1959-05-18

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, this being the day that has been designated to be celebrated as the birthday of Her Majesty Elizabeth II, Queen of Canada, I hope the Acting Leader of the Opposition will join with me in conveying congratulations from the House of Commons to Her Majesty. At the same time I know I speak for all Canadians when I say that she enjoys the loyalty and affection of all of us. After we have heard from opposition members, shall we then rise and join in summarizing our feelings by the singing of, "God Save the Queen"?
(Translation):


Hon. Lionel Chevrier (Laurier):: Mr. Speaker, I take this opportunity to say a few words in French, a language which has always been not only understood but very correctly spoken by our sovereigns.
I wish to associate myself with the words of congratulations which the Prime Minister (Mr. Diefenbaker) has just addressed to Her Majesty Queen Elizabeth II.
I should also like to express, if I may, the feelings of devotion, affection, attachment and loyalty of Canadians of French origin for Her Majesty Queen Elizabeth II. History shows, Mr. Speaker, that in times of emergency the people of French Canada have always supported the British crown. Indeed, on one occasion, if not two, they took up arms against invaders of our Canadian territory.
It seems to me fitting that, on this day, a French voice be heard so as to echo from this side of the house the feelings that the Prime Minister has just expressed towards the gracious lady who, by virtue of the Statute of Westminster, is now Queen of Canada. Therefore, on behalf of the members of the opposition, I wish to make known to this house our feelings of affection and devotion to the Canadian crown.
(Text):


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, we of the C.C.F. should like to associate ourselves with the Prime Minister and the Acting
Leader of the Opposition in offering our congratulations to Her Majesty. On this occasion when Canada commemorates her birthday we wish to assure Her Majesty of our continuing loyalty and affection, and of the continuing loyalty and affection of all Canadians. We have, of course, a monarchical form of government. We recognize that it is based on the sound democratic principles of a responsible government. Although some of us might wish the house were not sitting today, nevertheless it is appropriate that the parliament of Canada, in commemorating her Majesty's birthday, should carry on Her Majesty's business.
Whereupon the members of the house rose and sang
God Save the Queen



MISCELLANEOUS PRIVATE BILLS

[Stage Direction]
Tenth and eleventh reports of standing committee on miscellaneous private bills- Mr. McCleave.


Hon. Gordon Churchill (Minisier of Trade and Commerce):: Mr. Speaker, with the permission of the house I should like to table the report of the United Nations conference on lead and zinc.
In my statement to the house in advance of the conference on April 24 I explained that the Canadian government's views regarding the U.S. import quotas remained unchanged, and also that it would be made clear that Canada would be willing to explore the necessity for and possibility of an intergovernmental agreement for lead and zinc but that to be acceptable to Canada any such agreement must find wide support with all major importing and exporting countries playing their full part. I also referred to the representations which had been received from Canadian industry which has sought to avoid the necessity for an intergovernmental agreement and the regulation of exports, and the effects on mine production that such an agreement might entail.
As will be seen from the report which is being tabled, there was every indication prior to the conference that again in 1959 there

Tabling of Report on Lead and Zinc would be a substantial addition to world surplus stocks of lead and zinc as a result of the high level of production which was being maintained in the face of weakened and restricted markets. This situation could not, of course, continue indefinitely.
Shortly before the conference reports were received of decisions taken by private producers in one or two countries to reduce their production. These indications of a change of direction in production policies were noted by the conference and encouraged a broad reassessment of expectations on the part of the different delegations including their industry advisers. In a good number of cases this led to announcements dining the course of the conference of the intentions of other producers to curtail their production. In other cases governments, including that of the U.S.S.R., announced reductions in their expected or intended exports.
Hon. members will recall that the effect of the U. S. import quotas has been to restrict shipments by Canadian producers to the large United States market, and it became necessary for some of them to adjust production. The net effect of reduction by a number of our producers and revisions of previous forecasts is that Canadian exports will likely fall below 1958 levels by 9,000 tons of lead and 30,000 tons of zinc, as is indicated in the report.
If the revised forecasts are realized the annual rate of world production of zinc will be brought nearly into balance with expected consumption. Reduction from a forecast 120,000 ton surplus to a mere 16,000 tons for the world industry as a whole would be a major advance toward the restoration of more normal market conditions for zinc. The effect of forecast reductions in the case of lead is not quite so satisfactory, though there too the progress anticipated is significant.
I would not like to convey too optimistic an impression. The United States quota restrictions still remain in effect. Moreover, it should be noted that the report of the conference does not deal with the difficult problem of existing surplus stocks. However, it appears possible that as a result of voluntary decisions taken by private producers to adjust production to demand, the lead and zinc industries may have taken the first step on the way out of their recent difficulties.


Mr. G. J. Mcllraiih (Ottawa West):: I wonder if I may ask the minister if copies of the report will be available to any hon. members who may wish to obtain them; and second, do I understand his statement to indicate that no further restrictions on the part of the United States against Canadian exports to that country are to be expected?


Gordon Minto Churchill: I doubt that there will be further restrictions, Mr. Speaker. An attempt to solve the problem in this way was suggested a year ago, and the committee has now arrived at its findings. The report I have just tabled can be reproduced for those who require it. Three or four copies have been made available through the proper office, but other copies I think can be made available if it is so desired.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, the report just made by the Minister of Trade and Commerce is an interesting one, and indicates the difficulties in the situation as he has explained them. This matter is of grave concern, as we all know, to the mining industry of British Columbia and to the working people who depend for their livelihood on the prosperity of that industry. We do hope the government will continue to work in closest co-operation with the industry in Canada, and will continue its efforts in the spirit in which they have been commenced in co-operating with United States interests and the interests of other countries with a view to finding a final and satisfactory solution to this most complicated and difficult question.



VETERANS' LAND ACT


Hon. A. J. Brooks (Minister of Veterans Affairs) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to bring in a measure to amend the Veterans' Land Act to provide further financial assistance to veterans for home construction and to veterans presently settled under the act as full-time farmers or who may be so settled in the future and to veterans who may be settled as part-time farmers or commercial fishermen; and to provide further for certain changes in connection with the administration of the act.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Motion No. 102-Mr. Howard:
For a copy of all correspondence, telegrams and other documents exchanged between the federal government and any person, organization or government, since January 1, 1958, relative to the purchase of land or any other matter relating to the proposed Royal Canadian Mounted Police detachment at Queen Charlotte city.
Hon. E. D. Fulton (Minister of Justice):: There is no objection to accepting this motion subject to the usual reservation regarding privileged communications, if any, and also to the obtaining of consent from the provincial authority if any correspondence with the provincial government is on file.


Mr. Speaker:: Subject to those limitations is it the pleasure of the house to adopt the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. Paul Marlin (Essex East):: I wonder if the Prime Minister could give a report to the house of the conferences he held on Saturday last with the presidents of the Ford Motor Company of Canada, the Chrysler Corporation of Canada and General Motors Corporation with regard to the manufacture in Canada of small cars. This is a matter which I am sure the Prime Minister will realize is of the greatest consequence as it affects the employment of thousands in Canada.


John George Diefenbaker: The importance of the problem has, of course, been directed to my attention on a number of occasions by the hon. member for Essex West as well as by the representatives of labour who met the cabinet some weeks ago.
All I can say at this time is that I had meetings with the various executive officers of the several companies referred to by the hon. member for Essex East at which we discussed the problem in all its facets. I pointed out that it was the view of the government that the manufacture of small cars in Canada is an economic necessity. The interviews I had were conducted in a fine spirit on the part of the executives of the automobile manufacturers concerned. There was complete good feeling, and there was frankness shown by each and every one of them throughout the discussions. I can only say that any announcements that may be made from time to time respecting this matter will, of course, have to be made by the companies in question. Other than that I do not think I can make any comment at the moment that would be appropriate or of assistance.


Paul Joseph James Martin: Mr. Speaker, may I ask a supplementary question. Is it still a fact that the Prime Minister will see the president of the Studebaker corporation tomorrow?
Inquiries of the Ministry


John George Diefenbaker: Yes, Mr. Speaker. Of course, as the hon. gentleman knows the Studebaker corporation has already proceeded with the manufacture of small cars; but I felt it would be only fair, having regard to the circumstances, that the executive head of the Studebaker corporation should be given the opportunity of presenting the views of that company.


Hazen Robert Argue: Mr. Speaker, a supplementary question. I wonder if the Prime Minister could say whether any followup meetings or consultations are under consideration, and whether in his discussions there was any intimation that the policy of the companies' head offices in the United States would make it difficult for the companies in Canada to manufacture small cars, or whether the companies in Canada, as I would hope is the case, are free to make the decisions themselves based on the economic needs of this country.


John George Diefenbaker: Mr. Speaker, I do not think I can add anything more to what I have already said. If by "follow-up" is meant further meetings with the executive heads of the automobile companies, I have no present intention of undertaking any such follow-up. However, if "follow-up" means that there will be further correspondence as between the government and the companies, I feel sure that would be the case.


Hazen Robert Argue: Mr. Speaker, I wonder if the Prime Minister would answer the second question I asked. Since Canadian sovereignty in all these matters is of great importance to all of us, I wonder if the Prime Minister would say if the Canadian companies are free, apart from any outside influence, to decide on this project themselves based on Canadian interests.


John George Diefenbaker: Mr. Speaker, I am sure the hon. gentleman could secure that information by communicating with the companies. I was dealing with the companies on the basis that the representative heads in Canada would be in a position to determine the policies for the companies.


Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, may I also direct a question to the Prime Minister on this subject. Have he and his colleagues given any consideration to the thought that in regard to this problem there might be an advantage in giving a special concession with respect to the excise tax relating to small cars of lower weight?

Inquiries of the Ministry Mr. Speaker: I am sure the hon. gentleman would not expect a budgetary matter to be answered on orders of the day.


William Moore Benidickson: The budget debate is over. SHIPPING



GREAT LAKES


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, may I direct a question to the Minister of Transport. In view of the statement made by Vice Admiral Alfred Richmond, commandant of the United States coast guard, to the effect that there is little chance that congress will pass his legislation this session because of opposition from Canada and from three departments of the United States government, does the minister not think that now would be an opportune time for either himself or his officials to enter into discussions with the officials of the United States government in order to reach an agreement upon pilotage on the great lakes?


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, the officials of my department are in close contact with the officials of the United States government at all times regarding this matter, and they know our desire, expressed many times over, to reach an agreement between the two countries on this question.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Mr. John MacLean (Winnipeg North Centre):: Mr. Speaker, I wish to direct a question to the Prime Minister. Would the Prime Minister comment on Mr. Khrushchev's latest message to President Eisenhower and Prime Minister Macmillan which appears to indicate the Soviet government's willingness to take part in a technical conference to study scientific information related to the detection of high altitude nuclear tests?
Right Hon. J. G. Diefenbaker (Prime
Minister): Mr. Speaker, the reports in the press indicate that the Soviet appear to have taken a cautious step toward the solution of the problem of discontinuing nuclear tests. However, it would be a mistake to regard the expression of Mr. Khrushchev's views in an optimistic light, or to come to the conclusion that what has been said by him represents a concession of major significance. The house will recall that the question of detecting high 
altitude tests was discussed at length last summer at Geneva between western and Soviet experts, but those discussions were not pursued to agreed conclusions. Mr. Khrushchev's latest message, therefore, rather than initiating a fresh subject for negotiation represents merely an expression of renewed willingness to discuss an aspect of the problem on which a considerable amount of preparatory work has already been done.
It will be noted that his message is silent on the related question of how to detect subterranean tests. The aim with regard to subterranean tests is to reach agreement on a satisfactory number of annual inspections. On this aspect of the problem there was no encouragement whatsoever in Mr. Khrushchev's message as reported in the press.
All I can say is that while what has been suggested by him does represent at least a step forward, there is nothing in that statement which would lead the free world to believe that a major change of policy has been effected.


Paul Joseph James Martin: May I ask
a supplementary question. Can the Prime Minister comment on the departure this morning of Sir Michael Wright from the discussions in Geneva for the purpose of considering a further proposal to be put forward by Her Majesty's government in the United Kingdom?


John George Diefenbaker: Not at this time, Mr. Speaker.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinity-Conception):: Mr. Speaker, I should like to direct a question to the Minister of Fisheries, but owing to his absence I shall direct it to the acting minister. In view of the serious bait shortage being experienced right now by the lobster fishermen in Newfoundland, will the minister please inform the house what steps his department has taken to cope with this urgent situation?


Hon. Howard C. Green (Minister of Public Works):: Mr. Speaker, I shall brink this question to the attention of the Minister of Fisheries.



INQUIRY AS TO ACCEPTANCE OF PAY- MENT IN SOFT CURRENCIES

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I take great pleasure in asking the

Minister of Trade and Commerce a question. As the result of the recent meeting of representatives of Canada, the United States, Australia, France and Argentina in Washington to discuss the distribution of the world's No. 1 surplus food, namely wheat, to hungry people, is the Canadian government now giving consideration to accepting payment from the recipient countries in so-called soft currencies?


Gordon Minto Churchill: Mr. Speaker, I have equal pleasure in replying to the hon. gentleman. He gave me notice of his question, which I think is based on a newspaper report that emanated from Washington. But in answer to the question, the policy of the government and of the wheat board is the same as it was last year, that is not to accept soft currency. During the last crop year 90 per cent of our export wheat was sold for cash. The remainder was disposed of either by way of loans on a three-year basis to, for example, Poland and Israel, or on long term loans to countries under the Colombo plan, or by way of outright gift to the Colombo plan countries. In the latter instance counterpart funds are set up for those outright gifts, that is, local currency; and those counterpart funds are used by the recipient country of the wheat to promote development projects within their own countries. We have no intention of changing that policy at the present time.


Herbert Wilfred Herridge: May I ask a supplementary question. In view of the minister's reply, would he admit that the government is now following to some extent the policy advocated by this group for many years?


Gordon Minto Churchill: The government will continue to set an example to the group in that corner for many years to come.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. Hubert Badanai (Fori William):: should like to direct a question to the Minister of Public Works. In view of Premier Frost's recent statement that his government is in partnership with the federal government to make the ports of Fort William and Port Arthur the finest on lake Superior, can the minister indicate what contributions have been made so far by the provincial government, and what are the arrangements on sharing with this government in the future?


Mr. Speaker:: I am rather in doubt that the hon. member should expect an off the cuff
66968-9-237
Inquiries of the Ministry answer to a question which covers as much as that. Perhaps it might be put on the order paper and dealt with more efficiently in that way.



LAKEHEAD


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: I should like to direct a question to the Minister of Transport. In a telephone conversation with Hon. George Wardrope, the provincial member for Port Arthur, last Thursday, did the minister express, as reported in the Port Arthur News-Chronicle, surprise that the lakehead harbour commission had not met and appointed a chairman and secretary?


George Harris Hees: I have had no conversation with Hon. George Wardrope.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I wish to direct a question to the Minister of Northern Affairs and National Resources. Can he inform the house when we may expect the tabling of correspondence and documents agreed to on April 15 under motion No. 25, and having to do with the East Saint John thermal plant?


Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):: As I recall the motion accepted on April 15, it was on the understanding that if an agreement was signed with the province. The province has turned over the decision on the matter of costs and policy to a royal commission for a report. I have forgotten the exact date when the matter was turned over to that royal commission, but until that agreement is signed I am not able to table the documents.


Hédard-J. Robichaud: May I ask a supplementary question. Can the minister inform the house if it is still the intention of the federal government to participate financially in this project, and has the government been officially notified whether oil or coal will be used to generate power in the plant in question?


Francis Alvin George Hamilton: The government position has been made known on several occasions. There has been no official declaration by the province of New Brunswick as to whether they intend to use oil or coal at that plant, and there will not be until they get a report from the royal commission.
3744	HOUSE OF
Inquiries of the Ministry COMBINES INVESTIGATION ACT



GASOLINE


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: I should like to direct a question to the Minister of Justice; I hope my notice reached him in sufficient time. Has the attention of the minister been drawn to a newspaper advertisement in this morning's Globe and Mail, placed there by the Ontario retail gasoline and automotive service association, which charges that two oil companies, in an attempt to escape prosecution for price discrimination practices, used the subterfuge of buying back the gasoline originally sold to certain dealers at predatory rates and then claiming that the gasoline was being sold on a commission basis? If so, can the minister indicate what action is planned to determine whether the charges set out in the advertisement are correct; and if they are correct, what remedial action is to be undertaken by the combines investigation branch?


Mr. Speaker:: There are several questions involved. I do not know whether the minister would want to reply to the last one about combines investigation. However, it seems to me the first one is directed to prosecution for a criminal offence, which lies with the officers of the crown in the province.


Frank Howard: May I submit, Mr. Speaker, that the jurisdiction in this question of price discrimination falls under the Minister of Justice, and would initially rest there, I think, rather than with the provincial authorities.


Mr. Speaker:: If the minister can throw any light on the matter with respect to the aspect of combination in restraint of trade, he may wish to answer. I did not understand the hon. member to be asking a question of that kind. I thought it was a question directed to prosecutions.


Edmund Davie Fulton: think all such questions have usually been directed to the Minister of Justice, and perhaps I can answer on this occasion. I did not have the opportunity, since receiving notice of the hon. gentleman's question, to check the advertisement specifically, but I can tell the hon. member that the combines branch of my department has been keeping under close surveillance all gasoline price wars, so-called, over the past few months, and a number of informal steps have been taken from time to time to follow up complaints which have been received.
I could not, of course, be expected at this time to say whether or not the statements
[Mr. Hamilton (Qu'Appelle).l

made in the advertisement referred to are correct or disclose material warranting formal inquiry. However, I should emphasize once again that it would be most helpful if those concerned would, in addition to any other steps of this nature they may be inclined to take, communicate all specific information in their possession directly to the director of investigation and research in the combines branch.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: I should like to direct a question to the Prime Minister. Has the Prime Minister been able to arrange for General Norstad to give a private briefing for members of this house?


John George Diefenbaker: General Norstad spent two hours with the cabinet this morning, and thereafter attended a luncheon. He had to leave immediately for Oslo, Norway, so it became impossible for him to arrange his itinerary to permit the carrying into effect of the suggestion made by the hon. gentleman.


Paul Theodore Hellyer: I wonder if either the Prime Minister or the Minister of National Defence has any comment to make as a result of the meeting this morning?


John George Diefenbaker: I do not know what comment could be usefully made. The commander of NATO dealt at length with the situation in Europe, with the concept of NATO, and something of its future plans. He discussed with my colleagues and myself in particular Canadian participation in NATO and the future course to be taken by Canada.


POLYMER CORPORATION
[Stage Direction]
On the orders of the day:
Mr. J. W. Murphy (Lambton West):: I should like to ask the Minister of Labour if he can bring the house up to date on the Polymer strike.


Hon. Michael Starr (Minister of Labour):: Perhaps the hon. member has noticed a report in the Toronto newspapers that we have appointed Mr. Taylor of the city of Toronto as mediator. He will be convening a meeting between the two parties concerned either today or tomorrow.


WHEAT-INQUIRY AS TO FINAL PAYMENT ON 1957-58 CROP
[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I should like to direct a question to the Minister of Trade and Commerce arising out of the urgent need to supplement the cash position of western grain producers, particularly in the light of the very adverse crop conditions at this time. Is the minister in a position to say when an announcement can be made as to the final payment on the 1957-58 wheat crop? It has been over nine months since the end of the crop year.


Gordon Minto Churchill: I am waiting to hear from the Canadian wheat board. They advised me some time ago that preparations for the final payment should be completed about the middle of this month. I expect to hear at any time.


PUBLIC SERVICE
[Stage Direction]
On the orders of the day:
Mr. M. A. Hardie (Mackenzie River):: I
should like to direct a question to the Secretary of State. Is the minister aware of the discriminatory rate of northern allowances paid government employees at Hay River, in the Northwest Territories, compared to allowances paid at comparable high cost points in the north? If so, will the minister make appropriate representations to the treasury board in the near future on behalf of these employees?


Hon. Henri Courlemanche (Secretary of Stale):: I am not aware of this fact, but I
will check and let the hon. member know.


ST. LAWRENCE SEAWAY WELLAND CANAL  REPORTED TRAFFIC JAM
[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: I should like
to direct a question to the Minister of Transport. Did the minister note the article in this morning's Globe and Mail concerning the rather unusual traffic tie-up at the Queen Elizabeth highway crossing of the Welland canal?


George Harris Hees: I noticed some allusion to that matter. I should like to remind the hon. member that the traffic tie-ups that are now taking place on the Queen Elizabeth highway crossing of the Welland canal are exactly the
66968-9-2374
Inquiries of the Ministry same as those which occurred for 22 years under the former Liberal government, without that government doing anything whatever to alleviate those traffic problems.


Paul Theodore Hellyer: Mr. Speaker, I am sure the minister would not wish to leave the impression-


Some hon. Members:: Question.


Paul Theodore Hellyer: I should like to ask a supplementary question of the minister. Is it true that there is increased traffic through the Welland canal now, and that as a result the bridge is up for a greater length of time than it was previously?


George Harris Hees: Mr. Speaker, everything is moving faster, more quickly and more efficiently under a Conservative government than it did under the former government.


Paul Theodore Hellyer: Everything except the minister.


Douglas Mason Fisher: I have a supplementary question, Mr. Speaker. In view of Premier Frost's announcement that the government of Ontario is going to build bridges to relieve this congestion, can the minister indicate whether or not any conversations have been held with his department for the purpose of determining the federal government's position with regard to this particular project?


George Harris Hees: Mr. Speaker, Hon. Leslie Frost is quite capable of making his own decisions on behalf of the government of Ontario and has done so, to the voters' satisfaction, for the past 15 years.


An hon. Member:: All good things must come to an end.
ILater:]


Mr. W. H. McMillan (Welland):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Does the minister mean to leave the suggestion that the federal government is making any contribution toward a bridge across the Welland canal at the Queen Elizabeth highway?


George Harris Hees: No, Mr. Speaker. Neither did I intend to say nor, I feel sure, did I say anything to the effect.


FINANCE
[Stage Direction]
On the orders of the day:
William Moore Benidickson: Mr. Speaker, in view of the remarks of the Minister of Transport about all things getting better I should like to direct a question to the Minister of Finance, if I may. I should

Inquiries of the Ministry like to ask the Minister of Finance whether or not he has read the leading editorial in the Montreal Gazette of this morning with respect to tight money, and whether he and his colleagues are contemplating action that would avoid the results there indicated.


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, I have not yet read the editorial in question. I thank my hon. friend for directing my attention to it. I should be glad to have a look at it. There is no tight money policy as far as this government is concerned.


Mr. Pickersgill:: That is not what the Gazette says.


Donald Methuen Fleming: That policy belonged to the government that went out of office two years ago. According to a statement issued by the president of the Canadian Bankers Association last Friday, the chartered banks have instituted a policy of curtailing credit in the case of larger loans. I am told that this policy is not going to affect loans in amounts of under $100,000. I took particular note of the concluding paragraph of the statement issued by Mr. Ulric Roberge, president of the Canadian Bankers Association, when he said this:
Within these limitations, a special attempt will be made to look after the essential credit needs of small borrowers.


William Moore Benidickson: Mr. Speaker, I have a supplementary question. Knowing the bankers' problems, is the minister, from the point of view of government policy, doing anything to encourage the banks to act along those lines?


Donald Methuen Fleming: Mr. Speaker, I think the chartered banks are well aware of the government's wish that credit be provided within the means of the banks for creditworthy projects. If the banks find they have not an ample amount of money to meet the extraordinary demands for credit that are made upon them today as a result of the upsurge in the Canadian economy, then certainly it is not the intention of the Canadian government to inflict on the people of Canada a repetition of the tight money policy of our Liberal predecessors.


John Whitney Pickersgill: What are you going to do to stop it?


Paul Joseph James Martin: Mr. Speaker, I have a supplementary question. Will the minister deny that he has suggested to the Bank of Canada that in this restrictive policy some liberalization with regard to small borrowers should take place?


Donald Methuen Fleming: Mr. Speaker, 1
think the hon. gentleman is well aware, or

should be by now, that monetary policy is a matter that parliament has confided to the Bank of Canada.


Paul Joseph James Martin: Never mind the lecture.


Donald Methuen Fleming: Certainly the Bank of Canada assure me they have not made any suggestions to the chartered banks of this country that they should in any way restrict credit.


William Moore Benidickson: The Minister of Finance on several occasions in the past has indicated-


Some hon. Members:: Question.


William Moore Benidickson: -that when interest rates go down, it has something to do with the government. What is he doing now to try-


Mr. Speaker:: Order. It seems to me that this discussion on monetary policy on the orders of the day is rather fruitless, and I suggest that it be dropped at this point.



TRANSPORT


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I should like to direct a question to the Minister of Transport; I regret that I was unable to give him notice. It has to do with a telegram I have received from Prince Edward Island saying that west coast interests are reported to be considering the purchase of the Vacationland. Can the minister say what further consideration, since his statement on May 7, has been given by the government to the purchase of the Vacationland to augment the ferry service between Prince Edward Island and the mainland? If the decision has not been made yet, can the minister say when it is likely to be made?


George Harris Hees: Mr. Speaker, the question of using the Vacationland, along with several other alternative means of improving transportation facilities between the mainland and Prince Edward Island, is at present under active consideration by the government.


Hazen Robert Argue: I wonder whether the minister might be able to say when a decision in this regard will be made, since there is a great deal of interest in this matter in Prince Edward Island.


George Harris Hees: Mr. Speaker, there is also a great deal of interest in the department. We are

just as anxious as are the people of Prince Edward Island. Certainly the four members from Prince Edward Island have been bringing this matter to my attention daily. A decision will be reached just as soon as possible.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr, Frank Howard (Skeena):: Mr. Speaker, I wish to direct a question to the Minister of Transport. On Wednesday, May 13, I directed a question to him with respect to the seating capacity of a particular aircraft that went from Ottawa to Windsor and Wheatley, Ontario. The minister indicated that he would inquire and would let me know the exact number of seats. I wonder whether he is in a position at the moment to give me this information?


George Harris Hees: Yes, Mr. Speaker; 24.



ANNOUNCEMENT OF POLIOMYELITIS IMMUNIZATION PROGRAM FOR MEMBERS

[Stage Direction]
On the orders of the day:
Mr. J. W. Kucherepa (High Park):: Mr. Speaker, because some members of the house have not as yet received notice of this matter I should like to make a brief announcement on behalf of the parliamentary voluntary health committee which should be of interest to all members of the house.
The parliamentary voluntary health committee is commencing a polio immunization program on Tuesday, May 19 next. A doctor will be in attendance in the nurse's office between one o'clock and two o'clock on Tuesdays, Wednesdays, Thursdays and Fridays to administer Salk poliomyelitis vaccine. All members desirous of obtaining this protection against poliomyelitis are welcome to avail themselves of this opportunity. We hope the first part of this program may be completed by May 29 next.


William Moore Benidickson: I have a supplementary question, Mr. Speaker. What is the recommended routine with respect to the prime element between inoculations of this type? I understand that perhaps two or three months are required.


John William Kucherepa: Mr. Speaker, I should like to answer the hon. member's question. Briefly, we hope to complete this part of the program
Freight Rates
by May 29 in order that we may be able to give the second dose in about three to four weeks time, before the house should adjourn.



FREIGHT RATES


George Harris Hees: that the house go into committee to consider Bill C-38, to make provision for the reduction of certain class and commodity rates on freight traffic.
Motion agreed to and the house went into committee, Mr. Rea in the chair.
On clause 1-Short title.


Lionel Chevrier: Is the minister going to make a statement on this bill at this time?


George Harris Hees: No, Mr. Chairman. I have
already made a statement. As the hon. member knows, this matter received considerable discussion both at the resolution stage and on second reading. It was examined thoroughly by the standing committee on railways, canals and telegraph lines for a period of three days. I do not think there is really anything further I have to say at this time.


Lionel Chevrier: Mr. Chairman, this bill, which is known as Bill C-38, to reduce class and commodity rates on freight traffic, comes to the house as the minister has just said after examination by the committee on railways, canals and telegraph lines. In that committee representations were heard from various groups indicating to the committee and to the government what their views were on the bill. I would have thought that in the light of those representations, sir, the Minister of Transport would have seen fit to indicate to the house what his views, those of his department and those of the government were in regard to those representations. It seems to me too, sir, that the minister should have given the house some indication, particularly in the light of the announcement made by the Prime Minister the other evening, on the royal commission on transportation. Unfortunately he has not seen fit to do this, and this prompts me to make a few observations on the bill as it comes from committee.
In the first place, out of the evidence that was given before the committee there comes some pertinent information having to do with this subsidy of $20 million which is being granted by parliament to various regions of Canada. One of those pertinent facts is the evidence given by one of the members of the board of transport commissioners to the effect that this subsidy will be divided among the various regions as follows: to the

Freight Rates
western region, 57.6 per cent, or $11,340,000; to the central region, 26.5 per cent or $5,300,000; and to the maritime region, 16.8 per cent or $3,360,000. Having regard to the fact that it was announced in this house that this was a measure to bring relief to the long haul provinces, it seems to me that here is positive proof and positive evidence that this measure will not provide relief to the long haul provinces as was anticipated.


George Harris Hees: Mr. Chairman, may I be permitted to make a correction. I do not think it was ever said by me or by anybody on this side of the house that this was intended to relieve the long haul provinces; it was intended to relieve the long haul shippers.


Lionel Chevrier: Unfortunately, Mr. Chairman, I have not before me the statement made by the minister and that made by the Prime Minister, but there is no doubt in my mind what the implication of this measure is, that it is to come to the assistance of those who live in the far away parts of Canada, so the effect of the 17 per cent increase will be minimized to the extent of $20 million. That was clearly made the subject of statements made in this house.
However, the point I want to pursue is this; that had the committee been given the information which was asked, namely what was understood by a long and short haul and to what extent was the relief granted in the ten blocks established by the board of transport commissioners, then I am sure we would be able to ascertain and establish that the benefit of this subsidy is not nearly as great as was indicated and anticipated in favour of the long haul provinces. Unfortunately this information was not given. It is true that I did receive from the commissioner ten sheets, which were an analysis of the way bill sample, outlining the movements originating in one province and remaining in that province, but this information does not throw a great deal of light on the bill now before the house.
There is, however, another matter which I would like to discuss, sir, in relation to this measure, and that is the terms and the scope of the royal commission which was announced by the Prime Minister on Wednesday last. I would like to take this opportunity of saying, notwithstanding the statement which was made on that occasion, that the terms and the scope of the royal commission in my opinion are inadequate to deal with the problem that is now before us.
In the first place, before we consider that matter I think we must give some consideration to the reason the royal commission was established. The royal commission was

established because of the decision of the board of transport commissioners in November, 1958 authorizing a 17 per cent increase in freight rates to meet the wage increase which had been agreed upon between the railways and their employees. As the house knows, the provinces appealed this decision and the cabinet, in disallowing the appeal, stated that it would bring in a measure to relieve the inadequacies or inequities of the freight rate structure, and at the same time indicated that there would be a further study of the whole transportation problem in Canada.
The contention of the opposition at that time was that the government should have disposed of this problem earlier. The contention of the opposition was that in November, 1957 there was clear indication of this dispute between the railways and their employees, and if the government had then given the consideration which it should have given to this important matter then perhaps it would not have been necessary to take the action which was taken by the government, not of establishing the royal commission but of disallowing the appeal.
The wage increases for the employees, arose in November, 1957. It arose one year earlier than the statement made by the Acting Prime Minister, and it arose when the board of transport commissioners, faced with an application for an increase in freight rates because of an anticipated wage increase which at that time had not been agreed upon between the railways and the employees, had to make a determination of the issue, and the matter then came before the cabinet following the appeal from that decision. During the whole period of the wage negota-tions the government was aware that ultimately they would be called upon to give some consideration to the question and to take some positive action in order to settle the matter; but nothing was done and the matter was allowed to drift until the government was face to face with the appeal from the provinces.
I say, sir, that in my opinion the terms of this royal commission are inadequate. Before I give positive reasons for that assertion I should like to consider briefly the background. Why did the provinces appeal the decision? Though I was not present when the appeal was argued, I presume that one of the many reasons the provinces appealed the decision was that the long haul provinces suffered economic disadvantages on account of the long haul to markets and from the sources of supply which placed the Atlantic provinces and the western provinces in particular at a relative disadvantage in reaching

central Canadian markets in competition with producers in other parts of Canada, and particularly with producers who had shorter hauls to make.
The maritime provinces take the view that the Maritime Freight Rates Act should be retained and extended, and they want, to a large degree, the equalization of freight rates. The prairie provinces want the retention of the Crowsnest rates, and they too demand equalization of freight rates. They also would like closer supervision over the establishment of competitive rates. British Columbia wants the preservation of its transcontinental rates together with a greater equalization of freight rates.
In effect	this	means that	the	provinceswant lower freight rates, although different methods are suggested; some provinces favour one method, whereas other provinces favour another. Whatever method is suggested as the solution to this important problem, the object will be the same, namely to give to the shipper and to the consignee greater relief from the disadvantages attributed to	the	increases in	rates by the
horizontal percentage method, and at the same time to retain any existing advantages in rates which are enjoyed by the shipper and the consumer.
On the other hand, the railways want the preservation of the horizontal rate increases; they say that is their method of obtaining relief from	the	increasing costs	of transportation in	this	country.
Therein lies the clash between the provinces, on the one hand, and the railways on the other. It seems that between these two points of view a solution must be found. The royal commission has been established with the object in view, I presume, of finding some relief from that problem. What do the terms of the royal commission do in order to meet this point? Nothing specific is stated in the terms of reference to this question I have just raised. I say that the terms are inadequate, first because there is no specific reference in the order in council to horizontal rate increases and to the effect these increases will have upon the long haul provinces.
I ask you, Mr. Chairman, to consider the attitude of the government when they sat on this side of the house, and how hon. gentlemen opposite rose in their places and inveighed against the impact of horizontal rate increases from one end of the country to another and, by implication, indicated that when they got into office they would do something to relieve that burden. I say there is no specific reference to this problem, which to me is one of the most serious problems-1
Freight Rates


John George Diefenbaker: What about subsection
(a)?


Lionel Chevrier: -as indicated by the Prime
Minister and others when they sat on this side of the house. In a moment, if I may, I shall deal with subsection (a) in connection with horizontal rate increases. Then I will ask the committee to consider the attitude adopted by hon. gentlemen opposite during the election campaign. Will the Prime Minister allow me to read to him what he said on May 18, 1957 at Drumheller. He stated on that occasion:
-there should be equalization of rail rates in Canada "within reasonable limits" to give a shot in the arm to agriculture and industry on the prairies.
He is reported a little further on as having said:
-that a rate pattern discriminatory to the west has been made worse by recent increases. This had struck "an almost paralyzing blow" to industrial development in the west.
And still later, according to a report in the Toronto Globe and Mail of May 20, 1957, he is reported as having said:
-a Conservative government would equalize freight rates as far as possible to help both agriculture and industry on the prairies compete with the rest of Canada.
When these statements were made there had been three reports submitted by the board of transport commissioners equalizing freight rates to the extent that they could be equalized at the time. One of these reports is dated May 25, 1955.


John George Diefenbaker: What does the hon. gentleman mean by the words "to the extent that they could be equalized at the time"?


Lionel Chevrier: I mean this, that freight rates were equalized in western Canada. I mean, further, that freight rates were equalized on a long list of commodities as set out in Mr. Justice Kearney's report dated March 25, 1955 of which, I am sure, the Prime Minister could not have taken cognizance when he made the statement he did. I mean, also, the report on equalization dated September 22, 1957. This is the one handed down by chief commissioner Clarence Shepard in which is detailed a long list of class and commodity rates which had been equalized.


John George Diefenbaker: Does the hon. gentleman suggest that these lists covered all the commodities which affect western Canada and the Atlantic provinces?


Lionel Chevrier: I suggest this, that if the Prime Minister had read those three reports -and I know it is impossible for him to read everything which has to do with this

Freight Rates
subject-he would have amended the statement he made during the campaign, because these are three reports dealing clearly and without equivocation with what has been done by the board of transport commissioners to equalize freight rates in Canada. I think they are well worth reading, because they indicate to what extent the board has gone in dealing with this question of equalization.
1 return now to the terms of reference. It was suggested that term (a) of order in council P.C. 1957/577 covered the question I discussed earlier about the impact of horizontal freight rates. The point I was making was that this subsection does not deal particularly with the impact of horizontal freight rates, and having regard to the fact that members of the government when sitting on this side of the house complained so bitterly about this matter, it would seem to me that this was one of the first things they would have mentioned in the scope of the reference.


John George Diefenbaker: Is this not comprehensive enough to cover it?


Lionel Chevrier: I doubt very much whether it is, because the words are so broad that they could probably mean anything. But having regard to the fact that certain charges were made it would have seemed to me that a particular reference could have been included to cover the matter.
May I now draw another point to the attention of the government. It is stated that the commissioners are appointed to inquire into and report upon certain problems, one of which is stated to be inequities in the freight rate structure, their incidence upon the various regions of Canada, etc. My suggestion is this. I doubt very much whether there are inequities in the freight rate structure in the sense mentioned here. What I am saying is that there are inequalities. I know the Prime Minister is ready to rise and blast at me because of that statement, but I shall repeat it. I doubt very much if there are inequities in the legal sense of the word. There may be inequalities in the freight rate structure and I think there probably are serious ones, but how could there be inequities in the sense in which this is meant when the Railway Act clearly says that the moment an application is made to the board of transport commissioners the board shall deal with the matter as it comes before them? I refer to section 328, subsection 5 of the Railway Act which states:
-the powers given to the board under this act to fix, determine and enforce just and reasonable rates, and to change and alter rates as changing conditions or cost of transportation may from time to time require, are not limited or in any manner affected by the provisions of any act of the parliament of Canada-

I submit that the freight rates which have been determined by the board of transport commissioners, while they may be unequal because of the vast distances in Canada, are not inequitable because they are authorized under statute passed by parliament. To that extent I say that the wording of this section is not sufficient in order to cover adequately the impact of the horizontal rate increases.
Furthermore, the scope of this inquiry is not adequate because it contains no specific reference to the problems of the Canadian National Railways. Is there any railway in Canada or on the North American continent which at this time is suffering greater difficulties because of lack of traffic and competition from other sources than the Canadian National Railways? It seems to me that with a deficit of $51 million for the year 1959 as announced by the president and an estimated deficit of $34 million for the year 1960, some specific reference should have been made in the scope of this inquiry to deal with the problems of the Canadian National Railways which are most urgent at this time.


Howard Charles Green: May I ask the hon. member a question, Mr. Chairman. Is the hon. member suggesting that the commission should have been given power to examine all the ramifications of the Canadian National Railways?


Lionel Chevrier: I am not suggesting that, Mr. Chairman. What I am suggesting is that the commission might well have been given power to deal with what assistance could be given to help the C.N.R. in getting around its fixed charges. That is a matter that has come up in parliament from time to time and one about which the Canadian National Railways is greatly apprehensive. Without going into the whole scope of railway transportation I believe the government might well have given consideration to asking the commission to give specific attention to some of the problems of the Canadian National Railways that are most imminent at this time.
There is complete exclusion from this reference to the functions of the board of transport commissioners. I am not complaining about that, but I draw the attention of the government to the following fact. The Prime Minister will remember that when he and his associates sat on this side of the house they criticized the board of transport commissioners by saying that they were useless and were not doing their job properly. If that was the case, why did they not ask the commission to inquire into the functions of the board? Now that they sit on the other side of the chamber and see it in a different light they find that the board is operating

satisfactorily, or at least they do not intend to consider an inquiry into the board's functions.
Again, there is no specific reference to the problem referred to in the statement made by the acting prime minister in November of last year, namely the problem that in future the board of transport commissioners should not take it upon themselves to increase freight rates until a definite agreement had been made between the railway company and its employees on the subject of wages. There is no mention of that. This seemed to be a highly important matter when it came up for discussion and was contained in the statement made by the acting prime minister.


Howard Charles Green: May I ask the hon. member for Laurier to explain in more detail what he means by this suggestion? What does he think should have been written into the terms of the commission in this respect?


Lionel Chevrier: Mr. Chairman, at the request of the Prime Minister the other evening I indicated what I thought should be considered by the royal commission. The Prime Minister rose and said in effect that if anybody in the chamber wanted to tell the government what it should give consideration to with reference to the terms of the royal commission they should make suggestions. I rose and made four suggestions. The Minister of Public Works now asks me what I have to suggest. I am saying that the minister was complaining about this position in which the board of transport commissioners found themselves in having to raise rates because wages had been increased. The minister then made the statement that he did not think the board should be put in that position. Why should not the scope of the inquiry extend to that matter? Why should not that matter be studied so that if in future a similar situation arises the board will know what to do? Under section 328, subsection 5, the board has no other alternative but to deal with applications which come before it as those applications are launched by the railway association of Canada.
Then there is the other matter to which the Prime Minister himself referred when he made the announcement of the royal commission. I should like to quote his words. If I interpret them wrongly I am sure he will correct me. At page 3607 of Hansard of May 13 the Prime Minister said:
When the Minister of Public Works as acting prime minister announced the government's intention to arrange for this review he assured the western farmers that such review would not mean that they would have to pay more freight on the shipment of grain for export. I wish to take this occasion to confirm this, in regard particularly to the action that may be taken as a result of the 66968-9-238
Freight Rates
work of the royal commission. To make it clear beyond question, the Crowsnest pass rates are part of a bargain that was made between the railways and the government on the one hand and the settlers who went west on the other hand. We intend, in so far as this government is concerned, to see to it that that contract shall not be broken.
In that statement the Prime Minister for obvious reasons has started the royal commission off with-


The Deputy Chairman:: I am sorry to interrupt the hon. member, but I am obliged to inform him that his time has expired.


Some hon. Members:: Carry on.


Charles Edward Rea: Has the hon. member the unanimous consent of the committee to continue?


Some hon. Members:: Agreed.


Lionel Chevrier: I had reached the last point I intended to make, and I am grateful to the Prime Minister and hon. members of the committee for allowing me to continue. When I was interrupted I was saying that I thought this commission was being started off with one foot carrying a ball and chain, because unless I interpret this statement wrongly it indicates that they cannot consider the Crowsnest pass rates because these rates are part of a bargain that was made between the railways and the government on the one hand and the settlers in the west on the other. I doubt if that is correct from an historical standpoint, but I have not risen for that purpose. So far as the government is concerned, the declaration that this contract would not be broken seems to be tantamount to excluding the Crowsnest pass rates from the scope of the inquiry of the royal commission. If I am wrong I stand to be corrected.
The point I wish to make is this. When the Prime Minister made the announcement of the royal commission I said that when some years ago I occupied the position which my hon. friend the Minister of Transport now occupies, the situation in so far as the Crowsnest rates were concerned was quite clearly established by parliament and we had no intention of changing those rates in any way whatsoever. But the point I wish to make now is this. Why should it not be within the scope and purpose of the royal commission to inquire into whether those rates are compensatory? Surely there is nothing which would affect in any way the rights of people in western Canada if that were done. And if perchance it were found that the rates are not compensatory to the railways, then the royal commission might want to make a recommendation to parliament for the payment of a subsidy on behalf of the western farmer, who benefits from the movement of grain because of the Crowsnest rates, in the same manner

Freight Rates
and to the same extent that there has been a Maritime Freight Rates Act, as there has been a bridge subsidy, and as there has been assistance given from time to time to certain areas for the movement of commodities.


John George Diefenbaker: May I ask the hon. gentleman this question. He has quoted what I said and I stand on those words, but I would ask him what are his suggestions. How would the western farmer be compensated? He has studied this very carefully. The Turgeon commission dealt with this matter rather subjectively. The hon. member, having been a minister, and having given a great deal of study to this, possibly would suggest what he has in mind.


Lionel Chevrier: Before I answer the Prime Minister's question will be allow me to ask him one question. Am I correct in the assumption I have made that the royal commission on transportation is not to give consideration to the Crowsnest rates?


John George Diefenbaker: I have not challenged the hon. member's interpretation.


Lionel Chevrier: Then I take it I was correct in my assumption. That being so, it seems to me that I made it quite clear that if the commission were given the power to study this matter they might well make a recommendation that a subsidy should be paid which would give assistance to the railways in the amount required to compensate for the right which the western farmer enjoys in so far as those rates are concerned. If that were a recommendation of the royal commission and the government decided to implement it, I am sure that parliament would give it the consideration which is required in these matters and which it would deserve under all conditions.
Here it seems to me that a study of the railway transportation problem in Canada, an inquiry so important to railway transportation in Canada, is not complete unless there is a study of this problem because it is one of the most serious problems that exist today, as the Prime Minister knows. It comes up in the committee from time to time; it comes up in the house and it seems, in my opinion at least, that some consideration should have been given to it.
There is no question of eliminating an agreement or changing the agreement that was enacted by parliament away back in 1897. There is no intention on the part of those who sit on this side of the house to affect or change that agreement in any way whatsoever. That has been made quite clear on many occasions. But it is the railways who find themselves in a difficult position. It seems to me it would be just giving the members of 
this commission an additional term of reference, an additional scope of the reference, in order to consider what is of tremendous importance to the economy of western Canada.
Then, sir, there is no specific reference to the one and one-third rule which affects the province of Alberta so much, the one and one-third rule which has been lost as regards agreed charges. Then it seems to me the inquiry ought not to have been limited in its scope as it has been. It seems to me the government has narrowed the scope of the inquiry by the terms which have been set out.
Then there was the very important statement made by the Prime Minister and the Minister of Transport, that there is to be no increase in freight rates until the commission reports its findings. How long is the commission going to take? It seems to me that a most important task has been given to the members of the royal commission. If they are to do their jobs in the way parliament wants them to do them it may take more than a year. It took the Turgeon commission two and a half years. It is true this commission may do its work much faster. I am not saying that is not possible; but I am saying that future applications to the board of transport commissioners, future increases in freight rates, are tied down because of the statements which have been made. This is not an equitable way to deal with the commission which, it seems to me, should have all the time required to consider and report upon what is a most important problem.
Without trespassing unduly on the time of the committee I could go on with other matters, but I shall not do so. I will simply conclude by saying that the royal commission on transportation have a difficult and important task. Their duties are set out in the preamble to the order in council, which indicates that they are to inquire with reasonable dispatch into problems relating to railway transportation in Canada and the possibility of removing or alleviating inequities in the freight rate structure. With that statement no one can disagree. With the general and broad statement contained in the preamble to the order in council no one, I think, can find fault with it; but then, when it is broken down, it seems to me that there are specific problems having to do with transportation in Canada that should have been mentioned.
I mentioned four of them. On an earlier occasion I mentioned some of the matters which it seemed to me the railways were charged with, and consideration should be given to those matters. Whether the scope of this inquiry is broad enough to consider those I am not in a position to say, but I know that I would have felt a great deal happier, as

many hon. members in this house would have felt, if the terms had been spelled out in such a way that many other problems affecting railway transportation could have been considered in this inquiry.


Mr. Bell (Saint John-Alberl):: May 1 ask
the hon. member a question. With reference to the first part of his question, when he said he did not think this legislation would greatly benefit the long haul provinces, I would ask him how he reconciles this statement with the fact that counsel for the provinces in every case, I believe, in committee ultimately spoke in favour of the legislation? Then, the Canadian truckers' association opposed this legislation because they felt it would mean so much for the long haul provinces it would perpetuate the no-competition situation. Third, my question is, how does the hon. member reconcile this with his own initial statement that he felt it would not assist the central provinces?


Lionel Chevrier: My hon. friend has not listened to what I said because if he had he would not have prefaced his question by saying I had made that statement. I did not make that statement. What I said was this: This was a measure brought into this house to assist the long haul provinces in a general way, and after the evidence we heard, it tends to assist the central provinces, because if one looks at the evidence which was given before the committee, there are certain regions in Canada which are neither in the east nor the west which are going to benefit far more than the region from which my hon. friend comes, namely the maritime provinces.


Douglas Mason Fisher: This group will support the legislation. We followed it with interest when it was before the committee. I, followed the remarks of the speaker from the official opposition. It seemed to me he beat the legislation a little harder than it deserved to be beaten on some points. I must say you can never tell how people interpret things when they read them. I must say I came to the same conclusion about the Crowsnest rates when I listened to the Prime Minister, but after looking at the terms of reference, and after appraising the members of the commission, it looks as though this commission will have the Crowsnest rates very much in mind. It is a commission oriented to the west. If one looks at the terms of reference, one finds paragraph (b) reads:
(b) the obligations and limitations imposed upon the railways by law for reasons of public policy, and what can and should be done to ensure a more equitable distribution of any burden which may be found to result therefrom;
I could not think of anything to which this would refer except the Crowsnest rates
66968-9-238i
Freight Rates
and the maritime rates, unless the commission is going to get into the minor things such as commuter problems, passenger service, and that sort of thing.
Furthermore, it seems to me that the rider the Prime Minister put in with regard to the Crowsnest pass rates merely states that, as a principle, the Crowsnest rates from the west will be safe from any increase. It does not say, and I cannot get an indication from this, that the commission will not ascertain whether or not the Crowsnest rates are compensatory, and work out some sort of arrangement whereby the railways might get paid for the service rendered.
I speak with a certain amount of feeling on this because I have before me an editorial from the Regina Leader-Post of May 13 entitled "C.C.F. tips its hand", and it goes on to indicate that I, as spokesman for the C.C.F. on this particular matter, indicated a position supporting labour and diametrically opposed to the grain producers' interest in the prairies. It reads:
The farmers at least have one reason to be thankful to Mr. Fisher. The information his persistent questioning elicited from Mr. Gordon is a warning to them that they and their organizations should get busy to prepare their case for retention of the statutory grain rates before the proposed transportation inquiry. It is evident that if such an investigation is launched the most determined effort yet will be aimed at the destruction of the Crowsnest pass rates.
In this regard, I should like to put on the record something from the minutes of proceedings and evidence of the sessional committee on railways, air lines and shipping, page 186, which indicates my particular point of view. The hon. member for Jasper-Edson had just said, in connection with the Crowsnest pass rates:
Here is the ideal situation where the railway could find out whether the rate was compensatory or not, and I want to bring out again, perhaps as a matter of privilege, that a newspaper last night referred to the Crowsnest rates. I do not think the Canadian National should say the Crowsnest rates are compensatory until they are able to bring that forward.


Lionel Chevrier: Was that not done before the Turgeon commission?


Mr. Horner (Jasper-Edson):: No, the Turgeon commission stated they have not been able to say.
Then this is the point which I think answers the editorial and expresses our policy:


Douglas Mason Fisher: I agree with Mr. Horner on this that, until we have something definite laid on the line, all Mr. Crump's statements and all the other statements made by railroaders should not be made until we know something more definitive on the point. We have not, so far.
The point that bothers me, as someone interested in seeing grain go through the lakehead and also in seeing railway labour

Freight Rates
happy and the railways kept as going concerns, is this: There has been a two-sided argument in so far as the Crowsnest pass rates and other freight subsidies are concerned, and they pit farmers in the west against railway labour. What has happened has been that the two groups have been set against each other. Management and other people argue that subsidization is outrageous, and subsidies such as we are putting through here are nothing but a sop to labour and on the other hand subsidies like the Crowsnest pass rates are nothing but a handout to the western farmers. I do not believe that is so; it is a completely wrong attitude.
I do not believe the prairie farmer can afford any increase in the charges on his wheat. I feel that if anything we should be thinking, not of an increase in the prairie rates but a decrease. The point in so far as railway labour is concerned is this: Every time they want an increase the western farmers get excited, with newspaper encouragement, and say that these are the people who are putting pressure upon the Crowsnest pass rates. I suggest that if the Canadian Pacific railway is the key to western grain rates, not the Canadian National Railways, and the Canadian Pacific must earn 4 per cent on their stock, then let us establish that through this commission. Then we could say that we will see this free enterprise organization is subsidized to the extent of the non-compensatory margin, but we are going to keep these grain rates as they are or, if necessary, reduce them. We are going to try to get away from the situation where every time the railway unions ask for more money hands are thrown up and people say it is coming directly out of the federal taxpayer's pocket. This is one of the reasons I hope this commission will go into the facts relating to the Crowsnest pass agreement. If one looks at the terms of reference, I believe the commission will be in a position to do so.
In other words, let us find out how much the Canadian Pacific has made out of Consolidated Mining and Smelting over the years, and out of those properties given to them decades ago, from which they get gas and oil revenues. One of the things that is really serious in this matter is that, according to Mr. Gordon when he was questioned before the committee, it may be that we will be unable to have any way of determining historically whether or not the rates have been compensatory. A decision may have to be made by this commission on the situation this year or next year if we cannot get at the value of the things the Canadian

Pacific did get from the Crowsnest pass agreement. I suggest that what they did get was very substantial.
It seems to me that the real criticisms that can be made about this legislation are ones that have to do with the present mood and purposes of this government. It is in a very dull mood and the performance is not one that gives any feeling of energetic leadership. The issue came up last November when the Minister of Public Works made his statement. Here it is May before we get the royal commission announced, and we certainly seem to have been dawdling through this freight rate problem. I do not mean dawdling in the house, but I mean in working out a system by means of which the $20 million is to be circulated throughout the whole freight rate structure.
The very figure of $20 million intrigues me. Why was it struck? It only reflects 7 per cent of the 17 per cent increase, but it seems to me that $20 million was the best bargain the Minister of Trade and Commerce could get out of the Minister of Finance. It seems to me that $20 million is probably the best bargain the Minister of Trade and Commerce could get out of the Minister of Finance. It seems to me a pity that he could not have obtained a little better bargain in terms for the freight shippers. The figure of $20 million was really never justified to us in terms that were satisfactory in any way. It was just a figure supposedly pulled out of a cabinet meeting hat. I only wish we could have had more elaboration as to the justice or the merit of the $20 million figure.
As to the royal commission and where it is going to go, it is certainly apparent that its report is not going to be ready in time and that we are going to have to do something about putting something more through this complicated process. The year end will reach us soon. We are not going to get any kind of royal commission report by then. We were going to get a rush report on social security pension payments but look what happened. We were going to get a rush report by the Borden energy commission but look what happened.


Howard Charles Green: You received one.


Douglas Mason Fisher: Yes; we received one finally but it was not within the period stated by the government. Royal commissions are notoriously much longer in making their reports than is indicated by the most optimistic or most pessimistic forecasts of the gentlemen who set them up. We have no real indication that this commission is going to enable us to solve this problem in time. Of course, the other irony is that if and when a royal commission does bring down a report, how

long does it take this government to act upon it? It seems to me that we are not getting the dynamic, speedy leadership some people hoped for.
One of the other complaints that was made by the hon. member for Laurier was that the terms of reference were not being broad enough. After the evidence that was put before the freight rates committee by the Canadian truckers' association and the fact that every one of the provincial groups that came there felt that it was necessary to rebut that testimony or say something about it, we should surely have in the terms of reference something that would bring the trucking interests into this whole picture. This is one time when, in the interpretation of the terms of reference, I have perhaps missed something, but I cannot possibly see how under these terms of reference, this royal commission can study the trucking industry except as very much a side issue. To me that was extremely disappointing.


Paul Joseph James Martin: We ought to know exactly about that matter.


Douglas Mason Fisher: There is no use asking the Minister of Transport because we tried in committee to ask the Minister of Transport questions about spelling things out and he was always ready to take refuge in the urbanity of that extremely pleasant face of his and the smile.


John Whitney Pickersgill: But he cannot spell.


Paul Joseph James Martin: How can you speak of a face being urbane?


Douglas Mason Fisher: There are many things we can say about that face, but I think we will agree that the face is much more attractive than are the announcements that we get from him.
The initial views that I expressed on this whole idea of the $20 million subsidy brought before the house were that there was really no need for a royal commission and that there was no need for this complicated apparatus at all. In substance what the hon. member for Laurier was saying about equalization was the fact that the board of transport commissioners has done a fair job of carrying it out. Their last statement last December on the equalization of freight rates pointed out that there was only one province left that was really clamoring for more equalization, namely the province of Alberta. To me that fact suggests that with the research done and the information that the board of transport commissioners has gathered, with the great number of hearings that the transport commission has held lately, there was enough information available for an energetic, go-getting government to have done something right off the
Freight Rates
bat on their own initiative and not by this means of a royal commission.
The fundamental question in transportation in this country still boils down to this. It has been said before and it needs to be said again. We must make up our minds, in so far as the railroad side of it is concerned, whether we are going to continue to hobble along between the principle of socialism or free enterprise or, if we want to put it another way, whether we are going to recognize outright that transportation is, in the public domain, a public utility and that therefore the ordinary business costs and business efficiency that would apply to an enterprise in the private sector do not apply here. I can certainly agree with the feelings of Mr. Crump as expressed in his annual reports over the last few years with regard to the frustration of a private corporation trying to do business under the limitations under which the C.P.R. operate. To me and to the people in this group the solution is for us to move logically to the position that this is a field of public enterprise, not of private enterprise, and that until we move in that way we are going to have to continue to have this bastard arrangement of private enterprise and public enterprise, with the advocates of each condemning the other, and no real knowledge about where we are going.


Howard Charles Green: May I ask the hon. member a question?


Douglas Mason Fisher: Yes.


Howard Charles Green: Does he mean that there should be an amalgamation of the railways?


Douglas Mason Fisher: No, sir. I was asked, Mr. Chairman, whether I believed there should be amalgamation of the railways. No; I certainly do not believe that. But I believe that some sort of arrangement should be worked out by means of which the C.P.R. either gets out from the burden of working under these regulations or else the fact that the railway has to make so much in terms of profits or dividends, as the case may be, is no longer an issue in any way, and that this government and the provincial governments must recognize their responsibility there. No matter what steps were taken from the point of view of making the C.P.R. a public enterprise, I think it would be most inopportune to merge the lines together because I think that, even between public corporations, the competitive idea is not an unsound one.
The final point that I think we should consider in so far as this $20 million increase is concerned is what the next subsidy is going to be, how big is it going to be. I hope that the Minister of Public Works, who just got

Freight Rates
into this matter in a public way last November, and the Minister of Trade and Commerce, who was supposed to have led the fight in the cabinet, and the Minister of Transport will be considering whether it is to be $20 million or whether it is going to be, as we suggest, a larger figure to take care of these freight rate problems and the inordinate burden they are placing upon so many parts of Canada.


Hugh Macarthur Horner: If I may, Mr. Chairman, I should like to make a few brief remarks with regard to this bill. First of all, may I say that we in Alberta are extremely grateful to the government for introducing this bill and bringing it before parliament. Our transportation problem in Alberta, of course, is multiple. We are in a particular geographical area in which freight rates are extremely important to our economy.
In his remarks with regard to the bill the hon. member for Laurier tried to put on the record some of the pertinent facts that came to light out of the committee meeting on this bill. I think the pertinent fact that came out of that committee meeting was that all of the provincial government representatives there who had appealed the 17 per cent increase were wholeheartedly in support of this bill and that the only complaint they had-and the same complaint was just heard from the hon. member for Port Arthur-was the fact that there was not enough money. That, of course, is a chronic complaint for everyone, namely that there is not enough money to go around. However again we commend the government for this bill. It is an excellent one. It is one which will go a long way to relieve some of the inequities in the present freight rate structure.
If I may I should also like to make a few remarks with regard to the royal commission on transportation. We again commend the government for setting up this commission. We are particularly happy with the western representatives on this commission. I disagree entirely with the hon. member for Laurier when he says that in the terms of reference there is nothing by means of which they can look into the inequities of the horizontal rate increases. Does he think that men like Howard Mann, M. A. MacPherson and Arnold Platt will not look into the inequities of the horizontal rate Increase?


Lionel Chevrier: Mr. Chairman, on a question of privilege, my hon. friend apparently did not listen to what I was saying. I did not say that there was nothing in the terms of reference which authorized the commission to deal with the impact of horizontal freight

rates. What I said was there was no specific reference, and that is not the same thing.


Hugh Macarthur Horner: 
William Moore Benidickson: Freight Rates
say that I cut my teeth on the belief that these were inviolable and I still have that opinion. That decision, when it was taken, was a parliamentary decision and if it is changed that change must be brought about by a parliamentary decision. Although I was not a member of the committee, I was impressed on reading the extensive minutes of the House of Commons committee which examined the president of the Canadian National Railways on these matters. I do not think we have ever had an admission before from a senior railway executive in such plain words that a mere increase in freight rates, in percentage terms, would fall so far short of a comparable increase translated into terms of ultimate revenue. I think the president said that the last increase-was it 17 per cent?-had resulted, according to the calculations of his cost analysis department, in an actual over-all revenue increase of perhaps 8 or 9 per cent. I think this is very important.
With respect to this subsidy of $20 million, I may say that I support it. I think it is a right thing in the circumstances. But I find some uncertainty in deciding who is really going to benefit from this subsidy. Is it to be the railway companies, the shipper or others. Even the committee, according to its minutes, was somewhat vague about this.


George Harris Hees: May I answer that question
right now? I have stated before that it is the consumer who will benefit from this subsidy, the consumer who pays the shipping charges.


William Moore Benidickson: The whole economy benefits if the tax base is reasonably low. I know the Minister of Transport would agree with me in that respect because of the spending turn-over factor. I was pleased that the president of the C.N. railroad indicated in a general way-and there was some doubt about how much detail should be entered upon in the course of a parliamentary examination-that a staff training program has for some time been operating to enable persons displaced by automation or by changes in the system to enjoy first preference for new employment elsewhere. I shall have more to say about this when we deal with the C.N.R. guarantee and finance bill.
I think all Canadians must be impressed by the fact that changes do take place in the way these industries are organized and develop. On the other hand, I read recently in a United States publication that the overall contribution to cost on the part of so-called management in the United States has increased not very impressively while

the wage bill of employees on the railroads has gone down; at least, the number employed has gone down.
I think we are discussing a very important question, here. I know the committee gave it the most careful examination, but I am still not clear as to the allocation of the benefits which are to flow from this admittedly temporary measure, particularly with regard to the advantages which are to flow to the various elements in the railroad economy. I hope that when the minister replies he will give us some further information on this point, because this solution-subsidies and so forth-can go on indefinitely.
I am like the hon. member for Port Arthur, in so far as the C.N.R. is concerned. It is perhaps the biggest employer in the riding which I have the honour to represent. I never pulled my punches when I was a member of the administration with respect to any criticism of C.N.R. management, nor have I done so since in personal correspondence on behalf of those who are affected by changes in the railroad organization. I must say, however, that I thought the president gave a very good outline of the retraining program that is necessary in a thing of this kind to achieve economy and I shall do my best to explain that to those who might be affected.
I am not satisfied that the railway has given adequate notice of technological changes to its employees. I hope the minister will urge the railway to do so in the future. Even though, as the president said, some things were in the experimental stage and therefore could not be widely advertised better notice should have been given to the employees affected. I believe that a frank discussion such as we are having here today is a very helpful thing for the railway and for the economy. I hope the minister will explain whether the dollar sign looms as a larger consideration than the employees with respect to the railroad in these difficult days.


Mr. Granger:: Mr. Chairman, coming from the most easterly province in Canada and an island province I am naturally keenly interested in anything that has to do with freight rates. The cost of freight is vital to the economy of my constituency as indeed it is to the entire province of Newfoundland. Practically all of our consumer goods have to be imported including clothing, food, much of our building material and indeed most of the necessities of life. These are brought in by rail and ship. The products of our mines and our fisheries as well as our pulp and paper products have to be exported. The cost of moving goods in and out can mean the difference between solvency and bankruptcy

for people in this area. While this bill will give some help it will not give sufficient assistance considering the extent of the disability of the Atlantic provinces and particularly of Newfoundland.
The position of Newfoundland was very well stated by Mr. Edgar Miller, a prominent Newfoundland businessman, writing in the Daily News when he said:
Once more Newfoundland will bear far more than its fair share of this new freight increase. The 17 per cent has been applied as a percentage to existing tolls. We are at the end of the line and we pay the highest rates, so it is inevitable that we must contribute the greatest part to this increased freight cost.
-we are the people in Canada who are least able to afford to carry the burden of the railway's additional cost of operations. Here in Newfoundland we literally have no competitive rates or agreed charges.
-each year our contribution to the railway's increased cost for operation has been larger than each preceding year. A recent study disclosed that between 70 per cent and 80 per cent of the traffic in the Atlantic provinces-possibly higher in Newfoundland-moves on non-competitive rates and so all of this will be increased by 17 per cent.
While the Maritime Freight Rates Act does provide some benefits it is of the least importance to us. Practically all of our exports move by water and these are not eligible for the subventions. Except for a few competitive rates on traffic originating east of Montreal during the summer months, we have no competitive rates. Being at the end of the line our rates are the highest. Consequently all of our in-bound traffic, representing the necessities of life, will be subjected to the full impact of this latest freight rate increase. I suggest this province, its industries and its people are less able to supDort the railway than the rest of Canada.
May I suggest that transportation is a national family concern, yet under the present system those provinces that are not as well able to bear increased costs are required to shoulder them. May I point out that what I shall refer to as the centre of Canada sells to Newfoundland about $250 million worth of goods a year. As a matter of fact, the province of Newfoundland is the third greatest overseas market of Canada and I refer to it in those terms because Newfoundland is an island. Newfoundland buys more from the rest of Canada than does any market other than the United States and the United Kingdom.
With all due deference I should also like to point out that Canada sends millions of dollars worth of goods to Ghana and other countries which she justifiably hopes will develop and become customers. Is it not just as important or possibly more important to look after the interests of one who is already a good customer? All we are asking for is equality of opportunity. I should like to pass on a suggestion which has been made
Freight Rates
that in considering the position of the mari-times and Newfoundland consideration might be given to a roll back of rates to 1948 plus an increase based on a constant dollar.
In closing I should like to make a purely personal observation. From my limited knowledge of freight rates it seems they are getting more complicated every year. As a matter of fact there is some excuse for thinking that the best minds in Canada are spending their time making them more intricate as time goes on. This leads one to suspect that, given time, no doubt there will be one freight rate applicable to rice krispies and another applicable to sugarpops. I should like to suggest that some consideration be given to the possibility, remote though it may be, of applying the principle of the postage stamp to freight rates; that is, simplify the structure so that it would cost the same amount to move a pound of freight anywhere in Canada regardless of the distance involved.


Hazen Robert Argue: Mr. Chairman, this bill which is designed to roll back the 17 per cent increase in freight rates will undo at least part of the damage that was done by allowing the full increase. This measure does not, however, restore the freight rate structure in this country to the point at which it was when this government took office. Instead of fulfilling its well-known election commitment under which it promised to prevent further horizontal increases in freight rates this government has allowed them to be increased. Even after this measure has become law the freight users of Canada will be paying higher freight rates than when the Conservative administration took office.
We in the C.C.F. have said that all the information as far as freight rates are concerned which the government needs for action is already available. We have had many royal commissions in the past and many studies have been made by the board of transport commissioners. This government that has prided itself on being a government of action should not require the stalling procedure of bringing forward still another royal commission before it takes action.
This royal commission will take a good deal of time and will cost the country a substantial amount of money. Even though the recommendations that are made we would hope will result in an improved freight rate structure in Canada, nevertheless we believe that the required information leading to satisfactory recommendations is already at hand.
The announcement of the terms of the royal commission was made in this house on May 13. The scope of the inquiry is confined in general to freight rates and in

Freight Rates
particular to the operation of the railways and various financial aspects of their operations related to freight rates. We think that when a further royal commission was being contemplated its terms of reference should have included a study of overall transportation policy, a consideration of truck and air lines competition and the whole transportation field in Canada.


Mr. Morris:: Will the hon. member permit a question before he advances along this line of reasoning? When he speaks of the rollback having undone some of the damage caused by the increase, will he tell us what is his position on the increase?


Hazen Robert Argue: I believe my hon. friend asked me this question when I made my speech on this some time ago. At that time I said- and if necessary I will repeat it now-that I would take the position that was taken so ably and so consistently by the present Minister of Public Works when he was in the opposition, namely that there should be a halt to the horizontal increases in freight rates. That is the position I take, a consistent position that I have taken over the years, and I suggest that if the government itself has wished to be consistent it should have prevented further horizontal increases in freight rates. That is my answer to my hon. friend's question.


Edmund Leverett Morris: I thank you for that. These are not antagonistic questions. The 17 per cent increase was based upon labour wage demands.


Hazen Robert Argue: This is an assertion from my hon. friend which is an incorrect one. If it is a correct one, it condemns the board of transport commissioners. It means that the board does not in fact judge applications based on their merits. Are they in a position that they grant an automatic increase in freight rates every time there is an increase in wages?


William Moore Benidickson: On the C.P.R. yardstick.


Hazen Robert Argue: On the C.P.R. yardstick, a very wealthy yardstick, a very inappropriate yardstick, in my opinion. But they would be following the same policy consistently if, when there is an increase in interest charges as a result of the policy of this government, when there is an increase of financial charges, they automatically gave the railways an increase in freight rates; or, if the costs of dieselization are increased would my hon. friend say that this should mean an automatic increase in freight rates by the board of transport commissioners? Of course, that is an absolutely untenable position to take; and we believe that the board of transport

commissioners place themselves in a completely untenable, a very awkward and embarrassing position when they say that a given wage increase automatically results in their giving a similar increase in freight rates.
There has been a good deal of talk this afternoon about the Crowsnest rates. I take it that all of the political parties in this house are opposed to any tampering with the Crowsnest rates, although I think this is a rather generous interpretation of some of the remarks of the hon. member for Laurier who seemed most interested and desirous that this royal commission should have power to see whether rates under the Crowsnest pass agreement are compensatory. Then, he went on to use the phrase that these are rates from which the western farmer benefits. I know the western farmer benefits. I think it is very unfair to leave that remark, without any qualification, that this aspect of national policy was one that was directed to benefit solely the people of the prairie provinces who are engaged in the production of grain.


Lionel Chevrier: On a question of privilege, I think the hon. member would be the last to misquote anything I said. He did start off by saying that all the parties in this house favoured the rates adopted in 1897, with perhaps the exception of the member for Laurier.


Hazen Robert Argue: No, I did not say that.


Lionel Chevrier: That was my understanding of what he said. I want to make it quite clear here that anything I said does not derogate from the fact that in 1897 there was an agreement to which parliament was committed and which this party stands to support.


Hazen Robert Argue: No. I did not suggest-and I think the record will show this-that the hon. member was opposed to the Crowsnest rates, but by the remarks he used there was a very definite inference to be drawn that those rates are for the benefit of the western farmers. He left it at that. I do not think that is a fair interpretation of the Crowsnest rates at all. I think they were part and parcel of a national policy, and the people who brought forward and completed that national policy at that time decided that those rates would be of advantage in maintaining an important grain industry on the prairies, which in turn would support the economy of three provinces in that area, and that this in turn would do much toward the prosperity of the Canadian nation as a whole. I think it is impossible to say that the Crowsnest rates are in fact directed solely to the benefit of the prairie producers, and that is not exactly the way the hon. member for Laurier put it.

It has been part of a national policy that is necessary to the national welfare of this country. I will go even farther and say it is essential if there is to be national unity in Canada. If the Crowsnest rates are interfered with it would be the greatest blow to national unity administered by a government in this generation.


John Whitney Pickersgill: Will the hon. member permit a question? Does the hon. member not recall that those rates were suspended by a Tory government and restored by a Liberal government in the 1920's?


Hazen Robert Argue: Which underlines my statement about national unity, and if my hon. friend will check the date he will find that it was immediately after the first war. My statement still stands. The people of Canada and the governments of the day learned that this was an agreement that could not be tampered with.
Why should people say that this is an agreement which has resulted in benefit to the prairies only and leave it at that? It would be just as fair to say that because of the huge land grants, some 22 million acres, because of the cash subsidies, some $35 million, because of other concessions the Crowsnest rates that the Crowsnest agreement was the biggest handout ever given by any government to a private corporation and only benefited the C.P.R. This was an agreement entered into long ago, and the people of the prairie provinces who produce grain, and I believe all of the people of Canada have benefited from that agreement, but certainly the C.P.R. has benefited. Even in their most recent annual report they show that their net income from petroleum rents, royalties, reservation fees and land rents constitute the sum of $6,828,123. This is a very substantial continuing benefit from the agreements which were entered into when the railway was extended to western Canada and these grain rates established.
I have looked over the personnel that have been appointed to this royal commission. Of course, I am not acquainted with all of them, but there are at least two members of the commission with whom I am acquainted. I was pleased to see that these men will be on the royal commission. I have reference to Mr. Arnold Platt from Alberta, a former president of the Alberta farmers union, and a man who has contributed greatly to Canadian agriculture not only through farm organizations but also in the field of plant breeding. I think his name is a good one to have on the royal commission. The second person with whom I am quite well acquainted is Mr. M. A. MacPherson, senior, Q. C., of Regina, a very prominent and nationally known supporter of the Conservative party.
Freight Rates
I do not say that in any critical way because M. A. MacPherson of Regina, although a very prominent Conservative in Saskatchewan, has acted as counsel for the Saskatchewan C.C.F. government on freight rate inquiries for many years. I think he has brought to these freight rate inquiries a mind which is exceeded by no one's who took part in any of these discussions. I think Mr. M. A. MacPherson is particularly well qualified, and I say this without having any reference to political beliefs, to take part in this royal commission.
I think the people of Saskatchewan and the people of western Canada generally will be pleased that he has been appointed.


Paul Joseph James Martin: In view of Mr. MacPhersons' appointment to the commission, who will the province of Saskatchewan get to represent them before the royal commission?


Hazen Robert Argue: That is a very interesting question from the hon. member for Essex East. I think if we can accept the statement made by the Minister of Transport, there will not be any further freight increases-


Paul Joseph James Martin: No, I was thinking of counsel to go before the commission.


Hazen Robert Argue: I do not consider myself as well qualified to make a statement-


Paul Joseph James Martin: There are some good Liberal lawyers in Saskatchewan.


Hazen Robert Argue: We have a few, but they are a vanishing race, both in Saskatchewan and in Manitoba.


Paul Joseph James Martin: You ought to look at the Gallup poll on Saturday.


Hazen Robert Argue: I checked that, too, and I noticed that the Liberal party is still shrinking. I am sure there are any number of good people in Saskatchewan to represent Saskatchewan in any submission that is made before the royal commission. I do not know whether or not this would be an appropriate person, but Mr. M. A. MacPherson, Jr., has substituted for his father on some occasions on freight rate inquiries before the board of transport commissioners. Since they are members of the same legal firm, and I know very little about the ethics of the legal profession, I cannot be certain whether or not it would be proper to have two members from the same firm operating in two different capacities with relation to the commission.
We have this royal commission which has been set up. It has, I think, very substantial powers to inquire into the effect of freight rates. I believe its terms of reference, so far as freight rates themselves are concerned, are very comprehensive. For example, paragraph (d) says that the commission shall

Freight Rates
consider and report upon whether, and to what extent, the Railway Act should specify what assets and earnings or railway companies in businesses and investments other than railways should be taken into account in establishing freight rates. I think that is one of the most important terms of reference because, in the past, we have had the Canadian Pacific used as the yardstick. The board of transport commissioners, in determining the level of freight rates, has allowed the Canadian Pacific, in its accounting statements, to set aside those enterprises from which it has made very substantial profits and to consider its railway operations only. I do not believe such a division is fair or just. I believe that the Canadian Pacific's total position as a company should be considered whenever it asks for a freight rate increase.
I make that statement precisely because of these tremendous land grants and cash grants over the years which have been used by the Canadian Pacific to extend its operations into the field of air lines, hotel services, into the smelting business, into the petroleum business, and many other activities which have produced revenue for the Canadian Pacific.
I have been asked a question earlier, Mr. Chairman, as to my attitude about the 17 per cent increase in freight rates. I have said that it was my opinion the government should not have allowed this increase to take place. The inference is left that every time the railway workers get an increase in wages this automatically must result in an increase in freight rates. This is a premise I do not accept. I think the railway companies have shown over recent years a very great ability to reduce the number of workers necessary to operate the railways. One has only to refer to the size of freight trains to illustrate the very substantial reduction in labour as compared with freight trains in the early years. Freight trains used to have 30 or 40 box cars, but today's freight trains are often in excess of 100 railway cars and are operated by the same number of persons.
The program of dieselization has brought about very large savings to the railway companies. Earlier I mentioned Mr. MacPherson. I might say that in his statement to the board of transport commissioners on October 31, 1957 he pointed out that the evidence given by the Canadian Pacific vice-president, Mr. Emerson, shows that, comparing 1947 with 1957, there was a saving from dieselization alone of $45 million on an expenditure of $138 million. Mr. MacPherson points out that at that time the railways had been dieselized only to the extent of 48 per cent, 72 per cent passenger and 68 per cent yard. The railways
[Mr. Argued
in Canada must have made further, substantial savings in the intervening time as a result of dieselization.
The modernization of railways would dispense with much of the labour that has been used in the past. I understand that when the president of the Canadian National, Donald Gordon, was before a committee of this house he said in reply to a question that he could foresee the time when freight trains in this country would be operating without any people on the trains, completely automatic freight trains. If we had completely automatic freight trains in this country, do hon. members think that, without persons operating on freight trains, the railways would decide they needed no further increases in freight rates because they would not then be able to put the blame on increases in wages?
Of course, so long as cost increases continue, and so long as the railways are desirous of earning a substantial profit, we will be faced with further demands for increases in freight rates. We do not feel that this royal commission has been necessary, but we do admit that the personnel of the commission gives us some hope that the recommendations may be improved, and that if they are, and if the government acts, then the continued horizontal increases in freight rates may be halted. We may then have a more equitable freight rate system in this country, and our railways may provide again the national service that is expected from them. Then, too, the workers of this industry would not be discriminated against but would have an opportunity to improve their standard of living as Canadians in other occupations are able to do from time to time.


Mr. Carter:: This bill which is entitled "an act to make provision for the reduction of certain class and commodity rates on freight traffic" is of vital importance to my province; and to the extent that it will achieve this purpose, we welcome it and support it.
We in Newfoundland have the highest cost of living in all of Canada, and the most important factor in that high cost of living is freight rates. We know that this legislation is consequent upon an increase of 17 per cent in freight rates. It has been estimated that this subsidy will, in its effect, reduce that increase to 10 per cent. I think we must realize that these figures are only theoretical. They would be true if the same factors applied all across Canada, but that is not the case. The figure of 17 per cent is artificially high because in the central provinces other factors such as truck competition and water competition make it impossible to benefit from that increase to any extent. The burden of the extra revenue must

therefore come from the Atlantic provinces and from the western provinces. It is, of course, for that reason that the two central provinces do not even bother to appear before the board of transport commissioners and oppose these freight rate increases because they know an increase is not going to affect them materially in any way at all.
We had hoped that the distribution of this subsidy of $20 million would be carried out in such a way as to offset, as much as possible, these inequalities in the freight rates and in the freight structure owing to the factors which obtain in the central provinces and which are not operative in the eastern and western provinces.
If my understanding of clause 3 is correct, this subsidy will apply only to commodities where the full 17 per cent goes into effect. If that is not the case, I hope the minister will correct me when he replies. I think perhaps that is an advantage to the western provinces and to the Atlantic provinces because certainly they are going to have the greatest percentage of traffic upon which the full 17 per cent increase will be applied. But the figures which my friend the hon. member for Laurier put on the record just now, if they are even approximately correct, would suggest that the inequality is still going to exist to a remarkable degree. The central region is going to get 26.5 per cent of the $20 million or $5,300,000 while the maritime region will get 16.8 per cent or a total of $3,316,000.
The point I want to make is this. For traffic in the central provinces where the full 17 per cent increase is applied, that full subsidy goes into effect and will reduce it down to 10 per cent, which figure perhaps would be much lower than would otherwise be the case if just the normal competitive factors were allowed to operate. I am not going to complain about that fact. I think it should put the railway in a much better competitive position vis-a-vis the trucking industry and water transportation and should perhaps result in increased traffic and increased revenue for the railways so that a greater part of that $5 million which the central region is going to get may be recovered from them. If that is the case, the total subsidy would be reduced only to about, say, $15 million.
The maritimes, of course, are going to get an extremely small share of this subsidy and Newfoundland will get the least of all. As the hon. member for Grand Falls-White Bay-Labrador pointed out just now, the products of our industries are shipped direct from Newfoundland to foreign markets. We are in a much different position from that of the other maritime provinces. Mainland Canada
Freight Rates
buys very little from us. As to the paper that is shipped direct from Corner Brook or from Botwood to the British or the United States markets, I cannot see how it is going to get benefit as a result of this subsidy. The fish products that are shipped direct from the various cold storage plants are not going to benefit by it. This subsidy will not benefit our industries at all. Hence the benefit we get out of this subsidy is going to be derived mainly from the things that we buy from the mainland. Our total traffic in that respect is going to be in smaller proportion than that of the other maritime provinces.
I was greatly interested in what the minister said about this subsidy being passed on to the consumer. I know that the trouble with subsidies is that they seldom benefit the people we really want to help. I must confess that I find it extremely difficult to believe that the consumer in Newfoundland will benefit very much or even at all from this subsidy. If the government increases a tax, we know that immediately the prices go up in much greater proportion than does the tax itself. But when taxes are reduced, it is seldom that the full reduction is passed on to the consumer. The various people who handle the product always find some way of absorbing it. Suppose a merchant in some outport in Newfoundland, has on his shop shelves a shipment of tinned fruit which he now sells for 25 cents a tin, and gets in another shipment on which the freight charges are slightly less because of this subsidy. I cannot visualize that he is going to cut his price down from 25 cents to 23 cents. I find it difficult to visualize such a thing happening. I just wonder whether the minister had in mind any way by which the interests of the consumer could be safeguarded so that we could make sure that he would benefit from this subsidy.
Apart from that, I hope that we can find a better way of distributing subsidies of this kind than we have had up to date and even better than the one we have in this bill although I admit, by confining it to commodities which bear the full rate of the increase, it is perhaps fairer to the maritimes and the eastern provinces than would be the case if it were just a straight reduction.
That is all I have to say, Mr. Chairman, but this point of safeguarding the interests of the consumer is very much in my mind and I would like the minister, when he replies, to say if he has any ideas of enforcing my suggestion.


George Harris Hees: Mr. Chairman, if I might be permitted to answer that question, I would like to say that there is no way that I know of of forcing the shipper to pass along the freight rate reduction to the consumer. Having made

Freight Rates
a number of trips to the hon. member's province of Newfoundland and got to know the people of Newfoundland very well, I am so convinced of the honesty of the people of Newfoundland that I feel confident the dealers in Newfoundland will pass on the saving to the consumers.


Chesley William Carter: Mr. Chairman, I think the
minister has misunderstood the point which I made, because you cannot pass along any subsidy unless it is big enough to be passed along. The effect of this subsidy on the traffic going into Newfoundland will be so negligible that I do not think, however honest a person is, he would be able to pass it on anyway.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Charles Edward Rea: Shall clause 3 carry?
On clause 3-Revision of rates.


Lionel Chevrier: Mr. Chairman, on clause 3 I would like to move an amendment to subsection 1 which reads as follows:
Provided the reduction thereby effected shall lot be less than 7 per cent.


Howard Charles Green: Mr. Chairman, might I be permitted to submit to you that this amendment is out of order, because it clearly could provide for an increase in the amount of money which would have to be paid out. That means that there would have to be a resolution before the matter could be considered by the house. Therefore I submit the amendment is out of order.


Lionel Chevrier: Mr. Chairman, in answer to that point may I say that my understanding of the evidence given to the committee was that 7 per cent would not do that. My reason for moving the amendment was that the minister had stated on an earlier occasion that the effect of the subsidy would be to decrease the freight rates by 7 per cent, so my purpose in moving the amendment was that not only would the subsidy amount to $20 million but also, in effect, it would mean a reduction of 7 per cent in freight rates, as the minister has stated. Again in reply to the hon. house leader, I made a similar amendment in the committee and it was not declared out of order by the chairman at that time.


Hazen Robert Argue: Mr. Chairman, on the point of order raised by the Minister of Public Works, I would like to say that if something were being moved which would alter the $20 million it might be argued at that point it would require a new resolution, but surely since the bill following the resolution which has been introduced provides for a payment of up to $20 million it is quite in order for members of the committee to specify

what action the railways must take in order to qualify for this money. I am not too certain that the amendment itself adds very much to the kill or is in fact necessary, but I do not see how it can be argued that the amendment itself means an increase in the expenditures of the amount voted under this legislation. As I understood the amendment, what it means is that if the railways wished to have this money they must show a reduction in freight rates of not less than 7 per cent.


George Harris Hees: Mr. Chairman, I would like to make it very clear that I said in the committee, and I believe in the house, that it is estimated, and only estimated because it is not possible to make a flat statement, that the amount of reduction will be exactly 7 per cent, that it will be approximately 7 per cent. I think if the hon. member for Laurier will look up the original statement which I made when introducing the resolution he will see I specifically stated "approximately 7 per cent." In the committee on railways, canals and telegraph lines, where the bill went for examination and study, when Commissioner Knowles was questioned about the possibility of making a flat reduction of 7 per cent he pointed out that because it is not possible to estimate exactly how much the reduction will be, if exactly 7 per cent is specified it might easily mean that the $20 million could run out in perhaps ten months' time and, therefore, of course, if that were the case it would be necessary, as the Minister of Public Works has said, to increase the subsidy in order to carry it for the full twelve months.


Charles Edward Rea: As this amendment is attaching a condition to the amount of money involved here, and owing to the fact that it does not seem to be clear whether or not it would affect the total amount of money-there are two different viewpoints expressed-I will have to rule this amendment out of order.
Shall clause 3 carry?


Hazen Robert Argue: No, Mr. Chairman. Before the clause carries I wonder if I could ask the minister how soon after the passage of this bill it is expected that the reduction in freight rates can be made effective? Is the minister able to say whether it may be June 1, July 1 or how early will the benefits of the act come into effect?


George Harris Hees: Mr. Chairman, it is not possible to say exactly how soon. It will be put into effect, of course, just as soon as practicable. The board of transport commissioners will

start work immediately on it, and it will be put into operation as soon as possible.


Hazen Robert Argue: Mr. Chairman, I think the minister can do a little better than that for the committee. Can he say whether it will be in effect this calendar year? The board of transport commissioners operate under an act of parliament, and parliament is providing $20 million to take care, at least in a partial way, of a very important national problem, the question of horizontal increases in freight rates. I think the minister must have some idea of the length of time that the board of transport commissioners would expect to need in order to put this law into effect.
I imagine that since the legislation has already been before the committee, and since this is now a matter of public discussion-as a matter of fact, it was announced in the speech from the throne that the board of transport commissioners would be doing a good deal of work in this field on the understanding that parliament was likely to enact something along the lines of the present legislation-I think the house and the country are entitled to know when action on this bill is likely to be taken. Surely the minister can tell us whether it is to be a matter of a few months or whether it is to be a matter of years? Surely he does not expect it is going to be a matter of years. The minister does not do himself any credit by giving the House of Commons a wide smile. We should like a little information in addition to the smile.


William Moore Benidickson: Before the minister
answers, let me say, on that point, that I think the comments which have just been made are pertinent, because we have had evidence from the president of the C.N.R. that he has postponed certain ideas he might have had about going before the board of transport commissioners with his problems. And, of course, in my riding, in the riding of the hon. member for Port Arthur, and some others, the position of railway labour is very much related to this.


George Harris Hees: Certainly this will be in operation this year. It will certainly not be longer than, I would say, several weeks before it is in operation.


Lionel Chevrier: May I just pursue that
point a little further? As the hon. gentleman knows, this matter has been delayed for quite some time; longer than normally would be the case, because of the not unnatural desire of the Prime Minister and the government to give some consideration to the
Freight Rates
scope of the terms of reference. Having regard to the fact that clause 3 says: "Forthwith upon the coming into force of this act the board shall" do such and such, perhaps the minister will clear up the point. I take it that this measure will go through in a very few moments and will get third reading. Why not give this committee an undertaking that the act will be proclaimed just as soon as it has been approved by both houses?


George Harris Hees: It will begin operating as soon as it can be done. There is no desire on the part of the government	or	the	board oftransport commissioners or anybody else to hold this up. I cannot tell the hon. gentleman the exact number of	days it	will	take,but I can tell him-and	he	has	had	considerable experience in dealing with the board of transport commissioners- that they are a hard working, conscientious and efficient body and that as soon as this bill is passed they will immediately get to work and put it into operation as quickly as it is humanly possible to do so. No one	can	do	more
than that.


Lionel Chevrier: But the board of transport commissioners have nothing to do with the date on which this measure is proclaimed and becomes effective. It is the government which determines that, and then the board takes over. The bill itself says so.


George Harris Hees: If the hon. gentleman, along with others, helps us to get this passed, the act will be proclaimed as quickly as it is possible to do so.


Lionel Chevrier: You certainly cannot complain about assistance from this side of the house.


William Moore Benidickson: Do the terms of reference, which I have not got in front of me, include provision for an examination of automation and similar developments on the railways?


George Harris Hees: I have read through the terms of reference very carefully but I have seen no reference to automation, and I feel sure the hon. member has not either.


Chesley William Carter: I should like to ask the minister whether the railways themselves decide those commodities with respect to which they apply the full 17 per cent increase. Do the railways make the decision themselves, or must they consult the board of transport commissioners?


George Harris Hees: This measure will apply with respect to all commodities to which the 17 per cent increase applies at the time the bill becomes an act.

National Energy Board


Chesley William Carter: The railways were given permission to increase rates up to 17 per cent, but that did not necessarily mean that every commodity would bear this increase. Some might be raised 10 per cent, others 12 per cent and others 15 per cent. In the case of a commodity in central Canada where the railways have decided that a 12 per cent increase should be in effect, they could apply a 17 per cent increase to that commodity and take advantage of this subsidy and bring it down to 10 per cent.


An hon. Member:: No.


Chesley William Carter: In other words, they could juggle the commodities in order to compete with trucking services.


George Harris Hees: The hon. member is a member of the committee on railways, canals and telegraph lines. This whole matter was discussed at considerable length with Commissioner Knowles at the time and it was explained exactly how the whole thing would work. This would apply to any commodity which bears a 17 per cent increase at the time the bill becomes law.


[Stage Direction]
Clause agreed to.
Clauses 4 to 7 inclusive agreed to.
Title agreed to.
Bill reported, read the third time and passed.


Gordon Minto Churchill: that the house go into committee to consider the following resolution:
That It is expedient to introduce a measure to provide for the establishment and operation of a national energy board and the appointment of its members and staff, to define its duties, to authorize it to exercise certain powers and to provide for other related and incidental matters.
Motion agreed to and the house went into committee, Mr. Rea in the chair.


Gordon Minto Churchill: Mr. Chairman, this proposal to establish a national energy board which we have before us for consideration is the fulfilment of an objective held by the Conservative party over the years. That objective was clearly stated on February 25, 1955, at page 1530 of Hansard by the hon. member for Vancouver Quadra, now Minister of Public Works, in the following words:
We believe there is a great need for an over-all energy policy. Let us get away from dealing with the problem piecemeal with different departments concerned. It is not an efficient way to deal with

these important matters. For example, we suggest that consideration be given to setting up what might be called a national energy board under which could be gathered a professional staff to deal with those questions which would have the necessary information and the necessary training and which could recommend policy to the government. Then, once policy had been decided by the government, the board could implement that policy.
We believe the energy resources are among Canada's greatest assets, and that they can go far to make her one of the leading nations of the world. But if this is to be done we must get away from the present hit and miss method of dealing with those resources. We must have in Canada a national energy policy for the use of those resources, and the administrative machinery to carry it out.
When the opportunity arrived for the present government to take steps toward developing the policy outlined above an order in council was passed on October 15, 1957 setting up a royal commission on energy. The preamble of that order reads in part as follows:
That inasmuch as Canada has within its boundaries large sources of energy in the form of gas, oil, coal, water and uranium, the increasing need of energy for the growing industrial requirements of Canada renders it of the greatest importance to assure the most effective use of those resources in the public interest;
That it is desirable that an investigation be made now into a number of questions relating to sources of energy in order to assist in determining the principles and procedures to be applied in the administration of certain aspects of energy policy which fall within the jurisdiction of the parliament of Canada;
The royal commission was instructed to inquire into and make recommendations concerning, among other matters:
(a)	the policies which will best serve the national interest in relation to the export of energy and sources of energy from Canada;
(b)	the problems involved in, and the policies which ought to be applied to, the regulation of the transmission of oil and natural gas between provinces or from Canada to another country including, but without limiting the generality of the foregoing, the regulation of prices or rates to be charged or paid, the financial structure and control of pipe-line corporations in relation to the setting of proper prices or charges, and all such other matters as it is necessary to inquire into and report upon, in order to ensure the efficient and economical operation of pipe lines in the national interest:
(c)	the extent of authority that might best be conferred on a national energy board to administer, subject to the control and authority of parliament, such aspects of energy policy coming within the jurisdiction of parliament as it may be desirable to entrust to such a board, together with the character of administration and procedure that might best be established for such a board;
The members of the royal commission were Henry Borden, Esq., C.M.G., Q.C. of the city of Toronto, Chairman; J. Louis Levesque, Esq., of the city of Montreal; George Edwin Britnell, Esq., of the city of Saskatoon; Gordon G. Cushing, Esq., of the city of Ottawa; Robert

D. Howland, Esq., of the city of Halifax, and Leon J. Ladner, Esq., Q.C., of the city of Vancouver.
Subsequently, Dr. R. M. Hardy of the University of Alberta was appointed to the commission, and Mr. Cushing resigned to become assistant deputy minister of the Department of Labour.
The commission held public hearings in Victoria, Calgary, Regina, Winnipeg, Toronto and Montreal, in the course of which it has taken some 8,500 pages of evidence and received about ninety submissions.
In October, 1958 the commission submitted a first report dealing with some aspects of its inquiry and will submit a second report soon concerning some specific problems relating to crude oil.
Since receiving the report the government has studied it very carefully. Detailed and constructive comment upon the report has been supplied by provincial governments, and by various segments of the industries concerned and by investment firms.
The commission deserves congratulations and thanks for the exhaustive study it has made of the matters before it and for the conscientious discharge of its heavy responsibilities. Many of its recommendations are to be implemented as will be clear when the bill is before the house.
The measure, as the resolution indicates, has as its principal purpose the establishment of a national energy board. It is proposed that this board have most of the powers now held by the board of transport commissioners under the Pipe Lines Act, and those parts of the Railway Act incorporated in the Pipe Lines Act by reference.
Whereas under the Pipe Lines Act the board of transport commissioners has power to grant or withhold leave to construct pipe lines under the jurisdiction of the parliament of Canada, the new board in respect of applications for the construction of pipe lines would have the power to grant or withhold, subject to the approval of the governor in council, certificates of public convenience and necessity. It is proposed that the new measure supersede the Pipe Lines Act, and also the Exportation of Power and Fluids and Importation of Gas Act.
The new board would, on the basis of public hearings, and subject to the approval of the governor in council, grant or deny licences to export electric power or gas or to import gas.
The board would exercise certain broad advisory functions ranging over the whole field of energy and sources of energy in so far as the parliament of Canada has jurisdiction over such matters. The board would
National Energy Board have jurisdiction over tolls charged by all pipe-line companies subject to the act, and over prices at which gas and power might be exported.
The bill will set out, in much the same way as the present Pipe Lines Act, the general powers of pipe line companies subject to the jurisdiction of the parliament of Canada. The bill will contain provisions for transition from arrangements under the existing statutes to corresponding new arrangements.
These are the main elements of the proposed bill. I come now to certain points of policy which underlie the bill and which will guide the administration of the measure if approved by parliament.
We recognize the need for and welcome capital whether domestic or foreign for investment in the energy and associated industries, and we believe such capital, wisely invested, should enjoy a fair and reasonable rate of return. As to what is a fair return, it is not our intention to incorporate any fixed formula in the statute. Rather, our first premise is that returns on successful investment must be sufficient to attract capital for replacement and expansion, and our second premise is that the public interest requires that no pipe line company should exploit its monopoly or quasi-monopoly position to secure returns higher than are fair and reasonable. Certain general criteria will be set forth in the bill, and their application will be left to the fair and impartial judgment of the well-qualified men whose services on the board we hope to obtain.
We recognize that gas pipe lines are different from oil pipe lines, and that both are different from public utilities such as electric light and water service. Both oil and gas are subject to competition from other fuels and sources of energy, and an oil pipe line may be subject to competition in its markets by oil from other sources. There are elements of risk for both kinds of pipe line, and perhaps more risk for oil pipe lines than for gas pipe lines.
The customer of the gas pipe line is more nearly captive in that he cannot readily turn to another source of gas. The consumer of the gas in order to use an alternative fuel must convert his equipment or replace it if his gas supply becomes uneconomic or otherwise unsatisfactory. There is therefore a clear case for regulating the returns of gas pipe line companies.
The oil pipe line may not have the same sort of captive market. However, for some refineries one oil pipe line may be the only practical source of supply, and for many oil producers one oil pipe line is the only practical outlet to market. Therefore for practical

National Energy Board purposes an oil pipe line is a carrier in a monopoly or quasi-monopoly position, and should be regulated as such. For somewhat different reasons, therefore, we have come to the conclusion that the returns of both oil pipe lines and gas pipe lines should be regulated, though not necessarily on the same terms or at the same level.
While we have reached the conclusion that in the public interest there should be appropriate regulation of the returns of gas and oil pipe line companies, it is not the intention of the government in so doing to discourage in any way the healthy and beneficial devel-opmentof such companies.
As regards the exportation of electric power and gas, the key principle will be that quantities proposed to be exported must be surplus to present and reasonably foreseeable Canadian requirements.
In the case of electricity, it has been the policy in the past to grant only annual licences for export, so as to prevent permanent alienation of power. This remains our general policy, although some exceptions may be made in very special circumstances where the national interest would not be prejudiced by a longer term of export.
With regard to gas, we accept the recommendation of the Borden commission, which reads as follows:
Having regard to the proven reserves of natural gas in Canada and to trends in the discovery and growth of reserves, the export from Canada of natural gas, which may from time to time be surplus to the reasonably foreseeable requirements of Canada, be permitted under licence.
It appears necessary in granting licences for the export of gas to do so for periods up to 25 years in order to make possible the financing of the pipe line facilities.
Two governments must of course be agreed upon any such export. The first is the government of the province of origin. Until it declares gas available for removal from the province, this government can entertain no application for an export permit. After the province has declared gas surplus to its own requirements, the government of Canada, with the recommendation of the proposed national energy board, must decide whether it is also surplus to the requirements of Canada and, if so, upon what terms it may be exported, including the vital and complex question of price.
corresponding import permit. We are willing to work out an efficient arrangement with the United States which will satisfy our respective national requirements without hampering the mutually advantageous development of our gas industry. Our officials have already had discussions with appropriate officials of the United States state department and the federal power commission and we know from these talks that our willingness to co-operate and our desire to reach a flexible and mutually satisfactory working arrangement is reciprocated.
With regard to oil, it is not the intention at the present time to give authority in the bill for the issuing of export or import permits. However, a section of the bill will deal with this important matter and, if approved by parliament, will give authority to the governor in council to extend the application of the relevant portion of the bill to oil.
It will be evident, when the bill is distributed, that the experience of the past has been drawn upon extensively. Hon. members may wish to refer to Hansard of 1955, page 1523, for the debate on the Exportation of Power and Fluids and Importation of Gas Act. At that time the act of 1907 dealing with electricity was revised with particular reference to gas.
Hon. members may also read with profit the debate on the Pipe Lines Act of 1949, which is to be found at page 2509 of Hansard. The bill which is about to be introduced reproduces the substance of those two acts. Building on that foundation, we propose the setting up of a national energy board with appropriate powers to deal, so far as is within the jurisdiction of the parliament of Canada, with the whole problem of the utilization of the abundant sources of electrical and petroleum energy in our country in the national interest.
I am about half way through, Mr. Chairman. This is an appropriate time to call it six o'clock.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
The government of the United States, as Mr. Churchill: Mr. Chairman, prior to six represented by the federal power commission, o'clock, I was speaking to the resolution. I must also decide whether it will approve the dealt with the main principles which will be importation of the gas, and upon what terms, incorporated in the bill and indicated, in This raises the difficult problem of whether general terms, the important matters that we should grant an export licence before or will be shown in the bill. In the remarks after the federal power commission grants the which follow I should like to discuss the
IMr. Churchill.]

importance of this new industry which has developed in Canada largely within the last few years.
Everyone is aware that we have moved into a new era in the development of sources of energy. The constantly increasing demands for electrical power have stimulated the use of most of the readily available sources of hydroelectric power. Thermal power units, based on the utilization of coal, are being constructed in increasing numbers. Rapid advance is being made in experiments leading to the harnessing of atomic power for the economic production of electricity. Side by side with these developments there has been a spectacular rise in the production and use of oil and gas and their byproducts, and an equally spectacular increase in the installation of pipe lines for the gathering, long distance transmission and distribution of oil and gas and their products.
Ten years ago when the hon. member for Laurier, then minister of transport, was speaking on this subject he estimated that the production of crude oil in Alberta was about 100,000 barrels per day; that after allowing for the prairie provinces' requirements of 60,000 barrels per day, there would be a surplus of 40,000 barrels for use elsewhere. He estimated total Canadian consumption at 290,000 barrels per day.
In 1959, ten years later, we find western Canadian crude oil production running at a rate of about 500,000 barrels per day, equivalent to roughly two-thirds of the total Canadian oil requirements. For the sixth year in a row, oil was Canada's leading mineral in 1959, its value of production exceeding $400 million. And though our oil exports suffered a setback in 1957-58, crude oil contributed $73 million to Canadian export income in the year 1958. This is an impressive figure when one considers that the export of crude oil to the United States began as recently as 1951, via the Interprovincial pipe line, and did not become substantial until 1955, the first full year of operation for the TransMountain pipe line.
Parallel developments have taken place in the natural gas industry. Proven reserves of natural gas in western Canada have increased from less than 5 trillion cubic feet in 1949 to more than 25 trillion cubic feet at the end of 1958. Net production of natural gas was 60 billion cubic feet in 1949; 336 billion in 1958. Further sharp increases can be expected to follow the recent construction of major pipe lines. Gas from northern Alberta and British Columbia started to flow to the Vancouver area and the Pacific northwestern states through the Westcoast pipe line in 1957, and the completion of the Trans-Canada pipe line in November, 1958
National Energy Board opened the markets of Ontario and the Montreal area to western Canadian gas.
Applications to export large quantities of gas to the western United States have now been approved by the government of Alberta, and related applications have been filed with this government and with the United States federal power commission. Other projects looking to exports to the United States middle west and to New York state are in preparation. One urgent reason why this government is anxious to press ahead with the measure referred to in the resolution before us is, of course, that we desire to establish with all proper speed administrative machinery for making appropriate disposition of such applications for gas export licences, in the light of government policy and in full consideration of all the interests involved.
The great and increasing growth in gas production and transmission industries has necessarily been accomplished by a remarkable development of the gas by-product industries. Some of the by-products, in particular sulphur, natural gasoline, propane and butane, are themselves valuable. Complicated and costly plants are required to remove them. There are now in Canada 22 such plants for the processing of natural gas and recovery of by-products.
Some export markets for propane and butane have already been developed. These markets were cut off in March when the United States oil import controls were made mandatory and extended to unfinished oil and products, but the exemption from new United States oil import controls announced on April 30 will restore access to such markets. There is good reason to hope that these natural gas liquids and sulphur will become increasingly important in our export trade.
All this growth in production, processing and transportation to market for oil and gas and related products has required an enormous quantity of capital. In 1949 about $90 million were invested in oil and gas exploration, production, processing, transportation and marketing facilities. For 1959 the comparable investment is estimated at $627 million, nearly 7 times as much, and some 13i per cent of total business capital expenditures planned for 1959 in Canada. In the decade ending in 1958 the cumulative totals were $4.4 billion, excluding land acquisition costs.
These figures cover only direct investment in petroleum expansion and do not take into account the secondary effects of investment in new industries based on petroleum, such
3770	HOUSE OF
National Energy Board as petrochemicals, or new industries supplying the oil industry, such as pipe mills. Similarly, petroleum development has created jobs for thousands of Canadians, not only those directly employed by the industry but also those working in the ancillary industries I have mentioned.
If the development of the petroleum and related industries is to continue, still larger sums of capital must be attracted for future investment. It is our desire and intention that the climate for investment in these industries in Canada will, so far as it lies within control of this government, be such that this needed capital will be attracted by the prospect of fair and reasonable returns within a framework of stable and realistic government policy.
The past decade of development in the petroleum industries, remarkable as it has been, is only a beginning. We can look forward with confidence to continuing growth in reserves, in production, in employment, in export and in the necessary investment. These prospects, of course, involve the sound utilization of energy resources, perhaps the most important material resources a nation can possess. It is to protect the national interest in the wise use of these resources, and to apply to these complicated, sensitive and vital matters the careful and consistent scrutiny they require, that we have prepared the measure contemplated in this resolution, which I now commend to the house.
Mr. Dumas:: Mr. Chairman, we have before us for consideration a resolution to the effect that it is expedient to introduce a measure to provide for the establishment and operation of a national energy board and the appointment of its members and staff, to define its duties, to authorize it to exercise certain powers and to provide for other related and incidental matters.
Today the Minister of Trade and Commerce made a fairly comprehensive and interesting statement. No specific statement of the matters with which this proposed national energy board should deal is contained in the resolution. The minister has said that, for the time being, the board will have authority to deal with matters pertaining to electricity, oil and natural gas.
How closely the legislation will adhere to the recommendations of the Borden commission is not yet clear, although the minister has stated that many of these recommendations will form part of the proposed legislation. Certain of these recommendations have aroused the concern of many Canadians and more particularly that of both the petroleum industry and of some of the provincial governments having direct interests in oil and gas.


It is beyond any question that this legislation outlining the constitution and the powers of this new board will have an extremely important bearing on the future development of energy resources in this country. As I have said, we have too little information with regard to the intentions of the government in this matter. Until we have the bill before us, we do not know how far the government will go in delegating powers to this proposed new national energy board.
Does the government intend to implement fully the recommendations of the Borden commission as outlined in its first report of October, 1958, or does the government intend to compromise by incorporating in its legislation some of the recommendations made to the Prime Minister and the cabinet by the Canadian petroleum association, the investment dealers' association of Canada and others; or does the government intend to include all forms of energy under the authority of this national energy board? For instance, is it the intention of the government to include coal and atomic energy? Will the government eventually bring under one authority all the agencies we have at present, including the dominion coal board, the atomic energy control board, Atomic Energy of Canada Limited and the international joint commission?
From the minister's statement we conclude that the government does not intend that the authority of this new proposed agency should be limited only to fact finding and advisory responsibilities. Or again, does the government intend to have so much restriction and so many regulations that private industry will be shackled in exercising its proper function in the Canadian economy?
Those are extremely important questions. For this reason we feel that when the bill is before the house for second reading we should have ample latitude to discuss all aspects of this extremely important subject. We sincerely hope that we shall be given this opportunity of reasonable latitude in debating this subject so that we can fulfil the duties which are those of the official opposition and others in this chamber.
During the last four years two royal commissions have made recommendations as to how the energy resources of this country might best be developed, namely the Gordon royal commission on Canada's economic prospects and the Borden royal commission on energy. The Gordon commission of 1955, in its final report on Canada's economic prospects, commented at length upon the extent and importance of our energy resources and, after reviewing the export prospects of same, recommended the establishment of a single national energy authority. From the

report I wish to select a few paragraphs which, it seems to me, would be worth noting especially. At page 130 of the report we read the following:
To the international oil companies with operations in many parts of the world, it may not seem a matter of great urgency or concern whether large new markets are found for Canadian oil. They can supply all these markets from other sources and through other companies with which they are associated. They might even prefer to increase almost indefinitely their reserves of oil in Canada and draw down their reserves elsewhere. Also, as we have suggested, they are under pressure within the United States to do nothing that might disturb domestic prices there. In our opinion, however, it is clearly in the Canadian national interest that new markets be found. Only in this way can there be assurance that a steady and rapid pace of exploration and development in Canada will be maintained. Only in this way can early advantage be taken of this great natural resource and its exploitation not left to the hazards of an uncertain technological future. Above all, it is only in this way that a place can be left within the Canadian oil industry for the independent Canadian producers, who, unlike the large international companies, must receive some return on their investment in Canada if they are to stay in business and not be forced to sell out to the foreign-owned companies, which already hold such a high proportion of all the acreage now under reservation or lease in western Canada. It would seem that here is one instance, as is suggested in the discussion of foreign investment in a later chapter, where there might easily be some divergence between the Canadian national interest and the interest of foreign companies operating in Canada.
Further on in that same chapter, at page 135, the commission deals with the question of the terms under which gas is exported and expresses the opinion that Canadians have been insufficiently aware of some of the influences that have been operative in setting prices. This paragraph of the report on page 135 concludes as follows:
The present system of export licensing by the Canadian government would seem to be an inadequate counterweight to this bargaining advantage held by United States companies wanting to purchase Canadian gas; and in our opinion, the bargaining position of Canadian suppliers might well be strengthened by stronger institutional arrangements within the Canadian government in accordance with a proposal made later in this chapter.
I come to this proposal which we find at pages 146 and 147 of the same report. There the commission recommends the establishment of a national energy authority and this is what appears with regard to this national energy authority:
In order that a sound and comprehensive policy may be worked out with regard to development, exports, imports and consumption of all forms of energy in Canada, we propose that a national energy authority be established which would be responsible for:
(a) advising the federal government and, upon request, any provincial government on all matters connected with the long-term requirements for energy in its various forms and in different parts
National Energy Board
of Canada; methods of promoting the best uses of energy sources from a long-term point of view; export policy, including such questions as the further refining of oil and gas in Canada and the disposal of by-products; coal subsidies, etc.
(b) approving, or recommending for approval, all contracts or proposals respecting the export of oil, gas and electric power by pipeline or transmission wire, including, where necessary or desirable, the holding of public hearings in connection therewith.
If this proposal is accepted, the organization of the dominion coal board should be merged with that of the proposed national energy authority. It is perhaps unnecessary to add that the proposed new body would not interfere with the rights of the provinces respecting control over natural resources.
Mr. Chairman, the Borden commission of 1957, officially known as the royal commission on energy, was asked by the present government to make recommendations, first, on the policies which will best serve the national interest in relation to the export of energy and sources of energy from Canada; second, on the policies which ought to be applied to long distance transmission of oil and natural gas; and, third, on the nature and authority of a new national energy board.
The Borden commission submitted its first report during the latter part of 1958. The said report is divided into four parts. Chapter 1 deals with the export of natural gas and crude oil. Chapter 2 deals with the regulation of pipe line companies, while chapter 3 of the report is devoted entirely to the new national energy board. In this regard the Borden commission makes specific recommendations under 20 separate headings. Finally, chapter 4 of the report is dedicated entirely to a favourite subject of the Tory party, the Trans-Canada Pipe Lines Company. This is the chapter where the commission in no uncertain terms is recommending that the government repudiate the commitment of a former minister of the crown.
In a brief submitted to the Prime Minister by the investment dealers' association of Canada, Mr. Ely, the president, makes the following comments on this particular subject and I quote from pages 3 and 4 of this letter where Mr. Ely is commenting on the reactions abroad following the publication of the Borden commission report. This is what he had to say:
Even apart from the recurrent adverse comment in the financial press in New York and overseas, conversations of our members with foreign investors make clear the gravity with which the Borden report is viewed abroad. This concern is based in part on the recommended repudiation by the Canadian government of an undertaking given by a former senior minister of the crown. It is also based on the view that the report reflects an attitude on the part of the new Canadian government adverse to business and the investment of private capital.
There is no doubt that the impression created by the recommended repudiation of the gas export undertaking will adversely affect Canada's ability

National Energy Board to raise capital in foreign markets. In Great Britain and Europe this repudiation is being compared in some quarters with unilateral repudiaton of government contracts in Iran and Egypt, to the great detriment of Canada's standing as a field for capital investment. In the United States, comment is no less adverse. As one specific example, you will recall that over $100 million of first mortgage bonds of Trans-Canada Pipe Lines Limited were placed with a group of the largest American investing institutions during the initial financing of the line. The undertaking of a senior minister of the then Canadian government regarding gas export played a necessary part in the sale of these bonds, and there is no question that the purchasing institutions take a very serious view of its subsequent repudiation. Members of our association are not looking forward to approaching them to finance development projects in Canada again.
Mr. Chairman, from what we can make out of the Borden commission's report in respect to this subject a change of government seemingly would justify the repudiation of a former minister's commitment, such as that given by Mr. Howe in his letter of September 28, 1955 to Trans-Canada Pipe Lines Company Limited. I do not think it has ever been the practice to repudiate letters of this kind. It is bad enough for an important body such as the royal commission on energy to have made such a recommendation, but it would be even more awful if the government was to give force de loi to such a repudiation.
Although the Borden commission has reported on only two of the principal energy resources, that is oil and gas, it makes extensive recommendations as regard to the organization of a national energy board. The commission recommends the enactment of legislation enabling the government of Canada to control the export from and the import into Canada and the movement across provincial boundaries of all energy and sources of energy. The present legislation controls the export of any power or fluids, which include gas, oil, water or any other fluids, whether liquid or gaseous, and the import of gas. The commission recommends much more elaborate control, which involves including the control of (a) imports of power and fluids; and (b) interprovincial movements of power, gas, oil, etc. This is indeed a far-reaching recommendation, as it would appear also to include uranium. In resuming, the commission recommends that the board be given extensive authority, much too extensive for the good of the economy.
There are many silly and dangerous recommendations in the first report of the Borden commission. I have mentioned a few and I would like to bring one or two others to the attention of this house. Several references in the commission's report are made or implied that private contracts should be renegotiated after financial commitments have been made and pipe lines constructed. The recommendation to impose the renegotiation of existing

contracts seems to me to give rise to enormous dangers for the financing of new enterprises. When the financing of such a project is undertaken, those putting up the requisite capital, either in the form of bonds or stock, do so on the basis of the contracts entered into with the consumers, and if these contracts are to be subject to being changed and the revenues therefrom scaled down, investors would naturally be fearful as to the consequences that such a process would have on the ability of the gas pipe line company to meet its obligations and to provide a return on the investment. Compulsory renegotiation of existing contracts, Mr. Chairman, would simply mean confiscation, and in such circumstances no lending institution could afford to take the risk involved in financing a pipe line project.
The Borden commission also recommends that the prices, tolls, rates or tariffs be just and reasonable, non-discriminatory and calculated to yield a fair rate of return on the shareholders' equity. This recommendation has attracted the widest criticism. No one will disagree with the recommendation that tolls be just and reasonable, and indeed section 43 of the Pipe Lines Act requires that tolls be just and reasonable and likewise nondiscriminatory.
The commission's recommendation that the tolls be calculated to yield a fair rate of return on the shareholders' equity is an entirely new concept in rate-making, and would lead to the establishment of different tolls for the same services rendered by two different companies having radically different corporate structures. Thus, in the case of a company which had no funded debt, the shareholders' equity would be substantially higher than would be the case of another company whose capital was represented to the extent of say 60 per cent by bonds and debentures. The same amount of capital might have been invested in each case, but the difference in distribution could easily lead to discriminatory situations. But, apart from this, shareholders' equity is not a logical basis for rate-making. The practice varies enormously in Canada and the United States. In Quebec, legislation calls for rates based on "capital usefully invested", but there are many variants of this theme, and rate-making is in itself an extensive science.
If it is the intention of the government to follow the recommendation of the Borden commission in this respect, that is, establishing a base rate in this way, it will merely tie the hands of any board which will have to enforce the law, and at the same time it will discourage investment in Canada at a time when investment ought to be encouraged and not scared away by restrictive provisions.

The Borden commission's first report is a scarecrow. Commenting on the report in a letter dated January 7, 1959, and addressed to the Prime Minister, Mr. Ely, the president of the investment dealers' association of Canada has this to say, and I quote from page two of the letter:
There is no doubt that the report has been a great blow to the confidence of foreign investors in Canada. Its recommendations, if implemented, will certainly impair our ability to import from abroad the large amounts of capital we require.
And further on in the same letter, at pages 4 and 5, the president has this to say:
Canada's investment standing abroad has been no less seriously affected by the evident concern of foreign investors at the basic attitude to private enterprise and the rights of investors revealed in the Borden report. It is suggested that this attitude provides a clue to the attitude of the new Canadian government, and that on this basis Canada is no longer as attractive a field for the investment of private capital as it formerly was. The experience of our members active in foreign capital markets shows clearly that this prevailing impression is injurious to our ability to raise our full capital requirements from these sources.
Let us see now what the Canadian petroleum association has to say in regard to the Borden commission's first report. The Canadian petroleum association is an important organization in its own field. It is made up of some 240 exploration and producing companies which together produce 97 per cent of the oil and gas production in Canada. Here are a few of the most important paragraphs which I should like to quote from a special and lengthy report to the Prime Minister and the cabinet. At page 2 of the report, under the sub-section headed "Excessive regulation will be damaging to Canada", appears the following:
In terms of government regulation of industry, "too much" can be worse than "too little"-and, unfortunately, certain sections of the interim report -the Borden Commission's first report-have given rise to fears that excessive regulation and control over Canada's oil and gas industry is suggested by the commission. Such fears now exist, not only in this industry, but by many other Canadian industrial and financial leaders and by many outside of Canada whose views have an important bearing on the rate of flow of investment capital to our nation. Since Canada cannot generate sufficient capital within itself for its current pace of development, the withdrawal of foreign capital could have serious repercussions on the whole Canadian economy.
Even some members of the Conservative party were appalled to learn of the recommendations of the Borden commission's first report. The hon. gentleman who represents Calgary South was, I am sure, very much annoyed by the contents of that report. In a Canadian Press dispatch from Hamilton,
National Energy Board Bermuda, which appeared in the Ottawa Journal of February 28, 1959 we read this: Speaking before the Canadian pipe line contractors' association, the Calgary oil expert said-
I am not disputing this title, because I think the hon. member for Calgary South really is a man who knows something about oil and gas. He is a man who has devoted much of his time to a study of these Canadian resources, and I think he knows his business. The report continues:
-1959 will be a year of decision in which these points likely will be clarified:
Extent of Canadian government control over the industry; changes in oil and gas tax policies; a possible Canadian policy to increase domestic oil sales by Canadian producers; easing of federal regulations on the development of Arctic oil; tariff policies on oil; question of whether a satisfactory solution can be found to separate oil in the Athabaska tar sands.
Touching on the government's plans to set up a national energy board to regulate the oil and gas industries, Mr. Smith predicted the government will not adopt repressive action to restrict oil and gas profits as recommended by the Borden energy commission.
This shows that the hon. member for Calgary South did not too much like the recommendations of the report, but he says the government will not take action to curtail profits as recommended. The report goes on: He was convinced, he said, that the administration will ignore this recommendation for the government was vitally concerned, "with the importance of maintaining investment confidence in the petroleum and natural gas industry."
He said he also believed the government would not follow another commission recommendation- to require licensing of exports of oil to the U.S.- since this might hamper Canadian opportunities of finding long-term U.S. markets.
We of the Liberal party advocate the integrated development in co-operation with the provinces of petroleum, natural gas, hydroelectric power, coal and all other energy sources across the whole of Canada to meet the needs of industrial and population growth. We advocate the establishment of a national energy authority to advise the government as to the long term requirements of energy in Canada, including the best methods of providing efficient long term uses in Canada and for export. We feel that the government should not relegate policy making to any board. And, as was mentioned by the Canadian petroleum association, I feel myself that there should be a division of energy authority as between policy making, advisory and regulatory functions. For the time being, we feel that the organization of the dominion coal board should not be merged with that of any proposed national energy authority.
The Liberal position with regard to the export of electrical energy, oil and natural gas has remained basically the same since

National Energy Board it was enunciated in the house at different times in the past and more particularly in 1953 and 1955 by the then minister of trade and commerce, the Right Hon. C. D. Howe.


Charles Edward Rea: I am sorry to have to advise the hon. member that his time has expired. Will the committee give the hon. member unanimous consent to continue?


Some hon. Members:: Agreed.


Armand Dumas: In 1955 while introducing the Exportation of Power and Fluids and Importation of Gas Act, as reported at page 1524 of Hansard, Mr. Howe with respect to electrical energy had this to say:
While there have been differences of opinion as to how the policy on exports should be implemented, there is no doubt that such policy has crystallized in one of no firm commitment for power, that licences should be on a surplus interruptible basis only, and that they should be reviewed annually.
I think the minister said this afternoon that as far as hydroelectric power is concerned it is the intention of this government to impose a similar restriction except in special cases where we are assured there is a considerable amount of surplus in which case contracts would be negotiated.
In the same debate Mr. Howe reminded the house that he had enunciated the policy of the government with respect to oil on March 13, 1953, and with respect to natural gas on the same occasion. He summed up the position in 1955, as reported at page 1526 of Hansard in these words:
In brief, therefore, the policy with respect to these items (oil, electricity and natural gas) is that the export of oil should be based on the movement from the source of production to refineries in the cheapest possible way, and to arrange for that portion of the Canadian output that cannot be economically used in Canadian refineries the market that offers the highest return to the producer; that with respect to electricity there should be no firm export commitments and authorizations given only for interruptible surpluses; and that natural gas should leave Canada only when it is demonstrated to be surplus to determined Canadian needs.
Both the Gordon and Borden commissions appear to have been convinced that Canada has an exportable surplus of energy. At page 9, paragraph 6 of part 1 of chapter 1 of the Borden commission's first report we read the following statement:
It is our judgment that the entry of Canadian natural gas into available United States markets, on a moderate scale, is a highly desirable step. In recent years very large investments have been made by the natural gas industry in Canada covering, not only exploration and development, but also processing plants, pipe lines and distribution facilities. With reasonable access to United States markets, expectations of earnings in the industry would be raised to a level which would encourage further sound development.

At this point I should like to limit my observations in this respect to only one item, that of natural gas, for the simple reason that even the Borden commission reported very briefly on exports of oil. We are given to understand that another report will be filed by the same commission on this subject. There seems to be an urgency with regard to issuing permits for the exportation of natural gas to the United States. We feel that the government should not delay action in this respect. We think that the industry is right when it states that if the government were to wait until a new national energy board is organized to grant such permits this unnecessary delay could be detrimental to the economy.
In the early part of April last the Alberta government approved the granting of permits for the export of natural gas to two companies, Alberta Southern and Westcoast Transmission. Both companies have filed applications at Ottawa and Washington for Canadian federal government and United States federal government permits. I think it is reasonable to take the position that the federal government of Canada should grant a permit only if it is assured that the United States government will issue import permits.
In the Daily Oil Bulletin of April 8, 1959, Mr. Proctor, president of Canadian petroleum association, is reported to have commented as follows:
By granting the two companies permission to export natural gas for the next 25 years, the government of Alberta has taken a firm step toward linking Alberta natural gas with logical and necessary markets. From this point on, the federal government has the responsibility of processing export permits to allow the gas to reach those markets.
There is an important time element about all this, for Alberta is not alone in her efforts to market surplus natural gas. There are gas suppliers in the United States and Mexico just as anxious as Canada to win available markets which represent, to whoever captures them, a long-term source of income not only for producers, but for the public.
Natural gas is being discovered in Alberta at an annual rate of growth three times that of known market demand. There are proven natural gas reserves in Alberta at the present time of 27 trillion cubic feet, and the annual gas discovery rate is between 2 and 3 trillion cubic feet. This surplus of reserves over market demand is a constant one which will be maintained by the Alberta Oil and Gas Conservation Board. It is an assurance that the needs of the province and of Canada will continue to be met first before markets for surplus natural gas are sought outside the boundaries of Canada.
We feel that this calls for prompt action, that it is vital to the national interests that greater utilization of western Canada's surplus of gas reserves should not be delayed. Again I say that the government should not

necessarily wait for this new national energy board to be organized before processing these permits.
I wish to conclude by saying that we hope the government will not shackle the development of Canada's energy resources by imposing too many regulations and restrictions. When we have the bill we will be in a better position to judge the intentions of the government in this respect.


Gordon Minto Churchill: Mr. Chairman, I rise on a question of privilege which refers not to the speech just delivered by my hon. friend to which I listened with interest but rather to a phrase I used before the supper hour which apparently has lent itself to misinterpretation. I used the phrase "regulating the returns of gas pipe-line companies" and apparently to some hon. members this connotes profits. I want to assure the committee that there is no provision in the proposed bill to regulate the profits of pipe lines but rather the tolls charged for the transmission or transportation of oil or gas. The word "returns" was used with that meaning.


Herbert Wilfred Herridge: Mr. Chairman, we are very glad to see this important subject brought before the committee by the minister. I listened with a great deal of interest to the introductory statement made by the minister. I was most interested to note that he referred the committee to a statement of policy on the question made during the 1955 session by the then private hon. member for Vancouver Quadra who is now the Minister of Public Works. I want to say before I proceed that I am very happy to know that the present Minister of Public Works says exactly the same things as the Minister of Public Works on the questions of conservation, the development of the Columbia and of the establishment of a national energy board as he said when he was the hon. member for Vancouver Quadra and a distinguished member of Her Majesty's loyal opposition. When the minister was referring us to the statement of the hon. member for Vancouver Quadra of 1955, I could not help but think, is it not strange that the Minister of Finance has never referred us to any of the statements he made when in opposition on any particular question. I thought that was a most interesting parallel and I look upon it as one up for British Columbia.
The minister told us that the cabinet had carefully studied the report of the royal commission. As a result, if I heard him correctly, he introduced this measure which would make some provision for the regulation of free enterprise. That is a very interesting statement compared with things that were said a number of years ago. A few years 66968-9-239
National Energy Board ago the regulation of free enterprise was considered completely unorthodox and improper for some members of the minister's party when they were in opposition. I must say that I fairly glowed at one point in his remarks when he talked about regulating the returns of oil and gas companies. I thought to myself, well, the government is coming in our direction quite quickly. I was somewhat disappointed when the minister rose in his place just before I rose to speak and more or less modified his previous statement to bring it more in line with the principles of free enterprise that the government supports and wishes to give effect to.
Anyway, we were interested to know that this legislation will supersede the Pipe Lines Act and the Exportation of Power and Fluids and Importation of Gas Act. The bill will provide a transition stage and I think this is very sensible. This is a very important matter, and I think experience will have to be gained more or less slowly as a result of the operation of the bringing together of the various elements that are concerned in the successful operation of the national energy board, namely the federal authority, the provincial governments and the industries.
I was very pleased to hear the minister say that it is the intention of the legislation and its operation to protect Canadian interests with respect to the export of gas and of electricity and of other commodities of that type.


William Moore Benidickson: The same as last year.


Herbert Wilfred Herridge: I notice that the minister said that there had been discussions with the United States department of state and with the United States federal power commission. I do hope the result of those discussions will mean that this, shall I say, will bring on a better understanding of the Canadian position and will result in the advance of this country.
It is very difficult to say much in reply to the minister's general statement. We will have to wait for the bill for the details and for the answers to our questions to find out exactly what is intended by the government with respect to this resolution.
I want first of all to say that I shall deal more or less with a broad outline so far as our approach to this problem is concerned. The details and all the rest of it will be filled in by my colleagues later on in this debate. I want to bring to the minister's attention the fact that, if I recollect correctly, the word "energy" means force, power, efficiency, potency, efficacy, activity, go, mettle, impetus, verve, drive, vim. We in this group sincerely hope that the government, the national energy board and the personnel, when it is appointed,

National Energy Board-will exercise all those attributes in the operation of this legislation. They have an immediate, a very important and I think everyone will recognize a very heavy task.
The C.C.F. policy for many years has urged the need for the establishment of what I think we were generally pleased to call a national fuel and energy board. To inform the committee in that respect and to show how consistent our policies are and how continuing they have been throughout the years because they are based on sound foundations, I want to quote our program in this respect:
The C.C.F. proposes that it be reinforced by the following specific measures:
Establishment of a national fuel and energy authority to ensure that the use of all fuels-coal, oil, natural gas, electricity and atomic energy-will be planned to make the maximum contribution to the Canadian economy and the welfare of the Canadian people.
Well, sir, while we have not the details of this legislation at this time, we are very pleased indeed once again to note the influence on the government of this small group in this corner of the house in this parliament and during previous parliaments.
And now, Mr. Chairman, owing to his experience in the coal mining industry and knowledge of its disabilities, trials and tribulations, Clarie Gillis, a former member for Cape Breton South, was the most frequent exponent of the need for this policy on behalf of this group. He spoke from experience in the mines as a coal miner and from a knowledge of the industry in general and the marketing disabilities it suffered. He spoke with practical common sense and I am sure all members will agree with that. He had a practical approach to this problem and a wide knowledge of the coal industry because it had been his lifetime occupation prior to coming to this parliament.
I want to say, Mr. Chairman, that when a member's voice ceases to echo or reverberate or, in some cases, boom around this chamber, he is soon forgotten by some people. However, I wish to take this opportunity to pay a tribute to the former member for Cape Breton South, Clarie Gillis, for the contributions he made to the debates of this house and for the work of the committees while he was a member.
No doubt some members in this house will recall his interesting speeches, dotted with colourful and at times earthy language, and his metaphors drawn from a well of experience. I can still see the famous siphon that Clarie Gillis used to picture on occasions, with one end in the maritimes and the other end in central Canada, and that siphon operating so that the provinces of central
[Mr. Herridge.l
Canada were over the years sucking the wealth and the lifeblood of the maritime provinces. I always thought that was a good metaphor, and I never think of the former member for Cape Breton South without seeing that siphon, as it were, in front of me, I want to say this before going on to my further remarks with respect to the measure. In my opinion Clarie Gillis would be a most suitable person to represent the employees in the mining industry in Canada on any international or national board. He is a veteran with active service, a veteran with experience in the coal mining industry. He was a veteran C.C.F. member in this house and prior to coming to this house, and he would be I think a most appropriate person to be considered when appointments are being made to international or national bodies representing the employees in the mining industry.
I come back to fuel and energy. I want to tell you, Mr. Chairman, that an old man finds his energy waning a bit at this time of night. I want to deal briefly with our approach generally to this situation. The history of man's utilization of the more exhaustible forms of energy appears to be divided into several great periods or ages. First of all, there was the long period of time in which man depended upon wood fuels and, to some minor extent, upon agricultural wastes. Then, in the 19th century coal dominated the scene until after the first world war, when it was supplemented by water power. Later, petroleum and natural gas products entered the scene. Now nuclear power development is commencing and solar energy is a possibility.
These amazing developments in Canada in recent years, and particularly since the second world war, clearly indicate to me the necessity for public control and regulations, and in the circumstances where it is clearly indicated in the public interest, public ownership of pipe lines, as we in this group consider was indicated in the case of Trans-Canada Pipe Lines. We think Canada today would be in a much better position if Trans-Canada Pipe Lines was owned by the Canadian people.
Few aspects of the Canadian economy are as vital to the nation as the adequate development and efficient use of energy resources. To a very great extent, the nation's standard of living, and certainly its industrial progress, are dependent on the availability of large quantities of heat, power and fuel at prices and in locations which permit their maximum utilization. The supply of many sources of energy is, of course, limited. Furthermore, the principal supplies are not uniformly distributed in Canada. This is one of our

problems in connection with the efficient utilization of the natural resources we have.
The distribution and administration of various forms of energy have necessitated increasing public control over the development, conservation and use of various sources of energy supply. Public bodies have been established in every province to deal with various aspects of the production, transmission, sale and use of fuel and power, and at the national level several departments and agencies of government are also charged with various responsibilities in connection with fuels and energy.
I want to make a few comments on the present federal regulation of energy. The government regulation of energy has grown up in a somewhat haphazard manner. I think you find that if you read the history of the formation of the various boards, the work undertaken by various departments, and the work changed from one department to another. The several federal bodies concerned with energy resources have, in the main, been developed to meet particular problems in relation to specific situations. Until recently there has been very little co-ordination or correlation of these bodies, one with the other. We hope that this measure will have some effect in that direction. No less than half a dozen government departments are concerned with some aspect of energy production or the development of fuel.
Now, Mr. Chairman, clearly the federal government is already active with respect to many facets of energy production and use. It is true that intraprovincial fuel and power matters are exclusively within the jurisdiction of the provinces. This is as it should be, and under present circumstances we in this group would not want to change that one iota. Nevertheless, the precedent for federal energy regulation and federal administration of certain energy policies in the national interest is already well established.
I want to say at this point that years ago this party realized the value and necessity of public ownership, and considered certain aspects of energy development as public utilities. They should be brought under public ownership, either by federal or provincial governments of a combination of both or governments at other levels, where circumstances indicate it would be in the public interest.
I want to stress the importance of co-ordination from our point of view. Recent years have witnessed a growing recognition of the interdependence of energy sources and the importance of co-ordinating governmental policies with respect to them. Thus, there 66968-9-230J
National Energy Board has been established a federal interdepartmental committee on energy, I understand, composed of representatives from the various departments, bodies and agencies of government concerned, to centralize information and to investigate the relationship of sources of energy to the national economy. We in this group trust that this national energy board will carry forward that same work at a greater tempo and to much more efficient advantage.
I see you looking at me with a rather worried appearance, Mr. Chairman, but I did not know my time was quite exhausted yet. It has been increasingly apparent, however, that this limited degree of co-ordination is inadequate and that federal energy policies and programs must be more closely related. No longer can individual policies be considered in isolation. Both the supply of energy resources and their uses have been changing rapidly and substantially. In recent years the tempo of these changes has been increasing from month to month. Neither the supply nor the use of any of these sources of energy can be considered in isolation, as I said before. It is increasingly apparent that governmental policies with respect to these sources of energy must be correlated.
Then there is another matter that concerns this group; the importance of reducing costs. When compared to the United States, unit costs of industrial production in Canada are high. This is true despite the fact that hourly earnings-this is a matter of interest-of Canadian workers are as much as 25 per cent below those of United States workers on the average. These higher costs are caused by a limited market and Canada's geography which necessitates long hauls and consequently much higher transportation costs. In our opinion, the government can help to alleviate this condition through this national energy board, if it functions as we hope it will function in the days to come, as a board giving full time to all aspects of this problem.
What should they be, the objectives of a national energy board? We in this group think the first objective should be to increase the use of fuel and power production as part of a national development plan, a related national development plan through co-operation between the national energy board and suitable agencies in the provinces. Second, it should aim to conserve and direct the use of energy resources to the advantage of present and future generations. Third, it should ensure that, so far as is practicable, fuel and power resources are equitably distributed to all sections of the populated areas of Canada, to develop what we in this group have frequently spoken about, and what the former
3778	HOUSE OF
National Energy Board member for Cape Breton South spoke about, a national standard of living in Canada. This would avoid the situation we have in Newfoundland and in sections of the maritimes, as well as some other sections of Canada, resulting from the failure of these people to enjoy the national energy resources of this country.
Then, Mr. Chairman, I suggest some means by which these objectives may be reached. First of all, what about the question of taxation? This is an important one and the committee on mines, forests and waters in recent days has been listening to representations from the forest industry of British Columbia on this very question of the need for some reconsideration of taxation to provide incentive. We think one extremely important facet or instrument of federal policy is taxation. It could have a big influence on the development of any industry and its expansion. In our opinion, federal taxation policies can and should be devised which will encourage the search for and production of various forms of fuel. Furthermore, these taxation policies, concerning various forms of energy supply, should be correlated one with the other.
As I said before, this problem cannot be considered in isolation. There is, too, the question of subventions. Transportation subventions have been available for the past 30 years to assist the movement of coal into specific areas, principally central Canada from the maritimes. When a national energy board is established, this problem will have to be considered and studied in relation to the policies of a national energy board as a whole.
What about research? To me that is an extremely important question indeed. While considerable work is being undertaken by the national research council, the defence research board, the dominion coal board and the fuels division of the Department of Mines and Technical Surveys, and other departments, there is great need for an expansion of research by federal and provincial governments. We think that a major contribution could be made by an appropriate federal government agency undertaking some co-ordination of these research programs and facilitating the exchange of information, not only by federal agencies but by the other research programs carried on by the provincial governments. If this board does the things we hope it will do, it should be the agency to correlate and to develop the research required in this connection. We think the co-ordination of the federal government agencies is a first essential in the successful administration of the policy that we hope to see developed as a result of the appointment of a national energy board.
[Mr. Herridge.l

Because of the important role which energy plays in the economy and the tremendous changes that have taken place in both the supply of and demand for energy, and in view of the many regulatory and administrative bodies with some jurisdiction and responsibility in the field of energy, it becomes increasingly important, from the point of view of the members of this group, that national policies be integrated and that actions be directed toward common goals in this field. Co-ordination, it appears to us, would be best achieved by formal action along three related lines:
1.	The consolidation of policy and administration at the federal level, as I have mentioned previously, with respect to energy resources and use, in an appropriate departmental structure.
2.	We have advocated the constitution of a national energy board to deal with matters of regulation falling within federal jurisdiction. That is why we are glad to see this resolution come before the house. We trust that its final result and its administration will be along the lines that we have suggested throughout the years.
3.	We believe that, in order for this board to function satisfactorily, it is necessary to establish a continuing federal-provincial advisory body to protect provincial jurisdiction, and to promote in the best spirit co-operation and consultation in the administration of this extremely important sector of the Canadian economy.
I now wish to say a word or two about the national energy board. The national energy board personnel, in our opinion, should be composed of members who will represent various national interests and regional interests and be governed by the broad objectives of national policy. They must be men of capacity, intellect, industry and vision. As I said before, if this resolution proves to be the type of legislation we hope it will be, with a national energy board of the type I have mentioned we can hope to go somewhere in the development of natural resources.
Further, for successful administration under the national energy board we believe there should be a dominion-provincial advisory council. Because jurisdiction over natural resources, including sources of energy, as well as the production and intraprovincial movement or transmission of energy comes within the purview of provincial governments, as I have said before, and because the federal government has jurisdiction over other aspects relating to interprovincial transmission and export of energy, it is most important that co-operation be maintained between the

federal and provincial governments. It is with that consideration in mind that we ask the minister to give consideration to some form of federal-provincial advisory council on the development of energy resources so that the work of the national energy board can proceed in the best spirit and understanding, without any violation of the constitutional jurisdictions of the provincial governments concerned.
In conclusion, Mr. Chairman, may I say this. It is our opinion that if the national energy board is established on sound legislative foundations and if co-operation with the provinces is developed through a dominion-provincial advisory council, as I have suggested, it should soon prove to be a positive factor in the more equitable and stable development of the economy of this country which we all love, regardless of the party we support.


Mr. Smith (Calgary South):: Mr. Chairman, I propose at this point, like those who have preceded me in speaking, to deal only briefly with the general outline of the resolution which is now before the committee. Recognizing, of course, that the details of not only the legislation which will come before us in a bill but, equally important, the regulations which undoubtedly the new board will be empowered to make, will have a far-reaching effect on the development of these resources, I suggest that they must be subjected to the close scrutiny of this House of Commons. While it might be a bit early to congratulate the minister on the introduction of the resolution, I know that I speak for a great many people both inside and outside this chamber in congratulating him on behalf of the government on the fact that we have at least made a start in establishing a national oil and gas policy, something which I believe we have required for some years in the past. When the bill is introduced, I believe we shall have an opportunity to assess its limitations and the requirement for any amendments and thus to come up with a highly satisfactory working piece of legislation.
I can appreciate, as can most hon. members, the difficulty of the government in attempting to reconcile the two extreme views which have been expressed in relation to the Borden royal commission, namely those on the one hand who have stated their belief that the industry should not be in any way restricted by regulation, and those on the other hand who believe that a tight form of regulation is required in the interests of Canadian consumers. It is my contention that it is not inconsistent to believe that there can be introduced into and be passed by parliament a bill which, to a substantial degree, will satisfy
National Energy Board both of these two extremes. I agree, however, that in introducing any resolution whatsoever it is essential that we remember that if at any time we restrict the ordinary progress or development of an industry, where there is no intention to remove the ordinary rights of the citizen, we not only hinder the industry itself but, of course, we present a serious reduction in the development of our resources and thus the advantages which can be obtained to the consumers as a whole. Unlike the hon. member for Villeneuve who spoke a short time ago, I can see, even in the resolution form, several extremely important changes from the expressions of opinion by Mr. Borden and his colleagues; I refer to the resolution which was introduced and which will form the basis of a bill.
I think perhaps it might be well to point out some of the important ones which I think are going to be, as I said at the outset, of advantage to both consumer and industry alike. First of all, we will apparently be asked to transfer a very substantial measure of authority from the board of transport commissioners to the energy board. Thus we will eliminate what has in the past been the discretionary power of the minister under the power to export act to grant a permit for export without any public hearing. If I understand the minister's remarks correctly we will apparently have in the energy board the right, first of all, to grant a public convenience certificate for the construction of the line, and in addition to that an order may be issued after a public hearing to grant the export licence. This I suggest is a major difference in that it will streamline the operation in which an applicant may apply to the government of Canada for an export permit. I would assume, Mr. Chairman, that the policy of the government will still be the final authority to determine if such a recommendation will be acceded to.
We also see other major changes indicated in the resolution. Up to this point we have only regulations with regard to tolls or tariffs on the pipe lines which carry oil. It would appear from the resolution that this will cover all pipe lines including gas, again a major change. But there is one singular and important difference indicated by the resolution from the recommendations contained in the Borden report. Mr. Borden and his colleagues indicated that they would like to see a fixed rate of return based on shareholder equity, and this has apparently been replaced by granting the authority to the board itself to determine what is fair and reasonable.
The one point which, of course, immediately comes to mind is, how is this rate to be determined? This, of course, we will only

National Energy Board
learn when we see the bill. It is apparent from the resolution-I think this is important-that the first premise is that the return must be sufficient to attract capital, and with this I heartily concur. The second premise is that no company should exploit its monopoly or position to secure returns which are higher than fair and reasonable. The important point, and this is a point which apparently escaped the Borden commission, is that you cannot lump oil and gas pipe lines together because the rate of risk is exceedingly different. The basic criticism which I have of the Borden commission is that it failed to recognize the nature of the petroleum industry as a risk undertaking.
Those who question that statement and suggest there is no risk involved in the undertaking of a pipe line need only look at the operation of the Trans Mountain Oil Pipe Line Company which was built with a capacity of 275,000 barrels a day. Today it is taking deliveries of something less than 78,000. You can imagine then, gentlemen, the risk undertaking involved in a pipe line of that nature. If you set certain standards or formulas as recommended by Mr. Borden which do not take into consideration the varieties of risk involved in either a gas or oil pipe line, it is my contention that you would not see the underwriting or construction of any future pipe lines with private capital.


William Moore Benidickson: Mr. Chairman, may I ask my hon. friend a question. I have great regard for him, as he knows, but he said it was apparent in the resolution that there was some distinction between oil and gas, and so on. Does he speak from knowledge of the bill which is not given to other members of the house?


Arthur Smith: Of course, Mr. Chairman, my words were misinterpreted. I am making the assumption that that is accepted and that there is that difference, from the very nature of the fact that the powers which apparently are to be granted, as stated by the resolution, are to consider what would be fair and reasonable. Therefore this is an assumption that there is going to be that flexibility which there had hitherto not been. I think-


William Moore Benidickson: Mr. Chairman, my point of order is that there is nothing in the wording of the resolution to indicate what my hon. friend called an apparent distinction between oil and gas.


Arthur Smith: With all due respect to my hon. friend, I suggest that is contained in the minister's statement and by the restoration of the flexibility which I have suggested they intend to place in the energy board. However-


William Moore Benidickson: Mr. Chairman, I am not-


Arthur Smith: If the hon. gentleman will let me answer, I have not of course prior knowledge. I think that should be clear from the nature of my remarks.


William Moore Benidickson: Mr. Chairman, on a point of order, the hon. member made the assertion that there was apparent in the resolution which we are discussing now a difference between oil and gas. I think my hon. friend is straying a little bit from the resolution.


Arthur Smith: Mr. Chairman, I suggest this is contained in the minister's statement to us. However, I will be happy to discuss this at the appropriate time.
I left off at the point, Mr. Chairman, where I was suggesting that there is an important difference between the two and perhaps I might be permitted to continue on exactly that theme. To date, I have dealt with three changes which I suggest differ considerably from the Borden commission report and the outline of the bill as contained in the minister's statement on the resolution. I think perhaps at this point I might make some specific comments. The hon. member for Ville-neuve, when he decided to go back into history, might better have made his speech after the bill had been seen-as my hon. friend suggested might be the case in my speech-because he dealt extensively, first of all, with the Gordon report. Then he went into some detail on the Borden royal commission report. Then he was kind enough to make certain references to a speech which I made a short time ago in Bermuda.


William Moore Benidickson: Mr. Chairman, I have served under the hon. member, who is chairman of a committee that has, I think, done a good job, and he himself deserves a great deal of credit.


Some hon. Members:: Order.


William Moore Benidickson: But he is now saying certain things-


Charles Edward Rea: Order. I do not understand what point the hon. member is raising.


William Moore Benidickson: My point is, if we see the bill then we can debate at this stage. Has the hon. member seen the bill?


Arthur Smith: Mr. Chairman, I made it clear to the hon. member that I had not at that point, and I do not know that I can add anything more to that.
I would now like, if I might without interruption, Mr. Chairman, to continue. The hon. member for Villeneuve expressed some concern that the Borden commission had decided to recommend to the government against the

acceptance of a letter as a firm commitment written to Trans-Canada Pipe Lines Company by the then acting minister of trade and commerce in the former administration. The hon. member read at length from what had been said by the president of the investment dealers' association. I suggest to him there were a number of individuals who did not express concern with regard to the report issued by Mr. Borden and his colleagues of the royal commission in relation to the character of the letter. As an example, I think it is significant to note that the federal power commission of the United States said they did not consider his letter as a binding contract between the two governments. I suggest, further, especially to those who have had any legal training in this house, that when Mr. Howe offered a firm contract without any limitation as to time, certainly this was the intention, and this was contained in his letter to Trans-Canada Pipe Lines. There is no basis in fact by which it should be considered as a firm contract. The fact of the matter is that the terms which Mr. Howe offered to this company changed completely during the course of the time the offer was made. It therefore follows that the conditions under which the initial contract were made were not enforceable because the time altered so materially. I do not intend to pursue this matter any further except to say that a senior official of Trans-Canada Pipe Lines Company Limited under examination before the Borden commission himself said he did not consider this letter was binding.
I should like to make a personal observation on two other aspects of the question. The hon. member for Villeneuve stated I said I was convinced that this government would not take any action which would place the oil and gas industry in a regulatory strait-jacket. I certainly made that statement, and I still see no suggestion of this happening in the resolution before us. Then the hon. member went on to say that I was emphatic in my plea that we should not place licences on the export of oil because of our desire to maintain our export markets abroad. Here again, while there is power within this bill to introduce licensing for the export and import of oil, there can be no doubt that this power will not be extended without just cause. Again this is clearly an indication that this is a situation which could develop, and such action could be taken.
There are two major economic problems upon which the minister commented. The first was whether to process future applications for gas export through the energy board or some other alternative. While he
National Energy Board does not state this, the only other alternative is to process them through the present legislative facilities, otherwise the board of transport commissioners. It seems to me that if we are going to debate this legislation at any length-and it will require considerable scrutiny-we should recognize that time has the unfortunate habit of changing the circumstances of the markets to which we hope to export, and in addition the day may well come when the area to which we wish to export that gas may be captured by other sources of supply competitive with Canadian gas.
I can only hope, as in the past, to impress on the government the need for urgent action at the earliest date to process the applications currently before the board of transport commissioners so that any delay does not become unfortunate in that we may lose valuable markets to which we hope to export.
Second, I would point out the economic problem involved in the marketing of our oil. It is true that the removal of restrictions by the United States on the importation of Canadian oil is an excellent step, and the government is to be congratulated for convincing the United States of the need for freedom of trade between our two countries. We must also be realistic in recognizing that unless the United States refineries are prepared to give up their commercial preference, then indeed we may have to call upon the licensing aspect suggested in the resolution to be absolutely certain that we do not close down our petroleum industry through lack of protective action.
I suggest in addition that when Mr. Borden makes his second report-his report on the marketing of oil-that will be the time to determine what further course of action we should take. I agree it is not necessary to introduce licensing as such until a full review has been presented, and this in turn will come, we assume, in the second report.
My final comment on Borden and his work will be this:	I agree with the congratulatory remarks made by the minister. I think that basically the report did produce a valuable array of information to be used for the establishment of the oil and gas policy to which I have referred. As I have said many times, my principal criticism of the commission was that it did not recognize the nature of the risk involved in the petroleum industry. I would hope that when Mr. Borden makes his second report he will not so much comment on what action the government may have taken in the past but will rather state his views on what future action he thinks desirable. In other words,

National Energy Board I would hope his report can be introduced in the near future in order to help the government to decide with regard to the various alternatives open to it with relation to the marketing of our oil.
I believe it is important that we should also assess the entire problem in relation to the marketing of our by-products, the development of new and changing taxation practices, and the development of our resources in general. I believe, also, in the importance of maintaining research. Again, the resolution itself indicates this. Perhaps most important of all is the need for public understanding that when we talk about the requirement for Canadian citizens in both these resources we should not only equate the requirements for consumption, but also the rate of discovery that we anticipate over same period. It is shortsighted if we do not recognize that we will continue to explore and develop these resources at an even faster rate once we have established the markets for them. Here, I agree, this energy board can provide a useful instrument or vehicle in assessing the relation between market and demand.
So I close on the same note as I began, by saying that this is a first and most useful step forward in a real and honest attempt to provide a policy for the development of our resources, and this is something which the former administration neglected for so many years.


An hon. Member:: What about the Borden report?


Arthur Smith: I congratulate this government for making the first progressive step. It is up to parliament to make certain that we develop regulations from this point on that are in the interests of both the petroleum industry and the Canadian consumers.


George James McIlraith: Mr. Chairman, my remarks on this resolution will be rather brief. The subject matter of the resolution is very narrow. I wish to draw the attention of the committee to the fact that the resolution merely asks for a decision on the expediency of introducing a measure for the establishment and operation of a national energy board and the appointment of its members and staff. By accepting the resolution that is all we are doing.
The usual resolution in these cases, as I understand it, is much broader. I have taken the trouble to look up the resolution used when the dominion coal board was set up. I find that on that occasion the purposes of the proposed coal board were indicated in the resolution. The coal board

was to administer subventions and subsidies and there was also reference to the provision for the advisory functions of the board. For some reason or other that was not done in this case so we are somewhat limited in debating the subject at this stage. However, in his opening remarks on the resolution the minister dealt with it in a somewhat extended way and I think sought to remedy the omission as best he could. I hope he will take the opportunity at other stages of completing the remedying of the defect.
The importance of this subject is well illustrated by statistics on Canada's energy supply; that is, the relative importance of petroleum, natural gas and water power which I take it are the only three sources of energy being dealt with by this legislation. It is interesting to note that in 1928, 69 per cent of our energy was supplied from coal and 15 per cent was supplied from natural gas, petroleum and water power combined. In 1953 the comparable figures were 39 per cent from coal and 54 per cent from the other three combined. For 1980 the projected figure is 16 per cent from coal and 81 per cent from the other three sources being dealt with by this board. This illustrates more graphically than anything I could say the vast importance of this subject.
We are somewhat handicapped in discussing this question because of two factors arising out of the setting up of the Borden royal commission on energy. The first factor is the initial report of the commission published last October that is now available to the committee and the contents of that report to which I shall make further reference a little later on. The second factor is that we are still awaiting the second report of this commission. It is regrettable that the committee could not have had the second report before dealing with this matter. However, I am not going to criticize the government on that score concerning the delay of the commission in producing the second report. I think a great deal of damage has been done to some parts of the development in the petroleum and gas industry by the government not stating its policy since it assumed office in 1957. That is to say the government has not taken advantage of any opportunity to outline its policy in this whole field of development of our energy sources. While I regret very much the fact that the second report of the Borden commission is not available to the committee I am not particularly criticizing the government for proceeding without it.

The first report was rather commended to the house by both the minister in introducing the resolution and by the hon. member for Calgary South in his remarks. I must say that while they were very laudatory of that report I cannot share their views. I consider that the report has done a good deal of damage to the development of the industry in this country. While it is quite true that it has not impeded the exploration work in the oil and gas industry it undoubtedly has impeded development work. That is due to the nature of some of the recommendations contained in that report.
I also hold the view that this report has had a damaging effect on private enterprise outside this field altogether. That, of course, is a matter of debate and I suppose there could be sharply different opinions on it. However, that is the view I hold. I would wish that the minister at some point would undertake to indicate more clearly to the committee the parts of the report and those recommendations contained in it that are being adopted and the recommendations which he is prepared to reject.
If I may say so, his rising on a second occasion in this debate in committee to correct an impression taken from some words he used in introducing the resolution shows the necessity for great clarity on this question and illustrates the need for clarity as to what the government's attitude is with regard to certain recommendations in the first report of the Borden commission. The minister's action in being so quick to correct the wrong impression he inadvertently created in his opening remarks shows just how sensitive the industry is on this point.
There are two matters with which I wish to deal specifically. I was interested to notice that the minister at least on three occasions in his introductory remarks dealt with the necessity of there being capital investment in this industry. I was glad to see him stress the importance of that particularly in view of the somewhat adverse factors in the Borden commission report. I hope that when we see the bill it will indicate that his appreciation of the necessity of capital investment will find expression in the legislation and that there will be nothing in it of such a nature as to impede the proper flow of capital investment into the development of enterprise in this field.
I turn now to the second point arising out of the minister's remarks that concerned me specifically. Incidentally, I could not help but notice that the hon. member for Calgary South in his remarks kept referring to matters none of which were in the resolution and several of which were not dealt with in the 66968-9-240
National Energy Board minister's remarks but perhaps I can allow that to pass without further comment.


Arthur Smith: Mr. Chairman, I rise on a question of privilege. The hon. member has stated, as I understood him, that I made reference to several matters which were not in the resolution. That was purely an error in description. I was referring, of course, to the speech made by the minister. I wonder whether he will be kind enough to indicate to me, though, the number of matters which were not in the statement of the minister.


Charles Edward Rea: Order. I am of the
opinion that this is a matter of argument. When the hon. member is through, if the hon. member for Calgary South wishes to say something, if there is time, it will be in order.


William Moore Benidickson: On this point, Mr. Chairman-


Charles Edward Rea: Order.


William Moore Benidickson: -I think the hon. member for Calgary South had-


Charles Edward Rea: Order. The hon. member for Ottawa West.


George James McIlraith: Mr. Chairman, I understood from the minister's remarks he indicated that the legislation would provide for the board having jurisdiction over the export and import of oil. I think I understood him correctly on that point. Then, I understood him to go on to say that while the board would have this jurisdiction, that provision would not become operative until the governor in council made it operative.
What I want to say on that is that it seems to me there are two objections. Perhaps we can see better when we get the legislation. The first objection is that this is a matter of such importance and of such a nature that it should be dealt with by parliament and not be taken to the governor in council by way of arbitrary authority. That is one criticism. The other is that so long as that power is contained in the legislation, then we are going to have a situation where a threat is going to be hanging over the heads of the industry at large that the board will interfere by way of regulation, and that is damaging because of recommendation 19 of the Borden commission report. It is particularly damaging for that reason. For these two reasons I would hope that the minister would take a further look at that point before introducing his legislation.
In his speech the minister covered a very wide range of matters, and made it perfectly clear that the bill will be an extensive one. It is clear, for instance, that the pipe line legislation is to be replaced by this bill as

National Energy Board well as many other things here indicated. Perhaps the best way to proceed is to let us have a look at the bill.
I would hope that when we come to the second reading stage the minister will not be as eager as some of his colleagues have been in recent days to restrict the discussion on second reading. We can then have a full discussion when we see the bill. Bearing that in mind, I am quite prepared to curtail my remarks now so that the resolution may be dealt with and the bill introduced.


Douglas Mason Fisher: At this late point in the evening, I should like to make a few remarks on the national energy board that this government is promising to set up. There are still perhaps a few remarks which may be made about it. The thing that interests me in connection with this bill is that it goes right back to what has been a most exciting thing in recent parliamentary history, namely the pipe line legislation. This is the logical outcome of the stand that the Conservatives took in the pipe line debate, and this is their reaction to the bad way in which the Liberals handled things back in 1955 and 1956. This means that we shall be looking with an especially critical eye for this particular bit of legislation, and no less because, since the Borden commission first report came out, the vociferous nature of the protests of the oil industry seemed to indicate that they feared very much the legislation that is forthcoming. They seemed to be very apprehensive as to just how far this energy control bill would go, and they are especially worried in connection with the export of gas.
The views of this particular party have been so expressed by the hon. member for Kootenay West that I think they covered the general nature of the kind of board that we would like. As a matter of fact, I think the hon. member mentioned that for many years the C.C.F. has been talking about the planning boards that they would like for the regulation of public resources. If the speech in 1955 by the Minister of Public Works was merging toward our point of view we are very pleased to note that conversion and to give him all the credit in the world.


Howard Charles Green: You are in agreement with me.


Douglas Mason Fisher: I remember that in the past he expressed very strong views about that salt water fleet that he wanted. We have not seen any indication that as a member of the government he has been converted to that point of view.
In a minor way this is a contribution on the part of the government to taking over another part of the program that the C.C.F. has put forward if, as we have been given to understand, the legislation is to be spelled out as indicated.
I for one will be watching very closely the speech that the hon. member for Calgary South will make at the next stage of the proceedings when the bill is before us. Then we shall get an indicator as to how generally the oil industry and the gas industry in the west will view this particular legislation. If we find the hon. member for Calgary South speaking with a certain amount of criticism, or making some suggestions, we will begin perhaps to get the suspicion that this is a pretty good bit of legislation. It will be an indication that this adoption of general C.C.F. ideas has been a little bit deeper than we had felt.
Will you call it ten o'clock, Mr. Chairman?


Some hon. Members:: Carried.
Progress reported.



INCOME TAX ACT

Donald Methuen Fleming: May I ask leave to revert to motions for the purpose of giving the house notice of an amendment which I propose to introduce to Bill No. C-48 when it is reached. I thought it might be reached this evening. I had given copies of the amendment to hon. gentlemen opposite, Mr. Speaker, but if I might have leave I would put this proposed amendment on Votes and Proceedings for today for the use of hon. members when the bill is reached, presumably tomorrow.


Some hon. Members:: Agreed.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask what is the business for tomorrow and what the business will be on Thursday and Friday?


Howard Charles Green: Mr. Speaker, tomorrow we shall continue with this debate and then take the resolution concerning the Veterans' Land Act which appears under government notices of motion on today's order paper. The intention is to refer this measure to the standing committee on veterans affairs. If possible, we would like to have it referred to that committee this week. Then, we shall take item No. 13, concerning the convention for the abolition of forced labour; then, item No. 7, the amendments to the Excise Tax Act; item No. 8, the amendments to the Income Tax Act; item No. 16, a resolution

preceding a measure to amend the Bretton Woods Agreements Act; item No. 12, a resolution concerning the Royal Canadian Mounted Police Act; No. 15, to approve the state treaty for the re-establishment of an independent and democratic Austria; No. 9, the convention
Business of the House
on the nationality of married women. When the estimates are reached, we shall take those of the Department of Labour, and then the Department of Public Works.
At 10.03 p.m., the house adjourned, without question put, pursuant to standing order.
66968-9-2401

Tuesday, May 19, 1959