1960-12-20

Mr. Speaker:: I have the honour to inform the house that consequent upon the notification of a vacancy in the representation given in this house on Monday, December 19, 1960 by the hon. member for Ottawa West (Mr. Mcllraith), and pursuant to section 10 of the House of Commons Act, I have addressed my warrant to the chief electoral officer for the issue of a new writ of election for a member in the electoral district of Leeds.



REPORT ON PARIS MEETING OF MINISTERS

Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, I notice that there have been some questions asked in the house during my absence concerning the recent ministerial meeting of the North Atlantic Treaty Organization which was held in Paris on the 16th, 17th and 18th. I have made arrangements for copies of the communique which was issued to be distributed to the members of the house, but I am not sure whether or not they have been made available as yet. I also have copies in English and in French which I should like to table if that meets with the wishes of the house.
These meetings, by the way, were attended by the Minister of National Defence and myself. In the ordinary course the Minister of Finance would have been there as well, but he had to return to Ottawa after the meeting setting up the new organization known as O.E.C.D.
There was in the first place a review of the international situation and that went over the whole international picture, having to do primarily with the situation in the Soviet bloc and with Russian policy. Canada advocated that the NATO countries should have a flexibility in their reaction to statements and proposals made by the Soviet union. We do not think it is wise to be too rigid in the reaction to these various Soviet proposals. There was, of course, continued concern with regard to the situation in Berlin. As hon. members will notice, in the communique there was a paragraph which reads as follows:
The council regretted the lack of progress on the reunification of Germany on the basis of selfdetermination. With regard to Berlin, the council
reaffirmed their declaration of December 16, 1958. In face of the recent Soviet threats and harassing tactics, they once again declared their determination to protect the freedom of the people of West Berlin.
In the communique there was also a significant paragraph concerning disarmament. It is paragraph No. 4 and reads as follows:
The council deplored the lack of progress during the past year on disarmament, resulting from the communist states' withdrawal from the ten-power conference before even examining the western proposals. The council reaffirmed their support for the principles expressed in those proposals as a basis for attaining their common objective of general and complete disarmament by stages under effective international control. They expressed their hope for the early resumption of negotiations.
Then there was also a reference which will be found in paragraph 6 and also in paragraph 8 which, among other things, dealt with the question of the balance of nuclear and conventional weapons. In it there is this significant sentence:
There must be a proper balance in the forces of the alliance of nuclear and conventional strength to provide the required flexibility.
The basis for that sentence is that there is concern for fear the members of the alliance overlook the need of keeping up conventional arms. The worry is that the forces of NATO will be allowed to deteriorate or to depreciate in the field of conventional arms.
Then there were also two proposals made by the United States. They will be found in paragraph 7 of the communique. I will read the second part of this paragraph first:
The council welcomed the assurance of the United States to maintain in the NATO area United States nuclear weapons made available to NATO.
Some of the European nations have been afraid that the United States might withdraw a portion of their nuclear weapons already in Europe. This matter is viewed with some concern, so assurance was given by Secretary of State Herter to the effect that these nuclear weapons would be maintained in the European area of NATO.
In addition, Mr. Herter suggested the concept of a medium range ballistic missile multilateral force for consideration by the alliance. This was not put in the way of an actual proposal, but as a suggested concept. He did not want to be committed to any actual proposal because of course there is to be a change in the administration of the United States next month, and the present administration could not bind the incoming administration. In addition to that, congressional action would be required for a

Report on Paris NATO Meeting change in the law of the United States if this plan is to be carried out. Therefore, as I say, it was put forward as a concept.
Involved with that there was also a similar concept, that the United States might move five Polaris submarines to European waters. I think these would become part of the United States NATO fleet; like the sixth fleet in the Mediterranean.
These concepts were noted by other members of the council and instructions were given to the permanent representatives to study the suggestions and all related matters. Of course they would also have to be reviewed very carefully by the various governments because they involve serious and complicated questions; for example, the question of control of the medium range ballistic missiles if they should come under NATO. The MRBM multilateral force would also involve expenditures by the other countries which would have to provide the funds for these ballistic missiles.
Then there was a discussion on long term planning for NATO and various questions were considered; for example, consultation. There was no difficulty about consultation on matters having to do with the NATO area directly, but there was some difference of opinion concerning consultation on matters, for example, in Africa or in the Far East, which areas of course are not included in the NATO area.
Canada's opinion is that nations should be informed of the views of the other members of the alliance with regard to problems arising in these areas, but we have never agreed that there should be consultation in the sense of creating an obligation on the member countries with regard to areas outside the NATO area.
There was also the question of how the NATO countries should act in the United Nations. I think the secretary general would like to see NATO move as a bloc in the United Nations, but we pointed out that the only real bloc of that type in the world today is the Soviet bloc, based on dictatorship, so they can very easily move as a unit. The whole foundation of the other countries, the NATO countries, is based on democracy, on people being able to express their individual opinions and having nations express their individual opinions. We do not think it makes much sense to have a NATO bloc in the United Nations.
We also feel that some of the NATO countries have been rather downgrading the United Nations and taking this position: "Oh, well, after all we do not care what happens in the United Nations; we will not be bothered with it". Canada is convinced that is the wrong attitude.


Some hon. Members:: Hear, hear.


Howard Charles Green: There are now 99 nations in the United Nations. There are only nine in the Soviet bloc; there are 15 in NATO including West Germany which is not a member of the United Nations. That adds up to the necessity for winning friends in the United Nations. You cannot line up people any more down there; you have to have a case that will win the support of the noncommitted countries.
We believe that if the NATO nations came into the United Nations for that purpose, that is, the purpose of getting across our ideas and really worked at getting up resolutions which embarrass the Soviet side-we are not very good at it, though they are-I think if the NATO nations really put their backs into doing the job required at the United Nations under present conditions, very beneficial results would follow. We had quite an interesting discussion on that point.
Then there were various economic questions. It was felt that the main scope of NATO in the economic field at the present time is in connection with communist moves in the trade and economic field; that NATO should be a watchdog keeping track of what is done by the Soviet countries in this particular field and trying to devise measures to meet an offensive of that kind. As for the actual trading arrangements, we now believe that O.E.C.D. meet that requirement.
There is also great concern in NATO with regard to Greece and Turkey. They are underdeveloped countries, and they feel they should have help from other NATO countries. Their position met with a great deal of sympathetic understanding.
There was also discussion about holding a meeting of heads of state. Canada has felt -and our own Prime Minister has expressed this feeling on more than one occasion- that there is a need now, in the New Year, for the heads of government to come together and review the whole NATO picture. We are living in a different world today than we were ten years ago, and Canada is very anxious that there should be a meeting of the heads of governments. We got support for this from West Germany and Greece, but ran into the complication that the present United States administration cannot bind the new administration. Also, there is the fact that there are several very important conferences which the new president must attend early in the year. Thus no definite arrangement was made about a meeting of heads of government, but we are at liberty to raise the matter in the council should the international situation change before the ministerial meeting which is to be held in Oslo,

Norway early in May. Incidentally, Canada invited the other NATO nations to hold this meeting of heads of government in Canada. So that particular question remains unsettled at the moment.
In conclusion, may I say that the liveliness of the discussions demonstrated again the vitality of the alliance. There really is a great depth of understanding and friendship among the representatives of these 15 countries who meet twice a year. Down through the years there has developed a very remarkable spirit of co-operation, and we continue to believe that NATO has a great part to play in the affairs of the world. Canada has done her full share in the growth of this spirit, and I am sure there can be no question but that she will continue to do that in the years that lie ahead.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I should like to begin my few remarks by welcoming back from Paris the minister and his colleagues. We know they must have had a busy time in Paris and that they did everything that could be done there to contribute to the success and achievement of the NATO council meeting. It seems from the minister's statement and from what we have been able to read in the press that the discussions in Paris were frank, as they should be among friends. It also appears that, because of circumstances which have something to do with the United States political situation, it was not possible for the council, apart from other difficulties, to reach decisions in a way that might have been possible in different circumstances. I suppose it is not unfair to call this NATO council meeting a marking time meeting. Yet it is becoming clear that very soon some essential decisions will have to be taken in regard to the functioning of the NATO alliance.
I note in the communique, for instance- and the minister has already referred to this -three paragraphs dealing with the use by NATO members of nuclear weapons. Indeed, paragraph No. 6 to which the minister referred includes this sentence:
There must be a proper balance in the forces of the alliance of nuclear and conventional strength-
It is clear, because the decision was made a good many years ago, that the NATO forces are being trained at the present time in the use of nuclear tactical defensive weapons; therefore important decisions will soon have to be made by NATO itself, as they will have to be made by all the members of NATO as to individual national responsibility for the using or refusing to use weapons of this kind and as to the conditions, if they are to be used, under which they should be used.
Report on Paris NATO Meeting
It is interesting to note-and the minister also referred to this-that at least a suggestion, if not a proposal, has been made by the United States delegate which deals with the collective use by NATO of nuclear weapons. The minister also pointed out that there were some discussions of ways and means of strengthening political and economic consultation. That subject has been under discussion at every NATO council meeting from the day NATO was formed. This communique says, as so many communiques have said in the past, that the council studied once again ways and means of achieving better political consultation.
I do not think the problem is in achieving ways and means of doing this. The problem is developing the will to bring about better political consultation so that the interests of the members can be reconciled.
I think the minister is right indeed when he points out the undesirability of the NATO members trying to act as a bloc at the United Nations or anywhere else. I think the hon. gentleman was also wise in pointing out, as I gather he did in Paris, that while all the member nations have obligations to the alliance, we also have a pre-eminent obligation to the world organization of the United Nations. It should be a cardinal principle of policy of all the NATO members to reconcile those two obligations in a way which will not downgrade the world organization.
I believe the minister should have the support of every hon. member in the house in the effort he is making toward that end. At the same time I am sure the minister will agree with me when I say it is particularly important at the present time that the United Nations should not downgrade itself either by its actions or by its obstruction in the way of good actions. This is one of the major problems of foreign policy that confront every member of the United Nations at this time.
I note the minister's reference to the proposal for a summit meeting. There are occasions in NATO and outside NATO when summit meetings can be useful. Indeed, I suppose on some occasions they are essential. But I think we should take care before we support a meeting at the summit because, as the experience of the last year has shown, that kind of meeting, with all the publicity that attaches to it and all the expectations that are aroused by it, sometimes ends in disillusionment rather than constructive achievement. If a summit meeting is to be called to review, in the words of the minister, the whole picture, to review NATO and it workings, I suggest that kind of review should be taking place every week through the permanent council of NATO. Perhaps one of the most important things that could be
966	HOUSE OF
Report on Paris NATO Meeting done at this time would be to strengthen the prestige and the authority of the permanent council. I know there will be no difference of opinion between the minister and myself on that score.
No doubt we will have an opportunity after the new year to debate international affairs generally, including NATO. Meanwhile, all I wish to say is that we on this side support the minister and his colleagues in every step they may take at NATO and at the United Nations in order that Canada can continue to play an effective part in the search for international peace and security.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, this group joins with the Leader of the Opposition in welcoming the minister back to the house. I want to assure him that we miss him when he is absent, and we follow his sayings and his doings very closely from day to day. I also wish to thank him for providing us with a copy of the final communique of the ministerial conference of NATO just prior to making his brief report on his trip.
I must say, too, on behalf of this group that we were very pleased to note his reference to the relationship of NATO to the United Nations and his opposition to any attempt on the part of NATO countries to act as a bloc within the United Nations. I think he is on very sound ground in that respect. However, in reading the communique I note that the second section of paragraph 7 contains these words:
The council welcomed the assurance of the United States to maintain in the NATO area United States nuclear weapons made available to NATO.
I say without any equivocation that this group is opposed to the arming of NATO with nuclear weapons and the arming of other countries with nuclear weapons as well. In that connection I want to bring to the minister's attention the fact that recently I had the honour to be a member of the Canadian delegation to the interparliamentary union conference held in Tokyo. On the first day of general debate during that conference, I believe, the Polish delegate made a slashing attack upon the West German government and expressed very normal fears with respect to nuclear weapons and the possibility and danger of Polish territory being taken over in the days ahead.
What interested me and a number of other members of the commonwealth section of the delegation was the reply of the West German delegate who, when he spoke, replied in very moderate terms. He assured the conference that no nuclear weapons would ever be used by the German government without the consent of the president of the United States. At the time the comment was made it made me shudder, and we in this group are very


concerned about that situation, as are an increasing number of Canadians who are expressing the same concern with respect to the arming of other countries with nuclear weapons and the arming of NATO with such weapons.
Also, in paragraph 12 of the final communique we read the following:
In the economic field, they welcomed the creation of the O.E.C.D. which, by promoting balanced economic growth and the expansion of world trade, will benefit all the nations of the free world.
I quote that simply to bring to the attention of the house that the formation of O.E.C.D. illustrates quite clearly the complete failure to give effect to article II of the North Atlantic treaty itself.
I have made a few comments on behalf of this group, and when the debate on external affairs takes place early in the new year we will have an opportunity to express the policy of the C.C.F. on external affairs generally and particularly with respect to NATO.



UNITED NATIONS


Howard Charles Green: Mr. Speaker, with leave of the house I have another statement to make in connection with the Canadian resolution on disarmament at the United Nations. When the communist five walked out of the ten-nation disarmament committee on June 27 of this year we decided that Canada should take some steps to try to bring about a resumption of negotiations as quickly as possible. One way of doing this, we thought, was to focus world opinion on the nuclear powers, thus bringing home to them very clearly the insistence of the peoples of all other countries of the world that active steps should be continued not only to bring about disarmament but to prevent the nuclear weapons race from continuing.
At the same time we decided to endeavour to emphasize the rights and the responsibilities in the disarmament field of the middle and smaller powers. After all, the people of the middle and smaller powers are either going to be bombed or killed by radiation as well as the people of the nuclear powers, and they have a right to make their wishes heard. In addition, they have the responsibility to do something about the question of disarmament. We do not believe that they can sit back and leave it wholly to the nuclear powers to work out a solution.
As you know, Mr. Speaker, we took action accordingly in the disarmament commission of the United Nations, and were successful in getting a resolution adopted unanimously

by that commission on August 18 which called, among other things, for the earliest possible continuation of disarmament negotiations.
Then the battle moved to the general assembly of the United Nations, and there we brought in a resolution, co-sponsored by Norway and Sweden, which would have provided for the appointment of a neutral chairman in the disarmament talks. We had in mind possibly a citizen of Switzerland. It would also have provided for an ad hoc committee of non-nuclear powers whose job would be to try to keep pressure on the powers to bring about a resumption of negotiations and then keep an eye on the negotiating committee once negotiations had been resumed. At this point I should like to praise Norway and Sweden for the part they have taken in this effort. In most cases the Scandinavian countries arrive at the same conclusions that Canada does, and the way in which we naturally seem to end up on the same side is remarkable.
We ran into certain obstacles. None of the nuclear powers were very enthusiastic about our resolution, which can be understood. We did not expect them to be singing hallelujahs in support of it. In addition, however, there is fairly widespread reluctance in the United Nations on the part of the middle and smaller powers to antagonizing any of the big fellows. Some do not want to antagonize the Soviet; others do not want to antagonize the western side. In any event, we finally amended our resolution so that it at least got the support of some of the western nuclear powers, and we also managed to get 18 co-sponsors from countries all over the world except Africa. We had no co-sponsor from Africa.
Our resolution on disarmament was only one of about 13. There has been discussion, off and on, in the first committee on these various disarmament resolutions. Finally it came to the time when the assembly was about to adjourn and, like the House of Commons here, there developed a great enthusiasm for rushing things through and getting rid of any contentious issues. We all know how that happens here in Ottawa, and there was the same reaction in New York.
There was quite strong sentiment in favour of deferring all these bothersome disarmament resolutions until the United Nations reconvenes on March 7. We have been worrying about this; it has been our biggest obstacle. Yesterday my parliamentary secretary, the hon. member for Oxford (Mr. Nesbitt), who is the vice chairman of the Canadian delegation and who, I may add, has been doing an outstanding job at the United Nations both this year and last year as well as two years earlier, I understand, when he was acting in the same capacity, 90205-6-62
Statement on Disarmament Resolution moved a procedural resolution which would have had the effect of bringing about a vote at once on two resolutions, the one advocating no further nuclear tests and the Irish resolution which was against the spread of nuclear weapons, and holding over the debate on all the disarmament resolutions except the Canadian until March 7. The Indian delegation moved an amendment to include the Canadian resolution along with the other nine.
This finally came to a vote; there was a strong attempt made to get us to forget about it and just agree to let it go over until March but we insisted upon its being brought to a vote. The final result was that 17 voted in favour of having the Canadian resolution voted upon at once; 29 voted against, including all the Soviet bloc and some of the African countries-26 abstained and 27 were absent. You can tell from this how many wanted to go home for Christmas without having to vote on any issue of this kind. However, this means the resolution will now come up again when the first committee resumes its sittings on March 7.
The unfortunate feature is that for the next two and a half or perhaps three months nothing will be done about disarmament. The nuclear weapons race will go on, and more destructive weapons will be invented. The whole disarmament issue will be dormant for that time, just as it has been dormant since June 27. I think perhaps some of the other nations do not feel the urgency about disarmament that we do. They hang back, therefore, waiting for the nuclear powers to make a move. In any event, it is difficult to get action in the United Nations. However, I would hope members of the house will not be impatient. As I have said, our resolutions will be up again in March. I hope we will have 35 co-sponsors by then. We will do our best.
In any event, the end result may be very good. It just may be possible to get this resolution through unanimously, or it may not. We may get defeated again. I cannot make any promises. Canada has been doing the best she can to get some action on this question of disarmament and I assure you, Mr. Speaker, we shall continue to do that.


Hon. Paul Martin (Essex East):: Mr. Speaker, I am sure the house welcomes with gratitude this statement by the Secretary of State for External Affairs on the Canadian proposal for further discussion in the difficult and complicated field of disarmament. I may say to the Secretary of State for External Affairs, that while we take strong issue with him on some aspects of his disarmament policy, we

Statement on Disarmament Resolution strongly commend his persistence and his sincerity, certainly in procedural matters having to do with the disarmament discussions.
The Secretary of State for External Affairs reminded us that on June 27 the intransigent position taken by the Soviet union caused a break-down in the 10-power disarmament talks, and that following this break-down the Canadian government proposed at the disarmament commission that there should be no delay in reconvening the 10-power committee thereby providing an opportunity for discussion of these important matters. He mentioned the circumstances attending the presentation by Canada, with the co-sponsorship of Norway and Sweden, of a resolution which he just now acknowledged to be procedural in character. I think it is important to note that the result-[DOT]


Howard Charles Green: May I interrupt? When I referred to a procedural motion I was referring to the motion made to bring about a vote on the resolution yesterday, not to the resolution itself.


Paul Joseph James Martin: I thank the minister for this correction, but he will not think me less appreciative, if I say that the resolution put forward in the name of Canada and co-sponsored by Norway and Sweden is essentially a resolution of a procedural kind. As a matter of fact, this was the very point taken yesterday in the United Nations by the minister's parliamentary secretary in taking issue with Mr. Krishna Menon, who had said the Canadian proposal was a substantive one. The minister's parliamentary secretary took the position that this was merely a resolution dealing with procedure, and therefore there should be no difficulty in the resolution receiving the accord which the Canadian government and its spokesmen hoped would be forthcoming. The very ground taken by Mr. Krishna Menon, the delegate for India, was as I mentioned, that this was a resolution dealing with a matter of substance in the field of disarmament.
In so far as the character of the resolution is concerned, everyone in this house I am sure will agree that Canada, one of the original members of the subcommittee on disarmament, should take a lead in trying to bring about some persuasive effect in the field of disarmament through association with countries of the middle power group or with countries who belong to another category. We, through the Leader of the Opposition, put forward this very proposal, if the Secretary of State for External Affairs will recall, when this matter of disarmament was discussed in this house last winter.
However, the proposal Canada now has before the United Nations is not of the same

order as that proposed by the Leader of the Opposition. We should like to see Canada not only take an initiative in the matter of procedural formulae for disarmament but in putting forward a proposal of substance itself. Such a proposal might have an effect in persuading countries like the Scandinavian group, about which my hon. friend spoke so appreciatively and with justification. It might receive the support of other countries such as Brazil and Mexico. In any event, we would hope that between now and March it may be possible for the government to give consideration to strengthening its initiative at the United Nations not only by proposing an improvement in the matter of procedure but also in the matter of a substantial proposition which might be considered by the great powers in particular.
Finally, Mr. Speaker, may I say this. The minister has mentioned the fact that this matter will again come up for consideration on March 7. He has said that nothing can be done in the field of disarmament until that time. I would point out to him that there is no reason now, as far as I am aware, why the 10-power committee itself could not be reconvened at any time before March 7. If that were to happen, I am sure the minister would be among the first to applaud whatever initiative would be taken by any country toward the realization of that objective.
That being the case, and as Canada is a member of the 10-power committee, I take advantage of this opportunity to suggest to the minister that he might give consideration, once again, outside of the United Nations, before the resumption of the assembly meeting, to an initiative that might bring about a resumption of the 10-power meeting. If the minister could succeed in doing that he would win the gratitude of this country and of the people of the world.


Herbert Wilfred Herridge: shall speak briefly and with clarity, Mr. Speaker. This group expresses its wholehearted support for the minister in his efforts to promote a resumption of the disarmament talks. When the minister was speaking I was interested in his reference to the support we received from Norway and Sweden. We are extremely pleased to hear that. Those two countries are sane, mature and civilized. In the minister's talks with the representatives of these countries I hope he obtained some new ideas with respect to the solution of the unemployment and economic and trade problems.


Mr. Speaker:: Order.


Herbert Wilfred Herridge: Sorry, Mr. Speaker. We also greatly appreciate his concern over the expansion of the nuclear arms race. We know

that he is seriously concerned about this problem. We are pleased with his continued firm position with respect to nuclear testing. That is all I have to say at this time.

On the orders of the day:


Mr. Frank McGee (York-Scarborough):: should like to direct a question to the Secretary of State for External Affairs. I wonder if it would be convenient for the minister to place on the record at this time the names of the 18 co-sponsors of the disarmament resolution at the United Nations.


Lester Bowles Pearson: Order paper.


Howard Charles Green: I have them here, with the exception of one or two, but perhaps that question could go on the order paper.



HOUSE OF COMMONS ACT


Hon. J. W. Pickersgill (Bonavisfa-Twillin-gate) moved: for leave to introduce Bill No. C-54, to amend the House of Commons Act (election writs for by-elections).


Some hon. Members:: Explain.


John Whitney Pickersgill: The purpose of this bill is to amend the House of Commons Act in order to make sure there shall be no undue or unjustified delays in the calling of byelections and to impose on the chief electoral officer, an officer of this parliament, rather than on the executive the task of fixing the date of by-elections so that no constituency will go unrepresented for a whole session in this house, as happened in the last session and as appears likely to happen again in the present session.
Motion agreed to and bill read the first time.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: May I ask
the Minister of Labour if he is now in a position to table the report of the advisory committee of the unemployment insurance commission? The committee met in October, and about it there have already been questions this session.


Hon. Michael Starr (Minister of Labour):: No. I am not prepared to table it yet, as the government is still studying this report.
90205-6-62J
Inquiries of the Ministry CRIMINAL CODE



TRADING STAMPS


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: I should like to direct a question to the Minister of Justice. It arises out of the decision of the Supreme Court of Canada upholding the legality of trading stamps under the present law. Has the government given any consideration to introducing amendments to the Criminal Code that would effectively outlaw trading stamps, as has been requested by the retail merchants and consumers organizations?


Hon. E. D. Fulton (Minister of Justice):: The
only answer I can give to that question is that the throne speech forecast that there would be amendments to the Criminal Code during this session. When the bill is introduced, government policy in that regard will be indicated.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. Hubert Badanai (Fort William):: I wish to direct a question to the Secretary of State for External Affairs. It has been reported that the Congo operation costs the United Nation $10 million monthly, and that some of the nations are actually profiteering from the operation. For example, each nation is entitled to charge the UN for foreign service pay to soldiers.


Some hon. Members:: Question.


Mr. Speaker:: I suppose the hon. member is trying to lay a factual background for his question, but perhaps he could come to the question more directly and make any explanation he is obliged to make in connection with it.


Hubert Badanai: I will make it as brief as possible. Canada charges $1 per day for its officers; Sweden charges $10 per day and Guiana $80, even though its officers are inexperienced.


Some hon. Members:: Question.


Hubert Badanai: The question is this. Can the minister shed some light on these discrepancies of pay for UN officers serving in the Congo?


Howard Charles Green: I would be very doubtful, Mr. Speaker, that that is a correct statement. In any event, I cannot answer a question like that on the orders of the day.

Inquiries of the Ministry I will try to get the information if the hon. member will put the question on the order paper.



HEALTH INSURANCE


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolieiie-L'Assomplion-Montcalm):: Mr. Speaker, I should like to ask a question of the Minister of National Health and Welfare.
(Translation):
Could the minister tell the house whether in the hospital insurance contract which was signed yesterday with the province of Quebec there is a provision to the effect that the Lesage government is pledged not to impose new taxes on the people of Quebec, in pursuance of its electoral promises?
(Text):


Hon. J. W. Monleith (Minister of National Health and Welfare):: No, Mr. Speaker.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: I should like to pose a question to the Minister of National Defence. Will the minister give us as much information as possible about the United States proposal to equip the NATO forces with nuclear weapons? I refer to the pool arrangement.
Hon. D. S. Harkness (Minister of National
Defence): I cannot give any more information than has already been given by the Secretary of State for External Affairs and that which has appeared in newspaper accounts, I believe, of the NATO meetings. As the Secretary of State for External Affairs pointed out, the Americans put this proposal forward as a suggested concept. No great details in connection with the matter were gone into.


Paul Theodore Hellyer: I have a supplementary question. Can the minister say whether storage depots are already being built for the nuclear warheads that the Canadian forces expect to use, as reported by Peter Newman in the current issue of Maclean's'!


Mr. Harkness:: Under the infrastructure arrangement of NATO, certain storages are being constructed. Some of these storages are in areas where the Canadian forces are likely to operate or close to where they are stationed at the present time. However, these storages, of course, are for the use of NATO troops generally, as the term infrastructure really implies. It is the same kind of

arrangement as the various types of construction carried on by NATO under infrastructure have been more or less from the beginning.


Paul Theodore Hellyer: I have a further supplementary question, Mr. Speaker. In view of Canada's participation in these storage depots under infrastructure, and Canada's acquisition of vehicles for the deliverance of nuclear weapons, has the decision been made for Canada to obtain the warheads necessary to make them effective?


Douglas Scott Harkness: The answer is no.


Lester Bowles Pearson: Mr. Speaker, could I ask the minister whether he still believes it would be absurd for the Canadian forces not to use nuclear weapons?


Mr. Speaker:: I think the Leader of the Opposition's question is largely a controversial one and is likely to promote a discussion which would be inappropriate. However, if the minister wishes to accept the question he may do so.


Douglas Scott Harkness: Mr. Speaker, I think I could perhaps just point out that the Leader of the Opposition appears to be attempting to put words in my mouth, to which I object most strongly.


Lester Bowles Pearson: Mr. Speaker, may I ask the minister, does he deny the statement attributed to him by the press on this matter when he was in Paris earlier?


Douglas Scott Harkness: Mr. Speaker, I do not know to what statement the Leader of the Opposition refers, but I certainly never said anything about nuclear weapons being absurd from any point of view.


Lester Bowles Pearson: On a question of privilege, the Minister of National Defence stated a few minutes ago that I had misquoted him in the course of a question I asked. In justice to the minister and the house I should like to read the exact quotation which I was using. It was from a Southam news service report of an interview by Charles King, and it appeared in the Ottawa Citizen on November 2. The minister is reported as saying:
"If we are to have a fully effective force, our people have to have nuclear arms. This is the only position that a reasonable man can take."
"Not having nuclear arms is completely stupid."


Douglas Scott Harkness: The Leader of the Opposition started putting into my mouth words about nuclear arms, and my having said something about their not being used by Canada as being absurd, and I quite properly pointed out that I had never said anything

along those lines. Now he is trying to cover up the mistake he made by quoting something else. I should just like to say in connection with that matter that Mr. King and I had quite a serious difference of opinion about what I said on that occasion, something that is not unknown as far as things along that line are concerned. Certainly I felt very strongly I had not made a statement along those lines. Mr. King thought that I had. That was the situation. I would point out that in any event a statement of that kind is not borne out by any other statement I have made and was not reported by any other newspaper reporter and, since I got back to Canada, I have made it clear that it does not represent my thinking on this matter. (Translation):



POSSIBILITY OP PLANES FLYING OVER CANADA UNDETECTED

[Stage Direction]
On the orders of the day:
Mr. Romuald Bourque (Ouiremonl-Si. Jean):: Mr. Speaker, I should like to direct a question to the Minister of Transport. I apologize for not having given him notice of my intention to ask this question.
A Montreal French language newspaper commented recently on a report from the British Sunday Dispatch which stated that Great Britain had been able, owing to its antiradar system, to send its jet bombers over New York and other "target cities" in North America without their being intercepted. My question is this. Are there any foreign aircraft flying over Canada at this time which could not be detected?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, this is a technical question and I would not care to venture into that field at this time.
(Text):



NEWFOUNDLAND-REPORTED SHIFT OF U.S. EARLY WARNING SQUADRONS

Mr. C. W. Carter (Burin-Burgeo):: Mr. Speaker, may I ask the Prime Minister if he is in a position to answer the question I asked yesterday?


Right Hon. J. G. Diefenbaker (Prime Minister):: I am not, Mr. Speaker, but I will be tomorrow.


John George Diefenbaker: Mr. Speaker, a moment ago the hon. member for Burin-Burgeo asked me whether I had an answer to the question he asked yesterday and I said I had not. The Secretary of State for External Affairs has
Inquiries of the Ministry handed me the statement which according to the embassy in Washington is given by the United States department of defence to those who refer to the article in question. That statement reads as follows:
The Baldwin article is inaccurate in that it implies a major move from Argentia. Except that COMBALANT (Commander Barrier Forces Atlantic) probably will move his small command to Iceland in the near future, there will be virtually no change from the present complement and activity at Argentia.
In quoting that I am using the United States answer, but it is the only information we have and I adopt it as my own in answer to the question raised.


Chesley William Carter: I thank the Prime Minister.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Mr. W. F. Matthews (Nanaimo):: Mr. Speaker, I wish to direct a question to the Minister of Public Works. Would the minister inform the house if it would be possible to commence the reconstruction of the assembly wharf at Nanaimo so that it might contribute to the winter works program.
Hon. D. J. Walker (Minister of Public
Works): Mr. Speaker, I want to thank the hon. member for Nanaimo for notice of the question. The answer is yes. However, there are factors other than winter work to be considered. The operations of the sawmills and shipping interests require that the reconstruction be scheduled so as to provide minimum interference. However, every effort is being made to have this work put under way as soon as possible.



REQUEST FOR DATES AND DETAILS OF EXPORT PERMITS

[Stage Direction]
On the orders of the day:
Hon. George H. Hees (Minister of Trade and Commerce):: Mr. Speaker, I have given careful thought to the question asked yesterday by the hon. member for Essex East, that the house be advised, concerning the 17 permits, of the dates of the permits and of the types and quantities of goods covered in each case, with regard to shipments to Cuba.
I have to bear in mind the undertaking which is given to applicants for export permits that the details they disclose will be treated as confidential. I also have to bear in mind the very important principle observed in the Statistics Act, namely that if there are less: than three exporters of any one category of

Inquiries of the Ministry goods, statistics of export trade will not be separately disclosed but combined with those of other statistical items.
This principle is equally important as it affects disclosure of information on use of export permits, and would be involved in this case in connection with several of these permits. The information which has been requested, coupled with what will shortly appear in the trade statistics, could very well give to anyone knowledgeable in the trades concerned some commercial intelligence useful to potential competitors of the exporters, not only those within Canada but also their competitors in foreign countries. This would provide just the sort of commercial intelligence for which foreign competition is always on the lookout. Unfortunately it is impossible to predict in advance where damage of this nature can occur, and it is certainly in the public interest that the details of the business of Canadian exporters facing competition in foreign markets should be safeguarded.
As I explained in my statement to the house on Friday, December 16, I would have no reason to refuse the tabling of these permits if it were not for this important matter of principle, and I also explained that in disclosing the information I then gave the house I was already going further than I would in normal circumstances consider appropriate.
Since it is the matter of the export of reconditioned aircraft engines which appears to cause the members of the opposition so much concern, I have been assured by the companies concerned that the engines in question which were sent to Canada for reconditioning, and are re-exported for reinstallation in commercial aircraft, are not suitable for inclusion in modern military aircraft.
I have decided that it is time to call a halt to further public disclosure of the details of these transactions. Each successive disclosure represents a further impairment of the assurance of confidential treatment given to applicants. As I reminded the house the other day, it has been the consistent practice of this government, and of the preceding government, to respect the confidential nature of the information which must be disclosed by firms applying for export permits, and we do not intend to depart from this practice.


Paul Joseph James Martin: Mr. Speaker, may I ask a question of the minister. Would the minister be disposed to give us now the nature of the commodities covered by the permits in question? Surely this would not in any way offend the minister's sense of the kind of commercial intelligence that we should have in this country.
[Mr. Hees.l


George Harris Hees: I think the hon. member will find the answer if he looks back to what I said on Friday. I outlined the nature of the commodities. There were airplane engines and three or four other commodities which I specified at the time.


Paul Joseph James Martin: Would the minister say whether or not there were any parts which might be used by military tanks?


George Harris Hees: I am not aware of any. I am advised that these exports were of aircraft engines and three or four other commodities that were mentioned. There was no mention of any parts that could be used in tanks. I am sure there were not any such parts included in these orders.


Mr. G. J. Mcllrailh (Ottawa West):: Mr. Speaker, I should like to direct a supplementary question to the one asked of the Minister of Trade and Commerce. Will he agree with me that the reference in the Statistics Act to the limitation on publication of statistics was to statistics gathered under the authority of that act, and not to statistics gathered on applications under the export and import control legislation?


George Harris Hees: Mr. Speaker, I thought I had made myself very clear on this, but in case I have not I think I should read to the hon. member what Right Hon. Louis St. Laurent said on this matter in this house in 1956 when the question of an export permit for 12 Harvard aircraft to be shipped to Egypt was the subject of considerable discussion in this chamber. The then prime minister refused to table the export permits, and at page 787 of Hansard of Thursday, February 2, 1956, he stated:
I think this matter has been fully canvassed and discussed ... and full information has been given as to how that ministerial order was made. The only official document which is provided for by the statute is the export licence.


Mr. Drew:: -
The then leader of the opposition:
May I then ask the Prime Minister, Mr. Speaker, if he will have the export licence tabled which covered this particular order?


Mr. St. Laurent (Quebec East):: Mr. Speaker, that is a document which for other reasons it is not practicable to make public. All these documents dealing with individual transactions of commercial corporations are treated as confidential and are described as such in their form for purposes that are legitimately required by our industrialists who engage in competitive business.
A notice of motion, No. 24, was brought before the house on February 6, 1956 which reads as follows-


Mr. Speaker:: Order. I suggest to the minister that his response is more in the nature

of debate than an answer to the question which was asked, which itself may have been somewhat argumentative.


George Harris Hees: Mr. Speaker, perhaps I could just finish. I just wanted to outline that the then government voted solidly against the production of those papers at that time.


John Whitney Pickersgill: How did you vote?


Lester Bowles Pearson: Mr. Speaker, may I ask the minister whether he would make public the nature of the goods exported under these export permits, as was done on the occasion to which he has referred.


George Harris Hees: I have done that, and I have explained it very clearly. I did it last Friday, and I will read to the hon. member exactly what I said.


Lester Bowles Pearson: All seventeen.


An hon. Member:: Send him a copy of Hansard of last Friday.


Lester Bowles Pearson: Seventeen permits.


George Harris Hees: I have now found the reference I made last Friday to the articles covered in those 17 export permits. It is on page 867 of Hansard at the bottom of the left hand column:
All but five of the permits issued were to cover supply to the Cubans Airlines of parts and instruments and reserviced engines which initially had been sent to Canada from Cuba for repairs. These were for the Viscount and Britannia aircraft operated by Cubana Airlines. The other items include part of a cobalt therapy unit, some rebuilt automobile transmissions, some rock drilling supplies, and parts for radio sets. I can assure the house that no application has been received for a permit to export goods of a strategic significance to Cuba.
As I mentioned a few moments ago, my department checked with the Bristol company and the Vickers company regarding the aeroplane engines that were reserviced and sent back, and we were assured that nothing in them could be described as strategic materials by any stretch of imagination.


Paul Theodore Hellyer: I wonder if the minister will explain the difference between radio tubes and equipment for strategic uses and for other uses?


Mr. Speaker:: Order. It is not one of the
administrative responsibilities of the minister to be a radio mechanic. Furthermore, I think the question has been pursued as far as can usefully be done on the orders of the day.
Inquiries of the Ministry



SALE OF WATCH MECHANISMS BY RUSSIA TO CANADA

[Stage Direction]
On the orders of the day:
Hubert Badanai: I wish to direct a question to the Minister of Trade and Commerce. Can the minister inform the house whether the Soviet union has made a deal to sell Canadians watch mechanisms without cases for about $3 each-


Some hon. Members:: Order paper.


Hubert Badanai: -compared to the $7 now being paid for the same article and quality-


Mr. Speaker:: There was a certain amount of interruption while the hon. member was endeavouring to put his question, and I am not sure that I understand what he is driving at, but it seems he is asking for detailed information. May I ask whether he has given notice of this question?


Hubert Badanai: No, sir.


Mr. Speaker:: It would appear to me that in terms of urgency no harm would be done if the question were put on the order paper.


Hubert Badanai: I should like to ask the minister to take my question as notice.


George Harris Hees: Put it on the order paper.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. O. J. Godin (Nickel Bell):: Mr. Speaker, I wish to direct a question to the Prime Minister. Would the right hon. gentleman advise the house if he will take steps to prevent the appearance of Paul Robeson on a C.B.C. Christmas broadcast, that person being a well-known communist, so that in Canada there may be peace on earth to men of good will?


John George Diefenbaker: Mr. Speaker, that question comes strangely from the opposition, who on so many occasions in righteous wrath have suggested there should be no interference, even in the slightest degree, with the freedom of the C.B.C. to do as it will.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I wish to direct a question to the Secretary of State for External Affairs. In view of the report in Le Devoir of December 17 that the junior

Inquiries of the Ministry chamber of commerce of Montreal has submitted a brief to the government suggesting the extension to French speaking underdeveloped countries of the kind of aid now given to commonwealth countries, can the minister say what consideration has been given to this request?


Howard Charles Green: I cannot deal with that particular request, because I am not sure it has been received in my department, but we have been working on this problem for some months.


Hazen Robert Argue: I wonder if the minister would take this as notice, if he has not the information now, and bring the house up to date on what success he has had.


Howard Charles Green: The answer is thait we have been working on the problem for some months, trying to see if anything can be done.


Hazen Robert Argue: I wonder if the minister can say what success the government has had in increasing the number of French speaking students coming to Canada under the commonwealth training plan?


Howard Charles Green: All the French speaking students who can possibly be included under that scheme have been brought here, and in the same way we are trying to get as many as we can under different United Nations schemes. When I referred to an attempt being made to devise some additional policy, I had in mind some scheme over and above what we are already doing.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. R. L. Hanbidge (Kindersley):: I should like to ask the Minister of Public Works a question. I wonder if the minister could inform the house what progress has been made in connection with the winter works small post offices program.


Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, I have received a number of inquiries from various members of the house on this subject, and I wish to thank the hon. member for Kindersley for asking the question he did. I do not yet have a reply for the hon. member for Assiniboia, but I hope to be in a position to give him that information shortly.
May I say that contracts for the construction of 91 small post office buildings-and this is of interest even to members of the Liberal party, because this is part of the

winter works program-are all either awarded or advertised for public tender and in the process of being awarded. The program announced last month is part of the department's effort to increase winter employment by carrying out as much work as possible in the winter. The list of the locations where the post offices are being built is available.
During November and early December, contracts were awarded for construction in 59 locations. Tenders have been received and contracts will be awarded within the next few days for 24 other communities. Advertising for public tenders has been undertaken by the department for the remaining eight locations. As a regular practice, construction of these small post office buildings has been avoided during the summer months so they can form part of the winter works program. All of the buildings are part of the government's regular accommodation requirements in the smaller communities across Canada.
The small post office program was begun in 1958-59, and when this winter's construction is completed it will bring to more than 200 the number of such buildings erected since that time. Sixty-seven were built in 1958-59 and 52 more were completed last year.


George James McIlraith: Mr. Speaker, I rise on a point of order. The business indicated for today is the supplementary estimates that were before the house yesterday. With respect to the item that has just been debated by the minister, his answer to the question is offensive to the rules of the house on several grounds.
First of all, at the very start of his answer the minister added gratuitous references to the opposition. The hon. member who asked the question did not ask anything about the opposition in the House of Commons. Those comments were purely gratuitous on the part of the minister. The information contained in the answer given by the minister was proper material for the estimates which are presumably the next item of business. If we were to follow the precedent just set then it would now be in order for me to debate one of the estimates which may not be reached today. I would not wish to abuse the rules in that way, and I am sure that Your Honour would not permit me to do so.
There are other grounds on which the answer was out of order, and I should like to draw Your Honour's attention to those.


Mr. Speaker:: I appreciate the hon. member's interest in preserving the proprieties of the house. It is generally not proper on the orders of the day to ask about matters which are appropriate for inquiry during estimates. The

particular question seemed to me to have some immediate interest, and I did not consider that I should intervene in this particular case because it was a matter of current interest to the hon. member and I think to the public to know what progress is being made in the program. Therefore I allowed the question to go. I have made a note of what the hon. member has said, which is undoubtedly sound in principle, but in this case it seemed to me the question was one which would be permissible.


Paul Joseph James Martin: Mr. Speaker, may I put a supplementary question in view of the fact that Your Honour allowed the primary one. In view of the very interesting reply he has just given, may I ask the Minister of Public Works how he reconciles his reply with a statement he made on September 13, 1960 referred to in the Toronto Star under the heading "Public Works Poor Way to Make Jobs-Walker":
Federal public works minister David J. Walker said last night it is uneconomical to construct public buildings to fight unemployment.
Will the minister try to reconcile the two statements?


Mr. Speaker:: Order. The hon. member's supplementary question seems to ask for opinion rather than fact. The initial question was one of fact. I cannot allow the supplementary.


Mr. D. M. Fisher (Port Arthur):: I have a supplementary question, Mr. Speaker, which I think is in order. As a consequence of the hon. member for Kindersley asking this question, I wish to ask the minister whether he has stopped the practice of informing government members about post office contracts and giving them the opportunity to announce them.


David James Walker: I do not think there is any change in our routine, Mr. Speaker. The winter works program has such a tremendous percentage of labour and man hours that we are very happy to supply this information to hon. members.

The house in committee of supply, Mr. Flynn in the chair.
DEPARTMENT OF LABOUR Special services-
592. Payments, in accordance with terms and conditions approved by the governor in council, to provinces and in respect of Indian bands under the municipal winter works incentive program during the 1960-61 and 1961-62 fiscal years of amounts not exceeding one half of the cost of labour incurred in the period from the 15th day of
Supply-Labour
October, 1960, to such day in the fiscal year 1961-62 as may be determined by the governor in council, $30,000,000.


Herbert Wilfred Herridge: Mr. Chairman, in the few
moments at my disposal last evening I referred to the impressive parliamentary presence and oratorical ability of the hon. member for Essex East. I recognize the hon. member's interest and concern with the problem of unemployment. We in this group differ from him in this way. As a member of the Liberal party the hon. member supports an economic philosophy similar to that of the government. While we support this winter works program, we consider it an inadequate approach to the problem.
I could speak at some length of the attitude of this group on this question, but I will refrain from doing so. As a socialist I consider these remedies inadequate and superficial. We believe the time has come in Canada to build a new society with new ideas, a new sense of values and a new purpose. The United States way of life has become a shoddy thing to large sections of the world, and it is time we began to build a Canadian way of life as an independent nation.
We support this vote wholeheartedly because we know it will put a considerable number of men to work.


Mr. Marlin (Essex Easl):: Not enough.


Herbert Wilfred Herridge: Not enough, as the hon. member for Essex East said, but to the extent that it gives employment to some people it is beneficial.
I want to deal briefly with another aspect of the question. Before the debate concludes I hope the committee will hear from some hon. members who have experience with municipal administration and the problems and difficulties they are facing particularly in relation to playing their part in the municipal works program. I think it would be fair to say that, regardless of how well organized our society is from an economic point of view, owing to our climate, owing to the particular elevations of communities in some cases, owing to local circumstances, we will always have some legitimate, as I would call it, seasonal unemployment that will have to be met by programs of this type. I do not think that can be avoided. That unemployment should be on a very minor scale indeed and should be genuinely seasonal and as a result of the circumstances I have mentioned.
Therefore we in this group believe that the government should give consideration to the expansion of the principle of the municipal works program to embrace co-operation with provincial governments in the same way. One member who spoke last night referred to

Supply-Labour
unorganized territories and various organizations in unorganized territories. Personally I see great difficulty in the federal government co-operating with any entity less than a provincial government or a municipal government except in the case of some particular corporate community organization. This is going to require co-operation. It is going to require planning. It is going to require a survey of needs of the unemployed in the various provinces and areas concerned, and it is going to require some co-operation with respect to timing.
I have mentioned the matter of timing before because I believe that much more can be done if we can only get some genuine co-operation in the timing of certain public works. For instance, in my own district I have seen on occasion a considerable number of good miners employed on rock work on the highways when there was adequate employment in the mines at the time. Rock work, particularly on high bluffs, is an instance where, with planning and proper timing, the work can be done in my opinion with more efficiency under winter conditions, particularly in British Columbia, than under summer conditions because of the temperature and so on.
Some consideration could be given to the building of bridges and the building of deep cuts on the highways. There are certain types of construction work that can be done efficiently under winter conditions. Some consideration could also be given to the new development of building wharves for recreational purposes, which to some extent is a responsibility of the federal and provincial governments. River bank protection such as has to be done on occasion is a type of work that can be done very efficiently and at reasonable cost under winter conditions. Particularly in certain areas of Canada some work could be done on airports. I give these few illustrations of projects that could be undertaken as a result of a program providing for federal-provincial co-operation along the lines of the municipal works program.
I intended to say more, Mr. Chairman, but realizing the lateness of the hour and the desire of the committee to carry on with the estimates I suppressed many of my words of wisdom that were ready to bubble forth last evening when I was prevented from giving them to the house by the rather lengthy speech of the hon. member for Essex East. Again I say that we support this program and suggest that on a long term basis we should give consideration to federal, provincial and municipal works programs to take up the slack in what I would term legitimate and somewhat small scale seasonal unemployment.
[Mr. Herridge.l
(Translation):


Mr. Campeau:: Mr. Chairman, item 592 is an excellent one for providing winter employment. However, it is much more effective in medium sized towns and in small towns.
In the constituency of St. James, which is located in the heart of a great city and is one of the most highly developed in Canada, this measure is less effective, and I can assure you, Mr. Chairman, that unemployment is still rising in St. James.
The long term legislation which has been put forward and passed by the house is excellent. I refer to the National Productivity Council bill, the Small Business Loans Act and the technical and vocational training assistance program. However, such measures will only be effective in time, and are of no immediate assistance to the unemployed in the constituency of St. James.
Mr. Chairman, there is no use pretending that the problem can be solved by ignoring it. I have as little regard for those who play politics with the unemployment problem as for those who say that the matter will take care of itself.
Just spend one day in the office of the member for St. James, and you will see how many people come in with their unemployment insurance cheque and say they would rather work than cash a cheque that to them smacks of charity.
Just spend one day in my office, and you will see wives come in and seek jobs for their husbands, saying that he does nothing but loaf all day or spends his time in some tavern.
Just spend one day in my office and you will see how many fiancees come to me to ask for a job on behalf of their boy friend, because their hopes of getting married are about to collapse.
Mr. Chairman, the spectre of unemployment has made its appearance. Its shadow is upon us. It is undermining the foundations of our society.
I see only one solution to the unemployment problem. There has been some talk of tax reductions. Such a step will be of little avail to those who have no money to pay taxes. As I have just said, Mr. Chairman,
I see only one solution, which may seem drastic, and this is to declare war against unemployment, to establish a state of war and revive war measures to put our industries again into full production.

Mr. Chairman, I shall conclude my remarks by stating that human distress is claiming our attention more than ever, during a week where we talk of peace to men of good will.
(Text):


Miss LaMarsh:: Mr. Chairman, speaking to item No. 592 I should like to say in a preliminary way that before coming into this chamber I had had some personal experience with winter works in that I acted in a professional capacity for two municipalities and maintained a close liaison with all municipalities. Perhaps I might say at the outset that the riding of Niagara Falls represents a fairly good cross-section of the type of southern Ontario municipality which might be taking advantage of the proposals instituted by the government two years ago. In this riding we have a large city, the city of Niagara Falls, three townships, Stamford, Willoughby and Bertie, a town, Fort Erie, and two villages, Crystal Beach and Chippewa. Until this year, Mr. Chairman, only two municipalities and those the largest two, the city of Niagara Falls and the township of Stamford, with which I was associated, participated at all in the federal-provincial-municipal winter works incentive program. This year there is more participation and I will deal in particular with some of these types of projects as I go along.
There have been certain members of the house, Mr. Chairman, who have said that the riding of Niagara Falls was not a depressed area and they referred to newspaper articles to support their position. However, the Minister of Labour knows that this is not the case. Within the past two months he has been in the riding of Niagara Falls, as has the Minister of Defence Production. I should like to refer particularly to some remarks made by the Minister of Labour on that occasion when he visited the town of Fort Erie which is in the southern part of the riding of Niagara Falls. He was quoted in the Niagara Falls Review of October 21 as having said the following:
When the employment of 300 people In a town like Fort Erie is at stake we in Ottawa are very concerned. I can assure you-
He was speaking, of course, to a political meeting.
-we are looking into the matter very closely and more contracts will be forthcoming.
This was a reference to certain contracts which had been let fortuitously during the month of October by the Department of Defence Production to an aircraft plant in Fort Erie. I continue to quote:
The minister said: "When Raymond O'Hurley, the Minister of Defence Production, returned to Ottawa-
Supply-Labour
He had been in Niagara Falls just before that.
-I spoke to him and asked him what the situation was here. 'Mike', he answered, 'I will have to find something more for those people in Fort Erie because we simply must keep them in work.' "
Then the report goes on, Mr. Chairman:
Mr. Starr added:	"And I believe Raymond
O'Hurley when he says that because he is a very sincere and honest man."
I suggest that this indicates that at least in October of this year the Minister of Labour knew that in the riding of Niagara Falls there was cause for some concern over the increasing unemployment. I have before me certain figures which are as up to date as I was able to obtain dealing with Niagara and particularly the town of Fort Erie. These figures are weekly, commencing with October 10, 1960, and are taken up to December 9, 1960. Those unemployed in the week ending November 10 were 552 in number, including men and women, whereas at the same time in 1959 there were 438. In the week ending December 9, 1960 there were 866, an increase of 57 per cent in one month's time, whereas there had been 776 a year earlier. I do not have the figures as yet for December 20, but it is indicated there has been a rise of between 50 and 100 people every week in the last five weeks. It is apparent also that there will be approximately 1,000 people unemployed in Fort Erie now.
In so far as the Niagara Falls area is concerned, I have the monthly figures taken from the official figures of the unemployment insurance office there. However, I am able to contrast these figures for every month from 1956 to the month of November, 1960 inclusive. I should like to read these into the record to bring to the attention of the Minister of Labour what is happening in this area. I have taken them from the month of October to the month of April, inclusive, these being the months when the winter works program is applicable.
In 1956, during the month of October, there were 456 people out of work; in November, 617; in December, 1,317; in January, 1957, 1,738 people out of work; in February, 2,266; in March, 2,365 and in April, 2,023. It will be noted, Mr. Chairman, that this was the last year of the Liberal administration. In October, 1959 there were 1,145 people out of work in Niagara Falls, three times the number for the same month of 1956; in November, 1959 there were 1,581; in December, 2,528, twice as many as in the same month in 1956; in January, 1960 the figure leaped to 3,418, more than double the number for the same month of 1956; in February, 1960 3,460; in March, 3,304, and in April, 3,097. In October, 1960, there were 1,443 people

Supply-Labour
out of work and in November, 2,071. It is apparent that the December figure will be close to 3,000. There will be about 4,000 men and women unemployed in the Niagara Falls riding by the time I return to that riding tomorrow.
We have been listening to the preparations made by this government to put these Canadians, and individuals like them across this great nation, back to work. We have been unable to obtain any information from the Minister of Labour as to what immediate prospects these people have of finding employment. The only proviso is that there is in the supplementary estimates an additional sum of $30 million for winter works. The winter works program was broadened this year to some extent and considerable publicity was given to the fact it was announced earlier. But it is apparent, Mr. Chairman, that those who announced this program and designed it know little about municipal life and little about the timing in which the municipalities prepare their budgets. I would assume that there are those in this government who had municipal experience earlier and know that the municipalities strike their budgets early in the year.
When money has to be raised by a municipality for its portion, which is far greater than the portion this government pays for any winter works project, it has to be obtained in one of two ways, either paid for at once, in which case it becomes a part of the general rate against real property in the municipality, or else borrowed by debentures. It cannot be argued by any member of the government that raising money by debentures is not extremely expensive, particularly in the last three years during the regime of this government, and it has finally reached the point where many municipalities cannot afford to borrow at all.
When the budget is struck in March, the municipalities must then arrange what their spending is to be. They are unable to prepare, at that time, for a surplus. It is their responsibility, just as it is this government's, to keep their general rate to the lowest possible level. Thus when the government comes along and announces in August or September, that it is to start a new winter works program in October it is virtually of no benefit to any municipality in the province of Ontario, unless it be a municipality with a surplus on hand and that is something that does not exist any more or unless it be a municipality that is able to raise money by debentures.
Of the seven municipalities in the riding of Niagara Falls, all but one are required to debenture, and each of those municipalities has almost reached the point where the Ontario municipal board will not permit them

to borrow further. I should like to point out that in an area such as the city of Niagara Falls, which has been facing great capital expenditures and which will have in the next year or so a very large capital expenditure for sewage and filtration plants which it cannot afford, in the year 1959-60 they applied and received approval for certain projects under this government's proposals which required them to spend $110,000. There was a total subsidy from this and the provincial government of somewhat less than $12,000. It was necessary, therefore, to spend almost $100,000 in order to benefit from this magnificent winter works program.
In each of the municipalities the same sort of payment is required to be made. In the township of Stamford this year $162,800 will have to be spent in order to obtain a subsidy from both governments of a little over $50,000. The village of Chippewa, where for the first time they are able to construct a badly needed firehall and municipal building, has gone out and raised money for this building and is able to obtain a subsidy of only $20,000. This is for a public utility. The rest of the money must be raised by debentures.
Now, Mr. Chairman, if you raise money by debentures, it is paid for in exactly the same way as money which is in the general rate, that is the taxpayer who owns his property pays for it. This is nothing short of welfare, and this government has shifted the welfare from the shoulders of the whole of the people of Canada, a principle which under the Liberal administration was well accepted, and put it on the shoulders of the person who owns real property.
I suggest to this government that this is no! the place for this type of work. If all the work that was to be done under winter works was of a capital nature, something which would increase the stake in the community, I would suggest it might be more acceptable. However, when this government, under its leader, recommends that money be spent on such things as clearing brush, which seems to be something about which hon. gentlemen opposite are becoming experts, something which can be of no real benefit in the future, rather than on such things as constructing water filtration plants, something of real use in the future, then there is no justification for imposing this burden on the owners of real property.
I have sent out a survey and have asked each of the municipalities in what way such a program as this might be strengthened. In the first place it is suggested and has been approved by the Ontario municipal association-and these recommendations have been sent to this government but have received the

usual kind of consideration-that the subsidies paid by this government cover not just the cost of raw labour but also the cost of material and overhead. There is no question that if material be purchased for use in a winter works program, this procedure also creates jobs which create more jobs. The present figures are indicating that well above 50 per cent in most cases must be spent by the municipalities on such things as materials. Particularly if you get into such things as sewage or water pipes or anything of that kind, the greatest cost is, of course, in material.
It is also suggested that the government pay subsidies on the wages of regular staff which are assigned to winter works. In such municipalities as those which have permanent engineering staffs or which have foremen which are taken off regular maintenance work and sent out on this work, the municipality is of course paying them and is not receiving the subsidies from the provincial department of highways.
It is further suggested-and this is one of the more important things the minister may consider-that there be interim payment of subsidies. As the situation now is municipalities are having to borrow money or to go into overdraft or find the money wherever they can in order to keep their people working and they are not paid for about ten months. Most municipalities cannot afford this, particularly if it is a large expenditure in relation to their annual budget. It is therefore suggested that the government might consider making interim payments of these subsidies. Since the work must be completed by the end of April surely there seems to be no reason why payments may not be made from time to time.
I suggested earlier in my remarks that the government deal with the program of the following year. It is apparent from year to year during this government's life that unemployment is becoming an increasing problem across Canada. It is an unhappy thing. It is not a thing for anyone to gloat over. It is not a thing for anyone to be happy about. It is not just the hon. member for St. James who spoke a few moments ago who is concerned about those who come to his office to beg for work. These people are now losing what under 22 years of good government they were able to build up. I refer to their cars and their homes.


Some hon. Members:: Oh, oh.


Julia Verlyn (Judy) LaMarsh: I am surprised that hon. gentlemen should be so pleased. Since they are sitting here, being sure of an indemnity of a type, they at least are not unemployed.


Some hon. Members:: Shame.
Supply-Labour


Julia Verlyn (Judy) LaMarsh: They should be concerned for those across Canada who are unemployed.


Mr. Ricard:: She gives only what she has; she cannot give what she does not possess.


Julia Verlyn (Judy) LaMarsh: I should be pleased to give whatever of my substance I have in order to assist these people. However, it is a real problem today because they are unable to keep up the payments; they are unable to retain what they have. These people want to work. In many cases they have gone to the municipalities to ask for an opportunity to work. The municipalities have been obliged to say, "We cannot take you on; we can take only people whose benefits are gone". Hence even those who wish to go off unemployment insurance and to be gainfully employed are not at liberty to do so. The municipalities in my riding have had to take those who are in real need, whose employment benefits have been long gone.
These projects which have been set up will not employ more than 123 people in the whole of Niagara Falls riding which has approximately 4,000 unemployed.


Paul Joseph James Martin: That is the standard all over the country.


Julia Verlyn (Judy) LaMarsh: I have had figures given to me and in some cases they indicate that as many as 90 will be employed. Yet the works manager or the engineer of the city I understand says in each case, "Pay no attention to the 90 men". I wonder about the figures used by the Minister of Labour when he tells us how many men are to be employed in each province as he did yesterday in answer to the hon. member for Essex East. For instance, in the case of the city of Niagara Falls, under their approval it was indicated that 90 men would be employed. I should like to quote from a letter which I received from the city manager of that city. He states as follows:
The total number of men to be employed as shown on the program for 1960-61 is misleading because we will never have anything like 90 men on the job at one time and many of the men employed will be moved from one job to another.
I would estimate that we will not exceed 30 men on the work staff at any time. This is only a very small proportion of men that require work during the winter months.
There are 123 men who will be employed in Niagara Falls and these will be employed for different periods of time. When the government produces figures it does not indicate whether an individual man is to be employed for a day or for three or four months; nor do the projects themselves indicate their duration. I suggest to the minister that the figures are just false and misleading to the people of Canada.

Supply-Labour


Michael Starr: May I interrupt the hon. lady if she will allow me to do so in order to get this matter straightened out. As to these figures as to the number of men to be employed, I am afraid the hon. member will have to apply to the officials of Niagara Falls because they supplied us with those figures.


Julia Verlyn (Judy) LaMarsh: I appreciate the fact that certain figures are given as to the number who will be required for a number of hours. However, there is nothing indicating whether you will be hiring one man for a week or a month or four months and there is nothing indicating whether he will be working a four hour day or an eight hour day. I suggest to the government that the least they owe to this committee, and to the people of Canada is some break-down as to how many men will be employed, each for how many hours and how many weeks.


Michael Starr: The municipalities do not give that information at all. All we can give you is the number of man-days and the number of men to be employed and you divide one into the other and you get the average, something like 49 man-days per person.


John Whitney Pickersgill: What a businesslike way to run a department.


Michael Starr: Everybody is not Superman as is the hon. member for Bonavista-Twillingate.


Julia Verlyn (Judy) LaMarsh: I suggest to the minister that if he asked for the figures he might receive them. It might very well be that if he or his officials asked for them, they would receive them.


Michael Starr: If I understand the hon. lady needs them, I will get them.


Julia Verlyn (Judy) LaMarsh: I ask for them.


Michael Starr: I will write to the city of Niagara Falls. Evidently the hon. member has no communication with them.


John Whitney Pickersgill: She just gave a reference to a communication.


Hazen Robert Argue: I would ask the minister not to be mean to the lady.


Michael Starr: Then let the lady be ladylike.


Julia Verlyn (Judy) LaMarsh: Whether or not the minister accepts what I say with respect to a subsidy on materials I should also like to read the headline from the Niagara Falls Review of December 8, 1960. When I sent out questionnaires to the various municipalities they were discussed by the councils and the answers were sent to me upon the consideration of the elected officials. The engineer for the township of Stamford reported that a subsidy on materials could double winter works. On

the Stamford winter works program for this year, which is the largest one in the whole riding of Niagara Falls, it is estimated that 45 men will there be employed for 44,256 hours.
There is nothing, I suggest also, which leads this government to recommend even to the municipalities what hourly rate will be paid to employees. In some municipalities employees are paid well below prevailing rates and well below prevailing rates in construction. I was present this fall at a time when representations were made to pay the same as the municipal union rates and for the first time they were paid that rate this year. That rate, in case the Minister of Labour does not know it, in my riding is $1.35 per hour. This is the magnificent sum that is put into the hands of individuals under the only thing which the government so far has produced as an incentive to work or as a make work program.


Hazen Robert Argue: I have been informed that this is a memorable occasion for the hon. member for Niagara Falls. Not only has she just done a little bit more than hold her own with the Minister of Labour in the exchange that has just taken place but it is also the occasion of her birthday, and I congratulate her.


Paul Joseph James Martin: Do not go any
further, though.


Hazen Robert Argue: I do not know exactly what the hon. member for Essex East means-


Paul Joseph James Martin: You have told us it is the hon. lady's birthday; I am just saying, do not go any further.


Hazen Robert Argue: I do not know whether the hon. member for Essex East thinks this is his private preserve, or to what he may be referring; but anyway I was very sincere in offering my congratulations to the hon. member both on the occasion of her birthday and on the occasion of a very effective contribution to the debates in this house.


Some hon. Members:: Hear, hear.


Hazen Robert Argue: We are dealing with the government's program to provide winter works, and certainly a winter works program is greatly needed in this country at this time. It is not only needed because of the normal seasonal type of unemployment; it is needed because of greatly increased unemployment at this time, further aggravated by regional unemployment, concentrated as it is to quite an extent in the Atlantic provinces. Therefore the government's proposals are most important in relation to this all-embracing problem.



I960

[Stage Direction]
I have in my hand a publication by the economics and research branch of the Department of Labour, Canada, 1960, entitled "Seasonal Unemployment in Canada". It contains a wealth of information on this very serious problem. For example, in a table on page 21 it points out the vast increases in unemployment, the percentage increase from summer to winter; the average from 1954 to
1959	in unemployment of certain skilled workers in the construction industry. For example, bricklayers and tilesetters show an increase of 1,002.8 per cent; plasterers, an increase of 1,165.6 per cent.
Therefore it is not just a question of training people and expecting that as a result of their training will come job opportunities, because certainly in the construction industry the people who are skilled are just as much unemployed in the winter time as the ordinary workers in that industry. But this is the government's answer, along with certain other legislation, to this serious unemployment problem, aggravated as it is by a seasonal factor.
I have in my hand certain information that has been provided by the minister's department. It is a projection of the number of men to be hired in the period October 15,
1960	to April 30, 1961 as a result of the government's winter works project. It contains some very excellent information in that it enables members of the committee to judge just how comprehensive is the government's program, and allows members of the committee to decide, with the facts available, just how far short the government's program comes to picking up what might be termed the normal increase in unemployment because of the seasonal factor.
The publication to which I have already referred contains this statement on page 12, and I wish to quote it. It points out the extent of the seasonal unemployment problem when it states:
It is estimated that under reasonably full employment conditions, and with a labour force of about six million-[DOT]
Now over six million:
-some 250,000 persons-about 4 per cent of the labour force-are seasonally unemployed at midwinter. This figure may be slightly larger when employment is declining and slightly smaller when employment is expanding, as the seasonal amplitude appears to be affected in some indeterminate way both by changes in job opportunities and the level of total unemployment.
In general the amount of seasonal unemployment at mid-winter is declared to be 4 per cent of the labour force of Canada. As it is at the present time with the working force at the present level it amounts to some 250,000 persons.
Supply-Labour
The government's projected employment as a result of the winter works program is that 78,627 persons will be hired and that they will have in total some 3,597,320 man-days of work. The minister has just said 40, but my calculation is that this will amount to 46 working days per man placed on the job. Yet if one calculates the actual number of working days, excluding week ends and holidays, from October 15 to April 30 there are 138 working days. Yet every person who obtains employment under this program gets only 46 working days.
Therefore, even those who are employed are idle for two thirds of the time. This is really not an adequate winter works program. Even those who are successful enough to obtain work under the program will be idle two thirds of the time from October 15 until April 30. If one calculates the number of persons who receive employment on the average for 138 working days in this period, then this is a program that provides winter work over this period of time for just over 26,000 persons. Yet according to the government's own publication the seasonal unemployment in Canada amounts to 250,000. This is apart altogether from the abnormally high unemployment in the country today over and above the seasonal factor. Those persons provided with jobs for the winter period under this program amount to 26,000-just over 26,000-and yet the number of persons who are seasonally unemployed amounts to 250,000.
In other words, this program, valuable as it is, after all the blaring of trumpets and all the fanfare that the government has arranged in connection with its operation, is just 10 per cent effective when it comes to putting the seasonally unemployed to work, to say nothing of putting the vast numbers of unemployed to work who are in excess of the seasonal workers.
Mr. Brunsden:: Would the hon. member permit a question? On what does the hon. member base his 10 per cent figure?


Hazen Robert Argue: I base it on the statistics I hold in my hand from the Department of Labour and on the booklet from which the hon. member would know I had quoted, if the hon. member had been in his place, entitled "Seasonal unemployment in Canada, Economics and research branch, Department of Labour, Canada, 1960".
These figures are taken from official publications; my statistics are taken from the government's own figures. The calculations I have made are based on those statistics. I suggest that the government's program, valuable as it is, welcome as it is, helpful as it is, is just 10 per cent effective in dealing with this vast unemployment problem.

Supply-Labour
The government, the minister and his colleagues will have to present to parliament in other legislation and in other ways a tar greater program, a tar more effective program to deal with unemployment, and in particular to deal with seasonal unemployment, than the government has presented in this feeble, ineffective, 10 per cent program which we have been discussing today and last night.


John Whitney Pickersgill: I do not intend to hold up this committee and I am not going to repeat what has been so ably said by the hon. lady member for Niagara Falls and the hon. member for Assiniboia about the inadequacy of the program, but I cannot allow this vote to go by without repeating what we have said on this side of the house, and particularly what hon. members representing the Atlantic provinces on this side of the house have said about the inequitable character of this program-the fact that this program favours those municipalities which are the richest and which have the least unemployment and discriminates against those which have the least resources and the most unemployment. This follows by definition because the same 50 per cent formula is applied to all of them.
Some of us did think that when the government decided to include unemployment among the topics which were to come before the federal-provincial conference last October, perhaps it was willing to listen to some of the things that were said. Last night the hon. member for Laurier put on record in Hansard what was said by the premier of Quebec, the Hon. Jean Lesage, who during the course of that conference took substantially the same position as has been taken by the Liberal opposition here, namely that the contribution should be on a sliding scale; that it should be higher in those areas where there was heavy unemployment and in those areas where there was small ability to pay. Mr. Lesage pointed out as was pointed out by the hon. lady this afternoon that a very large part of these costs is not for direct labour on the spot but for materials and for that reason many municipalities are inhibited from taking part in the program.
But instead of listening to the constructive suggestions made by the premier of Quebec, what was the attitude of the government when that conference was over? I think we ought to have on the permanent record of parliament the Minister of Labour's own estimate of that conference, because I think it has not received enough publicity, and I think it will shock the people of this country to hear it. I have taken the minister's comments from the local organ of his party, the Ottawa Journal, a report by Mr. Richard Jackson who does not go out of his way to

report unfavourably on the present government. This is from the Ottawa Journal of October 29, 1960 and the headline reads: "Everybody Unhappy. Conference Nowhere on Tax Deal, Jobless." I am not going to read anything about the tax deal, Mr. Chairman. The article points out that the conference got nowhere in connection with this matter, and then it goes on to say:
Even more bleak had been the performance of the conference on unemployment.
"Out of it came not one single useful idea," confessed Labour Minister Starr.
"The premiers were the ones who insisted on talking about unemployment.-
In other words, the federal government was not even sufficiently interested to put this question on the agenda until it was asked to do so. The premiers were the ones who wanted to talk about unemployment. The quotation continues:
-and so we rather expected they might have some helpful suggestions. They had none that could be applied on a national basis. Each had his own provincial axe to grind, each his own provincial project to push."
The Charlottetown Guardian, also a supporter of the present government, quoted the minister as saying, on the same day, October 29:
"There were no suggestions today from any of the provinces for any national project. Each province had its own axe to grind, some particular project like the Chignecto canal in New Brunswick."
Since the leader of the party opposite, the Prime Minister himself, had promised to build the Chignecto canal, did the Minister of Labour expect the premier of New Brunswick to say nothing about it? The thing that is so extraordinary is that here was a national conference of all the premiers, dealing with a problem whose importance the government should have recognized, and one might have thought that some attention would have been paid to the constructive ideas and advice which were forthcoming from at least one provincial premier, as the hon. member for Laurier pointed out last night. Instead they complained because the provinces did not provide a national solution.
How absurd can you be? Provincial governments are elected to look after the affairs of their provinces and they would not be doing their duty properly if they did not look after those affairs. The government of Canada is returned to look after national affairs, and if this unemployment is not a national problem, then we have no national problem today. It is far and away our greatest problem.
As I have said, I do not intend to hold up this item, but I do want to point out again that this program is not only inadequate, as the hon. member for Niagara Falls and others

have said, but that it is also inequitable. If the government had accepted at least the suggestion made by the premier of Quebec for a more equitable distribution of the costs of the winter works program to the federal treasury there would have been the possibility of much greater participation in areas such as eastern Quebec and the Atlantic provinces where unemployment is relatively most serious and where ability to pay is least.
My attention has been drawn to an item which appeared in the Ottawa Citizen on December 14-a little squib which is very relevant to what we are discussing now- which reads:
Prime Minister Diefenbaker has said that his government's first three and a half years in office have been spent clearing the underbrush.
So that is what the government has been up to. A lot of people have been thinking it was lost in the woods.
As far as this problem of unemployment is concerned it is perfectly evident that this statement is an accurate assumption.


Michael Starr: I had no intention of saying anything on this item, but since the hon. member for Bonavista-Twillingate does like to be the last man to speak on any particular item, and to assess the situation, I think I should put on record some statements. First of all, I should like to put on record a telegram I have received. It reads as follows:
Information reaching us from municipalities all across the country confirms wide participation in federal assisted municipal winter works program. You and your colleagues are to be congratulated on extending scope of projects and amount of federal financial assistance for this very important employment undertaking. The municipal governments appreciate the facilitating aid which the program provides and to the fullest extent possible are availing themselves of it.
That telegram is signed by Mr. George Mooney, the secretary of the Canadian Federation of Mayors and Municipalities. The date of the telegram is December 19.
With regard to the suggestion of Mr. Le-sage which was made at the conference, I would remind the hon. member for Bonavista-Twillingate that this program went into effect as from October 15. The suggestions to which he referred were not put forward until the conference, which was held from October 26 to 29. If Mr. Lesage had been anxious to do anything about this-and he was informed that this plan was coming into effect at the same time as all the other provincial premiers were informed-and if he had any alternative in mind he would not have waited until the provincial conference was in progress, some 12 days after the project had been started.
Supply-Labour
(Translation):


Mr. Bourgei:: Mr. Chairman, I have
no intention of drawing out discussion on the winter works program, but I want to tell the minister right now, that the congratulatory telegram which he has read out to us, in which Mr. Mooney commends his action by no means lightens the burden which municipalities have to bear under the circumstances in order to put the program in operation.
Indeed, the proof of what I have just said is found in the statistics supplied by the Minister of Labour himself. By way of illustration, I shall take the province of Quebec. In the annual report of the Minister of Labour for the fiscal year ending March 31, 1960, we find that the total cost of projects started in that province under the winter works program of 1959-60, amounted to $20,600,000, and that the proportion paid out in salaries by the federal government was $2,689,000, which finally only means a contribution of 13 per cent of the total.
If we look into the report for the previous year, and I should have started by mentioning that, in the report established for the fiscal year ending on March 31, 1959, we find that the projects launched in the province of Quebec under the winter works program, amounted to $17,407,000. The contribution of the federal government paid out in salaries was $2,094,000, which means 12 per cent.
Well, I ask the Minister of Labour and his experts in the department what that 12 per cent of the cost of those projects will ultimately mean.
People experienced in municipal projects know that the over-all planning costs of this work are 6 or 7 per cent. They also know that municipalities have to borrow the necessary funds to carry out those projects, on which they will consequently have to add from 6 to 6j per cent interest.
Therefore, if the engineers' fees, that is, 6 or 7 per cent, are added to an interest of 6 or 7 per cent, it means that the amount paid by the federal government is practically nil and only covers the interests or the expenses of carrying out the work.
That, Mr. Chairman, is why I am interested in the question of municipalities. In the final analysis, they are the ones who have to carry the load. They are the ones who practically have to assume the whole cost of the project, considering the federal contribution under the circumstances.
I have here an article published in La Presse of November 3, 1960, where it is reported that in a brief submitted to the federal government, municipalities in the

Supply-Labour
province of Quebec, are asking the various governments to agree to pay part of the machinery and material.
If, for instance, we recall the federal government's past promises, more particularly those made during the elections, we may remember that its members, at the time, boasted that if a Conservative government took over, there would be no delay in helping the municipalities discharge their constitutional responsibilities.
Well, Mr. Chairman, what did the municipalities get since the Conservative party has come to power? Absolutely nothing. Under this winter works program, 90 per cent of the costs are still to be paid by the municipalities. I hope the minister will reconsider this matter.
As mentioned by the hon. members for Laurier and Bonavista-Twillingate (Messrs. Chevrier and Pickersgill) the premier of Quebec had suggestions to make when he came to Ottawa. The Minister of Labour (Mr. Starr) claimed that those suggestions had come too late. The minister should remember that the Liberal government in the province of Quebec has been in power only since last July-


Louis-Joseph Pigeon: Mr. Chairman, may I ask a question?


Maurice Bourget: -and Heaven knows-


Louis-Joseph Pigeon: Would you please say something about the new tax relating to the hospital insurance plan?


Maurice Bourget: I do not mind talking about taxes if it pleases you. I am quite willing to do so, for if the government has to levy additional taxes, it is as a result of the carelessness of the former administration-


The Chairman:: Order. While the hon. member does not mind referring to the new tax, the chairman does mind any such reference.


Maurice Bourget: Mr. Chairman, I am sorry for that digression but as you know it was brought on by the hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon) who misses no opportunity-


An hon. Member:: You are too touchy.


Maurice Bourget: I am not the least bit touchy.


Louis-Joseph Pigeon: This nettles you.


Maurice Bourget: It does not. On the contrary you never got over your defeat of June 22.
Mr. Chairman, as I was saying, the municipalities are bearing practically the full cost of the winter works under this program.

The minister is probably in agreement with this, for he said-I am coming back to my point now, Mr. Chairman, and I regret that interruption by my hon. friend from Joliette-L'Assomption-Montcalm-that the premier of Quebec made his suggestions only in October. I also suggested to the minister that it should be remembered that the Liberal party came to power in Quebec only in July.
And talking about delay, the minister must recognize that his own government has been in power for three years. Why then has it not thought of improving that winter works program? The only two changes made since the program has been in force have come as a result of suggestions made by members of the Liberal party, and they had to do with increasing the number or type of projects that could be accepted under the program and with starting the work in October. The minister will recall that those were two suggestions I made in my speech last February.
Mr. Chairman, may I call it five o'clock?


Mr. Fortin:: That is all you have to say.


Maurice Bourget: I beg your pardon, I am not like some ministers at certain public debates.
(Text):


Jacques Flynn: It being five o'clock, in order to permit the house to proceed to the consideration of private and public bills pursuant to section 3 of standing order 15, it is my duty to rise, report progress and request leave to sit again later this day or at the next sitting of the house as the case may be.
Progress reported.



PRIVATE BILLS

Hon. Gordon Churchill (Minister of Veterans Affairs):: Mr. Speaker, there has been general agreement that we forego the private members' hour and carry on with the supplementary estimates and endeavour to pass the supply bill by six o'clock. If the other parties are in agreement perhaps we might do that.


John Whitney Pickersgill: That is agreeable as far as we are concerned, Mr. Speaker.


Herbert Wilfred Herridge: Mr. Speaker, this group is willing to sacrifice its rights to that end.


Mr. Speaker:: Is it agreed that the house forego the hour for private and public bills?


Some hon. Members:: Agreed.


Mr. Speaker:: The house will then resume the business interrupted at five o'clock.


The house in committee of supply, Mr. Rea in the chair.
DEPARTMENT OF LABOUR Special services-
592. Payments, in accordance with terms and conditions approved by the governor in council, to provinces and in respect of Indian bands under the municipal winter works incentive program during the 1960-61 and 1961-62 fiscal years of amounts not exceeding one half of the cost of labour incurred in the period from the 15th day of October, 1960, to such day in the fiscal year 1961-62 as may be determined by the governor in council, $30,000,000.


The Deputy Chairman:: Shall the resolution carry?


[Stage Direction]
Item agreed to.

[Stage Direction]
The Senate-
595. General administration-further amount required, $25,000.
John Whitney Pickersgill: Mr. Chairman, I think we ought to be told why the Senate needs another $25,000. It surely is not a winter works program.


Mr. Bell (Carleton):: This is in respect of the of the Senate committee on manpower requirements and utilization. Before the Senate rose last year it passed a resolution which provided for the enlisting of a research team headed by Dr. John J. Deutsch, and this amount will be required for that research team.


John Whitney Pickersgill: That is what I thought it was. I just wanted to draw attention to the fact that we have to vote money in this house to pay for a committee in the other place although we were denied a similar committee by the government when the hon. member for Essex East asked for it.


Paul Joseph James Martin: A disgraceful performance.
Mr. Pallet!: It is.


Herbert Wilfred Herridge: Mr. Chairman, on behalf of this group I wish to take advantage of this item to wish all members of the staff of the House of Commons a very happy Christmas and a new year full of the best that life has to offer. I also want to take the opportunity to say that I think the staff of the house should be informed of the arrangements to be made over the holiday period so they can plan their holidays inasmuch as that is what any reputable business firm would do in dealing with its employees.
Supply

Legislation
I have one or two suggestions to make to the restaurant committee on behalf of this group. First of all, we believe that the restaurant committee should give consideration to the restoration of the principle and practice of seniority with respect to waitresses in the restaurant. We think this is only right and that those who have given long service should be recognized. It was brought to our attention quite recently that one of the waitresses who had served the house for 14 years was dismissed summarily as being inefficient after 14 years' service.
The second complaint I wish to make has to do with the menus. We understand that the chef receives a very good salary, I am told $500 a month, and that during the time the house is not in session he goes on vacation. I believe our House of Commons restaurant should provide Canadian meals representative of Canadian menus, and I suggest that the restaurant committee give consideration to allowing the chef to spend some time during his holidays as an observer in the lumbering and mining camps of British Columbia so that he will understand what good Canadian meals are. I say that because I think you have to have that experience to understand the type of meals that Canadians like. As I have said, I think meals in the restaurant should be symbolic of good plain Canadian cooking and food.
We also suggest that the menus be written in English and French. This international language is very difficult to understand. Repeatedly we have to send the waitress back to the kitchen to find out what the dish is. The waitress does not know and she has to go and take a look at it. She has to look-see, as it were, and then come back and report so that we will know whether or not to order it. I make these few brief suggestions for the consideration of the restaurant committee on the resumption of the session after the holidays.


Paul Joseph James Martin: I should like to make one brief intervention. The whip, who has the happy but sometimes irritating faculty of interpolating contrary to the interests of the person speaking, said a moment ago in commenting upon my observation, "a disgraceful performance", that I should not describe one of my own colleagues in that way. He sought to relate my remarks, "a disgraceful performance" to the very brilliant and constructive observation of the hon. member for Bonavista-Twillin-gate. What the latter said was that it was regrettable that parliament should be voting money to assist a study of unemployment in the other place when instead the House of Commons should have been engaged in a

Supply-Legislation
similar undertaking. When I said "a disgraceful performance" I want the whip to know, as he does know, that I was referring to the reluctance of the government to enable the House of Commons to study unemployment. That is what I meant by saying "a disgraceful performance", and I repeat that the government has not discharged its responsibility to the unemployed of our country in denying this house the right to study unemployment. I hope this intervention of mine will be a good lesson to the whip not to make any interpolations hereafter.


Mr. Palleil:: Mr. Chairman, I understand that the hon. member made the previous interpolation from his seat where he has most of his brains.


Mr. Regier:: Mr. Chairman, I should like to add a few remarks to the comments that were offered by the hon. member for Kootenay West. I hope that the employees of the other place will receive a holiday in lieu of Boxing day. I believe they should be given Monday off in lieu of Christmas day and should be given an added holiday to make up for Boxing day. They should have Monday and Tuesday off. I believe this should apply not only to employees of the other place but to those of this house and all other employees of the government. For many years now most employers throughout the country have granted their employees a holiday on Boxing day and in my opinion it is a disgrace that the government of our country does not do so. I think it is a disgraceful situation that the unemployment insurance offices and the other offices of the government are going to be open on that day. I think they should be closed and all employees of the federal government should be given not only Monday off but Tuesday as well as Canadian workers generally are being granted by most honourable employers.


Mr. Peters:: Mr. Chairman, I understand that this item is for the expenses of the committee of the other place. As the result of a bill passed by this house I had expected that the supplementary vote would be larger so as to provide the same type of assistance to the other place in order that they may give more consideration to a job they have to do than the facilities they now have.
I should like to endorse some of the remarks made by the hon. member for Kootenay West with relation to the restaurant. We are not telling the restaurant committee how to function but we think some consideration should be given with respect to the slips for the writing out of orders that are now in use in the restaurant. First of all, many of us are not enamoured of this system which Canadian

National Railways has seen fit to use for a long time, a system rarely used in restaurants generally. Second, the waitresses in the restaurant have the happy faculty of knowing exactly where everything belongs when they bring an order but under the present system they have to sort out their orders and if there are 10 or 12 people involved they have to ask who ordered cabbage and so on. It seems to me it was a much more happy arrangement when the waitress took the order and knew where everything belonged.
I am also quite sure that some of the writing is not too good. I am told by some of the girls that a number of members of both chambers refuse to write out their own orders and so the girls have to do it although they are not in a position to do so because they do not have the opportunity they had before for a continuous operation.
I also wish to endorse the view that seniority should be followed in the restaurant with regard to the allotment of tables and so on. The situation is unsatisfactory at present because the maitre d'hotel has not seen fit to give any consideration to the normal practice of making these arrangements on a seniority basis and giving any advantages to those with long service.
While we are speaking about legislation, Mr. Chairman, I should like to ask that consideration be given this year to the installation of radio facilities and probably television as well. It seems to me that this type of equipment should be in a location central to all the members, and this would be a much better arrangement than the two or three systems that are now installed in the building in a very unofficial way. We have seen how well this sort of installation works at the United Nations. It has been used to great advantage by the members who participate in the United Nations. An installation of this type would be much more acceptable to the members of the House of Commons than the haphazard arrangements now in effect.
Just before I resume my seat, Mr. Chairman, I should like to request that consideration be given this year to the many suggestions that were made by the consultant from the civil service with respect to our staff. He arrived at some conclusions which were not acceptable to me, but I feel that many of his conclusions warranted some consideration. I feel this vote should be increased by a sizeable amount to take care of the changing needs of the members as compared with what they were in the years when the arrangements we have now were established. In addition, Mr. Chairman, I hope we will give consideration this session to the removal



I960

[Stage Direction]
of the people from the other place so that the members of the House of Commons will have advantage of all the rooms that would be available in this building if that change were implemented.
John Whitney Pickersgill: I just want to draw attention to the fact that this item is exclusively for a study of manpower and the unemployment problem. While we addressed ourselves exclusively to the item before the committee, it is apparently now the new practice of the members of the new party to spend most of their time discussing the comfort of the members of the House of Commons.


Herbert Wilfred Herridge: I rise to protest that statement. We were discussing the welfare and comfort of the staff of the House of Commons, not the members of the House of Commons.


John Whitney Pickersgill: The hon. gentleman was discussing the meals he was going to get.


William Arnold Peters: It seems to me that Joey
Smallwood has again put his nose into the House of Commons as he did a year ago.


[Stage Direction]
Item agreed to.

[Stage Direction]
605. Polar continental shelf project-further amount required, $20,000.
Erhart Regier: I wonder if we might have an explanation of this item?


Mr. Comtois:: This item is to cover the purchase of prefabricated shelters of a special kind which the department needs for surveys in the Arctic during the course of the year.


Erhart Regier: I wonder if the minister would explain what exactly we are looking for. What is being surveyed? Is this because of the possibilities of oil or what is it?


Paul Comtois: It is for a general survey of the polar continental shelf project which was explained fully when I presented my estimates last summer.


[Stage Direction]
Item agreed to.
DEPARTMENT OF NORTHERN AFFAIRS AND NATIONAL RESOURCES Water resources branch-
612. Construction or acquisition of buildings, works, land and equipment-further amount required, $47,000.
John Whitney Pickersgill: I had hoped to be able to welcome the new minister at this point. We were told the ministers were all going to be here. This item has to do with the water resources branch and would be the item under which consideration would be given to the offer made to the government of British Columbia in connection with the Columbia river project. I know that there is no amount
Supply-Northern Affairs of money for that here, and I am not going to take up any time, but I do want to put on the record a reference to Hansard of March 26, 1957, where the Hon. Jean Lesage, then minister of northern affairs, put on the record the offer made by Hon. James Sinclair, who was then the minister of fisheries and a minister from British Columbia, on behalf of the previous administration, for federal aid for the development of the Columbia river. I put it on the record because the Minister of Finance questioned what I said yesterday when I said that the offer of the present government was, in all essential respects, identical with the offer made by the previous government. I think the facts should be on the record.


[Stage Direction]
Item agreed to.
Forestry branch-
Forest research division-
615. Construction or acquisition of buildings, works, land and equipment-further amount required, $44,040.
John Whitney Pickersgill: I wonder if we should not give the new Minister of Forestry a chance to tell us just what is being done under one of these items, at least. While these items are listed under the forestry branch of northern affairs, as a result of the answer given by the Prime Minister the other day, they are obviously for the new Department of Forestry. I think perhaps we would all be interested in having the Minister of Forestry tell us the purpose of item 615.


Mr. Flemming (Royal):: Mr. Chairman, I am very pleased to supply the information. This vote really consists of two items. One is for a winter works program to be undertaken at the Petawawa forest experimental station. I could give the details, but the total is $29,340. The other is the winter works program al Acadia which, as hon. members know, is neai Fredericton, New Brunswick. The total amount is $14,700. That makes a total of $44,000. I shall be glad to give the details. However, in general terms that is the explanation.


[Stage Direction]
Item agreed to.
617.	Contributions to the provinces, pursuant to agreements entered into with the approval of the governor in council, by Canada with the provinces, of amounts equal to one half of the amounts confirmed by the provinces as having been spent by them in establishing forest access roads and trails for the attainment of adequate fire protection as well as other aspects of forest management, $830,000.
John Whitney Pickersgill: I think we ought to have from the minister an explanation of this rather large sum.
988	HOUSE OF
Supply-Northern Affairs


Hugh John Flemming: The explanation is that it has to do with a vote which I believe has been made in the house-certainly prior to my being here-amounting to $5 million for the federal contribution to forest access roads. This approximately $800,000 is the amount which is anticipated will be spent or at least it is the federal government's share of the amount that will be spent by the provinces between now and the end of the fiscal period ending March 31. For the information of the committee I may say that we have replies from all provinces, except three I believe, in connection with forest access road. Steps are being taken immediately to contact those three provinces with a view to making the winter works program, so far as forest access roads are concerned, applicable to all the provinces throughout the whole country. However, we have from seven of the provinces at the present time replies indicating agreement with the federal government proposal which is to share on a 50-50 basis all the expenses. Previously I believe some objection was raised by the provinces with regard to federal participation on a 50 per cent share of the labour cost only. This arrangement has been changed and the proposal which has been made has been that the total cost of forest access roads shall be shared.


John Whitney Pickersgill: Will the minister make representation to his colleague the Minister of Labour in order to ascertain whether the same progressive step could not be taken with regard to the winter works program? Can the minister tell us whether an agreement has yet been reached with the government of Quebec to participate in this program as, I believe has been done in the case of roads to resources?


Hugh John Flemming: The answer is yes, Mr. Chairman. Quebec is one of the provinces which has signified a willingness to go ahead on a 50-50 basis.


John Whitney Pickersgill: Is that the real reason for the very large increase in the amount?


Hugh John Flemming: I am sorry but I just did not understand the question.


John Whitney Pickersgill: The minister was not here, of course. However, at the time the main estimates were passed, as he said, a considerable sum was voted for this program. At that time the government of Quebec- and it was then a different government- was not participating in this program. I just wondered whether it is as a result of the change of government in Quebec and the participation by the present government that an extra $830,000 is needed.


Hugh John Flemming: I do not think the gross amount has been changed. It was $5


million then; it is still $5 million. It may be that there will be a little bit more disposition on the part of Quebec to co-operate; I would not say.


Mr. Batten:: May I ask the minister if he could give a break-down of this amount, showing the amount for each province?


Hugh John Flemming: Yes, I have the figures here. If I may, I will give just the round figures. They are as follows:
Province	Amount
Quebec	 $1,250,000
British Columbia	 1,183,000
Prince Edward Island	 10,000
That is a token amount.
Province	Amount
Newfoundland	 $ 173,000
Nova Scotia	 85,000
New Brunswick	 135,000
Ontario	 940,000
Manitoba	   333,000
Saskatchewan	 232,000
Alberta	 655,000
I believe that is the information the hon. gentleman wanted.


[Stage Direction]
Item agreed to.

[Stage Direction]
Privy council-Special-
618.	Expenses of the royal commission on railway problems-further amount required, $89,000.
Erhart Regier: May I ask the Prime Minister whether it is the intention of the government also to appoint within the ensuing year a royal commission to investigate all transportation problems in Canada and not to have the investigation limited only to railway problems?


John George Diefenbaker: No consideration has been given to the appointment of a royal commission on all phases of transportation.


[Stage Direction]
Item agreed to.
619.	Expenses of the royal commission on Canadian magazines and other periodicals including the payment, notwithstanding the Civil Service Act, of honoraria or allowances as may be authorized by the treasury board to officers, clerks or employees permanently employed in the civil service for services rendered by them to the commission, $78,650.
(Translation):
Maurice Bourget: Mr. Chairman, with your permission and that of the Prime Minister (Mr. Diefenbaker) and of the other hon. members, I should like to raise a matter which does not concern the estimates under consideration. However, in view of its importance and urgency, I think no one will object. It has to do with the census which is planned for next year.

Since the beginning of the session, a number of questions were asked in this regard in the house by the hon. member for Laurier (Mr. Chevrier).
(Text):
Mr. Chairman, I note that some hon. member tried to object. As I said in French at the beginning of my remarks, it is a question that is not under the items that we are now discussing. However, owing to the importance and the urgency of the question, I said that I was asking your permission, Mr. Chairman, of the Prime Minister and of the members of the committee. If there is some objection, of course I will take my seat.


Gordon Minto Churchill: Unfortunately, Mr. Chairman, the same type of request might be made by any member of the house on any item that is not covered in the estimates. It is regrettable that these requests cannot be received.


Maurice Bourget: As I said, Mr. Chairman, I do not press the question. However, owing to the fact that we are going to adjourn tomorrow and that we will not meet again before January 16 next and owing to the importance and the urgency of the question I thought I might be allowed to speak for just two or three minutes on the subject. I wanted to address myself particularly to the Prime Minister. However, if there is objection, I will resume my seat.


Gordon Minto Churchill: I appreciate the hon. member's interest in this problem which is also of interest to others. However, the difficulty is the precedent that would be established when we are dealing with supplementary estimates and the fact that we would perhaps get into a debate on this particular subject. The hon. member may suggest that he has only one or two sentences to utter or that he will perhaps speak for only two or three minutes. But what about the reply? Obviously you get into a debate.


John Whitney Pickersgill: In view of the fact that the leader of the house did not object at all when we had a debate about the parliamentary restaurant on an item dealing with the Senate manpower committee, in which debate no one in this party participated, I suggest that we would save a great deal of time if the hon. gentleman were allowed to proceed.


John George Diefenbaker: As a matter of fact, I should like very much to hear this matter discussed. We can have it discussed immediately after we resume in January. We are going to have a debate on the baby budget. I presume that if the usual course of discussion is allowed and is followed every opportunity will be given for fullest discussion
Supply-Privy Council of this matter. As to the matter of the hon. gentleman's desire to have two or three minutes' time, may I say that I always listen with great interest to what he has to say. However, this procedure would simply mean that the matter would be opened at this time and be productive of endless discussion. I should like to have it brought before the house in a manner that would permit of the fullest expression of opinion. I suggest that in all the circumstances there will be plenty of time to discuss it when the session resumes. I am not trying to take any objection whatsoever, but I think if we are to have a full and complete discussion at that time there will be ample time for the purpose.


Maurice Bourget: I wish to thank the Prime Minister. May I also request of the Prime Minister that no action be taken until such time as we have a chance to discuss this matter in the house. That was the reason for my intervention at this time.


John George Diefenbaker: As a matter of fact, the census is not going to be taken until June, and therefore there will be ample time for discussion.


Paul Joseph James Martin: It is not a question of taking the census; it is a question of taking the decision such as suggested by the hon. member, and shared by many others, to ensure that there will be no printing and that no step whatsoever shall be taken by those in charge of this particular interrogation that is proposed. That is the nature of the request made by the hon. member to the Prime Minister.


[Stage Direction]
Item agreed to.
620.	Expenses of the royal commission on the motor vehicles industries including the payment, notwithstanding the Civil Service Act, of honoraria or allowances as may be authorized by the treasury board to officers, clerks or employees permanently employed in the civil service for services rendered by them to the commission, $75,450.
Paul Joseph James Martin: May I ask the
Prime Minister, with regard to this item, whether he is in a position to indicate when the royal commission hopes to be able to make its report. The Prime Minister will understand my interest in this matter. It would be very helpful if we had some idea when the royal commission might be expected to make its report.


John George Diefenbaker: The only information I have is that the commission is proceeding with its work. Many meetings have been held with representatives of the various companies and unions, and more are to be held in the next few weeks and months. I cannot say when the report will be submitted. I know that Dr. Bladen is proceeding with the utmost

Supply-Privy Council expedition. On one occasion I made a prophesy as to the date when a royal commission would make its report, and there have been occasions since when I have received words not of complete approbation for my powers of prophesy on commission reporting dates. I would not like to indulge in that again.


[Stage Direction]
Item agreed to.
621.	Expenses of the royal commission on government organization including the payment, notwithstanding the Civil Service Act, of honoraria or allowances as may be authorized by the treasury board to officers, clerks or employees permanently employed in the civil service for services rendered by them to the commission, $250,000.
John Whitney Pickersgill: Mr. Chairman, I am not going to hold up this vote now, but I would not want the silence on this side of the house to be taken as indicating that the opposition will not have something to say on this vote when the main estimates come up next year. This is the first time it has appeared, and our silence does not mean complete approval of every aspect of this vote.


John George Diefenbaker: Mr. Chairman, I can assure the hon. member that it is taken for granted that silence does not imply complete approval.


Erhart Regier: Mr. Chairman, I wonder
whether we might have a progress report on exactly what has been done to date and what are the plans for the immediate months ahead in connection with this royal commission.


John George Diefenbaker: The commission is under way in so far as the organization is concerned. It has a very large and responsible task. Those who have experience with what took place in the United States in connection with the Hoover commission will understand that a great deal of planning has to be carried out to put the scheme into operation and generally to lay the foundations for the investigation covering, as it does, the very wide ambit that is set out in detail in the royal commission order in council. I can only say that Mr. Glassco is giving a great deal of time, energy and ability to bringing about a full and complete organization to the end that this important and comprehensive investigation will be able to proceed with the utmost expedition.


Erhart Regier: Would the Prime Minister be in a position to say whether the commission is going to investigate government operations as a whole; or is it the plan to make a detailed review of each and every department of government as well as the over-all approach?


John George Diefenbaker: Mr. Chairman, I think I can do no better than simply set out the general field and ambit of the commission. It will report upon steps that may be taken to eliminate duplication and overlapping of services, to eliminate unnecessary or uneconomic operations, and generally the achieving of efficiency or economy through further decentralization of operations and administration.
To sum up, the purposes of the commission are to achieve efficiency or economy through reallocation or regrouping of units of the public service, to make more effective use of budgeting, accounting and other financial measures as a means of achieving more efficient and economical management of departments and agencies; improving efficiency and economy by alterations in the relations between government departments and agencies, on the one hand, and treasury board and other central control or service agencies of the government, on the other. The authority is quite wide, the purpose of course being the attainment of economy without the sacrifice of efficiency.


[Stage Direction]
Item agreed to.

[Stage Direction]
Public buildings construction and services- Construction, acquisition, major repairs and improvements of, and plans and sites for, public buildings listed in the details of the estimates, provided that treasury board may increase or decrease the amount within the vote to be expended on individual listed projects-further amounts required-
622.	Quebec, $1.
Item agreed to.
623.	Ontario, $1.
Maurice Bourget: I understand that most of these items for Quebec and Saskatchewan are for small post offices.


David James Walker: The hon. member for Levis is quite correct.


Maurice Bourget: What is the procedure to be followed by any municipality that would like to have a small post office? Is it necessary that before a post office can be located in a municipality the revenue must he $3,000? Could a post office be located if the revenue was less than, we will say, $3,000, $4,000 or $5,000?


David James Walker: There are three major points in this connection, if I may say so. First there is the date of the expiry of the lease; in other words, is the lease about to expire. Second is the accommodation under the old lease; is it satisfactory, or is further accommodation required. Third there is the revenue of $3,000. Those are the three major questions asked.


Maurice Bourget: It is necessary to have a revenue of $3,000?


David James Walker: Yes, that is so. Unless the revenue is that amount the post office will take care of the matter itself and it does not come under the Department of Public Works.


Maurice Bourget: Is the minister saying that unless the post office revenue is over $3,000 they cannot ask for a standard post office?


David James Walker: Yes; and there is the question of the lease. The post office usually has a lease on somebody's premises or part of the premises.


John Whitney Pickersgill: I wonder if I could ask the minister a question. I know there is no vote here for Nova Scotia, but would the minister tell us what is this problem about the post office at Sydney road, Reserve Mines, about which everybody in the house seems to be getting information.


David James Walker: I am glad the hon. member for Bonavista-Twillingate asked me that question, because there has been so much confusion about the post office at Reserve Mines. Finally I got a communication from the Legion and I have decided to cancel the whole thing and start over again, because apparently the site that was picked is unsatisfactory to many of the people there.


Murdo William Martin: With regard to establishing a small post office should the request be addressed to the Minister of Public Works-assuming the presence of the three qualifications the minister has mentioned-or should it be addressed in the first instance to the Postmaster General? I am assuming that it does not really matter, and I am now asking the Minister of Public Works if he will give consideration to a proposal to build a post office in the thriving community of Belle River in the constituency of Essex East. I have addressed this request to the minister on a number of other occasions. He has always given it sympathetic attention, and I would hope that from now on I can expect him to give it something more than sympathetic attention.


David James Walker: I shall be very happy to do that. As to who should be addressed, I always think I am very good natured, but so is the Postmaster General.


Murdo William Martin: I have known you longer.


[Stage Direction]
Item agreed to.
626. British Columbia, $235,000.
Herbert Wilfred Herridge: I should like to ask the minister a very simple question. Can he inform 90205-6-63
Supply-Public Works
the committee if a flag is provided to be flown on all federal buildings in Canada which are attended by a janitor, and, if so, what are the regulations with respect to flying that flag?


David James Walker: It should be flown from sunrise to sunset.


Herbert Wilfred Herridge: If a flag is provided by the department and a janitor is assigned to the building, the flag should be flown. That is obligatory, is it?


David James Walker: Yes, it is part of the regulations.


Herbert Wilfred Herridge: Are all the postmasters and those in charge of federal buildings informed of that?


David James Walker: We certainly were of that opinion, yes.


Erhart Regier: I wonder if the minister would explain what is being done to the old federal building in the city of Vancouver.


David James Walker: Extensive alterations are being carried out to the first and second floors, including partitioning, many mechanical changes and the installation of fluorescent lighting fixtures throughout.


Erhart Regier: Is this building being used as a post office yet? If it is, is it the intention of the government to maintain it as a post office for a considerable length of time?


David James Walker: Space in that old federal building will be reassigned to various federal services including those connected with transport, citizenship and immigration, printing and stationery, the unemployment insurance commission, the Department of Health and Welfare, the Department of Agriculture and so on. The work in progress will provide space for the expansion needs of these various departments and provide an ultimate saving in rent of approximately $80,000 a year.


Erhart Regier: Should I assume that it is the intention of the government to close the postal facilities available in the building?


David James Walker: The answer is, no.


Erhart Regier: I wonder if the minister would explain why there is need for a public building at Yarrow, which is not even an incorporated village or town.


David James Walker: We have needed accommodation at Yarrow for some time and in view of the fact that the present space is not sufficient we are doing this in order to accommodate the increased demand for post office facilities.
992	HOUSE OF
Supply-Public Works Mr. Macdonnell: Does the answer given by the minister with regard to flying flags mean that postmasters have to get up at dawn every day?


David James Walker: I was just wondering that myself. I should hate to be a postmaster. These are the regulations. In the winter months it would be no chore, and in the summertime it would be a pleasure.
(Translation):


Mr. Boulanger:: Mr. Chairman, I should like to ask the minister which flag should fly on post offices? Is it the Red Ensign, the Union Jack or a distinctive national flag?


An hon. Member:: The flag of the province of Quebec.


David James Walker: Mr. Chairman, of course it is the Red Ensign.


John Whitney Pickersgill: Everywhere?
(Text):


Maurice Bourget: I should like to ask the minister why there are items here for Parks-ville, Vananda and Yarrow. I understood from a list submitted to me at the end of last session that these three post offices-I take them to be post offices-were included in the miscellaneous works vote No. 368 which we passed in the main estimates last year.


David James Walker: In view of the fact that we found we needed more than 800 feet of space and in view of the further fact that it is costing more than $25,000 we have had to include this now as a supplementary item.


[Stage Direction]
Item agreed to.
Harbours and rivers engineering services- Construction, acquisition, major repairs and improvements of, and plans and sites for, harbour and river works listed in the details of the estimates, provided that treasury board may increase or decrease the amount within the vote to be expended on individual listed projects- further amounts required-
630. Newfoundland, $650,000.
Herman Maxwell Batten: I notice that in this item the amount of $650,000 in total is allocated specifically to work at St. John's harbour. In the main estimates last year the total amount spent in Newfoundland under this heading was approximately $5,628,000, $3,850,000 of which was spent on St. John's harbour. This means that in the main estimates of last year 68 per cent of the total allocation under this heading was spent in St. John's harbour. Now, in the further supplementary estimates, there is an amount of $650,000, all of which is being spent in St. John's harbour, which raises the amount for the whole year to something like 71 per cent of the whole amount.
I recognize that a great deal of work is going on in St. John's harbour and that it [Mr. Walker.j

is necessary to provide winter work, but that is not only true of St. John's; it is true of all parts of Newfoundland, and I think there are some projects in various parts of the province which might have been included so as to enable work to start this winter. I wonder if the minister can explain why this total amount is being spent in St. John's harbour.


David James Walker: I thank the hon. member for asking that question. We have been urging the contractors to get ahead with as much winter work as possible. In connection with this particular contract they went faster than we anticipated, so much so that the allotment we had set aside is now gone. It is a good thing the supplementary estimates are going through because we are spending more than we anticipated.


Herman Maxwell Batten: I recognize the explanation which has been given by the minister, and I think it is a fair one. However, I would hope that when further estimates are made up with respect to harbours and rivers in Newfoundland the minister will give some consideration to the requests which have been made on behalf of what he referred to last summer as "the Irish settlement of Piccadilly".


[Stage Direction]
Item agreed to.
634.	Quebec, $585,000.
Maurice Bourget: Does this represent a continuation of an existing project or a new project at Pointe-au-Pere?


David James Walker: Did my hon. friend say Pointe-au-Pere?


Maurice Bourget: Yes, Mr. Chairman.


David James Walker: Once again our request has been taken seriously. The work came along faster than anticipated. In addition the construction of a railway spur line from St. Anselme to Pointe-au-Pere, a distance of 3.3 miles, was taken into consideration.


Maurice Bourget: Then it is a project that has already started?


David James Walker: Yes.


[Stage Direction]
Item agreed to.
635.	Ontario, $1.
Mr. Garland:: Mr. Chairman, I wonder if I could take advantage of the opportunity provided under this item to ask the minister if he could give us any up-to-date information on the survey of the French river system undertaken by his department. The hon. member will recall the problem that existed in the area last year because of the flooding of the French river into lake Nipissing and Sturgeon falls and river areas. This is a

problem, of course, that is occasioned by the fact that the federal government controls the outflow from lake Nipissing and the provincial government through its department of lands and forests and the Ontario hydro control the inflow. The minister was good enough to undertake a survey to determine what natural chokes in the French river could be removed.
I understand the field survey has been finished. I wonder if the minister could bring us up to date on that. My special reason for making the request at this time is that a meeting will be held in North Bay on January 13 between the provincial government officials and several of the municipalities in the area to discuss other aspects of this problem. A statement from the minister would be most helpful at this time.


David James Walker: As the hon. member has said, the field survey has been completed. It was very thorough. At the present time we are collating the facts as a consequence of which recommendations will be made. I fear it wifi be a matter of another two months before the report is complete and it will not be ready in time for the meeting referred to by my hon. friend.


John Richard Garland: Mr. Chairman, I thank the minister. May I follow that up by asking if he could give a report on the progress made in respect of a similar survey that has been undertaken on the Ottawa river east of Mat-tawa. There again there are several chokes, both natural and man-made, which result in serious flooding in the Mattawa area during periods of spring freshets and even during periods of heavy rainfall. I would appreciate any comment the minister might make.


David James Walker: I am afraid that this survey has not progressed as far as the other and the question is still under study. When there is something to report I will be happy to report to the house or if my hon. friend wishes me to do so I could give him a preliminary answer at the beginning of the year. Would that be helpful?


John Richard Garland: Thank you very much.


[Stage Direction]
Item agreed to.
636.	British Columbia, $100,000.
Herbert Wilfred Herridge: Is the Kanaka creek referred to in this item and involving an expenditure of $29,500 a navigable river?


David James Walker: My understanding is that it is a navigable river.


Herbert Wilfred Herridge: Am I correct in assuming that the department has a definition of what is and what is not a navigable river?
90205-6-63i
Supply-Public Works


David James Walker: My hon. friend will be interested to know that even the courts have difficulty determining that question. I take it my hon. friend is interested in erosion?


Herbert Wilfred Herridge: Yes.


David James Walker: The rule we use is: Was the erosion caused first by navigation? Second, or, in the alternative, was it as a result of public structures of some kind built on the river?


Erhart Regier: I believe that on reflection the minister will want to revise his reply about Kanaka creek being a navigable river. What is planned under the heading of improvements here?


David James Walker: The proposed project at
Kanaka creek which is an item of $29,500 is the replacement of existing fishermen's landing with one of larger size including ice dredging.


Erhart Regier: I am happy to see this development. Some time ago I addressed a question to the wrong minister, the Minister of Transport, who wrote advising me he referred the problem to the Minister of Public Works. I refer to the problem of the annual flooding of the Coquitlam river. I do not want to hold up this vote. I am sure the minister will do his utmost to bring about a meeting of provincial, federal and municipal officials to at long last resolve the problem of flooding on the Coquitlam which is a river and not merely a slough or creek like the other.


John Whitney Pickersgill: Mr. Chairman, I am looking at the clock. In view of the time and of the parliamentary timetable, perhaps I should say that I am authorized to speak for the Leader of the Opposition. If the government will give us an undertaking that we will have the completest freedom to discuss any of these items on the main estimates or on any final supplementaries we would be prepared in a very summary way in the next ten minutes or so to go through the rest of these items and the supply bill so that it could go to the other place.


Gordon Minto Churchill: That is a very sensible suggestion, Mr. Chairman. There will be no objection from this side with regard to full discussion later on. If it is agreeable we could carry on for a few minutes, complete the items and put the bill through. It will not take long. I give the assurance that anything that has to be done hurriedly now can be dealt with more fully when the main estimates are before us in the spring.


Herbert Wilfred Herridge: We agree to completing these estimates before dinner time.

Supply-Public Works


Hazen Robert Argue: Would the standing over of the balance of these items until we come back in January affect in any way the government's unemployment program or the payment of any moneys under the votes? I think parliament should resist this kind of last minute rush. If it is required to make certain payments under the winter works program to proceed in this slipshod way we are prepared to do so but if these items can be left until we return without prejudice to anyone or to payments under the government's program, we should not proceed but stand the items over and deal with them in a proper manner when we return.


Mr. Bell (Carleion):: May I say, Mr. Chairman, that if this appropriation bill should not pass until after the house returns on January 16 there would be a shortage in some of the items. That would be particularly true in some of the shared cost items under the winter works program and the roads to resources program and true as well, I think, in relation to the Department of Public Works. Moneys would not be available to carry on the accelerated program in that department.


Hazen Robert Argue: If the money were not available would there be no means by which these things could be transferred from one item to another?


Thomas Miller Bell: As was explained yesterday, there is only the unforeseen item, which is practically all committed. There would be no means whereby moneys might be transferred to meet the programs. There is no desire on the part of the Minister of Finance or the government as such, of course, to force these items through the committee in any unseemly way but I believe the committee is anxious to co-operate and make sure that payments can be made during the early part of January.


Hazen Robert Argue: In view of the circumstances I will not stand in the way of unanimous consent being given to deal with these items in what I consider to be a slipshod and unseemly fashion. It is a serious reflection on the government and parliament that arrangements could not have been made to have given these items proper consideration which obviously cannot be done.


Gordon Minto Churchill: I do not want to get involve in a controversy but the hon. member's use of the word "slipshod" is a little unfortunate. We are confronted with estimates totalling over $56 million and have reached the stage where the items that remain are for the most part small items. The two that
[Mr. Herridge.l
are largest are in the Department of Transport. I would say that 90 per cent of the $56 million has already been carefully dealt with by the committee.


[Stage Direction]
Item agreed to.
639. Construction or acquisition of plant and equipment-further amount required, $400,000.
Maurice Bourget: Can the minister give an explanation or break-down of this item?


David James Walker: The amount is broken down in this way. So far as New Brunswick is concerned, we require $100,000 for the replacement of dredge No. 4 and also $300,000 in British Columbia to meet payments on the contract for the construction of the hopper dredge.


[Stage Direction]
Item agreed to.
General-
641. Miscellaneous works not otherwise provided for: a maximum of $15,000 may be expended in respect of any one work and, with the approval of treasury board, that maximum may be increased to $25,000-further amount required, $500,000.
John Whitney Pickersgill: May I ask the minister why this additional amount is required?


David James Walker: It is largely for additional post offices, some 20 that we did not contemplate.


John Whitney Pickersgill: Are any of them in the province of Newfoundland?


David James Walker: Yes, one.


Erhart Regier: Would the minister explain why we are not being supplied with the details as is ordinarily done and why the expression "miscellaneous works" is used. Yesterday, under the heading "miscellaneous minor or unforeseen expenses" we gave the Minister of Finance $1,500,000. Why does the Minister of Public Works ask for leeway to the extent of $500,000 if he can go to the Minister of Finance to meet unexpected expenses?


David James Walker: That is a very good question. This procedure has been followed for years under the headings "general" and "miscellaneous works". Many items under $25,000 find their way into this category, including small post offices.


Maurice Bourget: Can the minister tell us what was the total amount voted under the same item in the main estimates?


David James Walker: In the main estimates the amount was $2 million and this additional $500,000 makes a total of $2J million.


[Stage Direction]
Item agreed to.

DEPARTMENT OP TRADE AND COMMERCE General administration-
644.	Trade commissioner service-administration and operation-further amount required, $153,000.
John Whitney Pickersgill: Where is the Minister of Trade and Commerce? This is about the fourth or fifth time the minister has not been present.


Gordon Minto Churchill: He is unavoidably absent. I have the information here in front of me.


John Whitney Pickersgill: There is just one question I should like to ask and it may embarrass the former minister of trade and commerce. Were any plans or preparations made or any steps taken whatsoever with a view to having the meeting of trade commissioners that recently took place before the change in ministers? Was this a brillant idea of the new minister or was it in fact something that the old minister had already started to plan, because I have heard that it was the latter?


Gordon Minto Churchill: I think that answer would better be given by the present Minister of Trade and Commerce.


John Whitney Pickersgill: Mr. Chairman, in view of the co-operation there has been in the house I leave the question unanswered and I am quite willing not to hold up the item.


Hazen Robert Argue: Mr. Chairman, I too would be very interested in the answer to the question because the grapevine has it that it was the present Minister of Veterans Affairs who originated the idea and promoted it along its way to fruition and accomplishment but it was taken over at the open and spectacular stage by the new minister who has done a very good job of carrying on something for which a great deal of preparation had been made by the Minister of Veterans Affairs.


Erhart Regier: May I ask the minister whether the government has yet replied to the offer of the United Kingdom to establish free trading arrangements between Canada and that country? I believe this offer was made in Montreal a number of years ago. Has an answer yet been given by the government?


Gordon Minto Churchill: That does not come within the purview of the departmental responsibilities I have now.


Erhart Regier: May I ask the Prime Minister whether the government has yet replied to the offer of the United Kingdom government in this respect?


John George Diefenbaker: Mr. Chairman, I do not think that comes within the purview of the matter that is before us in the supplementary estimates.


[Stage Direction]
Item agreed to.
Supply-Transport

[Stage Direction]
Canal services-
645.	Operating deficit and capital requirements of canals and works entrusted to the St. Lawrence seaway authority with the approval of the governor in council-further amount required, $142,000.
John Richard Garland: Mr. Chairman, I had intended to say a few words on this item but in view of the spirit of the committee and the desire to co-operate I will reserve them for a later occasion. However, I should like to ask the minister a question with reference to the statements he made last Wednesday and on Monday of this week concerning the reported indication that the government will make a further study of the deepening of the Ottawa river. If I have understood the minister's statements correctly, he has said that he intends to have a study or review made of the studies that have already been made over the past 50 or 60 years to determine if a further study is justified. In effect I think that is what the minister said. In view of the importance of this project involving the provision of a shorter route from the west and having in mind the development of the area affected and the employment potential involved, could the minister say when he expects the further study recently announced by him will be completed, and will it be made public at that time?


Léon Balcer: I am afraid, Mr. Chairman, it will be rather difficult for me to give an exact date. The last report I had indicated it would be a number of months before the survey would be completed. There are many factors involved in a survey of this size which keep changing. In addition, we receive submissions from interested people and we give them careful consideration. There have been some interesting newspaper articles and resolutions, so that, all in all, I can do no better than assure the hon. member that as soon as we are in a position to announce the exact time I will be pleased to indicate the date to the house.


[Stage Direction]
Item agreed to.
Marine service steamers-
646.	Construction or acquisition of vessels and equipment-further amount required, $654,500.
Mr. Tucker:: In view of the lack of work in the dockyard at St. John's, Newfoundland, and the recent lay-offs which indicate that if the present trend continues the closing of the dockyard is imminent, I would strongly urge the minister to ask the Canadian National management to give serious consideration to having Canadian National coastal ships put into drydock now instead of next spring. I understand the Canadian National owns and operates 14 coastal boats and charters seven more. If some of these ships were placed in

Supply-Transport
drydock now it would help to solve the present unemployment situation. I understand that recently some of the men who received notice have been taken back because one of the coastal boats was put in drydock. I strongly urge the minister to see that steps are taken to have more of these boats placed in the dock for their annual overhaul at this time of year instead of the spring or summer.


Léon Balcer: I shall be very pleased to look into the matter.


[Stage Direction]
Item agreed to.
Aids to navigation-
647.	Administration, operation and maintenance- further amount required, $40,000.
James Roy Tucker: There is no navigation light on the government wharf or breakwater at Bay de Verde, Conception bay, Newfoundland. Since vessels and schooners often use this port in times of storm, especially at this time of year, I strongly urge the minister to have steps taken immediately to place a light either on the breakwater or on the dock in order to aid ships passing near this port. I have already brought the matter to the attention of the minister's department, but I would be grateful if he would have steps taken to see that the seafarers are aided in their work.


[Stage Direction]
Item agreed to.
Pilotage service-
648.	Construction or acquisition of buildings, works, land and equipment-further amount required, $95,000.
(Translation):
Maurice Bourget: Could the minister tell us what kind of works will be undertaken, and where?


Léon Balcer: You are asking me where?


Maurice Bourget: Yes where, and what kind of works are they to be?


Léon Balcer: They have to do with the building of a ship to replace the Islander II, which was built in 1942. The Islander II was damaged in a collision in 1957 and temporary repairs were made at the time. However, as the ship has now been in service for some 12 months and since it has been three years already that the temporary repairs were made, it is time the ship were replaced. It is a small vessel used by the Sydney pilots.


Maurice Bourget: In what area is this ship in service?


Léon Balcer: In Sydney, Nova Scotia. It is a pilot service ship. Unfortunately, I do not know where the new one will be built.
(Text):


John Whitney Pickersgill: Mr. Chairman, I have inadvertently omitted to ask the minister about an item in a previous vote, and perhaps I might be allowed to do so by the grace of the committee. I notice an item to provide for improvement and alteration of C. D. Howe. I hope the minister is not going to take this too seriously.


Léon Balcer: It is no use trying to make a Conservative out of him.


[Stage Direction]
Item agreed to.
Railway and steamship services-
649.	Railway to Great Slave lake-location survey, $250,000.
Erhart Regier: Does this item mean the government has decided to commence building, after the survey, a railroad along the so-called western route?


Léon Balcer: Yes, Mr. Chairman.


[Stage Direction]
Item agreed to.
Civil aviation branch-
653. Airports and other ground services-
Operation and maintenance-further amount required, $318,236.
John Whitney Pickersgill: I am rising to speak on behalf of my colleague the hon. member for Grand Falls-White Bay-Labrador, who is unavoidably absent from the committee today and who wished to say a word on this item about the importance of the government giving urgent consideration to lengthening one of the runways at Gander to improve the facilities there for the landing of jets, particularly the emergency landing in what is often not too good weather. At the present time, I understand, in bad weather they prefer to land at Goose where the facilities for passengers are relatively poor compared with the wonderful facilities that, in the words of the minister, were built by the previous government and opened by the present government, at Gander. It seems to me that in order to protect our investment and in order to maintain Gander as the crossroads of the world urgent consideration should be given to this proposal.


[Stage Direction]
Item agreed to.
Resolutions adopted in committee of supply this day reported and concurred in.

[Stage Direction]
The house in committee of ways and means, Mr. Rea in the chair.
Gordon Minto Churchill: That towards making good the supply granted to Her Majesty on account of certain expenses of

the public service for the fiscal year ending March 31, 1961, the sum of $56,092,918, be granted out of the consolidated revenue fund of Canada.
Resolution reported and concurred in.
Mr. Churchill (for Ihe Minisfer of Finance)
thereupon moved for leave to introduce Bill No. C-55, for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1961.
Motion agreed to and bill read the first time.


Gordon Minto Churchill: the second reading of the bill.


John Whitney Pickersgill: Before second reading is given, Mr. Speaker, I simply wish to say this, particularly in view of what was said in committee by the hon. member for Assiniboia (Mr. Argue). Before I made the intervention I made at six o'clock on behalf of the official opposition I had examined the remaining estimates very carefully and had satisfied myself that the items which the committee had not yet considered were mainly for construction of one kind and another. We would not have taken this unprecedented step of cooperation with the government if we had not felt that no responsible opposition should hold up any vote that is going to provide additional jobs at this time of an emergency unemployment situation.
To reiterate my understanding, it is that any of these matters that have been accepted in this way, in accordance with the undertaking given by the house leader, can be opened again on the main estimates notwithstanding the fact that by that time the money may have been spent.
Motion (Mr. Churchill) agreed to, bill read the second time and the house went into committee thereon, Mr. Rea in the chair.
On clause 1.


John Whitney Pickersgill: Before clause 1 carries I am going to ask the parliamentary secretary to the Minister of Finance to give the usual assurance that the bill, of which I have a print but which is not available to the members of the committee generally, is in the usual form and is in the same form, so far as the monetary sums are concerned, as the items accepted in the committee of supply.


Richard Albert Bell: Yes, Mr. Chairman. This bill is in the standard form for full supplementary estimates. The schedule of the bill is in the identical amount passed by the committee of supply.


[Stage Direction]
Clause agreed to.
Clauses 2 to 4 inclusive agreed to.
Question of Privilege Schedule agreed to.
Preamble agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the said bill be read a third time? By leave, now?


John Whitney Pickersgill: Since the hon. member for Greenwood (Mr. Macdonnell) is a privy councillor and in view of the fact that there is only one minister in the house at this stage, I suppose we would consent to the hon. member for Greenwood's seconding the motion for the third reading. This is something which should not happen.


Gordon Minto Churchill: the third reading of the bill.


Mr. Speaker:: Is it the pleasure of the house to adopt the motion?


John Whitney Pickersgill: By leave.
Motion agreed to and bill read the third time and passed.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


Mr. Frank Howard (Skeena):: Mr. Speaker, may I rise on a question of privilege. I rise at this time because of the urgency, importance and appropriateness that I, personally, feel it must be dealt with at this time. This question of privilege concerns the house and every member in it, and more particularly the members of the cabinet. My question of privilege is that some, if not all, members of the cabinet are not eligible to sit or vote in the House of Commons because of the provisions of section 10 of the Senate and House of Commons Act, which section provides that no person accepting any employment in the service of the government of Canada to which any emolument is attached is eligible as a member of the House of Commons, or shall sit or vote therein. Some, if not all, of the members of the cabinet have accepted such emoluments specifically, all or part of the $2,000 annual motorcar allowance.
Perhaps in explanation of this I could refer to the public accounts of Canada for the fiscal year ended March 31, 1959, volume 1, where

Question of Privilege
at page K6 is indicated, for instance, that the Minister cd Finance (Mr. Fleming) received such a $2,000 motorcar allowance pursuant to the Appropriation Act No. 5, being chapter 61 of the statutes of 1931. I would point out that the Appropriation Act No. 5 at one time gave statutory exemption from the provisions of section 10 of the Senate and House of Commons Act, in that a vote No. 352 contained in schedule A of the said Appropriation Act No. 5 provides as follows, and I quote from that schedule as shown on page 465 of the Statutes of Canada for 1931:
-for payment annually from the consolidated revenue fund of the sum of $2,000 to each minister of the crown charged with the administration of a department, the Solicitor General, and the Leader of the Opposition, and the sum of $1,000 each to the Speaker of the Senate and the Speaker of the House of Commons, in lieu of motorcars and their maintenance, including chauffeurs, the acceptance of such sums not to vacate their respective seats in parliament:-
The last part is the saving feature of that vote. This statutory vote had effect only until the fifteenth day of September, 1953, and I should explain that this statutory protection no longer exists by virtue of chapter 67 of the 1948 statutes, being an Act respecting the Revised Statutes of Canada, under which a commission was established to revise the public general statutes of Canada. The commission was authorized to append a schedule to the revision and to include in the schedule, and I quote from section 4 of the 1948 statutes:
-all acts and parts of acts which though not expressly repealed, are superseded by the acts so consolidated, or are inconsistent therewith, and all acts and parts of acts which were for a temporary purpose, the force of which is spent.


Hon. W. M. Hamilton (Postmaster General):: Mr. Speaker, on a point of order, I understand that the hon. member who is speaking has raised a question of privilege and I would draw your attention, sir, to article 104 of Beauchesne's fourth edition, part 3, which says:
A matter of privilege which claims precedence over other public business should be a subject which has recently arisen and which calls for the immediate interposition of the house. The matter should be raised at the earliest opportunity. A matter which occurred during recess was refused precedence because it was not raised on the first day of the session. A matter-
Just to make the hon. member happy:
-which is postponed to suit the convenience of the house or to secure the attendance of a member implicated, or to give the Speaker an opportunity to consider it fully does not forfeit priority when eventually raised.
Mr. Speaker, I would suggest to you that the fact that the galleries are full tonight and the attention of the country is centred here is no particular reason for the hon. member->


An hon. Member:: Order.


William McLean Hamilton: -to
raise this question of privilege at this moment, and that is the only reason I can find for him choosing this time.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Had the hon. member concluded the statement of his privilege?


Frank Howard: No, Mr. Speaker; I have concluded the substantive part of it to show a prima facie case.


Mr. Speaker:: If the hon. member has nearly finished his statement I think it would be appropriate to hear it out before I deal with the point of order which has been raised.


Frank Howard: It will not take very much longer, Mr. Speaker. I would point out that section 7, subsection 2 of the 1948 act to which I referred provides that after proclamation all the acts and parts of acts in the said schedule shall be repealed to the extent mentioned in the third column of the schedule. This is the key point of it.
This schedule as proclaimed by the governor in council declares that Appropriation Act No. 5, being chapter 61 of the 1931 statutes, had spent its force in this regard and was accordingly repealed. This is indicated in that schedule.
I refer again to volume 6 of the revised Statutes of Canada 1952, where in the third column of table 1, appendix 1, page 25, such an indication is given. I refer also to the table of acts and parts of acts consolidated being table 2 of appendix 2 where on page 12 in reference to the statutes of 1931 there is no reference to chapter 61 of the statutes of 1931 being carried forward beyond September 15, 1953, indicating that the said chapter 61 has lapsed and was repealed.
I submit, therefore, that for these reasons this statute does not exist. It is not my intention that this question of procedure should interfere with the presentation of the budget-


Some hon. Members:: Shame.


Frank Howard: -in order that the results-


Some hon. Members:: Shame.


Mr. Speaker:: 

THE BUDGET


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.
He said: Mr. Speaker, in previous budget speeches and on other occasions I have recognized the need for flexibility in our economic 90205-6-64
The Budget-Hon. D. M. Fleming policies. Last March, when presenting the budget to this house, I stated that "sound budget policies must be flexible and adapted to changing economic conditions". Not only must policies be flexible from year to year, but there are occasions when it becomes appropriate to reassess the economic outlook and to adjust fiscal policies between the main budget dates. This is such a time. (Translation):
Supplementary budgets are not entirely novel in the Canadian experience. They are intended to deal with important changes in the situation that may emerge within the course of the year. A responsible government cannot stand by and allow events to take their course simply on the ground that budgets are brought down only once a year. This government will continue to maintain flexibility in its fiscal and other policies to meet the needs of the Canadian people.
The introduction of a supplementary budget for the current fiscal year will not take the place of the presentation of a regular budget for the next fiscal year. Before the current year's budget is presented there will be the usual careful review of the tax structure with full consideration of the various suggestions for adjustments and technical changes which have been received during the year.
The need for a supplementary budget at this time arises from a number of recent developments. While some of them originated in Canada, most of them originated abroad and it is to the latter that I shall address myself first.
(Text):
The need for a supplementary budget at this time arises from a number of recent developments. While some of them originated in Canada, most of them originated abroad and it is to the latter that I shall address myself first.
Since the early months of this year there have been increasing signs of some slowing in the rate of economic expansion in Europe. The situation differs from country to country: in the United Kingdom, by far the largest overseas market for Canadian goods, the level of industrial output seems to have remained just about stable since early summer, and it is clear that the economies of many continental countries, particularly Germany, will not be able to maintain indefinitely the very high rates of expansion they have experienced in recent years. Consequently we cannot expect increases in our exports to these countries to materialize without increased effort on our part.
Even more striking is the difference of outlook in the United States. Nine months ago, the economic barometers to the south of us

The Budget-Hon. D. M. Fleming predicted fair weather ahead. Over this prediction there was little disagreement; the only-question at issue seemed to be the rapidity and extent of the economic expansion that was universally foreseen for 1960. Unfortunately, however, the United States economy has in fact expanded very little since the beginning of the year, and what expansion there has been was rather uneven. Our shipments to the United States, normally well over half our total exports, have not in fact behaved as we had good reason to expect. Indeed, for the first ten months of this year our exports to the United States declined by about li per cent while our exports to all other countries increased by over 20 per cent. Despite the slowing down in the United States, economic activity in that country continues at a high level and I am certainly not predicting any serious downturn. But it would be quite unrealistic to count on a substantial increase in our exports to that country in the near future.
Behind these shorter term developments in the major industrial countries of the world it is possible to discern certain more basic changes that are taking place. The downward drift on world markets of the prices of raw materials for several years now suggests that world consumption of raw materials, while continuing to expand, is not keeping pace with the general growth of economic activity. The industries rendering services are today in greater demand, as prosperity increases, than those producing commodities. There is no occasion for surprise in this; it reflects the fact that, as incomes expand beyond a certain level, a higher proportion of those incomes is spent on travel, recreation and other services than on food, clothing and other commodities.
There is a further point of some significance I should like to mention both in relation to raw materials and also to manufactures. In recent years, supply has overtaken demand, capacity has overtaken order books. During the war, and for more than a decade afterward, demand seemed almost insatiable. In part this demand stemmed directly from real physical shortages of goods; in part it reflected an exaggerated or inflated view of those shortages accompanied by an expectation of rising prices. As was inevitable, business enterprise all over the world, including Canada, pressed forward almost feverishly with plans for capital expansion and there have recently appeared some signs of the emergence of a temporary state of fairly widespread over-capacity. This is, perhaps, more pronounced today in North America than in Europe and Japan where for many years wartime destruction left disruption and


shortages in its wake. Be that as it may, we now find ourselves in a re-equipped and highly competitive world.
This, of course, is not the first time, although it is the first time since the war, that the industrial countries of the world have experienced a period of vigorous competition associated with ample productive capacities; indeed, such conditions have in the past appeared in a far more acute form than they do today. Economies are already in process of adapting themselves to this situation and we can be confident that it is temporary and will disappear. Capital expansion will be resumed and countries such as ours that are blessed with rich resources should make appropriate preparations. But for the time being, these industries cannot be expected to exercise the same vigorous and buoyant influences to which we have all become accustomed.
Against this broad background, how is Canada faring? On the whole it is faring well; but, as might be expected, we have had some difficulties and some disappointments. The one which concerns us most is unemployment.
When on March 31 I presented the budget for the fiscal year 1960-61 I based my forecast of revenues on an increase in gross national product of about 6 per cent for the year 1960 over the year 1959. In fact, the increase will be less, and I shall explain later what impact on our revenues is to be expected in consequence. At the same time, and this point needs emphasis, the levels of business activity that Canadians have actually been achieving during this year are higher than ever before. While growth and expansion have fallen short of our expectations, it remains the fact that in the course of 1960 new records have been set in the fields of production and consumption, trade and employment.
There are some who belittle these positive results to which all sections of Canada have contributed, who in so doing cast a shadow of gloom across the country, and, perhaps sometimes unwittingly, create a climate of apprehension and uncertainty in which enterprise and initiative are discouraged. Such persons, I believe, are doing a grave disservice to Canada. The fact is that the Canadian economy, after a long period of vigorous expansion, is continuing to operate at a very high level. Employment has continued to increase and for the first 11 months of this year was 1.7 per cent higher than in the same period of 1959 and 3.9 per cent higher than in 1957. These gains in employment are considerably higher than those achieved in the United States. In fact, from 1957 to 1960 employment in Canada in* creased almost twice as fast as employment in the United States.

However, during 1960 the trends of economic events in this country have closely paralleled the trends in the United States. While some economic indices have diverged the similarities have been greater than the differences. One may reasonably conclude that the forces that have resulted in a check to expansion in the United States have been also at work in Canada. In both countries, for example, actual fixed investment by private concerns has fallen appreciably below stated intentions; the accumulation of business inventories was markedly reduced throughout the year; housing starts were lower; increases in retail trade were less than in previous years. I do not intend, in this supplementary budget, to attempt a complete and detailed review of the economic situation at home and abroad. However, there are some features of the Canadian economy to which I must call special attention tonight.
We find ourselves in a situation which, in economic terms, is unusual, I might almost say paradoxical. As I have just mentioned, we have set new economic records this year. At the same time we have been experiencing an exceptionally rapid increase in our labour force and the level of activity has proved insufficient to keep our workers and capital facilities fully occupied.
Over the past several years Canada has had extraordinarily large additions to her labour force, rates of increase often two or three times those in other industrialized countries of the west. We have also had substantial gains in employment, as the majority of jobseekers have been absorbed into useful work. In the first 11 months of this year, there were, on the average, 102,000 more Canadians at work than in the first 11 months of 1959. This was an increase of 1.7 per cent. However, as I say, it was not sufficient to absorb the entire growth of the labour force, which amounted to 2.8 per cent.
In prior years the high rate of growth in our labour force reflected in large measure the heavy immigration of mature adults and their families to our shores. Many of them brought skills and training acquired in the countries of their birth and they were readily absorbed into our highly technical industrial economy. There was also a tendency for a much larger number of married women to take or to look for employment as the increasing mechanization of household work has provided the opportunity for women to seek gainful employment outside the home. These factors are still present, to some degree. However, the growth of our labour force is now more directly attributable to the coming of age, from an employment point of view at least, of the large number of babies who were born in Canada during and immediately 90205-6-64i
The Budget-Hon. D. M. Fleming after the war. In the period from 1943 to 1947 there were, on the average, 90,000 more births in Canada each year than ten years before. These children have been growing up. By the early 1950's they were entering school; and municipalities found that they had a great shortage of classrooms and teachers, first for the primary grades, and then for second-dary. Now they are reaching the labour market. This is happening under the changing economic circumstances to which I have already made reference. In the first decade after the war, the demand for Canadian products at home and abroad and thus the demand for Canadian labour was so high that youngsters with little or no training could easily find well-paid employment. Today the situation has changed and young people are finding that more training is necessary. The heaviest incidence of unemployment at the present time is amongst young men without special skills.
A second important feature of our economic situation to which I wish to call attention tonight is closely related to our labour force and our ability to keep it fully employed at appropriate wage levels. This is the competitiveness of Canadian products in markets at home and abroad. My reference to this subject will not surprise the house. Indeed in my past three budget speeches I have warned of the consequences of rising costs. In 1959 I pointed out that "world markets are becoming increasingly competitive, and unless we can keep our costs of production in line with those in other important trading countries we shall find it increasingly difficult to sell our goods abroad and meet the competition of imports at home". Recent developments seem to suggest that our exporters have had more success in retaining and extending markets abroad than some other Canadian producers have had in maintaining their traditional share of the Canadian market. Each group, and each industry within each group, has its own special problems; and the ways in which government may best assist differ from industry to industry. Both employers and employees must seek to improve the competitive position of our economy by exercising restraint in their demands on the public, and by maintaining a proper relationship between remuneration and productivity. The general issue of productivity, and keeping costs down, offers a challenge to industry and labour and also to government.
There is a third feature of our present situation to which we must give special attention. In the 15 years since the war we have experienced exceptionally rapid expansion. We have had one of the highest rates of capital investment in the world. Canadian

The Budget-Hon. D. M. Fleming investment has been distributed between primary industries, secondary and service industries, public utilities and social services. We have taken full advantage of our opportunities to expand our primary and secondary industries at a time when demand was strong. We have offered them special incentives, and we have incurred heavy obligations abroad. We have improved and extended our highways, and built hundreds of schools and hospitals, and hundreds of thousands of dwellings. On the whole, the results have been not only massive in quantity but reasonably well balanced in quality. The strength and diversity of the Canadian economy have been greatly increased, and so has its capacity to service obligations abroad.
Not only has our rate of investment during this period of exceptional demand for Canadian products been amongst the highest in the world, but the greater part of it has been financed from Canadian savings. At the same time we have been fortunate in being able to attract savings from abroad. If, as seems probable, our total capital investment, while remaining massive, increases somewhat less rapidly than in the past, it follows that the proportion to be financed from Canadian savings will be higher. This implies a change, perhaps a considerable change, in the sources to which Canadians must look for funds to finance their various investment programs. The key to the situation is the ability and willingness of Canadians of their own accord to save and to invest in Canadian enterprise, a theme which I have frequently stressed. The rearrangement of financial sources for Canadian investment will, of course, exercise its influence in two important directions; first the ownership and control of Canadian industry and, second, the balance of international payments.
This leads to the fourth subject to which I wish to direct attention. This is the subject of trade and international payments and their relation to the employment situation. This year it appears that our net imports of capital will be about $1 billion, and this is matched by a similar excess of our imports of goods and services over our exports of goods and services. In past years, when our economic capacities were stretched to the limit in the process of unprecedented economic expansion, we supplemented our own resources, both financial and physical, with goods and capital from abroad. But today our resources are not stretched, many of our capacities are under-utilized, and we have not the same need of resources from abroad for our economic expansion. The current scale of addition to our total foreign obligations is not necessary in relation to our current economic circumstances.

In the circumstances of today, if capital flows in from abroad in forms and in amounts that put upward pressure on the external value of our dollar, it impairs the competitive position of Canadian producers in both domestic and foreign markets. Imports of goods and services become unduly expanded, exports less than they could be, and our current account deficit becomes unnecessarily enlarged. While in many circumstances, and under many conditions, capital imports enlarge employment, aid productivity and broaden markets, they can also, in a different environment, aggravate an existing unemployment situation.
Capital imports, however, cannot be turned on and turned off at will like a tap. Many capital imports bring with them not only imports of goods and services to supplement our domestic resources but also other things that will always be welcome such as up to date technology and access to foreign markets.
It has sometimes been asserted that the participation of foreigners in Canadian business and in our capital markets should no longer be welcome and that investment from abroad should be sharply curtailed by policies directed to this end. This is not the view of this government. The result of blocking out foreign investors and foreign investment would be to produce a "little Canada", cut off from many of the contacts with the outside world that have enriched our national life. We would become comparatively isolated, and most of us would be disappointed by the effects on our economic development.
In any event, it is not really open to Canada to retreat into economic isolationism. Our country is committed by its very nature and by its history to participation in world trade and to full membership in the international community. We must sell a large proportion of our products in world markets; we must import many of the essentials of our everyday lives.
On more occasions than I can number, both in this house and elsewhere, I have spoken of our need for equipment, for markets and for techniques which accompany investment from abroad. We will want this investment, in greater or lesser degree, for many years to come. Accordingly we must continue to maintain a climate hospitable to foreign investment in this country. At the same time, in view of basic changes in the world economic environment, and Canada's altered situation, we must reconsider whether we wish, indeed whether we can afford, to give to foreign capital the special attractions and incentives to come to Canada that were appropriate in past years.

I have remarked that the excess of our imports of goods and services over our exports is running at a rate of about $1 billion. This is below the deficits we ran in the past four years. Actually our commodity trade in the past few months has shown a surplus, and for the year as a whole will probably be very close to a balance. This compares very favourably with 1956 when we had a record merchandise deficit of $728 million and an even greater record merchandise deficit with the United States alone of $1,167 million. Since that time our exports of goods have risen by over 11 per cent, while our imports of goods have actually fallen. Much the greater part of the current account deficit for the year 1960 is being incurred in respect of services. These include service of capital imported in the past and also current services of very different sorts such as transportation and tourist expenditures. The amounts involved are sufficiently large to be a matter of concern to many Canadians.
This completes my review of the main economic issues to which I wished to draw the attention of the house tonight. The question naturally arises, how can government policy best contribute to the necessary adjustments which the changing circumstances require? In part, Mr. Speaker, I hope to supply some answers later tonight. But before doing so, let me remind the house of the government's economic program as set forth in the speech from the throne.
I referred a few moments ago to the fact that skilled workers nowadays find employment more readily than unskilled, and also to the related problems of productivity and competitiveness. The government is, as the house knows, putting forward a number of measures in this connection. By increasing substantially our contributions toward technical and vocational training we intend to improve the efficiency of Canadian labour and to provide the oncoming group of young Canadians with the skills which will make it easier for them to find employment. At the same time, the actual construction of the training schools, of which the federal government will pay 75 per cent of the cost for the ensuing two years, will provide additional employment. By establishing a productivity council we shall encourage industry to seek out the most up-to-date and efficient methods of producing the goods and services which Canada and her customers demand.
Ever since the last war, a significant proportion of Canada's resources has been devoted to increasing and improving our stock of housing, schools, roads, and hospitals. The lengthy period of neglect of this aspect of our national life, during the depression of the thirties and during the war, and the rapid growth of our population since the war,
The Budget-Hon. D. iff. Fleming made such a policy necessary. Much has been accomplished in a relatively short period of time, most of it at the provincial and municipal level and much of it with financial assistance from the federal treasury. However, there still remain important requirements which should be met. A period of less intense economic activity in the private sector provides an opportunity for meeting some of the needs of the public sector. This is why the government decided that it was appropriate at this time to provide additional incentives for urban renewal and slum clearance, sewage disposal, hospital construction and the construction of student residences in our universities. Legislation to these ends has already been passed by this house and it is our hope and expectation that municipal and other bodies involved will benefit greatly from our assistance. These measures, combined with more generous provision for housing, should exercise an early and favourable influence on employment in the construction and building material industries.
We are also proposing to commence a number of specific major projects which will lay the groundwork for resumption and acceleration of the long term growth of our natural resource industries. The planned extensions of rail lines to Great Slave lake and to the Mattagami area of Quebec represent a further probing of our northern frontier and its rich natural resources. Flood control projects around Winnipeg and in western Ontario will ensure the further development of these rich agricultural and industrial areas. Under the leadership of the Minister of Justice a Canadian negotiating team is actively working out with the administration in Washington the final details of a treaty to deal with the international aspects of the Columbia river projects which, when their construction is commenced, will provide a powerful stimulus to the economy of British Columbia, and indeed to Canada as a whole.
In addition to these specific measures to provide the basis for continued growth of our resource industries as demand for our products expands, the government is proposing to introduce legislation of broad significance to the long term future of Canadian agriculture. This measure envisages a far-reaching program of rural development which taken together with existing facilities and program for assistance to farmers adds up to a well-rounded and comprehensive agricultural policy for Canada. Under this program, to be undertaken in co-operation with the provinces, we may look forward to a general betterment in the quality of our agricultural resources through projects for soil improvement and water conservation; the diversification of economic opportunities available in

The Budget-Hon. D. M. Fleming rural areas; the more effective use of marginal lands by converting them to community pastures and woodlots. These and other related activities encompassed in this program are directed to the long standing objective of the government to raise the standard of living and improve the economic opportunities of our rural population.
Our climate has always imposed upon us a markedly seasonal pattern of employment. The period from December to March is always marked by considerably higher levels of unemployment than the remainder of the year. Since coming into office the government has consistently attempted to offset this seasonal rise in unemployment by giving special encouragement to certain types of activity which create winter employment. This year we are redoubling our efforts in this regard and additional incentives have been announced to encourage municipal works projects. Special efforts have been made to accelerate construction of many federal works projects already approved by parliament, and the results are already beginning to show.	[DOT]
The government has given considerable thought to the question of mobilizing and, in a measure, channelling the savings of Canadians toward economic activities where demands for capital seem likely to be high or which have in the past been supplied from sources abroad. This presents a challenging problem which will not be solved quickly; however, we have made a beginning. I have already mentioned the additional federal assistance now available for slum clearance, sewage disposal and other projects. I should also remind the house that the government will introduce legislation to provide greater flexibility in the investments of insurance companies in order to permit a more dependable flow of funds to meet the capital needs of Canadian industry and housing. Furthermore, the legislation establishing a new system of government guaranteed loans for small business will help to meet the needs of a vital and enterprising section of our community and, incidentally, one where Canadian ownership and control are almost universal.
I have already pointed out that extra efforts will have to be made if Canadian exports are to continue to expand. Such a situation presents a challenge, both to private enterprise and to government. Accordingly, the government is giving additional help and encouragement to Canadian exporters. The initiation, jointly by the Canadian government and the Canadian banks, of new export financing facilities will provide assistance to exporters of capital goods. And in connection with our
[Mr. Fleming (Eglinton).l
export program as a whole, my colleague, the Minister of Trade and Commerce (Mr. Hees), called to Ottawa all his trade commissioners from every part of the world, in order to mobilize a new drive for markets. As in other parts of the government program, Canadian businessmen were invited to sit down with representatives of the Canadian government to work out a co-operative plan of campaign. Thus the approach of the government to foreign trade is expansive and constructive.
It would be quite out of keeping with such an expansive attitude toward exports to adopt, toward imports, the narrowly restrictive approach which is so often urged upon us. Canada will continue to support the principles and purposes of orderly and multilateral world trade.
It will be the intention of the government, Mr. Speaker, to continue to face new circumstances as they develop and to meet new needs as they arise. But we shall keep constantly in mind the paramount importance of maintaining and defending the integrity of our currency. Fears of creeping inflation were widespread only a year or two ago. Although more and more voices were raised to warn of the consequences of continued price rises, people acted for many years on the assumption that inflation would continue. In the past couple of years there have been signs that the efforts of the government and the people to contain inflation were at last achieving some measure of success. Though we must continue to be alert to the danger of a recrudescence of inflationary tendencies, the present position in North America appears to be that most if not all the immediate forces of inflation have been spent, and that more and more people are willing to base practical business and personal decisions on this assumption.
This is a most welcome development. The maintenance of the purchasing power of the Canadian dollar is essential for steady economic growth, for saving and investment, and therefore for the expansion of employment. We have made real progress over the past several years in overcoming inflationary excesses. It remains the steadfast purpose of this government to prevent the recurrence of inflation which brings in its train social injustice and the atrophy of the nation's moral and economic strength. There must indeed be flexibility and elasticity in Canada's economic and financial policies; but these must not be used in a way which again invites inflation. I believe that we must succeed in this endeavour.



GOVERNMENT ACCOUNTS, 1960-61

[Stage Direction]
I turn now, Mr. Speaker, to a re-appraisal of our budgetary position for the current year. In the March budget speech I estimated that our expenditures for the year ending next March 31 would be $5,880 million, that our revenues would be $5,892 million, and that we would have a surplus of $12 million.
As I said earlier this evening, the trend of economic events in Canada, heavily influenced as it is by the course of economic activity in the United States, has shown some progress, but not nearly as great progress as seemed probable nine months ago. Last March I expected our rate of growth in 1960 to result in a gross national product about 6 per cent above that of 1959. Figures are presently available for only the first two quarters of 1960. The first quarter of 1960 showed an increase of 5 per cent in the gross national product as compared with the first quarter of 1959. The second quarter showed a comparable increase of 1J per cent. The G.N.P. for the first half of 1960 was thus 3J per cent above the first half of 1959 and 2 per cent above the revised figure for the whole of 1959.
On the basis of our March expectations I forecast that our revenues for the current year would be 11 per cent above those of last year. Up to the end of August our revenue inflow was right in line with this forecast. During the past three months, however, the increase in revenues has been at a less rapid rate, and if present trends continue I would expect our revenues this year to be about 7J per cent higher than last year. In other words, our total revenues are likely to be some $210 million or 3i per cent less than forecast.
With the consent of hon. members I should like, Mr. Speaker, to insert in Hansard at this point a table of revenues showing the 1959-60 actual, the March forecast for 1960-61 and a revised forecast for 1960-61 based on actual figures for the first eight months of the current fiscal year and an estimate of trends over the remaining four months.
Mr. Speaker:: Has the minister leave of the house to include this table at this point?


Some hon. Members:: Agreed.


Mr. Speaker:: Has the minister other tables?


Donald Methuen Fleming: I have one more.


Mr. Speaker:: Perhaps the house might give consent now to include that table also.


Some hon. Members:: Agreed.
(Editor's note: The table referred to is as follows:)
The Budget-Hon. D. M. Fleming TABLE X
Revised forecast of revenues (in millions of dollars)
Actual	March	Current1959-60	forecast	forecastPersonal income tax ..	$1,566	$1,750	$1,715Corporation income tax	1,143	1,340	1,300Non-resident tax 	73	80	80Estate tax 	88	85	90Customs duties 	526	580	525Sales tax 	733	795	740Other duties and taxes	623	670	660Total taxes 	4,752	5,300	5,110Non-tax revenues ....	538	592	570Total revenues .	5,290	5,892	5,680


Donald Methuen Fleming: On the expenditure side I expect the results for 1960-61 to show an increase of about $100 million or less than 2 per cent over the estimate I put before the house last March. This increase is more than accounted for by three main changes; one resulting from the parliamentary decision made in August appropriating $42 million for wheat acreage payments; the second due to much heavier losses than had been anticipated in the agricultural commodities stabilization account and in the prairie farm emergency fund; and the third an increase of more than $50 million in the deficit of the Canadian National Railways. Last March the management of the C.N.R. forecast a deficit of $24 million. I am informed that this figure is now likely to exceed $75 million.
These three items will involve increased expenditures of about $130 million, and since our total expenditures are expected to be $100 million more than forecast, it appears that apart from these three items our other expenditures have not only been contained within the estimate but are likely to be about $30 million lower than I estimated in my budget speech last March.
The net result of these revised forecasts, based on eight months actual and four months estimated, is that our revenues for the current year are likely to be about $5,680 million; our expenditures about $5,980 million; and there would be a budgetary deficit of about $300 million.
On the other hand, I expect that our net cash requirements for the current year are likely to be very close to the amount of $210 million that I forecast last March. The shift from an estimated surplus of $12 million to an estimated deficit of $300 million will be offset by a probable shortfall of $90 million in the demand for housing funds through the Central Mortgage and Housing Corporation as compared with the estimate I put before the house last March, and by a saving of $225

The Budget-Hon. D. M. Fleming million in the C.N.R.'s financial calls on the government. Instead of increasing its net debt to the treasury by the $150 million to which I referred in my budget speech last March, the C.N.R. through its direct borrowing by issues of bonds to the public has reduced its net debt to the treasury by about $75 million. In short, our net direct demands on the bond and money market and upon the savings of the Canadian people are likely to be about the same as I forecast last March.
Since April 1, 1960, the total of the government's direct and guaranteed funded debt has increased by approximately $457 million. The outstanding volume of Canada savings bonds has increased by $472 million, while our marketable debt, direct and guaranteed, has been reduced by $15 million. The guaranteed debt has increased by $250 million while our direct market debt has been reduced by $265 million.



TAX POLICY

[Stage Direction]
As I said earlier in my speech, this is not a full scale budget. It is a series of specific proposals supplementary to the regular budget I brought down last March. It is an integral part of the broad economic policy set forth in the speech from the throne.
The government is formulating economic policies to ensure the stability and the growth of Canada and the well-being and prosperity of the Canadian people. In the first place, we are putting forward proposals related to immediate or short term objectives, of which the most important is to combat unemployment, especially winter unemployment. Governmental measures under this heading are chiefly of a non-budgetary character although I shall be recommending additional measures tonight.
A second group of proposals is designed to influence the structure of the economy in the direction of longer term objectives. We wish to promote and stimulate balanced economic growth; we must exercise vigilence against the possible recrudescence of inflation; we wish, by appropriate influences, to help move our balance of payments in the right direction; we wish to encourage the most effective use of Canadian savings in the development, management and control of an expanding Canadian economy.
In formulating this supplementary budget I have attempted to probe some of the deficiencies in our tax system which seem in the conditions of today to militate against the full realization of our economic potential. The purpose is to achieve real and enduring benefits for the more efficient functioning of the economy as a whole.
The proposals I shall be submitting to the house will make a major impact on the course

of developments over the next few years although I hope, in addition, that they will exercise considerable influence during the next few months.
Certain of the measures I am about to bring forward will provide business organizations, and particularly smaller ones, with increased assistance in the form of tax concessions to assist them to expand and provide more jobs where possible. In connection with imports, I shall ask the house to consider the rules determining what are goods of a class or kind made in Canada. I shall recommend measures to encourage increased investment. I shall also recommend the adoption of measures to ensure more efficient use of the savings of the Canadian people, to finance the development of our industry and our resources. These proposals, it is hoped, will make a substantial contribution to the increase of employment. In this same connection, I shall announce measures of assistance for new industries in areas of the country where unemployment is high. I shall also announce new measures of incentive for the further processing in Canada of the products of our resource industries and for the manufacture of new products. In the interests of financial equilibrium with the outside world, I shall propose the withdrawal of certain tax advantages which have hitherto provided incentives to the inflow of capital from abroad. In the light of changed economic circumstances and in the light of the encouragement we are now proposing to extend to Canadian savings and investment, these are no longer warranted, Finally, having regard to the importance of higher education, I shall bring forward certain measures of tax relief.

[Stage Direction]
I shall now proceed to describe the various measures in detail.
In our free society we depend to a large extent upon business to provide employment and expansion in economic activity. I have examined the system of taxes affecting business operations in an effort to extend encouragement to business and industry in these great tasks, the development of new fields and the creation of more employment.
I am submitting an important change in the structure of corporation income tax rates. At the present time the first $25,000 of a corporation's taxable income is taxed at the low rate of 21 per cent as compared to the rate of 50 per cent applied to the excess. It is proposed that, effective January 1, 1961, the size of the income bracket bearing this low rate be enlarged from $25,000 to $35,000,

Hon. members will recall that the first program of tax reductions placed before parliament by this government in December, 1957 contained a measure to aid small corporations by increasing the size of this initial bracket from $20,000 to $25,000. This has had very constructive effects. The present proposal to enlarge this bracket by a further $10,000 to $35,000 will extend the benefit of the low rate of tax to an additional 4,000 companies. Out of approximately 62,000 corporate income tax payers 55,000 have incomes below $35,000, and will in future pay no more than 21 per cent.
Together with other policies proposed by the government at this session to assist small business, this measure will have a significant impact. Companies, especially those which are not large enough to have ready access to the security markets, are in a position to enlarge the scope of their operations and to create more employment if their immediate needs for cash to pay taxes are relieved.
This tax change is expected to reduce revenues by $24 million on a full year basis. It will have no material effect on tax revenues for the remainder of this fiscal year, but the stimulus will, of course, be immediate.
Much has been said in recent months about using accelerated rates of capital cost allowances as a means of stimulating production. Perhaps some of these suggestions have been made without adequate consideration of the form such a program should take or the results that might be expected. Rates of capital write-off allowed under the income tax regulations are already generous and the scope for use of this device is not as great as many people appear to believe. After studying this matter very carefully, the government has decided to use the incentive of accelerated capital cost allowances in a selective way.
The most important of our immediate objectives, as I have already said, is to deal effectively with the problem of unemployment. Another of the objectives of the government is to achieve a wider measure of industrial processing in Canada of our own raw materials and natural resources. In addition, there is a widespread belief that industries in various fields are on the verge of expanding into new fields of endeavour. I fully share this optimism about the capabilities of Canadian industry. I am anxious to do everything within our means to encourage initiative and enterprise. As a powerful incentive to these ends I am pleased to announce measures to fulfil three major purposes: first, to assist new industries in areas where there is a substantial degree of continued unemployment over the years; second, to aid the development of new products from processing
The Budget-Hon. D. M. Fleming operations not hitherto carried on in Canada; and, third, to encourage the production of new types of goods. Double depreciation will, at the option of the taxpayer, be allowed in respect of capital expenditures incurred in the first year for these purposes, but may be applied in any of the first three years.
In some areas changing economic conditions have created a degree of chronic unemployment which requires special action. The purpose of this new program is to attempt to cope with this problem in the most effective way by encouraging new industries to establish themselves and provide additional employment in such areas. The areas to benefit from these new measures will be designated by the governor in council on the basis of the best and most complete information available.
In the two other fields, the further processing of Canadian materials and the production of new types of goods, the potential is great and the benefits will be of enduring value. The Income Tax Act already allows a rapid rate of write-off for current and capital expenditures in the field of research. Amongst other things, this new program will supplement these concessions in a very logical way. By expanding the range of our productive capacity, by making new goods in Canada, and by processing to a greater degree the raw materials produced here, we can broaden and strengthen the industrial framework of the nation.
Taxpayers who desire the special write-off in respect of capital assets acquired in fulfilment of any of the purposes I have mentioned will make application according to a procedure that will be announced in due course by my colleague the Minister of Trade and Commerce (Mr. Hees). The program will be introduced for an initial period of two years commencing January 1, 1961. The effect on revenue is difficult to estimate. The reduction may be as much as $25 million in a full year.
I turn now to measures to encourage investment and to ensure more efficient application of the savings of the Canadian people. I am proposing that the 4 per cent surtax on investment income be repealed as applied to income from Canadian sources. This additional tax, I am convinced, discourages investment by Canadian individuals to a degree that is out of all proportion to the small revenue that it yields. Moreover, since it does not apply to the return from savings of certain kinds, such as pensions and rents, but does apply to income from certain other desirable forms of savings, such as interestbearing securities and equities, it discourages individuals from making investments of the latter types. By the same token it raises an
1008	HOUSE OF
The Budget-Hon. D. M. Fleming additional difficulty for Canadian governments and corporations desiring to borrow in Canada. By removing this impediment to investment in Canadian securities we shall be taking a significant step toward the goal of encouraging Canadians to save and invest in their own country.
The loss of revenue from carrying out this proposal is expected to be $11 million in a full fiscal year. A substantial number of surtax payers because of their age or the loss of the family breadwinner are dependent on fixed investment incomes-in most cases, quite modest incomes. These are people for whom our tax laws normally afford special consideration, and it is desirable that they should be relieved of this special tax.
To achieve greater participation of Canadian capital in the ownership and control of Canadian industry, I am bringing forward certain measures pertaining to the investment policies of pension funds and of investment companies or mutual funds, as they are sometimes called. Taken together these institutions provide what is perhaps the largest flow of individual savings available for investment in the ownership of Canadian industry. The purpose of the measures I shall introduce is to induce investment of these savings in Canada rather than abroad. The individuals who participate in pension funds, mutual funds and the like, who are saving for their own future, have an enormous personal stake in the future of Canada; so there is a broad coincidence of private and public interests in these measures.
Investment funds and mutual funds which qualify as "investment companies" under the Income Tax Act enjoy a special low rate of tax of 21 per cent. This is in recognition of the fact that these companies are essentially conduits through which an individual may channel his investments in order to obtain a diversification which he could not obtain by investing directly. It has, I think, always been contemplated that the bulk of the investment made by these companies should be in Canadian enterprises, and at one time in the past such a requirement was imposed upon them by the Income Tax Act. This requirement was withdrawn in 1956, and an increasing amount of the funds of some of these companies has recently been diverted to investments outside Canada. It is only reasonable that companies whose shareholders enjoy the benefit of the 20 per cent dividend tax credit should place the bulk of their funds in shares of Canadian companies. Accordingly, I propose that corporations desiring to qualify as investment companies for tax purposes in the future must obtain at least three quarters of their gross revenue in the form of dividends from taxable Canadian corporations. This will 
[Stage Direction]
leave room for them to achieve a desirable degree of liquidity and diversification, while at the same time ensuring that the greater part of savings channelled through the hands of these companies flows into Canadian enterprise. It is recognized that some investment companies may not be able to meet this 75 per cent requirement immediately. In order to give them adequate time to make an orderly adjustment of their portfolios this income requirement will be 55 per cent for taxation years commencing in 1961 and 65 per cent for taxation years commencing in 1962. Companies already in excess of 65 per cent or 75 per cent respectively will not be permitted to fall below these levels during the next two years.
The amendment I have just described will not apply to companies whose business is primarily to invest in Canadian securities on behalf of shareholders who live in other countries. These are known as non-resident-owned investment corporations and they operate under different tax provisions which need not be altered.
Turning to employee pension plans, the latest published reports show that the assets of Canadian trustee pension plans now exceed $3 billion and they are increasing by about $300 million per year. A corporation or trust established for the administration of a registered pension fund or plan is exempt from income tax. Moreover, contributions to such pension plans by employers and employees are, in almost every case, deductible from income. In view of these concessions and the direct interest which all participants in pension plans have in the prosperity and development of Canada it is appropriate that a substantial part of their savings should be invested in this country. Because of the need to provide pensions of a predetermined amount, a substantial part of the funds of these plans has always been placed in bonds, mortgages and other fixed income securities. No attempt is being made here to interfere with this pattern, and private decisions will continue to prevail as to the form in which the funds shall be invested. It is proposed, however, that pension plan trustees qualifying for tax exemption in the future must derive at least 90 per cent of their investment income from Canadian sources. As with investment companies, this income requirement will be introduced gradually. It will be 70 per cent in 1961 and 80 per cent in 1962. In this case again, pension funds already in excess of the 80 per cent or 90 per cent respectively will not be permitted to fall below these levels during the next two years.
I have some important changes to propose in the taxes on income paid to non-residents. These are frequently called the withholding

taxes because the Canadian resident payer is responsible for withholding them and transmitting them to the government. By and large, they are imposed on the investment income of persons and corporations in other countries who have invested money in Canada. As I have already made clear in this speech, and frequently on other occasions, it is my view that the Canadian economy has derived great benfits from the inflow of [DOT]capital from abroad and benefits still continue to accrue. Our national development has been .accelerated thereby; the breadth and depth of our industrial structure have been increased; the scope of productive occupations for our [DOT]own citizens has been extended. There is no intention, therefore, of recommending policies antagonistic to foreign capital. To do so would not be in the best interests of Canada.
In the light of the developments I have described, however, it has become desirable to propose certain measures which will, I believe, help the Canadian economy to achieve an improved equilibrium with the outside world. At this stage of our national development it is appropriate to withdraw some of the special incentives which were designed in past years to attract foreign capital. As a result of such special concessions, non-residents profiting from investment in Canada do not always bear their fair share of the general costs of government and administration, although they benefit in full measure from them. To redress this situation, I shall be recommending several amendments to bring the principal non-resident withholding taxes up to a uniform level of 15 per cent, which is recognized in our law as the standard or normal rate. The house will recall that parliament established 15 per cent as the standard rate for comparable purposes in part II of the Estate Tax Act.
I shall deal first with amendments pertaining to the payment of interest to nonresidents. In recent years Canadian borrowers have frequently resorted to the capital markets of other countries. Under current conditions it is not helpful to the balance of payments, to the exchange rate or, indirectly but more important, to the employment situation, to continue to encourage provincial, municipal or corporate borrowers to issue bonds in other countries. In my budget speech of March 31, 1960 I warned such borrowers, in their own interests, of the exchange risks they incur by borrowing abroad. I shall recommend the withdrawal of certain special measures which were originally included in the Income Tax Act to facilitate the sale of Canadian bonds abroad, in very different circumstances from those existing today.
The Budget-Hon. D. M. Fleming
The act at present exempts from the 15 per cent withholding taxes interest on government of Canada bonds. I propose that this exemption be withdrawn with respect to the interest on all government of Canada bonds issued after tonight. The act also provides at present that interest received by nonresidents from bonds of the Canadian provinces payable in Canadian currency is taxed at a reduced rate of 5 per cent. It is proposed that these bonds be put on the same basis as those issued by the government of Canada and accordingly non-residents receiving interest from provincial bonds issued after tonight or not committed by contract prior to tonight will be taxed at the full rate of 15 per cent.
The remaining exemption for interest which I propose to ask parliament to change is that which applies to interest payable in a currency other than Canadian currency. At present interest on foreign-pay securities is generally exempt from withholding tax. Interest on bonds and similar obligations issued after tonight or not committed by contract prior to tonight, whether issued by federal, provincial or municipal governments or by other Canadian borrowers, payable in other than Canadian currency, will become subject to the same 15 per cent non-resident tax as interest payable in Canadian funds.
It is expected that withdrawal of the tax exemption for interest payable in a foreign currency will abate Canadian borrowing in foreign markets. Special tax concessions for the purpose of increasing the saleability of bonds of Canadian borrowers abroad should no longer be necessary and there is no justification for maintaining a tax concession which provides a direct incentive for the issuing by Canadian residents of securities payable in a foreign currency.
I wish to make two points quite clear. First, all my proposals relating to withholding tax on interest apply only to interest on new issues made after tonight. No new tax is being imposed on previous issues. Second, the withdrawal of the exemption for interest payable in a foreign currency relates only to interest payable on bonds and similar securities; it does not apply to interest on the normal business borrowings of Canadians operating abroad.
I should also mention a technical change in line with these proposals that will be made in the computation of the withholding taxes payable by non-resident insurance companies licensed to carry on business in Canada. These withholding taxes are calculated under special rules provided in the income tax regulations. Since the effect of these rules at present is to permit an exemption for interest payable in a foreign currency they will be amended
1010	HOUSE OF
The Budget-Hon. D. M. Fleming to require that bonds and similar obligations payable in other than Canadian currency that are issued after tonight will be included with other Canadian assets for purposes of the computation.
The second exception from the general 15 per cent tax paid by non-residents which I shall ask parliament to eliminate concerns certain dividends. The Income Tax Act provides that the general 15 per cent tax on dividends paid by Canadian resident corporations to non-resident shareholders shall be reduced to 5 per cent where the dividends are paid to a non-resident parent corporation which owns all the voting shares of the Canadian paying corporation. The continuation of this special concession appears no longer to be justified.
The withholding tax was first imposed at 5 per cent in 1933 on dividends other than those from wholly-owned subsidiaries. In view of everything else that has happened, it is really extraordinary that this rate of tax has never been increased in all these years. It will be remembered, for example, that the rate of tax on Canadian corporations was 12J per cent in 1933 compared with a top rate of 50 per cent today.
Non-resident corporations which derive dividends from subsidiaries resident in Canada have their property and their interests protected by Canadian laws in the same way as other non-residents who receive income from different forms of investment in Canada. It seems unnecessary and undesirable to continue an arrangement by which a non-resident corporation is granted a preferential rate, on the condition that it holds a large degree of ownership in the paying Canadian subsidiary. All non-resident shareholders, whether or not they happen to be controlling parent corporations, should henceforth pay the full 15 per cent tax on the dividends they derive from their investments in Canada.
In past years Canada has entered into a number of agreements with other countries whereby this country has undertaken not to impose more than a 5 per cent tax on dividends paid by a Canadian subsidiary to its non-resident parent corporation whose holdings constitute more than 50 per cent of the voting shares. There are provisions in some other agreements under which the rate of tax in question may be reduced to 2i per cent or zero. In amending our Income Tax Act we must, of course, observe our obligations under these treaties.
It will be necessary to enter into negotiations as soon as possible with countries with which we have conventions providing for less than a 15 per cent tax on dividends. The purpose will be to impose the full 15 per cent rate in every case.
[Mr. Fleming (Eglinton).l
[Stage Direction]
The tax agreement between Canada and the United States is of special significance in connection with the proposals I have outlined because of the large volume of dividends going from Canada to parent corporations resident in the United States. In one of the provisions each country has agreed to impose no more than 5 per cent on dividends paid by controlled subsidiaries to the parent corporation in the other country. However, the agreement provides for the cancellation of this particular provision without termination of the rest of the convention. When the present agreement was concluded it was foreseen that it might be necessary at some time to increase the 5 per cent rate and special provisions were included to cover this contingency. My proposal thus lies within the terms of the agreement with the United States.
Article XI of the agreement provides that either country may terminate its undertaking concerning the 5 per cent rate by imposing a rate in excess of 5 per cent. Commencing tomorrow Canada will increase its rate to 15 per cent. Because of the rules of budget secrecy followed in Canada it has not yet been possible to inform the United States authorities of our decision.
I may say that this situation is not unprecedented. In his budget speech of April 29, 1941, the then minister of finance informed the house that the tax on non-residents under the Income War Tax Act would be increased from 5 per cent to 15 per cent, and that the raising of the rate meant that the United States would be released from the requirements of the reciprocal tax convention of 1936. As hon. members are aware, a new and more comprehensive agreement, the one now in force, was satisfactorily concluded a few months later.
To sum up, the rate of tax to be withheld by all Canadian companies from all dividends paid to shareholders resident in the United States, and in other countries where the rate of tax does not continue to be restricted by a tax agreement, will be 15 per cent, commencing tomorrow.
In addition to interest and dividends, there is another form in which earnings from activities in Canada are transferred to nonresident owners. When a non-resident corporation carries on business in Canada without incorporating a subsidiary here the profits attributable to its permanent establishment or branch in Canada are taxed at regular Canadian corporation income tax rates. In the past no attempt was made to place any tax on the non-resident corporation when the profits of the branch were withdrawn by its head office even though the transfer of profits from a branch is analogous to the

payment of dividends by a subsidiary corporation to the parent. In view of the proposal to impose the full 15 per cent tax on dividends paid by all subsidiary companies a serious lack of balance would develop if some corresponding levy were not imposed on profits withdrawn from branches. We would then be in the anomalous position of offering to non-resident corporations which carry on business in Canada a strong tax incentive not to incorporate Canadian subsidiaries; this is the very reverse of the government's intention. Accordingly, I am proposing that the profits of branches of nonresident corporations carrying on business in Canada, computed after deducting the regular Canadian and provincial corporation income taxes, shall bear a special tax of 15 per cent in lieu of the non-resident withholding tax imposed on dividends. This will apply to profits earned after 1960. As in the case of subsidiaries, some of Canada's tax agreements with other countries will prevent the immediate imposition of this additional tax on the income of branches accruing to corporations resident in those countries.
An exception will be provided for banks and life insurance companies because they are often subject to statutory impediments to operating otherwise than through branches. A further exception will be made in favour of companies engaged in transportation or commercial communications across our international boundary.
An effort will be made to apply this new tax to branches in a manner closely parallel to the application of the non-resident withholding tax to dividends paid by foreign-controlled subsidiary companies. To the extent that it can be shown on behalf of a branch that net increases in capital investment in Canada are made, the taxable income will be reduced.
It is to be expected that where branches are affected by this tax decisions will be made in many cases to incorporate companies in Canada.
The increased revenue from all these changes with respect to income of non-residents is very difficult to estimate. However, it is thought that it may produce as much as $50 million in a full fiscal year and about $14 million in this fiscal year.
I come now to an important, although rather technical matter, in connection with interest rates on bonds to which attention must be given at this time. As hon. members are aware, bond interest is taxable income. Unfortunately, increasing use is deliberately being made of a device to pay bondholders the equivalent of interest in a form that is tax-free. If a borrower issues a one-year $100
The Budget-Hon. D. M. Fleming bond for, say, $96 and the bond bears a coupon rate of 1 per cent, the bondholder will receive $4 more than he paid for it when the bond matures at the end of the year. This excess over purchase price, plus the $1 in interest, will give the lender a 5.2 per cent return on his investment but it has been found difficult to collect tax on more than the $1 designated as interest. If the issuer of the bond is a taxable person he may not deduct as a cost of borrowing the discount at which he issues his bonds. Since he is permitted to deduct interest for income tax purposes the taxable borrower is discouraged from paying for the use of money through a discount instead of interest. However, this is not so where the borrowers are non-taxable, for example, provinces, municipalities, charitable organizations and school districts. For such organizations it is a matter of financial indifference whether they pay the cost of borrowed money in the form of interest or a discount.
To give an example of what is taking place, a province recently borrowed $8J million through issuing two-year debentures on which the contractual interest rate was only 2 per cent. Since this issue was priced at $93.64 the effective yield over the two-year period was 5.4 per cent. Another province borrowed over $5J million on approximately the same terms. Another issue brought to my attention was a one year issue by a provincial authority amounting to $1 million which had a contractual interest rate of 2 per cent but an effective yield to maturity of 5.6 per cent. In the long term field a province recently issued a 15-year bond with a contractual rate of 2 per cent priced at $66.45 to yield about 5.3 per cent to maturity. In all these cases tax is collected from most holders of these bonds only on the income from the coupon. Obviously such issues are very attractive to individual lenders in the high income brackets.
I wish to plug this loophole in our tax law. I am therefore proposing that where the contractual rate of interest on any bond, debenture or similar evidence of indebtedness, issued by a tax exempt borrower, is less than 5 per cent, and where the bond or debenture is issued at a discount which provides an effective yield to maturity or to the earliest call date that exceeds the contractual rate by more than one third, the whole of the discount shall be deemed to be income in the hands of the first Canadian resident taxable holder of the instrument. The purpose of this measure is not to raise revenues but to inhibit the use of a device to avoid payment of tax. A sufficient amount of discount will still be allowed to provide the flexibility that is requisite for the pricing of new issues.
[Stage Direction]
The Budget-Customs Tariff
My final tax proposal concerns university education. Of all Canada's assets by far the most valuable are her human resources. The preparation of her younger generation for the tasks which will confront them is of overriding importance. The house has recently approved the government's bill to assist the expansion of facilities for technical training. It is appropriate and timely to turn to the financial problems faced by university students and those to whom such problems deny the benefit of a university education.
Many deserving students require financial aid in order to attend university. Some provinces have inaugurated systems of loans to worthy students in need of direct financial assistance. These commendable plans are producing very beneficial results. The government is giving continuing study to this important aspect of the problem.
The other aspect concerns the income tax position of students and those on whom they are dependent. I propose a measure of tax relief for university students and their parents.
Some students, while pursuing their university courses, earn sufficient money to incur an income tax liability. I am proposing that a student in full time attendance at a university, if he is proceeding towards a degree, be allowed to deduct the tuition fees he pays to the university when computing his taxable income.
The income tax law already provides special assistance to parents who are supporting children at university by allowing them to claim a deduction in respect of such children even after the-v have attained the age of twenty one years. However, if the student of any age has income in excess of $950 he ceases to qualify as a dependent, and his parent then forfeits the $500 exemption otherwise accorded to him by the law, even though he may be giving financial support to the student. I propose that the student's tuition fees be allowed as a deduction from his earnings in determining whether he qualifies as a dependent. If his income after deduction of his fees falls below $950 the parent will recover the $500 exemption.
These changes will become effective on January 1, 1961.

[Stage Direction]
The speech from the throne contained two references to tariffs. They are as follows:
My government has decided that the modernization of the Customs Tariff of Canada, on which much has been accomplished in recent years, should be substantially accelerated. To make this feasible on a sound and fair basis, you will be asked to enlarge the tariff board and authorize it to sit in two panels.

You will also be asked to revise the definition in the Customs Tariff of goods of a class or kind made in Canada.
I should like to enlarge on both of these references now. I shall speak first of the proposed enlargement of the tariff board.
Throughout the period since this government assumed office the tariff board has been engaged on a series of references which have involved comprehensive reviews of major sectors of the Canadian tariff. Since June, 1957, I have tabled in parliament reports relating to basic iron and steel; pipes and tubes; fresh fruits and vegetables; and most of the textile items. In addition there have been reports on a number of other matters which, while of less general interest, were of concern to the industries directly affected.
The recommendations made by the board in the reports to which I have referred were largely implemented by legislation introduced in the last three budgets. The tariff revisions were in every case preceded by international negotiations. These negotiations were required in order to secure necessary modifications in Canada's commitments under the GATT, and in order to protect our exporters from the danger, indeed the likelihood, that trading advantages that benefit them in other GATT countries would be withdrawn. In each case we acted consistently with the internationally agreed rules, and we intend to continue that practice, provided, of course, that other countries do so also.
My 1958 budget introduced a comprehensive revision of the iron and steel sector of the tariff; the 1959 budget dealt with fruits and vegetables; and the 1960 budget dealt with the bulk of the textile schedule. Among them, these three budgets involved the amendment of some 400 items in the Canadian tariff.
Further tariff changes may be anticipated in due course on the basis of further tariff board studies recently completed, or now in progress. A particularly large number of tariff items is included in a major reference now on the board's calendar, namely that on chemicals. The board also has before it references on certain machinery items, radio, television and electronic products, nails, chinaware and glassware blanks for decorating, and architects' plans, drawings and blueprints.
I am now announcing a new reference to the board relating to oilseeds and vegetable oils. Representations have been made to the government by growers of soya beans in eastern Canada and by growers of rapeseed in western Canada concerning the tariff on these products. It has also been represented that modification of the duties on oil seeds and vegetable oils would be of assistance to dairy farmers across the country. Other points of

view concerning the appropriate rates of duty for these products have been expressed by the soybean crushing industry and the Canadian Feed Manufacturers Association. Moreover, because of the wide interchangeability of oilseeds and their products for a variety of agricultural and industrial uses modification of the duties for some items without compensating changes for others would be disruptive of production and trade. For these reasons* I have decided that the best course would be to refer the matter to the tariff board for study and report.
In view of the heavy program of important work which awaits the tariff board, the government proposes to enlarge the board and to provide for expediting its work. The government is fully aware of the urgent need to modernize sectors of the tariff which have become out of date. At the same time we consider it important to provide for careful investigation and public hearings before major tariff revisions are introduced. This permits all interests and all points of view to receive full consideration. We believe that the tariff board is the appropriate body to undertake this task, and that in order to do so expeditiously the board should be enlarged sufficiently to permit it to adopt a panel system.
Accordingly I am placing on the order paper a resolution looking toward a bill which will provide for an increase in the board's membership from five to seven. Additional membership will make it practicable for the board to operate normally as two separate panels, and to proceed simultaneously with two inquiries or appeals. In addition to authorizing an increase in the membership of the board, the bill will provide also for consequential amendments designed to facilitate the adoption and operation of a panel system.
I turn now to the problem of "class or kind". This is not a new problem, nor one to which there is any easy solution. Our predecessors in office were, I know, aware of the problem. Indeed the need to do something constructive about it was strongly and repeatedly urged upon them.
It might be advisable for me to sketch the background of the problem before explaining what we propose to do about it. The provisions of section 6 of the Customs Tariff containing the anti-dumping clause apply only to goods of a "class or kind made or produced in Canada". Moreover, there are in the tariff some 75 items which provide for free entry, reduced rates of duty, or duty drawback, in respect of specified types of goods when of a "class or kind not made or produced in Canada". The same goods if ruled to be produced in Canada bear substantially higher rates of duty.
The Budget-Customs Tariff
The purpose of these items, as stated at the time the most important of them were originally established, was to provide for reduced rates of duty on "machinery of production, not procurable in Canada". The antidumping provision dates from 1904, and some of the "class or kind" tariff items are of equally early origin. However, most of the present "class or kind" items were established more recently, particularly during the period from 1935 to 1939.
These items require administrative interpretation of the meaning of the words "class or kind" when applied to particular cases. From various statements made when these items were introduced it seems clear that the government and the parliament of the day intended that the words "class or kind" be given reasonably broad interpretation. It was not intended that imported goods be classified as "not made" simply because the size, style or quality differed somewhat from that of similar products made in Canada. I believe that when free entry or reduced rates of duty were provided for in respect of goods of a "class or kind not made or produced in Canada" the intention was that the reduction apply to goods not directly or closely competitive with those produced in Canada. That I believe was the intent of the government of the period when most of these items were introduced. I should add also that until about 1950 the items in question were always interpreted in that way. That was the way in which they were being administered when present GATT commitments respecting these items were undertaken, and it provided the basis on which other countries evaluated the concessions.
As long as the spread between rates on goods "made" and those "not made" in Canada was quite narrow few important problems emerged. However, the wide spread which had been introduced by 1950 between the rates of duty on many "made" items and "not made" items created a strong in-the intent of the "not made" items, and to some extent their efforts have been successful. They were successful because of the unsatisfactory way in which "class or kind" was defined. The effect has been to erode to some extent the protection afforded to Canadian producers. Moreover, the broadening of the application of certain "not made" items which has occurred during the past decade has conferred on our trading partners in the GATT a windfall benefit for which they have not paid, and to the withdrawal of which they could not reasonably object.
There is a further point which I should emphasize in this connection. It is that neither the language of the section of the
[Stage Direction]
The Budget-Customs Tariff Customs Tariff which defines "class or kind", nor that of the order in council which was passed in 1936 pursuant to it, is bound under the GATT. Thus they can be amended so as to restore and confirm the former interpretation without any need to renegotiate existing international commitments. While the definition itself is not bound, a number of rates of duty that depend on the definition are bound. The volume of trade affected by these rates is substantial, and we would risk retaliation against our exports if we made changes in the definition without full regard to the interpretation of the provision which prevailed when the GATT was negotiated, that is, in 1947. This we do not propose to do.
As I have said, there has arisen in recent years a need to confirm the historic interpretation of "class or kind". This need arises with respect to two distinct classes of goods. One is what might be described as "custom made goods". Under the conditions which prevail in modern industry, it is increasingly the practice for installations of heavy production equipment, for example in pulp and paper mills, steel mills or power plants, to be in some respects custom made for each particular application. The basic machine may be of conventional type, but the ancillary equipment and controls are likely to differ in some respects from those of any previous installation made either in Canada or elsewhere. The question then arises in such cases, how can the concept of "made in Canada" or "not made in Canada" be applied? It seems to the government that in order to apply the concept in such cases one must have regard to whether or not there is in Canada the installed capacity and technical know-how to produce the unit in question, rather than to whether or not substantial quantities of identical units have been or-as under the existing definition-are being produced here. If one attempts to apply the latter test, the answer must in almost every case be "no"; yet this was surely not the intention of parliament. In the government's view it is desirable, accordingly, to clarify the meaning of the phrase in the former sense, and to vest in the Minister of National Revenue (Mr. Nowlan) both the authority and the responsibility for applying it. At the conclusion of my remarks I shall present a resolution proposing that in the case of goods custom made to specifications they shall be deemed to be of a class or kind made or produced in Canada if adequate facilities exist in Canada for the economic production of such goods within a reasonable period of time.

The other class of goods affected may be described as "shelf goods". In respect of these goods the trend of decisions has been to narrow the concept of "class or kind". The question is whether in making "class or kind" determinations the Department of National Revenue should have regard only to imported and domestic goods which are virtually identical, or whether account should be taken of somewhat broader classes or kinds of goods which are similar in nature and purpose. The amendment which I shall propose would have the effect of confirming the broader interpretation which, as I have said, is the historic one. It would do this by providing that goods other than custom made goods shall be deemed to be of a "class or kind" made or produced in Canada if goods of approximately the same class or kind are made or produced in Canada. I should add that in respect of such goods the proposed amendment would retain in effect, and for the first time would incorporate in the statute, what has come to be known as the 10 per cent rule.
This 10 per cent rule has been applied since 1936 pursuant to an order in council, P.C. 1618 of July 2, 1936, which states that articles shall not be deemed to be of a class or kind made or produced in Canada unless Canadian production thereof is sufficient to supply 10 per cent of the normal Canadian consumption.
Statistical data are not always available as a basis for determining the normal Canadian consumption of particular classes of goods. However, by drawing upon confidential information available to them, the Department or Minister of National Revenue should be able to make reasonable estimates in instances where published data are inadequate. It is proposed, accordingly, that with regard to the determination of the normal Canadian consumption any appeal from departmental determinations shall be to the minister, and that his decision shall be final. With regard to questions of law, and with regard to questions of fact susceptible to determination by them, appeals will continue to go to the tariff board.

[Stage Direction]
The net effects on revenues of all the tax changes I have proposed will be to increase revenues in this fiscal year by about $14 million, and to decrease revenues in a full year by about $10 million. For the record I should like to place in Hansard a table showing the effects of these changes.

[Stage Direction]
Effect of Tax Changes on Revenues (in millions of dollars)
In In a full 1960-61 year
Tax on the first $35,000 of
corporate income	 -$24
Accelerated Depreciation	 - 25
Investment Income Surtax	 - 11
Non-Resident Withholding
Taxes	 +14	+50
+$14	-$10
The net result on our total budget for 1960-61 will be that estimated expeditures will remain unchanged at about $5,980 million; estimated revenues will rise by $14 million to about $5,694 million; and the estimated deficit for 1960-61 will be about $286 million.
(Translation):
Mr. Speaker, I can now conclude my remarks. At the outset I stressed the need to adapt budget policies to changing economic conditions. The proposals which I have now submitted to the house are designed to meet the changes which have occurred in economic conditions in Canada and also to clear the path for another major advance toward the fulfilment of this nation's high destiny.
Here are measures to overcome the deeper causes and manifestations of unemployment; to promote balanced economic growth; to facilitate and encourage the most effective use of the savings of Canadians in the development and control of their expanding economy; to achieve a better balance in Canada's trading and financial relationships with the outside world; to challenge the enterprise of our people; and to safeguard the savings of thrifty and industrious Canadians by maintaining the purchasing power of their currency.
In the free economy which is the proud heritage of Canadians, the rights and privileges of citizenship are always paralleled by responsibilities. The government has its sphere of responsibility; the citizen has his. Every Canadian can help to solve the problems of this nation. It is the role of every patriot to do so.
The government, bearing its responsibility to the nation, has set before parliament a comprehensive and courageous plan of constructive action. Let citizen and parliament and government then unite in a dynamic of effort, of faith, and of achievement.
(Text):

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
The Budget-Resolution
1.	That with respect to income of corporations earned on and after January 1, 1961, the amount of the first bracket of taxable income subject to a rate of tax of 21 per cent be increased from $25,000 to $35,000.
2.	That for the 1961 and subsequent taxation years the additional tax of 4 per cent imposed on investment income of individuals be repealed as applied to income from sources in Canada.
3.	That for taxation years commencing in 1963 and subsequent taxation years a corporation will qualify as an investment company only if not less than 75 per cent of its gross revenue is received in the form of dividends from taxable corporations resident in Canada and that for taxation years commencing in 1961 and 1962 this requirement be 55 per cent and 65 per cent respectively of such gross revenue; however, this requirement shall be 75 per cent of such gross revenue for taxation years commencing in 1961 and 1962 in the case of a corporation that received not less than 75 per cent of its gross revenue in the form of dividends from taxable corporations resident in Canada in its taxation year that commenced in 1960, and 65 per cent of such gross revenue for taxation years commencing in 1961 in the case of a corporation that received not less than 65 per cent but less than 75 per cent of its gross revenue in the form of dividends from taxable corporations resident in Canada in its taxation year that commenced in 1960.
4.	That for taxation years commencing in 1963 and subsequent taxation years a trust or corporation established or incorporated solely in connection with, or for the administration of, a registered pension fund or plan shall be exempt from tax only if 90 per cent of its income from investments is from sources in Canada and that for taxation years commencing in 1961 and 1962 this requirement be 70 per cent and 80 per cent respectively of such income; however, this requirement shall be 90 per cent of such income for taxation years commencing in 1961 and 1962 in the case of a trust or corporation that received not less than 90 per cent of its income from investments from sources in Canada in its taxation year that commenced in 1960, and 80 per cent of such income for taxation years commencing in 1961 in the case of a trust or corporation that received not less than 80 per cent but less than 90 per cent of its income from investment from sources in Canada in its taxation year that commenced in 1960.
5.	That the exemption from the 15 per cent tax payable by a non-resident person on interest received from a Canadian resident, now granted for interest payable on
[Stage Direction]
The Budget-Resolution bonds of or guaranteed by the government of Canada, be repealed with respect to interest on bonds issued after December 20, 1960, other than bonds held by
(a)	national governments of foreign countries and their central banks, and
(b)	such international agencies as may be prescribed by regulation.
6.	That the reduction from 15 per cent to 5 per cent in the rate of tax payable by a non-resident person on interest received from a Canadian resident, now granted for interest on bonds or other obligations of or guaranteed by Her Majesty in right of a province, and for interest on bonds or other obligations provision for the payment of which was made by a statute of a provincial legislature, be repealed with respect to bonds or other obligations issued after December 20, 1960, except bonds or other obligations issued after December 20, 1960 in respect of which a written agreement was formally entered into on or before that day for the purchase and sale, in specified amounts and at specified prices, of all of the bonds or other obligations included in the issue.
7.	That the exemption from the 15 per cent tax payable by a non-resident person on interest received from a Canadian resident, now granted for interest payable in a currency other than Canadian currency, be repealed except for
(a)	interest on any obligation where the evidence of indebtedness was issued on or before December 20, 1960,
(b)	interest on any bond or similar obli-spect of which a written agreement was formally entered into on or before that day for the purchase and sale, in specified amounts and at specified prices, of all of the bonds or similar obligations included in the issue, or
(c)	interest on any obligation incurred in the course of carrying on a business in a country other than Canada.
8.	That the reduction from 15 per cent to 5 per cent in the rate of tax payable by a non-resident person on dividends received from a Canadian resident, now granted for dividends paid to a non-resident corporation which owns all the voting shares (except directors' qualifying shares) of the Canadian resident paying corporation, be repealed with respect to dividends paid after December 20, 1960.
9.	That the rate of tax payable by a nonresident corporation on dividends received from a Canadian resident, now limited to 5 per cent in accordance with paragraph 2 of article XI of the income tax convention between Canada and the United States be increased to 15 per cent with respect to dividends paid after December 20, 1960.
[Stage Direction]

10.	That with respect to income earned on and after January 1, 1961 a special 15 per cent tax be imposed on a non-resident corporation carrying on business in Canada, other than a bank, life insurance company, transportation company or communications company and that the tax be computed by reference to the amount remaining after deducting from its taxable income earned in Canada the aggregate of
(a)	the tax payable under part I of the Income Tax Act including the tax payable under subsection (5) of section 10 of the Old Age Security Act,
(b)	income taxes payable to a province which are not deductible in computing income for purposes of the Income Tax Act, and
(c)	an allowance in respect of net annual increases in its capital investment in property in Canada.
11.	That where the contractual rate of interest on any bond, debenture, mortgage, note, bill or similar evidence of indebtedness issued by a tax-exempt borrower including a government after December 20, 1960 is less than 5 per cent, and the evidence of indebtedness is issued at a discount which provides an effective yield to maturity, or to the earliest call-date, that exceeds the contractual rate by more than 33J per cent thereof, the whole of the discount shall be deemed to be income in the hands of the first Canadian resident taxable holder of the evidence of indebtedness.
12.	That for the 1961 and subsequent taxation years a student in full-time attendance at a university in a course leading to a degree be permitted to deduct in computing his income the tuition fees paid by him in the year to the university, and that the said tuition fees also be deducted in computing the income of the student for purposes of determining whether the student is a dependent.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Customs Tariff and to provide:
1.	That the said act be amended by adding thereto immediately after section 2 thereof the following section:
"2A. (1) For the purposes of this act, goods shall be deemed to be of a class or kind made or produced in Canada if
(a)	in the case of goods other than goods custom-made to specifications, goods of approximately the same class or kind are made or produced in Canada; and
(b)	in the case of goods custom-made to specifications adequate facilities exist in Canada for the economic production of such goods within a reasonable period of time.

(2)	Notwithstanding subsection (1), goods other than goods custom-made to specifications shall be deemed not to be of a class or kind made or produced in Canada unless at least 10 per cent of the normal Canadian consumption of goods of the same or approximately the same class or kind are made or produced in Canada.
(3)	The decision of the minister shall be final with respect to the following matters:
(a)	the normal Canadian consumption of the goods described in subsection (2), and
(b)	whether goods are custom-made to specifications, and whether adequate facilities exist in Canada for the economic production of such goods within a reasonable period of time."
2.	That subsections (9) and (10) of section 6 of the said act be repealed and the following substituted therefor:
"(9) For the purposes of this act, notwithstanding section 2A, goods may be deemed to be of a class or kind not made or produced in Canada where similar goods made or produced in Canada are not offered for sale to the ordinary agencies of wholesale or retail distribution or are not offered to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade."
3.	That subsection (4) of section 6A of the said act be repealed.
4.	That any enactment founded upon this resolution shall be deemed to have come into force on the 21st day of December, 1960, and to have applied to all goods mentioned therein 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.
Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, having regard to the hour and the special proceedings that are to take place in the other house I am sure that all will recognize that I will not take perhaps any time tonight in which to pass the usual pleasantries or compliments to the Minister of Finance (Mr. Fleming). As we know, he always does a fairly good job of that himself anyway. However, I felt that the minister tonight was in a most unenviable position. We know how, after three or four budgets, he has had to school himself to rise to that great opportunity for a fastidious Tory to bring in with all the bragging that he could, even with the poor prognostications that accompanied it, what he described as a balanced budget for 1960-61.
I can understand his disappointment tonight. Before we come to another budget he wanted to relieve the blow that we would find next
The Budget-Mr. Benidickson spring and bring in, as he did tonight, an amendment which brings forward instead of a surplus of $12 million a deficit of almost $300 million. The surprising thing is that in the program attached to the budget we have a great disappointment, I am sure, to most of the people of the country. He concluded his remarks in his usual vigorous oratorical enthusiasm with such inappropriate words at this time as the suggestion that he is bringing forward adequate propositions to take care of fundamental difficulties in our economic condition.
There could be many descriptions of this budget tonight. Certainly it cannot be called anything but an empty stocking budget for the personal income taxpayers of this country. Indeed, if one analyses the budget he will find that perhaps only a corporation lawyer or a skilled accountant would appreciate the significance of most of the tax changes that are involved in this budget. I think perhaps the budget could be best described as the executive suite budget. Certainly the proposed changes are all for corporations.
Without giving the details, which I will give when I have a further opportunity, as to the economic health of this country the Minister of Finance made some extremely broad statements. He always paints these circumstances with a broad brush. He made some broad statements as to the economic health in certain places. But let me say that any higher incomes there might be for a few, will not impress those whose incomes have ceased in tremendous numbers of cases over recent months.
When we see the smallness of the proposals to deal with the tremendously serious conditions that are facing this country economically I think perhaps we must agree that the budget was set on the theme of a recent speech of the Prime Minister (Mr. Diefen-baker) because we can certainly continue to echo the feeling that he gave in October to a rally of his supporters when he said, "You haven't seen nothing yet". In another speech about a month later at Fredericton the Prime Minister again had what the newspapers picked up as a theme for that address and in which he said, "So far we have just been underbrushing; we have not got at the tall timbers". They are still underbrushing when it comes to dealing with the serious economic problems that confront this country today.


William McLean Hamilton: We
have cut you down to size.


Lester Bowles Pearson: A $300 million deficit.


William Moore Benidickson: From the Minister of Finance we heard that he thought this budget was symbolized by flexibility. Some of us

The Budget-Mr. Benidickson would perhaps not expect much flexibility from the well known pugnacious Minister of Finance (Mr. Fleming). However, the flexibility is certainly to be found in the rapidity with which a financial statement can go from a surplus of $12 million to a deficit of almost $300 million in the course of six or seven months.
Perhaps you, Mr. Speaker, would like me to move the adjournment of the debate.



THE ROYAL ASSENT

Mr. Speaker:: I have the honour to inform the house that I have received the following communication:
20 December, 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 today, the 20th December, at 9:50 p.m. for the purpose of giving the royal assent to certain bills.
I have the honour to be, Sir,
Your obedient servant, Esmond Butler Secretary
to the Governor General.
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 respecting loans to proprietors of small business enterprises for the improvement and modernization of equipment and premises.
An act respecting technical and vocational training assistance.
An act for the establishment of a national productivity council.
An act for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1901.



BUSINESS OF THE HOUSE

Mr. Habel:: Might we know from the leader of the house what is to be the business tomorrow?


Gordon Minto Churchill: Tomorrow we shall continue the budget debate. The house will then recess at 6 p.m. for Christmas.


[Stage Direction]
It being fifteen minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.

[The following items were passed in committee of supply].:

[Stage Direction]
A-Department-
Special services-
592.	Payments, in accordance with terms and conditions approved by the governor in council, to provinces and in respect of Indian bands under the municipal winter works incentive program during the 1960-61 and 1961-62 fiscal years of amounts not exceeding one half of the cost of labour incurred in the period from the 15th day of [DOT]October, 1960, to such day in the fiscal year 1961-62 as may be determined by the governor in council, $30,000,000.
Vocational training co-ordination-
593. Administration-further amount required, $30,000.
594.	To carry out the purposes of the Vocational Training Co-ordination Act and agreements made thereunder-payments to the provinces-further amount required, $700,000.

[Stage Direction]
The Senate-
595.	General administration-further amount required, $25,000.

[Stage Direction]
A-Department-
Administration services-
Departmental administration-
596.	Acquisition of common-use field survey and other equipment-further amount required, $100,000. Surveys and mapping branch-
597.	Geodetic survey of Canada-further amount required, $5,000.
Canadian hydrographic service-
598.	Administration, operation and maintenance -further amount required, $185,000.
Topographical surveys-
599.	Construction or acquisition of equipment- further amount required, $5,000.
600.	Legal surveys and aeronautical charts- further amount required, $5,000.
Geological survey of Canada-
601.	Construction or acquisition of equipment- further amount required, $125,000.
Mines branch^-
602.	Construction or acquisition of equipment- further amount required, $110,000.
Dominion observatories-
Dominion observatory, Ottawa and field stations-
603.	Construction or acquisition of buildings,
works,	land	and	equipment-further	amount	required, $30,000.
Dominion astrophysical observatory, Victoria, B.C.-
604.	Construction or acquisition of buildings,
works,	land	and	equipment-further	amount	required, $15,000.
General-
605.	Polar continental shelf project-further amount required, $20,000.

[Stage Direction]
National health branch-
Indian and northern health services-
606.	Construction or acquisition of buildings,
works,	land	and	equipment-further	amount	required, $657,334.
Supply-Items Passed
National research council-
607.	Construction or acquisition of buildings, works, land and equipment-further amount required, $171,500.

[Stage Direction]
Customs and excise divisions-
Ports-
608.	Construction or acquisition of buildings, works, land and equipment-further amount required, $24,000.

[Stage Direction]
609.	Contributions to the provinces, pursuant to
agreements entered into with the approval of the governor in council, by Canada with the provinces, of amounts equal to one half of the amounts confirmed by the provinces as having been spent by them for campground and picnic area developments-further amount	required,
[Stage Direction]
610.	Contributions to the provinces to assist in the development of roads leading to resources in accordance with agreements entered into by Canada and the provinces-further amount required. $4,000,000.
National parks branch-
National parks and historic sites services-
611.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $3,850,335.
Water resources branch-
612.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $47,000.
Northern administration branch-
Welfare and industrial divisions-
613.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $78,500.
Northwest Territories and other field services-
614.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $204,500.
Forestry branch-
Forest research division-
615.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $44,040.
Forestry operations division-
616.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $12,150.
617.	Contributions to the provinces, pursuant to agreements entered into with the approval of the governor in council, by Canada with the provinces, of amounts equal to one half of the amounts confirmed by the provinces as having been spent by them in establishing forest access roads and trails for the attainment of adequate fire protection as well as other aspects of forest management, $830,000.

[Stage Direction]
Special-
618.	Expenses of the royal commission on railway problems-further amount required, $89,000.
619.	Expenses of the royal commission on Canadian magazines and other periodicals including the payment, notwithstanding the Civil Service Act, of honoraria or allowances as may be authorized by
102G
[Stage Direction]
Supply-Items Passed
the treasury board to officers, clerks or employees permanently employed in the civil service for services rendered by them to the commission, $78,650.
620.	Expenses of the royal commission on the motor vehicles industries including the payment, notwithstanding the Civil Service Act, of honoraria or allowances as may be authorized by the treasury board to officers, clerks or employees permanently employed in the civil service for services rendered by them to the commission, $75,450.
621.	Expenses of the royal commission on government organization including the payment, notwithstanding the Civil Service Act, of honoraria or allowances as may be authorized by the treasury board to officers, clerks or employees permanently employed in the civil service for services rendered by them to the commission, $250,000.

[Stage Direction]
Public buildings construction and services- Construction, acquisition, major repairs and improvements of, and plans and sites for, public buildings listed in the details of the estimates, provided that treasury board may increase or decrease the amount within the vote to be expended on individual listed projects-further amounts required-
622.	Quebec, $1.
623.	Ontario, $1.
624.	Saskatchewan, $1.
625.	Alberta, $1.
626.	British Columbia, $235,000.
627.	Yukon and Northwest Territories, $1.
628.	Maintenance and operation of public buildings and grounds-further amount required, $400,000.
629.	Furniture and furnishings for government departments-further amount required, $130,000.
Harbours and rivers engineering services- Construction, acquisition, major repairs and improvements of, and plans and sites for, harbour and river works listed in the details of the estimates, provided that treasury board may increase or decrease the amount within the vote to be expended on individual listed projects- further amounts required-
630.	Newfoundland, $650,000.
631.	Nova Scotia. $325,000.
632.	Prince Edward Island, $196,600.
633.	New Brunswick, $100,000.
634.	Quebec, $585,000.
635.	Ontario, $1.
636.	British Columbia, $100,000.
637.	Repairs and upkeep, including reconstruction and replacements for the maintainance of services -further amount required, $100,000.
Dredging-
638.	Maintenance and operation of plant and contract and day labour works-further amount required, $125,000.
639.	Construction or acquisition of plant and equipment-further amount required, $400,000.
640.	Maintenance and operation of graving docks, locks and dams-further amount required, $65,000.
General-
641.	Miscellaneous works not otherwise provided for: a maximum of $15,000 may be expended in respect of any one work and, with the approval of treasury board, that maximum may be increased to $25,000-further amount required, $500,000.

[Stage Direction]
643.	Departmental administration-further amount required for a gift of Eskimo graphic art as Canada's contribution to the furnishing of the
administrative headquarters of les bureaux interna-tionaux reunis pour la protection de la propriety industrielle, litteraire et artistique, $1,000.

[Stage Direction]
A-Department-
General administration-
644.	Trade commissioner service-administration and operation-further amount required, $153,000.

[Stage Direction]
A-Department-
Canal services-
645.	Operating deficit and capital requirements of canals and works entrusted to the St. Lawrence seaway authority with the approval of the governor in council-further amount required, $142,000. Marine services-
Marine service steamers-
646.	Construction or acquisition of vessels and equipment-further amount required, $654,500.
Aids to navigation-
647.	Administration, operation and maintenance-further amount required, $40,000.
Pilotage service-
648.	Construction or acquisition of buildings works, land and equipment-further amount required, $95,000.
Railway and steamship services-
649.	Railway to Great Slave lake-location survey, $250,000.
Air services-
Telecommunications branch-
Radio aids to air and marine navigation-
650.	Administration, operation and maintenance- further amount required, $41,665.
651.	Construction	or	acquisition	of	buildings,
works, land and equipment, $349,210.
Meteorological branch-
652.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $82,250.
Civil aviation branch-
653.	Airports and other ground services- Operation and maintenance-further amount required, $318,236.
654.	Construction	or	acquisition	of	buildings,
works, land and equipment-further amount required, $1,018,500.
B-General-
Air transport board-
655.	Subventions for air carriers, as detailed in the estimates, $125,000.
DEPARTMENT OF VETERANS AFFAIRS Treatment services-
656.	Hospital construction, improvements, equipment and acquisition of land-further amount required, $650,000.
Loans, investments and advances-
Veterans affairs-
Soldier Settlement and Veterans' Land Act-
657.	Purchase of land and permanent improvements; cost of permanent improvements to be effected; removal of encumbrances; stock and equipment; and protection of security under the Veterans' Land Act-further amount required $1,868,000.
[Stage Direction]
Wednesday, December 21, I960