1959-06-03

STARRED QUESTIONS


Mr. Hellyer: 1.	Has the chairman of the board of referees of the unemployment insurance commission at Toronto been relieved of his duties?
2.	If so, what was the reason for his dismissal?


Hon. Michael Starr (Minister of Labour):: Mr. Speaker there are five chairmen of the board of referees in the city of Toronto. If the hon. member will be good enough to submit the name of the referee to whom he refers, we shall then be in a position to answer the question.


Mr. Speaker:: Stand.
Question stands.


R.C.M.P. PENSION PAYMENTS SINCE 1945
Mr. Howard: On January 1, 1945 and for the same date of each subsequent year how many, if any, former Royal Canadian Mounted Police were receiving pensions under (a) part 2; (b) part 3; (c) part 5, of the Royal Canadian Mounted Police Act, and of these, how many recipients pursuant to part 3 were covered by the provisions of part 4?


R.C.M.P. WIDOWS' AND CHILDREN'S PENSION PAYMENTS SINCE 1945
Mr. Howard: On January 1, 1945 and for the subsequent year, how many	same date of each (a) widows; (b)
95.	
Jan. 1st	(a) Part 2
1945 		.. . 64
1946 		75
1947 		93
1948 		97
1949 		97
1950 		98
1951 		101
1952 		... 102
1953 		103
1954 		106
1955 		106
1956 		... 99
1957 		.. . 94
1958 		. . . 93
1959 		
children, of former Royal Canadian Mounted Police were receiving pensions under (i) part 2; (ii) part 4; (iii) part 5, of the Royal Canadian Mounted Police Act?


Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, I wonder whether by leave of the house I might deal with Nos. 95 and 96 together. On Wednesday last the hon. member asked three somewhat similar questions, to which I gave answers. At that time I expressed a reservation as to whether or not it was appropriate that these questions involving long statistical answers should be asked at this stage of our proceedings. However, these two questions call for answers which will complete the information requested and therefore, subject to the same reservation, I would be glad if I might have permission to table the answers, which are purely statistical, so they could appear in Hansard at this point.


Mr. Speaker:: I take it the minister would like to have them printed in Hansard at this point?


Edmund Davie Fulton: Yes.


Mr. Speaker:: Is it agreeable to hon. members that the answers be printed in Hansard at this point?


Some hon. Members:: Agreed.
[Editor's note: The answers referred to above are as follows]
Recipients pursuant to part 3 covered by the provisions
(b) Part 3	(c) Part 5	of part 4396	NIL	1465	NIL	2561	NIL	7655	NIL	10723	NIL	16779	NIL	27864	NIL	30884	5	39997	15	521095	21	611148	31	751205	41	831250	55	1031278	65	1321329	81	134
Starred, Questions
96.
	(i) Part 2 R.C.M.P. Act	
	(a)	(b)
Jan. 1st	Widows	Children1945 	
35	51946 	
37	61947 	
36	41948 	
39	71949 	
41	51950 	
42	41951 	
42	21952 	
39	21953 	
40	21954 	
40	41955 	
42	41956 	
48	41957 	
54	71958 	
55	71959 	
59	6


ATLANTIC PROVINCES SHARE OF DEFENCE EXPENDITURES
Mr. Pickersgill: 1.	Have any steps been taken since March 31, 1958, to place a more equitable share of defence contract expenditures within the Atlantic provinces?
2.	If so, what are those steps, and what has been their effect?


Hon. Raymond O'Hurley (Minister of Defence Production):: Mr. Speaker, the answer to the first part of this question is yes, steps have been taken since March 31, 1958 to place a more equitable share of defence contract expenditures within the Atlantic provinces. The answer to the second question, describing these steps and their effect, involves a fairly extended explanation which I had planned to give when the estimates of my department were dealt with in committee. However, since the hon. member for Bona-vista-Twillingate has chosen to raise this matter I am quite prepared to deal with it now or, if it is agreeable to the house, to have the answer printed in Hansard.


Mr. Pickersgill:: I suggest that the answer be read.


Mr. Speaker:: I take it this is a rather extensive answer, is it?


Mr. O'Hurley:: Yes, Mr. Speaker.


Mr. Speaker:: I suggest to the hon. member that perhaps the answer is longer than is contemplated by the rules, and that if he would permit, it be printed in Hansard.


John Whitney Pickersgill: 

QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Badanai: 1.	Is the Ontario government in partnership with the federal government to make the ports of Fort William and Port Arthur the finest on lake Superior?
2.	If so, what contributions have been made so
far by the Frost government?
66968-9-272
Orders for Return
3.	What are the arrangements with the Ontario government on sharing with the federal government in the foreseeable future?



PUBLIC SERVICE


Mr. Argue: 1.	Are any American citizens presently employed in any capacity in any branch of the Department of
(a)	External Affairs: (b) Citizenship and Immigration; (c) Justice; (d) Trade and Commerce; (e) Transport? If so, how many?
2.	What is the name of each of these persons, the branch of the department in which he is employed, the position each holds, and the duties for which each is responsible?
3.	What was the date each person was appointed to this position, and by what authority?
4.	Have any of these persons taken the (a) oath of allegiance; (b) the oath of office?
5.	If so, which ones, on what date, and what was their position at that time?
6.	On what date did each of these persons first enter the service of the government of Canada, what date did they take up subsequent positions, what was the nature of each position, the duties involved, and under what authority were appointments made to each position?
7.	How long had each person been a resident of Canada before taking service with the government, what positions had each held prior to first appointment?




Mr. Argue: 1.	How many appointments to the Department of (a) External Affairs; (b) Citizenship and Immigration; (c) Justice; (d) Trade and Commerce; (e) Transport, have been made in each branch in each year since 1950 by order in council or treasury board minute?
2. What was the name of each person so appointed, the date, the position, the duties for which each was responsible and the authority under which appointment was made?
3.	In what country was each of these persons born, and what citizenship did each hold at the time of appointment?
4.	Were any of these positions (a) at the policy making level; (b) of officer status?
5.	If so, which ones?




Mr. Argue: 1.	Are any of the positions which American citizens presently hold or have held, in any branch of the Department of (a) External Affairs; (b) Citizenship and Immigration; (c) Justice; (d) Trade and Commerce; (e) Transport, (i) at the policy making level; (ii) of officer status?
2.	If so, (a) what is the name of the person in each case; (b) the position so designated, the duties for which each is responsible, and the branch and department?



FEDERAL CONTRACTS, LASALLE ENGINEERING, MONTREAL

Mr. Argue: 1.	Has any federal government department entered into any contracts with the La Salle Engineering Company of Montreal since January 1, 1954?
2.	If so, what was the date of each contract, the nature and purpose of each, and the value?
4284	HOUSE OF
Inquiries of the Ministry
3.	Who are the officers and directors of this company?
4.	Are any of the officers and directors of this company associated in any way with other commercial enterprises?
5.	If so, which persons, with what companies, and in what position?



JEAN FOURNIER

Mr. Bourgei: 1.	Is the government of Canada or any of its agencies, paying to Mr. Jean Fournier, of Montreal, publicist and agent, any salary, remuneration, fees or other sums of money?
2.	If so, through what department, board, commission, corporation, etc., is such payment made?
3.	What is the nature of his work, and on what date did he assume his duties?
4.	What annual amounts have been so paid to Mr. Fournier during 1958 and from January 1, to May 31, 1959?



MOTION FOR PAPERS


[Stage Direction]
Motion No. 118-Mr. Argue:
For a copy of all correspondence, telegrams, reports and other documents, exchanged between the federal government and each of the provincial governments since January 1, 1957, regarding the establishment of a national energy board and/or federal policy in the energy field.
Motion agreed to.

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I direct a question to the house leader, and ask him if it is a fact that the house leader has interfered with meetings of the committee on mines and forests. I have had shown to me the minutes of yesterday's meeting, a portion of which read as follows:
Upon instructions from the house leader-


Edmund Davie Fulton: On a point of order, Mr. Speaker-


Lionel Chevrier: -the meeting is adjourned because the members are required in the house.


Mr. Speaker:: Will the hon. member allow me to hear the point of order?


Edmund Davie Fulton: I am not aware as to whether or not this committee has yet reported to the house. Perhaps it has, although I do not believe that it has. If it has not, then I believe I am correct in saying it is out of order to refer to its proceedings at this stage.


Lionel Chevrier: On the point of order, Mr. Speaker, the question is not whether or not the committee has presented its report; the question is whether or not instructions were


given to a committee to have the members come into the house, contrary to the discussion which we had yesterday. The question I ask is this. Did the minister, in accordance with the minutes of the meeting, give instructions to the chairman to adjourn the meeting because the members were required in the house at that time?


Hon. Howard C. Green (Minister of Public Works):: The answer to that question is no. At one stage yesterday afternoon we needed reinforcements and I gave instructions to the whip to round up members wherever he could get them. It may be that that is how this question came up.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Minister of Finance arising out of a further telegram I have received from Mr. William H. Marsh, president of district 26, united mine workers of America and in which he says that Industrial Acceptance Corporation and Trader's Finance Company are the companies in question that have been seizing household articles of unemployed workers in Cape Breton. My question to the minister is this. Will the minister inquire into the situation? Will the minister consider the facts? Will the government consider taking appropriate action?


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, I think the hon. gentleman is already aware, from the conversations that have been held today, of the fact that no company under federal jurisdiction is involved in the complaints that have been made by Mr. Marsh. No licensed lender under federal jurisdiction is involved. The two companies he has mentioned and whose names were mentioned in the course of the inquiry today are companies which are engaged in the business of instalment sales financing and are not under federal jurisdiction.


Hazen Robert Argue: In the light of the facts I have brought to the minister's attention, will the government give consideration to introducing legislation to bring such companies under federal jurisdiction in the same way that small loans companies are now dealt with?


Donald Methuen Fleming: It is obvious that the question raises serious constitutional questions. I think the hon. gentleman's question should be directed to the provincial authorities.


Hazen Robert Argue: Mr. Speaker, if I may I should like to ask a supplementary question. Is the Minister of Finance aware of the fact that the deputy minister of justice a few years ago gave it as his opinion that the federal government could have jurisdiction in this field by passing appropriate legislation?


Donald Methuen Fleming: No, Mr. Speaker; I am not aware of that.


Hazen Robert Argue: You were a member of the committee.


Mr. Speaker:: Order.


Donald Methuen Fleming: Having been a
member of the committee, I think I would want to have something more than my hon. friend's reference to a legal opinion on an important question given from his recollection of some years ago before basing any statement on it in the House of Commons, if he will permit me to say so.


Hazen Robert Argue: Mr. Speaker, I shall be glad to send the minister evidence of what I have just said.



INQUIRIES FOR RETURNS


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: Mr. Speaker,
I should like to direct a question to the Minister of ^ Citizenship and Immigration. Can the minister say when the papers respecting the sale of part of the Chippewa reserve at Sarnia will be available?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, when this order was passed I told the hon. member that it would take some time to procure copies of those papers. It is quite a voluminous file.
I think it will be at least another two weeks.


Paul Theodore Hellyer: Can the minister say when the contract of Dimensional Investments Limited for the purchase of part of the said lands will be tabled?


Ellen Louks Fairclough: Mr. Speaker, I think that contract could be secured before the other papers. I will look into the matter.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I should like to direct to the Minister of Public Works a question of which I regret not having sent him notice. If notice is required, perhaps the minister could take
66968-9-272J
Inquiries of the Ministry this as notice. Has the Minister of Public Works noted the report in the press that the old Free Press building formerly occupied by the film board in Ottawa is being demolished in order to make a parking area for the Bank of Canada? If this is so, this being in a high rent area of Ottawa, will the Minister of Public Works inform the house how much it cost for acquisition and demolition of the building, and also the cost of establishing a parking area?


Mr. Speaker:: I would suggest that the hon. member put the question on the order paper, as it is asking for statistical information which cannot be given offhand.


Harold Edward Winch: The question is based on a report in the press yesterday.


Harold Edward Winch: Mr. Speaker, may I ask a question of the Minister of Public Works, and I am keeping in mind what you said. Are press reports correct that the old Free Press building in Ottawa is being torn down to make way for a parking lot for the Bank of Canada?


Mr. Speaker:: The hon. member in his second attempt does not seem to have got much further, because he is simply asking for verification of a press report; and if he refers to Beauchesne he will see it is not the type of question which is in order on orders of the day.


Harold Edward Winch: Then may I ask the minister if it is correct that the old Free Press building is being torn down to make a parking lot for the Bank of Canada?


Howard Charles Green: Mr. Speaker, the hon. member certainly deserves full marks for his persistence.
I will be very glad to make inquiries.


Harold Edward Winch: The minister also deserves full marks.



ST. LAWRENCE SEAWAY WELLAND CANAL  REPORTED PROTESTS RESPECTING IMPOSITION OF TOLLS

[Stage Direction]
On the orders of the day:
Mr. W. H. McMillan (Welland):: Mr. Speaker,
I would like to direct a question to the Minister of Trade and Commerce. In view of two strong protests from Premier Frost of Ontario, followed by those of Hon. Charles Daley and others, that tolls on the Welland ship canal have made lake Ontario a toll-locked lake and have created a ridiculous
4286	HOUSE OF
Inquiries of the Ministry distortion in the pattern of costs of moving commodities to lake Ontario destinations, could the minister say whether he himself has taken up the matter with the cabinet, as he is reported to have promised last Saturday at Port Weller, and can we anticipate an early announcement with regard to this matter?


Mr. Speaker:: Order. I do not want to limit questions unduly, but it seems to me that the hon. member is asking about a matter concerning meetings of the cabinet, which are confidential and privileged; it is not a matter which can be asked about in the house. Beyond that, the question raises a matter of policy which is hardly appropriate to be dealt with at this time.


Lionel Chevrier: Mr. Speaker, may I be allowed to intervene and point out to you that the matter is of importance and urgency in the constituency of Welland. The point has arisen because of representations which are alleged to have been made and which the Minister of Trade and Commerce stated, at a public meeting which took place less than two days ago, that he too would make. It does seem to me that the hon. member is in order in asking the minister what he nas done about it. That is in effect the purport of the question.


Mr. Speaker:: Unfortunately that was not the question asked. I am sure the hon. member could phrase a question on that subject which would be in order, but as it is expressed at the moment it cannot be accepted.


Lionel Chevrier: Then may I direct a supplementary question to the Minister of Trade and Commerce and ask him if, following the representations which he is alleged to have received when he was addressing the meeting recently, he has protested the imposition of tolls on the Welland canal, and whether he did carry these representations further and made them to his colleagues?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, that is a highly involved and tortuous supplementary question. I hope the hon. member for Laurier will get the facts straight before he asks another question.


William Hector McMillan: I wish to address
a question to the Minister of Trade and Commerce. Did the minister receive representations against tolls on the Welland canal last Saturday at Port Weller?


Gordon Minto Churchill: The answer is no.


(Translation):



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Samuel Boulanger (Drummond-Arthabaska):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture.
As a result of a statement made recently by the Minister of Agriculture regarding the Agricultural Stabilization Act, there is some confusion among milk producers. Here is my question: If a producer ships milk or cream to a retailer in Montreal or in any other city, is he eligible for a deficiency payment? If not, why should he keep shipping his milk to that retailer if he can get a deficiency payment of 25 cents per hundred pounds by sending it to a milk powder, butter or cheese manufacturer?
(Text):


Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, to begin with there is
no such thing as a deficiency payment as far as milk is concerned. There is a payment, a flat payment which is not a deficiency payment, of 25 cents per 100 pounds of whole milk delivered for manufacturing purposes.
The situation essentially is this. A man who is delivering cream for butter making is in exactly the same position as he was during the year previous to May 1 of this year, and should be receiving exactly the same price. The milk producer who is delivering fluid milk for consumption and who is thus receiving the fluid milk price, which runs from 75 to 100 per cent more than the price for manufacturing milk, is not eligible to receive the 25 cents per 100 pounds payment. Producers who deliver their milk for manufacturing purposes are eligible, however, for this payment of 25 cents per 100 pounds of whole milk delivered.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. M. A. Hardie (Mackenzie River):: wonder if the Prime Minister is now prepared to answer the question I asked on Monday, and again on Tuesday, with regard to the extension of the railway to Great Slave lake.


Right Hon. J. G. Diefenbaker (Prime Minister):: The question of Monday and
Tuesday will be answered on Thursday.


The house in committee of supply, Mr. Rea in the chair.



INTERIM SUPPLY

['The minister, of course, completely ignored the main tenor of my remarks in which I asked the minister where he expected to obtain the rest of the capital needs of the government. Some $1,800 million has to be raised before March 31 next. He has already had to pay an interest rate of 4.49 per cent on his initial issue, so what kind of interest rate may he well have to offer before March 31 next?\nThe minister also went to great length to explain the difference between rates on issues for which he is responsible and on the offerings of the United States government. He indicated yesterday that an offering almost like the one that he put out yesterday, a one-year United States treasury bill, produced a yield of 4.05 per cent. I assume that is in terms of United States dollars which means that in terms of Canadian dollars the yield would be slightly under 4 per cent. However, the money invested is United States money so it would be 4.05 per cent. For years now our dollar has been worth more than the United States dollar and we fail to understand why an offering by the Canadian Minister of Finance should have to pay an effective rate of 4.49 per cent when south of the border, where their money is worth less, they are able to obtain money for 4.05 per cent.\nThe minister was very mixed up in his interpretation of the billion dollars that has to leave Canada to pay homage to United States investment in Canada. It had nothing whatever to do with the fact that our dollar is worth more than the United States dollar. I simply reminded the minister of the information that has been available on the financial pages of the newspapers for several months that out of the 1958 Canadian economy there had to be paid to United States investors in Canada, by way of earnings on United\nInterim Supply\nStates investment in Canada, by way of interest rates on United States holdings of Canadian securities, a sum of money in excess of a billion dollars. The minister, himself, by listing United States investments in Canada tended to confirm these newspaper reports. He indicated that there was invested in Canada by United States investors a sum of money in excess of $18,000 million, and the return on that is somewhere in the neighbourhood of 4.5 per cent. I am not saying the return is excessive at all.\nHowever, I am attempting to point out that the failure of the government of Canada to supply leadership to the Canadian people, to supply the incentive to the Canadian people to be responsible for the development of Canadian enterprise, the failure of their leadership to appeal to the patriotism of the Canadian people to have confidence in the Canada of tomorrow, leads us to rely more and more for our prosperity on the confidence and faith that others have in us and in our resources. This places us ever more in hock to outside interests. The longer this condition is permitted to continue, the longer we are postponing the event. Some day Shylock will demand his pound of flesh and the Canadian people will suffer the consequence. I know that this is not peculiar to the federal Minister of Finance. Almost all levels of government and very certainly most individual Canadians are living beyond their means. However, hitherto the federal ministers of finance have been the prime leaders in sponsoring the philosophy that we can continue to borrow to keep pace with eternal prosperity. Those days must end, and they will end.\nThe sooner that Canadians in all walks of life, under the leadership of the Minister of Finance, begin to realize that we have to buy for the growing boy a new set of breeches every year, that if necessary we have to reduce our expenditures in order that we might eventually own Canada ourselves, the better off we will be. However, the minister continues to place blind reliance on the money market, puts his head in the sand and hopes that maybe tomorrow the sun will shine. He compares himself with the minister of finance of Saskatchewan. There simply is no comparison between the authority and power of this federal Minister of Finance and the authority and power of the minister of finance of any province. I believe even the minister will agree that compared to other provinces, the minister of finance of Saskatchewan, Mr. Fines, has done well indeed.\nThe minister asks, what is our remedy? He offers what he imagines is our remedy. He says, by implication at least, that the\nC.C.F. is advocating we use the printing press.\nI believe the Minister of Finance knows', 'Interim Supply\nbetter than that. Throughout its entire history, while the C.C.F. has advocated monetary reform, it has never advocated turning the handle of the printing press and turning out money for which there is no value. There is only one political movement of which I know that has advocated that, and that is the Social Credit movement. Let me warn the minister that if he pursues his present course of action, those irresponsible advocates of monetary reform are going to grow in influence throughout Canada. I am very annoyed, and I regret very much the evidence of the growth of a movement such as the Union des Electeurs in Quebec, where they are able to persuade municipality after municipality that the minister should use the Bank of Canada to finance, without interest, all the capital needs of our municipal governments. The list of municipalities advocating this measure is becoming alarmingly large.\nThis is an irresponsible recommendation and the minister well knows it is irresponsible. However, if the minister is going to follow his reactionary policies these counter movements are going to grow. You will find one city council after another throughout Canada endorsing the submissions of the Union des Electeurs. We have never advocated the issuance of more currency than is necessary to meet the needs of the Canadian economy. However, we have asked the minister to make a survey by means of a national investment board, royal commission or otherwise-let him decide whatever means he thinks best- of the credit resources available within the Canadian economy. We have asked for a survey of the credit needs of the various levels of government in Canada, of industrial enterprises and of individuals in Canada. The minister has, hitherto, laughed off all these recommendations.\nI should like to spend many minutes more in offering many other recommendations as to how the minister might undertake measures that would relieve him of the very difficult situation in which I think he ought to admit he is. Our submission is that the sooner the minister admits he is in difficulty, the sooner we will begin to find a solution and, as real Canadians we will work our way out of the predicament in which we are now.\nResolution reported and concurred in.']
Donald Methuen Fleming: That towards making good the supply granted to Her Majesty on account of certain expenses of the public service for the fiscal year ending March 31, 1960, the sum of $634,617,069.94 be granted out of the consolidated revenue fund of Canada, as set forth in the resolution concurred in this day in the committee of supply.
That a sum not exceeding $634,617,069.94 being the aggregate of
(a)	one-sixth of the total of the amounts of the items set forth in the main estimates for the fiscal year ending March 31, 1960, laid before the House of Commons at the present session of parlament, $606,770,511.84;
(b)	seven-twelfths of the total of the amounts of items 66 and 102 of the said estimates; $350,000.00;
(c)	one-third of the total of the amounts of items 136 and 263 of the said estimates; $824,276.67;
(d)	one-sixth of the total of the amounts of
items 25,	133 and 358 of the said estimates,
$1,492,983.34;
(e)	one-twelfth of the total of the amounts of items 6, 27, 161, 190, 191, 192, 194, 196, 200, 204, 205, 210 and 282 of the said estimates, $5,090,992.42;
(f)	one-sixth of the total of the amounts set
forth in the supplementary estimates for the fiscal year ending March 31, 1960, laid before the House of Commons at the present session of parliament $20,088,305.67;	'
be granted to Her Majesty on account of the fiscal year ending March 31, 1960.
He said: The aggregate of the various sums which I am now asking the committee to vote by	way of interim supply is

The committee will recall that one previous vote of interim supply has been made in respect to the present fiscal year in the amount of $616,654,878.69, to provide for the expenses of government for the first two months of the fiscal year. The proportion of nearly all the items voted on that occasion was, accordingly, one-sixth. There were, however, 12 items of a rather special nature for which additional proportions were then voted.
In the present resolution the committee is asked to vote an additional one-sixth of all items, both in the main estimates and the supplementary estimates, plus additional fractions in respect of 20 items. These 20 items are, of course, of a special or seasonal nature in so far as the programs to which they relate are affected. As to those 20 items, the additional proportions vary according to the nature of the program. The maximum which will be voted, if this present resolution carries, will, in the case of no item, exceed eleven-twelfths, and there are only two items in respect of which the vote proposed today will bring the proportion appropriated to that
Interim Supply
fraction of eleven-twelfths. They are items 66 and 102. The committee accordingly retains its full right to discuss and debate all items in the estimates.
I give also, Mr. Chairman, the time-honoured undertaking that the passage of this bill will not prejudice the rights and privileges of members to criticize any item in the estimates when it comes up for consideration in committee of supply, and that such rights and privileges will be respected and will not be curtailed or restricted in any way as a result of the passing of this measure. That undertaking, Mr. Chairman, is given, if I may remind the committee, for the purpose of avoiding duplication of debate. What is expressly acknowledged in this way protects the rights of hon. members to discuss every item when it comes up in due course in committee of supply.


Mr. Benidickson:: Mr. Chairman, I am sure the Minister of Finance and the committee, too, will be gratified to hear me say that my remarks will be brief. As far as I know, although each individual member has considerable rights under this particular resolution the official opposition, certainly through me, is not launching any major debate at this stage. We recognize that while three departments of the government have already passed through the committee of supply, it happens that in the supplementary estimates there are items with respect to each of those departments and very shortly we shall be discussing all the other departments in committee of supply. Therefore, as I say, we are not taking advantage of this motion to launch a debate which might be in the nature of a duplication. We want to facilitate the processes of the house in that way.
As the minister has stated, Mr. Chairman, there are one or two items that provide for more than four-twelfths of the appropriation in the book of estimates. There are just one or two on which I should like a little more information. I was wondering about item 66. As the minister has stated, we are here providing eleven-twelfths of the year's appropriation for the item with respect to additional service to the Indians of British Columbia. I wondered whether the minister would just put on the record a little more information in that respect. Then I would be a little curious about item 358. It is the public works item, general. The reason is that it seems early in the season to be asking for more than a normal advance on this item because it is entitled, "Balances re building projects undertaken in previous fiscal years for which no specific provision is made in

Interim Supply
fiscal year 1959-60." I wonder whether the minister would just give us the detail on this item.
While we are getting reminders oi the items that we have to make appropriation for in stages, I think none the less all of us recognize that even these fractions are for very considerable sums. We see now why the supplementary estimates were introduced the other day. It makes it possible for the minister also to obtain one-sixth of each of the items in the $120 million of supple-mentaries. But when we compare the first supplementaries of this year with those of last year, we are comparing $120 million with $58 million. This means an increase of $62 million in the first stage of the supplementaries, and we all know that when we compare the main estimates of this year with those of last year they show an increase of $416 million. Therefore when we take these two first stages of appropriations through the estimates we can see that as of this short period of time in the new year we have an increase of $478 million in over-all expenditures.


Mr. Regier:: Mr. Chairman, I realize it is usual to have a rather limited debate take place at the resolution stage having to do with interim supply. However, we are unable to ignore the fact that the minister is asking for a little in excess of half a billion dollars to be voted.
We have a matter which in our opinion is rather urgent at this time. For years now it has been the habit of the house to delay the estimates of the Minister of Finance until very near the end of the session. Since the interim supply bill has to do at least in a measure with the estimates of the Minister of Finance, including the estimate providing for the administrative expenses of the department he heads, I feel that I have to raise a matter that we consider of urgent national public importance at this time. It has to do with the policies now being pursued by the minister in regard to the management of the debt of the government of Canada.
I would like immediately to express our understanding of and our sympathy with the problems of the minister. This year he has to raise on the money markets on behalf of the government of Canada by way of loans an amount in excess of $2,000 million. This is a very large amount for any year excepting a year of war. We realize what are the minister's responsibilities. In the first place, he has to get the people of Canada or elsewhere to express enough confidence in the government to lend him another $2,000 million in this one year. He also has to assure the

Canadian economy that its credit needs are going to be met. He has to assure that out of the available investment money, in addition to the $2,000 million that he himself needs, enough will be left over to meet the needs of Canadian enterprise and of provincial and municipal governments as well as of individuals who need credit.
We also realize that, apart from the minister's responsibility, in addition to getting in excess of $2,000 million for the federal government, and in addition to assuring that all the other credit needs of Canada, municipal, provincial, industrial and personal will be met, the overriding desire of the minister is to restore and maintain public confidence in our monetary system.
I could use various terms or forms of language in making my appeal to the minister.
I could appeal to him in the language of one ex-Sunday school superintendent to another ex-Sunday school superintendent. However, I realize immediately that the minister would say that what we say on Sunday does not necessarily hold on a cold and frosty Monday morning.


Donald Methuen Fleming: I have never said that.


Erhart Regier: I might use the language of the Marxists and attempt to educate the minister as to some of the teachings of Karl Marx. However, I realize that would not be of very much value in this house under present conditions. Therefore I shall do my utmost to express our opinions in the minister's own language. I hope it will not be the language of Bay street or St. James street but the language of ordinary, patriotic Canadians. I should like to say that we have abiding confidence in the ultimate wisdom of the electorate of Canada.
I should like to refer to an announcement the minister made last night respecting the result of the bids on his latest treasury bill offering. Yesterday the minister announced that he had been able to borrow $200 million. That is less than 10 per cent of the amount he will have to borrow in the current fiscal year. He announced that the price obtained for one year treasury bills was $94.78 per $100, which produces a yield to those who invested of 5.492 per cent. In other words the Minister of Finance admitted that in order to borrow $200 million for the government of Canada for a period of one year he had to pay an effective interest rate of 54 per cent, or very nearly that, on a one-year federal government issue.
I know the minister likes to sugar coat the pill, and he has used a number of devices. He called this an issue of treasury bills

when in fact it was an issue of bonds. To all intents and purposes and for all practical purposes it is a one year government bond. However, I suppose the minister, acting on behalf of the people of Canada, had the idea that he might get a better rate by calling it a treasury bill rather than a bond.


Donald Methuen Fleming: The two things are quite different.


Erhart Regier: He admitted that it was something new in Canadian government financial history to issue a treasury bill with a duration of 365 days when treasury bills are usually of 90 days' duration. The minister admitted further weakness in his position when he indicated that those who converted the 2J per cent 1959 bonds for the new treasury bills would be able to collect on June 10 the payment falling due at the end of that month. In other words a 20-day bonus was given to the holders of the 2J per cent 1959 bonds.
The minister also announced last night, in response to a question by the hon. member for Kenora-Rainy River, that this treasury bill issue was one that might be used by the banks of Canada for deposit as a reserve with the Bank of Canada. Thereby the minister admitted that the issuance of these treasury bills was highly inflationary, in that an issue was being made that might be used for purposes of reserve with the Bank of Canada, replacing in effect a bond issue that was not acceptable for reserve purposes by the Bank of Canada.
Our complaint is that the minister is facing increasing difficulties and that in the light of that situation he is doing nothing about it. He is burying his head in the sand and, as far as we know, the government is not contemplating any action to head off the crisis that is approaching. The government seems to think that by a little bit of sugar coating, such as making bonds acceptable at par on June 10 when they should only be acceptable on June 30; such as making the new bonds acceptable by the Bank of Canada for reserve purposes, replacing bonds that were not acceptable; such as calling a bond a treasury bill rather than a bond, and by hiding our heads in the sand we may be able to avoid the growing crisis in the matter of government financing. The government, as far as we now know, is placing its undying faith in the money market place and hoping that events and circumstances will rescue it from the dilemma in which it now is.
I read in the newspaper this morning that at North Bay last night the Prime Minister had recited a number of instances that to him were signs of the return of prosperity to the Canadian economy. I know the Prime Minister is equally aware that he might also
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have used all kinds of figures, facts and statistics to prove exactly the opposite of the main tenor of his remarks last night. On a number of occasions we have asked the government to produce evidence of the return of prosperity to the Canadian economic scene, and we have received very vague replies indeed. For every instance of a return to a growing prosperity that the government is able to report, the opposition is equally able to record other enterprises in Canada that are on the downgrade at the present time.
One of the main evidences of a return to economic prosperity put forward by the minister over the past several months has been the demand being made at the present time on the resources of the banks. The remarks of the minister have had a strange uniformity. A number of us are asking ourselves, who is making all these demands on the banks now? Is it possibly the government itself which is absorbing all the available resources of the banks at the present time, or is there really a grass roots expansion of the economy and are Canadian enterprises really asking for additional loans from the banks with which to expand?
When I look at the rate of interest the minister announced last night I can appreciate that the banks might not be very interested in making any loans to Canadian industrial enterprises, that the banks might not be very interested in helping the Canadian economy expand. After all, if banks are able to make their resources available to the Minister of Finance and obtain a rate of interest of 5.5 per cent, why should the banks be interested in any way, shape or form in making their money available to Canadian enterprises at the maximum rate of 6 per cent?
I am referring now particularly to a fear that is rather widespread that the government of the day may very soon be seeking the authorization of parliament to amend the Bank Act. I have in my hand a copy of the Toronto Telegram for the day before yesterday, and the headline on the business and financial page is "Would boost rate on Bank and N.H.A. loans". I know the minister will agree with me that if he has to pay 5.5 per cent on one year treasury bills, he cannot possibly very long delay permission to the banks of Canada to raise the maximum allowable interest rate. He cannot very long delay the day when the maximum interest rate will be raised under the National Housing Act. He cannot very long delay the day when the maximum interest rate allowable under the Canadian farm loan board, as well as many other enterprises, will have to be raised. He cannot delay the day much longer, unless

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he changes his approach to the basic problem of public financing, when he will have to raise interest rates for all the major segments of the Canadian economy.
I realize that the Minister of Finance is possibly the most important man in the government, Mr. Chairman. I realize that the government must have a front, a showman at the head of it. However, over the years it has been hammered home to the Canadian electorate that the real man guiding the destinies of all of us is the federal Minister of Finance. Why our Prime Minister decided to select one of the most orthodox, one of the most faithful of men, who subscribes to the outmoded and discredited economic and financial policies, as Minister of Finance is beyond me. We have seen how month after month the tension has been mounting. We know our Prime Minister is a progressive. We know he is a westerner. We know he is willing to experiment, that he is willing to explore the unknown. We know, Mr. Chairman, that he was even able to take the remains of a completely dead Conservative movement and catapult it into office. However, why he ever decided to select as the most important minister in the government a man who is dedicated to pursuing outmoded and outworn economic policies is beyond our comprehension.


Mr. Henderson:: He should have got you; you are the smart guy.


Erhart Regier: I know the minister is willing to concede-


Walter Clarence Henderson: You are from B.C., a real wizard.


Erhart Regier: -that if we are going to relieve unemployment in Canada, if we are going to maintain economic prosperity, our economy has to grow. There is no such thing as standing still. Our economy must expand. I also know that if we are going to follow a policy of aiding production we will have to develop markets, and in this day and age the development of markets is going to cost us money. The other day the Prime Minister announced that there was $10 million available for flour here and so many million dollars available for milk products there. The development of markets to meet growing production is going to mean more money from the federal government.
Hitherto we have relied on investors in the United States for the expansion of our economy, with the result that our dollar is worth more than the United States dollar. This is imposing a hardship on all our exporters, and it is also imposing a hardship on Canadian manufacturing enterprises. Our reliance on the United States is going to

cost us a great deal in the years ahead. Indeed, it has already proven very expensive in so far as earnings are concerned in the form of dividends, profits and interest. The interest on what we owed south of the border last year took over a billion dollars away from Canadian production. I know the minister realizes that the all expansion of the Canadian economy has to come from the production of Canadian workers, out of unused production here, out of the savings of the people of our own land. We should like at this time to appeal to the minister for a little bit of leadership in order that we might eventually be masters of our own destiny.
Our proposal in this regard is that the minister, in the first place, should admit that he is in serious difficulty.
I should like to see him make a confession to the people of Canada. We realize that he alone is not responsible. Other governments and other ministers before his day have also added to the situation. Rather than to make a gamble or a play with the future welfare of the Canadian economy and the lives of our Canadian workers we should like to see him make a confession and the confession would say in effect that our riches have not expanded with the growth of the country. Our Canadian economy has expanded but, unlike the wise parent, we have failed to supply the boy with a new pair of britches annually and now in many parts of his anatomy the young lad is exposed and is at the mercy of others. Advantage is now being taken of our predicament.
I am sure that no Conservative regime in other areas of the British commonwealth would place such faith in the money market as our minister is doing. The investors of Canada are not misled. They are men who know what they are doing. They know that they have the minister over a barrel, and they know that they can extract even more blood than they are obtaining right now. That is why the minister yesterday was obliged to pay almost 5J per cent on a one-year issue of the federal government. I had a phone call out of the municipality of Coquitlam over the noon hour and learned that they were able to issue 20-year bonds and all they have to pay is an effective rate of 6.3 per cent. I asked the municipal clerk what was the reason for that. He said that after the let-down which the people of Canada have experienced at the hands of the federal government over the years, you cannot blame the investors of Canada for having almost as much faith-in effect it is a greater expression of a faith-in the issue of

a municipal government as they have in an issue being placed on the market by the Minister of Finance.
Anyone who knows anything about the investment field at all knows that a 6.3 per cent rate on a 20-year issue is in effect a lower rate than a 5.49 per cent rate on a one-year issue that has the backing of the federal government. We have therefore now arrived at the stage where the investors of Canada are expressing greater confidence and faith in our municipal governments and in our provincial governments than they are expressing in our present Minister of Finance.
We say that the investors are not misled. We say that the people are lacking in faith in the government of the day. We say that it is high time that there be an assessment of the credit needs of the Canadian nation, the federal government, all other levels of government, all levels of Canadian enterprise and of individuals. We should like at this time to ask the Minister of Finance this question. He has now financed a tenth of his needs for this year. What plans has he in mind to meet his needs for the rest of the year? How in the world is he going to be able to borrow $1,800 million more or less at an adequate rate of interest?


William Hector McMillan: Mr. Chairman, I do not want to take very many minutes of the time of the committee but I want to refer to interest rates. On Monday when questions were being asked the Minister of Finance regarding the current treasury bill rate, as reported at page 4192 of Hansard I asked him this question:
Is the minister aware that the highest United States short term treasury bill rate is 3 per cent, while our own exceeds 5 per cent, a differential of over 2 per cent?
Then the minister replied as follows:
With respect, Mr. Speaker, a very misleading impression has been left by the observation which the hon. gentleman has just made, and I would ask the opportunity to set that right. Evidently the hon. member is not aware of the situation with respect to treasury bill rates in the United States. I happen to have them with me in a statement which reached my desk only today. On the 340 day bills in the United States the rate is 3.835 per cent average: on the 220 day bills it is 3.565 per cent average, and on the 1 year certificates, the 4 per cent coupon is offered on a 4.05 per cent basis.
The minister is right except that he has assumed his old trick of comparing apples with oranges, as he did when he tabled the estimates for this year. He compared this year's estimates with last year's estimates plus the supplementary estimates plus supplementary estimates No. 1 and supplementary estimates No. 2. When I asked him the question my reference was to the 91 day treasury bills and not to the treasury bills for six months, 220 66968-9-273
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days or over seven months or to those running one year or slightly under one year.


William Moore Benidickson: Short term treasury bills.


William Hector McMillan: For treasury bills those are considered to be long term. In the financial papers on Saturday-I do not want to read them but I have them here-it is stated that Canada had to pay 5J per cent for 91 day loans while the United States government needs to pay only 3 per cent for 91 day or short term borrowings in treasury bills, and that in the United States it is expected that the supply of short term money will increase this year, thus forcing down interest rates in that country.
I learned from the Bank of Canada that Canada had sold six months treasury bills to yield 5.26 per cent. In comparing the last sales of 91 day treasury bills in the United States and ours I find that Canada on May 22 sold treasury bills to yield 5.05 per cent and that the United States on May 25-three days later-sold treasury bills that yielded 2.88 per cent, which showed a differential of 2.17 per cent.
I realize that last week-and I have heard it since-the Bank of Canada obtained a more favourable rate than the 5.05 per cent, that the rate had gone down to slightly under 5 per cent and that in the United States it went up slightly. Therefore that differential could be decreased. But I was certainly surprised to hear the minister announce with some pride last night that this treasury bill loan was over subscribed. I wondered why it would not be over subscribed with such a high rate of interest of almost 5J per cent. I was wondering if this would augur well for our provinces, our municipalities, our school boards and business organizations generally having to borrow money here in Canada. They will certainly have to pay a much higher interest rate.
In the financial press last Saturday I saw two or three references to the banks crediting the terrific spread between interest rates in Canada and those in the United States to the ballooning of the Canadian dollar premium. One report said that more money was coming in from the United States to Canada for investment in projects for high interest rates, and that tends to keep up the premium. According to Mr. Ambridge of the Abitibi Power and Paper Company, this makes it very hard for primary producers to sell their products in the United States. He goes on to say that each one cent increase in the premium slashes the income of our newspaper industry alone by more than $6 million a year.
Mr. Chairman, I do not want to take up the time of the committee, but I heard the

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previous speaker making reference to the amount of money which had to be raised or refinanced this year along with the amount of money which had to be raised on capital and current loans. I know that the minister told us in a three-hour speech that the government had nothing to do whatsoever with setting interest rates. I also recall that the minister came into the house on November 14, 1957 and told us that no previous government in Canada's history had accomplished as much in five months for the good of the people of Canada as this government, and I know a lot of hon. gentlemen here will agree with that. But in support of his thesis on that day he said he was happy to report that in the weekly issue of treasury bills at that date the government had achieved a reduction of at least two-tenths of 1 per cent. The Prime Minister also said on the hustings and in Calgary that the interest rates in this country had fallen sharply as the result of government action since last June. I would think that if both these gentlemen have any control over interest rates and have magic wands, now is the time to use them because interest rates are going up week after week. Talking of interest rates-


Lionel Chevrier: The government is not doing much about them, not even the Minister of Finance.


William Hector McMillan: -the $100 million loan of the government last February cost this government an effective interest rate of 6.6 per cent. I say that the farmer and the corner grocery man can go down and borrow money from the bank at the present time at a cheaper rate than the government did on that occasion.


Donald Methuen Fleming: Mr. Chairman, the hon. member for Kenora-Rainy River asked me for some further information as to the reason why an additional fraction on items 66 and 358 is now being asked. Item 66 is an item of $100,000 described in the estimates as a grant to provide additional services to the Indians of British Columbia. I may say to him that interest in this particular program, which embraces irrigation and agricultural products, is greater than ever before. It is essentially a summer program and the bulk of the funds are expected to be spent before the end of July.
As to item 358, may I remind the house that this is an item of $800,000 described in the estimates as:
Balances required to complete any projects undertaken in previous fiscal years and for which no specific provision is made in the fiscal year 1959-60.
May I point out, Mr. Chairman, that by its nature this vote is used in the early months

of each year to complete projects carried forward from the previous fiscal year.
I also noted the remarks of the hon. member for Kenora-Rainy River concerning the supplementary estimates. Some reference was also made to that by other speakers. I think, Mr. Chairman, that there has been some oversight here on the part of the hon. gentlemen. It is important that the basis of comparison should be clear and fair. In comparing the non-statutory items in the 1959-60 main estimates with the 1958-59 main estimates, plus supplementary estimates Nos. 1 and 2, there was in this year's estimates, as I pointed out when tabling them in February, a decrease of $39.1 million.


William Moore Benidickson: Let us compare main with main. As somebody said, let us compare oranges with oranges.


Donald Methuen Fleming: But let us talk about things which are controllable. I am talking about that when I draw the attention of the house to the relationship of fairly comparable items. In comparing the 1959-60 main estimates-


William Moore Benidickson: Will the minister permit a question?


Donald Methuen Fleming: -plus the supplementary estimates-


William Moore Benidickson: Take out the pluses.


Donald Methuen Fleming: -which I tabled on Monday, with the 1958-59 estimates plus the supplementary estimates Nos. 1 and 2, there is an increase of $15 million in nonstatutory items. In comparing the 1959-60 main estimates plus the supplementary estimates which I tabled on Monday with the 1958-59 main estimates plus the supplementary estimates Nos. 1 and 2 and final supplementary estimates 1958-59, there is a decrease in 1959-60 of $267.8 million in the non-statutory items.


Paul Theodore Hellyer: Does not the minister get confused from using so many different sets of figures?


Donald Methuen Fleming: No. These are all plain figures which are on the record, if the hon. gentleman takes the trouble to analyse them.


Paul Theodore Hellyer: To pick out the right ones.


Donald Methuen Fleming: Now, Mr. Chairman, I will direct my observations to the remarks made by the hon. member for Burn-aby-Coquitlam. He prefaced his remarks with a statement somewhat to this effect, that he was capable of giving me some instruction in the language of Marxism. If so I must confess I have no reason to pursue him into that field. I regret to say in general

of his remarks today that I have rarely heard more unadulterated nonsense talked in the House of Commons.


Mr. Mcllrailh:: The minister says that
about every speech.


Donald Methuen Fleming: First of all, he began with the curious statement that a treasury bill and a bond are the same thing. Mr. Chairman, everybody else in the House of Commons, I am sure, knows that while these are both Canadian government obligations, they are different in their nature. A bond is an obligation put out by the government with a coupon rate set by the government. A treasury bill is an invitation by those interested to buy at a price to be stated by them in their tender. It is an obligation on the part of the government of Canada to pay them a fixed round sum at an appointed date, whether it be at the end of three months, six months, nine months, or a year, as the case may be.
The hon. gentleman then went on to-


Erhart Regier: What is the difference?


Donald Methuen Fleming: If it is not apparent to the hon. gentleman, then all I can say, speaking in sorrow rather than anger, is that I think it is perfectly clear to everybody else in the house and that perhaps we had better proceed. The hon. gentleman seemed to take some satisfaction from what he said was the lack of faith on the part of the people of Canada with regard to these obligations issued by the government.


Erhart Regier: I did no such thing.


Donald Methuen Fleming: I heard a great deal from him about lack of faith on the part of the Canadian people.


Erhart Regier: No satisfaction.


Donald Methuen Fleming: I will simply take what comfort I think can properly be taken by the government and by hon. members of this house and I think by the great majority of the Canadian people from the fact that yesterday's invitation to subscribe and tender for treasury bills up to $200 million resulted, as I had pleasure in announcing in this house last night, in a very heavy over-subscription.


Erhart Regier: What does that mean?


Donald Methuen Fleming: It means something that evidently the hon. member for Burnaby-Coquitlam does not understand and does not like.


Erhart Regier: I dare you to explain it.


Donald Methuen Fleming: These are tenders on the part of persons who were prepared to indicate their confidence with regard to
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obligations to be discharged by the government of Canada one year from the date of issue.
Something was said by the hon. member about the rate. Everyone knows-or, at least, everyone else knows-that these various treasury bills have rates which bear a relationship to the maturity date. We in this country have not been accustomed to having one-year treasury bills. We had nine-months treasury bills back in 1955 under the former government, but if one looks at the figures in the United States, or at the relationship in Canada between treasury bills and the various maturity dates, it will be seen that practically uniformly the effective rate, that is the discount rate, or the "equivalent yield", is higher according to the length of the maturity. In other words, the discount is lower on the 91-day bills than it is on the six-months bills, nine-months bills or 12-months bills, and having regard to the rates obtaining latterly in the market on these very short term obligations the rate on the 12-months bill on our offering of up to $200 million is in line with the rates prevailing.
As I have said, Mr. Chairman, no minister of finance likes paying any more in the way of interest on the money that he must borrow than he is obliged to do. I do not intend to go back over the ground I covered on a previous occasion when I pointed out the extent to which the extraordinarily heavy demand for money today is a direct consequence of the rapidity of expansion and the forces of recovery at work in the Canadian economy which have forced interest rates to higher levels. This is not a situation confined to Canada. It is a situation which is paralleled precisely by the situation in the United States and it is reflected there in higher interest rates on all manner of securities. I have before me the rates paid on United States treasury bills-the 91-day rates. They show that the rate today is the highest prevailing during the entire period since last December. On 182-day treasury bills in the United States the rate prevailing today is the highest in this period-


An hon. Member:: How much?


Donald Methuen Fleming: The equivalent rate is 3.489, and that is the highest rate in the period of which I am speaking, beginning last December. Our experience is not exceptional. It is precisely the experience of the United States, and for similar reasons, namely, that there is an extraordinarily heavy demand for money. Similarly, on a previous occasion in this house I discussed the results of the bidding on the 221-day treasury bills of May 15, and there the equivalent rate of discount was 3.565 per cent. Again, on May 11, on

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the 340-day United States treasury bills the rate was 3.835 per cent. So it is quite clear to anyone who has followed rates at all that the rates on treasury bills rise according to the length of maturity. And I have pointed out that the rate existing in the United States today on the 91-day treasury bills and the 182-day treasury bills is the highest in the past six months.
Again, let us take note of what has been happening in Canada. It is true that, as we discussed this subject a month ago in this house, the treasury bill rate was rising in Canada, and for the reasons I have mentioned-


Paul Theodore Hellyer: Are there any other reasons?


Donald Methuen Fleming: There are always many reasons that operate, but we are speaking now of the effective and strong factors which are accounting for the movement of interest rates today, and while the treasury bill rate in Canada on the 91-day bills did rise in recent weeks, as we were reminded, the fact is that last week the treasury bill rate was down. The rate in the previous week was virtually the same on 91-day bills as it had been the week before that but, as I say, the rate last week was down whereas in the United States it rose. Similarly, on the 182-day bills the rate last week was down. In Canada, we have had offerings now over a period of the last four weeks on 182-day treasury bills, and the offering of May 29 sold at the lowest rate in this period. These are short periods, and I do not intend to draw any sweeping conclusions from these facts, but I think, in fairness, that when the hon. member for Burnaby-Coquitlam undertakes to speak on this subject he should speak with knowledge of the facts and not in the manner he did today.
As far as the difference between interest rates in Canada and rates in United States is concerned, let me remind the committee that there has always been a difference in these rates. All effective interest rates in Canada have always been higher than those in the United States, and for a good reason. Canada is an importer of capital; Canada, as an underdeveloped country needs capital. The United States, on the other hand, is a country with a highly developed economy and a country which has a great reservoir of capital. Take any type of security at all-treasury bills, reserve bank rates, chartered banks rates, government bonds in the short or the medium or the long term field-and in every case you can find a differential, and over the long years there has always existed this difference as between rates in Canada and in the United States. There is nothing new in the present situation, and hon. members
[Mr. Fleming (Eglinton).1
who try to make it appear that there is something new in this situation are, whether wittingly or unwittingly, misleading the public. This is a situation which has existed as long as Canada has existed, and it should not be misrepresented.
Then the statement was made by the hon. member for Burnaby-Coquitlam that in permitting the banks which have taken this one-year treasury bill to include it in their 7 per cent reserve we are indulging in something highly inflationary. It is regrettable that the hon. member does not appreciate what inflation is. This is the same hon. member who was chastising the government a few days ago with regard to the tightness of money. Now he is saying, if his statement has any meaning at all, that we should not permit the banks to include their holdings of this one-year treasury bill in their 7 per cent reserve.


Erhart Regier: I did not say that.


Donald Methuen Fleming: If the hon. member did not mean that, his statement was without relevance or significance to the matter that he was discussing.
To the extent to which chartered banks turn in holdings of this government bond maturing on July 1 and replace it with the 12-month treasury bill they will, as I pointed out in reply to the question of the hon. member for Kenora-Rainy River last night, be permitted to include this new obligation in their 7 per cent reserve holding, which they could not do before in the case of the bonds; but that is not an inflationary tactic at all. Indeed, Mr. Chairman, if the hon. gentleman is contending that the rules in respect of what may be counted in the 7 per cent reserve should be tightened, then he in fact is proposing a tighter money policy.
Then he goes on to talk about the government putting its faith in the market place. Mr. Chairman, the government has to deal with the public to the extent to which the public holds its government obligations. We have to deal with those who are the creditors of the treasury, the people who have acquired those obligations. It is so interesting to hear this necessary process described as putting faith in the market place and being worthy only of the hon. member's denunciation. He says we should do something else. What is the something else? The only other thing, Mr. Chairman, is to turn loose the printing presses and debauch the currency, or to take the money from the people by compulsory means and that means harsh taxation or confiscation. This government does not propose to pursue any of those courses.


John Whitney Pickersgill: What about taxation?


Donald Methuen Fleming: Therefore, I invite the hon. member to ponder well on this fact, that the government of that province which to him and those in his party who think like him is regarded as their paradise, the province of Saskatchewan, has done its financing in the market place and believe me, not so much in the market place of Canada as in the market place in New York. In the thinking of the hon. member it is all very well for the government of Saskatchewan to do these things and even to do them in New York. I am not criticizing the policy of the Saskatchewan government in this regard at all, but I do invite the hon. member to ponder well on why he castigates the federal government for dealing in precisely the same way with those who are its creditors in this country.
He is raising more bogeys today. He raised the bogey of an amendment to the Bank Act to raise the rate, an amendment to the National Housing Act to raise the rate. He has been told in this house, within the last week no less, that the government does not propose to introduce any amendments at this session to either of those acts, but he goes on raising those senseless bogeys.
Probably the last of those curious fallacies, those unique fallacies of the hon. member was his reference to the exchange rate as between the Canadian dollar and the United States dollar, and its bearing upon wider considerations affecting trade and the economies of the two countries. Mr. Chairman, I am not going to review the factors that enter into the present exchange rate. I did that in a recent debate in this house. Today the Canadian dollar is at a premium of approximately four cents over the United States dollar; but, Mr. Chairman, the hon. member evidently has quite misapprehended how this exchange differential has arisen as he has misapprehended the effect that it has on the terms of trade between Canada and the United States.
I doubt whether we shall hear a more extraordinary statement than the one he made this afternoon, namely that because of the existence of this premium Canadians had, as I understood him to say, last year paid a billion dollars more to the United States than they would otherwise have done.


Erhart Regier: No, I did not say that.


Donald Methuen Fleming: It is very hard to follow the hon. member in what he has to say.


Erhart Regier: I am convinced the minister would not want to misrepresent me. I said the profits, the dividends and the interest rates that were paid by the Canadian economy last
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year on United States investments in Canada exceeded a billion dollars. It had nothing to do with the value of the Canadian dollar.


Donald Methuen Fleming: Mr. Chairman, it would be very interesting indeed to see the hon. member produce the evidence upon which he bases that statement. You see, Mr. Chairman, it would require the assumption that there was moving across the Canadian border in terms of exchange translated into the exchange of the other country something over, I suppose, $25 billion, to have the difference in the exchange which varied throughout the year but averaged out at something like 3J per cent, I suppose, for the whole 12 months, amount to $1 billion. However, it is a fantastic statement. The gross investment of United States capital in Canada is about $18 billion. The net is substantially less. The net United States investment in Canada today is approximately-I think if I said about $13 billion I would be pretty close to the mark. Evidently, the hon. member just takes all of the United States investment in Canada, adds to it substantially and then calculates the exchange rate on that and assumes that the whole amount moved across the border, and was changed from the currency of one country to the currency of the other country in one year. How utterly and sadly fantastic and, Mr. Chairman, we have to sit here and listen to such things in the Canadian House of Commons!


Erhart Regier: I did not say anything of the kind.


Donald Methuen Fleming: It is very hard to understand what the hon. member does mean.


Erhart Regier: I will agree with that; it is hard for the minister.


Donald Methuen Fleming: I am very pleased to receive that generous absolution at the hands of the hon. member. One final observation, Mr. Chairman-


John Whitney Pickersgill: Not final!


Donald Methuen Fleming: Final for the time being. The hon. member for Welland, back on his favourite theme preaching gloom and making things look as black as possible, and hurting the country's credit just as much as gloomy and erroneous statements can hurt it-


Mr. Martin (Essex East):: Why say that?


Donald Methuen Fleming: -said that interest rates were going up week after week. I invite the hon. member to ponder on the fact that the rates on our treasury bills were down last week.


William Hector McMillan: That is the first time.

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Donald Methuen Fleming: The hon. member says yes. Perhaps it would have been a little lair on his part if he had said that when he was speaking earlier-


George James McIlraith: He did say it.


Donald Methuen Fleming: -instead of saying interest rates were going up week after week.


Lionel Chevrier: There is no fairer member than the hon. member for Welland.


William Hector McMillan: On a question of privilege; I did say that last week our interest rates on our 91 treasury bills were down in the market, and the differential with those of the United States was not as large.


Donald Methuen Fleming: The hon. member did say also-and 1 took down his words as he said them-that interest rates are going up week after week. There have been periods when they were going up, but why make things worse than they are, why distort the facts, always on the side of gloom? Let us rather, in deference to our duty as Canadians and the responsibility that is shared by all hon. members of this house in relation to the credit of this country, seek not to put an unwarranted gloomy interpretation or colour upon the facts, but let us deal with facts and not with gloom.


Paul Theodore Hellyer: When did you develop that high and lofty attitude?


William Hector McMillan: Would the minister permit a question? Did they not go up yesterday when these treasury bills were sold to nearly 5J per cent?


Donald Methuen Fleming: No, this is the first offering in this one-year field in the history of Canada.


Erhart Regier: I regret very much that I have to differ so violently with the minister. I also regret that the minister had to reply almost immediately and that his officials were unable to prepare a speech which he might have been able to deliver because I am convinced that a prepared speech of that kind would have made for much more reasonableness than the one to which we have had to listen. In the first place, the minister again referred to his statement last night when he said, as found on page 4278 of Hansard, that the $200 million "has been very heavily oversubscribed". The minister knows very well that when you offer treasury bills there is just no such animal as oversubscription.


Donald Methuen Fleming: Nonsense.


Erhart Regier: There are offers of many kinds and varied amounts, and the government accepts $200 million of the best offers that are being made. It is simply ridiculous to claim

that there was an oversubscription of an offering of treasury bills because, having regard to the way in which treasury bills are marketed, it is absolutely impossible for anyone ever to claim that an offering was heavily oversubscribed or even in any way oversubscribed.


Donald Methuen Fleming: That is nonsense.


Erhart Regier: I give the minister full marks for having the best interests of the Canadian people at heart, and I assume that when these offerings were opened yesterday at 5 p.m., I believe, the minister's advisers placed before him the $200 million of offerings with the lowest effective yield and the minister accepted them. There may well have been $1 billion or $5 billion offered to the minister. However, if he had accepted any of these other offers he would have had to pay a higher rate. I do not think the minister is able to argue successfully that the offering of treasury bills was heavily oversubscribed. We have never heard this terminology before with regard to treasury bills. When bonds are offered bearing a fixed rate of interest we can easily have oversubscription. When the government offers at par Canada savings bonds bearing a fixed rate of interest and having a fixed price there may be oversubscription. However, there never is oversubscription when you offer anything on the auction block.
I am not going to use terms that the minister loves to use such as "unadulterated nonsense". I thought he had forgotten that the other day when he only said that I was mixed up. I thought the minister was making considerable progress in his use of language with regard to opinions expressed by the opposition. However, the minister made one very serious error when he implied, I think even more than implied, that we in this group take satisfaction in a lack of faith in the government on the part of the Canadian people. I must inform the minister immediately that the only reason I am here and the only reason I rise at this time is not to express any satisfaction but to express our regrets at the lack of faith. I am attempting in my own humble way to advocate remedies which will restore the faith of the Canadian people in the monetary policy that the government of the day is pursuing.
I know that if you say a thing often enough maybe enough of the voters will believe you and the minister again expressed his belief that there was a heavy demand on the money available today. Again I must ask him, who is exercising the heavy demand? Is it the industrial heart of Canada? Is it the consumers of Canada or is it the minister himself who is exerting the heavy demand? I

should like to refer to the announcement made a little while ago by the banks of Canada. As if by magic, according to the interpretation of the minister, the banks of Canada announced at the same time that it was necessary to curtail the issuance of credit for the expansion of Canadian enterprise. I would point out that it was none other than the Minister of Finance who expressed his needs to the banking institutions of Canada in no uncertain terms and who impressed upon the banks that his needs ought to come first as they were of so much greater importance and that the expansion of the Canadian economy ought to take a secondary role.


Donald Methuen Fleming: That was never said.


Erhart Regier: The minister, of course, completely ignored the main tenor of my remarks in which I asked the minister where he expected to obtain the rest of the capital needs of the government. Some $1,800 million has to be raised before March 31 next. He has already had to pay an interest rate of 4.49 per cent on his initial issue, so what kind of interest rate may he well have to offer before March 31 next?
The minister also went to great length to explain the difference between rates on issues for which he is responsible and on the offerings of the United States government. He indicated yesterday that an offering almost like the one that he put out yesterday, a one-year United States treasury bill, produced a yield of 4.05 per cent. I assume that is in terms of United States dollars which means that in terms of Canadian dollars the yield would be slightly under 4 per cent. However, the money invested is United States money so it would be 4.05 per cent. For years now our dollar has been worth more than the United States dollar and we fail to understand why an offering by the Canadian Minister of Finance should have to pay an effective rate of 4.49 per cent when south of the border, where their money is worth less, they are able to obtain money for 4.05 per cent.
The minister was very mixed up in his interpretation of the billion dollars that has to leave Canada to pay homage to United States investment in Canada. It had nothing whatever to do with the fact that our dollar is worth more than the United States dollar. I simply reminded the minister of the information that has been available on the financial pages of the newspapers for several months that out of the 1958 Canadian economy there had to be paid to United States investors in Canada, by way of earnings on United
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States investment in Canada, by way of interest rates on United States holdings of Canadian securities, a sum of money in excess of a billion dollars. The minister, himself, by listing United States investments in Canada tended to confirm these newspaper reports. He indicated that there was invested in Canada by United States investors a sum of money in excess of $18,000 million, and the return on that is somewhere in the neighbourhood of 4.5 per cent. I am not saying the return is excessive at all.
However, I am attempting to point out that the failure of the government of Canada to supply leadership to the Canadian people, to supply the incentive to the Canadian people to be responsible for the development of Canadian enterprise, the failure of their leadership to appeal to the patriotism of the Canadian people to have confidence in the Canada of tomorrow, leads us to rely more and more for our prosperity on the confidence and faith that others have in us and in our resources. This places us ever more in hock to outside interests. The longer this condition is permitted to continue, the longer we are postponing the event. Some day Shylock will demand his pound of flesh and the Canadian people will suffer the consequence. I know that this is not peculiar to the federal Minister of Finance. Almost all levels of government and very certainly most individual Canadians are living beyond their means. However, hitherto the federal ministers of finance have been the prime leaders in sponsoring the philosophy that we can continue to borrow to keep pace with eternal prosperity. Those days must end, and they will end.
The sooner that Canadians in all walks of life, under the leadership of the Minister of Finance, begin to realize that we have to buy for the growing boy a new set of breeches every year, that if necessary we have to reduce our expenditures in order that we might eventually own Canada ourselves, the better off we will be. However, the minister continues to place blind reliance on the money market, puts his head in the sand and hopes that maybe tomorrow the sun will shine. He compares himself with the minister of finance of Saskatchewan. There simply is no comparison between the authority and power of this federal Minister of Finance and the authority and power of the minister of finance of any province. I believe even the minister will agree that compared to other provinces, the minister of finance of Saskatchewan, Mr. Fines, has done well indeed.
The minister asks, what is our remedy? He offers what he imagines is our remedy. He says, by implication at least, that the
C.C.F. is advocating we use the printing press.
I believe the Minister of Finance knows

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better than that. Throughout its entire history, while the C.C.F. has advocated monetary reform, it has never advocated turning the handle of the printing press and turning out money for which there is no value. There is only one political movement of which I know that has advocated that, and that is the Social Credit movement. Let me warn the minister that if he pursues his present course of action, those irresponsible advocates of monetary reform are going to grow in influence throughout Canada. I am very annoyed, and I regret very much the evidence of the growth of a movement such as the Union des Electeurs in Quebec, where they are able to persuade municipality after municipality that the minister should use the Bank of Canada to finance, without interest, all the capital needs of our municipal governments. The list of municipalities advocating this measure is becoming alarmingly large.
This is an irresponsible recommendation and the minister well knows it is irresponsible. However, if the minister is going to follow his reactionary policies these counter movements are going to grow. You will find one city council after another throughout Canada endorsing the submissions of the Union des Electeurs. We have never advocated the issuance of more currency than is necessary to meet the needs of the Canadian economy. However, we have asked the minister to make a survey by means of a national investment board, royal commission or otherwise-let him decide whatever means he thinks best- of the credit resources available within the Canadian economy. We have asked for a survey of the credit needs of the various levels of government in Canada, of industrial enterprises and of individuals in Canada. The minister has, hitherto, laughed off all these recommendations.
I should like to spend many minutes more in offering many other recommendations as to how the minister might undertake measures that would relieve him of the very difficult situation in which I think he ought to admit he is. Our submission is that the sooner the minister admits he is in difficulty, the sooner we will begin to find a solution and, as real Canadians we will work our way out of the predicament in which we are now.
Resolution reported and concurred in.



WAYS AND MEANS


Donald Methuen Fleming: that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Sevigny in the chair.
[Mr. Regier.l


Donald Methuen Fleming: Resolved, that towards making good the supply granted to Her Majesty on account of certain expenses of the public service of the fiscal year ending March 31, 1960, the sum of $634,617,069.94 be granted out of the consolidated revenue fund of Canada as set forth in the resolution concurred in this day in committee of supply.
Resolution reported and concurred in.
Mr. Fleming (Eglinton) thereupon moved for leave to introduce Bill No. C-53, for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1960.
Motion agreed to and bill read the first time.


Mr. Deputy Speaker:: When shall the said bill be read a second time? By leave, now.


William Moore Benidickson: Mr. Speaker, I have not had time to look at the bill. Will the minister just assure us that it is in the identical form of its predecessors?


Donald Methuen Fleming: Yes, Mr. Speaker. The bill is just in the usual form. There are four clauses which have now become standard and the schedules which fully contain the items in respect of which more than one sixth is being appropriated.


Donald Methuen Fleming: the second reading of the bill.
Motion agreed to and bill read the second time and the house went into committee thereon, Mr. Sevigny in the chair.
Clauses 1 to 4 inclusive agreed to.


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


Gordon Minto Churchill: the third reading of Bill C-49, to provide for the establishment of a national energy board.


Mr. Deputy Speaker:: Is it the pleasure of the house to adopt the motion?


George James McIlraith: Mr. Speaker, the bill before the house now for third reading is a much different and much improved bill from that presented to the house by the government. It will be recalled that at the second reading of the bill,

when the principle was before the house for approval, the opposition agreed to the principle of the bill, namely that a national energy board be set up to deal with oil and gas pipe lines, the export of gas and power and certain related matters. But at that stage they opposed certain clauses in the bill; as a matter of fact they opposed strongly some of the individual clauses. The opposition argued that they were contrary to the type of provisions that should be in such a bill and indeed wrong in principle in many cases.
The main items we opposed on the second reading when we were approving the principle of the bill may be summarized in this way. I will not attempt to deal with them all but only with the main ones. We opposed the duplication of government services which we thought was inherent in the wide advisory powers given to the energy board under clause 22 of the bill. In other words, we argued that the board would be duplicating services already performed by such government agencies as the atomic energy control board, the dominion coal board and other bodies of a similar type.
Then we opposed at some length what we thought were the arbitrary and excessive powers which the minister or the governor in council, as the case may be, was seeking under the bill which was submitted. We thought those powers were quite excessive and that no case could be made out for them. The type of arbitrary power to which I am referring was, for instance, the minister's right to refuse to table reports and studies made by the board on matters of energy under clause 22 (1), that is to say reports and studies that were not of a confidential nature.
Then we opposed the arbitrary power, as we saw it, inherent in clause 49 which was a clause in part III of the bill which deals with the issuance of certificates of public convenience and necessity governing the construction and operation of pipe lines. The arbitrary power we opposed there was the right of the governor in council to exempt lines from certain of the effective clauses in the operation of part III of the bill. A similar power was contained in clause 85 (2) of the bill which permitted the governor in council by regulation to exempt any person or class of persons of any product or class of products or any transactions, persons or areas from the operation of all or any of the provisions of part VI of the bill which was the part having to do with the export and import of gas and power. We argued that that was an arbitrary power that was wrongly being sought by the governor in council.
Then another very important objection to the bill was on clause 87, which had to do
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with the import of oil. There were really two parts to our objection to that clause. There was the same argument as we applied to other arbitrary powers; the governor in council seeking arbitrary powers to impose import controls and quotas on the import of oil. We thought there was no emergency warranting that step and that no case had been made out for it, and we also opposed such an important matter of change in government policy as controlling the import of oil and putting an embargo upon it being decided by the governor in council. We argued that it should be determined by parliament before any such far-reaching step was taken.
On second reading we also requested that the bill go to a standing committee. I still adhere to that view, but it is neither here nor there now because we were voted down on it and our request was not acceded to. We thought and still think it was the type of bill which should have gone to a standing committee. There were many clauses in the bill which could have been better drafted by a standing committee, but as I say our request was not acceded to.
At the committee stage of the bill a great many amendments were put forward. I think there were some 30 in all. Seventeen amendments were adopted, 11 were rejected and two were withdrawn. But the effect of those amendments was very important. We think that those amendments materially improved the bill. Some of them went very far in removing our objections to specific clauses of the bill. Perhaps in fairness I should deal with some of these amendments, not in a detailed way, but in order to make my point. We did put forward an important amendment to reduce the number of members of the board from five to three. We thought that would make for a better board, a stronger board in all the circumstances bearing in mind the volume and nature of the work and the difficulty in securing an adequate number of able men. But the committee in its wisdom unfortunately rejected that request.
Then we put forward another amendment which we thought was of considerable importance but which was also rejected. That amendment had to do with a provision in clause 83 of the bill. It will be recalled that the Prime Minister (Mr. Diefenbaker) on second reading spoke about the desirability of being sure that in the export of gas the price charged by exporters to the United States was not less than that charged to
430G

National Energy Board Canadians in like conditions. The Prime Minister's remarks will be found at the bottom of page 4025 of Hansard for May 26 last, where he said:
As to the price to be charged for gas and power, it must be just and reasonable in relation to the public interests. With the implementation of this legislation, no longer will there be any suspicion that the Canadian consumer is being forced to subsidize the foreign markets or that Canadian industries will be asked to pay higher prices for their industries-
I think there is a printer's error there and it should read "energy".
-than those paid by foreign industries using Canadian energy.
We thought the bill should have such a safeguard in it and we put forward an amendment to clause 83 (b) to that effect. Clause 83 (b) is the clause having to do with an application to the board for a licence to export, and it was argued in committee that that matter was adequately taken care of by the provision in the clause as it stood, namely:
-board shall satisfy itself that
(b) the price to be charged by an applicant for gas or power exported by him is just and reasonable in relation to the public interest.
The government argued that that provision adequately took care of the situation and our amendment was rejected. We did not quite agree with that view, but in any event the amendment was rejected. But we do think now that in the light of the discussion on that point at the committee stage it is highly probable that the board, in interpreting the meaning of the words "just and reasonable", is likely to take some notice of the argument advanced on this clause in the committee stage and is likely to try to apply that criterion as far as it can. For that reason I am making no more of our suggested amendment at this point. I think it was a correct amendment and I regret it was not accepted; but we think, having regard to all the circumstances, that the board will probably take cognizance of it anyway under the requirement that they shall satisfy themselves that the price to be charged is just and reasonable in relation to the public interest. The bill still does not do in so many words what the Prime Minister claimed it would do in this respect; but that is a point which does not fall to be argued here.
As to amendments which were adopted, may I say this. First of all there was our objection to the arbitrary powers which I mentioned a moment ago contained in clause 49 of the bill. That is the clause permitting the governor in council to exempt lines from the operation of part III of the bill; that is the part having to do with certificates of
[Mr. Mcllraith.j
public convenience and necessity in the construction and operation of pipe lines. That arbitrary power was removed from the bill in the committee stage. The government acceded to that, and I am not sure that they did not take our criticism and put it in the form of an amendment themselves. In any event, they acceded to our request and it was embodied in an amendment and that objectionable feature was removed from that clause.
Then there was the arbitrary power contained in clause 85 (2), which had the effect, we thought, of permitting the governor in council by regulation virtually to exempt gas pipe lines and gas exporters from the operation of the export provisions of the bill. We felt very strongly about that and so argued, and the government accepted an amendment which removed that objectionable subclause completely from the bill. It is quite true that a much more limited subclause was put in clause 87 relating to oil.
When we are dealing with oil products, there are, of course, a great variety of products and it is difficult to envisage any circumstance in which anyone would want to bring all of them under control; and while there might still be a case made for arguing against the arbitrary power of that clause, it is a very much more limited power and a case can be made for its retention, and I make no more of that point. The main point we were making was achieved by the removal of subclause (2) of clause 85.
Then, when we come to clause 87, the clause permitting the governor in council by declaration to extend the application of the bill to oil-to provide for regulation and control of oil imports and exports-we advanced a somewhat extensive argument. I sought to develop it as some length; I will not repeat what was said on that occasion, because it can be found on page 4028 of Hansard. But we did put forward arguments on two grounds. One of those grounds was the improper granting of arbitrary power. The other was that a decision of this nature was so important and so far-reaching in relation to trade policy that no action should be taken other than by a decision of parliament, and that parliament should have control of this matter. We maintained that there was no foreseeable situation in which there would not be sufficient time for parliament to deal with the subject should the need ever arise. We addressed ourselves, also, to a remark which the minister made as reported at page 3929 of Hansard when presenting the bill for second reading, on which occasion he said:
The case with respect to licensing imports of oil is different and more complicated. I do not propose to argue the case fully today. It would be

premature to do so until the second report of the Borden commission in respect of this matter has been received and considered.
We objected to the clause in the light of that statement, too. In any event, our arguments and objections on that point were recognized by the government, and the government, of its own volition, after our views had been expressed, brought forward an amendment which, while it did not fully meet the situation as we saw it, did go a very long way toward meeting our objection. Although the clause as amended does not permit parliament to make the original decision as to whether or not import control should be applied to oil, it does provide that if the government makes such a decision parliament shall have the opportunity of debating the matter promptly and of revoking the decision taken. So that while this could,
I suppose, properly be called second best from the point of view of our argument, it does go a very long way toward meeting our wishes on that point, and materially improves the bill.
I have sought to deal with this subject fairly briefly at this stage, and I have endeavoured not to reopen old arguments. I think I have been fair in picking out only those amendments which best serve to illustrate the point I am seeking to make. There were a great many other amendments which I could deal with, some of them of considerable importance, but though they are important they do not illustrate the point I have in mind.
I may say that had the amendments with which I have been dealing not been accepted in committee I do not see how we could now accept the whole bill as it would have been presented to us. However, these amendments having been made, and having gone so far toward meeting the objections we raised, we believe that on balance the bill is very markedly improved. The adoption of 17 amendments goes a very long way in improving the measure. I do not suppose I ought to comment on the work which was done in committee-work in which I, myself, participated-but I think all hon. members will agree that the bill has been improved as compared with the form in which it was first introduced.
We on this side have been sharply critical of the government for not enunciating its policy on this important subject earlier. Now that this policy has finally been announced and the present measure presented to parliament; now that the discussion in committee has been completed, and the situation in the country and in the industry being such that action should be promptly taken, we feel that no useful or proper purpose would be
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served by our presenting any amendments on third reading. While we have some reservations about certain parts of the bill, we think it is sufficiently improved for us to be able to concur in the third reading at this time and we hope that the government, when the bill has passed through all its stages, will proclaim it immediately and set about the task, which I think will probably be a difficult one, of finding as competent a board as it can to exercise the powers granted by this legislation.
In this, we hope the government will be successful, because the influence of the board on the industry itself and on the economy of the country as a whole will be substantial. We, therefore, in the light of the explanations I have made, are prepared to accord third reading to the bill.


Hazen Robert Argue: Mr. Speaker, the basic position of the three parties in the house has not materially changed since second reading. The Liberal party voted for second reading of the bill. They are now more in agreement with that vote than they were when they made it, so that on third reading they are very much in favour of this legislation.
As far as we are concerned, we acknowledge that certain improvements have been made. We are pleased that the government has gone some distance toward improving the legislation which was brought before this house, and we are aware that the government has acknowledged, in moving certain amendments, the role played by opposition members in advancing various propositions and in making certain criticisms of the measure as originally brought down.
However, our fundamental objection remains; namely that under this legislation the consumers of this country, both householders and industry, will pay higher prices for natural gas and for oil than are necessary. The role of the federal government in this field should have been a more positive one, a more active one, and one which would have resulted in the lowering of costs of energy to Canadians consumers and Canadian industry.
We are still very much concerned that the government has failed to implement the recommendation of the Borden commission that, in proceeding with the setting up of an energy board and the establishment of rates, a return on the shareholders' equity alone should be considered, and not a net return on all the assets of a corporation which would result in a much greater return on the shareholders' equity. The failure
4302	HOUSE OF
National Energy Board
of the government to implement that proposition in the legislation as guidance to the board, will, of course, mean higher prices for gas and oil in the future.
There are certain clauses in the bill which have been improved, and these have been outlined very thoroughly by the hon. member for Ottawa West. In our opinion, while the government has agreed to a certain curtailment of the all-embracing power for which provision was originally made in this bill, there are still too many examples of instances where the government has retained arbitrary powers for itself. I might refer, in particular, to clause 44 which reads:
The board may, subject to the approval of the governor in council, issue a certificate in respect of a pipe line or an international power line-
I could refer to clause 47:
Subject to subsection 2, the board may by order, with the approval of the governor in council, revoke or suspend a certificate if, in the opinion of the board, the person to whom it was issued has violated or failed to comply with any term or condition thereof.
We feel that in a case of wrongdoing or failure to abide by the terms of a certificate, power should not be retained by the governor in council to allow the company to break the terms of its certificate and still remain in existence without a penalty being provided. This could lead to very great abuses; it could lead to favouritism and it could lead to a type of pork barrel by a government that wished to play favourites under certain conditions.
Again, Mr. Speaker, we acknowledge certain substantial improvements in the bill, but there are certain provisions still remaining that we feel should have been improved by the committee. Clause 61 of the bill is not the only one that gives us concern, but is it one that is very ill-defined and has not been adequately explained by the minister. It reads as follows:
Where the gas transmitted by a company through its pipe line from any place within a province to any place outside the province is the property of the company, such proportion as the board may fix of the differential between the amount paid by the company for the gas and the amount for which the gas is sold by the company shall for the purposes of this part be deemed to be a toll charged by the company to the purchaser for the transmission thereof.
In other words, under clause 61, it is not necessary for the board to control the difference between the cost of gas going into a pipe line and the price of gas coming out of a pipe line but only an undefined portion of that difference, which might, in the opinion of the board, be a very small part of the difference, and therefore it might 

result in very ineffective and inadequate action by the board in controlling tolls for the transmission of gas.
For these reasons, Mr. Speaker, we think the government should have presented an alternative policy to this house. Not only should the board have had more exact instructions, not only should the governor in council have had less power to set aside decisions of the board, not only should profits and returns have been confined to shareholders' equity, but once again we say that in our opinion a public utility such as this, something that is a natural monopoly, is a field for public ownership, no matter what the political theories of any political party may be, a form of ownership which would give to the Canadian consumer energy at the lowest possible price.


[Stage Direction]
Motion agreed to, bill read the third time and passed.

[Stage Direction]
The house resumed, from Tuesday, June 2, consideration of the motion of Mr. Fleming (Eglinton) for the second reading of Bill No. C-41, to amend the Federal-Provincial TaxSharing Arrangements Act.
Erhart Regier: Mr. Speaker, I should like to rise on a question of privilege. Last night you asked me whether I had participated in the debate. I indicated that I had not, that I had merely spoken on a point of order. I based my assumption on the faulty listing of the page number on the table of contents of Hansard of May 6. I must now apologize to you and to your advisers. I had spoken.


Mr. Speaker:: Thank you. It was a mistake that might very easily arise from the way the index appeared.
(Translation):


Mr. Noel Dorion (Beliechasse):: Mr. Speaker,
I am sorry I was not in the house last night when the hon. member for Laurier (Mr. Chevrier) made his speech about the problem which is now before the house. On reading it however, I noted that, at one point, the hon. member for St. Denis (Mr. Denis) chipped in to insinuate that, during the speech, Conservative members from Quebec were hiding behind the curtains. That insinuation is all the more ill-willed and unjustified in that the hon. member knew-


Mr. Azellus Denis (St. Denis):: I rise on a point of order, Mr. Speaker.

(Text):


Mr. Speaker:: Order. Is the hon. member rising on a point of order?
(Translation):


Azellus Denis: Yes, Mr. Speaker, on a point of order.
(Text):


Mr. Speaker:: Would the hon. member address himself to the Chair.
(Translation):


Azellus Denis: I never said that the Conservative members were-
(Text):


Mr. Speaker:: Is the hon. member rising on a point of order?
(Translation):


Azellus Denis: Mr. Speaker, the hon. member for Bellechasse (Mr. Dorion) claims, regarding a vote in connection with provincial-federal relations, I said that the federal Conservative members had left the house. In fact, what I meant to say was that during a similar vote some members remained behind the curtains, and I maintain what I said.


Noël Dorion: I take note of the correction made by the hon. member and I only wish to add that at the time everyone knew that many of us were attending the meeting of the special committee on broadcasting and I would have been most happy to hear the hon. member for Laurier myself.
Besides I doubt that what the hon. member for St. Denis just said or his remarks made the impression on the public he wanted to make. Indeed, in Quebec and elsewhere, it is well known that Conservative members from my province, far from following the lead of the hon. member for St. Denis and remaining silent for a lengthy period of time, did not wait 20 years before rising in the house and voicing their opinions on problems of interest to their constituents. Everyone knows that their thoughts and words have never been shackled or regimented. Everyone knows that never in the past 22 years has Quebec been represented by such free, such forthright and such outspoken members.


Azellus Denis: Mr. Speaker, I respectfully submit that the reference to my past attitude with regard to votes taken in this house, or to speeches I may or may not have made, has nothing to do with the matter that is before the house.


Noël Dorion: Having expressed, in the first part of his speech opinions which, coming from him, have a hollow sound because they are so new, and which, I readily recognize, are in accordance with the doctrine of fiscal autonomy we have been preaching for years,
Dominion-Provincial Relations the hon. member for Laurier attempted to show inconsistencies in our position and, in a thunderous voice, as I am told, he urged us to vote against a measure which, I must point out, originated back in the days when the Liberal party was in office.
What a strange logic. There is the result of the efforts he has been making-quite in vain-since his return to politics, to speak on behalf of the province of Quebec. Obviously, it is no easy task for him to shed his past, after he has had a share in the works of the federal government, with astonishing regularity and continuity, throughout the dark days when the provinces stood at the mercy of the decisions and dictates of its leaders, who rebuffed with scornful mockery anyone who dared to seek fiscal freedom for the provinces and thus sought to insure the upholding and respect of the constitution without which Canada, as it now exists, would have been no more than a marvelous Utopia.
The latter part of the speech made by the hon. member for Laurier, where he implies that Quebec Conservatives are renegades and threatens them with electoral come-uppance, conjured up in my memory a short story by Villiers de l'lsle Adam entitled Plagiaries of Thunder. The action took place in a faraway island where some huge aras, an Australian species of macaws, felt they could spread terror by imitating the thunder. One day an eagle happened by, recognized them and terrified them. The aras attempted rather unsuccessfully, to imitate the cry of the eagle, but could not from then on frighten the inhabitants of the island who had by now realized that, after all, the would-be eagles were mere parrots.
By this comparison I do not wish to minimize the merits and the high qualities of the hon. member for Laurier. But I want to tell him that his pronouncements on autonomy are, as far as I am concerned, strongly reminiscent of this story, and that we Quebec Conservatives will surely not allow ourselves to be frightened by plagiaries of thunder, whoever they may be and whencesoever they may come from.
The bill introduced today by the government is after all but the fulfilment of the following promise made in the speech from the throne:
My government will recommend an amendment to the Federal-Provincial Tax-Sharing Arrangements Act to extend for another year the increase made last year in the provincial share of personal income tax revenue.
In other words, the purpose of this bill is to maintain the 13 per cent income tax de-
4304	HOUSE OF
Dominion-Provincial Relations ductions granted to the taxpayers of the provinces where a similar tax is already levied.
Personally, Mr. Speaker, I have no hesitation in saying, without any feeling of repudiating my convictions, that I am happy to support this bill for several reasons, particularly because it clearly renews the recognition of the constitutional right of the provinces to tax incomes and to exercise this right freely. The hon. members of the house know the origin of this bill. Last year, I had the opportunity to recall the battles that certain provinces have had to wage against the federal government since the war to obtain practical recognition of the exercise of a right which is specifically and clearly expressed in the Constitutional Act of 1867.
I have referred to the high-handed and uncompromising way in which some of them were treated at the federal-provincial conferences held between 1940 and 1956. I do not intend to go over this particularly tragical phase of the relations between the federal government and the provinces, during which our friends of the opposition were far from having those feelings of autonomy that they so glibly talk about now that they no longer have the responsibility of power. To keep within the limits of this legislation, I would like to relate briefly how the government of the day was compelled to change its mind and to adopt the act 4-5 Elizabeth 11(1956) the beneficial results of which are only increased and extended under this bill.
During the provincial session of 1953-1954, the Quebec government which, until then and as was strictly within its rights, had refused to renew the tax arrangements passed with the federal government during the war, decided to set up a provincial income tax, thus affirming a constitutional and undeniable right. As a result and because the province was exercising a right which is essential to its freedom in matters of taxation, a number of taxpayers had to pay double tribute to the fiscal authorities.
What was then the position of the government, the surviving members of which now set themselves up as champions of provincial autonomy? What theory was to guide those who, during each election, kept on recalling in the province of Quebec the illustrious memory of Sir Wilfrid Laurier? Were they going at last to be guided by the ideas of that great leader who, as early as 1905, had said here in the House of Commons:


It is a sound principle of finance, and a still sounder principle of government, that those who have the duty of expending the revenue of a country should also be saddled with the responsibility of levying and providing it.
Alas no! It must be said that the prime minister of this country was far from having in the province of Quebec assistants of his own calibre. Mr. Lesage, for one, far from recognizing the rights of the provinces, did not care a fig for them when, in April, 1954, he said:
This double taxation is exclusively due to the decision of the Quebec government which now attempts to throw the blame upon the Canadian government. This reminds me of the little boy-
Mind you, I am still quoting-
[DOT]-who pulled the cat's tail and replied to his father, who had told him to stop: "I am not doing the pulling: the cat is."
Not content with that quip of questionable taste, he went so far as to set himself up as a prophet and went on to say:
Some would lay down as a principle that any province which has not signed an agreement should be entitled to levy deductible taxes in proportion to the amount it would receive under the agreements . . . We can already see-[DOT]
Continued Mr. Lesage-
-the tremendous confusion that would follow the application of that principle subscribed to by the Conservatives at their last convention.
Of course, at that time Mr. Lesage never thought that the first one who would apply, at least in part, that Conservative policy would be none other than his own leader, Mr. Louis St. Laurent who, two years later, reducing to silence the small politicians surrounding him, putting aside all narrow, mean and political considerations, became the instigator of the 4-5 Elizabeth II act, chapter 29, adopted on January 31, 1956. Well, Mr. Speaker, that act is at the very origin of the bill that is introduced today, in which the principle of deduction is quite clearly stated.
I have read with interest the debate that has been held on that legislation. I have looked in vain for what was said on that occasion by the hon. member for Laurier and the other Liberal members of the province of Quebec. They were completely mum. Not one of those who, today, in the opposition, want to show us the way and who try to criticize our attitudes, not one of them has risen to denounce the remarks made two years earlier by Mr. Lesage, or at least to tone them down. Not one of them dared state the autonomist argument so loudly upheld by the hon. member for Laurier now that he is in the opposition.

In order to defend the conciliating attitude of Mr. St. Laurent and justify his new policy -a Conservative policy, according to Mr. Lesage-they had to resort to Mr. Walter Tucker, former Liberal chief of Saskatchewan and then Liberal member for Rosthern, whose speech was to be a source of inspiration for our friends opposite.
On that same occasion, the members of the Conservative opposition did not fail to make statements which are and I trust always will be a source of inspiration for this government. Thus, the present Minister of Finance (Mr. Fleming), recalled in clear and precise language that left no room for doubt the theory denounced two years before by Mr. Lesage and his friends, and which their leader, Mr. St. Laurent, was at that time consecrating by legislation with regard to individual and corporation income taxes.
(Text):
When this field Is entered into or when negotiations are entered upon with a view to arriving at understandings or divisions of the fields of taxation between the dominion and provincial authorities, let us remember, as the dominion government is prone to forget, that the provinces are in those fields not by leave of anyone; they are there as of right. It is their constitutional right. When there are suggestions from the dominion government about allowing the provinces to occupy some of this field, referring to that as a concession, we have a measure, Mr. Speaker, of the error in the federal government's thinking.
(Translation):
The present Speaker of the house will allow me to recall what he himself said on that occasion:
(Text):
I think those who believe that the federal system means something in this country and should be preserved owe a great deal to the fortitude of the people of Quebec, who have maintained that position throughout the last 10 years since the war. But even Quebec felt the pinch of the conditions with which they were confronted, and in 1954 and 1955 met something of a crisis which required the province to levy income taxes of their own, something which proved to be an embarrassment to them, and certainly to the federal government, and which resulted in a concession from Ottawa, namely a 10 per cent abatement in the personal income tax field. I think that is probably the genesis of the new agreements or the new arrangements which are now under consideration.
(Translation):
That new trend in the fiscal policy of the federal government was to become still more pronounced and definite with the coming to power of the Conservative administration. In that same debate, the man who is now the head of this nation had forecast it as follows:
Dominion-Provincial Relations
(Text):
When I go back to 1945 I remember the great hopes that were held; and I am in agreement with my hon. friend the minister in this regard that the matter is complex. It is one of the most difficult problems that parliament, or the government, can be called upon to deal with, because there are so many facets, so many difficulties and so many situations that demand not an arbitrary attitude but a compromising and considered one.
(Translation):
And later, admitting that that legislation was a step in the right direction, he added:
(Text):
Under our constitution the provinces were never intended to be beggars. The provinces have responsibilities, the provinces have fields of action, and the concentration of power and authority in the federal government with respect to taxation has had an adverse effect.
(Translation):
Such was the spirit which, under the new regime, was to form the basis of the relations between the federal state and the provincial governments. That spirit, all provincial governments at the 1957 conference were able to note and to appreciate, and give credit for it to this government. They realized that the atmosphere had changed, that they were entering upon a new era, that the provinces, from then on, would no longer be considered as vassals, obliged to bow to the federal state's will and demands.
After two days of discussion, before they separated, the representatives of the country and of the provinces who had taken part in those meetings agreed on the text of a press communique which included the following paragraph;
Possible changes in the Tax-Sharing Arrangements Act were discussed, but it was understood that no endeavour would be made to reach conclusion on this matter prior to further consideration of the subject by the dominion government, in the light of the public statement made by the provincial representatives in open sessions and the discussions which took place in committee.
In other words, since from then on conclusions would no more precede but follow discussions, since from then on, to reach those conclusions, the ten provinces as well as the federal state would be entitled to express their opinion, we could no longer afford the luxury of improvisation and hasty action. Besides, the law of January 1956 covered a five-year period, which has not yet expired. Meanwhile, as early as January 1958, this government hastened to increase that portion of taxes to be paid to the provinces, and to increase from 10 to 13 per cent the income tax deduction for the taxpayers of provinces that exercise their own power of taxation.

Dominion-Provincial Relations
Considering the importance of the problem and the impact that a slap-dash solution might bring about, the government tried to avoid hasty steps. At the second but last conference, at the suggestion of Mr. Frost and by common agreement, a committee was formed made up of federal and provincial officials to study technical problems raised by fiscal and economic relations between the various governments. On January 15 last, the Prime Minister announced that recourse would be had to this committee to prepare a conference of finance ministers of the various provinces under the chairmanship of the federal Minister of Finance.
Mr. Speaker, I had the opportunity to say, in the budget debate, how this policy seemed wise and forward-looking, in my opinion. The conference will make it possible to probe several aspects of this far-reaching problem of taxation in Canada. It will give rise to exchanges of views which are essential and which, I am sure, are such as to create an atmosphere of good will and understanding which is a necessity in a country with a constitutional organization such as ours.
In view of the abundance and variety of legislation, both at the federal and provincial level, in view of the frictions that are likely to occur from time to time, this conference will, I firmly believe, be the first step towards an agreement which, this time, will give due consideration to the requirements of the constitution, to its evolution since 1867, and to the legitimate needs and various views of the provinces and of the federal government.
This, Mr. Speaker, explains why and in what spirit I shall heartily vote in favour of the bill placed before us today by the Minister of Finance, convinced as I am that in so doing, far from transgressing any principles and convictions, I shall be doing my bit-in a very modest way, I realize- for the welfare and progress of the Canadian nation.


Paul Joseph James Martin: Mr. Speaker, it is not easy to understand why the government's answer to the speech made by the hon. member for Laurier (Mr. Chevrier) should be entrusted to someone who is not a member of the cabinet. I would have thought that a minister from the province of Quebec would have answered the statements of my colleague, the hon. member for Laurier, especially following his statements last night when he said, as found on page 4277 of Hansard:
As may be noted, Mr. Speaker, the election promises made by the Conservative party in the field of fiscal relations in 1957 and 1958 have been completely disallowed. The Conservative government, far from treating the provinces with more generosity than did the Liberals, as it had promised, takes over a greater share of direct taxation. It completely ignores the concrete proposals put forward by the majority of provincial premiers in November 1957. More than that, it even refuses to meet them again.
And finally my colleague said:
It is for all those reasons that the Conservative members from Quebec should now have the courage of their convictions and denounce such betrayal. They must do so, in the name of their principles: they must do so on account of the solemn pledge they made during the last federal election: they must do so for the sake of their electors to whom they gave that pledge, but they must do so also, and perhaps above all, on account of Mr. Duplessis who is responsible for their presence here in the house.
Well, Mr. Speaker, I believe those statements made by my colleague deserve an answer from someone who is a member of the cabinet in this government.


An hon. Member:: Hear, hear.


Paul Joseph James Martin: I do not question the hon. member for Bellechasse's (Mr. Do-rion) right to speak. He spoke well and I think very highly of him. I respect him very much, but I think that it should be a responsibility of a minister of the Canadian government to reply at once to a speech as momentous as the one we heard last night, especially in view of the speech made last night in North Bay by the Prime Minister (Mr. Diefenbaker).
I now address myself to the Prime Minister and to the speech he made last night in North Bay.
(Text):
I said, Mr. Speaker, that I thought that the speech of my friend the hon. member for Laurier (Mr. Chevrier) should have been replied to at once by a minister from the province of Quebec. I did not deny that the hon. gentleman who has just spoken was qualified in his own right to express his own views; but it seemed to me that, after the challenge made last night by the hon. member for Laurier, the reply ought to have come from one of the Quebec ministers, particularly in the light of the speech made last night in North Bay by my genial friend the Prime Minister (Mr. Diefenbaker).
Last night when the Prime Minister was in North Bay, he gave the impression that

we were going to have a real dominion-provincial conference. There was no reminder there last night in that happy northern Ontario community of the promise made by the Prime Minister in the elections of 1957 when he told the people of Canada and the people of the province of Quebec that when he became Prime Minister, he would call a dominion-provincial conference and resolve once and for all these fiscal differences between the two senior levels of government. That promise now is gradually, the Prime Minister hopes, evaporating in the clouds, never again to be seen and, he hopes, never again to be referred to. Certainly it was not referred to last night at the meeting in North Bay where, according to the Globe and Mail -and I think that would be an authentic bit of reporting-he made the following statement.
Mr. Diefenbaker said a four-point proposal by the Canadian government would be submitted to the conference. It covers:
1.	The existing fiscal arrangements;
2.	Future problems of fiscal arrangements and possible alternative approaches;
3.	Economic and fiscal policies and their impact on intergovernmental financial relations;
4.	Examination of the fiscal and economic outlook.
Then the Prime Minister went on to talk about national problems. I am sure that as a result of that speech many of the mayors concluded that there is going to be not a conference of the new order, of the new character with a new look but the kind of conference that was promised by the Prime Minister in the elections of 1957, one that was going to resolve once and for all this problem of fiscal differences between the two senior levels of government. But of course we all know now that we have had no conference. The conference which was held and which lasted for two days was adjourned. It was to be reconvened but it was not reconvened. The Minister of Finance (Mr. Fleming), exercising that ingenuity of his, sent a telegram without giving the provinces an opportunity to discuss the terms or the arrangements. Instead, the government may decide not on a conference of governments but on a study group, a seminar, as the Prime Minister indicated last night. We are going to have a conference- although this he did not explain-of officials. He did not explain that. He said, "We are going to have a conference and we are going to deal with these four subjects". He did not say that what we were going to have was simply a study group, a conference of officials which is nothing more, I submit, than a new delaying tactic devised by this government in the face of its heavy deficit position and more particularly at this
Dominion-Provincial Relations time devised so that it would not embarrass the premier of Ontario who is engaged in a provincial election.


Donald Methuen Fleming: Shame.


Paul Joseph James Martin: My hon. friend says "shame". I agree with him and say "shame".


Donald Methuen Fleming: Shame on you, for making such a ridiculous statement.


Paul Joseph James Martin: Premier Frost has said that he wants another $115 million from this government. He wants it on the basis of a proposal that is now agreed to and supported by all of the provinces, namely on the basis of the new formula, 15-15-50. But because the Minister of Finance and his colleagues would be embarrassed if they were to accede to this request of the premier of Ontario I suppose, politically, they would say at this stage "We cannot accede to your request for $115 million", they have devised the new tactic of having a study group that is going to take place after the provincial election is held in Ontario on June 11 next.


Lionel Chevrier: That is a pet theory of theirs;
I refer to study groups.


Paul Joseph James Martin: No wonder the Winnipeg Free Press in an editorial dated Wednesday, May 27 had this to say about the situation which has resulted from Mr. Frost's demand for more money which was not acknowledged by the federal government, particularly in the face of the other demands made on the federal government by other provincial governments, and particularly at a time when provincial elections in the province of Ontario are taking place.


Mr. Nesbitt:: It sounds as though the federal Liberals are going to try to help out the Ontario Liberals after all, although not financially.


Paul Joseph James Martin: The hon. member for Oxford may be very much interested in this matter because he comes from Ontario. I am sure he supports the request of the premier of Ontario for more money from the federal exchequer. I give my hon. friend a chance to say whether or not he supports Premier Frost in his demand for another $115 million. From his silence I take it that he does not acknowledge the offer of an opportunity to indicate this intention but that he joins with me in looking upon this particular demand of Premier Frost indeed as an extremely embarrassing one for this government and also extremely embarrassing at this time for the premier of Ontario.


Wallace Bickford (Wally) Nesbitt: Then you are supporting Mr. Wintermeyer?

Dominion-Provincial Relations


Paul Joseph James Martin: Yes. I am supporting the man who I think is likely to be the next premier of the province of Ontario.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: Here is what the
Winnipeg Free Press said:
At an election meeting in Peterborough the other night, the premier of Ontario again put on the record what he hopes to get from the Conservative government at Ottawa through the dominion-provincial tax-sharing arrangements. Mr. Frost told the meeting that he was still going after Ottawa for $115 million of tax money. ''I haven't forgotten it", he said. "A country lawyer hangs onto a thing like a pup to a root".
Ontario Conservatives may applaud Mr. Frost's tenacity;-
Says the Winnipeg Free Press.
-but they are unlikely to be joined by Mr. Diefenbaker and Mr. Fleming. Since the Conservatives came to power in Ottawa, they have carefully avoided a full-dress conference on tax sharing. Their reasons are pretty obvious. Mr. Frost is Mr. Diefenbaker's strongest ally in the provincial field.
I would put in parenthesis-and this is not the Winnipeg Free Press-that perhaps he is not any longer; I do not know. Then the article goes on as follows:
But if the Ontario premier is given what he asks for, what about the other provinces?
Mr. Diefenbaker is firmly committed to the principle of equalization of tax payments. Just a year ago he promised in Parliament that "every province will receive the same treatment" at the dominion-provincial conference.
So an extra $100 million or so tp Mr. Frost would mean proportionately larger payments to the other provinces than they are now getting. But where are the extra hundreds of millions of dollars to come from? The cupboard at Ottawa is bare. Mr. Fleming is now operating with a large annual deficit.
Yet these are the alternatives: Satisfy Mr. Frost and add to the deficit: or leave the Ontario premier still hanging on to his root.
In the circumstances it is little wonder that instead of the full scale conference, Mr. Fleming intends to meet the provincial treasurers in July to talk things over, after which there will be an investigation of federal-provincial relations by experts from Ottawa and the provinces.
This is not, of course, what Mr. Diefenbaker promised-


Mr. Speaker:: Order. I allowed the hon. member to read a large section of last night's debate before intervening. Now I think he is going to extremes in his reading of the Winnipeg Free Press.


Donald Methuen Fleming: Would you like the dictionary?


Mr. Marlin (Essex Easl):: I just have another two sentences.


Mr. Speaker:: While editorial comments are permitted they are to be used with moderation. I trust the hon. member has now read all he wishes.


Peter Francis Martin: There is just one short paragraph which I think would render the whole editorial a little more apparent than otherwise would appear.


An hon. Member:: It is a Liberal paper.


Peter Francis Martin: It does not matter where it is from.
This is not, of course, what Mr. Diefenbaker promised before he was elected. But such a conference, or rather the promise of a conference, serves one useful purpose so far as the Conservatives are concerned. It permits Mr. Frost to talk hopefully of an extra $100 millions in tax revenues, without in any way committing Mr. Diefenbaker or Mr. Fleming to do anything about it.
It is not perhaps without some justification that the heading of that editorial is "Mr. Frost's Bone". That is the whole point. This particular device which the Prime Minister and the Minister of Finance (Mr. Fleming) have created is for the very purpose of not embarrassing Mr. Frost, at the same time being able to offer to the mayors and to the public some justification for not having fulfilled an election promise.
I would like to remind the Minister of Finance that this very study that he has in mind can really serve no valuable purpose. Is the study necessary? Certainly when the premiers met at the last conference they dealt with the proposal that there should be a sort of study. I think the words of the former premier of Manitoba in this connection, supported by the premier of Saskatchewan, deserve to be put on the record. What I am now quoting from is the conference proceedings including Mr. Campbell's statement, where he said:
It is the contention of our government that we do not need at this stage to go into a detailed consideration of new principles-


John George Diefenbaker: Who is this?


Paul Joseph James Martin: Mr. Campbell, a worthy public servant who was entrusted by his people to represent them in the Ontario legislature.


Donald Methuen Fleming: Ontario?


Paul Joseph James Martin: I am sorry, I mean Manitoba. You see, I am so confident about the result in Ontario that I want to elect everybody.
It is the contention of our government that we do not need at this stage to go into a detailed consideration of new principles regarding our fiscal problems. We have gone through all this several times in recent years. We have had a number of meetings on this question. Our officials have met often to discuss its technical aspects.
Then Premier Douglas is reported at page 79 of the proceedings as having said this:
The fundamental failure of the present fiscal arrangements lies not so much in the method of sharing as in the size of the shares themselves.

I suggest to the Minister of Finance that the discussion which took place at that conference between Premier Frost and Mr. Campbell, which will be found at pages 89 to 92 of the proceedings, indicates clearly that they recognize that the present basis of equalization-that is the average per capita yield of the standard tax rates in the two top provinces-had been accepted by the provinces as a workable compromise. There was no question about that as far as all the provinces were concerned. All the provinces are now in favour of the new formula 15-15-50. So the only question which really remains is that of the determination of the standard tax rates, and that is a decision which cannot be made by the officials either of the provinces or of the federal government. That decision can only be made by hon. gentlemen on the ministerial benches who now look at me. That decision cannot be made by the deputy minister of finance or by corresponding officials in the provincial governments. Does the Minister of Finance not agree that that is the only remaining question, as both Mr. Frost and Mr. Campbell indicated?
Therefore to hold such a conference in the face of the fact that these officials cannot make this decision is only to resort to a delaying tactic, so that when my hon. friend presents his next budget he will then be free to indicate something which he now regards as not being free politically to do, namely to say to Mr. Frost, "We cannot accept your further demand of $115 million." That is the only reason for the holding of this conference of officials on July 6.


Donald Methuen Fleming: If you knew the facts you would think differently.


Paul Joseph James Martin: I challenge my hon. friend now to indicate I am wrong. I say the only matter now outstanding between the federal government and the provincial governments is to determine the standard rate of tax. That is all that remains, and that cannot be decided by the officials, and my hon. friend the Minister of Finance knows that is the case. There is no need any longer for a long study by officials to answer that question. As a matter of fact, the Prime Minister never talked about a study. He said, "Elect my party and in the month of September we will call a conference and resolve this question once and for all". That is what he told the people of Canada, and that is what the mayors of Ontario understood him to say last night. By the way, when he met them last night he did
Dominion-Provincial Relations not say anything about calling a conference at which the municipalities would be present.
I see that according to a report in tonight's paper Mr. Mooney, the secretary of that organization, expressed great regret that the Prime Minister would not afford the municipalities the opportunity of participating in a conference.


Donald Methuen Fleming: May I ask the hon. member a question. Is that the Mr. George Mooney who was a Liberal candidate in a recent federal general election?


Peter Francis Martin: I believe that is the same gentleman, and I may say he is a highly trusted gentleman. My hon. friend endeavours to cast some aspersions not only on that gentleman, but he also seeks to indicate that because a man has been a Liberal candidate he is on that account not to be regarded as a trusted and competent official. If my hon. friend the Minister of Finance does not have the same appreciation of Mr. Mooney that others have, he should note that at the conference at which the Prime Minister spoke last night to the mayors of our country thought enough of Mr. Mooney to continue him as secretary of their organization. What the Prime Minister did last night was to say, "Don't worry; we'll look after the municipalities. We realize you have heavy obligations to meet. We will take care of your interests as we sit down at the table with that demanding man, Mr. Frost".


John George Diefenbaker: Mr. Speaker, I do really enjoy the frivolities, but when the hon. gentleman proceeds to quote what I said in that direction, perhaps he will quote me rather than rely upon his fantastic and imaginative interpretation.


Paul Joseph James Martin: I will very gladly quote what the Prime Minister said, but it will require my looking at the second page of my hon. friend's official journal.


Donald Methuen Fleming: Try page 10.


Paul Joseph James Martin: Page 10 says: "Conservatives having difficulty in industrial relations committee."


An hon. Member:: Turn to the funnies page.


Paul Joseph James Martin: So that my time shall not be wasted I will ask my colleague to look for it.
The real issue in this situation is that the differences which prevail between the provinces and the federal government have resolved themselves into one single question.
4310	HOUSE OF
Dominion-Provincial Relations That question can only be decided by governments; it cannot and will not be decided by officials. All the facts which will be elicited at a meeting of officials in July will merely confirm, as Premier Douglas and Premier Campbell indicated, what they already have in their treasury offices.
Why does not the Minister of Finance now, before June 11, next Thursday, indicate frankly to the people why there has not been a conference called and why this problem is not finally resolved? Let the Prime Minister be as frank now with the Canadian people and with the parliament of Canada as he was during the election. Let him tell Mr. Frost why he cannot get his $115 million or, if he is going to get it, when he may expect it, instead of continually ignoring parliament and refusing to indicate why a promise solemnly made should not be carried out. Oh, the Prime Minister, that great actor, is obviously very irritated by what I am saying and expresses his irritation by laughter.
When he spoke to the municipalities, this is what he said, this is the report which was made:

We will study this problem, and by the time the study is over the provincial elections in Ontario will be over and we shall be able, afterwards, in a statesmanlike way, to resolve this problem, not in the interests of the Conservative party but in the interests of the people of Canada."


An hon. Member:: Hear, hear.


Paul Joseph James Martin: That is what the hon. gentleman will say after this conference, and as sure as I am standing here now the Prime Minister of Canada and the Minister of Finance have no more intention of giving Mr. Frost his additional $100 million than I have of walking across this floor and sitting as a permanent supporter to the right of the Minister of Finance.
Let this government stop dodging this issue. Let them recognize that the only remaining difference is one which governments alone can settle, and let them once and for all face up to this problem of dominion-provincial relations as the government of Canada was expected to do by the electorate when this administration was entrusted with office in June of 1957 and March of 1958.
Mr. Diefenbaker assumed that in the forthcoming conference the provinces would naturally present the viewpoint of the municipalities. There was no indication by the Prime Minister that a federal-provincial-municipal conference would be suitable.
That is not what the Prime Minister told the mayors of Canada; that is not what he said when he told the municipalities: you are poor, and added that the federal government was rich. That is not what he told them during the election. He told them then that he understood their problems and would see to it that assistance was given to them from the federal exchequer to enable them to carry on and discharge their responsibilities. That was not the same thing as the Prime Minister indicated when he stood in Massey Hall in 1957. Mr. Frost put his hand on his shoulder, then and said: "There's my boy; he's going to give me my $115 million
and I am going to see to it that we have a conference where these problems will all be resolved". Mr. Frost was waiting for this conference all last fall, and when, one day, he picked up the Globe and Mail and saw in the speech from the throne that there was not going to be a conference, I presume he called the Prime Minister at once and asked him: "How am I going to get out of this?" Of course, I am imagining some of this. And the Prime Minister said to the Premier of Ontario: "Don't worry, I will get you out of this. Donald is going to have a seminar; he is going to hold a study group.


Mr. Speaker:: If the hon. minister speaks now he will close the debate.


Donald Methuen Fleming: Mr. Speaker, I do not for a moment pretend that in the two minutes which remain prior to the adjournment at six o'clock I can hope to do justice to the remarks which have just entertained us and enlivened the proceedings of this house, let alone to the remarks which have preceded the stirring and memorable observations which have just issued in a torrent from the mouth of the hon. member for Essex East (Mr. Martin).
I think I shall content myself, in these few remaining seconds, by saying that the hon. member for Essex East was undoubtedly at his theatrical best today. The flights of imagination were simply superb. We have grown accustomed to expect these flights in the airy realms of fiction, but today the hon. member was undoubtedly at his incomparable best. It was a demonstration, indeed, of an hon. member preaching without a text.
It was a wandering exposition. The hon. member included some Liberal padding by reading from the Winnipeg Free Press and from speeches made by his colleagues. Subtracting that padding from his remarks, they seemed to come down to this-that the hon. member is a self-confessed imaginative citizen.
On motion of Mr. Fleming (Eglinton) the debate was adjourned.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the leader of the house what the business is to be tomorrow?


Howard Charles Green: We should like to finish this debate and then go on with the estimates of the Department of Public Works and the
Business of the House estimates of the Department of Fisheries. On Monday we would take a supply motion with, by agreement, a vote at 8.15 p.m. I cannot tell the house what the business will be for next Tuesday as yet.


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

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

Mr. Argue: 1.	Are any of the positions which American citizens presently hold, or have held, in any branch of the Department of Northern Affairs and National Resources, (a) at the policy making level; (b) of officer status?
2.	If so: (a) What is the name of the person in each case? (b) What is the position so designated, and the duties for which each is responsible?
Answer by: Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):
1.	(a) No. (b) Yes.
2.	(a) Barry, T.W., MacNeish, R.S., Langston, W., Crum, H.A., Oschinsky, L.
(b)	Biologist, 1, ornithology; Biologist, 5, archaeology; Biologist, 3, palaeontology; Biologist, 3, national herbarium; Anthropologist, 2, archaeology.


COMPRESSOR STATION CONTRACTS, NORTHERN ONTARIO
Mr. Badanai: 1.	Has a contract been awarded for the construction of three compressor stations at Geraldton, Ignace and Parthia?
2.	If so, to whom?
3.	What was the contract price?
Answer by: Hon. Gordon Churchill (Minister of Trade and Commerce):
1.	A contract has been awarded for the construction of each of the three compressor stations.
2.	Geraldton, station No. 80: The Fluor Corporation of Canada Ltd., Toronto, Ont. Ignace, station No. 58: Canadian Comstock
Company Limited, Leaside, Ont. Parthia, station No. 92: Refinery Engineering Limited, Toronto, Ont.
3.	Geraldton, station No. 80:	estimated
price, $1,103,430; Ignace, station No. 58: estimated price, $987,612; Parthia, station No. 92: estimated price, $1,032,726.


ILE AUX NOIX AND FORT LENNOX, QUE.- PUBLIC WORKS
Mr. Dupuis: 1.	Since June 1958, has the Department of Northern Affairs and National Resources, or any other agency of the federal government, given orders for the carrying out of any work on lie aux Noix and at Fort Lennox?
2.	If so, what work is involved?
3.	Were tenders called for this work?
4.	If so, what are the names of those who submitted tenders and the amount of each tender?
5.	How many men are employed on such work?
6.	Are they paid by the government or by individuals?
7.	When will such work be completed?
8.	What will be the aggregate cost of the said work?
Supplementary answer by:	Hon. Henri
Courlemanche (Secretary of State):
An answer to the above question was printed in House of Commons debates of May 26, 1959 at page 4060.
The question was incompletely answered and the following part answer was omitted in the original answer.
1.	The Department of Northern Affairs and National Resources requested the Department of Public Works on January 13, 1959, to construct a wharf on lie aux Noix, on the site of the existing wharf.
2.	The removal of the existing timber structure and its reconstruction to a length of 80 feet and a width of 20 feet.
3.	Tenders are to be called on June 10,
1959.
4.	5, 6 and 7. Answered by No. 3.
8. The work is estimated to cost $21,000.

Thursday, June 4, 1959