1959-06-15

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, the Leader of the Opposition asked the other day whether or not the house would be sitting on June 26, the date of the official opening of the St. Lawrence seaway. I said that if there was agreement I would move a motion today that the house do not sit on Friday, June 26. I find, however, that the motion is such that it is necessary to import into its wording the date when the house will sit.
I have heard it suggested, and I just place this before the house for the moment without comment, that following the opening of the waterway a large number of United States congressmen will be visiting Ottawa on Saturday, June 27. I am not in any way advancing this as a suggestion at the moment, but I know that hon. members are most desirous that every possible day be utilized for the business before us. It might be that later next week consideration may be given, after consultation with the various members of the house, to having the house sit on Saturday, the 27th. The house would then be in a position in which it would not be losing a day's work that week, and at the same time it would make it possible to receive the representatives of the United States congress.
Having said that, with the unanimous consent I move:
That when this house adjourns on Thursday, June 25, it stand adjourned until Monday, June 29.


[Stage Direction]
Motion agreed to.


John George Diefenbaker: Mr. Speaker, as undertaken the other day I wish to table two copies of the reasons for judgment in the Exchequer Court of Canada in the proceedings between Aileen M. Drew, suppliant, and Her Majesty the Queen, respondent.


Mr. Speaker:: Has the Prime Minister leave to table this document?


Some hon. Members:: Agreed.
66968-9-299J



DEFENCE PRODUCTION


Hon. Raymond O'Hurley (Minister of Defence Production):: Mr. Speaker, I wish to announce to the house details of the results of negotiations with the Grumman Aircraft Engineering Corporation of Bethpage, Long Island, New York, in connection with the supply of 10 SA16B aircraft, commonly known as the Albatross, for use by the R.C.A.F. search and rescue service.
The government has decided to award a contract for the supply of these aircraft to the Grumman corporation. The planes are urgently needed for the search and rescue operations of the R.C.A.F. and no other aircraft presently available has the same suitability for recovery at sea or on large water areas as the Albatross. These planes can also be effectively used for freight and supply in the northern areas of Canada, and should prove a valuable acquisition in this regard.
A full examination was made of the possibility of obtaining a licence for the manufacture of this aircraft in Canada, but such a transaction was found to be uneconomic since only 10 aircraft are to be ordered, and even if this quantity was doubled or tripled the cost of Canadian manufacture would still be prohibitive.
Special attention was then given to the working out of production-sharing arrangements, and as a result orders totalling approximately 40 to 50 per cent of the cost of the purchase of these planes will be placed with Canadian manufacturers. The engine which will be installed in the aircraft is the Wright R1820-82, which is being manufactured by Canadian Pratt and Whitney Aircraft Company, Longueuil, Quebec, for our S2F program. This engine can be accommodated in the Albatross aircraft by making a very small engineering change.
Numerous other items made in Canada, such as electronic and navigational items, will be incorporated in the Albatross aircraft, and a portion of the airframe is being subcontracted to Bristol-Aero Industries Limited in Manitoba.
In addition to these arrangements which have been made in connection with the supply of the Albatross aircraft, the Grumman Aircraft Engineering Corporation has agreed to let a subcontract in Canada to

Proposed Legislation
Enamel and Heating Products Limited, Amherst, Nova Scotia, in an amount of approximately $1 million for the supply of a substantial number of components for the S2F aircraft, which the Grumman company is building for the United States navy. The company has also agreed to consider letting additional subcontracts on other work for placement in Canada, but this is, of course, subject to their normal procurement cycle. I am hopeful that these additional orders will amount to a substantial sum over the next few years.
The details of this transaction have been worked out under the recently announced production sharing arrangements made between this government and the government of the United States.

On the orders of the day:


Mr. Hubert Badanai (Fort William):: Mr. Speaker, I have a question for the Minister of Defence Production arising out of the statement he made a few moments ago. Is the minister in a position to tell the house if the Fort William plant of Canada Car is being considered for sharing in the production of the aircraft components he mentioned or whether he has other contracts in mind for that plant?


Donat Raymond: No, Mr. Speaker, the plant at Fort William is not in the program I announced a moment ago. I have stated many times with respect to the plant at Fort William that in the production sharing program we have offered every facility to Canadian Car and Foundry to participate in any program we might have, but I have nothing to announce for the time being.



AGRICULTURE


Hon. D. S. Harkness (Minister of Agriculture) 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 introduce a measure to provide for the establishment of a system of long term mortgage credit to farmers, to incorporate therein the provisions of the Canadian Farm Loan Act, to add thereto a new type of supervised farm mortgage credit and to repeal the said Canadian Farm Loan Act.


[Stage Direction]
Motion agreed to.
(Mr. O'Hurley.]


Hon. Paul Comfois (Minister of Mines and Technical Surveys) 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 introduce a measure to amend the Maritime Coal Production Assistance Act to extend the application of the act to coal producers in all parts of Canada; to provide that the aggregate principal amount of loans made to coal producers under section 6 of the act shall be increased from ten to twenty million dollars and that the aggregate principal amount of loans made to any one coal producer under the same section shall be increased from seven and one-half to twelve million dollars; to extend the operation of the act from the 31st day of October, 1959 to the 31st day of October, 1964; and to authorize certain amendments to the agreement made under the act with the Dominion Coal Company Limited for the purpose of varying the terms of repayment of principal and interest as provided under section 4 thereof.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Motion No. 120-Mr. Brassard (Lapointe::
For a copy of all telegrams, correspondence, reports and other documents exchanged since August 1, 1958, between all persons or public bodies, and the Canadian maritime commission or the Department of Transport, regarding the ferry service operated by Rosario Harvey between St. Joseph de La Rive and St. Bernard de l'lle aux Coudres, in the county of Charlevoix.
Hon. George H. Hees (Minister of Transport):: Mr. Speaker, as I understand
the hon. member intends to ask permission to withdraw this motion, I would appreciate it if it could stand.
Motion stands.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I would like to ask the Prime Minister a question which, in view of its importance and the fact that I have not been able to give him notice, he may prefer to take as notice. The question is this. In view of the apparent uncertainty in Washington regarding continental air defence, and in view of the downgrading of the Bomarc missile in the latest United States master plan

lor such defence, will the government consider suspending Canadian expenditures on Bomarc and Sage installations until this situation is cleared up?


John George Diefenbaker: Mr. Speaker, I do not accept the preliminary words in the preamble to that question in any way. I rise merely for the purpose of saying that I do not agree with the suggestion made by the Leader of the Opposition. In so far as the question in general is concerned respecting the Bomarc, I would suggest the Minister of National Defence is the proper minister to answer it.


Hon. G. R. Pearkes (Minister of National Defence):: Mr. Speaker, I may say that I anticipated a question on these lines.
The United States secretary of defence has recommended certain reductions in the number of surface to air missiles planned for use against manned bombers. Briefly, the program involves a reduction in the previously planned deployment of the Bomarc and Nike-Hercules missile batteries and a step-up in the program for the development of an anti-ballistic missile defence. It is not the intention to eliminate one system or the other, but rather to make the best use of both systems since they complement each other. The proposed changes have taken full account of the effective integration of Canadian and United States air defences. These proposed changes do not affect our own defence position or the planned construction and employment of the Bomarc bases in Canada. Only United States bases are affected.
This is a realistic and practical approach to the solution of the problem of the defence of this continent. It conforms with Canadian thinking in that it recognizes, as I have frequently stated, that while the threat from the manned bomber still exists it is a diminishing threat. Therefore expenditures upon any weapons system designed to meet the bomber threat only should be kept within reasonable bounds. The two Canadian Bomarc stations have an important role in the general pattern of continental defence.
We have at all times and at the various official levels been in close touch with the United States authorities. During the past few days I have spoken with Mr. McElroy, the secretary of defence, and his scientific adviser, Mr. Holaday, who made the presentation to the senate armed services committee. These conversations have confirmed our previous knowledge that the proposed redeployment program would not in any way prejudice or make less effective the plans for the defence of Canada that have been agreed upon by our two countries.
Inquiries of the Ministry


Lester Bowles Pearson: Mr. Speaker, a supplementary question. Can the minister state whether the press report that the reduction in expenditure recommended in this new defence plan for the Bomarc amounts to over $700 million is accurate?


George Randolph Pearkes: There is a very considerable proposed reduction in the amounts to be spent on the Bomarc according to the original deployment plan; but as I have stated, the reductions which are planned will not affect in any way the defence of Canada.



MANITOBA-FEDERAL ASSISTANCE IN SEINE RIVER AREA

[Stage Direction]
On the orders of the day:
Mr. Laurier Regnier (St. Boniface):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture.
In view of flood conditions existing along the Seine river, which have forced the evacuation of some 40 families and are causing extensive damage along its banks in the municipalities of Ste. Anne, Tache and Ritchot, will the minister inform the house regarding any compensations that may be paid to the farmers in the flooded area? Mr. C. Chaput, reeve of the municipality of Ste. Anne, informs me by telephone that the seeded acreage will be a total loss, as the fields are still covered with water.


Douglas Scott Harkness: I thank the hon. member for having given me notice of his intention to ask this question. As far as loss of crops is concerned, awards under the Prairie Farm Assistance Act are payable to farmers in the spring wheat area who suffer loss of crop through flooding. In brief, the provision of the act in this regard is as follows. If one third or more of the total cultivated area of the land on six or more adjacent sections of land or river lots cannot be seeded, the farmers owning such land are entitled to an award of $4 per acre with respect to the flooded area. As long as there is an area of six adjacent sections or more, awards can be paid.
If the land has already been seeded it would come under the general provisions as far as loss of property through rain or drought or any other cause is concerned.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. W. M. Benidickson (Kenora-Rainy River):: I should like to address a question to the Minister of Finance. Could the minister

Inquiries of the Ministry inform the house whether he has authorized the Bank of Canada to invite subscriptions for a new bond issue today, and if so, would he give us particulars?


Hon. Donald M. Fleming (Minister of Finance):: 
William Moore Benidickson: May I ask a supplementary question. Has the minister, in approving of this offer, calculated the value to, say, a corporation or any other purchaser who has the benefit of capital gains, in the 50% tax rate bracket vis-a-vis buying another bond of similar term at a par price? Would the minister quarrel very much with me if I said that in my hasty calculation, on the 9 month 2| per cent issue a par issue would require an 8.2 per cent figure for the equivalent of what the minister has offered, or that the 3 per -cent 15 month issue would require 8.4 per cent at par coupon value to equal what the minister has offered to the public on his present requirements?


Donald Methuen Fleming: Mr. Speaker, I think to put figures before the house in the way the hon. gentleman has done is very misleading. These additions to outstanding maturities are priced quite close to the present market.


William Moore Benidickson: But my figures are correct.


Mr. Erhart Regier (Burnaby-Coquitlam):: Mr. Speaker, may I direct a supplementary question to the Minister of Finance. I wonder If the minister is aware that at the noon hour

his 3 per cent issue was being offered to yield a return of 5.68 per cent, and is the government contemplating any action at all to protect the taxpayers of the Dominion of Canada?


Donald Methuen Fleming: Mr. Speaker, the government has shown itself quite vigilant in protecting the interests of the taxpayers as well as with respect to the credit of Canada, and I invite the co-operation of hon. members opposite in doing what may lie within their power to assist us in that regard.


Erhart Regier: Mr. Speaker, I wonder if I might ask the minister how he is able to reconcile his earlier announcement concerning the 3 per cent coupons, when at the noon hour the offering yielded 5.68 per cent? How is the minister able to rationalize this as being realistic?


Donald Methuen Fleming: The price, Mr. Speaker, at which the 2J per cent bond due April 1, 1960 is offered is 98. The 3 per cent bond maturing December 15, 1960 is offered at 96.30. In both cases we have the assistance of knowing what the market is on these bonds because we are simply enlarging an outstanding issue in each case.



REPORTED INCREASE IN MONEY SUPPLY

[Stage Direction]
On the orders of the day:
['Tighter and tighter money.']
William Moore Benidickson: Mr. Speaker, I believe the Minister of Finance would agree that the money supply and inflation are usually concomitants. I wonder if he has examined the last available weekly report of the Bank of Canada June 11th which indicates the largest increase, ($81 million), in the money supply shown for quite a long time. Would the minister indicate to the house today, or tomorrow after he has considered the matter, what relationship if any this has with the government's need for additional borrowings?


Donald Methuen Fleming: Mr. Speaker, the matter to which the hon. gentleman refers-and I am making no comment confirmatory of his conclusion- has no bearing on the immediate borrowings of the government in the announcement which I made earlier today.


William Moore Benidickson: Oh, no.


Donald Methuen Fleming: I may say, Mr. Speaker, and I think it will be a matter of gratification to the house, that conditions in this country have shown the steady improvement to which reference was made on an



[Stage Direction]
earlier occasion, and our borrowing requirements this year are going to be substantially less than I indicated when I introduced the budget.
William Moore Benidickson: Tighter and tighter money.



TRANSPORTATION


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Prime Minister. Did the Prime Minister read the story appearing in this morning's Gazette entitled "Railway Commission Running Out of Time", in which it is stated that if the royal commission is to do its job in time it should move with dispatch? Can the Prime Minister state if as reported the commission, one month after its appointment, has not yet appointed its staff or drawn up an itinerary for its hearings?


John George Diefenbaker: Mr. Speaker, I read the article in question. As I said at the time the commission was set up, every dispatch was expected on the part of this commission in bringing in its report at the earliest possible date. I have the assurance of the chairman that everything is getting under way and that the general target date set at the time the commission was constituted will be met.



CIVIL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. M. D. Morton (Davenport):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare. Has the minister any comment to make on the statement made by the chairman of metropolitan Toronto that the metropolitan civil defence committee will disband on January 1 next unless further direction on the role of municipalities in civil defence has been given by the federal government?


Hon. J. W. Monteith (Minister of National Health and Welfare):: Mr. Speaker, I should like to thank the hon. member for having given me notice of his intention to ask this question. I think it has always been clear that it rests with the provincial authorities to determine how civil defence functions and responsibilities left with them shall be allocated as between the province itself and its municipal governments. The reorganized structure at the federal level does not affect this arrangement in any way.
Inquiries of the Ministry
Following the Prime Minister's statement in the house of March 23, giving details of the reorganization plans we had in mind, a civil defence conference was held on April 24. At this meeting there was full discussion of provincial-municipal responsibilities.
I appreciate the interest of the metropolitan Toronto civil defence committee in maintaining the co-operation of their workers. It seems reasonable that they should carry on their training programs on the existing basis, even though certain of these might in due course become the responsibility of the Department of National Defence. Discussions on the federal changes are now taking place, but things are still in the transitional stage. However, in the near future-as I have said, perhaps when my estimates are before the house-I hope to be able to give a statement on the type of leadership this government is prepared to give in civil defence.
We have encouraged the municipalities at least to maintain their present standards by increasing the federal contribution on municipal projects from 50 to 75 per cent, and I trust their active interest in this field will continue.


Hon. Paul Martin (Essex East):: May I ask
a supplementary question. In view of my hon. friend's modest assertion of leadership in this field by the government, can he tell us whether or not that leadership is of such a character as to warrant the minister now giving us an unequivocal statement about the government's policy in the matters of shelter and evacuation?


Jay Waldo Monteith: I have answered that question many times, I think as recently as one day last week. I have said that the matter of evacuation and shelter policy is being given prior consideration, and I think I indicated at that time that I would be very pleased to discuss the matter when my estimates are before the house.


Mr. Marlin (Essex Easl):: In view of the situation in Toronto and elsewhere throughout the country, does the minister not think further indication of this leadership is required?


Jay Waldo Monteith: I have answered the question, Mr. Speaker.


Mr. H. W. Herridge (Ka«tenay Wesl):: wish to direct a supplementary question to the Minister of National Health and Welfare on this same subject. Would the minister inform the house if provision is being made to assist fire brigades in unorganized communities that have been established for a good many years?

Inquiries of the Ministry


Jay Waldo Monteith: I did not quite get the question.


Herbert Wilfred Herridge: Is provision being made to assist local fire brigades in unorganized communities that have been established for a good many years?


Jay Waldo Monteith: Mr. Speaker, I think this question is being considered at the municipal and provincial level.



NATIONAL REVENUE


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to direct a question to the Minister of National Revenue. I apologize for giving him such short notice. I was requested by two or three people shortly before coming into the house to ask the question because the subject is of general interest. Can the minister inform the house when the expurgated edition of the blue book of pension plans is likely to see the light of day.


Hon. George C. Nowlan (Minister of National Revenue):: There is no expurgated edition of the blue book, because there never was an edition heretofore. A draft was prepared some three or four years ago but it never was published and never was used. I can tell my hon. friend that a draft has been prepared of the proposed blue book, and that it was handed to me last week. I have not had an opportunity to read it yet, but I hope to be able to do so within the next two or three days. In keeping with the assurance I gave the hon. member some weeks ago the tortoise will cross the blue line before the house rises, and I will be very happy to present a copy of the blue book to him.


Herbert Wilfred Herridge: I wish to thank the minister. It will save me answering a lot of letters if it comes that way.



ST. LAWRENCE SEAWAY FURTHER STATEMENT ON PASSAGE OF UNITED STATES NAVAL SHIPS

[Stage Direction]
On the orders of the day:
Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, questions have been asked in the house during the last few days concerning the passage of United States naval vessels through the Welland canal for celebrations in the upper lakes in connection with the opening of the seaway. As hon. members know, the problem has been that commercial traffic has exceeded expectations and from time to time has been delayed.

For some days friendly discussions have been going on between the two governments, and I am glad to be able to announce that it has now been agreed that only two of these naval vessels per day will be put through the canal on June 22, 23 and 24, and only three each day thereafter up to and including July 1. Furthermore, in some cases where three vessels go through they will be of such dimensions that the lockage required would be the equivalent of that for two of the larger vessels. If it should be found that the locks are not required on any of these days for commercial traffic, the passage of naval vessels will be accelerated. I might add that there has been excellent co-operation from the United States in working out this change of schedule.



BROADCASTING


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavista-Twil-lingate):: Mr. Speaker, I should like to ask the Minister of National Revenue if he will give consideration to proposing a change in the terms of reference of the committee on broadcasting in order to provide the premier of Ontario with an opportunity to air his grievance about his victory celebration.


George Clyde Nowlan: Mr. Speaker, I am sure if the committee makes any recommendation it will receive the attention which it deserves.



DOMINION COAL BOARD


[Stage Direction]
On the orders of the day:
Paul Comtois: Mr. Speaker, on June 11 the hon. member for Cape Breton North and Victoria asked the following question:
Has the minister of mines given any consideration to the proposal by the united mine workers of America that the powers of the dominion coal board be enlarged so that it can act as a coal sales agency?
The answer is yes. This proposal was made to the chairman of the dominion coal board in writing and subsequently verbally by officers of the union. Subsequently the hon. members for Cape Breton North and Victoria and Cape Breton South waited upon me and urged that the government give this proposal most careful consideration. The government has considered the matter very carefully

and cannot accept the suggestion for various reasons, including the following:
(a)	Apparently the coal board would be expected to sell the total production of the Nova Scotia mines at such price as could be obtained, whereas the corporation would carry on the operation of the mines and the government would have to make up the difference between the sales price and the cost of operations.
(b)	The government would have no control over the cost of operation.
(c)	The intervention of the government into the field of private enterprise for the benefit of one corporation would be an unprecedented development which could not be justified.
(d)	The corporation has a well established sales force which works very closely in cooperation with the dominion coal board.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Harold Hicks (Fraser Valley):: Mr. Speaker, in view of an article in the Citizen of June 11 indicating that the Fraser valley of British Columbia is the largest single commercial raspberry production region in Canada, I should like to inquire from the Minister of Agriculture what the plans are to handle the 1959 crop which will soon be ready to harvest. I understand that the stabilization board has dropped the price of government owned berries. What effect will this have on the 1959 crop?


Douglas Scott Harkness: Mr. Speaker, the present selling price for frozen raspberries held by the agricultural stabilization board is based on the price paid to growers plus processing charges for the 1958 production. The selling price should therefore not depress the market below the price at which berries were supported last year.
The preliminary estimate of raspberry production this year is somewhat lower than the 1958 production, and as yet there is no indication of the price levels at which the 1959 crop might be sold. Since any British Columbia production beyond domestic requirements usually moves to the United States market, developments in that country will have an important effect on the 1959 price level.
The stabilization board has not received any request to date for price support on the 1959 crop.
Inquiries of the Ministry



REQUEST FOR STATEMENT ON MEETING WITH WESTERN DELEGATION

[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: May I ask the Prime Minister if, following his answer to the Leader of the Opposition on May 26 regarding the second delegation of western farmers, he is now, as head of the government, in a position to say whether or not the government has arrived at a policy pursuant to the request for deficiency payments on wheat, oats and barley made by the two delegations representing many thousands of farmers in western Canada?
Right Hon. J. G. Diefenbaker (Prime
Minister): Mr. Speaker, there has been no decision made as yet with regard to this matter.



NATIONAL CAPITAL PLAN


[Stage Direction]
On the orders of the day:
Mr. G. J. Mcllrailh (Ottawa West):: Mr. Speaker, in view of news speculation over the week end concerning the chairman of the national capital commission, I should like to ask the Prime Minister if he will advise the house whether or not the chairman has resigned.


John George Diefenbaker: Mr. Speaker, the answer is no, nor has he communicated any suggestion of resignation.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I should like to ask the Minister of National Defence whether the movement of United States NATO fighters and fighter bomber aircraft out of France would have any effect on the communications and supply problems of the Canadian air squadrons in that country.


George Randolph Pearkes: The Canadian air squadrons receive the majority of their supplies through United States sources, but I understand that if-and this is still a hypothetical question -the United States fighters are moved out from France, the supply to Canadian fighter squadrons in France will still be assured.

Public Service Pensions PUBLIC SERVICE


Donald Methuen Fleming: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure respecting the adjustment of certain public service pensions to provide for increases, on a continuing basis, in certain pensions being paid to former civil servants, members of the armed forces, members of the Royal Canadian Mounted Police or their dependents; and to provide that the said increases shall be paid out of the consolidated revenue fund.
Motion agreed to and the house went into committee, Mr. Rea in the chair.


Donald Methuen Fleming: Mr. Chairman,
the purpose of this resolution is to provide on a statutory basis for increases in certain pensions to be paid former civil servants, members of the armed forces and the Royal Canadian Mounted Police or their dependants. Hon. members will recall that on July 28, 1958, I informed the house of the provision which the government proposed to recommend to parliament at the 1958 session to increase those pensions based on length of service where the recipients had been retired for a number of years. My review of the government's proposal can be found on pages 2757 to 2759 of 1958 Hansard. What I said on that occasion is equally applicable to the present resolution.
Subsequently increases effective July 1, 1958 in those pensions were authorized by vote No. 667 of Appropriation Act No. 5, 1958, which gave the governor in council the power to prescribe by regulation the terms and conditions under which those increases would be paid to the end of the fiscal year, March 31, 1959. While provision for those increases in respect of the fiscal year 1959-60 has been included in item 123 of the main estimates for the current fiscal year, yet, as indicated in the statement I made on July 28, 1958, the intention of the government was to introduce legislation at this session to provide continuing authority for those increases. As a result of order in council P.C. 1958-1366 of October 2, 1958, which was made pursuant to vote 667, increases in pensions have been paid in respect of the period since July 1, 1958.
During the fiscal year 1958-59 this measure benefited 15,425 cases in the groups of beneficiaries or their dependants which I mentioned earlier, to the extent of approximately $2,364,500.
I am pleased, Mr. Chairman, to say that the responses to the provision contained in the order in council have been very appreciative. I recall that the announcement

which I had the honour of making on July 28, 1958 was well received in the house. The provisions of the bill to follow approval of this resolution are somewhat complicated, since they deal with pensions paid under several acts and involve these different pension formulae. As the bill goes into this matter in some detail, I shall not occupy the time of the house by elaborating further at this stage.


Mr. Richard (Ottawa East):: Mr. Chairman, I welcome this resolution introduced by the Minister of Finance. This house, I believe, will agree entirely with the measure which was taken last year to give some relief to civil servants who had retired on pensions based on salaries which were scaled lower than those which exist now. I was hoping, Mr. Chairman, that the bill which will be introduced would modify some of the provisions which were contained in the order in council of October 2, 1958, to provide moneys for increases in civil servants' pensions. It has been the feeling of this house over some years that if and when this measure was introduced the purpose would be to establish at least a floor for civil service pensions which would enable them to have a good common way of living. If this resolution covers only last year's regulations, it will not in many cases improve the lot of the retired civil servant to the point of bringing his living standard up to that which is general these days.
I am not criticizing the basis of the resolution. However, I hope the Minister of Finance is acting in the light of the experience of the last few months; and by "the past few months" I mean those since July 1, 1958. Having found that the total cost to date has been relatively small, and in view of the fact that this resolution covers only a number of civil servants up to a certain number of years, and it is not an increasing number, I think he should make some effort to improve upon these regulations so that a greater number could benefit, and that the basis should be increased.
As I see it, this resolution will improve the lot of only those civil servants who retired prior to 1953. I must confess that I was guilty of thinking along the same lines. If someone were to refer to some of my speeches on this matter in earlier years they would find that I was also under the impression that provision for those who had retired up to 1953 would just about cover everything. Having seen some of the figures I now realize that this resolution could be extended to cover civil servants having retired up to 1957 and even 1958. I am hoping

that the bill may include some larger contribution and some greater benefits in the smaller pensions of retired civil servants.
This is only the resolution stage. Any information which may be required on the details I think can be obtained on the bill. Once again may I say that this is a welcome measure and that in this bill we hope the minister will do something more than was done last year.


Mr. Winch:: Mr. Chairman, I can say that we in this group also welcome the introduction of the resolution which indicates that there is to be some legislation which will have a beneficial bearing on certain of the previous employees of government in varying aspects. It is not our intention at this time to have to have a great deal to say.
As the minister has already pointed out, the bill to be introduced will deal with a number of acts which are at present on the statute books. The resolution foretells of dealings with former civil servants, members of the armed forces and members of the Royal Canadian Mounted Police or their dependants. However, as a result of the indication that such a resolution and bill were going to be introduced, we have been making some investigations in connection with this matter. All we want to say at this moment is that in our estimation there are in the existing acts a great number of discrepancies which need to be resolved, especially with regard to long time employees who have been long time pensioners, and their widows. In particular we feel that there are some discrepancies of a serious nature which must be cleared away with regard to widows of long time pensioners, and that the time is long past when some consideration should have been given to them.
That is all we are going to say at this time. We welcome the resolution and we are looking forward to the bill itself. After we see the bill in all its details and particulars we shall then have more to say.


George James McIlraith: The resolution reads as follows:
That it is expedient to introduce a measure respecting the adjustment of certain public service pensions to provide for increases, on a continuing basis, in certain pensions being paid to former civil servants, members of the armed forces, members of the Royal Canadian Mounted Police or their dependents; and to provide that the said increases shall be paid out of the consolidated revenue fund.
I take it that the whole point is that rather than provide for a change in what is being done for the pensioners at the moment the purpose of the resolution is to provide for it being done on a continuing basis rather
Public Service Pensions than through the estimates. I am wholly in accord that provision be made on a continuing basis rather than on an annual basis.


Donald Methuen Fleming: I may say that is precisely the purpose of the legislation. That was the undertaking I gave to the house last year.


George James McIlraith: That is as I understood the situation. From the minister's opening remarks I take it that in the legislation substantial changes are not contemplated from the provision now being made through the estimates. I have some things to say on that point. As the subject is complicated and there are different phases, by the very nature of it, it requires some working out in each particular case. I for one should like to see the bill. I am disposed to let the resolution stage pass so we may see the bill and, in order not to duplicate my questions to reserve them until the committee stage of the bill. I think that would be a more satisfactory procedure. I have one or two questions that I want to ask the minister at this stage, but I will ask them after any others who care to make general remarks have done so.
There is one feature of this matter that I think would indicate my feelings about it. Just, before I came into the house this afternoon, I was checking the resolution introduced by the former member for Fort William, Mr. Mclvor, in the 1957 session. It will be found in the debates for December 16, 1957 at page 2420. That resolution is in terms remarkably similar to those of the present resolution introduced by the minister.
I spoke at some length on that occasion, and I think perhaps there is no need to repeat those remarks here. For some considerable number of years I have felt that hardship was being suffered by a considerable number of persons pensioned from the public service, whether under the Civil Service Superannuation Act, the mounted police act, or the other legislation, although I must say that the obvious answer can be given, namely "Why were you not able to get something done about it?" Be that as it may, that has been my feeling for a considerable number of years.
I am glad to see what is being done. I think it could be extended and improved. I will have more to say about that matter at a later stage when the measure is before the house. There are one or two things that require improvement over last year's regulations, even apart from the question of increasing the rates. There are certain parts that are, as I think experience has shown, inadequate.

Canadian National Railways


The Deputy Chairman:: Shall the resolution carry?


Some hon. Members:: Carried.


George James McIlraith: Before it carries I should like to ask the minister this question. Can he tell us what is the anticipated expenditure under the new legislation?


Donald Methuen Fleming: It is the amount contemplated in the item before the house in this year's estimates. In item 123 it is estimated for the present fiscal year to be $3,100,000.


George James McIlraith: Is that the same rate as last year, but allowing for the full year?


Donald Methuen Fleming: Yes, that is correct. It is on the same basis, this time for a 12 month term.


George James McIlraith: So there are no new classes being brought under the legislation, and no increases in the rates of any of the classes there; is that right?


Donald Methuen Fleming: Yes.


George James McIlraith: I want to raise some points on that, but I think that can be done when the clauses of the bill reach committee stage.
Resolution reported and concurred in.
Mr. Fleming (Eglinton) thereupon moved for leave to introduce Bill No. C-60, respecting the adjustment of certain public service pensions.
Motion agreed to and bill read the first time.



CANADIAN NATIONAL RAILWAYS


Donald Methuen Fleming: 
William Moore Benidickson: Would the minister make a statement?


Donald Methuen Fleming: Mr. Chairman, this is the annual resolution which precedes the introduction of the annual Canadian National Railways Financing and Guarantee Act. It follows the annual review by the special committee appointed by the house to review the statements of the Canadian National Railways, Canadian National (West Indies) Steamships Limited and Trans-Canada Air Lines. That committee sat in the first week of May. It will be recalled that the government was requested to defer the present resolution, or at least defer proceeding with it, and having acceded to this request, Mr. Chairman, it now becomes somewhat urgent that the legislation be quickly proceeded with because it is desirable that it should be completed before the end of this month, for reasons which will be obvious to all members.
Hon. members will be interested to know that in 1952 the form of this annual resolution was changed so as to include the financing of all capital expenditures, whether authorized in that act or in earlier financing and guarantee acts. This procedure has been followed again this year.
The bill to follow the approval of the resolution is divided into three specific parts. The first part is to authorize the Canadian National Railways to incur capital expenditures of up to $348,900,000. The second part authorizes the railway company to make capital expenditures prior to July 1, 1960, to discharge obligations incurred under this act which become due and payable after January 1, 1960 in the amount of $130 million. The third part authorizes the railway company to enter into contracts for the acquisition of new equipment and for general additions and betterments in the amount of $81 million.
To summarize, Mr. Chairman, parliament is being asked to approve financing, either by way of the issue of new securities guaranteed by the government or by way of direct loan, in the amount of $289,900,000. For the convenience of hon. members I would ask permission, Mr. Chairman, to place on Hansard at this point a table giving the details of this sum.


Charles Edward Rea: Has the hon. minister permission to place this table on Hansard at this point?


Some hon. Members:: Agreed.
[Editor's Note: The table above referred to follows:]

The amount of $289,900,000 appearing in clauses 4(3) and 6(2) is computed as follows:
Road property	
Branch line construction	
Hotels	
Equipment	
Investment in affiliated companies: Trans-Canada Air Lines financial requirements	 $57,000,000
Others	 $17,416,000
Less:
Uncompleted work
Add:
Interim financing authority January 1 to June 30, 1960, on obligations incurred prior to January 1, 1960	
Less:
Depreciation accruals and amortization of discount on funded debt, etc. in relation
to calendar year 1959	
Depreciation accruals and amortization of discount on funded debt, etc. in relation to period January 1 to June 30, 1960


Donald Methuen Fleming: I do not need to dwell, 1 am sure, on why it is necessary to make provision authorizing commitments to be made in the first six months of 1960. That follows the practice which has now become well established, and permits the railway to carry on its functions having regard to the normal time of the sitting of parliament and the pressure of parliamentary ousiness, and to afford ample time in the session of next year for the house to appoint the committee which conducts the annual review of the affairs of the Canadian National system.
In addition to the features I have mentioned, this year's bill will provide, as did the bill of last year, for the appointment of the auditors of the Canadian National Railways for the year 1960, that is the calendar year 1960.


William Moore Benidickson: Are they different?


Donald Methuen Fleming: Prior to 1955 the appointment was made by a special bill. As the appointment of auditors relates to the functions of the railway, it was felt appropriate to include it in the annual financing and guarantee act, and parliament has followed that practice since 1955.


William Moore Benidickson: Mr. Chairman, I was unavoidably absent on the day in the session of 1958 when this particular legislation came before the house, and in my other five or
Canadian National Railways

six years in this house I was on the other side and it was my duty, as assistant to the minister of finance, to pilot this legislation through. Probably I more ruefully appreciate now the predicament of the former financial critic, the hon. member for Greenwood, when speaking at this stage of the legislation, because I find there is not a figure which is referred to in the resolution before us that can be related to the evidence before the special parliamentary committee on railways and shipping without a great deal of ingenuity. I do not think the figures are there-


Donald Methuen Fleming: May I say to my
hon. friend that the figures which will appear in the bill-


William Moore Benidickson: Quite. I know that from experience.


Donald Methuen Fleming: -accord with
those-


William Moore Benidickson: Therefore 1 shall not refer to the matter now or disturb the Minister of Finance in this debate.


Donald Methuen Fleming: They accord with those given to the committee and are to be found at page 215 and following of the proceedings of the special committee.


William Moore Benidickson: I was just going to come to the conclusion, Mr. Chairman, that it is very confusing to this committee of the whole,

Canadian National Railways which includes members like myself who did not serve on the railways and shipping committee, to find that there is no figure in the resolution before us that can be directly related to the printed evidence that the Minister of Finance has suggested is available in the committee Hansard of this session, on page 215 and following. But I know the Minister of Finance has, as I did in the past, with the consent of the committee tabled some additional information, and the particular paragraphs of the bill do, as it happens, tie themselves in with the evidence before the committee. But I do offer the suggestion from experience that those who draft resolutions of this type might look to ways and means of making it more possible for more than the 30 or more members who have given such great service on the special committee to see something in the resolution which ties in with the evidence that has been given before that committee.
I have looked at the resolution and it does in every respect, except for the figures, follow the pattern of resolutions in previous parliaments. I do, however, think it is appropriate for some of us to comment on certain of the factors which are presented to us at this stage. I was particularly impressed after reviewing, as a non-member, the very voluminous evidence of the railways, air lines and shipping committee in connection with several factors to which I wish to refer briefly. I hope that either at this stage or on second reading or in committee after second reading the Minister of Finance will comment on something which I regard as unusual, and I am referring to the bottom of page 3 of the financial report which the auditors of the C.N.R. made for the year 1958. Paragraph 2 says:
The financial statements for 1958 indicate a deficit of $51.6 million which is the highest recorded deficit since 1938. As explained in the notes to the financial statement-
This is the reference to which I wish to direct the minister's attention. The auditor says:
-on the suggestion of the Minister of Finance a different policy was adopted with respect to the obsolescence of steam locomotives.
All members of the committee may not have examined this balance sheet, but my complaint is this; that to those of us who are laymen it appears as though this figure of 7.1 or 7.2 in the balance sheet of 1957, re steam locomotive obsolescence translated to 1958 has been adjusted in such a way that the deficit of the C.N.R. for 1958 would have been greater to that extent than the figure reported in the press. In other words it would have increased the deficit of the Minister of Finance as announced in his budget

speech by the same amount, had not, in the words of the auditor, a suggestion been made by the Minister of Finance for this $7 million-plus adjustment between the accounts of 1957 and 1958. I hope the Minister of Finance will, at a proper time during the discussion of this report, comment upon this point.
I should also like the minister to indicate to us in the same sequence, since this is a matter relating to capital works and capital requirements, the degree of success or otherwise which has attended the latest bond issue by means of which the C.N.R. is asking the public rather than the minister for funds in a substantial amount to enable the railway to carry out its responsibility. I hope the minister will give us full information on this subject.
I can remember when the hon. member for Greenwood, now Minister without Portfolio, used to have the function which I now have under our parliamentary system, that of examining the proposals of the government and, to the extent that he felt it was in the public interest, questioning some of them and in certain cases criticizing them even though they involved the affairs of a crown company.
I wish to refer to the auditors' statement. I am not knowledgeable about some of these matters which involve high finance, but I had the feeling after reading this report by an experienced international firm of auditors, that they were somewhat alarmed about the rapid growth in the bond indebtedness of this, the largest crown company we have, and in consequence the fixed charges that result from the type of capital borrowing which we are permitting if we approve the proposal which is now before us.
The auditors showed on page 4 of their report to parliament for 1958 that the fixed charges of this railroad-irrespective of the obligation of the government to buy a certain percentage of preferred stock each year, thus introducing new capital into this company, unlike a private company-as a result of this legislation and legislation introduced over the past four or five years and in many years under the previous administration, has resulted in an impost before a profit is earned of the difference between $25.4 million in 1952, after the reorganization of the system, and $46.5 million in 1958. The auditor, to quote his words, said this:
It will be observed that during this period, fixed charges have come close to doubling and there was a particularly marked increase in the years 1957 and 1958, fixed charges going up $5.2 million in 1957 and $9.5 million in 1958.
I only want to draw the attention of the minister to the fact that there was no person in the House of Commons who did more to

create an atmosphere of doubt or caution in this respect than his colleague the hon. member for Greenwood, and I hope the Minister of Finance is keeping the debates of previous years in mind when he asks in this resolution for authorization of new capital expenditures not exceeding $348 million for 1959 which, in turn, will increase these fixed charges.
I hope, also, that the minister will give us a little more information concerning capital investment with respect to the trucking operations of the C.N.R. As I say, I did not have the benefit of being a member of the committee, although in the hurried way in which we do these things under the stress of the life we lead, I did peruse the evidence placed before the railways and shipping committee. As X read it I found that for the first time in many years the government's investment in stock of the C.N.R. has risen very substantially. I think the increase amounts to something in excess of $50 million. My closest investigation indicates that a substantial portion of that increase relates to the assumption of certain capital assets of the Hudson bay railway, but as this is a relatively new departure and certainly the greatest rise in government investment or transfer of investment from government back to the Canadian National Railways since 1952 I believe the minister should give us some explanation.
The figures I have indicate that this is a rise since 1952 of $52.9 million. I refer the minister to page 5 of the auditor's report. I have already indicated that the deficit for our largest crown company in 1958 was the largest deficit since 1938, a deficit of $51.6 million; and except for some bookkeeping, the reason for which I have not been properly persuaded, I suggest that this deficit would be an additional $730,000 or $740,000, and I hope the minister will inform us on this particular point.
I have indicated that I was not present in the committee the day this was debated in 1958, but I do not recall that we have ever had any difficulty debating general matters with respect to the Canadian National Railways and I feel it is quite proper at this time to ask the minister what is the present position of this government respecting railway pensions, because he ultimately would have this referred to him from the Minister of Transport. I ask what is the position of the present government, having in mind the long time attitude of the Prime Minister with respect to Canadian National Railways pension increases. I think this is all the more pertinent because of the resolution that was recently disposed of. There was no reference
Canadian National Railways whatever in that resolution to the C.N.R. and I think we should hear from the minister in this respect.
I have in front of me four or five pages of Hansard references to speeches of the Prime Minister in past days as to what should and would be done if he had authority with respect to the enlargement of pensions for retired Canadian National Railways employees. As has been properly said, none of these things that come before us as a parliament could mean too much to us if we did not all have a pretty broad and large confidence in government policy with respect first of all to management and second with respect to the board of directors.
I am not familiar with some of the new directors who have been appointed by order in council by this government. I cast no aspersions upon them, but without any intimate knowledge of the individuals concerned the committee would surely understand that sitting as I do on this side I must have some doubt when I note that one of the replacements on the board was a defeated Conservative candidate and another was a campaign fund collector for the Conservative party. I am just hoping that the government is not looking on this organization, our largest crown company, as another Harrington lake private preserve. I hope that will not be the attitude of this government.
There are one hundred and some odd thousand employees of this railway. They are watching this government very carefully. I want to tell the Minister of Finance and his colleagues that they are very concerned about appointments of this kind to the board which directs the management of this tremendous corporation. I have looked up "Who's Who" as indicative of the achievements of the replacements recommended by this government. I am not going to delay the committee by giving that information. It has always been my view that anything as large as the Canadian National Railways should look very carefully at the manner of appointment of directors of its chief competitor, the Canadian Pacific Railway.
In this respect I find two faults. I am an amateur in this game of public finance and business, but as I look at it my first criticism, offhand, would be that the board of directors of the Canadian National Railways is too small. I think it is 6 or 7 compared with 25 or 26 on the board of directors of the Canadian Pacific Railway.
I speak of this with some personal knowledge, because I know five or six of the directors of the C.P.R. and three or four of those of the C.N.R. I do know that a C.P.R.

Canadian National Railways director takes his job seriously. He is connected with a great number of other corporations, and in consequence it is his labour to try and bring business, freight and everything else, to the benefit of his company. I am sure that C.N.R. directors now and in the past have a similar obligation in their minds, but I question whether or not the appointment of lawyers, investment dealers and the like-and I remind the committee that I am a lawyer-represents the appointment of adequate replacements.


Donald Methuen Fleming: Mr. Chairman, would the hon. member permit a question?


William Moore Benidickson: Yes.


Donald Methuen Fleming: Does he approve the reappointment by the present government of directors appointed by the former government whose terms have expired since we came into office?


William Moore Benidickson: Mr. Chairman, may I inquire who those members were?


Donald Methuen Fleming: Mr. Wilfrid Gagnon and Mr. J. A. Northey.


William Moore Benidickson: Yes, I am familiar with the business connections of both those directors. They are good businessmen and have connections with a great number of business corporations in this country. They would likely develop and direct freight and business to the C.N.R. I refer in no disparaging terms to the former if not the present treasurer of the Conservative party, Mr. Bickle. I think it is an admirable thing that a man of his status would take on this public service job which I agree has to be done.


Paul Joseph James Martin: When was he
appointed?


William Moore Benidickson: I believe he was appointed for the C.N.R. board to replace another eminent businessman who had a great number of corporate connections across the country, Mr. Symington.


Paul Joseph James Martin: Oh, one of the
best.


William Moore Benidickson: I think that could be related, and I have no particular quarrel there. I am not sure, however, that a lawyer from Moncton who is listed in "Who's Who" as a publisher and general trusts executive is an adequate replacement for someone more active in maritime business. I think we should have had another labour man from Moncton. With respect to the western appointment I question whether a fuel dealer is a proper replacement for the president

of a wheat pool, an industry which as everybody knows supplies the greatest amount of bulk traffic to the railway as a grain deader in the west.
I repeat that there is a necessity for geographic representation on the board of directors. The board of directors is the same size as was approved by the previous administration I admit, but I am inclined to believe that the minister should advise his colleague the Minister of Transport to look for a little broader representation. I have no knowledge as to what a director of the C.N.R. is paid. I have never, outside a sense of smell with respect to the C.P.R., and that is all I have-the Postmaster General laughs but he is one of the first to use an advertising phrase of that nature.


Mr. Hamilton (Notre Dame de Grace):: But
we do not have such a thing as a sense of smell in advertising.


William Moore Benidickson: I am not at the moment making any scurrilous suggestions with relation to the word "smell". I am saying I have a concept or indication-


William McLean Hamilton: suspicion.


William Moore Benidickson: -from very few direct contacts with the directors of the C.P.R. I know three of them and I do not think I have seen any of the three more than once in the last five years. I have a feeling that they are real salesmen for their road, and I am simply urging, as I urged upon the former government, that we entice to the board of our nationally owned railway people who have a connection with business across Canada as well as others. I have referred to labour already. I made some inquiry about the replacement for a gentleman who was a close neighbour of mine when I was a boy and who was the labour representative on the C.N.R. board. I find that Mr. Daley was replaced by Mr. James Griffiths, assistant general chairman of the carmen of America. I think that is a very worth-while practice but there is one point about which I want to make sure. Mr. Daley was in the inner circle in that he was a member of the management committee of the board of directors which meets constantly in Montreal. I have forgotten the number of members of that committee but it is not more than five. Mr. Daley, representing labour, was for many years a member of that subsidiary but so important executive committee of the board of directors. Is Mr. Griffiths acting in the same capacity?
I want to direct the attention of the minister to one other matter at this point. We have

all become familiar with the effect of automation on the railways and I believe we are all acquainted with the fact that, combining the C.P.R. and the C.N.R., roughly 14,000 employees were displaced in 1958. This has a direct bearing on the kind of legislation we have before us now having to do with capital investment and replacement of old equipment with new that requires less labour. I want to say to the minister and the committee that we are constantly hearing from management of railroads not only in this country but in the United States about featherbedding. In presenting this legislation to us I hope that the minister has had a good look at the standard of efficiency in the operation of the railroad, having regard to the displacement of labour. I also hope he is looking behind the scenes and asking whether or not there have been similar reductions in the number of managerial and other staff in view of the fact that we are being asked to approve capital expenditures for the purpose of increasing efficiency. I hope that on second reading or later the minister will reply to some of these observations.


Harold Edward Winch: Mr. Chairman, every year the House of Commons has to deal with a resolution and bill similar to that now before us seeking the authority of parliament for capital or other expenditures running into hundreds of millions of dollars on the part of Canadian National Railways. Sometimes there are questions raised but the legislation is always passed and I think that is as it should be. However, personally I hope that the time is not too far in the future when it will not be necessary for the parliament of Canada to be asked to make these expenditures.
I am not going to make any charges whatsoever but naturally I am somewhat curious with respect to certain aspects of the operations of the Canadian National. I have not been a member of the special committee that deals with the Canadian National but I do have a keen interest in the operations of the railway. Canadian National Railways is a publicly owned system. In the past 26 years I have travelled from the Pacific coast to the Atlantic coast or from the Pacific coast to Ontario so often that I cannot possibly remember the number of times I have made the trip. My travelling has been both on the Canadian National and on the Canadian Pacific, and in making these long trips I have had a great many conversations with locomotive engineers, firemen, brakemen, passenger and freight conductors. These conversations have resulted in my present curiosity. I sincerely hope that either now or on second reading the Minister of Finance will answer
Canadian National Railways certain questions I have in mind arising from my conversations over the past 26 years with the men who are on the job and also because of the number of letters I have received in the past week as a result of the publicity given to the hearings before the special committee of the house which investigated the Canadian National.
My main question is, what was the relationship and attitude of the previous government with respect to the C.N.R.? If the minister cannot answer that, what is the attitude and relationship of the present government with respect to the C.N.R. as a publicly owned system compared with the Canadian Pacific, a privately owned railway? Does the government support the morale of the employees of the publicly owned system? Is there any direction at all from the present government to the Canadian National to operate in the most efficient way it possibly can and do the best job it possibly can? I should like very much to have an answer to that because from what I have been told by C.N.R. employees there is either a peculiar situation on that railway involving direct or indirect sabotage or else there is not sufficient backing of the publicly owned company. I have yet to find a person operating trains on the Canadian National, locomotive engineers, firemen, freight conductors or passenger conductors who will not say that the Canadian National could beat the blazes out of the Canadian Pacific on time from the Pacific to the Atlantic. But, Mr. Chairman, the schedules make the running time of the Canadian National a little bit slower than that of the Canadian Pacific. Why is this so?
The Canadian National has not the steep grades of the privately owned line. Those who do the running say that they could beat the privately owned line by hours. We, the people, own the Canadian National so why do we not do what all the conductors, engineers and dispatchers say can be done? If what I am told by businessmen is correct, and I think it is, then speed is money in so far as transportation matters are concerned. Who sets the scheduled time of passenger and freight trains on the Canadian National? Why is it, especially with regard to the Rocky mountain section where there are practically no grades at all compared with the Canadian Pacific grades, that the freight situation is the way it is?
I say, Mr. Chairman, it is curious, and I hope the minister can tell us why that situation prevails, and whether or not there are any controls being placed upon the Canadian National to limit the time in which those trains, either passenger or freight, can traverse the country from ocean to ocean. I am

Canadian National Railways very glad the Postmaster General is here. I am not speaking of the past two or three years because I have made no check during that time, and I want that clearly understood. I do know that previous to that I have actually seen Her Majesty's mail being transferred from Canadian National trains to Canadian Pacific trains at the first junction point, and yet the Canadian National train would reach Vancouver three hours before the Canadian Pacific train to which the mail was transferred. I have actually seen that happen, but not within the last two or three years. Does that situation still apply, or does it apply in similar circumstances across our entire transcontinental system?
There are other questions that come to mind. We have just recently opened a $11 million post office in Vancouver. Well over $1 million, I know, must have been spent on the tunnel from the post office to the Canadian Pacific station-it might well be $2 million, including equipment. Is there any reason why no tunnel was constructed to the Canadian National and Great Northern station, the Canadian National carries mail across Canada and the Great Northern to the United States? Is there any reason why there is only a tunnel to the Canadian Pacific station and not to the Canadian National? There are many questions. The Canadian National, I believe, is known as one of the greatest transportation systems in the world. We are certain it could be a lot better, so why is it not allowed to improve?
I have travelled Canadian Pacific for the last few trips I have made between Vancouver and Ottawa. It is amazing, Mr. Chairman, when you get into a discussion with travellers who have travelled on both lines to hear them say they will only travel by Canadian Pacific. I usually ask them why, and they will say that the Canadian Pacific has the dome cars and the Canadian National has not. Why, in the competition for passenger traffic and with far less tunnels than the Canadian Pacific has, has the Canadian National not the modern equipment? I am told that the Canadian National is losing out on passenger traffic because they have not the equipment. The Canadian National would not have to spend anywhere near the money on tunnel changes that the Canadian Pacific has, and yet they have not the type of equipment that the privately owned line has.
Is it deliberate? Is there any influence brought to bear or is it poor management? There must be answers somewhere to these questions which are posed to me either directly in conversation or by correspondence. I do not know the answers. All I do know is that year after year we have to vote hundreds of millions of dollars for the

Canadian National. There is no objection at all. Could the amount be reduced by greater efficiency? Could the amount be reduced by a speedier service? Could the amount be reduced if the Canadian National were permitted to operate on an absolutely competitive basis? All the information and evidence I have would lead me to believe that it could.
I hope that the minister, either now or on second reading, will make clear the policy and attitude of this government toward the operation of the Canadian National. Are they allowed a free hand in competition? Are they allowed a free hand on service and on equipment? As soon as the minister can give us answers to these questions, then we will know where to place the responsibility, either upon the government or on the management of the Canadian National.


Lionel Chevrier: Mr. Chairman, I have no intention of delaying this resolution unduly. There are, however, a number of points that I should like to bring to the attention of the committee and of the government as well. They arise, not only out of the statement made by the minister but out of other extraneous matters, some of which have been dealt by my colleague the hon. member for Kenora-Rainy River.
I have listened with interest to the speech which has just been made by the hon. member for Vancouver East. Not being on the other side of the house any longer, I have no intention of stating what the policy of the former administration was with reference to directing or not directing the affairs of Canadian National Railways. The minister, I am sure, will be able to give the position of the government if he chooses to reply to the query made by the hon. member.
However, I rose to deal with a number of other matters. In making his introductory statement the minister said that the bill divided itself into three parts. First, the bill authorizes the C.N.R. to incur an expenditure up to $348 million. Next, it authorizes the C.N.R. to make expenditures prior to July 1, 1960 in an amount of $130 million. Third, it authorizes the C.N.R. to enter into contracts for new equipment in the amount of $81 million, I believe. This information prompts me to discuss a matter which I have already brought to the attention of the government and which arises out of the establishment of the royal commission on transportation.
While no indication has yet been given by the Prime Minister or by the Minister of Transport as to the likelihood of the royal commission inquiring into certain aspects of the operation of the Canadian National Railways other than the broad terms of reference

which have already been announced, it seems to me that some consideration ought to be given to that matter. It seems to me that, because of the position in which Canadian National Railways finds itself at the moment, active consideration ought to be given by the government, not to going into the whole financial aspect of the railway but at least to going into some of the aspects which fall to be determined by a royal commission of this nature on transportation.
I can think of a number of matters to which consideration might be given. It seems to me that the commission might well look at the C.N.R. finances; I refer to the overall capitalization. My friend the hon. member for Kenora-Rainy River spoke about the deficit position and the increase in certain costs such as fixed assets. He drew the attention of the committee to the fact that over a period of years these costs have gone up considerably because of inflation, increase in the costs of materials, increase in the cost of equipment itself and also the dieselization program of the C.N.R. It also seems to me that the commission might well look into the terms under which the government capital should be provided.
I also wonder whether the time has not arrived to examine into the whole question of the financing of Canadian National Railways and to take another look at the capital structure of Canadian National Railways. As the committee knows, this was done in part by the former royal commission on transportation which made a substantive recommendation having to do with the recapitalization of the C.N.R., which recommendation was later implemented by the then government.
Is it necessary to give consideration to a matter of this kind at this time? I believe it is necessary. I do not think the minister will disagree with what I am saying, at least in its broad aspects. Again I want to make it clear that it is not possible to make a study of matters which have been entrusted to the royal commission and to go into the whole matter of the financing of the Canadian National Railways. However, I think there are aspects which might well be studied within the broad terms of the commission's reference.
May I now pass to another matter. The minister said that this bill deals with the appointment of auditors for the Canadian National Railways. I must say to him that I view with concern the appointment of an auditor for the year 1960 other than the firm which has given such excellent service to the Canadian National Railways over a period of years. I view it with concern for more than one reason. In the first place, I am informed
Canadian National Railways -and I believe this to be so-that the present auditors, George A. Touche and Company were not given notice that they were to be replaced by another firm. In the second place, I view this matter with concern because it was my experience when I sat on the other side of the house that the operations of the Canadian National Railways are such that they are to be found not only from one end of this country to the other but also in the United States as well. The Canadian National Railways have always argued that it is difficult if not impossible for an auditor to do the kind of job that should be done unless that auditor has subsidiaries or branches in the United States as well as in the large cities of Canada.
George A. Touche and Company have such subsidiaries. The Canadian Naional Railways operates a number of lines in the United States and, I need hardly add, lines in every part of Canada. The auditor who has been appointed for the year 1960-and I say this without wanting to reflect on him personally in the slightest degree-is, as the minister knows, a former defeated candidate of the Progressive Conservative party in one of the Montreal ridings. I do not want to pursue the matter unduly but I fear-and I shall have something to say about this subject a little bit later on-the danger of introducing politics into a railway of this magnitude.
I come back again to the point of the importance of and the necessity for an auditor of a crown corporation such as the Canadian National Railways having offices in the various regions of Canada, particularly a crown corporation with assets such as those possessed by the Canadian National Railways which include railways, airlines-I take it that the appointment of the auditors for 1960 also covers Trans-Canada Air Lines; if I am mistaken I stand to be corrected-telecommunications, transportation facilities, hotels; all of which, added up, come to many hundreds of millions of dollars; I believe the amount is well over $3 billion. Those are substantial assets. It would seem to me that the person who is going to audit such a corporation should at least have had some experience in that field. George A. Touche and Company have had a great deal of experience. I can remember that on another occasion many years ago, when there was a change of government there was also a change of auditors. On that occasion-and now I speak, of course, only from memory-the firm appointed was one which had offices all over the country and also in the United States.


William Moore Benidickson: They have international connections.

Canadian National Railways


Lionel Chevrier: That is extremely important for a crown corporation such as the Canadian National Railways.
I deprecate also, Mr. Chairman, the appointment of some of the members of the board of directors of the Canadian National Railways. Again I do not want to reflect on the person of any of these individuals, but I do feel it is a mistake when on a board of this importance men seem to be appointed rather because of their political affiliations than because of their business competence or business connections. I refer now to the successor to Mr. Ralph Brenan. I would like to put on the record a portion of an editorial which appeared in the Fundy Fisherman of January 28, 1959. The editorial is entitled, "Name Political Leader to C.N.R. Board", and reads as follows:
There will be widespread concern throughout the Atlantic region at the replacement of Ralph B. Brenan, one of the region's most outstanding business leaders, as director of the Canadian National Railways. It is well known that the difficulties of the C.N.R. are very great and require the most experienced management to surmount. Mr. Brenan brought to the board of management gifts of understanding of regional problems that are widely recognized as being of exceptional calibre.
The announcement from the office of Hon. George Hees, Minister of Transport, said that Mr. Brenan's term of office has expired. His replacement, W. Gerald Stewart, Q.C., is a past president of the New Brunswick Progressive Conservative Association.


William Moore Benidickson: And a defeated Conservative candidate.


Lionel Chevrier: I continue:
It has long been recognized that there should be a minimum of political weight given to appointments to a board of directors such as the C.N.R. and that business management qualifications are of paramount concern. The great seaports of Halifax and Saint John, faced with growing difficulties, had, in Mr. Brenan, a representative on the board thoroughly intimate with the problems of freight movements as they affect ocean shipping. His place will be difficult to fill.
Then I come to the final part of this editorial:
In the loss of the services, guidance and knowledge of Ralph B. Brenan, the C.N.R. has been given a severe blow. In a time of economic recession when the most efficient and capable management and direction is important, it is particularly unfortunate that his outstanding business ability is lost to a public board of such importance to the well-being of the Atlantic region.
Saint John citizens, who have for many years intimately known Mr. Brenan's exceptional gifts as a community leader and selfless devotion to public duties, will especially regret that his services are no longer available to an organization which is so important in many ways to the seaport.
Those are not my views; those are the views of this newspaper.
Then there is another appointment which has been made to replace that of Mr. Parker

from the province of Manitoba. The minister also will correct me if I am wrong in this respect. My information is that the person who has succeeded Mr. Parker has far more information and is far more competent in affairs concerning the Canadian Pacific Railway Company than in those concerning the Canadian National.


William Moore Benidickson: Mr. Chairman, may I ask the hon. gentleman a question. Mr. Parker was president of the Manitoba wheat pool and he is still available?


Lionel Chevrier: Yes, I understand that is the case, Mr. Chairman. However, this appointment has been made to succeed that of Mr. Parker's. If that is the case, as I have indicated, then I believe that that is not a good thing for the adequate operation of the Canadian National Railways.
There are a number of other matters that I might go into, but I desire to mention but one, and that has to do with the lay-offs on the Canadian National Railways. Unfortunately I am not in a position to place the facts on the record concerning that because we have not been given the information in that respect that I think we should have had. It was the practice of the former administration when asked questions of this nature to place on Hansard on orders of the day or on other occasions the position in so far as the C.N.R. lay-offs were concerned. I remember when I occupied a position on the other side that I was taken to task on more than one occasion by the then hon. member for Winnipeg North Centre because of the lay-offs which took place from time to time, and they were not nearly as great or substantial as they have been during the course of the years 1958 and 1959. As I say, I was taken to task because of lay-offs arising out of the information that I gave on the orders of the day.
But we have not been furnished such information. Questions have remained unanswered, or questions have been answered by indicating that the information could be obtained in committee. This information was not obtained in committee. Nonetheless, it seems to me that it should have been given in the house. The fact is that we have not received a comprehensive up to date statement about the lay-offs on the Canadian National Railways although we know that they are pretty substantial. It would seem to me, that before this bill passes the minister should give some indication of what these are.
There are, I am informed, employees of the Canadian National Railways having in some cases seniority of 35 and 40 years who have been laid off. Is there any reason for

this? Is it because the freight and passenger business of the Canadian National Railways has declined to the point where it has been necessary to do this? If that is the case, then I think the minister should give a full and frank statement of what the position is in all the regions of Canada, and then we will know the answer to that question.
I desire at this time to bring these points to the attention of the committee because I feel that before this measure passes they should be given consideration not only by the government but also by the minister who speaks for the government on this occasion.


Mr. Bell (Saint John-Albert):: Mr. Chairman, may I ask the hon. member a question. Does the hon. member know that Mr. Brenan, who he referred to as being replaced by Mr. Stewart, has been a treasurer of the Liberal party in the Saint John area for some time now? I do not mean to suggest that he is not a good citizen, but-


William Moore Benidickson: I suggested the other good citizen was Mr. E. W. Bickle, the former national treasurer of the Conservative party.


Lionel Chevrier: Mr. Chairman, I would like to answer the hon. member's question. The information I have put on record is that Mr. W. Gerald Stewart, Q.C., is a past president of the New Brunswick Progressive Conservative association.


William Moore Benidickson: And he is a lawyer.


Mr. Carter:: Mr. Chairman, there is one problem in connection with the operation of the Canadian National Railways in Newfoundland which I should like to bring to the attention of the minister at this time, and through him to his colleagues in the government. The railway service in Newfoundland is different, I think, from that in the other provinces in that it serves both inland and coastal settlements. The coastal settlements are served by coastal boats which are operated by the railway. In addition, the railway operates ships which transfer freight from mainland ports to ports in Newfoundland.
The problem I wish to describe to the minister is one which concerns freight claims. If an accident happens to a train, and goods in transit are damaged or lost the person to whom the goods are consigned can submit a claim, and that claim may be recognized and paid. If a ship transporting goods for the C.N.R. from mainland ports to Newfoundland ports runs ashore or meets with an accident, the same process is followed-the person to whom the freight is consigned can submit a [DOT]claim and obtain compensation in respect of damaged or lost goods. But the people in
Canadian National Railways the coastal regions who are served by coastal boats do not have this privilege. A person who loses freight or whose goods are damaged because a coastal boat runs ashore or meets with an accident cannot obtain satisfaction of a claim for loss or damage, the reason being that these coastal boats operated by the C.N.R. are exempted by the water carrier act. Because of these circumstances there is discrimination between people who live inland and people who live on the coast and who are served by the same company. It seems to me that the answer is to have the coastal boats excluded from the terms of the Water Carriage of Goods Act in this respect, and I would ask the minister to look into this matter and see if something can be done about it.


Donald Methuen Fleming: Mr. Chairman, a number of the hon. members who have spoken this afternoon have asked questions which are perfectly proper questions to ask on this matter. But a number of questions have been asked which pertain to the operation of the Canadian National railway system. As to the latter, I must say that the government does not operate the system, and with regard to any such questions all that any minister of the government can say-and all that the government ever does say-is that it will submit the questions to the management of the C.N.R. That is all I can do with respect to questions pertaining to operations.
In addition, we heard some rather surprising statements made here this afternoon. I had not expected hon. members opposite to be introducing personal considerations with respect to distinguished men who are giving worthy public service on the board of directors of the Canadian National Railways.


Lionel Chevrier: There was nothing personal.


Donald Methuen Fleming: I must say I deplore that being done. I do not recall that it has ever been done on previous occasions.


Lionel Chevrier: I rise on a point of order. I made it quite clear in my remarks that there was nothing of a personal character intended, and it was quite clear, also, from the remarks of my hon. friend the member for Kenora-Rainy River that his remarks were not of a personal nature either. So I do not believe the minister should pursue that angle any longer.


Donald Methuen Fleming: The hon. gentleman was not the only one who spoke. But he was the one who used an expression about "the danger of introducing politics" into the Canadian National system, and I wish to say to him that there is nothing in what he said, or in what has occurred, which would justify such personal assertions.

Canadian National Railways


William Moore Benidickson: Why so many defeated candidates?


Donald Methuen Fleming: That is an interesting question from the hon. member from Kenora-Rainy River. If his assertion is that anyone who is a defeated candidate or who has at any time been a defeated candidate is unfit to hold public office, then I think he is introducing something which will, on reflection, occur to him as being a dangerous principle, because there are quite a few people in the government service who have at one time or another been unsuccessful candidates. What is sauce for the goose must be sauce for the gander. I presume the hon. member would reconcile that situation with what he said by insisting that he was only referring to those who were defeated Conservative candidates.


William Moore Benidickson: No, I am referring to the biggest crown corporation-the C.N.R.


Donald Methuen Fleming: Apparently it is all right if those who preceded us appointed their defeated candidates to public office, but it becomes all wrong when the present government appoints to public office distinguished and worthy citizens who happen to be defeated candidates-


William Moore Benidickson: A point of order. The minister has asserted that the previous government appointed former defeated candidates. Who were they?


Donald Methuen Fleming: I could mention a considerable number.


William Moore Benidickson: To the C.N.R.? That is what I am talking about.


Donald Methuen Fleming: I am speaking
about government appointments in general. Surely, if the principle is good it must be a sound principle of general application. I do not hold with the principle just put forward by hon. members opposite. I do not think the fact that a man has been a candidate for public office-whether he has been successful or unsuccessful in obtaining it-is any disqualification for public service.


William Moore Benidickson: I agree.


Donald Methuen Fleming: If he has the
proper qualifications for public service, surely his candidature should not be allowed to stand in his way, regardless of the party whose candidate he was. If this applies in the case of one party I think hon. members opposite should be fair enough to recognize that it applies to persons who have been political candidates for parties other than their own.


William Moore Benidickson: It has been too conspicuous in this one big crown company.


Donald Methuen Fleming: Let me make it
clear that there have been four or five vacancies which have occurred in the ordinary course on the board of the C.N.R. since this present government came to office two years ago. I referred, in my question to the hon. member for Kenora-Rainy River, to two members of that board who had been reappointed by the present government. I note that the hon. member has no fault to find with those reappointments, but when the present government appoints others he has fault to find at once.


William Moore Benidickson: Just alarmed and worried.


Donald Methuen Fleming: Let me say that
the government considers these new appointments to be of men of high accomplishment and seasoned experience who are capable of making a notable contribution to the direction of the affairs of the Canadian National system as members of the board of directors. I think we have been fortunate in the quality of the men we have been able to appoint to the board.


William Moore Benidickson: Can I ask the minister
a question? Would he just describe the past connections of these men that might be translated into business for the C.N.R., or their experience other than being a lawyer or an investment dealer?


Donald Methuen Fleming: You will note that that question comes from the side of the house that disclaims any idea of introducing personal considerations into this question. Here we are asked to sit down and rake over the whole personal story of every one of our appointees, and yet we are told: Oh no, this is not prompted by any personal consideration.
The present set-up of the C.N.R. with a seven-man board was devised by the former government. We have made no change in that. It was decided by the former government, supported by the hon. member for Kenora-Rainy River, that it should be small rather than a large board.


William Moore Benidickson: In that, perhaps I was
wrong.


Donald Methuen Fleming: The present government did away with the commission form of management of the C.N.R. in favour of a small board of directors. We have made no change in that respect whatever. I expect in the light of what we have heard this afternoon that if we had enlarged the board of directors we would have been told that we had enlarged it for the purpose of appointing Conservatives to it. We have made no change whatever but have left the board precisely as it was.

The board has been set up from the beginning on a different basis from that of the board of directors of the Canadian Pacific railway for reasons the hon. member for Kenora-Rainy River recognized in his remarks this afternoon. The nature of appointments has been different because of the difference in the size of the board and the fact that in one case you have a private corporation and in the other a public corporation. Those whom we have been fortunate enough to enlist in the public service by accepting appointments to the board of directors of the Canadian National Railways are highly fit and qualified men who will give important and valued service on the board of directors of the C.N.R. system. The same applies to the other appointment which was mentioned and which can more properly be discussed on the bill.
Let me now deal with a point raised by the hon. member for Laurier who spoke about the present royal commission and suggested that it ought to examine as well the capitalization of the Canadian National Railways system. I would recall to his mind that the royal commission is a commission on railway freight rates and the scope of the commission does not include inquiry into the capitalization of the C.N.R. system. May I remind him, however, of the fact-


Lionel Chevrier: The terms of reference are pretty broad.


Donald Methuen Fleming: Yes. I speak subject to correction but it had not occurred to me that the terms of reference contained any provision that would include under any of the paragraphs an inquiry into the capitalization of the national system.


Lionel Chevrier: Mr. Chairman, perhaps the minister would permit a question at this stage. My recollection is that a portion of it had to deal with railway transportation and the effect on railway transportation. I do not have the terms before me. That is why it struck me, however, that perhaps it would be possible to give consideration to some aspects of railway financing.


Donald Methuen Fleming: I remind the committee, Mr. Chairman, that under the present financial provisions inscribed in the statute of this parliament the C.N.R. sells to the Minister of Finance each year preferred stock equivalent to 3 per cent of the gross earnings of the railway. Last year that involved a purchase on the part of the Minister of Finance of $21 million of the 4 per cent preferred stock of the corporation and this year it will involve a purchase by the Minister of Finance of $22.7 million of that preferred stock.


William Moore Benidickson: Is that realistic?
Canadian National Railways


Donald Methuen Fleming: That is what the statute requires.


William Moore Benidickson: I know; introduced by the former government.


Donald Methuen Fleming: Yes. That is what we are following obediently. That is the will of parliament.


William Moore Benidickson: You have taken no decision to change it?


Donald Methuen Fleming: This bill makes no provision in this respect and no other legislation on this subject has been indicated for the present session.
Let me quickly run through the other points raised by hon. members who asked for information. The hon. member for Vancouver East asked about the schedules of operation. This is entirely a matter within the power of the management of the Canadian National Railways system. It would be intolerable if the government or parliament interfered and told the C.N.R. system in detail how it should operate the trains or whether a transcontinental train should cut half an hour off its running time. It is obvious that this is clearly a matter falling within the scope of management and it would be highly improper for the government to interfere in the details of operations of that kind.
As to raising questions of this nature may I point out to the hon. member that that is the function and purpose that is served by the appointment annually of the special committee of the house because there hon. members, including at least one member from his own party, attended and asked a great many questions about operations. If he did not ask this question then perhaps the hon. member could put it on the list of questions to be asked the next time the officials of the system come before a parliamentary committee for questioning.
I was asked by the hon. member for Kenora-Rainy River concerning the increase in the government investment in the national system. Here may I point out that apart from several small items the increase in the capital investment by the government of Canada is accounted for by two large items. The first is the investment in the Hudson Bay railway which has been transferred to Canadian government railways; the amount is $34,682,534.80.


William Moore Benidickson: That was under the present minister's regime?


Donald Methuen Fleming: Yes, in 1958. The next item is the investment in the northwest communications system which was transferred to the Canadian National Railways; the amount is $17,833,075.52.

Canadian National Railways


William Moore Benidickson: Had there been any
similar increase in the previous five years?


Donald Methuen Fleming: I will make inquiries on that subject, Mr. Chairman.
A question was asked about the C.N.R. loan. I thought I had reported in the house already on this. On May 15 last the Canadian National Railways issued $150 million of 5 per cent bonds. These were duly sold, being $60 million of 1968 maturity and $90 million of 1977 maturity.


William Moore Benidickson: Mr. Chairman, I believe I inquired about the effective rate.


Donald Methuen Fleming: There was a 5 per cent coupon. The 1968 maturity was sold at $98.75 to yield about 5.18 per cent. The 1977 maturity was sold at $98 to yield approximately 5.17 per cent to maturity.


William Moore Benidickson: Would the minister permit a question at this time. I recall from my experience that when dealing with the large annual financial volume of requirement for the C.N.R. it has been customary for the government to underwrite it until such time as the bond market seemed to be propitious for the Canadian National Railways to go itself into the normal courses of the investment field for funds on a longer term. What would be the position at the moment with respect to the requirements contemplated in this bill which I believe the resolution says are approximately $348 million? What would be the picture for the next twelve months if the C.N.R. could not go into the financial market and get it own bonds on a long term basis? What are we really committing ourselves to in approving of this capital expenditure in so far as interest rates are concerned?
The other question I have in mind is this. To whom would the minister or alternatively to whom would the C.N.R. apply for getting these large amounts of capital funds? I think it is relevant now because we have to consider the present market. I did not feel the minister answered me very properly this afternoon when I gave to him the benefit of what was admittedly my own arithmetic after looking at the offer the minister had made for a new $200 million government of Canada loan requirement. What would the position be in connection with these capital requirements of the C.N.R.? Is it correct that if they needed money for only nine months and if they had a nominal interest rate on the bonds at 2J per cent and they were sold at a 2 point discount, anybody paying a 50 per cent income tax rate would find that that would be equivalent to 8.2 per cent compared with a par offering for nine months for the same amount of money?


Donald Methuen Fleming: Obviously the
hon. gentleman is wandering far from the subject matter before us and from the real purport of the inquiry he directed to me. He knows quite well, I am sure, that Canadian National Railways borrow money from the Minister of Finance.


William Moore Benidickson: If they cannot get it
from the public.


Donald Methuen Fleming: This has been
the practice for a long time. It certainly was the practice before we came into office because when we came into office we found that Canadian National Railways had borrowed from my predecessor as minister of finance- I speak now subject to correction as to the amount-something like $300 million. That was the indebtedness of Canadian National Railways to the former minister of finance when we came into office two years ago. That is the position. The first place of borrowing by Canadian National Railways is from the Minister of Finance, and periodically the company goes into the market to borrow money there by an issue of bonds guaranteed by the government. Canadian National Railways went into the market with the largest issue of bonds in its history in January 1958-


Paul Joseph James Martin: Three hundred million dollars.


Donald Methuen Fleming: -and recently, as I have indicated, went in for another issue.


William Moore Benidickson: Another big one.


Donald Methuen Fleming: The hon. member asked me what the rate would be for the next 12 months. I cannot predict the rate, Mr. Chairman. If I were able to do that I would be able to do something that I am sure nobody in Canada professes to be able to do at this moment.


William Moore Benidickson: May I assure the
minister-


Donald Methuen Fleming: May I continue, Mr. Chairman? I am trying to answer.


William Moore Benidickson: Would the minister allow me to ask a question-


Donald Methuen Fleming: May I finish what I am saying?


William Moore Benidickson: -in this context, may I say that the minister was probably justified-


Some hon. Members:: Order.


William Moore Benidickson: -in interpreting my remarks in the way he did. What I said was, would he confirm to this committee that if funds were not available outside-

The Depuiy Chairman: Order. If the hon. member for Kenora-Rainy River wishes to ask a question, perhaps he will wait until the minister has finished.


Donald Methuen Fleming: The hon. member asked that question before, in fact, several questions, and I am endeavouring to answer them. If I may continue, the hon. member will hear such answer as I am able to give him. It may not be the one he wishes but it will be such as I am able to give him.
This is the practice that has been followed. It is the practice that is in effect at the present time. What the bill will do will be to follow the usual provisions that have been in effect now for many years governing the financing operations of Canadian National Railways in this respect.
The next question I was asked by the hon. member for Kenora-Rainy River was in relation to trucking operations on the part of Canadian National Railways. I draw his attention to page 69 of the proceedings of the committee on railways, air lines and shipping owned and controlled by the government for May 4 where he will see that subject reviewed by the president of Canadian National Railways. He indicated on that page the circumstances under which the management proposes to enter on a trucking operation, saying that they needed to do so to be able to maintain their competitive position. If the hon. member will look further at page 221 of the proceedings he will see the amount given there in the statement tabled by the president of Canadian National Railways, Mr. Donald Gordon.


William Moore Benidickson: Was it $15 million?


Donald Methuen Fleming: It is $15 million for investment in capital stock of Canadian National Transportation Limited.
The final matter on which hon. members asked me questions concerned a difference in relation to a bookkeeping item amounting to something over $7 million. This also was discussed in the committee. The hon. member for Laurier raised it there. The hon. member for Kenora-Rainy River will find it dealt with at pages 195 and 196 of the committees proceedings. The hon. member for Laurier introduced it at some considerable length and Mr. Gordon made the following comment on it:
This whole affair arose out of a difference of opinion between technicians, in a sense. Our accountants-


William Moore Benidickson: You advised this. Are you the technician?


Donald Methuen Fleming: No, Mr. Chairman. If the hon. member will wait until I have read the whole answer I think it will be quite clear to whom Mr. Gordon refers.
66968-9-300
Canadian National Railways
This whole affair arose out of a difference between technicians, in a sense. Our accountants, supported by our legal department, felt that the entry for depreciation, as you have described it, was the proper way to handle this. When the matter reached the Minister of Finance, in terms of its being an item which should add to our deficit for that year, he took the position that it was not a proper entry as contemplated by the legislation. As I say, there was a difference of opinion. That difference of opinion was referred to the Department of Justice, and the Department of Justice gave a legal ruling, supporting the position of the Minister of Finance. In the light of that, there was nothing else we could do, and there was nothing else the Minister of Finance could do, because the ruling was given in the terms of an interpretation of the legislation that existed.


William Moore Benidickson: With respect to the concluding remarks of the Minister of Finance, probably I should not have interrupted him with some vehemence, but does he recall that I quoted a very authoritative source saying that he was the one who advised this change? I do not find that there is too much departure in the evidence he has just read to the committee from page 195.


Donald Methuen Fleming: I can clarify that if there is anything further to be added. When this matter came to my attention it was quite clear what the views of Canadian National Railways were, but we are not necessarily bound by them. My accounting advisers took the opposite view and in view of the difference of opinion the matter was referred to the Department of Justice for a ruling with the result that Mr. Gordon indicated in his testimony to the committee.


William Moore Benidickson: If the Department of
Justice had not so ruled, the deficit as reported to the house in April would have been more than $7 million larger than was reported?


Donald Methuen Fleming: That is the approximate figure. I think it was just over $7 million.


Paul Joseph James Martin: There are a few questions I should like to ask. My hon. friend has referred to the fact that the C.N.R. has two methods of financing its operations. One is by direct loan from the government of Canada and the other by borrowings from the Canadian people. He has referred to an issue of $150 million on May 15, I think it was, and I believe the rate of interest was 5 per cent. Is that the correct rate of interest?


Donald Methuen Fleming: That is correct. That was the coupon rate on both maturities.


Paul Joseph James Martin: Are these loans from the public undertaken by the C.N.R. the result of agreement on the part of the government or the Minister of Finance?

Canadian National Railways


Donald Methuen Fleming: What kind of
agreement?


Paul Joseph James Martin: Does the Minister of Finance concur in the decision to make a public borrowing?


Donald Methuen Fleming: The timing of the issues by Canadian National Railways is, of course, a matter for prior discussion between the management of the national system and the Minister of Finance because the Minister of Finance is required, pursuant to legislation contained in this type of bill, to guarantee the issue.


Paul Joseph James Martin: That is what I thought. Would I be correct in saying that one of the reasons for the decision to have this borrowing of $150 million undertaken was the failure of the $300 million issue that came out in January of 1958, I believe?


Donald Methuen Fleming: Mr. Chairman, it is entirely wrong for the hon. member to suggest there was any failure in connection with that January, 1958 loan. It was a very successful loan and was oversubscribed.


William Moore Benidickson: The Bank of Canada report says it was accompanied by softness in its relationship with the commercial banks.


Donald Methuen Fleming: The loan was substantially oversubscribed. We were very pleased with the result of this offer of Canadian National bonds.


Paul Joseph James Martin: The Minister of Finance says that this was a very successful loan, and he will of course recall that it had very considerable difficulty at the outset.


Donald Methuen Fleming: No.


Paul Joseph James Martin: The minister says, no; I think he will find that is the case. The governor of the Bank of Canada, at page 24 of his report, said that it involved initially a large increase in bank loans to security dealers, which is another way of saying that the loan did not meet with immediate public response. Certainly, the fact that a year later these bonds had a market value of between 85 and 89 is an indication of their reception and also of the state of the bond market at that time.


Donald Methuen Fleming: Not at that time, no.


Paul Joseph James Martin: A year later, I said, these bonds were worth around 85 or 89.
One of the reasons suggested for the investment of some of the trust funds of the unemployment insurance commission in

this particular Canadian National 4 per cent bond issue of $300 million was to encourage the public to participate in this borrowing which I say was not, in spite of what the minister says, a success at the beginning. What I want to ask the minister is this: Did the unemployment insurance commission investment committee decide to invest $15 million in what I say was, at the outset, an unsuccessful issue or certainly an issue that was not readily responded to, with the minister's knowledge? Was the minister aware of the decision to make this investment by the unemployment insurance investment committee, of which the governor of the Bank of Canada acts as chairman?


Donald Methuen Fleming: The hon. member is entirely wrong in the statements that he is making. He keeps on talking about the reception of the loan. The reception of the loan in January, 1958 was most cordial. I might say that the loan was very heavily oversubscribed. It was almost a record oversubscription, and that on the largest loan ever offered by Canadian National Railways.
Now, if the hon. gentleman talks about any drop in the quoted market value of bonds since then, he could take other examples as well and he could compare them as I had occasion to do not many weeks ago in this house. There was a substantial drop in the market value of all kinds of government bonds in this country in the years 1955-1957, bigger drops than have occurred since.


William Moore Benidickson: Not like the one now!


Donald Methuen Fleming: Yes. I shall be glad to go back and put those on the record again if it gives any comfort to hon. members to contemplate this subject.
But I come to the question asked by the hon. member. The Minister of Finance does not stand peering over the shoulders of the investment committee of the unemployment insurance commission to supervise, day by day, their financial transactions. These are highly competent men, I am sure the best available for this very important service. Whatever investment they made at that time I am sure was the kind of investment that would have been advised by any other competent person under the circumstances existing then.


Paul Joseph James Martin: No one quarrels with the competence of the governor of the Bank of Canada or the members of the investment committee of the unemployment insurance commission.


William Moore Benidickson: If the minister does not look over their shoulders.


Paul Joseph James Martin: The question of their competence only beclouds the issue. I say again that this loan had great difficulty in getting under way, and the decision of the investment committee of the unemployment insurance commission to invest trust funds, largely the contributions of workers and employers in this country, was taken at a time when this issue was having the difficulty which I have mentioned, and which the minister denies but I think the fact will support what I am saying, as indeed does the report from the governor of the Bank of Canada which I have read.


Donald Methuen Fleming: He is referring to the after market, which is a different thing altogether.


Paul Joseph James Martin: I also referred to the after market. A year later the value of the bonds was between 85 and 89. It will be seen that the market value of the issue, almost from the date of issue, was one of diminishing value. I do not have the exact figures before me, I wish I had. I think it will be found that within six months the value was at a figure that was comparable to the highest quoted figure of 89 which I mentioned a while ago.
What I am trying to get from the minister is this: Was the minister aware that the investment committee, including his own deputy minister and the governor of the Bank of Canada, had decided to invest some of the unemployment insurance funds in this particular issue? Was that decision taken with the minister's knowledge, with his concurrence and with his advice? I am not now criticizing him if that was done, but I want to find out.


Donald Methuen Fleming: With great respect, that has no relevancy whatever to the measure before us. The hon. member seems to think we have already reached a later item announced for today's business, namely the bill to amend the Unemployment Insurance Act. His question has no relationship whatever to the present measure.


Peter Francis Martin: My friend says this has no relationship. We are now discussing the financing of the Canadian National Railways. The minister has referred to an issue of $300 million in January, 1958, and that is the issue about which I am talking. It bore an interest rate of 4 per cent maturing on February 1, 1981. It is interesting to compare this issue with the subsequent issue of May 1959, in the amount of $150 million which, incidentally, had a maturing date four years earlier in 1977.
If my hon. friend is suggesting that we cannot discuss this particular issue under 66968-9-300i
Canadian National Railways this item to ascertain what was in the government's mind when it allowed trust funds to be invested in this particular issue, then I have no appreciation of the value of order in this committee. It is because I feel I am on sound ground that I ask the minister now to tell us whether or not he, as Minister of Finance, approved of the decision of the unemployment insurance investment committee to participate in this issue?


Charles Edward Rea: Order; questions regarding the financing of the bonds are in order, but questions as to who purchased the bonds, in my opinion, have nothing to do with this resolution.


Paul Joseph James Martin: With great
respect, sir, I would ask you to reconsider what you have just said. Here is the government of Canada, represented by the Minister of Finance who has to deal with these things as the minister of government responsible for the financial operations of this crown corporation, whose operations are dependent upon direct loans from the government of Canada and the Canadian public. Surely one is entitled to ask whether another arm or another division in the government of Canada made an investment in this particular issue with the knowledge and concurrence of the Minister of Finance.
If that procedure is not in order, Mr. Chairman, then I am not following the rules of the House of Commons. The Minister of Finance, of course, says that is the case. I know you will appreciate that this is an important matter. This is one involving not only an issue offered the Canadian people but at the same time an issue that was helped along its difficult way by investment from funds supplied by two segments of the Canadian people. All I am asking the Minister of Finance is that he tell the committee, if that investment was made respecting this $300 million issue which he approved, with his knowledge and concurrence.


Charles Edward Rea: Order. As I mentioned previously, I feel that is a question to be asked at another time.


Paul Joseph James Martin: I hope the Minister of Finance will be here.


Charles Edward Rea: I do not think that at this time we should go into the question of who bought every bond.


William Moore Benidickson: I should like to speak to the point of order, Mr. Chairman. At this point we are involved in $338 million of capital financing for the C.N.R. as referred to in the resolution on the order paper to which the minister has attached his name and which we are now debating. I want to refer

Canadian National Railways Your Honour to the annual report of the C.N.R. which indicates in detail the kind of financing that has been necessary in relation to these capital funds. The hon. member for Essex East has said that the Minister of Finance under certain circumstances in relation to the C.N.R. is obligated to give his opinion about certain matters related to the investment arena. I think that this is an extremely important matter, namely whether the Minister of Finance did or did not advise the C.N.R. that it would be better, for these capital expenditures last year and now in relation to next year, to go to the market or to rely on him and his policy in respect of government financing.


Charles Edward Rea: That was not the
point I was discussing. I was discussing the point whether or not the minister had caused the unemployment commission to buy those bonds. The reply was that we were not dealing with the question of who purchased the bonds. That was the only point I was making.


Lionel Chevrier: On that point, if I may be allowed to say a word, I should like to say this. The resolution as well as the bill deals with an issue of C.N.R. bonds. In fact, although I have not the notes which I took-


Charles Edward Rea: I realize that fact. I am not saying anything about that matter. The question arose whether or not the minister should say whether he allowed the unemployment commission to buy those bonds. I said that this resolution is not concerned with the individual purchasers of the bonds but that it is just concerned with the sale of the bonds; that to whom the bonds went was not the concern of this committee: that we were concerned with what it cost to raise this money, whether we raised the money and whether or not we raised it in the ordinary way. That is the point.


Lionel Chevrier: I am not going to pursue the matter further. I think that the point made by the hon. member for Essex East was well taken. But since Your Honour has ruled on the matter-


Charles Edward Rea: It might be raised in another committee.


Paul Joseph James Martin: I hope that Your Honour wil be presiding over the committee and that the Minister of Finance will be here.


Lionel Chevrier: I should like to pursue another matter and to bring to the attention of the minister, if I may-and I hope he will follow me-the terms of reference of the royal commission on transportation was made 
earlier. In his announcement the Prime Minister made it quite clear that it was a commission dealing with railway transportation. He went on to give the terms of reference which were more particularly itemized as follows. I am not going into them all but we find amongst other things the following:
(b)	the obligations and limitations imposed upon the railways by law for reasons of public policy, . . .
(c)	the possibilities of achieving more economical and efficient railway transportation;
And this is the one to which I direct attention.
(d)	whether and to what extent the Railway Act should specify what assets and earnings of railway companies in businesses and investment other than railways should be taken into account in establishing freight rates; and
(e)	such other related matters as the commissioners consider pertinent or relevant to the specific or general scope of the inquiry.
It struck me that within all these specific and broad general terms one might well go into some of the financial aspects of the C.N.R.


Donald Methuen Fleming: It will, of course, be a matter for interpretation on the part of the members of the royal commission itself as to what are the meaning and the scope of the terms of the order in council binding them which the hon. member has read. I had not thought those terms included an inquiry into the internal capitalization of the Canadian National Railways. I think there will be no advantage to be gained in my making any further comment on this subject except to say that, while I cannot speak for my colleague the Minister of Transport, I have received no representations on this subject of revision of the capitalization of the system or inquiry into that subject. That is not to say that others may not have received representations. However, I have not received any.


Lionel Chevrier: Does the minister not think that this might be an opportunity for consideration? It is not only a question of representation by the Minister of Transport. I doubt whether he has made any. I presume he has not done so. The Canadian National Railways may well have done so. I do not know whether or not that is the case. If there is a point in what I have brought to the attention of the committee-and I believe there is, and other hon. members agree- does the minister not think that this matter might well be given consideration?


Donald Methuen Fleming: I doubt whether I am the person to whom to put that question. I would just add this one observation. I would think it would be regrettable if more subjects were added to those already assigned to the royal commission with the result that

such additions might have the effect of delaying the report on this urgent question of the whole basis of establishing railway freight rates in Canada.


William Moore Benidickson: I think it should be recognized that the minister may probably not be up to date on the views of the Minister of Transport with respect to approval of a new pension plan for retired employees of the C.N.R. But having sat in the house for the same length time as I have-and I have been here since 1945-1 think the Minister of Finance has listened, as have I, to the views of the Prime Minister with regard to the necessity for or the desirability of enlarging the pensions of the C.N.R. employees previously retired. I imagine that in the last two years no scheme of this kind-and we have gone more than two years since this government has come into office-or no proposal of this nature would come to the government without reference to the man who must find the money to pay for it, namely the Minister of Finance. I therefore wonder whether the minister would make a comment about the possibility of adhering to the recommendations that were made by the Prime Minister when he sat in opposition with regard to the desirability of augmenting pensions for retired C.N.R. employees.


Donald Methuen Fleming: I know that representations have been made on this subject occasionally, I think largely by individuals and perhaps by some organizations. The matter has been given study but no decision has been reached on it yet.


William Moore Benidickson: I was astounded to hear the minister say, with two years cabinet experience, that these representations had been made by individuals only and perhaps by some few organizations. If I may be permitted to do so, I might indicate the national nature of the representations that are available to the minister. I thought he rather confessed the fact that he had not seen anything except the odd letter or individual representations. They have come to a great number of members of parliament on a provincial and national basis.


Donald Methuen Fleming: I was speaking of those which have come to my attention in the past two years.


Chesley William Carter: Mr. Chairman, I would like to say a further word concerning the problem which I raised earlier today on the resolution. I was trying to be brief and not take up unnecessarily the time of the committee, but perhaps I did not make myself clear, because the minister indicated in reply that it was a problem of operation and that all he could do was to pass it along to the
Canadian National Railways management of the Canadian National Railways. The problem which I described is not a problem of management at all, and there is no point whatever in passing it along to management, because there is nothing whatever they can do to remedy this situation. Whatever action is to be taken must be taken by the government.
The minister will recall that at the time of confederation the railway property and the coastal boats were the property of the Newfoundland government. On confederation the ownership of that property was vested in the government of Canada; it is not the property of the Canadian National Railways at all. The government of Canada appointed the Canadian National Railways as their agent in operating the facilities and they laid down certain conditions under which that operation would be carried out. One of the conditions was that the ships carrying freight across the gulf from mainland ports in Nova Scotia to the Newfoundland terminal would be regarded as a continuation of the Canadian National Railways. It was because of that condition that when any of these ships have an accident compensation for any losses or damaged goods can be claimed by the people to whom the goods are consigned. We had a case like that a year or two ago when the gulf ferry the Cabot Strait ran ashore near Port aux Basques with a considerable loss of freight in addition to a lot of other goods which were damaged. The people to whom those goods were consigned were able to claim their losses from and get paid by the Canadian National Railways.
The Canadian National Railways has nothing whatever to do with the operation of the water carriers act. That is an act of this government, and any change must be made by the government.


Charles Edward Rea: Order. I think the hon. member has answered his own question and is not talking on the resolution now. This is strictly a financial resolution. I think the hon. member's questions are more a transport matter than a financial matter, and I cannot see how they refer to capital expenditures.


Chesley William Carter: Mr. Chairman, if by a decision of the federal government the ships which ply across the gulf are considered to be a continuation of the Canadian National Railways, surely it is logical that the coastal boats should be put into the same category and that they too should be considered a part of the Canadian National Railways. Then in that case people who lose goods on one ship operated by the railway will be treated in the same way as people who

Farm Improvement Loans Act lose goods on another ship operated by the same company in the same service. That is all I am asking and it is government action, not C.N.R. management action, that can remedy the situation.
Resolution reported and concurred in.
Mr. Fleming (Eglinion) thereupon moved for leave to introduce Bill No. C-61, to authorize the provision of moneys to meet certain capital expenditures of the Canadian National Railways system for the period from the 1st day of January, 1959 to the 30th day of June, 1960, and to authorize the guarantee by Her Majesty of certain securities to be issued by the Canadian National Railway Company.
Motion agreed to and bill read the first time.



FARM IMPROVEMENT LOANS ACT


Donald Methuen Fleming: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Farm Improvement Loans Act to extend its operations for a further period commencing on the 1st day of April, 1959 and ending on the 30th day of June, 1962; to provide that the maximum amount of bank loans made in the new period and guaranteed under the Act shall he three hundred million dollars; to provide further for certain changes in connection with the administration of the act.
Motion agreed to and the house went into committee, Mr. Rea in the chair.


Donald Methuen Fleming: Mr. Chairman, the
purpose of this resolution is to permit the introduction of a bill to extend the Farm Improvement Loans Act for a further lending period and to amend the act in certain other respects.
This legislation was originally enacted in 1944 and came into force on March 1, 1945. The act was designed to encourage the granting by banks of intermediate and short term credit to farmers for the improvement and development of farms and for the improvement of living conditions thereon. The purposes for which farmers may obtain loans are many and varied and include loans to assist in financing the purchase of agricultural implements, livestock, agricultural equipment, farm electric systems and irrigation systems and to assist in financing the construction or alteration of farm buildings and improvements or developments of a farm, such as fencing, drainage, irrigating, breaking, and similar projects.
These loans are made by the chartered banks under a guarantee provided by this legislation. The government's liability to a bank is limited to 10 per cent of the aggregate

principal amount of guaranteed farm improvement loans made by a bank during a lending period. This liability has also been limited to a total lent by all banks during a lending period of $300 million. The maximum amount of a farm improvement loan is presently set at $5,000 and the interest rate is five per cent simple interest. Repayment terms of loans are for varying periods up to 10 years, depending upon the amount borrowed and the purpose for which the loan was obtained.
Loans under the act during 1958 totalled 70,278 in number and $90,539,743 in amount borrowed. This represents an increase in lending of approximately $20 million over the amount lent during each of the preceding three years. Repayments during the year amounted to $76,946,506.
As I have indicated, lending during 1958 was substantially larger than in each of the preceding three years, and for the months of January, February and March, 1959, a further increase has occurred over the corresponding period in 1958. In these three months the sum of $14,707,086 was borrowed in 1959 as against $10,436,991 in the same period in 1958. This represents an increase of almost 41 per cent over last year, so that lending during 1959 may be expected to reach a record volume.
Since the inception of the act to December 31, 1958, that is to say 15 years ago, a total of 723,675 loans have been granted for $813,499,097. Repayment of loans to December 31, 1958 amounts to $675,433,667, which is approximately 83 per cent of the amount borrowed. Accumulated losses under the guarantee since inception of the lending to December 31, 1958 amount to $835,772, of which $60,614 has been recovered. Therefore the loss ratio on $813 million lent is less than one-tenth of one per cent.
The figures give some indication of the credit service which has been rendered to Canadian agriculture through this legislation. The credit has been available and utilized in all provinces, and for the information of the committee I might place on the record a table indicating the extent of the lending by provinces for the years 1957 and 1958. It might meet the convenience of hon. members if it were incorporated in Hansard at this point in my remarks.


Charles Edward Rea: Has the hon.
minister the permission of the committee to include this material in Hansard as described?


Some hon. Members:: Agreed.
(Editor's Note: The table above referred to follows:)



LOANS CLASSIFIED BY PROVINCES

[Stage Direction]
1958	1957	% Increase or Decrease	Total 1945-1958No.	Amount	No.	Amount	No. Amount	No. Amount$	$	$Saskatchewan	
16,077	19,766,505.08	13,581	15,856,982.66	+18.4	+24.6	210,591	242,206,106.10Alberta	
17,335	21,793,131.39	14,257	16,923,731.79	+21.6	+28.8	197,186	217,430,807.70Ontario	
12,796	17,735,159.66	10,438	13,043,018.40	+22.7	+36.0	108,799	125,138,156.00Manitoba	
7,164	8,876,186.28	6,117	7,104,417.26	+17.1	+24.9	88,036	94,691,324.11Quebec	
12,187	16,442,747.46	9,631	11,862,445.24	+26.5	+38.6	71,733	84,880,794.32British Columbia	
1,892	2,653,165.25	1,597	1,990,218.64	+18.4	+33.3	20,888	23,100,770.61Prince Edward Island	
1,127	1,265,038.45	961	1,047,519.72	+17.3	+20.8	11,184	10,608,375.09Nova Scotia	
871	989,452.12	779	852,780.28	+11.8	+16.0	8,126	7,623,552.67'New Brunswick	
783	946,602.45	577	688,202.46	+35.7	+37.5	6,781	7,376,254.97Newfoundland	
46	71,755.84	50	58,557.49	- 8.0	+22.5	351	442,955.74TOTALS	
70,278	90,539,743.98	57,988	69,427,873.94	+21.2	+30.4	723,675	813,499,097.31
>4
Farm Improvement Loans Act
[Stage Direction]
Farm Improvement Loans Act
Donald Methuen Fleming: It will be noted that there has been an average increase in the amount lent in all provinces of 30.4 per cent in 1958 over 1957.
Specifically, the purpose of the present resolution is to permit the introduction of a bill to amend the Farm Improvement Loans Act in order to achieve the following objectives:
1.	To include beekeepers as qualified borrowers under the act. At present it is not possible for persons who have a principal occupation of beekeeping to obtain loans under the act. It is felt that lending should be made available for such persons.
2.	To increase the maximum loan allowable under the act to $7,500. This is considered warranted by reason of the additional capital requirements for farming in this mechanized age. The present limit on any one loan is $5,000. A loan of $7,500 would, of course, be beyond the repayment ability of the average farmer over a four-year term, but the increased amount could be utilized by banks in the case of large operators.
3.	To extend the provisions of the act for a further lending period. Lending since inception has been done within certain lending periods and the latest of such periods expired March 31, 1959. It is proposed to have the new lending period extend from April 1, 1959 to June 30, 1962. Although most lending periods have been for exactly three years in the past the proposed expiry date of the new period would make it possible to amend the act to set up a new period at a more appropriate time than is the case when a period ends March 31st. Although the latest lending period under the act terminated on March 31 last, I might say that the lending operations have been continued by the banks on my undertaking to introduce the present measure at this session.
4.	To limit the liability of the government under the guarantee to a maximum of $300 million which may be lent by all banks collectively during the new lending period. As I have mentioned previously, the contingent liability of the government with respect to the lending was limited, in the lending period which recently ended, to a total of $300 million lent by all banks. That is to say, the liability is based on 10 per cent of the lending of each individual chartered bank up to a total lent by all banks of $300 million. In the period from April 1, 1956 to March 31, 1959 there was approximately $240 million lent by all the banks and consequently it is felt that the $300 million figure is likely to be adequate for the servicing of this credit for the period proposed, namely from April 1, 1959 to June 30, 1962.


William Moore Benidickson: I think the committee generally will welcome the announcement of the minister. I was particularly pleased to hear the tributes which the hon. gentleman paid to this particular statute, the Farm Improvement Loans Act. This was one of the many statutes which were made available or which were created after the war to take care of the economic transition which was expected to take place at that time.
Unfortunately, members of the committee have not available too much information. I do not say that this is a new situation. The last time we were asked to amend the act in 1956 we were asked to do so for another expiry date, and legislation was introduced in March of that year, 1956, when there was more excuse for not having available to the House of Commons the latest report for the calendar year. I find that my remarks must be somewhat limited by the fact that the latest report available to members of the House of Commons is the report for loans made under the act for 1957.


Donald Methuen Fleming: I think the hon. gentleman must be mistaken. The 1958 report has been printed, and I have a copy in my hand.


William Moore Benidickson: I can assure the minister that having received notice on June 8 of his intention to proceed with this matter I made the usual inquiries, not directly, but through my secretary; no, I did so directly, and I was informed by the distribution office that the 1958 report was not available or, certainly, was not available as of last Thursday.


Donald Methuen Fleming: I am surprised. I think there must be some mistake.


Herbert Wilfred Herridge: May I say that I had exactly the same experience. I have a copy of the 1957 report, and I was told that this was the last report available for distribution.


William Moore Benidickson: As soon as I was told that this matter would come up for debate I endeavoured, as any hon. member would, to obtain a copy of the last available annual report. I found that in my personal files I had only a report for the calendar year ended December 31, 1957. I remember an experience of this kind last year with respect to the Canadian Farm Loan Act. Maybe we were derelict in the past, when the Liberals were on the government side, but I want to be fair. I want to say that any minister introducing legislation of this kind, certainly when it is legislation contemplated in the speech from the throne, should do his utmost to make sure that the report of the operations of the crown agency concerned should be the most

up to date possible. I have looked into this, and I want to assure the minister that when the amendment of this particular statute came up in 1956 the House of Commons did not have available to them the 1955 report.
However, I would point out that it was indicated in the speech from the throne, in January this year that this present subject would arise this session, and there is a substantial difference, I suggest, between the situation in 1956 and the situation before us at the present time in that the resolution amending the statute in 1956 was introduced three months earlier in the year than the amending legislation at this time. I think that in the circumstances, in courtesy to the house and to avoid, perhaps, the necessity in some instances of asking that reference be made to a parliamentary committee, an up-to-date report should be available to members before legislation of this kind is introduced.
The minister knows-and I am not scolding him for this-that in addition he will be including in his bill a request that the house approve retroactively this new term of three years, because the last term expired on March 31 of this year. This was known to the government. It was enunciated in the speech from the throne, and there is very little excuse for this kind of discourtesy, shall I say, to members of the opposition. Information of this kind is available to the government. It is available to the minister, and I hope when subsequent amendments of this sort come before us other hon. members will remember that if there is some information in annual reports they will hurry up the presentation of annual reports to the House of Commons even though in this instance the statute does not state a particular time when annual reports must be presented.


Donald Methuen Fleming: Would my hon. friend permit me to say that since he began speaking I made inquiries of my officials. I was sure that the 1958 report had been tabled. The officials to whom I directed the inquiry while my hon. friend was speaking tell me that the 1958 report was tabled and distributed in both languages some time ago. There may be some mistake at the distribution office. If there has been, I am sorry about that and I will certainly be glad to see that hon. members receive copies at once if there has been any misdirection in this respect. I am assured by my officials that the report was tabled and distributed.


William Moore Benidickson: I accept what the minister has said and I know he will accept my word when I say that on Thursday I personally inquired at the distribution office-
66968-9-301
Farm Improvement Loans Act and I am supported in this by the hon. member for Kootenay West-and it was not available. I can't now understand why. I do not want to delay the committee but I have dates concerning the distribution of this report in previous years. The report for the calendar year 1955 was tabled on June 8, 1956. The report for the calendar year 1956 was tabled on October 23, 1957. The report for 1957 which is the last available to us debating this as I know now was tabled last year on July 22. I do not complain too much except to say that when an act is likely to be amended as specified in the speech from the throne a special effort should be made to have copies of reports made available to hon. members. They should have the last available statistics before them. Knowing that this might happen I personally asked some questions about the 1958 results and they appear on page 750 of Hansard for this year. I am not going to refer to them. I know there will be others who will want to speak to this and we are now within five minutes of the dinner adjournment.
The other point I want to emphasize is in my opinion a very serious one. I invite him to look at the wording of the resolution. I have looked at it and compared it with the resolution when the last amendments were proposed to the house in 1956. I will agree there is very little difference in wording. I have not checked newspapers to find whether there is any difference in actual effect or end result. I complain very seriously to the minister and the government about the vagueness of the resolution when details have been released to the press. Only last night I read an article in the Winnipeg Free Press of June 10 in which reference was made to some particulars of the bill we are going to discuss on second reading. Reference is made to the fact that there is likely to be an increase in the maximum loan under which the government would guarantee the banks, and reference is made to beekeepers and some other things. I know the difficulty of keeping security in some of these matters. The minister has been a member of the House of Commons for as long as I have been and he has been in opposition longer. I know he has great respect for the necessity of maintaining some security in these matters. I hope he will ensure in future that information will not be available to the press when it is not included in the resolution and when he has not yet made an announcement in this chamber.


Donald Methuen Fleming: Mr. Chairman, I assure my hon. friend I am not aware where the Winnipeg Free Press got the information which they appear to have published.

Farm Improvement Loans Act


William Moore Benidickson: That I can imagine, Mr. Chairman. I am simply asking the minister and those of his ministerial colleagues who are in the house-not many of them are here -who subsequently will be introducing legislation of this kind not to be vague in wording resolutions if they allow their officials to give details to the press that are not contained in the resolution between the time a resolution is placed on the order paper and the time it is debated in the house. The date of the press release in question is June 10, 1959. How strange it is to compare the speech of the minister given before mine with the press release I have in my hand in which it is stated that individual farm loans may be boosted from a maximum of $5,000 to $7,500, that the rate of interest will remain unchanged at 5 per cent, and that beekeepers are to be included, et cetera. I am not criticizing the minister. I know that he and his colleagues will rectify this for future debates. I know the minister will agree that it is a most incongruous position to be in when you prepare for a debate at the resolution stage and the resolution is vague but details are announced in the press. The ministry wants the debate at the resolution stage to be not very lengthy. They hope that on second reading the major debate will take place. If information is given to the press and the facts are published, we have to anticipate debate on second reading and make our comments at this stage.
I think the committee will welcome the information given in this resolution. I reassert that having regard to the announcement made on January 15 through the mouth of the governor general to the effect that this would be done, this legislation has come before us in inadequate form and so late that the government has had to insert a clause in the bill that will follow to make it retroactive to March 31.


Herbert Wilfred Herridge: Mr. Chairman, may I call it six o'clock.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Herbert Wilfred Herridge: Mr. Chairman, the members of this group are very pleased to support this legislation which provides for the continuation of a very sound and what proved to be useful act. I must thank the minister for giving us a copy of the 1958 report which I understand failed to get into our hands through a mistake on the part

of one of the officials. We must not be too concerned about that because we all make mistakes, as Mary said when she kissed the cow. But I must say that like the hon. member for Kenora-Rainy River, I take some exception to the details of legislation appearing in the press before they are presented to the house.


Donald Methuen Fleming: May I tell my hon. friend that I share that feeling very strongly.


Herbert Wilfred Herridge: I am quite sure the minister does. I quite understand that it makes a member feel foolish on occasion when, on account of these articles in the press containing details of legislation to come before the house, people make inquiries and you have to reply and say that you have no knowledge of the legislation. I am quite sure there has been a mistake on someone's part.
I feel more at home with this type of legislation, Mr. Chairman, than I do with legislation dealing with bonds in respect of Canadian National Railways. I have had very little experience with bonds but as a country man who has aimed to make his living from the soil for over 50 years I have had a lot of experience with various aspects of farming and with farmers. I have known some most interesting farmers. I know their history in our district which includes a great deal of privation and hard work in the early days as well as hard work today. That reminds me of a story. Some years ago an old gentleman came to me in great distress and wanted me to lend him the services of a chap who was working for us at the time. He said, "You know, Mary has let me down." Mary was 86. "You know," he said, "she absolutely has gone balky. She refuses to climb those 20 foot ladders and pick apples any more." He was a very prominent member of the Conservative party.
However, Mr. Chairman, I must say I never deal with this type of legislation without seeing in my mind's eye the application of this act. I have seen farmers in my district building new houses and other buildings or repairing houses and buildings. I have seen them looking at livestock they have purchased as a result of having taken advantage of the act. I have seen them clearing and breaking land as a result of loans under the act. I have seen them building irrigation and water systems, draining fields, doing fencing. I have seen them able to secure new implements. That is why I say this is very sound legislation, and the record of its administration, the record of collections and the record of the benefits bestowed through the provision of short or intermediate credit prove that this is the type of legislation

that produces, shall I say, unusual results from the amount of government expenditure. It is government support behind the legislation that makes its application so much easier and so much more widespread.
I do want to say that in my experience those administering the act have received excellent co-operation from the local bank managers. I know of several cases where bank managers have gone out to the farms and have done their best to explain the working of the act and to assist the farmers in arranging credit. I think we should give credit where it is due because this type of legislation would not be successful unless everyone concerned from the administration to the bank managers, including the farmers themselves, co-operated to make it successful.
I notice in the annual report that by far the greater percentage of loans are obtained in the three prairie provinces and Ontario and Quebec. I presume that in the prairie provinces the large figure is brought about by the heavy investment in farm machinery. I am of the opinion that the farmers of British Columbia could make better use of the act that they have in the past, and while the local bank managers carry the literature and wherever possible do what they can to advise the farmers of the terms of the act and its value to them, I think a little more could be done to contact the farmers' organizations directly. Quite frequently I meet farmers who seem completely ignorant of the terms of the act. Many of them are under the impression that it is only for the building or improving of houses and the building or improving of other buildings. I think something more could be done in co-operation with the farmers' organizations to bring about even greater utilization of the act than occurs at the present time. I make that suggestion.
I presume the amendments are the result of the experience of the administration, representations from the farmers' organizations and also some consultation with the banks because it is from experience at the local bank level that deficiencies in the legislation would come to light in the first instance. When the minister was speaking he mentioned four particular amendments, the first one being to include beekeepers. I could never understand why beekeepers were excluded from the original act. I presume it was one of those oversights that occurred because we usually think of farmers in other terms. I am very glad to see that amendment is going to be made in the bill that will follow the resolution.
I think the increase in the maximum amount of individual loans from $5,000 to $7,500 is just about right. It will meet the need
66968-9-3014
Farm Improvement Loans Act for more money at the present time to do the same things. The third amendment will extend the act to June 30, 1962 and I understand that the fourth amendment will increase the total liability of the government to $300 million. We support all these amendments and we are glad that the minister has introduced them. I presume that the interest rate is to remain at 5 per cent. The minister said nothing about that.


Donald Methuen Fleming: There is no change in the interest rate proposed in the bill.


Herbert Wilfred Herridge: I presume that the terms surrounding loans are the same.


Donald Methuen Fleming: Yes.


Herbert Wilfred Herridge: I am very glad to hear that. This is sound legislation. As I said before, it has been proven most worth while. It shows that the government is anxious to contribute its share by its credit backing in support of those who are willing to do their part in the development of agriculture in general and in the development of the economic family farm which is so essential to the welfare of Canadian rural society.


William Moore Benidickson: Mr. Chairman, I have very little to add. Because I was looking at the clock before the supper adjournment I omitted one or two things that I had in my notes. Would the minister indicate whether or not the regulations have been altered since January 3, 1957, the date of what I happen to have in my file?


Donald Methuen Fleming: That is correct. I may say-


William Moore Benidickson: That was a consolidated revision.


Donald Methuen Fleming: There were several amendments, and I might refer to those. There was P.C. 1958-1636 of December 3, 1958.


William Moore Benidickson: What was the purpose of that?


Donald Methuen Fleming: I will just list them. There was P.C. 1958-961, July 10, 1958; P.C. 1958-384, March 18, 1958. I think it would be simpler, rather than to go into these, if I just gave my friend copies.


William Moore Benidickson: Yes; then, with respect to section 11 of the act itself, it indicates that appointments for the performance of duties under this act are to be made by order in council. Perhaps the minister might make a statement as to what appointments have been made by order in council under the present administration. I believe that the former chief officer under the minister, Mr. MacRae, retired about a year ago. I think

Income Tax
it is a great tribute to him that some $800 million have been lent under this statute with losses, I think, of one-twelfth of one per cent of that amount, as referred to in the 1957 report.
The only other thing I want to say, Mr. Chairman, is that prior to our supper adjournment I was complaining a bit about the failure to provide this committee-the statute does not provide a time requirement -with copies of the annual report for the latest possible period, 1958. The minister has explained to me that this report was made available. He has accepted, I think, the word of the hon. member for Kootenay West and myself that we had endeavoured to find it through the usual sources, and it was not available. I want to thank the minister for his forethought in making the report available, and I think this should be the standard practice. If something is coming up for debate in a session, and that is known at the time of the speech from the throne, I think a special effort should be made to have these things available. It was made in this case but, through inadvertence, the report was not available.
Resolution reported and concurred in.



INCOME TAX


Donald Methuen Fleming: the second reading of Bill No. C-54, to implement a convention between Canada and the republic of Finland for the avoidance of double taxation with respect to income tax.
He said: Mr. Speaker, the purpose of this bill is to implement a convention between Canada and Finland for the avoidance of double taxation with respect to taxes on income. As hon. members are aware, the bill is in the same form, and the convention it is intended to ratify is in the same form, as others which have been before the house in recent years. The substance of the convention follows the general pattern of the income tax conventions which Canada has entered into with the United States, the United Kingdom, New Zealand, France, Sweden, Ireland, Denmark, the Federal Republic of Germany, the Union of South Africa, the Netherlands, Australia and Belgium. All of those were, in their turn, swiftly approved by the house.
In particular, the provisions of this convention are similar to those in the convention between Canada and Denmark. I have no doubt, therefore, a general account of the terms of the convention will suffice for present purposes.

The main purpose of the convention is to avoid double taxes on income of persons both individual and corporate, who are resident in one of the countries and receive income from the other country. The taxes included in the scope of the convention are the Canadian federal income tax, including surtaxes, and the old age security tax on income and the Finnish national income tax. As in Canada, this tax applies to the income of both individuals and corporations. There is no equivalent in Finland of Canada's old age security tax on income.
The chief means of avoiding double taxation is by a reciprocal system of tax credits where the country of residence gives credit for the tax imposed by the country where the income has its source.
Another means is by providing that in certain instances the country in which the income has its source is not to impose tax on that income. In this case it will be taxed only once-by the country of residence. This rule applies to the following kinds of income: Profits on shipping and aircraft companies; copyright royalties from certain artistic activities; purchased annuities; pensions paid in consideration of past services, and business profits not derived through a permanent establishment. In some instances it also applies to the remuneration for personal services rendered by visitors who are businessmen, members of professions, professors, teachers, students and apprentices.
Double taxation is also reduced by restricting to a maximum rate of 15 per cent the withholding tax on certain income going from one country to the residents of the other. It is reduced also by the prohibition of discriminatory taxes against citizens of the other country and by the provision for settlement of special cases of double taxation by mutual agreement.
Mr. W. M. Benidickson (Kenora-Rainy
River): Mr. Speaker, I recall the minister rather comparing this bill specifically with a similar convention on taxation with Denmark. It just so happens I am not familiar with that particular statute. I have looked at the agreement with Belgium, the most recent I think; with the Belgian Congo in the last session; with Australia in the session of 1957-58; with South Africa in 1957 and with the Netherlands in 1957. I believe this bill is in similar form to those, but I wondered why the minister particularly chose as his example of similarity the agreement with Denmark. Was that a more recent one than those to which I have referred?


Donald Methuen Fleming: No, it simply happened that in the course of negotiations the result approximated more closely the result

in the case of the agreement with Denmark than with any other. There are no departures from the others, but actually if one is measuring the matter in fine scales, the present convention before the house more closely resembles the one with Denmark than any other.


William Moore Benidickson: Last year on July 16, 1958, at page 2307 of Hansard, the minister is reported as being just a little more specific with respect to the similarity of a bill of this kind with its predecessors. The minister has no hesitation in saying that, basically, this bill is without material difference to the same kind of bill that has been presented to the house in past years with respect to the other countries we have mentioned so far in our discussion?


Donald Methuen Fleming: Yes, Mr. Speaker.


William Moore Benidickson: I would hope that, as we come to the further stages of debate, the minister might indicate why, under the new administration, it seems that a bill of this kind is piloted by the Minister of Finance. As I recall it, under the previous administration, bills of this kind were piloted by the minister of national revenue. In fact, I think if the minister will look at article II (m) of the present bill, when the Canadian minister is involved he is described again as the minister of national revenue. I was wondering why it happens to be piloted by the Minister of Finance (Mr. Fleming), contrary to the previous practice.


Herbert Wilfred Herridge: Mr. Speaker, the members of this group support this bill on the understanding that it extends to Finland with respect to the double taxation of individuals and corporations the same consideration as we extend to other countries.


Donald Methuen Fleming: Yes, Mr. Speaker; to the other named countries.


Herbert Wilfred Herridge: Yes.


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


Some hon. Members:: Question.


Donald Methuen Fleming: Mr. Speaker-


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


Donald Methuen Fleming: -the only matter that requires comment is the one raised by the hon. member for Kenora-Rainy River as to the minister who is piloting the bill through. These are bills from the finance department. The agreements are signed by the Minister of Finance. It was by arrangement between the two ministers, namely the
Income Tax
minister of finance and minister of national revenue in the former government, that the minister of national revenue piloted at least some of these measures through. Perhaps the reason I am piloting this one through is that it was thought the Minister of Finance did not otherwise have enough to do.


William Moore Benidickson: I doubt that.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sevigny in the chair.
Clauses 1 to 5 inclusive agreed to.
The Chairman:: Shall the schedule carry?


Some hon. Members:: Carried.


William Moore Benidickson: Mr. Chairman, when you said "Shall the schedule carry?" were you assuming that each article would carry ipso facto? I think if you just ask for the carriage of the articles one by one it might facilitate procedure in debate.
On article I.


William Moore Benidickson: On article I, may I ask whether it is customary that bills of this kind have no reference to an estate tax agreement?


Donald Methuen Fleming: The practice has been to have a separate agreement with respect to estate taxes or succession duties or death taxes.


[Stage Direction]
Article agreed to.
On article II.
William Moore Benidickson: Would the minister care to make any explanation as to the difference under section I (e) in defining "resident of Finland" and "its business is not managed and controlled in Canada" and the fact that the same language is not used in reverse with respect to a Canadian resident?


Donald Methuen Fleming: I am not sure that I follow my hon. friend's observation. This clause which contains all the definitions for the purpose of the convention embraces in the one subclause the two definitions: first the definition of the term "resident of Finland" and second the term "resident of Canada". I do not find any difference between the two definitions. As I read them, the one is the precise counterpart of the other.


William Moore Benidickson: If one simply looks at the number of words used I think he will see that they are not counterparts. But having regard to the fact that the terms used in this bill are identical with the terms used in bills of this nature passed previously I will not argue further about the matter.


[Stage Direction]
Article agreed to.
Article III agreed to.
[Stage Direction]
Income Tax
On article IV.
William Moore Benidickson: I just repeat what I said before in my inquiry. In article II (m), page 4 of the bill, the minister will recognize that it is indicated there that in the case of Canada the minister of national revenue seems to be the authorized or designated minister who would normally have responsibility for this kind of legislation. I accept what the minister said on second reading, namely that he has not enough to do and so he has taken on this responsibility in addition to his other heavy responsibilities.


Donald Methuen Fleming: The Minister of National Revenue is the minister charged with responsibility for the administration of all tax legislation.


Mr. Crestohl:: May I ask a question for the purpose of getting some information? I note that this convention has already been signed by the Minister of Finance and by the representative of the Republic of Finland. Is there anything that the house can now do other than approve this convention? Has the house any choice other than to approve a document that has already been signed by both parties?


Donald Methuen Fleming: Of course the
house can refuse to ratify it. That, of course, is the right of the house if the house chooses to exercise it. But if the house did so, it would be reversing a practice which the house has always approved in times past.


Leon David Crestohl: I am not suggesting by any stretch of the imagination that we do otherwise than approve it. I am just inquiring. Here is a document that has already been signed and confirmed. I am wondering whether the more appropriate procedure would not have been to submit to the house a document for ratification before it is signed.


Donald Methuen Fleming: That would be an entirely unconstitutional practice. Under our parliamentary system the practice is for the agreement to be signed by or on behalf of the government and then to submit it to parliament. In some cases a convention or international agreement will take effect on signing. In other cases it will take effect upon its ratification. The provision for ratification of this convention is contained in article XX. The provision with regard to its coming into effect is contained in article XXI.


William Moore Benidickson: Just as a matter of curiosity as to who comes first, may I ask this question? Has the equivalent legislature in Finland yet approved this convention?


Donald Methuen Fleming: I believe so.


[Stage Direction]
Article agreed to.
Articles V to XIX agreed to.
IMr. Benidickson.]
William Moore Benidickson: Mr. Chairman, I do not know whether it is because you are not raising your voice or whether it is because the microphone in front of you is not working, but we can scarcely hear you.
On article XX.


Leon David Crestohl: Can the minister tell us whether the convention has already been approved at Helsinki by the Finnish authorities?


Donald Methuen Fleming: I was asked that question just now and I replied that I believed it had been. I now verify that.


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


George Randolph Pearkes: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to provide for the revision and consolidation of certain of the pension provisions of the Defence Services Pension Act, for the payment out of the Consolidated Revenue Fund of superannuation and other benefits to members of the Canadian forces and their dependents and for matters incidental thereto, and to provide further for certain administrative changes in connection therewith.
Motion agreed to and the house went into committee, Mr. Sevigny in the chair.


Mr. Hellyer:: Is the minister not going to make a statement?


George Randolph Pearkes: Mr. Chairman, the purpose of this resolution is to introduce a bill entitled the Canadian Forces Superannuation Act that will revise and re-enact part V of the Defence Services Pension Act.
The Defence Services Pension Act, as hon. members know, is divided into five parts. Parts I to IV apply only to persons who were enrolled in the regular forces prior to March 31, 1946. Part V applies to those persons enrolled in the regular forces since March 31, 1946 and those enrolled before that date who had elected to come under part V.
The pension schemes under parts I to IV and part V are basically the same. The principal difference is that under parts I to IV an other rank, that is a non-commissioned officer or man, contributes nothing to the pension fund but has no pension protection for his widow or dependent children. Under

those parts officers contribute 5 per cent of their pay and allowances to the pension fund. Under part V both officers and other ranks are required to contribute 6 per cent of their pay and allowances and all officers and other ranks have protection for their widows and dependent children. Under both pension schemes the amount of the pension is one-fiftieth of pay and allowances for each year of service. The pay and allowances under parts I to IV are based on the average of the last three years' service; under part V they are based on the average of the last six years. Under the new act parts I to IV basically stand and only very few minor amendments are made. Part V is repealed and replaced by the new act.
The new act will not deprive anyone now serving in the forces of any of his substantial pension rights. The principal purpose of the new act is to simplify administration, correct certain anomalies and bring the regular forces' pension scheme into greater conformity with the Public Service Superannuation Act and the proposed new Royal Canadian Mounted Police superannuation act, the resolution of which was introduced this afternoon.
Whilst the basic pension scheme of part V of the Defence Services Pension Act is retained in the proposed new act, the following important changes will be made. Men who are granted commissions for a fixed term of service will cease to be contributors under this act; they will receive a gratuity under the act for their service as a man and a gratuity under deferred pay regulations in respect of their commissioned time. This will obviate the payment of pensions to relatively young men. Officers who are permitted to retire voluntarily and have 25 years' regular service will be eligible to receive a pension reduced by 5 per cent for each year under their retirement age. Previously they only had to serve 20 years. The maximum benefits payable to widows and children will be raised to those contained in the Public Service Superannuation Act; that is to say, from a maximum of 75 per cent of the contributor's pension to 90 per cent. Only a return of contributions will be payable in future except in the case of death or disability of a contributor where he has served three years or less in the regular forces. Members of the forces to whom parts I to IV of the Defence Services Pension Act are applicable will be given one more year within which to elect to come under the new statute. This will permit men under parts I to IV to obtain protection for their families. The proposed new
Defence Services Pension Act act will be very similar to the Public Service Superannuation Act which was enacted by parliament in 1953.


Paul Theodore Hellyer: Mr. Chairman, I thank the minister for his statement. It would appear that the changes proposed will eliminate certain anomalies in the law as it presently stands. I think we also welcome the fact that it will bring this act into greater conformity with the Public Service Superannuation Act. As most of the suggested changes are of a technical nature, I think we will reserve our comments until the bill has been introduced in the house. I think it is only fair that the provisions be amended so that people who serve for very short periods of time receive gratuities instead of pensions, which is more closely in line with the practices in private enterprise and private service. I think we also welcome the fact that the provision will be changed so that widows and children will have the opportunity to receive a larger percentage of the pension of the deceased father. I think the minister is being fair in providing one year additional for election under parts I to IV, and in conclusion, Mr. Chairman, I wish to say that in general we welcome these amendments. We will reserve comment on the specific items until we have had a chance to see and study the bill.


Mr. Roberge:: Mr. Chairman, with my colleague for Trinity I welcome this resolution. I have one question to ask the minister. Is there in this act that is to be presented to parliament an increase in the pensions of service men who are concerned with the act?


George Randolph Pearkes: There is no basic increase in the pension which will still be based on one-fiftieth of the pay and allowances that he receives each year.


Gabriel Roberge: Is there an increase in the contribution to be paid by the member?


George Randolph Pearkes: Those who have been under parts I to V, if they were not officers, have paid nothing, but their widows and children receive no pension benefit. Under part V they will now contribute 6 per cent of their pay and allowances. Officers who were, under part IV, contributing 5 per cent of their pay and allowances will now contribute 6 per cent.
Resolution reported and concurred in.
Mr. Pearkes thereupon moved for leave to introduce Bill No. C-62, respecting the superannuation of members of the Canadian forces.
Motion agreed to and bill read the first time.

Unemployment Insurance Act UNEMPLOYMENT INSURANCE ACT



AMENDMENTS TO INCREASE RATES OF REMUNERATION AND CONTRIBUTIONS, ETC.

Hon. Michael Starr (Minister of Labour) moved: that the house go into committee to consider Bill No. C-43 to amend the Unemployment Insurance Act.
Motion agreed to and the house went into committee, Mr. Sevigny in the chair.
On clause 1-Repeal.


Paul Joseph James Martin: Is the minister going to explain?


Michael Starr: Mr. Chairman, this bill has gone through second reading, and a considerable time was spent on it clause by clause in the industrial relations committee. I have spoken on second reading and made many statements in respect of all these clauses when this bill was under consideration in the industrial relations committee, and at the moment there is nothing I can add to what I have already said.
(Translation):


Mr. Caron:: It is true that we discussed the bill at great length at the resolution stage and also on second reading as well as in the committee on industrial relations. But, to our mind, the bill is of such capital importance, and the various public bodies called before the committee on industrial relations made such significant representations that we must insist again on this legislation not being passed in its present form.
I have here certain items from representations made to us which indicate that people are practically unanimous in their condemnation of this bill. I am taking them up at random as they reached me, and I see that the board of trade of metropolitan Toronto among others wrote us the following:
(Text):
An increase in contribution costs of this dimension constitutes a considerable problem at a time when business is being urged, and is endeavouring, to hold the line on costs.
(Translation) :
That should be considered significant action.
It is true that the government, and more particularly the Minister of Finance (Mr. Fleming), asked industrialists more than once to try and maintain production costs at their lowest level so as to check inflation in Canada.
Now the government is submitting legislation which provides for new taxation for, after all, this is a tax that is being imposed, not upon everybody, but in respect of two particular groups: workers and employers. Yet, in spite of all this, the government seems to ask us to hold the line.
I also see that the Canadian Manufacturers' Association, which appeared before the com-
[Mr. Pearkes.l
mittee on industrial relations raised several objections to the present bill. This is what they said:
(Text):
If relief is required for persons unemployed in the off season it should come from a public assistance scheme and not from an insurance plan based on actuarial principles. We also feel that this proposal should have had a proper review and consideration by the advisory committee before being recommended to parliament by the government as an amendment to the act.
However, we point out that we think it should have been the proper function of the advisory committee to have reviewed this proposal and made its recommendations before the stage was reached of an amendment being proposed by the government to parliament for approval.
This proposal for increased contribution rates in all present classes for employees and employers only is one which the association believes to be unrealistic and should not be approved especially at this time when the government itself is urging industry to hold the line on costs and maintain steady year round employment.
(Translation):
This, Mr. Chairman, is very similar to the views expressed by the board of trade of metropolitan Toronto.
(Text):
In amplifying its reasons for the recommendation that the fund be stabilized by the government contribution being "made equal to one-half that of the combined contributions from employers and employees" it must also be recalled that the advisory committee called attention to "some of the expenditures with which the fund had been burdened and for which provision for sufficient balancing revenue has not been made."
Despite the recommendations of the advisory committee, we note that no mention has been made in the bill now before parliament of the government's intention to increase its own contribution rates.
If employers and employees are expected to contribute more to the fund, it is all the more reason that the government should increase its own rate of contribution so that responsibility for providing revenue to the fund would be equally divided between all contributors, as the advisory committee recommended.


Michael Starr: Mr. Chairman, may I ask the hon. member whether he is not aware that the government is also increasing its own contribution by 30 per cent?


Alexis Pierre Caron: I may tell the minister that I am just reading what I find in the brief of the Canadian Manufacturers' Association. It is a fact that the government may have slightly increased its contribution but not to the degree asked for by various bodies and certainly not in accordance with the increased cost of living and increased salaries. (Translation):
The Manufacturers' Association goes on to say:
(Text):
No changes In the present Unemployment Insurance Act and scheme should be made until a complete review, such as we propose, has been completed.

(Translation):
That is something we had been asking for. We asked for a fuller and more detailed study, more in keeping with the needs, in Canada, of both labour and management, and yet, the department ignored our recommendations.
And the Canadian Manufacturers' Association goes on to say:
(Text):
No increase in the contribution rates of employers and employees should be made at this time until there has been a thorough re-examination of the act and scheme. If it is found that an increase in contribution rates is required it should not exceed the increase recommended by the advisory committee and actuarial authorities. If employer and employee contribution rates are to be increased, the government's own rate of contribution should be increased equally.
(Translation):
Those recommendations were put forward by an interested public body, the Canadian Manufacturer's Association, and what strikes us in those recommendations is the fact that for once, at least, the representatives of a labour organization, as those of the manufacturers, were in full agreement about their recommendations to the said committee. And here is what the Canadian Labour Congress states:
(Text):
The fact remains, however, that additional amendments have been found necessary since 1955 and these seem to point to the need for a much more thorough going review of this act than has yet taken place-
We will go so far as to say that the proposed amendments not only retain an unsatisfactory ratio between wages and benefits but impose an unjustifiable burden on the insured population, one which should be more equitably distributed.
It seems to us to point to an assumption of continuing high unemployment since if high employment such as we knew in the immediate postwar years were to be resumed the fund would presumably replenish itself without the need for such a marked increase in the contribution rate or any increase at all.
We believe that these payments should never have come out of the unemployment insurance fund but out of consolidated revenue since they represent a payment over and above the normal unemployment insurance benefits for which the act was designed. Seasonal benefits are a reflection of a special and serious condition of unemployment and should be a charge on the national purse and not on the insured population alone. If supplementary and seasonal benefits had in fact been paid out of consolidated revenue, the balance in the fund at February 28, 1959, would have been over $818 million instead of $547 million and the present concern about the state of the fund need never have arisen-
(Translation):
This, Mr. Chairman, we have already said here. We pointed out to the government that neither the employees nor the employers should assume the responsibility of the situation then prevailing in Canada. We pointed
Unemployment Insurance Act out that, if we were in the grips of a depression the burden should not be shifted solely to the workers and employers, especially when thousands of people are without jobs, through no fault of their own but merely on account of an economic situation for which they are in no way responsible and to which they cannot change anything.
Here is now what the national congress of labour added; it repeats what Mr. Gordon Graydon said, as a Conservative member in this house in 1950, as recorded on page 214 of Hansard:
(Text):
*-it seems to me we have reached the limit of absurdity when we ask the workers of this country to put up more money to solve the unemployment situation. That is the government's job, not the workers.
(Translation):
Mr. Chairman, those words were spoken by a Conservative member at the time he was sitting in the opposition. If this government does not react in the same way, it is because it is afraid the deficit might be higher still if the situation were shown as it should be.
And here is what they say:
(Text):
Experience in the past has shown that only a relatively small number of claimants used up benefits beyond the thirty-sixth week.
(Translation) :
I am told that it is about 5 per cent. (Text):
We wish to state also that this one improvement in the degree of protection afforded by the act- (Translation) :
This is a change from 36 to 52 weeks. (Text):
-is not sufficient in itself to overshadow the very heavy burdens which have been imposed on the insured population through the increase in the contribution rates.
(Translation):
And the Canadian Labour Congress goes on to say:
(Text):
We believe that unemployment assistance for employable unemployed is fundamentally a matter of exclusive federal concern, not necessarily in constitutional but in terms of the economic facts of life. We would therefore urge upon you and the government the effective coupling of unemployment insurance and unemployment assistance, with the latter conceivably administered through the offices of the unemployment insurance commission but with payments coming exclusively from federal revenues. We repeat that this is a matter of urgency. We hope your committee will make a strong recommendation along the lines we have suggested. (Translation):
In that regard, Mr. Chairman, at the industrial relations committee we asked the government, as we had done on second reading, and as was done particularly by the hon. member for Essex East (Mr. HOUSE OF COMMONS
Unemployment Insurance Act Martin), to assume its responsibility in helping the unemployed who are not casually so but who are seasonally unemployed. The government, however, seems to delight in refusing to accept recommendations submitted by public bodies.
We have made suggestions to the government, and the government turned them down. Yet when we criticize without making suggestions, we are accused of being irresponsible. Really, I find it difficult to understand the government's attitude at the present time. The Canadian Construction Association, which appeared before the committee, submitted a brief from which I should like to quote a few short excerpts. Among other things, the association stated:
(Text):
For some time now our association has been concerned over several developments in the unemployment insurance scheme. The association has recently, in view of this bill, adopted a motion recommending that no amendments be made to the Unemployment Insurance Act which had not previously been studied and approved by the unemployment insurance advisory committee and, indeed, that no major amendments be made until the whole scope of the present act is carefully reviewed and reported on by an impartial body which contains or can call upon independent expert advice.
(Translation):
That suggestion is similar to those put forward by other public bodies, namely that the act should be gone into more thoroughly and more intelligently.
(Text):
The considerations prompting the members of the association to endorse this motion were:
The unemployment insurance advisory committee recommended that any increase in rates of contribution should be borne by the government from general revenues since they could be classified as general welfare measures rather than burden workers and employers with paying for the new features. The government's proposal that participating companies and their employees pay larger contributions will result in a considerable increase in labour costs .. .
Whereas the government has resisted pay increases to the civil service and armed forces on the grounds that such action would have an inflationary tendency, the new proposals will have just that effect.
The average increase in construction contractors' contributions will not only amount to 30 per cent but to about 50 per cent of the rate now being paid. This is due to the high hourly wage rate level in the construction industry. This will cause a particularly difficult problem for contractors engaged in carrying out long term lump sum construction contracts.
(Translation):
As you can see, Mr. Chairman, no matter what representations are looked into, whether they be of this or that public body, they are astonishingly similar and seem to coincide with those put forward by the Liberal party in the house at the resolution stage and on second reading. We also attempted to put forward those same suggestions in the industrial relations committee; unfortunately,

we have sometimes met with little success.
About unemployment insurance, the Vancouver board of trade also submitted a brief from which I quote:
(Text):
Unemployment insurance has been In effect long enough now, with the experience of varying economic conditions, to make a review completely practical. We firmly believe that such a review is now warranted in the public interest. The Vancouver board of trade therefore recommends that a royal commission or commission of inquiry be established to evaluate and make recommendations in respect of unemployment insurance. We further recommend that the terms of reference to such commission should include the purpose and function of unemployment insurance, and maintenance of the fund on an actuarial basis, consideration of the rates charged, and the method of levy, and discriminatory features as between classes of industry and classes of workers.
(Translation):
Everywhere we run across similar suggestions: a closer study by an investigation committee, a royal commission. Now, the executive board of the Canadian Chamber of Commerce has this to say:
(Text):
Any additions to the already extensive welfare programs should be carefully assessed not only with regard to their initial costs but also with regard to their foreseeable growth and supplementary requirements over the years. In principle the chamber believes that any additional welfare expenditures should be delayed until the full impact of present commitments can be assessed. (Translation):
This group too is calling for further study.
(Text):
Provisions of the bill opposed by the executive council.
The present rates are scheduled to rise by approximately 30 per cent average if the bill is passed. If, however, the top rate in the present legislation (60 cents) is compared with the top rate in the bill (94 cents), it will be noted that there is an increase of over 50 per cent proposed. If, on the other hand, interpolating the normal progression and allowing for a top rate of 72 cents as compared with the new top rate of 94 cents, the rise is over 30 per cent. The 30 or 50 per cent figure, whichever is used, is well over the 20 per cent figure that was set out in the unemployment insurance advisory committee report, dated July 8, 1958, as the percentage of increase in the contribution rates that would maintain the fund at the present level.
The executive council submits that the average increase in rates should not be implemented, as it will greatly add to the cost of doing business and is partly based upon certain built-in drains on the fund, to which we will make reference in the following section.
(Translation):
I am still quoting words from the Canadian Chamber of Commerce:
(Text):
We are of the view that before an increase in rates is imposed, a number of areas of drain should be examined:	alternative methods of financing
should be reviewed and the question of coverage be studied. . . .
We note that the same committee submitted to the government that the loss to the fund caused

by extending benefits to fishermen should be paid from sources other than regular contributions . . .
There is reference In the report of the unemployment insurance advisory committee to the drain on the fund occasioned by the extension of the seasonal benefit period, and a recommendation is made that a grant should cover this drain. There is also a recommendation from the same committee that the division of responsibility for revenues to the fund between employers, employees and government be adjusted so that the provision from each be made equal. We find no reflection in the proposed bill, however, of these recommendations of the advisory committee . . .
The foregoing are matters that, in the opinion of the chamber, should be examined by a special commission of inquiry . . .
The executive council opposes the provisions of the bill dealing with extending the duration of benefit and increasing the contribution rates.
The executive council recommends that a representative commission of inquiry be appointed to examine the operations of the act as to sources of drain, coverage and financing before any increases in rates are contemplated; the said commission to report back by December 1, 1959.
(Translation):
As you see, Mr. Chairman, these recommendations which are very similar came from all groups which have appeared before the industrial relations committee.
The Canadian and Catholic Confederation of Labour has also been heard. Here is what they had to say:
It seems obvious to us that, of late years, the Canadian government has been inclined to have the unemployment insurance fund assume certain expenses which normally should be paid from the consolidated revenue fund of Canada, or by special social security measures. We believe that the rather rapid decrease in the level of the fund is much more the result of that policy than a consequence of inadequate contributions by employees and employers in relation to normal costs incurred by the administration of the act.
That is why we fully support the Unemployment Insurance Commission's advisory committee recommendation to raise the government's contribution to a satisfactory level in order to cover the cost of unemployment insurance elements which have been introduced in the legislation. That government's contribution should be at least half the overall contributions of both employers and employees.
Finally, for the reasons we pointed out in the above paragraphs, we are opposed to the proposed contribution increase. In our opinion, it is unwarranted and saddles the insured with a financial burden which should be taken care of by another fund than the unemployment insurance.
Here now is a brief submitted by the Canadian Retail Federation, which says: (Text):
Generally speaking, it seems to us that government has two means at its disposal to ease the effects of unemployment both in regard to the individual unemployed and to the economy of the country.
One is a scheme of unemployment insurance based on sound actuarial principles and designed to pay out benefits to those insured persons who become unemployed. The other is a program of public assistance designed to provide for those not protected at all or not protected adequately by unemployment insurance and to assist in those periodic times of economic recession during which unemployment rises to abnormal heights.
Unemployment Insurance Act We do not criticize the humanitarian motives of government in making changes in the Unemployment Insurance Act, intended to cope with such problems as those produced by seasonality in economic activity, by industries that are essentially seasonal in character, or by economic recession with its attendant and often substantial degree of unemployment which may be of considerable duration. We are intensely concerned to see what we believe to be undue and even unfair demands made upon the unemployment insurance fund, demands which appear to violate the actuarial basis of a good insurance act and which pertain rather to a program of public assistance than to a sound insurance scheme.
The results of such mingling on any wide scale of the two concepts of unemployment insurance and public assistance are only too likely to be reflected in an unsound fund, an effect which seems to be already unfortunately in evidence.
In the act as it now stands this discrimination against the main body of supporting contributors appears to have occurred to a considerable degree.
For example, in covering the employee in stable, year-round work the risk involved is unexpected unemployment, but with highly seasonal industries the risk is expected unemployment during some part of each year. Unless the highly seasonal industries are protected under some other legislation, it would appear that only higher rates for them, in recognition of a greater risk, can avoid the effect of subsidization by both employers and employees in the more stable industries. Lack of recognition of this would seem to involve unfair discrimination against the bulk of contributors who may reasonably expect their contributions to be used to cover the contingency of their unexpected unemployment.
Summary and Recommendations
(3) The federation recommends that a royal commission or similar body be established to completely review the Unemployment Insurance Act.
(Translation):
As you can see, Mr. Chairman, a study of our suggestions and of all submissions made to the industrial relations committee would indicate that, according to all public organizations without any exception, the increase is acceptable neither to the employees nor to the employers. Moreover, it is claimed that, unless a more serious investigation is made by a royal commission or some specially set up independent committee responsible for studying the question and reporting to the government, it will be impossible to establish clearly what exactly the government intends to do at this time.
As a matter of fact, if we consider the figures supplied to us, we see that the unemployment insurance fund has dwindled appreciably, not necessarily as a result of inadequate contributions-though this decrease was particularly noticeable for the years when unemployment figures were up.
We find that in March 1958, the unemployment insurance fund had assets of $744,200,124.87, while in March 1959 the amount was down to $496,251,386.48. This means, Mr. Chairman, that as a result of the recession we have been through, considerable amounts from this fund have had to be paid to the

Unemployment Insurance Act unemployed, at the expense of people who had paid contributions in the hope that they might benefit in the event of their becoming temporarily unemployed in the course of their lifetime. I think the government is seriously derelict in its duty if it fails to take from the consolidated revenue fund the necessary money to put back the unemployment insurance fund on a sound basis. In such a case, the government will simply be holding two classes of society responsible for all the trouble we have been having in Canada for some time.
We also notice in report No. 6 which has been submitted to us and which refers to the addition of new changes introduced by the bill under study-
(Text):
Increases In benefits arising from the addition of two new classes.
(Translation):
We notice that an increase of $9.4 million-
(Text):


Mr. McMillan:: Mr. Chairman, I want to say something concerning these amendments to the Unemployment Insurance Act. I may say that I joined the committee rather late, and most of the briefs had been submitted. However, several briefs were presented, and those which I heard, as well as those which I read, were practically all critical of the amendments that have been presented.
In looking over the briefs I find most of them are against the rise in the contributions or against the fund paying the supplementary benefits, more particularly the seasonal benefits. They recommend that the whole matter should be referred to a committee of actuaries who would devise some better methods than those contained in these particular amendments. Labour, for the most part, agreed with the increases in benefits and the extension of benefits from 36 to 52 weeks. However, they objected greatly to paying contributions out of all proportion to the cost of these increased benefits. So far as I can see, the government has paid no attention to these recommendations that were received by the committee through the different briefs that were submitted.
I know the government has a big majority, and they will probably carry through this measure. However, I believe they should listen to some of the advice that has been given, and some of the representations made, particularly from employers and from labour. From the manufacturers' point of view, these amendments certainly add to their cost of production in a highly competitive market. It is difficult for many of our manufacturers to maintain themselves in some products even in our home market. When their costs rise,


this rise will tend to increase unemployment even further. To give you some examples of what the manufacturers think of these amendments, I have only to refer to one presentation which is typical of several that were submitted. They say this:
The present wording of the act with reference to eligibility qualifications has many ambiguities which make it extremely difficult for the local offices to prevent abuses.
I might say that I can refer to this particular reference in some of the labour representations. The manufacturers also state as follows:
The extension of the plan in recent years whereby additional occupational groups of employees have been included and by which benefit periods were increased in length has thrown the unemployment insurance fund into jeopardy . . .
The scheme has departed from its original concept of an actuarially sound insurance plan designed to tide employees over periods of temporary unemployment. Generally speaking, the operating deficits in recent years may be attributed to the above-mentioned extensions of both coverage and benefits.
One has only to go to the representation made by the Canadian Congress of Labour to see what they say about these amendments. They say this:
We think that the fund, to the extent that it needs replenishing through means other than a return to full employment, should be replenished in other ways and from other sources.
They make certain recommendations. They say:
The congress believes that there are other amendments which should be made to the act. We have already referred to the need for much greater coverage than now exists, more particularly to the justification of immediate inclusion of hospital employees.
Being connected with some hospitals, I might say that I think that hospital employees across Canada, or at least those in the part of Canada in which I live, would like the opportunity of being included under this act. The paragraph continues:
Other amendments that we recommend to you for your consideration are:
(1)	the elimination of the waiting period;
(2)	the elimination of the anomalies in regard to benefits during illness whereby benefit would be available if and as soon as employment was lost due to illness;
(3)	modification of the disqualification resulting from unemployment due to a stoppage of work whereby such disqualification would not result if the stoppage is a lockout imposed by the employer,-
Then they go on to recommend prohibition of referrals to struck plants; restoration of dependency status for dependents residing outside Canada and so on. I think I have referred to sufficient here to show that both labour and industry are opposed to the amendments proposed by the government.
In looking over the state of the fund, according to page one of the unemployment

insurance supplement that was issued, we find that at the end of the fiscal year 1957- that is at the end of March, 1957-the fund had $874 million and that at the end of the fiscal year 1959 the fund had $496 million, a drop of $378 million. According to the investment position changes tabled in the house the figure for government securities on hand as of March 31, 1959 was $490 million, down over $250 million from the previous March 31. As at the end of May many of these $490 million of bonds-


Mr. Grafftey:: Would the hon. member permit a question?


William Hector McMillan: When I get through.


William Heward Grafftey: I do not blame the hon. member.


William Hector McMillan: Many of these $490 million of bonds were hypothecated against a $80 million loan from the Minister of Finance, on which they had to pay interest of 5 per cent. The value of the bonds in the portfolio had depreciated so much in value that the equity of the unemployment insurance commission in that fund was actually only $350.3 million as of the end of May, 1958. I think Mr. Coyne gave us the figure each month. At the end of March it was $357 million. I am giving the figure to the closest million. At the end of April it was $353 million. At the end of May it was $350.3 million. We know that the bond market has fallen considerably since the end of May and I would say it is now down considerably under $350 million. We were told that at the beginning of June the fund would just about balance; that is that the intake and the outgo of the fund would just about balance. If that is true, then the fund is below $350 million at the present time. We know that the fund has already taken a loss of over $10 million in securities that were sold.


William Heward Grafftey: That is wrong.


William Moore Benidickson: That is correct.


William Hector McMillan: The fund has already taken a loss of over $10 million in securities that were sold. The conversion loan and the government's fiscal policy of having high current deficits have both helped to force the bond market down, have caused higher interest rates and have helped to put the unemployment insurance fund in jeopardy.
As we know the fund borrowed $80 million at 5 per cent. The commission has done this in order to retain its position intact. As Mr. Coyne told us, if they put a great many bonds on the market that procedure would tend to depress the market further. Certainly we do not want anything to help to depress the Canadian bond market. If you go to New York or if you go any place you will find that it takes only about one sale
Unemployment Insurance Act to knock them down about a point or so. You can see that happening in New York. I ask anybody to pick up the New York Sunday Times. There he will see that if one or two Canadian bonds are sold there they go down a point while probably Australian bonds are going up.


William Moore Benidickson: What about Cuba?


William Hector McMillan: Cuban bonds are higher than equivalent Canadian bonds in New York at the present time and they were much higher in February. In February the Cuban four and a half per cent 1977's were selling at 104.25 while Canadian four and a half per cent 1983's were selling at 94.


William Moore Benidickson: They had Castro instead of Fleming.


William Hector McMillan: That was true whether it was under Castro or Batista because the range of the Cuban bonds was 102 to 104.25 -that is for the previous fourteen months- whereas here in Canada the bonds of the Diefenbaker government certainly were not as good as the Batista or Castro bonds in New York.


Some hon. Members:: Oh, oh.


William Moore Benidickson: That is a fact.


William Hector McMillan: It is nothing to laugh about because the people who bought these Canadian bonds have certainly lost a great deal of money. I think there are two excellent reasons, and the government has given two excellent reasons, why we should not increase these contributions toward the unemployment insurance fund. First of all, the Prime Minister went around the country at last election time and said there soon would be no unemployment. In fact, one night I remember sitting at the television and hearing the Minister of Labour himself say that within two or three months there would be no unemployment. That being the case, and it is nearly two years ago, why have they not cleared up the problem of unemployment in two years? If the unemployment were cleared up there would be no need to increase the unemployment insurance contributions, because the fund would be rising by leaps and bounds at the present time.
Then there is another reason. The Minister of Finance said-and he said this at the time of his budget-that the gross national product would rise by 7 per cent up to about 34.5. I think that only today he said it would not be necessary to borrow so much money, and I take it from that that the gross national product is up more than he expected, and that certainly the gross national product will be higher this year than any year. So why do they need to collect more contributions from the workers when the gross national product is higher than it has been at any time heretofore?

Unemployment Insurance Act
All the segments of the population are being taxed and certainly the working man is paying more taxes. The working man is paying more taxes because of the excise tax and because many smoke cigarettes and drink beer. But this government is putting this extra tax on the working man. The working man is having to pay more tax because of unemployment. I maintain that the working man alone should not be paying what the Canadian people as a whole should be paying. If the government thinks that the unemployment benefits should be extended from 36 to 52 weeks, I think the working man should be charged with that amount and that amount alone. If he is charged with that amount alone, he would only be charged about one-eighth of what he is being charged in increased contributions under these amendments.


William Moore Benidickson: One-eighth of the extra
payment.


William Hector McMillan: One-eighth of the extra
premium. The government is making a great pretence to the working man. I heard Conservative members in the committee say that we must hurry up and get this through to help the working man. The government is making a great pretence to the working man that they want to get this through to help him. The point is that they want to get this through to get the working man to help the government. They are wanting the working man to pay increased contributions because they are not going to pay him back in proportion to the amount they collect from him in extra premiums. I maintain this will not fool the people of Canada. It certainly will not fool the working man himself, and I do not think the working man should be called upon to pay these extra premiums. He is really paying the tax that the Minister of Finance should be collecting from the people of Canada.
(Translation):


Alexis Pierre Caron: Mr. Chairman, may I be
allowed to go on with the few remarks I had started to make?
(Text):


Mr. Martel:: Not again!


Alexis Pierre Caron: Yes, again, and it may be longer than you think.


An hon. Member:: A filibuster.
(Translation):


Alexis Pierre Caron: As I was saying, Mr. Chairman-
I am waiting for hon. gentlemen to stop making remarks.
According to report No. 6 with regard to unemployment insurance, which was sent to

us by Department of Labour officials, the addition of two classes would cost the unemployment insurance commission $9,400,000, and the increase resulting from the 36 to 52 weeks' extension of the benefit period would amount to $11 million. The adjustment would equal $3,100,000, which brings the total of new expenses for the unemployment insurance commission to $23,500,000.
When it is known that a 30 per cent increase would represent an amount of $78 million, while new expenses are supposed to amount to no more than $23,500,000, we can well believe that there's something wrong in the way this act was put together.
Besides, if losses had occurred simply because the commission had had to pay somewhat more to keep the jobless provided with the basic necessities of life, we might understand the situation. But we have been told that the unemployment insurance commission was advised by the investment committee to exchange a number of securities it held for long term conversion bonds, which resulted in a 10 million dollar loss. However, that figure does not represent the actual value of those bonds, which has been reduced to the extent that, if we were forced to sell those we own, in order to obtain enough money to pay the people who need unemployment insurance benefits, the commission would have to take an additional loss of $62 million, which added to the $10 million, gives a total of $72 million, i.e. approximately the amount needed to replenish the fund which has been depleted for the last few years.
Mr. Chairman, the worker and the employer should not be called upon to shoulder the total cost of the damages brought about by a somewhat faulty administration, because I understand there was incompatibility between the chairman of the investment committee and the one who acted as adviser for the unemployment insurance commission. In fact, the latter was caught in an extraordinary dilemma, as he was at the same time adviser to the Minister of Finance, in which capacity he advised him to issue a conversion loan. On the other hand, on account of the secret he had to keep, he could not advise the unemployment insurance commission that there was some risk in keeping any longer the treasury bills which it still had in hand and that it would be preferable to sell them on the market to get a better price. So, the commission kept its treasury bills till the last moment, which led to the exchange for conversion bonds, and to that considerable loss. Furthermore, unemployment had increased enormously. Now, instead of buying treasury bills which could have been sold on the market when they would have brought

more money, the unemployment insurance commission was practically forced to accept long term bonds in order to give the Minister of Finance the credit of having made a marvellous deal. On the other hand, we know that certain other public bodies having bonds sold them in time and did not incur the losses incurred by the unemployment insurance commission. Furthermore, those losses were caused by an urgent need of money, brought about by the need for paying unemployment insurance benefits.
Mr. Chairman, according to the table I have here the percentage of outlays compared to revenues in 1952 was but 44.2 per cent; in 1953, that percentage was 64.9; in 1954, 86.3; in 1955, 118.7; in 1956, it was back to 94.1; in 1957, to 91.9 and in 1958, to 151.2; finally, in 1959, it reached 207.5.
Mr. Chairman, this means that employers and employees are now being taxed for the administration's mistakes, whereas the money should be drawn from the consolidated revenue fund of Canada.
We note that in 1958, employer and employee contributions amounted to $718,409.64, while the government's share was $143,681.93. In 1959, the share of employees and employers will be $778,008.07, while the government's share will be raised to only $155,601.41. This means that there is a drop in the share to be paid by the government as compared to the share that employees and employers are being forced to pay.
Mr. Chairman, when we look at the bill, we find that there are certainly some items we can accept. However, we cannot see how the government can introduce this bill and ask us to pass it, and take advantage of its majority to push it through, when all public organizations we have heard are unanimous in objecting to the bill as it reads. Despite this disapproval, the government apparently intends to ram it down the throats of the Canadian people.
If objections had come only from labour organizations, I would say that perhaps they are a little biased, but we find that not only the workers, but employers, chambers of commerce, manufacturers and builders throughout Canada have all, without exception, objected to the bill, that all have described it as impractical and have suggested that it be studied by a special committee or by a royal commission appointed by the government. And when we ask that the bill be postponed out of deference for the wishes of the great majority of people in every part of Canada, they say "we want to help the workers". Yet when we suggested that at the beginning of this session the house adjourn for the purpose of studying the unemploy-
TJnemployment Insurance Act ment situation, the government objected that there was no urgency at the time, although there were 500,000 unemployed in Canada. There was no urgency! But today when, according to them, the number of unemployed has decreased, they want to put through legislation which is not practical and which will please no one. Besides, when we asked for information in order to study this legislation, it was refused to us.
On several occasions, in order to be able to have a good understanding of this bill, we asked for certain information which, by the way had been printed in the newspapers, but was never given officially in the house, at the committee, they took pleasure in putting grit in the bearings, almost continually.
Mr. Chairman, I could take any report from the committee and show you that we were discriminated against, because they did not want the truth to come out. We were repeatedly insulted because we asked for information that the government was not ready to give out. At this stage, I want to be fair and say that when he appeared before the committee, the minister gave us enough leeway and answered our questions fairly well. However, we were not allowed to seek advice from the unemployment insurance advisory committee whose members were in a position to give us plenty of information on that question, since the advisory committee had not recommended that measure. Despite the fact that the advisory committee put forward the same reasons as those submitted by the various public organizations, the government is bent anyway on by-passing those suggestions and intends to thrust that bill upon us.
Mr. Chairman, I submit that the attitude shown, at the industrial relations committee meetings, toward members of the Liberal party and C.C.F. members present is a glaring injustice. Every time a question was asked, the chairman rose and declared it out of order, even before we had a chance to express an opinion.
He led the discussions of this committee in a deplorable way and prevented us from obtaining the information we needed to debate the matter further in the house.


Mr. Ricard:: This is a tissue of lies.


Alexis Pierre Caron: We have in this house a committee member who is largely responsible for that unfair treatment within the committee-


J.-H.-Théogène Ricard: A tissue of lies!


Mr. Denis:: Don't spoil your chances of being appointed parliamentary secretary.


J.-H.-Théogène Ricard: Keep an eye on your own chances!

Unemployment Insurance Act


Alexis Pierre Caron: Mr. Chairman, I said that we had a right to protest, and now that the bill is back before the house, where those members who were forced-


Mr.   Hicard@: It is a tissue of lies.


Alexis Pierre Caron: Mr. Chairman, now that peace is restored, I might go on with my remarks.


Mr. Chambers:: Are you calm?


Alexis Pierre Caron: Is there anyone who wishes to say something?


Egan Chambers: I asked you if you are calmed down.


Alexis Pierre Caron: I did not understand a thing.


An hon. Member:: He doesn't understand anything.


William Moore Benidickson: He does not speak French well.


William Heward Grafftey: Continue.


Alexis Pierre Caron: Mr. Chairman, those interjections indicate that our complaints are justified.
I was going to suggest to the Minister of Labour whose responsibility it is to recommend members to be appointed chairmen of various committees, that if he intends again to recommend the appointment of the hon. member for Danforth (Mr. Small) as chairman of the industrial relations committee next year, he should set up a special class in order that the hon. member may get acquainted with parliamentary procedure and the way to preside at meetings. In fact, twice we had to leave the meeting in protest, because we were being denied the required information, and this as a result of the line followed by the hon. member for Danforth who was chairman of the committee. Therefore, we missed part of those sittings and the opportunity was taken to rush things through.
Mr. Chairman, I referred a while ago to labour representatives who appeared before the committee to present their views. This advisory committee included labour representatives who had to resign because they did not agree with the way the government was dealing with Canadian workers. And when we discussed the situation, a certain member whose riding I do not recall said something like this:
(Text):
The resignation of the labour members has been a service to the commission.
[Mr. Ricard.l
(Translation):
Mr. Chairman, these words could give the impression that the workers' representatives within the commission were not acting according to their conscience or in a way that would help the committee and advise the minister with insight and objectivity.
Well, Mr. Chairman, I contend that, at this time, we are not in a position to pass bill C-23, for lack of relevant information.
We received protests from organizations throughout the country. I believe that, as long as we have not received the necessary information which would enable us to consider the bill, we, in this house, cannot vote in favour of a legislation which can, at present, be considered unfair, because it throws upon only two groups of our society the whole burden of the errors that have possibly been committed by the present government since it has been managing this country's business and which may have been the cause of a decrease in our international trade and thus of a lack of employment in Canada.
This decline in our trade also caused some industries to close down, at least for a while. Warehouses were chock full of goods and manufacturers were being forced to stop production while waiting to sell part of the accumulated stock.
Mr. Chairman, if that is the government policy, there cannot be any doubt that the resulting unemployment is responsible for the deplorable condition of the unemployment fund. It rests with the government to replenish the unemployment fund. It is also up to the government to contribute $400 million to the fund, if necessary, so as to restore it to the level it was at before the economic recession, so that employees and employers shall not be requested to pay larger contributions into this fund which is designed to help those who lost their jobs, as a result of the difficult economic conditions which the country has been facing these last few years.
Mr. Chairman, I urge the minister to adjourn the debate on that measure and to set up a committee to study it further. I am satisfied that in acting upon this suggestion, it would be granting the request of the Canadian Labour Congress, the Canadian manufacturers, the Board of Trade of Canada, the Chamber of Commerce, the Board of Trade of Toronto, and of all who appeared before the committee. Then we will be In a position to draft a bill more suited to the needs of the country, of the worker and of

the employer, because, and we should not forget it, as a result of the proposed increase of the contributions, certain industries which produce particular items will see their production cost increased by as much as $16,000 a year. That fact was brought to the attention of the committee on industrial relations by the Canadian manufacturers.
Therefore, Mr. Chairman, can we reasonably require that only two categories of people in Canada be responsible for all the troubles that this country is experiencing today? Can the minister logically attempt to keep on imposing on us such a measure when he personally knows that the advisory committee, far from recommending it, even criticized it?
Can he logically ask this house to pass it, unless he uses a servile majority to force it upon us.
I say that we propose to fight it. We are trying to get the minister to allow us at least the time to go into it more thoroughly. Meanwhile, let the government, which is responsible for that sorry plight, pay out of Canada's consolidated revenue fund the amount required to replenish the unemployment insurance fund, because we know that if next winter we have anything like last winter's unemployment, it will cost at least another $250 million. And in view of the fact that there is only some $350 million left at the present time and that the market value is lower than the book value, it is my contention that if we have that kind of unemployment next winter, the fund will practically be exhausted and the government will have yet to draw from the consolidated revenue fund to maintain conditions across the country.
So, if the government, by reason of the dangerous state of the fund, has to draw additional amounts from the consolidated revenue fund, why should it not do it right now? Then it could have this bill studied by an independent body, which could be made up of persons having made special economic studies who could advise the government. If their views were similar to that of the advisory committee, that would mean that the government would be in the wrong, and then we would vote against the bill. If, on the other hand, that particular committee advised the government to follow its present policy, well, we could say to the government: assume your own responsibilities. We would let the bill go through with
Unemployment Insurance Act all the more satisfaction since it would have been thoroughly examined.
There are things which are not accurate in this bill. For instance, it is claimed that the increase will average 30 per cent. But when we consider the new classes, we realize that the increase will reach 64 per cent in certain cases. An increase of 64 per cent, both for the worker and for the employer, means an increase in the cost of living. An increase in the cost of living means an inflationary upsurge in the country. An inflationary upsurge in the country means that the cost of our goods will increase to such an extent that we are going to go on losing our markets abroad. And if we keep on losing our markets abroad, there will be an increase in the number of unemployed in Canada.
Can we afford, here in Canada, a small country in terms of population but large in size, to wait until that calamity is upon us before we react? I say that the ministers are too responsible to accept such a view. I say, as the Minister of Finance did say himself, that we must assess the situation and check that increase, in order that the Minister of Trade and Commerce (Mr. Churchill) may find markets for the products we have at the present time.
Mr. Chairman, we want the minister to change his mind and grant us a more detailed study of the bill before it is adopted.
Mr. Chairman, may I call it ten o'clock? (Text):
Progress reported.
Hon. Donald M. Fleming (Minister of
Finance): Mr. Speaker, may I have leave of the house to revert to motions for the purpose of giving first reading to the bill entitled an act to amend the Farm Improvement Loans Act pursuant to the resolution which was reported and agreed upon earlier this afternoon?


Mr. Speaker:: Has the minister leave to revert to the introduction of bills?


Some hon. Members:: Agreed.



FARM IMPROVEMENT LOANS ACT


Donald Methuen Fleming: for leave to introduce Bill No. C-63, to amend the Farm Improvement Loans Act.
Motion agreed to and bill read the first time.

Business of the House BUSINESS OF THE HOUSE


Lionel Chevrier: Mr. Speaker, may I inquire what the business is for tomorrow? I presume we shall start, as the house leader said on Friday, with item No. 19 and thereafter, I take it, the leader will indicate what the business is.


Howard Charles Green: Yes, Mr. Speaker, we will start with item No. 19 on today's order paper and then continue the debate on the amendments to the Unemployment Insurance Act; then take item No. 10 respecting the superannuation of the members of the Royal Canadian Mounted Police; then item No. 3, an act respecting the Royal Canadian Mounted Police; and then item No. 11, an act to amend the Criminal Code.
Once those are finished we should like to go on with the bills following the resolutions
that were passed today. I believe three of them are under the Minister of Finance and one under the Minister of National Defence.


Lionel Chevrier: Will the estimates be the same as indicated last Friday?


Howard Charles Green: Yes, Mr. Speaker, although there may be a change in the order. We may take the estimates of the Department of Finance ahead of those of the Department of Justice.


Lionel Chevrier: Will they start in any case on Thursday?


Howard Charles Green: I would hope we could start them on Wednesday. It will depend on what progress we make with the legislation.


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

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

Mr. Dupuis: 1.	Were tenders called for the granting of a concession for the operation of gasoline pumps and a repair shop for motor boats on a parcel of land belonging to the government, on the western bank of the Richelieu river at St. Jean, south of the Canadian National bridge between St. Jean and Ibervillle?
2.	If so, what are the names of the persons, companies or corporations who submitted tenders, and what was the amount of each tender?
Answer by: Hon. George H. Hees (Minister
of Transport):
1 and 2. Tenders were not called for the lease of the government wharf and adjoining water lot at St. Johns, P.Q. It has not been the practice to call for tenders under circumstances similar to this case. When applications are received for the leasing of departmental land the normal procedure is to determine whether or not such land may be leased by the department and when there is no objection from the departments standpoint to its use for the purposes indicated by the applicant, a lease may be granted. A rental based on current land valuations in the area is set and the applicant informed accordingly. A lease has not yet been executed.


SCIENTIFIC POSITIONS, DEPARTMENT OF AGRICULTURE
Mr. Argue: 1.	Were any senior scientific positions in the field of botany above the salary of $9,000 (a) created;
(b)	unfilled, in any section of the former science service division of the Department of Agriculture between January 1 and March 1, 1959?
2.	If so, in the case of (a) on what date were they created, and in the case of (b) on what date did they become vacant?
3.	What positions were they, in what section, what salary, and what was the nature of the work?
4.	Was a civil service competition opened for any of these positions?
5.	If so, for which ones, on what date, and what was the number?
6.	If not, what was the authority under which each of them were to be filled?
Answer by: Hon. D. S. Harkness (Minister of
Agriculture):
1.	(a) No; (b) Yes.
2.	(b) October 1, 1958.
3.	AGR-517 SSB-1, Chief research division (agric. 1), botany, salary $9,600 to $10,140.
4.	No.
5.	See answer to 4.
Questions
6.	Held vacant pending reorganization, research branch.


RADIO LICENCES ISSUED SINCE JANUARY 1, 1959
Mr. Argue: 1.	Has the board of broadcast governors issued any licences to operate radio stations since January 1, 1959?
2.	If so, (a) what stations have been licensed, and on what date; (b) to whom were they issued, and who is the licensee of each; (c) what town or city are they to serve; (d) what persons sit on the board of directors of each station, and who are the owners?
3.	Are the licensees of any of these radio stations engaged in (a) operation of any other radio or T.V. stations; (b) other commercial enterprises?
4.	If so: (a) what is the nature of the businesses upon which each is engaged? (b) what is the name of each of the companies owned by each licensee?
(c)	who are the directors and officers of each?
(d)	who are the owners?
Answer by: Hon. George H. Hees (Minisler
of Transport):
1.	The board of broadcast governors makes recommendation on new applications to the Minister of Transport but the board does not issue licences. Such licences are issued by the Minister of Transport upon the approval of the governor in council. Following the approval of the governor in council for the issuance of a licence, authority is granted for the establishment of the station but authority for its operation is not granted until the station has been established and the licensee organization set up in accordance with the approved application. Authority has been granted for the establishment of 14 private commercial broadcasting stations since January 1, 1959 but the stations have not yet been established.
2.	(a) (1) CFCP, Courtenay, B.C., April 28, 1959.
(2)	CJCB-TV-1, Inverness, N.S., April 8, 1959
(3) CKKW, Kitchener, Ont., April 8, 1959.
(4) CHEC, Lethbridge, Alta., April 8, 1959.
(5)	CJIR, Quebec, P.Q., April 8, 1959.
(6)	CFAX, Saanich, B.C., April 8, 1959.
(7)	CJCJ, Woodstock, N.B., April 8, 1959.
(8)	CFML, Cornwall, Ont., May 21, 1959.
(9)	CKMP, Midland, Ont., May 25, 1959.
(10)	No call sign allocated (TV), Princeton, B.C., May 8, 1959.
(11)	No call sign allocated (TV), Corner-brook, Nfld., May 8, 1959.
(12)	No call sign allocated (TV), Kenora, Ont., May 8, 1959.
(13)	No call sign allocated (TV), Moncton, N.B., May 8, 1959.
(14)	No call sign allocated (TV), Trail, B.C.. May 8, 1959.
2.	(b)(1) Wm. Geo. Browne, on behalf of a company to be incorporated.
(2)	Cape Breton Broadcasters Limited.

Questions
(3)	Alan G. Hodge, on behalf of a company to be incorporated.
(4)	H. W. Brown, on behalf of a company to be incorporated.
(5)	Les Entreprises Sillery Quebec Inc.
(6)	Ellison Queale, on behalf of a company to be incorporated.
(7)	R. J. Morrison, on behalf of a company to be incorporated
(8)	Mrs. Madeleine Laframboise.
(9)	R. Bruce Armstrong, on behalf of a company to be incorporated.
(10)	Princeton Television Limited.
(11)	Canadian Broadcasting Corporation.
(12)	Canadian Broadcasting Corporation.
(13)	Canadian Broadcasting Corporation.
(14)	Canadian Broadcasting Corporation.
(c)	See Answer 2(a) above.
(d)	(1) Owners: Wm. Geo. Browne*, Chas.
E.	Renecker*, Mrs. E. M. R. Brackett*, Robt. H. Blackmore*, Geo. Hobson*.
(2)	Owners: J. Marven Nathanson*, Norris L. Nathanson*, Mrs. Jennie Nathanson*.
(3)	Owners: Albert Dunker*, Harold J. Parker*, Nyle H. Futher*, Gordon R. Brock*, Alan G. Hodge*, Robert Shantz, Geoffrey Lewis.
(4)	Owners: H. W. Brown*, R. M. Tanner*,
A.	L. Batty*, S. R. Broder*.
(5)	Owners:	Jacques LaRoche*, Odilon
Crevier*, Raymond LaRoche*.
(6)	Owners:	Ellison Queale*, J. Henry
Allison*, Ray Vernon Parrett*, Ellison Queale Radio Supply Limited.
(7)	Owners: R. J. Morrison, W. B. Groh, George Baker, John Winslow*, H. E. Montgomery*, C. W. Donovan, Clifton Cummings, James F. H. Crocco, G. W. Montgomery, Harrison Monteith, R. B. Cluff, H. Stanley Leech, H. L. Hatfield, H. M. Carter, E. R. Hunter, Deane Crabbe, Fred A. McCain, S. W. Bell, Chas. Allen*, F. H. Hatfield, L. M. Ellis, Walter B. Cluff, C. Gordon Ross, Ronald Moffatt, W. H. Oldenburg, Fredric Beatty, J. Frank Cluff, W. W. Cluff, C. G. Demmings, Edwin S. Green, Ada B. Flemming, E. P. Rempel, Albert H. Morrison, P. B. Jollota, J. D. Morrison, R. A. Normandin, B. Cosman.
(8)	Owner: Mrs. Madeleine Laframboise; directors, nil.
(9)	Owners:	R. Bruce Armstrong*, J.
Stanley Tulk*, Gordon A. Sinclair, Grant R. Forsythe*.
(10)	Owners: Samson A. Gould*, Anna Gould*.
(11)	Owners:	Canadian Broadcasting
Corporation; directors: J. Alphonse Ouimet,
B.	A., B.Eng., F.I.R.E., Ernest L. Bushnell, Mrs. Gertrude Alexandra Carter, Mrs. C. Armstrong, Dr. W. L. Morton, B.A., B.Litt., M.A., F.R.S.C., Mrs. Kate Aitken, Charles
*Directors.
Leeson, Raymond Dupuis, Q.C., Robert L. Dunsmore, B.Sc., R. Whidden Ganong, Dr. C. B. Lumsden.
(12) Same as answer 2 (d) (11).
(13) Same as answer 2 (d) (11).
(14)	Same as answer 2 (d) (11).
3.	(a) (1) Cape Breton Broadcasters Limited operates stations CJCB and CJCB-TV at Sydney, N.S.
(2) The Canadian Broadcasting Corporation operates a number of publicly owned stations in Canada.
(b)	Nil.
4.	(a) See answer 3 (b) above.
(b)	See answer 3 (b) above.
(c)	See answer 3 (b) above.
(d)	See answer 3 (b) above.


STATION CJON, ST. JOHN'S, NFLD.
Mr. Argue: 1.	Who Is the licensee of station CJON St. John's, Newfoundland?
2.	On what date was this license first granted, and to whom?
3.	Who are the officers, directors, and owners of this station?
4.	Is the licensee of this radio station engaged in (a) operation or ownership of any other radio or T.V. station; (b) any other commercial enterprises?
5.	If so: (a) what is the nature of these businesses? (b) what is the name of each company? (c) who are the directors, officers, and owners of each?
Answer by: Hon. George H. Hees (Minister
of Transport):
1.	Newfoundland Broadcasting Company Limited.
2.	October 10, 1951-Newfoundland Broadcasting Company Limited.
3.	Geoffrey W. Stirling; D. Jamieson; Florence Dawe.
4.	(a) Television broadcasting station CJON-TV, St. John's, Newfoundland. Satellite television broadcasting station CJOX-TV, Argentia, Newfoundland.
(b)	Not known.
5.	(a) See answer 4 (b).
(b)	See answer 4 (b).
(c)	See answer 4 (b).


FERRY SERVICE, ST. JOSEPH DE LA RIVE-ST. BERNARD DE L'lLE AUX COTJDRES
Mr. Brassard (Lapointe): 1.	Have complaints been received by the Department of Transport or the Canadian Maritime Commission concerning the ferry service operated by Rosario Harvey between St. Joseph de La Rive and St. Bernard de Tile aux Coudres?
2.	If so, of what nature were such complaints?
3.	Did the department or the commission make an investigation of such complaints? If so, what were the findings?
4.	Did the Canadian Maritime Commission inform Mr. Harvey of the cancellation of subsidy in connection with this ferry? If so, on what date?

5.	Did Mr. Harvey hold a permit issued by the public service board of the province of Quebec for the operation of this ferry service? If so, during what period?
6.	Is this ferry service being operated at the present time?
7.	If so, by what person, company or partnership, when was the contract awarded and what is the amount of the subsidy?
8.	Did the present operators hold a permit from the public service board of the province of Quebec for this ferry service when awarded the contract by the board or department?
Answer by: Hon. George H. Hees (Minister
of Transport):
1.	Yes.
2.	Resolution of the council of the municipality of St. Bernard de l'lle-aux-Coudres, also delegations from the island to interview the Canadian maritime commission. Complaints were:
(a)	concerning the alleged poor condition of the vessel and doubts of its stability and safety;
(b)	concerning the way in which automobiles were loaded on the deck of the ferry in such a manner as to preclude the possibility of their occupants escaping from them in an emergency;
(c)	inadequate capacity for the traffic in that many automobiles were alleged to be left behind on frequent occasions owing to lack of sufficient space;
(d)	concerning the type of vessel in use, which was a converted goelette.
3.	Yes.
A.	The board of steamship inspection, Department of Transport, reported
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(a)	that the ferry was in a satisfactory condition;
(b)	that the senior steamship inspector, at the port of Quebec, was instructed to draw again to the attention of the ferry operator public notice 1013 which points out that the deck stowage arrangement of vehicles should be such as to provide ready escape from any vehicle, in an emergency;
B.	The Canadian Maritime Commission reported
(c)	that traffic has increased steadily over the past few years and that day excursionists, on Sundays and holidays, were also increasing, thus creating congestion on week ends, particularly on Sundays. Supplementary trips in excess of the schedule had been made on 22 occasions to endeavour to satisfy the public demand. However, the complainants maintained that many would-be users of the ferry had turned away rather than wait an indefinite period to make a crossing. The week day traffic had been accommodated without much trouble;
(d)	it is true that this vessel was a converted goelette and lacked luxury accommodation.
4.	Yes. February 26, 1959.
5.	Yes. From April 30, 1957, until March 19, 1959.
6.	Yes.
7.	By la Cie de Navigation Cartier Limitee; the contract was executed in May, 1959, for an annual subsidy of $15,000.
8.	Yes.


Tuesday, June 16, 1959