1959-04-30

VETERANS AFFAIRS

[Stage Direction]
Second, third and fourth reports of standing committee on veterans affairs-Mr. Dinsdale.

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, as the house knows, the United States since July of 1957 has restricted imports of oil, first by what was known as the voluntary oil imports program and, since March 10, 1959, by mandatory controls. This government has consistently maintained and repeatedly emphasized to the government of the United States that we could not recognize that such controls were consistent with the mutual security interest of Canada and the United States and with the economic co-operation which must underlie such a vital common interest.
I am pleased, therefore to be able to tell the house that the United States government has today announced the exemption from import restrictions of crude oil, unfinished oils, and finished petroleum products which enter the United States by pipe line, motor carrier or rail from the country in which they are produced. Under the terms of the United States government decision the exemption will become effective as of June 1 next.
I wish to take this occasion to express the Canadian government's satisfaction at the decision which has been taken and announced by the United States. I am glad to recognize that it is the consequence of a desire on the part of the United States administration to reach agreement with Canada in the solution of a difficult problem.
The exemption will be of direct benefit to the export sales of Canadian crude oil and products. As important, if not more, is the benefit which will follow in terms of a normal, healthy development of the Canadian petroleum industry, which is thus restored to its appropriate place as an important and natural supplier of the North American markets.
In addition to its intrinsic importance for the future of the Canadian oil industry, the decision is also of significance in terms of our general relations with the United States in that it removes a source of distressing irritation and reflects a degree of co-operation and sensible development of resources which is so necessary for the economic prosperity and mutual defence of our two countries.


Hon. L. B. Pearson (Leader of ihe Opposition):: Mr. Speaker, I am sure all hon. members of the house will have heard with great satisfaction from the Prime Minister of the decision of the United States government to lift the restriction on the export from Canada to the United States of this very important product. We all hope this may be followed by an increase in our exports of oil to the United States and in an encouragement to the development of this industry.
Perhaps I am not right in this assumption, but I assume from the Prime Minister's statement that the action taken by the government of the United States affects Canadian oil and not imports of oil from other countries in this hemisphere. If that assumption is correct perhaps I may be permitted to ask the Prime Minister whether as a result of the discussions and negotiations that have been carried on in Washington, Canada's hands are tied in any way in regard to any action which we may feel obliged to take in the future concerning imports of oil from, say, Venezuela.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, this announcement by the Prime Minister is a welcome one. I believe that parliament as a whole has supported the representations the government of Canada has made to the United States. We have supported the government in these actions, and we are fully confident of the fact that because parliament spoke with one voice this had some bearing on the important results announced today.
This announcement is of importance to the Canadian oil industry and to the oil industry of western Canada in particular. In recent months there have been serious cut-backs in production. There has been a reluctance on the part of oil companies to continue exploration at a rapid pace. We hope this will restore morale to the oil industry and mean an expanded exploration and development program. We believe it should result in increased markets for Canadian oil.
3180	HOUSE OF
Inquiries of the Ministry


John George Diefenbaker: Mr. Speaker, the question raised by the Leader of the Opposition I think is answered by the fact that the exception covers the products I mentioned which enter the United States by pipe line, motor carrier or rail from the country in which they are produced.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to ask the Prime Minister whether any agreement has been reached with the United States in regard to the storing and control of nuclear weapons on Canadian soil.


John George Diefenbaker: Mr. Speaker, I am glad to welcome the hon. member's return after his enforced absence from the house. I assure him that the whole subject will be dealt with very shortly on an occasion other than on orders of the day.



REQUEST FOR TABLING OF WHITE PAPER IN ENGLISH AND FRENCH

[Stage Direction]
On the orders of the day:
Mr. Maurice Bourget (Levis):: Mr. Speaker, I should like to direct a question to the Minister of National Defence. I understand that he said yesterday the white paper on national defence would be tabled today. I should like to ask him if he would inform the house whether French and English copies of that report will be made available simultaneously.


Hon. G. R. Pearkes (Minister of National Defence):: Mr. Speaker, the white paper on national defence was placed in the hands of the Clerk of the house today, and it will be distributed to hon. members by the distribution office some time today. Unfortunately, although the translation has been completed, the printing of the French edition is not yet complete. As soon as it is finished it will be distributed to the members.



ST. LAWRENCE SEAWAY REPORTED STATEMENT RESPECTING INADEQUATE FACILITIES

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I wish to direct a question to the Minister of Transport arising out of a report in this morning's Montreal Gazette that a 15,000-ton vessel dented two hull plates, scraped her sides and lost part of her deck railing in


negotiating the canals and locks. Can the minister comment on the statement by Captain MacDermid of the Grace Line freighter Santa Regina to the effect that unless changes are made in the seaway canals and locks, which are so narrow and inadequate, ocean vessels may have to be redesigned to avoid damaging their hulls and superstructures in the cramped facilities of the seaway?


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I would say it is all a matter of ocean-going skippers becoming as skilled as lake-going skippers in navigating their ships through the seaway.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I should like to direct a question to the Minister of Labour. I understand the government is in receipt of telegrams from the Vancouver and district labour council and affiliated unions expressing concern at unemployment insurance supplementary benefits being cut off on May 15. This is the purport of the telegrams. Can the minister inform the house of government policy on this matter, and will provision be made for continuing assistance if employment is not available?


Hon. Michael Siarr (Minisler of Labour):: Mr. Speaker, no consideration has been given to that suggestion as yet.


Harold Edward Winch: May I ask a supplementary question. In view of the statement by the Minister of Labour that no consideration is being given to the matter, will the Minister of Labour inform the house-if supplementary benefits are cut off on May 15 and no employment is available-what the government expects these men and women to live on?


Hon. Paul Martin (Essex East):: May I ask
the Minister of Labour a supplementary question to that put by the hon. member for Vancouver East in regard to representations made to the Prime Minister in the matter of a continuation of supplementary unemployment insurance benefits. The minister said no consideration has been given that matter. In view of the fact that we shall soon be confronted with the 15th day of May, will the government give consideration to this request?


Michael Starr: Mr. Speaker, this government, for the first time any government has ever taken such action, extended seasonal benefits by two months last year and again for six weeks on a temporary basis when conditions

demanded it; whereas the former government would not even extend it by even one month.


Paul Joseph James Martin: They did not face the unemployment levels now before us.


Michael Starr: Those conditions existed in 1954 and 1955. The members of this house and the people of this country have a great deal of confidence in this government, and we will see that the proper thing is done to look after the people.


Mr. Chevrier:: Not nearly as much as you think.


Paul Joseph James Martin: Mr. Speaker, I thank the minister for what he has said, but he has not yet answered my question. In view of the fact that there are now over 522,000 men and women out of work in Canada, will my hon. friend tell the house whether or not the government will give consideration to the request made to the Prime Minister by the Vancouver and district labour council?


Michael Starr: Mr. Speaker, this government gives consideration to every request, as has been pointed out. On every occasion when requests have been brought to the attention of this government, action has been taken.


Harold Edward Winch: Based on the remarks of the minister a few moments ago, if these people are cut off from benefits on May 15, what do they live on as far as government policy is concerned?


Mr. Speaker:: The hon. member is carrying on an argument on this question.



REPORTED LAY-OFFS IN ALBERTA MINES

[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I should like to address a question to the Minister of Labour. A few days having passed since I asked a question in reference to some men being laid off in Drumheller as a result of the abandonment of two mines, what consideration if any has been given this matter by the minister's department up to date?


Michael Starr: Mr. Speaker, as I pointed out to the hon. member the other day, my officials are doing everything possible to assist those miners who have lost their jobs in the Drumheller coal mines. There are approximately 300 of that type of miner. Every effort is being made to find alternative employment wherever this can be located. I have declared this area a labour surplus area, so that arrangements can be made to pay removal expenses of those
Inquiries of the Ministry miners, their wives, families and household effects, who wish to take jobs in other areas. This is not compulsory on anyone who does not wish to so move.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Lucien Cardin (Richelieu-Vercheres):: May I direct a question to the Minister of Finance? Will the minister advise the house whether bank rates have increased since he spoke in the house on Tuesday last?


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, the weekly rate on treasury bills today is 4.76 compared with last week's rate of 4.72. It is practically the same as last week's.


Louis-Joseph-Lucien Cardin: It did increase.


Donald Methuen Fleming: If the hon. gentleman wishes to gloat over the increase I presume he will continue to do so, as his colleagues have in the past.


Lionel Chevrier: You should not get angry over a question like that.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinily-Conception):: Mr. Speaker, I should like to direct a question to the Minister of Transport. May I ask the minister if his department is giving consideration to a request from the Newfoundland board of trade for a subsidy on a steamship service between Prince Edward Island and Newfoundland and, if so, what is the attitude of the department?


George Harris Hees: We are giving consideration to that request, Mr. Speaker.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: wish to address a question to the Minister of Citizenship and Immigration. As an immigrant who came from Great Britain in the same year as the Minister of National Defence, but who has not done nearly as well as he, and as one who is proud to be a Canadian, I am very concerned, as I think a number of other members are, about the series of articles recently published by the English

Inquiries of the Ministry newspaper The People with respect to conditions in Canada, supplemented by pictures taken I believe in 1955. Would the minister inform the house of the steps being taken by her department to correct the false impression of conditions in Canada created by these articles?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, we have been greatly concerned over what we consider to be the totally false picture painted by this newspaper. A representative of the paper is in Canada at present and the facilities of my department have been made available to him so that he may properly assess the facts as they are. We hope the stories he will write will be somewhat different from those he has written in the past.
I should also like to say that I am grateful to the members of the press gallery having connections with other United Kingdom papers who have offered the facilities of their newspapers in an effort to set the story straight. I believe that through this medium we will eventually get across to the people of the United Kingdom the facts as they are.



ELEVATOR SERVICE FOR MEMBERS DURING RINGING OF BELLS

[Stage Direction]
On the orders of the day:
Mr. Erhari Regier (Burnaby-Coquillam);: Mr. Speaker, I understand it is not proper to interrogate the Speaker, and in line with the usual custom I should like to ask the Minister of Public Works whether he has noticed the growing annoyance of members of the house because the old rule is not being observed that when the bells ring calling us into the house for its opening or for a vote, first priority on the elevators should go to members of the house. Will the minister look into the existing situation?


Hon. Howard C. Green (Minister of Public Works):: This really comes under His Honour, I believe. However, I will be very glad to do what I can.



LIVESTOCK


[Stage Direction]
On the orders of the day:
Mr. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture, notice of which I have given him. Has any progress been made in having the port of Boissevain certified to handle registered livestock shipped

through there? In view of the approaching summer season this matter is assuming some urgency.


Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, Canadian livestock inspection facilities are in the process of being built at Boissevain, Manitoba, close to the United States border, and when these facilities are ready they will be available to the United States department of agriculture veterinary officials for the inspection of Canadian cattle moving to the United States. The United States authorities have not yet agreed to provide regular veterinary inspection services at Boissevain. However, when the Canadian inspection facilities are available the United States veterinarians will travel to Boissevain at the request of the United States importers to make the inspection of Canadian cattle moving to the United States. Expenses and time charges made by the United States animal inspection service for this inspection away from a regular United States inspection port are chargeable to the owner of the livestock being examined for admittance to the United. States.
As soon as our new inspection facilities at Boissevain are ready for use we intend to again write the United States department of agriculture officials requesting that they provide part-time inspection facilities on prescribed days at Boissevain.


Mr. Pickersgill:: May I ask a supplementary question of the minister. Does he hope to have these facilities at Boissevain ready by May 14?


Douglas Scott Harkness: Mr. Speaker, I do not know why the hon. member for Bonavista-Twillingate seems to be so interested in affairs in Manitoba at the present time.


John Whitney Pickersgill: I lived there for 30 years.


Douglas Scott Harkness: Apparently he has some particular interest there which has not been disclosed to the house.


Mr. Bell (Saini John-Albert):: They ran him out.


Douglas Scott Harkness: In any event, this matter has been under consideration for well over a year now, and progress has been made in getting something satisfactory to the people there into operation.



COMBINES INVESTIGATION ACT


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: I should like to direct a question to the Minister of Justice,

of which notice was given earlier this morning. Is the minister able to give the house any information regarding the status of the investigation by the combines investigation branch into the operations of Pacific Press Limited of Vancouver?


Hon. E. D. Fulton (Minister of Justice):: In accord with the usual practice, I must answer this question in rather general terms; and say, I am not in a position to give the house any information regarding the state of this investigation, except that I have not yet received any report from the restrictive trade practices commission; but if and when I do receive such a report it will be published, as required by the act, in the usual way.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Harold Edward Winch: should like to direct a question to the Minister of Justice. I regret not having given him notice, but since he is so conversant with the operations and responsibilities of his department I feel sure he can answer extemporaneously.
In view of the unanimous recommendation of the joint committee of the Senate and the House of Commons that the question of capital punishment should be reviewed, and in view of the statement by Mr. Justice Manson denouncing the use of the Queen's clemency to commute death penalties to life imprisonment as an abrogation of the authority of parliament-with which statement I may say, sir, I completely disagree-


Some hon. Members:: Order.


Mr. Speaker:: Up to this point the hon. member has been out of order, so perhaps he can bring himself in order by asking his question.


Harold Edward Winch: I was right there when you rose, Mr. Speaker. My question, therefore, is, will the minister inform the house whether consideration has been given or will be given to reconstituting the joint committee for the purpose of further considering this most important, controversial and complex matter?


Edmund Davie Fulton: can tell the hon. gentleman that up to the present time no consideration has been given to reconstituting that committee, and in view of the complaints we have already heard from the opposition about the number of committees on which they have to serve I should think it is not likely that any consideration will be given to that suggestion at this session.
Inquiries of the Ministry TELEVISION



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Mr. W. A. McLennan (New Wesiminster):: I should like to direct a question to the Minister of National Revenue. Since over 60 per cent of the population of British Columbia live in the lower mainland area, where there is no private television station, and since $1,500,000 per year is spent by British Columbians on advertising over the Bellingham, United States, television station, would the minister give consideration to granting a private television licence for a station in the lower mainland area of British Columbia, preferably in the New Westminster-Surrey district?


Hon. George C. Nowlan (Minister of National Revenue):: The short answer to that question, Mr. Speaker, is no, because of course I have no control over the issuance of television licences. This matter comes under the control of the board of broadcast governors. Therefore I have no opinion in this matter, but in fairness to the house, and with Your Honour's permission, I may take 30 seconds because I know many members are interested in this matter.
I find that there are no regulations respecting television in Canada. I have asked the board of broadcast governors to draft regulations respecting television in Canada so that if and when the board of broadcast governors see fit to consider or grant applications for additional television stations wherever they may be, the applicants will at least know the rules and regulations with which they will have to comply, and will not have to complain about the fact that someone has changed the rules in the middle of the game. I am advised by the board of broadcast governors that they hope the regulations will shortly be drafted in preliminary form and finished in the very near future, and once they have been published and promulgated the government will then give consideration to lifting the present restrictions on competing television stations in Canada.


Lionel Chevrier: Mr. Speaker, may I ask Your Honour if it is now permissible to discuss this question now, at this moment, because this matter was raised by members of the opposition on a previous occasion and the minister has taken this opportunity, in answering a question, to debate this matter. I might say there are many members on this side of the house who would like to enter the debate.
3184	HOUSE OF
Dominion-Provincial Relations Mr. Speaker: As I understood the minister, he asked leave of the house to make the short statement he did make, and no objection was taken. Therefore I assumed the house gave its consent.


Lionel Chevrier: Mr. Speaker, I here and now take objection to the form of the question, although of course it might be important to the hon. member. I take objection to the form of the question and to the manner in which the answer was given, because this is the very kind of question which has been prevented from being asked from this side of the house and, with respect, the rules should apply to both sides of the house.


Mr. Speaker:: I will note what the hon. member has said. The question has been asked, and the answer was no.


Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I would just like to support what the hon. member for Laurier has said. We had a discussion yesterday on this very topic, and the only comment we had from the minister was a brief interjection.



FEDERAL-PROVINCIAL TAX-SHARING ARRANGEMENTS ACT FURTHER EXTENSION OF INCOME TAX RATE

[Stage Direction]
The house resumed, from Wednesday, March 11, consideration in committee of the following resolution-Mr. Fleming (Eglinton)-Mr. Rea in the chair:
That it is expedient to introduce a measure to amend the Federal-Provincial Tax-Sharing Arrangements Act to extend for a further period of one year the rate of 13 per cent for standard individual income tax for the purpose of calculating the tax equalization payments to the provinces and the amounts payable to the provinces under the tax rental agreements.
Erhart Regier: Mr. Chairman, when we last had this resolution before us on March 11, in the dying minutes of the day the minister made an appeal to the house, as recorded on page 1854 of Hansard, to agree to the passing of this resolution. At the time I indicated we were not yet prepared to allow the resolution to pass so the minister might introduce the bill, because looking at the wording of the resolution it is obvious that once the bill is before us we will be limited very much indeed in our debate on the matter. Once the bill is before us we will be limited to the terms which are outlined in the bill. Looking at the resolution, it says:
That it is expedient to introduce a measure to amend the Federal-Provincial Tax-Sharing Arrangements Act-
There is a feeling in our group that the word "expedient" in this context is of importance. I looked up the word in the dictionary, and I found that "expedient" may 

mean that "it is advisable". However, I also noticed in one dictionary that in the days of William Shakespeare the word "expedient" could be interpreted as "hasty". I believe that the Elizabethan interpretation of the word "expedient" ought to apply here. I would prefer to say that the resolution ought to read: "Resolved that because of the lack of policy and the unwillingness to fulfil election pledges, it is regrettable that it is expedient that this measure now be introduced."
I realize that a ruling has been given that we may not at this time debate the advisability of calling together a formal dominion-provincial conference. The minister has indicated that there is to be a meeting of the finance ministers of the ten provincial governments himself, and to that end the minister has indicated on the orders of the day that he has now employed a roving ambassador who is interviewing the ten provincial finance ministers.
I hope that before the resolution is adopted the minister is going to indicate to the house what kind of reception this roving ambassador has received and when we may expect the meeting of the finance ministers. We feel that the government has ignored its election pledges, that it is carrying on the old policy, and that it is employing an ad hoc philosophy in regard to the financial resources of the various levels of government. We in our group feel that there ought to be developing in Canada the idea that the federal government should begin to share the responsibilities that are faced by various levels of government in the year 1959. We prefer a sharing of responsibilities attitude to the approach that used to be expounded by the Conservatives when in opposition, which was one of the federal government relinquishing certain sources of revenue in favour of other levels of government.
We should like to ask the minister this question. On what basis is this resolution founded? Why does he ask the house to continue the old arrangement? I have indicated before that what the minister is now asking is not in line with his election speeches. We notice-and it is with agreement on our part-that the government has provided for extraordinary grants for a number of our Canadian provinces, namely Newfoundland, Prince Edward Island, New Brunswick and Nova Scotia. We notice also, and with extreme pleasure, that the federal government under the auspices of the Prime Minister has at long last agreed to share the cost of a major undertaking in the province of Saskatchewan. I refer, of course, to the building of the dam. We also note with some agreement that the federal government is willing to share responsibility in the field

of unemployment by way of its winter works program, that the federal government has also agreed to help in the development of natural resources, and has itself evolved a roads to resources program. We hear-and we hear this only by way of the "grapevine" -that the federal government is about to undertake a sharing of some responsibilities with the government of Manitoba, and we hope an announcement in that regard will not be very long delayed.
This problem which faces our ten provincial governments and all our municipal governments is a very serious one. Since March 11, when this question was last under discussion, we have received information regarding the expected revenues and expenditures of each of our provincial governments. We have also read a good deal in our home town newspapers about the budgets of our municipal governments. It causes us a great deal of concern when we realize that our municipal governments, almost without exception, have found it necessary to raise the mill rate.
I know the advice the Prime Minister gave to the municipalities last October was that if they did not wish to raise their mill rates, maybe they ought to raise their assessments. That is advice which I think could be exploded by any 14 or 15-year old in Canada. However, we regret that our municipalities, by reason of the niggardliness of this federal government, are in the position where they must either raise their mill rates or their assessments. I may say that many municipalities and provinces are giving very serious consideration to the imposition of a retail sales tax in order that they may be able to meet their obligations. I understand that in the province of Manitoba, unless there is an extraordinary announcement on the part of the national government, a sales tax will be imposed after May 14.
I should like at this point to read the receipts by way of taxation for the fiscal year ending March 31, 1957. I notice that the federal government received the sum of $5,019 million. Our provinces were able to collect $733 million, and our municipal governments were able to raise the sum of $923 million. In other words, of all the taxes levied upon Canadians 75 per cent went to the Minister of Finance here in Ottawa, our ten ministers of finance in the provinces collected 11 per cent, and our municipalities collected 14 per cent.
Now let us look at what happened in the year 1937. We see that in that year the federal government did not receive 75 per cent of the taxes the Canadian people had to pay. They received only 47 per cent. Our provincial governments did not receive 11 per
Dominion-Provincial Relations cent. They got twice as much; they received 22 per cent of the taxpayers' dollar. In the same year, 1937, our municipalities received 31 per cent, as compared with 14 per cent in the fiscal year ending March 31, 1957. Thus we see that there has been a real change in the apportionment of the money which the Canadian people pay in taxes. The federal government has received an ever-growing share of that money, and other levels of government which have been faced with increasing responsibilities have received a lesser percentage.
We believe there ought to be a growing willingness on the part of the government of Canada to enter into agreements with other levels of government in assuming a part of the burden. I notice that in the fiscal year ending March 31, 1957 in the important field of transportation, while the provinces incurred expenditures amounting to $591 million the federal government spent only $27 million. In other words, this government spent only 4.5 per cent of the money which was spent by the various Canadian governments in improving our roads and highways. In the field of health, while the provincial governments had to spend $326 million expenditures by the federal government in this sphere amounted to only $37 million, or 11 per cent. I could list social welfare, education and resources and, in the second case, the figures show that the federal government paid only 1.3 per cent of the total expenditures on education.
It is our contention that the resolution is inadequate in that it makes no new arrangements whereby other levels of government have any reason to look forward to a new deal at the hands of the present Minister of Finance.


Mr. Carter:: Mr. Chairman, in a recent nation-wide telecast the Prime Minister of Canada made the following statement:
I find that since confederation Newfoundland has received a total of $300 million from the federal government including the amounts for the current year.
In view of that statement by the Prime Minister I should like to ask the Minister of Finance if he would be good enough to give the committee the total amounts under all headings paid to each of the other nine provinces for the same period, including the amounts for the current year. I should like to emphasize that I am not interested in a breakdown of these figures, but just the total amounts.
(Translation):


Mr. Caron:: Mr. Chairman, for a number of years that very significant matter of federal-provincial agreements has been discussed in this house. We all admit that the subsidies paid to the provinces by the government are
3186	HOUSE OF
Dominion-Provincial Relations justified. Criticism is mainly aimed at the way those subsidies are distributed. Now, the method of distribution was attacked at the time our hon. friends opposite were sitting on this side of the house, and the promises they have been making since 1957 would lead the people of Canada, and particularly in Quebec, to believe that there would be great changes in the approach to this matter.
Indeed, after the Conservative government came into power on October 18, 1957, the Solicitor General and member for Three Rivers (Mr. Balcer) stated in this house, in answer to a question:
Mr. Speaker, I would like to tell my hon. friend that I am still opposed to subsidies such as were proposed by the former government.
A little later he added:
I want to tell him that proposals of the federal government are not yet known, but I am convinced that they will be made on a very different basis from those of the former government.
Consequently, I cannot blame the Solicitor General very much for believing this. He had followed the various discussions held in the house and, in view of the speeches made by the present Minister of Finance (Mr. Fleming), at the time he was sitting in the opposition, everything pointed to a very different approach when the Conservatives would come into power, for on July 23, 1956, as shown on page 6296 of the official record, the present Minister of Finance said:
I ask the government to take a responsible attitude in this matter and recognize the imperative needs of the provincial and municipal governments. This formula is at best a makeshift; it is no solution of the problem. What is needed is a government with a realistic and sympathetic appreciation of the responsibilities and burdens and problems of the provinces and a wholesome respect for the constitutional position of the provinces and the constitutional rights they possess, as well as the responsibilities they bear.
In the light of that statement made by the present Finance Minister when he was sitting in the opposition, it will be seen that, according to him, the Liberal government of the day did not sufficiently consult the provinces before taking a decision. At that time he wanted more federal-provincial conferences. Yet, since the Conservative government took power, the provinces have been called in only once. Indeed, after provincial officials had met for a couple of days in Ottawa, they were told: "Now go home and study the position; draw up some suggestions and we shall call you in again later and you may then submit them."


Since then, no action was taken to call a further federal-provincial conference to discuss that important problem. And yet, during the 1956 session, as recorded on page 699 of Hansard, the present Minister of Finance stated:
Would the Minister permit a question? Has the government given consideration to the resumption of the federal-provincial conference on constitutional questions?
It can be seen, therefore, that the present Minister of Finance, who was then so interested in calling a federal-provincial conference when the Liberal party was in power, has completely lost track of the opinions he expressed at the time, since, on July 23, 1956, as recorded on page 6287 of Hansard, he stated:
The house is now asked to carry into legislative form and effect the formula which was the essence of the federal government proposals. We are asked to do so with full knowledge that no provincial government has yet given its approval to those proposals and indeed with full knowledge that there has been widespread disapproval of the government proposals on the ground of their inadequacy.
A little farther on, he added:
If we look at the constitution with regard to the history of the intervening 89 years, we must recognize at once, as fairminded men and women, that the provinces in these common fields of taxation have at least equal rights with the dominion.
Again it was he who, when sitting on this side of the house, denounced the Liberal government's policy. Yet, we know that when the Liberal party was running the country, it never imposed its will on the provinces and never acted without first consulting them, to establish what should be done. There might have been times when the governments concerned failed to reach full agreement, but each time, at least, the provinces were consulted; they were not informed of a decision by a mere telegram or announcement in the speech from the throne.
Here is a further statement of the hon. member for Eglinton, during the 1956 session, as recorded on page 6289 of Hansard:
Sir, there have been premiers who have said that so far as the so-called conference this year was concerned, it was really no conference at all.
And yet, Mr. Chairman, it was still he who said that the Conservative government had called a federal-provincial conference, he who then criticized the Liberal government about such a conference, because there had not been full agreement, who criticized the Liberal government's attitude in saying

that it was no conference at all. How would the present Minister of Finance describe the federal-provincial conference he called hardly a year and half ago, when the provinces were required-
(Text):


Donald Methuen Fleming: Mr. Chairman, I rise on a point of order. I do not wish to interrupt the speech of the hon. gentleman, but when this resolution was under debate on March 11 a question arose as to whether it was in order to make references to proposals for a dominion-provincial conference, and a ruling was made at that time that it was not in order to refer to that subject in view of the extended debate that had taken place on that same subject in this house on February 9 and 10, culminating in a decision of the house on the evening of February 10 on an amendment to a supply motion. You will recall, Mr. Chairman, that from the time of that ruling on March 11 the debate proceeded on the basis that reference to the subject of a dominion-provincial conference was out of order.


The Deputy Chairman:: The hon. member will keep that in mind.
(Translation):


Alexis Pierre Caron: Mr. Chairman, on the point of order-
(Text):
On a point of order, Mr. Chairman. Seeing that you have your hearing aid may I be permitted to continue in French?
(Translation):
I believe, Mr. Chairman, that the way the Minister of Finance's approach to the problem is so narrow as to be unacceptable.
The resolution reads:
That it is expedient to introduce a measure to amend the federal provincial tax sharing arrangement act-
It deals with matters which must be related to the sharing of taxes between the federal government and the provinces. It therefore follows that such agreements cannot be made in the manner announced by the minister, either by telegram or in the speech from the throne. But we can also rightly claim, as did the minister himself when he used to sit on this side of the house, that in this matter a federal-provincial conference is essential to the good relations between the federal government and the provinces. I say that if he tries to curtail the debate on that matter he would be enforcing closure, and I do not think that the chairman could agree to that at this time.
Dominion-Provincial Relations
The matter of federal-provincial relations is intimately related to federal-provincial conferences.
(Text):


Charles Edward Rea: Order. I think the hon. member must realize that the Chair is bound strictly by the rules of the house. Since a resolution dealing with a federal-provincial conference was discussed on February 9 and 10, the hon. member cannot discuss a matter that has already been discussed. I am sure the hon. member must realize that. I say once again the Chair does not make the rules; it interprets them, and I shall have to ask the hon. member not to debate a federal-provincial conference since it has already been discussed.


Paul Joseph James Martin: I point out to you, sir, that the strictness of the ruling you have just given does not seem to be in conformity with the rules or the practice of this house. I am not addressing myself now to the point made by the Minister of Finance. An hon. member in a subsequent debate, after another matter had been decided, is certainly not precluded from making reference discussed but which has some relevancy to to the subject matter which may have been the point under immediate discussion.
To say that the hon. member who is now speaking cannot refer to the failure of the government to call a dominion-provincial conference is surely stretching the rules of the house far beyond their literal meaning and far beyond what was ever intended. I submit with confidence that the hon. member has the right to refer to the fact that the government has not called a conference and that it should call a conference. He has no right to make a full speech on that subject, but to preclude him from making reference to it is I think doing mischief to the rule referred to by the Minister of Finance.


Charles Edward Rea: I would refer the hon. member to citation 148 of Beauchesne's Parliamentary Rules and Forms, fourth edition:
It is a wholesome restraint upon members that they cannot revive a debate already concluded; and it would be little use in preventing the same question from being offered twice in the same session if, without being offered, its merits might be discussed again and again.
This is exactly the point I was trying to make to the hon. member. I realize that there may have to be references to it, but not a debate on the question of a federal-provincial conference.


Paul Joseph James Martin: If I may say so,
sir, you have underlined the very important words:
It is a wholesome restraint upon members that they cannot revive a debate already concluded-

Dominion-Provincial Relations
That is clear; that is the rule to which the minister directed our attention. But then it goes on to say:
-and it would be little use in preventing the same question from being offered twice in the same session if, without being offered, its merits might be discussed again and again.
It is not being offered again. That is not what the hon. member is doing. He is discussing the resolution before us, which has to do with the rate of 13 per cent for standard individual income tax for the purpose of calculating the tax equalization payments to the provinces and the amounts payable to the provinces under the tax rental agreements. Surely under this he can refer to the failure of the government to do certain things which would have made more effective the very purpose contemplated in the resolution now before the house.
All that the hon. member has been doing is to refer in passing to this conference and to the failure of the government to carry out its promise to call the provinces together for the very purpose of this resolution. We could not have debate of any kind in this house if we were to be restricted in the manner suggested by you, sir, a few moments ago.


Charles Edward Rea: I am not suggesting the hon. member cannot refer to it, but he cannot enter into a debate on it. I was listening to him quite closely, and I was getting the impression that he was going to debate it. I hope the hon. member will bear that in mind.
(Translation):


Alexis Pierre Caron: Mr. Chairman, I was just
about through dealing with this matter. I merely sought to show up the many inconsistencies between the words and deeds of the Minister of Finance and his government. Besides, he said, and I quote from page 6292 of Hansard for July 23, 1956:
Let no one underestimate the importance of the provinces and municipalities in the field of government of this country. They are the governments that are closest to the people. Anyone who has had experience of municipal government and has entered the federal field is well aware of the fact that is the form of the government that is closest to the people.
We are so aware.
It is a form of government much older than our federal form of government in this country.
As you see, Mr. Chairman, the action being taken today is in total contradiction with the statements made by the ministers when they were on this side of the house. Indeed, in the last elections, and particularly in the province of Quebec, Conservative candidates promised great changes in the handling of federal-provincial relations. Foremost among

them were the hon. member for Three Rivers (Mr. Balcer), the Secretary of State (Mr. Courtemanche) and the Minister of Defence Production (Mr. O'Hurley). I am not blaming them, I do not say they acted in bad faith, nor would I say that the Conservative members in this house were acting in bad faith when they promised constant improvements, but I do say they were misled, just as an enormous sector of the public was misled, by the promises of the present Minister of Finance (Mr. Fleming) and of the Prime Minister (Mr. Diefenbaker), who went about the country saying that everything was wrong and that henceforth everything would be different.
Those people believed in what they had been told, but the promises made were not kept. So now, with the party system we have in Canada, they can hardly rise in the house and express total disapproval of the government's position. They can express their views in a caucus, but it remains a secret with the caucus, and the public has no way of knowing what has been said there. Just the same, I pity those people, because it is hard on them to see that their government has not kept the promises made before and during the elections. I wonder how the Minister of Finance can rise in this house and speak as he does if he has gone over his past speeches in the federal parliament.
How can the minister come here and deny by his actions his words uttered in this house? But then, he is not the only one. During the 1956 session, the present Prime Minister, head of this government, had this to say, and I quote from page 2917 of Hansard lor April 13 of that year:
Mr. Chairman, I want to join the hon. member for Rosetown-Biggar in his reference to the necessity for action being taken to overcome hazards-
-which we find everywhere. And he added:
I should like to have the minister reply, realizing that this a national problem, and indicate why the national government should not give deed by convening a conference with the provinces and municipalities to consider the adoption of an effective slum clearance program throughout the dominion.
Therefore there are indeed many problems which must be considered in conjunction with the provinces.
When the Liberal party was managing this country, it called provincial conferences to study those problems. Today, there are no more conferences. As a matter of fact, certain views are being forced upon the provinces. They are told: "Take it or leave it; that is all

you can do". When we ask the Minister to approach the provinces and see if they want to accept such and such a position with regard to some problem, we are told that the government does not want to interfere in provincial matters, but that the provinces will be called in conference and their requests looked into. Such an attitude is a far cry from the one the Minister of Finance used to advocate when he was sitting on this side of the house.
The right hon. Prime Minister, as we may see on page 6369 of Hansard for the year 1956, stated at that time:
Why these short-term meetings? Why these gatherings of a day or two? Why do we not have a meeting of the federal authorities, the provincial authorities and the municipalities? Call it a constitutional convention, if you like, without the power of amendment of the constitution in respect of those fudamental rights which are inherent in the constitution, but why not have a gathering designed to bring about the reconsideration of a problem which for the last 13 years or so has become increasingly complex?
And further:
Why should the municipal authorities be required to provide the necessary services in the way of roads and so on for federal government institutions without that government paying full taxation? Why should the municipalities be required to pay 10 per cent sales tax on their needs, apart from the exceptions in connection with fire and road machinery costing over $1,000 per unit?
Now, Mr. Chairman, that is the issue-the whole municipal and provincial issue that faces us when we speak of taxation. Yet, the present minister who had been so critical now seems completely incapable of acting on his own suggestion.
Moreover, during the same session in 1956, some time before the Conservative party came to power, the Prime Minister stated:
What is the position of the municipalities? I do not want to go into particulars; let me just say that, at the present time, municipalities throughout Canada are finding it almost impossible to get by.
And conditions as they were then cannot be settled. As long as the question of federal-provincial relations is not completely solved, the position of municipalities will not be settled either.
And yet, due to the inefficiency of the present government, municipalities have to spend extravagant sums of money in order to provide for the families of the unemployed who are getting no unemployment insurance benefits, not having worked long enough, or having used up their stamps.
Mr. Chairman, those problems must be settled. And the federal government will have
Dominion-Provincial Relations to convene the provinces. Whether it be a federal-provincial conference, a meeting with the provinces, or a discussion with the provinces, the name does not matter; the important thing is that the federal government should begin to think about its responsibility, which is not limited to saying that 13 per cent in tax return will be granted to the provinces for another year.
Mr. Chairman, the plight of the provinces is more serious than it seems to be admitted. And we sense some danger in the increase in taxation. Besides, the Prime Minister agreed with us in 1956, when he said, as reported on page 6371 of Hansard of that year:
I have before me a table showing the increases in expenditures by municipalities for education and for general services. AH these are eastern municipalities, but we, in the west, find ourselves in the same position. The percentage of increases as between 1951 to 1954 are as follows:
And that percentage has increased still more since that time.
Scarborough 62.07 per cent, 42.78 per cent.
Those are situations which, in some provinces, can only be settled by the provincial government. For instance, in the province of Quebec, schools are not the responsibility of the municipal governments, but of the schoolboards, which are under the jurisdiction of the provincial government. Unless this rise is stopped, our schoolboards will be driven to bankruptcy, precisely because this government will have failed to carry out its promises and because no understanding will have been reached with the federal government to find some means of raising the funds needed to keep the school-boards from going bankrupt. In the city of Hull, in fact, there is a constant deficit, and we are always forced to seek help from Quebec, just as other schoolboards are doing. The Quebec government is doing its best, but probably lacks means to do more. This, incidentally, was indicated by the premier of Quebec just a few weeks ago.
We realize that the premier of Quebec is inclined to be rather demanding in his proposals, but we also know that some of his proposals would at least warrant a hearing. Unfortunately, this government refuses to consider proposals not only from Quebec but from the other provinces.
The premier of Ontario complained a short time ago that the government had hinted, if not promised, that his province would get

Dominion-Provincial Relations an additional amount of $100 million. He complained bitterly that the government had failed to carry out this agreement or promise. Yet the premier of Ontario had surely done his best to put this government in the saddle, because he was hoping for much more from the government, precisely because of the speeches made by the present Prime Minister and the Minister of Finance. Today however, those two ministers remain strangely silent and dare not speak up, ashamed as they are of all the promises they made and of the little action that has followed.
We recognize, Mr. Chairman, that problems have changed and have become more difficult; we recognize that Canada is no longer the small colony that it was 50 years ago; we realize that the needs are greater and are constantly increasing with Canada's emergence as an international power; we acknowledge our responsibilities to the United Nations; we acknowledge our responsibility to keep troops in Germany and France; we acknowledge the responsibility we had of sending troops to Korea; we acknowledge the responsibility we had of sending troops in the last world war. We also recognize our responsibilities with respect to NATO and to all the problems facing the world; we recognize that in joining the Colombo plan, we willingly accepted responsibilities, quite simply as a matter of charity and because the more favoured nations have a duty to help underdeveloped countries.
. We have responsibilities with respect to education. Whether or not we accept the principle of helping education, directly or indirectly, whether or not this is a direct responsibility of the provinces, it makes no difference. We still have a responsibility in this field. If this is a matter under provincial jurisdiction, it is nevertheless a responsibility of ours to give them more for educational purposes and at various stages of education. We have responsibilities with respect to the social legislation of our country. The federal government has its responsibilities and, directly or indirectly, it has to meet them. We have responsibilities in regard to unemployment insurance, which requires more and more money. Increased unemployment brings about other responsibilities with respect to hospital insurance. All this points out to the increased responsibilities of the federal government in the last few years. Therefore, the federal government needs more revenue than in the past; however, this does not mean that
[Mr. Caron.1

the federal government can completely ignore the provinces. Provinces, too, have their rights. There is no supreme government in Canada.
Each provincial government has its own rights and the federal government should approach the situation in that spirit. It should do nothing that could be prejudicial to the other governments of the country. The federal government has no right to take decisions without consulting the provinces. Yet, that is what has been done since this government is in power. Provinces have not been consulted about anything, though, in my opinion the taxation problem is possibly the greatest single problem facing this country today. However, in spite of all the glittering promises which the right hon. Prime Minister (Mr. Die-fenbaker) and the present Minister of Finance made when they were sitting on this side of the house, and especially those they made during the election campaigns, they keep silent now, and I can assure you, Sir, that they will not solve the problems that we have brought to their attention. They will simply wait and say: "We believe we should wait another year before proceeding with the revision of the act, or with further study of the problem in conjunction with the provinces."
Mr. Chairman, if the present government again waits as long as it has since it took power, we are forced to the conclusion that we will never reach an agreement and that, next year, the house will again have to deal with this same bill to extend the present fiscal agreements for another year, simply because the government lacks the courage to face its obligations.
Mr. Chairman, I say that there is in this government less determination than we have known for many years, because the man who is heading it, the Right Hon. Prime Minister, though a past master of electioneering lacks the courage of his convictions in the administrative field. To my mind, the Prime Minister looks genuinely pitiful when meeting provincial representatives. If he had the courage of his convictions, he would respect today the words he said when he was sitting on this side of the house.
The same goes for the present Minister of Finance and those people who are trying to run the country their own way, without even caring to take the advice of anyone. Those people are really to be pitied.
Mr. Chairman, we shall be celebrating shortly the centenary of confederation. Would

it not be the finest gift we could give the Canadian citizens to ask the present government to convene the provinces in order to study not only the fiscal problem, but also the matter of a thorough review of the 1867 constitution?
Mr. Chairman, we know that in 1867, Canada was a small colony and that its population was small. Its expansion was far from being what we know it to be today. The rural population, which was then 70 per cent, is now only 35 per cent of the whole population. Problems and needs are now different. At the time, people were satisfied with a horse and buggy, and narrow barely passable roads. Today, we need modern highways. In fact the federal government was forced to help provinces and municipalities to rush the completion of the trans-Canada highway. Let us not forget, sir, that this was the work of the Liberal party.
In the light of all the problems that face us today, could we not justifiably say to the federal government: "Instead of merely introducing a bill to extend present agreements for another year, you should have the courage of your convictions and call a conference of the provinces so as to make a thorough study of the problem of Canada's constitution, in the light of the present situation, and of federal and provincial responsibilities."
Mr. Chairman, I am sure that if the federal government wanted to go to the trouble of calling a provincial conference, it would receive the approval of all parties in the house, for all here agree that this problem, which has been with us for some years now, will become even more acute in years to come. To do this, what we need is not an election-minded man, but a statesman. And that is what we are looking for now.
Mr. Chairman, you no doubt recall Mr. Disraeli's idea of the difference between a statesman and a politician. Mr. Disraeli, a true Conservative, used to say that a politician prepares the next election, while the statesman prepares the next generation.


Mr. Asselin:: Then you can surely not qualify as a statesman.


Alexis Pierre Caron: It is a responsibility of the present government to prepare the next generation. And may I say to my hon. friend who has just interrupted me that I may be a politician-I never claimed to be anything else-but I ask those who like to think of
30, 1959
Dominion-Provincial Relations themselves as statesmen to act like statesmen, and to do the things that statesmen do, because, according to what has been done so far, they have shown themselves to be good politicians in preparing for elections, but that they surely failed in preparing the next generation.
(Text):


Harold Edward Winch: I wish it were possible, Mr. Chairman, and I think it would be profitable, for those in this house to have an honest, heart to heart and down to earth conversation on the entire question of federal-provincial tax-sharing arrangements. I think it would be for the good of Canada if that could be done without reference to points of order, previous decisions and precedents. In my opinion one of the most difficult problems facing the various governments of our country today is that of having sufficient revenue, from old or new sources, to meet the new and varying responsibilities with which they are faced.
I am firmly of the belief that the provinces and municipalities have a very good case in asking for a reasonable and logical basis for the sharing of taxation. I had the privilege, Mr. Chairman, of being the leader of the opposition in British Columbia when the first tax-sharing arrangement was made between the federal government and the provinces of Canada. I can well remember the thinking in the British Columbia legislature at that time. What was noted then I think should be noted here this afternoon, when we are discussing the resolution now before us.
There can be no question but that the provinces, under the British North America Act, were given and still have the right of direct taxation. It was the provinces which exercised that right in the first instance by the introduction of the income tax, corporation tax and succession duties. Because of the exigencies of world war I Sir Robert Borden, then prime minister, moved the federal government into the field of direct taxation under the over-all section of the British North America Act.
To the best of my knowledge there was an indication given at that time by the federal government under Sir Robert Borden that this move of the federal government in the field of direct taxation was made only because of the exigencies of war and there was no intention of remaining in that which was accepted as being a provincial tax field.
3192	HOUSE OF
Dominion-Provincial Relations However, the federal government having got its foot in the door of the provincial field of taxation never got its foot out. It has not only stayed in continuously and consistently, but in 1941 it got more than a foot in the door; it shoved all the way in when, because of the exigencies of another world war, it introduced an arrangement between the federal and provincial governments whereby the tax was levied by one government only but there was a sharing by two.
I fully realize that in the original introduction of this method in 1941 it was understood, and I think it still is, that a basis was provided upon which a province may withdraw; but I know that the majority of the provinces of Canada realize that people do not like being taxed twice or having to fill out two forms if one will do the job. Therefore the federal government is in a very strong position in that regard. Mr. Chairman, I honestly believe that the federal government when it considers, as it is now considering, a continuation for a further year of the federal-provincial tax-sharing arrangements it has more than a moral responsibility in this matter. In fact, the federal government is an interloper in this field of taxation, although under one general clause they have the right of so taxing. I admit that never will the federal government be able to remove itself from that field of taxation; but I do think there is a moral responsibility to remember the statements made by Sir Robert Borden back in the time of the first world war that it was only a temporary measure; and remember too the arguments used to the provinces in 1941 as to why they should give up their rights of taxation in the direct field and operate jointly with the federal government.
There is also something which is perhaps of more paramount importance than that, and that is that when the fathers of confederation drafted the British North America Act, brilliant as they were, and brilliant as is the document which became the constitution of Canada, they could not have anticipated or foreseen the economy of Canada or the new responsibilities of government for the next hundred years. I feel that all members of this house, whether cabinet ministers or hon. members, are dodging the issue and refusing to face up to facts. We must recognize that in making a federal-provincial tax-sharing agreement it has to be done with an understanding of the new responsibilities of all forms of government and the need for money in order to meet these responsibilities which were not foreseen 100 years ago.

I know there are many who think that the British North America Act is something which is sacrosanct and, like the sacred cows in India, completely untouchable. Mr. Chairman, we are not going to be able to appreciate fully federal-provincial taxation agreements unless we recognize the need now for the clarification of the responsibilities of the three levels of government and how they are going to be able to meet their financial responsibilities. That will in my estimation, in the long run, most definitely require not only understanding between governments but also revision of the British North America Act.
Whether we like to name it as such or not, we are rapidly moving into a welfare state society. Because the allocation of responsibilities, quite understandably, could not have been foreseen 100 years ago, we find today between federal, provincial and municipal levels of government an absolute hodgepodge of security measures and responsibilities which makes it almost impossible for a municipal government, a provincial government or a federal government to know quite where they are going or how to finance themselves.
May I very briefly outline the situation in which the governments find themselves today? If it is a question of workmen's compensation, that is a provincial responsibility. If it is mothers' pensions, that is a provincial responsibility. If it is welfare, the responsibility for that has been changing over the years but now it is a federal, provincial and municipal responsibility. A municipality does not know where it stands because its position is determined by the province. If it is family allowances, that is a federal responsibility. If it is unemployment, that is federal. Unemployment insurance payments are the responsibility of the employer, the employee and the federal government. If it is old age pensions, for the over 70's it is federal, but under 70 it is federal and provincial. Now in our normal and understandable development we have reached a hodgepodge of security measures where the responsibility in one case is provincial, in another dominion and provincial, and in yet another dominion, provincial and municipal.
Surely the point I am trying to make is understandable to all. We have reached the point where we are entering into a welfare state and building up progressively, as we must do, a system of security measures, but on an unrealistic basis. We must understand that what applied 100 years ago does not apply now and there must be found some method or means of allocating responsibility, and with responsibility the ability to pay for those responsibilities. That is something, Mr. Chairman, which I think must be considered


in the very near future by the government of Canada and any provincial government which calls itself a responsible government.
But because that situation has not yet come about and, undoubtedly, it will be some time before it does, we must extend a considerable measure of sincere understanding to the municipalities and to the provinces, because in this coming year they have to rely to a great extent on measures taken by this House of Commons in connection with tax-sharing arrangements. I can understand the unhappiness felt by the provinces in this regard, in the light of the fact that there is to be no change in the basis of tax-sharing in the coming year as compared with the basis of sharing revenues in the past year. The responsibilities of the provinces and of the municipalities are increasing, yet the means open to them for collecting money through taxes continue to be limited as before. The federal government has the broad field of taxation to cover, and is not exercising its prerogative of collecting money from sources where it can be collected, such as racketeers and profiteers. This is an avenue not open to the provincial governments and to the municipalities, and for this reason the dominion government has an even greater responsibility for assisting other levels of government.
It must be remembered, too, that the responsibility for taking the initiative in these matters lies with the federal government. It is the federal government which must do the basic thinking, and initiate the studies which are required if the sharing of taxation revenue in the light of governmental responsibilities is to be placed on a scientific and constitutional basis. This is, in my view, an added reason why the provincial governments are entitled to more consideration than it would appear they are to be given judging from the motion which is now before us. I do not object to being called a politician, because I think that is an honourable word, but I venture to say it is high time that the government showed a little more statesmanship in dealing with this particular subject, since statesmanship is now something which is most needed in Canada.
(Translation):


Mr. Brassard (Lapointe):: Mr. Chairman,
the matter of federal-provincial relations is a very important one, it is even a vital matter for our country, for the provinces and also for the municipalities and school boards. In short, it is of vital importance for all Cana-
30, 1959
Dominion-Provincial Relations dian citizens whatever province they come from, because the federal policy in this field with regard to the provinces may affect the entire economy of this country; it will, indeed, have repercussions on the means the provinces, municipalities and school boards have of fulfilling their obligations with regard to the people.
The members of the government now in power, when they were sitting on this side of the house, felt strongly about federal-provincial relations. They also felt strongly on the matter during the 1957 election. Even in 1956, during the national convention of the Conservative party, a manifesto was prepared with regard to practically all matters concerning the federal government, the provinces and municipalities as well as the school boards. But the manifesto was never made public. There had been prepared, so it seems, a press release which was held back. However, this is what we find on page 4 of that manifesto with regard to federal-provincial relations. I quote:
We have full confidence in the federal system of government such as it is outlined in the British North America Act which divides responsibilities and obligations between the federal government and the provinces. That system is jeopardized by the exaggerated centralization practised by the present federal government. In order to restore a just balance between the Dominion and the provinces, we shall ensure;
Then comes a series of steps that are advocated, but I shall read only two. Paragraph (d) reads:
The working out, after consulting with the provinces, of a lasting solution to the problem of fiscal relations between the federal government and the provinces.
And paragraph (e) says:
We also are of the opinion that provincial governments and municipal councils should have sufficient financial means to carry out their constitutional responsibilities and meet the ever growing needs for education and public services in order to ensure the constant development of their economic productivity.
As I said, Mr. Chairman, that manifesto never was released. Various reasons were given by some groups, but the fact remains that the public never was informed of the resolutions in this field which had been passed during the convention which elected the present Prime Minister leader of the Conservative party.
There is also the Minister of Finance who spoke very feelingly, when sitting on this side of the house, about federal-provincial relations. My colleague from Hull (Mr. Caron) recalled some of his words. I too
3194	HOUSE OF COMMONS
Dominion-Provincial Relations
should like to recall one in particular, which he said when the house was considering, in 1956, the new money-sharing project with the provinces. It was the project introduced by the hon. Mr. Harris. On page 6287 of Hansard of July 23, 1956, there appears the following, which was spoken at the time by the present Minister of Finance, then member for Eglinton.
The question that we ought to ask ourselves is similar to that which my leader put before the house when he spoke a week ago. To paraphrase it, I would say the question before us is whether or not at this time there is evidence that the proposals of the government, and in particular this formula, will satisfactorily meet the demands which are actually now imposed upon provincial governments, municipal councils and boards of education throughout Canada and particularly whether they will be adequate over the five-year period during which the new scheme is intended to be in effect.
As to the details of the formula, suffice it to say at this point that it is an actuarial maze to most people. The formula itself would undoubtedly confuse most citizens. Talk of tax equalization payments, provincial revenue stabilization payments, tax rental agreements, gross national product, average personal income, and other expressions in which this formula abounds make it very difficult for the average citizen to appreciate the niceties of the formula.
Mr. Chairman, since the Minister of Finance took over his portfolio, he must have had some opportunity of studying the formula, and he must have understood it very well for he has kept using it.
And later on, the hon. member for Eglinton said, as recorded on page 6297 of Hansard of the same date:
Therefore, sir, apart from all other considerations, some of which I have mentioned, I give this house in conclusion ten reasons why, because of its utter inadequacy, we of Her Majesty's Loyal Opposition, cannot support this bill and why we shall on second reading vote against it.
And do you know what those ten reasons were, Mr. Chairman? When I read that, I was expecting very sound reasons, something really solid; but the hon. member for Eglinton merely said: First, it makes inadequate provision for Prince Edward Island. He then went on to enumerate the nine other provinces, after Prince-Edward Island. Those are rather insignificant and childish reasons to oppose the equalization formula, such as it was introduced in 1956.
During the 1957 campaign, the matter of federal-provincial relations was raised.
I shall not take much of the time of the house, because I only wish to quote two or three promises made at that time, when the former Liberal administration was accused of having treated the provinces with arrogance, of having failed entirely to settle the question of federal-provincial relations,

and of having taken only unilateral action in that regard.
Here is what the Prime Minister said on May 27, 1957, at Saskatoon, as reported in the Toronto Globe and Mail of May 28, 1957:
(Text):
Any new decision, he added, would be based not on the Liberal policy of a grasping greed for dollars but only on the basis of agreement by all the provinces. "They are all equal", he underlined.
(Translation):
On May 7, 1957 in Hull, according to Le Droit for the next day, the present Prime Minister had this to say:
The Leader of the Opposition said that he has noticed the same uneasiness in all the municipalities of western Quebec, where he met no less than 20 mayors who are all faced with increasingly acute financial problems.
The new Conservative leader pledged that, as soon as his party is elected to power he will call a federal-provincial conference to revamp the tax sharing system between the central government and the provinces and municipalities.
On May 22, 1957, the present Prime Minister made a speech in Victoria-that is he spoke on May 21 but the report was published the next day in the Victoria Times. And this is what he said:
(Text):
The plight of the municipalities is becoming tragic because there is a constant increase in federal taxes. Now the federal government takes the attitude that there is no responsibility on them to assure that the municipalities shall have the right to discharge their responsibilities-
The municipalities find themselves unable to carry on because they are being restricted of the sources of revenue.
The premiers of many provinces, he said, had complained there was no recognition of their fiscal needs.
Even the city of Victoria has to pay outrageous rates of interest today. Taxation is falling more and more on local residents in our municipalities.
The time has come for a meeting of the provinces and the federal government, with the municipalities present, to discuss these problems.
We intend to convene such a meeting in the spirit of confederation. If action is not taken we shall find ourselves in a position in five years' time where the municipalities will be bankrupt or unable to carry out their responsibilities.
(Translation):
I will quote only a few of his promises, because we already have two full books of them and soon we will probably have to make up a third one because there are Conservative members who, at certain by-election campaigns, go out and add to the innumerable promises that were made in 1957 and 1958.
In a speech he made in Massey Hall, in
Toronto, at the start of the 1957 campaign_______
on April 25, 1957 to be more precise-the Prime Minister had this to say:

(Text):
We believe there can be no national unity in this nation until there is a realization that the federal-provincial matters have handcuffed the provinces of this nation; have denied the municipalities adequate sources of revenue; have placed the provinces and the municipalities in a position where they cannot discharge their constitutional responsibilities or permitting the necessary development in their own territorial confines of the natural resources that there are. We believe the provinces and municipalities must have the financial resources to carry out those responsibilities. We believe in the federal system of government. We believe that its preservation is essential to Canadian unity. We believe the federal system is today being challenged by the centralization complex of the St. Laurent government and that a healthy division and balance of revenues as between the federal and provincial governments must be assured.
We intend to form a government to immediately convene a dominion-provincial conference to bring about a settlement of these problems, not in the spirit of arrogant domination as displayed by the present government, but in the spirit of unity and amity and with mutual tolerance and respect. (Translation):
That is the kind of statements and promises made to the nation by the Prime Minister, both as leader of the opposition and in 1958, after he had become Prime Minister of this country.
I do not suppose we can discuss federal provincial relations without being allowed at the same time to discuss the matter of a federal-provincial conference. If opposition members are refused a chance to deal with this matter, it means that the government is not to be blamed for trying to settle the problems of federal-provincial relations on a unilateral basis, that is to say on its own terms. There can be no question of settling the problem of federal-provincial relations without consulting the other provinces. We have heard all kinds of statements, all kinds of promises in this regard. We were promised a conference. There has been a sham federal-provincial conference, where the government listened and then said that the conference should be guided by a spirit of cooperation. Le Devoir for September 18, 1957 reported as follows:
The Prime Minister had then stated that the next conference might be final or might simply clear the way for another conference where more work would be done.
"The provinces will have their say on the matters to be discussed and on the date of the discussions", the Prime Minister added. "We shall be guided by a spirit of co-operation. The provinces will have the privilege of making recommendations on the most desirable action."
The Prime Minister's office has added that this latter statement was contained in the invitations subsequently sent to the premiers of the ten provinces.
30, 1959
Dominion-Provincial Relations
The press release simply states that the next conference will be called "to discuss a review of tax sharing arrangements".
The Prime Minister listened. The Minister of Finance listened. And when everything was over, the Minister of Finance spoke to the representatives of the various provinces and said: "Gentlemen, we understand your problems, but all your demands would require $1J billion from the federal treasury".
There is the kind of co-operation we had been promised in the 1957 and 1958 election campaigns.
A conference had been announced for 1958. Then there were telegrams. If I may refer to a phrase used by the hon. member for Bellechasse (Mr. Dorion), this was not a matter of having the knife at one's throat, but I think it was even worse, because in that telegram, the provinces were not even asked for their views.
The speech from the throne referred somewhat tersely to federal provincial relations. There was talk of co-operation. What is the government waiting for to call a federal provincial conference?
I would like to quote the remarks that the hon. Minister of Finance made on April 28, 1954 when he used to sit on this side of the house.
As can be seen on page 4213 of the official record, the hon. member for Eglinton said:
It is imperative that there be called a dominion-provincial conference. Only the Prime Minister of Canada can call a dominion-provincial conference. The agenda for that conference must include this whole field of taxing powers and responsibilities. It must take due account of the necessity of honouring and respecting, both in the letter and in the spirit, all existing agreements. It must seek in the long run, under the proper auspices and with a patriotic Canadian spirit, to secure a better deal than any of the provinces have had as yet. It would mean an end, Mr. Speaker, to a situation such as that which now has arisen and for which this federal government must accept responsibility.
In the same speech, the hon. member for Eglinton stated another reason which, to my mind, has demagogic overtones. As a matter of fact, we further find on that same page of Hansard dated April 28, 1954, that the hon: member had this to say:
Is it not a strange contradiction, is it not an amazing commentary on the attitude of the government opposite, that at this very moment at

Dominion-Provincial Relations Geneva representatives of the Canadian government are sitting around a table with representatives of communist governments, Russia and China, to discuss matters of at least common concern, yet the Canadian government will not bring itself to sit down with fellow Canadians representative of the provinces to discuss matters of common concern?
I think the hon. member might have given sufficiently good reasons at that time to ask that a federal-provincial conference be called, without having to resort to concepts that might rouse all sorts of feelings and thoughts amongst Canadians.
Mr. Chairman, one of the favourite defenses that this government and its ministers resort to when we accuse them of failing to do their duty or to keep their promises, is to tell us, after picking up a sheet of paper and asking their secretaries to do some careful research work: "In such and such a year, you did exactly the same thing in another field."
Mr. Chairman, when is this government going to stop behaving this way? It is behaving like a 15 year old boy who, on being called down by his father for staying out till 11 o'clock or midnight the night before, answers: "My big brother who is 30 didn't get in till four this morning".
This government has no business recalling what we did when we were in power. On two occasions, the Canadian people rendered its judgment. There is no purpose in recalling the fact and perpetually harping on the former Liberal administration's actions when it was administering the country. However, Mr. Chairman, there will be an appeal against the decision the people have rendered on two occasions since 1957, and when that appeal is heard, the present government, including the Minister of Finance and the Prime Minister, will be judged according to their own actions and not according to the deeds of the former Liberal administration when it was at the helm in Ottawa.
Mr. Chairman, present developments in the field of federal-provincial relations repeat themselves in many other fields and departments of the federal government.
Everybody remembers the decision which affected more than 14,000 workers in Toronto last February and, at this point, I want to read out a sentence from an item published in the Globe and Mail of February 23, 1959, with regard to this administration's decision and I quote:

(Text):
This weakness has been apparent since the government assumed office 20 months ago: but never, in that time, has it been so dramatically disclosed.
(Translation) :
Mr. Chairman, what is happening at the present time is not limited to the field of fiscal relations; it also applies in several other fields. We could even apply to the present government much more aptly and truthfully today what the present Minister of Finance said of the Liberal government in 1957 when he was sitting in the opposition. In fact, as recorded on page 2559 of Hansard of March 21, 1957, speaking of the Liberal government, the hon. member for Eglinton said:
-a government floundering in the welter of its own incompetence, errors, contradictions and arrogance! These are the fruits of this government; and in the words of Holy Writ, ye shall know them by their fruits.
Mr. Chairman, government members often accuse us of merely criticizing. I should therefore like to close my brief remarks with a suggestion to the government. The field of federal-provincial relations is a very complex one; it must require the federal government's daily attention. I do not believe we can solve those complex questions in a two-day conference held each year or every three years, unless we manage to develop some organization or even a department whose sole duties would consist in studying those matters and keeping in touch with the ten provinces of Canada. That is a question of vital importance to the federal government and the ten provinces, as well as to the municipalities and school boards.
It seems to me the government should consider that suggestion. Besides, I do not claim credit for the idea, for I have heard it expressed by other colleagues on many occasions. However, I am of the opinion that if the government seriously wished to consider the opportunity of setting up a department of federal-provincial relations, there would be no need for calling a conference every two or five years to tell the provincial representatives: "We understand your problems, but we can't do any more than this".
If the government set up a department of federal-provincial relations, it would gain much more co-operation, not only in the field of taxation but also with regard to public works and education, as well as in sectors of common concern to the federal and provincial governments.
I sincerely thank the Minister of Finance for listening to my humble remarks and I hope he will take them into consideration.


Mr. Flynn:: Mr. Chairman, our friends in
the official opposition have chosen the occasion of the debate on this resolution to bring up the whole problem of fiscal relations between the federal government and the provinces. If the discussion had remained within the terms of the resolution, a debate of such scope would not normally have been allowed. Personally, I have no intention of exhausting the subject, or of expressing all my thoughts on the matter. I shall only make a few remarks which are prompted by the speeches made this afternoon in the house by the hon. members for Hull (Mr. Caron) and for Lapointe (Mr. Brassard).
Mr. Chairman, I must say at the outset that I am rather surprised at the statements made by the hon. members for Hull and Lapointe, because they prove the former government's fiscal formula to have been a failure.


An hon. Member:: Then, why are you
using it?


Jacques Flynn: Mr. Chairman, I shall deal
with that question in a moment.
I claim that the remarks of those hon. members show that the system has proved a failure, because at the present time no province is satisfied with it. The fact is that this very complex problem cannot be solved through a simple conference, as the hon. member for Lapointe agreed a moment ago.
When the central government convened the provincial representatives in 1957, it listened to their proposals, but soon realized that there were such differences of opinion between them that it became necessary to go very deeply into that problem.
In other words, the present system has shown that fiscal centralization can never really work in Canada, a country with a federative regime. The important thing would be to find a formula which would hand back the provinces their responsibilities in fiscal matters. That responsibility is essential so that provinces can fully exercise their rights in the field of legislation. Those responsible for the present situation, though they do not like to be told, are the Liberals. They are the ones who during the war, took over the main sources of revenue and who, after the war was over, refused to restore them to the provinces. They are the ones too who, having got hold of those considerable revenues, surreptitiously invaded many other exclusive provincial fields.
Today those people are watching our attempts to solve the problem, and realizing how they messed up the whole thing, how they complicated the fiscal system in this country, they keep telling us: just try to untangle the skein.
Dominion-Provincial Relations
The problem of fiscal relations between Ottawa and the provinces reminds me of an iceberg, only a tenth of which shows above the surface. Actually, Mr. Chairman, the government must be put in a position where, through this legislation, it can keep on arranging meetings and other preliminary talks between the Minister of Finance and the provincial ministers to a new federal-provincial conference, in order to find a lasting formula and not only expedients. It is to be hoped, Mr. Chairman, that once that durable formula is found, it will recognize two principles. First of all, the maximum fiscal responsibility of the provinces. If all provinces were equally empowered to levy revenue, there would be no serious problem involved in allowing them to raise the funds needed to meet their obligations under the constitution. It would only be a matter of distributing the various taxes between the federal government and the provinces. The difficulty today is that several provinces are unable to raise the funds they need, and therefore have to be helped financially. Of course the present system was an attempt to settle this problem, but it considers such assistance as a basic rule rather than an exceptional and temporary one. However, subsidies to the provinces should not be considered as a permanent feature. First, a way should be sought to enable the legislatures to raise their own funds, before asking Ottawa to grant them money that is collected across Canada by the central government, and for which the legislatures are not responsible to the people.
The second principle is that we must recognize the necessity of helping the economically weaker provinces. But this, again, must be a temporary rule. I am confident, Mr. Chairman, that eventually the solution found by this government will rest on those two principles, and then we shall be back to the true spirit of Confederation.
The system devised by the Liberals over 14 years ago has created a bad habit. It is known that several provinces, rather than increase their own tax rates, come here and ask the federal government for subsidies to supplement their budget. This practice is the result of the system adopted by the Liberals, and it is really the basic obstacle to a settlement of the problem. That is why I think we must proceed slowly, and as suggested in this resolution, extend the present system for a period of one year while granting the provinces a further three per cent. But the very fact the government is seeking permission to extend the system for a single year is an indication that it does not intend to maintain a system which, again, has proved inadequate and which truly

Dominion-Provincial Relations shackles the fiscal responsibility ol the provinces, and which must necessarily be discarded. I truly believe that the spirit of confederation requires that the provinces be sovereign and be able to use their taxation powers. Again, the present system does not allow this.
(Text):


Mr. Garland:: Mr. Chairman, I want to say a brief word or two on this admittedly complex subject of dominion-provincial fiscal relations. I want to comment on only one phase of the resolution. The resolution provides us with the opportunity to bring to the attention of the house and the country another broken promise of the government. All Canadians remember the Conservative election and pre-election promises to call at once a dominion-provincial conference to improve the existing agreements with the provinces and to settle this matter on a long term basis. Hansard is filled with the utterances of hon. members opposite on this subject when they sat on this side of the house and newspaper files across the country are loaded with statements on the matter. But I can do better than that. I can read from an interesting document I have here. This is a statement of policy of the Conservative party and that aspect of its dealing with federal-provincial fiscal relations, as found in paragraph (d), reads as follows:

We will provide for the development in conference with the provinces of a long-term solution of dominion-provincial fiscal relations.
Two elections and almost two years later what has happened? This promised Utopia in federal-provincial fiscal arrangements has not been delivered. In fact, with the passing of the second election the ministry is suddenly strangely silent on this very important subject.
Most Canadians are familiar with the series of incidents over these last two years. At a politically appropriate time the provincial premiers were called to Ottawa with appropriate publicity. Pleasantries were exchanged, some speeches were made, several pictures were taken and more promises were made to meet again soon. There the story seemed to end.
It is true that a small election bone was thrown to the provinces in the unusual form of telegrams, again with appropriate publicity, just conveniently prior to the March 31, 1958 election. However, these election bones shrunk from the time they were promised, which was before the election, to the time they were delivered, which, of course, was after the election. I am thinking now of the Ontario story. The promise there was something of the order of $22 million

or $23 million and I understand that when delivery was made the amount was substantially less due in part, of course, to the economic slow-down for which the government must assume a fair share of the responsibility.
This Ontario story is indeed an interesting one. It was a romance born of political expediency and frustrated ambition. Canadians living in Ontario particularly remember clearly the political shenanigans between Mr. Diefenbaker and Mr. Frost. They co-operated to lead the voters in Ontario down the primrose path. Most people remember those happy, reckless days of love and mutual appreciation for each other. Today, the two principal stars of the show, each for his own reasons, would like the public to forget their earlier alliance and avowed aims to correct the wrongs in the field of federal-provincial relations.
Perhaps I should, for the benefit of those who might need their memories refreshed, refer briefly to a couple of items on this subject. There is one appearing in the Globe and Mail, which is scarcely a Liberal organ, under the heading, "Frost Views PM as new FDR". This article goes on to say:
Prime Minister Diefenbaker. Premier Frost and the Conservative members of the Ontario legislature had a love feast over lobster and other cold delicacies yesterday at Queen's park.
By the time they reached the coffee and the end of two short, so-called non-political talks, the two leaders had cemented the mutual security pact born of last year's campaign and, equally important, last June's victory..
What they were doing for each other, they said, they were really only doing for Ontario and Canada.
The luncheon was a re-run of one held last February and MPP's who attended both said they detected an ever greater air of cordiality.
Along the same vein, to substantiate this alliance and to enter into the spirit of it, I would quote what the Prime Minister said about the premier of Ontario. This is taken from the Montreal Star of February 18, 1958. He said:
"Your co-operation, your counsel, your advice and, above all, your wisdom, has meant more to me than I can ever possibly pay an adequate tribute to."
It was a case of love in a cold climate as snow swirled in the stingingly-cold wind outside.
Then, the article continues:
But the political climate couldn't have been warmer.
We all remember Premier Frost's demands for an extra $100 million. I do not need to detain the house on that particular point. We all remember Premier Frost's appearances. We can all think of one in particular in which he turned to the present Prime Minister and said, "There sits the man who will give Ontario its just dues; there sits the man from

whom we will get this $100 million." There were statements of this kind. In order to avoid any misunderstanding about that, I should like to quote briefly from an article which appeared in the Globe and Mail after the election. This refers to the $100 million, which was still Ontario's aim. It reads:
Premier Frost still expects to get the balance of the $100 million he suggested to Ottawa last year would be a fair division of tax revenue.
He forecast yesterday that the dominion-provincial conference which adjourned last November will be resumed before July 1 and that Ontario's just needs would be satisfied.
What has happened since March 31, 1958?
I suggest that if Premier Frost had wanted a conference one could aasily have been held. If the Prime Minister had wanted a conference one could easily have been held, as promised.
Now, what can one conclude from all this? Is Mr. Frost waiting to slide through another election, hoping the voters will not remember this hoax? Is the Prime Minister waiting for important provincial elections to be held before disposing of this matter? Who knows? Is there to be a new approach or will we simply be called upon, as we are in this resolution, to extend this arrangement a year at a time? After almost two years in office the Conservative government has failed to do what they said they would do if given the opportunity to form a government.
There is another aspect of this matter upon which I should like to speak briefly. Before the elections the Conservatives said they would leave more room in the direct taxation field for the provinces. Let us look at what has happened. In the field of corporation taxes we find that before the Conservatives took office this tax rate was 47 per cent. The provinces were returned 9 per cent or practically one-fifth, and the federal government retained 38 per cent. Today, after the election, as a result of the recent Conservative budget, the provinces will receive proportionately less in the field of direct taxes. With the election safely behind them, they have moved in the opposite direction. The provinces will still receive only 9 per cent, in spite of the increase in the rate of tax on corporate income to 50 per cent, and the federal government will retain 41 per cent. This is just another example of broken Conservative promises.
The Minister of Finance, by increasing the federal government's slice in this particular field of direct taxation in his budget, has given us a peek at new government policy. You will remember the minister advised us in his budget speech that the federal government would be borrowing less in 1959-60 than last year. He indicated that this would leave 66968-9-203
30. 1959
Dominion-Provincial Relations more money available for the provinces and municipalities to borrow. Apparently a new Conservative government policy on federal-provincial fiscal arrangements has emerged. What they are saying, in effect, is: We will tax more, and you borrow more. This is a further example of broken promises.


Mr. Batten:: I should like to make a few observations on this resolution. If I understood the translation of what was say by the hon. member for Quebec South, he referred to the arrangements made by the previous administration as a fiasco. Well, there was at least an arrangement under which the provinces knew what they were going to get, and there was no need for an annual resolution such as the one we have before us now. The provinces knew what they were going to get, and they knew that further conference had been called. If this was a fiasco, Mr. Chairman, I think it could be well said that after two elections and after almost two years this government has done very little to improve the situation.


Mr. Brooks:: It certainly improved the situation in Newfoundland.


Herman Maxwell Batten: I will refer to that in a few minutes.
When this resolution was introduced the Minister of Finance said that the purpose of the resolution was clear and simple. I certainly believe the purpose of the resolution is clear, but I do not believe it is that simple. I am sure that this resolution is one that is of deep concern to the provinces across this country. They have to bring down their budgets and arrange for their year's work. There is some of this work that will take more than one year, and yet they are dependent on the federal government for payments to be made to them based on an annual resolution in parliament. They have no assurance that these payments are going to be made. After all, this government is not one that is noted for observing its election promises or even its contractual obligations, for that matter. The provinces have no guarantee, therefore, that these payments are going to continue.
I believe the time has arrived when this government should meet with the provinces and decide on some arrangement that will at least give the provinces a fairly long term outlook and enable them to arrange their own affairs. There is no need to go into the long list of election promises. We all know what they were. In fact, the government has now become so embarrassed by the continued repetition of those promises that they have decided to divide them into two classes; those that are not so sacred

Dominion-Provincial Relations and those that are sacred; those that are made outside the House of Commons and those that are made inside. It is a little bit difficult to see what use the members of the cabinet will be able to make of such an argument, but I think it is understandable.
Then there were the promises before the election of 1957 and before the election of 1958. We all know what happened. There was the so-called conference, called in November, 1957, and then we had the famous, or infamous, telegrams of the Minister of Finance, and then later the take it or leave it attitude of the government by declaring an increase of 3 per cent on the income tax arrangements. At the conference held in November I remember the Prime Minister said that this would be no take it or leave it attitude; but when a similar resolution came before this house on January 25 last year the provinces were told it was going to be increased from 10 to 13 per cent for one year. There was no agreement; it was just a unilateral action and could not be described as anything but a take it or leave it attitude.
On February 9 exactly the same resolution was introduced by the Minister of Finance. Again there was no agreement between the central government and the provinces; it was a decision made by the central government, and as far as the provinces were concerned they could take it or leave it. I believe we live in a country where it is absolutely imperative that there should be sharing of responsibilities between the central government and the governments of the different provinces. There is no sharing of responsibility in a resolution of this type. As I said before this is nothing more than a unilateral action and the provinces have to like it or lump it.
As far as the maritime provinces are concerned I agree that special grants have been made to them, and I would be one of the first to commend the government for the action it has taken in this respect. But let me say this. These grants have been made not by agreement with the provinces of Canada. I think there is a tremendous difference between making grants to provinces unilaterally and making grants to provinces by agreement. I think agreement between the central government and the provinces is necessary and desirable, and just giving handouts to different provinces, no matter how welcome they may be, is not the proper way to do the job.
Last year, I think on January 25, when the Minister of Finance introduced a similar measure he said it was an interim measure, and an interim measure only. Those words are to be found on page 3796 of Hansard for January 25, 1958. Yet here we are a year later still talking about the interim measure. I think it is about time we had some sort

of meeting with the provinces to find out what agreement can be reached in order to solve the very pressing problems which now face different provinces across the country. I believe that the way this thing is being handled by the government is one example of the piecemeal policy they have adopted for nearly two years now. They have no long term guiding policy; if they have there has been no announcement of it, and there has certainly been no sign of it. They are approaching many of the very important problems in this country on a temporary footing, just to solve the problem for now and avoid the responsibility of having to make any long range policy by which the present government can be guided, by which the governments of the different provinces can be guided, and by which the people of this country can be guided.
Mr. Chairman, everybody recognizes that this is not a simple problem. It is indeed a very complicated one, and I think it is for that reason that more effort should be made by the present government to tackle this problem in some sensible way. Certainly there is no permanent arrangement. I do not think there is any permanent arrangement which can be made between the central government and the provinces in this particular problem. I think it is one which can be solved only for a short period of time, and then further meetings must be held in order to arrive at some arrangement which will carry on for a few more years. But I do not think it is possible to find a permanent solution. It seems to me that the method by which the government is handling this question is nothing more than asking parliament every year for an annual reprieve from their election promises and from their responsibility to the people of this country.
We live in a country which has its central government and its different provincial governments. We live in a country which is governed by unity within multiplicity, and until all parts of this country have their fair share of the great things with which this country is endowed there will always be parts of the country which will be particularly well off and other parts which will not be so well off. In conclusion, Mr. Chairman, I say that this country will only be a good place for some of us to live in when it is a good place for all of us to live in.
(Translation):


John Whitney Pickersgill: Mr. Chairman, before the introduction of the budget, I had not intended to speak on this matter, but when I saw the strange table on page 2410 of Hansard, I decided to look closely into these so-called federal contributions to the provinces. I

shall demonstrate that this table indicates an utter disregard for provincial autonomy.
I hope that Conservative members from the province of Quebec will remain in the house to hear the remarks I intend to make later on in my mother tongue. If they have the patience to listen, I will prove to them that the attitude of the present government toward the provinces is paternalistic and quite different from the one which, during the election campaign, their .party had pledged itself to take.
I will also make a few comments about the remarks made this afternoon by the hon. member for Quebec South (Mr. Flynn). (Text):
Now I will continue. In order to save the Minister of Finance from the temptation of raising points of order which are not really points of order, I intend to read part of the resolution to show why I am completely within the ambit of this resolution.
Resolved-
I may say I am not resolved about this; very far from it.
-that it is expedient to introduce a measure-
They are the governing words of the resolution, that it is expedient to introduce a measure. Mr. Chairman, you just cannot have a one-sided debate; at least not in the kind of parliament we have in a free country under British parliamentary institutions. If you are able to argue that it is expedient, you are likewise able to argue it is inexpedient. I propose to argue that as long as the government has the kind of attitude to the provincial governments that it has demonstrated since it came into office it is not expedient year after year, as my hon. friend from Humber-St. George's said so well a moment ago, to give the government an annual reprieve from its promises. That is a phrase which I wish I might have coined myself, and on which I compliment the hon. member. It expresses very neatly what we are being asked to do, and what we will be asked to do again, I predict, as long as the government has-and here I quote the hon. member for Eglinton when he was on this side of the house-"a servile majority". As long as that obtains we will have to do this in 1960 and again in 1961, and then possibly, but only possibly, they may call a conference before the election of 1962 or the expiry of this set of agreements in order to give some more election promises. But more likely the Minister of Finance, whoever he may be, will send out another lot of telegrams telling the provinces that things will be the same as before; or if things go on the way they have 66968-9-203J
Dominion-Provincial Relations been going financially since this government came into office conditions will probably be a good deal worse.
Now I want to examine, as I indicated in my opening remarks, this table which the minister put on record in Hansard on April 9 at page 2410 and which he was pleased to describe as the federal contributions to the provinces in millions of dollars. Let us see what this government, which pretended to be a champion of provincial rights, calls a federal contribution to the provinces. It calls the statutory subsidies a federal contribution to the provinces. But they are nothing of the kind. This is a solemn obligation which was placed upon the treasury of this country as one of the terms of confederation. It is not a contribution at all. A contribution is something which we, in this parliament, have the freedom to give or not to give; it is not something which is a constitutional obligation, though I am not sure that the present government understands the difference, judging by some recent announcements about which I intend to say no more at this time.
Next, we have tax rental and abatement, and I hope the hon. member for Quebec South is listening to this. What are tax abatements? A tax abatement is an amount by which the federal tax is reduced in order to allow a provincial government to collect its own taxes. In other words, what the minister is claiming in this table is that the taxes which the legislature of Quebec imposes and collects are federal contributions. I do not think Mr. Duplessis ever made so extravagant a claim as that. The idea that money which is collected by a province on its own responsibility and put into its own treasury could ever be called a federal contribution is almost too far-fetched to be credible.
Let us turn, now, to tax rental. What is a tax rental? It is a certain sum paid to a province for relinquishing temporarily its right to impose a similar tax. It belongs to the province, and when we were in power we always said that it belonged to the province; it was in no sense the property of this parliament or of the federal government. All that happened was that as a matter of convenience to the taxpayers in the provinces which desired it-and only in the provinces which desired it-taxes could be imposed by this parliament, collected by the minister of national revenue and then paid over to the provinces. But it was always the property of the province, and we never said anything different. And now we have this government, which claims to be the champion of the
3202	HOUSE OF
Dominion-Provincial Relations provinces, calling that a contribution to the provinces. Of course, it is nothing of the kind.
Next, we have this 50 per cent share of income tax on power utilities. Here again we have a tax which, it is true, is collected by the federal government. It is collected only on those utilities which are privately owned, because the publicly owned utilities are not taxed, and it was felt that it was unfair that the federal authority should receive the full tax on the privately owned ones when it did not tax the publicly owned ones. For this reason it was agreed to split this revenue between the two governments. This money had never belonged to us and we, while in office, never said it did, for the reason that the provinces, had they so wished, could have collected it directly themselves. Here is another example of what might be called the Diefenbaker largesse, and again this largesse is just as phoney as most of the other promises made by hon. gentlemen opposite.
And then we have the term 29 award to Newfoundland which the minister said had been paid, although later he had to admit he was only going to pay when parliament so decided and I hope that it will not be long before this has been done.
If we look again at this list we find two more items, equalization and stabilization, to which I will refer in more detail later, but first I wish first to deal briefly with these so-called conditional payments. I do not intend to go into detail with regard to them because I do not wish to take too long. What are these conditional payments? They represent sums appropriated by this parliament, mostly under Liberal initiatives, for very good causes such as agriculture, health, hospital insurance, welfare, vocational training, highways, resources development and slum clearance, and when we appropriated money for slum clearance we did not use it as an excuse to interfere in provincial administration.
These are fields in which, in our wisdom, we in this parliament, or in previous parliaments, decided it would be advantageous to spend money collected from the taxpayers of Canada. And we said we would spend it if the provinces would match the money. This is not a contribution made by the government to the provincial treasuries at all. It does not help the provinces with their normal financing in any way whatever. Indeed, as the late Angus Macdonald and as Mr. Douglas Campbell, the former premier of Manitoba, frequently pointed out, they often forced a province to go ahead
[Mr. Pickersgill.l

with things at a time when there might be some doubt about their ability to pay for them at the time.
The main point is that this is not a contribution to the provinces. These payments are a very good thing, of course, in every one of the cases I have mentioned, and I say so because they were all brought in by Liberal governments. But they were things done for the benefit of the Canadian people; they were not done for the provinces, and to call these payments contributions to the provinces is just another indication of this centralizing mentality, this attitude that the government is the source of everything, and that it gives everything, whereas, of course, there is no giving involved at all.
Then we have this third category-the most absurd of all-the university grants. Mr. Chairman, university grants do not go to the provinces; they do not go to the provincial treasuries. Indeed, the provincial governments have nothing to do with them, except to the extent that they say which institutions are universities. In no way whatever are university grants related to the provinces. These payments are contributions made for very good and sufficient reasons, and I have no doubt this government also believes that to be the case, because it has increased them by 50 per cent. I am glad the government has done that, although I doubt whether the hon. member for Quebec South would say so, or some of his colleagues who, having got elected on the pledge that they would abolish university grants, came here and voted to increase them by 50 per cent. However, I think they are a good thing, and this is an increase in expenditure which was a great deal more justified than most of the other increases which have brought our expenditures to unprecedented heights-


An hon. Member:: What about old age pensions?


John Whitney Pickersgill: -such as all the money paid to McKim's and all the additions to travelling expenses. But I do not intend to be diverted from my speech into making the speech of the hon. member for York-Scarborough. Next on this list, in paragraph C, we have "grants to municipalities in lieu of taxes on federal government property". This is described as a contribution to the provinces, and it is so ridiculous that it is not even worth wasting words upon. We have left, in the whole of this table, just three items: equalization payments, stabilization payments and the Atlantic provinces adjustment grants.

Dominion-Provincial Relations
Everywhere I have been I have given the government full credit for the Atlantic provinces grants. I think they are a good thing. I wish we had felt that we had been able to make them when we were in office. But I would remind hon. members that between 1956 and 1957 the increases, not in grants or contributions but in the share of the taxation that went to the provinces of this country as a result of Mr. Harris' new deal, were very much higher than the Atlantic provinces grants. In fact, they were three or four times as great, though the Atlantic provinces grants were a good and needful thing and I give the government full credit for them.
The equalization payments and the stabilization payments are, of course, grants to the provinces. That, I admit, and I admit it with the more enthusiasm because this was a Liberal achievement, one of the greatest Liberal achievements of our domestic policy, and, I may say, one which was opposed bitterly by the Tory party from start to finish. Mr. Drew did his utmost when he was premier of Ontario to prevent it. He attacked it unsuccessfully all the time he was Leader of the Opposition. My friend the hon. member for Lapointe this afternoon recalled the attitude that the hon. member for Eglinton expressed in this house as recently as 1956. Indeed, this whole equalization policy was a policy which the Tory party was pledged to end. The Solicitor General said that this basis of grants was a wicked thing and as soon as his government got into office they would change the whole basis but we have not heard much on that subject from the Solicitor General since he became a minister of the crown. Of course, we understand the rules of cabinet solidarity; at least some ministers observe it.
In the year 1957-58 the amount of the equalization payment was $136 million and the amount of the stabilization payment was $3,400,000; that is to say, a total of approximately $140 million. That represented some small increase over the previous year in the equalization feature-a very small increase indeed-but the bulk of that $140 million was the direct result of the formula in the taxsharing law as it was enacted by this parliament in 1956 when the Liberals were in office. There has been only a small increase in these payments to the provinces apart from the Atlantic provinces grants since this government came into office. In fact, the word "contributions" is used rather than "payments" and indeed if they were payments it might have been another matter, but the only contributions since this government came into power apart from the Atlantic provinces grants were the equalization features of the 3 per cent we are talking
about today and the equalization aspect of this is, of course, a relatively small proportion of the total amount which I have not taken the time to work out but which no doubt the minister could give to the committee.
In order to indicate how very different that is from what the minister said the members of his party were going to do, let me remind the committee of one or two things he said as recently as last year. I have here extracts from several speeches and broadcasts he made. Perhaps I should read this to the hon. member for Quebec South. This is an extract from a speech made by the Minister of Finance on the French television network program, "Les Affaires de l'Etat", on November 24, 1958. This was after the election. It was even after the Montmagny by-election. As closely as I can make out it is an exact repetition and an accurate translation of what was said in the Montmagny by-election and that is perhaps why it was repeated. It reads as follows:
(Translation):
In the same way, we have respected provincial rights. We have injected into federal-provincial relations a new spirit of co-operation and respect. And so it is estimated that under the new taxsharing formula with the provinces-
The new formula is exactly the same Liberal formula.
-the new tax-sharing formula with the provinces, Quebec will receive $19 million more than under the Liberal government.
(Text):
Again claiming that the taxes that Quebec collects itself are a contribution from this generous government. I continue: (Translation):
We have increased the provincial share of each tax dollar paid by the Canadians, thus reducing proportionately the federal share.
(Text):
That was before the budget; it is all changed now and in fact it is just the reverse. I continue:
(Translation):
Unlike the Liberals, we are not-
(Text):
That is a real joke. I continue: (Translation):
-we are not centralizers, but constitutionals. (Text):
That was also before the Prime Minister's statement of March 25, this claim that the Conservatives were constitutional. I do not want to sit down without saying a word or two about what was said a while ago by the hon. member for Quebec South. He said that the Liberal scheme was impossible and un-

Dominion-Provincial Relations satisfactory. Why? Why was this Liberal scheme unsatisfactory? What was the great reason? He said:
(Translation):
None of the provinces are satisfied.
(Text):
I think that is evident. It is still true and in 1962 it will still be true and when the hon. member and I are both dead it will still be true. There would be something dead about any federal state in which both national and provincial authorities were fully satisfied with the fiscal relations, because the people who are elected to look after provincial affairs have a responsibility to do the best they can for the people of their province and they are never really going to admit they have enough money to do it, especially when they think they can get the money from the generous Minister of Finance. The hon. gentleman need not think that a new formula is going to change that very much.
What will be disturbing to many people and I am sure it was extremely disturbing to the friends of the hon. member for Quebec South and those of the Minister of Finance in the province of Manitoba was something else he said. He trotted out the old Tory idea which I thought the Prime Minister buried during the 1957 election when he spoke in Manitoba. He did not talk about it in Ontario but when he was in Manitoba he apparently got in a funk and declared, "We believe in equalization, too. We are just as much in favour of equalization as the Liberals are." Here we have the hon. member for Quebec South coming back with the old doctrine under which they would divide up the tax fields and let the provinces collect their own taxes and the federal government collect its own taxes and everybody would be happy. I will tell the hon. member that if the people in Quebec did the arithmetic they would not be very happy about this doctrine but I am not now talking about Quebec, I am talking about Manitoba where more than any place this doctrine of equalization was devised by Mr. Bracken and Mr. Garson many years ago when we had the problems that we had in the thirties in the western provinces.
I can tell the hon. member that any politician, no matter what party he belongs to, who goes out and tells the people in Manitoba, New Brunswick, Nova Scotia, Saskatchewan, Prince Edward Island, Newfoundland or even Alberta, I suspect, that equalization is going to be done away with and the provinces can raise their own revenues-


Jacques Flynn: I did not say that.


John Whitney Pickersgill: If the hon. gentleman
wants to tell us what he did say, he can correct me as soon as I am finished. What I understood him to say was that temporary aid would be given to the poorer provinces when they needed it but that it should be temporary. The plain fact is that at least six of the provinces in this country all the time, if they have to depend upon the taxes that they can collect within their own borders, will not be able to give decent Canadian services to their people. That is the whole reason for equalization. That is why we did it and that is why we Liberals are proud of it. We believe that if Canadians are going to have an equal citizenship they must have at least a rough approach to equality of services and opportunities.
This notion that in Saskatchewan, Manitoba, Newfoundland or even in Quebec you can impose a level of taxation and raise enough money there to provide provincial services without imposing punitive taxation upon the people is just not a fact. Of course, it can be done in Ontario. Why? It can be done in Ontario because of the protective tariffs and many other economic advantages that Ontario now has, not all of which are natural advantages, though many of them are.
What was the system we had at the beginning of confederation? Why do we have those statutory subsidies mentioned in that table? We have them because in 1867 Quebec would not have entered into confederation without statutory subsidies. Nova Scotia got them raised within three years of confederation. New Brunswick would not have come in without the statutory subsidies. The only people who would have been satisfied with this system of having provincial revenue raised exclusively through taxation were the people of Ontario. For a long time they will continue to be the only province where that would work. Unless we want to have disunity, division and inequities in this country, that would not be tolerable at all.
Although I do not think it is expedient to be asking us here in this parliament every year to pass this same resolution and do this same thing, I do say that the fundamental policy, of which this resolution is a small amelioration, a very small amelioration, as I think I have shown in what I have said, is fundamentally and basically a good policy; and the best reason for contending that it is, is the fact that after two years in office the ingenious and hard-working Minister of Finance, with all those commitments behind him and all those promises behind him, has not been able to devise anything better.

This government will not meet the provincial governments in conference. Why? Because they have nothing new to suggest, and they have now called-and I refer to the speech from the throne, and there was no motion about this subject, sir, since you are beginning to get restive-they are going to ask civil servants of the federal government and the provincial governments to try to get together and work out some ideas for them.
Where are those wonderful ideas that the Solicitor General had before the election that were going to sweep this rotten Liberal system out of existence and put something better in its place? Where is this better thing? It is just another vision, sir, and it is worth about as much as the rest of the vision.


Jacques Flynn: Mr. Chairman, if I am permitted to answer the hon. member for Bonavista-Twillingate I will say that what I proposed was a formula based on two principles: the first one, maximum fiscal responsibility; and, the second, federal aid to the poorer provinces in the form of a subsidiary measure on a temporary basis; but "temporary" may be as long as needed.


John Whitney Pickersgill: I do not think I did the hon. member much injustice.


Jacques Flynn: I am more optimistic on the future of Newfoundland than the hon. member for Bonavista-Twillingate seems to be.


Douglas Mason Fisher: May I ask the hon. member a question? Is the point of his speech this: the policy of this government is identical with that of the Liberal party so far this particular question is concerned?


John Whitney Pickersgill: No, I did not say the policy was identical. I do not think they have any policy. They are simply continuing to use our formula because it is a good one and because they have not been able to think of anything better.


Hazen Robert Argue: Mr. Chairman, I feel that at this time dominion-provincial relations are at a very low ebb. I think the government is getting a decided bad reaction from the provinces, not only because of what the government is doing but the manner in which it is being done.
The resolution which is before us at this time will carry into effect for another year the motion and the provisions which are being followed at the present time. We had expected that, as a result of many promises made in the recent election campaign, there would have been a new arrangement worked out on a satisfactory basis with the provinces by mutual agreement in a way which would improve provincial financing. Before the
30, 1959	3205
Dominion-Provincial Relations election the government seemed to keep in mind the long complaints that the provinces have had as to the need of additional revenue, and seemed to take the feelings of the provinces into account; but immediately the election was over the government's consideration for the welfare of provincial governments seemed to come to an end.
On January 25, 1958, as reported at page 3795 of Hansard, the Minister of Finance, in announcing the formula that is today being discussed, had this to say:
The estimated cost to federal treasury is over $62 million. This is an interim measure pending reconvening of dominion-provincial conference to seek fiscal settlements.
This was the message that was sent out to the provinces. We are waiting, Canada is waiting, for this solemn commitment to be fulfilled. Instead of the government having brought about an agreement, if possible by mutual discussion, by mutual arrangement, the government at this time has sent an ambassador, a civil servant, out to interview officials of provincial governments. This is a unique way, to say the least, to carry on federal-provincial relations. I am certain that no provincial government has asked that this method be followed. I am certain that this type of action by the government is not one that will inspire confidence from the provinces.
We have asked in this house on previous occasions what progress has been made as a result of this one-man ambassador's travels across the country. At this time when we are discussing very large sums of money the minister owes it to the house to give us a progress report, to tell us when, if ever, we are going to be able to get away from this ad hoc method of handling federal-provincial relations.
The present formula that is being proposed by this resolution and that will be continued has a number of faults, one of which from the standpoint of have not provinces and those whose revenues are most inadequate to meet their needs is that the amounts are too low. The second very strong criticism is that although the percentage is fixed there has been no raising of the floor under these grants, so that although the Minister of Finance outlined in the house last year the amount of money that he forecast the provinces would receive because of the increased percentage that was being provided, these increases have not materialized.
One of the main considerations in federal-provincial relations and federal-provincial conferences in the past has been to place under provincial revenues floors that would be maintained in times of falling revenues. That has not been done in this case. There-

Dominion-Provincial Relations fore, the budgets of provincial governments become subject to the failure of the federal government to maintain a buoyant income, and when the federal government fails to provide full employment, full production and an increasing gross national product, provincial revenues suffer. If the government would place a 95 per cent floor under this additional amount as compared with the former amount it would provide a greater measure of stability for the finances of provincial governments.
The crying need in Canada today is to provide stability of provincial revenues and to provide the provinces with the kind of revenues they need to maintain the services that are their responsibility. Having regard to the way our federal constitution is drafted, responsibility for most of the main services rests with the provinces. They have the responsibility but the federal government has the ability to raise revenues out of all proportion to the responsibilities of the federal government. Having regard to the services that the provinces must provide, the federal government should act in order to give Canadians in every province the opportunity to enjoy the same level of services that is enjoyed in some provinces.
The action of the government in failing to consult the provinces on a high level basis, its failure to consult the premiers of the provinces, has not been well received. The minister has had certain correspondence with various provincial premiers, and as far as federal-provincial relations are concerned the government's attitude seems to be the same kind of attitude that is prevailing in other quarters. Instead of consultation, instead of mutual arrangements, the federal government says: "You can take it or leave it."
With regard to discussions with the provinces I suggest that the minister himself is guilty of using the kind of language that does not improve federal-provincial relations. Correspondence took place with regard to this particular formula with the premier of Saskatchewan, and the Minister of Finance, replying to a letter written to him by the Hon. T. C. Douglas, premier of Saskatchewan, said in part in a letter dated July 7, 1958:
My dear premier:
I acknowledge receipt of your letter of June 23. Notwithstanding your mistaken comments, my letter of June 17 is entirely clear and in accord with the facts. While I doubt if I can usefully add anything to what I previously said, perhaps in view of your apparent misunderstanding of the question some further clarification might have value.
The 1958 amendment to the Federal-Provincial Tax-Sharing Arrangements Act is likewise perfectly clear. I therefore find it extremely difficult to believe that one of your knowledge and experience would find it capable of misinterpretation,

particularly in view of the explanation given not only in parliament but through subsequent correspondence.
I suggest, Mr. Chairman, that the language contained in this letter was intemperate, uncalled for and that if it were designed to interfere with normal federal-provincial relations it could not have been drafted in a manner better calculated to achieve that regrettable result. There is much talk of the minister being transferred to another portfolio, that of the Department of External Affairs. I would hope that the new training he is being subjected to would result in an improvement in his attitude so that this kind of language is not used. I do not think that abusive language to a premier of a province is something that should be condoned by parliament or by any member of the House of Commons. It is time that the federal government learned from statements made in the past. Although the statement I am about to refer to was made by the Prime Minister in 1956, it could well have been a comment on federal-provincial relations at this time. This is what he said on July 24, 1956:
I believe this. I think it is fair to say that the attitude taken by the government at the last conference was an arbitrary one. The government simply said, "These are the terms." No opportunity was given for amendment or for amelioration of any terms. The recipe for a division of taxation was as final as the laws of the Medes and the Persians, and how similar that attitude was to the attitude of the government in this house, which is that power makes perfect anything they do.
Instead of taking action on the resolution at this time, the government should be placing before parliament new proposals agreed to by the provinces after full consultation, proposals designed to relieve some of the very heavy burdens now being borne by the provinces, designed to bring about an economy with full employment and full production, designed to strengthen the economic and democratic fabric of the nation.
Federal-provincial relations are at a low ebb. They have been damaged. I hope that the government will reconvene a federal-provincial conference and that it will cease to to delegate to a departmental official a role that in fact should be borne by the Minister of Finance.


John Whitney Pickersgill: Before the resolution carries, may I point out that the hon. member for Burin-Burgeo asked the minister some questions earlier this afternoon based on certain figures that were given by the Prime Minister in a television broadcast the other day. These figures purported to show how much in contributions, if I may use a word used by the minister, the government of Newfoundland and the people of Newfoundland had received from the federal treasury

since confederation, that is, since April 1, 1949. I know that the minister cannot provide these figures right now but it does seem to me that this information should be provided. I believe there was an order for return passed yesterday asking for somewhat similar information but the information should be provided now so that we will have it when the bill comes before the house. It should not be any more difficult to prepare it for the other provinces than it was for Newfoundland and I suggest that to prepare it for one province and not for the other provinces and not to make it available to all members equally is not a very satisfactory position in which to leave the matter. I wonder whether the minister can assure us that the material will be ready.


Donald Methuen Fleming: No, Mr. Speaker, I am sorry but I cannot give any such assurance. The material has not been prepared with respect to the other provinces. It would be quite a formidable task to prepare it. It is hoped that the bill to be founded on the resolution will be passed soon because until it is passed we are not in a position to make any payments to the provinces in respect of the additional 3 per cent of the yield from the personal income tax which the bill would authorize.
I may point out, Mr. Chairman, that the statement the hon. gentleman refers to is a statement made outside the house. It is something that is not in the context of this legislation. It relates to a great many other things as well and it is not relevant. The kind of statement he wants goes far beyond the context of the present measure.


John Whitney Pickersgill: I am quite astonished to hear this reply coming from the hon. member for Eglinton, and I call him that for obvious reasons because, in language that I do not intend to attempt to emulate, we heard charge after charge ring through this house from the day the hon. gentleman was first elected about the denial to parliament of information.
Here is basic information about federal-provincial fiscal relations which the minister must have prepared, or which his department must have prepared, for the Prime Minister. This information was used by the Prime Minister outside the house in a television broadcast, and was designed to influence public opinion. However, when we, as members of the house, ask for similar information about the other provinces, the minister says he is too busy and it takes too long to prepare; that it is very important to get this legislation through in a hurry. He says we are not entitled to have that relevant information, and it is relevant information.
66968-9-204
30. 1959
Dominion-Provincial Relations Surely, if we are asked to form an opinion as to whether or not additional moneys should be paid to the provinces, the basic information about what they are getting now should be in the possession of the committee.
In a matter of finance, above everything else, where the control of the house over expenditure is the very stuff of which the history of our institutions is made, it is an absolutely incredible position for the Minister of Finance to take. I hope he will reconsider it. I am quite sure that the difficulties of preparing this information would be no greater than the difficulty of assembling the information in that table that was put before us, which I examined this afternoon. It seems to me that the minister should reconsider, and remember those eloquent words he used to use about the rights of parliament.


Erhart Regier: I wonder, now that a considerable length of time has elapsed since this resolution was introduced, and since the minister has now had an ambassador interview the ministers of finance in the provinces, whether the minister would be able to supply the committee with a report on the ambassador's visit?


Donald Methuen Fleming: I would be able to do that at the proper time, but that leads us into the question of a conference, which has been ruled out of order in the present debate. At the proper time I will be happy


Erhart Regier: Looking over the wording of the resolution, it starts: "Resolved, that it is expedient-". I was wondering whether or not the minister would be able to report that as a result of the visit to the provincial ministers of finance most of our provincial governments would agree that it is expedient at this time to have this resolution dealt with?


Donald Methuen Fleming: The purpose of this consultation was not directly related to the present measure. It was related to the proposal for the holding of a conference between provincial treasurers on the one hand and the Minister of Finance on the other, to be followed by the studies that have been discussed earlier at the official level. This does not hinge on the present measure.


Erhart Regier: I have another matter about which I should like to question the minister. Is it reasonable to expect that if we endorse this resolution there may be an announcement within a matter of a week or so that, over and beyond the provisions of this resolution, there will be a new cost-sharing arrangement announced by the federal government in relation to Manitoba?


Donald Methuen Fleming: What does the hon. gentleman mean by "cost-sharing arrangement"? We are here dealing with a pro-

Dominion-Provincial Relations posal that the federal-provincial tax-sharing arrangements be enlarged so the provincial must have prepared, or which his department share of the yield from the personal income tax would be increased from 10 per cent to 13 per cent. As the house is well aware, this is the change that is proposed by the federal government for this fiscal year, and this is the only one that affects the unconditional grants payable under the Federal-Provincial Taxsharing Arrangements Act.


Erhart Regier: I think I am within my rights in asking the minister at this time, when he asks for the endorsation of this resolution, whether it is within his knowledge that the government of Canada is intending, within a limited number of days, to make an announcement in regard to assistance to a province over and above what is contained in this resolution.


Lester Bowles Pearson: The minister has quite rightly said that this resolution precedes a bill which will be introduced to enlarge the provincial share of the income tax from 10 per cent to 13 per cent. In that sense it affects the grants to the provinces. Now, any consideration which this committee gives to the proposed bill would be affected by a very pertinent factor, namely the grants that are being received now by the provinces from the federal government. As my hon. friend, the hon. member for Bonavista-Twillingate, has pointed out, a statement has been made by the Prime Minister outside of this house in which he said the total amount of $300 million had been received by one province since confederation, including the amount for the current year. This has a bearing on this resolution, as it will have a bearing on our consideration of the bill.
A request has been made, and surely it is a proper request, that we should have that information for the other provinces before we consider the bill. An impression has been created by this statement outside the house that one province is being treated fairly and equitably in regard to the amount of money it has received. We would like to have that information confirmed by the minister. We would like to have the same information in respect of the other provinces. I cannot really believe that this kind of information, which apparently has been secured for one province, could not be secured for the other provinces. I do not want to hold up the resolution at this time, but I do want to let the minister know that we will expect this information when we come to consider the bill. We hope to have it before us at that time.
Resolution reported, and concurred in.
Mr. Fleming (Eglinton) thereupon moved for leave to introduce Bill No. C-41, to amend the Federal-Provincial Tax-Sharing Arrangements Act.
Motion agreed to and bill read the first time.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Rea in the chair.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
1.	That for the 1960 and subsequent taxation years each of the graduated rates of tax at present applicable to individuals on taxable income in excess of $3000 be increased by two percentage points and that for the 1959 taxation year each of the graduated rates of tax applicable to individuals on taxable income in excess of $3000 be increased by one percentage point.
2.	That with respect to income of corporations earned on and after January 1, 1959 the 45 per cent rate of tax on taxable income in excess of $25,000 be increased to 47 per cent and the 43 per cent rate of tax on taxable income in excess of $25,000 applicable to corporations deriving more than half their gross revenue from the sale for delivery in Canada of electrical energy, gas or steam be increased to 45 per cent.
3.	That commencing January 1, 1959 the definition of medical expenses exclude those amounts which the taxpayer is not required to pay because they are paid with the assistance of the government of Canada under the Hospital Insurance and Diagnostic Services Act.
4. That amounts paid on or after January 1. 1959 for iliostomy and colostomy pads, crutches, trusses for hernia and rocking beds for poliomyelitis patients be included in the medical expenses that are deductible in computing taxable income.
5. That for the 1959 and subsequent taxation years an individual be allowed to deduct in computing income, in addition to the amounts now permitted by the act, any amount received by him out of a pension fund or plan upon withdrawal or retirement from employment or upon the winding up of the fund, not exceeding the portion thereof that is paid in the year, or within 60 days after the end of the year, as a contribution to a registered pension fund or plan or as a premium under a registered retirement savings plan.
6.	That with respect to deaths occurring after April 9, 1959 the exemption for a portion of a death benefit paid by an employer upon or after the death of an officer or employee in recognition of his service be changed from an amount equal to the employee's remuneration for the last 90 days in the office or employment to an exemption for an amount equal to the remuneration of the employee for the last 12 months in the office or employment or the amount of $10,000 whichever is the lesser.
7.	That for 1960 and subsequent taxation years there shall be included as income from an office or employment the amount of the benefit which an employee derives by virtue of the payment by his employer of a premium under a group life insurance plan to provide the employee with life insurance coverage to the extent that it is in excess of $25,000.
8.	That the time within which a notice of objection to an assessment issued after February 8, 1959 must be served be increased from 60 to 90 days from the day of mailing of the notice of assessment.
tMr. Fleming (Eglinton).]

9.	That the privilege of qualifying as a foreign business corporation be withdrawn except for those corporations that were so qualified for the 1958 taxation year.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at 8 p.m.
Mr. Benidickson:: Mr. Chairman, is the minister to make any comment beyond his budget address?


Donald Methuen Fleming: Mr. Chairman, I think there is nothing new to be mentioned in connection with this opening paragraph. When we come down to paragraph 9, Mr. Chairman, I will have an amendment to propose to it. If I may make a suggestion in the interest of orderly procedure, while there is just one resolution to amend the Income Tax Act it might contribute to orderly discussion in the committee if you were to call the paragraphs seriatim.


Charles Edward Rea: Is the committee agreeable that the paragraph be discussed seriatim?


William Moore Benidickson: Mr. Chairman, I do recall the discussion of last year with respect to relevancy and order, and I think I would agree with the minister that providing there is at all times adherence to relevancy it is desirable that an attempt be made for speakers to keep to the individual paragraphs in the resolution in seriatim. My understanding is that in recent years we consider that we have in nine parts a resolution as a whole. The only difficulty I can think of is that some member might come in a bit late and feel that his rights had not been properly respected. I personally would address myself to the resolution in its separate nine parts.
Mr. Chairman, we have, of course, very recently completed a formal debate on the budget. I think that in particular the first two paragraphs of this resolution, Nos. 1 and 2, highlight and pinpoint the general criticism which was advanced to the budget speech of the minister, which I think can be most appropriately advanced to these particular paragraphs. The general phrases, if one were to summarize, which seem most effectively to indicate the feeling of the opposition, and indeed the public as a whole, are that these paragraphs pinpoint the nature of betrayal and the nature of bad faith when one relates the proposals we are now asked to deal with in detail to the promises spree which we heard in two recent elections. In other words, we are today at the point where the promises of yesterday are the deficits and taxes of today.
If there were any key promises of this government that I think most members of 66968-9-204i
Income Tax Act
the public have in mind and which helped bring the government to power, surely they were the seemingly clear pledges that the government would not be increasing taxes but on the contrary would be reducing taxes. In other words, we are asked here in the first two paragraphs to raise the tax rates on individual incomes and on corporation incomes, and I suggest that this is a complete reversal of everything that was advanced to the public by this government. We have a very keen recollection of how my hon. friend the Minister of Finance and those associated with him, not only in the house but on the election platforms, blasted their opponents ever and over again claiming that their predecessors were spending too much and taxing too much. We have in this resolution to amend the Income Tax Act an application of new taxes which involves an increased take from the public by way of income tax of 12J per cent.
I have raised the question before and I raise it again now in the hope that the minister will comment upon it. I would like his comments as to whether or not these proposals may not do the very opposite of what is desired with respect to our economy. I am thinking that these increases in taxes to the extent that they are advocated may actually brake the re-employment that is the desire of everybody, and indeed could very much backfire on the economy of the country at this present stage. I think the minister shares my respect for a certain non-partisan organization that considers tax matters. I refer to the Canadian tax foundation, the director of which is a former very highly respected member of the Department of Finance, Mr. Harvey Perry, even prior to the minister's budget proposals, said and I quote "already taxes are at such a level that they influence, and usually in a detrimental way, almost every aspect of our economy."
The conspicuous thing about the financial proposals which have come from the minister and his government at this present time is that they do not seem to have the recipe which we heard so much about in the election campaigns of 1957 and 1958. The Prime Minister has confessed to the trades and labour council and to the municipalities and other delegations since he has assumed office that there was no such recipe which, on the other hand, he indicated he had, namely that you could have a great amount of candy in connection with government administration and not pay for it. I ask the Minister of Finance in his subsequent remarks tonight to indicate his views upon these tax increases in relation to higher prices, more inflation, and the threat to exports; and in particular one thing which is concerning us

Income Tax Act
all at the present time, and that is whether we are, as a result of a built-in tax expense, being taxed out of sales.
I indicated to the minister on budget night that it was a very startling thing to find him budgeting seemingly with mirrors, in that within a very short space of time he had ceased boasting about tax reductions of $178 million in 1957 and was, in this 1959 budget, proposing tax increases of double that amount-$2 increase for every $1 decrease. Increases in taxes in a full year, he says will be $352 million. The most startling thing about it all is that none of these proposals seem to jibe in any way with the long held views which the minister has so long and often expressed in this house. We recall that in the past few weeks we have heard some surprising and cynical remarks from occupants of the treasury benches about the subject of promises, and there seemed to be some priority in connection with their promises, depending on whether they were made inside or outside the House of Commons. But both inside and outside the house the Minister of Finance and the Prime Minister have gone on record with respect to disapproving tax increases. Their fiscal policies are on record, and have been on record for a great number of years.
I raise this question of money left over for capital expenditure because it seems to me that the fillip that we might expect at the present time, and which would give us the greatest opportunity for the re-employment of those who are now unemployed, could very properly come from the private segment of our economy. This seems to be a view which the minister himself shared in recent times. I would remind the hon. gentleman that on March 27, 1956, as reported at page 2648 of Hansard, he said this:
Canada needs capital. We need capital created out of the savings of the people. That is one reason why the government ought to be making resolute efforts to reduce the burden of taxation on the Canadian people.
I think the finance minister should tell this house why his views seemed to have changed in such a short period of time.
During the budget debate we heard spokesmen of the ministry indicate that a certain amount of economic surgery and unpleasantness was necessary in present circumstances. The Minister of National Revenue suggested that men and women did not always expect from their government policies which involve flavoursome potions and painless surgery. But that is not what this administration said to the Canadian people in the two recent election campaigns. The most charitable thing I can say to the finance minister and to his associates is that perhaps they were so naive and so disrespectful of economic laws that

they actually believed that the advantages which they promised could be achieved without increases in taxation. Either the government must admit that they possessed this naivety-a naivety amounting almost to stupidity-or, on the other hand, they did believe that through high pressure selling they could take the Canadian people as, shall we say, saps, and persuade them to accept the kind of economics they presented to them. But events are catching up with this government and we now see very clearly the cost of the so-called vision.
In the budget debate I did make reference to the new taxes whose imposition the minister was prepared to advocate at the sales tax or consumers' tax level. I find that with respect to the sales tax for old age pensioners, the minister's proposal means that another $93 million would accrue to the treasury from the 1 per cent increase. He expects another $46 million from new imposts on the excise taxes. In other words, a total of $139 million out of $352 million comes from tax on spending. We have already seen how quickly proposals of this kind can be triggered into eventual cost burdens on the consumers in this country, burdens which are far greater than the actual dollar value of the taxes themselves. The Prime Minister exploded over this matter in the House of Commons when replying to a question addressed to him by the hon. member for Vancouver East. Well, these increases might be inexcusable, but the Prime Minister offered no remedy with respect to them. The pages of Hansard over the past ten years are full of statements by the Prime Minister and the Minister of Finance indicating that this would be the inevitable result of an increase in this particular type of taxation on consumers spending.
I hope that before we conclude our discussion of items one and two, the minister will very carefully explain to this committee why he feels that measures to increase this type of taxation can be advanced by him without the consequences which he himself in the past said were so unfortunate from the point of view of inflation and spiralling costs.


Herbert Wilfred Herridge: I may say at the outset that the members of this group intend to discuss the items themselves, and not to enter into a general debate on the income tax provisions and similar subjects. I rise on item one to bring to the attention of the minister two or three matters which I have raised in this committee in previous years and which have come to my notice as a result of considerable correspondence from a large number of people who are concerned about the questions I intend to raise.
The first matter I wish to bring to the minister's attention is that while we note

that no general increases in exemptions for income tax purposes have been provided, we in the C.C.F. party do feel that there was an opportunity to assist certain groups of people who are obliged to bear extra expense because of their situation or the conditions under which they live. The first are those working people who live some distance away from their places of employment. This problem becomes ever more acute with the growth of our cities and the necessity which so many people find of moving into suburban areas in order to obtain suitable housing and so on. We feel that some provision should be made for the exemption of at least a portion of the extra expense occasioned by travel in such circumstances.
In the constituency which I have the honour to represent, there are a number of working people who are obliged to travel as far as 30 miles to work each day. This is necessary because they have to live at some distance from their places of employment in order to find satisfactory living conditions for their families. I do urge the minister to give some consideration to allowing at least a portion of this travel expenditure to be exempted for income tax purposes.
The second group from whom I have heard is a group of disability pensioners, and I suggest it would be possible for the minister to assist these pensioners and war veterans without great expense to the treasury while performing a service of particular value to these handicapped persons. I have particular reference to amputees.
I know of several cases where these people are required to hire a taxi to go to their employment because they cannot drive a car or where they are required to use a motor vehicle because they are unable to walk and things of that sort. These men who suffer these disabilities should receive some consideration because of the extra expenses they have to incur in travelling. I bring that to the attention of the minister and would like to have his comments later on in the evening. I have received a number of letters about this matter. The suggestion appealed to me because it seemed to me that the minister could do something for these unfortunate persons who have difficulty meeting the increased cost of living because of disability incurred in the service of their country.
I have also had representations from people with respect to the allowance costs incurred for non-licensed ambulances or methods of transportation used by persons who have to be taken to hospital where it is impossible to employ a licensed ambulance. I know that in a constituency such as I represent, and there must be many others in the same position, if a man is
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injured in the woods it is sometimes necessary to hire a launch to take him a distance of 20 or 30 miles and then hire a car to take him a distance which in some cases is up to 100 miles, or hire some other form of conveyance. I mentioned last year a case where we had to put an injured man on horseback and take him over the hills for some considerable distance. These are expensive forms of travel. Of course, no one considers expense when taking an injured person to hospital when he is stricken in the woods, the hills or the mines. I have met many people who believe that some consideration should be given by the minister to those much higher costs incurred for performing what is in effect an ambulance service compared with those that have to be paid by persons who can obtain licensed ambulances because they are close to cities where distances are shorter and so on. I urge the minister to give further consideration to this and I should like to hear his comments about those suggestions.
I have received many letters criticizing the limitation of $100 for charitable donations. The argument used in those cases is that it does not properly recognize persons with charitable instincts whether they are donating to churches, hospitals or other charitable causes. There should be provision for a larger exemption in this respect or provision for the amount a person donates to these good causes. That is all I have to say at this point and I shall look forward to hearing the minister's comments later.


Lester Bowles Pearson: Mr. Chairman, the first of these resolutions we have before us tonight is the first concrete indication we have had that the bills are coming in. They are to be met in part through income tax increases and other taxes. These will serve to meet them only in part because some of them will be merely absorbed in the deficit for next year which is still something over $400 million.
When the Prime Minister was speaking on "The Nation's Business" over television on April 20 last, he had something to say about these increases in income and other taxes. I shall quote what the Prime Minister said from the circulated text of his broadcast:
We have put into effect many of the human betterment measures which people have asked for. These have already cost large sums of money and will continue at a high level in the current year.
I agree that they have cost large sums of money and that they certainly will continue at a high level, but some of us remember how these costs were to be met out of the waste and extravagance of previous government expenditures amounting to something approaching $500 million in the

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estimation of various Conservatives. They said then that these costs for what the Prime Minister calls human betterment measures would be met out of the waste and extravagance of the Liberal administration. In his broadcast the Prime Minister went on to say:
The tax increases in this year's budget-
The increase in the first resolution is an important part of them. I continue:
The tax increases in this year's budget are directly related to the human betterment expenditures. In total, however, the tax increases are much less than the additional payments to alleviate the effects of the recession. The budget is up by $245 million in taxes in the current fiscal year.
I think the minister will support this statement. The increase in taxation for a full year will come to well over $245 million; according to our calculations it will perhaps be $340 million or $350 million. However, leaving that difference aside for the moment, the Prime Minister went on to say:
Even so, the income rates will be lower than when our government assumed office.
Perhaps the minister will confirm that in his remarks. The Prime Minister continued:
On the other hand we will be paying out this year $550 million more to Canadians in national health insurance, welfare and social security payments than in 1956-57, the last year before we came into office. That is to say, twice as much as the tax increases.
"Twice as much as the tax increases," says the Prime Minister using a figure of $550 million and including in that sum payments for national health insurance which employees and employers contribute to and only part of which comes from the government. It is therefore quite a misleading calculation to say the least. Then the Prime Minister went on to say:
The $550 million does not include additional expenditures which will be made for unemployment insurance as a result of the extension of these benefits to more people and for longer periods. Here alone, the additional costs will be $200 million more than in 1956-57. This will bring the total of human betterment measure payments to more than three times the amount of the tax increases.
I would like to see if the minister confirms that the increase in human betterment payments this year will be over $1 billion because the increase in taxes for a full year will be $350 million.
This was the statement made a few weeks ago to the public. The Prime Minister concluded this part of his statement with the following words:
These heavy demands for social and individual security measures to meet the recession effects have resulted in a projected deficit for the current year.
Mr, Chairman, I call your attention to the reason given by the Prime Minister for these heavy demands for social and individual

security measures. He said, as he said previously, they are to meet the recession. That is the purpose, according to the Prime Minister, of these additional social security demands, to meet the recession effects. Are we to draw from that that when these recession effects are over-and the minister says we are on the way out of the recession-these heavy demands for social and individual security measures which have been made to meet the recession are to be withdrawn and this social security program about which the Prime Minister boasted in the early part of his statement is to be reconsidered again?
Perhaps when the time comes the minister will deal with these two matters; the statement made over the air that there have been additional payments for human betterment this year of over $1 billion and the statement made that these heavy demands for social security and other increased payments in this form were made to meet recession effects. Perhaps he will tell us what is to be done about them when the recession disappears as we all hope it will?


Mr. Henderson:: Mr. Chairman, I should like to draw the attention of the minister to the fact that in my part of the country the land is of no use until the brush is removed but there is no provision under which the costs of the removal of brush from the land are deductible from income tax. I would urge the minister to give this matter serious consideration and shall look forward to hearing his comments on this subject.


The Chairman:: Is there any further discussion on paragraph one?


Frank Howard: I gather that the minister will possibly make comment on some of the things that have been mentioned; therefore I would like to leave this thought with him. I hope he may be able to reply to it, since he is thoroughly familiar with the question that I am about to mention, it having been brought to his attention in a formal way on other occasions. I make reference to the question which my friend from Kootenay West raised, notably travelling expenses of industrial workers. The expenses incurred by such people may vary from one part of the country to another and certainly may vary according to the work that a person does; but I should like to relate the problems that the workers on the west coast of British Columbia are confronted with, because of the extraordinarily high travelling expenses they have to meet.
The logging industry on the coast of British Columbia is classified or considered as being a seasonal one. There is during the winter months of December, January

and February, depending on the severity of the winter, a shut-down of the logging industry. Then, in the summer months, depending again on the weather, how dry it is and how low the humidity is, there is a possibility of a shut-down. The summer closures or shut-downs take place at the insistence of the provincial government. Where there is excessively low humidity they may institute forest closure which means that all of the logging camps in the area affected must close down. A logger finding himself confronted with these two problems has in effect at the start of the winter to pay his fare from Vancouver, where most of the hiring is done and then out to the logging camp initially to get started in the spring. If the forest closure comes along, which happened in 1951 in particular and again last year, sometime probably in June, the logger finds that he has to pay his fare back again to Vancouver and then from Vancouver out to the camp again when the forest closure is lifted, and back to Vancouver again when the winter season sets in, say, in the month of January. Therefore, he finds he has to make four single trips or two round trips from the camp at which he is to Vancouver where, as I said, most of the hiring is done. This is an excessively high penalty that he has to pay to become employed and keep employed.
Certainly, I think some consideration should be given in so far as being able to deduct the travelling expenses that a logger, and other industrial workers like him have to incur in order to get out to the job where they are working and back to town again, especially when their travelling is no fault of their own, when it is occasioned by weather, by governmental action in closing the forests or by curtailment of production, as happens from time to time and the camp closes down. Especially in these cases he should have the right to make certain deductions on his income tax return for the money that he spends in getting out to work and providing income for himself and his family.
Also the loggers-again I mention them only because I am personally familiar with their difficulties but this applies to construction workers as well; it applies to miners and it applies to other types of industrial workers- find themselves in this position. Most of the logging camps

I would say 90 per cent of them-have no accommodation for families, or very little. Those that do have accommodation for families are concentrated in the lower portion of Vancouver island where there are quite a number of roads and access transportation is more readily available than it is in the upcoast camps. Practically all

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of the upper coast camps do not have accommodation for a man and his family. Consequently, practically all of the loggers have to maintain their wives and children, say, in Vancouver or in the Fraser valley, in Westminster. I know many in Burnaby.
Loggers who live there who have to go up to the upcoast camps in order to work find also that they have to pay board and lodging charges to the company for whom they work. They are in effect maintaining two homes, again through no fault of their own. Many of them that I know personally would like to move their families with them where they are working but the policy of the company, the places where the camp is located, the lack of transportation facilities, road, rail or ship, and so on, make it impossible for the person to locate himself and his family at the particular logging camp. Some provision should be made whereby in these circumstances he is able to make a deduction for income tax purposes of the extra money he has to pay out, first to provide board and lodging for himself in the logging camp and second to maintain a home where his wife and family live, which is some place else.
Third, and probably I would consider this the least important of the three, the necessary deductions which I think should be allowed relate to clothing for industrial workers. The argument, of course, which says that this is probably not so important as the other two is that we all have to buy special clothing of some kind. For instance, probably the Minister of Finance has a larger number of blue ties than do loggers in the logging camps or the miners under ground. I imagine we can assume that part of the outlay of the Minister of Finance for clothing should be a deductible expense, depending on the number of blue suits and ties he has. But there are some types of workers who, because of the type of work they are in, have to expend money for particular types of protective clothing which are not required elsewhere. For instances, miners underground need hard hats. They need rubber clothing or sweater clothing to keep dry and they are required also by law to have safety-toed or steel-toed boots.
The loggers out in the bush are in the same position. The compensation regulations require them to wear a certain type of boot to log with on the coast. The logger has to have a cork boot. They have to wear hard hats. They also need other extra types of clothing, depending on the weather. Other types of workmen need special types of gloves, depending on the industry in which they are working. Consideration should be given to these factors also, especially when we look at the cost of some of these protective

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pieces of clothing which are required by law. A pair of logger's cork boots, for instance, which might last, if he is lucky and does not have to wear them in country that has too much rock in it or is too rough, a logging season, costs somewhere in the neighbourhood of $33 to $35 a pair. If, as we gather from newspaper articles, there is a trend by boot manufacturers to increase their prices, the price of cork boots will be somewhere in the neighbourhood of $40 a pair. Many people have to get specially made cork shoes because of the impairment they may have in their feet, and so on. The cost of a pair of such shoes may range as high as $50 or $60 and they last probably only for one season.
I think special consideration should be given to those three items. While I have mentioned loggers particularly, I only do so because of familiarity with them and I am not in any way intending to leave the impression that other industrial workers are in a less favourable position. Certainly they have somewhat the same costs for somewhat the same reasons.
This matter has been brought to the attention of the present minister and to the attention of his predecessor. I know that other hon. members are familiar with the problem and have discussed it with other people. It is obvious that no provision is to be made in these amendments but I would certainly appreciate an indication from the minister as to what action he contemplates in this regard and I hope that the action will be more than the usual statement that the matter is under consideration.


Mr. Southam:: Mr. Chairman, while we are discussing this resolution I should like to point out that great emphasis has been placed in the last number of years on the field of higher education. In that regard I should like to suggest that because the summer work period for students is short some consideration should be given to exempting them from income tax on their earnings in order to encourage them to work. In other words, we should eliminate any retarding factor with regard to their going to work during the summer holidays. I have discussed this problem with quite a number of hon. members and people attending universities and they feel that some consideration should be given to this particular factor as far as income tax is concerned.


Mr. Hellyer:: Mr. Chairman, I should like to support the idea just put forward by the hon. member for Moose Mountain. I know that all hon. members are interested in the subject of higher education. It is not too long ago, in fact earlier this year, that a brief was presented to the government by the Canadian association of medical students and

internes in association with the national federation of Canadian university students. As a preamble to the brief the following statement by Dr. J. Cyril James, principal and vice-chancellor of McGill University, is quoted:
A young Canadian from a family of modest circumstances has less chance of getting a university education today than a youth in any other country with which I am familiar. It underlines the fact that Canadians have fewer opportunities to obtain a university education.
That is a very serious observation, one which I think we have a responsibility to do something about. The brief goes on to give some statistics. It points out that only 7.2 per cent of students of university age in Canada go on to attend university despite the fact that more than 30 per cent of any given age group being deemed suitable university material. The brief sets out that of those who leave school before completing their education fully 50 per cent do so for financial reasons. The brief elaborates on the difficulties students have in earning sufficient money during the summer to pay their expenses and says that about 80 per cent have to have support from their parents or their spouse. They go on to suggest that without any contravention of the British North America Act the Minister of Finance could assist students in obtaining a university education by making certain amendments to the Income Tax Act and providing for certain deductions from taxable income. The five suggestions they make in their brief are:
1.	The cost of tuition for the student in full time attendance at a Canadian college or university should be deductible from the taxable income of the student or from the taxable income of the person paying this expense, whether that person be parent, guardian or spouse.
2.	The cost of books and instruments for the student in full time attendance at a Canadian college or university should be deductible from the taxable income of the student or from the taxable income of the person paying this expense, whether that person be parent, guardian or spouse.
3.	The present amount which a student in full time attendance at a Canadian college or university may earn and still be claimed as an exemption on the income tax return of parent or guardian should be increased from $950 to $1,100.
4.	The exemption which the parent or guardian of a student in full time attendance at a Canadian college or university may claim, as exemption for the student, should be increased, when this exemption is applicable, to $1,000 from the present $500.
5.	The spouse of a student in full time attendance at a Canadian college or university should be allowed an exemption of $1000 for the student provided that the student not earn more than $1,100 in which case the exemption would be reduced by the amount earned over $1,100 subtracted from $1,000.
The brief and its recommendations were very carefully thought out by a group of interested students who will themselves reap

no benefit but who have at heart the interests of those who will succeed them in academic life. I urge the Minister of Finance to consider these recommendations and to see if he cannot at least accept them partially. I also urge the support of all members of the house, particularly all Progressive Conservative members, for the suggestions put forward in this brief.
On the subject of the changes in taxation, Mr. Chairman, we know that the Progressive Conservative party has always claimed to be consistent in its viewpoint. Therefore I think we might examine the record for a moment to see the nature of their consistency. I have here a document entitled, "What the Progressive Conservative party Stands For." It is a resume of the resolutions adopted by that party at their national convention in December, 1956. Under the heading "Taxation and Trade" the first resolution passed reads as follows:
The Progressive Conservative party will reduce taxation to a level that will result in a balanced budget and eliminate huge surpluses-
They have certainly eliminated the huge surplus already.
-of revenue over expenditure to the end that the individual taxpayer will be given relief from the crushing burden he has been carrying and our producers will be enabled to meet competition better in foreign markets through lower prices for their products.
I think the resolution was excellent, and I am sure the Minister of Finance would be well advised to try to live up to it more closely than he has been able to.


John Whitney Pickersgill: Would the hon. gentleman permit a question?


Paul Theodore Hellyer: Certainly.


John Whitney Pickersgill: Can the hon. gentleman tell me whether the document he is reading from is not a secret document?


Paul Theodore Hellyer: I think it has been withdrawn from publication under orders from the present leader of the Progressive Conservative party.


An hon. Member:: Let's have a duet.


Mr. Hodgson:: Why don't you sing us a song?


Paul Theodore Hellyer: Thank you for the applause. During the election campaign of 1957 the Prime Minister had some other things to say about taxation. The following is part of a report of an address he made in Toronto:
"It is time", he said, "to take the unrepentant taxmasters off the backs of the Canadian people.
. . . The government seems to think it is good for the souls of the Canadian people to overtax them and to have honest Canadians pushed around and pilloried by income tax snoopers. The views of the ivory tower boys seem to be that if you
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spend your money it makes inflation but if the government takes it from you and spends it, no harm is done."
He went on to say:
When the Conservative party forms the government of this country a session of parliament will be called to reduce taxation.


An hon. Member:: They were.


Paul Theodore Hellyer: Someone said that there was. What is necessary is a postcript to the effect that another session of parliament would be called to put them back up again.
Then, at Quebec on April 27, 1957, the Prime Minister made a statement. The newspaper article reads:
The Liberal government was concentrating taxing power in Ottawa and if that trend continued it would dilute provincial rights as effectively as if the constitution were amended.
Mr. Diefenbaker called the Liberal party "the high tax party" and reiterated his promise that a Conservative government, if elected June 10, will call an immediate session of parliament "to reduce such taxation as can be reduced".
"Don't you think you have been overtaxed long enough by this government?" he asked.


An hon. Member:: They must have.


Paul Theodore Hellyer: I take it, Mr. Chairman, that the Canadian people may feel that they have been overtaxed by the present government, and if the Minister of Finance does not show greater consistency between those views put forth by himself and his leader in the days when they were on this side of the house and those which they are putting forward at the present time on the other side of the house, he can expect the Canadian people to pass the same verdict on his administration that he requested them to pass when we were over there.


Paul Joseph James Martin: I think there are a few further observations that ought to be made in connection with the increases in taxes which are now proposed by the Minister of Finance. These increases ought to be related to the situation, as the hon. member for Trinity has just pointed out, described by the Minister of Finance, the Prime Minister and others concerning the kind of rectification that they would provide if they were given an opportunity of sitting on the ministerial benches.
As the hon. member for Trinity has reminded us, the Conservatives made their appeal to the people in the two last federal elections on the ground that they would provide a reduction in taxation. Undoubtedly that had an important effect on the judgment of the Canadian people. Long before the elections, in session after session, hon. gentlemen opposite complained about the levels of taxation in Canada. The hon. member for Kenora-Rainy River has pointed out

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that, confronted with the present situation, we should examine the consequences of the administrative policy of the government. The Leader of the Opposition has reminded us of the statement made by the Prime Minister in a recent speech which he made over the Canadian Broadcasting Corporation television network on Monday, April 20. I remind the Minister of Finance of certain words in that speech which are to be found on page 3 of the text. The Prime Minister said:
We have put into effect many of the human betterment measures which people have asked for.
Now that, of course, is not an accurate statement. The government did amend certain social welfare legislation, and that is a matter of record. But the fact is that over 90 per cent of the benefits of existing social welfare measures were established by the previous administration under Liberal auspices. It is inaccurate for hon. gentlemen opposite to say that they have put into effect many of the human betterment measures which people have asked for.
Then, the second sentence-


Mr. Nesbitt:: We raised the old age pension.


Paul Joseph James Martin: My hon. friend says that they did raise the old age pension. Yes, the present old age pension is $55 and hon. gentlemen opposite are responsible for $9 of that, while Liberal administrations are responsible for $46. It is true that my hon. friends have raised old age pensions, but it must not be forgotten that if the budgetary recommendations that will shortly be considered by this committee are put into effect, then what this government did when it raised old age pensions is now being taken away by additional taxation which they said was not necessary in order to provide the increases in social benefits.
Then, the Prime Minister goes on to say:
In total, however, the tax increases are much less than the additional payments to alleviate the effects of the recession.
Then, he says:
The tax increases in this year's budget are directly related to these human betterment expenditures.
That is not the fact; undoubtedly, some of the tax increases are due to some of the matters relating to programs for human betterment.


Mr. Broome:: Such as hospital insurance.


Paul Joseph James Martin: Introduced by a Liberal administration, and placed on the statute books of this country by a Liberal administration. Hon. gentlemen opposite are now going about the country, not having provided one single social measure, taking credit

for something that was put on the statute books by a Liberal government, and which hon. gentlemen opposed.
Now, the fact is that we are called upon to deal with a proposal for increased expenditures and increased taxes in consequence, expenditures which, session after session, hon. members opposite criticized and said were unnecessary. I regret to say it, but perhaps there was no greater critic of many of these expenditures than the Minister of Finance, who dealt with item after item in the various departmental estimates and complained about the cost of this or that particular item. Yet, what do we find on an analysis of the expenditures proposed in the estimates for 1958-59 as compared with those of 1959-60? I propose to examine a few of these items on a comparative basis to ascertain the extent to which this government, dedicated to the principle of reduction of expenditures and at the same time enthusiastically dedicated to the principle of tax reductions, was able to achieve its stated objective.
The increase in taxes is, first of all, the dominant fact of the moment. In the face of this it will be interesting to examine, as I now propose to do, the extent to which hon. gentlemen opposite, by their administrative policies, have been able to carry out their election promises in regard to these items, as well as the demands which they repeatedly made during the sessions of this parliament over the course of the last decade.
Hon. gentlemen opposite used to complain about the level of professional and special services. The government of Canada was spending too much of the money that parliament was voting on professional services. In the estimates for 1958-59, professional services are 92.9 as compared with the increase in the estimates for 1959-60 to 96.7. In other words, there is an increase in professional services of 3.8 per cent.
Then, when we come to travelling and removal expenses, we find the same thing. Oh, the criticisms that were levelled against every minister who presented his estimates before the period when hon. gentlemen opposite came into office; too much money was being spent on travel by officials, by ministers and by others. Let us examine the situation now. In the 1958-59 estimates the percentage for travel and removal expenditures was 57.7, and in the estimates for 1959-60, they totalled 66.8 an increase of 9.1. This government was going to cut down on travel expenses of all kinds, but the first full year of office the Minister of Finance is estimating for an increase in this particular expenditure of 9.1. Hon. gentlemen are now confronted with a demand for an increase in taxes, and this is one reason, among others,

that there is some necessity for the government to impose additional taxation to meet these additional expenditures which hon. gentlemen opposite said they would reduce.
Then we come to postage. We were told that the government would save all kinds of money if it would encourage a policy of thrift in the amount that was spent on postage in all government departments. In 1958-59, 5.9 was spent on postage, and in the estimates for 1959-60, 6.0, an increase is proposed of close to 1 per cent.


Mr. Macdonnell:: Point one per cent.


Paul Joseph James Martin: That is what I said.


James MacKerras Macdonnell: No, you did not.


Paul Joseph James Martin: What did I say?


James MacKerras Macdonnell: One per cent.


Paul Joseph James Martin: Then I thank the hon. Minister without Portfolio for discharging his without portfolio ministerial duties.
Then we come to exhibits, advertising, films. We all recall how the Minister of Finance used to fulminate on this subject. Too much money was being spent by all government departments on pamphlets and films. A great saving could be effected and consequently taxes would be reduced if only the government did not spend so much on all kinds of pamphlets, films and so on. Well, in the estimates for 1958-59, the figure is 11.8, and the same figure represents the expenditures in the estimates for 1959-60, but there is no reduction, although the Minister of Finance when a private member of this house said that this was one area where much reduction could be effected.
Well do I remember how on one particular night the then Minister of Finance was joined by his colleague and seat mate, the Minister without Portfolio, the hon. member for Greenwood, when he took up pamphlet after pamphlet of the Department of National Health and Welfare. One which I remember was entitled "Recreation Pays Dividends". That caused much mirth at the time. I do not know whether there has been any reduction in the pamphlets of the Department of National Health and Welfare. I am not suggesting that there should be. I believe they were all very useful, but what hon. gentlemen forget is that they said that was one very important place where reductions in expenditure could take place.
Then materials and supplies. Too much was being spent by government departments on materials and supplies of all kinds. The situation in 1958-59 was that the expenditure was 179.5, and in the estimates for 1959-60
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it was 181.5, an increase of 2 per cent. No reduction there. Too much money was being spent by the government, we were told by the Minister of Finance, in all kinds of unnecessary maintenance work, repairs and upkeep. In the main estimates for 1958-59 the expenditures represent 165.0, and in 1959-60 these repairs and maintenance charges have gone up to 183.5, an increase of 18.5.
One could go on into various other comparisons to indicate the extent to which pledges made by hon. gentlemen, and demands made by hon. gentlemen when in opposition, are not being implemented by them when they now have the opportunity of so doing. Then of course hon. gentlemen complained about the large numbers of people employed in the public service. Too many people were employed to serve the government of Canada; that was the charge of hon. gentlemen opposite. Well, the number of additional men and women serving in the public service is close to 5,000.


William Moore Benidickson: It is nearer 9,000.


Donald Methuen Fleming: No.


Paul Joseph James Martin: Close to 5,000 was the last figure I saw, but my hon. friend the Minister of Finance says no. It may be higher than that; perhaps I am underestimating.


Donald Methuen Fleming: My hon. friend never underestimates.


Paul Joseph James Martin: The minister will find one of his colleagues, in outlining during the course of his speech the efficiency of the public service, referred to an increase of something around 5,000. My hon. friend keeps shaking his head; no doubt he will produce the figures. If he cannot produce the figures contradicting this statement, I can only say to him that if there is an increase in taxes it is because this government has not reduced expenditure as it said it would, and on that account, instead of being able to present the people with a promise fulfilled to reduce expenditures, it is called upon to increase taxation as the result of its failure to observe the principles of thrift and economy which it espoused for so many years when it sat on this side of the house.


Douglas Mason Fisher: Mr. Chairman, after the organ in full symphony I hope you will not mind a toot or two on a whistle! I would like to support very strongly the remarks made by the hon. member for Trinity in relation to some alleviation of or consideration for the problems of people who are going to university, and especially the recognition by the Income Tax Act of the special burdens they

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have. As I have heard recently about the Conservative party being positive, I thought I would introduce a little of that positive approach into this debate. The only coherent statement I have encountered of the Conservative position today is in the pamphlet "Conservative Concepts", which was published this year and which I hope most of my Conservative friends have read. There appears in this pamphlet a very good article written by an academician, W. L. Morton, called "Canadian Conservatism Now". He stresses a sound philosophy for Conservatism and asks can such a program applicable to present circumstances in Canada be deduced from such an attempt to sketch a Conservative philosophy for our time? He says he believes so, and then lists nine points, and point No. G is the one to which I want to draw the particular attention of the Minister of Finance. It is:
The massive support of the able in education and of research in all fields of knowledge.
At the conclusion of his nine points he says:
You will note that I do not ask that anyone pass a law, except to reform the Senate. I do ask that Conservatives should have a definite concept of government, that they should endeavour to substitute enlightened administration for hasty lawmaking, an stop the diarrhoea of legislation which now drains parliament of its vitality.
All we are asking for here is for enlightened administration in so far as income tax allowances for university students are concerned. I hope all hon. members read this pamphlet. It contains, as I say, the only coherent statement of Canadian Conservatism I have ever encountered. The case has already been made to the Minister of Finance in connection with medical students, and I think the national federation of Canadian university students has met the medical students' case in this particular regard. I hope that some time in the next year this what is in effect very small concession in terms of revenue for the crown will be granted. I would hope that some of the younger members on the government side who have spoken up rather boldly for increased aid to education would press this point. I know that most hon. members are probably speaking on this matter in caucus, and if they come out into the open and speak on it here it might have some influence on the minister. I do hope these students will get some assistance in this particular field.


Harold Edward Winch: I should like to draw the attention of the minister to an item which is small in the over-all budget picture but one which is, nevertheless, important to individuals. It has been brought to my notice

by two trade union groups. As the minister knows, if the Minister of National Revenue hopes to collect any income tax from workers. the workers have to receive pay cheques, and there are many workers	who must have tools in order
to earn pay cheques. Take the situation of a journeyman auto mechanic. He has to have tools worth in the neighbourhood of $500-700. A journeyman electrician must possess equipment worth between $300 and $500 and that is a very large outlay for a working man: These people believe, and I also believe, that consideration should be given to allowing the deduction for income tax purposes of the heavy expenditure necessary on tools, and I hope the minister will see if this can be brought about.


Lester Bowles Pearson: The hon. member for Essex East has put on record some reasons which indicate why we are being asked to increase taxation in the manner shown in the resolutions, and to indicate that this increase is not necessitated entirely by considerations of human betterment as the Prime Minister suggested in his broadcast. There is one other reason why an increase in the income tax is required, and that will be apparent on a comparison of the main estimates of 1956-57, the last full year of Liberal administration, with the main estimates of 1959-60. If hon. members are in a position to look at the sheet entitled "Summary of Standard Objects of Expenditures and Special Categories" which was attached to the estimates and then compare it with the similar sheet attached to the estimates for 1959-60, they will find that the item "Interest on Public Debt etc." has increased by $155,500 million, and that is another explanation of why we are being asked to increase the income tax at this time.


Donald Methuen Fleming: If it meets the wishes of the committee I propose to deal now with those points which have been raised before we proceed with the other paragraphs of the resolution under discussion. I think it will meet with the convenience of the house if I deal with the individual points which have been the subjects of questions.
The first point was raised by the hon. member for Kootenay West with regard to the transportation of persons to and from their places of employment. That point was further developed by other hon. members, and the hon. member for Skeena raised the question in particular as applied to loggers.
I think I may say that all the subjects of these individual questions are matters which have been submitted to the department from time to time and which have been carefully

studied by the department. Once in a while, in these debates, some point will arise which is novel, but in the vast majority of cases the points which are, quite properly, raised are matters which have already been submitted to the department for consideration either by hon. members or by interested persons or organizations. I may say in regard to all these matters which have been the subject of questions tonight that they have been studied by the department.
As to requests for further exemptions in particular cases, I simply remind hon. members that in a year when it is found necessary to raise taxes the conditions are hardly appropriate for extending exemptions in individual cases unless those cases are very clear, and I think hon. members will agree that the cases which have been submitted tonight are difficult rather than clear cases. I would say at once that the search for elimination of any discriminatory features in our tax legislature must continue in all circumstances, but while views may differ in regard to some of these individual circumstances, I must say that the type of year we are now facing is certainly not conducive to seeing a clear issue with regard to some of the individual cases which were raised.
As to transportation, in the first place it is very difficult to draw a line. That is a persistent difficulty. One can say in general, or in theory, that if a man lives at a distance from his work the cost of transportation incurred moving to work and back to his home is an expenditure laid out for the purpose of earning his income. But if one examines that situation a little more closely, one finds that this situation applies in a varying degree to practically everyone, and where are we to draw the line? It must be borne in mind, too, that the place of residence is, in the case of most income earners, a matter of choice. One man may choose to live at a distance from his work and he may thereby succeed in lowering his housing costs, but when it is necessary, as it is in tax legislation, to legislate for the generality of cases, the difficulties of trying to introduce exemptions or permit reductions for the purpose of transportation will, I think, be apparent to hon. members, and it will be realized that they present some very thorny problems.
As to the loggers, the hon. member for Skeena acknowledged in his opening remarks that conditions varied in different parts of the country and here again we must legislate for the generality of interest. This is one of the difficulties of any tax legislation; we must always seek to enact rules which are capable of an equitable general application.
As to the loggers, the question was raised, first of all, in reference to transportation. I
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think I cannot usefully add anything to what I have said already on that matter of transportation. The next point in reference to loggers which was raised by the hon. member for Skeena concerned protective clothing. This has some relationship also to the question of tools which was raised by the hon. member for Vancouver East. Here again, one can theorize and come up with a striking superficial case for an exemption on the ground that a person must have certain types of clothing, or must be equipped with certain tools in order to practise his trade and earn income from so doing. But again I think hon. members will realize on analysis that a thorny difficulty arises over the problem of drawing a line. Everybody owns tools of some kind or another. The people who own tools make use of them. This use may be directly related to earning an income or may be directly related to the saving of expenditure. These tools may be put to a variety of uses. Similarly, in reference to clothing, while it may be possible to theorize about some types of clothing being of a protective nature and not for general use, here again the problem arises as to where to draw the line, because many kinds of what are called protective clothing, whether clothing, shoes or facilities of other kinds, are capable of other uses, either initially or at some stage of their lives. These are just a few of the difficulties one experiences in trying to apply the general rules of taxation to individual cases.
I believe I may lead on from that point to the question that was raised about university students. I may tell the committee that we have received a number of briefs from different groups of university students that do not all ask for the same thing. The hon. member for Trinity read from one brief. We have had other briefs that have submitted requests rather different in scope from the one from which he read.
Let us look in detail at some of these proposals. One was in regard to earnings. We have a problem here, Mr. Chairman. Everybody wishes to see those who are capable of absorbing university education and appreciate it and are prepared to exert themselves for it have the opportunities to obtain that education. In this respect I am simply saying what my predecessors have said on this very subject when it was raised in previous sessions before the change of government. Here I may remind the hon. member for Trinity that he sat on this side of the house supporting a government in which the minister of finance had to face something not unlike what we have had to face in this respect and there were no complaints raised at that time by the hon. member and others of his party when

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my predecessors in this office were giving reasons why they felt they could not go farther in assisting university students.


Paul Theodore Hellyer: Mr. Chairman, the minister would not want to convey the impression that there were no changes made during that period. There were some concessions made by the former minister in his last budget.


Donald Methuen Fleming: Yes, Mr. Chairman, I shall touch on those. When the hon. member asks for further changes let me remind him that further changes were rejected by my predecessors. What is the situation in regard to the earnings of university students? In respect of their earnings they are treated like other persons in this country. A single person may have an exemption of $1,100 if he takes the standard exemption for charitable donations and dues within the scope of the $100 exemption. We have been asked to extend that. I might point out that an extension would mean creating a special class of taxpayer. Under our tax legislation it would mean giving to university students a preferred tax position not enjoyed by anybody else in this country so far as income is concerned. This is a matter that is not to be undertaken lightly.
One must face up to this situation. In the case of young persons leaving high school one may go on to university and another may be obliged to go and work for two or three years to earn enough money to assist him through university. Are we then to say that the person who is not in a financial position that would permit him to proceed immediately to a university education should be taxed as much as anybody else but the person who is in a position of being able to go directly to university should as far as his summer earnings are concerned be in a better position than the man who has to go out and earn a living? Those are weighty and serious considerations.
I have received communications proposing that the parents of university students should have some further exemption not extended to any other class of dependents. Here again hon. members are aware that under the Income Tax Act the parent of a university student is permitted to claim the $500 exemption in respect of that dependent university child while attending university regardless of age.
Here again one must look at the class features of a situation of this kind. One does not wish to create discriminations. Here is a parent of a dependent child who is not able to go to university and yet the law says that in that case that parent shall be entitled to a $500 exemption and no more. Is it to

be regarded as fair and equitable that the child of a father who is in a position to send him to university should thereby enjoy some higher amount of exemption? It has been proposed that this sum should be increased substantially. I think that hon. members on reflection will realize that much as we wish to see every opportunity extended to university students to obtain their education we must be careful as to the methods we choose to assist them lest we thereby create discriminations and advantages that are of a discriminatory nature. That is something against which we must be on our guard.
As to books, one may say again a university student has to have books but then there are lots of other people in the country who have to have books and they are not entitled to income tax exemption for them.
These are some of the difficulties with which we have been confronted especially in a year when we have been obliged to propose increases in the general rates of taxation. I may say that this is not a new problem nor is it one, I am sure, divorced from the personal experience of a good many hon. members in this committee. A large number have had the experience of being university students themselves and know what this problem is and some have also had the experience of being the parents of university students and know what the problems are in that respect.
The tax position in this respect has been advanced. It is now permitted to any dependent to earn $950 in any year before the parent loses the $500 exemption in respect of that dependent. It is true that there are some university students who under present conditions are able to earn more than $950 in a summer and if they do the parent loses the $500 exemption. If they go further and earn $1,100 or more then they become taxable in respect to the excess over the $1,100. I will say with some assurance, however, looking at my friend and classmate of university days, the hon. member for Essex East, that if we had been able in our summers to earn the sums university students are able to earn today we would have considered ourselves very well off. In those days we did not earn more than a fraction of the sums we are discussing today.


Lester Bowles Pearson: But how high were university fees in those days?


Donald Methuen Fleming: It is true that university fees have risen. The cost of education and the cost of maintaining a student at university have risen.


Paul Theodore Hellyer: You are comparing apples and oranges.


Donald Methuen Fleming: With respect to some of the deputations I have received from university student groups I may say that I have been told that they regard it as their right to have such tax advantages extended to them as to enable them to complete their university education out of their earnings and not have any indebtedness in respect of their education at the end of it. I find that a little difficult to follow because I believe the experience of those of us here who were university students, certainly in the days when the Leader of the Opposition was our distinguished lecturer, was that there were not many students then who finished their university course without having incurred some debt which they had to work off in the early days of their earning careers.
I am not making any final statement on this subject but I am pointing out the difficulties which are bound to arise when any proposals are made for extending assistance of a special nature to any particular group, and in this case to the university students, however worthy they may be.
One other matter was raised by the hon. member for Cariboo. It was the subject of clearing brush off the land. This, of course, is an aspect of farm improvement. I may say, Mr. Chairman, that in regard to clearing and brushing farm lands the rule is that the clearing of the land of brush, stones, trees and the like is capital expenditure. These are regarded as permanent improvements to the land and it is for that reason that they are not deducted from income as they would be if they were current operating expenses. This is the situation as it applies to the owner of the land.
The situation is somewhat different with respect to the tenant of land who is clearing it. The tenant who makes such expenditures is in a different position because his expenditure is not of a permanent nature, depending upon the particular circumstances of his tenancy and notably the duration of it. These may be expenses deductible in the year made, or they may be amortized over the term of his lease.
I pass now, Mr. Chairman, to some of the remarks of a more general nature. Here we have for I think the third time a resumption of the budget debate in its main aspects. I would not wish to impose upon the committee a repetition of the remarks I made on Tuesday, April 21, in replying to the main opposition amendment to the budget. These matters were all reviewed there. In the speeches made tonight by the hon. member for Essex East and by the Leader of the Opposition we heard and saw the same old straw being threshed. Nothing new was
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raised by these members tonight. We went over that in the budget debate in the eight days of speeches, half of which came from the opposition, and again this week we have had a resumption of it in a debate on a supply motion; but hon. members opposite seem to think they establish a point by repeating erroneous statements or incomplete statements, and we have heard a good deal of that tonight.
May I first deal with a question that was seriously asked tonight by the hon. member for Kenora-Rainy River, which was his opening subject. It is the question as to whether the tax increases may not result in some increases in the cost of production. Mr. Chairman, here I draw attention again to the places where these increases, these necessary increases, have been imposed. Hon. members opposite talk about a comparison of the reductions which were made in 1957 and again in 1958 with the increases which are proposed in the present budget. In my remarks on April 21 I drew attention to the fact that the reductions which were proposed and brought about in 1957 and 1958 in terms of today's economy, in terms of today's incomes, in terms of today's numbers of taxpayers, are worth to the taxpayers, not the figure that they amounted to when we introduced them but a larger figure. They are worth today an estimated $230 million. The increase in taxes for the present fiscal year amounts to $245 million, but I draw attention to the places where the reductions were made on the one hand, and the places where the increases were made on the other.
The reductions were made for the purpose of benefiting principally the persons in low income brackets. In December, 1957 the proposed increases in the exemptions for dependent children of family allowance age, were from $150 to $250 per annum. For those over family allowance age the increase in exemption was from $400 to $500 per annum. We reduced the rate of tax on the first $1,000 of taxable income by 2 percentage points: we reduced the rate of tax on the second $1,000 of taxable income by one point. That is where the benefit of the reductions was concentrated. In our reductions of tax on business we concentrated on the small corporations. Then, the other reductions we brought about were brought about on smaller estates, on municipalities, on many other persons or enterprises that hon. members will recall from the reductions of 1957 and 1958.
Now, when in the face of the budgetary situation with which we were confronted, we found it necessary to propose taxes we were careful to propose that those taxes be applied where they would hurt least. That is the reason why in the case of the increases in

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the income tax we have been careful to propose these only with respect to taxable income in excess of $3,000 per annum; that is to say, in the case of the married taxpayer with dependent children, it means that there will not be a cent of additional income tax unless his income is above, in an average case, $6,500.
Now, Mr. Chairman, you will recall that in the budget speech I drew attention to the fact, in a series of illustrations there, that taking the average married person with two dependents, with the decrease in taxes in 1957 and 1958 and the limited increase in 1959, he is better off unless his income is over $7,500 per annum.
In connection with the first paragraph of the resolution for amendment of the Income Tax Act now under discussion, Mr. Chairman, I remind you that the change proposed in this paragraph will have no effect whatever on 3,800,000 of Canada's 4,600,000 income taxpayers. That, I think is, the principal answer to the question of the hon. member for Kenora-Rainy River.
It is true that in relation to the proposals we made for augmenting the sources of revenue, the contributions to the old age security fund, the three increases that were proposed of one point on each of the three taxes, personal income tax, corporation tax and sales tax, this does involve an increase of 1 per cent in the tax on the commodities that are subject to the sales tax. But I remind hon. members that this tax was defended by my predecessor, Mr. Abbott, as an eminently fair tax for this purpose.


John Whitney Pickersgill: In these comparisons the minister was making between the reductions in 1957 and the increases now did he include the new 1 per cent levy on incomes for the social security tax?


Donald Methuen Fleming: Yes, Mr. Chairman, they were included, $2.50 per month.


John Whitney Pickersgill: Does the hon. gentleman say then that for three-quarters of the taxpayers and including the social security levy there is no change this year?


Donald Methuen Fleming: I said they were better off than they were before we came into office back in the dark days when the former government was in office. The hon. member for Kenora-Rainy River raised a question also about what we see in the press these days concerning certain increases in prices. It may well be that there are increases in prices being announced now on different commodities that are being associated with-


William Moore Benidickson: Triggered off.


Donald Methuen Fleming: -the increase in the sales tax, but I think that in this regard
tMr. Fleming (Eglinton).]
the hon. member will be fair enough to recognize that the increase in the sales tax warrants an increase of 1 per cent-this is what we are dealing with-as applied to the generality of commodities that are subject to the sales tax, and where increases are being announced these days in excess of that sum, or approximately that proportion, the excess increase is not attributable to the increase in tax.


Paul Theodore Hellyer: Will the minister permit a question? Does he realize that in what he is saying he is not being consistent because when he was on this side of the house he pointed out time and again that when there is an increase at the manufacturer's level the retailer applies a percentage mark-up so that the net result to the purchaser is a greater increase than the amount of the increase in the sales tax?


Donald Methuen Fleming: It is because of that fact that I was careful to add the words I did at the end of my last sentence when I referred to the amount of the tax or that approximate amount. There are mark-ups and that is why I have made allowance for that fact in my answer to the hon. member for Kenora-Rainy River. But some of the increases I have heard of that have gone beyond this figure obviously are not attributable to the increase in the tax at all.


William Moore Benidickson: But you started them going.


Donald Methuen Fleming: As to the other commodity taxes, I think the hon. gentleman will agree that here it is a matter of personal choice whether-


Charles Edward Rea: Order. I am very sorry but I have to advise the minister that his time has expired.


John Whitney Pickersgill: I would be glad to ask the
minister a question so that he can go on. The question I would ask is this. Does the minister consider-


Charles Edward Rea: Order. I would
assume that the committee is agreeable to the minister continuing.


Some hon. Members:: Agreed.


Donald Methuen Fleming: I would much rather hear the question of the hon. member.


John Whitney Pickersgill: Mr. Chairman, I think I have a right to ask my question because the minister has exhausted his time and I am a member of the house. I am quite willing to give the minister a chance to speak again by asking a question. My question is this. Does the minister consider that these price

increases that were not, as he said, attributable to the tax increase were, in the words of his leader, inexcusable?


Donald Methuen Fleming: I would consider as inexcusable any attempt to raise a price and attribute the price increase to the increase in tax where it is not in fact attributable to the increase in tax.


William Moore Benidickson: You predicted this would happen.


Donald Methuen Fleming: I shall endeavour to be brief with regard to some of the other general assertions made here tonight although I do not think the committee expects me to thresh straw again and again that has already been threshed in the course of the last two and a half weeks of debate in this house.


Paul Theodore Hellyer: Brevity is not one of your many fine qualities.


Donald Methuen Fleming: Well, I could be briefer if hon. members opposite would not go on repeating the same speeches containing the same old errors all the time. I first of all take up the remark of the Leader of the Opposition that the debt this year is going to be in excess of $400 million. He knows the figure is $393 million.


Lester Bowles Pearson: Leaving out social security.


William Moore Benidickson: Plus $42 million.


Donald Methuen Fleming: Yes, and the
Leader of the Opposition knows very well how that is being handled and that it is completely in keeping with the way my predecessors have done it in certain years when he was a member of a government that did the very same thing.


Lester Bowles Pearson: How many years?


Donald Methuen Fleming: The hon. gentleman unhappily has forgotten-


Lester Bowles Pearson: No such thing.


Donald Methuen Fleming: -some of these things when conditions were comparable, and now that we are moving to put the fund in balance I think he will say, if he will be frank, that this is the proper way to do it and, as I indicated in the budget speech, we will bring the fund into balance within probably the next two and a half years.
Then he talks about the $500 million by way of reductions in expenditures. He had better get his dates straightened out, Mr. Chairman, and be quite frank and forthright with the house with regard to this matter because he has used this figure on several occasions. This goes back to the year 1953 and the general election of that year.


Lester Bowles Pearson: And 1957.
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Donald Methuen Fleming: No. The leader of the opposition of those days, in going into the election campaign, said that if the people would give him a mandate he would bring about a reduction of $500 million in government taxation, and he showed how it could be done. He said it would be done by a reduction of $200 million in the expenditures of the Department of National Defence and $300 million by eliminating these unplanned surpluses. We were told then by the former government that it could not be done and yet within a matter of a year and a half the reduction in the expenditures of the Department of National Defence had been brought about. The very thing that hon. members opposite said could not be done was done and the fact that they were driven to do it proved that we were right in saying what we did. We were asked about additional payments this year. I dealt with that in detail when I replied in the house on April 21 to the opposition amendment on this subject.
The Leader of the Opposition referred to words of the Prime Minister in a television broadcast recently having to do with expenditures made to meet the recession and asked if some meaning should be read into the words "to meet the recession." Everybody here knows that the increases that have been brought about on the initiative of this government with the support of the house in the various rates of social security payments, old age pensions, old age assistance, pensions for the blind, pensions for the disabled, veterans benefits of numerous kinds, have been written into the statutes of the country, and no one is going to take seriously the suggestion thrown out by the Leader of the Opposition-


Lester Bowles Pearson: It was not a suggestion; it was a quotation.


Donald Methuen Fleming: -that there is something sinister about such a reference. These increases have been made part of the statute law of this country and I think the Leader of the Opposition will be fair enough to recognize that. As I pointed out in the budget speech of April 9 these payments, which are of a transfer nature, have contributed very greatly to meeting the recession by stimulating consumer purchasing. Even through the recession consumer purchasing was rising and that has been one of the leading elements among the forces that have brought us through the recession and now have planted Canada's feet firmly on the path of recovery.


William Moore Benidickson: Could I ask the minister a question? On December 6, 1957, when he introduced these increases, did he use the words "possible recession"?

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Donald Methuen Fleming: Possible recession?


William Moore Benidickson: Yes, in December, 1957.


Donald Methuen Fleming: Is my friend asking about the word "possible"?


William Moore Benidickson: Or "recession".


John Whitney Pickersgill: There was no recession at that time, according to the government.


Donald Methuen Fleming: There were expenditures introduced directly for the purpose of meeting the recession by providing employment. There were increases in these transfer payments, the rates of social security payments, which are designed to assist in meeting problems of persons, principally of very low income, who were the recipients of these pensions. These have greatly assisted in meeting the problem of the recession.
If hon. members opposite are looking for figures, Mr. Chairman, why do they gloss over the figure of $750 million in relation to the housing program? This was a tremendous undertaking through which the government provided funds to assist in the construction of housing in Canada which resulted in the rate of house construction in Canada in 1958 reaching an all-time record.


Lester Bowles Pearson: On a point of order, Mr. Chairman; the minister has brought into the discussion what I am supposed to have quoted from the Prime Minister's broadcast. He has paraphrased it. I think the exact words should be put on the record so I could not be accused of misrepresenting what the Prime Minister said.
This is the second reference in his broadcast to the purpose of these social security increases, that is to help cure the recession. He said, and I am quoting from the text of the broadcast which the Prime Minister gave. This is the actual text of what the Prime Minister said, and this will appear in the text which I gave to my hon. friend:
These heavy demands for social and individual security measures to meet the recession effects have resulted in a projected deficit for the current year.
This is an accurate quotation on my part, and the deduction I drew from it I think was quite fair.


Donald Methuen Fleming: Let there be no doubt in the mind of anyone about the expression used. My quarrel is with the inference or meaning that the Leader of the Opposition is purporting to read into this statement, which I think is quite unjustified. He was good enough to send me his copy of the text. The Prime Minister, on this page which has been referred to by the Leader of the Opposition and the hon. member for Essex East, has been talking about

a great many things. He talks about the big housing program, the $750 million spent on that; he talks about the winter works program; unemployment insurance benefits; human betterment measures; and then he goes on to national health expenditures, welfare and social security payments. He refers to these payments of various kinds about which he has been talking and then he says:
This will bring the total of human betterment payments this year to more than three times the amount of the tax increases. These heavy demands for social and individual security measures to meet the recession effects have resulted in a projected deficit for the current year.


Paul Joseph James Martin: Will my hon. friend permit-


Donald Methuen Fleming: When I was speaking on this subject I drew attention to the fact that we had, even as compared with last year-one does not have to go back to 195657, the last full year of the former government-increased very substantially our expenditures on this social security program and human betterment program.


Paul Joseph James Martin: Will the hon. member permit me to ask him to read that sentence in which the Prime Minister attributes the rise in taxes to the government's program of human betterment; that is the sentence about which we are complaining.


Donald Methuen Fleming: I think my hon. friend has forgotten the sentence in question. Is it the last one, about the deficit? The Prime Minister said:
These heavy demands for social and individual security measures to meet the recession effects have resulted in a projected deficit for the current year.
Is that the sentence?


Mr. Marlin (Essex Easl):: No.


Donald Methuen Fleming: The other sentence is:
The tax increases in this year's budget are directly related to these human betterment expenditures. In total however, the tax increases are much less than the additional payments to alleviate the effects of the recession.
My hon. friend indicates he would like me to read again the sentence that I just read. It reads:
The tax increases in this year's budget are directly related to these human betterment expenditures.
Of course, they are related to them. We would not have been confronted with this deficit this year if we had not been making these substantially increased expenditures on human betterment, and because our deficit would have been so large this year we felt, in regard to the general inflationary dangers,

it was necessary to budget for a reduction in that deficit. Therefore, we proposed an increase in taxes. The matter is perfectly plain and open for all to see. I am surprised that an acute hon. member like the hon. member for Essex East has somehow or other failed to grasp this. There was a time when the hon. member for Essex East would have grasped the point. He could have done it.
I	can remember the time when he was not nearly so slow about picking up points as he has sought to impress the house tonight that he is. There were days when he was regarded as a person of somewhat acute intelligence. While I realize that perhaps my hon. friend has not applied that acute intelligence of his perhaps as directly to the problem as he should have, and has not devoted as much time and thought to the problem as he might have-


Paul Joseph James Martin: Let us stick to the budget.


Donald Methuen Fleming: -nevertheless, I think we will all have to be a little dubious about the show he put on here of not being able to see through this simple equation.


John Whitney Pickersgill: Would the minister permit
a question?


Donald Methuen Fleming: Certainly.


John Whitney Pickersgill: Has the minister forgotten that these social security increases were made in the autumn of 1957, and the Prime Minister did not discover the recession until he read the hidden report in the house on January 20, 1958?


Donald Methuen Fleming: Mr. Chairman, these increased benefits for the people of Canada were brought into effect on November 15, 1957, and I think the government can claim some credit for moving swiftly to meet the deficiencies left to us by our predecessors in the matter of the social security program. We have no apology to make for having moved swiftly to remedy these deficiencies.


William Moore Benidickson: Have you any apology for hiding the eventual bill?


Donald Methuen Fleming: No, we have not hidden the bill and therefore we have no apology to make. I leave that to those who hid reports and other interesting things the people of Canada should have had.
Therefore, Mr. Chairman, I simply remind hon. members of the vast collection of human betterment measures that the government has sponsored. They are referred to in part
II	of the white paper. The various payments are mentioned, the health grants, hospital construction, health insurance program and
Business of the House
many others. I am sure that these meet with the approval of the majority of the members of this house.


Lester Bowles Pearson: Before the committee rises may I, on behalf of the official opposition, express our appreciation to the minister for his patience this afternoon under difficult circumstances of personal bereavement. I should like to assure him of our sympathy. Perhaps I might repeat that we would have been quite willing to agree to a change in the order of business which would have permitted him to be out of the house today. We greatly appreciate his carrying on in the way he did.


Hazen Robert Argue: I should like to add to the words used by the Leader of the Opposition the sincere sympathy of the C.C.F. group on learning of the passing of the minister's brother. As the Leader of the Opposition has said, we were quite prepared to go on with some other order of business. I should like to tell the minister, most sincerely, that our thoughts are with him at this time.


Donald Methuen Fleming: Mr. Chairman, I do thank the Leader of the Opposition and the hon. member for Assiniboia for their very kind words which, I assure them, I deeply appreciate. I should not have risen at this time to say anything, except that I should like to make a matter of record the kindness that was extended to me this afternoon by both hon. gentlemen in expressing their willingness to have the order of business for the day changed to accommodate the circumstances in which I found myself today. This was a willing and voluntary offer on their part and I am very grateful to them for it. In receiving it I did say to them that I felt the business of the house announced last night should not be disturbed, as I had no wish to impose upon the house.
Progress reported.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: Mr. Speaker, I wonder if I could ask the leader of the house if he could indicate the business for tomorrow; and if he could indicate any of the business for next week it would be appreciated.


Howard Charles Green: Tomorrow we shall commence with the agricultural estimates and then take those of the Department of Labour. I cannot give the house the business for Monday yet. I will try to let hon. members know tomorrow morning.
At ten o'clock, the house adjourned, without question put, pursuant to standing order.

Questions