1959-04-16

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


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, on April 8 the hon. member for Rosedale asked:
Would the Prime Minister tell us the attitude of the Canadian government toward the legislation recently passed in the United States House of Representatives in regard to the diversion of water from the great lakes at Chicago?
I replied, after dealing with one or two matters of history, and said:
-we are paying the closest attention to this matter, at the same time not wishing to do anything that would in any way cause a situation to arise which might not be beneficial.
I now wish to bring the house up to date on this subject. When I last spoke on April 8 I stated what the fact was, that the government was giving careful consideration, and since then has given further consideration to the most effective manner of making known Canada's opposition to the bill which, as I said a moment ago, has passed the House of Representatives and is now before the Senate committee on public works. A note registering the reasons for Canada's objection was delivered on April 9, and with the leave of the house I ask permission to table it so that it might possibly appear in Votes and Proceedings. I am not going to read the entire note, but just two particular paragraphs thereof to indicate the general tenor and attitude of the government in this regard. In the third paragraph the following appears:
Every diversion of water from the great lakes watershed at Chicago inevitably decreases the volume of water remaining in the basin for all purposes. The government of Canada is opposed to any action which will have the effect of reducing the volume of water in the great lakes basin. Careful inquiry has failed to reveal any sources of water in Canada which could be added to the present supplies of the basin to compensate for further withdrawals in the U.S.A. The government of Canada considers that many agreements and understandings between the U.S.A. and Canada would be broken if unilateral action were taken to
divert additional water from the great lakes watershed at Chicago and directs attention to provision of two treaties in particular.
The first is the boundary waters treaty of 1909 and the second is the Niagara treaty of 1950.
The general summation of the attitude of the government in this regard is contained in the last two pertinent paragraphs:
Because of the importance attached by the U.S.A. and Canada to the honouring of international undertakings in letter and in spirit, the government of Canada views with serious concern any possible impairment of agreements and undertakings relating to the great lakes basin. Furthermore, the alarms created by repeated proposals for diversion which inevitably disturb the people and industry of Canada are a source of profound irritation to the relations between our two countries which we can ill afford.
I am instructed, therefore, to express the hope of the government of Canada that the U.S.A. will view this matter with equal concern and will be able to give satisfactory assurances that unilateral action will not be taken which would imperil the present regime of the waters in the great lakes basin and the status of the agreements and understandings to which I have referred.


Mr. Speaker:: Would the Prime Minister perhaps modify his request so the letter will be printed as an appendix to Hansard'!


John George Diefenbaker: Yes.


Mr. Speaker:: Is the house agreeable to having this document printed as an appendix to Hansard today?


Some hon. Members:: Agreed.
[For text of document referred to above, see appendix, pages 2784-5.]


Hon. L. B. Pearson (Leader of Ihe Opposition):: Mr. Speaker, perhaps I could say a word with regard to this extremely important matter. I think the house will have learned with satisfaction that a note in the terms which the Prime Minister just read has been, I think on April 9, presented to the United States government. It will be recalled that a note in not very strong terms was presented by the Canadian government last year expressing our concern. This note of April 9 seems to be a much stronger one, and I think that is all to the good.
I believe I am right when I say that this note, however, presented on April 9, has been presented at a time when it is too late to influence congress which has, if I am not misinformed, already taken action in this matter. Therefore, Mr. Speaker, it now remains for the President of the United States

Inquiries of the Ministry to protect Canada's rights in this matter by vetoing action which may have been taken by congress. Perhaps if this note had been presented earlier before congressional consideration had been given, it might not have been necessary to rely entirely on the President of the United States to protect our interests in this matter.
However, the note has been presented and I hope it will have the effect it should have in preventing the United States from taking action which would be a breach of treaty arrangements between the two countries.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, on behalf of this group I want to say that we are extremely pleased to hear the statement of the Prime Minister with respect to this latest note. We are also pleased to note that it is in stronger terms than any previous note. We support the government in any effort it may take to protect Canadian interests. We in this group hope that the congress of the United States will pay attention to this day's proceedings and note from the proceedings that parliament in this respect is unanimous.



A. V. ROE COMPANY INQUIRY AS TO GOVERNMENT ACTION TO RELIEVE UNEMPLOYMENT SITUATION

[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Min-nister of Labour arising out of reports of almost total failure to secure jobs for the 10,000 persons who lost their jobs in the aircraft industry at Malton. Will the minister say what success he has had in locating jobs for these unemployed workers? Would the minister comment on the statement by union leader Peter Podger that the minister has said that other industries are reluctant to hire these workers because of the possibility of their being recalled by Avro or Orenda?


Hon. Michael Starr (Minister of Labour):: Mr. Speaker, I wish to thank the hon. member for giving me notice of his intention to ask this question. First I would like to refer to the latter part of his question, and say that the remarks made by Mr. Podger are not entirely correct; but when he states that employers and industries are reluctant to hire these workers because of the possibility of their being recalled by Avro or Orenda, I say this is the report which I get from my national employment service officers in that area. In addition, the report also includes the fact that most of these people are still hoping

to be recalled to Avro and Orenda; consequently they are not too receptive to placement in any other industry.
At the time of the lay-off there were registrations totalling 11,582. The number who have been placed by the national employment office is 622. Those who have found work on their own total 1,179. Those who have failed to report back to the national employment service-in other words they are not drawing unemployment insurance, and naturally we feel they have found employment elsewhere-amount to 1,268. A total 3,069 have been removed from the national unemployment insurance rolls.
[Later:!


Hon. Paul Hellyer (Trinity):: I wish to direct a question to the Prime Minister. Is the Prime Minister able to tell the house if the government is making continuing efforts to find appropriate alternative work for the displaced workers and capacity of the Avro plant in Toronto?


John George Diefenbaker: Mr. Speaker, the government
is giving very careful consideration to everything that can be done through the instrumentality of joint production and the like to the end that Canada's airplane industry shall receive its fair share; and if this is secured and maintained naturally there will be an extension of employment to those who have been trained in that type of work.


Paul Theodore Hellyer: A supplementary question, Mr. Speaker. Does the Prime Minister think the present negotiations will result in some agreement in the not too distant future?


John George Diefenbaker: Mr. Speaker, the hon. gentleman having occupied a portfolio in the last government in the days between April and June will realize something of the delays that do take place in the best plans that are made.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Mr. John MacLean (Winnipeg North Centre):: I would like to ask a question of the right hon. Prime Minister. Can the Prime Minister comment on recent press reports concerning the proposals made by the United States and the United Kingdom at the resumed negotiations in Geneva on nuclear tests?


John George Diefenbaker: Mr. Speaker, I was informed by the hon. gentleman of his intention to ask

this question. I appreciate his interest in this regard, but I feel that in view of the length of the answer which would have to be given, if he would agree I could answer his question tomorrow before the orders of the day.



LEAD AND ZINC


[Stage Direction]
On the orders of the day:
Mr. G. J. Mcllraiih (Ottawa West):: Mr. Speaker, I should like to ask the Minister of Trade and Commerce whether or not an international lead and zinc meeting will be held in New York at the end of April, I believe on the 28th or the 30th, and if so will Canada be represented at such meeting?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, Canada will be represented. I am not sure of the exact date of the meeting.


George James McIlraith: A supplementary question, Mr. Speaker. Would the minister, perhaps not today but when he has an opportunity, tell the house the attitude which the Canadian representatives will take with regard to the conference and the organization of a lead and zinc agreement?


Gordon Minto Churchill: Mr. Speaker, I will be prepared to give an answer to the hon. gentleman later.



UNEMPLOYMENT ASSISTANCE


[Stage Direction]
On the orders of the day:
Mr. Erhart Regier (Burnaby-Coquiilam):: would like to ask the Minister of National Health and Welfare if the Canadian Labour Congress has supplied affidavits to the government in which it is claimed that unemployment assistance or social welfare has been denied to residents of Newfoundland because they were members of the I.W.A., and if so, because of the contributions of the government toward unemployment assistance, what action is being taken in regard to this alleged discrimination?


Hon. J. W. Monteith (Minister of National Health and Welfare):: I would like to thank the hon. member for having notified me of his intention to ask this question. I would say that some time ago, in the latter half of March-I believe on March 23 to be exact- press reports from Newfoundland did indicate that applicants for relief in that province were being questioned as to their membership in
Inquiries of the Ministry the I.W.A., and that relief was being denied to members of that union.
As soon as these reports came to my attention I gave instructions that a letter should be sent to the provincial welfare authorities in Newfoundland asking for a full report on the matters dealt with in the press. A letter was sent to the Newfoundland authorities under date of April 6, and we are now awaiting a reply to this letter.
I should add that some time later, on Tuesday of this week, representatives of the Canadian Labour Congress came to see me about the situation, and yesterday they sent me a number of affidavits along the lines of the earlier newspaper reports. I was able to tell the gentlemen who came to see me of the action already taken by the department and to assure them, as I am glad to assure the hon. member, that this matter is being actively followed up.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver Easl):: I should like to direct a question to the Prime Minister. Could I ask the Prime Minister whether or not the government is planning any legislative or other action to protect consumers against unscrupulous manufacturers who are raising prices by more than the tax increases announced by the Minister of Finance a few days ago.


John George Diefenbaker: There have been reports indicating that some manufacturers and the vendors of some products affected by the commodity tax changes announced in the budget are raising prices to the public, and increasing them inexcusably by amounts in excess of the increase in the tax.
However, there is no legislation at the present time which would meet such a situation. Indeed, it is questionable whether any legislation passed by the federal government which could bring about any result of the nature suggested would be within the legislative province and authority of parliament. I can tell the hon. member also that the only way in which price control legislation could be passed, if I read the authorities correctly, would be under the emergency provisions-the emergency being defined by the courts. The government has no intention of introducing price control legislation of the kind suggested.
If the hon. member has knowledge of any manufacturers who are raising their prices

Inquiries of the Ministry illegally by the exercise of monopoly or restrictive pricing power, I suggest he bring the facts of the case to the attention of the combines branch of the Department of Justice, which is constantly on the lookout for such practices.


Harold Edward Winch: Did 1 understand the Prime Minister to say "illegally", not "immorally"?



COMMONWEALTH RELATIONS


[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: Mr. Speaker, yesterday the hon. member for Laurier asked for a progress report with regard to the two ships which Canada proposes to give to the West Indies federation. The designs of two passenger cargo type vessels have been prepared by a firm of ships' architects according to plans drawn up by officials of the West Indies government and accepted by officers of the Department of Trade and Commerce and the Department of Transport. The designs have been submitted to a shipping expert named by the West Indies government. He has approved the designs, and specifications are now being prepared by the company of ships' architects and will be ready by May 15. The West Indies representatives will see the specifications at this stage and tenders will be called.
The ships will be built in Canadian shipyards, and it is hoped that they will be ready early in 1961. The plans provide for two 1,500-ton ships, 298 feet in length, with 80,000 cubic feet of cargo space and accommodation for 54 cabin and 200 deck passengers.


Mr. E. J. Broome (Vancouver South):: Arising out of the statement made by the Minister of Trade and Commerce with respect to the two ships that are to be built, may I ask the minister if the government will give consideration to having one tender called on the west coast and one on the east coast?


Gordon Minto Churchill: It will be done by open tender, Mr. Speaker.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: Mr. Speaker, perhaps in regard to another delay I might ask the Minister of Justice if he has given further consideration to the appointment of a woman as the fifth member of the national parole board.
[Mr. Diefenbaker.l


Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, I have just received notification through Votes and Proceedings that a question is to be asked in that regard, and I shall be answering it in due course.



NEWFOUNDLAND


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavista-Twillin-gate):: Mr. Speaker, in view of the remarks of the Prime Minister yesterday, may I ask him when the government hopes to fill the vacancy in the Newfoundland supreme court, a vacancy which has now existed for four months?


John George Diefenbaker: Mr. Speaker, experience in the
past with the former government was that there were long delays. There will not be a long delay in this case, and I hope the Minister of Justice will be in a position to make an announcement very shortly.



POLYMER CORPORATION


[Stage Direction]
On the orders of the day:
Mr. J. W. Murphy (Lambton West):: Mr. Speaker, I should like to ask the Minister of Labour if he can add anything to the statement he made yesterday regarding the strike at the Polymer Corporation in Sarnia.


Michael Starr: Mr. Speaker, the only thing I can add is that we expect to have a mediator appointed in the early part of next week.


Hazen Robert Argue: A supplementary question, Mr. Speaker. I wonder if the minister could say whether or not the new mediator will meet with representatives of the union and the company, and when his work will actually be started?


Michael Starr: Mr. Speaker, the situation is that the mediator is not of any use unless he meets with both the company and the union.


Hazen Robert Argue: Perhaps the minister misunderstood my question. Can he say how soon the mediator will start work in mediating in this situation?


Michael Starr: As soon as he is appointed. AGRICULTURE



POTATOES


[Stage Direction]
On the orders of the day:
Mr. H. J. Michaud (Kent. N.B.):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture. In view of the

Prime Minister's statement at Summerside, Prince Edward Island, as reported in the Halifax Herald of February 28, 1958, that the 80 per cent floor is assured for all farm products, and in view of the fact that potatoes this year have been selling at about half what they sold for at the time the statement was made, can the minister tell us whether this floor will be applied to potatoes in the maritime provinces?


Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, I do not know the content of the statement to which the hon. member refers; therefore I am in no position to make any comment on it.



PATENT ACT


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I have a question about long delay that I wish to address to the Secretary of State. It arises out of the extended delay in the completion of the inquiry of the royal commission on patents, copyrights, trade-marks and industrial designs, appointed June 10, 1954. Can the minister say when he expects to receive the report of the commission on patents and the report on trade-marks, and when these reports will be published?


Hon. Henri Couriemanche (Secrelary of Stale):: I wish to thank the hon. member for giving me notice of his questions. The latest information I have is unfortunately to the effect that the submission of the report on patents of inventions will now be delayed until next fall. I have no information as to when there will be a report on trade-marks, if any.



CRIMINAL LAW


[Stage Direction]
On the orders of the day:
Harold Edward Winch: should like to direct a very short question to the Minister of Justice. I do so in view of all the inquiries made to me. I should like to ask the minister, as I did over a month ago, when he expects to be able to table the report of the McRuer commission on sexual psychopaths.


Edmund Davie Fulton: My
recollection is that the last time the hon. member inquired I said it was being printed. I am sorry I do not have more up to date information, but I will inquire immediately, and will press for prompt completion of all steps leading to tabling of the report.


Harold Edward Winch: That was six weeks ago.
The Budget-Mr. Fisher PRICE SPREADS



INQUIRY AS TO REPORT OF ROYAL COMMISSION

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: May I ask the Prime Minister when he expects to receive the report of the royal commission on price spreads appointed, I believe, about a year and a half ago.


John George Diefenbaker: I will have to inquire about that. I have not had any recent information.



THE BUDGET


[Stage Direction]
The house resumed, from Wednesday, April 15, 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, and the amendment thereto of Mr. Benidickson, and the amendment to the amendment of Mr. Regier.
Mr. D. M. Fisher (Pori Arthur):: Mr. Speaker, it is a pleasure to have the opportunity to speak when there are at least more than the corporal's guard present who will be here tonight when the hockey game is on. One of the points brought up by the hon. member for Hull interested me very much. I do not quite see its relevance to the budget, but he did make some remarks about the position labour should take so far as political action is concerned, and he pointed to the United States situation as a wonderful example of how labour can do very well without taking direct political action.
I should like to suggest to the hon. member, having in mind the whole attitude toward American labour unions and American business, that he cannot have it both ways. Surely any member of the house can recognize that the United States system is so different from ours that political pressure by any lobbying group can be exerted on individual members of the House of Representatives and Senate, who are not welded together in a party unit as is the case in this country. Therefore the United States experience is completely different, and there is much more compulsion toward labour taking political action in this nation than there is in the United States. I am not saying that is complete justification for it, but it is certainly an argument.
On the other hand we are always having the United States example of labour not taking political action held up to us, while at the same time these very same people, and I would not rule out the hon. member for Hull, are the ones who say that we will rue

The Budget-Mr. Fisher the day that we hooked up with international unions. They say it is a terrible thing that Canadian unions should be tied up with United States unions. As a matter of fact over 70 per cent of Canadian unions have American affiliation of some kind or other. It seems to me that you cannot have it both ways. If you are going to argue that the one thing is bad, then surely you cannot argue that the other is bad.
I should like to make another point in that regard. You also have to look at the fact that most of our large economic organizations have a very direct relationship with United States companies. Quite often they are subsidiaries. That is one of the logical points with respect to the international union pattern, because economies within specific industries have a direct relationship. Yet we have this kind of nonsense that is all part of the "clobber labour" picture that seems to be so popular at this time, and if you do not want to stress the other side then at least in fairness this point should be looked at.
I was very interested to notice today in the Montreal Gazette the annual report of the St. Lawrence Corporation containing some very striking comment by the president, Mr. Percy M. Fox. Mr. Fox is a gentleman who got a load off his chest only a couple of months ago about this terrible situation of United States union domination in Canada and how it was the ruination of the country. The interesting thing to me is that amongst the directors of the St. Lawrence Corporation there are several Americans, and there are strong indications that United States capital plays a very large part in this company.
Furthermore, Mr. Fox made the standard insinuation that with this union domination there is no democracy in unions any more. Let us look at the picture with respect to corporations and see how much democracy there is there. There have been a number of recent examples of very small shareholders trying to bring their points of view before corporations. There was one recently involving the Canadian General Electric Company. If you are going to stress democracy in the one case, why is it not stressed in the other?
The point I want to make in connection with this call for democracy has some relationship to a political point. There was an interesting article in the Toronto Star the other day by Mr. John Bird on whether we have a one-man government. I do not entirely agree with all the points he made, but he presented a very challenging point of view that the government that we have today is a one-man government. Certainly my impression from talking to Conservative members

of parliament is that the Prime Minister is very much in control. There is nothing wrong with that. I think we accept that as part of the situation. On this very point I should like to refer to an editorial in the magazine The Reporter for April 2, 1959, where I find the following:
Quite a number of elected politicians still find it difficult to acknowledge the leaders of organized labour as politicians from another realm. We have heard ad nauseam in the halls of congress that union members should incessantly and massively participate in all the major decisions on union affairs and spend their free time watching over their elected representatives. Respectfully, one can ask our congressmen how they would like to have their constituents massively breathing down their necks.
I should like to suggest that the Prime Minister does not have his constituents or the members of parliament who support him in the house massively breathing down his neck at all times, from a democratic point of view. Surely you have to recognize that a union is the kind of organization in which the executive, when elected, has to be given responsibility, especially in the interim periods between elections. Therefore it seems to me that the howl or cry that unions are undemocratic organizations is based upon a misconception of how a union has to carry out its task. If the union executive has to turn around every time any kind of decision is to be made and call a mass membership meeting, I can only suggest that the union would be in a very difficult position, just as difficult a position as if the Prime Minister had to go to the country every time a major decision in politics was to be made.
I think this is a point that really needs to be made and emphasized, because it is all part of the unfair damnation of the labour movement that seems to be so popular in Canada at the present time and especially, I am sorry to say, quite often within the House of Commons.
One of the other points in connection with labour that the hon. member for Hull made was a warning of the danger of getting tied up with the C.C.F. with respect to the idea of forming a new party. I think any fair-minded member in this house will recognize that if there is any possible way in which you can get people discussing politics under almost any auspices in this country, you are achieving something; you are carrying out some kind of educational pattern. I think all hon. members are aware of the apathy that we had. Whether or not this new party movement is successful-I happen to have my hunch there, and it is probably different from the rest-surely it is going to be a fairly large achievement if it presents a challenge to the labour movement, to the

people connected with the labour movement and other citizens who may be interested in it. Surely one result will be an increase in political interest and in the whole tempo of political events. I insist that that is very good, because I feel that one of the reasons we now have perhaps less understanding in our country of the responsibilities of government is because of this apathy, disinterest and the increasing tendency for people to shrug off any mature responsibility toward political events.
There is one other point I should like to make to these people who are taking this interest in the new party. The assumption within this House of Commons always seems to be that this is going to be strictly a labour deal. I should like to remind hon. members, as an example, that the majority of the members in this particular group in the House of Commons have no direct connection with labour, have not come up through any labour organization or labour movement. We happen to be rather proud to some of the achievements of the C.C.F. in a democratic way. The C.C.F., whatever its efforts, has managed to develop a fairly large membership, and that membership has never been based upon any great union strength. I think the government members from Saskatchewan will acknowledge that.
I believe it is complete nonsense to say that out of this development that may be coming you are going to get a political party that is going to be completely dominated by labour. I should like to assure the members who have this interest that within the C.C.F. movement itself there is enough concern, enough interest, in this particular point of view to see that we do not develop a political party that is in any labour leader's pocket. I do not mean by that last remark that I have anything against labour leaders; it is just not going to be that type of political party.
I feel that one of the points made by Mr. Fox in his annual report has a definite bearing upon the budget in a general way, and concerns something for which I have been looking in this House of Commons. I refer to the genuine free enterprisers who belong to these other two majority parties. Mr. Fox says:
Politicians still bet on voters being foolish enough to think that welfarism means something for free, that higher taxes and bigger spending don't matter as long as the hand-outs keep coming. And the politicians still seem right about some people, for there are some who try to think that a government is coping with inflation when it taxes more even though it shows no attempt to spend less.
The Budget-Mr. Fisher
It seems to me this is a direct comment upon the budget presented by the Minister of Finance. Mr. Fox goes on to say:
We cannot look to politicians or any political party to halt the spreading of indiscriminate welfarism. The aim of politicians is to win elections.
This affects all of us. The Minister of National Revenue was very candid the other day in suggesting that there is a lot of difference winning elections and carrying out a program. Mr. Fox goes on:
They tell themselves that the people ask for welfarism: that it will continue to catch votes. Therefore, whether they think it good or bad, political party strategists will go on offering more and more of it until the people themselves stop them. In over 30 years we have had no sign of statesmanship in Canada to let us hope for anything different.
Well, that is a very bleak picture. I think one of the great disappointments to me, as one interested in political ideas and the fact that there should be some sharp division of ideas, is that I have not been able to recognize in that monster party that flows around the sides of this chamber any clear-cut exposition of what I thought they were directly connected with, that is free enterprise, private enterprise and all the rest. I have expressed this opinion before. We find it quite simple, in many cases, to cast our votes for most of the measures that are brought in here. This, if I correctly interpret it, indicates that we have a sprawling, middle of the road party that is away over on the left. Perhaps this is fine and perhaps it will keep members in for a long time, but it makes it very difficult to find any clear-cut political opposition. It is obviously making it difficult for the Liberal party.


Hazen Robert Argue: They have gone to the right.


Douglas Mason Fisher: We do not know where they have gone. The Leader of the Opposition made this statement; he said that the Liberal party is not against social planning. This represents tremendous progress.


Hazen Robert Argue: Nor Joey.


Douglas Mason Fisher: Well, they are not against Joey, either; that is one of those things that are difficult to define. Obviously what Mr. Fox has called for is not going to come, at least it does not look as though it will come, unless we can make enough appeals to gentlemen like the Minister of Finance.
The political party to which I belong, and which we hope will develop into a different one, of course has the greatest difficulty because-


Some hon. Members:: Oh, oh.


Douglas Mason Fisher: -of this particular situation.

The Budget-Mr. Fisher
Mr. Pallet!:	You might enlarge that
statement.


Douglas Mason Fisher: The difficulty is precisely this-


Ernest James Broome: May I ask the hon. member a question?


Douglas Mason Fisher: I am always willing to give the hon. member a chance to ask questions.


Ernest James Broome: When your party evolves into the party you expect it to be, will you still be introducing a bill concerning the disclosure of election expenses?


Douglas Mason Fisher: Absolutely; I cannot see what difference that would make. I imagine the hon. member himself is interested in election expenses, especially out in British Columbia. I should not be surprised if the hon. member would like to know why some Conservative members in British Columbia got more money out of the kitty than he did.


An hon. Member:: Did they?


Douglas Mason Fisher: I have been asked, did they? Oh, yes, they did.
The difficulty of a definite position here, in so far as a group or a party that feels it is a socialist party is concerned, is simply that so many of the ideas of democratic socialism have permeated right through this chamber that we have difficulty marking out a clear-cut position. This is one of the things we attempt to do, and we will try to do to a greater extent. I know someone made a scornful reference to our amendment as being full of time worn phrases such as "the effect of social and economic planning". I admit that the time-worn phrase "social and economic planning" is not good enough. Of course an amendment does impose on you some limitation in spelling out what you suggest, but certainly our hope is in the future, and certainly our plan will have to be, to spell out in much greater detail both the steps in a welfare direction and the steps in so far as planning is concerned, especially economic planning.
On that last point there is still considerable confusion amongst what I call the less thoughtful people in this country-I will not say they are reactionary-about just what the term "socialism" means. I know that quite often, especially by United States writers, it is taken to be a blanket political program of complete nationalization. One of the points put up was that we did get into the amendment the idea of a capital gains tax. The suggestion was made that we meant that this tax was to apply all across the board, to property and everything else. That is just nonsense. The United States, which I think can claim with some fairness


to be a little bit more capitalistic than this country, has a capital gains tax. It works and is effective. It applies specifically to dealings in the stock market; it has nothing to do with property.
To return to the planning aspect of what we need to do and where we need to go, may I say this. It seems to me the fact that the majority of people recognize that the central government has a responsibility for the economy today is full support for the idea of a coherent planning program. One of the other difficulties that loom in our way in Canada, and is a big bogey, is the whole question of provincial rights. We can certainly see that education has to be a fundamental part of any plan. It may be the whole key to our future, whether or not we are taking a socialistic interpretation. As long as we have one province holding the line, as Quebec indicates it is going to do, we are going to have difficulty in moving to national planning in order to attack the problems in education. If Quebec holds on to its point of view I think we may even reach the stage where we will find that the rest of the country will have to go ahead with national educational planning and let Quebec stay outside, as she has stayed outside in a number of other arrangements. If Quebec feel that it is so necessary for their own individuality and culture to remain outside in the educational field, then I think we will have to recognize that they have that right and, on the other hand, Quebec will have to recognize that the rest of Canada has a right to go ahead on a national basis with some sort of plan to pull us out of our educational problems.
That is an example of the kind of field I think we have to attack with planning. It is one of the fields to which I think we can point and say to this particular government, "You have not done what you indicated you would do". There is no use flaunting around the words of a man who is no longer here. Certainly as an educationist I and most of my colleagues, to my knowledge, had great respect for the late secretary of state for external affairs. We know that he proselytized across the country time after time, before he was a politician and when he was a politician, for a national approach to the higher education problem. He spelled it out in terms of junior colleges and the kind of support the government should give. That is the type of planning with which I thinir we should go ahead.
One of the points always made by antiplanners seems to be that it leads to a greater and greater build-up of the top-heavy civil service. Let us look at an example. I was checking the departments of this government

and their rate of growth; and, from what I can make out, the fastest growing department we have is the Department of Transport.
Yet that is a department in which almost every member of this house has a real interest. We are always calling on that department, and I think fairly, to extend its services.
If you stop and think of the scope of these services and what they mean, Mr. Speaker, it is obvious that a department of this kind must grow in order to fulfil its obligations. Consider for example its obligations in so far as television and radio communications are concerned, licence checks and that type of thing, or in the field of northern development, airports and airport development and the tie-in with our whole communications structure. That department is bound to get bigger and broader and be involved with faster and more complicated devices.
This matter of growth is something you just cannot shrug off. It is something that has to be thrown back at these people who are always calling for smaller and smaller government. In a field such as transportation I think we can and should call for what we have insisted on for some time, namely a national planning authority and some kind of regulatory authority. In the last few days we have had in a committee a long argument on freight rates. From the presentations that are being made it is obvious that this is more than a question of railways. It is a question that comes down to fundamental principles in our country, namely whether we should take the socialistic approach to our railways or whether we should try to put the clock back and go back to some kind of capitalistic approach. It is also evident that you cannot separate the railways from water transportation or truck transportation in any kind of regulatory control. If you give one regulation, it impedes it unfairly with respect to the others.
One of the obvious difficulties of the planning approach is that it is difficult. It is not easy. There is no simple formula, and experts can quite often be wrong. It is easy for people to look around the world and cite certain examples where the experts have been wrong. I think the favourite example is the labour government's groundnuts scheme in Africa just after the last war. We can get all kinds of examples of that kind. But really there is no choice but that of planning. There is no other choice. We cannot go back to any day that really never did exist in Canada, of complete dog eat dog, the market place ruling and the law of supply and demand. That situation just does not exist any more.
What our responsibility should be-and it is certainly a responsibility that this group tends to bear and that I hope our new party
The Budget-Mr. Morissette will tend to bear-is to do more detailed planning of where we should go. If that program does not appeal to the Canadian electorate and does not get their support, of course we shall be disappointed; but more than being disappointed, I think we shall rue the day.
(Translation):


Mr. Emilien Morissette (Rimouski):: Mr. Speaker, the Minister of Finance (Mr. Fleming) should be commended for his budget speech. His review of Canada's general economic position and his analysis of the public accounts for the year ending March 31 last, reveal on the one hand that his estimates of last year were accurate, which lends probability and validity to his estimates for the current year and, on the other hand, that legislation passed by this government has efficiently and decisively contributed to check the recession and launch our economy towards a new era of prosperity.
The facts brought out in the minister's speech also show that the gloomy forecasts of our Liberal and socialist friends were not to be taken seriously and were the result of an ill-contained spite rather than an objective and intelligent study of existing circumstances.
My colleagues will remember that the Minister of Finance had forecast, with regard to 1958, a gross national revenue of about 32 billion dollars. The facts have proved him right.
As a matter of fact the gross national revenue exceded that amount. According to the dominion bureau of statistics, it reached a figure of $32,184,000,000. Yet, the hon. member for Kenora-Rainy River (Mr. Benidickson), financial critic of the official opposition, has attempted to deride the minister's forecast. He has accused the Minister of Finance of picking that figure out of the air and of failing, in those estimates, to take into consideration the main components of the gross national revenue. The hon. member said, at that time, as can be seen on page 1465 of the official record of this house:
I suggest that the minister seems to have taken probably the most optimistic of all advice in calculating the gross national product. That leaves some doubt in the first instance, when we consider this matter of deficit, as to whether the revenue estimate of $4,660 million is attainable.
Everybody knows today that in 1958 the Minister of Finance was not over-optimistic, and that his forecast was a sound one, for the revenue which had been estimated at
2746	HOUSE OF
The Budget-Mr. Morissette $4,652 million actually amounted to $4,770 million. The facts, therefore, failed to justify the opposition's calculated pessimism.
Other members of the opposition had also made gloomy computations. Some of them had forecast the breakdown of our export trade. Others had indicated that the number of unemployed would reach a million. All of them were wrong, for our export trade has remained stable and the employment situation never deteriorated to the extent prophesied by our hon. friends. As the Minister of Finance stated the other day, the number of workers has gone up by 152,000 as compared to last year, and the number of unemployed itself is also lower than the year before.
On the whole, Mr. Speaker, and thanks especially to a fiscal policy and adequate legislation, the pattern of the Canadian economy has been sound in 1958. The recession was brought under control and under the impetus of a wise government policy the country's economy is showing signs of increased buoyancy.
It is both interesting and encouraging to note that the trend of the Canadian economy as a whole has been better than that of our neighbours. I should like here to make a brief comparative survey of this development on the basis of some of the most reliable tests of the economic situation. The figures I am going to use are found in the Labour Research, a review published by the Canadian Congress of Labour. According to this review, the seasonally adjusted gross national product in Canada reached $31,748 million in the third quarter of 1957. In the last quarter of 1957, it decreased to $31,460 million. In the first quarter of 1958 it had increased $31,684 million, and in the second quarter to $32,248 million. We are aware that this upward trend held out in the latter part of the year, and that the rate of increase was stepped up.
In the United States, at the end of 1957, the gross national product amounted to $438,900 million. In the first quarter of 1958, it was $425,800 million and, in the second quarter, $429 billion. Thus, it is easy to realize that the volume of gross national income in the United States was falling off, whereas Canada's gross national product had already begun to grow substantially. In other words, assuming that the gross national product figure reached in the third quarter of 1957 represents 100, we find that in the last quarter, it went down to 99.1 per cent, then up to 99.8 per cent in the first quarter of 1958 and as high as 101.6 in the second quarter of 1958. In the United States,


the situation is as follows: the figure in the third quarter of 1957 reached 100. The index decreased to 98.5 in the fourth quarter of 1957, to 95.6 in the first quarter of 1958, and stood at 96.3 in the second quarter of 1958.
In other words, while the downward trend in the volume of the gross national product occurred at the same time both in the United States and in Canada, it was never as marked in Canada as it was in the United States, and moreover, the gross national product had already started to increase in Canada while it was still declining in the United States.
Now, let us draw a parallel between available personal incomes. I mean the total volume of personal income, less direct taxes and especially income tax.
In Canada at the end of 1957, those incomes amounted to $21,480 million. In the first quarter of 1958, they went up 2.8 per cent, to reach $22,080 million; in the second quarter, they rose to $22,892 million. In the United States, the available personal incomes reached, in the third quarter of 1957, $308,700 million. In the fourth quarter, they dropped 0.6 per cent to $306,800 million. They again declined, in the first quarter of 1958, by 1.2 per cent to $305 billion. They went up again in the second quarter of 1958, when available personal incomes reached $307,500 million, which was still 0.4 per cent below the pre-recession level. There again, the Canadian economy is showing greater buoyancy.
It should be pointed out, Mr. Speaker, that the buoyancy, in Canada, of available personal income resulted in greater consumption, estimated at 3 per cent, between the third quarter of 1957 and the first quarter of 1958, while in the United States, it declined by nearly 1 per cent, as a result of a substantial decrease in the purchase of durable goods.
The greater strength of available personal income is due especially to the fact that old age pensions and other governmental transfer payments have been' increased, while there was a decrease in taxation rates.
There is now evidence that those government measures have had considerable effect on the expansion of our economy.
In Canada, the workers' income rose, in August 1957, to $1,305 million. I refer here to the over-all seasonally adjusted monthly income. After having gone down to $1,282

million at the end of 1957 that income rose to a new high of $1,316 million in May 1958, i.e. an increase of 0.8 per cent as compared to August 1957. In June, there was a slight decrease to $1,312 million, followed by a new rise to $1,317 million in July 1958, which exceeds the level reached in August 1957.
Let us now refer to the same statistics with regard to the United States. In August
1957,	workers' income reached $20,825 million. That figure kept declining until April
1958,	to reach the level of $20,075 million, i.e. a decrease of 3.6 per cent. They increased in May, June and July 1958. Worker incomes, both in Canada and in the United States, started to drop during the same period, and declined steadily until the end of 1957. However, while the decrease was felt until April 1958 in the United States, the trend was reversed in Canada in January 1958, and the index continued to rise steadily. In Canada, worker incomes did not drop as low as they did across the border, and they recovered earlier, at a more rapid pace and to a greater degree than in the United States.
Now if you compare industrial production Indexes in both countries, you again find that Canada's economy showed greater strength than that of the United States. Both production indexes began to drop at about the same time in early 1957, but while there was substantial recovery in Canada early in 1958, there was no marked recovery in the United States until mid 1958. Furthermore, the decline in industrial production was twice as great in the United States as in Canada. In July 1958, the industrial production index in Canada was 4.4 per cent below the point reached before the downswing, while in the United States, the gap was 8.2 per cent. In manufacturing, the situation was similar; in Canada, the index declined in 1957, but began to recover as early as January 1958. The rise continued into February, April, May and June. In July, the index reached a point 5.7 per cent below the level of February 1957. In the United States, the decline began in August 1957 and lasted until April 1958, when the trend was reversed. Thus, while manufacturing production declined earlier in Canada than in the United States, it dropped to a much lower level in the United States. Manufacturing production had been picking up for three months in Canada while it was still declining in the United States. In July 1958, in the United States, it stood at 6.8 cent below the peak registered before
The Budget-Mr. Morissette the decline; in Canada, it was only 5.7 per cent below the February 1957 level.
In Canada, the production index for durable goods, after reaching a peak in July 1956, began to drop until March 1958. At that time, the trend was reversed, and increases were registered in April, May, June and August 1958. In the latter month, the index stood at a point 12.7 per cent below the 1956 peak.
In the United States, the same index began to fall in December 1956. The downswing went on from September 1957 to April 1958. Having reached a low point of 20.6 per cent, the index then began to recover.
Here, in Canada, the production of durable goods weakened earlier than in the United States, but on the other hand, the decline was greater in the United States.
In Canada, the number of housing starts had reached a record of 145,400 units in the first quarter of 1955. Early in 1957, that number had decreased to 86,000, or 40.9 per cent.
From then on, though, a marked increase was recorded. In the first quarter of 1958, the number of starts reached a fantastic high of 175,600, 20.8 per cent above the pre-recession record. In the second quarter of 1958, they decreased to 162,500, still much higher than the pre-recession record.
In the United States, the highest number of starts, 1,435,000, had been reached in December 1954. In March 1957, they went down by 35 per cent and in February 1958, the decrease had reached 36.2 per cent.
In July, a recovery took place but it was still a long way from the high level reached before the economic slow-down.
The volume of home building has therefore declined less sharply in Canada and recovery has been infinitely stronger than in the United States. In Canada, home building permits for an amount of $86,712,000 had been issued in September 1955. In December 1956, this amount had dropped to $50,466,000, a decline of 41.8 per cent.
A new record was reached in November
1957.	The figure was then $92,539,000. This increase held out until February 1958, when the fantastic amount of $130,242,000 was reached. This was an increase of 50.2 per cent over the record pre-recession level. In June
1958,	the amount was still at the very high level of $101,133,000, or 16.6 per cent above the pre-recession record.
In the United States, a record was reached in November 1956, when the total amount
2748	HOUSE OF
The Budget-Mr. Morissette was $1,468,000,000. A year later, in November 1957, there was a very slight improvement. From then on, there was a drop until May 1958 followed by an increase in August 1958.
The lowest level was 9.1 per cent lower than that of November 1956 and 9.4 per cent lower than that of November 1957. The August 1958 high was 2.6 per cent over that of November 1956 and 2.3 per cent higher than in November 1957. While recession started earlier and was sharper in Canada than in the United States, the recovery was much stronger in Canada. The whole credit for this should go to the government, for making the necessary funds available to house builders. We know that 50 per cent of the housing starts in 1958 in Canada were financed through the National Housing Act.
In the field of industrial construction, it should be noted that while the decrease in Canada was sharper than in the United States, recovery was noticeable by May 1958, while the decline was continuing in the United States.
In business construction, the American economy was somewhat better than our own.
Let us now compare statistics relating to corporation profits. I refer here to profits before taxes. An unprecedented high had been reached in that field during the first and third quarters of 1956. From the third quarter of 1956, they registered a decline lasting up to the first quarter of 1958. From the second quarter of 1958, corporation profits were on their way up.
The United States have experienced a somewhat similar movement, but the decline was twice as sharp there as in Canada.
Let us look now at the trends of employment in some sectors of the economy. In Canada, the employment index in manufactures reached a high in December 1956. From then on, it decreased until April 1958, but in May, June, July and August 1958, it showed an increase. In the United States, the pre-recession high was reached in December 1956.
From then on there has been a decline until May 1958. During the following months, conditions showed some improvement. The decline began at the same time in the United States and in Canada. It has been checked earlier in Canada, and it never reached the same proportions as in the United States. From that point of view, Canada stood up
IMr. Morissette.]

better than our neighbour. The same holds true for the employment index in the production of durable goods. The peak was reached in Canada in November 1956 and was followed by an irregular downward trend until April 1958. In May and June, there was an increase.
In the United States, the highest level was reached in December 1956, followed by a decline until May 1958. The development of the unemployment index in that sector of the economy is very much similar in both countries though, here again, we find that recovery is firmer in Canada. The employment index with regard to the production of non-durable goods reached its peak in Canada in August 1957. A downward trend was noted until March 1958, but from then on there was an increase. In the United States, the peak was reached in November 1955, and was followed by a decline until March 1958. From then on, an increase was noted, but, here again, it must be said that the downward trend in the United States was twice as marked as in Canada.
We may therefore conclude that, after all, Canadian economy has stood up well in a period which was extremely difficult for North America. Recession is one of those things the Conservatives inherited from the Liberals. The facts I have shown prove that the recession has hit bottom and that recovery is now well on its way.
In his annual report the governor of the Bank of Canada stressed that "in the last quarter of 1958, the gross national product was higher by 4 per cent in Canada and 2 per cent in the United States, than the previous record figure."
The policy of relaxation with regard to monetary conditions which the government applied at the end of 1957 contributed more than any other factor to check the recession and to promote economic recovery. As a matter of fact, the recession has not been as severe or as protracted as certain people had foreseen. This is an a posteriori confirmation of the government's wise policy.
The Canadian public is grateful to the government and to the Minister of Finance who, in a difficult period, have practised a bold policy which, in the first place, checked the progress of the recession, then stopped it completely and, finally, brought about a strong economic recovery.


Mr. Jean-Paul Racine (Beauce):: The figures and statistics quoted by my good friend the

member for Rimouski (Mr. Morissette), who is an economist, I believe, have yet to convince me that Canada's economy is in good shape.


Mr. Tremblay:: You failed to understand his speech.


Mr. Dupuis:: Come, come, Roberval-you naughty boy!


Mr. Pigeon:: We do not use Mr. Lamon-tagne's statistics.


An hon. Member:: Nor Mr. Martin's.


Jean-Paul Racine: I believe I heard the voice of the member for Roberval (Mr. Tremblay). I also note that the member for Joliette-L'As-somption-Montcalm (Mr. Pigeon) has already started to interject. If he really wants to coo, he might wait till I am through with my remarks.
Mr. Speaker, the budget brought down on April 9 last by the Minister of Finance (Mr. Fleming) came as no surprise, as far as the deficit is concerned, and despite the government's efforts to have the people accept this general tax increase, I think the people are fully aware that this government's election promises were nothing but a smoke screen and had no other purpose than to win votes.
We also recall that the pre-election concessions granted by this government in the taxation field included reductions involving about $178 million.
It follows that such generosity is more than cancelled by the $245 million to be taken from the taxpayers by the end of this year, and by the $352 million which the new taxes will cost us in a full year.
There is no denying that the tax increase will mostly hurt the consumer, because most of the business firms that are being taxed will include the taxes in their sale price. Consumer purchasing power, which already was extremely low, will be further lowered by the government's action.
The consumer purchasing power being reduced, that will substantially affect the demand and, in my opinion, the supply will certainly be affected as well. It should not be surprising if, as a result of that decline in the purchasing power, some concerns were obliged to cut down their production, which would certainly not help solve the unemployment problem nor bring the revenue which the Minister of Finance seems to be so much in need of.
The Budget-Mr. Racine
The Minister of Finance has admitted a deficit of $616 million for the fiscal year 1958-1959.
That deficit would certainly have been more palatable if it had contributed, in some way, to an economic recovery or had helped at least to partially reduce unemployment, if not completely.
That deficit is not either the immediate result of an increase in social benefits, such as family allowances, for instance, which would have helped increase the purchasing power of the taxpayers as well as stimulate business and industry.
The position of the federal treasury and the financial problems facing the minister are evidence, as well as the very picture, of the difficulties which workers, farmers and industrialists in this country must face.
Such financial unbalance is the very picture of the sad economic situation prevailing in several fields in Canada, and which is causing unceasing concern to a great number of our fellow-citizens, especially if we consider the nearly total absence of governmental measures designed to help remedy such a situation.
We realize also that the financial situation of the government has deteriorated during the two years of Conservative administration. For instance, the funded debt, according to table 2a, page 2412 of Hansard, has gone up from $15.4 billion in 1956 to $15.6 billion in 1959. For the same period, the total debt rose from $19.1 billion to $20.2 billion, and the percentage of the gross national product, which was 41.7 in 1956, has gone down to 36.3.
In spite of increased taxation, the present Minister of Finance will be able to boast of a rather unenviable record: that of having increased the national debt by more than $1 billion in two years.' His forecasts for 19591960 are hardly more encouraging, since he expects another deficit of $393 million.
Are we going to have, under the present government, a continuous and yearly increase in taxation? The Minister of Finance stated on television, the night he introduced his budget, that he could not say when he would be able to introduce a balanced budget.
And yet, Mr. Speaker, when he was in the opposition, the same minister was asking for a balanced budget, and was not criticizing Conservative deficits, but rather Liberal surpluses, which contributed to reduce the national debt.

The Budget-Mr. Racine
The Minister of Finance is far from improving our financial position. He faces the same problem as last year, and has admitted himself that in spite of the deficit he expects, he will again be facing the same problems next year.
If, at that time, he uses the same methods, the consumer will be paying again, and we will again witness a further drop in our purchasing power.
Just to show the inconsistency of the present administration, let us take an item which has been increased, as evidence that election promises are not being carried out.
Here is a statement made by the right hon. Prime Minister (Mr. Diefenbaker) on February 17, 1958 at Brantford, as reported in the Toronto Daily Star of February 18:
(Text):
Prime Minister Diefenbaker last night dropped a clear hint that the taxes on cigarettes, cigars and tobacco soon may be cut.
He told an audience of 1,400 that no industry in Canada suffers a greater degree of taxation than the tobacco industry.
Tobacco growers, he said, are the one segment of agriculture that has not received the attention it deserves, although growers long have clamoured for government aid.
The Prime Minister added: "We want to give them this assistance. We are having a study made of this industry to see what action is needed to give tobacco growers a reasonable return and some security for their efforts."
The tax on a 33 cent pack of cigarettes now is about 18 cents, made up of an excise tax, and excise duty, and a 10 per cent sales tax.
The study probably will be made by the Department of Finance and any ensuing tax cut could be introduced in time for the 1958-59 federal budget expected in May.
To the Brantford audience, living on the northern fringe of Ontario's tobacco belt-where production has jumped from 63,000 acres in 1943 to 120,000 in 1956-the Prime Minister's hint appeared an effective vote catcher.
(Translation):
I wonder if, after presenting this budget, the Prime Minister could go back to Brantford, repeat those statements and make as many friends among the voters.
This budget also fails to justify any hope of higher benefits under existing social legislation or of any further welfare measures.
May I quote what the Prime Minister said in Hull on February 25, 1958, as reported in the Montreal Star of February 26, 1958:
(Text):
The Prime Minister told his Hull audience of some 850 persons that some features of the United States plan would have to be altered before it could be fitted on top of the present Canadian program of $55 monthly pensions paid to all at 70.


He detailed the payments which he said are made under the United States plan to those on average incomes:	between $88.50 and $98.50 a
month for single workers retiring at age 65; $132.80 a month for a husband and wife retiring at age 65; death benefits of $255; disability payments starting at age 50.
(Translation):
More unkept promises! Mr. Speaker, if I wanted to list these in detail in this house, it would take me much longer than my allotted forty minutes.
However, if we examine all the Prime Minister's election promises, we find with some surprise that he has not indicated his position with regard to family allowances which are, to my mind, the most significant social legislation we have in Canada.
Last year, on the same occasion, that is during the budget debate, I spoke at length about family allowances and showed that at that time the cost of living index regarding family needs had doubled since they were introduced in 1944 and paid out in 1945, and that it was the government's responsibility to increase them adequately.
No one need be an economist to realize that the family allowances set up in 1945 no longer have the same buying power in 1959, and I believe it is the government's duty to correct that situation so as to provide for the needs and requirements of Canadian homes.
If the Prime Minister made no reference to this matter during the last elections, are we to understand that family allowances are of no interest to him or that he wittingly or unwittingly overlooked them? Under the circumstances, I cannot account for the Prime Minister's position on this matter. On the other hand, there were hon. members who did not hesitate to tackle the subject, during the election campaign and to come out with their promises so that I wonder why they kept mum about it last year. At all events, I hope those hon. members will not be afraid to expound their views on the subject and to ask for an improvement with regard to family allowances.
I would now like to deal with another question of great significance, i.e. federal-provincial relations, especially as concerns grants to universities.
My friend, the hon. member for Sherbrooke (Mr. Allard), when speaking in this house on April 13 last, mentioned in certain parts of his speech the satisfaction he felt over being given the seat he now occupies, pointing out that he

was happy to get farther and farther away from the opposition.
I am delighted that he should find comfort in this particular way. Obviously, he is easily satisfied. Of course we do miss his presence just opposite. However 1 would point out to him that he is getting closer and closer to the exit, and that we will be very unhappy, after the next federal election to see him go, but let him take comfort in the thought that he will not be the only one:	many other
members opposite will be doing the same.
I say that my hon. friend from Sherbrooke is both likeable and understanding, and I can prove it because I admit those qualities in him. I should like to quote a statement he made which, in my opinion, is exceedingly important. I congratulate him for the sincerity with which he dealt with the problem of university grants, as far as the province of Quebec is concerned. As recorded on page 9 of the appendix for April 13, here is what he said, and I quote:
That is why if the Quebec government cares to offer a suggestion, to make an official proposal, an appropriate and constructive one, I am positive that this government will consider it with great care and that, eventually, a proper solution will be found in this field.
I am in full agreement with my hon. friend from Sherbrooke. I am sure that, if the Quebec government really wanted to make a constructive proposal, the present government would consider it with great interest, as the previous government would have done too. But, if we accept my hon. friend's statement we have to infer that in the last 7 years since those grants were offered, the province of Quebec or rather the Union Nationale government or even the premier himself, (Mr. Duplessis), have failed to come out with some constructive suggestion, some official or appropriate proposal in order to settle that problem.
In the meantime, Mr. Speaker, how many talents have gone to waste, how many young people have had to give up their studies because they could not afford to stay in college.
Last week, I received a letter from a young man who had two more years of philosophy to do before completing his classical course and enter the university. I should have liked to read that letter in the house, but I do not think it is proper to read the names of people who are in such dire straits, and thus reveal their sad plight. I shall content myself with summarizing the contents of the letter without tabling it.
66968-9-175
The Budget-Mr. Racine That young student, forced to interrupt his studies, wrote to me, asking whether I could find a job for him for a year, so that he could earn enough to finish his studies. That young man showed much interest in his studies and was even prepared to make sacrifices; I believe this is a typical case. That student explained to me that he comes from a family of 14 children and that his father could no longer afford to keep him in college.
I think I can safely say that many young men in the province of Quebec are in the same plight, so that we can state there is an enormous wastage of talent.
I therefore agree with my good friend, the member for Sherbrooke, that the Quebec government should put forward some constructive proposals with a view to reaching understanding, so that our young people might benefit from this help and reach their goal in life.
On the other hand, the Quebec government is responsible for wasting the abilities of a whole generation, because it has been turning down these grants for seven years, has taken a negative stand, and made no move to iron out the differences that existed.
The member for Sherbrooke has expressed surprise at finding, since his election to the house that many members show little interest in the matter and are reluctant to discuss this vital problem. Let him have no fear, we too know of this problem, and have been aware of it for quite some time. We too would have been anxious for the Quebec government to take the action he has suggested, and which we have been suggesting for some time.
With this in mind, I have obtained from the Association Generale des Etudiants de Laval, from the Association des Etudiants de l'Uni-versite de Montreal and from the federation of classical colleges, some of the tables included in the brief they submitted to the Tremblay commission. The first table shows the percentage of students attending Laval and Montreal Universities and classical colleges in the province of Quebec according to the job classification of their fathers:
Job classification of fathers
1.	Professional men: ...
2.	Manufacturers, businessmen. owners of large business concerns:		
Percentage of students Classical Laval Montreal colleges 17.0%	21.6%	44.3%
28.0 26.1

The Budget-Mr. Racine
Percentage of students
Job classification	Classical
of fathers	Laval Montreal colleges
3. Clerical workers, in
civil service, railways.
etc	. 28.0 9.3	12.14. Skilled workers: ...	. 18.0 9.5	25.75. Unskilled workers: .	. 2.0 4.5	5.36. Agriculture: 	. 7.0 7.6	12.5Attending	Within theuniversity	province1. Professional men: ..	... 19.3%	4.4%2. Manufacturers, etc.:	... 26.9	6.03. Office workers etc.:	... 18.6	15.94. Skilled workers: ...	... 13.7	43.15. Unskilled workers: ..	... 3.3	6. Agriculture 	... 7.3	16.67. Others: 	.... 10.9	14.0
Mr. Speaker, we also know that tuition fees in the province of Quebec are perhaps not the highest in the country, nor are they the lowest. So with the permission of the house-


Léonard-David Sweezey Tremblay: It was different last year.


Yvon Dupuis: Quiet, Buster!


Jean-Paul Racine: Mr. Speaker, if the house agrees, and to avoid taking up too much of its time, I should like to include into the official record a table indicating tuition fees in leading Canadian universities.
(Text):


The Acting Speaker (Mr. Rea):: Has the hon. member permission to put this table on Hansard?


Mr. Fleming (Eglinton):: May I ask the
source of the figures contained in the table?
(Translation):


Jean-Paul Racine: Mr. Speaker, this table was included in the brief submitted to the Tremblay commission by the Canadian federation of universities.


Louis-Joseph Pigeon: So long as it was not by Maurice Lamontagne.


Yvon Dupuis: Are you jealous of Mr. Lamontagne?
(Text):


Donald Methuen Fleming: I gather these figures are not from an official government body, nor is the table one drawn from any official government source, either primary or secondary source?


Jean-Paul Racine: This table is contained in the submission of the universities to the royal commission and has been submitted to the government. It is the same table.


The Acting Speaker (Mr. Rea):: Has the hon. member permission to put this table on Hansard?


Some hon. members:: Agreed.
Tuition Fees in Leading Canadian Universities
Universities	Medicine	LawMontreal 	
$525	$375McGill 	450Laval 	
400	350Alberta (55-56) 	
510	235British Columbia 	
445	290Dalhousie 	
500	330Manitoba 	
465	200Osgoode Hall 	320Ottawa 	
375	275Queen's (55-56) 	
469.80	Saskatchewan 	
475	215Toronto 	
550	365Western (55-56) 	
575	
(Translation):


Jean-Paul Racine: According to the table showing representation in universities, 41.2 per cent of the sons of professional men and manufacturers attended universities in 1956, while their parents accounted at the time for only 10.4 per cent of the population of the province of Quebec.
In other words, 89.6 per cent of the people, made up of clerical workers, skilled and unskilled workers, farmers and others were using only slightly over one half the capacity of universities. Skilled workers, farmers and others, are usually considered in the class of 
Humanities	Social	DentalScience	and Arts	science	Pharmacy	surgery$425	$375	$375	$425	$475450	450	450	551.50350	350	350	235	225	360240	290	320	230	230	420250	250	225	275	350	350	210	445.30	324.80	225	500	325	365	500375	375	
average income who should be enjoying the same privileges as people of greater means. I still believe that an agreement should be entered into and that action, as suggested by the hon. member for Sherbrooke, on the part of the government of the province of Quebec, for the purpose of making positive proposals, should be taken at once so that families who account for close to 89.6 per cent of the population might receive the same benefits as the well-to-do.
The province's refusal of federal grants is detrimental to those people and. I trust that some way of accepting the grants will be

found so as to provide assistance to many students who, while they have the necessary aptitudes, sometimes lack the money to go on with their studies.
I am sure that the universities would gladly accept those grants, for we are all aware of their financial problems and we know that they must find other sources of income to make up their deficit.
We hope that these grants will be discussed at the federal-provincial conference we are looking forward to, and we also trust that, at the time, a solution will be found that would be fair to both the government of the province of Quebec and the federal government, because university students who have been deprived of those grants for seven years now need them badly.
In that same regard, I suggest to the hon. Minister of Finance that he grant higher tax deductions to parents with children in college or at the university.
Mr. Speaker, I would like to close my remarks by quoting a few excerpts of a statement made by the hon. Leader of the Opposition and of the Liberal party (Mr. Pearson) on February 10, 1959. They are proposals that we have made during the election campaign and, unlike the Conservatives, what we said then we can say again today. We still believe, as we have advocated, that the way to reduce unemployment is to increase the buying power of consumers by lowering taxes. This government has chosen an altogether opposite view, and we know into what depths we have been thrust as a consequence.


Mr. Allard:: May I put a question to the hon. member for Beauce? Could the hon. member tell the house if he believes that the reference to education in section 93 of the British North America Act applies to university education?


Jean-Paul Racine: Would you repeat your question; I did not quite understand it.


Maurice Allard: Does the hon. member for Beauce think that section 93 of the British North America Act, in its reference to education, also applies to university education?


Jean-Paul Racine: Mr. Speaker, I have repeatedly said during my speech that I agreed with the hon. member for Sherbrooke when he said that the province of Quebec should take whatever steps are required to come to an 66968-9-175J
The Budget-Mr. Allmark agreement with the federal government. My hon. friend knows, of course, that I am not a lawyer and that references to sections are matters that have given rise to much controversy.


Léonard-David Sweezey Tremblay: Oh, no. Oh, no.


Jean-Paul Racine: I think it is irresponsible to solicit my advice on those matters, for even leading jurists do not agree on their interpretation.
(Text):


Mr. B. G. Allmark (Kingston):: Mr. Speaker, may I add my congratulations to those already expressed to the Minister of Finance (Mr. Fleming) for his excellent presentation of the budget. May I also extend my congratulations to the hon. members who have preceded me in this budget debate for the contributions which they have made through their budget speeches.
In the presentation of the budget the minister has given the Canadian people a frank and honest appraisal of Canada's economic position, and a clear-cut explanation which Canadians have learned to expect from our capable and realistic Minister of Finance. Editorial comment regarding the budget has been interesting, and for the most part the opinions expressed showed satisfaction. There has been a general agreement that the minister's budget is one well suited to our present economic position. I am sure, Mr. Speaker, I speak for all Canadians when I say I am pleased to see indications which definitely point to recovery. The fact that there is less unemployment than a year ago and there are more Canadians employed in Canada than one year ago is extremely encouraging and proof of the wisdom of Conservative government policies.
The provision of money by this parliament in its first session made possible more than 163,000 housing starts in Canada in 1958. That is truly an amazing record and one which surpasses the previous record year of 1955 by about 25,000. The availability of this money for housing was a notable factor in creating employment in my own riding. In the riding of Kingston in 1951 the value of housing for which building permits were issued totalled slightly less than $1 minion; in 1957 this figure stood at slightly over $2 million; in 1958 in the city of Kingston this figure jumped to $4,725,000. That is concrete evidence of the value of the government's policy to provide money for the construction of homes.
Both labour and contractors in my riding have been doing an excellent job carrying on winter construction. However, I think that

The Budget-Mr. Allmark we Canadians have a great deal to learn about winter construction. Nevertheless it is apparent that never before has construction been carried on to the extent it has been carried on this winter. I think it is most important that we intensify the educational program which has already had excellent results but which if carried on in a thorough and extensive manner will result in a further expansion of construction during the winter months.
It has been quite remarkable to watch the construction of buildings at Queen's University during the past winter. There has been excellent co-operation by the university. As a result, our Kingston tradesmen and labourers have benefited through this season when normally employment would be at a low level. I think our own government departments which are responsible for construction should make it their policy to award contracts at a time of the year when it would permit the building to be at such a stage that construction could be carried on during the winter months under the most favourable conditions. It is useless for the Minister of Labour (Mr. Starr) to publicize the necessity for providing winter work unless, of course, our own government departments co-operate and set an example to the general public.
Mr. Speaker, since this is the first occasion on which I have spoken on a budget or throne speech to date, I trust that you will grant me the privilege of making some reference to the riding which I represent. I refer to the historical riding of Kingston, an area comprising the fast growing city of Kingston, the townships of Kingston, Storring-ton and Pittsburgh and the islands of Wolfe, Howe and Simcoe. I do not intend to trace the events in the long and historical existence of my riding, but I think I should mention the fact that the people I represent have displayed an exceptional quality of judgment down through the years. My electorate chose John A. Macdonald, then 29 years of age, as Kingston's member to the government of Canada, on October 15, 1844. This quality of good judgment has obviously remained with the people. This fact was proven last autumn when the Speaker of the House of Commons was chosen as the recipient of an honorary doctor's degree at the fall convocation at Queen's University. It was my privilege to attend this convocation; and may I say that I was extremely proud to witness our able Speaker being honoured by the university in my riding.
We who are the residents of this riding are proud of the part we have played in Canadian history but may I stress the fact that in these days of growth and expansion in Canada we are not living in the past. We

are not afraid-as are some on the other side of the house-that Canada is facing ruin. We believe we will share in the great and rapid expansion which will take place in Canada in the years ahead. We believe that Kingston will share in the prosperity which will result from the opening of the St. Lawrence seaway which will carry the ships of all nations half-way across this vast continent.
It is to be regretted, Mr. Speaker-and I have said this before in the house-that those responsible for the planning of the seaway did not have the foresight or the good judgment to use the Canadian channel in the western 25 miles of the St. Lawrence river. I think that the hon. members of the house should be aware of the fact that before the building of the seaway there were approximately 30 miles of the Kingston to Montreal section of the St. Lawrence in United States waters. The decision to put the Snell and Eisenhower locks on the United States side placed 20 miles in United States waters, and the decision to use the United States channel rather than the Canadian channel in the Kingston area-and this channel had been the shipping channel since shipping in the St. Lawrence began-placed another 25 miles in United States waters, so that now approximately 75 miles of this 168-mile stretch of river is completely on the United States side of the boundary.
Kingston is a thriving port, handling one million to one and one-half million tons of seaway cargo a year, I think it is interesting to note that with the proposed seaway tolls this represents $600,000 to $700,000 yearly. That is a substantial contribution toward the $28 million required annually to amortize the seaway over a 50-year period. It is difficult to understand why such a port was ignored by the Liberal government when for a small expenditure the channel could have been retained in Canadian waters.
On June 28 of this year the people of the Kingston area will welcome Her Majesty's yacht Britannia which will carry the Queen of Canada and His Royal Highness Prince Philip to the city of Kingston which was once the capital of Canada. We are distressed to realize that the Britannia will not follow that same Canadian channel taken by Baron Sydenham, governor of Canada, when he arrived in Kingston on May 28, 1841 to open the parliament of Canada. I hope that on this trip which the Queen makes across Canada there will be a minimum of ceremony and an opportunity for the royal couple to enjoy the scenic beauty and the many places of historic interest in our country. By our actions this year let us convince our Queen that she may enjoy in

Canada that leisure and rest which will make this trip an enjoyable vacation.
This junction of the St. Lawrence river and the lakes is also the terminal for both river and lake pilots. There appears to be the opinion that the crews of foreign-going ships are capable of piloting their ships through the restricted waters of our inland system. There is no one who will deny that foreign ships' officers are capable navigators, but this is a skill of little importance in lake and river shipping. It has been said that the safety of the seaway is paramount, and this also applies to our marine installations throughout the lakes, to our ships and to the lives of Canadian sailors. If we in Canada are to be assured of the degree of safety necessary then we must rely on the experience and ability of those men who have spent their lives learning the skill of ship handling and learning the hundreds of miles of river and restricted channels in our inland waters.
We have in my riding four of Canada's nine penitentiaries, one of these being the women's penitentiary. Kingston is also the location of a staff college for the training of penitentiary officers. I do not suggest that those of us who live near the penal institutions are therefore experts in the matter of penal reform; and I trust that the observations I am about to make will not be construed by the members of this house as being those of an authority. The Minister of Justice (Mr. Fulton) has within his department a correctional planning board which is at present studying the penal system in Canada. To this group may I suggest that the majority of female inmates come from the same fair province as does the minister. It is my observation that his province would be a much more suitable location for this institution. I suggest that this handsome limestone building now being used as a women's prison might well be converted into a modern inmates' hospital. The excellent Queen's University medical school is undoubtedly responsible for providing in Kingston hospital facilities comparable to the best on the continent. A new modern penitentiary hospital could enjoy the benefits which this medical school would provide.
May I also request the Minister of Justice to consider Kingston as the site for a new minimum security institution. There are many advantages in having prisons grouped in one area. Kingston, located as it is halfway between Toronto and Montreal, is ideally situated since it makes the visiting by the inmates' relatives easier and this visiting privilege, I understand, is an important factor in the rehabilitation of the inmate. If the
The Budget-Mr. Allmark Kingston area is fortunate in obtaining a new institution I would suggest that it be located a few miles to the north of the city rather than to the east or west, where in a few years it would be encircled by residential development.
The people of my riding have a fair knowledge of penal institutions. The officers for the most part are residents of our city and we appreciate the problems which exist in the operation of penitentiaries, and we are indeed pleased to have them located in our area. There is one point which is very apparent, and that is that the present Minister of Justice has had dumped in his lap a penal system totally inadequate to take care of the needs of a country of 17 million people. This is a direct result of the failure of the Liberal government to take those steps which are necessary to increase the accommodation in these institutions.
One of the scenic beauty spots of our country is that point of land at the junction of the great Cataraqui river and the St. Lawrence, where the royal military college is situated. Many of the members of this house had the opportunity to visit R.M.C. on army day last year, and I am convinced that they were impressed with the natural beauty of this location. On the very tip of this point of land is located Fort Frederick, a very beautiful and historic old fort which in recent years has been allowed, unfortunately, to fall into a bad state of disrepair. I would like at this time to express my appreciation of the very able and expert assistance of the Kingston historical society, which assisted me in bringing to the attention of the minister the condition of Fort Frederick. This fort is being repaired and will further enhance the appearance of these beautiful grounds. The decision of the Conservative government to do this work is to be commended.
I would like to remind the Minister of National Defence (Mr. Pearkes) that the removal of those houses with which I am sure he is acquainted located at the north of the playing field at R.M.C. would make possible the conversion of this particular area into a beauty spot in keeping with the remainder of the college grounds. There are thousands of United States tourists each year who view our Kingston military installations and the college as they pass along No. 2 highway. It is my opinion it is extremely important to Canada that these buildings and grounds be kept in a condition of which we, as Canadians, may be proud.
I am very pleased that the route of the Britannia will carry Her Majesty through the thousand islands on her holiday this summer. This is a magnificent sight and one which
2756	HOUSE OF
The Budget-Mr. Allmark should thrill our royal visitors. One of our great assets in the thousand islands are our national parks. Pleasure boats varying in size from the small outboard motorboats to the large palatial yachts pack the dock facilities provided by the Canadian government. Here too there has been an unfortunate lack of foresight in the national park area, with the result that today there are far too few docks to accommodate the vast number of boats in this area. Obviously we would not wish to prevent our United States visitors from using these national parks, so there appears only one solution. If Canadian boat owners are to enjoy their own Canadian islands we must build additional dock facilities. I can assure the Minister of Northern Affairs and National Resources (Mr. Hamilton) that the provision of additional docks in the parks of the thousand islands will make him a very popular person among the great number of boat owners.
Mr. Speaker, we have in my riding a very large and growing tourist industry. Not only in the city, but in the country to the north there are hundreds of beautiful lakes, and it is truly a fisherman's paradise. There is presently set up an international Kingston-Cape Vincent bridge committee which comprises six United States and six Canadian members. Its purpose is to promote the construction of an international bridge in this area to facilitate the crossing of the St. Lawrence and thereby further increasing the tourist business to this lakeland area. If this bridge is built it will be indeed a tremendous asset. I would like to point out the spirit of goodwill and co-operation which exists between the Canadian cities and towns in this area and those across the border in the United States. This is indicated by the ability of these neighbours to join together for the promotion of a project beneficial to both countries. May I commend here the members of this committee for their sincere effort and enthusiasm in this project.
I earlier made some modest reference to Kingston's place in history and to the fact that in 1844 Kingston was represented in the parliament of upper and lower Canada by John A. Macdonald. May I close, Mr. Speaker, by saying that Kingston riding has been denied for some years the privilege of having the name of Sir John A. Macdonald placed on the pages of Hansard by a Kingston member of the same political faith as the old chieftain. I do so today with humility and respect for that great statesman, whose leadership, wisdom and vision foresaw in this united dominion the land of opportunity we have today.


Mr. O. J. Godin (Nickel Belt):: The Budget-Mr. Godin like to quote a phrase from a speech made by Mr. Abbott, who was the minister of finance at that time, because it was quoted by the hon. member for Eglinton to indicate what the situation was. This was the statement by Mr. Abbott:
A further reduction in the levy on cigarettes seems desirable. It is clear that following the reduction made last year there was quite a definite increase in cigarette sales which from the point of the revenue collector is very encouraging.
Then the present Minister of Finance had this to say, and I hope hon. members will listen very carefully. These are his words as found at page 3411 of Hansard, the fourth volume, of 1953:
I speak as one who does not smoke and who is not personally affected by this present bill. But as a non-smoker I wish to say that I think the taxes on cigarettes and tobacco are still too high. I wish to say also that if we have a smuggling problem at the border today with respect to cigarettes it is largely the creation of this government by the boosting sky-high of excise taxes and other impositions on cigarettes, particularly the large advances in taxes that were made two years ago.
Where will the Canadian people find the reasons for smuggling today? What a contrast there is between the statements made by the present Minister of Finance when he was in the opposition and those he made in his recent budget speech concerning increased taxes.


Mr. Nesbitt:: The price of United States cigarettes is up.


John Whitney Pickersgill: What has that to do with our budget?


Donald Methuen Fleming: It has everything to do with it.


Osias.-J. Godin: Mr. Speaker, I cannot resist commenting that Conservatives are somewhat like buttons in that they keep popping off.
It occurs to me that the Postmaster General (Mr. Hamilton), who has just this moment entered the house, may be prepared to give consideration to the introduction of a special commemorative stamp this year. If this is so, possibly he will accept my suggestion and print a stamp commemorative of a 25-year period in Canadian history which is indeed memorable. Possibly one-half of the new stamp could bear the effigy of Lord Bennett and on the other half there could appear a weeping taxpayer.


Wallace Bickford (Wally) Nesbitt: Big joke.


Osias.-J. Godin: I doubt that the Postmaster General would be disposed to having printed a stamp commemorative of the tenth anniversary of Newfoundland and so I was inspired to offer this alternative suggestion. Perhaps many Canadians would appreciate the thought behind it. A stamp such as that I describe

would certainly commemorate a definite anniversary, one which would be understood by every Canadian, because Canadians feel at this time that we are marking the anniversary of the Bennett administration.
(Translation):
Mr. Speaker, I want to express myself in French in order to deal with a few matters for the benefit of my fellow citizens, i.e. hon. members from the province of Quebec. I believe it appropriate to speak on behalf of my fellow-citizens in northern Ontario with regard to the serious problems of higher education in this country, of federal-provincial relations and, lastly, of grants to universities.
I rise as the representative of a riding which has the youngest bilingual university in this country, i.e. the University of Sudbury, which, for several years, has had the opportunity of benefiting from federal grants put at the disposal of Canadian universities.
As an hon. member explained just now, I realize how easy it is to make political speeches about that problem and to repeat the words "autonomy" and "constitutional", but I think that the 50 hon. members or so from the province of Quebec who are sitting on the government benches would be well advised to take steps to come to some agreement with the federal government and the government of Quebec so that students from that province might enjoy the benefits of higher education which federal grants could provide and therefore be on the same footing as their fellow students elsewhere in this country.
I have no intention to refer to discussions regarding the constitutional point of view, but it seems reasonable to assume that the fathers of confederation, when wording the British North America Act, possibly did not imagine what higher technical education would cost in 1959.
In order to prove that allegation, I would like to quote remarks from professor Lower's volume From Colony to Nation. On page 343 of that book, professor Lower deals with the question of higher education in Canada in 1867 and he says:
(Text):
In higher education all the larger colleges and universities of eastern Canada had been founded with the exception of Western Ontario and McMaster. Some of these institutions, such as Queen's, already had several faculties. Both Queen's and Victoria had faculties of medicine and there was also a medical school in Toronto. Queen's had 18 professors and 180 students, Victoria had 200 students, Trinity seven professors, University College, Toronto, nine. Every institution in the

country, with the exception of Toronto and Dal-housie, was denominational and there was about them all as there was about every school, too, a strong religious flavour.
(Translation):
It is of interest, Mr. Speaker, to compare the situation which prevailed at that time to present day conditions.
On page 412 of the same volume, Professor Lower says further:
(Text):
The universities were still somewhat out of the main currents of Canadian life. As late as 1890 their staffs were mainly old-country men who regarded themselves as "exiles" in Canada; Canada's own able young men, under the weight of the older and stronger culture, were only slowly winning footholds in the higher education of their country. Students bodies were larger, but not much larger than they had been thirty years before: Universities were for the education of persons who took education seriously and expected to go into a profession; the great modern movement of mass 'education' had not begun.
(Translation):
Mr. Speaker, I think it is high time politicians realized that they should not undertake to settle by themselves the problem of education.
In the field of education, and in the light of recent developments, consideration should be given to the establishment of laboratories where atomic energy development could be taught. There is possibly no province in this country which would be wealthy enough to set up, on her own, a proper laboratory for the teaching of that science. Consequently, provincial governments should request federal help in that field.
As hon. members from Quebec belonging to the Conservative party are on good terms with the federal as well as with the Quebec government, they might lend their good offices so that some agreement might be reached which would permit acceptance of the grants under reasonable conditions, so that Quebec universities might benefit like those of other provinces.
Mr. Speaker, it should be understood that we cannot always hide under the cover of the constitution and of autonomy.
It is a recognized fact that the present premier of Quebec accepts grants from the federal government.
Last year, in answer to a question I was asking him, the Minister of Mines and Technical Surveys (Mr. Comtois) maintained that grants awarded in the geological field were accepted in the province of Quebec.
Mr. Speaker, if the province of Quebec accepts grants for certain purposes, in all 66968-9-176
The Budget-Mr. Godin logic she should accept them for any and all purposes for which the federal government offers them.
It goes without saying that I leave it to the authorities of the two governments concerned to find an adequate formula, whereby those grants might be distributed and accepted.
Mr. Speaker, I should like to read you parts of the brief submitted by the College Jean-de-Brebeuf, to the royal commission on constitutional problems. I quote from page 158:
Without claiming any competence in constitutional matters, we believe, however, that it is not necessary, in order to solve that serious problem, to redefine the basic powers of taxation. A somewhat different agreement, one that would safeguard basic provincial powers, seems to us possible and practicable.
And now, Mr. Speaker, it seems that members from the province of Quebec would like to settle the educational problem, by substituting themselves to educators and professors.
On page 160 of the same report we read the following:
So we should consider the possibility of entrusting the levy of personal income tax and perhaps even the corporation income tax, not only to the central government, acting both for itself and for the provinces, but to a joint administrative body which would become the representative of both the central state and the provinces.
Mr. Speaker, I do not claim that this is the only solution, but I do say that the views of Quebec educators do not coincide with those of politicians.
In this connection, and concerning specifically the federal-provincial relations, here is what I read in the May 1958 issue of Relations, a review which is highly regarded in the province of Quebec:
A new era in the federal-provincial relations?
In the March 31 election, the people gave to one party the greatest majority ever enjoyed by any Canadian government. The Conservatives now occupy the comfortable position held for more than 20 years by the Liberals: they are now the undisputed masters of federal policy.
A Conservative era therefore seems to have started in Canada. Among the many matters brought up by this event, there is one which we should like to point out: Will this era really bring something new in the field of federal-provincial relations, most particularly in the relations between Quebec and Ottawa?
Mr. Speaker, we have heard the promises made by the Conservatives in Quebec that they would change that situation. We have seen the government, without the 50-odd members from the province of Quebec knowing it, rubbing a little salt into the wound by doubling the grants to the universities, grants which are accepted only in the other provinces.

The Budget-Mr. Godin
And, Mr. Speaker, the article goes on to say:
As far as Quebec is specifically concerned, now that between its government and that of Ottawa the obstacle of partisan rivalry has been removed, it is imperative that as soon as possible and in line with a constructive federalism, settlement should be sought of the two most urgent problems from the standpoint of federal-provincial relations: federal grants to universities and hospital insurance. In both cases, the maintenance of the status quo would appear as the less defensible solution; it is the duty of both governments to try to remedy a situation which, left to itself, could only deteriorate.
Mr. Speaker, I think I have said enough on the subject to make the house understand it is time to find an adequate solution.
(Text):
I should like to say a few words, Mr. Speaker, on the matter of municipal and federal relations. This is of the greatest importance in my riding because it contains rather small and young municipalities located in rocky areas where construction of public services is most costly. When I spoke for the first time in the house last year I suggested that the government should think of the burden of taxation on the people living in mining areas brought about by the high cost of services in the municipalities. I suggested that the government should find a solution for the problem of double taxation whereby the ratepayer pays for all local services and also pays a second tax to the treasury in Ottawa on the money so spent.
Before the election the municipalities were promised a meeting with the federal government, a meeting at which they would find solutions to their local problems through federal channels. Later came the conversion loan which, as is known by all municipal officers, hurt their position very much by raising the rate of interest and creating many difficulties in the sale of their debentures. Taxation is high in the mining municipalities. The people employed in the mines must live nearby and they live in a rocky region where it is definitely more costly to build homes. I believe that the government should assist Canadians to realize their ambition to own their own homes. A system whereby money spent for municipal taxes would at least to some extent be exempt from federal taxation would be one way of equalizing the burden of home ownership in Canada. It is obvious to all that it is more costly in certain areas to have the services which Canadians are entitled to have under our standard of living and this type of tax exemption would certainly be beneficial.
What about the federal-municipal meeting which was promised during the election campaign? We know that it was held. We know very little more about it with the

exception of certain comments made in the press on what took place at the meeting. I have here an editorial which appeared in the Winnipeg Free Press of October 8, 1958. Commenting on the meeting held late last summer, it had this to say under the heading "No Taxes for Towns":
In the last election campaign Mr. Diefenbaker expressed great concern about the financial plight of the municipalities. He promised that, if reelected, he would call an "informal" federal-municipal conference. Out of this conference would come, he hoped, "alternate sources of revenue" for the municipalities. "We shall see to granting them a reasonable share of taxes so they will be able to meet the new needs arising from their rapid growth," he said.
It was with these glowing promises in mind that the municipal representatives trooped down to Ottawa. They could be forgiven for thinking that Mr. Diefenbaker, by some magic, would figure out a way to give them a larger share of federal tax revenues; or, at the very least, that the federal government would, through some kind of loans system, provide a greater measure of indirect financial help.
The Prime Minister lost no time in disillusioning them and in again demonstrating the vast difference between the pre-election and the postelection Mr. Diefenbaker. No longer was the federal government interested in seeing to it that the municipalities got a reasonable share of taxes.
The Canadian people, especially municipal officers, are fully aware today that not an iota of assistance has come from the federal government to the municipalities.
As I am just about ready to conclude, Mr. Speaker, I should like to remind the Minister of Finance that in preparing a budget, which is supposed to be a reflection of the administration of the affairs of the nation, he should at least indicate that he has a target at which to aim instead of shooting at random, and that is one fact which is most important in the budget. Everyone is hit a little bit, and in that way I suppose it becomes easier for the administration to use the word "minor", as has been done frequently by speakers on the government side, with reference to the tax increases. On behalf of my constituents I am most pleased to support the amendment presented by the hon. member for Kenora-Rainy River (Mr. Benidickson) indicating that the people of Canada have lost confidence in the conduct of the government as exposed in the budget, that the government has made promises and in no way-


Wallace Bickford (Wally) Nesbitt: Would the hon. member permit a question?


Osias.-J. Godin: Yes.


Wallace Bickford (Wally) Nesbitt: Would the hon. member tell
the house if he intends to support the C.C.F. amendment?


Mr. Habel:: You will know when the time comes.


Osias.-J. Godin: The question is irrelevant. May I suggest to the government member who has just spoken that possibly, in view of the budget just presented, the best manner for him to save face would be to keep the lower part shut. It is obvious-


An hon. Member:: Keep the lower part shut?


Osias.-J. Godin: As I said at the beginning of my remarks, it is possible that members of the government will not appreciate my remarks. However, if they have time to review some of the opinions I have expressed and the facts I have cited during the last half hour or so, I am quite sure that in their own minds, and in their own rooms, they will admit that only two years after this administration came into office the Canadian people are definitely worried about economic conditions in this country and about the faith they should have in the present administration.
Perhaps I appear to be speaking harshly and without consideration for the feelings of some hon. members, but I recall after the last election, at which time I was elected for the first time, I had occasion to read a news item. This will be most interesting to the hon. member who has just popped up. I had occasion to read a news item in the local Sudbury newspaper which, as everyone knows, is not unfriendly to the present administration. This article referred to the possible visit to Sudbury area of one Mr. Grosart, who was to investigate why the people had voted in the manner they had. This surprised me, so I checked to ascertain who he could be. I was told that he was a businessman, so I placed a certain question on the order paper. Just the other day I read in the same Sudbury Star a news item which was as follows:
Figures tabled for Nickel Belt M.P.
McKim Advertising Limited of Toronto received $2,211,708, from the federal government on contracts since June 1. 1957, the commons was informed Monday...
Directors of the company in 1957 included Al-lister Grosart, now national director of the Progressive Conservative party.
I admit, Mr. Speaker, that possibly this is one promise which had been made and which was kept.


Wallace Bickford (Wally) Nesbitt: How about Cockfield Brown?


Osias.-J. Godin: Perhaps before hon. members on the government side suffer a breakdown, I should close my remarks. I should like, first, to tell them of a remark I received from a lady constituent of mine. She had this to say: "God made everything out of nothing, but the Conservatives have made nothing out 66968-9-176J
The Budget-Mr. Payne of everything". I was hoping the hon. members may take credit for that, because they take credit for about everything that has been done by the Canadian parliament.
Mr. Pallet!: On a point of order, Mr. Speaker, I wonder if the hon. member would table the letter to which he has made reference? He has read from a letter.


Mr. Speaker:: If the hon. member quotes from a letter, the house is entitled to have it in its possession.


John Whitney Pickersgill: Without labouring the point, Mr. Speaker, may I say that I think there have been many occasions when this question has arisen on points of order, and that it is only official documents quoted by the government to which this rule applies.


Osias.-J. Godin: In any event, it is a very good definition.


Mr. Speaker:: Perhaps the hon. member would give me a moment to consider this matter. It appears that there may be some limitation of the rule to official documents, and I shall reserve judgment on the matter.


Osias.-J. Godin: Thank you, Mr. Speaker. No doubt members of the government would like to spend some time on matters which are irrelevant in order to divert the attention of the house from some of the important subjects which I have had occasion to mention in the last few minutes.
In conclusion, I am sure my people would wish me to state that they feel they can continue to assist in the expansion of Canada. We Liberals have faith, notwithstanding the fact that the administration has created many difficulties. As a member of this parliament I feel that the Canadian people have gone through worse times and they will get through these hard times in the same fashion. Nevertheless, since I am the elected representative of the Nickel Belt constituency I feel that I have a duty to advise the government about the shortcomings which my people have noticed. With that in mind, I feel that this government should think over their present policies in order to find a means of achieving, in part, the great expansion and prosperity which was enjoyed by the Canadian people for 23 years during a Liberal regime.


Mr. W. H. Payne (Coast-Capilano):: Mr. Speaker, I should like at this time to pass along very hearty congratulations to our able Minister of Finance (Mr. Fleming). I might say that one week has passed since the presentation of the budget, and unlike the hon. member for Nickel Belt (Mr. Godin) I can say that mail has been arriving. If I may hazard a chance, I should like to quote the two basic words which are in practically

The Budget-Mr. Payne every letter received. Those words are, "sensible", and "sound". Those are the two descriptive adjectives found in every single bit of correspondence that has reached me containing references to the budget presented by the Minister of Finance one week ago tonight.
In addition, there have been many references to the courageous stand taken by the Minister of Finance in relation to the refinancing plan. Facing as he did a formidable accumulation of maturing bonds he set forth a long range program which would permit Canada's economy to become stabilized over the next 12 or 15 years, so that progress on a proper business basis would again be possible. Following these remarks which are directly relevant to the presentation made by the Minister of Finance, I should like to ask your indulgence, sir, to refer more specifically to items relating to the economy of this nation. I should like, in doing so, to discuss at some length and in some detail matters relating to the great harbours of this natipn, and in particular to the great harbour of Vancouver.
In doing so, I wish first of all to stress and state again my full confidence in the basic policy of the administration of Canada's great deep sea ports, those entities which reflect so intimately the ebb and flow of the economy of this nation of ours. We being a great exporting country I should like to stress and state my faith in the basic administration under the concept of the national harbours board. In doing so I should like to pay particular respects to the chairman, Brigadier Archer, and the vicechairman, Mr. Rankin, for the tremendous work they have done and co-operation they have shown during this past year in the administration of one great harbour. I should further like to say congratulations and thanks, on behalf of the people of the whole of the lower mainland of British Columbia, to the Minister of Transport (Mr. Hees) for taking a new look at a problem which was sorely neglected for over 30 years. In doing so, may I say that I am sorry that the hon. member for Nickel Belt has left the house because I am sure he would be somewhat alarmed himself to realize some of the
activities which in the past have marred the history and the development of this great national asset.
In order that this discussion can go forward on a factual basis, Mr. Speaker, with the consent of the house I should like to submit statements for the year 1957 covering arrivals and departures, of vessels and net registered tonnage; one covering capital expenditures on ports; one covering cargo tonnage; a statement on maintenance and repairs plus a statement secured, in this case, from various ports throughout the world, as to the annual foreign cargo tonnages shipped. May I have leave to file these statements, Mr. Speaker?


Mr. Speaker:: Is the hon. member suggesting that this material be printed? Is that his request?


William Hector Payne: Yes, Mr. Speaker.


Some hon. Members:: Agreed.


Mr. Speaker:: What is the extent of the documents which the hon. member wishes to have incorporated in the record?


William Hector Payne: They are statements. They
are quite brief but they are statistical and I would not wish to take the time of the house in going over the details.


Mr. Speaker:: How many pages are there?


Mr. Benidickson:: Would the hon. member indicate the source of the material?


William Hector Payne: It is the 1957 statement of the national harbours board in one instance. In the case of foreign ports, it is from the port authorities of six foreign ports throughout the world.


Mr. Speaker:: Does the hon. member wish the leave of the house to have these tables incorporated in his speech at this place?


William Hector Payne: If I may have it, Mr. Speaker.


Mr. Speaker:: Has the hon. member leave to have the proposed statements incorporated in the record?


Some hon. Members:: Agreed.


William Hector Payne: The statements referred to are as follows:

Halifax .... Saint John . Chicoutimi Quebec ... Three Rivers Montreal .. Vancouver Churchill ..
Totals	
The Budget-Mr. Payne
National Harbours Board Arrivals and Departures-1957
Arrivals	Departures
	Net		Net
No. of	registered	No. of	registeredvessels	tonnage	vessels	tonnage2,938	6,650,659	2,929	6,635,3311,589	2,563,574	1,664	2,584,219206	200,349	206	200,3494,537	6,884,587	4,527	6,890,0203,226	2,243,346	3,222	2,239,6695,426	9,738,951	5,420	9,731,12631,433	21,169,505	30,997	21,147,71166	197,829	66	197,82949,421	49,658,800	49,031	49,626,254
National Harbours Board 1957
Cargo Tonnage
Foreign Domestic Total
Halifax	
5.373,631	1,610,681	6,984,312Saint John	..	2,106,326	562,537	2,668,863Chicoutimi	..	60,003	294,410	354,413Foreign	Domestic	TotalQuebec 	905,061	2,837,115	3,742,176Three Rivers	887,669	2,529,792	3,417,371Montreal 	8,722,262	7,138,522	15,860,784Vancouver ...	7,880,971	5,241,529	13,122,500Churchill ....	519,323	6,422	525,745Totals 	26,455,246	20,220,918	46,676,164
National Harbours Board Capital Expenditures
From
From	replacement	Fromborrowings	funds	revenues
o-	1CVCUUC3
Halifax	 $ 2,124,686	$191,670
Saint John	 394,667
Quebec	 1,998,106
Three Rivers	 227,526
Montreal	
11,578,032	110,870	624 040Churchill	
240,050	23,725Vancouver	
140,425	841	186Totals	
$16,703,492	$326,265	$1,465,226
Totals $ 3,316,356 394,667 1,998,106 227,526 12,312,942 263,775 981,611

From the 1957 Annual Report of the National Harbours Board
Maintenance and repairs	1957
Halifax	 $ 288,907
Saint John	 361,867
Chicoutimi	 9,853
Quebec	 840,746
Three Rivers	 29,085
Montreal	 1,446,019
Vancouver	 207,860
Churchill	 215,679
Total	 $3,400,016
Foreign Ports-From Information Supplied	by Various	Port Authorities	Harbour	Year	Vessels	Registered tonnage	Cargo tonnagesAustralia;	Sydney, Australia India:	1957-58	4,192	(gross)	17,305,596	8,056,991Calcutta South Africa:	1956-57	1,383	(gross)	8,562,955	8,869,210Capetown (Table Bay)	ending 31 March	(net)	15,605,867	5,383,0501957	5,796	United Kingdom:	Bristol	ending 31 March	(net)	5,313,902	6,509,7841958	8,769	ending 30 June	(net)	15,323,104	7,207,267Clyde Navigation Trust 1958	17,096	United States:	Port of Albany, N.Y.	1957	7,360,000Portland, Oregon	1957-58	1,008	1,277,067Seattle, Wash.	1958	1,733,689
The Budget-Mr. Payne


William Hector Payne: Mr. Speaker, these tables will bring into vivid focus the fact that the port of Vancouver, unknown largely throughout Canada, handles a foreign tonnage in excess of that of Bristol in the United Kingdom, Capetown in South Africa and the Clyde navigation trust in the United Kingdom. I feel that it is right that hon. members of this house should be advised of these rather important facts. I would also further state that only fractional, under the total foreign tonnages is the total of Vancouver compared with that of the great world ports of Sydney, Australia, Calcutta and the port of Montreal.
I would further state that in this connection I wish to draw direct reference to certain specific suggestions. I would point to the arrivals in the year 1957. The total for the national harbours board was 49,421. The ships and vessels arriving at the port of Vancouver totalled 31,433, or 60 per cent of those arriving in our national harbours board ports in Canada. I would further like to point out that of the total of national harbours board recorded departures of vessels, namely 49,031 ships, 30,997 sailed from the port of Vancouver or over 60 per cent of the total in this dominion. The registered tonnages arriving and departing from the port represent 40 per cent of the total registered tonnages in this dominion. As to cargo, 29 per cent of all the cargo tonnages in and out of national harbours board ports passed or under the first Lions Gate bridge at the First Narrows in the port of Vancouver.
Set against this record and in tragic reference to the administrations of the past, in many instances the administration of the national harbours board was not left at the discretion of the board but was handled through the discretionary powers of the former minister of transport who unfortunately is not with us at this time. Despite this, in 1957, following the pattern through the years of Liberal administration, 6 per cent of the total amount spent by the national harbours board on maintenance of ports was spent on the port of Vancouver. I would point out that this 6 per cent represents no charges for ice-breaking. It represents no capital cost relative to the construction of seaways. In saying that, Mr. Speaker, I wish to stress that the people of British Columbia do not in any way criticize any capital development anywhere in Canada. We endorse it; we wish it well. We just ask that in the future-and indeed I am sure that this will be the case-the tragic pattern which has led to the distressing conditions in this great port of the world will not continue as it did under the former administration.

I should also like to draw your attention, Mr. Speaker, to the fact that on capital account spending, following a pattern established again under the former administration and followed for many years, 5 per cent of the total spending for capital development went into the port of Vancouver in 1957. That pattern was a tragic one that can be traced throughout our history during the years of Liberal administration. Again we say in respect of the administration and the difficulties experienced in this great port, that it was indeed Canada's Cinderella port. As far as the former minister of transport was concerned, it was hidden 3,000 miles from Ottawa and across the Rocky mountains. That was the measure of concern that was given to this industrial and commercial facility which provides Canada with berthing for 60 per cent of all the vessels arriving at and departing from national harbours board administered ports in this nation.
I have already stated that the port of Vancouver makes no call on the government to provide ice-breaking facilities. In addition, along with the ports on the east and west coasts, it provides berthing and harbour facilities for vessels 12 months of the year, providing stability to commerce throughout the full 12-month period and does not curtail the movement or in any way impede the matters of trade and commerce at any period of the year.
Basically in the port of Vancouver our largest movements are of grain, livestock, coal, chemicals and oil, in addition to British Columbia's own world outstanding export of lumber, finished and in logs.
We have over the past years, as indicated by the figures and the comparisons I have given, suffered acute congestion in the harbour, which I point out definitely most directly affects the ability of that port to service the needs of Canada's industries. The speed with which a ship may arrive in port, discharge its cargo and again depart with a load aboard, the turnaround, indicates the basic cost factor with which that port is able to handle its input of tonnages. If a port becomes stagnant by virtue of delays then there is an increased cost factor involved, it ceases to serve the needs of this exporting nation; and it matters not how well your other freight carriers may discharge their responsibilities and carry their loads, you cannot meet the needs of commerce.
I would point out in considering the Vancouver situation that in 1957 from a maintenance cost $207,860 was spent in the port of Vancouver, $8,000 less than was spent in the port of Churchill, to handle 132 inbound and outbound vessels as compared with the figure given earlier of 31,433. I think these figures

point out the tragic need and necessity which faced the Minister of Transport on taking office and reviewing the general conditions and situation surrounding this great natural facility. And what was found? I would like some of the former administration to listen to this.
Here is a port surrounded by mountains, limited in its foreshore development upon the recovery of gravel from the floor of the harbour to construct headlands. And what have they done? For years the favoured few garnered permits for the recovery and removal of gravel for 10 cents a cubic yard to sell to the commercial market at fantastic profits. And this, tragically enough, they did.
Perhaps that accounts for the quotation I would like to read from Bruce Hutchison's "The Fraser", which I would point out was printed and published in 1950. I am sure, Mr. Speaker, that you and hon. members do not recognize Bruce Hutchison as an outstanding Tory propagandist. On page 197 of "The Fraser", for all to read, is this tragic statement:
In the shelter of this mushroom aristocracy, and usually with the aid of its campaign funds, Vancouver has produced some of the worst politics in Canada. The famous machine that has dominated public life almost without interruption for more than thirty years, has appointed its princelings to Senate and bench, has won elections with more money than prayers and always found that investment profitable, is about as efficient and ruthless as any in the nation. Governments, in both Victoria and Ottawa, have often tried to shake it but they have never succeeded, for it can deliver the votes.
But in 1957, and again last March, that machine could not deliver the votes, and it has been one of the jobs of the Minister of Transport to bring into focus and bring into function a proper policy so that in future these valuable assets of fill which can be recovered from the harbour bed and laid on the foreshore to guarantee that the development of this great harbours future could go forward. That policy, as I said last spring to my constituents, the minister has endorsed.
At this time I wish to give notice to the Minister of Transport, who unfortunately is not here, that some commitments had been made prior to the institution of this policy and certain permits are still running which will terminate this spring. I believe one has been renewed for a period of two years. I do not wish to be unreasonable, nor do I think my constituents would wish me to be unreasonable, but I will assure you that I will be a watch dog to see that when it terminates in two years no more raids on this great asset shall be undertaken.
The port of Vancouver, definitely reflecting this unimaginative program with the years of withholding the necessary funds for proper maintenance of the harbour has brought
The Budget-Mr. Payne into focus today the urgent need for certain development and planning. Proper utilization in the future is a responsibility which we owe the generations which are yet unborn and the future needs of the harbour and the tonnages that the port will have to discharge. I feel that we should embark upon a very broad study to assure its proper utilization and development, and if necessary search the world for the outstanding engineers and consultants necessary to lay forth these plans. These, I would point out again, should be given authority, and the harbour authority should be extended so that proper negotiations can be conducted between the city of Vancouver, the city of North Vancouver and the other four municipalities which surround Burrard inlet. Because without this it is impossible to bring into being plans for imaginative development programs, which our port needs if it is to survive and service this nation's and the west coast's needs. This authority must also call upon the department of Indian affairs, which I should mention holds very valuable strategic properties lying along the foreshore. It is important not only to Vancouver and the commercial needs of western Canada; it is also a requirement as far as the Indians are concerned. It will give them an agency through which these lands could be recovered, put to the best possible use, bringing to them as a result the highest potential returns.
Very urgently needed today, particularly on the main waterfront of Vancouver itself, is a high level approach road. Through topsyturvy development in the past, no proper road access exists in many areas, be it for the movement of freight or be it for fire protection on the waterfront. This capital spending would amount to millions, but if our port is not going to be strangled it must be included in future plans and at an early date.
I would like through you, Mr. Speaker, to advise this house that the Vancouver Wharves Limited have during these past ten days or two weeks announced the construction, on the north shore of Burrard inlet a new facility which will provide the basic deepsea wharfage need which I mentioned in the throne speech debate at the last session was so urgently required. This will provide the newly developed Pacific Great Eastern railway with the outlet to the ocean so badly needed. We are pleased to see this program going forward, and I trust that the minister and the national harbours board will see that no impediments are placed in the way of this development so that this essential program may proceed. Also, since last speaking to the house, Pacific Coast Bulk Terminals Limited have developed on the south shore a bulk loading facility so that in future,
27G6

The Budget-Mr. Payne I believe as of June this year, bulk tonnages and cargoes of coal, sulphur, chemicals and products of mines can be shipped from the port of Vancouver and will no longer require movement across the border and shipment from the port of Seattle.
One difficulty which today has caused more concern than any other-and this certainly was not only engendered but fostered by the former administration-has to do with the terminal railway facilities around the harbour. I must point out that at this time this great port which is today moving tonnages 15 times in excess of those handled by the port of Portland, Oregon, has no central terminal rail facilities. Instead, we have a complex and confused arrangement of railway switching charges under which, for instance, a C.N.R. box car delivered to a C.F.R. port for trackage outlet may be delayed for eight days and, in the process, have to pay exorbitant charges based on tonnage. Linking the north shore with the south shore we have the Second Narrows bridge; the old bridge, not the new highway traffic bridge which was the subject of tragic attention in this house last year. The old Second Narrows bridge was also the focus of attention in this house when a private bill was discussed. At that time I endeavoured to point out how essential a part the old Second Narrows bridge would play in a proper harbour authority terminal rail facility. Today I should like to call on the Minister of Transport to give serious and urgent consideration to bringing into being an adequate harbours board terminal railway facility based on the pattern existing in the port of Montreal so that this ridiculous and artificial obstruction to the movement of our trade and commerce may end forever.
These are but a few of the problems which face the harbour. We have seen over the years, in every city in all nations where harbours develop, that bridges become an essential part of the necessary facilities. I must confess that it is with special satisfaction that I find that bridges owned and operated by the national harbours board, or bridges which are being built and which are to be owned or operated by the board, exist today. I will name two-the Jacques Cartier bridge, with a capital cost of over $20,080,000, to be operated under a toll authority by the national harbours board, and the Champlain bridge with approximately $32 million of capital cost. I trust that this may be considered a new policy on the part of the government, for I am sure that the people of Halifax will join with those of us on the lower mainland of British Columbia in urging the need for assistance in particular areas where bridges are required over navigable

waters and in making the plea that the national harbours board or some other national body or administrative entity should be able to assist in relieving communities of the inordinately high cost which they must inevitably face in building bridges high enough to span navigable waters and at the same time, provide for the free movement of ships.
There is another situation which I think calls for immediate attention and inclusion in planning if the outlet to the world of commerce of which I have been speaking is to operate with any degree of efficiency. And in saying this I should like to point out that over 60 per cent of the world's population live today within 183 miles of the Pacific shore coast.
This final suggestion has to do with the port of Squamish, served, as it is, by the Pacific Great Eastern railroad from the north. This port is capable of providing good possibilities for the development of useful additional deep sea wharfage facilities in an area with which the port of Vancouver is closely connected and I submit that it would be tragic for this new port and tragic for the future both of the port of Squamish and of the port of Vancouver if any development undertaken were not to go forward on a complementary basis. I suggest that this port should be included as a satellite, or as an integral part of the administration of the port of Vancouver itself.
With these remarks I now leave the subject of the harbour for a moment, though not entirely because I wish to refer again to my initial statement and that is to the great and profound faith I put in the theory of administration by the national harbours board. I must state, however, that the activities which have already gone on and the developments which have taken place, the facts and figures of the past and the activities within the port of Vancouver, bring into focus one thing which I think the house today should consider carefully. This is the fact that management authorities within each port and unit are on a highly powerful and personal level. It must of necessity be that way. I think we should take a second look at the personnel who are engaged in administrative areas such as this, especially at those who have in the past, as the record proves, so completely failed to justify the faith placed in them in the discharge of their responsibilities to this nation. How in the world can we have faith in their ability, judgment and vision with regard the future planning which must go forward in order to provide for the facilities and needs of the future?
Mr. Speaker, I thank you again for this opportunity to present to the house a case which is as vital as this one is to the people

of the lower mainland. I trust we may see no continuance in the future of the tragic policies of the past. I am sure we shall not see this with respect to the port of Vancouver.


Mr. G. R. McWilliam (Norlhumberland-Miramichi):: In rising to take part in this debate, I extend appreciation to the Minister of Finance (Mr. Fleming) for the work he must have put into the preparation of the budget. I judge that the time and effort which must go into the preparation of this most formidable document, irrespective of how the budget may be received, is considerable, and I think the minister and his officials should be shown appreciation for their discharge of this task. Another step has been taken along the fiscal road of the nation's business by the presentation of this year's budget. It is now part of the permanent history of Canada. It will, very likely, be the basis of discussion on many future occasions, if only for the purpose of comparison in election campaigns yet to come. Time will tell. It is now the subject to the forefront at this present time.
This debate is following the pattern of other budget debates. Party spokesmen add up the items, make calculations and come up with totals that are widely different. Some leave out relevant items and others include them which leads me to believe that an old saying is no longer true. That saying is, "Liars can figure, but figures do not lie." The arguments pro and con presented thus far in this debate, like those presented in other budget debates, suggest on the one hand that the government has presented a splendid budget, while on the other hand suggest that this budget will be detrimental to the country.
The government spokesmen contend that we are in a period of economic recovery, that there is a marked improvement in the trend of employment and earnings; an improvement in the volume of retail sales; that corporate profits have increased; and that there is no present evidence of overinflation. Opposition spokesmen contend that the budget has taken back from the public $2 for every $1 given in the previous budget, that the percentages of increase announced by the government on certain goods will be further increased by producers' costs which will result in a further increase in the cost of living, and that the total tax for the year will be $640 million and not $245 million, as announced in the budget. Opposition spokesmen will claim that living standards have declined in the past year, that there was a reduction in real earnings
The Budget-Mr. McWilliam and that the true deficit figure is $835 million and not $617 million, as announced in the budget.
As government and opposition members take part in this debate comparisons will go on and on. Many speakers present a story on the budget items which they have derived from research and which they feel gives a true picture. However, in many cases with the human element being in the forefront guiding the thoughts along certain channels, factors that are pleasant predominate while factors that do not suit the taste are dropped.
I am of the opinion that most hon. members of this house are far from being experts on government financing. I am one of those. This being the case, I do not intend to dwell upon the financial aspects of the budget except for a few comments. Everyone understands what taxes are and what increased taxes, hidden or otherwise, mean to us as individuals in our everyday lives. We know that if taxes are increased we must increase our personal income to provide and maintain our present standard of living. People do not like to cut back their standard of living, especially in peacetime, and therefore will look for opportunities to increase their income when the cost of living rises. As these costs increase they look for matching increases in family revenue.
It sounds very patriotic to say that Canadians must work harder and produce more to keep their economy buoyant. Canadians generally speaking are prepared to work harder to improve the economy of the country, to provide for their families a good standard of living, to work toward the accumulation of holdings that will provide security in the future, to provide education for their children and to assist their children in getting established.
I wish I could share the optimism of those who state that the Atlantic provinces are on the doorstep of economic and industrial expansion. The only apparent industrial expansion in that area is in the city of Saint John, New Brunswick. The other areas of those provinces are in the main very depressed. The Newfoundland cod fishing industry is in dire straits. The maritime lumber industry both in terms of export and import is labouring under the hardship of falling prices and decreasing markets. The maritime coal industry is in a most precarious state and income from maritime farming is away below the Canadian average. Many sectors of our base metal industry have closed down.
Immediate action toward the improvement of trade policies is vital and essential. Major government projects that will provide lasting

The Budget-Mr. McWilliam benefits must be undertaken. The government must provide the opportunity to increase trade and seek by other means to keep alive the very lifeline of the provinces on the Atlantic coast and thus pave the way for an improved economy.
Shortly after confederation the maritimes fell out of step with Upper Canada. The great contribution they made went to the benefit of Upper Canada and in later years to western Canada. The maritimes received little in return. The wider benefits that are the inherent right of the maritime and Atlantic provinces never became a reality.
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 8 p.m.
George Roy McWilliam: Mr. Speaker, when we adjourned for the dinner recess at six o'clock I was commencing to make some remarks with regard to confederation and how it affected the maritime provinces. I said that shortly after confederation the maritimes fell out of step with Upper Canada and that the great contributions that were made by the people of the maritimes at that time and in the years following confederation went chiefly to the benefit of Upper Canada and in later years to western Canada. The sacrifices made by our forefathers in the maritimes did not bring about the good results held out by confederation. The visions held out which brought about union and prompted great sacrifices and toil by our forefathers in the maritimes were not realized.
In a great many respects the maritime provinces today, on a comparative basis with the rest of Canada, are in a much less favourable position than they were in the period prior to and immediately following confederation. I feel that the maritimes paid the price of union and their inherent rights were not recognized down through the years. Throughout the years many of our maritime leaders have promoted the view that the maritimes should break away from confederation. I do not think this is a solution and I certainly do not hold this view. There are no better Canadians, than the people who live in the maritime provinces.


Mr. Drysdale:: British Columbia.


George Roy McWilliam: I will include other parts of Canada. Maritimers wish to remain full-fledged Canadians, these descendants of the Scots, the French, the Irish and the English

who are proud to call themselves Canadian. In my opinion the solution lies in the proper recognition by the federal government, proper recognition as of right as the first step and as subsequent action is necessary to bring about the balanced economy which we believe is so necessary for the provinces by the Atlantic ocean.
I am sure that Atlantic province members of both parties share these views and desires and in their own respective and limited ways they are trying to bring this about. The onus is upon the federal cabinet members from these four provinces. Theirs is the task to convince their cabinet colleagues that action must be taken. Their provincial differences, if any exist, must be resolved and they must present a united front before their cabinet colleagues, a united Atlantic provinces front.
The federal cabinet ministers from the maritimes, and I say this sincerely, are doing a good job as heads of the departments of veterans affairs, fisheries and national revenue, and we in the maritimes think it is unfortunate that one of them is not Minister of Trade and Commerce. As the chief spokesmen for the Atlantic provinces they have a most important job to do, the task of bringing a balanced economy to the provinces they represent. In their efforts toward this end they will receive the support of all Atlantic coast members and the support of all groups and people in the area.
Many and varied suggestions to improve conditions are a matter of record. The Atlantic provinces economic council, is working toward this end. Other groups have presented views and are anxious to assist in the field work. Bold and imaginative action is required. Efforts of the type made in varying degrees in the past will not be sufficient in my opinion. A better, a wider, a more comprehensive over-all plan is needed. A more practical and realistic plan must be put in action. This is the appeal I make particularly to the Atlantic provinces cabinet ministers.
While it is realized that all parts of Canada cannot be on an absolute par, nevertheless no part of this great country should be lagging behind the average level to the extent that the Atlantic provinces are. It has been said often that the greatest export of the maritimes is brains. Lack of opportunity has been the reason why our better educated and highly skilled young people leave the provinces of their birth. Opportunities are vital to keep them at home where they can make great contributions to their respective provinces.

Because the area in square miles is much smaller than other provinces and because the population figures are lower should not work to their disadvantage when consideration is being given at the federal level toward improving the economy of the Atlantic provinces. Because we have only three Atlantic provinces ministers as heads of departments of government and one minister without portfolio should not weaken our case at the federal cabinet level.
There are only three Liberals from the maritimes, all from the neighbouring constituencies of Gloucester, Northumberland-Miramichi and Kent on the east coast of New Brunswick. They have been referred to as the three members from the Gaza strip. There are five Liberal members from Newfoundland who I am sure join with all the Conservative members from the Atlantic provinces in the hope that a program involving a planned economy will be undertaken to improve the conditions which I have outlined generally in my speech.
Budgets will come and budgets will go. Budgets will be drafted by the department's financial experts and the minister of finance of the government of the day. Taxes may be increased or may be decreased, all of which has a bearing on the country at the particular time. But what is more important at this time, more important than the present budget, to the people of the Atlantic provinces is an uplift in our economy, the providing of additional opportunities for our people to make the uplift a reality and provide security for the future of these people, descendants of the pioneers of our nation who have a deep sense of loyalty and responsibility and who are still prepared to make sacrifices to build a bigger and better Canada. They only ask for the opportunity to keep on making contributions to our Canadian way of life on an equal basis with the Canadian average. I trust, Mr. Speaker, that any efforts that are made will be crowned with success and the inherent rights under consideration will at last be ours.


Mr. Heward Graffiey (Brome-Missisquoi):: Mr. Speaker, it is a great privilege for me to have the opportunity to address myself to the current budget debate. It is a debate in relation to a budget which in its forthrightness asks sacrifices from those who can sacrifice. It is a budget which considers those people who must be considered under present economic and social conditions.
During the past elections many Canadians supported the present government because our party told the people of Canada that they would bring government back to the people and the people back to the government, to
The Budget-Mr. Grafftey the House of Commons, where it ought to be. I feel sure that this is borne out by the fact the Canadian people today are taking a greater interest than they ever have in exactly what is happening in this House of Commons, and by the fact that the budget now under discussion has kept faith with the people.
I noticed that at the start of this budget debate the hon. member for Burnaby-Coquit-lam (Mr. Regier) referred to the fact that the Minister of Finance (Mr. Fleming) told the Canadian people there was no reason to have fear. Then he read into this statement all kinds of ulterior motives. I say the very reason that the Minister of Finance made such a statement was because of the doom, gloom and pessimism which has been preached by opposition members. I have attended this debate quite regularly since it began and I have heard one opposition member after another criticize the high expenditures. However, I have not heard one suggestion as to what expenditures they would cut. Would they cut the increased old age pensions? Would they cut the increased hospital insurance? All these measures have resulted in increased expenditures. Not one suggestion have they offered to the Canadian House of Commons during this debate with regard to the cutting of expenditures.
I have not been surprised. This opposition is what I call a Hamlet opposition, "To be or not to be". They have a very uncanny knack of falling on both sides of every question that is brought to the floor of this house. You know, sir, they did almost the impossible. I think I witnessed the impossible being done by the Liberal party on the floor of this house recently. It was almost as rare as a triple play in baseball. During the Newfoundland debate they actually fell on three sides of the question.
During the budget debate this morning I noticed that the hon. member for Port Arthur (Mr. Fisher) mentioned the unions. He was talking about labour unions in relation to their international affiliations. When he mentioned unions I could not help but think of a remark he made during the closing days of the last session. I shall show you why I feel the remark he made had something to do with unions. He said that the C.C.F. party would go to the next election with increased money muscles. I asked myself exactly how they would get bigger money muscles for the next election. I think, Mr. Speaker, I have the answer. Oh, I know they are going to say that once these things come about there will be freedom at the local level of the unions. I have heard that argument before. I will tell the C.C.F. how they think

The Budget-Mr. Grafftey -they will not-they are going to get increased money muscles for the next election. The only way they could do it would be by deductions from the pockets of workingmen and women who never have and never will support the C.C.F. socialist movement in this country.


Mr. Howard:: Your cheer leaders are at the hockey game.


William Heward Grafftey: The hon. member for Port Arthur mentioned they might be there tonight, but I cannot see him in the house, either.
We, as Canadians, can be rightfully proud of one thing and that is since the days of confederation we have encouraged and nurtured a classless society founded on the truest type of democratic principles. I know how hard this is for my friends away yonder in the C.C.F. to appreciate. They would not like this, I know, because one only had to listen to their leader on budget night to realize that that party has its own little divide and rule game to play. I can tell the hon. member for Assiniboia (Mr. Argue) that the Canadian people will never tolerate or be drawn into this type of bitter "chip on the shoulder" warfare.
I realize that tradition designates a fair latitude of discussion on both the budget debate and the throne speech debate. It is for this reason that this evening I should like to relate to the House of Commons some of the impressions and some of the observations I made recently as an observer of the last session of the United Nations general assembly. I can assure you that I have been duly warned about the dangers and pitfalls which face a freshman member of parliament who plunges into the intricacies of foreign affairs. I can equally assure you and the house, sir, that 1 do not intend to go into any farflung interpretation of international conditions. I was merely an observer, and I merely have observations to offer.


Hazen Robert Argue: Is this your bid for a cabinet post?
(Translation):


William Heward Grafftey: Mr. Speaker, I want to take this opportunity to offer my deepest and most sincere condolences to the family of our late secretary of state for external affairs, the Hon. Sidney Smith. As a young man, I had the great honour and privilege of serving under his guidance at the United Nations. Again, Mr. Speaker, I offer my sincere condolences to his family, and I bow to his memory.
(Text):
Basically, the United Nations is performing a pretty straightforward function, but perhaps we all have a tendency to look upon it as a bit of a mystery, even though we have


a general appreciation of how it works and even though something is usually written about it each day in our newspapers. The United Nations today is performing a role and functions which were not clearly visualized during the early days of San Francisco. Like so many people in Canada, and in this House of Commons, I have read a great many reports emanating from the United Nations during the postwar years. I had a general appreciation of how the various councils and agencies were set up, but never did I feel that I had a real insight into the basic meaning of this world organization. As one columnist put it to me, "The world today needs a meeting place and this is it."
I readily admit that seven weeks is too short a time in which to gain a complete insight into many of the complex problems which face the security council and the general assembly but it is not necessarily too short a time in which to realize that situated within this building on the East river are to be found ideals and principles which just must work in the world of today. Inevitably [DOT]-and I say, sir, unfortunately-the political aspect of the United Nations gets most of the publicity.
I think most of us here today realize that when something goes wrong in the world it is bound to end up in the security council or the general assembly. Much public criticism is often levelled in the direction of the United Nations because, after endless talk, charges and countercharges, often no solutions are reached and resolutions passed are often flagrantly violated by member countries. Yet I suggest that in the United Nations we are dealing with problems which are as old as man, problems which the United Nations itself did not create but which are aired and dealt with by nations and men with all their faults, both good and bad. As man does not always live up to the principles of his religion, so nations and men do not always live up to the principles of the United Nations and its charter. But this does not mean that we should destroy the institution which, as I have said before, is so often merely a mirror for nations, men and their collective behaviour.
(Translation):
It is often said that not enough attention is paid to the hard day to day work of the United Nations. The work they accomplish for children, refugees and underdeveloped countries of the world is so important. Such agencies as the World Health Organization work without letup. Let us look for a moment at one example of international cooperation: how a letter or a parcel can be delivered, in a very short time, to any corner of the world? You address your letter,

put a stamp on it, mail it in your own town and often, after quite a lot of handling, it rapidly gets to destination. This is not done by some miracle, but because of a continuous international co-operation.
(Text):
Mr. Speaker, in relation to the United Nations I have yet another brief observation to make and it is this. I felt that many of the member countries wished to remain uncommitted to either the east or the west. It is so important that we attempt to capture their imagination by good example. At the same time I feel that too much public emphasis should not be placed on a struggle to line these countries up with the western camp, as so many of the middle powers have their own destinies to follow. When parents sometimes separate and quarrel in public over the custody of their children, frequently the latter back away and seek their own home and way of life. When I say that we should capture their imagination by good example, and while the historical doctrine of the two swords separates church from state, we in the west should never be too shy to tell the communist countries in clear and emphatic terms that our political, social and economic orders are founded on eternal religious principles. For this reason it seems so extremely important that we do not limit our debate with the communist bloc to the economic level, even while the so-called cold war has taken on characteristics of an economic nature.
It seemed that the citizens of many of the member countries at the United Nations had seen tyranny at first hand. They deeply feel and deeply believe in the principles and ideals embodied in this institution. For this very reason I think it is extremely important that we as Canadians, living in a most privileged land, never look upon this international institution merely as an intellectual proposition; for before too long I personally sense that the authority of the general assembly and the security council will have real teeth in it. While I dwelt on this thought my mind wandered back to the early days of parliamentary history, and I wondered exactly what Westminster looked like at that time. Then I realized that, while the United Nations oftentimes passed resolution after resolution which were often openly and flagrantly violated by member countries, they perhaps here were evolving procedural customs and practices which ultimately would form the basis of a new type of body.
I listened with great interest to the fine speech delivered in this house yesterday by the hon. member for Dufferin-Simcoe (Mr. Rowe). After listening to his speech I realized that, in a realistic fashion, we might
The Budget-Mr. Grafftey be obliged to avoid calling it a world government; undoubtedly, we shall be obliged to avoid calling it a world government. But nevertheless, I feel that in the not too distant future the security council and the general assembly will have greater teeth in it. Admittedly the present voting and veto system leave much to be desired. But this state of affairs is not necessarily permanent, and no doubt patience and future demands will dictate change.
Another lasting impression that I took home with me relates to the secretary general himself. One could not help but be impressed by the energy, the integrity and the vigour of this great man. I think all hon. members of the Canadian House of Commons were more than interested to note that he acted for and on behalf of the United Nations in the Middle East dispute. One might easily say that the secretary general acted as a negotiating force. I can only add that as long as men of the integrity and the character of Mr. Hammarskjold occupy this high position of public service, it should prove to be a most interesting and useful experiment.
Mr. Speaker, Canadians should be rightfully proud of the part being placed by Canada at the United Nations. It has often been said that under modern conditions the middle and the smaller powers have a role of definite importance to play. As has been said so often both inside and outside of this house by myself and many other hon. members, Canada herself is in a unique position, often interpreting the old world to the new and the new world to the old. This should never mean, though, that we do not have our own well-defined stand on any major issue. Yet, when the major powers become deadlocked, it is often the smaller and the middle powers which come up with a solution. I am sure that the Leader of the Opposition (Mr. Pearson) is aware of these circumstances. As one Swedish correspondent said to me down in New York, "Small countries do not necessarily mean small ideas". As the head of the British delegation mentioned to some of the younger observers from the Canadian delegation down in New York, after our late secretary of state for external affairs had made his intervention in the political committee on the disarmament debate, "That was a fine speech by your secretary of state for external affairs; he said so many things that are better said by you than by us".
Circumstances offer us a peacemaking role which is often denied the larger powers, and while they gain much of the publicity at the United Nations, no country remains unaffected by world events nor can remain aloof

The Budget-Mr. Grafftey from the current interplay of international politics. I repeat, that the very forces which cemented and created Canadian confederation can help us play a most significant role today on the international stage. I am sure that hon. members in all parties will agree when I ask, what other country has had our extremely interesting history of dominion-provincial relations? I am certainly sure that all members of all parties will agree that dominion-provincial conferences have been and continue to be conferences which must be approached with a high degree of understanding compromise. I repeat that these qualities well equip Canada to play her role on the international scene.
With this in mind, we should always realize that compromise should never be overstressed under present conditions. I think all of us here today would readily admit that what I refer to as the compromise spirit has many beneficial characteristics; but it also has characteristics of which I, in all sincerity, feel we should be aware. Admittedly, all confederate powers must approach their legislative functions with a spirit of compromise, and Canada is no exception to this rule. But in my opinion Canada has other distinct historical and current characteristics which add to what I call this compromise spirit.
Second, there is the above-mentioned go-between function on the international level; and third-I know I will be accused of having a partisan spirit when I say this- there was the long period of 22 years of Liberal rule where pragmatic compromise often keynoted the activities of a party which had long since abandoned its principles. So often it seemed to me that the architects of dullness misjudged the temper of our nation and its ability to absorb direction in its leadership. To know our strength is to know our history.
I make these remarks about compromise because it is so terribly important under present international conditions that Canada, on the international scene, does not take on a cool, aloof look of spiritless self-satisfaction. But I feel that under the present administration this can never happen. I have often said in the house, and I say it again here tonight, that under the present government the new spirit of Pan-Canadianism has united this country as it has never been united before. I say that this feeling of strength gives us a more united and strong look on the international scene, thus always assuring our allies exactly where we stand.
Sir, on my last day at the United Nations it was not very difficult to return home to Canada with a feeling of real and deep faith in this important world body. As I passed

along the corridors outside the general assembly hall I passed by men and women who had dedicated a great part of their lives to the important work of this body, men and women who realize that, in this short period of history, man is faced with a task which must be lived up to, which must be challenged. I returned home to a country which is a comparatively young country; a young member of the family of nations living together on the banks of the East river. Yet to me it seems to be a most welcome member, a member which should bring those qualities of optimism and imagination to a living room which is sometimes sad, and to a household which too often loses its sense of humour.


Mr. H. M. Batten (Humber-Sl. George's):: Mr. Speaker, I am not going to be like the hon. member who has just taken his seat and speak during the budget debate about a subject which at this particular time has very little to do with the budget. I was wondering if there was any reason why he steered his speech away from the budget into other channels. I suppose there have been many names given to this particular budget according to the way it appeals to those who have read and paid attention to it. I would call it the pay-off budget. It is the budget that has demanded of Canada payment for the election promises and the wild spending of the present Conservative party. In the last two years we have danced the dance and now we must pay the fiddler. But I was rather interested in the way this budget debate began.


Mr. Palleli:: You fellows are expert fiddlers anyway.


Herman Maxwell Batten: You will have your chance when your time comes, and you will probably steer away from the budget too, and I do not blame you. As I was saying, I was interested in the way the Minister of Finance (Mr. Fleming) came into the chamber to deliver his budget speech. I thought the carnation with its artificial colouring was conspicuous by its absence. I thought the reading stand had been bared of the usual blue velvet, but I suppose the time had come when the Minister of Finance was no longer going to handle the people of Canada with velvet; this was going to be a harder budget. We, I suppose, have been able to see this budget in the light of the many promises which have been made over the last two election campaigns. I am not going into a long speech reiterating these; that has already been done. But we can see the Prime Minister (Mr. Diefenbaker), for example, flitting across this country in the spring of 1957 telling the people that they were overtaxed by $500 million, that each family was

overtaxed by $120 a year, that Canadian people were overtaxed by $30 for every man, woman and child in the country. Yes, we can see the Prime Minister saying all this, and we can also see him telling what services were going to be given under his government if he were elected. We can see him standing up and telling the people who listened to him, "Give us a chance and we will show you."
We have seen in this particular budget that it is impossible to provide more benefits and increase the spending of the government without the time coming when these bills have to be paid. But I suppose these are election promises which, according to the Minister of National Revenue (Mr. Nowlan), are not very sacred anyway. But if one could judge from recent happenings I might say that even contracts which have been laid on the table of the House of Commons are not very sacred either. So it appears we are now being ruled by a government which rules by expediency, although before the election of 1957 they were the champions of rule by law and of the dignity of office.
In former budget discussions we heard a lot about the vision. This year it has scarcely been mentioned. I am reminded of the professor who was trying to explain to one of his students how it is possible in the English language to have two words which normally mean the same thing but which, placed in different contexts, may mean something entirely opposite. And as an illustration he said, "Take the words 'vision' and 'sight'. At the college dance, the girl you had was a vision and the one I had was a sight." I think that the Tory vision has now gravitated into a definite sight.
I should like to pass on to one of the aspects of our financial affairs which in the last three or four years has occupied the attention of many people. I want to speak for a minute or so on interest rates. I do not intend to define interest rates, because every hon. member will know what interest rates are and how they are calculated. I am sure all hon. members will all know how important the interest rate is to the people of this country, particularly to provincial governments and to municipal governments. We have heard many fears expressed in the past about the difficult times ahead for provincial governments, municipalities and other borrowers because the interest rate on borrowed money was so high. I listened to the Minister of Finance when he spoke as a member of the opposition on August 11, 1956, as reported on page 7462 of Hansard. He said this:
The effect of these repeated increases in interest rates-five in the period of one year-
The Budget-Mr. Batten
May I stress the word "five"?
-has been a tremendous increase in the burdens cast upon provincial governments with respect to their borrowings and upon municipal governments with respect to their borrowings and upon business, and punishing losses upon the holders of Canada's obligations.
These were the words of the Minister of Finance, as he is now, on August 11, and at the time he was speaking the interest rate was 3.25 per cent. The hon. gentleman has been witnessing over the last three months some very significant increases in these interest rates although the Conservative party pledged during the election campaign that they would be reduced. Not only did the hon. gentleman's party pledge to reduce them, but they also took credit for reducing them, and I say to the Conservative party today: if you are going to take credit for reducing the interest rate I fear you will also have to take the blame for raising it. If you take credit for the drop, you will also have to take the blame for the rise. Listen to the Prime Minister speaking at Calgary on March 14, 1958 as reported in the Winnipeg Tribune of March 15. The report reads:
He claimed that interest rates had fallen sharply as a result of government action since last June from a high of 4.33 per cent to 2.89 per cent in recent weeks.
If the Prime Minister thought that 4.33 was a high rate, I suggest he should compare that with the rate last week.


William Moore Benidickson: And it was higher yesterday.


Herman Maxwell Batten: The Prime Minister went on to speak in Selkirk, Manitoba, on March 7, 1958, as reported in the Toronto Telegram of March 18. After claiming that the government had eased the tight money situation, he went on to say:
This has been done by releasing $300 million for new housing, launching a vast public works program and by reducing taxes.
Incidentally, I wonder where that public works program went to. Then, in Halifax, on March 24, 1958, as reported in the Halifax Chronicle-Herald:
Referring to finances, Mr. Diefenbaker said his government reversed the "tight money policy of the Liberals". Interest rates had been decreased from 4.3 per cent to 2.8 per cent. As a result of the $300 million provided for housing loans there were more housing starts on homes "for average Canadians" than ever before.
Yet despite the promises which were made in 1958, we find that the interest rate today is higher than it has ever been before, and if we look at the rates since January 7, 1959 we shall find that there has been a gradual increase from a rate of 3.5 per cent to a figure which, last week, was 4.67 per cent. Surely if there were grave disadvantages for the

The Budget-Mr. Batten provinces and the municipalities, as predicted two years ago, when interest rates were lower than 4 per cent, those disadvantages are present today in a much more acute form. Here is a case of just another promise which was made to the people of Canada and forgotten after the balloting was over.
May I now proceed for a moment to a discussion of the gross national product. The Minister of Finance began his budget by explaining how he thought the Canadian people were prepared for an increase in taxes, and he went on to condition even the members of the House of Commons on those lines. He talked about the flexibility of budgets, and so on; in fact I thought at times that the budget which the minister was reading was a treatise on flexibility by inflexible Fleming. At any rate, the hon. gentleman went on to forecast an increase of 7 per cent in the gross national product, provided, of course, that prices remain stable. I think there are many people across this country who doubt that in the coming year there can be an increase of 7 per cent in the gross national product.
Earlier in the year, the Minister of Finance predicted a gradual improvement in the position, or a gradual growth in the gross national product, and I think he was right in this expectation. But I do not think that an increase of 7 per cent at this particular time, with stable prices, could be considered as normal or steady growth. I believe that is exaggerating. After all, a recovery of 7 per cent in the gross national product very nearly approaches boom conditions; that was the size of the growth in 1956. I think we have to bear in mind that this recession has been something more than a pause; that it has dug deeper into our economy. I believe that from here on we are never going to have conditions which will be quite the same as before. Our economy has been readjusted because of this recession, mild as it was. These recessions always have an effect on the economy of the country in which they occur, and here in Canada, particularly, where we are so dependent on foreign trade, it is difficult to see how a recession coming at a time when there is also a recession in other countries could not have a very serious effect upon the economy. Other countries are expanding. Other countries are making efforts to capture new markets, and to the extent to which they succeed a new problem is created for a country such as Canada which must depend for its livelihood on trade.
Take as an example Canadian exports to the United States. These do not reflect the recovery that we might have expected or the recovery which I think is taking place in the United States. Let me give the house one case with which I feel I am familiar; I refer to

the newsprint industry. The demand for newsprint in the United States for the first quarter of 1959 increased by 4.4 per cent, but Canadian exports to the United States were down by 6 per cent. This was not due to a decrease in production in Canada, because the decrease in the production of newsprint in Canada amounted to only 1.7 per cent.
I do think the minister's forecast of a 7 per cent increase in the gross national product is somewhat ambitious. In 1958, for example, the increase in the gross national product was 2.5 per cent over 1957 but the larger part of this was taken up by increases in prices. In actual fact the increase in the gross national product for 1958 over 1957 was less than 1 per cent.
One might go on and make reference to some more figures. By volume, 1958 was less than 1 per cent over 1957. In 1957 there was very little change over 1956 and for the period 1947 to 1958 the average growth in the gross national product was 4 per cent. It does indeed appear that the minister's forecast was a little high and yet it is the forecast on which he bases his figures for the coming year.
In talking about the gross national product let us have a look at the corporation tax. The corporation tax was increased by 3 percentage points which means that the actual tax to be paid by corporations that make a profit of more than $25,000 for the year 1959 will be increased by approximately 6 per cent over that of 1958. This means that the main sources of employment are being taxed rather highly. Modern plants and modern equipment are needed to produce in Canada products at a price acceptable in the foreign markets. If we are going to tax our corporations too highly it will mean that the price at which the products we produce will be sold will be unacceptable in the markets of the world.
In 1958, the corporation tax was about 5 per cent lower than in 1957. In 1957 it was lower than in 1956 but there were gains in 1955 and 1956. When we look at the fact that the corporation tax is decreasing we must ask ourselves this question: Are we levying increased taxes on a decreasing return? I think that is perhaps what we are trying to do here. We must realize that our corporations produce the goods we sell. While I think the corporation tax is decreasing, I have no doubt in my mind about the Canadian potential. I believe we have a great potential for production in the future. However, we have in this country a great deal of old plant facilities and old plant equipment. I believe the time has come when industrial Canada should take a good look at itself and compare its capacity to increase with its present

potential. In the years that lie ahead this will be a matter of great importance to our country.
I wish now to refer briefly to federal-provincial relations. Hon. members will remember that this is one of the topics that occupied the attention of many of those who traversed this country in 1957 and in the campaign of 1958. We will remember that promises were made in 1957 to the effect that a federal-provincial conference would be called immediately if the Diefenbaker party were elected. Well, it was elected and the conference was called, not immediately but in November. I was present at that conference, at least the public part of it. For all that was done the premiers of the provinces might just as well have stayed home and sent in their submissions by mail. They rose and read their presentations to the conference and proceeded to go back home to their respective provinces having been given the promise that they would meet again in January. They did not meet in January. Instead of a meeting being called the premiers were the recipients of the notorious telegrams sent by the Minister of Finance in December stating what was going to be done and saying, in effect, "You must take it or leave it".
We saw a reflection of this same attitude in the throne speech. It contained no plan for arriving at some satisfactory solution to all the problems that now exist between the federal government and the provinces. Let me say immediately that the government has given a great deal of assistance to the provinces including the maritimes. I will be one of the first to admit that. My criticism of the government's attitude is that the assistance it has given the provinces and particularly the maritimes has not been the result of general policy but rather the result of a piecemeal operation which so characterizes the present administration.
I believe we have reached a time when, if these problems are going to be solved, a federal-provincial conference must be called. But I suggest that this government is not going to call such a conference at this time. My own province has some extremely serious problems in this respect but I shall wait for a proper occasion to make my specific comments concerning these matters. I trust, however, that the Minister of Finance does not think that reducing the excise tax on artificial bait and lures is any substitution for the fulfilment of term 29 of the articles of union.
In conclusion may I suggest that the supporters of this budget have been arguing, in effect, that it is just right for the present financial situation. I must confess there is some truth in that position, but let me hasten
The Budget-Mr. Keays to add that the present financial situation with which this government finds itself confronted is of its own making. Members of the government have gone out around the country and have made promises to the people. They came into parliament, formed the government and proceeded to spend wildly. Now that they have spent the bills must be paid and they are demanding that the Canadian people pay increased taxes in order to bail them out.
I believe that the Canadian people will accept this budget resignedly because they believe nothing else can be done under the present circumstances. I am also of the opinion, however, that many people across the country will know that the present financial situation is one the government voluntarily got itself into.


Mr. J. R. Keays (Iles-de-la-Madeleine):: Mr. Speaker, as a reward for those who have been patient and loyal I should like to announce that at the end of the first period in the game between Toronto and Montreal for the Stanley cup the score is 0-0.


John Whitney Pickersgill: We missed nothing, in other words.


James Russell Keays: As I rise to take part in this debate, I wish first of all to convey to this house the gratitude and appreciation of the people of Gaspe, where I have the honour of being mayor, concerning the recent announcement that Her Gracious Majesty will visit that town on June 21 next. The itinerary as announced was very welcome. Recently a dispatch has been sent to Her Gracious Majesty expressing on behalf of our town good wishes for a safe voyage and expressing the eagerness of our townspeople to receive her.
It is interesting to note that when the royal couple visit our great country they will first pay a visit to the youngest province of Canada and then the oldest. When I say the oldest, Mr. Speaker, I refer to the year 1534 when that famous French explorer, Jacques Cartier, by the act of erecting a cross took possession of this country in the name of God and his country. Throughout the annals of history Gaspe has always been described as the birthplace of civilization in Canada and I was somewhat disturbed by the fact that at the celebrations in honour of Champlain in Quebec city last year they attributed to themselves the honour of being the birthplace of Canada. It was at Gaspe. With this in mind I wish to convey to the house the appreciation and gratitude of our people at receiving her.


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

The Budget-Mr. Keays


James Russell Keays: Mr. Speaker, I will permit a carload of questions as soon as I have finished my remarks. I should like to speak for my constituents and express their heartfelt thanks to the government for acceding to the request for an economic and physical survey of the Magdalen islands. This was undertaken by the government in the fall of 1958 and I must say that it was a thorough investigation. It proved that the Magdalen islands have been forgotten and I trust sincerely that when the study has been completed these people will be given a chance to win the battle they have been fighting since 1653, the battle between man and the sea, the battle for the right of survival of the people of these islands and the right to earn what they need for their existence. I am quite sure that when these studies have been completed these islands will be given the harbours and fishing facilities needed for the survival of the people.
As I have mentioned, Mr. Speaker, these islands have for long been forgotten. The history of the islands dates back to 1653 when Nicolas Denys took possession of same as a favour from his government and since that time the people have been engaged in the battle to which I have referred. I should like to refer to an article which appeared in a local newspaper, Le Phare, in October, 1948, and which reads as follows:
(Translation):
The cove provides so little security that people have to get up on very stormy nights to go and pull the boats ashore, and there are only 30 of these boats left in the bay. Fishermen are getting discouraged and try to find a more stable way of earning a living elsewhere. Our two seaports are only so in name: They are Havre Aubert and Cap aux Meules. They are in need of dredging and of some construction work: breakwaters and jetties, so that ships of higher tonnage might find shelter there. Some coastal communities, which have neither our population figure nor our volume of business have well-organized seaports. The project is therefore practicable. Our requests are reasonable.
(Text):
It then goes on to say, Mr. Speaker, (Translation):
Magdalen islanders are hoping that the federal authorities will one day favourably consider their requests.
The same paper wrote in December 1948:
If that field were under provincial jurisdiction, there would be action and no mere promises. (Text):
I then read the ideas of Robert Rumilly, a great historian and one interested in the problems of the Magdalen islands: (Translation):
And that is true. The federal government is as indifferent and negligent with regard to the isles as was the provincial government until 1936. We would let them off if they did for the islands a tenth of what the provincial administration did for us. Let me write down all my thoughts, which
[Mr. Pickersgill.l

have been confirmed by 13 years of experience in Ottawa. The federal government has jurisdiction on the sea fisheries of all provinces, except Quebec. So that the federal treasury, fed by Quebec taxes, looks after the maintenance of fisheries in all provinces who have any, except those in Quebec. The federal administration being freed from that load should as a compensation take more interest in our ports which are still under its jurisdiction. The victims of this federal sulking are the fishermen.
(Text):
It is therefore apparent, Mr. Speaker, that the Magdalen islands have long been neglected and as a result of the study undertaken and a realization of the needs the government has already undertaken the construction of a large wharf at Grindstone island, the construction of a wharf at Amherst island, commonly called Havre-Aubert, these facilities permitting the fishermen to approach the fish processing plants. I am sure that the study undertaken by the government will prove that the people of the Magdalen islands have long been forgotten and that it is time to realize their needs.
New transportation facilities are required and subsidies to encourage the establishment of such facilities. Although the present air service is quite adequate, unfortunately the freight rate is rather high for the transportation of fish by air. For your information, Mr. Speaker, the first steamboat to ply between the islands and Nova Scotia and Prince Edward Island started to do so in 1876. The first telegraph line was installed in 1880, but unfortunately broke down in 1910. The numerous requests which were made to this government at the time for transportation facilities fell upon deaf ears.
It was then that the mayor of House Harbour or Havre-aux-Maisons, Alcide Gau-dette, thought of one method of transportation. He arranged a barrel or cask in which he placed the mail going to the relatives of these people in the United States, Nova Scotia, New Brunswick and the Matapedia valley. These were the relatives of the deported Acadians. Then, on this barrel he placed a little white flag to represent the spirit of the people in those islands. Some days later he set this new mode of transportation afloat and left it to the will of the open seas. It left on January 8, 1910 and on February 12 this barrel landed on Cape Breton island. In the barrel there was a letter addressed to the then postmaster general, Hon. Rodolphe Lemieux, which said: "If you cannot send a reply by boat, send it in this barrel".
The result of this communication was that in March of that year a steamboat left Sydney carrying mail. It is noteworthy also, that in 1911 with the advent of the Borden government the first Marconi station was

installed on the Magdalen islands. The people of the island were then granted a special privilege from the fall until the spring of sending 2,000 words per week free of charge. This was the beginning of regular transportation between the islands and the mainland.
It is easy to conceive, that everything was not rosy for these brave fishermen. What they claim today, as I have already mentioned, is the right of survival and the right to a share in the general economy of our country. We have heard a great deal of criticism from the opposition of this budget. I would not dare say that much of it was of a substantial nature, but rather seemed to follow the present policy of the opposition of criticizing without making constructive suggestions. They seem to be endeavouring to instil in the minds of Canadians a state of despondency. If only this mode of criticism could be left aside and the opposition would make a volte-face, we might hear something concrete and beneficial.
We hear repeated references to inflation and recession. I should like to refer to what the Leader of the Opposition (Mr. Pearson) said as recorded on page 35 of Hansard for January 19, 1959:
While we were in office, Liberal fiscal, monetary and economic policies were sound, steady-and steadiness is pretty important-flexible and successful. They made it possible for this country to combine startling economic expansion and reasonable monetary stability.
We know, that the contrary is true. Reports received from many financial institutions indicate that our economy is more stable today than it has been during the last few years. This opinion, is shared by many of the financial institutions in this country. Although we are aware of the dangers of inflation, much of this is of a chronic nature. The Minister of Finance has brought in a budget which is aimed at combatting inflation and reducing its dangers. This budget is very important and, as evidence will prove later, was brought in as a medium of attacking inflation, keeping in mind the genuine recovery of our economy. This, in itself, is very commendable, is good business practice and logic.
The Minister of Finance has endeavoured to further narrow the deficit and, as he mentioned in his speech, has brought in a budget designed to foster recovery. It is conceded that the mere statement made by the Minister of Finance will not, in itself, be a cure-all for the inflationary dangers, but is rather merely the first step provided by the government to relieve the dangers.
I should like to bring to the attention of this house the fact that inflation is not the sole concern of government but of every individual taxpayer in Canada. A few minutes
The Budget-Mr. Keays ago I mentioned that first public reaction to the presentation of the budget was probably doubtful. However, after the business consultants, analysts and critics had a chance of studying the proposed actions contained in this budget, they were pleased and commended the minister for his courage in facing reality and giving us a budget commensurate with the needs of the day.
Mr. A. C. Ashforth, president of the Toronto-Dominion bank, and president of the Canadian chamber of commerce, is quoted in the Winnipeg Free Press as follows:
I believe balanced budget, or close to one, would improve the bond market and general business. I personally was not surprised at the Increase in income taxes to meet the current situation. However, I do feel that income taxes are too high on a long term basis for a young developing country like Canada.
We cannot expect the government to lower taxes if we, the public, are constantly asking them to do more and more for us.
Every penny the government spends has to come out of the pockets of the taxpayers. There is no other source. I am pleased to see the minister of finance is optimistic about the volume of this year's business.
Mr. Laurent Lauzier in an article in La Presse of Montreal of April 11 has this to say:
(Translation):
The federal budget continues to give rise to many comments, especially among businessmen and, above all, among income tax experts. The first hours of reflection and consideration having elapsed, the actual objectives aimed at by the government in its budgetary resolutions, introduced Thursday night by the Hon. Donald Fleming, Minister of Finance, are better grasped.
In financial quarters there seems to be general agreement-
(Text):
I should like hon. members of this house to note this.
(Translation):
In financial quarters there seems to be general agreement about the necessity of the tax increases announced by the government. It is generally believed that the increases provided are not high enough to hamper the economic recovery now in full swing.
(Text):
I have one more quotation coming from the income tax committee of the Chamber of Commerce which was presided over by Mr. Charles McLaughlin. He had this to say in an article in La Presse of Montreal of April 11:
(Translation):
The tax committee of the chamber of commerce, presided over by Mr. Charles McLaughlin, C.A., chief of the taxation division at the Canadian Industries Ltd., notes that the tax increase is slightly lower than could have been expected in the circumstances. He approves of the general attitude of the government, which seems to have looked for a middle course solution between a fight

The Budget-Mr. Keays
against inflation and a balanced budget. The committee notes also that the government is showing an obvious desire to protect the taxpayer, small or average, in restricting its income tax increases to higher income brackets and its sales tax increases to luxury articles.
(Text):
Last night, Mr. Speaker, I attended the closing meeting of the Canadian mining convention and I met a friend of mine who attended the luncheon on Tuesday of the chartered accountants and business administrators of the city of Montreal. He admitted that everyone was surprised that when the experts on administration and financial affairs spoke, every one of them said there was no other course to follow and that they endorsed the courage of the Minister of Finance (Mr. Fleming).
It is noteworthy, Mr. Speaker, that when statements such as these are made we find that they come from people who have no political axe to grind. All hon. members know that the best interests of our form of government demand that those with authority to speak must give constructive criticism to legislative government so that the rights and concerns of all sections of our country are made known to the legislators. The Prime Minister (Mr. Diefenbaker) himself was well aware of this situation when speaking in Winnipeg last year to the Canadian Labour Congress. He then asked labour to hold the line with respect to demands for wage increases. Regrettably, such has not been the case, and in many instances labour has requested increases in revenue which were much to the detriment of the companies concerned.
There are those in this house sitting at our extreme right who have a well-known reaction to any announcements made in this house of government subsidies to farmers, industries or others. Whenever a statement is made that $40 million or $6 million or $2 million is to be made available to the public, they have but one common reaction: it is either peanuts or it is not enough. This group want bigger grants, bigger social security commitments and higher wages, with no concern for higher productivity.
Mr. Speaker, in order that a country can prosper, the corporations must make a profit and take out of their surplus the requirements for their expansion and future development. I do not say that all unions are in the same boat, because some have justly understood the problem and have heeded the warning of the Prime Minister. Labour in general has made a grand contribution to our development; but unfortunately there are still those who do not understand that increases in salary should also bring about increase in

productivity, in order thereby to keep our dollar value as stable as possible.
Mr. Speaker, may I interrupt this speech to say that the score is still 0-0 at the end of the second period.
On the other hand, we have those in our country who are the executives of large corporations and who have an important say in the directives given to industries. To many of these persons can be atributed the dangers in our economy. Too many after dinner speakers and social club speakers spend their time criticising government legislation without endeavouring in any way whatever to suggest any solution to the problems always confronting government and refusing to take an interest in their communities in so far as these problems affect the economy of our country. They deprive their communities, their province and their country of the gift of their talents. They fail to see the forest for the trees and miss a great opportunity to create better public relations to the benefit of their concerns.
Those who seem afraid of public life or who seem to look down upon those who take an active part in it will be well advised to reconsider their position and to realize that they owe a debt to their communities and to their country. Instead of staying away from public life and avoiding exposing themselves to criticism, they should think the matter over and, if possible, bring to their communities, as I have already mentioned, the gift of their talents.
I was very happy some time ago to read what another Gaspesian, Gratton O'Leary of the Ottawa Journal, when speaking at a luncheon meeting in the Chateau Laurier during the congress of the Ottawa insurance agents' association, had to say, and I quote:
Canada's business leaders sit "in the bleachers" and complain about the government but don't know what they are talking about because they take no active interest in public affairs. They sit in the bleachers. They talk loudly about inflation. But I don't see any of them telling us what should be done. Businessmen were calling at the same time for both lower taxes and a balanced budget.
Those who believe they are born to be sheep should endeavour to be shepherds and become the leaders of labour and industry and help those who take an active part in the business and financial problems of our Canadian economy. There is a place in Canada for everyone to be in the flock and not to be of those who eventually find themselves in the camp of those who oppose constitutional government, or even find themselves the leaders of such groups.
Before concluding, Mr. Speaker, I should like to refer to a speech made in this house by the hon. member for Timmins (Mr. Martin) reported in Hansard at page 207. The hon. member referred to the infamous strike at

Murdochville. I am not going to defend Gaspe copper mines, nor am I going to defend Noranda mines, its president, vice-president or other officials. But I believe in all justice to those labourers who stayed on the job that they deserve to be defended, and I would like to tell this house that when they marched on Murdochville, 1,000 people from all over the province of Quebec, they found not 40 men back on the job but 675 people back on the job and willing to work. I say this because I live with the people and many have come to see me, crying and wondering what they should do. They were intimidated and afraid and would not return to work although they had five, six, seven or eight children to feed. They said, "What are we going to do? We are scared. We want to go back to work but are frightened". They were satisfied with the salaries paid and happy to work for a higher wage than they had ever earned before.
In conclusion, Mr. Speaker, I would like to mention how our Canada has come ahead from the days when Voltaire once described it as a few acres of snow, and relate the sentiment expressed by Mrs. Erich Neuhouser, a lady of German descent, who fears that Canadians are losing the pioneer spirit of their forefathers. This to some extent is true, and I believe that the alarm should now be sounded to revive this spirit, and with the example shown by many of our new Canadians give impetus to the development of this country and the vision as seen by this government.


John Whitney Pickersgill: Mr. Speaker, the hon.
member from Iles-de-la-Madeleine (Mr. Keays) was kind enough in the course of his speech to say that he would answer a question of mine at the end of his speech, and my question is this. Does the hon. gentleman know that before Cartier planted the cross at Gaspe he visited Bonavista, and 37 years before that, the real discoverer of Canada, John Cabot, discovered Canada at Bonavista?


James Russell Keays: If I might answer that Mr. Speaker, as we read through history we will find at one time, many years before the hon. member for Bonavista-Twillingate (Mr. Pickersgill) ever gave to this country his gift of knowledge, that Newfoundland, the Magdalen islands and Prince Edward Island were all connected, and I would say that this connection of the Magdalen islands and Prince Edward Island gave to Newfoundland the desire to come into confederation ten years ago.


Mr. Marlin (Timmins):: Will the hon. member permit another question? The hon. member referred to the strikebreakers at Murdochville receiving the highest wages they had
The Budget-Mr. Howard ever received. Could he tell us what the wages were at that time?


James Russell Keays: Mr. Speaker, as a Gaspesian and one who lives close to his constituents and employs 200 or 300 people, I can speak on labour problems in the Gaspe peninsula. I would say that the salaries paid at Murdochville were 20 per cent higher than any salary paid in that region.


Frank Howard: Mr. Speaker,
I would like to preface my remarks with those points which I know will be looked upon and received with the most interest. This knowledge is probably well known, but I think in view of the undue interest in another event which is taking place this evening I might say that at the end of the second period of the hockey game there was no score.


Mr. Hamilton (Notre Dame de Grace):: Just like you.


Frank Howard: The Postmaster General (Mr. Hamilton) gets nastier and nastier every day.


Mr. Hamilton (Noire Dame de Grace):: have such good material to work with.


Frank Howard: Naturally, sir; look who he is sitting next to.
Mr. Speaker, often members start by referring to the particular motion which is before them, especially when it is a long debate, so that we can go back over the ground. I do not think it would be too wise to do that in this case because the motion is that you leave the chair and it has no substance to it in fact. The next best thing we can do is to look at the amendment moved by the Liberals, and if I may I should like to read it again:
This house regrets the had faith of the government, which sought and secured support from the Canadian people on a program of lower taxes, reduced expenditures and a balanced budget, and which has now produced, in flagrant disregard of pre-election promises, a budget calling for higher taxes, record expenditures and a large deficit.
There is certainly a philosophy contained in that particular amendment which is the same as the philosophy of the Liberal party; that there is nothing constructive in it, there is no suggestion, no ideas or proposals-


John Whitney Pickersgill: Just good faith.


Frank Howard: My hon. friend made no such point as that tonight. Yet they moved that motion in all sincerity and in all good faith and expect hon. members to vote for it.


An hon. Member:: I expect you will.


Frank Howard: What you expect and what you receive may be two different things.


John Whitney Pickersgill: You will vote for it all right.


Frank Howard: The hon. gentleman must not be too hasty in his assumptions. I will just say this: if they would allow a free vote from
2780	HOUSE OF
The Budget-Mr. Howard their supporters, I would point out to the hon. member for Bonavista-Twillingate (Mr. Pickersgill) that many of his own followers would not hesitate about voting for it. This represents the quandary the Liberal party is in and reflects the attitude of fence sitting which has been so common in the party for so many years. And we know why. We know that there is a great deal of dissatisfaction existing at the moment in the Liberal party. We know there is an attempt under way to replace the present Leader of the Opposition (Mr. Pearson) by someone else who has gained national prominence in the past two or three weeks.


An hon. Member:: Shame.


Frank Howard: Hon. members may laugh,
and my friend may say "shame" but if the truth is shameful that is the way it is.


Mr. Bell (Carleton):: You ought to know.


An hon. Member:: Are you going to try for it?


Frank Howard: Do you want me to be the leader? There is one thing I will be proud about to my dying day, and that is I was not, and never will be, a member of the Liberal party.
This attempt to substitute "Smallwoodism" for negativism does reflect the political dilemma of the party to my left and the situation which exists in Canada between the Tories and the Liberals. The Liberals know that their usual position on a seat on the fence a little left of centre does not exist any longer because the Tories have replaced them in it. As far as progressivism is concerned, the Tories are more progressive. So what can they do? They have gone just as far as they can go in a progressive direction, so now they say: we must go in the other direction; we must move to the position of being a reactionary group. At this point there comes into the picture a personage from Newfoundland, Premier Smallwood, hoping that with a policy of reassessment and re-examination the Liberal party might be built up to the position it once held; and the hon. member for Bonavista-Twillingate is paving the way for all this to take place.


An hon. Member:: Carving the way.


Frank Howard: My hon. friend says "carving the way". It may be a little more sanguinary but it does represent the quandary in which the Liberal party finds itself. I think we only have to make a comparison between the amendment put forward by the Liberals and the amendment to the amendment which we have proposed to be reminded of the differences which exist between our group and that which sits to my left. After all, our amendment, within the limited scope avail-


able, does recommend some positive, some constructive, some progressive action, and this is the role which the C.C.F. has always played even though we have never been in government. We have always led the way in progressive measures and in the introduction of constructive ideas. We do not complain because the Liberals over the years have stolen them, or that the Tories have stolen them. We wish to heaven they would take over the whole works and put it into effect because then we would have the kind of society we want.
One of our proposals deals with the question of instituting a capital gains tax. I think we are entitled to look at the condition which will develop in the future if we continue to be without a tax on capital gains while our neighbour to the south has imposed such a tax. First of all, such a tax on capital gains would provide a monetary incentive for the investment of United States capital in Canada and increase the influence exercised by the United States corporations in this country. That is one of the detrimental effects which such a situation would bring about. Another is that in some instances there would be a drain on the finances of Canada, because if a person or corporation from the United States invests in Canada, makes a capital gain and returns to the United States, such gain is subject to taxation by the United States authorities. In other words, funds which should be flowing into the coffers of the Canadian Minister of National Revenue (Mr. Nowlan) are instead being diverted to the coffers of the United States treasury.
A third effect of such a situation is this: one of the by-products of the investment of United States money in Canada is a tendency to force up the exchange rate between the two countries which places us at a disadvantage in so far as world markets are concerned. It further places the Canadian taxpayer in an unfavourable position because he suffers at the hands of the Minister of Finance (Mr. Fleming) through having to raise additional money for taxes out of his own pockets. All this could be avoided if we had the capital gains tax we suggest. By his failure to institute this kind of tax, as we envisage it, the Minister of Finance has made the pro-Canadian type of speeches he used to make when in opposition sound extremely hollow. Indeed, his lack of action shows that the Prime Minister (Mr. Diefenbaker) spoke in a somewhat hypocritical fashion when he talked about United States buccaneers making piratical profits out of the pipe line stock deal, which was a capital gain.
Many of the unpleasant consequences which I have just mentioned would be overcome to a great extent if the minister

would only have the courage to introduce measures of the kind we have suggested in, apparently, what is to be one of his last actions as Minister of Finance before he moves to another office. I see a smile upon the minister's face. I say to him that if the speculation in the newspapers is correct, and if he does move to this other post in the cabinet, that of external affairs, I hope he will be more tactful and diplomatic in that post than he has been as Minister of Finance.


An hon. Member:: He has improved.


Frank Howard: He has improved. He now smiles a few times a day as he is doing at this moment, but it will take more than that forced smile to raise Canada to the position it enjoyed when the present Leader of the Opposition was secretary of state for external affairs.	In fact, it might be
that the Prime Minister had this in mind, knowing there is no one in his own ranks available to take this post. It may be that he is considering a bi-partisan policy and will take the Leader of the Opposition into his ranks and thus pave the way for the appearance of Premier Smallwood as leader of the Liberal party. This may sound amazing and imaginative but in politics nothing is impossible, especially with the Tories in office.


An hon. Member:: A bed time story.


Frank Howard: Every time I look across the house I see hon. members opposite nodding in their chairs, whether it is early in the day or late in the evening. So any time is appropriate for a bed time story.


An hon. Member:: When you have the floor.


Frank Howard: That is possible, and I would be the one to admit it. But there are 208 others who, I am sure, are much worse than I am.
Another matter mentioned in the amendment to the amendment was the rise in interest rates and this is a very crucial question because these rates represent a hidden drain on the purchasing power of all the taxpayers in Canada. Increases which may at first appear to be quite small -one-tenth of one per cent, for example- amount to a great deal when they are accumulated, and the effect of these higher rates of interest on the purchasing power of individuals, municipalities and provinces is most serious. At the present time these rates are at usurious levels and they are tending to creep even higher.
Municipalities, provinces and individuals are finding themselves in a very difficult position because of the attitudes and actions of the present Minister of Finance (Mr. Fleming)
The Budget-Mr. Howard and the present government. In fact, they are trapped. The municipalities, provinces and individuals are trapped in this interest rate by what one might classify as "Fleming's foolishness".
I know that the minister comes from some constituency in Toronto and doubtless he will be interested as will other hon. members in knowing that Toronto has just scored and the score is 1-0.


Mr. Speaker:: Has the hon. member unanimous consent to impart that information to the house and make it part of the record?


An hon. Member:: He has to say something intelligent.


Frank Howard: Coming from the west as I do, I hope Toronto will win, of course.


Donald Methuen Fleming: Hear, hear.


Frank Howard: Seriously, the Toronto Maple Leafs have been favourites of mine ever since I was a small child and first began listening to hockey games over the old crystal set.
When we come to talk about interest rates we can look back only a little while ago to that time when the Minister of Finance was gloating and rubbing his hands in glee over the decline in the rediscount rate on treasury bills. It was not long ago that he was asked questions about this. They are recorded in Hansard and if I have to refer to them for the exact words, I will. At that time the minister said the lowering of the rediscount rate on treasury bills was directly the result of the action of this government. He explained that it meant that inflation was curbed because interest rates were going down. He suggested that it meant the economy was recovering and that it marked the end of the tight money policy of the Liberals. He sat there and mustered together as large a smile as he is capable of producing and said these things with apparent open honesty. He attempted to take the credit saying it was the result of the efforts of his government that interest rates were lowered.
Following that we had the conversion loan which was designed, the minister said, to stabilize the money market. In this instance, I refer to page 4598 of Hansard of September 4, 1958 where my hon. friend who may be going to some other post in the cabinet is reported as having said:
I will say without fear of contradiction on the part of any responsible source in this country-
The minister took in a pretty wide territory, speaking for everyone in Canada. He continued:
-that the effect of the Canadian conversion loan has been to stabilize the market and in that way it has contributed not only to preventing a further

The Budget-Mr. Howard
rise in interest rates but in checking it and turning the tide in that respect. That is the effect of this issue.
At the end of August at about the time the conversion loan was to go into effect the rediscount rate was somewhere in the neighbourhood of 1.4 to 1.7 per cent. That was in the last part of August or the first week of September. Since that conversion loan took effect interest rates have climbed higher and higher and today they are at the highest point they have ever reached in the history of Canada. What does the Minister of Finance, silent Sam, do now? He keeps his mouth shut. He does not talk about that because it is embarrassing to the government to find out that today the rediscount rate stands at 4.86 per cent, an increase of 1.9 per cent over a week ago, as a direct result of the budget.
I observe that the minister shakes his head and denies that this was a result of the budget. The minister is at liberty to deny that. All I have to do is look back at the number of statements he has made since assuming that portfolio. He has been wrong so many times that it is obviously doubtful if we should pay any attention to the statements he makes at this time.
In the one instance he is only too eager to accept the credit, but in the other instance he keeps his mouth shut. I say to him that if this government is going to take the credit for those periods when the sun shines it also has to take full responsibility for those periods when it rains. Today was a beautiful summer-like day with high temperatures and it is a wonder that some hon. gentleman opposite did not rise in his place and make the statement that the weather has now been placed under the jurisdiction of the federal government.
This treasury bill rate reflects government policy as the Minister of Finance has told us so many times in the past. It is indeed a direct result of government action, attitudes and policies and represents a direct return to the situation that existed when the Liberals were in office, not a tight money policy but an even tighter money policy. My hon. friend shakes his head again. Perhaps he does not know what tight money is. Money is tight with me all the time and if interest rates go up much higher I, like some other hon. members of this house, may have to find a part-time job.


Mr. Aiken:: You might find a full-time job.


Frank Howard: It may well be that my employers, the constituents in Skeena, may decide to employ me full-time someday. That
is,	of course, a decision that they may take and there will not be much I can do about
it,	although I shall attempt to convince them that they have an excellent employee in me and should continue to employ me, which is a course followed by everyone in this house.
I should like to deal now with the effect of a financial policy of the government which has been mentioned by two or three hon. members, some in a derogatory way, some in a way that indicates they have not the foggiest idea what it is about and others in a partially sensible way in which they attempted to look at both sides of the picture.
The hon. member for Iles-de-la-Madeleine (Mr. Keays) who preceded me in this debate mentioned what he thought was the effect of wage increases on the economy. The hon. member for Acadia (Mr. Horner) in either the throne speech debate or in a speech on the estimates of the Department of Agriculture, I forget which, also used the same approach and drew the analogy that because wages go up the farm implement machinery industry has to increase the prices of farm machinery and therefore the hon. member blamed the wages of workingmen for the higher prices of the materials used by manufacturers in producing farm machinery and the resultant higher costs of farm machinery and equipment.
My friend the hon. member for Acadia may know something about farming but it is extremely obvious that he does not know a darn thing about the relationship of wages and trade unions to the general economy.
Mr. Speaker, may I call it ten o'clock and in the same breath announce that the score is still 1-0.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: Mr. Speaker, I wonder if I may ask the Minister of Finance if it is proposed to go on tomorrow with the same debate?


Donald Methuen Fleming: Yes, Mr. Speaker.


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

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

Mr. Marlin (Timmins): 1.	How many graduates of colleges or universities now reside in Canada, as follows: (a) bachelors or equivalent level; (b) masters or equivalent level; (c) doctors?
2.	What percentage of the population is each of the above categories?
Answer by: Hon. Gordon Churchill (Minister of Trade and Commerce):
1.	Statistics are not available.
2.	Statistics are not available.


CHANGES IN RURAL POSTAL REGULATIONS
Mr. McWilliam: 1.	Has a change been made in postal regulations reducing the required number of patrons from four per mile to three per mile to qualify for rural mail route service?
2.	If so, is the post office department making a survey to ascertain the additional patrons who will qualify?
Questions
3.	If the department is not making a survey at this time, will the department accept requests for service from additional qualified patrons?
Answer by: Hon. W. M. Hamilton (Postmaster General):
1.	Yes.
2.	No.
3.	Yes.


IMPORTS OF NORWEGIAN LURES AND ANCILLARY EQUIPMENT
Mr. McWilliam: 1.	Is the government giving further consideration to the elimination of the custom duty on the importation of Norwegian lures and ancillary equipment used in commercial fishing on the east coast of Canada?
2.	If so. will a decision be reached in the near future?
Answer by: Hon. Donald M. Fleming (Minister of Finance):
1.	The government has recently given consideration to the elimination of the customs duty on the importation of Norwegian lures and ancillary equipment.
2.	In the tariff changes introduced in this year's budget it is proposed that lures, jiggers and artificial baits be permitted duty free entry under the provisions of tariff item 682.
[DOT]177

Chicago "Water Diversion



APPENDIX


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NO. 184 Sir,
I have the honour on instructions from my government to refer to proposals for legislation in the United States of America concerning an increase in the diversion of water from lake Michigan through the Chicago drainage canal. It is noted that one proposal to this effect has been approved by the House of Representatives and will shortly be considered by the Senate. During a period of many years there have been numerous occasions on which the government of Canada has made representations to the government of the U.S.A. with respect to proposals concerning the diversion of water from lake Michigan out of the great lakes watershed at Chicago.
Many of these representations have been directed toward particular proposals then under discussion by U.S.A. authorities. Because of the importance of the question, the government of Canada believes it timely to re-examine the considerations which it regards as most important concerning any proposals for additional diversion of water from the great lakes watershed. Accordingly, in order that there may be no misunderstanding as to the views of the government of Canada,
I have been instructed to bring the following considerations to your attention.
Every diversion of water from the great lakes watershed at Chicago inevitably decreases the volume of water remaining in the basin for all purposes. The government of Canada is opposed to any action which will have the effect of reducing the volume of water in the great lakes basin. Careful inquiry has failed to reveal any sources of water in Canada which could be added to the present supplies of the basin to compensate for further withdrawals in the U.S.A. The government of Canada considers that many agreements and understandings between the U.S.A. and Canada would be broken if unilateral action were taken to divert additional water from the great lakes watershed at Chicago and directs attention to provisions of two treaties in particular
(a) The boundary waters treaty, 1909: The applicability of either art. II, para. 2 or art.
Ill of this treaty depends upon the interpretation of physical facts.
If lake Michigan physically flows into the boundary water lake Huron, art. II preserves

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to Canada the right to object to such a diversion which would be productive of material injury to the navigation interests in Canadian waters.
If, as has been asserted by eminent U.S.A. jurists, art. III of the treaty applies, no further diversion shall be made except with the approval of the international joint commission.
(b) Niagara treaty, 1950: This treaty allocates water for scenic and power purposes. The amount of water which shall be available for these purposes is the total outflow from lake Erie. The specific inclusion of certain added waters in art. Ill of the treaty emphasizes the underlying assumption that existing supplies will continue unabated. In addition to these treaty provisions, there is a further agreement of far-reaching importance. Power development in the provinces of Ontario and Quebec is predicated upon agreed criteria for regulation of the flows of the St. Lawrence river. The order of approval of the international joint commission of October 29, 1952 as supplemented on July 2, 1956 and accepted by both our governments, forms the basis for the construction and operation of the hydroelectric power installations in the international section of the St. Lawrence river. Criterion (a) of this order of approval assumes a continuous diversion out of the great lakes basin limited to the present 3,100 cubic feet per second at Chicago.
Navigation and commercial interests depend upon the maintenance of the basis upon which channel enlargements have been designed in order that vessels of deep draught may proceed with full load to and from the ports of the upper great lakes. In this connection I would refer to the following matters:
(a)	The construction of the St. Lawrence seaway. Legislation in the two countries and the several exchanges of notes concerning the construction and operation of the seaway now just completed are based on the assumption and understanding that there will not be unilateral action repugnant to the purposes of the legislation. Withdrawal of water from the great lakes basin would materially affect the operation of the St. Lawrence seaway;
(b)	Dredging. By agreement contained in the various exchanges of notes between the two countries, profiles have been prepared for the excavation which has taken place or is about to take place in the International rapids section of the river, in the Amherstburg channel and in the St. Clair river. These agreements are based on the implied understanding

that material changes would not be made in the volume of water available for navigation;
(c) New channel. In an exchange of notes dated February 28, 1959, it has been agreed that a new channel should be constructed to eliminate the so-called southeast bend of the St. Clair river. The agreement by the government of Canada to this proposal was based on the understanding that there would be no artificial interference with the present supplies of water.
Because of the importance attached by the U.S.A. and Canada to the honouring of international undertakings in letter and in spirit, the government of Canada views with serious concern any possible impairment of agreements and undertakings relating to the great lakes basin. Furthermore, the alarms created by repeated proposals for diversion which inevitably disturb the people and industry of
Chicago Water Diversion Canada are a source of profound irritation to the relations between our two countries which we can ill afford.
I am instructed, therefore, to express the hope of the government of Canada that the U.S.A. will view this matter with equal concern and will be able to give satisfactory assurances that unilateral action will not be taken which would imperil the present regime of the waters in the great lakes basin and the status of the agreements and understandings to which I have referred.
Please accept, sir, the renewed assurances of my highest consideration.
A. D. P. Heeney
The Canadian Embassy,
Washington, D. C.
April 9, 1959.
66968-9-1774
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Friday, April 17, 1959

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Eighth report of standing committee on miscellaneous private bills.-Mr. McCleave.