1959-07-13

Hon. Howard C. Green (Minister of Public Works) moved:: That the report of the civil service commission concerning certain employees of the library of parliament, laid upon the table of the house Friday, July 10, be now concurred in.


[Stage Direction]
Motion agreed to.


Howard Charles Green: 
Hon. L. B. Pearson (Leader of ihe Opposition):: Mr. Speaker, I am sure the house appreciates the report which the minister has just made, as I am sure all hon. members here and indeed all Canadians appreciate the fact that the Secretary of State of the United States was able to stop off in Ottawa on his way back to Geneva.
I should like to associate myself and our party with what the minister has said about the new Secretary of State. I am sure all Canadians wish him well on the occasion of this conference and on future occasions of this kind. I am sure we all agree with the minister when he said that Mr. Herter is

Motions for Papers
peculiarly qualified by experience and by ability to carry on the important work that has been entrusted to him. It is well that the Canadian government should be informed on these matters even though we may not be represented at the particular meeting, because our commitments and our responsibilities are definitely and deeply involved. If there is to be that essential unity inside the coalition that we all work for there must be this kind of consultation in advance of decision.
I quite appreciate the fact that it would be unfair to ask the minister to give us details of the negotiations which are taking place. That is not the way in which negotiations can best be conducted. But I think we are agreed that the principle which underlies these negotiations should be the maintenance of western rights in Berlin and that if there is to be any alteration of the situation there, it should not be at the expense of those rights. I think Mr. Herter's visit also emphasizes the unity inside the western coalition, which as I said is essential and is perhaps one of the most gratifying features of the earlier negotiations. Although there have been disappointments in the past I hope that during the weeks ahead, if there are to be further meetings, with this strong, fundamental unity among the three western foreign ministers, and with flexibility in negotiation, perhaps the new session will be able to come to some satisfactory conclusion.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, this group are very pleased to hear the report of the Secretary of State for External Affairs of his meeting with Mr. Herter. We are glad to hear of these discussions, because we believe that discussions are the essence of progress toward some agreement and some final settlement of all our problems. Before taking my seat I do want to say how pleased we are that the government has emphasized its support for a summit conference and for the value of continuing negotiations during these difficult times.


MOTIONS FOR PAPERS
[Stage Direction]
Motion No. 130-Mr. Bourget:
For a copy of all telegrams, correspondence and other documents exchanged since June, 1957, between the federal government or any of its departments. the Canadian National Railways and the city of Quebec, or representatives of the said city, with respect to the construction of a new post office in that city.
Motion agreed to.

Mr. Argue: For a copy of any letter, lists or other memoranda sent to Central Mortgage and Housing Corporation by the Department of Public Works since January 1, 1956, stating the names of legal agents that may be engaged by the corporation.
Motion agreed to.


REPORTED STATEMENT BY U.S. SECRETARY OF AGRICULTURE
[Stage Direction]
On the orders of the day:
Hon. Paul Martin (Essex East):: Mr. Speaker, may I ask the Minister of Agriculture if his attention has been directed to a statement made by Mr. Ezra Benson, the Secretary of Agriculture of the United States, who in a speech over the week end stressed the desirability of free trade between Canada and the United States, particularly in agricultural products. Has this statement been brought to the attention of the government, and is the Minister of Agriculture in a position to make any comment?


Hon. D. S. Harkness (Minister of Agriculture):: The answer to all those questions, Mr. Speaker, is no.


Paul Joseph James Martin: May I, in answer to this very succinct reply, ask the minister if he would be good enough to look at the observations of his counterpart in the United States, study them, and be prepared to comment in this house upon them before we prorogue, if we ever do?


Douglas Scott Harkness: Mr. Speaker, I will be very glad to look at Mr. Benson's speech. Whether I shall be prepared to comment on it I will not know until after I have read the speech.


LABOUR CONDITIONS
[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, in the absence of the Minister of Labour may I direct a question to the Prime Minister. Can the Prime Minister inform the house whether it is the intention of the government to proceed with a winter works program for the coming winter months?


Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I think in view of the fact that earlier questions have been directed to the Minister of Labour, and as the Minister of Labour will be here for the rest of the session, this question might be allowed to stand until his return.


CANADIAN NATIONAL STEAMSHIPS
[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: would like to address a question to the Minister of Transport, the genesis of which is our interest in the accounts receivable by the government of Canada. Can the minister give the house any information as to the payments received on account to date with respect to the Canadian National ships which were sold to Cuban interests?


Hon. George H. Hees (Minister of Transport):: No, Mr. Speaker. I think the hon. member will realize, not having given me notice of this question except for a very small slip of paper which indicated, as I sat down in my seat, that he intended to ask the question, that I cannot carry figures of that kind in my head. I will inquire of the management of the Canadian National Railways to find out the situation in that regard, and will be glad to report to the house when I have that information.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, on Saturday the hon. member for Skeena asked me a question and I said there would be an answer today. I rise simply to say that I trust the answer will be given tomorrow; it is not forthcoming at the moment.



HARBOURS


[Stage Direction]
On the orders of the day:
George Harris Hees: Mr. Speaker, on Saturday the hon. member for Lapointe asked me a question regarding the possible location of the pilot boat which was sunk in Saint John harbour two years ago. I have inquired into this and found that the object which was located in Saint John harbour is now definitely identified as the pilot boat which sank a couple of years ago.
We are in process of making arrangements to have the boat raised, and this, of course, would involve any bodies that might be found.
13, 1959	5993
Grants to Newfoundland FINANCE



MEASURE TO PROVIDE ADDITIONAL GRANTS TO NEWFOUNDLAND

Hon. Donald M. Fleming (Minister of Finance) moved: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to provide for the payment of additional grants to the province of Newfoundland.
Motion agreed to and the house went into committee thereon, Mr. McCleave in the chair.


Donald Methuen Fleming: The resolution
before the committee asks leave to introduce a measure to provide for the payment of additional grants to the province of Newfoundland. The bill for the introduction of which leave is now sought will provide authority for the payment to the province of Newfoundland of amounts recommended by the royal commission on the terms of union with Newfoundland for the fiscal years 195758 to 1961-62 inclusive. This bill may well find itself placed among the important constitutional documents of our country. The operative portion of the measure is brief but the bill will contain extensive recitals. Having regard to the nature and importance of this legislation I may say I hope to approach the subject in keeping with the seriousness of it for the Canadian confederation.
Ten years have passed, sir, since Newfoundland, the Atlantic outpost of this continent, joined the Canadian family. This act of confederation brought a sense of completion to the farsighted work of the fathers of confederation which had not been until that time, attained. The only regret of Canadians in the other parts of Canada was that Newfoundland's entry into the Canadian family had been long delayed. Had Newfoundland come in during earlier years Newfoundlanders and other Canadians, in this expanded realm, might have grown together and Newfoundlanders might have played their influential part from the beginning of confederation in fashioning the history of this new young nation and adding to her glories and her destiny, as they are doing now and as Newfoundlanders will continue to do.
Forty-four years had passed since the last provincial members had been previously added to confederation, in 1905, and all Canadians welcomed with enthusiasm the entry of Newfoundland into the Canadian family. This is the spirit, I am sure, in which the house approaches this present measure today. It is in the larger spirit of the larger Canada.
Our concern in this present measure must, of course, relate to the financial basis of

Grants to Newfoundland Newfoundland's confederation with Canada.
I shall not delay the committee by any extended review of the financial terms of confederation. They are contained in articles 23 to 29 of the terms of confederation.
Article 23 related to the assumption of debt. Article 24 related to the disposal of the financial surplus that Newfoundland had at that time; article 25 to the retention by Newfoundland of its interest in the proceeds of a particular loan at that time. Article 26 provided for the payment of annual subsidies by Canada to the province of Newfoundland, and it is under that provision that the subsidies have been paid in the interval. Article 27 provided for the entry of Newfoundland into a tax agreement with Canada similar to that which had been entered into by the majority of the provinces at that time in relation to the sharing of the proceeds of the direct standard taxes. Article 28 provided for the payment of a series of annual transitional grants over a period of 12 years by Canada to Newfoundland.
These grants, for the first three years, were to be in the amount of $6,500,000 each, and from that point they graduated down until in the tenth year the amount was to be $1,050,000; in the eleventh year, $700,000, and in the twelfth year, $350,000. The last of these payments will be made in the fiscal year which will end on March 31, 1961.
Then we proceed to article 29, from which the measure now under discussion stems. The background of article 29 of the terms of union is, I am sure, well known to all members of the house. There existed at the time of confederation wide differences in the degree of development attained in Newfoundland as compared with the rest of Canada. Newfoundland, with Labrador, is a land of vast resources, but while there had been some development of those resources the great period of their development lay in the future. There was in Newfoundland a pronounced lack of what has come to be known as social capital, public investment in roads, schools, hospitals and other services. Communication was limited. The island government, however, was virtually free of debt.
Under these circumstances it was quite clear to those who negotiated the terms of confederation that following the union there would be what I might call a period of bridging the gaps. Premier Smallwood has called it a period of transition. The gaps which it was contemplated would need to be bridged involved time, first, to equalize services in Newfoundland wih those in other parts of Canada, and time also, in the second place, to develop the tremendous potential of Newfoundland. So far as the equalization of

services was concerned, regard was had in term 29 to the state of taxation in the three maritime provinces.
I have stressed that this was a period of bridging the gaps or, as Mr. Smallwood has called it, a period of transition. It was not contemplated that this period would last forever. On the contrary, it was thought of as a period that would be limited in time, but at that stage no one could say how long the period would continue.
Now, sir, I think it appropriate to examine the terms of article 29. It reads as follows:
In view of the difficulty of predicting with sufficient accuracy the financial consequences to Newfoundland of becoming a province of Canada, the government of Canada will appoint a royal commission within eight years from the date of union to review the financial position of the province of Newfoundland and to recommend the form and scale of additional financial assistance, if any, that may be required by the government of the province of Newfoundland to enable it to continue public services at the levels and standards reached subsequent to the date of union, without resorting to taxation more burdensome, having regard to capacity to pay, than that obtaining generally in the region comprising the maritime provinces of Nova Scotia, New Brunswick, and Prince Edward Island.
It may be, Mr. Chairman, that the terms of this article have not been always clearly understood. It may be that in a sense they have been oversold in the understanding of some in relation to the fair interpretation of this important article. It is clear on examination that the elements in this article of union are as follows. First, the royal commission was to be a federal royal commission. In the second place, it was to be appointed within a period of eight years after the first day of April, 1949. No time was set for the completion of the hearings of the royal commission or the date of its report. The provision simply was that the appointment should be made before March 31, 1957. The reason given in the article for the appointment of the royal commission is in the opening words. It relates to the difficulty of predicting with sufficient accuracy the financial consequences to Newfoundland of becoming a province of Canada.
The purpose the royal commission was to serve was twofold. First, it was to conduct a review and, second, it was to make recommendations. It was in the first place to review the financial position of the province of Newfoundland, and in the second place it was to recommend the form and scale of additional financial assistance, if any, that might be required by Newfoundland. "Additional financial assistance" obviously means in addition to the transitional grants provided for in article 28 and the subsidies provided in article 26. The purpose of the additional

financial assistance, if any, was, first, to continue the public services reached in the postunion period. It is quite clear, and this has been a matter of comment since, that it was not to improve these services but to continue them. And second, this was to be done without resorting to taxation heavier in relation to capacity to pay than obtained in the three maritime provinces of Nova Scotia, New Brunswick and Prince Edward Island.
The terms of reference of the royal commission were thus completely defined in article 29. The article, it may seem strange to some in reading it, makes no provision whatever for what is to follow the report of the royal commission. It is completely silent on that point. It gives no indication of what disposal shall be made of the recommendations the royal commission might make. Indeed, in terms of the express obligations created by this article it is quite clear that the only obligation expressly created on the part of the federal government was the appointment of a royal commission.
This limited extent of the provisions of article 29 was clearly recognized in the debate in this house on the terms of union, which occurred in February, 1949. The then prime minister, Mr. St. Laurent, in introducing the resolution on February 7, 1949 made this comment on article 29 as recorded at page 289 of Hansard:
It was also provided that within eight years from the coming into force of the terms of union a commission would be set up to examine the situation anew, and to report as to whether or not the terms provided are working satisfactorily and are sufficient to bring about the object of equalizing the lot of the people of the new province with that of the people of the older provinces. There is no undertaking to implement any terms of recommendation that may be made at that time by a royal commission. It was felt by the Newfoundland delegation, and by the representatives of the Canadian government, that this was something that was being entered into in a spirit of fairness on both sides, and that it was not necessary to make binding stipulations about what would happen with respect to the report of a royal commission. It was felt if there was an investigation and a report b.y a commission, in which the public at that time would have confidence, the legislators of that day could well be trusted to do what would prove to be right in order to make this enlarged nation a united nation continuing on its path of progress toward its great destiny.
I am sure every hon. member of this present parliament would applaud in full that comment made by Mr. St. Laurent on February 7, 1949. It is unquestionably an interpretation of the terms of article 29 to which no exception can be taken by anyone and it correctly expresses, I am sure, the spirit of the Canadian parliament in this day and in the days to come.
Grants to Newfoundland I may say that the same issue arose in the hearings of the royal commission, as was indeed inevitable. I will just mention several of the passages in the proceedings of the royal commission where the question arose. At page 1504 of the proceedings the chairman of the royal commission, Chief Justice McNair of New Brunswick, made this comment on the terms of article 29 and the work of the royal commission. He said:
Anything we do here will have no binding effect. Further, at pages 1512 and 1513 the chairman said, and this time his remarks were replied to by Mr. Carl Goldenberg, the very distinguished counsel who represented the province of Newfoundland before the royal commission:
A number of questions arise in my mind on this point, Mr. Goldenberg. Our recommendation alone-
That is the recommendation of the commission.
-will create nothing binding.
Mr. Goldenberg replied "No". Then the chairman commented further on page 1513: Our recommendation alone has no effect.
To this Mr. Goldenberg replied:
It is only a recommendation to the government of Canada.
Premier Smallwood, and I add this for the completion of the record on this subject, at pages 1604 and 1605 apparently approached the question from a slightly different point of view. In speaking of term 29 he said:
-but spells out-I thought until this hearing- very carefully and very clearly the actual words of the terms of reference.
He proceeded to base his argument on the terms and he said:
The recommendations you make-
He was addressing the royal commission. -will morally bind not only the government of Canada to submit them to the parliament of Canada with their own qualified recommendation, but will morally bind the parliament of Canada to adopt them.
Premier Smallwood was there basing his argument on a moral obligation, while it was quite clear it was the stated view of the commission, as it was of the eminent counsel who appeared on behalf of Newfoundland before the royal commission, that there was no explicit or binding obligation. Therefore, Mr. Chairman, I pause at this time simply to draw this inference in the light of the statements of Mr. St. Laurent, who was prime minister in 1949, and the statements by Chief Justice McNair and Mr. Goldenberg that what we do now in this parliament in 1959 is not done under any literal compulsion or binding stipulation, for there is none in article 29 or

Grants to Newfoundland elsewhere. What we do now is an expression of the desire of the Canadian parliament and the Canadian people to be just and fair to our new partner in confederation, according to the abiding conceptions of justice and fair play of the Canadian people and their parliament.
These are the same conceptions of justice and fair play which animated the Canadians in 1867, in 1870, in 1871, in 1873 and in 1905 on the occasion of the accession of the other provinces to the federated family. It is the same spirit in which I am sure we can trust the parliament of Canada in the year 1962 to approach the same problem.
The royal commission was appointed by the former government on February 21, 1957 in fulfilment and discharge of the obligation created by article 29. The order in council naturally follows precisely and verbatim the language of article 29. I think regard must be had naturally to the personnel of the royal commission, particularly in the light of the language used by Mr. St. Laurent as I quoted him in 1949 when he referred to the commission at that time as men in whom the public would have confidence. Three distinguished commissioners were chosen; one was the chief justice of New Brunswick, Chief Justice McNair, who was chairman of the commission; the next member of the commission was Sir Albert Walsh, chief justice of Newfoundland, who had participated as one of the representatives of Newfoundland in the negotiation of the terms of union. The third member was Mr. John Deutsch, former assistant deputy minister of finance.
I do not need to say, I am sure, Mr. Chairman, that any royal commission composed of men of the experience and capacity of the members of this commission must be regarded with great respect in any part of Canada. The personnel of this commission was quite evidently chosen by the Canadian government of that time in consultation with the government of Newfoundland, because it is quite clear that the personnel of the commission was completely satisfactory to the government of Newfoundland. I have before me a press dispatch dated February 25, 1957, which appeared in the Charlottetown Guardian and which reads:
A beaming Premier Smallwood groped for superlatives Friday to express his delight at the choice of members for the royal commission to review Newfoundland's financial terms of union with Canada.
Work of the commission, whose appointment was announced in the commons Friday by Prime Minister St. Laurent, would be "of absolutely terrific importance to Newfoundland," Mr. Smallwood told a press conference.
The future of Newfoundland's "standards and levels of services will be determined by the recommendations of the commission," he said. It would recommend "the form and scale" of additional financial assistance.

Commission chairman John McNair, chief justice and former premier of New Brunswick, was "long a personal friend of mine," Mr. Smallwood said. Mr. McNair was "a famous fighter for maritime rights and after we went in for Atlantic provinces rights."
John James Deutsch was "probably the most knowledgeable man in all Canada of federal-provincial affairs." He was "a great friend of Newfoundland ... a man of great sympathy for Newfoundland."
Of Newfoundland Chief Justice Sir Albert Walsh, third of the three commission members, Mr. Smallwood said "Newfoundland could be searched from end to end and we would not find a better man to represent Newfoundland on this royal commission. He is thoroughly informed."
When we as a government came into office on June 21, 1957 the royal commission had not yet commenced its sittings, and asked for directions from the new government in that respect. We requested the royal commission to carry on, and did everything in our power as a government to facilitate their inquiry.
The royal commission had not proceeded very far before it encountered the inevitable difficulties raised by the vague and nebulous terms of the reference which had been taken from article 29. The difficulties confronting the royal commission revolved principally around the problem of projecting a selected year into the indefinite future. It was the difficulty of determining future needs on the basis of past conditions.
This problem is quite clear to anyone reading the report, and it confronted the royal commission with constant difficulties. I shall not detain the committee by an extended review or an attempt at an extended review of the report of the royal commission. I am assuming that all hon. members are acquainted with its contents. Perhaps I might just mention a few passages in passing to emphasize the highlights of the report, both as to the difficulties confronting the royal commission and as to their findings. On page 3 we find this sentence:
The economy of Newfoundland was more highly dependent upon external markets than any Canadian region.
On page 4:
The new provincial government came into existence virtually free of debt and with $40 million in its treasury. These substantial resources were available for the improvement of public services and the promotion of economic development. However, these tasks had to be assumed under a number of serious handicaps. Unlike the rest of Canada, Newfoundland had not received the benefits of over 80 years of aggressive federal policies designed to assist economic development and to foster economic expansion. Newfoundland had been outside the great national structure of transportation facilities, highly developed government services, and extensive regional and industrial supports. Newfoundland was without a modern system of transportation. In the greater part of the populated area there were no roads whatever and in

the remainder only a few miles were up to modern standards. The natural resources were largely unsurveyed and unexplored. Very few intensive investigations had been carried out. Little or no research had been applied to problems of untiliza-tion and marketing, even in the fisheries.
At page 5:
In this respect Newfoundland was at about the same stage as the maritime provinces were in 1867.
At page 8-


Mr. Pickersgill:: I wonder whether the minister would mind reading the few lines in between.


Donald Methuen Fleming: Yes, I shall be glad to read them. I am trying to pick out the essential highlights of the report without spending too much time on it. The words in the interval between those two last passages are as follows:
"Newfoundland has had a long history of poverty: and this poverty meant the neglect of the public services."
That quotation is taken from the submis-mission of the province of Newfoundland to the royal commission on Canada's economic prospects. The report continues:
The deficiency in the public services was strongly evident in the lack of social capital and in the limited development of the social services. Aside from St. John's, and a few other centres the province was without municipal organizations or municipal facilities. In this respect Newfoundland was at about the same stage as the maritime provinces were in 1867.
At page 8:
There have been few really major improvements in the levels and standards of services. The deficiencies of the past have not been substantially overcome.
Further down:
The Newfoundland portion of the trans-Canada highway is not more than a quarter completed in terms of total estimated cost. There is no transprovincial road whatever. The majority of the numerous small settlements in the province are still without any road connections.
Further down:
In short, Newfoundland is confronted with the urgent task of modernization, but is without the modern means of mobility and communication.
At the bottom of the page and extending over to page 9:
The average per capita incomes in Newfoundland are further affected by the more limited opportunities for female workers and by the fact that the proportion of the population of working age is significantly smaller than elsewhere in Canada. In 1956, 41 per cent of the population of Newfoundland was under 15 years of age as compared with 32 per cent for Canada as a whole.
Further down on page 9:
The addition of Labrador to Canadian territory has added also another frontier rich in minerals and water power. Labrador is already making
Grants to Newfoundland its contribution to the vital role which undeveloped frontiers have played in the history of national economic expansion.
Then on page 16 in the course of the financial review the report proceeds:
The total of the federal payments-
This is in the post-union period.
-comprised 73 per cent of the total provincial net revenue in the fiscal year ending March 31, 1951 and 48 per cent in the fiscal year ending March 31, 1957.
Further down on the same page:
In other words, during the past three years the revenues of the province on ordinary account have fallen more and more short of the requirements for ordinary expenditures.
Further down on the same page:
In the most recent fiscal year ending March 31, 1958, the estimated financial requirement was nearly $16 million, all of which would have had to be borrowed.
Then on page 18:
In the early years the debt position of the provincial government was very favourable. At the outset the provincial government had in hand a substantial net cash surplus and was virtually free of any net debt charges. Since 1952 the provincial debt has increased steadily.
And further down:
The total estimated net direct and indirect debt of the government of Newfoundland outstanding on March 31, 1958, was $71.0 million. This total amounted to $163 per capita compared with about twice this amount per capita for the governments of the maritime provinces combined. These comparisons would appear to indicate that the debt position of the government of Newfoundland continues to be favourable in relation to the maritime provinces.
Then on page 19 the commission enters upon chapter III which relates to the levels and standards of public services in Newfoundland. Here on page 19 the report points out-


The Chairman:: Order. I must advise the hon. member that his time has expired. Is it the pleasure of the committee that the minister be permitted to continue?


Some hon. Members:: Agreed.


Donald Methuen Fleming: I thank the committee, Mr. Chairman. On page 19 the report states as follows:
It must be assumed that the phrase "the levels and standards reached subsequent to the date of union" means the highest levels and standards reached. Otherwise term 29 has little meaning.
And further down:
The brief presented on behalf of the government of the province of Newfoundland in support of additional financial assistance assumes that the highest levels and standards of public service reached subsequent to the date of union were reached in the fiscal year 1956-57.
Then at page 25:
The calculations show that there has been a fairly steady improvement in the per capita levels

Grants to Newfoundland
and standards of public service over the period 1949 to 1956 although half of that improvement was due to increased federal grants in aid. The level of service in 1956 was about 22 per cent higher than in 1949.
Then, Mr. Chairman, I turn to page 37, where the commission concludes its chapter on the burden of taxation with this observation:
-we have come to the conclusion that the burdens imposed by the present tax systems of Newfoundland and the maritime provinces are of the same order and that, for the purposes of our inquiry, we should regard the burden as approximately equal.
Then at page 38 begins the important and final chapter V containing the recommendations of the commission. At page 38, after setting out certain tables, the commission reaches the conclusion that the revenue deficiency-and this is the final line of the table-including the transitional grant of $2,250,000 is $5,190,000 for the fiscal year in 1956-57. The commission's observation on this table is as follows:
It will be seen from the above table that the total requirements for 1956-57 exceeded the total revenue, exclusive of the transitional grant, by $5,190,000. In other words, on the basis of 1956-57 the province would require additional revenue of $5,190,000 less the transitional grant of $2,250,000, or $2,940,000, to continue public services at the levels and standards reached.
Then at page 39 in the next paragraph following we find this:
The terms of reference require the determination of the additional financial assistance necessary to continue public services at the levels and standards reached subsequent to union. In our view the words "to continue" involve consideration of the future at least as far as to make some assessment of the probable course of revenues and expenditures. While it is impossible to project the expenditure requirements and revenues of the province into the future, we feel that we should give consideration to the financial position of the provincial government as indicated by the estimates for the year 1957-58 furnished to us by the financial adviser to the province.
Then the commission proceeds to set forth a table relating to the fiscal year 1957-58, which concludes with this line:
Estimated revenue deficiency, including the transitional grant of $1,400,000, $8,102,000.
On that point the commission makes this comment:
The revenue deficiency indicated by the above table amounts to an estimated $8,102,000 inclusive of the transitional grant of $1,400,000 or $6,702,000 excluding the transitional grant.
Then on page 40, the final page of the report, the commission, after saying that with respect to the year 1957-58 the recession is no more than a temporary condition, proceeds to this final paragraph of the report:
After giving consideration to the deficiency in revenue indicated by our calculations for the fiscal

years 1956-57 and 1958-59 and after attempting to make a fair and equitable assessment in respect of the uncertainties and special factors mentioned above, we find that the government of Newfoundland requires, as from April, 1957, additional financial assistance of $8,000,000 per annum, less the transitional grant while it applies, "to enable it to continue public services at the levels and standards reached subsequent to the date of union without resorting to taxation more burdensome, having regard to capacity to pay, than that obtaining generally in the region comprising the maritime provinces of Nova Scotia, New Brunswick and Prince Edward Island". Accordingly we recommend additional financial assistance as follows:
(a)	for the fiscal year beginning April 1, 1957, $8,000,00 less the transitional grant of $1,400,000 or, $6,600,000;
(b)	for the fiscal year beginning April 1, 1958, $8,000,000 less the transitional grant of $1,050,000 or, $6,950,000;
(c)	for the fiscal year beginning April 1, 1959, $8,000,000 less the transitional grant of $700,000 or, $7,300,000;
(d)	for the fiscal year beginning April 1, 1960, $8,000,000 less the transitional grant of $350,000 or $7,650,000;
(e)	thereafter $8,000,000 per annum.
The report concludes at that point. It is signed by the three commissioners and evidently is a unanimous report. I have already said, Mr. Chairman, that having regard to the personnel of this royal commission its recommendations are entitled to great respect.
There are two questions which arise, I think, when anyone reads this report. The first is as to why, without any explanation, in the final chapter the royal commission departed from the year 1956-57, which was the basic year upon which all the evidence had been submitted up to that point, and chose to base its recommendation on the fiscal year 1957-58. That question remains unanswered.
The second question which arises is as to what the commission meant by the word "thereafter" in the final line of the final recommendation. This naturally presents a question, and in endeavouring to determine the meaning to be given to this expression in the report one must of course have regard to the fact that these commissioners are not men who are given to expressing themselves in words of imprecise meaning. Had they meant to say that these payments were to run indefinitely I think it might be expected that they would have said so explicitly. Certain it is that the province of Newfoundland did not ask or expect the royal commission to make any recommendations of this nature that would have indefinite effect. Indeed, counsel for the province, Mr. Golden-berg, in his submission dealt with this subject explicitly. At page 621 of the proceedings

Mr. Goldenberg, after dealing with the annual amount sought by the province of Newfoundland, made this comment:
This is the minimum additional financial assistance now required in order to continue the existing levels and standards oi services on a most conservative basis. It is not suggested, however, that such assistance will be required indefinitely.
Then further, at pages 627 and 628, Mr. Goldenberg, the eminent counsel for Newfoundland, again dealt with this aspect in his submission to the royal commission on July 26. He said:
Now, Mr. Chairman, I am not suggesting that this additional financial assistance will be required by Newfoundland indefinitely. As Newfoundland's public services improve and its economy expands, the differentials in income and in tax burdens as compared with other provinces will narrow; with the narrowing of the gap, the dependence on grants from the government of Canada will decline. Accordingly, while Newfoundland is now entitled, under the provisions of term 29 of the terms of union, to receive additional annual financial assistance of the order of $17,000,000, provision should be made for a further review of its financial and economic position within a reasonable period of time.
Accordingly, Mr. Chairman, on behalf of the government of Newfoundland I submit that the government of Newfoundland is entitled to claim from the government of Canada an annual grant of $17,000,000 subject to the adjustments which we have discussed over and above all other federal grants as the additional financial assistance required under the explicit provisions of term 29. I recommend further that the said grant should be paid annually to the province of Newfoundland, commencing in the fiscal year 1957-58. I recommend that the amount of the said annual grant should thereafter be subject to periodic review. That, Mr. Chairman, completes my presentation of the case under term 29.
I may add, Mr. Chairman, that throughout the hearings on more than one occasion the same theme had been reiterated, that the annual amounts which were being asked for by Newfoundland were not being asked on the basis of a period of indefinite duration but that there should be a further and later review.
Mr. Chairman, I do not need to remind the house of the reaction of the government of Newfoundland to the report when it was made public in July of 1958. If I say the report was received with keen disappointment in Newfoundland, I perhaps understate the reaction in the tenth province. This subject was discussed in this house last September, and I am sure I do not need to remind hon. members of the expressions used on that occasion. However, the discussion occurred, on September 4 and 6 and the comments of the premier of Newfoundland on the recommendations are recorded in Hansard at page 4724 of September 6. Feelings in Newfoundland were obviously deeply disturbed by the
Grants to Newfoundland report, and the comments of the head of the government of the province were put in strong terms.
A meeting followed, Mr. Chairman, in Ottawa last January 26. Premier Smallwood and Mr. Spencer, the provincial treasurer of Newfoundland, came to Ottawa accompanied by Mr. A. B. Perlin, who had been a member of the royal commission which had prepared the submission which the province made to the federal royal commission, as well as Mr. Carl Goldenberg, the counsel. Premier Smallwood and Mr. Spencer met with the Prime Minister and myself in the morning. The conference continued in the afternoon without the Prime Minister, but officials of the Department of Finance were also present on this occasion.
I am not going to review in detail the nature of the extended and friendly discussions which were held at that time. Premier Smallwood was highly critical of the report of the royal commission. He criticized it on various grounds, and he asked that the federal government provide larger payments than those recommended. He pressed for a review at a later date on the subject of fiscal relations between the province and the dominion. He pointed out he had previously recommended that there should be this further and later review. In the course of the discussion possible dates for such a review were mentioned, and Mr. Smallwood suggested that in view of the imponderables in the situation concerning the future, this review should take place in the year 1965, or thereabouts; and he referred to the fact, as he put it, that there had already been ten reviews of the financial provision made on behalf of the maritime provinces in confederation since 1867.
I turn now to recall to the minds of hon. members that in the meantime, since the royal commission had been appointed in the spring of 1957, this government had moved, I think I may say swiftly, to enlarge the payments made to Newfoundland which were not related to the provisions of term 29. The Atlantic provinces adjustment grants came into effect on April 1, 1958, and provided for payments out of the federal treasury to the four Atlantic provinces of a total of $100 million over the four fiscal years then commencing. That provision had followed approval given to it at the dominion-provincial conference in November, 1957, and a meeting of representatives of the governments of the four Atlantic provinces at Halifax later in 1957, at which agreement had been reached as to the distribution of this $25 million annual payment from the federal treasury.
5900	HOUSE OF
Grants to Newfoundland.
The agreement was that the payment should be divided at the rate of $7,500,000 each per annum, to Newfoundland, New Brunswick and Nova Scotia, and $2,500,000 to Prince Edward Island. It is, I think, of interest to say in this committee that the fact that there was this equal distribution among the three provinces of Newfoundland, New Brunswick and Nova Scotia reflects credit upon the attitude of the province of Nova Scotia, having regard to its very much larger population. Also an additional 3 per cent was provided for the provincial share of the yield from the standard taxes by an amendment to the Federal-Provincial Tax-Sharing Arrangements Act.
Those were increases in the unconditional payments made by the federal treasury to Newfoundland amounting in all to approximating $9 million per annum. On the side of conditional payments or cost sharing arrangements there was, of course, a very substantial addition for the benefit of Newfoundland. Here, Mr. Chairman, if the committee would approve, I might place on record for the information of hon. members a statistical summary of federal contributions to and for the benefit of Newfoundland for the fiscal years 1949-50 to 1959-60 inclusive classified under four headings; unconditional grants, conditional grants, payments for the benefit of provincial institutions and payments to individuals.


John Whitney Pickersgill: On that point I think it would be extremely prejudicial to a dispassionate consideration of this case if those figures are to be given only for Newfoundland. I think they should be given for the four Atlantic provinces in exactly comparable form and for the provinces of Manitoba and Saskatchewan, with which comparisons have always been made in the past. Would the minister do that?


Donald Methuen Fleming: I have not those figures with me, though they could be brought together. They were prepared for an order for return which was passed some time ago. However, I have not those figures here. While I believe we should consider this matter with the utmost harmony, having regard to its considerable constitutional importance, I could not agree that for this purpose the figures for other provinces have any relevance. The hon. gentleman and I may not agree on

that. No one doubts that there were payments made to other provinces and that the payments were made in keeping with federal legislation, but this table which I was proposing to place at the disposal of hon. members is not put forward for the purpose of comparison with other provinces but simply to give the committee the factual data as to the provision which has been made and from which Newfoundland has derived benefit in the period since confederation.


Lester Bowles Pearson: Would the minister agree, however, that the payments which relate to the other provinces were made without consideration to any other payments which had been made previously as a result of obligations to those provinces?


Donald Methuen Fleming: Oh, yes. I pointed out that these payments were made without any regard to the terms of term 29. In the preliminary figures for the years 1958-59 and 1959-60 this table includes the payments which are in contemplation as a result of the measure now under discussion.


The Acting Chairman (Mr. McCleave):: Does the committee give the minister permission to include this compilation as an appendix to Hansard?


Some hon. Members:: Agreed.


John Whitney Pickersgill: In spite of the lack of courtesy shown me by the Minister of Trade and Commerce on Saturday, I do not object to what the Minister of Finance is asking for now.


Mr. Churchill:: Nonsense. You were trying to break the rules, that was all.


Donald Methuen Fleming: I appreciate the consideration extended by the hon. gentleman. I was simply putting this on the record because I thought the information might be of assistance to hon. members with regard to this point. I think it would be more useful to have them in the text of my remarks at this point rather than as an appendix to Hansard, and perhaps, Mr. Chairman, you would so direct.


Robert Jardine McCleave: Is
it agreeable that the table be inserted in Hansard at this point of the proceedings?


Some hon. Members:: Agreed.
[Editor's note: The statistical summary referred to follows.]

Statistical Summary op Federal Contributions to Newfoundland for the Fiscal Years 1949-50 to 1959-60
The statistical information for section A, unconditional grants, has been drawn from the public accounts of Canada. The information for section B, conditional grants, has been drawn for p years 1949-50 to 1952-53 from D.B.S. publication "Financial Statistics of Provincial Governments" and from fiscal year 1953-54 to 1957-58 from D.B.S. publication "Financial Statistics of the Government of Canada which commenced publication with the former fiscal year. The figures for 1958-59 and 1959-60 are from various departmental sources and are preliminary. While the information is generally^ complete, in some cases no provincial distribution has been available and this has then been made on the basis of previous or anticipated experience.
The information m sections C and D is draw'nfrom the public accounts of Canada, departmental and agency sources.
With respect to slum clearance (section B), this is the net cost. It does not include advances for purposes of land assembly and low cost housing projects some part of which is recoverable.
1. NEWFOUNDLAND-1949-60 (in thousands of dollars)
A-Unconditional grants
1.	Statutory subsidies	
2.	Transitional grant	
3.	Tax rental (1)	
4.	Equalization	
5.	Stabilization	
6.	50 per cent share of income tax on power utilities	
7.	Atlantic provinces adjustment grant	
8.	Term 29 award	
Subtotal	
B-Conditional grants
1.	Agriculture	
2.	Health	
1. Hospital insurance	
4.	Welfare	
5.	Vocational training, etc	
6.	Highways and transportation	
7.	Resource development	
8.	Slum clearance	
9.	Civil defence	
10. Other	
Subtotal	
C-Payments for the benefit of provincial institutions
1.	University grants	
2.	Grants to municipalities in lieu of taxes on federal property_
Subtotal	
D-Payments to individuals
1.	Old age security	
2.	Family allowances	
3.	Unemployment insurance benefits	
Subtotal	
TOTAL	
1949-50	1950-51	1951-521,925	1,540	1,5696,500	6,500	6,5004,860	7,200	7,733-	-	6213,285	15,260	15,864390	980	7291,468	4,719	3,224-	47	63Mil!	958	9991,858	6,704	5,015_	181-	-	15-	-	196_	1,6979,747	10,224	10,6143,291	4,042	2,25713,038	14,266	14,56828,181	36,230	35,6431952-53	1953-54	1954-551,569	1,569	1,5695,650	4,800	3,95012,789	11,825	12,54798	161	19020,106	18,355	18,256_	8	33835	857	824952	1,019	1,02090	84	414527	877	2,018_	3	212,404	2,848	4,330187	192	19948	17	-235	209	1996,996	7,243	7,46011,039	11,498	11,9683,553	5,877	7,53221,588	24,618	26,96044,333	46,030	49,7451955-56	1956-57	1957-581,569	1,569	1,5693,100	2,250	1,40012,484	13,805	4,449-	-	11,579208	214	24717,361	17,838	19,24481	130	1371,011	1,026	1,0951,126	3,716	3,456142	406	3852,240	1,171	861647	66	5631	33	14-	25	-5,278	6,573	6,004206	415	42647	-	33253	415	4597,599	7,738	9,49112,415	12,881	14,1313,261	9,896	15,18923,275	30,515	38,81146,167	55,341	64,518
Prelim- Estiinary mated
1958-59	1959-60	Total1,589 1,050 4,737 12,155	1,569 700 5,402 13,820	17,586 42,400 97,851 37,554286 7,500 13,550	296 7,500 7,300	1,762 15,000 20,85040,847	36,587	233,003162 1,688 2,800 4,577 181 4,913 230	164 2,001 4,900 4,762 345 3,025 1,660	715 11,436 7,700 30,039 2,157 17,589 2,65925	46 71	173 9614,576	16,974	72,564657 133	675 n.a.	3,138 293790	675	3,43111,000 15,200 17,871	11,160 15,600 n.a.	70,384 135,317 72,76944,071	26,760	278,470100,284	80,996	587,468
(1) The recovery of the overpayment under the 1952 agreement which amounts to some $102,315 per annum for fiscal years 1957-58 to 1961-62 has not been deducted from the tax rental pay. ments for those above years to which the deduction applies. n.a.=not available.
Grants to Newfoundland

Grants to Newfoundland


Donald Methuen Fleming: I hope not to detain the committee much longer. The government was faced with the necessity of making a decision with respect to the recommendations contained in the report of the _ royal commission, and to make such a decision in the light of what I have said about the extent of the provisions of article 29, of what I have said about the importance to be attached to the recommendation of the royal commission, the reservations on certain aspects, which one has on reading the report, and also the objections taken to the recommendation by the premier of Newfoundland notwithstanding what was said earlier about the personnel of the royal commission.
Under all the circumstances the government has decided to ask this house to make the following provision by the present bill. It has been decided to ask the house to provide for payments by the federal treasury to Newfoundland for the five-year period commencing April 1, 1957, and concluding March 31, 1962, at the rates recommended by the royal commission. The five-year period in question coincides with the current five-year period of agreements entered into in pursuance of the Federal-Provincial Tax-Sharing Arrangements Act. Indeed, it coincides with the current five-year period prescribed by that particular enactment of this parliament.
If the bill receives the approval of parliament there will be provision made for payment in respect of these five years of course, over and above the transitional grants which expire on March 31, 1961, of a total of $36,500,000. Of this sum nearly one-half will become payable forthwith. The payments that were recommended for the fiscal years 1957-58 and 1958-59 and the first of the two semi-annual payments for the current fiscal year, 1959-60, will become immediately due and payable, and they aggregate $17.2 million.
It is proposed that this provision be made on a continuing basis by this bill, and that the matter should not be left to be dealt with by items in the annual estimates. In this respect the bill gives effect to the request made by Premier Smallwood. The payments, of course, will be unconditional.
The second aspect of the matter concerns what is to follow March 31, 1962. Already, as a result of decisions taken at the dominion-provincial conference of finance ministers and provincial treasurers last Monday and Tuesday, a comprehensive study of all aspects of federal-provincial fiscal relations has been proposed, approved and launched.
I point out that this bill notes and states that in the course of that comprehensive review not only will the circumstances of Newfoundland be taken into account along with

those, of course, of any other provinces, but that any special circumstances relating to Newfoundland will be taken into account in determining the financial relations between Canada and Newfoundland after March 31, 1962. This position is clearly set out in a recital in the bill. Thus parliament is invited to place itself on record as giving to Newfoundland an assurance which, we are led to understand, means much to Newfoundland and to which that province will, it is expected, attach no little importance.
This, then, is the approach of the government in this important matter, and I think it may be quite fair to say that it is an approach in the spirit of confederation that we believe will be served through the medium of this significant measure. In conclusion may I point out that all financial relations between the dominion and the ten provinces of this country must be reviewed as at April 1, 1962.


John Whitney Pickersgill: Mr. Chairman, would the minister permit a question at this point. He said "must be reviewed". Could the minister give the statutory authority for that?


Donald Methuen Fleming: 1 am not referring to statutory authority, Mr. Chairman. If my hon. friend will allow me to proceed I think he will see quite clearly what I mean. I point out that every province is concerned in what happens as from April 1, 1962, in regard to the financial relations between the dominion and the provinces. It is with this fact in mind that we proposed the comprehensive study which was approved and inaugurated last week. It is quite clear that Newfoundland's fiscal relations with the dominion are explicitly included in the scope of this comprehensive study. That is the setting in which this review will occur, as the Prime Minister said in this house in his statement of March 25.
What may be said of special claims on the part of Newfoundland? It is quite clear in the light of the difficulties the royal commissioners had to face that it would be impossible to make calculations today on that subject. No one can project that far in the future in a period when the development of resources in Newfoundland and Labrador is proceeding at a very rapid pace, and when the population is increasing at an unprecedented rate, and when many other changes are taking place. Therefore the bill expressly states in one of the recitals that "any special circumstances relating to the financial position of the province of Newfoundland after March 31, 1962, would be taken into consideration".
We have sought in this measure to spell out this matter in parliamentary form, indeed in

black and white. May I remind hon. members that apart from the constitutional subsidies, no other province-not one of the other nine provinces-has anything in black and white beyond March 31, 1962, to define its financial relations with the dominion; yet does anyone doubt that honourable solutions of fiscal problems between the provinces and the dominion after that date will be earnestly sought? This is the way the Canadian confederation has worked, and in the view of the government this is the way the Canadian confederation will work in 1962 and in years to come.
As a government we have endeavoured to demonstrate our concern over the fiscal problems confronting the provinces and the municipalities. We have enlarged our own federal burdens in order to assist the provinces and municipalities to meet theirs. As I have already endeavoured to point out, there is no binding stipulation on the federal government under article 29 to follow in any way the terms of any recommendations made by the royal commission; yet in the same spirit that animated Mr. St. Laurent in his statement in the house in February, 1949, which I read earlier, we are asking the house to appropriate by this bill for the period ending March 31, 1962, the sum of $36,500,000. In this way we are inviting parliament to express the desire of parliament and the Canadian people to be just and fair to Newfoundland.
Likewise there was no obligation on parliament to make any such provision as is now made through the medium of the Atlantic provinces adjustment grant; yet parliament made that provision and the four Atlantic provinces are deriving the benefits thereof today. Why was that done? While there was no legal obligation to do it, it was an expression on the part of the Canadian parliament of its view that the Canadian people are one family and that we must have regard to the problems of all sections of this great country. That measure was an expression of the spirit of confederation. It was an expression of the concern of the dominion, with the concurrence of the other six provinces, at the conference of November, 1957, over the well-being of the four provinces down by the sea. That concern, Mr. Chairman, will continue.


Mr. Carter:: Will the minister repeat that statement?


Donald Methuen Fleming: My friend will find it on record. I said it was a matter of concern, and that that concern will continue. So, Mr. Chairman, I do earnestly urge that the concern, the fear, let us say, in regard to what may happen in the future is not a 66968-9-374
Grants to Newfoundland justified fear. I think the expression contained in an editorial in the Ottawa Citizen, which is not a friendly newspaper to the present government, is a fair statement of the spirit that will actuate the parliament of Canada in the days to come. Concerning the recommendations of the royal commission and the action indicated by the Prime Minister in his statement in the house on March 25, the Citizen had this to say on March 28:
No federal government, of whatever party stripe, is likely to seek by a deliberate act of bad faith to dismember that partnership.
So, Mr. Chairman, I do suggest that what we are doing today is proposed to the house in a spirit in keeping with the true spirit of the Canadian confederation. May I add, sir, that we look forward with confidence to a rapid advance by Newfoundland, to the fruitful development of her vast resources, to the exploitation of her material endowment for the benefit of her people, and to their enjoyment of public services, schools, hospitals and roads, worthy of Canada's Atlantic bastion. In assisting Newfoundland to attain her just place in Canadian prosperity and well-being, it is our hope and wish that the financial provision made by this bill and the assurances which accompany it will be effective, helpful and timely, and that they will demonstrate to our compatriots in the tenth province the warm and respected place they hold in the hearts and hopes of the other members of the Canadian family.


Lester Bowles Pearson: Mr. Chairman, the committee will have listened, I know, with the greatest possible interest to the statement the minister has just made on the resolution before us. If I may quote the words of the minister as I took them down, "having regard to the importance and the nature" of the subject matter of this resolution, dealing as it does with fundamental matters concerning our confederation, it seems to me that it would have been more appropriate to have had this legislation introduced and sponsored in the house by the Prime Minister, the leader of the government. I say that without, of course, any disrespect to the minister who has put the case as he sees it before us this morning very clearly and in very moderate terms and tones. But I think it would have been even more appropriate if the Prime Minister had taken the responsibility for this legislation because of the statement he made on this matter in March last, and I will have something to say about that later.
This resolution deals with a matter which in a sense is concerned with the completion of the work of confederation. There was no

Grants to Newfoundland single move made by the previous government, of which I had the honour to be a member for some years, which caused our party greater pride than that which brought about, except in regard to this one bit of unfinished business, the completion of this great work of unity in confederation, this great work of national development which had eluded the efforts of Canadian and Newfoundland statesmen for many, many years before it was successfully accomplished ten years ago.
There was, however, as I have said, one piece of unfinished financial business which was in a sense postponed but is dealt with in an article which is an integral part of the terms of union, article 29. Term 29, as it is called, was as much a condition of union as any other article of this fundamental pact which brought about union. We should keep it very much in our minds that if term 29 had not been included perhaps confederation could not have been completed at that time. I think those of us who had something to do with the negotiations which were so successfully concluded then will all agree as to the importance of term 29.
That article, just as much as the others, constituted a specific and solemn undertaking given by the Canadian government and accepted as satisfactory by the government of Newfoundland as the result of which two sovereign nations-I admit that one of them at that time had its sovereignty temporarily in a commission-within the commonwealth of nations signed a pact, a treaty if you like, which provided for their union. Indeed in that sense, because of the circumstances that surrounded the negotiations at that time ten years ago, the negotiations and this pact, if you want to call it that, differed from the negotiations, agreements and arrangements which covered the colonies coming into a confederation through an act of the British parliament in the nineteenth century. That is the way term 29 as part of the pact of union is regarded by the people of Newfoundland, and I think it is the way it should be regarded by all Canadians.
Perhaps I might put on the record, because I think it correctly reflects the views of the people of Newfoundland with regard to the significance of term 29, an excerpt from the budget speech of the minister of finance of Newfoundland, Hon. Mr. Spencer, on June 26 of this year. I quote what he had to say at that time in the Newfoundland legislature:
It will be useful, I think, if I put the simple facts on the record. These facts are unmistakable. It would require almost a wilful attempt to misunderstand them.
This term-

He was talking about term 29.
-was passed by the parliament of the United Kingdom, House of Commons and House of Lords. It was passed by the parliament of Canada, House of Commons and Senate. It was confirmed by the government of the day in Newfoundland. That would be the commission of government. It forms part and parcel of Canada's constitution, the British North America Act of 1867 with amendments. It is therefore no ordinary document. It is not a contract made between two tradesmen. It is rather a solemn agreement made between two high contracting parties, these being the government of Newfoundland and the government of Canada at a time when they were separate countries.
What is term 29? The minister put it on the record once, but perhaps he will permit me and the committee will bear with me if I read it into my own remarks.
In view of the difficulty of predicting with sufficient accuracy the financial consequences to Newfoundland of becoming a province of Canada, the government of Canada will appoint a royal commission within eight years from the date of union to review the financial position of the province of Newfoundland and to recommend the form and scale of additional financial assistance, if any, that may be required-
May be required for what?
-by the government of the province of Newfoundland to enable it to continue public services at the levels and standards reached subsequent to the date of union, without resorting to taxation more burdensome, having regard to capacity to pay, than that obtaining generally in the region comprising the maritime provinces of Nova Scotia, New Brunswick and Prince Edward Island.
I would just point out in regard to term 29 that there is no time limit in any way, shape or form, directly or indirectly; no time limit has been placed in this particular obligation.
Now, as the minister pointed out, in due course the royal commission to examine this matter of term 29 was appointed and it consisted, as he well said, of distinguished, competent, and I think objective persons who gave this problem the careful and considered examination to which it was entitled, and who made their report on May 31, 1958.
I agree with the minister that the matter under investigation was complicated. Indeed, the difficulties that faced this commission were only matched by their importance. There is no doubt about that. It was not easy, I am sure, for the commission to come to the conclusions that are embodied in its report. But I am perfectly certain that it did not come to those conclusions, and it did not make those recommendations, without a most exhaustive and painstaking examination, and without having received evidence from every possible source bearing on this problem.
This morning the minister put on the record some quotations from the report of the commission, and perhaps I may supplement one or two of them. He was quoting

from page 5 about the economic background of the immediate situation in Newfoundland. He quoted from the top paragraph on that page, or part of it, and I believe the last part of that paragraph should be added to what the minister said:
In this respect Newfoundland was at about the same stage as the maritime provinces were in 1867.
The minister himself put that sentence on the record. Then the report goes on to say:
The proportion of homes equipped with water and sewer services was only about one-third of the Canadian ratio. The death and disease rates were considerably higher than those in any other Canadian province, which indicated, among other things, a serious deficiency in health services. The physical facilities for education were generally inadequate.
There was, therefore, no question in anybody's mind-indeed, there is no question now-as to the need for help to bring about a situation in Newfoundland under which these deficiencies would be removed. In this respect, and indeed in other respects, Newfoundland would be assisted to reach at least the level of other provinces of Canada.
Then the minister also discussed certain observations of the royal commission on financial and debt matters. He read, for instance, from page 18 some sentences concerning the debt position of the provincial government which indicated, in the first sentence of that paragraph, that it was very favourable in the early years. I should like to put on the record also the last two sentences of that paragraph which he did not mention:
However, in considering the significance of this relative position-
That is the position in regard to provincial debt relative to the other Atlantic provinces.
-regard must be had to the fact that the government of Newfoundland has been encountering rising deficits on ordinary account over the last several years. Also, consideration must be given to the vulnerability and uncertainties of the Newfoundland economy and the significantly lower per capita personal income. In these circumstances special problems and limitations arise regarding the support of heavy fixed charges.
It was one of the purposes, of course, of the assistance to be provided under term 29 to raise the level of services which would involve heavier fixed charges. Then on page 19 of the report there is a paragraph dealing with the levels and standards of public services in Newfoundland, in which we find this:
It must be assumed that the phrase "the levels and standards reached subsequent to the date of union" means the highest levels and standards reached. Otherwise term 29 has little meaning.
66968-9-374J
Grants to Newfoundland
This has a bearing on something the ministers said about the year that was chosen as the basis.
It would appear that the purpose of this clause in the terms of union was to ensure that levels and standards of public service reached in Newfoundland during the period under review would continue to be feasible for the province if its taxation were no less burdensome than that obtaining in the maritime provinces generally.
The minister quoted from the recommendations of the commission and wondered why the commission took the year 1956-57 as a basis; why did they pick on that year? Well, obviously they picked on the end of 1956-57 because that was the latest year at which a certain level had been established, and that must be the basis on which they must make their calculations into the future. I would have thought that was quite a reasonable attitude for the commission to adopt.
Then, having made these observations, the commission made its recommendations. I do not propose to put them on the record. The minister did that, and indeed it has been done before. The recommendation was that there should be a grant of $8 million a year, less the existing transitional grant, until 1961 and thereafter-thereafter being after the fourth year-$8 million per annum. There is no ambiguity about that; thereafter, $8 million per annum. There is no cut-off date recommended by the commission. There is no suggestion that the payment should stop at any particular time.
There is, of course, as the minister has pointed out, consideration given to the desirability of reviewing these matters; that would be the most normal and natural course to follow. But the provision for review which might have been agreed upon, I suggest, until any change had been made as a result of that review by agreement on both sides-any provision of that kind-could not affect the obligation of the recommendation of the royal commission; "thereafter $8 million a year".
Let me make it clear again what the understanding on this point was in Newfoundland. If we do not appreciate their clear understanding of the obligation which was undertaken by the federal government as the result of which Newfoundland accepted the act of union, and if we do not appreciate their feelings in this regard, it is difficult to understand their reaction to the announcement that was made last March. In the budget statement of the minister of finance he had this to say on this point:
What is this treaty? It is a treaty under which one of these parties, Canada, undertakes to pay to Newfoundland each year the cost of continuing Newfoundland's public services at certain standards and levels. There is only one condition to this undertaking. The condition is that Newfoundland itself shall tax its people for that purpose no less
5906	HOUSE OF
Grants to Newfoundland burdensomely than the governments of Nova Scotia, New Brunswick and Prince Edward Island tax their peoples for the support of their public services. Regard must be had, however, to the relative capacity to pay in each of the four provinces.
Then he went on to say this in his budget speech last session-


Donald Methuen Fleming: In the session of 1958, does the hon. member mean?


Lester Bowles Pearson: This is Mr. Spencer in his budget speech in Newfoundland.


Donald Methuen Fleming: I beg the hon. member's pardon. I thought he said the Minister of Finance.


Lester Bowles Pearson: I am sorry. I do not want to get my ministers of finance mixed up. This is the minister of finance of Newfoundland.


Donald Methuen Fleming: I think he is known as the provincial treasurer.


Lester Bowles Pearson: He calls himself minister of finance, anyway. He said this:
It is necessary to make one further observation on this matter. When the premier of Newfoundland and I visited the Prime Minister of Canada in January last the premier quite frankly suggested to the Prime Minister that Newfoundland would be pleased if the parliament of Canada provided for another review under term 29, according to the terms of reference of term 29.
There is no difference of opinion on that matter. The minister himself made that clear this morning. Then Mr. Spencer went on to say this:
The premier suggested that this second review might well take place within 16 years of the date of union. The $8 million a year would, he suggested-if the Canadian government would not in the meanwhile accede to Newfoundland's request to raise the amount-be paid each year for the eight years pending the holding of the second review. This is an altogether different thing from agreeing to pay the amount recommended for a strictly limited period of years, after which it was to come to a final and complete end. This review that might take place outside the terms of reference of term 29 would deprive Newfoundland of the special rights set up for her in term 29, and place her at the mercy of any general settlement which might be contrived from time to time for all the provinces or any number of them.
I realize that the minister made quite a point this morning of the fact that no legal obligation was imposed on the government of Canada by any recommendation of a royal commission. That, of course, is perfectly true. No legal obligation is imposed on the government of Canada by any recommendation of any royal commission. Perhaps no legal obligation was imposed on the government of Canada to continue the confederation subsidies after 1867. They had to be voted by parliament, and parliament was the master of its own destiny in regard to the voting of money.


Mr. Browne (SI. John's West):: May I ask
the hon. member a question at this point? Does he not think that the British North America Act, having made provision for the payment, would have given the maritime provinces a right to this payment?


Lester Bowles Pearson: Yes, indeed. The British
North America Act has also been changed by term 29 of the act of union with Newfoundland. All I am pointing out is this. While these obligations are embodied in the constitution, both in the act of 1867 and amendments and in 1949, the money to carry out these obligations must be voted each year by the parliament of Canada; and if the parliament of Canada, in its sovereign wisdom, sees fit not to vote that money the province would not get the money and the obligation would have been infringed. If there is a constitutional obligation or a moral obligation of this kind-as I submit there is under term 29 and in the recommendation made by the royal commission under term 29-I suggest that the refusal by any federal government to carry out that obligation would be of the same nature as a refusal by the federal government to carry out similar obligations made in respect of other provinces for financial assistance when they came into confederation. Furthermore, it seems to me-


Mr. Walker:: Might I ask the Leader of the Opposition this question. Was that the point of view of the then prime minister, Mr. St. Laurent?


Lester Bowles Pearson: I will come to that matter. Indeed it was his point of view. I shall be glad to deal with that matter in a few moments.
But surely, Mr. Chairman, there was this obligation under term 29, and I think there was an equally strong moral and constitutional obligation with regard to the recommendations of the royal commission. If that is true, then any change with regard to these matters-and I am not suggesting that there should not be changes in the future-or any change with regard to recommendations of this kind made under term 29, should be a change made with the knowledge and approval of both parties to the contract. Indeed the Prime Minister himself last March, when he was referring to this matter, talked about a contractual obligation; and one party to a contract-especially a constitutional contract, a contract which is one of the bases now of confederation-surely has no right to alter the terms of the contract unilaterally. That is the argument I am now trying to make.
Mr. Chairman, I wonder whether you would call it one o'clock.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Lester Bowles Pearson: Mr. Chairman, at one o'clock I was discussing the nature and effect of the recommendations of the royal commission. I was asked a question about the legal significance of those recommendations. I quite agree, and the minister made it perfectly clear this morning, that recommendations of a royal commission of this kind do not have legal significance in the sense that they impose any legal obligation on the government that has set up the royal commission. Indeed, as the minister pointed out this morning, the then prime minister on Monday, February 7, 1949 made it quite clear what his understanding of the significance of the work and recommendations of the royal commission would be. He said-and I quite agree that there is no undertaking-


David James Walker: What page is that?


Lester Bowles Pearson: It is February 7, 1949; I have not the page here.


Donald Methuen Fleming: It is page 289.


Lester Bowles Pearson: Page 289 of Hansard for February 7, 1949. The then prime minister at that time said there was no undertaking to implement any terms of any recommendations which might be made by a royal commission. It was felt by the Newfoundland delegation and by the representatives of the Canadian government that it was something that was being entered into in a spirit of fairness on both sides, and that it was not necessary to make binding stipulations about what would happen with respect to the report of the royal commission.
On the other hand I think I am also right in my recollection, Mr. Chairman, that at that time-perhaps not exactly at that time but in discussions with regard to this matter-the Minister without Portfolio from Newfoundland had emphasized the importance that would be attached to the recommendations of this commission-


Mr. Browne (St. John's West):: Mr. Chairman, may I make a correction. The passage which the hon. gentleman quoted from Mr. St. Laurent's speech was before the election of 1949, and I did not come into the house until October.


Lester Bowles Pearson: That is right; but the minister also came into the house in 1953, I think it was; at any rate, when he was in the house he emphasized more than once the importance which would be attached to this royal commission when it was set up, and he argued that it should be set up. I think he
Grants to Newfoundland said at that time, and he will correct me if I am wrong, that the government of that day should announce in advance that it would accept the recommendations of such a commission.
Mr. Chairman, I suggest that whatever the legal significance may be, the recommendations of a royal commission of this kind to implement term 29 of the act of union with Newfoundland should not be altered in their implementation by the federal government without consultation and agreement with the other party. The minister said this morning that they will be reviewed. Of course they will be reviewed, and I have tried to put on the record the understanding of the Newfoundland government in that regard. However, I suggest that until these recommendations, having regard to the nature of the commission, the importance of the work it undertook, and the constitutional character of that work, are altered as a result of the review in question, they should be implemented by the federal government.
The minister mentioned-and this has been mentioned before-that the Newfoundland government was not satisfied with the recommendations. They thought they were not generous enough to Newfoundland, and they wanted them reviewed and altered. There is no doubt they wanted them altered upward. If that suggestion of the government of Newfoundland had been accepted by the federal government there would indeed have been a review of those recommendations; there would have been an alteration of those recommendations accepted by both parties, and that would have been perfectly fair and perfectly normal. But that kind of alteration desired by the government of Newfoundland was not acceptable to the federal government. Surely if that is a reasonable position to take-and I am not quarrelling with it for the time being-that principle should be applied in both directions. It is not in accordance with what I think should have been the conduct of the federal government to make the kind of changes in the recommendation which it is now proposing to make and which are objected to by the government of Newfoundland.
It seems to me also, Mr. Chairman, that it is most unfair to justify this change in the recommendations by the argument that since union Newfoundland had also received a good deal of financial help from Ottawa, along with the other Atlantic provinces. That this particular help should have any bearing on the obligations under term 29 of the act of union with Newfoundland does not seem to me reasonable and fair or valid. Surely the grants to the Atlantic provinces which the minister talked about this morning are grants

Grants to Newfoundland to put all the Atlantic provinces in a better economic position and have no relationship, as the minister admitted himself, to term 29. The financial assistance under term 29 is designed to put Newfoundland on a level with the other provinces in respect of services on which improvement can begin and would be based. To use the additional financial assistance given to Newfoundland in another context and for other purposes to justify an alteration in the recommendations of the royal commission, Mr. Chairman, does not seem to me to be fair.
The Minister of Finance said this morning that feelings had been disturbed in Newfoundland last March on a certain announcement of government policy.


Donald Methuen Fleming: Excuse me, but I must correct the hon. gentleman on that point. I spoke about the feelings in Newfoundland aroused by the announcement of the recommendations of the royal commission last summer.


Lester Bowles Pearson: Well, the minister did that. He said that feelings were disturbed in Newfoundland owing to the announcement of the royal commission because those recommendations did not go far enough to satisfy the Newfoundland government and to satisfy what the people of that province thought were their just demands. But the minister also referred to the strong language which was used in Newfoundland as a result of the statement made here with regard to those recommendations.


Donald Methuen Fleming: No, excuse me. The strong statements to which I referred were those put on record last September, and they related to the recommendations of the royal commission.


Lester Bowles Pearson: I am sorry if I did the
minister an injustice, but if he did not say so perhaps I can say so. Feelings were disturbed in Newfoundland last March, and that disturbance was expressed in strong language after the Prime Minister made a statement in this house on March 25 which unilaterally and without any consultation or agreement with the province of Newfoundland rejected a very important part of these recommendations. The Prime Minister had something to say about the recommendations that day, as reported at page 2215 of Hansard, and he put them on the record. The Hansard of that day made a very important omission, and after the Easter recess the Prime Minister corrected it and said there had been a mistake and that the figure for 1961-62 should be "thereafter, $8 million". So that was cleared up as far as Hansard was concerned. The

Prime Minister then had this to say, and I am quoting from page 2216:
My colleagues and I are accordingly of the opinion that parliament should be invited to take action on the commission's recommendations. It is proposed, therefore, to ask parliament to authorize payments as recommended by the royal commission, but in our view the duration of the payments should be limited to five years, as both Newfoundland and Canada have recognized the difficulties involved in making projections from one selected year into the future, and it has further appeared to be quite inappropriate to endeavour to provide for a fixed amount payable annually over a period of unlimited duration.
That is exactly what the royal commission did recommend, pending any agreed change in the recommendation. Then the Prime Minister went on to say:
A resolution will shortly be placed on the order paper asking leave to introduce a bill to carry into effect these provisions pertaining to the terms of the union.
This was on March 25. The right hon. gentleman continued:
The proposed payments will be unconditional, and will be in final and irrevocable settlement of the provisions of article 29 and the contractual obligations of the union consummated in 1949.
In other words, with respect to one part of these contractual obligations, without any agreement on the part of the other party- and this is a very important contractual obligation-the Prime Minister said "We will take action on term 29 of the act of union which will be in final and irrevocable settlement of that part of the agreement".


John George Diefenbaker: May I ask the hon. gentleman whether, in justice, he will read the final paragraph?


Lester Bowles Pearson: I was about to do that. The statement goes on:
On conclusion of the payments as of March 31, 1962, which corresponds with the conclusion of the present five-year fiscal arrangement between Canada and the provinces, Newfoundland's position can be considered in the light of the general methods of providing financial assistance to the provinces which may be in effect at that time.
In other words, this obligation under term 29 extends for five years unconditionally and after that time, though there is nothing which would indicate this in the pact or in the terms of reference of the royal commission, it can be reconsidered; the whole question could be reconsidered by the federal government in the light of the circumstances of that time, and the federal government would no doubt take whatever action it seemed desirable to take at that time.
I think I do the minister no injustice when I say this seems to be the purport and significance of the bill which will be introduced if this resolution is passed. That is something to which we on this side take strong

exception. When the Prime Minister talked about this, not in the house but at Saskatoon on March 28, as reported by the Canadian Press, he went a little further than he did in this chamber. This Canadian Press report which I quote from the Ottawa Journal under the dateline Saskatoon, March 28, reads as follows:
Prime Minister Diefenbaker says he does not interpret a royal commission report as recommending continuing payments of $8 million annually to Newfoundland indefinitely after 1962.
Though if that is not the interpretation the word "thereafter" means nothing. To continue this report:
Mr. Diefenbaker was commenting in an interview on the announcement of Premier Smallwood of a provincial "day of mourning."
Asked about opposition leader Pearson's claim that a royal commission had recommended specifically continuing payments of $8 million annually indefinitely after 1962, the Prime Minister replied that he did not so interpret the recommendations.
What other interpretation can you give to a recommendation which includes the phrase "thereafter $8 million a year"? The report goes on:
Mr. Diefenbaker said Newfoundland's financial position would be reviewed by 1962-"the whole problem of dominion-provincial fiscal relations will be looked into by that time''.
And the Prime Minister went on to say:
Premier Smallwood had had a say in appointments to the commission which was named by the previous Liberal government.
I am calling to the attention of the committee this statement that a recommendation to end payments in 1962 was made by a royal commission, and I ask the Prime Minister whether he can point to anything in the report of the commission which would justify such an interpretation of its recommendations.


John George Diefenbaker: May I ask a question? Does the hon. gentleman interpret the royal commission recommendation as requiring the payment in perpetuity of the amount in question, $8 million?


Lester Bowles Pearson: There is no other interpretation which can be given to a recommendation of the kind I have just read, which includes the words "thereafter, $8 million per annum". It is true that there are other provisos about the burden of taxation but, of course, that does not prevent a review of the position before 1962 and it does not prevent a change in that provision; it does not prevent an alteration in the terms of the report of the royal commission. However, it is our contention, and surely a reasonable one because of the nature of this obligation, that such a change in this recommendation of the royal
Grants to Newfoundland commission should be made only after review and agreement by the two parties to the change.
After all, as I have said, the province of Newfoundland has wanted a change already; it has wanted a higher figure than $8 million, and the federal government has said "No, we cannot agree". Should it not apply both ways? Until that change is made by agreement it is our contention that there is an obligation on the part of the government to maintain the recommendation of the royal commission established under the terms of the act of union with Newfoundland; and when the Prime Minister made his statement, and particularly when he elaborated on it in Saskatoon, it is no wonder that there was uneasiness and disturbance in Newfoundland itself.
The Prime Minister gave a broadcast in "The Nation's Business" series on April 20 and had this to say; I am quoting from the text of that broadcast:
I believe that the keystone of our union is the maintenance inviolate of the interpretation of those rights in terms of the fullest measure of equality of opportunity for all Canadians everywhere.
In so far as we are able to understand the nature of this bill, as explained by the minister this morning, it does not carry out those highly desirable principles which the Prime Minister enunciated in that particular sentence. I have just given my own interpretation of what the minister said in general terms about the nature of the bill, and he can correct me if I am wrong. He suggested that there will be payments made for five years as recommended by the royal commission, and after that time the federal government will decide whether or not those payments are to be continued. In other words there is no obligation on the federal government to do anything after 1962 except to have the matter reconsidered before 1962. That seems to me to be contrary to the spirit of the obligation entered into by the federal government under article 29 of the terms of union.
The province can, the minister said, rely on the good will and understanding of the federal government to take all factors into consideration which have a bearing on the situation. The province of Newfoundland can rely on the federal government to do the right thing, but the province of Newfoundland has a stronger basis for action than just relying on the good will and understanding of the federal government, in our view. It has article 29 of the terms of union and the recommendations of the royal commission, which should not be altered except through agreement with the province of Newfoundland. Therefore I appeal to the minister

Grants to Newfoundland who spoke this morning and to the government to accept the recommendations of this royal commission until both parties to the act of union agree to their change.


Hazen Robert Argue: Mr. Chairman, we in the C.C.F. group believe that Newfoundland has a very substantial claim for continuing grants from the federal treasury at such levels as will enable the province to maintain the level of services that has been reached in recent years without increasing their level of taxation beyond the general maritime level.
The objective, we feel, of national policy should be to raise the level of services all across our nation, but in particular the objective of national policy should be to increase the level of social services in the "have not" provinces. We believe it is essential in the context of our federal system that the federal government, which has such widespread taxing powers, should pay from general revenue to provincial governments by way of grants, moneys that will enable the residents of the "have not" provinces to enjoy substantially the same services that are maintained and enjoyed in the other provinces across this nation.
Anyone who has seen the province of Newfoundland will realize that levels of income and services in Canada's tenth province are definitely below the national average. As a matter of fact it is appalling to see many of the economic conditions that exist in that province. I refer to the lack of roads, and the housing that is below the standards that obtain in many other provinces. The general absence of prosperity and the appearance of prosperity as we see it in other provinces is very apparent.
During the few days I spent in Newfoundland last year I was given a very friendly reception and enjoyed meeting with the Canadian citizens of that province. Although I come from a province that has not enjoyed the same per capita income that has been enjoyed in some of the other provinces 1 was nevertheless shocked at what I saw of the economic conditions in Newfoundland. I remember being in one village where they were constructing some new streets and houses. The width of the new streets that were being surveyed, I was told, was just 50 feet. I asked why they would construct such a narrow street and was told that it was impossible to raise the funds necessary to provide wide, modern streets as we know them, for example, in the province of Ontario.
I believe that any member of this committee who has an interest in raising the standards of living for people in provinces where incomes are relatively low should support

substantial grants and adopt a generous outlook toward the problems of the people of N ewf oundland.
The members of the C.C.F. group, the party which forms the government today and the Liberal party which formed the government in 1949 supported the terms of union. Mr. M. J. Coldwell welcomed the entry of Newfoundland into confederation at that time as Canada's tenth province, and placed on the record our general objective that action by government at both levels should result in higher standards of living in the less well to do provinces. Mr. Coldwell, as reported on page 295 of Hansard for February, 7, 1949 had this to say:
May I say at once that members of the C.C.F. throughout Canada join with other people in welcoming into confederation the island of Newfoundland .. . We should consider Newfoundland and Labrador as part of the whole maritime region, which incidentally is a region that cries aloud for a new deal. . . We welcome Newfoundland, then, on another count; because it will tend to strengthen the position of the maritime provinces and the other "have not" provinces, and to highlight their problems.
Canadians generally believe today that Newfoundland's association with Canada in our confederation has been a very wise move and has been beneficial both to the citizens of Newfoundland and the citizens of the rest of Canada. But one would be blinding oneself if one did not recognize that in this addition to confederation and in the relations that have existed there have been substantial misunderstandings. I believe those misunderstandings have come about not entirely through the fault of either the government of Newfoundland or the federal government but because both in different instances have made some very serious mistakes. I believe the province of Newfoundland made a serious mistake in the labour laws it placed on its statute books recently which have resulted in the wiping out in certain instances of the freedom of association of workers in various trade unions for which they had previously indicated their support under the laws of that province. This action by the government of Newfoundland has not added to the cementing of the bonds of confederation.
The announcement made by the Prime Minister on March 25 last was another instance where the bonds of confederation were not tightened but rather were strained, having regard to the terms in which the announcement was couched. We think the terms of confederation are clear. There was to be a study by a royal commission to determine what federal assistance should continue in order that social services in the province of Newfoundland might be maintained at the level which had been reached without increasing taxes beyond the level of taxes in the

maritime provinces. This was surely a very minimum objective, because the level of services in the province of Newfoundland even after ten years of confederation is still substantially below the level of services in the rest of the maritime provinces. On page 8 of its report the royal commission had this to say on this point:
The construction programs have included significant outlays by the provincial government on industrial projects for economic development, on roads, on municipal works, and on education and health facilities. However, the expenditures on these items of social capital have served largely to keep up with the pace of a rapidly growing population. There have been few really major improvements in the levels and standards of services.
In the next paragraph the royal commission went on to say:
The lack of an adequate road system is, in the present day, one of the outstanding handicaps to economic development and social improvement.
And further:
The notable increases in Newfoundland production and incomes in recent years have not measurably reduced the disparities with the rest of the country which had previously existed. In the generally prosperous year of 1956 the average per capita personal income after adjustment for differences in the cost of living was still somewhat less than half the Canadian average and about one third less than that of the maritime provinces.
It is very obvious from the documentation of this report that services in Newfoundland are still below the maritime average, and that economic conditions in Newfoundland are not only inferior to the rest of the maritime provinces but much inferior to the remaining part of Canada. As has already been quoted a number of times in this debate, and it is not necessary to put the exact words on record again, the royal commission concludes that in order to fulfil the terms of union the federal government should pay to the province of Newfoundland after March 31, 1961 a sum of $8 million per annum. In the light of that recommendation the government has made a decision which was announced initially in the house on March 25. On that day the Prime Minister stated, as found on page 2216 of Hansard:
Notwithstanding the difficulties presented by its report, it remains a fact that the royal commission was appointed to fulfil the terms of union of Newfoundland with Canada, and these terms are part of the British North America Act. My colleagues and I are accordingly of the opinion that parliament should be invited to take action on the commission's recommendations. It is proposed, therefore, to ask parliament to authorize payments as recommended by the royal commission, but in our view the duration of the payments should be limited to five years-
The Prime Minister readily admits, as the royal commission finds in its report, that payment is necessary under the terms of union of 66968-9-375
Grants to Newfoundland Newfoundland and Canada, but he has not hesitated to say in the very same paragraph that by action of the federal government alone the implementing of these recommendations will cease as at March 31, 1962. The Prime Minister went on to say:
The proposed payments will be unconditional and will be in final and irrevocable settlement of the provisions of article 29 and the contractual obligations of the union consummated in 1949.
I think the Prime Minister erred gravely in making that latter statement. In the light of the objective that I feel all Canadians approve for the bringing of social services in the economically less fortunate provinces up to the level of services in other parts of Canada, in view of the fact that the history of this nation adequately demonstrates that the trend is for the federal government to pay more and more to the provinces to assist in the provision of essential services; and realizing that the trend in our economy is to expand, is there anyone here who believes that payments by the federal government to Newfoundland or to other provinces are likely to become less in the years ahead? So the suggestion in the Prime Minister's statement that this would be the end of the payments is not likely to be borne out by the facts. The fact is, I believe, and future events will prove this to be so, that increasing payments will be made to Newfoundland and other provinces. If that is what is most likely to happen, I think the Prime Minister's choice of words was unfortunate.
I can appreciate the position of the people of the province of Newfoundland. They have entered confederation and become a part of our nation in recent years. They are not fully conscious of the background of our nation. They feel that the guarantee they have as to economic conditions in the years ahead is contained in the terms of union, and the terms of union being further carried out have brought forth a royal commission recommendation which says, in simple English, that after the initial period spelled out, grants from the federal government shall be $8 million per annum.
I can understand their feeling that the government of Canada had sabotaged their terms of confederation when the Prime Minister announced that, in final and irrevocable settlement of the provisions of article 29, payments would be made to the end of March 31, 1962. They do not understand, as I think members of all political parties in this house really understand, that this kind of obligation of the central government to all the provinces is one that is continuing and will continue. In the light of the statement by the Prime Minister and their short history as part of Canada, I can understand why they



S912 HOUSE OF COMMONS

[Stage Direction]
Grants to Newfoundland felt this was a black day for the province of Newfoundland, and why the announcement would indicate for them that it was a day of mourning.
The government has taken into account, in some measure, the feeling of the people of the province of Newfoundland. They have announced that they are putting in the bill that will be introduced a special clause which says there will be further consideration of the position of Newfoundland by March 31, 1962. This is going some distance in taking into account the very natural feelings of the people of Newfoundland. Any federal statute that has within it a provision for the payment of a certain sum of money to a provincial government cannot, I think, be reasonably considered something that is there for all time. After all, it is the prerogative of the members of the House of Commons, of parliament, to amend Canadian statutes from time to time, and to amend those statutes which have in them provisions for certain payments, under certain conditions, and that are placed there on an indefinite basis.
I come to the conclusion, therefore, that in considering the recommendation of the royal commission that a grant of $8 million per annum should be paid thereafter, the federal government, in order to implement this recommendation, should have provided exactly what the recommendation says, namely for the payment of $8 million per annum to Newfoundland. This does not mean that $8 million, $8 million alone and nothing more, will remain in that statute forever. It merely means that is what the people of Newfoundland can look for on an indefinite basis until such time as the parliament of Canada, in its wisdom, decides to amend the provision.
I want to say, Mr. Chairman, that although we in the C.C.F. group have taken strong exception, and will continue to take strong exception, to certain actions of the government of Newfoundland which we have felt interfered with basic human rights and fundamental freedoms of Canadian citizens in Newfoundland, this in no way colours our attitude toward the economic case for Newfoundland or to the terms of confederation when they are under consideration. I feel it is a sorry day not only for Newfoundland but for all of Canada when there is so much misunderstanding over the grants that are paid to Newfoundland under the terms of confederation. I would think that a province like Newfoundland, coming into a new nation and accepting its obligations, should expect from any federal government in this country the maximum amount of consultation, the 
maximum amount of consideration. If there were this kind of consideration by both the federal and provincial government there would be no violent controversy as to whether or not the terms of union have been implemented.
I would suggest that, in keeping with the terms of reference, in keeping with the objectives of the Canadan nation, the federal government should act in such a way as to provide grants and assistance to Newfoundland, to the other maritime provinces and to the other provinces, that would provide financial help at such levels as would enable Canadian citizens from one coast of this nation to the other to enjoy substantially the same social services.
Chesley William Carter: Mr. Chairman, I was glad to hear the hon. member for Assiniboia say that the Newfoundland labour legislation has no relevance to this debate because I, too, regard it as irrelevant and for that reason I do not intend to make any reference whatever to it.
The purpose of introducing a resolution before a money bill must be to get the feeling of the house as to what the bill should contain. The wording of this particular resolution does less than justice to the bill that will be introduced if this resolution carries, because it makes reference only to provision for the payment of additional grants to Newfoundland, and makes no reference whatever to the fact that these payments are made as a constitutional right under the terms of union.
The bill that will be introduced after this resolution passes is not just another money bill to provide financial assistance to a needy province. The sums of money and payments specified in this bill are of a very special nature because they represent, in tangible form, one of the most important conditions under which Newfoundland agreed to forgo its own national sovereignty and become the tenth province of the Dominion of Canada.
These payments represent one of the constitutional rights of the province of Newfoundland, a constitutional right which is embodied in a solemn treaty between the people of Newfoundland and the people of Canada. This morning the minister went to some pains to point out that there was no legal obligation binding the government of Canada to make these payments, but he did admit that there was a moral obligation. Well, Mr. Chairman, are we to assume that a moral obligation is less binding than a legal obligation? Let there be no misunderstanding on this point. These payments represent a treaty obligation, and the amount

and manner in which they are paid constitute an indication and a means by which the good faith of the mainland Canadians, on whose behalf they are made, can be measured.
These payments are to be made in accordance with term 29 of the act of union. When a sovereign country sacrifices its sovereignty and forfeits its chief sources of revenue, great financial adjustments must of necessity be involved. It was beyond human wisdom and capability to forecast with any degree of accuracy what financial impact confederation with Canada would have upon Newfoundland generally, and particularly upon revenues available to the provincial government. It was for that reason that term 29 was inserted in the terms of union. So union with Canada became largely an act of faith on the part of the Newfoundland people, faith in term 29 and in the integrity of the people of mainland Canada.
As the minister pointed out this morning, term 29 provides for a review of the financial position of Newfoundland within eight years from the date of union, and it makes the following provisions. In the first place, it postpones a final settlement indefinitely and it directs that a royal commission be set up within eight years to do certain things. It also directs that royal commission to review the financial position of the province of Newfoundland and to recommend the form and scale of additional financial assistance, if any, that may be required by the government of the province of Newfoundland to enable it to do certain things having regard to certain conditions.
What was it that the Newfoundland government was to be enabled to do? Term 29 is very clear on this point. The Newfoundland government was to be enabled to continue public services at the levels and standards reached subsequent to the date of union, that is the levels and standards reached in 1957, eight years after the date of union. What was the limiting factor which would determine the size of payments and the conditions under which payments, if any were recommended, would be made? Again term 29 is perfectly clear. The limiting factor is that Newfoundland is to be enabled to continue these services at the 1957 level without resorting to taxation more burdensome, having regard to capacity to pay, than that obtaining in the maritime provinces generally.
Hon. members must bear in mind the fact that Newfoundland came into confederation 80 years late. Because of that fact Newfoundland did not enjoy the benefits of confederation which had been available to the mainland provinces for a period of some 80 years.
66968-9-375J
Grants to Newfoundland Newfoundland has never at any time enjoyed as much prosperity as have the other maritime provinces of Canada, a prosperity which was due largely to their huge ship-building and shipping industry and which continued after confederation though at a much slower rate.
Consequently, at the time of confederation with Canada in 1949 the public services of Newfoundland-health services, hospitals, roads, schools, etc.-were about 50 years behind those of the maritime provinces. On becoming a part of Canada the provincial government, under the dynamic leadership of Premier Smallwood, put forth a concentrated effort to improve those services. Because she had been left to her own resources, dependent upon a precarious fishing industry as the mainstay of her economy; because she had been handicapped by severe laws passed in order to discourage colonization and to encourage exploitation by the English merchants; because she had been disappointed time and time again by apathy in the mother country; because she had been faced with fires, famine, financial crisis, catastrophes, and tragedies, Newfoundland had never been in a position to build up a high level of public services.
During the first eight years of confederation more roads were built, more classrooms were constructed, more hospital beds were provided than in all our previous history. But in spite of these prodigious efforts, at the time of the royal commission inquiry in 1957 our public services were still 25 years behind those of the maritime provinces, and the public services of the maritime provinces are themselves considerably below those of central and western Canada.
The purpose, then, of these payments under term 29 is to enable the public services of Newfoundland to be continued at a level which is at least 25 years behind that of the maritime provinces, provided this cannot be done by the Newfoundland government without resorting to taxation more burdensome than that of the other maritime provinces.
Hon. members must be quite clear as to the difference between payments made under term 29, which we are considering in this resolution, and payments made under the Atlantic provinces grants act. Reports and articles in the mainland press indicate a great deal of confusion in the public mind on this point. It has been intimated that the grants are similar, that they serve the same purpose and can be substituted the one for the other. Nothing could be further from the truth. They are quite different in nature, they serve different purposes and are paid under different conditions.

Grants to Newfoundland
Payments made under the bill which will be introduced as a result of this resolution and which embodies term 29 are made as a matter of right. It is our safeguard, our guarantee that our levels and standards of public services will never be permitted to fall below what they were in 1957. It was on the basis of that guarantee that Newfoundland agreed to become a part of Canada, and Newfoundland can claim these payments as a constitutional right whenever and as long as she is unable to continue her public services at the 1957 level without resorting to taxation more burdensome than that which obtained in the maritime provinces at the same time.
Payments made under the Atlantic provinces grants act are not made as a matter of right but by the grace and favour of the government of the day. That is a very important difference. Equally important is the difference in purpose. The purpose of the payments under term 29 is to continue the public services of Newfoundland at their 1957 level. I should like to stress the word "continue". To continue the same level of public services for an increasing population means a yearly increase in public expenditures which cannot be satisfied by fixed grants even if dollar depreciation were not an important factor.
In contrast, the purpose of payments under the Atlantic provinces grants act is to enable the different provinces to improve their levels and standards of public services. If federal funds are to be devoted to the improvement of provincial public services, surely Newfoundland is entitled to share in that improvement. Indeed, on the basis of need Newfoundland would have a prior claim because her need is greater than that of the others. Otherwise the effect of the Atlantic provinces grants would be to widen the gap between Newfoundland and the other maritime provinces in their levels and standards of public services beyond the 25 years which is the case at the present time.
It cannot be denied that funds made available to the Newfoundland government through the Atlantic provinces grants, through tax rental agreements and other financial agreements, in so far as they contribute to the general revenue and affect the level of taxation in the province will have an important bearing on the size of payments made under term 29. It is true also that Newfoundland possesses a great potential of natural wealth which, when developed, will also improve her revenue position and tax burden.
We look forward to the day-and it may not be very far in the future-when Newfoundland will, through her own resources, be able to continue her public services at


the 1957 level without a tax burden any heavier than that of other maritime provinces. When that day arrives, and as long as that condition continues, Newfoundland will have no claims for financial assistance under term 29. But that does not mean that the agreement under term 29 is terminated. That agreement is part of our constitution, and it must remain as long as our constitution lasts. It may become temporarily inoperative-we hope it will become permanently inoperative- but it must never be terminated because it is our guarantee of a minimum level and standard of public service; it is our only safeguard against a return in the future of those misfortunes which too often in the past have been our lot.
I therefore plead with the minister to insert in the bill that will be introduced later a provision to safeguard Newfoundland's constitutional right and to honour the solemn agreement with Newfoundland entered into in 1949.


Mr. Batten:: Mr. Chairman, I had intended to make some rather extended remarks on this resolution, but following the statement made by the Minister of Finance this morning and having heard some of the general terms of the bill, there seems to me to be little purpose in discussing the resolution in detail when we already know in general terms what the bill is going to be.
My leader has placed our position on record, and it appears to me now that the comments I might have made at the resolution stage might more properly be made when the bill is before the house. However, there is one point which I think we ought to get clear and it is this. Term 29 is not an agreement between a province of Canada and the federal government. Term 29 is a solemn agreement between two sovereign nations and, in my opinion, has nothing at all to do with the fiscal relations existing between the province and the dominion. It was an agreement entered into before Newfoundland became a province of Canada and, may I say, it was an agreement which played a large part in Newfoundland becoming a province of Canada.
I suggest to you today, Mr. Chairman, that if term 29 had not been one of the terms of union with Newfoundland, I doubt very much whether we would be discussing this bill here today.
I know from my own people back in Newfoundland that one of the things which made the terms of union agreeable to them was the fact that after a period of eight years it would be possible to have this matter reviewed and to do something about maintaining the levels of services which had been reached at the end of the eight years. I say

again that term 29 is not an agreement between the federal government and the province; it is an agreement between two sovereign, independent nations and one which I think this government has nothing else to do but to honour. If that agreement is going to be broken or if there is going to be a change in the agreement, I think that change should be after consultation between the federal government of Canada and the now province of Newfoundland. It was an agreement entered into by two parties, and I believe it should not be changed other than by agreement between the two parties.
In the report of the McNair commission there can surely be no misunderstanding of this recommendation. There can be no misunderstanding at all as to what the recommendation means. I had hoped the time would come when my province would be able to play a more independent part in the Canadian federation that it has played in the last ten years, and I believe that it will. I believe that the time will come when we can develop our province to the point where it will be far less dependent upon the federal government than it is today. But that is going to take time, and it will need support and it will need money. However, I still believe that although we are the newest and the youngest province of Canada, the time will come when we will be able to make a substantial contribution to the Canadian federation. Our natural resources when properly developed will bring not only income to the people of Newfoundland but will bring income to the federal government. If our people are permitted to become Canadians I have no doubt there will be none more loyal except perhaps those who have always had the privilege of calling themselves Canadians.
Mr. Chairman, I listened to the speech made by the hon. member for Assiniboia. I sincerely regret that it was necessary for him to describe the province from which I come in the terms he did, but I must agree with him. We do need in Newfoundland many more improvements in our services if we are to bring the level of our services up even to the levels which are enjoyed by the people of the three maritime provinces. In the field of education we are having a difficult time, not only in improving the standard as it is now but even in maintaining it. In a province where a great many of the people are settled around the shores in isolated settlements, education becomes a mighty expensive service. Some years ago I had the opportunity of comparing the system of education in Newfoundland with that in Nova Scotia, New Brunswick, Quebec and Ontario, and even today I must admit that our services
Grants to Newfoundland are far below the services that are given to the young people of these other provinces.
Of course, that is not true in every place in Newfoundland. In my own city the educational services are perhaps a little higher than on the coast. That may be true for other larger centres in Newfoundland as well; but generally speaking the standards of education in Newfoundland require a great deal of improvement, and it will take a lot of support to be able to do that.
Our health services are at a much lower level than those experienced by people here on the mainland. In my own home city there exists a hospital that was built with some assistance from the provincial government, and by a large donation from the public in general. When that hospital was built it was well able to serve the needs of the area, but that is no longer so. Today the hospital is not able to provide the medical attention which an ordinary Canadian expects and deserves in this day and age.
One might also go on and mention other levels of services. On an earlier occasion in the house during this session, as I have in other sessions, I referred to transportation in Newfoundland and to the tremendous load which is placed upon Newfoundlanders in being asked to build their share of the trans-Canada highway. For example, the number of miles per 10,000 of population, regardless of the difficulty in building, regardless of cost, and regardless of the ability to pay, is still twice as much as in any other province, and is roughly four times that which exists in the province of Ontario. Certainly the need is great, and I hope that when this bill is introduced it will give to us something of a different conception than that given to us by the Minister of Finance this morning. If it does not, let me assure you, Mr. Chairman, that Newfoundlanders will be a very disappointed people. They will be angered, for they will feel that once again history, as it has so many times in the past, has worked against them, and I am sure they will feel that not the Canadian people but the Canadian government has deliberately failed to honour an agreement between the people of the province of Newfoundland and the central government of Canada.


Mr. McGrath:: Mr. Chairman, there have been many important items raised affecting the province of Newfoundland, both on the floor of the house and outside the house, in the recent past. They were items very controversial in their purport, and were subjects of far-reaching concern to the province of Newfoundland, indeed to this Dominion of Canada. I must confess that as a Newfoundlander I have found some of the points

Grants to Newfoundland of view expressed inside and outside this house, and some of the decisions taken because of those points of view, a little difficult to reconcile. At the same time, I fully recognize the constitutional responsibilities of those placed in positions of authority.
Perhaps of all the questions to be discussed in this house and outside, none is more important to Newfoundland than that outlined in the resolution which is now under discussion, namely article 29 of the terms of union. Indeed, article 29 is the whole purpose of this debate today, and underlies our discussion. Article 29 was born out of the contract of union between Newfoundland and Canada. As has been outlined earlier today, Mr. Chairman, article 29 called for the establishment of a royal commission some eight years after union. That article has been quoted by the Minister of Finance and by others in its entirety, and I will not burden the house with undue repetition. However, we must not lose sight of one important fact, namely that as has been established clearly here today article 29 called for the setting up of a royal commission, and in my opinion it has placed certain obligations upon us. But there is one inescapable fact, and it is this: royal commissions may recommend, but they may never legislate; the sole body which may legislate is this parliament.
I was naturally interested, and I may say a little concerned, on going back through the debates of the House of Commons leading up to confederation in 1949 to find that so little reference was made to article 29, particularly in committee. One of the few references I could find was the reference by the then prime minister which has been quoted by the Minister of Finance and which is to be found on page 289 of Hansard of 1949. Perhaps one should not lose sight of that point, the fact that article 29 was perfectly clear to everybody in 1949 and prior to 1949 when it was adopted in this house.
What of the royal commission itself? We have heard many quotations read by hon. members who have preceded me from the report of the royal commission dealing with various economic factors in the province of Newfoundland. However, we have heard little reference to the failure of that royal commission to discharge one of the most important functions under article 29, namely to establish a scale. To my mind, this is where the royal commission fails-it failed to establish a scale of financial assistance. The royal commission bases its conclusions on its findings with regard to economic conditions in the province as they are now and as they were eight years ago. I should like to quote from the report of the royal commission on page 5. It says:

The need to improve social services and health and educational facilities laid a heavy claim upon the provincial revenues. This claim was always in conflict with the need to achieve economic betterment. Under these conditions the provincial government sought out and resorted to short cuts. A considerable attempt was made to achieve a quick increase in employment opportunities through the establishment of secondary manufacturing industries with the aid of provincial loans and credits. Financial assistance was also given for the construction of a number of plants to process local natural resources. Substantial credits were made available to achieve a rapid increase in fish-processing facilities. To a considerable extent these direct financial commitments were undertaken at the expense of greater progress in the provision of basic facilities and services. Apparently, in the face of immediate employment problems it was thought that there was no time to waste for longer-run but more lasting results. In the event, these measures have met with a mixed and sometimes transitory success.
The conclusions to be drawn from this are evident, and I will not go into them here because they would bring in topics of a controversial provincial-political nature. After all, reference was made in the report as the minister, the Leader of the Opposition and the hon. member for Assiniboia pointed out, to what is perhaps one of the greatest shortcomings in Newfoundland today, namely the lack of an adequate road system. The minister quoted from page 4 of the royal commission's report and I will not go into that aspect of the question here. However, at page 8 there is another reference to this particular shortcoming, roads and it reads as follows:
The lack of an adequate road system is, in the present day, one of the outstanding handicaps to economic development and social improvement. From the economic standpoint this basic deficiency is a serious obstacle to a better concentration of population; it hinders the development of natural resources, raises the costs of distribution, restricts the diversification of industry and limits the growth of local enterprise. From the social standpoint the lack of roads adds substantially to the cost and difficulty of providing a necessary and desirable standard of public services. In short, Newfoundland is confronted with the urgent tasks of modernization, but is without the modern means of mobility and communication.
This factor is also referred to in the Gordon report or the report of the royal commission on Canada's economic prospects, and the quotation which I should like to read can be found at page 408 of that report:
It was made clear to us that perhaps Newfoundland's greatest single need was a greatly expanded system of roads in order to open up the resources of the province and also to establish communication between the centres of population and at least some of the potentially more accessible outports.
If the report of the McNair commission does not do anything more than highlight some of the deficiencies in Canada's overseas province, it will achieve a great deal as far as the economic development of the

Atlantic coast is concerned. I am sure that hon. members are not fully aware of how important this road shortage is. Most hon. members of this committee have never visited the province of Newfoundland and indeed many government members have not visited there. I would suggest that steps be taken in the future to see that there is a greater familiarity with Canada's newest province, this least known area of Canada. If hon. members were to go there they would, as the hon. member for Assiniboia pointed out, see how apparent is this deficiency in a system of roads.
I wish to make a comparison. My figures may be questioned because it is extremely difficult to find accurate figures with regard to road mileage. According to the statistics I have, the province of Newfoundland with the territory of Labrador represents a land mass of 152,000 square miles and has a total road mileage of 7,101 miles as against the province of Nova Scotia with an area of only 21,068 square miles and a total road mileage of 15,257. The implications of this analysis are obvious.
Equally obvious is the fact that under the present arrangement Newfoundland lacks the financial resources which would enable it to live up to its obligations under the Trans-Canada Highway Act and to provide provincial access roads. It has been estimated that to build and finish the trans-Canada highway in Newfoundland would cost $80 million. Nowhere else in Canada, I suggest, is there a road problem such as there is in Newfoundland nowhere else in this country has the lack of roads retarded progress to the extent it has there.
Another aspect dealt with in the McNair commission report which is highly important and one concerning which not enough is heard is the extreme vulnerability-and I underline the words "extreme vulnerability", -of the Newfoundland economy. We are at the very end of the economic yard stick. If there is a minor recession in North America, in Newfoundland it comes closer to being a full scale depression and indeed serious problems arose last year as a result of the North American economic recession. The vulnerability of the economy of the newest province is due to many factors, not the least of which is an economy based primarily on export trade, a false economy, referred to at page 7 of the McNair report in these words:
The heavy dependence in recent years upon the construction industry has introduced a further source of instability. In the best of times, it is a highly seasonal industry. Consequently seasonal unemployment and underemployment have continued to be major problems and important factors in the low level of annual incomes. Furthermore
Grants to Newfoundland the rate of construction activity is subject to wide fluctuations in accordance with business conditions and market developments as they affect an export economy. Throughout the period 1949-56 the magnitudes of the construction programs in Newfoundland whether for military purposes or resource development, have from year to year dominated the economic scene to a greater extent than in other regions of Canada.
This present year we in Newfoundland are experiencing a boom in the building industry, but what happens the year after that when these buildings are completed? What happens the year after that when there is no more building and there is a famine in the fishery? I say that these are serious questions requiring serious and careful attention and consideration lest we see in Canada's newest province a repetition of what happened in the early thirties. That is why it is so important for us to have the wherewithal to develop our own resources, to develop the resources of the great Labrador storehouse, a natural storehouse of untold mineral wealth, and the forests and minerals of the island of Newfoundland proper.
Another aspect touched on by the McNair commission which has not been mentioned in this debate thus far and which to my mind is worthy of consideration is this. I quote from page 12 of the report:
Because of the very limited development of municipal institutions, the provincial revenues in Newfoundland were required to cover the cost of services which in other provinces are generally paid for out of municipal taxes-
In other words the municipalities in Newfoundland are unable through their own sources of revenue to provide the basic services that municipalities in other parts of Canada are expected to provide. Again this represents a tremendous drain on the finances of the Newfoundland government.
The vulnerability of the Newfoundland economy to which I referred a moment ago was clearly spelled out in the report of the royal commission at page 40 where it is stated:
The economy of Newfoundland is highly vulnerable and is somewhat more dependent upon export industries than is the economy of the maritime provinces. For this reason the provincial and municipal revenues in Newfoundland may be subject to greater variation. The amount of accumulated capital and wealth is noticeably smaller in Newfoundland than in the maritime provinces. Average per capita money incomes, after the exemptions we have allowed in our calculations, are lower. This difference in incomes is greater in real terms because of the higher cost of living in Newfoundland-
These are some of the problems highlighted by the McNair report and very obvious to those people who are familiar with Newfoundland. There is on the order paper notice of motion with respect to encouraging

Grants to Newfoundland industry in the Atlantic provinces. I should like to refer for a moment, just as a recommendation to be considered perhaps at some future date, to a statute on the books of the parliament at Westminster passed in 1945 and known as the distribution of industry act, 1945. This legislation was primarily designed to provide long term loans at low interest rates to establish industries in those areas of the United Kingdom which do not have, by comparison, the means to provide jobs. This act was amended in 1950 and again in 1958, widening its original intent and broadening its scope. I would commend similar legislation for those economically depressed regions of Canada of which Newfoundland is one. On April 13, 1959, referring to the need to encourage industry and develop resources, the Newfoundland board of trade, an organization known in Newfoundland for many years, sent an open letter to the Prime Minister. I should like to quote from that letter as it is apropos to my remarks concerning the United Kingdom distribution of industry act. It reads in part as follows:
From the beginning of this century, until relatively recent times, the policy of the federal government was to develop the resources of Canada by extension of the frontiers and by assistance to private enterprise. This policy took the form of advancing and fostering settlement, creating a transportation system across the nation, encouraging manufacturing industries by tariff protection and other means; the construction of highways, canals, harbour developments, docks and terminals, public buildings and utilities of various kinds. Newfoundland, of course, was not part of Canada through all this process, and relatively little economic development took place; the island during that time depending on the export market for the sale of our primary produce and the cost of living in Newfoundland being kept artificially high by a substantial revenue tariff.
The letter goes on to refer to the fact that Newfoundland joined Canada in the era of social security and that while this is desirable and helpful it must not be allowed to become a substitute for productive, wealth-creating work which can only come as a result of developing our primary resources to the full.
I realize, Mr. Chairman, that I have been broad in my remarks but I feel that the onus is on me not only to draw attention to these deficiencies in our economy but as a responsible member of the house to suggest some means of overcoming these deficiencies. I think that in my remarks there is at least some suggestion of how these problems might be overcome through the necessary research and investigation.
I would quote from the remarks made by the Prime Minister on April 20 of this year on the national television network program "The Nation's Business". The Prime Minister, in referring to Newfoundland at that time, had this to say:

In the case of Newfoundland, there has, I am sorry to say, been some misunderstanding-but differences arise even in the best of families. Let me say at once that I believe that we can and will resolve these differences in that spirit of understanding, common sense and compromise which has been so characteristic of the Canadian confederation from its very beginning. While there is a difference of opinion at the moment about the interpretation of specific terms, what is much more important is that there should be neither doubt nor misunderstanding about the equality of Newfoundland's status in the Canadian partnership.
He emphasized the full equality of Newfoundland's status in the Canadian partnership. I do not wish to refer to personalities in any controversial way because I do not approve of that but for a moment I should like to refer to the words of the premier of Newfoundland uttered in Ottawa on April 8 of this year. The premier said at that time, and I quote from a press dispatch, that Canada "would resume its role of ignoring Newfoundland as it has done for 10 years". "As it has done for 10 years", and for the first eight years of confederation hon. gentlemen opposite were in office at Ottawa.
As has been pointed out already today, we in Newfoundland have the highest birth rate and the lowest death rate in all of Canada. At the same time we only produce 10 per cent of the province's estimated food requirements. It is this fact, coupled with the high cost of transportation, that gives Canada's tenth province the highest cost of living in the dominion. When this fact is compared with the very frightening statistic that we also have the lowest per capita income in the dominion, then the conclusions to be drawn go without saying. Always in Newfoundland we have had the problem of the people of that old and ancient colony fighting against difficult odds, always struggling against the spectre of poverty. This has been our lot down through the years and it is only of recent date with the promise of development of our great natural resources that we have shown some signs of achieving that degree of stability in our economy so essential to our own well-being.
I should like to refer for a moment to the statement of the Minister of Finance. In speaking of the bill he said that it expressly states in one of the recitals that any special circumstances relating to the financial position of the province of Newfoundland after March 31, 1962 will be taken into consideration. Although I have not seen the bill, I think some of the economic background and the economic circumstances and difficulties in Newfoundland have been clearly spelled out in the bill in the light of the reference to it by the Minister of Finance. I feel satisfied that after 1962 the special needs of Newfoundland will be given that consideration

in keeping with the spirit of confederation. Who can tell whether at that time that consideration of this factor may or may not be an important factor?
The real issue underlying all the controversies, underlying term 29, underlying this resolution, underlying this debate, is not the payments that have been made in the past or the payments that are now being made but the future. What of the future? This to my mind is the crux of the matter, the future of Canada's newest province within the framework of confederation, the ability of the Newfoundland people to achieve a standard equitable with the standard taken for granted by Canadians in other parts of this great country. No one will question the fact that Newfoundland, like other provinces, will have to depend in large measure on fiscal payments from the federal government in order to develop resources and improve services. But in this way we will be adding to the development of Canada as a whole.
I believe it rather unfortunate that both inside this chamber and outside suggestions have been made that payments to Newfoundland will abruptly end in 1962. I take exception to those statements, and I further submit that this is a most unrealistic attitude, particularly from those people who have had experience in federal-provincial relations. I note also with considerable regret that during the controversies of recent months there have been many attacks of a personal nature upon the Prime Minister and members of the government by those people who purport to be responsible leaders in Newfoundland. I want to assure the Prime Minister and the members of this government-I feel I can speak on behalf of the great majority of Newfoundlanders-that these attacks of a personal nature are merely the narrow partisan views of a few and they in no way reflect the true feelings of the Newfoundland people.


The Acting Chairman (Mr. McGee):: I regret to have to interrupt the hon. member, but his time has expired.


James Aloysius McGrath: If the committee would give me a few minutes more, I would be able to finish.


John Whitney Pickersgill: Oh, certainly.


Frank Charles McGee: Is it
the pleasure of hon. members to allow the hon. member to continue?


Some hon. Members:: Agreed.


James Aloysius McGrath: I was saying that these narrow partisan views are merely a reflection of the views of a few, and in no way characterize the view of the people of Newfoundland as a whole. Throughout their long
Grants to Newfoundland history the people of Newfoundland have always, and in all places, manifested the highest respect for men in high office. Furthermore, the people of Newfoundland are not at all unaware of the record of achievement of this government, particularly as it applies to the Atlantic region and, indeed, as it applies to the province of Newfoundland.
Finally, may I say that a chain is only as strong as its weakest link and so, too, is this nation only as rich as its poorest province. In the words of my colleague from Halifax spoken in this house, we believe that government exists for the people and not the people for government. Underlying all the controversies are the people of Newfoundland and their disabilities. If they have disabilities,
I am the less as a fellow Canadian.


Mr. Tucker:: Mr. Chairman, the statement of the Prime Minister made last March was unfavourably received in Newfoundland and also in many parts of Canada. I am sure that the announcement of the Minister of Finance today will be received with even greater disappointment. The minister said all Canadians welcomed the union. Of course they did. He also said that we entered union in a spirit of fairness on both sides. With this statement, I am sure all Newfoundlanders will agree.
He referred also to the word "thereafter" in the report of the royal commission on Newfoundland finances, and how it could be applied. I want to assure this committee that it only has one meaning so far as Newfoundlanders are concerned and that is, as it states, thereafter or until the government of Newfoundland and the federal government meet to discuss or review the terms of union. When Newfoundland entered confederation her entry was different from the entry of the other provinces because the result was a union between two sovereign states under the British crown, even though Newfoundland's sovereignty was temporarily suspended.
When the terms of union were signed they bound the governments of the future to carry out those terms, and the parliament of that day confirmed that obligation by a formal act of parliament approving the terms of union. An amendment was made to the British North America Act which made the terms of union a part of the constitution of Canada. It was Prime Minister Mackenzie King's opinion that if Newfoundland did not join Canada she would join with the United States, and ultimately confederation itself would be endangered if its eastern gateway were to be dominated by a foreign power.
When Newfoundlanders finally faced the issue and voted by a small majority to join
5920	HOUSE OF
Grants to Newfoundland Canada, Prime Minister Mackenzie King was very disappointed with the slight majority. The final negotiations for union were left to Prime Minister St. Laurent, but Prime Minister King had fulfilled Macdonald's vision of a nation taking in the north half of the continent. Thus it was under the late Prime Minister Mackenzie King that confederation was completed.
Under the terms of union a royal commission was to be appointed within eight years of the date of union, and while the terms do not say that any parliament had to accept the recommendations of that commission, few Newfoundlanders thought the government would not carry out in good faith the constitutional obligation to provide additional financial assistance, if any were required, to enable the government of Newfoundland to continue the levels of provincial services without greater provincial taxes than the average in the maritimes. It was also the belief that the constitutional obligation was not to end in 1962, or any other year. It was to last as long as the union lasted, just as the constitutional subsidies to other provinces were to continue as long as confederation continued.
I was shocked at the announcement of the Minister of Finance of the decision of the Progressive Conservative government on term 29 of the terms of union of Newfoundland with Canada. In my opinion, the recommendations of the McNair commission were the lowest possible that could, with honour, be offered to Newfoundland under term 29. I am convinced also that neither those who signed the terms of union 10 years ago nor the McNair commission ever recommended or even envisaged the stoppage of this grant after a definite period.
The Diefenbaker government, after twelve months considering the recommendations of the McNair commission and term 29, accepted the recommendations of this commission only as a yardstick to back up their decision and then by limiting the grant to only five years duration. I hope Mr. Chairman, that this does not show any political spleen toward the Newfoundland government or the Newfoundland premier who has the courage of his convictions and who has never been afraid to speak out whenever the welfare of Newfoundland or its people were at stake.
In my opinion, the government of Canada has lost face by this act of betrayal in failing to honour a sacred bond given and accepted in good faith just 10 years ago. The honour and record of Canada as a nation has been defamed and blackened in the nations of the world and unless and until this decision is voided or adjusted the word of Canada will 

never again be accepted with sincerity and confidence. This is a sad period in the history of Canada, when her honour and integrity have been blackened by the betrayal decision of a Progressive Conservative government which a short time ago won acclaim unequalled in political history based on promises of sincerity, integrity and fair dealings in all matters affecting Canada and Canadians. Today, by the decision of the Diefenbaker government in not honouring the sacred word given just over 10 years ago, Newfoundland has been betrayed and Canada stands before the nations of the world as a country which has betrayed her province. Canadians everywhere will deeply resent this blackening of their country's honour. I now conclude with a verse from our ode to Newfoundland:
As loved our fathers, so we love,
Where once they stood we stand,
Their prayer we raise to Heaven above God guard thee, Newfoundland.


Mr. Granger:: Mr. Chairman, in common, I believe, with virtually all of Newfoundland and, I would dare to say, most Canadians, I was deeply shocked this morning by the announcement of the Minister of Finance with regard to the final part of the confederation of Newfoundland with Canada. Term 29, which has been debated here today, was an act of faith on the part of the people of Newfoundland when they decided to join their destiny with the destiny of the great nation of Canada. The interpretation put upon term 29 this morning seems, to me at least, to be the negation of the spirit of that time. Indeed, it seems to contain the seeds of disunity and the fear of oppression.
Term 29 is distinct and clear from the other grants which have been made to Newfoundland. The grant to the Atlantic provinces was designed to help those provinces which were considered to be less prosperous than the rest of Canada. But term 29 was designed to help Newfoundland maintain the improved standards which it was hoped the province would have at this later date. Since Newfoundland entered confederation 10 years ago a great many improvements have been made in the public utilities of Newfoundland including roads, schools and hospitals. All these have been improved. I imagine that in the past 10 years more progress has been made than in previous history. However, this was done at high cost in effort and in money.
The maintenance of these improved services is what term 29 was designed to cover. Having obtained these improvements, having had more and better schools, more and better roads and more and better hospitals, how are we to maintain them if term 29 is not to be implemented in its original meaning? That meaning was clear. Ten years ago the

government of the day and the Newfoundland people tried, as far as possible, to protect the future of Newfoundland. No one could forecast that far into the future but what they could do was to make sure that means were available by which adjustments, such as time and circumstance should determine, might be made. This in essence was term 29, and it was left to the future years for those who at that future time were the guardians of Canada's destiny and honour, to implement the intent of the people who wrote and signed that agreement. But the limited interpretation put upon term 29 this morning has jeopardized the whole future of our province. After the interpretation put upon the word "thereafter", what reason is there for us to have much faith in the phrase "special needs"? Today there is small reason to blame the people of my province for feeling that they have been betrayed.


Frank Charles McGee: Shall the resolution carry?


John Whitney Pickersgill: Does the minister from Newfoundland not intend to speak?


Donald Methuen Fleming: What about?


Some hon. Members:: Carried.


Frank Charles McGee: Shall the resolution carry?


John Whitney Pickersgill: No, Mr. Chairman. If the minister is without voice, as he has been throughout the consideration of this matter up to now, I as the one remaining member from Newfoundland who has not yet spoken will certainly not be without voice.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: At the same time, I do not intend to take a great deal of time in the committee this afternoon on this matter. I myself think that there is only one point that really divides the government and the opposition. That point was put with great clarity by the leader of our party and it has been successively put by each of the members on this side of the house from Newfoundland. It is in order to indicate our unanimity of view on this matter as much as anything else that I too am going to take a little of the time of the committee.
The hon. member for St. John's East made one or two observations but he carefully avoided discussing term 29 or what it meant. He seemed to express contentment with an enunication of some hazy and pious aspiration on the part of the Minister of Finance that there would be some vague clause in the bill indicating that special circumstances would be taken into account in 1962. We would never have had any of these fiscal
Grants to Newfoundland arrangements between the federal and provincial governments which have been characteristic of the period since the second world war if it had not been for the inexorable need, because of the nature of our federal system, of special consideration for special situations. If all the provinces had the same levels of income and the same resources there would be no need for tax-sharing arrangements at all. Everyone could stand on his own feet. What the minister is saying, as clearly as we can see it without having the bill before us, is that Newfoundland is to lose a right under the constitution and in substitution thereof is to be given the same kind of consideration, or lack of consideration, that may or may not be given before 1962.
The minister said in response to a question of mine, when I asked him what statutory authority he had for saying that these tax sharing arrangements must be reviewed before 1962, that there was no statutory obligation. And there is no statutory obligation. There is no "must" at all. It all depends on the grace of this government, this government which in November, 1957 undertook to call a federal-provincial conference in January, 1958 and did not carry out that promise but imposed a unilateral arrangement. There is no reason, on the basis of the experience we have had with this government, to expect anything except unilateral treatment of the provinces in 1962. As my hon. friend from Grand Falls-White Bay-Labrador has just said, when we get the extraordinary distortion of the ordinary, plain English meaning of the word "thereafter" which we have already got from the Minister of Finance this morning, there is certainly no reason to expect that we will get anything whatsoever beyond what this government unilaterally is willing to do in 1962 or before 1962.
Mr. Chairman, I would like to make one or two observations about one or two of the points which were made by the Minister of Finance this morning before making my own brief contribution to this debate. First of all I want to say that I was disappointed, and I know the people of Newfoundland will also be disappointed, that it was the Minister of Finance and not the Prime Minister who introduced this legislation. It is, it seems to me, another example of the indifference of the government in this matter. This, after all, was the final act of confederation. It was the kind of degrading act that I cannot imagine any of the Prime Minister's predecessors performing. Even if he had wanted the minister to make the speech, as is often done in this house, the resolution could have been put in the name of the Prime Minister. In a situation where there is already a good
5922	HOUSE OF
Grants to Newfoundland deal of feeling about this very point, it seems to me that there was a lack of constitutional propriety, a lack of a sense of the fitness of things in this matter.
There is one other thing which I want to say a very brief word about. The Minister of Finance regretted, as I think all Canadians regret, that the completion of confederation did not take place long before 1949. The minister said that if it had taken place before 1949 the people of Newfoundland would have made an even bigger contribution to the development of Canada than in fact they have made in those ten years since union. But I do not think we should just leave it at that, because notwithstanding the fact that the formal union did not take place until 1949 there had been a more intimate association between Newfoundland and Canada for a longer period than was perhaps the case between any two countries, even Canada and the United States, before union. The formal union was really a formal acceptance of what had almost become a fact before that.
The minister does not need to go further than the city and university with which he is so closely associated to recall that the greatest of our Canadian poets is himself a Newfoundlander. One could go on into almost any field. I reminded the house the other day that the president of the St. Lawrence seaway authority is a gentleman who happened to have been born in the settlement of Twillingate and who had part of his education in Bonavista. It is the same wherever you go in Canada. And this is not new, it has been true since the beginning of confederation in 1867 and even before it. It is statistically impossible to demonstrate this fact, but I would be very surprised indeed if there were not more people who had some of their origins, at any rate, in Newfoundland on the mainland of Canada than there are in Newfoundland, despite the growth of population there has been in the last ten years.
I come next to the second point which the Minister of Finance made this morning, which I wanted to take issue with, and that was the question of the duration of term 29. The minister attempted to show that this term was for a period of transition and that it was not meant to last indefinitely. Of course, the terms of union themselves demonstrate conclusively that that is not correct, because the very term before term 29, term 28, is precisely the term which deals with the period of transition. It is the term which provides for the transitional grants, and term 29 was to provide for something which was to take the place of the transitional grants if that were necessary. As has been said over and over again, there is no question


whatsoever that it was on term 29 that the negotiations almost failed, as the Leader of the Opposition pointed out this morning. It was the critical term, and it was the term on which Mr. Crosbie refused to sign the terms of agreement, because he felt that it was not an adequate safeguard. The hon. member for St. John's West, when he was in the parliament two before the last one, made statements in 1950 and 1951 about this which I have looked up, and he too had his doubts about the adequacy of this matter and was pressing at that time to have the royal commission appointed immediately and have this matter settled at an earlier date.
The Leader of the Opposition pointed out that there was absolutely no hint in term 29 of any time limit, no hint whatever. And there is no hint whatever of any time limit in the report of the royal commission. It is true, as the Minister of Finance has pointed out, that the royal commission was urged by counsel for the province of Newfoundland to recommend a periodic review, but the royal commission in its wisdom did not do that. I suggest that one of the reasons why they did not do that, which was set out in a letter by Professor B. S. Keirstead, of Toronto, published in the Globe and Mail of April 3, 1959, was that Mr. Ritchie, who at that time was counsel for the federal government, took exception to this suggestion and suggested that it was not within their purview.
But after all it is a rather fruitless thing for the Minister of Finance and myself to be discussing what was in the minds of the royal commission. What we have before us is not what was in their minds but what is on paper in their report. In the entire report there is not a word, or a hint, or a suggestion of any termination. I agree with the Leader of the Opposition and I agree with the premier of Newfoundland and I agree, to a very limited extent, with the Minister of Finance that a payment in perpetuity of $8 million is probably not the most suitable way of dealing with this problem, though I think that if the government had chosen to deal with it in that way they would have discharged the obligation under the terms of union to the letter, and I think that no valid criticism either on constitutional grounds or on grounds of good faith could have been directed against them if they had done that.
But I do think, as the premier of Newfoundland has said and as the Leader of the Opposition indicated earlier today, that an agreement between the federal and provincial governments to review this question on the basis and under the conditions provided in term 29 after a period of years would be better than the payment of $8 million in

perpetuity or for an indefinite period. I think the hon. member for Assiniboia put this point very well-that we do not legislate in perpetuity; we have a great many enactments with no time limit on them, but that does not mean that they cannot be changed by parliament within its sovereign power.
I would suggest, as the Leader of the Opposition suggested before me, that any unilateral change of this character is a repudiation of the spirit of the constitution and certainly of what the Newfoundlanders believed they were getting when they had this article written into the terms of union.
The Minister of Finance read article 29, and I am not going to read it in full again, but I should like to emphasize briefly once again what it was that this article was supposed to do. It was supposed to provide whatever difference of revenue was necessary to continue the public services at the level they had reached at the time of the inquiry as long as it was necessary to do that, without obliging the government of Newfoundland to impose taxes heavier than those in the maritime provinces. The minister says that the only express legal obligation was to appoint a royal commission and, of course, that is quite true. That is perfectly true, and that was recognized, as the minister said, by Mr. St. Laurent in the quotation which, again, I will not read because the minister has put it on record in Hansard.
But does anyone in this committee think for one moment that any of those distinguished Newfoundlanders who signed the terms of union would have signed if they had not had confidence in the good faith of Canadian public men, regardless of political party, to carry out the obvious intent of article 29? No one in his senses would have signed that document believing that if a royal commission was appointed the government of Canada had discharged its full obligation. No one in his senses would have signed it. Are we in this parliament going to say that because that is the only express legal obligation there is therefore no constitutional obligation? It seems to me that to ask that question is to answer it.
So little confidence did the hon. member for St. John's West and his colleague of those days, the late Mr. Higgins, have in this kind of protection that they campaigned, as I well know, in the year 1953, when I was elected to parliament, against the St. Laurent government, and the burden of their campaign was that the government of Canada should obligate itself to accept the report of the royal commission regardless of what it was. That was supported by their leader, Mr. Drew, in a speech at St. John's. In
Grants to Newfoundland other words, the position of the Conservative party under Mr. Drew in the year 1953 was that the royal commission's report should be accepted in advance regardless of what it contained.


William Joseph Browne: Can the
hon. member give a citation in support of that?


John Whitney Pickersgill: I do not have them to hand but I will be glad to get them for the hon. gentleman and put them on record at the second reading stage of this bill.
I remember that situation very well, of course, because it was my first election. I was asked my own views on this subject and I repeated, though not literatim and verbatim, what Mr. St. Laurent had said. It was a big issue in Newfoundland at that time.
The Minister of Finance said there were two questions which arose concerning the recommendations of the royal commission. The first was that the commission gave no explanation of why it had departed from the year 1956-57 and taken the budget of Newfoundland for the year 1957-58 as the basis for its recommendation. The Leader of the Opposition dealt with that matter, I think. He made the point, but I should like to underline it a couple of times because the Minister of Finance did not seem to grasp it and because it does seem to be an important point. In 1956-57 the services were still being built up as they were in every previous year after 1949. The budget for 1957-58 was essentially to continue the services-because the word is "continue" not "maintain"-at the level they had reached at the end of the eight years. Of course, if a niggling, cheese-paring treasury board attitude were to be taken toward this matter of the final determination of confederation, perhaps some argument might be made about this, but it is an argument which I should be very surprised if hon. gentlemen opposite would carry very far.
The second question, the minister said, is what is meant by "thereafter". I am not going to argue that question because it seems to me to be very obvious that what is meant by "thereafter" is thereafter.
The minister has told us about the comprehensive study that has been launched into all aspects of fiscal policy. We on this side of the house have very grave reservations about that study. We have had a lot of experience of this kind of study going right back to 1936 and the Bank of Canada investigation into the three prairie provinces which was the foundation of the Rowell-Sirois commission. There was also the very

Grants to Newfoundland thorough study made in preparation for the dominion-provincial conference of 1945, and those studies have been going on continuously ever since. During that period a great many ideas have been contributed by many of the provinces themselves, as well as by the federal government. But the one thing to which everyone in Newfoundland objects most in the attitude of the present government toward this matter is its persistent attempt to assimilate this question of term 29 to federal-provincial relations generally. That seemed to be the position which was taken by the Prime Minister during the federal-provincial conference of November, 1957, when he said as reported at page 12 of that conference:
Now may I turn for a moment to the subject of fiscal relations In particular. As I view the situation, the first problem we have to consider is the need for some special recognition of the situation of the Atlantic provinces. There is, of course, a royal commission considering the particular problem of Newfoundland in accordance with the undertaking in the terms of union, so I shall not endeavour to express opinions upon Newfoundland's position pending receipt of the recommendations of the commision.
I believe that we all recognize, however, that the Atlantic provinces as a group are confronted with greater difficulties in public finance than the rest of the nation, if they are to maintain the sort of provincial and municipal services that Canadians generally expect. The taxable capacity of the Atlantic provinces, even in the best of times, is significantly lower than that of the other provinces.
This statement does contain-I am not going to put it in any other way than that- what certainly appeared to the premier of Newfoundland, and what certainly seems to me, to be an ambiguity. One can draw one of two conclusions from that statement, either that Newfoundland was expected to participate in this general treatment of the Atlantic provinces or, because of the royal commission, it was not. Mr. Smallwood was sufficiently concerned about that to devote a large part of his speech to it and the relevant parts are mainly on pages 99, 100 and 101. I do not want to take up the time of the committee by reading them but I would like to briefly summarize them.
What Mr. Smallwood said-and it was put very well by my friend the hon. member for Burin-Burgeo a little while ago-was that term 29 would provide Newfoundland with the necessary money to continue the existing level of services, and what these Atlantic provinces grants appeared to envisage was some improvement in their existing situation, and that surely Newfoundland was entitled to participate in that improvement, and that the fact that she was also having consideration given to the means of continuing the existing services should not exclude her from

participating with the other Atlantic provinces in the improvement. At page 101 the Prime Minister appeared to agree with that view. I will read the Prime Minister's words:


Joseph Pierre Albert Sévigny: I will say no more at this time, but I would point out to the premier of Newfoundland that when I used the expression "the Atlantic provinces" I anticipated what his views would be in regard to the use of that expression.
I was present in the audience. I heard that statement and took from it what most other people took from it, that the Prime Minister agreed that these were two entirely separate things. But that has not been the attitude of hon. gentlemen opposite since.
Last year when we were endeavouring to get these payments that were requested unanimously by the legislature of Newfoundland in a resolution moved by the premier and seconded by the leader of the opposition, the Minister of Finance used the Atlantic provinces grants as an excuse for delaying. This attitude is bitterly and universally resented in Newfoundland. The suggestion that because they are allowed to participate with the other Atlantic provinces-and certainly, as the hon. member for St. John's East pointed out this afternoon, their need is at least as great as any other Atlantic province and we think greater

is no reason why they should be denied their constitutional rights. That is our position.
There is just one other point I want to deal with before I come to the crux of this matter. The hon. member for St. John's East referred to the attitude taken in Newfoundland. He said something about narrow partisan views. I feel I should put on the record an article which appeared in the St. John's News of March 26, 1959, quoting a statement made by the leader of the Conservative opposition in the Newfoundland legislature. I do not suppose the hon. gentleman would accuse him of narrow partisan views on this question. The article is entitled, "Hollett: We Fail to Understand", and reads as follows:
Malcolm M. Hollett, leader of the opposition in the Newfoundland legislature and political leader of the Progressive Conservative party in this province, said he fails to understand the statement of the Prime Minister in relation to the provisions of term 29.
Mr. Hollett said in a statement to the Daily News "We scarcely know what to say. The royal commission recommended $8 million from the first of April, 1957, to be paid annually to the government of Newfoundland to enable it to continue public services at the levels and standards reached subsequent to the date of union. These are the words of the term itself."
"Rightly or wrongly," the opposition leader continued, "most of us thought that $8 million was too little. Even if $8 million were sufficient I fail to see how the federal government can accept the amount recommended by the royal commission

and then limit it to five years, which is contrary to the commission's recommendation in respect to time."


James Aloysius McGrath: Would	the	hon.	member
permit a question?


John Whitney Pickersgill: Certainly.


James Aloysius McGrath: Would	the	hon.	member
consider that to be a rude remark of a personal nature representing a personal attack such as I was referring to?


John Whitney Pickersgill: No. Mr. Chairman, I took down the hon. member's words and he said "narrow partisan views". He seemed to apply that to all the opposition to the government's attitute in the province of Newfoundland. I thought I should remind the hon. gentleman of this statement by Mr. Hollet.


James Aloysius McGrath: On a point of order, Mr. Chairman, the hon. member is trying to put words in my mouth that I did not use. I referred to those people in Newfoundland who made attacks of a personal nature on the person of the Prime Minister and the members of the government and said that their opinions reflected their own narrow political views.


John Whitney Pickersgill: I had not intended to mention this, but in that regard the hon. gentleman will remember that a delegation of students from Memorial University made a parade through the city of St. John's and they were led by a young man who was a prominent member of the young Progressive Conservative association. If that is what the hon. gentleman has reference to, that is all right with me.


Some hon. Members:: Shame.


John Whitney Pickersgill: I had not intended to enter a discussion of this aspect of the matter at all. I merely wanted to correct the impression I thought was left by the hon. gentleman that there was something narrow or partisan about this opposition. I was in Newfoundland myself in the early days of April and I know perfectly well that it was extremely difficult to find anyone who did not share Mr. Hol-lett's views in greater or lesser degree. I now come to the crux of this whole situation.


John George Diefenbaker: Would the hon. gentleman permit a question before he moves on to another subject?


John Whitney Pickersgill: Certainly.


John George Diefenbaker: The hon. gentleman made a reference a little earlier to the fact that this resolution had been introduced by the Minister of Finance rather than the Prime Minister. Is it not a fact that through the years-and I think particularly of 1956 the
Grants to Newfoundland records of which I have before me-whenever financing arrangements were discussed and provision made by the house the resolution and indeed the bill itself was introduced by the minister of finance?


John Whitney Pickersgill: The Prime Minister has illustrated precisely my point. As the Prime Minister very well knows, those tax-sharing arrangements were financial arrangements made long subsequent to confederation, starting in 1941, dealing with the fiscal arrangements and tax-sharing between the provinces and the federal government. What I had earlier said, as the Prime Minister will find if he looks at my words, and what I repeat, is that it is this very attempt to degrade this measure into that field that is resented in Newfoundland. This measure deals with the constitution itself. This is the implementation of one of the terms of the British North America Act. This is the completion of confederation. It was for that reason and for that reason alone that I made the observation I did and I take it that my hon. friend the Leader of the Opposition made similar observations. I feel very keenly about this matter. What is more, of course, the Prime Minister will recall that it was he and not the Minister of Finance who made the statement on March 25.
I might point out to the Prime Minister that I never took any exception to the Minister of Finance bringing in the Atlantic provinces grants legislation. I praised and supported them. I did not say the Prime Minister should have done it at all. That is one of the things that is quite within the normal departmental activities of the Minister of Finance. On the other hand I would not have blamed the Prime Minister if he had done it because I think it was about the only good thing this government has done in two years. However, he did not do it and I take no exception to that. But this is different. This measure is the completion of the constitutional framework of this country. I have no apology whatever to make for taking the position I have taken on this matter.


Joseph Pierre Albert Sévigny: I regret to interrupt the hon. member but his time has expired.


James Aloysius McGrath: Would the hon. member permit a question-or he can carry on.


John Whitney Pickersgill: If the hon. member would like to ask a question I would be very happy if he would do so.


James Aloysius McGrath: Does the hon. gentleman advocate payment of a definite, statutory grant in perpetuity?


John Whitney Pickersgill: No. That is precisely the point I was coming to. I do not advocate

Grants to Newfoundland that. I thought I had made that position clear, but I shall come to the very crux of this situation. The hon. member for Burin-Burgeo put the essence of this obligation very well, I thought more clearly than I had ever heard it put before and I have heard this matter discussed a good many times. It seems to me that the essence of this obligation is that Newfoundland should have the necessary revenue to continue the level of public services that was attained eight years after the union and to continue that without a level of taxation higher than the average in the maritime provinces. That is what the delegates thought they were getting. That is what they signed this for. They did not sign it to get a royal commission. They did not sign it to get $8 million for an indefinite period. They signed it to have that specific condition fulfilled. It might have been nothing or it might have been $20 million.
Indeed, the hon. member for St. John's East made a rather interesting point. He suggested that if the government of Newfoundland had increased its services instead of devoting some money to industrial development they could have had even better services by 1957. At least, I took that to be the import of what he said. That would have meant that a figure more than $8 million would have been recommended here.
But what I am saying is that a royal commission was the instrument by which this was to be determined, subject, of course, to the ordinary prudential considerations that have to be taken into account and subject, of course, to the final action of a sovereign parliament. There is a real problem, as the Prime Minister and the Minister of Finance both well know and as I am sure most hon. members also know, with respect to our normal conception of parliamentary sovereignty and the conception of federalism. In a unitary state there is no problem. In a federal state there always is a problem and it was illustrated very well by the Leader of the Opposition this morning.
But subject to that limitation there was no question that this royal commission was the instrumentality to determine what was needed in this matter, and I say that what was needed in this matter and what will continue to be needed is the essence of the matter. That is what good faith demands that this parliament provide.
I do think if the government had accepted the recommendation no one, as I said earlier and I want to repeat it, could criticize the government on constitutional grounds. No one could accuse them of bad faith. They might be accused of niggardliness, and I am sure some have so accused them, but there could


not be a valid accusation of bad faith if they had accepted the recommendation in the report, legislated on it and had done nothing more. But what I think would be preferable, what the Leader of the Opposition indicated he thought would be preferable and what I still think would be the wise course for the government to take would be to consult with the government of Newfoundland and agree upon a period during which this award be paid and upon a method for its revision before the end of that period. If that were done I think there would have been unanimous approval for this measure. I know that as far as I am concerned I would have approved it wholeheartedly.
From what the Minister of Finance told us about the attitude taken by the premier and the minister of finance of Newfoundland at the conference in January it would seem to me that was the position they took at that time. I have no warrant to speak for the government of Newfoundland and I have never pretended I have, though I do happen to enjoy very friendly relations with that government which I hope will continue. I do think that if they were approached on this matter there would be very little difficulty in getting agreement as to the period of review and about the form of review that might be taken. When this measure was delayed so long after January, having been delayed to January from the previous July when the report was actually made available to parliament, although, of course, it was actually made available to the governor in council on May 31, we on this side felt-


Donald Methuen Fleming: That is not right.


John Whitney Pickersgill: Well, it is dated May 31- that the reason that the government was delaying this was precisely in order to give special consideration to a way in which a satisfactory review on the basis of the stipulation in term 29 could be incorporated into the bill. As I say again, I am sure if that had been done there would have been no difficulty whatsoever with this legislation on either side of the house. But simply to be told that we must trust this all-wise government to take some undefined special considerations and special needs into account in 1962 is very little to go on on the basis of the record of the government up to the present in dealing with the provinces.
But that is not the point. The point is that these fiscal arrangements are arrangements; that, apart from the statutory subsidies, the provinces have the right under the constitution to raise their own revenues. These fiscal arrangements are not part of the constitution. They are arrangements. They are of a different order from rights under the constitution,

and to ask the people of Newfoundland to forego their rights under the constitution for something vague like "special circumstances" is not good enough. The Prime Minister himself recognized that this was a contractual obligation-


Mr. Lennard:: Three-quarters of an hour.


John Whitney Pickersgill: I heard one hon. member say something about three-quarters of an hour.


Frank Exton Lennard: Mr. Chairman, my reason for making that remark is that the hon. gentleman said that he was not going to take up the time of the committee and was only going to speak for a few minutes. Three-quarters of an hour is quite a few minutes. Personally I do not care. You can go on as long as you like.


John Whitney Pickersgill: As a matter of fact, the Prime Minister recognized that this was a contract. As the Leader of the Opposition pointed out, in the Prime Minister's statement on March 25 he referred to "the contractual obligations of the union consummated in 1949". The Prime Minister said, as found on page 2216 of Hansard:
The proposed payments will be unconditional and will be in final and irrevocable settlement of the provisions of article 29 and the contractual obligations-
It seems to me that for one party to a contract, without consultation with the other, to change the terms of that contract and say that this is in final settlement of it is a most extraordinary attitude to take.


John George Diefenbaker: Would the hon. gentleman advise whether he agrees with the words of Mr. St. Laurent that have already been quoted, namely:
There is no undertaking to implement any terms of recommendation that may be made at that time by a royal commission.


John Whitney Pickersgill: I certainly agree with the words of Mr. St. Laurent and I have said so. I said very much earlier that the only legal obligation, as the Minister of Finance pointed out this morning before hon. gentlemen make too much of it, was to appoint a royal commission, but the Prime Minister did not quote the other words of Mr. St. Laurent which are very relevant. Mr. St. Laurent never thought that anyone would be indulging in legal quibbles or talking about legal obligations. What he said right after that was:
It was felt by the Newfoundland delegation, and by the representatives of the Canadian government, that this was something that was being entered into in a spirit of fairness on both sides, and that it was not necessary to make binding stipulations about what would happen with respect to the report of a royal commission. It was felt
Grants to Newfoundland if there was an investigation and a report by a commission in which the public at that time would have confidence-
That is a commission in which the public would have confidence.
__the legislators of that day could well be trusted
to do what would prove to be right in order to make this enlarged nation a united nation continuing on its path of progress toward its great destiny.
What Mr. St. Laurent meant by that is quite plain. He meant that if the recommendations of the royal commission carried out the real intent of this clause, which was to provide the government of Newfoundland with the money to continue these services without having higher taxes than the other maritime provinces, this parliament would do that and do it according to the recommendation of the commission.


An hon. Member:: He did not say that.


John Whitney Pickersgill: He did not say that, no, because everything under our unwritten British constitution is posited on good faith and that is perhaps the reason why the hon. member for St. John's West, when he was in opposition, thought this was not good enough and wanted from Mr. St. Laurent a pledge in advance to accept the report of the commission. Perhaps the hon. gentleman foresaw a change of government. Perhaps he foresaw a government that would be satisfied with a legal quibble instead of good faith as a basis of government, but surely not.
I should like also to draw the Prime Minister's attention to something that was said about this matter by somebody else in this same debate. I quote here the words of the present Prime Minister in this debate as recorded at page 339 of Hansard for February 8, 1949:
That, of course, is the legal and parliamentary position. But in addition to the legal position, as I see it there is also a moral responsibility resting upon this parliament to remove or alleviate any causes of discontent on the part of the very large minority who voted in the negative during the two referendums. The essence of democracy is a recognition of the need to preserve the rights of minorities.
Then, he continued:
The acquisition of Newfoundland will take its place, in strategic importance, with the acquisition by the United States of Alaska and Louisiana. It is actually the completion of that unity which caused Mr. Galt, as he then was, to say at the time of confederation:
"Half a continent is ours if we have but the courage to take up the burden."
Then, he continued:
In taking up that burden, in welcoming those who heretofore have belonged to a sister dominion, above everything else we want to be sure that these new citizens who join us will do so in a
5928	HOUSE OF
Proposed Long Term Credit to Farmers
spirit of amity and unity, thereby making their contribution to the strength, power and destiny of this confederation.
Now we are told that by a legal quibble, they can escape this obligation.
On March 25, after the Prime Minister made his statement, I asked him this question:
Does the Prime Minister realize that every person in Newfoundland will regard this as another breach of a solemn contract?
That, of course, is precisely what has been the attitude of everyone in Newfoundland. It has been the attitude because it is so obviously a breach of a solemn contract.


John George Diefenbaker: That is not what Mr. St. Laurent said.


Joseph Pierre Albert Sévigny: Shall the resolution carry?
Mr. Pallet!: May I ask for a standing vote, please?
Motion (Mr. Fleming, Eglinton) agreed to: Yeas, 71; nays, 16.
Resolution reported and concurred in.
Mr. Fleming (Eglinton) thereupon moved for leave to introduce Bill No. C-72, to provide for the payment of additional grants to the province of Newfoundland.
Motion agreed to and bill read the first time.



AGRICULTURE


[Stage Direction]
The house resumed, from Tuesday, July 7, consideration in committee of Bill No. C-67, to provide for the extension of long term mortgage credit to farmers-Mr. Hark-ness-Mr. Sevigny in the chair.
On clause 1-Short title.
Douglas Scott Harkness: I think perhaps considerable time of the committee might be saved if I made a short statement at this time. I propose to ask one of my colleagues to move an amendment to clause 16 when we come to that clause. As members of the committee will perhaps recall, this clause deals with the rate of interest. The amendment I propose is:
That paragraph (c) of clause 16 be deleted and the following substituted therefor:
(c) The interest rate on loans shall be 5 per cent per annum.
I observe, Mr. Chairman, that this announcement has apparently been received with universal acclaim throughout the committee.
I should like to explain, shortly, the reasons 

why the government has considered it desirable to make this change. We had proposed, and we still intend, that the farm credit provision shall be a self-sustaining one, that it will not be a scheme providing for a subsidized rate of interest. However, a large number of members of parliament from the Conservative party as well as some organizations made representations to the effect that the type of scheme which was provided for in the bill as it was introduced, and which was that the rate of interest charged should be the cost of money to the government, would cause the rate of interest to vary from year to year and would be unfair to those farmers who borrowed in years when the rate of interest happened to be relatively high as compared to those farmers who borrowed in years when the rate of interest happened to be low.
It was felt, therefore, it was more desirable to have what you might call an equalized interest rate; in other words, an interest rate which would be the same from year to year and which would be set over a period of years so that the amount of interest paid would be sufficient to pay the costs on the money which the government would put up for these loans. As a result we propose to make this amendment and to put into effect the 5 per cent interest rate which it is calculated will be sufficient to pay the cost of money to the government plus the ordinary carrying or administrative costs of the scheme. (Translation):


Mr. Boulanger:: Mr. Chairman, we were pleased to hear the Minister of Agriculture (Mr. Harkness) state that he would leave the rate of interest at 5 per cent. I must congratulate him and thank him for that, on behalf of the farmers. We realize he has understood the value of the claims we submitted at the resolution stage.
In fact, we had asked that the rate of interest be not higher than 5 per cent, and we had even recommended that it be made equal to the rate paid by the government on its loans. Besides, it is the same recommendation which was made by the Canadian Federation of Agriculture, as well as by all other farm organizations in general.
Having made other suggestions, we hope that on each item, the minister, having welcomed our suggestions, will introduce suitable amendments.
We suggested in the course of the debate that the bill be considered by the standing committee on agriculture and colonization, since this large scale bill involves far-reaching consequences; in fact, it should have

been referred to that standing committee so that it might have come back well prepared, well considered, polished and ready for efficient implementation.
The future of family farming is at stake. If we want to save the family farm, which is still the soundest unit of our national economy, it must be given the minimum of stimulus which its vitality and survival require.
In the province of Quebec, the number of farms is decreasing at the rate of 2,000 a year. Soon, with the farm laws being fostered by the Conservative government, it will not only be the number of abandoned lands that we will deplore, but actually the number of parishes. Our parish organizations, our school boards are deep in debt, and their burdens are becoming heavier and heavier, as a result of higher rates of interest.
What we need, Mr. Chairman, and what we have recommended many times, is the study of the very basis of the agricultural problem, which could be done if a federal-provincial commission were set up to consider particular farm conditions in each province.
Such a commission would have a huge and most useful task to accomplish, in the study of land use and conservation, readaptation of cultures and productions to their respective environments, and in the field of research, price products stabilization, marketing, etc.
We shall achieve those results when the Minister of Agriculture will have understood the problems of eastern farmers as well as those of western farmers.
According to the Gordon commission, it costs the Canadian taxpayers $1 billion a year to protect our industry in general. The agricultural class does not ask that much.
I do hope the Minister of Agriculture will fully understand the problems of our farmers, especially those of eastern Canada, so that, thanks to that new farm credit act, they may maintain themselves and prosper.
(Text):


Herbert Wilfred Herridge: Mr. Chairman, I must frankly admit that the minister's announcement was very pleasing to members of this group. I had intended to deal mainly with the interest rate and the inequalities of the interest rate. However, the minister has now scuttled my argument. Consequently I shall not have as much to say as had been my intention. Before proceeding I must say that we are pleased that the minister listened to
Proposed Long Term Credit to Farmers the arguments of the members of the opposition when the resolution was before the house. In my opinion he has taken a sensible course.
As one who appreciatss the value of the economic family farm in Canadian society, I am pleased indeed to see this measure come before the house. It is on that account that we support the measure in principle. It provides for supervised farm credit in reasonable amounts over a reasonable period of years and will make possible the maintenance, the improvement and the development of economic farm units in Canada. If the interest rate is maintained at not more than 5 per cent this measure could mean a new era in the use of agricultural credit in Canada.
We are in a somewhat better position with this bill than we were with the bill providing for crop insurance. There is definite and genuine experience upon which to base this legislation. That experience comes from the activities of the Veterans Land Act administration. I presume that this measure is based on that experience. I want to say once again-and I have no hesitation in saying this wherever I have the opportunity to speak on this subject-that this is to a great extent due to the dynamic and imaginative direction of the Veterans Land Act administration under Brigadier Rutherford supported by an extremely competent staff.
In that connection I want to bring to the attention of the committee some documents. I want to illustrate the imagination that has been used by the director of the Veterans Land Act administration and his officials in the preparation of materials that assists people to understand the results of the settlement of veterans under that act since the second world war. This shows a human interest in the problems of those we settle on the land and in their needs and requirements. It also shows an interest in making suggestions to improve the legislation.
I am not going to deal at length with them here, but I have here the Veterans Land Act administration quarterly comparative summary dealing with director's quarterly letter to all staff; self-analysis questionnaire for credit advisers; collection standing by districts and regions; number of special arrears by districts and regions; summary of work by districts; summary of work by regions and summary of work by fields. Then there is another pamphlet dealing with the organization, distribution and duties of staff, classifications and so on. Then there is another pamphlet pertaining to full-time farming settlement, part-time farming settlement,
5930	HOUSE OF
Proposed Long Term Credit to Farmers commercial fishing settlement, housing, civilian purchase contracts and various other matters. Then there is a very excellent book which deals with the summary of a survey of 5,000 V.L.A. farmers made between July, 1957 and September, 1958 for the purpose of assessing the progress and future credit requirements of farmers settled under the Veterans Land Act.
This demonstrates in an imaginative direction something we have not had before with respect to agricultural credit in this country. This is the sort of thing which lays a sound foundation for governments to pass legislation on, and I have no hesitation in paying a tribute to the excellent work being done by the Veterans Land Act administration. I would also say it is not only recognized by the members of this house and the veterans who have benefited from this legislation, but it is recognized by the Canadian Legion and other veterans' organizations. The Canadian Legion in its representations to the Senate committee on veterans affairs just recently urged the government to consider extending the same type of credit facilities which are provided to veterans under the Veterans Land Act to young Canadians who wish to commence farming in this country. It is an illustration of what has been done and can be done under this legislation for young Canadians who wish to commence farming.
On page 3 of this summary there is a table dealing with net worth, and it says:
The average net worth of the settlers, including the conditional grant of $2,320 as if earned at time of settlement, $5,376. The average net worth at time of survey, an average of 8.9 years after settlement, $13,487.
That is a clear, concrete illustration of the success which has been obtained under this legislation.
I want to make reference too to a paragraph on page 6, and I am putting this on the record because I think it is important that as many people as possible in Canada know what is being done under the Veterans Land Act administration, and know what can be done under this legislation now before the house, if it is used constructively and with the assistance of the Veterans Land Act officials. It says:
In this survey, we see 5,000 comparatively young farmers in all parts of Canada sitting down with their resident credit advisers and planning their future farm organization and production progams on the basis of at least some probability that ample supervised credit will be made available to them in order to carry out their plans. These men can see the possibility of increasing their net property and labour income by an average of about 60 per cent-which this survey has indicated to be possible and practicable-and of earning 30 per cent annually on the extra capital necessarily borrowed, or 24 per cent capital income after allowing $10 per day for the 40 days additional labour required. 

They are at the same time, and without even deliberately planning to do so, adjusting their future production in a way that, if made more general, would eventually largely eliminate surpluses of have-to-sell products such as wheat, and better ensure the required supply of high-protein refrigerator foods such as beef-for which there is an ever-increasing demand and which, on a calorie basis, take up to five times more land to produce an equivalent human ration. One can only speculate what would happen during the next ten years if even 50 per cent of the more progressive Canadian farmers with inadequate units did the same thing-which they undoubtedly would if given the opportunity.
I have no hesitation in saying that we are very glad they are going to be given the opportunity of this legislation.
The ultimate result would be fewer farms, but many more farms that could be classified as sound, economic, family sized units. Units in this class are able to make full and advantageous use of available labour and of the minimum equipment necessary to the production of a standard, readily marketable product on a production-line basis and at the lowest possible cost. There would seem to be little doubt that such units, given similar soil, climate and market conditions, could compete successfully over a long period with almost any corporate or integrated farm set-up.
That is very necessary for the success of the economic family farm.
If, through the use of adequate credit, Canadian agriculture could voluntarily reorganize itself over a period of years into economically sized family units, a considerably lower production cost and a higher quality product would ensure a fair profit at a lower selling price which would give Canadian farmers a safer corner on the home market now being threatened by the United States and New Zealand and put them in a much better position to compete in markets abroad.
To achieve this result through the medium of a controlled credit program would necessitate very careful credit administration in line with a consistent and long term policy, and much would depend on how well such a policy was accepted by farmers and farm organizations.
If V.L.A. farmers are at all typical of Canadian farmers generally, and we think they are, it would appear from the response to this survey that the great majority would welcome a credit program designed to encourage the voluntary reorganization of Canadian farms into economic family sized production units which would be more in line with present day capital and income requirements, and that they would be only too ready to co-operate fully in any long term program designed to assist with such voluntary reorganization. There would seem to be much to be gained and nothing to lose from such a program. Sound economic family sized units probably represent the most secure long term investment available which carries with it capital increment possibilities. The opposite could be said, however, of sub-marginal and inadequate farm units, since production costs on such units very often leave little or nothing in the way of profit with which to repay a capital debt.
I put that on the record because I think it is a very sound, but brief, analysis of the situation.
As I say, we were very pleased to hear the minister's announcement. Why should we

be doing this in view of the value of the economic family farm to Canadian society? It maintains many of the values in rural life which are very necessary if we are going to keep a healthy, democratic society in this country. We subsidize gold mines, we subsidize railways, we subsidize shipping companies, and we subsidize other industries. If we can subsidize this too I am sure that whatever slight subsidization results from maintaining the interest at 5 per cent will not only be supported by all members of this house but by farm organizations across Canada and the people of Canada generally. I have a number of constituents in my riding who welcome this legislation and who are in the very circumstances that this legislation is advanced to meet.
In conclusion, I have had my whole argument scuppered, and I wish the minister had let me know beforehand. I expected to spend about an hour on the deficiences of the bill, and it would have saved me some time. But we are pleased to hear this announcement and we accept it with pleasure. I might say we have a few suggestions to make and it is likely we will have an amendment; but our major criticism of the bill is met by the minister's announcement prior to the commencement of this debate.


Charles Ronald McKay Granger: Mr. Chairman, there was nothing for fishermen comparable with the Canadian farm loan board an dthe new legislation makes no provision for long term loans to fishermen. I regret that once again the government has ignored the fishermen.
(Translation):


Mr. Roberge:: Mr. Chairman, I failed to take advantage of the resolution stage and second reading to make the few remarks I had in mind because, even if they concern specific matters, they also deal with several clauses of the bill which is before the house and the committee.
First of all, I would like to point out to the house that my remarks apply specifically to subparagraph (i) of section 2, as well as to sections 23 and 26.
Mr. Chairman, I see that the Minister of Agriculture (Mr. Harkness) has picked up his receiver-
(Text):


Douglas Scott Harkness: I wonder if I might request the hon. member to save his remarks on this particular clause until we come to that clause, because I think that would make for a more orderly discussion than an attempt to deal with all the clauses at once?


Gabriel Roberge: As my remarks relate to more than one clause of the bill I think it would be more appropriate for me to make them at
this time than to wait until a specific clause
13, 1959	5931
Proposed Long Term Credit to Farmers is under review, because If I do that it may be too late for the minister to agree whether or not some of the things I have said are just.
(Translation):
I have noticed that section 23-as the minister realized, judging by his remarks-deals mainly with "supervised farm loans".
If we look up subparagraph (i) of section 2 of this bill we see, in the French version, that the word "hypotheque" includes "mortgages" and ventes a remere. I am not too sure whether the word "mortgage" is French, but I assume that the translators made sure of the accuracy of that word. In the English version under subsection (1) of section 2, the word "mortgage" is defined as follows:
"mortgage" includes hypothecs and ventes A remere.
You will note, Mr. Chairman, that the phrase "ventes a remere" is expressed in French words.
There are such things as "ventes a remere" in the province of Quebec. I do not know if there are "ventes a remere" in the other provinces which have adopted the English code of laws; in any case, I know that such sales occur in the province of Quebec. In my opinion, this bill, especially as regards part 3, might create complications. At least I am afraid so. I believe this bill will create complications for the farmers of the province of Quebec.
In fact, section 23 of the bill provides:
-loans to farmers upon the security of first mortgages on farm lands and chattels and such additional security as the Corporation may require.
Under the civil code of the province of Quebec, farmers may pledge their live-stock as security for a period of 18 months only, and for that matter, I refer the minister to section 1979 (a) of the civil code of the province of Quebec, which reads as follows:
Any farmer may pledge, as security for a loan which he contracts, for a term not exceeding eighteen months, all his livestock and farm produce, present and future while at the same time retaining them in his possession. The borrower shall have, towards the creditor, the obligations of a depository, without having any recourse against him for the cost of custody and conservation.
As we can see, that farm security which has been introduced in our civil code a few years ago provides for loans upon the security of livestock only and farm produce, but not on the security of farm implements or other things included in the definition of "chattels" that we find at subparagraph (c) of section 2. This will no doubt create some legal difficulties in contracts drawn up in the province of Quebec.
5932	HOUSE OF
Proposed Long Term Credit to Farmers
As I was saying, Mr. Chairman, the "ventes a remere" system exists in the province of Quebec, and again I refer the minister to section 1546 and the following sections of the Quebec civil code. In a "vente a remere", the borrower, as a means of providing adequate security, sells his chattels to the lender. It doesn't matter what they are; they may be actual chattels or real property. Whichever they are, the maximum term allowed for a loan under the "ventes a remere" system is ten years. During that ten-year period, the vendor "a remere", who is in fact the borrower, may buy back the property he has given as security. That explains why the phrase "droit de remere" is known in English as "option of repurchase", or "right of redemption". The vendor has a right to buy back what he has sold, but this right must be exercised within ten years.
In the case of real estate, if the borrower or vendor "a remere" has repaid 75 per cent of the loan, he can require his lender, that is, the purchaser a remere, to grant him a mortgage.
If chattels are involved, whether they be livestock or farm equipment, the right to repurchase is retained for a maximum of 10 years. In such a case, the borrower cannot ask for a mortgage, because in the province of Quebec, as the minister no doubt knows- or perhaps his Quebec colleagues in the cabinet have told him-there can be no mortgages on livestock or chattels.
The minister will therefore realize the problems that may be raised in Quebec by this bill, particularly in the drawing up of contracts.
Turning to section 26 of the bill, here is what I find at subparagraph (c):
The portion of the loan based on the appraised value of the land shall be repayable within a period not exceeding thirty years and the remainder of the loan shall be repayable within a period not exceeding ten years;
I do not know whether this is what the minister had in mind when this subparagraph (c) was put in by the drafters of the bill. 1 do not know whether they had in mind those aspects of the vente a remere which would enable borrowers, in the province of Quebec, to use chattels, livestock and farm implements as security for a ten-year period only, and to mortgage their real property, such as buildings, for a 30-year period. What I do know is that, under section 26 subparagraph (c), the amount to be repaid by the borrower in the first ten years will be much too high in my view.


Those are problems that occurred to me, Mr. Chairman, on examining this bill, particularly Part III.
There is a mortgage provision which applies to real property, including land and buildings, and that raises no problem; there is also provision for redemption sales for a ten-year period and also for an agricultural security for a period of 18 months. People who draw up contracts, that is, notaries, in the province of Quebec, will find things difficult, not knowing to what period those provisions apply, and what kind of security is to be given to the government.
I should be grateful if the minister would reply to my remarks, which I have made in good faith and which are merely intended to help improve this legislation.
(Text):


Hazen Robert Argue: I am very happy at the announcement of the Minister of Agriculture. There has been some comment about the place to the effect that as the session draws to a close debate on resolutions is unnecessary and that by eliminating this stage we could shorten the session without interfering with the rights of hon. members to speak. The example we have had this afternoon demonstrates the great value to the Canadian public of having a resolution preceding a money bill and a resolution stage at which debate can take place. When the measure was before the committee of the whole my major criticism was that there was no ceiling as to the interest rate that could be charged. When I asked the minister whether he could assure me that at least in the initial operation of the new act the interest rate would not be above 5 per cent his answer was no, but since giving that reply the government, in the light of the debate that took place at the resolution stage, has reconsidered its position and has now announced that there will be a statutory rate of 5 per cent.


Mr. Rapp:: Others, too, were interested in the problem.


Hazen Robert Argue: I am sorry I did not hear that interjection because I should be happy to have an opportunity to reply.


Reynold Rapp: Other hon. members were also interested in the problem.


Hazen Robert Argue: 
Mr. Parizeau:: We work behind the scenes.


Hazen Robert Argue: Is that right? Hon. members, I take it, sit up with the minister late at night after the house has risen and give him the benefit of their advice. We are pleased to hear that and hope that in the future on these important questions hon. members will tell us in this chamber what they are working on and report on the progress they are making.
The corporation set up under this measure will replace the Canadian farm loan board. Over the years I have bitterly complained about the narrow concept of the board in processing applications. I have been pleased to observe that in recent years some improvement was made in its administration and a larger number of loans have been made under the act. I have, however, a substantial file of letters from people whose applications for loans have been turned down by the board. I think that in substantial measure the criticism made by the Canadian Federation of Agriculture before the banking and commerce committee in 1956 is still valid, that this board has taken a conservative attitude in the processing of applications.
I would like the minister to tell me when he replies if in actual practice the board has denied large areas of western Canada loans under this act? I also want to know if the new corporation will have a more efficient system of filing than the board apparently had. I have received letters from people in my constituency complaining that their applications for loans were turned down although they felt their financial position would encourage the board to grant them a loan. I have suspected that large areas of western Canada have been declared areas where the board will not grant loans. I asked the board how many applications for loans were received in each year since 1950 from persons whose post office addresses were Killdeer, Wood Mountain, Rockglen, Scout Lake, Lisi-eux, Canopus and Strathallen. The answer I received was as follows:
The Canadian farm loan board does not maintain records respecting applications and loans by municipalities as it does not require to do so for administrative purposes and the information requested is therefore not available.
This seems a rather devious way to answer the question. I then framed the question in these terms:
How many (a) loans; (b) applications for loans, have been made by and to the Canadian farm loan board in each year since 1950, in each of townships 1-4 inclusive in ranges 27-30 inclusive, west of the 2nd meridian, and in each of townships 1-4 inclusive in ranges 1-3 inclusive, west of the 3rd meridian, in the province of Saskatchewan?
13, 1959	5933
Proposed Long Term Credit to Farmers
The reply to that question was as follows:
The Canadian farm loan board does not maintain records respecting applications and loans by federal constituencies or parts thereof as it does not require to do so for administrative purposes and the information requested is therefore not available.
The question I now put to the minister is this. On what basis will the records of the new corporation be kept? How can an hon. member frame a question so as to determine the policy of the board in the past or the policy of the new corporation in the future in respect of denying loans to large areas of western Canada? I have asked for that information on the basis of the legal description of the land and on the basis of the post office description but to no avail. 1 am sure the minister will give me some assistance in phrasing a question so that an hon. member may determine what policy is being followed.


Howard Charles Green: Before we rise, Mr. Chairman, may I say the suggestion was made that it might facilitate the business of the house if at eight o'clock this evening we commenced with the second reading of the bill to amend the Public Lands Grants Act, and then took the two bills having to do with agreements between the government of Canada and the governments of New Brunswick and Nova Scotia in respect of Indian reserves, followed by the approval of the convention on the nationality of married women. As soon as those were through we would go back to the farm credit bill.
One reason for that is that I have to take the amendments to the Public Lands Grants Act and I must leave for Vancouver tomorrow morning. I understand there is no opposition to these four bills and it would at least clear the order paper of this business.


Mr. Chevrier:: That is perfectly satisfactory as far as we are concerned, Mr. Chairman.


Hazen Robert Argue: The house leader was good enough to come over to my desk and tell me about some of the suggestions that had been made to expedite the business of the house. I understood that he would like the bill in his name brought forward because he was leaving Ottawa, but I did not understand that these additional requests would be made. I do not know whether or not the Minister of Citizenship and Immigration is leaving town. I would suggest that the house accede to the request of the house leader to suit his own convenience because he has to make this very necessary trip, but other than that, unless there are equally good reasons, the announced order of business of the house should be maintained.
5934	HOUSE OF
Proposed Long Term. Credit to Farmers


Howard Charles Green: Whatever the house wishes. I understood that these other three measures were also agreed to and would only take a very few minutes but if there is to be a debate of any length on them we will have to call them in the order which was announced.


Hazen Robert Argue: As I said, I am perfectly happy to agree to the request to take the bill in the name of the Secretary of State for External Affairs so that he can make this important trip. Other than that, unless there are equally good reasons, and apparently there are not, I think we should stick to the order of business that was outlined last Friday.


Joseph Pierre Albert Sévigny: Shall clause 1 carry?


Hazen Robert Argue: If the minister would reply to my question I would be quite happy to let clause 1 go at this point.


Douglas Scott Harkness: Mr. Chairman, as I wrote down the hon. member's question he asked whether the farm loan board has in practice removed large areas of western Canada from the lending facilities. I am informed that there are no such areas and never have been in western Canada where the farm loan board has refused to make loans. In any event, I can assure the hon. member and the committee that under this legislation each application will be dealt with strictly on its own merits and without any regard to what area is involved or anything else. There are, of course, as I think the hon. member realizes, areas not only in western Canada but in all parts of Canada where the security that can be attached to the land is so small that the amount of loan that can be made is also very small. In many cases it is not a proposition on which a loan should be made at all. Frequently you have an area where the soil is infertile and the amount of cultivated land on the farm is very small with the result that it is impossible to create an economic unit there. That is why you will note in two or three places in the bill that some emphasis is put on money being lent to create an economic unit. The only reason that any farm in any area would not be able to get a loan under this legislation is that it would be impossible to create an economic farm unit there.


Hazen Robert Argue: In the area I am talking about it is correct that on the basis of wheat productivity it is not the best land in Saskatchewan. However, it is an area in which a substantial quantity of grain is produced and it is a very important and prosperous livestock area. Therefore, while it may be difficult to create an economic unit if it is


related to the production of wheat, if you relate the economic unit to the production of beef and the production of grain it is an area in which economic units of substantial acreage would enable farm families to make good incomes comparable with those of people in other areas. I am not endeavouring to put the minister on the spot. I would be satisfied if he would check with the officials of the new corporation to see whether or not the kind of information I have requested can be obtained from the files of the Canadian farm loan board. Surely when one defines a large area it is possible for the board by some means to find out whether or not, within the operations of the board, money has been lent to farmers in that area. I think this is a very simple question. I have a strong feeling that if the board had wished to answer the question the information would have been produced.


Douglas Scott Harkness: I will be glad to try to get that information for the hon. member. In connection with his other remarks I can only say that the idea of an economic farm unit is by no means limited to grain production. In fact, to a large extent the situation is just the reverse. One of the reasons why this supervised credit scheme is being introduced is so that expert advice will be available to a farmer to direct him into the type of activity or combination of farming activities which will give him a profitable enterprise.


[Stage Direction]
Clause agreed to.
Progress reported.
At six o'clock the house took recess.
[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


Howard Charles Green: the second reading of Bill No. S-2, to amend the Public Lands Grants Act.
He said:	Mr. Speaker, His Excellency the
Governor General having been made acquainted with the purpose of this bill has given consent, so far as Her Majesty's property rights are affected, that the house may do therein as they think fit.
The object of this bill is to make a purely technical amendment to the Public Lands Grants Act. The amendment has to do with the transfer of the right of management of public lands from the federal government to

a provincial government or some other government of Her Majesty. The transfer of the right of management or administration is technically different from the sale of the land. When lands are sold there is a change in title. However, all public lands are vested in the crown, which is one and indivisible. The transfer of lands between one government of the crown and another does not involve a change in title. Transfers between governments of Her Majesty merely pass from one government to another the right to control the disposition of lands.
I might point out that the transfer of a publicly owned lot of land from the government of Canada to, for example, the government of the United Kingdom, does not in any way affect sovereignty. The transferred to remain within the jurisdiction of Canada as much as if a private individual had sold it to the government of the United Kingdom.
I should perhaps further point out that this bill has nothing to do with the transfer of lands to any government outside of the Commonwealth. It deals only with transfers from the government of Canada to provincial governments or other governments of Her Majesty.
Now, because an ordinary sale to a private individual is technically different from the transfer of administration to another government of the crown, the method of transfer is different. In an ordinary sale letters patent are issued transferring the title to the purchaser, letters patent being the form of deed used in conveyances by the crown. But because there is no transfer of title when administration is passed to another government of the crown the courts have long held that letters patent or a deed should not be used. The proper method according to the courts is for the transferring government merely to pass an order in council transferring the right of administration and control. This is the method which has been used by the government of Canada for many years.
The present section 4 (a) of the Public Lands Grants Act authorizes the sale of lands, but does not authorize the government of Canada to transfer the administration of public lands to another government of the crown. Nevertheless, such transfers were made as it was not thought that statutory authority was necessary. However, in a recent case in the Supreme Court of Canada, referred to in the explanatory notes in the bill, some of the judges said that transfers to the provinces by order in council are not valid unless the governor in council has the express authority of parliament to make such a transfer. It is to remove any doubt as to
66968-0-376
Public Lands Grants Act the validity of such transfers that it is proposed by this bill to give the governor in council the authority to transfer lands to the crown in the right of a province or in some other right.


Paul Joseph James Martin: There need not be much time spent, I take it, on this bill. The minister, I assume, has had the advice of the law officers of the crown, based on the case of the Attorney General of Canada versus Higbie, although up until this case was decided I take it from what the minister has said in explanation of the bill there has always been a judicial view that the proper way to transfer land from the crown in the right of Canada to the crown in respect of one of Her Majesty's dominions was by order in council and not by a grant provided for in a deed.
The case to which the explanatory note directs our attention has indicated a different view, and I assume it is because of this that the government has found it necessary to meet the technical objections involved in the transfer of land from Her Majesty in the right of Canada to Her Majesty in the right of some other jurisdiction, I take it that would include the provinces as well as any other jurisdiction under the crown outside of Canada and within the British commonwealth. The minister said in his explanation, however, that a transfer to Her Majesty was not to be regarded as an infringement of Canadian sovereignty. I assume that this bill does not change that situation. A grant under the old method, that is through order in council, certainly did not involve any challenge to Canadian sovereignty. The minister's observation was simply by way of a gratuitous, although valuable, explanation, and was not in any way directed to this particular bill. The minister nods, so I take it my observations are correct.


Hazen Robert Argue: Mr. Speaker, I think the information that has been given by the Minister of Public Works is valuable and that this is merely a case, according to the advice of the Department of Justice and according to the ruling of the supreme court, of giving to the governor in council a right to transfer to the crown at some other level this land, and to do so by means of an order in council. We are pleased, Mr. Speaker, to support the passage of this bill at this time because we think it is a measure which has been deemed, by the courts, to be necessary, and also to facilitate the departure of the minister on his very important assignment.


Paul Joseph James Martin: Can the minister just answer this question? I do not know the

Public Lands Grants Act case of the Attorney General of Canada versus Higbie and consequently I am not in a position to say whether or not it would apply to a temporary arrangement provided by the government of Canada with regard to the use for a particular purpose of a sovereign power outside of the commonwealth itself. I know this bill does not direct itself to that, but my hon. friend will remember that in the case of the birth of a child to the present Queen of the Netherlands there was some declaration that the hospital room was to be regarded, for the purpose of the birth, as foreign territory. Does the minister know under what authority that particular declaration was made?


Mr. Speaker:: May I inform the house that if the minister speaks now he will close the debate.


Mr. McMillan:: May I ask the minister a question?


Howard Charles Green: Perhaps I could answer the questions in committee.


Paul Joseph James Martin: Yes. Let us do that.


William Hector McMillan: I should just like to ask this question. How would the transfer of lands from a province to the federal government be effected?


Paul Joseph James Martin: In the same way. The question can be asked in committee.


Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Question.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sevigny in the chair.
On clause 1-Transfer to the crown in any right other than Canada.
Howard Charles Green: In answer to the point raised by the hon. member for Essex East, Mr. Chairman, may I say that my understanding is that this bill merely makes it certain that the practice which has been followed in years gone by is legal. Evidently the case of the Attorney General of Canada versus Higbie referred to in the explanatory note casts some doubt on the validity of the course which had been followed prior to that time. I do not think that the declaration made in respect of the birth of a child to the present queen of the Netherlands would come under the Public Lands Grants Act, although it may do so. However, it would certainly not be under this particular section which is merely

for the dealing with lands between two governments of the commonwealth, including dealings between the federal government and the provincial governments.
Then the point raised by the hon. member for Welland was as to how these transfers were carried out by a provincial government to the federal government. I believe that matter will be subject to provincial legislation. I am not in a position to say just what form the provinces used to use to authorize such a transfer. Probably it differs in the various provinces.


Paul Joseph James Martin: The case of the Attorney General of Canada versus Higbie would apply to the provinces as well.


Howard Charles Green: I think the case which the hon. member for Essex East has mentioned was referring to the Public Lands Grants Act of Canada. It may be that the legislation of the various provinces provides for such a transfer in some other way. I really am not in a position to answer that question.


Mr. Bourgef:: I do not think there is much to be said with regard to what the minister has just stated. I understand the purpose of this bill is simply to empower the governor in council to transfer by order in council rather than by deed the administration and control of public lands from Her Majesty in right of Canada to the crown in right of any province or otherwise. From what the minister has just said I understand it has been the practice in the past but there was some doubt-and I think that doubt was raised in the supreme court-whether the governor in council could do so without specific authority. I understand that the purpose of this amendment is just to resolve that doubt.


Howard Charles Green: That is the whole story.


Maurice Bourget: The minister says that is the whole story. If that is the purpose of the bill, we have no objection to its passing.


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


[Stage Direction]
The house resumed consideration in committee of Bill No. C-67, to provide for the extension of long term mortgage credit to farmers-Mr. Harkness-Mr. Sevigny in the chair.
[Stage Direction]
On clause 1-Short title.
(Translation):
Samuel Boulanger: Mr. Chairman, when we adjourned at ten past six, the hon. member for Megantic (Mr. Roberge) had asked some questions which the Minister of Agriculture (Mr. Harkness) had not yet answered.
On second reading of the bill, I myself asked the minister some questions as to the possibility, for farmers in the province of Quebec, to borrow as much as $27,500. I said then that Quebec farmers would not qualify under the act, if it were adopted in its present form, because our laws do not allow farmers to use livestock as collateral for more than 18 months. I also said that there is legislation governing "ventes a remere" which prohibits the mortgaging of livestock for a period of more than 10 years.
Consequently, I am asking the minister to tell us if farmers in the province of Quebec will be able to borrow more than $20,000 and obtain supervised loans?
(Text):


Douglas Scott Harkness: Mr. Chairman, I did not answer some of the questions which were posed on clause 1 because they really come more properly under some of the subsequent clauses. However, if it will expedite matters I perhaps should say a word on some of the points which have been raised.
The hon. member for Drummond-Artha-baska, in speaking previously, expressed some doubt whether this legislation was applicable in eastern Canada as well as in western Canada. He also expressed some doubt whether I was aware of agricultural problems in the east as well as in the west. I can assure him that I certainly am aware of them. As a matter of fact, I have them brought to my attention very forcibly every day. I may also tell him that my first recollections actually were of life on a farm in eastern Canada. I have therefore had a certain amount of familiarity with farming conditions in eastern Canada from the time that I can first remember anything.
In connection with this question of whether a farmer in the province of Quebec would be able to borrow the maximum amount possible under this legislation, namely $27,500, may I say that it would be just as possible for a farmer in Quebec to secure the maximum amount as it would be for a farmer in any other province as long as he has sufficient security in land, livestock and chattels to justify a loan of that amount. There are in the eastern townships of Quebec a considerable number of farms with which I am 66968-9-376?
13, 1959	5937
Proposed Long Term Credit to Farmers familiar on which a loan of $27,500 would be well justified. A young man, say the son of a farmer or somebody else who wished to buy the farmer's place in that particular area, I think could qualify there for the $27,500 just as well as or in fact much better than in many other areas in Canada of which I know. I trust that is sufficient as far as that point is concerned.
I should like to compliment and thank the hon. member for Kootenay West for his tribute to the Veterans Land Act and the work it has done in this country. I myself never lose an opportunity of saying how great a contribution the Veterans Land Act has made, not only to the Canadian veteran but to Canadian agriculture generally, in the work it has enabled to be done in the past 15 years. The Veterans Land Act has set up an excellent organization and they have done an extremely good job as far as supervising farm credit is concerned, and it is on the basis of the great success the Veterans Land Act has had that we thought it was a practical and useful endeavour to set up a supervised farm credit plan such as the one we now have under consideration, which would be applicable to the younger farmers throughout Canada. I am quite sure that this present bill will work out just as successfully as the Veterans Land Act has done in establishing younger men on farms, and in aiding the setting up in this country of economic farm units.
The member for Megantic brought up the question of "rentes a remere". Those are, as I understand it, a particular type of agreement for sale which exists in the province of Quebec. The precise reason why we have used those words in this act, both in the English and the French versions-there is no good English translation of that phrase, I understand-was to make it clear that the type of instrument used in the province of Quebec would be acceptable and could be used as far as this bill is concerned. I am not familiar with what I might call the legal ramifications of this, but certainly the legal people from Quebec were consulted by our justice department when this bill was drafted, and that is the reason why the term was included in what would be looked upon as a mortgage for the purposes of this act. As far as I know, I am advised that there will be no serious legal difficulties in applying the act in the province of Quebec.
I think that I dealt with the points brought up by the hon. member for Assiniboia before we adjourned.


[Stage Direction]
Clause agreed to.
5938	HOUSE OF
Proposed Long Term Credit to Farmers
On clause 2-Definitions.
(Translation):
Samuel Boulanger: Mr. Chairman, sub-paragraph (e) of section 2 of the bill defines the word "farmer" as follows:
"Farmer" means a person whose principal occupation is farming, and, for the purposes of Part II, includes a co-operative farm association and a family farming corporation as defined by regulation;
May I ask the minister what is meant here by a "co-operative farm association"? (Text):


Douglas Scott Harkness: Yes, Mr. Chairman, there exist a number of co-operative farming organizations, particularly in western Canada, in which 4, 5, 6, 7, 8 or more farmers have combined together to do their farming as a co-operative and thus are able to buy bigger machinery and a greater variety of machinery than anyone could do individually. They form a co-operative under the co-operative laws of the province to carry on their farming operations. It was felt that an organization of that kind should have the advantages of this farm credit act.


Mr. Nesbili:: Mr. Chairman, just a brief remark. Subclause (e) says that:
"farmer" means a person whose principal occupation is farming-
We all realize the purpose of this being included in the interpretation clause of the bill, but I would like to express the hope to the minister that his officials, when administering this act, will be a little more flexible in their interpretation than were the officials of the farm loan board in days gone by. There are a great many people, particularly in my part of Canada, especially new Canadians from the Netherlands, who are very anxious to obtain farms, and everyone in the family gets out and works to try to pay for the farm. It often happens that the father may have a job in a plant in town in order to try to earn enough money to help pay off the mortgage more quickly, and his wife and the other members of the family look after the farm. I know that in the past people who wished to become genuine farmers under the long term provisions of the act, and who are working temporarily in a plant only to try to raise money to buy sufficient stock and implements to make it a paying operation, have been discriminated against. I hope when this act comes into effect much more flexibility will be given, as I feel sure it will, to the interpretation of the words "whose principal occupation is farming", and that the needs of many people who have side jobs occasion-nally on a full-time basis, as I say only in 

order to make payments on the farm and buy stock and equipment, will be given greater consideration than was given them by the former farm loan board.


Douglas Scott Harkness: It is to look after situations of this kind which have now become reasonably common that clause 11 (2) was put into the bill, so that where a man has two occupations and it can be determined that the major occupation is farming, he would be eligible for a loan, which up to date he has not been.


Mr. Henderson:: I am very interested in this bill. In my part of the country the average farmer is getting past his working age and he would like to sell the place to his son. Of course the son has not enough money to buy it, and this act is made to order for him. There is not a chance in the world of losing a cent because these people are all good farmers. These people are in the Peace river country, the finest grain producing part of Canada, and farmers from this district won the world championship for growing wheat five times. The exhibitor Herman Trelle was finally barred at Chicago. You can look his name up and you will find it. Also the champion grain grower last year was growing grain in that country. These young farmers want to start. I have had dozens of letters from them. The older farmers cannot retire because they have nothing to retire with. There is no country more sure than this country I am speaking about. They have a crop every year, not like Saskatchewan.


Some hon. Members:: Oh, oh.


Walter Clarence Henderson: The young fellows feed cattle in the winter time and they really know their jobs. But grain growing and growing grass seed is essential, and if they can get this loan at 5 per cent-they do not want to pay 10 or 12 per cent-then they will make a success and you will not lose one dollar.


Douglas Scott Harkness: I am sure the Peace river country is one of the areas where this bill will be particularly beneficial. It might be of interest to the hon. member and other hon. members of the committee to know that the three times wheat champion, Herman Trelle, did have a loan under the farm loan board.


Mr. Aiken:: I would like to direct the attention of the minister to subclause (g) which defines farm land. I notice that the definition of farm land now includes buildings and other improvements thereon, which was not in the previous act. I am referring particularly to people like poultry raisers who have been unable to get a loan because they did

not have enough land and most of the investment was in buildings. I would like to ask the minister if this new definition of farm land will be of assistance to that type of person.


Douglas Scott Harkness: I think it will, but the appraisal of any particular piece of land for the purpose of this act will be made primarily on its production potential. If you have an acre of land with three or four chicken houses on it I do not think the production potential could be based on the chickens you would be able to produce in those circumstances. In other words, the land would have to be valued on the basis of an appraisal of what the chances would be in the next ten or more years in that particular branch of the industry.
(Translation):


Samuel Boulanger: Mr. Chairman, I should like to say a few words in connection with the minister's reply about loans to farm cooperatives. I would have liked the minister to announce a system of loans for farm cooperatives, like the one reported by farmers through their associations. In fact, the Canadian Farmers' Association has requested on many occasions that loans be put at their disposal to promote their business and the marketing of farm produce, because our cooperatives are in urgent need of money to prepare, produce and market their products.
I would ask the Minister of Agriculture to kindly consider their request and introduce an amendment accordingly, in order to help farmers who are in need of money, and to offset integration from which we are suffering today.
(Text):


Douglas Scott Harkness: The farm co-operatives
which are mentioned in subclause (f) are, as I indicated earlier, associations of a relatively small number of farmers in most cases who pool their operations and machinery. They are producing co-operatives. The type of farm co-operatives about which the hon. member is thinking are mostly marketing co-operatives, and we have legislation to look after them in the Agricultural Products Co-operative Marketing Act. This measure is not designed to assist people who market their production and I do not think we should confuse the purpose of this act, which is designed to enable people to get into the farm business or expand their present farm operations, with the objects of the legislation which I have just mentioned, because they are two different things.


Mr. Martin (Timmins):: I wonder whether the minister does not think there may be
13, 1959	5939
Proposed Long Term- Credit to Farmers some clash between clause 2 subclause (e) and clause 21 in part II of the bill which says:
(2) The total amount outstanding of loans made under this part to any one person, alone or jointly with others or in respect of a single farming enterprise, shall not exceed $20,000.
How would this apply so far as co-operative groups are concerned?


Douglas Scott Harkness: No, there is no conflict with regard to that matter at all. A co-operative group is entitled to $20,000 or $27,500 as the case may be, or two men in partnership might be entitled to it. However, the total amount for a particular farming operation would not exceed $20,000 under part II and $27,500 under part III.


Mr. McQuillan:: I should like to ask the minister if this bill applies to tree farming.


Douglas Scott Harkness: There is a special clause which we have put into the bill to deal with wood lots. It is clause 19(2) which reads:
For the purposes of this act the value of a farm for agricultural purposes may include the commercial value of any part thereof used for the production of forests products.
That is to look after, in particular, the value of wood lots. As I say it would include, of course, tree planting for commercial purposes.


[Stage Direction]
Clause agreed to.
Clauses 3 to 8 inclusive agreed to.
Clause 9-Advisory committee.
Hazen Robert Argue: Clause 9 provides for an advisory committee. It reads as follows:
9. (1) The Minister shall appoint an Advisory Committee consisting of a Chairman and at least six but not more than nine other members, the majority of whom shall be farmers or representatives of farm organizations.
(2)	The Advisory Committee appointed under subsection (1) shall advise the Corporation with respect to such matters arising under this Act as are referred to it by the Minister or the Corporation.
(3)	The members of the Advisory Committee may be paid for their services such remuneration and expenses as are fixed by the Governor in Council.
We are pleased that there is to be an advisory committee and that the majority of the members will be farmers or representatives of farm organizations but we feel that the advice of this committee should not be available only when sought expressly at the direction of the minister or of the corporation but rather that the committee should, of its own right, be able to tender advice to the corporation and to the minister. What will happen, in effect, if the advisory com-mitee has not the right to tender advice on its own is that its advice will seldom be sought, that the committee will meet very
5940	HOUSE OF COMMONS
Proposed Long Term Credit to Farmers seldom, if ever, and that in time its advice, if sought at all, will be requested with regard to some particular matter referred to it by the Minister of Agriculture. I think that is far too narrow a scope. I think it restricts unduly the function of such an advisory committee and will probably mean that the committee will be entirely useless. We have had experience with advisory committees set up under acts. We know that sometimes they are seldom called together and that their advice is sought not on important policy or controversial matters but with regard to details of questions which are not as important as questions involving major policy.
We had a discussion on this point in connection with the Agricultural Prices Stabilization Act and finally there was a provision made, if I recall it correctly, that the advisory committee should meet twice a year. However, there is no provision in this bill for regular meetings of the advisory committee. Unless something is done to meet this point the committee will have its hands tied and be unable to do its job of giving advice to the minister and to the corporation on what it feels are important policy matters. I therefore move, seconded by the hon. member for Timiskaming:
That paragraph 2 of clause 9 be amended by deleting there from all of the words after the word "corporation" in line 19, and substituting therefore the following words: "and the minister on matters of policy within the term of this act."
Paragraph 2 would then read as follows:
The advisory committee appointed under subsection (1) shall advise the corporation and the minister on matters of policy within the terms of this act.
This would allow a competent and energetic advisory committee composed of farmers and representatives of farm organizations to give advice to the corporation and to the minister on matters of policy within the terms of the act. We have used the word "policy" to make it clear that we would not ask the advisory committee to pass on particular applications, but to look into the details of the operation of the board.
We have heard a great deal of strong criticism in this house of the Canadian farm loan board in recent years. I am certain that if there had been a strong and lively committee that had the right to tender advice to the board its administration would have been much better than it in fact has been.
We are hopeful that this new legislation will work in the long term interests of agricultural producers. We say again that we are pleased with the announcement that there shall be a fixed rate of interest. That will prevent an increase in the interest rate to more than 5 per cent as long as that provision

is in the bill. If the minister cannot accept this amendment we would have no objection to his accepting the spirit of it and wording it somewhat differently.
The idea behind the amendment is that the advisory committee should feel free to advise the corporation and the minister on main policies coming within the scope of the legislation.


Douglas Scott Harkness: If the hon. member had had any experience with advisory committees of this kind he would know they are never loath to give advice on general policy measures or anything else that might come within the purview of the body to which they are an advisory committee.
The terms here are the same as in the Agricultural Stabilization Act. The advisory committee is set up under a very general type of terms. Certainly there is no idea in anybody's mind that the committee will be circumscribed in any way.
The hon. member is trying to establish a point that does not exist, that the wording here would circumscribe severely the advisory committee. That is just not the case. It is the same type of committee that we have under the Agricultural Stabilization Act. That advisory committee discusses matters of all kinds and tenders advice on matters of all kinds concerning stabilization policies. I presume this advisory committee would follow the same course.


Herbert Wilfred Herridge: Mr. Chairman, I wish to
support the remarks of the hon. member for Assiniboia and let the minister know that we thought this amendment over and offer it in a most constructive and cooperative spirit as we have demonstrated throughout the discussion of the bill since the improvements were announced by the minister this afternoon. We take the words "as are referred to it by the minister or the corporation" as limiting the capacity of the advisory committee to advise the minister or the corporation. We fully understand in moving the amendment that the responsibility for decisions continues to rest with the minister and the corporation, even after advice is given on any matter and even if the amendment is carried.
This amendment is not moved with the idea of transgressing the responsibilities and powers of the minister and the corporation. It is moved with the idea of making it possible for the committee to at all times submit its views to the minister or the corporation on any matter with respect to policy in the administration of this legislation. Those would be matters of direct concern to farmers, borrowers and persons of that sort

We urge the minister to give further consideration to our amendment and representations knowing they are advanced, as I said before, in a most constructive and co-operative spirit.


Mr. Brunsden:: Mr. Chairman, the last speaker and the leader of his very small group, as usual, have completely ignored the fact that in matters agricultural the minister and his new farm loans organization have the finest advisory body in Canada; they have members on this side of the chamber who are dedicated to the farmers of Canada. I should like to say to the two hon. gentlemen that as one having had some experience with the Canadian Farm Loan Board I know that one of the weaknesses of the board as operated to date has stemmed from the fact that there has been no advisory body of any kind. The interpretation and administration of the act, the classification, granting and refusal of applications and matters related thereto, have been determined very largely by one man. That individual is no longer with the Canadian Farm Loan Board.
It seems to me, may I say in all humility, that with the very valuable advice of many of us on this side of the chamber who are in a position to give the minister and his administrators our conscientious views on questions of this kind, and with the services of the advisory board that is now to be created, this legislation will be far superior to anything we have had in Canada with respect to farm loans and therefore should be endorsed.


Lionel Chevrier: Mr. Chairman, it would strike me that the purpose of this clause is to establish an advisory committee which, I take it, would from time to time advise the minister. It would also strike me that if the minister required advice from the advisory committee all he would need do would be to seek advice from time to time as is the case with respect to another matter that came before the house concerning the Unemployment Insurance Act. In that light it would strike me that this amendment is redundant to that effect at least. For that reason we propose to vote against it.


Herbert Wilfred Herridge: Mr. Chairman, I did not reply to the hon. member's suggestion. He mentioned the unemployment insurance advisory board. If this advisory committee were to operate in the same way it would mean the minister would not take any advice.


Mr. Peters:: In reply to the hon. member who has spoken for the Conservative party I would like to point out that a great deal has been said recently about the matter of the
13, 1959	5941
Proposed Long Term, Credit to Farmers advice that legislators are giving to the cabinet. It is about time we found out how fast these backbenchers can talk. There are 208 Conservative members and during the course of one caucus meeting-


An hon. Member:: Listen to the C.C.F. brainchild.


Joseph Pierre Albert Sévigny: Order.


William Arnold Peters: Mr. Chairman, I am just pointing out that each member has 26 seconds a week to tell the frontbenchers what they should do-


Joseph Pierre Albert Sévigny: Order. At the present time we are talking about the members of the advisory committee.


Hazen Robert Argue: We have just had a volunteer from Medicine Hat.


William Arnold Peters: I am just talking about the 208 who are going to act as the advisory committee to the minister.


Some hon. Members:: Order.


William Arnold Peters: I pointed out that each has only 26 seconds a week to talk on this matter.


Some hon. Members:: Order.


An hon. Member:: Another farm expert.


William Arnold Peters: Mr. Chairman, we move this amendment because we are aware that the advisory committees have not been satisfactory in the way they have been constituted either in the case of the unemployment insurance commission or with respect to the agricultural stabilization legislation. In neither case have the members of these committees been able to give the advice that they were fully capable of giving. I am sure that the members of this advisory committee will be capable of giving advice on a variety of subjects. Their advice may not suit the minister but it may be of vital importance to the farm organizations and the farmers who are going to take advantage of these loans.
I can see no objection if the minister wishes the type of advice that the people to be appointed to this advisory board are in a position to give. If he says he is willing to accept this type of advice in the case of the agricultural stabilization board, then I see no reason why this amendment cannot be adopted and why it is not supported by the minister unless he has it in mind that only those matters he wishes will be referred to the committee. I would urge the committee to accept the amendment either in its present form or in a form that the minister himself may see fit to introduce.


Hazen Robert Argue: Mr. Chairman, the clause as it now stands makes a farce of the advisory
5942	HOUSE OF
Proposed Long Term Credit to Farmers committee. It makes the advisory committee not only a creation of the government and of the minister but it leaves any future meetings of the advisory committee entirely at the discretion of the board and the minister and that is also true as to the subjects it may consider for the purpose of tendering advice to the government. I am surprised that the Minister of Agriculture has taken the position of emasculating the advisory committee even before it has been set up.
I always listen to the remarks of the hon. member for Medicine Hat with great interest. I can remember occasions when he has said things in the house with which I have agreed very emphatically. But I do not think he was on very sound ground tonight. What he has said is that we do not really need an advisory committee representing farmers and farm organizations.


Edwin William Brunsden: May I ask the hon. member a question? Is he putting words in my mouth? I did not say that. I merely said that with respect to policy the minister had the opportunity to draw on the experience of a lot of members who represent farming constituencies. I did not oppose the advisory committee.


Hazen Robert Argue: I quite understand that. The hon. member did not oppose the type of advisory committee that would be provided for by this clause. The member has emphasized exactly what I thought he was saying, namely that when policy matters are concerned it is not an occasion for advice from an advisory committee consisting of farmers and representatives of farm organizations but rather it is an occasion for advice from the private members of parliament who support the government.


An hon. Member:: The elected representatives from certain ridings.


Hazen Robert Argue: My hon. friend has talked about the advice that has been given with regard to the farm loan board for which this new corporation is to be substituted. He has said that one important person who used to have a good deal to do with the farm loan board is now gone because of the advice that has been given. This is a classic example, Mr. Chairman, of one set of politicians in power trying to get rid of another set of politicians. The hon. member has said that the advice that they have given to the minister and the government has brought about the dropping of the head of the Canadian farm loan board. I say to my hon. friend that he has strengthened the very reason why we have moved this amendment, namely to try to get an advisory committee of farmers and representatives of farm organizations


who are in an independent position to advise the government on matters of policy. We do not want these matters to remain the exclusive property apparently of the backbench Conservative members. Rather, we want to see established a strong, independent advisory committee that is not the child of the Minister of Agriculture and does not depend for its existence on the minister asking for its advice and then being remunerated in accordance with the terms of subclause 3.
The hon. member for Medicine Hat has said that when it comes to policy matters the government has a very strong group to advise it.


An hon. Member:: Haven't we?


Hazen Robert Argue: That is very true. Almost every member in their vast majority is there to advise the government, but I am wondering what the advice has been with regard to other matters. If their advice as to policy is being followed now, it is a wonder that these gentlemen are not advising the government to make deficiency payments.


Gordon Minto Churchill: You are out of order.


Joseph Pierre Albert Sévigny: Order. I listened with great care to the arguments of the hon. member for Medicine Hat. I must say that until I had heard what he had to say I could hardly call him out of order, which he actually was. I therefore have given a similar chance to the hon. member for Timiskaming and the hon. member for As-siniboia to be out of order for a while. I believe that at present we are discussing a rather simple matter concerning an advisory board to the minister to advise on questions of farming. We are straying somewhat into a general political discussion and I believe all hon. members will agree with me that this is neither the time nor the place to stray into such a discussion. I must therefore declare the present debate on this particular question of politics out of order. Hon. members have heard the amendment. Those who are in favour-


Hazen Robert Argue: Mr. Chairman, I have the floor. Even the chairman cannot take that away from me.


Some hon. Members:: Oh, oh.


Hazen Robert Argue: I have the floor.


Mr. Graffley:: Louder.


Hazen Robert Argue: I am wondering for how long it has been out of order in this house to have a political discussion. As a matter of fact, I think that is the pith and substance of discussion in the Canadian House of Commons. This measure has been brought in by the government and in that sense is a political

measure. It is a measure that we have supported and we will continue to support it. I am endeavouring to say why there should be a strengthening of the advisory committee under clause 9 of the bill. I have said that the committee should be strengthened in order to remove advice on policy matters given to the corporation as far from political considerations as may be possible.


William Heward Grafftey: Would the hon. member permit a question? Is the hon. member suggesting that the elected representatives of the people are not in a position to advise, or at least give their suggestions, because that is exactly what he has said?


Hazen Robert Argue: Oh, no, not at all.


William Heward Grafftey: You say that, and you should know that is right.


Hazen Robert Argue: I am very pleased indeed with these interruptions and these questions.


William Heward Grafftey: Answer my question.


Hazen Robert Argue: Yes, I am in favour of it. Is that good enough? The hon. gentleman asked if I was in favour of members of parliament being able to give advice and the answer is definitely yes. That is what we are here for, and we are doing it all the time. However, I do not believe the hon. member for Medicine Hat should endeavour to say that because members of parliament on the government side of the house are giving advice to the board on policy matters, that therefore you do not need a strong advisory committee as we are requesting by this amendment.
We have other advisory committees, Mr. Chairman, giving advice on some occasions to the government and to other boards. I would be very much interested to have the opinion of the hon. member for Essex East on this very important amendment that has been presented here tonight because not only do I realize that the member for Essex East is studying farm questions very diligently and is making continued and substantial progress, but I am well aware, as I know government members are painfully aware, of the tremendous interest the hon. gentleman has taken in another advisory board, namely the board advising the unemployment insurance commission.
Before you rule me out of order, Mr. Chairman-


Gordon Minto Churchill: A constant breaking of the rules.


Hazen Robert Argue: I am listening to the Minister of Trade and Commerce who has been interrupting, in spite of the rules, as he always does.
66968-9-377
13, 1959	5943
Proposed Long Term Credit to Farmers


Gordon Minto Churchill: I rise to a point of order, Mr. Chairman.


Hazen Robert Argue: Let us have a legal interruption.


Gordon Minto Churchill: Will you rule the hon. member for Assiniboia out of order for discussing a matter that had been raised earlier and which you indicated was out of order? He is now continuing his flagrant flouting of the rules, which is outrageous conduct.


Hazen Robert Argue: We would make a lot more progress-


An hon. Member:: If you sat down.


Joseph Pierre Albert Sévigny: I must remind the members of the committee that we are discussing at present the question of the appointment of an advisory committee under subclause 1 which says:
-shall advise the corporation with respect to such matters arising under this act as are referred to it by the minister or the corporation.
Then, the hon. member for Assiniboia introduced his amendment. What is actually out of order is to change things around and suggest that the advisory board should be composed of hon. members of this house. It was out of order to suggest such a thing. It is quite out of order for the hon. member for Assiniboia to carry on in this fashion. It is also out of order, in this particular matter, to ask the hon. member for Essex East to become an expert on agricultural matters.


Paul Joseph James Martin: I have no right to
rise on a point of order, as you know, but I am sure Your Honour would recognize that has now become an accomplished fact.


Hazen Robert Argue: I have been referring to the hon. member for Essex East, and since the hon. member for Essex East is not at all backward, before I had announced that he had graduated from the school of agriculture he has announced that he is already an expert. I know, therefore, he would be most interested in my reference to his strong stand on the need for advisory committees and the need to have advisory committees advise the government and boards that carry on under important acts, independently and beyond the control and influence of the government.
I was dissappointed with the statement made by the hon. member for Laurier. Sometimes we in this group advance an idea that commends itself to the government and the government, after considering it, will accept it. One of the things that makes it most difficult is when we in the C.C.F. advance an idea for the consideration of the government to be opposed by the Liberal party. I have spoken to farm leaders in recent weeks and they are not satisfied with the method of operation of the advisory committee to the
5944	HOUSE OF
Proposed Long Term Credit to Farmers agricultural prices stabilization board. I say, and I think I can do so without fear of successful contradiction, that farm leaders across Canada would welcome the amendment that has been proposed, they would welcome the right to appoint representatives to the advisory committee who, in turn, would have the right without qualification to advise the government on policy matters. But the hon. member for Laurier says that is not acceptable; he does not want to give an advisory committee that much power.


Lionel Chevrier: He said no such thing.


Hazen Robert Argue: Therefore, if the government should decide to oppose this amendment, and the minister should continue to oppose the amendment, if members of the Liberal party join with the government in opposing this amendment, then they will have to answer to farm organizations and farm leaders in this country, who not only support advisory boards but support boards advisory to the government and to the minister that have the authority in their own right to tender advice without waiting for something to be submitted to them by the minister.


Lionel Chevrier: Mr. Chairman, the amendment which is before the committee seems to me to be a very simple one, and one which could be very easily defined. The hon. member for Assiniboia, unfortunately, instead of dealing with the amendment has dealt with a number of other things, and Your Honour has allowed him to do so.
The point which I am trying to make now, and which I tried to make earlier as briefly as I could in order to hasten the passage of what appears to us on this side of the house to be a measure which is commendable in itself, was this: What the amendment seeks to do is to ask the advisory committee to advise the minister as well as the board; so that under the circumstances there could be no doubt, in our mind at least nor is there any question, of the personnel of the advisory committee. This does not come up in the amendment, nor is it here for consideration.
If one looks at the definitions in clause 2 one has not got to be a Philadelphia lawyer in order to understand that the amendment now before the house is redundant in that the definition of the minister is given as that of the Minister of Agriculture. It strikes me, and I hope it will strike those who sit with us on this side of the house, that if the Minister of Agriculture is the responsible one for the appointment of the advisory board, then that advisory board will report to him. The minister will then be in a position to either accept or reject or ask for


advice. On the amendment as it stands now, it is not a question of whether or not the personnel of the advisory committee should be considered, but as it reads it is simply this: That the advisory committee appointed under subsection one shall advise the corporation and the minister on matters of policy within the terms of the act.
My submission is that the clause as now formed contains what is in the amendment and for that reason the amendment is redundant.


Douglas Scott Harkness: I have been trying to intrude myself into this argument for some time in what for me perhaps may be a somewhat unusual role, namely that of pourer of oil on troubled waters. If the hon. member will look at his amendment and at the clause that is written in the bill, I think he must come to the conclusion that his amendment is redundant. What else can the board advise the minister on? What else would they be asked to advise on except policy matters? They are certainly not going to advise whether Jones gets a loan of $20,000 or $15,000, individual cases as I think the hon. member for Kootenay West stated. In other words, the purpose of the advisory committee is to give advice on policy matters. That is why they are there. That is really the only type of advice that they can give. They cannot give advice with regard to individual cases. Therefore to write in or to try to write in, as the hon. member has done "shall advise the corporation and the minister on matters of policy within the terms of the act" is a procedure which, as the hon. member for Laurier has said, makes the language completely redundant and does nothing. In other words, I submit that all this argument has been really over practically nothing. Instead of wasting our time on something that is not material, I think we should get on with the other clauses of the bill.


Mr. Howard:: We listened very carefully both to the comments from the hon. member for Laurier and those of the minister just recently on the question of redundancy or whether the idea behind the amendment is already contained in the clause. I would suggest to the minister that if he is following the advice given to him by the hon. member for Laurier he is taking rather poor advice and that he would do better to consult the officials in front of him.


An hon. Member:: What about those behind him?


Charles Benjamin Howard: Yes, and those behind him. I wish the minister would take that advice when it comes to important matters like

Proposed Long Term Credit to Farmers
deficiency payments. Whether or not they Amendment (Mr. Argue) negatived: yeas, have advised him, I do not know.	6; nays, 99.


Some hon. Members:: Order.


Charles Benjamin Howard: If I may, I should like to point out again the purpose of the amendment, and it is quite clear without any reference to Philadelphia lawyers or lawyers from any other part of the country. It is quite clear that the design behind this amendment is to give the advisory committee the right to study things and make reports and recommendations to the minister on its own initiative without having to wait for the minister if and when he so decides, after he gets political advice from his 206 friends; without having to decide whether he should refer that to the advisory council or without having to wait for the corporation to decide whether or not to refer something to the committee. This would give to the advisory committee the right to study things itself, to take matters under consideration, to look at them as they arrive from day to day, without waiting for the minister or the corporation to make up their minds, without waiting for these self-appointed advisers that are in the house at the moment to decide what they might suggest to the minister he should refer to the committee.


William Heward Grafftey: Explain that term "selfappointed advisers".


Charles Benjamin Howard: The minister was just looking for some sort of lame excuse to oppose the amendment merely because it comes from this section of the house and he grasps the straw offered to him by the hon. member for Laurier who likewise does not know what he is talking about. The hon. member for Laurier must still think he is sitting on the other side of the house on the government benches. He should learn for at least a while that he is sitting on this side of the house where sense prevails and where we do not tackle things with all the intensity of inexperience but look at them as they should be looked at, namely in the light of the words that are used.


Some hon. Members:: Question.


Charles Benjamin Howard: I am sure that the minister in reflecting upon the comments he has just made in giving the committee the Liberal policy such as it is on this particular phase of the agricultural question will make the frank admission that he was in error in talking about redundancy. I ask him to be honest and say that he was incorrect and that he will accept the amendment and will disregard what my friend the hon. member for Laurier tells him.
66968-0-377|


[Stage Direction]
Clause agreed to.
Clause 10 agreed to.
On clause 11-Objects, purposes and powers.
William Arnold Peters: It is not clear to me how close we are going to get the Veterans Land Act directors involved in this matter and the extent of supervision. We have heard the favourable words that have already been said by hon. members on the other side of the house with regard to the need of some supervision and the wonderful job the Veterans Land Act administration has done. I should like to ask the minister how closely they want to co-operate or intend to co-operate with the officials of the Department of Veterans Affairs and in particular the administration of the Veterans Land Act.


Douglas Scott Harkness: The closest possible cooperation is in mind. We expect that all of the supervision will be carried on and most of the appraisal work or at least a good deal of it, will be carried on by the Veterans Land Act administration. As I have said, all of the supervision will be carried on by the Veterans Land Act administration. For this purpose the director of the Veterans Land Act will use exactly the same personnel, the same organization and so forth but he will report to me as Minister of Agriculture for the work he does under this act rather than to the Minister of Veterans Affairs to whom he will continue to report for the work he does under the Veterans Land Act with regard to soldier settlers, veteran settlers and so on.


Herbert Wilfred Herridge: I just want to say that I am very pleased to hear that the practical administration of the act will be through the director of the Veterans Land Act administration and his officials. On that basis I am quite sure that we can be assured that success will be the result of the administration of this act.


William Arnold Peters: I should also like to express my thanks and the appreciation, I am sure, of all those who are going to be getting loans because of the decision that the minister has taken. In speaking on the resolution the other day I asked that some consideration be given to this matter of insurance. Clause (f) states as follows:
(f) take such steps and do all such things as to it appear necessary or desirable to protect the interest of the corporation;
That sounds very much like some of the writing which came out of the trans-Canada pipe line easement clauses where there is all kinds of protection for the corporation
5946	HOUSE OF
Proposed Long Term Credit to Farmers but none for the farmer. This is a case where the minister could turn to some of the backbenchers and ask their advice, because if it is not important to them, it should be.
As I mentioned, Household Finance will take out insurance on the life of a mortgagor. This has obviously been advantageous because now banks have followed suit as well as other financial organizations. I cannot see any justification for protecting the government and this corporation, but taking no steps to protect the farmer, particularly his family where the breadwinner dies leaving his family with the mortgage and the widow is not able to carry on or even to sell the farm. This type of insurance would at least ensure that the widow and children left behind as a result of a disaster of this nature would have a mortgage-free farm. This is a matter which I am sure every mortgagor would welcome. He would pay the small premium necessary for insurance of this nature, which is not expensive. I can see no justification for this government, a government represented by so many who say they have the interests of the farmer borrowing under this bill in mind, neglecting to have insurance attached to the mortgage. I suggest another clause should be written in the bill in conjunction with this one which protects the interests of the corporation in order to protect as well the interests of the families which are dependent on the breadwinner and who will be obtaining this mortgage.


Douglas Scott Harkness: Mr. Chairman, I am sorry that the hon. member did not bother to read the bill. If he had he might have saved himself and the committee the last five minutes of time, because if he will look at clause 26 it is provided that there shall be insurance on the life of the borrower to cover the loan, and in the event that the borrower dies his widow and family will have the land and chattels free of debt. That is one of the provisions in this bill.


[Stage Direction]
Clause agreed to.
Clauses 12 to 15 inclusive agreed to.
On clause 16-General provisions respecting loans.
Douglas Scott Harkness: Mr. Chairman, on clause 16, as I indicated when we commenced our study of this bill, I should like to ask my colleague the Minister of Transport to move an amendment to subclause (c) governing the rate of interest. As I indicated at the start in committee, we have decided to place an equalized interest rate, I might call it, of 5 per cent instead of the proposal, as it was to begin


with, of an interest rate which would be the cost of money in any particular year to the corporation, which would have meant, of course, high interest rates at certain times and low interest rates at others. As I said, it was felt that this would be an inequality, and to some extent an inequity, as far as farmers who borrowed at the high rate were concerned, and that it would be better to put them all at the same level.
There is one other thing in connection with it. At the present time it may seem to be somewhat embarrassing to certain provinces which have farm credit schemes of their own. For example the province of Saskatchewan has a farm credit scheme in which the interest rate is 6i per cent.


Hazen Robert Argue: That is incorrect.


Douglas Scott Harkness: One of the reasons why, as I stated on second reading, we had this interest rate in the form it was was to avoid making it difficult or embarrassing in any way to any of the provincial credit schemes. However, as I say, the general opinion of most of the supporters of the government was that it would be better to have an equalized interest rate rather than the basis which was originally proposed. The hon. member for Assiniboia said that this is not correct and that the Saskatchewan C.C.F. government scheme does not bear interest at 6J per cent. However, that is the case.


Hazen Robert Argue: That is not what I mean. I will explain to the minister in a moment.


Douglas Scott Harkness: I have an excerpt from his favourite paper here, The Western Producer for June 25, which states very definitely that the interest rate has been set initially at 6J per cent. However, as I say, for the reasons I have given we have decided now upon this equalized interest rate, and I will ask my colleague, the Minister of Transport to move the amendment providing for that.


George Harris Hees: Mr. Chairman, I move:
That paragraph (c) of clause 16 be deleted and the following substituted therefor:
"(c) the Interest rate on loans shall be 5 per cent per annum;"


Hazen Robert Argue: Mr. Chairman, I want to assure the Minister of Agriculture that not only is the amendment which has been moved by his colleague, the Minister of Transport, not something which will embarrass the C.C.F. or the Saskatchewan government, but it is something we have advocated many, many times in this house.


Some hon. Members:: Oh, oh.


Hazen Robert Argue: Before the Minister of Agriculture and his supporters get too joyful, they

should remember that what this does is not to lower the interest rate. What this does is to make certain that the interest rate does not go any higher, and that is very important. I was reading the other day the evidence given by the Canadian Federation of Agriculture on agricultural credit and a system of agricultural credit, and one of their strong recommendations was that the whole question of agricultural credit should be removed from the Department of Finance and placed under the Minister of Agriculture. Although the Canadian Federation of Agriculture in 1956 could not know the interest situation in Canada today, they must take great satisfaction in having advocated the transfer of farm loan legislation from the Department of Finance to the Minister of Agriculture. This is the first hopeful suggestion we have had that perhaps, if the Minister of Finance himself will not put a brake on the ever-increasing interest rates that result from his policy, other ministers, in this case the Minister of Agriculture-


Douglas Scott Harkness: Order.


Hazen Robert Argue: -will put a very welcome, but a very necessary brake on interest rates. I think that in the light of the continuing high interest rates this amendment presented by the Minister of Agriculture is a very acceptable and a very commendable one.
The Saskatchewan government legislation has been referred to, and I will sit down if the minister thinks anything I say now is misinterpreting the information which he has. As I understand it, the Saskatchewan government itself is not in the field of farm loans at all. It has not intended and does not intend to get into that field. Rather, having waited for a long time for action at the federal level, they have decided that they would provide certain guarantees to the very large cooperative credit societies we have in Saskatchewan so that the co-operatives could provide the machinery for the making of loans	to	farmers	in	Saskatchewan.	TheSaskatchewan government will be making no loans	to	farmers	in	Saskatchewan.	The
agency which will be making loans is the Cooperative Trust Company, and its debentures and credit are guaranteed by the Saskatchewan treasury. To that extent, of course, the Saskatchewan government is promoting the field of farm credit.


Douglas Scott Harkness: They are in exactly the same position as we are with this proposed farm credit corporation that the present bill sets up.


Hazen Robert Argue: I do not think so. The corporation the minister is establishing here is a government corporation. This is a socialist
Proposed, hong Term Credit to Farmers enterprise which our federal Minister of Agriculture is piloting through this house. This corporation, owned by the federal government, owned by the people of Canada, will be in the position of making loans to farmers at 5 per cent, and in the context of the high interest rates being charged today by the private lending institutions for agricultural credit, if the new loan corporation follows a policy which is liberal with a small "1" it will be doing the bulk of the farm loan business in Canada and will be driving out the private mortgage interests as we know them. Farmers are sufficiently good businessmen to try to get their mortgages at the least possible rate of interest, and to my knowledge there is not a single mortgage company in business which is making loans at 5 per cent; the majority are making loans at 6 per cent, 6| per cent, 7 per cent and perhaps even higher.


Mr. Hanbidge:: Is there any company making farm loans in Saskatchewan outside the Canadian Farm Loan Board?


Hazen Robert Argue: Yes. I can think of a couple of loan companies in Saskatchewan which in very recent times have provided loans to farmers in that province. Since the hon. member for Kindersley has asked that question, may I say that I do not think the mortgage companies have been doing any large business; I do not believe the farmers of Saskatchewan are too anxious to become involved, because of their experience with private mortgage companies in the past, and therefore it has been necessary for the federal government to provide for a crown corporation which would lend money to farmers at a rate of interest fixed at 5 per cent. This means that this corporation, if it looks at the applications in a reasonable manner, will do a very large business and supersede to a large extent private mortgage companies in this country as far as agriculture is concerned.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
Clause 17 agreed to.
On clause 18-Agreements to supervise farming operations.
Douglas Scott Harkness: On clause 18 there seems, from some of the articles I have read in the newspapers and from some of the letters I have received, to be a certain amount of confusion in regard to the supervision ol loans. I should like to point out that this clause makes it possible for supervision to be provided in connection with any loan made under the act.

Proposed Long Term Credit to Farmers
A number of people apparently think that supervision can only be given when a loan is made under part III, that is, the type of loan for which the maximum is $27,500 made to a farmer between the ages of 21 and 45. However, that is not the case. Clause 18 makes it possible to supervise a loan secured by a farmer under part II. I should make that clear to the committee. I do this particularly because only today on my return from the west I received a letter from Mr. Walls, the manager of the British Columbia federation of agriculture who was under that impression. His letter states:
X wish to congratulate you and your government on the presentation of Bill C-67, the new Farm Credit Act. This may well be one of the most important and far-reaching pieces of legislation promulgated for the benefit of Canadian farmers.
The legislation includes practically everything which the Canadian Federation of Agriculture proposed with one principal exception-and it is on this exception that I would solicit your giving consideraton to amendng this bill before it obtains third reading.
I refer to the granting of supervised credit only to farmers up to the age of 45-
As I say, this seems to be a general misapprehension, that supervision was only for people who took loans under part III. That is not the case, and I want to take this opportunity of making it clear that any farmer who secures a loan can obtain supervision.


[Stage Direction]
Clause agreed to.
Clause 19 agreed to.
On clause 20-Loans to farmers. (Translation):
Mr. Racine:: Mr. Chairman, this clause of the bill reads as follows:
The corporation may make a loan to a farmer on the security of a first mortgage on farm lands and such additional security as the Corporation may require.
Now it appears that in some cases, a farmer who borrows from the new corporation will have to give all his real property and chattels as security for the loan, and with all his assets thus tied up as security for the corporation, he will be unable to secure an additional loan. It follows that under certain circumstances, where a farmer needs a further loan, for instance if he sustains damage through an act of God such as a flood, etc., he will be unable to do so.
If I remember correctly, the Canadian Federation of Agriculture, in its brief to the government, had suggested a practical credit system for the granting of government loans in certain special cases. I believe it would be important to consider, as a complement to

this act, a policy of providing credit to farmers faced with emergency situations resulting from damage caused by an act of God.
I therefore wish to move the following amendment:
(Text):
That section 20 be amended by adding the following: "Provided that, notwithstanding any provisions contained in this act or in any other act, the corporation may, in special cases, make loans on first or second mortgage to farmers, when a group is affected, in a specified devastated district, wherein their real or personal property has been damaged as a result of natural causes or acts of God, such as inundations, tornadoes and hailstorms. Such loans may be granted after investigation by an authorized official of the corporation who, after assessing the damage, shall establish the amount of the loan, the period of reimbursement of such loan which shall extend over a period of three to ten years, due consideration being given to the amount of the loan and the rate of interest, which shall cover administration costs only."
(Translation):
If I remember correctly, this is along the lines of the recommendation made by the Canadian Federation of Agriculture in its brief to the government.
(Text):


Douglas Scott Harkness: I think that what the hon. member is doing here is attempting to introduce some very modified form of crop insurance into a farm loan act. We have already passed a crop insurance act in the past week and I do not think we should attempt to write a crop insurance feature into a farm loan act. The chief purpose of this bill as I have indicated on several previous occasions is to enable farmers to farm economic farm units, not to protect them against hail storms and things of that nature. That is the proper function of insurance. I do not think we should try to mix up insurance with a long term farm credit measure.
(Translation):


Samuel Boulanger: Mr. Chairman, by the remarks of the Minister of Agriculture (Mr. Harkness), I can see that he has not read the recommendations of the Canadian Federation of Agriculture. In fact, in its brief, under the heading "Farm Credit", that organization recommended the establishment of a special credit in case of emergency or disaster. Here is what it said:
(Text):
A system of emergency or disaster credit, wherein, on the recommendation of local and provincial authorities, funds could be made available at no interest to persons struck by natural disaster of the kind which, occurring on a large scale, often results in massive public and government relief, but on a small scale often finds no sympathetic public response.
(Translation):
Mr. Chairman, on many occasions and more particularly, last year, at the time of

the proposed amendment to the Prairie Farm Assistance Act, I mentioned that, in the eastern part of the country, and in the province of Quebec, we could not qualify under the act. I also gave instances proving that those who incur damages, on account of flood or hail in that part of the country, could not get any government assistance, while in other areas of Canada farmers were covered by special legislation.
It is as a result of the recommendations of the Canadian Federation of Agriculture that my colleague, the hon. member for Beauce (Mr. Racine) introduced his amendment which we fully endorse.


Gabriel Roberge: Mr. Chairman, the minister mentioned in his remarks, that this amendment mainly deals with crop insurance.
I know quite well that in some parts of the country, for instance in Beauce county, no insurance company will insure farmers against flood risks. That is the reason for the amendment introduced by the hon. member for Beauce.
I also know that the area I represent was flooded recently by a river that does not too often go on a rampage. A good many farmers in the parish of Ste. Sophie de Megantic suffered losses in a recent flood; it is quite likely that they did not have the required insurance coverage, and it is also likely that they will not be eligible for insurance under this act.
I therefore feel, Mr. Chairman, if the minister is unwilling to accept the amendment suggested by my colleague from Beauce he should at least consider the matter.
(Text) :


Joseph Pierre Albert Sévigny: I know that the hon. member for Assiniboia wishes to comment on this amendment and before ruling on the matter I am prepared to listen to his comments.


Hazen Robert Argue: Thank you, Mr. Chairman. I just wish to express general support for the principle behind the amendment. As the minister has indicated, this legislation goes a long way toward meeting the recommendations farm organizations have made. However, I am sure he is aware of the policy statement on farm credit of the Canadian Federation of Agriculture dated January 1956. In that statement they set forth the very type of amendment that has been presented to this committee.
If it were passed the amendment would give the board general power to make loans in situations where disaster had struck on
13, 1959	5949
Proposed Long Term Credit to Farmers a local basis. I would point out to the committee that even the passage of this amendment would not assure farmers who experienced such disasters that loans would be made. All that would take place if the amendment were passed would be that authority would rest with the board to consider applications.
I do not know if the minister would care to comment on the question I am about to put. Without this amendment and in the face of a disaster, could the farm loan board not provide mortgage money? I would think that if a farmer were in good financial shape otherwise, and a flood came along and destroyed all his dairy cattle, even without the amendment his application would be given consideration. All I am saying is that an amendment of this kind would not necessarily provide the mortgages that are sought nor would the refusal of the government to accept the amendment prevent money being provided to a farmer in the event a disaster took place.


Douglas Scott Harkness: I believe what the hon. member for Assiniboia has said is correct. A farmer who has sufficient equity in land, livestock and chattels could secure a loan following a flood in order to re-equip himself just as anyone else could secure one. If he did not have an equity-in other words if the flood destroyed all his equity, livestock, chattels and so on-he would not be able to secure a loan under the other provisions of the legislation in any event because it is provided there that you cannot make a loan for more than 75 per cent of the appraised value of the land and chattels.
I do not believe this amendment would really accomplish anything and it would have a bad effect in giving unjustified hope to many people that they could secure a loan when in effect they could not obtain one.


Herbert Wilfred Herridge: Mr. Chairman-


Joseph Pierre Albert Sévigny: I regret to interrupt the hon. member but-


Lionel Chevrier: Mr. Chairman, if you are
going to rule on the validity of this, I should like to speak to it.


Joseph Pierre Albert Sévigny: 1 will then give the floor to the hon. member for Kootenay West.


Herbert Wilfred Herridge: Mr. Chairman, I thank you for recognizing a junior member of the committee in preference to a veteran member like the hon. member for Laurier. We are supporting this amendment because we believe in the principle of disaster insurance. If the amendment is voted down I would suggest to the government that there is a place for national disaster insurance in this
5950	HOUSE OF
Proposed Long Term Credit to Farmers country in co-operation with the provinces which would cover not only agricultural disasters but the disasters suffered by other sections of the community.
We have had disaster funds and generally speaking the experience has not been too satisfactory. If the minister sees fit to reject this amendment we urge the government to give consideration to the necessity for a national disaster fund or act that could be drafted, operated and administrated in cooperation with the provinces to meet disasters affecting not only agriculturists but other segments of the community.


Lionel Chevrier: Mr. Chairman, my purpose in rising is not to deal with the merits of the amendment because I think they were dealt with amply by the two hon. members who have spoken. I have risen because when Your Honour rose earlier I took it for granted that you were going to deal with whether or not the amendment was in order. If I am wrong about that, perhaps Your Honour might so indicate and I will resume my seat. But if I am not wrong then I should like to deal with the amendment from the point of view of whether or not it is in order.
The point I wish to make is that the amendment does not provide for an extra charge on the crown because clause 20 reads as follows:
The corporation may make a loan to a farmer on the security of a first mortgage on farm lands and such additional security as the corporation may require.
What the amendment seeks to do is to spell out in another form and in another manner what is already in clause 20 of the bill, and for that reason I am not going to deal with the merits and the necessity of the content of the amendment. What I am maintaining now is that the amendment does not provide for an extra charge upon the crown. All it does is to change the distribution of the sums of money and the loans which can be made to a farmer. It only specifies and defines at greater length what I think is the subject matter of the clause. For that reason, sir, I would hope that you would find it in order.
(Translation):


Jean-Paul Racine: In his remarks on the amendment, the minister referred, among other things, to crop insurance. The major point, in that amendment, is the matter of the second mortgage. Besides, if the house and outbuildings of a farmer were damaged, I cannot see how crop insurance would do the farmer any good.
On the other hand, the hon. member for Assiniboia (Mr. Argue) said that a farmer has only to make a request. If the farmer has suffered damage from hail, tornadoes, etc.,


and if he has already obtained a farm loan under this legislation, and if his repayment terms are not reduced by a certain amount, the corporation probably will not be able to lend him money, on the grounds that he would already have obtained the 75 per cent provided for in the act.
I believe that, under the circumstances, the most important thing in that amendment is the question of a second mortgage that could be made available to the farmer.
(Text):


Joseph Pierre Albert Sévigny: It seems to me that the amendment goes beyond the scope of the explanatory note of the present bill. Furthermore I do not believe that the amendment means too much, because, as the minister rightly explained, it is not simply because a farmer has suffered damages due to natural causes that he has lost all his power to borrow. If, however, the question of a second mortgage enters into the picture, then a second mortgage probably means additional expenditure going beyond the scope of the present bill. If the amendment does not actually means added expenditure and if, as explained by the minister, the farmer has not necessarily lost his power to borrow because he has suffered damage, then the amendment really is meaningless. However, it is rather difficult for the Chair to rule at this stage that the amendment is out of order. If the committee is ready for the question I will be pleased to put the question.
Amendment (Mr. Racine) negatived: Yeas, 19; nays, 69.


[Stage Direction]
Clause agreed to.
On clause 21-Amount of loan.
William Arnold Peters: I should like to ask whether the minister has given any consideration to changing the method of making valuations of land. Most of the emphasis is put on land and therefore it is quite important that an over-all amount of money is not specified per acre for a particular area because of the variance from the real cost or real selling value of the land. I have had many complaints of valuations being made of only $25 a cleared acre and it has cost the farmers more than $25 just for the clearing of the land. In most cases it costs upwards of $50.
Therefore the farmers in my area at least feel that the valuations have not taken into consideration the real value of the land. They believe that this has been unfair and has tended to reduce the amount of money they can borrow on the land. I would think that there must be a fair relationship between the selling value of a farm and its appraised value, and quite often they have been

nowhere near the same amount. When the minister is setting up the new board I should like him to see to it that the board gives consideration to being more lenient and taking into account the actual sale value of the farm. I can give an example of a farm that was for sale at a price of $17,000. The valuation of the board was $10,000. The farm was sold a year later for $20,000. The person who applied for the loan had no opportunity to buy it at all because of the valuation. It meant that he was only going to get $7,000 to buy a farm that was going to cost him $17,000.


Douglas Scott Harkness: Once more, if the hon. member had studied the bill he would know this is provided for. Paragraph (a) of clause 19 (1) provides that the corporation may make regulations for:
(a)	establishing the basis and method of determining the appraised value of property for the purposes of this act, but the appraised value shall be based only on the value of the land for agricultural purposes and as far as possible on the productive value as shown by experience.
In other words, the appraisal will be made on the productive value of the farm for agricultural purposes. This clause was framed that way specifically so that land which is close to a city and has a value some years in the future, or perhaps immediately, for subdivision purposes or things along that line, will not be appraised on its value for building lots but on its value for producing agricultural products.


William Arnold Peters: The minister should know that I have read that clause of the bill, and although I made one mistake earlier, in this particular case I think there is some difference of opinion between the purchase price and the productive value. The productive value depends entirely, in my opinion, on the use to which the farm is put. If a farm has not been in production for a number of years it will be very difficult for an outside appraiser to come in and say the farm is worth a certain amount. The selling price of that farm may be determined by other factors, some of which the minister has mentioned. I am quite pleased he is familiar with this problem. All I ask is that he give some instructions to some of the people who are doing this work because, in my particular area, the valuations by the Canadian farm loan board have been very low.


[Stage Direction]
Clause agreed to.
Joseph Pierre Albert Sévigny: I believe it is the pleasure of the house that we continue?


Some hon. Members:: Agreed.
Clause 22 agreed to.
13, 1959	5951
Proposed Long Term Credit to Farmers
On clause 23-Supervised loans.


Gabriel Roberge: I have some remarks to make with reference to this clause, as I did earlier this afternoon. I was very pleased that during the recess the minister considered the remarks I made. I am not fully satisfied with what he said shortly after eight o'clock on clause one of the bill. I am also pleased to know that the minister knows about the eastern townships. I may say that I come from that part of the country. I know there are some fine farms in that section, but that is not the situation all over Canada and it is certainly not the situation all over Quebec.
Having said that, I want to return to the subject I discussed earlier today. This clause 23 refers to supervised loans and to mortgages on farm lands and chattels. In my estimation the wording of the clause has the effect of joining the land and the chattels on the first mortgage. Now, as I said earlier, that is not possible in the province of Quebec under the civil code that is in force in that province. I know that earlier clauses of the bill provide that the corporation will have the power to prepare drafts of contracts to submit to the prospective borrower.
I repeat that I believe that in the province of Quebec, in order to make a loan on both farm land and on chattels it would be necessary to have two separate deeds, one deed for the land and another deed possibly for the cattle and farm equipment. The bill would be much clearer if we could separate these two things. I drew this amendment, and I put it forward now because I have another amendment to another section. I would move:
That section 23 be amended by deleting in line 3 thereof the words "on farm lands and chattels'* and by substituting therefor the following words: "on either farm lands or chattels or on both".
I feel that this amendment does not endanger at all the interpretation of the bill but it does give more opportunity, in my opinion, to farmers in Quebec to take part in the scheme for supervised loans. I hope the minister will agree with this proposed amendment to clarify that clause.


Douglas Scott Harkness: I do not believe there is any necessity for this, and actually the legal officers of the crown spent a great deal of time studying the best way in which to draft this clause in order to make it possible to make loans throughout Canada. So far as the province of Quebec is concerned, and this would apply in practically all the provinces, there would be two documents. There would be a mortgage on the land and there would be some document covering the chattels, which would be taken separately. As I say, the law officers of the crown, after a
5952	HOUSE OF
Proposed Long Term Credit to Farmers good deal of study of this matter came up with this clause as it is, and I think I am bound to follow their advice in a legal matter of this kind rather than that of the hon. member.


Gabriel Roberge: I would ask the minister if he would consider at this time allowing the clause to stand until we reach clause 26 and he hears what I have to say on clause 26.


Douglas Scott Harkness: I am quite willing to stand it until we get to clause 26, Mr. Chairman.


Herbert Wilfred Herridge: I have a question to ask the minister in respect of the supervised farm loans. Will the same reports and the same procedure be used in administrating supervised farm loans under this act as those used under the Veterans Land Act?


Douglas Scott Harkness: I think essentially the same; as I say, the Veterans Land Act administration is going to do the supervision. We will pay them a small fee for this, whatever they calculate it should be and that is provided for later. I would presume they would carry on this work in almost exactly the same way as they have been carrying on their ordinary work under the Veterans Land Act.
Clause stands.
On clause 24-Conditions under which loans may be made.


Jean-Paul Racine: There is mention made in this clause of the fact the borrower has to have at least five years experience in farming. Would the son of a farmer, who has been living on a farm with his family, be considered under this act as having at least five years experience?


Douglas Scott Harkness: Yes, Mr. Chairman. The idea is that a young man who has had five years experience in farming would be qualified under this clause. This would make it impossible for a man who was living in the city, for example, to say, "I want to borrow $20,000 to buy this piece of land". In other words, it makes experience on the farm a requisite to securing a loan.


[Stage Direction]
Clause agreed to.
Clause 25 agreed to.
On clause 26-Provisions applicable to loans.
Gabriel Roberge: The amendment I have
devised to clause 26 is in three parts. The first two parts are very much related to the amendment I presented to clause 23. I should like to say a few more words on paragraph (c) of clause 26. This paragraph reads as follows:
(c) the portion of the loan based on the appraised value of the land shall be repayable within a


period not exceeding thirty years and the remainder of the loan shall be repayable within a period not exceeding ten years;
Before I go any further I should like to ask the minister a question which I should like him to answer now. Is the ten years mentioned in the last part of the subparagraph in addition to the thirty years mentioned in the first part of the paragraph?


Douglas Scott Harkness: No, Mr. Chairman. You may have a case such as this. Suppose a man gets a loan for, say, $25,000. Of that amount $15,000 would be based on the appraised value of the land. The other $10,000 would be on the appraised value of the livestock, chattels and so forth. The amount on the appraised value of the livestock, and chattels would have to be paid off in 10 years and the amortization of the loan would be drawn with that idea in mind, namely the payment of so much a year to amortize it in ten years, whereas the other part of the loan based on the land would be amortized over 30 years.


Gabriel Roberge: As I understand it, the maximum period on the livestock and chattels is 10 years. It seems to me, as I said earlier, that the amount to be repaid in the first 10 years will be a little bit too much for the farmer to handle if he is obliged to repay that amount at the same time as he is repaying on the land; that is, for the first 10 years. It is with that idea in mind that I have prepared and now wish to move an amendment which reads as follows:
That section 26 be amended in the following manner:
(a)	By deleting in line 24 thereof the words "on farm lands and chattels of the borrower" and by substituting therefor the following words:
"on either farm lands or chattels of the borrower or on both";
(b)	By deleting in lines 30 and 31 thereof the words "of the farm lands and chattels" and by substituting therefor the following words:
"of either the farm lands or chattels or of both"; and
(c)	By deleting in line 37 thereof the semicolon and the word "and" and by adding the following:
"provided that the former portion may not be made repayable before the date on which the latter portion is to be completely reimbursed".
The effect of this proposed amendment, especially the last part of it, is that the borrower will have to reimburse a portion of the mortgage loan in the first part of the period of the loan and the rest of the money borrowed in the last part of the period of the loan.


Douglas Scott Harkness: Mr. Chairman, I think that most of these matters could more appropriately be covered by regulations made under the act than by being written into the legislation. The main point which the hon.

member raised was that payments would be too high during the first ten years. The amortization which would be provided for on a package deal of this kind would be such that the amount paid in would pay off the portion of the loan which was on the livestock and chattels during the first ten years and during that period the amortization payments on the land would really be very small. Therefore the difficulty of which the hon. member is afraid or which he has envisaged will not arise, in my opinion.


Herbert Wilfred Herridge: May I say that we in this group are not quite certain of the legal necessity for this amendment. However, in order to indicate our desire to make certain that our fellow citizens in Quebec suffer no handicap under this legislation, we are going to support it.
(Translation):


Samuel Boulanger: Mr. Chairman, together
with the hon. member for Megantic (Mr. Roberge), who is a lawyer of note in the eastern townships, I carefully studied this legislation, and as we see it, it is impossible for a farmer of the province of Quebec to combine payments on a "vente & remere" and on ordinary mortgage.
I do not know what farm experts think, especially experts in farm credit. We are privileged to have among us one such, and I mean the Minister of Mines and Technical Surveys (Mr. Comtois). I would therefore like to hear his opinion about the amendment introduced by the hon. member for Megantic. (Text):


Joseph Pierre Albert Sévigny: Is the committee ready for the question?


Some hon. Members:: Question.
Amendment (Mr. Roberge) negatived: yeas, 20; nays, 62.
Clause stands.


Joseph Pierre Albert Sévigny: As the amendment to clause 23 is rather similar to the amendment to clause 26, is it the pleasure of the committee to revert to clause 23?


Some hon. Members:: Agreed.
On section 23-Supervised loans.


Gabriel Roberge: I think the amendment was put previously. Since the amendment to clause 26 was defeated, there is now no reason whatsoever to vote on the amendment to clause 23. That would be a waste of the time of the committee. I therefore withdraw the amendment to clause 23.


Joseph Pierre Albert Sévigny: Is it the pleasure of the committee to allow the amendment to be withdrawn?
13. 1959	5953
Proposed Long Term Credit to Farmers


Some hon. Members:: Agreed.
Amendment withdrawn.


[Stage Direction]
Clause agreed to.
On clause 26-Provisions applicable to loans.
Samuel Boulanger: Will the interest of 5 per cent include the cost of insurance on the life of the borrower under part III of the bill?


Douglas Scott Harkness: No.


Samuel Boulanger: What will be the interest for the insurance?


Douglas Scott Harkness: The interest, Mr. Chairman, is provided in clause 16 at 5 per cent. The cost of the insurance will be in addition to that. I think we will probably have a group insurance policy which will mean quite a low premium rate.


Murdo William Martin: That would mean that in addition to the basic 5 per cent rate there would be three additional charges; one for insurance, one for the appraisal fee, and one for the supervising fee?


Douglas Scott Harkness: That is right. I should like to point out, however, that the appraisal fee is limited to a maximum of $100, and that would come only once, of course. We anticipate that the charge made by the Veterans Land Act for their supervision will be very modest.


Murdo William Martin: This supervising fee would be a fee to the officials of the Veterans Land Act administration?


Douglas Scott Harkness: Yes.


[Stage Direction]
Clause agreed to.
Clauses 27 to 30 inclusive agreed to.
On clause 31-Repeal.
Herbert Wilfred Herridge: Before clause 31, the repeal of the Canadian Farm Loan Act, carries, Mr. Chairman, I would like to say that a good number of people are interested in this legislation. They have been waiting for it for some months and will want to take advantage of it at the first opportunity. Would the corporation give consideration to the publication of a small booklet which would give the information required to anyone who wishes to take advantage of this legislation? It is not quite sufficient just to send a copy of the act to people; a pamphlet with some explanation would be much better for them to understand.


Douglas Scott Harkness: I think that is a very good suggestion and we shall certainly give consideration to it. It is something, I think, which could be done without perhaps too

Business of the House
much expense, and when the arrangements for the transition from the farm loan act to this new act are ready to go into effect I think we could have something ready to distribute at that time.


[Stage Direction]
Clause agreed to.
On clause 32-Commencement.
Samuel Boulanger: What date will this law come into force?


Douglas Scott Harkness: As I think the hon. member for Essex East could tell his colleague, this is a thing which is pretty difficult to predict with accuracy. We have, of course, not only to complete it here but the other place has to consider it as well. Then how long it will take before all the administrative arrangements can be made to have the organization of the farm loan board passed over to the new corporation, I do not know. We expect to do it within a relatively short space of time, but it is bound to take some time.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill as amended agreed to.
Bill reported, read the third time and passed.
Douglas Scott Harkness: Mr. Speaker, I should like to thank all hon. members for sitting overtime and for their co-operation in getting this bill through.



BUSINESS OF THE HOUSE

Lionel Chevrier: Mr. Speaker, may I ask the house leader if he would be good enough to indicate what the business will be from now to the end of the session?


Howard Charles Green: Mr. Speaker, we have made very good progress today, thanks to the cooperation of the two opposition parties. Tomorrow the Minister of Citizenship and Immigration has to leave in the afternoon, so we will commence with item No. 4 on today's order paper, an agreement between the
federal government and the government of New Brunswick concerning Indian reserves. Then we will take item No. 7, a similar agreement with Nova Scotia; then item No. 10, concerning the convention on the nationality of married women. Then we will take item No. 12, the international wheat agreement; item No. 13, second reading of the Newfoundland grants act; item No. 2, the Senate amendments to the Income Tax Act, on which I think concurrence will be moved. Then we will take item No. 9, the act to provide for the humane slaughter of food animals.
The intention for Wednesday is to take up estimates, commencing with the Department of Trade and Commerce. Then we will take those of mines and technical surveys, fisheries and post office. We have a tentative agreement between the parties to sit from 2.00 to 2.30 on Wednesday and so long thereafter as we continue estimates, and an extra hour from 7.00 to 8.00 in the evening. I would hope that we could start next Wednesday evening, so we will then sit the whole of Wednesday evening and also take the extra hour from 7.00 to 8.00 on Thursday, Friday, and also sit on Saturday evening if necessary.
On Thursday the item No. 3 on today's order paper, the Senate amendments to the Royal Canadian Mounted Police Act, will be taken; then item No. 8, concerning the Combines Investigation Act. Then we will take the estimates of the Department of Northern Affairs and National Resources and of the Secretary of State. On Friday we will take the estimates of the Privy Council, the C.B.C., national revenue, legislation and health and welfare, and on Saturday the estimates of finance.


Mr. Winch:: Which Saturday will that be?


Howard Charles Green: Saturday, July 18.


Paul Joseph James Martin: The minister did not tell us when the legislation with regard to the deficiency payments on wheat would be brought up.


[Stage Direction]
It being 31 minutes past ten o'clock the house adjourned, without question put, pursuant to standing order.

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

Mr. Dupuis: 1. Has the Minister of Transport, his executive assistant, his deputy minister or any other officer
Question
of his department, received a delegation from St. Jean d'Iberville on or about June 23, 1959, concerning the lease of a parcel of federal land south of the central Vermont bridge?
2. If so, what are the names of the members of such delegation, what requests did they make, and what action has been taken by the department with respect to the said request?
Answer by: Hon. George H. Hees (Minister of Transport):
1.	No.
2.	Answered by part 1.

Tuesday, July 14, 1959