1960-03-31

SPEECH FROM THE THRONE


Mr. Speaker:: I have the honour to inform the house that I have received a message from His Excellency the Governor General, signed by his own hand, reading as follows: Government House, Ottawa 30th March, 1960
Members of the House of Commons:
I have received with great pleasure the address that you have voted in reply to my speech at the opening of parliament. I thank you sincerely for this address.
Georges Vanier



THE ROYAL ASSENT

Mr. Speaker:: I have the honour to inform the house that I have received the following communication:
Ottawa, March 30, 1960
Sir:
I have the honour to inform you that the Honourable Patrick Kerwin, Chief Justice of Canada, acting as Deputy of His Excellency the Governor General, will proceed to the Senate chamber on Thursday, the 31st March, at 5.45 p.m., for the purpose of giving the royal assent to certain bills.
I have the honour to be, sir,
Your obedient servant,
E. Joly de Lotbiniere Assistant Secretary to the Governor General



COMMONWEALTH RELATIONS


[Stage Direction]
On the orders of day:
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, having regard
to the grave deterioration of the situation in South Africa, I should like to ask the Prime Minister a question. Will he instruct the Canadian representative there to inform the South African government of the alarm and distress of this parliament at political developments which have led to such violence and may lead to anarchy?


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I am acutely conscious of the deeply held feelings of the
house and, indeed, of Canadians generally, over this question and, I need not add, of their abhorrence and mine of discrimination.
The house will be aware, from the statements I have made in this house since the recent disturbances began, of how profoundly the government regrets and deplores the tragic situation which prevails in that country. I should add, too, that the views that have been expressed in this chamber in recent days have been made known to the representative of South Africa in Ottawa, and I do not consider at the moment that any beneficial purpose would be served by doing as suggested by the Leader of the Opposition; for, whatever one's feelings may be, a sense of responsibility demands that we should not act in such a way as to exacerbate the prevailing situation.



INQUIRY AS TO INTRODUCTION OF VOTING MACHINE

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, as one member who is very concerned with some of the aspects of the development of automation in modern society, I wish to address a question to the Prime Minister.
In view of the invitation extended to members of the House of Commons by a very prominent British Columbia member of the Progressive Conservative party to attend a demonstration of an electronic roll call machine, given this morning by a representative of the International Roll Call Corporation of Richmond, Virginia, United States of America, will the Prime Minister inform the house whether the government is considering voting arrangements for the House of Commons which will make it unnecessary for members to stand up and be counted?


John George Diefenbaker: Mr. Speaker, I may point out that the invitation extended to the hon. gentleman and his acceptance was by a private member, and in no way suggested that the government is considering such voting arrangements. However, this is one subject that might be appropriately discussed by the rules committee when it is set up, for the purpose of ascertaining whether its adoption would accelerate or expedite the proceedings of the house.

Inquiries of the Ministry
I might say to the hon. gentleman, in respect of the last statement, that while it may seem somewhat paradoxical, in the event that this is adopted members while still in a recumbent position will be able to stand up and be counted.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I direct a question to the Secretary of State for External Affairs. Has the minister seen a report in this morning's press concerning the Chicago water diversion and the present position before the foreign affairs committee of the Senate of the United States? Can he tell the house what the position is since the comprehensive statement made by the Prime Minister earlier in this session? Could he tell us what representations, if any, have been made since then, and what is the present position of the matter in so far as Canada is concerned?


Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, in December of last year Senator Fulbright, chairman of the foreign relations committee of the United States Senate, requested the state department to hold consultations with Canada about this question. These consultations were duly held here about the 12th of January and the whole question was thoroughly canvassed at that time. Later the United States state department evidently made a report to the foreign relations committee of the Senate, and that committee has been sitting in secret, I believe, dealing with the proposed bill.
As I understand it, the report this morning referred to a vote in the Senate committee dealing with the possibility of having witnesses called before that committee. The Canadian position was made very clear during the consultations in January of this year, and there has been no deviation from the strong stand which the government has taken against the proposed diversion.



PENSIONS


[Stage Direction]
On the orders of the day:
Mr. J. A. McGrath (St. John's East):: Mr. Speaker, I have a question for the Secretary of State for External Affairs, notice of which has been given. Does the minister have a statement to make with regard to the pension rights of Canadian nationals employed on United States defence bases in Canada, more

particularly with reference to Canadian nationals employed at Pepperrell air force base, St. John's, Newfoundland?


Howard Charles Green: Mr. Speaker, as hon. members know the hon. member for St. John's East has been very much concerned about this matter. I believe that Pepperrell air base is in his constituency.
The house will recognize that this is a matter between the United States government on the one hand and the individual Canadian employees on the other. Nevertheless, in accordance with the undertaking given by the Prime Minister on April 15, 1959, officials of my department have been discussing this matter informally with the United States embassy. I am pleased to inform the house that yesterday afternoon I received a letter from the United States ambassador which reads as follows:
Recently there have been informal conversations between members of the embassy and officials of the Department of External Affairs regarding the pension rights of Canadians employed at United States military bases in Canada.
In this regard, I am pleased to inform you that it has been determined that those Canadians who are permanently employed, as defined by United States civil service regulations, by United States forces in Canada are entitled to the benefits of the United States civil service retirement act. A survey to determine the exact number of Canadians so entitled is now being made, and the payroll deductions and employer contributions required by the act will be initiated.
As you know, the number of employees at Pepperrell air force base will be reduced this summer, and I am particularly gratified that the permanent employees there who qualify for retirement because of age and length of service will be afforded certain benefits even though they made no contribution to a retirement fund in the past.
Those employees whose positions are defined as "indefinite" are not entitled to benefits under the United States civil service act, but our department of defence is seeking to find suitable means to provide a retirement system for them. To this end, it is contemplated that the appropriate Canadian authorities will be approached in the near future so that certain technical questions involved may be examined.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. Erhart Regier (Burnaby-Coquitlam):: 
Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, I was not aware of this matter until the hon. member sent me notice of his question across the floor of the house a few moments ago. As he undoubtedly knows, there are scores and scores of organizations which have been classified as charitable under the Income Tax Act which comply with the principles of the common law as they have been enunciated in the leading cases before the privy council over two centuries ago. I presume this is a case which follows those principles, but I will check into the matter.



DOMINION-PROVINCIAL RELATIONS NEWFOUNDLAND  REQUEST FOR ACKNOWLEDGE- MENT OF RIGHTS UNDER UNION

[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisia-Twillin-gate):: Mr. Speaker, on this the 11th anniversary of the union of Newfoundland with Canada, I should like to ask the Prime Minister if the government would not mark the anniversary by acknowledging the constitutional rights of Newfoundland under the terms of union, which the government repudiated a year ago.


Mr. Speaker:: I am not sure whether that was a patriotic speech or a partisan speech, but in any event it does not seem to be a question asking for information.


John Whitney Pickersgill: I am asking the Prime Minister to reverse a position taken in this house, sir, and it is a question seeking information.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: I should like to direct a question to the Associate Minister of National Defence. Can the minister now confirm a Washington report that the Bomarc program has been reduced to ten bases, eight in the United States and two in Canada?


Hon. Pierre Sevigny (Associate Minister of National Defence):: Mr. Speaker, this question was clearly explained in the house by the Minister of National Defence. There is nothing I can add to what the minister said in this house on Monday and Tuesday.


Paul Theodore Hellyer: Mr. Speaker, two or three days ago the minister was merely asked to comment on a report and he said he did not know whether or not it was official. My question is-


Mr. Speaker:: Order.
Inquiries of the Ministry


Some hon. Members:: Sit down.


Mr. Speaker:: Order. What the hon. member for Trinity is doing is complaining, shall I say, about the answer he has just had. It is contrary to the practice of the house to permit complaints about the character of an answer that is received. It is within the discretion of the ministry to give such answers as they see fit, so if the hon. member has any question to ask-


Paul Theodore Hellyer: Perhaps the minister would answer a supplementary question for me. Could he tell me how many of the ten bases will be equipped with Bomarc A missile and how many will be equipped with the Bomarc B?


Joseph Pierre Albert Sévigny: There again, this information was given to this house by the Minister of National Defence on Tuesday.


Mr. Rodolphe Leduc (Gatineau):: I should like to direct a question to the Associate Minister of National Defence. Is there any truth in this morning's newspaper statement from Cape Canaveral to the effect that tests on the Bomarc B have been suspended indefinitely?


Mr. Speaker:: I do not like to be too meticulous, but the hon. member is simply asking whether a newspaper report is true. If answers are to be given to questions of that kind, there is no limit to the newspaper reports that could be brought in and the time of the house taken in attempting to verify their truth or otherwise. It has long been established that that type of question is not permissible. If the hon. member wants to know some fact about Bomarc tests he should ask about that fact, and if it is something within the administrative responsibility of the minister then the question can be asked.


Mr. G. J. Mcllraith (Ottawa West):: I
should like to put a supplementary question on the same point, based on the report from Cape Canaveral contained in Le Devoir this morning. My question is, in the United States-Canada joint program on the Bomarc missile, has the development test work been discontinued?


Joseph Pierre Albert Sévigny: May I ask the hon. member to repeat his question? I am sorry; I could not hear.


George James McIlraith: My question was whether or not development test work on the Bomarc B missile had been discontinued.


Joseph Pierre Albert Sévigny: The hon. member for Ottawa West is quoting from a press report which is purely speculative.


Mr. Martin (Essex East):: He is not quoting.

Inquiries of the Ministry



HONEST JOHN MISSILE-STATEMENT ON INQUIRY AS TO ATOMIC WARHEAD

[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: I wonder if the minister is in a position to answer today the question of which he took notice yesterday.


Joseph Pierre Albert Sévigny: I can tell the hon. member in reply to the question he asked yesterday that the Honest John rocket is capable of being equipped with either an atomic or a conventional warhead.


Paul Theodore Hellyer: A supplementary question. Can the minister tell us whether it is the intention of the Canadian government to equip it with the atomic warhead?


Joseph Pierre Albert Sévigny: I have nothing to report on that matter.



INDUSTRIAL RELATIONS


[Stage Direction]
On the orders of the day:
Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, I should like to address a question to the hon. member for Danforth, the chairman of the committee on industrial relations.


Mr. Fleming (Eglinton):: Order. You cannot ask the chairman of a committee.


William Moore Benidickson: I wonder whether the hon. member would have an early meeting of the industrial relations committee called to consider my motion, which was reserved, in connection with the possibility of meeting to improve the statistical methods of measuring unemployment.


Mr. Speaker:: Order. While it is appropriate to raise matters relating to the business of the house I question whether the house decides the time and place of committee meetings. Once a matter has been referred to a committee, it then lies with the committee itself or its chairman to determine when it will meet. I may be wrong in that understanding. If any hon. member can give me any assistance on the point I shall be glad to have it. However, that is my recollection of the situation that is involved in the hon. member's question.


Paul Joseph James Martin: Mr. Speaker, may I speak to the point about which Your Honour has asked for some expression of opinion. I refer Your Honour to standing order 39(1) which states as follows:


Questions may be placed on the order paper seeking information from ministers of the crown relating to public affairs-
We recognize of course that the hon. member to whom this question is directed has not yet been invited to join the government. The citation continues:
[DOT]-and from other members, relating to any bill, motion, or other public matter connected with the business of the house, in which such members may be concerned-
I may say to Your Honour that I solicited the view of officers of this house, in whom Your Honour would have great confidence, as to the procedure in this matter. If Your Honour definitely takes the view that he is not of our opinion, perhaps Your Honour would withhold final judgment pending consultation with your trusted officers. But I assure you that was done and that the course the hon. member has taken is the only one available. Weeks have elapsed since this committee has met. There is no way outside this chamber by which members of the committee can themselves take steps to have the committee convoked; the hon. member for Kenora-Rainy River, I submit to you with confidence, under standing order 39(1) has taken the only course that is open to him under our procedures.


Mr. Speaker:: I have doubt about whether this is business of the house. That is the point I raised. It is business that the house has referred to a committee. But without determining the point of order which I myself raised, I shall allow the question to be asked at this time, and I shall give consideration to the question for a future occasion.


William Moore Benidickson: Shall I repeat the question, Mr. Speaker? I sent the hon. member notice of this. I think the hon. member for Danforth is familiar with the question.


Mr. R. H. Small (Danforth):: Ordinarily, Mr. Speaker, I would take the question as notice and answer it on the terms of reference on which the committee has been set up. All that can be handled by that committee must be directed from the house. To date we have had no direction.


Paul Joseph James Martin: Speaking on the point of order, may I say that what the hon. member has just said-


Donald Methuen Fleming: There is no point of order now.


Mr. Speaker:: There is no point of order unless the hon. member is raising one.


Paul Joseph James Martin: Yes, Mr. Speaker, I am raising one. The answer the hon.

member has given is not an answer to the question. He is now making the very ruling which Your Honour alone has the right to make. I submit that the hon. member has not the right to do that.


Mr. Speaker:: I permitted the question. I have nothing to do with the terms of the reply. The hon. member must take the answer that is given.


William Moore Benidickson: May I say a word on a matter of privilege?


Some hon. Members:: No.


William Moore Benidickson: The motion upon which I had assurance from the committee was a motion within the rules, and many precedents are provided for it. It was a motion that the committee seek authority from the House of Commons to have this item of business referred to it, because the committee had nothing else to do.


Mr. Speaker:: I think that is scarcely a matter of privilege.
(Translation):



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. J. J. Martel (Chapleau):: Mr. Speaker, I should like to put a question to the Minister of Citizenship and Immigration. Could the minister tell us if her department has launched an inquiry, or is considering such action in order to establish whether one Anna Chisholm, who is now being held in a Montreal jail, is the Russian princess Anastasia Romanova, as she claims to be, according to a report in La Presse of March 29?
(Text):


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Since the person to whom the hon. member has referred has been in Canada, I understand, for many, many years, the question of her identity is scarcely one which would fall within the jurisdiction of my department.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Lionel Chevrier: I wish to address a question to the Minister of Citizenship and Immigration and ask her whether a firm decision has been taken by the department in connection with the inconvenience and delay which is alleged in a report in the Montreal press, due to customs clearance at Quebec of passengers bound for Montreal.
79951-0-168
Inquiries of the Ministry


Ellen Louks Fairclough: I think the hon. member made a slip of the tongue. I am sure he did not mean to say "customs clearance".


Lionel Chevrier: I am sorry; I meant in connection with immigration.


Ellen Louks Fairclough: I am afraid I cannot give a satisfactory answer to that question at the moment. The co-operation of the companies concerned has been sought, but I have no information other than what I read in the morning papers.


Lionel Chevrier: Has the department taken a decision as to whether it will be necessary to delay passengers bound for Montreal for a period of eight to ten hours at Quebec?


Ellen Louks Fairclough: There is no indication that there will be any such delay.


Lionel Chevrier: I wish to direct a supplementary question to the Minister of Citizenship and Immigration. Will there be undue delay at the immigration offices in Quebec to passengers bound for Montreal, following the opening of navigation?


Ellen Louks Fairclough: That is a difficult question to answer. It depends on what is meant by delay, taking into consideration the length of time it has taken under another system and what it would now take to examine these passengers elsewhere, and so on. I do not think I can give a specific answer.


Lionel Chevrier: I think that is a reasonable reply, but could I ask the minister to make a statement on this matter when she has further information in connection with it?


Ellen Louks Fairclough: I shall be very glad to do that.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: I wish to address a question to the Associate Minister of National Defence. Can the minister inform the house whether the government plans to disband one third of the R.C.A.F. division overseas when the supersonic F-104 goes into service?


Joseph Pierre Albert Sévigny: First of all may I be permitted to make a correction in the answer I gave to the second question asked by the hon. member for Trinity today. The Minister of National Defence made comments on

National Energy Board Act the hon. member's question on Monday and not on Tuesday, as I inadvertently stated.
In answer to the question which has just been asked by the hon. member for Trinity, may I tell him that the report which appeared in the press this morning is purely speculative, and that there is nothing to report on this matter at the present time.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: I wish to direct a question to the Minister of Transport, based on the announcement by the president of the Canadian air industries transport association that an emergency meeting of the association is to be called in April in order to consider the minister's charge that this association or its members are interested in maintaining a monopoly. Is the minister giving any consideration to elaborating his anti-monopolist views at this particular meeting when it is held?


Hon. George H. Hees (Minister of Transport):: No, Mr. Speaker.



NATIONAL ENERGY BOARD ACT


Hon. Gordon Churchill (Minister of Trade and Commerce) moved: the second reading of Bill No. S-26, to amend the National Energy Board Act.
He said: In directing the attention of the house to this important bill amending the National Energy Board Act, I think it is only appropriate that I should make some explanation as to why this measure comes before us at this time.


Mr. Speaker:: Order. Would the minister allow me to intervene for a moment for the purpose of securing attention? I know that some hon. members leave the house at this time when orders of the day are reached, but would they kindly do so as rapidly as possible; otherwise it delays our getting on with the proceedings.


Gordon Minto Churchill: I was saying that it would be appropriate to make an explanation as to why this bill is brought forward at this time rather than earlier, and I should like to do so at this stage in order that there may be no misunderstanding. I do not want anyone to think there is any hidden motive behind our action in bringing forward at this particular time a bill which is of some urgency in relation to the conduct of the affairs of


the national energy board, and which affects a number of business enterprises in Canada. I know that no one in the House of Commons will make any reference to alleged default on the part of officials. The responsibility for delay in connection with this bill is mine and mine alone, and I have no intention of shifting it on to the shoulders of anyone else.
The national energy board drew my attention quite some time ago to the fact that in view of the number of applications for the export of gas which were coming to their attention it would be almost impossible to deal with the export licences in respect of electricity. There are 20 companies which have annual licences to export electricity from Canada. I recognized the fact that the energy board would be unusually busy in January, February and March, and consequently accepted their suggestion and had an amendment drawn to the National Energy Board Act which would permit these annual licences to be carried forward for a further period during which the board would be able to perform its proper function of having public hearings and considering each application on its merits, and either extending the licences again for one year, as has been done in the past, or for some further period.
That amendment was ready and I had intended to bring it to the house in the first week of February. In the interval the board, having been organized and having had an opportunity to study the act with greater care, suggested that there were other amendments which perhaps might be brought forward at this session of parliament. Consideration was given to these suggestions, and then it appeared that some of the proposed amendments would involve considerable discussion; and when it was obvious that the energy board was fully occupied with its gas export hearings I decided about the middle of February that we would be in a position to accept only one amendment in addition to the one I have already mentioned, and that is a small amendment to section 61 of the act which strikes out certain words.
Everything went all right up to that point, and there was still plenty of time to redraft the bill and bring it before the House of Commons; but somewhere at that stage there was a lapse of some sort. I have not bothered to fully investigate exactly what happened, but obviously I had not given clear instructions or the matter would have been dealt with. When I found out by the first of March that the bill was not available to the house I took immediate steps to rectify the error.
That, Mr. Speaker, is the sum and substance of the explanation for the delay in bringing this measure before the house. I repeat that I accept full responsibility for it,

and I regret that the house is being asked to consider rather hurriedly a measure of this sort. On the other hand, the two amendments which are brought to the attention of the house are not such as to cause any great disturbance to people who are familiar, as hon. members of this house are, with the National Energy Board Act, which occupied the attention of this house for nine days last session.
There is no general principle in this bill, and in the second reading debate I find I am in the position of having to continue the discussion as though we were in committee, but I see no way around it because I want now to explain the two amendments for the benefit of hon. members.
The first amendment is to section 61 of the act. This section occasioned considerable difficulty to our drafting committee last year and to the House of Commons in consideration of it, and when the energy board examined it very carefully they found that the words which I am now suggesting be struck out of the section rather limited their powers. Section 61 as it stands in the act reads as follows:
61. Where the gas transmitted by a company through its pipe line from any place within a province to any place outside the province is the property of the company, such proportion as the board may fix of the differential between the amount paid by the company for the gas and the amount for which the gas is sold by the company shall for the purposes of this part be deemed to be a toll charged by the company to the purchaser for the transmission thereof.
It is suggested that the phrase "from any place within a province to any place outside the province" should be struck out. We are dealing here, of course, with pipe line companies which cross interprovincial boundaries and therefore come within the jurisdiction of parliament and under the National Energy Board Act, and may be dealt with by the energy board.


Lionel Chevrier: Would the minister permit a question here? Does the statement he has made indicate that a pipe line which operates exclusively within a province is outside the scope of the bill?


Gordon Minto Churchill: Yes, a pipe line operating exclusively within a province, picking up gas within that province and selling it within that province, does not come within the jurisdiction of the national energy board; but a pipe line which transports that gas outside the province, that crosses a provincial boundary, does come within the jurisdiction of the board.
This section which gives the board power to determine tolls is a section which the board will now be considering during the next few 79951-0-168J
National Energy Board Act months when the companies operating have placed before them their rate structures and the board faces the very difficult chore of determining how to apply this section and determine the tolls. However, last year we discussed this in the House of Commons, and the whole problem of the toll-setting capacity of the board is not under question at this moment. This amendment simply clarifies the issue and in the opinion of the board will make it easier for them to perform their task. Striking out these words does not give the board any powers it does not already have. The deletion of this phrase makes for clarification of the section.
The second amendment comes about because, as I mentioned earlier, licences to export electricity have been annual licences. Those licenses were issued under the Exportation of Power and Fluids and Importation of Gas Act, which was discontinued when the National Energy Board Act came into effect, and the former act has lapsed. The energy board has to exercise the same care with regard to the export of electricity as it does with regard to oil and gas. It must review these licences to export and determine whether or not the licences shall be continued and for what length of time.
These licences have been renewed annually virtually automatically. This has put the companies in the position of having to come to the department year after year to have their licences renewed. Although I have not examined the record that carefully, I do not know of any instance in which one of these licences was discontinued.
When we reach the committee stage I am prepared to give the committee a list of the 20 companies that are affected and the amount of electricity which is exported. I would just say at this stage that these annual licences to export electricity have been in effect since 1907 -with regard to some companies and since 1924 with regard to those companies that are exporting the largest amounts of electricity. What we are asking for in this amendment, then, is permission to extend these licences until December 31, 1961, unless they are dealt with at an earlier period.
That date was selected merely as a matter of convenience. The energy board might deal with these electricity problems within the next twelve months, but as a precautionary measure we thought an extra few months might be allowed. Because public hearings have to be conducted, and because the energy board is new and has many serious problems before it and may have other difficult matters to deal with in connection with oil and gas, we thought an extension of time beyond twelve months would be acceptable.

National Energy Board Act
That constitutes the basis of this bill. They are two small amendments in size but important in character which do not materially alter the power of the national energy board. They are introduced simply to make the task of the energy board somewhat easier and to protect the interests of those 20 companies which have the privilege of exporting electricity.
When we reach the committee stage I shall be prepared to make an explanation of the third clause if anyone so desires. At this stage I would simply say that this clause does not alter the practice which has prevailed in the past with regard to setting in a date when there is uncertainty as to when a bill will receive royal assent. If anyone desires further information, that may be given when we reach the committee stage.
I simply conclude by asking the house to use its good judgment in this matter, as it will. I have endeavoured to give an explanation of the delay imposed, and I express my regrets that this house is asked to consider this particular bill with a rather urgent deadline facing it. I am quite prepared to accept from hon. gentlemen opposite any suggestions for the future. Hon. gentlemen opposite who have had experience-and some of them have had great experience-in the preparation of legislation for the House of Commons will appreciate some of the difficulties that face those who have that task. They fully understand that unexpected delays may occur when legislation is being processed through the various important stages that must be followed before it is brought to the House of Commons in its finished and printed form. I commend to the house the amendments proposed.


Lester Bowles Pearson: Mr. Speaker, in moving second reading of this bill the minister has characterized it as an important one, though he added that he did not think there was any question of general principle involved in these amendments. We agree with him in the first statement; it is an important bill. We do not agree with him in the second, because we think there , is an important question of principle involved in the first of the amendments.
In being asked to consider this bill on second reading this afternoon, Mr. Speaker, we are faced with an extraordinary situation which the minister himself has admitted. It is not necessary to look for any hidden motive to explain our bewilderment at the procedure which has been followed by the government in this matter. Indeed, Mr. Speaker, we are now in one of those

confused and unsatisfactory parliamentary situations into which this government has a genius for getting.
The minister said that some of us on this side of the house have had a good deal of experience with the preparation of parliamentary legislation. That is true, Mr. Speaker; but none of us has ever had any experience of the situation in regard to parliamentary legislation which faces us this afternoon. The procedure being followed is not only confused, it is a striking example of the violation of the rights of this house. It is also an ignoring of the interests of the provinces of this country in a matter which has real interest and perhaps great importance for them, as indeed was recognized in the other place. This afternoon we are witnessing a quite extraordinary procedure. It is an example, I think, of a violation of the rights and the dignity of this house and of the interests of the provinces.
The government knew at the beginning of this session that 20 licences for the export of power would expire on March 31 of this year, that is today, unless legislation were passed by this parliament to extend those permits. As a matter of fact, such legislation was announced in the speech from the throne in the middle of January in the following terms:
An amendment will also be proposed to the National Energy Board Act authorizing the temporary extension of the licences for the export of electricity until the board can conclude its urgent business on export of gas.
Notwithstanding this announcement in the speech from the throne, nothing has been done since that time so far as this house is concerned, and this House of Commons is now asked to approve this important bill today, before six o'clock-no, Mr. Speaker, before 5.45 p.m., as we learned a few moments ago-to approve this bill, if it sees fit, in all its stages or else compel 20 Canadian companies to break the law of this land. This is a strange way to carry on the business of government, Mr. Speaker. The minister who is responsible for this measure must take, as indeed he has taken, full responsibility for it. It is an appalling example of muddle, confusion and inefficiency.
In case the house does not approve this bill in all its stages today the government has, of course, included a clause which the minister mentioned, namely clause 3. Though he said it was an ordinary clause in legislation of this kind it is in our opinion really fantastic. Let me read this clause:
Sections 1 and 2 shall come into force on the day this act is assented to, except that if that day is after the 30th day of March, 1960-

And we are in the 31st day now.
-section 2 shall be deemed to have come into force on the 30th day of March, 1960.
This, Mr. Speaker, is a provision for indemnification by law for breaking the law before the crime has been committed. The minister has indicated that when we get into the committee stage on this bill he will give us further detailed information on matters of this kind. I shall be very interested to receive information about any legislation where a clause of this kind has been introduced for indemnification, not after the crime has been committed but before the crime has been committed. If this bill is approved parliament says to these 20 Canadian companies, "You may break the law of Canada if you like and we will fix you up after the crime has been committed", because that is the purpose of clause 3. Perhaps I can put it in another and somewhat more theological way. In essence it is this:	"We will give you prior
absolution for the sins we are forcing you to commit". Surely, Mr. Speaker, that is carrying the bill of rights a little too far. So we on this side feel that this particular clause or any such provision is most undesirable and to be strongly condemned in legislation of this kind.
So far as clause 2 is concerned, the minister has put us in the position where we must approve it this afternoon before 5.45 or put the companies concerned in a position where they would suffer most grievous prejudice through no fault of their own but solely because of the carelessness and inefficiency of the minister and the government.
I was glad to hear the minister say there is no shelter to be found behind any official for negligence in this matter. An explanation has already been given elsewhere that this is the reason for the delay. That was not accepted elsewhere, and of course it would not be accepted here. A minister, as the minister has already stated, must take the responsibility for every act of every official in his department. Any other course would be not only unconstitutional but cowardly.


Gordon Minto Churchill: Will the Leader of the Opposition permit a question? Will he make it quite clear that I was not the one who gave the other explanation in the other place?


Lester Bowles Pearson: I will be glad to make it quite clear. The minister was not mentioned at all in the other place in connection with this matter, and there was no suggestion in the evidence I read concerning what happened in the other place that the minister had anything whatever to do with this explanation.
What are the consequences if these licences are not renewed today, in other words if
National Energy Board Act the bill is not passed before 5.45 p.m. today? Well, either an international incident would arise with the country receiving the power, which in every case would be the United States of America, or these companies will have to go on exporting power and in doing so would be breaking the law at least temporarily until their action was legalized by a later passage of this bill. If either of these two results should occur the minister and the government alone would be responsible for that situation.
We have no desire, Mr. Speaker, to be accessories to this kind of crime. We do not want to cause, even indirectly, an international incident of the kind I have suggested, or force any Canadian company into illegality. That is why we are quite prepared to take the minister off the hook and, if necessary, suspend the rules of the house in order to repair a serious mistake which has certainly been made.
But we are prepared to do this, Mr. Speaker, only on one specific condition. We ask the minister to undertake that when the bill reaches the committee stage he will drop clause 1 of the bill for later and more careful and exhaustive consideration. Clause 1 is the clause which deals with tolls for the transmission of gas. The minister has indicated the purport and importance of that clause which in our view does embody a very important question of principle affecting not only this parliament but the provinces. Clause 1, as the minister pointed out, would enable the energy board to fix tolls for transmission of gas within a province.


Gordon Minto Churchill: Only in respect of a line that carries on beyond the province.


Lester Bowles Pearson: I appreciate what the minister has said; only in respect of companies as described in the bill, companies engaged in interprovincial or international traffic. But notwithstanding that, in our view this clause does raise important constitutional and policy questions, and we are certainly not prepared to approve it without the most careful, complete and adequate consideration. It is intolerable and an affront to parliament that we should be asked to do so.
Notwithstanding what the minister has said, we on this side are not sure if it is within the jurisdiction of parliament to enact such a provision, if it is within the powers of parliament. I know the argument the minister has mentioned, and I know there have been constitutional cases dealing with this matter, the most important of which is the Winner case in New Brunswick. However, according to my understanding of that case it does not in every respect embody exactly

National Energy Board Act the same principles as this bill. It was a case that went to the privy council in London and on which judgment was given by Lord Porter, but irrespective of that particular judgment and' the validity that it may have for all time in cases of that kind or, indeed, the effect it might have on analogous cases, the fact is that what we are doing here is enshrining in legislation a decision of that kind. We have great doubts, Mr. Speaker, whether such an important step is advisable and sound as a matter of policy, and certainly we do not accept for a minute that it should be done in this hasty and ill-considered way.
Moreover, Mr. Speaker, we feel that the failure of the minister and the government to Consult with the provinces on the matter is open to strong condemnation. It is my information that the bill first came before the other place only a week ago today, and that it was considered again on Tuesday evening of this week. Today is Thursday, and I understand that only on Tuesday evening was the bill sent to the provinces for their examination. The provinces were informed by air mail special delivery, not even by telegram, through letters sent to them not by anybody representing the government but by the clerk of a committee of the other place. That is a very strange procedure indeed to follow on a matter of such concern to the provinces.
If clause 1 were to be approved the national energy board might be involved in the fixation of tolls at the local level. Surely, therefore, before we are asked to approve it the provinces not only should be properly informed about the bill but, if they so desire, they should be given the opportunity to present their views concerning it to parliament.
The provinces were treated in matters of this kind with more courtesy and consideration under the former government. In a similar case, when the bill on international rivers improvements was considered by parliament in 1955, the bill was sent well in advance to the provincial governments, which were given the opportunity to present any views they might have concerning the matter before the standing committee on external affairs.
Surely, Mr. Speaker, the same procedure should be followed in connection with this bill today. If this particular clause were sent to a committee, it would not only give the provinces an opportunity to be heard but it would enable members of this house to hear the officers of the Department of Justice concerning the constitutional basis for this provision, and also to hear members of the

national energy board on the need and advisability of such a provision being enacted at this particular moment.
I ask the minister, what is the particular hurry to amend this clause at this time? What argument can be brought forward against our proposal that this particular clause should be dropped when we get to the committee stage? Then it should be possible to pass the only clause which is of an emergency nature. We would thereby avoid either having to make a snap decision on a constitutional principle of political and economic importance or force companies in this country into breaking the law.
I do not propose at this stage to say anything more about the substance of this amendment. May I sum it up by saying that if the government, at the appropriate time, is prepared to drop clause 1 of the bill, which would make clause 3 unnecessary, we are quite ready to do what we can to ensure that clause 2 of the bill, which is the one that must be passed today, should be passed today.
We believe that clause 1 should be referred to a standing committee. If the government is not willing to accept this course of action, which we think is most reasonable and is put forward as a way out of this difficulty, then I tell the minister that if his bill cannot be approved today by the house because there has been insufficient time for consideration of it, and because there has been no time for provincial views to be heard on it, the government will have to take full responsibility for that unfortunate result and for forcing these Canadian companies into illegality.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, the Minister of Trade and Commerce has said that by inadvertence or oversight on his part he has placed the House of Commons in a very difficult situation at this time. One can appreciate that it is possible for anyone to make a mistake, and this is what the minister confesses to us he has done. Nevertheless, since the minister is a member of the government, and since the government is responsible to parliament, whether it has been a mistake of inadvertence or oversight it has a very serious result in that the government, by this means is holding a gun to the head of the House of Commons and is saying to members of the opposition, in effect, "If you exercise your prerogative, your right and your duty of discussing the bill before the house and looking into its effects as it is constituted, thereby carrying the discussion beyond six o'clock, then the responsibility for the dire results that will flow therefrom is yours".

This is a situation, Mr. Speaker, that has been brought about by a government which in the past, when its members were in opposition, has been very vocal about the rights of parliament. This bill comes from the other place of this house. It was discussed in the other place. As I am sure you would expect, sir, and as the minister would expect, hon. members interested in the bill have read the debates in the other place. Members in the other place have shown great impatience and have been sharp in their criticism of the delay in bringing this bill forward. We might have had an opportunity of dealing with the bill in this house at a somewhat earlier stage if the members of the other place were not on such short time. Some of these members might be compared to our T-to-T members in this house, about whom we have heard a great deal, and these extended week ends have not been conducive to an early consideration of this bill there and a resultant earlier consideration in this house.
I believe the points that have been raised by the Leader of the Opposition have been very well put and deserve the consideration of the government. I should like at this time to associate myself and the members of the C.C.F. group with the request that the first clause of the bill be withdrawn, and that we proceed to the discussion and consideration of clause 2 as expeditiously as possible. This would allow the government to withdraw clause 3, and we would have a very simple bill before the house which would make it possible for members of parliament, while protesting, to correct the error that the Minister of Trade and Commerce himself has admitted to the house.
I want to make it quite clear, however, that we are very much in support of the national energy board having adequate power so far as tolls are concerned on gas going through interprovincial pipe lines. We are not certain, however, that this amendment is necessary to achieve that purpose. We have not had it explained to us in a fashion that convinces us that this is correct. We certainly do not condone, and we would oppose, any undertaking by the government which would mean the exercise of prerogatives we feel properly belong to provincial governments or provincial companies operating within a province, whether they be private companies or publicly owned companies.
I should like some further explanation as to whether this clause, in its present form, would put power in the hands of the national energy board to, in fact, control the business operations of a company like the Saskatchewan Power Corporation, which obtains all its
National Energy Board Act gas supplies in the province of Alberta and therefore must bring the gas through pipe lines which go across interprovincial boundaries. This gas is sold exclusively within the borders of Saskatchewan. I do not believe the minister would wish the national energy board to be setting the policy of the Saskatchewan Power Corporation as that policy affects business which is strictly a provincial concern and is not the concern of the national energy board.
Clause 3, apparently, is considered necessary by the minister because of the possibility that this legislation may not become law prior to the expiry of the licences that are involved. I think this is a very bad clause.
I believe the practice of making any law retroactive is something that should be followed only in extreme circumstances. I can remember how members of the present government, when in opposition, complained so loudly about taxation by radio when a former minister of finance announced a certain policy over the radio and said he was going to have parliament brought into session in order to make this policy effective at midnight of the night he was making this announcement.
I think this is an even more repugnant proceeding in that parliament is in session. In spite of parliament being in session we are asked, as the Leader of the Opposition has stated, to take steps which would allow companies to break the law and would give them absolution by means of clause 3 coming into effect at a later date.
I think the suggestion made by the Leader of the Opposition is a good one. I hope the Minister of Trade and Commerce will accept it. Otherwise he himself must take the responsibility for the delay that will be required for a thorough and adequate discussion of clause 1 of this bill. I can see nothing that would be lost by removing clause 1 and considering that clause in a separate bill at a later stage during this session.


Lionel Chevrier: May I ask the minister if-


George James McIlraith: On a point of order.


Lionel Chevrier: I rise on a point of order at this stage in the debate, Mr. Speaker, to inquire of the minister whether at this time he will not give consideration to the suggestion made by the Leader of the Opposition. If he does so I think it would perhaps hasten the consideration of second reading and also shorten the discussion on the bill and allow us to get on with it more quickly. As has been stated by the opposition and also by the C.C.F. party, the suggestion appears to be reasonable on its face. I am not going to insist on that point, but I wonder whether
2652	HOUSE OF
National Energy Board Act the minister would not indicate to the house at this stage whether he is in a position to consider it favourably.


Mr. Speaker:: By leave of the house, may the minister answer without closing the debate?


John Whitney Pickersgill: By leave.


Paul Joseph James Martin: It is just a point of order.


Gordon Minto Churchill: In answer to the hon.
member's question may I say that this is an alternative that certainly did not escape my notice when I was considering the bill. I think what we should reasonably do is go into committee and decide the issue there. It is there that it will have to be decided. There are quite a number of things upon which I should like to comment before we reach that stage, but the situation in so far as this bill is concerned is, as the hon. member for Assiniboia has indicated, that the amendment requested in clause 61 could be brought forward on some subsequent occasion; that in fact at the next session of parliament there might be other amendments to this very important act if experience should indicate that clarification is required.
I am quite prepared to take into consideration the suggestion of the Leader of the Opposition. I am not too pleased with the way in which it was indicated, namely by a sort of threat that something would be done unless it was followed. This is a cooperative venture. Last year when we were considering this bill for nine days in this house a fine spirit of co-operation was shown. I accepted amendments put forward by hon. members opposite without much debate on some of the issues. We also put forward amendments which were acceptable to the house.
This is an act which is breaking new ground in Canada. This particular amendment comes before the house only because the chairman of the energy board suggests that for the proper application of section 61 it is required. In the other place this subject matter was considered. The law officers of the crown appeared, and members of the energy board, and satisfied hon. members of that house that this would be a satisfactory method of procedure.
However, on the other hand, I do not want to do anything that would appear to infringe upon the rights of the provinces. If someone considers that there is a constitutional issue here involved, that puts a different light on the matter. Why this issue was not raised a year ago when we discussed section 61, I do not know.


George James McIlraith: There was no amendment then.


Lester Bowles Pearson: We did not need this.


Gordon Minto Churchill: It could have come up at that stage. However, although there is urgency with regard to the electricity matter; although this proposed amendment would assist the board in the performance of its duties, and although it may be interpreted from rejection of this amendment by hon. members opposite that they are not in favour of having tolls determined by the board, which was the clear intent and purpose of parliament last year, nevertheless, because of the delay which occurred in bringing this bill forward, and because of the quite proper consideration of giving every province its opportunity to be heard if there is any suggestion that constitutional issues are involved, I am not averse in the committee stage to withdrawing this particular amendment.


Mr. Aiken:: On the question of order raised by the hon. member for Laurier, may I point out that this is a Senate bill. I wonder whether we would be any further ahead. It would be necessary for it to go back there.


Mr. Speaker:: I do not recognize any point of order. A question has been raised with the minister as to whether the government would accept the suggestion of the opposition, and it has been answered. Now we proceed with the debate. I recognize the hon. member for Laurier.


Lionel Chevrier: Mr. Speaker, I should now like to deal with the bill which is before us and to address myself to three points before coming to the answer given by the minister to the question I raised either directly or by way of a point of order.
The first one, of course, is that of the delay which for some reason or other has been responsible for the government bringing the bill before the house at this late date. In conformity with what has been said by the Leader of the Opposition I think I should state that the minister, although accepting responsibility for it, I am afraid has not given a sufficient reason or a good reason for the delay in bringing this bill forward. It is one thing to say in the speech from the throne that legislation of this nature is going to be brought forward, and it is another thing to bring it forward on the very day or the day before the licences for the export of fluid and electricity expire.
That is why, without pressing the point unduly, I think the minister must give careful and serious consideration to the other point, namely the one I raised in posing the question to him and also the one which the Leader of the Opposition raised. The minister himself has stated that this is an act which

is breaking new ground. That is the expression he himself used. If it is an act which is breaking new ground, then a fortiori great care must be taken to see that the rights of the provinces are not infringed.
Neither I nor the Leader of the Opposition has stated that the rights of the provinces are being infringed. However, there is a grave doubt about the matter of their being infringed. Some mention was made of the Winner case. I have before me the decision in the Winner case. I had some knowledge of the Winner case, because following that decision it was decided by the government of that day to amend, as the minister knows, one of the statutes of parliament in order to give parliament jurisdiction over interprovincial and international highways. Up until that time there were grave doubts in the minds of the officers of the Department of Justice as to whether the federal parliament had jurisdiction over what was termed international and interprovincial transportation.
The decision lays down some very important principles. The decision states in so far as international and interprovincial transportation is concerned, that the federal parliament would have jurisdiction. But it then went on to make a number of very careful distinctions between intraprovincial movements and interprovincial movements, and because of that fact-because doubt has been raised by that decision-I think it is extremely important that we go very slowly and carefully with regard to clause 1.
I should like to bring this to the attention of the minister: before this legislation was introduced, the government of the day called a conference of the provinces here in Ottawa, and it took many days-I cannot remember how many, but perhaps the greater part of a week-before it was possible to get the provinces to agree, not without some difficulty, on the kind of legislation which should be introduced in parliament. Since that act was passed I do not know whether there has been any conference with the provinces or any representations from them in the field of highway transport. I mention highway transport because the question of pipe lines is akin thereto, and because the Winner case would not only have a bearing-


Paul Joseph James Martin: It involved transport.


Lionel Chevrier: My hon. friend says it involved transport. It would not only have a bearing, but it would also be a precedent in so far as the pipe line is concerned.
The point I am trying to make now, is that if there is any doubt in our minds as to whether there may be an impingement on the
National Energy Board Act rights of the provinces, we should hesitate to do anything with regard to clause 1. The minister has I think given agreement to the suggestion, because I think he said something like this in reply to the question: If someone considers that this infringed provincial jurisdiction, I am prepared to consider the proposal made by the Leader of the Opposition.
We on this side of the house feel that it does, and we think it would be in the general interest of the house and the country if we were to give immediate consent, if the minister wishes, to the passing of clause 2, upon the distinct understanding that clause 1 would be brought in at a later date; it could even be introduced tomorrow, if the minister desired, and put on the order paper so that we could give consideration to it during the Easter recess and discuss it later.
If the minister would do this-and I feel, from what he has said, that he is so disposed-I think we might get on fairly quickly with this piece of legislation. There is, of course, clause 3 which has already been mentioned by the Leader of the Opposition. All I want to do is to state that if perchance this bill did not pass today and we went on discussing it, not tomorrow, because we have other business announced, but at a later date, every act of export of fluid gas or electricity by these 20 companies would be illegal, and the fact that clause 3 is enacted does not for the time being at least legalize that illegality. So it would strike me that this is a departure from what was done in earlier cases.
I do not know that I want to add any more to what I have said. As far as we on this side are concerned I think I can say again on behalf of the opposition, that we are willing to consent to the passage of clause 2 of the bill, which is really what the minister wants, so that we may give consideration at a later date to clause 1. I think I am not unduly pressing the issue when I say that I believe the minister has agreed, in effect, to withdraw clause 1. If he will do that, I can assure him we shall not hold up the second reading of the bill.


Herbert Wilfred Herridge: want to say a few words on this bill and I will be brief. The members of this group have given this measure some attention, and we were very concerned about the lateness of the date on which it was introduced. However, I must say we were very pleased to hear the minister accept full responsibility for the delay in introducing the measure and make no attempt to put the responsibility on someone else's shoulders. I think the hon. gentleman made a frank and manly statement, and that goes a long way with me.

National Energy Board Act
This is a very serious matter, because even if the bill is passed as quickly as possible it is likely that these companies with export permits will operate illegally for a short period of time.
I should like to support the suggestion made by the Leader of the Official Opposition (Mr. Pearson) that clause 2 be held over for further consideration. We did consider this clause and discuss it with persons having legal experience, and we were definitely of the opinion that the wording is ambiguous, to say the least. It is not at all clear. In the years I have been in this house ministers have assured us from time to time that the language used in various clauses was satisfactory, that it had a particular meaning. Nevertheless, some hon. members were not clear as to what it actually did mean, and we have often been informed that the interpretation of a clause by a minister does not necessarily correct any errors in the wording which may exist, or remove shortcomings from the legislation in the form it is eventually passed. When the bill is passed the courts have to determine its interpretation, and we are very anxious that this particular clause which has been mentioned should be carefully drafted in order that the rights of the provinces should be protected beyond a doubt.	,
In addition, as the hon. member for Laurier (Mr. Chevrier) mentioned, there is no question but that some doubt could arise in the minds of the governments of the provinces on reading this clause of the bill, and for this reason we wish to support wholeheartedly the suggestion that clause 1 be withdrawn. I listened to the minister carefully and I am not sure whether he definitely undertook to do so or not. It is my view that further considerations should be given to this question so that there might be no doubt about the situation.
While I am on my feet, I wish to direct some questions to the minister which could be answered during the committee stage. The board is of growing importance and I find an increasing interest in its activities and a growing desire to obtain information about the applications and decisions of the board. Are the meetings open to the public? Can any person interested in the board's work obtain transcripts of the evidence of various companies making application providing he pays for the cost of the transcript and can one also obtain copies of the board's decisions in the same way? I have had some inquiries of that nature and request an answer to my questions when we reach committee stage.
(Translation):


Mr. Noel Dorion (Bellechasse):: Mr. Speaker, I apologize for rising at the very end of this
[Mr. Herridge.l
discussion, but there are just a few remarks I feel bound to make.
I have been going over clause 1 of the bill carefully, and I must say that it gives me some concern. Aware as I am of the minister's good nature, I am sure he will not take amiss the few remarks I am about to make.
The hon. member for Laurier (Mr. Chevrier) referred a moment ago to an unhappy experience when the supreme court, after ruling in the Winner case that part of an interprovincial licence was the responsibility of the provincial authorities and the other part, with respect to interprovincial operations, came under federal jurisdiction. That case, involving the attorney general of Ontario versus Winner, was appealed before the privy council. I think it was in 1954. Unfortunately, as I had not expected to take part in this debate, I cannot recall the exact date. Still, as far as I can remember, the privy council formally ruled that interprovincial businesses were exclusively under federal jurisdiction, even as regards the use of their license within the province.
Following that ruling, if I remember correctly, the government put a bill through whereby it yielded to the provinces the responsibilities arising out of the privy council's interpretation of section 92, paragraph 10, of the British North America Act. Unfortunately, and I say this quite sincerely, with no thought of attaching any blame to my friends in the opposition-there remained an escape clause-I think it is in section 5- whereby the governor in council reserved the right to exempt any business or part thereof from such terms in the act as gave back to the provincial authorities, or which in fact entrusted to the provincial authorities full powers with regard to such interprovincial businesses.
Unfortunately, in section 1 of this bill, I see a very striking analogy, and it is obvious that in the light of the ruling in the Winner case, it would be extremely difficult for the provinces to exercise their powers, in view, as I say, of the purport of that section.
On account of the confidence I have in the minister, I hope-indeed I am convinced that he will take my remarks in good part and will kindly take them into consideration. Therefore, I think that section should be deleted from the bill, because of the situation in which it would put the provinces and

especially on account of the extremely broad interpretation in favour of federal authorities that was given by the privy council in the Winner case.
For those reasons, I would feel obliged to vote against the adoption of that section, as now drafted. But I do not believe I shall have to do so, since the minister has indicated that he would see that this section is sti'uck out. I repeat, it seems to me an extremely dangerous one for the powers already exercised by the provinces, or at least by some of the provinces.
(Text):


John Whitney Pickersgill: Mr. Speaker, I had not intended to say anything on this bill and I am only going to utter two sentences now. We in the Liberal party are very pleased that the hon. member for Bellechasse (Mr. Dorion) has joined with us in the defence of provincial rights.


An hon. Member:: That is the first time in your life you ever did so.


Mr. Speaker:: Order. I must advise the house that when the minister speaks he will close the debate.


Gordon Minto Churchill: Mr. Speaker, I had intented to comment on the various speeches that have been made but in view of the fact that I have already agreed to drop the offending clause there seems to be no purpose in further discussion of it. I will say no more than that I think there has been an overemphasis placed on this bill with regard to the alleged violations of the rights and dignity of this house, the phrase used by the Leader of the Opposition (Mr. Pearson), and in the use of the word "crime" in connection with the export of electricity beyond a certain date, and things of that nature. However, in the course of debate phrases like that sometimes come quickly to hon. members' lips and are uttered.
We seem to have reached an agreement that to prevent any possible criticism on the part of the provinces or any possible doubt that provincial rights might be infringed by the suggested change that it would be wise to postpone consideration of this to some later occasion and I am quite prepared to do that.
Time is passing very rapidly again and we do not want to get into the position where the other house cannot assist us in this matter. There are certain steps that have to be taken, namely the passing of this bill through the other stages, transmitting a message to the other house which has already been alerted and then having the concurrence of the other house with regard to what
National Energy Board Act we do here with respect to this bill, all of this to be done before royal assent may be granted at a quarter to six.
If I can get an assurance from the other house that their action will be immediate then there is no need for the third clause which occasioned some comments from the other side. If that assurance is not forthcoming then the third clause has to be inserted in order to safeguard the situation, but I think the common sense of both houses will prevail under the circumstances and that we may within just a few minutes deal with the one remaining clause in this bill which refers to the export of electrical energy on the basis of these annual licences.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Flynn in the chair.
On clause 1-Tolls for transmission of gas.
Lionel Chevrier: Mr. Chairman, will the minister make a statement on this clause?


Gordon Minto Churchill: This is the one we propose dropping. It is just a question now of wording the necessary motion to that effect.


Mr. Smith (Calgary South):: Can the minister tell us whether any examination was made by the board itself to determine the legal aspects of clause I before it was placed in the bill? On the legal arguments that have been offered, I cannot concur in the suggestions that this should not be included. I have no personal objection, of course, to the minister saying that it should be dropped, but it does occur to me that when the energy board has a former official of a provincial government as its president, the board certainly would not introduce something that was going to offend a provincial statute or a provincial law.


Gordon Minto Churchill: The answer is yes; the energy board did get competent advice with regard to this particular matter and it was on that basis that this drafting was done and the amendment put forward. However, in order to move on with this, I will ask my colleague to move:
That clause 1 be deleted; that clause 2 be renumbered 1 and that clause 3 be deleted.


Mr. Brooks:: I so move.


[Stage Direction]
Amendment agreed to.
On clause 2-Expiry date.
The Chairman:: Shall clause 2, now clause 1, carry?


John Whitney Pickersgill: I should like to say a word or two before it carries. The minister can relax because I am not going to prevent

National Energy Board Act progress. I was very much struck by one observation the minister made. I think we all felt a certain sympathy-I know I personally did-for the minister when he said that he had overlooked this matter until March 1. But what really did astonish me was when the minister discovered on March 1 that no progress was being made with this bill-and I listened very carefully and I am sure that is what the minister said; if I am wrong he will correct me right away-why he did not do something. That was 30 days ago, sir. I do not know what has happened in those 30 days. I do remember those days in the middle of June, 1940, of course, and I am sure the Minister of Veterans Affairs will remember them, too, when one of the most important pieces of legislation that was ever passed by this parliament was drafted in a single night, introduced the next day, and passed through all stages in this house in two days and through the Senate on the third day and received royal assent. Here we have a little minor bill, when we consider all that is left of it now. Why, on March 1, when the minister found this had happened, he did not get a special meeting of the legislation committee-and I assume this government has one, as we had, under the Minister of Justice-why he did not get it approved at the council and get it before that day ended, or if it was late, at least by March 2, on the order paper of this house or the other place, it is hard for me to understand.
Then the minister mentioned the matter here, if I remember correctly, on March 18, in response to a question from my hon. friend about the business of the house. If my arithmetic is right, it was March 24 when this bill was first introduced in the other place, which promptly took its usual long weekend and consideration was not completed there until yesterday. It does seem to me that we can forgive anything that happened before March 1, and feel a certain sympathy for the minister's difficulties before that time but really, I am flabbergasted. I have had a long experience, as hon. members know, not in parliament-I have not been here nearly as long as the hon. gentleman- but on the periphery of parliament, and have had a lot to do with legislation that was subsequently introduced in this parliament and this case does seem to me to be unique. It seemed to me, just so that there would be a kind of recollection of it so that it would not happen again, perhaps this deserved to be mentioned.


Gordon Minto Churchill: I want to thank the hon. member for forgiving all my sins in January and February but not absolving me from

my sins in March. I would say this to him. Perhaps I will put down some notes with regard to what happened in March and if the executors of my estate determine something should be written about my life and appoint the hon. member for Bonavista-Twillingate to do the writing, he will have all the information available to him and know exactly what happened during the month of March.


Paul Joseph James Martin: This matter is one of importance, not only because of the permission that will be extended by parliament to some 20 companies in respect of licences which they have enjoyed in the matter of the export of power, but important for the reason which the hon. member for Bonavista-Twillingate has emphasized, and which, I think, bears some repetition, even though I may not do it on exactly the same basis as the hon. member.
Those of us who have been in this house for some time will recall the very strong positions taken by hon. gentlemen opposite when they were sitting on the benches on this side about any alleged effort on the part of the administration in any way to pressure the House of Commons into the consideration of matters which time did not afford. We would have been challenged by hon. gentlemen opposite, and particularly by the Prime Minister, if we had taken the course which the minister for one reason or another has been forced to take in this matter. We would have been told first of all that this was a bill that should have been introduced in this chamber first. That was not the course adopted by the present government. Of course, the reason why the upper chamber dealt with this matter first was that time was running out and it was necessary to run to the other place first.
But that does not in any way absolve hon. gentlemen from themselves now being implicated in the very charges which they on other occasions, in the light of their previous conduct, would have made. It is a violation of the spirit of parliament for any government to present legislation of this importance in the way in which this legislation now comes to us in this house. We are dealing with it for the first time this afternoon and because of the exigencies we are going to extend passage of the bill before five o'clock in order to guarantee to some 20 corporations in this country a right previously extended to them by parliament.
No member of parliament is open to censure for criticizing vigorously the position in which the government has placed us at this time. I join with the hon. member for Kootenay West in saying that the minister

was tactful and wise today in accepting readily a responsibility which he says was his. He thereby, of course, contradicts a distinguished public servant who said that the responsibility was his. We also commend that individual. We have before us two willing culprits with respect to the delay for which parliament is now suffering.


An hon. Member:: Shocking.


Paul Joseph James Martin: It is certainly a shocking matter. It is certainly a violation of the rights of parliament. The minister by his very own words has indicated that the delay did not occur because the government suddenly realized its responsibilities. It realized its responsibilities early in February. The minister began his remarks today by saying there was some discussion early in February as to whether there should be one or more amendments to the legislation. He said that he had discussions with the energy board about some amendments, all of which he decided not to incorporate in the measure which came to us from the other place only this afternoon.
But the minister went on to say that he had intended bringing in these amendments early in February, and by that very statement I am sure he will recognize, good sport that he has proven himself to be this afternoon, how valid is the criticism that we level against the government for placing parliament in the position in which it has been placed today as a result of the dilatory actions of the government and of the minister. It is a most unusual situation. The minister certainly will not find in the history of parliament in the last 25 years any situation which could be regarded as a precedent for the inefficient manner in which the government has conducted this phase of the public business.
It should have been within the initiative of the minister to take the course suggested by the Leader of the Opposition, the hon. member for Laurier and the hon. member for Bellechasse, who like this party is concerned with provincial rights. This position should have been taken by the minister at the outset today instead of putting the Leader of the Opposition in the position where he had to offer as a condition precedent to acceptance by the house of the new clause 1, the former clause 2 of the bill. The fact that the minister must have been aware that a request had been made by the other place to inform the provinces of the implications of the former clause 1 should itself have served as notice that that clause ought to have been deleted at once
National Energy Board Act or that the matter should have been referred to the courts for a determination as to its constitutionality.
The minister says that the law officers of the crown are of one mind in the matter. The evidence does not support that. There is grave doubt whether the bill as first introduced was not one that involved powers that come under section 92 and the property and civil rights section of the British North America Act. So not only are we faced today with the inefficient way in which public business has been handled, not only are we asked to pass legislation involving doubtful constitutional measures, but we are also asked in the former clause 3 to pass a bill which in effect would have been official notice given by parliament to some 20 companies now operating legally of a declaration that "you may break the law of Canada if you like to do so and we will fix you up after the crime has been committed". That is the clear implication of the former clause 3 of the bill.
I am sure that the minister will not readily and easily forget this day. I am sure that those who love this parliament and the protection that it gives to our ancient usages and liberties will not soon forget this day.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: Hon. gentlemen laugh but I hope that they will remember this on the day that the present Prime Minister introduces his bill of rights, a bill of rights intended not only to preserve the liberties of the subject but intended to preserve the liberties of parliament. Today the liberties of parliament were protected by a small group of individuals sitting on the opposition benches and by one of their own members.


An hon. Member:: Order.


Paul Joseph James Martin: Someone says "order". If I were a young and promising member of this house I would join in the denunciation of a government which by its conduct today has given strong evidence that it has really little regard for the functioning of parliament as we have known it traditionally in this country.


Gordon Minto Churchill: Mr. Chairman, I should like to say that there has been some overemphasis on the part of the hon. member for Essex East. No one is more adept at shadowboxing than the hon. member.


George James McIlraith: I cannot agree that there has been any over-emphasis whatever on the part of my colleague, the hon. member for Essex East. However, I recognize the extreme urgency of getting the bill, now before us

National Energy Board Act in committee, to the other place, and I should like to add only one or two comments. The minister pleaded lack of experience. I could not help thinking that the minister was given a great deal of experience during the nine days that the energy bill was before the house last session. I am afraid he did not profit from that experience to the extent that he might and should have. In any event, I should like to ask him now to indicate the names of the companies and the value or quantity of electricity involved. In his remarks on second reading of the bill I think he said he was willing to do that.


Gordon Minto Churchill: Yes, Mr. Chairman. There are 20 companies involved here. I will give the date of the original licence to export on an annual basis. The first is the HydroElectric Power Commission of Ontario. The date was the 31st day of the third month, 1924 and the licence involved a firm contract of 395,280,000 kilowatts. The second one was Hydro-Electric Power Commission of Ontario, and the date is 15-5-24, with respect to an interruptible amount-


George James McIlraith: If this is in tabular form, Mr. Chairman, I would have no objection to the minister putting it on Hansard.


Gordon Minto Churchill: Well, if that is agreeable-


Jacques Flynn: Is it the pleasure of the committee to give permission to have this table printed at this point?


Some hon. Members:: Agreed.
[Editor's note: The table rejerred to is on page 2659]


Mr. Van Horne:: Mr. Chairman, I am pleased to see this section being removed. It indicates the measure of reasonableness of this government when it recognizes the merit of suggestions from hon. members all over the house.
In New Brunswick, we are not too happy with the energy board. I shall come back to that later. As a matter of fact, some of our people are calling it the lack of energy board. I can assure you that there are other provisions in this act that meet with our approval but, up to now, there has been very little indication on the part of the energy board of a serious attitude toward problems connected with the transportation of gas and other fluids in New Brunswick or the other maritime provinces. In saying this, I realize that the hon. member for Bonavista-Twil-lingate will probably repeat the accusation he made the other day in Toronto that I am trying to promote some private interest. He

may have said this to some reporter in Toronto, but nothing could be farther from the truth.


John Whitney Pickersgill: I should like to rise on a question of privilege, Mr. Chairman. I think the hon. gentleman said I had once said of him that he was trying to promote some private interest. I have no recollection of ever having made any such statement. I certainly never had any such idea. If I was reported as having done so and did the hon. gentleman any injury, I apologize at once.


Mr. Van Home:: I merely read a report that the hon. member had said that. I can assure the hon. member that is not the case. We in the maritime provinces are interested in this matter of getting the energy board to take a more serious attitude toward our problems. I wish to take this opportunity of going on record to request the government to direct the energy board to give more serious consideration to these problems that come under this act, as they relate to the maritime provinces.


Gordon Minto Churchill: My attention has been drawn to the fact that when we put forward the amendment we left in the printed section the word "said" in the first line, referring back to the National Energy Board Act. Consequently, we will have to have a further amendment now striking out the word "said".


Paul Joseph James Martin: In what paragraph?


Gordon Minto Churchill: This is in line 1 now of the
clause which has remained. We have to strike out the word "said" and put in the "national energy board" and then the line will read as follows:
Section 99 of the National Energy Board Act is amended by adding thereto the following subsection:


Alfred Johnson Brooks: I move that clause 1 be amended by deleting the word "said" in the first line and substituting therefor "the National Energy Board Act".


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


Lionel Chevrier: By leave.


Gordon Minto Churchill: the third reading of the bill.


[Stage Direction]
Motion agreed to, bill read the third time and passed.


[Stage Direction]
Licensee	Date	Licence authorization terminating March 31, 1960 thousands of KWH	Actual exports for calendar year 1959 thousands of KWH	Reported value of export (excluding tax)Firm	Surplus interruptible	Firm	Surplus interruptible	1 Hydro-Electric Power Commission of Ontario	
31- 3-24	395,280	394,200	1,742,2802 Hydro-Electric Power Commission of Ontario	
15-5-24	5,402,160	3,095,884	8,363,971* **3 Cedars Rapids Transmission Company	
9-10-12	658,800	494,332	1,199,7284 Canadian Niagara Power Co	
9-11-07	327,643	284,258	931,2505 Canadian Niagara Power Co	
3- 4-25	243,317	46,982	155,6576 Ontario-Minnesota Pulp & Paper Co	
17-12-09	48,312	43,378	252,0267 Maine & New Brunswick Electrical Power Company	
9-11-07	43,920	37,132	354,1928 Maine & New Brunswick Electrical Power Company	
4- 8-27	43,920	14,296	131,9739 British Columbia Electric Railway Co	
22-4-11	4,392	1,477	25,76810 British Columbia Electric Co. Ltd	
30- 4-49	**	12,414	37,24311 West Kootenay Power & Light Co. Ltd	
22-12-17	4,392	17	37412 Southern Canada Power Company	
14- 4-26	6,588	4,878	70,30813 Southern Canada Power Company	
27- 3-52	131,760	46,883	188,17714 Northern British Columbia Power Co	
13- 9-29	220	19	1,36015 Fraser Companies Ltd	
5- 6-26	13,176	403	1,81416 Eraser Companies Ltd	
1-10-45	87,840	65,571	294,97017 Detroit & Windsor Subway Co	
3-11-30	2,635	418	1,37918 Manitoba Power Commission	
28- 8-36	220	36	77019 New Brunswick Electric Power Commission	
27- 9-52	307,703	39,684	281,74820 British Columbia Power Commission	
10- 6-58	**	Totals	1,505,358	6,216,920	1,260,512	3,321,750	14,034,988
* December figure estimated.
** Export is irregular.
National Energy Board Act
[Stage Direction]
Trans-Canada Highway Act TRANS-CANADA HIGHWAY ACT

[Stage Direction]
The house resumed from Wednesday, March 30, consideration in committee of the following resolution-Mr. Walker-Mr. Flynn in the chair:
That it is expedient to introduce a measure to amend the Trans-Canada Highway Act to extend until March 31, 1964, the period during which contributions or payments may be made to the provinces under the act and to prolong until December 31, 1963, the period in respect to which construction costs may be incurred under this act; and to provide also that the aggregate of all expenditures under the act may be increased to a maximum of four hundred million dollars.
Mr. Batten:: Mr. Chairman, I should like to make a few remarks at this time concerning the trans-Canada highway. There is certainly no need to go into the history of the act itself as the committee is well acquainted with the history of the act from December 10, 1949. I should, however, like to point out that early in 1955 it became evident it would be impossible to complete this highway within the time limit which was then December 9, 1956.
On November 14 and 15, 1955, at a federal-provincial conference, this matter was thoroughly discussed and, as a result, the 1956 amendment to this act came about. During the debate of 1956, the then members of the opposition, now the government, had some very caustic comments to make. 1 am not going to quote those comments now, but I should like to make some general reference to them. At that time many members of the opposition referred to the need for more generous treatment of the trans-Canada highway program, particularly with reference to the amount of money being spent by agreement with the provinces. There was a good deal of discussion also concerning the maintenance of the trans-Canada highway after its completion.
Certainly we have now a fairly large number of miles of the trans-Canada highway completed and it will not be too long before the bills for maintenance will begin to come in to the provinces. As indicated in the debate of 1956, many Conservative members felt that as the cost of building the trans-Canada highway was too large for any province to carry, hence the cost of the maintenance of the trans-Canada highway would also be too large for many of the provinces to carry. There were those who then proposed that a greater share of the cost of building the trans-Canada highway should be borne by the federal government. Even though at that time the amendment to the act included a clause whereby 90 per cent of 10 per cent of
(Mr. Churchill.]

the mileage in any province would be paid for by the federal government, there were those who felt that this amendment to the act was not sufficiently generous.
Last year the act was further amended as to the amount of money to be included in the federal share and we have a similar action this time. Dealing with the government's second amendment to the Trans-Canada Highway Act, may I say I would have hoped that some consideration would be given to those provinces that are feeling the burden of carrying their share of the cost of the trans-Canada highway. I would also have hoped that some consideration would be given to the possibility of maintaining this road in a condition suitable for a trans-Canada highway in the future.
I think all of us will agree that there are some measures which, when offering a 50-50 deal to the provinces, are fair. But it is my view, as it always has been, that the 50-50 deal as far as the trans-Canada highway is concerned is not fair to all the provinces. If I may digress here for a moment, I might say that my own personal opinion was that there should have been built across Canada a trans-Canada highway completely paid for and completely maintained by the federal government. That is my personal opinion. I took that position when I was on the other side of the house. I took that position in the debate on the amendment last year and I still think that was the thing to have done. However, it was not done and we have arrived at this 50-50 deal which is in existence.
This 50-50 deal makes no allowance for the differences in mileages to be borne by the different provinces. It makes no allowance for difficulty in construction. It makes no allowance for the cost of materials which must be transported over long distances and sometimes imported into the province as in the case of Newfoundland. It makes no provision for the existence of alternative routes or for the per capita income of the provinces through which the road is to be built.
I think one thing about which we must be extremely careful is the fact that it makes no provision at all for the demand for other basic services which may exist in the provinces. In my own province of Newfoundland we have a tremendous demand for health and educational services. With these demands being as great as they are there is only a limited amount which the provincial government is able to spend on the trans-Canada highway, although it might be very much inclined to accept the agreement in order to get what they can out of this type of arrangement.
Many hon. members on the other side of the house have recognized these difficulties

in connection with building the trans-Canada highway under the present agreement. We have a considerable discrepancy in the number of miles to be built by the various provinces. For example, the population of Newfoundland is 32 per cent of the population of the other three Atlantic provinces but Newfoundland is obliged to build 72 per cent of the total mileage in the other three provinces. If we consider the four Atlantic provinces combined, Newfoundland has 24 per cent of the total population of the Atlantic provinces but is obliged to build 42 per cent of the total mileage. We might also compare the number of miles per 10,000 of population. Last year when this act was amended I put on Hansard, a table showing the number of miles per 10,000 of population in each of the provinces. I have now revised this table and I am going to read it rather than to have it put on Hansard as it is. I have taken my population figures from the dominion bureau of statistics figures of February 10, 1960 and the mileages from table 1 of the trans-Canada report for the year ended March 31, 1959. It shows that in the province of Alberta the number of miles per 10,000 of population is 2.2-maybe I should point out first that the national average is 2.9 per 10,000 population -Ontario, 2.4. It will be noted that both these provinces are below the national average. The number of miles per 10,000 of population are as follows:
Trans-Canada highway
No. of miles per 10,000
Province	of population
Alberta	 2.2
Ontario	 2.4
Manitoba	 3.5
British Columbia	 3.6
Nova Scotia	 4.3
Saskatchewan	 4.5
New Brunswick	 6.5
Prince Edward Island	 6.9
Newfoundland	 12.2
Newfoundland has 12.2 miles per 10,000 of population, a figure which is not quite but almost twice as great as that of any of the other nine provinces of Canada.
It is also interesting to compare the percentage of miles in a province with the total mileage, and the percentage of the population of a province with the total population. For example, British Columbia has approximately 13 per cent of the total population of the nine provinces included in this agreement and has roughly 13 per cent of the mileage to construct; Alberta has about 10 per cent of the total population and only 6 per cent of the mileage; Saskatchewan has 7 per cent of the population and 9 per cent of the mileage; Manitoba has 7 per cent of the population and 7 per cent of the mileage; Ontario,
Trans-Canada Highway Act a province which is probably able to pay better than any other province in Canada has 48 per cent of the population but builds only 33 per cent of the mileage of the trans-Canada highway; New Brunswick with less than 5 per cent of the total population builds 9 per cent of the highway; Nova Scotia has 6 per cent of the population and builds 7 per cent of the mileage; Prince Edward Island has 0.82 per cent of the total population and builds 1.64 per cent of the mileage; Newfoundland has 3.6 per cent of total population but must build 12.8 per cent of the mileage. These figures show-


John Whitney Pickersgill: Would the hon. member mind repeating the comparison between Newfoundland and British Columbia?


Herman Maxwell Batten: British Columbia has about 13 per cent of the population and about 13 per cent of the mileage-the actual figures are 12.72 per cent and 13.13 per cent-Newfoundland has 3.6 per cent of the population and 12.8 per cent of the mileage. It is interesting to note that the percentage of the mileage in Newfoundland is almost equal to that of British Columbia, yet the population of Newfoundland is a little more than a third of the population of British Columbia.


Mr. Walker:: Have the percentages changed much since the Liberals passed the bill in its present form?


Herman Maxwell Batten: Of course not. The hon. gentleman knows very well that these percentages are arrived at on the basis of the population and mileage in each province. There has been a slight change in the population over the last few years-it has increased in most provinces-but the mileage has remained fairly constant. The only change would be a slight reduction in the number of miles per ten thousand of the population, but no significant change.
Various schemes have, of course, been discussed with the object of providing a better deal for some of the provinces. One suggestion which has been made is that the federal government should have built and maintained the whole of the highway. Another suggestion, made by my own leader, is that in the maritimes the federal government should pay 90 per cent of the cost. A further suggestion from another hon. member of this house is that the federal government should pay 75 per cent of the cost.
Of the various schemes which might be put forward, one, for example, could be based on mileage per ten thousand of the population. The average mileage per ten thousand of the population in Canada is 2.9, and it might be possible to base an agreement on this figure. Fifty per cent of the

Trans~Canada Highway Act total cost, plus 90 per cent of 10 per cent, could be paid, as under the present agreement, to all provinces which have to build the national average or less. Suppose, however, the mileage to be built in a province was above the national average. An arrangement could then be worked out under which the federal government would pay a greater proportion of the cost. I might say that at the existing rate, under the existing plan, 40 per cent of the total mileage in the country would be covered, a mileage of 1,718. Where the mileage to be built in a province amounted to four miles per 10,000 of the population the federal government would pay 60 per cent of the cost, and if the mileage rose to six, the federal government would pay 65 per cent of the cost. For percentages in excess of six miles per ten thousand, the federal government would pay 70 per cent of the cost.
I have made some rough calculations as to what this would cost the federal government, and from these calculations, based on estimates of the cost of completion of the trans-Canada highway given by the minister last year, I find that both Alberta and Ontario would complete their mileage under the existing agreement. Manitoba would receive an increased grant of $2 million; British Columbia would get an increase of $9 million; Nova Scotia an increase of $3.5 million; Saskatchewan, $2.5 million; New Brunswick, $10 million; Prince Edward Island, $1.5 million; and Newfoundland an increased grant of $5 million; making a total cost to the federal treasury of $33.5 million.
I recognize, of course, that this scheme which I have broadly outlined does not take into account the various other factors which make the building of the trans-Canada highway so difficult for provinces such as the maritime provinces and British Columbia.
The motor business in Canada is becoming very big business indeed. In 1920 there were
400.000	cars and trucks in Canada; in 1930, there were 1,250,000; in 1940, 1,500,000; in 1950, 2,500,000; and in 1960 there will be more than 5,000,000, an increase of 100 per cent in the last ten years. It is estimated that during the present year Canadians will travel
40.000	million miles over Canadian roads. The amount received in registration fees and gasoline taxes in 1958 was just less than $500 million, or almost 25 per cent of the total net general revenue of all 10 provinces. Certainly these figures go to show that motor traffic in Canada has grown very fast indeed during the last 20 years.
In my own province the growth has been slower. Nevertheless, in the last five years

there has been a speeding up of the development of the motor industry in the island province. In 1940, for example, there were 4,378 cars and 1,306 trucks, making a total of 5,834 vehicles; in 1949, just before confederation, the total was 11,500; and in 1950 it had increased to 16,375. In the last ten or eleven years since confederation, however, the total number of cars and trucks on the island increased to 52,578, a threefold increase in nine years. I draw these figures to the attention of the committee in order to illustrate the demand in the province for increased highway construction. As everybody knows, highway construction begets more construction; the more roads you build, the greater the demand will be.
As was pointed out two days ago by the hon. member for Grand Falls-White Bay-Labrador, who took the opportunity to recount some of the history of transportation in Newfoundland, there are large distances around the coast where the provincial government must construct its own roads. The demand for this type of road is so great that there is not enough money left over for any rapid progress to be made in connection with the trans-Canada highway.
Certainly there has been great progress made in connection with highway construction in Canada, though nothing compared with the progress which has been made in the United States. I recognize that the conditions are different. However, in the United States and also in Canada, we have devoted great research into the building of automobiles and trucks but we have not done the same amount of research work, or the same type of research, with regard to the roads over which vehicles have to travel. I do not think road construction in Canada has kept pace with the advance in the construction of motor vehicles. We have almost half a million miles of roads in Canada. Of this total, one mile in ten is paved, 4.5 miles in ten are gravel surfaced and 4.5 miles in ten have an earth surface. Road mileage in Newfoundland at the end of operations in 1959 resulted .in the following picture:
Paved highways	
234	milesGravel highways	
2,930	milesMotorable secondary roads	
454	milesNon-motorable secondary	roads	
785	milesLocal roads	
3,000	miles
In the last ten years 1,600 miles of road have been constructed in the province of Newfoundland. In 1959 there were 138 road projects undertaken. Expenditures for this construction and for the maintenance of roads that had been built before that amounted to an all-time high of $18 million. The sum of $18 million may not be a lot of money to a province like British Columbia or Ontario

but I can assure the committee that with the demand for other services in Newfoundland $18 million for road construction is a great deal of money especially when considered on a per capita basis.
In 1958, for example, the per capita expenditure on roads in Canada was $45. The per capita expenditure in Newfoundland in 1958 was $51. Certainly the roads in Newfoundland are just as important to that province as are the roads in any other province of Canada.
In this great country of ours we have many attractions for people who want to come as tourists from other countries and particularly from south of the border. They are attracted here by the scenery, the wide open spaces and the things that go to make up our tourist industry. I believe that if you are going to develop industry in an part of Canada the type of industry must be based upon the resources of that area.
In the maritimes there is certainly a tourist resource that can be developed but it will never be developed without the type of road over which tourists like to drive. I do not think for a moment that Florida became the great tourist resort it is because of its geographical position. I believe Florida is the great tourist resort it is today because the people who wanted to go to Florida, and particularly the people of the United States, were able to get there over the type of road which they demand.
We have, for example, the situation in the state of Maine. Maine in many respects is similar to the Canadian maritimes. Both the maritimes and Maine in the early part of the century had a fairly substantial shipbuilding industry and a large trade with the West Indies but the turn of the century saw both those industries decrease. Both areas have also witnessed the migration of a large percentage of their population west. There are indeed many similarities between Maine and the maritime provinces of Canada and yet the state of Maine has become the Florida of northern United States. This has come about largely because of the building of the Portland turnpike. The tourist traffic brought into the state of Maine because of the Portland turnpike last year was far greater than any of the sponsors of that highway had hoped.
I believe that such a highway going down through the maritimes and a similar type of highway across Newfoundland would bring into the Atlantic provinces a number of people that would raise the tourist industry there to the same level to which it has been raised nationally.
Trans-Canada Highway Act
I say again that if you are going to develop industry in any part of Canada it should be based on the resources that happen to belong to that particular area. We should do what can be done to encourage the growth of the tourist industry in the maritimes. We in Newfoundland have not been able to avail ourselves of a large percentage of the tourist dollar but we believe that with an improved highway system and improved facilities for caring for tourists during their stay in the province and with the many attractions Newfoundland can offer we too could find a good deal of revenue in the tourist industry.
Another reason why further consideration should be given to the construction of the trans-Canada highway in Newfoundland is that this province has never received from the federal government the same railway services that have been received by the other nine provinces. When Newfoundland entered confederation in 1949 it brought with it its own railway which had been built and paid for. It is true that since 1949 the Canadian National Railways have spent a great deal of money improving the Newfoundland railway service and have done a pretty fair job, all that could be done with a narrow gauge railway. But we have never had any railway expansion or money spent on canals. The people of Newfoundland have not had the opportunity of deciding how to transport their produce, whether by rail or road. There was only one way in which it could be done. My own riding is an area of particular importance to Newfoundland with respect to agricultural products. These products have to be transported by C.N.R. at rates that are high and sometimes at rates that seem unfair. When the trans-Canada highway is completed these products can be taken from the farming areas to places where there is a higher density of population and where a good market could be found for the things which can be grown in this area.
I know that all I have said today has been said before. I know, too, that the minister is well aware of the situation that exists in Newfoundland. The hon. gentleman last year was kind enough to come to my province. I know that time did not permit him to visit my part of the country but when he makes his next trip I hope he will be able to come to the west coast of Newfoundland which is able to provide some of the finest scenery anywhere in Canada. I can assure him that if he comes he will receive a welcome that will be typical of Newfoundland hospitality, a sample of which he has already experienced, and we will show him a fine part of Newfoundland, one that I believe

Trans-Canada Highway Act will impress on him the need for further consideration of this trans-Canada highway program.


Mr. Cadieu:: Mr. Chairman, I too should like to express my approval of this resolution providing for the completion of the present trans-Canada highway. I am also of the opinion that it does not provide sufficient money. In view of the fact that the present trans-Canada highway is already completed in the province of Saskatchewan and has been for almost three years, and in view of the fact that Manitoba and Alberta have almost completed their share, I would recommend highly that a second trans-Canada highway get under way. I was very pleased to hear the contribution to this debate made by the hon. member for Dauphin and was very interested in his remarks.
When one looks at the great potentialities this northern route would open up in the way of natural resources and connecting with roads to resources and connecting many federal and provincial parks in this vast area and some of the best farm land in Canada he immediately sees the value of a second trans-Canada highway, coming into Saskatchewan on No. 3 highway on the east, thence to Prince Albert, connecting roads to resources at that point and making use of the much-needed and new four-lane traffic bridge now nearing completion at that point, then continuing west to Lloydminster and west through the province of Alberta and British Columbia. One really has to see this great country to realize the need for this second trans-Canada highway. I can assure you, Mr. Chairman, it will be second to none. I think, without any doubt, construction of this highway under a join federal-provincial program would give access to one of the most scenic and resourceful routes in Canada.
In this area we have an organization known as the northern trans-Canada route association which has been doing much research work on this proposed route. In their pamphlet I notice they indicate that the extension of such a highway construction program should be considered by the government of Canada at the 1960 session of parliament so that the provincial governments can make their plans and include this item in their 1961 budgets. They go on further to point out the points brought out by the Secretary of State for External Affairs, who stated in the House of Commons on Friday, June 5, 1959, as reported at page 4385 of Hansard:
Possibly some policy may have to be adopted which will allow one type of aid in one province and another type of aid in another province in order to serve the national interest.


This is very important, because there is such a difference in the vast terrain and we can build so many more miles cheaper, comparatively speaking, than can be built through parts of Ontario, British Columbia and the maritimes.
Consideration should be given to the starting of a second trans-Canada route in this area. I was also very interested in the remarks of the hon. member for Churchill who pointed out some of the great resources that such a route would open up. I notice that my colleague, the hon. member for Saskatoon, proposed a route through Saskatoon on the basis of freight rates. If Saskatoon had the freight rate problem of the north that city would warrant a lot more consideration. Also, if we in the north had a highway built to the standard of No. 5 highway which runs through Saskatoon we would refer to it as our second trans-Canada highway. The importance of the starting of a second trans-Canada highway cannot be over-emphasized, Mr. Chairman.


Douglas Mason Fisher: Mr. Chairman, one of the things that you can always note about highway construction within a provincial framework is that choosing the setting is the most efficacious way of pleasing voters. I think the example of Mr. Gaglardi and Premier Bennett in British Columbia is a very good indication. If you want to make an impression on the voters you build highways. I think Premier Frost in Ontario is about the smoothest politician that Canada has known. He has also followed this practice to quite an extent. I notice that in the eastern Ontario constituencies in particular, where we have a malapportionment in so far as votes are concerned in relation to suburban constituencies, the road program is excellent. I also notice in our part of Ontario where cities are few and far between and the mileage is great, the road construction progress is rather slow. I want to bring to the minister's attention, before he listens seriously to his people in the house who are advocating a second trans-Canada highway-and I include the members in my own party-this fact. I wish he would take a look at what has gone on up in our part of the country and give us an explanation as to what is happening to the first trans-Canada highway.
I would like to point out to the minister- I know there is no collusion between him and the politicians of the same stripe as he in the provincial setup-that the whole assumption is that the highway construction that goes on is from the magnificent boundary of the province of Ontario. We tend to get pretty critical about this boundary,

knowing that most of the highway construction up there that is taking place along the trans-Canada route is being paid for by the federal government, anyway. This is the image that comes forward, which is abetted by the provincial politicians in our area. The member for Port Arthur in the provincial house, who has recently been in a bit of hot water for an optimistic statement in connection with a judicial matter, is also very free with his announcements in so far as culverts, bridges, and everything else are concerned.
There are usually about three stages in trans-Canada highway contracts. He announces all three stages. As a matter of fact, he makes so many announcements about trans-Canada highway contracts that I think everyone is confused. But anyone who drives over the trans-Canada highway between the Manitoba border and White River is more than confused. He is pretty well shaken up. It has got to the stage where you cannot politic in any decency. I know we had a riding association meeting last week in Nipigon, some 70 miles out of Port Arthur, and about 104 people managed to make it from various spots on the trans-Canada highway. But the main point that was made to me was, let us not have any more of those meetings if we are going to have our life and limb and property threatened by going over that highway. It is a terrible situation all the way from Port Arthur to Nipigon and from Nipigon all the way to White River and west of Port Arthur it is just tragic. As the hon. member for Fort William pointed out the other day, this was going to be the big link to enable trucks to fit in with the seaway development, tie in with Manitoba and give us cheaper transportation costs and help us to build.
I would like the minister to explain just what is the relationship of his department with the provincial department of highways. I would like him to explain why he cannot get them to move any faster, and why we have not a higher standard on the trans-Canada highway in our part of Canada.
Before he encourages the Prime Minister to go on television and talk about the possibility of further development of the trans-Canada, would he have the Prime Minister just take a drive from Winnipeg over to White River and examine the existing trans-Canada highway. I can tell you it is no prize. I know he would not want to blame his predecessors in that case, that terrible Liberal administration, because after three years in office the government ought to be able to get the provincial governments bugged
Trans-Canada Highway Act up. The only thing we know about the trans-Canada highway is that we have had a beautiful scandal down there. I am not going to raise scandals again; but three or four years ago, as the minister may remember, we had all sorts of charges and counter-charges. We even had a couple of contractors pay very large fines. That is about the main contribution the trans-Canada highway has made in our area. It has the worst record of detours, bumps, springs torn out that I have ever heard of.
One man in our constituency, a union organizer, who has to travel far and wide, told me that he is always getting representations from the international office because his car bills are so high. There is one highway that he hardly ever goes down that he does not lose at least a muffler or an oil tank, and this is the trans-Canada highway that the minister is so proud of.
I know there is a tendency, whenever money is being voted on projects in the area, for politicians to become sweet and fatuous, but I do not see how the minister can be either sweet or fatuous if he has ever had to drive over the trans-Canada highway in northwestern Ontario. It is no prize. I know he will restrain the enthusiasm for a second trans-Canada highway until he gets something going along this route. All sorts of construction work are being done, but at the rate it is going by the time those new projects are finished the ones that were at one time up to standard will be all shot. In the light of this, I think we should snuff out all the guff that we have heard about a second trans-Canada highway and concentrate upon that mileage that has not been completed. I am not speaking of the gap from White River east to Wawa or that particular area. We will assume that will be done this year. This provincial politician I have been talking about has been predicting its finish for the last four years. We have even had people in the Conservative party betting in all directions in the last few years as to how soon it is going to be finished. I am talking about the part that is theoretically finished now but is not up to trans-Canada highway standards.
Of all the misbegotten highways that anyone has ever driven, I think the stretch between the Manitoba boundary and White River is about it and yet it is one of the longest stretches in the trans-Canada highway. I notice that the railways, using freight rate terms, always refer to this part of the country as the bridgehead area, the big link they have to move goods through to get them from east to west. You really think you are in a real war bridgehead when you go over some of that road.
2666	HOUSE OF
Trans-Canada Highway Act
I have requested both privately and publicly that the minister visit the lakehead. Conservative fortunes are not very high there and he could do something about raising them. It seems to be an area that does not take to Conservatives to any marked or consistent degree. The people there do not even take to the vision. I am always willing to give Conservative politicians every opportunity to come there and rectify the situation, so my invitation to the minister is sincere. Come up there and take a look at this trans-Canada highway. Take a look at the botch you have managed to make of the lakehead terminal so far. Bring the Prime Minister along and take him for a drive. I have noticed that he likes driving through Quebec. He took a big tour through Quebec last year because he thought the situation was shaky but I can assure him that he will be shaking when he is through driving over the trans-Canada highway in that part of Ontario. I would1 very much like to see such a visit. When the Prime Minister and the Minister of Public Works travel that part of the trans-Canada highway they will be very warm when they are through. In other words, I am suggesting that we have a built-in warm reception in the form of the trans-Canada highway.
I do not want to overdo this point but I should like to reiterate: Let us not have any talk about a second trans-Canada highway as an if or a promise or a vision until we have the substance in northwestern Ontario of the first trans-Canada highway. I suggest that the minister has got to do more than talking to the provincial authorities to get them on the move. I know that the provincial authorities have been threatening to come here and do some tough talking about more money. In this particular case the money is there, according to the minister and previous ministers, but they have not been taking it. I think that some time during this debate or the later discussion we should have from the minister a really candid explanation of why the Ontario government has been puttering around for so long with respect to the trans-Canada highway in our part of the country.
(Translation):


Noël Dorion: Mr. Chairman, I read with interest the speech made yesterday in this house by the hon. member for Levis (Mr. Bourget), with regard to the resolution sponsored by the Minister of Public Works (Mr. Walker).
The tone and the character of his remarks show that the hon. member is obsessed by the imminence of provincial elections in


Quebec. His federal mandate is apparently not enough for him and so he did not fail to sermonize people who, after all have been given a mandate different from his own and which entrusts them, and them alone, with the responsibility for managing the affairs of the province. Does it mean that his provincial leader is so weak that he needs an alter ego in Ottawa to help him strengthen his positions?
Be that as it may, I do not intend to follow suit. In spite of my regard for the Quebec government, I have always endeavoured to rely on my own convictions in setting the course I should follow in this house. This I have chosen and still choose to do, out of regard for the mandate entrusted to me by the people of Bellechasse, a mandate which prompts me to adopt a federal and constitutional approach in dealing with the problems we have to consider.
That might well come as a surprise to my good friend of Levis. Indeed, according to the remarks he made yesterday, he seems to think that a man cannot reason on his own, assume his own responsibilities, but has to borrow ideas elsewhere and take his orders from outside.
If that is the hon. member's conception of a political party, and because of the regard I have for him, I refuse to believe that it is-
(Text):


The Deputy Chairman:: Order. I have
been listening to the hon. member and I should like to remind him that we are discussing a resolution to amend the Trans-Canada Highway Act. I was hoping that he was perhaps making a point leading up to that, and I am sure he will now come back to the resolution before the committee.
(Translation):


Noël Dorion: Mr. Chairman, I was merely referring to certain remarks made yesterday, but at your kind direction, I will at once revert to the matter under review.
The views I shall express today on the problem we are considering-and this is the first opportunity I have of doing so- are quite personal views that in no way engage the responsiblity of either my colleagues or of the government which has been entrusted with administering Quebec's affairs and whose views, attitudes and inspirations I respect.
The sole object of the legislation before us is, after all, to increase to $400 million the contributions required to complete the trans-Canada highway and to extend to December 31, 1963, the period required for its completion. The resolution says no more and no less. It does not at all raise the

matter of principle; it merely ensures that the project undertaken under a 1949 act, will not come to a halt and that the federal government that took it over will carry out the agreements made with nine of Canada's ten provinces.
How could we shirk the responsibilities undertaken by parliament, and attempt to terminate, by unilateral action, the agreements that were signed with the provinces? That alone would be reason enough to justify our support of the resolution.
I might perhaps let it go at that. However, having long since learned to face my responsibilities, I shall go even further and say that, in view of the wording of the 1949 act, I doubt that its provisions are contrary to section 92 of the 1867 constitutional act. Though the act does not expressly refer to the exceptions provided in paragraph 10 of section 92, it is fully in accord with the spirit of that paragraph.
Indeed, the primary purpose of the trans-Canada highway is to link the various provinces together by means of a motor highway, so that any Canadian may drive over it from coast to coast right in Canada, without occasional detours over United States highways. Now this primary object, and I think this is the main point-is in my view fully within the spirit of the exceptions provided in paragraph 10 of the said section 92.
It is quite normal that this legislation should have caused misgivings to the government of the province of Quebec, especially when we consider the centralization context existing at the time this act was adopted. It must be admitted that in the meantime the atmosphere has definitely cleared up.
Indeed, last year, when some hon. members of this house who had met with success in the province of Quebec by arousing dis-sentions and bickering-that is how they understood national unity-were doing all they could to blast the position of -the government of the province of Quebec, the hon. member for Vancouver Quadra (Mr. Green), then minister of public works, gave them this answer, and I quote:
I merely say that in the province of Quebec, there is a first-class highway. The Canadian public is not inconvenienced in any way because Quebec has not seen fit to participate in any way in this program. That province has its rights under the British North America Act, and if the men who happen to form the government of the province see fit to follow a policy, then I doubt very much the wisdom of attempts being made in the house to blow up a storm in the province of Quebec either on this measure or on any other.
Trans-Canada Highway Act
In other words, the hon. minister recognized that each government had to take its own responsibilities, and that he would surely not intervene in charting the course of the policy taken by Quebec or any other province.
Besides, when this legislation was adopted, it seemed that the concern felt by the government of the province of Quebec was being shared, to some extent, by the hon. member for Levis (Mr. Bourget). According to the speech he made in this house on November 28, 1949, he would not have agreed to the federal government paying the full cost of the highway, as this might have given the federal government property rights and control over the highway. Here is, in fact, what he said on November 22, 1949:
Well, under the circumstances, it would be easy to infer that in letting the federal government pay 100 per cent of construction costs, and later pay for maintenance, it would be a recognition of the federal government's jurisdiction over this highway. Although I am neither a lawyer nor an expert on constitutional issues, I think we all agree that the question of provincial roads, legally speaking, belongs exclusively to the provinces, even if parts of those provincial roads have to be used for the trans-Canada highway.
When the member for Levis was expressing such fears, why should not our rulers in the province of Quebec, who were more directly concerned with the administration of the province, entertain similar fears?
In a country with a British constitution, it is so dangerous to set a precedent and therefore a rule which, despite the terms of the constitution, eventually takes on a permanent character.
Then too, it does seem that, because of his long tenure in parliament, the hon. member for Levis is indulging a tendency to appeal to precedents in urging the federal government to venture farther and farther afield into ways and by-ways fraught with perils for the rights and freedoms of the provinces.
In fact, here is a suggestion he made yesterday, which make us believe that the hon. member has already cast aside the caution he expressed in 1949. I quote from yesterday's Hansard:
The minister has no doubt been informed of the statement made by the president of the Canadian Construction Association who, speaking before members of that association at Calgary, in early January, suggested that a federal-provincial conference should be held this year to consider the national highways problem. He also added that, in his opinion, members present at this important meeting must work in close co-operation with Ottawa and the provinces.

Trans-Canada Highway Act
On the other hand, according to the answer given by the Prime Minister (Mr. Diefenbaker) to the hon. member for Assiniboia (Mr. Argue), some time ago, no official talks, so far, have been opened with the provinces in connection with that project. In my view, it is high time such a meeting were called, because two or three western provinces have already completed their highway, and it would be desirable that plans be made for the construction of highways, that would be of national interest.
Of course, I should be ill-advised if I stated an opinion on a project about whose nature or general character we know nothing; however, in my opinion, it is a project about which we should be cautious. As remarked by Mr. Pierre Yigeant in he Devoir for July 23, 1959, certain federal undertakings should not be regarded as precedents justifying the government in taking up highway construction, which except in extraordinary circumstances, is under provincial jurisdiction.
Of course, the exceptions provided under paragraph 10 of section 92 are most insidious, and of such a nature as to give rise to all sorts of misunderstandings and interpretations. Already, on March 18, 1912, a senator whose opinion our hon. friends of the opposition would no doubt hesitate to disclaim, Sir Richard Cartwright, expressed himself very clearly on that point, in a debate of this nature, and I quote from the Hansard of the Senate for March 18, 1912, page 517:
What are those exceptions?
He is referring of course to the exceptions provided under section 92, paragraph 10, of the British North America Act of 1867:
What are those exceptions? Lines of steam and other ships, lines of steamships between the provinces, and lastly, such works situated within the province which are declared to be for the general advantage of Canada. I know how easily legal gentlemen of experience can drive a coach and four through any act of parliament that was ever drafted, and I suppose that it would be technically possible for the hon. gentleman to declare all these small roads, wherever they may be, to be works for the general advantage of Canada. Very possibly the courts might sustain that view, but I submit that no greater abuse of the provision could possibly be imagined than declaring local works of that kind to be for the general advantage of Canada.
The cautionary measures just quoted remain amazingly timely, and I believe that all members of this house should ponder and heed them. Was it not because of the exceptions under section 92, that, in 1954, in the case of the attorney general Ontario v. Winner-a case that was referred to this afternoon-was it

not because of those exceptions that the privy council decided that interprovincial road transport is not under provincial jurisdiction and is entirely under federal authority?
They are exceptions that the federal legislator should resort to only with extreme caution and circumspection if he genuinely wants to safeguard the federative character of our constitution and, above all, if he really wants to preserve and to foster peace and harmony between the Ottawa government and the provincial governments, and between the various schools of thought which characterize the people of Canada.


Mr. Habel:: Mr. Chairman, may I say that I have been most interested in the remarks of the hon. member who has just spoken. It was certainly a masterly speech from a constitutional point of view. As an expert on the Canadian constitution, the hon. member for Bellechasse (Mr. Dorion) has said all that needs be said to explain and justify the vote of the Conservative members from Quebec on this resolution.
Coming back now to the resolution itself, I must say I am a bit disappointed that, on the occasion of this amendment to the Trans-Canada Highway Act, the minister failed to give greater consideration-notwithstanding the views of my friend the hon. member for Port Arthur (Mr. Fisher)-to the construction of a second trans-Canada highway.
I think the house will be interested to know that there is now, in Canada, an essentially trans-Canadian highway. I refer to the road linking Manitoba with Port Arthur and Fort William, and then running through to Long-lac, Hearst, Cochrane, North Bay, and from there to either Toronto or Montreal.
(Text) :
Progress reported.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate Chamber.
And being returned:

Mr. Speaker informed the house that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bills:
An act for the relief of Janet McMillan Sim Sinclair Kerr.
An act for the relief of Jacqueline Joly Mazurette.
An act for the relief of Shirley Evelyn Ellis Bertram.
An act for the relief of Sally Emden Rohr.
An act for the relief of Barbara Steinberg Shapiro.
An act for the relief of Olga May Hospadaruk Edwards.
An act for the relief of Georgette Rosenberg Korman.
An act for the relief of Donald Snowdon.
An act for the relief of Mary Nisbet Clements.
An act respecting the Canadian Public Health Association.
An act respecting The Algoma Central and Hudson Bay Railway Company.
An act to amend the National Housing Act, 1954.
An act to amend the Indian Act.
An act to amend the Canada Elections Act.
An act to amend the National Energy Board Act.
An act for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1961.
An act for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1960.

Paul Joseph James Martin: Is there any change in the course of business today?


Gordon Minto Churchill: There are four items available for discussion tomorrow-the resolution concerning the Federal-Provincial Tax-Sharing Arrangements Act and the resolution concerning the Trans-Canada Highway Act among them. If these should be completed, there are the two resolutions in the name of the Minister of Northern Affairs and National Resources dealing respectively with the Yukon Act and the Northwest Territories Act.


Mr. Marlin (Essex Easl):: No change in the rest of the business for today?


Gordon Minto Churchill: No. Tonight we continue with the budget debate.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.

[Stage Direction]
ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE Hon. Donald M. Fleming (Minister of Finance) moved:
That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
79951-0-169
The Budget-Hon. D. M. Fleming
He said:
(Translation):
Mr. Speaker, for a third time it is my honour and privilege to present to the house the annual budget.
In presenting my first budget on June 17, 1958, I drew attention to the fact that never since confederation had any portion of the budget speech been delivered in this house in the French tongue. I expressed surprise that in a parliament with two official languages enjoying complete equality every portion of the budget speech had always been delivered in English. Within my acknowledged limitations I departed from that practice in 1958 and again in introducing my second budget a year ago.
Tonight I am going to take a step further and open my remarks in the French language which has so gracefully adorned the proceedings of this house and holds a secure constitutional position in the Canadian parliament.
As on the two previous occasions, I shall begin with a review of economic conditions over the past year and an indication of what I regard as the likely trends to be expected during the new fiscal year. I shall report to the house on the government accounts, on dominion-provincial relations and on our debt management measures, then proceed to review our financial plans for the new fiscal year and the tax policy on which they are based. Finally I shall outline the tax proposals which are embodied in the resolutions which I am introducing this evening.
(Text):

[Stage Direction]
Twelve months ago when I introduced the last budget we were emerging from a recession. Our fiscal and other related policies at that time were based upon an expectation of continued and accelerating recovery. In these circumstances we believed we should move in the direction of a balanced budget at a pace which would resist inflation and at the same time encourage a healthy rate of balanced growth. Looking back over the fiscal year which ends tonight, I think we can take satisfaction in the results. In spite of a period of credit strains and in spite of some unfortunately prolonged industrial stoppages both at home and abroad Canada has had a good year. A gratifying degree of price stability has been achieved, and employment, production, incomes and trade have all shown healthy increases. We can look forward optimistically to another year of solid expansion and balanced growth.
I shall not attempt a detailed review of economic developments of the past year; the
[Stage Direction]
The Budget-Hon. D. M. Fleming budget white paper tabled yesterday covers these fully. Rather, I shall touch on some of the highlights and examine the prospects for 1960.
Last year we emerged from a recession which had been caused by a number of factors; capital expenditures by business, especially in industries producing raw materials for export, had declined; business investment in inventory holdings had fallen sharply from levels which had been high in relation to business sales; and export incomes, previously increasing, had levelled off for two years because of a reduction in demand in other parts of the world. The government had fought this recession by measures to sustain consumer demand, by stimulating housing, by increasing government investment, by augmenting transfer payments to other levels of government and by many other means.
The decline was reversed late in 1958 and gave way to expansion last year. Capital expenditure by business, especially on machinery and equipment, increased throughout 1959 and in the last half of the year was running at a rate well above that of the low point of the recession. The survey of business intentions released by my colleague the Minister of Trade and Commerce a few weeks ago indicates that this upward trend will continue throughout 1960.
As business conditions improved, first in the United States and later on in western Europe, our exports began to increase and toward the end of the year accelerated sharply. In 1959 we exported more than $5 billion worth of goods for the first time in our history. Exports to the United States showed the greatest absolute gains, but in the latter half of the year the most rapid rates of increase took place in exports to overseas countries. In the fourth quarter the rate of our total exports of goods, seasonally adjusted, was 12 per cent above the rate in the first quarter of 1959.
With rising exports and greater business investment, Canadian incomes increased. Consumer expenditures continued to grow and outlays on housing were very close to the record rate of the previous year. Expenditures by provincial and municipal governments on goods and services increased. The federal government slightly reduced its own outlays on goods and services, but increased its transfer payments to the other levels of government.
With the general improvement in business, there was no longer any liquidation of inventories, such as had taken place in 1958; instead businessmen added to their stocks to keep pace with rising sales. In 1958 the liquidation of business inventories had amounted
fMr. Fleming (Eglinton).l
to $323 million, while last year there was a net accumulation of $355 million, a reversal which increased demand by a total of $678 million.
Reflecting all these and other influences, the gross national product in 1959, according to our present preliminary estimates, rose to $34.6 billion compared with the estimate of $34£ billion upon which I based last year's budget. Accompanying this rise in production was an increase in employment of 2.7 per cent over 1958. Hon. members have seen the recently published February employment figures. The number of persons with jobs was 116,000, or 2 per cent, higher than at the same date a year ago, but 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. 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.
The past year was notable for a welcome absence of speculative excesses in production, demand and inventories. I stress this because often in the past such excesses have provided a major cause of recession. Our economic growth has been orderly and balanced. New investment in plant and equipment has been broadly based. Increases in consumer expenditure have moved in line with personal disposable incomes and personal saving was maintained at the 1958 level.
Average per capita wages and salaries of workers in trade and industry reached a new record of $3,773, an increase of 4 per cent over 1958 and of 10 per cent over 1956. Since the consumer price index was only 1 per cent higher than in 1958, there was a very satisfactory gain of 3 per cent in real income.
The balanced nature of our economic growth has contributed to price stability, and price stability in turn, to balanced growth. Like the consumer price index the wholesale price index for 1959 was about 1 per cent higher than in 1958.
In the financial sector 1959 was marked by some disturbances which had subsided by the end of the year. During the first eight months of the year there was an extraordinary increase in the demand for bank loans. In order to meet their customers' demands the banks were heavy sellers of government bonds. At the same time all levels of government continued to be net borrowers although demands for funds, especially by the federal government, were substantially
[Stage Direction]
lower. As a result of all these forces, combined with the effect on Canada of rising interest rates abroad, especially in the United States, bond prices declined and interest rates rose from January to August. Since then short term rates have declined substantially and longer term rates remained steady until recently when they showed a downward trend.
The general public, attracted by higher interest rates and increasingly confident in the determination and ability of the government to combat inflation, provided the savings necessary to meet a large part of these and other demands for capital. Private savings, both personal and corporate, totalled some $6.6 billion, $260 million higher than in 1958 and more than $500 million higher than in 1957.
The high level of Canadian savings has, however, been more than matched by the level of capital investment. During 1959 the equivalent of one quarter of our gross national production went into investment. This proportion is one of the highest among all western countries.
Our capital requirements in 1959, and over the past several years, have necessitated a substantial inflow of foreign capital to supplement our domestic savings. The initiative for this inflow has come in part from our own people who have borrowed abroad, and in part from foreign investors attracted by the nature and the diversity of our resources. This direct investment by foreign entrepreneurs, not only from the United States but also from the United Kingdom and from Europe, is a reflection of strong confidence in our economic prospects and brings into Canada not only capital funds, but also technical know-how, and often also brings with it an assurance of export markets. All told the net inflow amounted to $1,460 million in 1959, about $400 million higher than in 1958, and only slightly above the previous peak of
1957.
This increase in the inflow of capital was, of course, interrelated with the increase in our balance of payments deficit on current account. I wish to comment on this subject. Our current account can be divided into two parts; goods and services, and the movements of these two parts are quite different. In the goods sector our deficit amounted to about half the size of the record deficit of 1956. This improvement reflects the fact that imports were more affected by the intervening recession than were exports, while the recovery of 1959 saw sizeable increases in both. In contradistinction, our deficit on account of services has steadily increased, reflecting higher dividend payments on successful investments by non-residents in Canada, 79951-0-1694
31, 1960	2671
The Budget-Hon. D. M. Fleming higher interest payments, business fees of one kind and another, and increased travel and expenditure by Canadians abroad. In 1959 this deficit exceeded one billion dollars.
Putting goods and services together, they add up to the total of $1,460 million. This deficit is reflected by, and is a reflection of substantial continuing imports of capital. I do not mean to say that we use all of the money we borrow abroad to import machinery and other forms of capital equipment. We produce domestically many of the goods and materials used in our investment pro-, gram, and the composition of our imports reveals only a partial picture of that program. What is significant is the use we make of all our resources, including the product of our own labour and equipment, and what we obtain as a result of our foreign transactions. What is important is that a substantial portion of these resources 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. Broadly speaking, I believe that these objectives are being attained.
However, as my colleague the Minister of Trade and Commerce has said, we must not be complacent. Basically our attention must be directed to our spending and investing habits. Our standard of living has increased to a level undreamed of a generation ago. Our people have demanded social security, services and facilities from all levels of government on an expanding scale. Along with our investment program, this scale of expenditures has required a heavy outlay of resources, both physical and financial. In spite of a rate of saving which is higher than that of almost any other country in the western world, we have not been able to supply all. these resources ourselves. The inflow of capital and the accompanying balance of payments deficit reflect this underlying situation.
Any inflow of capital raises questions as to ownership and control of Canadian industry and resources, and also the question of the servicing of debt. As to ownership and control, this government's position is clear. We welcome capital into Canada if, when here, it is willing to act as if it were Canadian and not as if it were foreign. During the past two years there has been increasing evidence, in many quarters, that foreign capital in this country is becoming increasingly conscious of its Canadian responsibilities. This is a subject that has been vigorously brought to the attention of foreign investors by the Prime Minister and others. It would be better if the desired result were achieved by such persuasion than by legislation.
[Stage Direction]
The Budget-Hon. D. M. Fleming
As to the servicing of external debt, I have already explained that a very large proportion of our national output consists of additions to our national stock of capital equipment which increases our total productivity. The inflow of capital has contributed to the growth of our gross national product. Over the years of our history economic growth has taken place at a faster rate than the additional net financial indebtedness to the outside world which has been incurred in the course of achieving it, and our ability to service this foreign debt has correspondingly improved.
From the mid-1920's to the outbreak of war in 1939 our net foreign indebtedness was equal to or exceed our gross national product. During the war years and in the immediate post-war years we made very large loans, amounting in total to more than $2.5 billion, to our friends and allies overseas and to new international financial institutions. In the same years we had to defer much of the maintenance and most of the expansion of our social capital, while at the same time all levels of government in Canada were progressively paying off or buying back large amounts of foreign-held debt. As a result by 1950 our net foreign indebtedness was equal to less than one quarter of our gross national product.
Since 1950 we have been expanding very rapidly in resource development, in secondary industries, and in augmenting and modernizing our social capital, at rates considerably in excess of our domestic rate of saving. In this period the rate of increase in our net foreign indebtedness has exceeded the growth in national output, and the ratio of net foreign debt to gross national product is currently about 45 per cent. Thus in relation to our national product our net foreign indebtedness is today less than half what it was before the war and our ability to service it is correspondingly greater. The net cost of servicing our external debt in 1926-1930 represented more than 4 per cent of our gross national product; in 1950 it was just over 2 per cent, and in 1959 it was just under \\ per cent. I do not anticipate that, if we manage our affairs prudently and properly, Canada will indefinitely continue to rely on capital from abroad as heavily as in the last few years. I expect that our need for capital from abroad, while fluctuating from year to year, will continue to decline in relation to our economic development and growth.
Admittedly, if a situation were to arise in which the economic environment or the financial climate deteriorated rapidly and radically, there would indeed be problems
[Stage Direction]

associated with past capital inflows, but happily that is not the situation in Canada, today.
We have been following constructive and realistic policies in matters of trade and finance, policies appropriate to present and foreseeable circumstances. What are the alternatives to such policies? A program of government controls? The imposition and enforcement of import restrictions and quotas? Individual restraints upon Canadians desiring to travel abroad and on the amount of money they could take with them? The creation of a centralized capital issues committee which would dictate to provinces, municipalities and to private business as to where, when, on what terms and how much they could borrow? I have only to list a few of these questions to indicate the obvious reply. They may be justifiable in the midst of a national crisis. In peace and prosperity, in a free society, they are not warranted. Indeed, some of them would be unconstitutional. Moreover, I believe that some of these so-called remedies would actually cause the disease that they are supposed to prevent or cure. Government controls, by interfering with freedom, cause confidence to falter, initiative to freeze, and capital to take flight.
Canadians can increase their own domestic capital and make this country financially more self-reliant if they are prepared to practise increased efficiency, productivity and thrift. This responsibility falls on all levels of government, private business and individuals.
We must place emphasis on greater productivity and efficiency rather than on sheer size, on cost control rather than on price increases, on greater saving rather than on excessive consumption. I have every hope that in the mood of renewed confidence in the soundness of our currency, and in the absence of shortages of goods, both business and the public at large will be disposed to review more carefully their spending programs.
In saying this I am fully aware of the role of leadership that falls to the federal government. It is the responsibility of the government to try to establish the conditions of financial balance within which the endeavours of others can be carried out successfully. Let me assure hon. members that the government is discharging this responsibility.
In the post-war years, in this country as in others, there has been a serious threat of inflation. Some people were actually led to suppose that chronic price increases were inevitable; others even suggested that they were desirable, or at least less undesirable

than some imaginary alternatives. Let us give no quarter to such defeatist doctrines. Inflation acts like a drug on the economic system. Even small doses breed a craving for more.
One of the most serious effects of inflation is that, like other drugs, it erodes stamina and will power. The will to save, to build carefully and prudently for the future, lies at the heart of sound financial policy, whether it be the financial policy of the individual, the corporation or the government. Saving -voluntary, purposeful, constructive saving -is essential in an economic system dedicated to freedom and progress. Yet it is this sort of saving that inflation most insidiously undermines. As prices rise and stability disappears, the prizes of inflation go not to the worker but to the speculator, not to the saver but to the spendthrift.
To contain inflationary pressures the government has reduced its borrowing and has held a firm check on the expansion of government expenditure. The treasury board has painstakingly reviewed and revised spending programs. As a result of careful scrutiny we are reducing substantially the demands of the federal government on the financial markets and, through them, on the savings of the Canadian public.
If all of us, working and saving together, will increase the total amount of capital available for sound investment in Canada, we can reduce our reliance on foreign resources. In short, we have at our disposal the means to achieve in a positive way, the objectives which negative courses of action cannot hope to accomplish.
There is a related question upon which I should like to dwell for a moment. This is the question of our exchange rate. The external price of our Canadian dollar has been high for eight years now and is currently running about five per cent above the United States dollar. This situation has been brought about mainly as a result of an inflow of foreign capital and reflects the confidence of outsiders in the soundness of the management of our financial affairs. Admit^dlv it lowers the prices received in Canadian dollars by those exporters who have to sell in world markets at world prices. It also means a lower price in Canadian dollars for many classes of Canadian imports. On the other hand, it lowers the cost of imported raw materials and semi-finished goods used by our manufacturers, and it has helped to keep down our cost of living and cost of producing.
I have said on many occasions and I repeat now that I would welcome the development of circumstances that would reduce
The Budget-Hon. D. M. Fleming the external price of our dollar provided this was brought about by means other than an arbitrary and artificial attempt by the government to work against basic economic forces.
I have seen some references to a demand that the government should deliberately "devalue the dollar". This kind of talk might have been appropriate when Canada was on the gold standard, or even when it maintained a fixed exchange rate. We have not been on the gold standard for half a century and we have not had a fixed exchange rate for a decade.
An attempt by the government artificially to lower the external price of the Canadian dollar would involve borrowing or raising by taxes very large sums of money witli whichjto buy up foreign exchange. It might well be that the government could not reduce the inflow of funds sufficiently without imposing direct controls on capital movements and then on the movement of goods. Apart from the economic objections to such policies it would be a very difficult matter to work out effective technical means of control. Even then the controls would not be effective unless the objective were one which commanded the broad public support which is necessary for general compliance. In other words we would be embarking upon a gigantic financial speculation with no assurance of success.
The exchange value of the Canadian dollar is determined by the free play of the forces of supply and demand. These forces have pushed the rate up, and at some time in the future market forces could drive the rate down. Many people would be happy about such a development, at least if it came about in an orderly manner. However, those who undertake commitments in terms of United States dollars or other external currencies expose themselves to the risk of having to repay at a time when the exchange rate for the Canadian dollar may be quite different from what it is today. This is a risk which the borrower, whether personal, corporate, provincial or municipal must bear himself and is a danger which I clearly wish to stress.
I have referred to the improvement in our exports; we must look further ahead, however, and make every effort to preserve and improve our access to world markets so that Canada's exports, which will remain one of the foundations of our prosperity, can continue to expand.
In recent years the western European economy has been enjoying particularly rapid and substantial growth. More than one quarter of our exports go to western Europe including the United Kingdom. A prosperous, politically stable and expanding European economy will
2674	HOUSE OF
The Budget-Hon. D. M. Fleming provide increasing opportunities for profitable Canadian trade. We have been concerned, however, with the possible political implications of economic disagreements within western Europe. We need also to take all practicable steps to ensure that our trading position is not adversely affected.
We have therefore been giving very close attention to the problems that are arising from the emergence of the two regional trading groups in Europe: the European economic community of six countries and the European free trade association of seven countries. We have been anxious that these arrangements should not lead to inward looking and discriminatory practices and should not weaken the world wide trading system which has been built up so patiently and so successfully in recent years. We are therefore seizing every opportunity to put forward the Canadian point of view at meetings with representatives of these groups and with our other trading partners. Moreover, we are participants with the European countries and the United States in discussions relating to, and have declared ourselves ready to become members of, a reconstituted organization for economic co-operation and consultation,
O.E.C.C.; and further we will press that such organization shall subscribe not only to the principles of the international institutions governing trade and payments but also that members shall honour their obligations in these institutions. In particular, we are continuing to urge European countries to resist the growth of European tariff discrimination by extending their tariff reductions to other countries on a most favoured nation basis. We have found that our views are shared by many countries in other parts of the world, and particularly by those in the commonwealth. The general tariff conference of the contracting parties to the GATT which is to be convened next September will provide an opportunity for a further reduction in world trade barriers and new opportunities for Canadian exporters.
I have dealt at some length on our external position because of the bearing which it has on our domestic situation. So long as our access to foreign markets is unimpaired and we are able to keep the costs and the quality of our products and services thoroughly competitive, we need have no fears for the future. The economic expansion which Canada is now experiencing is soundly based; incomes are rising and we have demonstrated a willingness to save; relative price stability seems reasonably assured; business confidence is high, and capital investment is expanding; our export prospects are bright. I
[Mr. Fleming (Eglintonl.)
[Stage Direction]
expect that the forces of expansion will continue during 1960, and that the rates of increase we have experienced in 1959 should be maintained throughout the year. Within this framework I am basing my forecast of 1960-61 revenues on an increase in the gross national product in 1960 of about 6 per cent, or to a record level between $361 and $37 billion dollars.

[Stage Direction]
The government's accounts for the fiscal year that ends today are set out in detail in the white paper tabled yesterday afternoon and I propose to refer to them only very briefly now. I should, however, remind hon. members that the figures I use tonight as well as those in the white paper are preliminary and subject to change. The final figures will not be available until next July or August after the accounts for the year have been closed and audited.
The house will recall that in my budget speech last April I budgeted for revenues of $5,267 million, expenditures of $5,660 million and a deficit of $393 million. On the basis of figures in the white paper it is now estimated that our revenues for the fiscal year were $5,301 million, our expenditures $5,707 million and the deficit was $406 million.
Revenues, expenditures and the total deficit all were very close to forecast. Revenues were $34 million or two thirds of one per cent higher than last April's budget estimate; expenditures were up $47 million or three fourths of one per cent more than forecast; and the deficit which was forecast at 7.5 per cent of revenues has turned out to be 7.7 per cent of revenues. Defence expenditures were $175 million less than forecast but this was more than offset by increases of $87 million for higher charges for interest on the public debt, $50 million for larger subsidy and taxsharing payments to provinces, and approximately $55 million for various payments in connection with our agricultural and farm assistance program.
Over and above these expenditures that are charged to the budgetary accounts we have under authority of parliament disbursed considerable sums for loans, advances and a number of other essential purposes. These included loans of $325 million to Central Mortgage and Housing Corporation, $233 million to the C.N.R.-which, however, repaid $489 million on account of these and earlier loans from the proceeds of public issues of government guaranteed C.N.R. bonds-$30 million to the farm credit corporation, $23 million to the St. Lawrence seaway authority and $21 million to the Northern Canada power commission. During the fiscal year these
[Stage Direction]
disbursements amounted in all to $945 million. To meet these outlays $942 million was available from the repayment of loans, net annuity insurance and pension receipts and other sources. Thus a net amount of $3 million was required for all these non-budgetary transactions. This compares with a net cash requirement of $664 million to finance our nonbudgetary transactions in the previous fiscal year.
The budgetary deficit of $406 million and the net amount of $3 million required for non-budgetary transactions have been financed by an increase of $333 million in the government's outstanding unmatured debt and by a decrease of $76 million in our cash balances. Combining the net new issues of C.N.R. guaranteed bonds, the net new issues of direct government of Canada bonds and the reduction in our year-end cash balances, our total net cash requirements for the year have turned out to be $900 million.

[Stage Direction]
At this point I should like to report briefly on the old age security fund. As hon. members know, the Old Age Security Act provides a
31, 1960	2675
The Budget-Hon. D. M. Fleming pension of $55 a month to every eligible person 70 years of age or over. Prior to last year these payments were financed by contributions of 2 per cent on corporate and personal incomes, with a maximum contribution of $60 on personal incomes, and a 2 per cent sales tax. Under last year's budget, these contributions were raised from 2 to 3 per cent to take effect January 1, 1959, for corporate incomes; July 1, 1959, for personal incomes, with a maximum contribution of $90, and April 10, 1959, for the tax on sales.
During 1959-60, pension payments from the fund totalled $574 million and revenues credited to the fund amounted to $550 million. The deficit of $24 million for the fiscal year was covered by a temporary loan.
May I insert in Hansard at this point, Mr. Speaker, table 1-showing the contributions and pension payments under the Old Age Security Act for the last four years.
Mr. Speaker:: Has the minister leave to have this table inserted at this time?


Some hon. Members:: Agreed.
[Editor's note: The table referred to is as follows:]



TABLE 1

[Stage Direction]
OLD AGE SECURITY FUND (in millions of dollars)
-	1956-57	1957-58	1958-59	1959-60Contributions- Personal income tax	
Corporate income tax	
Sales tax	125.0 67.3 179.3	135.0 60.7	146.4 55.3	185.6 91.3371.6	371.5	375.3	549.9Pension payments	379.1	473.9	559.3	574.0Deficit	7.5(>)	102.4(1)	184.0(')	24.1(i)(*) Charged to budgetary expenditure under appropriation by Parliament. (J) Temporary loan from the Minister of Finance.


[Stage Direction]
(Translation):
Donald Methuen Fleming: During the past year there have been important developments in our financial relations with the provinces. On July 6 and 7, 1959, the newly created dominion-provincial committee of ministers of finance and provincial treasurers met in Ottawa to discuss a wide range of subjects connected with these financial arrangements and to make provision for their systematic study. This committee met again in Ottawa on October 15 and 16 for further discussions. At the October meeting I
informed the provincial treasurers and ministers of finance that it was the intention of the government to ask parliament at this session to approve legislation continuing for a further two years the increase from 10 per cent to 13 per cent in the provincial share of the yield from the personal income tax.
As hon. members are aware, this legislation is at present before the house. This measure also contains important provisions relating to university education and federal-provincial co-operation. A solution has been offered which takes into account the

The Budget-Hon. D. M. Fleming long-standing objection of the province of Quebec to payment of federal grants to the universities of that province. The alternative provided in the measure will enable any province to replace the present federal grants to universities by additional provincial grants without placing greater burdens on its taxpayers and without increasing the cost to the federal treasury.
At the October meeting of the committee of ministers of finance and provincial treasurers, I also stated that it would be the intention of this government to arrange for a dominion-provincial conference of prime ministers and premiers in mid-1960 to discuss federal-provincial financial relations for the period after the expiry of the present agreements March 31, 1962. As hon. members are aware, the Prime Minister on March 24, wrote to all the provincial premiers inviting them to a plenary conference in Ottawa, July 25-27 of this year. We hope that this meeting will make a further major contribution to the achievement of harmoni-

ous fiscal relations between the dominion and the provinces.
(Text):
From a budgetary standpoint our fiscal relations with the provinces are extremely important since the amounts paid to or for the provinces absorb nearly one quarter of our total federal revenues. I should like to place on record table 2 showing the cost to the federal treasury in recent years of our fiscal arrangements with the provinces. This table includes unconditional payments and tax abatements as well as conditional grants and certain closely related payments, the grants to universities and the grants to municipalities in lieu of taxes. It will be seen that the total amounts paid or abated to the provinces have approximately doubled over the past four years.


Mr. Speaker:: Has the minister leave to have this table inserted in Hansard?


Some hon. Members:: Agreed.
[Editor's note: The table referred to is as follows: 1



TABLE 2

[Stage Direction]
FEDERAL CONTRIBUTIONS TO THE PROVINCES (in millions of dollars)
		1956-57	1957-58	1958-59	1959760 (preliminary)	1960-61 (estimated)
A. Unconditional Payments-					
1. Statutory subsidies	22.8	22.0	21.6	21.4	21.02. Tax abatements (estimated)	157.4	275.6	275.1	299.6	335.83. Tax rentals	365.9{	213.8	249.0	278.6	290.14. Equalization (including: stabilization)	139.5	149.1	180.7	181.55. 50 per cent share of income tax on	power utilities	6.6	7.4	8.7	9.0	9.06. Atlantic Provinces adjustment grant	-	-	25.0	25.0	25.07. Term 29 award (Newfoundland)	-	-	13.6	7.3	7.7Sub Total	552.7	658.3	742.1	821.6	870.1B. Conditional Payments-	8. Agriculture	.8	1.0	1.9	8.2	1.89. Health	36.4	34.6	46.1	46.0	40.210. Hospital insurance	-	-	54.7	149.8	167.011. Welfare	38.4	48.1	73.7	86.9	90.312. Vocational training	4.0	4.2	7.6	8.5	8.413. Highways and transportation	26.9	50.9	53.7	58.1	53.014. Resource development	2.9	4.4	8.7	16.0	12.415. Other	1.6	1.6	1.7	9.8	15.9Sub Total	111.0	144.8	248.1	383.3	389.0C. Payments for the benefit of provincial institutions-	16. University grants	16.0	16.6	25.5	26.1	19.017. Grants to municipalities in lieu of taxes on federal government prop-	erty	9.7	17.5	21.9	21.5	22.8Sub Total	25.7	34.1	47.4	47.6	41.8TOTAL	689.4	837.2	1,037.6	1,252.5	1,300.9
Donald Methuen Fleming: The preliminary figure for the cost to the federal treasury of unconditional payments and tax abatements to the provinces in 1959-60 is $822 million, an increase of $80 million over the previous year and $163 million higher than in 1957-58. It is estimated that there will be a further increase in cost for 1960-61 of $48 million. Of the estimated increase of over $200 million in unconditional payments and abatements between 1957-58 and the fiscal year 1960-61, more than one half is the result of new payments or changes in the basis of payment or abatement. The increase in the provincial share of the yield from the personal income tax from 10 per cent to 13 per cent, which has benefited the provinces by $120 million in the past two years and it is estimated will mean a further $68 million to them in 1960-61, by itself accounts for approximately one third of the total increase.
Conditional payments to the provinces were also substantially higher in 1959-60, increasing by $135 million to a total of $383 million. Seventy per cent of this large increase was the result of increased contributions under the Hospital Insurance and Diagnostic Services Act as more provinces participated in the scheme. There were, however, also large increases in grants for welfare and resource development. It is estimated that there will be a further increase of $6 million in conditional payments in 1960-61.



DEBT MANAGEMENT

[Stage Direction]
In reporting to the house a year ago on the management of our public debt I pointed out that the large conversion operations undertaken during the summer of 1958 had removed a source of heavy pressure on the bond market and that by substantially lengthening out the average term of our
31, 1960
The Budget-Hon. D. M. Fleming debt a sound debt management policy could be developed and carried forward.
Public debt transactions during 1959-60 included the issue, refinancing and redemption of a large volume of government securities. However, as a result of the successful conversion loan operations undertaken during 1958 the volume of debt transactions in 1959-60 was considerably less than in the previous year.
During the year now ending we have sold $1,048 million of new marketable bonds and we increased the outstanding issues of treasury bills by $530 million. In the same period we paid off $1,550 million of market issues so that the total volume of direct government of Canada marketable issues outstanding at the end of the year is only $28 million higher than at the beginning. In addition we sold $1,445 million of new Canada savings bonds and paid off or redeemed $1,170 million of earlier Canada savings bonds.
After taking into account the net decrease of $20 million in bonds held in our securities investment and sinking fund accounts, the unmatured direct debt held outside these government accounts was $333 million higher at the end of the fiscal year than it was at the beginning. This compares with an increase of $1,439 million during the previous year and is an indication of the progress we have made.
With the consent of the house, Mr. Speaker, may I insert here three tables showing the size, distribution, average term and total interest cost of our public debt over the past 10 years?
Mr. Speaker:: Perhaps the house would give consent at this time to the insertion of such tables as the hon. minister proposes to use


Some hon. Members:: Agreed.
[Editor's note: The tables referred to are as follows:]
79951-0-170

The Budget-Hon. D. M. Fleming



TABLE 3

[Stage Direction]
GOVERNMENT OF CANADA Gross and net direct debt
Net Debt
-	Funded Debt	Total Debt	Net Debt	Per Capita	As per cent of G.N.P.($ billion)	($ billion)	($ billion)	$	March 31	1950	
15.2	16.8	11.6	849	71.31951	
15.0	16.9	11.4	816	63.51952	
14.7	17.3	11.2	774	52.81953	
14.8	17.9	11.2	752	46.51954	
14.6	17.9	11.1	727	44.41955	
14.5	18.0	11.3	717	45.31956	
15.4	19.1	11.3	701	41.61957	
14.4	18.3	11.0	664	36.01958	
14.2	18.4	11.0	648	34.81959	20.2	11.7	669	35.81960	
15.9	21.0	12.1	681	34.9

[Stage Direction]
GOVERNMENT OF CANADA Interest Cost of Gross and Net Direct Debt
		Interest and		
Interest	other earnings	Net InterestYear ending March 31	paid on	from	Net Interest	as p.c. oftotal debt	Investments	Cost	net debt(millions)	(millions)	(millions)	$440	$ 92	$348	3.00425	90	335	2.94432	118	314	2.80451	117	334	2.98476	152	324	2.92478	134	344	3.04493	149	344	3.04520	207	313	2.85539	169	370	3.36606	221	385	3.30738	239	499	4.13
1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957.
1958.
1959.
1960.
TABLE 5 GOVERNMENT OF CANADA Maturity and Distribution of Direct and Guaranteed Debt					
Average term of Debt* * December 31 Years	Amount of Debt held by	P.C. held by Gen. PublicBanks	Government Accounts	General Public	($ millions)	1950	5,093	847	9,952	62.61951	5,052	1,009	9,273	60.51952	
6.8	5,176	1,102	8,909	58.71953	
6.2	5,184	1,314	9,139	58.41954	
7,2	5,633	1,204	8,629	55.81955	
6.3	5,540	1,491	8,969	56.11956	4,950	1,518	8,766	57.51957	5,104	1,367	8,693	57.31958	
10.3	6,190	1,258	8,968	54.61959	
9.5	5,488	929	10,720	62.61960 (Mar. 23),	5,487	840	10,990	63.5
Excluding Canada Savings Bonds and Perpetuals.
Donald Methuen Fleming: These tables show that at the end of the current fiscal year our net debt is $12.1 billion, which is about $400 million higher than it was at the beginning of the year. In per capita terms it was $849 ten years ago, $717 five years ago, and has now dropped to $681. As a percentage of gross national product our net debt at 34.9 per cent now stands at a lower figure than for any previous year except 1958.
Last year I mentioned the decline in the holdings of Canada bonds by the general public that had been going on more or less steadily since the end of the war, but noted that since September 1958 there had been a sharp reversal of this trend. I am very pleased to report tonight that during the past year the general public's holdings of Canada bonds have continued to increase and that they are now $1.5 billion more than at March 31, 1959, and $3 billion more than on September 30, 1958. The latest figures show that the holdings of the general public are now 63.5 per cent of the total outstanding funded debt compared with 62.6 per cent at December 31, 1959, and 57.8 per cent at June 30, 1957.
Net interest payments over the whole year amounted to 4.13 per cent of our net debt at the end of the year, as compared with 3.30 per cent in the preceding year. This rather sharp increase is largely due to the fact that the net debt mounted rapidly during the latter part of 1958-59, and interest on the increased debt was paid for only part of that year. In 1959-60 interest on this increased debt was paid for a full year. The average interest rate on our total unmatured debt stands today at 3.96 per cent compared with 3.54 per cent a year ago.



GOVERNMENT ACCOUNTS 1960-61

[Stage Direction]
I turn now to the budget prospects for 1960-61. The main estimates for the fiscal year totalling $5,740 million were tabled early in February. In addition there are bound as usual to be some supplementary estimates. Provision will have to be made for the C.N.R. deficit for 1960, although I expect this will be somewhat less than the 1959 deficit, and I must assume that there will be some payments under the agriculture stabilization act and also some additional statutory expenditures.
Offsetting these there will be some lapsings in appropriations although these are likely to be less than in previous years because of the very careful and exacting scrutiny of departmental estimates made by the treasury board this year. As I said on tabling the main estimates, although we have provided for sustaining and in some cases increasing 79951-0-170J
31, 1960
The Budget-Hon. D. M. Fleming the expenditures relating directly to national development in such fields as atomic energy, exploration, scientific research, transportation and communication, controllable costs have been carefully scrutinized and sharply restrained.
There is, however, one substantial additional item of expenditure in prospect which I should report to the house and which relates to the review of salaries in the public service.
When I announced on October 13, 1959 that the government was unable to assume, during the 1959-60 fiscal year, the cost of carrying into effect the recommendations of the civil service commission for increases in the salaries of many classes of civil servants, I stated that:
The decision taken by the government, in the light of its financial position, will not preclude consideration being given to the special position of certain categories of civil servants as the government's financial circumstances permit.
In conformity with this undertaking, revisions of the salaries of the nursing classes where special conditions obtained were approved by the treasury board on October 15, 1959 and January 28, 1960.
It is now nearly three years since there has been a general increase in civil service salaries. The last general increase was authorized by the present government in July, 1957 and made retroactive to May 1, 1957. In July, 1958 the civil service commission reported that a general increase in salaries at that time was not warranted. A year later, in June 1959, the commission made recommendations to the government covering the great majority of classes in the civil service. This report recommended widely varying increases for several hundred classes of employees. For reasons which I made public last October the government decided that it could not implement those recommendations.
Our public service contains the widest range of jobs and positions, from unskilled labourers to research scientists. The relative pattern of wages and salaries for such diversified groups in a dynamic society changes with the passage of time and with shifts in the economic and social structure. It has seemed to me that instead of embarking upon periodic general wage and salary increases across the board, it would be a more sensible approach to develop a continuous cycle of reviews and recommendations. In this way the salaries of different groups or clusters of related classes of employees can be reviewed in successive months or quarters in the light of rates of pay prevailing in private employment and in the light of our demonstrated capacity to recruit and retain the right number and quality of public servants.
[Stage Direction]
The Budget-Hon. D. M. Fleming I have discussed this approach with the chairman ol the civil service commission and I am given to understand that the commission agrees that there is merit in this suggestion.
We have an excellent public service in Canada. In terms of ability and integrity it compares very favourably with those of any other country. Now that up to date information on the current levels of salaries paid by private employers is becoming available in the form of preliminary reports by the pay research bureau, and as the budgetary situation now makes action possible, the government will accelerate its program of implementing recommendations from the civil service commission affecting a number of classes in the public service where the comparison with outside rates and the recruitment situation justify action.
I am happy to report that the treasury board, taking into consideration the degrees of disparity between civil service salary rates and those of private employers and the problems of recruitment and retention of qualified employees, has now approved recommendations from the civil service commission involving some 50,000 employees of the public service, principally in the clerical and stenographic classes, but also including some of the professional classes, such as meteorologists and veterinarians, where recruitment and retention of the essential number of qualified officers have become increasingly difficult. These revisions in salary ranges will be effective from tomorrow, April 1, 1960 and will involve an increase in expenditure during the fiscal year of about $15 million. Details of these revisions will be made public as rapidly as possible over the period of the next ten days or two weeks.
With the same principles as criteria, a review of all other classes in the public service will be carried out by the civil
service commission forthwith and is expected to be completed before the end of the summer. As recommendations are received from the civil service commission, they will be promptly cosidered by the treasury board on a class by class basis.
After considering all the available data and taking into account our unremitting efforts to effect further economies and efficiency in all government activities, I have concluded that our budgetary expenditures for the fiscal year ending March 31, 1961 will be approximately $5,880 million.
This is $173 million higher than our budgetary expenditures for the year now ending. Approximately one third of this increase is in defence expenditures. The other two thirds part is in our non-defence expenditures and is due to higher public debt charges, higher civil service salaries, higher social security and welfare payments reflecting the increase in our population, and increased outlays under the government's programs designed to promote national development.
Revenue forecasting, as I have observed on previous occasions, always presents formidable difficulties. However, on the basis of a projected gross national product of between $36J and $37 billion for 1960 and in the light of our present information, I have concluded that our present tax structure, with no change in rates will yield $5,892 million in 1960-61. This is $591 million more than our revenues in the past year.
For the convenience of hon. members, may I insert in Hansard at this point a table showing my estimate of the past year's revenues and what we may expect to receive in the ensuing year from the present tax structure.
[Editor's note:	The table referred to
follows:]
. TABLE 6
REVENUE FORECAST BEFORE TAX CHANGES (In millions of dollars)
Personal income tax___
Corporation income tax
Non-resident tax	
Estates tax	
Customs duties	
Sales tax	
Other duties and taxes.
Preliminary	Forecast
1959-60	1960-61
$	*
1,555	1,750
1,140	1,340
75	80
88	85
529	580
737	795
626	670
Total taxes	
4,750	5,300Non-tax revenue	
551	592
Total revenue
5,301	5,892
[Stage Direction]
With revenues estimated at $5,892 million and expenditures at $5,880 million and assuming no change in our existing tax laws, I should expect a surplus of $12 million for the coming year.
During the coming year I expect the old age security fund to show a small surplus of revenue over expenditure for the first time since the fund was inaugurated on January 1, 1951. Between January 1, 1951 and March 31, 1960, the old age security fund has experienced deficits totalling $630 million. Of this amount over $500 million has been paid off out of general tax revenues and about $100 million was charged in 1954 to our balance sheet reserve against active assets. There remains outstanding now a deficit incurred during the past 12 months of $24 million. Revenues to the fund from the current 3-3-3 formula in 1960-61 will be about $630 million; pension payments after making provision for certain amendments forecast in the speech from the throne will exceed $590 million. If these expectations are realized the prospective surplus will be sufficient to extinguish the presently remaining deficit in the fund.
Before proceeding to discuss the tax policy appropriate to our present and prospective circumstances, I should like to refer briefly to our non-budgetary transactions and our cash requirements for 1960-61. In addition to the expenditures for administrative and other governmental services that are included in our budgetary accounts, we pay out each year substantial amounts of cash as loans to or investments in a wide variety of essential public undertakings. These outlays are not considered as budgetary expenditures as the principal is usually repaid, and, in almost every case, they earn interest or produce revenue for the government.
Against this, we receive each year large amounts of cash that are not recorded as budgetary revenue. For the most part, these consist of repayments of loans made in previous years and moneys received by the government as net premiums, contributions and earnings in connection with annuities, insurance or pension funds.
During 1960-61 we shall probably require about $290 million for housing loans, including new and existing commitments, about $150 million for C.N.R. and T.C.A. capital investment and refunding, and perhaps as much as $100 million for other non-budgetary purposes such as the St. Lawrence seaway authority, the national harbours board, the farm credit corporation and other crown companies. Against this we shall probably have somewhat more than $300 million available from the repayment of loans and from
The Budget-Hon. D. M. Fleming the transactions in our various annuity, insurance and superannuation accounts. Thus the net cash required for all these non-budgetary transactions, excluding the exchange fund requirements, which cannot be forecast, will be of the order of $225 million. With a prospective budget surplus of $12 million, our net cash requirements, including those of the C.N.R. will be about $210 million as compared with $900 million during the year just ended and $1,273 million in 1958-59.

[Stage Direction]
As I said a year ago, and as I have repeated in this house and elsewhere on a number of subsequent occasions, sound budget policies must be flexible and adapted to changing economic conditions. The onset of the 1957 recession called for lower taxes, higher expenditures and heavier capital commitments in order to offset the downward trends in the private sector of the economy and the decline in the external demand for some of our basic products; and I put such proposals before the house in December, 1957 and again in June, 1958.
The fiscal policies we followed during our first year in office had a major influence in reducing both the depth and the duration of the recession, and by the third quarter of 1958 the low point of the recession had been passed and the forces of expansion began to gather momentum. By the spring of 1959 recovery was well on the way, and in my budget speech a year ago I recommended to this house policies which were designed to bring us back to a position of budgetary balance as soon as the economy had recovered the losses of the recession and was moving firmly forward and upward to new record achievements in production, employment and investment.
The position we have now reached, with its sound prospect of a fully balanced budget, represents the fruits of carefully designed policies carried forward over the past 18 months. This is not something that has just happened. It is the result of considered aims and efforts. It began with the great conversion loan of the summer of 1958 which made possible a policy of sound debt management which in turn restored public confidence in government credit and in our determination to control the powerful forces of inflation. It was continued in the expenditure controls and the tax changes of 1959, and is reinforced in this year's program of reduced controllable expenditures balanced by the continued promotion of constructive national development.
I am happy to say that we have reached this goal of a balanced budget without the
[Stage Direction]
The Budget-Hon. D. M. Fleming necessity of recommending any further increases in taxation, indeed at a level of taxation which in relation to gross national product will be lower than in any year between 1950 and 1958.
Another fruit of our policies over the past year and a half is that during the coming year we shall be making very modest claims upon the capital market. Our net new borrowings, as I have already indicated, will be about $210 million. This will greatly ease the problems of provincial and municipal governments and also of private industry in meeting their essential financial requirements in the domestic market. If other levels of government follow similar policies of prudent financial management they too should experience less difficulty than in any recent years in meeting their basic financial needs.
As I said in my opening review of economic conditions, we are anticipating a year of solid expansion and balanced growth. The mam forces of inflation are quiescent. We still have, however, some slack in certain sectors of our productive capacity, though I expect to see these diminish as the year progresses. While I look forward to the day when we can undertake a measure of orderly reduction in our public debt, present circumstances do not, in my judgment, warrant an increase in tax rates in order to expedite the retirement of debt.
In the light of all these facts and prospects I am proposing no major tax changes in any fields this year. I shall, however, be recommending to the house a number of technical amendments to our taxing statutes, all of them designed either to remedy certain anomalies that have developed or to close certain loopholes for tax avoidance that have been discovered, or to meet certain other special circumstances.

[Stage Direction]
In the income tax field there will be quite a number of technical amendments but I shall refer now only to those of general interest.
I am proposing an increase in the maximum amount of medical expenses that can be deducted in calculating taxable income. The existing limits have remained unchanged for some years, at the levels of $1,500 for a taxpayer of single status, $2,000 for a taxpayer of married status, and $500 for each dependant but not exceeding $2,000 in respect of these dependants. Over a period of years increases have taken place in the costs of medical care and in the accepted standards of medical care. The maximum limits that were once considered appropriate are increasingly found to impose hardships upon people of

moderate means. The new limits I am recommending are $2,500 for a taxpayer who is single, $3,000 for a taxpayer of married status, and $750 for each dependant but not exceeding $3,000 in respect of dependants.
I shall also bring forward an amendment to provide a deduction from certain items of income, such as superannuation, pension or death benefits, on account of the estate tax that has been paid on the asset corresponding to that income. This measure is being introduced to alleviate a problem that sometimes affects the financial resources of the widow and the children of a deceased taxpayer. The purpose is to provide relief in certain cases from the so-called double impact of estate tax and income tax, which may deplete unduly the resources of the surviving family.
I am proposing to provide for the appointment of an additional member of the tax appeal board. Concern exists about delays encountered in connection with appeals. The enlargement of the board will implement a proposal set forth in the report of May 8, 1959 by the standing committee on estimates.
I am also bringing forward an amendment to deal with the problems of associated corporations to which I drew attention last year. At that time I said that perhaps it was becoming too easy to divide a corporation into a number of smaller components, each of which may qualify for the low rate of tax on its first $25,000 of income. I indicated that consideration was being given to the possible necessity of introducing some appropriate measure to deal with this method of tax avoidance. In the meantime further study has indicated an amendment of this kind to be necessary.
There are two other highly complex issues relating to the income tax law to which much study has been devoted but in respect of which I am not yet ready to make specific recommendations. I am, however, proposing two separate courses of action.
The first is the question of the application of the income tax law to employees' profit sharing plans. In various parts of the country increasing use is being made of plans by which employers share a portion of the annual profits with employees, thus providing a source of funds to assist the individual to plan for his eventual retirement. Special tax rules for profit sharing plans have been in existence for some time. These rules, however, do not permit employees to defer taxes on amounts contributed to these plans on their behalf. Largely for this reason they have been criticized as being insufficient to allow the fulfilment of the potential social usefulness of profit sharing plans.
[Stage Direction]
My intention in this matter is to follow the precedent established some years ago in connection with the Income Tax Act and more recently with the Estate Tax Act. I propose to introduce toward the end of this session a separate bill which will incorporate a new approach to the taxation of the several components of employees' profit sharing plans. I shall invite the house to give this bill first reading but to proceed no further at this session. This will provide full opportunity for all interested citizens and organizations to study the bill and make their views known to the government. Consideration will then be given to the incorporation of this new approach into the Income Tax Act next year.
The improved facilities to be made available for employees' profit sharing plans will constitute an important piece of social legislation within the framework of the Income Tax Act. In its distinctive way, this will supplement the growing body of social security measures that have been sponsored by the government. It may be that the medium of profit sharing will provide fresh opportunities for capital, labour and management to work out new forms of co-operation amongst themselves in various instances. Neither expense nor obligation will be imposed, however, upon groups and organizations that do not choose to assume them.
The second complex question that requires fresh study and consideration pertains to the designation of surplus under section 28(2) of the act. The central issue is the taxation, as personal income or otherwise, of earnings that are distributed or are available for distribution in various forms by corporations. We shall be undertaking a comprehensive study of these matters during the coming year. I shall welcome considered expressions of view from all interested persons and organizations.

[Stage Direction]
The new Estate Tax Act has been in force since January 1, 1959. It has received general public approval. At the same time experience has indicated a number of points at which it can be improved, and I shall place before the house a number of amendments for this purpose. Most of these will be of a technical nature and on balance they will benefit the taxpayer.
An amendment of general interest will provide for the reopening of the assessment of an estate within a fixed period of years and the refunding of estate tax when, for example, a life annuity is terminated prematurely. It sometimes happens that an important asset in an estate is an annuity to the surviving widow. This annuity may come to an end if she dies or if she marries again. It
31, 1960	2683
The Budget-Hon. D. M. Fleming is nevertheless valued for purposes of estate tax on the basis of the prescribed mortality tables. The proposed amendment will provide that where certain classes of income rights are terminated or altered within four years of the death of the testator, the assessment may be reopened on request and appropriate adjustment made.

[Stage Direction]
I am placing before the house a small number of amendments which will affect the application of the Excise Tax Act.
I am proposing that electric heating equipment designed to be permanently installed as part of a building heating system should be exempt from sales tax. The effect will be to permit this method of household heating to compete for the market on the same terms as other methods of heating.
I am proposing that manufacturers of doors, windows and window frames should be required to pay sales tax on the hardware attached to or sold with doors, windows and window frames unless such hardware is specifically exempt under schedule III of the act. The standard items of hardware that are used with doors and windows are, in fact, listed in schedule III. The purpose of the amendment is to remove some uncertainty that has existed with respect to some special items of hardware. The result will be that the whole group of manufacturers concerned will be more fairly and equitably treated as amongst themselves.
In order to avoid the possibility of misunderstanding I shall mention a comparatively minor amendment intended to prevent private individuals who purchase yachts from avoiding the imposition of sales tax in respect of the materials that are included. This will not affect the commercial shipyards, which will continue as before to purchase materials for the construction of ships free of sales tax under licence.

[Stage Direction]
I turn now to matters relating to our Customs Tariff. I have six resolutions to place before the house and I shall also be mentioning some new references to the tariff board.
Four resolutions relate to textiles and contain the results of tariff negotiations with other countries designed to give effect to reports received from the tariff board. The reports in question are those relating specifically to cotton and cotton products, to silk, man-made fibres and their products, to textile wastes, slivers, rovings and yarns, and also to wool fabrics other than those covered by tariff items 554b on which action has already been taken.
[Stage Direction]
The Budget-Hon. D. M. Fleming
I should perhaps add that, as the house knows, I received from the tariff board a few weeks ago one further report on textiles relating to hosiery and knitted goods, and within the textile field the tariff board has still to report on a miscellaneous group of products including woollen clothing, hats and caps, coated fabrics, laces and embroideries. Negotiations on these products will be undertaken in due course. Negotiations will also be undertaken in relation to the tariff on record changers on which I have also received a report from the board recently.
The negotiations related to the textile tariff changes proposed tonight were undertaken with seven of the other contracting parties to the general agreement on tariffs and trade, specifically the United States, the United Kingdom, France, Italy, Benelux, Japan and Peru. In addition, consultations with other countries were required under GATT procedures. I am happy to be able to announce that all the necessary negotiations and consultations with all of these countries have been successfully completed.
As the house is already aware, tariff board recommendations often, perhaps usually, include proposals for both increases and decreases in rates of duty. Sometimes it is found in the subsequent negotiations that the other countries concerned are ready to accept the proposed decreases as full compensation for the proposed increases in our tariffs against them. However, in the case of the particular group of textile tariff items negotiated on this occasion, it was found that the increases, of which the most important relates to coloured cotton fabrics, somewhat overbalanced the decreases. Hence, in order to conclude negotiations, we found it necessary to reduce about a score of Canadian tariff rates on items outside the textile field. The implication of this is that the Canadian textile industry is receiving some additional protection, as proposed by the tariff board, but that this is being matched by some reductions of tariffs in other fields. Some of these reductions were requested by Canadian industry while others involve quite small reductions from relatively high rates of duty which should not damage the industries affected.
I mentioned earlier that there were four resolutions relating to textiles and textile negotiations. Much the most important of these covers the substance of our textile negotiations including the additional items outside the textile field to which I have just referred. A second contains changes that are merely matters of form. A third provides for a much-needed definition of "man-made fibres"; this is a technical proposal put forward by the tariff board. A fourth resolution
[Stage Direction]

amends an existing drawback item relating to textiles. I should also add that, again in conformity with the board's recommendations, some temporary items established in past years by order in council are being revoked forthwith, while others will be permitted to expire on June 30 of this year.
Two further resolutions cover miscellaneous tariff changes, of which there are 15. This is an unusually small number and I should explain that this year, in considering requests for tariff alterations, we had very much in mind the fact that in the autumn an important round of tariff negotiations under GATT will be initiated. In a good many cases we decided that it would be imprudent to take action on the Canadian tariff in advance of these negotiations. Many of the proposals that have been put to us during the past year for changes in tariff rates may find some place in the forthcoming negotiations.
In these two resolutions covering miscellaneous changes, the only alterations to which I might call attention are those relating to instant potatoes and seismograph bits. Production in Canada of both these items has only recently commenced, and it is proposed to provide for modest rates of duty.
The six resolutions together propose changes in 123 tariff items. Of these changes 20 are purely formal; they simply involve the renumbering of existing items as a matter of convenience. A further 49 involve changes in nomenclature without alteration in the rates of duty. Sixteen involve increases in the rates of duty that will be payable, while 38 involve decreases. As on earlier occasions, I should warn that these bare statistics are not very revealing or conclusive, but they do serve to indicate the general balance and moderation with which this government is approaching tariff matters.
As I said earlier, I am planning some new references to the tariff board. In doing so it is of course necessary to take into account the work which is already before the board. This includes, in addition to a substantial number of appeals, the remaining parts of the textile reference, a reference respecting electronic items and, most important, the very substantial reference embracing virtually the whole field of chemicals. Obviously, with such an agenda already before it, we cannot ask the board to take on much more. However, there is one section of the tariff which, on the basis of representations that have been made to me, I am convinced requires the attention of the board at a fairly early date. This is a series made up of so-called end use items which provide special rates of duty for machinery and equipment

in certain specified uses such as the mining industry and the oil and gas industries. We have here, mainly in items numbered from 410a to 410z, a mixed bag of rates which were intended, when they were introduced, to give concessions to the industries named but some of which, due to the change of other tariff rates, now act in fact as obstacles. Accordingly I shall be asking the tariff board to review this particular group of tariff items.
In addition I shall also be assigning three tasks of much smaller dimensions, but of some urgency and difficulty, to the board. One relates to a small group of rates of special concern to the few firms in Canada which undertake the decoration of chinaware and glassware. The Department of Finance has had substantial correspondence on this subject over several years and, since we have not been able to work out a solution that is acceptable to all parties, a reference will be directed to the board.
Second, I am asking the board to review the tariff items under which plans, drawings and blueprints come into this country, some duty-free and others dutiable. The standing committee on estimates last year drew attention to the problems involved and I now propose to refer the matter to the tariff board.
Finally, certain producers have drawn attention to the substantial and rapidly rising imports of nails and to certain anomalies in the duties applicable to these imports. Accordingly, I shall be asking the board to review and report on the tariff items relating to this product.

[Stage Direction]
The net effect of all the amendments I am proposing to our taxing statutes will be to make no measurable change in the estimate of total revenues for 1960-61, which I presented to the house earlier this evening. The amount of tax relief accorded by some amendments will be approximately balanced by the increased revenues from others. The total loss of revenue from the relieving amendments could add up to as much as $2 million, and the increased revenues from blocked loopholes and clarified definitions are likely to be of about the same amount. While these changes on balance do not affect total revenues they nevertheless represent significant improvements in the fairness of our tax structure.
(Translation):
The past year has witnessed an extraordinary resurgence in the economic strength of the western world. Canada has shared generously in this remarkable progress. Today she is stronger, more developed and more united than ever before.
The Budget^-Resolutions
The abiding goal of our fiscal policy is the maintenance of a sustainable rate growth in terms of employment, development of resources, and a sound dollar. This year's budget, devised to meet the conditions and needs of 1960, will I believe, effectively serve this goal. It is my hope that this balanced budget will strengthen the economic and financial structure of Canada, impart renewed confidence to Canadians in their future, and give fresh impetus to the enterprise and initiative of our people. With courage, selfdiscipline and self-reliance Canadians will meet the challenges of the new decade. (Text):
The past year has witnessed an extraordinary resurgence in the economic strength of the western world. Canada has shared generously in this remarkable progress. Today she is stronger, more developed and more united than ever before.
The abiding goal of our fiscal policy is the maintenance of a sustainable rate of growth in terms of employment, development of resources, and a sound dollar. This year's budget, devised to meet the conditions and needs of 1960, will, I believe, effectively serve this goal. It is my hope that this balanced budget will strengthen the economic and financial structure of Canada, impart renewed confidence to Canadians in their future, and give fresh impetus to the enterprise and initiative of our people. With courage, self-discipline and self-reliance Canadians will meet the challenges of the new decade.


[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act to make provision in respect of a new class of profit sharing plans under which
(a)	amounts allocated by the trustee shall not be included in the income of an individual who is a beneficiary under the plan until the year in which they are received,
(b)	no tax shall be payable by the trustee under the plan on the taxable income of the trust,
(c)	an employer may deduct in computing income for the year an amount which when added to his contribution, if any, under a registered pension fund or plan does not exceed $1,500 per employee.
[Stage Direction]
The Budget-Resolutions

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
(1)	That the increase from 10 per cent to 13 per cent in the deduction from tax granted to taxpayers in a province which imposes an income tax on individuals be continued for the 1960 and 1961 taxation years.
(2)	That for the 1960 and 1961 taxation years the deduction from tax allowed to corporations in respect of income earned in a province which imposes an income tax on corporations and in which arrangements exist for the replacement of federal grants to universities by additional provincial grants in accordance with the proposed amendments to the Federal-Provincial Tax-Sharing Arrangements Act be increased from 9 per cent to 10 per cent in respect of income earned after December 31, 1959.
(3)	That for the 1960 and subsequent taxation years the maximum amount deductible from income on account of medical expenses be increased to $3,000 for taxpayers who are entitled to claim the deduction for married status and $2,500 for other taxpayers (not exceeding $3,000 for husband and wife together) plus $750 in respect of each dependant of the taxpayer up to a maximum of $3,000 in respect of dependants.
(4)	That for the 1960 and subsequent taxation years, where a person who formerly carried on a business in Canada the income from which was computed by the cash method has ceased to be a resident of Canada, there shall be included in computing his income from the business for the last year in which he resided in Canada the value of the accounts receivable and inventory at the time he ceased to reside in Canada.
(5)	That with respect to any amalgamation after March 31, 1960 any share other than a common share of a new corporation resulting from an amalgamation shall be deemed to be a liability of the new corporation for purposes of section 105C of the act.
(6)	That for the 1960 and subsequent taxation years no deduction shall be made as an allowance in respect of an oil or gas well or a mine in computing the income of a non-resident-owned investment corporation.
(7)	That for the 1960 and subsequent taxation years, for purposes of calculating the amount of the credit a taxpayer may claim in respect of taxes paid to a foreign country, the limitation at present computed by reference to the tax paid to the foreign country on that part of his income from
[Stage Direction]

sources in the foreign country that is also subject to tax in Canada be amended so as to be computed by reference to the income tax (other than income tax on dividends which are deductible by the taxpayer) paid to the foreign country.
(8)	That for the 1960 and subsequent taxation years the rules for determining income from a source be amended to specify the deductions that shall be made in computing the income of a non-resident person from a business or employment in Canada and in computing income from sources outside Canada for the purpose of calculating the foreign tax credit allowed to a person resident in Canada.
(9)	That for the 1961 and subsequent taxation years for purposes of the provision that only one of a group of associated corporations shall receive the benefit of the lower rate of tax on the first $25,000 of taxable income the present rule for determining whether one corporation is associated with another, which is based on ownership of shares, be replaced by a rule related to control of the corporations.
(10)	That the four-year period, after which the minister may not make a re-assessment of the tax payable for a taxation year unless there has been fraud or misrepresentation by the taxpayer or the person filing the return, shall commence with the date of mailing by the minister to the taxpayer of the original assessment or of a notification that no tax was payable for the year.
(11)	That the four year time limit, after which the minister may not make a reassessment unless there has been fraud or misrepresentation by the taxpayer or person filing the return, may be waived by the taxpayer by notice to the minister.
(12)	That for the 1960 and subsequent taxation years the present rule in section 36 of the act for determining the tax on certain lump sum payments which the taxpayer may elect not to include with other income be changed to provide that in determining the tax the following rates shall apply:
(a)	10 per cent of the amount taxable if the amount taxable does not exceed $1,000,
(b)	$100 plus 20 per cent of the amount by which the amount taxable exceeds $1,000 if the amount taxable exceeds $1,000 and does not exceed $5,000.
(c)	$900 plus 30 per cent of the amount by which the amount taxable exceeds $5,000 if the amount taxable exceeds $5,000 and does not exceed $10,000.
(d)	$2,400 plus 40 per cent of the amount by which the amount taxable exceeds $10,000.

(13)	That for the 1960 and subsequent taxation years a corporation whose principal business is production or marketing of sodium chloride or whose business includes extraction of sodium chloride from halite deposits may deduct in computing its income drilling and exploration expenses incurred by it in the year in exploring or drilling for halite.
(14)	That for the 1960 and subsequent taxation years an individual who receives a superannuation, pension or death benefit or a benefit under a registered retirement savings plan in respect of which any tax under the Estate Tax Act or succession duty imposed by a province was payable in respect of a death occurring after December 31, 1958 may deduct in computing his income for the year a portion of the benefit received by him determined by reference to the tax or duty applicable to the benefit.

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

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Estate Tax Act and to provide among other things:
(1)	That the deduction from aggregate net value allowed for the value of any gift made to a charitable organization in Canada be extended to the value of a gift made to a charitable foundation in Canada.
(2)	That the Canada Council be deemed to be a charitable organization for purposes of the act.
(3)	That there be included in computing the aggregate net value of the property passing on death any amount payable under a policy of insurance effected on the life of the deceased for the benefit of the family of the deceased, where such policy, immediately prior to the death, was owned by the employer of the deceased.
(4)	That where the property passing on the death of a person includes property the value of which was determined as of the date of death of that person according to prescribed tables of present values of annuities,
[Stage Direction]
The Budget-Resolutions and within tour years of the date of death there occurs an event, such as a death or change in marital status of a beneficiary, that allows the value of the property to be determined having regard to the occurrence of that event, the property shall, on application made in accordance with prescribed conditions, be revalued and the difference in tax refunded.
(5)	That the four-year limit, after which the minister may not make a re-assessment unless there has been fraud, misrepresentation or failure to disclose by the person filing the return, may be waived by the executor by notice to the minister.
(6)	That any enactment founded on paragraphs (1) (2) and (4) shall apply in respect
[Stage Direction]
of deaths occurring after December 31, 1958, and any enactment founded on paragraph (3) shall apply in respect of deaths occurring after March 31, 1960.

[Stage Direction]
1. Resolved, that subsection (1) of section 2 of the Customs Tariff be amended by adding thereto the following definitions: "man-made fibre" means a staple fibre or filament produced by manufacturing processes, wholly or in part of organic polymers, but does not include rubber; and "sliver" means fibres in a continuous strand, combed or not, not twisted and not exceeding twelve inches in length, and includes tops.
2. Resolved,
that Schedule A to the Customs Tariff be amended by striking out tariff items 160(a), 236, 343, 414a, 414e, 463a, 520(1), 520(2), 520a, 5205, 520c, 521, 522, 522a, 5225, 522e(l), 522c(3), 522d, 522e, 522/, 5220(1), 522ff(2), 523, 523a, 5235(1), 5235(2), 5236(3), 5236(4), 523c, 523d, 523e, 523/, 523g, 523h, 523i, 523/, 5235, 5231, 523n(l), 523n(2), 524, 524a, 532, 532a, 5326, 532c, 532e, 5356, 535c, 535d, 535/, 549, 549a, 5496(1), 5496(2), 5496(3), 550, 550a, 5506, 550c, 550d, 551, 551a, 5516, 551c, 551d, 551/, 553(1), 554, 554a, 554c, 554ff, 557, 557a, 5576, 557c, 558, 558a, 5586(a), 5586(6), 558c(i), 558c(«), 558d(a), 558d(6), 558e, 558/, 559, 560, 560a, 5606, 560c, 561, 561d, 563, 564, 564a, 567, 567a, 5676(1), 5676(2), 573, 586, 663/, 802(6) and 818; and the enumerations of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations of goods and rates of duty:
Rates in Effect Prior to Rates Proposed in this Budget
Tariff 	
Item	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff66b	Pretzels	Free	15 p.c.	30 p.c.	Free	20 p.c.	30 p.c.142	(6) N.o.p.: (iii) Unstemmed, when imported by cigar manufacturers for use as wrappers in the manufacture of cigars in their own factories	per pound	10 ets.	10 cts.	40 cts.	12} cts.	12} cts.	40 cts.160	Alcoholic perfumes: (a) When in bottles or flasks containing not more than four ounces each	20 p.c.	20 p.c..	90 p.c.	22} p.c.	22} p.c.	90 p.c.187e	Sensitized negative film, sixteen millimetres in width for exposure in motion picture cameras	Free	15 p.c.	30 p.c.	Free	20 p.c.	30 p.c.199m Woven paper fabrics, open mesh, not less than nine feet in width, for use in the manufacture of carpets	15 p.c.	22} p.c.	35 p.c,	17} p.c.	25 p.c,	35 p.c.me	Sugar cane wax	Free	Free	10 p.c.	5 p.c.	7} p.c.	10 p.c.236	Surgical dressings, antiseptic or aseptic, including absorbent cotton, lint, lamb's wool, tow, jute, oakum, whether imported singly or in combination one with another, but not stitched or otherwise manufactured; surgical trusses and suspensory bandages of all kinds; sanitary napkins, and abdominal supports	10 p.c.	20 p.c.	35 p.c.	10 p.c.	20 p.c.	35 p.c.343	Tin, in blocks, pigs, bars, or granular form	Free	Free	Free	Free	5 p.c.	5 p.c.347e	Electrolytic manganese metal for alloying purposes	Free	5 p.c.	20 p.c.	Free 15 p.c.	15 p.c. 20 p.c.	20 p.c. 25 p.c410o	(in) Mine roof and wall supports and support systems, of metal, including yielding props or chocks, for use underground in mines; parts of the foregoing	Free	12} p.c.	35 p.c.	10 p.c.	22} p.c.	35 p.c.414a	Parts of typewriters	Free	7} p.c.	25 p.c.	Free	15 p.c.	25 p.c.
The Budget-Customs Tariff
Tariff
Item
414e
463a
466c
465a
465b
506}
5tOa
5t0b
5S1
British
Preferential
Tariff
Parts of adding machines
Free
Motion picture projectors, arc lamps for motion picture work, motion picture or theatrical spot lights, light effect machines, portable motion picture projectors with or without sound equipment; electric rectifiers or generators designed for use with motion picture projectors; parts of all the foregoing, not including electric light bulbs, tubes, or exciter lamps	 Free
Motion and still picture screens
Free
Signs or indicating markers of material other than paper with radioisotope activated light source	 7} p.c.
Radioisotope activated self-luminous standards for calibration purposes	 10 p.c.
Southern yellow pine lumber, not further manufactured than planed on two sides, for use in the manufacture of flooring for motor trucks	 Free
Raw cotton and cotton linters not further manufactured than ginned	;	v	 Free
Cotton fibres, n.o.p., and carded sliver, wholly of cotton.... 5 p.c.
Yarns and rovings, including threads, cords and twines, wholly of cotton:
(!) Singles	 12} p.c.
It) Of count 40 or finer, when imported by manufacturers of mercerized yarns for use in the manufacture of mercerized cotton yarns,	 Free
Most-
Favoured-
Nation
Tariff
10 p.c.
15 p.c,
10 p.c.
17} p.c.
15 p.c.
Free
Free 10 p.c,
17} p.c.
15 p.c.
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Rates in Effect Prior to Rates Proposed in this Budget
General Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff25 p.c.	Free 10 p.c.	121 P-C. 221 P.c.	25 p.c, 35 p.c.35 p.c*	Free	15 p.c.	35 p.c.35 p.c.	Free	15 p.c.	35 p.c-30 p.c.	10 p.c.	20 p.c.	30 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c. J.25 p.c.	10 p.c.	10 p.c.	25 p.c.Free	Free	-Free	Free12} p.c.	Free 5.p.c.	10 p.c. 10 p.c.	121 P-c. 121 p.c.22} p.c.	12J P-c. 121 P-c. Free	15 p.c. and 3 cts. per lb. 15 p.c. 20 p.c.	221 P-c. and 4 cts per lb. 22} p.c. 25 p.c.20 p.c.	Free	15 p.c.	15 p.c.
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The Budget-Customs Tariff
(3)	When imported by manufacturers for use in the manufacture of cotton sewing thread or of crochet, knitting, darning or embroidery cottons:
(a)	Singles	
Free	10 p.c.(b)	Plied	,	
5 p.c.	10 p.c.(4)	Of count 70 or finer, when imported by manufacturers for use in the manufacture of levers' lace.. Free	Free(5)	Other, n.o.p	
15 p.c.	20 p.c.
StS Woven fabrics, wholly of cotton:
(1) Not bleached, mercerised nor coloured, n.o.p.... 15 p.c.	20 p.c.
(i) Bleached or mercerized, not coloured, n.o.p...	17$ p.c.	22$ p.c(3)	Coloured, n.o.p	
17$ p.c.	22$ p.c(4)	Composed of yarns of counts of 100 or more, including all such fabrics in which the average of thecount of warp and weft yarns is 100 or more	
Free	25 p.c.(5)	With cut pile	
10 p.c.	25 p.c.(8) For use in the manufacture of sails for boats or ships	
Free	20 p.o.(7) Bleached, when imported by manufacturers of handkerchiefs for use in the manufacture of handkerchiefs wholly of cotton	
Free	20 p.c.(3) Weighing not more than 7$ pounds per 100 square yards, not bleached nor coloured	
Free	Free15 p.c.	71 p.c.	15 p.c.	20 p.c.Free	10 p.c.	15 p.c.20 p.c.	5 p.c.	10 p.c.	20 p.c.25 p.c.	Free	Free	25 p.c.30 p.c.	15 p.c.	17§ p.c. and 3 cts. per lb.	25 p.c. and 4 cts per lb.15 p.c.	20 p.c.	25 p.c. and 4 cts per lb30 p.c.	15 p.c.	15 p.c. and 3 cts. per lb.	25 p.c. and 4 cts. per lb.Various	Various	Various30 p.c.	171 P-c.	171 P-c. and 3 cts. per lb.	271 P-c. and 4 cts. per lb.Various	Various	Various35 p.c.	171 P-c.	171 P-c. and 3 cts. per lb.	321 P.c. and 4 cts. per lb.Various	Various	Various35 p.c.	Free	271 P-c.	321 P-c. and 4 cts. per lb.35 p.c.	15 p.c.	221 P-c. and 3} cts. per lb.	321 p.c. and 4 cts. per lb.5 p.c.	25 p.c. and 31 cts. per lb.	321 P-c. and 4 cts. per lb.30 p.c.	Free	20 p.c. and 31 cts. per lb.	25 p.c. and 4 cts. per lb.271 p.c.	Free	221 P-C.	271 P-c.30 p.c.	Free	Free	25 p.c. and 4 cts. per lb.15 p.c.	15 p.c. and 3 cts. per lb.	25 p.c. and 4 cts. per lb.
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The Bridget-Customs Tariff
		Most-
	British	Favoured-
Tariff -	- Preferential	NationItem	Tariff	Tariff522	(9) Not coloured, for use in the manufacture of ribbons(cont.) lor typewriters, calculators, or other office appliances. Free	12J p.c.523a Clothing, wearing apparel and other articles, made from woven fabrics wholly of cotton; all textile manufactures, wholly or partially manufactured, the component fibre of which is wholly cotton, n.o.p________-..	25 p.c,	25 p.c,523b	Handkerchiefs, wholly of cotton	
12| p.c.	27§ p.c.524 Woven fabrics, open mesh, wholly or in chief part by weight of cotton, imported for use in the manufacture of fruit or vegetable bags	
Free	Free
530a Wool and wool noils, not further prepared than scoured
or carbonized	 Free	Free
530b Slivers, wholly or in part of wool, not containing man-made
fibres or glass fibres	per pound	Free	10 cts.530c Hair and hair noils; slivers, 50 p.c. or more, by weight, of hair; horsehair not further manufactured than dipped or dyed	
Free	Free5S0d	Hair, curled or dyed, n.o.p	i-. . .	12J p.c.	15 p.c.531a	Rovings and yarns, 50 p.c. or	more, by weight of hair. Free	10 p.c.
and, per pound
531b Rovings and yarns, wholly or in part of wool, n.o.p:... p.c.	121 p.c.
and, per pound	7 cts.	17 cts.
BSlc Rovings and yarns, wholly or in part of wool or hair in
measured skeins or balls	
7J p.c.	12J p.c.and, per pound	10 cts.	20 cts.
Rates in Effect Prior to Rates Proposed in this Budget
General Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff15 p.c.	Free various	12\ p.c. various	15 p.c. various35 p.c.	25 p.c, 22$ p.c. Various	25 p.c. 22£ p.c. Various	35 p.c. and 4 cts. per lb. 35 p.c. and 4 cts. per lb. Various35 p.c.	12$ p.c.	27$ p.c.	35 p.c. and 4 cts. per lb.Free	Free	Free	FreeFree	Free	Free	Free15 Ct3.	Free	10 cts.	15 cts.Free	Free Free	Free Free	15 cts. per lb. Free20 p.c-.	12$ p.c.	15 p.c.	20 p.c.20 p.c. 17$ cts. 22$ p.c. 22$ cts.	7$ p.c. 5 cts. Various 7$ p.c. 5 cts.	12$ p.c. 15 cts. Various 12$ p.c. 15 cts.	20 p.c. 17$ cts. Various 20 p.c. 17$ cts.22$ p.c. 22$ cts.	7$ p.c. 5 cts.	12$ p.c. 15 cts.	22$ p.c. 22$ cts.
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The Budget-Customs Tariff
SSld Yarns and warps, spun on the worsted system, composed wholly of wool or in part of wool or hair, imported by manufacturers for use in their own factories in the manufacture of woven fabrics in chief part by weight of wool or hair and not exceeding six ounces to the square yard, when in the gray or unfinished condition, under such regulations as may be prescribed
by the minister	 Free	15 p.c.
and, per pound	 15 cts.
BSSd Woven fabrics, composed wholly or in chief part by weight of yarns of wool or hair, not exceeding in weight four ounces to the square yard, when imported in the gray or unfinished condition, for the purpose
of being dyed or finished in Canada	 Free	20 p.c.
and, per pound	 15 cts.
5S2e Woven fabrics composed wholly or in part of yarns of wool, imported in the web in lengths of not less than five yards each, for use exclusively in the manufacture of neckties, scarves or mufflers, but not including such
fabrics for use as interlining	 Free	15 p.c.
and, per pound
In the case of such fabrics weighing not more than nine ounces to the square yard, the total duty leviable shall not be in excess of	per pound	
$1.10550 Silk cocoons	
Free	Free
551a Yarns and rovings, wholly of silk, degummed or not:
(/) Not thrown or spun	
Free	Free(2) Not further advanced than thrown or spun	
Free	7} p.c.(S) N.o.p., including threads, cords or twines	
12} p.c.	20 p.c.551b Yarns and rovings of silk and vegetable fibres	
12} p.c.	20 p.c.552a Woven fabrics, more than 50 p.c. by weigh, of silk, not containing wool or hair	
12} p.c.	22} p.552b Woven fabrics of silk and vegetable fibres, n.o.p	
12} p.c.	22} p.c.20 p.c.	Free	15 p.c.	20 p.c.17$ cts	
15 cts.	17$ cts.30 p.c.	Free	20 p.c.	30 p.c.20 cts.	20 cts.40 p.c. 40 cts.	Free	15 p.c. ... *1.10	40 p.c. 40 cts.Free	Free	Free	FreeFree	Free	Free	Free10 p.c.	10 p.c.	12$ p.c.	15 p.c.Free	7$ p.c.	10 p.c.25 p.c.	12$ p.c.	20 p.c.	25 p.c.25 p.c.	12$ p.c.	20 p.c.	25 p.c.45 p.c.	17$ p.c.	25 p.c. and 5 cts. per lineal yard	45 p.c. and 10 cts. per lineal yardVarious	Various	Various45 p.c.	17$ p.c.	25 p.c. and 5 cts. per lineal yard	25 p.c. and 5 cts. per lineal yard
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The Budget-Customs Tariff
Rates in Effect Prior to Rates Proposed in this Budget
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[Stage Direction]
Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff
553	The following, when the textile component thereof is more than 50 p.c., by weight, of silk:						
(/) Handerchiefs, made from woven fabric	20 p.c.	221 P-c.	45 p.c.	27} p.c.	30 p.c.	45 p.c. and 7 cts. per lb.(2) Headsquares, scarves or mufflers, made from woven fabrics	20 p.c.	221 P-c.	45 p.c.	27} p.c.	30 p.c.	45 p.c. and 7 cts. per lb.(3) Clothing, wearing apparel and articles, made from woven fabrics, and all textile manufactures, wholly or partially manufactured	27} p.c.	30 p.c.	45 p.c.	27} p.c.	30 p.c.	45 p.c. and 7 cts. per lb.559a	Rags and wastes, whether or not cleaned, dusted, willowed, picked or pulled, unfit for use without further manufacture; used textile manufactures or waste portions of unused yarns or of unused fabrics, imported for disintegrating or for the manufacture of wiping rags; none of the foregoing to include remnants or mill ends	Free	Free	Free	Free 7} p.c.	Free 10 p.c.	Free 12} P-c.659b	Waste portions of unused fabrics, n.o.p., not to include remnants or mill ends	7J P-c.	10 p.c.	20 p.c.	7} p.c. Free	10 p.c. 7} p.c.	12} p.c. 10 p.c.559c	Garnetted material, obtained by disintegrating yarns err fabrics, wholly of wool or hair, in the natural colour of the fleece or the hair	Free	Free	Free	Free	Free	Free559d	Garnetted material, obtained by disintegrating yarns or fabrics, n.o.p	71 p.c.	10 p.c.	20 p.c.	7} p.c.	10 p.c.	12} p.c.659e	Nubs, slugs, slubs, neps or hemps	Free	Free	Free	Various	Various	Various559}	Washed wiping rags, trimmed or untrimmed; machine wiping wastes or machibed journal-box packing wastes	71 p.c.	10 p.c.	20 p.c.	7} p.c.	10 p.c.	12} p.c.560a	Man-made fibres or glass fibres, not exceeding 12 inches in length	5 p.c.	12i p.c.	15 p.c.	Free	7} p.c.	10 p.c.
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The Budget-Customs Tariff
660b Sliver, wholly or in part of man-made fibres or of glass
fibres	 5 p.c.	12} p.C.
560c Man-made filaments or glass filaments imported for converting into lengths not exceeding 12 inches, for use in the manufacture of:
{1) Textile yarns or flock	
5 p.c.	12} p.c.(2) Cigarette filter tips	
5 p.c.	12} p.c.
560d Man-made fibres, not exceeding 12 inches in length, for use
in the manufacture of carpets	   2}	p.c.	10 p.c.
561a Yarns and rovings, wholly of man-made fibres or filaments or of glass fibres or filaments, not more advanced than singles, not coloured, with not more
than seven turns to the inch	 20 p.c.	22}'p.c.
but not less than, per pound	22 cts.
561b Yarns and rovings, wholly or in part of man-made fibres or filaments or of glass fibres or filaments, including
threads, cords or twines, not containing wool or hair. 22} p.c.	22} p.c.
but not less than, per pound	22 cts.
661c Yarns, wholly of man-made fibres or filaments, not more advanced than singles, not coloured, with not more than seven turns to the inch, for use in the
manufacture of woven cord tire fabric	 7} p.c.	12} p.c.
but not less than, per pound	11 cts.
66Id Yarns and rovings, including threads, cords or twines, wholly or in part of man-made fibres or filaments, not containing silk, wool or hair, for use in the manufacture of fabrics for conveyor or transmission belts or belting
containing rubber	 12} p.c.	22} p.c.
561e Yarns and rovings composed of hair combined with manmade fibres or filaments, for use in the manufacture of
tailors' canvas interfacing	 Free	7} p.c.
and, per pound	10 cts.
662a Woven fabrics, wholly or in part of man-made fibres or filaments or of glass fibres or filaments, not containing wool or hair, not including fabrics more than 50 p.c.,
by weight, of silk	 22} p.c.	30 p.c.
and, per pound	20 cts.
IS p.e.	tree	7} p.c.	10 p.c.15 p.c.	Free	7} p.c.	10 p.c.15 p.c.	5 p.c.	12} p.c.	35 p.c. but not less than 28 cts. per lb.15 p.c.	Free	7} p.c.	10 p.c.35 p.c. 28 cts.	20 p.c. 5 p.c.	22} p.c. but not less than 22 cts. per lb. 22} p.c. but not less than 22 cts. per lb.	35 p.c. but not less than 28 cts. per lb. 35 p.c. but not less than 28 cts. per lb.35 p.c. 28 cts.	22} p.c. 7} p.c.	22} p.c. but not less than 22 cts. per lb. 22} p.c. but not less than 22 cts. per lb.	35 p.c. but not less than 28 cts. per lb. 35 p.c. but not less than 28 cts. per lb.35 p.c. 28 eta.	7} p.c.	12} p.c. 11 cts.	35 p.c. 28 cts.35 p.c.	Various	Various	Various20 p.c. 17i cts.	Free	7} p.c. 10 cts.	20 p.c. 17} cts.45 p.c. 40 cts.	22} p.c. Various	25 p.c. 30 cts. Various	45 p.c. 40 cts. VariousMARCH 31, I960	2695
The Budget-Customs Tariff
Rates in Effect Prior to Rates Proposed in this Budget
[Stage Direction]


Tariff Item	-	British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- F avoured-Nation Tariff	Tariff
B6ta (cont.)	Woven fabrics containing five per cent or less, by weight, of man-made fibres or filaments or of glass fibres or filaments shall not be dutiable under this item but shall be dutiable as though composed wholly of the remaining constituents.						
662b	Woven fabrics with cut-pile, wholly or in part of manmade fibres or filaments or of glass fibres or filaments, not containing wool or hair	20 p.c.	30 p.c.	45 p.c.	171 P-c.	25 p.c.	35 p.c.662c	Woven fabrics with leno-edged strips, not less than 40 inches in width, wholly of man-made fibres or filaments, imported in the unfinished condition by manufacturers of metalline ribbons, for use in the manufacture of such ribbons	Free	5 p.c.	45 p.c.	Free	5 p.c.	45 p.c.662d	Umbrella-covering fabrics, impregnated or not, with or without hemmed edges, in lengths of not less than 10 yards, for use in the manufacture of umbrellas having a rib length of not more than 27 inches	Free	Free	Free	Free	Free	20 p.c.662e	Woven fabrics, wholly or in part of silk or of man-made fibres or filaments, imported in lengths of not less than five yards, by manufacturers of neckties, for use in the manufacture of neckties, but not including such fabrics for use as interdining	15 p.c.	15 p.c.	45 p.c.	15 p.c. Various	15 p.c. Various	45 p.c.'and 40 cts. per lb. Various662f	Woven cord tire fabric, wholly or in chief part, by weight, of man-made fibres or filaments, not to contain silk or wool, for usein the manufacture of pneumatic tires, n.o.p	
and, per pound	71 p.c.	71 p.c. 71 cts.	45 p.c. 40 cts.	71 p.c.	71 p.c. 71 cts.	45 p.c. 40 cts.662g	Woven cord tire fabric, wholly or in chief part, by weight, of man-made fibres or filaments, not to contain silk or wool, coated with a rubber composition, when imported by manufacturers of rubber tires, to be incorporated by them in pneumatic tires, in their own factories	Free	15 p.c.	45 p.c.	Free	15 p.c.	25 p.c. and 4 cts. per lb.
The Budget-Customs Tariff
66Sh	Woven fabrics, wholly or in part of man-made fibres or filaments, not containing silk, wool or hair, whether or not coated or impregnated, when imported by manufacturers of conveyor or transmission belts or belting containing rubber, for use in the manufacture of such belts or belting	15 p.c.	27$ p.c.	45 p.c.	22$ p.c.	25 p.c. and 30 cts. per lb.	45 p.c. and 40 cts. per lb.66S	Clothing, wearing apparel and articles made from woven fabrics, and all textile manufactures, wholly or partially manufactured, the textile component of which is 50 p.c. or more, by weight, of man-made fibres or filaments or of glass fibres or filaments, not containing wool or hair	20 p.c.	27$ p.c.	50 p.c.	20 p.c. Various	27$ p.c. Various	50 p.c. and 7 cts. per lb. Various664	Church vestments, prayer shawls, prayer shawl fringes and prayer shawl bags	10 p.c.	10 p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.c.666	Saris of any material	20 p.c.	22$ p.c.	50 p.c.	20 p.c.	22$ p.c.	45 p.c. and 7 cts. per lb.573	Enamelled carriage, shelf and table oilcloth, and cork matting or carpets	
and, per pound	15 p.c.	27£ p.c.	35 p.c. 4 cts.	15 p.c.	27$ p.c.	35 p.c. and 4 cts. per lb.573a	Linoleum; felt base floor covering not including such materials in which are incorporated synthetic resin sheets or cellulose plastic sheets	
and, per pound	15 p.c.	25 p.c.	35 p.c. 4 cts.	15 p.c.	27$ p.c.	35 p.c. and 4 cts. per lb.686	Anthracite coal; anthracite coal screenings and dust.per ton	Free	Free	50 cts.	Free 35 cts. per ton	Free 50 cts. per ton	50 cts. per ton 75 cts. per ton624a	(5) Toy electric train sets, transformers, parts and accessories for use therewith	5 p.c.	20 p.c.	40 p.c.	Various	Various	Various663/	Iodized mineral salts, for use in the feeding of animals..	Free	10 p.c.	25 p.c.	Free	15 p.c.	25 p.c.that Schedule A to the Customs Tariff be amended by striking out tariff items 552c(2), 530,531,532<i, 552,552a, 553(2), 553(3), 553a, 5546(1), 5546(2), 5546(3), 561a(t), 561a(u), 562,562a, 565, 566 and 5676(3), and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:	6SSa	Woven fabrics composed wholly or in part of yarns of wool or hair, n.o.p	
and, per pound The total duty leviable shall not be in excess of	per pound	20 p.c. 20 cts. 60 cts.	27$ p.c. 38 cts.	40 p.c. 40 cts.	20 p.c. 20 cts. .. 60 cts.	27$ p.c. 38 cts.	40 p.c. 40 cts.
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			Most-
		British	Favoured-
Tariff	-	Preferential	NationItem	Tariff	Tariff
682b Woven fabrics composed wholly or in part of yarns of wool or hair and weighing not less than twelve ounces
to the square yard	
and,	per pound
The	total	duty	leviable	shall	not	be	in excess
of	per pound
682c Woven fabrics composed wholly or in chief part by weight of yarns of wool or hair and weighing not more
than nine ounces to the square yard, n.o.p	
and,	per pound
The	total	duty	leviable	shall	not	be	in excess
of	per pound
638a Cotton yarns, wholly covered with a double layer of metallic strip in single strand only, when imported by manufacturers for use exclusively in the manufacture of electrical conductors, in their own factories
and, per pound
5S8b Lace and embroideries, wholly of cotton, coloured, when imported for use exclusively by manufacturers in the manufacture of clothing, in their own factories.
and, per pound.
688c Knitted fabric wholly of cotton, in the web, imported by manufacturers of rubber boots and shoes for use exclusively in the manufacture of such articles in their own factories	 10 p.c.	20 p.c.
688d Fabrics wholly of cotton, coated or impregnated, n.o.p. 20 p.c.	25 p.c.
and, per pound	
688e Felt, pressed, of all kinds, in the web, not consisting of or in combination with any woven, knitted or other
fabric or material	 12} p.c.	17} p.c.
and, per pound	 12} cts.
5S8J Felt, splint, for use in making moulded splints for medicinal purposes	 Free	10 p.c.
20 p.c.	27} p.c.
15 cts.	33 cts.
55 cts.		
20 p.c.	27j p.c.
20 cts.	38 cts.
60 cts.	$1.10
10 p.c.	10 p.c.
7} p.c.	15 p.c.
Rates in Effect Prior to Rates Proposed in this Budget
to
m
co
Co
British	Most-
General	Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff	Tariff
40 p.c. 40 cts.
40 p.c. 40 cts.
25 p.c. 4 cts.
30 p.c. . 4 cts.
25 p.c.
35 p.c. . 4 cts.
25 p.c. 20 cts.
20 p.c.	27* p.c.	40 p.c.15 cts.	33 cts.	40 cts.
55 cts.
20 p.c.	27} p.c.	40 p.c.20 cts.	38 cts.	40 cts.60 cts.	$1.10	10 p.c.	10 p.c.	25 p.c.7j p.c.	15 p.c.	30 p.c.
4 cts.
10 p.c.	20 p.c.	25 p.c.20 p.c.	25 p.c.	35 p.c.12} p.c.	17} p.c.	25 p.c. 20 cts.
n
o
*1
o
as
w
25 p.c.
Free
10 p.c.
25 p.c.
The Budget-Customs Tariff
5S8g Blankets of any material, not to include automobile rugs, steamer rugs, or similar articles:
(1) Blankets, wholly or in part of wool or hair	20 p.c.	25 p.c.	35 p.c.	20 p.c.	25 p.c.	35 p.c.and, per pound	5 cts.	20 cts.	30 cts.	5 cts.	20 cts.	30 cts.(2) Blankets, n.o.p	20 p.c.	25 p.c.	35 p.c.	20 p.c.	25 p.c.	35 p.c.and, per pound	5 cts.	20 cts.	30 cts.	5 cts.	20 cts.	30 cts.5S8h	Stereotypers' and typecasters' blankets or blanketing and press blankets or blanketing used for printing presses, of a class or kind not made in Canada	Free	5 p.c.	10 p.c.	Free	5 p.c.	10 p.c.BS8i	Fabrics, coated or impregnated, n.o.p.: (1) Composed wholly or in part of silk	27| p.c.	30 p.c.	45 p.c.	27} p.c.	30 p.c.	45 p.c.(2) Composed wholly or in part of synthetic textile fibres or filaments, but not containing silk	30 p.c.	35 p.c.	50 p.c.	30 p.c.	35 p.c.	50 p.c.6S8j	Woven fabrics not exceeding twelve inches in width generally known as "ribbons", whether with cut pile or not, wholly or in part of silk but not containing wool. 	22} p.c.	25 p.c.	35 p.c.	22} p.c.	25 p.c.	35 p.c.588k Woven fabrics not exceeding twelve inches in width, generally known as "ribbons", whether with cut pile or not, wholly or in part of synthetic textile fibres or filaments, but not containing silk nor wool	p.c.	25 p.c.	35 p.c.	22^ p.c.	25 p.c.	35 p.c.588m	Embroideries, lace, braids, cords, chenille, gimp, fringes and tassels, whether containing tinsel or not, nets, nettings and bobinet, n.o.p	17} p.c.	22} p.c.	35 p.c.	17} p.c.	22} p.c.	35 p.c.538n	Plaited or braided lines and cords, non-elastic, whether of tubular or of solid construction, not exceeding one inch in circumference, wholly or in chief part by weight of vegetable fibres	15 p.c.	30 p.c.	35 p.c.	15 p.c.	30 p.c.	35 p.c.6S8p	Woven fabrics, containing figured designs, not exceeding twelve inches in width, laces, embroideries, emblems and medallions, for use in the manufacture of church vestments	10 p.c.	10 p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.c.
4. Resolved,
that Schedule B to the Customs Tariff be amended by striking out items 1030(a) and 1030(6) and the enumerations of goods and the rates of drawback of duty set opposite each of those items, and by inserting the following item, enumeration of goods and rate of drawback of duty:
Portion of Duty (not including Speeial
Item	Goods	When Subject to Drawback	Duty or Dumping
No.	Duty) Payable as
Drawback
1013 Materials
When used in the manufacture of articles enumerated in tariff item 236	 50 p.o.
The Budget-^Customs Tariff
5. Resolved,
that Schedule A to the Customs Tariff be amended by striking out tariff items 1246, 180a, 237a, 399a, 403(c), 409c(1), 4376, 438/(1) and (2), 438*7, 440m and 440n, and the enumerations of goods and the rates of duty set opposite each of those items, and by inserting therein the following items, enumerations of goods and rates of duty:
Rates in Effect Prior to Rates Proposed in this Budget
Tariff Item	-	British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured-N ation Tariff	General Tariff90e	Potatoes, pre-cooked, without admixture beyond the addition of preservatives, in powder, flake or granular form	17$ p.c.	17} p.c.	25 p.c.	Free	Free	2| cts. per lb.124 b	Squid, octopus and cuttlefish	Free	Free	Free	Free 12} p.c.	Free 17} p.c.	Free 25 p.c.180a	Photographs, negatives and exposed film, for use only as news illustrations	Free	Free	Free	Free	Free	Free237a	Deuterium oxide or heavy water; uranium in the form of pigs, ingots, billets or bars	
On and after July 1, 1962	Free Free	Free 15 p.c.	25 p.c. 25 p.c.	Free Free	Free 25 p.c. 15 p.c. 25 p.c. (On and after July 1, 1960)	399a	Pipes or tubes of iron or steel, commonly known as "oil-country goods", being casing or tubing and fittings or couplings therefor; sucker rods, pony rods, polished rods and couplings therefor; seismograph drilling bits, in sizes three and one-half inches to four and three-quarter inches inclusive; all of the foregoing for use in connection with natural gas or oil wells	5 p.c.	10 p.c.	20 p.c.	5 p.c. Free	10 p.c. Free	20 p.c. Free403	Wire, of steel: (c) Valued at not less than two and three-quarter cents per pound for use in the manufacture of wire rope	Free	5 p.c.	7} p.c.	Free 10 p.c.	5 p.c. 20 p.c.	7} p.c. 20 p.c.409e	(1) Spraying and dusting machines and attachments therefor, including hand sprayers, for agricultural or horticultural purposes; apparatus for the destruction of predatory animals by the discharge of poisonous cartridges and poisonous cartridges for such apparatus; automatic explosive bird-scaring devices; apparatus specially designed for sterilizing bulbs; pressure testing apparatus for determining maturity of fruit; pruning hooks; pruning shears; dehorning instruments; magnets for veterinary use; parts of the foregoing	Free	Free	Free	Free 15 p.c.	Free 22\ p.c.	Free 30 p.c.
o
o
s
o
a
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The Budget-Customs Tariff
79551-0-171
4375 Diesel motor rail cars or units and chassis for same for use on railways for the carriage of passenger, baggage, mail or express traffic, and parts thereof	 Free
4S8f Parts, n.o.p., electro-plated or not, whether finished or not, for automobiles, motor vehicles, electric trackless trolley buses, fire fighting vehicles, ambulances and hearses, or chassis enumerated in tariff items 424 and 438a, including engines, but not including ball or roller bearings, wireless receiving sets, die castings of zinc, electric storage batteries, parts of wood, tires and tubes or parts of which the component material of chief value is rubber	 Free
438g Brake linings and clutch facings, whether or not including metallic wires or threads, {or automobiles, motor vehicles, electric trackless trolley buses, fire fighting vehicles, ambulances and hearses, or chassis enumerated in tariff items JJH and 438a:
(/) When made wholly or in part from crude asbestos of British Commonwealth origin	 Free
(8) When made wholly or in part from crude asbestos, n.o.p	 15 p.c.
438h Motor cycles or side cars therefor, and parts of the
foregoing	 Free
440m Aircraft, not including engines, under such regulations as the Minister may prescribe:
1.	When of types or sizes not made in Canada.... Free
On and after July 1, 196£ Free
2.	When of types and sizes made in Canada	 Free
440n Aircraft engines, when imported for use in the equipment of aircraft:
1.	When of types or sizes not made in Canada.... Free
On and after July 1, 1962 Free
2.	When of types and sizes made in Canada	
FreeFree	35 p.c.	Free	Free	35 p.c.25 p.c.	35 p.c.	Free	25 p.c.	35 p.c.25 p.c.	35 p.c.	Free	25 p.c.	35 p.c.25 p.c.	35 p.c.	15 p.c.	25 p.c.	35 p.c.17* P.c.	30 p.c.	Free	17* p.c.	30 p.c.Free	27£ p.c.	Free	Free	27* p.c.15 p.c.	27l p.c.	Free	15 p.c. (On and after July 1,	27* p.c. 1960)15 p.c.	27$ p.c.	Free	15 p.c.	27* p.c.Free	27* p.c.	Free	Free	27* p.c.15 p.c.	27* p.c.	Free	15 p.c. (On and after July 1,	27* p.c. 1960)15 p.c.	27| p.c.	Free	15 p.c.	27* p.c.
>
o
[Stage Direction]

cn
6. Resolved,
that Schedule A to the Customs Tariff be amended as follows:
1.	by adding to the enumeration of goods in tariff item 438c the following:
"Door opening weatherseal retainers;
Reclining seat mechanisms;
Swivel seat mechanisms;"
2.	by deleting from tariff item 438d the words "Internal combustion engines of 349 cubic inches and over in displacement;" and substituting therefor the words "Internal combustion engines over 348 cubic inches in displacement;"
The Budget-Customs Tariff
3.	by adding to the enumeration of goods in tariff item 438d the following:
J'Air cleaners;
Cast aluminum road wheels for tube type tires using rim sizes larger than twenty inches by eight inches and for tubeless type tires using rim sizes larger than twenty two and one half inches by eight and one quarter inches;"
7. Resolved,
that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the 1st day of April, 1960, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day.
(See also Budget Papers, pages 2709 to 2806)
2702	HOUSE OF COMMONS
The Budget-Customs Tariff
William Moore Benidickson: Mr. Speaker, it is something of a
novelty to find the Conservatives applauding a surplus, even a small surplus. First of all, I think they have only had this opportunity four times since confederation to applaud a surplus from a Conservative government and, in my time, I do not recall that they were very enthusiastic applauders of the many surpluses of the previous administration.
I was thinking particularly on this particular anniversary that swift indeed has been the descent from Olympus when we think of an event two years ago. This is the second anniversary of that event and already we see across the country lapels bearing buttons saying, "Do not blame me; I voted Liberal." Two years is a fairly short span in history, but it has been a rather long period for Canada in so far as its terms of record deficits are concerned, record expenditures, record taxation and record unemployment. I suggest that is the significant feature of this anniversary for most Canadians.
Now with the applause for this very dismal surplus, as surpluses have been experienced in this country, we must also recognize that the government supporters had to take with it tonight a report from the Minister of Finance (Mr. Fleming) that this was the second largest deficit in Canada's peacetime history and the previous record was, of course, the record of the same Minister of Finance in the previous year. I think most of us were expecting to hear tonight from the minister what his estimate would be of the gross national product for the coming year. I was surprised by some of the omissions of qualifications in his description of the prospects for the gross national product next year, just as I am sure the house was surprised to get his white paper and find that his estimates for last year, having regard to these usual qualifications, prove exceedingly disappointing.
Last year the minister indicated that subject to normal crops, stable prices and no untoward external events, he expected a gross national product increase of 7 per cent. If we read his white paper we find, first of all, that 6 per cent is the attained figure and then from that 6 per cent, according to his own report, you have to take off 2 per cent for increases in prices. But that is not the only point. Since the white paper was sent to the printers I find that we have the typical confusion exhibited between the Department of Finance and the Department of Trade and Commerce, because on Tuesday 79951-0-1714
The Budget-Mr. Benidickson the Department of Trade and Commerce published its D.B.S. accounts of income and expenditures for the fourth quarter of 1959. You will find there a record of volume of production in relation to gross national expenditures, and you will find that the increase was only 3.5 per cent. In other words, the estimate of the Minister of Finance a year ago was just 50 per cent wrong.


Some hon. Members:: Oh, oh.


William Moore Benidickson: In so far as gross increase was concerned, we find it was 6 per cent instead of a 7 per cent increase subject, as the report of this dominion bureau of statistics indicates, to a reduction of 2.3 per cent in so far as prices are concerned.
Tonight, as I took down the words of the minister, I found he predicted an increase in the gross national product for the coming year of 6 per cent but, for the first time in many years I found absent from that statement those qualifying words that have been typical in the past from my hon. friend and his predecessors, "subject to normal crops, stable prices and no untoward external events." Are we to assume, as a result of this absence that stable prices are now an unrealistic assumption on the part of the minister? Did he get discouraged from the poor estimating that was done last year? Is inflation to be accepted?
1 do not know when in the history of any administration the country has lost as much ground in as short a period of time and I want to give some indication of that situation. As to lost ground in so far as the shareholders of Canada are concerned, here are some of the indications. The net debt during this administration has gone up $1,084 million. The unemployment insurance fund has been depleted by $504 million. We no longer have the defence equipment account; $165 million is gone there. The minister has even changed the method of reporting to this house this year. For the first time in many years the deficit on the old age security account is not taken into this year's expenditures. That fact accounts for another $24 million which would increase the deficit from $406 million, as reported, to $430 million for 1959-60.
In any event those items total $1,777 million in three years. A rough estimate of the population would be perhaps 17,700,000. I suggest that makes mathematical calculation very easy. One will recognize the fact that the net worth of the shareholders in Canada in this short time has gone down $100 per person. To use the old phrase which the Prime Minister (Mr. Diefenbaker) used to use, namely "an average family of

The Budget-Mr. Benidickson five", this means $500 a family. I suggest to you, Mr. Speaker, that that is an indication of the lost ground under this administration of which I have spoken.
In addition to that consideration, this administration is now collecting more taxes from more people than any other government in history. The minister has indicated tonight that next year, as compared to this year, he proposes to take out, of the Canadian populace an additional $591 million in taxes and that figure does not include the additional amount he will take, as compared to this year, on the old age security account. A little bit of calculation there again I think will indicate that this works out to about $30 per capita. If you multiply that figure by five, it is an increase of $150 a year for an average family of five persons. Indeed, the long arm of the Minister of Finance is certainly going very deep when we have such an astronomical increase in the proposed take from taxes such as he has indicated to us tonight.
The minister has an extremely slender budget surplus forecast; I think it was $12 million. Based on revenues in excess of $6 billion, one can understand how unreliable an estimate of that kind can be. In addition to that, it seemingly would indicate that to attain that budget surplus on the estimated expenditures he will come to this parliament in the coming twelve months with supplementary estimates totalling only $140 million. We all know that in recent years, even under this Minister of Finance, after the opening of the fiscal year we have been getting later supplementary estimates that at times have totalled between $400 million and $500 million additional to those contained in the blue book of estimates.
In addition to that, quite apart from the budget, this administration in three years has reported to this house cash deficits that totalled $2,338 million. Is it any wonder that the position for financing of our junior governments and of the business of this country has been greatly embarrassed by this type of activity? Certainly it is true that this government and the minister have been hogging this market and others have had very little chance indeed.
Tonight, if I took down the minister's words correctly, he said this with respect to debt management:
In reporting to the house a year ago on the management of our public debt I pointed out that the large conversion loan operations undertaken during the summer of 1958 had removed a source of heavy pressure on the bond market and that by substantially lengthening out the average term of our debt a sound debt management policy could be developed and carried forward.


The minister pounds away on this theme. He referred again to the "great conversion loan" of 1958. In the press release with respect to it in 1958 these were his words:
This great conversion will lay the foundations for a new healthy and confident tone to our whole bond market, and the beneficial results of this will extend well beyond the market for Canada bonds and into the market for provincial, munic* ipal and corporate bonds.
I wonder what our provincial treasurers think now of that statement. I wonder what our school boards and the municipalities, in their desperate financial state today, think about it. I find that on page 88 of the minister's white paper tabled the other day he has given an average interest rate of 3.96 per cent with respect to our public debt on March 31, 1960. I think it is not just a coincidence, that this is the highest rate on our public debt since the last Conservative administration, that of R. B. Bennett, in 1935.
In addition to that, there is more of our direct and guaranteed securities maturing within two years from February 29 of this year than there was prior to the launching of this great conversion loan, all borrowed by the present administration and coming due under the policies of the government. In addition to that, when we were told about the conversion loan a reference was made to the balance that was piling up and coming due within eight years. I think $6,400 million was mentioned. The situation today is that almost the same amount is falling due within eight years as there was prior to the launching of this "great conversion loan".
There has not been a great deal of applause, outside of this house for the performance of the administration financially during the past year unless it comes from the moneylenders. There certainly has not been any applause from the taxpayers. I have indicated that they were obliged to pay $676 million last year more than they paid into the treasury of the minister in the previous year. There certainly is not any applause from the unemployed. There should not be any applause from the consumer. I have stated that the bureau of statistics reports indicate there has been a 2.3 per cent price increase related to gross national expenditures. There is certainly no cheering from the provinces, the municipalities, the school boards or business, large or small. I greatly doubt whether civil servants are going to cheer very much about the statement of the minister tonight. There certainly should be very little cheering from the young people of this land who have facing them the prospect of home building. That, of course, is a very formidable undertaking indeed with the high interest rates prevailing.
I do not propose to be a Cassandra but I think the minister has been unduly optimistic.

I think it is only right that someone should draw the attention of the house and of the country to some factors that certainly are not in this atmosphere tonight as a result of this glowing report we have heard from the Minister of Finance.
Unemployment has been increasing every month. Bank loans this year have declined by comparison with last year. We read the other day about heavy lay-offs in the automobile and other industries. Freight car-loadings, always an impressive statistic in the estimation of the Prime Minister, are not above those of 1959; bankruptcies have increased by comparison with 1959. With regard to the unemployment insurance fund in one year the minister has to report to us in the white paper that the fund is down a further $126 million.
The trade deficit was a real shock to this country. We have heard tonight, with respect to it, again, just preachings, not remedies. Opportunities for employment have certainly not been opening up as rapidly as the labour force has been increasing, and we do not seem to have any remedies presented to us by the minister. Soft commodity prices are certainly not encouraging the building up of inventories. Everybody recognizes that in recent months the optimism of the business community has moderated. We have had very little in the way of guidance and leadership in the fiscal proposals of the minister tonight. This, indeed, is a very tepid budget.
The Budget-Mr. Benidickson I think that if we were to call it anything at all it could be described as a "do-nothing" budget. That is what we have in front of us in the minister's presentation.
We were not looking forward to very much from the minister tonight, because we feel that in the monthly preachings he has been making in Toronto and elsewhere-he eliminated one month's speech in order that we should get something from him tonight-he has fairly well dealt with this theme of "work and save". The hon. gentleman said recently in Saskatoon that we were now in a period of unprecedented boom and market expansion.


Some hon. Members:: Hear, hear.


William Moore Benidickson: Then, in the conclusion of this speech he urged everyone to take self denying measures, use self-discipline, and- at least I can understand why the minister should have emphasized this-exercise forbearance. He then urged self-denial. There certainly is not very much except an appeal for self-denial as far as this budget is concerned.
I suggest this is pretty cold porridge for the unemployed and for many other people who are certainly not sharing in what the minister refers to as unprecedented boom.
May I adjourn the debate?


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

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

Mr. Brassard (Lapointe): 1.	Has the government, during the last few months, awarded a contract for the construction of a ferry boat to carry automobiles between Tormentine, New Brunswick, and Borden, Prince Edward Island?
2.	If so, were public tenders called for the said contract?
3.	Who were the tenderers and what was the amount of their respective tenders?
4.	Who was awarded the contract, and at what price?
5.	What is the length, beam and power of the said ferry boat?
Answer by: Hon. George H. Hees (Minister
of Transport):
1.	Yes.
2.	Yes.
3.	Halifax shipyards, Halifax, N.S., $2,970,-
241; Saint John Dry Dock Co. Ltd., Saint John, N.B., $3,083,000; Geo. T. Davie and Sons Ltd., Lauzon, P.Q.,	$3,157,618; Canadian
Shipbuilding and Engineering Ltd., Colling-wood, Ont., $3,269,000; Davie Shipbuilding Limited, Lauzon, P.Q., $3,269,450; Canadian Vickers Limited, Montreal, P.Q., $3,442,281; Marine Industries Ltd., Sorel, P.Q., $3,732,000.
4.	Halifax Shipyards, Halifax, N.S., $2,970,241.
5.	Length O.A. 279'6"; breadth extreme 60'4"; depth 20'; power 5200 S.H.P.


AIR TERMINAL BUILDING FURNISHINGS, KELLY LAKE, HALIFAX
Mr. McWilliam: 1.	Were tenders called by the Department of Transport for furnishings In the air terminal building at Kelly lake, Halifax?
2.	If so, who submitted tenders and what was the amount of each?
3.	Has a contract been awarded?
4.	If so, did the successful tenderer include all requirements for furnishings as specified in the original tender?
Answer by: Hon. George H. Hees (Minister
of Transport):
1.	Yes.
2.	Tenders were received from:
(a)	S.P. Zive and Son, Limited, $92,908.14, (this bid was not in accordance with the tender requirements and could not be accepted) .
(b)	H.H. Popham and Company, Limited, $98,373.21.
(c)	Seaman-Cross Limited, $105,064.48.
(d)	The Robert Simpson Eastern Limited, $110,847.95.
(e)	Dictating Equipment Maritimes Limited, $34,977.24, (this bid was incomplete covering only a part of the work and lower bids for the same part were received from (b) and (c) above).
3.	Yes, to H.H. Popham and Company, Limited, the lowest bid meeting the tender specifications.
4.	Yes.


MAIL CONTRACT, ST. JEAN-CANTIC, QUE.
Mr. Dupuis: 1.	During the last fifteen years have tenders been called for the conveyance of mail between St. Jean and Cantic, Quebec?
2.	If so: (a) on what dates were tenders opened? (b) what are the names of those who submitted tenders and the amount of each tender? (c) to whom was the contract awarded in each case?
3.	Who is the holder of this contract at present, and since what date?
4.	Are new tenders to be called shortly? If so, when?
Answer by: Hon. W. M. Hamilton (Postmaster
General):
1.	Yes.
2.	(a) July 16, 1948, for a service Lacolle and St. Jean.
(b)	Leo Tremblay, St. Blaise, $1,795; Georges Aime Bouchard, St. Valentin, $1,800; J. A. Tetreault, Lacolle, $1,980; Jean-Bap-tiste Bouchard, Lacolle, $2,400; Rene Cho-quette, Lacolle, $2,700; Floribert Robillard, Grande Ligne, $2,700; Leopold Blain, Lacolle, $3,250; Alexis Pelletier, Lacolle, $4,000; Fred Gregoire, Lacolle, $4,000.
(c)	Leo Tremblay, St. Blaise-$1,795 per year.
3.	Leo Tremblay, since November 1, 1948; contract renewed without tender calls in 1952 and 1956.
4.	No decision will be taken on this contract until July 1, 1960.


SALE OF &quot;MINAS&quot; FSE-189
Mr. Bourgel: 1.	Has the Minas, FSE-189 of the coastal convoy of the Royal Canadian Navy been sold?
2.	If so, were tenders called with respect to this sale?
3.	What are the names of those who submitted tenders and the amount of each tender?
4.	To what company or what person was this vessel sold?
Answer by: Hon. Raymond O'Hurley (Minister of Defence Production):
1.	Yes.
2.	Yes.
3.	The first call for offers produced four bids as follows:
Stradiotti Brothers Limited, 2582 Kent street, Vancouver 16, B.C., $6,001.

Gordon H. Smith, 3935 Holland ave., Victoria, B.C., $4,561.
Hogan Truck & Equipment Limited, 12835 Trans-Canada Hwy., Box 235, Whalley, B.C., $3,156.
Torbay Trading Co. Limited, c/o 1865 Stewart street, Vancouver, B.C., $2,000.
A late bid was received from Davis Trading and Supply Co., 115 East 2nd ave., Vancouver 10, B.C., for $12,600. All bids were refused and a second call brought the following offers:
Wagner, Stein and Greene Co., 1832 Store street, Victoria, B.C., $14,900.
Atlas Iron and Metals Ltd., 250 Prior street, Vancouver, B.C., $14,750.25.
Questions
Zidell Machinery and Supply Co., 3121
S.W. Moody St., Portland, Oregon, $11,353.53.
Davis Trading and Supply Co., 115 E. Second ave., Vancouver, B.C., $9,250.00.
B.C. Brokerage Co. Ltd., Granville Island, Vancouver, B.C., $8,200.00.
O. H. "Doc" Freeman, Northlake Boat Sales, 999 Northlake Way, Seattle, Washington, $5,689.76.
Gordon H. Smith, 8937 Holland ave., Victoria, B.C., $3,175.00.
Thomas S. Byrn, 1838 West 17th ave., Vancouver, B.C., 3,150.00.
Hogan Truck and Equipment Ltd., 12835 Trans-Canada Hwy., Box 235, Whalley, B.C., $2,000.00.
4.	Sold to Wagner, Stein and Greene Co., 1832 Store street, Victoria, B.C.


I960
[Stage Direction]
The Budget-Appendix

[Stage Direction]
presented by
the Honourable Donald M. Fleming, M.P., for the information of Parliament in connection with the Budget of 1960-61
79951-0-172

The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1959, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government Accounts for the
fiscal year ended March 31, 1960.
79951-0-1724
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Page
1.	National Accounts-
National Income and Product	 2713
National Expenditure	 2715
Personal Income and its Disposition	 2718
Source and Disposition of Saving	 2720
Investment and Capital Expenditure	  2721
Revenue and Expenditure of All	Governments	
27242.	Balance of International Payments	
27283.	Employment and Earnings	
27344.	Financial Developments	
27365.	Price Trends	
2740
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1959 estimates are preliminary and subject to revision.

The Budget-Appendix THE NATIONAL ACCOUNTS
National Income and Product
Gross National Product in 1959, according to preliminary estimates, amounted to $34.6 billion, more than 6 per cent above that of 1958. Most of the increase represented gains in the volume of production; the rise in prices was about 2 per cent.
The increase in the volume of production in 1959 was the first significant gain in real output since 1956 and compares with a postwar average of about 4 per cent. The rise in output had been underway since mid-1958, but 1959 was the first full year to feel the impact of the current expansion. The expansion proceeded until the third quarter of 1959 when there was a temporary pause, caused in part by the effects of some major labour disputes. By the fourth quarter of the year, however, the upswing had been resumed, and the final quarter annual rate of Gross National Product of $35.3 billion was 2 per cent above the average of 1959 as a whole.
It is also possible to measure changes in real output on an industrial basis. While official statistics do not completely cover all sectors of production, there are indications that the rise in total real output, as measured this way, may have been more than 4J per cent. The gain in output was widespread among industrial groups, with both goods-producing and service industries higher by that amount. The largest gains were registered in mining and forestry (which reflected the pickup in demand from abroad for Canadian wood and metal products) and in public utilities and durable and non-durable goods manufacturing. By year end the pace of the upswing had brought total industrial output to a level 8 per cent above the previous peak at the beginning of 1957. Output in durable manufacturing, which had generally declined from the beginning of 1957 to the autumn of 1958, rose substantially throughout 1959 and by October had almost reached the previous peak. There was little change in the

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BILLIONS OF DOLLARS	'	BILLIONS OF DOLLARS
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level of agricultural production. Output in construction and in fishing and trapping was somewhat below the level of 1958. The decline in construction activity was the result of a slightly smaller level of housebuilding and a moderately lower level of private non-residential building for the year as a whole. In the last half of 1959, however, private business construction was increasing.
There was a substantial increase in employment during the year as the increase in production opened up new job opportunities. Total employment rose by 156,000 persons from 1958 to 1959. At the same time the growth in the labour force was 101,000 persons so that the number without jobs and seeking work fell from an average of 405,000 in 1958 to 350,000 for the year 1959. This represented 5.6 per cent of the labour force in 1959 compared with 6.6 per cent in 1958.
Increased production and employment provided the basis for a rise in income in 1959; national income was up 6.4 per cent. Most major income groups showed gains over the preceding year. As is typical of periods of economic expansion, corporation profits rose more than other elements of the national income, increasing by 14 per cent over 1958 and almost reaching the 1956 peak. Labour income rose throughout the year reaching a record level of $17.7 billion, almost 8 per cent above the previous year. The number of paid workers increased by 3.7 per cent; average hours worked in manufacturing were up from 40.2 hours to 40.7 hours per week, and average hourly earnings increased by 4 per cent. Consumer prices rose only about 1 per cent in 1959 so that there was a substantial increase in total real income. After allowing for the increase in population, there was a considerable gain in real income per capita.
Corporations increased their profits almost to the level of the previous record of 1956 as output was higher and costs remained relatively stable. Corporation profits amounted to $2,836 million in 1959, up from $2,483 million in 1958. Profits had risen sharply in the final quarter of 1958 and remained at this higher level throughout 1959, increasing only moderately throughout the year.

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-	1956	1957	1958	Prelim. 19591. Wages, salaries, and supplementary labour income	14,890	(Millions 15,996	Df dollars) 16,434	17,7172. Military pay and allowances	424	476	491	4963. Corporation profits before taxes	2,908	2,547	2,483	2,8364. Rent, interest, and miscellaneous investment income	1,767	1,905	2,015	2,0945. Accrued net income of farm operators from farm production1	1,450	996	1,193	1,1086. Net income of non-farm unincorporated business..	1,965	2,011	2,119	2,1507. Inventory valuation adjustment2	-238	-71	-33	-1208. National Income (1+2+3+4+5+6+7)	23,166	23,860	24,702	26,2819. Indirect taxes less subsidies	3,636	3,848	3,883	4,22010. Capital consumption allowances and miscellaneous valuation adjustments	3,642	3,994	3,923	4,13111. Residual error of estimate	141	71	98	-3912. Gross National Product at Market Prices (8+9+10+11)	30,585	31,773	32,606	34,59313. Index of G.N.P. in Constant Dollars	100.0	99.7	100.5	104.01 Includes accrued earnings arising out of the opera * See footnote 2, Table 2.	tions of the Canadian Wheat Board.	
The Budget-Appendix
Rent, interest and miscellaneous investment income increased by almost 4 per cent.
Farm output remained high and cash income was at about the 1958 level of $2.8 billion, 3 per cent below the 1952 record. The farm labour force declined a further 3 per cent during the year to a level almost one-quarter below that of 1952, and per capita farm cash income continued to increase. Accrued net farm income amounted to $1,108 million in 1959, 7 per cent below that of the previous year. The 1959 grain crop was larger than that of 1958 and marketings were about the same. In both years marketings exceeded production and stocks were drawn down. Income from the sale of livestock was almost unchanged in the year; a decline in marketings of cattle and calves, associated with lower exports to the United States, was mostly offset by higher income from hogs.
Net income of unincorporated business amounted to $2,150 million in 1959, 1.5 per cent above the level of the preceding year. The major gains in this sector were accounted for by service industries and transportation. Net income in forestry also rose, in line with higher levels of operations in the woods industries.
National Expenditure
The strength of domestic demand which had sustained the Canadian economy in 1958 provided impetus to the expansion of production in 1959. Consumer expenditure, supported by higher levels of income, provided the main stimulus to demand in dollar terms. The increase in government expenditure on goods and services was also a significant element in the expansion of domestic demand. Private investment was almost unchanged from the 1958 level. Expenditures on new housing declined very slightly from the record of the previous year, while non-residential construction was 8 per cent below 1958. On the other hand, business investment in machinery and equipment was 9 per cent above 1958, and was decidedly stronger in the second half of the year. Exports responded to the rising tempo of economic activity abroad and reached a record level. The rising level of total demand prompted a buildup in inventories, in contrast to 1958 when there had been a liquidation of inventories. About three-quarters of the increased demand was met by means of higher domestic production, and the remaining one-quarter by higher imports. It should be noted that the movement of imports has been considerably more volatile than that of total Canadian demand; in periods of slackening demand, imports tend to decline more rapidly than other components of Gross National Expenditure so that the decline in domestic production is mitigated. Conversely, in periods of expanding demand, imports tend to increase more rapidly than other components.
The average consumer increased his volume of real spending on consumer goods and services by more than 2 per cent in 1959. The value of consumer expenditure on goods and services rose by 6 per cent and amounted to $22.3 billion. Expenditures rose steadily throughout the year and by the fourth quarter of the year had reached a seasonally adjusted annual rate of $22.8 billion. Almost all of the rise in value represented a gain in volume. Average prices of consumer goods and services in 1959 were only one per cent above the average of 1958, while average prices in 1958 had been 2| per cent above those of 1957. The gain of almost 5 per cent in the volume of consumer expenditure contrasts with a population increase of about 2| per cent.
In 1959 expenditure by all levels of government on goods and services amounted to $6,437 million, 4J per cent above 1958. This is in contrast to increases of 7 per cent in both 1957 and 1958. All of the gain in 1959 was at the provincial and municipal levels; total federal expenditure on goods and services declined slightly, with an increase in federal non-defence spending not quite offsetting a decline of about 6 per cent in defence expenditure. About
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three-quarters of the net increase in total government spending was accounted for by capital expenditures which rose by 15 per cent to a level of $1,600 million. Other government non-defence expenditure on goods and services in 1959 was about 5 per cent above the level of 1958.
Private capital expenditures, including housing, moved upward strongly during 1959 and the fourth-quarter rate was 5 per cent above that for the beginning of the year. For the year as a whole, private capital expenditure amounted to $6,961 million, about equal to 1958 and 5 per cent below the 1957 record of $7,335 million. Since prices of capital goods increased somewhat during 1959, the volume of capital expenditures declined about 3 per cent from that of the previous year.
The pattern of investment expenditure in 1959 was somewhat different from that of 1958. In the latter year there had been declines in spending on business plant and machinery, offset to some extent by a sharp increase in housing expenditure. In 1959 housebuilding activity was at almost the record level set in 1958 and, while business expenditure on plant was lower, there was a significant recovery in investment in machinery and equipment.

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-	1956	1957	1958	Prelim. 1959
1. Personal expenditure on consumer goods and		(Millions of dollars!		
				
services	18,833	19,964	21,035	22,2612. Government expenditure on goods and services	5,386	5,738	6,161	6,437current expenditure	4,126	4,356	4,772	4,837gross fixed capital formation	1,260	1,382	1,389	1,6003. Business gross fixed capital formation1	6,774	7,335	6,975	6,961new residential construction	1,526	1,409	1,763	1,743new non-residential construction	2,589	3,103	2,811	2,592new machinery and equipment	2,659	2,823	2,401	2,6264. Value of physical change in inventories-total2	1,084	210	-435	300non-farm business inventories	808	311	-323	355farm inventories	241	-152	-79	-67grain in commercial channels	35	51	-33	125. Exports of goods and services3	6,365	6,394	6,332	6,6576. Imports of goods and services3	-7,715	-7,796	-7,363	-8,0627. Residual error of estimate	-142	-72	-99	398. Gross National Expenditure at Market Prices	(1+2+3+4+5+6+7)	30,585	31,773	32,606	34,5939. Index of G.N.E. in Constant Dollars	100.0	99.7	100.5	104.0
1 Includes private businesses and institutions, and publicly owned business enterprises.
((	1 The^ book value of inventories is deflated to remove the effect of price changes and the derived
"physical" change is then valued at average prices of the current period to obtain the value of physical change. The difference between this value of physical change and the change in book value is called the inventory valuation adjustment (see line 7, Table 1).
* Minor adjustments have been made to the figures of current receipts and payments shown in Table 10 and in "The Canadian Balance of International Payments, 1956 to 1959", Dominion Bureau of Statistics, to achieve consistency with the other component series.
Housebuilding in 1959 was at a level of $1,743 million compared with the $1,763 million spent in 1958. After allowing for a rise in building costs, the volume of housebuilding activity was about 5 per cent below that of 1958. In terms of physical activity 145,671 housing units were completed in 1959, almost equal to the 1958 record of 146,688 units; at the same time 141,345 starts were recorded, as against 164,632 in the preceding year. At year end, there were 81,905 units still under construction; at the same period a year previously 88,162

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units were under construction. As in 1958, government action played an important role in the financing of housebuilding; there were about 34,000 mortgages financed directly by government funds.
Outlays in private non-residential construction were $2,592 million in 1959, 8 per cent below the 1958 level and 16 per cent below the record year 1957. The declines reflect the completion of large projects begun in 1956 and 1957, years of an extraordinary capital goods boom. By 1958 the major work had been completed on large projects such as the St. Lawrence Seaway, and work done in 1959 represented a greater emphasis on a large number of smaller projects throughout all sectors of the economy. There was a decided strengthening of private nonresidential construction throughout 1959 and the fourth-quarter rate was 2 per cent above the year as a whole. Prices were about 2J per cent higher than in 1958.
Investment in machinery and equipment, which includes outlays both for the equipment of new plant and the modernization of existing plant, rose more than 9 per cent in 1959 to a level of $2,626 million. Prices of machinery and equipment were about 2| per cent above those of 1958 so that there was a significant gain in the volume of investment for the year. The peak in expenditures on machinery and equipment was reached at the beginning of 1957 and there had been a decline until the middle of 1958 when the current upswing began. Outlays in 1959 were the third highest on record, being exceeded only by the extraordinary years of 1956 and 1957. In the last half of 1959, expenditures on machinery and equipment were at a rate 17 per cent above the low point in 1958.
The accumulation of inventories was a major source of expansion for the economy in 1959 and bore a more reasonable relationship to current sales than the excessive accumulation of some earlier periods. The buildup of inventories amounted to $300 million, in contrast to a decline of $435 million in 1958. This reversal increased demand for investment in inventories by $735 million or more than one-quarter of the increase in total demand.
Farm inventories and grain in commercial channels decreased by $55 million in 1959; there had been a larger liquidation amounting to $112 million in 1958. In the latter year, the grain crop was below average and sales were met out of inventories; there had also been an unusually high level of exports of cattle to the United States. In 1959 total marketings were about the same as in the previous year, while the grain crop was larger and there was no repetition of the unusually high cattle sales abroad.
All of the inventory accumulation occurred in the non-farm sectors. The liquidation in 1958 had come to a halt by the fourth quarter of 1958 when a slight accumulation took place. This was followed by a strong accumulation throughout the entire year 1959. For the year as a whole, the business inventory accumulation amounted to $355 million; stocks increased in the manufacturing, retail and wholesale sectors. In total, the percentage rise in inventory holdings was in line with the rate of increase in shipments and sales.
Exports of goods and services set a record in 1959 and totalled $6.7 billion, 5 per cent above 1958 and 4.6 per cent above the 1956 level. This increase reflected a strong pickup in foreign demand. While exports rose generally throughout the year, the fourth-quarter movement showed particular strength. Imports of goods and services rose in 1959 to $8.1 billion, 9§ per cent above 1958 and 4.5 per cent above the 1956 level. The upswing in imports began in the fourth quarter of 1958 and there was a gradual increase throughout 1959. The 1959 total of imports was 4| per cent above the rate of the fourth quarter of 1958.
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Personal Income and Its Disposition
Personal income in 1959 increased by 6.1 per cent over the preceding year and totalled $25,940 million*. Almost all components showed an increase. The gain over 1958 was fractionally less than that of national income, in contrast to the experience of the preceding two years. There were two main reasons for this difference in movement. Corporation profits rose more rapidly than did the other items in national income, as is typical of a period of upswing and, as noted, corporation profits are excluded from personal income. Transfer payments from government rose only 5 per cent in 1959 in contrast to sharp increases in the two previous years. In part, this movement reflected the decline in unemployment insurance payments in 1959 as the level of unemployment declined considerably. The decline in unemployment insurance payments was more than offset by the increase in payments under the hospital insurance scheme; the scheme came into effect on July 1, 1958 and 1959 was the first full year of operation.

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-	1956	1957	1958	Prelim. 19591. Wages, salaries and supplementary labour income...	14,890	(Millions 15,996	jf dollars) 16,434	17,717Deduct: Employer and employee contributions to social insurance and government pension	funds	-532	-589	-614	-6642. Military pay and allowances	424	476	491	4963. Net income received by farm operators from farm	production1	1,430	1,002	1,197	1,1164. Net income of non-farm unincorporated business...	1,965	2,011	2,119	2,1505. Interest, dividends and net rental income of persons2	1,908	2,013	2,120	2,3006. Transfer payments to persons (excluding interest)-	2,657	2,785(a) from government	1,766	2,079	(b) charitable contributions made by corpora-	tions	34	36	36	407. Personal Income (1+2+3+4+5+6)	21,885	23,024	24,440	25,9401	Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board.2	Includes all government debt interest paid to persons.
Personal direct tax payments increased by 16 per cent in 1959 reflecting a higher level of wages and salaries, slightly higher rates of taxation in the upper income brackets and a sharp rise in miscellaneous taxes, representing mainly the premiums paid under the hospital insurance scheme. Income tax collections amounted to $1,747 million in 1959, 12 per cent above the previous year. Succession duties were up slightly at $130 million while payments of miscellaneous direct taxes almost doubled to $211 million.
After deducting direct taxes from personal income, the residual, or personal disposable income, totalled $23,852 million, 5.3 per cent more than in 1958.
* Personal income differs from national income in a number of ways although the components of these two totals are for the most part similar or identical. While national income is the total of the annual earnings of Canadian residents from the production of goods and services, personal income is the sum of the current receipts of income of persons, whether from production or from transfers. For example, personal income includes all wages and salaries, but only that part of corporation profits which is actually received by Canadian persons as dividends. Personal income also includes transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations, although these are not payments for services and do not, therefore, form part of national income.

The Budget-Appendix DISPOSITION OF PERSONAL INCOME1"

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1949	1950	1951	1952	1953	1954	1955	1956	1957	1958	1959

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Personal saving rose to $1,591 million and was 6.7 per cent of disposable income in 1959 compared with the 7.1 per cent achieved in 1958. This contrasts to an average savings ratio of 6.5 per cent over the ten-year period 1949-1958. Personal saving is represented by changes in the assets and liabilities of persons and would include, for example, changes in holdings of liquid assets, life insurance, outstanding consumer debt and mortgage debt and the value of changes in inventories of unincorporated business and farmers.

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-	1956	1957	1958	Prelim. 19591. Personal direct taxes-	1,496 146 90	(Millions 1,693 126 98	Df dollars) 1,555 126 113	1,747 130 211
1,732	1,917	1,794	2,088
2. Personal expenditure on consumer goods and services- Goods-				
	9,736 2,431 6,666	10,357 2,431 7,176	10,853 2,500 7,682	11,400 2,658 8,203
				
				
				
18,833	19,964	21,035	22,2613. Personal saving- (a)	personal saving excluding farm inventories.. (b)	change in farm inventories	1,079 241	1,295 -152	1,690 -79	1,658 -67
1,320	1,143	1,611	1,591
4. Personal Income (1+2+3)					
	21,885	23,024	24,440	25,940
				
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At the same time that consumers maintained their savings they also spent more on durable goods, non-durable goods and services. Outlays on consumer durable goods rose by more than 6 per cent. The largest increase, both in percentage and in dollar terms, was in the purchase of new cars, which rose by almost 10 per cent. Purchases of household appliances and home furnishings also increased significantly during the year. Prices of durable goods rose by 1§ per cent in 1959 so that the gain in volume was of the order of 5 per cent. Purchases of non-durable goods, including clothing, food, tobacco and gasoline were up by 5 per cent. All of this increase in value represented a real gain since prices of non-durable goods were unchanged in 1959 over the preceding year. Outlays on services rose by about 7 per cent, continuing the long-run increase in this sector. Prices of services were 3 per cent higher than in 1958.
Source and Disposition of Saving
In 1959 there was a sharp increase in total saving over the preceding year. Saving totalled $5,895 million, 9 per cent above the level of 1958. Personal saving was maintained. Business saving increased while there was a smaller deficit (i.e., negative saving) for all levels of government so that governments as a whole drew less upon the saving of persons and businesses. In 1959 the deficit* of all governments combined was sharply down to $617 million from a level of $1,037 million in the preceding year. The decline in the total deficit was mostly accounted for by the federal government; the deficit of provincial and municipal governments was slightly lower than in 1958.

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-[DOT]	1956	1957	1958	Prelim. 1959
		(Millions of dollars)		
Personal saving1	1,320	1,143	1,611	1,591Business gross saving-total	4,793	4,858	4,771	5,080(a) Undistributed corporation profits2	1,131	870	852	957(b) Depreciation allowances	3,642	3,994	3,923	4,131(c) Adjustment on grain transactions3	20	-6	-4	-8Inventory valuation adjustment	-238	-71	-33	-120Adjusted government surplus (+) or deficit (-)4	350	70	-1,037	-617Residual error of estimate6	141	71	98	-39Total	6,366	6,071	5,410	5,8951	See Table 4.2	See Table 7.
2 Accrued earnings arising out of operations of the Canadian Wheat Board. 4 See Table 9.
4 See Tables 1 and 2.
Business saving increased substantially in 1959 to $5,080 million and provided the major part of total Canadian saving. Depreciation allowances, the largest item in the total, rose by $208 million to $4,131 million. Undistributed corporation profits increased from $852 million to $957 million as the sharp rise in corporation profits was only partly offset by higher dividend payments.
* Government saving would be represented by the excess of revenue over expenditure for all three levels of government combined. Revenues are computed on an accrual basis, in accordance with national accounts convention and differ from revenues on a cash basis.

The Budget-Appendix

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-	1956	1957	1958	Prelim. 1959
		(Millions of dollars)		
Business gross fixed capital formation	6,774	7,335	6,975	6,961Value of physical change in inventories	1,084	210	-435	300Surplus (+) or deficit (-) on current account with	non-residents1	-1,350	-1,402	-1,031	-1,405Residual error2	-142	-72	-99	39Total	6,366	6,071	5,410	5,895
1 Minor adjustments have been made to the figures appearing in Table 10. s See Tables 1 and 2.
In 1959 the deficit on international current account, on the national accounts basis, amounted to $1,405 million, up from the 1958 level and about the same as in 1957. The deficit on current account was matched by an inflow of foreign capital; the main items in this inflow were direct investment from abroad and new security transactions. The capital inflow served to supplement the flow of Canadian saving.

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-	1956	1957	1958	Prelim. 1959
		(Millions of dollars)		
Corporation profits before taxes including dividends				
paid to non-residents1	3,345	3,027	2,930	3,326Deduct: corporation income tax liabilities	1,413	1,326	1,280	1,506Excess of tax liabilities over collections.	40	-225	-53	69Tax collections	1,373	1,551	1,333	1,437Corporation profits after taxes	1,932	1,701	1,650	1,820Deduct: dividends paid out2	-801	-831	-798	-863Undistributed corporation profits8	1,131	870	852	957
1 Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis. ! Includes charitable contributions made by corporations (See Table 3).
* See Table 5.
Investment and Capital Expenditure
The value of capital investment increased slightly in 1959 after having declined the previous year from the extraordinary levels achieved in 1957. Private and public spending on capital goods totalled $8,411 million or 24.3 per cent of Gross National Expenditure. This ratio is lower than those achieved from 1956 to 1958, but higher than all other postwar years.
Trends in capital expenditure in the past three years have reflected in large part the completion of major large-scale resource projects and a greater emphasis on a wide variety of investment, including social capital. The enormous amounts of capital invested during the resource boom of 1955-1957 provided for an expansion of basic facilities in mining and basic manufacturing for some time in advance-
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the "lumpy" nature of such investment implied a cessation of investment, once the facilities were in place, until the expansion of export and domestic markets was sufficient to induce additional investment. The completion of the Seaway, some major pipelines and power projects in 1958 explains the lower level of investment in the utilities and transportation sectors in 1959. This reduction was more than offset by the expansion in investment in primary industries, service industries, and social capital both public and private. Investment in manufacturing, mining and housing was relatively unchanged from the year before.

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1949	1950	1951
In 1959 there was a considerable expansion in investment in farms and forests. The rise in farm investment was associated particularly with the acquisition of machinery which increases farm productivity and which has permitted farm production to remain at the high levels previously reached in the face of the continuing decline in the number of persons engaged in agriculture. The increase in forestry investment was related to the expansion in demand for wood products. In the past few years emphasis had been given to investment in the wood-using industries rather than woods operations.
Capital expenditures in mining were almost unchanged from the level of the previous year and totalled $344 million. Outlays in manufacturing amounting to $1,074 million compared well with expenditures of $1,095 million in 1958. Both mining and manufacturing had declined sharply in 1958 from the boom levels of 1956 and 1957.
Outlays in electric power, gas and water and in the transportation, storage and communications groups continued to decline from the 1957 peak. Expenditures for these groups were 14 per cent below the levels of 1958 and 20 per cent below 1957, a measure of the extent to which basic undertakings had been completed.

The Budget-Appendix

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-	1956	1957	1958	Prelim. 1959Agriculture and fishing	
Forestry	488 76 542 1,394 769 993 200 611 402 1,547 1,012	(Millions 434 48 606 1,479 947 1,361 158 690 454 1,430 1,110	of dollars) 465 33 342 1,095 845 1,308 157 705 514 1,782 1,118	555 46 344 1,074 799 1,049 183 759 531 1,759 1,312Mining, quarrying and oil wells	
Manufacturing	Electric power, gas and water works	
Transportation, storage and communications	
Construction industry	
Trade, finance and commercial services	
Institutions	Housing	Government departments	
Total Capital Expenditure1	
Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in Constant Dollars	8,034	8,717	8,364	8,41126.3	27.4	25.7	24.3100.0	104.0	97.8	95.7
.	1 For reconciliation with Business Gross Fixed Capital Formation in housing, plant and equipment
in Table 2, see below.
Prelim.
1956	1957	1958	1959Private and Public Capital Expenditure-Table 8	8,034	8,717	8,364	8,411Deduct:	Provincial hospitals and schools, and municipal schools	-222	-246	-247	-266Government housing excl. C.M.H.C. rental housing	-21	-21	-19	-16Direct government department outlays	-1,012	-1,110	-1,118	-1,312Other	-5	-5	-5	-6Add:	+150Business Gross Fixed Capital Formation in Housing, Plant and Equipment-Table 2	6,774	7,335	6,975	6,961
* This figure represents an upward revision to data given in "Public and Private Investment in Canada, Outlook 1960", Department of Trade and Commerce, to take account of later available information.
Capital outlays in the service and trade sectors increased from $705 million to $759 million reflecting the continued growth in these industries. Investments by institutions also increased by $17 million.
The largest increase in capital spending was by government departments. There was a gain of $194 million over 1958. The gain was accounted for by higher provincial and municipal spending on capital facilities including roads, water services and sewers.
Outlays on housing, private and public, were almost maintained at the record 1958 levels and amounted to $1,759 million. Housing, government departments and institutional capital expenditures in 1959 were 43 per cent of total private and public investment compared with 41 per cent in 1958 and 34 per cent in 1957.
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Revenue and Expenditure op all Governments
The deficit on an accrual basis for all levels of government in 1958 was $1,037 million and in 1959, $617 million.* The smaller deficit in 1959 reflects a growth in government revenues which more than offset the increases in expenditures over those in 1958.
Almost all of the reduction in the deficit in 1959 arose from the federal accounts; the deficits of provincial and municipal governments combined were only slightly reduced. Federal expenditures in 1959 increased by $258 million or 4 per cent. However, federal revenues registered an increase of $662 million, or 12J per cent, more than double the growth in expenditures. As a result, the deficit of the federal government declined from $803 million in 1958 to $399 million in 1959. In the case of provincial and municipal governments, the growth in expenditures amounted to $568 million, an increase of 13 per cent. Provincial and municipal revenues exceeded this increase slightly, rising by $584 million or 14 per cent. Thus, the deficit for these levels of government was $218 million in 1959 in contrast to $234 million in 1958.
The 1959 expenditure on goods and services by all three levels of government was greater by $276 million than in 1958. The overall increase was composed of divergent movements at the various levels of government. While provincial and municipal expenditures in this category increased in 1959, federal outlays showed a decline due to the fall in defence expenditures. In 1959, defence expenditures declined by $101 million, or 6 per cent, following the decrease of $104 million in 1958. As a result, defence outlays comprised 24 per cent of combined government expenditures on goods and services as compared with a proportion of 27 per cent in 1958. The decrease in defence spending was partially offset by an increase in federal civilian outlays of $70 million or 6 per cent. The expansion here was

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PERCENT	PERCENT
* The following section discusses only those government transactions relevant to the National Accounts. As a result, the figures used may not agree with those shown in other Public Accounts. Table 9 indicates the reconciliation between federal deficit or surplus for purposes of the National Accounts and the comparable figures appearing in the Public Accounts. In particular, federal corporate taxes have been adjusted to an accrual basis to make this item consistent with other components of the National Accounts. In 1958 this adjustment decreased revenues by $53 million, and in 1959 increased revenues by $69 million.

The Budget-Appendix
considerably less than in 1958, when these expenditures increased by $226 million. At the 1959 level of $1,258 million, federal expenditures on goods and services for civilian purposes were approximately one-fifth of combined government expenditures in this category, about the same proportion as in 1958. For provincial and municipal governments, expenditures in 1959 on goods and services rose by $307 million, or 9 per cent, to a level where their combined outlays comprised 56 per cent of the total at all levels of government for this purpose. While growth in the cost to governments of wages and salaries accounted for some of the increases for goods and services, a higher level of investment expenditures also contributed to the increase.
While government expenditure on goods and services is the only government outlay included in the gross national expenditure account, it is necessary to discuss other government expenditures in order to arrive at the figure for government surplus or deficit appearing in the saving and investment account. Total expenditures at all levels of government combined were $11,230 million in 1959, an increase of $826 million, or 8 per cent, over 1958. The expenditure on goods and services made up 57 per cent of the 1959 total, a proportion slightly below that of 1958. Transfer payments to persons, interest on the public debt, subsidies and transfers to other levels of government accounted for the remainder of total government outlays. Expenditure on transfer payments to persons was much the largest of these four items, comprising in 1959, 25 per cent of all government expenditures, roughly the same proportion as in 1958.
There was a continuation during 1959 of the postwar trend towards increased expenditures on government transfer payments to persons. Taking all levels of government combined, the increase in 1959 was considerably less than in 1958 when these payments rose rapidly. In the federal sector in 1959 there was a decline of $109 million, or 6 per cent, from the level of 1958. There were diverging trends within this total movement. Family allowance and old age pension payments increased moderately due to a larger number of eligible recipients. These increases were offset by a substantial decline in outlays from the unemployment insurance fund as unemployment levels dropped in 1959. In addition, miscellaneous transfer payments declined by comparison with 1958 when a special acreage payment was made to western grain farmers. There was an increase in payments on the public debt. At the provincial and municipal levels the growth in transfer payments was substantial. Payments at these levels rose by $237 million, or 32 per cent, largely due to increased payments under provincial hospital insurance plans. The calendar year 1959 was the first full year of operation of the federal-provincial hospital insurance arrangements and the first year when the majority of provinces participated.
Federal subsidies rose by $49 million in 1959, due almost entirely to the increased cost of the agricultural stabilization program. In the case of federal transfers to other levels of government, 1959 saw a further substantial increase in these payments. In 1958, transfers to provincial and municipal governments had increased by $146 million or 28 per cent. The 1959 increase exceeded this, the transfers in 1959 being greater by $215 million, or 32 per cent, than in 1958. While increased tax rental payments to the provinces accounted for some of this growth, the major portion was due to the effect of the first full year's operation of the federal-provincial agreements on hospital insurance.
Total revenues of all levels of government showed increases in 1959 as compared with 1958. Approximately two-thirds of the increase in the yield from direct personal taxes was accounted for by the rise of $183 million, or 12 per cent, in the revenues from federal personal income taxes. This growth was due to increased personal income and the slightly higher federal tax rates introduced for the last half of 1959 on upper income brackets. At the provincial and municipal level, the most significant increase was in the revenue from miscellaneous
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-	1956	1957	1958	Prelim. 1959
		(Millions of dollars)		
Government Revenue-	1,917	2,088Direct Taxes-Persons	1,732	1,794	Income-	1,692Federal	1,461	1,652	1,509	Provincial and Municipal	35	41	46	55Succession Duties-	76Federal	88	69	70	Provincial	58	57	56	54Miscellaneous-	Federal	1	2	2	2Provincial and Municipal	89	96	111	209Direct Taxes-Corporations	1,413	1,326	1,280	1,506Income-	Federal	1,334	1,120	1,047	1,248Provincial	79	206	233	258Other Direct Taxes-	48	72Witholding taxes-Federal	69	83	Indirect Taxes	3,759	3,964	4,022	4,410Federal	1,972	1,990	1,912	2,131Provincial and Municipal	1,787	1,974	2,110	2,279Investment Income	834	865	943	992Federal	296	276	319	326Provincial and Municipal	538	589	624	666Employer and Employee Contributions to Social	614	664Insurance and Government Pension Funds	532	589	Federal	357	384	391	413Provincial and Municipal	175	205	223	251Transfers from Other Governments-	Provincial and Municipal	485	520	666	881Total Revenue	8,824	9,264	9,367	10,613Federal	5,578	5,576	5,298	5,960Provincial and Municipal	3,246	3,688	4,069	4,653
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TABLE 9-Concluded

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-	1956	1957	1958	Prelim. 1959
		(Millions of dollars)		
Government Expenditure-				
Goods and Services		5,386	5,738	6,161	6,437
Federal-				
Defence	1,802	1,765	1,661	1,560Non-defence	881	962	1,188	1,258Provincial and Municipal	2,703	3,011	3,312	3,619Transfer Payments to Persons	1,766	2,079	2,657	2,785Federal	1,224	1,463	1,910	1,801Provincial and Municipal	542	616	747	984Interest on Public Debt	714	741	781	937Federal	524	519	544	678Provincial and Municipal	190	222	237	259Subsidies	123	116	139	190Federal	118	108	132	181Provincial and Municipal	5	8	7	9Transfers to Other Governments-	Federal	485	520	666	881Total Expenditure	8,474	9,194	10,404	11,230Federal	5,034	5,337	6,101	6,359Provincial and Municipal	3,440	3,857	4,303	4,871Deficit (-) or Surplus (+)	350	70	-1,037	-617Federal1	544	239	-803	-399Provincial and Municipal	-194	-169	-234	-218Total Expenditure minus deficit or plus	surplus	8,824	9,264	9,367	10,613Federal	5,578	5,576	5,298	5,960Provincial and Municipal	3,246	3,688	4,069	4,653
1 Reconciliation with Public Accounts Surplus or Deficit shown below.
Prelim.
1956	1957	1958	1959Federal Government calendar year surplus or deficit for national accounts purposes	544	(Millions of dollars) 239 -803	-399Adjustments: Difference between calendar and fiscal year	-305	73	409	-34Difference between corporation tax accruals and government receipts	-40	225	53	-69Revenue items omitted	37	68	22	23Reserves, write-offs and similar items omitted from expenditure	-118	-247	-219	-253Shipment of military equipment to NATO countries less replacement	22	32	188	36Extra-budgetary funds for pensions and social insurance (net)	-157	-72	249	41Adjustment to place debt interest on a "due date" basis	8	-12	-24	-55Other adjustments	-24	-48	87	101Federal surplus for fiscal year as per public accounts	-33	258	-38	-609(1955-56)	(1956-57)	(1957-58)	(1958-59)
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taxes where yields rose by $98 million. The growth in revenues from the direct taxes used by the provinces to cover their share of hospital insurance costs contributed almost all of this increase.
Federal revenues from corporate income taxes (on the National Accounts accrual basis) increased sharply in 1959, reversing the sharp drop in revenues from this source in 1958. Rising corporate income, as well as increased tax rates, resulted in an increase of $201 million, or 19 per cent, in 1959 in corporate tax revenues. For the governments of Ontario and Quebec, the receipts from the corporate taxes levied in these provinces continued to grow in 1959 showing an increase of $25 million. This expansion was not as great as during 1958 when application of the Ontario tax for the first full year was the main factor contributing to increased revenues.
For all levels of government combined, receipts from indirect taxes rose by $388 million or nearly 10 per cent. The federal share of this increase was $219 million. While growing economic activity contributed to this increase, the higher sales tax rate in 1959 was also a factor. In addition, increased receipts from customs duties resulted from the greater volume of imports during 1959. Provincial and municipal revenues from indirect taxes showed a growth of $169 million or 8 per cent. As in 1958, the component mainly responsible for this increase was the revenue from municipal taxes on real and personal property. Provincial collections from the gasoline tax and retail sales taxes rose by moderate amounts in 1959.
Investment income for all levels of government includes three main components; interest on government-held public funds, interest on loans and advances and the net profits of government business enterprises. At the combined provincial and municipal levels, this income increased by $42 million, or 7 per cent, in 1959 as compared with a rise of $35 million, or 6 per cent, in 1958. In the federal sector investment income in total was relatively stable, showing an increase of $7 million, or 2 per cent, in 1959. The moderate increase in 1959 resulted from a rise in receipts from federal government loans and investments offset partially by a small decrease in the combined trading profits of government business enterprises.

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Canada's international transactions for the year 1959 reflected the expansion in economic activity at home and abroad which began late in 1958. Merchandise exports rose by more than 5 per cent after relative stability for the years 1957 and 1958. For the year 1959, merchandise imports increased by 9 per cent over the preceding year; following a two-year decline this increase did not quite bring imports to the 1956 level. The merchandise trade deficit increased to $386 million, more than double the deficit incurred in 1958 but well below the deficits of 1956 and 1957. At the same time, the deficit on non-merchandise transactions rose from $915 million in 1958 to $1,074 million in 1959. As a result, the total current account deficit amounted to $1,460 million in 1959 compared with $1,085 million in 1958, $375 million higher than 1958 and slightly above the 1957 figure.
The average level of prices for commodity exports was moderately higher while that of commodity imports was slightly lower. Consequently, the terms of trade, that is the ratio of export prices to import prices, moved in Canada's favour in 1959.
The trade results for the year as a whole obscure an interesting development which occurred in the latter part of the year. On a seasonally adjusted basis, merchandise imports began to rise strongly in the fourth quarter of 1958. The

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INTERNATIONAL PAYMENTS: CURRENT ACCOUNT
-	1950	1957	1958	Prelim. 1959
		(Millions of dollars)		
Current Receipts-				
Merchandise exports (adjusted)1	4,837	4,909	4,890	5,152Gold available for export	150	147	160	147Travel expenditures	337	363	349	397Interest and dividends	142	154	166	170Freight and shipping	457	445	401	411Inheritances and immigrants' funds	99	124	91	100Other current receipts	442	388	366	380Total Current Receipts2	6,464	6,530	6,423	6,757Current Payments-	Merchandise imports (adjusted)	5,565	5,488	5,060	5,538Travel expenditures	498	525	542	589Interest and dividends	523	587	586	656Freight and shipping	502	515	460	506Inheritances and emigrants' funds	115	157	145	155Other current payments	627	682	715	773Total Current Payments2	7,830	7,954	7,508	8,217Balance on Merchandise Trade	-728	-579	-170	-386Balance on other Transactions	-638	-845	-915	-1,074Current Account Balance	-1,366	-1,424	-1,085	-1,4601	Aid to NATO countries under Defence Appropriation Act has been excluded.2	See footnote 3 to table 2.
Estimated Geographical Distribution of the Net Balance on Current Account
-	1956	1957	1958	Prelim. 1959Between Canada and- United States	-1,639 +252 +48 +17 -44	-1,568 +138 +9 +21 -24	-1,134 +108 +65 +13 -137	-1,236 +52 +12 -149 -139United Kingdom	Rest of the Sterling Area	Other OEEC Countries	
All Countries					
	-1,366	-1,424	-1,085	-1,460
				
upward trend continued until the third quarter of 1959 and was replaced by a decline in the fourth quarter. By contrast, merchandise exports, seasonally adjusted, showed minor irregular gains until the fourth quarter of 1959 when they increased sharply and were running 12 per cent above the first-quarter rate and 7 per cent higher than the average for the year as a whole. There was a sharp increase in exports to overseas countries as well as a substantial rise in sales to the United States. As a result of the fourth-quarter trend, the trade deficit narrowed in the final months of 1959 and the overall current account deficit, seasonally adjusted at annual rates, declined to about $1.3 billion.
The value of merchandise exports in 1959 amounted to $5,152 million compared with $4,890 million in the previous year. The increase in exports was widespread and the most significant gains occurred in exports of iron-ore, primary
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and semi-finished steel, uranium, forest products, copper, asbestos and farm implements and machinery. The largest declines took place in exports of aircraft, beef cattle and meat; in 1958 these items had shown large increases because of special circumstances.

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The value of merchandise imports rose from $5,060 million in 1958 to $5,538 million in 1959. The increase in imports was also widespread. There was a large increase in importations of automobiles, trucks and parts and substantial increases in purchases of farm and other machinery, electrical equipment and iron and steel products. Declines, where they occurred, were moderate.
There were some important changes in Canada's pattern of trade in 1959. Exports to the United States increased by 10 per cent while imports from that country rose by 8 per cent. Sales to the United Kingdom rose by about 2 per cent and exports to other Commonwealth countries fell by 3 per cent. On the other hand, purchases from the Commonwealth, including the United Kingdom, increased by 12 per cent. The value of merchandise exports to continental OEEC countries and their dependencies declined by over 13 per cent while imports of goods from this source rose by 22 per cent. The decline in exports to this group was largely due to large non-recurring sales of military aircraft to European NATO countries in 1958. Sales to all other countries increased by 9 per cent while imports rose by 7 per cent.
The result of these developments was a slight decline in 1959 in our trade deficit with the United States while our trade surplus with all other countries was reduced by more than 60 per cent. The proportion of imports originating in the United States fell from 67.9 per cent in 1958 to 67.0 per cent in 1959. The proportion of purchases made in the Commonwealth rose slightly while those from OEEC countries increased to 7.6 per cent compared with 6.8 per cent in the previous year. While the proportion of total exports to the United States increased for 1959 as a whole to 62.0 per cent from 59.5 per cent in 1958, this movement was reversed during the latter part of the year when the sharp increase in exports to overseas countries took place.

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The reduction in the trade surplus with overseas countries was the major factor in the emergence in 1959 of a current account deficit with those countries. Within the total, a small current account surplus with the United Kingdom and other Commonwealth countries was more than offset by a greatly enlarged deficit with all other countries.
Canada's surplus with overseas countries began to decline in 1953. This was the result of a decline in the trade surplus on the one hand and a growth in the deficit on non-merchandise transactions on the other. To a large extent, this trend was a reflection of the recovery and subsequent expansion in production in western Europe and the greater participation of other overseas countries in world multilateral trade. At the same time, currency and trade restrictions which, until recently, were widespread had a limiting effect on purchases of Canadian goods. The increase in the deficit on non-merchandise account reflected growing expenditures on travel, freight and shipping and the servicing of foreign investment.

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MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
The increase of $159 million in Canada's deficit on non-merchandise transactions in 1959 was the result of a 9 per cent increase in Canadian payments and a 5 per cent increase in receipts. Payments for interest and dividends, freight and shipping, and for miscellaneous items were the largest elements in the increase in the deficit. A lower level of gold sales was an additional factor. The balance on travel and the inheritances and immigrants-emigrants funds component showed little change since the increase in receipts matched the increase in payments.
Canada's balance on merchandise trade has usually fluctuated sharply in response to changes in demand at home and abroad. By contrast, the traditional deficit on non-merchandise transactions has grown continuously since 1953. With the exception of gold sales, every component of the non-merchandise account has contributed to the growing deficit, since in every case the increase in payments exceeded the increase in receipts. To a large extent the increase in the deficit is a reflection of the rapid economic growth in western industrialized countries. The strong world market for raw materials fostered rapid Canadian resource development and substantial imports of investment goods and capital.
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The import of capital led to a rising volume of interest payments to non-residents and, where past investment has proven profitable in terms of increased production and exports, to an increasing level of dividend payments. Accompanying the inflow of capital has been an inflow of technical "know-how" and this has resulted in a variety of payments abroad for business services, including patents, royalties and similar items. The growth in imports carried with it a higher level of freight and shipping and other business charges. In addition, a rising standard of living greatly increased spending by Canadians on travel abroad. Further, Canada's contributions to underdeveloped countries have increased.
The net inflow of long-term capital into Canada in 1959 was slightly larger than in 1958. These net long-term inflows of capital in the form of direct investment, security transactions and official transactions, were equivalent to about 70 per cent of the 1959 deficit on current account compared with more than 90 per cent of the smaller 1958 deficit.
Net direct investment in Canada, after declining in 1957 and 1958, rose in 1959. Compared with 1958 direct investment in Canada was higher by $80 million while Canadians increased the level of their direct investments abroad by $12 million. The net capital import through international security transactions amounted to $627 million compared with $610 million in 1958. Proceeds from new Canadian issues of bonds and stocks to non-residents declined for the third successive year but remained the largest single source of external capital. Net sales abroad of outstanding Canadian issues increased by $120 million while there was a net outflow of $21 million from transactions in foreign securities. At the same time, redemptions of foreign-held Canadian securities were $64 million higher than in 1958. There was a net inflow of $44 million from official transactions in 1959.
There was a substantial increase in all other net capital movements, mainly of a short-term character. In 1959 these amounted to $349 million compared with $182 million in 1958. Movements in Canadian dollar holdings of foreigners

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INTERNATIONAL PAYMENTS: CAPITAL MOVEMENTS
-	1956	1957	1958	Prelim. 1959
		(Millions of dollars)		
Direct investment in Canada	+583	+514	+420	+500Direct investment abroad	-104	-68	-48	-60Canadian securities-	Trade in outstanding issues	+199	+92	+88	+208New issues	+667	+798	+677	+662Retirements	-141	-133	-158	-222Foreign securities	+2	+6	+3	-21-34	-1Repayments	+69	+50	+64	+34-4	-59Canadian dollar holdings of foreigners	-24	-35	+106	+13Official holdings of gold and foreign exchange (increase,	-)	-33	+105	-109	+70Other capital movements	+152	+95	+76	+336Net capital movement financing current account	balances	1,366	+1,424	+1,085	+1,460
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added $13 million to the capital inflow for the year as a whole but there were significant variations in this category during the year. In the period January to August, non-residents added nearly $90 million to their holdings of Canadian treasury bills because Canadian yields were sufficiently higher than those in the United States to allow for the cost of exchange protection through forward transactions. The differential narrowed somewhat in the latter part of August and the employment of United States funds in Canadian treasury bills became less attractive. By the end of December, non-resident holdings of Canadian treasury issues were only slightly above the value held a year earlier.
The balance in the miscellaneous group showed a net inflow of $336 million in 1959 compared with $76 million in 1958. This group includes, among other things, short-term commercial payables and receivables, miscellaneous borrowings by Canadians and private Canadian holdings of foreign exchange.
At December 31, 1959, Canada's official exchange reserves, expressed in United States dollars, amounted to $1,869 million compared with $1,939 million at the end of 1958. The decrease largely reflects Canada's increased subscription to the International Monetary Fund which, though it can be regarded as a secondary reserve, reduced our official reserves by $62.5 million.

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(Millions of U.S. Dollars)
-	1956	1957	1958	1959Exchange Fund Account and Bank of Canada- Gold	1,103.3 798.0 34.9	1,100.3 697.5 30.5	1,078.1 800.0 61.0	959.6 879.4 30.2U.S. Dollars	Other Government of Canada Accounts	
Total Gold and U.S. Dollars	1,936.2	1,828.3	1,939.1	1,869.2
Geographically, about 80 per cent of the net total capital inflow in longterm forms in 1959 came, as in the previous year, from the United States. Net long-term investment funds originating in the United Kingdom represented 10 per cent, about one-third lower than in 1958. A considerable part of this change reflected unusually large outflows from Canada for direct investment in the United Kingdom. The completion in 1958 of repayments by the United Kingdom on the 1942 loan was also an important factor. Net inflows originating in all other countries rose sharply. Direct and portfolio investments from this source increased and in 1959 there were no substantial outflows in the form of intergovernmental loans matching those made by Canada in 1958.
The exchange value of the Canadian dollar which had been rising, almost without interruption, since September, 1958, showed some decline in the final months of 1959. The average rate of exchange for the United States dollar, in terms of the Canadian dollar, reached a low for the year of 94.77 in October, 1959. This was followed by a slight decline in the value of the Canadian dollar and for December, 1959, the rate for the United States dollar was 95.12 compared with 96.46 for December, 1958. For 1959 as a whole, the average noon rate was 95.90 compared with 97.06 in 1958.
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There was a significant improvement in the demand for labour in 1959. There were more persons employed in each month of 1959 than in the corresponding period in 1958. In 1959, for the first time since 1956, the increase in employment exceeded the growth of the labour force, and unemployment declined.
For 1959 as a whole, the average number of persons with jobs rose by 156,000 or 2.7 per cent. This is in contrast to the fractional decline which occurred in 1958. At the same time it is estimated that on balance 101,000 persons entered the labour market in 1959, an increase of 1.6 per cent compared with the expansions of 2.1 per cent in 1958 and more than 3 per cent in both 1956 and 1957. The moderate size of the increase in the labour force was a reflection of the lower level of immigration in 1959 as well as relative stability in labour force participation rates.
The shift from rural to urban occupations which has been evident throughout the postwar period continued in 1959, though at a somewhat lower rate than in previous years. It is estimated that some 22,000 persons left the agricultural labour force in 1959 compared with 26,000 in 1958, 30,000 in 1957 and 44,000 in 1956.

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t i t i \ t Ltd i f:
ITtTtT LtiTL

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: - 5000
; - 4000
: - 3000
!; - 2000
i - 1000
^ADJUSTED FOR SEASONAL VARIATION
Since 1946, the agricultural labour force as well as agricultural employment has declined about 40 per cent. Within this total, employers and "own account" workers declined by one-third while the number of unpaid family workers was nearly two-thirds lower. The number of paid farm workers has shown a decrease of one-quarter since 1946, although in 1959 their numbers increased by 12,000 over 1958.
The number of persons with jobs in non-agricultural occupations rose in 1959 by 176,000 persons. The growth of 3| per cent in non-agricultural employment in 1959 compares with a rise of 8,000 persons, a fractional increase, in the previous year. On a seasonally adjusted basis, non-agricultural employment reached a peak in September, 1957, and subsequently declined by 1.4 per cent to a low in

The Budget-Appendix
February, 1958. This was followed by irregular gains and by August, 1959, nonagricultural employment had exceeded the previous peak by nearly 4 per cent. In the fourth quarter of 1959 non-agricultural employment levelled out. This stability was, in part, a reflection of the indirect effects of the strike of forestry workers in British Columbia in the third quarter of the year and the lengthy strike of the steel workers in the United States.

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THE CIVILIAN LABOUR FORCE Annual Averages (Thousands of Persons)
-	1956	1957	1958	Prelim. 1959Civilian Labour Force	5,782	6,003	6,127	6,228Male	4,436	4,570	4,634	4,679Female	1,346	1,433	1,493	1,549N on-Agricultural	5,001	5,252	5,402	5,525Agricultural	781	751	725	703Persons without jobs seeking work	180	257	405	350Persons with jobs	5,602	5,746	5,722	5,878In Non-Agricultural Industries	4,826	5,002	5,010	5,186Paid Workers	
Employers, own account workers and	4,303	4,460	4,481	4,637unpaid family workers	523	542	529	549In Agriculture	776	744	712	693Paid Workers	
Employers, own account workers and	102	96	97	109unpaid family workers	674	648	615	584
On a year-over-year comparison, increases in employment opportunities were general in all regions and most industrial divisions in 1959. In the previous year, the commodity-producing industries had registered substantial declines and increases were limited to the service sector. Despite the improvement in output in the goods-producing industries, the greatest gains in employment in 1959 were again concentrated in the service industries. Community services, notably education, health and government, and trade accounted for nearly three-quarters of the increase in non-farm employment. Manufacturing provided about one-fifth of the new job opportunities in 1959.
The average number of persons without jobs and seeking work in 1959 amounted to 350,000 or 55,000 fewer persons than in the previous year. As a proportion of the labour force this was 5.6 per cent compared with a postwar high of 6.6 per cent in 1958.
Total labour income increased in 1959 by 7.8 per cent compared with 2.7 per cent in 1958. Higher rates of pay and increases in the numbers of hours worked per week as well as increased job opportunities contributed to the rise in salaries and wages. In 1958, the number of paid workers did not show much change from the level of the previous year and the moderate increase in total labour income resulted in a gain of 879 in average annual earnings per paid worker. In 1959, the number of paid workers grew by 168,000. Nevertheless, the very much greater increase in labour income led to a $143 gain in per capita income, an increase of 4 per cent. In manufacturing, average hourly earnings rose
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by 3.6 per cent compared with 3.1 per cent in 1958 while average hours worked per week rose by about one per cent compared with a small decline in the previous year. In the light of the minimal rise in the cost of living in 1959, most of the increase in per capita earnings represented real income gains whereas in 1958 the moderate increase in per capita earnings was more than offset by higher prices.
In 1959 all the major industrial groups shared in the increase in total salary and wage payments. In the service sector, in line with employment opportunities, the growth in labour income was more pronounced than in the goods-producing industries as a whole. Wages and salaries paid out in trade, public utilities, transportation, storage and communication, governments, finance and related groups rose by 9 per cent in 1959 compared with a gain of 6 per cent in 1958. Earnings in agriculture increased by nearly 10 per cent while those for construction rose by 9 per cent. Total wages and salaries in manufacturing and forestry increased by 6 per cent while those for mining rose by 5 per cent.

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Financial conditions in Canada in 1959 reflected the growing demand for funds which naturally accompanies economic expansion and recovery. They also reflected a number of other influences of a more deep-seated nature which were at work both at home and abroad. Interest rates and bond yields were higher in 1959 than in 1958 and there were important movements during the course of the year.

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-	Government Securities Selected Issues	3 Month Treasury Bills3	Bank Rate	Canada	U.S. Spread1	Canada U.S. Spread2	Canada	U.S.	Spread	Canada	U.S.1956-	March	3.41	3.00	.41	3.40	3.00	.40	2.64	2.17	.47	2.75	2.50June	3.37	2.99	.38	3.40	2.96	.44	2.52	2.54	-.02	3.00	2.75September	3.81	3.24	.57	3.88	3.27	.61	3.16	2.99	.17	3.25	3.00December	3.90	3.39	.51	3.98	3.48	.50	3.67	3.22	.45	3.92	3.001957-	March	3.92	3.30	.62	4.15	3.27	.88	3.70	3.03	.67	3.95	3.00June	4.17	3.61	.56	4.56	3.89	.67	3.81	3.23	.58	4.06	3.00September	4.31	3.65	.66	4.66	3.82	.84	3.80	3.54	.26	4.05	3.50December	3.80	3.24	.56	3.66	2.99	.67	3.60	2.75	.85	3.85	3.001958-	March	3 93	3.22	.71	3.59	2.77	.82	2.27	1.19	1.08	2.52	2.25June	3.89	3.27	.62	3.53	2.88	.65	1.72	1.01	.71	1.97	1.75September	4.15	3.77	.38	3.83	3.60	.23	2.27	2.51	-.24	2.52	2.00December	4.42	3.83	.59	4.48	3.94	.54	3.49	2.69	.80	3.74	2.501959-	March	4.72	3.95	.77	4.75	3.92	.83	4.30	2.77	1.53	4.55	3.00June	4.92	4.09	.83	4.83	4.33	.50	5.01	3.16	1.85	5.26	3.50September	5.30	4.12	1.18	5.30	4.65	.65	5.50	4.19	1.31	5.75	4.00December	5.30	4.41	.89	5.37	4.90	.47	5.12	4.52	.60	5.37	4.00
1 Canada 31% Oct. 1/79. U.S. 31% June 15/78-83. Last Wednesday of month.
1 Canada 2f% June 15/67-68. U.S. 2\% Dec. 15/63-68. Last Wednesday of month. 3 Average tender on Thursday following the last Wednesday of month.

The Budget-Appendix
There were marked changes in the pattern and distribution of borrowings: total bond offerings were less than in 1958; the federal government deficit was reduced substantially and there was greater government reliance on shortterm borrowing; corporation borrowing on the long-term market was relatively steady as a result of a lower level of fixed investment and a higher level of retained earnings. At the same time there was a sharp rise in borrowings from the banks. The increasing tempo in general economic activity and a substantial rise in inventory holdings led to greater demands by business for chartered bank funds. Bank lending to individuals also increased rapidly. With total bank assets almost unchanged during the year, the banks sold off a considerable amount of their security holdings to meet the rising demand for loans. Finally, the instalment finance companies issued short-term paper to help finance the expansion in consumer credit.
The net effect of these movements was an increase in interest rates, with short-term rates rising more than medium- or long-term. The general public became heavy buyers of bonds, and governments and banks were sellers. Corporations sold long-term bonds but, with their high degree of liquidity, also became buyers of short-term government and finance company paper.
Interest rates, which had begun to rise in mid-1958, continued to increase until the late summer months of 1959 when a moderate decline took place, lasting for the remainder of the year. At year end, however, the level of interest rates was above that at the beginning of 1959.
The yield on three-month treasury bills showed the sharpest changes throughout the year, rising from 3.49 per cent at the end of 1958 to 6.16 per cent in August and then declining to 5.12 per cent at year end. The decline has continued into 1960, and on March 24 the rate was 3.41 per cent. Medium-term yields followed a different pattern, rising until September, then remaining more or less stable until year end. The yield on the 2f per cent June, 1967-1968 Government of Canada Bonds, for example, rose from 4.48 in January to 5.30 in September, and ended the year at 5.37 per cent. Long-term Government of Canada's followed the same pattern as those of the medium-term issues; the yields on 3j per cent, October, 1979 bonds were similar to those of the June 1967-1968 issue. The Bank of Canada discount rate, which is set at one-quarter per cent above the average tender rate for three-month treasury bills, stood at 5.37 per cent at the end of 1959, and at 3.66 per cent on March 24, 1960.
Interest rates on provincial, municipal and industrial bonds also rose during the year, in line with the general increase in interest rates. The prime rate on chartered bank lending which had been 5j per cent at the beginning of 1959 was 5j per cent at year end.
In the United States interest rates generally moved upward during the year, responding to much the same influences which were operative in Canada. However, there were differences in the spread between United States and Canadian rates throughout the year. The spread of Canadian rates over those of the United States increased until late summer and then narrowed in the latter part of the year. At year end the spread was greater for long-term bonds than at the end of 1958 while for treasury bills and medium-term bonds the spread was smaller.
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The Budget-Appendix

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CHARTERED BANK ASSETS (month-end figures)
-	As at Dec. 31 1959	Changes'			
		Calendar Years			
		1956	1957	1958	1959
		(Millions of dollars)			
Bank of Canada notes and deposits	953	42	-16	135	-48Day-to-day loans	101	-7	136	-87	-22Treasury bills	974	313	65	145	24Sub-total	2,028	348	185	193	-46Government bonds	1,827	-957	44	727	-735Call loans	139	-20	35	-75	23Net foreign assets2	21	6	41	-54	-68Total of foregoing assets	4,014	-623	305	791	-826Canadian loans (other than day-to-day and call	loans)	6,003	532	114	82	707Insured mortgages	968	199	93	204	178Non-Government securities	1,063	-58	-8	202	-101Total holdings	12,047	50	504	1,278	-421	To make the statistics for the different periods in this table comparable certain approximate adjustments have been made in calculating changes in loans and investments. The 1956 figures have been adjusted for the reclassification of foreign currency loans from Canadian loans to net foreign assets which was made in the returns of the banks to the Department of Finance, and the 1957 figures for the change in the allocation of inner reserves consequent upon the change in the method of valuing Government and provincial securities required in the returns of the banks to the Department of Finance.2	Total foreign currency assets less total foreign currency liabilities. Excludes foreign currency securities issued by Canadian borrowers.
Net new issues of bonds including treasury bills showed a considerable drop in 1959 from the previous year, with $1,768 million being raised, compared with $2,875 million in 1958. All classes of borrowings showed declines; provincial and municipal borrowings were about 10 percent below 1958, while there were much sharper declines in borrowings by the federal government and by corporations. Net new issues of bonds and treasury bills by the Government of Canada decreased from $1,252 million to $723 million while the net issues of corporate bonds were only $171 million compared with $665 million in 1958. Offsetting to some extent the decline in corporate bond borrowings was an increase in corporate stock issues from $300 million in 1958 to $409 million in 1959; most of the stock issues took place in the first half of the year. The decline in corporate borrowing was a reflection of relatively steady outlays for capital goods at the same time that retained earnings of corporations were rising in line with higher profits.
Net new issues of bonds and stocks payable in foreign currencies amounted to $224 million in 1959, or about one-half of the 1958 level. There was an increase in provincial government bonds payable in foreign currencies, little change in the level of municipal borrowings and a sharp drop in corporate bonds and stocks payable in foreign currencies. There was a net redemption of Government of Canada bonds payable abroad. This included an issue of $150 million 3 per cent bonds maturing in 1963 and called for prior payment on February 1, 1959. In earlier years the Government had purchased $129.5 million of the original issue and held it in a special sinking fund.

The Budget-Appendix
There was almost no change in the level of Canadian chartered bank assets in 1959. The increase in the demand for loans led to bank sales of securities which amounted to $812 million for the year. The banks increased their holdings of insured residential mortgages by $178 million in 1959.
Bank loans, excluding day-to-day loans and call loans, increased sharply by $707 million. The peak in bank lending came in August, and from then until the end of 1959 there was a more than seasonal decline in loans outstanding. Almost every borrowing group increased its loans in 1959, with the exception of provincial governments and some of the major resource industries. Loans to industry, merchandisers, construction contractors and public utilities accounted for almost one-half of the increase in loans. Personal loans rose by $163 million, or 18 per cent, to account for another major share of the increase. Loans to farmers, municipal governments and religious and social institutions rose moderately as did loans to stockbrokers and investment dealers. There was an increase of $82 million in loans to grain dealers and exporters while instalment finance companies increased their borrowings by $57 million. It should be noted that this latter group also issued $135 million of short-term paper in 1959.

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-	1956	1957	1958	1959
		(Millions o	f dollars)	
Currency-notes and coin		1,605	1,667	1,781	1,832
Bank deposits-				
Deposits other than personal savings deposits....	3,580	3,725	4,303	4,057Personal savings deposits2	6,007	6,108	6,844	6,900Total bank deposits	9,587	9,833	11,147	10,957Government Securities-	Market securities	6,225	6,045	6,073	7,513Non-market securities	2,541	2,649	2,895	3,212Total government securities	8,766	8,693	8,968	10,725Total liquid assets	19,958	20,193	21,895	23,5141	Includes all holdings other than those of the banking system and the federal government and government accounts.2	The deposit balances of religious, educational and welfare institutions and personal accounts used mainly for business purposes were reclassified from "personal savings deposits" to "other notice deposits" as at September 30, 1957 in the returns of the banks to the Department of Finance. The figures prior to September 30, 1957 are thus not comparable with those since that date. The amount of deposits reclassified was approximately $140 million.
A higher level of bond yields, along with growing public confidence, led to greatly increased holdings of federal government bonds by the general public outside the banking system. This increase in holdings by the general public was one of the outstanding financial events of the year. Holdings of government securities by the public outside of the banking system rose by $1,757 million or 20 per cent in the year. Holdings of Canada Savings Bonds increased by $317 million, those of treasury bills by $340 million while the remaining increase of $1,100 million represented other government securities. There were small increases in the public's holdings of currency and in savings deposits, while other deposits declined.
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The Budget-Appendix
The total amount of federal government direct and guaranteed securities increased by $719 million in 1959 compared with an increase of $1,252 million in 1958. As mentioned above, the general public more than accounted for this increase. In the course of 1959 the banking system sold $702 million of Government of Canada securities while Government of Canada accounts, including the Unemployment Insurance Fund, were reduced by $336 million.

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The upward movement in the consumer price index which began in mid-1956 was far less marked during 1959 than in preceding years. For the year 1959 as a whole, the average level of consumer prices increased by 1.1 per cent. This compares with increases of 2.6 per cent in 1958 and 3.2 per cent in 1957. The general index of wholesale prices was 229.8 for December, 1959, only fractionally higher than 229.3 a year earlier.

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-	Consumer Price Index (1940=100)	General Index of Wholesale Prices (1935-39 = 100)Average for tear: 1956	118.1	225.61957	121.9	227.41958	125.1	227.81959	126.5	230.6126.1	229.7125.7	230.8125.5	230.8125.4	231.2125.6	231.2125.9	230.7July	125.9	231.0126.4	230.8127.1	230.9128.0	230.1128.3	230.3127.9	229.8
The consumer price index declined during the first four months of 1959 from 126.2 in December, 1958 to 125.4 in April, 1959. The decline was reversed in May and consumer prices reached a high of 128.3 in November. Slight declines occurred in the next three months and in February, 1960 the consumer price index stood at 127.2. As in the case of the total index, all major groups, with the exception of the food component, averaged slightly higher in 1959 than in 1958. The increases in 1959, however, were in most cases smaller than in the previous year. Clothing prices were fractionally higher while the costs for shelter and household operations rose by 2.2 per cent and 1.4 per cent, respectively. The largest increase in 1959, as in earlier years, occurred in the cost for services and all other commodities where prices rose by 3.1 per cent. This compares with increases of 3.8 per cent in 1958 and 4.3 per cent in 1957. The most significant change occurred in food prices which were fractionally lower on average in 1959. This is in marked contrast to increases of 3 per cent in 1958 and 4.6 per cent in 1957. From 1953 to 1956 the downward movement of food prices had offset increases in other components and imparted an element of stability to the total.

The Budget-Appendix

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The performance of wholesale prices in 1959 was in slight contrast to that of 1958. In 1958 the general index in December was more than one per cent higher than at the beginning of the year whereas in a year-over-year comparison with 1957 the index showed little change. In 1959, on the other hand, average wholesale prices were more than one per cent higher than in the previous year but the gap narrowed at the end of the year. The contrast came about mainly because of a weakening in wholesale prices after mid-1959 which followed an upward trend that began in the final quarter of 1958. In a year-over-year comparison, prices for industrial materials showed a marked increase in 1959 compared with substantial declines in the previous two years. Similarly, construction materials which had declined fractionally in 1958 were moderately higher in 1959 though some weakening appeared at the end of the year. Prices for raw materials and manufactured goods were also slightly higher in 1959 following relative stability in 1958.
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The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	 2744
2.	Highlights of governmental financial operations during 1959-60.. 2744
3.	Budgetary accounts	
2746A.	Revenues	
2748B.	Expenditures	
27544.	Summary of assets and liabilities as at March 31, 1960	
2776A.	Changes in principal liability classifications during 1959-60...	2776B.	Changes in principal asset classifications during 1959-60. 2782C.	Increase in net debt	
27895.	The cash position	
27906.	The public debt	
27937.	Supplementary detailed tables	
2799
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The Budget-Appendix
Part II

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1. INTRODUCTION
The fiscal year of the Government ends on March 31 but the books must remain open for some time after this date to record various adjusting entries and to take into account all payments up to and including April 30 made on account of expenditures originating in and properly chargeable to the fiscal year 1959-60. Consequently the figures presented in this Part for the fiscal year are preliminary and subject to revision. The final figures when they become available next July or August may vary to some extent from those given in the following pages.
2. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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The following table summarizes the financial operations of the government for the fiscal year and indicates how the budgetary and non-budgetary transactions, together with changes in the unmatured debt, affected the government's cash balances. In the sections entitled "The Budgetary Accounts" and "The Cash Position" a more detailed explanation of these transactions is given.

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(in millions of dollars)
Summary of Budgetary and Non-Budgetary Transactions and Changes in Cash Position	Fiscal year ended March 31	
	1960 (estimated)	1959
Budgetary transactions- Revenues-		
	4,750	4,248 507
	551	
	5, SOI	4,755
Expenditures-		
	-1,528	-1,442
Non-defence		-4,179	-3,922
	-5,707 -406	-5,364 -609
Non-budgetary transactions- Receipts and credits (excluding unmatured debt transactions)-		
Repayments of loans, investments and working capital advances	348	104Net government annuities account receipts	52	58Net insurance and pension account receipts	216	525Net sales of investments of unemployment insurance fund	125	251Other non-budgetary receipts	201	150942	1,088Disbursements and charges (excluding unmatured debt transactions)-	Loans, investments and working capital advances	-770	-868Net payments from unemployment insurance fund	-126	-245Other non-budgetary disbursements	-49	-639-945	-1,752Net amount received from or required for (-) non-budgetary	transactions	-3	-664Overall cash requirements (-) to be financed by increase in debt	or decrease in cash balances	-409	-1,273Net increase in unmatured debt outstanding in the hands of the	public	333	1.439Net increase or decrease (-) in Receiver General bank balances	-76	166
The Budget-Appendix
Budgetary transactions
The revenues, expenditures and deficit as forecast in the budget speech of April 9, 1959 and the actual figures as now estimated are shown in the following table:

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(in millions of dollars)
	Budget Forecast April 9,1959	Actual (estimated)	Increase	
			Amount	Per cent
Revenues	5,267	5,301	34	0.6Expenditures	-5,660	-5,707	47	0.8Deficit	-393	-406	13	3.3
Revenues of the government for the fiscal year ending March 31, 1960 amounted to $5,301 million. This is $34 million or less than two-thirds of one per cent above the total of $5,267 million forecast in the budget speech of April 9, 1959 and $546 million or 12 per cent more than the total of $4,755 million collected in 1958-59.
Expenditures amounted to $5,707 million and were $47 million or approximately three-quarters of one per cent more than last year's budget forecast of $5,660 million and $343 million or 6 per cent more than the 1958-59 expenditures which totalled $5,364 million.
On the basis of these figures the deficit for the fiscal year is $406 million compared with the deficit of $393 million as forecast in the budget speech of April 9, 1959 and a deficit of $609 million in 1958-59.
Revenue collections have shown an increase over the previous year. This is due partly to the fact that the general level of activity and production in the economy was higher than in 1958-59 and partly to tax increases announced in last year's budget speech. Tax revenue increased by $502 million and non-tax revenue by $44 million.
Electronic data processing of the returns of Ontario taxpayers by the Taxation Division of the Department of National Revenue has resulted in earlier payments of refunds. As a consequence net revenues for 1959-60 are approximately $10 million less than they would otherwise have been and revenues in the first three months of 1960-61 will be correspondingly higher. Had the procedures of previous years been followed 1959-60 revenues would have been $10 million more and the deficit $10 million less.
On the expenditure side defence again constituted the largest item. Budgetary outlays on defence amounted to $1,528 million or 27 per cent of the total expenditures. In 1958-59 defence costs charged to the budget were $1,442 million but in that year equipment purchases amounting to $212 million were charged to the non-budgetary defence equipment account. Thus while budgetary defence expenditures in 1959-60 appear $86 million higher than in 1958-59 the cash outlays were in fact $106 million lower.
Civil or non-defence expenditures amounted to $4,179 million, an increase of $257 million over the corresponding total for the previous year. Of this increase $95 million is due to government contributions under the Hospital Insurance and Diagnostic Services Act, $138 million to public debt charges and
The Budget-Appendix
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$55 million to provincial subsidy and tax-sharing payments. In addition there were increases of $22 million in the expenditures of the Department of External Affairs, $20 million in the expenditures of the Department of Agriculture and $16 million in the expenditures of the Department of Northern Affairs and National Resources. There was no charge in 1959-60 to reduce the temporary loans to the old age security fund, which in 1958-59 amounted to $184 million.
More detailed explanations of budgetary revenues by source and budgetary expenditures by classification and department are given in later sections of this Part.
Non-budgetary transactions
Although the budgetary deficit for 1959-60 is expected to be $406 million, the government's bank balances at the end of the fiscal year are estimated to be only $76 million less than a year ago. This decrease in cash balances is the net result of budgetary requirements of $406 million, requirements of $770 million for loans, investments and working capital advances and of $175 million for other non-budgetary disbursements offset by non-budgetary receipts and credits of $942 million from repayments of loans and investments, annuity, insurance and pension accounts receipts and other non-budgetary sources and an increase of $333 million in outstanding unmatured debt.
Old age security fund
Pension payments from the old age security fund amounted to $574 million and tax receipts credited to the fund totalled $550 million, and the deficit of $24 million for the fiscal year was covered by temporary loans by the Minister of Finance. During 1958-59 pension payments amounted to $559 million and tax receipts credited to the fund to $375 million resulting in an excess of pension payments over tax receipts of $184 million which was charged to expenditures in 1958-59 under the authority of a vote of parliament.
Debt transactions
During 1959-60 the government issued securities amounting to $3,033 million (excluding the refunding of treasury bills which mature periodically) and redeemed or converted issues in the amount of $2,720 million, resulting in an increase of $313 million in unmatured debt. As other liabilities increased by $434 million the government's gross public debt increased by $747 million to $20,997 million at March 31, 1960. During the fiscal year the government's net assets increased by $343 million to $8,915 million. As a result, the government's net debt at March 31, 1960 is estimated to be $12,082 million compared with $11,678 million at March 31, 1959, the increase of $404 million reflecting the budgetary deficit of $406 million less an adjustment of $2 million in respect of prior years' transactions.
Cash position
Receiver General bank balances decreased by an estimated $76 million during the fiscal year as net budgetary and non-budgetary requirements totalled $409 million and outstanding unmatured debt (after taking into account transactions in the securities investment and sinking fund accounts) increased by $333 million.
3.	THE BUDGETARY ACCOUNTS
Total revenues, amounting to $5,301 million for 1959-60, are $546 million more than the total for the previous year. Total expenditures are $5,707 million, an increase of $343 million over the total for 1958-59. The deficit for the fiscal year is $406 million compared with $609 million for the previous year.

The Budget-Appendix

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Budgetary Revenues, Expenditures and Surplus or Deficit (in millions of dollars)
Fiscal year ended March 31	Budgetary revenues	Budgetary expenditures	Surplus or deficit (-)1955	4,123.5	4,275.3 4,433.1	-151.81956	4.400.0 5,106.5 5,048.8 4,754.7 5.301.0	- 33.11957	4.849.0 5,087.4 5.364.0 5,706.8	257.51958	- 38.61959	-609.31960 (estimated)	-405.8


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MILLIONS OF DOLLARS |6000


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* Estimated


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The Budget-Appendix
A. Revenues
Budgetary revenues were $5,301 million in the fiscal year 1959-60. This is $546 milhon or 12 per cent more than in the previous year. Of the total revenues for the year, $4,750 million, or 90 per cent was derived from taxes and $551 million or 10 per cent from non-tax revenues.

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Budgetary Revenues by Major Sources (in millions of dollars)
	Fiscal year ended March 31				Increase or decrease (-)	
Source	1960 (estimated)	1959	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenues- Income tax-	Personal^*	1,555.0	29.3	1,353.5	28.5	201.5	14.9Corporation")	
On dividends, interest, etc., going	1,140.0	21.5	1,020.6	21.5	119.4	11.7abroad	
Excise taxes-	75.0	1.4	61.2	1.3	13.8	22.5Sales")	737.0	13.9	694.5	14.6	42.5	6.1Other	287.0	5.4	240.6	5.0	46.4	19.3Customs import duties	529.0	10.0	486.5	10.2	42.5	8.7Excise duties	338.0	6.4	316.7	6.7	21.3	6.7Estate tax(2>	88.0 1.0	1.7	72.6 1.2	1.5	15.4 - 0.2 60S. 6	21.2 -16.7 11.8Non-tax revenues-	4, 750.0	89.6	89. S	Return on investments	239.0	4.5	221.2	4.7	17.8	8.0Post office	165.0	3.1	157.5	3.3	7.5	4.8Other non-tax revenues	147.0	2.8	128.6	2.7	18.4	14.3551.0	10.5	607.3	10.7	43.7	8.6Total revenues	5,301.0	100.0	4,754.7	100.0	546.3	11.51959-60	1958-59
(estimated)
">
Excluding tax credited to the old age security fund-
Personal income tax	
Corporation income tax	
Sales tax	
185.6	146.4
91.3	55.3
273.0	173.6
549.9	375.3
<*>
Includes duties levied under the Succession Duty Act.
(1)	TAX REVENUES
Tax on personal incomes
The personal income tax was again in 1959-60 the largest source of government revenue, the yield (excluding the old age security tax) being $1,555 million. The increase of $202 million or 15 per cent over the previous year is due partly to the higher level of personal incomes during the year and partly to the increase in rates which took effect on July 1, 1959.
The introduction of electronic data processing in the Taxation Division of the Department of National Revenue has resulted in the earlier payment of refunds to Ontario taxpayers. Net revenues for 1959-60 are approximately $10 million less than they would otherwise have been and this will be reflected in an equivalent increase in revenue in the first three months of 1960-61. If the procedures of earlier years had been followed, the 1959-60 revenues from personal income tax would have been $10 million higher and the deficit $10 million less.

The Budget-Appendix
In addition the tax on personal incomes levied under the Old Age Security Act yielded $186 million. This tax which previously was 2 per cent with a maximum of $60 was increased effective July 1, 1959 to 3 per cent with a maximum of $90. This revenue is credited to the old age security fund.
4000
2000

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TOTAL REVENUE FROM TAXES 69.0%


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*Esti<ni!Gd
Corporation income tax
The corporation income tax (excluding the old age security tax) yielded $1,140 million in 1959-60 and was the second largest revenue producer. The increase of $119 million or 12 per cent over the previous year is due partly to higher corporate profits in 1959 and partly to the increase in rates which was effective January 1, 1959.
In addition the tax on incomes of corporations levied under the Old Age Security Act yielded $91 million which is credited to the old age security fund. This tax was increased from 2 per cent to 3 per cent effective January 1, 1959.
Taxes on interest, dividends, rents and royalties going abroad
Revenue under this heading is derived from taxes withheld on payments of interest, dividends, rents, royalties, alimony and income from estates and trusts made to non-residents. The increase of $14 million over the previous year reflects higher corporate profits in 1959.
Excise taxes
Included under this heading are the revenues from the general sales tax and the special excise taxes levied on a number of manufactured products.
From a revenue standpoint the most important tax levied under the Excise Tax Act is the sales tax. The increase of $43 million or 6 per cent in receipts (excluding the old age security tax) over the previous year reflected the higher general level of activity and production in the economy in 1959-60.
The tax on sales levied under the Old Age Security Act and credited to the old age security fund yielded $273 million compared with $174 million in the previous year. This tax was increased from 2 per cent to 3 per cent effective April 10, 1959.
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The Budget-Appendix
Excise taxes other than the general sales tax were $46 million or 19 per cent more than in the previous year. Receipts from the tax on tobacco products were $36 million higher than in the previous year, due mainly to the increase in the tax rate of two cents per package of twenty cigarettes which was effective April 10, 1959. In addition receipts from the tax on automobiles were $7 million higher.
Customs import duties
The increase of $43 million or 9 per cent in customs import duties reflected the increase in the volume and value of imports during the year
Excise duties
Excise duties are levied only on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act referred to above.) The collections from the taxes on alcoholic beverages, before deducting refunds, were $195 million, an increase of $15 million over the previous year, due mainly to the increase in rates by one dollar per proof gallon effective April 10, 1959. The gross receipts from the taxes on tobacco products amounted to $147 million, an increase of $6 million.
Estate tax
The revenue from this source for the year amounted to $88 million, an increase of $15 million over the 1958-59 total. Although the Estate Tax Act replaced the Succession Duty Act with respect to death on and after January 1, 1959 a large part of the revenue received in 1959-60 was derived from duties levied under the Succession Duty Act.

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* Estimated
Other taxes
Most of the revenue under this heading was received from the special taxes on the export of electrical energy from Canada, but a small amount was also received from the tax on the export of furs from the Northwest Territories.

The Budget-Appendix
(2)	NON-TAX REVENUES
Non-tax revenues for 1959-60 were $551 million, $44 million or 9 per cent more than the 1958-59 total of $507 million.

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(in millions of dollars)
Non-Tax Revenues	Fiscal year ended March 31	Increase or decrease (-)	I960 (estimated)	1959	Amount	Per centReturn on investments	239.0	221.2	17.8	8.0Post office	165.0	157.5	7.5	4.8Refunds of previous years' expenditures	45.8	37.7	8.1	21.5Services and service fees	30.5	27.2	3.3	12.1Proceeds from sales	24.7	23.5	1.2	5.1Privileges, licences and permits	31.9	27.9	4.0	14.3Bullion and coinage	5.9	4.4	1.5	34.11.0	1.0	Other	7.2	6.9	0.3	4.3551.0	507.3	43.7	8.6
Return on investments
Receipts in this category amounted to $239 million compared with $221 million in 1958-59.
Payments from Crown corporations were $154 million, $7 million over the 1958-59 amount. Increases of $17 million in receipts from the Central Mortgage and Housing Corporation, $3 million from the Canadian National Railways and other smaller increases amounting to $2 million were offset partly by a decrease of $15 million from the Bank of Canada.

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(in millions of dollars)
Return on Investments	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Loans to, and investments in, Crown corporations- Bank of Canada-profits	74.0	88.6	-14.6Canadian National Railwavs	14.3	11.4	2.9Central Mortgage and Housing Corporation	45.9	29.0	16.9Eldorado Mining and Refining Limited	4.2	3.5	0.7Farm Credit Corporation 	2.6	2.0	0.6National Harbours Board	3.3	3.2	0.1Northern Ontario Pipe Line Crown Corporation	4.1	3.1	1.04.0	4.0	Miscellaneous	1.6	1.7	-0.1154.0	146.5	7.5Other loans and investments- United Kingdom	22.5	22.8	-0.3Other national governments	11.1	9.1	2.0Provincial governments	1.4	0.9	0.5Soldier and general land settlement loans and veterans land act advances	5.0	5.1	-0.1Exchange fund account	25.5	18.6	6.9Securities investment account	3.9	2.6	1.3Sinking fund and other investments held for retirement of unmatured debt	2.5	6.1	-3.6Interest-bearing deposits with chartered banks	8.1	5.0	3.11.3	1.3Miscellaneous	3.7	4.5	-0.885.0	7 4.7	10. S239.0	221.2	17.8
(l) Formerly the Canadian Farm Loan Board.
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The Budget-Appendix
Other loans and investments yielded $85 million, an increase of $10 million over the previous year. Increases of $7 million in profits of the exchange fund, $3 million in interest on deposits with the chartered banks and other smaller increases amounting to $4 million were offset partly by a decrease of $4 million in earnings from the sinking fund and other investments.
Post office
Gross post office receipts totalled $191 million but authorized disbursements from revenues for salaries and rent allowances at semi-staff and revenue offices, commissions at sub offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., amounting to $26 million, brought the net revenue to $165 million. Last year gross receipts amounted to $183 million and authorized disbursements totalled $26 million.
As costs of operating the post office during 1959-60 (excluding the $26 million charged to revenue) were $168 million, net expenditure exceeded net revenue by $3 million. However, in making this comparison, it is to be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
Refunds of previous years' expenditures
Refunds in the current fiscal year of expenditures made in prior years totalled $46 million, $8 million more than in 1958-59. These refunds included $15 million received by the Department of National Defence, of which $5 million was on contracts with the United States Government for the supply of engines, aircraft and other defence equipment under an arrangement that when Canada places contracts with the Government of the United States, payments of the estimated costs are made to the United States Treasury and if these estimated costs are revised, or if there are reductions in the contracts, the United States Government refunds the overpayments. The Department of Finance received $13 million (of which $12 million was a repayment by the Province of Ontario in connection with succession duty payments under the tax-rental agreements), the Departments of Transport and Veterans Affairs received $2 million each and other departments received $11 million. In addition, the unexpended balance, amounting to $3 million, of the 1958-59 parliamentary grant for the capital expenditures of the radio and television services was refunded by the Canadian Broadcasting Corporation.
Services and service fees
Sums totalling $31 million were collected during 1959-60 by various government departments for services and service fees, $3 million more than the total collected in the previous year.
Revenue from this source included $10 million received by the Royal Canadian Mounted police, mainly for police services to provinces and municipalities; $6 million by the Department of Trade and Commerce, mainly for services in connection with the inspection, weighing, storage and elevation of grain

The Budget-Appendix
and for electricity, gas and weights and measures inspection services; and $5 million received by the Department of Transport, mainly for wharfage and other canal and marine service fees, steamship inspection, air-ground radio at airports, and government telegraph and telephone services.
Proceeds from sales
Receipts from proceeds from sales were $25 million for 1959-60, $1 million more than the total received in 1958-59.
Receipts under this category included $6 million from Crown Assets Disposal Corporation representing amounts realized from the disposal of surplus Crown assets (after deducting certain agency fees and transfers), $4 million under agreements of sale and $5 million from Central Mortgage and Housing Corporation representing the proceeds from the sale of wartime housing properties and including amounts available as the result of the reversal of the provision for depreciation set aside by the corporation in previous years on properties that have now been sold.
Privileges, licences and permits
Revenues of $32 million were received during the fiscal year on account of privileges, licences and permits compared with $28 million received last year.
Included in these revenues is an amount of $11 million collected by the Department of Transport, mainly on account of aircraft landing fees, rentals of hangar accommodation, and other miscellaneous rental charges, and $3 million by the Department of Northern Affairs and National Resources for oil leases in the Northwest Territories.
Bullion and coinage
Revenue of $6 million under this heading arose out of the operations of the Royal Canadian Mint and included a net gain on coinage of $5 million, and gold refining, storage and handling charges and gain in gold refining of $1 million (of which more than half was in respect of handling charges).
Premium, discount and exchange
Under this heading is recorded the premiums and discounts incurred in the purchase of foreign currencies. Transactions in the current fiscal year resulted in a net credit of $1 million to revenues, the same as in the previous year.
Other non-tax revenues
Revenues under this category amounted to $7 million, the same as in 1958-59.
(3)	COMPARISON OF ACTUAL REVENUES WITH FORECAST
The Budget Speech of April 9, 1959 forecast that budgetary revenues for the fiscal year 1959-60 would be $5,267 million.
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The Budget-Appendix
It is now estimated that actual budgetary revenues for the fiscal year will be $5,301 million or $34 million more than forecast.
The following table shows the extent to which actual revenues for 1959-60, as now estimated, differ from the budget forecast:

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Comparison of Forecast with Actual Revenues for Fiscal Year Ended March 31, 1960
(in millions of dollars)
Source of Revenues	Budget forecast of revenues	Revenues (estimated)	Increase or decrease (-) compared with budget forecast	
			Amount	Per cent
Personal income tax	1,578	1,555	-23	-1.5Corporation income tax	1,097	1,140	43	3.975	75	Estate tax	75	88	13	17.3Customs import duties	528	529	1	0.2Sales tax (net)	756	737	-19	-2.5Other duties and taxes	648	626	-22	-3.44,757	4,750	- 7	-0.1Non-tax revenues	510	551	41	8.0Total budgetary revenues	5,267	5,301	34	0.6
As the above table shows, the actual revenue from a number of sources is expected to be very close to the amount forecast. The revenue sources which showed a significant difference, on a percentage basis, from the amount forecast are the corporation income tax, estate tax and non-tax revenues.
The revenue from corporation income tax exceeded the forecast by a small amount, reflecting higher than expected corporate profits.
The revenue from the estate tax has been substantially influenced in the last four years by duties payable on two exceptionally large estates and actual revenues in each year have varied from forecasts because of the difficulty of foreseeing exactly when the duties on these estates would be paid.
Non-tax revenues were $41 million above the forecast, due to larger than expected returns on investments.
B. Expenditures
Budgetary expenditures for 1959-60 amounted to $5,707 million, an increase of $343 million over the 1958-59 total of $5,364 million.

The Budget-Appendix

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Statement of Budgetary Expenditures by Departments and Major Classifications
(in millions of dollars)
-	Fiscal year ended March 31				Increase or decrease (-)	
	1960 (estimated)		1959			
	Amount	Per cent	Amount	Per cent	Amount	Per cent
Defence expenditures-						
National Defence	<01,505.7	26.4	1,424.7	26.6	81.0	5.7Defence Production	17.3	0.3	13.9	0.2	3.4	24.5Civil defence	<* 5.3	0.1	3.8	0.1	1.5	39.51,528.3	26.8	1,442.4	26.9	85.9	6.0N on-defence expenditures-	Agriculture	185.3	3.3	165.8	3.1	19.5	11.8Atomic Energy	31.1	0.5	26.1	0.5	5.0	19.2Canadian Broadcasting Corporation...	61.6	1.1	62.0	1.2	-0.4	-0.6Citizenship and Immigration	55.8	1.0	52.9	1.0	2.9	5.5External Affairs	97.9	1.7	75.5	1.4	22.4	29.7Finance-	Public debt charges	786.1	13.8	648.0	12.1	138.1	21.3Provincial subsidies and tax-sharing	payments (including transitional	and additional grants to New-	foundland)	522.0	9.2	467.0	8.7	55.0	11.8Government contributions with re-	spect to the superannuation account	40.0	0.7	37.7	0.7	2.3	6.1Other	76.8	1.3	75.5	1.4	1.3	1.71,«.J	25.0	1,228.2	22.9	196.7	16.0Fisheries	20.2	0.4	17.5	0.3	2.7	15.4Justice	8.2	0.1	7.6	0.1	0.6	7.9Office of the Commissioner of	Penitentiaries	20.5	0.4	16.7	0.3	3.8	22.828.7	0.5	2Jf.S	0.4	L 4	18.1Labour	22.9	0.4	14.4	0.3	8.5	59.0Unemployment Insurance Act ad-	ministration and government's	contribution	81.4	1.4	72.4	1.3	9.0	12.4lOJf.S	1.8	86.8	1.6	17.5	20.2Mines and Technical Surveys	55.1	1.0	43.8	0.8	11.3	25.8National Health and Welfare-	Family allowances	491.3	8.6	474.8	8.9	16.5	3.5Reduction in the amount of tempo-	rary loans to the old age security	fund	184.0	3.4	-184.0	-100.0Government contributions under the	Hospital and Diagnostic Services	Act	149.8	2.6	54.7	1.0	95.1	173.9Other	<* 168.5	3.0	155.6	2.9	12.9	8.3809.6	14.2	869.1	16.2	-59.5	- 6.8National Research Council	31.3	0.5	25.4	0.5	5.9	23.2National Revenue	69.2	1.2	68.8	1.3	0.4	0.6Northern Affairs and National Re-	sources.	81.4	1.4	65.2	1.2	16.2	24.8Post Office	167.6	2.9	157.8	2.9	9.8	6.2Public Works	215.2	3.8	226.1	4.1	-10.9	- 4.8Royal Canadian Mounted Police	53.3	0.9	51.7	1.0	1.6	3.1Trade and Commerce	67.4	1.2	65.6	1.2	1.8	2.7Transport	298.4	5.2	288.8	5.4	9.6	3.3Veterans Affairs	290.0	5.1	288.8	5.4	1.2	0.4Other departments	<4>
30.2	0.5	31.4	0.7	- 1.2	- 3.84,178.5	73.2	3,921.6	73.1	256.9	6 6Total budgetary expenditures...	5,706:8	100.0	5,364.0	100.0	342.8	6.4
<[DOT]>
Does not include $0.4 million in respect of civil defence.
<*>
Includes expenditures of $3.7 million made by the Department of National Health and Welfare, $1.2 million by Privy Council and $0.4 million by the Department of National Defence.
Does not include $3.7 million in respect of civil defence.
!4) Does not include $1.2 million made by Privy Council in respect of civil defence.
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The Budget-Appendix Defence expenditures
Defence expenditures which consist of expenditures of the Departments of National Defence and Defence Production and outlays for the civil defence programme are again the largest category of government budgetary expenditures. The total of $1,528 million for 1959-60 was approximately 27 per cent of the aggregate budgetary expenditures of the government and was $86 million, or about 6 per cent, more than the total of $1,442 million for 1958-59 when defence expenditures were also 27 per cent of aggregate budgetary expenditures.
Expenditures of the Department of National Defence were $1,506 million, those of the Department of Defence Production were $17 million and outlays for the civil defence programme were $5 million. In 1958-59 expenditures were $1,424 million, $14 million and $4 million respectively.
Expenditures for army, naval and air services totalled $1,378 million, $169 million more than the 1958-59 total. The outlay for army services increased by $30 million, for naval services by $48 million and for air services by $91 million over the previous year's totals. However, when comparing defence costs charged to budgetary expenditures for the past two years it must be noted that in 1958-59 purchases in the amount of $212 million were charged to the national defence equipment account rather than to budgetary expenditures. This was in accordance with the policy announced by the Minister of Finance in his budget speech of June 17, 1958, that the balance in the national defence equipment account would be liquidated during the fiscal year 1958-59.
Expenditures on mutual aid to NATO countries in 1959-60 show a decline of $56 million from those of the preceding year. However, this apparent decline was due to a change in the method of accounting for this programme in the current year rather than to any major reduction in the programme itself.

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expenditure In the year In which they were paid.
2. Doe* not Include thoae payments made to provincial and municipal ijovernmenta for specific purposes. * Estimated

The Budget-Appendix

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(in millions of dollars)
Defence Expenditures	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Department of National Defence-			
Army services	400.8	370.6	30.2Naval services	261.6	213.9	47.7Air services	715.4	624.4	91.01,377.8	1,208.9	168.9Defence research and development	
Mutual aid to NATO countries including contributions	40.1	74.4	-34.3towards military costs of NATO	
Government contribution to the permanent services	14.7	70.7	-56.0pension account	51.8	49.5	2.3Administration and general	«>
21.3	21.2	0.11,505.7	1,424.7	81.0Department of Defence Production-	Capital assistance	2.9	1.8	1.1Administration and general	14.4	12.1	2.317.3	13.9	3.4Civil defence programme	<* 5.3	3.8	1.61,528.3	1,442.4	85.9
<'l Does not include $0.4 million in respect of civil defence.
<*>
Includes expenditures of $3.7 million made by the Department of National Health and Welfare, $1.2 million by Privy Council and $0.4 million by the Department of National Defence.
Direct charges to mutual aid in 1958-59 amounted to $13 million consisting of procurement of equipment for mutual aid and Canada's share of NATO military budgets and infrastructure costs. Expenditures on these items in 1959-60 amounted to $15 million. However, in 1958-59 the mutual aid appropriation was charged also with the value of equipment transferred from service stocks amounting to $51 million plus a further $7 million in respect of NATO aircrew training carried out by the RCAF. In the fiscal year under review the costs of these items are being borne by the services without recovery from the mutual aid appropriation which provides for direct charges only. The value of these items in the mutual aid programme in 1959-60 was $54 million for transfers of equipment and $5 million for NATO aircrew training.
Outlays for defence research and development were $40 million compared with $74 million in 1958-59.
The government's contribution to the permanent services pension account of an amount equal to If times the contributions by permanent services personnel was $52 million, an increase of $2 million over the total for the previous year.
Administration and general costs were $21 million in 1959-60, approximately the same as for 1958-59.
The total expenditure of $17 million for the Department of Defence Production was $3 million more than in 1958-59. This increase resulted from the $1 million outlay in connection with the government programme instituted in 1959-60 of supporting selected defence development programmes in order to sustain technological capability in Canadian industry, the increase of $1 million in administration and general costs and the $1 million increase in respect of the
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programme under which capital assistance is given to private contractors, Crown plants operated on a management-fee basis and Crown corporations undertaking contracts essential to the defence programme.
Civil defence expenditures of $5 million were $1 million higher than comparable costs in 1958-59.
In addition to these budgetary expenditures for defence, there were certain other cash outlays which must be considered in assessing the full effect of the defence programme on the economy of Canada.
Under section 11 of the National Defence Act, materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, may be sold to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales in 1959-60 amounting to $4 million were credited to a special account to be used for the procurement of materiel. Net cash outlays from this account during 1959-60 were $10 million leaving a balance of $4 million at March 31, 1960.
The Department of Defence Production also makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. As a result of the transactions during 1959-60 proceeds from sales exceeded purchases by $10 million and the assets of the fund were reduced by an equivalent amount leaving a balance of $20 million in the account at March 31, 1960.
For several years cash outlays were made for the purchase of equipment and supplies for the army, naval or air services which were charged to the national defence equipment account and not included in budgetary expenditures. In 1958-59 this account was liquidated in accordance with the policy outlined in the budget speech of June 17, 1958. Consequently there was no non-budgetary charge in 1959-60 comparable to the charge of $212 million made in 1958-59.
The following table summarizes the cash outlays for defence for the past two fiscal years:

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(in millions of dollars)
Cash Outlays fob Defence	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Budgetary expenditures-	1,505.7 17.3 5.3	1,424.7 13.9 3.8	81.0 3.4 1.5
			
			
Disbursements from-			
	1,528.3	1,442.4 211.7 4.3 -24.4 191.6	85.9 -211.7 5.9 14.2 -191.6
Replacement of materiel account-sec. 11, National	10.2 -10.2		
			
			
			
	1,528.3	1,634.0	-105.7
			

The Budget-Appendix
Agriculture
Expenditures of the Department of Agriculture totalled $185 million for 1959-60 compared with $166 million in 1958-59.
Increases of $43 million in the net operating loss of the agricultural stabilization board, $6 million in contributions to the provinces of Alberta, Saskatchewan and Manitoba in respect of unharvested crops, $8 million in expenditures of the production and marketing branch, $5 million in outlays for rehabilitation and reclamation projects and $2 million in research branch expenditures were offset partially by decreases of $41 million in payments to western grain producers and $4 million in the deficit of the prairie farm emergency fund.
TABLE n
(in millions of dollars)
Agriculture	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Agricultural stabilization board-net operating loss	 Contributions to Alberta, Saskatchewan and Manitoba-	57.7	15.0	42.7
	6.0		6.0
Payments to western grain producers	41.3	-41.3Prairie farm emergency fund-deficit	
Production and marketing branch-	13.2	17.0	- 3.8Freight assistance on western feed grains	23.2	20.0	3.2Premium on hog carcasses including administrative costs	8.2	6.9	1.3Other	27.3	23.9	3.458.7	50.8	7.9Rehabilitation and reclamation projects	18.9	13.5	5.4Research branch	28.6	26.2	2.4Administration and general	2.2	2.0	0.2185.3	165.8	19.5
The 1959-60 net operating loss of the agricultural stabilization board was $58 million compared with $15 million in 1958-59.
Under the authority of Vote 613 of Appropriation Act No. 1, 1960 contributions totalling $6 million were made to the Provinces of Alberta, Saskatchewan and Manitoba during 1959-60, in accordance with terms and conditions prescribed by the Governor in Council, of one-half the amounts paid by the Governments of those Provinces to farmers in respect of unharvested crops to a maximum of $300 in respect of any one farm; and contributions to the Governments of those Provinces (or their municipalities) in respect of the administrative costs incurred by them in making such payments.
In 1958-59 payments of $41 million were made under authority of Vote 663 of Appropriation Act No. 5, 1958 and Vote 698 of Appropriation Act No. 1, 1959 in accordance with Western Grain Producers Acreage Payments Regulations. There was no expenditure for this purpose in 1959-60.
Advances of $13 million made by the Minister of Finance to the prairie farm emergency fund to cover the year's deficit were charged to budgetary expenditures. The comparable amount in 1958-59 was $17 million.
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The Budget-Appendix Atomic Energy
Expenditures of the Atomic Energy Control Board and payments to Atomic Energy of Canada Limited totalled $31 million compared with $26 million in 1958-59, an increase of $5 million.
Administration expenses of the Atomic Energy Control Board and grants for research and investigations with respect to atomic energy were $1 million, slightly higher than in 1958-59.
During the fiscal year $30 million was paid to Atomic Energy of Canada Limited for its research programme, $4 million more than in the previous year. Of the total, $19 million was for current operations and maintenance and $11 million for the construction and acquisition of buildings, land, works and equipment.
In addition, working capital advances of $2 million were made to Atomic Energy of Canada Limited during the year. This brought the total of advances covered, or to be covered, by obligations or shares of the company to $61 million at March 31, 1960.
Canadian Broadcasting Corporation
Expenditures of $62 million were made by the government on account of the Canadian Broadcasting Corporation during 1959-60, approximately the same as in 1958-59.
Grants for radio broadcasting and television services increased by $2 million over the corresponding amount for 1958-59, while expenditures for the international shortwave broadcasting service remained at approximately $2 million.
There were no payments made during 1959-60 of amounts equal to the 15 per cent special tax collected under the Excise Tax Act in respect of radio and television sets and equipment. These payments were discontinued under the provisions of the Broadcasting Act which came into force on November 10, 1958.
During the fiscal year 1959-60 grants totalling $7 million were made to the Canadian Broadcasting Corporation for the capital requirements, including the replacement of existing capital assets, of the radio and television services.
TABLE 12 (in millions of dollars)
Fiscal year ended March 31
Canadian Broadcasting Corporation	1956	1957	1958	1959	1960 (estimated)Grants to the Canadian Broadcasting Corporation by the Government of Canada- Amounts equal to tax collected under the Excise Tax Act in respect of radio and television sets and equipment	
Capital requirements of the radio and televi-	23.1	19.3	16.8	9.8	7.2 52.4 2.0Radio broadcasting and television services International shortwave broadcasting service....	6.3 1.8	18.3 1.7	24.4 1.8	50.3 1.9	31.2	39.3	43.0	62.0	61.6
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration were $56 million in 1959-60, an increase of $3 million over the total for 1958-59.

The Budget-Appendix
Outlays for the Indian affairs branch increased by $5 million during 1959-60, due principally to increases of $3 million in expenditures for Indian education and $2 million for Indian welfare, while costs of the operation of the immigration branch decreased by $2 million due to lower expenditures in connection with assisted passage and other assistance given to immigrants.
TABLE 13 (in millions of dollars)
Citizenship and Immigration	Fiscal year ended March 31		Increase or decrease (-)
	I960 (estimated)	1959	
Citizenship and citizenship registration	1.4	1.4	Immigration	12.1	14.4	-2.3Indian affairs	41.6	36.4	5.20.7	0.7	55.8	52.9	2.9
External Affairs
Expenditures of the Department of External Affairs totalled $98 million in 1959-60, an increase of $22 million over the previous year.
The principal changes in expenditure were increases of $15 million in the grant to the Colombo plan fund, $6 million in contributions to international organizations, $2 million in assistance to other countries and $1 million in the costs of representation abroad.
TABLE 14 (in millions of dollars)
External Affairs	Fiscal year ended March 31		Increase or decrease (-)
	I960 (estimated)	1959	
Assistance to other countries	
Canada's assessment for membership in international or	16.2	14.6	1.6commonwealth organizations	4.2	4.4	- 0.2Contributions to international organizations	10.4	4.9	5.5Grant to Colombo plan fund	50.0	35.0	15.0Representation abroad	10.4	9.6	0.8Administration and general	6.7	7.0	- 0.397.9	75.5	22.4
Finance
Expenditures of the Department of Finance amounted to $1,425 million in 1959-60, an increase of $197 million over the corresponding total of $1,228 million in 1958-59.
Increases of $138 million in public debt charges, $55 million in provincial subsidies and tax-sharing payments and $2 million in government contributions with respect to the superannuation fund were the main factors in the overall increase.
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The Budget-Appendix

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(in millions of dollars)
Finance	Fiscal year ended March 31		Increase or decrease (-)
	I960 (estimated)	1959	
Public debt charges		786.1	648.0	138.1
Provincial subsidies and tax-sharing payments (including			
transitional and additional grants to Newfoundland)....	522.0	467.0	55.0
Government contributions with respect to the superannuation			
account	40.0	37.7	2.3Grants to municipalities in lieu of taxes on federal property..	21.5	21.9	- 0.4Grants to universities- Payments to the National Conference of Canadian	Universities	26.1	25.5	0.6Government contribution as an employer to the unemploy-	0.8	0.8	Office of the Comptroller of the Treasury-administration	0.4expenses	18.3	17.9	Administration and general	10.1	9.4	0.71,424.9	1,228.2	196.7
Public debt charges
In 1959-60 public debt charges are again the second largest item of budgetary expenditure. These charges, which consist of interest on public debt, the annual amortization of bond discounts and commissions, the cost of issuing new loans and other costs incurred in servicing the public debt, amounted to $786 million in 1959-60 or 14 per cent of all budgetary expenditure compared with $648 million or 12 per cent in 1958-59.

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(in millions of dollars)
Interest and Other Public Debt Charges	Fiscal year ended March 31	IncreaseI960 (estimated)	1959	decrease (-)Interest on public debt- Unmatured debt including treasury bills- Payable in Canada	597.6	476.3	121.31.5	1.5	Payable in New York	4.1	7.9	- 3.860S. 2	485.7	117.5Other liabilities-	3.3	0.1Deposit and trust accounts	3.4	Annuity, insurance and pension accounts	131.6	117.6	14.01SS.0	no. 9	14.1Total interest on public debt	738.2	606.6	131.6Other public debt charges-	45.6	36.7	8.9Annual amortization of bond discounts and commissions.	Cost of issuing new loans	1.7	4.1	-2.40.6	0.6	1,7.9	41.4	6.5786.1	648.0	138.1
The Budget-Appendix
Interest on public debt was $738 million in 1959-60, an increase of $131 million over the 1958-59 total of $607 million. Interest of $603 million on unmatured debt was $117 million higher due to an increase in unmatured debt and the general rise in interest rates; interest of $135 million on other liabilities was $14 million higher due mainly to increases of $8 million in respect of the permanent services pension account, $3 million in respect of the superannuation account and $2 million in respect of the government annuities account. Approximately one-half of the increase in respect of the permanent services pension account was due to the fact that the 1958-59 totals did not include interest for the first quarter of the year on the increase in the balance effective April 1, 1958 due to an actuarial adjustment of $326 million.
Other public debt charges amounted to $48 million compared with $41 million in 1958-59. The annual amortization charges of bond discounts and commissions were $9 million higher and the cost of issuing new loans was $2 million less than comparable 1958-59 amounts.
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1959-60 this income was $239 million as shown in the non-tax revenue section under the heading "Return on investments". This amount deducted from the gross total of $738 million for interest as shown in the above table leaves a net amount of $499 million compared with a net of $386 million in 1958-59.
Subsidies and tax-sharing 'payments to provinces
Payments to the provinces during 1959-60 for statutory subsidies, rentals under the Tax-Sharing Arrangements Act, the transitional and additional grants to Newfoundland, and the transfer of a portion of income tax receipts from certain public utility companies are expected to amount to $522 million compared with $467 million in 1958-59.
Charges to budgetary expenditures in 1959-60 under the Federal-Provincial tax-sharing arrangements, including adjustments made on account of previous years, were $61 million more than in 1958-59. The increase was occasioned by higher individual income tax collections and corporation taxable income for the 1959 taxation year.

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(in millions of dollars)
Subsidies and Tax-Sharing Payments to Provinces	Fiscal year ended March 31	Increase1960 (estimated)	1959	decrease (-)Payments under Federal-Provincial Tax-Sharing Arrangements Act, c. 29, Statutes of 1956, as amended, e. 29, Statutes of 1957-58	484.3	423.1	61.2Statutory subsidies	20.7	20.6	0.1Transitional grant to Newfoundland	0.7	1.0	-0.3Additional grants to Newfoundland	7.3	13.6	-6.3Transfer of certain public utility tax receipts	9.0	8.7	0.3522.0	467.0	55.0
The Budget-Appendix
Payments to the provinces under the Federal-Provincial tax-sharing arrangements in 1959-60 were adjusted by deducting a total of $1 million from the taxsharing entitlement of the provinces of Newfoundland, Prince Edward Island, New Brunswick, Manitoba and Saskatchewan. These deductions represented recovery of one-fifth of overpayments made to those provinces under the 1952 tax-rental agreements on account of an over-estimation of their population as revealed by the 1956 census. By memoranda of agreement with the provinces concerned, the 1952 tax-rental agreements were amended to authorize the recovery of the overpayment in equal monthly deductions from the tax-sharing payments of those provinces over the five-year life of the new agreements.
Under the Newfoundland Additional Grants Act, pursuant to the report of the Royal Commission on Newfoundland Finances appointed under clause 29 of the Terms of Union, Newfoundland is to receive additional grants for the fiscal years 1957-58 to 1961-62 inclusive. The additional grant for 1959-60 was $7.3 million. The additional grant of $13.6 million paid in 1958-59 was for two fiscal years.
Statutory subsidies at $21 million in 1959-60 were virtually unchanged from the previous year.
A summary of payments, by provinces, during 1959-60 is given in the following table:
TABLE 18 (in millions of dollars)
	Fiscal year ended March 31, 1960 (estimated)				
Subsidies and Tax-Shabing Payments to Provinces					
Statutory subsidies	Payments under tax-sharing arrangements	Transitional and additional grants	Transfer of certain public utility tax receipts	Total1.6	27.4	8.0	0.3	37.30.6	6.7	0.1	7.42.0	39.4	0.5	41.91.7	33.6	0.2	35.53.3	68.6	2.4	74.33.6	106.2	1.6	111.42.1	39.2	41.32.1	39.9	0.1	42.12.4	55.4	2.3	60.11.3	67.9	1.5	70.7
20.7	484.3	8.0	9.0	522.0
The amount of public utility tax receipts to be transferred to the provinces in 1959-60 is estimated to amount to $9 million, virtually unchanged from the previous year. Section 6 of the Tax-Rental Agreements Act, 1952, authorized the payment to the provinces, whether participating in an agreement or not, of a portion of the income tax collected from corporations whose main business was the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam. The 1958-59 payment represented the transferable portion of the income tax from the above corporations for the taxation year 1956. That payment was the last transfer authorized under the 1952 Tax-Rental Agreements Act; the payment for 1959-60 was authorized by Vote 114 of Appropriation Act No. 5, 1959.

The Budget-Appendix
Fisheries
Expenditures of the Department of Fisheries amounted to $20 million in 1959-60, $3 million more than was spent in 1958-59. Increases of $2 million in outlays by the field services division and $1 million in administration and general costs accounted for the change.

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(in millions of dollars)
Fisheries	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Field services	10.2	8.2	2.0Canada's share of the costs of international commissions	0.8	0.8	5.0	5.0	Administration and general	4.2	3.5	0.720.2	17.5	2.7
Justice
Expenditures of the Department of Justice amounted to $29 million for 1959-60, an increase of $4 million over the 1958-59 total, due mainly to an increase in the costs of the Office of the Commissioner of Penitentiaries.
TABLE 20 (in millions of dollars)
Justice	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Judges' salaries and travelling allowances	5.0	4.8	0.2Administration and general	3.2	2.8	0.4Office of the Commissioner of Penitentiaries-	8.2	7.6	0.6Operation and maintenance of penitentiaries	13.4	12.0	1.4Construction, improvements and equipment	6.5	4.2	2.3Administration	0.6	0.5	0.120.5	16.7	S.828.7	24.3	4.4
Labour
Expenditures of the Department of Labour amounted to $104 million during 1959-60, an increase of $17 million over the 1958-59 total of $87 million. Increases of $8 million in the government contribution to the Unemployment Insurance Fund, $8 million in payments to provinces for assistance to municipalities for winter works projects and $1 million in payments to provinces under the Vocational Training Co-ordination Act were the main factors contributing to this increase.
Authorized payments to a province by the Government of Canada during 1959-60 of amounts not exceeding one-half of the cost of labour incurred on winter works projects are expected to total $8 million compared with $250 thousand in 1958-59.
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[Stage Direction]
(in millions of dollars)
Labour	Fiscal year ended March 31	IncreaseI960 (estimated)	1959	decrease (-)Administration and general	6.6	6.5	0.1Payments to provinces authorized by Vocational Training Co-ordination Act	8.6	7.7	0.9Municipal winter works programme	7.7	0.2	7.5S3.9	14-4	8.5Unemployment Insurance Commission- Administration and general	35.9	35.3	0.6Government's contribution to the fund	45.5	37.1	8.481.4	7 2.4	9.0104.3	86.8	17.5
Unemployment Insurance Act administration and government's contribution
Expenditures in 1959-60 relating to the Act (excluding the government's payment as an employer) amounted to $81 million compared with $72 million in 1958-59.
Unemployment insurance benefit payments are not charged directly to budgetary expenditures but are paid from the unemployment insurance fund which is financed by equal contributions from employees and employers, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of the combined employee-employer contributions.
The government's contribution to the fund for 1959-60 was $45 million and administrative costs were $36 million; the corresponding amounts for 1958-59 were $37 million and $35 million respectively.
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys totalled $55 million for 1959-60, an increase of $11 million over the total for 1958-59.
TABLE 22 (in millions of dollars)
Mines and Technical Surveys	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Emergency gold mining assistance	13.2	9.8	3.4Dominion Coal Board	17.6	11.3	6.3Surveys and mapping including aerial photography	13.6	13.1	0.5Mines branch	3.8	3.6	0.2Geological survey of Canada	3.0	3.2	0.4Administration and general	3.3	2.8	0.555.1	43.8	11.3
The Budget-Appendix
The increase of $11 million was due mainly to increases of $6 million in the expenditures of the Dominion Coal Board for payments in connection with the movements of coal and $3 million in emergency gold mining assistance.
National Health and Welfare
Expenditures for the Department of National Health and Welfare (excluding outlays of $4 million for civil defence) during 1959-60 amounted to $810 million, a decrease of $59 million from the 1958-59 total of $869 million.
Outlays for the national health branch totalled $226 million in 1959-60, reflecting an increase of $95 million over the previous year's total, almost entirely due to the increase of $95 million in government contributions under the Hospital Insurance and Diagnostic Services Act.
During 1959-60 expenditures of the welfare branch decreased by $154 million from the 1958-59 total. Estimated increases of $17 million in payments for family allowances, $12 million for unemployment assistance and $1 million for disabled persons allowances, were more than offset by the fact that there was no comparable charge in 1959-60 to the 1958-59 expenditure of $184 million for the reduction in the amount of temporary loans to the old age security fund.

[Stage Direction]
(in millions of dollars)
National Health and Welfare!1)	Fiscal year ended March 31	Increase1960 (estimated)	1959	decrease (-)National health branch-	General health grants to provinces	
Government contributions under the Hospital Insurance	46.0	45.9	0.1and Diagnostic Services Act	149.8	54.7	95.1Indian and northern health services	21.0	22.2	-1.2Other	9.5	9.0	0.5m.s	181.8	94.5Welfare branch-	Family allowances	
Reduction in the amount of temporary loans to old age	491.3	474.8	16.5security fund	184.0 30.2	-184.0 0.3Old age assistance	30.5	Blind persons allowances	4.2	4.2 15.3	Disabled persons allowances	16.1	0.8Unemployment assistance	36.1	23.9	12.2Other	3.2	3.1	0.1681.4	735.5	-154.1Administration and general	1.9	1.8	0.1809.6	869.1	-59.5
<'>
Excluding civil defence costs of $3.7 million in 1959-60 and $3.8 million in 1958-59.
General health grants to provinces
General health grants to the provinces for assistance in hospital construction, general health services and the control of diseases are estimated to be $46 million in 1959-60, approximately the same as in 1958-59.
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[Stage Direction]
(in millions of dollars)
General Health Grants	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
1.0	0.9	0.11.4	1.9	-0.50.3	0.4	-0.11.6	1.7	-0.113.2	15.9	-2.715.9	11.8	4.12.3	2.4	-0.12.6	3.0	-0.43.5	3.5	4.1	4.3	-0.20.1	0.1	
46.0	45.9	0.1
Hospital insurance and diagnostic services
The Hospital Insurance and Diagnostic Services Act, Statutes of 1957, authorized contributions by Canada in respect of programmes administered by the provinces, providing hospital insurance and laboratory and other services in aid of diagnosis. Payments for 1959-60 are estimated at $150 million compared with $55 million in 1958-59. The increase of $95 million was due mainly to the fact that during the previous fiscal year no province had participated in the plan for a full year whereas in 1959-60 seven provinces had participated for a full year and two provinces for a partial year. The effective date of each agreement is as follows:-July 1, 1958 for Newfoundland, Manitoba, Saskatchewan, Alberta and British Columbia; January 1, 1959 for Nova Scotia and Ontario; July 1, 1959 for New Brunswick; and October 1, 1959 for Prince Edward Island.

[Stage Direction]
(in millions of dollars)
Hospital Insurance and Diagnostic Services	Fiscal year ended March 31		Increase
	I960 (estimated)	1959	
Newfoundland	4.7	2.9	1.8Nova Scotia	8.1	1.6	6.50.4	0.44.4	4.4Ontario	71.0	13.1	57.9Manitoba	12.0	7.1	4.9Saskatchewan	13.5	8.4	5.1Alberta	15.6	8.8	6.8British Columbia	20.1	12.8	7.3149.8	54.7	95.1
Family allowances
Family allowances are payable in respect of all children under sixteen resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada a year before an allowance is payable.

The Budget-Appendix
The monthly allowance is $6 if the child is under 10 years and $8 in the age group 10 to 15. Children of immigrants receive family assistance of $5 per month during their first year of residence in Canada from the Department of Citizenship and Immigration if during that period they are under sixteen years of age.
Family allowance payments in 1959-60 amounted to $491 million and represented 9 per cent of total expenditures. The increase of $17 million over the previous year reflected the increase in the number of children in the eligible age groups.
TABLE 26 (in millions of dollars)
Family Allowance Payments	Fiscal year ended March 31		Increase
	1960 (estimated)	1959	
Newfoundland	15.6	15.2	0.4Nova Scotia	20.9	20.5	0.4Prince Edward Island	3.1	3.0	0.1New Brunswick	18.6	18.2	0.4Quebec	150 6	146 3	4 3Ontario	156.7	150.2	6.5Manitoba	23.7	23.1	0.6Saskatchewan	25.3	24.8	0.5Alberta	35.7	34.1	1.6British Columbia	40.0	38.4	1.6Northwest and Yukon Territories	1.1	1.0	0.1491.3	474.8	16.5
Temporary loans to the old age security fund
In 1959-60 payments of $574 million out of the fund exceeded receipts of $550 million resulting in a deficit of $24 million which was covered by temporary loans by the Minister of Finance. In the budget speech of April 9, 1959 the Minister stated that since provision was being made for the necessary revenues (by increases in the old age security tax rates) to bring the fund into balance over the next two or three years he did not propose to treat the 1959-60 deficit as a budgetary charge in that year but to carry it forward into 1960-61.
Old age assistance, disabled persons allowances, blind persons allowances and unemployment assistance
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $55 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the Act may receive a pension of $55 per month from the federal government out of the old age security fund.) Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances of not more than $55 per month to blind persons in need 18 years of age or over by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $55 per month for allowances to disabled persons in need 18 years of age or over. In 1959-60 payments of $30 million for old age assistance and $4 million for blind persons allowances were approximately the same as in 1958-59 while payments of $16 million in respect of disabled persons allowances were $1 million higher than in 1958-59.
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Under the Unemployment Assistance Act the federal government contributes up to 50 per cent of the cost of unemployment assistance paid by the provinces, subject to certain deductions as set out in the Act. All provinces have now signed agreements with the federal government. There was an increase of $12 million in these contributions over those for the previous year.
TABLE 27 (in millions of dollars)
Federal Share of Old Age Assistance, Disabled Persons Allowances, Blind Persons Allowances and Unemployment Assistance	Fiscal year ended March 31, 1960 (estimated)			
Old age assistance	Disabled persons allowances	Blind persons allowances	Unem- ployment assistance1.7	0.3	0.2	3.51.6	0.7	0.4	0.70.2	0.2	(i)	0.11.8	0.6	0.4	0.310.7	8.8	1.5	7.36.8	3.7	0.9	12.71.6	0.4	0.2	2.41.8	0.4	0.2	1.81.9	0.5	0.2	2.02.3	0.5	0.2	5.30.1	(i)	(1)	(1)
30.5	16.1	4.2	36.1
(') Less than $50,000.
National Research Council
Expenditures of the National Research Council amounted to $31 million in 1959-60, $6 million higher than for 1958-59. Increases of $2 million in scholarships and grants in aid of research, $2 million in construction or acquisition of buildings, works, land and equipment, and $1 million in salaries and operating expenses were the main factors in this increase.
In addition, under the Queen Elizabeth II Canadian Research Fund Act, 1959, an amount of $1 million was paid to The Queen Elizabeth II Canadian Fund to aid in Research on the Diseases of Children.
National Revenue
Expenditures of the Department of National Revenue were $69 million in 1959-60, approximately the same as in 1958-59.
TABLE 28 (in millions of dollars)
National Revenue	Fiscal year ended March 31		Increase or decrease (-)
	I960 (estimated)	1959	
37.3	37.0	0.331.7	31.6	0.10.2	0.2	
69.2	68.8	0.4
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs and National Resources in the fiscal year 1959-60 were $81 million, an increase of $16 million over the total for 1958-59.

The Budget-Appendix
The main increases in expenditures of this department were in the northern administration and lands branch and in the national parks branch. The increase of $12 million in the northern administration and lands branch was due mainly to increases of $7 million in contributions to the provinces to assist in the development of roads leading to resources, $3 million in operation and maintenance in the Northwest Territories and $2 million for construction in the Yukon Territory. Outlays for the national parks branch increased by $3 million due to higher expenditures for the national parks and historic sites services.
TABLE 29 (in millions of dollars)
Northern Affairs and National Resources	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
National parks branch	26.0	22.9	3.1Water resources branch	2.3	2.4	-0.1Northern administration and lands branch	39.5	27.3	12.2Forestry branch	6.8	7.3	-0.5Canadian government travel bureau	2.3	2.2	0.1Administration and general	4.5	3.1	1.481.4	65.2	16.2
Post Office
Gross expenditures of the Post Office Department for 1959-60 were $194 million, an increase of $10 million over the 1958-59 outlay of $184 million.
Remuneration of postmasters and staffs at revenue and semi-staff offices, commissions at sub-offices and certain other authorized disbursements are paid from revenue. These payments, included in the total of $194 million, amounted to $26 million in 1959-60, approximately the same as for 1958-59.

[Stage Direction]
(in millions of dollars)
Post Office	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Charged to budgetary expenditure- Operations-salaries and other expenses of staff post offices, district offices and railway mail services; and supplies and equipment and other items for	102.9	97.2	5.7 4.0Transportation-movement of mail by land, air and	60.1	56.1	2.8	2.8	1.8	1.7	0.1167.6	167.8	9.8Charged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-	26.4	25.8	0.6
194.0	183.6	10.4
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Public Works
Expenditures of the Department of Public Works for 1959-60 amounted to $215 million, compared with $226 million for 1958-59, a decrease of $11 million.
Increases of $4 million in development engineering services and $1 million in outlays for the National Capital Commission were more than offset by decreases of $15 million in public buildings-construction and services and $3 million in payments to Central Mortgage and Housing Corporation in respect of defence housing administration, housing research and slum clearance, and reimbursement of losses sustained as a result of the operation of Federal-Provincial housing projects.
Outlays for the National Capital Commission were shown in previous years with Privy Council expenditures. For purposes of comparison the 1958-59 costs have been included with Public Works expenditures in the following table.
TABLE 31 (in millions of dollars)
Public Works	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Public buildings-construction and services- Acquisition, construction and improvements of public buildings-			
Ottawa	16.0	22.4	-6.4Other centres in Canada	27.8	37.5	-9.70.4	0.4Maintenance and operation	42.1	41.3	0.8Furniture and furnishings	2.5	2.2	0.30.2	0.2	89.0	10S.6	-H.6Harbours and rivers engineering services- Acquisition, construction and improvements of harbour	and river works	30.8	31.1	-0.3Dredging	4.3	3.9	0.4General	0.8	1.3	-0.5S5.9	S6.S	-0.4Development engineering services- Trans-Canada Highway division- Contributions to the provinces under the terms of	the Trans-Canada Highway Act	52.0	51.1	0.9Trans-Canada Highway through national parks	12.0	9.9	2.1General	3.3	1.9	1.467. S	62.9	4-4Housing	2.1	5.2	-3.1National Capital Commission^	6.3	4.9	1.4Administration and general	14.6	13.2	1.4215.2	226.1	-10.9
Formerly reported under Privy Council expenditures.
Expenditures for "Public buildings-construction and services" declined by $15 million during 1959-60 due mainly to reductions in outlays for the acquisition, construction and improvement of public buildings of $6 million in Ottawa and $10 million in other centres in Canada partly offset by $1 million in maintenance and operation costs.
The increase of $4 million in the expenditures of the development engineering services was due mainly to increases of $1 million in contributions to the provinces under the terms of the Trans-Canada Highway Act, $2 million in increased expenditures in connection with the Trans-Canada Highway through national parks and $1 million in general services.

The Budget-Appendix
Royal Canadian Mounted Police
Expenditures for the Royal Canadian Mounted Police amounted to $53 million for 1959-60, $2 million more than the total spent in 1958-59.
Payments as shown in the table represent gross expenditures; payments received from the provinces and municipalities for police services amounting to $10 million were credited to revenue.
Increased expenditures of $5 million for the land, air and training divisions were offset partially by decreases of $3 million in headquarters administration and national police services and smaller decreases in marine services and the government contribution to the Royal Canadian Mounted Police pension account.

[Stage Direction]
(in millions of dollars)
Royal Canadian Mounted Police	Fiscal year ended March 31	IncreaseI960 (estimated)	1959	decrease (-)40.7	36.1	4.62.1	2.6	-0.5Government contribution to the Royal Canadian Mounted	1.4	1.6	-0.22.9	2.7	0.2Headquarters administration and national police services..	6.2	8.7	-2.553.3	51.7	1.6
Trade and Commerce
Expenditures of the Department of Trade and Commerce totalled $67 million for 1959-60, an increase of $2 million over the previous year.
The main item responsible for this increase was the $4 million increase in payments of carrying costs of temporary wheat reserves, partially offset by the fact that there was no comparable charge in 1959-60 to the $2 million expenditure in 1958-59 to the Canadian Wheat Board on account of the loss on oats for the crop year 1956-57.

[Stage Direction]
(in millions of dollars)
Trade and Commerce	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
42.3	38.4	3.96.1	6.2	-0.12.1	-2.18.5	8.2	0.30.2	0.22.4	2.2	0.23.6	3.5	0.14.3	5.0	-0.7
67.4	65.6	1.8
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Transport
Expenditures of the Department of Transport for 1959-60 amounted to $298 million, an increase of $9 million over the total of $289 million in 1958-59.
TABLE 34 (in millions of dollars)
Transport	Fiscal year ended March 31		Increase or decrease (-)
	I960 (estimated)	1959	
Air services-			
Civil aviation branch	74.1	74.7	-0.6Meteorological branch	13.5	11.8	1.7Telecommunications branch	30.0	25.7	4.3Administration	4.1	3.2	0.9121.7	115.4	6.3Canal services	7.1	9.7	-2.6Marine services	54.6	51.8	2.8Railway and steamship services-	Maritime Freight Rates Act-	Difference between tariff and normal tolls	14.3	13.1	1.2Freight Rate Reduction Act	9.2	9.2Construction and acquisition of auto-ferries	2.4	0.2	2.2Other	1.4	1.6	-0.227.3	14.9	12.4Board of Transport Commissioners-	Maintenance of trackage	7.0	7 0	Railway grade crossing fund	15.0	15 0	Administration and general	1.2	1.1	0.123.2	23.1	0.1Canadian Maritime Commission	6.8	5.9	0.9Crown Corporations-	Deficits-	Canadian National Railways	43.6	51.6	-8.0Other	8.6	9.2	-0.6Non-active advances-National Harbours Board	2.1	4.3	-2.254. S	65.1	-10.8Administration and general	3.4	2.9	0.5298.4	288.8	9.6
Outlays for air services increased by $6 million during 1959-60 attributable primarily to expanded services for aviation and include increases of $4 million in expenditures of the telecommunications branch and $2 million in increased costs of the meteorological branch.
Canal services expenditures decreased by $3 million during the year due mainly to the transfer of the Welland Canal to The St. Lawrence Seaway Authority, and to elimination in full or in part of canals due to the opening of the Seaway. Outlays for marine services increased by $3 million due to expanded northern supply operations.
Expenditures of railway and steamship services increased by $12 million due mainly to payments of $9 million under the Freight Rate Reduction Act for which there was no comparable charge in 1958-59 and increases of $2 million in expenditure towards construction and acquisition of auto-ferries and $1 million m payments under the Maritime Freight Rates Act.
The payment in respect of the Canadian National Railways deficit for 1959 was $8 million less than the comparable figure for 1958, and the non-active advances to the National Harbours Board were $2 million less than in the previous fiscal year.

The Budget-Appendix
Veterans Affairs
Expenditures of the Department of Veterans Affairs amounted to $290 million in 1959-60, an increase of $1 million over the 1958-59 total of $289 million.
An increase of $3 million in war veterans allowances and other benefits was offset partially by decreases of $1 million in pensions for disability or death and $1 million in expenditures in respect of the Soldier Settlement and Veterans Land Acts.

[Stage Direction]
(in millions of dollars)
	Fiscal year ended March 31		Increase
1960 (estimated)	1959	decrease (-)Pensions for disability or death	149.6	150.7	-1.1Treatment and welfare services	58.8	59.4	-0.6War veterans allowances and other benefits	63.4	60.4	3.0War services gratuities and re-establishment credits	2.8	2.2	0.6Soldier Settlement and Veterans Land Acts- Administration and general	5.2	5.4	-0.2Provision for reserve for conditional benefits, Veterans Land Act	3.8	4.4	-0.6Departmental, district and pensions administration and miscellaneous payments	6.4	6.3	0.1290.0	288.8	1.2
All other departments
Expenditures of the departments not dealt with in preceding sections amounted to $30 million, a decrease of $1 million from the 1958-59 total.
The most significant change in the expenditures of these departments was the reduction of nearly $3 million in the expenses of the Office of the Chief Electoral Officer due to the 1958-59 figure having included part of the costs of the last federal election. However, this decrease was offset partly by increases in expenditures of other departments.
TABLE 36 (in millions of dollars)
All Other Departments	Fiscal year ended March 31	Increase1960 (estimated)	1959	decrease (-)0.9	0.8	0.10.2	0.1	0.10.3	3.2	-2.93.6	3.5	0.10.4	0.4	1.3	1.2	0.17.8	7.6	0.24.6	4.3	0.30.8	0.6	0.2«>
1.4	1.1	0.30.7	0.7	3.5	3.5	4.7	4.4	0.3
30.2	31.4	-1.2
WDoes not include $1.2 million in respect of civil defence.
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4.	SUMMARY OF ASSETS AND LIABILITIES OF CANADA AS AT MARCH 31, 1960
The balances of the asset and liability accounts at March 31, 1960, the comparable balances at March 31, 1959, and the changes in each category during 1959-60 are shown in the following table:

[Stage Direction]
Summary of Assets and Liabilities of Canada
(in millions of dollars)
	Balance at March 31		Increase or decrease (-)
	I960 (estimated)	1959	
Liabilities			
Current and demand liabilities	1,139.2	952.5	186.7Deposit and trust accounts	214.1	237.9	-23.8Annuity, insurance and pension accounts	3,569.1	3,301.9	267.2Undisbursed balances of appropriations to special accounts...	89.7	83.4	6.3Deferred credits	89.1	81.4	7.7Suspense accounts	8.5	18.7	-10.2Unmatured debt	15,886.8	15,574.1	312.7Total liabilities	20,996.5	20,249.9	746.6Assets	Current assets	854.5	910.9	-56.4Advances to exchange fund account	1,964.0	1,995.0	-31.0Sinking fund and other investments held for retirement of	unmatured debt	84.3	83.2	1.1Loans to, and investments in, Crown corporations	3,471.6	3,271.1	200.5Loans to national governments	1,414.4	1,449.0	-34.6Other loans and investments	939.0	683.1	255.9Securities held in trust	19.3	20.7	-1.4Deferred charges	153.1	147.4	5.7Unamortized portion of actuarial deficiencies-	Permanent services pension account	326.3	326.3	Superannuation account	139.0	139.0	Suspense accounts	2.0	0)	2.0Capital assets	(2)	(2)	Inactive loans and investments	93.5	92.2	1.3Total assets	9,461.0	9,117.9	343.1Less reserve for losses on realization of assets	-546.4	-546.4	Net assets	8,914.6	8,571.5	343.1Net debt (excess of liabilities over net assets)	12,081.9	11,678.4	<3>403.5
(1>Less than $50,000.
(2)Shown at nominal value of $1.
^Reflecting the budgetary deficit of $406 million less an adjustment of $2 million in respect of prior years transactions.
A. Changes In Principal Liability Classifications During 1959-60
The gross liabilities of the government increased by $747 million during the fiscal year. The main changes were increases of $313 million in unmatured debt, $267 million in annuity, insurance and pension accounts and $187 million in current and demand liabilities.

The Budget-Appendix

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Current and demand liabilities
This category consists of obligations of the government payable currently or on demand. The principal changes were increases of $176 million in noninterest bearing notes, $11 million in accounts payable, $14 million in interest due and outstanding and $16 million in interest accrued and decreases of $7 million in matured debt and $2 million in outstanding money orders.
The increase of $176 million in non-interest bearing notes was due to the increase in Canada's quota to the international monetary fund in October 1959. A more detailed explanation will be found under the asset category "Other loans and investments".
Accounts payable are those payments made in April in accordance with section 35 of the Financial Administration Act but which are applicable to the previous fiscal year.
TABLE 38 (in millions of dollars)
Current and Demand Liabilities	Balance at March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Outstanding treasury cheques	227.3	247.3	-20.0Accounts payable	
Non-interest bearing notes payable to the international monetary fund and the international bank for reconstruction	267.0	256.4	10.6and development	381.8	205.8	176.0Matured debt outstanding	22.0	28.7	-6.7Interest due and outstanding	70.2	56.2	14.0Interest accrued	140.4	124.9	15.5Post office-outstanding money orders	30.0	32.4	-2.4Other current liabilities	0.5	0.8	-0.31,139.2	952.5	186.7
The Budget-Appendix
During 1959-60 a change was made in the system of recording Post Office accounts. In prior years these accounts were recorded in one account named "Post Office-net liability for money orders, etc." which was maintained under the current and demand liability category. In 1959-60 this account was distributed to the following accounts:-"Outstanding money orders" under the current and demand liability category, "Philatelic trust account" under the deposit and trust category and "Cash on hand and in transit" and "Departmental working capital" under the current asset category. For purposes of comparison the corresponding balances for the previous year are shown in the appropriate tables.
Deposit and trust accounts
In these accounts are recorded sundry funds deposited with the Receiver General of Canada or held in trust for various purposes. The net decrease of $24 million was due mainly to a decrease of $18 million in the account "United States-S.A.C. bases", which records funds received from the United States Government for the purpose of facilitating the placing of contracts by the R.C.A.F. on behalf of the U.S.A.F.

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(in millions of dollars)
Deposit and Trust Accounts	Balance at March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Army benevolent fund	6.9	7.2	- 0.3Canadian Pension Commission-administration trust fund	10.3	9.1	1.218.2	18.2	Contractors securities-sundry departments-	Cash	18.0	19.9	- 1.9Bonds	11.5	11.8	- 0.3Certified cheques	1.5	l.S	- 0.3S1.0	S3.S	- 2.59.2	9.2	Emergency gold mining assistance-holdbacks	2.5	1.9	0.6Indian trust funds	29.0	28.6	0.4Korean operations pool	6.8	7.4	- 0.6National Harbours Board-special accounts	3.2	6.2	- 3 0Post office savings bank	31.8	34.1	- 2.3Soldier settlement and veterans land act trust account-general	3.0	2.8	0.2United States-S.A.C. bases	23.9	42.2	-18.35.0	5.0	Instalment purchase of bonds, public service	9.7	10.7	- 1.023.6	21.8	1.8214.1	237.9	-23.8
Annuity, insurance and pension accounts
This category records the amounts to the credit of the various annuity, insurance and pension accounts.
There was a net decrease in the unemployment insurance fund during the year of $126 million. The balance at March 31, 1960 was $384 million compared with $510 million at March 31, 1959. Benefit payments were $409 million and receipts were $283 million consisting of contributions by employers and employees of $227 million, government contributions of $46 million and income from investments of $10 million. Benefit payments were $70 million lower than the $479 million paid out in 1958-59.

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The Budget-Appendix
TABLE 40 (in millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Unemployment insurance fund		383.8 -363.8	509.9 -488.9	-126.1 125.1
			
			
	20.0 1,157.5 1,229.9 1,056.2 105.5	21.0 1,105.8 1,136.0 942.3 96.8	-1.0 51.7 93.9 113.9 8.7
			
			
			
			
	3,569.1	3,301.9	267.2
The government annuities account increased by $52 million reflecting the amount by which premium receipts of $57 million, interest credited to the account by the government of $43 million and a small amount required to maintain the reserve exceeded payments of $48 million to annuitants and beneficiaries.
The increase of $94 million in the superannuation account was due mainly to the government's contribution of $40 million equal to the estimated current and prior service payments of individuals in 1958-59 and $47 million interest credited to the account. The remainder of the increase was due to the excess of employees' current and prior service contributions of $40 million and miscellaneous receipts of $1 million over benefit payments of $34 million.
The permanent services pension account increased by $114 million. The increase reflected the government's contribution of $52 million which is made at the rate of one and two-thirds times the current and prior service contributions, interest on the account of $40 million, and contributions of $32 million by permanent services personnel for current and prior years service less payments of $10 million from the account.
Old age security fund
Under the Old Age Security Act pensions of $55 per month are paid, without a means test, from the old age security fund to all eligible persons seventy years of age and over. Payments from the fund during the fiscal year were $574 million while credits to the fund from the tax on personal incomes (maximum tax $90), the tax on corporation profits and the sales tax totalled $550 million. Temporary loans amounting to $24 million were required to cover the deficit resulting from these transactions during 1959-60.
In 1958-59 payments were $559 million, receipts were $375 million and the deficit in the fund covered by temporary loans of $184 million was charged to 1958-59 budgetary expenditure by authority of parliament.
The increase of $175 million in 1959-60 in receipts from the old age security taxes was due to the increases in the rates announced in last year's budget speech. These were: an increase from 2 per cent to 3 per cent in the tax on personal incomes with a maximum contribution of $90 (previously $60) effective July 1, 1959; an increase from 2 per cent to 3 per cent in the tax on corporate incomes effective January 1, 1959; and an increase from 2 per cent to 3 per cent in the tax on sales effective April 10, 1959.
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The Budget-Appendix
TABLE 41 (in millions of dollars)
Fiscal year ended March 31
Old Age Security Fund	1956	1957	1958	1959	1960 (estimated)Tax receipts- Sales tax	
Personal income tax	
Corporation income tax	
Total tax receipts	
Pension payments	
Excess of payments over receipts	160.4 102.5 53.3	179.3 125.0 67.3	175.8 135.0 60.7	173.6 146.4 55.3	273.0 185.6 91.3316.2 -366.2	371.6 -379.1	371.5 -473.9	375.3 -559.3	549.9 -574.0-50.0 -63.3 63.3 50.0	-7.5 -50.0 56.0 1.5	-102.4 -1.5 103.9	-184.0	-24.1Appropriation by Parliament- Charged to budgetary expenditure	
Temporary loan from the Minister of Finance to	184.0	24.1
TABLE 42 (in millions of dollars)
	Fiscal year ended March 31		Increase or decrease (-)
Old Age Security Payments	I960 (estimated)	1959	11.2	11.0	0.227.0	26.8	0.24.8	4.8	19.9	19.6	0.3120.0	117.0	3.0208.2	203.3	4.935.1	34.0	1.136.0	35.1	0.938.2	36.5	1.773.2	70.8	2.40.4	0.4	
574.0	559.3	14.7
Undisbursed balances of appropriations to special accounts
This category records the undisbursed balances of appropriations to special accounts for which moneys have been appropriated by parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made.
The increase of $5 million in the railway grade crossing fund represented the amount by which the $15 million credited to the fund and charged to budgetary expenditure exceeded disbursements from the fund.
In 1959-60 an amount of $50 million was credited to the Colombo plan fund and charged to budgetary expenditure but as disbursements were approximately the same there was no significant change in the balance at March 31, 1960 from the balance at March 31, 1959.
The balance in the national capital fund was $2 million at March 31, 1960 compared with $1 million at March 31, 1959. The increase represented the amount by which the $4 million credited to the fund and charged to budgetary expenditure exceeded disbursements of $3 million.

The Budget-Appendix

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(in millions of dollars)
Undisbursed Balances or Appropriations to Special Accounts	Balance at March 31		Increase or decrease (-)
	1960 (estimated)	1959	
60.1	59.9	0.2National capital fund	1.9	0.9	1.027.6	22.5	5.10.1	0.1	
89.7	83.4	6.3
Deferred, credits
This category records the amounts of deferred interest on loans and advances to certain Crown corporations and national governments and other deferred payments due the government. These are contra accounts to corresponding items under "Cash-in blocked currencies", "Loans to, and investments in, Crown corporations ", "Loans to national governments" and "Other loans and investments". Further explanations are given under these categories.

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(in millions of dollars)
Deferred Credits	Balance at March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Agreements of sale of Crown assets	13.6	16.4	-2.8Crown Assets Disposal Corporation	5.8	6.2	-0.4Deferred interest-	The St. Lawrence Seaway Authority	24.4	12.8	11.6United Kingdom Financial Agreement Act, 1946	44.2	44.2	1 1	1 8	0 789.1	81.4	7.7
Balances receivable under agreements of sale of Crown assets are set up as contra accounts to corresponding items under "Other loans and investments". The net decrease of $3 million during the year was due to the receipt of payments on outstanding agreements having exceeded the total amount of new agreements set up in the account.
The increase of $12 million in deferred interest in respect of The St. Lawrence Seaway Authority represented interest due to the government during 1959-60 on outstanding loans to the corporation.
Suspense accounts
These accounts consist of balances where some uncertainty as to disposition exists.
The "Paylist deductions" account consists of deductions for Canada savings bonds, income tax, etc., which are credited to this account pending transmittal to the Department of Finance or to the department concerned.
The "Replacement of materiel" account established by section 11 of the National Defence Act is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited
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The Budget-Appendix with disbursements representing amounts paid for the procurement of replacement materiel. During 1959-60 disbursements exceeded credits to the account by $10 million.
TABLE 45 (in millions of dollars)
Suspense Accounts	Balance at March 31		Increase or decrease (-)
	I960 (estimated)	1959	
	0.2 3.7 1.5 3.1	0.1 13.9 1.5 3.2	0.1 -10.2
Replacement of materiel, sec. 11, National Defence Act				
			-0.1
			
	8.5	18.7	-10.2
XJnmatured debt
The unmatured debt of Canada at the close of 1959-60 amounted to $15,887 million compared with $15,574 million at the close of the previous fiscal year. Debt payable in Canada increased by $313 million. There was no change in debt payable in London and New York.
In the year under review, unmatured debt obligations payable in foreign currencies have been stated in Canadian dollars converted at the rate of $2.80 for the pound sterling and par for the U.S. dollar.
B. Changes In Principal Asset Classifications During 1959-60
The total of assets increased during 1959-60 by $343 million. The principal changes were increases of $201 million in loans to Crown corporations and $256 million in other loans and investments and decreases of $56 million in current assets, $35 million in loans to national governments and $31 million in advances to the exchange fund.


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0
1953	1954	1955	1956	1957
* Estimated


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The Budget-Appendix
Current assets
There was a decrease of $56 million in this category during the fiscal year, due to decreases of $76 million in cash and $22 million in the securities investment account which were partly offset by increases of $39 million in departmental working capital advances and revolving funds and $3 million in moneys received after March 31.

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(in millions of dollars)
Current Assets	Balance at March 31		Increase or decrease (-)
	I960 (estimated)	1959	
	397.8	473.5	-75.7
	2.8	2.8	
	167.0	167.0	
Departmental working capital advances and revolving funds-	116.4	67.1	49.320.0	30.2	-10.2Miscellaneous departmental imprest and advance ac-	22.5	22.5	31.7	32.3	-0.6190.6 76.3	162.1 98.0	S8.B -21.7Other current assets-moneys received after March 31 but	20.0	17.5	2.5
854.5	910.9	-56.4
Cash in current and special deposits decreased by $76 million and moneys received after March 31, 1960 is estimated to increase by $3 million.
"Post Office-cash on hand and in transit" is a new account set up in 195960. For purposes of comparison the 1958-59 balance has been recorded in the above table. The balance was previously included in the current and demand liability account "Post Office-net liability for money orders, etc.".
The increase of $39 million in working capital advances and revolving funds was due to an increase of $49 million in the agricultural commodities stabilization account partly offset by a decrease of $10 million in the defence production revolving fund.
Advances to the exchange fund
Advances during the year to the exchange fund account to finance the purchase of gold and foreign exchange amounted to $119 million and repayments were $150 million, reducing outstanding advances to $1,964 million at March 31, 1960.
Sinking fund and other investments held for retirement of unmatured debt
There was an increase of $1 million in this category during the fiscal year bringing the balance to $84 million at March 31, 1960.
Loans to, and investments in, Crown corporations
These loans and investments increased by $201 million during 1959-60 bringing the balance m this category to $3,472 million at March 31, 1960.
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The Budget-Appendix

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(in millions of dollars)
Loans to, and Investments in, Crown Corporations
Atomic Energy of Canada Limited	
Bank of Canada	
Canadian Arsenals Limited	
Canadian Commercial Corporation	
Canadian National Railways	
Canadian National (West Indies) Steamships Limited Canadian Overseas Telecommunication Corporation...
Central Mortgage and Housing Corporation	
Eldorado Mining and Refining Limited	
Export Credits Insurance Corporation	
Farm Credit Corporation(1)	
National Capital Commission	
National Harbours Board	
Northern Canada Power Commission	
Northern Ontario Pipe Line Crown Corporation....
Polymer Corporation Limited	
The St. Lawrence Seaway Authority-
Loans	
Deferred interest	
Trans-Canada Air Lines	
Other Crown Corporations	
Balance at March 31		Increase or decrease (-)
I960 (estimated)	1959	
60.9	58.8	2.1
5.9	5.9	
7.5	7.5	
6.0	4.0	2.01,210.2	1,465.7	-255.51.0	2.8	-1.221.7	13.0	8.71,328.6	1,003.6	325.08.2	8.2	10.0	10.0	117.0	87.2	29.817.8	7.1	10.7161.6	145.6	16.043.1	21.7	21.4121.5	113.5	8.030.0	30.0	293.0	270.0	23.024.4	12.8	11.61.4	2.5	-1.11.2	1.2	3,471.6	3,271.1	200.5
(1>
Formerly the Canadian Farm Loan Board.
Advances to Atomic Energy of Canada Limited, to be covered by obligations or shares of the company, amounted to $2 million during the year.
Loans to the Farm Credit Corporation (formerly the Canadian Farm Loan Board) amounted to $31 million during the year while repayments by the board were $1 million bringing the total advances to $117 million at March 31, 1960.
Loans to Central Mortgage and Housing Corporation during the year amounted to $360 million, of which $351 million was for direct loans by the corporation and $9 million for federal-provincial housing projects. Repayments totalled $35 million of which $32 million was in respect of direct loans, $2 million in respect of loans for federal-provincial housing projects and $1 million in respect of loans for house construction. The net increase for the year of $325 million brought the total loans to the corporation to $1,329 million at March 31, 1960.
Loans to the Northern Ontario Pipe Line Crown Corporation in connection with the construction of the Northern Ontario section of the all-Canadian natural gas pipe line totalled $8 million in 1959-60.
Advances to The St. Lawrence Seaway Authority amounted to $23 million bringing the total loans to $293 million. In addition deferred interest on these loans was increased by $12 million being the amount of interest due on December 31, 1959. A contra item for this amount is included in the liability category "Deferred credits".
In the fiscal year ended March 31, 1960, the government advanced to the Canadian National Railway Company the sum of $167 million for capital purposes and retirement of debt in the hands of the public. Of this amount $6 million was advanced for the Company's Purchase Fund which is operated under the terms of Canadian National Railway Company bonds, guaranteed by the Government of Canada, issued on May 15, 1959, December 15, 1959 and January 1, 1960. During the year ended March 31, 1960, repayment of current and prior years' advances totalled $446 million (of which $441 million was made available through the sale of $450 million of the above-mentioned bonds).

The Budget-Appendix
In addition, to assist the Company to finance further capital expenditure during the fiscal year, the government purchased $22 million of four per cent preferred stock of the Canadian National Railway Company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to three per cent of the gross revenue of the Company.
Further, in the year which ends March 31, 1960, the government provided the Company with temporary loans of $30 million to cover in part the 1959 income deficit. This amount plus temporary loans totalling $14 million made on the same account in the year ended March 31, 1959, brought the total of the loans on account of the 1959 deficit to $44 million which was charged to budgetary expenditure in 1959-60.
In addition, temporary loans of $14 million were made in February 1960 to the Company in respect of its 1960 income deficit.
In summary, the total amount made available to the Company during the year was $233 million and repayments amounted to $489 million. The amount of advances to the Company outstanding at the end of the fiscal year was thus reduced by $256 million.

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(in millions of dollars)
Advances to, and Repayments by, The Canadian National Railways During the Fiscal Year 1959-60	Fiscal year ended March 31		Increase or decrease (-)
	1960 (estimated)	1959	
Advances-			
For the refunding of debt	5.4	44.8	-39.4For capital expenditures	156.1	152.1	4.0For purchase fund	6.3 43.6	6.3 -7.1For interim financing of income deficits	50.7	211.4	247.6	-S6.2Repayments-	Advances for capital purposes	-445.6	-11.1	-434.5Advances for interim financing of income deficits	-43.6	-56.1	12.5-489.2	-67.2	-422.0Excess of advances over repayments or repayments over	advances (-)	-277.8	180.4	-458.2Purchase of 4 per cent preferred stock (C.N.R. Capital	Revision Act, 1952)	22.3	21.3	1.0Transfer of Northwest Communications facilities to C.N.R.	0.3	-0.3Net increase or decrease (-) during the fiscal year in the government's advances to, and investments in, the	Canadian National Railways	-255.5	202.0	-457.5
At March 31, 1959, temporary loans of $2 million were outstanding to the Trans-Canada Air Lines in respect of its 1959 income deficit. During 1959-60 a further advance of $1 million was made. The total amount of $3 million was repaid during the year. In addition $1 million was advanced in respect of its 1960 income deficit.
Other changes included increases of $16 million in loans to the National Harbours Board, $21 million in advances to the Northern Canada Power Commission, $9 million in advances to the Canadian Overseas Telecommunication Corporation, $11 million in loans to the [National Capital Commission, $2 million in advances to the Canadian Commercial Corporation and a decrease of $1 million in loans to the Canadian National (West Indies) Steamships Limited.
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The Budget-Appendix Loans to national governments
These loans totalled $1,414 million at March 31, 1960, a decrease of $35 million during the fiscal year.

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(in millions of dollars)
	Balance at March 31		Increase or decrease (-)
Loans to National Govebnments	1960 (estimated)	1959	Loans to United Kingdom- The United Kingdom Financial Agreement Act, 1946..	1,064.1 44.2	1,080.5 44.2	-16.4t,108.S	1,124.7	-16.4Loans under the Export Credits Insurance Act, Part II-	39.2	41.5	-2.3150.6	159.0	-8.478.0	82.6	-4.62.6	-2.6267.8	285.7	-17.9
Miscellaneous loans and advances

1.5	1.6	-0.1Special loans to finance the purchase of wheat and flour from Canada-	1.5	1.5	33.5	33.0	0.5Netherlands-military relief and currency credits	1.1	1.7	-0.60.7	0.8	-0.1S8.S	38.6	-o.s1,414.4	1,449.0	-34.6
During the fiscal year the United Kingdom government repaid $16 million on the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the principal outstanding at March 31, 1960 to $1,064 million.
Repayments of advances under Part II of the Export Credits Insurance Act to certain foreign countries to assist them in purchasing goods and services in Canada amounted to $18 million during the year reducing the balance at March 31, 1960 to $268 million.
Miscellaneous loans and advances to foreign governments in the amount of $38 million at March 31, 1960 were approximately the same as at March 31, 1959.
Other loans and investments
There was an increase of $256 million in this category during the year bringing the balance to $939 million at March 31, 1960.
In October 1959, action was taken to implement an agreement whereby Canada's quota to the international monetary fund was increased from $300 million U.S. to $550 million U.S. The increase was equivalent to $240 million Canadian, of which $177 million was covered by non-interest bearing notes payable on demand, $3 million by a cash payment and the remainder by a transfer of gold to the fund. A contra entry for $177 million was made to the current liability account "Non-interest bearing notes payable on demand".

The Budget-Appendix

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(in millions of dollars)
Other Loans and Investments	Balance at March 31	IncreaseI960 (estimated)	1959	or decrease (-)Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of- International monetarv fund	528.9	293.3	235.6International bank for reconstruction and development 	70.9	70.9	International finance corporation	3.5	3.5	Working capital advances and loans to international organizations	2.0	2.2	-0.2605.3	369.9	335.4Loans to provincial governments- Alberta	8.4	8.8	-0.4British Columbia	16.3	17.1	-0.8Manitoba	13.8	14.4	-0.6New Brunswick	26.3	29.5	-3.2Nova Scotia	0.1	0.1	Prince Edward Island	0.1	0 1	Saskatchewan	22.1	23.3	-1.287.1	93.3	-6.9Overpayments to provinces arising out of 1952. tax-rental agreements- Manitoba	0.4	0.6	-0.2New Brunswick	0.4	0.6	-0.2Newfoundland	0.2	0.3	-0.1Prince Edward Island	0.5	0.7	-0.2Saskatchewan	0.6	0.9	-0.33.1	3.1	-1.0Veterans Land Act advances	187.8	192.9	-5.1Less reserve for conditional benefits-Veterans Land Act, 1942	-37.4	-41.9	4.5150.4	151.0	-0.6Miscellaneous- Acquisition of land to control properties in the vicinity of main terminal airports	10.4	6.4	4.0Assisted passage scheme (section 69, Immigration Act, R.S.1952)	3.7	5.1	-1.4Balances receivable under agreements of sale of Crown assets	16.0	19.1	-3.1Construction of dock and rail facilities for Steep Rock Iron Mines Limited	1.9	2.1	-0.2Crown Assets Disposal Corporation- Government equity in agency account	5.8	6.2	-0.4Dominion Coal Company Limited	5.7	5.7	Housing projects for Canadian forces	4.5	3.6	0.9Municipal Improvements Assistance Act, 1938.. .	1.8	2.1	-0.3New Westminster Harbour Commission	2.4	2.4	Old age security fund-temporary loans	24.1	24 1Town of Oromocto, New Brunswick	3.9	3.0	0.9Town of Oromocto Development Corporation	1.0	0.5	0.5Yukon Territory	2.4	2.4	Northwest Territories	1.2	0.6	0.6City of Montreal- St. Remi Tunnel	1.2	1.2	Atwater Tunnel	2.0	2.0 0.7Other	6.1	5.4	94.1	65.8	98.3939.0	683.1	255.9
The Budget-Appendix
The accounts of the fund are maintained in terms of United States dollars, therefore, in order to keep Canada's subscription at the required amount, that portion represented by Canadian dollar balances is revalued quarterly and any settlement required is made annually as at April 30, the end of the fund's fiscal year. Revaluation adjustments resulted in a credit of $4 million to Canada.
The net increase of $236 million in the account during the year was due to the increase of $240 million in respect of Canada's quota, partly offset by the revaluation adjustments of $4 million.
Loans to provincial governments were reduced by $6 million and overpayments to certain provinces arising out of the 1952 tax-rental agreements by $1 million during the year.
Advances under the Veterans Land Act decreased by $5 million. The reserve for conditional benefits under the Act decreased by $4 million and consequently the net decrease was $1 million.
Miscellaneous loans and investments increased by $28 million during the year Included in this increase are temporary loans of $24 million made to the old age security fund by the Minister of Finance during 1959-60 to cover the 1959-60 deficit in the fund. In 1958-59 temporary loans to the fund were charged to budgetary expenditure in accordance with Vote 764 of Appropriation Act No. 3,1959. However in the budget speech of April 9, 1959 the Minister stated, that, since provision was being made for the necessary revenues (by increases in the old age security tax rates) to bring the fund into balance over the next two or three years, he did not propose to treat the 1959-60 deficit as a budgetary charge in that year but to carry it forward into 1960-61.
Securities held in trust
This category records the security holdings of various liability accounts. There was a decrease in this account of $1 million, the balance at March 31, 1960, being $19 million.
Deferred charges
This category consists of the residual balance of discounts and commissions, redemption bonuses and conversion premiums on loan flotations that have not been amortized or written off to expenditures.
The balance in the account at March 31, 1960 of $153 million was $6 million more than the balance at March 31, 1959. Costs of new loans issued in 1959-60 and charged to the account were $59 million, of which $16 million was in respect of treasury bill discounts which will be charged to interest on public debt in 1960-61. Credited to the account was $53 million of which $46 million was charged to annual amortization costs and $7 million representing discount on treasury bills sold in 1958-59 was charged to interest on public debt in the 1959-60 budgetary expenditure accounts.
XJnamortized 'portion of actuarial deficiencies
There was no change in the unamortized portion of the actuarial deficiencies in the superannuation and permanent services pension accounts. The balance remained at $465 million.
Suspense accounts
There was an increase of $2 million in this category during the fiscal year, due mainly to revaluation adjustments of Canadian dollar balances in the international monetary fund. A further explanation of these revaluation adjustments is given in the comments on the account "International monetary fund" maintained under the asset category "Other loans and investments".

The Budget-Appendix
Capital assets
Capital assets, which consist of assets of the government such as land, buildings, works and equipment, etc., that are charged to budgetary expenditures at the time of acquisition or construction, are shown on the statement of assets and liabilities at a nominal value of $1.
Inactive loans and advances
This category records loans and advances which are not currently revenue-producing or realizable. Included are the loan of $49 million to China under the Export Credits Insurance Act, loans of $24 million and $7 million made to Roumania and Greece in 1919-20 and 1920-21 and advances of $13 million in respect of the implementation of guarantees (Ming Sung Industrial Company Limited).
Reserve for losses on realization of assets
There was no change in this reserve during the year. The balance at March 31, 1960 remained at $546 million.
C. Increase in Net Debt
The budgetary deficit of $406 million for the fiscal year 1959-60 less an adjustment of $2 million in respect of prior years' transactions increased the net debt of Canada from $11,678 million at March 31, 1959 to $12,082 million at March 31, 1960.
[Stage Direction]
The Budget-Appendix
5. THE CASH POSITION
The government's cash position is affected not only by the budgetary transactions explained in some detail in preceding sections but also by nonbudgetary transactions and changes in the government's outstanding unmatured debt. Although there was a budgetary deficit estimated at $406 million in 1959-60, the government's bank balances decreased by only $76 million during the same period. This decrease was the net result of the budgetary deficit of $406 million, net disbursements of $3 million from non-budgetary transactions and an increase of $333 million in outstanding unmatured debt (after taking into account transactions in the securities investment and sinking fund accounts).
Non-budgetary receipts and disbursements relate to transactions which result in increases or decreases in the government's assets and liabilities and do not appear in what might be called the government's income account for the fiscal year nor do they enter into the calculation of the annual budgetary surplus or deficit. However, in considering the full scope of the government's financial operations and in measuring their effect on the government's cash position and their impact on the economy, non-budgetary as well as budgetary transactions must be taken into account.
The increases or decreases in the government's assets and liabilities have been described in detail in the section entitled "Statement of Assets and Liabilities of Canada". On the assets side the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liabilities side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension funds held or administered by the government.
The following statement summarizes both the budgetary and non-budgetary transactions for 1959-60 and indicates how they, together with the changes in unmatured debt, affected the government's cash position. For purposes of comparison the corresponding figures for 1958-59 are also shown.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
Changes in Cash Position	Fiscal year ended March 31	
	1960 (estimated)	1959
Budgetary transactions-		
	5,301.0	4,754.7
Expenditures	5,706.8	5,364.01. Budgetary deficit (-)	-405.8	-609.3Non-budgetary transactions-	Receipts and credits (excluding unmatured debt transactions)-	Repayments of loans, investments and working capital advances	(net)-	Canadian National Railways	255.5	-199.5Defence production revolving fund	10.2	24.4Exchange fund	31.0	-20.0United Kingdom (1946 loan)	16.4	16.1Export Credits Insurance Act	17.9	18.017.1	42.8S48.1	-118.2Net government annuities account receipts-	Premium receipts less payments to beneficiaries	8.7	17.3Government contribution to maintain reserve	0.3	0.2Interest paid by government	42.7	40.751.7	68.2Net insurance and pension accounts receipts-	Employee contributions less payments to beneficiaries	34.4	32.2Government contributions	93.2	89.4326.3Interest paid by government	88.9	76.9216.5	62I>.&Net sales of investments of unemployment insurance fund	125.1	250.9Non-interest bearing notes payable to the international monetary	176.0	Net increase in other current and demand liabilities	10.7	74.5Net receipts in sundry other accounts	14.3	34.4942.4	824.6Disbursements and charges (excluding unmatured debt transac-	tions)-	Loans, investments and working capital advances (net)-	Agricultural commodities stabilization account	49.3	40.6Canadian Overseas Telecommunication Corporation	8.7	0.3Central Mortgage and Housing Corporation	325.0	335.6Farm Credit Corporation	29.8	22.0National Capital Commission	10.7	5.0National Harbours Board	16.0	20.2Northern Canada Power Commission	21.4	7.3Northern Ontario Pipe Line Crown Corporation	8.0	42.724.1	The St. Lawrence Seaway Authority	23.0	106.1International monetary fund (subscription to capital)	235.6	18.0	65.8769.6	645.6Net payments from unemployment insurance fund	126.1	244.9Net payments from special defence accounts	10.2	216.1Net payments on account of S.A.C. bases (in trust)	18.3	-41.7Net disbursements from sundry other accounts	21.4	423.7945.6	1,488.62. Net amount received from or required for (-) non-budgetary tran-	sactlons	-3.2	-664 03. Overall cash requirements (-1 to be financed by increase in debt or	decrease in cash balances (1+2)	-409.0	-1,273.34. Net increase in unmatured debt outstanding in the hands of the	public-	Unmatured debt	312.7	1,329.0Securities investment account	21.7	-18.2Sinking funds and other investments	-1.1	128.5333.3	1,439.35. Net Increase or decrease (-) in Receiver General bank balances (3+4)	-75.7	166.0
The Budget-Appendix
As the table shows, non-budgetary receipts and credits for 1959-60 (exclud' ing unmatured debt transactions) totalled $942 million while non-budgetary disbursements and charges (also excluding unmatured debt transactions) amounted to $945 million, resulting in a net disbursement of $3 million from nonbudgetary transactions. As there was a budgetary deficit of $406 million, $409 million required financing by an increase in unmatured debt or a decrease in cash balances. In 1958-59 there was a requirement of $664 million for nonbudgetary transactions and this, together with the budgetary deficit of $609 million resulted in $1,273 million having to be financed by an increase in unmatured debt or a decrease in cash balances.
Non-budgetary receipts and credits, as already indicated, totalled $942 million in 1959-60. Repayments of loans, investments and working capital advances were $348 million and included $256 million from the Canadian National Railways, $10 million from the defence production revolving fund, $31 million from the exchange fund, $16 million from the United Kingdom Government on account of the Financial Agreement Act, 1946 and $18 million from other national governments on loans made under Part II of the Export Credits Insurance Act. Net government annuities account receipts were $52 million and net insurance and pension accounts receipts were $216 million. The net proceeds from the sale of investments of the unemployment insurance fund to finance payments out of the fund amounted to $125 million, and net receipts and credits in various other accounts amounted to $201 million.
Non-budgetary disbursements and charges amounted to $945 million. Loans, investments and working capital advances were $770 million and included net advances of $49 million to the agricultural commodities stabilization account in connection with the purchase and sale of commodities, after allowing for a charge of $58 million to budgetary expenditures in respect of the operating loss for 1959-60, $9 million to the Canadian Overseas Telecommunication Corporation for additions and betterments to facilities, $325 million to Central Mortgage and Housing Corporation for the purpose of making housing loans, $30 million to the Farm Credit Corporation for the purpose of making loans to farmers, $11 million to the National Capital Commission for the purpose of acquiring land in the National Capital area not required for immediate use, $16 million to the National Harbours Board for reconstruction and capital expenditures, $21 million to Northern Canada Power Commission for power plant construction in Northern Canada and assistance under the Atlantic Provinces Power Development Act, $8 million to the Northern Ontario Pipe Line Crown Corporation for financing the Northern Ontario section of the natural gas pipe line, $24 million by way of temporary loans to the old age security fund, $23 million to The St. Lawrence Seaway Authority for dredging and construction of the seaway and $236 million in respect of a subscription to the capital of the international monetary fund. Net payments from the unemployment insurance fund were $126 million. Other non-budgetary disbursements and charges amounted to $49 million.
In summary, as budgetary and non-budgetary transactions during 1959-60 required financing in an amount estimated at $409 million, and unmatured debt outstanding in the hands of the public (after taking into account transactions in the securities investment and sinking fund accounts) increased by $333 million, cash balances on deposit with the banks decreased by $76 million.

The Budget-Appendix
6.	THE PUBLIC DEBT
Gross and net debt
During the fiscal year ended March 31, 1960, the gross public debt increased by $747 million to $20,997 million. This increase was made up of increases of $313 million in unmatured debt and $434 million in other liabilities. During the year the government's recorded net assets increased by $343 million. The net debt increased by $404 million to $12,082 million, reflecting the budgetary deficit of $406 million less an adjustment of $2 million in respect of prior years' transactions.


[Stage Direction]
1953	54	55	56	57	56	59	60«

[Stage Direction]
Statement of Public Debt, Unmatuked Debt, Recorded Net Assets and Net Debt of Canada
(in millions of dollars)
As at March 31	Gross Public Debt	Less recorded net assets	Net debt	Increase or decrease (-) in net debt during fiscal yearUnmatured debt	Other liabilities	Total	1956	
1957	
1958	
1959	
1960	(estimated)	15,407.6 14,368.4 14.245.1 15.574.1 15,886.8	3.716.6 3.967.3 4.173.4 4,675.8 5.109.7	19,124.2 18,335.7 18.418.5 20,249.9 20.996.5	7,843.8 7,328.0 7,372.2 8.571.5 8.914.6	11,280.4 11,007.7 11.046.3 11.678.4 12,081.9	17.3 -272.7 38.6 632.1 403.5
TJnmatured debt
The total unmatured debt of Canada at March 31, 1960 was $15,887 million. This was $313 million more than the total at the end of the previous fiscal year. During the fiscal year the government's holdings of its own securities in the sinking fund and in the securities investment account showed a net decrease of $20 million. The net increase in the amount of outstanding unmatured debt in the hands of the public was $333 million.
[Stage Direction]
The Budget-Appendix Summary of security issues and redemptions during the year
During the year ended March 31, 1960, the government issued securities payable in Canadian dollars in the principal amount of $3,033 million (excluding the refunding of treasury bills which mature periodically but including the increase in the issue of treasury bills in the amount of $530 million) and redeemed or converted issues in the amount of $2,720 million. The total amount redeemed or converted was payable in Canadian dollars.
The following is a summarized table of changes in unmatured debt for the last two years:
TABLE 53 (in millions of dollars)
Unmatched Debt	Fiscal year ended March 31	
	I960 (estimated)	1959
	15,574 30 1,425 100 530 8,085 948	14,245 855
New issues-		
		
		1,550 70 2,i75 6,805
		
		
Less		
	3,033	9,280
	- 602 948 -1,170	-	592 -6,805 -	554
		
		
		
	-2,720	-7,951
	313	1,329
		
	15,887	15,574
		
At March 31, 1960, the outstanding unmatured debt payable in U.S. dollars was $150 million, unchanged from March 31, 1959. The amount payable in sterling was $52 million, also unchanged from the previous year.
Net sales of Canada savings bonds, 1959 series, as at March 31, 1960 amounted to $1,425 million and additional sales of Canada savings bonds, 1958 series, during the year were $30 million and redemptions of Canada savings bonds series 4 to 13 (of which series 4 matured on November 1, 1959) were $1,170 million. The net increase during the year for all series was $285 million and the amount outstanding at March 31, 1960 was $3,133 million.
The issue of treasury bills was increased by $530 million during the fiscal year and the amount outstanding at March 31, 1960 was $2,125 million, consisting of $1,375 million in three-month bills, $510 million in six-month bills, $200 million in special one-year bills (due June 10, 1960) and $40 million in special 253 day bills (due June 10, 1960). The March 31, 1959 balance of $1,595 million consisted entirely of three-month bills.

The Budget-Appendix

[Stage Direction]
Redemption of Debt During Fiscal Year Ended March 31, 1960
Maturity	Interest rate	Where payable	AmountJuly 1, 1959	per cent 2i 2i 3 3 3 21 various	Canada Canada Canada Canada Canada Canada Canada	$ 200,000,000 300.000.	000 300.000.	000 250.000.	000 300.000.	000 200.000.	000 1,170,598,000July 1, 1959	October 1, 1959	October 1, 1959	December 15, 1959	April 1, 1960<*	Canada savings bonds, S. 4 to 13	
2,720,598,000
(I) Partial conversion on Feb. 15, 1960.

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New Securities Issued During Year Ended March 31, 1960
Description	Price to govern- ment	Yield at price to government	Total amount issued	RenewalsJ'or conversions included in amount issued	Amount issued for cashIssued to general public- Marketable bonds- July 1, 1959-Apr. 1, 1960 2|%	97.90	5.64	$ 144,000,000	$ 144.000.	000 94,000,000 135.000.	000 125.000.	000 250.000.	000	$July 1, 1959-Dec. 15, 1960 3%	96.10	5.83	94,000,000	n>Oet. 1, 1959-Oct. 1, 1960 5i%	98.75	6.81	135,000,000	Oct. 1, 1959-Mav 1, 1961 3%	94.50	6.71	125,000,000	®Oct. 1, 1959-Oct. 1, 1962 5J%	97.25	6.52	250,000,000	<*Feb. 15, 1960-Oct. 1, 1962 5J%....	99.00	5.91	100,000,000 200,000,000	100,000,000«>Feb. 15, 1960-Apr. 1, 1963 5|%....	98.75	5.94	200,000,000	Canada savings bonds- Nov. 1, 1958-Nov. 1, 1973, 41%...	99.00	30,000,000 1,425,300,000 530,000,000	30,000,000 1,452,300,000 307,798,000Nov. 1, 1959-Nov. 1, 1968 4%....	98.75	Treasury bills (increase)	222,202,000	
3,033,300,000	1,170,202,000	1,863,098,000
<*Exceangeable at the option of the holder, on or before June 30, 1960, into an equal par value of 55% non-callable bonds due October 1, 1975.
«>
Exchangeable at the option of the holder, on or before June 30, 1962, into an equal par value of 51% non-callable bonds due October 1, 1975.
<3>
Exchangeable at the option of the holder, on or before December 31, 1962, into an equal par value of 5\% non-callable bonds due April 1, 1976.
Interest rates
The average interest rate on the government's unmatured debt at March 31, 1960 was 3.96 per cent compared with 3.54 per cent at the end of the previous fiscal year.
Treasury bill yields reflected a trend similar to that of general interest rates. The yield on three-month bills at tender on April 2, 1959 was 4.33 per cent. On August 13, 1959, the yield had risen to a high for the year of 6.16 per cent and was 4.02 per cent at tender on March 17, 1960.
The yield on six-month bills was 5.27 per cent at tender on May 7, 1959 (the first issue during the year). On August 13, 1959 the yield had risen to 6.87 per cent and was 4.26 per cent at tender on March 17, 1960. The yield on the one-year bills issued June 10, 1959 was 5.49 per cent and the yield on the 253 day bills issued October 1, 1959 was 6.80 per cent.
[Stage Direction]
The Budget-Appendix
The following table shows the high and low yields together with the yield on the last issue of three-month bills for the fiscal years ended March 31, 1956 to 1960 inclusive, and for six-month bills for the fiscal year 1959-60:

[Stage Direction]
Treasury Bill Yields at Tender
Fiscal Year Ended March 31	High	Low	Last issueper cent	per cent	per centThree-month bills- 1 Qnfi 	2.64	1.08	2.641QJV7 	3.81	2.40	3.701958 	4.08	2.27	2.271959 	4.30	0.87	4.30I960 	6.16	4.02	(«4.02Six-month bills- I960 	6.87	4.26	<04.26
W At tender on March 17, 1960.
Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities the government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, or as to interest only, and a number of miscellaneous guarantees, the chief of which are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.

The Budget-Appendix
The government's liability under its guarantee of insured loans under the National Housing Act, 1954 was $2,678 million at December 31, 1959, compared with $2,059 million at December 31, 1958.

[Stage Direction]
Summary of Indirect Debt or Contingent Liabilities as at March 31, 1960
Amount outstanding March 31, 1960 (estimated)
[Stage Direction]
Bonds and debenture stocks guaranteed by the government- Railway securities guaranteed as to principal and interest-
Canadian Northern Alberta 3|% due May 4, 1960..
Canadian Northern Ontario 3|% due May 19, 1961.
Grand Trunk Pacific 3% due Jan. 1, 1962	
Grand Trunk Pacific 4% due Jan. 1, 1962	
Canadian National 2f% due Feb. 1, 1963	
Canadian National 5h% due Dec. 15, 1964(1>
Canadian National 3% due Jan. 3, 1966	
Canadian National 2|% due Jan. 2, 1967	
Canadian National 5% due May 15, 1968(1>
Canadian National 2due Sept. 15, 1969	
Canadian National 21% due Jan. 16, 1971	
Canadian National 3|% due Feb. 1, 1974	
Canadian National 2f% due June 15, 1975	
Canadian National 5% due May 15, 1977(1)	
Canadian National 4% due Feb. 1, 1981	
Canadian National 51% due Jan. 1, 1985(1)	
316,856
2,069,805
26,465,130
7,999,074
250.000.	000
199.000.	000
35.000.	000
50.000.	000
57.550.000
70.000.	000
40.000.	000
200.000.	000 6,000,000
87.750.000 300,000,000
99.500.000 1,431,650,865
Railway securities guaranteed as to interest only- Grand Trunk 5% debenture stock, perpetual... Grand Trunk 4% debenture stock, perpetual...
51,190
5,054
56,244
1,431,707,109
Other outstanding guarantees and contingent liabilities-
Deposits maintained by the chartered banks in the Bank of Canada	
Loans maintained by approved lending institutions under National Housing Acts
prior to 1954 Act	
Loans made by lenders under Part IV of the National Housing Act, 1954, for home
extensions and improvements	
Insured loans made by approved lenders under the National Housing Act, 1954...
Guarantees to owners of returns from moderate rental housing projects	
Guarantees under the Export Credits Insurance Act Part I	
Guarantees under the Export Credits Insurance Act Part II	
Loans made by chartered banks under The Farm Improvement Loans Act	
Loans made by chartered banks under The Veterans' Business and Professional
Loans Act	
Loans made by chartered banks under the Prairie Grain Producers' Interim Financing Act, 1956	
Loans made by chartered banks and credit unions under the Fisheries Improvement
Loans Act	
Loans made by chartered banks to Canadian Wheat Board	
Loans made by chartered banks to Canadian Wheat Board pursuant to the Prairie
Grain Provisional Payments Act	
Loans made by chartered banks under the Prairie Grain Advance Payment Act....
650,000,000
Indeterminate
6,415,541
2,671,918,347
Indeterminate
42.000.	000 1,275,000
37,888,033
342,869
114,444
119,168
91.000.	000
690,000
22.000.	000
[Stage Direction]
3,523,763,402
4,955,470,511
The original amounts issued were as follows: 1964 maturity $200,000,000; 1968 maturity $60,000,000; 1977 maturity $90,000,000; 1985 maturity $100,000,000; as at January 31, 1960 these amounts were reduced by $1,000,000, $2,450,000, $2,250,000 and $500,000 respectively through the operation of the Company's Purchase Fund.
79951-0-177

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Annual Changes in Loans and Investments Unmatured Debt
79951-0-1771
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
-	1955-56	1956-57	1957-58	1958-59	Estimated 1959-60$	$	$	$	$Tax Revenubs- Income tax-	1.185.6 1.027.7 66.2 2,279.5	1,400.5	1,499.8	1,353.5	1,555.01,268.3	1,234.8	1,020.6	1,140.0On dividends, interest, etc., going abroad-	76.4 2,745.2	64.3 2,798.9	61.2 2,455.3	75.0 2,770.0Excise taxes-	641.5	717.1	703.2	694.5	737.0Other excise taxes-	76.2	79.7	72.3	59.3	66.08.7 9 2	9.0	0.6	9.8	0.7	126.9	132.3	142.4	148.0	184.05.0	6.1	5.3	5.6	5.60.9	0.8	0.9	0.9	0.9Television sets, radios, tubes and phono-	22.8	19.0	16.9	17.8	18.20.8	5.6	6.1	6.3	6.8	7.52.5	2.6	2.7	3.1	2.92.1	2.3	1.4	1.2	1.50.4	0.5	0.6	0.5	0.7-0.4	-1.1	-0.7	-2.6	-0.3260.7	267.1	249.4	240.6	287.0481.2	549.1	498.1	486.5	529.0Excise duties-	141.9	153.4	171.9	179.6	195.0110.4	121.1	131.7	141.2	147.0(3)	(3)	(3)	(3)	(3)-2.9	-3.1	-3.5	-4.1	-4.0249.4	271.4	S00.1	S16.7	S38.066.6	79.7	71.6	72.6	88.015 5	16.7	1.3	1.6	1.5	1.2	1.0
3,995.7	4,647.9	4,622.8	4,247.4	4,750.0
					
Non-Tax Revenues-	137.4	145.8	152.9	157.5	165.0149.3	206.6	169.4	221.2	239.0Other	117.6	106.2	103.7	128.6	147.0404.3	458.6	426.0	507.3	551.0
4,400.0	5,106.5	5,048.8	4,754.7	5,301.0
					
0>
Excluding tax credited to the old age security fund-	Estimated
1955-56	1956-57	1957-58	1958-59	1959-60Personal income tax	
Corporation income tax	
Sales tax	
102.5 	
53.3 	
160.4	125.0 67.3 179.3	135.0 60.7 175.8	146.4 55.3 173.6	185.6 91.3 273.0
(!) Net after deduction of refunds and drawbacks as well as transfers to the old age security fund. <3>Less than $50,000.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
-	1955-56	1956-57	1957-58	1958-59	Estimated 1959-60$	$	$	%	$Agriculture-	Administration and general	1.6	1.9	1.9	2.0	2.2Agricultural commodities stabilization account	-net operating loss	5.8	5.0	6.0	15.0	57.7Contributions to Alberta, Saskatchewan and	6.041.3	8.4	5.9	17.0	13.2Production and marketing	18.6	18.3	21.0	23.9	27.3Freight assistance on western feed grains....	16.0	17.5	17.5	20.0	23.2Premium on hog carcasses suitable for export	to United Kingdom	5.9	5.7	5.5	6.9	8.2Rehabilitation and reclamation projects	11.9	13.6	12.5	13.5	18.9Research branch	20.0	22.6	24.4	26.2	28.688.2	84.6	94.7	165.8	185. SAtomic Energy	19.0	21.9	21.6	26.1	31.1Auditor General's Office	0.7	0.7	0.8	0.8	0.9Board of Broadcast Governors	0.1	0.2Canadian Broadcasting Corporation-	Grants toward the anticipated operating deficit	and capital expenditures of the radio broad-	casting and television services	6.3	18.3	24.4	50.3	59.6International service	1.8	1.7	1.8	1.9	2.0Payment from the consolidated revenue fund	of amounts equal to taxes collected under the	Excise Tax Act in respect of radio and tele-	23.1	19.3	16.8	9.8	SI.2	S9.S	4s. 0	62.0	61.6Office of the Chief Electoral Officer	0.4	0.2	13.6	3.2	0.3Citizenship and Immigration-	Administration and general	1.5	1.8	1.9	2.1	2.1Immigration branch	8.0	18.6	22.1	14.4	12.1Indian affairs branch	21.5	23.7	27.8	36.4	41.6S1.0	44-1	51.8	52.9	55.8Civil Service Commission	2.4	2.7	3.2	3.5	3.6Defence Production-	Administration and general	9.6	10.5	10.2	12.1	14.4Capital assistance to defence industry	6.5	10.0	4.8	1.8	2.916.1	20.5	15.0	IS. 9	17.SExternal Affairs	13.0	14.4	15.8	16.6	17.1Assistance to other countries and international	organizations	28.8	40.0	40.1	54.5	76.6Membership in commonwealth and interna-	tional organizations	3.1	5.8	4.3	4.4	4.2U-9	60.2	60.2	75.5	97.9Finance-	Administration and general	6.7	8.0	7.6	10.2	10.9Office of the Comptroller of the Treasury	14.9	16.0	17.5	17.9	18.3100.0	Grants to municipalities in lieu of taxes on federal	property	7.0	9.5	17.5	21.9	21.5Grants to universities	5.5	16.0	16.6	25.5	26.1Government contributions with respect to the	superannuation account-	General	31.5	31.6	33.8	37.7	40.0Special	40.8	44.3	
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-continued
(in millions of dollars)
-	1955-56	1956-57	1957-58	1958-59	Estimated 1959-60$	S	$	$	$Finance-concluded	Payments to provinces-	Subsidies	20.3	20.6	20.6	20.6	20.7319.6	365.9	353.3	423.1	484.3Transfer of certain public utility tax receipts	7.9	6.6	7.4	8.7	9.0Transitional grant to Newfoundland	3.1	2.3	1.4	1.0	0.713.6	7.31 4	Provision for reserve for losses on realization	50.0	Public debt charges-	Interest on public debt	492.6	520.2	539.2	606.6	738.2Cost of issuing new loans and annual amorti-	zation of bond discounts and commissions.	21.1	13.4	27.7	40.8	47.3Servicing of public debt	0.6	0.5	0.5	0.6	0.6Reduction in actuarial deficiency in the super-	50.0	0 4	981.2	1,152.8	1,1874	1,228.2	1,424-9Fisheries	12.4	13.8	16.4	17.5	20.2Governor General and Lieutenant	Governors	0.4	0.4	0.4	0.4	0.4Insurance	0.5	0.5	1.2	1.2	1.3Justice	6.6	7.0	7.2	7.6	8.2Office of the Commissioner of Penitentiaries...	10.7	12.0	12.7	16.7	20.517.8	19.0	19.9	24.8	28.7Labour	9.0	9.5	10.2	14.2	22.7Government annuities-amount required to	1.2	0.2	0.2Unemployment Insurance Act, 1940-	Administration and general	26.6	29.0	32.5	35.3	35.9Government contribution	33.9	37.4	37.8	37.1	45.569.5	75.9	81.7	86.8	104.8Legislation-	House of Commons	5.1	5.4	5.0	5.6	5.7Library of Parliament	0.3	0.3	0.3	0.3	0.3Senate	1.4	1.5	1.5	1.7	1.86.8	7.2	6.8	7.6	7.8Mines and Technical Surveys	17.6	17.5	18.7	22.7	24.3Dominion Coal Board	11.3	9.7	8.8	11.3	17.6Emergency gold mining assistance	9.3	8.7	8.6	9.8	13.288.2	85.9	86.1	48.8	55.1National Defence-	Defence forces, Army, Naval and Air services.	1,464.9	1,504.1	1,415.0	1,222.7	1,390.5Defence research and development	64.3	69.3	78.7	74.4	40.1Government contributions with respect to	permanent services pension account	40.1	46.3	49.7	49.5	51.8Mutual aid to NATO countries	175.0	133.6	118.5	70.7	14.7Pensions-payments under defence services	pension act	5.3	5.6	5.8	6.0	6.4Other	0.4	0.5	0.8	1.4	2.61,750.0	1,7594	1,668.5	1,424.7	1,506.1National Film Board	4.1	5.0	4.0	4.3	4.6National Gallery of Canada	1.3	0.4	0.6	0.6	0.8
The Budget-Appendix
STATEMENT ON EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THEsLAST FIVE FISCAL YEARS-continued
(in millions of dollars)
-	1955-56	1956-57	1957-58	1958-59	Estimated 1959-60$	$	$	$	$National Health and Welfare-	1.3	1.5	1.5	1.8	1.92.4	3.7	4.0	3.8	<*3.7National health branch-	33.5	36.3	34.6	45.9	46.0Government contribution under the Hospital	54.7	149.822.7	25.5	29.8	31.2	30.5Welfare branch-	382.5	397.5	437.9	474.8	491.3Old age assistance, blind persons and disabled	29.5	30.4	39.7	49.7	50.863.3	56.0	103.9	184.0	7.9	8.2	23.9	36.12.7	2.9	3.1	3.1	3.2587.9	561.7	662.7	872.9	818.S16.1	19.0	21.6	25.4	31.356.1	61.8	67.7	68.8	69.2Northern Affairs and National Resources.	24.7	37.0	49.1	65.2	81.4127.4	140.0	153.3	157.8	167.6Privy Council including Prime Minister's Office	0.5	0.5	0.6	1.1	2.60.5	0.6	0.7	0.7	0.72.2	3.2	3.3	3.5	3.5126.0	140.5	156.6	170.1	156.93.4	3.4	3.3	4.9	6.316.1	24.8	49.4	51.1	52.0H5.5	168.7	209.8	226.1	215.236.6	43.4	47.4	51.7	53.33.0	3.5	4.0	4.4	4.717.6	23.6	23.6	27.2	24.918.9	31.8	33.3	38.4	42.30.286.5	55. J,	56.9	65.6	674Transport-	3.1	3.3	3.7	4.0	4.657.3	70.5	90.3	115.4	121.74.3	5.0	5.2	5.9	6.88.3	8.2	8.6	9.7	7.120.6	26.9	32.8	51.8	54.6Non-active assets-	3.0	4.1	4.8	4.3	2.18.3	8.2	5.7	1.8	3.8Deficits-	22.1	51.6	43.6Canadian National (West Indies) Steam-	0.1	0.6	1.2	North Sydney-Port-aux-Basques ferry and	2.4	5.4	6.0	5.8	5.8Prince Edward Island car ferry and	1.6	1.8	2.0	2.0	2.60.3	0.3	0.2	0.29.27.0	7.0	7.0	7.0	7.011.0	12.5	12.6	13.1	14.35.0	5.0	5.0	15.0	15.0182.0	158.2	206.7	288.8	298 4
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-concluded
(In millions of dollars)
-	1955-56	1956-57	1957-58	1958-59	Estimated 1959-60Veterans Affairs-	$	$	$	$	$Administration and general	
Hospital accommodation, additions, altera-	4.9	5.4	6.2	6.3	6.4tions and improvements	3.5	4.6	3.3	3.3	3.8Pensions	130.7	130.3	145.6	150.7	149.6Provision for reserve for conditional benefits...	8.8	6.8	5.2	4.4	3.8Soldier settlement and veterans land acts	5.4	5.4	5.6	5.4	5.2Treatment and welfare services	
Veterans allowances, treatment allowances and	47.6	50.8	56.4	56.1	55.0other benefits	
War service gratuities and re-establishment	44.0	45.8	53.1	60.4	63.4credits	3.6 248.5	2.4 251.5	1.8 277.2	2.2 288.8	2.8 290.0Total Expenditures	4,433.1	4,849.0	5,087.4	5,364.0	5,706.8
(1>
Total civil defence expenditures were $5.3 million of which $1.2 million was made by Privy Council and $0.4 by the Department of National Defence.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
-	1955-56	1956-57	1957-58	1958-59	Estimated 1959-60$	$	$	$	$Loans to, and investments in, Crown corporations-	11.7	9.1	3.2	2.7	2.18.4	-0.1 -2.0	-0.3	-27.0	-4.0	2.0170.7	172.1	-10.7	199.5	-255.5Canadian National (West Indies) Steamships	-0.2	-0.3	-0.2	-0.3	-1.2Canadian Overseas Telecommunication Cor-	4.0	4.3	0.3	0.3	8.7Central Mortgage and Housing Corporation-	-10.4 4.7	-4.1 9.3	107.5 14.3	335.6 22.0	325.0 29.82.1	5.0	10.7-0.1	7.2	11.1	20.2	16.0-0.4	0.3	6.7	7.3	21.4Northern Ontario Pipe Line Crown Corporation	0.3	70.5	42.8	8.020.2	56.0	<2>99.2	W106.1	<!>34.62.5	-1.10.4	-0.1	0.1	205.0	252.0	SOS. 8	716.7	200.5Loans to national governments- United Kingdom- The War Appropriation (U.K. Financing) Act, 1942	-30.0	-30.0	-30.0	-22.5	The United Kingdom Financial Agreement Act, 1946	-15.2	-15.5	«>44.2	-16.1	-16.4-22.4	-21.9	-19.9	-17.9	-17.9Special loans to Colombo plan countries to finance the purchase of wheat and flour from	16.2	18.3	0.5-3.4	-3.8	-1.1	-0.8	-0.8-71.0	-71.2	9.4	-S9.0	-S4.6Other loans and investments- Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of-	6.3	-8.8	5.0	-2.6	235.63.5	Working capital advances and loans to inter-	0.8	-0.2	-0.2-3.6	-3.4	<'>1.0	W25.5	-7.2Balances receivable under agreements of sale	11.8	7.8	-4.4	-2.9	-3.1-13.2	-48.5	-1.5	24.1-0.6	-3.8	-3.2	-3.0	-0.62.2	2.8	9.4	3.4	7.32.9	-49.6	6.1	20.4	255.9Sinking fund and other investments held for	20.0	0.9	-128.5	1.1
Net total of changes in loans and investments..	156.9	131.2	320.2	569.6	422.9
<* Formerly the Canadian Farm Loan Board.
<s) Includes deferred interest.
<*>
Deferred interest.
«>
$4 million in overpayments to provinces arising out of 1952 tax-rental agreements offset in part by repayments of $3 million.
<*>
Loan of $29.5 million to New Brunswick in respect of the Beechwood Power Project offset in part by repayments of $4 million.
79951-0-178
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Date
of
maturity
1960,	Apr. 1....
June 1	
Oct. 1	
Nov. 1
[Stage Direction]
Dec. 15... Dec. 15...
1961,	May 1	
Dec. 1. . ..
1962,	Feb. 1....
Aug. 1
[Stage Direction]
Oct. 1	
1963,	Apr. 1....
Jan. 1	
July 1	
July 1	
Aug. 1
[Stage Direction]
Oct. 1	
1965,	Sept. 1....
Nov. 1_____
1966,	Sept. 1___
Nov. 1....
1967,	Nov. 1....
1968,	June 15....
Nov. 1_____
1969,	May 1	
1970,	May 1	
Nov. 1_____
1972,	Sept. 1....
1973,	Nov. 1....
1974,	Sept. 1....
1975,	Sept. 15...
1976,	June 1....
1978,	Jan.15....
1979,	Oct. 1....
1983, Sept. 1.... 1998, Mar. 15. ..
Perpetual	
Various	
Various	
1960, June 10....
June 10____
Description
Rate
per
cent
Where
payable
Amount
of
loan
[Stage Direction]
Annual
interest
charges
[Stage Direction]
Loans of 1958 and 1959	T. 31
Sixth victory loan	L.	9Loan of 1959	T.	34
Canada savings bonds 1950.. .S. 5
Loans of 1957 and 1959	T. 21
Loan of 1959	T.	21
Loans of 1958 and 1959	T. 23
Conversion loan of 1958....T. 26
Seventh victory loan	P.	3
Canada savings bonds 1951...S. 6
Loan of 1959	T.	35Loan of 1960	T.	37Loan of 1959	T.	33Loan of 1933/34	Loan of 1938	
Canada savings bonds 1952... S. 7
Eighth victory loan	P.	5
Conversion loan of 1958....T. 27
Canada savings bonds 1953... S. 8
Ninth victory loan	P.	7
Canada savings bonds 1954...S. 9 Canada savings bonds 1955.. .S. 10
Refunding loan of 1950	P. 9
Canada savings bonds 1959.. .S. 14 Canada savings bonds 1956.. .S. 11
Loan of 1958	T.	24
Canada savings bonds 1957.. .S. 12
Conversion loan of 1958....T. 28
Canada savings bonds 1958.. .S. 13
Loan of 1949	
Loan of 1950	
Loan of 1954	T.	11
Loans of 1953 and 1958	T. 5
Loan of 1954	T.	13
Conversion loan of 1958....T. 29
Conversion loan of 1956....T. 15
Loan of 1936	P.	1
Three-month treasury bills	
Six-month treasury bills	
One-year treasury bills	
253-day treasury bills	
2f
5§
2f
3
3
3§
5*
5*
4 3
3!
3f
3
31
4 31 31 41 41 41 21 21 31 31 31 41 31 3
(4)
(4)
<«5.49
<*>6.80
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
London
London
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
New York
New York
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Payable in Canada... Payable in London.. . Payable in New York
	329,000,000	9,047,500
	46,588,650	1,397,660
	135,000,000	7,425,000
(1)	11,300,000	310,750
	515,000,000	15,450,000
	94,000,000	2,820,000
	525,000,000	15,750,000
1	,020,514,000	30,615,420
	53,473,150	1,604,195
(1)	32,000,000	1,120,000
	350,000,000	19,250,000
	200,000,000	11,000,000
	100,000,000	4,000,000
(2)	49,833,091	1,494,993(2)	1,978,362	64,297(1)	36,400,000	1,365,000223,020,200	6,690,606l	,266,723,100	47,502,116(1)	123,900,000	4,646,250245,202,200	7,356,066(1)	83,200,000	2,704,0000)	80,600,000	2,619,500350,000,000	9,625,000(1)1	425,300,000	57,012,000(1)	143,900,000	5,036,500200,000,000	7,000,000(1)	767,200,000	36,442,0001	366,733,800	58,086,187(1)	429,400,000	18,249,500(3)	100,000,000	2,750,000(3)	50,000,000	1,375,000300,000,000	9,750,000250,000,000	9,375,000400,000,000	13,000,0002	151,548,950	96,819,703250,000,000	9,375,00055,000,000	1,650,0001	375,000,000	64,173,832510,000,000	25,843,492200,000,000	10,439,89340,000,000	2,598,66815	886,815,503	632,835,12815	685,004,050	627,150,83851,811,453	1,559,290150,000,000	4,125,00015,	886,815,503	632,835,128
Note: Where various rates of interest are applicable during the term of a loan the interest rate in effect at March 31, 1960 has been used.
(1>
Estimated.
(2)	Conversion rate $2.80 Can. = £1.
(3)	Conversion rate $1 Can. = $1 U.S.
(4)	Rate of discount on bills sold.
Rate of discount.
[Stage Direction]
Friday, April 1, 1960