1960-04-12

[Stage Direction]
Miss Margaret Aitken (York-Humber)
presented the second report of the standing committee on standing orders, and moved that the report be concurred in.
Mr. Speaker:: The hon. member has unanimous consent to move concurrence in this report later this day? Perhaps some arrangement might be made to dispense with the reading of it, because it is a long report. If the conclusions or recommendations are read, will that be satisfactory?


Mr. Chevrier:: What is it?


Mr. Speaker:: It is a report of the standing committee on standing orders with respect to various petitions for divorce which were technically imperfect and required consideration by the committee. Is it agreed that we dispense with the reading of all but the recommendations?


Some hon. Members:: Agreed; dispense with all.


Mr. Speaker:: Dispense.


[Stage Direction]
Motion agreed to.
(Translation):


Mr. Samuel Boulanger (Drummond-Ariha-baska):: Mr. Speaker, I rise on a question of privilege. On going over yesterday's Hansard I find that the Minister of Agriculture gave the impression that I had based my question on a report dating back to 1959.
Although I was sure that such was not the case, I took the trouble of again checking the report from "Le Bulletin des agriculteurs" to which I had referred, and I repeat that the item was indeed dated March 1960.
I hope that, in the meantime, the Minister of Agriculture had an opportunity of checking on the accuracy of his gratuitous statement in my regard.
(Text):


Mr. Speaker:: The hon. member has given an explanation. It does not seem to raise
a matter of privilege; it is an explanation of a matter reported in Hansard.



ANNOUNCEMENT OF CONCLUSION OF AGREEMENT

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, negotiations for a trade agreement between Canada and the U.S.S.R. have now reached a stage where a basis for agreement has been established. The delegation of Canadian officials which has been in Moscow during the past week now reports that the final stages of the negotiations have been completed and that the agreement is ready for signature.
The last agreement was signed in Ottawa. On this occasion the agreement will be signed in Moscow. The Minister of Trade and Commerce has been given the authority to sign on behalf of the government of Canada. He will leave for Moscow tomorrow, and it is expected that the agreement will be signed on Saturday.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I am sure the house will be gratified to learn that at last this agreement is about to be signed by the Minister of Trade and Commerce in Moscow. I assume that the agreement will be submitted to the house for consideration before ratification.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, the members of this group consider this a welcome announcement, and hope this will be an omen of agreement on other questions to come.

On the orders of the day:


Mr. G. J. Mcllraiih (Ottawa West):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce arising out of the announcement made earlier today about his trip to Russia to sign the proposed Russian-Canadian trade pact. My question is this. Is he in a position today to give any information as to what will be in the trade treaty, particularly with reference to wheat?


Hon. Gordon Churchill (Minister of Trade and Commerce):: 
Hon. Paul Martin (Essex East):: Mr. Speaker, may I ask the minister whether this agreement is not on a much smaller scale than the previous agreement in which the ratio of Canadian purchases was less and the ratio of Canadian exports was higher? May I also ask the minister whether in the proposed treaty Russian-made automobiles are included among the commodities to be purchased?


Gordon Minto Churchill: I am not aware of the ratio that the hon. member mentions-


Lester Bowles Pearson: Five to one.


Mr. Fleming (Eglinton):: That was not provided in the agreement.


Lester Bowles Pearson: It was the effect.


Gordon Minto Churchill: 
Lester Bowles Pearson: Mr. Speaker, may I ask the minister what arrangements have been made under this agreement to ensure that this proportion of Russian imports do in fact come into this country?


Gordon Minto Churchill: Mr. Speaker, we are not a state trading nation, and the Canadian government cannot ensure that the proportion desired comes into the country from Russia. This is a matter for the businessmen of this country who are alert to seize business opportunities.



TRANSPORT


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I have an announcement that will be of interest to members travelling


to Toronto and western Ontario tomorrow afternoon by train. The pool train that usually leaves at 3.30 p.m. will leave at 3.45 p.m. in order to give members a chance to get aboard.


Lionel Chevrier: Following a good precedent.



IMMIGRATION


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, it is important that I correct an erroneous news report which was prominently displayed in virtually all newspapers and broadcast several times over the radio in the Federal Republic of Germany yesterday to the effect that German farmers who have recently fled from the Soviet zone cannot emigrate immediately to Canada.
This statement is contrary to fact, since our officers in West Germany deal without delay with the applications of persons who have fled from the east zone of Germany and who have been classified as refugees by the authorities of the federal republic.
It is a matter of record that Canada has accepted many thousands of refugees from Germany. It would be most unfortunate if this erroneous news report should act as a deterrent to the movement of agriculturists from East Germany, who are welcome in Canada and for whom excellent settlement opportunities continue to exist.



REPORT OF STUDY GROUP ON TRANS-ATLANTIC ECONOMIC ORGANIZATION

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to ask either the Minister of Finance or the Secretary of State for External Affairs if he can make any statement to the house on the report of the four experts to the 20-nation body dealing with European economic co-operation, which report apparently was made yesterday in Paris.


Donald Methuen Fleming: Mr. Speaker, I have not the actual text of the report yet but I had some intimation of the nature of the report that was likely to be made. Canada made her views known to the four men in question some weeks ago, along with the other countries that were concerned. I do not think it would be appropriate for me to go beyond that at this point.



HOUSE OF COMMONS-CHAMPIONSHIP BOWLING TEAM

[Stage Direction]
On the orders of the day:
Mr. R. J. McCleave (Halifax):: Mr. Speaker, I have a question for the Postmaster General on behalf of the hon. member for St. Denis. In view of the fact that within the last hour the hon. member's team has won the House of Commons bowling championship, will the Postmaster General give consideration to issuing a stamp commemorating this event, which is an outstanding feat for the master of the left-handed screwball?


Hon. W. M. Hamilton (Postmaster General):: Mr. Speaker, I received no notice of this question. I am sorry that we cannot issue a stamp for this purpose, but I would express my gratification that the hon. member for St. Denis seems to make more strikes outside of the house than he does inside.


Mr. Azellus Denis (St. Denis):: I must thank my good friend the Postmaster General for his kind words of congratulation. May I assure him that I did not win as the result of theft.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. Erhari Regier (Burnaby-Coquitlam):: May I ask the Minister of Labour whether he has yet received a report from the unemployment insurance advisory committee in respect of regulations 172 and 173 of the Unemployment Insurance Act?


Hon. Michael Starr (Minister of Labour):: No, Mr. Speaker.


Erhart Regier: I wish to direct a question to the Minister of Labour. Will he explain to the house the reason for the long delay in the report of the unemployment insurance advisory committee reaching his office? Is he taking any action to obtain an early delivery of that report?


Michael Starr: I can only repeat what I said last week and on a number of occasions prior to that time, namely that I have had communications with them urging them to bring in this report. They held another meeting on Friday and the report is not in yet.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. John Pratt (Jacques Cartier-Lasalle):: I should like to direct a question to the
Inquiries of the Ministry Minister of National Revenue in his capacity as spokesman for the C.B.C. I have received a protest from one of my constituents against a proposed television production during the forthcoming Easter week by the Canadian Broadcasting Corporation of what is described as a rock 'n' roll passion play. Could the minister inform the house whether he has received a similar complaint or whether, to his knowledge, the C.B.C. has received complaints in any significant numbers with reference to such a program?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, the hon. member was good enough to send me notice of his question this morning, which gave me an opportunity to inquire of the corporation about this matter.
In the first place, I have received no such complaints whatever, nor has the corporation. The C.B.C. has no intention of producing anything which could be called a rock 'n' roll passion play. The first intimation the corporation had of this was when they read the news story in the papers this morning. I am advised that it is without any foundation in any shape or form.



NATIONAL CAPITAL PLAN


[Stage Direction]
On the orders of the day:
George James McIlraith: I should like to ask the Minister of Public Works whether an appointment has yet been made to the position of chairman of the national capital commission.


Hon. D. J. Walker (Minister of Public Works):: I thank the hon. member for the question, and I can tell him that Mr. Alan Hay has been appointed chairman of the national capital commission for a temporary period.


George James McIlraith: What is the significance of the addition at the end of the answer of the words "for a temporary period"? Does that relate to the time only, or does it relate to the authority of his office?


David James Walker: Mr. Speaker, two months.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: I should like to direct a question to the Secretary of State for External Affairs. In view of the apparent failure of the members of the 10-power commission to make progress in the

Inquiries of the Ministry matter of disarmament, I should like to ask whether the Canadian government consented to the long adjournment of the commission about which Secretary Herter complained; or was Canada's agreement made on the sole initiative of the spokesman for the Canadian delegation?


Hon. Howard C. Green (Secretary of State for External Affairs):: The hon. member for Essex East should not be so downhearted about the disarmament negotiations. I am leaving tonight for Washington to attend a meeting of the five foreign ministers of the western nations which are members of that commission. I am hopeful that some progress can be made at that time. Any adjournment made would have been with the consent of our representative at the meeting in Geneva.


Paul Joseph James Martin: I thank the minister for his statement: May I ask him whether we are to conclude that because of his intended visit to Washington, there will be grounds for optimism?


Howard Charles Green: I hope so. Certainly there will be no grounds for all the pessimism the hon. gentleman from Essex East shows.


VISIT OF FRENCH PRESIDENT-LIAISON OFFICERS
[Stage Direction]
On the orders of the day:
Mr. Louis Fortin (Monimagny-L'IsIei):: should like to direct a question to the Secretary of State for External Affairs. Would the minister give the house the names of those who will act as liaison officers to the President of the French republic, General de Gaulle, during his visit to Ottawa, Montreal, Quebec and Toronto?


Howard Charles Green: Yes, Mr. Speaker, Mr. Jean Belleau and Mr. J. W. Hughes of the national film board will be accompanying the press party throughout. In Quebec city they will be assisted by Mr. Jean Pelletier, press secretary to the premier of Quebec; in the city of Montreal by Mr. Pierre Jerome of T.C.A., and in Toronto by Mr. Jack Berry of the C.P.R.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisla-Twillin-gate):: I wish to direct a question to the Minister of Citizenship and Immigration. Is the hon. lady now in a position to answer the question I asked on Friday?


Ellen Louks Fairclough: Yes, Mr. Speaker. When the hon. member asked me the question on Friday I was not too sure just where the suggestion had originated with reference to Miss Rebrin's departure. On looking up her record I find that it was her solicitor who informed officials of my department that she did not have sufficient funds in order to leave voluntarily. They were subsequently informed that the department would be prepared to assist in paying for her departure provided this was accomplished before deportation arrangements were made by the immigration department. This offer was made under the provisions of section 70 of the Immigration Act.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. M. W. Marlin (Timmins):: I wish to direct a question to the Minister of National Health and Welfare. In view of the very critical comment contained in the annual report of the deputy minister of health and welfare of the province of Ontario, can the minister inform the house whether it is the government's intention to sit down with the federal-provincial advisory board with a view to overhauling its regulations in this matter?


Hon. J. W. Monleilh (Minister of National Health and Welfare):: Mr. Speaker, I am not just too sure to which portion of the report the hon. member is referring.


Murdo William Martin: I am referring to page 11.


Jay Waldo Monteith: I have not read the report as yet, I am sorry to say. However, I shall be glad to do so and let the hon. member know.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Yesterday, Mr. Speaker, I asked the Minister of Labour whether he could give us the latest available figures in the offices of the unemployment insurance commission covering the number of unplaced applicants. Is the minister in a position to give us that information today?


Michael Starr: Yes, Mr. Speaker. The number is 834,990, as of March 31, 1960.


Paul Joseph James Martin: In view of the increase in this figure may I ask the minister whether he is aware that the figure he has given represents an increase of 53,400 over the same date last year?


Mr. Graffley:: That is a statement, not a question.


Mr. Speaker:: Order. I think the hon. member is asking for a reply to the obvious, and that he is making a statement rather than asking a question.



ELLIOT LAKE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I would like to ask either the Minister of Trade and Commerce or the Minister of Labour whether they will be in a position soon to make a report on their week end at Elliot Lake.


Gordon Minto Churchill: Mr. Speaker, I could report briefly now.
The Minister of Labour and I visited Elliot Lake on Saturday and Sunday. We were exceptionally well received by the people of that area, had a long conference with representatives of the various organizations in town who presented half a dozen briefs to us in the course of Saturday afternoon, drove round the community and saw the dwellings there, the schools and the hospital, and met ever so many people. We reviewed the situation generally, and are taking into consideration the suggestions made by the citizens of Elliot Lake with regard to the present situation there and the future.
The problem requires action on a broad front, and that action is going forward. In the first place the citizens themselves have shown commendable initiative in organizing the community with the intention of attracting to that area industry from other parts, and in generally looking after the welfare of those who are disturbed because of the employment situation. The mining companies are taking an active interest in the situation and are endeavouring on their own account to make plans for maintaining employment in the area, and increasing it similarly by encouraging other industry.
The provincial government of Ontario have indicated in the legislature their very keen interest in the welfare of Elliot Lake and are similarly making plans to assist. The dominion government is also considering ways and means of coming to the assistance of a community which through no fault of its own is facing circumstances which for some
Inquiries of the Ministry of the people there are rather trying, to say the least. I think it will be possible within a very short interval to provide from our sources-that is from the dominion government-some assistance to Elliot Lake, and the other organizations I have mentioned will also be doing something very soon.
It is a model community situated in the northern part of this province. It represents the type of effort that is being made in developing northern parts of Canada through the mining industry, and it has great possibilities for the future. It is recognized that the uranium industry is now suffering a contraction, but the evidence that can be produced by experts in the field indicates that within a few years the demand for uranium may again increase and, that being so, there will be a good future for the industry in Elliot Lake and in other areas that produce uranium. Unfortunately there is at present a time lag between the period of 1963 or 1965 and 1970, and in that interval certain things will have to be done to sustain the community.
There is no doubt whatever that the government is keenly aware of the problems affecting the people of Elliot Lake and is anxious to do everything that is reasonably possible to meet that situation. In my opinion the people of Elliot Lake are showing great initiative and remarkable courage under trying conditions.


Lester Bowles Pearson: Mr. Speaker, in thanking the minister for his statement may I ask him whether the federal government is in a position at this time to put forward any concrete proposals for assistance to this community?


Gordon Minto Churchill: Mr. Speaker, I gave an
assurance when I was there that by the first week of May an announcement would be made by the federal authorities. I think that assurance will be fulfilled and that an announcement will be made in due course.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
David James Walker: Yesterday the hon. member for Timmins asked the following question:
In the light of the imminent move of the trade mark office to No. 8 temporary building, could the minister inform the house whether adequate notice has been taken of (a) the design load of the building, (b) the actual load of the office, and (c) the safety factor?
The answer to (a) is yes; the answer to (b) is yes; and the answer to (c) is yes.

Inquiries of the Ministry HOUSING



NORTHERN ONTARIO


[Stage Direction]
On the orders of the day:
David James Walker: While I am on my feet may I reply to the question asked yesterday by the hon. member for Nickel Belt, and which was as follows:
Is it true that applicants for loans under the provisions of the National Housing Act-and I am referring now to people resident in northern Ontario -have to report the bonuses paid to mine workers, an amount which is unascertainable from year to year? If this is so, would the minister not consider having that regulation withdrawn and the question removed from the application papers?
The answer is as follows, Mr. Speaker. Applicants for N.H.A. loans under the present direct lending policy are obliged to disclose all sources of income except family allowances. In determining eligibility for a loan, Central Mortgage and Housing Corporation considers the income, including bonuses, of the applicant during the 12 months immediately preceding the date of application.
It is not intended to change the method of computing income at this time.



PRIVILEGE


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I wonder whether the Secretary of State has been able to look into the question of the return I asked about yesterday, because I would like very much, if I could, to get this information before the Easter recess.
Hon. Leon Balcer (Acting Secretary of
State): Mr. Speaker, it will be tabled later today.


John Whitney Pickersgill: Thank you.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I wish to direct a question to the Minister of Finance. As the minister and the house are aware, the chartered banks are withdrawing from circulation all United States coins, which are reported to amount to as much as 25 per cent of the total silver in circulation. Will the minister inform the house whether adequate steps are being taken to ensure that there will be no shortage of Canadian coins?


Donald Methuen Fleming: Well, Mr. Speaker, I trust that the hon. gentleman will not suffer from any shortage. If he does, we will do our best to see that the need is met. I have no reason to think there will be any shortage.


John Whitney Pickersgill: Mr. Speaker, I wonder if I could ask the Minister of Finance whether the offer he just made to the hon. member for Timiskaming to relieve any shortage of coins he might experience applies equally to all hon. members.


Donald Methuen Fleming: I am quite sure I would not deny that assistance to special favourites of mine, Mr. Speaker, like the hon. member for Bonavista-Twillingate.


John Whitney Pickersgill: Very well, Mr. Speaker. I will let the minister know my requisition.



THE BUDGET


[Stage Direction]
The house resumed, from Monday, April 11, consideration of the motion of Mr. Fleming (Eglinton) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Benidickson.
Mr. J. E. Pascoe (Moose Jaw-Lake Cenfre):: Mr. Speaker, at the ten o'clock adjournment last night I had congratulated the Minister of Finance for a budget job well done. I had pointed out that this year's balanced budget would bolster confidence in Canada's economy. I referred to a chart which graphically indicated the country's financial growth, showing an increase in the gross national product to a record $34.5 billion in 1959. I said this tremendous growth was due to this government's policy and to the long term planning and tenacity of the Minister of Finance.
I drew attention to the great increase in federal contributions to the provincial governments since the present Minister of Finance assumed office. Unconditional payments, conditional payments and special payments to the provincial governments will total $1,300,900,000 this fiscal year compared with about half that amount, $689,400,000, paid in 1956-57, the last fiscal year of the Liberal government.
In connection with these federal contributions to the provinces, I would like to continue with an assessment of what Ottawa is paying to the Saskatchewan government under these arrangements. I have here a break-down of these federal payments to the Saskatchewan government for the 1960-61 fiscal

year showing a comparison with what the Liberal government paid in the last fiscal year during which it was in office, 1956-57. Unconditional grants to the Saskatchewan government this year will total $43,068,000 compared with $29,562,000 in 1956-57. Conditional grants to Saskatchewan will total $27,894,000 compared with $7,723,000 in the last fiscal year of the Liberal government. Nearly $71 million is being paid to the Saskatchewan government this year by way of conditional and unconditional grants, compared with $37,285,000 paid by the Liberal government in 1956-57.
Saskatchewan will receive nearly $41 million this year from tax rental and equalization payments, compared with $27,432,000 in 1956-57. The equalization payments are designed to pay to the provinces the difference between the tax rental payments per capita to the provinces of Ontario and British Columbia and the tax rental payments per capita to each of the other provinces. In the case of Saskatchewan this difference for 196061 is estimated at $24.76 per capita, which means that $22,680,000 will be paid to Saskatchewan under this agreement.
In connection with this greater federal payment to the provincial governments the mayor of Saskatoon recently made a very interesting comment, as reported in the Saskatoon Star-Phoenix. He said:
Saskatchewan municipalities are in urgent need of more financial assistance from the provincial government to ease the increasing burden of municipal taxes. He hoped that the Saskatchewan government would share the increase in tax rentals from Ottawa.
The Saskatchewan mayor is reported in the newspaper to have said:
The Saskatchewan provincial government might be able to claim a reduced provincial debt, but the debt reduction was due to a shift in the tax load from the provincial to the municipal governments.
Earlier in my remarks, Mr. Speaker, I referred to the fact that the great industry of agriculture, like all other economic groups, will benefit at least indirectly from sound government financing and a balanced budget. This government has provided many benefits to agriculture, and there will be a great many other farm benefits arising from the government's long term agricultural policy. In the course of a speech in this house the Liberal member for Drummond-Arthabaska (Mr. Boulanger) made a very interesting comment on this government's farm price policy. Here is what he said as reported at page 2464 of Hansard of Friday, March 25. I shall read the translation. He was referring to the supplementary estimates brought in by the Minister of Agriculture, and he said:
Under this item, we are asked to vote an amount of $57,661,176 under the heading "Operating Loss
The Budget-Mr. Pascoe Sustained by the Agricultural Prices Stabilization Board." That, Mr. Chairman, is the highest amount Canada has ever spent to support farm prices, since the passing of the Agricultural Prices Support Act in 1946.
If we look at the report, we find that the total amount spent under the act since 1946 is approximately $100 million, including the losses arising from the outbreak of foot-and-mouth disease, mainly in the western provinces, and which accounted for $70 million on that amount.
Under the Liberal administration, from 1946 to March 1957, the Agricultural Prices Support Act cost $25,052,806.98.
Now if you look at the expenditures for the past three years, that is since the Conservative government took over you find that in 1958, Canada spent close to $6 million, and in 1959, $15,124,000. Now, for the year 1959-60, we are asked to vote $57,661,176.
That means that since the election of the Conservative government, it has cost the taxpayers the substantial amount of $78,773,819 to support agricultural prices.
In short, therefore, it can be said that in the last 12 years of Liberal administration, it cost us $25 million to support those prices, while in three years of Conservative administration, the amount expended was $78 million.


An hon. Member:: That is why there is not a Liberal from west of the great lakes.


James Ernest Pascoe: This statement by a Liberal speaker certainly endorses the government's agricultural policy.


Mr. Hellyer:: Did he mention the millions the farmers had lost through lower prices?


Samuel Boulanger: What did the farmers get?


James Ernest Pascoe: Coming from a prairie farm region and an area principally devoted to grain raising, I naturally consider that bolstering the position of the western wheat farmer is one of the main problems facing this government. It is not a problem of this government's making; it is a problem that has been building up for years. The Leader of the Opposition made this clear when he said, according to a report in the Edmonton Journal of October 3, 1958, that agriculture had not had a fair share of the national income for the past 10 or 15 years.
This government's long range farm policy, Mr. Speaker, is the first real attempt at a national agricultural policy. Its full impact may not be felt for some time. That is why I believe some action of a more immediate nature should be taken this session to ease the problems of particular groups, such as the western wheat farmers. I use the term "immediate action" to differentiate between it and the long range farm program.
First I want to deal with this long range program. I know I am not making an original statement when I say that farming, which once was regarded as a somewhat individual way of life, has now become a business proposition, with all the problems of high cost operations and also with at least some of the

The Budget-Mr. Pascoe hopes of the financial returns offered in business. When I say farming is now a business proposition I do not mean that farms must necessarily become big farms. Personally I believe in the preservation of family farms that can become economic units. Such family farms were the backbone of the economy in Saskatchewan in earlier days, and I am hoping the federal government policies will help to maintain these family farms in the years to come.
In the government's long range farm policy there are three main points of attack on present problems, and here I speak as a western farmer of the problems of western grain farmers. The first point is more adequate long term credit to help put farms on the necessary business basis. The second is a guarantee of a minimum yearly grain income through crop insurance, worked out in cooperation with provincial governments. The third is continuing efforts, through the Canadian wheat board, to sell more wheat both on the export and on the domestic markets. In this connection, Mr. Speaker, I was very pleased to hear the announcement by the Prime Minister of the trade agreement with Soviet Russia, which will take more of our wheat.
Great interest is now centred on this government's long term credit plans, especially among young farmers and among those who would like to be farmers. It is almost impossible today for a young man to start on a farm without sufficient credit, or for older farmers to expand or reorganize their operations without such credit. In commenting on this situation an editorial in the Family Herald of March 12, 1959 had this to say:
Credit is essential. The problem Is to learn how to use it as a tool, and to lessen the risk. There was a day when the necessity of borrowing was thought to be the last mark of disaster for a farmer; when keeping out of debt was a mark of honour. Since then, farmers have learned that credit is a tool that may be as helpful to them as any other tool. Farming, besides being a way of life, is an industry and a business, and it must operate as such. The wise use of credit is just one of the business skills that farming requires. And a hearty welcome awaits any sound scheme that will make credit easier to get.
I suggest, Mr. Speaker, that under this government's new policy we certainly have made more credit available to farmers. This government believes it has worked out a sound farm credit program that will operate under the Department of Agriculture and help young farmers, through some form of supervision, to see that credit is used in the best way possible. The 47 prairie members on the government side can take some credit -if I may use the term in another sense-


for this new credit plan, especially for keeping the interest rate at 5 per cent. The 5 per cent interest rate is quite a contrast to the interest rate of 63, per cent charged under the farm credit plan for young farmers set up recently by the Saskatchewan government.
The second part of this government's long range farm program, a crop insurance plan, would guarantee a minimum level of annual grain income and would fit in with the credit program. The Saskatchewan government at first rejected the crop insurance program as an insult. That was the word used. Now it has changed its mind, possibly because of pressure from farmers and farm groups, and is going to follow the lead of the Manitoba government and set up test areas to see how crop insurance can be worked out. The federal government will pay one half the cost of administration and 20 per cent of the insurance premiums. This is the same rate of contribution that is made by the government to the unemployment insurance fund. I emphasize this point, Mr. Speaker. Unemployment insurance contributions from the federal government are in practically the same proportion as has been agreed to for crop insurance.
On the third front of the government's farm policy, aggressive action to sell more wheat, the Minister of Trade and Commerce gave the house an outline of what has been accomplished. It was a good report, despite the attempts of the opposition to minimize the export figures. Canada has held her position as the world's leading exporter of wheat in commercial markets, with cash sales in the last crop year exceeding the cash sales of United States wheat by 125 million bushels. In this crop year Canadian wheat exports have been running about 10 million bushels ahead of last year. I have a chart here which shows that situation. It indicates an increase each month over the same month last year. Increased world production of wheat, continued restrictive measures in some countries and the pressure in other countries to dispose of wheat surpluses are obstacles to greater wheat board sales; but, as the Minister of Trade and Commerce points out, the high quality of Canadian wheat is the chief sustaining feature of our world trade.
These three points have been mentioned in the house on other occasions, Mr. Speaker, but I make no apologies for outlining them again. They contain the three essentials of an integrated farm program of particular interest to the prairie; namely, more adequate credit facilities to establish farms on a business basis, some assurance of annual income through crop insurance, and continuing efforts to sell more wheat.

It is recognized that this is a long range policy and that its benefits may not be fully felt for some years. Saskatchewan members have suggested on other occasions, and I take this opportunity to suggest it again, that help of a more immediate nature could be given prairie wheat farmers through a two-price system for wheat sales. A two-price system would mean that wheat sold on the domestic market for human consumption, at present about 50 million bushels, would be sold at a price higher than the price on the world market and more in line with other Canadian prices.
If the 50 million bushels of wheat for domestic consumption sold for $1 a bushel above the export market price, this would mean an extra $50 million for distribution to grain growers through the Canadian wheat board. It is my personal view that under such a plan the additional money could be distributed on either a limited acreage basis or on the basis of a limited number of bushels for each farmer, say on the first 2,000 bushels delivered by any one farmer. Under this arrangement the smaller farmers would receive a good share of the additional money.
In connection with the domestic market for wheat, I want to refer to the decreasing consumption of bread. Based on its nutritional value, bread is one of our cheapest foods. In view of this is it surprising that in Canada, where we grow the best milling wheat, the per capita consumption of bread is going down. As a farmer and the member for the constituency of Moose Jaw-Lake Centre, where probably the best bread-making wheat in the world is grown, I am disturbed over this situation and consider that something should be done about it.
I have been amazed at the growing practice in eastern Canada, the area east of the great lakes, of not eating much bread at meals. I have been at a loss to understand why, and have gone to considerable trouble to seek an explanation from the planners of meals, the wives and mothers. It appears to be the young wives and the young mothers who are the leaders in the curtailment of bread consumption. The one answer I get is that they really like bread but that it is not on their slimming diet.
Out on the prairies, Mr. Speaker, the young wives and mothers know the value of bread consumption, both for their health and for the welfare of the wheat producers who are either themselves or their neighbours. Many of them bake their own bread. One of the great pleasures of visiting in my constituency is to go into a home where there is the smell of home baked bread. I know of one young mother with four sons who must
The Budget-Mr. Pascoe bake a dozen loaves of bread each week. Her boys are the picture of health, and she is just as slim as those who avoid bread in their diets. What I am attempting to emphasize is that a larger consumption of bread would raise the domestic sales of flour milled from our good western wheat, and this would help to reduce our wheat surplus.
I have some figures for the United States which I think can be converted into comparable figures for flour consumption in Canada. Consumption of flour in the United States at the present time averages 119 pounds per year per capita, compared with an average of 160 pounds per capita in the period from 1935 to 1939. If Americans were consuming flour at the 1935 to 1939 rate it would mean using an additional 165 million bushels of wheat a year for milling purposes, or well over 1 billion bushels of wheat in the past 10 years. On the basis of the same estimate Canada, with a population about one tenth that of the United States, would have used an additional 100 million bushels of wheat in the form of flour in the last 10 years; and I think, Mr. Speaker, we would be a healthier people.
I have here a food chart issued by the health league of Canada. It is headed "Canada's Food Rules", and at the bottom is this notation:
Approved by the Canadian council on nutrition, nutrition division, Department of National Health and Welfare, Ottawa.
It is true that the chart was issued before the present government came into office, but in this connection I think the government in office at that time was on the right track. Foods are shown for a balanced diet, and the chart goes on to say:
These foods are good to eat. Eat them every day for health. Have at least three meals each day.
Under the heading "Cereals and bread" there is the following:
One serving of whole grain cereal and at least four slices of bread.
If each person in Canada, Mr. Speaker, ate four slices of bread a day the wheat marketing problem would be very much easier for the Minister of Trade and Commerce. I should like to have that statement on the record as one way in which the Canadian people can help to reduce the wheat surplus.
Before I conclude I feel I must make reference to remarks made by the hon. member for Port Arthur (Mr. Fisher) about a divided Canada through what he referred to as "Quebec provincialism". The hon. member's remarks perhaps should not be taken too seriously, because he delights in making statements that receive headlines. In this particular case he probably was disappointed
3144	HOUSE OF
The Budget-Mr. Pearson because the headlines were not too many or too large. I am sorry he is not in the house to hear these remarks.
Quebec has shown little interest in his party at any time, and perhaps that is the reason for his statements. To me it is the old game of divide and conquer, or should I say attempt to divide and attempt to conquer. As I see it, the hon. member for Port Arthur realizes that the party of which I am a member is the one truly national party, the party of unity, the party of one Canada. His party thrives on disunity, on divided segments in our economy. His latest speech can be considered as an effort to drive a wedge between Quebec and the rest of Canada now that the two are coming closer together as a united Canada under the Progressive Conservatives.
Mr. Speaker, I do not need to speak for the Quebec members; they are well able to speak for themselves. As a member from a predominantly English speaking province I have been impressed with the way in which we have been able to work with our French speaking colleagues. I believe this holds out the best hope for Canadian unity; one Canada under this Progressive Conservative national government.
The hon. member for Port Arthur says Quebec members have little interest in national problems and are concerned only with Quebec matters. I do not agree with this view. I have found Quebec members very interested in our prairie problems and anxious to help us do something about them on a truly national level. I cannot speak too strongly against the regrettable statements of the hon. member for Port Arthur. He may speak for his group of eight members in this house, but I am sure he does not speak for the members of our party, nor does he speak in the interests of Canadian unity.


Lester Bowles Pearson: Mr. Speaker, I may not have agreed with everything my hon. friend who has just taken his seat has said, but I certainly do agree with him in his last remarks. In this debate we are dealing primarily with the economic health of the nation, and we are talking about facts and figures which bear on that particular subject. However, in his last words the hon. member has made us aware of the fact there can be no prosperity, no stability, no economic progress or progress of any kind in this country unless we have national unity, something which I should like to think every member of this house, without exception, is interested in strengthening.


Herbert Wilfred Herridge: You are quite right in that assumption.
[Mr. Pascoe.l


Lester Bowles Pearson: My hon. friend will forgive me if I do not follow him in his very interesting discussion on how to eat wheat and grow slim and healthy. But like him I will be, in my contribution to this debate, using some facts and figures which have already been used and, like him, I make no apology for doing so because of the importance of the situation which these facts and figures portray.
On March 31, in his third budget the Minister of Finance, after previous budgetary deficits totalling more than a billion dollars and cash deficits totalling $2,300 million, announced that he was budgeting this year for a surplus of $12 million on an expenditure of $6,330 million. There remained, however, an estimated cash deficit for the current year of $210 million. This, Mr. Speaker, is in contrast to the experience of his predecessor who after three cash surpluses in a row and out of expenditures of $5,072 million had, in his last budget in 1957, a budgetary surplus of $258 million and a cash surplus of $424 million.
When we pointed out this contrast in the budget debate last year and expressed some anxiety about what these contrasting figures represented in terms of economic development in our country, we were accused by the minister and other members of the government and the government party of indulging in gloom. But the predictions made on this side in the budget debate last year as to what was likely to happen in the ensuing 12 months have been borne out by events. I remember saying, as recorded on page 2913 of last year's Hansard, in reference to the prediction made by my hon. friend:
I suggest his prediction of a 7 per cent increase-
He added, when he made the prediction, "with stable prices".
-may well be too optimistic, and that if the hon. gentleman is wrong in this calculation the effect on employment opportunities in 1959 and 1960 in this country will be very bad indeed.
What are the facts? Well, the gross national product increased in volume by 3.5 per cent.
In so far as employment is concerned I said, as recorded on page 2914 of Hansard for last year:
If only a 4 to 5 per cent increase in the volume of the gross national product is achieved ... that would mean that during the current year we would have, on the average, more than 300,000 people unemployed in this country which would be the second highest level in the post-war period.
What are the facts? The average number of unemployed during 1959 was 350,000, 50,000 more than the prediction I made which was considered to be too pessimistic.
In so far as inflation is concerned, I said I believed prices would rise in the current

year. The dominion bureau of statistics reports an increase of 2.3 per cent in final prices in 1959 as compared to a rise of 2.2 per cent in 1958. So, Mr. Speaker, predictions of that kind which were made last year, and which were criticized as being too pessimistic, have in some respects turned out to be not pessimistic enough in the light of events.
On March 31, 12 long days ago, we had from the minister the forecast of things to come in his budget speech this year. It was, of course, the minister's night, and I should like to congratulate him on his presentation. He made a fine appearance, and it was a fine presentation. There is, of course, as much difference-I know the minister will agree- between appearance and achievement as there is between a beauty queen parading in a bathing suit and swimming the English channel. Now the minister is in the swim, in the waters between Scylla and Charybdis, that is in the cold waters between Coyne and Churchill, pulled and pushed by opposing currents. On this occasion, however, on March 31, I think he was more Churchillian than he had been on previous occasions.
There have been some noticeable differences between the statements of the two ministers in the past few months on economic and financial matters, and on the nature and seriousness of our economic problems. There have been not only differences but there have been contradictions, and those contradictions on a few points have extended even to the facts. An example of this is to be found-this is only one example-by comparing a sentence from the minister's speech on March 31 and one from a speech made by his colleague on the same general subject on March 21. The minister is reported in Hansard, page 2672, as saying:
Since 1950 . .. the rate of increase in our net foreign indebtedness has exceeded the growth in national output.
The Minister of Trade and Commerce, as reported in Hansard, page 2281, on March 21, 1960 said that the rate of economic expansion had surpassed the rate of increase in Canadian foreign indebtedness. Well, which minister is right? You pay your taxes and you take your choice.
The difference between the minister, as he spoke on March 31, and the views of the governor of the Bank of Canada is somewhat more surprising because of the statement the minister had previously made, which seemed to harmonize with statements the governor of the Bank of Canada had been making. The governor of the bank said a few months ago in Winnipeg as follows, and I quote from his speech on that occasion:
The Budget-Mr. Pearson
Canadian savings and the machinery of the Canadian capital market can now supply all the capital funds needed by government and business combined to carry on a capital expenditure program as large in total as is sound and healthy for the Canadian economy to sustain in any one year.
The Minister of Trade and Commerce, of course, has not agreed with that statement, and has insisted in more than one statement that United States capital, in present circumstances, is necessary and desirable. The Minister of Finance himself on March 31 was not so much worried about this matter. He said, and I quote from Hansard at page 2674:
The economic expansion which Canada is now experiencing is soundly based.
He would go no further in caution on that occasion than this, and I quote from the same speech:
I do not anticipate that if we manage our affairs prudently and properly-
And what a government escape hatch that is.
-Canada will indefinitely continue to rely on capital from abroad as heavily as in the last few years.
That statement may be found at page 2672 of Hansard. There is quite a gap between the view of the governor of the Bank of Canada and the minister on that score. What a contrast between the attitude taken by the minister on this occasion and the Conservative election manifesto of 1957, which had this to say on this point:
In 1956 Canada achieved a frightening and perilous adverse balance of trade with the U.S of $12 billions.	'
I would call the attention of hon. members to that expression "balance of trade". That is an expression which, when I used it in a debate some time ago in this house, was contradicted by the Minister of Trade and Commerce, who said it was inaccurate and wrong. But on this Tory occasion it refers to trade both tangible and intangible. At that time in 1956 it was supposed to be frightening when the adverse balance of trade was $1.2 billion-"frightening and perilous" were the words used-but now when the figures are much higher they apparently no longer frighten hon. gentlemen opposite. The minister stated as follows:
We can look forward to another year of balanced growth.
That statement is to be found at page 2669 of Hansard. What a contrast that is not only to the election manifestos but to the minister's own speech of June 17, 1958, when our total deficits were much less than they are now but when he said, and I quote from

The Budget-Mr. Pearson a speech made in this house as reported at page 1237 of Hansard of that year:
-carry serious implications for the future health and economic independence of our country.
In the same speech the minister added:
The chronic nature of our massive trade imbalance with the U.S. requires ... energetic corrective measures.
That was at a time when the imbalance was not as serious as it is now. I ask whether this budget shows that we have or are getting these energetic corrective measures. That is our chief complaint or our major criticism against this budget. However, the minister tempered his optimism somewhat a week ago Thursday evening by this statement, which I quote from his speech. He said:
But, as my colleague, the Minister of Trade and Commerce, says: "We must not be complacent".
In singling out the Minister of Trade and Commerce as an exemplar of cautious realism, the minister has proved at least one thing, namely that he has a sense of humour, something about which there has apparently been some doubt in the past.
As I have already tried to point out in previous discussions of this matter, not only the amount but the nature of our unfavourable balance must cause anxiety. Last week in his budget speech the Minister of Finance said this:
What is important is that a substantial portion of these resources-
That is investments from abroad.
-should be put into new capital investment rather than into consumption and that this new investment should be of a character that will promote the efficiency and productivity of our country.
Then he added:
Broadly speaking I believe that this objective is being attained.
The facts show, Mr. Speaker, that it is not being attained nearly to the extent that it was being attained a few years back. Indeed, the facts show that the trend in the last year or two has been in the opposite direction.
Having delivered himself of some cheerful but, as we think, unrealistic predictions, the minister found that some of the figures he used in his own speech and some of the figures in the budget papers rather spoiled the effect of those predictions; because they showed-and I am going to mention only one or two of them-that in 1960-61 not only would Canadians pay nearly $600 million more in taxes than in 1959, but that in spite of these payments we would have a fourth consecutive cash deficit of about $210 'million.
As a consequence of this, the minister said he was not announcing but was looking forward to the day-and I quote from him-

-when we can undertake a measure of orderly reduction in our public debt.
That statement is to be found at page 2682 of Hansard. That was something we on this side of the house, when we were on the other side, could look backward to and not merely forward to. A budgetary surplus is, of course, a good thing, even a little one, provided it is achieved in the right way, through the right policies and of course not at the expense of even more important things than balancing the budget. In order to bring about his baby budgetary surplus the minister delayed action on any increases in civil service and armed forces salaries and then reduced such increases, when they were made, to a minimum. Further adjustments-and they undoubtedly will and should be made- will convert the present small budgetary surplus into a deficit. Indeed, other supplementary estimates may have that effect on the minister's already shakily balanced budget. How shakily it is balanced I shall hope to show by referring to some parts of the minister's statement itself and to the accompanying budgetary white paper.
The general situation, says the minister, is one of "balanced growth". But is it? The gross national product increased 3.5 per cent in volume in 1959. That is the first real increase since 1956, and of course it is welcome. But it is below the post-war average, and it is about one half what the minister himself estimated.
Mr. Pallet!: Oh, no.


Lester Bowles Pearson: It is about one half the minister's own figure of what he estimated.
Mr. Pallet!: No; that is Martin figures you are using.


Lester Bowles Pearson: That is the figure which is taken from the national accounts, income and expenditure. If my hon. friend who is sceptical about the matter will look at page 7, percentage changes in value, volume and price, he will see that the gross national expenditure volume in 1958 is up 3.5 per cent. Now, Mr. Speaker, a figure so far below the forecast for 1959-60 is surely not a very impressive basis for optimism based on predictions of a 6 per cent increase for 1960-61. If the minister is as far out this year as he was last year, the surplus will very quickly be converted into a deficit.
The minister gave us a good deal of advice in his speech. His policy to deal with any danger that might be ahead, particularly the danger of inflation on which he quite rightly spent some time and made some warning statements, is to advise us to work and save. That is good advice, but it is not as impressive as it might be coming from a government

which in about four years will have produced four cash deficits amounting to $2.5 billion and which, contrary to all its promises, has upped expenditures from $5,218 million in 1956-57 to $6,470 million in 1960-61.
This exhortation to work and save also comes from a government that has failed to do anything effective to prevent mass unemployment. We had the latest figures this afternoon which illustrate what we mean by mass unemployment at the end of March. The figure for unplaced applicants was 835,000, 53,400 more than at this time last year.
Mr. Speaker, those without work cannot save, as has already been pointed out in this debate. But the minister's treatment of this problem in his budget speech was pretty casual, and I will quote the passage in his speech dealing with it. He said, as reported at page 2670 of Hansard:
-as the result of an unusual Increase in the number of persons estimated to be in the labour force, the estimate of the numbers without jobs and seeking work was 18,000 higher than a year ago.
It is more than that now. The minister then went on:
I am confident, however, that employment will rise as the coming of spring opens up new job opportunities and as the economy continues its upward trend.
This might be called the meteorological approach to the problem of unemployment. It will go with the snow. I wish it were true, but the facts do not seem to bear out the prediction the minister has made. His assertion that the higher unemployment which he talked about was due to an unusual increase in the labour force is a misrepresentation of the facts. The increase in the labour force in I960 was not unusually high. The increase in the labour force in 1959 was unusually low, and if the minister will take a look at page 26 of his budget papers he will find statistics there to show this. Mr. Speaker, the fact is, as we have pointed out from this side of the house time after time, that seasonal unemployment is not only unusually high but has now become a chronic and serious problem about which something must be done.


Mr. Palleii:: What would the Liberal party do about it?


Lester Bowles Pearson: When the Liberal party was in power there was never this kind of unemployment, but I will come to that later. We had our recessions in the period after 1945, and I will be very glad to show my hon. friend later in my speech how we dealt with the kind of recession and unemployment we had then, which was not nearly as high as it is now. Mr. Speaker, you would never
The Budget-Mr. Pearson realize this problem is as serious as it is from the minister's speech. "The coming of spring" is the only hopeful sign he can bring forward.
What about agriculture, about which the hon. member who preceded me had a good deal to say in his speech? I think I am right in saying that it is completely omitted from the minister's economic picture. The gross national product last year is up in value by 6 per cent. The net farm income, as has been pointed out more than once in this house, is down by 7 per cent. The estimated increase in the gross national product in the current year is another 6 per cent. The estimate for agriculture is another decline, I think of 7 per cent. That surely does not represent a balanced growth in a vital sector of our national economy. But there is not a word about this problem in the minister's statement.
Mr. Speaker, what about the Atlantic provinces? Is there balanced growth down there? We did not get a progress report from the minister in his budget statement on the realization of the Atlantic charter. And we know why. Since the 1958 election it would be difficult for the minister to point to anything that has been done for the Atlantic provinces except the establishment of royal commissions. It would be difficult for the minister to prove that economic conditions are not deteriorating in the Atlantic provinces at this time, especially in the coal industry, where I think the situation will be admitted by just observers to be about the worst in 50 years.
I know the minister was down in the Atlantic provinces not long ago. I was there a week after he was, in Halifax. The minister mentioned 21 things which had been done by this government for the Atlantic provinces, 18 of which had been initiated by the previous government. He included the construction of the Canso causeway. I am sure the 100 pipers who filed by Angus Macdonald on that great day were not participating in the realization of a Conservative vision.
That is perhaps one reason why the minister was silent about the situation in the Atlantic provinces. Of course he did say there would be a reduction of the sales tax on electrical heating equipment to permit-and I quote-"this method of household heating to compete for the market on the same terms as other methods of heating". That may be a very desirable thing to do, but it is no help to the coal industry in the Atlantic provinces except perhaps to help them tj live better electrically. Yet we are told that balanced
3148	HOUSE OF
The Budget-Mr. Pearson growth has characterized the progress of the last year, and that our economic growth is soundly based.
Mr. Speaker, let me examine this policy in respect of the balance of payments situation and the premium on our dollar. I have already touched upon the minister's dilemma in this matter as illustrated by his own speeches, on some occasions as an economist and on other occasions as a politician. In these speeches, especially the one on budget night, he seems to me to be, as I have suggested, balanced uneasily between the warnings of Mr. Coyne and the hosannahs of Mr. Churchill, with one eye on the red light of the governor and the other on the green light of the minister. In a friendly way I would warn him that it will be difficult to maintain this ambiguous posture. It will require all the political and economic gymnastic ability of the Minister of Finance.
One aspect of this imbalance which has political as well as economic significance is the problem of foreign ownership and control, of course primarily by the United States. The passionate anxiety of the minister and his colleagues of other days has dwindled to the modest preoccupation with this particular subject shown in the budget speech. He indicated that no legislative or governmental action was required, that no special steps were necessary to encourage Canadian as opposed to foreign control. He suggested that we might leave it all to the Prime Minister's <Mr. Diefenbaker) great gift of persuasion, that gift of bedazzlement which at times deteriorates into a genius for befuddlement.
An Indian delegation visited the Prime Minister not so many weeks ago, and I think this was referred to by my friend the hon. member for Kenora-Rainy River (Mr. Benidickson). A member of the delegation is reported to have said with reference to the Prime Minister: "He is a great talker. He can almost make you forget what you came here for."
So the minister forgets his worries about swollen deficits and foreign control and assures us that our growing foreign-held debt can easily be borne. He does that, as some of his colleagues have also done, by making what can only be described as a phony relationship between the foreign-held debt and our gross national product, as if the latter-the gross national product-represented any adequate measure of our ability to pay our debt in foreign currency.
The minister is not too worried. I quote again from his speech at page 2674 of Hansard:
So long as our access to foreign markets is unimpaired and we are able to keep the cost and the
(Mr. Pearson.]

quality of our products and services thoroughly competitive, we need have no fears for the future.
But there are others who are more worried than the minister and they are not all members of the Liberal opposition. Indeed, they included the minister himself on earlier occasions and they certainly include the governor of the Bank of Canada. There are people in this country who are worried about our increasing total trade imbalance, our increasing foreign-held debt and the high external price of our dollar which is a special problem especially in connection with export trade which must increase if we are to go ahead.
The minister expressed the other night the thought that the premium on our dollar could be reduced without the necessity of any form of governmental action even though I suggested governmental action-


Donald Methuen Fleming: Mr. Speaker, is the hon. gentleman saying that I said that?


Lester Bowles Pearson: Yes. I am saying that the minister said he hoped this situation could correct itself without any form of governmental control.


Donald Methuen Fleming: Well, that is different.


Lester Bowles Pearson: But the minister did not suggest any governmental action that might be taken to correct it, either.


Donald Methuen Fleming: We took it.


Lester Bowles Pearson: The minister made no suggestion for any kind of governmental action to correct the situation. He did say it should not be done by any form of governmental control but I suggest to the minister that governmental action is largely responsible for this particular situation and I will try to explain how.
Our money supply, as the minister knows, has been stable since October, 1958. Out of this constant supply the government borrowed in 1959, $871 million or 52 per cent of all the bonds marketed in that year. That governmental demand, of course, was a major factor in creating a scarcity of funds for others, in pushing interest rates up so high and in bringing about tight money. The result of that was that the provinces and municipalities had to borrow their money in the United States market. In 1959 the net amount so borrowed was $400 million which is a record. It represents 27 per cent of our net import of foreign capital that year. That itself is a major cause of our dollar premium and for that the federal government must accept much of the responsibility.
What about the situation in the current year in regard to borrowing? Of course, it should be much easier for the provinces

and municipalities. They have no desire to go to the United States money market to satisfy their financial needs. If they can get their money in Canada at reasonable rates it is not necessary to urge or compel them to do that. All that is required is to leave them some room in the Canadian market, to stop hogging it and to stop pushing interest rates up. I suggest that that would be a very simple way of reducing the premium on our dollar without recourse to controls which, I quite agree with the minister, should be put into effect only in an emergency and as a last resort; that is, a complete system of government exchange control.
I certainly do not advocate that in the present circumstances. The borrowing requirements for 1960-61 represent for the federal government-they come from a cash deficit-about $210 million but of course they may be more. Even if they do not increase they represent a substantial but I agree it is well below last year's figure which was approximately $900 million. That should be all to the good in regard to financing in Canada but I should like to call the minister's attention-and perhaps it is not needed-to a new factor which is arising and which will hinder this development and which is in its turn, if I may use the expression, a hangover from that conversion loan about which the minister and the government still boast.
To ensure the success of that loan the Bank of Canada had to buy very substantial amounts of the outstanding bonds which it converted into long term conversion bonds. In fact, by the end of October, 1958 the Bank of Canada held more than $1,200 million of all bonds with maturities of 10 years or more compared with $300 million before the conversion loan was undertaken. The bank naturally found itself subsequently in a very illiquid, inflexible position. Its holdings were mainly of bonds not maturing for several years.
The Bank of Canada is apparently at the present time attempting to correct the situation by selling long term conversion bonds to the public and with the proceeds buying treasury bills and other short term securities. That is driving down the treasury bill and the bank rates, already weakening under lessening demand, and is keeping the long term interest rates higher than they otherwise would be. It also means that the bank is now doing what the government did last year, competing with the provinces and municipalities for long term money in Canada.
This policy of the bank if it is continued, along with the necessity for the government to meet its own cash requirements, may well mean that the provinces and municipalities 79951-0-199
The Budget-Mr. Pearson will not find it much easier in 1960 than in 1959 to satisfy their borrowing requirements in Canada and they may be forced once again to go to the United States market thereby keeping up an artificially high premium on our dollar.
Therefore, instead of trotting out the bugbear of controls the minister should have faced up to this problem realistically and responsibly because the government is largely responsible for it. It is one of the problems that should temper the excessive optimism about the situation in the current year.
On what does the minister base this optimism? As I have said, for the coming year the minister forecasts a gross national product increase of 6 per cent. He leaves out the condition that this will occur if it is a year with stable prices. If that 6 per cent is meant to be an increase in volume it will probably turn out to be optimistic. If it is a 6 per cent increase in value, and if the price level moves about the same this year as it did last year, it would means about a 3.5 per cent increase in volume. I would think that might be a reasonable forecast. But, if it turned out to be a reasonable forecast it would mean that for the fourth consecutive year the gross national product increase would be below the post-war average. Is that a reason, then, for booming optimism?
For the year as a whole all the main components are expected to rise: new investment, 4 per cent; total business investment, excluding agriculture and fisheries, about 7 per cent, although in the United States it is 14 per cent; but in constant dollars it will be lower than in 1957, and yet the Minister of Finance (Mr. Fleming) says: "Business confidence is high" and all is well.
One thing is sure, Mr. Speaker. Even on the basis of the minister's own forecast these trends, prospects and estimates are not sufficient ground for hoping for any material improvement on the unemployment front. In 1959 employment rose 2.7 per cent but unemployment was higher than in any postwar year except 1958, and almost equalled that. That situation would have been worse but for the lowest increase in the labour force experienced in recent years, not an unusually high increase, but the lowest increase in the labour force experienced in recent years, an increase of 1.6 per cent as against an average of 4 per cent in 1957. The minister can get these figures from his own budget papers at page 27.
With a normal increase in the labour force this year the average level of unemployment in the current year might well exceed that of 1959, and surely that is a cause for worry and no ground for complacency of any kind.

The Budget-Mr. Pearson The minister may say, "Well, the gross national product increase will take care of it". Even on the basis of the minister's own estimates, this well may happen; especially in view of the minister's statement, and I quote from page 2674 of Hansard:
The rate of Increase we have experienced in 1959 should be maintained throughout the year.
I suggest that prophecy is of doubtful validity. I should like to explain why I suggest the minister may be too optimistic in his view of the prospects.
The so-called short business cycle, mainly caused by fluctuations, I suppose, in inventories, has always been quite a regular feature of our economy. If we accept the years immediately after world war II, we are now going through the third of those cycles in the post-war period. During this post-war period we experienced recessions in 1948-49, 195354 and 1957-58, each one worse than the one preceding it. We are told by experts- and I think the facts bear it out-that we have been on the upturn since April, 1958. Past experience and certain trends indicate that a fourth post-war cycle may develop again soon. Surely, Mr. Speaker, we should be prepared for it; surely, we should plan against the danger of its recurrence before long.
Economic forecasters themselves agree that we shall have a recession soon, but most of them differ as to its timing. I am quoting now from economists who have certainly no political axe to grind in this matter. The most optimistic outlook for the future was presented by the economic advisers of the Department of Trade and Commerce. Dr. Firestone, in a speech on October 24, 1959, said this, and I quote one paragraph from his speech:
Looking ahead to the immediate future, we can see a fair rate of increase in economic activity for 1960 and possibly 1961... If anything, the problems that we may be encountering as we go into 1962 may be more difficult to deal with than those we encountered in the post-war period. What I am implying is that the recession we may be facing in 1962 could be more extensive than anything we have yet experienced since the end of world war II, and it may require quite vigorous action to reduce its extent in terms of length of time and the severity of the economic downturn.
That is Dr. Firestone in a speech last October, but since October other expert economic analysts have produced more and more evidence that another recession may begin sooner than expected by Dr. Firestone. In its tax memo on the federal budget outlook published in February, 1960, a document with which 1 am sure the minister is quite familiar, the Canadian Tax Foundation refers to the possibility of a downturn in the current fiscal year. The same warning is given in the last three

business forecasts issued by General Research Associates from Toronto. Here is what these experts had to say in January about general economic conditions that we may expect in 1960, and I quote from their forecast. They say:
The chances are better than ever that the next business cycle peak will occur in the fourth quarter of 1960 or the first quarter of 1961. The more rapid the intervening buildup-and the more closely it is related to inventory building-the greater is the probability of the earlier downturn.
That was their January bulletin. They followed that up with their March bulletin, when they were a little more precise. They had this to say:
In general summary, there has been little evidence to suggest that the current prosperity will last much beyond the third quarter of 1960. Such evidence as has appeared in the last two or three months would suggest, if anything, an earlier downtrend.
That is from their March bulletin. Their latest forecast for April, which has just come out, had this to say:
The contrast produced by the shades of light and dark is typical of the turbulence that occurs just prior to the end of a business upswing.
These expert and objective forecasts do not support the rosy picture which is painted by the minister and the government. Perhaps the trade and commerce "hidden report" would be equally cautious if we were allowed to see it. Perhaps it may have warnings which explain why it has been secreted, although the issues of 1957 and 1958 were made public in dramatic circumstances.
I ask the Minister of Finance, does the government recognize any of those omens, or does it merely intend to bury its head in the sands of self-satisfaction? Does it not realize that the financial position is such that the government will be seriously handicapped in facing any new recession which, according to Dr. Firestone, may be more extensive than any we have experienced since the end of world war II? These problems are not imaginary. To apreciate them we have only to look at the year 1960, not in isolation but in relation to the recent past.
Compare the business cycle through which we are going with the one before, both in regard to changes in the gross national product and in the financial position of the government. For the purpose of making the comparison I should like, if the house agrees, to insert in Hansard at this point two tables taken from official statistics, one giving the actual changes in the volume of the gross national product since 1953, expressed as a percentage of the previous year. The other table is the budgetary and cash position of the Canadian government since the fiscal year ended March, 1954.


Mr. Speaker:: Has the hon. member leave to insert these two tables at this point in Hansard?


Some hon. Members:: Agreed.


Gordon Minto Churchill: Are they D.B.S. figures?


Lester Bowles Pearson: Yes, they are from D.B.S. figures.
[Editor's note:	The tables referred to
above are as follows:]
The Budget-Mr. Pearson
Table 1. Annual changes in the volume of gross national product since 1953 expressed as a percentage of the previous year.
	Percentage		Percentage
Year	Change	Year	Change1953	+3.8	1957	-0.31954	-1.0	1958	+0.71955	+8.6	1959	+3.51956	+8.6	1960	+3.5(Estimated)	Table 2.	Budgetary and	cash	position of the
Canadian government since the fiscal year ending March 1954.
In millions of dollars
Year	Budget Surplus or (-) deficit	Cash Surplus or (-) deficit	Year	Budget Surplus or (-) deficit	Cash Surplus or (-) deficit1954	45	370	1958	- 38	-1651955	-152	67	1959	-609	-1,2731956	- 33	125	1960	-406	-9001957	258	424	1961	12	-210Total	118	986	Total	-1,041	-2,548


Lester Bowles Pearson: The Budget-Mr. Pearson unsettled fiscal relations with the provinces and growing dependence in defence and development on the United States of America?
The minister's budget speech and the budget itself ignored these problems. So I ask the minister to tell us, if a recession should recur-


An hon. Member:: Wouldn't the Liberals be glad.


Lester Bowles Pearson: -with the government's financial position weaker than at the beginning of the last one-that, of course, was quite an unworthy comment by my hon. friend. When we point out these possibilities which are also being pointed out by men who are not interested in politics at all hon. gentlemen not only accuse us of gloom and doom but of playing politics in doing our duty and indicating what may happen. So I ask the minister, and I make no apology for asking him, if a recession should recur, with the government's financial position weaker than it was at the beginning of the last one and with a continuing high level of unemployment, what are the government's plans and its policies to meet that contingency in a way which will recognize its responsibilities to maintain full employment and financial stability?
Will the government once again fall back on a series of huge, unplanned deficits which add new rigidities to our economic and fiscal structure, higher interest rates, without creating anything like full employment? That has been our experience in the last few years. Will the government once again rely on solemn sermons and emotional appeals, while getting the Bank of Canada to bail it out through another round of rapid credit expansion and monetary inflation?
If the minister cannot answer these questions, what right has he to claim, as he did in his budget speech, that he is "fully aware of the role of leadership that falls to the federal government"? If the government is really aware of its role of leadership, why are we not getting it instead of expedients designed to paper over the cracks or, to cite an analogy a little more topical in Ottawa at this time, to fill up the potholes? Surely there is no leadership in waiting for something to turn up, which this budget does; or the philosophy that we will jump off that bridge when we come to it. I quote from an editorial in the Hamilton Spectator of April 6, a newspaper that is not notoriously friendly to the Liberal party:
Mr. Fleming may be accused of lacking leadership. In a sense he has stepped to the sidelines and left us to look after our salvation with a mild word of advice.


There is no leadership in merely telling Canadians to manage their own affairs better, to show self-restraint and caution, to work and save. As the Globe and Mail, another newspaper not notoriously friendly to this party, put it on April 4:
We wish Mr. Fleming would manage his own affairs as prudently as he exhorts the Canadian people to manage theirs.
In default of plans and policies of their own to deal with these matters the government look at us and implore, what would you do? In the first place we would have put into effect three years ago fiscal policies which would have prevented many of the difficulties in which we find ourselves now, those Liberal fiscal and financial policies which met previous recessions successfully. They have been put forward more than once and proof of their effectiveness is found in the history of Canada from 1940 to 1957. One reason we are now facing the difficult problems which we are facing in this field today is that this kind of financial policy was not followed.
I have tried to state what the difficulties are, even if the minister has not. To face them frankly, to be aware of them, is the first and indispensable step in their solution. Hon. members are continually saying, what would you do? On several occasions in this session we have said what we would do about unemployment; we have said what we would do about agricultural conditions, support prices for eggs, hogs instead of deficiency payments; we have said what we would do in trying to stimulate our export trade. When we have made these proposals we have raised them in concrete form. What does the government do? It ignores them completely. When we try to raise these problems in the field of defence, where we are spending $1,500 million which would be a great help in meeting some of these financial problems, what does the government do? It refuses to even give us the right to discuss these problems effectively. Then they continue to say, what would you do? When we tell them what we would do, they ignore our suggestions or refuse us the right to even discuss them.
There is one more point I want to emphasize before I conclude. In defence, and in every other form of governmental activity, every single dollar of unnecessary expense must be eliminated. This, however, does not mean, as we see it on this side, that for desirable social purposes, such as the restoration and development of depressed areas, the government should hesitate to spend the money which is required where private enterprise cannot do the job alone or at all.

Furthermore, in a general economic emergency, not the kind of recession we have had since world war II, but in a general economic emergency which I hope we will not have, the kind of emergency we had in the 30's, with massive unemployment even worse than we have today, no government should be afraid of a deficit, provided that deficit is planned and designed to achieve the social and economic purposes in mind and is not one accumulated through the implementation of un-co-ordinated political commitments, as were the deficits of my hon. friend in the last two years. There should also be the proviso that it be made clear, in any proposal that is made, that all expenditures can only come, either immediately or ultimately, from the pockets of the taxpayers. There is no other way. It is important to balance our national budget. It may be important, in certain circumstances to budget for a surplus. But there is an objective of government more important even than these, to keep free people working and a stable country expanding. Good social purposes should not be subordinated even to fiscal policies. The two must go hand in hand, each one supporting the other. This requires wisdom, imagination and courage on the part of governments at all levels. It requires hard work and common sense on the part of the citizens. This is a combination, Mr. Speaker, that should underlie Canada's development in the years ahead and can ensure, in so far as national policy can ensure, a good future for our country.


Donald Methuen Fleming: Mr. Speaker, I welcome more than I can adequately say the opportunity of following immediately after the speech by the Leader of the Opposition (Mr. Pearson) this afternoon. Before I address myself to replying to some of his observations, may I turn back to these seven days that the budget debate has progressed and express to many hon. members who have spoken in the course of this debate my very deep sense of gratitude for the most kind things that they have said about the budget and the effort that was devoted to it. These things mean a great deal to me, and I do wish to convey my sense of appreciation of them.
The debate has, by this time, come to be impressed with several features. In this respect I think probably we have had less contributed to the features of this debate by the opposition than is usual in this annual debate. It is evident, I think, that the dominant note throughout this debate has been a positive and constructive note struck by those hon. members supporting the government who have seen fit to speak of the
The Budget*-Hon. D.M. Fleming budget and the fundamental objects in the Canadian economy which this budget is designed to serve. But if there has been a contribution to this debate by hon. members of the official opposition I say, Mr. Speaker, that it has been distinguished by two features. The first is that the opposition has no alternative and no policy to offer to the Canadian people. The second is that they are lost in gloom of their own creation.
Let me enlarge on these two points. We have been waiting patiently during these seven days of debate for some indication, at least some outline, of what hon. members opposite say ought to be done in these circumstances by a budget that this budget does not do, or what a budget ought not to do that this budget has done. We have waited, even to the last minute of the speech by the Leader of the Opposition, for some statement of the policy of the Liberal party and what they say they would do under those circumstances were they transferred to this side of the house. We have been waiting, and we have not heard.
A glorious opportunity was given to the financial critic of the opposition, not only when he spoke to the house a week ago yesterday, and it was a great opportunity that was given then, but also on a certain television program in which that distinguished hon. gentleman participated during the same week. If I may attempt to summarize the course of the press interview on the television program, it came down to this: Time and again those who participated in the questioning urged, asked, begged, the hon. gentleman to answer this question, what would you do under these circumtances? Two things emerged crystal clear from the replies of that hon. gentleman. Oh, how constructive were those replies, Mr- Speaker. He said in the first place,-and I tell you this is a constructive answer-"We would consult the experts".


John Whitney Pickersgill: It might have been a good idea if you had done so.


Donald Methuen Fleming: That is rather hard on Professor Lamontagne. The financial critic certainly down-graded the Liberal professorial brain trust. But he did not stop there. Oh, no; he had a second answer, firm, courageous and constructive. This is what he said. When pressed again with this question "What would you do?" his answer was, "We would do something". That is the content of the whole press interview as to what he would have done or what his party would have done under these circumstances.
We have now heard the Leader of the Opposition. He has had the benefit of another

The Budget-Hon. D.M. Fleming week to think over this problem. He has had the opportunity of many more days in which to consult such experts as he sees fit to consult. He has had the benefit of some well-meant admonitions from many of the organs of the Liberal press in this country. What does he come up with?
It was in his final paragraph that he reached the great peroration in his remarks this afternoon. Oh, how thrilled we were. He was going to answer this question. We waited. We moved to the edge of our seats. We pricked up our ears. We became tense. Excitement rose, I am sure, in every bosom. Our hearts began to beat faster. At last we were going to be let in on the great Liberal secret and be told what they would do in these circumstances. Then out came the answer. How profound it was and right to the point. How forthright it was. There was no beating about the bush. Here is what he said. He said, "We would have put into effect Liberal fiscal policies three years ago".
Then he was asked from various parts of the house what those policies were. He did not have an answer and we are still waiting to hear it. We know just as much about what those policies are as we did before the hon. gentleman came to the beginning of his peroration or indeed before he began to speak this afternoon. He is still going on talking. It is the same old Liberal tactic. He talks about Liberal fiscal policies but he does not come down to earth and tell anybody what they are.
Then when he was pressed again by hon. gentlemen on this side of the house who said, "Tell us what are these policies", the best that anybody could get out of him was this; and I remind the house that he had unlimited time in which to speak today. He was not the least bit hurried. He had ample time in which to answer that question. He said, "We have said what we would have done". Does anybody remember his having said anything that they would have done under these circumstances? One can only conclude-and I am sure that this is a conclusion that only those among us most charitably disposed toward the Leader of the Opposition would reach under these circumstances-that what he is saying is that the policies they would have put into effect are those Liberal fiscal policies which led this country into the recession of 1957-58 and which the people of this country rejected in 1957 and again in 1958 at the polls in the most decisive manner.
I said there was a second feature contributed to this debate by the Liberal participants in it. It was indeed the contribution of gloom. To those who believe in the two-party system I must say in deep earnestness

that it fills some of us with deep concern to see the Liberal party wallowing in gloom concerning Canada. Perhaps it is not unnatural for them, on looking at their particular situation, to be afflicted with feelings of despondency. But why do they have to go further and try to transfer that gloom to Canada? In any event, I believe their efforts are not being crowned with success. Indeed, they are being crowned, on the part of the Canadian people, with the displeasure and disapproval which those tactics on the part of hon. gentlemen opposite so abundantly deserve. All their chagrin and all their disappointment at the failure of their gloomy predictions will be no justification in the minds of the Canadian people for their efforts to pour gloom and pessimism over the Canadian scene.
Indeed, hon. gentlemen opposite have not been satisfied with the facts. The facts are not in accord with the kind of conclusion they want people to draw and so they must put a gloss on the facts. We have witnessed some extraordinary things in this debate. It evidently matters not in their calculations whether what they say does harm to Canada as long as it serves the partisan interests of the Liberal party. I suppose this procedure makes no great impression in this house. We have heard them previously. We have seen them indulging in these tactics which have become chronic on the part of hon. gentlemen opposite since they went into opposition. I suppose there are not too many Canadians who do not see through this political game. But I believe that these statements do Canada's name harm outside of Canada.
I had occasion last summer when in London to be confronted with a number of articles concerning Canada in some of the economic journals in the United Kingdom. They were dismal in their reading of the trends of the Canadian economy. Where did those impressions arise? They certainly did not arise from the facts for at that very time Canadians were earning more than ever before, saving more than ever before, spending more than ever before and more were employed than ever before. One could point to a host of other facts. These facts had not registered there but the gloom had made some impression. If that had any relationship with facts in this country I can trace it to one source and one source only and that is to the kind of statements that have come from the Leader of the Opposition and his followers.
But the matter did not stop there. It has just gone on in the same way. In recent days they have endeavoured to quote back

to us-and the hon. member for Kenora-Rainy River (Mr. Benidickson) did so a week ago yesterday-some of the articles in newspapers in the United Kingdom based not on the facts but on the kind of statements that have emanated from hon. members opposite. I think the situation has reached the point where hon. members opposite owe it to themselves as well as to the country and to the two-party system to examine themselves and to examine the tone and the trend of their remarks. I tell you that this kind of gloom in which they are indulging is not the kind of thing that is going to enable the Liberal part to fulfil its function and the future it thought it had in the two-party system.
I am speaking in this debate, Mr. Speaker, as one who is a firm believer in the two-party system and does not wish to see the Liberal party dig its own grave in dismal gloom. This has reached the stage of irresponsibility. Remember it is not so very long ago, just a year ago in the budget debate, when the Leader of the Opposition, as reported on page 2912 of Hansard for April 21, 1959, was saying:
X tell him-
That is the Minister of Finance.
-and the government that the word of Canada does not mean as much now as it did.
He was not satisfied to say that things were not going right; he was impugning the honour of this country in saying that Canada's word was not as good as it used to be. There seems to be-


Lester Bowles Pearson: Mr. Speaker, this has been brought up before. If the minister wishes to be fair he will explain that when I made that statement it was with regard to a repudiation of a contract made by an agent of the government of Canada for the purchase of pictures for the national gallery. Perhaps the minister will explain that.


Donald Methuen Fleming: Mr. Speaker, it is quite true that the hon. gentleman went on to cite as evidence the contract to which he now refers. But he did not, as he is trying to pretend now, content himself with that. After making this bold, brazen charge I have just read, he went on to say, "I can get lots of evidence to support that statement". Then he went on to choose one example, namely these R.C.M.P. contracts. He referred to "lots of evidence". I can understand why-


John Whitney Pickersgill: Would the minister permit a question?


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: I can understand why the Leader of the Opposition-
12, 1960
The Budget-Hon. DM. Fleming


John Whitney Pickersgill: Would the minister permit a question?


Donald Methuen Fleming: No. I can understand why the Leader of the Opposition is so-


John Whitney Pickersgill: Mr. Speaker-


Mr. Speaker:: Order. The minister will not accept a question so the hon. member should resume his seat.


John Whitney Pickersgill: I am sorry, I could not hear his answer.


Donald Methuen Fleming: Mr. Speaker,
the tactics of the hon. gentleman in selecting what they want to hear and what they do not want to hear is a fine example of the "pick and choose company".


John Whitney Pickersgill: I was just going to ask about repudiating the constitution.


Donald Methuen Fleming: The hon. member for Bonavista-Twillingate (Mr. Pickersgill) has just said something which makes it evident he is seeking to support the statement made by the Leader of the Opposition which I have just quoted from Hansard. Mr. Speaker-


John Whitney Pickersgill: Mr. Speaker, I rise on a question of privilege. I am-


Donald Methuen Fleming: He is supporting the bold, brazen charge impugning the honour of Canada.


John Whitney Pickersgill: I am rising on a question of privilege. I am seeking to support it, and I am seeking to support it because this government repudiated the good name of Canada in its constitution.


Mr. Speaker:: Order. The hon. member is taking liberties with his question of privilege. What he says is purely a matter for debate.


Donald Methuen Fleming: Mr. Speaker, no one knows better than the hon. gentleman that that was no ground for intervention. Anyway, we have him lined up-I think it is interesting to see this-in support of a statement made by the Leader of the Opposition which it is evident the Leader of the Opposition now wishes he had never made and which he now wishes to back away from-


Lester Bowles Pearson: Mr. Speaker-


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: -on a question of privilege, I am not trying to back away from the statement. I stand by my statement, and there was a breach of the word of Canada in three respects which I mentioned at the time. Now, carry on with your budget.

The Budget-Hon. D.M. Fleming


Donald Methuen Fleming: Mr. Speaker, it is quite clear the Leader of the Opposition cannot suppress the statement that is so clearly on record and which will be there never to reflect creditably upon him as long as he continues to support it and as long as his loquacious supporter to his left, the hon. member for Bonavista-Twillingate, undertakes to support it as well.


John Whitney Pickersgill: Any time you want to debate term 29 I am ready.


Donald Methuen Fleming: Mr. Speaker, the hon. member is very agitated. I guess there must be something on his mind or his person that is bothering him.
Do not take my word for it. Let us hear what the Toronto Star has to say about the course of the participation of hon. members opposite in this debate. This is what the Toronto Star said on April 7-


John Whitney Pickersgill: Mr. Speaker, I rise on a point of order. The other day Your Honour ruled, when an hon. member on this side of the house sought to quote an editorial reflecting on a debate going on in this house, that it was out of order. I submit that the same rule should be applied to the Minister of Finance (Mr. Fleming) as was applied to this side of the house.


Mr. Speaker:: That is quite true. If the minister does seek to quote such an editorial it would be proper to call him to order, but so far there has been no indication in which direction the editorial is heading.


Donald Methuen Fleming: Mr. Speaker, I recall that the Leader of the Opposition read quotations this afternoon from various editorials.


Lester Bowles Pearson: Not dealing with the debate.


Donald Methuen Fleming: I am talking of the conduct of hon. members opposite. They say that it is all right to read editorials concerning the budget. Mr. Speaker, allow me to make reference to a Liberal source. I am sorry they do not like this kind of Liberal source any more in its references to them and what they lack in the way of policy. That, I think, is well within the rules of the house. If there is any doubt about it, then I say at once that I adopt the sentiments expressed in this very interesting piece of writing as my own. The heading is: "Liberals Keep 'Em Yawning", and it states:
The Liberal party had better get some policies or else stop holding press conferences.
This conclusion was forced on us by watching three parliamentary correspondents diligently but vainly trying to extract some clear answers from William Benidickson, Liberal financial critic on the C.B.C.'s televised "Press Conference" Tuesday night.
In the Commons, Mr. Benidickson had called Hon. Donald Fleming's budget a "do-nothing"

budget. Then what, asked the correspondents, would Mr. Benidickson have done in Mr. Fleming's place?
If he knew, Mr. Benidickson wasn't telling. He was true to the Liberal high command's policy of no-policy, of criticizing the government's action without offering alternatives. This is producing some of the most barren press conferences on record.
Would the Liberals raise taxes? No. Would they cut taxes? Well... perhaps some taxes on production.
Mr. Benidickson replied to some topical questions by recalling bold, wise moves the Liberals had taken in comparable circumstances when they were in power. For example, their emergency import restrictions to conserve American dollars in 1947.
We have news for Mr. Benidickson and the Liberal strategists: The voters don't care a hoot what the Liberals did in 1947. They just might be interested in Liberal remedies for the country's ills in 1960.
Mr. Benidickson viewed unemployment with justifiable concern. But he didn't say what the Fleming budget should have done about it.
Like other Liberal spokesmen, Mr. Benidickson offered two excuses for his unresponsiveness:
(1) The duty of the opposition is to criticize, not originate policies: (2) The opposition, being out of power, lacks access to the facts on which to base policies.
These excuses won't wash. It's true that the main job of the opposition, in parliament, is to expose government errors and omissions. But when a politician calls a press conference, or accepts an invitation to one, people expect some information, some constructive opinions. Fence-sitting and roundabout evasions make dull copy and dull T.V.
As for the excuse of lacking access to the facts, this might justify-but only in part-the Liberals' uncertainty on defence policy. The government does reserve important information in this field. In the others, plenty is known.
Unless the Liberals have some ideas and the courage to state them, they had better stay off television, for the sake of the party, as well as the viewers.


John Whitney Pickersgill: Will the minister permit a question now?


Mr. Speaker:: Order.


Donald Methuen Fleming: If you will not call it five o'clock for a moment, Mr. Speaker, I will be pleased to answer.


Mr. Speaker:: Order, it is five o'clock.


Donald Methuen Fleming: Perhaps I could take it this evening when we resume again.


Mr. Speaker:: There will be another opportunity.



BUSINESS OF THE HOUSE

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.


William Arnold Peters: With the unanimous consent of the house we are prepared to waive the private members' hour.


John Whitney Pickersgill: We in the Liberal party are perfectly agreeable to that.


Mr.   Morion@: We who are sponsoring bills on behalf of certain companies are anxious to have them dealt with and despite the fact that the C.C.F. may be tired of discussing divorce bills we feel we should deal with these bills. We will agree to deal with them as expeditiously as possible and after those bills are dealt with we could revert to government business.


John Whitney Pickersgill: Mr. Speaker, in the exceptional circumstances I think the hon. gentleman's proposition is a very reasonable one and if the C.C.F. would agree to it we would be prepared to accept his proposal.


Mr. Howard:: That is agreeable.


Mr. Speaker:: If I understand the unanimous order that the house is prepared to make it is that we will proceed with private bills other than divorce bills and when they have been dealt with we will return to the debate. Does the house give unanimous consent to this proposal?


Robert Jardine McCleave: No, I cannot agree to that, Mr. Speaker.


Mr. Speaker:: It being five o'clock, as I have already intimated, the house will now proceed to the consideration of private and public bills. Obviously there is not unanimous consent.



PRIVATE BILLS


[Stage Direction]
The house in committee on Bill No. SD-37, for the relief of Helen Elisabeth Millar Ramshaw-Mr. McCleave-Mr. Rea in the chair.
On clause 1-Marriage dissolved.
Charles Benjamin Howard: Mr. Chairman-


Robert Jardine McCleave: On a point of order, Mr. Chairman, is it not the usual courtesy to give the sponsor of the bill the first word?


The Deputy Chairman:: The Chair has already recognized the hon. member for Skeena.


Charles Benjamin Howard: I am prepared to waive that recognition if the hon. member for Halifax wishes to comment first.


Robert Jardine McCleave: Mr. Chairman, I was
simply going to say that this is a case of a 25-year old woman looking after two children ages 2 J years and 14 months, with an income of between $250 to $300 a month. The husband is a poet and is incapable of providing any assistance. It is a very worthy case, Mr. Chairman.
79951-0-200
Private Bills-Divorce


Charles Benjamin Howard: I thank the hon. member for his concise assessment of the facts. Because the hon. member made reference to the evidence given before the Senate committee and because there is doubt that we can consider that evidence I would at this stage ask that the committee give unanimous consent to allowing a discussion on the evidence given before the divorce committee of the Senate which will permit expansion of the comments made by the hon. member for Halifax. May we have that understanding?


Charles Edward Rea: Order. I am sorry but the committee is bound by standing order 59 (2) reads as follows:
59 (2) Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.


John Whitney Pickersgill: Mr. Chairman, on the point of order we feel that the rules should be very rigidly adhered to.


Charles Benjamin Howard: Only when it suits your purpose, I gather.


John Whitney Pickersgill: Exactly.


Charles Benjamin Howard: I appreciate the rule, Mr. Chairman, and the fact that the hon. member for Halifax contravened it in mentioning the children. I do not mean that in a derogatory sense but it indicates that the hon. gentleman shares our concern that there are more people involved than the petitioner and respondent.
It is my understanding that the committee cannot suspend the standing orders by unanimous consent. I think we have a right to make requests for special considerations. Taking that approach we might obtain authority from the house with Mr. Speaker in the chair to suspend the standing order and permit the committee to consider the evidence submitted to the divorce committee of the other place in order that all relevant facts may be properly dealt with in considering this case.
To do this I feel we must indicate orally the desire of having the Speaker take the chair and move a motion to that effect. The motion would be that the committee rise at this stage for a moment or two to ascertain if the house would by unanimous consent suspend the standing order and give the committee an opportunity to discuss the evidence given before the divorce committee in this case. I therefore move:
That the committee rise, report progress and ask leave to sit again later this day.


Mr. Winch:: Mr. Chairman, may I say-


Charles Edward Rea: Order. The motion is not debatable.
Motion negatived: Yeas, 3; nays, 49.

Private Bills-Divorce


Charles Edward Rea: I declare the motion lost.


Harold Edward Winch: Children must be ignored in divorce cases.


Charles Benjamin Howard: I do not want to reflect in any way upon the decision of the committee; it is certainly an overwhelming majority which desires not to concern itself with the children and the effects on them. I am not reflecting on the wishes of the committee; I expressed my own feeling by voting as I did, and in my remarks prior to making the motion.
I come now to the petition. I think it is proper for us to make reference to particular items in order to see whether certain things have been proved.
The petition says in paragraph 1:
That on the 24th day of January, 1957, your petitioner-was lawfully married to the said-in the city of Pointe Claire, district of Montreal, in the province of Quebec.
There is evidence in paragraph No. 4 that the petitioner and the respondent lived and cohabited together. In paragraph No. 5 it is indicated that two children were born of the marriage. To the extent that it is necessary to prove, or to indicate that the marriage was consummated, this is one way in which consummation is proved. Since children were born of the particular marriage, to that extent we are duly bound to take cognizance of the particular material shown in the petition itself, and also of the corroborating evidence given later on.
Paragraph No. 6 of the petition makes reference to a certain matter which by itself does not seem to be in keeping with the orders of the other place relating to divorce, but I expect this is cleared up and permits us to overlook the fact that it does not comply with the standing orders of the other place. Paragraph No. 6 states:
That in the month of June 1958, your petitioner became suspicious that the said-had previously on divers occasions committed adultery with divers women whose names are unknown to your petitioner.
It is this reference which I submit is not in keeping with the rules of the other place relating to this matter. However, paragraph No. 7 is more specific, and makes reference to adultery having taken place on a particular day with a particular person and at a particular address. I would imagine that this is the reason why the members in the other place overlooked the conflict between this paragraph and the previous paragraph which refers to adultery in a sort of general way. Without discussing it, I am assuming this is the reason they overlooked the conflict with their standing orders.
[The Deputy Chairman.]
In order to prove this particular point, certain questions are asked by the clerk of the committee of the petitioner. The first proof required is that of the marriage having taken place. The petitioner was sworn and the clerk of the committee asked these questions:
Q. Are you married and, if so, to whom?
A. Yes, I am married to-.
Q. When were you married?
A. January 24, 1957.
Q. Do you remember by whom?
The name of the clergyman and the name of the church were given. I continue:
Q. I show you a document. Do you recognize this?
A. Yes, it is my marriage certificate.
Q. Are the names and dates correct?
A. Yes.
There is reference in the petition to the fact that two children were born, and the petitioner gives evidence to this effect, as was indicated by the hon. member for Halifax, and by the questions asked of the petitioner by Mr. Leggat, Q.C., counsel for the petitioner. He makes reference to the children having been born. For instance, on page 9 he asks this question:
Q. Did you have the baby?
A. Yes, I had the baby in August of 1957.
At various places throughout the evidence questions are asked as to the children, their ages, and other facts regarding them, to indicate that consummation of the marriage had taken place.
There is also a great deal of reference, as was indicated by the hon. member for Halifax, to how the children were to be looked after, what was the financial position of the petitioner and whether she would be able to care properly and adequately for them. There was reference to her being an ophthalmologist and to the fact that she was living with her mother. She is not working on a full-time basis. She has worked in a number of cities in eastern Canada. The amount of her income was referred to. There was also reference to the fact that her mother is caring for the children while she is away. A baby sitter does come in and does work but the mother is there most of the time.
There is also reference to the fact of the mother raising two small children, which indicates she is not sure whether she will have any difficulty in raising them. On page 12 she says:
As long as I am able to continue this work.
Senator Taylor questioned her about her present income, and she indicated that if she were sick or had to stop work it might be awkward but she is sure some arrangement could be made. There is extended reference to the children.

I submit that to some extent we should consider the fact that there are children is proof that the marriage has been consummated. We should consider the children to that extent, although we are forbidden by the rules and by a vote of this committee to concern ourselves any further with their welfare.
In this particular case, as the hon. member for Halifax indicated very succinctly and clearly, an extremely strange relationship existed prior to the actual case coming before us with respect to adultery having been proved. There is a great deal of reference about the physical and mental condition of the husband. I think we should concern ourselves with the aspect of mental cruelty which might lead up to adultery having taken place.
The evidence indicates that they lived at a particular address; that she was a student at McGill and he was working at Canadair. I am reading from page 9 of the evidence. The evidence says:
But he soon left Canadair and he wasn't working at all, he was sitting around writing.
Q. Writing what?
A. Poems.
Q. What happened during the months of February and March, 1957?
A. Well, I wasn't allowed to see anybody or talk to anybody. He was always arguing with me and swearing at me and calling me names and beating me up and he wouldn't let me out of the house and he wouldn't let my mother see me or come to see me.
Q. Did he virtually keep you a prisoner in the home?
A. It was pretty well like that. I suppose 1 could have skipped lectures but I was a student and he knew what my timetable was and if I didn't come right in on the dot he would beat me up or something. Then I was pretty worried too because I was pregnant and I was afraid that I would lose the child or something like that.
Then there is a question by Senator Isnor and the answer is a reiteration of the date when this occurred. Then Mr. Leggat continued:
Q. Did he ever actually cause you any bodily harm?
A. Yes, he did. He hurt me very badly and he made my ear bleed once, I remember. I was always covered with bruises. So I went to Mr. Leggat to see if I could do anything about it, and he said we could try to get a separation.
Then there is some reference to a separation. There is also indication of the respondent's lack of concern for the welfare of his wife and the two young children. There is evidence that would lead one to believe that he has a completely irresponsible attitude which in my submission is a form of mental cruelty. The respondent left at one stage and she did not hear from him for some time. When she did hear from him after the first 79951-0-200J
Private Bills-Divorce child was born he was in British Columbia. She had this to say as found on page 9 of the evidence:
A. I saw him once or twice in the spring of that year-
I would think that would be 1957.
-and then he left in June and then I heard from him again at the end of August after the baby was born, from British Columbia, and he had a job lined up there for teaching the following year and be asked me to go out and bring the baby and live in Prince George, British Columbia, but he didn't offer to pay for me to get out there or to pay the doctor's bills for the baby or for the hospital when the baby was born, or anything for my keep in all that time.
Q. And did you go out and try to make a go of it in British Columbia?
A. Yes, I did. I went out at the end of September, 1957. I had hoped if he was working again things would be different-
Then she indicates that he did pay some expenses for the upkeep of the house and herself there. She goes on to say:
He had been there about two months before I arrived and he had his group of friends and everything and he had various women who would drop around to the house quite frequently, and whenever they were there he seemed to ignore me and he would get very irritated if the baby cried and interrupted his conversation. Again it was the same thing, arguing with me and beating me.
So there is a repetition of what had happened before so far as cruelty is concerned and lack of concern for the wife and the child. In one instance he left in 1957 and she did not hear from him for some time. Then she did hear from him and she went out with the baby to Prince George, British Columbia. Then she was asked this question:
Q. What happened in the spring of 1958?
A. Eventually he suddenly told me one day he had given notice to the landlord and I would have to leave, and he wasn't going to keep on this house that we had and I might as well go back home, that he didn't want me. I suggested finding some other place and he really blew up then and he said no, that I could go back to my family in Montreal.
Q. He sent you back?
A. Yes, he pretty well did.
By Senator Barbour:
Q. Did he pay your way back?
A. No, he didn't. I borrowed money for that.
Q. He really abandoned you out there in the west?
A. It was pretty well that. I didn't know anyone there. There was no one I could stay with and he made no alternative arrangement. He just sort of dropped me.
Following that the young lady returned to her mother in Montreal in April, 1958. She is asked a question about the next time she saw the respondent, her husband and she gave this answer:
A. He came back to Montreal in June of 1958 and he phoned me up one day to say he was in Montreal but he didn't say what he was doing or anything, and he was not working. I had another baby coming in November but he didn't show any interest particularly in that or in the child we

Private Bills-Divorce already had, and he would call me up from time to time. He came to see me once and to see the little boy and he didn't offer to support me or anything or to pay any of the medical expenses and he Wouldn't tell me what he was doing or anything, and I asked him and he said he was just sitting around in his room doing nothing.
So we can assume that as far as the attitude of the husband is concerned it is a case of desertion. We are not duty bound to grant divorces on the basis of adultery and neither is the other place so even though there appears to be an unconscious desire to insist that some evidence of adultery be presented I submit that desertion would be the ground for the granting of a divorce in this case. I think the members of the committee of the other place gave the greatest weight to the questions of cruelty and desertion. I have only made reference to the evidence in that regard to show how extensive it was and how much the members of the other place were concerned with cruelty and desertion and with the lack of consideration by the husband for the welfare of the wife and the children.
I submit that this evidence influenced the members of the other place to a much greater extent than did the evidence of adultery and I think it is evidence which would properly influence us in granting this petition for divorce and dissolution of the marriage. But inasmuch as there is a desire to prove that adultery did in fact take place there is evidence given to this effect. I should like to make one or two comments about the evidence and the manner in which it was obtained. Evidence was given by Mr. George Roland Faucher who is an investigator and appeared as a witness on behalf of the petitioner. He was questioned extensively by Mr. Leggat and by the senators as found on pages 13, 14, 15 and 16. I might add that while there were two investigators involved in this case one of them died subsequent to the investigation and before the evidence was submitted to the committee so that only one individual gave evidence on behalf of the petitioner. He indicates that on a particular day they appeared at a certain address and noticed certain things. He was questioned by Mr. Leggat, as found on page 14:
Q. Do you know the apartment number?
The reference is to the particular address where adultery was supposed to have taken place or where it was indicated that it could have taken place.
A. Apartment 4 on the first floor, just to the right of the staircase.
Q. What did you do after you met him at 9 o'clock?
A. We waited until about 10.45 and decided we would try to go in and if he answered the door and was fully dressed we would use an excuse and walk away. We made our way to the first


floor and I knocked at the door which was opened a few moments later by Mr. Ramshaw, who was wearing a dark brown dressing gown and a pair of soft shoes. As the door opened toward the left we were able to see to the right that the woman was in the room-
Here again is evidence, I think, of illegal entry on the part of some of these investigators in their attempt to get evidence in order to prove certain circumstances which might lead us to reasonably assume that adultery could have or may have taken place. He said:
-and I pushed in and was followed by Mr. Maisonneuve-
This is the other investigator.
-I asked him to close the door behind me. As he opened the door I asked him if he was Mr.-, and he said yes, and I seen the woman and we both rushed in and I asked Mr. Maisonneuve to close the door.
There is an indication of illegal entry or trespass, pushing their way into someone else's private sanctum. I submit this is an invasion of the rights of the individual which should not be countenanced. I believe it is a criminal act, contrary to the Criminal Code, and that charges could be pressed for trespass or illegal entry. At least, as I have had this section of the Criminal Code explained to me I have been led to believe this could be done when evidence of this nature is given. These men both rushed in. You do not use the word "rush" or "push" if there is an invitation from an individual to enter. I continue to quote:
I then produced this photograph and asked him if it was one of himself, and he looked at it and said yes. He wanted to know what it was all about and I proceeded to tell him but he was angry-
I would assume that under normal circumstances he would be angry if two strangers were to push their way in or rush in and close the door. Up until this time, if this was not an arranged case, the respondent did not know that these particular investigators were coming to visit him at this particular time. He could come to the conclusion that all sorts of things might be the case. It might be an attempted robbery. I do not know what thoughts would go through his mind, but certainly there was reason for him to be angry.
-he was angry by the fact we were both in the room, and the woman was to our right in the bed and, as far as questioning our legality, we have a warrant-
I do not know whether or not, legally, they would be entitled to obtain a warrant for this particular type of activity. I would assume that warrants are granted to official police constables from time to time by the courts. I could not say whether or not these

gentlemen would have a warrant, but I would doubt it very much. In any event, the evidence goes on:
*-and as I tried to calm him down and explain the purpose of the call he became angry, and I finally threatened him that if he didn't quieten down and listen to me I would call the neighbours and Mrs.-, who I think was the home operator.
So we have here, one, invasion of rights contrary to the Criminal Code; enforced entry, pushing your way in; two, if they did not have a warrant, and I doubt this very much, then there was a lie and threat and, finally, there is a threat of certain action if the person did not quieten down and listen to him. Unfortunately these are three things which investigators do from time to time in complete disregard of the rights of the individual in his home or apartment, wherever he happens to be. They do these things in order to obtain evidence which would indicate that the circumstances were such that adultery may have taken place. It is unfortunate, as I say, that these things occur, but they do. I do not believe we should countenance them. I would expect that in a court of law if evidence of this nature were given of having pushed their way in, the judge might well take account of that and make some comments to the individual who gave that sort of evidence, that this was contrary to the statutes of Canada.
I would imagine, also, that the individual whose apartment this was would have cause for complaint. He could quite properly suggest that an arrest be made, on the basis of the Criminal Code, the person not having been invited into his apartment. These investigators are in an advantageous position at certain times because the individuals do not want any undue publicity given to their activities. This might result in the investigators being more forthright in their disregard of individual rights than might normally be the case. You could ask any individual in this committee if, at 10.45 in the evening, two strangers came knocking at his door and, when he went to the door they rushed in, closed the door behind them and began to ask particular questions, would he not become angry?
It is possible for these investigators to make errors from time to time and get into the wrong apartment. I had one case recounted to me in which this happened, not this particular case about which I am speaking now. The investigators made an error and broke in on somebody else, a man and his wife who were very much upset by this intrusion. I submit it is only because these investigators have an advantage that they
Private Bills-Divorce are able to get away with this sort of nonsense of pushing into an apartment. It does not matter whether it is a hotel room or an apartment, an individual rents it and has a right to privacy there. These investigators should not be allowed to barge in and violate the law in order to get some evidence. There should be some other arrangement made.
I submit that in this case, as I said earlier, primary consideration was given by the other place to the question of cruelty and to the matter of desertion. When I refer to "cruelty", I mean both mental and physical. Primary consideration was given to the fact he kept this woman almost a prisoner in his home. These were the things to which primary consideration was given by the committee of the other place. There was her evidence of having been beaten and covered with bruises and a separation action having been commenced; evidence of desertion, about not caring for the family. There is a reference to the husband here by one hon. senator as a bohemian or beatnik type of individual. These were the things that weighed rather heavily in the minds of the committee members of the other place in reporting favourably on this bill. Since we are not bound by any strict legislation that says adultery must be proven, these are the things that should be given the greatest amount of consideration by this committee in giving passage to this particular bill.
I should like to return to this question of the pushing in, the rushing in. I have noticed, Mr. Chairman-I hope I will be allowed to make a comment or two on this-in other instances where evidence has been given by investigators that they forced their way in, that they rifled through someone's private property such as a purse in one instance that I recall; that they engaged in thievery by taking a nameplate off a door in order to say "This is the nameplate that was on the door, so it proves that is that particular person's abode"; that they used threats in dealing with-


Charles Edward Rea: Order. I am sorry to interrupt the hon. member but I must advise him that his time has expired. Shall clause 1 carry?


William Arnold Peters: I presume that the sponsor of these bills is more familiar than are some of the rest of us with the law, he having a degree in law. I presume that he has given some consideration to the legal stipulations necessary for this committee to handle and process a divorce under the rules and regulations prescribed by the Senate. I would ask the sponsor whether he has given consideration, and, if so, in what manner to the
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Private Bills-Divorce
domicile of the woman and to the domicile of the husband in this particular case.


Robert Jardine McCleave: It is true that the husband was a bit of a wanderer. The evidence as given shows that they lived for a while in Quebec and also for a while in British Columbia and that the husband apparently when last heard of was in England. The practice has been to bring the case before parliament only when the husband is domiciled in Quebec or Newfoundland. Change in domicile is defined within the law. If a man establishes domicile in one place and then turns into a bit of a nomad, there is no reason to think that he has changed the domicile he has unless there is very strong evidence to that effect. On looking at the facts here fairly, I think the domicile is established as in Quebec. While he may have lived for some time in England, he had not lived there sufficiently long to show that he had changed his domicile.


William Arnold Peters: I believe it is true that he has been a bit of a nomad and has wandered considerably. But as we read the evidence it would indicate that the place where he established a home or a residence and permanent domicile-and the only place in which he did this-was	in the province of British
Columbia. The only place in which the wife indicates that any support or reasonable support took place was in the province of British Columbia. At the same time I believe it has been clearly pointed out that this man lived in England, was raised in England, that his natural domicile of origin is England and that he has now returned to England. During the questioning there has been no indication that he has any intentions of returning to Canada or to the province of British Columbia or to the province of Quebec.
I think the sponsor of this bill is probably aware of the fact that domicile under the divorce laws of Canada can be established outside of the jurisdiction of the husband Which I would submit is England in this case. It can be established outside of that jurisdiction if two years have elapsed. Because of the desertion charges which are also indicated and suggested in the evidence, after two years the wife has the right by law to take the domicile of her considered residence and no longer has to come under the domicile of the husband.
This matter has been given some consideration. It not only has caused a problem where we have had to decide in Canada, for purposes of establishing domicile, that each province will be considered to be a country and that the domicile of the husband, is always the domicile of the wife whether or not she is living with the husband, even

in those cases-and this appears to be a fact in this case-where a legal separation has been granted by the court and then consideration has again been given to the marriage by the two parties and they have lived together on a number of occasions. It has been pointed out that in the case where a wife has been deserted the situation is as follows, and I am quoting from page 287 of W. Kent Power's book "The Law of Divorce in Canada":
The decision of the privy council in Cook v. Cook and Attorney General for Alberta (a) that a wife deserted by her husband cannot acquire a domicile separate from him so as to give the courts of that domicile jurisdiction to dissolve the marriage, even though she was judicially separated from him led to the enactment by the dominion parliament of the Divorce Jurisdiction Act, 1930, chapter 15, which provides:
"A married woman who either before or after the passing of the act has been deserted by and has been living separate and apart from her husband for a period of two years and upwards and is still living separate and apart from her husband, may in any one of those provinces in Canada in which there is a court having jurisdiction to grant a divorce a vinculo matrimonii, commence in the court of such province having such jurisdiction proceedings for a divorce a vinculo matrimonii praying that her marriage may be dissolved on any grounds that may entitle her to such divorce according to the law of such province and such courts shall have jurisdiction to grant such divorce provided that immediately prior to such desertion the husband of such married woman was domiciled in the province in which such proceedings are commenced."
I believe that the sponsor of this bill has an obligation to the House of Commons, and I believe he will readily admit to me that the place in which they lived together, and the only place in which they were really domiciled in the true sense of the word, was in Prince George in the province of British Columbia. It would therefore be impossible for the wife to start proceedings in the province of Quebec through the parliament of Canada when there was already recourse open to her by law in the province of British Columbia and an opportunity to get a divorce.
If the sponsor says this is not true, then I think we would have to apply our minds again to the fact that if we were to grant-* and I do not agree but I say if we were to do so-that the jurisdiction of the domicile will fall within the province of Quebec, we have still not established a separate domicile from the husband in another country, namely England. This divorce was applied for on April 17, 1959. The last time these people had met and had some discussion-and the evidence does not disclose whether or not they had a closer relationship than that-was in January, 1959, only a few months prior

to this application. If we establish the last domicile of the couple, the last time they had cohabited, the last time they had lived together as man and wife, then I think we shall have to agree that this was in the province of British Columbia and that that took place in 1958.
The law does not say that the decree can be granted two years after that. It says that two full years must go by before application is made. Quite obviously, even if we use the earliest possible date of April, 1958, we would find that we are already only in April, 1960 and that this divorce was applied for a full year ago. Hence this lady would not be eligible during that period of time to apply the Canadian divorce court act as it relates to the disallowance of marriage and she would not be able to use this as grounds for obtaining this divorce.
There are other factors in this case. I could point out that there are many problems raised in the evidence which are worthy of some consideration by the committee. I could point to the fact that there were two investigators in this case originally, that one died before he could give evidence, and therefore we have only the unsupported testimony of one investigator who in my opinion is not very reliable and has not proved to be reliable in previous cases. It is quite true we could go into all these things and discuss them at some length, but I think this is much more fundamental than a discussion of the evidence given in the Senate, namely that we are being asked to grant a divorce which in my opinion contravenes the very law passed by the house in 1930, the law of divorce in Canada.


Robert Jardine McCleave: Would the hon. member like an explanation of this point?


William Arnold Peters: Yes, I would.


Robert Jardine McCleave: The evidence clearly shows that of some 11 years spent in Canada before returning to England all but 8 months were spent in the province of Quebec, which I think clearly establishes domicile in Quebec. The two year rule, as far as I can see, has no application whatsoever.


William Arnold Peters: The matter of domicile is established in several ways, but not necessarily by living in a particular province. As I understand it, you could live in any particular province. You could even make a formal declaration that you were going to live in some particular place and never establish that. As the hon. member for Halifax knows, it has been pointed out on many occasions that people have indicated they would live in one province and have lived in another for a number of years. The fact
Private Bills-Divorce that they made a formal declaration that they would live in one particular place has not made much difference.
There are many cases which indicate this. There is a case reported in Dicey's "Conflict of Laws", 5th (Keith's) edition, page 54 which illustrates what I mean:
With regard to the United States, an intention indefinite as to locality to live somewhere in the United States is in itself inconclusive where the question at issue is: Has A., the person whose domicile is in dispute, taken up residence in a given state with the intention of residing permanently in that state? Residing in Philadelphia with the intention, not of making his permanent home in Philadelphia, but of making his home in Philadelphia, Baltimore, or Washington, could not be effective to displace the domicile of origin.
In this particular case it has not been indicated-certainly the evidence does not indicate-that this gentleman had any intention of establishing domicile in Canada or in any particular province in Canada. He lived in the province of Quebec. He moved to the province of British Columbia and then back to the province of Quebec. Then he moved back to the United Kingdom where he was raised and had lived before, and he appears to have got a job. His wife was asked on page 8 by Senator Taylor this question:
Q. Just a minute, now, is he living in Montreal?
A. Yes-I beg your pardon, I misunderstood the question,
Q. Is he living now in Montreal?
A. No.
Q. Where is he living now?
A. He is in England now.
Q. Do you know if he intends to stay there?
A. I don't know.
By Mr, Leggat:
Q. When did he leave, do you know that?
A. Yes, he left-well, I heard from him in the fall of last year that he was in England and I guess he had left some time during the summer.
Then the questioning was continued later and she replied that she did not know if he intended to return or not.
I suggest that this man's domicile in the true sense of the word has not been proved and that when he came to Canada he had not made up his mind where to live. He neither formally nor informally informed his wife he would make his residence permanently in Canada, and from the evidence and the cross-examination I suggest that his domicile is now England and that it always has been England.
It should be noted that the fact that they have applied for this divorce has not prejudiced their position in relation to the two-year waiting period. If they withdraw this particular petition then the two-year period can be established, and the fact that

The Budget-Hon. D. M. Fleming after one year one of the parties has petitioned for divorce will not make it necessary for them to requalify for the period of desertion.


Robert Jardine McCleave: What a humanitarian.


William Arnold Peters: Mr. Chairman, the hon. member says, what a humanitarian. I do not think we are discussing humanitarianism here; we are discussing a particular divorce case and discussing it as closely as we can within the legal requirements-


Charles Edward Rea: Order. It being six o'clock, shall I rise, report progress and request leave to sit again at the next sitting of the house?


Some hon. Members:: Agreed.
Progress reported.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Mr. Fleming (Eglinton) that Mr. Speaker do now leave the for the house to go into committee of ways and means, and the amendment thereto of Mr. Benidick-son.
John Whitney Pickersgill: Mr. Speaker, I believe the minister was going to permit a question. The question I was going to ask is this. As I understood it the hon. gentleman said he made his own everything that was in that editorial from the Toronto Star with which he edified the house-


Mr. Kucherepa:: The part he read.


John Whitney Pickersgill: Yes, the part he read. The editorial concluded with a statement to the effect that the Liberals should not be allowed on the C.B.C. Does the minister agree with that view and, if so, could the minister arrange to have the Minister of Trade and Commerce (Mr. Churchill) put on again?


Donald Methuen Fleming: Mr. Speaker, I know that you do not expect accuracy from the hon. member for Bonavista-Twillingate. The hon. gentleman has just given another demonstration of his chronic inaccuracy because the extract I read from that excellent editorial in the Toronto Star does not say what he attributed to it at all. I am glad to have


an opportunity of repeating the final paragraph for his special consumption. It reads:
Unless the Liberals have some ideas and the courage to state them, they had better stay off television, for the sake of the party, as well as the viewers.
Never did the Liberal party receive better advice.
Those hon. members who were members of this parliament a decade ago will remember that after the 1949 general election questions were raised as to the future of the C.C.F. party. It will be remembered that on one occasion Mr. Coldwell, the much respected leader of that party, was asked what was the future of the C.C.F. His answer was that the C.C.F. might some day gets its chance in the event of a depression or recession.
I make no further comment on that particular statement of the time, but I draw attention to the similarity between the view entertained at that time with respect to the C.C.F. and a view which is now being entertained and expressed with respect to the Liberal party.


John Whitney Pickersgill: By whom?


Paul Joseph James Martin: Only in Conservative circles.


Donald Methuen Fleming: I will have ample evidence from Liberal sources to satisfy all intelligent members of the house.


John Whitney Pickersgill: Self adulation.


Paul Joseph James Martin: It is too early in the evening.


Donald Methuen Fleming: Some hon. members of the house saw a television broadcast within the past week in which one gentleman who is regarded as a rising star in the Liberal party was interviewed on a subject close to the one I indicated a moment ago. I refer to Mr. Charles Templeton, a man whom many of us respected very highly in his former calling. On this particular program Mr. Templeton, who is now regarded as certain to be a Liberal candidate in one of the Toronto or York ridings in the next election, whenever that might come-


John Whitney Pickersgill: Eglinton?


Donald Methuen Fleming: If he wants to come to Eglinton, I can assure you he will be welcome. There has not been for many years a Liberal candidate in a federal election in Eglinton riding who lived in that riding. They have always had to go outside to find one.


John Whitney Pickersgill: Does the present member live in that riding?


Donald Methuen Fleming: He certainly has made that riding his home since the year 1933.


John Whitney Pickersgill: I can produce some evidence to the contrary.


Donald Methuen Fleming: On this particular program Mr. Templeton who, as I say, is regarded as one of the rising stars in the Liberal party-there are even those who refer to him, if the hon. member for Essex East (Mr. Martin) will permit me to say so, as the possible next leader of the Liberal party-


John Whitney Pickersgill: Is this a vision or a hallucination?


Donald Methuen Fleming: The hon. member for Bonavista-Twillingate should not laugh at that.


John Whitney Pickersgill: I was asking the minister if that was a vision or a hallucination.


Donald Methuen Fleming: The dialogue ran to this effect. Mr. Templeton was being interviewed by Mr. Cohen.


John Whitney Pickersgill: Who is Mr. Cohen?


Donald Methuen Fleming: Mr. Cohen addressed this question to Mr. Templeton:


Mr.   Cohen@: Mr. Templeton, X know that politics interest you. Off the record, do you see a revival on the federal scene of the Liberal party? Do you see them staging a comeback?


Mr. Templeton:: This is off the record on
television?


Mr.   Cohen@: Off the record on television.
Mr. Templeton then replied-


John Whitney Pickersgill: Mr. Speaker, on a point of order, since the minister has said this is off the record could he indicate from what source he is quoting?


Donald Methuen Fleming: I am quoting from the remarks made by Mr. Cohen and Mr. Templeton on the television program in question.


John Whitney Pickersgill: Where did the minister get it? Is this another secret document?


Donald Methuen Fleming: This is a plain statement of fact and consequently obviously is over the head of the hon. member for Bonavista-Twillingate. I shall go back because I do not wish the hon. member for Bonavista-Twillingate to lose the thread of this dialogue.


John Whitney Pickersgill: It is yarn, not thread.


Donald Methuen Fleming: Mr. Cohen began by asking Mr. Templeton this question:


Mr.   Cohen@: Mr. Templeton, I know that politics interest you. Off the record, do you see a revival on the federal scene of the Liberal party? Do you see them staging a comeback?
12, 1960	3165
The Budget

Hon. D. M. Fleming


Anthony Robert Temple: This is off the record on
television?


Mr.   Cohen@: Off the record on television.
Mr. Templeton then replied as follows:
The only thing X would say about that is that there is a chance of a Liberal revival if there is the economic recession predicted by-I hope accurately-by a number of well-known economists.
If that is not the kind of statement that ought to bring shame to any Canadian, I hope we will never hear a worse one than it on television.


Paul Joseph James Martin: Do you remember your speech of March 22, 1955?


Donald Methuen Fleming: Pardon?


Paul Joseph James Martin: Does the hon. gentleman remember the speech he made in this house on March 22, 1955, a copy of which I have before me?


Donald Methuen Fleming: I do not remember all parts of it but if the hon. member does I congratulate him and I commend it to his serious perusal and contemplation. You see, it is an interesting diversion. The hon. member for Essex East does not like this reading from the dialogue that occurred on television-


Paul Joseph James Martin: It is not as good as this one.


Donald Methuen Fleming: -and this statement on the part of a rising star of the Liberal party. I accept that statement of Mr. Templeton. I think it may be a franker statement than some we have been accustomed to listen to on the part of hon. gentlemen opposite. The fact is that the Liberal party has now chosen as its tactic in the hope of improving its political fortunes either to create or to sow in the minds of the public the idea that a recession is coming or that a recession has come. It is now a party with a definite recession complex.
Because they are eager partisans it is perfectly clear now that they seek to persuade the people of this country that another recession is on the way. For lack of facts anything does, even emanations from the Martin bureau of statistics.
I think it is in the knowledge of hon. members that you can create some of the elements of depression, let us say, some of the effects of depression by creating in the minds of the public the belief that there is a depression. You can have the psychological elements created by that kind of talk, and it does not matter in the minds of hon. members opposite that this hurts Canada, or hurts Canada's interests, as long as it improves the political prospects of the Liberal party.
3166	HOUSE OF
The Budget-Hon. D. M. Fleming The whole theme of the speech of the Leader of the Opposition this afternoon was that the Minister of Finance ought to be worrying-


Paul Joseph James Martin: Hear, Hear.


Donald Methuen Fleming: The echo from Essex East, the hollow echo. The hon. member for Bonavista-Twillingate should not laugh at that.
I hope that as long as I am privileged to hold this portfolio I shall always be prepared to be realistic and look facts in the face. I think that will be evident to any intelligent member who read the budget speeches of 1958 and 1959; but I do not propose to be led into a worried frame of mind by the misleading statements that have been emanating from the benches opposite in the course of this debate. I do not believe that that is a realistic or responsible approach to the economic scene today.


John Whitney Pickersgill: Will the minister permit a question?


Donald Methuen Fleming: With pleasure.


John Whitney Pickersgill: Does the minister really think that the Canadian public is so easily misled as he suggests?


Donald Methuen Fleming: I certainly believe that the Canadian public is not as easily misled as hon. members opposite seem to think.


John Whitney Pickersgill: Why is the minister
worried, then?


Donald Methuen Fleming: I just pointed out that I did not intend to be worried by the misleading statements that have come from hon. members opposite, and I reject the invitation that I received this afternoon from the Leader of the Opposition to be a worried man.
Having made those restrained comments on the thoroughly irresponsible attitude taken by the Leader of the Opposition and other hon. members about him, let me point out some of the things that have been said by hon. members opposite in the course of their comments from over a period of time with a view to creating the impression that things are worse than they are, much worse. Do I need to remind hon. members opposite of the course of events from the budget speech in June, 1958 until the budget speech of April, 1959.
In that budget speech of 1958 I indicated that I thought the deficit was going to be $648 million. That was increased to $650 million, by some tax changes that were made when the bills were before the house and I indicated later in the session, by reason of some additional commitments that were then 

approved by parliament, that I expected the deficit would amount to some $700 million. But that was not enough for hon. members opposite. So they went out and said, "This is a billion dollar deficit". If a billion dollar deficit in fact could have done harm in this country, in disturbing confidence or for any other reason, hon. members opposite would have created that same harm in Canada by their assertions up hill and down dale throughout this country that the deficit was going to be $1 billion or more than $1 billion.


John Whitney Pickersgill: What was the cash deficit?


Donald Methuen Fleming: The deficit


John Whitney Pickersgill: The cash deficit?


Donald Methuen Fleming: We are talking about the deficit.


John Whitney Pickersgill: You are always talking about something else.


Donald Methuen Fleming: We are talking about the deficit. It was the deficit that the Leader of the Opposition was talking about when he was making misleading statements on this very subject.
It may be of interest to hon. members to recall some of the statements that were made by the Leader of the Opposition in that respect. On October 6, 1958, he was quoted in the Winnipeg Free Press as having said at Regina-do I hear the hon. member for Bonavista-Twillingate take exception to the reading from this newspaper?


John Whitney Pickersgill: Just another hallucination on the part of the minister.


Donald Methuen Fleming: Did he take objection to the accuracy of this newspaper?


John Whitney Pickersgill: No; it was just another hallucination on the part of the minister.


Donald Methuen Fleming: I just looked for it naturally. This is the extract:
"The deficit for the current year will be much greater than the $700 million forecast by Finance Minister Donald Fleming. My guess is that it will be close to $1 billion," Mr. Pearson said.
Then, on November 12, 1958, he was quoted in the Toronto Globe and Mail as having said in the course of a speech in Toronto:
We are now reaping the whirlwind of a $1 billion deficit.
That is the sort of thing they were going about in their irresponsible way and saying in the course of the year 1958. It must have galled them greatly when the accounts were complete for 1958-59 and it transpired that the budget deficit was $609 million and not

the $1 billion that they had been talking about. It must have been a disappointment to them.
Then, Mr. Speaker, we move on to 1959. You will, I am sure, not need to be reminded of their gloomy attitude toward the budget at that time. I think hon. members may well test the accuracy of hon. members opposite in their gloomy forecasts today by the touchstone of what they said last year with reference to last year's budget. It will be remembered that at that time, namely, April, 1959, I estimated a budget deficit for the fiscal year 1959-60 of $393 million. It recently transpired that the budget deficit was $405.6 million. I will come back later to this matter of accuracy in that respect.
But hon. members opposite were not satisfied with this; they were not satisfied at the time. They said the deficit was going to be much greater; that I had overestimated revenues; that I had taken much too optimistic a view of the economic outlook and so they said it was going to be much worse. There is the actual fact. They carried this game on all through the year. Here is my distinguished predecessor, Mr. Walter Harris, speaking quite recently. The house will recall the quotation which was read here last Friday by the hon. member for Grey-Bruce (Mr. Winkler) where Mr. Harris said just a month ago that "the deficit may well be $600 million." This, of course, is 50 per cent out and it just shows how far Liberals can err in their estimates when they have not the benefit of the advice of the experts that the hon. member for Kenora-Rainy River indicated he would fly to if he had the opportunity.
Then this afternoon we were treated to a most harrowing tale of an imminent recession by the Leader of the Opposition. He must have sent the chills up and down our spines as he pictured the horrors of this recession. It is quite clear that the Leader of the Opposition just cannot wait for the next recession to come. He is talking of it now and if he can bring it on by his talk he is certainly going to do it. He has exaggerated unemployment, just as hon. members opposite have been doing this long time, and he has created gloom so thick that he has lost his own way in it now. He is simply groping about in gloom of his own creation. There is a couplet, Mr. Speaker, from a hymn that I am sure the Leader of the Opposition must remember.
Take up the torch and wave it wide,
The torch that lights time's thickest gloom.
I commend that to the Leader of the Opposition. I hope the next time he undertakes to sing he will sing that hymn. It is No. 384 in the hymnary of the United Church.
12, 1960
The Budget-Hon. D. M. Fleming


John Whitney Pickersgill: Would the minister quote the next two lines?


Donald Methuen Fleming: No, but I can quote from another hymn that speaks about "the encircling gloom". The Liberals were wrong in 1957; they were wrong in 1958; they were wrong in 1959; and they are wrong again now in 1960.


Mr. Robichaud:: And so are you.


Donald Methuen Fleming: The Leader of the Opposition was so anxious this afternoon to get everybody talking recession with him that he was in effect asking the Minister of Finance what preparations he was making for the next recession. The best preparation that can be made for the next recession is to continue the present government in office. That is the surest guarantee of avoiding a recession. I will say this to the Leader of the Opposition, that we will not find this country in the position in which it was in 1957 when the recession induced by the Liberals at that time came upon the country.


John Whitney Pickersgill: We certainly will not.


Donald Methuen Fleming: In one respect we can be thankful that the financial position of the government will be very much better and I mention it in passing in view of what has been said about the conversion loan by the hon. but not too well instructed members opposite. The average debt of this country will not be maturing nearly so soon, thanks to the conversion loan, as it was when we came into office in 1957.


John Whitney Pickersgill: It was also being paid off when you came into office.


Donald Methuen Fleming: I come now to another subject that interests me very much, the subject of accuracy in estimating. I noted with not less than passing interest this afternoon a remark made by the Leader of the Opposition. He said: "If the minister is as far out this year as he was last year his surplus will quickly melt into a deficit". That is quite a remarkable statement to come from the hon. gentleman. It perhaps is an echo of the statement made by the hon. member for Kenora-Rainy River as found at page 2703 of Hansard. Referring to myself he said:
Did he get discouraged from the poor estimating that was done last year?
Let us examine the estimating that was done last year in the light of the figures as we have them at the present time. They are not complete, but they are estimates that were made as of the last week of March. I have reminded the house that the deficit estimated by me in the budget of April, 1959 was $393 million. It proved to be $405.6

The Budget-Hon. D. M. Fleming million, an increase of $12.6 million or a little less than 3 per cent over the estimate.
Is this a departure that indicates inaccuracy in budgeting, that calls for the kind of comment that was made by the Leader of the Opposition this afternoon or the hon. member for Kenora-Rainy River a week ago yesterday? Evidently the Ottawa Citizen does not think so, for in an editorial which appeared on March 31, the day that the white paper was tabled in the house, I read the following with reference to the figure of $405.6 million:
The figure is higher than Mr. Fleming thought it would be when he made his budget forecast last April ($393 million) but it is not far out as these matters are measured.
That is an interesting comment. I ask hon. members opposite to consider what was the estimate and what it was based on. In the budget speech of April 9, 1959 this is what I said about the basis of the estimate, as found at page 2409 of Hansard:
-I shall be basing my budgetary policy and my revenue forecasts on a gross national product of about $34J billion which is about 7 per cent above the average level achieved in 1958.
Hon. members opposite have been laying great stress on the 7 per cent. They have been saying latterly, "Oh, but the figures now show it was only 6 per cent". I have a comment to make upon that. Let me remind the house that I based my budget estimate on the forecast of a gross national product of $34| billion. I commented that that was 7 per cent above 1958. We actually reached a figure of about $34.6 billion instead of a figure of $34.5 billion. When the hon. member for Kenora-Rainy River referred to this forecast in speaking in the house a week ago yesterday he did not say anything about the $34.5 billion. He took half the sentence and he chose the half with a view to leaving out the figure. He simply said that I had based the budget forecast on the view that the gross national product in 1959 would show an increase of 7 per cent over 1958. As it turned out we exceeded in gross national product the figure on which I based the budget forecast.
But that turned out to be only an increase of 6 per cent over 1958. And why? When hon. members opposite use this figure they ought to be frank enough or informed enough to tell the whole story and to give it to the house. The fact is that the figure calculated on the 1958 gross national product was advanced during the year by the dominion bureau of statistics. There was a change in the calculation and it was the 1958 figure that was advanced. The 1959 forecast was reached; indeed, it was slightly passed. It


was the change of the 1958 figure that accounts for the fact that the increase was only
6	per cent instead of 7 per cent over 1958. That did not affect the forecast, as the figures have shown.
But let me not dwell unduly on that. Let me turn now to what the opposition had to say about the increase in the gross national product for 1959 over 1958 when they were engaged in the budget debate a year ago. Here is the Leader of the Opposition speaking on April 21 last year, as found at page 2912 of Hansard. He referred to my forecast of $34.5 billion or a 7 per cent increase and he continued:
He made no attempt then to justify this optimistic forecast, and he made no attempt to justify it this afternoon. It is a forecast which has been dismissed by many experts, and I will name mine, although he did not name his this afternoon. They include the Canadian tax foundation, the financial editor of the Montreal Gazette, and indeed the Canadian chamber of commerce, which in its submission to the government forecast a gross physical output in 1959-60 of approximately 1 per cent, not
7	per cent.
That was the forecast of the Leader of the Opposition and I suggest that his forecast today and his comments on the forecast upon which the 1960 budget is based can well be judged in the light of his errors as revealed a year ago in the budget debate. But his characteristic pessimism in opposition did not end there. He went on to say at page 2913:
My calculations on this point last year, as stated in my budget speech, were that the minister was too optimistic.
"Too optimistic", that has been their cry. Further down in the paragraph he said:
He does not give us any basis for his optimism.
I am content to have the 1959 budget forecast judged in the light of events. I do not think you can get any better or more searching test than that. I am quite prepared to have my forecast tested by the facts. I do not think the Leader of the Opposition would wish to have his tested by the facts. He had the temerity this afternoon to say in one of the more extraordinary statements in his speech, that his predictions last year have been borne out by the events.


Hédard-J. Robichaud: Sure, they have.


Donald Methuen Fleming: We will not expect too much from the hon. member for Gloucester (Mr. Robichaud). If 7 per cent and 1 per cent are the same thing to him, I do not think any of us can do very much to help the hon. member. The Leader of the Opposition poured scorn on our forecasts last year, but I think they have been borne out by the facts. Let us not judge these hon. gentlemen opposite by their despondency in these days in opposition. Let us go back

and judge the accuracy of the forecasting and budgeting that has been done for the last three budgets as contrasted with the period when the Liberals were in office. I do not want to take the house back over the whole record, so let us start with the postwar period.
Let us start with the fiscal year 1946-47. In that year, they forecast a deficit of $300 million, and they were just out $674 million in that estimate. There was an error of 22.4 per cent in the revenue forecast and 25.6 per cent on expenditures. I am prepared to make allowances for that year because it was the first full fiscal year of peace. I expect it was a very difficult year in which to make forecasts. I am prepared to make allowances for that year. Let us go on to 1947-48. They forecast a surplus of $190 million and they finished up with $676 million, for a difference of $486 million. In 1948-49 they were out by $107 million; in 1949-50, they were out $47 million; in 1950-51, they were out $196 million. So it goes, on down the line. I do not know whether or not hon. members can stand much more of this. If you want something in the way of a comparison, go back to these figures in past Liberal regimes. You can check the margin of difference between the actual figures and the figures forecast.
If hon. members want more of this I can say that in 1950-51 the difference was $196 million; 1951-52, $218 million; 1952-53, they were close that year, $15 million; 1953-54, $35 million; 1954-55, $156 million; 1955-56, $127 million, and 1956-57, $145 million. Yet they talk about inaccuracies in my budgeting.
The Leader of the Opposition says that if the present minister is as far out this year as he was last year his surplus will quickly melt into a deficit. All I can say is that we have budgeted carefully. We have made the most careful forecasts that we can, and I would not have submitted this budget to the house had I not believed it is an honest, straightforward budget that will stand up to the test of the best estimating possible at the date on which the budget was introduced.
I will come back to say some things about this matter of records. We were told this afternoon by the Leader of the Opposition and we have been told by others, that, after all, this surplus of $12 million that has been forecast is nothing. Apparently it was not even worth announcing in the house in the view of hon. members opposite. The $12 million does not hold the record, even in recent years, for the smallest forecast of a deficit or the smallest forecast of a surplus. I am sure hon. members opposite will be glad to have their faltering memories
12, 1960
The Budget-Hon. D. M. Fleming refreshed if I recall to them that in the fiscal year 1954-55, the last budget of Mr. Abbott, now Mr. Justice Abbott, he forecast a surplus of $4 million. Did hon. members opposite rise in holy horror and say, this is too small; this should not even be announced? No, they came forward then and said it was an honest estimate.
I might just mention in passing what happened that year. Perhaps it was this experience that gave rise to some of the cynical comments by hon. members opposite as to what might happen this year. In place of that forecast surplus of $4 million, at the end of the year there was a Liberal deficit of $152 million.


Some hon. Members:: Shame.


Donald Methuen Fleming: This was not the
only year in which a small surplus was forecast. In the previous year, 1953-54, the surplus forecast at the time of the budget was $11 million; in 1952-53 it was $9 million forecast in the budget; in 1950-51, $20 million, later changed to $15 million. So let it not be said that this 1960 surplus is the albino of its breed. There are numerous precedents for a forecast of a relatively small surplus.
I may say that the comments by the Leader of the Opposition on the forecast surplus have been interesting. He is reported in a Canadian Press dispatch of April 2 as having said in Toronto that my budget will have to be tested by time. That was a profound statement indeed. I had thought that every budget had to be tested by time. I hope my budget will be tested by time and not by the vagaries, errors and caprices of hon. members opposite.
Before we leave this subject of the derision that they have heaped on this budget surplus of $12 million, let me say this, and I address my comment particularly to the hon. member for Kenora-Rainy River. He wanted to add to the 1959-60 deficit the deficit in the old age security account. It will be interesting to see what the hon. gentleman will say next year in the budget debate when that old age security account shows, as we expect it will, a surplus on next year's operation of perhaps $40 million. I am sure he will be the first to come forward and say, I insist on adding the $40 million to the announced budget surplus, as announced by the Minister of Finance in the white paper.


Mr. Benidickson:: Because you have added taxes of millions and millions of dollars last year for this account.


Donald Methuen Fleming: Apparently the hon. member cannot keep his seat. There must be something contagious in that seat over there.

The Budget-Hon. D. M. Fleming It was his seatmate the hon. member for Bonavista-Twillingate this afternoon, and I suppose these things spread.
We were told this afternoon that there are some surpluses that are good. There is virtue in some surpluses, but not the Conservative kind. We were told that in times past the Conservatives had not approved of surpluses. This is poppycock.
Our quarrel with the surpluses in the days of easy financing in the post-war period before this Liberal induced recession was that they did not budget properly and they did not plan for debt retirement. It was always on a hit and miss basis, and the surpluses were not those for which they budgeted. The budgeting was inaccurate in many of those years. Never once did they set out at the first of the year to make plans for debt retirement. It was always catch as catch can. Never was there any planning in that respect. Having heard the Leader of the Opposition this afternoon talk about orderly debt reduction and say that they look back to orderly debt reduction on the part of the Liberal administration, may I just say this. He is looking back and he is seeing things that just are not there. One can understand why there is nothing for him to look forward to.


John Whitney Pickersgill: Will the minister permit a question?


Donald Methuen Fleming: Oh, always.


John Whitney Pickersgill: Does the minister really think it is a really terrible thing to pay off a little bit more of the national debt than you thought at the beginning of the year you were going to be able to pay off?


Donald Methuen Fleming: No, but I like to see these things done in an orderly and planned way and not the arrival at surpluses at the end of the year by errors and consequent over-taxation. That was where the over-taxation occurred, namely because the country was not being given proper budgeting.


John Whitney Pickersgill: You are taking a billion dollars more than the Liberals took in 1956-57.


Donald Methuen Fleming: Where we are quarrelling with hon. members opposite is that they never planned for any orderly debt reduction at all. They are simply seeing things now that did not occur at all.
I wish to pass on from these agitated and garrulous gentlemen to talk about the subject of muddle. They have been talking lately about the muddle. Unquestionably there is a muddle but it is not where they think it is. The fact is that they are so muddled and befuddled that they think everybody else is


muddled and befuddled because they are. This is a psychopathic situation.


Paul Joseph James Martin: Has the time not come for the minister to discuss the serious business of the nation?


Donald Methuen Fleming: What was that
remark?


Paul Joseph James Martin: I was just saying this to my hon. and dear friend. Does he not think, as Minister of Finance, that the time has come in this house when he should discuss the serious business of the nation?


Donald Methuen Fleming: Mr. Speaker, I have been-


Mr. Speaker:: Order. If I might interject here, I should like to say that it seems to me that far too many bright thoughts are being expressed at the wrong time tonight and that it would be better if the house would give to the minister who has the floor the full use of it.


Donald Methuen Fleming: I have been discussing what hon. members opposite have been saying in the course of this debate. By the definition applied by the hon. member for Essex East apparently what they have said was not serious business of the country.
Hon. members opposite have been completely, utterly and hopelessly self-confused. In the course of this debate we have seen on their part confusion thrice confounded. We do not know yet whether these hon. gentlemen advocate today a balanced budget or a deficit. They have all had ample opportunity to speak in the course of this debate. The Leader of the Opposition left us in a complete quandary on this subject at the end of his remarks today. He was on both sides of the question. Indeed, he was on both sides of every question that he allowed himself to touch upon in his remarks today.
It remains an unresolved mystery as to whether the official opposition in this situation believes that the government should budget for a balanced budget or a deficit. To use an expression that was coined by a president of the United States about 50 years aeo, to try to get some sense and some clear expression of opinion from the Liberals on 'his question you might just as well try to nail jelly to the wall. We have witnessed on their part hopeless floundering or else calculated double-talk. We thought the Leader of the Opposition this afternoon was going to come close to saying something. But having reached the point where it seemed that he was coming close, he backed away and went off on a tangent. What did he say? This is what he said this afternoon. He said that today no

government should be afraid of a deficit if related to a plan and not due to un-co-ji'dinated circumstances.


Paul Joseph James Martin: That is not all of
it; that is not the whole sentence.


John Whitney Pickersgill: That is just half the
sentence.


Donald Methuen Fleming: That was as much as I was able to take down; and believe me, of the sentence uttered by the Leader of the Opposition, this is much the better part.


William Moore Benidickson: Dishonest as usual.


Donald Methuen Fleming: He said that today no government should be afraid of a deficit. Did he mean to convey the idea that he was advocating a deficit? Is that what he meant?


Paul Joseph James Martin: He was talking about social need. I am surprised at my hon. friend.


Mr. Speaker:: Order.


William Moore Benidickson: He sits in the front pew of a church and then says this kind of thing.


Mr. Speaker:: Order. If hon. members have views to express they might at least rise in their places.


Donald Methuen Fleming: The Leader of the Opposition, having permitted himself to say that today no government should be afraid of a deficit-


Paul Joseph James Martin: Mr. Speaker, I rise on a point of order. You have asked us to rise and I think you are quite right in giving that direction. This is the third time in the last half minute the Minister of Finance has misquoted the statement of the Leader of the Opposition. The Leader of the Opposi-sion related deficit to the problem of social need-


John Whitney Pickersgill: And depression.


Paul Joseph James Martin: -and the possibility of depression and further recession. The Minister of Finance has misquoted the words of the Leader of the Opposition in a shameful manner.


Mr. Speaker:: Perhaps the correction might more appropriately have been made at the end of the minister's speech. Will the minister proceed?


Donald Methuen Fleming: I think the house will have taken note-and everybody is glad to see it-that the hon. member for Essex East is laughing and snickering at himself now. He does not laugh at his interventions half as much as do the rest of us in this house.
12, 1960
The Budget-Hon. D. M. Fleming
I compliment the hon. member for Essex East on having greatly improved the speech made this afternoon in this respect by the Leader of the Opposition. That is what the Leader of the Opposition said this afternoon about a deficit.


Paul Joseph James Martin: He did not say
that.


Donald Methuen Fleming: I have his words here. I trust my note of them much better than I trust the failing memory of the hon. member for Essex East unless he was the man who wrote the speech of the Leader of the Opposition. He said that today no government should be afraid of a deficit-


John Whitney Pickersgill: That is half of the sentence and the minister knows it.


Donald Methuen Fleming: Here is the rest of it; if related to a plan and not due to un-co-ordinated something or other.


John Whitney Pickersgill: That is not correct. This is a thoroughly dishonest performance.


Mr. Speaker:: Order.


Some hon. Members:: Withdraw.


Mr. Speaker:: Order. I know the hon. member for Bonavista-Twillingate would be the first to object to an interjection of that kind and I hope he will make the proper correction.


John Whitney Pickersgill: Mr. Speaker, I quite
deliberately said that was a thoroughly dishonest performance and it is my opinion that it was a thoroughly dishonest performance. I listened carefully to what the Leader of the Opposition said. What he said was that if we had a real depression, a government should not be afraid of a deficit. If the Minister of Finance was not listening carefully he should not quote half a sentence. I give the minister credit for not having been deliberately misquoting the Leader of the Opposition because he has said that he did not hear it all. But when he says he did not hear it all it seems to me it is a dishonest performance to treat it as though it were a full sentence.


An hon. Member:: Withdraw.


Mr. Speaker:: I am not sure whether I understood the hon. member. I thought he began by withdrawing the words "dishonest performance" because in my view "dishonest performance" means a deliberately untrue statement. The hon. member knows that it is not permissible, within the standards of debate which we set for ourselves, to impute deliberate untruth and dishonesty to another hon. member.

The Budget-Hon. D. M. Fleming


John Whitney Pickersgill: Mr. Speaker, I think you will agree I have always respected your rulings. If there is any imputation that I suggested that the Minister of Finance was deliberately dishonest-although I think he was carelessly dishonest-if the word "dishonest" should not be used I will say he was shockingly misleading.


Donald Methuen Fleming: Mr. Speaker, I ask for an unconditional withdrawal of the word "dishonest".


Mr. Speaker:: I understand the hon. member for Bonavista-Twillingate has unreservedly withdrawn the word "dishonest".


John Whitney Pickersgill: Yes, quite; I have unreservedly withdrawn the word "dishonest".


Donald Methuen Fleming: Then we are making progress, Mr. Speaker. I wonder how much more the hon. member feels like withdrawing.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. If hon. members
would allow the minister to proceed I am sure the debate would be more progressive.


Paul Joseph James Martin: The minister should not provoke us.


Donald Methuen Fleming: I am sorry to be provoking to the hon. member. Believe me, nothing is further from my thoughts than that I should be provoking to the hon. member for Essex East.
In asking ourselves about this muddle on the part of hon. members opposite and where they stand on the question of a deficit or a balanced budget, I recall that in 1958 they attacked our planned deficit. In 1959 they attacked our planned deficit. In 1960 they went back and re-attacked the deficits we had had in 1958 and 1959. And now also, Mr. Speaker, in 1960 they have attacked our balanced budget for 1960-61. Where is the sense in all of this and where is the consistency? These hon. members are in a muddle and are just wildly attacking everything which the government puts forward; that is the explanation.
Here again I recall what the Leader of the Opposition said in his Toronto speech of April 2. This Canadian Press dispatch says:
While admitting the government's balanced budget might be all to the good-
Did we hear him say that this afternoon? Did we hear him say that the government's balanced budget might be all to the good? No, Mr. Speaker; no one opposite has even admitted that this balanced budget might be all to the good. I have marvelled at some parliamentary performances, but I think Houdini in his best and palmiest days might

well have envied this rubber-jointed, double-jointed performance on the part of sleight of hand artists opposite.


William Moore Benidickson: What are you reading from?


Donald Methuen Fleming: Something you would not understand; it is plain English. It is because they are in this horrible muddle and do not know where they are going that they keep on contradicting themselves.
I spoke of their position in times past. In 1958 they were advocating or having good words to say about the idea of budget deficits. On January 19, 1959, as reported on page 35 of Hansard, the Leader of the Opposition said:
The previous administration did not hesitate to budget for a deficit when there was a threat of recession.
Apparently it was all right for them to do it, but it was not all right for us to budget for a deficit in 1958 and 1959, coping in the first year with recession and in the second year with the continuing effects.
I will defend, as I have defended before, the measures that led us into deficit financing in 1958 and 1959. We coped with that recession and spent money to increase the social security payments in this country, and in that way we increased consumer purchasing. We spent a good deal of money to stimulate housing, and not only helped the housing situation but as well reduced unemployment very greatly. We increased our expenditure on public works and provided employment in that way, and we went down the line in that way to put forward constructive measures to help the country out of the recession.


William Moore Benidickson: And into more unemployment than last year.


Donald Methuen Fleming: The hon. member for Kenora-Rainy River cannot stop.
The Liberal party is not at one on this subject because the Liberal leader in the province of Nova Scotia has had something to say about our deficits in the years 1958 and 1959.


John Whitney Pickersgill: Tell us about Mr. Roblin.


Donald Methuen Fleming: If you do not mind, may I make my speech and talk of the former Liberal premier of Nova Scotia, Mr. Henry Hicks. I hope the hon. member for Bonavista-Twillingate is not above hearing what Mr. Hicks has to say.


John Whitney Pickersgill: Is it about federal affairs?


Donald Methuen Fleming: On page 55 of a booklet issued by Mount Allison University, publication No. 4 on Canadian politics, which booklet contains speeches delivered at Mount

Allison summer institute last August, this statement is attributed to Mr. Henry Hicks:
Furthermore, whatever view we may have as to the financial policies of the present government of Canada, I do not believe that as a matter of practical politics the huge deficits of the past two years will be counted against the Diefenbaker government at all.
We heard something said this afternoon about quotations from the white paper, but there is one which has missed the attention of the Leader of the Opposition. If he will look at the top of page 40 of the white paper he will see the results of the past six years. If he will put the present year alongside, leaving out the year 1957-58 in which the two parties shared power, it will be seen that the last three years of the Liberal regime showed two deficits and one surplus. The Conservative administration in three years has shown two deficits and one surplus.


John Whitney Pickersgill: Anything more misleading than that-


Donald Methuen Fleming: There he goes
again. It is too bad; he just cannot help it.
I have spoken, and I will remind hon. members, about the difficulties of the situation we have to contend with, and how we were prepared, in order to help out the provinces and the municipalities, to weaken our own fiscal position in order to help theirs.


John Whitney Pickersgill: You sent up the interest rates.


William Moore Benidickson: That is the biggest laugh.


Donald Methuen Fleming: Hon. members
opposite would not recognize a serious statement, I am sure. We incurred two deficits and now the budget is balanced, but some apparently want a deficit again. They have been busy all this year attributing what they call tight money and high interest rates to the deficit and blaming the government for it. Now they attack the balanced budget. Is it because of their own reasoning that they seem to want to have what they have called tight money and high interest rates? We of the government do not. We have here firm and constructive measures in this budget to bring about a balance so that that situation may be firmly met.
We have heard many things said today about the premium on the Canadian dollar. It is regrettable that memories on the other side of the house are so short. The Leader of the Opposition talked about this subject and reached the point of saying that apparently it could only be dealt with by over-all control measures. But he was not advocating that. What was he advocating? We are left wondering again.
12, 1960
The Budget-Hon. D. M. Fleming
On this subject let me quote the remarks of Liberal ministers in the days of the Liberal regime and test what is being said now by hon. members opposite and some Liberals outside the house. Mr. Walter Gordon talked in Toronto about the devaluation of the dollar, calling on the government to devalue the dollar. Apparently that hon. gentleman, a royal commissioner of a few years ago but now evidently on the hustings for the Liberal party, has forgotten things which were said under more responsible circumstances by Liberal ministers. This is what Mr. Harris said in his budget speech of April 5, 1955, as reported on page 2729 of Hansard:
There has been no change in the policy of the government to allow the rate of exchange to be determined by the sum total of the forces operating in the exchange market, including of course the influence of fiscal and monetary conditions. The resources of the exchange fund are not used to reverse persistent trends but only to contribute to orderly conditions by limiting excessive short-run movements in either direction which might otherwise occur.
Mr. Abbott in one of the last speeches he made in this house as reported at page 6545 of Hansard of June 23, 1954, said:
I am not one of those who believe in the competitive depreciation of currencies.
And further:
I do not believe that any action which the Canadian government might take to put a fixed exchange value on the Canadian dollar could possibly be successful without pretty drastic exchange controls. I for one would not be prepared to recommend at this time a return to that form of control.
Mr. Howe, as reported at page 448 of Hansard of November 30, 1953, stated:
The fact that the exchange rate has remained strong is, I suggest, evidence that confidence in Canada has not been at all impaired by the change in the current account position from a surplus to a deficit. It is not unusual for a country in Canada's position-prosperous and building up its productive capacity at a rapid rate-to experience a moderate deficit on current account, financed by a net import of capital.
Why did not the Leader of the Opposition quote that?


John Whitney Pickersgill: He agreed with that; he said the same thing.


Donald Methuen Fleming: Why did not hon. members opposite quote this a few weeks ago when they were railing about a balance of payments deficit?
Let me pass on as quickly as I can to say this of the balanced budget, that it is the fruit of planned policy. The hon. member for Kenora-Rainy River talked about a long series of un-co-ordinated decisions. It is too bad that the hon. gentleman had not been better acquainted with the facts because this
3174	HOUSE OF
The Budget-Hon. D. M. Fleming balanced budget is the outcome of co-ordinated decision and planned policy over a period of time. We have followed a consistent policy. The program adopted from time to time has been flexible to meet changing conditions, but this has been a goal and it has now been attained.


John Whitney Pickersgill: Would the minister permit a question at this point. Would the minister say whether this government two years ago deliberately planned to increase the debt of this country by over $2 billion?


Donald Methuen Fleming: Mr. Speaker, the hon. gentleman knows the answer to that question before he asks it. He knows very well, if he will be frank with the house and with himself, that he has no basis today for quarreling with fiscal policies enunciated in the budget of 1958, or those enunciated in the budget of 1959, or those enunciated in the budget of 1960.


John Whitney Pickersgill: Why not answer the question?


William Moore Benidickson: You steered away from the question.


Donald Methuen Fleming: I dealt at some length with the subject of debt in my budget speech and I will commend to hon. members opposite both the table that I put on the record of the house in this respect and the comments I made upon it. I pointed out that as a percentage of the gross national product of this country the net debt of Canada in 1960 is with the exception of the year 1958 the lowest in the country's history.


Mr. Cardin:: Now answer the question.


John Whitney Pickersgill: Rubbish.


Donald Methuen Fleming: This, happens to be the fact and the comment of the hon. member for Bonavista-Twillingate is a comment on the fact because I have given the house the fact. There is the fact.


John Whitney Pickersgill: Why not answer my question? It is simple.


Donald Methuen Fleming: It is interesting to see that in the view of the hon. member for Bonavista-Twillingate parliamentary debate has now become a matter of dialogue.
I presume that if he is entitled to carry on a dialogue with me he is entitled to do so with anybody in the house. I presume that the rules of the house have been bent to accommodate the hon. gentleman and his insatiable love of hearing his own voice.


William Moore Benidickson: You would not answer the question.


John Whitney Pickersgill: I cannot compete with the minister in that field.


Donald Methuen Fleming: There, he is at it
again. He has been talking incessantly.


Mr. Speaker:: Order. I should intervene at this point. The minister is complaining about interruptions. Undoubtedly there has been a great deal of interruption from both sides of the house and I cannot say that the minister who has the floor is himself entirely blameless. Some of the things he has said have perhaps inspired some of the interruptions. However, that does not excuse hon. gentlemen.
One practice which is developing which I think should definitely be cured if we are to maintain an orderly and dignified debate is the practice of hon. members speaking from their seats. If hon. members wish to raise points of order or questions of privilege the least they can do is rise and secure the floor. It is intolerable to have four or five different interrupters speaking from their seats at one time. It renders the debate impossible.


Donald Methuen Fleming: Mr. Speaker, I come now to make just a brief comment on the subject of balance of payments. I shall deal with it briefly because I discussed this subject at considerable length in the budget speech. The Leader of the Opposition this afternoon appeared at one stage of his remarks to say that his chief criticism was somehow or other related to this subject and then he trailed off into vagueness again and no one could keep up with his thought.
I suggest that it is high time for the Leader of the Opposition to come out and say whether we should take the kind of measures that would have to be taken to prevent the importation of capital into this country. At a time when he is talking about unemployment let the hon. gentleman not indulge in these vague statements but let him come out and be specific and straightforward and tell us what he has to say about this subject instead of being on both sides of this subject as on all others.
The Liberals were not even aware of the existence of this problem until they pounced upon a passage in the annual report of the governor of the Bank of Canada. I repeat, they were not even aware of it. Now they have seized on that and have tried to make a political issue out of it. Let me say very briefly to them on this subject that the government is meeting this problem by sound fiscal and trade policies reflected in the balanced budget and in the handsome increase in our export trade.
Hon. gentlemen opposite have had a great deal to say about unemployment, and I have been chided because I did not discuss this subject at length in the budget speech. It is

evident that hon. gentlemen opposite like long budget speeches. I was trying very hard to shorten the budget speech this year after the long ones of 1958 and 1959. Let me now comment on this subject.
What hon. members opposite have had to say on this subject has throughout this entire session been characterized by gross exaggeration. Here is a statement made by the Leader of the Opposition. Can you imagine anything more irresponsible than what he is reported to have said in Toronto on April 2, as quoted in a Canadian Press dispatch:
We're not going to rejoice over a balanced budget when we have 800,000 unemployed.
The Leader of the Opposition ought to know that we have not 800,000 unemployed in this country. When he was talking this afternoon about the figure of unplaced applicants he knows perfectly well that is not a figure of unemployed in this country. He and the hon. member for Essex East in bandying these figures about and using them in this misleading way reflect no credit upon themselves in my opinion.


Paul Joseph James Martin: Mr. Speaker, I rise on a point of order. My hon. friend has said I used figures in a misleading way. Is the hon. gentleman not aware that on March 22 he used exactly the same standard when he talked about unemployment. The figure used by the Leader of the Opposition-


Mr. Speaker:: Order. The hon. member, I take it, is endeavouring to correct what he considers to be a misleading impression given by the hon. gentleman who has the floor. If so, he should defer it to the end of the address, if he takes issue with what has been said, otherwise he must raise a point of order and he has not done so.


Paul Joseph James Martin: No hon. gentleman, I say with great respect, has the right to say that one hon. member has misled the house, as the hon. gentleman said I had and as he has suggested the Leader of the Opposition had. I was simply saying in defence of the position I took that we were using the same figures-


Mr. Speaker:: Order. I have no doubt that the allegation that an hon. member has misled the house is offensive and certainly our rules are against offensive language, but it has been a practice that is well established that unless there is more than a simple statement that a member has been misleading, it is not regarded as being unparliamentary.


Donald Methuen Fleming: The figure of unplaced applicants, as every hon. member in
12, 1960
The Budget-Hon. D. M. Fleming this house ought to know, is not the figure of unemployed in this country. I did not ignore-


John Whitney Pickersgill: Will the minister permit a question about this?


Donald Methuen Fleming: No. I did not
ignore this subject in the budget speech. I expressed my belief in an early improvement in the unemployment problem, and I still do. I believe that the policies that have been reflected in this budget will aid substantially in improving the problem of unemployment in this country.
I have something to say as well on the subject of trade. In this situation we have had desultory remarks on this subject, jibes from hon. members opposite, not all confined to the budget debate, but appearing from time to time in the course of questions on the orders of the day and in other passages which might, I should have thought, have been better put forward in straightforward speeches if those were matters of conviction on their part.
I am not going to repeat what I said in the budget speech about the tariff proposals; I simply draw attention to the fact that when we have heard talk in this house about trade questions we have heard double-talk on the part of the hon. members opposite. One member of the opposition rose and posed as an apostle of free trade, and a seatmate or someone near him from the ranks of the same party rose and posed as an apostle of protection and high tariff. This is not new.


John Whitney Pickersgill: I am raising a point of order, Mr. Speaker. Your Honour will recall that at the time the hon. member for Kenora-Rainy River made his amendment some objection was taken by the Minister of Finance to certain parts of it and certain parts were removed at the direction of the Chair. It would appear to me that anything that was not the subject of the amendment could not be the subject of debate. The Minister of Finance is clearly here seeking to revive a debate on a subject on which the house made a decision on a motion to go into supply. I do not think he should be allowed to proceed on this line, in view of the fact that we were stopped.


Donald Methuen Fleming: The hon. gentleman, of course, has forgotten that the budget does contain some proposals with respect to customs tariff and proposals that do affect trade. The hon. member has just revealed the condition of confusion to which I was going to point in the evidence that I was about to adduce. Perhaps it is not necessary now; the hon. member has proved my point.
3176	HOUSE OF
The Budget-Hon. D. M. Fleming


Mr. Speaker:: The minister does propose to continue to discuss the matter of trade?


Donald Methuen Fleming: Yes, I have something to say on the subject.


Mr. Speaker:: Then we shall deal with the point of order. It is quite true that the formal amendment was amended in two particulars: one, to remove the item as stated by the hon. member for Bonavista-Twillingate, but the debate itself has not been restrained either in that or in any other way. Perhaps it is an inconsistency in our practice, but the amendment was corrected so as not to put the house in the untenable position of having an amendment on a matter on which it had already voted.
I have not sought to restrain the debate itself. In fact the minister, when he made his budget speech, discussed these same matters. I have not attempted to restrain any others. I hope the hon. member will accept it as a condition of debate that is not strictly logical, having regard to what was done with the amendment.


John Whitney Pickersgill: I accept willingly, sir.


Donald Methuen Fleming: The hon. member is most gracious.
I have reminded the house of the resolutions that relate to tariff proposals and how they affect the textile trade in certain regards. This leads me to make a comment concerning our trade relations with Japan. Attempts have been made on the part of hon. members opposite, not in a very straightforward way, more by stealth than otherwise, to make a political football out of this question. Let me make it as clear as I can that we in the government will do all we reasonably can to avoid matters pertaining to Japanese trade becoming a political football in this country.
Our relations with Japan are very friendly. We desire a valuable two-way commercial relationship in our trade with Japan. I pointed out before that our desire is for trade growth on an orderly basis. Orderly growth is the feature of the trade policy we pursue with respect to Japan. Our position in this respect has been brutally misrepresented, particularly in western Canada. Papers like the Winnipeg Free Press and the Saskatoon Star-Phoenix have been seeking to mislead western Canada into thinking that the policy of the federal government is somehow going to hurt the Japanese market for Canadian wheat and other products. There is not and there never was any foundation in fact for that attempt to mislead the people of western Canada. This has been misrepresentation.


I can cite some facts in this regard and I shall do so; but let me first of all comment on the fact that export quotas are applied by Japan with respect to shipments of certain commodities to Canada. Where did the system of export quotas originate, and when? Let us have an end to the double-talk from hon. members opposite. Those quotas originated in the time of the Liberal government in this country. The quota on cotton blouses and sportshirts was applied January 1, 1956; the quota on cotton fabrics, on April 1, 1956; the quota on cotton damask table cloths applied September 1, 1956; the quota on cotton coats and slacks, February 1, 1957; the quota on cotton knitted wear, February 1, 1957; the quota on cotton pillow cases, February 1, 1957. Now, when we are negotiating the application of quotas for 1960 on this and on spun rayon and other products you would think we were throwing to the winds all concern for the export markets of western Canada in Japan. Did you ever hear anything more hypocritical than hon. members opposite who were the authors of most of the system of export quotas applied by Japan in its shipments to Canada? The story does not end there.
The trade of these two countries is carried on in pursuance of an agreement that was entered into between these two countries in 1954. I do not need to remind you what party was in power in Canada in 1954. I may remind you that the Japanese trade treaty was fully supported by the Conservative party in this house in the debate on this measure in 1954. That trade agreement was accompanied by an exchange of letters, and a letter written on March 31, 1954 to the ambassador of Japan to Canada contains this statement:
On the occasion of signing the agreement on commerce between Canada and Japan, I have the honour to inform Your Excellency that the government of Canada reserves the right to establish values for ordinary and special duty purposes in the following terms:
1.	If, as a result of unforeseen developments and of the effect of the obligations incurred by Canada under the aforesaid agreement, any product is being imported into its territory in such increased quantities and under such conditions as to cause or threaten serious injury to the domestic producers in its territory of like or directly competitive products, Canada will be free, in respect of such product, and to the extent and for such a time as may be necessary to prevent or remedy such injury, to establish values for ordinary and special duty purposes.
2.	In determining whether values should be established in respect of any product pursuant to paragraph 1 and in determining the level at which such values should be established, Canada will take into account the prices of like or directly competitive products, if any, being imported at that time from other countries.
3.	Before Canada takes action pursuant to paragraph I, it will give notice in writing to Japan as

far in advance as may be practicable and will afford the latter an opportunity to consult with it in respect of the proposed action. In critical circumstances, where delay would cause damage which it would be difficult to repair, action under paragraph 1 may be taken provisionally without prior consultation, on the condition that consultation shall take place immediately after taking such action.
Perhaps I should read the balance of the letter. There is only a paragraph.
I have the honour to state further that in the view of the government of Canada these provisions are consistent with the general agreement on tariffs and trade and that the government of Canada will regard these provisions as continuing to be applicable in the event that the general agreement on tariffs and trade is applied between Canada and Japan.
That is a letter written on March 31, 1954, a letter that stipulated the right on the part of Canada to apply fixed values for duty, special values for duty, on Japanese imports into Canada where there was a threat of serious injury to domestic producers in Canada as a result of imports in increased quantities. Do you know who signed that letter, Mr. Speaker? Who set up the provision in this regard that gives Canada the right to impose fixed values for duty on imports from Japan under this treaty? Oh, Mr. Speaker, think of it. The name appended to this letter is L. B. Pearson, secretary of state for external affairs.


John Whitney Pickersgill: How dramatic.


Donald Methuen Fleming: Will we be treated to more of these questions by hon. members opposite suggestive of their shock and horror at the idea of our negotiating in a friendly way agreed export quotas to be applied by Japan on the shipment of goods to Canada where grave injury is threatened to Canadian competitive producers? I think it is well to remind hon. members opposite that it was they, that it was their leader of this day who wrote into the agreement with Japan a covering letter under which he reserved on the part of the government of Canada the power to apply fixed values for duty in any such circumstances. Is it not time that there was an end to the hypocrisy that we have had to listen to as hon. members opposite have wrung their hands on this subject?
The proof of the pudding is in the eating. Let us look at the facts. Is there anything in the facts that gives warrant to any person in this country to think that the government is losing any of its concern over the export market in Japan for products of western Canada? Let me give very briefly some simple facts in this respect. We have said that there is no foundation for the fears that hon. members are conjuring up about the loss of our
12/ 1960
The Budget-Hon. D. M. Fleming export markets in Japan. Here are the figures of Canadian exports to Japan:
Year	Amount
1956		 $127,870,000
1957		 $139,152,000
1958		 $104,891,000
1959		 $139,857,000
Are we losing any markets in Japan? Canada's exports to Japan in 1959 were the greatest on record and they are still increasing. Here are the figures for the first two months of 1959 and 1960. In 1959 the figure was $17,250,000 and in 1960 $27,462,000. They are going up by leaps and bounds.
What about all this talk about the loss of our export market in Japan for wheat from the Canadian prairies? Let us ask ourselves if anyone can seriously suggest that there has been any loss or any reason to fear a loss of our export market for wheat in Japan. Here are the figures:
Year	Amount
1956		 $56,677,000
1957		 $53,673,000
1958		 $62,773,000
1959		 $69,165,000
Our wheat exports to Japan have been rising steadily since this government came into office.


John Whitney Pickersgill: And before.


Donald Methuen Fleming: And they are still going up. Here are the figures for the first two months of 1959 and 1960. In 1959 the figure was $6,792,000 and in 1960, $12,082,000. These figures demonstrate very clearly even to hon. members opposite that our exports to Japan in the first two months of this year were almost double what they were in the first two months of 1959. This government has no lesson to learn from hon. members opposite, the remnant of the Liberal regime of earlier years, in the matter of concern for and determination to preserve and extend Canada's export markets abroad for good Canadian wheat.
The hon. member for Bonavista-Twillingate will be wringing his hands before we are through with the budget bills and resolutions about all the injury that this government, by its fiscal policies, has done to Canada's export trade. He wanted to wring his hands- I said his hands-a couple of years ago about the injury that we were going to do to our export trade to Italy. When we adjusted the tariff very slightly on imported wooller. fabrics from Italy in 1959 one would have thought that all doors in Italy would be closed to Canadian exports and particularly exports of codfish. That slight increase in duties became effective on April 10, 1959. Did it result in or was it followed by a cataclysmic drop in our exports to Italy?

The Budget-Hon. D. M. Fleming
Here are the facts, Mr. Speaker. In 1959 total exports to Italy were up about 8 per cent compared with 1958, and increases were general throughout most of the major commodity groups, including agricultural and fisheries products. The value of exports to Italy of codfish-light and heavy salted codfish and frozen codfish blocks, combined-increased from $763,000 in 1958 to $987,000 in
1959	or an increase of 30 per cent. How wrong can a man be?


John Whitney Pickersgill: Will the minister permit a question? Has the minister seen the tariff that the common market is proposing to put on codfish, which will have a very deleterious effect on these exports if something is not done about it?


Donald Methuen Fleming: On various occasions in this house the efforts that the present government has made in dealing with this situation have been reported to the house in detail. But I wish to say this to the hon. member, that what is being proposed with regard to the averaging of tariffs on the part of the six in Europe has nothing whatsoever to do with the very slight increase that was applied by Canada in April of 1959 on imported woollen fabrics from Italy, and the figures I have just given the house show how wrong the hon. member for Bonavista-Twil-lingate was in his gloomy and doleful prognostications.


John Whitney Pickersgill: Well, I hdjSe I was.


Donald Methuen Fleming: You were.


John Whitney Pickersgill: We will see.


Donald Methuen Fleming: I have little to add to what I have been saying. I shall just remind the house that each year I have given in relation to the proposed changes in the customs tariff what I call a box score on the changes. I have always made it clear that this is not a complete picture of the effect of the changes, but it is interesting as one test when we are pictured as voracious high protectionists who are not the least bit concerned about Canada's export markets.
I point to the fact that Canada's export trade under this government in 1959 reached an all time record. Here is the box score on tariff changes. In 1958 there were 17 increases, 46 decreases and 64 others that are of a mixed nature that perhaps do not lend themselves to simple classification. In 1959 there were 32 increases, 40 decreases and 70 other formal changes of a mixed nature. In
1960	there were 16 increases, 38 decreases and 69 formal changes of a mixed nature. The composite box score for the three budgets is 65 increases, 124 decreases and 203 formal changes of a mixed nature.


William Moore Benidickson: What does that mean?


Donald Methuen Fleming: It just gives the answer to the nonsense or exposes the nonsense talked by hon. members opposite.
I have made no apology for what I have said to the house concerning the reasons for confidence in the Canadian outlook. I do not share at all the gloomy statements which were made this afternoon by the Leader of the Opposition. He did not give a fair, a balanced picture in what he said about our current accounts balance of payments.
As I tried to follow him this afternoon I think he was speaking about 1956, and he said the balance against us was $1.2 billion. He left the impression, as I understood his remarks, that this applied to all transactions and he said that today the balance of payments deficit was increasing. However, if I correctly apprehended his remarks, the Leader of the Opposition is quite wrong. Let me give him the figures for 1956 in relation to our current balance of payments deficit with the United States. In 1956, the last full calendar year of Liberal rule, the deficit in our merchandise trade with the United States was $1,167 million; our deficit on nonmerchandise items was $472 million in that year; our deficit on both accounts with the United States was $1,639 million. He left the impression that this condition was growing worse, so I lay alongside those figures the figures for 1959 in relation to our balance of payments with the United States. In 1959 the merchandise balance deficit was $518 million and the non-merchandise deficit totalled $718 million, a total of $1,236 million. This represents an improvement by way of reduction in the deficit in our commercial relations with the United States between those two years of $403 million. This just accidentally escaped the attention of the Leader of the Opposition.
In so far as the extraordinary statements he made this afternoon about the actions of the Bank of Canada in relation to the purchase and sale of bonds are concerned, either the Leader of the Opposition did not understand the situation at all or he was proceeding on quite erroneous information. I do not direct the operations of the Bank of Canada in relation to its purchases and sales of bonds. The Minister of Finance has no authority to do that. The bank reaches its own decisions in that respect. Indeed, while they may occasionally acquaint the minister with what they are doing in that respect or what they are aiming to do, they do not consult him in relation to their own decisions in this respect. He has no authority over them in that regard. When reference is made to the fact that the Bank of Canada has been selling long term bonds, then apparently the Leader of the

Opposition is not aware that this has the effect of increasing the yields of long term bonds and widening the spread between long term and short term interest rates; that this, in turn, has the effect of stimulating saving by giving more incentive to investors to hold long term bonds. In its operations, I think the Bank of Canada has been proceeding in a way very different from that described to the house this afternoon by the Leader of the Opposition.
In my concluding remarks, let me say this: There is a sound basis for confidence in Canada today. All the gloom that the Leader of the Opposition and his associates are creating, if people would listen to them, is not going to change the facts and these are facts that give reason for solid confidence in Canada.
Let me remind the house very quickly that, in the first place, inflation has been contained. As I said in the budget speech, many of the inflationary factors are quiescent. We cannot rest on our laurels, however. We have to be vigilant in this respect at all times. It is well, however, to proceed on facts, not on errors, as hon. members opposite have been doing. They would have you believe that we have not been successful in our efforts to grapple with inflation.
Here are the figures. The consumer price index in January, 1959, was 126.1 and in March, 1960, 126.9. Does that sound as though things got out of hand in 1959? Here is what the Leader of the Opposition said a year ago in his doleful prophecy about inflation. According to page 2914 of Hansard for April 21, 1959, he said this:
This year there should be less, but still serious, unemployment and a greater danger of inflation.
How wrong can he be? Here are the figures for the general index of wholesale prices. In January, 1959, it was 229.7 and in March, 1960, 229.6. Does that sound as though inflation got out of hand in 1959? These are the facts, and the incontestable facts.
Next, in speaking of trade, I have pointed to the fact that in 1959 Canada's export trade reached an all time record of $5.2 billion, and the rapid increase has continued in 1960. In the first two months of 1960 domestic exports of this country reached a total of $832 million as compared with $655 million in the same two months a year ago. This represents an increase of approximately one third in our exports in the first two months of this year over the first two months of last year. What shall we say of the hon. member for Essex East who, according to the press, used this expression in Montreal on April 6: "The stagnation in Canada's export trade".
12, 1960
The Budget-Hon. D. M. Fleming We have apparently an all time record, with rapid increases, but to the hon. member for Essex East this means stagnation.
Hon. members are now aware of the decision that was announced last week in relation to the export of gas and what this is going to mean in terms of the expansion of the Canadian economy and again in contributing to a better balance in our commercial relations with the United States.


William Moore Benidickson: Two years too late.


Donald Methuen Fleming: This decision was reached after having satisfied ourselves by an exhaustive inquiry that the needs of Canadians would first be assured.


John Whitney Pickersgill: After having satisfied
yourself that C. D. Howe was right.


Donald Methuen Fleming: The last point to which I have time to refer is the fact that benefits have already accrued to the Canadian economy from this balanced budget. The fact is that it has brought renewed confidence to the Canadian people and to the Canadian economy. In the budget speech I said that it is going to make it easier for the provinces, the municipalities and business to borrow in Canada because the federal government will be largely withdrawing from the role of a net borrower. Already benefits have been experienced in this regard. One has only to look at the reception accorded to a recent province of Ontario bond issue at a lower rate of interest than that at which they were borrowing quite recently.


William Moore Benidickson: You promised that two years ago.


Donald Methuen Fleming: You see this renewed confidence expressed in that way. There are other benefits that are going to follow from the budget and from this withdrawal of the federal government from a net borrowing position. There will be less occasion than there was-if indeed there was any justification-for provinces and municipalities to be going to the United States to borrow, with all the dangers in that respect of which I have attempted respectfully to give warning. Already we are seeing benefits in this respect. It is only about a month ago that the premium on the Canadian dollar was five cents. Today it is less than three and a half cents.


Mr. Speaker:: Order. It being 9.45 o'clock p.m. it is my duty, pursuant to subsection 5 of standing order 58, to interrupt these proceedings and put forthwith the question on the amendment now before the house.

Division