1959-05-26

[Stage Direction]
Second report of standing committee on mines, forests and waters-Mr. Murphy.


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: I should like to ask the Prime Minister if he has any comment to make on the supplementary statement left today by the western farm delegation with the members of the government in support of deficiency payments on wheat, oats and barley.


Right Hon. J. G. Diefenbaker (Prime Minister):: As the house knows, representatives from Alberta, Saskatchewan and Manitoba met with members of the government today and placed before the government certain supplementary information, to which was added a reply to the several questions I had raised in the house on this subject in August last, as well as on the occasion of the farmers' meeting here in the month of March. I think I can go no further than to say that there was a very complete discussion of the whole situation and that in so far as the whole question is concerned it will now receive further consideration in the light of the information given in the additional brief, as well as the information personally passed on to members present by representatives of the various organizations.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I have a supplementary question. Can the Prime Minister say whether, following the consideration that is now being given, a decision will be made during the present session of parliament so that if it is necessary to introduce legislation in order to implement the government's decision, that can be done?


John George Diefenbaker: Mr. Speaker, I would not want to answer that question directly, for the reason that it depends on the length of time during which consideration is given to the request.


Hazen Robert Argue: Since the government has been considering this matter now for some months,
does the Prime Minister not feel that a decision can be made within the next few
weeks?


John George Diefenbaker: Mr. Speaker, the government gives the fullest consideration to matters before finally making a decision. In that respect it is somewhat different from the hon. gentleman whose question prompts this reply.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: I should like to direct a question to the Minister of Public Works. Will the minister comment on the report presented yesterday to the National House Builders' Association that only 67,500 houses will be built in Canada this year?


Hon. Howard C. Green (Minister of Public Works):: Yes, Mr. Speaker. I think whoever made that estimate was an extremely poor guesser.


John Richard Garland: Perhaps the minister would care to make an estimate of his own for the benefit of the house. I am serious, Mr. Speaker. Would the minister be in a position to make an estimate of his own?


Howard Charles Green: As I have told the house previously, Mr. Speaker, I am not in the business of estimating. We are watching the situation very carefully. Tomorrow I am meeting the officers of the National House Builders' Association. When the government's policy has been decided upon it will be announced in the house.


John Richard Garland: Would the minister agree that this particularly drastic decrease of 55 per cent in house construction is due to a shortage of mortgage funds?


Howard Charles Green: Mr. Speaker, I am not agreeing to these far-fetched words which are used in statements of this kind. I know it is what I used to do when I was in opposition; I always tried to make things look as black as possible.


Some hon. Members:: Oh, oh.


Mr. Mariin (Essex East):: You did not have as good material, though.


John Richard Garland: Perhaps the minister will be in a position tomorrow to tell the house and

Inquiries of the Ministry the country-and I am sure, Mr. Speaker, this is a serious matter, as he agrees-just what the government intends to do to correct this shortage of mortgage funds. I wonder whether today he would be in a position to assure the house and the country that the interest rates on N.H.A. loans will not be increased.


Howard Charles Green: I can give the hon. member the latter assurance, Mr. Speaker. With regard to his earlier suggestion, I would point out to him that it does not help house building, the morale of the Canadian people or the creation of employment to have all this calamity howling that we are getting here on this question.


Hon. J. W. Pickersgill (Bonavisia-Twil-lingate):: I have a supplementary question. May I ask the minister whether he used to feel that way when he was over here on this side of the house?


Howard Charles Green: Mr. Speaker, I thank God that I have never felt like the hon. member for Bonavista-Twillingate.


Some hon. Members:: Oh, oh.


Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct a supplementary question to the Minister of Public Works. I wonder whether the Minister of Public Works, after reversing his position in other matters, also reverses his position with regard to painting pictures and now paints as rosy a picture as possible?



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: I should like to direct a question to the Minister of National Defence. Would the minister care to comment on a Canadian Press dispatch appearing in today's Globe and Mail to the effect that there is growing uncertainty with respect to the Bomarc anti-aircraft missile and that in the event the United States should discontinue its production, Canada would be left without an air defence weapon?


Hon. G. R. Pearkes (Minister of National Defence):: Mr. Speaker, in my opinion the facts do not warrant any uncertainty as to the effectiveness or future use of the Bomarc ground to air missile. I visited NORAD headquarters at Colorado Springs as recently as last Saturday, and I can say that the Bomarc program is up to schedule, and the inclusion of this weapon as a major element in the defence of North America remains unchanged.


Paul Theodore Hellyer: May I ask a supplementary question. Has the Bomarc yet been successfully tested against a supersonic target?


George Randolph Pearkes: I said that the development of the Bomarc is up to schedule, and if it had been planned that it would be tested against a supersonic target, that would have been done. If it has not been, the intention is not to have it tested as at this date.


Paul Theodore Hellyer: Mr. Speaker, I thank the minister for his hypothetical answer. Will the minister consider using his surplus Arrows to test the Bomarc before it is too late, and thus do a great service to our western allies in determining its deficiencies or otherwise?


An hon. Member:: You be the pilot.


George Randolph Pearkes: Canada is not developing this weapon. The development of this weapon is being carried out in the United States at their expense, and if the hon. member wishes to act as pilot in one of the target aircraft he should apply to the United States authorities.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I would like to direct a question to the Prime Minister, notice of which I was able to give him just before 2:30 p.m. Has the Prime Minister's attention been drawn to a press report of a statement made by United States Senator Lyndon Johnson that there should be a summit meeting of the many in order to emphasize the important influence in the world today of countries other than the great powers? If so, is Canada prepared to extend an invitation to hold such a summit meeting in this country?


John George Diefenbaker: Mr. Speaker, I have not had the opportunity, even though the hon. gentleman did give notice of his intention to ask this question, to read the remarks of Senator Johnson. However, I will read the transcript of his remarks instead of the press summary, and when I have done so I will be in a position to reply. Certainly we have one invitation out now for the holding of a summit meeting in Canada, and I think one at a time is really sufficient.



TRANSPORT


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Minister of Transport. In view of the desire of

many tourists and residents of the area to make use of the lock at the Rideau Ferry bridge on Sundays, would the minister give consideration to the opening of this lock to traffic on Sunday, May 31 and thereafter?


Hon. George H. Hees (Minister of Transport):: Yes, Mr. Speaker. I have been spoken to several times about this matter by the hon. member for Lanark, the member in whose riding this lock is, and I am very glad to say that we are going to be able to keep this lock open for the extended time requested.



CHIGNECTO CANAL


[Stage Direction]
On the orders of the day:
Frank Howard: I would like to direct a question to the Minister of Transport. I sent him notice of this question, and I hope he received it in sufficient time. My question is, has the attention of the minister been drawn to an article on the front page of the May 23 edition of the Financial Post, which states that the Chignecto canal cannot be justified on economic grounds? If so, would the minister care to comment?


George Harris Hees: I wish to thank the hon. member for giving me notice of his intention to ask this question. I have not seen the article to which he refers. My department is giving close study both to the economic and the engineering feasibility of this project.


Lionel Chevrier: May I ask
a supplementary question. Has a board of engineers or a commission been established by the minister's department to study the economics of the canal?


George Harris Hees: The economics of the canal are being studied by the economics division of the Department of Transport.



ST. LAWRENCE SEAWAY OLD WELLAND CANAL    INQUIRY AS TO CLEAN-UP AND RESTORATION

[Stage Direction]
On the orders of the day:
Mr. John Smiih (Lincoln):: I should like to direct a question to the Minister of Transport. It has to do with the old Welland ship canal, which is now under the seaway authority. Is the seaway authority now prepared to accept the agreement with the municipalities and the engineer's plans and estimates prepared by the Department of Transport, canal services branch, to complete the clean-up and restoration work on the old Welland ship canal in Niagara peninsula? If so, when will further tenders be called?
Inquiries of the Ministry


George Harris Hees: I should like to thank the hon. member for having given me notice of this question.
Having taken over the administration of the Welland canal effective April 1, the St. Lawrence seaway authority will implement the arrangements made by the Department of Transport in connection with the work referred to, provision for the expenditures involved to be made from the canal services construction vote. Tenders will be called next month for the second stage of the planned improvements.



WELLAND CANAL


[Stage Direction]
On the orders of the day:
Mr. W. H. McMillan (Welland):: I should like to direct a question to the Minister of Transport. Yesterday the minister referred to the traffic jam at the Ontario end of the Welland ship canal and told the house it was down to five ships, all of which were awaiting pilots. My question is, to what degree is shipping being held up at that point because of the shortage of authorized pilots, and to what extent is the delay due to the physical capacity of the canal?


George Harris Hees: When I made my announcement yesterday I said that only two of the ships were being held up for lack of pilots; the other three were waiting in the harbour itself.



REQUEST FOR STATEMENT RESPECTING


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I should like to direct a question to the Minister of Trade and Commerce. In view of the signing the day before yesterday of a five-year trade agreement between the United Kingdom and the Soviet union, can the minister inform the house what progress if any has been made toward the renewal of the Canadian-Soviet trade agreement which lapsed many weeks ago?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Negotiations with the representatives of the U.S.S.R. are continuing with a view to having a new trade agreement between our two countries. The fact that this agreement has been concluded in the United Kingdom may have some bearing on the conclusion of the conversations we have been conducting with the representatives of the Soviet union.

Inquiries of the Ministry
UNEMPLOYMENT ASSISTANCE	NATIONAL ENERGY BOARD



NEWFOUNDLAND


[Stage Direction]
On the orders of the day:
Mr. Erhari Regier (Burnaby-Coquitlam):: should like to direct a question to the Minister of National Health and Welfare. Is the minister in a position now to report on the results of his investigation as to the basis of welfare payments to the unemployed in Newfoundland?


Hon. J. W. Monteilh (Minister of National Health and Welfare):: As I think I mentioned earlier, an official of my department has been in correspondence with officials in Newfoundland and has received a reply to his inquiry. I am not in a position to say exactly what the present situation is without further study, but I shall be glad to report to the hon. member.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I should like to direct a question to the Minister of Citizenship and Immigration. Has the minister's attention been drawn to a report in the British newspaper The People that there has been almost a total failure of co-ordination between the unemployment authorities in Canada and Canadian immigration officials in the United Kingdom, and that this has enticed Britain's skilled manpower into a veritable man-trap in Canada and caused bitter disappointment because of lack of jobs? Have steps been taken to investigate the situation and to correct any false impressions which may have been created?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: The answer to the first part of the question is yes. I really do not know what one can do to correct reporting when it is so biased and so falsified as that which has been indulged in by the newspaper to which the hon. member referred. This newspaper sent one of its representatives to Canada. He was given every co-operation by officials of my department in travelling around this country. He represented himself to me as having been satisfied with what he saw here. Beyond that I am not sure I can go. If the newspaper insists on misrepresenting the facts as they are, I am afraid there is not much I can do about it.



PROVISION FOR ESTABLISHMENT AND OPERATION, APPOINTMENT OF MEMBERS, ETC.

[Stage Direction]
The house resumed, from Monday, May 25, consideration of the motion of Mr. Churchill for the second reading of Bill No. C-49 to provide for the establishment of a national energy board.
Mr. Arnold Peters (Timiskaming):: Mr. Speaker, when the debate was adjourned last evening I was making the point that we had done very little to solve one of the problems outlined by the Borden commission, that of the financial manipulation that takes place from time to time, an outstanding example of which was that which occurred with respect to Trans-Canada Pipe Lines Limited. I pointed out that an official of that organization having made an investment of approximately $8 received a return of something over $1 million. The commission pointed out that investors are entitled to receive a fair return on their equity, but I suggest that even the government would agree that a return of this size in relation to the total investment is unreasonable.
We in this group are interested in the energy bill. Energy affects all Canadian people. This is a matter of interest not only to hon. members from western constituencies, nor is this a bill just to regulate or decide on the price of gas. Natural energy concerns everyone. Our heating, cooking and home illumination are provided by natural forms of energy, and all these aspects of the question should be considered in relation to this bill.


Mr. Speaker:: I am sorry to interrupt the hon. member, but I feel I should ask the house to settle itself and hon. members who have business to transact in the house to do it in such a way that it will not make it impossible to hear the hon. member who has the floor.


William Arnold Peters: Mr. Speaker, we in northern Ontario are vitally concerned with this bill. In the days of the founding of northern Ontario the potential of the natural resources there was well known to the traders and trappers who passed through the area over a period of years. Of particular interest at that time was the potential lumbering industry. When the development of that part of the country took place other forms of natural resources were found. In northern Ontario communities have been built around two major industries, the lumbering industry and mining which includes nickel, cobalt, silver, gold and copper. These industries have built many of the towns in northern Ontario,

and these communities are totally dependent on these industries. Communities such as Timmins, Kapuskasing, Kirkland Lake, Ma-tachewan and Cobalt, which have all the facilities of modern towns including housing and schools and which should be capable of supporting a large population, have been unable to expand or even maintain a normal rate of growth.
It was thought that one stimulating factor would be the advent of gas. What happened when this new and potent form of energy was introduced in northern Ontario? A pipe line was built through our part of the country. A number of people who might be called land agents of the pipe line company came in to get easements of land for the construction of the pipe line.
The bill refers to expropriation. This was not a promise in northern Ontario; it was a threat. Many of the people had their arms severely twisted by the threat of expropriation. They were told that if they did not give easements to the company they would be taken to court where they would have to go through the process of law, and would have to give up rights pertaining to their farms whether the line happened to be going through the barn or the house or some other place. They were told that they were going to have to give these easements for a lot less than the company was offering.
I would suggest that the bill has all the inherent faults and problems that we were faced with, because the expropriation section is based on the old Railway Act and, as everyone knows, you can expropriate the land to build a railway from coast to coast much more easily and cheaply than you can expropriate a piece of property 66 feet wide on a man's farm. It would take several years to go through the due process of law, and the farmer would have no farm left by the time he had fought the case through the many stages necessary to conduct his case.
We have not given consideration in the bill to the people who are affected with respect to easements, but we have given a great deal of consideration, as we always do, to the people who are going to make fortunes as a result of the bill. They are going to have the law on their side, as has always been the case. There is going to be justice for the rich and no justice for the poor. I know many farmers in my area who did not get a fair deal even after we made a very strong case publicly on their behalf. The amounts were tripled and raised even higher in many cases, but they still did not get a fair and reasonable deal.
The transporting of energy through a pipe line was looked forward to in northern Ontario as something that would solve some of
National Energy Board the problems with which we are faced. Most of our industries are based on natural resources that cannot be renewed, and the ones that can be renewed have not been or it does not appear that they are going to be. I speak of the forest industry. As far as the mining industry is concerned, the towns involved are withering away through lack of impetus to bring about further development in the area.
Gas coming into northern Ontario could mean a great number of things. It could have meant the development of a low grade coal project we have in the area. If this energy could have been supplied at cost it could have made possible the development of this low grade coal deposit. We also know that in the wastes which come from our mines in the form of slag we have a great potential so far as building materials are concerned. If we were able to use this energy for the betterment of that part of the country we probably could develop a process to transform the slag into building blocks in one form or another, and thus utilize many of the wasted assets connected with the mining industry.
We have depended on hydro power, we have depended on coal and oil. Each of these commodities is terrifically expensive, and that is not because of the geographical position of that part of the country. We made arrangements many years ago to sell hydro power to southern Ontario. We made arrangements to sell timber to other parts of the country. As to the gold, coal and nickel industries, they are not designed so they can be advantageous to our secondary industries. Oil costs us 29 cents a gallon, and the price is not competitive with that of oil in other parts of the province.
We have raw materials available in the form of wood and many minerals. All we need is a source of energy which will allow us to process them into completed products and thus be the basis of our secondary industry. But when gas came into northern Ontario it did not supply this need. Therefore we are suggesting that again the Canadian people have not been given the things they expect from our natural resources. They have not worked to our advantage.
We say this bill is just a cover-up for a lot of mistakes in many other bills. It is a conglomeration of a number of other bills, and it does not set up a new national energy policy. One of the Conservative members rose last night and said that eastern members should help to pass the bill immediately because it only affects the people of the west. That is not what we want from a national energy bill, and that is not what we are going to support.

National Energy Board
I move, seconded by the hon. member for Port Arthur (Mr. Fisher):
That this bill be not now read a second time but that the subject matter thereof be referred to the standing committee on railways, canals and telegraph lines.
In moving this amendment, Mr. Speaker, I am doing what the Leader of the Opposition said he wished to do. I have also decided on the committee to which the bill should be sent, something on which he could not decide, and we hope we will have the support of the opposition in our effort to refer this matter to the committee for further consideration.


John George Diefenbaker: Mr. Speaker, first I wish to express my regret that by reason of circumstances I could not control I was not able to be in the house last evening when the Leader of the Opposition spoke on the bill, for after all I was most anxious to hear his views on this very important measure. While one can read Hansard, it never conveys the message to the same extent as listening to the spoken word. As I proceed I shall be making mention of some of his suggestions and some of his references.
However, I must say I am glad that the opposition has seen fit, as I apprehended his remarks, to support this measure which is so necessary to the development of our country. I shall also refer to the amendment just moved by the C.C.F. party which, of course, as I understood from an earlier speaker, builds its case on a policy of national ownership of those things that are required for national development.
I shall commence simply by speaking of the purposes of the bill, and I think the explanatory note sets forth those purposes, "to assure to the people of Canada the best use of energy resources in this country." In other words this is another step forward in the national economic policy of the government wherein positive action is being taken. Indeed, there is no other basis for national development than through the medium of such a policy in which the state provides the climate and the opportunity for development while at the same time maintaining the public interest and denying injustice in the carrying out of development plans by private industry.
I remember so well, and I speak now for the moment in so far as the C.C.F. amendment is concerned, that prior to 1944 the solution for every problem in Saskatchewan connected with the development of that province depended on nationalization and control by the state. I find, however, that in the light of the experience those in the government of that province have gained, they no longer have that same feeling of

massive adherence to the doctrine of socialism which they had prior to taking office.
I am one of those who are opposed to anything in the nature of unjustified or inordinate profits made without risk. The essence of profit is the foundation upon which jobs are assured. You cannot expand a nation unless there is a reasonable and proper return, that return being dependent, in size in particular, upon the degree of risk undertaken by those who are prepared to invest their money in these plans. The hon. member for Timmins said he had read the Borden commission report and it seemed to come close to recommending public ownership. I have read that report from end to end, but I see nothing to indicate support for that contention.
I think I should mention the transition, the metamorphosis that has taken place in Saskatchewan, when these hon. gentlemen opposite speak with horror of fair returns to industry. A moment ago there was a speech, and it was similar to one that was made a day or so ago, regarding the awfulness of expropriation. Well, we have expropriation in our province and we also have the means by which the individual may assure himself, through the courts, about the way in which it can be done and those circumstances have been disclosed.
When these hon. gentlemen speak in lachrymose words and tones regarding profits, non-risk and the like, I would remind them of one or two recent examples in Saskatchewan wherein the government of that province has seen fit not to maintain the principle of public ownership but indeed to invite private enterprise into Saskatchewan fortified by the guarantee of the provincial government. I am not going into the particulars in this regard unless hon. gentlemen have a curiosity for full information. However, I would remind them of one or two recent examples. One of the latest examples is the establishment of a steel mill in Regina. In that case the government of Saskatchewan backed the loan to the extent of $10 million, according to the Financial Post, and there were 2 million common shares authorized. Of those, 130,000 were offered to the promoters at 60 cents a share.
Banish the thought, Mr. Speaker, of the government of Saskatchewan agreeing to guarantee and back private enterprise companies which were not undertaking too great a risk, but in this instance they allowed the promoters to take 130,000 shares at 60 cents a share. Do you know why they did so, Mr. Speaker? I do not, but it is interesting to note that the provincial treasury took 180,000 shares at the same rate and the

sponsoring group took a further portion of those shares at $5.40. Finally, there was a public offering to the average person at $6 per share.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Now, the hon. member for Assiniboia (Mr. Argue) may believe that this is different from oil companies. Well, as the result of a guarantee by the provincial government this company, and indeed another company, a cement company, as well as the Prairie Pipe Company, were able to go into Saskatchewan and establish themselves under a guarantee of their bonds by the government of that province, in whole or in part, and for that 60-cent investment, in which there was no particular risk, the promoters and the treasury of Saskatchewan could, if they were to take the price of the shares set in a public offering, get $6. I am not going into further particulars about these companies unless anyone exhibits a zest for further information in that regard.
Is it not strange, Mr. Speaker, that they are still speaking of the merits of public ownership? I ask these hon. gentlemen to go out to Saskatchewan to see the experiment in operation. They went to New York to get financing; they found it necessary to go to private enterprise when Alberta and Manitoba were advancing very rapidly in the matter of resource development, with a view to seeing whether or not it would be possible to secure the necessary funds so that Saskatchewan, which was presumed to be the experiment in nationalization and socialization, would be able to catch up with the other two provinces. It is well to keep these things in proportion, and it is well to realize that when these facts were pointed out to the hon. member for Assiniboia he answered in words to this effect, "Well, it is different". Perhaps I should read from the article in question. It is an article dated December 1, 1958 in the Globe and Mail, and reads:
Speaking recently in Vancouver, Mr. Argue said parliament should pass a law making it illegal for company promoters to offer stock to the public at more than they themselves paid for it, or conversely, that they should not be permitted to get it for less than the offering price.
Then it goes on to say:
In Saskatchewan in the last three years three industries have been launched with government financial assistance. In each instance promoters obtained stock below the price asked the public. In the latest venture-Interprovincial Steel-the C.C.F. government itself owns the biggest block of promotion stock.
When this was brought to the attention of the hon. gentleman he said, "Well, these are different types of companies". These vocal rules he had established became obliterated in the light of experience. I point these things
National Energy Board out by way of introduction because the hon. gentleman said this, as reported on December 27 in the Regina Leader-Post:
-his criticism of shares being given to individuals at low cost, was confined at criticism to pipe line companies.
I will allow him to extricate himself from his own reasoning in due course.
The latest thing is the motion that this matter should be submitted to a committee. Throughout this session I have heard complaints that so many committees have been set up that it is impossible for hon. members to discharge their responsibilities. Here we have legislation for which the government must take the responsibility. Royal commissions do not legislate. They hear the evidence; they make recommendations, and governments act on the basis of accepting those portions which in the opinion of the government will meet the exigencies of the moment. We have had two commissions on this matter. The official opposition say the Gordon commission covered this situation. The Gordon commission sat for a long while. It sat for $1,380,000 worth of time. It was covering the history of Canada for the next 25 years and, as an incidental in the recommendations it made, it dealt in part with this question.
As I remember the facts in connection with that commission, the report in general was available in September of 1956 although it did not officially come into the possession of the government until December 6 of that year. The Leader of the Opposition says, "We are all for an energy board; we came to that conclusion in January, 1958". The Gordon commission recommended the setting up of such a board in December of 1956. I brought the matter before the House of Commons in February, 1957 and I remember the disparaging answer given by the then minister of northern affairs and national resources to the effect that all was well- and a reading of his speech at that time will indicate support for my contention thereon -that there was no need for such a board.
While the recommendation was made by the Gordon commission, it was not acted upon. The former government was in power until June 20. The house sat until April of that year, yet no action was taken. It was not until January, 1958, according to the Leader of the Opposition, that the Liberal party Anally came to the conclusion that this particular recommendation was in accordance with its wishes, its desires and its hopes.
I would say this. I intend to review the bill in general without referring to the sections, something of the nature of the bill

National Energy Board that is before us and its reasoning. A moment ago I said it marks a further major step in the implementation of a great national development policy for which this government received a mandate from the people of Canada. A national energy board covers this particular phase of the entire situation, namely energy within the definitions contained in paragraph 2. The Leader of the Opposition says there should be a national energy policy in a statute. I do not know what kind of a statute it would be if it were to contain generalities with respect to national development. This is but another step in that national development policy.
As to coal, and in particular maritime coal, this government has taken forward and important action in order to assist the miners of the maritimes. Tomorrow, I will be in western Canada, in the province of Saskatchewan, to see taken one further step in that national development plan, namely the beginning of the work on the South Saskatchewan dam. For many years members in various parts of the house asked that action be taken in this regard and pointed out the possibility that the time would come again-as has happened recurrently in the last 100 years- when drought and the like would overwhelm those particular portions within the Palliser triangle. This year conditions are not as hopeful as I should like them to be.
Over the years, over and over again, there have been advocates in support of this tremendous undertaking. We received promises, qualified and unqualified, from 1949 on; but it was only when this government came into power that action was taken in this regard and a beginning was made on this project.


Paul Joseph James Martin: I rise on a point of order, Mr. Speaker. The Prime Minister is now giving us a dissertation on irrigation in western Canada. In it he might include the request for deficiency payments made this morning by the farmers of Canada. What have these matters to do with the bill now under discussion? In the last few days, Mr. Speaker, we have been held strictly to account. You have ruled us out of order on matters which had more relevancy than this. I would ask you to remind the Prime Minister that he is not immune from the rules of this house any more than any other hon. member.


Mr. Speaker:: I do not know whether or not the Prime Minister wants to reply before I say anything on this subject.


John George Diefenbaker: Mr. Speaker, with becoming modesty in so far as this government is concerned I was trying to answer the Leader of the Opposition, who said last night that

this bill did not go far enough and that it should go further. I am showing that it is just a step in the national development policy. That causes the hon. member for Essex East, by reason of his own conscience bothering him, to be just a little bit exasperated.


Lester Bowles Pearson: On the point of order, Mr. Speaker, may I say this. You will recall that yesterday you ruled an amendment out of order because it dealt with public ownership, a subject which you considered to be irrelevant to this bill.


Mr. Speaker:: I am not sure that the Prime Minister was talking about public ownership.


Lester Bowles Pearson: He was.


Mr. Speaker:: As I understood the point of order, it was concerned with the South Saskatchewan dam, which is somewhat remote from the problem we have in hand, except in so far as it may generate electricity. I am sure the Prime Minister does not intend to stay in Saskatchewan too long. To deal with what the Leader of the Opposition said, it is true that this is not a debate on public ownership, as I have already ruled. I noticed that the Prime Minister got rather far in that field today, but it was in response to what had been said earlier and I do not intend to try to confine the matter too rigidly. But on the point that has been taken I agree that the South Saskatchewan dam is not relevant to this bill.


John George Diefenbaker: All right, Mr. Speaker; I was trying to give hon. gentlemen some information on this matter. I knew it would be a bed on which they would not want to lie.


Mr. Mcllrailh:: Follow the rules.


John George Diefenbaker: I do not want to continue to cause them so much personal suffering.
At that point, Your Honour, I was about to deal with other examples of this national policy, but I shall not do so in view of your ruling. I think, however, I should say something about our energy reserves, not in detail in any way but simply to indicate the importance of this bill, because the attitude taken by the Liberal party is a most unusual one. They support it in principle.


Lester Bowles Pearson: In principle.


John George Diefenbaker: They are opposed to this provision and that provision. They are shocked by certain items. They are annoyed by items which do not exist at all, and they are exasperated by the fact that we are proceeding to do that which should have been done, as they now concede, years ago.
Few countries in the world are so richly endowed with potential sources of energy as

Canada. The hon. member for Edmonton West and the hon. member for Bow River and other hon. gentlemen have over the past months told us something of these vast resources. I am now restricting myself to oil and gas, which provide the opportunity for Canada to stand on the threshold of a new era. The mobilization of these resources of oil and natural gas, coal and hydro power must be assured to guarantee to Canadians the fullest advantage of this land and their heritage.
I shall not deal with the hydroelectric potential or with the tremendous possibilities of the Hamilton river in Labrador, other potentialities on the Yukon river when diverted through huge tunnels into the Taku river, and the undeveloped power in this country amounting to more than 54 million kilowatts. All these are resources that we believe must be developed. Their development must be encouraged now, while at the same time protecting and preserving the public interest. In the western Canada sedimentary basin there are today proven and potential resources which may give to this country the largest crude oil resources in the world. No one can say today what is the possibility and the extent of the black gold which lie beneath the surface in Canada.
It was because of the importance of this matter that we advocated on many occasions a national policy in respect of the various kinds of energy and also the various types of potential development. No one can give any estimate as to how much our oil resources are worth. There are those, however, who have recently estimated that the crude oil resources of Canada are worth $96 billion. In so far as the gas resources are concerned, it is estimated they are worth $40 billion. These are figures which actually stagger but at the same time challenge the imagination of this country.
It was because of this that we endeavoured, not only in 1957 but earlier, to secure some action on the part of the former government. As the then leader of the opposition I set forth our views in this house on February 11, 1957 as reported on page 1160 of Hansard of that date, and on that occasion moved this amendment:
-this house is of the opinion that the welfare of the Canadian people requires the adoption now of a national development policy which will develop our natural resources for the maximum benefit of all parts of Canada, encourage more processing of those resources in Canada, correct the present serious unfavourable trade balances, foster wider financial participation by Canadians in the development of our resources, and promote greater opportunity and employment for a steadily increasing population.
National Energy Board
The answer given at that time, in general, was that no such policy was needed, that we had the necessary legislative powers under existent statutes. I would like to point out before I proceed to deal with the remarks of the Leader of the Opposition just what that legislation comprised. It consisted of an act to regulate the exportation of power and fluids and importation of gas. Fluids are defined as "gas, oil, water or any other fluids, whether liquid or gaseous, that originate or are produced or recovered in Canada". I would point out that that act was passed in 1955 and included oil.
The manner in which the act dealt with licences permitted those things which took place in the Trans-Canada pipe line organization that we, by this legislation, intend to ensure shall not take place in the future. The provision as to licences was under section 3, which reads:
Subject to the regulations and to such terms and conditions as the governor in council may approve . . . licences may be granted for
(a)	the exportation of power and fluids;
(b)	the importation of gas; and
(c)	the construction or placing of any line of wire-
And so on. Then subsection 2 reads:
A licence to export power or fluids may provide that the quantity of power or fluid to be exported shall be limited to the surplus remaining after due allowance has been made for distribution to customers for use in Canada during the period of the licence.
Then section 6, subsection 1, reads:
No person shall export any power or fluids-
"Fluids" include oil.
-or import any gas except under the authority of and in accordance with a licence granted under this act.
All the powers as they were exercised then were within the limitations which are now objected to by the official opposition. In so far as exports were concerned, regulations were made in this regard. Section 9 of the regulations passed by order in council on June 20, 1955 reads as follows:
The price charged by a licensee for power or gas exported by him shall not be lower than the price at which power or gas, respectively, is supplied by him or his supplier in similar quantities and under similar conditions of sale for consumption in Canada.
Now, sir, that did not protect Canadians from being placed in the position of subsidizing the cost of gas and the like for another country. That was one of the most serious shortcomings of this legislation as it existed subject to the regulations in 1955, that it was ineffectual in that regard. I remember the momentous debates of three years ago in which we endeavoured to point out to this house and to the country the serious situation

National Energy Board whereby Canadians would pay more for gas in Canada than would the recipients of the gas in the United States after export. In other words, our contention was that action had to be taken in this regard to protect Canadians, both producers and consumers.
The Leader of the Opposition in his remarks last evening seemed to leave the impression, or endeavoured to do so, that the Borden commission had been an expedient, a delaying action. He suggested that the legislation now before us did not clarify the national energy policy, that it left unresolved numerous duplications in function; and in sharp words he spoke of the oncoming dangers of arbitrary government by order in council.
Then he ended by saying, "Let us have a committee on this. The Borden commission made the situation clear and heard evidence over a very considerable period of time, but let us now disregard the evidence which was taken in the past and have this matter submitted to a committee of parliament". I say there is no expedition in that course nor any value in it, having regard to the fullest possible investigation which has been made by these two commissions.
The Leader of the Opposition complained that we had delayed bringing this particular piece of legislation before parliament. I would point out that the time of parliament has been taken up mainly, with the exception of certain items of legislation which have been brought before it, with the debates on the speech from the throne and, latterly, on the budget, and the budget resolutions. The resolution preceding this measure was placed on the order paper early in the month of April. Every opportunity was given for the study of these two reports in the intervening period.
The Leader of the Opposition says that in June, 1958-and I take it that was in a spirit of resignation-the Liberal party came out in favour of an energy commission. Well, I can understand the hon. gentleman's feelings in that regard, for he spoke in the city of Victoria during the election campaign and he dealt with this question. At a press conference he said he would agree to the export of natural gas to the United States.
He took a long time to come to that conclusion-until 1953 or 1954. But listen to these words, the significance of which can only come to the minds of those who were here three years ago.
He said this, but he emphasized-and I can see him as he did so-that this would not be a one-man decision. Whom did he have in mind? Did he have one in mind who is no longer here and who was able to advise the Trans-Canada pipe line company that export


would be allowed in the event that the federal commission in the United States agreed? No longer was there to be a one-man decision.
That is the reason for this type of legislation-to assure that decision will be made by a board; not by such a board as was suggested by one member and reiterated by another, but by a board which, when set up, will hold office during good behaviour for a period of seven years and which can only be removed by the governor in council upon an address by the House of Commons and the Senate. There is not much of the stooge about a board whose members will be placed in the same position as the civil service commissioners, who can not be removed except by a vote of parliament. In other words, to make sure that this board will operate for the benefit of all Canadians it will operate beyond any suggestion of control in any way.


Mr. Winch:: Eyewash. All the powers are subject to the cabinet.


John George Diefenbaker: When it comes to eyewash I do not want to compete with the hon. gentleman.
The Leader of the Opposition said he intended to support the legislation. We are glad to see the opposition taking that view. We are dealing with legislation which is difficult to draft-difficult to assure and preserve the rights of Canadians as a whole-and we hope there will be full examination; we hope the views of hon. members of this house with regard to this measure will be placed before the government of the day through the medium of debate.
The board has no power to do other than handle the energy resources of Canada. Mention was made of power exercised by order in council. Let me say that in so far as our great resources are concerned no responsible government would dare place itself in the position where any determination would be made on questions of national policy except on the basis of our legislative system, whereby responsibility rests on the executive with the assistance and the support of the House of Commons and the Senate.
There seems to be general support for the legislation. The broad powers are made flexible enough to assure that risk capital will not be prevented from coming into Canada; it will be invested here, and development will be maintained. I cannot refer to the several clauses, and I do not intend to do so except in so far as I may paraphrase them.
I mentioned a moment ago how entirely free from outside control the board will be. Now with regard to the issue of certificates -and again I am just paraphrasing-someone

has said-and I think I heard the Leader of the Opposition say this-that there would be no assurance that Canadians would have any participation, and that we had strongly advocated the necessity of our natural resources not being owned to an overwhelming extent outside Canada.
I would point out that in granting licences the board has to take several matters into consideration. It is not a perfunctory or routine discharge of responsibilities. The board has to take into consideration the availability of oil or gas or power, the existence of markets, the economic feasibility of a pipe or power line. In addition, it has to ponder another consideration; to deny fly by night promoters, who risk nothing but organization costs, the opportunity to make tremendous profits, inordinate profits. The board must take into consideration the financial responsibility and the financial structure of the company, the method of financing, and-I underline this because it is of material importance-the extent to which Canadians will have an opportunity of participating in the financing, engineering and construction of the line. What could be clearer than that?


George James McIlraith: I wonder if the Prime Minister would permit a question at this point. Is he suggesting that the criteria he has just read from the bill are any different from the criteria which have been applied by the board of transport commissioners for Canada in connection with hearings for leave to construct pipe lines?


John George Diefenbaker: I am not here to discuss what the board of transport commissioners did or did not do, or the criteria they applied. But from now on these criteria, in the event that they are passed by parliament, will be dominant in the determination by the board to give regard to the necessity of Canadian participation.
Finally, even when all these things are determined, a major matter is the question of the public interest which must at all times be one of the considerations in the determination of a recommendation for the issue of a licence. Also, the board can issue a certificate; but it has already received instructions under an earlier clause that it must take into consideration and may add such items and conditions in the issue of the licence as to construction, ownership and operation of the line as it considers desirable or necessary. That is an answer to all these querulous arguments that we have in any way abdicated from the position we took when we determined on the necessity of Canadian participation.
Those clauses of themselves indicate something of the circumstances which must be
National Energy Board taken into consideration and which do in fact protect the public interest. Then, too, there will be no more hiding on the hearings. The hearings will be in public so that all who want to may be present and every opportunity will be given for the fullest possible airing of all the circumstances connected with the matter.
Finally there is the question of whether the public interest will be protected. One of the matters that was the cause of infinite unfairness to Canadians under some of the licences granted when the former government was in power was that Canadians paid through the nose for consumption in Canada while the price in the United States was lower. Members of the former administration said, "We cannot protect you because the regulations say that regard must be had to similar conditions and similar quantities before determination in this regard can be made".
These are a few of the material matters with which this legislation is concerned. Somebody said that the powers should be spelled out. In reply I affirm that they are spelled out and are sufficiently flexible to assure, through public hearings and through maintaining the inviolability of the board by its appointment for a period of seven years unremovable except by vote of parliament, that the public interest can be and will be maintained.
When it comes to the question of appointments we intend to make the best appointments it is possible for us to make.


Harold Edward Winch: All Conservatives.


John George Diefenbaker: I did not have the hon. gentleman who interrupts in mind. We intend to assure that those who are on this board will be the best men procurable regardless of any other consideration.


Harold Edward Winch: That would be something new in appointments.


John George Diefenbaker: My hon. friend must be thinking of the experience in Saskatchewan. We want to assure that the best possible men will be obtained. I know the Leader of the Opposition will agree with me when I say that no one can understate the difficulty of getting the number one, the most outstanding men for these various positions, because of the sacrifice that results from the salaries that are granted. There is no doubt about this, as anyone occupying a position of responsibility will corroborate.
I know this has been my own experience. I have seen outstanding men approached concerning appointments of this nature. They have begun by pointing out to me that in private life they make a great deal more

National Energy Board money and that these are their earning years. They finally conclude by saying that much as they would like to serve the public interest they find themselves unable to sacrifice to that extent.
This is an aside, but may I say that when I was in Australia and New Zealand a few months ago I met a number of outstanding men in the public service there. These were civil servants like those we have in Canada, who make an outstanding contribution. I am thinking out loud now, but I have often personally wondered why they remain in the civil service at the salaries they receive. In speaking to these men of tremendous capacities and great abilities who were prepared to accept salaries far below what they could secure in private life I said, "How is it?" "Well," they said, "we have little rewards that go farther than money can possibly go in compensating us. When we give years of devoted service we ultimately may receive something not in the nature of a title but something in the nature of a decoration which will indicate the state's appreciation for the services rendered."
Mr. Speaker, we experience difficulty in securing the best, but we intend to do everything possible to assure that this board, with the great responsibilities it has to protect the public interest and to maintain the assurance of resource development, will be composed of the most outstanding men who are available; because among other things this board will have the power to determine just and reasonable tolls-and this is of great importance- and shall always, subject to the exception therein given, be responsible for seeing that they are charged equally to all persons at the same rate. That is one of the most important considerations, the determination of just and reasonable tolls, not tolls that by any stretch of the imagination could permit of exorbitant or extraordinarily great profits without risk being attached; such rates that will assure the return that must always be accorded to those who risk, and that will assure a fair return to all and at the same time preserve and maintain the public interest.
I found it a little difficult to follow the arguments of hon. gentlemen opposite. The hon. member for Villeneuve, in what I thought was a most thoughtful speech, argued that the Borden commission was not needed because the work had already been done by the Gordon commission. He said that had all been done but of course urged that a standing committee be set up for public hearings. There were those who said they believe today in a national energy board. Again I would point out what the former minister of northern affairs and national re-


sources said with respect to this matter in 1957.


John Whitney Pickersgill: Would the Prime Minister permit a question?


John George Diefenbaker: Yes.


John Whitney Pickersgill: Would the Prime Minister give the reference to what Mr. Lesage said in 1957, and the date?


John George Diefenbaker: Mr. Speaker, as a matter of fact I can tell the hon. gentleman that it appeared in Hansard following the motion I moved on February 11, 1957. I have in my hand the notes I took at that time. I have not the copy of Hansard here, but the hon. gentleman could look it up.


John Whitney Pickersgill: Perhaps, sir, the Prime
Minister would permit one other question.


John George Diefenbaker: Surely.


John Whitney Pickersgill: Was not Mr. Lesage at
that time referring not to a national energy board but to a national development policy?


John George Diefenbaker: This was one of the
elements in a national development policy. I will not cross swords with the hon. gentleman on that because we have proven since how necessary a national development policy was and how development can be achieved by proper encouragement on the part of the government.
I am not going to take very much longer. The three most important features of the legislation are, first, maintenance of the public interest; second, the assurance that the wells of risk investment shall not be dried up; the exercise of important advisory functions under which the board will continue to mobilize statistics relative to power, gas, oil and the like and have up to the minute information in the public interest and, finally, the streamlining of the entire procedure.
I want to deal with one other matter, the question that has been raised as to delay. Under the Exportation of Power and Fluids and Importation of Gas Act exports of oil required a licence which in the case of oil pipe lines was granted freely on an annual basis. However, oil, unlike power and gas, moves fairly freely into world trade. There have been those in this country who have felt that some action should be taken in order to assure, in the event that the United States were to maintain its mandatory controls against the importation of Canadian oil, that there would be a market for Canada's oil and that Canada would have to take the necessary measures to open up a market in Montreal. The Leader of the Opposition (Mr. Pearson) says, why have you that power, which he says is only to be exercised under order in council? I cannot read the clause,

sir, but again it is a question of proclamation. Ordinarily certain statutes provide that the entire statute shall come into operation by proclamation of the governor in council. There have been many such statutes throughout the years. This is not order in council government. This is simply a provision that one portion, instead of the entire act, shall come into effect by proclamation.
The Leader of the Opposition says, why is this, what is the reason? I am reminded again of his words in his speech in Edmonton in the month of February, 1958, when he found himself in a most disagreeable position. Nobody knew what the Liberal policy was on this question and he proceeded to enunciate that policy. The wording of the Canadian Press despatch from Edmonton, February 27, is as follows:
Lester B. Pearson has pledged to Canadan oil producers that as prime minister he would turn over the rich Montreal market to them if the United States continued to restrict oil imports from Canada.
I ask him, how was he going to do that? What were his plans? Were these but words? There is only one way in which it could be done economically and that would be to apply import quotas against those companies that today control the market in Montreal to a large extent.


Lester Bowles Pearson: But not by order in council.


John George Diefenbaker: Oh, Mr. Speaker-


Lester Bowles Pearson: Which you would do.


John George Diefenbaker: -how the unrepentant have become repentant. The hon. gentleman now admits in effect by that interjection that what he had in mind was the imposition of quotas. Well, anybody who advocates that-


George James McIlraith: No, no.


Lester Bowles Pearson: Mr. Speaker, the Prime
Minister (Mr. Diefenbaker) has quite completely misinterpreted me.


John George Diefenbaker: Oh, I see. All right.


Lester Bowles Pearson: When I interjected "but not by order in council" I meant it would be done by parliamentary approval and not by order in council of the cabinet.


John George Diefenbaker: Mr. Speaker, I am glad to see this reformation on the part of the opposition but I remember the hon. gentleman's own speech in the pipe line debate dealing with the cutting off of discussion. It is only three years ago but I do not want to resuscitate that debate to the exasperation of my hon. friends opposite.


Paul Theodore Hellyer: You should be very grateful the pipe line was built.
National Energy Board


John George Diefenbaker: The fact is that in his Edmonton speech the Leader of the Opposition went on to say:
If Washington will not modify its present attitude with respect to importation of Canadian oil-
These were hard words spoken from the heights of Olympus.
-if the American government insists on placing restrictions on such importations and thus damaging and retarding the national development of a vitally important industry in a friendly neighbour country, then we, in Canada, will have to consider necessary steps to move oil from western Canada into the big market centring on Montreal.


Lester Bowles Pearson: What is wrong with that?


John George Diefenbaker: I say that as a result of our action these controls were removed. We pressed strongly for their removal. They were imposed in July, 1957 and they would have been imposed by the United States administration regardless of what government was in power in Canada.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Oh, the record shows that.


Paul Joseph James Martin: The 15 per cent diversion caused that.


John George Diefenbaker: Importation would have been prevented by the United States to the same degree that it was because the plans had already been made. Public reference has been made to that fact. We acted. We pointed out the difficulties and the impossibility of the position of Canada, with its joint defence relationships with the United States when oil, so necessary to our joint defence and to freedom itself, was excluded. We were able to secure removal of the controls. I will give you something of the picture of the initial effect of the action taken by us resulting in our being able to secure that action by the United States. As generally expected, it means an increase in exports of from 15,000 to 25,000 barrels of crude oil per day. That is a most important and valuable concession. I have before me the Daily Oil Bulletin for May 20, 1959 in which is set forth some of the changes that have taken place as a result of the strong action and strong objection this government took against the importation quotas in the United States. In this publication there is the following:
Effective June 1. crude oil and products brought into the United States from country of origin by pipe line, rail or truck are freed from the restrictions imposed by U.S. import quotas . . . Today the first news of direct impact on western Canadian oil producers was released, when refiners submitted nominations to the Alberta oil and gas conservation board for crude to be delivered in June.
The article goes on to set out that in particular the Texas company has nominated for

National Energy Board its first Canadian crude for its plant at Puget Sound. The article states:
Texaco has called for 8,000 barrels daily of pipe line fill for June, which will mean actual deliveries to its refinery will start by July 1. Shell Oil Company, whose Puget Sound refinery dropped Canadian crude for one year, resumed take in May with nomination for 12,000 barrels daily. Shell's nomination has been raised to 15,300 barrels daily for June. General Petroleum's Puget Sound refinery, a consistent user of Canadian crude, has nominated for 27,400 barrels daily in June, up from 15,350 barrels daily in May. Total Puget Sound nominations for June are 50,700 barrels daily, including the pipe line fill, compared to 27,350 barrels daily in May.
For the United States midwest, June nominations for Alberta crude total 13,400 barrels daily, up from
9.300	barrels in May. International Refineries in Minnesota calls for 7,800 barrels daily, up from
7.300	in May. Bay Refining Company in Michigan calls for 4,000 barrels daily in June, after taking 3,000 barrels in April, none in May. International Refineries Incorporated, will receive 1,300 barrels in June compared to its 2,000 barrel take in May. West Branch Refineries, 300 barrels daily in June after taking that amount in April and none in May.
The over-all Alberta nominations total 352,092 barrels daily, an increase of 51,272 barrels daily, or 17 per cent over the May nominations of 300,820 barrels.
Then it goes on to deal still further therewith. In other words, we have, as a result of the strongest protest that could possibly be made under all the circumstances, been able to achieve with the co-operation of the United States the removal of these quotas which did, in fact, play havoc with the oil industry.
Reference was made to the overruling power of the governor in council. How shocked the finer sensibilities of the Leader of the Opposition were when he referred to that. Let me point out the various boards that are in the same position. The most analogous is the board of transport commissioners, to which reference was made a little earlier. The authority granted to the national energy board is in no way unique. Section 53 (1) of the Railway Act respecting the powers of the board of transport commissioners reads as follows:
The governor in council may at any time, in his discretion, either upon petition of any party, person or company interested, or of his own motion, and without any petition or application, vary or rescind any order, decision, rule or regulation of the board, whether such order or decision is made inter partes or otherwise, and whether such regulation is general or limited in its scope and application; and any order that the governor in council may make with respect thereto is binding upon the board and upon all parties.
In other words, so much has been said about so little, and when you consider the similar powers with respect to the board of transport commissioners there is a complete answer to all these wails about the danger in the authority given the governor in council under this legislation.

I want now to go to one other matter which has to do in particular with the province of Alberta. At no time have I, nor shall I, in any way participate in any degree in a provincial election. I think the Prime Minister should follow that course, and my predecessors have done so. However, when there are statements made in that election or prior to that election, and if those statements do not accord with the facts, then they deserve being commented upon. I intend to refer particularly to a statement made by Premier Manning of Alberta in which he says that one facet of the proposed national energy board is a threat to the further development of the oil and natural gas in Alberta. He goes on to say that if the board is set up there will be a delay in deciding on these applications for export which will be detrimental to the province of Alberta. He said that the processing by the new board will mean a delay of at least four or six months, and the delay is costing the province thousands of dollars, but there is an even greater cost in lost development.
I wish to say in regard to that, that his own words, as reported on November 7, 1957, give the reply. Following an interview in Ottawa Premier Manning said that he could foresee no delay if the international interests require early action by the federal government in approving export permits when new markets opened to Canadian industry by such permits are vital to continued development and expansion of the petroleum and natural gas industry and the national economy. Then, he goes on to say that Ottawa is derelict in its responsibilities in not pressing the major integrated oil companies to accept more Canadian crude for refining. In so far as that statement is concerned, I say to him, it is in your own province where these things happen. It is there that the control can be exercised and I suggest to him that the control, if any, that he has in mind lies in that province because the major companies receive their licences from that government and should have determined for them, by him if he so desires, the action which he asks us to take.
I intend to refer to the question of delay because the boot is on the other foot. There has been an effort made to shift the burden of oil and gas surpluses to this government. I want to make this abundantly clear now. As soon as this bill is put through, the applications of Westcoast Transmission Company Limited, Southern Gas Company Limited, and any other application will receive immediate attention by the board which will be set up immediately after the conclusion of this legislation. There is going to be no delay.


Harold Edward Winch: You already have your appointees in mind, I take it?


John George Diefenbaker: As I said, the question of export permits will receive immediate consideration. I am going to go to the record, because it is intensely interesting. The premier says we have delayed. Let me give the picture in so far as these companies are concerned. In so far as Westcoast Transmission Company Limited is concerned, its application for export was made on July 30,
1957.	Hearings were held on December 10 to 13; December 16 and 17, 1957; January 13, 28, March 4 to 7, 1958; and permission was refused on September 15, 1958. The application was amended on December 9, 1958. The hearings on the amended application took place between January 6 and January 20, 1959, and there was no grant by the government of Alberta of the right to export until April 7, 1959. If it took the board in Alberta, including the original application and the amended application, from July 30, 1957 to finality on April 7, 1959, where is there any solid support for the suggestion of delay by this government?
These records tell the story as clearly as it is possible to tell it, and give the answer to the words to which I have referred. The Alberta and Southern Gas Company applied on October 18, 1957 to the gas conservation board. There were hearings on February 11, 1958 and from March 11 until March 31, 1958 and finally it was refused on September 15,
1958.	Then there was an amended application on December 2, 1958. It was heard on January 6 to January 20, 1959 and was not granted until April 7, 1959.
If it took that much consideration, Mr. Speaker, to determine whether the conservation board of Alberta should decide in favour of exports, where is there any basis for the suggestion that a month and one-half or a little over should not have passed by without action on the part of this government? It might be said that the date of application to the Minister of Trade and Commerce (Mr. Churchill) was, in the case of the first company, December 27, 1958 and in the case of the second company, December 23, 1958. That might be another argument that could be used. That is true enough. But the fact remains that as yet no determination made by the national government would in any way hasten the export because action is required on the part of the federal commission in Washington. That action has not yet been determined.
There are other companies in the same position. There is the Canadian-Montana Pipeline Company. There was an application
National Energy Board to the Alberta conservation board on December 2, 1958; sittings from January 6 to January 20, 1959; application granted April 7, 1959. Again we find the same position of affairs. The application to the minister was on December 24, but any determination on our part in that regard would in no way hasten the export without a decision on the part of the federal commission of the United States.
I agree that it is essential that these matters be thoroughly investigated. I am not complaining at all. It is for the government of Alberta to determine the time to be taken. What I am saying is that if the government of Alberta found it necessary to hold the matter up for the length of time it did so, we must certainly be given every opportunity to look fully into the matter in order to determine the course to be taken. A general examination has been made by the department. Again I come back to this point. In so far as those applications are concerned, they will be processed immediately by the board when it is set up. It will be set up immediately. There will be no need to wait for the mobilization of the board. The members of the board, from the evidence taken by the Gordon commission, the evidence taken by the Borden commission and the evidence taken by the conservation board of Alberta, will be in a position, I am sure, to determine fully the entire question.
With regard to export, it is provided that in the granting of export-and again I reiterate this-the quantity of gas does not exceed the surplus remaining after due allowance has been made for the reasonable foreseeable requirements for use in Canada. It is necessary to maintain that surplus for, after all, these resources are not replaceable. Once gone, they are gone forever. The result is that the primary consideration must be the assurance that Canada in the future shall not find itself handcuffed or in a straight-jacket as a result of the failure on the part of those of us here today to realize the necessity for that degree of conservation which will assure to Canadians full development while at the same time maintaining for future generations the necessary supply without which Canada's industrial development will not be attained.
As to 'the price to be charged for gas and power, it must be just and reasonable in relation to the public interests. With the implementation of this legislation, no longer will there be any suspicion that the Canadian consumer is being forced to subsidize the foreign markets or that Canadian industries will be asked to pay higher prices for their energy than those paid by foreign industries using Canadian energy. That matter is

National Energy Board extremely important. In the trade world in which we are living, with the conflicts that are accelerating from month to month in the communist trade offensive, above everything else it is necessary for us in Canada, if our international trade is to be maintained, to see to it that we shall not be placed in a position where our costs in connection with energy derived from Canada are greater to Canadians than they are to any other nation, however friendly that nation may be.
As I see it, the bill protects not only the industrial future of Canada but the producer and the consumer. It assures a maximum advantage from the available production of Canada of gas and of power, it being available, in so far as gas is concerned, for export when surplus to the needs of the Canadian economy in this and foreseeable generations in order to ensure for Canadians an adequate supply of the natural resource sources which are the heritage of this country, at the same time bringing to Canada the benefits that are confirmed by profitable export of surplus resources.
When we get into committee of the whole, if there are suggestions on those matters that reasonably will assure the achievement of these purposes, I hope they will be made. My attitude on this matter, as it was when I sat in the opposition, will be that what we are trying to do is to preserve the resources of Canada, to maintain the assurance that the resources shall not be uneconomically wasted and to bring about in this country a development by means of which our country may reach the destiny which its resources make possible.


George James McIlraith: Mr. Speaker, I shall not attempt to follow the Prime Minister (Mr. Diefenbaker) in the emotional effusions he has placed before the house this afternoon. I shall, however, try to deal with the subject bearing in mind relevancy and reason. I quite share the view expressed by hon. members who have spoken previously, indeed on all sides of the house, as to the importance of the subject matter. I must say, however, that I regret that the Prime Minister saw fit to take so much of the time of the house in order to deal with his views on certain provincial governments. The Prime Minister, of course, is entirely free to do as he wishes in the provincial elections, as are private citizens outside of the house. But surely the provincial election in Alberta does not have to be fought in the chamber of the House of Commons. The delightful excursion into local politics in Saskatchewan on the subject of public ownership was probably interesting to some. But having regard to Your

Honour's ruling yesterday and the decision given by Your Honour and, as I understand it, adopted by the house, that that was irrelevant to this bill, it therefore was not a subject for discussion here. The Prime Minister saw fit to make this delightful excursion into local politics in Saskatchewan, but however much one may dislike or like, as the case may be, the particular government in that fine province, it surely is not relevant to this particular bill.
While this rather lengthy discourse was going on this afternoon on all kinds of subjects, some relevant and some irrelevant, erecting a smoke screen in front of the real matters confronting us on second reading of this bill, I wondered what the purpose of the Prime Minister was. I still am not wholly clear what it was.	I cannot help
but recall, Mr. Speaker, that the Prime Minister made reference to the resolution stage and to how long the resolution was on the order paper. I would point out to him, as I had occasion to point out at the resolution stage, that the resolution did not contain the usual information that resolutions preceding the introduction of bills should contain. It left out all the relevant information, and was therefore of no value whatever by way of notice.
Then a rather extraordinary thing happened. The bill became available for public distribution through the distribution office shortly after twelve o'clock on Wednesday. It is true that certain members of the opposition were able to get copies on Tuesday immediately after first reading. The proposition was put forward on Tuesday night that the debate on second reading should be proceeded with on Thursday. That would be about 24 hours after the bill became available for public distribution. That is a most extraordinary procedure with regard to new legislation of this type, which is a bill involving some 100-odd clauses dealing with such an important subject. Then the Prime Minister intervened and had the matter stood over for one other day, and second reading was started on Friday of last week. So two days were allowed to elapse to enable the public to see the bill.
I have been curious about what it is that the government was seeking to hide. Why was it they were so concerned with not permitting members of the public, particularly those in the industry, to have an opportunity to receive copies of the bill and peruse it? It is particularly interesting to note, in view of the fact that for the two whole years since the government assumed

office in June 1957, they have refused to make any statement of policy on this important subject.


Mr. Pallell:: What was the hon. member doing for those two years? Was he asleep?


George James McIlraith: The chief whip for the government seeks to make a personal reference but I will let it go by. The fact is that the government has refused, and in doing so has done considerable damage to the industry, to make any statement of policy on the subject of energy resources in Canada, particularly with reference to oil and gas and its exportation and importation, as well as other related matters. But it has now become clear, after listening to the Prime Minister, just what the reason was, after such a long delay in dealing with the subject, for the haste to get this bill through. Such is their determination to prevent the public looking at it and prevent their being heard.
In that connection, it is interesting to note also that throughout the time the Prime Minister took in his speech this afternoon he omitted to deal with the request made by the Leader of the Opposition (Mr. Pearson) that this bill, when it gets second reading, be referred to a standing committee where witnesses could be heard. He omitted to deal with that altogether. What are we to conclude? We can only conclude, I respectfully suggest, one thing, that after two years of no policy the government has been somewhat humiliated by having to come to the decision that the policies of the Right Hon. C. D. Howe in relation to the commercial aspects of this matter were sound policies, and that the recommendations of the Borden commission, which were so effective a smoke screen during the last election, were of no value at all and not to be used.
It is true that there are two important matters of principle on which new policies are asserted in this bill. One has to do with the advisory functions of the board, and the other has to do with the import of one of our trade commodities, oil. But on those two matters of principle it is interesting to note that while the government brought in a new policy it did not in either case follow the recommendations of the Borden commission.
With respect to that new principle concerning the advisory committee, it is interesting to note that the legislation provides that the board shall study and keep under review matters over which the parliament of Canada has jurisdiction in the field of energy. Energy is not defined in the bill before us. This wholly new principle of charging the board with responsibility and instructing it to study and keep those matters under review is 66968-9-256
National Energy Board a complete duplication in so far as the dominion coal board is concerned, the atomic energy control board is concerned, as well as other legislation dealing with fuel is concerned. It is, as I say, a complete duplication. It is not even in a form which is permissive, but it is a requirement that they shall keep it under review. This means, in addition to the waste and inefficiencies of duplication, that the industry will have to duplicate information and so on. In his remarks on second reading the minister seemed to indicate that he did not visualize duplication, yet it is one of the main principles of the bill which he has introduced.
Then there is another interesting matter. The first report of the Borden commission states that the national energy board shall have the authority to study, review, recommend and so on. In other words, the recommendation of the Borden commission in that respect is repudiated. The minister has given no explanation as to why he chooses to repudiate the report of the Borden commission on that point.
I have other matters with which I want to deal in particular. First of all, there is the question of export. I am sorry that the Prime Minister has left the chamber so quickly after speaking this afternoon, although I understand he had to leave and I think he has explained why, but I wanted to say something about his reference to the export provisions now covering oil. My point is this. He omitted to mention that when that legislation was enacted the situation was that we were relatively small producers of oil.
He omitted that altogether, but, more important still, he omitted those parts of the definition contained in the act which are relevant to his argument, that is, that "export" had reference to export through pipe lines only. That is the one subject which he omitted in his argument about export. In addition, of course, the export of oil began in wholly different circumstances before the development of the oil industry; we now have a margin available for export and the problem is one of finding markets. The hon. gentleman spoke about fluids and, of course, he did not read the definition of fluids, either. I regret that the effect of presenting his case in this way was to make his argument on that point of a nature which would be misleading to any person who was not familiar with the legislation on this subject, and I am sure that is not what he intended.
There is another principle in this bill which I find wrong and difficult to accept. It is to be found in clause 87 where the governor in council is, in effect, given power to control the export and import of oil. This provision

National Energy Board is offensive for two reasons. The first is that by the very nature of the operation of the oil business there would be sufficient time for legislation to be enacted by parliament in the event of any of the difficulties arising such as the minister mentioned in his introductory remarks. The hon. minister knows perfectly well that the construction of refineries is only undertaken when supplies of oil are assured. He knows that contracts for the supply of oil either through pipe lines or by other means cannot be entered into on a day to day basis. Thus there is no possibility of any of the evil things which the minister told us might happen at some dim and distant time in the future occurring so suddenly that parliament would have no opportunity to deal with them. I am one who believes that parliament should have the right to deal with matters of this kind, and I am at a complete loss, remembering the argument used by the Minister of Trade and Commerce (Mr. Churchill), the Prime Minister and the Minister of Public Works (Mr. Green) when they were in opposition, to understand how they could seek the kind of arbitrary power they are now seeking, and let this proposal get past the draft bill stage and be introduced into this house, having regard to all they said against arbitrary power in a situation which was related to a national emergency and to the national defence of this country.
Now the government wishes to take this arbitrary power and apply it to a trade commodity-a very important trade commodity-when there is no case at all to be made out for doing so. As a matter of fact it is interesting to recall the remarks made by the minister when he was dealing with this subject. He seemed to be very sensitive about it, because in introducing this bill on second reading he had this to say as reported at page 3929 of Hansard:
Therefore we feel there is no requirement of national policy to be served at present by licensing exports of oil.
The hon. gentleman dismisses the matter of exports in that way, though there is, perhaps, some argument which could be made for licensing exports in the light of restrictions of imports by the United States. And in the next paragraph, the Minister of Trade and Commerce had this to say:
The case with respect to licensing of imports of oil is different and more complicated. X do not propose to argue the case fully today. It would be premature to do so until the second report of the Borden commission in respect of this matter has been received and considered.
For the minister, having said that, to ask the House of Commons to give him the power of regulation is something which, I must confess, I find strange. Surely if there

is no case to make for the possession of this power, and if it is premature to deal with the question, we should not be asked to pass the authority of parliament over to the minister and his colleagues in the cabinet. Surely that is a principle which is quite wrong and I am amazed at the minister putting it forward. In fact, I suppose one could use such words as "effrontery" to describe the conduct of a minister who comes before parliament and says: I do not propose to argue the case fully because it would be premature to do so until the second report of the Borden commission has been received and considered, but despite that I am asking you to give me these powers. That is closure with a savagery we have never seen.


Gordon Minto Churchill: Nonsense. There is no closure in it at all. You were the proponents of closure in 1956, and you suffered for it.


George James McIlraith: The minister will not argue the case. He does not propose to argue it. He himself says he cannot argue it because the background against which the matter could be discussed is not yet available. Despite this, he says: give me the power. If that is not closure, then nothing is. It prevents any argument on this subject and I respectfully suggest that the question of whether there should be control of oil imports is a very important matter, and that if and when any government decides that controls should be applied, that is a matter which should come before this house for debate and decision. I am still old fashioned enough to consider that there is some virtue in debate in parliament on these matters and that our discussions throw some light on the subject and enable a better decision to be taken.


Gordon Minto Churchill: I wish you had held that view in 1956.


John Whitney Pickersgill: We wish you held that view today.


George James McIlraith: There is a marked difference between what was done in 1956 and what is being done today. In the case which the minister has in mind I would recall for the benefit of hon. members that there was three weeks debate on the legislation in question. This way, the minister is not going to permit any debate at all.


Gordon Minto Churchill: That is not true. You can have all the debate you want for as long as you want.


George James McIlraith: Let me remind the hon. minister that he has been given a high responsibility of administering and directing the trade policy of this country. That is a very difficult and complicated task and one of great importance to the economy generally.

The hon. gentleman must surely have learned something from that foolish 15 per cent trade diversion policy put forward at one time. Here he is now seeking to put another product that has historically moved rather freely from country to country under the arbitrary control of himself and his colleagues without even a debate on it in parliament. I invite him to consider what he is doing in asking for such authority.
Let me remind the minister of one other thing. The Prime Minister spoke at great length today about making our resources available to the Canadian people which is an excellent sentiment but there is another facet to this matter. The availability of energy is basic to the development of our whole economy, there is no doubt about that at all. Allow me to place on the record a statement made by Mr. John Davis in a booklet entitled "Canadian Energy Policy" published by the Canadian institute of international affairs. At page 6 of the booklet we find these words:
-the basic difference-
Between Canada and the United States.
-is one of price. Even in 1958, consumers in Canada were paying between 30 and 50 per cent more for their energy than were their opposite numbers in the U.S.A.
The point I want to make out of that is that I hope the minister will bear in mind the cost of energy sources to suppliers and producers who are seeking to export. These things should be considered. The Prime Minister chose not to deal with this question in his lengthy remarks this afternoon. I suggest to the minister that he take another look at the principle that he is trying to assert in this bill on this point and that he consider withdrawing it.
May I also point out that this is the type of question on which we could get information if the minister would permit this bill to go to a standing committee where evidence could be obtained on all these points.
There is another thing I want to point out about the minister and his colleagues taking this arbitrary power. This is bad not only on the grounds of it being arbitrary power vested in the minister but it is also bad to provide import control in such a way that the first report of the Borden commission which is outstanding could be incorporated in it. Section 19 of that report which deals thoroughly with the subject provides rather drastic controls. I think the minister will agree with my description of them as being drastic. I commend section 19 to the attention of the minister. With that kind of comprehensive and burdensome control recommended in the report of the Borden commission and with the minister and his colleagues assuming this 66968-9-256J
Interest Act
arbitrary power to deal with this subject, does the minister not see what could happen in places like the maritimes? Is anyone going to develop refineries in the maritimes to supply purely local needs? There are great problems like that which should be debated in this house at a time when the government feels it has any information that would warrant putting on import controls. Does the minister not see the damage that could be done to the development of this industry in assuming this power, damage that would be unnecessary and improper and that would have the effect of sharply increasing the cost of our energy in the meantime?
The Prime Minister this afternoon raised the same old cry about the former government not establishing this board and he referred to the Gordon commission report. The Prime Minister raised this matter in the house on January 15, 1957, when he asked the then minister of trade and commerce if he would agree to the suggestion in that report about setting up a national energy board. Mr. Howe in reply said that he had not considered the matter and that the decision would be one for the government rather than for an individual minister and that he did not want to give his opinion at that time.


Mr. Deputy Speaker:: Order. It being five o'clock it is my duty to interrupt the hon. member in order to permit the house to proceed to the consideration of public bills in accordance with section 3 of standing order 15.



INTEREST ACT


[Stage Direction]
The house resumed from Thursday, February 12, consideration of the motion of Mr. Argue for the second reading of Bill No. C-3 to amend the Interest Act and the amendment thereto of Mr. Roberge.
Mr. W. L. M. Creaghan (Westmorland):: Mr. Speaker, the explanatory note of Bill No. C-3 reads as follows:
Section 2 as at present provides that there is no restriction as to the rate of interest except as provided by statute. The amendment limits the rate to 12 per cent.
This bill was the subject of a full day's debate on February 12 last at the conclusion of which the hon. member for Megantic (Mr. Roberge) moved an amendment as recorded at page 962 of Hansard in the following words:
That the bill be not now read a second time but that the subject matter thereof be referred to the standing committee on banking and commerce.

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Following the amendment a number of hon. members participated in the debate and spoke in favour of the amendment. I want to go on record as favouring the amendment but I wish to say a few words on the bill itself in order that my expressed reaction will be available when the amendment goes before the standing committee on banking and commerce.
Naturally I am opposed to high interest. High interest in Canada is not justified on any ground. However, when we consider interest I think it is only fair that the word itself should be interpreted in the usual and customary way. Credit must be available to keep our factories in production and to make it possible for Canadians to maintain their high standard of living. Extended credit is necessary for the housing industry, for automobile manufacturers, household appliance firms and every other type of business in Canada. Credit is the backbone of the nation and without it millions of our citizens would immediately be put out of work.
The problem I see in the bill is who should have credit and at what price. We have various types of credit. The first and common type of credit is first mortgages. In my short time as a lawyer I have seen first mortgages bearing interest running from 4J per cent up to 8 per cent and higher. If a maximum rate for any type of interest is to be fixed, let us not do anything that may encourage an increase in the interest rate of first mortgages.
Another common type of credit is bank credit. Credit is given to a customer depending on his credit standing and in many cases with security. I am a bit afraid if we pass the bill in its present form we may be opening the door to encourage the banks to demand an amendment to the Bank Act which will permit bank loans for normal purposes at a higher rate of interest.
I think it is only right that I should refer to the report made by the banking and commerce committee in 1938 so far as the word "interest" is concerned. I refer to page 418 where I find the third report of the standing committee with respect to its inquiry into small loans and small loans companies. At that page the following appears in the report: That the search for a "reasonable" rate of interest should have continued over the ages is largely due to the application of the word "interest" to dissimilar uses.
In the same paragraph the concluding sentence reads as follows:
While under our present economic system we have imperfect competition, it is manifest that given a sum of $100,000 for investment the rates on its return will necessarily differ as to whether the sum is say: (a) invested in a block of Canadian 
government bonds, (b) lent to 50 land owners secured by first mortgages, or (c) distributed in lots of $200 to 500 people of nondescript occupations on personal security.
In explanation the final paragraph on the same page reads in part as follows:
While loans on personal security are made tor diverse purposes, as set out in our records, and contain different degrees ol risk, they possess two common features that affect the element of cost, namely: "size" and "time", i.e., they are small loans made for short terms. Quite obviously the purchase of a block of 12-year Canadian government bonds requires little expenditure for investigation and none for supervision; investments on 50 farm mortgages, for varied periods, entail considerable cost for both investigation and supervision; while the investigation of 1,000 applications to effect loans to 500 people for a few months, with meticulous supervision, becomes expensive business when expressed as a percentage rate of $100 on a monthly basis.
I suggest it is only fair that all of us must remember that recommendation when considering this bill either in this house or before the standing committee. In the previous debate there was serious criticism of Eaton's and Simpsons-Sears. Both of these firms do business in my riding and I feel that the criticism was not entirely justified. The mover of the bill suggested that these companies charged up to 54 per cent on instalment purchases. He explained that on an instalment sale of $20 the customer paid a minimum of $2.25 and that this amounted to 54 per cent provided the loan was paid to the firm at the rate of $5 per month.
I have not made any effort to check the computation but I think when he refers to interest he is overlooking the important factor of other costs. Surely the firm is entitled to make some charge to a willing purchaser for the cost of staff salaries as a result of the office work entailed, bookkeeping expense, the cost of ledgers, the cost of collection and perhaps the cost of loans or financing in order to maintain inventories.


Harold Edward Winch: How much is reasonable?


William Lawrence Marven Creaghan: I think reasonable costs are costs necessarily entailed in order to finance the sale. I do not suggest that the salaries of the clerks engaged in selling should be charged as an expense but I think that charging necessary administrative costs in order to supervise the loan is reasonable.


Harold Edward Winch: Is that what is 54 per cent?


William Lawrence Marven Creaghan: The 54 per cent may apply to the cost of a $20 sale. One thing that I believe should be kept in mind is how much of the cost, about which the hon. member has been questioning me, is actually interest. I think the house should be more concerned about making finance houses, small money lenders and instalment vendors show clearly

the annual rate of interest rather than the monthly rate which we see advertised so often in their advertising "come-ons". I believe this rate should not include the costs I have just mentioned and others necessary to record a legal document in a registry office in order to protect the vendor. I do not think this type of cost should be part of the interest rate.
Another thing which I feel is related to the subject under discussion, and which I believe is in order, is the subject of loss leaders. Personally, I believe they are related to the subject of interest. People under a free enterprise system like to take advantage of a bargain, and in their anxiety to take advantage of a loss leader, which is strictly a gimmick of the retailer-


The Acting Speaker (Mr. McCleave):: Order I shall have to ask the hon. member how he would relate loss leaders to an act to amend the Interest Act which is before the house this afternoon.


William Lawrence Marven Creaghan: The reason I think it is related is that loss leaders tempt people into a store. They sign credit contracts, and when they sign these contracts they are, in some cases, paying exorbitant rates of interest, etc.


Harold Edward Winch: Good for you; you have finally come to it, have you?


William Lawrence Marven Creaghan: They pay exorbitant rates of interest or selling costs which are not all true selling costs. In any case, whatever they pay for, it is related to the subject because the result is to place that many more contracts into existence, and they are reflected in the total millions of dollars of credit extended to the people. This leads people to buy things that they cannot afford, and in many instances the loss leader type of contract is responsible for a man getting himself into debt to 15 or 20 creditors and eventually arriving at the door of the moneylender.
Since the end of the war the government has done a lot to help the home owner. It has done a lot for the farmers and fishermen, and we all hope it will do more. Through the creation of the industrial development bank it has done a lot to help small industry. What has it done to help the automobile industry? I suggest, Mr. Speaker, that the automobile and truck industries have contributed more to the growth of the small loan companies and the moneylenders of this country than any other commodity. Why could the government not consider the creation of a crown company to make money available at reasonable rates of interest to those people who are employed in the trucking industry? This would make it possible for the small loans companies, the finance
Interest Act
companies and other types of moneylenders to have more money available and if they had an excess of cash I am sure the rate of interest, about which we are concerned, would automatically come down to a more reasonable level.
The high interest rate is the main cause of inflation. This bill itself would not curb it. A few years ago if a man was in debt he might lose his job if his employer found out about it. I have had examples of people having garnishee orders served upon them, and as a result they advised me that if the judgment were not paid in full the employer would not keep them on the payroll. The finance companies have, in this one instance in my opinion, done quite a service to the public in permitting some people to consolidate their debts. This has given these people some peace of mind.
My main criticism of the finance companies is the type of advertising they put out. In today's Globe and Mail there is an ad which I saw at five o'clock. It is in the classified pages and reads:
Second mortgages, $2.49 Interest weekly-
Then the words, "for every thousand dollars you borrow", are in small print. There follows the name of a certain mortgage company in Toronto. If the loan remained in existence for a year, this rate of interest on second mortgages would be in excess of 12 J per cent per thousand dollars, on what might be considered a fairly secured risk in the city of Toronto. If it is necessary to pay up to 12J per cent for some types of second mortgages which are secured debts, how would it be possible for finance companies to make loans at the suggested rate of interest? I believe that these advertisements must be regulated. I do not believe it is proper to advertise "Money for loan" in large black type, and then follow it in small type with the words, so much per week for every thousand dollars borrowed. I believe that the house should consider the necessity for regulating the type of advertising, and I suggest we should seriously consider making it compulsory to advertise an annual rate of interest as opposed to a weekly or monthly rate. In this way it would be possible for the average person to readily compute what he would be paying for the money borrowed, and at the same time make it convenient to compare the rates demanded by various companies.
In addition, Mr. Speaker, I believe it only fair that finance companies should be permitted to charge a rate over and above what second mortgages demand, and over and above what the banks request. In my opinion the house should give serious consideration to making it possible for the finance companies and moneylenders to itemize their

Interest Act
costs separate from their interest income. These companies maintain properties, pay office expenses, and a great many people throughout this country are employed by them. I think that the cost of the loan should be itemized separate and apart from simple interest per annum. At the present time the various financial companies, small moneylenders and retail credit vendors, have outstanding nearly $2 billion loaned to the people of Canada. This has done a good deal toward helping provide employment and keeping the industries of the country going.
As I said earlier, I would encourage the house to give serious thought to regulating the loss leader type of merchandising; to give some thought to recommending to the government that truckers, who cannot borrow except through finance companies, be entitled to borrow money, as their fellow Canadians do, from crown corporations at reasonable rates of interest; and that some regulation should be introduced governing the type of down payment that vendors in this country must insist upon. This would discourage people from buying things that they cannot afford. I know that it looks relatively easy to put out a dollar or two dollars a month to buy a certain article or piece of household equipment. However, when you add these payments on to the payments to which people have been previously committed for other types of merchandise, it does not take long before people have become indebted to 15 or 20 creditors, which makes it impossible on pay day to give each and every one of them 50 cents or a dollar.
All of these suggestions which I have mentioned would automatically reduce the volume of business that the moneylenders are doing. As I said before, if their business is reduced, they will have an excess of cash available and money will be lent by them at more reasonable rates.
In conclusion, I wish to put on the record a statement that, in my opinion, the finance companies and the moneylenders of this country have done a service to this country. I refer to an editorial which appeared in The Albertan on Wednesday, April 4, 1956. This editorial is long but I intend to put only a couple of paragraphs on the record. It is entitled "The Small Loans Business" and it reads in part:
The C.C.F. members of parliament have been opposing two private bills having to do with small loans companies. One would give a company already in business a more attractive name, the other would incorporate an American company which happens to have the national president of the Liberal party as one of its dummy directors-
Later on the editorial states as follows:
The Albertan has no sympathy with the practice of levying exorbitant interest. We acknowledge the

seeming injustice of people most desperately in need of money having to pay the highest rates of interest.
With that paragraph I am in complete agreement as, I am sure, are all members of this honourable house. The editorial states further:
Banks and mortgage firms offer money at reasonable rates. If the borrower can't qualify for a loan there, in most cases he could have been an active member of a credit union and borrowed from it. Credit unions more and more are meeting the need for small loans, and still they have a long way to go before they have reached the limit of their possible expansion.
The concluding paragraph of the editorial states as follows:
We doubt that there is any more moral justification for government controls on the price of money than on the price of housing rental, the price of automobiles, or the price of pickles. Anyone who objects to the price someone else is charging is free to offer that commodity at a lower price.
In conclusion, Mr. Speaker, I wish to state that this editorial expresses in most certain terms most of my thinking on this important bill.


Mr. E. J. Broome (Vancouver South):: Mr. Speaker, I am sure all members of the house are in sympathy with the intent of this bill. The problem of usury has faced governments and peoples down through all written history. In his introduction to the bill the sponsor of it stated that this bill would control part of the area of small loans. He pointed out that as to small loans companies the ceiling on their loans on which control was exercised had been raised from $500 to $1,500. This was done under the former minister of finance, Hon. Walter Harris.
I spent some time going back and reading some of the statements made during the sittings of that committee. I found many of them to be pertinent to the bill that is now under consideration. It was pointed out that the degree of risk inevitably was reflected in a higher rate of interest; that if a person is not a good credit risk, he pays more for his money. The problem, of course, is how to legislate people into dealing prudently with their resources or how to legislate people into being good financial managers of the resources they may have. I believe that is a problem that would stick even our friends in the C.C.F. group. It comes back to human nature.
The hon. member for Assiniboia (Mr. Argue) makes a passing reference to this matter as reported at page 949 of Hansard. He states as follows:
Canadians need credit. They have to have credit, and when they have to have credit they are forced to pay these fantastic rates of interest. I am suggesting that the government should take action in this field, and should study this whole question.

With all the good will in the world towards the intent of this bill, Mr. Speaker, may I say that the statement made by the hon. member is certainly open to question. Canadians need credit. Everybody needs credit. Our whole business economy is fashioned and based upon an extensive credit system. But we need credit within the resources which we have and which will allow us to repay the loans we receive. If a person is making $4,000 a year and that is the extent of his resources, I doubt whether that person would be a good credit risk for a loan of $40,000 or $50,000.
I well remember that, in canvassing in the election of June, 1957, I met a lady who said to me, "Why can't you do something about these loan sharks?" She was referring to the way in which the future of borrowers is mortgaged to the point where they have no reserve whatsoever for any eventuality that might come up, where they are prisoners of their own enthusiastic buying. After discussing the matter for a little while, she came to the conclusion that they would work their own way out of it, that they would never get caught again but also that this tale of their experience would not help their neighbours who would have to find out for themselves.
I know of other cases about which I have been told where a cash sale has been refused at the price originally offered because the salesman expected that it would be a time payment matter. It was quite clear that the interest rate would be quite high, and that is where the profit of the sale lay.
The advertising mentioned by the hon. member who spoke previously can be seen when you walk down the streets. It seems to me that the largest customers of the neon companies are the loan companies because, wherever you look you find there is one advertisement after another staring at you. Their advertising is to be found in the busses as well as in the newspapers. But at the same time these people give a useful service in the way of advancing credit which the person receiving that credit could not normally secure.
Credit unions have been mentioned. I helped to found a credit union. Over the years I have periodically had loans from that credit union and I paid 12 per cent interest. It is true that I obtained a rebate but the rebate was not very much. There is little risk to a credit union. They know everybody in it. The greater part of the loans they make are secured. Nevertheless they still are obliged to charge that interest rate in order to break even. This is a nonprofit organization.
Interest Act
We have heard from the superintendent of insurance of the success of the Bank of Nova Scotia small loans plan. I believe the Bank of Nova Scotia was the first chartered bank to go into that field, but even there you pay 12 per cent. I am not arguing that there is no need for control. I would say that the interest rates as set up in the present Small Loans Act are reasonable, because those interest rates reflect the fact that small loans are more expensive to carry and operate than large loans. As the hon. member for Assiniboia undoubtedly knows, on the first $500 the interest rate is 18 per cent, and after that, from $500 to $1,500, it drops to 12 per cent. The intent of this bill would be to raise that ceiling indefinitely, and on that basis the principle is good because the larger the loan the less money it should cost the loan company. However, the only result will be that those loan companies will have become more selective and will have to refuse credit, which perhaps may be a good thing.
I think the hon. member for Assiniboia is certainly not reasonable in his statement which I have referred to, where on one side he says there should be almost unlimited credit, and on the other side he says interest rates should be controlled. Those two things just do not go together. That is another reason why the amendment to send this bill to a committee for further study is a proper amendment. Because a few years back it was wise and right to raise the ceiling to $1,500, perhaps the proper course is not to take the recommendation of the hon. member for Assiniboia in toto but maybe that after study the upper limit should be raised to $2,500 or even $3,500, I do not know. But those facts can be brought out if this bill is referred to a committee to thoroughly investigate the situation.
I do wish to refer to the remarks made by the previous speaker in regard to misleading advertising. I believe that is a subject which has been brought up in the house before and it is pertinent to this particular measure. Misleading advertising in regard to small loans is the sort of thing where you get the small print, where the rate is stated as $10 or $100 and you do not get the rate of interest you are paying per annum, because the original amount of the loan starts to reduce one month later and the interest rate which you may appear to be paying simply does not reflect the true interest rate which in fact you are paying. I think there is room for control there, and I believe further control is needed in the field touched upon in the hon. member's

Interest Act
bill. I do say that in correcting one evil we may jump into or subject ourselves to worse evils.
The whole point, as I suggested at first, is that you cannot legislate people into being good financial managers. If a person wants a loan and there is a law which says he cannot have it, there are always people available to help him break the law by means of turning back a certain amount of the loan and the face value of the loan does not reflect the amount of money he receives, and so on. The fact that the law can be broken is no reason why one should not be there. But whatever law is enacted, it must be enforceable. It must have safeguards in it and it must be reasonable.
I would like to try to find words properly to describe how I feel in regard to the practice of holding people up with fantastic interest rates, and on top of that to make tremendous discounts on the face value of a mortgage. Perhaps a person should not take out a second mortgage, but in many cases people are forced to. They must have a house to live in because they have children and they cannot rent a house. In that last respect if we had more rental accommodation or had some law which compelled landlords to take in families, perhaps matters might improve. Therefore this person is faced with the necessity of acquiring a basic essential of married life, namely a home. If he never makes another mistake in his life, or never has to buy anything else on terms, that one purchase can put him behind for 15, 20, 25 years, because of the bonus which he may have to pay if he has not enough money to make a big enough down payment so that a first mortgage would carry the balance. In that field I have thought that Central Mortgage and Housing Corporation might perhaps enter. It may be a field which should be considered entirely separately from the particular point brought out by the member for Assiniboia.
In conclusion, Mr. Speaker, I am sure no hon. member wants to see unreasonable interest charges and bonuses imposed on people because they have to have something. We believe that where it is possible the government needs to control the situation. Such a committee I think might well investigate the legislation which other countries have on their books, for example, Denmark, Norway, Sweden, the United Kingdom and the United States. But in the final analysis, any legislation which is evolved must be legislation which is fair and which is enforceable.


Hazen Robert Argue: Mr. Speaker, this bill has been before the house a number
of times and we are now debating an amendment that was moved to the bill on February 12. The amendment reads as follows:
That the bill be not now read a second time but that the subject matter thereof be referred to the standing committee on banking and commerce.
Although different attitudes are taken from time to time regarding an amendment of that type, it is usually considered that, at least for the time being, it sets aside the bill under discussion and refers not the bill itself but the subject matter thereof to a committee. Mr. Speaker, we have seen a lot of tears- I do not know if they are crocodile tears or not-being shed with regard to the welfare of Canadians who have to pay exorbitant rates of interest. Some members when discussing this bill have complained of the one per cent figure, or the rate of approximately 12 per cent per year. They have said: "Where did you get the figure? Did you pull it out of a hat? Why this figure? Isn't it too low? Won't it cause the companies too much hardship if the rates are reduced to that amount?" Mr. Speaker, I do not think I got the figure out of a hat. It is the rate charged by credit unions in this country, the maximum rate. A great many of them charge less, but as far as I know it is the maximum rate which is charged by credit unions. The credit unions have done a very excellent type of business. They have made a good saving for their customers. They have grown, and I think it is the very maximum rate which should be allowed at this time.
Although the adoption of the amendment before the house would not result in any heady progress with this matter, I do suggest that the very least hon. members opposite should do would be, first of all, to permit a vote on this amendment and, second, to support it. Then they will not be embarrassed, if indeed it is an embarrassment, by having to decide whether or not they think the 12 per cent figure is a correct one. They would be making it possible for the banking and commerce committee of this house to study the question of interest rates and to study the subject matter of the bill, and, I hope, after studying the subject, to take action which would result in the lowering of interest rates.
I have in my hand the Toronto Star for today. I sent for it a short time ago, and I noticed on the front page a heading: "Demand Ottawa Probe 50 per cent Mortgage Bonus". The article reads:
Richmond Hill council last night called for a federal judicial inquiry into the practice of some mortgagors charging up to 50 per cent bonuses for second mortgages in new town subdivision. Coun. James Haggard explained that to get a second

mortgage of $5,000 some homeowners must pay an additional $2,500 as a bonus. This must be paid back with interest.
A resolution calling for the inquiry was passed unanimously. Copies will go to the Ontario minister of planning and development and the Toronto real estate board, council decided.
All Metropolitan Toronto municipalities will be asked to support the Richmond Hill resolution.
The passage of the amendment to this bill will enable this inquiry to proceed immediately in Ottawa before the banking and commerce committee and we could find out whether this nefarious practice, this legal gangsterism which is referred to in this article, should be allowed to continue unchallenged in this country. By talking about this measure and preventing it from coming to a vote, hon. members opposite must accept responsibility for these abhorrent practices being continued. I think it is a disgrace to the free enterprise economy which hon. members opposite champion so strongly that Canadian homeowners should have to pay a bonus on second mortgages reaching the staggering amount of $2,500 on a mortgage of $5,000.
If hon. gentlemen will vote on this amendment, and if the amendment is carried, it will not cause political embarrassment. Surely the whip will not be hard on them; surely the whip will not chastise them; surely, even the Minister of Finance (Mr. Fleming) will not instigate disciplinary action, because all this would do would be to allow a committee of this house to hear witnesses, take evidence and see whether or not in the opinion of the committee action should be taken in this regard.
I challenge hon. members opposite to quit this farce of talking out this measure time after time, this farce of preventing, by talk, members of this house taking a decision and, by talking out the measure, making it impossible for people in this instance and in many other instances who wish to obtain homes to obtain those homes, and obtain second mortgages, unless they pay staggering and fabulous rates of interest.
The rates of interest charged in this country are not going down. The present government, by its high interest policy, is promoting, aiding and abetting a continuation of this type of gangsterism in the interest field. The government has allowed the rediscount rate to reach the highest interest rate in the history of this country. The tight money policy of the former administration was just a joke compared to the rigid high interest policy of the present administration; apparently there is no limit to be placed upon it. My appeal today is for the government to allow this amendment to go to a vote so that members of parliament may study this question. Then 66968-9-257
Interest Act
let us take action in the interest of the ordinary Canadian to reduce and limit these fantastic interest charges.


Mr. N. L. Spencer (Essex West):: I was
surprised to hear the sponsor of this bill reentering this debate to support the amendment made to his motion.


Hazen Robert Argue: Better than killing it by talking it out.


Norman Leonard Spencer: No one has spent more time in talking about bills and talking a lot of nonsense than has the hon. member who sponsors this measure, and I do not think he made any contribution toward furthering the passage of this bill by the remarks he made, if he sincerely intended that it should pass.
I think it is obvious that there is a general feeling in this house that some kind of control of interest rates should be adopted. This bill, when one considers it, is an all-embracing bill in that it defines and covers not only interest as we understand it but all manner of charges including discounts and penalties. I do not think that we can, by a simple formula of specifying a rate per annum based upon the size of a loan, arrive at a figure which would be fair and reasonable and just in all circumstances.
I think that this bill has created a forum for the making of a lot of extravagant and unjustified statements. I have no sympathy with so-called loan sharks, but I do not think it is fair to those who are engaged in the legitimate business of lending money to classify them in a general way of being loan sharks. Neither do I think it is proper for members of this house to rely on newspaper statements and accept those statements as being full statements of all the information on those subjects, and to refer to those involved in terms of gangsterism. I know that in this country we do have elements of gangsterism, but they are certainly not confined to the interest field as the hon. gentleman would have us believe.
This question has two sides like so many other questions and issues that arise from day to day in our daily lives. I think it is generally agreed, as is indicated by the remarks of those who have thus far taken part in this debate, that there is a need for legislation for regulating interest and other charges of a like nature such as commissions, bonuses, investigating charges and perhaps recording and renewal charges, but when you take into account penalties, fines and charges for defaults as is the case in this bill then you are, of course, stepping into a realm of figures just as fantastic as most of the figures we have heard related in this house as being

Interest Act
charges which are unconscionable and unreasonable. Over the years we have accepted penalties as being reasonable but when they are applied and determined on the basis of an annual rate they become unreasonable.
We know, for instance, of utilities that impose a penalty for non-payment of bills which is applied on the first day of the default. It is true that the penalty may be the same whether the default continues for thirty days or even longer but the fact remains that the penalty is imposed on the first day of default. When that is determined as a rate per annum then we enter the realm of percentages ranging from 20 to 50 per cent per annum.
The bill also deals with discounts. Here again we find that premiums are granted for prompt payment. When those are projected into percentages per annum we again find that we reach fantastic rates.
Another objection I have to the bill which I do not believe could be cured by passing the amendment and referring it to the banking and commerce committee is that it is deficient in many respects. I have no doubt that what is in mind in connection with this legislation is the small loan. Of course, we have some legislation in existence dealing with the exacting of interest and maximum rates of interest on small loans. I believe that if we are going to legislate in respect of loans then there should be some limitation in connection with loans on real estate as well. Of course, when we consider that factor we come to the question of security. That again is something not taken into account in the bill now before the house and no attempt is made to spell it out.
Everyone knows that the element of risk has a great deal to do with interest. That may be manifested in many ways but it does obtain very generally in the money market and in the security market.
No one would suggest, for instance, that a loan of a modest amount of money, perhaps to the extent of 25 per cent of the value of a first class real estate property and secured by way of a first mortgage should carry with it a rate as high as if the loan were up to 75 per cent of the value. Instead of criticizing and casting aspersions upon the government of the day in so far as its record in the field of loans is concerned, I think the hon. member for Assiniboia (Mr. Argue) might well have congratulated the government and also might well have mentioned what I consider to be a most significant statement made today concerning the intention of the government to keep the rate on first mortgages down to 6 per cent per annum. That is of much more significance than all our time-consuming debates on small loans.

I know of instances where rates far in excess of 6 per cent are now being exacted on mortgages and I believe the average rate is about 6J per cent. When that is projected over a period of 30 years the borrower really becomes burdened. There is no great burden in his having to pay anywhere from $1 to $5 in interest even though that may represent interest in excess of 12 per cent per annum but when a home owner has to pay an annual rate of interest in excess of 6 per cent which I think should be the maximum rate payable on a home loan and when one considers the length of the term of the mortgage one realizes that it runs into substantial sums of money.


The Acting Speaker (Mr. Rea):: It being six o'clock I do now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Mr. Churchill for the second reading of Bill No. C-49, to provide for the establishment of a national energy board, and the amendment thereto of Mr. Peters.
George James McIlraith: Mr. Speaker, when this debate was adjourned for private members' hour I was dealing with some of the remarks of the Prime Minister. I had been seeking to deal with his charge that the former government should have provided an energy board and his reference to it being referred to in the Gordon commission report on Canada's economic prospects. I was dealing with his having asked the then minister of trade and commerce on January 15, 1957 whether he was going to set up a national energy authority and his statement that the minister had replied that he had not considered the matter, that the decision would be a matter for the government and he did not care to express an opinion then. It was at that point in my remarks that the interruption in this debate occurred.
I want to continue my argument by pointing out that the Gordon preliminary report had been tabled on January 10, 1957, some five days earlier. It had been made available to the government either in December of 1956 or early January of 1957. Therefore up to that time there had been no opportunity to consider the matter at all. I also

want to point out that the report made reference to a special study being carried out with regard to Canada's energy prospects. That study bears date of March, 1957, and was tabled in the house on November 22, 1957, after the change of government. That report would presumably be a basic document in considering the Gordon report recommendations on this subject. Therefore, bearing in mind that parliament was dissolved on April 12, 1957, it was wholly misleading to the house to suggest that there was an opportunity for the previous government to consider the Gordon commission report on the subject of energy and to deal with it.
Reference was also made to Mr. Lesage, then minister of northern affairs and national resources, and it was asserted that he had been opposed to the setting up of such an authority. In that regard reference was made to a debate but the Prime Minister gave no page reference to Hansard for the then minister's speech. We were left without being able to identify the exact page when the Prime Minister made the assertion. It now turns out that the matter under discussion on that occasion was the whole subject of the treatment of national resources and it was not related to the subject of a national energy authority at all. Nowhere can I find any statement by Mr. Lesage which would indicate opposition to a national energy authority being set up.
Then there was another part of the remarks of the Prime Minister to which I think some reference should be made. I refer to his reading of the criteria set out in the bill for deciding whether or not a licence or certificate should be granted. Perhaps I can deal with that point very quickly. He might just as well have read the criteria from notes he might have got from the board of transport commissioners as to the procedure to be followed in dealing with pipe line applications under the old legislation. They are all there. There is nothing new or changed in the bill in that respect although there is one change in the bill in that it omits certain former legislation that had to do with the price of gas exported from Canada being not less than the price of gas sold in Canada.
Another argument made by the Prime Minister was rather interesting. He took great credit for obtaining the removal of the mandatory controls or quotas applied by the United States against the export by Canada of oil to that country. He is not modest in taking credit for some of these things but there are those who think that maybe his policy involving the famous 15 per cent trade diversion had something to do with causing such mandatory controls to be imposed in the first place.
66968-9-257i
National Energy Board In any event, granting him credit for having such influence with the United States government as to have that government remove these quota controls, I think his attention ought to be drawn to an article in the Montreal Gazette of Tuesday, May 26, 1959. That article is headed, "Crude Oil Exemption Political Convenience". Perhaps I should read part of the article. I should like to read it all but time does not permit me to do so. It reads in part as follows:
The possibility of any substantial increase in American imports of Canadian crude seems more remote than ever, despite the exemption of Canadian crude from import quotas and the encouraging 20,000 to 30,000 barrels daily increase scheduled for Puget Sound refineries.
The reason for this gloomy assessment is found in section 2, paragraph (c) (11) of the presidential proclamation exempting Canadian oil from the quota. The substance of the paragraph is that the quotas will be re-established if Canadian oil begins to flow in large volume.
It looks as if all the United States has done is to remove a political source of irritation without forfeiting the economic advantages to its producers of the quotas.
Canadian oil, it should be remembered, seldom, if ever, was imported into the United States to the full extent permitted by the quotas. The recession was most often cited in explanation for this. It is now quite apparent other considerations were at work.
The most obvious of these has been the pressure upon American-based international oil companies to keep facilities, refineries, pipe lines and tankers designed for off-shore oil running at maximum capacity.
The initial imposition of quotas was followed by elaborate swap-out arrangements between these companies and between them and American independent producers and refiners, all directed towards concentrating import volume where it would yield the most profitable return.
Canadian oil, while cheaper than American oil in some border markets and in the American northwest, had small attraction to American refiners in these circumstances. The subsequent exemption of Canadian oil has made little difference.
There is a lot more to the editorial but the point I want to make is that the Prime Minister's remarks on that aspect of the subject were something less than complete and put a better picture on the position of Canadian exporters than the facts warrant at the present time. Then the Prime Minister went on to say that the bill-


Mr. Lambert:: Would the hon. member permit a question? Would he not agree though that this has removed a very definite trend in the other direction?


George James McIlraith: I have a very short period of time left. I do not want to prevent the hon. member from asking a question because I know he is interested in the subject. The answer is that undoubtedly it helped remove a handicap to our export volume. Of course it did. The Prime Minister then went on to indicate that the bill removed the suspicion

National Energy Board that Canadian industries will be asked to pay a higher price for their energy than that paid by foreign industries using Canadian energy. At that point in his remarks he was referring to gas. I want to point out just how loose that statement is.
How is he going to control the price that foreign industries have to pay for the natural gas they import from Canada? A large public utility in the United States, using vast quantities of gas from a number of sources, may very properly and very probably be taking a small percentage of its total quantity from Canadian sources, and the Canadian government has no control over the retail price charged by this company to its consumers, especially if the bulk of its supplies come from sources within the United States at a lower cost because of proximity or other reasons.
What he undoubtedly was seeking to refer to was his hope that there would be no export at prices lower than those charged to Canadian industry. However, that is quite a different thing from what he said in his argument. I point that out to show how loose his argument was this afternoon, and how misleading it could be.


Mr. Speaker:: Order; I am sorry to interrupt the hon. member, but his time has expired.


Mr. A. R. Smith (Calgary South):: Mr. Speaker, it is not my intention to take a great deal of the time of the house in adding to the many remarks and observations which have been made during this debate and which I think we will all agree have been, for the most part, of a constructive nature. I have had occasion to express my views before in relation to the problems of import and export, so there is no need to repeat them except as they apply directly to this bill.
It has occurred to me though, Mr. Speaker, in listening to the discussion thus far that we have reached a point in the motion for second reading of the bill presented to us where those of us sitting in our seats in the house or people sitting in the galleries might find it confusing to try to ascertain exactly what we are endeavouring to determine in so far as the objectives of an energy bill are concerned. I fully recognize that I am not the last speaker, nor am I setting myself up as an authority to determine how to summarize the debate thus far. It would, of course, be suggested by more than one member on the opposition side that my view would be prejudiced. However, if for no other reason than to try to clarify my own thinking, I propose to try to separate the various arguments in their generalities so that we can come to some basic conclusions on which to either agree or disagree.

I can do no better than to start with the argument of the hon. member for Villeneuve (Mr. Dumas), who opened the debate from the standpoint of the opposition. I join with the Prime Minister (Mr. Diefenbaker) who complimented him. I think the Prime Minister described it as a thoughtful contribution, and I would add that I think it was generally objective. His basic objections, as I understood them, were that there was really no difference between this piece of legislation we have before us and the situation in which the petroleum and natural gas industry found itself in the past.
You will recall, sir, he then went on to say that we, as a government, had rejected or repudiated the Borden commission recommendations. There was, of course, some inconsistency there because one of his colleagues who followed him pointed out that the government had accepted some 23 of the recommendations and had rejected only 11. The point of his argument was that we had not employed-these are my own words-some of the tired, old Liberal ideas that had been left on the shelf for years. We had not put them into force as part of this energy bill. He quoted at length from Mr. John Davis who did a very fine job in the interests of the Gordon commission. He suggested that the government had not shown sufficient speed because they had sufficient material to establish an energy board, had they used the Gordon commission as a basis.
I wonder if the hon. member would reflect, first of all on the fact that this commission held its hearings some time ago, and certainly some time before the rather extreme changes which occurred in the economics of the industry. I believe that Mr. Davis might concede that he did not make as extensive a study or examination as Mr. Borden and his colleagues, and certainly his report would have needed updating. More important, the problems that he was asked by the commission to investigate were much broader than those objectives of the Borden commission, upon whose recommendations this energy bill is based. From one side of the house we have heard criticisms to the effect that the government has introduced more of the recommendations than it should, and from others we hear that it has not introduced enough.
Perhaps it is important to note that this government did not ignore the Borden royal commission recommendations as has been the habit for many years past of the previous governments, but rather it took the best from this report and rejected the balance. After all, that is their responsibility. I have, on more than one occasion, joined the critics in suggesting that Mr. Borden and his colleagues, first of all, did make a fine contribution to energy

resources in Canada by establishing a vast array of material for the development of a national oil and gas policy. I have also said that many of their recommendations, as I intend to show, have been adopted in this bill and will be beneficial, not only to the industry but to the consumer as well. As I have had occasion in the past to tell my friends in the oil industry, this commission was not established for any one particular group. It was established for the benefit of the public, regardless of whether they were developers of resources or just consumers.
The criticism which I have repeated many times in relation to the weakness in the Borden commission report-I think it is a human weakness-is that it fails above everything else in some of its recommendations to recognize that this is a business which involves great risks; great capital investment is required. I have been endeavouring to impress this on the house since I was first sent here. When one recalls that this industry spend a million and a half dollars a day in looking for these resources, it is quite obvious it is an undertaking that involves substantial capital and the risk factor is extreme.
I am going to leave this question and go on to the principal differences which the hon. member for Villeneuve says exist to the detriment of the industry. First of all, a board was established, and the Prime Minister dealt with that. I feel I certainly could not add to his remarks. A board was established, and that is something of which we should not lose sight.
Second, its advisory functions, I think, have not been given the weight or have not been put in the perspective in which they should have been put by many of the hon. members who have spoken. We hear to a considerable degree some of the comments with regard to the problems, first of all, in relation to the federal power commission of the United States and the problems of equating the amount of the reserves which are going to be required for Canadian consumption. These must be related also to the gas and oil that we anticipate to find, and the research that must be continually done in co-operation with the provinces. These are functions of an advisory nature which have never been carried out before and which will be carried out by this board. This is a second difference between what today we may look forward to and what has happened in the past.
A third rather distinct difference between what this bill proposes and what we have seen in the past is the simplification by which an applicant can appear before an agency of government to determine whether he has the right to construct a pipe line, and equally
National Energy Board important whether he has a right to export a hydrocarbon product. We know that under the old process it was necessary first of all to appear before the board of transport commissioners in order to obtain what we call a certificate of public convenience and this was given to the applicant who if successful received consent in the form of a certificate. He then had an additional problem of appealing through a second act for power to export. This gave him a licence, provided the minister conceded that this was acceptable. It was partly a discretionary power however.
I suggest that had this discretionary power been removed, had the present energy board been in force some three years ago and had the right of a public hearing been granted to Trans-Canada Pipe Lines in their initial application for an export permit, we would never have seen the situation by which this company eventually was asked to bring into the house an unprepared case and then drag out a hearing before the House of Commons in the pipe line debate. I am not suggesting that parliament should not have had that opportunity. But here we saw the minister of that government attempting to negotiate a contract which should have been the right of a public board, a body that would have had the opportunity to weigh the evidence, that would have been able to call witnesses and have them examined, and then to produce a finished recommendation on which the representatives of the people could then make a determination whether it was in the best interests of the people to grant a permit. It would have then been unnecessary to drag this long and extended application through the parliament of Canada. That is indeed a distinct difference between what we will see today and what has taken place in the past. But let me go on.
We have in this bill-and again repetition is unnecessary because the Prime Minister has dealt with the matter-provided for greater Canadian participation. I should like to say here that there is in some quarters in Canada a feeling that those involved in the petroleum industry of those outside it in western Canada are somewhat resentful of this suggestion. Believe me, Mr. Speaker, there are no more loyal Canadians, either in or outside of the petroleum industry, than there are in western Canada. We believe in the rights of Canadians no matter where those Canadians may live. We welcome Canadian participation as an inclusion in this bill.
Then we have, of course, the question of the regulation of tolls; and in this matter we see again the separation, in the past
performance of a government which saw
4040	HOUSE OF
National Energy Board no reason to regulate tolls in so far as they applied to gas. Indeed, this is another change in this bill which marks, so far as I have been able to count them, the fifth major change to date. I propose, Mr. Speaker, to make reference to others at a later point. But in discussing the change in the exercising or maintaining of a toll rate on gas lines, I should like to make what I hope will be construed by the hon. gentlemen on your left as an assessment which is done in all fairness of their arguments.
They have expressed considerable approval over Mr. Borden's recommendation of a fixed rate of return and asked whether something more stringent was still not necessary, something that was going to prevent the extreme profits of their Texas buccaneer from recurring.
I recall the hon. member for Assiniboia (Mr. Argue) dealing with the options which were granted to a group of executives of three companies in particular. At most they were a handful of men. I say very quickly that I do not justify extended options. I am not making a case for these gentlemen. They have been entitled to speak for themselves. However, what I say is this. Let us remember that when you fix a rate of return, when you apply any fixed formula controlling these returns, while it might have some influence on the Texas buccaneers, I suggest to them that it would also destroy completely the value of the shares, either present or future, held by many Canadians. Equally important, it would in my view eliminate the possibility of the construction of future pipe lines, certainly with private capital. Recognizing the difference in our ideologies, perhaps that matter is not of any real concern to them.
I suggest that we should remember that in one pipe line company alone-one which has been subjected to considerable publicity in this house-namely Trans-Canada Pipe Lines, there are 30,000 Canadians who would be affected as shareholders. They represent about 70 per cent of the share capital of that company. I suggest that when they invested their money as equity in this company they did so in the hope or the belief that it would not be interfered with by undue government regulation. It should be remembered that the principle of return based upon equity implies more rigorous control than we have ever experienced in Canadian industry. Certainly in peacetime, to regulate the return on equity we would have to decide whether the company could borrow money; if so, when and how much; and, finally of course, what rate of interest the bonds should pay and perhaps even who should buy them.

National Energy Board great bodies of ore, lead, zinc and iron which can be upgraded to a considerable degree and therefore utilized in a finished product within Canada. I suggest that here again is a matter to which the advisory board will certainly make a useful contribution.
On the question of any infringement on provincial rights, I was happy to hear the minister say in his statement that every effort had been made to avoid this. It was his view, I understood him to say, that there was no indication of any such infringement. Where there is any question of provincial rights it might be worthwhile, and I suggest it is worthwhile, if this problem might be referred to a body which I have often felt, while it performs a useful function, could make a more useful contribution to a board of this nature. I refer to the mines ministers' conference which, while it only meets annually, has a variety of committees which deal exactly with these and other subjects and could be used very effectively in an advisory capacity to the board as well. I point out that this consists of a group of men from industry and government in every province where there is any form of resources, and I suggest to the minister that he might usefully employ this body, to assist the energy board. I should like also to have the minister state clearly that there will be one hearing for an export permit after the order has been issued for a permit for convenience. I read the bill again at dinner time, and it did seem to me that there might be a need for clarification in this respect.
I come now to the last point I wish to make, and this concerns the remarks made by the Leader of the Opposition when he dealt, first of all, with the problem of marketing oil in Canada, and with our domestic market. I thought his concern over the delay in the introduction of this bill was touching, because the concern which we have had in the province of Alberta has been with the delay which the Liberals in that province have shown in agreeing to the exportation of natural gas. It was refreshing to hear the hon. member for Villeneuve urge that immediate action should be taken. This is in contrast with the position taken by the leader in our province and it will be interesting to see what his comments will be in view of the hon. member's statement.
Then the Leader of the Opposition talks about the fact that there are no safeguards for Canadians. It is hardly necessary for me to dignify those comments by discussing them further. They have been dealt with. There was a complete lack of recognition of the fact that there is an important clause which deals with this point. He stated his view firmly


that there is no urgency whatsoever about granting authority to the governor in council to exercise the right to license imports and exports of oil. The hon. member for Ottawa West (Mr. Mcllraith) also dealt with this point.
I say, not in any heat of battle or debate, that I somehow get the feeling that hon. gentlemen opposite just do not understand the problems with which we are confronted. We have a marketing problem which is twofold. First, we export a volume of oil into what is known as district 5 of the United States and also into the mid-west of the United States. We import vast quantities- 290,000 barrels-of foreign crude into eastern Canada into the refining area of Montreal. Our problem is, one of markets for exports and, second, a problem of whether the imports of foreign crude coming into Canada are seriously reducing the markets which western Canadian oil has captured in eastern Canada.
Western Canadian oil men have never asked for any special advantage or consideration. What they do maintain is that when this oil comes in at firesale prices, at a dump rate, and the provisions of the anti-dumping act are not such that it can be prevented, then surely some form of regulation to protect the entire Canadian economy, not a segment of it, is essential.
It seems to me we are splitting hairs in determining how we are going to apply this principle of regulation in the bill. We can recall the Leader of the Opposition in Edmonton accepting the need of establishing oil markets in eastern Canada in the event that the restrictions by the United States on the entry of Canadian oil were not lifted. He must be equally honest with himself and recognize, while we are grateful that these restrictions have been lifted, and the indications are that we are going to benefit as Canadians as a result, that there is still no certainty that this will be a continuing benefit. If we are to continue to be able to market only about 45 per cent of our possible production, if dumped crude comes in from other parts of the world at six or nine cents a barrel compared with Canadian costs of $1 a barrel, is it not essential in the interests of the Canadian economy to have some type of legislation which can be employed immediately? I suggest that no one can appreciate this problem unless he recognizes the havoc that it can create in the industry.
As I have said many times, you cannot turn on a valve when you require oil or gas and then turn it off. You have to maintain a healthy industry. That is something which is entirely dependent on markets, and on continuous markets. If we found ourselves tomorrow in a situation where there

was a vast quantity of Russian crude on our doorstep, as we were a few short weeks ago with substantial quantities of crude from Venezuela, from Borneo and from the Middle East-crude that comes in at, say, 45 cents or 60 cents a barrel-below the price of Canadian oil, are hon. members going to tell me that the eastern Canadian consumer is going to benefit for more than just a few days? What about his line of supply? What if an emergency were to occur when these supplies of foreign crude were not available?
Is anyone going to argue that it is not essential that we should maintain a healthy economy based on a continuous supply of the product, and this is the basis on which this regulation can and will be implemented as I understand it. No one likes government regulation unless it is essential. The word "protection" has indeed become a dirty word. There are occasions, however, when one must recognize that the products we build or produce in Canada from our resources are essential in order to maintain economic unity, and without that economic equality how can we maintain national unity?
I should like to make one reference to the remarks of the Prime Minister. I have long been an advocate of the need for early action with regard to the export of our surplus natural gas based on the statistics which I have given to the house on many occasions in the past. This is not a question of trying to get rid of gas for quick profits. It is part of the argument I have just advanced in favour of the necessity of maintaining a continuous supply and a continuous market. I thank the Prime Minister for his statement that every consideration is going to be given to hearing the three applications currently before the board of transport commissioners, and that they will be transferred to the energy board. I accept his suggestion that they can be heard immediately following this debate and that the board would then be in a position, as I understand it, to hear these applications without any further delay.
I do not intend to go into Premier Manning's statements now, but in view of the Prime Minister's statement I feel we could ask for no more than has been offered. I think this is a satisfactory solution. I think it will provide the answer to the producers in western Canada to say, first of all, that the gas is going to be sold when it is surplus to the requirements of Canadians and that, on the other hand, in processing applications through the energy board the rights of the Canadian consumer will be adequately protected.
In these last moments I should like to say to my friends in the house that I have on
National Energy Board a number of occasions been overly sensitive to the suggestions that the petroleum industry and those of us in western Canada generally come from the land as it is so often described as "a fast buck". If you come from Calgary or that general area or have any connection with the petroleum industry one is regarded by many people as a cross between a procurer and a pickpocket, but I may assure hon. members that neither designation is true. While some may attempt to degrade the industry and its people in holding an exaggerated conception of wealth in their minds, let them remember some basic facts in relation to the industry. First of all the petroleum and natural gas industry is the number one mineral industry in Canada. Let them also be reminded that it was the greatest single factor in western Canada's postwar development. Let them remember, too, that when one single drilling rig moves into a community employing some twenty men it immediately contributes approximately $20,000 to the economic life of that area.


Mr. Speaker:: Order. I am sorry to interrupt the hon. member but his time has expired.


John Whitney Pickersgill: Mr. Speaker, before the hon. member takes his seat, would he permit a question? My question is this. The hon. gentleman referred to Texas buccaneers. I should like to ask him if he would take exception to the investment in Canada of United States enterprises in the petroleum industry?


Arthur Smith: If I may reply to that question, Mr. Speaker, I have said on many occasions as the hon. member for Bonavista-Twillingate well knows that we in western Canada welcome capital invested in the development of our petroleum industry regardless of its nationality, whether it is foreign or domestic capital, we need it so urgently and in such quantity.


John Whitney Pickersgill: Then you do not agree with the Prime Minister (Mr. Diefenbaker).


Arthur Smith: Mr. Speaker, may I rise on a point of order and comment that there is no relationship between the statement the Prime Minister made and the comment I have just made.


John Whitney Pickersgill: We can judge that for ourselves.


Mr. M. W. Martin (Timmins):: Mr. Speaker, I listened with great interest to the remarks made by the hon. member for Calgary South (Mr. Smith) for two reasons. In the first place I have a great personal respect for the hon. gentleman and second, I realize that he has a vast knowledge of the gas and oil industry

National Energy Board through his past association and no doubt because he comes from a part of the country where this industry is prominent. I do not necessarily always agree with what he says but I have a great deal of respect for the hon. gentleman.
The hon. member mentioned one point of considerable importance. If I heard him correctly he said that his only suspicion about this bill was that should hon. members of this group ever form the federal government the bill as it stands would give them much concern at that time. Perhaps I did not understand him correctly but I gathered from his remarks that this was the only reservation he had about this bill. I should like to know how hon. gentlemen opposite can have this suspicion when there is no proof? Why should they think that hon. members in this corner of the chamber would not suspect this bill when we in this corner have ample proof gathered over the years that there is need of more teeth in this legislation? If they are suspicious without any proof how can they expect hon. members in this group not to be suspicious when we have abundant proof before us based on the experience of the past?
I was most amused this afternoon at the example of the memory of the Prime Minister (Mr. Diefenbaker). How well that hon. gentleman's memory served him in taking him back to 1944 in talking about the great and terrible thing that the Saskatchewan government did at that time. This was also referred to by the hon. member for Bow River (Mr. Woolliams) and the hon. member for Edmonton West (Mr. Lambert). The Prime Minister's memory recall amazed me because his memory is so poor concerning what he himself said just two or three years ago. Interestingly enough, in referring to 1944 the Prime Minister did not substantiate his statements any more than did the hon. member for Edmonon West who when asked to specify yesterday said he could not remember the exact events but had given his impressions.
Perhaps most amusing of all was the smoke screen the Prime Minister tried to throw about the purchase of shares in certain companies by the provincial treasury of Saskatchewan. I am sure he intended to give the impression that the government of Saskatchewan is no different from the government of Ontario or any other province but there is one distinct difference. In the words of the Prime Minister himself it was the provincial treasury of the province of Saskatchewan that owned the shares; not the provincial treasurer, but the treasury. These

shares are still owned by the people of Saskatchewan and are not owned by the cabinet ministers-
Mr. Pallet!: What about the promoters of that transaction?


Murdo William Martin: -nor the Tory friends of the Prime Minister, as we have seen in the province of Ontario. The Prime Minister did not mention that any of these shares were owned by the provincial president of the C.C.F. in Saskatchewan.
Mr. Pallet!: They are owned jointly by the government and the promoters.


Murdo William Martin: Like we have seen shares owned by the president of the Conservative party in the province of Ontario. Indeed, he made no mention of the number of shares passed on to the leader of the Liberal opposition in the province of Saskatchewan like we have seen in Ontario. There is a marked difference between the practice in the province of Saskatchewan and that in the province of Ontario and other provinces.
Thus far in the debate we have heard no hon. member on the government side of the house point out how the Canadian public is going to receive any more protection under this bill than it has received in the past. Instead of citing my own opinions for a moment I should like to refer to an expression of opinion contained in an article by Mr. John Bird which appeared in the Toronto Star of Monday, May 25, 1959:
The public was shocked by the revelations of the Borden royal commission showing the perfectly legal "killings" made by the insiders in the Trans-Canada pipeline stock set-up. To control this sort of thing in future, the Borden report recommended relating pipeline tolls to the actual amount of equity capital in the venture.
Not only members of this group are concerned about this matter but many others who do not belong to this party are equally concerned. Another interesting point is contained in the final paragraph of this article:
And so, until the board is set up and we see how it functions, and particularly until we see what yardstick it uses for determining fair tolls and how carefully it examines the financial set-up of applicants for pipe lines, we shall have no way of knowing how far the public interest is to be safeguarded.
It is not too often that members of this group can turn to the Financial Post and find agreement with our comments and observations. But much to our surprise we find that in the May 23 edition of the Financial Post the biggest part of one page is devoted to the very problem under discussion at the present time in an article by Michael Barkway. I have not studied the material there thoroughly but I find that there are at least 15 places where concern is

shown in the Financial Post article along the same lines expressed by members of this group. I think that some of these observations could very well be put on the record. The headline reads as follows: "How Ottawa Plans to Control Pipe Lines; National Energy Bill Would Regulate Rates, Tolls and Export Prices, But Standards Are Not Laid Down." The article goes on to point out in many places the views expressed by the members of this group and, indeed, expressed by myself when I spoke on this matter yesterday. The article points out that in clause after clause control is left firmly in the hands of the cabinet. The new board that is to be set up is not being given the jurisdiction that it should have. The article states:
Wide powers to regulate oil and gas pipe lines and export of electrical energy are conferred on the Cabinet-
Farther down it goes on to say that all gas and oil pipe lines which come under federal jurisdiction will require a certificate of convenience and necessity "but its issue will be subject to cabinet approval". It goes on to point out that international power lines for the export of electric power will be subject to the same cabinet approval and that the export and import of gas and export of power will be subject to regulations to be issued by the cabinet itself. We go down farther and we see there is a reference to "general cabinet regulations, within the terms of which the national energy board may grant licences". In another place it is pointed out that the decision of the board will depend on government approval in two different ways. In another place it says:
But the certificate will not be issued without government approval.
Then the article goes on to say:
The wording of the bill says: "The board may, subject to the approval of the governor in council, issue a certificate'-
And further:
But very wide discretion is left to the members of the national energy board to find a basis for setting a rate of return. It is assumed here that the board will have to set what is in effect a standard rate of return on a certain defined base. But what that may be cannot be known until cases are argued and rates set in specific cases.
And again:
But exports are to be covered by regulations issued by the cabinet-
Then there is a reference to "such terms and conditions as the cabinet prescribes". Again, we find these words: "But they must be ruled by cabinet decision". Then we have the words, "which are subject to cabinet approval". Then there is the following:
National Energy Board
Before they issue export licences, since these must be in accordance with cabinet regulations laid down before they even examine the applications.
And finally:
Decisions of the national energy board may be appealed direct to the Supreme Court of Canada on matters of law only. There is no appeal on matters of fact.
Here we see the Financial Post, which certainly by no stretch of the imagination can be classed as a C.C.F. newspaper, very much in accord with us on this most important matter. There has been some reference made to the Texas buccaneers of yesterday. I know that both from the government side and the official opposition benches there is very little talk about the Canadian buccaneers of today. I suggest that the only difference between the two is that we used to recognize the Texans by their drawl.
All members of this group have wondered just where the Liberals stand with respect to this bill. I must confess I listened very carefully to the Leader of the Opposition (Mr. Pearson) yesterday but when he finished I am afraid I was no wiser than when he started. When we find a newspaper like the Financial Post pointing out so clearly what a puppet body the proposed board is going to be, how completely under the control and domination of the cabinet it is going to be I wonder where our Liberal friends have found this new faith in the Tory party and the Tory cabinet. Where is the sham battle that we so often see between the two old parties?
Some point was made today that the board is going to have powers similar to those of the board of transport commissioners. That is not so. The board of transport commissioners has the power to make decisions subject to veto by the governor in council. From what I have been able to see from the bill this new board will have no such power. In my opinion one thing has been demonstrated very clearly not only to the house but throughout the country as a whole, namely that the huge, overwhelming majority on the government side is completely controlled by the cabinet. I think it is also equally understood and has been demonstrated on many occasions that the cabinet is completely ruled and dominated by the Prime Minister. To go one step further, Mr. Speaker, we have also seen that the Prime Minister is not even ruled by parliament itself.


Gordon Minto Churchill: Nonsense.


Murdo William Martin: We saw that very clearly demonstrated yesterday and it is reported today on page 17 of the Globe and Mail. At this time I should like to say that

National Energy Board I agree completely with the amendment proposed by the hon. member for Timiskaming (Mr. Peters) and I also recommend it for consideration to my hon. friends in the Liberal party to my left.


Ernest James Broome: Mr. Speaker, very little can be added in the closing hour or so of the debate on the bill to set up a national energy board. I should like to try to kill once and for all one red herring that has been dragged in by the official opposition. It was brought in tonight by the hon. member for Ottawa West (Mr. Mcllraith) when he referred to the 15 per cent trade diversion and the 15 per cent reduction in oil imports by the United States. In the early months of 1957 I happened to be a senior engineer with perhaps the largest pipe line contracting firm in the world. At that time the official journal of the oil industry in the United States was full of the submissions which were being made to Washington, particularly by the independent producers in Texas, asking for mandatory restrictions on oil imports, and the figure mentioned in issue after issue of this journal was 15 per cent.
The reason they were asking for this restriction was that it was claimed the independent producers in Texas were operating at about one-half maximum efficient capacity because the majority of the refining capacity was in the hands of the majors and the independents could not sell as much as they wished to the majors. The majors had enough of their own oil coming in from offshore concessions to satisfy a large part of their requirements. This 15 per cent business is about the most arrant piece of nonsense that I have heard in this house in the length of time I have been here. I am seeking very carefully for words which will not be called unparliamentary in order to describe the antics that have been gone through in this regard.
In so far as the possible control of oil imports is concerned, the hon. member for Calgary South (Mr. Smith) has made a very able speech pointing out the necessity for it. I should like to add a few remarks covering a few points which he did not mention. It is not generally known, but the approximate cost of bringing a barrel of oil to the surface is half a cent per barrel in the Near East; 65 cents in Venezuela; 90 cents in Canada and $1.20 in the United States. The reason for this, of course, is that a well in the Near East will be producing 10,000, 20,000 or 30,000 barrels per day, whereas in Canada a well will produce 20 to 30 barrels per day on the average. Our wells are operating at about half the capacity the wells in Texas were

operating when the Texas producers demanded that a state of emergency be declared and that oil imports be limited because production in Texas had dropped so low. Our western producers were in, and are in, a far worse position than the Texas producers ever were.
We have heard something about this point of commercial preference. It sounds complicated, but it is very simple. It simply means this, that the major oil companies are world wide organizations, fully integrated and owning producing fields in Venezuela, in Sumatra and in the Near East. When they import this oil they are buying it from themselves, and they can set whatever price they wish on it. They also have the advantage when they use it in their refineries of using 100 per cent of their own oil. When they use western Canadian oil, because all wells are on a pro rata system, the independents and the majors alike pump into the gathering systems according to the number of wells that they have in production and on the basis of the quota that they have been allotted by the provincial board governing that matter. Therefore, when they use Canadian oil they get only that percentage of their own oil that this percentage bears to the total production of all wells in western Canada. It is therefore much more advantageous for a company to use its own offshore oil.
It is also advantageous from the point of view that oil in Canada is safe but oil in these other areas I have mentioned is unsafe because of unstable political conditions. Mr. Harold Rea, president of the Canadian Oil Company, speaking to the Harvard club in Tulsa, Oklahoma, had this to say, and I quote:
"Large U.S. companies with substantial oil reserves in Canada, and facilities to market that oil in the U.S., should do so."
Companies should not tie up great tracts of exploratory land in Canada and put their reserves of Canadian crude in "mothballs" while, at the same time, eastern Canada must import large quantities of foreign-produced oil. Mr. Rea stated.
At the conclusion of the Borden commission hearings the oil companies voluntarily agreed that they would use more western oil in the Toronto refining area, and they would back up oil which was being refined in the Montreal area to give a greater marketing area to the refined products from Toronto. This was to increase the use of Canadian crude. They also agreed that in the oil deficiency areas of the United States, that is district No. 5 comprising Washington, Oregon and the northern part of California, those refineries which were connected by pipe line through Trans-Mountain Oil Pipe Line Company to sources of Canadian crude, would be allowed a greater degree of freedom in the amount of oil that

they purchased. In fact, they were not originally on a quota basis so far as the United States government was concerned, but so far as the operation of the oil companies is concerned they are on a quota which is based on how best they can use their reserves to make the most profits for themselves. This operation dictated the use of offshore oil.
Now, when we talk about the importation of 290,000 barrels per day of Venezuelan oil into the Montreal market, we really mean 290,000 barrels per day of United States oil because that oil comes from companies owned and controlled in the United States. It is only fair and reasonable that we should be able to use this major import as bargaining lever with the United States to promote the flow of our oil into our natural market, that is the oil deficiency area of district No. 5 in the Pacific northwest and the oil deficiency areas in the midwest United States. It is for that reason I believe the mandatory controls have been lifted. As the hon. member for Ottawa West did point out, there was an article in this morning's Gazette by Mr. Meyer, the financial editor, pointing out that even the elimination of this mandatory control still leaves the ceiling section in the regulations which prohibits the importation of Canadian oil in excess of the quota arrangements we had been given previously. I am not sure whether or not Mr. Meyer has properly interpreted the regulations, but if he has we can only gain back the ground we have lost, and that will not be satisfactory. It is for this reason that in this bill the government is being given the power to use this importation of 290,000 barrels of oil per day as a bargaining lever. If it does not work out that way, then there is always the alternative of supplying our own oil to this major Canadian market.
So far as the companies are concerned, as I have tried to point out, through commercial preference and the integrated operation between the producing fields and the refining and distributing set-up, the world wide company can pretty well set what price it wants to set on its own oil; but that price means nothing.
But what does mean something, incidentally, is that the underdeveloped countries are demanding a greater and greater share in the profits from the mining of their oil. Where Anglo-Iranian could get by with a 25-75 split, Aramco today are signing contracts on a 60-40 basis, with 60 per cent for Saudi Arabia. Hence the costs of this so-called cheap oil are going up. There is still that major factor of the political instability of these countries and the necessity for the international oil companies to plow back into those countries revenues in the form of royalties
National Energy Board in order to maintain the government which they have. This is their problem; it is not ours.
Reverting to the question of natural gas, there is one point on which I will disagree with my friend the hon. member for Calgary South, namely with regard to Trans-Canada Pipe Lines Company. Trans-Canada today is a good company controlled by Canadians. As the hon. member pointed out, some 80,000 Canadians have shares in it. I have talked to the president. The company has almost 100 per cent Canadian personnel now and in every respect it is a good company. It is a good company for the people of Canada and a good company for its own employees. When that company was set up I believe the names which would appear as the largest shareholders start off with Mr. Murchison and run through the gamut of the so-called Texas buccaneers. These people sold out. They sold out their cheap stock at a fairly good price to people like Home Oil and others. Canadians paid good prices for this stock which these people obtained as a gift through the policies of the previous administration.
I should like to make particular reference to gas as it affects Vancouver. I will quote from an editorial of Thursday, February 20, 1958 which appeared in the Vancouver Province. It has to do with the sale price of gas to the Pacific Northwest Pipe Line Company and to the British Columbia Electric Company. This editorial is headed "Bilked on our own gas" and it reads in part as follows:
The Borden commission in its Calgary hearings has already laid bare, and in fact openly suggests, that the Canadian public is being bilked in the promotion and sale of its natural gas.
The situation in British Columbia is presently under examination. Distributors in the United States are buying our natural gas at the border for 22 cents a thousand cubic feet. Canadian distributors pay 32 cents a thousand cubic feet.
The Westcoast Transmission Co. Ltd. has made a 20-year contract to deliver natural gas from northern B.C. and Alberta to the Pacific Northwest-
That is Pacific Northwest Pipe Line Corporation.
-for 22 cents.
The chairman of the commission, Henry Borden, has been moved to comment in open hearings that this export of Canadian gas is "unprofitable."
The editorial goes on to say this:
Commission counsel has shown that it costs 24 cents to deliver the gas to the border. He has also suggested that any profit on this kind of operations must come out of the Canadian consumer.
The editorial is broken into two parts. In the second half it goes on to state as follows:
The gas-price situation being examined by the Borden commission could-and should-brew up into a first-class political scandal.
During their years in power the Liberals insisted repeatedly that their policy was to protect the interests of Canadian gas consumers.

National Energy Board
On March 13, 1953, the then minister of trade and commerce, Mr. C. D. Howe, declared proudly that while the Conservatives were talking of a "Canada first" gas policy, the Liberals went farther: their policy was "Canada always."
On April 15, 1953, announcing the granting of a 22-year permit to Westcoast Transmission, Mr. Howe said flatly in Commons that "the interests of British Columbia customers will be protected."
On June 4, 1956, the then minister of finance, Mr. Walter Harris, quoted regulation No. 9 of the Exportation of Power and Fluids and Importation of Gas Act, and said:
"This means, Mr. Speaker, that when a licence is granted for the export of gas out of Canada-and that licence has not yet been granted-it is going to be subject to these regulations, and these regulations will be enforced by the government of Canada to see that the export of gas is not at a price lower than the price for gas supplied in Canada."
What is regulation No. 9? It was quoted by the Prime Minister (Mr. Diefenbaker) this afternoon.
The said regulation No. 9, drafted by the Liberal government, reads: "The price charged by a licencee for power or gas exported by him shall not be lower than the price at which power or gas, respectively, is supplied by him or his supplier in similar quantities and under similar conditions of sale for consumpton in Canada."
The loophole is the phrase "in similar quantities and under similar conditions of sale."
The Borden report went into great detail on this matter. I should like to say that this condition came about through no fault of Westcoast Transmission. The promoters of Westcoast Transmission spent great sums of money and had brought it to the point where it had no future because they were denied the right to export gas to the United States. It looked like a lost cause. When they were offered this arrangement from Pacific Northwest they were obliged to accept or see the whole project fall through completely. I have been up around Dawson Creek where the hon. member for Cariboo (Mr. Henderson) lives and Fort St. John and Taylor. He can tell you better than I of the industrial activity and the vitality that has come to that country through the building of this gas pipe line. But that is not to say that we should not expect to get these benefits in the future without sacrificing any part of our birthright.
The Pacific Northwest Company drove a hard bargain with Westcoast Transmission. I now quote from page 17 of the Borden report which states as follows:
In December, 1954, as a part of the consideration for executing the gas purchase contract with Westcoast, Pacific Northwest demanded a 50 per cent share interest in Westcoast but accepted an option, dated December 11, 1954, in favour of one K.S. Adams, to purchase common shares equivalent to 25 per cent of the common shares of Westcoast outstanding after its public financing and at the price at which shares would be offered to the public.
The result of this was that Pacific Northwest acquired 1,127,750 of its common shares

at the price of $5 per share. Those shares were $16 on the market right after the public offering. So we have this United States company paying far less for their gas than does the Canadian distributor which incidentally is taking off at the same take-off point as the United States company. The United States company to boot has obtained 25 per cent of the stock of the transmission line. Finally, any profits made by the transmission company will be made on the sale of gas to Canadians and the United States company will get 25 per cent of that amount also. This is the sort of thing that is meant in this bill in clause 44 where reference is made to the financial responsibility and financial structure of the applicant, the methods of financing the line and the extent to which Canadians will have an opportunity of participating in the financing, engineering and construction of the line and the question of any public interest which may be involved.
It seems that although the Borden commission talk about sanctity of contracts I see no sanctity in the contract with Pacific Northwest. I believe one of the first acts of the energy board should be to review this matter to the end that the gas sold in the United States or any exported gas is not sold at any more favourable price than it is offered to Canadian consumers.
The final point I would like to make is in regard to Canadian participation in these companies and the fact that the bill itself states that the commission shall see to it that financing is carried on in such a way that Canadians participate. I do not think there should be an offering of any pipe line shares other than in Canada. I think the method used to finance the Alberta trunk gas lines is an excellent form to follow, except of course in that case it was restricted to the residents of Alberta alone. I am convinced that the people of Canada do have the courage to invest in risk enterprises like this, because a pipe line is a tremendous risk. It is a gamble and if it fails then there are literally millions of dollars lost, because with a pipe line there is no halfway measure. But I believe that Canadians do wish to participate and wish to have the right to subscribe at the initial offering of stock in these companies, and this bill will see that Canadians will have that right.
In conclusion, Mr. Speaker, I wonder what all the talk is from the opposition benches? We have heard more twaddle, more vagueness, more lack of understanding of this whole question from the opposition benches than anything I can recall having listened to in the house before. The hon. member for

Timmins (Mr. Martin), an admirable fellow in many ways, talked about the cabinet taking the responsibility and not the energy board. Of course the cabinet has the responsibility. The energy board does not have to report to the Canadian people, but the cabinet does, and through their elected representatives the Canadian people will have control and will be able to say whether they do or do not agree with the way this board is working. It seems to me that that is the only possible way to make this work. Undoubtedly there will be a period of trial and error. There will have to be minor modifications, but the bill has been so framed that not only is there freedom for the board to work but there is also the saving grace of cabinet approval. Therefore I suggest, Mr. Speaker, that we get on to the details of the bill as soon as possible.


Mr. M. L. McFarlane (Kootenay East):: Mr. Speaker, I would like to speak for a few moments tonight on the export of gas and what I think should be done in connection with the Canadian consumer.
With the discovery of vast quantities of natural gas and the subsequent construction of pipe lines throughout Canada and the United States, natural gas is fast replacing many other types of fuel in communities which are fortunate enough to have this modern convenient type of fuel. In the years to come any community that is not serviced by this modern convenience when the pipe line is in construction will be seriously handicapped in its development. Western Canada has been blessed with an abundance of natural gas and large quantities of this fuel to export to areas which are less fortunate. We would definitely urge the exporting of gas in order that the economy of Canada may benefit.
First, Mr. Speaker, we would like to recommend return on capital invested in the gas and oil industries. We feel that the investors are entitled to a return on their investments. Second, the creation of employment for Canadians in the construction of gas lines and gathering systems, scrubbing plants and also the development of by-products from the gas itself. Third, the creation of permanent employment for Canadians in the maintenance and operation of these installations. Fourth, giving the gas companies encouragement to continue further explorations for new fields, and I believe many of these could be found in southeastern British Columbia.
However, Mr. Speaker, before permits for the export of natural gas are granted by the department provision should be made to supply Canadian communities within reasonable range of the main transmission line which
National Energy Board desire to be serviced with adequate gas supplies at a reasonable rate. There will very shortly be an application or applications presented to the energy board by the Alberta and Southern Gas Company Limited and the Westcoast Transmission Company Limited to export approximately three trillion cubic feet of natural gas from Alberta to the Pacific northwestern states. The proposed pipe line will transport gas from the Alberta border at the Crowsnest pass to the international boundary at Kingsgate, British Columbia, travelling through that part of British Columbia more commonly known as the east Kootenay.
In the east Kootenay there are six organized municipalities, namely the cities of Fernie, Cranbrook, Kimberley, two small villages of Marysville and Chapman Camp, and the rapidly expanding district of Creston. These communities are very desirous of being served with natural gas and the only possible source of this fuel for these communities will be this pipe line solely designed for export purposes. We feel that if these communities are serviced at the time of construction we will have an added incentive for industry to come into our area.
Mr. Speaker, due to the location of this pipe line-incidentally I have been over part of the present survey-it is not economically possible to serve the above mentioned communities, with the exception of Fernie, by the main pipe line. Therefore we are going to need branch lines taken off the main service lines. The cost of transportation of gas from the pipe line as presently proposed to the boundaries of these municipalities desiring the service would make the cost of the gas very high to the consumer. However, if the export pipe line company were to include the cost of these distribution lines to the various communities which I have named, bringing them to the boundaries of their municipalities, in the over-all cost of the pipe line, so that the entire volume of gas carried would bear its share of the cost, the increase per million cubic feet would be very nominal.
We have watched with consternation the establishment of rates for natural gas on the previously constructed pipe lines. The fact that Canadian utilities, for example Inland Natural Gas Company Limited and the British Columbia Electric Company, pay more for gas than the United States utility companies, for example Northwest Utility Company, is a situation which does not meet with approval in Canada, and in British Columbia in particular. In the opinion of some of the experts Canadians are subsidizing United States gas. This should not be the case. It would be more reasonable to expect the reverse. In the present application the maximum Canadian

National Energy Board consumption would be approximately 2 per cent of the gas carried and it is not unreasonable that 98 per cent should subsidize the 2 per cent for the privilege of export. This is a matter which is very important to the Canadian communities concerned.
In our area we have an abundance of raw materials. We have practically all the raw materials that are required for the manufacture of a great number of articles. We should like to be in such a position that when the gas lines are brought to the edge of the municipalities we could apply for it and derive the benefits of this gas without the necessity of making formal application to various boards. The hon. member for Vancouver South (Mr. Broome) has mentioned the difference in the Vancouver rate, and pointed out that Vancouver is paying approximately 50 per cent more for gas than the people across the line.
I wish to bring three points to the attention of the house. I think when this gas line is constructed it should supply natural gas to the cities of Cranbrook and Kimberley and to the villages of Marysville, Chapman Camp and Creston; that the companies should sell the gas to these communities at the same cost as sold at the international boundary, and that they should deliver the gas to the boundaries of the municipalities concerned.


Hazen Robert Argue: There are some members of this house who are, I know, very anxious to deal with this bill and have it passed as quickly as possible. However, I believe the statement made by the Prime Minister (Mr. Diefenbaker) this afternoon showed that the government is very concerned about the great amount of adverse criticism of this bill and the very bad press which the government has received in connection with this legislation.
The Prime Minister made a long statement this afternoon in which he spent a great deal of time attacking the C.C.F. group in this house. Mr. Speaker, it has always been my contention that until you are effective enough to get the government to pay some attention to you and counter-attack you are not making your points, and the very fact that the Prime Minister had to spend so long trying to prove to us that public ownership was not a good thing suggests to me that this was hitting him where it hurts.
I found it surprising that he should have to journey out to Saskatchewan, just a few hours ahead of the plane trip which he is about to make, in order to attack policies of the Saskatchewan government which have nothing to do with this bill whatsoever. This measure is concerned with the government's

policy on natural energy. I did not know it had anything to do with a cement factory;
I did not know it had anything to do with a steel factory. But the Prime Minister, in saying that public ownership is not the best type of ownership, takes us out to Saskatchewan and talks about a cement factory and talks about pipe lines.
It is significant that he did not mention that the Saskatchewan government has its transportation facilities under public ownership.


An hon. Member:: And they cost more.


Hazen Robert Argue: And they cost a good deal less than in the province of Manitoba in similar circumstances.


Gordon Minto Churchill: Not in all parts of Manitoba. It is cheaper in Brandon.


Hazen Robert Argue: I will deal with Brandon. I can appreciate the fact that the Minister of Trade and Commerce (Mr. Churchill) is very sensitive about this because, of course, he comes from the city of Winnipeg and he was one of those who criticized the Liberal administration so vigorously-


Gordon Minto Churchill: And effectively.


Hazen Robert Argue: -and effectively-that is correct-when they were following the policy of coddling the Texas buccaneers. But now the Minister of Trade and Commerce has taken those same buccaneers to his own bosom. He is doing nothing under this policy which changes in any way the substance of the policy of the former administration, and it is no wonder that after advancing this anaemic and innocuous bill he is sensitive to the fact that in the city of Winnipeg the people in his constituency are paying these exorbitant prices for natural gas.
The Prime Minister took us out to Saskatchewan not to deal with the Saskatchewan power corporation which is in the field of the distribution of natural gas and which, I may say, has made a very good showing. The corporation is this year extending natural gas to all of the small cities in Saskatchewan as well as to the larger cities which already have gas, and to the communities on the lines between those smaller cities. Not only is the Saskatchewan power corporation extending gas to those communities but it is showing a profit on its operations. I have in my hand the annual reports for 1957-58 of the crown corporations in the province of Saskatchewan, available to hon. members in the parliamentary library, and this volume shows that in the year 1958, with a revenue of some $7,639,000 from gas, the Saskatchewan power corporation made a net profit of some $843,442. With this good financial showing

the Saskatchewan power corporation is obtaining funds to extend its supplies within Saskatchewan to the smaller communities. The people of Saskatchewan recognize that the Saskatchewan power corporation in its distribution of natural gas is providing the best type of service to that province, and it would be interesting if the Prime Minister would tell us what he thinks of the effectiveness of that corporation.
We hear hon. members of the Liberal party, and of the Conservative party, too, criticizing crown corporations-criticizing socialism. One of the Liberal members in that province a few years ago said that if the Liberals ever got to office they would throw the crown corporations out the window. It is significant that when the Saskatchewan Liberal leader was asked the other day what he would do with the Saskatchewan power corporation if he became premier of the province-whether he would sell it-he replied: "No. Over my dead body. We would maintain it as a publicly owned enterprise." The Prime Minister would have made a more significant statement today if instead of going out to Saskatchewan to attack the province's policies with regard to other matters he had told us where he stands as far as the Saskatchewan power corporation is concerned. This is a publicly owned utility which is doing a good job in that province by bringing gas to the people of Saskatchewan at a rate cheaper than the citizens of Manitoba are able to obtain it, and the people of Saskatchewan would be anxious to hear from the Prime Minister where he stands on that point.
When the Conservatives were in opposition they attacked the Texas buccaneers. They attacked the fabulous profits-


An hon. Member:: Old stuff.


Hazen Robert Argue: The hon. member says, "Old stuff". You see how quickly they want to forget? The Minister of Public Works (Mr. Green) when he was in opposition said that the deal was the greatest betrayal in history.


Howard Charles Green: Mr. Speaker, I rise on a question of privilege. The hon. member has referred on several occasions to the last paragraph of a speech I made-


Hazen Robert Argue: This was the second.


Howard Charles Green: -but he never goes on to point out that the terms of that speech had no connection whatever with the attacks he has been making on this government.


Hazen Robert Argue: They had no connection? The Prime Minister called it a nefarious deal. He called the people involved Texas buccaneers. Now the interjection is that this is old stuff. After just three years, less than two of which
National Energy Board were spent in office, apparently members of the government believe that everything said by them when in opposition is old stuff.
The Minister of Public Works told us today that what was said in opposition was not always the attitude taken by hon. gentlemen opposite when they got to the government side of the house which is perfectly true. This government through this bill is saying in effect that Mr. Nathan Tanner, who according to the government's own royal commission report made just under $1,500,000 capital gain on a risk of $8, should be allowed to go, not only scot free and be allowed to have his capital gain, but indeed the government goes even further in this legislation by refusing to implement the part of the report which says that returns to shareholders of pipeline companies should be based on their own equity. So what can happen under this legislation and what I have no doubt will happen is that not only will these buccaneers get huge returns on the amount of their investment plus the amount of their capital gain but the door will be wide open to give them an additional return based on the amount of borrowed capital, the amount of debentures and the amount of other capital that the corporation uses.
This will be a fine state of affairs. Not only will Mr. Tanner, Mr. Coates and their associates and other buccaneers-


Mr. Woolliams:: And Mr. Fines.


Hazen Robert Argue: -be able to make huge capital gains-$1,500,000 on an investment of $8 is not too bad-but will be able to obtain a net profit, a return on somebody else's capital, since the government has refused to implement that part of the report of the commission which has to do with returns on equity capital.
There has been a great change in the attitude of the Conservative party. It is no wonder that the interjections tonight are to the effect that this is old stuff. It is old stuff, all right; it has been forgotten as rapidly as the Conservative government has been able to forget it as well it might because when the former leader of the Conservative party, the Honourable George Drew, stated the policy of the Conservative party back in 1956, as reported at page 4673 of Hansard of June 4 of that year, the motion he presented read as follows:
That the Bill be not now read the third time but that it be referred back to the committee of the whole with instructions that they have power to amend sections 5, 6 and 7 thereof to include the agreements made with Trans-Canada Pipe Lines Limited as schedules to the bill and add other sections necessary to ensure that the bill shall give effect to one of the following principles;
First, the immediate agreement of Trans-Canada Pipe Lines Limited to reorganize as a company under effective Canadian ownership and control and

National Energy Board to undertake construction without a grant of public money, in accordance with the assurances upon which its charter was granted by parliament; or-
There is no indication now that Trans-Canada Pipe Lines Limited is to reorganize as a company under effective Canadian ownership. In introducing the legislation the minister said that as far as the government was concerned it would welcome Canadian and foreign capital. All that means in the context of this legislation is that the government is prepared to have pipe lines built and controlled by outside capital. It can mean nothing else because there is no control based on Canadian capital and no control to prevent foreign capital from controlling this industry.
I continue with the words of the motion of Mr. Drew:
Second, failing such agreement, the immediate consideration of other proposals submitted by any other persons or companies for the immediate financing and construction of the pipe line under effective Canadian ownership and control and without a grant of public money; or
Third, enlarge the powers of the crown corporation so that the entire pipe line may be constructed immediately under public ownership.
The Conservatives in 1956 were prepared to accept public ownership as an alternative policy to that being followed by the government of the day. Today they not only reject public ownership but they reject any effective control that would guarantee that this industry and other energy in Canada be developed by Canadians and by Canadian capital.
This government has made a complete about face. It has turned its back on its own statement and its own record. Not only is it prepared to allow this industry to fall more completely into the hands of outside persons and outside capital but it is not prepared as outlined in this bill to give the
energy board any effective power to deal with the development and control of energy in Canada.


Norman Platt Lambert: Produce the evidence to support your remarks.


Hazen Robert Argue: I shall be happy to produce evidence. The evidence is contained in this bill. You do not have to look beyond the bill to find evidence.


Norman Platt Lambert: You have proved that you know even less than you knew yesterday.


Hazen Robert Argue: Under this proposed legislation anything the board can do the government can set aside. Anything the board can do effectively has to be done with the approval of the governor in council and if the governor in council wishes it can put aside anything the board may do. This is a bill drafted by a government that considers itself allpowerful, that considers parliament subservient, and that considers all it has to do through the Minister of Trade and Commerce is to look around at the tremendous majority and say, "Who is going to stop us?"


Norman Platt Lambert: You know even less than you did yesterday.


Some hon. Members:: Ten o'clock.



BUSINESS OF THE HOUSE

Lionel Chevrier: Mr. Speaker, may I inquire
what the business is for tomorrow?


Howard Charles Green: Mr. Speaker, tomorrow we shall continue with this debate and in the event it concludes the order of business will be that announced last night. Any estimates that might be taken this week would be those of public works and fisheries.


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