1958-07-03

MARINE AND FISHERIES


[Stage Direction]
Mr. Roland English (Gaspe) presented the first report of the standing committee on marine and fisheries, and moved that the report be concurred in.
Motion agreed to.

Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, I would like to make a statement with regard to the feed grain situation in the prairie provinces. The Canadian wheat board has been keeping in close touch with the development of the 1958 grain crop in the prairie provinces, and particularly with the drought disaster which has struck such wide areas of Manitoba and Saskatchewan. It is now apparent that great loss has been sustained and, as time goes on, the possibility of recovery is becoming more limited.
The wheat board has completed a survey of deliverable stocks of wheat, oats and barley on farms at all the 2,100 delivery points in the prairie provinces. Fortunately there are substantial reserve stocks of feed grains on farms in all three western provinces and, although all these stocks are not evenly distributed, they do constitute an important measure of security in conditions which now prevail.
Over and above farm stocks of feed grain there are over 50 million bushels of oats and barley in country elevators at this date. Part of these stocks can be mobilized to meet acute feed and seed problems as they arise. In spite of the widespread drought there are ample supplies of feed grain in the prairie provinces, although these stocks are not necessarily within the area where they may ultimately be required.
As a first step in meeting the problem which has arisen, the wheat board is prepared to hold in country elevators such supplies of wheat, oats and barley as the provincial and municipal authorities think advisable.
In carrying out this policy of retention the wheat board will follow policies pursued some years ago. Provincial and municipal authorities will arrange with elevator companies for the retention of needed stocks of these grains and will provide that the necessary carrying charges are taken care of. An instruction has been issued today by the wheat board setting forth the method which may be followed by the provincial and municipal authorities and the elevator companies.
At the present time the wheat board has quite large sales commitments, but the board will be in a position to play its part in relieving any distress that may result from the present adverse crop conditions in some parts of Saskatchewan and Manitoba.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I think the announcement of the Minister of Trade and Commerce is most timely, and I believe it is a measure of insurance which ought to be taken at this time. We hope that crop conditions will improve; we have seen prairie conditions improve very rapidly, and we hope that this planned step may not be necessary in the final analysis.
I wonder if the minister or his department or the government have considered whether the transfer of the grain that may be involved from places where it is now in store to some other places where it may be needed may be done on the basis of the Crowsnest pass freight rates, the low freight rates, rather than the very high freight rates on smaller movements of grain. I think that is an important consideration.


Gordon Minto Churchill: I will look into that. I have not received from the wheat board the instructions they are issuing today to the provincial authorities and the elevator companies, and in those instructions perhaps that point is mentioned.



REPORTED PROPOSAL TO FORM


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: I wonder whether the Minister of Trade and Commerce would care to comment on a report from Washington this morning to the effect that during his visit to Ottawa next week the President of the United States will discuss with the Prime
1856	HOUSE OF
Inquiries of the Ministry Minister a proposal of the latter to form a Canadian-United States pool to liquidate the wheat surplus.
Hon. Gordon Churchill (Minister of Trade
and Commerce): I think I will have to reserve comment. I have not seen that report. My sources of information are perhaps not as actively engaged as those of the Leader of the Opposition.


Lester Bowles Pearson: Why not?


Hazen Robert Argue: May I ask
a supplementary question. I wonder if the minister or his department is considering action on the suggestion made by certain United States congressmen some weeks ago that there should be something in the nature of a Canadian-United States wheat board to handle the disposal of surplus wheat in both countries on a mutually agreed basis.


Gordon Minto Churchill: I did hear about that. We have had no formal discussions with our United States friends along those lines. At the present moment the surplus disposal program as far as Canada is concerned is going very well, and among the four great exporters of wheat we are leading the field.


Hazen Robert Argue: A further supplementary question. Does the minister not feel that such a suggestion has great merit, and is the minister aware that forecasts indicate that the United States this year will have one of the largest wheat crops in its history, if not actually the largest, which may further complicate the export of this commodity?


Gordon Minto Churchill: There is every advantage to be gained by co-operation with our American friends so far as the disposal of surplus wheat is concerned. I am aware of the forecast of a very large wheat crop in the United States. It seems large, in comparison with Canadian crops, this forecast of a 900 million bushel wheat crop in the United States, but it is not so much in excess of crops in other years that we need to be too greatly alarmed about it. The consumption of wheat in the United States amounts to about 600 million bushels a year, so the surplus available for export is not the entire figure which the hon. member has mentioned.



PIPE LINES


[Stage Direction]
On the orders of the day:
Mr. Alexis Caron (Hull):: Mr. Speaker, may I direct a question to the Acting Prime Minister. In view of Premier Manning's recent visit to Ottawa and of the Prime Minister's statement last Wednesday regarding
[Mr. Pearson.)

an Alberta-Montreal pipe line, can the minister advise the house if a decision has been reached regarding the construction of such a line?


Hon. Howard C. Green (Acting Prime Minister):: I will take this question as notice.



TRANS-CANADA PIPE LINES-INQUIRY AS TO REPORTED STRIKE

[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. Is the minister in a position to give any information as to the location and scope of the reported strike on the pipe line, and to tell us if it is within the Northern Ontario Pipe Line Crown Corporation area?


Gordon Minto Churchill: Mr. Speaker, I have not the information the hon. member desires. I will have to take his question as notice.


Douglas Mason Fisher: I should like to direct a question to the Minister of Labour with regard to the pipeline walk-out in the lakehead area. Has the minister any information as to whether his department has jurisdiction in this dispute? If so, what action is being considered by his department?


Hon. Michael Starr (Minister of Labour):: Mr. Speaker, the only knowledge I have of this dispute is what I have read in the newspaper article this morning, but upon investigation we find that there is a collective agreement in existence. If there is any dispute on the wage question, the federal government has no jurisdiction. It is rather the responsibility of the contractors and the union which has an agreement with those contractors.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: May I
direct a question to the Secretary of State for External Affairs. In view of an article which appeared in this morning's Montreal Gazette to the effect that Canada was not prepared to extend its sea limits, would the Secretary of State for External Affairs comment on the government's position with regard to Iceland's definite announcement that she would extend her limits to 12 miles effective as of September 1 of this year?


Hon. Sidney E. Smith (Secretary of State for External Affairs):: Mr. Speaker, our view is that we should not take unilateral action at this time as Iceland has done.
The announcement as of July 1 by the Icelandic government is to the effect that this unilateral action will become effective on September 1. We are hoping that before September 1, through bilateral discussions between Iceland and the United Kingdom, Iceland will not be obliged to take that step. We are still placing confidence and faith in the possibility and probability of having another international conference and we are still maintaining our position with regard to six miles of territorial waters and an additional six miles for fishing.


Hédard-J. Robichaud: A supplementary question, Mr. Speaker. Is any consideration being given to protecting our own Canadian fishermen from the possibility of fishermen from other countries fishing within the 12-mile limit?


Sidney Earle Smith: Mr. Speaker, up to the present time there has been no change in the rights of foreign fishermen that have prevailed hitherto.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to direct a question to the Minister of National Defence, a sort of send-off before he begins his two-week trip. Is it now the policy of the Department of National Defence to supply surplus uniforms at a nominal cost to welfare agencies in Canada undertaking rehabilitation programs? If so, would the minister inform the house as to the details of this policy?


Hon. G. R. Pearkes (Minister of National Defence):: Mr. Speaker, there is no such policy. Under the provisions of the Surplus Crown Assets Act the Department of National Defence is required to report to the Crown Assets Disposal Corporation all surplus equipment, and that includes clothing.


Herbert Wilfred Herridge: A supplementary question, then, Mr. Speaker. Is the newspaper report to the effect that the Department of National Defence has sold 1,000 uniforms to a welfare agency for $1 incorrect?


George Randolph Pearkes: Mr. Speaker, I have not seen the report to which the hon. gentleman refers. Any uniforms which were for sale would be disposed of in the manner I have already described.
Inquiries of the Ministry


REPORTED STATEMENT AS TO OBSOLESCENCE OF PRESENT WEAPONS
[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I have a question which I should like to direct to the Minister of Defence Production. In his absence perhaps it could be taken as notice. Can the minister indicate whether the news item which appeared in the Ottawa Citizen of July 2, and which reported on the tour by the minister of the plant of the Renfrew Aircraft and Engineering Company Limited, is correct in its quotation of the minister's remark on that occasion, which was, "We are working on guided missiles, rockets and CF-105's, but they may be obsolete in a very short time"?


Mr. Speaker:: Since there have been two questions of this kind today I think I should remind the hon. member that it is not strictly in order to ask a minister to verify the truth or otherwise of a newspaper report. If the hon. member will refer to the citation in Beauchesne's Parliamentary Rules and Forms having to do with oral questions he will find that although newspaper articles may be referred to as the basis of a question, the question should relate to something under the responsibility of the government and not simply be an attempt to verify newspaper statements.


Frank Howard: Perhaps I can rephrase it in line with your remarks and ask whether the minister is aware of this particular newspaper article, and whether he would care to comment on it.


STATEMENT ON EQUIPPING OF MISSILE TESTING STATION IN CANADA
[Stage Direction]
On the orders of the day:
George Randolph Pearkes: Yesterday the hon. member for Vancouver East asked me to comment on recent allegations that a contract had been awarded for the equipment for a missile testing station in Canada. Then, as a supplementary question, he asked whether I would check as to whether or not a contract had been awarded to Computing Devices of Canada.
The answer to the first question is that Canada is developing the Sparrow air to air missile, and this will be tested at the range at the R.C.A.F. station at Cold Lake, Alberta. Various contracts have been awarded over a period of time for the purpose of equipping this range at that station.
The answer to the supplementary question is that Computing Devices of Canada have

Inquiries of the Ministry been given a contract for the maintenance of the range facility and for the supply of certain items of equipment.


Mr. Harold E. Winch (Vancouver East):: May I ask a supplementary question. Is this missile testing station, which the minister has said is now to be established in Canada, for the testing of our own production or United States production? I could not quite make that out from his answer.


George Randolph Pearkes: It is being used for the testing of the Sparrow air to air missile, which is a missile being developed in Canada.


AVAILABILITY OF OFFICIALS TO COMMITTEE ON ESTIMATES
[Stage Direction]
On the orders of the day:
Harold Edward Winch: should like to direct a supplementary question to the Minister of National Defence. May I say that I understand the minister is to be absent for a few days. In view of that fact, would the minister inform this house whether or not his officials will be available to the estimates committee when considering the estimates of the Department of National Defence, in order to deal with the question of a missile named Sparrow being produced in Canada and tested in Canada, in relation to missiles of the United States?


George Randolph Pearkes: Officials of the Department of National Defence have been available at every meeting of the estimates committee; and when their presence is required, they will be available whenever a meeting is called.


Harold Edward Winch: I have a supplementary question. I asked a direct question with regard to a missile known as the Sparrow. Will the officials be available to discuss that question before the estimates committee?


Howard Charles Green: The question is out of order.


Mr. Martin (Essex East):: Let the minister answer.


George Randolph Pearkes: It is entirely up to the committee chairman. When the committee chairman requires officials of the Department of National Defence, they will be made available and will be able to give all suitable information.


Howard Charles Green: I rise on a point of order, Mr. Speaker. I suggest that this is a matter which should be raised and discussed in the standing committee on estimates and not in the House of Commons.


Mr. Speaker:: I think the point is well taken. Until the committee has asked for evidence and has failed to get it, it seems

to me this is not a matter to be brought into the house; and if it is brought into the house, it should be brought in by way of report from the committee.


Harold Edward Winch: I did not know until yesterday that there was a Sparrow missile in Canada.


UNEMPLOYMENT INSURANCE
[Stage Direction]
On the orders of the day:
(Translation):
Mr. J. A. Richard (St. Maurice-Lafleche):: I wish to direct a question to the Minister of Labour.
(Text):
Has the Minister of Labour received a telegram from Mr. J. A. Foucher, mayor of the city of Shawinigan, concerning the great number of unemployed persons in the said city and asking that unemployment insurance benefits be extended? If so, what action does the government intend to take in order to solve this problem?


Michael Starr: Mr. Speaker, I wish to thank the hon. member for giving me notice of his intention to ask this question. My answer to that is that no such telegram has been received in my office as yet. In any event, based on the question he has asked, I wish to inform the hon. member that the seasonal benefits have already been extended twice this year, and it is not the intention of the government to make any further extensions of seasonal benefits.


FISHERMEN
[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, yesterday the hon. member for Trinity-Conception asked me a question regarding any recent changes in the unemployment insurance regulations so far as fishermen are concerned. That was followed by a supplementary question by the hon. member for Bonavista-Twillingate with respect to whether a report in the newspapers of Newfoundland to the effect that the Minister without Portfolio had announced that there had been changes was correct.
I have a copy of the telegram sent by the hon. member for St. John's West, Minister without Portfolio, to the Newfoundland papers. This was based on a letter which was dictated by the unemployment insurance commission and sent by our office to the Minister without Portfolio outlining the factors affecting fishermen under the act. Unfortunately,

although the letter related the present regulations as they have been in effect, they were released as changes in the act.


THETFORD MINES
[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, in answer to the question asked yesterday by the hon. member for Megantic I want to inform him that our office has not received any communication from the municipality of Thetford Mines relating to unemployment insurance or any other subject.


Mr. Gabriel Roberge (Megantic):: Mr. Speaker, I am grateful to the Minister of Labour for his answer, but I would ask the Acting Prime Minister whether he or the Prime Minister received such a telegram.


Howard Charles Green: Mr. Speaker, I have not received any such wire. One may have gone to the office of the Prime Minister. I will make inquiry.


STATEMENT ON REQUEST FOR SEASONAL BENEFIT PAYMENT FIGURES
[Stage Direction]
On the orders of the day:
Michael Starr: In further answer to the question asked yesterday by the hon. member for Bonavista-Twillingate regarding figures relating to the number of persons receiving seasonal benefits,
I informed the hon. member that it takes about two weeks to compile these figures following the end of the month. I also informed him on May 23, as found on page 404 of Hansard, that it is not possible to provide a figure for the number of persons actually receiving benefits. The best we can do is to give him the number of live claims. If he will look at page 404 of Hansard he will see that I explained this matter in some detail.


Hon. J. W. Pickersgill (Bonavista-Twillin-gate):: Mr. Speaker, if I may ask the minister a supplementary question, does he not think that it would be within the capacity of the statisticians of his department to work out some scheme to ascertain the number of persons actually receiving benefits? It does seem to me that, particularly at this time, such information would be of great benefit to the house and to the country.


Michael Starr: I advised the hon. member on May 23 that it would be necessary to instal an electronic tabulation system. Until such a tabulation system is installed it is impossible for us to do it.
Inquiries of the Ministry COMMUNICATIONS


POLICY RESPECTING GRANTING OF SUBSIDIES TO TELEPHONE COMPANIES
[Stage Direction]
On the orders of the day:
Mr. Jean-Paul Racine (Beauce):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Would the minister indicate to the house if the Department of Transport has any intention of re-establishing the policy of grants in aid to the private telephone companies?


Hon. George H. Hees (Minister of Transport):: That matter is under consideration by the government, Mr. Speaker.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: Mr. Speaker, I should like to direct a question to the Minister of Public Works. Since the regular employment of several hundred people in the mill and woods operations in the Cache Bay area is being adversely affected by the low water level of lake Nipissing, will the minister consider having his officials seek to obtain the closest possible co-operation between his department and the Hydro-Electric Power Commission of Ontario, which controls much of the flow into lake Nipissing, with a view to achieving a more effective control by his department of the water level in that lake?


Howard Charles Green: Mr. Speaker, at the moment I am unaware to what extent, if at all, the Department of Public Works is responsible for the level of lake Nipissing. However, I shall be glad to make inquiries.



HEALTH INSURANCE


[Stage Direction]
On the orders of the day:
Hon. J. W. Monieith (Minister of National Health and Welfare):: Mr. Speaker, yesterday the hon. member for Welland asked me a question concerning press reports relative to the signing of the federal-provincial hospital insurance agreement with the province of British Columbia.
There has been correspondence between the minister of health for British Columbia and myself in this connection and I have asked his permission to have it tabled. When I receive his agreement I will be prepared to deal with the questions raised by the hon. member.

Inquiries of the Ministry OLD AGE SECURITY



INQUIRY AS TO REPORT OF DR. ROBERT CLARK

[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, may I ask the Minister of National Health and Welfare whether he has yet received the report of Professor Clark with regard to the old age and survivors and old age security system in the United States? If my hon. friend has received that report, is he in a position to tell the house when it will be tabled to be scrutinized by hon. members?


Jay Waldo Monteith: No, I have not yet received the report the hon. member mentions.


Paul Joseph James Martin: Has my hon. friend any indication when it may be received? He will remember that I asked him this question some five weeks ago, and his reply was the same as today. Does he expect that the report will be available before the adjournment or prorogation of parliament?


Jay Waldo Monteith: I would think, Mr. Speaker, that would probably depend on the prorogation of parliament. The preparation of the report is progressing favourably and, of course, I am looking forward to receiving it as soon as possible.


Paul Joseph James Martin: It is taking a long time to obtain something we already know.



REPORTED REDUCTION IN PROHIBITED EXPORTS TO COMMUNIST COUNTRIES

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I should like to direct a question to the Minister of Trade and Commerce. Can the minister inform the house what Canada's policy is at the conference now going on in Paris relating to the lifting of trade restrictions on the sale of goods to communist countries? I ask this question because of the great interest throughout Canada in increasing our trade.


Gordon Minto Churchill: The interest of the government, Mr. Speaker, equals and surpasses that of the hon. member who has just asked the question.


John Whitney Pickersgill: The usual courtesy.


Gordon Minto Churchill: We are hoping that there
will be a general relaxation of the restrictions which have been imposed now for a long time on trade with certain countries. I have no specific information at the moment as to what items will be removed from the present list.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: I wonder whether I could ask the Acting Secretary of State if the hon. lady has been able yet to trace the correspondence with the premier of Newfoundland about which I asked a couple of days ago.


Hon. Ellen L. Fairclough (Acting Secretary of State):: I believe that was tabled this morning. I signed a return for the hon. member, and I believe that will answer his question.


John Whitney Pickersgill: I thank the hon. lady.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I have a question for the Minister of Labour arising out of the present unemployment situation and the indications that unemployment may reach serious proportions again this winter. Can the Minister of Labour say what progress he is making in the convening of a conference of labour, industry, commerce and government to deal with the whole field of seasonal unemployment, as he forecast in April and as the Prime Minister did again at a later date?


Michael Starr: Mr. Speaker, invitations have been sent out to all those who are to be invited to participate in this conference. The conference will be held here in Ottawa on July 14 and 15.


Paul Joseph James Martin: I have a supplementary question. Does this invitation include representatives of provincial governments as well?


Michael Starr: That is right. Some of the ministers of labour from the provinces also will be here.


Paul Joseph James Martin: It might be a good time to have the dominion-provincial conference as well.



THE BUDGET


[Stage Direction]
The house resumed, from Wednesday, July 2, consideration of the motion of Hon. Donald M. Fleming (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. Hubert Badanai (Fort William):: Mr. Speaker, first I should like to compliment the Minister of Finance on a very creditable oratorical effort and on the few changes made on government revenue which were welcomed nevertheless. In this budget one or two items are noticeably conspicuous by their absence and I wish to comment on them. One in particular was not even mentioned, notwithstanding every expectation that it would be dealt with in the government's first budget. I am referring to the excise tax on automobiles, against which the minister spoke long and loudly when in opposition. According to the record he waxed eloquently against this tax. I quote from the May 3, 1955, budget debate speech in which the then hon. member as reported at page 3395, said this about the tax:
The excise tax has largely been ignored in the minister's approach to the problem-
Oh, they made much of the removal of the luxury tax-because that is the guise in which it was introduced a few years ago-on tires for motor vehicles. They have made much of the reduction of the excise tax from 15 per cent to 10 per cent on motor vehicles. Well, what they have done, in the way they have gone about it-in leaving the tax at far too high a figure, and giving no benefit at all to those dealers who had a stocked-up inventory of motor cars-has been to bedevil the wholesale and retail motor car business in Canada today.
Then again in volume 3 of Hansard of 1956, on March 27, 1956, the minister as reported at page 2648, had this to say:
The second feature of the sales and excise taxes which is worthy of mention relates to a reduction that was made last year. The government last year actually reduced from 15 to 10 per cent the excise tax levied on automobiles. What was the result, sir? A reduction in revenue? On the contrary, there was an increase in revenue. The collections from the excise tax on automobiles actually exceeded those of the previous year by $8 million. I suggest that there is a lesson there to be learned by the Minister of Finance and by the government. A few more reductions in rate would not necessarily mean serious and crippling reductions in revenues. On the contrary they would assist the circulation of money and the expansion of business enterprise.
Evidently he no longer believes in his own statement. Then again the Prime Minister, speaking on January 14, 1955, as reported at page 192 of Hansard, had this to say:
What are we doing to meet the situation? What is the reason tor it? We have said that over the years Canadians were being taxed out of the markets of the world and taxed out of their jobs. I know they used to say you could make jobs without profits. We have learned differently In Saskatchewan with the disappearance of the mirage of 1944.
What about hidden taxes? The average automobile has a hidden tax of $400. This government in its wisdom has decreed a high cost structure in the last few years. It has isolated our trade. It has started the march of unemployment. I believe
The Budget-Mr. Badanai
that Canada's industry must be revitalized by giving tax relief at once. The government must act and act now.
That is precisely what the members of Her Majesty's loyal opposition are now saying, and that is what we are standing for.
During the last session of parliament the minister reduced the tax by 2J per cent. The reduction was made without giving an account of government spending plans, but we were encouraged to believe that in the very first budget, which the people were expecting before the election of March 31, this tax would at long last be consigned to the limbo where all existing government inequities were to be purged.
This tax was conceived as luxury tax when only a few people could afford to own and operate a car. Then the war came along and an all-out struggle demanded the curtailment of civilian spending and all available money had to be channeled into war loans. The automobile industry needs a stimulant rather than a deterrent. The excise tax today is a factor in lowering the sales of automobiles in this country where they are a vital necessity. This was pointed out by the hon. member for Middlesex East when he spoke during the budget debate on March 19, 1957, as recorded at page 2492 of Hansard, as follows:
There is no doubt the day is coming when some arrangements will have to be made whereby the municipalities and the provinces will have a greater share of the tax dollar. Their necessities are still taxed . . . Probably the motorist is the most heavily taxed individual in this country, yet an automobile is a necessity in our country of vast distances and for transportation to employment.
I say amen to that. In many cases the automobile is actually a tool of production. Over 80 per cent of all cars driven in Canada are driven in the pursuit of business. We do not place an excise tax on the carpenter's saw or the plumber's wrench, but we do place an excise tax on automobiles which are equally used as tools to enable people to earn a living. It is no easier for a salesman to earn a living-and believe me, I can speak from actual experience-than it is for a carpenter to do so. To place an excise tax on the automobile is therefore a deterrent to the sale of cars, as has been amply demonstrated many times when there has been a rumour of a tax cut.
You might recall that last December when a Toronto newspaper printed such a report on November 28, 1957 under the banner headline, "Ottawa to Cut Car Excise Tax" the government was not in a position to comment upon it. There was no reliable estimate of a probable budget, as has been the case in previous years, and people who wished to buy cars cancelled orders placed with dealers in order to see what saving they might enjoy if the tax were removed.

The Budget-Mr. Badanai Naturally the automobile dealers across the country sought immediate action, and meantime automobile companies closed down because they could not sell their cars. General Motors closed down for two days, Chrysler for four days and Ford of Canada laid off some 2,400 people a few days prior to the appearance of the headline I have quoted. This meant that thousands upon thousands of Canadian workingmen were laid off and deprived of income with consequent suffering to their families and communities. This is just one indication of public awareness of the excise tax on automobiles and the money which this tax costs the public.
If the public suspects the excise tax on cars might be removed the sales of cars stop, and I submit that the very presence of this 7J per cent tax on passenger cars is a threat to the steady employment of thousands of Canadians. I am convinced that its removal would provide more jobs and more steady employment than any measure the government has so far introduced in an effort to reduce unemployment. This is a serious handicap to have hanging over an industry so vital to the economic well-being of Canada. The excise tax creates instability in this major industry upon which so many people from coast to coast are entirely dependent for their livelihood.
I wonder if hon. members realize that one in every seven persons in the entire labour force of Canada is employed in the automobile industry, exclusive of service stations dispensing products necessary for the operation of motor vehicles. In other words this tax creates a situation of instability for this large group of Canadians.
Automobiles are taxed in so many ways on both a federal and provincial basis that it would require a lengthy computation by a battery of so-called mechanical brains to find out just how much of the cost of a car is accounted for by taxes. Let me cite a few instances. The latest figure I can obtain is for 1956, when ten provinces in Canada collected $383,765,000, which was equal to 24.9 per cent of the total revenue of those ten provinces. In 1956 the federal government collected from the 10 per cent sales tax almost $98 million and from the 10 per cent excise tax $72,250,000. True, the excise tax- and it is about that tax I am speaking and not the sales tax-was reduced to 7J per cent last December. The sales tax of course remained at 10 per cent.
All these millions of dollars, plus special automobiles taxes in some of the provinces and in some municipalities, when placed on the purchase price of a car have a seriously deterrent effect on car sales. This is particularly important this year, when we should


be doing everything possible to stimulate and not to hold back business.
The removal of the 7J per cent excise tax on passenger cars, to my mind, would be the best way to stimulate employment. I can think of no better way to stimulate the economy, to provide more employment for the over 40,000 people working in the motor vehicle industry in Canada. To illustrate the importance of the industry I should like to quote the following figures. In the first five months of 1956 the industry paid out in wages a total of $70,263,588, while for the same period in 1957 the figure was $74,446,692. For the first five months of 1958 the figure was $63,361,036. These figures apply only to persons engaged in the manufacture of new motor vehicles in this country.
During the same five-month period in 1956 the government collected in sales tax $43,645,371 and in excise tax $34,679,323, a total of $78,324,692. In the same five-month period in 1957 the government collected in sales tax $49,941,684 and $39,681,983 in excise tax, a total of $89,623,667. And for the first five months of 1958, this calendar year, it collected in sales tax $39,401,540 and in excise tax $23,837,996, for a total of $63,239,536.
Now, Mr. Speaker, before proceeding further I would ask leave of the house to have this table incorporated in the proceedings of Hansard. It is a table showing revenues received by the federal government from 1914 to December, 1957.


Mr. Speaker:: What is the source of the
information?


Hubert Badanai: The source is the customs
department.


Mr. Speaker:: Is it the pleasure of the
house that the hon. member be given leave to incorporate this table in the record without reading it?


Mr. Fleming (Eglinion):: May I ask the
hon. member what is the particular publication from which this item is selected? He referred to the department.


Hubert Badanai: It is a document prepared
by the customs department here.


Paul Joseph James Martin: It shows the
increase in the excise tax on automobiles. It is an official document authorized by the hon. gentleman.


Mr. Speaker:: Is it the pleasure of the
house that this table be incorporated?


Some hon. Members:: Agreed.


Hubert Badanai: Thank you, Mr. Speaker.
The table is as follows:



CHRONOLOGICAL TABLE OF DUTIES AND TAXES ON AUTOMOBILES 1914 TO DATE

[Stage Direction]
Excise Taxes
Rate of Duty	
[Stage Direction]

 Amt. in
Value Value	Luxury Taxes	Excessto	$1,200	Value	Special	
Excess	$650$1,200	to	Over	War	W.E.	Up to	Over	Up to	of	Whole-	Up toRetail	$2,100	$2,100	Tax	Tax	$3,000	$3,000	$1,200	$1,200	sale	$700
Sales Tax
$700	$900	$1,200	
Specialto	to	Over	Up to	to	Over Do-	Import$900	$1,200	$1,200	$1,200	$2,000	$2,000	mestic	Import	Tax1914	35%	35%	35%	Feb. 12-1915 to Apr. 29-1918.	35%	35%	35%	74%	Apr. 30-1918 to May 18-1920.	35%	35%	74%	-	10%	10%	May 19-1920 to Dec. 19-1920.	35%	35%	35%	-	15%	20%	1%	1%	-Dec. 19-1920 to May 9-1921..	35%	35%	35%	1%	1%	-May 10-1921 to May 23-1922.	35%	35%	35%	24%	-May 24-1922 to Dec. 31-1923.	35%	35%	35%	-	-	-	-	5%	10%	24%	34%	-Jan. 1-1924 to Apr. 10-1924 ..	35%	35%	35%	-	-	-	-	5%	10%	6%	6%	-Apr. 11-1924 to Apr. 15-1926..	35%	35%	35%	-	-	-	-	5%	10%	5%	5%	-Apr. 16-1926 to Feb. 17-1927.	20%	274%	274%	-	-	-	-	5%	1C%	5%	5%	-Feb. 18-1927 to Feb. 16-1928.	20%	274%	274%	-	-	-	-	5%	10%	-	-	-	-	-	-	-	-	4%	4%	-Feb. 17-1928 to Mar. 1-1929..	20%	274%	274%	-	-	-	-	5%	10%	-	-	-	-	-	-	-	-	3%	3%	-Mar. 2-1929 to May 1-1930...	20%	274%	274%	-	-	-	-	5%	10%	2%	2%	-May 2-1930 to June 1-1931. . .	20%	274%	274%	-	-	-	-	5%	10%	1%	1 ^	-June 2-1931 to Apr. 6-1932. . .	20%	30%	40%	-	-	-	-	5%	10%	4%	4%	1%Apr. 7-1932 to Dec. 31-1935..	20%	30%	40%	-	-	-	-	5%	10%	6%	6%	3%Jan. 1-1936 to May 1-1936	174%	224%.	-	-	-	-	5%	10%	-	-	-	-	*	*	-	-	6%	6%	3%May 2-1936 to Apr. 25-1939..	174%	174%	174%	-	-	-	-	-	-	5%	-	-	-	-	-	-	-	8%	8%	3%Apr. 26-1939 to June 25-1940.	174%	174%	174%	-	-	-	-	-	-	5%	-	'	-	-	-	-	-	8%	8%	-June 26-1940 to Dec. 2-1940..	174%	174%	174%	-	10%	-	-	-	-	10%	20%	40%	80%	-	-	8%	8%	-Dec. 3-1940 to Apr. 30-1941..	174%	174%	174%	-	10%	-	-	-	-	-	20%	20%	40%	80%	-	-	-	8%	8%	-May 1-1941 to May 14-1945..	174%	174%	174%	-	10%	-	-	-	-	25%	25%	40%	80%	-	-	-	8%	8%	-May 15-1945 to Oct. 13-1945.	174%	174%	174%	-	10%	-	-	-	-	-	10%	10%	10%	10%	-	-	-	8%	8%	-Oct. 13-1945 to Nov. 17-1947.	174%	174%	174%	-	-	-	-	-	-	10%	10%	10%	10%	-	-	-	8%	8%	-Nov. 18-1947 to Jul. 31-1948.	174%	174%	174%	25%	50%	75%	8%	8%	-Aug. 1-1948 to Sept. 7-1950...	174%	174%	174%	10%	10%	10%	8%	8%	-Sept. 8-1950 to Apr. 10-1951..	174%	174%	174%	15%	16%	15%	8%	8%	-Apr. 11-1951 to Apr. 8-1952..	174%	174%	174%	25%	25%	25%	10%	10%	-Apr. 9-1952 to Apr. 5-1955. . .	174%	174%	174%	15%	15%	15%	10%	10%	-Apr. 6-1955 to Dec. 6-1957. ..	174%	174%	174%	10%	10%	10%	10%	10%	-Dec. 7-1957 to	174%	174%	174%	74%	74%	74%	10%	10%	
Note-On June 8, 1926, passenger cars under $1,200, manufactured in Canada (which qualify under Canadian content requirements) were made exempt from the 5% excise tax up to May 1, 1936. From May 2, 1936, excise applies to both domestic and imported passenger jobs.
From June 2, 1931, to May 1, 1936, the 3% special import tax did not apply on passenger jobs which were subject to excise tax.
Imports of passenger and truck chassis were subject to the 3% tax.
After May 2, 1936, to April 25, 1939, imports were subject to both the 5% and 3% tax.
From Feb. 21, 1931, to Jan. 1, 1936, the maximum discount from list price on wholesale importation of automobiles was limited to 20%. During all other periods covered by this chart, the discount is the maximum allowed in the country of export to similar classes of trade.
Note-On and after April 6th, 1955, where radios are installed in motor cars at the factory, the rate of excise tax applicable to the motor car viz , 10% will apply to the car including the accessories, such as radios, heaters, whitewall tires, washers and similar goods installed at the factory.
Where radios are sold to dealers for their installation in the customers cars, the 15% rate of excise tax is to be applied.
The Budget-Mr. Badanai
1864	HOUSE OF
The Budget-Mr. Badanai
But even these figures, impressive as they are, do not tell the whole story. Canadian automobile manufacturers are purchasing materials and parts from thousands of suppliers. I have only the figures of one company, General Motors of Canada. In 1957 this company purchased Canadian goods to the tune of $425 million and I assume the other Canadian car manufacturers are spending proportionate amounts with Canadian suppliers, which all adds up to the tremendous contribution of the automobile industry to the national economy.
Now, Mr. Speaker, in view of these facts I do not see how the government can ignore this awkward situation confronting one of the industries which is giving Canada so much, and contributing to the employment and welfare of so many. I respectfully suggest that the minister give assurance to this house that this matter of the excise tax on automobiles is not made final, and that he will give serious consideration in the near future to the complete elimination of this tax. There might have been justification for it at one time, but if there was any good reason for it in the past that justification is now obsolete and unwarranted.
There is another matter in which I am particularly interested, and that is the plight of our poor municipalities. If there was any expectation that the budget would contain some sign of assistance to the municipalities, with the exception of the removal of the sales tax on certain municipal purchases, for which we are grateful, with the announcement that the federal government will be offering large blocks of bonds to the public every few months these long-nursed hopes were shattered. These offerings will have a decided effect on limiting the amount of municipal debentures that may be offered, and also any that are offered will have to carry a high interest rate if they are to be sold in Canada.
This budget will force municipal governments to borrow in the United States. The failure to include in the budget a measure to establish a pool or a loan fund to which municipilities may sell their debentures at a reasonable rate of interest was, from the standpoint of the municipalities, a serious omission. Such a loan fund would be of inestimable assistance to the hard-pressed municipal governments. It seems to me to be the only system which would provide them with funds to continue with their progressive construction programs, and keep a goodly number of people employed.
Perhaps investment dealers or brokers do not look favourably upon such pool or loan fund for the obvious reason that, if established, such a fund would take away competitive marketing. I am not suggesting
[Stage Direction]

that the government was influenced by financial institutions in its failure to giving serious consideration to this important and vital issue. I am pointing out, however, that the minister in his closing remarks said:
This budget has been born of confidence in Canada's future, not blind wishful thinking, but unshrinkable realism.
I for one fail to see the realism of the Minister of Finance when he overlooks the immense task of the municipalities of Canada, the oldest form of democratic government, the level of government closest to the people, which is the most responsive to the requirements and needs of Canadians. I cannot see much realism, I regret to say, in a budget which totally ignores an industry such as the automobile industry which has contributed billions to the wealth of the nation.
The fact that only one company purchased goods from more than 4,000 suppliers in more than 400 communities is proof that without a healthy and prosperous automobile industry Canada could not possibly expect much from the vision of development so eloquently portrayed by the Prime Minister and echoed by the Minister of Finance in his two-hour budget speech in the house on June 17. I express the hope that the government will see fit to give this industry another look, and I am confident that there would be no dissension in this house if finally once and for all this iniquitous excise tax were removed.
I was very happy to see the Minister of Labour here this afternoon. I am sorry he is absent at the moment, but I know he would support my contention. The minister and I worked closely together when he was mayor of the city of Oshawa. Coming as he does from a community which is practically wholly dependent upon the automotive industry I know he would also support this measure to eliminate the excise tax on automobiles. This measure would be received by the municipalities and the people of Canada as a beneficial and progressive one designed to achieve the very things this government has so eloquently advocated, not only while its members were in opposition but during the recent election campaign and also in the throne speech.
Here my case on behalf of the automotive industry and the municipalities of Canada rests.
Mr. Lambert:: Mr. Speaker, I wonder if the hon. member would permit a question?


Hubert Badanai: Surely.


Norman Platt Lambert: Would the hon. gentleman kindly advise this house why the city council over which he presides was interested in buying buses in the United States rather than in Canada?


Some hon. Members:: Oh, oh.


Mr. Ricard:: All right, let us have it.


Hubert Badanai: Mr. Speaker, the hon. member who addressed this question to me should be aware that the municipality which I represent did not purchase any buses from the United States. We have in that community the only manufacturer of buses in Canada, the Canada Car Company, a subsidiary of A. V. Roe Corporation, which was established in Fort William many years ago. I think the hon. member refers to the transportation commission of the city of Toronto.


Norman Platt Lambert: And the city of Fort William.


Mr. Habel:: It is not the same city at all.


Mr. P. V. Noble (Grey North):: Mr. Speaker, at the outset I wish to add my congratulations to those already tendered the Minister of Finance on the presentation of a very fitting budget. It will help many and is obviously the result of careful, intelligent thinking. I am convinced that our Minister of Finance is a very conscientious man, and I am sure the Canadian people have much confidence in him. On behalf of my constituents I wish to thank the minister for the excellent and fair way in which he has covered the field under his jurisdiction and for the masterly presentation of this budget. Regardless of what has been said by opposition critics, this budget will go down in history as representing a sound approach to the financial and business problems of our day.


Joseph-Alphonse-Anaclet Habel: Imagine.


Percy Verner Noble: Mr. Speaker, on talking with many of my constituents over the past week end I found that the majority were happy with the contents of this budget, and they had not been expecting miracles such as the opposition critics have intimated was their expectation. They felt that their confidence in this government had again been justified. For those who think in terms of all the people there is very little fault to be found with this budget. Never in the history of Canada were our citizens enjoying a better standard of living. Granted, we have problems and they will perhaps always be with us; nevertheless this government has faced present difficulties and adopted an earnest, sound approach to their solution.
The criticism directed at the government in respect of unemployment by two or three members of the opposition has become monotonous and nauseating. These hon. gentlemen have been instrumental in creating fear and aggravating this regrettable situation. Their propaganda in the last session as well as in this one has influenced 57071-3-118
The Budget-Mr. Noble many timid business people who have postponed making decisions which could have added much momentum to an upturn in business and employment. Some positive thinking and constructive suggestions would be more appreciated by the government and those who are inconvenienced by what is presently a weak link in our economy. However, in spite of these alarmists business and employment are on the upswing.
Mr. Speaker, with your indulgence I will quote a short editorial that I think is appropriate on this occasion. The editorial is entitled, "The Awful Uncertainty of the Future" and reads as follows:
It is a gloomy moment in history. Not in the lifetime of any man who reads his paper has there been so much grave and deep apprehension; never has the future seemed so dark and hard to calculate.
In France the political cauldron seethes and bubbles with uncertainty.
England and the British empire is being sorely tried and exhausted in a social and economic struggle, with turmoil at home and uprising of her teeming millions in her far-flung empire.
The United States is beset with racial, industrial and commercial chaos, drifting we know not where.
Russia hangs like a storm cloud on the horizon of Europe-dark, menacing and foreboding.
It is a solemn moment, and no man can feel indifference, which happily, no man pretends to feel in the issue of events.
Of our own troubles, no man can see the end.
This editorial sounds pretty gloomy, does it not? The writer evidently was weighed down by present problems and quite ready to sell himself and our nation short. Did I say present problems? Excuse me, please; far from it. This editorial appeared before world war II, before the depression of 1929, before the first world war in 1914, before the panic of 1891 and before the civil war in 1865. This was an editorial which appeared in Harper's magazine on October 10, 1847, well over 100 years ago. Yes, pessimism is the scarecrow that fear erects in the watermelon patch of the future to frighten away the timid souls so the feast may be richer for the few who are not afraid. We still have these gloom artists with us. As a matter of fact we have too many in the House of Commons, on the opposition benches, who would rate as experts in this profession.
At this point I would like to say the riding I have the honour to represent lies along the southwest shore of Georgian bay. It is made up of nine townships and five urban centres consisting of Owen Sound, Meaford, Thom-bury, Clarksburg and Shallow Lake. Although we have considerable industry, agriculture constitutes the largest share of my constituency's earning power. The people are basically Anglo-Saxon in origin. However, recent immigration has introduced some Dutch people into my riding. I am proud to say this
1866	HOUSE OF
The Budget-Mr. Noble adds up to a thrifty populace of sound citizens. I want to point out that the people of my constituency desire government recognition, but they realize that the first duty of the government is to attack problems of national importance, and I feel the Minister of Finance dealt fairly with one and all in the budget for this fiscal year.
Agricultural conditions in Grey North have improved during the past year. However, small operations in mixed farming have ceased to be economically sound and the trend is toward larger farms properly mechanized. Some farmers have improved their position through specialization, and it is quite evident this course will be followed by others. Our most successful farmers are those who have the latest scientific methods of operation. Soil is tested so that it may be properly treated for best results. Special attention is given to a program of herd improvement. The net result is more food produced by fewer people. By this progress a process of elimination is taking place. People without the capital and other qualifications necessary to participate in this type of farming are drifting into other phases of our economy where we hope they may be satisfactorily absorbed. However, it is gratifying to know that the Canadian Farm Loan Act stands to be amended. This could help those in need of capital, especially our young farmers.
One branch of our agricultural specialization that has been successful in my riding is the production of apples. In the Meaford-Thornbury area there are more than 3,000 acres of apple orchards. It is an accepted fact in the trade that some of the choicest apples on the continent are produced in this area. These apples are kept at their best for many months after harvesting by three large up to date cold storage plants.
In the past these people have experienced considerable difficulty marketing their crop in competition with United States growers. Perhaps some of the competition was fair; nevertheless when production was good across the line it was apparent that dumping contributed to some of the grief experienced by our growers. Because of this budget, with its promise of strict enforcement of the antidumping law, and with the hope that the Department of Agriculture will allow only the better grade of apples entrance to Canada, our growers may look to a future with brighter prospects.
I hesitate to speak about matters which concern me in a personal way, but since I bring to this house some experience in the field of fur breeding, and since this industry has not had a voice heretofore to explain its position, perhaps I might be excused for bringing to your attention, Mr. Speaker, some


of its highlights and problems. After all, many people in Canada are dependent on this industry for their livelihood. Shipments of fur to the United States and other countries have brought millions of dollars into our economy.
I am in the unique position of being the only member of this house representing the fur industry. Of course I fully realize that this industry does not play a major role in our economy. However, the fur trade influenced our early colonization and in those years was the wealth and the key industry of Canada. Through the years of early development wild fur was in plentiful supply, but during the following years of exploitation fur became scarce and this prompted the birth of a new, specialized branch of agriculture, namely that of fur ranching.
As its representative in Ottawa, Mr. Speaker, I will do my utmost to keep this house informed of its problems. Our relationship with the United States, Canada's best market, has been all that could be desired. We have co-operated fully with the United States ranchers in a program of continuous advertising, and the United States market has always been open to us. We in our industry trust that this spirit of neighbourliness may always exist, and that our Department of Trade and Commerce will continue to foster close co-operation and good will with our friends to the south.
Perhaps at this time you will allow me to take a few minutes to tell you something of the phenomenal development which has taken place in ranch mink during recent years. As most hon. members know, mink can now be produced in many shades of grey, blue and brown, also extra dark brown which is almost black and, of course, white. These are all natural colours known as mutations, and are not dyed or bleached. At our ranch we produced the first mutations in Canada, and we were the original breeders of white mink anywhere in the world.
In mink, as in all other livestock, we have disease problems. The two biggest killers have been distemper and virous enteritis. However, the spread of rabies across the country is cause for some concern. The former disease we have been able to control satisfactorily with a live virus vaccine but the latter has been causing serious losses for several years. Virus enteritis originated on a ranch in the neighbourhood of the Fort William garbage dump, thereby linking the disease with rats.
The budget gave encouragement to the extermination of this pest, which is costing our country millions of dollars annually as a disease carrier and a culprit of destruction. Since the time of the original outbreak

at Fort William thousands of mink have fallen victims of this disease. Much research has been done and many experiments have been carried on. The government laboratory at Hull did considerable work on the disease but gave up about three years ago. I pay tribute to the Ontario veterinary college for the contribution they are making in helping the mink producers protect their herds against this devastating disease. Within the next few weeks many mink will be vaccinated with a vaccine produced by this institution in the hope that some protection may be afforded those areas where the disease is known to exist.
This government supports an experimental fur farm at Summerside, Prince Edward Island, under the supervision of Dr. Gunn. I feel that this project has outlived its usefulness at this location. It served a purpose when Prince Edward Island was the centre of the silver fox industry, but since this phase of fur ranching is terribly neglected with very little hope of recovery I think it is time this institution was moved to Ontario, the heart of the mink industry in Canada. Today the mink industry is the fur industry. Our country is climatically ideal for fur production. The food used on fur farms is almost exclusively by-products which would be of little value otherwise.
Therefore, Mr. Speaker, I urge this government to encourage and foster this young industry, and to give careful consideration to the establishment of an up to date dominion experimental fur ranch in Ontario where it could work in close collaboration with the Hull laboratory and the Ontario veterinary college.
In Grey North, manufacturing is confined mostly to Owen Sound and Meaford, though Thornbury and Shallow Lake have some small plants with good growth possibilities. The two larger urban centres have several woodworking factories that produce flooring, windows and doors, furniture, radio and television cabinets and many other wood products. Owen Sound has two modern plants producing electrical products, also an up to date publishing company specializing in office stationery, bookbinding and other paper products. In Meaford we have a modern textile mill which at present is having a difficult time. However, all these manufacturers are pleased indeed with the assurance given in the budget that they will not have to compete with any dumped products, and that textiles will be given further consideration.
Owen Sound boasts of one of the most modern engineering works and steel, iron and bronze foundries in Canada. This plant
57071-3-118J
The Budget-Mr. Noble is capable of turning out castings which are calculated by the ton. They are equipped to build large propellers, and during the war this shop produced propellers for all the ships built in Canada. They have produced a new metal which is especially adapted for the construction of propellers for icebreakers and other boats which have constant contact with ice. I maintain, Mr. Speaker, that since this plant contributed so much in our time of need it should be given first consideration by the government in competition with propeller manufacturers outside this country.
My riding, located as it is on a fine body of water, has several boat manufacturers. From these establishments come some of the finest pleasure craft available anywhere. The largest of these plants is equipped to build steel barges, landing craft and boats up to 150 feet long, with a tonnage of up to 580 tons. Other steel products manufactured by this company are transformers, lighting poles, road rollers, marine gas and oil drilling equipment. With this line of products this firm will be in a position to make a notable contribution to the development of our north country.
There is an urgent desire by the people of my constituency for more industry. We must have more work if we are to absorb the growing labour force and supply a livelihood for the people who prefer to live in the ideal and pleasing surroundings of Grey North. I hope that decentralization will be given serious consideration, and that this government will use its influence in the encouragement of this plan. It is essential from the point of national security, and would work needed benefit in our smaller urban centres.
Industrial development corporations were instrumental in developing Toronto's golden mile of industry, but these corporations are reluctant to operate in smaller cities off the beaten path where the possibilities of profitable business for them are less favourable. However, Mr. Speaker, a group of public-spirited citizens in Owen Sound have banded themselves together and propose forming a company. Their purpose will be the raising of money through the sale of shares in this company. With the money they propose to render the same service to their city and community that is extended to the larger centres by the industrial development corporations; but to be successful considerable government help will be needed. Not forgetting decentralization, Mr. Speaker, I suggest this government make available, on long-term loan, an amount equal to that raised by any public organization for the purpose of industrial promotion.
The tourist industry has grown to be one of Canada's major industries. Grey North,

The Budget-Mr. Noble with Georgian bay as its northern boundary, shares handsomely in the dividends from this industry. Accommodation is available on sandy beaches or on rugged shore lines, and for those wishing to establish their own summer homes excellent building lots can be secured at reasonable prices. In this budget the tax exemption extended to building materials should give stimulation to summer cottage building.
At Owen Sound first-class passenger boat service is scheduled to points in the upper lakes for the duration of the tourist season. At Meaford pleasure craft with licensed guides are at the service of visitors for water tours or fishing trips. Meaford is visited by yachts from many points in the United States as well as in Canada, and is reputed to be the finest harbour on the great lakes for small craft. This harbour is in urgent need of floating docks, and I feel certain the Department of Public Works will remedy this matter.
I would be remiss in my duty if I did not mention the beautiful scenery in Grey North. It is unsurpassed in any part of Canada. With the welfare of the tourist industry in mind, Mr. Speaker, I suggest that we facilitate travel by United States citizens through our country. In this respect may I suggest the swift completion of a better means of travel between Canada and the United States at Sault Ste. Marie. This is a fine place to enter Canada, as a great area open to fishing and hunting is immediately available. Even more important to this point of entry was the completion of the famous Mackinac bridge which makes possible a flow of traffic 15 times greater than before. However, without a bridge at Sault Ste. Marie we have a serious bottleneck to the free flow of traffic into Canada.
I am informed that an act was passed by parliament on May 4, 1955, to incorporate the St. Mary's Bridge Company for the purpose of constructing and maintaining a toll bridge across the St. Mary's river at the Sault. The Canadian company was to enter into an agreement with the international bridge authority of Michigan to do this, and their agreement with that commission was approved by the governor in council on September 9, 1955.
No work was actually done on this venture. This first arrangement apparently broke down. Then the state of Michigan began negotiating with the province of Ontario, and this was the position as far as the federal government was concerned up to February 13, 1958. Subsequently, however, the two original companies have submitted a plan to the Department of Transport for a projected location of this structure. It seems to me, Mr. Speaker,

that after the delay of three years since parliament recognized the necessity for this bridge it is now urgent that some influence be directed by the government toward the early completion of this venture.
Plans for improved ferry service from South Bay to Tobermory are now being considered. This is a very popular tourist route, and with the improved facilities I have mentioned many thousands more Americans would visit Canada and a corresponding increase in their spending would result.
I am very well aware of the fact that the British North America Act gave the federal government legal jurisdiction over coastal and inland fisheries. However, by agreement the province of Ontario has taken over the management of fisheries within its boundaries. This arrangement worked very well over the years when Georgian bay and lake Huron, the areas in which I am particularly interested, were well stocked with lake trout and whitefish, but now that these waters have become almost depleted of these species our fishermen have fallen on evil days. These regrettable circumstances could have been contributed to by unsuitable legislation for the conservation of these fish or laws that were not enforced. Fishermen were allowed to go on the spawning beds and take fish, which has proven to be a serious mistake. At that very time these fish were having a tremendous struggle for survival. Lamprey eels were taking a terrific toll. The areas were being heavily populated with smelts. This fish if fed raw carries an enzyme that destroys the vitamin B in any given diet, with the result of paralysis and eventually death. I have proven this in mink feeding. I feel that smelts have also contributed to the disappearance of trout and whitefish.
The federal government has entered into a convention with the United States government in an effort to control the lamprey eel and to rehabilitate whitefish and lake trout in the great lakes. In Georgian bay, which is completely Canadian water, I suggest to the government that immediate stimulation be given a program of conservation and rehabilitation in co-operation with the provincial government. This body of water, which in the past produced millions of dollars of revenue through food and as a mecca for tourist fishermen, is now reduced to a good place for boating.
For example, a few seasons ago in the harbour at Meaford 35 fishing craft for the purpose of trolling for lake trout were kept completely occupied for several months each season. Each boat accommodated four passengers and a guide. I regret to inform

you, Mr. Speaker, that not one boat now leaves Meaford harbour to troll for lake trout. The chamber of commerce of Meaford estimates that the loss to the town is in excess of $250,000 annually. The people who are suffering more directly are the commercial fishermen who have thousands of dollars invested in tugs, nets, warehouses and other equipment. They are scattered up and down the shores of this largest fresh water bay on the continent.
In Grey county we are sharing in three conservation authorities. These are on the Saugeen, Sauble and Beaver rivers. The last mentioned is completely within the boundaries of Grey county. In the development of these authorities, and not forgetting the fact that we have large tracts of land not suitable for agriculture, an excellent opportunity is presented for the establishing of camp grounds and a national park. I realize that the provincial government is required to take the initiative in these projects before federal assistance can be expected. However, I want to commend this government for the keen interest and consideration they have extended with regard to this particular development. We in our riding plan to take advantage of this opportunity.
Considering our whole economy, I am satisfied that the finance minister has gone all out to correct the immediate problems on which the budget could work any remedy. At this time I want to repeat the wise words of the finance minister when he said, as found at page 1250 of Hansard of June 17:
Only by keeping our costs of production in line with those of our competitors can we hope to achieve expanding employment and progressive improvement in our standard of living.
The economic growth and recovery we desire to bring about must take the form, as pointed out by the Prime Minister not of higher costs and prices but more production and more jobs.


Douglas Mason Fisher: Mr. Speaker, there was naturally a somewhat marked disparity between the speech that introduced the budget and the speech the Minister of Finance made yesterday. We were back again yesterday to those lovely phrases such as "crocodile tears", "crystal clear", and "welter of contradictions", which I thought the minister had perhaps departed from forever with the relative dignity and, may I say, underplayed presentation given the budget. In his speech yesterday the minister proceeded to take everybody to task, and I suppose he should certainly be allowed that delight because of the fact that he has sat here and listened to so much.
The Budget-Mr. Fisher
He started off by saying that much of the criticism had been contradictory and none of it had been very constructive. Of course the charge that criticism is not constructive is really a red herring. It is not a logical answer. I think the fact that some of the criticism is contradictory is only to be expected when there are so many different interests in this country. For example, there are those who favour higher tariffs and those who favour lower tariffs.
But it seems to me that the contradictions are paralleled by the budget itself. I know I have felt, so far as some of the criticism the Liberal party has made of the government since assuming office is concerned, that much of it has been sour grapes. For example, with respect to dominion-provincial relations the Liberals managed to keep Quebec in a sort of post-Regina, scaffold trauma for many years, and it was certainly about time and most desirable that that hold be broken. I welcome the fact that the Bourbonnais and the Hardy Smalls, the Cathers and the Pigeons are lying down in the same political tent, and I think the Liberal party may be making too much of the disparities. Perhaps we will get something from this government in time. We may even see the Conservative party push some of the Quebec politicians into the twentieth century.
In that regard I think the Tremblay report makes very interesting reading. This is the report on constitutional problems published several years ago. It stresses constitutional and fiscal problems, and there are two paragraphs here that I think should be very much in the mind of the Minister of Finance if indeed they represent the point of view of Quebec as the commission suggests and if, to carry it a step further, these ideas represent the opinions of the members from Quebec who now form such a large part of the party in power. On page 22 of the summary of the report there is the following:
Since indirect taxes, within the meaning of constitutional jurisprudence, are assigned to the federal government by the constitution, any agreement that may be made would only affect direct taxes. With the federal government itself having access to this category of taxes, any settlement between the governments assumes there would be definition and acceptance of a rule of sharing which would suppress the ambiguities from which the constitutional practices of the past thirty years have resulted-
May I interpose here that of course the charge is that most of these ambiguities developed under the previous administration. I would imagine that the people who presented this report would see the Conservative government as a St. George killing these dragons of ambiguity. To continue:
We have already formulated this rule of sharing and it is deducible from the Constitution's general

The Budget-Mr. Fisher aims and purposes. Inasmuch as taxes have a qualitative relationship with the functions of collective life, (such relationship becoming more apparent as taxation becomes more onerous), they should be assigned, in a federative state, to the two orders of government according to the functions respectively vested in them. Thus, taxes on incomes affecting individuals and institutions should be reserved to the provinces, upon which devolves jurisdiction in cultural and social matters. On the other hand, since the federal government, for its part, is vested with the wider economic responsibilities, it should have sole access to taxes on goods and on the circulation of goods.
I want again to comment and say that if this is a good statement of the Quebec position or of the provincial position, and the minister spoke so strongly yesterday to stress the fact that his is not a centralizing government but that it is a government that has a respect for the provinces, I fail to see that within this present budget much consideration has been given to this matter and the stand of Quebec in relation to fiscal policies. I hope that in the future, as these two wings of Progressive Conservatives merge the Quebec viewpoint as expressed by the Tremblay report and the viewpoint of the people from what I might call outer Canada, the government will define more clearly just what it is going to do about the centralist position and whether it is going to be a centralist government or whether it is going to take the lead in financial matters to give the provinces back what the Quebec government in this report claimed was its right. In expressing my own opinion I might add that I hope the government does not make a retrograde step. I hope it leads these people from Quebec up to the view where they realize that the centralist position is the true position of this greater Canadianism that is now being broadcast and advanced so ably by the Prime Minister (Mr. Diefen-baker) of this country.
The minister made the point that no one had mentioned the magazine tax. I intended to mention the magazine tax. I felt all along that it was discriminatory; but I have never seen two better examples where I should like to see discrimination practised than in relation to Time magazine and Readers Digest. It has always seemed to me that Time magazine-and this applies in the United States as well as Canada-is a most retrograde form of journalism. You have opinionated conclusions presented in the form of what appears to be a news report. You have a continuous indoctrination. I wondered at the time when the tax was cancelled, at the fact that Time magazine in its indoctrination in its Canadian section has taken such a generally favourable view of the new government. But that probably is an unworthy suspicion.

With regard to gold, the minister felt that he had not received nearly enough recognition for the step he had taken there. I am pleased to recognize that step. What bothers me about this increase in the gold subsidy is this old question of private enterprise and free enterprise of which we are told consistently in this house. We just had it the other night, I believe, from the hon. member who defeated the former deputy leader of the C.C.F., stressing that his party is a party of free enterprise and private enterprise. It has always seemed to me to be most peculiar that this government would even consider extending this subsidy instead of wiping it out. Surely if you believe in free enterprise and private enterprise, and if this is the heart of your conviction, you do not want to subsidize and keep going something that cannot compete in the markets of the world.


Donald Methuen Fleming: May I ask the
hon. member whether he does not realize that it is government that sets the price of gold?


Douglas Mason Fisher: I am quite aware that government sets the price of gold but it is not the Canadian government. With regard to that matter, I am just suggesting that there is a certain inconsistency here in the private enterprise, free enterprise myth that goes along with the Conservative party. I am, as well aware, as the minister is, that you are not a private enterprise, free enterprise party down the line. You are probably as pink as we are.


Donald Methuen Fleming: Heaven forbid!


Douglas Mason Fisher: I am very pleased to see this subsidy. I think it is great stuff. I just hope that these people who are giving us this private enterprise, free enterprise line would stop and realize that it is not free enterprise or private enterprise; it is a government subsidy keeping going an industry-the gold mining industry-that is so proud of flexing its free enterprise muscles. I have every sympathy with communities such as Timmins and places like that which come down to Ottawa seeking support and for the social reasons that led the government to extend this subsidy. I think they are admirable and I compliment the Minister of Finance on it. But I hope that some time, perhaps in the Conservative caucus, he might read a little lesson on the weakness of free enterprise and private enterprise in certain sectors of our economy and so explain to them that government action is not completely black and awful as many of the backbenchers especially seem to be putting forward here in this house.
I think one comment which the minister made is a very sound one. I think perhaps even members of my group and certain of

the Liberals have been unfair. He stressed that his government entered this house immediately following an election and that at that election they obtained a tremendous vote of confidence. I think that is a very sound argument. But I know the minister during his long stay in the opposition never allowed that matter to get in his way. I have checked the Hansard debates immediately after the 1949 election when the Liberal party was swept into power with such a great majority and I fail to find that he put halters on his tongue or took a very reticent part. He was extremely aggressive right after the election. I think that today we all acknowledge that certainly at this time his government has the confidence of the people.
I should also like to suggest to him-in contrast to what I have heard previous Conservative members say-that this budget has not gained a great deal of popularity in the country. It is not the most popular budget that has ever been brought down. There has been considerable criticism of it. Even such journals-righteous supporters of the government-as the Montreal Gazette have not been particularly kind to this budget or to the minister. I think that on this particular point he will have to recognize that we are just, in our poor and humble way, trying to carry out the duties of the opposition. If some of us are even taking his former actions in the opposition as a model, I hope that is not too hard on our dignity. I hope that he realizes that under it all we recognize that for a few moments and perhaps for another few months his party has the confidence of the country.
One of the points the minister stressed yesterday was that no one had come forward with any ideas to combat inflation; that here he had presented a budget, that inflation was one of the great problems of the country at the present time, and especially the Liberals had been retrograde in not coming forward with suggestions to stop this. There is a book that I have been reading-it was recently published-that has a number of suggestions on how to combat inflation. I should like to recommend it to the members of the house. It is a recent publication by a United States professor who had Canadian roots, namely J. Galbraith; it is called "The Affluent Society". There are a number of points from a commentary by another leading United States economist, Stuart Chase, on this book, that I think bear on this problem of inflation. This review from the Reporter magazine states:
Another important change has occurred in the conventional wisdom since Ricardo's time,-
For those who do not know who Ricardo was, may I say that he was an early 19th
The Budget-Mr. Fisher century economist who predicted the continuance of poverty and insecurity in the world.
-primarily as a consequence of the great depression. The goal of full employment and high wages is now supported by practically everybody in America.
And I would say in Canada.
How else indeed can the affluent society absorb its own production? This goal entails, however, a painful side effect in the wage-price spiral and more inflation. "Where inflation is concerned," Galbraith notes, "nearly everyone finds it convenient to confine himself to conversation."
It seems to me that the minister and the Prime Minister are wonderful at confining themselves to exhortative conversation, especially to labour groups with respect to combatting inflation. The article goes on:
"All branches of the conventional wisdom are equally agreed on the undesirability of any remedies that are effective." Effective means of combating inflation conflict with the ideal of production for the sake of full employment, and a bigger gross national product.
There is a theory that advancing the discount rate-
And this comes into the tight money policy idea as reflected in Canada-
-by the federal reserve will check inflation, but recent monetary history, alas, shows this to be an illusion. Such changes, furthermore, can be dangerous by checking business investment and encouraging unemployment, while administered prices soar majestically upward. The same attitudes that lead us to advocate full employment and the use of industrial plant at capacity "deny us the measures to prevent inflation." This is a shattering conclusion, but I am afraid it is true.
This is the comment of an economist upon one of the most important books on economics which has been published for some time. There is the question of inflation and the question of production, and the whole matter of how far we should push our gross national production. Should production, production, production be the only goal? One would almost gather that the minister thinks so, although I am sure that is not so. I know he is a man of religious conviction and I think he recognizes that there are many more important things in life than just pushing up our gross national product. I see, however, almost no recognition of this fact or of these other parts of life which are so important in this budget message which completely stresses the short range economic problems with which we find ourselves faced at the present time. Certainly in this budget there is no long range vision to pull us out of this inflationary spiral.
I think one of the brightest remarks made by Keynes, the economist, was that one of the difficulties in talking about short runs and long runs in economics is that in the long run we will all be dead. This is definitely

The Budget-Mr. Fisher a short run budget and there is no long range hope in this budget that we are going to snap out of this trend toward more and more inflation. The only solution the minister seems to have is the exhortatory one of admonition to the opposition.
Before leaving this subject I would like to refer to some recommendations made by Galbraith in order to get ourselves out of this particular rat trap into which our race to increase the gross national product has got us. I especially have in mind the first one, which I believe is well worth consideration by this government. I know it is an extraordinary measure, but I believe it is one which would do a great deal to snap us out of this condition and I suggest that the government particularly consider it if this winter turns out to be as bleak as some people predict.
Galbraith recommends firstly a flexible system of unemployment compensation, financed outside of actuarial standards by the federal government, on top of what provinces may do. As unemployment increases, scales of compensation go up until they are just under weekly earnings. As unemployment declines, scales go down. Thus, when jobs are plentiful the system will provide little incentive for malingering; when jobs are scarce no useful distinction can be made between those who are voluntarily idle and those unable to find work. A full head of consumer demand is meanwhile maintained and "the effect...is to make tolerable the unemployment which is associated with price stability." Galbraith says we cannot hope to check inflation without having some unemployment from time to time and that this is a fact which must be faced.
Galbraith goes on to make many other suggestions which I think would be equally applicable and one of them has always been a bane of the life of the Minister of Finance (Mr. Fleming). This is that some form of limited price and wage controls should be instituted and a further step should be the automatic diversion of a share of the increasing income taxes to public authorities for public purposes.
I recommend that this analysis of what I would say is the North American economy and the difficulties in relation thereto should be considered together with some of the solutions suggested and that this will afford much assistance not only to members of parliament but to the Minister of Finance.
I would now like to refer to one point having to do with an omission in the budget, which I had hoped to see rectified. This matter has been taken up with the minister and I know he has his side of the story to tell. It has to do with an amendment which

was presented during the last parliament to the Income Tax Act providing as follows:
A person employed as a construction worker at a construction site from which he cannot reasonably be expected to return daily to his ordinary place of residence where he maintains a home in which he lives with his wife or other dependant shall not be required to include in income the value of free board and lodging furnished during the period of necessary absence or free transportation furnished to or from the construction site, or a reasonable allowance paid to him to cover expenses of such board and lodging or transportation.
During the last parliament the former member for Comox-Alberni and myself, together with the man who is now the leader of the Quebec Liberal party, pressed for this allowance to be extended to the loggers and bush workers in our country whose situation closely parallels that of the construction workers. A group of lumber workers in my area presented a brief to the Minister of Finance, and I must compliment the minister on the audience he gave us but the difficulty appears to hinge around this point: The construction workers who benefit from this particular amendment which was introduced comprise a very, very limited group. This legislation does absolutely nothing for the hourly wage earner; it applies only to people on salary and applies to the sort of executive or person on the managerial level. Very rarely does it help the bulk of the people working on a job. The fact remains that a bush worker or a logger in order to earn his income in most cases has to go away from his home and in effect maintain two domiciles or at least, if he is married, maintain a home in a town or village and also support himself on the job. He is unable to take advantage of this clause and even if the clause were to be extended to take care of loggers and bush workers it would not be of any assistance for the simple reason that under the contracts which apply in most cases in Canada between the unions and the employers in the woods industry there is no such thing as free board and lodging. The men pay for their board and lodging and the only way that any changes could be made which would prove effective for these men would be for the minister to bring in an amendment which would allow men living under these conditions, when they are maintaining a domicile in a city, to deduct what they pay for their board and lodging as an expense on their income tax returns.


Mr. Bigg:: Would the hon. member permit a question? I was wondering if he could explain why the lumber industry, which was taken over by the socialists in Saskatchewan, closed down after large monetary losses, as

did some lour other industries including the fisheries, tanneries and shoe-making industries.


Douglas Mason Fisher: Mr. Speaker, I suggest that the question is completely irrelevant. I am not discussing Saskatchewan or provincial matters at all. I think the question brought up by the hon. member may be of interest to him and of interest to me, but it has nothing to do with changes in the Income Tax Act, and if the hon. member is just trying to cast a reflection on my interest in the lumber industry I would be a fool not to be interested because we have 12,000 lumber workers in our constituency.


Frederick Johnstone (Jack) Bigg: I do not require clarification of my education as to the efficacy of your socialistic programs.


Douglas Mason Fisher: The efficacy of socialistic programs has been proved in many parts, and I suggest the hon. member should look at the gold mining industry, and what is being done for that industry. Now that is a socialist measure. Does he approve of that?


Frederick Johnstone (Jack) Bigg: There were no gold mines in that province, but we had an experiment in socialism which was a complete failure.


Douglas Mason Fisher: Mr. Speaker, this dreadful failure in Saskatchewan always bothers me. I know the hon. member for Bow River brought it up, probably because he is a fugitive from there, an emigrant who had to go to vigorous Alberta and carve out a career for himself there.


Frederick Johnstone (Jack) Bigg: Ten boards closed down. That proved it was a socialist failure.


Douglas Mason Fisher: I would just like to remind hon. members that the government has been re-elected a good many times.


Mr. Deputy Speaker:: Order. I believe there are too many speakers at the present time.


Douglas Mason Fisher: Well, I did not want to go into this free enterprise business. Anyway, the party across the way is not really a party of free enterprise. After all, these deficiency payments for agriculture, these subventions for coal, that is not free enterprise.


Paul Joseph James Martin: How would you describe the party opposite?


Douglas Mason Fisher: Pink, but not a really deep pink. I think there has been too much talk about blue over there.


An hon. Member:: We are far from red.


Douglas Mason Fisher: I would say that the minister has a nice healthy colour. But I should like 57071-3-119
The Budget-Mr. Fisher to get back to the point I was making when I was so pleasantly interrupted.
The amendment that will enable the bush-workers to claim what I think is their due in the light of what the construction workers now have will be a very difficult one to administer; it is going to create problems for the income tax section which tries to administer it. But I would remind the minister that last year he promised he would give us fair and just treatment wherever taxes were concerned. That principle, he said, would be his sole guide in the application of taxation. I should like to suggest to him that there is an inequity at the present time in connection with this, and I wish he would keep it in mind and try to straighten it out. If he could do so it would mean much for the bushworkers in Canada who, I think, need this help.
One of the points in the budget was the increase in tax allowance to corporations, which the hon. minister hopes will lead these corporations into giving more to the universities. I notice we did not hear anything more in this budget with regard to the $25 million promise which the Secretary of State for External Affairs (Mr. Smith) seems to have made out west during the election campaign. A study of charitable donations made so far by companies would lead one to think that little gain will result from this increase from 5 per cent to 10 per cent. The total profits of corporations in 1955 amounted to $2,769.9 million; the total of charitable donations amounted to $26.3 million, representing a percentage relationship between charitable donations and profits of .9 per cent. How much of this charitable donation went to education we cannot be sure, but there are some figures which we can gather from previous years. For some years the national conference of Canadian universities has been attempting to gain from the federal government certain changes in the tax laws relating to deductions for charitable purposes in order to increase grants or gifts from private and corporate sources. The fact is that the corporations have not taken advantage even of the present tax situation. One wonders what they are going to do now that there is an additional 5 per cent. By law, corporations were permitted to deduct 5 per cent of their taxable income in respect of charitable donations. In 1956 they had deducted three-quarters of 1 per cent; in 1953 about $26.3 million or about 1 per cent of their net taxable income. In that year 5 per cent would have amounted to about $130 million. It is obvious from these figures that the corporations have not taken advantage of the 5 per cent allowance they previously had. I ask the minister, therefore, what leads him

The Budget-Mr. Fisher to believe that they are going to take advantage of this additional 5 per cent. There is no need for me to make any comment on the importance of this matter, because the Secretary of State for External Affairs, when he was head of the University of Toronto, said:
We want a great deal of money. Without wishing to sound ungrateful, I have sometimes thought, when a prospective donor makes an offer, that the industrial conscience in some instances can satisfy itself by putting a very small sum on the collection plate. There are shining exceptions.. .but on the whole Canadian corporations have not as yet taken seriously the needs of higher education.
And here is the key to the minister's comment:
They have not even taken advantage of the 5 per cent deduction from their taxable income permitted under the tax laws of Canada.
The fact is that this increase is really going to do very little, if anything for the universities. I think the hon. member for York-Humber (Miss Aitken), who is a member of the government, stressed this point. It seems to me that this particular change will do very little to solve the university crisis which we are supposed to have had and which most of us believe we still have. I know one of the difficulties in connection with the corporate contribution to education is that many of our corporations are not Canadian, but when you get a branch plant economy you cannot expect United States companies to be as concerned with Canadian needs, especially university needs, as Canadian companies. I think the government has got to go much further with regard to getting corporation money to the universities than it has done by taking this particular step.
One of the other factors which is not considered at all by this increase is the fact that corporations in Canada are concentrated in certain sectors of the country. I do not know what this increase is going to do for the maritime universities or for some of the western universities where you have got much less in terms of a corporate tax structure to support you and it just seems to me that the change will mean, if anything more and more for those who already have more.
I am glad to see that the Minister of National Revenue (Mr. Nowlan) is in the house, because one of the final points I wish to touch on concerns his department as much as anything else. Several times I have brought up the question of the Premium Iron Ore Company, and the fact that this company is before the courts in the United States, the argument being that it is not legitimately a Canadian corporation and that it should therefore be taxed under United States tax law. This is a matter of great

interest to the people in our particular area because Premium Iron Ore is tied in with our Steep Rock iron mine. I have sent some of the statements which have been made in this house by the Secretary of State for External Affairs and by the Minister of National Revenue to the gentleman who is at the head of Premium Iron Ore, Mr. Cyrus Eaton, and he has sent me the following answer in connection with the matter.
The point I want to make clear is that the Premium Iron Ore Company will have no redress if the case goes to the Supreme Court and is won by the United States tax authorities. Furthermore, it will place in a ridiculous position our double taxation treaty with the United States. In his letter, Mr. Cyrus S. Eaton said:
If the American courts should decide the case against Premium, there would be no redress.
There would be no way by which Premium could get back the money it has already paid to the Canadian government in terms of taxes. I continue:
Steep Hock and Premium sell iron ore in the United States so that it would be possible for the American tax authorities to attach the payments to Steep Rock and Premium customers.
If the decision should go against Premium . . . because in the United States the ruling of the Supreme Court is binding on the Congress, the President and all departments . . . there would be no redress for other Canadian companies against the allegation that they were carrying on business in the United States. A principle would have been established which would be law in this country and no governmental authority here or in Canada could set aside the principle of the court.
If this is the case, I wonder why the Canadian government is not strongly protesting in an effort to keep that case from going to the Supreme Court.


Mr. Nowlan:: How would you do it? Do you suggest we fire on the United States? What do you want us to do?


Douglas Mason Fisher: No, we cannot declare war with the United States but I do suggest it should be taken up at the highest level, perhaps next week when we expect a distinguished visitor from that country.


George Clyde Nowlan: Does the hon. member not realize that both the preceding government and the present government sent strongly worded protests to the state department and replies have been received from the United States government? What more can be done? My hon. friend's premise of law is entirely fallacious but I shall deal with that later on. At the moment I would like him to tell me what further can be done. In situations of this kind between two friendly countries the governments concerned can only express their opinions.


Joseph-Alphonse-Anaclet Habel: Send the minister down; he is a strapping, tall fellow.


Douglas Mason Fisher: Someone has suggested that the minister should be sent to Washington to strike fear into the heart of the government. This is perhaps not an unwise idea if we remember the picture the minister presented two days ago as he stood with his fists flailing and his gigantic Bulk vibrating in indignation at the dirty, nasty criticisms from the opposition benches.
I suggest that public declarations on the part of such people as the Prime Minister have been receiving a great deal of publicity and I believe this would be stronger in a case of this kind than aide memoires that mysteriously disappear and find their way into the hands of United States senators. This is an issue on which some one at the top level of authority in this country should speak forthrightly when we have top officials from the United States here.
I hoped to have sufficient time to proceed to a discussion of the 15 per cent trade diversion proposal. I would only suggest to hon. members who are interested in a British economist's view of the Canadian proposal and Mr. Thorneycroft's counter proposal that there is a new book recently published which is called "British Economic Policy Since the War", a Penguin publication, by Mr. Arthur Shonfield. I hope hon. members will examine it because it exposes some of the fallacies of the 15 per cent offer. One conclusion I wanted to express which I gained from glancing at this book was that its author indicates that the former leader of the Conservative party, the Right Hon. George Drew, was not badly mistaken in analysing Canadian trade problems when he emphasized that Canada's future trade development would to a large extent have to lie with South America and the orient.
As this economist presents the case, the 15 per cent trade diversion or a free trade relationship between Great Britain and Canada would almost certainly lead England into dollar difficulties. If Canada were to carry through the 15 per cent diversion policy effectively she would have to come to some sort of agreement with the United Kingdom that would prevent Canada from being used as a mere entree for United States goods seeking to enter the British market through the preference that was being given to Canadian goods. This book and particularly the comments it contains concerning the proposal for the diversion of 15 per cent of Canadian trade from the United States to Great Britain is important reading, in my view, for almost any one who expects to rise in the House of Commons and speak on the subject.
57071-3-119J
The Budget-Mr. Tremblay
My concluding words with regard to the budget are these. It is a short range, short run budget. There is no vision in it compatible with the dynamic program of Canadian development to which we are looking forward. Indeed, I would almost judge that there may have been some conflict within the cabinet in relation to the budget. The magnificent vistas that were opened up to us by the Prime Minister and which were echoed by the Minister of Northern Affairs and National Resources (Mr. Hamilton) led many people in this country to believe that we were going to witness a tremendous change in federal government policy. No change has occurred and there has been a certain letdown in relation to the budget. The budget does not reflect in a financial or economic sense the tremendous vision of the future of Canada in which the Prime Minister invited us to share.
(Translation):


Mr. J. N. Tremblay (Roberval):: Mr. Speaker, I was hesitant about taking part in the budget debate-


Mr. Rouleau:: And well you might!


Jean-Noël Tremblay: The solemn character of this assembly and the distinction of its members had filled me with understandable diffidence and, I daresay, an amount of fear which I found rather difficult to overcome. On the other hand, I realized that the proper thing to do at first was to listen to seasoned parliamentarians, follow their example and profit by their remarks.
However, I had felt for some time that the mandate given me by the electors of Roberval required that I should not remain a silent listener to discussions in which the interests of my fellow citizens are at stake. In addition, I am convinced that the first duty of a member is to express his opinion at the proper time, on national problems and on the solutions which are offered. I do not believe that there is a better opportunity to do this than the budget debate, since the policy of the government is, as it were, on trial.
I therefore join the discussion, but with all the caution required by my youth and my inexperience.
This being my maiden speech in this house, allow me, Mr. Speaker, to offer you my congratulations. You know that you already enjoy my confidence. It would ill become
1876	HOUSE OF
The Budget-Mr. Tremblay me to wound your modesty by repeating what so many members have said about your integrity, your wisdom and your perfect gentlemanliness. Rather do I congratulate those who praise those qualities: they were right, and were only telling the truth.
Nor did they fail to draw the attention of the house to the qualities of the Deputy Speaker (Mr. Sevigny). I cannot do better than associate myself with those tributes. Let me add, about the chairman of committees (Mr. Rae), that I congratulate those responsible for such a wise choice.
Mr. Speaker, I said a moment ago that the budget gives us an opportunity to put government policy on trial. The speeches we have heard so far are the best evidence of this. I cannot help saying that they reminded me of some trials in which the evidence was not particularly conclusive. I refer especially to speeches of Liberal back-benchers.
From the hue and cry raised by members of the opposition, one would think that the Canadian political situation is at its worst and that all that can be done now is to withdraw to some secluded spot to meditate while awaiting the final catastrophe.
I will not claim that everything is perfect and that the budget introduced by the hon. Minister of Finance (Mr. Fleming) gratifies every last wish of the Canadian taxpayer. Besides, such was not the intention of the minister who, drawing upon all his knowledge of economics and his superior talents, brought down a realistic budget which takes into consideration the Canadian economic situation. I believe he succeeded in meeting the requirements of the Canadian economy and the legitimate wishes of the taxpayers, not in the sense that tax reductions are extravagant but in the sense that, having regard for the present situation, the taxpayers will enjoy substantial reductions in certain fields without being burdened by other charges in other fields.
I suppose our friends opposite feel the great urge to ask where the tax cuts are. The answer to that one is easy. The Conservative government has granted, in the course of the past four or five months, substantial tax reductions totalling more than $200 million. Added to that, there will be the savings made by taxpayers thanks to the new measures contemplated in the budget. There is no justification therefore in crying hardship and saying that the government did not make good its promises to the electorate. If the government has yet to make good on some of them, it is in the process of doing so, and the experience of admin-


istration that our friends opposite have gained should have made them realize that sometimes the implementation of some measures takes time.
At any rate, I believe that, if the budget is somewhat disappointing to anyone it is because the government has anticipated on the program it intends to achieve in the course of the next fiscal year. In fact, even before making his budget speech on June 17 last, the Minister of Finance had provided some tax relief. We should therefore feel grateful to him for that. Much has been said about the deficit and, in this regard, government opponents did not fail to use electoral and demagogical tactics by reviving an obsolete antitoryism. All that musty gammon and spinach, all that prattle is so phony that it is not worth talking about. We only have to put them to the account of some hon. members who seem to believe that the government puts their seat at stake, or attacks their prestige when it proposes to abolish the tax on rodent poison.
On the contrary, I believe that the deficit budget presented by the Minister of Finance, and so well defended by him yesterday when he replied to the official objections of the opposition, is a realistic budget. The minister must be given credit, great credit, for not having concealed the truth. Of course, it is not particularly pleasant for the Minister of Finance to reveal certain things and to demand certain sacrifices. But, he is duty bound not to abuse the confidence of Canadians. Who else is in a better position to inform Canadians about the economic situation? As soon as the situation is clearly defined, if the citizens have confidence in those who preside over the destinies of the nation, they leave it up to these people to take care of the nation's financial problems. I am fully convinced, in any case, that all Canadians have already accepted the provisions of this budget. On the whole, it is quite satisfactory: if we consider the tax reductions of the last few months and the improvements in social security measures, this budget efficiently lightens the taxpayers burden. On the other hand, it attempts to control an unstable economic situation which could touch off a more serious regression. I would remind those who criticize the budget on the basis of the deficit of those very pertinent remarks made by a distinguished economist, the hon. member for Rimouski (Mr. Morissette) who said, as recorded on page 1711 of Hansard of June 27:
I was surprised to find that our Liberal colleagues base all their disparagement of the budget on the fact that this year the government will have a

deficit of about $650 million, when the very ABC of economics say that, in periods of recession, government expenditures should be maintained at a very high level.
Surely, the hon. member whose words I have just quoted will not be blamed for taking heed in this wise of principles expounded by someone who is still the economic adviser of the opposition.
All this, Mr. Speaker, leads to the conclusion that the budget introduced by the hon. Minister of Finance is not a camouflaged budget, a travesty of the present economic situation, as was the case in the first few months of 1957. This budget sets out the economic facts; it recommends appropriate measures; it refers to problems of importance and suggests efficient solutions; it shows certain trends and admits some concern. The hon. Minister of Finance thus institutes a kind of dialogue with the people of Canada, telling them just what the economic situation of the country is, and avoiding at the same time to induce that depression psychosis which the experts from the opposition are striving to create. They are very badly inspired to do so, because they contradict themselves, they who unanimously foretold for Canada an unprecendented economic development, at the time of the June 1957 election, when they had received from their own economic experts all the evidence showing that Canada was then drifting seriously towards recession. Those gentlemen of the Liberal party have no more right to castigate the government for not reducing taxes than they themselves had done. When will they start telling us about the fabulous tax cuts introduced under a Liberal regime? When will they come out with a table of tax reductions instituted under their wise administration?


An hon. Member:: Let the hon. member for Hull listen to that!


Jean-Noël Tremblay: Their newly-formed awareness of the people's will is all to their credit, but it does not fool anyone. They have too richly deserved the reputation of stranglers of the people, for us to challenge such reputation. In this respect, I found touching-


An hon. Member:: Touchd!


Jean-Noël Tremblay: -the remarks made by the hon. member for Lapointe (Mr. Brassard)- I see that he is now occupying his seat- who said the other night, as found on page 7 of the appendix to Hansard of June 26:
There is no word there of any reduction in tax, only ominous silence with regard to family allowances, and complete silence too with regard to federal-provincial fiscal relations.
Where does such solicitude come from? I do not think that he learned it from his
The Budget-Mr. Tremblay present leader (Mr. Pearson). The hon. member for Lapointe has probably not forgotten the statements made in 1953 and 1957 by the then secretary of state for external affairs of Canada. Here is a report of La Presse of July 23, 1953:
The minister for external affairs, the Hon. Mr. Pearson, said last night that the 16-point program of the Progressive Conservative party includes nothing else but charges and promises, and constitutes a program which would be highly detrimental to the Canadian economy.


Mr. Brassard (Lapointe):: There was no unemployment at the time.


Jean-Noël Tremblay: Speaking before some 150 people, Mr. Pearson branded as "utterly ridiculous" the promise of Mr. Drew to reduce taxes by $500 million per year if he were elected. We have nothing against anybody suggesting to reduce taxes by such an amount, but we denounce Mr. Drew's contention that he can reduce taxes by $500 million without reducing the social services, or materially increasing the national debt.


Augustin Brassard: There was no unemployment in 1953.


Jean-Noël Tremblay: From the same paper, on May 27, 1957, I read the following statement:
Instead of making promises, the Conservatives had better tell Canadians-
And there was unemployment at that time, in spite of what the hon. member for Lapointe might say.


Augustin Brassard: If there was, you did not discover it.


Jean-Noël Tremblay: -how they are going to reduce taxes and government expenditures, Hon. Mr. Pearson, Secretary of State for External Affairs, stated on Saturday night. He added that 40 per cent of government expenditures are earmarked for national defence: "It would be very unwise to neglect our insurance policy against war".
This was in the heyday of the Liberal party-


Augustin Brassard: No unemployment.


Jean-Noël Tremblay: -at the height of its power, but very close however to the Tarpeian rock. However, the only thing that mattered then was to fight the Conservative party and prevent the people from believing in the Conservative party. One had to use all the necessary force of persuasion. The Liberal policy was well defined; it did not vary in that field from one member of the party to another. In 1957, they were opposed to tax reductions at a time of unemployment. Reserves had to be accumulated and surpluses piled up, there being a fad, at the time, about surplus budgets. The events of June 10, 1957 forced our friends
1878	HOUSE OF
The Budget-Mr. Tremblay to change their stand. Immediately, they came out in favour of tax reductions. They quoted figures as impressive as $400 million a year. For once, they were forced to pass from facts to promises; the trouble is that the electors did not believe in them. The Liberals had done so many things, they had made so many mistakes that the people chose to give their confidence to a group of men who, during the elections, had promised to reduce taxes and who, as soon as they were in power, did in fact reduce them.
I have no objection to the hon. member for Lapointe's request for tax cuts. I quite approve of it. In fact I ask for tax cuts myself most strongly on behalf of the taxpayers of my constituency. However, I do so with peace of mind because the leader of my party never had to turn his coat on this point. He pursues his objective of constantly improving the financial situation of Canadian citizens.


Mr. Deschaielets:: Apparently, you were not present at the Conservative convention.


Jean-Noël Tremblay: Does the hon. member wish to ask a question?


Jean-Paul Deschatelets: I am asking you if you were at the Conservative convention.


Jean-Noël Tremblay: Since my hon. friend is a man of high culture, I advise him to read "En attendant Godot."
The same hon. member had another very touching remark about exemptions. I now quote from page 7 of the translation annexed to Hansard of June 26:
The budget offered an opportunity to increase the basic exemptions which would have been a form of tax reduction.
I suppose the former minister of finance,
Hon. Mr. Harris, did not seek the advice of the future member for Lapointe, on April 6 1956, when, to a labour leader asking for exemptions of $3,000 for married men and widowers and $2,000 for unmarried people, he replied in the following terms:
If exemptions were raised to $2,000 for single persons and to $3,000 for married people, the amount of income tax collected would be reduced, in our estimation, by more than $500 million, not taking into account an important reduction of income from the old-age security tax. Now then, this amount of revenue would be sufficient to pay the operating cost of the Departments of Agriculture, External Affairs, Justice, Labour, Mines and Technical Surveys, Public Works and the Post Office together, or to pay for family allowances, old age assistance, health subsidies, pensions to the blind and several other services of the Department of National Health and Welfare.
And the former minister of finance went on to say:


If revenue from income tax was reduced by $500 million or more, substantial reductions in our expenditures in the field of social welfare or of defence, or considerable increase of other taxes, would be necessary. I do not believe that the majority of Canadians would approve either one of those solutions.
Mr. Speaker, to achieve so miraculous a conversion, our friends must have earnestly ruminated on the meaning of their defeat. They must have mustered many spirits from the great beyond to find themselves suddenly in such a state of grace!


Augustin Brassard: What did the present Minister of Finance have to say about tax reductions in 1953?


Mr. Deputy Speaker:: Order.


Augustin Brassard: May I ask a
question of the hon. member?


Mr. Deputy Speaker:: I would ask the hon. member to let his colleague from Roberval go on with his speech without interrupting him, unless the hon. member for Roberval
allows-


Jean-Noël Tremblay: I am quite willing.


Mr. Deputy Speaker:: -him to ask a
question.


Augustin Brassard: Mr. Speaker, the hon. member for Roberval has just spoken about the statement made by the former minister of finance, Mr. Harris. I would ask him if he would comment now on the observations made in 1957 by the present Minister of Finance about tax exemptions, to the effect that the basic exemption should be raised from $1,000 to $1,500 for single persons and $2,000 to $3,000 for married people.


Jean-Noël Tremblay: As my time is rapidly running out, I cannot do so. The hon. member for Lapointe is just about to go on another trip. To help him in his meditations I advise him to re-read "Le voyage de M. Perrichon".


Augustin Brassard: Something you
would like to do yourself.


Jean-Noël Tremblay: As I was saying, Mr. Speaker, to have achieved such a miraculous conversion, our friends must have earnestly pondered on the meaning of their defeat. They must have mustered many a ghost to find themselves all of a sudden in such a state of grace!
They are now acting the busybodies, each trying to outdo the other. All of a sudden, they have discovered the ills which afflict our country. I find it strange that the same man

who, during his electoral campaign, confessed on television that the Liberals had fallen asleep at the helm, that they had lost contact with the people, must today so bitterly criticize a government which has just achieved absolute power and which, after a few months of administration, managed to reduce the fiscal burden by $204 million, to increase payments on pensions of all kinds, and to promote a public works program of some $1,185,000,000. I feel that it is a promising beginning and that it is wrong to complain, especially when the Liberals must not have a very clear conscience in this regard. The judgment of the people, so categorically expressed on March 31 last,-judgment against which appeal is now being strenuously made, -should rankle as a remorse in their hearts. And I am very much inclined to believe that it is to get relief from some fixed idea which obsesses them that they have undertaken to systematically demolish the government's policy.
I have no intention whatever of challenging their right to criticize. That is the role and duty of the opposition. It thus fulfills a sound regulating function. It helps prevent some dangers and avoid temptations that stand in the way of regimes that are too powerful. But the opposition should refrain from obstruction. For that, it must not be prejudiced and, above all, must avoid any electoral preoccupations. It is precisely that serious mistake which the present Liberal opposition cannot avoid. It has too much to do trying to regain, by all means possible, the confidence of the people to remain within the limits of objectivity. It goes further than that, and the remarks made here by some Liberal members fall little short of outright demagogy.
Efforts have been made, Mr. Speaker, to disparage those members who form in this house the Conservative representation from Quebec. Some have tried to brand us as supporters of a provincial political group, regardless of the fact that the provincial Liberal party has never been anything but a subsidiary of the federal Liberal party, and forced to bow to its sovereign will.


Some hon. Members:: Hear! Hear!


Jean-Noël Tremblay: I may say, Mr. Speaker, that the members from the province of Quebec are here because the electors sent them here as representatives of the Conservative party. As regards the political opinions in the provincial field, that is a strictly personal business. Anyone is free to support the party of his own choice, on the basis of certain
The Budget-Mr. Tremblay convictions and certain facts. None of us, in this regard, need accept lectures from members of the Liberal opposition. Besides, those Liberal members are definitely lacking in ability and, to a certain extent, lacking in tact, since, for a second time, the provincial Liberal party has seen fit to elect as its leader a federal member from the same party.


Some hon. Members:: Shame!


Jean-Noël Tremblay: Let them go and ask Mr. Lesage what reasons impelled him to become a deserter, leaving in the lurch the tattered remnants of a team already quite thinned out.
I now come, Mr. Speaker, to a subject which forms the basis of the criticism of the Liberal opposition: the Conservative representation from Quebec. This took the Liberals by surprise. It dispelled an illusion to which they had clung obstinately. They had thought they could hold on in the province of Quebec, calling up, to gain confidence and save face after June 10, 1957, their triumphs of 1949 and of 1953. But they had forgotten that public opinion had changed since the days of 1948 when the population of Quebec was asked to forget the slaps in the face and the broken promises, as well as the war policy of the Mackenzie King government, and to support, in the name of race and religion, a fellow citizen of the same language and creed. Citizens of the province of Quebec and of Canada were right in then giving confidence to a man who proved himself a great Canadian. But it turned out that the Liberal government, even led by a great leader, abused its strength and lost touch with the people. That is why the people have withdrawn their confidence. It is then that the Quebec Liberals have believed, Mr. Speaker, that they could hold the province of Quebec by raising racial and religious prejudices.
I do not hesitate, Mr. Speaker, to deal with that subject. I must emphasize that I am keeping very close to the subject matter of this debate since we have to examine all the aspects of the government's policy in order to discover why Canadians must today give their confidence to the Conservative party.
I am pleased to state that if the Canadian electorate has expressed so spontaneously its affection and confidence in the Prime Minister (Mr. Diefenbaker) it is because he personifies a comforting form of national conscience for all the racial elements of this country. Since his election at the head of the Conservative party, he has never ceased to advocate national unity. He has done so unremittingly by word and deed. For once, Canadians have the satisfaction of hearing the same

The Budget-Mr. Tremblay thing from one end of the country to the other. The province of Quebec, in particular, has not been favoured with a special and specious version of those words on unity. No one has tried to sell them a political idea through false pretenses. The same gospel of national unity, of harmony and co-operation "for a better Canada" has been preached. But they have been assured, this time with new emphasis, that the essential civic liberties would be respected and that the Canadian constitution would be, as it should, the guarantee of such liberties.
I recall that during the last electoral campaign, some newspapermen expressed their surprise that the Prime Minister was not making more promises to the province of Quebec. Liberal spokesmen instantly scented an easy and convenient trail. They started to blame the Conservatives for not making enough promises. But the electors were not fooled. They had too bitter memories of Liberal promises of a Canadian flag, of an ambassador to the Vatican and of bilingual cheques. And they had long been aware of the comedy put up on that theme by the former member for Quebec-Montmorency. Just a few hours before polling began, when the Prime Minister came to Quebec and said:
-one of the great strengths of our country is its ability to draw on the two greatest cultures of the modern world, English and French cultures, to create a truly Canadian spirit-
And then he said:
I do not think there is in Canada any majority or minority; there are only equal partners embarked upon the same undertaking: the undertaking to work towards the progress and the welfare of the whole country-[DOT]
Then, Mr. Speaker, the Canadians of our province realized, through that statement, the deep sincerity of the man who is seeking, as he said the other day, a way to weld together Canadians of various ethnic origins. I know that there were again some newspapermen who questioned that last intention and found it suspicious. I can understand such caution from people who have been used to prejudices. That is why I denounce the manoeuvres of the Liberal party, those unfair electoral practices, which were unsound and morally dishonest and tended to hold the hon. Prime Minister as an enemy of the French Canadians in the province of Quebec. When, the other day, the hon. member for Lapointe (Mr. Brassard), and all hon. members of his group who spoke before him, launched into a series of criticisms of the budget, they could have included what he said on television and over the radio during his electoral campaign, when he made use of the accusations of his


party against the person of the Prime Minister, and read abusive pamphlets against the religious and ethnical convictions of the hon. Prime Minister.


Augustin Brassard: Those are only quotations.


Jean-Noël Tremblay: I have on file, Mr. Speaker, some of those publications. It is not for the purpose of reviving electoral quarrels that I report that attitude and that I speak as I do. It is for the purpose of inspiring our friends of the Liberal opposition with a certain form of caution in their criticism. Today they are playing the game of objectivity; they are criticizing the Conservative government. Yesterday, they were condemning the leader of the Conservative government. They tried to raise some doubts and some hard feelings towards the policy of the Conservative government. They carefully avoid mentioning that the electors refused to follow them in their attempts to discredit the hon. Prime Minister. It is to denounce such hypocrisy that I have spoken about those facts, as I do not want the public to be misled once more.
The electors of the province of Quebec voted for the Conservative party on the basis of its serious political program and its achievements. It would be an insult to their conscience to claim that they have yielded to all sorts of entreaties.
Instead, they ignored the calumnies which, -if not expressed openly at present by Liberal members from the province of Quebec, now in this house,-are not forgotten by those who heard them during the election campaign.


Augustin Brassard: This is not the
provincial assembly.


Jean-Noël Tremblay: Allow me to tell my hon. friends of the opposition who sent me this splendid red flower that I shall lay it on the grave of the Liberal party.
It is high time, Mr. Speaker, that some misconceptions which are fatal to good understanding between various racial groups of our country, be cleared. The sentence pronounced by the Canadian people, on March 31 last, shows eloquently that the electors of this country are enlightened judges of our political actions, and that we would be mistaken in trying to distract their attention from essential administrative problems. I am delighted because I see in this a sign of political maturity and the assurance that demagogues will no longer be listened to. At any rate, for the information of those who, a few years ago, denounced political immorality in our province and of those who make it

a point of discrediting our province, I might add that I do not understand why they are so slow in denouncing the campaign of racial and religious prejudice carried out by the Liberal party and of which the former member for Quebec-Montmorency has given now a too notorious example.
I know for sure that from now on Liberals will have to find other themes than those they have kept using in the province of Quebec to denounce the Conservative party and make it appear as a scarecrow synonymous with war, conscription, economic depression and racial and religious prejudice.


Guy Rouleau: And unemployment.


Jean-Noël Tremblay: On March 31 it was revealed how worn out were these old methods and how inefficient they had become. Liberals had to answer for their actions; the nation required of them an exact accounting of their stewardship. Such answer as they gave, no doubt, was far from being satisfactory to their accusers. To defame the Conservative party it was far too easy to talk of the 1917 conscription or of the depression of the thirties. The Liberals were far luckier than they deserved, in 1939, when the second world war brought an artificial prosperity to this country and seemed to demonstrate that they had been right in their statements against the Conservative party.


An hon. Member:: Artificial for twenty years.


Jean-Noël Tremblay: And it is largely because they failed to prepare Canada for normal conditions and for a peacetime economy, that this country now finds itself in a somewhat difficult position.
Whatever is done now in the way of rousing of anti-Tory feeling, whatever attempts are made to make a bogey out of the Conservative party, this will henceforth be no way to gain public support. Since the far-off days of 1917 and 1930, modern improvements have brought about a radical change in means of public information. No longer can anybody prevent people in British Columbia, for instance, from hearing, on the same day and at the same time, what is being said at the far end of Newfoundland. The provinces of this country are now in a position to speak to one another and it would be a very serious error to fail to take into account this factor of unity.
The Liberal party must therefore find something else to say. More particularly it must, as far as the province of Quebec is concerned, draw on resources other than those which it has exploited so far. No longer will it do to preach unilateral unity. Those tactics will have to be replaced by a truly national policy. I hope the Liberals in this
The Budget-Mr. Tremblay house realize that their present numbers, and the fact that they represent only a very few provinces, are the best possible demonstration of their party's failure in the national field. It should be sufficient to point out that close to one half of them represent the province of Quebec. Let them reflect on that fact, which confirms what I was saying about the events of 1949 and 1953, events which, while admirably serving their party, failed to assure its national survival. This might well be because the Liberal party has lost sight of its beginnings and did not remain faithful to its basic principles. It was to be the party of freedom and reform, as stated by Sir Wilfrid Laurier in a speech delivered on June 26, 1877. He said:
The policy of the Liberal party is to ensure the protection and defence of institutions, the spreading of influence, and-within the framework of these institutions-the development of our country's untapped resources. That is the Liberal party's policy; there is no other.
One can hardly deny that the Liberals of today have followed the downward trend. The twenty-two years of Liberal rule have belied the magnetism and the truth of Laurier's words. What it amounts to, Mr. Speaker, is that the Liberals of today are whittled-down Liberals, mere shadows of the Liberalism of former times-of that Liberalism which, judging by Sir Wilfrid Laurier's words, was indeed to bring about radical changes in Canadian institutions. But the Canadian Liberals were scared of the principles which they had borrowed from Europe; they wanted to water down, little by little, what was disquieting in their basic principles; they were afraid of going right through with it, of drawing the conclusions arising from their premises and of proving themselves to be true, strictly conforming Liberals. They did not have the courage of their political convictions. They ended up with that drab type of Liberalism, drained of its doctrinal content, with which we are familiar. And their principles are so inadequately given expression that it is difficult to associate Laurier with these politicians who have bartered their gospel of doctrinal Liberalism-which I do not approve of-for a vague creed of electoral opportunism.
Give me the Conservative tradition; it is based on the facts of history. The party of Macdonald and Cartier has never wished to break with tradition. It has not looked for a solution in historical continuity. It continued with its natural development within the constitutional framework of 1867. Never did it wish to blaze an unbroken trail, or advocate steps which were not in all respects in accord with the spirit and the letter of our constitutional instrument.

The Budget-Hon. P. Martin
I believe the strains we are feeling at the moment arise from the Liberal party having implemented an artificial constitutional evolution in Canada; and this political phenomenon finds its expression in the constitutional solutions of the Liberal party. That these solutions do not correspond wholly with the nature and the spirit of the British North America Act is the least that one must admit.
Thus it is, for instance, that the advocates of Canadian neo-Federalism try, by subtle means, to swing the pendulum of constitutional frictions. They would like to change an economic framework-in itself contingent upon, and subject to, the shifting conditions of our country's economy-for a constitutional formula-
(Text):


Mr. Deputy Speaker:: I am sorry but I must inform the hon. member that his time has expired. I now recognize the hon. member for Quebec East.


Paul Joseph James Martin: Mr. Speaker, I thank you very much for the honour of designating me as the member for the historic riding of Quebec East, which for the greater part of Canadian history, has been represented in this house by a member of the Liberal party.


Mr. Bell (Carleton):: Not now; the condition has materially improved.


Paul Joseph James Martin: In rising to take part in this very important budget debate I would like at the outset to say to my friend and classmate who has the great distinction of being the first Conservative in almost a quarter of a century to present a budget to this nation that, as one of his friends and contemporaries, I share his pride and his deep satisfaction in having that honour. I am sure that we in this house all recognize that the Minister of Finance (Mr. Fleming), a man of the greatest integrity and-as he once told us-a man of the greatest industry, would try to do all he could to present a budget which would satisfy a maximum number of citizens in this country.
However, while I congratulate my hon. friend on the great achievement that is his of being the first Tory in many years to present a budget in this house, I regret, also as a friend, that this particular budget should have so many shortcomings and that it will always be recognized as a budget presenting the greatest deficit in Canadian history.
My hon. friend yesterday did himself less than the justice one would have expected from the Minister of Finance under the circumstances. He admonished the opposition


because we had not indicated to him how savings might have been provided for and how the consequences of those savings might have been handed on to the Canadian people.
I would merely remind the minister as he himself reminded his predecessor, that no opposition is free from the obligation of making constructive suggestions from time to time.
But the primary obligation in the matter of the conduct of government in a country such as ours rests on the hon. gentlemen who sit on your right, Mr. Speaker.
Now the present Prime Minister (Mr. Die-fenbaker) said in this house in 1957 something which I think my distinguished friend the Minister of Finance might well wish to remember on this occasion. The present Prime Minister, who was then, of course, speaking on this side of the house, said:
I say to the government, if you would meet inflation, physician, heal yourself.


Donald Methuen Fleming: I thought it was "thyself".


Paul Joseph James Martin: Let us have some action on the part of the government to bring about the reduction of unnecessary expenditure . . . The governor of the Bank of Canada has warned the government. The government saw his report before it was produced here. He warned them about government expenditures and the need for action to reduce them. Yet instead of taking action the government fans the fires of inflation by failing to restrict its own expenditures. Indeed, the major creator of the existing inflation is the actions of this government . . . No one denies that there is no painless cure for inflation. We have to cut down total spending where total spending exceeds our productive capacity. Cuts are imperative.
I would remind the Minister of Finance of these words. The leader of the opposition concluded, in 1957, by saying:
Again I say it is the government itself which must act.
So I say to the Minister of Finance, a member of a government which said it was possible to increase expenditures and at the same time present a balanced budget, that in the face of this deficit which we on this side of the house contend will be over one billion dollars in 1958 and 1959 it is up to this government, that it is up to the government of which he is a member, to effect the necessary reductions in all government departments.
I would remind the Minister of Finance of the paraphrased words of the hon. member for Greenwood (Mr. Macdonnell) who, addressing the former minister of finance, said:
Let the minister of finance have courage. Let him confront each and every one of his colleagues before they go to treasury board, and say to them:

you will have to curtail expenditures by this percentage or there will have to be an understanding between us as colleagues in the same government.
The Minister of Finance has primarily on his shoulders the responsibility for doing what he told us yesterday evening was our responsibility.
The present Prime Minister, when he was leader of the opposition, told the people in the last election that he could at the same time incur additional expenditures and provide a balanced budget-


Donald Methuen Fleming: It was not the
last election.


Paul Joseph James Martin: He said "Give us the power and we will show you". They were going to cut down government spending, eliminate waste and balance the budget. They were going to cure unemployment; they were going to increase our trade and divert some $625 million from the United States to Great Britain. They were going to avoid inflation; they were going to embark on a great new program of public works; they were going to ensure our farmers a fair return for their labours; they were going to reapportion tax revenues among the other levels of government so as to provide the provinces and the municipalities with much larger incomes. These were the assurances given to the people in the last election and in the election of 1957, and the minister who now shakes his head-


Donald Methuen Fleming: I was not nodding my head. I was shaking my head.


Paul Joseph James Martin: I think the minister should be reminded of these promises, and if our public life means anything, the people who made these promises must continually be reminded of them and held to them.
Instead of these promises being fulfilled, we are faced with a billion dollar deficit. "This, the Minister of Finance denies, notwithstanding the fact that the head of the Canadian Tax Foundation, the president of the ^Canadian Manufacturers Association, and disinterested observers and writers throughout this country have taken the position that the minister's estimate is certainly far short of *what he will have to present to this house [DOT]on the occasion of his second budget.


Donald Methuen Fleming: They do not justify the figure you have given.


Paul Joseph James Martin: The minister
shakes his head, but that will not in any way disturb the fact that the president of the *Canadian Tax Foundation has estimated that The deficit will not be less than $900 million.


Donald Methuen Fleming: That is not correct.
The Budget-Hon. P. Martin


Paul Joseph James Martin: The main criticism I have to make is that in the face of current economic conditions, in the face of the present abnormal level of unemployment in this country and in terms of what I contend to be a developing trend in unemployment which may be more serious than what we have experienced up to now, this government, through its Minister of Finance and through this budget, has not appreciated the seriousness of the economic situation which now confronts this country and which, I am going to argue, will face us with increasing severity in the months ahead.
The other day we asked, through a motion put forward by the hon. member for Bona-vista-Twillingate (Mr. Pickersgill), for the economic survey for 1958, and the Prime Minister, resisting that motion, said it was a secret document. He did not use the phrase that it was a hidden document, but he said it was a document confidential in character which, because of the public interest, could not be given to the Canadian parliament or to the Canadian people at this time.
Mr. Speaker, we have the right to ask of this government whether these budgetary policies as presented by the Minister of Finance represent the advice given to the government by its financial officers, by its trade officials, by officials in the Bank of Canada and others in the public service competent to advise the ministry in matters of this sort. We have the right to suspect in the face of many indications that this budget does not represent all of that opinion and all of that advice. We have grounds for suspecting greatly that this government in its budget ignores the financial situation which now confronts the nation and which is likely to confront it in the months ahead. Hon. members will not forget how on January 20 last, the present Prime Minister, speaking in this house said, as recorded on page 3522 of Hansard:
My hon. friend said there are problems today that were not even contemplated last June. I intend to establish as clearly as the printed word will make possible that during the months of March, April, May until June 10, my hon. friends concealed from the Canadian people the facts.
Then at page 3526, the same right hon. gentleman, speaking of this confidential document, this secret document, this hidden report which continues to be produced by the Department of Trade and Commerce and which has been denied to us by the right hon. gentleman in 1958, said;
They went ahead with the policy which could not but accelerate the forces that were bringing about a deflationary condition in Canada. I am going to now read from this document in order to answer my hon. friend who the other night said, "In

The Budget-Hon. P. Martin June there was no problem of unemployment; our trade was at the highest level; we had an expanding economy."
Today one looks back and realizes that these men who were in power did not do that of which my hon. friend spoke in such colourful terms the other night. He said we must not conceal facts, but I put it to the hon. members opposite- every one of them in the official opposition-that they hid the facts; they concealed the record; they did not let the Canadian people know what was taking place.


An hon. Member:: A good speech.


Paul Joseph James Martin: Someone says, "A good speech". Yes, it was a good speech and because it was a good speech I am now using it as a basis for the action I am going to ask the Minister of Finance to take. If it was right for the Prime Minister in January of 1958 to embark on the unprecedented step of divulging to this house a document marked confidential and secret that had been prepared by one department of government dealing with the economic situation of the country, does any hon. member deny that it is right that this house should now ask the present Prime Minister to now reveal to this parliament and to this nation the economic survey presented by the Department of Trade and Commerce to this government in 1958?
The former minister of finance, Mr. Harris, in his budget speech in 1957 did not dodge the implications of this so-called secret, hidden report which the previous government, in the language of the present Prime Minister, "refused to give parliament" and the current counterpart of which that same right hon. gentleman now refuses in 1958 to disclose to each and every one of us so that we can ascertain the extent to which the Minister of Finance properly carries out the recommendations and the policies of Her Majesty's advisors in Canada. What was right in 1957 regarding the document known as the economic survey by the same logic must continue to be valid in 1958.
In 1957 Mr. Harris, the then minister of finance, did not overlook the danger signs outlined in the so-called secret, hidden document which the present Prime Minister placed on the table of this house at our insistence once he had made reference to it. The minister of finance in 1957 clearly took cognizance of that report. In fact he used practically some of the very words contained in it indicating the seriousness of the situation as the authors of this report saw developing.


Donald Methuen Fleming: That is just what he did not do.


Paul Joseph James Martin: To compare his statement in that particular with the statement of the Minister of Finance today is


abundant proof of what I have said. The Minister of Finance today did not do what Mr. Harris did.


J.-H.-Théogène Ricard: Thank goodness.


Paul Joseph James Martin: Mr. Harris devoted a section of his budget to the economic prospect-


Donald Methuen Fleming: That is just what he did not do.


Paul Joseph James Martin: I suggest to the Minister of Finance that he listen carefully to what I am going to say. The then minister of finance, Mr. Harris, devoted a special section of his budget to the economic outlook including references to the probable behaviour in 1957 of those things that constitute the gross national product, such matters as investment, exports, government and consumer spending. But the present Minister of Finance in his budget speech of June 17 gave us no indication whatever as to the probable trend of exports and of government and consumer expenditures-


Donald Methuen Fleming: I certainly did.


Paul Joseph James Martin: -and of the
labour force and profit margins for 1958. As a matter of fact, my hon. friend did the house a great injustice in this particular. The only thing he did was to refer to the 1958 outlook for private and public investment, a document that had been issued some time before by the resourceful Minister of Trade and Commerce (Mr. Churchill) who sits on my hon. friend's right.


Donald Methuen Fleming: Did the hon. member want me to make a longer speech?


Paul Joseph James Martin: As I have said, this publication was issued months ago by the Minister of Trade and Commerce. It forecast a decline of 3 per cent in capital expenditures, a point which my hon. friend the Minister of Finance did not underline at all.
I have spent some time on the economic survey of 1958 and on the right of parliament, in light of last year's precedent, to know what that document contains. Does it reflect the judgment of those impartial bodies such as the Canadian Tax Foundation, the Canadian Manufacturers' Association, the Canadian Chamber of Commerce and the very excellent study on unemployment made by the Canadian Labour Congress? Does it reflect the attitude of the Department of Labour? I suggest to the Minister of Finance that the reason the Prime Minister refused to give the house the 1958 economic survey is because that survey does not support the main lines taken by the Minister of Finance

in his budget, a budget that denies the critical seriousness of present and future unemployment levels.
The Minister of Finance was the last minister in the government to acknowledge last fall and last January that there was a serious problem of unemployment. The Minister of Finance by this budget completely ignores the recession which Canadians are experiencing. The minister seemingly is gambling on the possibility of a sudden upturn which we all trust will eventuate. I am going to suggest, in anticipating the kind of argument that will be made by those who do not like a realistic appraisal of the economic situation as one sees it in the country, that I sincerely hope the upturn in our country will be such as to warrant the Minister of Labour (Mr. Starr) being able to refer to low unemployment rolls and to show a minimum number of unplaced applicants under the national employment service. I earnestly trust that the export position of this country will improve. I hope that no hon. member will say that because the facts do not seem to support this kind of assessment we are not doing our duty to the nation when we, as well as impartial observers, indicate how completely out of step this budget is with realities in our country at the present time.
The acting minister of labour tabled the other day some figures showing 366,000 persons unemployed and 607,000 unplaced applicants in the last reported month. I suggest that the gap between these two figures, the number of unplaced applicants and the actual jobless, is so great as to warrant the dominion bureau of statistics taking a second look at them and seeing whether or not the gap which is unusually large does not represent a much greater margin of error than can reasonably be expected through the sampling process. I realize that the estimate of the dominion bureau of statistics is based on a small sample survey taken each month and it is possible that a greater than average margin of error was experienced in May which could possibly account for the disparity. In any event, 366,000 persons out of work in the month of May represents a serious economic situation in a country like Canada particularly at that period of the year.
When one adds to this figure the numbers of others who are unemployed but who are not reported in the dominion bureau of statistics standards as being unemployed one realizes that my statement is by no means an exaggeration. The dominion bureau of statistics does not include as unemployed a man who works only half an hour a week; it does not include people who are engaged for less
The Budget-Hon. P. Martin than 30 hours a week; it does not include those who will be called back to work within a limited time. Therefore, applying the lowest estimate to the month of May, the Minister of Finance I am sure will not deny that that represents a serious unemployment situation. It represents a figure more than double what it was in the preceding year and in the corresponding period.
I said earlier that I did not believe the Minister of Finance has taken into account in his calculations the advice given to him by his own officials. I do not say positively that that is the case but from everything that one can see, from pronouncements made by independent bodies, whose job and whose interest it is to make compilations of future trends, one comes to the conclusion that either the Minister of Finance has completely shut himself off from those who advise him or he is taking the great gamble of being overly optimistic in the hope that his gamble might work. That is a dangerous course for any minister of finance to take.


Donald Methuen Fleming: And a dangerous speculation on the part of the hon. member.


Paul Joseph James Martin: It is not the way
to build up confidence in the country.


Donald Methuen Fleming: It is a misleading speculation.


Paul Joseph James Martin: The way to build up confidence in the country is not to ignore facts but for the Minister of Finance resolutely to face up to them, something he has not done in this budget, is not doing at this very minute.
For the purpose of gaining some idea where we are heading, I have projected, in accordance with what others have written, the national employment service unplaced applicants figure and the figures of the dominion bureau of statistics to the end of March, 1959. I am sure that the hon. gentleman himself has done this and I will be very interested to know whether his calculations and mine agree. In any event, if those figures which I am now going to give are true-


Donald Methuen Fleming: They probably are not.


Paul Joseph James Martin: My hon. friend says that they probably are not. If these figures are true, then I say to the Minister of Finance we have never had in two decades or more any budgets so unrealistic as that brought in by my classmate, the hon. member for Eglinton.


Donald Methuen Fleming: That is a mighty "if".


Paul Joseph James Martin: I suggest to the Minister of Finance that for the month of

The Budget-Hon. P. Martin June the minimum figure of national employment service unplaced applicants will be some 550,000; that the dominion bureau of statistics figure will be around 360,000. In the month of July, the national employment service figure could likely be somewhere in the neighbourhood of 500,000 and the dominion bureau of statistics figure more than 303,000; the August figure of the national employment service could be 460,000 and the dominion bureau of statistics figure somewhere in the neighbourhood of 300,000. That would mean that in the month of August, if these prognostications are accurate, based on the assessment made of the purchase of plant equipment and other indices, we would have in the month of August twice as many men out of work as we had in the corresponding month in 1957.
In September, the national employment service figure could be around 460,000 and the dominion bureau of statistics figure somewhere between 310,000 and 325,000. In the month of October the national employment service figure could be 520,000 and the dominion bureau of statistics figure 425,000. In the month of November the national employment service figure could be 720,000 and some 425,000 for the dominion bureau of statistics. In the month of December-I suggest that my hon. friend might want to read the study issued by the Canadian Congress of Labour regarding this particular figure-1 million-plus for the national employment service and 550,000-plus for the dominion bureau of statistics. In the month of January there could be a possible high of
550.000	for the dominion bureau of statistics.


Donald Methuen Fleming: That was at the
time that my hon. friend said there were
800.000	unemployed.


Paul Joseph James Martin: My hon. friend says he is not concerned about that figure for the month of January.


Donald Methuen Fleming: I am saying my hon. friend said that there were 800,000 unemployed then when there were a quarter of a million fewer than that figure by a true count.


Paul Joseph James Martin: If my hon. friend thinks this is a small figure, why he and I certainly do not have the same point of view with regard to the responsibilities of the Minister of Finance.


Donald Methuen Fleming: The figure you gave was very much larger than the true figure.


Mr. Bell (Saint John-Alberl):: You are
gloating.


Paul Joseph James Martin: My hon. friend says "gloating". I expected this comment.

I say to the hon. gentleman who comes to this house as a new member that whatever may be his concept of a member's responsibilities it is the responsibility of all members on all sides realistically to face the situation which they believe confronts the nation at a time when we are discussing this kind of question.


Norman Platt Lambert: How do you feel you have a monopoly on that?


Paul Joseph James Martin: What is the brilliant observation of my hon. friend?


Norman Platt Lambert: How do you feel you have a monopoly on that?


Paul Joseph James Martin: My hon. friend knows a lot about monopolies; I do not.
In the month of February, I project as an estimate a dominion bureau of statistics figure of 575,000 and in the month of March, 604,000. I have not given national employment service figures for January, February and March simply because my compilation has not gone that far, and I notice that the Canadian Congress of Labour likewise has not prognosticated that far. But these are projections made by responsible, independent groups in this country, such as by the president of the Canadian Tax Foundation, by the Canadian research economic associates, by the Canadian Manufacturers Association and by the assessments that are made by the Department of Trade and Commerce as to the future of buying within the next eight months of plant equipment and the importations of pipe and the like, all indices that are used to determine the likely increased load in the national employment service, in the kind of assessment that must be made by the dominion bureau of statistics and the unemployment insurance commission.
I hope that events will show that this picture is not in accordance with what will develop. Every hon. member will be happy if these estimates are shown to be wrong eight months from now because there are human beings involved in this, men and women who are out of work, 15,000 of them in my own community of Windsor, as well as in other cities; men and women who have run out of their unemployment insurance benefits, who have run out now by some 3,000 their seasonal benefits and who see in the immediate future no prospect of being able to obtain remunerative employment.
I do not say now that the full responsibility rests on the shoulders of the government, but the full responsibility does rest on the shoulders of the government to make sure that in its budgetary provisions it is making a realistic analysis of the current and the developing situation. What steps has this government taken to do something about

unemployment, both in terms of the present figures and in terms of the figures that I have projected? The Minister of Finance says nothing about public works. We know that this government has projected only $35 million more into the public works program than was undertaken by the previous administration.


Donald Methuen Fleming: How silly can you be?


Paul Joseph James Martin: Where can you find in the budget any positive reference to the recession? The Minister of Finance was one of those who strongly argued that one way of curtailing unemployment in this country was for the government to do something about it. Le me remind him of his words at page 4208 of Hansard, volume 4, 1953-54, when he looked across the aisle and said to Mr. Harris:
Does this budget offer any relief at all for unemployment?
He continued:
Mr. Speaker, the situation is serious but it does not seem to worry this government. They have not faced up to it... .Already 50,000 of those receiving unemployment insurance have exhausted their benefits. What is the government doing about that? Nothing!


Donald Methuen Fleming: How true that was!


Paul Joseph James Martin: I say to the minister, what is the government doing-


John Whitney Pickersgill: It is now 300,000.


Paul Joseph James Martin: *-about a much more serious problem? I say, to use his own word, nothing! My hon. friend was one of those who always spoke not only during the formal budget debate but also when the resolutions were discussed. He was a most active member. He wanted the government to eliminate the sales tax on the necessities of life. There are pages of Hansard with that Victorian rhetoric of the Minister of Finance about such things as the sales tax. Are there any reductions in the sales tax on the necessities of life of any consequence or at all in this budget?


John Whitney Pickersgill: Rat poison.


An hon. Member:: Cut flowers.


Paul Joseph James Martin: Some one says "rat poison". What about the excise tax on automobiles? Here is what the Minister of Finance urged as found at page 4373 of Hansard for June 2, 1955.


Donald Methuen Fleming: And did something about it last December, too.


Mr. Marlin (Essex Easl):: My hon. friend says he did something about it. He reduced the excise tax only by 2| per cent.
The Budget-Hon. P. Martin


Donald Methuen Fleming: Twenty million dollars.


Murdo William Martin: Twenty million dollars, yes.


An hon. Member:: More than you did.


Murdo William Martin: My hon. friend is wrong, as I shall show. The minister will still get from that source a revenue of some $60 to $70 million. His leader in 1957, speaking in Kennedy collegiate in Windsor, said that he would eliminate-


Donald Methuen Fleming: No, he did not.


Murdo William Martin: -or substantially reduce the excise tax.


John Whitney Pickersgill: Substantially reduce.


Donald Methuen Fleming: And that is what we did.


Murdo William Martin: Does my hon. friend suggest that 2J per cent is a substantial reduction?


Donald Methuen Fleming: I certainly suggest that $20 million was a substantial reduction.


Murdo William Martin: If my hon. friend says that this budget is directed to relieve unemployment, directed to the recession, why does he not take into account that in the city of Windsor today in the Chrysler plant, the Ford plant and all the auxiliary plants there are 15,000 men out of work wondering what the government is going to do about something which only a few months ago they said they would correct. Why did he not provide for a reduction in or elimination of this tax? It would not have solved the problem of unemployment completely but it certainly would have given encouragement in the face of the stagnation now existing in sales regarding one of the most important sectors in the Canadian economy. Talking about addressing oneself to unemployment, talking about feeling keenly about unemployed men and women as the Prime Minister did all over the country in the last election-


John Whitney Pickersgill: No one would suffer.


Paul Joseph James Martin: -the way to
demonstrate that no one will suffer is by the government to come forward with a budget and policies consistent with its declarations made during the course of the last election.
My leader did make reference during the course of the election to methods by which, in the context of the situation that then existed, some encouragement could be given to the depressed state of the Canadian economy. Hon. gentlemen opposite saw fit to ridicule those suggestions, suggestions that would have involved a new orientation of fiscal policy at least on a temporary basis.

The Budget-Hon. P. Martin


An hon. Member:: The Canadian people
would not accept them.


Paul Joseph James Martin: My hon. friend says that the Canadian people would not accept them. My hon. friend is right. The Canadian people did give hon. gentlemen opposite a mandate to do something about unemployment but I must say that to date the government has not given any evidence that it is prepared to embark on any policy, whether through orientation of fiscal matters or through public works, in a courageous way, in a nonorthodox way to meet what is undoubtedly a serious emergency, a serious social disaster, to use the words of the Prime Minister uttered in the city of Edmonton.
No consideration has been given by the Minister of Finance to such things as accelerated depreciation allowances, to the kind of income tax reductions that would reach the masses of the people thus enabling them with this additional money to purchase the necessities of life, which might serve as a means of priming the pump. These proposals, which will undoubtedly be dealt with later, were made in the context of the situation as it then existed, not in the context of a budget with a likely deficit in 1958-59 of over a billion dollars.
We had a right to think that there would not be a deficit of such large proportions because did not the Minister of Finance say not later than the end of January that he anticipated a surplus of $80 million? This government was elected with the biggest majority in history and I know hon. gentlemen opposite will like to applaud that.


Some hon. Members:: Hear, hear.


Paul Joseph James Martin: I congratulate
them on that great electoral achievement. But it is over now. The problems facing the Canadian people in terms of the unemployed, in terms of farmers who are dissatisfied with the floor price policies of the government, in terms of our trading relations with United States and Great Britain, demand of the government action consistent with the professions made to the people of Canada and which contributed to the fact that hon. gentlemen sit to Mr. Speaker's right at this time. I ask the Minister of Finance, in the face of his heavy responsibilities, with his great abilities and his great sincerity-


Some hon. Members:: Hear, hear.


Murdo William Martin: -to acknowledge that the picture I have painted today is not an exaggeration.


Donald Methuen Fleming: I think it is a very exaggerated and inaccurate picture, if you want me to say so.


Murdo William Martin: Let us hope that the minister is right but if he is not right-


Some hon. Members:: Order.


Murdo William Martin: -he will incur the wrath-


Mr. Speaker:: I am sorry to interrupt the hon. member in full stream but his time has expired. The hon. member for St. Hyacinthe-Bagot.


J.-H.-Théogène Ricard: Mr. Speaker, may I call it six o'clock?
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Mr. Speaker:: I understand that the hon. member for Outremont-St. Jean (Mr. Bourque) has a question of privilege to raise. I wiU hear him.



PRIVILEGE


Mr. Romuald Bourque (Oulremonl-Sl. Jean):: Mr. Speaker, yesterday in my absence the Minister of Finance (Mr. Fleming) made what I consider to be an unjustified attack on me, one which I believe is prejudicial to my reputation as a businessman and which can be very derogatory to me. He said this, and I will have to say it in French:
(Translation):
I would recall to this house that the financial critic for the opposition was determined that this deficit would be very much larger and things progressed until, on June 27, the hon. member for Sudbury (Mr. Mitchell) raised the figure to $1 billion. Not to be outdone by the hon. member for Sudbury, along came the hon. member for Outremont-St. Jean-
(Text):


Mr. Speaker:: Would the hon. member tell me what page he is reading from?


Romuald Bourque: Page 1948, from the French debates of yesterday. I continue: (Translation):
Not to be outdone by the hon. member for Sudbury, along came the hon. member for Outremont-St. Jean (Mr. Bourque) that same afternoon and he managed to get the figure up to $2,167 million. That is not arithmetic; that is what I believe to be astronomical flights into the realm of fancy, but Canada's credit is not helped by irresponsible statements of that kind. The statement of the hon. member for Outremont-St. Jean is irresponsible to the point of irrationality when he says that we are going to have a deficit in such figures as he mentioned.
I most strongly deny this statement by the Minister of Finance (Mr. Fleming). I never said that the deficit would amount to $2,167 million and I shall now read to you the official account for the afternoon sitting of Friday June 27, 1958:

(Text).
From page 1793 of the French debates of Friday, June 27:
(Translation):
Considering an estimated revenue of $4,660 million, the actual budget deficit is $1,092 million.
There, you have it, Mr. Speaker. I said that the actual budget deficit would be $1,092 million.
I do not want to read it all because I do not wish to take all the time of the house, but I went on to say later:
-which will give, for this year, an actual increase of $2,167 million in our debt.
And further on, I repeated:
-the Minister of Finance will have increased our debt by $2,167 million in a single year.
Now then, having mentioned only one figure, the minister meant to imply yesterday that I had said that the deficit would amount to $2,167 million. Of course, this was to justify the inconsistent budget which he presented.
There is no excuse for the Minister of Finance misrepresenting figures, and I cannot tolerate such tactics.
(Text):


Mr. Speaker:: I take it that the hon, member has now made the correction which he felt it was necessary to make. I rather think he was not speaking upon a question of privilege, but as I was not able to follow him fully, I take it that the matter is satisfactorily disposed of.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Hon. Donald M. Fleming (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
George Clyde Nowlan: Mr. Speaker this afternoon, just before the dinner recess, we were treated to a flow of eloquence forcefully delivered in the best traditions of a histrionic display: the dark clothes, the flashing eyes, the sombre voice. All that was needed was the black cap and we would have had the judge pronouncing sentence of death on the Canadian economy. It was a type of delivery which was somewhat wasted in the House of Commons and which might better have been employed in the theatre at Stratford where I am sure the hon. gentleman could obtain employment to a very high degree. I am not sure just what histrionic display is going to follow it but I know that it will not be given in any such funereal language. However, I am sure that another will paint as sombre
The Budget-Mr. Nowlan and lugubrious a scene. Perhaps for a few moments, Mr. Speaker, moving between these pictures of gloom and doom, we may come back to the facts of the budget and deal with these for a short time.
Much has been said in this debate of a critical nature. The Minister of Finance (Mr. Fleming) has been criticized. We have sat here for eight days listening to the debate, the contents of which the house well knows. This is not one of those sensational earthshaking budgets, that provokes great headlines in the press but it is a budget, as the Minister of Finance said at the outset when he delivered his speech, that has produced many matters of benefit to many Canadians. I am not dealing now with the general economic policy but with the specific matters in the budget to which I think attention should be called for a moment in passing.
One of these comes under the department which I happen to administer, namely that of national revenue and has an impact with respect to income tax. From the time I came into the office which I now hold I was impressed by the number of letters-not running into the thousands, but perhaps 500 or 1,000; something of that nature-which were sent to the minister complaining of the application of the act in so far as income tax reductions were concerned in connection with drugs. You all know the situation there. There is in the Income Tax Act a provision that when medical expenses exceed 3 per cent of the income, these deductions can be made for income tax purposes. Under the preceding administration, as the act was administered heretofore, those drugs had to be enumerated and specified by the Department of National Health and Welfare. Then when that was done a deduction could be made for those purchases. As I said, many of the letters received from the ordinary citizens of this country, from parents with children who were desperately ill; from people who had relatives who needed the most expensive drugs in order to recover, and where recovery was perhaps not always certain, they were pathetic letters-I think that is the only word that can be used to describe them-in which they suggested that some change should be made whereby they could obtain deductions for these drugs which are prescribed today by doctors and which were outside the very limited number which had been prescribed by the Department of National Health and Welfare. Even under the more efficient administration of my colleague, the present Minister of National Health and Welfare (Mr. Monteith), we did not find that we could give the deductions that I felt were necessary.
In consultation with the Minister of Finance and the Minister of National Health and

The Budget-Mr. Nowlan Welfare it was decided, as you know, to include in the budget a provision whereby drugs bought on doctor's prescription could hereafter qualify for a deduction in this regard. We trust the medical profession. We know that provision will not be abused. This, Mr. Speaker, is a simple illustration of what has been done in this budget. Simple, common sense, matter of fact changes are made here and there which affect the lives of thousands of Canadians across this country and which reflect tremendous credit on the Minister of Finance who prepared that budget and who brought it into the House of Commons.
I can think of another provision under the Income Tax Act which does not affect thousands, but does probably affect tens of thousands of Canadians. The one I have in mind I have myself encountered many times. I am sure all lawyers who have had the good fortune to practise in rural communities will also have faced it. I have in mind the family where the parents are getting old and they want to have their son remain on the farm and they convey the farm over to him as an inducement to him to remain there, not thinking of the application of the Income Tax Act and not thinking of the provisions with respect to the gift tax. Having done so, they then find one, two, three or sometimes even five years later, after the father has died and it has become impossible to change the situation, that a gift tax has been imposed sometimes running into thousands of dollars.
Then there is the case of the husband and wife who are perhaps retiring, perhaps establishing a home somewhere else and knowing that there will sooner or later be a death but who want to maintain a home so as to avoid the payment of gift tax, succession duty and so on and so forth. The husband has earned the money and has paid for the house but, if it were under a joint ownership arrangement, all sorts of problems arise with respect to taxes.
Under the budget which has been brought down we have a provision whereby the farmer or the father-not necessarily a farmer, of course-can convey property to his son or to his daughter and avoid payment of the gift tax. Similarly, a husband can convey his property to be held under a joint ownership by himself and his wife and can also avoid the tax and all the incidental obligations which arise upon the death of one or other of the parties. Here, again, is a very simple illustration of what I mean when I say that this budget, although it has not made the headlines with respect to these matters I have mentioned, has

affected the lives of many thousands of people in this country and has very favourably affected those lives.
Take next the matter of the sales tax. We have been asked what we have done for the municipalities-have we forgotten the municipalities, and someone over on the other side of the house will say, "Hear, hear". When we were on the other side of the house we urged the government for years and years to do something about the relaxation of sales taxes on purchases made by municipalities and when we made such suggestions we were treated with scornful contempt. It was impossible to consider such a thing. This budget has made provision in this respect. There is wide provision for sales tax exemption on purchases made by municipalities, particularly in those fields which are important to municipalities in these times; for instance, with respect to the problems of pollution, sewage disposal and all those matters which are today bearing so heavily upon the municipalities. There is a provision in this budget whereby they will save millions of dollars, even on the present scale of purchases, and as the years go by there will be more and more savings.
With respect to institutions, whereas formerly there was a narrow list certified by the Minister of National Health and Welfare, the provisions for institutions are now immeasurably widened so far as sales tax exemptions are concerned.
There is a simple little problem which has created so much hardship and difficulty which has also been provided for, and that is with respect to school authorities across this country, from Vancouver to Halifax. Protests have rolled in-I have seen scores of them in the short time during which I have been in office-complaining of the effect of taxes on school purchases for furniture and the fact that exemptions apply only to that furniture specifically designed for schools. Scores of school boards have had to pay sales tax on items which they very properly thought would have been free of such tax. This condition has now been rectified and I know the provisions of this budget will mean tremendous savings to school boards throughout the country.
I could go on and on to list examples of measures which will ensure tremendous savings to the people concerned and which are of great importance to them, but there is one, perhaps very minor item, which I would like to mention which has certainly been a source of great irritation to the public in the past. There was an imposition of a fee of $2 imposed upon businessmen for a licence to collect the sales tax from themselves for the government. While this $2

fee was not a very important factor, perhaps, I do not know of anything which has created more irritation among businessmen. A simple little change has been made and this fee has been done away with.
I have not exhausted the list of benefits under this budget by a long shot but I would now like to turn to some of the many criticisms we have heard. Firstly, we have heard that this is a high tariff budget; we have had a somber picture painted for us of high tariff walls being erected, shades of Bennett being invoked and references to Tory policies in the past. We are told that this country is now facing high tariffs as a result of the budget which has been brought down.
One such reference will be found at page 1538 of Hansard for June 23, 1958, where the hon. member for Bonavista-Twillingate spoke of the tariff provisions as follows:
-I do not know that I should call it a Bennett provision because Mr. Meighen tried it before him and it was repealed once before by the Liberals before Bennett-is, of course, of all the protective devices the most insidious and the most dangerous.
We are all of course familiar with the imagination of the hon. member for Bonavista-Twillingate in portraying the pictures in his mind. Sometimes when I hear him speaking I am reminded of that house that Jack built, the house which had a little malt in it, a little rye in it, a little straw in it and all the rest of it, and finally it fell down. That was the house that Jack built, and that is the way it is with the house of high tariffs, which this Jack has built, because there is absolutely nothing in the budget which in any way reflects high tariffs.
There are five classes of changes in the budget, five minor classes, with respect to tariff changes and four of these were recommended by the tariff board. The minister is accused of being a high tariff Tory; this government is being accused of raising the tariffs as high as Hamono's gallows.
What would have been the accusation, what would have been the criticism if we had failed to accept the recommendations of the tariff board. We would have been criticized and attacked for not recognizing the impartial judgment of that great tribunal. The minister has now done this and we are criticized for these so-called high tariffs. I do not think anyone seriously objects to the revision with respect to steel products. The iron and steel amendments are long overdue as the last revision was issued 28 years ago, while today there has been a tremendous expansion in the development of all primary and secondary steel industries in Canada.
The Budget-Mr. Nowlan The great majority of the amendments, however, are merely for purposes of simplification; some are for reduction and there are very, very few limited increases.
It is the same situation with respect to the pipe and tube schedule; it is almost entirely a matter of adjustment and simplification. It is also the same with respect to woollens. We have heard a great deal about the increase in the tariff on woollens; this increase was also recommended by the tariff board and we were confronted with that recommendation.


John Whitney Pickersgill: You asked for it.


George Clyde Nowlan: We asked for it. The matter had been referred to the tariff board. Sure, we got their recommendation but what is the tariff board for? Did the hon. gentleman opposite raise tariffs without the recommendation of the tariff board? Did they ignore such recommendations? Of course they did not.


An hon. Member:: We reduced them.


George Clyde Nowlan: Yes, and we have reduced them too. We have reduced far more in this budget than we have increased, make no mistake about that. The increase on woollens, on a yardage basis, means only a few cents on the amount of cloth going into a suit of clothes.


John Whitney Pickersgill: Why do it at all, then?


George Clyde Nowlan: Because we had a recommendation from the tariff board and we followed that recommendation. That is why we did it. There is certainly ample justification for the increase, as the tariff board has established, and I wonder if hon. members on the other side of the house are questioning that. If they are I would like to hear about it. So much for tariff increases, the ones specifically named in the budget.
There has also been much talk about the practice of the department with respect to evaluation. It is true that we have increased the evaluation staff of the department. Prior to the war the previous government had 45 or 50 evaluators, highly trained appraisers in most of the ports of the world, making examination of goods coming into Canada. The war came and most of these men, practically all of them, were brought back to Ottawa. Because of their skill and experience they were given senior jobs here, and the net result was that after the war there was practically no one left at all who had had any training in the appraisals branch except the senior executive officials in headquarters in Ottawa. In those days the market was such that everybody was buying, regardless, and it was not necessary to fill up these staffs.

The Budget-Mr. Nowlan Today the situation is different and we have got 45 or 50 appraisers, university men, largely, who are being trained so that they may strengthen the staff and carry out the appraisals which are necessary if Canadian industry is going to be protected from superficially low values.
An ad valorem tariff can be easily nullified if the values are reduced to such an extent that they have no basis in actuality. After all, the term "fair market value" must surely have some meaning, and it must be remembered that it has been determined time and time again that the market value has really had no reference whatsoever to fair market value and that anyone by making a few sales in the country of origin could then send the goods here, avoiding dumping duty. And when such goods are sold superficially below cost they threaten not only Canadian industry but, what is more important, the employees of Canadian industry.
We heard a prophecy this afternoon of dire doom with respect to unempolyment and the great extent to which it was going to increase in this country. I sat the other morning in the railway committee room and listened to Mr. Burt and the other spokesmen from the delegation that came from Windsor and Hamilton representing the unemployed and demanding government action. What was the principal thing which they demanded? They demanded that we take tariff action to keep out importations from, in particular, the United States. They said, and I am not passing judgment on the correctness of their statement, that the importation of automobiles, the importation of automobile parts, the importation of machinery, all these things had increased substantially, and contributed to unemployment in Canada. They urged us to take action so that these goods could be manufactured in Canada and provide employment for Canadian workmen rather than that they be made in some other country.
I wonder whether the hon. member for Essex East (Mr. Martin) who was so eloquent this afternoon on the subject of unemployment will give the government his support when the motion comes before the House of Commons to provide for a different basis of fixing valuations. I presume we can count on his full support and on the support, also, of the party to your left, Mr. Speaker, whose spokesmen were so eloquent on this subject in the House of Commons the other day.
And now, with regard to this so-called high tariff policy. There is no high tariff policy in so far as actual tariff changes are concerned. None whatever. And the change as far as increasing the staff is concerned is something going back to the practice which was carried on by hon. members opposite prior

to the war, and they profess to be a low tariff party, not a high tariff party. And the changes in valuation which were suggested by the Minister of Finance, and which I hope to have the honour to introduce in this house before very long, is one change and one change only; not an invidious change or something which would alter the whole economic structure of this country, but one which will help to deal with the unemployment situation, because goods are being brought into this country at fictitious values, often below the cost of production. We intend to do something about this and ensure that we at least give some protection to Canadians in this country.
What else do the critics say about this budget? They say it is a deficit budget. Sure it is a deficit budget. We have a deficit. The hon. member for Essex East this afternoon took off the judge's robes for a moment and assumed the mantle of a prophet and predicted that the budget deficit this year would be way over what the Minister of Finance had suggested, and called in aid several organizations to support his contention.


Donald Methuen Fleming: But they do not support it.


George Clyde Nowlan: There is no question we are going to have a substantial deficit, a deficit which the Prime Minister (Mr. Diefenbaker) had envisaged, and a deficit for which this government is prepared to take the responsibility, because we prefer to have deficits rather than mounting unemployment and hardship. As long as we are in power-and we will be in power for a long while-


Some hon. Members:: Oh.


George Clyde Nowlan: That observation has apparently provoked some question on the other side. Let me give this word of advice to hon. members opposite. They have talked a lot about two faces, and they have talked about our having one mask at one moment and another at the next. They have accused the people of Canada of being fooled. Well, the people of Canada were not fooled by our one face or by our two faces; they were just sick and tired of your faces, that is all. They were sick and tired of complacency, conceit and arrogance; they just got bored to tears with you and they turned you out. As for Mr. Mackenzie King, your revered leader, listen to what he said: "The Liberal party has to go through the valley of humiliation." As long as members of that party keep talking about two faces and blaming the people of Canada for being fooled, the people of Canada will continue to be fed up with them and they will sit there until your great grandchildren have grown beards.

Mr. Speaker, I know that my time is running out much more rapidly than I realized, and I have to pass on to other matters. There are many other things which have been said about this budget, and again I refer to our friend with the Puckish sense of humour, and the house that Jack built. That wonderful travelogue the hon. member for Bonavista-Twillingate (Mr. Pickersgill) gave us a couple of days ago should have been featured in the Canadian geographical magazine. I just made a rough check of what it would cost us if we constructed all the projects in his constituency which he recommended in that speech and I worked out that it would come to over $1,730,000. I do not know whether the hon. member for Bonavista-Twillingate is carrying the Liberal party or whether the Liberal party is carrying the hon. member for Bonavista-Twillingate, but I may say there is not going to be much money for the other people on his side if he ever came back into power.
Where would the deficit be if the program was carried out that was advocated by the Leader of the Opposition (Mr. Pearson) before the election? I would like to know that, Mr. Speaker. We were told we had $400,000 in tax deductions, and so on and so forth, added on to the others.
In dealing with deficits I would like to call the attention of my hon. friends opposite to a financial guide in whom they took great pride, and properly so-Mr. Abbott. The following are remarks made by Mr. Abbott on the occasion of his bringing down his budget on May 18, 1948 at which time he was minister of finance, as recorded at page 4063 of Hansard:
I believe that all parties In this parliament and most Canadians share the view that the national budget is no longer merely a matter of the government accounts that should be balanced every 12 months on some financial rule of the thumb. We view the national budget now as an integral part of the nation's business, influenced by and having an influence upon the state of employment, income and prices.


John Whitney Pickersgill: And what did you say about that at that time?


George Clyde Nowlan: I have here additional quotations from the remarks made by Mr. Abbott which I could cite if time permitted.


John Whitney Pickersgill: This is a latter day conversion.


George Clyde Nowlan: I have dealt with the situation in so far as deficit financing is concerned. We have heard talks about the government being anti-British with respect to what it has done with regard to woollens. Hon. gentlemen opposite give us no credit for having arranged a trade mission or a commonwealth conference. If time permitted I
The Budget-Mr. Nowlan could go on at length in dealing with this matter but there is one matter to which I should like to draw the attention of the house before my time runs out and that is that after all what we are concerned with here is a review of the facts; not dire prophecies, but facts. We are told that the Canadian economy is in a terrible condition, that the government has failed and that the Minister of Finance has made a mess of things.


An hon. Member:: He has.


George Clyde Nowlan: You may think so, my friend. We also know, and every hon. member will admit it I am sure, that the economy of this country is difficult to administer. Canada is a vast country covering an enormous area stretching from the Atlantic to the Pacific and embracing areas stretching from the temperate zone to the Arctic zone. It is not as easy a country to administer as is that to the south which is, as it were, a self-contained empire embracing a tropical and temperate climate. One would assume that the situation in the United States would be much better than the situation that obtains here particularly in view of all the mismanagement in Canada about which we have heard and also because of the fact that hon. gentlemen opposite tie our economy to the coat tails of the United States economy so it is hard to divorce ourselves from it even if we wanted to. We know what the facts have been down through the years. When the United States economy went up, the Canadian economy also went up, but not quite so high because we ride on its coat tails and when the United States economy went down our economy went down further and faster. That has been our history and I do not think any one can question it.
It would be interesting at this point to glance briefly at a comparison of indices between the two countries. I hasten to admit at the outset, as was pointed out this afternoon by the hon. member for Essex East, that motor vehicle production in Canada has fallen considerably below that in the United States as is also the case with regard to pulp production which is a large industry in this country. In that case, too, we have fallen below the United States. But let us examine some of the other indices that are available. Are we really sustaining hard times, a depression? That was the sort of claim that was made in this chamber this afternoon. A thick curtain of gloom was drawn over our proceedings today by hon. gentlemen opposite but now is the time to examine the facts. Let us first examine business failures. What about business failures? Surely there must be a vast number in Canada as compared with the United States. The index reveals that in

The Budget-Mr. Nowlan Canada we have 42.4 per cent less business failures than we had this time last year. I repeat again, 42.4 per cent less. The United States had 23.9 per cent more business failures than this time last year.
What about freight car loadings? It is not as happy a picture as we would like to see, it is true, because we are down 4.9 per cent from last year, but the United States is down 26.0 per cent.


Romuald Bourque: What about bankruptcies?


George Clyde Nowlan: I have already dealt with business failures which covers bankruptcies.


Mr. Palleil:: He does not know the difference.


George Clyde Nowlan: I hear the laughter that bespeaks the vacant mind. What about construction contracts? We have been told that the government has undertaken no construction and that the public works program has failed. The constructon program in Canada, according to the index is up 26.8 per cent whereas in the United States it is down 11.6 per cent.


An hon. Member:: How you can juggle figures!


Donald Methuen Fleming: You do not like these figures, do you?


George Clyde Nowlan: I appreciate that this is painful for you but you have to listen to it. Let us consider housing starts. Housing starts are up 51.5 per cent in Canada and down 9.2 per cent in the United States. What about the percentage of the labour force unemployed? It is serious, of course, and no one seeks to minimize it for one moment. The unemployed figure in Canada is up 68.6 per cent and in the United States it is up 80.6 per cent.


Some hon. Members:: Oh, oh.


George Clyde Nowlan: I hear the groans over there and I do not wonder at them. After all, we have been told that this is the government that brings in faulty tariff policies that will ruin Canada's exports. But what is the export picture? Canada's exports are up 1.3 per cent while the United States exports are down 27.6 per cent. Our industrial production is down 5.3 per cent which is a bad situation but industrial production in the United States is down 12.4 per cent. Again I could go on at length dealing with the figures in these indices. Of the 14 indices I have before me, Canada has lost more ground than the United States in respect to two, motor vehicle production and pulp production, but in every other case the Canadian economy is ahead of the United States economy. These are all


based on dominion bureau of statistics figures so hon. gentlemen opposite will not quarrel with their authenticity.
The significant thing about these figures is that they appeared in the Financial Post of June 14, 1958, on almost the same date as the budget was brought down. Have we heard any hon. gentlemen opposite quote these figures during the course of this debate? We have listened to them spreading doom and gloom but we have not heard any facts because the facts do not coincide with the prophecies of disaster. What would have happened if these figures had gone the other way? Can you not imagine hon. gentlemen opposite this afternoon not forced to prophecy, not forced to declaim and not forced to sound doom but just reading facts and saying, "What a record!" Imagine their howling about the terrible record of failure if the figures were reversed.
Those, Mr. Speaker, are some of the factors with respect to economic conditions in this country at the moment. I could go on at length but I do not want to take more time in dealing with this matter. I am convinced I have produced enough facts to indicate the truth of this matter. This government does not profess perfection. We differ from hon. gentlemen opposite in that respect. They admitted they were perfect; they boasted about it. We admit that we are not perfect.


An hon. Member:: Perfect fools!


George Clyde Nowlan: We have made mistakes and
we probably will make more.


John Whitney Pickersgill: That is for sure.


George Clyde Nowlan: But we are going to make
them in doing something for the people of this country and not in sitting complacently and idly by, smug in a false sense of our own security and perfection as did our predecessors in office.
My hon. friends opposite this afternoon talked and prophesied about unemployment in this country. Unemployment is a serious matter. No one-not even the hon. member for Essex East, and certainly not I or anybody else-knows what the unemployment figures will be next winter. As a good Canadian I know that the hon. member for Essex East hopes the unemployment figures will be reduced but I suspect as one who has somewhat of an interest in politics he has more than an academic interest in scanning the employment figures and seeing if they do not rise.


Paul Joseph James Martin: What does the
economic survey show?


George Clyde Nowlan: Regardless of what the economic survey may show-


Paul Joseph James Martin: But that is the
whole point.


George Clyde Nowlan: -if this government were
not in power today the unemployment figures in Canada would be infinitely higher than they are now.


Some hon. Members:: Oh, oh.


George Clyde Nowlan: I know this is hard to take
and I do not blame hon. gentlemen. Instead of donning the robes of mourning and gloom, I suggest that they attire themselves in sackcloth and ashes which may ensure their return to office quicker than otherwise.
In any event, Mr. Speaker, I presume the Leader of the Opposition will follow me in this debate which will conclude in an hour's time with the division that will take place. This is the eighth day of this debate. The rambling prophesying which has been done has no relevancy whatsoever to the facts of the situation of Canada's economy today. Not one fact has been adduced by hon. members of the opposition which reflects upon this government or upon the administration of the financial affairs of this country by the Minister of Finance.
I simply condensed the record for a few minutes. As a matter of fact, Mr. Speaker, I thought my time was up 5 minutes ago. Instead of that I have a few minutes more to give more facts. I could give them but all the facts and all the records show that this government has given good administration to this country.


Some hon. Members:: Oh, oh!


George Clyde Nowlan: The poor fellows will never learn, Mr. Speaker; they are still conceited; they are still arrogant. The Minister of Finance has taken criticism as a good sport, as it is his duty to take it, and it is the duty of the opposition to give it. He has listened to it and he has taken it. Some of it may have been reasonable-some of it was-but some of it was unfair and unjust. But in any event the Minister of Finance has the satisfaction of knowing that he, in company with his colleagues of the government, has given administration to this country during most difficult times which reflects great credit on him and which has strengthened the economy of Canada to a very marked degree.


Lester Bowles Pearson: Mr. Speaker, in rising to take part in this debate as it reaches its closing stages, I must begin by congratulating my hon. friend who has just sat down on his interesting contribution, during which there were times when I felt he was about to substitute the cap and bell for the black hat which he put on the hon. member for Essex
The Budget-Mr. Pearson East (Mr. Martin); but there were other times when he did get down to facts and he did produce his sheaf of statistics to show that in some respects the economy of this country is not as badly off as some people may think. In so far as there are indications of strength in the economy of this country we all rejoice. But it is our duty-and he will, I know, accept this as a statement of the duty of the opposition-to point out as vigorously as we can the problems that we face and to criticize the government when we feel they are not dealing with those problems in the way in which they should be dealt with. We propose to discharge that duty.
But before making my contribution to that discharge I would like to join others, in paying my tribute to the Minister of Finance on the presentation, the very effective presentation, of his first budget to this parliament. I do so with all the greater pleasure because, as we have so often reminded ourselves in this house, he and I over the years, I was once his teacher; but I hasten to add-


Gordon Minto Churchill: He survived it.


Lester Bowles Pearson: -he did not get his mathematics, his economics, his logic or his philosophy from me.


Donald Methuen Fleming: Hear, hear!


Lester Bowles Pearson: Especially his mathematics and his economics.


Ellen Louks Fairclough: Were you qualified to teach him?


Lester Bowles Pearson: Quite frankly, Mr. Speaker, I give the minister on this occasion that kind of admiration that might be felt for a ship's doctor who performs a delicate operation while the ship is pitching and rolling its way through a howling gale. It is a difficult operation that he is being called on to do.


John Cameron Pallett: One that was left to us.


Lester Bowles Pearson: And it is quite an economic gale that is now blowing around the government. The difference between the respective positions of the ship's doctor and the Minister of Finance is that the gale which the ship's doctor would have to contend with would be an act of God, whereas the Minister of Finance is performing his operation in circumstances largely of the contriving of his own government. It is quite clear that the captain has steered the ship into the gale and he is now asking a new surgeon to perform this operation. Well, has the operation been a success?


Some hon. Members:: No.


Lester Bowles Pearson: I can say this. The patient, which is Canada, will not die and we all know, regardless of where we sit, that the

The Budget-Mr. Pearson patient is a tough, resilient person and is going to survive this recession and is going to survive this operation. There is no doubt about that.


An hon. Member:: What about the years of Liberal rule?


Lester Bowles Pearson: I will come back to that in a minute and I will be glad to talk about the last 10 years of Liberal rule and what it meant to this country. I will be delighted to do that, Mr. Speaker, and compare those 10 years with what is happening in this country today.
This budget debate, now in its eighth day and night, is notable for some contributions and also for some omissions. It has been normally the case over the recent years, for instance, that in a budget debate the Minister of Trade and Commerce (Mr. Churchill) would give us a statement of the economy, the export trade, the commerce of the country. That has been the custom. We have not had it until tonight, indeed, in the interesting contribution which has been made by the Minister of National Revenue (Mr. Nowlan). We had no member of the cabinet participating in this debate except my hon. friend-and it is a good exception- the Minister without Portfolio, the hon, member for Greenwood (Mr. Macdonnell). We had no contribution from the Minister of Labour (Mr. Starr), over whom looms many of the problems we are discussing in this budget. We have had no contribution from the Minister of Trade and Commerce.
There is another omission, namely the question of dominion-provincial relations. Last night the Minister of Finance said, well, I did not discuss this in my budget speech; I discussed this a few weeks ago in a special motion that was before the house and surely the house would not wish me to repeat what I said on that occasion. It is quite true, Mr. Speaker, the house would not wish him to repeat what he said on that occasion because repetition of nothing by nothing does not add very much to our knowledge. We had hoped that perhaps the Minister of Finance on this occasion, the budget occasion, would have said something about this problem. However, he contented himself last night with criticizing us because in our speeches on this side we spent so much time in fighting the last election and that we had not accepted the verdict of the people. That was mentioned again by the Minister of National Revenue tonight. Because we had not accepted the verdict of the people we did not have enough common sense to sit down and say nothing. We must not speak or criticize because of the last election; we must not fight the last election over again in

this house. If there is anybody in this house, Mr. Speaker, who fights the last election over again it is the members of the party of the government, perhaps because they get more pleasure out of the fight than we would likely get. Anyway, the last thing in the world that the Minister of Finance should reproach us for is discussing the last election. Nor has he any right to draw from that the conclusion that we have no right to criticize the government.
Indeed the Minister of Finance last night began to fight the next election, in that connection he made one statement which on reflection I hope he will withdraw. He said there was no member-and he mentioned especially on this side, the member for Villeneuve (Mr. Dumas)-who had not the decency-that was not the word he used- who had shown any appreciation of what the government had done in this budget through the Emergency Gold Mining Assistance Act, and he mentioned the hon. member for Villeneuve. Perhaps he thought in doing that he would help his party in the next election. If he had looked at Hansard- he should have looked at it before he made this reference-he would have found the hon. member for Villeneuve spoke in the budget debate at page 1617 of Hansard, where he had this to say:
I was very happy to hear the Minister of Finance's statement with regard to the Emergency Gold Mining Assistance Act. This 25 per cent increase is certainly welcome, and the retroactive effect which the government intends giving to that legislation will compensate, to a certain extent, the considerable losses which the industry has suffered because of the premium on the Canadian dollar.


Donald Methuen Fleming: That is not all he
said.


Lester Bowles Pearson: The minister might have been generous enough to admit he had made a mistake in this regard in saying what he said last night.


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


Lester Bowles Pearson: Well, Mr. Speaker, we will let that pass. This budget speech of the minister is a fascinating thing to study in the light of perhaps what I may be permitted to call certain Fleming fixations in the years before 1958. The first and most important fixation in those years-I wish the minister would read some of his old speeches-was that the budget must be balanced. There must be neither deficits in difficult times through tax cuts to stimulate the economy nor must there be surpluses in boom times as a hedge against inflation and for debt reduction. Down, he so often said-and his words at that time were often very vigorous

-with cyclical budgeting as an instrument of the devil and Douglas Abbott, the Douglas Abbott who was quoted with so much approval by the Minister of National Revenue a few moments ago. Budgets must be balanced.
Well, Mr. Speaker, what have we now? The old Conservative orthodoxy has been thrown to the winds and the minister is now in direct and startling contradition with his former statements. He is forced and is trying to defend now what he used to condemn as heresy, the Liberal theory of budgetary policy which was stated a few moments ago by the Minister of National Revenue. In other words, he is favouring now deficit financing and we are glad indeed to welcome him into that fold. But to be logical and responsible the minister must also admit now that surpluses, debt reduction and credit restrictions may also be desirable in circumstances when expansion seems to be leading to inflation.


Donald Methuen Fleming: I suggested planned debt reduction, not unplanned.


Lester Bowles Pearson: Oh, I have read the minister's speeches. I have them all here on my desk but I do not want to bore the house by going over all of them. I will only quote a very few.


Mr. Fulton:: They will be the best part of your speech.


Lester Bowles Pearson: The second fixation is that tax reductions can be made without deficit financing. We remember those days too in opposition when the Prime Minister (Mr. Diefenbaker), the minister and those of their colleagues who are here now said that $500 million could be cut without a deficit or without decreasing any necessary services. How? It could be done easily-Mr. Drew used to wax eloquent on this-by eliminating waste and extravagance. They said that $500 mil- ' lion in tax reductions should come out of such savings and reduced expenditure. Why, the hon. member for Greenwood, Minister without Portfolio, had this to say in the house on April 5, 1955, as found at page 2765 of Hansard:
-tax reductions . . . should not come out of deficits; they should not have to be borrowed . . . We should get tax reductions from savings of expenditures-
Two years later, on March 19, 1957, he had this to say as found at page 2464 of Hansard: Everyone who is not a moron knows that it- Government spending.
-could be cut down.
Well, Mr. Speaker, what has happened to that doctrine? Look at the estimates. They are the highest in our history. What about waste and extravagance? It was said that savings could be made to bring these figures 57071-3-120
The Budget-Mr. Pearson down even in a time of emergency and recession and how is this unprecedented increase in our estimates regarded? As something to be deplored? Not at all. Here are the minister's own words in his speech a couple of weeks ago. As found on page 1232 of Hansard he had this to say:
Government expenditures contributed to the maintenance of economic activity. At all three levels of government they rose by almost seven per cent despite some decline in defence expenditures.
Again, on page 1235 he said that now that business is slowing down "we shall be able to devote more of our energies to filling some of the gaps which have developed... in housing, in municipal services and in other requirements for social capital in Canada, and in laying the basic foundations for the new period of business expansion which will not be long delayed." I suggest, Mr. Speaker, that if the government is not careful and wise in its fiscal policies the government is more likely to be laying the basic foundation of new and strong inflationary pressures by relying as a cure for recession more on an unplanned and hit and miss policy of public works and what it calls creating additional social capital and less on tax cuts. So far as public works are concerned-


Howard Charles Green: Go easy on them.


Lester Bowles Pearson: -the minister now admits that they have only-he said this in his speech the other night-a slow impact on employment.


Donald Methuen Fleming: That is not the
statement. Give the full statement. That is not fair.


Lester Bowles Pearson: If I am misquoting the minister I will be glad to apologize but I have this in quotes from Hansard. Perhaps if I am wrong he will look it up and correct me.


Donald Methuen Fleming: You have taken a portion out of context.


Lester Bowles Pearson: In any event, the vision of 100,000 men springing to work on a billion dollars worth of public projects has now become an acknowledged mirage.


Howard Charles Green: What about housing?


Lester Bowles Pearson: It was the greatest electoral hoax in history.


Howard Charles Green: What about housing?


Lester Bowles Pearson: The minister has also boasted of the superb timing in the government's threefold approach to the twin problems of recession and inflation. He said the other night that this policy had just the right balance, and I think I am quoting him accurately when I say that he said "it is the

The Budget-Mr. Pearson best mix of the various means" applied in a timely fashion. Well, Mr. Speaker, it is a mix all right. It is a mix concocted in the last 12 months of a variety of political ingredients applied as and when political considerations seemed to dictate, applied bit by bit, dissipating and minimizing the effect on employment which a budget with a planned, co-ordinated, comprehensive system of tax reduction brought in last autumn would have had. Only now, in June and July of this year, does the government, rationalizing after the event, discover an economic purpose for steps which it took for political reasons. Only now is it trying to make an economic virtue out of political necessity.
If we look at the true size of the deficit we will all agree that the minister is certainly practising his new cyclical religion with the zeal of a convert, if not with the wisdom of the experienced worshipper. But surely he must know, if he is a student of these matters at all, and I assume he gets good advice on them, that during periods of declining economic activity in the private sector of the economy, maintaining the stability of employment and income requires more than a huge budgetary deficit. Anti-cyclical policy would be too easy to apply if it could be reduced to that simple formula. The timing of the deficit, the method by which it is brought about and its size in relation to the national product are of very great importance indeed if a reasonable degree of economic stability is to be achieved or is to be maintained.
Above all, government fiscal policy must be based on a realistic assessment of economic conditions themselves. Now, Mr. Speaker, I am sure that even the minister will readily admit that his deficit was not planned and timed on any such rational assessment of current economic conditions. It is not leading to any new policy designed and adequate to cope with the present situation. It is merely, as I have said, as a result of the implementation of some electoral promises made when economic conditions were much different from what they are today.
Indeed, as we have said on this side time and time again, this huge deficit was implicitly contained in the Conservative program presented during the election of a year ago in June. Moreover, Mr. Speaker, while this 1957 Conservative program was being implemented in part during the last session,-and I emphasize the words "in part"-no indication of any planned or comprehensive action to deal with the recession was given by the government at this time. Indeed, the measures then introduced could not have been initiated by the government to deal with increasing unemployment, because almost until the very
[Mr. Pearson. 1
end of the last session the ministers denied- and they denied it repeatedly in this house- that a serious economic situation was developing. As a result we now have a built-in deficit created on the spur of the political moment. The attempt made by the minister to give us a post mortem rationalization of the sporadic action taken by the government will not change the facts.
Therefore it is not the deficit as such that we are criticizing, because deficits are required in the kind of situation we have in this country at the present time. Even though this deficit represents a complete reversal of financial and economic policy on the part of those who are bringing it in, it is not that which we are criticizing so much as the method or rather the lack of method used by the government in bringing it about. Furthermore, most of the additional items responsible for this deficit-except, of course, the drop in tax yields-constitute long term commitments which the government will find almost impossible to reduce if the economic climate were to change in the next few years, as we all hope it will not change. I recognize of course, as my party did at the time, that most of these items-tax cuts, increased social security benefits and the others-might well have been desirable in themselves for social or humanitarian reasons. But there was no possibility whatever at that time of considering them also in the framework of the economic outlook and of their long term inflationary implications.
The government systematically refused last autumn to present to the house a realistic assessment of the economic position or to give us a proper national accounting. Surely all must now realize that as a result of the unrelated actions, or perhaps I had better say as a result of the action related only to the political situation taken at that time by the government, new and important financial rigidities have been introduced into our economic structure which, in the minister's own words, have planted an inflationary time bomb which might later go off with a dangerously explosive effect. That is a very graphic way of putting it.
Believe me, Mr. Speaker, all this is very different indeed from the planned and coordinated tax cuts applied in a manner and in a place where they could give the maximum impetus to the economy and to employment. That is what we proposed in the last election campaign as something which should have been done by this government last autumn. We stand by those proposals today. We certainly do not apologize for them in any way, shape or form. They were proposals which

at that time were considered to be economically sound by some of the best economic thinkers in this country.


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: Not by the people.


Lester Bowles Pearson: They were proposals put forward in the midst of a grave unemployment situation and, as I have just said, without any benefit of a national accounting by the government or without complete and full information either of the economic situation or of the government's policy with regard to it which we should have had in the House of Commons last autumn. As a comprehensive and co-ordinated emergency unemployment program they made sense. In the eyes of the economic and financial experts in this country they made far more sense than did the sporadic and unrelated approach made by the government to this problem at this time.


Donald Methuen Fleming: But not to the
people.


Lester Bowles Pearson: It was certainly not our fault that they could not put them forward last autumn or early this spring within the framework of a budget and a national accounting. That national accounting should have been given in view of the promises made during the election campaign a year ago and in view of the attacks made on the monetary and fiscal policies of the previous government. It had been definitely promised by the minister himself. If that had been done, and it was not done-


Donald Methuen Fleming: It was not
promised.


Lester Bowles Pearson: The promise has been put on the record in this house at least half a dozen times. If words mean anything at all-and perhaps they do not mean very much to my hon. friend-those words mean that he did promise to introduce a budget into the house at the last session.


Donald Methuen Fleming: I deny that.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: The record will have to speak for itself, Mr. Speaker. If that had been done Canadians at that time would have been able to form an idea of the course to be followed by the government and the proposals from other parties could have been made and considered in the light of a full knowledge of the situation. But no such action was taken.
What did we learn from the minister last December about the situation in this country? The estimate of his predecessor, Mr. Harris, of revenue was $5,170 million, made in March, 57071-3-120i
The Budget-Mr. Pearson 1957, and he accepted that estimate of revenue. Last December it was accepted. That will be found at page 2002 of Hansard. The other day in the house he told us that no substantial reduction in revenue was likely except from the 1957 tax reduction. We were told that. This is the kind of information on which we had to make up our minds and base our policies. What were the facts? Revenue dropped $510 million to $4,660 million and much of that drop-more than half of it- had nothing to do with tax reductions. As for expenditures, these were $534 million higher in spite of all the Tory talk about reducing expenditures, which talk was repeated by the minister himself on December 6 and, if he likes, he can read it at page 2003 of Hansard in order to refresh his memory of what he said.


Donald Methuen Fleming: I am sure the hon. gentleman does not wish to be unfair but he purports now to be quoting figures given by me last December which were with reference to the fiscal year 1957-58. But by a peculiar form of elision he slipped on to say that the revenue receipts were $4,660 million. Those are for the fiscal year 1958-59 and are an estimate.


Lester Bowles Pearson: I am not misquoting, Mr. Speaker, and I am not misunderstanding the minister. Surely he does not deny that revenue dropped last year from the figure which Mr. Harris gave us in the spring and which he accepted as the estimate of revenue last December.


Donald Methuen Fleming: It did not drop to $4,660 million.


Lester Bowles Pearson: It was on the basis of his acceptance of those figures that we have to operate at this stage and in spite of that information which we got and which did not turn out to be accurate information. Of course, I do not expect the minister to be infallible and omniscent in these matters.
he expenditures now proposed, however, are far from anything that any one on this side could possibly have anticipated in the previous session of parliament, provided we believed in any way, shape or form the figure which they gave us and their protestations of cuts in expenditure. The result of all this was that Mr. Harris estimated for last year a surplus of $151 million, leaving out the $100 million which my hon. friend always added to that surplus. Even at the end of January of this year, the Minister of Finance insisted that this surplus, which he called a respectable surplus, would be achieved by what he called prudent management. That will be found at page 4019 of Hansard. We learned in June of this year that the position was

The Budget-Mr. Pearson very different indeed and that instead of this respectable surplus which was to be achieved by prudent management, we got a deficit of $39 million. This was the kind of information, or these were the facts on which we on this side had to operate in working on our financial and tax policies for a recession.
Now let me come to a third and very fierce fixation held by the minister and which I think has now been liquidated by the responsibility of office. It often has a salutary and liquidating effect. This fixation is the vicious effect of so-called tight money on the business and economic situation last spring.
Tight money, that was the culprit! The Liberal culprit responsible for the pause, the slowdown, unemployment and everything else that was bad. The Liberals did it all.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: As a result of their tight money policy they were responsible for everything.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: That is just what I had hoped to hear; that is the way the fable goes. It continues that the tight money policy was the culmination of those years of misrule.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Those years of misrule under which Canada became the most envied country in the world, achieving a position of wealth, power and high respect unparalleled in its history, which the minister well knows, because outside this country he acknowledges it.


Donald Methuen Fleming: What?


Lester Bowles Pearson: In his speeches he acknowledges it.


John Whitney Pickersgill: The minister should read his own speeches, particularly the one made in Florida last year.


Lester Bowles Pearson: He acknowledges the fact that our country is envied and has been for years the envy of all other countries in the world.


Donald Methuen Fleming: It has been envied a great deal more since June 10, 1957.


Lester Bowles Pearson: We have now come to the end of this ten year period-and what a period of time it was. It was a period, to use the words of an hon. member-I believe from Nova Scotia-when he was speaking the other night, of wounds and scars. Wounds and scars on a national economic body which during those years was perhaps the healthiest national economy in the world.


An hon. Member:: Nonsense.


Lester Bowles Pearson: Don't take my word for it.


An hon. Member:: Don't worry, we won't.


Lester Bowles Pearson: I will quote an authority far more impressive to hon. members opposite than myself, namely, the Minister of Finance himself. In his budget speech reported in Hansard at page 1237 for June 17, 1958 he talks about the rapid development which has been taking place in the Canadian economy in recent years. He also refers to Canada's rapid economic growth of recent years. How did we manage to accomplish this rapid economic development in Canada at a time of such terrible misrule? Does this sound as if the Tory government inherited a decaying country, weakened and destroyed by Liberal misrule. The minister is right when he speaks like this, and he is wrong when he talks the other way on the hustings, and he knows it.


Donald Methuen Fleming: I talk the same way everywhere, and you know it.


Lester Bowles Pearson: What, then, caused the
recession?


An hon. Member:: You caused it.


Lester Bowles Pearson: That is the trouble with some hon. members, that they can think in no other terms than party politics, but times are a little too serious for that kind of political party	approach.	At the	beginning	of the
election campaign on February 14-


An hon. Member:: We are not supposed to be talking about the election campaign.


Lester Bowles Pearson: -I said	the	cause	of the
economic recession-


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Perhaps	my	hon.	friendswho have not spoken in	the	debate would
kindly wait their turn.


Mr. Speaker:: Order. I cannot hear the hon. member.


Lester Bowles Pearson: I hope, Mr. Speaker, that those who are making these interjections will not acquire the kind of reputation which some members in the past have acquired, to the effect that every time they open their mouths they illustrate the emptiness of their minds.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Here is what I said on the influence of the recession on the decline of the economic activity:
During the second halt of 1957 trouble really began to spread. Demand for our products, both here and abroad, lessened. This brought excess capacity, declining private investment opportunities and, with an expanding labour force, growing unemployment. For a country like Canada, when both private investment and exports go down, you can expect a substantial increase in unemployment.

That was a consequence, or a part of it, of the recession in this country as it existed at the beginning of the election campaign. It was not very long afterwards that my analysis was confirmed by the annual report of the governor of the Bank of Canada published on February 28, 1958 and hon. members will recall the reaction of the Tory party to that statement of the governor of the Bank of Canada. I recall, and I recall very well, the reaction of the minister himself to that analysis of the situation, but what does he say now that he is chastened and sobered by the responsibility of office?


Donald Methuen Fleming: The same thing.


Lester Bowles Pearson: Oh, well let him read what he says. I quote from his carefully prepared analysis contained in the budget speech in respect of which he had the benefit of some pretty good expert advice and assistance. He does not repeat the stupid partisan charge that tight money was the cause of the change from expansion to recession, and that therefore it was all our fault. He in fact repudiates both his own and the Prime Minister's campaign explanation of the "pause". He does not even mention tight money as a cause of economic decline, but he does have a lot to say about the decrease in world demand for Canadian raw materials and our consequent condition of oversupply and unused productive capacity.
Why, his observations on this matter in the budget speech might have been written by the governor of the Bank of Canada himself.


Donald Methuen Fleming: What about all the references to credit restrictions, high interest rates and so on, before we came into office?


Lester Bowles Pearson: The minister had better read his remarks as recorded at page 1231, as follows:
As the boom lost momentum in the latter part of 1957-


John Whitney Pickersgill: Hear, hear.


Lester Bowles Pearson: That was the latter part of 1957. I would now like to quote from a later passage in the same speech, as follows:
The rate of economic growth slowed noticeably during 1957 as the forces which underlay the great surge of 1955 and 1956 spent themselves.
The great surge under the Liberal administration!


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: He continued and said that this surge, this excessive pace of 1955 and 1956, was straining our resources of men and materials despite very large borrowings abroad.
The Budget-Mr. Pearson
Incidentally, I do not recall hon. members opposite who were in the house in those days complaining about the excessive pace of our progress during those years, but that surge, that pace, if you like, did represent danger, the danger of serious inflation, as the minister now admits. It was Mr. Walter Harris in his budget who emphasized that danger and took steps to meet it as a result of which steps factious and partisan men condemned him and the prejudiced echoes of that condemnation are still heard in this house.
We also remember the Prime Minister and his misleading and unworthy use of carefully selected passages from a secret report of the Department of Trade and Commerce in an attempt to show that it was not inflation but recession and unemployment which was the immediate and real danger last spring. This was referred to by the hon. member for Essex East this afternoon. The Prime Minister said we had been told all this by the experts and had ignored their advice and that this had caused all the trouble.
We now know that this was a false charge and the impropriety of the tactics used in making the charge have now been illustrated by the Prime Minister himself.


Donald Methuen Fleming: It is a true charge which has been confirmed.


Lester Bowles Pearson: If we were to be criticized- and how bitterly we were criticized in this house and on the hustings for "hiding" that report 15 months ago, when it was not asked for-what is the Prime Minister now doing when he is hiding the report of the same body for 1958, which has been asked for.


Mr. Speaker:: I am sorry, but I cannot allow the hon. member to proceed on that phase, because that is the subject of a motion presently before the house.


Lester Bowles Pearson: Very well, Mr. Speaker, I bow to your ruling and will leave that aspect of my remarks. But I will return for a few moments, if I may, to this very important question of inflation. What does the Minister of Finance now say about inflation? He charged us on this side with taking no interest in the danger of inflation. Believe me, this question has been very much in our minds, and not only during this debate. The minister says in his budget speech: "Inflation now remains a very real danger". This is the inflation which he said in this house only last November had been checked. If this danger still exists, and it certainly does, in July 1958, how much greater was it in the spring of 1957, so we ask ourselves what light does the minister's statement and the budgetary papers accompanying it throw on this situation and

The Budget-Mr. Pearson what is the government doing to keep this danger of inflation in check.
But when I talk about this I get back to the deficit, and I am quite sure that any observations I am going to make will result in my being accused of spreading doom and gloom, as we always are on this side when we try to state the facts as we see them. Those gentlemen opposite who accuse us of spreading gloom should recall their speeches made in 1955, and before that when we were in a very mild recession and when we were subjected to a far more bitter assault than that to which the goverment is beng subjected now; when they showed much less sense of responsibility in a far less serious situation than we are trying to show in a much more serious situation. It is in this spirit I give my analysis of the danger of inflation.
The minister has provided in his main estimates for an expenditure of $5,179 million, and in his supplementary estimates for $58 million. To this we must add an old age security fund deficit amounting to $190 million, and a further $70 million with respect to the Hospital Insurance and Diagnostic Services Act, plus a C.N.R. unspecified deficit, and I think the minister will probably not quarrel with me if I put this at $55 million. All this brings the total to $5,552 million against revenues estimated at $4,660 million.
That is a deficit of $892 million, and it is a deficit which even the most conservative commentators-conservative in the small "c" sense-in this country are accepting, including the director of the tax foundation. The Minister of Finance denied that this afternoon, but here is the statement of the speech which Mr. Perry of the tax foundation made, headlined: "Predicts Deficit Near $1 Billion". This is a prophecy which has not been made by us alone but by bank presidents, economists, by the head of the tax foundation, and by others qualified to form an opinion, and it will probably prove to be somewhere near the right amount because you have to add to that figure of $892 million, civil service pay increases, payments under the Agricultural Prices Stabilization Act and new payments under the gold mining act, more money, perhaps, for the provinces and so on. Therefore we have the right to say-and we can surely say it without being accused of attacking the national interest-as is being said outside this house, that on the minister's own calculation of an increase of 2 per cent in the gross national product next year, the deficit will likely be over $1 billion.
The minister does not tell us very much about how he reached his own optimistic deficit figure, but it is based on a forecast of a gross national product of $32 billion


which is, as I have said, a 2 per cent increase, assuming there is no significant rise in prices and assuming normal crops. After what we have heard this afternoon about the situation in the west, that is a somewhat risky assumption to make. However, that is his assumption. He also leads us to believe he is basing that estimate on the 1958 investment outlook, this assumption of a 2 per cent increase.
But according to the bulletin entitled "The 1958 outlook for private and public investment" published by the Department of Trade and Commerce, present investment plans indicate that total capital expenditures, both private and public, are nearly 3 per cent lower in 1958 than in 1957. We all know, of course, the great influence that capital outlays have in determining the gross national product, and it seems to me difficult to understand how the minister can reconcile a 2 per cent increase in our gross national product with a 3 per cent decrease in total capital outlay without any price rise and with agricultural prices remaining normal.
About that I would say first, that we on this side of the house are finding it impossible to accept the optimistic conclusion of the minister, and we have evidence-and it is not selective evidence, and it is not put forward for any other purpose than an attempt to face facts in a realistic way-which justifies, I think, our caution in this regard. The most recent piece of evidence we have-and the minister must surely be acquainted with it-is the figure published by the dominion bureau of statistics on the gross national product for the first quarter of 1958. That figure is $31.7 billion which, seasonally adjusted at annual rates, shows an increase of only 0.7 per cent over the comparable adjusted figure for the last quarter of 1957.
Furthermore, that particular estimate is based on an arbitrary estimate of crop production for 1958 and ignores the fact that final product prices were slightly higher in the first quarter of 1958. There was in fact a decline in volume of production of goods and services of about one half of 1 per cent compared with the same period a year ago, and a drop in the volume of non-farm output of nearly 2 per cent.
Mr. Speaker, it is impossible for us to accept this optimistic conclusion of the minister because the evidence seems to us to point in the other direction, and if that is the case surely the minister should be taking this into consideration in the plans and policies which he must be preparing at the present time.
But even if we assume an increase of 2 per cent in gross national product in 1958, what would be the employment outlook for the current year? The hon. member for

Essex East made his projection this afternoon, and I think, without going into the details he went into, that if there is this 2 per cent increase in the gross national product and if there is the same ratio between that figure and employment which has existed over recent years, it would mean we would have an increase of about 1 per cent in employment in this country in 1958 as compared with 1957. If there is an addition to the labour force of 2.5 per cent we would have considerably more unemployment next year than last year, and the peak figure would be far too high. I am willing to leave it at that.
The implications with regard to unemployment are serious, but the implications with regard to inflation are just as serious. I do not need to tell the minister this, but his dilemma-and I mentioned this in a speech in the House of Commons on the address- is that he has at the same time to deal with the danger of recession today and the danger of inflation tomorrow.
If we take into account the real budgetary deficit and the net requirement of cash nonbudgetary transactions which comes to $775 million on the minister's own figuring and which, in a sense, is a deficit of its own, the government will have to borrow-as the minister must well know because I am sure the figures are haunting him-approximately $1.8 billion in 1958-59. In addition, nearly $2 billion will be needed to pay off maturing securities. This means that the government's borrowing program for 1958-59 will reach nearly $3.8 billion of which approximately $1 billion is due to government deficit.


Donald Methuen Fleming: Do not magnify that. I think my hon. friend ought to be responsible. I gave the figures.
Mi. Pearson: These are the figures which the minister himself has used.


Donald Methuen Fleming: No, they are not.


Lester Bowles Pearson: Will the minister tell me what the figures are?


Donald Methuen Fleming: Three billion four hundred million dollars was the total I gave, not $3.8 billion.


Lester Bowles Pearson: All right, $3.4 billion. But if the minister were to check again I think he will find that the figures total $3.8 billion.


Donald Methuen Fleming: Not at all.


Lester Bowles Pearson: That is, in the minister's own words, "a major financial operation".


Mr. Stinson:: That is what he said.


Lester Bowles Pearson: That is what the minister called it and certainly it is a major financial operation, especially when we consider the
The Budget-Mr. Pearson very important fact not mentioned by the minister, that total savings by individuals and businesses in Canada in 1957 amounted to about $6 billion and that the new capital requirements of the private sector of the economy in 1958 will amount to about $5.7 billion.
Even if the minister receives-and again I am using his own words-"the closest co-operation between the Department of Finance, the Bank of Canada, the chartered banks and all investment institutions and dealers", which he asks for and to which he is entitled, he has indeed a major financial operation ahead of him. I do not need to tell him that unskilful handling of this financial operation will have very serious consequences for the country and I am sure everyone on this side of the house will wish him well in the conduct of this complex, difficult and important operation.


Donald Methuen Fleming: Thank you.


Gordon Minto Churchill: He is equal to it.


Lester Bowles Pearson: If you think my predictions on these matters, coming from a political source, are suspect, I can refer again to the director of the Canadian Tax Foundation who is an accepted authority in this field. He recently stated his view that in addition to the economic deficit this year there would almost certainly be another substantial deficit in 1959 and that only a "roaring inflation"-that is what he called it although I certainly hope it can be avoided -could increase federal revenues sufficiently in the next year to balance the budget.
The director was gloomy about the long term prospects. The best he could see was a "modest federal surplus by 1967", the year that will mark the centenary of confederation. I hope that the words once applied to Sir Robert Peel when he was chancellor of the exchequer-I think by Disraeli-will not be applicable to my hon. friend. Disraeli said:
I see the chancellor of the exchequer sitting on the edge of bottomless deficits fishing for budgets.
But, says the minister, notwithstanding all these expenditures and deficits-and these are his words-the "net burden of the public debt will remain well below what we carried quite easily only a few years ago." He did not go on to say that, if this is true, it is due largely to Liberal fiscal and monetary policy after world war II. We know what that policy was. It was laid down in the white paper on unemployment and income published in 1945. That economic and financial policy was systematically and intelligently applied by Liberal governments throughout the post-war period. There were short recessions in 1949

The Budget-Mr. Ricard and 1954 and tax cuts made on those occasions helped the country get out of them. For the other years during that period inflationary pressures were predominant and there were budgetary surpluses. As a result of this anti-cyclical policy, a high and stable level of employment and income was maintained and the public debt was reduced by $2.2 billion. As the Financial Post said just the other day:
The Conservative government is thus reaping the reward of those big budget surpluses by which Mr. Abbott reduced our national debt from 1947 on by . . . $2.2 billion.
I was going to go on to talk about trade matters but I have not time for that and in any event I will have another opportunity to talk about trade. But I want to summarize by saying that this budget contains very little which gives any encouragement to us to believe that the government is going to follow an expansionist trade policy. There are indications in it-and we were not entirely reassured by the eloquence of my hon. friend the Minister of National Revenue this evening-that the government on the other hand may in a time of recession fall back on restrictionist policies which they attempted to follow with such bad results for the country in the past. There are indications in the budget, also in the field of trade, that the government is adopting a very peculiar way of preparing for the commonwealth economic conference, first by ignoring the offer of freer trade and secondly by flouting the goodwill of the British by raising the duty on woollens.
My main criticism of the budget is that it contains nothing that will effectively meet the most major domestic problem before us today, that of unemployment. There is nothing in it to encourage trade expansion. It contains very little to give us encouragement in facing the problems of unemployment and recession which lie ahead. In short, Mr. Speaker, this budget, introduced by the longest budget speech in our days, is the shortest in constructive purpose and forward-looking policy we have had since 1935. It represents an inadequate and ill-planned attack on a situation more serious than any we have faced for many years. It shows all the evidence of having been bedevilled at birth by the electoral necessities of those who produced it. There is no route here in the unplanned path that will lead us out of our difficulties. No wonder that in the country it has been received-shall I say-with indifference. That is probably the best one can say for it. It has been unwept, unhonoured and unsung. It is, in short, unworthy of the seriousness of our time.

The Minister of Transport (Mr. Hees), who is not in his seat, made an interesting comment to his constituents in Toronto on March 1 last in explaining why a budget was not brought down last autumn. The congenial minister put it this way, and I quote from the press report of his speech on that occasion:
You don't really accomplish anything in bringing down a budget.
Mr. Pallet!: That is taken completely out of context.


Lester Bowles Pearson: The budget that was brought down a few short days ago may, I am afraid, prove that the Minister of Transport was right at least on this occasion. This budget will not indeed accomplish the purpose which we all desire on all sides of the house to see accomplished, that of putting Canada back on the high road to prosperity and full employment which characterized those ten great years in our history, 1947-57. The minister should talk to his colleagues about it.


J.-H.-Théogène Ricard: Mr. Speaker, since I have only a very short time at my disposal I must admit that I am confused in knowing where to start in the speech I had taken a brief moment to prepare but in view of the fact that again tonight hon. members of the Conservative party have been challenged to produce evidence concerning extravagance and waste under the previous Liberal government I would like to draw to the attention of hon. members of the Liberal party an article which appeared in the Montreal Star of January 16, 1958, which bore the following headline, "Project Launched, Then Abandoned-Cost: $6 Million". Part way through the article we find these words:
The works department paid an architect $48,675 for professional services in October, 1956, although the architect had died the previous July. The money was subsequently paid to the architect's firm but no release was obtained from the deceased's estate.


An hon. Member:: I'll bet he voted, too.


J.-H.-Théogène Ricard: Again we read:
A foreign service officer in the external affairs department was granted 18 weeks' sick leave with pay though he had resigned from government service. Mr. Sellar said: "It is generally accepted that (sick) leave may be granted only when it may reasonably be regarded that the civil servant will return to duty upon recovery."
I ask hon. gentlemen to my right, if this is not extravagance and waste, what is it? Further along in the same article we read:
An employee of the agriculture department was paid between $1,259 and $1,659 annually for four years but $600 of the annual payment was classed as casual earnings so that the employee could qualify for war veterans allowances.


Some hon. Members:: Order.


Mr. Speaker:: Order. It being 9.45 o'clock p.m., it is my duty, pursuant to section 6 of standing order 58, to interrupt these proceedings and put forthwith the question on the main motion.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Rea in the chair.
The Deputy Chairman:: The house in
committee of ways and means to consider a proposed resolution to amend the Income Tax Act. Shall I rise, report progress and ask leave to sit again at the next sitting of the house?


Some hon. Members:: Agreed.
Progress reported.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: I think the leader of the house has indicated the business for tomorrow. Can he indicate the business for Monday?


Howard Charles Green: Tomorrow, Mr. Speaker, we shall take the estimates of public works and agriculture. On Monday we will move to go into supply.


[Stage Direction]
It being five minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
57071-3-121
[Stage Direction]
Friday, July 4, 1958