071-3-181J
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should be given. He is saying the same consideration should be given to the private company, a company town-it is really less than that, it is an unorganized area. The municipal services that normally are provided by the municipal government are provided by the mines or some other industry. If a duly constituted area is getting exemption for this very important item which, in terms, is passed on to the consumer, it seems to me that my hon. friend is very relevant in suggesting that an extension of this exemption must be made to the company areas.


Donald Methuen Fleming: The hon. member for Villeneuve, Mr. Chairman, of course has his opportunity to raise this matter. There is no question about that. We discussed the point with reference to mines last night, in reference to the amendment that was being introduced with respect to the use of diesel fuel oil for internal combustion engines used in the logging operations and in the manufacture of rough lumber. There is no question about his right to bring that up.


Lionel Chevrier: Why not allow him to do so now and save time?


William Moore Benidickson: No, there is a suggestion in the last item to which my hon. friend the minister is referring that the materials must be consumed or extended directly in the process of manufacture or production of goods. My hon. friend from Villeneuve is speaking about a public service that is provided by a private company for home owners. It is the equivalent of this exemption that is given the municipalities to exempt them from sales tax on fuel that is used for the purpose of generating electricity in that community.


Donald Methuen Fleming: We should not take up a lot of time on this. I thought what I was going to suggest would meet the desires of the hon. member. In this case the diesel fuel oil is used in the production of electricity, and not in the production of other goods, and that is why this matter falls under the clause I have mentioned. We have spent so much time now in talking about where it should be taken up, and I think it is quite clear that my hon. friend will have his opportunity to bring it up and the last item is the place because that is where we had our discussion on the subject last night.


Armand Dumas: I do not object to discussing it under the last item of the schedule, if the minister is right in what he is saying that the diesel fuel oil used by municipalities in generating electricity could have been included in the last paragraph. However,

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if the minister is ready to propose that amendment for the mining companies, as he did for the lumbering and logging companies, I am willing to wait until the last paragraph.


Leon David Crestohl: Perhaps before we approve this section under the heading "Municipalities" the minister could give us the proposed amendment to the last section.


Donald Methuen Fleming: I did not say I was
proposing an amendment to the last section. There is an amendment that was introduced into the resolution in committee of ways and means last evening.


Lionel Chevrier: The minister said he had a statement to make on it, did he not?


Donald Methuen Fleming: Yes, when we come to that paragraph under "Processing Materials".


Lionel Chevrier: Would he make it now?


Donald Methuen Fleming: It does not relate to municipalities at all.


Lionel Chevrier: The only fear we have is that if we wait until the last item "Processing Materials" to discuss the matter which the hon. member for Villeneuve wants to discuss it may be suggested we are out of order and that is why hon. members feel it should be discussed under this item.


Donald Methuen Fleming: I expressed the opinion the hon. member for Villeneuve would be entirely in order in raising it there. I think that is clearly the place where it ought to be raised. There is no problem about his raising it at all. It was on that subject we had our discussion last night and clearly that is the place for it under "Processing Materials".


George James McIlraith: There seems to be a lot of time taken up on points of procedure. I hope my remarks will help to clarify it. The point under discussion last night was a proposed exemption for fuel oil for use in internal combustion engines in logging operations, and the suggestion was that should apply to mining operations and the production of minerals. The point under discussion now by the hon. member for Villeneuve is a different point. It is suggested there should be an exemption for diesel fuel oil for use in generating electricity, which electricity will be used for servicing groups of homes which in most parts of the country are grouped together in municipalities, but which in some parts of the country are not given municipal status but are operated by mining companies.
That latter point is in order under this subheading "Municipalities", and the other that was under discussion last night is in order

under the subheading "Processing Materials". I would point out to the committee that the hon. member for Villeneuve is now discussing a different point from the one discussed last night, except that both points apply to mining companies. That is the only thing they have in common.


Leon David Crestohl: Can the minister tell us if there is a definition of municipalities?


Donald Methuen Fleming: Not in this act.


Leon David Crestohl: Then, how are we going to differentiate between the form of set-up that a corporation in the north country creates by which it builds 100 houses, builds some streets and, in fact, becomes a mining municipality and providing the same sort of service as will be given by organized municipalities? If there 'is no definition of municipality, could we not, in some form, cover that sort of organization by a mining company or lumbering company? I think that is what the hon. member for Villeneuve has in mind. They will be generating electricity by using diesel fuel oil, so why should a creation of that kind not get the same benefit as an incorporated municipality? It is, in fact, a municipality without legal status. If there is no definition in the act, would the minister think an organization like that would be covered?


Donald Methuen Fleming: No, Mr. Chairman.


William Moore Benidickson: There is one saving provision, I would think. It would be in the interests of the mining company to organize something that was the equivalent of a municipality, apply for an improvement district or something of that kind, because by so doing in the province from which I come they would get substantial provincial grants for school purposes and things of that kind. So I imagine even in a company town there is some form of organization that is the equivalent of a municipality.


Erhart Regier: I wonder if the minister would be good enough to explain the Excise Tax Act as it now applies to the purchase of automobiles and trucks by municipalities and what changes are involved in that regard as a result of this bill?


Donald Methuen Fleming: Automobiles purchased by municipalities are subject to the sales tax. This is the form of exemption permitted to municipalities in the case of the purchase of equipment which is designed for these purposes but my hon. friend has observed that there is a clear exclusion from the terms of exemption on automobiles and ordinary motor trucks.


Erhart Regier: I believe the minister will admit that certain classes of trucks are

exempt from excise tax and I would like him to now say what are those types.


Donald Methuen Fleming: Fire trucks, for example.


Erhart Regier: I rather regret the minister has not seen fit to aid the municipalities by exempting from excise tax all manner of trucks purchased by them. A number of municipalities have complained to me that it is only on their larger vehicles, and I am not quite sure that the minister is quite comprehensive enough when he says only fire trucks are exempted at the present time. My information may be wrong and the minister can no doubt correct me, but I believe certain trucks utilized for road building purposes are also exempt and have been so exempt for quite a while.


Donald Methuen Fleming: That is right under the clause my hon. friend has read. The exempting provision is as follows:
Equipment, at a price in excess of five hundred dollars per unit, specially designed for use directly for road making, road cleaning or fire fighting, but not including automobiles or ordinary motor trucks;
It is quite clear that leaving out ordinary motor trucks and automobiles, the clause provides that equipment that is used directly on road making, road cleaning or fire fighting and which costs more than $500 is exempt.


Erhart Regier: I am sure the minister will agree that these days the municipalities- especially the older ones-have a considerable need for motor vehicles such as light weight trucks and they find it more convenient and economical in many departments to supply their men with half-ton or one-ton trucks. Yet these vehicles are not exempt from excise tax.
There are also many departments of municipalities, especially in the urban areas, which have to be supplied with automobiles and if the government is really sincere in its desire to aid the municipalities and yet not interfere unduly with the concept that the municipalities are primarily the responsibility of the provincial government, it might at least extend to the municipalities all the aid possible within the confines of its own responsibility. This might be done by removing from the municipal corporations every taxation burden possible.
I know the department of the minister has been giving this problem some consideration and I wonder if he might outline to the house the reasons why the department- especially since he has taken office-has decided not to include automobiles and small trucks purchased by municipalities for municipal use in the exemption.
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Donald Methuen Fleming: Mr. Chairman, it will be quite clear to my hon. friend, if he examines the language of the amendment, that the type of amendment introduced pertains to equipment and exempts equipment of a nature associated with municipal use. That is very clear and would not admit of the equipment being devoted to some other use.
That principle does not apply in the case of ordinary automobiles purchased by a municipality, for instance, in the case of a fleet of automobiles for the transportation of members of the city council. Perhaps such a fleet after a year or two would be disposed of or turned in by the municipality and would then be purchased by someone else-possibly private persons-and no tax would have been collected on such vehicles. I am sure my hon. friend will appreciate that difficulties arise with respect to a fair application of the tax as compared with the purchase in the first instance by an ordinary individual who must pay tax. Here we have dealt with this matter in what we believe to be a sound and logical way. We have exempted the kind of equipment which the municipalities have to buy for essentially municipal purposes.


Erhart Regier: It is now being assumed, Mr. Chairman, that the municipality, for its police department and social welfare department or any other department for which automobiles are needed, is able to buy them without having to pay the excise tax, and that when the municipality after several years turns in these cars and buys a new fleet, somebody is going to get the benefit who was never intended to do so.
I must submit to the minister that when the corporation of the city of Toronto turns in 100 police cars to some firm and takes in a trade 100 new automobiles, the valuation placed by the dealer or automotive agency on these used cars would include some credit to the municipality concerned for the fact that the cars would be available for resale. It would not be the second hand purchaser who would get the benefit at all, it would be the municipality turning in the used cars, and I do not think the minister can successfully argue that benefit would accrue to anyone other than the municipal corporation.
The same thing applies to the half ton and one ton truck and to the station wagon, which is coming into greater use by municipal corporations. In most cases our municipalities use such vehicles, in the aggregate, to a far greater extent than the heavy fire trucks or road building items of machinery. This is especially so in the case of the older

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urban areas where there is no longer any major road building left to be done and where the major items of fire fighting equipment already have been purchased. By far the greatest expenditures today are for the purchase of automobiles and small trucks for the use of the various departments of the municipalities.
I believe that if this government was sincere in its repeated expressions of sympathy for the municipalities it would have seen fit to extend this concession to them. The argument used by the minister is an old one which was also used by the former minister and I do not think he has readily given this problem very serious consideration. I sincerely hope he will do so before long.


Mr. McMillan:: Mr. Chairman, under
municipalities there appear the words "goods for use as part of a sewage and drainage system" and it says that the minister might name any agency to act on behalf of the municipality, which agency, I presume, would recover the sales tax. I may say in connection with sewer systems that there are different sizes of east iron pipes-4 inches, 6 inches and 8 inches-that might be utilized.	They also use pipes of these
sizes in water systems, and I take it there is a sales tax payable on water pipes. How does the minister presume to differentiate between the use of these two different pipes when made to serve as water pipes or sewage pipes?


Mr. Winch:: Mr. Chairman, I also am in the position of not quite understanding why the Minister of Finance will not give complete recognition to the principle that goods which are purchased solely for the purposes of municipalities ought to be exempt from taxation. I want to commend what the minister said a few moments ago, and support such steps as he now intends to take. But there appear to me to be a number of anomalies. For example, if a municipality purchases a fire engine, which lasts 10 or 15 years, they will be relieved of taxation of this kind, but I would point out that one of the larger expenses of a municipality is the purchase of cars and trucks, and these only last two or three years. Take, for example, the city of Vancouver and its requirement to purchase large numbers of vehicles for the use of the police department. These vehicles are all bought for a municipal purpose, and in Vancouver, as far as I know- and I think I know the situation fairly well- every time they purchase a new car for police purposes another car is turned in in exchange. In the long run all purchases

made by a city or municipality are for the purposes of that city or municipality itself, and I am not able to understand the minister's argument that he cannot extend the policy which is exemplified in this bill to the point of removing sales tax on all municipal purchases.


Donald Methuen Fleming: This is a very long subject. For one thing, we have a deficit this year of $648 million. For another, one would have to go very far in examining the different types of goods which are used by the municipalities. There are very great difficulties in applying the ordinary safeguards which it is the responsibility of the Department of National Revenue to apply in dealing with exemptions when goods of certain kinds are purchased by municipalities.
We have gone a considerable distance this year; we have gone that distance in seeking to create more exemptions for municipalities. The exemptions that are created by this bill in favour of the municipalities will be worth $5 million to the municipalities of this country in a year. We think that is a very substantial measure of assistance to municipalities, and we have moved in the direction of exempting goods of a nature with respect to which it is possible for the Department of National Revenue to exercise a proper degree of control. The department has, of course, the responsibility of policing the exercise of these exemptions and making sure that the exemptions are not being abused. We have made these exemptions in directions where we can be sure that it is the municipalities and the municipalities alone which will derive the benefit, and where we are not at the same time creating unfair discrimination.


William Moore Benidickson: The minister would agree that there is no restriction on exemption for sales tax with respect to hospitals? He accepts that there is full exemption in the case of public hospitals.


Donald Methuen Fleming: And the same applies to the provinces. Goods purchased by a province are not subject to sales tax. But then it is so much easier to police the purchases made and to see that the act is being properly administered. You have 10 provinces in this country, but you have nearly
5,000	municipalities. It is an entirely different matter.
I have to point out in this connection, arising from the hon. member's remarks, that in the case of the provinces which impose a provincial sales tax they do not, I think, exempt the purchases made by municipalities.
Here we have gone a very long distance in a direction which will, I hope, commend itself

to the house in seeking to exempt municipalities from this tax. We have done so in cases where we can be very sure that the goods purchased are of a nature that will be used by municipalities and by municipalities alone, as far as we can see to it.


William Moore Benidickson: On that very point, I think the minister has a very good memory and I am sure he will remember that I had to tell him the very same thing not more than a couple of years ago. I explained the difficulty of dealing with 5,000 or so municipalities, and I explained, also, that certain of the provinces, whose children the municipalities are considered to be, were not exempting the municipalities from provincial taxation, even with respect to such purchases as were being exempted by the former government. But I would ask the hon. minister to have another look at this question, particularly in view of his former commitments and those of prominent members of his party. And, with regard to the most prominent of his colleagues, I refer to page 3396 of the 1956 volume of Hansard, when the hon. minister's leader at that time said there should be no sales tax imposed on municipalities and school boards.
And now with regard to this item, I should just like to be given some explanation with respect to the composition of the bill. Am I right in thinking that we have here a new section?


Donald Methuen Fleming: Yes.


William Moore Benidickson: That in itself is not underlined. I am not trying to be unduly critical in this respect, and I have great regard, of course, for the gentlemen who look after these things, with whom I was recently associated. But I may say that when I was trying to do a little homework on this bill I found some difficulty. I find it even tonight. I take it that the minister has before him the latest consolidation of the act as we discussed it last night, the consolidation which was published in August, 1957. On page 31 of that consolidation we have the former reference to exempting municipalities from sales tax.
I want to make this observation to those who draft these bills. It is very helpful to members of parliament-and the bills are first of all for their purposes-if when there is some change in placement of an enactment a notation were to appear on the right hand side of the page to the effect that there has been a change. It would be very easy for those who have spent many weeks dealing with the material to indicate on the right hand side that there has been a change. In the resolutions, for instance, I found it
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difficult to locate the change relating to structural steel versus aluminum for bridges. I know that my hon. friend has had more recent familiarity with the act than I have and I would like him to point out to me where I will find the exemption for structural steel for bridges in the consolidation.


Donald Methuen Fleming: Yes, Mr. Chairman. On page 30 under the heading "Certain Building Materials" about ten lines from the bottom of the page. The item reads:
Structural steel when purchased by municipalities for the construction of bridges in highway systems.


William Moore Benidickson: I thank the minister for his courtesy. I had difficulty finding what is now the fourth item under the miscellaneous grouping under the heading "Municipalities". If there is to be a redesigning of the structure of the bill there should be on the right hand page an indication that would prove helpful to hon. members of parliament.


Donald Methuen Fleming: I thank my hon. friend for his suggestion. I think he has a point that could well be kept in mind by the draftsmen of bills. It has not been the practice in the past to give notes on the right hand side of the page opposite schedules to bills. The practice has been to do so opposite the substantive provisions of the bill clause by clause but not in the case of the schedules appended to the bill. In the present case I think it is quite clear that what has been done by the draftsman is to bring about a convenient rearrangement.


William Moore Benidickson: Oh, I approve of the new
section. I thought it should be drawn to our attention when we are trying to study the biU.


Donald Methuen Fleming: There is no change in the provisions of the act in the respect that is mentioned, but for convenience-and I think it is commendable-the draftsmen have gathered together under a new heading "Municipalities" those items which in the case of materials purchased by municipalities for their own use and not for resale had not previously been gathered together under one heading.


Harold Edward Winch: Mr. Chairman, I should like to refer back to the comment made by the Minister of Finance a few moments ago on the question of the exemption from taxation of certain purchases by municipalities. First of all I wish to convey through you to the minister the appreciation of all of us for the recognition the minister has given in terms of a reduction in certain taxes paid by municipalities on their purchases but he outlined this as a principle and in my opinion did not follow through on the principle itself.

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According to the terminology of the bill the tax is to be removed on purchases by the municipalities of certain materials such as culverts, diesel fuel oil, fire truck chassis and so on. That is a good principle without doubt and it is something for which many of us have fought over the years. But I do not personally understand the view expressed by the minister a few moments ago.
To the best of my knowledge a municipality would purchase a fire truck chassis perhaps once in five or 15 years but the municipalities constantly make heavy expenditures of other kinds. I think, for instance, of the welfare departments of municipalities and also of the police departments. The police department of a municipality represents one of its most heavy expenditures and they are required to purchase automotive equipment for that department.
I feel that I know something about the purchases made by the city of Vancouver and when the city purchases equipment for its departments of welfare, police or parks it is not purchased with the idea of reselling it. When new equipment is purchased the old equipment is invariably turned in on the purchase of the new material.
I hate to put it this way but I am going to do so. In view of what the minister said a few moments ago I can only conclude that he was implying that he suspects the municipalities may be guilty of bootlegging automotive equipment.


Donald Methuen Fleming: No, no.


Harold Edward Winch: One cannot take any other interpretation from what was said by the minister. He not only said it once but twice. I do not believe there is a municipality in this country that makes any purchase with the idea of deriving the benefit of sales or excise tax exemptions and then re-selling the object for a profit. The municipalities do not try to cheat the federal government nor evade paying tax nor do they engage in bootlegging equipment purchased by them.
The majority of hon. members of this house know something about the expenses of municipalities. The municipalities have heavy expenditures for police and fire protection, park maintenance and operations and drainage, sewerage and waterworks operations but the present bill does not extend to expenditures in connection with these operations the principle outlined by the minister. The minister deserves commendation for the $5 million start he made on what he himself admits is a correct principle that a municipal government should not have to bear a federal

tax on its basic purchases but the application of the principle should be extended to the fields of municipal activity I have outlined.
I would like to ask the minister if he believes-and I think he will admit he does believe-in the honesty of municipalities. If he does, the present bill should be extended to provide further tax relief on the necessary purchases of municipalities in discharging their governmental responsibilities.


Hubert Badanai: Mr. Chairman, I have already dealt with the unfortunate omission of trucks and automobiles in the exempt class by the minister. Now, I wish to bring to the attention of the minister the importance to the municipalities of snow removal equipment. This equipment is very important to municipalities such as Fort William and all the northern Ontario cities, which must have snow plows and snow removal equipment which cost a great deal of money. A snow blower would cost approximately between $20,000 and $25,000. Snow plow equipment is not purchased for the purpose of resale, nor is it something we purchase every year. A piece of equipment would last probably five years to 10 years. Snow removal is a very important feature in a municipality. We in Fort William pride ourselves on keeping our city streets clean and we do plow them after every snow storm. Is the minister going to consider giving relief on that class of snow removal equipment?


Donald Methuen Fleming: There is no occasion for consideration of that because that equipment is already exempt. If my hon. friend will look at page 11 of the bill, about line 10, he will see that certain named goods sold to or imported by municipalities for their own use and not for resale are exempt. Now, the goods that I cited and the words following them include:
Equipment, at a price in excess of $500 per unit, specially designed for use directly for road making, road cleaning or fire fighting-
And road cleaning includes snow removal.


Erhart Regier: Is it just the chassis?


Donald Methuen Fleming: This is not confined to a chassis; this applies to the equipment.


Erhart Regier: Would the minister inform the house whether the motor of a fire truck is exempt from the excise tax? I notice it says "fire truck chassis". Would he define what it means exactly? Does it not include also the price of the motor?


Harold Edward Winch: At the same time would he also explain why only the chassis of fire fighting equipment bought by a municipality, city or town is exempt?


Donald Methuen Fleming: Mr. Chairman, I think there seems to be a misapprehension. The truck in that case has been exempt. The question that arose was in the case of a part of certain equipment, and here in the amendment we have spelled out the fire truck chassis for the permanent attachment thereon of fire fighting equipment to be used directly in fire fighting. Cases have arisen where it has been found that attempts have been made to add all kinds of things to the fire vehicle, on the truck chassis, which were not intended, and this amendment has been introduced to make it quite clear and assure to the municipalities exemption in the case of the fire truck chassis for the permanent attachment thereon of fire fighting equipment to be used directly in fire fighting.


Harold Edward Winch: Does that include the motor?


Donald Methuen Fleming: This provision
enables-and this was widely sought, I may say-the municipality to purchase the chassis from a local dealer and then take it over to someone else to have the firefighting equipment attached to it.


Harold Edward Winch: Would you mind answering my question.


Donald Methuen Fleming: Because, if he buys the whole fire fighting vehicle, equipment and all, it is now tax exempt.


Harold Edward Winch: Why the devil don't you say so?


Donald Methuen Fleming: The chassis, Mr. Chairman, includes the motor that operates it.


Harold Edward Winch: I am sorry, it does not.


Donald Methuen Fleming: That is the interpretation that has been put on it and that is really what counts for people paying the tax.


William Moore Benidickson: If that is so, if the chassis includes the motor, surely it has always been an article of value over $500. Would it be exempt under the existing legislation?


Donald Methuen Fleming: It has not been a fire truck.


Leon David Crestohl: Mr. Chairman, the minister suggests the fear of a sale of a fleet of automobiles to a municipality and that ultimately those automobiles may be disposed of in a way by the municipality that the tax might not be paid? Now, when he suggests that a fire truck or the chassis of a fire truck could even be dealt with in such a way that something else could be constructed on it and again deprive the government of the tax, is he not going a little bit too far in questioning the integrity of the municipalities?


Donald Methuen Fleming: Mr. Chairman,
there is no questioning of the integrity of
57071-3-182
Excise Tax Act
municipalities involved; it is a question of constructing legislation which can be properly administered by the Department of National Revenue which is charged by parliament with that responsibility.


William Hector McMillan: I asked a question a while ago and perhaps the minister did not hear it.
I wanted to know how the department would police the end use of pipe? For instance, four, six and eight inch cast iron pipe is used both in waterworks systems and sewage systems. According to this amendment, any agency might be named by the municipality or by the minister on behalf of the municipality. I should like to know just how the minister would police it in connection with these different agencies?


Donald Methuen Fleming: Mr. Chairman, I am sure my hon. friend is aware that this exemption exists in the case of these things when purchased by municipalities. I am informed that there is no difficulty in the administration in this respect and none is anticipated as a result of the enactment of the proposed exemptions. It is a matter of establishing by invoice, or by whatever other form of proof is required, that the pipe in question was purchased as part of a sewage or drainage system.


George James McIlraith: Not for the waterworks.


Donald Methuen Fleming: Not for the waterworks system or water supply. This has nothing to do with the purchase by individuals of pipe for the course of their own water supply. This has to do with purchase by municipalities, and I am informed that the department anticipates no difficulty in administration in this respect.


Mr. Bourgel:: In that case, would the
municipality have to supply plans to show that the cast iron pipe will be used for the sewage system only, because very often cast iron pipes are used in other systems and you would not be able to detect that by the invoice. You would have to ask the municipality to show you the plans and the length and the size of the cast iron pipes. Cast iron pipes are used in other places. You cannot detect unless the department has a certain way of doing it.


Donald Methuen Fleming: Mr. Chairman, I think it is a matter that we can be sure will be covered by the invoices in question. A point was raised on a similar subject in the committee of ways and means as to whether it may be necessary to take account of the change in the provisions of the law with regard to the ordinary documents pertaining to sale. That might be. In any event, it will be necessary for the municipalities receiving

Excise Tax Act
the exemption to show to the department that the pipe, whether cast iron or of some other material, is used as part of a sewage or drainage system. I can only repeat that the department informs me they anticipate no difficulty in administering this particular feature.


William Moore Benidickson: I raised last night the question of the tendency to have a great deal of installations of sewage and drainage systems done by the subdividers of property. I take it that these people are not contemplating as being included in the reference here to "any agency operating a sewage or drainage system." I assume they do not operate such systems but simply instal them. Therefore this provision is not related to the problem of the subdivider who has an obligation to instal these things.


Donald Methuen Fleming: We dealt with the question of the subdivider last night. I think the matter is clear and I do not understand that my hon. friend wishes to speak further about it. What we are speaking about here with respect to an agency would be such an agency or commission as exists in some provinces. For instance, in the province of Ontario we have a commission established under provincial legislation which assists municipalities in the purchasing and financing of drainage and sewage systems. If the goods were purchased by the government for the province they would be exempt. If they were purchased by the municipality they would be exempt. In this case this particular commission is the agent of the municipality for this purpose and the matter, of course, presents no difficulty whatever from the point of view of administration.


William Moore Benidickson: But in order to obtain the exemption, if the construction is done by the subdivider the subdivider will probably have to change the form of his contract with the municipality so that the municipality purchases the materials. Otherwise there is no tax exemption which in the end would benefit the home owner who has to pay for these things in the long run.


Donald Methuen Fleming: I think that is right. We went over that point last night. The contractor in this case may invoice the municipality separately for the work done and for the sewer pipe and equipment sold to the municipality. It is not going to present any serious problem from the point of view of establishing the contractual arrangements that are required to permit the exemption to be had in a case of that kind.


William Moore Benidickson: We have had a good discussion this afternoon and I see that the hour of adjournment is rapidly approaching. It

does seem to me that for the benefit of readers of Hansard it would be appropriate if the hon. member for Villeneuve were permitted to indicate the point he has in mind. I think we have all received telegrams from certain mining organizations referring to discrimination in the case of diesel fuel oil for use in generating electricity. Other purchasers have enjoyed this tax exemption in the past and as the matter is relevant to the section we are discussing I think we should hear the hon. member.


Donald Methuen Fleming: 
William Moore Benidickson: I thank the minister for
his explanation. The hon. member for Kootenay West and myself raised the question last night with respect to mining companies specifically. I saw the minister consulting his officials and I am sure he got information from them that no mining company had benefited.


Donald Methuen Fleming: The signals got
a little mixed.


William Moore Benidickson: In any event, they may
not have been the officials who had to do with the exemption claims. In order to complete the record, and it would only take two or three minutes, I think that the hon. member for Villeneuve might read the telegram that most of us have received from the mining companies.


An hon. Member:: Six o'clock.


William Moore Benidickson: It will complete the
continuity of the discussion. It may be days before we get back to it.


Donald Methuen Fleming: I think we have
all received the telegram.
Excise Tax Act


Armand Dumas: If I may be permitted to do
so, I will read the telegram. It was addressed to me and similar telegrams were sent to many other members of the House of Commons. It reads:
Note first reading and passage of budget resolution re excise tax on diesel fuel used in generating electric power. As legislation now stands tax removed for municipalities and for logging and lumbering operations. After temporary suspension tax now reimposed on fuel used to generate electricity for mining operations. This measure greatly disturbing to mining industry which regards it as discriminatory and restrictive. Power for mines in settled areas supplied from established hydro stations not subject to tax. Present regulations impose great hardship on mining operations in remoter areas entirely dependent on diesel fuel for power and on new mines awaiting hydro power. To subject such mines to this tax appears discriminatory and not in keeping with government's declared intention of encouraging northern development. Trust careful reconsideration and revision will be given to the regulation by final passage by parliament.
This concludes the telegram, Mr. Chairman, but I wish to add to what has been said in this telegram. I suppose I shall have an opportunity later.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the house leader what the business is for tomorrow?


Howard Charles Green: Mr. Speaker, tomorrow we shall commence with item No. 21, which is the resolution preceding the amendment to the Children of War Dead Act; that is to go to the standing committee on veterans affairs, and we hoped it could get second reading tomorrow in order that it can be sent to that committee. Then, we shall take agriculture estimates.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
57071-3-1821
[Stage Direction]
Question

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

Mr. Deschaielels: How many pounds of margarine or similar spreads were produced in each province from June 1, 1957 to June 1, 1958?
Answer by: Hon. Gordon Churchill (Minister of Trade and Commerce):
Margarine and spread production in Canada, June 1, 1957 to May 31, 1958:
Ontario	 98,124,334
British Columbia	 13,062,710
Other provinces*	 24,798,059
Total	 135,985,103
* In compliance with section 15 of the Statistics Act production for individual provinces other than Ontario and British Columbia may not be released.

Thursday, July 31, 1958



COMMITTEES OF THE HOUSE

[Stage Direction]
Third report of standing committee on railways, air lines and shipping owned and controlled by the government.-Mr. Rowe.


[Stage Direction]
Mr. Alan Macnaughlon (Mount Royal)
presented the first and second reports of the standing committee on public accounts, and moved that the first report be concurred in.
Motion agreed to.	.