1958-06-02

SUPPLEMENTARY ESTIMATES, 1958-59

[Stage Direction]
A message from His Excellency the Governor General transmitting supplementary estimates for the financial year ending March 31, 1959, was presented by Hon. Donald M. Fleming (Minister of Finance), read by Mr. Speaker to the house, and referred to the committee of supply.

['The purpose of this amendment is to prohibit, and make punishable as an illegal practice, the publication in any manner before election day of the results of a straw vote or poll of the political opinions of the electors. The proposed amendment does not prohibit the taking of such a poll for private purposes.\nMotion agreed to and bill read the first time.']
Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, in accordance with custom and by leave of the house I beg to move, seconded by the Leader of the Opposition (Mr. Pearson):
That the address of His Excellency Dr. Theodor Heuss, President of the Federal Republic of Germany, before the members of the Senate and of the House of Commons of Canada in the chamber of the House of Commons today, together with introductory and related speeches, be included in the House of Commons Debates and form part of the permanent records of this parliament.


[Stage Direction]
Motion agreed to.
[For text of address above referred to, see appendix, pages 771-774.]

John George Diefenbaker: Mr. Speaker, I should like to make a short statement respecting the letter from Mr. Khrushchev which was handed to me on Saturday by the Soviet ambassador. This letter was in reply to my letter to Mr. Khrushchev of May 9. The contents of the letter received have been carefully studied in the hope that it might contain promise of progress toward a settlement of some at least of the differences between our country, and in particular the question of disarmament.
The letter, unfortunately, reveals the continuing refusal of Mr. Khrushchev to understand the intentions of the Canadian government in supporting the proposal made recently in the United Nations security council for a system of control in the Arctic
regions. This proposal was an honest endeavour on the part of Canada and its allies to work out measures of control over military activities on this important frontier which would give security to all countries participating, including the Soviet union. We have not had, nor do we have, any intention, as suggested in the letter to us, of imposing a system of inspection on the Russians. We are, however, seeking to work out in collaboration with them and our other Arctic neighbours a system which will satisfy the needs of all and remove the fears, from whichever side they may arise, of air attack launched without warning. For our part we are continuing to study the possibilities of such a system of control in the hope that the Soviet union will come to recognize that this system would play an essential part in any effective scheme of security and disarmament.
Mr. Khrushchev's letter is, however, not entirely negative. It does indicate willingness on the part of the Soviet union to go along with proposals recently made by President Eisenhower for an immediate study of methods for controlling the suspension of nuclear tests. I have made clear our anxiety that progress be made in this important aspect of disarmament, and welcome this promising sign. If this fruitful project is to be carried out, good will and a spirit of forbearance are required on all sides. For this reason, therefore, I will refrain from taking issue with Mr. Khrushchev over the misrepresentations and allegations in his letter and emphasize rather the more hopeful aspect of his message.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I received, as perhaps other members of the house did, a copy of this note from the Soviet ambassador. It was my intention to ask the Prime Minister a question arising out of it concerning the allegations that United States bombers armed with nuclear weapons were flying over Canadian territory. However, in the circumstances I think perhaps it would be better if I merely gave the Prime Minister an indication that because of the importance of the matter I will ask that question, and he can take it as notice.


John George Diefenbaker: I appreciate the consideration of the Leader of the Opposition. Having taken notice of it I will give a reply at the earliest possible date.
724	HOUSE OF
Inquiries of the Ministry CANADA ELECTIONS ACT


Mr. Arnold Peters (Timiskaming) moved: for leave to introduce Bill No. C-19, to amend the Canada Elections Act (publication of straw poll results).


Some hon. Members:: Explain.


William Arnold Peters: The purpose of this amendment is to prohibit, and make punishable as an illegal practice, the publication in any manner before election day of the results of a straw vote or poll of the political opinions of the electors. The proposed amendment does not prohibit the taking of such a poll for private purposes.
Motion agreed to and bill read the first time.



NATIONAL PARKS


Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That It is expedient to introduce a measure to provide for the withdrawal of certain lands from Cape Breton Highlands national park.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Motion No. 4-Mr. Fisher:
For a copy of the clause or clauses in pipeline construction contracts of Northern Ontario Pipe Line Crown Corporation for 1958, having reference to contractors' obligations relating to employment of Canadians, wage rates, hours of work, and working conditions.
Motion agreed to.


[Stage Direction]
Motion No. 5-Mr. Argue:
For a copy of instructions to Canadian immigration officers in the matter of examination of Canadian citizens who are returning to Canada after a visit to the United States.
Motion agreed to.

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I wonder whether the Prime Minister could state whether the recently


reported sales of wheat to communist China were concluded under the agreement which, according to the press, he mentioned at Nanaimo and Port Alberni in British Columbia on March 12 of this year. If so, would the Prime Minister inform the house of the nature of this agreement?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, I will have to take that question as notice, to check on the agreement which the Leader of the Opposition has mentioned.


Mr. Hazen Argue (Assiniboia):: I would like to ask the minister a supplementary question in the same field of inquiry. Would the minister comment on recent reports in the newspapers that orders for wheat from communist China could not be filled by certain Canadian firms because of some restrictions? Could he assure the house that these orders are in fact being fulfilled?


Gordon Minto Churchill: Mr. Speaker, I have seen some of these reports and there have been rumours, but the fact of the matter is that no sale of Canadian wheat to mainland China has been interfered with to my knowledge. If there are firms which feel unable to deal with mainland China we still, on the other hand, have others which are in a position to negotiate those sales. We have had a growing market for wheat in mainland China, which is a departure from previous policies and is a great help to our prairie wheat growers.



AUTOMOBILES


[Stage Direction]
On the orders of the day:
Hon. Paul Martin (Essex East):: I should like to ask the Minister of Trade and Commerce a question which he may also treat as notice if he wishes to do so. Pursuant to the assurance given by the Prime Minister at Arnprior during the recent election campaign with regard to an alleged intervention by automobile companies in the United States having subsidiary units in Canada, in the shipment of Canadian manufactured automobiles to China, could the minister say when we might expect to learn the results of that investigation, and whether or not the government of Canada has made representations to the government of the United States with respect to the matter?


Gordon Minto Churchill: Mr. Speaker, I am very happy to learn that the hon. member who has raised this question is reading and meditating upon the speeches made by the Prime

Minister. I am sure this will be very helpful to him in the course of his parliamentary duties.


Lester Bowles Pearson: Very helpful.


Gordon Minto Churchill: No representations have yet been made, but I would like to say that the subject matter of the question is under consideration and information is being gathered to indicate whether or not there is any restraint on trade on the part of subsidiaries of United States companies established in Canada.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: should like to address a question to the Minister of Labour or, in his absence, to the acting minister. When an employer, unable to reach an agreement with his employees in a labour dispute, locks out his workers, why are indentured apprentices who are not union members pursuant to an employer-union agreement denied unemployment insurance benefits, as in the present situation in Vancouver with respect to the lock-out of plumbers by the master plumbers' association? Can the minister rectify this situation immediately?


Hon. Ellen L. Fairclough (Acting Minister of Labour):: Mr. Speaker, in answer to the question of the hon. member I am informed that under section 63 of the Unemployment Insurance Act disqualification is automatically imposed upon any person directly interested in the outcome of a labour dispute, even though they may not necessarily be members of the union.
I believe that is the situation in the present case. Although the apprentices may not be full-fledged union members, they are directly interested in the outcome of the labour dispute.



REQUEST FOR STATEMENT ON BENEFIT PAYMENT FIGURES

[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisia-Twillingaie):: I also have a question to ask the Acting Minister of Labour. I wonder whether the hon. lady could tell us the number of persons who were receiving regular unemployment insurance benefits and the number receiving seasonal benefits, as at the end of May.
Inquiries of the Ministry


Ellen Louks Fairclough: I will try to procure the latest information and have it available for the hon. member.



TRANSPORT


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: I should like to address a question to the Minister of Transport. Have representations been made to the government on behalf of Canadian road transport associations asking the government to assume control over interprovincial and international trucking, and is the matter under study?


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I thank the hon. member for giving me notice of his intention to ask this question. I have checked, and we have received no such representations.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I would like to ask the Prime Minister if he would now give to the house what he has already given outside the house, an interpretation of his interpretation last Friday in the house of the very clear and unambiguous remarks of the secretary general of NATO on the relationship between that organization and NORAD.


John George Diefenbaker: As I have already stated, this matter will shortly be before the house, when instead of having a discussion piecemeal the whole matter can be considered. Further than that I do not intend to go at this time, nor do I intend to deal with the question of representations or their interpretation.


Lester Bowles Pearson: On a question of privilege, Mr. Speaker, the reason I brought this matter up is a press release dated May 30, from the office of the Prime Minister dealing with this subject, subsequent to our discussion in the house.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. W. L. Houck (Niagara Falls):: May I
direct a question to the Prime Minister. I should like to know who is the leader of the

Inquiries of the Ministry Canadian delegation at the current conference at Geneva of the international labour organization.


Ellen Louks Fairclough: Mr. Speaker, the Minister of Labour is at present attending the meeting of the ILO on behalf of the government. I do not have at hand the names of all those who are on the delegation, but I should be very glad to procure that information and give it to the hon. gentleman.


William Limburg Houck: Yes, Mr. Speaker. I should like to know who is the leader of the delegation. I know the Minister of Labour is over there. I should like to know at the same time what his function will be.


Ellen Louks Fairclough: I will secure that information and make it available to the hon.
member.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, with your permission I should like to ask my semi-annual question, which I have directed to ministers of national revenue for the past three years, on a matter of importance to my constituents and to many other Canadians. I must say that in view of the minister's promptitude, perceptive aptitude and solicitude for matters concerning his department I ask this question with some reluctance and timidity.
In view of the fact that for some years thousands of industrial workers and other persons in Canada have been awaiting the second and revised edition of the department's blue book, "Pension Plans for Income Tax Deductibility", and, in view of the fact that the house has been repeatedly informed that a new draft was in preparation and was being considered by officers of the minister's department, can the minister now inform the house when these administrative snails are expected to reach their destination on this question?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, I will not ask for any more flowers in view of the fulsome flattery which the hon. member heaped upon my head a moment ago. I wish to refute at the outset any imputation about there being administrative snails connected with this matter. If there is any delay-and of that I have no knowledge

the analogy, I should think, would be that of the tortoise rather than that of the snail because, if the hon. member would recall,

the tortoise took his time but crossed the finish line first, after giving due consideration to all the problems with which he was confronted.
Seriously, this is an important matter. There are many questions of policy which have to be decided, and quite frankly I have not had time to give to them all the careful consideration I should like to give them. However, I can assure the hon. member that in due course, and without undue delay, the tortoise will finish the course and produce the blue book.



COMBINES INVESTIGATION ACT


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Pori Arthur):: Mr. Speaker, I should like to direct a question to the Minister of Justice. In view of the confusion which might arise over a statement in last Thursday's Ottawa Journal to the effect that the pulp and paper companies in eastern Canada, other than two at Kapuskasing, were charged by the combines investigation branch with fixing the price of farm pulpwood, would the minister clarify the exact geographical range of the recent investigation and say whether it did extend into northern Ontario?


Hon. E. D. Fulton (Minister of Justice):: thank the hon. gentleman for having given me notice of this question. In reply I must begin my remarks by saying that the report of the investigation, being now a public document and containing certain allegations which may have very far-reaching consequences, must, I think, be permitted to speak for itself as to the details.
However, in general I can say that the commission found that some 19 pulp and paper companies or pulpwood buyers had participated in price fixing agreements, and that the purchases of pulpwood by such companies constituted in total a very substantial part of the total production of pulpwood for sale in the province of Quebec and in certain districts in the province of Ontario. The report did not draw conclusions as to the exact degree of participation of each company named nor as to the exact local areas affected. The most northwesterly area in Ontario which is indicated in any of the documents quoted in the report as being affected by the arrangements appears to be an area around Cochrane.
The newspaper item referred to by the hon. member for Port Arthur does, however, go too far afield in indicating that the report implicated-and here I am quoting from the

newspaper report-"all pulpwood companies in eastern Canada, except two at Kapus-kasing." That statement goes too far afield.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: Mr. Speaker, I have a question for the Minister of Labour which I will direct to the acting minister. Could the acting minister inform the house whether consideration by the Department of Labour of a request for mediation of the great lakes pilots' dispute made by the pilots has led to any action?


Ellen Louks Fairclough: Mr. Speaker, on May 20 the
pilots' association was asked for additional information. This was received only this morning and will have to be considered before I can give a further answer.


Douglas Mason Fisher: A supplementary question, Mr. Speaker. Has the minister drawn the original letter of the association to the attention of the Minister of Transport, who informed us on Thursday that there had been no indication by the disputants of any desire for mediation?


Ellen Louks Fairclough: I think the hon. member should direct that question to the Minister of Transport, because having just now started to act in the absence of the Minister of Labour I am not aware whether or not that communication has gone forward.


Hon. Donald M. Fleming (Minister of Finance) moved: that the house go into committee of supply.



DOMINION-PROVINCIAL FISCAL RELATIONS

Lester Bowles Pearson: Mr. Speaker, this motion gives me an opportunity to bring to the attention of the house, ultimately in the form of a motion, a matter of very great importance to the house and the country; namely the failure -or if not failure certainly the unwarranted delay on the part of the government-to call a federal-provincial conference to discuss unemployment and other urgent problems of common concern to both federal and provincial authorities, and in particular to give an assurance that the government would maintain or improve the principle of equalization of direct tax revenues of the provinces embodied in the present law.
This problem of fiscal relations between federal and provincial governments is inevitable in any federal system. Its origin
Dominion-Provincial Fiscal Relations lies in the uneven division of wealth and resources and income among the different parts of the federation, coupled with the necessity, on grounds of national unity, of the central government doing everything possible to lessen these disparities. Wealth in a country like Canada tends to accumulate to a greater extent in some areas and provinces than in others, and those others naturally feel deprived of adequate means for growth, welfare and economic security.
The problem also arises out of the fact that national policies, which are essential to unify and strengthen the country as a whole, may have an uneven impact on various sections and provinces. If the central government did not try, by financial contributions, to correct these inequities, national unity certainly would suffer. And this particular problem is always more acute in a time of depression or recession or pause, as we learned in the thirties.
That is another reason why discussion and action are desirable at this time. The motion I will move will not only give the government an opportunity to do something about this important problem at this time, when something should be done, but will give new members from Quebec, Ontario and the other provinces a chance to speak on this problem; the problem whether the federal government should share taxes with the provinces and if so, on what basis and by what formula and, above all, how much should the wealthier provinces, which have larger sources of provincial income than some of the other provinces, claim from the shared taxes.
The Liberal party and Liberal governments have always accepted the obligation of action in this field of federal-provincial relations, and our record in this matter is clear and good. I suggest that in this case the vision of the future or difficulties of the present should not be permitted to obscure and distort the record of the immediate past. In this case, as in other cases, it is not difficult to answer the question, "What did you do", which hon. gentlemen opposite like to throw at us as we discuss this and other problems, so perhaps I should go into the record for a few moments.
In 1935, in the midst of the depression some provinces in our federation were or. the verge of bankruptcy and the federal system was breaking down under the pressures of depression and unemployment. Hon. members will recall that in 1935 the Rowell-Sirois commission was set up to examine the problem of fiscal relations in the light of that situation, and in due course that commission presented a plan for grants in aid from the central government which, as these
728	HOUSE OF COMMONS
Dominion-Provincial Fiscal Relations grants were to be made on the basis of need, did embody the principle of equalization.
This plan was not accepted by the provinces. Nevertheless, during the years steady progress was made by Liberal governments in Ottawa toward their objective of an agreement for the single collection and equitable division of the three important direct taxes which, under our constitution, are shared between the federal and provincial governments. As hon. members know, those three taxes are the personal income tax, corporation income tax and succession duties.
It seems obvious that these taxes, if they are to be collected by the federal government, must be shared between the two levels of government in a way to permit both levels to perform their functions and carry out their obligations to their people. It is very often complained, and it has been complained more than once by the Minister of Finance, that the federal share of these and other tax revenues has gone up in recent years to the detriment of the provinces. Of course the federal share has gone up but so have federal expenditures for defence, expenditures arising out of the war such as veterans aid and all that kind of thing. Federal expenses have also gone up because of direct contributions made by the federal government to the provinces, direct transfer payments for education, health and other purposes.
Whereas it may be charged, as it sometimes
is,	that 70 per cent or even more of the taxpayer's dollar now goes to the federal government, if allowances are made for these payments made by the federal government to the provincial governments that figure must be greatly reduced. If that calculation is made, and perhaps the minister has made
it,	it will perhaps be found that having regard to these transfer payments the proportion of the taxpayer's dollar now taken by the federal government is not higher than it was in 1939.
It might be argued, of course, that it would be better and would avoid complications and difficulties if the provinces collected their own taxes in these three fields at their own rates, as they do in other fields of taxation. That, however, would be fair only if the provinces were close enough together in wealth and resources to permit of approximately the same amounts per capita from the same levels of taxation in these three fields.


Donald Methuen Fleming: Would the hon.
gentleman permit a question? Did I understand correctly that he was challenging me to prove that the federal share of the tax

dollar was greater in 1939 than in 1956? Would he elaborate on that? What are his figures?


Lester Bowles Pearson: No; I was suggesting to my
hon. friend that if in making this calculation at the present time he makes allowance for transfer payments to the provinces from the federal government and for the growth in expenditures for national defence, for instance, which affect all the Canadian people, he may find that the percentage of the taxpayer's dollar collected by the federal government in 1958 is not greater than that collected in 1939. I said if that calculation were made allowance must be made for transfer payments and these other defence and war expenditures.
I had just said that it might be argued that it would be better if the provinces collected their own taxes at their own rates in these three fields of taxation. I also said that would only be fair if the provinces had approximately the same wealth and resources so they would get approximately the same amounts from the same levels of taxation. But as we know that, of course, is not the case. A provincial income tax at a rate which would bring in large revenue in the province of Ontario would bring in very little indeed in the province of Prince Edward Island. Therefore, as we see it, the best plan is central collection at a single rate with a division of the total which, through equalization provisions, would permit every provincial government to provide adequate services to its own people.
Equalization in this sense means that where per capita revenue from the shared fields of taxation falls below an agreed amount, however calculated, federal contributions will make up the difference. I suggest that the putting forward, establishment and acceptance of this equalization principle is one of the most important domestic achievements of Liberal governments in recent years. Indeed, I would go further and say that its acceptance in some suitable form is important, and perhaps that may be an understatement, to the preservation of national unity in our federal system, and it can and must be applied by agreement and with a minimum of federal interference with and no infringement of provincial rights.
There is no centralism in this, Mr. Speaker, but there is a desire to strengthen the position of all the provinces in the federation and thus strengthen national unity.
On January 14, 1955, a new plan was put forward by the Liberal government of that day as a substitute for previous tax-rental agreements. This plan laid down a definite equalization formula based on the per capita

average receipts of the two wealthiest provinces from the three shared taxes. In putting forward this plan at that time the prime minister of that day, Mr. St. Laurent, had this to say:
The present government has no intention of abandoning the objective of the tax-rental agreement which is to make it financially possible for all provinces, whatever their tax base, to perform their constitutional functions themselves and to provide a reasonable Canadian level of provincial services without an abnormal burden of taxation.
He added:
That is the foundation of the policy of the federal government.
This remains the foundation of the policy of our party in this field. The tax-sharing plan that was put forward at that time was not, of course, perfect, but it certainly seemed better at that time to all concerned than anything else that had been proposed. For the first time all the provinces which accepted the arrangement would receive approximately equal shares of these three direct taxes paid by Canadians. We on this side of the house, Mr. Speaker, are proud of the achievement in developing and putting forward that proposal. It embodied progress made in the solution of this problem over the years.
In order to indicate what progress had been made, may I just suggest to the house that at the end of the war, in 1945, the provinces received in tax rentals-the hon. member for Bonavista-Twillingate (Mr. Pickersgill) mentioned this the other evening-about $92 million. But in the last fiscal year, 12 years later, under the tax-sharing and equalization plan they received $631 million. Our last year in office as a Liberal government saw the provinces receiving $114 million more than under the tax-sharing arrangement of the preceding year, or an increase for that year of 20 per cent. Of course, Mr. Speaker, all the provinces at that time wanted still more; that was understandable. They were not satisfied; that was natural. I shall have a little more to say about this in a moment, but that is the inevitable problem a federal government must face in trying to share revenues with provincial governments.
The Minister of Finance of that time, Mr. Harris, put this problem in a statement to the House of Commons after the last conference in 1956, as follows:
While there seems to have been a general acceptance of the principle of equalization-
That was at the dominion-provincial conference.
_there is, I realize, some conflict of views on
the manner in which it has been applied. Some provinces with very substantial taxable capacity feel that their responsibilities are such that they should be accorded still more room in these tax fields. Other provinces, where taxable capacity is
Dominion-Provincial Fiscal Relations below the average, press for still larger equalization or fiscal need grants. The federal government is squeezed between these conflicting views.
I suspect that the Minister of Finance is beginning to feel that squeeze now. Wealthier provinces like Ontario, whose premier at that time thought that province did not get enough and that the plan proposed was too generous to certain other provinces, wanted more. Less wealthy provinces, like the Atlantic provinces and Saskatchewan, which felt that fiscal grants should supplement even equalization payments when the need justified it, also wanted more. It was the federal government's responsibility then, as it is the federal government's responsibility at any time, to strike a balance between these claims, and that balance was established by the late government by a formula which we know as 10-9-50, 10 per cent of the personal income tax, 9 per cent of the corporation tax and 50 per cent of the succession duties to be turned over to the provinces, with equalization payments based on the per capita average receipts of the two wealthiest provinces.
This formula, or even the very principle of a formula of sharing, was not accepted by the province of Quebec. So far as Ontario was concerned only the personal income tax formula was accepted, and this under protest as being too low. The premier of Ontario, Mr. Frost, in more than one appearance with the Prime Minister during the election campaign of 1957, demanded more money and a higher formula. He indicated that the government of Ontario would insist on what is known as the 15-15-50 formula which would bring Ontario, if it were applied, more than $100 million over the formula which was then in effect. I believe it is fair to say that the people of Ontario were led to believe at that time that Ontario would get that formula only under a Conservative government, and that they would get it under a Conservative government.
Well, what did the Conservative government do? As we know, it increased the percentage of personal income tax to 13 per cent for one year only. It was estimated, and perhaps the estimate may not turn out to be too accurate in view of falling revenues, that this would bring in about $62 million, of which Ontario would get more than one-third or $22 million. This change was made, but it was not made at any conference with the provinces. There was no conference at which this change was agreed upon, but the change was made by the federal government and notification of it was sent to the provinces by telegram. There were even some mathematical errors in the computations first made.
It seems to me, Mr. Speaker, it was a queer way of doing business by a government the
730	HOUSE OF
Dominion-Provincial Fiscal Relations members of which when in opposition had this to say about the attitude of the previous government in its dealings with the provinces. When in opposition the present Prime Minister put the Conservative position in this regard very clearly. I am reading from page 6370 of Hansard for July 24, 1956:
The government-
That is of course the St. Laurent government.
-simply said-
In respect of these earlier arrangements.
-"These are the terms." No opportunity was given for amendment or for amelioration of any terms. The recipe for a division of taxation was as final as the laws of the Medes and Persians . . .
There was no opportunity for negotiation; there was simply the attitude of a feudal lord bringing into being a modern feudalism and laying down the law to the vassals.
Well, if that was the attitude taken by the present Prime Minister to arrangements then made, which had been discussed at a provincial conference, I wonder what he would have said if he had been on this side of the house in regard to the procedure adopted to bring the plan into effect last January.
Now, leaving procedure aside for the moment, let us look at these various formulae to see what they would cost the national treasury and also what they would give the wealthiest province, Ontario, if they were applied. The Liberal formula of 10-950, as I think I have already stated, would have brought in $631 million for the provinces, of which Ontario would get $216 million. The Conservative formula for one year only at 13-9-50 will cost the federal treasury $683 million, and of that amount the province of Ontario will get $238 million or $22 million more. The formula put forward by Premier Frost as the only one that would be acceptable to the province of Ontario of 15-15-50, without any provision for equalization, would cost the federal treasury, if my figures are correct, $760 million, of which the province of Ontario would get $332 million. If the equalization principle were included in that formula and calculated on the basis which Mr. Frost said would be the only tolerable one-and he was opposed to equalization in principle-that would cost the federal treasury $846 million; and if it were calculated on the basis of the two highest provinces it would cost the federal treasury almost $1 billion.
Was the premier of Ontario satisfied with the decision which was made last autumn, and which gave him $22 million more? To illustrate his feelings in that regard when this announcement was made and his reaction to it, perhaps I might read a short statement by the Liberal financial critic in the Ontario
IMr. Pearson.]

legislature at that time, in February, 1958, when this matter was under discussion, and the reply of the premier of Ontario to this statement later during the course of his own budget debate. In February of this year Mr. Wintermeyer in the Ontario house had this to say:
He-
That is Mr. Frost.
-personally did more to defeat the Liberal government in Ontario than any other man alive, and he did it because the people of Ontario believed that, when he said he needed $100 million and that they were holding it back unlawfully and inequitably from him, they believed him, and they supported him and voted a government out of power.
A new government took over-
Continued Mr. Wintermeyer.
-on June 10 and it seems wholly inconsistent that he should come back to this legislature at the expiration of one year-
Referring to Mr. Frost.
-and say: "Gentlemen, I have made an arrangement. I do not know exactly what this arrangement is, but it is an instalment for interim payment on what 1 still say that government owes." That is not what he said a year ago. A year ago his words were; "We will make them disgorge, if necessary, that $100 millions. It is ours. It is owing to us."
In the year 1957 not one red penny of that $100 million was paid to us. In the year 1958-59 there has been a promise of some. I ask, how much? What faith has Mr. Frost in the promise of the Right. Hon. Premier of Canada?
In the budget debate of that time, February 26, 1958, Mr. Frost replied to that statement as follows:
Ontario has made it plain that the province's share of the main direct tax fields should not be less than 15 per cent of the federal personal income tax, 15 percentage points of corporation income and 50 per cent of federal succession duty collections in each province ... I have said Ontario needs $100 million more in direct taxation.
We know what that means in terms of dollars and cents. Last Thursday night, I think it was, in this house the hon. member for Essex East addressed this question to the Prime Minister as reported at page 665 of Hansard:
Does he now suggest that this government has fully met the demands made by the province of Ontario when the premier of that province has said he wants an additional $78 million from the government of which my hon. friend is the head?
The reply given by the Prime Minister was this:
The provinces will naturally place the very best claim they possibly can place before their people and the country as a whole.
I think this house has the right to know, and I think the people of Ontario would like to know, whether the Ontario government's demand for 15-15-50, with what that

implies in contributions from the federal treasury, is to be accepted by this government as its policy for aid to that province and the others.
This situation or this dilemma, if you like, into which the government has fallen because of its statements may have something to do with the failure of the government to call a conference at this time to settle the matter. Certainly during the 1957 election campaign- and this is on the record already in this house-the Prime Minister said he would summon a conference immediately to deal with this problem. We know what happened. "Immediately" was November. The conference lasted two days and did not deal in any effectual way whatever with this problem, and did not deal with unemployment in any effectual way either.
As a matter of fact, as my friend the hon. member for Essex East pointed out the other night, in 1955 when there was much less unemployment in this country than there was last November we who were on the other side of the house at that time were pilloried day after day by members of the opposition for not calling a provincial conference immediately to deal with the unemployment problem, which was not half as serious as it was last November and as it is today. Yet no conference with the provinces has been called yet to deal with that problem.
We know what the figures are. As of April 17 the dominion bureau of statistics figures show 516,000 unemployed still in this country as compared with 306,000 a year ago. On April 30 claims for unemployment insurance fell-there was a drop, I admit-but they still show 722,000 as opposed to 373,000 at the same date last year. If that does not justify the calling of a conference to deal with this problem, what could?
Furthermore, has this problem of taxsharing and equalization been dealt with? Not in any way whatever. On November 26 the conference to which I refer met for a couple of days and then adjourned to meet early in this year. Did it meet? Has it met? The answer is no. It could not meet before the election, according to the Prime Minister, because members of parliament were spending too much time asking questions.
May I say that we are still asking questions. Surely that is not the reason the conference has not met in April or in May or in June of this year. Or is there some other hidden reason, arising out of the expenditure promises made by the government and their relation to the worsening position of the federal treasury? If that is not true perhaps the Minister of Finance will enlighten us.
2, 1958
Dominion-Provincial Fiscal Relations
Certainly we have had no enlightenment with regard to this matter up to the present time. The Minister of Finance has not yet, after all these months, given us the accounting that he promised for last autumn. All we know is that in January of this year he estimated a surplus for the year that is past. We know, because it is common knowledge, that revenues have declined while expenditures are increasing, though not as fast as promises to spend are increasing. There is surely a problem here of reconciliation which will tax even the ingenuity, agility and financial acrobatics of the Prime Minister and the Minister of Finance.


Lionel Chevrier: And the late hours of the Minister of Finance.


Lester Bowles Pearson: Perhaps that may have a bearing on the delay in holding a provincial conference at this time. Mr. Frost wants more from a federal treasury which is not, to say the least, flourishing, and he is not to be held off by $22 million. There is the indecision of the government over the equalization principle; whether to accept it and, if it accepts it, how to apply it. A conference with the provinces might not be too happy a meeting at this particular time.
There is another question about which I would like to say a few words, and that is with respect to the special grants to the Atlantic provinces. It must be recognized, indeed it is recognized by all members, that the lower average income of the Atlantic provinces makes the position very difficult in respect to providing, even with equalization payments, the kind of services all Canadians should have. I admit at once, as indeed we admitted last autumn in this house, that the special grants that were given were helpful, but we criticized them and we still criticize them because they are not based on any formula which would make possible their general application to all provinces. In other words they are not based on any; principle; they are a hand-out.
Surely a better way than that could be found to give that kind of assistance, valuable as this assistance has been. In order to make my point I would like to quote from one who certainly could not be accused of having any political leanings or political prejudices in this matter. I have in my hand the speech of the president of the Atlantic provinces economic council, made in Montreal, I believe, on March 7 or at least in that week, and he is reported in the press as follows:
What is needed first, however, is a changed attitude in all provinces. At present people think of national development in terms of power stations and pipe lines in the west, the seaway here in central Canada, and the opening of the north.

Dominion-Provincial Fiscal Relations
But once attention is turned east of Quebec to the Atlantic area, people think of aid, assistance, subsidies, subventions and the like. Useful and welcome as they are, they are not national development; they are more like economic tranquilizers which are dangerous when taken alone and in too large quantities and which can lead to overdependence. Let us stop thinking of the Atlantic provinces in terms of aid alone, and regard them as a region ready for, and worthy of, some of the same developmental projects that all of us now support in the rest of Canada.
The Halifax Chronicle Herald, on January 28, had something to say on this subject in an editorial from which I quote as follows:
The Atlantic provinces are appreciative of these grants but would prefer to have the same policy applied to them that applies to the other taxsharing payments-variations from year to year with a fixed floor.
We on this side of the house feel that they should be adjustable and should be flexible, and that the formula for calculating them should apply to all provinces. That would make it a part of national policy. In other words, in Atlantic provinces grants and all other grants, the principle of equalization with a fixed floor should be applied and a new formula adopted for that purpose. This reference to a fixed floor is just another way of saying that grants of this kind and formulae which are adopted and changed subsequently should always include provisions for stabilization.
Let us look for a moment at this question of stabilization, what it means and what the attitude, in so far as we have been able to determine it, of the government is with respect to it. It presents another horn of the dilemma on which the government finds itself. In the 1956 act, passed by a Liberal government, the tax agreements provision, as my hon. friend knows so well, provided that each province should be guaranteed a payment for the fiscal year 1958-59-that is, the subsequent fiscal year-of not less than 95 per cent of what was received the previous year.
Surely the importance of that provision will be obvious to every member of this house, especially at a time of falling revenues. I believe the Liberal government at that time showed commendable foresight in putting that provision into the agreement. Today revenues will not have to fall very far to make the Conservative formula of 13-9-50 return even less than our formula of 10-9-50, because no stabilization provisions were included in the new act of last January. Under that formula, because of falling revenues and because of the absence of this stabilization provision, they may receive no increase at all and indeed only 95 per cent of what they got last year which, under the


stabilization provision of the Liberal government in the year before they were bound to get in any event.
Perhaps even more important than this question of stabilization is the government's attitude toward equalization, especially in view of the fact that demands of the provincial governments, particularly Ontario, are being made for a new formula which would provide more income for them. I have already mentioned the difficulty over the policy insisted upon by Mr. Frost, the premier of Ontario, and that policy makes the question of equalization more important than ever, especially for the less wealthy provinces. If Ontario is going to get more-and Ontario certainly expects more-are all to get more? The Prime Minister during the election campaign appeared to accept Mr. Frost's rejection of equalization, and to accept on the other hand the historical position of his party which was opposed to it.


Donald Methuen Fleming: Oh, rubbish.


Lester Bowles Pearson: If my hon. friend thinks that is rubbish let him look up the record in Hansard and his own vote at the time with respect to the tax agreements provision, and the attitude of his party with respect to this whole matter of equalization.


Donald Methuen Fleming: That was not a vote on the principle of stabilization or on the principle of equalization. It was a vote to condemn the insufficiency of your payments.


Lester Bowles Pearson: We in this party have challenged the government and the Prime Minister on more than one occasion, and perhaps my hon. friend will clear away this difficulty right now when he gets up to speak in this debate. We have challenged them more than once to say specifically and definitely that no province, Ontario or any other province, would be given preferred treatment in any way and that any increase in payments would be spread equitably; in short, that the principle of equalization would be maintained on a proper basis. We over here have taken our stand that there should be no special deals which are not applicable to all who qualify for extra help. A year ago our questions were not answered, and again during the election campaign they remained unanswered. Furthermore, in the last session the same questions were not answered, and we were told that a provincial conference would be called immediately which would answer all these questions. However, they were not answered and since that time we have been told nothing, with one qualification to which I will come in a few moments.
The premier of Manitoba has asked in letters for the same assurances for which we

asked regarding equalization, and he did not get them. The matter was pressed, as I think my hon. friend will agree, at the provincial conference last November, without result. Then during the recent election campaign in Winnipeg on February 12 the Prime Minister did promise to retain the equalization principle in future dominion-provincial tax agreements. I suggest that in that statement he reversed the policy of his party which had been oposed to equalization payments in principle-


An hon. Member:: He never did.


Lester Bowles Pearson: -and had voted against tax agreements which contain that principle.


Mr. Montgomery:: You are building a straw man to knock down; that is what you are doing.


Lester Bowles Pearson: If my hon. friend wants to speak on this matter let him refer to Hansard and read the record of his party, and let him put that record on Hansard now.


John Whitney Pickersgill: Let him ask the Solicitor General too.


Lester Bowles Pearson: And the Solicitor General (Mr. Balcer). Let him say something about the matter. Conservative members will have lots of opportunity to clarify their views and their government's attitude during the course of this debate. Indeed, that is one of the reasons this motion is being moved. However, while the Prime Minister was in Winnipeg during the election campaign in February last he accepted the principle of equalization. But he has said nothing since that time, as he said nothing at that time about the nature and scope of the equalization action he supports.
Not only is the principle important, but the application of that principle is even more important. On what basis are equalization payments going to be made? As far as this party are concerned we are pledged to equalization on the basis of the per capita yield of the three taxes in the wealthiest province. We made that proposal during the election campaign, and we stand by that policy in this House of Commons at this time as being the basis which is fairest, especially to the less wealthy provinces.
Surely it is just as important to establish the right basis for equalization as it is to support the principle itself. If we take another basis, for instance the national average, which has been favoured by some people, or if we take the basis of the top four provinces, we will get a different result and a result not nearly so satisfactory, especially to the less wealthy provinces. If, for instance, we were to take the basis of the national average, equalization payments would amount only to
Dominion-Provincial Fiscal Relations $64 million, while on the basis we are advocating they would amount to $163 million. Liberal policy with regard to both the principle and the basis of the application of equalization has been declared, and on that we stand. I hope the government in the course of this debate will make its own position equally definite and equally clear. Indeed the fact that we do not know what is the policy of hon. gentlemen opposite is, I suggest, a main reason why a conference should be called after that policy has been made clear, perhaps in this house during this debate.
It surely seems perfectly obvious to all reasonable people that a provincial-federal conference should be called at this time. Joint action on unemployment is required now, and action is also required to prepare for a situation which next year may necessitate even more effective and far-reaching measures. We hope the situation will not require such action, but surely it would be wise to prepare for such a situation now, and to prepare for it jointly with the provinces. If it was essential to have this kind of meeting in 1955, when a meeting did not turn out to be necessary because the unemployment problem was not so serious, surely it is far more essential to have one now when the unemployment problem is at least twice as serious as it was then.
A conference is also required, Mr. Speaker, because of this question of fiscal relations which is now being dealt with on an ad hoc, piecemeal, one-year basis. It should be settled now according to some principle which would give some form of security to the provinces for the future, particularly in respect to equalization; how this would be brought about and upon what basis. No longer should there be doubt and delay on these important matters. The government has a duty to take action now, action which it has so far refused to take.
I therefore move, seconded by the hon. member for Essex East (Mr. Martin):
That all the words after the word "that" be deleted and the following be substituted therefor:
"this house regrets that the government has failed to call a federal-provincial conference to discuss unemployment and other urgent problems of common concern to federal and provincial authorities; and that the government has failed to give assurance that it would maintain or improve the principle of equalization of direct tax revenues of the provinces embodied in the existing law."


Hazen Robert Argue: Mr. Speaker, I think the presentation of a motion such as this is most timely, because today this nation faces a very serious recession. Unemployment is widespread and is a drain not only on our national economy, as such, but on the budgets of the provinces and municipalities. As a

Dominion-Provincial Fiscal Relations matter of fact I think in a great many respects our nation faces crises in many fields which urgently require examination by both federal and provincial governments.
Members and supporters of the government, in the speeches they have made and through statements contained in the speech from the throne, are claiming that they represent a government which keeps its promises. If there was one promise which recurred throughout the election of last year and the period since, it is that the government was prepared to call another dominion-provincial conference to study the whole question of fiscal relations and consider many of the problems which face the provincial administrations of this country. That promise was clear and definite, and I think the government should announce today that it is being fulfilled.
We in this group have over the years supported the making of grants from the federal treasury to enable the provincial governments to maintain the essential services for which they are responsible. The need for such a policy is evident, because the provincial governments must be in the possession of the necessary financial resources if they are to meet their obligations. Such a claim upon the federal treasury is just, because of the very nature of the federal system.
As hon. members no doubt realize, the head offices of the larger corporations of this country are generally speaking located either in the province of Ontario or in the province of Quebec. Because this is so the profits which accrue to these companies accrue in the provinces of Ontario and Quebec, even though their revenue derives from business done in all ten provinces of our nation.
The proposals made in the 1945 green book were very important, far-reaching and imaginative. Since 1945 we have looked to a Liberal government for their fulfilment. Now we look to a Conservative government to make progress in implementing these proposals. The Liberal government which made them was, I think, unnecessarily slow in seeing that they were fulfilled. Even at this date many of the recommendations which were made in 1945 have not been proceeded with.


John Whitney Pickersgill: I wonder if the hon. gentleman would permit a question. Is it not true that the proposals made in 1945 were contingent upon certain action being taken by the provincial governments, which they have never yet been willing to take?


Hazen Robert Argue: Of course; that is the usual way in which promises were made by the party of which the hon. gentleman is a member-


John Whitney Pickersgill: Respect for the constitution.


Hazen Robert Argue: There were a number of contingencies, that is perfectly correct. The late Right Hon. Mackenzie King never made a promise in his life if he did not have many avenues of escape to use should he feel at some date that he could not fulfil it, so one would expect in connection with the green book proposals that there would be many avenues of escape available. However, I repeat the statement I have made, namely that in some notable instances important proposals made in the green book of 1945 have yet to be implemented.
Although under our constitution the provinces have very important responsibilities in the field of services we find from experience that under our constitution they have not adequate sources of revenue. As a matter of fact, in the distribution of revenues in this country we find that the federal government receives 70 per cent or more of the tax dollar and that the remaining 30 per cent must be divided amongst all the provinces and the thousands upon thousands of municipalities.
Since the end of the war we find there has been a greater demand on the budgets of municipal and provincial governments than there has been on the budget of the federal government. The budget of the federal government has changed very little since 1945. Expenditures at that time amounted to just over $5 billion, and forecast expenditures today are approximately the same. Generally there has been little or no change in the federal budget compared to 1945. On the other hand the budgets of municipal governments have increased by 246 per cent since 1945, and the budgets of provincial governments have increased by 381 per cent since that date.
The provinces today find it increasingly more difficult to meet the demands that are made on their treasuries, and the municipalities are in a much more difficult position even than are the provinces. It is to make it possible for the provinces to carry on the services that are necessary to the building up of this country, and in turn to make it possible for municipalities to meet their commitments that we are supporting the motion that has been placed before us at this time.
The Prime Minister has made it very clear time and time again that another dominion-provincial conference would be called; and certainly, as has been pointed out, in the face of rising unemployment there is great urgency for the calling of a conference at this time. Surely at such a conference one of the first items on the agenda would be proposals for public works and for national developments

that would take care of the very widespread unemployment that prevails in Canada at this time. If the Prime Minister had reason during the election campaign in 1957 to propose the calling of a federal-provincial conference, there is much more reason for calling such a conference today. Half a million people in this country are unemployed and seeking jobs. Is that not a matter that should be brought before a federal-provincial conference?
The Leader of the Opposition has referred to recent figures for the month of April which indicate that there are 560,000 persons in this country without jobs and seeking work. The figures for unplaced applicants are more recent. Those for May 22 indicate that there are 641,852 unplaced applicants in Canada. This is a drop of just 180,000 from April of this year. This is a smaller drop than occurred last year from April to May in the same statistics when the figure dropped from
545,000	to 360,000; and in the previous year, when the figure dropped from 488,000 in April to 281,000 in May. In other words even with unemployment much more serious today and with the figures of unplaced applicants showing an increase, the absolute rate at which unemployment is dropping is less than it was in either 1956 or 1957. This should be great cause for alarm, because if we were to have unemployment vanish this year we would require to have the rate of unplaced applicants falling much more quickly than it was a year ago.
The situation is critical not only for the people who are unemployed, who lack income and whose families have little means of support, but this problem is serious for the nation as a whole. I have made some calculations concerning the amount of real wealth that has been lost by unemployment in the last year, and my computation indicates that it is between $1,500 million and $2 billion. In other words the serious unemployment prevalent in the nation today affects our real production, our real wealth, the real income of the people of the country, and is having an adverse effect on the revenue of the federal government, the provincial governments and the municipal governments. For this reason it is imperative that action be taken at once and that the government's commitment to call a new federal-provincial conference be carried out.
That the government has committed itself to this is extremely clear. In opening the conference that was held last fall the Prime Minister had this to say:
I would suggest that we might have in mind two days of discussion at this November meeting, first in public and then in committee, after which we
Dominion-Provincial Fiscal Relations
would adjourn to a later date when we would plan to be ready to consider specific proposals arising out of our first meeting.
It is very clear from this statement that the conference was to be adjourned to a future date. The Minister of Finance, who is in his seat at this time, said on January 29, 1958, in this house as recorded at page 3956 of Hansard:
-an interim measure to take account of the urgency of the present situation and the fact that it was not possible to reconvene the dominion-provincial conference under the pressure of the present protracted session of parliament.
This suggests again that the government intended to call a further conference.
The Prime Minister on November 27 last, as recorded at page 1556 of Hansard, had this to say:
A subsequent meeting as soon as possible in the new year will be held in accordance with the proposals made by this government in calling the conference.


Paul Joseph James Martin: Are you reading from the Prime Minister's letter to Premier Campbell?


Hazen Robert Argue: No, I am referring to a statement made by the Prime Minister in this house on November 27 last. That statement is a clear indication that another conference would be held early this year. I ask the Minister of Finance why the conference has not been called. I ask the Minister of Finance what is the cause of the delay. I ask the Minister of Finance why the government is not prepared to say at this time that a further conference will be held at an early date.
Certainly the provinces are asking for a conference. It is evident that the municipalities are highly dissatisfied with the treatment they have received. It is not, as the Prime Minister implied the other evening, solely that they are dissatisfied with the treatment they received from the Liberal government. They are also dissatisfied with the treatment accorded them by the present administration.
The submission of the municipal governments to the federal government on February 7 contains the following as found on page A-4:
Since 1945, and increasingly with every passing year, the pressures for urgent and costly programs of local improvements and modern community facilities have continued to mount. There is little prospect that any substantial proportion of these needs can be provided unless facilitating financial assistance can be made available to municipal governments.
There is a clear statement that unless assistance is provided to municipalities to relieve their pressing financial burdens they will not be able to meet the important demands for essential services now being made
736	HOUSE OF
Dominion-Provincial Fiscal Relations on them. So the municipalities are not satisfied with the results of the one conference that has been held and anything that has been done arising from that conference.
We in this group believe in the principle of federal-provincial tax agreements. We believe that under these agreements the less wealthy provinces should receive substantial payments. We believe the agreements should be used in such a way as to equalize opportunities for citizens all across the nation. We believe that because people live in the have-not provinces so-called or provinces that have a more difficult time financing their administrations they should not have a lower level of public services than people who live in other provinces.
The payment formula today is based in part on the average per capita yield in the two highest provinces. We suggest that this should be changed to bring it up to the highest province. We suggest that there should be consideration of fiscal need and that each province should be paid a stated sum in relation to its population for every dollar per capita personal income falls below the national average. This would mean a substantial measure of equalization in the case of these provinces.
We point out that in a period of recession and falling income such as we are in now provincial revenues are adversely affected. Provincial revenues depend in the main on gasoline taxes, motor licence fees, liquor profits and sales taxes. All of these sources of revenue are tied in very closely with income within the provinces. That being the case, it is most essential that the federal government make it possible for the provinces to stabilize revenues and the income of the people within those provinces.
We believe there should be another factor included in the formula, namely that a prov-vince would not receive in any case less than it received by way of payment the previous year so that the moneys coming from the federal government to the provincial treasury would in each case be assured.
I have said that there are a number of things that could and should be discussed at such a conference. One is the serious unemployment situation facing the nation. The second one I would list is low farm income and the price-cost squeeze affecting the primary producers. At such a conference consideration should be given to whether we are willing to see our agricultural plant deteriorate or whether we are going to adopt policies that will maintain full production of food badly needed throughout the world. The


whole question of the maintenance of farm income should be considered as well as the provision of crop insurance in the various provinces.
The third item we suggest should be considered by such a conference is national development and a national development program that can be shared in by all the provinces. During the last parliament we were very pleased to support loans to the maritime provinces for power development but we think that this good policy of providing money for power development in the mari-times at relatively low rates of interest should be applied to the other provinces. I ask the Minister of Finance (Mr. Fleming) why the government has not provided this kind of policy for all the provinces and why it has made it applicable only to the maritime provinces. Certainly the province from which I come is asking the federal government at this time for the sum of $100 million by way of a loan for the purpose of power development. I ask him why the policy applied to the maritimes has not been applied equally to other provinces.
At such a conference 1 would suggest that there should be consideration of the development of the roads in our nation. We support the northern development road program outlined in the speech from the throne but I ask the government why a road development program for the people outside the north has not been provided. I suggest that at such a conference the federal government should show its willingness to participate in an expanded road program which would include more than one trans-Canada highway and would include highways running north and south.
The province of Saskatchewan has completed its section of the trans-Canada highway and under the government's normal road development program Saskatchewan will be the only province in Canada that will not be able to obtain any financial assistance this year because its section of the highway has been completed. That province is prepared to enter into an agreement with the federal government for the construction of more highways running east and west and north and south. I ask the Minister of Finance if that is not the kind of road development program we need at this time not only to provide better roads but to help to solve the very serious unemployment problem facing our nation.
We suggest that the fourth item that should be considered at such a conference is the crisis that prevails in our educational system and institutions. I believe most hon. members are acquainted with the fact that Canada has

been very short of graduates in the fields of engineering and medicine in recent years. In spite of our need for more graduates from our universities we find that instead of the situation with respect to entrance fees improving they are going up this year at most universities anywhere from 10 per cent to 25 per cent. Tuition fees are increasing. With unemployment prevailing, it is more difficult for students to obtain the necessary summer employment and we face a real educational crisis.
I suggest that the fifth item that should be considered at such a conference is an overall health program so that the ordinary citizen will not have to pay the very high cost of medical care. A good step is being made in the field of hospitalization at this time. We suggest that it should be extended.
These are some of the things that we suggest must be considered at a federal-provincial conference if the economic crisis facing the nation is to be resolved and a solution of the important problems facing us achieved.
I believe there is another reason why these major issues must be dealt with at this time. We are all aware of the very great advances the Soviet union is making in many of the fields to which I have referred. Canadian businessmen who have recently returned from the Soviet union have said, according to newspaper reports, that at the present rate of increase in production in the Soviet union it is only a matter of time, perhaps 10 or 15 years, until their per capita rate of production exceeds that of the North American continent. We are being challenged across the world today as we have never been challenged before. Is the Minister of Finance going to refuse to call a further federal-provincial conference to deal with unemployment in the face of this great challenge of the Soviet union today?
I suggest to the government that it is not just a matter of comfortable financial arrangements with the provinces enabling them to meet their financial needs. The problem is to make sure that democracy, and our nation, meets the Soviet challenge by increasing our production, by solving our unemployment crisis and by meeting the other important problems to which I have referred.


Donald Methuen Fleming: Mr. Speaker, there are some issues that I might have expected the Leader of the Opposition (Mr. Pearson) to choose as an amendment on such a motion as that now before you. Certainly, however, this would not have been one that I would have expected a sensible Leader of the Opposition to choose as the subject of his amendment today. If there is one subject upon which the people of this country spoke with a clear voice on 57071-3-47
2, 1958
Dominion-Provincial Fiscal Relations March 31, it was on the subject of the position of this government with respect to the provinces of this country. Apparently there is such a lack of subjects upon which the Leader of the Opposition may choose to found a grievance that he seeks to go back and fight the election all over again on the hustings. If that is what he wishes, there will be no difficulty in gratifying his wish.
I believe the people of this country expected that when the new parliament met the members of this house, in all parties, would be prepared to take account of the fact that the people had spoken decisively on some of these issues. If the Leader of the Opposition wishes to go back and fight these issues over again I can assure him that his wish will be gratified. I believe there are two people in Canada who will not be grateful to him for the speech he has made today.	It does not require very much
guessing as to who those two are. I can think that when the press carries the report of the speech of the hon. gentleman the new Liberal leader in Ontario will not take very much satisfaction out of it. The new Liberal leader in Quebec will not find very much in it to cheer him along his thorny path.
We have heard speeches of this kind before. We heard such speeches during the last session and the session before; yes, on earlier occasions as well. I suppose as long as the Leader of the Opposition and those associated with him lack something new about which to talk we can expect them to go on expressing the same kind of touching concern for Mr. Frost as the Leader of the Opposition undertook to express today. His speech ranged over the issues of not only the 1958 election but the 1957 election as well. I am going to suggest to him that if he hopes to carry his party anywhere from its present position he will have to find something new and fresh about which to talk. The old record, the old story and the old cliches just will not make a very good impression on the Canadian public today any more than they made on the Canadian electorate on March 31.
The Leader of the Opposition appeals on his record. What could have led him to refer to the record of the government of which he was a member? There is no comfort there for him. I can only conclude that it was the pricking of an uneasy conscience that led him today to try to revise and repaint the record of that government of which he was a member. He has endeavoured to give it a fresh coat of paint; anything to give it a new look; anything but the old record in its true colours. We will have an opportunity, I trust, to examine that record, not with the fresh coat of paint that the Leader of
738	HOUSE OF
Dominion-Provincial Fiscal Relations the Opposition applied to it today but in its true colours, in its sordid reality.
Now, sir, what was the record of the government to which the Leader of the Opposition has himself made reference this afternoon and invited a reference on my part? No one in this house, and few people in this country, are going to forget the attitude of that government toward the provinces year after year. It was not simply a matter of the things they did; it was not simply a matter of the things they left undone; it was their attitude, and that attitude we saw expressed time and again. We saw that attitude expressed in dominion-provincial conference after dominion-provincial conference. It was a haughty attitude, an overbearing attitude. It was a take-it-or-leave-it attitude, a stubborn, stiff-necked attitude. When that government condescended to meet the provinces, they laid the proposals on the table and there was to be no deviation from those. So far as the provinces were concerned, they might take them or they might leave them, but so far as these federal masters were concerned, there would be no change.
As you well know, Mr. Speaker, that attitude was reflected in so many ways. I would have hoped that by this time hon. members opposite would have learned something about the folly of their own attitude. But, sir, only look if you please at the situation in which we found ourselves when we took office last summer. We moved to meet the provinces and the provinces sent their representatives, their premiers, other ministers and officials to meet us here in Ottawa in November.


John Whitney Pickersgill: Five months after the election.


Donald Methuen Fleming: The hon. member can count up to five; he has proven that today.


John Whitney Pickersgill: The hon. gentleman can add correctly, too.


Donald Methuen Fleming: But the hon. gentleman does not seem to be very successful in counting the votes of his party in Canada.


John Whitney Pickersgill: I was able to count a few in my own riding.


Donald Methuen Fleming: Yes, the hon. gentleman is quite unique. I think hon. members ought to grasp the point he is trying to make. He is telling this house, and telling the country, that of the 265 Liberal candidates during the last election, he is unique amongst all the Liberals in being the one Liberal in Canada who increased his majority.


John Whitney Pickersgill: Even that is not true.


Donald Methuen Fleming: It is not the first respect in which we have found my hon.


friend unique. However, Mr. Speaker, I invited you to consider the situation in which we found ourselves. Last fall when we met the provinces, we were determined that there would be no repetition on our part of the attitude of those who had preceded us as representatives of the federal government. We therefore did not face the provinces with any hard and fast, take it or leave it terms. We indicated three measures that, if they approved, we were prepared to take. But we asked them to bring to the conference their proposals. Nothing short of a complete reversal of attitude at that time would have sufficed to break down the wall of suspicion and hostility that had been built up over the years on the part of the representatives of the provinces by those who were then the government, of whom the remnants today sit opposite.


John Whitney Pickersgill: I wonder whether I might ask the hon. gentleman a question?


Mr. Hodgson:: Ask him two questions.


John Whitney Pickersgill: Does he recall what the premier of Ontario said at that conference about the attitude of the former prime minister in provincial conferences?


Donald Methuen Fleming: Yes. He paid a very generous compliment to Mr. St. Laurent. He reserved his comments in these remarks on those associates of Mr. St. Laurent of whom my hon. friend was one.


John Whitney Pickersgill: I shall read the record shortly.


Donald Methuen Fleming: I commend to the hon. gentleman the reading of many records. No one needs it more than he does. With that kind of attitude, we were able to bring about a new atmosphere at that conference. I will say this. A gentleman who has attended many dominion-provincial conferences, and not as the representative of a province with a Conservative government, said to me at the conclusion of the conference that he had attended every conference in the last 25 years but had never seen one the equal of this one for the new spirit, the new attitude that had been created in that conference by the representatives of the federal government.


Lester Bowles Pearson: May I ask the hon. gentleman a question? Would he mind telling me which member of his delegation he is quoting?


Donald Methuen Fleming: He was not a member of my delegation at all. I have made it quite clear that he was the representative of a province that did not have a Conservative government.


John Whitney Pickersgill: It certainly was not the
premier of British Columbia.


Donald Methuen Fleming: We put before that conference three things which we indicated we were prepared to do if they met with their approval. In reference to the scheme of hospital insurance we were prepared to remove that veto which the former government had introduced and which would have meant that a minority of the provinces of this country could have prevented the hospital insurance scheme from coming into effect. We indicated that we were prepared, if parliament would support us, to eliminate that provision that required the subscription to the plan by a majority of the provinces representing a majority of the Canadian population. We indicated we were prepared as well to advance the date on which that scheme was to be brought into effect, to remove these crippling fetters on that scheme which hon. gentlemen opposite had imposed.
We then said that we were prepared to remove another limitation on another project that hon. gentlemen opposite had imposed in relation to unemployment assistance. It will be remembered that in the face of our pleas for more generous treatment of the provinces in this matter, when the former government asked parliament to legislate in terms of unemployment assistance it imposed what came to be known as the threshold provision, that there should be no sharing on the part of the federal government with any provincial government in the matter of unemployment assistance costs unless the numbers of unemployed in the particular province exceeded .45 per cent of the population. The hon. gentleman who seconded the amendment today (Mr. Martin) is the hon. gentleman who introduced in this house and defended that threshold provision in order that the federal government would not contribute a cent unless the figures of unemployed exceeded that percentage. We indicated last November to the provinces that we were prepared to eliminate that threshold provision and to contribute dollar for dollar with the provinces to the cost of unemployment assistance.


John Whitney Pickersgill: May I ask the hon. gentleman a question?


Donald Methuen Fleming: We indicated we were prepared to move in a third respect, namely in the matter of Atlantic adjustment grants.


John Whitney Pickersgill: I wonder if the hon. gentleman would permit a question?


Donald Methuen Fleming: I can understand the agitation of my hon. friend when I mention Atlantic adjustment grants.
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John Whitney Pickersgill: My question was not in relation to that matter at all. I waited patiently until the hon. gentleman finished his reference to the threshold provision because I wanted to ask a factual question about it. I should like the minister to tell us if he can, what province, if any, asked to have the threshold removed? I may say that I listened to most of the proceedings of the conference and I read them all, and I can find no request anywhere in the proceedings for that to be done.


Donald Methuen Fleming: Not only had the positions of the various provinces been stated on that point, but our indication of our willingness to make that move was greeted by the provinces then and since. If my hon. friend had done a little bit of touring in the last election campaign he would have heard expressions at that time; I refer to expressions of approval in the provinces by the representatives of the provinces.


John Whitney Pickersgill: That does not answer my question.


Donald Methuen Fleming: I went on to speak of our indication of our willingness to take action with respect to Atlantic adjustment grants. Oh, how the Leader of the Opposition talked today about the record of his government! Mr. Speaker, if you will look at the record of that government in reference to Atlantic adjustment grants you just will not find any record. Their achievement in this respect is a zero. This record that he boasts about is a record that could be summed up in one cipher. Not only that, but when we who are on this side of the house today urged consideration of the position of the Atlantic provinces and when those Atlantic provinces themselves at the dominion-provincial conferences prior to the spring of 1956 asked for consideration of the particular position of the Atlantic provinces, they not only got the cold shoulder but a firm refusal on the part of the former government to give any consideration to this question.
You, Mr. Speaker, well know what we did. You well know that we made our statement to the conference last November. That statement was hailed by the provincial representatives. In the official communique that was issued at the conclusion of that conference this sentence took a leading place:
It was generally agreed that the over-all economic position of the Atlantic provinces is now such as to justify some special grants in aid to the governments of those provinces from the federal government.
That is the statement of our position and the statement of general approval on the part of the representatives of the provinces

Dominion-Provincial Fiscal Relations at that conference. It was in implementation of that general agreement that we proceeded from that point as we did.
The most concrete proposal with respect to the formula for an Atlantic adjustment grant, prior to the 1957 dominion-provincial conference, had been the one put forward at the last previous dominion-provincial conference -indeed I believe at two of them-by the premier of the province of New Brunswick, Hon. Hugh John Flemming. It was in no small degree the vigour of his advocacy of that formula which led to the concrete decisions taken in the fall of 1957. At the conference in November it was agreed that it would be necessary for the Atlantic provinces themselves to decide on their ideas as to what might be a fair basis of division among those four provinces of whatever sum might be made available as an Atlantic adjustment grant. It was for them to decide and those four provinces held a conference of officials at Halifax in December to which the federal government was asked to send representatives to be of whatever assistance they could be in the negotiations. A decision emerged from that Halifax conference to recommend to the governments represented that the Atlantic adjustment grant-whatever it might be -should be divided among those four provinces in the following proportions:	Nova
Scotia 7.5, New Brunswick 7.5, Newfoundland 7.5 and 2.5 for Prince Edward Island, or to give the proportions instead of the amounts that were eventually agreed upon, 3, 3, 3 and 1.
The governments of the Atlantic provinces themselves then made a decision and notified the Prime Minister (Mr. Diefenbaker) of Canada of that decision. It was their decision. It was a decision by the governments following this conference at Halifax, and Premier Stanfield, having been so notified and authorized by the premiers of the other three Atlantic provinces, advised the Prime Minister of Canada that the four provinces down by the sea were prepared to agree on that formula for the division of the grant.
Then in January of this year we took two steps of very great importance. One of them was indeed of historical importance-it was the Atlantic adjustment grant. For the first time in history recognition was given by the parliament of Canada to the fact that the Atlantic area, embracing the four provinces there, was entitled to a division of revenues from the three joint fields of taxation, on the basis of a special degree of need. It was an historic principle; it was an overdue recognition of a need. We recognized and we advocated it but those who sit opposite and who are prepared to support this amendment

today, not only had not recognized but had indeed vigorously opposed. That is their record on the Atlantic adjustment grant.
We moved to place $100 million at the disposal of these provinces in order to meet that special need and commencing with April 1 of this year there is to be divided among the four Atlantic provinces, in the proportions unanimously agreed upon among them, the sum of $25 million per annum for the next four years.
I think it will be of interest to the people of the Atlantic provinces to read that the Leader of the Opposition came out today and began to talk about the Atlantic adjustment grant. I would have thought that with a modicum of political sense he would know that that is one subject that no Liberal -let alone the Leader of the Opposition himself-would ever wish to hear breathed again.
But we did not stop there. We took into account the fact that it had not been possible to reconvene the dominion-provincial conference-


John Whitney Pickersgill: Why?


Donald Methuen Fleming: Because you were talking too much.


Lester Bowles Pearson: Now at last we have got the real reason.


Donald Methuen Fleming: Can a leopard change his spots? It is a senseless interjection but I suppose it might be misleading to someone who reads the record and did not have the facts, so I will just say in a word that the house was sitting at that time morning, afternoon and night and all day Saturday, and these considerate gentlemen opposite, who had opposed any Atlantic adjustment grant, were saying that we should have another dominion-provincial conference on top of sittings at that pace.
There is going to be full opportunity to discuss these subjects in due course. We then moved to meet the needs of these provinces as urged upon us by the provincial governments because the provinces knew that there was now in office a government which had some recognition and understanding of the problems of these provinces and they did not cease their urgings and their representations in that respect. When the conference rose at the end of November we had additional representations from them and we were urged, particularly by the provincial treasurers who were then in office and were faced in January with the problem of preparing their budgets for submission to their legislatures, for some immediate measure to take care of the current situation. We did move to take care of that immediate situation, and that is how the increase from 10 per cent to 13 per cent in the provincial share of the

personal income tax yield came about as a result of the amendment we introduced in January.
We estimated-and again I emphasize estimate because it depends on the yield from these joint fields of taxation in this fiscal year 1958-59-that this additional sum for distribution among the ten provinces would amount, if the figure for 1958-59 was the same as that for 1957-58, to approximately $62 million. That was just $62 million more than those provinces would have received had there not been a change in government in June 1957.


John Whitney Pickersgill: Would the minister permit a question at this stage; a purely factual question? I take it that payments are being made at this time. Could the minister give us the amount of the instalments paid for the month of April?


An hon. Member:: Do you want them stopped?


Donald Methuen Fleming: The payments have been duly reckoned in accordance with the provisions of the statute and I can furnish my hon. friend with the figures in due course if he wishes to have them in precise form.
There were two measures taken by us in January of this year. We said that the increase from 10 per cent to 13 per cent was on a one-year basis; it was an interim measure and it was designed to meet the immediate needs of the provinces because they were ready for their budgets. That is the way the matter stood then and that is the way the matter stands today. Those needs have been met in that form for this present.
Now let me straighten out a few things which have been badly cluttered up and which were badly misrepresented in the speech made by the Leader of the Opposition this afternoon. I wish to deal, first of all, with his figures in regard to the federal share of the tax dollar. If, Mr. Speaker, you want figures on the federal share of the tax dollar at the time that tax dollar is collected, I may tell you that the federal share in the fiscal year 1939-40 was 46.5 cents, and if you come down to the 1950's you will find that the figure has varied between 1950 and the last year for which complete figures are available, between 67.7 cents and 72.6 cents of the total Canadian tax dollar.
But if you want to take account of the transfer payments and think just in terms of the revenue finally yielded out of those sources to the provinces and the federal government, here are the figures: in 1939-40 the federal share of the tax dollar after transfer payment was 44 cents; in the fiscal
Dominion-Provincial Fiscal Relations years 1953-54, 1954-55 and 1955-56, which latter period is the last for which figures are available, it has run between 61 cents and 65 cents.
It is not much use the Leader of the Opposition saying today: well, deduct the cost of national defence. Of course, the cost of national defence has increased compared with 1939, but this is, and always has been, a federal responsibility. Surely it is not germane to this question of what is the revenue of the federal government. We are talking about revenues. There is, of course, the whole question of responsibility. There has been an assumption of some additional responsibility-some responsibilities that go back to the earlier period-but if the hon. gentleman is talking about the federal share of the tax dollar, either in terms of the dollar as collected or of the dollar after the transfer payments among the various levels of government have been effected, the figures are those I have given.
The Leader of the Opposition sought this afternoon to introduce into this debate two issues which I can describe in one word and one word only, "fictitious". He talked about equalization, and he took the opportunity to unburden himself of a charge that those of us who now sit on your right, Mr. Speaker, had voted against the principle of equalization in 1956. He made an equally baseless charge that those of us who were in the house in 1956 had voted against the principle of stabilization. There is not a word of truth in either of these charges. We certainly did vote in 1956 against a measure that was introduced by the former government-the Federal-Provincial Tax-Sharing Agreements Act.
It is true that that measure did embody a provision for equalization and a provision for stabilization, but it embodied some other things too, and we were not prepared to accept those other things. We never voted against the principle of equalization; we never voted against the principle of stabilization. But we did vote against that measure because, as we made perfectly clear at the time that measure was debated, we believed it to be unfair to the provinces and unfair to the municipalities because it did not go far enough. That is all on record, and it is going to take more than speeches such as were made this afternoon by the Leader of the Opposition to change the facts; the facts will, indeed, give little comfort to the hon. gentleman and provide no foundation for the charges he made in this house this afternoon. Those charges are utterly lacking in any basis whatever.
Let me remind the hon. gentleman, in the light of all his talk about the principle of equalization, that in the amendments which

Dominion-Provincial Fiscal Relations were introduced in January last the principle of equalization was carried further than it has ever been carried before by any action taken by the Canadian parliament.


John Whitney Pickersgill: It was exactly the same principle.


Donald Methuen Fleming: It was carried further than it has ever been carried in the history of the Canadian parliament.


John Whitney Pickersgill: Except there was no
stabilization in it.


Donald Methuen Fleming: Mr. Speaker, the hon. member for Bonavista-Twillingate-


Paul Joseph James Martin: Does that mean that the hon. minister now accepts the principle of equalization on the basis of the position of the two highest provinces?


Donald Methuen Fleming: That is not what I said at all.


John Whitney Pickersgill: That is what you have never said.


Donald Methuen Fleming: We carried the principle of equalization which was written into that act of 1956 and which was supposed to be a crowning glory of Liberal achievement, as it was described here this afternoon, to an extent which hon. members opposite were not prepared to carry it. They can make anything they like out of this talk about equalization but the cap does not fit. The Leader of the Opposition, as the hon. member for Victoria-Carleton (Mr. Montgomery) so rightly said, was simply putting up a straw man. He threshed it, he tore it limb from limb, he pulled its eyes out, set fire to it and then, for good measure, poured acid on it. But it was nothing but a straw man.


Lester Bowles Pearson: Straw men don't have eyes.


Donald Methuen Fleming: It was an interesting exhibition, but it had nothing to do with the facts; it was completely divorced from history.
The principle of stabilization continues to be recognized. Had we wanted to interfere with that principle I suppose we would have been expected to propose it last January. But there was no interference with that principle. Every item, every syllable in the principle of stabilization which hon. members opposite invited parliament to place on the statute books is still there; there has been no interference whatsoever, and two provinces, British Columbia and Prince Edward Island, are today deriving from the federal treasury benefits which result from the recognition of the principle of stabilization.


John Whitney Pickersgill: Could I ask the minister a factual question? Is he now asserting that the same principle of stabilization covers the extra 3 per cent of personal income tax that was granted to the provinces in this legislation?


Donald Methuen Fleming: No, Mr. Speaker. As the hon. gentleman knows, two sections were added to the act-section 11 and section 12-and one section provides:
-paragraph (f) of subsection 1 of section 2 shall for the purposes of this act and any tax rental agreement, be read and construed as if for the words "ten per cent" therein there were substituted the words "thirteen per cent".
It is perfectly clear.


John Whitney Pickersgill: There is no stabilization there.


Donald Methuen Fleming: Before I leave this subject, let me say just one thing by way of reminding the house of the testimony of the provinces themselves. This is the degree of satisfaction they expressed for the generosity of the treatment they received from the former government, whether on the basis of equalization, stabilization or anything else. The legislation of 1956 contemplated agreements that were to run from April 1, 1957 for a 5-year period. They would have run until March 31, 1962. When we met the provinces, they had all signed the agreement except the province of Quebec; Ontario had signed in respect of one tax instead of three, but the others had all signed for all three.
Did we find they were satisfied with them or, indeed, signed them on the basis of being satisfied with their contents? No, Mr. Speaker, there was not a single province there, regardless of the political colour of its government, which was satisfied with the agreements that had been entered into in pursuance of the legislation passed in 1956 by hon. gentlemen opposite. Not one province. What about Newfoundland, with a Liberal government? What about Prince Edward Island, with a Liberal government? What about Manitoba, with a Liberal government? Were they satisfied? They certainly were not. No provincial governments represented at that conference were more vocal in their denunciation of the inadequacy of the agreement entered into in pursuance of that 1956 legislation than those three provinces represented by Liberal governments. There is the test, surely; the test of the adequacy of the treatment that the provinces received at the hands of the former government.
We did not stop with making provision for meeting fiscal needs on the part of the provinces in the way I have indicated. We went further. We well recall the stony, callous

unwillingness of the former government to enter into measures of partnership with the provinces to carry forward works related to the development of resources. For years we had asked the former government to make some provision for assisting the province of New Brunswick in financing the Beechwood power development but that government would do nothing. All that New Brunswick received was a stony refusal.
On the other hand, we moved, we acted. In a measure that received approval in this house last January we moved to assist the province of New Brunswick with the financing of up to $30 million of the cost of that project which promises to assist so greatly in the development of the resources of the province of New Brunswick. We also moved in the matter of the development of power in the Atlantic provinces and again in legislation that parliament approved at the last session provision was made for federal participation on a partnership basis with the provincial governments in the Atlantic area in the development of power in those areas that will unquestionably be of great assistance in developing the resources of that important part of Canada.


John Whitney Pickersgill: A Liberal measure.


Donald Methuen Fleming: And then, looking west, we had not forgotten the way in which that former government or some of its members had talked for years about the South Saskatchewan irrigation dam. South Saskatchewan, what memories that expression conjures up: the discussions in the house, the discussions on the hustings, the former minister of agriculture campaigning up and down Saskatchewan promising the people that if the Liberal government were returned to office they would get their long deferred dam and of course the then prime minister coming along later and saying "No, you will not get it." Well, perhaps talk on that subject served the interests of the former government but talk was all that they ever produced on that subject; we acted.
We have indicated to that province in generous terms the assistance that we are prepared to give to the construction of the South Saskatchewan irrigation dam. If hon. members will look at the supplementary estimates which I had the honour to table in the house this afternoon they will find item 533 under the Department of Agriculture which reads:
Major irrigation and reclamation projects in the western provinces-further amount required, $4,719,600.
Most of that sum is provided for the construction of the South Saskatchewan irrigation dam this year and construction will be
Dominion-Provincial Fiscal Relations commenced this year if the province of Saskatchewan is prepared now to come forward and enter into the agreement on the very generous terms which we have communicated to its government. Where the former government talked and talked, procrastinated and procrastinated, played politics and shilly-shallied, we have acted.


John Whitney Pickersgill: You still have not got an
agreement.


Donald Methuen Fleming: Mr. Speaker, as hon. members well know this is not the end of the program of the development of resources. The program upon which we were elected to office contemplates that where there are projects that will be of general benefit we are prepared in partnership with the provinces to come forward and assist in those projects. The day of the development of resources in this country is not past. The great day in the development of the resources of Canada lies before us. That was the decision of the people on March 31. And so, far from there being any hidden reason for the actions that we have taken, our actions have been completely open and above board.
I do not pretend for one moment that those actions commend themselves to hon. gentlemen opposite. How could they when they were not prepared to take action along those lines in the long years that they held office here? Again I say there is nothing hidden. The immediate needs of the provinces have been met in the interim measure that was introduced in January and when the time is ripe and there is an opportunity for a resumption of the dominion-provincial conference of course one will be called. There has been no doubt left in the mind of any citizen on that point by the Prime Minister.


Hazen Robert Argue: This year?


John Whitney Pickersgill: This year, next year, some time, never.


Donald Methuen Fleming: When the Leader
of the Opposition says that someone does not know our policies then all I can say to him is that if he is not yet aware of our policies at least the people of Canada showed that they are aware of our policies.
As far as unemployment is concerned, we did not wait for any dominion-provincial conference to move to combat the problem and we are not waiting for the provinces today. We took measures that will assist the provinces and municipalities by substantial increases in the fiscal payments to enable them to measure up to their responsibilities in respect of unemployment within their borders. We never at any time waited for a dominion-provincial conference before moving in this field and we are not waiting

Dominion-Provincial Fiscal Relations today. Our whole program has been designed to discharge fully every vestige of federal responsibility that relates to the unemployment problem. Our responsibilities as a federal government in that respect we will continue to discharge.
We did not wait for any dominion-provincial conference to undertake our vast program of public works. We did not wait for any dominion-provincial conference to weigh the nice question as to what are the relative degrees of responsibility of various levels of government. Again where hon. gentlemen opposite hid their heads in the sand and turned their backs upon their responsibilities, we acted.
The proof of the pudding is in the eating. Compare what has been said here today by the Leader of the Opposition with the attitude of his party when it was in power. The Leader of the Opposition today spoke as though he were the apostle of the provinces, the advocate of the new deal for the provinces. The provinces of this country have not confided to the hon. gentleman the role of advocate and spokesman for the provinces of this country.


John Whitney Pickersgill: Does my hon. friend suggest that he holds that mandate?


Donald Methuen Fleming: The provinces are familiar with the test, "By their fruits ye shall know them." The provinces well know the bitter fruit they were made to eat when my hon. friend was in office and they want no more of that kind of diet. They are not going to ask my hon. friend to be their spokesman and advocate. On the contrary they know that it is this government which in its days in opposition advocated the cause of justice for the provinces. When it had the opportunity this government moved swiftly to meet the needs of the provinces and to discharge to them the responsibilities upon which hon. gentlemen opposite had shamefully turned their backs.


Paul Joseph James Martin: Mr. Speaker, after the vigorous statement we have just heard from the Minister of Finance (Mr. Fleming) I think it would be well for us to recall exactly what the precise terms of the amendment moved by the Leader of the Opposition (Mr. Pearson) are so that we can get back to the subject matter which he so ably raised this afternoon. That amendment reads:
That this house regrets that the government has failed to call a federal-provincial conference to discuss unemployment and other urgent problems of common concern to federal and provincial authorities; and that the government has failed to give assurance that it would maintain or improve the principle of equalization of direct tax revenues of the provinces embodied in the existing law.

First of all, in what I have to say by way of comment on the speech of the Minister of Finance I should like to begin with the last portion of the amendment, not that I propose to do what he has done, to seek to divert our attention from the main purpose of the amendment but to indicate the extent to which many of his statements cannot be confirmed or agreed with. The fact is that until very recently it was not possible for any member of the government to say that he was in favour of the principle of equalization. In the last session of parliament during the month of January the Minister of Finance was pressed from all sides of the house to indicate whether or not he was in favour of extending the principle of equalization beyond one year and notwithstanding the pressure imposed on the minister it was not possible to get him to yield one iota from the position he took.
It was the Prime Minister (Mr. Diefen-baker), as my leader pointed out, who during the course of the election said in a general statement in Winnipeg, that he was in favour without limitation of the principle of equalization. The statement that we have heard from the Minister of Finance really does not advance us very much. In fact, his statement is to be contrasted with the statement made by the Prime Minister and his declaration likewise is more in harmony with the well known position taken by Premier Frost in the matter of equalization and the position put forward from time to time by the premier of the province of Quebec.
As a matter of fact, the speeches of the Minister of Finance in the house while he was a private member on this subject clearly indicate that he has been in favour of the principle of equalization grants based on need but not, as my leader indicates this party is, on the basis of equalization for all provinces which is quite a different thing. The speeches of the Minister of Finance throughout his career in the house on this particular matter show that he has given emphasis to the question of need and not to the principle of equalization.
I am sorry that the minister had to leave, undoubtedly to attend to more important duties, but I would point out that there could hardly be more important problems before the country at this time than those raised by the amendment put forward by the Leader of the Opposition. We are asking that a dominion-provincial conference be held and in answer to that the Minister of Finance says, "Oh well, the people of Canada dealt with that in the election of March 31; they returned this government with a huge

majority." He thereby suggests that the people of Canada were in favour of undue delay in settling once and for all, as the Prime Minister said in 1957, this matter of fiscal problems and differences between the federal and provincial governments. Surely that is not a conclusion to be drawn from the fact that so many hon. members supporting the Conservative party sit on Mr. Speaker's right.
The fact is this, and the government will not be able to escape it: In the election of 1957 the government promised to call a federal-provincial conference in the month of September for the purpose, in the language of the Prime Minister, of settling this question finally as between the central and provincial governments. That is the promise that was made in the election of 1957 and it was repeated in the election of the present year.
As my leader pointed out, the fact is that a conference was held in the month of November and no agreement was reached. The provinces were told that the conference would resume in the month of January. In fact, this assurance was given in a letter by the Prime Minister to the premier of the province of Manitoba. But instead of the conference being reconvened the Minister of Finance sent a telegram to the provinces, a telegram in which, as my leader has indicated, the minister revealed his faulty mathematical training, giving the provinces a take it or leave it proposition by way of interim payments with no opportunity to sit around a table and indicate their reactions. Almost a year has passed since the government first took office and still this dominion-provincial problem which the Prime Minister said he was going to solve has not been solved and we are debating the issue once again.
That is the situation, and why we cannot get from the Prime Minister, why we cannot get from the Minister of Finance some indication when this conference is going to be held is surely one of the biggest mysteries of the political life of our country at the present time. The Prime Minister said that in the month of September the government is going to give the federation of municipalities an opportunity to make representations. When he said that he gave the impression that this was an innovation in the conduct of the operations of the federal government. I want to say to the Prime Minister in passing that that particular accommodation is no different in the case of the federation of municipalities than is the case of the Canadian Labour Congress, the farmers' union or the federation of agriculture. These bodies have been meeting the government of the day and previous governments in the same way that the federation of municipalities is going to meet the government in September and lay before them 57071-3-48
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Dominion-Provincial Fiscal Relations its grievances and solutions for the many problems that confront them.
But if it is possible for the Prime Minister to tell us that he is going to meet the federation of municipalities in this informal way, surely it should be possible, in the face of his promise, in the face of the demands of the provinces, in the face of the fact that this problem remains unsettled, for the Prime Minister to give the house and the country some indication of when the conference is going to be resumed. Surely we are entitled to that from the man who, in 1957, said that there was no question that was more important to the national unity of Canada than this question of the financial relations between the federal and provincial governments. A Conservative government, he pledged, would call an immediate dominion-provincial conference to settle such problems, not in the spirit of arrogant domination displayed by the Liberal government, but in a spirit of unity. They would call that conference to settle that problem in the month of September.
That was in 1957. In the face of that kind of assurance, and the promise made to the Canadian electorate, it has not been possible for any of us on this side to elicit from the Prime Minister or from the Minister of Finance the slightest indication as to when they will condescend to meet the provincial governments who share with them, as the Prime Minister said, a responsibility for the unity of this country. These remarks were made by the same Prime Minister who in 1955, when we had comparatively less unemployment than we have now, rose in his place and said, as reported in Hansard for March 15, 1955, page 2037:
As to our suggestions, the Leader of the Opposition (Mr. Drew) suggested that there should be a dominion-provincial conference on unemployment. Why could it not be held? Why could not this conference in April be held with reference to this matter and plans made respecting other fiscal matters? That is the first question I ask.
Those are the words of the present Prime Minister of Canada. I throw them back to the Minister of Finance who, a few moments ago, said that his party was prepared to deal with unemployment without calling upon the other governments of our country to share in that responsibility. All I can say is that if that is the policy of the government then why do they not give us some evidence that they are really tackling this problem of unemployment?
A few moments ago the Minister of Finance said that hon. members opposite accused them of not doing something about unemployment. Then he listed some of the great national projects which were going to form part of this public works program and put so many

Dominion-Provincial Fiscal Relations of our people back to work. I ask the Minister of Finance, or any minister in the house now in his absence, to tell us which one of those projects has been started; that is the first part of the question. If started, what portion of the unemployed men and women have been put back to work on such projects?
First of all, I ask this government to tell us which one of these projects has actually been started. The hon. gentlemen talk about what they have done for the unemployed. I repeat that question. Let them tell us which national project that they have proposed has actually been started, and let them say how many men and women have been put back to work as a result of the policies of this administration.
The other night we had a statement from the Minister of National Revenue (Mr. Nowlan), and I am sorry he is not in his seat today. I was hoping we could confront him with some of the statements he made on this occasion.


An hon. Member:: He just left a moment ago.


Paul Joseph James Martin: I am sure he is
preoccupied with important matters; I understand that. He made a statement the other night, when talking about unemployment, that automobile sales had improved. I quoted in reply certain statistics that had been furnished to me by the industry to disprove his statement. I wish I had had before me this statement dealing with the very same subject put out by a government department on May 30. The dominion bureau of statistics daily bulletin for May 30, 1958 indicates that factory shipments of Canadian-made passenger and commercial vehicles for sale in Canada and for export declined in April to 39,794 units from 49,193 a year earlier, lowering the January-April shipments to 139,446 units from 175,725 a year ago. Now, if my own figures were inadequate, certainly they are now being properly cushioned by this statement from the dominion bureau of statistics which the Minister of National Revenue could have examined as easily as I have done.
In so far as this industry alone is concerned, on last Saturday the Chrysler corporation in Windsor announced a shutdown of its plant operations for the ensuing week. According to Ward's automotive report, this shutdown will probably eat up entirely the gains in automobile production given by that publication for the previous week.
If one wanted further evidence of the situation in the country, apart altogether from the fact we know now there are 516,000 people out of work as compared with 306,000 on April 20 a year ago, we have but to
1M. Martin (Essex East) .1
examine some of the statistics furnished by government agencies with reference to industrial production in Canada, which is now down eight per cent from last year. By the way, all these figures I am now going to use are available to every member of the government and are furnished every member of the house by the Minister of Trade and Commerce (Mr. Churchill). They show the following situation in Canada with regard to capital investment outlay: The petroleum industry is down 31 per cent; wood products are down 42 per cent; non-metallic minerals are down 60 per cent; iron and steel, down 30 per cent; textiles, down 32 per cent; transportation is up two per cent. The construction industry is down eight per cent and the machinery industry is down 11 per cent.
So, Mr. Speaker, may I sum up the facts that are basic to this particular amendment, that is that there is a serious unemployment problem and that one of the ways by which this problem might be met is by the government calling in the provinces and discussing not only fiscal matters but other matters such as unemployment which have a bearing on the responsibilities of the two senior levels of government in Canada. Why does this government not indicate to us the reason for not calling this conference if it was important for the Leader of the Opposition in 1955 to say, as he did and as reported at page 1652 of Hansard for March 2, 1955:
In all earnestness I urge the Prime Minister (Mr. St. Laurent) not to wait to write to the premiers with respect to the taxation conference before dealing with this immediate subject. This is something that should be dealt with right away. I am confident that if the Prime Minister sent a telegram to the premiers of every province in Canada and asked them to come to a conference immediately to deal with the problem of unemployment and ways and means of meeting the situation, he would receive an affirmative response from every one of them without delay.
Then, Mr. Drew concluded:
That conference could take place within a week. It should take place within a week.
I think also that representatives of the municipalities should attend that conference.
Were those valid words in 1955? Was the statement made by the present Prime Minister valid? Were those gentlemen insincere on that occasion? Surely if hon. gentlemen were justified in using those words then with regard to the comparatively minor problem of unemployment in 1955, there is every reason why those words are applicable today, particularly because the same hon. gentlemen are now sitting on the treasury benches, and it is their responsibility to try to do something about this problem of unemployment. But we have the right, which we intend to assert-in fact, it is more than a right; it is a duty-to inquire why, in spite

of all its assurances in 1957, and in spite of the aggravation in the economic picture, the administration persists in not calling this conference or in not having it reconvened. There must be some reason. Is it because there is a serious difference of opinion between the Prime Minister and the Minister of Finance in the matter of equalization?


Mr. Bell (Carleion):: Oh, no.


Paul Joseph James Martin: The hon. member for Carleton says "Oh, no". He knows perfectly well that in so far as the Hansard record is concerned, the Minister of Finance and the Prime Minister are at variance in this matter of equalization. Likewise he knows perfectly well that the premier of the province of Ontario has said that he proposes to ask for his full $100 million less the $22 million already provided by way of interim arrangement. Is it because Premier Frost is now insisting upon the balance of this $100 million that the conference is not being called?
Is it because, as I said the other day, there may be new developments in the government of Ontario urging a completely new formula in the matter of fiscal relations, based upon a sharing of the gross national product? Is it because some members of the provincial government of Ontario now take the view that the basis of settlement in the matter of fiscal relations should be that the provinces should share a percentage of the gross national product a basis which if possible would certainly bring up the share of Ontario by another $300 million? Is that the reason why the conference is not being called?
Or is it because the province of Quebec as I indicated the other day, through its premier has some strong non-centralization views which may not harmonize with some of the policies of the present administration, and that premier is now anxious to have a meeting in which he can make demands which he feels he is entitled to make on behalf of his government and which this government may feel, in the light of its responsibilities, it cannot accept. Are these the reasons?
Or is it because there is an election in the province of Manitoba and because, knowing something of the position taken by Premier Campbell with respect to fiscal agreements, the government feel that it would be better and more advantageous from many points of view if the conference were postponed at the present time?
I do not say these are the reasons. But in the face of the stubborn refusal of the Prime Minister to give the house any indication of when this conference is going to take place
57071-3-48J
2, 1958
Dominion-Provincial Fiscal Relations and in the face of the fact that he indicated that this was one of the techniques that should be used in the matter of trying to provide a solution to the problem of unemployment, I do not believe that an argument of this kind is extravagant, exaggerated or unfair, particularly when the matter is put by the Leader of the Opposition in the way in which it was put today, because of the current serious problem of unemployment.
We do not say that the full responsibility for that situation lies on the doorstep of the government, although we say its trade policies have greatly contributed to this situation. What we say is that in this particular situation nothing but good could ensue from a conference between the federal government and the provincial governments for the purpose of seeing whether something cannot be done about unemployment which now is as revealed still of major proportions. The numbers of unemployed because of seasonal factors may now have been reduced, but there still remains a hard core of some
516,000	individuals who are not at work and of this number many are not able to qualify for supplementary unemployment insurance benefits. If the government says that it can not do anything about this problem, at least that would be a fair way of approaching the situation. My friend the hon. member for Carleton smiles. I am trying to find some reason why-


Mr. Bell (Carleton):: I smile because I have never heard so many straw men put up in such a short period of time.


Paul Joseph James Martin: My hon. friend says that many straw men have been put up. That is quite right. Many straw men are being put up. But these straw men are suggestions that one makes for the purpose of trying to speculate as to why the government is reluctant to call this conference or -as my hon. friend suggests-why this government refuses to call the provinces together. In Hansard you will not find any reply of any previous prime minister that will correspond to the reply given by the Prime Minister on Thursday night. Every other prime minister has indicated that a conference would be held at such and such a period or that he could not give the exact date. They would say it will be held in 1958 or 1960, or that it is not going to be held at all. But to give an answer such as that which was given to the Leader of the Opposition and say that the government is going to call the federation of municipalities some time in September and to refuse to say when he is going to call in the provincial governments which, under our constitution, are the creators, as it were, of the bodies

Dominion-Provincial Fiscal Relations corporate known as municipalities, is surely giving an indication of failure in this particular instance to understand what the responsibilities of government mean. If it was necessary last year for Premier Frost to ask for $100 million, surely it is not less imperative for him to ask this government to give consideration to his proposal now, a year later. I am not saying whether or not his demand is a fair one.
I am simply pointing out that here is the head of one of the largest provinces, a gentleman who shares the same political convictions as do hon. gentlemen opposite, who wants a conference held before July 1 and who said there would be a conference before July 1, only to be repudiated by the Prime Minister in this house who said that no decision has been reached in the matter. That is the situation that confronts this country and this parliament. The policy, laid down by a right hon. gentleman who said, "Elect me and I will call parliament together in September and I will resolve this problem" must be remembered at this time. That is the situation. It is the same gentleman who said that this was the technique to employ in trying to work out, on an intergovernmental basis, some policy by means of which to bring about a solution to the problem of unemployment.


Mr. Macdonnell:: May I ask the hon. gentleman a question?


Paul Joseph James Martin: Yes.


James MacKerras Macdonnell: The hon. gentleman is making a great deal of the fact that there was some delay in calling a dominion-provincial conference last autumn, and that it was not as early as some people would have liked it to be. Does he think that the electors of Canada, by their action in March, showed very great displeasure at what was done last autumn?


Paul Joseph James Martin: My hon. friend, for whom I have the deepest respect, knows perfectly well that that is the kind of question which I am sure in his case is well in-tentioned but really is more of a straw man than the kind of straw man that I was raising. The fact is this, and there is no one in this house who has a greater sense of honour in public life than has my hon. friend. If the hon. gentleman had told the Canadian people that he was going to call the provinces together and resolve that question in the month of September, I know that he would have done that many months ago or he would have resigned his office.


James MacKerras Macdonnell: Might I ask the hon. gentleman this question: does any one know


better than he that the exigencies of events, political and parliamentary, do sometimes cause things to be done a little later than expected?


Paul Joseph James Martin: My hon. friend is certainly a better apologist today than the Minister of Finance proved to be.


An hon. Member:: Apologist?


Paul Joseph James Martin: Apologist, yes; apologist for the government of Canada. My hon. friend knows perfectly that there was no reason why the dominion-provincial conference could not have been held at the end of January and there is no reason why that conference could not have been held any time after January 3. To say that this house was meeting is no excuse; this house met when the conference was held in the railway committee room in the month of November. Many such conferences have been held simultaneously with a parliamentary session. That is no reason, and in the absence of a satisfactory explanation, which we should certainly receive in this debate in the light of this amendment, we must conclude that there is some reason perhaps involving a new look on the part of the government, particularly in the light of the demands of some of the provinces including the province of Ontario.


Lester Bowles Pearson: Declining revenues.


Paul Joseph James Martin: Yes, perhaps the fact of declining revenues together with the resurgence of more unemployment than was anticipated by the government, are all contributing reasons for the position which the government takes at the present time. I know that the hon. member for Greenwood (Mr. Macdonnell), if he were not in the ministry and applying the objective touch he has always applied, would say there is no good reason for the government not having convened this conference long before now. Certainly there is no good reason why the country should not be furnished with the reasons why the government is refusing to call a conference or to give some indication when it is likely to be called.


James MacKerras Macdonnell: All in good time.


Paul Joseph James Martin: My hon. friend says all in good time.


Lester Bowles Pearson: That is not the way he talked before.


Paul Joseph James Martin: I would like to recall the kind of reply of the present Minister of Citizenship and Immigration (Mrs. Fairclough) to a former colleague of mine

when he made a somewhat similar remark during a former debate. She said "the unemployed of this country cannot wait for the convenience of the administration". That was the reply to the observation made by hon. members opposite when they were urging us to call a conference at a time when there were half as many men out of work as there are today. Because we said we were giving consideration to calling a conference we were told by the present Minister of Citizenship and Immigration that the unemployed of her city and of this country could not wait. I am not going to make that reply to the hon. gentleman. However, if there is any inference to be drawn from the reply given, the hon. gentleman will, I am sure, appreciate its application quite readily.
The Minister of Finance said today that the adjustment grants to the Atlantic provinces constituted an historic principle and that it was the government of which he is Minister of Finance which was responsible, as though this were the first time grants had been made to those provinces, forgetting, of course, that the original subsidies adopted at the time of confederation in 1867 were increased to some or all of the provinces in 1869, 1873, 1874, 1876, 1879, 1882, 1884, 1885, 1887, 1898, 1901, 1907 and up to as late as 1937. He forgot to mention that it was the former government, headed by Mr. King, which brought in the first real attempt to put the fiscal problems as between the provincial and federal governments on a proper basis of principle through the Rowell-Sirois report.


James MacKerras Macdonnell: Would the hon. gentleman permit another question? Would the hori. member recall to the house that tens of millions of dollars were made available to the provinces and to the municipalities last autumn and hundreds of millions of dollars, as the Minister of Public Works (Mr. Green) pointed out, were made available by the Department of Public Works and the Department of Transport.


Paul Joseph James Martin: The Minister of Finance made a statement that the particular grants to the maritime provinces were made for the first time-


Lester Bowles Pearson: The first time it had ever been done.


Paul Joseph James Martin: The first time this had ever been done. All I am pointing out is that the statement of the Minister of Finance, to use his own language-


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: -is nonsensical. Hon. members may laugh and I do not blame
2, 1958
Dominion-Provincial Fiscal Relations them for laughing because of course it is nonsensical; it is ridiculous to suggest that it was the first time.
We all recognize that the problems of government in this country depend on satisfactory arrangements between the provincial governments and the federal government. Good government in Canada in the final analysis depends on satisfactory relations between the provincial and federal governments, the former having been assigned under our constitution heavy responsibilities within their sphere of what might be described as sovereign rights. We, too, have great responsibility and because of our obligations to other communities in the world and because of our preoccupation with the country as a whole our federal obligations are more onerous. Nevertheless the only way we have been able to devise a technique for the proper handling of the problems of government in Canada is through satisfactory relationships with the provinces.
I suggest, therefore, that to have called the provinces together last November and not to have given them a clear statement on how far the federal government was prepared to go, to have listened to their submissions and to have allowed the conference to adjourn in spite of having given the assurance that it would be reconvened in January, and then to have taken the unusual step of making a unilateral arrangement without giving the provinces the opportunity of discussing its implications and the extent to which it met their problems in part or in whole is, as I think everyone in this house must agree, not the kind of course calculated to bring about satisfactory relations between these two senior levels of government. The quicker this conference is reconvened, the better, so that the provinces may know where they are at and so that this government, having with one year of experience surveyed its responsibilities over the coming years, will be able to take a fresh look and will be able to communicate to the provinces what its final position will be.
There has been a change on the part of this government-that is clear-because when Premier Frost and the present Prime Minister stood on the same platform in Massey Hall a year ago this month there was no hesitation on the part of the Prime Minister with respect to the statement made by the provincial premier that he could look to the leader of the Conservative party in Canada for another $100 million to enable his provincial government to meet its obligations. Compare that statement with the reply of the Prime Minister the other night to my question, which was referred to a few

Dominion-Provincial Fiscal Relations moments ago by the Leader of the Opposition. I asked him did he think that this interim payment of $22 million was going to satisfy Premier Frost, who still wanted some $78 million from the federal treasury. The Prime Minister replied with great solemnity that everyone who has had any experience in government knows full well that it is the task of each government to put forward a maximum number of demands without really fully expecting those demands to be accepted by the party to whom they are directed. Compare that reply of the Prime Minister, who now has four years ahead of him, with the remarks of the same Prime Minister who, as leader of the Conservative party, was looking for support all over this country and got it. Because he got it he has the responsibility to do something about fiscal relations and about unemployment in Canada by calling these provinces together which as the Leader of the Opposition so ably pointed out, it is in the national interest to do at the present time.


Mr. E. L. Morris (Halifax):: Mr. Speaker, we backbenchers who come from the maritime provinces and support the government will, I think, find ourselves in agreement with the Leader of the Opposition (Mr. Pearson) with regard to three of the remarks he made this afternoon.
We do not have his advantage of seeing Hansard as it is being produced, so the hon. gentleman will correct me if, in my amazement, I took down his words incorrectly. If I understood him rightly he said that the record of his party was clear, and then he went on to advise us that contemporary events should not be permitted to obscure the record of the past. I am not sure that he intended these words in quite the way we heard them on this side of the house. I will refer later in the course of my remarks to the third statement with which we all find ourselves in agreement.
May I say that as a relatively new member of the house-I have been a member for less than a year-I have come, in recent months, to consider those who sit on your left, Mr. Speaker, as being in the nature of political lemmings. Those who are interested in such matters will know that a lemming is an animal who is consumed with the necessity of making periodic migrations into the past for the single purpose of devouring itself.
We want to speak about conditions as we found them, to which the Leader of the Opposition in his solicitude for the provinces made no reference this afternoon. It would not be fair to take an incomplete year, so let us take the last year of Liberal misrule- 1956. Examples can be found on any page of the Canada Year Book. In that year, farm

wages were lower in Nova Scotia than in any other part of the country. We had the third smallest number of farm improvement loans, and we had the second lowest cash income from the sale of farm products. The average wages of our transportation employees in Nova Scotia were the lowest in Canada. In our shipyards and dockyards we had the lowest wage rates. The average hourly wage rates were lower in Halifax than in Toronto, Winnipeg or Vancouver for bricklayers, masons, carpenters, electricians, painters, plasterers, sheet metal workers and plumbers.
In addition, we also had the smallest number of first mortgage loans in Canada under the Canadian Farm Loans Act. Indeed, in the current fiscal year 1957-58 the federal treasury derived its lowest per capita tax yield from Prince Edward Island-$8.46 per head. The second lowest, $11.55 came from Newfoundland, and Nova Scotia was third lowest with a per capita yield of tax revenue to the federal treasury of $14.16.
Hon. gentleman opposite will not, of course, necessarily believe a statement by a Conservative backbencher, so we will have to quote from their own authorities. When one contemplates the vacuity of paralysed cerebrums on the opposite side of the house, the only relief is that offered by the hon. member for Bonavista-Twillingate (Mr. Pickersgill) who was born in the province of Ontario in order to be near his mother at the time of his nativity-


John Whitney Pickersgill: Very clever.


Edmund Leverett Morris: -and who now lists himself in his nomination papers as a shipowner in the maritime provinces. And according to page 427 of Hansard for October 25, 1957, the hon. member for Bonavista-Twillingate said with some alacrity that he was giving his support to increases in old age pensions introduced by the Conservative government; and he said he was going to do this for a most unusual reason, namely that the effect of the proposed legislation would be to give to the retired adults in many of our communities larger incomes-it was $55-
-than those of the working members of their families.
This is after 22 years of Liberalism.
Or, Mr. Speaker, let us take a quotation from the Halifax Chronicle Herald of January 13. This was B.C.-before convention.
Premier Matheson of Prince Edward Island said on arrival in Ottawa Sunday his group will seek a better deal for the maritimes from the federal Liberal party.
"Prime Minister Diefenbaker is giving it to us, so why can't the Liberals?'' said the lanky Liberal premier who is a delegate to the three-day Liberal party convention opening Tuesday in Ottawa.

"That's why the Liberals were defeated last June" he said. "They didn't give the maritimes half a deal."
It is interesting to note that the next paragraph goes on to add that Mr. Matheson declined to say whom he favoured for the leadership of the Liberal party. As the newspaper put it:
He observed that while Paul Martin and Lester B. Pearson were in the running, so was "my old friend" Mayor H. Lloyd Henderson of Portage la Prairie, Manitoba.
In the 1957 election campaign, the then prime minister and leader of the Liberal party said in Halifax at a public meeting that there was an unholy alliance between the present Prime Minister and Mr. Leslie Frost. When he was asked by an inquiring reporter what contribution he thought that remark made to national unity, he said: "Why, we just slipped that into the speech. We thought there was an antipathy here in the east toward Toronto. We thought we would just stir them up a little."


John Whitney Pickersgill: Perhaps I was not paying the attention to the hon. member that I should, but could he indicate to me the source of that quotation.


Edmund Leverett Morris: I was quoting Time magazine which was in turn quoting the then speech-writer for the then prime minister. Perhaps the hon. member for Bonavista-Twillingate, who is so anxious to interject in this debate, would clarify something else which would be of great benefit to the maritime provinces -the reference made by the former prime minister to the use of coal in the maritimes. I quote from the Gleaner of Fredericton, January 23, 1958:
In reply to a question put by the hon. member for Cape Breton South, Mr. Pickersgill denied "absolutely and positively" that the former Prime Minister had said, in effect, that coal should be left in the ground. Mr. Pickersgill stated that there was no such statement in the speech, that he himself was on the platform and heard every word of it. The suggestion was "cheap Tory propaganda."
In the light of this, the Gleaner of the same date records, at the end of this article, the words which Mr. St. Laurent had actually used with regard to this question:
As far as I am concerned, and as far as my opinion may carry weight in the decisions that are taken, we are not going to encourage a substantial increase in the production of coal, because I don't think that that would be fair to the future generations of Canadians. I think that it is desirable for the future generations of Canadians that we give them the chance of benefiting from a greater value in these coal resources-
Then the Gleaner says:
In other words: The coal should be left in the ground.
Dominion-Provincial Fiscal Relations
And it concludes:
Mr. Pickersgill has said that to the best of his knowledge and belief no such statements were ever made by either of these gentlemen, Mr. St. Laurent or Mr. Sinclair.
The Daily Gleaner asks him-
The hon. member for Bonavista-Twillingate-
-in the public interest, and in justice to Canadian journals which have published the statements, to make a public retraction.
What is the explanation of this?


John Whitney Pickersgill: Well, Mr. Speaker, as the hon. gentleman has asked me to do it, I am very happy to reply.


Clayton Wesley Hodgson: Do not do it now.


John Whitney Pickersgill: The quotation from the Gleaner of what Mr. St. Laurent said is, I believe, an accurate statement of what he did say but it bears no relation whatsoever to the statement that I denied he had made. Surely there is all the difference in the world between saying that you are not going to try to increase the amount of coal that will be produced and suggesting that because you are not going to try to increase it that you do not think the existing production should be carried on. And incidentally, I do not think this Tory government has done much to increase coal production either.


Edmund Leverett Morris: With largesse I absolved the hon. member for Bonavista-Twillingate (Mr. Pickersgill) a few moments ago from that intellectual Sahara that invades his side of the house but I am not sure I should not have kept him in. It might be illuminating to the hon. member who seems to evade so many meaningful quotations in the press if he were reminded of what his present leader said on arrival in Halifax, and I paraphrase. In another election campaign a few months ago after a period of meditation the hon. gentleman said that his party stood for equality and fair treatment for all parts of Canada. This is a motivation which is of particular appeal to maritimers for in the past we have had an ample record of Liberal inequality. And yet, a few days later, if I understood him correctly, the Leader of the Opposition (Mr. Pearson) said in Rimouski, which is not in Nova Scotia, that special projects had to be watched in Canada lest they contribute to regional jealousies. One has to read all the press in order to find out what is being said by Liberal spokesmen.


Lester Bowles Pearson: May I ask the hon. gentleman what he is reading from now concerning Rimouski? Could he mention the press, the place or the time perhaps?


Edmund Leverett Morris: I was not aware there was such a distinction between the press and

Dominion-Provincial Fiscal Relations Time. I am sorry that the hon. gentleman did did not hear me. I believe I made it clear I was paraphrasing.


Lester Bowles Pearson: May I ask the hon. gentleman from what newspaper article or report he is paraphrasing?


Edmund Leverett Morris: The Halifax newspaper.


Paul Joseph James Martin: There are two newspapers in Halifax. Which one? What is the date?


John Whitney Pickersgill: Why not quote it.


Lester Bowles Pearson: What has that to do with Rimouski?


Edmund Leverett Morris: The Halifax newspaper carries news items from Rimouski as part of its contribution to national development.


Lester Bowles Pearson: If you must paraphrase,
paraphrase accurately.


Edmund Leverett Morris: We have been told here today that the Liberals believe in equality of treatment for all the provinces. We in the east remember full well that it was the Gordon royal commission appointed by our predecessor government which after an exhaustive inquiry into the period of 22 years of Liberal rule came up with an interesting conclusion as to what could be done, presumably by that government, to help us out of our difficulty. "Give them one-way tickets," it said. "Migration is the solution for maritime troubles." This solution was offered by a royal commission appointed by the Liberal government to examine the effects of its rule.
We understand that this suggestion today is to help employment in Canada. As I sat and listened I wondered what had become of the $400 million tax cut that was supposed to be an aid for employment in Canada. It may very well be that hon. members opposite, since we do not hear any more about this tax cut, have recalled the Journals of the House of Commons for Monday, April 1, 1957, when the hon. member for Greenwood (Mr. Macdonnell), Minister without Portfolio, proposed a motion in these words:
"this house regrets that the economic policy of the government fails, despite a very large surplus, to meet the needs of the Canadian people and in particular . . .
(c) does not assure to the provinces a larger share of the revenues from federal-provincial fields of taxation;-"
This can be found at page 355 of Volume CII of the Journals of the House of Commons for that date. Among those who voted against an assurance to the provinces of a larger share of the revenues from federal-provincial fields of taxation were Messrs. Balcom, Dickey, Fraser (St. John's East), Kirk (Shelburne-Yarmouth-Clare), MacEachen, McCulloch

(Pictou), Power (St. John's West), Purdy, Stuart (Charlotte), and Winters, hon. gentlemen whom we do not now have the pleasure of sitting with in this house.


Clayton Wesley Hodgson: Pleasure!


Edmund Leverett Morris: We in the maritimes are trying to get away from the idea of confederation being a mere affliction which is what the Liberals taught us. The mind of maritime Liberalism as it is revealed in this house has become inconsequential. The only thing it cannot stand is good news. When a factory closes or there is talk of unemployment some Liberal member rises up and flaunts this information.


Lester Bowles Pearson: Rubbish.


Edmund Leverett Morris: They are deliberately trying to erode such progress as we have been able to make since last June.


John Whitney Pickersgill: The voice of the ostrich.


Edmund Leverett Morris: Mr. Speaker, may I call it six o'clock.


The Acting Speaker (Mr. Rea):: Just before I call it six o'clock I would like to suggest to hon. members that perhaps during the dinner hour they read the amendment that is under discussion.


Lester Bowles Pearson: A very good observation.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Edmund Leverett Morris: Mr. Speaker, before the supper recess, in discussing the amendment moved by the Leader of the Opposition (Mr. Pearson) I had said that some members of the opposition seemed to us to be concerned only with eroding such progress as we have been able to make since last June, especially in the maritime provinces. Consider the vision in fact compared with the vision portrayed in the amendment. It is true that there are now 25 out of 33 members from the four Atlantic provinces on this side of the house but so much remains to be done that we still entertained the hope we could do it together instead of one side trying to make progress and the other side trying to erode.
Consider what remains of the Liberal vision. It consists almost entirely of attempts to deride our vision. The opposition members do have a vision but they never mention it in the house. Their vision is 18 feet, 6 inches across the floor of the House of Commons. It is little wonder that that is

their vision because their new leader tried to get them across into the chosen land without even going through the mechanics of an election. If William Ewart Gladstone were to be dumped among these people they would treat him as one of the non-anointed. They have recently taken up research but it appears now that what they need first is anthropology.
I said at the opening of my remarks, that I would make mention of the third statement by the Leader of the Opposition with which we on this side of the house agree. The Leader of the Opposition said that there Was an "obligation of action". We agree with that. Certainly the members from the maritime provinces agree that there is an "obligation of action". The maritimes have been getting just that since June 10, 1957.


Mr. Erharl Regier (Burnaby-Coquitlam):: Mr. Speaker, we in this house welcomed most heartily the announcement made the other day by the Prime Minister (Mr. Diefenbaker) when, in referring to the commonwealth conference to be held in the month of September, he said, as found on page 666 of Hansard of Thursday, May 29:
As soon thereafter as it is possible to do so the municipalities of this country are going to be given the opportunity to place their views before the government and before the people of Canada-
We rather regret that he did not set a definite date for the holding of such a meeting. He said that it would be held as soon as possible after the commonwealth conference. However, "as soon as possible" may mean many things to different people and we rather regret that apparently no definite aid will be forthcoming for the municipal governments this year.
I wish to speak on the amendment proposed by the Leader of the Opposition (Mr. Pearson) in which he expressed his regret that the government has failed to call a federal-provincial conference and he lists a number of reasons why such a conference should be called. We in this group have long maintained that a new deal with regard to the relationships of the various levels of government with each other is long overdue.
There are two methods of approach. One approach is that of a parallel sharing of responsibilities and a parallel sharing of costs. The other approach was well expounded by the Conservatives while they were in opposition in that they were continuously advocating, not only a realignment of the responsibilities of the various levels of government but also a reassignment of the powers of taxation as they now obtain between the various levels of government.
We in this group have always preferred a new deal that would be based on a parallel
Dominion-Provincial Fiscal Relations sharing of responsibilities as well as sources of revenue. It is for that and other reasons that the British Columbia section at least of the C.C.F. movement has had over the years as the first item on its program the establishment of a permanent dominion-provincial secretariat. We have these meetings of officials and ministers of the different levels of government going on all the time and we feel that the interests of Canadian unity and harmony would be well served indeed if there were set up, even if need be under the auspices of a minister of the crown, a dominion-provincial secretariat where the various problems and conflicts between the different levels of government could be discussed as they arose.
In addition, we have proposed that there should be not merely temporary agreements between the dominion and the provinces but that an attempt should be made to convene a major constitutional conference in the hope that when we have our 100th anniversary as a nation nine years hence we will have reached agreement as to a new deal for the other levels of government.
For a few minutes I should like to refer to the speech made by the Minister of Finance (Mr. Fleming) this afternoon. I have long been advised that a successful politician, if he wishes to remain a successful politician, should be able to laugh at himself once in a while, and if I had any advice to give to the Minister of Finance, and this applies equally well to the Prime Minister, I would say that once a week they should look in a mirror and have a good heehaw at themselves.
The Minister of Finance advises us to take account of the fact that the people of Canada have spoken decisively. We are taking account of the fact that the people of Canada have spoken decisively and we realize that almost half the people of Canada have not endorsed those who now occupy the government benches. I should remind the minister that the opposition is usually referred to officially as Her Majesty's loyal opposition and we also have a role to play in the government of Canada. The Conservative party is not the end-all of affairs in Canada.
The minister has made a number of statements in the house of late to which I should like to refer. He has assured us that there is a continuing study of the plight of retired civil servants. He has assured the people of Canada that as far as unemployment is concerned we are past the peak. He has assured the people of Canada that Canadians have a buoyant economy. He assured us in the house not many months ago that at the end of the last fiscal year we would have a balanced budget. He reminds me very much of the politician who did not have the ability to speak without a prepared text and would
754	HOUSE OF
Dominion-Provincial Fiscal Relations make notes in the margin as to the manner in which he should deliver his argument. He came to a particular spot in his prepared speech and wrote in the margin, "Argument weak here, shout like hell."
I feel that rather than shouting like hell, we in a democracy ought to have a little faith in ourselves and in our ability to resolve the many complicated problems that face us.
I should like to refer to one particular statement of the minister. He said, "we do not impose hard and fast terms". The minister was referring to what he likes to think of as the new kind of deal that they gave to provincial governments. He referred to the Liberals as being like ostriches who hide their heads in the sand. I can think of another animal that works his way into the sand the other way round, and all that you hear is a very beautiful voice shouting like hell and perhaps you see a beautiful face and some very wavy hair. The people have been taken in by that for the time being. However, when the minister says we did not impose hard and fast terms, I should like to remind him of the hard and fast terms that were imposed in relation to the new health insurance plan when the provinces were advised, without negotiation, that mental and tubercular costs could be shared by the federal government only on the condition that they would be deducted from the ordinary grants usually paid to the provinces.


Donald Methuen Fleming: That is not true.


Erhart Regier: We have been given that understanding and it has not yet been denied. I am pleased to hear the minister now denies it.


Donald Methuen Fleming: Read the record without indulging in all that conjecture.


Erhart Regier: I am very pleased to hear the minister now say that if the federal government now shares mental and tubercular costs under the health insurance plan, that will not be deducted from the grants the province would otherwise receive.


Donald Methuen Fleming: Why do you not
stick to the facts just once?


Erhart Regier: The minister said that in his opinion sufficient funds were now available to the provincial governments. I am referring to the extra grants which were provided for by this house some months ago. If this was done by negotiation, and if the minister did not impose hard and fast terms upon the provinces, I should like to ask the minister how is it that on a Friday afternoon we in this house were assured British Columbia would receive approximately $5 million more, and on the Monday we were told that was a mistake and British Columbia would receive


only $2 million more. The day following the premier of our province assured the people of his province that they would not get anything more.
I should like to thank my colleague, the hon. member for Vancouver East (Mr. Winch), for providing me with information as to whether or not this government imposed upon the provincial governments a condition with relation to paying part of mental and tubercular costs under the proposed health insurance plan. I have before me the minutes of the dominion-provincial conference of 1957. I see the following attributed to the Prime Minister (Mr. Diefenbaker) on page 10:
My colleagues and I have no objection in principle to introducing amendments in parliament to provide for inclusion of mental hospitals and tuberculosis sanitoria, which have been estimated will cost $68 million to begin with if all the provinces come in, and the cost will mount 3'ear by year. But we wish to make clear-
I should like to underline this, Mr. Speaker.
-that whatever is offered to provincial treasuries in this matter cannot be provided in other forms, and in particular must be taken into consideration in any revision of the tax-sharing arrangements act.
The minister branded my statement as untrue. If he wishes to say that his own Prime Minister said something last fall that was untrue, I leave that up to him. The minister says, we did not impose hard and fast terms. Were those terms negotiated with the provinces? Telegrams were supposedly sent to the 10 premiers of the provinces, but I do not know whether or not all of them have ever received copies of these telegrams. We know that at the time the announcement of these terms was made, some of the premiers at least had not even been given the common courtesy of a note informing them what the terms were.
I should like to ask the minister how much negotiation there was with the provinces before the federal government announced they were willing to share in the costs of picnic sites? How much negotiation was there with the provinces before the federal government agreed to pay part of the cost of access roads through our forests? How much negotiation had been conducted with the provinces before there was a change made in the grants payable for hospital construction? How much negotiation went on with the provinces before the federal government announced that the floor had been removed in the sharing of the cost of assistance to the unemployed? No, Mr. Speaker, I am afraid the minister was rather off course when he announced that they did not impose hard and fast terms on the provinces.
I should like further to ask the minister how much negotiation or even consultation

with the provinces there was before this government announced that several hundred million dollars would be expended in the northern areas of Canada, rather than in helping to develop some of the natural resources that are awaiting development in the provinces? The minister calls to witness the reactions of the provincial premiers when he insists that they did not impose hard and fast terms. We are well aware that there are many Conservative provincial premiers who may well have decided, for political reasons, to hide their disappointment. However, the premier of British Columbia certainly cannot be called as a witness in favour of what the federal government has done.
This afternoon the minister made a statement-I do not know whether he was just becoming wildly enthusiastic because of the loudness of his voice-that the immediate needs have been met. I assume he meant the immediate needs of the provinces have been met, and therefore there was no urgency about reconvening the conference.
After many long years this government finally granted to provincial governments increases ranging from 10 per cent to 15 per cent over what they had been getting before. When we consider the needs of the provinces at this time with relation to roads, highways, bridges, education, welfare services and a national health insurance program, is that sufficient? Certainly in so far as the health insurance program is concerned there was no consultation with the provinces because many of the provinces have been asking this federal government to institute a comprehensive national health insurance program rather than the hospital insurance program that his party has presented.
When we consider the needs of the provinces in relation to the development of their resources, I certainly cannot agree for one moment that the immediate needs had been met with the extra grants that were allotted at the last parliament. The situation today, is that all levels of government are faced with a decline in revenues. For the minister that fact may seem to be a relatively unimportant matter because he can resort to the practice of deficit financing. I should again like to underline the dangers involved in that practice.
If the minister is unwilling to impose any measures of economic control and if he is willing to allow inflation to run hogwild, then if he engages in any large scale deficit financing he is going to bring this nation and its economic welfare to the brink of ruin. However, his immediate problem is solved in that he is able to devise ways and means of meeting his bills. However, for our municipalities and our provincial governments there
Dominion-Provincial Fiscal Relations is no such relatively easy solution. Their income is based on the personal income of the individual citizen and the buying power of those citizens.
Right here I should like to point out one of the weaknesses of even the dominion-provincial tax-sharing agreement, in that so much of the income to the provincial government is based on the level of expenditure or the ability of the individual to spend money. In a time of recession, even the grants payable by the treasury to the provincial governments are subject to very serious reductions indeed. When to that consideration you add the fact that most of the revenues of the provincial governments today are based on the buying power of the average citizen we find the provincial governments in a precarious situation indeed. In our province our 5 per cent sales tax accounts for from one-quarter to one-third of the revenues of our government. If people are unable to buy other than the bare necessities of life the revenues of our government are going to decline; and they have already declined very seriously indeed. If this government wanted to do anything really worth while for the provinces they might consider the possibilities of underwriting the level of expenditures that are now found necessary in the provincial field.
The agreements between the federal government and the provincial governments used to be founded on certain basic principles. We may have had our arguments with regard to some of them. However, at the present time I am becoming convinced that they are now based on political expediency pure and simple. The procedure is like that of a good many men I used to watch in my younger days when they used to deal in horses. It is some political horse trading. That seems to be about all that I can find by way of principle in the methods now adopted.
We used to have the principle of equalization of the wealth of the nation. When I lived in Saskatchewan years ago, I well remember the argument put forward with regard to so much of the insurance money we paid, the money we paid for the farm implements we had to buy and in respect of many of our other major expenditures. It was contended that the money went to the province of Ontario and that as that was the place where these corporations paid their taxes, it was therefore only right that there be such a thing as an equalization principle and that some of that money be returned to the government of our province. The province of Ontario and the province of Quebec have never liked the equalization principle. The outstanding spokesman in the Conservative party in this house over the years against

Dominion-Provincial Fiscal Relations the equalization principle has been the hon. member for Three Rivers (Mr. Balcer). I certainly hope that before this debate is concluded we shall see the hon. member for Three Rivers taking his part in it in order that we may hear what the Duplessis government now has to say on this whole subject of dominion-provincial financial arrangements.
There was a retreat from the principle of equalization with the introduction of the stabilization factor. The richer provinces put up such a howl that we were obliged to introduce what we call the stabilization factor so that the richer provinces who paid the lion's share of taxation would not suffer unduly. Equalization was retained to some extent in order that there might be some money over and above the normal amount for the have-not provinces. I always regretted this factor entering the scene, but it is now part of the pattern.
We in our group contend that a third consideration must now enter the picture, namely the need for national development.
I am all in favour of the spending of a great deal of money, if need be, in northern Canada. While some argument may be found for building a railway from igloo 'to igloo and a highway from Eskimo hut to Eskimo hut, at the same time it must be remembered that we have vast resources in the provinces of Canada in which most of the people of Canada live. The development of these resources is a matter which is beyond the abilities of the provincial governments. We feel that the time is long past when the federal government should begin to assume some responsibility.
Reference has been made to the rather generous-at least in the eyes of the government-terms that have been given to the Atlantic provinces. We are all in favour of them. If my reading of the proceedings of meetings of the federal authorities and the provincial premiers is correct, I believe it was the premier of British Columbia and the premier of Saskatchewan who were most insistent that something be done to restore the economic life and welfare of the people of the Atlantic provinces. What we do not like to see-and I am sure the premier of British Columbia and the premier of Saskatchewan do not like to see it-is the fact that these sums of money are now paid as a handout. I know that is typical Conservative philosophy; charity for the poor but a fair deal never.


Donald Methuen Fleming: What drivel!


Erhart Regier: They insist upon taking whatever is in their power to take. Then they exercise charity to those who have been a [Mr. Regier.l

little less greedy than they have been along life's way. I am sure that the people of the Atlantic provinces would like to know that they are citizens of Canada, that they have a right to the wealth of the Canadian nation and that they do not have to receive handouts at the hands of this federal Conservative government.
When we plead for more money, we realize that this federal government must retain fiscal and monetary control within the nation. We are not centralists. However, we hope we are realists.
We do not wish to rob the central government of that. We do not like, however, the other levels of government-and I never call them the lower levels-to be treated as poor relations.
I would like to close my remarks by again expressing my pleasure at the announcement that some time after September there will be an unofficial dominion-municipal conference. We believe in the parallel sharing of responsibilities and revenues by the various levels of government. We have called for the establishment of a permanent dominion-provincial secretariat in the interests of national unity to prevent these conflicts from arising as they have arisen in the past. We appeal for a constitutional conference of major significance and scope.
We do not agree with the minister that this government did not impose its will. We believe it imposed its will in a harsher manner than any other government has done, and they did it, in our opinion, for one purpose only-to win the last election. We believe that the present plight of our provincial and municipal governments is serious indeed and that in any new arrangements we should maintain the principle of equalization-stabilization if you will-but also with an eye to national development within the provinces. We feel there is no way out in the light of the current situation, with revenues declining for all governments, except to adopt the C.C.F. program of a planned economy in order to be able to implement these recommendations.


Hon. W. J. Browne (Minisier without Portfolio):: Mr. Speaker, I listened with great interest to the speech of the hon. Leader of the Opposition (Mr. Pearson) this afternoon, but I must say his speech was very puzzling to me. I have in my hand his amendment which falls into two parts, two principal parts at any rate. The first dealt with his criticism that the government had failed to call a federal-provincial conference to discuss unemployment and other urgent problems of common concern and the second part with his criticism that the government had failed

to give assurance that it would maintain or improve the principle of equalization of the direct tax revenues of the provinces embodied in the existing law.
With respect to the first part he said nothing; I do not recall one statement by the Leader of the Opposition in regard to the first part of his motion. He dealt with the second part but the hon. member for Essex East (Mr. Martin) dealt with the first part when he gave us a brief resume of some of the arguments he advanced in the debate which took place in this house a few days ago. I think I should at least thank him for his acknowledgment that full responsibility does not rest on the present government for unemployment conditions in Canada and I wish he would preach that point to other members of his party, some of whom seem to think that it does. I think the hon. member should also remind them of the contents of the document furnished to members of the previous government on March 31 of last year when they were certainly warned as to what was going to happen in regard to unemployment in this country.
Most people throughout the country in the recent election, I believe, held the same view -that full responsibility did not rest upon the present government. In fact, the people of Canada recognized that no responsibility for the existing unemployment conditions fell on the shoulders of this government. I believe that hon. members on the other side of the house, if they are fair, will recognize that the unemployment situation in Canada is not just a condition peculiar to this country because trade is a two-way affair and if we cannot sell our goods it means that somebody else cannot buy them. The best customer we have, of course, is the United States, and it means that they are not buying as much and that they are not selling as much, either. Actually they have a tremendous unemployment problem in the United States and anyone who has followed the activities of the government there in trying to solve the problem will see they have done some of the things we have done, although I would submit that they have not done nearly as much and they have not been quite as effective in this respect as we have been.
Some of the previous speakers on the other side of the house referred to some of the things we have done and I would like to remind the house of the large number of things we have done to help reduce unemployment in this country, which have indeed eased that situation. The Minister of Finance (Mr. Fleming) has already referred to the action of the federal government in assuming the full cost of half the unemployment expenditures in the provinces. Half the total
2. 1958	757
Dominion-Provincial Fiscal Relations cost of social assistance is now being borne by this government; we increased the old age pensions and it is well known that many people who, perhaps, had not many of this world's goods, have been able to benefit by the increase in the old age pension. Similarly, we have increased old age assistance and the blind pensions and pensions for the disabled. We increased unemployment insurance seasonal benefits and I believe many people are inclined to forget that we actually increased the amount payable in respect of those benefits, in addition to extending them last year by six weeks. We gave more benefits; we increased the ratio from 50 per cent to five-sixths. In other words, a person who had we will say 20 stamps would, under the previous administration, get ten weeks' unemployment insurance seasonal benefits. Under our arrangement he would get about 17 weeks' or 70 per cent more unemployment insurance benefits than he did under the previous government. This season we have also extended by six weeks unemployment insurance seasonal benefits.
We started a big housing program last year when parliament voted over $300 million, resulting in greater housing construction than had ever been undertaken in this country. The number of houses which were being built last winter was the greatest number on record, and there is nothing which responds so well to artificial assistance as house construction. In this way it is estimated that
200,000	more people were employed as a result of the stimuli given than would otherwise have been employed.
We made money easier and that had >
the effect of putting more funds into circulation and in turn enabling more houses to be built and other activities undertaken, thus creating additional employment. We made arrangements with the provinces by which access roads to natural resources and access roads with a tourist value could be built on a 50-50 basis and we also arranged with the provinces to go 50-50 on the construction of such things as picnic grounds, camp sites and that sort of thing. I will admit that this is not a very great development, but I know from experience in my own constituency that it has meant here and there that a considerable number of people did get employment and useful work was undertaken.
Then, as was mentioned by the previous speaker, the increase in the allowance for hospital construction by doubling the grant has been of great assistance to the provinces in helping them in their hospital programs. Moreover, bringing in this hospital program on July 1 will enable Newfoundland and, I think, some other provinces to begin to get the benefit of the expenditure by the federal
753	HOUSE OF
Dominion-Provincial Fiscal Relations government on July 1 instead of having to wait until next year. That is going to be a tremendous thing as far as Newfoundland is concerned, and I think it will amount to between $4 and $5 million a year benefit to Newfoundland.
Turning now to public works, I heard the hon. member for Essex East (Mr. Martin) challenge hon. members on this side of the house to say what public works-he qualified his question by adding "of a national character"-have been undertaken. He was referring to some major undertakings. Well, he knows as well as I do that no great public work of a major character has been inaugurated since this house opened, nor could it have happened before this house opened.


Paul Joseph James Martin: If the hon. gentleman would permit me, the question I asked was: can he name a project which this government initiated and which has actually been started and, if it has been started, how many men have been put to work as a result.


Mr. Browne (SI. John's West):: I admit the validity of that question, and I cannot personally point to anything that has actually given great employment, but I do know of a number of works for which money will be voted in the estimates or in the supplementary estimates. The Minister of Finance has drawn attention to the vote of $4 million in the supplementary estimates tabled today for the South Saskatchewan river dam.


Harold Edward Winch: That is for all the year.


John Ferguson Browne: Maybe, but you cannot start a $100 million program within a few minutes-I think the hon. member will realize that. We have a project for harbour development in St. John's, Newfoundland, with which hon. members in the Liberal party opposite are familiar. That has been under consideration for several years; it was under consideration by the Liberal government, but they did nothing about it.


John Whitney Pickersgill: Would the hon. gentleman permit a question? Is he not aware that the planning of this project was started by the previous government and carried on continuously by the present government, and that there was no change at any time?


William Joseph Browne: I am perfectly familiar with the investigation that was conducted.


John Whitney Pickersgill: And that is all that is going on now?


William Joseph Browne: Oh no, there is more going on now.


Mr. Harkness:: All you did was talk
about it.


John Whitney Pickersgill: Perhaps the hon. gentleman would permit a second question?


William Joseph Browne: Let me
answer this question first. This project was planned under the auspices of the previous government but the plans were put on the shelf.


Douglas Scott Harkness: I do not think they even got to the shelf.


John Whitney Pickersgill: They were being worked on on the drawing boards.


Douglas Scott Harkness: They did not even get off the floor, let alone up to the shelf.


John Whitney Pickersgill: Would the hon. gentleman mind answering my second question now? Would he tell me how many people are now employed on the harbour at St. John's? There are none.


William Joseph Browne: I cannot give you that figure, but I have no doubt the Minister of Public Works (Mr. Green) will be pleased to supply the information. I am trying to indicate the number of methods by which this government is trying to ease the unemployment situation and increase the number of people employed.
We gave assistance to the coal mining industry by increasing the subsidy to that industry in the maritime provinces and in Alberta. And it must always be remembered that according to the figures given by the hon. member for Richelieu-Vercheres (Mr. Cardin) there were more people working this year on April 15 than there were last year at the same time.
Then again, we gave assistance to the maritime provinces in the construction of thermal power plants, and I believe something in the neighbourhood of $10-12 million will be spent on these projects this year.
Another very important effort on the part of this government to assist provinces to provide employment for the people who reside there-and it must be remembered that it is not entirely a federal problem; the provinces have their share in regard to the solution, too-is by the special maritime adjustment grant of $25 million. The hon. member for Bonavista-Twillingate knows that the province of Newfoundland will receive $7,500,000 out of that $25 million, in addition to $1,600,000 from the increase of 3 per cent of the income tax, and as a result of that the hon. member for Bonavista-Twillingate happens to be the only one who increased his vote in the last election.


John Whitney Pickersgill: On a question of privilege, I do not like to be given that honour. Every Liberal member in Newfoundland increased

his vote, and, to be fair, I must admit that the Conservatives did, too.


William Joseph Browne: Every Liberal member may have increased his vote, but he did not increase his majority. I am not sure the hon. member did this.
This house has not yet been told of the very interesting campaign we had in Newfoundland. We had some distinguished visitors from the mainland, including the Leader of the Opposition, and he could tell a tale if he wished about his experiences. However, the hon. member for Bonavista-Twillingate is aware that on the strength of the assistance that the federal government gave in supplying the $7,500,000 and the $1,600,000 to the Liberal government in the province of Newfoundland, the premier of Newfoundland announced publicly that he was embarking on a program of spending over $100 million. I will give the house details, and show how this was to be made up. He was going to spend $56 million on building roads, $20 million on building schools, $20 million on hospitals and $5 million on rural electrification.


John Whitney Pickersgill: Over what period?


William Joseph Browne: I presume it is over a three-year period.


John Whitney Pickersgill: Longer than that.


William Joseph Browne: Yes, it will take you much longer than that.


Douglas Scott Harkness: You have hit the nail on the head.


John Whitney Pickersgill: That is what the premier said.


William Joseph Browne: Before that plan was announced the government of Newfoundland did not have a cent to spend on anything. They had adjourned the house; the assembly was adjourned, and the premier was waiting to hear what he was going to get from Ottawa from this adjustment grant. It was presumably on the strength of what he knew he would get that he was enabled to announce this $100 million expenditure.
I see today in the newspaper a statement of the minister of highways in Newfoundland that of the 600 miles of road he is going to pave in three years under an accelerated program, 100 miles will be done this year, 200 miles next year and 300 miles the year after. Our people are accustomed to pie in the sky; we are accustomed to a lot of promises being made in advance, as the hon. member for Bonavista-Twillingate knows as well as anybody, and perhaps better than anybody. So we only have 100 miles to be paved this year. But, as hon. members concerned with this province will know, the cost of paving there is extremely high and to pave
2. 1958
Dominion-Provincial Fiscal Relations 100 miles of highway would cost in the neighbourhood of $10 million. Perhaps the hon. member for Bonavista-Twillingate could tell me if I have underestimated the cost of it.


John Whitney Pickersgill: I do not pretend to be an expert.


William Joseph Browne: I will look at the list and see if there is something here for the hon. member. There is reference to a road from Gander to Gambo, a distance of eight miles. I believe that is in the hon. member's district.


John Whitney Pickersgill: Three miles of that would be in my district.


William Joseph Browne: There is also reference to the veterans' housing road, Gander, a distance of two and a half miles but I do not think that is in the hon. member's district.


John Whitney Pickersgill: No.


William Joseph Browne: I will resist the temptation of dwelling on this at length. Although it is interesting I will not embark on a further discussion of this matter.
There was, of course, other assistance given to the provinces through increasing the formula on personal income tax from 10 per cent to 13 per cent. As far as Newfoundland is concerned it received $9 million which has made possible this expenditure to which I have referred. If it is possible in Newfoundland then similar expenditures are possible in the other Atlantic provinces, namely New Brunswick, Prince Edward Island and Nova Scotia.
I have referred to the extra grants amounting to $87 million which have been given to the provinces. Now I come to the second part of the amendment moved by the Leader of the Opposition which reads as follows:
-and that the government has failed to give assurance that it would maintain or improve the principle of equalization of direct tax revenues of the provinces embodied in the existing law.
I must confess I found it extremely difficult to derive very much from the argument advanced by the Leader of the Opposition. I have in my hand a copy of Hansard of January 27, 1958, and at page 3851 there appears the speech made by the Minister of Finance when he introduced the measure to provide financial assistance to the Atlantic provinces in which he explained very clearly the principle of equalization. The act that was introduced in 1956 provided for equalization payments based on the average of the two top provinces, namely Ontario and British Columbia. The total yield on a per capita basis for Ontario was $42.39 and for

Dominion-Provincial Fiscal Relations British Columbia it was $30.53. That average is supposed to come to $41.58. That was the amount given to the provinces.
Stabilization was a principle under which the provinces would not get less than they got under the previous arrangement between 1952 and 1957.


John Whitney Pickersgill: Ninety-five per cent of the previous year.


John Ferguson Browne: Only two provinces benefited from that, namely British Columbia and Prince Edward Island, so we can really disregard both of those things when we think about what this government did last year.


John Whitney Pickersgill: Could I ask the hon. gentleman a question? I think perhaps he has overlooked the other stabilization, that is that the revenues in any one year would not fall below 95 per cent of those they got in the previous year which is of great importance to Newfoundland.


John Ferguson Browne: The hon. member, I am sure, will explain that very carefully when he rises. He has more knowledge and experience with this than I have because I did not happen to be here when that bill was passed in 1956.
There were two statements made by the Header of the Opposition to which I wish to make reference, one of which I took down as he made it. I am not certain I took it down correctly and I would like to be corrected if anybody can do that. I understood the hon. gentleman to say-and I understood the hon. gentleman who just sat down to say something of the same order-that special grants to the Atlantic provinces were a handout. Is there anyone who can contradict that? That is what I have written down as having been said by the Leader of the Opposition.


Paul Joseph James Martin: No, he did not
say that.


William Joseph Browne: Oh yes he
did; I have it written down here. If any one else cares to contradict it they are welcome to do so.


Paul Joseph James Martin: In fairness do you not think you should read the whole sentence? There were three sentences which were all connected. You have taken one sentence and given it an interpretation which I am sure upon reflection you will agree is not the case.


William Joseph Browne: Upon reflection I will not agree with anything of the kind. The Leader of the Opposition went on to quote with approval the speech made by
[Mr. Browne (St. John's West).)

the president of the Atlantic provinces economic council to the effect that we should stop thinking of the Atlantic provinces in terms of aid alone.


Paul Joseph James Martin: He was quoting somebody.


John Ferguson Browne: I am not certain what the connotation of that expression is but I do know that the Atlantic provinces were looking for assistance, aid or whatever you want to call it from the Liberal government and did not receive it and it was not until the Conservative government was elected last June that they were called together in Ottawa to be told in the words of the Prime Minister (Mr. Diefenbaker) as recorded in the proceedings of the dominion-provincial conference at page 12:
I believe that we all recognize, however, that the Atlantic provinces as a group are confronted with greater difficulties in public finance than the rest of the nation, if they are to maintain the sort of provincial and municipal services that Canadians generally expect. The taxable capacity of the Atlantic provinces, even in the best of times, is significantly lower than that of the other provinces.


Lionel Chevrier: To what year are you
referring?


William Joseph Browne: The dominion-provincial conference convened in Ottawa in November 1957. The Atlantic provinces have been labouring for generations under a great handicap and that handicap was never relieved to the same extent as was done by this government when it introduced that legislation in the last session. My friend the senior hon. member for Halifax (Mr. Morris) referred this afternoon to the manner in which the Atlantic provinces had been handicapped and quoted the premier of Prince Edward Island who said the mari-times did not receive half a deal. I am sure that hon. members of the Liberal party recognize that if they had their time over again they would have acted differently toward the Atlantic provinces.
At the dominion-provincial conference the Prime Minister, as reported at page 9 of the proceedings, went on to say:
-we are prepared to assist provinces in carrying out their functions where we agree that is necessary and when parliament approves. We are prepared to consider on their merits major projects which will contribute to national development and which are beyond the capacities of any of the provinces.
Hence we have the vote in the supplementary estimates to enable the government to proceed with its part in the construction of the South Saskatchewan irrigation dam and consideration will be given to other

projects from time to time when they are brought to the attention of the federal government.


John Whitney Pickersgill: Might I ask the hon. gentleman a question? Is the government of which he is a member still prepared to give favourable consideration to the request of the premier of Newfoundland that aid should be given to hydro development as well as to thermal plants?


John Ferguson Browne: If the hon. member wants to thrash that old straw again I am quite prepared to do so.


John Whitney Pickersgill: So am I.


William Joseph Browne: As a matter of fact I am glad that the hon. member has brought that up. Hon. members who were here in the last session will remember that the hon. member for Bonavista-Twillingate delayed the passage of legislation in this house for an entire day asking for that very thing but when the premier of Newfoundland announced his rural electrification program during the election campaign prior to March 31 he did not mention the word "power plant". He did not need any assistance for power plants; he found out that the power companies that exist in Newfoundland were quite prepared to supply all the power the province requires.
The house perhaps does not get the significance of this but let me point it out. Last year the premier of Newfoundland sent me a message asking for the inclusion of hydro power plants in the thermal power plant bill. Perhaps as a result of representations made by me provision was made in that bill for the construction of transmission lines and then we had a big fuss and argument over the meaning of "transmission lines". Well, it turned out I was absolutely right and there was no need of the hon. gentleman making all the fuss that he did. When the premier announced the rural electrification plan he said that he had made an agreement with the Newfoundland Light and Power Company, with the United Towns Electric Company, with the power company at Port Union and other power companies to have electricity extended to all these places, the whole project to cost $5 million, and there was no mention of a power plant at all.
Actually, as I said, there is a 10,000 horsepower plant standing by in St. John's. I went to see it. It was not even being used. Right alongside it at the present moment a 20,000 horsepower plant is being constructed which will be finished by the end of November. Therefore the companies are quite ready to supply all the electricity that the government of Newfoundland needs.
2, 1958
Dominion-Provincial Fiscal Relations


John Whitney Pickersgill: Am I correct in understanding the hon. gentleman to be asserting now that there is sufficient power capacity developed in Newfoundland to provide all the power for this rural electrification program?


William Joseph Browne: Mr. Speaker, the hon. gentleman-


The Acting Speaker (Mr. Rea):: Order. I do not think the hon. member who has the floor has to answer that question. Once again we are getting away from the amendment. I would ask the hon. member for St. John's West to come back a little closer to the amendment we are discussing.


William Joseph Browne: Thank you, Mr. Speaker. It is such an interesting subject that I should like to go on dealing with it for some time because I was so pleased to find out that what I had said here was so right and that the hon. member for Bonavista-Twillingate and his supporters were so completely wrong and were shown to be completely wrong by the premier of Newfoundland himself in writing. I have the speech here-


The Acting Speaker (Mr. Rea):: Order.


John Whitney Pickersgill: Perhaps the hon. gentleman will read it.


William Joseph Browne: I had it
with me on every platform throughout my district and I read it until I was tired of reading it. Perhaps the hon. gentleman has not seen it yet.


John Whitney Pickersgill: It did not get much publicity down there.


William Joseph Browne: To get back to the second part of the amendment introduced by the Leader of the Opposition, I could not quite understand what he meant by this equalization business. He suggests that we should take the highest per capita total yield. He knows that the premier of Ontario, I believe it was, suggested that the average of the four highest provinces should be taken to get the yield. That is the tax yield from income taxes, corporation taxes and succession duties. The Leader of the Opposition wants us to take the highest, Ontario, which would be 42.39 and multiply that by the population to get the equalization grant. Why did they not do it when they were in office? He asked that himself. Can he evade responsibility for not having done it by just asking the question? It is a very nice trick to say, "I know we are going to be asked why we did not do it." Why did they not do it? They had the chance. I think if they had their time over again perhaps they would do it.
762	HOUSE OF
Dominion-Provincial Fiscal Relations
I think I have said all I need to say with regard to the amendment. The Leader of the Opposition was a member of the Liberal government which had the opportunity to do the same things that we did. They did not do them. We did them and the people gave us our reward for having done them by sending us back here with an overwhelming majority.
(Translation):


Mr. Lucien Cardin (Richelieu-Vercheres):: Mr. Speaker, the notion of equalization brings back to my mind a succession of serious and sincere attempts on the part of the previous administration with a view to solving a problem which, I think, is and always was an important and difficult economic and social problem.
This principle of equalization also recalls to mind the successive stands taken by all the provinces but more particularly by those provinces which, while being part of the Canadian confederation, acted as distributors of their industrial production as they had attained a greater and quicker prosperity than the other provinces of this country.
Though the problem we are facing is of national import, I would like to mention more particularly the stand of the government of Quebec with regard to the taxation problem.
The Union Nationale members sitting in this house- and I should like to draw a distinction between the Conservative members from Quebec and the Union Nationale members-are shocked by the fact that the Liberal members are saying things to them which are far from being laudatory, and they accuse us of indulging here, in this federal parliament, in provincial politics. These hon. members, no doubt, forget that the Union Nationale has always carried out its politics, and especially its elections, at the expense of the Ottawa Liberal government.
(Text):


Some hon. Members:: Order! Order! (Translation):


Some hon. Members:: Order!
(Text):


Mr. Ricard:: He is out of order.
(Translation) :


Louis-Joseph-Lucien Cardin: Mr. Speaker, it seems to me you should explain to the new members from Quebec that I am not out of order each time I say something which does not suit them.
(Text):


Mr. O'Hurley:: On a point of order, Mr. Speaker, the hon. member for Richelieu-Vercheres should deal with the amendment as you suggested before and not with provincial matters as he is now doing.


Lionel Chevrier: Mr. Speaker, the hon. member is discussing the question of equalization payments.


Some hon. Members:: No, no.


Lionel Chevrier: Just a moment. That is entirely within the meaning of the amendment. In the course of dealing with equalization payments he has referred to the attitude of the Quebec government-


Some hon. Members:: No, no.


Lionel Chevrier: -and he has a perfect right so to do.


The Acting Speaker (Mr. Rea):: I have been talking to the Clerk and I feel that the hon. member should be allowed to go a little further but not very much further with his remarks.
(Translation):


Louis-Joseph-Lucien Cardin: Mr. Speaker, it ill becomes our opponents from Quebec at this time to object to our discussing with them in this house the important questions of federal-provincial relations and of autonomy, about which they were so vocal before June 10 and about which they have kept oddly silent ever since. In their customary meaningless oratory, they continue to set themselves up as the champions of the rights of the province of Quebec.


Raymond Joseph Michael O'Hurley: Divide and conquer.


Louis-Joseph-Lucien Cardin: But again today, as always, they neglect to tell us just what provincial rights were violated and in what respects the provinces lost the tiniest part of their autonomy under the former Liberal administration. Instead of seeking to prevent Liberal members from dealing with these questions, surely they should be anxious to reveal to us as soon as possible their own plans and policy on this problem of federal-provincial relations. And since the supporters of the Union Nationale were always opposed to suggestions and solutions offered by the Liberal government in Ottawa, we should expect this government to put forward a solution altogether different from that which the Liberals initiated and which still obtains today.
We should hope too that the arguments of our learned friends-


Mr. English:: Would the hon. member for Richelieu-Vercheres allow me a question?


Louis-Joseph-Lucien Cardin: I shall be pleased to answer the hon. member as soon as I have finished my speech.


An hon. Member:: Answer now.


Louis-Joseph-Lucien Cardin: We should hope too, Mr. Speaker, that our learned friends will not be

content to use for arguments vague and empty phrases, as they have used now to the effect that the present government has more respect for the constitution of this country than the former Liberal government. It is extremely important that they explain to us how they arrive at this surprising conclusion, and that they be prepared to prove their statements.
Our opponents will surely not claim that the present government has increased by 3 per cent the deductibility of federal taxes for provincial purposes since, as the premier of Quebec has so often repeated, this is not a mere question of money. For him and for the Union Nationale it is a matter of principle. "Never," he has said, "would he betray the province of Quebec by selling her rights for thirty pieces of gold".


Some hon. Members:: Hear! Hear!


Louis-Joseph-Lucien Cardin: Wait till you hear the rest!


Some hon. Members:: Hear! Hear!


Louis-Joseph-Lucien Cardin: While the Liberals were in power, the government of the province of Quebec was claiming exclusive rights to direct taxation and on that point the premier of the province boasted he would never budge. Well, Mr. Speaker, are we to believe that, now that the Conservatives are in power in Ottawa, the premier of Quebec and the Union Nationale members in this house are ready to sell the rights of the province of Quebec for 3 per cent, or approximately a $19 million deduction from federal income tax?
Mr. Speaker, what monstrous duplicity! Here is an attempt to convince the people of Quebec that this action on the part of the present government is restoring to the province those rights and priviliges which the Union Nationale was claiming from the Liberals. How hypocritical it is to contend that this 3 per cent deductibility is in any way more in accordance with the constitution and restores to the provinces more rights than did the 10 per cent which the Liberals granted in 1955 on exactly the same basis, and which meant $50 million for the province of Quebec.
How naive it is for hon. members of the Union Nationale to state that the present government will not offer agreements to the provinces on a take it or leave it basis, when only a few days after the November federal-provincial conference, where that matter had not been raised at all, the government announced to the provinces, and by telegram if you please, Mr. Speaker, its intention of increasing the deductibility by 3 per cent,
Dominion-Provincial Fiscal Relations confirming in this way an agreement which had been so bitterly criticized by the Union Nationale.
That is, Mr. Speaker, what they call a government which respects the rights of the provinces. And they call themselves the true upholders of the rights of Quebec.
Mr. Speaker, it might be useful to make a brief recapitulation of the fiscal problem and of dominion-provincial relations. As every hon. member knows, that problem dates back to the financial difficulties suffered by several provinces during the depression of 1930-35. It is a well known fact that, during that depression, the western provinces could not meet their obligations, and everywhere in the country unemployment imposed on provincial governments an intolerable burden. The federal government had to help fi-ancially some provinces and, in order to correct the inadequacy of our social system, the previous administration had to introduce the system of social legislation which we enjoy today and which, I am sure, no one would like to see disappear.
In 1939 we had the second world war, and afterwards we had industrial expansion, a raise in the standard of living of the Canadian people and the gradual development of social security; there was also the Korean war, the cold war, the scientific revolution of war machines and the conquest of space by Russia which is a challenge to the western countries and a formidable threat to world peace. All this has increased the responsibilities of the central government and raised federal expenditures from $373 million in 1930 to $4,900 million in 1956, and it is estimated that the 1958 expenditures will come to $5,800 million.
And while the premier of the province of Quebec accused the federal government of centralization he himself endorsed an amendment to the constitution authorizing the federal government to pay old age pension at the age of 70. Nor did he hesitate to saddle the federal government with the whole responsibility for the unemployment problem in the province and in the country.


An hon. Member:: It is a federal responsibility.


Louis-Joseph-Lucien Cardin: When the premier of Quebec wanted provincial responsibilities taken over by the federal government he was not so concerned about the constitution as he was when it came to co-operate with the federal government in finding a solution to the fiscal problem.

Dominion-Provincial Fiscal Relations
Our opponents from Quebec were also shocked by the fact that the federal government entered the field of direct taxation. They contended that the federal government was violating an exclusive right of the provinces, forgetting that in 1917 the Conservative federal government imposed a direct tax without anybody accusing them of violating the provincial rights.
In 1942, in order to provide for the increasing expenditures which already were $3,742 million, an agreement was signed between the federal government and the provinces, whereby the provinces rented the field of direct taxation for a five year period. In 1946, at the end of the first federal provincial agreement, the national expenditures were still $2,850 million.
Therefore, the fiscal problem had not been solved. Consequently, the federal government asked for a renewal of the agreement for an additional period, in order to find a solution which would allow the provinces as well as the federal government to provide for new financial needs, without imposing double taxation.
Notwithstanding the many statements of the premier of the province of Quebec to the effect that the provinces had an exclusive or a priority right in the field of direct taxation, everyone recognizes that the federal government and the provinces have an equal and concurrent right to it, and there was never any question, on the part of the federal government, of violating any of the provincial taxation rights, as has been contended for so long by the supporters of the Union Nationale. In any event, the premier of Quebec refused-for reasons which I then believed, and believe even more today, to have been of a political nature-to sign the agreements for a definite period, thus causing the people of Quebec to lose the millions of dollars to which our province was entitled.
During the federal-provincial conferences where the serious fiscal problem was being discussed, the Quebec premier never made any concrete suggestion or proposal to solve this thorny problem. He merely indulged in generalities and demagogic platitudes.
After much study and effort, the Liberal government developed the 1955 solution which permitted, among other things, either the rental of direct taxation rights or the 10 per cent deduction from direct taxation. That solution also provided the imaginative and fair method of paying a subsidy which,


on a per capita basis, would allow each province to receive its fair share of the national revenue without double taxation.
But here too, our opponents came out against the principle of equalization, declaring it unacceptable. Not until June 10, and the increase of deductibility of 3 per cent did our opponents seem to want to take credit for introducing equalization, and now they also state that this deduction is a safeguard for the provincial rights of Quebec.
And what about the attitude of the Union Nationale party with regard to federal subsidies? It is clear, from the history of our country, that the fathers of confederation and those who fought most zealously to protect provincial autonomy never considered federal subsidies as being incompatible with autonomy, because at the time of the interprovincial conference of 1887, the constitution was amended so as to allow for an increase of federal subsidies to the provinces, and subsequently, from time to time, the latter asked the federal government for a further raise of these annual contributions.
Only in the province of Quebec, and in comparatively recent times, was an already complex problem wilfully made more so on the claim, inspired by political reasons, that the acceptance of federal subsidies of any kind was the complete negation of provincial autonomy. And yet each year the Quebec government receives $27,323,000 in subsidies from the federal government. This latter figure is for the financial year ending on March 31, 1957. Of those subsidies, there are the statutary ones coming from the special corporation tax, the technical school subsidies which actually come within the field of education; subsidies for the building of hospitals, for public health, for the control of tuberculosis and cancer, for mental health, for old age pensions, for pensions to the blind, for the disabled and for other things.
Those subsidies, Mr. Speaker, are administered exclusively by provincial governments and in the province of Quebec it was even found possible to work out patronage and discrimination with some of those federal subsidies.


An hon. Member:: Quite true.


An hon. Member:: When and where was that?


Louis-Joseph-Lucien Cardin: Of course, our opponents from the province of Quebec never mentioned those federal subsidies from which the province greatly benefitted since it began receiving

them but, instead, they let the people of Quebec believe that all this money came exclusively from the provincial treasury.
Those subsidies were accepted without a word but a great deal of fuss was made when subsidies to universities, subsidies for the construction of the trans-Canada highway and so many other subsidies were refused, under the pretence that this could jeopardize the autonomy, the rights and privileges of the province of Quebec.


Raymond Joseph Michael O'Hurley: That is true, too.


Louis-Joseph-Lucien Cardin: In 1953, I said that the province of Quebec, for political reasons, cried wolf with regard to autonomy and attempted to convince wrongly the people of Quebec that our language, our race and our religion were really in danger. I even added that the day would come when the autonomy of Quebec would be in real danger, but that the people would remain, as in La Fontaine's fable, "indifferent to very real threats."
Now, Mr. Speaker, we shall see how sincere were our Quebec friends when they refused our people, in the name of autonomy, subsidies of which they had such great need.
We shall also see how really serious were the speeches of our Union Nationale friends who were so loud in their condemnation of the Ottawa centralizers and who, today, are part of a government which, among other things, proposed to legislate on our natural resources and to infringe in the municipal field, two matters which fall within exclusive provincial jurisdiction.
Whatever the solution may be-
(Text):


Mr. McGee:: I rise on a point of order, Mr. Speaker. I should like to call Your Honour's attention to citation 144 of Beauchesne's fourth edition. By now it must be transparently obvious to everyone in the house that the hon. member has been reading every word of his speech.


Lionel Chevrier: Mr. Speaker, if the hon.
member has been reading his speech, may I advise my hon. friend on the other side of the house that this is a procedure that has been going on since the beginning of the sittings of the house. There are few members of this house who have not been guilty of reading speeches. I think this is a rather late date at which to raise this point of order.


Louis-Joseph-Lucien Cardin: I should like to thank the hon. member for his courtesy. I think that was a gentlemanly way in which to deal with the situation. 1 will have the opportunity of reciprocating.
Dominion-Provincial Fiscal Relations


Mr. Deputy Speaker:: Order. It is quite
true that it is against the rules of the house for hon. members to read their speeches. It is also quite true that since the beginning of this session a great many speeches have been read by hon. members. Since the point has been raised I must rule therefore that hon. members refrain as much as possible from reading in their entirety the speeches they are making. They may consult notes from time to time but they may not read their entire speeches.
(Translation):


Louis-Joseph-Lucien Cardin: No matter what will be the solution of this government, it is well to remember, in studying the fiscal problem with impartiality, that the province of Quebec and the other provinces which entered into the Canadian confederation in 1867 did so with a view to securing some advantages among which the improvement of their economic system was not the least.
It is only in the last 15 years or so that some provinces, having become more prosperous through industrialization, have started to ask for a greater independence and have wished to detach themselves from the central government. It is for that reason that the provinces of Ontario and Quebec, which are more prosperous than the others, have forgotten the responsibilities and obligations they have assumed in entering confederation but are anxious to assert the rights and privileges conferred to them by the constitution. On the one hand, they were not ready to waive any of the benefits they could receive from the constitution, but on the other hand they were anxious to be relieved of some responsibilities while retaining the rights and privileges.
I feel that it would be unfair to the other provinces of Canada which were not so generously endowed by Providence, to act in such a way that the present government, through favoritism, prevents the poorer provinces from reaching a degree of prosperity equal to that of the other provinces.
Nor would it be fair, Mr. Speaker, that the present government, when calling a federal-provincial conference, grant to the already privileged provinces, fiscal advantages at the detriment to the other provinces.
1 believe that we, of the opposition, have a right to urge the government to call such a federal-provincial conference as soon as possible in order that we may know finally what position the government intends to take, since they say absolutely nothing in this respect. It would also be valuable for us in the opposition, and more particularly for us in the province of Quebec who have listened for

Dominion-Provincial Fiscal Relations years to the people of the Union Nationale, to hear them air their views on all matters of taxation.


An hon. Member:: When ever did you listen to them?


Louis-Joseph-Lucien Cardin: I maintain, Mr. Speaker, that, if the government, as it seems inclined to do, favours certain provinces, even if this treatment is in keeping with the letter of the constitution-it would not be in accordance with the spirit of the British North America Act, nor even with elementary justice. I am convinced, for instance, that it would not agree with the Liberal concept of national unity.


Roland Léo English: Would the hon. member allow a question? Can the hon. member for Richelieu-Vercheres tell me if his uncle, the late hon. P. J. A. Cardin, held similar views on the policy of the Liberal party?


Louis-Joseph-Lucien Cardin: Mr. Speaker, I had the greatest respect for my predecessor, the Hon. Mr. Cardin, and I am proud of him. However, in my family, everyone thinks for himself.


Mr. L. J. Pigeon (Jolieile-L'Assompiion-Monicalm):: Mr. Speaker, on reading the history of our country, one finds that the confederation agreement of 1867 was worked out by two great Canadians, one Frenchspeaking and the other English-speaking, namely Sir Georges-Etienne Cartier and Sir John A. Macdonald. They worked together hand in hand to distribute the taxation powers throughout the Canadian nation at the time. Our hon. friends in the opposition have held power for 22 years and they did their best to centralize everything and so destroy the fiscal autonomy of the provinces. They tried to destroy the British North America Act.


Some hon. Members:: Oh, oh.


Louis-Joseph Pigeon: And every time provincial premiers of the Canadian nation came here to Ottawa to discuss fiscal problems, what were our hon. friends saying then? They said: "Take it or leave it". In other words: "Believe or die."
That, Mr. Speaker, was the policy of our opponents. They destroyed the fiscal freedom of provinces by resorting to excessive centralization much like the centralization existing in countries behind the iron curtain. They wanted to centralize everything in the hands of a single power. Municipalities have their rights. Provinces have their rights. The federal government has its rights. On that matter the confederation pact is clear enough. Well, Mr. Speaker, the right hon. Prime Minister of Canada (Mr. Diefenbaker) has already begun to hand back to the provinces part of their taxation powers. I am sure that in the

future he will continue to go forward in recovering the spirit of the confederation agreement, in a word, in undoing the nefarious centralizing work of our predecessors who wished to control everything and to starve the provinces in order to be in a position to tell them: "Believe or die, that is take it or leave it."
I believe, Mr. Speaker, that this attitude on the part of our hon. friends from the opposition was antidemocratic while the Confederation Act is consistent with democratic principles. I am sure that the right hon. Prime Minister of Canada will continue to give back to the provinces their powers of taxation, that is a new lease of life, their essential freedoms.
When I heard a moment ago the hon. member for Richelieu-Vercheres (Mr. Cardin) speak about the Conservative members, I had the impression that he had the feeling of being elsewhere, in some other place. Well, I can assure the hon. member for Richelieu-Vercheres that all of us, in this house, are Canadians. We are Canadians with our own character, and we are not ashamed of expressing in this house the feelings of the province of Quebec, and we know that the Conservative members from other provinces, well meaning members of parliament coming from all parts of the country, feel, too, that we should come back to the principle of the B.N.A. Act.
In conclusion, I want to thank personally the right hon. Prime Minister for returning to the provinces a small part of their power of taxation. I feel confident that he will keep following this course so as to undo what was done by the centralizers of that time.


Mr. Alexis Caron (Hull):: Mr. Speaker, this afternoon I listened to the Minister of Finance (Mr. Fleming) who, like the Prime Minister and other hon. members, always seem to talk about what the Liberal party did in the past, in order to apologize for their present inertia.
They may have discovered some slight errors, for governments are composed of men, and, since the sin of our first parents, men are afflicted with a somewhat infirm mind, it happens at times that governments commit slight errors. But when they try to convince the people that the present lack of action on the part of this government is justified, by constantly reminding our people of certain things which may have happened a few years ago, that is a very different proposition. I think the Canadian people are tired of these conditions and want to know what this government means to do and will do for the people in distress.

That is what we are asking for now. The amendment now before us deals with federal-provincial relations and with problems arising out of them.
(Text):
That this house regrets that the government has failed to call a federal-provincial conference to discuss unemployment and other urgent problems of common concern to federal and provincial authorities;
(Translation):
And at the end he deals with the principle of equalization.
Well, Mr. Speaker, the federal government certainly did not keep its promises because, ever since the election campaign which brought them to power in June, we have heard the Prime Minister and some of those around him go about the country speaking of provinces which had been scoffed at by the previous government.


Mr. Tremblay:: That is true.


Alexis Pierre Caron: An hon. member says "That is true". If the hon. member had gone to the trouble of looking into this matter, of removing his blinkers, he would probably have had a better understanding of what he does not understand at the present time, namely, the importance of keeping promises. We all know that all across this country the Prime Minister promised that he would convene the provinces and the municipalities to discuss their problems.
(Text):
According to the Saskatoon Star-Phoenix of February 13, 1958, the minister has gone on record in support of equalization in dominion-provincial relations. He is reported as saying;
I stated that the equalization principle would be applied. I say it again, and I repeat it now, that the principle will be put into administrative effect.
(Translation):
That's it, the Prime Minister and those who surrounded him have promised that the principle of equalization would be respected and adhered to.
Now, this very principle was attacked in the province of Quebec at the time it was advocated by the Liberal party. And the very same people who are now forming the Union National wing of the Conservative party were roving the province at the time of the election, to say that the Liberal government was betraying the two central provinces of Canada by establishing the equalization principle.
Well, it is a fact that I am in favour of that principle, and that I have always upheld it. I know that the party now in power
2, 1958	767
Dominion-Provincial Fiscal Relations will meet with a lot of difficulties when discussing these questions with the Quebec government, because the premier of Quebec once said: "It is not charity that we want, it is the right of taxation".
Well, those hon. members who sit in this house and probably represent the ideas of the premier of Quebec rather than those of the Conservative party in Ottawa should instead of interjecting remarks without rhyme or reason rise and state clearly their stand on the subject of federal-provincial agreements. They should if they approve of what the Liberal party has initiated and what the Conservative party is in the process of continuing. After all, the Conservative party only changed the figures but not the principle because it wants to maintain those federal-provincial agreements. Besides I hope it will maintain that policy because Canada, which has become an international power, has witnessed an extraordinary expansion and because we need this investment capital to take part judiciously in the solution of international problems.
Apparently the government wants to make this policy its own and I can only commend it for that because it is the only way of administering the affairs of this country at the present time.
The hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon) spoke of the British North America Act a moment ago. Well, if the hon. member understands that act properly, he should know that it defined the taxation rights. It gave the provinces the right to direct taxation. If the hon. member had read the act properly with clear glasses, not blue or red ones, he would have seen that the powers of taxation of the federal government are unlimited but that the federal government was so kind as to consent, since confederation, to leave to the provinces certain fields in which they were at liberty to exercise certain powers-


An hon. Member:: Oh, no.


Alexis Pierre Caron: But let no one think that this matter was never discussed before the advent of the present government-


An hon. Member:: Taschereau.


Alexis Pierre Caron: Mercier, Gouin, Taschereau have all dealt with that matter but not to make political hay. They discussed it intelligently in an attempt to give the province all the rights it possessed. That is what should be done at this time.
768	HOUSE OF
Dominion-Provincial Fiscal Relations
However, I wonder in what position will these gentlemen be during the next elections, having helped the Conservative government maintain the very same principle they condemned during provincial elections? I wonder how they will manage to run and if the Union Nationale will be as generous next time?


An hon. Member:: Don't worry about us.
Another hon. Member: That's our business.


Mr. Deputy Speaker:: It might be because it is late, but there is really too much noise in this house. I would ask the hon. members to be so kind as to let the hon. member for Hull continue his speech.


Alexis Pierre Caron: Mr. Speaker, I do not mind seeing children amusing themselves. That is allowed in this country. I might add that I rather enjoy looking at them having so much fun. However, if anyone wants to raise any objection or put any question to me, I wish they would stop mumbling and speak so that I can hear what they are saying.
Mr. Speaker, I wonder what this government has to offer. It has been claimed that the Liberal party told the provinces at the time: "Take it or leave it". Of course it did, and it was the logical thing to say. The Liberal government had attempted to discover the maximum that could be granted and it said: "That is all we can offer you for the time being; if you want it, it is yours." All the provinces, except Quebec, accepted. Since that time, the province of Quebec has been losing millions and millions of dollars, just as our universities are losing millions and millions and just as we have lost millions and millions in connection with the construction of the Trans-Canada highway. And why? Simply because we have over there a Prime Minister who wants to go down in history as one of the greatest economists of all times.
But, Mr. Speaker, does true autonomy consist in fostering misery, in letting the province run into bankruptcy, with our universities in a bad way, our classical colleges hard pressed and our unemployed starving? If that is autonomy, I do not want any part of it. In my opinion, autonomy means the willingness to spread welfare everywhere in Canada and if we continue to turn down everything that comes from the federal government, well, I contend that we are leading the province into bankruptcy. Those who are responsible for such a situation are people who look at autonomy in their own private way and do not seem to understand its true meaning.


An hon. Member:: I would say that you are one of these.


Alexis Pierre Caron: What are you saying?


An hon. Member:: I would say you are one of these.


Alexis Pierre Caron: Well, Mr. Speaker, I am being interrupted by people who are instantly ashamed of their interjections.
One situation which is deteriorating in Canada is that of the municipalities. Having no autonomy, they are constantly seeking permission from the minister for municipal affairs the right to borrow money to build sewers, water systems or sidewalks, or anything liable to improve their services. They are at present in a truly sad situation.
Yet, the Prime Minister had said that he was to meet the representatives of municipalities in order to discuss their problems. He said, as I find in an editorial of the newspaper he Devoir which took that information from the Halifax Chronicle-


An hon. Member:: It must be true.


Alexis Pierre Caron: -that Mr. Diefenbaker had decided to call a meeting of municipalities to determine and discuss their needs, with a view to helping our suffering municipalities.
The election has been over for quite a while, and yet no thought has been given to convening these poor municipalities.
(Text):
Such a meeting he said would enable the federal government to draw up a proposal to present to the next federal-provincial conference for easing excessive municipal real estate.
(Translation):
This is reproduced in the Montreal Star. The Ottawa Journal said:
(Text):
Mr. Diefenbaker announced that he proposed to call a federal-provincial-municipal conference in the very near future. He recognized that the municipalities come under the jurisdiction of the provinces. The conference might have some plan to ease the excessive municipal tax burden on real estate.
(Translation) :
he Droit of February 26, 1958 quoted the Prime Minister as saying:
We are going to grant them a reasonable share of taxes in order to help them meet the new needs arising of their rapid growth.
Mr. Speaker, I could go on indefinitely mentioning occasions when the right hon. Prime Minister promised to convene the municipalities. When we ask when such convention will be held, the answer is always adjourned, and meanwhile-


Mr. Flynn:: Has the hon. member read the statement of the Prime Minister on this matter? It is recorded on page 611 of the official report of the debates.


Alexis Pierre Caron: 
Mr. Deputy Speaker:: I am sorry to interrupt the hon. member, but it is now ten o'clock.
(Text):



BUSINESS OF THE HOUSE

Lionel Chevrier: Mr. Speaker, may I ask the house leader what the business is for tomorrow?


Mr. Green:: Mr. Speaker, we shall continue with this debate tomorrow and if by any chance it should conclude before ten o'clock then we will take item No. 6 on today's order paper, the resolution concerning hospital insurance.


Lionel Chevrier: May I ask what it is intended to do on Wednesday?


Howard Charles Green: On Wednesday we are asking for interim supply first and then we will go on with this resolution, item No. 6 on today's order paper, and then any of the other items before us.


Lionel Chevrier: No estimates?


Howard Charles Green: No.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
770
[Stage Direction]
Questions

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

Mr. Martin (Essex East): 1.	Have representations by way of protest been made by any group of farmers In Essex county or elsewhere in Canada regarding imports of fruits and vegetables from the United States in respect of an alleged failure to meet Canadian requirements?
2.	Is the government aware that some of these products are said to be substandard?
3.	What quantities of such imported fruits and vegetables can be imported without an inspection certificate?
Answer by: Hon. D. S. Harkness (Minisier of
Agriculture):
1.	Yes.
2.	The government is aware of such allegations.
3.	Gift shipments of five packages or less, or experimental or exhibition shipments, or such other shipments as may be authorized by the minister.
Commercial shipments not exceeding 25 packages.


SKIM MILK POWDER
Mr. Boulanger: 1.	What have been the monthly purchases and disposals by the government with respect to skim milk powder, beginning August a year ago up to May 1, this year?
2.	What were the government holdings of skimmed milk powder at April 1, 1958, and May 1, 1958?
3. What quantities of skim milk powder have been donated to UNICEF and other welfare agencies?
Answer by: Hon. D. S. Harkness (Minisier of Agriculture):
Month	Purchases	Disposals
	(lbs.)	(lbs.)
1957		
August	2,034,000	nilSeptember	6,907,932	nilOctober	6,662,600	nilNovember	8,345,700	nilDecember	3,986,850	nil1958	January	5,705,100	nilFebruary	3,227,400	5,920,850March	2,453,850	5,820,900April	5,291,650	4,390,3502.	April 1, 1958, 27,713,882 pounds; May 1, 1958, 26,337,892 pounds.3.	The government offered 30 million pounds of skim milk powder for relief agencies but to date only 3,107,600 pounds have been accepted.


CREAMERY BUTTER HOLDINGS
Mr. Racine: 1.	What were the government holdings of creamery butter at May 1, 1958?
2.	Of such holdings how much was purchased in 1956, 1957 and 1958?
Answer by: Hon. D. S. Harkness (Minister of Agriculture):
1.	22,124,496 lbs.
2.	1956, 4,898,360 lbs.; 1957, 16,432,248 lbs.; 1958, 853,888 lbs.

Visit of Dr. Theodor Heuss


APPENDIX
[Stage Direction]
of
PROFESSOR DR. THEODOR HEUSS President of the Federal Republic of Germany
to

[Stage Direction]
Dr. Heuss was welcomed by the Right Hon. J. G. Diefenbaker, Prime Minister of Canada, and thanked by the Hon. Mark Robert Drouin, Speaker of the Senate, and the Hon. Roland Michener, Speaker of the House of Commons.
John George Diefenbaker: Mr. Speaker and members of both houses of the parliament of Canada: I welcome the President of the Federal Republic of Germany on this unique occasion, unique in that it is the first time that the parliament of Canada has been addressed, and indeed it is the first time that North America has been visited, by a head of state of Germany.
President Heuss was a member of parliament for seven years. He has been a statesman, a professor of history and political science, a publicist and editor, a biographer and author.
Canada is a land of recent immigrants as measured in the perspective of human history, and they and their descendants have learned to live together in amity and brotherhood in this land. While the basic racial stocks are French and English, Canada is a land of many races who have all made their contribution to our traditions and development.
It is of interest to recall that the first of these races who came in the wake of the early French and British colonizers were some 2,300 persons from the Palatinate and the upper Rhine who between 1750 and 1752 were settled in Nova Scotia under a colonization plan of George III. They were followed by others of your race, sir, who came to Canada after the revolutionary war in large numbers from what today is the United States of America. Even at the time of confederation there were within our country around 200,000 people of German origin. Today that number amounts to some 800,000 who have come and have made their citizenship here in keeping with the traditions of the other races who have joined together to comprise the people of Canada.
57071-3-49J
We meet here under unusual circumstances indicative of the fact that there is no finality in history; for that partnership that now exists among the United Kingdom, France, the United States, Canada and the other nations of NATO, including Germany and Italy, is indicative of those changes that have taken place in binding together the freedom-loving peoples of mankind.
During the presidency of our distinguished guest and under the wise statesmanship of Chancellor Adenauer, the Federal Republic of Germany joined and is now one of the major members of the North Atlantic Treaty Organization. I believe that what these nations have been able to attain in understanding and co-operation will, in the years ahead, if our faith is maintained, permit a like development of freedom under law for mankind, a worthy and attainable objective.
We believe with you that the free world must maintain its defences. We believe that the subjugation of defenceless nations on global proportions by force, infiltration and economic penetration makes it necessary that nations co-operate. Our experience in the past, of course, has been that pacts of themselves are insufficient. Deeds are needed as well as words, and for that reason Canada maintains the Canadian infantry brigade in the Soest area in Germany and bases for its air forces in Germany and France, and under the mutual aid program we train in Canada considerable numbers of German air crew personnel.
We believe that further attention and consideration to the principles of economic cooperation inherent in article 2 of the NATO treaty is necessary if NATO is to meet successfully the changing forms of Soviet influence.

Address by Dr. Theodor Heuss
We have intensive trade relations with Germany. We are co-operating in the fields of atomic energy, taxation and civil aviation. Believing that the preservation of human freedom-I know that the members of parliament have the same view, and that you share that view-transcends all other considerations, Canadians intend to nurture that spirit of good will with all like-minded nations. We reaffirm our belief in and support for the North Atlantic Treaty Organization as a defensive organization dedicated to peace and with no offensive objectives. I wish to make it clear that, whatever threats may be made against those nations which believe in the mission of NATO and the necessity for its continuance, Canada will maintain forces in Europe as long as international disquiet and justifiable fears require Canadian participation.
My hope is that if the western world will maintain its unity of purpose and will not weary in its pursuit of peace with freedom, however uncertain and hesitant the steps to that objective may appear to be, that peace with justice under law will have been achieved.
It is in that spirit, sir, that I welcome you to the parliament of Canada in this chamber with representatives of the Senate and the House of Commons present. We welcome you for the stands you have taken since assumption of the presidency of Germany in 1949, for that spirit of understanding and co-operation which has characterized your state. It is in that spirit that I welcome Dr. Theodor Heuss, President of the Federal Republic of Germany, and now ask him to speak.
Professor Dr. Theodor Heuss (President of the Federal Republic of Germany):	Mr. Speaker of the Senate, Mr. Speaker of the House of Commons, hon. members of the Senate and members of the House of Commons: Permit me first to express my thanks to the Canadian people on my visit to Canada. I wish them to understand that my ability to speak English or French is not indicative of the depth of my feelings. I am sorry that I have not had practice in speaking foreign languages, either English or French, and I must ask your indulgence to permit me to speak to you in German. Permettez-moi de continuer en allemand.
(Translation):
I thank His Excellency, the Right Honourable Vincent Massey, Governor General of Canada, and the Canadian government for their kind invitation to visit Canada.
I have asked the Governor General to convey my greetings to your Queen, Her Majesty Elizabeth II, and tell her now
happy I am to become acquainted with this important and beautiful country and member of her commonwealth.
I hold it a great honour to be permitted to speak in this illustrious house, which is at once a home and a model of the democratic spirit.
My words are at the same time addressed to the people of Canada to whom I wish to extend cordial greetings from the German people. May I accompany these greetings by my sincere thanks for the friendly reception accorded me everywhere since my arrival in this great country.
Throughout the centuries preceding our own, which has brought such tragedy to the peoples of the world, relations between Germany, whatever her form of government, and Canada were of a peaceful nature.
Then followed the two world wars, the first brought about by political misunderstanding and ineptitude, the second by evil and arrogant worship of power.
We cannot ignore these historical events which claimed so many victims and caused so much bloodshed. I still remember the war memorial honouring the Canadian soldiers who fell in northern France in 1917 and 1918.
Out of these many battles there emerged mutual respect for soldierly gallantry, and then the understanding that it would be better to live with one another-yes! for one another! For it must not be forgotten that we have the same spiritual heritage and a great deal in common both intellectually and culturally.
Alas! Our generation knows all too well that campaigns and wars may have been brought to a victorious conclusion, but that peace has not yet been won.
The fear lurking in the souls of many nations is the result of political or military decisions still prompted by old wartime passions and worries.
We in Germany have many reasons to be grateful to the Canadian government and the people of Canada for their early and unwavering understanding.
We appreciate what it means for Canada to maintain soldiers on German soil, to afford an opportunity to young German pilots to familiarize themselves with the constantly developing aircraft techniques, and to recognize and support the German people's demand for reunification by peaceful, democratic means.
The North Atlantic Treaty Organization, of which both our countries and peoples are loyal members, is the political expression of mutual solidarity.

Due to the times we live in, this treaty at first had military and even strategic aspects. But it is growing out of that stage, and this in itself refutes all eastern propaganda claiming that it is a kind of aggressors' plot.
The political and economic traditions and aspirations embodied in this treaty are much too diversified for anything like that.
Canada, with her wide open spaces, and her rich resources waiting to be tapped, is developing her own historical rhythm. But she nevertheless still remains linked to Europe through the origin of her inhabitants belonging to separate language and cultural groups and stemming from her formative period and through the immigrants who bravely faced the risks of the new environment or, driven from the soil of their forefathers, established a new home here. What thousandfold opportunities many of them found in this land, especially the Germans expelled from southeastern Europe.
Here, where vast space fashions its own laws, it will also be appreciated that free Europe and, in the not too distant future it is hoped, the other Europe which, together, we historically consider as an indivisible whole, is developing the elements of its unity in the economic, social as well as the spiritual and cultural fields, despite its present division.
These are the questions which find their expression in concepts such as EURATOM, common market and free trade area, but I cannot enlarge on their problems at this time and place. I think that the progress they represent is also appreciated in this country.
The psychological and political background of all this is the fact that the convulsions which characterized the relations between Germany and France for centuries have now been eliminated, after terrible experiences.
German youth has understood this to be essential to the future of Europe.
Germany, which gratefully cultivates friendly relations with the United Kingdom and the countries in the north, west and south, has given herself authority in her constitution to renounce her traditional national sovereignty.
The days spent here have made me richer in understanding, as I have viewed venerable and historic Quebec; seen the living present of Toronto and Montreal and had the incomparable experience of seeing the St. Lawrence seaway and Niagara falls. And I know you will not mind my quiet feeling of pride when I think that 60 years ago, when the falls were first harnessed to generate power, it was my native province that supplied the first turbines.
Visit of Dr. Theodor Heuss
In closing, allow me to say that this country offers immense opportunities for all those who face the future unafraid, and who love freedom. This country will help humanity in its efforts to give prosperity to everyone and to preserve peace among the nations.
Such is my fervent hope.
(Translation):


Hon. Mark Robert Drouin (Speaker of the Senate):: Mr. President, allow me to say to you, on behalf of the members of the Senate of Canada, how very pleased we are to have you with us at this time and to express our gratitude for the admirable address which you have just delivered.
We have had, on previous occasions, the great honour of greeting, in this very chamber, a number of remarkable statesmen, particularly from the commonwealth, from the neighbouring republic and from France. We are happy and proud, at this time, to be able to add your name to that memorable list of the best friends of our country and of the outstanding personalities of the free world.
The German people could not have chosen a better ambassador than yourself, Mr. President. We were already aware of your qualities of heart and mind, but we had yet to enjoy your great personal charm and to enter into bonds of friendship with the first citizen of that Germany which has become not only a true friend but a precious ally in that gigantic struggle which is being waged since the end of the last war for the defence of peace and of freedom. We are glad of this opportunity which has been provided by your government.
Our friendship with your beautiful country is an established fact. A substantial part of our population is of German origin. Naturally, for that very reason, that group has preserved a deep affection for Germany. But, moreover, no one can be unaware of all that your country has contributed through the centuries and still contributes today, to science, music, literature, philosophy and the various aspects of technical knowledge.
In addition, our two countries are solemnly associated in the North Atlantic treaty to face any emergency. They are thus closely linked within the western community where Germany's influence, I am glad to point out, is increasingly being felt. We are therefore basically united by our common attachment to the same ideals and political principles.
In this regard it gives me pleasure to mention your personal contribution to the development and drafting of the democratically inspired constitution of the Federal Republic

Visit of Dr. Theodor Heuss of Germany, before you were elected first as a member of the Bundestag and then President of the Republic.
While we are already closely bound in the political, commercial and cultural spheres, we trust that this co-operation between our two countries, in facing current problems, will continue to grow in the future. Your visit, I am sure, reflects your country's determination to persevere in this course.
Mr. President, please convey our best wishes to the German people as well as to the members of the government and of the parliament of the Federal Republic of Germany. Tell them, particularly, on our behalf, that our most sincere wish is that they may, very soon, with the help of the other free nations, raise the iron curtain which now divides them and prevents them from uniting freely.
Hoping that your visit to Canada will be enjoyable to you all, we wish you a pleasant journey home and many more years of fruitful life.
(Text):


Hon. Roland Michener (Speaker of the House of Commons):: Mr. Bundes President: On behalf of the House of Commons and the Canadian people whom we are representing, although not exclusively I should say in the presence of so many senators, may I express to Your Excellency our lively appreciation of the honour which you do us by your visit. You will appreciate from this second address of thanks that we are a bilingual country of English and French origins. After these two basic groups the third largest element in our population is of German descent. Many of these are third arid fourth generation Canadians and some, such as those who founded Lunenburg, already mentioned, have a much deeper Canadian background.
As you have discovered on your recent visit to Toronto, this ethnic bond between our countries has been strengthened in the last ten years by an influx of many thousands of your countrymen. These latter, and to a lesser extent the descendants of the earlier German settlers, will appreciate your message in the words in which it was spoken; but all Canadians will welcome, in translation, the friendly message of greetings which you have brought us from the Federal Republic of Germany.
What you have said is not only welcome but important. Our future, as well as the peace and progress of much of mankind, will be affected in no small degree by the course which is taken by the German people, with their great capacities for work, invention and the arts of peace and war.
The world has shrunk since the first German immigrants came here in sailing ships. With modern transport you have had a quicker and, we trust, a more comfortable passage. Nevertheless from Bonn to Ottawa is still a long journey to be undertaken by one of your high position and responsibilities. On that account we are the more grateful to you for having come.
By your presence you have not only imparted to your message the integrity and purpose which have been exemplified in your illustrious career, but you have given us the opportunity of closer acquaintance with one of the great men of modern Europe.
We wish you happiness in your visit and a safe return to Bonn. Will you take home with you the thanks and cordial greetings of the House of Commons of Canada.
I conclude with words which most Canadians will understand and which all would wish to apply to your visit: Danke schon und auf wiedersehen.