1960-06-07

Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, I should like to announce that the agricultural stabilization board has been authorized to support the price of sugar beets for the year 1960 on a national average basis of $14.23 per ton for beets yielding 17 per cent sugar, which is 100 per cent of the 10-year average national price.
For the 1960 crop the stabilization payment will be calculated as the difference between the prescribed price of $14.23 per ton of sugar beets and the average price per ton received by producers in the provinces of Ontario, Manitoba and Alberta. In the case of Quebec, provision has been made for stabilization payments per ton similar to those made in the other three provinces.
In 1958 and 1959 the board supported sugar beets on a regional basis, and the prescribed price for each area was based on the average gross return per pound of sugar in that area. However, with the concurrence of producer organizations in each of the provinces and in line with board policy, the stabilization program for this year will be based on the national average producer return.
Present indications are that there will be a reduced acreage of sugar beets in Ontario this year but an increased acreage in Manitoba and Alberta, and that production may be approximately the same as in 1959.



REQUEST FOR TABLING OF UNITED STATES


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of Ihe Opposition):: I should like to ask the Minister of Trade and Commerce whether it is a fact that the Canadian government has received from the United States government an offer list of commodities on which tariff concessions could be negotiated, as well as a list of commodities on which the United States hopes to secure tariff concessions from Canada. If so, could that list be tabled?
79951-0-290


Hon. Gordon Churchill (Minister of Trade and Commerce):: I am informed that this is just a preliminary list; that the final list has not been produced, and that the officials are negotiating concerning it.


Lester Bowles Pearson: Is the minister not aware that it was announced in Washington that if anyone wishes to have a copy of this list all that has to be done is to make a request to the state department at Washington, and the list will be sent? Could we not have the same information in this house?


Gordon Minto Churchill: If anyone could have a copy of the list, then I presume the Leader of the Opposition has already sent for one.


Lester Bowles Pearson: Is it necessary for a member of parliament to send to Washington for a list of this kind which affects Canada?


Gordon Minto Churchill: I understood the hon.
gentleman to say that any individual could get a copy of the list on application-


Lester Bowles Pearson: I am asking the minister if he will table a copy of this list which affects Canadian interests.


Mr. W. M. Benidickson (Kenora-Rainy River):: Is the minister suggesting that he does not possess a copy of this list?


Gordon Minto Churchill: I was not suggesting that, but if it is available to the public then it is surely not necessary to table it.


Mr. G. J. Mcllrailh (Ottawa West):: Mr. Speaker, I should like to direct a question to the Minister of Finance and ask him, since as I understand it the responsibility for international negotiations on trade matters under GATT comes under the jurisdiction of his department, whether he would be good enough to table the so-called offer list made by the United States so the Canadian parliament could have it to assist in the discussion in relation to trade matters.


Hon. Donald M. Fleming (Minisler of Finance):: Mr. Speaker, both the Department of Finance and the Department of Trade and Commerce, of course, share responsibility in connection with the forthcoming GATT negotiations. The plans that are being made for that conference are being made on behalf of the government jointly through both departments.

Inquiries of the Ministry
As to the plans of the United States in this respect, I have not the detailed information. The house has been given information this morning by my colleague, the Minister of Trade and Commerce, in that respect. I understood that the Leader of the Opposition was asking earlier not for a Canadian document but for a United States document available in the United States. It was on that basis that my colleague gave his answer to the Leader of the Opposition, as I understand it.


George James McIlraith: A supplementary question, Mr. Speaker. The list is the list given to the Canadian representatives by the United States authorities. It is in the possession, as I understand it, of the Canadian government now. I am not aware of any reason why it should not be given out. My question is whether that document, now in the possession of the Canadian government, can be made available to this parliament so the subject matter can be adequately and properly dealt with when it comes up for discussion later in the session.


Donald Methuen Fleming: We on this side of the house always try to be obliging. I have not seen the document in question. Whether it is in the possession of my department I do not know, but inquiries can be made in that regard. I am sure that if it is proper to produce such document, if it is in the possession of the government, my colleague will be the first to see that any document which is properly producible by the Canadian government will be put before the house.
As for the question directed to me, I have not seen the document yet but I will make inquiries in that regard.


Hon. Paul Martin (Essex East):: Will the Secretary of State for External Affairs inquire as to whether it is a fact that this document has been made available to the public in the United States, a document which both the Minister of Finance and the Minister of Trade and Commerce refuse to place-


Some hon. Members:: Order.


Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, I think this question has been fairly well dealt with by the two other ministers.


George James McIlraith: It has not been dealt with.


Paul Joseph James Martin: On a question of privilege-


Mr. Speaker:: Order.


Paul Joseph James Martin: We are now informed by the Secretary of State for External Affairs that this matter has been properly dealt with. The statement of the Leader of the Opposition is that a document

of this government has been circulated in the United States, and we are now denied by ministers of the crown in this house the right of access to this document. I would submit, Mr. Speaker, that it is a violation of the privileges of this house for two ministers of the crown to take this position.


Donald Methuen Fleming: Mr. Speaker, on a question of privilege, I object to the hon. member for Essex East distorting my remarks beyond all recognition.


Gordon Minto Churchill: I raise the same objection, Mr. Speaker.


Howard Charles Green: So do I, Mr. Speaker.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: In
view of the continuing interest and concern of a large number of Canadians in radioactivity, I wish to address a question to the Minister of National Health and Welfare.
Will the minister inform the house whether he has received the report of committee II of the international commission on radiological protection? If so, would he comment on the recommendation it is reported to contain that the maximum permissible levels of strontium 90 found in food and water be lowered from 80 micromicrocuries per litre to 33?
Will the minister also inform the house whether the government intends to give effect to those recommendations?


Hon. J. W. Monieiih (Minister of National Health and Welfare):: Mr. Speaker, I wish to thank the hon. member for having given me notice of his intention to ask this question. This department has received the report to which the hon. member refers, and I am pleased to be able to advise him that the substance of its recommendations will be incorporated into the annual report of the radiation protection division for 1959, which will be available later this month.
However, I think it is important to stress that the recommendations made by committee II with respect to maximum permissible concentrations refer to water, but not to food. The maximum permissible concentration in water for strontium 90, applied to the general population, is calculated to be 33 micromicrocuries per litre, assuming a constant intake level for 50 years. On the other hand, based on an average daily intake of approximately 1 gram of calcium, the maximum permissible level

of strontium 90 in the average diet is calculated by my department to be 79 micromicrocuries per gram of calcium.


Paul Joseph James Martin: A supplementary question, Mr. Speaker. Will the Minister of National Health and Welfare say whether it is the intention of the government of Canada to now adopt the levels of strontium 90 referred to in the question put by the hon. member for Kootenay West a few moments ago?


Jay Waldo Monteith: Mr. Speaker, this is a very complicated question, of course. The annual report will be published shortly, and I am sure the question will be dealt with in that report.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. K. H. More (Regina City):: Mr. Speaker, I should like to direct a question to the Minister of Citizenship and Immigration. Has the minister received representations from Regina local 179 of the united association of journeymen and apprentices of the plumbing and pipe fitting industry of the United States and Canada protesting the recruitment of United States welders by the Fisch Engineering Company, employed by the Saskatchewan Power Corporation on the compressor pumping station project at Hatton, Saskatchewan, while Canadian welders with previous experience on similar projects are unemployed?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Yes, Mr. Speaker, I have just received a protest and have asked my department to investigate the situation. I might just add that non-immigrants from the United States who are in Canada are not permitted to take employment unless they receive prior approval from my department. In this case the particular employment concerned is cleared with the national employment service. If there are Canadian workers available to do this particular job, then permission is withheld.


Mr. E. J. Broome (Vancouver Souih):: supplementary question, Mr. Speaker. Is the minister aware that many of these people come in as landed immigrants simply for the purpose of evading immigration regulations and have no intention of staying in this country, but come in only for the duration of the job? Is there any way by which the minister's department can plug this loophole?
79951-0-290i
Inquiries of the Ministry


Ellen Louks Fairclough: Well, Mr. Speaker, if the hon. member will give me specific instances I will have the situation investigated.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Hon. J. M. Macdonnell (Greenwood):: Mr. Speaker, I wish to address a question to the Secretary of State for External Affairs. Having regard to the fact that at the time of the minister's visit to Turkey there was a revolution, and that at the time of his visit to Chile there was an earthquake, does the minister consider it possible that his visits to other countries may be regarded with some alarm?


Howard Charles Green: Mr. Speaker, I think I have been in enough trouble today already. As long as my visits in Ottawa and in the House of Commons are not regarded with alarm, I have no worry.



WEST GERMANY


[Stage Direction]
On the orders of the day:
Howard Charles Green: Mr. Speaker, I should like to reply to a question asked by the hon. member for Kootenay West on the orders of the day on June 3 concerning 20 Polish Canadians having war claims against the Federal Republic of Germany. I took notice of this question at the time, but unfortunately I cannot give a comprehensive answer without first knowing the particulars with respect to the 20 persons involved such as their names, when they came to Canada, when they became Canadian citizens, the details of their claims and what replies they have received from the government of the Federal Republic of Germany to their approaches. If the hon. member will provide specific particulars I will be very pleased to look into the matter further.



INQUIRIES FOR RETURNS

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, may I direct a question to the Acting Secretary of State. Will he inquire into the progress being made on the return to an order of this house made on February 3 with respect to certain questions involving the Department of Citizenship and Immigration? Will he also inquire with respect to another order of this house made on February 15 with respect to another matter falling under
4598	HOUSE OF
Inquiries of the Ministry the Department of Citizenship and Immigration, and also with respect to an order for return of February 24 with respect to Northland Navigation Company and its agreement with the federal government?


Hon. Leon Balcer (Acting Secretary of State):: I will inquire with pleasure, Mr. Speaker. While I am on my feet, may I say that yesterday the hon. member for Laurier inquired about four returns concerning Georgian Bay Airways Limited. Three of these returns were tabled yesterday and the fourth will be tabled later today or tomorrow. With respect to the return about which the hon. member for Ottawa West inquired, it will be tabled within the time limit that I mentioned yesterday in the house.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Hon. George H. Hees (Minister of Transport):: Mr. Speaker, yesterday the hon. member for Port Arthur inquired about the arrangements being made by the cities of Fort William and Port Arthur to transfer property for the construction of harbour facilities by the Department of Public Works. The arrangements for transferring the administration of said property at the lakehead are not yet complete. The matter has been the subject of correspondence between my department and the lakehead, and I will be glad to report to the house more fully at a later date.



CITIZENSHIP AND IMMIGRATION


[Stage Direction]
On the orders of the day:
Ernest James Broome: should like to direct a question to the Minister of Citizenship and Immigration. Can the minister advise as to what progress is being made in the setting up of a citizenship court in the city of Vancouver? Where will this court be located, and when will it be in operation?


Ellen Louks Fairclough: Mr. Speaker, I cannot answer completely. I will get the hon. member a factual reply, but I can assure him that we are proceeding as rapidly as possible to put this court into operation.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, may I ask the Secretary of State for External Affairs whether he has had an opportunity to examine the communique issued following the meeting between the Prime Minister and the President of the United States with regard to the reference in that communique to the common desire to achieve effective international control to end nuclear testing?


Howard Charles Green: Yes, Mr. Speaker. The reply I gave the hon. member yesterday still stands.


Paul Joseph James Martin: May I ask a supplementary question. Does that mean that the minister sees no inconsistency between his announced policy with regard to the cessation of tests and the joint statement issued by the President and the Prime Minister?


Howard Charles Green: Mr. Speaker, the only inconsistency that I see in this whole matter is the persistence of the hon. member for Essex East, who seems to be in favour of further nuclear tests.


Paul Joseph James Martin: Mr. Speaker, the hon. gentleman knows that is not the case. He is aware-


Mr. Speaker:: Order. Is the hon. member asking a question or rising on a question of privilege?


George Harris Hees: Just rising.


Paul Joseph James Martin: Is the Secretary of State for External Affairs not aware that in a matter of this kind and of this importance such flippancy is not in the interests of proper consideration of so important a matter?


Mr. Speaker:: Order. The hon. member for Saskatoon.


Lester Bowles Pearson: Mr. Speaker, may I ask the Secretary of State for External Affairs whether he does not realize that there is a difference between-


Some hon. Members:: Order.


Mr. Speaker:: I am sorry, but I have already recognized the hon. member for Saskatoon. Perhaps the Leader of the Opposition did not hear me.

Hon. L. B. Pearson (Leader of ihe
Opposilion): May I ask the Secretary of State for External Affairs, does he think there

is any difference between the prohibition of nuclear testing under effective international control and the prohibition of nuclear tests, period?


Howard Charles Green: I have explained the government's policy to the Leader of the Opposition and the hon. member for Essex East on several occasions, but there are none so dumb as those who refuse to understand.


Paul Joseph James Martin: I ask the Prime Minister whether the communique between the President and himself was referred to the Department of External Affairs before being finally accepted by Canada.


Right Hon. J. G. Diefenbaker (Prime Minister):: The hon. gentleman knows very well, of course, that that is not the course followed. In so far as inconsistency is concerned, I suggest that he review his own record.


Mr. Pickersgill:: What difference does that make?


Paul Joseph James Martin: I did not ask the
Prime Minister-


Mr. Speaker:: Order. It seems to me that this exchange is definitely becoming a debate and is not questions seeking information, so we should leave it at this point.


Paul Joseph James Martin: This is a very important matter, Mr. Speaker, and I desire to pursue it. Will the Prime Minister say, whether or not it is the custom, whether this communique was referred in any way to the Department of External Affairs before Canada accepted its terms?


John George Diefenbaker: Mr. Speaker, there has been no change or suggested change along the line that has been advanced by the hon. gentleman. Canada's policy is completely unchanged.


Paul Joseph James Martin: You have not answered the question.


Lester Bowles Pearson: May I ask the Prime Minister whether it is the policy of the Canadian government at this time to favour the prohibition of nuclear testing only under effective international control?


John George Diefenbaker: The policy of this government has been made very clear. We favour-


Lester Bowles Pearson: Why don't you answer the question?


John George Diefenbaker: I cannot give intelligence to those who cannot understand.


Lester Bowles Pearson: Just answer the question.


John George Diefenbaker: We have made it very clear that we believe in the complete termination of nuclear testing.
7, 1960	4599
Old Age Security Act NATIONAL DEFENCE



SASKATCHEWAN


[Stage Direction]
On the orders of the day:
Mr. H. F. Jones (Saskaloon):: I should like to direct a question to the Minister of National Defence. In view of the confusion caused by the recent announcement by a Saskatchewan government official regarding service personnel voting in Saskatchewan, is the minister prepared to advise commanding officers of service establishments in Saskatchewan that service personnel, otherwise qualified, who are resident for six months in Saskatchewan are entitled to vote regardless of whether they have or have not made a declaration under the Canadian forces voting regulations contained in schedule 3 of the Canada Elections Act? If so, are the commanding officers being instructed to advise military personnel and their wives to that effect?
Hon. G. R. Poarkes (Minister of National
Defence): The service men who are entitled to vote according to the laws and regulations of the province of Saskatchewan will be given every facility to do so, and will be encouraged to exercise their franchise.



ACREAGE PAYMENTS


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: I wish to address a question to the Prime Minister. I apologize for not sending him notice, but I just got a message from Saskatoon. Is there any truth in the statement reported to have been made by the leader of the Conservative party in Saskatchewan in a television address on Sunday night, that any provincial acreage payments to grain producers would be matched by the federal government?


John George Diefenbaker: I do not know of any such radio speech having been made at any time.


Mr. Winch:: I heard it, and saw it.



OLD AGE SECURITY ACT


Jay Waldo Monteith: the third reading of Bill No. C-63, to amend the Old Age Security Act.
Motion agreed to and bill read the third time and passed.
house of commons
Canadian National Railways CANADIAN NATIONAL RAILWAYS



PROVISION FOR CAPITAL EXPENDITURES, ISSUE OF SECURITIES, ETC.

Donald Methuen Fleming: that the house go into committee to consider the following resolution:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to make capital expenditures in the year 1960 not exceeding $309,950,000 and to make certain capital expenditures and enter into certain contracts prior to July 1, 1961; to authorize the national company to issue securities to provide amounts required for the authorized expenditures; to provide that, except as expressly provided, the aggregate principal amount of securities outstanding at any time shall not exceed $203,950,000; to authorize the governor in council to guarantee the principal and interest of securities issued by the company for the purpose aforesaid; to authorize the Minister of Finance to make loans to the said company secured by such securities and not exceeding $203,950,000 in principal amount to enable the said company to meet such expenditures and with authority to give financial aid and assistance to other companies of the national system.
Motion agreed to and the house went into committee, Mr. Flynn in the chair.


Donald Methuen Fleming: Mr. Chairman, this is the annual resolution preceding the introduction of the annual bill respecting financing and guarantee of the Canadian National Railways. The legislation follows a form which has been consistently followed since the year 1952.
This year the bill founded upon this resolution will be divided into four major parts, as indicated in the terms of the resolution. The first part authorizes the Canadian National Railways to incur capital expenditures of up to $309,950,000 in the calendar year 1960. The second part authorizes the railway company to make capital expenditures prior to July 1, 1961 to discharge obligations incurred under the act which become due and payable after January 1, 1961 in an amount not exceeding $86 million. The third part authorizes the railway company to enter into contracts for new equipment and for general additions and betterments to the system in an amount not exceeding $51 million. The fourth part provides for the continued purchase by the Minister of Finance of Canadian National Railways 4 per cent preferred stock up to December 31, 1961. This latter provision is new.
Authority provided in the Canadian National Railways Capital Revision Act for the purchase of the railway company's 4 per cent preferred stock to the limit of 3 per cent of the company's gross revenue expires on December 31, 1960. Parliament is being asked to approve financing either by way of the issue of new securities guaranteed by the government or by way of direct loan from 
the treasury in an amount not exceeding $203,950,000. For the convenience of hon. members I would ask permission to place on Hansard at this point a table indicating the break-down of this sum of $203,950,000.


The Chairman:: Does the committee agree to having this document inserted at this point of our proceedings in Hansard?


Some hon. Members:: Agreed.
[Editor's note: the table above referred to follows:]
The amount of $203,950,000 appearing in clauses 4(3) and 6(2) is computed as follows:
Road property .	$170,207,000
Branch line
construction .	2,259,000
Hotels	 3,315,000
Equipment ___________________ 34,977,000
Investment in
affiliated companies:
Trans-Canada Air Lines financial requirements $82,350,000
others	 6,842,000	89,192,000 $299,950,000
Less:
Uncompleted work
Add:
Working capital:
Amount required to finance temporarily alterations to Victoria bridge to coordinate with St. Lawrence seaway	
Add:
Interim financing authority January 1 to June 30, 1961, on obligations incurred prior to January 1,	1961		
Less:
Depreciation accruals and amortization of discount on funded debt, etc., in relation to calendar year
1960	 112,000,000
Depreciation accruals and amortization of discount on funded debt, etc., in relation to period January
1 to June 30, 1961	 50,000,000	162,000,000


Donald Methuen Fleming: The usual authority is provided for the making of temporary loans to the railway company and to Trans-Canada Air Lines to meet operating deficits to June 30, 1961. The budget of the railway company contemplates a deficit of $24 million for the calendar year 1960. The amount outstanding at June 1, 1960 authorized by financing and guarantee acts previously
30,000,000
269,950,000
10,000,000
279,950,000
86,000,000
365,950,000

passed is $162,578,749.76, and the authorization in that respect is to be found in the 1956 and 1959 acts.
Mr. Chairman, the committee is aware that a special committee of the house was appointed earlier this session to review the operations and all accounts and budgets of the Canadian National Railways system and its subsidiaries, including Trans-Canada Air Lines. That committee has submitted its report to the house. Its third and final report is recorded in Votes and Proceedings of the house of Friday, May 6, at pages 427 and 428. It is the custom to introduce this present measure after such a committee has conducted that review of the operations and financing of the Canadian National Railways system and has made its report to the house.
I think it is fair to say also, Mr. Chairman, that it has been found previously to contribute to a more knowledgeable discussion if the main part of the discussion of this subject takes place on the bill which will be distributed immediately after the resolution has been adopted.


William Moore Benidickson: Mr. Chairman, I am sure, as I have always experienced in giving any attention to this legislation, that all members find great difficulty in reconciling any figures that appear at the resolution stage with any prior activities we may have had in the committee to which the minister referred, before which officials of the Canadian National Railways appeared and when there is a discussion in that committee as to their budget for the current year and the capital expenditures that are proposed by the Canadian National Railways. I think those who were members of the sessional committee on railways, air lines and shipping, government owned, will recall that despite what we are reading here, in essence the capital program of the Canadian National Railways, or the borrowing involved in the capital program of the Canadian National Railways for 1960, amounted to the figure of $197.8 million. That was compared with the 1959 bill which was similar to this and which was presented to us at about the same time last year.
That sum of $197.8 million would, we were told, be financed in part by a depreciation availability of $112 million. Some $23 million is provided by reason of the 1951 reorganization legislation under which the government agreed to buy each year 4 per cent preferred stock up to an amount of 3 percent of the revenues of the road. So that actually what is proposed this year is an increase in borrowing of $62.8 million; and we were told in committee by the president that this, when related to the 1959 report, shows a comparable figure of $130.2 million.
Canadian National Railways
Mr. Chairman, I think there is much in the financing of the C.N.R. which gave concern to the members of the committee. In the introductory statement of the president, which will be found on page 23 of the committee report, Mr. Gordon had this rather disappointing summary to make of the railways' affairs. He said that the financial results were most disappointing, particularly in light of the fact that economic activity in 1959 reached new record levels and the gross national product in real terms was approximately 5 per cent greater than in the previous year.
The Minister of Finance will of course recall that we have an argument as to the real value of the growth in the gross national product in 1959. The dominion bureau of statistics has recently calculated that the value of the growth in real terms was 3.5 per cent. None the less, the president reported that notwithstanding this increase in the general economy the deficit was substantial, and I know this is worrying to all members of this committee.
The prospect for 1960 is not very encouraging, either. The minister has made reference to the fact that the bill to be founded on this resolution will ask the house for authority to finance temporarily any deficit which may be incurred by the C.N.R. prior to the time this house can authorize payment of the actual ascertained deficit by a vote in the estimates. However, a review of the testimony of the officials of the C.N.R. given before the committee, plus an examination of the operating reports to date, is somewhat alarming. The deficit in 1959 was $43.5 million. The estimated deficit for 1960, when we were last officially informed, was given as $24 million. In other words it is indicated that in 1960 the net position of the C.N.R. might improve by $19.5 million. I believe the Minister of Finance in calculating his budget for the fiscal year has accepted the estimated figure of $24 million as the likely deficit of the C.N.R. for 1960.
However, we do have available since the sittings of the committee the net earnings report of the C.N.R. for the first four months of 1960. We find there that instead of showing a better net position compared to a like period in 1959, which I assume would be necessary if the company is to show an improvement in the over-all deficit of $19.5 million, we find that a deficit has already been incurred of $25 million compared with a deficit for the first four months of 1959 of $18.6 million. In other words the position is poorer for the first third of 1960 in relation to 1959 by $7.4 million.
It is very easy to calculate, if this trend continues in comparison with 1959 for the

Canadian National Railways balance of the fiscal year, what the result is likely to be. Three times $7.4 million comes to $22 million for a full year. Even if we were equalling rather than falling behind the record of last year, there would be a further deficit of $19.5 million beyond the estimated deficit of $24 million. In other words, when we project the poorer position which has been experienced this year and add the $19.5 million which would be required even to equal the position of last year, I calculate that those two figures come to $41 million. To put it in another way, if this continues the Minister of Finance will find that the position of the C.N.R. will require from him $41 million more than was the basis of his calculation when he predicted a $12 million surplus when he brought down his budget on March 31.
In view of the seriousness of this situation, I hope, the minister, either at this stage or on second reading, will give us some further information as to the prospects and as to any developments about which we may not have been informed which would in any way disparage the calculations I have presented to the committee. To sum these up briefly, even if we do as well as last year the calculations of the budget would be increased by another $19.5 million. If the trend we have experienced for four months should continue we would need an additional $22 million, so the budget would be out by $41 million.
It has been indicated that the capital budget this year will be down by some $56 million in comparison to 1959. Unfortunately, only two lines of typed reference were given in the committee relating to any proposals involving additional borrowing with respect to the proposals for increased terminal facilities at Toronto. We were only told in the committee that $6.6 million of this year's budget would be required for the Toronto terminal. However, hon. members know that we have on the agenda for debate today another resolution involving not only the $197.6 million to which reference is made in this resolution but an additional financing requirement of $100 million for the Canadian National Railways for a Toronto terminal.
The president of the railroad suggested that a very careful paring had been done with respect to the presentation of capital needs this year. He said that when the detailed statement of needs from the field was presented it amounted to $272.5 million. He told us there was a committee at Canadian National Railways headquarters which subsequently reviewed those proposals and the figure was brought down to $225.8 million. Then, he said, the proposals received the personal attention of himself as president and

of other officials at the head office, and there was a further reduction of $28.2 million.
What we should like to learn from the minister is this. After that stage what, if anything, in the way of examination and personal attention is given by the members of the cabinet, representing the shareholders, to ensure that this is the minimum figure which will be required for 1960 in view of the very unfavourable operating results that are reported? I found there was evidence given that last year, at approximately this date, the management discovered that it could do with some $40 million less than the figure presented to the cabinet and through the cabinet to parliament, as its 1959 capital requirement.
I think that decision was made in July. All hon. members will recognize that that date was not very far from the present date. I am wondering whether anything of that kind is contemplated this year, a further paring or a decision that certain expenditures will not be needed? If so, I think inquiries should be made now before the bill is drafted; because parliament should be given the most up-to-date calculation as to the minimum requirement. After all, the figures we are dealing with here were set up by the company perhaps four or five months ago. I think parliament should be taken a little more seriously than that year, when in June we are asked to pass certain capital expenditures and then within a matter of days afterwards a decision was reached by the C.N.R. that that figure could be reduced by the tremendous sum of $40-odd million.
The committee I think was disturbed, as indeed was the management of the road, by the very obvious growth in fixed charges. Reference is made to this item on page 65 of the committee report, where it is shown just how substantially fixed charges have risen since the last financial reorganization of the C.N.R., which affected the 1952 balance sheet, and it was indicated to us that from there the fixed charges would grow and would total approximately $80 million by 1965.
The other alarming feature of this-and this is all related to these substantial capital expenditures and borrowings-is that the percentage of revenues required to finance these fixed charges is also rising very substantially.
The Minister of Finance has always been one who, in connection with the increase in the national debt, has indicated that it is not too worrisome if it can be related to the growing national income, because when related to a percentage of the national income it does not show, in his view, an alarming growth. But that, of course, is not

similar to the predictions with respect to the fixed charges of the C.N.R. related to their anticipated income. I do not think we got from the committee as much as perhaps we should have, but as everybody knows we are badly rushed there; we put on three meetings a day, and these figures are very complicated, and the management is always in a hurry to get back to head office-


Some hon. Members:: Oh, oh.


William Moore Benidickson: That is an understatement about management's hopes, I well know. In view of the seriousness of the financial forecast I believe we should get from the minister a statement of the progression of the fixed charges from 1952 forward rather than being satisfied with the figures we got from the committee, which as I recall them were really projected forward in part and were not projected back to 1952. I believe it would be worth while having them projected back to that year.
Another feature that is not generally understood by most of us, nor I am sure by a great number of the public at large, is the obligation under the 1951 financing act to which I referred earlier, that of the government to buy automatically preferred stock on the basis of a percentage of gross annual income. The amount of preferred stock under the reorganization of 1951 was set at $756 million. This involved a very substantial writing down from the past of the nominal book liabilities of the C.N.R. But I find that in only three years-1952, 1953 and 1955-was anything earned or available to pay anything on this 4 per cent preferred stock, and between 1952 and 1959 inclusive an additional $168 million of financing has been provided by this method quite apart from the aggregate of the deficits with which we are more familiar.
In 1959, in addition to meeting the deficit of $43 million through a vote of this house of $40 million, the government bought $22.1 million of preferred stock under this statute. In 1960 it is estimated that another $22 million will have to be provided through the purchase of preferred stock without any prospect, of course, of it providing for the nominal interest rate of 4 per cent.
As the Minister of Finance has indicated, we have in the past felt it necessary to peruse carefully the complicated figures such as he has given us this morning. I do not propose to make any extended remarks until I have an opportunity of examining the details of the proposals. Before closing the debate the minister might reiterate his intentions in this respect, but I understood him to say that the bill that will follow will contain this year a new provision. There was some noise in the chamber at the time and I did not
Canadian National Railways follow the minister with respect to certain financing forward to 1961 that apparently is to be incorporated in the new bill, but I will defer any comment on that point.


Donald Methuen Fleming: Mr. Chairman, in case the hon. member wishes to make comment, I said that the fourth part provides for the continued purchase by the Minister of Finance of Canadian National Railways 4 per cent preferred stock up to December 31, 1961. This provision is new. Otherwise the power under the existing legislation expires on December 31, 1960. By extending it for one year it makes it coterminous with the provision in the capital revision act for the interest-free period on the $100 million of 20-year obligations, which also terminates on December 31, 1961.


William Moore Benidickson: I thank the minister for that explanation. I wonder if the committee would allow me a little indulgence. We are all acquainted with the voluminous nature of the reports of the committee on railways, canals and telegraph lines. I have indicated that we met three times a day on some occasions, and with the other work of the house it was somewhat difficult afterwards to check the Hansard report. For the benefit of the debate on second reading I should like to indicate to the committee a correction that should be made at page 138 of the sessional report. I am reported as having asked a question of Mr. Gordon in these words:


William Moore Benidickson: Do you know that this is made under the C.N.R. act?
That should read:
Do you know if this is made under the provisions of the C.N.R.-C.P.R. act?
Hon. members will be aware of the fact that there is a statute of that name which was passed in 1932 or 1933. I continue:


Mr.   Vaughan@: The application is not made under that act.


Mr. Chevrier:: It is made under the Railway Act.
That completes my reference to the committee report. Beyond that I simply want to say I have made subsequent inquiries and confirmed the belief 1 had when I asked the question there; that the economies under co-operation for which permission was being sought and to which reference was made in that instance were not made by the C.N.R. under the Railway Act but were in fact, as I had thought, made under the statute known as the C.N.R.-C.P.R. act.


Mr. Fisher:: Mr. Chairman, there are several points in connection with the Canadian National financing that were touched on in the committee. There is one question on which I should like to ask the minister for

Canadian National Railways an explanation that none of us in the committee got around to asking for, although from a reading of the evidence it is very apparent that the question should have been asked, and it may be relevant to the point made by the hon. member for Kenora-Rainy River. At page 55 of the proceedings and evidence Mr. Drysdale asked this question:
Did the actual expenditures in 1959 coincide with the capital budget expenditures?


Mr. Gordon:: No. I am going to mention that a little later. As a matter of fact, we considerably underspent our budget, for the reason that we started holding down on expenditures commencing July of last year.


William Moore Benidickson: May I just refer to that? I have just looked at my notes. The committee will recognize that we were not informed either last Thursday night or Friday night that this item would come up for debate; we were not informed that it was coming up as the first item today until ten o'clock last night. Therefore I have had some difficulty in that interval in trying to refresh my memory about what went on in the committee. The hon. member is going to refer to the same subject that I was going to refer to. When I referred to the underspending decided upon in July, 1959 I used the figure $40 million. I think the hon. member for Port Arthur was just going to refer to the item that I see in my notes. The sum of $24.5 million is the correct figure, not $40 million.


Douglas Mason Fisher: What is the page number?


William Moore Benidickson: Page 57 of the proceedings and evidence.


Douglas Mason Fisher: The question that comes to mind is why none of us asked why the C.N.R. decided last July to cut down. What I should like to ask the minister is, did he or any of his officials communicate with the Canadian National Railways and ask them to cut back and pare down their capital expenditures? If they did, it would seem reasonable and logical, I think, that he should give us a fuller explanation of how his department or he may be looking at the C.N.R. budget for this coming year.
If you search through the evidence you get the impression from Mr. Gordon's remarks that very strong efforts were made to cut down capital expenditures; that is, the projections for this year. I think he said that the estimates come from the field to head office, and they were trimmed $47 million in the first process at head office and then another $20 million before they were finally put in. I think we deserve to know whether this policy of cutting down on the capital expenditures is the result of advice or persuasion from the minister.


I can make this somewhat more relevant by underlining the fact that one of the expenditures for this coming year caused considerable controversy in the committee. It was not on a political basis necessarily. I refer to the expenditures to go into trucking operations. I will not say that there was a majority of the committee, but there was very strong objection on the part of certain members of the committee to the effect that the C.N.R. had no business getting into this field, or committing its capital budget to an extension into this particular field.
Another part of the capital expenditure comes to mind. The needs of the central traffic control program are now to be less in certain areas, since most of the work is completed. These expenditures are going down, but the revolutionary effect upon the communities resulting from those capital expenditures is just about to take place. Now, this is a step away from finance, but what bothers those of us who have divisional points in our constituencies-the hon. member for Kenora-Rainy River knows this problem very well -is this. The people want to know why, when this dislocation takes place, proper provision is not made for relocation, for education, for training and this kind of thing. I am talking about something that is the result of capital expenditure; technically a revolution takes place in the employment picture of the railway community.
This, Mr. Chairman, is not immediately relevant to what the minister is bringing in here, but I should like to know whether in the consultations the minister may have had with the Canadian National Railways they were prepared at any time to make more extended provision than they have in their capital budget for education and retraining and relocation of personnel affected by the capital expenditure.
The question of the scale of the deficit is certainly great. From the figures that have come out so far this year the C.N.R. is not going to have as good a year in 1960 as it had in 1959. Certainly carloadings indicate that we are not going to get the optimistic trend that the lower deficit might indicate. I think the minister might pull together our ideas on this projected deficit and tell us what kind of estimate of business now appears available for this particular year. The president of the railway was relatively optimistic when he was before the committee, but certainly the figures that have come along since, in the past month, indicate that carloadings and revenue are not going up to the degree that was expected.
There is one other question on which I should like an answer from the minister.

Mr. Gordon, at page 56 of the proceedings and evidence, gives an indication that the company expects to recoup, I take it, approximately $10 million from the St. Lawrence seaway authority for expenditures incurred in constructing the diversion and related facilities around the Victoria bridge.
I think this is a large enough sum for us to be given an indication as to whether that money is going to be coming to the Canadian National Railways this particular year.
The whole question over the past decade in the financing of the Canadian National Railways would seem to be that the government by rather large capital expenditures has been trying to put the Canadian National Railways in a position to modernize and so eventually reach the state of balancing its budget and becoming a more viable concern. Despite all the optimism of the president of the Canadian National Railways-and I am not going to argue that this expenditure should not have been made-the railway is in no better position that we can see, relative to what it was five or six years ago, as a result of all this expenditure.
The capital program is going to continue on a very large scale until 1965, and this raises one point. Surely the Canadian National Railways and the government of Canada have been wrong or, let us say, mistaken in their projection into the future. If we go back five years when very large capital expenditures on the C.T.C. and on dieseliza-tion and all that sort of thing were being undertaken, the argument was that those expenditures would enable the railway to get into a viable economic position. Now the expenditures have been made. I understand the last steam locomotive has blown its whistle on the Canadian National Railways, and the railway is not in any better position.
I know the president argues that despite increases in productivity, this situation has been created by wage demands and changes in the transportation picture, especially the increasing amount of traffic that is hauled by rival carriers. But my point is that the projection has been wrong; it has been mistaken.


James MacKerras Macdonnell: Would the hon. member permit a question?


Douglas Mason Fisher: Yes.


James MacKerras Macdonnell: The hon. member has conceded that as against the savings which were projected and which I understand have been made, it was not foreseen that there would be adverse elements which have affected the situation. Would it not be fair for him to assess those, because after all we are not prophets and cannot have all the wisdom in the world. If in fact savings were actually
Canadian National Railways made though offset by unforeseen and even keener competition from rival methods of carriage, is it not fair to take that into account?


Douglas Mason Fisher: I certainly agree with the hon. member that it must be taken into account, but my whole point is that where you are expending millions and millions of dollars, substantial fractions of billions of dollars, very careful projections need to be made, and all I am suggesting is that within five years the optimistic projections have been proved wrong. The program is now going to continue for another five years, and I am just wondering what assurances we will have that there is more accuracy in the present projections.
Put in its most simple terms, a tremendous amount of capital has been pumped into Canadian National Railways since the war to make it a going concern. Yet in 1960 the C.N.R. seems no closer to being a going concern than it was in the post-war years up to a decade ago. Surely this faces us with a question of economics and a question as to the future. No one is in a position to say that this should end the C.N.R. We cannot turn our backs on the problem, but I do think we should know much more concretely and have a much tighter projection as to the future of this railway in terms of deficits. I cannot see why these trends toward loss of traffic to rival carriers and the trends as to wage demands were not taken into the picture.
Looking back over the years it seems to me that the C.N.R. repeatedly comes before the house committee and these bills are brought before the house, and the projection is always too short range and always too optimistic. I am not suggesting that we should call a halt to passing measures such as this, but certainly we should get a much clearer pattern as to where we are going in our railway expenditure. This raises an issue that is much larger than what is now before this house, and that is the issue before the royal commission on transportation. I want to emphasize that I do not believe the royal commission on transportation is getting to the nub of problems such as this. I feel that its proceedings have developed into an argument between various regions of the country over questions involving the freight rate structure, which is very complicated and which only a few experts can understand. I do not know what Solomons there are on the royal commission on transportation, but I do not envy them the task of working out the freight rates question.
It seems to me that what we have to consider is something even more important than anything the royal commission is trying to settle, namely where this railway is heading

Canadian National Railways when we keep on having these huge deficits when, despite the immense expenditures, the railway that we are supporting is not improving its position. Mr. Gordon has told us to fire him if we do not think he is efficient. I am not yet at the stage where I wish to suggest that we should importune the government to fire Mr. Gordon, but I certainly think we have to take into consideration whether we can go on much longer with the present management of the railway and the present treatment that the government is giving to the railway, and yet year after year be faced with this very dark financial picture.
It would seem to me that it would be acceptable if we took it for granted-this of course is what the members of this party believe-that the government-owned railway is not a viable economic concern in the sense of a corporation operating in a free market structure, but it is very hard to get this view generally accepted not only in the minds of members of parliament but outside the house. The president of Canadian National Railways insists that his railway be treated like any other corporation. That is one of the reasons he refuses to give members of parliament certain information they would like to have. In other words, the president of Canadian National Railways insists that this is a corporation like any other corporation, and one that is operating under many of the same factors. As I say, he goes so far as to say that we should fire the management if we think they are inefficient. What can one help but think about the management if after these tremendous capital expenditures, with many more to go, the picture is still as stark and gloomy as ever?
I should like to argue that Mr. Gordon himself and those who expect Canadian National Railways to operate like any other corporation, for example the Canadian Pacific Railway, are the ones who are mistaken. I think the president himself has a wrong conception of the role of this corporation. I think it is time we stopped kidding ourselves that by bills such as this, that pump millions into the C.N.R. structure for capital improvement, we are finally going to enable the railway to reach the stage where it will show a balance sheet with profits. In the light of our experience with the C.N.R. over the last 10 years it almost seems to me that the balance sheet is not a very important item at all. This leads me to the suggestion that what we should perhaps do is analyse just how far we want to go as a government and as a nation in committing ourselves to Canadian National Railways, and also just what we expect from the railway.
It seems to be ironical that we should allow the president of Canadian National


Railways to go before the royal commission on transportation and present his argument on the statutory grain rates, for example, or his argument so far as the trucking situation is concerned; or that we should allow Canadian National Railways to appear before the royal commission as an independent organization, when we know that the government is underwriting the railway and that in many ways the railway is carrying out chores which can never be economical in terms of the balance sheet but which the government and the people of Canada expect it to do.
I know that one of the things we expect in our part of the country is that when the iron ore trenches north of lake Superior are opened up, Canadian National Railways will be in there to provide rail service. What I am suggesting is that we expect much more from Canadian National Railways than we can expect from an ordinary corporation operating in a free market. For this reason the attitude of the president and of the government tends to be out of line. We are importing into our consideration of Canadian National Railways arguments, attitudes and financial procedures that apply to a free market corporation, and that is not what we have.
I should like to have the minister's comments upon this particular situation. It seems to me that if the future of Canadian National Railways is not to be a black one, you must forget the idea it is an organization primarily designed to make a profit. If the members of this house believe it is the primary design of Canadian National Railways to make a profit, then it seems to me we have to come to grips with Canadian National Railways and do some real cutting and slashing. We have to get much tougher than we have been. It certainly seems to me that Canadian National, judged as a corporation in the free market, has been a failure in the last five or six years. I am not going to be the one to call for Mr. Gordon's head, but some of the members of the house who are much more wedded to the free enterprise concept should be pressuring the government at this time, it seems to me, to have Mr. Gordon's head.
We will support this resolution, Mr. Chairman. However, I should like to underline again that the understanding members of parliament have of the operations of Canadian National Railways on the financial side is of a sketchy nature. This year Mr. Gordon, before the committee, tried a new approach in order to enlighten us on the railway's problems. Instead of reading from reports he showed us a series of graphs and charts. This was much better than the form of presentation used in the past. The difficulty with

this presentation, however, was that questions and analyses are rather difficult in a darkened room when graphs are flying on and off a board. I think anyone who reads the evidence from approximately page 36 through to about page 70 is going to come to the conclusion that our analysis of the finances of Canadian National Railways was rather superficial. I believe our analysis of this resolution in this committee is probably going to be superficial, and for that reason I should like to throw the committee upon the mercy of the Minister of Finance. Perhaps with that prodigious industry of his-he has spent so much time understanding the finances of the government and the Canadian National -he could give us some enlightenment on these points, especially the ones brought up by the hon. member for Kenora-Rainy River. Perhaps he could enlighten us on this whole question of the government's views on the Canadian National and its efficiency.


Mr. Browne (Vancouver-Kingsway):: I want to raise a matter which I raised in the committee on railways, air lines and shipping and which caused a good deal of discussion at that time, although we did not seem to get too many answers. I refer to the entry of the railroads into the trucking business. I think this is something that needs to be given very serious consideration. We were told by Mr. Gordon in that committee that the railroad had committed $5 million to the purchase of trucking firms, and that they were asking for a further $5 million this year. At that time I suggested that before the second $5 million was committed we should be made aware of what had been done with the first $5 million.
It was my feeling that if the railroad went too extensively into the trucking business it might have the effect of lessening competition in the transportation field, and I do not believe that would be in the public interest. I should like to cite a case which came up in 1957, and which would indicate to some extent the value of having trucking competition with the railroads. I refer to a submission made to the board of transport commissioners at a time when the railroads had made some rather serious cuts in their rates. This quotation is taken from the submission made to the board of transport commissioners by the Canadian trucking association, and the rate cuts referred to are taken from the published tariffs of the Canadian National and Canadian Pacific railways, which are identical. Paragraph 2 of this brief says:
It can be seen most of the rate reductions are of the order of 40 per cent and more, some even exceed 70 per cent and one represents a cut of 77 per cent.
Canadian National Railways
I believe that these benefits accrue directly from competition in the transportation field. There is little doubt in my mind that no such rate cuts would have been made if the railroads had owned these particular trucking companies. I feel that anybody can see the need for the railroads to have feeder lines today to bring goods to the railroads. However, when we tried to find out in the committee on railways, air lines and shipping what the policy of the Canadian National was going to be in going into the trucking business, there were some rather interesting answers given by Mr. Gordon in reply to the hon. member for Simcoe North. I do not want to take up too much of the time of the committee so I will not read the question, but I will read Mr. Gordon's answer, which is self-explanatory. At page 132 of the evidence of that committee Mr. Gordon is reported as saying:
We have had quite a number of operators who have offered themselves for sale. What we are trying to do now, and we are at a very early stage, is to pick and choose in such a way so that we will form a backbone of trucking service which will be on a coast to coast basis. We may select any particular trucking operation which might fit into that plan; but we do not want to duplicate or overlap.
Then the hon. member for Simcoe North said:
I do not quite understand why you want coast to coast trucking service. I seem to be a little confused on that subject. It would seem to me that you would be more interested in providing a trucking service which would truck, say, within a metropolitan area and thereby generate coast to coast shipping for your railway.


Walter Lockhart Gordon: Because there are many instances where the traffic that is operating under modern conditions is not best handled by the railway.
It seems to me this only indicates the railway's desire to go completely into that line of endeavour, thereby eliminating competition. We had another instance of the lack of competition given to us in the committee, and that was in the piggyback operations of the railroad. We were informed by Mr. Gordon that in the maritime provinces the railroad would not take trucks belonging to anybody else in the piggyback operation; they would take only their own trucks and refuse to carry trucks belonging to anyone else. I feel it is significant that, notwithstanding the Maritime Freight Rates Act, freight rates have gone up faster in the maritimes in the past 10 years than in other parts of Canada. I suggest to the committee this is the result of lack of competition.
I do not know what effect the amount of money the railroad has spent has had in the way of lessening competition, but it seems to me it is a wrong policy for the railroad to commit $5 million to this purpose and not tell

Canadian National Railways parliament what they have done with that amount of money. Now they are asking for a further $5 million and I see that according to the terms of this resolution the railroad could enter into contracts up until July 31, 1961. It seems to me we should have some idea of what has been done so that we can make some assessment of whether this purchase of truck lines by the railroad is going to have the effect of lessening competition. I do not see what other effect it could have.
In the past, royal commissions on transportation have said there should not be too much concern in that regard because it was very easy to get into and out of the trucking business. The cost was small and, therefore, it would be very hard to eliminate competition. However, the trucking industry has been growing in importance in the last few years. Costs have risen greatly. Some of the types of trucks that are used in the kind of competition referred to here would cost $25,000, $30,000 or even up to $40,000 per unit. It is not quite as easy to start in this business as it was a number of years ago. Second, there is a great deal more control by provincial governments. One has to prove public necessity before a licence is granted to operate a trucking business. I suggest that if the railroad applied for a trucking licence in an area in which there was room for only one trucking firm, the provincial government would be hesitant about granting a licence for another person to go into competition with the railroad. Then we would be in the position of having no competition whatsoever in those areas. We would have a railroad owned trucking operation competing with the railway, and I do not think that would be a very effective means of competition. As I said before, I do not think we would have had the rate cuts we have had if it had not been for the advent of trucking competition.
I suggest to the government that this whole question be referred to the royal commission on transportation. I have little doubt that it will come before them, but I think there should be a direction from the government to the royal commission that it is their feeling that this whole matter should be completely investigated, and I think we should have a report from the royal commission before the railroad is allowed to go too much further into this field.


Mr. Regier:: I wish the minister would explain exactly when is it that the C.N.R. obtains its money from the money market on its own initiative and when it obtains it by way of loans from the minister. I notice that this resolution calls for a measure to


grant the minister authority to make additional loans to Canadian National Railways. The money market was rather swamped last year when there was a most unexpected demand on it by Canadian National Railways for $300 million, I believe it was, which is a large amount. I am glad that the issue was oversubscribed at the time; I understand the response to the offering of Canadian National Railways was excellent indeed.


William Moore Benidickson: Highest interest rates ever.


Erhart Regier: Yes, I realize the interest rates were excessive. However, it indicated a little loosening up at the time of available resources in the investment field. At that time we were a little amazed because it was our understanding that these capital needs of the C.N.R. would be made available by the minister. I believe he had received the authority to make this money available to Canadian National Railways, and then rather unexpectedly and for reasons which the minister has not yet explained in this house Canadian National Railways appealed to the money market on its own.
The minister is again asking for authority to make available to Canadian National Railways moneys not exceeding in total $203,950,000. I wonder whether we might have some assurance from the minister that he has every intention of making this money available, or whether, if and when the minister may find himself in difficult circumstances, Canadian National Railways will again have to approach the market on its own. I believe this committee is entitled to a clarification of what happened last year and why it happened, and also an explanation of what are the intentions of the government with regard to implementing the resolution now before us.
The other issue I would like to raise is this. Last year there was indication that the development program of Canadian National Railways was being deliberately curtailed by orders of the government in order to help the government arrive at a balanced budget. I know this could not be so because any curtailment of expansion of the C.N.R. would have nothing to do with the balancing of the budget; there is no relationship at all. However, there is a relationship between expansion and inflation, the availability of investment resources on the money market and the issue of unemployment.
I regret that that expansion program of Canadian National Railways was curtailed, thereby aiding and abetting the unemployment situation. I regret especially that the Canadian National Railways expansion program was not able to even absorb the numbers who were laid off by the railway company

because of automation. I believe that in that one-year period Canadian National Railways laid off some 13,000 men. When there is a great expansion program under way and men with 18 years of seniority have to be laid off, as has happened, then I feel it is most unwise for the government to curtail the plans and expansion needs of Canadian National Railways.
This happened last year, and I think the country is entitled to an explanation as to why that planned program was curtailed. Was it in order to help contain inflation? Was it because of lack of resources, of capital? 1 would like to know whether it is the intention of the government to contain the dangers of inflation and restore normal levels of supply and demand to the money market, even if it means greatly increased unemployment. I would also like to know whether the government regards full employment as an expendable factor when a decision has to be made in this regard. We are afraid, and many of the working people of Canada are becoming increasingly afraid also, that when the government makes a decision on this matter the welfare of the Canadian worker is considered as the expendable element, and that he has to pay the penalty of unemployment in order to help the government achieve other admittedly worth-while objectives.
I hope the minister will be able to make a reply on this matter of financing and also the matter of when curtailment of the program is in order and when it is not.


Ernest James Broome: I would like to make a few remarks, Mr. Chairman, before this resolution is approved. As a member of the committee which reviewed the budget reports of the C.N.R., in the writing of our report I think for the first time since the government changed we did make mention of the fact that we were concerned about the continuing deficits of the C.N.R.
With regard to some of the remarks made by the hon. member for Port Arthur, it is my opinion that the C.N.R. should be operated on the same basis as the C.P.R., and that is to provide services at a reasonable cost, and to get themselves into the black and stay in the black.
One of the recommendations made by the committee had to do with the board of directors. In this regard I was very interested in the report of the Canadian Pacific Railway. They have 24 members on the board of directors of whom seven are on the executive committee, compared to the Canadian National Railways where they have seven members on the board of directors only two of whom are the executive committee.
In testimony the president pointed out that he and any two directors formed the
Canadian National Railways executive committee. The function of the executive committee, of course, is to approve the acts of the president in the administration of the railway. The president was careful to point out that the C.P.R. stands on its own feet, that it is a private corporation and not under the control of the government. That is all very fine, but because of that attitude figures and facts and questions about the operation of the railroad were not given that full disclosure with which they should have been treated.
The C.N.R. is not in that position whatsoever. The C.N.R. is in the favoured position of having all the advantages of free enterprise and having none of the disadvantages. When they have a deficit to whom do they come? They come to the government. But the government has no real control over the C.N.R. As the minister himself pointed out, he simply reports to parliament on behalf of the company. Indeed, the committee was told about a statement by Right Hon. Mr. Mackenzie Kang when the C.N.R. was set up, making it clear that the company was to be operated as a private enterprise corporation over which the government would have no direct control. So we have this private enterprise corporation functioning without the checks and controls which government could place on management, and without the checks and controls which are normally placed on a business enterprise by shareholders and by outside competition under free enterprise.
The evidence makes it clear that the directors do not take an active interest in the operation of the railroad. In one case they stated themselves that they were not too conversant with the details. On the other hand, when one looks at the Canadian Pacific Railway one finds an entirely different setup which characterizes the whole operation, from the board of directors to the final balance sheet. I wish the balance sheets of the C.N.R. bore some resemblance to the balance sheets of the C.P.R.
I return to the point I wish to make, which is that to all intents and purposes the president of the C.N.R. does not have those checks and balances on his power or his decisions which one finds either in a corporation which is controlled directly by the government or in a corporation which is controlled by a board of directors responsible to the shareholders, and I do not think that is the best arrangement for a good operation.
I do not wish to belabour this point. All one has to do is read the reports of the C.N.R. Look at the money that has been poured into it since the end of the war, some $500 million. Then take a look at the final

Canadian National Railways figure for each year. They are shown as far back as 1935, but let us go back simply to 1950. It will be seen that the over-all deficit amounts to something in the neighbourhood of $160 million, while the operation of another railroad, which does perhaps have certain advantages, shows a reasonably good picture.
I am viewing this question simply from the point of view of a free enterprise economy. I do not think the C.N.R. is a make-work program. I think it is in the same position as the C.P.R., and that it is intended to provide a service at a reasonable cost. I say there is something that we should look into with regard to C.N.R. operations. There must come an end to these continuing large scale deficits. Some measure of government action will eventually have to be taken unless the railroad can clear its own house and pull itself into a more reasonable condition.


Mr. Drysdale:: I should like to make one or two brief comments on this subject. I am particularly interested in a matter concerning which the hon. member for Vancouver-Kings-way has spoken, and that is the activity of the C.N.R. in the trucking field. As the hon. member for Vancouver-Kingsway pointed out, there was considerable questioning of Mr. Gordon on this particular subject.
In the budget of 1959 some $15 million was allocated to enable the C.N.R. to get into the trucking field. Of that $15 million the company has apparently used $5 million. The committee endeavoured to find out how this money was being spent. Mr. Gordon indicated that the majority of the deals had not been consummated, and he thought it was not in the interests of the C.N.R. to have the names of the trucking firms revealed at this particular time. I endeavoured to have Mr. Gordon indicate to the committee what was the long range objective of the C.N.R. with regard to the trucking field, and I suggested that if it were not possible to reveal the names at least he could indicate to the committee how the money was to be spent. Unfortunately I did not get an answer to this particular question.
What worries me is that this question is very important to the Canadian people generally, as was underlined during the recent discussion of the Combines Investigation Act. When a government entity such as the C.N.R. is able to expand into the field of trucking, and members of parliament are not told the extent to which this move is likely to go, a serious position arises. There was $5 million allocated for this purpose in 1959. That has been taken up. There is to be another $5 million allocated in 1960, and there is every

reason to believe there will be a further $5 million spent for the same purpose.
I think it is important to examine at this time, in some detail, whether an expansion of this kind is in the public interest. I must admit readily that I think what Mr. Gordon is doing is in the interests of the C.N.R. His main objective is to cut the deficit, and anything he can do in that direction is very commendable as far as the C.N.R. is concerned. However, we do not know what effect this is going to have on the remainder of the Canadian economy. We are being left in the dark about these transactions, and what worries me is that by the time the money has been allocated-perhaps over a period of three years, if the $15 million is spent-the C.N.R. may have bought out the major trucking companies across Canada and, in effect, stifled trucking competition. The answer given by the C.N.R. to our inquiries in the committee has been "We do not think it is in the interests of the C.N.R. at this time to disclose the information".
However, during the committee proceedings I was in a position to ask Mr. Gordon when he thought he would be in a position to indicate what interests had been acquired by the C.N.R. I am reading from the minutes of the committee proceedings at page 222.


John Andrew W. Drysdale: You have $5 million actually
invested now. Could you indicate when you think you would be in the position to advise parliament, through the committee or through publicity, as to the completion of that?


William Moore Benidickson: I was going to ask a similar question, knowing this usually comes before parliament. The capital bill comes before parliament in June. Does the president think by that time, through the voice of the Minister of Transport, that he would be in a better position to give this information?


Walter Lockhart Gordon: I would expect so. I think over the course of the next six weeks or two months we will be able to get some of these entanglements worked out.
I wonder whether the Minister of Finance is in a position to inquire of Mr. Gordon whether he is yet in possession of this information, and to let us know at some stage of the bill whether Mr. Gordon is able to advise us as to the manner in which this money has been expended. I think it is most important to find out in what direction the C.N.R. is proceeding. What is the long range scheme? If the minister could present this information to the committee I think it would be of considerable assistance.


Donald Methuen Fleming: I shall endeavour to review the points addressed to me generally in the order in which they were raised during the discussion. It is evident that some of them at any rate will be clarified when the bill is distributed after receiving first reading.

I was asked about the estimate of the deficit. I have no intention of revising the estimate that has been made by the competent officials of the C.N.R. as to what they think will be the results of the 1960 operation. These estimates are made on available data, and naturally no one can completely foresee the complete course of business during the year; but I have no reason to undertake to revise the estimate of the deficit that was presented by the railway, of $24 million.
I was asked about the extent of any review of these estimates by the Department of Finance. The capital budget of the Canadian National Railways, like that of other crown corporations, is reviewed. That, of course, is done each year by the Department of Finance.
Next I was asked about fixed charges since 1952. The hon. member for Kenora-Rainy River directed this question to me. These are all printed in the copy of the annual report for 1959. I gather that he wishes me to put them on the record. The fixed charges on the railway company commencing in this table with the year 1935 average consistently sums between, let us say, $46 million and $57 million per annum until the capital revision of the C.N.R. was brought about and became effective in 1952. From 1951, when the fixed charges amounted to $48-odd million, they dropped in 1952 to $25,415,000. The other figures for the succeeding years are 1953, $29,376,000; 1954-


William Moore Benidickson: Mr. Chairman, I may have used that term but in doing so I was in error. I am familiar with the progression of fixed charges. I was really thinking in terms of the long term debt. The minister is aware that the financial statements presented to the committee this year were largely in graphic form through the use of slides. Those slides have been produced, of course, in the minutes of the committee, but one sometimes has to guess even within quite a spread of millions of dollars to find what is involved.
The question I had in mind was the progression of the long term debt upon which fixed charges would be based. I refreshed my memory and discovered since that in 1959 it appeared in statistical form. It was not presented in statistical form this year because of the graphic form of presentation.


Donald Methuen Fleming: I was asked then, Mr. Chairman, as to whether I had communicated with the Canadian National Railways management concerning the program of capital investment in 1959. Was the wicked Minister of Finance somehow responsible for imposing his ideas upon the management of
Canadian National Railways the C.N.R. and staying their hand in undertaking useful capital expenditures?


Douglas Mason Fisher: "Wicked" is the minister's own word.


Donald Methuen Fleming: Perhaps that is the way I have grown accustomed to looking upon myself in this role. I can disclaim at once having had any communication with the management of Canadian National Railways in this respect. The decisions in regard to capital expenditures made by the management in 1959 were their own decisions. It will be clear to those who have followed the evidence heard in the committee that the result of the fact that capital expenditures were not as large as they were in the preceding year has been only to delay some of the expenditures; because, as the president of Canadian National Railways pointed out at page 57 of the evidence, the effect has been, of course, to create some budgetary pressures this year.
The next question raised was concerning the recovery of a claim of Canadian National Railways in respect of the construction work on the St. Lawrence waterway arising out of a railway diversion there. I have no further information on that point. I understand that the amount has not been recovered yet, but the committee will recall Mr. Gordon's firm assertion to the committee at page 57 of the proceedings that the company's claim was valid, right, legal and moral, and he indicated his confidence that the claim would be recovered.
I was asked by one hon. member concerning the market borrowings of Canadian National Railways and the course of borrowings from the Minister of Finance. Provision is made in this annual legislation for the financing of Canadian National Railways. Authorization is given to the Minister of Finance to extend loans to the company, and provision is also made for public borrowing on the market.
When we came into office in 1957 we found there had not been any market issue on the part of the C.N.R. for some very considerable time. Indeed, we found that the C.N.R. had borrowed something like $400 million from the treasury and no effort had been made, certainly no sufficient effort, to liquidate that indebtedness to the treasury by borrowing through a public issue of bonds. Since that time we have provided out of the treasury for the current needs of Canadian National Railways, but the company has at intervals of approximately one year undertaken a market offering with a view to liquidating in whole or in part that indebtedness to the treasury.

Canadian National Railways
That is the course that has been followed. The timing, the amounts, the terms of these offerings are a matter of consultation between the management of the company and the Minister of Finance. I think it is a matter of some satisfaction that a high degree of success has been attained in connection with these offerings of Canadian National Railways. The government, of course, must be consulted in these matters, because these bonds of the company are offered only with a guarantee by the Minister of Finance on behalf of the government.
The hon. member for Burnaby-Coquitlam suggested that the last offering was a great surprise. I do not know on what authority the hon. gentleman makes a statement like that. Certainly within the ordinary decisions of selection and timing in these matters, I think everyone was well aware that there had not been an offering of C.N.R. bonds for approximately one year, and that the pattern that had been followed indicated that these offerings were being made at intervals of approximately one year.
I was invited also to give some projection on a long range basis of the future policy and future financial position of Canadian National Railways. I must modestly at once assert that that is rather a tall order to put to anyone. This is going to depend upon many factors, factors related to the economic growth of the country, to the preferences of the public, to the broad direction of economic growth and change and also those questions which go to the root of the whole basis of the outlook for railway transportation in general in the future. There are so many factors that enter into the situation and qualify anything one might say in this respect that I do not think it would be profitable to attempt to read the future in that regard for very long at a time.
Mr. Chairman, may I call it one o'clock?
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Donald Methuen Fleming: Mr. Chairman, the last subject that I was making comment upon was the request that I endeavour to give some long range projection of the future course of the operations, business outlook and finance of Canadian National Railways. This is a subject that is engaging the attention of the best minds in Canadian National Railways. I have indicated reasons why it is difficult to be precise in a field of this kind very far into the future. This is a field that


is undergoing very rapid change, as anyone who has followed the history of railway operations over the past couple of decades well knows.
Mention was made also of what were described as limitations on the annual review of the operations of the Canadian National system. Well, the thought that immediately came to my mind was this, Mr. Chairman. There is very full opportunity available to hon. members of the house through the appointment of the committee that is set up annually for this purpose. This year the committee sat for four consecutive days, namely March 28, 29, 30 and 31. Those were lengthy sessions that the committee held. I do not know of any large corporation engaged in private enterprise which is submitted at its annual meeting to a four-day examination of the details of its business, the way this crown corporation and its subsidiary, Trans-Canada Air Lines, are. The annual meetings of most of the large corporations in this country, which are comparable in size and extent with the Canadian National Railway's operations, last normally for not more than half a day. This is not to suggest that there should not be fuller examination, if any hon. member on that committee wishes, into the affairs of Canadian National Railways. I am simply pointing out that probably the affairs of Canadian National Railways, at the hands of this committee established annually by the house for the purpose, receive a fuller and more searching examination than the comparable affairs of any similar corporation engaged in private enterprise in this country.
If any hon. member has not obtained all the information he sought in that committee it is not possible for me to take any responsibility in that respect. One must remember, of course, Mr. Chairman-and I think this is the point that has been raised by the representatives of management of Canadian National Railways in appearing before the committee-that after all they are engaged in competition with another transcontinental railway, namely the Canadian Pacific Railway. They are also engaged in competition with trucking interests and other forms of transportation; therefore they feel that, in relation to some detailed aspects of their business, to give fuller information would be to make available to their competitors information which could be used to the detriment of the system.
Now, here is a problem in balance, the problem on the one hand of affording to the elected representatives of the people the fullest information concerning the operations and finances of a crown corporation, and on the

other hand seeking to protect the competitive position of that company in relation to its competitors.
I think the final subject that was raised concerns the entry of Canadian National Railways into trucking operations. This has been referred to by several hon. members from British Columbia. This, Mr. Chairman, if we ever embarked upon it, could prove to be a very large subject, and I think it would be unprofitable to us here and now to attempt to discuss it broadly or enter upon the time-honoured debate as between railway operations and trucking operations. I have had some long experience with this subject, Mr. Chairman, and I think I have some appreciation of its extent and ramifications.
The fact is that the railways of this country over long years have been engaged in other forms of transportation than rail operations. The Canadian Pacific has operated a system of steamships; Canadian National Railways for a time also operated a steamship service. Both companies are engaged in air operations, and the Canadian Pacific Railway Company has been engaged in trucking operations in some forms for some years. It was this fact which led Canadian National Railways to represent to the government, something like a year and a half ago, that in order to protect their competitive position vis-a-vis the Canadian Pacific system, and also their position in the face of competition from truckers, it would be necessary for them to enter into trucking operations to some extent.
The committee will recall that a year ago the plan of Canadian National Railways to invest a total of $15 million in the acquisition of trucking rights and operations was discussed and approved. This year the committee was informed by the management of Canadian National Railways that during the past year the company had undertaken commitments in relation to the acquisition of trucking rights and facilities amounting to $5 million. The 1960 budget of the company contemplates the expenditure of a further $5 million for this purpose.
Mr. Donald Gordon, as some hon. members pointed out this morning, indicated why he felt he should not be pressed to give the committee particulars as to the contracts the company had entered into for the acquisition of trucking rights and interests. I am not in a position to give the committee any further information in that regard at this time. In any event, I think the house would normally expect to receive information of that type through the Minister of Transport rather than through the Minister of Finance. But when these negotiations are completed and
Canadian National Railways the particular trucking lines are acquired, I presume the president of Canadian National Railways would not then maintain the objection he expressed in the committee to giving details. I understand that he was protecting the position of the company in pending negotiations, or in any event protecting the position of the company until these various purchases had been consummated.
A question was raised about the C.N.R. acquiring transcontinental trucking services. It was pointed out by several hon. members this morning that this did not look like using trucks as feeders to a railway system. No, it does not, Mr. Chairman. As I understand what Mr. Donald Gordon was saying in this respect, it was that there are certain types of traffic that are moving even transcontinentally by truck, with respect to which the railways do not find themselves in an effective position to compete with the trucking operations because of the advantages of flexibility that rest with the trucks. It was with a view to putting the Canadian National system in a position to compete with these services that, as I read his evidence, Mr. Donald Gordon was indicating that the company might wish to establish transcontinental services as distinguished from services that might be regarded as feeders to normal rail operations.
I believe the house is well aware that both railway companies have used trucking services very effectively as feeders to their rail services, and they have maintained-I have no doubt that in this respect they are on sound ground-that apart from providing such trucking services they are not in a position to compete effectively against truckers for certain classes of traffic.
I think the final aspect of this matter that was raised was whether there might be any question of suppression of competition if a company like Canadian National embarked more extensively into the field of trucking operations and bought up existing services. I do not think anyone need have any fears about lack of competition in transportation in Canada. This is a very highly competitive field. Indeed, there has been an intensification of competition in this field in the last quarter century that has left the railways in a position where, working under severe regulation as they have been, they have maintained that they are prevented from protecting their position in the face of new forms of competitive transportation. So these are all considerations that have entered into the decision of the management of Canadian National Railways to enter the trucking field, and the reasons the present bill, which is related to the budget for 1960, contemplates the investment of a further $5 million in the acquisition of trucking rights and facilities.

Canadian National Railways
Because answers in detail on certain negotiations were not available to this year's committee does not mean, as I interpret the evidence, that information of that kind would not be available next year after negotiations are completed with respect to contracts which were under negotiation or had not yet been consummated at the time the committee was sitting in March last.


William Moore Benidickson: Mr. Chairman, I should like to refer first to the last point dealt with by the minister, namely the type of information requested by a couple of other members of the committee from Vancouver. I think one of them quoted some reference in the proceedings to what I had said, but I want to assure the minister that I was endeavouring to lend some help to the president of the road if, from the competitive point of view, a short period of time was required before giving this information. But I think all members of the committee will agree that that concession having been made in the committee, and the fact that the point was not pursued, gave the committee the very definite understanding that there was a commitment that before we passed this legislation we would find the Minister of Transport in his seat ready to give this information. He is not here today, but perhaps he could be here on second reading of the bill, inasmuch as there was a definite understanding that the legislation could not be expected to receive passage in the house with the approval of most hon. members unless this information was provided.
I do not think it was quoted by hon. members who spoke on this subject this morning but I believe a point was reached in the proceedings-I cannot put my finger on the passage at the moment-where the president indicated that if pressed he would even give the information then. Certainly we all got the impression that there was a commitment so far as the president was concerned. I think he was grateful for the extra two months for negotiation, but he did not expect the legislation would pass without giving the information to parliament which supplies these funds.
Before we approve the resolution there is another point on which I should like a little more information from the minister. When he rose to reply he said he had obtained the impression from the debate that he was being characterized again as the wicked Minister of Finance. I certainly do not think that is the impression he has conveyed today. If he is to be criticized at all, I think he might be criticized on the grounds of extraordinary benevolence and complacency.


Donald Methuen Fleming: I was referring to the suggestion that there had been some interference on the part of the Minister of Finance with the operations of the management of Canadian National Railways in relation to its capital investment program.


William Moore Benidickson: Quite; and it is on that point that I wonder whether the committee will not come to the conclusion that the minister and his department are perhaps not checking on these matters sufficiently. I raised the point originally that last year, within a few days after we had been considering legislation identical with the legislation we are considering now, the C.N.R. came to the conclusion that an amount of $241 million in the funds that parliament had been asked to provide a few days earlier was not going to be necessary. I raised the question this morning whether the same kind of thing would happen this year.
I have more reason to raise the question about this year's budget. I failed to draw this to the attention of this committee this morning but I recall that in the sessional committee on railways, air lines and shipping owned by the government the president himself said, although I do not think he put a dollar value on it, that the budget included an item for 40 diesel locomotives which might not be required this year.
I indicated in my main remarks this morning that the operating experience, as reported for the first four months, has been very disappointing indeed. The road is not even equalling the equivalent net revenue position of 1959. Indeed, in the first four months it has gone behind the experience of 1959 to the extent of $7.5 million. I just cannnot imagine the minister being so indifferent to this situation that he or his officers would overlook this suggestion of the Canadian National that this item might not be required; and inasmuch as the budget has been prepared many months ago, I would think that before a bill was prepared for parliament the minister would scrutinize the capital requirements again and ask whether or not there are to be reductions such as were made a few days after this legislation was passed last year. I would think he would ask in particular whether the report to parliament, along the lines indicated by the president of the road, was in accordance with the circumstances, and whether it is going to be necessary in 1960 to provide financing for these 40 diesel units to which reference was made on page 55 of the report of the committee on railways, air lines and shipping.


Donald Methuen Fleming: Mr. Chairman, our information is that this capital program is required. The hon. member speaks about this

program having been prepared many, many months ago. It is not quite that long, Mr. Chairman. It is true that work on the preparation of the annual budget, as regards both capital expenditures and current operations, is begun before the end of the previous year, but this type of document is under examination in the early months of the succeeding year and the house has had an opportunity, through the committee, to obtain any recent information on the subject. It was in line with the situation at the end of March that the committee examined the budget and proposed capital expenditures for 1960. I do not profess to have anything new, anything different, anything to vary the picture as disclosed to the committee of this house by the management of Canadian National Railways.


William Moore Benidickson: This information was provided on March 28. Many millions of dollars are involved. The remarks of the president of the road on March 28, to which I referred on page 55 of the minutes, read as follows:
We have a commitment item in the 1960 budget for an additional 40 units, for which commitment authority was previously granted, but these locomotives will be purchased only if traffic should exceed our expectations in the latter part of 1960 or during 1961.
Surely, with money for any purpose being as scarce as it is, the parliament of this country would expect the minister and his officers, after two months from the receipt of this type of information and before asking us for unnecessary authority, to make inquiry and try to determine whether, having regard to the operating results which are very depressing, this commitment need be made by this parliament in the bill that will follow this resolution.
(Translation):


Mr. Dubois:: There is, in my riding, an organized trucking service operating in areas not served by the railways.
Today, after years of difficulties, private interests have managed to set up a service which is entirely satisfactory to their customers.
Now that the operation is soundly established, railway companies want to set up a trucking service of their own.
We know that, for years the C.N.R. has been unable to take care of its own expenditures and that every year it requires government subsidies to meet its operating costs. Well, if for the sole purpose of competing with existing services, the railway puts in a trucking business which cannot meet its
Canadian National Railways own expenditures-as is already the case for its railroad operations-are we not justified in wondering whether, sooner or later, the government will not be faced with the obligation of supplying new grants to cover more losses in that respect?
If the railways are allowed to enter that field, our truckers and private trucking companies will sustain losses that will be too much for them, and will have no other alternative than to apply for government grants to make up for their deficits.
In my opinion, Mr. Chairman, it would not be to the government's advantage to encourage railways to establish trucking operations, especially in areas where there are no railroads and where there will probably never be any.
If private concerns or interests have been successful in providing the transportation needs of any given area, I fail to see why railways should be allowed to compete with them.
Therefore, I am all in favour of the suggestion made by the hon. member for Van-couver-Kingsway (Mr. Browne) and I move that the matter of highway transportation be referred to a royal commission on transport.
(Text):


Douglas Mason Fisher: I just wanted to ask the minister if he could give us any indication as to whether the amount of money being extended by the Canadian National to Trans-Canada Air Lines is the same as was indicated in the annual report of Trans-Canada Air Lines, namely approximately $82 million for this coming year.


Donald Methuen Fleming: There is no information to change that indication, Mr. Chairman, since the matter was before the committee. This figure is largely influenced by the requirement of Trans-Canada Air Lines in relation to the purchase of new equipment.


Douglas Mason Fisher: On page 365 of the committee report we find the Trans-Canada Air Lines property and equipment budget for 1960, 1961 and 1962, and we have a rather remarkable cut-down in major construction as you get past 1960. When you look at Canadian National Railways chart No. 14, page 62, which was displayed to us by the president of the C.N.R., you get an indication that there is going to be a rather remarkable cut-down in capital expenditures, although we did get an indication that the fixed charges were going to go up for a number of years until they hit a peak at some $70

Canadian National Railways million. This is the sort oi projection which I was talking about, which would be very useful.
I am wondering what the attitude or position of the government is going to be with regard to making absolutely sure these projections are carried out. What guarantee have we that we are going to get this continued cut-down in these rather large expenditures? Can we assume that Canadian National Railways and Trans-Canada Air Lines are entering a decade in which their capital needs will be such, no matter what difficulties either one of these lines may get into, that we can absolutely count on the fact that this is going to continue on its downward path?


Donald Methuen Fleming: Unfortunately there are wide fluctuations from year to year in the capital requirements of Trans-Canada Air Lines. The figures appearing on page 365 of the proceedings of the committee for the years 1960, 1961 and 1962 very clearly illustrate this fact. It happens that in 1960 Trans-Canada Air Lines is taking delivery of a great deal of new equipment. Their program arises out of re-equipment of their principal lines of operation, and that equipment is being delivered in 1960. Then largely with the completion of that program their requirements for 1961 and 1962 will be very materially reduced.
It is of course unfortunate from the financing point of view that it is not possible to level out the requirements more evenly than these figures indicate, but that is a situation which results from the program of purchases that the company has entered into. This was the only way in which arrangements could be made for delivery of the new planes with which they are equipping their major lines.


Douglas Mason Fisher: I will not put in a rhetorical way but rather in a general way. Can the minister say he is satisfied that one can take a fairly optimistic view about the financial position of these two government enterprises in the next, say, five or ten years?


Donald Methuen Fleming: Mr. Chairman, perhaps I should have said, in enlargement of my answer to the hon. member's previous question and observations, that I gave intensive personal study to this very point, because I do not need to disguise my concern over the very heavy volume of capital expenditure by Trans-Canada Air Lines in the year 1960. I would have been much happier in relation to other responsibilities that the government must meet if the capital expenditure of Trans-Canada Air Lines could have been spread out more. But there was no possibility of meeting this situation in any

other way because the contracts had been entered into, deliveries are provided for in 1960, and payment must be made in this coming year.
Now as to the longer outlook, here again, Mr. Chairman, I do not propose to substitute myself for the officials of Trans-Canada Air Lines who came before the committee and were there available to be questioned on these very matters. I can only say that from the government's point of view the same due regard will be had for seeking a sound approach to the provision which must be made for these crown corporations to enable them to discharge the function that parliament has given them to perform.


William Moore Benidickson: Mr. Chairman, the minister made no comment after the last remarks I addressed to him. I indicated this morning that there were several stages of scrutiny of requirements. The president of the C.N.R. indicated to us that his field people thought that this year they would need capital expenditures of $272 million; that this was reviewed by a committee at head office and was brought down to $225 million; that the president himself gave it his personal attention and it was brought down to $197.6 million. There is no indication here that anything happens after that comes to the government. Is that the impression the minister wants this committee to retain?
I indicated to him a place where the committee was informed that certain funds might not be necessary for this year, that if conditions were not very good some 40-odd diesel locomotives might not be required. In the interval of two months since that evidence was given to parliamentarians, does the minister want to convey the impression to this committee that the cabinet does not inquire into these things and that they sort of automatically rubber stamp a request of this kind from the crown corporation?
During the luncheon recess I made some calculations about funded debt, to which I made reference this morning, and I found that the grand total at the end of 1951, before the reorganization, amounted to $1,472 million. There was a writing off, as all people know, of some of the debt of the road, with the result that the balance sheet showed that at the end of 1952 the grand total, instead of being $1,472 million, was written down to $605 million. The total has now gone from that figure of $605 million to a total at the end of 1959 of $1,686 million. That is an increase of $1,081 million, and takes no account of an additional increase in debt that is paying no interest, namely the purchase of preferred shares.



I960

[Stage Direction]
The original amount of purchase as shown in the balance sheet for the first year after reorganization, December 31, 1952, indicated that the preferred 4 per cent shares amounted to $754 million. In the annual report for last year they are shown as amounting to $904 million. That is an increase of $150 million, in addition to the $1,081 million which I have indicated as the amount of increase in funded debt since reorganization. In other words, it shows a total increase since December 31, 1952 of $1,231 million. I am not saying that has not progressed under the former administration as well as the present, but I do say that there were at least three surpluses during the previous regime and we have not had them recently.
The hon. member for Port Arthur raised some very pertinent questions today, as to whether this supply of new funds year by year has actually improved the financial position of the road. I think all of us in the committee would be perturbed if we felt that the minister and his colleagues simply felt obligated to approve automatically a request which came from the management when we are dealing with outstanding sums such as we have been talking about today.
Donald Methuen Fleming: Mr. Chairman, to anyone who has not been following this debate, the hon. member's remarks would leave a very misleading impression. I dealt with this subject before the luncheon adjournment, and I made it quite clear that the capital budget of Canadian National Railways, like the capital budgets of other crown corporation, comes before the government. It is reviewed in the Department of Finance before it is approved. The hon. member, I am sure, must be familiar with the law in that regard.
I do not know of any justification that anybody has had for suggesting that the government has operated in any respect like a rubber stamp. I have never heard that allegation asserted before, Mr. Chairman, in relation to the discharge of the responsibilities of the Department of Finance in reviewing budgets and expenditures.
What the hon. gentleman had to say earlier on the subject of equipment acquisition also called for some comment. When any large corporation of this kind prepares its program of capital investment it is not possible to fit it wholly into the groove of the measurement of the 365 days of the year that the calendar creates. These are plans which naturally require time to fulfil. Questions arise as to forward commitments, as to deliveries, and many other things which affect the tempo and rate of the acquisition of equipment and
Canadian National Railways the fulfilment of programs of capital investment. The C.N.R. has done what any corporation would do in its planning in this respect. It has a requirement in relation to capital equipment and it makes the best estimate as to what, in the first place, it is prudent to acquire within the succeeding calendar year from a financial point of view. Within that limit, again, is the question of what may be expected in the way of deliveries.
That is the situation in which we find ourselves with respect to this matter of equipment. Full disclosure was made in the committee as to the equipment requirements and the plans of the company for the acquisition of equipment, including the diesels. The corporation has based its budget upon deliveries of some of the capital equipment needs that it projected. I think this is all on record before the committee.


William Moore Benidickson: Is the minister, in effect, saying to all of us that notwithstanding the statement which I read from page 55 of the committee report, made over two months ago by the president of the railroad, that 40 locomotive units might not be required if economic conditions were not good-is the minister saying that despite this he does not propose, between this stage of the debate and his presentation of a bill in which he must set out certain figures, to make any inquiry so we can be sure when we are asked to pass a bill with certain sums of money mentioned in it that these are the minimum sums which will be required for 1960?


Donald Methuen Fleming: I hope the hon. gentleman is not going to persist in trying to put words in my mouth which were never there. He has been at pains to take certain capital expenditures proposed for 1960 and try to relate those expenditures to 40 diesel locomotives. The fact is that in the equipment classification plans of the C.N.R. there are not 40 locomotives contemplated, but 140. There is other equipment which the company plans to acquire, and the information which the company has furnished indicates that this sum which is provided for here in relation to capital equipment, totalling approximately $35 million, is what is going to be required in 1960 and will need to be paid for in 1960. That is the item amounting to $35 million in round figures. That is the request by the company for the acquisition of equipment. It is related to a need for a substantial volume of equipment, and it will be acquired as available in 1960.


William Moore Benidickson: Whether or not this equipment is secured in 1960, or paid for in 1960, is the minister going to say to this committee

Canadian National Railways that in the bill he is to present based on the present resolution there will not be included an authorization to the C.N.R. to make this commitment for the 40 diesels I mention at a future date, or that there is not still an opportunity to cancel this decision in view of present economic considerations?


Donald Methuen Fleming: I do not know what present economic considerations the hon. gentleman has in mind.


William Moore Benidickson: The operating results of the railroad.


Donald Methuen Fleming: The hon. gentleman has been attempting today to rewrite the current budget of the C.N.R., and to paint a gloomy picture as to the prospects of the company. 1 have said in reply that I do not intend, and I do not think it is my function, to stand here and revise the estimates which were put forward by the competent management of the C.N.R.
In relation to the acquisition of equipment in the capital investment program of the company for this year what is provided for here is the acquisition of a portion of a much larger total of locomotives, passenger cars, freight cars and work equipment units. The company has asked for a sum of approximately $35 million designed to make provision for what is considered a reasonable portion of this capital equipment need; reasonable from the standpoint of the resources available to meet it, and reasonable from the point of view of expectation of deliveries in 1960.


Jacques Flynn: Shall the resolution carry?


William Moore Benidickson: No. Specifically on this resolution, I ask whether these 40 diesel locomotives are not part and parcel of the phrasing of this resolution. If the resolution were passed without amendment, or without amendment in the bill, would we not be giving authority to Canadian National Railways to make certain capital expenditures or to enter into certain contracts prior to July 1, 1961 respecting these units commitments which extend for almost 13 months ahead? I am referring, of course, to the locomotives. All I have asked the minister to do is to inquire of the management of the C.N.R. before he presents his bill to this house in final form on second reading; to ask the management and report to this house whether the company intends to order these 40 diesel locomotives, because two months ago the president of the railroad said that if economic conditions were not good they probably would not be required.


Donald Methuen Fleming: If it will make the hon. gentleman any happier I will be

glad to ask the management of the C.N.R. the question he put. However, I doubt very much if it will have any effect on the figures submitted to us here today. I have talked about the figure for acquisition of equipment.
I have referred to the fact that this is a portion or fraction of a larger program for the acquisition of capital equipment, the aggregate of which is, in round figures, $35 million, of which $26,345,000 is related to the acquisition of locomotives, passenger cars, freight cars and work equipment units.
I should just like to add on this subject that there is no new commitment authority for diesels in this capital budget. The provision for equipment authority is all old. It has already been provided by parliament. The total of these previous commitment authorities is $33.5 million. Of this, only $20.7 million is expected to be a cash requirement this year. The rest, namely $12.8 million, will be required in the future if all the equipment is in fact ordered, and commitment authority for this purpose already exists. A large part of these sums is due to diesels.


Erhart Regier: I wonder whether the minister is able to inform the committee as to the rate of interest which Canadian National Railways must pay the government of Canada for the $400,000 which he indicated was owing to the government until very recently.


Donald Methuen Fleming: That is at the current rate charged to crown corporations. As the hon. member, I think, is aware, a rate is struck every six months for the six months commencing April 1 and the six months commencing October 1. That is applicable to borrowings from the treasury by all crown corporations. It consists of the current rate that the government must pay on the sums it borrows plus a service charge of one eighth of one per cent.


Erhart Regier: Can the minister indicate what rate prevailed on the $400 million he indicated was owing?


Donald Methuen Fleming: That was owing when we came into office in June of 1957?


Erhart Regier: Yes.


Donald Methuen Fleming: I would have to look back for that, Mr. Chairman. The rate might very well vary from the rate set at the time the loan was entered into. That $400 million was the total of loans going back over a period of some two and a half to three years, as I recall it. The rate in each case would be set at the time the advance was made. I would have to go back and obtain the hon. member those figures.


Erhart Regier: Thank you. In his budget address on March 31 last, as reported at page 2674 of Hansard, the Minister of Finance said:
Over and above these expenditures that are charged to the budgetary accounts we have under authority of parliament disbursed considerable sums for loans, advances and a number of other essential purposes. These included loans of $325 million to Central Mortgage and Housing Corporation, $233 million to the C.N.R.-which, however, repaid $489 million on account of these and earlier loans from the proceeds of public issues of government guaranteed C.N.R. bonds-
I remind the minister that the C.N.R., either on its own volition or on orders from the minister, obtained $300 million, the proceeds of which loan were used to repay to the government money that had been advanced by it to the C.N.R. They offered $200 million of five year bonds at 5J per cent and $100 million of 25 year bonds at 5f per cent. I understand that the yield on the bonds offered was close to 6 per cent.
In other words the minister insisted on repayment of the advances made and on which the C.N.R. had to pay an additional burden through interest. I do not know the rate, nor does the minister offhand, but knowing interest rates as they were a number of years ago I expect that the C.N.R. paid the minister on this sum somewhere between 3 per cent and 4 per cent. The minister, because of his own financial predicament, caused the C.N.R. to apply to the money market for $300 million, and to repay with that money the advances it had received. Therefore the railway was burdened with an additional interest levied on the money obtained, and all of this merely to relieve the minister of the financial difficulties in which he found himself.


Donald Methuen Fleming: That is utterly untrue.


Erhart Regier: If the minister can offer another opinion we would be interested in hearing it. He admits that the proceeds were turned over to the consolidated revenue fund in the repayment of advances. The minister will have to admit that the C.N.R. had to assume an additional interest burden because of the financial difficulties the minister was in at the time. The minister did not appeal to the money market or issue bonds. The hon. gentleman issued treasury bills-


Donald Methuen Fleming: Why do you not
inform yourself on the facts once in a while and stick to them?


Erhart Regier: He was so hard up at the time he had to pay up to 6.8 per cent on the money he needed from the money market in order
79951-0-291
Canadian National Railways to protect himself and his reputation and in an effort to find a scapegoat-


Donald Methuen Fleming: Mr. Chairman, I rise on a point of order. Do we have to sit and listen to the rules of the house being broken in this way through the hon. member making observations of this kind? There is a rule of this house which is supposed to make it improper for hon. members to cast reflections on other hon. members or impute motives to them. The hon. gentleman has said that a certain course of action was taken at that time to protect the reputation of the Minister of Finance. Surely there must be a limit to this kind of doggerel.


Paul Joseph James Martin: On the point of order, Mr. Chairman, surely the Minister of Finance is beside himself-


Donald Methuen Fleming: It was Paul who was beside himself.


Paul Joseph James Martin: The hon. member is advancing an argument. Any argument that reflects on the administrative capacity of the Minister of Finance is not out of order, although it may be incorrect. I do not believe it is always incorrect, but in this instance it may have been. The fact that the minister has been attacked in his administrative capacity is certainly no ground for intervening. The trouble with the Minister of Finance is that he always intervenes in the speeches of others.


Erhart Regier: I notice that the minister is very touchy. Before one o'clock he referred to himself as the evil minister. I know the minister as an individual is most benevolent. I am willing to grant that he is the kindest man in the committee. In my opinion the policies the minister implements are evil, and I was discussing his administration of those policies. On March 31 last as reported at page 2681 of Hansard the minister said:
During^ 1960-61 we shall probably require about $290 million for housing loans, including new and existing commitments, about $150 million for C.N.R. and T.C.A. capital investment and refunding_
On March 31 the minister indicated that he needed $150 million. Today in this resolution he indicates that he needs over $200 million. What has happened in the interval? Roughly only 70 days have elapsed, yet already there has been an increase from the announced figure of $150 million to over $200 million. How does the minister account for the discrepancy? I think the minister will agree- he will have to agree-that he asked the Canadian National Railways to pay into the consolidated revenue fund hundreds of millions of dollars which the company had to obtain from the money market at a much
4620	HOUSE OF
Canadian National Railways higher rate of interest than the rate of interest it was obligated to pay under the terms of the advances as they were made. The minister by his own action, therefore, added an undue burden to the operating expenses of our Canadian National Railways.
At the same time I should like to reply to what I consider to be most unwarranted attacks on the Canadian National Railways, which were launched by the hon. member for Vancouver South and endorsed in some measure by the hon. member for Vancouver-Kingsway and also the hon. member for Burnaby-Richmond.
The hon. member for Vancouver South indicated that the Canadian National Railways ought to be operated on the same basis as the Canadian Pacific railway; it ought to get itself in the black, he said, and it ought to remain there. The hon. member for Vancouver South ought to realize that Canadian National Railways, when it was originally organized as a government owned enterprise, had to absorb all kinds of bankrupt railway corporations and ensure that the investors in those organizations would not lose a nickel on their investment. Therefore there was an undue burden placed on the Canadian National Railways at that time which was partially eliminated by legislation a number of years ago but has never been entirely eliminated. In addition, Canadian National Railways as a public enterprise is repeatedly called upon to serve public interest, the national interest, regardless of the balance of expenditures and revenues; whereas the Canadian Pacific Railway Company does no such thing; it is under no obligations. It operates only when there is money to be made; whereas Canadian National Railways has to operate whatever railways are needed regardless of the possibility of earning a net return. Also, Canadian National Railways has not the heritage that the Canadian Pacific railway has, in that it did not receive those vast natural resources. There is no Consolidated Mining and Smelting Company to which Canadian National Railways can appeal for other revenue to help its over-all balance account.


Ernest James Broome: Will the hon. member please look at the Canadian Pacific statement and compare other railway operating revenues and leave those ancillary operations out of the picture. Also will the hon. member please remember that both railways report to the board of transport commissioners.


Erhart Regier: I will do as the hon. member asks but I will contend that Canadian National Railways have to offer many services to the Canadian people as a whole-


Ernest James Broome: Such as what?


Erhart Regier: -in the national interest, which the Canadian Pacific railway will not offer.


Ernest James Broome: Such as what?


Erhart Regier: The hon. member asks "Such as what?" I contend that in the matter of grain movements which, as the hon. member knows, have to be operated at a loss, Canadian National Railways is the railway which has to bear the brunt of moving grain at an uneconomical rate and the Canadian Pacific railway is able to get off relatively scot free on that account.


Ernest James Broome: Will the hon. member specify?


Erhart Regier: The hon. member has only
to look at the railway map and he will immediately realize that it is Canadian National Railways that hauls the bulk of the grain out of Manitoba, Saskatchewan and Alberta, and the Canadian Pacific railway has very little of this burden.


Donald Methuen Fleming: How ridiculous.


Mr. Speakman:: How little you know about grain hauling.


Erhart Regier: I know a little about the
railways. I know Canadian National Railways has to bear the brunt of this uneconomical operation. I also know there are oodles of branch lines all over the Dominion of Canada which are uneconomical and if they are owned by the Canadian Pacific railway the service is discontinued. However, if they are owned by Canadian National Railways they have to supply this railroad service in the national interest. The Canadian National Railways has to assume many a burden that the Canadian Pacific Railway Company is able to escape.


John Andrew W. Drysdale: Has the hon. member comparative figures for the two railway systems to submit? Can he assist the committee by giving the figures?


Erhart Regier: I ask the hon. member to
have one look only at the railway map of Manitoba, Saskatchewan and Alberta.


John Andrew W. Drysdale: I am not interested in the railway map; I am interested in getting figures to make a comparison of what the hon. member says is a fact.


Erhart Regier: I shall return to the hon. member in a moment.


Mr. Brunsden:: What is the relative mileage of the Canadian Pacific and the Canadian National in the largest grain-growing parts of Manitoba, Saskatchewan and Alberta?


Mr. Pascoe:: He does not know anything about it.


Erhart Regier: I am not a railway director. If the hon. member knows the figures I will be very happy to have him place them on the record.


Edwin William Brunsden: Look at the map.


Erhart Regier: I dare any hon. member on the government side of the house to produce the figures as to the mileage of each of the railway companies in Manitoba, Saskatchewan and Alberta, and I think if they do they will realize that Canadian National Railways is at a distinct disadvantage.
The hon. member for Vancouver South indicated that the board of directors of the Canadian National Railways had no control over Canadian National Railways; that the control they have does not come anywhere near the authority exercised by the board of directors of the Canadian Pacific Railway Company. I hope I have not misinterpreted his basic assumption in this regard. If the hon. member would take the time to investigate all the other responsibilities and offices held by the directors of the Canadian Pacific Railway Company I think he would immediately agree that these men-I believe he indicated they were 24 in number-are so occupied with so many other enterprises that they are unable to give the close supervision to the operations of the Canadian Pacific Railway Company that he and I would like to see them exercise. These are honorary positions and management has almost complete sway in this as well as in many other corporations. The hon. members for Vancouver-Kingsway and Burnaby-Richmond seem to be very concerned about Canadian National Railways being able to buy out competing truck lines. I did not hear them voice any opposition to the Canadian Pacific railway buying out truck lines.


John Ferguson Browne: You
were not listening.


John Andrew W. Drysdale: The C.P.R. was not before the committee.


Erhart Regier: We used to have a spokesman representing the interests of the Canadian Pacific Railway Company in the House of Commons. He was an opposition member then but he is now Prime Minister. He is no longer able to represent the interests of this organization and now we have the hon. member for Vancouver South and the hon. member for-


Mr. Fulion:: Mr. Chairman, on a point of order, if I understood the hon. member correctly he has just made an allegation which again, if I understood him correctly, is so 79951-0-291i
Canadian National Railways unfounded that I think he should be asked to withdraw it, particularly in the absence of the Prime Minister.


Paul Joseph James Martin: What was the allegation?


Edmund Davie Fulton: The allegation was that when the Prime Minister was in the opposition he was a spokesman for the Canadian Pacific Railway Company. That, sir, is entirely unfounded, and in the light of that fact and especially in the absence of the Prime Minister I think the hon. member should withdraw that allegation.


Erhart Regier: May I say that if necessary I will amend my statement-


Donald Methuen Fleming: Withdraw it first.


Some hon. Members:: Withdraw.


Erhart Regier: -and say that the Prime Minister used to speak on behalf of the Canadian Pacific Railway Company in the house and now we obviously have new representatives in the house of the interests of the Canadian Pacific Railway Company as opposed to the interests of the Canadian National.


Donald Methuen Fleming: A shocking untruth.


Jacques Flynn: I think the hon. member will agree that he cannot say that any member of the house speaks on behalf of special interests, and I am sure he will correct his statement further and in a clearer manner than he has done up to now.


Donald Methuen Fleming: Withdraw.


Gordon Minto Churchill: Withdraw.


Erhart Regier: I will amend it in line with your wishes, Mr. Chairman, and say that the effect of the representations made by the hon. member for Prince Albert used to advance the interests of the Canadian Pacific Railway Company and the effect of the remarks of the hon. members for Vancouver South, Vancouver-Kingsway and Burnaby-Richmond is to advance the interests of the Canadian Pacific Railway Company as opposed to the interests of the Canadian National.


John Andrew W. Drysdale: On a question of privilege, Mr. Chairman, I would ask the hon. member to withdraw these remarks because they are unfounded in the light of the facts. The only railway before the committee was the Canadian National, as the hon. member should fully understand, and the statements I made were made in an attempt to get certain information from the president, Donald Gordon, as to their activities with respect to

Canadian National Railways truck lines. Mr. Gordon indicated that perhaps the information would be available some two months later. I have sought to get this information to ascertain where Canadian National Railways is going in its trucking program. I have no interests in the C.P.R. or the C.N.R. I was only trying to find out something about what was in fact discussed by the committee and I object to the hon. member drawing unwarranted conclusions which are not justified by the facts and the statements I made.


Edmund Davie Fulton: Mr. Chairman, on the question of privilege, I am sure the hon. member for Burnaby-Coquitlam will realize on reflection that he has not withdrawn the allegation he made that the Prime Minister was a spokesman for the Canadian Pacific Railway or, alternatively, that he represented the Canadian Pacific Railway's interests. That is an improper allegation which is entirely unfounded and incorrect, and I suggest that the hon. member should withdraw it without qualification.


Erhart Regier: I thought I had done so when I said that in effect-


John George Diefenbaker: Mr. Chairman, I rise on a question of privilege immediately. The hon. member allegedly made the statement that during my representation in the House of Commons I spoke for the C.P.R., intimating that I had acted for the C.P.R. at some time or other. That statement is false in its entirety. At no time throughout my entire period as a solicitor-not that I would deny it if it were a fact-in my professional capacity have I acted directly or indirectly. In addition, the statement that I have expressed the viewpoint of the C.P.R. in the House of Commons is without any vestige of truth, and I ask that the hon. gentleman withdraw.


Erhart Regier: I thought I had made it perfectly plain that I had absolved all these members, the hon. member for Prince Albert, the hon. member for Vancouver South, the hon. member for Vancouver-Kingsway and the hon. member for Burnaby-Richmond of any intent to represent the interests of the Canadian Pacific Railway Company in the house as opposed to any other interests. However, I do contend that the effect of the representations they have made in the house has been to aid the interests of the Canadian Pacific Railway in opposition to the interests of the Canadian National.


John Andrew W. Drysdale: Nonsense.


Erhart Regier: I think I am completely within my rights in expressing my opinion of the effect of their representations.


John Andrew W. Drysdale: The facts do not bear you out. That is a lot of nonsense.


John George Diefenbaker: Mr. Chairman, I never ask for a withdrawal except when statements are obviously made with improper purposes in mind.


Erhart Regier: I object, Mr. Chairman. On a question of privilege, the Prime Minister has no right to impute improper motives to me or to any other member of the house.


Jacques Flynn: Order. A point of order has been raised and I will hear the hon. member on the question of privilege after the point of order has been disposed of.


John George Diefenbaker: Mr. Chairman, no improper motives were imputed. A statement was made that simply has no basis. I do not require absolution from the hon. member. I require a withdrawal of any suggestion of truth in the statement that he made.


Jacques Flynn: As I have mentioned, no hon. member may impute any motive to any other hon. member. I understand that the hon. member for Burnaby-Coquitlam is willing to withdraw his statement, and if I heard him correctly he has withdrawn completely.


Some hon. Members:: No, no.


Donald Methuen Fleming: With respect, Mr. Chairman, the hon. member did not say he withdrew. He simply said, "I will amend my statement", and then he went on and said something equally objectionable under the rules of the house. The hon. member has said something that is in breach of the rules of the house and with respect I say he should be called upon to make an unqualified withdrawal of his assertion that the Prime Minister, as he first said, represented the C.P.R. in the house and, as he later said, spoke on behalf of the C.P.R. in the house.


Jacques Flynn: In any event, in order to make the position clear I am sure that the hon. member for Burnaby-Coquitlam will clarify his withdrawal.


Erhart Regier: I thought I had made it perfectly clear but I will reiterate what I said earlier. I withdraw completely any imputation or impression that these hon. gentlemen represent the Canadian Pacific railway in the House of Commons. What I maintain though is that the effect of what they say is to advance the interests of the Canadian Pacific Railway Company over and above those of Canadian National Railways. I think I am right in placing my interpretation on the effect of their speeches while at the same time realizing that their motives are as noble and as good as my own.


Donald Methuen Fleming: Mr. Chairman, it is regrettable that the time of this house must be taken up in listening to speeches of the kind that has just occupied the time of the committee, if not its attention. We have just listened to some of the most pathetic nonsense that I am sure has ever been uttered in this house. If there is any resemblance at any point in the hon. member's lengthy remarks to the facts and the truth, then surely that resemblance must be purely coincidental. The hon. member's statements bear no resemblance to the facts in relation to what he said in regard to Canadian National financing or in his attacks on hon. members of this house.


Paul Joseph James Martin: Why not state the argument instead of flinging insults?


Donald Methuen Fleming: Will the hon. member kindly confine himself to conducting his own affairs in the house without seeking to rule the house or his friends in it?
The hon. member began by drawing on his imagination in regard to the financing operations of Canadian National Railways in the open market, and made some assertions and accusations in which there is not one tittle or shred of truth or foundation. In the first place, he pictured Canadian National Railways as enjoying a favourable rate of interest as long as they were able to borrow from the treasury, and then they were pushed out into the cold to borrow money at a higher rate of interest. It is regrettable that the previous administration had not followed the proper course from time to time of having the borrowings of Canadian National Railways from the treasury liquidated. Apparently the hon. member's idea is that so long as money is owed by Canadian National Railways to the treasury, everything is all right. Well, the treasury has to go and borrow that money. This is the simple fact which, in his presentation of the situation, was completely omitted.


William Moore Benidickson: If the government have a surplus they do not need to go out and borrow.


Donald Methuen Fleming: The hon. member cannot afford to talk very much about a surplus. In the period in which his party formed the administration, if there was a surplus, why was it this huge amount of $400 million was left to accumulate in the treasury?
Everybody knows that Canadian National Railways, over the period of years it has been in operation, has been meeting its money requirements on an interim basis by borrowing from the treasury. Then at periods that were regarded as suitable the railway has gone into the market and has offered bonds, with the guarantee of the Minister of Finance, and with the proceeds from those bond issues
Canadian National Railways has liquidated, in whole or in part, its indebtedness to the treasury. This is what should have been done earlier than 1957, and that is what we were left to undertake. In the beginning of 1958 Canadian National Railways put out an issue of $300 million of bonds bearing a 4 per cent coupon, and that issue was oversubscribed. This sum was used to liquidate part of the indebtedness to the treasury.
The hon. member said that on that and subsequent occasions the treasury was not borrowing in the market and that we resorted to having Canadian National Railways borrow in the market so the treasury would not be in that position. The fact is that all throughout this period the treasury was undertaking marketing operations of its own, and there is just no truth in the imaginative flight of fancy of the hon. member. The second issue by Canadian National Railways was put out in the spring of 1959 when they floated an issue of $150 million. Then the third issue of $300 million was floated last November, 1959. There is just not any truth in his statement in this regard. Canadian National Railways borrowed at the current rate; the rate at which the treasury lends money on an interim basis to Canadian National Railways is the rate which the government has to pay on its borrowings, plus a service charge of one eighth of one per cent. This is said by way of correction of this distorted, imaginative statement by the hon. member for Burnaby-Coquitlam.
I apologize for having to spend any time in dealing with the other remarks of the hon. member; such extraordinary, far fetched and baseless statements as those in which he indulged this afternoon in his atttack on hon. members of this house. I do not believe, Mr. Chairman, that any hon. member in this house is lacking in his duty to Canadian National Railways in relation to the sittings of the committee or any of the matters that came before that committee or any of the matters that are under debate today. For any hon. member to arrogate to himself the exclusive right to be the champion of Canadian National Railways is not only to assume a mantle that does not belong to him but to cast aspersions on every hon. member in this house. I am sure every one of the hon. members is seeking earnestly to discharge his public duty, and that public duty involves passing upon questions related to the financing and operations of Canadian National Railways. I think it reflects no credit on the hon. member to resort, as he has done this afternoon, to baseless, personal charges directed against other hon. members in this house.
4624	HOUSE OF
Canadian National Railways


Erhart Regier: I must say that the minister, despite all his verbosity, has completely failed to explain why, at a time when he was in difficulties in the money market, he forced the Canadian National Railways to meet its obligations to the minister, and why Canadian National Railways had to borrow money on the open market, paying an interest rate that was in excess of the rate of interest that it was paying on its obligations of some $400 million to the minister. I refer once again to the admission made by the minister in his budget speech of March 31 last when he admitted that Canadian National Railways repaid $489 million on account of its earlier loans from the proceeds of the issue of government guaranteed Canadian National bonds. The minister was in difficulties at that time, because he well knows,-


Donald Methuen Fleming: You don't know what you are talking about.


Erhart Regier: -despite his assertion to the contrary, he was issuing treasury bills that produced a yield as high as 6.8 per cent in the latter months of last year. He was in difficulties to the extent where he had to use Canadian National Railways as the whipping boy. He had to force this railway company to go on the market, to borrow on the market, rather than the minister going to the market to issue bonds. The railway company would have to issue bonds at a much higher rate of interest than they were currently obligated to pay the minister.
The minister has not yet disclosed how much the difference in interest rate was between what the railway company was then paying to him on its obligations to the consolidated revenue fund and the rate the railway company had to pay on the money that it had to borrow on the market.
In so far as this other issue is concerned, it is obviously all right for the Canadian Pacific railway to buy up truck lines ad nauseam. However, the moment Canadian National Railways attempts to protect itself and, incidentally the public interest, by invading this field, there is a hullabaloo raised both in the committee and on the floor of this house about the arrogance of Canadian National Railways.
I believe that what is sauce for the goose is sauce for the gander and if the Canadian Pacific Railway Company is at liberty to buy out these truck lines in order to eliminate competition it also ought to be equally right, although I am not saying it is right in the first place, for the Canadian National railway company to do this, more especially so since the Canadian National Railways operates in the interest of the public at large and very
[Mr. Fleming (Eglinton).l

often has to assume uneconomical responsibilities which the Canadian Pacific Railway Company is not obligated to assume.
My over-all contention holds that the government of today is fundamentally a friend of the Canadian Pacific Railway Company and its actions are to the detriment of the interests of the Canadian public as a whole.


Donald Methuen Fleming: Mr. Chairman, the only comment I have to make on that is that the hon. member has done violence to the truth. He does not know what he is talking about, but that has never stopped him from talking yet.


Erhart Regier: I wonder if I might ask the minister how much was the increase in the interest rate that the Canadian National Railways has had to assume as the result of its having to repay to the government of Canada the sum of $489 million? Was it 1 per cent, 2 per cent, or what?


Donald Methuen Fleming: It was the going rate in the market where the company, in accordance with time-honoured and proper
practice, was borrowing to repay other indebtedness. It has no right to impose upon the treasury and enjoy hidden advantages there.


Erhart Regier: Since the minister is obviously unwilling to answer, may I ask him how much of an additional burden by way of interest rates he imposed on our publicly owned railway system?


Donald Methuen Fleming: I dealt with that subject earlier.


Erhart Regier: May I ask if the minister has any intentions of using this $203,950,000 taken out of consolidated revenue and making it available to the Canadian National Railways, or is he again going to ask the Canadian National Railway Company to obtain its capital funds on the money market.


Donald Methuen Fleming: Mr. Chairman, is there no limit to stupidity? The practice which will be followed is the practice which has been followed hitherto. The interim financial needs of Canadian National Railways will be met by borrowings from the treasury, and at what will be considered jointly by Canadian National Railways management and the Minister of Finance to be a convenient time an offering will be made of bonds, if that is the decision to be taken, and out of the proceeds the treasury will be repaid the amount of those interim borrowings by Canadian National Railways.


William Moore Benidickson: How does that differ from the policy under the previous administration?


Donald Methuen Fleming: It does not differ in the long run from that policy. The only trouble is that the previous administration just skipped it the last three years it was in office.


William Moore Benidickson: The difference is that the previous administration had funds in surplus on hand to loan to Canadian National Railways and the present administration has been operating under a terrific deficit.


Donald Methuen Fleming: The difference is that the previous administration apparently chose not to go to the market but chose to see the indebtedness accumulating and accumulating further and further. Why they did that I do not know, but it was not a responsible course.


Erhart Regier: I wonder if the minister would admit that he is able, as Minister of Finance, to obtain money on the market at a lower rate of interest than is a crown corporation on the issuance of government guaranteed bonds?


Donald Methuen Fleming: There is a very slight difference normally between government issues and government guaranteed issues. It is a very small fraction.


Erhart Regier: Would the minister explain why Canadian National Railways ought to be burdened with this additional rate of interest?


Donald Methuen Fleming: It is not an additional rate of interest at all, Mr. Chairman. What the hon. member is suggesting is that the treasury should give some special advantage to Canadian National Railways as compared with what the cost of that money is to the treasury. The policy that has been followed and is going to be followed is that money will be available from the treasury to crown corporations which are entitled and authorized to borrow from the treasury at the cost of that money to the treasury plus the service charge.


Mr. Smallwood:: Mr. Chairman, along with other irresponsible remarks by the hon. member for Burnaby-Coquitlam he mentioned that Canadian National Railways hauls the bulk of the grain under the Crowsnest pass agreement. I would like to inform him and other hon. members of the committee that my information is that in 1959 the C.P.R. received $37.7 million and the C.N.R. received $32.5 million; and the C.P.R. hauls the bulk of the grain.


William Moore Benidickson: On the point just raised I would refer the hon. member to the evidence given by the president of the C.N.R. I am not getting into an argument except to say that I think we need some accuracy.
7.	1960	4625
International Development Association The president of the road, whether with the approval of the government or not I do not know, gave evidence on behalf of the crown railroad to the royal commission on freight rates to the effect that his road was losing about $40 million per year carrying grain at statutory rates. It would be of interest to know whether or not he had the approval of the government for making that condemnation of statutory grain rates and, second, whether he had the approval of the administration for offering a remedy, namely that that should be taken care of in the form of a government subsidy to be paid by the taxpayers.


Donald Methuen Fleming: Mr. Chairman, that remark is not worthy of the hon. member. He knows perfectly well the position which the Prime Minister of this country has taken time and again on this subject and he knows perfectly well that there is not the slightest truth in either of the allegations he has just now made.


Mr. Marlin (Essex Easl):: Oh, stop
moralizing.


Donald Methuen Fleming: Then stop providing the necessity for it.
Resolution reported and concurred in.
Mr. Fleming (Eglinion) thereupon moved for leave to introduce Bill No. C-69, to authorize the provision of moneys to meet certain expenditures of the Canadian National Railways system.
Motion agreed to and bill read the first time.



INTERNATIONAL DEVELOPMENT ASSOCIATION


Donald Methuen Fleming: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure respecting the international development association, to approve the articles of agreement thereof and to provide further for the payment out of the consolidated revenue fund to the association of an amount or amounts not exceeding in the whole an amount equivalent to the subscription assigned to Canada, that is to say, thirty seven million, eight hundred and thirty thousand United States dollars.
Motion agreed to and the house went into committee, Mr. Flynn in the chair.


Donald Methuen Fleming: At its last annual meeting the board of governors of the international bank for reconstruction and development unanimously requested the executive directors of the bank to formulate articles
4626	HOUSE OF
International Development Association of agreement of an international development association. The purpose of the resolution now before the house is to obtain the approval by parliament of the articles of agreement which have been drafted in accordance with the board's resolution to authorize participation by Canada in the association, and to authorize the payment to the association of the subscription allotted to Canada under the articles of agreement.
The articles of agreement of the association are attached as a schedule to the bill. They are to a large extent self-explanatory and for that reason it may accord with the wishes of the hon. members to reserve their remarks principally for the debate on the second reading of the bill. However, I should review, now, the main features of these articles.
The purposes of the association are to promote economic development, increase productivity and raise standards of living in the less developed areas covered by the association's membership. As hon. members know, the need of less developed countries for capital from abroad is in excess of their capacity to make payments of principal and interest on loans secured on conventional terms. The association will provide finances to meet important developmental needs on terms which are more flexible and bear less heavily on the balance of payments than those of conventional loans. It will thus help to fill an important gap in the existing international machinery for assisting less developed countries.
It is expected that the membership of the association will be the same as that of the bank. Total subscriptions will amount to $1 billion payable in five annual instalments. The subscription assigned to each prospective member will be found in schedule A to the articles of agreement. It will be seen that the more economically advanced countries, those listed in part I of the schedule, which includes Canada, will subscribe $763.07 million. Their subscriptions will be payable in gold or freely convertible currency. The less developed countries, those listed in part II of the schedule, will subscribe $236.93 million of which 10 per cent will be payable in gold or freely convertible currency, and the balance in local currency. The finances provided by the association will be used for further development in the less developed areas of the world covered by the membership of the association.
The scale of subscriptions is the same as the one used by the international bank. Under this scale, Canada's share of total subscriptions will amount to $37.83 million (U.S.) of which


approximately $8.7 million would be payable 30 days after the association started its operation and $7.3 million in each of the next four years. The articles of agreement do not involve any commitment on the part of member governments to make further contributions to the association after their initial subscriptions have been paid at the end of the four-year period. The bill now before the house limits the Canadian commitment to $37.83 million (U.S.). However, the association may at some later date review the adequacy of its resources and, if it deems desirable, authorize a general increase in subscriptions. If this were to happen and the government wished to increase the Canadian subscription, it would be necessary to seek authority from parliament.
The articles of agreement authorize the association to accept supplementary contributions in a currency other than the currency of the country making the supplementary contribution. Thus a country holding counterpart funds in another country may offer to put these funds at the disposal of the association. In considering such offers, the association will pay due regard to the possibility of effectively using the supplementary contributions and to their possible inflationary and other undesirable effects.
The association will be set up as an affiliate of the international bank and its operations will be closely integrated with those of the bank. The president of the bank is to be president of the association; both organizations are to have the same board of directors; and, to the extent possible, the staff of the bank is to be appointed to serve concurrently as the staff of the association. The close integration of the bank and the association should help to keep administrative costs down, allow the association to benefit from the accumulated experience, wisdom and knowledge of the bank, and ensure that the efficient administration and effective use of resources, which have been apparent in the operations of the bank, will also characterize the operations of the association.
The association will give assistance only to less developed areas and only to its own members. Aid to be financed from subscriptions now proposed-that is to say, from the $1 billion to be subscribed in the first five years-will all be provided in the form of loans. The terms under which the loans will be extended are not specified in the articles. They might take various forms. For example, payment of interest, or principal or both might be in a local currency; or the interest rate might be below current commercial rates; or there might be a long period of grace before payment of principal begins.

The terms of each loan will be decided by the board of directors in the light of all relevant factors.
The articles of agreement also provide that in the procurement of goods and services required for projects which it is financing the association shall give due regard to considerations of competitive international trade. The association will seek to subject the procurement of goods and services to the maximum amount of international competition and whenever possible to international competitive bidding. Firms from all member countries, including Canadian firms, will thus have the opportunity to provide the goods and services to be financed by the association.
The association will not commence operations before September 15, 1960 and the articles of agreement will remain open for signature until December 31, 1960. The agreement will not come into force until it has been signed on behalf of the governments whose subscriptions comprise not less than 65 per cent of total subscriptions. Many of the main potential contributors have already initiated the legislative action necessary to allow them to become members of the association. In the United States the Senate has already approved the legislation; the banking and currency committee of the House of Representatives has also approved it and the legislation is expected to go before the house some time this week. In the United Kingdom I understand from our latest information that the second and third readings of the bill have been completed in the House of Commons and the second reading in the House of Lords. In Australia the legislation has received royal assent. In other countries, such as Germany, France and Norway, legislative action has also been taken.
The proposal to establish the international development association has received widespread support. All major industrial countries have indicated their willingness to subscribe to the association. The administrative and operational arrangements provided for in the articles of agreement will, I believe, ensure the efficient management and operation of the association.
Hon. members will, I am sure, agree that it is in Canada's general political and economic interest to assist less developed countries in their efforts to accelerate the pace of their economic development. The establishment of the international development association will add substantially to the flow of assistance already going to these countries and will provide this assistance on terms and conditions which are not presently available from any existing international organization and which are well suited to meet the needs of less developed countries.
79951-0-292
7, 1960	4627
International Development Association
Canadian membership in the association will supplement our efforts under the Colombo plan and our other assistance programs. It will provide further tangible evidence of Canada's continued interest and sympathy in the complex and difficult problems facing the less developed countries and of our willingness to help as best we can in their solution. It will strengthen the warm and friendly relations which we have long maintained with less developed countries. The establishment of the association should result in increased contacts between Canadians and the people of these countries and thus lead to a better mutual understanding. Canada is blessed with many of the resources which are required for economic development and in the long run I would expect that as a result of economic progress in these countries trade on a mutually beneficial basis will grow between them and Canada.
I intend to propose to the committee that after the bill has been given second reading it be referred to the standing committee on banking and commerce. I am further going to suggest that that committee take advantage of the opportunity to invite Mr. Louis Ras-minsky, the very eminent and highly respected deputy governor of the Bank of Canada and Canada's member on the executive board of the international bank, to come to the committee and testify in any way that the committee may desire. Mr. Rasminsky has had a long and very fruitful association with the international bank and has played a very important part as Canada's representative on the executive board of the bank in the fashioning of the articles of association for the proposed international development association.
Those few remaining members of the house who were members of the banking and commerce committee in the autumn of 1945 will long remember the testimony given before that committee by Mr. Rasminsky when the Bretton Woods legislation was submitted to the house and to that committee at that time. I think this will afford all hon. members an opportunity to obtain all the first hand information they may desire in relation to the international development association and its relationship with the international bank. This may also serve the desirable purpose of perhaps shortening debate in the house because I think all hon. members will feel better qualified to express their opinions after they have had the detailed and searching study and analysis of this measure that will be afforded in the banking and commerce committee with so eminent a witness as Mr. Rasminsky before it. That is the proposal I will be making in due course after the bill has received second reading.
4628	HOUSE OF
International Development Association


Mr. McMillan:: I must say I was glad to hear the minister state that when this resolution has been enacted into a bill and given second reading it will be referred to the committee on banking and commerce where we will have a better opportunity to examine all the details.
Canada's share, as the minister has said, amounts to $37,830,000 which is a fraction of the $1 billion to be made available by members of the international bank. I did not hear the minister say whether or not all 68 members of the international bank will be subscribing but I presume that is so.


Donald Methuen Fleming: That remains to be seen, Mr. Chairman. They have the right to subscribe but it remains to be seen if they will exercise it.


William Hector McMillan: I have not read the articles of agreement but as the minister said they have to do with the conditions under which loans are made and the countries to which loans may be made.
I take it that the loans are for projects in those countries that are underdeveloped and unable to borrow money through the bank. The minister did not say whether or not these loans are for manufacturing plants and I would certainly like to know what type of projects are under consideration. These loans not having the safety and security required by the international bank cannot be made by that bank and that is the reason for the setting up of this association. I understand that the $1 billion loan was proposed first by the United States and that the secretary of the treasury there, Mr. Robert Anderson, said that the United States may have to curtail the outpouring of dollars from that country.
The Minister of Finance himself according to the Montreal Gazette appealed for an end of all trade discrimination against Canada, the United States and the countries in the dollar area. I believe the minister was right in suggesting that after we have given favourable consideration to countries in our own markets and particularly to those countries in the sterling area they should not impose discriminatory restrictions on our exports.
I noticed-and this is by the way-that the minister in speaking at this meeting described our own economy and said that at that time we were proceeding from a time of heavy deficits to a balanced budget in our economy. I was rather intrigued that the minister when speaking down there should have given as a reason for our high interest rates the fact of heavy government borrowing. That is by the way, but actually those were his words.


The minister said the reason for high interest rates in this country is because of heavy government borrowing.


Mr. Pugh:: Would the hon. member permit a question. Is that the only reason the minister gave?


William Hector McMillan: Heavy government and industrial borrowing.


Donald Methuen Fleming: That was not the
only reason at all.


William Hector McMillan: Those were the only two reasons the minister gave but that is beside the point. I was rather intrigued that the minister should give that as the reason for high interest rates in this country because he would never do so in this chamber although from time to time in this house we have suggested that that is the real reason.
I believe the minister should doubly assure us when we vote our subscription that it will not be discriminatory to Canada.
According to a press report carried in the Ottawa Journal of October 1, 1959 the minister at a press conference in Washington expressed concern that these soft loans to the impoverished countries might be utilized by the United States as a vehicle for the expansion of a vast food give-away program. The minister should tell us what assurance he has from the United States that this will not take place.


Donald Methuen Fleming: I have already done that this afternoon, Mr. Chairman. The statement the hon. member refers to was made before the articles of association were drafted. In that regard I am happy to say we have been gratified by what has been written into the articles of association. I dealt with that in my remarks this afternoon.


William Hector McMillan: Were those articles of association not known at that time?


Donald Methuen Fleming: They were not in existence at that time; they were drafted last autumn.


William Hector McMillan: We will refer to section 2 of the articles later. I should like at this time to ask the minister to express his opinion on the concern which he said at that time he had that the United States might raise its tariffs. The secretary of the treasury of that country said he would have to take a close look at the United States balance of payments. I presume the only way the United States could correct these, if unfavourable to that country, would be by raising tariffs.
While in Washington the minister referred to two or three other subjects probably outside the scope of the discussion of this resolution. One had to do with the price of gold which

is stabilized at $35 an ounce. I do not suppose the minister will comment on that but at that time he referred to the premium on the Canadian dollar which stood at 5 per cent and which now is much less. I should like to ask the hon. gentleman if there was any action taken on the part of the government in bringing about this much desired decrease in the premium which will certainly assist our exporters and serve to relieve unemployment?
We are in favour of this legislation. The minister should give us some assurance on these matters that I have brought up and particularly in connection with the articles. I should like to be assured that the articles are as he stated; that there will be no discrimination against Canadian trade and that he has an assurance from the United States that they will not raise tariffs against our exports.


Erhart Regier: Our group very definitely intends to support this resolution. We believe that the more we can do in the matter of supplying help to and the capital needs of underdeveloped nations the better. We believe that it is not only our moral duty to do this but that it is in our own national long term economic interest to help underdeveloped countries of the world to raise their standards of living because in our opinion this will add to the potential markets available to Canadian export interests.
I should like to make one proposition. It is now being proposed that we establish yet another international organization in order to make capital funds available to help the development of the underdeveloped areas of the world. I am a little afraid that there may be duplication of effort and endless expense in overhead. I would much rather have noted an attempt to expand existing organizations so that this particular need might be met.
We have the international bank, we have the International Finance Corporation, we have the Colombo plan, we have the various agencies under the auspices of the United Nations. Now it is being proposed that yet another international agency be created for what is basically the same purpose as is the purpose of a variety of existing organizations. I believe that we are getting overloaded with numbers of agencies and that we might more usefully have explored the possibilities of amending the legislation having to do with existing organizations in order that we might accomplish the aims of the organization that it is now proposed we affiliate ourselves with.
I am a keen observer of the investments being made by Canada and by Canadians in other nations and investments being made by outside agencies in Canada. If we are really 79951-0-292i
7, 1960	4629
International Development Association concerned with the brotherhood of man and with the development or the maintenance of world peace I think all of us ought to be concerned with the realization that for a goodly number of years now we have been on balance importers of investment capital. I believe this is wrong. I believe that when we consider the world as one community we in Canada ought to be a little ashamed of what has happened. I believe that on balance we ought to be exporters of capital rather than importers.
I appreciate this resolution because it will help a little bit toward what I feel is the over-all aim that the rich ought to help those who are less rich and that Canada has a responsibility to the rest of the world community. My only reservation is as to the method being offered. I feel that we might very well have used other facilities of the United Nations, and that would be most preferable. However, if that was impossible of accomplishment we might have extended either the international bank or the Colombo plan in order to meet the aims that are now offered.
We heard only a little while ago that the government is giving very serious consideration to even yet another international organization in order to help the nations of Africa. I regret that the line of development is in the direction of more and more independent organizations. I believe that in the interests of economy and efficiency we ought to pay a lot more attention than we have in the past to this. Rather than entertaining each and every new brain wave that appears on the international scene we ought to consider the lack of mobility of existing organizations with the aim that we might expand those organizations to accomplish our larger aim.


Paul Joseph James Martin: Mr. Chairman, this is an important resolution. In the context of the situation that exists in the world it is perhaps among the most important proposals that the Minister of Finance has laid before this house. My recollection is that when this project was first proposed-I think it was in February, 1958, by Senator Monroney of Oklahoma in the Senate of the United States and later formulated more officially-the reaction of the Minister of Finance in Canada was not as favourable as the very strong support for it which he recommended to the house today. If that is so-and I am only speaking from recollection-I am very happy that he has seen-


Donald Methuen Fleming: Faulty recollection.


Paul Joseph James Martin: -fit to correct his earlier reaction.
4630	HOUSE OF
International Development Association
This international development association seeks to assist, as I followed the minister and from the researches that I have been able to make, the underdeveloped countries or, as they are more correctly called, the less-developed countries of the free world by extending the flow of developmental capital on terms which are more flexible than those which exist now under any existing agency.
I share some of the concerns of the hon. member who has just spoken about the increasing establishment of international organizations. I was concerned as to why the objects of this particular body could not have been served by some modification in the international bank for reconstruction and development. I am satisfied why that is not possible. I have before me the special report of the national advisory council in the United States on the proposed international development association. It is therein pointed out that the international bank for reconstruction and development, which has made such a notable contribution, now finances its operations almost entirely by borrowing in open capital markets.
As we know, the bond issues of the international bank are made available to private investors in all countries which are members and perhaps, for that matter, in the markets of the world, and I think 75 per cent of the debentures are supported and guaranteed by what I would call the donor countries. The report goes on to say on page 1:
Accordingly, its loans must carry rates of interest sufficient to cover the bank's own interest and administrative cost and to provide reserves against the possibility of default. The term of its loans must be related, though less directly, to the maturity at which the bank itself borrows. It must receive payment in the currencies lent. The bank cannot prudently lend unless there is the probability that borrowers can service loans on the terms required by the conditions of the bank's operations.
I think that is an explanation as to why the bank, certainly as now constituted, could not provide this service although, as the Minister of Finance said, this new association is to be regarded hereafter as an affiliate of the international bank. I think the need for this particular fund must be apparent to anyone who has any appreciation of the condition of the underdeveloped countries of the world, whether they be in Asia, Latin America, Africa or the Middle East. We are not going to have peace unless the more fortunate nations recognize their obligations toward these less developed countries. That is the philosophy and motivation of this proposal.
All countries need capital for their growth. Those countries with low savings and low


income present the greatest need for capital assistance. I have mentioned some of the regions. The less developed countries need large amounts of capital. They need large amounts of capital equipment to encourage and to realize the development that is required. All we have to do is to remember the effectiveness of the Marshall plan in Europe which set into being the productive processes of the economic system in Europe. The new prosperity of Europe may be largely attributed to the assistance given by the Marshall plan and in essence, in principle, this particular proposal is designed for the same purpose in the less developed areas.
These less developed countries, as I say, need capital just as we all do. Some of this capital they can get out of their own current savings. Some can be obtained by them by borrowing in conventional ways and some capital can be obtained by assistance from private investors. But in most of these less developed countries the need for capital imports is in excess of the amounts which they can hope to secure through the regular channels I have just mentioned, so the justification of this multilateral body must be apparent to all members.
I have examined the articles of agreement with some thoroughness. It is interesting to note that the number of countries that will be on the receiving end and who are listed in part II of the schedule is considerable. As the minister pointed out, their total contributions to the $1 billion fund will be $236,930,000 compared with contributions amounting to $763,007,000 which are to be provided by those countries in part I, which includes Canada and, of course, most of the countries in the western world as well as Australia and Japan.
I note with interest that while the United States will be the largest contributor and the United Kingdom next, followed by Germany and France, Canada will be the fifth largest contributor in this group. Our subscription, which is provided for in the resolution, is to be $37,830,000 payable, as the minister observed, over a period of five years. That, by the way, provides a flexibility which should encourage many other countries to join the association, an encouragement that is not open in the case of some other organizations such as the Colombo plan and even the technical assistance operations of the United Nations.
The United States contribution is to be $320,290,000 and the other so-called economically strong countries are to provide $442,780,000. An interesting feature of the articles of agreement is that the funds provided

by all the countries, both those which will be entirely in the lender class, as it were, and those which will be in the class of both lenders and beneficiaries, are to be freely convertible. That has, of course, positive advantages but, as the hon. member for Welland pointed out a few minutes ago, it has for Canada some potential dangers which the minister feels have already been anticipated by the wording of the articles of agreement. However, I do want to say a word about this danger for Canada.
The developing countries are themselves to subscribe $236,930,000 and I understand from reading the articles of agreement that 10 per cent of this amount will be freely convertible. The subscriptions are to be paid as I said, over a five-year period and the contributions by the less developed countries are only circumscribed by the examination of each project as it will be presented. However, there is a statement in the words of approval given the whole plan by the President of the United States that I think should be examined. I look at section 2 (a) of article III of the agreement and I find that it reads this way. Even though the section is long I read it because of its importance to Canada. It is in these words:
The association may enter into arrangements, on such terms and conditions consistent with the provisions of this agreement as may be agreed upon, to receive from any member, in addition to the amounts payable by such member on account of its initial or any additional subscription, supplementary resources in the currency of another member, provided that the association shall not enter into any such arrangement unless the association is satisfied that the member whose currency is involved agrees to the use of such currency as supplementary resources and to the terms and conditions governing such use.
Now this feature of convertibility is unique. It is certainly one of the reasons why the resources of or the institution of the bank itself could not be used. I have no doubt that the government of the United States and other signatories to these articles of agreement intend to give the interpretation which the Minister of Finance says this particular section warrants. However, I notice that in the letter of transmittal by the President of the United States to congress he says, in the middle section of his letter, the following:
In addition, the association may accept supplementary resources provided by one member in the currency of another member. Thus, some part of the foreign currencies acquired by the United States primarily from its sales of surplus agricultural commodities may be made available to the association when desirable and agreed to by the member whose currency is involved.
Now there have been stories in some financial journals recently indicating, because of
International Development Association the growing surpluses of agricultural products in the United States, that some of the concerns which the people of that country feel towards future methods for the disposal of those surpluses. We should be alerted to this potential situation. I would suggest to the Minister of Finance that Canada ought to give very careful consideration to whether the United States fully subscribes to the minister's understanding of what section 2 has to say in that regard. The two sentences I have read from the President's letter of transmittal, certainly warrant the suggestion that this matter should be looked at carefully.
The minister has said he is going to suggest that this matter be sent to the committee on banking and commerce. That is a wise suggestion. It will afford an opportunity of examining the articles of agreement in detail and learning about those articles from Mr. Rasminsky. I fully subscribe to the deserved tribute which the Minister of Finance has paid to Mr. Rasminsky whose services were noted by the minister as extending from 1945. Of course Mr. Rasminsky served Canada long before that in the bank. He served in the economic section of the League of Nations over a long period. He was one of the most constructive officials at Bretton Woods, as the minister noted. He is one of those men who will be enshrined in history because of his work in connection with the establishment of the economic and social council of the United Nations.
And so this concept does provide an opportunity for countries like our own to promote conditions of peace in the world. This is one of the most effective ways by which that can be done. It is only fair when we criticize the United States so much in this house, I think generally with justification, that we should observe that the idea for this further assistance came from that country, a country that has been most generous with its resources and with its treasure in trying to assist areas of the world that need assistance, particularly since the end of the second world war. It is perhaps symptomatic of the tensions that prevail and the clashes that exist between the two main ideological divisions that the Union of Soviet Socialist Republics is not designated here as a potential member. It is interesting to note, however, that such countries as the United Arab Republic and Israel are included in part II, as well, of course, as countries like Australia, Belgium and the great powers and Japan, in part I. This particular resolution, Mr. Chairman, is one which will receive wide support in this house, in principle, and I believe that in the effort that civilized countries are making today to achieve peace this venture will,

Private Bills
in the judgment oil history, prove to be amongst the most effective methods.


Mr. Carter:: Mr. Chairman, since it is two minutes to five, may I call it five o'clock?


The Deputy Chairman:: I am sorry, but it is not five o'clock as yet.


Chesley William Carter: The principle of this resolution is one which all hon. members can support. It is a principle which recognizes a duty and obligation on the part of those countries which have developed a fairly high standard of living to assist with the development of those countries which are developed to a lesser extent. The legislation to follow this resolution, as the minister pointed out, will enable Canada to make her contribution, thus encouraging development, increasing productivity and raising the standards of living in underdeveloped countries. This is a very worthy motive. It is inspiring when the have nations of the world can engage in a co-operative effort of this kind to assist the have not nations.
However, if the principle is good with respect to other countries of the world, surely the principle is equally good in its application to the underdeveloped parts of our own country. What a great thing it would be for the unity of Canada if the more developed provinces, the richer provinces of Canada, would engage in a similar co-operative effort to assist in the development of those parts of our country which are still underdeveloped. Is it too much to hope that before long the minister will introduce legislation embodying the very same principle to set up some development corporation or some fund that will be used in a similar way for the development of other parts of our own country.
Resolution reported and concurred in.
Mr. Fleming (Eglinlon) thereupon moved for leave to introduce Bill No. C-70, respecting the international development association.


Mr. Speaker:: It being five o'clock, the house will now proceed to the consideration of private and public bills, the former having precedence, pursuant to section 3 of standing order 15.



PRIVATE BILLS

Kenneth Hamill (Ken) More: Before you leave the chair, Mr. Speaker, I should like to ask leave of the house to have the second reading of Bill No. S-30, item 354 on today's order paper, proceeded with first, and then follow with consideration of Bill No. S-29, item 384 on today's order paper, and Bill No. S-34, item 386 on today's order paper.


Mr. Caron:: That would mean that Bill No. S-24, No. 383 on the order paper, will be omitted for today? Then I will accept that.


Mr. Speaker:: Is the house prepared to give unanimous consent to varying the order of the items listed under private bills by taking first, items No. 354, respecting Western Surety Company; item No. 384, respecting Allstate Insurance Company of Canada; No. 385, respecting the Wawanesa Mutual Life Insurance Company; and No. 386, respecting the Wawanesa Mutual Insurance Company


Some hon. Members:: Agreed.



WESTERN SURETY COMPANY

Kenneth Hamill (Ken) More: the second reading of Bill No. S-30, to incorporate Western Surety Company.
He said: This bill for the incorporation of Western Surety Company is proposed by Western Surety Company Limited, a Saskatchewan corporation. The origin of this company can be traced to 1909 when the Saskatchewan Fidelity and Guarantee Company was incorporated in Saskatchewan. In 1949 this company was taken over by the Saskatchewan government insurance office, but its managers immediately formed Western Surety Company Limited which has carried on business under that name for more than 10 years.
The business of the company has been limited to fidelity and guarantee insurance and the company's name well describes the type of business in which it will engage. The company's main operations have been carried on in the province of Saskatchewan, but it also became licensed to carry on business in Alberta. As its business has grown, the company has found that it would be desirable to incorporate federally to enable it to give a more complete service to its clients.
The company has been well and conservatively managed and will have no difficulty in meeting the operating requirements established by the department of insurance.
In the usual way I suggest that the bill be given a second reading and be referred to the house banking and commerce committee where officers of the company will be available to answer detailed questions.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Mr. G. E. Halpenny (London) moved: the second reading of Bill No. S-29, to incorporate Allstate Insurance Company of Canada.



I960

[Stage Direction]
He said: Mr. Speaker, the purpose of this bill is to incorporate a Canadian insurance company by the name of Allstate Insurance Company of Canada.
The Allstate company has been doing business in Canada since 1949 and up to this time the United States company has been a wholly owned subsidiary of Sears-Roebuck. The proposed Allstate Insurance Company of Canada will be 50 per cent owned by Sears-Roebuck and 50 per cent owned by the Canadian company, Simpsons-Sears Limited.
I might say that in 1959 they did a business in Canada of approximately $14 million worth of premiums, of which 98 per cent was automobile insurance.
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Mr. Gordon Chown (for Mr. Mandziuk) moved: the second reading of Bill No. S-33, to incorporate the Wawanesa Life Insurance Company.
He said: Mr. Speaker, in the absence of the hon. member for Marquette (Mr. Mandziuk) I have been asked by the parliamentary agent to sponsor these two private bills.
These two bills are complementary one to the other.
The Wawanesa Mutual Insurance Company was first incorporated under the mutual fire insurance act of the province of Manitoba in 1896. This was followed by incorporation under special act of the parliament of Canada assented to on May 1, 1929. It has been in active operation for some 64 years.
Although the head office of the company is, and always has been in the comparatively small town of Wawanesa in Manitoba, the company which writes fire and casualty insurance has been conspicuously successful and operates throughout Canada. In fact it is reported to be the largest mutual fire and casualty insurance company in Canada and does the second largest fire insurance business in the dominion. As at December 31, 1959 the company had admitted assets of $30 million, a surplus of over $8 million, government deposits of more than $12 million and insurance in force of more than $1,200 million.
The company has taken a leading part in many developments in the field of insurance. For some time the directors and officers of the company have been considering organizing a mutual life insurance company with the object of utilizing further its extensive network of branches and agencies throughout Canada. This project was acted upon
Private Bills
by the directors early this year. At the suggestion of the department of insurance the principle was submitted to a special general meeting of the members, that is the policyholders, of the parent company since that company will provide, if these bills are passed, the guarantee fund for the new life company. The proposal was unanimously approved by the members at the meeting held on April 29 last. To give effect to this decision the act incorporating the parent company requires amendment, giving specific authority for contributing to the guarantee fund.
The bills have been under careful study and review by the superintendent of insurance and his officers. When the bills are referred to the banking and commerce committee the officers of the insurance department and the managing directors of the company will be present to supply further information that may be desired.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

Gordon Campbell Chown: the second reading of Bill No. S-34, respecting the Wawanesa Mutual Insurance Company.
He said: Mr. Speaker, this is the second bill with respect to the organization of a new company and the whole purpose of the bill is to authorize the parent company by way of this amendment to make contributions to the guarantee fund of the Wawanesa Mutual Life Insurance Company in accordance with clause 11 of this proposed bill.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

[Stage Direction]
The house in committee on Bill No. SD-51 for the relief of Vivian Phyllis Steine Skol-nik-Mr. McCleave-Mr. Rea in the chair.
On clause 1-Marriage dissolved.
Frank Howard: Mr. Chairman, I should like
to make a few comments on this bill. The petition alleges that a number of things took place, and in pursuance of the practice of considering the specific item before us, I think we should examine this measure.
The petition indicates that on or about December 22, 1957, the petitioner was lawfully married to the respondent, in this instance, and that at the time of the marriage both the parties were domiciled in Canada and have ever since continued to be, and are, domiciled in Canada in the province of Quebec.

Private Bills-Divorce
Point 6 of the petition says that on or about April 24, 1959 at the Queen's hotel in the city and district of Montreal the respondent committed adultery with a corespondent whose name is given. Further evidence is given later concerning whether the statements made in the petition are correct or not. The evidence of the petitioner was taken, as appears on page 9 of the report. She is sworn, and gives evidence with respect to her name, her address, her residence and occupation. Then the following exchange takes place:
By the Clerk of the Committee:
Q. I show you a photograph, of whom is it a likeness?
A. My husband.
Q. Approximately when was it taken?
A. That was taken around November, 1957.
Q. Is it a good likeness?
A. Oh, yes, sir.
The clerk asks her if she is married and, if so, to whom. She answers giving the name of her husband, or the respondent in this case. Another question asked is: when were you married? And the answer is given that she was married on December 22, 1957 at the Mount Royal hotel, Montreal. Questions are then asked about the religions of herself and her husband. She is shown a document and identifies it as her marriage certificate. She testifies that the statements contained therein are true and correct, and the marriage certificate is then filed and marked exhibit No. 1. The photograph of her husband which she has also identified is marked as exhibit No. 2.
Mr. John J. Urie, who is a lawyer, appeared as counsel for the petitioner and he also proceeded to address some questions to her. There appears to be possibly only a slight degree of conflict between the statements in the petition and the evidence as far as the residence of the respondent is concerned. The relative passage in the evidence is as follows:
By Mr. Urie:
Q. Mrs. Skolnik, would you tell the members of the committee where your husband was born, to your knowledge?
A. My husband was born in Israel, and he came to Montreal at about the age of two.
Q. With his family?
A. Yes, and he has lived there ever since.
By the Chairman (Senator Roebuck):
Q. In Montreal?
A. Yes, sir.
Q. Is he working in Montreal now?
A. No, not at present, sir.
Q. Where is he now?
A. In Brookline, Mass.
By Mr. Urie:
Q. How long has he been there?
A. About eight months, I would say.
Q. Is he employed regularly, to your knowledge?
A. Really, I don't know.
Q. Prior to going there was he employed in Montreal?

A. Yes, sir, he was.
Q. By whom?
A. Well, he had several jobs really. At one time he was a salesman, and then an accountant, and then as a salesman again just before he left.
Q. Have you spoken to him recently?
A. No sir.
Q. Do you know whether he plans to return to Montreal?
A. I really don't know.
Q. Where is his family?
A. His family live in Montreal.
There is additional evidence here which would indicate that the respondent is resident in Brookline, Mass., but it is not clear. I assume he is still a Canadian citizen. Perhaps he is there only temporarily, though the question is not cleared up. Further questions are, however, put on this matter. Senator Roebuck asked:
Q. How do you know he is in Massachusetts?
A. Well. Mr. Gross had found that out.
Then Mr. Urie explains that Mr. Gross is the petitioner's solicitor from Montreal, and that he is in court.
I do not wish to read every word of this evidence, although perhaps I should, because the hon. member for Victoria (B.C.), who is acting as substitute for the hon. member for Halifax, has on previous occasions objected to my reading only parts of the evidence. Not wishing to get into conflict with him again, or run the risk of being accused of selecting only those parts of the evidence which might support a particular view, I think I had better continue to read the whole of the evidence especially in so far as this question of residence is concerned at the time of this statement which, incidentally, was January 28, of this year.
By the Chairman (Senator Roebuck):
Q. And you have not discussed going with him in that eight months?
A. No, I haven't seen or heard from him.


Mr. Urie:: Service was actually made in Brookline, Mass.


Jacques Flynn: What does the service say?
The Clerk of the Committee: The respondent was served by Thomas J. Hill, Jr. of the town of Brookline, in the state of Massachusetts, one of the United States of America, and he served the respondent at-in the said town of Brookline, Massachusetts on July 2, 1959.


Jacques Flynn: Is there any statement about his admitting that he is the party involved?
The Clerk of the Committee: Yes, there is, sir. It says, "That the person on whom I effected the said service is the person whose photograph is annexed to this affidavit, exhibit D.


Jacques Flynn: Is that the same as the exhibit that has been filed?
The Clerk of the Committee: It is sir.
It further goes on to say, "and that the person on whom I served the said proceedings admitted to me that he was-and that he was the husband of-", named in the petition.


Jacques Flynn: Proceed, Mr. Urie.

The chairman has ruled that we cannot debate general matters such as the meaning of "domicile". Instead of discussing the domicile of the respondent and being unable to complete the discussion I will content myself by saying there may be a point of conflict in this instance about the domicile of the respondent which the committee of the other place should have cleared up. The husband was served with a notice of this action on July 2, 1959 in the town of Brookline, Massachusetts, which point No. 4 in the petition states is his temporary residence. Point No. 3 of the petition indicates that the petitioner and respondent were domiciled in the province of Quebec at the times relevant to the issue. On page 10 the petitioner testified that her husband had been residing in Brookline for approximately eight months following the signing of the petition.
No children are mentioned in the petition but the subsequent evidence reveals that a child was born of the marriage two months after the signing of the petition. I urge hon. members to study the evidence and reflect on what weight should be attached to this in the disposition of this case.
Mr. Urie and the chairman of the committee inquired about the background of marital discord at some length which doubtless had some bearing on the weight attached to this petition by hon. members of the other place. On page 11 we read:
By Mr. Urie:
Q. How long did you live together at-
He gives the address at which they resided. I continue:
A. Fourteen months, sir.
Q. When did he leave?
A. In March 1959.
Q. At that time you were pregnant?
A. That is correct, sir.
Q. Now, why did you separate in March of 1959?
A. Well, to begin with he was supposed to be going to school to study for his C. A. exams about four nights a week, and it turned out after we had inquired at the school that he had never attended at all, he hadn't even been registered, and when I asked him where he had been those evenings he just shrugged, he didn't give any answer whatsoever; that was the beginning of it really.
Q. The beginning of the difficulties with your husband?
A. That is right.
Q. What caused the separation eventually?
A. Well, later on in February he went to New York for a weekend supposedly on a business trip, and when he returned he told me he had contracted venereal disease, and I had told my obstetrician immediately, because I was pregnant, and all, and he had also told me he had gone to a Dr. Rosenfeldt to be cured, and my obstetrician wanted him to go to another doctor as well to see if he really had been cured, and he went to this Doctor Siminovitch, and he took pills several days; and my doctor got a full report from Dr. Siminovitch about the situation.
Private Bills-Divorce
By the Chairman (Senator Roebuck):
Q. Your husband told you that?
A. Yes.
Q. That he had gone to the other doctors?
A. Yes, sir.
Q. And that he had to take pills. Did you see him take the pills?
A. Well. I saw the pills in the house, yes sir.
Q. Did your husband say what they were?
A. Yes, he did. He said this Dr. Siminovitch had given them to him and he was supposed to take them.
By Mr. Urie:
Q. How did he come to tell you he had venereal
disease?
A. Well, he just came out and said it, but he didn't say the reason he had contracted it, he said it was drinking from somebody else's cup; in other words, he was not telling me that he had committed adultery; and then when I had gone to my obstetrician he told me that he didn't contact-*
"Contact" should probably be "contract". I continue:
-it through sexual intercourse, not through drinking from anybody's cup; and then I said to my husband that that was-
I insert the word "what". I continue:
-the doctor had said, and my husband then admitted that it was true.
That sentence as it appears in the evidence containing two negative references is probably a typographical error. Some doctors argue that it is possible in rare cases to contract venereal disease without sexual intercourse having taken place but the courts have generally disregarded that evidence. The sentence probably should read:
-and then when I had gone to my obstetrician he told me that he could contract it through sexual intercourse but not likely through drinking from anybody's cup-*
In any event, she carries on:
And then, I said to my husband that that was the doctor had said, and my husband then admitted that it was true.
By the Chairman (Senator Roebuck):
Q. What was true?
A. That he had committed adultery, and he even boasted about it, and all that.
By Mr. Urie:
Q. As a result of this information you separated immediately, did you?
A. Well, we separated as to bed and room. He slept on the couch in the living room, but he stayed for about another three weeks during which he was out just about every evening, coming home four in the morning; and then later on, about three weeks after this, he went away for a whole week end and saying he had gone skiing and when he returned he called me from his mother's home and by that time I felt really that this was enough, so I asked my father if he would tell my husband to please leave the apartment and take his clothes and go, which my father did, and my husband took his clothes and left.
Q. During that three week period did you have any sexual relations with your husband?
A. No, not at all, we barely spoke to each other. Q. Have you had any relations with him since that time?

Private Bills-Divorce
A. No, sir, I have not.
Q. So it is fair to say that since the time you *discovered he had venereal disease and since his admission that he committed adultery, you have had no relations with him whatsoever?
A. That is correct, sir.
By the Chairman (Senator Roebuck):
Q. Can you give us about the date of your last relations with your husband?
A. Oh, it was I would say the end of January *or just before he went away.
Q. January of what year?
A. 1959, it was around the 27th of January, I would say.
Q. But can you say you have had no relations since the end of January?
A. That is correct, sir.
Then they go into some additional comments about support and other things. I will indicate at this point, Mr. Chairman, that there are two investigators, Mr. Etheridge and Mr. Brault, who appear and give evidence as to certain circumstances and situations. The petitioner's father also appears and gives evidence as to the things which he has knowledge of although from my reading of it the father's evidence is not corroborative. In any event I wonder whether it is necessary to have other evidence in view of the evidence which I have just read about adultery, the eventual admission of adultery having been committed while the respondent was in New York, about his having venereal disease, about his having gone on his own admission to one doctor and subsequently to another doctor, and that he was treated with pills for venereal disease.
I wonder whether this would not be sufficient evidence in a court of law, if one were permitted by the rules to delve into the work of Power on the question of divorce, and whether one could not come to the conclusion that it is sufficient evidence in itself for one to proceed to grant divorce on the grounds of adultery or that it is sufficient evidence of adultery to proceed to grant the divorce without having the matter thoroughly or fully gone into by the two private detectives who give evidence later on in respect of certain things that indicate that the respondent and the woman were in a hotel room.
You know the trend of the evidence, Mr. Chairman, as well as I do. You know that they went in and discovered the people in various stages of undress, clothing around, bed all mussed up and undergarments around the room, and things of that nature, which would lead one to believe that adultery may have taken place or might have taken place after they left. It would seem to me, if our consideration of these matters was influenced, as it might well be-I think it should be-by the circumstances, perhaps we could very well proceed to agree on the basis of the evidence

that I have related to the committee so far that adultery had taken place by admission, even though it is sort of hearsay admission by the petitioner; that the respondent admitted to her that he had committed adultery, that he had contracted venereal disease and this is the only way that one does contract it, through intercourse; that this should be sufficient.
I do not wish to argue the point as to how courts of law have looked upon this question in the past, whether a court of law would say this is sufficient evidence or not, whether it would want additional evidence in the form of corroboration of the actual circumstance itself. But perhaps we may be able to develop that point a little bit further after a while.
Some questions are asked about condonation by and collusion between the petitioner and the respondent. These questions are asked by Mr. Urie. He also asks about support and contribution to the care and maintenance of the child, also about proceeding in the courts of Quebec or in another province. With respect to the question of collusion he asks:
Q. Do you know anything from personal knowledge as to the adultery which is alleged in the petition?
A. No, sir.
Q. Have you entered into any agreement with your husband whereby he would provide the evidence upon which this petition could be brought?
A. No, sir.
Q. Have you stood by wilfully and permitted him to commit adultery?
A. No.
I do not know whether that is the usual phrase that is used but in any event it seems strange to ask a woman if she permitted someone to commit adultery. It seems to me if you are going to commit adultery you do not ask permission. I continue:
Q. In order to bring this action?
A. No.
By the Chairman (Senator Roebuck):
Q. Or have you connived at it in any way?
A. No, sir.
By Mr. Urie:
Q. Have you forgiven your husband for the act of adultery that you learned of?
A. No.
Mr. Chairman, on her evidence we can come to the conclusion that she did not forgive him in any way for the adultery which he admitted. She did not forgive him for the act of adultery which took place while he was in New York or on his way there. She did not forgive him for the fact that he contracted venereal disease as a result of this act of adultery. Senator Golding then asks:
Q. You would not take him back now?
A. No, sir, I would not.


Charles Edward Rea: I must advise the hon. member that his time has expired.


Mr. Peters:: No doubt the committee read with interest the recent article appearing in Maclean's magazine which would affect this case, I would imagine. I say that prior to application for divorce being made all other measures by way of remedy should be taken.
I am quite sure that is true in this case. It would appear to me from reading the evidence, and I am sure it is evident to all other hon. members, that the surprising feature in this case is what we find on page 15 of the evidence. Mr. Steine appeared as a witness on behalf of the petitioner and having been duly sworn gave his testimony. Mr. Steine is not a detective or a lawyer but the father of the young lady petitioning for a divorce. The clerk of the committee asked these questions:
Q. What is your name?
A. Mitchell Steine.
Q. What is your age?
A. Fifty nine.
Q. Where do you live?
A. Montreal.
Q. What is your occupation?
A. Chartered accountant.
Then Mr. Steine was asked the following questions by Mr. Urie:
Q. Mr. Steine, you are Mrs. Skolnik's father?
A. Yes, I am.
Q. You then know Laurence Skolnik. I understand that he was at one time employed by you?
A. That is correct.
Q. Do you know anything about what led up to the separation of your daughter and Mr. Skolnik?
A. Yes. it was his misbehaviour.
Then the chairman of the committee, Senator Roebuck, asked these questions:
Q. How do you know that? Did you have discussions with him personally?
A. Not on that point. I knew that through my daughter's complaints to me about it and his lack of denial.
Q. Were the complaints made in his presence?
A. Yes. in his presence.
Q. What were the complaints?
A. The complaints were that he was out late at night, he had been spending money foolishly and he was unable or would not explain where he spent those nights and with whom he was with -that was the general picture of the development that led up to the separation.
I think this is in keeping, Mr. Chairman, with what we have read with interest about the attitude of those of the Jewish faith toward divorce. I think this evidence is as significant as any in the cases we have dealt with. The complaints mentioned here are actually the grounds on which the divorce is being granted and the reason that the charge of adultery is involved at all is simply that such a charge is required by law in order to grant a divorce. But the complaints are as stated, that he was out late at night, had been spending money foolishly and was
Private Bills-Divorce
unable or would not explain where he spent these nights and whom he was with. That was the general picture of the developments that led up to the separation.
It should also be pointed out that it is surprising that information was forthcoming about venereal disease because it seems to me that the matter was handled very loosely. If a person has venereal disease, which is a communicable disease, usually the doctor will isolate the person for at least a limited length of time. It is not normal to be handed a handful of pills and to be allowed to carry on in the same manner as before because of the fear of contaminating a large number of people. It would seem surprising to me that he is reputed to have visited two or three doctors and that in these circumstances each one of them let him go home. It is even more surprising when one reads the evidence on page 11 where these questions are asked by Mr. Urie:
Q. What caused the separation eventually?
A. Well, later on in February he went to New York for a week end supposedly on a business trip, and when he returned he told me he had contracted venereal disease and X had told my obstetrician immediately, because I was pregnant and all, and he had also told me he had gone to a Dr. Rosenfeldt to be cured, and my obstetrician wanted him to go to another doctor as well to see if he really had been cured, and he went to this Dr. Siminovitch, and he took pills several days; and my doctor got a full report from Dr. Siminovitch about the situation.
This strikes me as being a very loose way of dealing with venereal disease. I am sure every hon. member who was in the services knows of people-


Charles Edward Rea: Order. I do not think this committee is concerned with the medical advice the hon. member is giving. I will have to ask him to come back to Bill No. SD-51.


William Arnold Peters: Mr. Chairman, it would seerr. to me that this is pertinent to the discussion. All I want to do is to indicate that it may or may not have been a fact that venereal disease was present. If it had been really a case of venereal disease I would have thought that at least one of these doctors would have suggested that the pills be administered in hospital.


Charles Edward Rea: Order. There is nothing in the bill relating to the medical condition of the person in question. The bill relates strictly to adultery. I have been very lenient with the hon. member in allowing him to make his point but I now ask him not to refer to this matter again.


William Arnold Peters: I was only attempting to indicate that this seems to have been something that was thrown in rather than really being an addition to the discussion. I should like to

Private Bills-Divorce
point out that from reading the evidence it would appear to me that the young lady in question is very fortunate that she has a father who is as indulgent and gullible as her father appears to be. With respect to the evidence given as to the arrangements that appear to have been made leading up to the adultery charge, I can see in them the fond hand of the father. They only took place after the young lady had forced her husband to leave. I would suggest that we find in this case corroboration of what has happened in other cases, namely that the adultery charge on this particular day was brought about by arrangement. I should like to refer the committee to page 14 of the evidence and to point out that poetic licence is taken even with the name of the corespondent. The evidence reads:
She gave us her name as Jessie Lucas and her address as 2166 St. Luke Street, Montreal.
I would suggest that the use of this name would indicate that the name was made up at the time and that a particular street name was chosen to suit the name of the person. Therefore, there could be this similarity between Lucas and Luke. I would suggest, Mr. Chairman, because of the religious background of these people and the indication that they gave consideration to this divorce, as well as the fact that the father has agreed he is willing to support the wife and child, there is no reason why we should not grant this particular divorce.


Frank Howard: If I may have just a moment or two, Mr. Chairman, I do not intend to go into the details of the evidence given by the investigators because I think it is entirely superfluous in view of the other evidence that has been given. However, I should like to point out one bit of evidence given by Mr. Etheridge. It is found on page 14 when he says, in answer to questions by Mr. Urie about something they had discovered:
We went to the door at about 11.20, to the door of-
Then he gives the room number.
-knocked on the door several times and finally Mr.-
He gives the name of the respondent.
-opened the door, and when he came to the door we identified ourselves and we pushed our way into the room. He was very excited, hostile and threatening us.
The point I want to draw to the attention of the committee is that, again, we have investigators violating the rights of individuals, and breaking the Criminal Code by pushing their way into somebody's room, thus being guilty of the crime of trespass. I merely wanted to draw this to the attention

of the committee in the hope that our discussions in this way will have some effect on these investigators in the future in that they may come to the conclusion they should pay attention to what the law says rather than violating the rights of individuals.


[Stage Direction]
Clause agreed to.
Preamble agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall this bill be read a third time, now?


Some hon. Members:: Agreed.


Mr. McPhillips (for Mr. McCleave) moved: the third reading of the bill.
Motion agreed to and bill read the third time and passed.



NATURAL GAS


Gordon Minto Churchill: May we revert to motions so that I can make an announcement?


Mr. Speaker:: Has the minister leave to revert to motions?


Some hon. Members:: Agreed.


Gordon Minto Churchill: Mr. Speaker, I wish to
table two copies of a report dated May 31 by the national energy board in the matter of an application under the National Energy Board Act of Niagara Gas Transmission Limited. This report deals with the second application of Niagara Gas for a licence to export near Cornwall, Ontario, a small volume of gas to St. Lawrence county of New York state and to build the necessary pipe line facilities to transmit the gas to the international boundary. Its first application was rejected by the national energy board because the board was not satisfied, among other things, that the price to be charged by the applicant for the gas proposed to be exported was just and reasonable in relation to the public interest.
The board heard a further application by Niagara Gas commencing on May 4 at which time new evidence was submitted by the company. This evidence included a new contract between Niagara Gas Transmission Limited and St. Lawrence Gas Company Incorporated, the distributing company in New York state, the effect of which is to raise the border price for Canadian gas so that in any year the full cost of transmitting gas to the point of export will be recovered by Niagara Gas in that year and the full cost of the

original pipe line facilities installed to make the export will be recovered over the period of the export licence. In the second instance, the market area was more closely defined. In this report the board indicates that it is prepared to issue an export licence to Niagara Gas Transmission Limited and recommends that a certificate of public convenience and necessity be issued.
The government concurs with the board's findings on this application, and accordingly will authorize the issuance of the licence and certificates as approved by the board and on the terms set forth in its report.


William Arnold Peters: I should like to ask one question. Is this the situation where a pipe line was laid under the St. Lawrence seaway during the construction period of the seaway, for the export of gas?


Gordon Minto Churchill: Yes, arrangements were
made at that time so that gas could be moved across the river.



WAR VETERANS ALLOWANCE ACT


[Stage Direction]
Hon. A. J. Brooks (Minister of Veterans
Affairs) moved that the house go into committee to consider the following resolution:
Resolved, that it is expedient to introduce a measure to amend the War Veterans Allowance Act, 1952 to permit payment of war veterans allowance in certain circumstances to veterans, widows or orphans who absent themselves from Canada after the said measure comes into force; to provide saving and transitional provisions to protect and preserve the rights of certain veterans, widows or orphans who are absent from Canada upon the date the said measure comes into force; and to establish a residence qualification for former members of His Majesty's forces or allies who served during world war II similar to that already provided for members of those forces or allies who served during world war I.
Motion agreed to and the house went into committee, Mr. Rea in the chair.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at 8 p.m.
Jacques Flynn: Shall the resolution carry?


Mr. Brooks:: Mr. Chairman, before the resolution carries I should like to make a short statement with reference to the proposed bill.
The War Veterans Allowance Act has provided for some 30 years financial assistance to many veterans and widows of veterans. The act was designed to alleviate the difficult conditions which many older veterans
War Veterans Allowance Act and their families had to face because of limited income and resources, particularly where their problems were complicated by impaired health or advancing years. The act has been reviewed on a number of occasions and has been amended from time to time to meet changing conditions. At the present time it is providing assistance to some 68,000 veterans and widows.
One of the provisions which has applied since the beginning has been the requirement that a recipient of an allowance must be residing in Canada in order to receive it. Some years ago the principle was modified slightly by permitting recipients to absent themselves for limited periods and receive on their return, provided they were still qualified, the payment of the allowance for their period of absence. This period was increased three years ago to permit an absence of six months after which they would be eligible to receive the allowance upon their return to Canada.
It has become apparent that for various reasons a number of veterans and widows who have qualified for the allowance while in Canada would find it desirable to reside outside this country for longer periods. The persons of whom I am thinking are those who have fully qualified for an allowance and have been recipients for some time in this country. Instances have come to our attention where some recipients' health would be improved if they were able to take up residence in climates less severe than that which they are likely to encounter in this country. There are other instances where families have dispersed and the call of family ties would encourage them to live with or near members of the family who are unable to return or move to Canada.
The government has been concerned about these veterans and widows and has felt that this was an opportune time in which to take steps to permit the continuance of an allowance to a recipient who would find it desirable to absent himself from Canada for an indefinite period. A similar principle is being considered with relation to the Old Age Security Act where the government has also felt some freedom should be granted to pensioners under that act to change their residence to other countries.
The proposed amendments contained in the bill are not intended to reflect the results of a thorough review of this legislation such as the one we made in 1957, but to incorporate at this time the principle of flexibility of residence which I have explained. One of the conditions involved is that in order to be eligible for an allowance outside of this country a recipient must have resided continuously in Canada for 12 months before

War Veterans Allowance Act he absents himself. I think this is a desirable provision because it establishes the principle that veterans and widows who wish to have the allowance paid to them outside of Canada must in effect be bona fide Canadian residents and thus be persons for whom the allowance was originally intended.
It has not been possible to estimate how many veterans or widows who are recipients under the act will absent themselves from Canada and will continue to receive the allowance. There will be administrative problems introduced by the payment of allowances outside this country because, as I mentioned, the allowance is payable only where recipients are in necessitous circumstances. The war veterans allowance board are working out the necessary administrative arrangements to provide that the principle of the means test will be adequately maintained. Each recipient who absents himself will be acquainted with all matters relating to the continuance of payment outside of Canada so that there will be no misapprehension on the part of any recipient.
There is one other amendment to the act which is proposed by the bill. When the act was last amended during the 1957-58 session one of the amendments reduced from 20 years to 10 years the Canadian residence requirement for eligibility for an allowance for a former member of His Majesty's forces or the forces of His Majesty's allies or associated powers where the qualifying service was in any war concluded on or before August 31, 1921. It now seems desirable to establish a corresponding Canadian residence qualification for former members of His Majesty's forces or allies who served during world war II, thus allowing treatment of these veterans on a basis similar to that now available to the veterans of His Majesty's forces or allies who served in earlier wars. The number of veterans who will qualify for an allowance on this basis is not great, but I think hon. members will agree that they should not be deprived of an eligibility which their comrades of earlier wars now have.
Mr. Chairman, as has become customary with all bills respecting amendments to the acts contained in the veterans charter, I anticipate that this bill following second reading will be referred to the standing committee on veterans affairs where it will be thoroughly reviewed by the committee members who are well acquainted with the present provisions of the act. It will afford an opportunity for a detailed explanation of the clauses of this bill and I am sure that it will be thoroughly studied.


Chesley William Carter: Mr. Chairman, I should like to indicate our support for this resolution,

which I am sure will also have the support of every hon. member of the committee. This resolution envisages an amendment to the War Veterans Allowance Act which in many respects is the counterpart of an amendment which was passed recently with respect to the Old Age Security Act. Just as the amendment to the Old Age Security Act will enable old age pensioners to receive their pensions when living abroad so will the amendment implied in this resolution permit war veterans under certain conditions to receive their war veterans allowance while living outside of Canada. This is a principle which every hon. member of the committee will heartily endorse.
We recognize that this measure is necessary because many veterans, as the minister has just pointed out, for health reasons alone are compelled to live outside of Canada in a climate more conducive to a state of good health. There are also many lonely veterans who would like to spend months and perhaps even years visiting their various relatives who live in different parts of the world. Formerly they could do this only by forfeiting their war veterans allowance or by returning after a certain period in order to reinstate themselves. Therefore the amendment involved in this resolution will be of great convenience to these people.
While this legislation envisaged in this resolution does parallel the amendment to the Old Age Security Act, it is different in one very important respect. The old age pensioner receives his pension as a matter of right. The veteran receives his war veterans allowance not as a matter of right but in conformity with a means test. This, as the minister has said, will involve some administrative problems and for that reason we welcome his statement that the legislation will be referred to the standing committee on veterans affairs. There it could be thoroughly reviewed, and every aspect of this application could be thoroughly discussed. No doubt there would be some very useful suggestions, as always, from this committee for the improvement of the original bill. At this stage we are concerned only with the principle of the resolution, and I give it my hearty support.


Herbert Wilfred Herridge: I have sat here all day anticipating this resolution coming before the committee. Then I was unavoidably detained and had to rush down on being telephoned by the hon. member for Vancouver East. Anyway, as usual, I have arrived.
I must say I rise to support the principle and purpose of this legislation on behalf of this group. This bill will not affect a large number of veterans or their dependents, but it will mean a great deal to those it does

affect. I first urged on behalf of this group an amendment to the War Veterans Allowance Act along these lines eight years ago, and I will tell hon. members the reason why. The need for such an amendment was brought to my attention owing to the sad case of a personal friend of mine who was a veteran living on the Arrow lakes. This veteran was a first world war veteran who had lost his son in the second world war. After he became about 65 years of age he found it necessary to apply for a war veterans allowance, and he received it after some three or four years while a resident there. He suffered from a very severe non-pensionable bronchial condition, some obscure lung trouble. He went to Shaughnessy on a number of occasions but nothing could be done for him.
Finally the Department of Veterans Affairs said the only way to prolong his life and obtain a greater measure of comfort or, perhaps I should say, a greater absence of misery, was to live at a high altitude in a dry climate. Consequently this poor veteran sold his small property for $700 and went to live in a little village near Mexico City. He soon exhausted his $700. Of course, having left Canada, he was not entitled at that time to continue to receive the war veterans allowance. After his small capital was exhausted he was maintained by a few friends who used to send him a few dollars a month where he lived in this little village near Mexico City.
Then one day I got a letter from some Mexican peasants, written by a person who could write and understand English. Apparently they had found some of my letters in his belongings. They informed me that they had picked him up; that they had found his body on the street. They knew where he lived. They had known him for the year or two during which he lived there. They had gone to his quarters and found these letters which I and other persons had written. In the letter they said, we liked this nice old veteran very much and he was a good friend of ours and we did all we could to take care of him because we knew he was very poor. But we are very poor people, too. In order to see that he got a decent funeral we collected about 700 pesos and buried him with due respect and reverence but, being poor people, we cannot afford to lose the 700 pesos. Is there any way in which you can see we get our money back?
I took the matter up with the Department of Veterans Affairs, with Mr. G. H. Parliament, the director general of welfare services and with the Department of External Affairs. The Department of External Affairs, through its officers in Mexico, arranged to
War Veterans Allowance Act repay the money to the villagers in question and thank them on behalf of the government of Canada for having taken care of this ailing veteran.
This incident brought to my attention the need for some provision whereby a veteran in receipt of war veterans allowance should be allowed to continue to receive this benefit during his absence from Canada. I believed in the principle that a person who had served this country in war was entitled to spend his declining years wherever he wished and to receive the allowance. However, I found I could not make much headway in that direction so, at the time, while supporting the principle of this bill and the purpose of this resolution, I urged the government to consider permitting a veteran to receive the allowance if he was forced to live outside Canada, particularly on the recommendation of doctors of the Department of Veterans Affairs.
I brought the matter to the attention of the house over a period of years-in 1952, 1953, 1954, 1955 and so on. Then, because of the circumstances of this particular veteran whose story became known to the veterans throughout Kootenay West, a number of legion branches-and I have a lot of very active legion branches in my constituency-took the matter up and passed a resolution urging that Canadian veterans residing outside Canada and otherwise qualified should be granted war veterans allowance. Then the matter was taken up at a dominion conference, and as a result of the expression of an opinion of the dominion conference the dominion representatives of the Legion made representations to the government and to the veterans affairs committee, first in 1953.
I just want to read the resolution they brought before the committee in 1953 in this connection. The recommendation was that Canadian veterans resident outside Canada and otherwise qualified for a grant of war veterans allowance should be entitled to receive it. The comment in connection with this resolution was as follows:
Many veterans of the Canadian forces have found it necessary for health reasons, possibly due to pensionable disability, to reside outside Canada. We feel that these veterans should not be denied the right to war veterans allowances. The numbers are small and the cost would not be great if this recommendation were acted upon.
The matter was discussed by the committee and, as the hon. minister will recall, it had sympathetic support of the committee. The Legion presented a similar resolution the following year and, later, the minister of that day, Mr. Lapointe, said he would study the question. He did so, and later reported during a discussion in this house of the estimates of his department that while

War Veterans Allowance Act he considered there was considerable merit in the suggestion he could not recommend it because of administrative difficulties. There were serious problems, he said, in that connection, and on that ground he could not recommend the suggestion to the government.
I as one of the members of this group am very pleased that this resolution has come before us, and I am sure this applies to all members of the House of Commons. As I said in my opening remarks, this will not affect a large number of veterans. It will not be a matter of great expense to the treasury of Canada. But it will be of great advantage to those whom it does affect and it will be bringing much happiness to a certain number of veterans and their dependents. It will do this for three reasons: first, and most essential, when a veteran finds it necessary to live in some other climate on account of his health. Second, owing to family circumstances-and I am sure we all know these circumstances-he finds it to his advantage and perhaps to his relatives' advantage to live in another country with them. Third, in some cases he wishes to continue a youthful friendship in his declining years and live with friends or a former associate or comrade. For these three reasons in particular there is no doubt that the majority of veterans who wish to receive this allowance in a country other than Canada will be pleased indeed.
We are glad the bill is to be sent to the standing committee on veterans' affairs where I know it will not be criticized but where an opportunity will be provided to question the minister and his officials about procedures and administrative problems. We will then be able to advise our veteran constituents how to proceed. Some are drawing old age security and the war veterans' allowance and there will be many matters to be discussed in committee so we can fully inform our veteran constituents how to take the fullest advantage of the old age security provisions and the War Veterans Allowance Act.


Mr. Forgie:: Mr. Chairman, I wish to join with those who have already spoken-


Jacques Flynn: Order. I am sorry to interrupt the hon. member but I have already recognized the hon. member for Melville.


Mr. Ormiston:: Mr. Chairman, as a government backbencher, not to be confused with the members of the official opposition to whom I sit so closely-


Mr. Baiten:: Move back one seat.


Mr. Hellyer:: Better back away from us.


James Norris Ormiston: -as a member of the veterans affairs committee and as a veteran from the province of Saskatchewan I should


like to commend the minister for the amendment which is being provided to the War Veterans Allowance Act. I believe that the province of Saskatchewan has more veterans than any other province with the exception of Ontario. Naturally we are very interested in legislation which will be of beneficial effect not only to the veterans of Saskatchewan but of Canada in general.
I am particularly interested in this resolution because several cases have been brought to my attention of veterans, mainly of British extraction, who would like to spend a little more time with their relatives and friends in the British isles. This measure will make it possible for them to enjoy the benefits of their allowance in circumstances which may be more comfortable or more healthful than those in which they live at present.
In closing I again express my sincere appreciation of the fact that the minister has seen fit to bring this amendment before the committee.


James Moffat Forgie: Mr. Chairman, along with the others who have spoken I wish to express my wholehearted approval of the principle of this resolution. I am looking forward to seeing the amendments discussed thoroughly in the committee on veterans affairs. I am not directing my remarks at the minister when I say that I am a little disappointed that in this resolution there is no reference made to an amendment to the Pension Act.


Harold Edward Winch: Mr. Chairman, I am certain there will be no objection to this resolution on the part of any hon. member. I wanted to speak because I welcome the opportunity of being able to commend the government instead of always having to condemn it.


Paul Theodore Hellyer: It may not be much but it is something.


Harold Edward Winch: When I have an opportunity to commend the government I am always glad to do so. At long last I will be able to answer all the letters I have received asking when this principle was going to be applied. Perhaps the minister would be interested in knowing that not one veteran in my constituency who wrote desires to see this amendment brought in because he wants to leave Canada but because he must do so on medical advice. This indicates that our veterans are as loyal to Canada in time of peace as they are in time of war.
(Translation):


Mr. Fortin:: Mr. Chairman, may I add a
few words in French on behalf of Frenchspeaking veterans in my province to congratulate the Minister of Veterans Affairs (Mr. Brooks) for the special consideration he always gives to every request of theirs.

It seems that as memories of the last war get hazier in our minds there is a tendency to forget the men who, at the time of trial, did not hesitate to sacrifice their lives, or often part of their skills, according to the various degrees of disability from which they suffered when they returned to Canada. I think that members from every province in this house should have an opportunity once more to devote their undivided attention to the problems of the war veteran and let him know that, after all those years, the memory of his sacrifice is still with us.
On behalf of all my former buddies and every French-speaking veteran in Quebec, I take this opportunity to tender thanks and appreciation to the minister.
(Text):


Herman Maxwell Batten: Mr. Chairman, I do not intend to make extended remarks at this time. I rise to indicate my support for this amendment to the War Veterans Allowance Act. Certainly any other amendment would not be consistent with the views of this parliament regarding old age security.
There are, of course, a number of reasons why some veterans would like to live outside Canada and be able to carry their allowance with them. In my province-and I suspect this is true of other provinces-we have a number of older veterans whose children either married south of the border or in England. Some of these men would like to live with their children and this amendment will make it possible for them to take their allowance with them. It is for these two reasons that I support this resolution and commend the minister for bringing it before the committee at this time.


Jacques Flynn: Shall the resolution carry?


Some hon. Members:: Carried.


Jacques Flynn: Shall I report the resolution?


Some hon. Members:: Agreed.


Mr. Henderson:: Mr. Chairman-


Jacques Flynn: Does the committee agree to give unanimous consent to permit the hon. member for Cariboo to speak?


Some hon. Members:: Agreed.


Walter Clarence Henderson: Mr. Chairman, I should like to say a few words in support of this amendment. I am an old soldier. Last night I spoke as an old farmer but this evening I speak as an old soldier. I was president of the first great war veterans association
War Veterans Allowance Act in the Peace river country. That part of the country was settled largely by returned men. Today a large number of them have passed away and those who remain are getting along in years as I am. I am 69.
I am pleased that this amendment is being brought forward. I want the old soldiers to get the best of everything. Some of them may want to live in the south or abroad. I personally want to live in Canada. I am satisfied to live here. I wish to thank the committee for its courtesy in permitting me to speak.


Edwin William Brunsden: Mr. Chairman, I am intrigued by the hon. member for Cariboo describing his area as Canada. May I say a word for a different class of people. I have two or three members of the armed forces in my constituency. Some of them served in the first C.M.R.'s of which the Minister of National Defence knows something. One of them in particular is suffering from cancer. He is ill; he is put to a great deal of expense and two or three months ago his wife became eligible for the old age pension. He writes me that on account of her old age pension his veterans pension is reduced. I submit to you, sir, that this is an injustice. She should enjoy her pension without any restrictive effect on his war veterans allowance. I think this is something the minister might well inquire into and perhaps bring about some amelioration.
Resolution reported and concurred in.
Mr. Brooks thereupon moved for leave to introduce Bill No. C-71, to amend the War Veterans Allowance Act, 1952.
Motion agreed to and bill read the first time.


Mr. Speaker:: When shall the bill be read a second time?


Some hon. Members:: Now.


Alfred Johnson Brooks: the second reading of the bill.
Motion agreed to and bill read the second time and referred to the standing committee on veterans affairs.


Gordon Minto Churchill: Mr. Speaker, at this stage, owing to the unavoidable delay imposed on the Minister of Transport, I wonder whether I could move the next item of business, which is the second reading of Bill No. S-2, to amend the Canada-Netherlands Income Tax Agreement Act, 1957.

Income Tax



CANADA-NETHERLANDS INCOME TAX AGREEMENT ACT AMENDMENT TO APPROVE SUPPLEMENTARY CONVENTION

Gordon Minto Churchill: the second reading of Bill No. S-2, to amend the Canada-Netherlands Income Tax Agreement Act, 1957.


Mr. Richard A. Bell (Parliamentary Secretary to the Minister of Finance):: Mr. Speaker, the purpose of this bill is to implement the supplementary income tax convention between Canada and the Netherlands which was signed on October 28, 1959. The supplementary convention is set forth in a schedule to the bill. This supplementary convention modifies the original convention which was signed on April 2, 1957, and approved by parliament shortly thereafter. It is chapter 16 of the statutes of 1957, assented to on April 12, 1957.
This bill and the supplementary convention are in the same form as others which have been before the house, and I would refer the house particularly to the act to amend the Canada-United States Tax Convention Act, which was approved by the house in 1956.
Hon. members, of course, are well aware of the general pattern of Canada's income tax conventions with other countries. Consideration was given to the most recent of them- the Canada-Finland income tax convention- in this house only last June. It is unnecessary therefore for me to describe the terms of the original convention with the Netherlands, and it will be sufficient to give an account of the ways in which the supplementary convention modifies the original convention, which is chapter 16 of the statutes of 1957.
The proposed supplementary convention is intended to settle certain problems encountered by both countries under the terms of the original convention. There are, in fact, three changes.
The first change which hon. members will find in article 1 of paragraph (a) merely provides for the deletion from the original convention of the special provisions which permitted the speedy termination of two articles. These articles provided for a maximum rate of withholding tax on dividends and interest having their sources in one country and going to the residents of the other country. These special termination provisions were in addition to the normal provisions for terminating the convention and were inserted to enable either country to increase its withholding tax on six months' notice. In the absence of such special provisions it would have been necessary to rely on

the normal termination provisions but they could not be invoked before June 30, 1959. Now that this date of June 30 is past, there is no need to retain the special termination provision.
The second change, which is contained in article 1, paragraph (b) of the supplementary convention, concerns the rate of withholding tax applicable to dividends from a subsidiary company resident in one country to its parent company resident in the other. Under the Income Tax Act the rate on such dividends is 5 per cent if the subsidiary is wholly owned by the parent company. In many of our income tax conventions this requirement for ownership is reduced from 100 per cent to a majority of the shares; that is, the requirement is for control rather than for complete ownership. In our convention with the United Kingdom the 100 per cent ownership provision was retained but the rate of tax was reduced to zero. In the original convention with the Netherlands both the ownership requirement and the rate of tax were reduced, the ownership requirement to a majority of the shares and the rate to zero. Thus the provision in the original convention is less restrictive than in any other of the conventions into which Canada has entered.
This provision has been changed in the supplementary convention so that the requirement for ownership is 100 per cent rather than a majority of the shares and the rate of tax is 21 per cent rather than zero. This change will make it possible to collect more revenue in withholding taxes and it will bring the convention with the Netherlands into closer harmony with our other income tax conventions.
There is however-and I must point this out to the house-one exception to this principle. If the subsidiary company merely receives income in the form of dividends and interest from companies abroad and receives no income from its own country of residence the rate of tax on dividends sent abroad to its parent company will continue to be nil. But to take advantage of this concession such a company will henceforth have to be 100 per cent owned rather than merely controlled by the parent company as at present. This means that where this form of investment income is merely funnelled through a holding company in Canada and does not have its source here it will continue to be free of tax.
Then, there is a third change which is contained in article II and the effect is to prevent withholding tax from being levied on alimony from a resident of one country to a resident of the other. Alimony will thus be treated in the same way as pensions. The practical effect is that Canada will give up its

withholding tax on alimony going to residents *of the Netherlands but will not have to give a credit in respect of Netherlands tax against its income tax on a Canadian resident who receives alimony from the Netherlands, as it was formerly bound to do.


William Moore Benidickson: Is that typical of the other agreements?


Richard Albert Bell: That is not typical of the others. This is a change from other agreements.


William Moore Benidickson: The first time, may I ask?


Richard Albert Bell: Yes, I believe this is the first time. I might point out, that all the changes described are reciprocal.
Article III of the supplementary convention contains, as the house will see, the usual provisions for ratification and coming into force which will take place only after parliament has given its approval to the bill. By its terms the supplementary convention will take effect from the first of January, 1960. It has been indicated that the supplementary convention has already received the approval of the Queen of the Netherlands and the exchange of instruments of ratification between the two countries now awaits only the enactment of the bill by the House of Commons and royal assent.


William Moore Benidickson: Mr. Speaker, I was very pleased to see this bill presented to the house on behalf of the Minister of Finance (Mr. Fleming) by his parliamentary secretary. I was wondering why this type of legislation, which basically involves tax collection, was sponsored by the Department of Finance. I find that in recent years under the previous administration legislation of this kind was usually presented by the minister of national revenue. I know that the Minister of National Revenue (Mr. Nowlan) has been otherwise engaged.


Richard Albert Bell: And happily so.


William Moore Benidickson: And successfully so, but in 1951, 1952, 1955, and on two occasions in 1957, bills of a similar nature were presented to the house and on each occasion they were sponsored by the then minister of national revenue. I wonder whether there is any particular reason for this departure in practice. I was glad to have the assurance of the parliamentary secretary that in form and intent these arrangements substantially follow the desirable practice of agreements between countries on a reciprocal basis to avoid double taxation. Perhaps in reply the parliamentary secretary might indicate those countries with which Canada now has tax agreements on this basis.
Income Tax
In view of the fact that we have recently amended and revised the law with respect to one element of taxation-I refer to the Estate Tax Act which became effective at the beginning of 1959-I was also wondering whether there is some reciprocity with respect to estate taxation as a result of this supplementary agreement. As to estate taxation generally, having regard to our new law, with how many countries have we either reached an agreement for reciprocity or are engaged in discussions at the moment with the thought that past tax agreements should be altered because of the fact that we have a new Estate Tax Act?


Mr. Speaker:: Is the house ready for the question? If the parliamentary secretary wishes to reply I must inform the house that if the parliamentary secretary speaks now he will close the debate.


Richard Albert Bell: Mr. Speaker, the
hon. member for Kenora-Rainy River (Mr. Benidickson) has raised three points. The most interesting one relates to the number of countries with which Canada has income tax conventions at the present time. I believe the list is as follows: the United Kingdom, the Netherlands, United States, Sweden, Ireland, Denmark, Belgium, Finland, New Zealand, France, Germany, Union of South Africa and Australia.
The hon. member then mentioned a matter which is perhaps outside the ambit of this bill. He asked in the first instance whether the bill and the convention which it implements related to estate taxation. They do not. He also asked whether negotiations were under way in respect of the Estate Tax Act, and I think he is aware that such negotiations of a significant character are under way with the United States of America.
The hon. member commenced by suggesting that in the more recent years of the former administration bills of this kind had been sponsored by the minister of national revenue. I have to confess that I was not aware of that fact, if such it be. I can only say to him that there is nothing sinister involved in this regard. The Minister of National Revenue (Mr. Nowlan) has been engaged in activities in connection with which the majority of the members of the house would wish, I think, to extend compliments to him. I am sure that in the circumstances nothing should be attributed to the fact that this bill is sponsored by the Minister of Finance (Mr. Fleming).


William Moore Benidickson: It does not suggest a trend that the Minister of Finance is going to be minister of everything?

Canadian National Railways


Mr. Bell (Carleion):: Mr. Speaker, while the Minister of Finance has, of course, demonstrated with the greatest of clarity to all members of the house his terrific competence, nevertheless what the hon. member suggests is not accurate. The minister is a team player in all respects.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Flynn in the chair.
Clause 1 agreed to.
On clause 2-Coming into force.
William Moore Benidickson: With respect to clause 2, the parliamentary secretary indicated that legislatively the other partner to the agreement had progressed even in advance of what we are doing here tonight. Therefore I would anticipate that there would be no unusual delay in proclamation.


Thomas Miller Bell: No, it has already had the approval of Her Majesty the Queen of the Netherlands, and it is only a matter of the exchange of the instruments of ratification after royal assent has been given.


[Stage Direction]
Clause agreed to.
Schedule agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the bill be read
the third time?


Some hon. Members:: Now.


William Moore Benidickson: Next sitting.


Mr. Speaker:: Next sitting of the house.



CANADIAN NATIONAL RAILWAYS


George Harris Hees: that the house go into committee to consider the following resolution:
That It is expedient to introduce a measure to provide that the Canadian National Railway Company may construct and complete certain railway terminal facilities at and in the vicinity of the city of Toronto: that the Minister of Finance may, with the approval of the governor in council, make temporary loans out of the consolidated revenue fund not exceeding one hundred million dollars to enable the work of construction and completion of the Toronto project to proceed forthwith; that the governor in council may guarantee the principal and interest of the securities that the company may issue under the provisions of the said measure; to provide also that the proceeds of any sale, pledge or disposition of the securities shall be deposited to the credit of the Minister of Finance in trust for the company in one or more banks designated by him. and released from time to time to the company by the said minister to be applied to expenditures made or indebtedness

incurred in connection with the said project; and to provide further that the estimate for the amount to be expended be $87,000,000.00 and the company shall not in performing the work of construction and completion exceed such estimate by more than 15 per cent.
Motion agreed to and the house went into committee, Mr. Flynn in the chair.


George Harris Hees: Mr. Chairman, this resolution seeks to authorize the Canadian National Railways to construct certain railway terminal facilities in the metropolitan Toronto area. I should like to say a few words about the nature of the improvements and expansion which are proposed, the estimates of cost, and the economic and operating features of the plan.
It is a fundamental principle of this government that in order to enable it to operate efficiently and economically, and thereby offer the greatest values to the public, the established capital needs of the publicly-owned system must be met. This government has encouraged, and proposes to give continued encouragement to capital projects that are submitted to it by the railway management that can be recognized as self-liquidating. The project which is the subject matter of the resolution is in that category.
I should like the committee to view it in relation to what is being done across the country to adjust the railway plant and services to the needs of today, raise the level of productivity and achieve economies. In this regard strong emphasis has been placed in recent years on the need to provide better yard facilities for handling trains in terminals. Yard extensions and improvements have just been or are being completed at Halifax, North Sydney, St. John's, Corner Brook, Campbellton, Joffre, Garneau, Sarnia, Edmonton and Port Mann. The plan calls for linking all these modernized facilities with electronically controlled hump yards at the four major centres of Moncton, Montreal, Toronto and Winnipeg. The work is advancing rapidly at Montreal, Moncton and Winnipeg, but the full benefits of the capital expenditures in these yards will not be realized until similar facilities have been completed at Toronto. The yard proposed for Toronto is thus an essential element of this important chain.
As hon. members will remember, Canadian National Railways was created after world war I to operate as one system various railways previously operated directly by the government, as well as those of the privately owned Grand Trunk and Canadian Northern systems. These railways, in many instances had constructed their own separate terminal facilities at various locations. The integration of these facilities has been an exhaustive

process, and is not yet finished. For instance, in the city of Toronto at the present time, no fewer than eight freight yards are operated by the Canadian National. Due to their limited capacity and the lack of available property around it is not possible to expand any one of these yards to provide the central classification facilities that are needed for the marshalling of trains in an efficient and economical manner. However, even if the proposed facilities could be located on the site of an existing yard or on existing lines there are other features that would have to be considered.
Canadian National Railways operate passenger trains, with mail and express cars, and freight trains over six separate lines or subdivisions radiating from the Toronto union station area, from the Bathurst street yard in the west to the Don yard in the east. Three lines diverge from the west end and two others from the east. The sixth has its junction about five miles east of the Don, and its traffic is also fed into the heart of the congested area. Railway traffic is thus concentrated between Bathurst street and the Don river and, to add to the congestion, there are continual cross-over movements necessitated by the fact that there are numerous facilities such as express and freight stations, team tracks, and yard and harbour facilities located on either side of the main line. The congestion causes delays and costly handling of traffic.
The management of Canadian National believes that in these circumstances the only practical, long term solution that will obviate delays and costly handling, provide more efficient service, and reduce operating costs, is to construct a modern, electronically controlled hump yard and related facilities in an entirely new location outside of the congested area. The site which has been selected is in Vaughan township, and access lines to this yard, as planned, will run from Pickering in the east and through Malton in the west, circumventing the congested Don-Bathurst street area. This is considered to be the most feasible location from the combined standpoints of engineering, operation, land use and zoning, cost and return on investment.
The gross capital requirement for this project is estimated at $37 million. The annual savings in operating expenses will be substantial, not to mention several non-assessable benefits which are expected to accrue from the construction. For one thing, the reduction in the handling time of cars will substantially improve freight deliveries. Shippers will thereby be better served and more apt to increase their railway shipments. Second, the considerable reduction in terminal delays will
Canadian National Railways increase the availability and use of road power. The fact that over-all fewer units of road power have to be used has a certain value which cannot be accurately computed, but is nevertheless appreciable, particularly during times of shortage of motive power. A third and very important benefit lies in the opening up of large new industrial areas which can be economically served by the proposed lines.
This program of construction is not designed simply to resolve local problems. It is, as I have indicated at the outset, part of a long range plan for greater efficiency and more economical operation of the railway system as a whole. Improved operating efficiency is the key to lower transportation charges, and for this reason the proposed measure is of direct interest to the public and to shippers all over Canada who have shouldered in the past the burden of freight rate increases occasioned by rising operation costs. As such it will benefit farmers in western Canada equally as well as shippers in the maritimes and in the central provinces. For all these considerations, I earnestly hope that the resolution will commend itself to all hon. members.
I might say, Mr. Chairman, that after second reading of this bill I shall move that it be referred to the standing committee on railways, canals and telegraph lines for examination by that committee.


Paul Theodore Hellyer: This evening, Mr. Chairman, I have had the advantage of being largely in agreement with respect to most of the legislation which has been before us. With this resolution, too, we of the Liberal party are in accord. The terminal, of which this legislation will permit the construction, is designed primarily, as the minister has told us, to serve the Toronto metropolitan area. As all hon. members know, this is a great industrial city which has experienced a rapid, almost explosive, growth, particularly in the last decade since the second world war. The very nature of this rapid growth has increased the problems to which the minister has referred in connection with industrial development, which had been concentrated more or less in the central areas of the city and which has now been moved, enlarged and augmented by new industry situated in the periphery of the metropolitan area from Etobicoke on the west through to North York, Scarborough and Pickering on the east. This has considerably increased the problem of handling traffic to service all of this new major and supplementary industry.
We welcome this new development which the minister has referred to this evening. It is a development of considerable magnitude,

Canadian National Railways which is witnessed by the size of the expenditure. Certainly any project involving an expenditure of the order of $100 million is one of considerable importance. It should permit the handling of freight at the north end of the city and enable this to be done more expeditiously and at the same time we hope more economically, especially to these new suburban industries I have mentioned.
The minister has said that the project will be self-liquidating. We hope this is so and also that it will bring considerable savings as he has indicated and thus reduce the cost of doing business.
There are other advantages proposed in this project. We hear a great deal about planning of our metropolitan areas these days and we have a problem in planning in Toronto, as have other great metropolitan cities. We have heard some complaint about the location of this proposed marshalling yard, but I am not qualified to speak on that. I presume the factors were carefully and sympathetically considered by the C.N.R. and by the board of transport commissioners.
This project should release the older tracks for use by commuter trains. As the minister has said, these tracks enter the downtown area of Toronto from six different avenues and they funnel into a central yard at Union station, and for years we have been talking about the possibility of an adequate commuter service to serve the downtown areas. I know that many Torontonians have looked with some envy at the excellent service enjoyed by the people of Montreal, and we hope that with this development it will be possible to use some of these facilities for a new and improved commuter service for the downtown areas.
As a matter of fact it would be possible to have quite a comprehensive rapid transit system without the expenditure of further large additional sums of money. I hope that the Toronto metro planning authorities will co-operate with the C.N.R. in trying to work out just such a comprehensive system of rapid transit, and that the two of them will work together with the Toronto transportation commission in order to avoid a duplication and to make sure there is the maximum service provided at the minimum cost.
It appears, Mr. Chairman, that this project will be beneficial to the majority of the residents of the metropolitan Toronto area, and under these circumstances I will reserve any further comment at this time until the bill is available and we have seen it.


Douglas Mason Fisher: Mr. Chairman, the outstanding thing about the project outlined in the

measure in front of us has been the resistance offered by certain ratepayers in the region affected by the new line. Before I review some of the points that certain groups have made I should like to indicate that I think this is a worth-while bill and I hope that the relative quiet in the last four or five months as far as this resistance is concerned indicates that everyone is happier than they were.
The main complaints of the people in the Thornhill-Markham-Vaughan areas hinge on the choice of the route of this particular Canadian National Railways by-pass line and the location of the terminal. The objections were quite extensive, but most quite naturally stemmed from self-interest and a feeling that the line and the yards were going to affect property values and the selling values of the homes and the land in the area. The complaints centred around the fact that the C.N.R. had gone ahead with the planning project as a result of a report prepared for them by De Leuw-Cather and Company and this De Leuw-Cather report was kept secret so that those who were protesting the specific location of this route were unable to determine what alternative routes there were.
Some of these ratepayer groups, such as the Thornhill-Markham-Vaughan group, tried to work out with what resources they had alternative routes. One of the points made by ratepayer associations in the Thornhill area was that the project director refused to join the ratepayers association in a study of the socio-economic effects on homes and property in the district. When asked to reveal details of the carefully concealed De Leuw-Cather report on which the project plans were supposedly based the C.N.R. refused to table it even for study by the member for the area, the hon. member for York Centre. When asked what damage would be done by a heavy traffic double track slashing through the heart of an established residential community with fine homes and schools, the C.N.R. admitted that they did not know and yet displayed no interest in helping to determine this as part of the costs involved in their route consideration.
The Toronto metro area has received very recently what you might call its "Gordon report", and it is a projection of metro's role into the year 1980. It is very interesting, if you look at the synopsis presented in either the Toronto Telegram or Star, to discover the projection for the year 1980. It is projected that the area where the yard will be will be one of the fastest growing areas in terms of population. The whole shift in population according to this metro study is northwards,

and nowhere will there be a greater concentration of population in the next 20 years than in the particular region where this yard is going to go.
The other interesting point is that the Canadian Pacific railway have plans for a marshalling yard of not quite comparable size, but of considerable size nevertheless, in the east towards Agincourt. Again if we look at the metro projection map, that is another area which will be much more heavily populated. When you look at the analysis presented in the Toronto Star of the transportation future up to the 1980's in Toronto you get this quotation which appears on page 35 of the Star for January 31, 1960:
The new C.N.R. "Toronto terminal" to be linked to its main lines by new access lines, will be one of the largest and most modern railroad terminals. The company's growing piggyback operations will be handled here.
When the new yards are completed, freight will be distributed from the outside into the city instead of from the inside out as at present. As a result, railroad facilities in the inner area will be relieved.
These facilities will still be needed to serve the industrial and commercial areas in the central part of the city and will continue to carry express, mail and interurban passengers. The report predicts this business will decrease.
The relevance of this projected yard and the tremendous growth of Toronto in the particular region around Thornhill underlines the possible conflicts and the need to be absolutely sure about the location and the plans for its extension in the future. I would hope that when we do have the bill before the committee we will have an opportunity of going into the alternative routes and be told just what consideration Canadian National Railways has in the mind of its management so far as its relationships in this area with residential development are concerned. I know the argument was put to the committee by the president of the railways that most of the objections seemed to have been circumvented and that everyone seemed to be happy with the plan. I acknowledge that I have not received any recent spate of letters on the matter such as I did last fall. But when you have a potential growth in the Toronto area and something of this size is placed into what is considered to be the largest potential there is, I think we should know what the plans of the metro planning authority will be in the matter and also where the people of Vaughan and Markham townships stand in relation to the dividing off of the area adjacent to the yards along that line for different types of industry.
It is apparent from the projection that it is expected that industry will follow the movement northward and link up with this particular railway line. It seems to me that we
Canadian National Railways could have here the makings of a really heavy congestion and also a serious conflict between the residents, the C.N.R. and potential industrial users unless we are absolutely sure that there are plans to circumvent or head off such a conflict. With the experience in our minds of the very sharp conflicts that can develop between the ratepayers in an area and Canadian National Railways, I think we should, in the committee stage, go into this matter very thoroughly. I hope the minister will agree to help persuade the committee to let us have some spokesmen from the municipality before the committee so that we can be absolutely sure that there will not be in a few years any repercussions that are going to cause difficulty for our government owned railway.


William Moore Benidickson: I have no fundamental quarrel with the proposal of the Minister of Transport, nor do I claim any particular information about his proposal. I rather resent the fact that we are not better informed on a matter of this kind. It surprised me very much to find that on May 16 the Minister of Transport presented a resolution to parliament involving a C.N.R. capital expenditure amounting to $100 million, ten days after a sessional committee of this house had examined officials of the C.N.R. with respect to their operating budget and their capital intentions with regard to expenditure for 1960. The most casual reference at that time, when we all had the opportunity to inform ourselves better, was made to anything which related to the Toronto terminal. The only thing that I can find in reviewing the evidence which was given to representatives of this house in the committee took up two or three lines of the committee Hansard when it was suggested that terminals of a very modern nature-I think they were called hump yards -were to be established across the country at considerable expense.


Douglas Mason Fisher: If I may interrupt for a moment, if the hon. member were to turn to page 212 of the proceedings he would find that there is perhaps a page about the Toronto yard. I agree it does not give much information, but the president did answer several questions on the subject as reported on page 212.


William Moore Benidickson: I am very glad to hear that comment. I had checked and found that on page 61 a reference was made to Montreal; that it would be largely completed in 1960, that Moncton would be completed in the fall of 1960, and Winnipeg early in 1962. There was only a passing reference from a

Canadian National Railways capital point of view to Toronto on that page. It was mentioned that $6.6 million would be required.
The other thing that puzzled me-and I wonder if the hon. member for Port Arthur has considered this-is that I do not recall with respect to terminal requirements at Montreal, Moncton and Winnipeg that this house was presented with anything in the nature of legislation similar to the present legislation. I realize it may involve something tantamount to the type of legislation we have had where branch lines are required. I take it we have here a combination of the expenditures for the equivalent of branch lines, plus the equivalent of what hitherto has been provided for in other types of capital expenditure legislation-the normal type for terminal investment such as has been projected already at Moncton, Montreal and Winnipeg.
I wonder if the minister, when he is explaining his resolution, would indicate to us just why the Montreal, Moncton and Winnipeg expenditures which, I think, are, in part, of a similar nature, have not required a separate bill or a separate resolution. I should also be glad if he could indicate to us what portion of the $100 million that is referred to in this resolution represents such a thing as an access roadbed or road line that might be the equivalent of a branch line, and how much of the $100 million is expenditure of the nature that has been provided at Montreal, Moncton, Winnipeg and other terminals as a terminal expenditure in the annual capital requirements budget of the C.N.R.


Mr. McGee:: Rising to speak on this resolution after a rash of opposition speakers, I should like to review the background of the situation in view of the fact that the projected route which manages by one means or another to avoid any heavily populated districts as it proceeds over the north end of Toronto has landed right in the middle of one of the most beautiful areas in metropolitan Toronto.
The citizens in that area, as the hon. member for Port Arthur indicated, were disturbed and upset by the prospect of the double line -the major freight traffic line-particularly so because most of the persons resident in that area, especially in recent years, had retreated from the downtown and congested areas of Toronto with the accompanying noise and other disturbances that accompany city life and found, in more recent times, on reaching the quiet area of north Yonge street, where, somehow, were contained all the advantages of both city and country living, that the noise and disturbance had followed them

out there and were presenting a most disquieting prospect for the future of that community.
Certainly throughout the discussion which took place with respect to this matter no one took serious issue with the need for such a line; the legitimate necessity for it and the fundamental economic basis on which it was projected. The hon. member for Trinity mentioned some clash but I believe that no one quarrels with the purpose. Some relief will be provided through the projected by-pass with the spokes of the wheel, as it were, leading down to the centre of the city. The feasibility of the project for commuter traffic is demonstrated.
I do not think that anyone is too optimistic, and certainly I am not, about the ultimate prospects of commuter traffic but at least the possibility of relief exists in a more practical way. Clearly the townships in the areas adjacent to the proposed line will benefit. The establishment of the line will be welcome news to the township councils with respect to the effect this will have on balancing the municipal versus commercial tax revenues. Against that must be weighed the cost of this in terms of upset and disturbance.
I should like to commend a number of people in this connection and perhaps especially the people in the area for their vigour in pressing for action. At an earlier stage in my remarks I was going to describe Thornhill as a sleepy village but I feel that the minister, the president of the C.N.R. and anyone else who has had anything to do with the matter would probably select "sleepy" as the least appropriate word to describe the residents of the area. This group of ratepayers were most vocal in their protestations. Some were engaged in engineering and other fields. They were able to recruit from among their numbers members who were capable of making an intelligent judgment on the basis of the information that was made available to them concerning the availability of alternative proposals.
The attitude of the minister throughout has been very commendable in terms of his cooperation with me during the many interviews and discussions which we had concerning the problem. I wish I could say the same for the relationship that existed between the management of the C.N.R. and the various ratepayers' groups involved. Perhaps enough has been said about that in other quarters and what I have said will suffice. I should like the minister and the committee to know, however, that the residents of the area still feel that the explanations offered

to them in reply to the various questions they asked concerning the alternative proposals left something to be desired. This group recognized throughout the need and the essential soundness of the proposition but felt that in the handling of it and in the discussions between the crown corporation and the various citizens' groups much was left to be desired.
As far as the De Leuw-Cather report is concerned, we are concerned with a similar report of a committee of this house at this time. I am impressed by the argument that interdepartmental reports of crown corporations and government departments should not be tabled, published or become public and this particularly in a case where the C.N.R. is competing, after a fashion, with the C.P.R. However, the fact remains that in this case the information to which the ratepayers in the area felt they were entitled has not been presented to them in the form in which they required. I assume that when this matter goes to the committee some effort will be made by the minister to clear the air concerning that issue and to satisfy the residents of the area and particularly those of the village of Thornhill about the basic soundness and merits of the proposed by-pass route.
That is all I wish to say at this point. I look forward to hearing from the minister and perhaps he will comment on some of the suggestions I have made. I also look forward to further clarification when the bill reaches the committee stage.


William Moore Benidickson: Mr. Chairman, I am not a member of the committee that will consider this measure although I was a member of the committee that had the opportunity of examining the senior officials of the Canadian National Railways.
I know from talking outside this chamber with a number of backbench members of the Conservative party that they, too, are rather concerned about the depressing financial results of the C.N.R. I am sure that they and all other hon. members who will serve on the committee when it examines the bill that will follow this resolution will look into some of these matters very carefully.
Following the kind suggestion of the hon. member for Port Arthur I have re-read page 212 of the proceedings of the former committee which examined C.N.R. matters. I find there the phrase to which the discussion referred and the one that was always used was "Toronto by-pass matter". That is the thing the committee that will examine this new measure should examine into.
I repeat my point that we have always considered that terminal facilities would be 79951-0-293
Canadian National Railways part of the capital budget of the Canadian National Railways presented annually. Indeed, if we look at the resolution we are now considering we find that it refers to a provision for certain railway terminal facilities. My concern is this. After we had in another committee what we considered to be a proper examination of the capital expenditures of the C.N.R. as required for 1960, including expenditures relating to terminal facilities and other matters, why do we have a separate piece of legislation at this time in this respect?
Having regard to some of the discussions which we hear less formally than we usually hear in this chamber, I wonder if the members of the committee that will consider this new measure will examine carefully whether or not the competitive road is embarking on capital expenditures such as are contemplated in this resolution. Both are experiencing today rather adverse revenue records. I mentioned this morning in connection with other legislation that the operating experience of the C.N.R. for the first four months of 1960 as compared with 1959 reveal a decrease in revenue of $7.6 million. The Canadian Pacific railway-and I have the figure for three months rather than four months of 1960-reports an increase. Nobody can raise the question of dividends from subsidiaries because the revenue refers to rail income only. Their revenue was up half a million dollars. These matters should be looked at carefully when we consider further expenditures of this kind, such as were referred to this morning by the hon. member for Port Arthur when he said that these millions are being provided in a capital way but are they increasing the net revenue of our crown company?
I find also that the proposed capital expenditures involve $100 million in addition to the $197 million that we were discussing this morning, or $297 million for Canadian National Railways. I find that the Canadian Pacific proposals for 1960 are $83 million. This includes $25 million for their air subsidiary. The other figures for the C.N.R. are quite separate and apart from the Trans-Canada Air Lines, although the capital stock of the Trans-Canada Air Lines is, 1 believe, owned entirely by Canadian National Railways. I think the comparison is very striking. I am not a member of this committee but I hope it will examine very carefully some of the comparisons, such as those suggested by other hon. members earlier today.
As I say, some of those comparisons are striking and, as the hon. member for Port Arthur suggested, we have tried this for 10 years; a billion dollars has been provided in extra capital to the crown company. Are

Canadian National Railways we satisfied that these things are providing efficient operation to the extent that eventually the net income will improve sufficiently to justify the expenditures? Or, as the hon. member for Port Arthur suggested, do we as responsible representatives of the shareholders say that even if they do not provide the net revenue improvement, they are improvements to the country as a whole and are justified? But I am very disappointed to think that there would be any casualness on the part of the executive when certain paring down of demands occur at the executive level of the C.N.R., as was given in evidence with respect to their basic capital requirements, going from $272 million down to $197 million in various stages, but when it is presented to the government there is no change.
I hope that in this item as well as in the other the committee will examine the role of the executive as to prior inquiry before the legislation comes to us as a justification for capital expenditures of the magnitude that have been presented to us today.


Mr. Creaghan:: Mr. Chairman, I feel it is important that this committee and the country appreciate the interest that this government has shown in the C.N.R. in recent months and during the past couple of years. Admittedly a hump yard is well under way just outside the city of Moncton. This has been a great improvement to the area and it is going to make it possible for the C.N.R. to remain competitive.
As long as the government of Canada owns the C.N.R., in my opinion there is a strong obligation on the government to give it the tools to remain competitive with other modes of transport and with the Canadian Pacific Railway. Consequently, I feel all members will agree with the principle of this legislation.
I hope the Minister of Transport will be invited to Moncton by the railway management when the hump yard in Moncton is officially opened sometime later this year. If he is invited I feel quite confident that he will attend. At the same time I suggest it would be very educational for the members from the Toronto area to accompany the minister because there they will see in operation what Toronto expects to have probably in three years time.
There has been some criticism tonight of the fact that the sessional committee did not study this particular piece of legislation. I have been on that committee for the past three years, and its major function has been to go over the policies and the previous year's operation of the C.N.R. In my opinion the standing committee on railways, canals and telegraph lines is far more competent to study


this legislation. In the first place, the sessional committee is composed of only 16 members while the standing committee consists of 60 members representing each and every major railway and shipping area of the country. Consequently it will be possible, with management before this large standing committee, for the public and the members of parliament to understand absolutely, without any doubt, the policy of the railway management. Therefore I do not believe there is any strength or justice to the criticism that this subject should have been before the sessional committee.
Another point which I notice and which I am very pleased to see is the fact that this committee will now study the scheme before the operation goes into effect. It seems to me quite apparent that the government, or the management of the railway, has recognized the importance of letting the municipalities become familiar with the future trend and plans of this large government corporation. Too often in the past major railway decisions were made before local and municipal governments and the public of the area were notified. In this instance the people in the Toronto area will be invited to the committee and the committee will have firsthand knowledge of their thinking in so far as the proposed hump yard project is concerned.
In conclusion, Mr. Chairman, I want to re-emphasize the fact that I am glad to see that management is going to hear and listen to the feeling of the public and I am also glad to witness that notwithstanding a series of annual deficits this government still has confidence in the railway and is stiH prepared to finance its operations.


James MacKerras Macdonnell: Mr. Chairman, I am rising for the purpose of asking a question. I am a little confused as to the course of this debate for the following reason. As I understand it, we have here a resolution which is to authorize the provision of certain moneys for Canadian National Railways and the method of doing so is set out. The money is being provided for the purpose of providing certain railway works in the Toronto area. My understanding is that the railway itself, through its own officers, will negotiate with the parties in interest, the municipalities and metropolitan Toronto, if it comes in. I do not know whether it does come or not. There is also the board of transport commissioners. I ask this question. After this money is voted the matter does not concern us further, as I understand. Is it not left to those other responsible bodies to negotiate with the railway and to reach a conclusion?
I find in this debate that evidently the ideas I have in mind are very different from those of several other people who have spoken, and

they may be right. I am asking this question with this thought in mind. As I understand it, they are proposing that the committee on railways, canals and telegraph lines should really go into the whole of this scheme and should make up their minds whether the Canadian National Railways is wise in entering into this scheme.
According to what I understand from some hon. members, they are going to go into all kinds of questions, questions of policy, questions of detail. It is a matter I want to raise now while we are passing this resolution so that there will not be any misunderstanding afterward. It would be very easy for the minister to explain that I am wrong and that nothing will happen, that I have simply taken up four or five minutes of the time of the committee to raise that point.
Although I was not on the committee I remember reading that a question arose as to the functions of the executive officers of the railway and apparently there was some difference of opinion as to just where those functions ended and the committee stepped in and more or less guided them. I think that is an important question. I think it is a matter of some importance to clear our minds now because if I am right then the house in voting money should not expect to be put in the position of being the real managers of the railway. We have the power to authorize the managers of the railway to go ahead and through ordinary channels enter into consultations with the municipalities concerned, metro Toronto if that is necessary and anyone else, and also the board of transport commissioners in order to settle the matter.


Douglas Mason Fisher: Mr. Chairman, perhaps the remarks that I made led to the doubt in the previous speaker's mind, and I should like to refer him to page 212 of the proceedings of the committee on railways, air lines and shipping. Actually I imagine it will be the standing committee on railways, canals and telegraph lines that will be looking at the bill. On page 212 it will be found that I said:
The argument was put to me by ratepayers' groups and individual ratepayers that in discussion with the Canadian National officials they used extracts from this report-
That is the De Leuw-Cather report.
-to support their argument and yet they, in terms of rebuttal, did not have the total picture.


Walter Lockhart Gordon: You mean naming the De Leuw-Cather report?


Douglas Mason Fisher: Yes.


Walter Lockhart Gordon: They should not do that. I am not aware that they have. I think perhaps some of your informants may have assumed they did. But certainly any expression of opinion relating 79951-0-293J
Excise Tax Act
to the line or what should he done is entirely a Canadian National responsibility and we should be examined on it on the basis of our justifying that whole project on our own.


Douglas Mason Fisher: And we will have that opportunity then? I would like to ask the minister, will we have that opportunity this session?


George Harris Hees: Yes, I intend to introduce a bill this session and I intend to refer it to the committee on railways, canals and telegraph lines.
In other words, it is my assumption from this that we are going to have the opportunity in committee to examine Canadian National Railways as to its reasons for selecting this site and as to its relationships with ratepayer groups and with the communities in order to be absolutely sure that the whole plan is acceptable not only to Canadian National Railways and not only in terms of the cost but to the people in the particular region.
Resolution reported and concurred in.
Mr. Hees thereupon moved for leave to introduce Bill No. C-72, respecting the construction by the Canadian National Railway Company of certain terminal facilities at and in the vicinity of the city of Toronto.
Motion agreed to and bill read the first time.


Mr. Deputy Speaker:: When shall this bill be read the second time? Next sitting of the house?


Some hon. Members:: Now.


Mr. Deputy Speaker:: By leave, now?


Some hon. Members:: Agreed.


George Harris Hees: the second reading of the bill.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on railways, canals and telegraph lines.

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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act to provide:
1.	That the sales tax on electric heating equipment, designed for use on a system using 230 volts or greater, for permanent installation as part of an electric heating system for buildings, be repealed, but not including electric wiring or other materials leading to or connecting such equipment to the electric power supply.
2.	That ducts for warm air systems for heating buildings, but not including materials used in their manufacture, be exempt from sales tax.
3.	That the sales tax on laryngeal sneaking aids and parts therefor, including batteries specifically designed for use therewith, be repealed.
4.	That the sales tax on prepared surgical sutures be repealed.
[Stage Direction]
Excise Tax Act
5.	That the sales tax on goods enumerated in Customs Tariff Item 692a, that is. "articles presented from abroad in recognition of the saving of human life", be repealed.
6.	That the sales tax on perlite be repealed.
7.	That portrait photographs of individuals be exempt from sales tax.
8.	That the exemption from sales tax for,
"perforated bituminized fibre pipe for drainage
purposes not exceeding four inches in inside diameter"
be changed to read
"perforated pipe for drainage purposes not exceeding four inches in inside diameter".
9.	That the exemption from sales tax for feeds and feed supplements be extended to include feed supplements for addition to feeds for fur-bearing animals, and materials to be used exclusively in the manufacture thereof.
10.	That hardware for doors and sash not specifically mentioned in Schedule III be excluded from the sales tax exemption for articles and materials to be used in the manufacture of building materials.
11.	That the exemption from sales tax for.
"septic tanks"
be changed to read,
"septic tanks and grease traps therefor"
12.	That the exemption from sales tax for,
"Usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax and materials to be used exclusively in the manufacture of such coverings"
be changed to read,
"Usual coverings or containers to be used exclusively for covering or containing goods not subject to the consumption or sales tax and to be delivered and sold with the goods, and materials to be used exclusively in the manufacture of such coverings or containers".
13.	That the exemption from sales tax for
"Materials for use only in the construction,
equipment and repair of ships over ten tons net register tonnage" be changed to read,
"'Materials for use only in the equipment and repair of ships over ten tons net register tonnage".
14.	That the security required under the Excise Tax Act include bonds or other securities of or guaranteed by the government of Canada.
15.	That any enactment founded upon this resolution be deemed to have come into force on the 1st day of April 1960.
Jacques Flynn: I think it has been agreed that we will consider this resolution paragraph by paragraph, and if I remember correctly paragraph 1 had been agreed to.


Thomas Miller Bell: No, Mr. Chairman.
On paragraph 1.


Thomas Miller Bell: Mr. Chairman, on Friday, May 6, the Minister of Finance gave notice of an amendment to paragraph 1, and I would ask the Minister of Transport if he would be good enough to move the amendment.


George Harris Hees: Yes, Mr. Chairman. I move:
That paragraph 1 of the Excise Tax Act resolution be amended by deleting the expression "230 volts" and substituting therefor the expression "200 volts".


William Moore Benidickson: I take it that this amendment is a relieving amendment?


Thomas Miller Bell: Yes, it is.


William Moore Benidickson: The benefit will be available to a wider number of users of electric heating equipment than was the case under the amendment as proposed on budget night. Has the parliamentary secretary any indication as to the proportion of the trade that is affected by the proposed amendment?


Thomas Miller Bell: No, it would be very difficult to give an actual estimate. The situation is that when representations were made before the budget was introduced urging exemption for permanently installed electrical heating equipment reference was made in all cases to equipment designed to use 230 or 240 volts. After the budget was presented it was discovered that in some areas of Canada service was provided by systems using 208 volts and consequently this amendment was brought in with the intention that it would provide for equipment in these areas.


[Stage Direction]
Amendment agreed to.
Paragraph as amended agreed to.
On paragraph 2.
William Moore Benidickson: With respect to paragraph 2 I think a great number of members of parliament have received letters of inquiry from people engaged in the occupation of tinsmithing because prior to the budget proposals the government by order in council had made certain changes in a long prevailing practice under the Excise Tax Act. My understanding is that by circular ET-1, which is an order in council type of thing, the government in July of 1959 by executive decree deleted the trade of tinsmith from certain advantages of exemption with respect to the imposition of the 11 per cent sales tax. In consequence there has been a fair amount of havoc and consternation. I hope that the parliamentary secretary will indicate that this proposal in the resolution before us, as I hope is the case, is designed to bring tinsmiths back to their former status whereby they had for a long time enjoyed exemption from sales tax with respect to their work.


Richard Albert Bell: I think, Mr. Chairman, it could be said that this particular paragraph merely provides for the continuation of an existing exemption which has been welcomed on behalf of the industry by the Canadian warm air heating and air conditioning contractors association, who have extended to the Minister of Finance their warm and sincere thanks for this particular exemption. I would not wish the hon. gentleman to think that this restores in full the position

as it was prior to the particular direction of the Minister of National Revenue to which he referred, but it does in fact restore it in relation to ducts for warm air systems for the heating of buildings, and so on that basis has been warmly welcomed.


Paul Theodore Hellyer: I wonder if the parliamentary secretary could tell us why the change was made by the government, and what effect this has on the cost of small houses?


Thomas Miller Bell: I think, Mr. Chairman, the effect of this amendment on the cost of small houses is to restore it exactly to the position in which it was. I do not think there is any change whatever.


William Moore Benidickson: Am I right in my understanding that because of this executive decree by order in council in July of 1959 the tinsmiths' work with respect to ducts for warm air systems became subject, in the meantime, to a tax of 11 per cent? The hon. member for Trinity would have more knowledge of this than I have, but the correspondence I have received appears to indicate that in the meantime there has probably been $30 or $40 extra added to the cost of homes. Would the parliamentary secretary know from the representations that have doubtless been made to him, as they have been made to me and others from the sheet metalworkers international association and the tinsmiths, as to whether or not that is a reasonable conclusion?


Thomas Miller Bell: I would not be able to say, Mr. Chairman, as to whether that particular figure which the hon. gentleman states would be accurate. It is true that last July the Minister of National Revenue announced his intention of removing tinsmiths from the class of small manufacturers, except for those who met the general definition of a small manufacturer, which would be those whose actual volume was less than $3,000 worth of taxable goods sold exclusively to users.
In order to retain the exemption for one of the most important products of tinsmiths it is proposed by this amendment that ducts for warm air heating systems for heating buildings be the subject of specific exemption. They are listed in schedule 3 of the Excise Tax Act. This will cover as well stovepipes and all the ducts used in a heating system. I think the committee would be interested in the fact that under date of April 7 the general manager of the Canadian warm air heating and air conditioning contractors wrote the Minister of Finance, and I quote:
-may we convey our sincere thanks and appreciation for the recent exemption given to our industry re: ducts-warm air heating systems.
This exemption is further proof that our government is doing its share to decrease the cost of new house construction to the Canadian consumer.
Excise Tax Act
Your sympathetic understanding as to the many problems that would have been created by the enactment of circular ET-1 has been noted from coast to coast in Canada.


William Moore Benidickson: I am sure that this is an improvement upon the decision that was taken, as I say, by the executive by order in council a year ago, which was quite arbitrary and a great shock to the trade. But am I not right in thinking that there remains the substantial change, that is, the name of tinsmith is no longer to remain as a part of the regulations and not one of those trades named in section 3 of the regulations, subsection (b), describing a manufacturer? In consequence
I	imagine that a house builder, from the time of this edict last summer, who needed eaves-troughing or air conditioning or other tinsmith work in connection with the construction of a house, would have had to pay an
II	per cent tax which they did not have to pay until this administration came into office.


Thomas Miller Bell: As the hon. gentleman is well aware a change in the regulations does not change what has been the practice of not imposing a sales tax on sheet metalwork done on the construction site, whether it be for flashings or roof work or for whatever else it may be.


William Moore Benidickson: May I draw the attention of the parliamentary secretary to the reference to $3,000 in the regulation? I take it that the amount of $3,000 is not set by this committee, but is set by the executive to whom parliament has given the power to decide upon the merits. I do not know when this $3,000 was set as the limit of the output of a small manufacturer.


Thomas Miller Bell: It is hallowed by tradition, I think.


William Moore Benidickson: I think, then, we should think about this hallowing, perhaps, and I wonder what consideration is being given to the fact that manufacturers' costs have increased substantially, I imagine, from the time this $3,000 limit was established in the regulations. If the executive has the power to set the $3,000 limit, it has the power to increase the limit. I wonder if consideration could be given to this, having regard to the increased cost of production of all things, even those things that are included here. It may have been something that the previous administration could have considered for many years, as I do not know how long this has been hallowed, but I think it deserves consideration because $3,000 no longer describes the output of a manufacturer. He could not live on the profit from a $3,000 output.

Excise Tax Act


Thomas Miller Bell: I have no doubt the figure was before my hon. friend when he was in the role which I now occupy-


William Moore Benidickson: I do not recall it being before me.


Richard Albert Bell: -as it has been before me from time to time. I can only assure my hon. friend these matters are under constant review.


Erhart Regier: I should like to add my voice to the objection raised by the hon. member for Kenora-Rainy River because I too have had representations from tinsmiths who have regretted the fact they are no longer eligible to be classed as manufacturers and to have their production exempted from sales tax.
However, I should like to raise another matter here, and that is the discrimination against wholesalers. This amendment refers to manufacturers, and while manufacturers are able to sell their wares to consumers, they are obligated to collect this sales tax only on the materials used in their manufacture if the product ends up in the hands of the wholesaler. He then has to pay this sales tax on the whole unit. If he resells he is under a severe handicap as opposed to the manufacturer who, in the case of this particular product, often has direct deals. I should like to move, therefore:
That the resolution be amended by eliminating therefrom the words, "but not including materials used in their manufacture."
This, I feel, would place the wholesaler on the same level as the manufacturer now is.


Jacques Flynn: Shall I put the amendment?


Thomas Miller Bell: I was going to raise a point of order.


Some hon. Members:: Ten o'clock.
Progress reported.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: Mr. Speaker, perhaps before you leave the chair the house leader would indicate what is to be expected for tomorrow.


Gordon Minto Churchill: Mr. Speaker, for tomorrow there will be the third reading of Bill No. S-2, an act to amend the Canada-Netherlands Income Tax Agreement Act; then second reading of the bill with regard to the international development association, of which the resolution was passed today. Then I would like to carry on with the budget resolutions, but at four o'clock, due to the required absence of the Minister of Finance, if we are not finished with the budget resolutions I would like to adjourn that debate and commence with the estimates of the Department of Citizenship and Immigration and carry on with those estimates on Thursday, if necessary. That will be followed on Thursday by the estimates of the post office, and then for Friday we would commence with the estimates of the Department of Transport, followed by mines and technical surveys and fisheries, and fit in post office if that is not completed on the Thursday. It is a slight change in the order but the departments are the same which I named last week.


John Whitney Pickersgill: I wonder if the house leader will consider adhering to the statement he made earlier and start with the estimates of the Department of Citizenship and Immigration on Thursday morning? And if any estimates are taken tomorrow, could we take the Department of Transport estimates, because it would be much more convenient to us on this side to start with a new department on a new day.


Gordon Minto Churchill: That is quite agreeable to me, if it suits the minister. Then transport estimates tomorrow at four o'clock.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, June 8, 1960