1958-08-12

CANADIAN NATIONAL STEAMSHIPS


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I wish to inform the house that the management of Canadian National (West Indies) Steamships Limited has today announced that an offer to purchase its eight vessel fleet made by the Banco Cubano del Commercio Exterior, Cuba's foreign trade bank, has been accepted. The purchase price is $2,800,000.
The ships will be operating under Cuban registry by Flota Maritima Browning De Cuba, a Havana shipping firm, which already has a contract with the bank to operate six other ships now being constructed for Caribbean service. The firm plans to place the eight C.N.S.S. vessels in service as soon as possible between Canada, Cuba and the West Indies, using the ports of Halifax and Montreal.
The sale agreement will be signed by Canadian National (West Indies) Steamships Limited and Banco Cubano del Commercio Exterior, a subsidiary of Cuba's state-owned national bank, Banco Nacional de Cuba. The approval of the shareholders of Canadian National (West Indies) Steamships Limited has been provided by the governor in council, acting in the capacity of majority shareholder of the company.
In addition to the foregoing announcement, I wish to inform the house that the offer accepted was by far the best of any of the purchase offers submitted. Seven purchase offers were submitted for the entire fleet, while some nine others involved a purchase of a part only of the fleet. The offer accepted was not only the highest offer but the only offer providing sound security for the balance of the purchase price.
May I also inform the house that all the officers of Canadian National (West Indies) Steamships Limited were offered transfer and employment in the marine services of the Department of Transport. A few decided to retire because they were eligible to accept retirement, and a few decided to accept other offers of employment. The others are now employed in my department's marine operations. The pension rights of all concerned have been protected.


Hon. Lionel Chevrier (Laurier):: May I ask
a question, Mr. Speaker. Can the minister give any indication-perhaps he did in his statement, which I was not able to follow- where these ships will be operated by the new purchaser?


George Harris Hees: They will operate between the West Indies, Cuba, the Caribbean area and Canada, using the ports of Halifax and Montreal.


Lionel Chevrier: What are the terms of purchase?


George Harris Hees: The terms are payment of 20 per cent now and the remainder in five equal yearly payments, which are guaranteed by the Bank of America.


Lionel Chevrier: Does this mean that the minister has presided over the liquidation of the Canadian merchant fleet?


George Harris Hees: No, Mr. Speaker. The minister has simply made an announcement of a transaction which has been successfully and well completed by Canadian National (West Indies) Steamships.


Mr. Martin (Essex East):: In view of the fact that the Canadian government is giving consideration-


Mr. Speaker:: Order. I wonder whether hon. members would defer their questions until the orders of the day.

On the orders of the day:


Mr. R. J. McCleave (Halifax):: A question for the Minister of Transport, Mr. Speaker. Could the minister inform the house about the condition of the ships whose sale he has just announced and where they will, perhaps, be spruced up?


George Harris Hees: Mr. Speaker, the ships will require a certain amount of reconditioning before they are fit for service, and I have asked the management of Canadian National (West Indies) Steamships Limited to ask the new owners if they will give every consideration to having the reconditioning done in Canada.


Lionel Chevrier: Mr. Speaker, may I ask the Minister of Transport the following question. In view of the fact that the Canadian maritime commission has recommended that the size of
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Canadian National Steamships the Canadian ocean-going fleet should at no time be less than 750,000 deadweight tons and since the sale which was announced this morning reduces it to less than one-third of that figure, what does the government propose to do about restoring the fleet to the size recommended by the Canadian maritime commission?


George Harris Hees: As the hon. member knows very well, all possible considerations were taken into account in trying to keep this fleet intact and operating under Canadian registry. Unfortunately it was found impossible to do so, and it was therefore found necessary to dispose of the fleet.


Paul Joseph James Martin: In view of the fact that the minister said consideration has been given to every aspect of this problem, I wonder whether, before arriving at this decision, he consulted with the Secretary of State for External Affairs with regard to the proposal that is being made for a ship to be provided by Canada to the West Indies federation for interisland service under a principle analogous to the Colombo plan, which is being considered by the Department of External Affairs; or was the minister not aware of this consideration that was being given by the other department?


George Harris Hees: Mr. Speaker, perhaps the hon. member was not in the house when those questions were asked on, I think, at least two former occasions.


Paul Joseph James Martin: I was.


George Harris Hees: And on both occasions I replied that this matter had been taken up with the West Indies federation. The ships belonging to the Canadian National (West Indies) Steamships were not suitable for their purpose.


Mr. Martin (Essex Easl):: Has the minister seen the evidence of the recent meeting of the external affairs committee where it was suggested that possibly that was not the case?


George Harris Hees: I have not read that evidence, no.


Lionel Chevrier: Mr. Speaker, may I be allowed another question on this subject and if the minister has not the information at hand perhaps he can give it to the house at a later date. I was wondering how many officers and men on these eight ships will be affected by the sale, and how many of them have found employment in the Department of Transport, as he suggested?


George Harris Hees: Mr. Speaker, I have not the exact figures here; I do not think the hon. member


would expect me to have them. As I outlined to him, everyone who did not wish to retire or take employment elsewhere is now in the employment of the Department of Transport. If he wants the exact numbers, and they are of some significance to him, 1 shall be glad to give them to him privately.


Lionel Chevrier: I did indicate to the minister-perhaps he did not hear me-that this information may not be available to him at the present time, but I would like to get the exact number.


George Harris Hees: I shall be glad to get that information for the hon. member.



ROYAL VISIT


Right Hon. J. G. Diefenbaker (Prime Minisler):: Mr. Speaker, hon. members will be interested in the following message which I received this morning from Her Royal Highness the Princess Margaret. It reads as follows: Thank you so much for very kind message on my departure from Canada. I am filled with sadness at having to leave after the most exciting and enjoyable month visit to your great country. I was deeply moved by the wonderful reception I was given everywhere I went and by the unfailing kindness of everyone I met during my tour. Please pass on my most sincere thanks to all who contributed in any way towards the successful organization of my visit. I am delighted and proud, Mr. Prime Minister, that the principal mountain range on Axel Heiberg isle is to bear my name. I am delighted with this and it sets the seal on a visit which I shall never forget for its happiness and interest.
Margaret
With regard to the naming of the mountain range, I may say that the geological survey of Canada, which is now working on a survey of the far north, advised that a name was needed for the principal range of mountains which form the backbone of Axel Heiberg island, the large island immediately west of Ellesmere island. This mountain range is the principal feature of the Queen Elizabeth islands and forms the larger part of that island. It was with pleasure that my colleagues and I decided that the visit of Her Royal Highness could best be commemorated permanently by naming that mountain range the Princess Margaret range.
I think I can add, with the approval of members in all parts of the house, that the visit of Her Royal Highness endeared her everywhere, and that the broadcast last night over television and radio was deeply appreciated by Canadians and touched a chord in their hearts in their regard for the royal family.


EXTERNAL AFFAIRS
[Stage Direction]
Righl Hon. J. G. Diefenbaker (Prime Minister): I should like to refer to a matter that has received consideration generally in the house. During the past several months discussions have taken place, both here and in the United States, respecting a means of providing an opportunity from time to time for those who are engaged in the legislative aspects of government in the two countries to meet together and examine common problems, to exchange views and possibly make suggestions to their respective governments arising from these deliberations.
It is my understanding that action in this regard is going forward in the houses of the United States congress with evident support from all shades of political opinion. I have here the Congressional Record of July 17 containing a speech by United States Senator Neuberger with respect to this matter and the resolution which he introduced. This resolution provides for close relationship between the legislators of both countries, and section 7 says:
This resolution shall become effective, and a joint committee established, upon receipt by the president of the Senate and Speaker of the House of Representatives of notification that a committee with similar functions and terms of reference has been established by the Canadian parliament.
It appears from the record that the proposals had the approval of the executive of the United States and of the President, who under the constitution is responsible for the conduct of foreign affairs.
I have been informed that in this country consideration has been given to this matter in the other place, and that a motion of this nature has there been looked upon favourably. I am not going to quote the resolution that was passed, except to say that it welcomed the recent suggestion of the Prime Minister of Canada for the establishment of joint parliamentary committees between Canada and the United States, and the opinion was that if such a committee were set up it would be of great benefit in improving relations between the two countries. The other place offered its co-operation toward this end.
The Leader of the Opposition (Mr. Pearson) and the hon. member for Assiniboia (Mr. Argue) both indicated on August 8 that they would give support to proposals along these lines. This morning I consulted with each of them by telephone, and it is my understanding that they are in accord with the procedure I am about to propose. If the house
Canada-XJ.S. Joint Committee generally indicates its agreement, I would suggest that we proceed along the following lines.
My proposal is that I should request the Speaker of this honourable house, in consultation with his colleague in the other place, to establish a committee of members of both houses and of all parties for the purpose of exploring jointly with appropriate representatives of the executive and legislative branches of the government of the United States the means whereby increased systematic discussions between legislators of the two countries on problems of common concern may be provided.
I would suggest that such assistance as may be appropriate and required for the purpose of implementing this proposal, if generally acceptable to this house, should be provided by the Secretary of State for External Affairs (Mr. Smith) from his department, with cooperation from other departments of government as may be needed from time to time.
I feel that if this general proposal is accepted we shall be making an advance that will prove beneficial not only to the exchange of ideas as between legislators of our countries, but also that in their deliberations suggestions will be forthcoming which will be generally helpful and will assure that the best of relations continue in the years to come.
This is the first time that anything of this nature has come before this house in so concrete a form. I hope it will receive support. The other day when I was speaking I mentioned the occasion in 1942 when representatives of the Senate and the House of Representatives of the United States met here in room 16. It was the first time representatives of the United States had been present at a meeting of the Empire Parliamentary Association, as it was then known. The hon. member for Laurier will remember very well the deliberations that took place at that time and the extent to which, out of the community of counsel, agreements in principle as to courses generally beneficial to both countries and also to the commonwealth as a whole were arrived at.
Subsequently the hon. member for Laurier, Mr. M. J. Coldwell, Senator Vien and I went to Washington and there met with representatives of congress for a couple of days. Those were the first occasions on which the United States had at any time had representatives of congress meeting, as I said, with either Canadian legislators or representatives of the commonwealth. This course has since been followed to the manifest appreciation of those who have belonged to the several delegations, and also to the material benefit of our relations.
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Canada-U.S. Joint Committee
Hon. L. B. Pearson (Leader of ihe Opposition):: Mr. Speaker, before saying a
word about the important matter which the Prime Minister mentioned in concluding part of his statement, may I just say this with regard to the visit of Princess Margaret. I am sure that members of the house will have heard with great satisfaction the message she has sent. I can only add that I hope she derived as much pleasure out of her visit to Canada as those who had the honour and the privilege of meeting her derived from that meeting.
The decision of the government to name a mountain range after her was original and imaginative. Judging from Her Royal Highness's message, the fact that the mountain range is on Axel Heiberg island, which is some distance from the more settled parts of Canada, does not seem to have interfered with her appreciation of that unique distinction.
So far as the important statement made by the Prime Minister regarding what I hope will be the establishment on a continuing basis of contacts between the legislators of the United States and Canada is concerned,
I might say that we in this party most warmly support such a move. I have personally felt for some time that the official contacts which have now been well established for many years on the executive and diplomatic levels between the two governments should be supplemented, although they could not of course be replaced, by this kind of joint legislative committee. That this should be done is particularly important, though it may add to our difficulties because of the fact that under the constitution of the United States the legislative branch does play a very important part within that country in a rather different way from that played by the parliament of Canada with respect to the development of foreign policy, in that in the United States the role of the legislative branch is almost, although not completely, an independent one.
I have found from personal experience in that field that the contacts between our two countries on the diplomatic and executive levels are not adequate to meet all the problems involved in relations between us. At the same time this will have to be worked out very carefully, because our formal and regular contacts will remain those between the executive branches and through the diplomatic channels of our two countries. I have also had some reason as a result of personal experience in this connection to appreciate the fact that in Washington efforts made on the diplomatic level to establish regular and more or less formal contacts with congress sometimes meet with a little suspicion from other branches of government.


However, the Prime Minister has put forward proposals which would be very helpful in reaching this very important end. We think they are practical proposals for getting a start made on the Canadian side and, as I have said, we warmly support them.


Mr. H. W. Herridge (Koolenay West):: On
behalf of this group, Mr. Speaker, and in response to the gracious message of the princess which was read by the Prime Minister, I want to say that we in the C.C.F. realize that the princess brought much happiness to many Canadians in her visit to Canada, a visit which was carried out with such charm, such distinction and such grace. We are also very pleased to hear that the government has decided to name a range of mountains in the Arctic after this most distinguished citizen of our commonwealth.
The leader of this group will deal with the other question raised by the Prime Minister.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, the Prime Minister was kind and considerate enough to telephone me this morning with regard to the resolution he has placed before the house. I want to say that the C.C.F. are very pleased that this move is being made. We feel that such a joint committee representative of both houses of parliament and, as the Prime Minister has said, representative of the executive and the congress of the United States is something that could achieve very great things for both our countries. We feel that in the matters of trade, tariffs and export policies generally there is room for discussion; we believe that from those discussions might come subsequent agreements which could result in the freeing of trade and an increase in the standards of living of both our peoples.
In respect to international affairs generally, we in this group have very often felt that we could not wholeheartedly follow the leadership, in certain instances, given to the western world by the United States. We realize, too, that the Canadian government very often questions some of the moves that are made in Washington. I am certain that this type of prior consultation will result in a more forward look and a more realistic policy being adopted by both our countries. We have had joint associations in the past which continue today; for example, the commonwealth parliamentary associations and the association of the members of the various parliaments connected with NATO. Now we have this further advance, and with you taking the leadership, Mr. Speaker, on behalf of the House of Commons,

we are certain that the results will be excellent and that this committee will be well launched.
If I may say so at this time, I hope similar committees may be set up in the future for an interchange of representatives with other major powers in the world. Even though we may disagree, as we do very violently, with policies that are adopted by countries outside the western world, nevertheless this kind of interchange of ideas among people who are acquainted with governments and, in our instance, people who are responsible in our democratic nations, could do nothing but good.
We welcome this motion wholeheartedly and I am sure that in the country, as in this house, it will receive the overwhelming support of the people of Canada.


Mr. Speaker:: Before proceeding with the next item I take it that the Prime Minister does not propose any more formal testing of the opinion of the house than the proposal he has made, which has been concurred in unanimously by the leaders of the parties. I believe that he and they have expressed the unanimous view of the house in this matter.



COMMUNIST CHINA


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, in the absence of the Secretary of State for External Affairs I wonder whether I may ask this question of the Prime Minister. In the light of the growing influence of red China in international affairs and the apparent increase in support in the United Nations for the seating of red China at the general assembly, can the Prime Minister say whether any consideration has been given to Canada's policy in regard to China, particularly in regard to the seating of red China at the United Nations assembly?


Mr. Speaker:: Of course, if the Prime Minister wishes to accept the question I have no objection, but I would point out that this is a question which has been raised from time to time, and it is a matter of policy which I assume the government, when it came to a conclusion, would announce.


Lester Bowles Pearson: Mr. Speaker, on that point this, of course, is a matter of urgency in view of the fact that the United Nations assembly will be meeting tomorrow and this may be the first item on the agenda.


John George Diefenbaker: Mr. Speaker, I think the Leader of the Opposition answered the hon. member
Inquiries o/ the Ministry for Assiniboia. It is a hypothetical question. It is only anticipation, as the Leader of the Opposition has said, and certainly in these circumstances it has not yet become a matter that should be the subject of a question on the orders of the day.



DOMINION COAL COMPANY SURPLUS


[Stage Direction]
On the orders of the day:
Hon. Paul Comlois (Minister of Mines and Technical Surveys):: Mr. Speaker, I wish to table the information requested by the hon. member for Villeneuve on August 6 with regard to the Dominion Coal Company.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to ask the Minister of National Defence whether any negotiations have been initiated or are contemplated with the United States government with regard to the exchange of information on atomic matters for mutual defence.


Hon. G. R. Pearkes (Minister of National Defence):: There have been departmental discussions on this matter, and any exchange has been made on a "need to know" basis. [Later:]


Lester Bowles Pearson: Mr. Speaker, I should like to ask the Minister of National Defence a question arising out of the reply he gave me a few minutes ago. In view of the fact that any exchange of atomic information on defence will be subject, I assume, to the limitations of the United States atomic energy act, is the government negotiating an agreement under that act which will remove those limitations in so far as exchange of information on defensive tactical military weapons is concerned?


George Randolph Pearkes: The government is not negotiating any such agreement at the present time.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. M. A. Hardie (Mackenzie River):: Mr. Speaker, I should like to direct a question to the Minister of National Defence. Has the Royal Canadian Air Force headquarters in
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Inquiries of the Ministry Ottawa received reports from Royal Canadian Air Force personnel based at Fort Churchill in regard to trips made by the R.C.A.F. to Garry lake in the Northwest Territories on March 22 and May 6 of this year? If so, will the minister table the reports?


George Randolph Pearkes: Mr. Speaker, it would be only routine reports which have been received. There was a trip made on March 22 in response to a request from the Royal Canadian Mounted Police. An Otter aircraft flew with blood plasma to Chesterfield inlet, where there was a seriously ill native, and subsequently to Baker Lake, where it picked up a Royal Canadian Mounted Police constable and a quantity of food for transportation to Garry lake, and from Garry lake the aircraft returned to Fort Churchill. This is the sort of work the R.C.A.F. are doing continually, and they do not submit any definite report on each trip made.


Mervyn Arthur Hardie: Mr. Speaker, is the Minister of Justice in a position to answer the question I asked him on Saturday last?


Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, the hon. member asked me on Saturday whether the Minister of Justice had received reports from the R.C.M.P. in the field at Baker Lake in regard to the starvation of Eskimos at Garry lake.
The answer, Mr. Speaker, is that the commissioner of the Royal Canadian Mounted Police advises me that he has received a number of reports from the non-commissioned officer in charge at Baker Lake concerning this matter. The reports, however, are in the nature of routine reports from a junior officer to his senior, and as such are not the type of reports which it is normal to produce in the house. They are administrative reports.
It is my understanding, however, and I am having this checked, that there is nothing in the reports that would add to or detract in any way from the evidence given by the R.C.M.P. at the coroner's inquest, which was discussed here on the estimates of my colleague the Minister of Northern Affairs and National Resources on Saturday last.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. W. L. Houck (Niagara Falls):: Mr. Speaker, I know this is a matter primarily under provincial jurisdiction, but I should like to ask the Minister of Labour whether he 

has been asked to take part in negotiations for the settlement of the Stelco strike?


Hon. Michael Siarr (Minisier of Labour):: No, Mr. Speaker, and I do not expect I will be asked.



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, in view of the fact that this is what I would call a spur of the moment question I have not had the opportunity to send the minister notice, but I wish to address a question to the Minister of Agriculture. In view of his statement in the house to the effect that he would make an announcement with respect to deficiency payments for the British Columbia tree fruits crop year 1957, can the minister say whether the statement in the press this morning with respect to that question was made by him, and where?


Hon. D. S. Harkness (Minisier of Agriculture):: Mr. Speaker, as the hon. member is aware, I think, statements as to payments being made under the stabilization act are made by the stabilization board, and they issued a statement yesterday in connection with the payments to be made as far as British Columbia apples are concerned.



DEFICIENCY PAYMENTS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: May I ask
the Minister of Agriculture whether he is in a position to say if the government has yet reached a decision to grant deficiency payments to farmers as requested by the interprovincial farm union?


Douglas Scott Harkness: Mr. Speaker, this is the same question that has been asked here on numerous occasions, and I can only give the same answer. This is a matter which is still under consideration, and when it has been decided an announcement will be made.



SHIPPING


[Stage Direction]
On the orders of the day:
Robert Jardine McCleave: Mr. Speaker, would the Minister of Transport bring the house up to date on his department's consideration of the possible use of atomic powered icebreakers?


George Harris Hees: Mr. Speaker, I thank the hon. member for advising me of his intention to ask this question. The matter of utilizing atomic power for icebreaking is and has been under active consideration by the Department of Transport since I first announced this last January. A committee was set up to review progress in this field in other countries and also progress made by Canadian commercial companies. Positive progress has been made in line with the desire of the government to achieve nuclear powered icebreakers for Canada without spending millions of dollars to duplicate research in this field otherwise available to us. The government is fully aware of the value of this new form of ship propulsion for the development of our Arctic region.



ESTATE TAX ACT


[Stage Direction]
The house resumed, from Wednesday, August 6, consideration in committee of Bill No. C-37, respecting the taxation of estates- Mr. Fleming (Eglinton)-Mr. Sevigny in the chair.
On clause 1-Short title.
Mr. Benidickson:: Mr. Chairman, we did not get very far when the committee last considered this bill. That was on August 6, and the debate can be found on pages 3166 and 3167 of Hansard. It makes it difficult when one's remarks are interrupted, particularly at this stage of the game when it is the desire of all, I think, to avoid repetition. I do not want to repeat the remarks I made then. I did say that we had before us, as I think all will admit, a better bill than Bill No. 248 introduced at the last session, which was made available to the public for criticism. It just goes to show that advice from outside bodies and members of the general public expert in the fields of law and accountancy is of considerable value.
The bill was discussed in the standing committee on banking and commerce, and I think there will also be agreement that the amendments now before us and which will be moved as we proceed, particularly two of them, greatly improve the bill. However, I said in the committee and previously in this debate that the bill could still be improved. Of course that is true of all legislation, but I felt that this bill particularly could be improved if it were to be examined by the same people who commented on Bill No. 248 of last session, and that it would have helped us if we had received their comments before
57071-3-214
Estate Tax Act
we were forced to hurry along with the consideration of the bill in the banking and commerce committee.
The house knows, of course, that the bill will now pass to the Senate, and I have no doubt that the Senate will refer the bill to its committee on banking and commerce. If outside organizations want to make representations I hope that committee will not deny them the opportunity. Therefore there is still the prospect that further recommendations concerning the bill may reach this house.
Since the banking and commerce committee concluded its consideration of the bill I believe we have all received a brief from the Canadian federation of university women. I told our banking and commerce committee that it was obvious that these people would like to make representations. They have taken a great interest in estates legislation over the years. I told the committee that the Ottawa officers just happened to be on vacation during the two or three days when we were having double sittings of the committee with respect to the bill, and that I quite believed they were not aware that we were sitting.
This particular brief brings some very important points to our attention, matters that have greatly exercised the women of the land with respect to estates for some years. Of course they readily agree that speedier and less expensive appeal procedures before the income tax appeal board will likely contribute to the settlement of estates within a shorter period of time. They also indicate that some simplification in the assessment of tax will make it possible for estates to be settled and distribution to be made much earlier than was possible under the succession duty act; but they still point out that the fundamental effort they have had in mind over the years is not given much recognition in the bill.
I should like to quote one or two excerpts from their brief. The Canadian federation of university women have this to say:
We are distressed to note that in spite of repeated submissions by thousands of Canadian women, no recognition has yet been made of the marriage partnership. We reiterate that "one-half of a deceased marriage partner's estate should, if it passes to the surviving partner, be considered for tax purposes as earned by the surviving partner and not therefore subject to estate taxation."
They go on to say with respect to this point:
Today the number of working wives is constantly increasing. These women contribute, in dollars and cents as well, to an estate which is still considered for purposes of taxation as belonging solely to the husband. Of course a few of these women are interested in building estates of their own and keep their earnings separate for that purpose, but the large majority feel, and rightly so, that such an accounting negatives the partnership in which they are proud to participate.
I-r:\

Estate Tax Act
They go on to refer to some of the new provisions with respect to exemptions, as have many of the bodies that have made representations. They even champion the position of the widower. They say:
Under Bill C-37 an exemption of $60,000 is allowed in the case of a deceased male person survived by a spouse. For the exemption of $60,000 to apply, however, in the case of a deceased female person survived by a spouse that husband must not only be infirm but the deceased must also leave a dependent child.
This provision, of course, again denies the principle of equality in the marriage partnership-a principle which must work both ways. We are also at a loss to know how the placing of an invalid husband in a worse position than a healthy wife can be justified on any grounds whatsoever.


Mr. Bell (Carlelon):: Would the hon. member permit a question?


William Moore Benidickson: Yes.


Thomas Miller Bell: Is the hon. gentleman reading the brief to indicate his support of it, and does he in fact, support the representations therein made?


William Moore Benidickson: Yes, and when we come to the clause in relation to fair value I thought I might further expand my reasons for supporting it.


Thomas Miller Bell: Does that include all paragraphs of the brief my friend has read?


William Moore Benidickson: In addition, I believe further consideration should be given to this very important matter because, of course, it is the practice in the country to the south of us, the United States.
Only two or three days ago, I believe, the Canadian tax foundation sent out its printed comments with respect to this bill. I gave the banking and commerce committee some excerpts from what was likely to be in that publication. Again intending to be brief, I should like to quote the final paragraph of the report of the Canadian tax foundation to its membership who, of course, are lawyers and accountants who specialize in that field of taxation. These are the concluding comments of the Canadian tax foundation with respect to this bill, and I quote:
Scattered throughout the above description are indications that certain of the provisions of Bill 248 against which strong representations were made remain unchanged in Bill C-37. Many important concessions were granted but several points of grievance remain. To sum up, these include:
1.	Inclusion of foreign real estate.
2.	Taxation of death benefits, pensions and annuities under both estate tax and income tax.
3.	Rules of situs which in some instances conflict with common law principles.
4.	In the case of valuation the provisions that no account shall be taken of future income tax liability and the general rule that the property shall be valued only at the time of death.
5.	The period during which tax may be paid on an annuity or interest in expectancy, which remains

at six years, nor is there any change made in the establishing of tax liability under these conditions.
The study concludes with, I think, these prophetic words:
These and other omissions suggest that the Minister of Finance will continue to receive representations for changes in his new measure long after it has become the law of the land.
I have some further remarks, of course, to make as we reach the various clauses of the bill. I do, however, want to co-operate with the committee and not unduly prolong its consideration of these matters at this time, first because the minutes of the banking and commerce committee are available to all where this bill was given clause by clause study by the members who sat on that committee; second because I realize that the Senate committee also will have an opportunity to consider the bill. I assume they will do so shortly and I have every confidence that if members of national organizations having an interest in this legislation wish to appear before the Senate committee that committee will not refuse them this opportunity.


Mr. Godin:: It may appear proper that
another lawyer should follow the hon. member for Kenora-Rainy River in saying a word on this very important bill now before the committee concerning the difficult position and the rights of widows and orphans. Some of my remarks may pertain to the problems and rights of widowers, although I realize that this matter may more properly have been discussed by the Minister of Citizenship and Immigration, who has just left the chamber.
There is no doubt that the principle underlying the amendments brought forth by the committee is to increase certain exemptions for certain classes of people, and second to pay some attention to the problem with which the administration is faced in connection with the rights of the widow or widower in certain properties of the deceased spouse. I feel, in connection with both these matters, that although it may be true that the problems of devolution and benefits accruing to beneficiaries are more properly within the jurisdiction of the provinces, and no doubt the provinces have enacted certain laws to protect beneficiaries so far as devolution and distribution are concerned, such as the devolution act and the dependents' relief act, here we are interested in the taxation of these properties as they evolve in the death of one spouse.
I feel that the amendments quite clearly signify the protection this government no doubt wants to bring about so far as the unity of marriage and the values of ownership which spouses may have in the property they

own in this country are concerned. I am very surprised to realize that in increasing the exemption for the widow to $60,000, no reference is made to a widow who receives this property or the benefit of the goods left by the deceased husband. The amendment to clause 7 more specifically refers to the fact that it is the wish of this government that everyone should receive a benefit if he is a beneficiary, whether or not he is a spouse of the deceased person. I feel this brings about a situation whereby the government may lose certain taxes where the exemption is not properly or should not be properly admitted.
For instance, this brings about a situation whereby a man who has been separated from his wife for years may die and under his will may give the major portion of his estate to a total stranger. The stranger would receive the benefit of the exemption, whereas no doubt the intention is that the widow should receive the exemption. I feel that if the act were amended to grant the exception only in those cases in which there is a widow and dependent children, that would be more satisfactory and more in line with the wishes of the citizens of this country.
However, it may be said that there is some attempt to find a better solution to the problem of the difficulty, after the death of one spouse, of ascertaining just what was his property and what part of the assets may properly be the property of the surviving spouse. It is true that the wording has been changed to a certain extent but I do honestly feel, Mr. Chairman, that the change does not go far enough to protect the partnership which is created by marriage.
I feel that possibly in the smaller estates this problem arises more specifically. I read a short time ago comments to the effect that the increase now granted in the exemption, though it may affect 35 per cent of the estates, will reduce the income to the government by barely 6 per cent. It is true that in smaller estates the attention required is not given by the husband or the wife to the problems which may occur after their death. In recognition of the rights of the remaining spouse in the property left by one who dies, I would suggest that possibly in estates of $100,000 and less, half be automatically considered as the property of the surviving spouse, thereby bringing about a proper and true exemption.
I should like to say one word on another matter, namely the exemption permitted for the benefit of surviving children. I feel that this brings about a problem where a father dies leaving very young children. It is true that the act provides certain exemptions of
57071-3-214J
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up to $15,000 per child, but it states that all that is considered by the department is the fact that the child is under 21 years of age. In other words, the exemption is the same for a father who leaves three children ranging from say 16 years of age to 20 years of age and a father leaving three children whose ages range from 2 years to 5 years.
I feel that necessarily as this exemption is given to help overcome the burden of bringing up the children who are left fatherless, the exemption should vary and be increased as the age of the surviving children decreases. In other words there should be a scale whereby if a man dies leaving children who are very young, the exemption will be greater than in the case where the children may be requiring some assistance for a year or two only before they mature.
Although the act brings about certain assistance which the citizens necessarily require, I feel that in its essence and principle it does not pay enough attention to the partnership which is created by marriage. In the second place, I think it is wrong in the sense that the government will be losing the benefit of taxes in those cases where all the benefits of an estate may go to strangers although a wife may survive the deceased.
I mentioned earlier that possibly there is no real principle whereby a surviving husband should benefit from the exemptions only if he is infirm or an invalid. It seems to me that there is no justification for this limitation, though I realize that it may not be the most important of my comments. I feel that the act should pay greater attention to the ownership of the assets of a married couple upon death, especially with the full intention of assisting the smaller estates where often the people concerned do not pay all the attention which may be required to provide for the future if some misfortune should happen in the family. Also I feel that greater exemptions should be given to these very young children who are left without fathers early in life.


[Stage Direction]
Clause agreed to.
On clause 2-Persons domiciled in Canada.
William Moore Benidickson: I simply want to point out that, as the minutes of course elaborate, we have heard much of some of the reductions in taxation, particularly as to the foreign real estate item. Under this clause and clause 3 certain types of property which had hitherto escaped succession duty or estates taxation now come under taxation.


[Stage Direction]
Clause agreed to.
[Stage Direction]
Estate Tax Act
On clause 3-Property included.
William Moore Benidickson: I should also like to point out that I think this clause is much improved as a result of the reconsideration by the government of the briefs that were given to it by some of those national organizations of which I spoke earlier. In Bill No. 248 there was indication of an intention to tax certain forms of disposition that have occurred longer than three years from the date of death. However, much of this, in fact probably all of it, has now been altered.


The Chairman:: Shall clause 3 carry?


Some hon. Members:: Carried.


William Moore Benidickson: Mr. Chairman, this is an extremely complicated bill, as you know. Each clause has a number of paragraphs and those paragraphs in turn have subparagraphs. Clause 3 (1) has subparagraphs numbered from (a) to (m). I wanted to make a comment-but I had to turn the page- with respect to clause 3 (1) (1). This provision again is taxing something that hitherto had not been taxable under estates taxation. I referred to this matter in the committee. I still think this voluntary gift by an employer to a dependent of a deceased is something which it is extremely difficult to justify taxing. This is a class of property to which the deceased had no right. The estate could not claim anything against the employer. I do not see how something of that nature can be considered to be part of an estate. As such a contribution or receipt on the part of a dependent would be open to income tax, it seems to me that is a quite adequate tax under the circumstances.


Mr. Hanbidge:: To what section is the hon. member referring?


William Moore Benidickson: That was clause 3 (1) (1),
subparagraph (i):
under any disposition made voluntarily in recognition of services rendered by the deceased as an employee of that person-
In other words, it is something that not he nor the estate nor his dependents have any right to claim in a legal way, and I just do not see how that can be considered to be part of an estate.


Joseph Pierre Albert Sévigny: Shall clause 3 carry?


Mr. Fleming (Eglinion):: I think my hon. friend will appreciate the great difficulty that will arise if such a provision is not contained in the act. We have had a similar provision in the Dominion Succession Duty Act, in the old clause 3 (1) (g). This is not a new principle. It is a matter of trying to carry a principle to its logical conclusion, and also to close what is an obvious loophole in the existing legislation.
tMr. Benidickson.]


William Moore Benidickson: This is a new form of tax. You did, of course, tax receipts by dependants, widows or children, which were in the nature of fringe benefits, something the deceased himself knew he was entitled to from his employer. When that benefit is received the recipient pays on it not only income tax but an estate tax. Sometimes, as we discussed in the committee, this payment involves considerable hardship. I know the difficulty of the minister where it is a pension that a man has made part of his contract of employment, but this particular death benefit is completely voluntary on the part of the employer after death. This one is completely voluntary, and there is no right of action with respect to it. I just do not see, therefor, that it is the property of the deceased.


[Stage Direction]
Clause agreed to.
On clause 4-Property not included.
William Moore Benidickson: Mr. Chairman, I realize that it will take longer, but I wonder if you could follow through this bill by quoting the subheadings when we come to a long section such as clause 3. Would the committee not agree to say clause 3, subparagraph 1, subparagraph 2, and so on.


Joseph Pierre Albert Sévigny: Is it agreed by the committee that I quote paragraph by paragraph and subparagraph by subparagraph?


William Moore Benidickson: In fact, Mr. Chairman, each of these items indicated by letters are sufficiently important to almost justify your calling (p), (q), and so on. We will go through them very rapidly, but I think there would be less attempt made to go back and less feeling of frustration if you were to go down the page and simply call major headings, paragraph 3, subclause 2, and then (a), (b), (c), (d), and so on.


Joseph Pierre Albert Sévigny: Is it the pleasure of the house to accept the suggestion of the hon. member for Kenora-Rainy River?


Donald Methuen Fleming: I take it that my hon. friend is confining his suggestion to the long clauses and not clauses such as Nos. 5 and 6.


William Moore Benidickson: That is correct.


[Stage Direction]
Clause agreed to.
Clause 4 to 6 inclusive agreed to.
On clause 7-Amounts deductible in computing aggregate taxable value.
William Moore Benidickson: Mr. Chairman, I have already indicated that subclause 1 of clause 7 is the clause which has elicited a great deal of interest by the public, and this is the clause

to which the women of our land have perhaps directed most attention in their briefs.
Since the banking and commerce committee concluded its sittings I have received additional communications about this matter as to what is a proper value. I realize this is a very difficult decision for the administration. There is an increase, but it must be pointed out that when the exemption of $50,000 was determined it was as far back as 1951, and there has, of course, been a considerable erosion in the purchasing power of the Canadian dollar since that time.
One must also consider that today, even at a period when interest levels are comparatively high, the income of a widow who has been left $100,000 is not very substantial. I was given some illustrations of what, under present day circumstances with these relatively high interest rates, would be the return upon an estate of $100,000 and upon one of $150,000. I have in my hand one figure calculated by an experienced trust officer whom I do not wish to name, unless my hon. friend insists upon my doing so, because he is speaking in his personal capacity and not for the company he represents. He points out, however, that if one takes a typical estate trust of $100,000, let us say that the residence value amounted to $15,000 and the value of the car perhaps to $2,000, the value of the furniture to $1,000; then that is $18,000 off the $100,000. The funds available for investment, therefore, would be $72,000.
He outlined to me what I believe to be a normal and very creditable portfolio of securities, which he said the trust company had already used for purposes of investment. I will not go into the details, but he ends up by saying that $72,000 invested in bonds at relatively high rates today would bring in a gross income of $3,689. He tells me that administration and collection charges of the trust company would amount to $328, and the difference, therefore, would be $3,361. He estimated the income tax at $114, so the disposable income from this $100,000 would be $3,246 or $270 a month. He pointed out that this was not something which should be regarded as great wealth or high income for a widow trying to maintain a home ip these days. Therefore, while the exemptions admittedly have been raised, there is justification for giving further thought to doing something better in the very near future with respect to these exemptions.
The committee may be interested to know that only about 1 per cent of our national revenue comes from this sort of taxation. This same informant has done some further arithmetic for me, as a result of which he makes the assertion that if there were an
Estate Tax Act
exemption of even up to $150,000 for all estates the loss of revenue would be only one quarter of that 1 per cent which I indicated was received from this form of taxation. He stated further that if we exempted all estates below $100,000 the government would lose only 15 per cent of the 1 per cent indicated as received from estate duties.
Consequently one must consider the importance of this form of taxation in the lower brackets to the total receipts by the government and the desirability of giving further consideration to these exemptions because of the relatively small income which can be produced today by normal investment-not necessarily cautious investment, but normal investment for an estate of either $100,000 or $150,000.
(Translation):


Mr. Roberge:: Mr. Chairman, I think many a Canadian man and woman, especially husbands and wives, will have reason to complain about clause 7, as any testator, or a husband or wife but especially a testator, may will a large portion of his or her fortune and property to a perfect stranger who will nevertheless benefit from the exemption of $60,000, though the wife survive. If the husband survives-I am thinking here of paragraph (a) (ii)-the wife may leave her property to a stranger, and that stranger will nevertheless benefit from the exemption.
I realize, as the minister stated at the committee on banking and commerce, that this is contrary to the spirit of the tax on the bulk of the succession. But the fact remains, and should be kept in mind, that the family is the basic unit of our Canadian economy.
I think husbands and wives in this country will not like this clause, in its present form. I therefore suggest that some time, if not at this session at least during some future one, the government consider the advisability of setting this matter right.
(Text):


Donald Methuen Fleming: Mr. Chairman, I have just a brief word to say in connection with the remarks which have been delivered by the two hon. gentlemen who spoke last.
It may well be that the hon. member for Kenora-Rainy River and I do not mean quite the same thing when we talk about estates of smaller value. He seems to argue that the benefits of this bill should be more widely extended and that there is room for further extension within estates of smaller value. Mr. Chairman, this bill brings benefits to estates of smaller value on a scale not matched by any previous legislation enacted in this parliament. When the Dominion Succession Duty Act was enacted in 1941 it exempted estates

Estate Tax Act
of $5,000, and there was provision for further exemption in cases where a widow survived. In 1948 provision was made for exempting an estate up to $50,000; not a provision that there should be a $50,000 exemption on all estates, but that all estates under $50,000 should be exempt.
This bill goes much further in extending the principle of exemption. In the first place, it carries forward the provision that no estate under $50,000 will be taxed. Now there is also provision in connection with estates up to $53,056, as will be seen on page 14. This bill clearly retains the principle that no estate up to $50,000 will bear any tax at all. Quite apart from this, we have also introduced exemptions that apply to all estates. There is a basic exemption of $40,000 for every estate. That is new. There is a basic exemption of $60,000 in every estate where the deceased is a man survived by his widow, and the same exemption applies where the deceased person is the widow and the surviving husband is infirm, that is, unable to pursue normally a gainful occupation and where there is a dependent child.
There are also here provisions for additional exemptions in the case of dependent children-$10,000 for every dependent child -and, where the child is an orphan, $15,000. These are substantial exemptions, and there can be no doubt that this bill does bring very great benefits to all estates of smaller value.
I have earlier given an instance of the estate left by a deceased person with a surviving widow and four dependent children. Of that estate $100,000 will be exempt under this bill, a clear exemption of $100,000, and there has been nothing in previous legislation which it is possible to compare with that. It is because of provisions such as this that the Canadian Tax Journal, at page 269 of its issue, to which the hon. member for Kenora-Rainy River referred earlier, has said of the changes we have made as compared with the old Bill 248:
Several of the changes go to the fundamentals of death taxation and are more sweeping in their effect than most of the innovations in the first measure. On the whole the taxpayer has come off quite well. Of a dozen or so major changes most are to his advantage.
In Bill 248 introduced last session the basic exemption provided was $30,000. That has been increased under this bill to $40,000. It will therefore be seen that provision has been made to lighten the burden of estate taxation on anything which could reasonably be called a small or smaller estate.
As to the remarks of the hon. member for Megantic, let me say this. We have in this

measure strictly respected the constitutional jurisdiction and the constitutional preserves of the provinces, and we have not trespassed on the field of property and civil rights in the provinces, which is exclusively assigned by the constitution to the legislatures of the provinces. The law of succession is strictly provincial in its constitutional incidence, and there is ample opportunity for the provinces to exercise such jurisdiction, and in most cases they have done so, and make such provision as is required in favour of the widow.
We merely make provision for this tax exemption, and it remains within the jurisdiction of the provinces to see to it, by whatever laws they choose to enact, that the claims of the widow in such an estate are provided for. If the will does not make adequate provision for her, there is nothing to prevent a province from passing legislation to override the terms of the will, making adequate provision for the widow. Indeed, many of the provinces have done so; and there is, as well, legislation dealing with the devolution of estates of intestate persons where provision for the widow is earmarked by statute.
In this bill we have in this respect simply recognized the constitutional rights of the provinces, and within that principle we have applied the principle of the estate tax.


William Moore Benidickson: The minister makes reference to the province of Quebec. I have, of course, no intimate knowledge of the law in that province, but it is a fact that if the spouses held community property in that province half of the estate of the deceased spouse would be considered as belonging to the survivor and would not be subject to tax under this bill, regardless of its size.


Donald Methuen Fleming: The law in this respect recognizes the legal results of the acts of the parties. In the case the hon. gentleman has cited, the parties themselves have entered into a contract the effect of which is to create community of property. Now, there is nothing in the common law of the other nine provinces which would prevent spouses from creating community of property if they so chose and so acted. But, equally, there is nothing here which imposes upon or creates, in the absence of an act by the parties themselves, a community of property which is not created by the provincial law, and that is the essential difference.
We have gone further in this bill than federal legislation has ever gone before in permitting the creation of joint tenancies, the holding of property in joint tenancies, that will be exempt, providing the gift in joint

tenancy on the part of the husband was made more than three years before the date of death. This bill is much more generous to the taxpayer in this case than the Dominion Succession Duty Act has ever been, and if any spouses in any of the provinces of Canada, whether common law provinces or the civil law provinces, choose to create community of property between them as to all their property or as to any specific portion of it, this bill will take account of that legal fact. But it leaves it for the parties to create that result, and does not by this measure attempt to create it. We believe that there would otherwise be a trespass on the jurisdiction of the provinces over property and civil rights.


William Moore Benidickson: My hon. friend has referred to contracts entered into to establish community of property in a province other than Quebec, but if that was done, and the source of funds belonged to only one spouse and the contract was entered into within three years of death, the same exemption would not apply with respect to half the estate, would it? In addition, if a contract of that kind with respect to community of property were entered into, and it was of a substantial amount and was solely that of one spouse, the income tax people would want a gift tax with respect to the gift of half, would they not?


Donald Methuen Fleming: My hon. friend
knows we have gone some distance in an amendment to the Income Tax Act this year in exempting gifts made by a spouse to his wife where the gift is of an interest in the home they occupy.
Now, as to the estate tax, Mr. Chairman, the only limitation that is placed upon the right to create the joint tenancy and to exempt property thereby created from the estate tax is the three-year rule. So far as it is a gift, then the gift must take place more than three years prior to death in order to give rise to the exemption.


William Moore Benidickson: In a province other than Quebec, but in Quebec the establishment of the community of property does not have to take place within three years of death?


Donald Methuen Fleming: In that case there is not a gift.


Osias.-J. Godin: I followed very carefully the remarks of the Minister of Finance. I do not think his remarks replied to the problems which were presented by the hon. member for Megantic and myself. It is true the devolution of property is a provincial matter. Relief assistance is also a provincial matter.
Estate Tax Act
We are here taxing estates in various provinces of Canada, and we do feel it is right to do so, and in doing so we are bringing about certain exemptions which we also feel it is our right and duty to do.
Now, the step the government is failing to take is to bring about a measure of understanding that those exemptions will be applied in a satisfactory manner, and that is the complaint I have to make and undoubtedly the hon. member for Megantic has to make. The Minister of Finance seemed to suggest that we will indicate exemptions, but we will leave it to the provinces to deal with them as they see fit under their own laws. The contention of myself and of the opposition is that in granting exemptions we do not take into consideration certain benefits which no doubt it is not the intention of the government to grant.
An example has been given, but the minister has not explained why this government should grant an exemption of $60,000 to a total stranger just because a man died leaving a wife who was practically unknown to him, and who was possibly presently living in Vancouver while the man lived in Ontario, say. That is the purpose of the amendment of clause 7, and it is difficult for the opposition to see the value in it, and why the government should take on itself the responsibility of granting exemptions but will not indicate to whom they may properly apply, leaving that problem to the provinces. This applies to the ownership in partnership by parents of certain goods.
This has been explained by the Minister of Finance in the sense that it is very difficult, especially in smaller estates, to realize what assets may be those of the wife or those of the husband. It is most difficult, and it is felt that if the act provided for a minimum exemption which would take into consideration the livelihood of those people, one of whom unfortunately has died, and considered a certain amount as the normal value of the share that the surviving spouse contributed in obtaining those assets, it would be a great help.
I do feel that this could be explained further. Let us say that one half of $100,000 could be considered as a fair share which may have been contributed by the surviving spouse in making up the assets but, upon the death of the husband, it may not be possible to ascertain exactly who has the interest and exactly who is the owner. I realize that the wording is slightly changed and that it now reads that the department is to ascertain the interest which the deceased may have had in certain property, but that is very difficult to ascertain also. I think in Canada especially we realize the community in marriage, and

Estate Tax Act
I feel it would be proper in a small estate to have the wife left in a position that upon the death of her husband she will be considered as owning one half of the property up to a certain amount.


Donald Methuen Fleming: This clause deals with exemptions and exemptions only. Every estate is exempt to the extent of $40,000, regardless of circumstances, and in the case my hon. friend has referred to, the case of a man dying survived by a widow, in that case there is an additional exemption of $20,000.
Now, my hon. friend raises the question as to why this additional exemption should apply whether or not the deceased has made a gift to that extent to his wife under the will; or, in the case of intestacy, whether or not the wife has received a benefit to that extent. It is regrettable that my hon. friend did not come to the meetings of the banking and commerce committee where this matter was discussed. I believe he is not a member of that committee but all hon. members, of course, whether members of the committee, or not, are perfectly entitled to attend. I commend to him the reading of the proceedings of the committee where this matter was discussed, as well as other matters, at some length. A good deal of time was spent on the subject of the exemptions and the bases of the provisions in clause 7 of the bill.
This clause illustrates the essential difference between the Dominion Succession Duty Act and the estate tax act. In the case of the succession duty regard is had to the succession of property from the deceased to the successor. In the case of an estate tax, regard is had to the mass of the estate, and the tax is laid upon the estate in the aggregate. In the case of succession duty the tax is laid on the succession from the deceased to the successor.
If the estate tax principle is sound-and this house has approved it-then, Mr. Chairman, I submit there is no ground for introducing into the estate tax principle the succession duty principle as well, and that is what my hon. friend is arguing for. But even though the estate tax principle is to be followed, he wishes us to go further and apply the old succession duty principle to the estate tax.
Now, Mr. Chairman, if we are to do that in that one case, where is the line to be drawn? We will be asked to do it in all manner of others, and what are you going to do? What is the net result in that case?
The difference is a $20,000 exemption. There will be a $40,000 exemption anyway, and I think virtually every province has enacted legislation to protect the rights of

the widow in a case where her deceased husband has not made provision for her. In the province from which my hon. friend and I come that right of the widow is clearly protected by the dependents' relief act. No husband can be generous with others before he is just with his own dependents, including his widow.
There is another aspect of this matter that I commend to the consideration of my hon. friend. What about the case of the children? If you are going to make provision that the exemptions created by this clause, in cases where there are surviving dependent children, are dependent upon the benefit going to the child, how are you going to calculate the extent of the benefit? Suppose the deceased has left $5,000 to a dependent child. What are you going to do there? This bill will provide an exemption of $10,000 where there is such a child and $15,000 if the child is an orphan, but how are you going to break this down? Are you going to have some pro rata treatment of the exemption, in the case where the deceased has made provision for the child, to the extent of part of the amount that is provided here by way of exemption?
These illustrations are put forward to indicate how confused and unsatisfactory a situation you can create once you depart from the estate tax principle and, Mr. Chairman, I do not know where you are going to draw the line.
Therefore we have proceeded on what I think is sound ground. This is an estate tax. The house has approved the estate tax principle. We are proceeding on that principle, and I think we can safely leave it to the provinces to ensure that the rights of the widow will be sufficiently protected in the estate of the husband in relation to succession.


Osias.-J. Godin: Not being a member of the committee I have read what was said by the minister on July 21, as found on page 60 of the minutes of proceedings and evidence of the committee. Although he may have given some explanation, I feel he has not shown that the dependents' relief act of Ontario gives protection to a widow who for some years has not been living with her husband. Therefore the benefit of the exemption would go to a stranger in any event in Ontario, and possibly in other provinces also, where the widow is not considered to be entitled to the benefit upon the death of her husband. The dependents' relief act only applies in proper cases where a wife living with her husband under proper circumstances would normally be entitled.


Donald Methuen Fleming: My hon. friend will agree with me that parliament has no power over the succession. Parliament can only tax in relation to the succession. The passage to which my hon. friend referred is not the only passage where this matter was dealt with in the committee. It was dealt with also on pages 14 and 15 on an earlier day when we were dealing with the broad features of the measure. But there is the principle, Mr. Chairman. The house has approved the principle, and I think the provision is quite clear.


Osias.-J. Godin: I took it for granted that the passage to which I have referred contained the full extent of the ministers' remarks on the problem, since he ended his remarks by saying:
I think I have said enough or perhaps too much on exemptions, Mr. Chairman.


Mr. Crestohl:: Would the minister be good enough to point out how the legislation deals with this problem? A man can deplete his estate by a gift of $10,000 under the Income Tax Act in every province except the province of Quebec. In the province of Quebec his estate will always be stuck with the additional $10,000, whereas husbands in other provinces can reduce their estates by a gift to their wives. The way I see it, we still have not brought the same measure of relief to the province of Quebec as in the case of the other provinces.


Donald Methuen Fleming: Mr. Chairman, my friend is reviving or perhaps I should say exhuming the somewhat lengthy discussion we had on the resolution respecting amendments to the Income Tax Act earlier this session, and I do not think it touches the matter we have before us, estate taxation.


Leon David Crestohl: Indeed it does. Here we are talking about exemptions, and estates in all the other provinces except Quebec will be reduced. There will be exemption of the $10,000 that the husband has given to the wife, but estates in the province of Quebec will not be able to benefit from that exemption.


Donald Methuen Fleming: I think my hon. friend has overlooked the fact that the advantage so far as the taxpayer is concerned is much stronger in Quebec than it is in the other provinces by reason of the creation of community of property, and the recognition here of the ownership principle in relation to joint property. This bill goes further than the law of the country has ever gone before in recognizing the ownership principle in respect to property jointly held. That applies to property held under the rule of community of property in the province 57071-3-215
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of Quebec, so that far from taxpayers in Quebec being under a disability in this respect they actually have an advantage-


William Moore Benidickson: Some do.


Donald Methuen Fleming: -where community of property exists.


Mr. Mcllrailh:: I want to clarify in my own mind the matter that was under discussion a moment ago. Before doing so, may I say that I was rather interested in the minister's explanation to the hon. member for Nickel Belt. He based his whole defence of the point at issue in the legislation on the fact that he had followed the principle of survivorship as opposed to the principle of exemption based on succession. I would point out to him that his argument was not wholly logical, because in the very section he has drawn a distinction between types of survivorship, survivorship by the widow and survivorship by the widower. He has already drawn that distinction. The point raised by the hon. member for Nickel Belt was that he should move the line of distinction to a different place.
However, that is not the main point I want to raise now. If the minister will bear with me for a moment, I should like him to clarify my understanding of the significance of this section. I take it that the amount of the exemption is based on the relationship of the survivors. In other words, where there is a surviving widow and a certain number of surviving children, by that very fact the exemption is larger than it would otherwise be. But I think it should be clearly understood that one of the consequences is that the exemption is larger in an estate of a man dying in such circumstances, that is leaving a surviving widow and a number of surviving children, than it would otherwise be, and that larger exemption obtains even although the man dying gives the whole of his estate under his will to a total stranger.
I think that is a correct statement of the law. What I want to do is point out to hon. members how far-reaching that is, and what a substantial departure it is from any principle of taxation I have been aware of in the Canadian parliament. Its implications are very far-reaching, and I have grave doubts in my own mind as to its propriety. I am of the opinion that the minister, or whoever holds his office from time to time, will be back with amendments to this section before very long.
It is a principle that I, for one, cannot condone and which I cannot approve. I do not believe it is necessary in following the main principle of seeking to tax the estate as opposed to taxing the succession.

Estate Tax Act
Clause 7 (1) agreed to on division.
Clauses 7 (2) to clause 9 (7), inclusive, agreed to.
On clause 9 (8)-situs of property.


William Moore Benidickson: On clause 9, subparagraph 8, we had quite a discussion in the banking and commerce committee about these changes that are made in the rules that hitherto have been applied with respect to situs of property. There are provinces that collect estate duties, and they are obliged to follow the common law. Practically every organization that submitted a brief to the minister with respect to his proposals for changing the situs with respect to certain types of property felt that this was very undesirable, even though they admitted that it perhaps provided some efficiency from the federal point of view.
It was pointed out that the provinces were obliged to accept the common law in so far as the situs of various types of property was concerned. They felt that in a country where we had people subjected to both provincial estate duties and federal estate duties, it was very undesirable to have two rules with respect to situs, and until there could be some unanimity they did not approve of these changes the minister recommends in this bill.
I realize that we had evidence on this point and the evidence was probably somewhat convincing that the rules here, in some instances, seemed to be more natural and perhaps more efficient. But it is establishing a conflict with the provinces that either now or in the future will be collecting succession duties and establishing situs of property, and as in the committee on banking and commerce I feel I would have to say "on division" with respect to this section.


Donald Methuen Fleming: The matter of situs arises, it is true, under clause 9, subparagraph 8. It arises also much more extensively under section 38, and that is the place where I think the matter could have been more properly discussed. It is the place where we discussed it in committee.
I shall make this observation and content myself with it, Mr. Chairman. The common law rules in regard to the determination of situs of various classes of property are difficult. Anyone who has had experience in determining questions of situs of property in relation to succession and in relation to succession duty knows how difficult those rules are.
In this bill, in the clauses I have mentioned, we have introduced a number of statutory definitions. In the main they follow

the common law. They clarify, and they will make it easier for the parties concerned to know, the rules on situs that will be applicable in the determination of the estate tax. I think, Mr. Chairman, this is one of the improvements the bill has brought about in the existing law, because it has laid down in clearer terms than existed in the case books the rules that are to govern. Substantially they follow the common law rules. There are divergences, but I think in those cases the divergence is sound and is to be desired in the interests of clarification of the law and a clear understanding on the part of those who will be governed by the law.
Clause 9 (8) agreed to on division.
Clauses 10 to 14 (6), inclusive, agreed to.
On Clause 15 (1)-Instalment payments.


William Moore Benidickson: On 15 (1), Mr. Chairman, I have a very brief comment to make. I noticed, I think it was 10 days ago, that the United States House of Representatives developed a bill with respect to taxation generally. It was in several parts. They provided some relief with respect to income tax, but in the same bill they were amending their rules with respect to estate duties. The only amendment I noted in the bill that had relation to estate duties was that they felt obliged to alter the term for instalment payments to 10 years. I commend that to the minister.


Donald Methuen Fleming: This clause, Mr. Chairman, goes further than any federal legislation has gone before. The previous rule in the Dominion Succession Duty Act was payment in four annual instalments. This provision allows payment in six annual instalments.


William Moore Benidickson: And it is an improvement on Bill No. 248, is it not?
Clause 15 (1) agreed to.
Clauses 15 (2) to 20 (3), inclusive, agreed to.
Clauses 21 to 24 inclusive agreed to.
On clause 25-Irregularities.


William Moore Benidickson: Mr. Chairman, I have
some remarks to make on clause 25. Perhaps we can call it one o'clock.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m. Clauses 25 and 26 agreed to.
On clause 27-Listed securities.
William Moore Benidickson: Mr. Chairman, one does receive representations from the public when

a committee proceeds rather hastily in examining a bill of this kind, and the question of value is, of course, very important. I think some improvements have been made in the bill, not only in committee but also previously, but I have one or two suggestions I would like to make to the minister at a later stage, some of which have been made by the specialized insurance counsel. The particular suggestions I have in mind do not relate to this particular clause, however, so I shall defer my remarks until we reach the appropriate clause.


[Stage Direction]
Clause agreed to.
Clauses 28 to 31 inclusive agreed to.
On clause 32-Shares of controlled corporation where beneficiary of insurance policy.
William Moore Benidickson: I would just like to make a comment on this clause, in that I feel it received a pretty fair overhauling from Bill No. 248, which was presented last session. I believe the members of the banking and commerce committee were gratified that that had happened because the protests in connection with Bill No. 248, as originally drafted, were pretty strong.


[Stage Direction]
Clause agreed to.
Clauses 33 to 37 inclusive agreed to.
On clause 38-Situs of property.
William Moore Benidickson: Clause 38, as amended, still does not meet with the approval of some members of the committee. This, of course, deals with the situs of property and we referred to this matter this morning. The clause, of course, gives in detail the situs of property which henceforth will be statutory and will not have to be determined by common law. I must say, as I said in connection with the earlier section, that we oppose the adoption of this clause.
Clause agreed to on division.
Clauses 39 to 41 inclusive agreed to.
On clause 42-Person leaving Canada or removing property.


William Moore Benidickson: This is one clause of many in the bill where we see to the right in the explanatory notes that this is something new in so far as the collection of estates duty is concerned, and the explanation has been given in the other clauses, and is now given here, that this clause is similar in part to sections of the Income Tax Act.
These to my mind are new administrative privileges which are being asked for with respect to enforcement and so on. I think
57071-3-2151
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they may provide simplicity to the administration, but one has some hesitation in extending to this type of property the same type of strong-arm authority on the part of administration which might now be provided under the Income Tax Act.
We discussed this question in the banking and commerce committee and the officials indicated, usually, fairly sound reasons for asking for this extension of privilege and authority. I may say that it was a member of the government on that committee who, I think very wisely, made an interjection that not every member of either the House of Commons or the committee was satisfied that it was enough to say that because it is in the Income Tax Act it is justified in being in the Estates Tax Act.


Donald Methuen Fleming: The hon. gentleman said "a member of the government".


William Moore Benidickson: A member of the government party, I should say. A member of the government party very wisely said that he had never been satisfied that some of the administrative provisions of the Income Tax Act were perfect, and therefore it was not, in logic, good enough to say that a section was similar to something in the Income Tax Act.
I have heard hon. members opposite, when they were sitting on this side, complain very bitterly about some of the provisions of the Income Tax Act, and if they have those feelings I hope that as time goes on they will urge the minister to relax some of the authority that is contained in this bill generally -not especially in this clause-an authority which makes it less open to the taxpayer to argue and assert his point of view.


[Stage Direction]
Clause agreed to.
Clause 42 agreed to.
On clause 43-Lien for taxes.
William Moore Benidickson: Would the minister tell us what effect this clause would have upon a mortgage, or upon a purchaser?


Donald Methuen Fleming: Clause 43 creates a lien in respect to the amount payable as tax, interest or penalties on the real property of the deceased that is situated in Canada. There is one new provision in this respect. The provision in the present succession duty act which applies in this situation is section 25, subsections 3 and 4, and that provision creates a lien on the property of the deceased of the same nature as the lien created by clause 43 now under discussion, except that section 25 applies to the real property situated in Canada of only those deceased persons who died domiciled outside Canada. The one change this clause makes is to extend this lien to apply to all persons whether they

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were at the date of death domiciled in Canada or domiciled elsewhere. That is the change this clause makes.
In an ordinary case there is no requirement in the legislation of most of the provinces respecting registration of deeds for the registration of the release that is issued by the dominion succession duty authorities. In the provinces which still collect their own succession duties, provision is made prohibiting registration of any instrument affecting a title to land after the death of a person having an interest in that land without a specific release in respect of that property being obtained from the provincial succession duty office. Provision has been made, and will continue to be made in this new legislation, for the issuance of releases by the estate tax authorities in respect to specific assets of the deceased, and because of the existence of this statutory lien created by clause 43 it will be the responsibility of persons dealing with property in which a deceased person had an interest, where his successors or personal representatives are issuing instruments affecting the title, to take the responsibility-and the purchaser will have the same responsibility cast upon him for his own protection-of making sure that the estate tax has been paid; and of course the best evidence of that would be the production of the estate tax release in respect of that particular asset.


Mr. Drysdale:: I do not intend to labour this point, because I have already raised it with the Minister of Finance, but we in British Columbia operate under the Torrens system of indefeasible certificate of title. In my opinion this method of imposing a lien has jeopardized our position as far as title registration is concerned, and I should like to suggest what I have already told the Minister of Finance privately; that consideration be given-not immediately, but within the next year-to putting into effect a system providing a time limitation on the filing of the lien, or else making a provision whereby the lien must be filed within a stated period of time, otherwise it would expire.
In British Columbia we have a situation at the present time, under the 1941 succession duty act under which a person searching a certificate of title, before relying on the title, must search back to 1941 in order to ascertain whether or not the estate has been released from its tax obligations and, in the case of the old act, whether the deceased was domiciled outside of Canada.
The situation at present is that there is no assurance that the government may not step in at some future time to recover the lien on the estate, maybe in five, ten or even 20 years time, and I would suggest a limitation to say six months from the date of death,

or from probate. I draw this to the attention of the minister because the matter is of particular importance to British Columbia.


Donald Methuen Fleming: The hon. member has discussed this matter with me very earnestly. It is a subject that was touched on briefly in the banking and commerce committee, and I should just like to say a word about it.
One can appreciate the desire of persons who hold a certificate of title under the system of land tenure and registration prevailing in British Columbia and some other provinces to maintain all the features of the title to which the certificate purports to testify. On the other hand we are making no change in the law in this respect. This is simply re-enacting, in essence, the terms of the succession duty act as they have been in effect since 1941. The only change this section makes in the existing law is the inclusion of property in Canada owned by persons who, at the date of death, were domiciled in Canada.
My hon. friend speaks about a time limit. There is provision here for the registration of a caution. My hon. friend spoke about the registration of a lien. The section, of course, creates a statutory lien that can be followed up by the registration of a caution if that were thought by the enforcement authorities to be desirable. These matters, of course, are always under consideration, and we shall be glad to give continuing study to it.
I point out, Mr. Chairman, that in the certificate of title that is issued under the same system of land tenure and registration in some other provinces there are statutory exceptions. Normally they are mentioned in the certificate of title. They are not enumerated but reference is made to them, so tha'-any person taking or acting on a certificate of title is on notice that there are some statutory provisions that will substract something from what might otherwise be regarded as an indefeasible and absolute title.
I do emphasize, Mr. Chairman, the fact that this clause does not carry the principle of the statutory lien any further. It applies it in one more case, but it does not carry the principle as such any further.


John Andrew W. Drysdale: In fairness to the minister, I may say that in British Columbia we have a section in the land registry act, section 38, which deals with the specific exception to which he refers; but, on the other point, he said there has been no change in principle or in the law from the 1941 succession duty act. I would point out to the minister that I do not agree that the principles in the 1941 act are correct.


William Moore Benidickson: May I just say that the hon. member for Burnaby-Richmond was one of those who, as a new member, took quite an interest in the sittings of the banking and commerce committee and contributed to some of the amendments that I think were generally satisfactory. Quite a few members realize the opportunities that are open to them when we do have a chance informally to consider a bill in one of our standing committees. I think those who participated in the proceedings of the banking and commerce committee and criticized some of the provisions of the bill as originally presented will feel fairly satisfied in their own minds that they were fulfilling a worth-while purpose.
They will remember that at the opening of the sittings with respect to the estate tax bill the Minister of Finance made some reference to an analogous situation when the income tax revision was referred to the House of Commons banking and commerce committee in 1948, and he referred to the analogy there in so far as procedure is concerned; but may I say to the hon. member for Burnaby-Richmond that while we were discussing the Income Tax Act in 1948 I took a position very similar to that which was taken by several members supporting the government in the recent sittings of the banking and commerce committee, to the extent that he will find on page 716, the final meeting of the committee, a considerable compliment paid to me by one of the senior critics of the opposition, namely the late Senator John Hackett, because I did not choose to be a rubber stamp in connection with a matter of that kind. Mr. Abbott, of course, was piloting the bill, and just as an encouragement to the hon. member may I say that I ended up as parliamentary assistant to the minister at a later time.


[Stage Direction]
Clause agreed to.
Clauses 44,	45 and 46	(1) inclusive,
agreed to.
On clause 46, subclause 2-Offence.
Robert Leith Hanbidge: I was not a member of the banking and commerce committee. Is there a section in the act under which an executor or an administrator can obtain a clearance certificate?


Donald Methuen Fleming: No, Mr. Chairman; this new act does not carry forward the old provision for the issuance of a certificate of discharge.


Robert Leith Hanbidge: Is there no way for an executor or administrator to get clear of the debt?


Donald Methuen Fleming: Well, there is provision that he is in effect automatically
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cleared when the tax had been paid. As to specific assets, it will be his responsibility to obtain his release in respect of particular assets. As to his liability, payment of the tax will discharge him from his liability, but there is no provision for issuance of a certificate of discharge now.


Robert Leith Hanbidge: Then it is not possible to get an order from the court discharging the executor or administrator without a clearance certificate?


Donald Methuen Fleming: No. The court has no status in such circumstances to make a finding or order that an executor has discharged his liability in respect of the tax.


William Moore Benidickson: As an executor or administrator can he get it cleared by the court? Under the old succession duty act he could not; the court had no jurisdiction, under our rules, to give a clearance certificate, or at least to discharge an executor or administrator without that clearance certificate.


Donald Methuen Fleming: The court has no
status, as I indicated a moment ago, to make a finding. No court that I am aware of has the status to make a finding in such circumstances that the executor has or has not completely discharged his liability in respect of tax. That is a matter between him and the Department of National Revenue.


William Moore Benidickson: Of course under the old bill it was possible to get a certificate of discharge. This greatly exercised members of the committee, particularly, I must say, members of the legal fraternity who are supporters of the government. I think the minister and his officials should now, in their leisure, having regard to future opportunities to amend this bill, give this point very serious consideration. I am sure this particular void in the legislation was the subject of as much general discussion during the banking and commerce committee hearings as anything else, and I suggest to the minister that while we were pushed pretty hard, two sittings a day, to get through this bill- and it is a long one-I think if we had gone about it a little more leisurely we would have been able to arrive at something that would be an adequate substitute for the present certificate of discharge which is available to an executor.


Donald Methuen Fleming: That matter was fully considered. It was fully considered before the bill was brought to the house, because representations were made about it. It was fully discussed before the banking and commerce committee, and the committee was fully informed as to the representations that had been made on the subject. I do not think

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the impression should be left that the committee hurried over this bill. The committee did not hurry over any feature of the bill. As a matter of fact the committee proceeded very deliberately and as one who has had, I think, a fair amount of committee work here in the last 13 years may I say I do not think any committee has ever done a more thorough piece of work on any piece of legislation than the banking and commerce committee did on this particular measure.
In case the hon. member for Kindersley has not reflected upon it, I might draw his attention to the provisions of clause 12, subclause 5 (b) at the top of page 18, where he will see that there is no power on the part of the Minister of National Revenue to reassess after four years from the date of an original assessment or the date any property is disposed of under a disposition or agreement as described.


William Moore Benidickson: That was one of the worth-while amendments as a result of the committee discussions.


Donald Methuen Fleming: No. That was an amendment made by the government as compared with Bill 248 before Bill C-37 was introduced.
Clauses 46 to 50 inclusive agreed to.
On clause 51, subclause 1-Offences.


William Moore Benidickson: I do not have the succession duty act in front of me, but I am sure the minister or his officials through the minister will be able to indicate to what extent there have been changes in the penalties. What are the differences in minimum penalties between what is provided in clause 51 and the penalties that have been applicable hitherto? I note in the explanatory note that this clause is new in part. Perhaps the changes might be pointed out.


Donald Methuen Fleming: The relevant provisions of the succession duty act are sections 52 and 53. Section 52, subsection 1 provides:
Every person failing to deliver the statement required by section 16 is liable to a penalty of $10 for each day of default which elapses after the time limited for delivering such statement, but such penalty shall not in any case exceed $1,000.
The second subsection provides as follows:
Every person failing to complete the information required on the forms prescribed by the minister for reporting the particulars required by section 16 is liable to a penalty of $10 where the aggregate net value of the property the subject matter of the succession does not exceed $50,000, and to a penalty of $100 where the aggregate net value exceeds $50,000.
It is also provided in section 53 as follows:
For every default in complying with the provisions of section 18 and section 20-

Those are the sections pertaining to furnishing information on demand or producing documents required by the minister.
-the persons in default are each liable on summary conviction to a penalty of not less than $25 for each day during which the default continues.
My hon. friend will see that the penalty created by clause 51 (1) of the present bill is a fine of not less than $100 and not more than $10,000. That, of course may be an increase over the penalty now prescribed by the Dominion Succession Duty Act. Then in subclause 2 of clause 51-


William Moore Benidickson: I was concerned only with the minimum penalties.


Donald Methuen Fleming: In subclause 2 the penalty is a fine not exceeding $5,000 or imprisonment for a term not exceeding six months or both fine and imprisonment, and there is a saving provision in subclause 3.


William Moore Benidickson: It was my understanding that there had been a minimum penalty of $10 per day under the equivalent of 51 (1). I can imagine that could become quite a sum under certain circumstances. Under the former statute was there some method of remitting the fine under proper circumstances, or was it absolute?


Donald Methuen Fleming: The statute itself did not make provision for remission. It simply provided in section 52, subsection 1, that the person in default should be liable to a penalty of $10 a day for each day of default, but I am told that the penalty was applied only in clear cases.
Clauses 51 to 59 inclusive agreed to.
On clause 60-Coming into force.


William Moore Benidickson: On the matter of coming into effect, the minister cannot, of course, predict the result of further processes with regard to this legislation, but is it his intention to have the legislation proclaimed as rapidly as possible after passage through parliament?


Donald Methuen Fleming: No, Mr. Chairman. This is a statute with respect to which we think adequate warning must be given to the public. It is highly important that the public should have ample warning and notice of the intention to bring the bill into effect. I pointed out on previous occasions that the bill has not been drawn so as to provide for the repeal of the existing legislation, the Dominion Succession Duty Act. That act will continue on the statute books and will apply to the estates of all persons dying prior to the date on which the new legislation is brought into effect in pursuance of clause 60 now under discussion.

When the present bill is proclaimed it will have effect with respect to the estates of persons dying after that date, but it will not have any application to the estates, whether partly assessed or partly administered, of persons who die prior to the date on which the new act comes into effect. We will certainly have in mind the importance of giving ample warning to the public of the intention to bring this legislation into effect.
I should like to make this statement as to the effect of the new tax in relation to existing wills. Under the succession duty acts, provincial and federal, liability for duty falls on the successor. Many testators provide in their wills that such duty be paid from the mass of the estate as a general charge like a debt. Such wills should require no change. However, wills without such a provision require alteration if the new tax is to be charged against all the successors rather than only against those who succeed to the residue of the estate. If this is the testator's desire he would have to provide instructions to his executors to apportion the amount of the tax as he wishes after payment has been made by the executors as required by the act.
I would therefore urge all persons to examine their wills with the new tax in mind to ensure that when it comes into effect their testamentary intentions will in this respect be carried out. To provide an adequate period for this to be done, the new act will not be proclaimed for some months.


William Moore Benidickson: This is a little inconsistent, as I see it. When the minister appeared at the first meeting of the banking and commerce committee he was arguing that we had to be in a rush. For one thing, he wanted the legislation to be advanced to the Senate. He also took pride in the fact that he had given the public an opportunity to examine his draft Bill No. 248 of January, 1958. In his remarks on financial matters in December, 1957, and again in his budget speech, he certainly threw out his chest considerably about the savings that would be available to people, particularly in the lower income tax brackets, as well as the lower duties that would be operative under this statute as compared to the succession duty act.
We were told, as I understood it, in the banking and commerce committee that the advertising through regular channels of the contents of this bill was so complete that we did not need to hear from members of the public any criticism of it. Now it appears that any beneficence in this bill is not likely to be operative in the very near future.
I raised this very point that people had to consider their wills, and that was one of
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the reasons I said that I did not want to see two laws with respect to the situs of property, because it might make it difficult for people making wills. This argument was dismissed as not very consequential by the majority of the committee.
I think for the minister to say that this act will not become operative for some months after he informed the Canadian public on December 6, 1957, that there were tax benefits amounting to some $7 million coming to them, and when he said again on June 17 that this was of great benefit to the people who had relatively small estates, he should be more specific as to the appropriate time he thinks he could recommend that it be proclaimed by the governor general.


Donald Methuen Fleming: I have been very specific on this matter as to the considerations that have to be taken into account. I have been very frank and forthright with the committee in this respect. I would deplore it if the impression were left by my hon. friend's remarks that there was any rush to get this measure through the committee. I assert very firmly, Mr. Chairman, that there was no rush that this matter be put through the committee. The committee proceeded very deliberately, and had five lengthy meetings on this bill. There was no attempt to rush the matter through the committee but the committee did choose, and I think very wisely, to have for itself the benefit of a consecutive study of this bill.
I am sure hon. members who have had very much experience with committees around here know how easy it is for committees, when they are meeting once or twice a week, to lose the thread of a study. This measure is an entity; and one of the factors, in my opinion, that contributed most to the effectiveness of the very intelligent scrutiny to which this measure was submitted in the banking and commerce committee is that the committee did not spread its meetings out over a period of weeks. The committee met each day. The committee had a meeting on the first Friday, then Monday, Tuesday, Wednesday and I think Thursday. In that way we maintained continuity in the review of the bill.
I think that was wise. I believe the committee made a sound choice in the first place in that respect, and I think the committee, as it proceeded with the bill, showed in its deliberations that that decision had been beneficial in assuring the members who attended the committee that there was no loss of continuity from meeting to meeting.
So far as the date of proclamation is concerned, I cannot be more specific. We believe there are benefits to be had from this measure.

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We believe it is a good bill. It is not a perfect bill, and in any new measure of this kind I am quite sure there will be opportunities as the years pass for making improvements in it. But we believe this is a good measure. It is an improvement, and we do not intend to delay any longer than is strictly necessary, having in mind the factors I mentioned earlier, the bringing into effect of this measure and the benefits we believe it will bring to the Canadian people.


William Moore Benidickson: I was not going to bring back the argument as to whether or not this committee had proceeded too quickly in its deliberations. I said that at several stages, and that was not the point I really wanted to emphasize, though I believe it very firmly. Since the minister has reintroduced this subject I just want to give my own experience.


Donald Methuen Fleming: It was my hon. friend who introduced it.


William Moore Benidickson: Probably I did not emphasize properly the point that was impressing me. The point that was impressing me was that the minister in December last, and in his budget, emphasized the advantages of the tax reductions that would result from this legislation. Now it appears that we have no assurance that this bill will be rapidly proclaimed, despite all the virtues the minister has claimed for it.
I think the minister was fair. I do not recall in the banking and commerce committee he ever chastised the former government for not bringing in its announced changes in connection with the overhaul of the succession duty act or introducing a substitute for the succession duty act. I have heard him say we were dilatory in changing the act after, I think it was, as far back as 1954, Mr. Abbott announced that he was giving this matter very serious consideration.
I know some of the difficulties that arose. There was controversy about such a radical change in the form of taxation, that it would go from succession to the quantum of the estate. But I am by no means satisfied with this thought that the government do not believe that this measure, which they advertised as being so beneficial, should be proclaimed at an early date.


Donald Methuen Fleming: Mr. Chairman, my hon. friend is usually very fair. I hope he is not leaving on the record or in the mind of any member of the house the impression that we said there were going to be tax reductions brought about by this measure in this present year. If my hon. friend will look at the budget speech of June 17 he will

see that, as found at page 1245, in reference to this matter I said this:
The proposed new estate tax is definitely a tax-reduction measure. On an annual basis the yield from this revenue field will be less by about $7 million.
Then in giving the house a detailed estimate of the effect of this tax on the revenues for the fiscal year 1958-59, if he will look at page 1249 of Hansard he will plainly see there in table IV that I show that the estate tax would bring about a tax reduction in a full year of $7 million, but that I did not estimate any tax reduction from this source for the fiscal year 1958-59; nothing.


William Moore Benidickson: Now we see the nigger in the wood pile.


Donald Methuen Fleming: The reason for that is two-fold. First there is the necessity of having the legislation passed and proclaimed. The second is that revenue under a measure of this kind makes itself felt only after a period of about six months. If this measure were brought into effect today it would not have any perceptible effect on the revenues for six months, because it takes six months for payment to be made in each particular case. I think my hon. friend can see very plainly that no matter when this measure is brought into effect, there would not be any effect on the revenues for a minimum of six months. That is why, in what was said, no effect was attributed to this new measure on the revenues for the fiscal year 1958-59, this present fiscal year.


William Moore Benidickson: Mr. Chairman, I am very much disappointed in the Minister of Finance. I heard him on two occasions when he made major financial announcements in this house, namely on December 1, 1957 and June 17, 1958, and on both occasions he took pride in announcing to the house that he was introducing a measure that would reduce taxation for those that might be interested in the residue of an estate, which reduction would amount to a cost of the treasury of $7 million. Now we find that he will give us nothing definite as to when these much heralded, much advertised benefits will actually accrue to those who are interested.
After reading his speeches in December, 1957 and June of this year, I think we can expect more than that from the minister. He made some reference to some complication in getting proclamation of an act of this kind. I do not want any Hansard reader to think there is anything important in that matter. One who is interested, as a member of the government in getting an act proclaimed, can do so fairly quickly-

in a matter of hours, sometimes-by appeal to the Governor General. I therefore do not want anybody to think that the proclamation in itself is a complicated bit of red tape. I am surprised that this form of tax relief which the minister has talked about is to be left aside or shelved for an uncertain time. He will not tell us when it may likely become effective.


Donald Methuen Fleming: Mr. Chairman,
fair comment will be welcomed at all times, but any statement of the kind the hon. member has just made is no correct paraphrase of anything I have said this afternoon. To talk about shelving this measure is to do violence to anything that has been said here this afternoon. What I did Mr. Chairman, was to take into account matters that any responsible government must take into account in relation to proclamation. If this measure were proclaimed next month, next month being September, it would not have one copper's effect on the revenues from the estate tax for the balance of this fiscal year for the very reason I have mentioned, namely that it does not have any effect on revenues for at least six months.
There is no ground whatever for any suggestion of shelving. We brought this measure forward because we believe in this measure. We have not brought it this far, let me assure my hon. friend, only to have it shelved or bypassed. We believe in this measure. We are going to see it through. It will be brought into effect when, having regard to all the circumstances, it can be brought into effect with due notice. I am sure no minister can do more than that.


William Moore Benidickson: Mr. Chairman, the matter of the six months is simply a red herring. One knows that six months will apply in the same way if this act is not proclaimed until six months from now. In the meantime the government receives revenues based on the old act. I hope that is not what has motivated the hon. member because, as I say, he has said so much in favour of the importance of providing these reductions in estate duties.
In so far as a comparison with other taxing statutes is concerned, we all know that of the resolutions which are before us and which we still have to complete, some of them became effective June 17 budget day, so far as the Income Tax Act was concerned and some of the proposals that resulted from the minister's budget of June 17 were even made retroactive. They apply back to January 1 of 1958.


Donald Methuen Fleming: Only when it is a matter of relief; when they are relieving sections.
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William Moore Benidickson: Those considerations are not impediments in so far as the minister is concerned. In conducting the program now, after this bill passes the Senate, if it does so, and comes back to us for approval and is passed, nothing prevents the minister, if he will recommend it, from having it proclaimed so the taxpayers whom he says will benefit to the extent of $7 million will get that benefit.


Leon David Crestohl: Before passing from the discussion for proclaiming the measure, may I say that I think there was one feature which surrounded the bill as it went through the banking and commerce committee which the minister might perhaps still remedy. It is true that we sat almost consecutively. Some might have felt that, being a new measure, it was quite cumbersome. It had 60 sections, with a great many subsections and a great many subparagraphs. Despite the fact that we sat almost consecutively it was not a very simple measure to digest. I think we should have had the benefit of hearing from the public at large. Large national organizations familiar with this type of legislation, such as the tax foundation, chambers of commerce and others like them should have come before the committee.


Paul Joseph James Martin: And the council of women.


Leon David Crestohl: Yes, and the council of women. We should have heard from these organizations. We should have had the benefit of their views. Even though the minister was anxious to pilot it through-and it is a good piece of legislation; we do not deny that completely; it is well drafted-I feel that from my point of view it could not have been given the full and cautious study that a new piece of legislation like this should have. I should like to recommend that the minister-I do not know how he can possibly do it-give every encouragement to the other place when they go through the legislation to notify the people to appear before them in committee so that at least we might have there the benefit of the points of view of these organizations and the Canadian public at large.


Donald Methuen Fleming: The points of view of these organizations were fully put before the committee on banking and commerce. The briefs of the national organizations were before the committee, and something was done that I do not recall being done previously in my 13 years' experience in the house. As we came to section after section upon which we had received representations from these national organizations, where we did not under the new bill give full effect to the representations the minister and the

Estate Tax Act
officials reviewed for the information of the committee the representations that had been submitted. So that the committee had full knowledge of the relevant representations before it proceeded to pass any of the clauses-


Paul Joseph James Martin: This was a most undemocratic procedure.


Donald Methuen Fleming: Mr. Chairman, this was done for the instruction of the committee. The committee had the briefs before it and as to any further representations which came in while the measure was under consideration in the committee, those likewise were placed before the committee. The committee therefore had all the information before it as to the views of these national organizations.


Leon David Crestohl: Will the minister not admit that it is very much more helpful to us to have a witness before us whom we can question on the various representations made, so that we may hear the various points of view on all such suggestions rather than resorting to the cold print of a typewritten memorandum. I am sure these organizations would have been delighted to have been heard and to have given us the benefit of their viewpoints.


William Moore Benidickson: Mr. Chairman, on this point I just cannot allow the minister's remarks to remain where they have been left.
I quite agree that when asked he and his officials did reply very courteously as to what such and such an organization had to say to them in criticism of this bill. The minister, however, overlooks the fact that generally speaking it was necessary for a member of the committee to be acquainted with the briefs and it was necessary also to ask in each case what representations had been received.


Donald Methuen Fleming: No, no, that was volunteered.


William Moore Benidickson: Only after one trust company president, who was not named wrote-


Donald Methuen Fleming: Not at all. That is not true.


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

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

[Stage Direction]
2. That schedule A to the Customs Tariff be amended by striking out tariff items 345, 345a, 346, 346a and 346c, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Tariff Item	-	British preferential tariff	Most- favoured- nation tariff	General tariff845	Zinc dross and zinc scrap for remelting, or for processing into zinc dust	Free	Free	10 p.c.845a	Zinc spelter, zinc, and zinc alloys containing not more than ten per cent by weight of other metal or metals, in the form of pigs, slabs, blocks, dust or granules	per pound	i ct.	1 ct.	2 cts.346	Zinc, manufactures of, n.o.p	15 p.c.	17i p.c.	25 p.c.846a	Zinc, or zinc alloys containing not more than ten per cent by weight of other metal or metals, in the form of foil, ribbon, strip, sheet, plate, discs or slugs; coated or not	5 p.c.	7i p.c.	20 p.c.846b	Zinc rods; zinc shapes other than flat-rolled; zinc strip or sheet, ungrained, whether or not ground, for making offset plates for lithographing; zinc strip or sheet, not planished, ground or polished, coated on one side with acid-resisting material, to be prepared for use in photo-engraving; all the foregoing if containing not more than ten per cent by weight of other metal or metals	Free	Free	10 p.c.
William Moore Benidickson: We have not concluded our discussions on resolution No. 2 relating to zinc and zinc products. In the meantime, I think most hon. members have received a (Mr. Fleming (Eglinton).]
report under the Combines Investigation Act in which it was alleged that there was a conspiracy against the public interest in the matter of the distribution in Canada, having

regard to equitable prices and fairness to all customers, of natural zinc products of this country.
The combines investigator in his report made a very unusual recommendation; he recommended the removal of the Canadian customs import tariff on refined zinc, the metal from which zinc oxide which was the subject of the commercial controversy is produced. This has developed since we last discussed this item, and I wonder if the Minister of Finance has received an appeal from the Minister of Justice, whose officers made this report, and whether or not he would inform the house of the developments which have taken place in the meantime.


Donald Methuen Fleming: Mr. Chairman, the report of the restrictive trade practices commission recently circulated among members concerning the production, distribution and sale of zinc oxide has, I think, no bearing whatever on the changes proposed in resolution No. 2.
So far as the resolution itself is concerned, the significant changes which are recommended here are those on zinc strip and sheet and zinc dust. There is a change also with respect to zinc alloys. However, the report of the restrictive trade practices commission concerned zinc oxide and refined zinc and as to those two products, I might say first, with respect to zinc oxide, this item is dutiable under tariff item 242, which is one of the tariff items included in the chemical reference now before the tariff board for study and report. The chemical items in the customs tariff have been included in that particular reference which has for some time been awaiting a place on the very heavy schedule of the tariff board.
The other commodity was refined zinc, and in that respect the tariff board in its report on zinc and zinc products reported that none of the Canadian fabricators had suggested any change in the tariff applying to zinc in primary forms.
We shall, of course, give consideration to the recommendation of the restrictive trade practices commission that customs duties on refined zinc be removed. It could be that in the course of tariff negotiations such a reduction might prove to be a useful bargaining item.


William Moore Benidickson: Would the minister say what are the present rates on zinc in primary form?


Donald Methuen Fleming: That is item 345a. The hon. member will see the rate in effect at the time of the bringing in of the budget under that item.
Customs Tariff


William Moore Benidickson: Is my hon. friend saying that the item which the combines investigator thought should not receive protection is in fact at present receiving no protection?


Donald Methuen Fleming: No. My hon. friend will see that the rates have always been f of a cent per pound British preferential and 1 cent per pound most-favoured-nation.


William Moore Benidickson: I was looking at tariff item 345a. I see it is 345a. The imports, I think, are referred to in the tariff board report which brings this item before the committee for discussion today. So far the imports of zinc or zinc products as outlined on page 24 of the tariff board report are of relative insignificance compared with the total production of zinc concentrates and refined zinc into this country.


Mr. Regier:: Mr. Chairman, the resolution reads; 'that it is expedient to amend the Customs Tariff-" and so on. There are many phases of this resolution with which we agree; there are other phases to which we take exception, and other members of this group will have some remarks to make on the specific matters that are recommended when the detailed items are up for consideration.
However, in the main, on the principles of the resolution, I can say that the C.C.F. believes that it is essential that_ we endorse the highest possible level of international trade. Much of the prosperity of our people in Canada depends on a high level of international trade, and this applies with special force to western Canada and I have in mind in particular my own province of British Columbia. The Canadian economy is very vulnerable indeed to any changes in the level of international commodity prices and, therefore, any amendment to the Customs Tariff is of vital concern, especially to the primary producers of this country.
Now, the ideal of the socialist, naturally, is eventual world wide freedom of trade. However, we recognize that the world in which we live today is not an ideal world and that this worthy objective and ideal cannot immediately be obtained; it may not be obtainable in our lifetimes even. Among the present limitations on world wide free trade are the varying standards of living of the workers in different countries of the world, and this has to be recognized. We cannot allow Canadian labour to be forced to compete with the wages that are being paid in many other countries.
There is another handicap which prevents the realization of our ideal of world free

Customs Tariff
trade in the immediate years ahead, namely that various national policies have helped to establish industries in many countries of the world where such industries ought never to have been set up in the first place. When I think of the heavy burden that many European taxpayers have to pay at the present time in order to subsidize the growing of wheat, for instance, I believe I have an example which is worthy of some consideration. It is obvious that the best place in the world to grow the finest type of wheat for the least money is in our Canadian west, yet for national reasons of their own many countries in the world have over a long period encouraged their people to engage in the production of wheat, though they should be doing something else. Right here in Canada we have had governments which over the years, for reasons valid or otherwise, have encouraged the establishment of a cotton textile industry here, an industry which is not natural to the Canadian scene. And yet we cannot attempt to abolish this industry at this time because hundreds of thousands of Canadians would suffer serious hardship if that attempt were to be made.
What we need in order to obtain freer world trade is the raising of the living standards of the workers of all countries to a point where they are at least as high as the living standards of our own Canadian workers. If we were to do that, many of the goods which are produced abroad would no longer offer any unfair competition to our Canadian workers.
We also need a policy whereby the government, rather than entrenching further those things which ought not to exist on the Canadian scene would, rather, pursue a policy by means of which, if those industries have to be sacrificed, no hardship would be involved by those who are now earning a livelihood in these fields.
One of the most important handicaps to a fair exchange of commodities between the various nations of the world is the handicap of currency, and we need to exert much greater efforts toward making possible a freer exchange of the currencies in existence in the world. I would much rather have seen the government engaged in some vigorous action directed toward making possible a freer exchange of currencies than to be discussing an amendment to the Customs Tariff.
High tariffs, low tariffs, or even free tariffs are not the answer in the world in which we live today. High and low tariffs are a game that the Liberals and Conservatives have played in Canada ever since
[Mr. Regier.I
the time of confederation, and I was hoping that those two parties would have become adult by now and grown out of playing such games. Whether tariffs are high or low, it will not solve our problems; it does not even meet the problem. And free tariffs at the present time are not practicable.
We are afraid-and I think that succeeding speakers are going to voice some of the reasons for our fears-that the tendency in this proposed new measure of the government is toward higher and still higher tariffs, and that in this, as in many other respects, the Conservative government is again repeating the history of the Conservative government we had from 1930 to 1935. The days when the tariff was looked upon as a sort of revenue for the minister of finance ought to be gone. I believe they are gone, even in the mind of the Minister of Finance. He no longer looks on the Customs Tariff as a source of revenue. I believe even he has got round to the point when he considers that the Customs Tariff is an instrument by means of which a government either encourages or discourages certain sections of Canadian enterprise, and that any revenue flowing to the treasury is merely incidental.


The Deputy Chairman:: 1 have been waiting for the hon. member to get back to the second resolution and I find that he has been talking on the principle of customs tariff. We are now discussing resolution No. 2, which refers to certain specific articles. I would ask the hon. member to bring his remarks back to those specific articles.


Erhart Regier: I am sorry. I presume that
resolution No. 1 was passed at the time of our national convention and I did not realize that it had carried. However, just to summarize in one sentence what I meant to say, we feel that a new approach is necessary. We advocate that we line ours< Ives up with the modern, progressive nations of the western world and that we begin to plan as they do and use the instrument of the customs tariff for the welfare of our people and that we establish export and import boards which will regulate customs so as to supply the maximum employment to all Canadians.


Charles Edward Rea: Shall the second
resolution carry?


George James McIlraith: Did you say the second
resolution?


Charles Edward Rea: Resolution No. 2.


George James McIlraith: I take it you are dealing
with zinc?
Resolution 2 agreed to.

Customs Tariff
3. Resolved, that schedule A to the Customs Tariff be amended by striking out tariff items 355b, 377, 377a, 3776, 377c, 377d, 377e, 377/, 378, 379, 380, 381, 382, 383, 384, 385, 385a, 386, 387, 387a, 3876, 387c, 388, 388a, 3886, 388c, 3883, 388e, 388/, 388s, 389, 392a, 395, 395a and 438/, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Tariff 	
Item	British preferential tariff	Most- favoured- nation tariff	General tariff855b Metal alloy strip or tubing-not being such strip or tubing as accords with the definition of 11 steel", in paragraph (1) of subsection (?) of section 2 of the Customs Tariff-containing not less than thirty per cent by weight of nickel and twelve per cent by weight of chromium, for use in Canadian manufactures	Free	Free	20 p.c.


Charles Edward Rea: Shall resolution 3 placed on Votes and Proceedings of July 28, carry? there is an amendment of the first item, namely item 355b. The amendment which Mr. Fleming (Eglinton): On resolution 3, as appears in Votes and Proceedings runs to is indicated in the amendments which were this effect:			
That resolution No. 3 of the budget resolutions relating to the Customs Tariff be amended by deleting therefrom item 3556 and by substituting therefor the following:			
Tariff 	
Item	British preferential tariff	Most- favoured- nation tariff	General tariff3556 Metal alloy strip or tubing-not being steel strip or tubing- containing not less than thirty per cent by weight of nickel and twelve per cent by weight of chromium, for use in Canadian manufactures	Free	Free	20 p.c.
I shall ask my colleague, the Minister of National Defence, to move this amendment.


George Randolph Pearkes: I so move.


Charles Edward Rea: Shall the amendment carry?


William Moore Benidickson: I presume we shall have a general discussion on opening up resolution No. 3. Then, I would like the minister to explain the reason for his amendment of item 355b. Mr. Chairman, this deals with basic iron and steel items which were referred to the tariff board for consideration. They were referred, of course, by the previous administration. Mr. Harris, the then minister of finance, wrote on May 19, 1955 to the tariff board under the act directing them to conduct an inquiry into the subject of the various tariff items that he outlined in his letter, and I should like to quote just the odd excerpt from this letter of Mr. Harris. He said:
I have received representations from Canadian primary iron and steel producers to the effect that the provisions of the Customs Tariff relating to their products have become out of date. They
request that these provisions be revised to take account of the expansion that has occurred in the Canadian industry, the changes that have taken place in production techniques, in trade usages, and other developments.
He went on to say in his letter:
I would request the board to prepare a revised schedule of tariff items, with recommendations-
I believe the minister may either request recommendations or simply request a report as to the general situation in the industry. In this case Mr. Harris asked for recommendations as to rates of duty covering primary iron and steel products, and to include a proposed schedule in the report. The then minister of finance said that in preparing its proposed schedule of rates of duty on primary iron and steel products the board should:
I would expect that the board would have regard to the rates now applicable to more highly manufactured products of iron and steel.
In drawing up a revised schedule it is recognized that certain adjustments in margins of preference may be involved. In this regard, however, it is not the intention that there should be any general change in preferential margins and the board should keep in mind the obligations of the GATT in this respect.


Donald Methuen Fleming: Mr. Chairman, first of all may I say that it is quite erroneous to picture the numerous tariff changes proposed in these various resolutions as some major upward revision in the Canadian tariff.


William Moore Benidickson: I did not say that.


Donald Methuen Fleming: No, another member did. Largely these are revisions that arise out of studies made by the tariff board having regard to the need of modernization of the tariff. A number of the tariff items referred to the board by my predecessor were items that had stood in the tariff for many years in that form and there have

been many changes since in techniques and in the descriptions of articles and commodities of the kind embraced here.
In connection with resolution No. 3 respecting iron and steel, may I point out that there are 113 items in the existing tariff which the board reviewed and some 92 of those items have been boiled down by the board to 38 items by a process of consolidation and revision. In this resolution there are, as we saw in the previous one, some increases and some decreases, but the principal purpose was to modernize the tariff in the light of modern needs.
The hon. member for Kenora-Rainy River asks about the reason for departures from specific recommendations of the tariff board. May I remind the committee that after the tariff board made its recommendations it was necessary for the government, under the provisions of GATT, to initiate negotiations with the United States, it being the principal country in whose favour these items had been bound. In the course of these negotiations it was impossible to expect that we would come out with the recommendations of the board in their entirety. There was some give and some take and these recommendations are in the form in which they now appear following negotiations with the United States under the established procedure.
In some other cases we have received representations, and as a result of our inquiries we found that the situation had changed somewhat from the time the tariff board had made its report. Naturally we reviewed all recommendations and the resolution now before the committee is the result.
My friend asked in particular as to what had been the outcome of recommendation No. 10 of the tariff board. The board recommended that an item be set up providing duty free entry under the British preferential and most-favoured-nation tariffs for strip steel less than four inches in width with rolled or milled edges. A number of representations were received objecting to the provision of duty free entry for this material which is now being slit in Canada. In these circumstances it was not considered appropriate to introduce a statutory duty free rate on this material. Hoop steel used in the manufacture of barrels or kegs is not available in Canada and continued duty free entry for this material has been provided under tariff item 382a by order in council until January 31, 1959. My friend is familiar with that provision of the Customs Act that permits the governor in council to reduce the tariff rates applicable to materials that enter into the manufacture of a product in Canada.
Customs Tariff


William Moore Benidickson: My hon. friend has referred to something that he suggests exists now, the slitting of this material in Canada. On page 110 of the tariff board report, reference No. 118, the board pointed out that this item was of interest to the cooperage business, people who make barrels and so on. It has been a free item hitherto both from the United Kingdom and from most-favoured-nations under our tariff arrangements. Naturally there is anxiety about the temporary nature of an order in council, particularly when it expires on January 31, 1959. The board said that this is not an item that is produced in Canada to any extent and they felt that the end cooperage user should not be dependent upon an order in council and recommended that a permanent item be put in the tariff which would continue entry on the basis of free; free; 15 per cent.
When there is avoidance of a recommendation by the tariff board, there is apprehension, especially when the minister says simply that they have temporary coverage under an order in council which expires on January 31, 1959. I understand that if that order in council were not renewed instead of the rates for these products for the cooperage industry being free British preference and, mostfavoured-nation, free; it would become 10 per cent British preferential and 15 per cent most-favoured-nation.


Charles Edward Rea: Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
Charles Edward Rea: Shall the resolution No. 3 as amended carry?


William Moore Benidickson: I would ask the committee if they would not think that each and every one of the enumerated items must be called. I think that is in accord with past practice. I do not ever recall that these tariff items were dealt with simply in bulk. There are many of them, I want to assure the minister, upon which I have no questions to raise at the moment because, so far as I can see, they are in accord with the recommendations of the tariff board. On the other hand, there are some 20-odd items in which it appears there have been changes from the recommendations made by the tariff board. I think we could not make real progress in the committee unless we called each item by its numeral in the tariff schedule.


Charles Edward Rea: Then, item 355b, as amended:
Customs tariffs 355b Metal alloy strip or tubing- not being such strip or tubing as accords with the definition of "steel", in paragraph (1) of subsection (1) of section 2 of the Customs Tariff-containing not less than thirty per cent by weight of nickel and twelve per cent by weight of chromium,

Customs Tariff
for use in Canadian manufactures; British preferential tariff, free; most-favoured-nation tariff, free; general tariff, 20 per cent.


Donald Methuen Fleming: My hon. friend asked for an explanation of this amendment. There is no change in substance between the item as now proposed and that proposed at the time of the budget. The only change is that the wording between the two dashes has been simplified. The item is being amended to make it clear that strip or tubing which contains more than 50 per cent iron is to be classified as steel strip or tubing and not under this item as an alloy.


[Stage Direction]
Item agreed to.
Items 377 and 377a agreed to.
378. Iron or steel, semi-finished, namely; blooms, slabs, billets or sheet bars: British preferential tariff, free; most-favoured-nation tariff, five per cent; general tariff, ten per cent.
William Moore Benidickson: This item is not in accord with the recommendations of the tariff board. I think the pertinent recommendation is No. 3 in their report No. 118. I wondered if the minister would give us some explanation. Hon. members will notice with respect to item No. 378, that now the British preferential tariff is changed. I think our chief concern is with respect to the most-favourednation tariff. The tariff board recommended that the most-favoured-nation rate be $3 per ton. The administration has seen fit to change that to five per cent. I think hon. members will easily recognize that this could have a very important consequence, according to the value of the product that was being imported. I believe that it would involve a substantial increase in tariff on any item imported of this kind if the value were over $60 a ton. Can the minister explain why he did not see fit to accept the recommendation of the tariff board in this respect?


Donald Methuen Fleming: Item 378 covers semi-finished steel in several forms. Formerly, this product came in under various tariff items, and the rates proposed, on balance, probably mean some increase in the margin of preference. The tariff board recommended two divisions of this item, one covering semifinished steel for pressing or rolling into bars, with a British preferential rate of free and a most-favoured-nation rate of $3 per ton. The other division was for processing, other than into bars, with a British preferential rate free and a most-favoured-nation rate of five per cent.
It was not considered that the operation of processing into bars warranted setting up a special end use item, and consequently a single item, No. 378, is proposed, covering semi-finished steel regardless of the end use,
[The Deputy Chairman.]
with a British preferential rate of free and the most-favoured-nation rate of five per cent.


William Moore Benidickson: I am asking about the technique of this thing. I do not imagine the minister, any more than myself, is very well acquainted with the actual manufacturing processes involved here. But the tariff board considers all these matters, hears all parties interested, the producer, purchaser and the fellow in the middle. After many days of laborious hearings they produce a report that goes to 315 pages. Generally speaking, I believe we have confidence in the tariff board of this country. They suggested that a rate of $3 per ton, regardless of the value of the product and having regard to the quantity of imports, would be adequate and fair to all concerned. Now what happens? Who advised the minister that they know better and he should not adopt this report of the tariff board?


Donald Methuen Fleming: My hon. friend, from his experience in the Department of Finance, knows how these matters are processed from the time they are before the tariff board until the time they reach the house. Earlier I outlined the factors which accounted for the changes between the form of the tariff board recommendation and the form of the resolution now before the committee. It is well to bear in mind that the tariff board report on iron and steel was signed on February 28, 1957. It is a year and a half old now.
When the recommendations of the tariff board came in they were submitted to study and to negotiation. As I have indicated to the committee already, the differences between the recommendations of the tariff board and the resolution in its present form may be attributed to one or more of three factors: First, the process of negotiation with the United States; second, changes in the situations regarding the manufacture and supply, and then representations. In this particular case, as in others, the difference between the tariff board report and what appears in the resolution is the product of one or more of these various factors that I have mentioned. It is not just a matter of somebody in the department having an idea that he has something better to recommend than the tariff board. There are representations being made to the department all the time, as my hon. friend well knows, and when the report of the tariff board on this matter as well as on others was made known there were brought to the attention of the department representations and changes in conditions which had occurred since the tariff board was taking evidence on these matters.

There have been many situations, we have found, in which there have been changes in manufacturing, changes in supply and in Canadian needs with regard to many of these items. We have so many items that are embraced within the scope of these particular tariff board references, most of which were directed by my predecessor, that since the reports were issued we have received a great number of representations drawing to the attention of the department that there have been changes since. There are a great many changes going on in the technique of manufacturing and in regard to the development of Canadian supply to meet Canadian needs.


William Moore Benidickson: It seems to me a great deal of flexibility has been introduced into this item that might involve a very radical change in the tariff impost. I indicated that if the value of the product was about $60 a ton, it made no difference. I am told that under this item one might import a fair amount of specialty steel which I do not think is manufactured in any direct way in Canada. But if the specialty steel was valued at several hundreds of dollars per ton and the rate per ton instead of being $3 became 5 per cent, my hon. friend can realize that the change in the duty from the recommendations of the tariff board is substantial indeed.


Donald Methuen Fleming: With respect,
Mr. Chairman, may I say that I think my hon. friend is mistaken in saying that this is a drastic change or anything approaching a drastic change. Actually this is a very minor change for all that it does is to achieve a minor simplification. There are Canadian sources of supply in this field, I may assure my hon. friend, that perhaps he was not aware of and that others were not aware of previously. This is a minor change.


William Moore Benidickson: Could my hon. friend indicate the sources of supply for specialty steel that might be valued at several hundreds of dollars a ton?


Donald Methuen Fleming: I do not think I want to mention specific firms, Mr. Chairman; but I shall be glad to indicate to my hon. friend privately these Canadian available sources.


Lester Bowles Pearson: May I ask the minister
whether it is a fact that where changes have been made in the items under this resolution from the recommendations that came to the minister from the tariff board, those changes have been upwards in the sense of more protection?


William Moore Benidickson: On the steel item.


Lester Bowles Pearson: Yes, on the steel item. If that is the case, surely one factor which
Customs Tariff
the minister gave as bearing on the desirability of change, namely the process of negotiation with the United States, would not operate.


Donald Methuen Fleming: My hon. friend is quite mistaken. There are nine changes. Five of them are downward changes and only four of them are upward changes. I therefore suggest, with respect, that my hon. friend is quite mistaken in saying that the broad effect of these changes is to increase the tariff.


William Moore Benidickson: Just on that point may I say this. This matter is extremely complicated to those of us who have been out of touch with it for some time; and even when I had the good assistants whom the hon. gentleman has in front of him at the moment. I confess I always found it extremely baffling. The minister has indicated that there were nine departures from tariff board recommendations. Can he, with reference to the enumerated items that we have in front of us, say which ones are departures from the tariff board recommendations that involve increases and which ones involve decreases?


Donald Methuen Fleming: The four increases are 378, 380, 381a, 382(5); the five decreases are 380a, 382(7), 384, 392a (2)-


William Moore Benidickson: My hon. friend and I are not talking about the same thing. I started off by indicating to him that at this stage my concern was to establish in committee reasons for departure from tariff board recommendations. I quite admit that with respect to 378a there is an increase as proposed by the minister when one compares that with the recommendation of the tariff board.


Donald Methuen Fleming: There is no 378a.


William Moore Benidickson: I mean item 378. But when my hon. friend starts to give the reductions in tariff, they are reductions that were recommended by the tariff board.


Donald Methuen Fleming: No. My hon.
friend is quite mistaken. I am speaking about reductions that have been introduced in this resolution as compared with recommendations of the tariff board.


William Moore Benidickson: Just in order to put me on the track here, let us look at item 381 which the minister instances as a reduction from what was recommended by the tariff board. Where does that come in? My quick checking indicates that the resolution was in accord with what the tariff board recommended.


Donald Methuen Fleming: I suppose we can jump around in this way, Mr. Chairman;
3418	HOUSE OF
Customs Tariff
but I thought my hon. friend was asking that we take these items individually.


William Moore Benidickson: That is quite right. But we had a broad statement that there were five reductions and four increases. I just wanted to make sure that my hon. friend and I are not comparing oranges with grapefruit.


Donald Methuen Fleming: Would it not be better to deal with these items as we come to them. I gave the numbers of each of those items. Would it not simplify the procedure if we dealt with each of these items when we come to them?


George James McIlraith: The point can be cleared up. There was a little bit of confusion as to the numbers which the minister was calling out at this point. He was interrupted and he turned to clarify the numbers. If

he would again just clarify the numbers that were reductions and the numbers that were increases I think we could dispose of the point.


Donald Methuen Fleming: I gave the correct numbers, Mr. Chairman. I will go over them again.


George James McIlraith: I would ask the minister to do that.


Donald Methuen Fleming: The increases are in items 378, 380,-there are two parts there; just take it as 380-381a, 382 (5). Those are the four increases. The five decreases are these: 380, 380a, 382 (7), 384, and 392a (2).


William Moore Benidickson: And which would not show on our papers?


Donald Methuen Fleming: That is right.


[Stage Direction]
Item agreed to.
Items 379, 379a, 379b and 379c agreed to.
British	Most-
Customs	preferential	favoured-	General
tariff	

 tariff	Nation	tariff
tariff
S80 Shapes or sections of iron or steel, not further manufactured than hot- or cold-rolled:
(1)	Angles, beams, channels, tees, zees, or other shapes or sections, n.o.p	
5 p.c.	10 p.c.	20 p.c.(2)	Wide-flange beams more than ten inches but not more than eighteen inches in depth; when not made in Canada	per ton Free	So.00	$20.00(3)	Angles more than six inches in length of either leg; beams, including wide-flange beams, more than eighteen inches in depth; channels more than fifteen inches in depth; zees more than six inchesin depth of any leg: all the foregoing when not made in Canada.... Free	Free	10 p.c.(4)	Sash, casement or frame sections of iron or steel, hot- or cold-rolled, coated or not, not punched, drilled nor further manufactured, and similar material formed from hot- or cold-rolled iron or steel strip, coated or not, when imported by manufacturers of metal window sash, casements or frames for use in the manufacture of such articles, in their own factoriesper ton Free	$7.00	$7.00
William Moore Benidickson: This is an item where my hon. friend says there is a decrease from the recommendations of the tariff board.


Lester Bowles Pearson: An increase.


Donald Methuen Fleming: Item 380 is one
where there were both an increase and a
decrease.


William Moore Benidickson: Yes, that is how I understand it. Would the minister explain that? 
Would he give us the rates recommended by the board and compare them with the rates proposed in this resolution?


Donald Methuen Fleming: The tariff board recommended in their item No. 4b that all wide-flange beams more than 10 inches in depth be duty free under the British preferential tariff and dutiable at $5 per ton under the most-favoured-nation tariff.

Tariff items 380 (2) and 380 (3) differ from the tariff board recommendations in the following respects: First, wide-flange beams more than 18 inches in depth will be free of duty under the most-favoured-nation tariff as long as they are not made in Canada, instead of being dutiable at $5 per ton. That is the decrease.
Second, wide-flange beams more than 10 inches in depth, when they are made in Canada, will be dutiable along with other such structural steels at the British preferential 5 per cent and the most-favoured-nation 10 per cent instead of being duty free under the British preferential tariff and dutiable at $5 per ton under the most-favoured-nation tariff as recommended by the board. That is the increase.


William Moore Benidickson: In other words, the place where we find the change is in the wording of 4b. The resolution itself says "when not made in Canada" and that distinction was not in recommendation No. 4b of the tariff board.


Donald Methuen Fleming: That is correct.


[Stage Direction]
Item agreed to.
Items 380a and 381 agreed to.
Customs tariff-381a. Plate of iron or steel, flanged or dished: British preferential tariff, 5 per cent; most-favoured-nation tariff, 20 per cent; general tariff, 30 per cent.
William Moore Benidickson: I would like to ask the minister to explain his reasons for departing from the board's recommendation in this respect. From reading the tariff board report I gained the impression that the average value on the product with which we are concerned here is a value of approximately $200 per ton. The board made a tariff import recommendation much below what the duty would be under the proposal of the minister and I wonder if he would give us an explanation.


Donald Methuen Fleming: The tariff board recommended in their item 6b the rates of $5 per ton British preferential and $8 per ton most-favoured-nation. The rates formerly in effect were: British preferential 5 per cent and most-favoured-nation 22-i per cent.
Following the publication of the tariff board report the government received strong representations from Canadian producers of flanged or dished steel plate, objecting to the tariff board recommendations. They pointed out that the effect of the tariff board recommendations would be that their raw material, namely steel plate, would be dutiable at 10 per cent under the most-favoured-nation tariff, whereas the duty on their finished product at $8 per ton would be substantially less than the 10 per cent. Since the most-favourednation duty on steel plate is being reduced by 2| per cent it was considered that a
Customs Tariff
similar reduction in the duty on flanged or dished steel plate would be appropriate and consequently the most-favoured-nation rate of 20 per cent is proposed. The British preferential rate of 5 per cent formerly in effect remains unchanged.


William Moore Benidickson: Just assuming that the value of this product is $200 per ton, one can readily see that a 20 per cent tariff, in so far as the most-favoured-nation rate is concerned, amounts to $40 per ton, and under the proposal of the tariff board the rate would have been $8 per ton. There is therefore a very substantial increase in the cost to the purchaser. The reference behind the recommendation No. 6b is to be found at page 107 of the report, where the tariff board, after looking at the situation said:
Plates of iron or steel, flanged or dished, per ton, $5, $8, $15. This recommended sub-item is intended to replace that portion of existing item 380(c) dealing with flanged or dished plate. These forms of steel are not produced in Canada by basic steel producers and normally must be imported by steel fabricators, particularly in the larger sizes, for incorporation into pressure vessels etc. The recommended rates of duty would permit the importation of these important components for pressure vessels at rates considerably reduced from those at present in effect.
I just cannot reconcile that with the explanation of the minister concerning the Canadian product.


Donald Methuen Fleming: I would remind my hon. friend that the report of the tariff board was signed on February 28, 1957.


William Moore Benidickson: Just a year ago, or a little over.


Donald Methuen Fleming: It is a year and a half ago, and we received these representations from Canadian producers which brought to our notice some information additional to that contained in the report of the board.
I also point out that what is involved here is a reduction in the present tariff rate. While the British preferential rate remains unchanged, nevertheless there is a reduction of 2-i per cent in the most-favoured-nation rate, and I am told that this means $5 per ton, approximately.
I can tell my hon. friend that if any situation arises-and he is familiar with the way in which these situations do arise in connection with procedures in the department- where it is found that there is some material which is not available in Canada and that some Canadian processor is faced with a tariff on his material, we will be glad to look into such a situation and if warranted arrange a temporary reduction. However, we are satisfied that these products are available in Canada and that the proposed reduction is fair and realistic.
3420	HOUSE OF
Customs Tariff


William Moore Benidickson: Mr. Chairman, we have here a forthright statement by the tariff board that after investigation, which of course applied to the time at which they submitted their report, they found that these forms of steel were not produced in Canada by basic steel producers.
I am quite familiar with the kind of information which the minister has in front of him. When I was on the official side I had the privilege of receiving memos and summaries with respect to situations of this kind from some officers of the departments. I think some of the same officers were in fact in office at the time when I was assistant to the minister of finance, and in those notes an indication was always given as to who were the Canadian producers. This information is also invariably given to us in the tariff board reports, so 1 do not see why there should be any secrecy on the part of the

minister and why he should not say that in the last 18 months, for instance, so-and-so and so-and-so became producers of these products and thus need extra protection. I would have been prepared to have given such information from the notes that were provided me in the days gone by.


Donald Methuen Fleming: Mr. Chairman, the information has come to us from a number of Canadian producers; it is not a matter of one or two, and I can also tell the hon. gentleman, with all respect to the tariff board, that we are satisfied that the information upon which the tariff board based the finding which he read was certainly not as complete or as up to date as the information which has been made available to the department in the interval.


[Stage Direction]
Item agreed to.
Item 381b agreed to.
Customs
Tariff
British	Mostpreferential	favoured-	generaltariff	Nation	tariff
tariff
[Stage Direction]
Sheet or strip of iron or steel, corrugated or not, and whether or not
with rolled surface pattern:
(1)	Hot-rolled	
(2)	Cold-rolled or cold-drawn	
(3)	Coated with tin or vitreous enamel	
(4)	Coated with zinc	
(5)	Coated, n.o.p	
(6)	Slot- or cold-rolled, when imported by manufacturers of butts and hinges for use in the manufacture of butts and hinges, in their own factories	
(7)	Cold-rolled, with silicon content of 0.075 per cent or more, when imported by manufacturers of electrical apparatus or of parts therefor, for use in the manufacture of electrical apparatus or of parts therefor, in their own factories	
5 p.c.	10 p.c.	20 p.c.5 p.c.	15 p.c.	25 p.c.10 p.c.	15 p.c.	25 p.c.71 p.c.	15 p.c.	25 p.c.71 p.c.	15 p.c.	20 p.c.Free	71 p.c.	10 p.c.5 p.c.	121 p.c. 25 p.c.
George James McIlraith: I wonder whether the minister would consider having this item stand over, with the pipes and tubes item. I think that would expedite matters.


Donald Methuen Fleming: I think the hon. gentleman misunderstands. You have called item 382, paragraph 4, Mr. Chairman.


George James McIlraith: Oh, I see, I was thinking of item 384.


Joseph Pierre Albert Sévigny: Item 382 (5).


William Moore Benidickson: Here again is a departure from the recommendation of the tariff board and, indeed, it is rather a substantial increase with respect to British preference. As I remember it, the tariff board recommended

that this particular item, so far as Great Britain is concerned, should be imported free, and notwithstanding the forthcoming commonwealth trade negotiations the administration has seen fit to suggest 7-J per cent. I wonder if the minister would give us some explanation.


Donald Methuen Fleming: 
George James McIlraith: Following that reason, why is the general tariff item lower.


Donald Methuen Fleming: For this purpose, the general tariff rate has very little significance.


George James McIlraith: I thank the minister for a frank answer to that question.


Lester Bowles Pearson: The minister has said that experience has shown in the department that it should be done this way, but I take it that the same experience is available to the tariff board, who decided it could not be done.


Donald Methuen Fleming: Again, the tariff board, when it conducted its heatings in 1956 proceeded on the evidence before it and the basis of the studies made at that time. Those hearings were carried on in 1956, the report was made ready early in 1957, and it was signed at the end of February. This is now a year and a half ago.
I can tell the Leader of the Opposition also that I have been impressed with the wide range of items which have, naturally, demanded attention in the light of the numerous reports of the tariff board with which I have had to deal during the time I have held this office, as well as the number of changes which are taking place in Canadian industry, with more Canadian sources of supply becoming available.


Lester Bowles Pearson: I may be wrong, but I gather from the minister that he was dealing with a principle in his explanation of this matter, the principle being that as indicated by experience a basket item, as I think he called it, of this type should not be at a rate lower than other items in the same category, and that because of this experience they had taken a certain action with regard to the recommendation of the tariff board. The question I asked was: did the tariff board not have the same experience, and yet it did not bring them to the same conclusion.


William Moore Benidickson: There is another item which arouses my curiosity with regard to this particular matter. I am looking at page 137 of the tariff board's report. I am quite sure there is a good explanation for this, but
Customs Tariff
I recall that when I was trying to pilot legislation of this type through the committee I invariably referred hon. members to the three columns on the left, which were the proposed rates, and the three columns on the right, which were the former rates or the operative rates at the moment. The minister will note here that it is suggested that until this is made effective the most-favourednation tariff rate was 12J per cent. But on page 137, with respect to item 383 of the existing tariff schedule the tariff board report says this:
The most-favoured-nation rate was reduced to 10 per cent in 1948 under GATT.
Is that arrangement still in effect and if so why would we not see 10 per cent rather than 12 per cent on the righthand side of that page?


Donald Methuen Fleming: I think it is just a matter of numbering. The rate figures which the hon. gentleman sees here, 5 per cent, 12J per cent and 15 per cent as the rates in effect prior to this budget are the rates that were in existence under item 383(e). He will find that at page 138 of the report of the tariff board. They quote 383 (e):
Sheets, plates, hoop, band or strip, of iron or steel:
(e) Coated with paint, tar, asphaltum or otherwise coated, n.o.p.
B.P.	M.F.N.	General5%	121%	15%


William Moore Benidickson: On this item this is what the tariff board had to say:
The recommended rates for this item are very similar to those proposed for uncoated sheet and strip. The reason for this relationship is that such coatings-as paint-as are applied in Canada do not advance the metal greatly beyond the rolling stage. On the other hand, many of the other more complicated coatings are not applied in Canada and the product must be imported. There are, therefore, sound reasons for not recommending rates greater than those applying to hot- or cold-rolled steel.


Donald Methuen Fleming: I say again that as to any particular situations, if there is a situation where a Canadian manufacturer cannot obtain in Canada a material, that is mentioned here, for use in the production of his product, then we will certainly be glad to give consideration to any such situation and deal with it on the usual temporary basis for production in Canada.


William Moore Benidickson: Perhaps; but he went to his government board, which was the tariff board, and probably spent a fair amount of money to make his case. I think this involves, does it not, some stove manufacturers who did not want an increase in the cost of their product, but it is this alteration from a report of a board before which they have appeared, and sometimes I imagine there are

Customs Tariff
certain compromises in a hearing of that kind, and businessmen go away thinking that they have made the best bargain possible and then they find that the tariff board recommendations are not accepted and altered here on budget night to their surprise and chagrin.
Item 382(7) is another of those items. A former item involved an increase from recommended free to 7J per cent under the British preferential for whom my hon. friend is always very vocal in saying that he wants to increase trade. This is another item where the tariff board felt that when coming from Britain it should be imported free. Notwithstanding the commonwealth conference, my hon. friend has seen fit to recommend that the tariff be 5 per cent. I wonder whether we can hear something about this?


Donald Methuen Fleming: Mr. Chairman, my hon. friend may not be aware that under the tariff board report, had it been implemented, this item would have come in under sub item 2 of item 382 as cold-rolled sheet and at a higher rate than is proposed under 382(7), under most-favoured-nation tariff.


Mr,. Benidickson:: Was the old item under 385c?


Donald Methuen Fleming: The old item was 386p.


Lester Bowles Pearson: My information is that the item under which the recommendation was made by the tariff board was 7(g), as appears on page 97 of their report, and reads as follows:
Hot- or cold-rolled, not more than .025 inch in thickness, containing not less than 2.90 per cent of silicon, coated or not, for use in the manufacture of electrical apparatus or parts therefor.
Under that particular item as enumerated there would have been no duty on British imports.


Donald Methuen Fleming: I am sorry, but I am afraid the hon. gentleman has erred there. He is talking about something different; it is a different item.


William Moore Benidickson: Is this not recommendation 7(g) of the tariff board?


Lester Bowles Pearson: At page 97.


Donald Methuen Fleming: No, it is not.


William Moore Benidickson: It is not in the present wording but is it not the same type of thing? It is goods for making electrical apparatus; it is very expensive, many hundreds of dollars a ton.


Lester Bowles Pearson: Mr. Chairman, may I read the recommendation of the tariff board in this

matter? It is on page 97, under section 7(g) and it reads as follows:
Hot- or cold-rolled, not more than .025 Inch In thickness, containing not less than 2.90 per cent of silicon, coated or not, for use in the manufacture of electrical apparatus or parts therefor.
Does this particular recommendation not correspond to the one we are now discussing, and is it not true that under that recommendation British imports would have been free?


Donald Methuen Fleming: The answer is that it does not correspond.


George James McIlraith: I do not quite understand why the word "free" is printed under "British preferential tariff" in the resolution as existing.


Donald Methuen Fleming: Because it used to be 386p, which was free under British preferential.


William Moore Benidickson: Surely, under this item, 382(7) we are dealing with the tariff board reference on page 145 of the report. They said this:
It is doubtful that there is much Canadian production in the high-silicon range covered by the item.
Has that situation changed?


Donald Methuen Fleming: Mr. Chairman, it is perhaps quite a natural thing that there should be a misapprehension here, since this is a little complicated, but I draw attention of hon. members to the fact that the tariff board, at the bottom of page 97 of its report, in recommending the item that was read by the Leader of the Opposition, has recommended it in "g" with respect to:
Hot- or cold-rolled, not more than .025 inch in thickness, containing not less than 2.90 per cent of silicon,-
I am told this is a very different product from hot- or cold-rolled with silicon content of .075 per cent.


William Moore Benidickson: But my hon. friend and his predecessor were seeking simplification in the number of items in the tariff schedule and for that reason the board recommended that all such items could be included in their recommendation 7(g).


[Stage Direction]
Item agreed to.
Items 383 and 383a agreed to.
Customs tariff-384: Skelp, plate, sheet or strip of iron or steel, hot- or cold-rolled, when imported by manufacturers of pipes or tubes, for use in the manufacture of pipes or tubes: British preferential tariff, free; most-favoured-nation tariff, 7| per cent; general tariff, 15 per cent.
Mr. McMillan:: This is an item which relates to items 397 and 399. I am wondering whether the minister would give consid-

eration to standing item 384 over to be considered at the time we are considering items 397 and 399?


Donald Methuen Fleming: Mr. Chairman,
this question was asked by the hon. member for Ottawa West. Frankly, I do not see the point. I wish to be reasonable about this. We have to deal with this item on skelp at some point, and it is part of resolution No. 3 on iron and steel products.


George James McIlraith: Mr. Chairman, may we dispose of the point before five o'clock. The suggestion is made to prevent duplication. The item must inevitably be referred to in the discussion of the items having to do with pipes and tubes and if we discuss this item now we must discuss pipes and tubes, and then discuss them again when we come to the item on pipes and tubes. I think we can eliminate that duplication of discussion by having the full discussion on pipes and tubes.


Charles Edward Rea: Order. It being five o'clock, it is my duty, pursuant to standing order 15, to leave the chair in order to allow the house to proceed to the consideration of private and public bills.
Progress reported.


Mr. Speaker:: Order. It being five o'clock the house will now proceed to the consideration of private and public bills, the former having precedence, pursuant to standing order 15 (3).


PRIVATE BILLS
Mr. Speaker:: Before the assistant clerk reads the first order, I have been informed that the house will consider giving consent to dealing with some of the items on the order paper which can be handled expeditiously before dealing with other items that may be contentious. If that is the case, may I suggest that we proceed with the second readings of divorce bills. As hon. members will note, there are four series of second readings of divorce bills on the order paper. Is the house agreed that we proceed with these second readings?


Some hon. Members:: Agreed.


SECOND READINGS
Robert Jardine McCleave: that the following bills be read the second time:
Bill No. SD-219, for the relief of James Nelson LeBlond.-Mr. McCleave.
Bill No. SD-220, for the relief of Louise Auger Lecavalier.-Mr. McCleave.
Bill No. SD-221, for the relief of Marie Noella Therese Legault Lebel.-Mr. McCleave.
Private Bills-Divorce
Bill No. SD-222, for the relief of Muriel Marguerite Elizabeth Ada Brant Yeaman.- Mr. McCleave.
Bill No. SD-223, for the relief of Marie Becherbleith Reicher.-Mr. McCleave.
Bill No. SD-224, for the relief of John Charles Underhill.-Mr. McCleave.
Bill No. SD-225, for the relief of Patricia Wirth Usher.-Mr. McCleave.
Bill No. SD-226, for the relief of Jean Audrey Vickers Mastro.-Mr. McCleave.
Bill No. SD-227, for the relief of Mary Rebecca Lafontaine Johnson.-Mr. McCleave.
Bill No. SD-228, for the relief of Jetti Edelstein Popowski.-Mr. McCleave.
Bill No. SD-229, for the relief of Jean Phil-ippon.-Mr. McCleave.
Bill No. SD-230, for the relief of Sidney Schwartz.-Mr. McCleave.
Bill No. SD-231, for the relief of Kenneth Herbert Gregory.-Mr. McCleave.
Bill No. SD-232, for the relief of Barbara Crawford Bucci.-Mr. McCleave.
Bill No. SD-233, for the relief of Holger Madsen.-Mr. McCleave.
Bill No. SD-234, for the relief of Miriam Astrof Hymovitch.-Mr. McCleave.
Bill No. SD-235, for the relief of Margaret Welsh Clark Gray Perego.-Mr. McCleave.
Bill No. SD-236, for the relief of Eunice Joyce Stone Berwick'-Mr. McCleave.
Bill No. SD-237, for the relief of Rita Elizabeth Edwards Bryant.-Mr. McCleave.
Bill No. SD-238, for the relief of Mary Farrelly Crane.-Mr. McCleave.
Bill No. SD-239, for the relief of Margaret Eileen McKenzie Beauchemin.-Mr. McCleave.
Bill No. SD-240, for the relief of Jeanette Josephine Cools Cox.-Mr. McCleave.
Bill No. SD-241, for the relief of Geraldine Marilyn Woods Spencer.-Mr. McCleave.
Bill No. SD-242, for the relief of Mariette Giselle Denise Pesant Forget.-Mr. McCleave.
Bill No. SD-243, for the relief of Joy Diedre Shelley New.-Mr. McCleave.
Bill No. SD-244, for the relief of Muriel Ethel Serchuk Rutenberg.

Mr. McCleave.
Bill No. SD-245, for the relief of Deborah Barash Dindzik, junior.-Mr. McCleave.
Bill No. SD-246, for the relief of Gladys Elsa Hannah Birnbaum Aston.-Mr. McCleave.
Bill No. SD-247, for the relief of Barbara Janet Dillane Barr.-Mr. McCleave.
Bill No. SD-248, for the relief of Giulietta Marcogliese Iacurto.-Mr. McCleave.

Private Bills
Bill No. SD-249, for the relief of Herbert Budd, junior.-Mr. McCleave.
Bill No. SD-250, for the relief of Dorothy Mary Shrimpton Legault.-Mr. McCleave.
Bill No. SD-251, for the relief of Maria Giusseppa Di Nunno.-Mr. McCleave.
Bill No. SD-252, for the relief of Marie Jacqueline Fernande Belisle Wechselberger.- Mr. McCleave.
Bill No. SD-253, for the relief of Simonne Fournier Bergeron.-Mr. McCleave.
Bill No. SD-254, for the relief of Cecily Anne Maud Carter Bernard.-Mr. McCleave.
Bill No. SD-255, for the relief of Marie Henriette Andree Massue Prevost.-Mr. McCleave.
Bill No. SD-256, for the relief of Lovell Orville Woodard.-Mr. McCleave.
Bill No. SD-257, for the relief of Joseph Wing.-Mr. McCleave.
Bill No. SD-258, for the relief of Adrienne Menard Huot.-Mr. McCleave.
Bill No. SD-259, for the relief of Hilda Jamesie Hatfield Carter.-Mr. McCleave.
Bill No. SD-260, for the relief of Evelyn Mae Wood Snell.-Mr. McCleave.
Bill No. SD-261, for the relief of Robert Smith.-Mr. McCleave.
Bill No. SD-262, for the relief of Ethel Fisk Gwynne-Davies.-Mr. McCleave.
Bill No. SD-263, for the relief of Marie Reine Drouin Milliard.-Mr. McCleave.
Bill No. SD-264, for the relief of Joseph Leonidas Albert Paradis.-Mr. McCleave.
Bill No. SD-265, for the relief of Hyman Wexler.-Mr. McCleave.
Bill No. SD-266, for the relief of Natasha Harpf Crayter.-Mr. McCleave.
Bill No. 267, for the relief of Martha Ratelle Holtken.-Mr. McCleave.
Bill No. SD-268, for the relief of Shirley Bertha Marietta Birrell Wilson.-Mr. McCleave.
Bill No. SD-269, for the relief of Norma Elizabeth Gammie Costigan.-Mr. McCleave.
Bill No. SD-270, for the relief of Merita Helen Gertrude Alarie Russell.-Mr. McCleave.
Bill No. SD-271, for the relief of Sydney Clarence Walker.-Mr. McCleave.
Bill No. SD-272, for the relief of Barbara Anne Young McFadden Pallett.-Mr. McCleave.
Bill No. SD-273, for the relief of Jean Mercidus Cecilia Steel MacDonald.-Mr. McCleave.
Bill No. SD-274, for the relief of Arthur Thomas Hazell.-Mr. McCleave.
Bill No. SD-275, for the relief of Joseph Ovila Maurice Valentyne.-Mr. McCleave.
Bill No. SD-276, for the relief of Iris Olive West Dion.-Mr. McCleave.
Bill No. SD-277, for the relief of Margaret Cox Lafortune.-Mr. McCleave.
Bill No. SD-278, for the relief of Gertrude Falkenstein Garfield.-Mr. McCleave.
Bill No. SD-279, for the relief of Gweneth Vera Payne Smith.-Mr. McCleave.
Bill No. SD-280, for the relief of Angela Bertha May Cohen Weinstein.-Mr. McCleave.
Bill No. SD-281, for the relief of Raymond Leslie Larocque.-Mr. McCleave.
Bill No. SD-282, for the relief of Rosanne Dolimont Ruelokke.-Mr. McCleave.
Bill No. SD-283, for the relief of Jeannette Hatsedakis Haeck.-Mr. McCleave.
Bill No. SD-284, for the relief of Natan Grunstein.-Mr. McCleave.
Bill No. SD-285, for the relief of Gordon Kent Lambert.-Mr. McCleave.
Bill No. SD-286, for the relief of Catherine Doris Dooley Bantey.

Mr. McCleave.
Bill No. SD-287, for the relief of Monica Frances Fleice Bottomley.-Mr. McCleave.
Bill No. SD-288, for the relief of Fritz Drechsler.-Mr. McCleave.
Bill No. SD-289, for the relief of Robena Sarah Florence Worrell Day.-Mr. McCleave.
Bill No. SD-290, for the relief of Hedwig Papp Witwitzki.-Mr. McCleave.
Bill No. SD-291, for the relief of Gerald Leonard Pilcher.-Mr. McCleave.
Bill No. SD-292, for the relief of Mary Madeleine Dorothy Butler Meaney.-Mr. McCleave.
Bill No. SD-293, for the relief of John Shaw Macneill Carson.-Mr. McCleave.
Bill No. SD-294, for the relief of Libusa Franic Kotow.-Mr. McCleave.
Bill No. SD-295, for the relief of Sheila Estelle Rosenstone Lane.-Mr. McCleave.
Bill No. SD-296, for the relief of Renald Leroux.-Mr. McCleave.
Bill No. SD-297, for the relief of Pierrette Beauregard Ifould.-Mr. McCleave.
Bill No. SD-298, for the relief of Marion Brooks McConnell Bienvenue.-Mr. McCleave.


CANADIAN WOMEN'S PRESS CLUB
Miss Margaret  Aiiken@York-Humber: the second reading of Bill No. S-8, to incorporate Canadian women's press club.


Paul Joseph James Martin: Have we had an explanation of the bill? I am sure the house would be very anxious to hear the hon. and charming lady.


Miss Margaret  Aiiken@York-Humber: Mr. Speaker, the purpose of the bill is just as the preamble states, to incorporate the Canadian women's press club so as to give statutory recognition to something that has been in existence for 54 years. The Canadian women's press club was formed in 1904. I think there were 14 members originally and there are now 600 with 15 branches across Canada. They simply want parliament to allow them to incorporate.


Paul Joseph James Martin: Of course I know the answer to this question but others may want to know if there are any male members of this organization.


Miss Margaret  Aiiken@York-Humber: No, there are not.


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

Mr. Speaker:: The third item mentioned to me is the last item under the heading of private bills, order No. 124, consideration of Bill No. SD-199, an act for the relief of William Harrison Terry. Has the hon. member for Winnipeg South leave to move a motion?


Some hon. Members:: Agreed.


Mr. Peters:: Mr. Speaker, before we give agreement I should like to ask if this bill is being sent back to the committee with instructions to hear further evidence in this particular case.


Mr. Chown:: The motion I have worded is explanatory in that respect. I move, seconded by the hon. member for Vancouver-Kingsway (Mr. Browe):
That Bill No. SD-199 entitled "an act for the relief of William Harrison Terry", be recommitted to the standing committee on miscellaneous private bills for the purpose of hearing evidence.


Mr. Speaker:: Is the house agreed that this motion may be moved now by unanimous consent?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The house in committee on Bill No. SD-129, for the relief of Kaljo Klasman-Mr. Mc-Cleave-Mr. Rea in the chair.
On clause 1-Marriage dissolved.
William Arnold Peters: Mr. Chairman, on many occasions the house has been most concerned about the method followed in these proceedings and the form of evidence presented in some divorce cases. This case is a contested case, and in my opinion it has been presented
57071-3-216
Private Bills
very strongly and defended very poorly. It is a contradiction of another case we have been discussing which was presented very poorly and defended very strongly. The case received considerable attention in the committee and in looking over the evidence it is my opinion that we are asked to stretch the bounds of credulity too far when we are asked to rule that adultery was committed.
There are a number of things that are odd about this case and I should like to refer to some of them. One of them is the evidence given by the co-respondent. The second is the evidence given by two witnesses, Mr. and Mrs. Fournier. Mr. and Mrs. Fournier claimed and repeated in the evidence on a number of occasions that they were very close friends of the defendant. They pointed out that they had known Mrs. Klasman for some length of time. It was pointed out that Mrs. Fournier and Mrs. Klasman were very close friends but when subpoenas were issued to Mr. and Mrs. Fournier they presented themselves with no apparent reluctance and testified in a manner which in my opinion is not in keeping with close friendship.
The evidence points out a number of things. First, we should point out that there were two alleged acts of adultery and one of them, not being proven before the Senate, was dropped by agreement. They proceeded with the second charge. In this particular case the story is that the lady went to this party at the Fournier's establishment. Mr. Umblia came to that party later. After considerable drinking, Mr. Umblia and Mrs. Klasman left the party. The next morning Mr. and Mrs. Fournier drove to Mrs. Klasman's house where they were to pick the people up to go for an outing that day. At that time Mrs. Fournier knew where Mrs. Klasman lived. They drove to that address but Mrs. Klasman was not there.
It seems significant that Mr. Fournier testified that he did not know where Mr. Umblia lived but Mrs. Fournier was quite familiar with the address. They went to that address. It was not proven by Mr. Fournier, but only by Mr. Umblia and other witnesses, that they ever arrived at the Umblia apartment. When they arrived there Mr. Umblia, according to the evidence on page 25, said he had been drinking a great deal. He was asked when he arrived at the Fournier's apartment and he said about midnight, but then he added, "I don't remember".
Mr. Umblia testified he had been drinking very heavily on the night in question. Mrs. Fournier testified that when she arrived at that apartment Mrs. Klasman was not fully dressed, to the extent she did not have her shoes on. Mr. Umblia was asked how he was

Private Bills-Divorce
dressed, and he said he was not dressed, but he had his stockings and shoes on. The evidence reads:
Q. You remember that?-A. I wasn't well dressed.
Q. Did you have your pants on?-A. Pyjama pants on.
The implication was that he was not fully dressed and that Mrs. Klasman was there and she was putting on her makeup. In my opinion the evidence that was given in this case is not the type of evidence that proves adultery. It does not even indicate that adultery took place. The woman herself testified very definitely that no adultery had taken place. Although Mr. Umblia testified that it had, he also admitted that he was drunk and on a number of occasions when cross-examined he said he did not remember. He also pointed out that on a number of occasions he drank very heavily on Saturday nights. A question was asked of him if he got drunk. On page 25 we find this:
Q. Do you often get drunk on Saturdays-A. Sometimes, if it is a party.
He did not say he just drank, but he said he got drunk. I submit his testimony is not the kind of testimony you would expect from somebody who would be involved in this kind of case. Mrs. Fournier's evidence does not appear to be what you would expect from a friend testifying against another friend. There is an implication that there might be some agreement between the parties concerned to get this divorce, particularly Mr. and Mrs. Fournier and Mr. Umblia. These people gave evidence because they were subpoenaed, but they gave the type of evidence you would not normally expect friends to give.
I think this is a case in which adultery has not been proven, has not even been intimated. The allegation of adultery is only borne out by one witness who implied it from the state of dress or undress and the condition of the apartment. The implication was that the two parties had spent the night and early morning in this apartment. I would suggest that this is a case where the adultery has not been proven, and I do not believe the divorce should be granted.


Robert Jardine McCleave: Perhaps some of the
remarks of the hon. member deserve an answer. I would first want to correct a statement he made, I know it was unintentional, to the effect that the second charge of adultery was not proven and was dropped by agreement. There was no attempt, after one initial attempt at introducing a letter, to prove the other act of adultery that was alleged in the petition and so it does not come before us.
In this case there were no professional witnesses. The hon. member mentioned that two friends of the respondent came and gave testimony which was rather damning to her, and he expressed surprise that these people would come in and give evidence which he felt was not in keeping with friendship. I would suggest to the committee that this is a very dangerous point to make. If witnesses cannot be expected to come in to court or into the committee of the other place and tell the truth under oath, whether it hurts their friends or helps them, then the whole system of law would fall into disrepute.
In my opinion the strongest evidence of adultery in this case was contained in a statement brought out in cross-examination of Mrs. Fournier that Mrs. Klasman, the respondent in the case, had admitted that she had slept with Umblia and that she wished to have a baby by him. The other evidence was primarily that of the co-respondent himself.
As the hon. member properly pointed out, the statement that he did commit adultery was denied by the respondent. Perhaps the members of the committee will consider that these two statements cancel each other out. There is no evidence, in the first place, to show that Mrs. Fournier, and she was cross-examined thoroughly, had any unfriendly feelings towards Mrs. Klasman that would cause her to come before the Senate committee and tell the story she did. I think that is a very significant point that the committee must consider. We have the statement of an independent witness who finds the parties in an apartment in the early morning, one in a state of partial dress and the other one making up her face, which I understand is part of the lady's toilet in the morning and which was indicative of the fact she had spent the night there.
There is no attack on Mrs. Fournier as to why she should go before the committee of the other place and make these statements. I think that is perhaps the most important part of the case.


William Arnold Peters: On the matter of the two allegations, at page 28 of the evidence before the divorce committee of the Senate we find the following:
The Chairman (Senator Croll) : You have made two allegations in your pleadings, Mr. Hume.


Mr. Hume:: I would move to amend the petition, Mr. Chairman, to strike out the second allegation. If we have proved one adultery, that is sufficient.


Joseph Pierre Albert Sévigny: You appreciate the difficulty in that respect. An allegation has been made and there is a record of that allegation. The person involved might be entirely innocent, and it

seems to me a very dangerous practice to make these allegations without bringing some proof.


Mr.   Metrick@: I object to the amendment.


William Marvin Howe: I felt that the proof of one adultery was sufficient and that is what I came prepared to present. Before I came to that conclusion I had advice that that would be in order and that is why at this time I would move an amendment to the petition, to strike out that portion of paragraph 5 which refers to a date in November-
I refer to that matter only because it appeared in the evidence given in the Senate divorce committee beyond the original petition.


Robert Jardine McCleave: The hon. member is correct in that statement. You will frequently find in these cases that the parties allege all sorts of things and then strike them out. As I indicated, there was one letter adduced to support the second allegation and the parties went no further.


Murdo William Martin: In these matters of divorce, with the limited experience I have had in this committee, one of the things that bothers me most of all is the matter touched on by the hon. member for Timiskaming, namely the ability of the counsel in presenting these cases either for the one who is suing for the divorce or the one who is answering the charge or who is contesting the divorce. I sometimes wonder whether we in this house, with all the duties that we have, are fully qualified to deal with this matter. As mentioned by the hon. member, we have the examples of two particular divorce cases on two particular days, and in those two cases the roles were completely reversed. On one day we had an excellent presentation on one side and an extremely poor presentation on the other side. On the next day the roles were completely reversed. I am not saying that was the reason that any particular decisions were made in those two cases but I say it is something to which this committee handling these matters must give particular consideration, namely whether cases of this kind are not decided on the merits of the case itself but rather on the ability of the advocates who present the various sides of the matter.
I think one thing that we must keep in mind at all times is that it is our duty to ensure, if at all possible, that there is no miscarriage of justice. Of course that statement applies both ways. On the one hand we must try to ensure that we do not have a miscarriage of justice by granting a divorce where it is not justified; and equally important, we must on the other hand try to ensure that we do not refuse a divorce if, in fact, it is warranted and by so doing have a miscarriage of justice. I think it is of special importance, owing to the position in which we find ourselves, particularly in this session in which,
57071-3-2161
Private Bills-Divorce
as I am sure all hon. members will agree, we have not too much time in which to concentrate on any one particular subject. I believe that cases of this kind need the ability of a committee to devote its full attention to the matter and not possibly be thinking of a bill that is coming up next, some speech that may have to be made that afternoon or indeed any one of the other duties we have to face in this particular session.
In this particular case the hon. member for Timiskaming raised some of the points that I intended to raise. I will try to avoid repetition by speaking to others that I recall. I say "that I recall" because of this circumstance. I had my particular copy of the bill and the evidence submitted in respect of that bill. I had it marked in readiness for this occasion and I found that I had mislaid it. I therefore must rely to a great extent on memory.
One point that has not been dealt with yet is the statement given by the corespondent, Mr. Umblia. I will admit it was not sworn testimony under oath.


Robert Jardine McCleave: Where was it given?


Murdo William Martin: It was made under oath by the other party but not on the part of Mr. Umblia. This is a statement taken sometime prior to the case. When he was asked if Mrs. Klasman had been at his apartment, he said yes. When they asked how often, he said on one or two occasions. They asked what the reason was. He said that at one time he had sprained his ankle and she had visited his apartment to administer first aid and so on and so forth.
As has been pointed out, in these cases it is seldom that we get actual proof. In other words, as was pointed out by the hon. member for Halifax who is the chairman of this committee, you must weigh the evidence; and if the weight of evidence is one way or the other, you must govern yourself accordingly in coming to your decision. When that is the case, you must look at all other factors. As one hon. member pointed out, you must see whether there is a certain pattern of conduct which has developed over the months or over the years that the people have known each other. You must also study or try to understand the matter of motives, namely the motives of the one who applies for divorce and the motives of the one who may be contesting it and indeed the motives of the various witnesses who appear. This certainly is one factor that has also bothered me a good deal about this case.
As mentioned by the hon. member for Timiskaming, we must consider the motives of the two main witnesses in this case,

Private Bills
namely the Fourniers and in particular the motives of Mrs. Fournier in the evidence that she gave in this case. I think that we might all agree that the most damning evidence in this case was given by Mrs. Fournier. I think that if the evidence of Mrs. Fournier was not taken into account, not very much of a case would be left. One point that I think could well be of great significance is the fact that during the testimony given by Mr. Fournier it was clearly indicated that on the occasion of the trip out to the zoo or the fair or whatever it was in Magog, or wherever it was, when they called to pick up Mrs. Klasman and Mr. Umblia it came out in evidence there that while Mrs. Fournier knew the address of the apartment of Mr. Umblia, her husband did not. As I say that matter might or might not be significant. But in the search for motives and in the endeavour to look at all aspects of a case of this kind, a matter of that kind could indeed give serious food for thought in regard to the evidence submitted by Mrs. Fournier. As I say, Mr. Chairman, without that particular evidence I do not think there would be very much of a case in respect of this particular bill.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Title agreed to.
Preamble agreed to.
Charles Edward Rea: Shall I report the bill?


Some hon. Members:: On division.
Bill reported on division.


Robert Jardine McCleave: the third reading of Bill No. SD-129, for the relief of Kaljo Klasman.


Mr. Speaker:: Shall the bill be now read a third time?


Some hon. Members:: No.


Mr. E. J. Broome (Vancouver South) moved: that the house go into committee to consider Bill No. S-6, respecting Trans Mountain Oil Pipe Line company.
Motion agreed to and the house went into committee, Mr. Rea in the chair.
On clause 1-subdivision of shares.


Erhart Regier: I would like to ask a question of the sponsor of the bill, the hon. member for Vancouver South. In taking this bill into consideration we have only one major concern, namely will the passage of the amendment that is sought be in the public interest? I notice from the last annual report of the company that these $10 shares had earnings

in the five years of operation as follows: In the first year,-and this was only part of the year, only one-quarter of the year while the company was in the process of getting under way,-there was a loss of 31 cents per share. In the second year, 1954, there was a loss of 84 cents per share. I would point out, Mr. Chairman, that these losses per share are after a deduction for depreciation which, in
1954,	amounted to $3,245,000. In the third year,
1955,	the net earnings per share were $2.05. In 1956, the net earnings per share were $4.65; and in 1957, the net earnings were $5.52 per share. In other words, in the last three years, the net earnings per $10 share have been $12.22. In the first two years there was a total loss of $1.15 per share, so that over all, in the entire history of the company, every $10 share has earned a $11.07.
The point has often been made in the past that when a company's earnings become exceptionally high the company then loves to dispose of those earnings in other than the standard method, which is paying out the dividends earned. One of the ways in which a company can make its earnings appear less, and therefore a little less embarrassing, is for the company to engage in what is called share-splitting so that the net earnings per share do not appear to be so excessive to the general public.
This pipe line is a utility engaged in the transportation of oil from Alberta to the lower mainland of British Columbia. It is a monopoly in this field, and therefore it is up to the members of parliament to be very careful of the public interest. I know the hon. member for Vancouver South has spent many long hours and has been associated with the affairs of this company over a long period of time, I believe, even reaching back to its original organization, and I believe that he would have a more adequate answer to the question I ask than the officials were able to give either to the committee of this house a year ago or to the committee of this house this year. I have read all the evidence that the officials of the company have given so far and they have not yet been able to convince me. I am not sure that at this time I have made up my mind on the position I intend to take on this bill, but I do feel that once and for all we should have on the record a satisfactory explanation of how the public interest will be served if this committee agrees to the request that is contained in the bill sponsored by the hon. member.


Ernest James Broome: Mr. Chairman, I have only a few minutes to reply to the question asked me; but the contention in regard to the split-ing of this stock is that first of all there will be wider distribution of the stock, and
Private Bills
that has been the past history in stock splits. Further, the wider distribution of the stock will be an aid in the stabilizing of the price of the stock and it will not be so subject to market manipulation, if you want to put it that way. The extra shares in the treasury of the company will permit the company to stand on its own feet in future financing. The company is taking this course on the best financial advice that it can secure. The idea is that Trans Mountain will require something like $200 million in future financing to keep ahead of the possible demands upon their capacity.
In their past financing they were carried by five or six major oil companies who guaranteed bonds and interest on the bonds. In the future, according to the management of the company, and according to their financial advisers, they propose to raise the extra money they require through the sale of securities and of stock. Their advisers-and they are pretty good advisers in the field-have told them that if they split the stock and have a stock in the range of between $10 or $20 a share they can go out and sell this stock to the Canadian public. The company is not listed with the S.E.C. in the United States. It is not on the United States stock exchanges and the intention would be, and the result would be, that a majority of this stock would be owned by Canadians.


Murdo William Martin: I do not know just how significant this point is, but possibly the hon. member can explain it. In the submission to the royal commission on energy, a copy of which was handed to all hon. members last week to assist us in understanding this particular company and all its aspects, is a reference on page 1 to one of the wholly-owned subsidiaries of the Trans Mountain Company called the Trans Mountain Oil Pipe Line Corporation, which owns and operates a system in the state of Washington. On page 2 there is a further reference to this company. The company has three wholly-owned subsidiaries called the Trans Mountain Oil Pipe Line Corporation incorporated in the state of Delaware. I was wondering whether there is any significance in this or what the reason is that the subsidiaries of this company should be incorporated in one state and operating in a different state altogether. Is there any significance? If so, what?


Ernest James Broome: I do not think there is any significance outside of the fact that companies perhaps find it easier to incorporate in the state of Delaware. I am not a company lawyer; I do not know. But I do know it is not unusual for companies to incorporate in

Customs Tariff
Delaware and that they do not have to incorporate in the state in which they operate.
Progress reported.


Mr. Speaker:: The hour for private and public bills having expired, the house will revert to the business which was interrupted at five o'clock.



[Stage Direction]
The house in committee of ways and means, Mr. Rea in the chair.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at eight o'clock.

[Stage Direction]
Customs Tariff-384. Skelp, plate, sheet or strip of iron or steel, hot- or cold-rolled, when imported by manufacturers of pipes or tubes, for use in the manufacture of pipes or tubes: British preferential tariff, free; most-favoured-nation tariff, 7£ per cent; general tariff, 15 per cent.
William Hector McMillan: Mr. Chairman, at five
o'clock I asked the minister if he would agree to considering item 384 together with items 397 and 399 because I think it is impossible to discuss item 384 without some repetition of debate. However, since he has not agreed may I say that I have been aware for a long time that representations-


Donald Methuen Fleming: Mr. Chairman, the suggestion was first made this afternoon by the hon. member for Ottawa West. I have no particular objection to it. A request was made earlier this afternoon by the hon. member for Kenora-Rainy River that we should take these items one at a time. I only wish to accommodate the committee, and if there is a strong wish on the part of my hon. friend to take them that way I am not going to offer objection.


George James McIlraith: I think it would save a lot of repetition of debate if 384 could be allowed to stand over and be discussed when we are on 397 or 399, as the minister wishes.


Joseph Pierre Albert Sévigny: Is it agreed that resolution 384 stand?


Some hon. Members:: Agreed.
Item stands.
Item 385 agreed to.
Customs tariff-386. Plate or sheet of iron or steel, rolled from ingots, blooms or slabs of Canadian origin, when imported by the manufacturers of the said ingots, blooms or slabs (this item expires effective January 1,	1961) :	British preferential
tariff, free; most-favoured-nation tariff, free; general tariff, 20 per cent.


William Moore Benidickson: In reading the left-hand column table and comparing it with the

right-hand column one might assume a reduction from $10 per ton under the mostfavoured-nation tariff to free. Am I right in thinking that these products are now admitted under order in council at rates similar to those proposed in the resolution?


Donald Methuen Fleming: Yes. Old item 385b is an order in council item.


William Moore Benidickson: I was talking about 386.


Donald Methuen Fleming: The new proposed item 386 is the old item 385b which is an order in council item.


William Moore Benidickson: I am concerned with the words that appear after the description of the item, "this item expires effective January 1, 1961." I did not understand that that was part of the board's recommendation. Has the minister some comment to make on that?


Donald Methuen Fleming: My hon. friend is correct in pointing out that to the recommendation of the tariff board with respect to the rates this resolution has added the proposal that the expiry date be January 1, 1961. The purpose of adding this expiry date is to provide an opportunity to reconsider at a later date whether or not it is in the best interests of the Canadian economy to provide duty free entry for plate or sheet which has been rolled in a foreign country from semi-finished steel made in Canada.


[Stage Direction]
Item agreed to.
Items 387, 387a and 387b agreed to.
Customs tariff-387c. Railway intersection layouts, intersections, switches, crossings, frogs, guard rails, of iron or steel: British preferential tariff, 15 per cent; most-favoured-nation tariff, 25 per cent; general tariff, 30 per cent.
William Moore Benidickson: I do not find a reference to this in the tariff board schedule as recommended. What is the situation here?


Donald Methuen Fleming: Items 387b and 387c were not in the tariff board reference and the change at this time simply represents a renumbering of the former items.


[Stage Direction]
Item agreed to.
Customs tariff-392a (1). Forgings of iron or steel, hollow, rough-machined or not, not less than 12 inches in internal diameter; all other forgings, solid or otherwise, rough-turned or rough^ machined or not, of a weight of 20 tons or more: British preferential tariff, 5 per cent; most-favourednation tariff, 20 per cent; general tariff, 30 per cent.
William Moore Benidickson: On this item there is a deviation from the tariff board recommendation. I take it that the administration has decided to make two classes. I think they have accepted the tariff board recommendation and rates with respect to forgings 20

tons and under and have made an additional class of those over 20 tons. Is that right?


Donald Methuen Fleming: The tariff board recommended an increase of 5 per cent in both the British preferential and mostfavoured-nation tariff on forgings over 20 tons in weight. Since forgings over 40 tons are not available in Canada this item is being proposed to retain without change the rates of duty formerly in effect on the large forgings over 40 tons.


[Stage Direction]
Item agreed to.
Item 392a (2) agreed to.
Joseph Pierre Albert Sévigny: Shall we proceed with resolution 4 and let this one item stand?


Donald Methuen Fleming: We have allowed item 384 to stand, Mr. Chairman.


Joseph Pierre Albert Sévigny: Then we shall let item 384 stand and take it up when we reach item 397.
4.	Resolved, that schedule B to the Customs Tariff be amended by striking out items 1005, 1006, 1007, 1009, 1015, 1023, 1025 and 1045, and the enumerations of goods and the rates of drawback of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of drawback of duty:
Customs tariff-1004. Steel when used in the manufacture of files: payable as drawback, 60 per cent.


William Moore Benidickson: We are now dealing with three items of the drawback category. Am I right in thinking that in all respects these comply with the tariff board recommendations?


Donald Methuen Fleming: Yes, Mr. Chairman.


[Stage Direction]
Item agreed to.
Items 1005 and 1006 agreed to.
Resolution agreed to.
5.	Resolved, that schedule A to the Customs Tariff be amended by striking out tariff items 396, 396a, 397, 398, 398a, 398b, 398c, 399, 399a, 399b, 399c, 400, 410b, 410d, 410g, 410z and 848, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Customs tariff-396. Pipes or tubes of cast iron, whether or not coated or lined: British preferential tariff, 71 per cent; most-favoured-nation tariff, 121 per cent; general tariff, 25 per cent.
William Moore Benidickson: We are now on a new section dealing with tariff board reference No. 119, pipes and tubes of iron or steel. This too was submitted by the former minister of finance to the tariff board on September 14, 1955, I believe. As everyone realizes, there is quite a correlation between the two references. The material that the pipe and tube industry utilizes is involved in the section we have just considered. I think the reports were made by the tariff board to the minister more or less simultaneously, is that correct?
Customs Tariff


Donald Methuen Fleming: Yes, the two
reports bear the same date, February 28, 1957, and were submitted together by the board.


William Moore Benidickson: Basically, of course, this involves a conflict of interest between our manufacturers of pipes and tubes and particularly our new and expanding resource industry engaged in the development of our petroleum resources. Shortly after his budget speech I think the minister received a protest from the Canadian petroleum association. I have not seen a copy of the protest, but perhaps the minister could give us some information about it.


Donald Methuen Fleming: No, I have no recollection of receiving a protest from the Canadian petroleum association.


William Moore Benidickson: I am quoting from the Edmonton Journal dated June 28, and which indicates that the Canadian petroleum association felt that not only in respect of certain income tax matters but with respect to-


Donald Methuen Fleming: What is the date of that?


William Moore Benidickson: June 28, after presentation of the budget. I am quoting from an article in the Edmonton Journal, and they state that while the tariff boosts unfavourable to them were perhaps not large, that is was not a big tariff boost, it was felt to be enough to add to oil exploration and production costs at a time when the industry is cutting corners everywhere in an effort to weather a very difficult period in their experience. I have not a copy of the brief, but I thought the minister might outline it to us. The minister says he is not familiar with the brief?


Donald Methuen Fleming: No, I have been discussing this with the officials and I will check further, but no one seems to have any recollection of receiving any submission from that source on that subject. I might suggest to my hon. friend that the matter he is discussing does not seem to be item 396, in any event.


William Moore Benidickson: No, I am thinking of making remarks which I think are appropriate at this time when we are introducing discussion of this new resolution dealing with a group, namely the pipes and tubes group. As I indicated when we were discussing former sections, I find some deviations in the resolution as proposed by the minister and the recommendations of the tariff board. With respect to this tariff board report No. 119 I am concerned about

Customs Tariff
recommendation No. 2. Where is recommendation No. 2 to be found in the enumeration of tariff items that we have in front of us at this moment.


Donald Methuen Fleming: It is under item 400.


William Moore Benidickson: In different wording and somewhat altered from the recommendation, is that correct?


Donald Methuen Fleming: Yes.


Lester Bowles Pearson: I should like to say just a word on this particular item, Mr. Chairman, though it really is pertinent to the whole of the resolution. The schedule of recommendations proposed by the tariff board is, I gather, followed in the main. Perhaps the minister would be good enough to let the committee know, as he did this afternoon, where these recommendations are departed from and whether the departures represent an increase or a decrease in protection.
The minister said in his budget speech that the changes proposed in this resolution would involve some reductions and some increases. Later, I think he said in the same speech that the major result of these changes will be to make more effective the protection which is afforded to Canadian producers. We must assume, therefore, that the increases are more important than reductions. Perhaps the minister might, on that other point I mentioned, be good enough to do what he did this afternoon and which we found helpful in the discussion of these items, that is to indicate where there are departures from the tariff board recommendations and whether they are departures upward or downward from those recommendations.


Donald Methuen Fleming: Yes, gladly, Mr. Chairman. Here again, as was the case with the recommendations of the tariff board respecting the iron and steel items in the tariff, what is being brought in here is a modernization of the tariff. Speaking of making it more effective we had in mind the elimination of a number of end use items.
The resolution, as compared with the report of the tariff board, contemplates increases in three items and decreases in six. The three items increased as compared with the recommendation of the tariff board are 399, 399a and 400. The six items in which the resolution proposes a decrease as compared with the recommendations of the tariff board are as follows: 397, 397b, 399, 410b, 410g and 410z.


Lester Bowles Pearson: Did the minister say there was an increase in the change recommended in 399, and then go on to say there was a decrease in that same item?


Donald Methuen Fleming: That is correct. If the Leader of the Opposition will look at the columns under the heading "Rates in effect prior to rates proposed in this budget", he will see that there are various rates there and the effect is to reduce some and increase others.


George James McIlraith: Perhaps if the minister would indicate his amendments now, it might be helpful.


William Moore Benidickson: Well, only when we come to 399, perhaps.


Donald Methuen Fleming: Yes, the only
amendment is with respect to item 399.


[Stage Direction]
Item agreed to.
Customs tariff-397. Pipe or tubes of iron or steel, n.o.p., with plain or processed ends, whether or not coated or lined: British preferential tariff, 12J per cent; most-favoured-nation tariff, 20 per cent; general tariff, 30 per cent.
William Hector McMillan: I have been aware for a considerable time that representations were made to the former minister of finance in connection with the customs tariff relating to basic iron and steel products as well as iron and steel pipes and tubes. These matters were referred to the tariff board under reference Nos. 118 and 119, and certain recommendations were made by the tariff board in connection with pipe. The city of Welland happens to be a pipe manufacturing centre, so naturally I have looked at these proposed items with a view to ascertaining whether or not these tariff items might add to the large number of unemployed we have in that area now.
Under tariff item 384 the duty on skelp for use in the manufacture of pipes has been increased. The British preferential tariff has not been increased, but the most-favourednation tariff has been increased from 51 per cent to 7J per cent, and the general tariff has been increased from 5 per cent to 15 per cent. I am told that very little skelp comes in from Great Britain or the United States. The pipe mills in Welland are not integrated and they must buy their skelp. The fact is that the increase in the most-favoured-nation tariff of 2h per cent on skelp will in all likelihood increase the price of skelp, whether it is bought in the United States or at home in Canada.
I notice that the tariff board recommended one tariff item which would be the main or basket item relative to pipes or tubes of iron or steel. It would cover, wholly or in part, such pipes and tubes as come under 15 or more existing items. The recommendation of the tariff board was not to differentiate further in the size of pipe. The old item 397a had to do with pipe up to 10J inches and item 397b with pipe over 10J inches.

With the amendment brought in by the Minister of Finance the other night, he has in effect continued to make this differentiation against the advice of the tariff board. The new item 397 in the budget includes about 15 or more existing items and item 399 nullifies most of the protection given under item 397 for pipe 10J inches in diameter and larger, where the pipes or tubes of iron and steel and fittings and couplings are used in the transmission of natural gas to points of distribution, or in the transmission of crude oil.
I am told that all the pipe made in Welland by Welland Tubes Limited and much of the pipe made by Page Hersey which is in excess of 104 inches in diameter will come under the new tariff item 397, but this particular item will be largely nullified by item 399.
Having in mind the increase in protection given to skelp, I have prepared some tables showing the decrease in protection given to pipe under 10J inches in diameter and also pipe over 10J inches in diameter. I will give them in the three figures, namely British preferential, most-favoured-nation and the general tariff. Under the old rates they were 15, 224 and 30; under the present budgetary proposals they are 124, 20 and 30, so that the net tariff reduction is 24, 24 and zero. If we take into consideration the 24 per cent of raw material increase,-after all, the raw material, the skelp that the pipe mills have to buy constitutes about 65 per cent of their cost of production-instead of 24 and 2J and zero we would have 5, 5 and 24 as a reduction in protection. If we take the tariff board recommendation of 12J, 224 and 30 we have a net reduction of 24, 5 and 24 when we take the present budgetary proposals. Hence our manufacturers are worse off under these new proposals for pipe under 104 inches in diameter.
It is interesting to compare the proposed budgetary rates with the tariff board proposals and the old tariff rate on pipe of 104 inches in diameter and larger. The tariff board proposal was 124, 224 and 30; the budget rate is 10, 15 and 30. Hence the budget rate is under the tariff board proposal by 24, 74 and zero. In both cases there is a 24 per cent increase in the price of skelp, if skelp is sold in Canada up to the amount of the protection that is given. The old rate on pipe-I take it under 397b on pipe of 104 inches in diameter or larger-was 10, 15 and 20. This budget rate is 10 and 15, so that it is zero and zero. The present budget rate, of course, allows charges of 24 per cent on the skelp which would increase the raw material in the larger pipe so that in both cases we have these budgetary proposals which are detrimental to the manufacturer of pipe both 57071-3-217
Customs Tariff
under 10J inches in diameter and over 104 inches in diameter in Canada.
Taking into consideration, as we must, the 24 per cent increase in the tariff on skelp, the tariff board proposals give the best overall protection to the pipe industry; the old tariff the next; and the present budgetary proposals the lowest. The amendment announced by the minister has the effect of having one duty for pipe up to 10J inches and another for pipe over 10J inches in diameter when it has certain uses. This is contrary to the recommendation of the tariff board.
I understand that items 397 and 399 will apply to the great volume of pipe admitted into Canada. Without the amendment to item 399 I think our pipe manufacturers in Canada might have had fairly tough competition from foreign producers. Manufacturers of the larger pipe will not be as well off as they were before. I know that in Welland under the old tariff item it was difficult enough for the pipe manufacturers making large pipe to get orders. The new Welland Tubes Limited plant which was established under the former government cost many millions of dollars and makes all large diameter pipe. Page Hersey Tubes Limited also makes considerable pipe over 104 inches in diameter. I hear rumours that the former plant is to close down for a period of six months. I am not against a lower duty on pipe but I am against a lower duty on pipe when this government is at the same time raising the cost of production of pipe. The whole matter seems to be haphazard and discriminatory to my mind.
It seems to me that those who build oil and gas lines have monopolies in their particular fields and regions, but they are given very favourable consideration under item 399. I feel that this will put many Canadian workmen now working out of work. The pipe manufacturers claimed that they should have the same protection on all sizes of pipe in order to develop the industry. I know that much of this larger pipe has been admitted into Canada from the United States, Great Britain and Germany. I understand that Germany comes under the most-favourednation tariff. I do not know how much more pipe will come into Canada because of this decrease of duty on the smaller pipe and also because of the increase in duty on skelp for the larger pipe but I think in the city of Welland this will tend to increase the number of unemployed. The manufacturer of the larger pipe involves a new industry which is just getting started. I would personally like the government to adopt the recommendation of the tariff board rather than to reduce these duties, particularly since this might put a

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number of our men out of work. I would much prefer to see our men employed rather than having much of the pipe imported while our men are walking the streets and in Welland we certainly have a number of unemployed men, and this applies to the pipe industry. Granted, Page-Hersey has recently been working steadily because of the new pipe lines coming into operation in Ontario, including the trans-Canada pipe line. However, I understand that the larger mill making the big inch pipe might have to close down for six months for lack of work. I do not for one moment mean that if they got an order they would not start operations right away, but the future does not look very bright for the large pipe manufacturers.
I would like to ask this government not to increase the cost of production of pipe, particularly when a blanket or across the board tariff for pipes of all sizes is not apparently being considered.


George James McIlraith: 
Donald Methuen Fleming: The discussion
seems to have dealt with items 397, 399 and 384 together, and perhaps it would be better if, for that reason, I dealt with all three together in my remarks.
The tariff at the present time has two relevant items; 397a, pipe not more than 104 inches in diameter, and the rates are B.P. 15 per cent; M.F.N. 224 per cent; general, 30 per cent. I may say at once to the hon. member for Ottawa West that that is the origin of the 104 inch diameter which is mentioned in the amendment which will shortly be introduced on item 399. The other item in the present tariff is 397b, pipe more than 10J inches in diameter, and the rates are B.P.,
10	per cent; M.F.N., 15 per cent; and general 20 per cent. It is important to bear in mind that there has been a drawback of 50 per cent provided in the case of pipe used for gas transmission lines.


William Moore Benidickson: There has been; that is being abolished by this legislation.


Donald Methuen Fleming: Yes, I will deal with that. In addition, remissions have been granted on pipe used for the construction of
011 pipe lines. That is the situation as we find it at the time of the tariff board inquiry. Now the tariff board conducted its inquiry and made certain recommendations. As has been suggested already, the resolution contains certain departures from the recommendations of the tariff board and, I submit, for good and sufficient reasons. It should be borne in mind that these are items which, under the terms of GATT, had to be negotiated with the United States, and try as we might we had no chance of coming out of these negotiations with the recommendations of the tariff board inviolate.


William Moore Benidickson: Would the minister indicate what he did trade, finally, in that respect?


Donald Methuen Fleming: It is not customary to indicate the various stages in the bargaining. We might have to bargain again with 57071-3-2174
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the United States at some time, and I think the hon. gentleman will realize that the practice in this respect is a sound one-not to attempt to retrace the various stages in the bargaining. But we did the best we could in the course of the negotiations and I think that in the event, having regard to the fact that there were bargaining and negotiating on both sides for quite an extended period, the result, though not entirely of our choosing, can be regarded on the whole as reasonably satisfactory to both sides.
To turn now to item 397 in the resolution which covers pipes or tubes of iron or steel not otherwise provided, with plain or processed ends whether or not coated or lined, here I intend to confine my comments to the rates under the British preferential and the most-favoured-nation columns because the general rates have, I think, only academic interest. The tariff board's recommendation with respect to pipes and tubes of iron or steel was British preferential, 124 per cent; most-favoured-nation, 224 per cent. The resolution now before the committee contemplates the following rates: British preferential, 124 per cent; and most-favoured-nation, 20 per cent.
It will be seen that we have emerged from these negotiations with the same British preferential rate, and a reduction of 24 per cent in the most-favoured-nation rate. I am going to make a comment a little later about that 24 per cent. Perhaps I might just say now before I return to the item on skelp, that this reduction of 2J per cent as compared with the tariff board's recommendations is offset by the 24 per cent reduction in the rate on skelp under the present resolution as compared with that recommended by the tariff board.


George James McIlraith: Before the minister leaves item 397-


Donald Methuen Fleming: I have not left it yet. Under the general purpose pipe item, 397, the British preferential rate proposed is that recommended by the tariff board, that is 124 per cent. I wish to make that quite clear. And I have stressed the fact that the reduction on the skelp item-the material- of 24 per cent offsets the reduction of 24 per cent in the most-favoured-nation rate on the pipes and tubes under item 397. The effect of our proposal as compared with the recommendation of the tariff board is, first, to increase the effective margin of protection under the British preferential tariff and, second, to retain the effective margin of protection under the most-favoured-nation tariff. That is the net result of the change.

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That is all I propose to say on item 397 and now, perhaps, the hon. member for Ottawa West might wish to ask his question.


George James McIlraith: I take it that the minister does not, of course, suggest that the 2J per cent difference on skelp between what was recommended and what he has brought in under the resolution is the equivalent of 2J per cent duty on the finished article? I am sure he will not want to leave that impression.


Donald Methuen Fleming: Not entirely, and not in terms of dollars and cents. Nevertheless I think the hon. gentleman will agree that basically it maintains the difference that exists between the rate on the incoming material on the one hand and on the finished product on the other hand, in a tariff sense.


George James McIlraith: Before we leave item 397, I have just one other question. The minister has not dealt with the change of wording. What he has said by way of explanation of item 397 is weakened by the fact-and I would ask him to comment on this-that the item is no longer applicable to the vast majority of the pipes and tubes, because of the language used in item 399. Formerly, item 397 included oil pipe lines, but it no longer does.


Donald Methuen Fleming: Item 399, as I will say in a moment, sets up a new and special item for pipe lines, and pipe lines alone.


George James McIlraith: No; on 397, what I had in mind-


Donald Methuen Fleming: On 397 I thought, from the way in which the hon. gentleman started out, that he was going to talk about the change in wording in relation to fittings-


George James McIlraith: No.


Donald Methuen Fleming: -because they are dealt with now under item 400.


George James McIlraith: My point was that he compared it with 397a, which previously covered a large percentage of the total tonnage of pipe manufactured in this country. Because of the changed wording, it will now cover a relatively small percentage of the total pipe manufactured in Canada. That is the point I wish to make. Item 397 is no longer applicable to pipe used in oil pipe lines; whereas formerly it covered all oil pipe lines.


Donald Methuen Fleming: That is true. That is the point I was dealing with. Item 399 is the new item which now deals with pipe for pipe lines. Item 397 remains the basic item dealing with pipes or tubes of iron or steel not otherwise provided, and we have taken out of the general description the tubes

or pipes, fittings and couplings, in 399 used in the transmission of natural gas to points of distribution or in the transmission of crude oil.


George James McIlraith: I do not think I am making myself clear to the minister. What I want to get at is this. The effect of changing the language in item 397 as compared with the former item 397a is to make this item, which the minister spoke of as the basic item, no longer the basic item. As it existed, the basic item covered a very large percentage of the total pipe manufactured in this country. Under the new language it has become applicable to only a relatively much smaller percentage of the total pipe manufactured in Canada. That was the point I wished to establish.


Donald Methuen Fleming: Mr. Chairman, item 397 covers all the pipes and tubes-


George James McIlraith: Not otherwise provided for.


Donald Methuen Fleming: -that the former tariff items 397a and 397b covered, with the exception of the pipes or tubes now proposed to be covered in 399. Items 397 and 399 cover the totality of pipes and tubes as did 397a and 397b under the old tariff.


George James McIlraith: Yes, that is correct. Going on from there, the point I want to establish is that under the old item 397a there was this higher tariff that the minister concerned himself with a moment ago. Item 397b was a lower item which, as I indicated, until very recently covered the pipes and tubes not made in Canada. That was the effect of it. By changing the language of item 397 the minister has now made it applicable only to certain limited pipes and tubes; whereas formerly it covered a very large percentage of the total pipe manufactured in Canada.


Donald Methuen Fleming: Yes, my hon. friend and I were on common ground that 397 and 399 in the resolution cover the totality of pipes and tubes as did 397a and 397b in the old tariff.


George James McIlraith: That is correct.


Donald Methuen Fleming: Now without going too far off the line of argument or remarks that I was about to follow, let me just say here and now, Mr. Chairman, that in the amendment I am proposing to ask one of my colleagues to introduce to item 399 the rates will be for pipes or tubes of iron or steel more than 10J inches in diameter, and fittings and couplings therefor, B. P., 10 per cent; M.F.N., 15 per cent; general tariff, 30 per cent; whereas, under the old item 397b, which covered pipe more than 10J inches, the B.P. and the M.F.N. rates were just the same, namely 10 per cent and 15 per cent respect-

ively. Therefore, we have retained in item 399 in the amended form now proposed the hitherto effective B.P. and M.F.N. rates with respect to pipe more than 10J inches in diameter.
Now, Mr. Chairman, having said that, perhaps I should go on with the remainder of the explanation of item 399. Item 399, Mr. Chairman, as you will see, covers pipes or tubes of iron or steel and fittings and couplings therefor, for use in the transmission of natural gas to points of distribution or in the transmission of crude oil. These are the pipe lines, whether for transmission of gas or crude oil. The tariff board made a recommendation here, Mr. Chairman, and associated with the rates they recommended a proposal for a 50 per cent drawback. They recommended a B. P. rate of 12J per cent and an M.F.N. rate of 22J per cent. If you apply to that the drawback of 50 per cent which they recommended, you have effective net rates recommended by the tariff board of 6-J per cent B.P., and 11-i per cent M.F.N.
The budget proposal is that the rates be 10 per cent B.P., and 15 per cent M.F.N., so that the hon. member for Welland must see that what is recommended in the budget proposal is an effective increase in the effective tariff rates on the gas pipe lines recommended by the tariff board. I think, if I may say so to my hon. friend, what he overlooked in his argument was the existence of the drawback recommended by the tariff board as well as the fact that there has existed until now a 50 per cent drawback on pipe lines used for gas and a remission on pipe lines used for transmission of crude oil.
With respect to oil pipe lines, Mr. Chairman, the tariff board recommendation was for tariff rates B.P. 12J per cent; M.F.N., 22J per cent. The budget proposal is as follows: B.P., 10 per cent; M.F.N., 15 per cent; and on both B.P. and M.F.N. accordingly there is a reduction proposed in the resolution as compared with the tariff board report.
Just to recapitulate as briefly as can be, Mr. Chairman, as to pipe for pipe lines, the situation is as follows: On pipe used in gas pipe lines the tariff board recommended the continuation of the 50 per cent drawback of duty which was formerly in effect. On pipe used in oil pipe lines the tariff board made no specific recommendation in reference to drawback. However, on substantial quantities of pipe used in oil pipe lines, remission of duties has been permitted under the Financial Administration Act. That has been going on now for years.
Tariff item 399, as introduced in the budget, proposed a British preferential rate of 10 per cent and an M.F.N. rate of 15 per cent on all pipe used in gas or oil pipe lines. Since
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the budget was introduced, representations have been received from the pipe industry pointing out that-this is the pipe industry that the hon. member for Welland was referring to-the item as introduced would cover pipe of all diameters. It is with those representations in mind that I am putting forward the amendment to item 399 in order to limit the item to pipe over 10J inches in diameter.
I remind my hon. friend that the 10J inches diameter comes from old tariff item 397b. It is now a well-established point of differential in the diameters of pipes for this purpose. The effect of this change will be that all pipe 10J inches or less in diameter will be dutiable under tariff item 397 which, as I have explained, retains the effective margin of protection between the rates of duty on pipe and on skelp recommended by the tariff board under the M.F.N. tariff and somewhat increases the effective margin of protection under the B.P. tariff.
With respect to pipe over 10J inches in diameter used in gas and oil pipe lines the British preferential tariff will be 10 per cent and the most-favoured-nation tariff will be 15 per cent. Under the tariff board's recommendations on gas pipe lines the effective rates would have been British preferential, 6J per cent, and most-favoured-nation, 11J per cent on most of this pipe, so that the item now proposed represents substantially more protection than would have resulted from the tariff board's recommendations. I think the hon. member for Welland must recognize that. On pipe used in oil pipe lines it would be difficult to resist requests for remissions of duties to the extent provided by the drawback item recommended by the tariff board on pipe for gas pipe lines, in which case the rates now being recommended would again provide significantly more protection to the pipe industry.
I have tried to make clear the effect of items 397 and 399 and perhaps at this point it is appropriate that I should say perhaps a brief word about skelp which is the basic material in item 384.


George James McIlraith: I have one or two questions I want to ask. Would the minister prefer me to ask them now?


Donald Methuen Fleming: I will finish this up quickly and then take my hon. friend's questions. On skelp the tariff board recommended a most-favoured-nation rate of 10 per cent but since the rate of 22J per cent on the finished pipe recommended by the tariff board was being reduced as a result of the GATT negotiations with the United States to 20 per cent it was considered appropriate to reduce the rate on skelp from 10 per cent

Customs Tariff
to 7J per cent to provide the offset that I have mentioned to the manufacturers of pipe.
The last thing I should like to mention is the amendment to item 399. I have indicated the effect of the amendment so perhaps I might read it now and then ask my colleague, the Secretary of State, to move it. The motion is:
That resolution No. 5 of the budget resolutions relating to the Customs Tariff be amended by deleting therefrom item 399 and by substituting therefor the following:
399. Pipes or tubes of iron or steel, more than 101 inches in diameter, and fittings and couplings therefor, for use in the transmission of natural gas to points of distribution or in the transmission of crude oil: British preferential tariff, 10 per cent; most-favoured-nation tariff, 15 per cent; general tariff, 30 per cent.
Perhaps my colleague, the Secretary of State, would move that amendment.


Mr. Couriemanche:: I so move.


Charles Edward Rea: As the resolution is in Votes and Proceedings may I dispense with reading it?


Some hon. Members:: Agreed.


George James McIlraith: I have one or two questions arising out of the minister's remarks. I understood him to refer to the measurement 10J inches in diameter as the well established differential between the two types of pipe. The tariff board made a finding on that which I interpret very differently. As I read their finding, they said it was merely a historical point at which the Canadian mills developed the capacity to manufacture pipe of that size, and in effect their finding was that the old items, 397a and 397b, had been changed in accordance with the changed capacity of the Canadian mills. I gave the reference to that a few minutes ago, page 43 of their report.
In their report they recommended that we go further than that because a substantial change from 16 inches to 36 inches in the capacity of the Canadian mills took place during the tariff board hearings. No government prior to the hearings would have made a change in the tariff item because the capacity of the Canadian mills had not changed.
Coming to the drawback item applicable to the minister's argument, I take it that he was referring to 1018a. I think that is right. I wanted to point out one or two facts to the house that I think are relevant. The first is that that drawback item was only applicable to pipe 16 inches or more in diameter. That means that in effect it was only applicable to pipe not made in Canada. They could just as easily have used the language, "of a size not made in Canada", because 16

inches was the largest size made in Canada in 1955 when that drawback item was put in the tariff, as I understand it.


Donald Methuen Fleming: With respect, I think my friend is in error there. If you look at page 40 of the tariff board report you will see that under 1018b the size of more than 16 inches in diameter applies only to pipes or tubes electrically welded. It was confined to that.


George James McIlraith: That is my whole point. The type of pipe used in the transmission of gas is electrically welded and the limitation of 16 inches is the same as saying, "of a size not made in Canada." That was my whole point. The drawback item was specifically made applicable to a size not made in Canada, and that is my understanding of the matter.
That does not deal with the other type of seamless pipe which is used as oil country goods. That same argument was not applicable to it. It did not have that limitation which was equivalent to "of a size not made in Canada." I should like the minister to address himself to that point. If you follow through the drawback item you will find that as to 1018a there was no corresponding drawback item on the raw material going into pipes of that size if they had been made in Canada but that in 1018, which dealt with oil country goods or seamless pipe, there was a corresponding drawback item in the raw material because they were made from a different raw material.


Donald Methuen Fleming: Mr. Chairman, I do not think there is much I can add to what I have said with regard to the diameter of 10| inches. It was well established before under the old tariff as a point of difference between large pipe and smaller pipe. Following our negotiations with the United States, and I have indicated the difficulties we encountered there, we have simply reverted to the existing definition with respect to pipe more than 10 J inches in diameter and the rates which have hitherto been applicable thereto.
As I understand it, the hon. member for Ottawa West is arguing that there should be more protection for Canadian manufacturers of pipes and tubes than is available to them under the resolution.


George James McIlraith: No, that there should be the same protection as was recommended by the tariff board.


Donald Methuen Fleming: Does my friend take objection to what we are doing on the ground that it provides too much protection

or too little? I thought my friend was following the same line of argument as the hon. member for Welland, that Canadian manufacturers of pipes and tubes were now being left without as much protection as they should have.


William Moore Benidickson: I do not believe the minister and his advisers have properly utilized the value of this tariff board report No. 119. The tariff board went into this matter very thoroughly, and I realize that some of the ministers best advisers have to be all over the world at various times of the year and cannot consistently and steadily study some of these problems. You will find in the middle of page 43 of the report that it says:
It appears to have been the policy of succeeding governments in Canada to alter the diameter specified in the main items, 397(a) as Canadian production came into being-from two inches and smaller in 1897, to 101 inches as at present.
I do not know why the administration is sticking to 10J inches as a criterion. After the tariff board has given careful study to this matter, you will find this reference-this is after examining all the people interested in the industry-at page 43, and I quote:
-pipes of the seamless type are now made in Canada by Page-Hersey up to and including seven inches in diameter; pipes welded (by various processes) actually are manufactured at present up to 16 inches and in the near future will be produced up to 36 inches in diameter.
My question is, if the tariff board attempts to give advice why do we stick to the old nomenclature in so far as some of these changes and departures from the tariff board recommendations are concerned? That is one point.
The other point that prompted me to rise was that we are dealing with item 397. It is inevitable that in dealing with 397 we would also have to consider 399 and, with the consent of the committee, we also held up item 334 in the basic iron and steel group. I do not think it will prove, in the end, an inadvisable step because we will pass them in a group. But with respect to 397, which is covered by recommendation 3A of the tariff board report I was going to raise a question as to where fittings and couplings might be found. The board recommended that these be included with pipes and tubes at the same rate.
I recall the minister, in his budget speech, reviewed some of the activities of the tariff board respecting these and other tariff item changes. He said that the recommendations that would come to us at this time would involve a simplification and consolidation of a great number of tariff items that probably were no longer needed in the quantity that existed in that big tariff schedule. The tariff
Customs Tariff
board referred to this particular item and said that since the proposed item provides for no distinction as to the diameter of the pipes to be admissible thereunder it will not be subject to varying rates on the basis of that criterion as is the situation at present under the many tariff items which, in the event of the adoption of item No. 3, will disappear from the schedule. In other words, the public would receive a much more condensed and simplified tariff schedule, but the minister has not accepted that recommendation. I rise, therefore, to ask, where do we find fittings and couplings? I think the minister, in his very helpful expositions tonight indicated that that will probably be found in item No. 400 rather than as the board recommended-


Donald Methuen Fleming: It is found there.


William Moore Benidickson: -in 397. But I raise this question. If fittings and couplings had appeared in 397 as recommended by the tariff board, the British preferential rate would have been 12J per cent, whereas under 400 it is 15 per cent. I say this is another insidious form of increasing tariffs against the importation of goods from Great Britain prior to a time when we are asking these people to get together with us on commonwealth trade agreements. I just wonder if the minister would explain why he did not accept the recommendations of the tariff board and why he has, as in so many other items of this schedule, rather insidiously increased here and there the tariffs against the British.


William Hector McMillan: I just want to ask the minister one question. What would the duty and drawback be, if any, on electrically welded pipe of 12 inches in diameter? The minister referred earlier to the fact that because of a decrease of 2J per cent in the duty on skelp, it was a write-off for the mostfavoured-nation duty of 20 per cent on that item. I suppose he meant a decrease from the tariff board recommendation, is that right?


Donald Methuen Fleming: May I deal with the last point first, the point raised by the hon. member for Welland? There is no change in the present resolution with respect to the rate on electrically welded pipe of 12 inches in diameter for the transmission of gas.


George James McIlraith: There is no drawback now?


Donald Methuen Fleming: No drawback, not at the present time. The rates remain at British preferential, 10 per cent, and mostfavoured-nation, 15 per cent.
Dealing with the point raised by the hon. member for Kenora-Rainy River on 397, may I say that this is the basic pipe item and has no limitation in it at all with respect to the

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diameter of pipe. It applies to all pipe, regardless of diameter, except the pipe that falls under item 399. It is quite clear that the British preferential rate is 12J per cent and the most-favoured-nation rate is 20 per cent.


William Moore Benidickson: If it comes under 400 it will go up to 15 per cent.


Donald Methuen Fleming: I am coming to 400. The only item that takes any pipe out of the general scope of 397 is 399; that is perfectly clear. There is the only place where the limitation is drawn in respect of diameter. I do not know what more I can say in regard to this diameter that was chosen. It is true that Canadian mills are capable of producing pipe and are producing pipe in excess of 10J inches, but in the larger diameters, Mr. Chairman, you are then into pipe for pipe lines. This is an item which had to run the gamut of negotiations with the United States, these GATT negotiations. I think we have done quite well to hold this item in the form in which it appears in the resolution.
As to the origin of the 12J inch diameter-


William Moore Benidickson: No, 10J inch diameter.


Donald Methuen Fleming: I am sorry, 10J inch diameter. I have already pointed out that its origin lies in the former tariff items 397a and 397b.
I should say a word about couplings. These are dealt with under item 400 and, as has been observed by the hon. member for Kenora-Rainy River, the rates are British preferential, 15 per cent; most-favourednation, 20 per cent. There is no difference in the most-favoured-nation rate as compared with item 397. There is an increase of 2J per cent in the British preferential rate over that provided in item 397. The explanation simply is that we had very strong representations from Canadian manufacturers with regard to the harmful effects they would suffer if the rates on couplings were reduced to 12J per cent. They were just the kind of representations that have been received by the hon. member for Welland, which he has put before the house tonight, and the same kind of views as those put before the house by the hon. member for Ottawa West.


George James McIlraith: There is just one point I wish to make. In referring to item 399 I think the minister used the expression that he wanted to hold the line on oil pipe transportation lines and that the rate of duty was now going to be the same as it was under item 399.


Donald Methuen Fleming: As amended.


George James McIlraith: Yes; as amended. If he is going to hold the line in that way, I would

point out that what he has done is not to hold the line for the persons concerned with oil transmission but he has put an increased tariff on the raw material. That is a matter of some concern when we start increasing the cost of production. Under item 384 we have put an increased tariff on the skelp going into the manufacture of the pipe covered by item 399. Hence if the minister was holding the line-and I am using the expression he used-he should have gone a little bit further and said that he was having the pipe companies hold the line but that he was not having the holding of the line done by anyone further down in the manufacturing business, such as the primary steel producers. I wonder whether he would care to comment on that point.


Donald Methuen Fleming: So far as the rate on skelp is concerned, it is true that there is an increase of 2| per cent proposed here in comparison with the existing rate. But what we are proposing here is nonetheless 2J per cent less than the tariff which was recommended by the tariff board.


George James McIlraith: The point on which I am picking the minister up is as to the reason why he kept item 399 as it was. He said he was holding the line for the oil industry.


Donald Methuen Fleming: To continue, Mr. Chairman, I might have added to what I was saying in reply to my friend the hon. member for Kenora-Rainy River with regard to couplings under item 400, that when he points out-I was about to say "complains", but I am not sure whether he is complaining about it-


William Moore Benidickson: At this stage we are trying to get information and reasons for departure from the tariff board recommendations.


Donald Methuen Fleming: He points out that the B.P. rate that is recommended, which is 15 per cent, is 2J per cent above the rate recommended by the tariff board, but nevertheless it represents a substantial reduction as compared with the rate hitherto in effect.


William Moore Benidickson: But the board took that into consideration.


Donald Methuen Fleming: The B.P. rate on couplings has been 20 per cent. What we are recommending now is a B.P. rate of 15 per cent.


William Moore Benidickson: I have just one other question. It arises from the observations that the minister made when we were discussing drawbacks, to which we shall probably come later. I think item 1018 referred to a drawback only with respect to

pipe for transmission of natural gas. There were many debaters who followed the minister in the meantime but did I understand him to say that, notwithstanding the fact that the drawback item was restricted to gas transmission there had been a practice of remitting under another provision of the law the import duties paid by those that are engaged in the transmission of, shall we say, oil? I was not aware of that.


Donald Methuen Fleming: That is what I indicated.


William Moore Benidickson: That equalizes the situation which, when I was looking at these documents, I thought was not equalized.


Donald Methuen Fleming: Yes. The remission was made under the Financial Administration Act.


Charles Edward Rea: Shall item 397 carry?


Mr. Caron:: I just wanted some information on item 396. I think there was a duty of $5 per ton under the B.P. tariff and now it is 7 per cent on a certain type or pipe. What would be the difference?


Donald Methuen Fleming: Would my hon. friend care to indicate what particular type of pipe he has in mind? This item 396 contains a re-grouping of two former items with various rate. Would my hon. friend care to be more specific as to the type of pipe he has in mind?


Alexis Pierre Caron: 
Donald Methuen Fleming: I am told that this change might mean a slight increase, but not a great difference.


William Moore Benidickson: 1 think the tariff board report indicated that the products under this item have a value of-and of course that is two years ago-between $130 and $160 a ton.


[Stage Direction]
Item agreed to.
Item 397 a agreed to.
Customs tariff-397b. Corrugated metal culvert pipe, quoted or not: British preferential tariff, 12J per cent; most-favoured-nation tariff, 15 per cent; general tariff, 30 per cent.
William Moore Benidickson: This item has no reference to the tariff board report. Am I right in thinking that? This is just a rewording of some kind?
Customs Tariff


Donald Methuen Fleming: Yes; it has not any
reference to the report.


[Stage Direction]
Item agreed to.
Item 398 agreed to.
Donald Methuen Fleming: Perhaps this would be an appropriate point at which we might carry item 384 which was held over from resolution 3.
Item 384 agreed to.
Resolution 3 agreed to.
Items 398a, 398c, and 399 as amended agreed to.
Customs tariff-399a. Pipes or tubes of iron or steel, commonly known as "oil country goods", being casing or tubing and fittings or couplings therefor, for use in connection with natural gas or oil wells: British preferential tariff, 5 per cent; mostfavoured-nation tariff, 10 per cent; general tariff, 20 per cent.


Charles Edward Rea: Shall this item carry?


William Moore Benidickson: 
Donald Methuen Fleming: 
William Moore Benidickson: This was a bound item, was it?


Donald Methuen Fleming: No, this was not a bound item previously, and I think my hon. friend will appreciate that is probably the reason-


Lester Bowles Pearson: -you got away with it.


Donald Methuen Fleming: We made the change.


[Stage Direction]
Item agreed to.
Items 399a, 399b, 399c, 400, 400a, 410b, and 410d agreed to.
3442	HOUSE OF
Customs Tariff
Customs tariff-410g. Articles for use in the metallurgy or smelting of iron, namely: machinery and apparatus for sintering or nodulizing iron ore, concentrated or not, or flue dust; machinery and apparatus for use in the construction, equipment and repairs of blast furnaces for smelting iron ore, such machinery and apparatus to include hot blast stoves and burners, blast piping and valves connecting the blowing engines with the furnace, scale cars, charging and hoisting apparatus, blast furnace gas piping, cleaners and washers; parts of the foregoing, not including structural iron work, valves ten and one-half inches or less in diameter, nor pipes of iron or steel:
British preferential tariff, free; most-favourednation tariff, 5 per cent; general tariff, 5 per cent.
William Moore Benidickson: Now we are back to the utilization of dimensions and another differentiation from the recommendation of the tariff board; is that consequential?


Donald Methuen Fleming: This diameter applies not to the pipe but to the valves; valves 10i inches or less in diameter.


William Moore Benidickson: Yes, but the tariff board was prepared to recommend an item without diameter being specified. Why is this restriction inserted. The minister's answer could also deal with 410z.


Donald Methuen Fleming: The answer applies to 410b, 410g and 410z. In these items the only change from the tariff board recommendation is that valves 10i inches or less in diameter will continue to fall under these items and the effect of the tariff board recommendation would have been to exclude such valves from these items with a consequent increase in the rates of duties up to 20 per cent in the case of brass valves and 10 per cent to 17 i per cent increase in the case of valves of iron or steel.
The other machinery item, 410d, differs from the tariff board recommendation in that the item proposed will continue to cover machinery and apparatus of a class or kind not made in Canada but used in connection with the maintenance and testing of gas and oil wells.
The tariff board had recommended that these words be dropped since they were

largely inoperative because of the existence of item 848 (1). To a large extent that is true, but to retain the coverage of the item for those goods not coming under item 848 (1) these words are being retained in item 410d.


[Stage Direction]
Item agreed to.
Items 410z, 848, 848a and 848b agreed to.
Resolution as amended agreed to.
6.	Resolved, That schedule B to the Customs Tariff be amended by striking out items 1017, 1018, 1018a and 1028, and the enumerations of goods and the rates of drawback of duty set opposite each of those items.
William Moore Benidickson: Would the minister just put on record the change in the tariff rates which will result from the elimination of the 50 per cent drawback, which hitherto applied respecting items 1018 and 1018a. In other words, assuming that we pass all these items, what was the old rate after drawback and what will be the new rate for the items affected?


Donald Methuen Fleming: I am informed that the required answer to that question would be extremely complicated and detailed. My friend will have some idea of the nature of the necessary reply if he will refer to page 36 of the report of the board where he will see that some ten different headings are involved. Perhaps if it is his wish-


William Moore Benidickson: I am prepared to let it pass at the moment. It did seem to me, however, that I had worked out the amounts but I cannot find my calculation. I think that between now and the presentation of the bill it would be possible for the minister to inform the house as to the nature of the change in the effective rate on gas transmission pipe.


[Stage Direction]
Resolution agreed to.
7.	Resolved, That schedule A to the Customs Tariff be amended by striking out tariff item 554b, the enumeration of goods and the rates of duty set opposite that item, and by inserting therein the following item, enumeration of goods and rates of duty.
Cus-	British	Most-	toms	-	preferential	favoured-	Generaltariff	tariff	nation tariff	tariff
554b
(1)	Woven fabrics composed wholly or in part of yarns of wool or
hair, n.o.p	
and per pound,
Provided, that the total duty leviable shall not be in excess of
per pound
(2)	Woven fabrics composed wholly or in part of yarns of wool or hair
and weighing not less than twelve ounces per square yard..
and, per pound
Provided, that the total duty leviable shall not be in excess of
per pound
20 p.c.	27§ p.c.	40 p.c.20 cts.	30 cts.	35 cts.20 p.c.	27| p.c.	40 p.c.15 cts.	30 cts.	35 cts.55 cts.	
[Stage Direction]
(Translation/:
Mr. Allard:: Mr. Chairman, with regard to item 554b, I thank the Minister of Finance (Mr. Fleming) for accepting the tariff board's recommendation of a slight increase in the rates of this item. I also very greatly appreciate his stating, in his budget speech of June 15 last, his intention to amend the definition of the term "dumping" so that the value of the price of foreign products shall include production costs, and a reasonable margin for sales costs, carrying charges and profit.
As the present discussion relates to the textile industry, I take this opportunity of commending the Minister of National Revenue (Mr. Nowlan) on adding 40 more assessors to the staff of the various customs offices in this country.
To come back to item 554b, I may say to the Minister of Finance that the increase, slight as it is, applies particularly to the British preferential tariff. We also note that there has been no increase in the mostfavoured-nation rate nor in the general rate.
I therefore ask the hon. Minister of Finance to give further consideration to the possibility of increasing those rates in the interests of our textile industry.
(Text):


Mr. Wratten:: Mr. Chairman, I feel I should make a few brief comments under this item with respect to the textile industry and the effects of the tariff upon one of the big mills in my home city of Brantford. What I have to say is in no way a criticism of the minister, because I am sure the changes are the result of tariff board recommendations, but I do wish to draw to the attention of this house some of the problems faced by the textile industry in my constituency-


Some hon. Members:: Order.


Jack Wratten: There are wide differences in the rates of wages-


Charles Edward Rea: I must ask the hon. member to stick right to item 554b, which has to do with woven fabrics. We are dealing with specific items and cannot talk on the principle of the bill at all.


Jack Wratten: Under item 554b the British preferential tariff has been increased from 50 cents to 60 cents, while the others are not changed. I would suggest that British competition is not the reason for the difficulties in the textile industry in my city, but that it is rather the imports from such countries as Italy and Japan which are playing havoc
Customs Tariff
with that industry. Such countries are not affected by the changes in the tariff, and my point is that the wages paid in those countries differ widely from those paid in Brantford. The average wage in our textile mills-


Some hon. Members:: Order.


Charles Edward Rea: I must bring the hon. member back to the item.


Jack Wratten: These figures are very pertinent to what I am trying to bring out and certainly the number of employees-


Charles Edward Rea: I am sorry, but I cannot allow the hon. member to bring in figures of employees or anything of that nature. We must stay with the specific item.


Jack Wratten: I would like to ask the minister, and through him the government, if the government would ask the tariff board to go over the tariff regulations so far as the mostfavoured-nation classification is concerned. I believe this comes under GATT. My purpose for this request is to see whether they cannot bring in another recommendation to increase tariffs against these foreign countries so that our home factories will be able to continue operations and keep their employees at work. I would point out that if these factories are not kept in operation we will have a considerable number of men out of work-


Some hon. Members:: Order.


Jack Wratten: These men in the textile industry-


Charles Edward Rea: Order.


Jack Wratten: I am sorry, Mr. Chairman, but that is the point I wanted to bring out, but if I cannot speak of the number of men who are going to be out of work if these factories are closed down there is no point in my saying anything further.


William Moore Benidickson: Mr. Chairman, I made some reference to this item when I spoke in the budget debate. The minister introduced it in his budget speech of June 17 and he said this was just a weeny bit of a tariff change. The Financial Post, in an article, subsequently estimated that the effect would only be to add perhaps three cents a pound to the cost of imported British cloth. But I pointed out at that time that to me the significance of the item was that it indicated a trend, a desire and an intention. I said that beyond that, and maybe more important than that, it would probably cast quite a chill on the forthcoming commonwealth conference because we were in this very small way adversely affecting an export from Great Britain-an export which happens to be Britain's principal export to Canada.

Customs Tariff
We had a visit from the Prime Minister of the United Kingdom. I heard all members of this house, and particularly members on the Conservative benches, cheering and applauding the Prime Minister of Great Britain when he came to this North American continent and was beyond everything else advocating that we should have economic interdependence, freer trade and lower tariffs. It was just four days later that the Minister of Finance brought in this somewhat chilling trade item-the budget papers in so far as this very important customer of Canada is concerned. As I see the change, it is not something particularly significant in itself-three cents a pound on cloth. I cannot for the life of me see how that would give anybody here a "fighting chance", as some people have said, for survival. As a matter of fact the tariff board itself looked at this, as we imagine they would, very carefully. They had previously considered it, but the new government forced them to look at it again. I just want the committee to be very clear about exactly what the tariff board had to say with regard to the possibilities open to them in this area. On page 42 of their report, with respect to wool fabrics, the board says this:
Whether or not the Canadian taxpayer should further assist by increased tariff protection the domestic wool cloth industry is debatable, unless, of course, it be on the grounds of national security.
This is the point I want to make. The tariff board recommended this rather nominal increase more or less under pressure from the government to give the matter reconsideration. I said the increase was not significant in itself, but it is very obvious in reading the report of the board that a policy with respect to protection or otherwise for this industry having regard to Canada's other advantages in trading of other products is doubtful, and the board, in its report on page 43, says this:
Apart, however, from the question of security, in respect of which cost to the taxpayer in peace presumably would not be a prime consideration, the matter of the maintenance in a healthy state of a wool cloth industry in Canada seems essentially one of high policy.
In other words, a decision of this nature rests upon the government. It is the government which must decide whether or not a three cent increase per pound is to be followed by a further increase of substance which might prevent the perhaps inevitable erosion that was predicted not only in this report of the tariff board but in the former report also.
I am simply going to say that I think there has been considerable ineptitude in the timing of the government in its attitude

toward this question. They profess to be the party which has the highest regard and consideration for imperial preferences and for special conferences and trade within the commonwealth. We all recall that there was a bit of a muff just prior to the Mont Trem-blant conference last autumn when this reference to the tariff board respecting woollen goods was made within a few days of the discussions between members of this government and their counterparts who came here from Britain to discuss the opportunity of widening trade.
Now we are again to have a commonwealth trade conference held in this country, and it is a great honour to have it here. But our government has attacked a trading item with Britain which happens to be that country's biggest export, and I suggest that this is an item worthy of very serious consideration by this committee and by the government.
(Translation):


Mr. Pigeon:: Mr. Chairman may I be allowed just a few words to call the attention of the house to the fact that the constituency of Joliette-l'Assomption-Montcalm is one of Canada's largest textile centres. In so far as that industry is concerned, the city of Joliette is one of the most important centres in this country. Indeed Pinatel Piece Dye Works and Consolidated Textiles Limited operate large mills in this community, employing large numbers of workers.
I congratulate the Minister of Finance for having raised the tariff on woollen imports from abroad. This will substantially assist the textile industry of this country. I urge him to continue that policy in order to encourage the textile industry and, of course, the workers themselves. As it is, the textile industry has been defined as an ideal industry for this country since, (a) it is at least 50 per cent Canadian owned and (b) it employs the largest number of workers over the winter, thereby reducing seasonal unemployment, (c) it provides goods of a highly necessary character,
(d)	it may be set up in areas which are not as highly developed as others and, finally, it uses Canadian raw materials.
Once again I congratulate the Minister of Finance for the step he has just taken with respect to woollen goods from abroad.
(Text):


Mr. Anderson:: Mr. Chairman, I was not aware that it was necessary to adhere strictly to the tariff changes, and I had prepared what was to have been my maiden speech in

defence of the woollen industry in the district of South Waterloo. However, I would agree with the ruling of the chair, and withhold my speech until a later occasion when I will be able to deal with the subject matter in a more extended way.


William Moore Benidickson: Would the Minister of Finance indicate what representations he has received from Great Britain since he announced in his budget speech that he had this present intention? We have certainly read some interesting comments in newspapers of importance in Britain, and they did not seem to think that it was a very promising inauguration or preparation for the conference on trade that is about to take place in Montreal.
Such important journals over there as the Financial Times, the Yorkshire Post, the Economist and others have commented upon the minister's intentions very bitterly, inasmuch as an opportunity is obviously being cut off for consultation on the lines of improving trade between one country and the other.
I do not wish to reiterate some of the things which are already on record in Hansard, but I think the hon. member for Mount Royal during the budget debate contributed some very important quotations from some of the most influential journals of the United Kingdom, and it is obvious that they are not taking this in good spirit. I wonder if the minister would indicate just what representations the government has received, and his view as to the extent to which it is likely to contribute to good feeling and effective bargaining at the commonwealth conference we are to have in Canada next month. This is likely to reduce the effectiveness of good feeling and bargaining at the conference that we are to have soon, in fact next month.


Donald Methuen Fleming: Mr. Chairman, I
shall be very brief because I hope the committee will allow the remainder of these resolutions to pass tonight in order that we may have the bill introduced tonight and circulated.
There is no need, I think, to resume the debate that we had on this subject during the course of the budget debate. There is nothing new. If the effect of the increase is as slight as my hon. friend has indicated, then it is true to precisely the same degree that any complaints that have been made in any newspaper in the United Kingdom must correspondingly have very slight grounds to justify them.


William Moore Benidickson: Their language does not
suggest that.
Customs Tariff


Donald Methuen Fleming: With respect to
discussion between countries, I know my hon. friend does not expect these to be disclosed. These are communications between governments. We do not expect this slight increase to impede in any way the negotiations that will be taking place at the commonwealth trade and economic conference. The position on both sides of the water is clearly understood and I think it is realized that this is but an extremely modest increase that the tariff board has recommended.


Lester Bowles Pearson: Mr. Chairman, I want to say a few words about this and I am afraid that what I have to say will take more than the five minutes that are left.


Donald Methuen Fleming: Could I make a
suggestion to my hon. friend? Would the committee be willing to sit past ten o'clock, if necessary, so that my hon. friend could complete his remarks and have the bill introduced tonight, or would my friend be willing to make his remarks on the bill, either on second reading or on the appropriate clause of the bill when we have it introduced? He would have the same freedom on that clause in the bill.


Lester Bowles Pearson: Mr. Chairman, the difficulty
about that is that we are opposed to this particular resolution and since we take that position we wish to establish the reason why we are opposed to it, and I do not think that can be done in the five minutes that are left tonight. This I think is the place to do it, Mr. Chairman, because we have already been informed this session that if we have any general observations to make we should make them on the resolution. This I would like to do at this stage, but I certainly cannot do it in five minutes. However, I do want to indicate in the time that is available some of the reasons why we will not be able to support this particular resolution.
The minister has said that it is a very modest, very small increase. If it is a small increase, it is not going to do very much to help the Canadian woollen industry. The minister might also have said that this increase applies only to British imports and has no effect on the most-favoured-nation clause and therefore on other imports. As it happens, and as the minister knows, the British have not even been holding their share of this market; whereas imports from other countries, more particularly from Italy, have been increasing.
We know that the minister and the government are negotiating to maintain the margin between the British preferential rate and the M.F.N. rate and, as he has already indicated to us this afternoon in connection

Customs Tariff
with another item, in that process of negotiations the proposal which they make may not come out inviolate and therefore for that reason and for a good many other reasons we are not happy about this resolution.
It may not be enough of an increase to do very much for the woollen industry but it has been enough to cause a great deal of disturbance in the United Kingdom, as my hon. friend has pointed out, at the very eve of a commonwealth economic conference which will be dealing with trade matters. It seems to me to be a pretty unfortunate essay in international economic policy vis-avis the United Kingdom at this time when we are proposing to interfere with the exports from the United Kingdom, on the eve of this conference, of a commodity which represents her largest export to this country, I think something like $35 million worth of goods.
There has been abundant evidence, as my hon. friend from Kenora-Rainy River pointed out, that while this may be a modest increase it has not been considered in its implications as such on the other side. Even the high commissioner of the United Kingdom, who is a discreet individual and a diplomat and normally would not have very much, if anything whatever, to say on a matter of this kind, is quoted in the Vancouver Sun of July 21, 1958, as follows:
Britain's offer of free trade with Canada is still open, United Kingdom High Commissioner Sir Saville Garner said in Vancouver today.
It's on the table. Any time the Canadian government wishes to discuss it they'll find a ready response in the United Kingdom".
When he was asked about the British reaction to Canada's increase in wool tariff, which was announced in the minister's budget, he replied:
"No comment".
This is the kind of comment you would expect from a discreet and experienced diplomat. Apparently his feelings were too much for him because he added:
We were inevitably disappointed-especially at a time when the United Kingdom is trying to work up enthusiasm to come into this market.
And, Mr. Chairman, they have been encouraged by this government to work up excitement and enthusiasm. The Chairman of the National Wool Textile Export Corporation of Bradford, Yorkshire, states in regard to this increased duty:
The Canadian tariff board's recommendation is incomprehensible,-
That is the recommendation which is embodied in this resolution. I continue:
-especially at a time when the British share of the Canadian woollens market has been stable while the foreign share has been rapidly increasing.

The president of the Huddersfield chamber of commerce, which is in the very heart of the British woollen industry, said at the same time:
The recommendation of the tariff board-
Which is now the policy of the government. I continue:
-is not only disappointing, but inexplicable. Both the British and Canadian governments are expressing a desire to encourage trade between the two countries. It is not an encouragement when an increased duty is recommended on one of our largest exports.
Therefore, this matter is not considered as one of no importance in the United Kingdom especially, as I say, on the eve of the commonwealth economic conference. For this reason, and because it is not going to give any substantial help to the Canadian industry, and it is not meant to save the Canadian industry, as the tariff board report states very frankly, because, in negotiating with other countries under the M.F.N. clause, especially Italy, we can get ourselves into trouble in regard to exports from this country; for these and for a good many other reasons which I may have an opportunity to refer to on another occasion, I cannot support this resolution.


Donald Methuen Fleming: Can this item be carried, on division?


Mr. Pickersgill:: No.


Lionel Chevrier: Ten o'clock.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the leader of the house what the business is for tomorrow?
I wonder whether he can also indicate what estimates we will be discussing on Thursday, Friday and Saturday?


Mr. Green:: Mr. Speaker, tomorrow we shall commence with these Customs Tariff resolutions and then take item No. 4 on today's order paper, the house in committee on Bill No. C-44, to amend the Excise Tax Act. Then we shall take items 8 and 9 on today's order paper, one having to do with amendments to the Loan Companies Act and the other with amendments to the Trust Companies Act.
It is the intention to refer these to the standing committee on banking and commerce. Then we shall go into estimates, commencing with the Department of Northern Affairs and National Resources and then labour and fisheries.

Business of the House


Lionel Chevrier: What about the rest of the estimates of the Department of Transport, week?	I am not sure yet.


Howard Charles Green: 


[Stage Direction]
We are planning to take the At ten o'clock the house adjourned, without estimates of mines and technical surveys but question put, pursuant to the order of the not until Saturday. We may also take the house passed on August 4.
[Stage Direction]
Questions