1960-07-06

Mr. Noel Dorion (Bellechasse):: Mr. Speaker, I have the honour to present the second report of the joint committee of the Senate and the House of Commons on Indian affairs in English and in French.



STARRED QUESTIONS


UNEMPLOYMENT INSURANCE FUND


Mr. Marlin (Essex East): 1.	What changes were made in the investment portfolio of the unemployment insurance fund for the period from June 1, 1959 to March 31, 1960?
2.	What were the amounts involved in the buying and selling of bonds and other securities?
3.	On the individual transactions, what were the amounts of profits realized or losses sustained?


Hon. Donald M. Fleming (Minister of Finance):: As the answer to these three questions contains many figures, I suggest, Mr. Speaker, that with the approval of the house it be printed in Hansard without being read.


Mr. Speaker:: Does the house agree to the suggestion of the hon. minister?


Some hon. Members:: Agreed.
[Editor's note: The answer referred to is as follows:1
1.	From June 1, 1959 to March 31, 1960 there were net purchases of treasury bills of $6,025,000 (par value) and net sales of bonds of $139,653,000 (par value).
2.	Gross purchase of treasury bills amounted to $102,515,000 and gross sales of treasury bills amounted to $96,490,000. Gross sales of bonds amounted to $139,653,000. All these figures are in par values. There were no purchases of bonds.
3.	It is not in the public interest to disclose the details of individual transactions. The following table shows the gross purchases and gross sales (par values) of treasury bills and bonds, and the profits or losses realized on these transactions, for each month from November 1959 to March 1960. There were no purchases or sales of either bills or bonds between June 1 and October 31, 1959.
Treasury bills
Purchase	Sales	Profit1959	November 	nil	nilDecember 	$ 2,000,000	$ 2,4191960	January 	22,750,000	79,916February 	28,465,000	24,042March 	43,275,000	84,038Total 	$ 96,490,000	$ 190,415Bonds	Purchases	Sales	Loss1959	November 	$ 15,000,000	$ 687,250December 	30,150,000	1,465,5871960	January 	2,275,000	227,500February 	53,725,000	3,209,437March 	38,503,000	2,825,672Total 	$139,653,000	$8,415,446
Starred Questions



HALIFAX NAVAL PERSONNEL AT SEA

Mr. Hellyer: 1.	How many navy personnel stationed at Halifax were at sea during June 3, June 4, and June 7, last?
2.	On what ships and what number of personnel on each?


Hon. Piene Sevigny (Associate Minister of National Defence):: The answer to the first part of the question is as follows: June 3, 4109; June 4, 4596; June 7, 4605.
The answer to the second part of the question includes the names of 24 ships and their complements, and I would ask that this information be printed at this place in Hansard.
[Editor's Note: The information referred to is as follows.1
3 June	4 June	7 JuneBonaventure 	.. 1176	1176	1176Nootka 	.. 238	238	238Huron 	.. 85	85	85Iroquois 	.. 232	232	232Sioux 	. . 219	219	-Athabaskan 	.. 216	216	216Micmac 	.. 231	231	231Cayuga 	. . 	-	228Chaudiere 	. . 246	246	246Columbia	.. 254	254	254Kootenay 	. . 	251	251Lanark 	.. 139	139	139St. Croix 	. . 	236	236Buckingham 	. . 143	143	143Cap de la Madeleine .	.. 156	156	156Inch Arran 	. . 146	146	146La Hulloise	. . 146	146	146Lauzon 	.. 139	139	139Swansea	.. 143	143	143Porte St. Jean	. . 33	33	33Quinte	. . 42	42	42Thunder 	. . 42	42	42Chaleur 	. . 41	41	41Fundy 	. . 42	42	424109	4596	4605



INDIAN AGENCIES (SERVED THROUGH NORTH BAY)

Mr. Benidickson: 1.	Which Indian agencies in the constituencies of Kenora-Rainy River, Port Arthur or Fort William under present administrative arrangements are required to process their needs through an Indian affairs branch set-up in North Bay?
2.	How far in miles is each of the above mentioned agencies from (a) North Bay; (b) Ottawa headquarters?


Hon. Ellen L. Fairclough (Minisier of Citizenship and Immigration):: The answer to part 1 of the question is as follows: the Indian agencies at Sioux Lookout, Kenora, Fort Frances, Port Arthur and Nakina come under the jurisdiction of the regional office located in North Bay, Ontario.

In answer to the second part of the question, the distance in miles from these agencies to North Bay and Ottawa is as follows:
Agency	(a) North Bay	(b) OttawaSioux Lookout (C.N.R.)	.. 762	988Kenora (C.P.R.) 	
Fort Frances (C.P.R.	... 923.9	1171and C.N.R.) 	... 856.4	1103.5Port Arthur (C.P.R.) .	... 626.1	873.2Nakina (C.N.R.) 	... 511	737



MOTION FOR PAPERS


[Stage Direction]
Motion No. 120-Mr. Chevrier (for Mr. Benidickson):
For a copy of all correspondence between January 1, 1960, and June 1, I960, relating to the vacancy and competition No. 60-H-562 for the position of supervisor of proofs, technician grade I, inspector naval ordnance branch at Bedford naval magazine, Nova Scotia.
Joseph Pierre Albert Sévigny: Mr. Speaker, apart from the routine forms related to a competition of this kind there is no correspondence in connection with this motion. Application forms submitted in competitions under the provisions of the civil service commission have always been considered to be of a confidential nature and thus fall within the definition of privileged documents.
In view of these circumstances may I ask the hon. member whether he would agree to have this motion dropped from the order paper?


Mr. Chevrier:: Mr. Speaker, in view of the absence of the hon. member for Kenora-Rainy River (Mr. Benidickson), could the matter stand?


Mr. Speaker:: In the absence of the mover of this motion I suggest that it stand.


Joseph Pierre Albert Sévigny: That would be all right, Mr. Speaker, but may I mention to the house the fact that I gave the fullest explanation of this item, which has been on the order paper for some time, to the hon. member for Kenora-Rainy River, and he sent me a note stating that upon the answer I have just given he would be willing to drop this matter from the order paper.


Lionel Chevrier: Under those circumstances, Mr. Speaker, I would withdraw my request.


Mr. Speaker:: The hon. member for Laurier for the hon. member for Kenora-Rainy River, and with his consent, agrees to the withdrawal of this motion.
Order discharged and motion withdrawn.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, may I ask the Prime Minister whether any nuclear warheads which might be provided for Canadian forces under NATO in Europe are to be under sole Canadian control, in the same way that the Prime Minister indicated they would be if they were used for continental defence?
Right Hon. J. G. Diefenbaker (Prime
Minister): Mr. Speaker, that question is, of course, an improper one. At no time did I say "sole control." I said joint control of Canada as to use, and also as to everything connected therewith. That statement still stands.


Mr. Hellyer:: The right hon. gentleman said Canadian control.


Lester Bowles Pearson: Mr. Speaker, in view of the fact that the Prime Minister doubted that my question to him was quite proper, in that he stated I had misquoted him, may I rephrase it. Does the Prime Minister's statement on page 5654 of Hansard "that if and when the Canadian government should decide to equip its forces with nuclear weapons those weapons would be under Canadian control" apply also to Canadian forces in Europe under NATO?


Mr. Diefenbaker:: Mr. Speaker, this is an indication of the kind of questions that the hon. gentleman asks. Let me point out this fact, that he either deliberately or intentionally in his question used the words "sole control", and suggested that I had said "sole control". I answered that by saying that at no time had I said "sole control". I would suggest to him that when he asks questions on a matter as important to Canada and Canada's future-


Some hon. Members:: Oh, oh.


John George Diefenbaker: -and having regard to his responsibility-


Mr. Mcllrailh:: Answer the question.


John George Diefenbaker: -that he not quote or pretend to quote in his question something that he knows is not correct.


Some hon. Members:: Hear, hear.


Mr. Speaker:: I know that the Prime Minister has great regard for our practices, and I am sure he would like to reconsider the last phrase he used; because in it he has implied that a member of the house would make a statement which he knew was not correct.
Inquiries of the Ministry


Lester Bowles Pearson: Mr. Speaker, on a question of privilege, the Prime Minister should, of course, withdraw what he said.


John George Diefenbaker: No, he should not.


Lester Bowles Pearson: The Prime Minister now says he should not. I ask him to withdraw what he said. The Prime Minister, of course, as you pointed out, sir, was not in order when he made that statement. After he has withdrawn that statement perhaps the Prime Minister will then answer the question.


John George Diefenbaker: Mr. Speaker, the question asked of me suggested that I had said that nuclear weapons would be under sole Canadian control. This question on the part of the hon. gentleman was not correct. In wording his question in that way he was not reading from the statement I made, but if it was not done with knowledge or intention, simply the fact is that he did not read the answer I gave.


Lester Bowles Pearson: Perhaps the Prime Minister might be asked to withdraw the statement he made previously and which you, sir, indicated he should withdraw. When I asked him the original question I did use the words "sole control". The Prime Minister took exception to that so I read what he said from Hansard. There was no reference then to joint control but to Canadian control. Once again I ask you to ask the Prime Minister to withdraw the statement which he made, and which was out of order; and perhaps even now, if he can calm down a little bit, he will answer the question.


Mr. Speaker:: My intervention was not concerned with the preliminaries but only with the final phrase the Prime Minister used. I feel sure he will review that and, on re-flection, will see that there was a direct statement that another hon. member stated what he knew was not true. I hope, in view of the fact that the hon. member concerned has not been satisfied, the Prime Minister will reconsider that final phrase in his statement which, as I recall it, was that the hon. member stated something which he knew was not true.


John George Diefenbaker: I have already stated it simply indicated that he had not read the statement I had made, but by the question endeavoured to leave an impression which was not in accordance with the answer given by me the other day. That is a very clear and definite modifying as you suggested.


Lionel Chevrier: The words used in connection with the statement made by the Prime Minister were "deliberately and intentionally". I am sure that-

Inquiries of the Ministry


Some hon. Members:: Oh, oh.


Lionel Chevrier: I am on a point of privilege, sir.


Mr. Ricard:: He is telling the Chair, now.


Lionel Chevrier: I am sure Your Honour will not ask me to read the rule, which is well known in the house-


An hon. Member:: Sit down.


Lionel Chevrier: No, I do not intend to sit down until after I have completed my point.


John George Diefenbaker: May I interrupt the hon. gentleman. If I said "deliberately and intentionally", naturally, in view of the statement made by the hon. gentleman, I will certainly not convey that idea. I have already made clear that it must have been unintentional, that he could not have read the actual answer.


Lester Bowles Pearson: Mr. Speaker, in the excitement of a few moments ago the Prime Minister forgot to answer my question, so perhaps I could repeat it. My question was did the words of the Prime Minister, as reported on page 5654 of Hansard, namely "that if and when the Canadian government should decide to equip its forces with nuclear weapons, those weapons would be under Canadian control" apply to Canadian forces in Europe under NATO?


John George Diefenbaker: If the hon. gentleman would read the rest of my statement he would see that it states, "those weapons will be under Canadian control and would be used in Canada only as the result of a decision by the Canadian government". In so far as NATO forces are concerned, the hon. gentleman knows that the responsibilities of NATO carry with them the implementation of NATO policy.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: I should like to direct a question to the Minister of National Defence. I wonder whether the minister could give the house any additional information with respect to the tragic accident which resulted in the death of Air Vice Marshal Keith Hodson.


Hon. G. R. Pearkes (Minister of National Defence):: Air Vice Marshal Hodson was deputy chief of staff for operations at NORAD headquarters. Part of his duties required him to be cognizant of the problems connected

with flying jet interceptors in squadrons under the operational control of NORAD. At the time of the accident he was undertaking a proficiency rating in a T-33 jet trainer, and due to a flame-out of the jet engine both he and the other pilot, a U.S.A.F. colonel, parachuted from the aircraft. Air Vice Marshal Hodson's parachute opened successfully, but for causes which are still unknown he suffered fatal injuries. An investigation is now under way in an effort to establish the cause of his death.
Air Vice Marshal Hodson was a distinguished officer in the R.C.A.F. I would like to express to his family and his fellow officers in the R.C.A.F. my sincere sympathy on the occasion of his death in the line of duty.


Paul Theodore Hellyer: I should like to join with the minister in paying tribute to the air vice marshal, who in my opinion was one of the outstanding officers in the R.CA..F. I know that all hon. members would wish to join in the expression of sympathy with the family.
In view of the series of accidents which has involved senior officers of the R.C.A.F., will the minister consider the possibility of measures which might reduce the likelihood of further accidents of this kind? I think there are some measures which are worthy of consideration.


George Randolph Pearkes: I should be very pleased to do that.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. M. W. Martin (Timmins):: Mr. Speaker, I wish to direct a question to the Minister of Labour. In view of the fact that well in excess of 2,000 miners have been laid off in the Elliot Lake area, including 450 at the Pronto mines, 650 at Canmet and 800 at Laknor, all of which closed down this year, can the minister explain to the house reports of senior officials of his department to the effect that there has been a consistent shortage of miners in the Elliot Lake area?


Hon. Michael Starr (Minister of Labour):: Mr. Speaker, the hon. member sent me notice of his intention to ask this question only a few moments ago. I have not had an opportunity to check the hon. member's allegations concerning reports which he said emanated from the senior officials of my department. I should like to advise him, however, that I am informed by officials of the Denison mines that a severe shortage of labour exists at the present moment at Elliot Lake. My officials in the national employment service are now

trying to fill an order for 50 miners who will be employed for a period of two or three years in the mines there, and I am also informed that another 50 will be required almost immediately. The type of personnel required is in the skilled rock breaker category. The existing shortage has cut capacity in the mine by 20 per cent.
Miners presently in the Elliot Lake area are being referred to these jobs, and every effort will be made to fill the present requirements.


Murdo William Martin: A supplementary question, Mr. Speaker. Is the minister aware that miners at Elliot Lake have accepted jobs in other areas at half the pay that is being paid in the Elliot Lake area?


Michael Starr: Mr. Speaker, I know that some miners insist on moving into other areas and some are being paid by the government for their removal to these areas, even though there is an opportunity of procuring work in the Elliot Lake area.



ELLIOT LAKE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I should like to submit a question to the Minister of Trade and Commerce. Now that the provincial government of Ontario has made known its plans for assistance to Elliot Lake, may I ask when the federal plans in that regard will be made known?


Hon. Gordon Churchill (Minister of Trade and Commerce):: A somewhat similar question was asked by the hon. gentleman the other day, and I gave an appropriate answer in the circumstances.



GIFT OF STRAWBERRIES FROM FRASER VALLEY GROWERS

[Stage Direction]
On the orders of the day:
__ Mr. Harold Hicks (Fraser Valley): Mr. Speaker, I have a question for the Minister of Agriculture, but in view of the fact that he is not present maybe I had better ask it of every hon. member in the house.
Mr. Speaker:: Order. That would be a dangerous precedent, even though it involves good strawberries. Perhaps the hon. member could select a parliamentary secretary.


Mr. Hicks:: I notice that he is absent also.


Gordon Minto Churchill: I will accept the question as notice.


William Harold Hicks: I could ask it of the Acting Minister of Agriculture.
Inquiries of the Ministry


Mr. Speaker:: The house leader will take the question as notice.


William Harold Hicks: Is the minister aware that through the generosity of the growers of the Fraser Valley, British Columbia, a shipment of Canada's finest strawberries has arrived in the capital today by air, and that these strawberries will be served as a gift to those who dine in the parliamentary restaurant at noon today, also I believe to those dining in room 16?
I believe, Mr. Speaker, it is time that some members took their wives out to lunch. I would particularly like the agricultural critics in the opposition to sample the berries and report to me their opinion as to flavour, colour, shipping quality, and so forth.



TELEVISION


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker-


Mr. Chambers:: A supplementary question?


Lionel Chevrier: No, not after that. Mr. Speaker, may I direct a question to the Minister of Transport or to the Minister of National Revenue, though I think it should be to the Minister of Transport. It is this. Is Mr. E. L. Bushnell, who is to be director of a company headed by Mr. Gordon Archibald which has been recommended by the board of broadcast governors to operate a television station in Pembroke, the same person as Mr. Ernest Leslie Bushnell, the former general manager of the C.B.C. and the president of the company which has been recommended by the same board to operate a private television station in Ottawa?


Hon. George H. Hees (Minister of Transport):: I really do not know, Mr. Speaker.


Lionel Chevrier: I am somewhat surprised, Mr. Speaker, at the lack of knowledge of the minister, who generally has the answers to these questions. Will the minister inquire and tell the house whether he is one and the same person?


George Harris Hees: I will be very glad to, Mr. Speaker, but I am absolutely positive that the hon. member knows the answer to the question.


Lionel Chevrier: Mr. Speaker-


George Harris Hees: I will be very glad to do that, Mr. Speaker.


Lionel Chevrier: I have a supplementary question for the minister. Will he also inquire, if he does not know at the moment, whether
5798	HOUSE OF
Inquiries of the Ministry among the five applicants for a private television station in Ottawa Mr. Bushnell's company was the only one to be financially backed by foreign capital?


George Harris Hees: Yes, Mr. Speaker, I will be glad to.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinity-Conception):: too, should like to direct a question to the Minister of Transport. Will the minister please advise the house whether he has received representations from the residents of the Jerseyside, Freshwater and Placentia area of Newfoundland regarding the removal of the spur line from Placentia and the moving of the railroad station?


George Harris Hees: It has not come to my attention so far, Mr. Speaker.


James Roy Tucker: A supplementary question. Will the minister give favourable consideration to the views and wishes of the people in that area?


George Harris Hees: Mr. Speaker, I always give careful consideration to the views of any people who are Canadians who bring their problems to my attention.



GREAT SLAVE LAKE


[Stage Direction]
On the orders of the day:
Mr. M. A. Hardie (Mackenzie River):: should like to direct a question to the Prime Minister. Now that the Prime Minister has received the report of the commission studying the railway route to Great Slave lake, will he inform the house whether he intends to introduce the bill which he withdrew two years ago, which would provide for the construction of the railway?
Right Hon. J. G. Diefenbaker (Prime
Minister): The other day I was asked a question with regard to this report, and I am now in a position to table the report, although only in English. If the opposition is prepared to accept the tabling of the report in English only, as it was prepared, I shall have it tabled immediately so that there may be before the end of the session whatever discussion is considered necessary. On the other hand, if a French translation is required then it will take some time before that is ready.


Mr. Speaker:: Does any hon. member of the house take exception to the tabling of the report at this time?
[Mr. Chevrier.)


Mervyn Arthur Hardie: Mr. Speaker, that is not an answer to my original question. I asked the Prime Minister whether, in view of the fact that he has this report, whether it is tabled or not, he would reintroduce into this house before the end of this session the bill he promised in the speech from the throne in 1958, thus bringing about the building of the railway to Great Slave lake.


John George Diefenbaker: Mr. Speaker, after the report has been read and the various opinions have been considered, a determination will then be made. That is the reason I suggested that if there was no objection to it the report could be tabled in English. Then having read the report and the several opinions of the three commissioners, a decision could be reached.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: I should like to direct a question to the Postmaster General; I regret not having had the opportunity to give notice. The question is based on a letter dated June 29 from the minister to myself and relates to certain postal facilities in a community called Kitwanga. I should like to ask the minister whether I can disregard the words "personal and confidential" on the letter, because the subject matter is well known in the community of Kitwanga.


Mr. Speaker:: I suggest that the hon. member might communicate questions of that kind privately. After all, it is not public business.



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. E. J. Broome (Vancouver South):: Mr. Speaker, I have a question for the Minister of Transport, of which I have given him notice. Has the minister received formal notification of a recent decision of Vancouver city council to open negotiations with his department to determine on what terms the federal government will take over the operation of Vancouver municipal airport? Will the minister give his assurance that the compensation to be offered the city will be based on a proper appraisal of city-owned lands and buildings at today's values? Finally, with regard to plans now being prepared for the city for proposed new terminal facilities, will the minister say what action may be proposed by his department?


George Harris Hees: Mr. Speaker, I wish to thank the hon. member for giving me notice of his intention to ask this question. I have not yet received any formal word from the city council, but would certainly give prompt consideration to any request relating to the federal take-over of the Vancouver airport. Any government decision to make an offer to purchase the city's interest in the airport would have to be preceded by a full appraisal by the federal representatives, of all items concerned, and any decision on the nature of new terminal facilities would also be a matter for detailed technical and economic studies by federal representatives, which would include a review of any preliminary studies made by the city.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare arising out of a Toronto Star news report of June 29, indicating serious contamination of Bow lake by radioactive waste deposited in the lake by Faraday Uranium Mines, and a resultant loss in value to tourist and other properties in the area. Would the minister indicate whether his department has made any tests of the lake water for radioactivity, and whether his department has made any representations to the company regarding the disposal of its wastes which resort owners and conservation officials state are causing pollution?


Hon. J. W. Monteilh (Minister of National Health and Welfare):: I received notice of the hon. member's intention to ask this question shortly before the house opened. I have not seen the press report, but I will have the matter looked into and will be glad to reply to the question later.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, on Monday last the hon. member for Kootenay West asked whether the lost United States plane reported as having disappeared near the northern coast of the U.S.S.R. had taken off from an airport in Canada or passed over Canadian territory at any point in its mission, and if the answer was in the affirmative, why?
Inquiries of the Ministry
I am informed that this aircraft neither took off from an airfield in Canada nor passed over Canadian territory on its mission.


ATOMIC ENERGY
[Stage Direction]
On the orders of the day:
Howard Charles Green: Mr. Speaker, I also have a reply to a question asked by the hon. member for Assiniboia on the same day. His question concerned the present status of the international discussions directed to the establishment of international safeguards on the peaceful uses of atomic energy.
The discussions referred to have been carried on in the board of governors of the international atomic energy agency, which is an international body operating under the auspices of the United Nations.
At the board of governors' meetings held last March and April a document was provisionally approved by a large majority of the 23 members which embodied proposals for a system of safeguards against the diversion to military use of nuclear materials supplied for peaceful purposes. It will be discussed this coming September by the general conference of the agency in which the entire membership of over 70 nations is represented. The force and effectiveness of any multilateral system of safeguards and the extent to which it can replace the bilateral controls now maintained by Canada and the other major suppliers will, of course, depend upon the general acceptance accorded to the proposal.
Up to the present time some members of the agency, and in particular the Soviet union, have not given the proposed system their full support. It is therefore of the greatest importance that the forthcoming debate at the conference of the 70 nations should result in a general and favourable endorsement of the proposals leading to their unanimous acceptance and early implementation by the board of governors.
Canada is a member of the board of governors and has strongly supported its efforts to develop a generally acceptable system of safeguards. In common with their other supporters, who include the world's major suppliers of nuclear materials, we believe that effective international safeguards, if they can be developed, will make an essential contribution toward the controlled disarmament which continues to be our objective.

Inquiries of the Ministry BUSINESS OF THE HOUSE


DIVORCE BILLS-REPORTED STATEMENT BY HON. MEMBER FOR HALIFAX
[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, may I direct a question to the Prime Minister; I regret not having sent him notice of it. My question is based on an article which appears on page 5 of today's Globe and Mail which, among other things, contains some scurrilous remarks by the hon. member for Halifax. But in any event it mentions that the hon. member for Halifax has indicated that the house will sit past the normal time-


Some hon. Members:: Question.


Frank Howard: -when the business of this house is disposed of in order to deal specifically with private bills relating to divorce. I wonder whether this statement by the hon. member for Halifax reflects the view of the government on this matter.


John George Diefenbaker: Mr. Speaker, I have not seen the alleged statement. I can simply say that the house will determine what course it will take, because we intend to complete whatever is before the house legislatively before this house concludes this session.


Frank Howard: May I ask a supplementary question. I wonder whether the remarks of the Prime Minister in reply to my question relate also to those items appearing under "Public bills and orders" on the order paper.


NATIONAL PARKS
[Stage Direction]
On the orders of the day:
Mr. J. R. Taylor (Vancouver-Burrard):: Mr. Speaker, I would like to ask the minister of northern affairs whether he has yet received any written offer from the premier of British Columbia respecting Garibaldi park?


Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):: No, Mr. Speaker, I have received no communication from the premier of British Columbia concerning Garibaldi park. I have read the press announcement by the premier, however, and I assume that if he is serious in that opinion he will be writing to me.


MINES AND TECHNICAL SURVEYS
[Stage Direction]
On the orders of the day:
Mr. Grant Campbell (Stormont):: Mr. Speaker, I would like to direct a question to the minister of mines. Has the minister
received any communications from the Cornwall board of trade protesting the recommendation of the hon. member for Laurier that the mid line of the St. Lawrence river be adopted as the Ontario-Quebec boundary, which would give Cameron, Chestnut and other Ontario islands to Quebec as the Cornwall canal was given to the United States?


Hon. Paul Comtois (Minister of Mines and Technical Surveys):: I have not received any communication of that kind as yet, Mr. Speaker.


Grant Campbell: A supplementary question.


Lionel Chevrier: Mr. Speaker, before the supplementary question is put I wish to raise a question of privilege. My question of privilege is this, that no suggestion such as that attributed to me by the hon. member for Stormont was ever made. A question was put to the minister of mines who replied to it, and the reply is on Hansard. But no statement as that suggested by the hon. member for Stormont was ever made by me.


Mr. Campbell (Stormoni):: A supplementary question. No doubt the hon. minister would be prepared to hear representations from the interested parties in the city of Cornwall before a decision is made in this matter?


Mr. Comiois:: Yes, Mr. Speaker.


AUTOMOBILE PARTS
[Stage Direction]
On the orders of the day:
Mr. Romuald Bourque (Oulremoni-St. Jean):: Mr. Speaker, I would like to direct a question to the Minister of Trade and Commerce; I apologize for not having sent him notice. He recently received a brief from the Canadian auto parts industry association expressing alarm at the expressed intention of the United States government to ask for additional tariff concessions from Canada and asking him to stand firm against any such request. My question is, has he taken any action on this request?


Gordon Minto Churchill: Mr. Speaker, I have not had an opportunity to take any action, but the matter will be considered very carefully.


WHEAT BOARD REGULATIONS RESPECTING DELIVERIES TO FEED MILLS
[Stage Direction]
On the orders of the day:
Hazen Robert Argue: I should like to direct a question to the Minister of Trade and Commerce arising out of the desirability

of enforcing delivery quotas, and the suggestion that the wheat board's enforcement rules may be suspended as a result of the evidence given to the agriculture committee. Can the minister assure the house that regulations of the Canadian wheat board as set forth before the agriculture committee on February 25 are still being applied today and are being enforced in relation to feed mills in this country?


Gordon Minto Churchill: I did not receive notice of this question. I will have to look into this subject and see what the situation is. My understanding is that there has been no change in the regulations of the wheat board at the moment, and the agriculture committee has not yet submitted its report to the house.

The house in committee of supply, Mr. Flynn in the chair.


DEPARTMENT OF JUSTICE
[Stage Direction]
Penitentiaries-
161.	Administration of the office of the commissioner of penitentiaries including $90,000 for grants to recognized prisoners' aid societies as may be approved by the treasury board, $641,516.
Mr. Fulton:: Just before the end of the discussion on another item, item 151, last Thursday I was asked by the hon. member for Megantic a question about the number of inmates or prisoners who had been freed under the royal prerogative, and I undertook to obtain the information. However, at the close of the exchange I said:
I take it the hon. member wishes to know how many pardons, conditional or absolute, were granted in the last fiscal year. I will get that figure and supply it.
On rereading the question asked by the hon. member I have concluded that what he was really concerned about was not the granting of pardons but the number of unconditional releases of inmates from prison under the royal prerogative of mercy as opposed to releases on parole.
During 1959 there were 175 inmates serving sentences under the criminal law of Canada who were released, prior to expiration of sentence, by the Governor General under the royal prerogative of mercy on the recommendation of the Solicitor General.


Frank Howard: On the item before us, Mr. Chairman, may I say that I do not think even the building of new prisons will in itself accomplish very much in the field of rehabilitation or reform. Even when these new institutions at Valleyfield, Springhill and other
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places are opened and in full operation there will still be a decidedly large number of inmates in Canadian prisons and we will still be faced with the problem of overcrowding unless this expansion of prison facilities, especially in the medium and minimum security field, is still further extended.
I believe we might consider this subject in the light of the remarks made by the minister and the thoughts he has-perhaps I could even say the hopes he has-in so far as the treatment of narcotic addicts is concerned. I do not differentiate between those who have been confined under the provisions of the narcotic act and those who have not, because efforts must still be made to treat them.
The minister referred to institutional treatment which would be provided, and I assume he had in mind treatment of a psychiatric type rather than physiological treatment, because apparently the major problem in connection with addiction is psychological. I think we shall need to rely on doctors experienced in the psychiatric or psychological field to do the major amount of work in this regard. The mere provision of medium and minimum security prisons in this country will not by itself effect the rehabilitation of this type of prisoner unless it is accompanied by an adequate program of treatment, and at the moment we are faced with a shortage of workers in the important field I have mentioned.
I made some inquiries of the minister in this regard, and the answer I received is printed in Hansard of February 23. I have the original typewritten copy of the reply dated February 23. In any event, I inquired of the minister how many psychologists and psychiatrists are employed on a full-time basis at each of the penal institutions under federal jurisdiction. In reply the minister gave information to the effect that there are a total of 11 psychologists stationed at institutions across the country at Dorchester, St. Vincent de Paul, Kingston, Manitoba, Saskatchewan and British Columbia, and that there are no full-time psychiatrists but that these services are provided on a part time basis at all institutions. In addition there are staff members who are classification officers with some training in psychology and social work who contribute something in this field in conjunction with the professional psychologists.
Unless parliament is prepared to spend more money on the employment of full-time psychologists and psychiatrists there will be little decrease in recidivism, and little improvement in rehabilitation. That is not an original thought but one often expressed by penologists.

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Under the present system a person convicted in Ottawa would automatically go to the penitentiary at Kingston, and one convicted in British Columbia would be sent to New Westminster. There is an arrangement for the transfer of prisoners from one penitentiary to another, from maximum security prisons to training schools like that at Collin's Bay.
I suggest that when a person is convicted he be confined during a period in which he would be interviewed by a board consisting of penologists, psychiatrists or psychologists, who would decide to which institution the prisoner should be sent to achieve the maximum degree of rehabilitation and corrective training. Prisoner A, perhaps a first offender, might be sent to a training institution where he could learn a trade that would be valuable to him upon his release. Prisoner B, if not susceptible to learning, could be directed to some other institution where another type of training was available. A deeply disturbed person could be sent to an institution where he would receive the maximum amount of intensive psychiatric assistance.
It was the practice in the past to send prisoners to maximum security prisons with little attempt being made to segregate first offenders from recidivists, from the deeply disturbed or from those convicted of offences involving sexual deviation or perversion. This condition has been aggravated by overcrowding and the lack of full time psychiatric treatment. Some strides have been made in improving the situation, but a great deal more has to be done in this area.
I know the minister and his officials appreciate that it is not enough simply to provide more prisons if there is not an intensive expansion of psychiatric treatment and an enlightened approach. We must convince society to adopt a new approach to the problem. Prisons can no longer be viewed merely as places of isolation and punishment. Without a greater emphasis on rehabilitation and psychiatric assistance it will be another 50 years or more before we make any real progress in this important endeavour.


Mr. Deschateleis:: Mr. Chairman, I note that item No. 161 provides for grants to recognized prisoners' aid societies, and that this year the estimate shows an increase from $75,000 to $90,000. Would the minister be kind enough to tell us how we have arrived at this increase of $15,000 for this year? I would also like to know whether these societies submit a budget of their needs. If so, what was the amount they suggested for this year, and was any cut made in their request?


Edmund Davie Fulton: The agencies do submit financial statements to us, and they also submit reports on the amount of work they have done for us in the year just concluded. It is on the basis of the work they do, the number of cases they handle, that the division of the total amount authorized is made among the agencies.
With respect to the amount of the increase, I would not suggest that it is proportionate to any amount of work. We recognize the importance of the work done by these agencies for the prisoners and for the correctional system generally, and we are auxious to help them to the greatest extent possible. We have made an increase in each of the last three years. In 1955-56 the amount provided was $40,000; in 1956-57 it was $50,000; in 1957-58 and in 1958-59 it was $60,000. For this year we have increased it to $75,000.
As I say, we are anxious to give as much financial help as we can on the basis of the work done, but the limits of the amounts we can give are set by treasury board. I suppose the answer as to why we arrived at the increase of $15,000 might be said to be that this was all that treasury board would authorize.


Mr. Fisher:: Mr. Chairman, I should like to raise two small matters. One relates to something about which I wrote the minister, namely criticism of the annual report in connection with penitentiaries. I received an answer to the effect that the information carried in those reports was in a sense of a traditional character, and useful. I will not push the criticism again, but I should like to say that this is one of the ugliest and worst edited reports that I have encountered in the government service. I think it is loaded with information that does not need annual reiteration.
In his reply to me the minister indicated that there was information in the report which was very valuable. I quite agree. For example, I would not like to see any of the statistical tables dropped; but I suggest to the minister that the annual reiteration about a cook moving or of some change in the kitchen is not necessary. If this kind of petty administration detail was dropped, or if there was a general synopsis instead of this reiteration in each particular area of the country, we might expect a much better presentation of the statistics.
One of the tables that interests me is that indicating the ethnic background of prisoners. Why could we not have in the reports occasionally a recapitulation of this information back over a number of years? I am

shocked when I look at the annual report to see the very direct relationship between educational attainment and incarceration in penitentiaries. On occasion I should like to see in this report historical consideration of this relationship in statistical form, with some kind of analysis. Instead, we get in this report year after year, a repetition of what I consider to be supernumerary details.
I suggest to the minister that he look at some of the other departments of government which have smartened up the editorial work on their annual reports in recent years. If he looks at the annual reports in some kind of perspective and checks them back for four or five years, I do not see how he can be pleased with the ones put out. I see that these reports cost $7,000 last year, and it is estimated that they are going to cost $7,300 this year. It is not much money, but I think we could expect better editorial work for our money than we are getting.
I notice that the provision for the publication of reports of the Department of Justice for the coming year has dropped from $22,000 to approximately $2,500. I cannot very well retrace my steps, but I was quite interested in this and wondered whether it indicated that in the central administration of the department there was a complete revision of this attitude toward publications.
The second point I wanted to touch on related to something brought up recently by the hon. member for Laurier, namely the question of the prison farm being so close to or involved with the metropolitan area of Montreal. In one of our parliamentary committees we had a witness who has had a great deal of experience as a policeman with criminal elements across the country. In offering us some opinions as to the relative criminal milieu at Toronto, Montreal and other places, he made the point that he is always surprised that Montreal is not worse than it is because of this very large prison population feeding into and out of the city and in a sense being part of the climate of the city and the city a part of the climate of the prison. I would certainly gather from his judgment, and the hon. member for Laurier tended to argue the same way, that one of the best steps that could be taken with regard to the Montreal situation in terms of, let us say, criminal health, would be to remove the prison farm or the penitentiary farm from this city and put it in some kind of rural section. I do not know what would be involved in this in terms of expense, but certainly it was brought very close to all of us in that committee who heard this evidence of the close tie and relationship between the penitentiary and
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the city, and it certainly brought to the mind of those of us from Ontario how fortunate Toronto and Hamilton have been in having Kingston penitentiary or Portsmouth in that section of Ontario.


Mr. Fulion:: I appreciate what has been said by the hon. member and also by the hon. member for Skeena. Perhaps the remarks of the hon. member for Skeena do not call for a detailed reply at this time. They will be kept in mind as we make our attempts to improve the penitentiary program generally. I can assure the committee that we realize that the best facilities are of no use unless we have trained personnel to manage them and to operate the program. We do have a problem in securing the personnel. I think that is all I should say on that point.
With regard to the annual report, I accept the criticism of the hon. member as something which will require investigation and study to see whether we can improve the report from the point of view of the knowledge it imparts and the convenience of the readers in acquiring that knowledge. However, I would point out to the hon. member something which he has perhaps overlooked. At the present time the Penitentiary Act itself requires that the reports from each institution be included in the annual report of the commissioner of penitentiaries. Maybe this is something we should look at when we revise the Penitentiary Act, but it imposes on us the obligation to include a lot of the detail which my hon. friend claims to be superfluous.


Frank Howard: May I pose a question or two to the minister based on a matter which is in the detailed section of the estimates. I rather think that some of this information might more properly be referred to under item 162 or item 163, but I wonder whether we might not have a general understanding that we would deal with it all under one item.
We appear to be more concerned with the salvation of the souls of inmates than we are with their rehabilitation and the contribution we can make toward getting them to be better citizens once they are released. I notice on page 230 that eight part time psychiatrists are listed as compared with six last year but there are 17 full time chaplains plus two part time chaplains. I think some of the money provided for chaplains might be directed toward obtaining more psychiatrists and psychologists. In any event, I should like the minister to indicate two things to me if he can. With what regularity or upon what basis do psychiatrists visit prisons? Does this vary from one prison to the other? Do they only

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attend when asked? Second, will the minister indicate where I can find the reference to psychologists under this vote or under some other vote, as the case may be? How are they classified? Are they called something else?


Edmund Davie Fulton: To deal with the points in the order in which they were raised, may I say I do not want to get into a controversy with the hon. member as to the importance of the chaplain service to the penitentiaries, but I certainly would not accept any suggestion that the chaplain service is not an essential part of the organization and one that is essential to the welfare of the inmates. It may be that the hon. member was being a bit humorous. With regard to the comparison of numbers, I will confine myself to saying that there are chaplains available and frequently we find it difficult to obtain the services of psychiatrists.
The organization of the psychiatric service is on the basis of five half days per week. The psychiatrist attends regularly every morning or every afternoon Monday through Friday. A psychiatrist is also available at any time, of course, for consultation or referral should a special need arise. Psychologists are categorized as rehabilitation officers 7.


Frank Howard: Are there other rehabilitation officers 7 who are not psychologists? I think there must be.


Edmund Davie Fulton: Yes, there are. The number of psychologists is contained in the answer I gave the hon. member earlier in the session, to which he referred this morning.


Frank Howard: May I suggest that in the future it would be helpful if the number of psychologists could be indicated in brackets.


Edmund Davie Fulton: We will be glad to consider that.


Frank Howard: I have one other question relating to page 232 and the further details for construction, improvements and equipment. This matter may also be dealt with in the supplementary estimates, but I should like to ask a question with respect to St. Vincent de Paul. One of the series of questions I asked had to do with the number of cells in penitentiaries which did not contain toilet or wash basin facilities. The answer was that there are 107 in Dorchester penitentiary and 420 in St. Vincent de Paul. In other words, these cells are simply cement encased bare rooms with no toilet facilities whatever; yet inmates have to spend a considerable number of hours in such cells.
I imagine that the present toilet facilities perhaps consist of a bucket. That is what I have been told. Unfortunately I have not had a chance to visit St. Vincent de Paul yet, but I hope to do so. I understand that early

in the morning there is a bucket parade for the inmates of these 420 cells without toilet or wash basin facilities, and that the buckets are emptied in some central spot during the morning. What steps are being taken to eliminate cells without toilet or wash basin facilities at St. Vincent de Paul and Dorchester penitentiaries? There are a large number at St. Vincent de Paul and a relatively large number in comparison to the inmate population at Dorchester. There are also a few at Kingston, although the number there is relatively small.


Edmund Davie Fulton: With regard to cells without toilet or wash basin facilities, I am glad to say that the 107 at Dorchester are not now occupied. There has been some slight reduction in the population there so that we do not have to use these cells now. When the move to Springhill is made, which should permanently reduce the population at Dorchester and give us some leeway to carry out works and measures of this kind, it is the intention to strip these cells and use the area for recreation and similar purposes.
With regard to St. Vincent de Paul, I regret that the situation there is not so fortunate. I have to report that the majority, if not all, of these cells are occupied. Because of the physical nature of the building, St. Vincent de Paul represents our worst overcrowding problem at the present time. However, as soon as l'lnstitut Leclerc is available for occupancy, which will be this fall, we will be able to move men over there and clear out this area. It is the intention to remodel that portion of the building then and use the space as a dormitory. Therefore by the end of this year or by next year, or as soon as it can be physically done, I hope we will not have in either of these institutions cells without toilet facilities; and if we have them I certainly hope it will not be necessary to use them.


Frank Howard: I have one other thought I should like to express with reference to chaplains. It was not my intention to say they had no place in these institutions. However, I think it will be found that the church attendance of the inmate population is in a much higher ratio compared to total inmate population than is the case with any other group in society outside the penitentiaries. I think many prisoners look upon attendance at church service as a form of recreation, in that they can be free from the restrictions of their cells and chat with their friends and so on. To that extent church service is looked upon as more or less a form of recreation, yet we hope that by association they will also get some spiritual guidance.


Mr. Roberge:: Can the minister make a
progress report as to the discussions held with the provinces on the matter of taking into the penitentiaries all persons sentenced to serve a year or more?


Edmund Davie Fulton: I am very sorry, but I did not get the full question the hon. member asked.


Gabriel Roberge: Last year there was a meeting of the Minister of Justice and the attorneys general of the provinces with a view to changing the law so that all prisoners sentenced to over one year would serve their sentences in a penitentiary instead of a county jail.


Edmund Davie Fulton: That is correct; that conference was in the fall of 1958, and there was agreement on that principle. I have reported before on it. It is a part of the over-all correctional reform program on which the correctional planning committee has been working. The committee presented its report, which is before cabinet for approval in detail at the present time.
The intention is that in the future the whole program, both of physical construction, and of training and rehabilitation, will be based on the federal authority assuming responsibility for all prisoners sentenced to a term of more than one year. However, we have to solve our own overcrowding problem and get our own present responsibilities in satisfactory shape. We will not yet be able to undertake the expanded responsibility this would represent, and the attorneys general have been advised that it will be three or four years before we expect to be in a position to assume this responsibility, but our planning is based on that feature.


Mr. McMillan:: Is there an effort made to have all inmates seen by a psychiatrist reasonably soon after their admission, or are they examined only after they have become mentally disturbed and are referred by a medical officer?


Edmund Davie Fulton: No, Mr. Chairman, the initial interview is carried out by the classification staff with a psychologist. If there is an indication that the inmate needs psychiatric help, then he is referred to a psychiatrist.


[Stage Direction]
Item agreed to.
162.	Operation and maintenance of penitentiaries including compensation to discharged inmates permanently disabled while in penitentiaries, $14,878,797.
William Hector McMillan: There is a reference here to compensation to discharged inmates permanently disabled while in penitentiaries. Does this refer to inmates who have become
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permanently disabled as the result of sickness? What is the amount of the payment under this item?


Edmund Davie Fulton: It would not cover the case of an inmate disabled through sickness. I am informed that it covers the occasional industrial accident or event of that nature.


[Stage Direction]
Item agreed to.
163.	Construction, improvements and equipment, $2,353,840.
Gabriel Roberge: In the details for this item there is reference to $1,097,400 for a new institution in Quebec. Is this the Valleyfield institution?


Edmund Davie Fulton: That is l'lnstitut Leclerc
which we expect to have completed this year.


Gabriel Roberge: I understand Valleyfield has been completed?


Edmund Davie Fulton: Yes. Valleyfield was a military camp to which we had to make modifications, and that was completed last year.


Mr. Coates:: I wonder if the minister could give a report on the situation at the present time at Springhill?


Edmund Davie Fulton: The situation is that construction is nearing completion. All the necessary equipment is on order and some of it has been delivered, while the rest of it is in the process of being delivered. Staff training is nearing completion and we expect, if things go according to plan, to be able to have it ready for occupancy and start transfers within the next two months.


Robert Carman Coates: How many prisoners is it expected there will be?


Edmund Davie Fulton: Approximately 100.


Robert Carman Coates: What would be the number of employees during that period?


Edmund Davie Fulton: In the neighbourhood of 35. The actual number will depend on the nature of the program, whether it becomes an industrial training type of program or a farm operation type of program or a combination of both. I cannot give an exact figure for the staff until we determine the type of program that will be carried out.


Mr. McFarlane:: Ever since being elected to this house in March, 1958 I have been quite interested in the construction of penitentiaries in western Canada. We have placed our views before the department with regard to the need for penitentaries in British Columbia. We have requested also that serious consideration be given to locating a penitentiary in the city of Fernie. I realize that the length of time taken in reaching a decision is excusable because of the investigation being

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conducted into our whole penal system. The report of the investigating committee was turned over to the department in January of this year, but we are still waiting for some action by the department. In the meantime the community is endeavouring to carry on, hoping for an affirmative decision to build the penitentiary in Fernie.
In August, 1958, as recorded on page 3201 of Hansard, I brought to the attention of the department the tendency to centralize penitentiaries in the province. Hon. members agree that many of the larger industrial concerns in Canada have found that it does not pay to centralize too many departments in a small area, and I suggested that consideration should be given to spreading the penitentiaries around the province of British Columbia. At that time the need for something to stabilize the economy in Fernie was quite urgent. I mentioned that the mines had closed down almost overnight. In several other instances communities have been advised that the mines will close within two or three years, but in the case of Fernie the mines closed down overnight and the employees wiere advised there was no more work.
I was advised that a three-man committee would investigate various sites across Canada. I was very disturbed to learn that only one man went to the city of Fernie, and it appeared to me this was just a token effort to show that there was a certain amount of interest in Fernie. In 1959 I also brought this matter to the attention of the department, and at that time the need of the city of Fernie was greater than in 1958. I received the following reply from the minister as recorded in Hansard of June 24, 1959 at page 5100:
When we get the committee's report we shall be able to come to some final conclusion. As I have assured my hon. friend and others who have written me on behalf of Fernie on previous occasions, the suitability of that location will be most carefully investigated.
That I certainly appreciate, but it is over two years now since I first brought this matter to the attention of the department, and it is six months since the report was filed. I feel it is now time that a decision should be made. We have been depending in this area on certain assurances that we were to be given consideration, but I do not think we should go on forever with such assurances. The case of Springhill was much the same, although my sympathies are with all mining areas, but it was not very long before a decision was reached to build a penitentiary there.
The department has been written to giving further considerations for a correctional institution in the Fernie district, and according
[Mr. McFarlane.l
to a press report I have here we are still given the chance of having a prison built there. It says that a letter from the Minister of Justice to the Fernie chamber of commerce outlined preliminary plans for correctional institutions in British Columbia and said that he would be giving his personal attention to the question of Fernie being a possible site for further development. I also noticed a press report from Elliot Lake greeting the announcement that a $2 million reform institution was going to be established there. All we are asking is that we be given the same consideration as other distressed areas where mines have closed down.


Mr. Herridge:: Before the minister replies I want to congratulate the hon. member for Kootenay East for fighting for his constituents in this respect, and I know he has raised the matter on two previous sessions.
I am interested in this matter because it appears to be government policy to consider areas suffering from depressed economic conditions when they have to consider building new penitentiaries. As the hon. member mentioned, one has been built at Springhill and according to the press one is to be built at Elliot Lake. I think he has made out a good case for one in British Columbia in the Fernie area. I know the circumstances he has related, and I rise to give my wholehearted support as a colleague in another portion of the Kootenays.


Edmund Davie Fulton: Mr. Chairman, I appreciate the feeling of the hon. member for Kootenay East, and I wish I could give him the assurance he wants and for which he has worked so hard. But I would remind the committee that we are designing a national system of correctional institutions. The program we are developing will be nation wide and the new institutions, wherever and whenever built, have to fit in with the national plan. It has been made clear to all communities which have pressed for the construction of new institutions in their localities that we are not prepared to make a decision as to where a new institution forming part of this pattern should be located until we have the pattern itself developed and approved; because to make such a decision in advance of the establishment of the basis of the whole program might well distort the program.
It is true that the report has been in my hands since January, but in a program of this magnitude neither my department nor the minister is free just to approve this and say "Go ahead". It has to have cabinet approval, and it is a very bulky, far-reaching and important document. When I say bulky it is in two large volumes. I press my colleagues as much as I can, but you cannot just

drop everything else and deal with the correctional planning report. I expect that it will be dealt with as early and as expeditiously as possible, and then we will be able to make detailed decisions based on the recommendations of the committee.
I know the situation in Fernie and there are at least a dozen, if not more, similar communities in British Columbia all of whom have been pressing me for a penitentiary to be located in their community. I have not yet been able to satisfy any of them, and I know I am in the position that when a decision is finally made I will have one friend and probably upwards of 99 disappointed enemies. But that will be my responsibility ultimately, and I will have to make the decision.
May I mention one impression which might be created by the hon. member's remarks if I left it uncorrected. It is not our policy to establish reform institutions in depressed areas. Where a decision can be made to establish a new institution or to extend an existing one by the establishment of a satellite, and where the proper factors to be taken into account do make it possible to locate in a depressed locality, then we locate there. But we are planning for the future. Penitentiaries and correctional institutions are long term, almost permanent institutions, and I think it would be very unsound to take as the guiding factor the principle that they should be located in a depressed area, which we certainly hope will only be a temporary problem. We would not have a scientifically worked out program if that was the sole basis for it.
It is true that a new institution has been established at Springhill, where it coincided with an area which had first a disaster and then became a depressed area as the result of the closing down of the mines. But this is not a completely new institution such as the one in western Canada will be. This is a satellite to Dorchester, which was established in accordance with that part of the program which establishes minimum security institutions as satellites to existing institutions and as projects which will relieve overcrowding in existing institutions. It is not the sort of new type of institution which will be built in accordance with the total program when that program is developed.
In British Columbia we have established a satellite to the British Columbia penitentiary, just as we have at Springhill a satellite. The needs were assessed and the areas available were assessed, and the decision was made to establish that one at William Head on Vancouver island, in part because the buildings were available exactly of the type we wanted, 79951-0-366
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and in part because, being a satellite of the present institution, we wanted it to be reasonably close for administrative purposes.


Mr. Speakman:: Before the item carries, I was pleased to hear the minister say that this program for building additional correctional institutions is being carried out on a long range basis. However, I would remind the committee that every province in Canada has a penitentiary with the exception of Alberta. While I am not making the claim that we have more people requiring correction in the province of Alberta, I think in the interests of economy the location of this proposed new institution should be considered in the central part of Alberta. It would save the government a considerable amount in travelling, because we have people in Alberta who are sent to penitentiaries in Prince Rupert, or to Vancouver, or even as far as Kingston, which all involves considerable expense to the crown.
I make a plea, of course, on behalf of the area in which I am interested. I sympathize entirely with the hon. member for Kootenay East, but I would remind him that trade conditions with Japan have somewhat improved conditions in his area and therefore some of the urgency of his plea has been lost. I did make representations to the minister, and I frankly admit it, on behalf of central Alberta because of its facilities for an institution, its excellent transportation services and the fact that the province of Alberta does not at this time have a correctional institution.


Frank Howard: I have two or three other thoughts to mention. I know there are some members of the house who have undertaken on their own to visit some of the prisons, although the number of members who have done so is small. Bearing in mind the saying that one look is worth a thousand reports, in order that members may get a better understanding of the function and operation of the penitentiaries, perhaps on lines similar to those developed by the Department of National Defence, I suggest that something might be done to arrange for small groups of members to visit some of our penitentiaries and prisons under the auspices of the department in order that they may get first hand knowledge and a better understanding of the facilities which exist, including some of the facilities which would be better removed from our prisons such as solitary confinement cells, the crosses and arrangements for lashes and other things of that nature. It would also afford an opportunity of understanding the attitude of the prisoners themselves. I commend this suggestion for study by the minister and his department.

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As I have said, I do not think the groups should be too large-perhaps they should not consist of more than four or five members- in order that the visitors might have a better understanding of these things. It might be a couple of years before a large body of members of parliament would visit these institutions, but when they had done so they would be in a better position when the estimates were being considered to determine whether or not a correct approach was being made.
Another thought I have is in the form of a question. I believe that last year an officer or guard at Kingston was arrested for possession of narcotics. Presumably it was felt that he was not using those narcotics himself but was smuggling them into the prison. I wonder whether the minister could indicate what experience his officials have had in so far as attempts to smuggle narcotics into federal institutions are concerned, and perhaps we could be told the experience with regard to alcohol and other things of that nature. Is this practice prevalent or not?


Edmund Davie Fulton: The suggestion made by the hon. member for Skeena with regard to visits by members of parliament is one that should perhaps be studied. The question involved is, of course, whether the government should undertake responsibility for making buses available and paying transportation costs in connection with such visits. That is one of the things that will have to be considered. Also, since in many cases the institutions are close to Ottawa, particularly those at Kingston and Montreal, it is not really a great undertaking for members themselves who are interested, as I know the hon. member is, to visit these prisons on their own initiative, as I know the hon. member has done. However, we could give consideration to the question of visits by organized groups of members. We have no buses in the department, but perhaps the Department of National Defence would make its buses available to us. That is something we shall be glad to consider.
With regard to smuggling narcotics or other articles into prisons, this is something against which we have to be on guard at all times. However, our experience is that safeguards can be made effective and that our measures can be reasonably successful. I do not claim for a moment that narcotics or alcohol are never smuggled into prison, but the exceptions are, I think, rare enough that they do not warrant any cause for concern that our precautionary measures are not proving successful.
There was an incident in British Columbia recently where an ex-inmate had attempted to conceal narcotics. He was apprehended,

the cache was discovered, and there is a prosecution now under way. We had another case at Kingston where a guard was involved. Suspicion was aroused, an investigation was made, and as a result the guard has been dismissed from service.
I do not say those are the only incidents which have taken place recently, but when the British Columbia incident took place I did become concerned and asked that both the penitentiaries branch and the R.C.M.P. should let me have a report as to whether there was an increase in the incidence of smuggling of narcotics into penitentiaries. After examining their files and records and making an on the spot check, both organizations informed me that the situation in this regard was normal and that there was no indication either that our methods were unsuccessful or that there was any carelessness on the part of the staff of the institutions.


Frank Howard: I understood the minister to say with respect to the guard at Kingston that he was dismissed.


Edmund Davie Fulton: Yes.


Frank Howard: Does the minister know whether any charges were laid with respect to the possession of narcotics?


Edmund Davie Fulton: My recollection is that he was charged but acquitted for insufficiency of evidence or some such reason. I can send the hon. member the information as to the reason, but we would have to look it up in the files.


Frank Howard: It just seems odd that a person should be dismissed because he was in possession of narcotics, presumably on fairly definite proof that this was the case, and then that the charge against him should be dismissed because of insufficient evidence. It seems to me there is a conflict between these two circumstances, and perhaps the guard would have the right to reinstatement if it was not proved that he was in possession of narcotics.


Edmund Davie Fulton: I can assure the hon. member that such was not the case at all. I said the charge failed for lack of evidence or some technicality. I am not sure what the technicality was. It was certainly not proven that the guard was not in possession of narcotics. The criminal charge did not succeed on some ground, some technical objection which was raised, as I recall it, by the defence. I will obtain information about the precise reason why the charge was dismissed and send the hon. member the details so he may be satisfied that we do not go about unjustly dismissing our guards.


Mr. Brunsden:: Mr. Chairman, my only reason for rising is that when my constituents read today's Hansard and find that my colleague, the hon. member for Wetaskiwin, is the only Alberta voice that has spoken out in the house with respect to the proposed new penitentiary-my constituents are highly intelligent; they read Hansard-they may feel we are not fulfilling our duty if we do not participate. I think the minister knows that with respect to the proposed penitentiary in the west, as applied to Alberta, there is only one place for it and that is in southern Alberta.
My colleague from Wetaskiwin talks about travel. What that has to do with the inmates of a penitentiary I do not know. We in the south have railways, we have an excellent climate, we have occupations. We have all the conditions necessary for a splendid site for a penitentiary. I am sincerely persuaded that when the new penitentiary site is selected it will be somewhere in the southern part of Alberta.


Mr. Smallwood:: Mr. Chairman, I am sorry I did not get the floor before the hon. member for Medicine Hat. Medicine Hat has nothing to offer compared with what I am going to propose in a few moments. I am speaking here on behalf of the town of Wainwright. I wish to draw to the attention of the committee and the minister the fact that this town is on the main line of the C.N.R., a terminal point where the continental train stops twice daily. Furthermore, the dominion government at present owns a large tract of land around Wain-wright. It is used for military purposes part of the year, but we could use this land as a site on which to build the penitentiary. We have an abundant supply of water from the river, natural gas and all the prerequisites for a site for a penitentiary. I am sure the minister and his officials will give Wain-wright every consideration when they are selecting the site for this penitentiary in Alberta.


Mr. Nugent:: Mr. Chairman, after listening to the remarks of my colleagues I can see that every hon. member wants this penitentiary to be located in his constituency. I merely want it to be located in Alberta. I know that in addition to these few spokesmen from whom we have heard today the minister has been badgered by the hon. member for Jasper-Edson and the hon. member for Acadia. When the minister has that fearsome combination of the Horner brothers confronting him I know he will have a difficult task. Therefore I feel I should simply 79951-0-366i
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say that I will forgive him and understand if he therefore does not put the penitentiary in my constituency.


Lester Bowles Pearson: Mr. Chairman, may I ask the minister whether there is any danger on his part of being unable to choose between these idyllic communities in Alberta and having to move right out of the province?


James Ross Fulton: The choice is going to be a difficult one, Mr. Chairman.


[Stage Direction]
Item agreed to.
Penitentiaries-
525. Construction, improvements and equipment- further amount required, $632,250.
Frank Howard: Would the minister explain the change in this item?


Edmund Davie Fulton: Mr. Chairman, it relates to a new building for women at Kingston to accommodate 50 inmates, with facilities for school room and recreation.


Frank Howard: Did the minister say school room or pool room?


Edmund Davie Fulton: School room. It is for women.


[Stage Direction]
Item agreed to.
Royal Canadian Mounted Police-
Headquarters administration and national police
services-
372. Operation and maintenance, $6,753,539.
Mr. Winch:: Mr. Chairman, would the minister give us information about the work undertaken by the R.C.M.P. laboratories at Regina, which I believe do all research and analysis work for the force in western Canada? I am informed by officers there that large sums of money are spent in travelling expenses by individuals at Regina because of the necessity of their giving evidence in court. I am also told the time has long since passed when a laboratory should be established in the vicinity of Vancouver. At present the work from British Columbia must be sent to Regina, entailing some loss of time. An even greater loss of time is involved in members of the Regina staff travelling to British Columbia to testify in court. I am told that one or two of them spend more time travelling by plane to courts in British Columbia than they spend in the laboratory at Regina. Would the minister tell us What study has been made of the situation, and whether any thought has been given to the establishment of a laboratory in British Columbia?


Edmund Davie Fulton: Mr. Chairman, the matter of a further laboratory for western Canada is now under consideration. There have been

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correspondence and discussions with the attorney general and his department in British Columbia with respect to the matter of the establishment of a laboratory, probably in Vancouver. That question is under study.
The hon. member is quite right when he refers to the problem created by the necessity of members of the staff flying from and to Regina to give evidence with respect to the exhibits analysed in our laboratory. As against that, the problem that has to be considered is the considerable expense of starting another laboratory because of the expensive equipment it requires. At the moment I can only say that the matter is under study, and it is under study on the basis that we recognize that there are compelling reasons arguing for the establishment of a further laboratory.


Frank Howard: My remarks will be more restrained than last year because the situation then obtaining in Newfoundland has changed. I should like to make some comments about the activities of the R.C.M. Police in investigating allegations that a number of Chinese people have come to Canada illegally in the past few years, and the manner in which the investigation was conducted. I am given to understand that in the city of Vancouver, somewhere around the end of May, the R.C.M. Police executed 15 search warrants. Whether those search warrants applied to individuals or establishments I do not know. In any event, the homes and business establishments of the individuals concerned were in effect raided on the grounds that a conspiracy existed to bring Chinese to Canada illegally. I am given to understand that the R.C.M. Police seized documents which obviously had nothing whatsoever to do with any such alleged conspiracy, real or imagined.
Commissioner Harvison is supposed to have made reference to 11,000 Chinese coming to Canada illegally. This statement cast doubt upon the legal position of all members of the Chinese communities in Canada, because reference was made to no specific locality. I do not know what the situation is today, but weeks after the raids were carried out by the R.C.M. Police no indication has been given as to whether any charges would be laid or whether any of the documents seized would be returned. There has been refusal on the part of the R.C.M. Police to say what has happened with respect to the documents seized, and a cloud of suspicion has been cast upon the people involved in the search warrants.
I think some fundamental freedoms of the individual are involved here. The R.C.M. Police should have been more judicious in

their activities in this field. They should not have been so flamboyant in their attitude toward the public as to what they were doing. This has cast a cloud over the entire Chinese community in Canada. At the end of the raid no indication was given that any charge would be laid.
Furthermore, I am given to understand that some indication has been given-and this is reported to have come from the commissioner's office, though it may have come from the members of the R.C.M. Police- that the police do not intend to charge all the Chinese who have allegedly entered Canada illegally. If they do not intend to charge all, then this smacks of some sort of discrimination, the picking and choosing of people, if there are any who have come here illegally.
Then there is reference-and this I submit is the sort of red herring that is dragged in occasionally to cloud the issue-in the Vancouver Sun of January 8 to the fact that the R.C.M. Police had reported that red agents or communist agents-the story said "red"- have been brought into the country from China as part of the conspiracy. It seems that the R.C.M. Police are prejudiced toward looking for communists operating in Canada.
Another part of this unfortunate situation is the injudicious use of the R.C.M. Police in these raids and the manner in which the raids were conducted. These raids were widely publicized, and they cast doubt and suspicion upon each and every individual of Chinese origin who has come to Canada in recent years. These things should be cleared up immediately. If there are charges to be laid, lay them as quickly as possible and clear the air of the doubt and suspicion that rest in the minds of those people.
This situation was further aggravated in the city of Prince Rupert. I received a telegram from Mr. Bruce Brown, a lawyer in that city, inquiring what right the R.C.M. Police had to question citizens of Chinese origin about this matter. I checked and discovered that they had no right whatsoever, other than the normal right of a policeman to ask questions which individuals are not obliged to answer. I understand the people were advised accordingly and that they refused to answer the questions. It was not a matter of the R.C.M. Police constables or officers conducting the inquiry in Prince Rupert going to an individual Chinese in his home and telling him privately that he would like to ask a number of questions; it was a matter of asking the members of the Chinese community to report to the police station in the city hall to answer a number of questions.

I have a copy of the questionnaire provided for that purpose. I understand this questionnaire was developed somewhere in the regional offices, and its purpose was to ensure that the well-trained police constables did not miss anything in their interrogation. The information they required, without giving any indication what it was for, was the name and other names, addresses, business address, date and place of birth, occupation, distinguishing marks, tattoo, and so forth. There is reference to whether the person speaks English well or poorly, place and date of entry into Canada, name used at that time. He is asked whether he is a Canadian citizen, the number of the certificate when issued, issued in the name of; name of the sponsor and relationship, his address; whether the individual has a passport; what is the number of the passport; details about wife or wives or husband; about names; place and date of birth; number of children; place of birth of parents, brothers and sisters; production of all documents showing number of names, and so forth; previous address in Canada. If this sort of thing does not smack of the same sort of inquisitorial approach connected with the other raid which was conducted previously, I do not know what it is.
Second, I understand that a visa fraud section has been set up by the R.C.M. Police for which this sort of information is required in a sort of general way, indicating that everybody must answer the questions. This immigration visa fraud section has an unlisted telephone number; at least when you telephone them you find that it is not an R.C.M. Police number, it is another number. They do not answer by saying "R.C.M. Police"; they answer by saying "Hello" or something of that nature. If this is some sort of a secret organization that has been established in this regard I think the Chinese people should insist on their rights and refuse to answer any such questions, especially when they are asked to come down to the police station, as they were in the city of Prince Rupert, in order to be asked for information of this nature, namely whether a person has a passport; what other names he has; what information he has about brothers, sisters, parents, children, wives and husbands and all the other relatives that an individual may have. I think this is another of the erroneous steps the R.C.M.P. have taken in dealing with this question.


Lester Bowles Pearson: Mr. Chairman, I should like to say a few words on this item, which concerns the Royal Canadian Mounted Police. Along with every other Canadian I am proud of the record of the force; not only their
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record on the television screen, though I have no particular complaint to make about that, but their record in history and the contribution the force has made to the growth, development and security of our country. The police, as is the case with every other police force, often have unpleasant duties to perform. No doubt our R.C.M.P. have their share of these. They also have the responsibility under the government for certain security duties which are not likely to make them very popular, but as far as my own experience goes I cannot imagine security police, doing the kind of things that have to be done and conducting these operations more fairly and discreetly and with a greater regard for the rights and liberties of the subject than our own security officers of the R.C.M.P.
Therefore, feeling as I do, and I think most Canadians feel the same way, we must all be very sensitive to any kind of unfavourable publicity that may attach to the force. There was unfavourable publicity a year or so ago. I am not going into that now because I think I would be out of order in any event, but it resulted as we know, in the resignation of the commissioner under circumstances which I think were regretted by everybody. This perhaps gives me the opportunity to pay my respects to the new commissioner, who I know will be a worthy successor to a long line of distinguished Canadians who have held that post.
The hon. member who preceded me referred to the unfavourable publicity which the R.C.M.P. has been getting in connection with one matter, that of Chinese immigration. There is no doubt that when announcements are made on a matter like this by the R.C.M.P. or by somebody speaking for the R.C.M.P. there will not only be publicity, but in a situation such as this there will be controversial publicity. I think that is unfortunate and regrettable. In my view the original announcement by the R.C.M.P., as reported by the Canadian Press on May 24, was regrettable in that such an important statement, which was bound to have repercussions and create controversy, should have come from someone authorized to speak for the government. The matter could then have been discussed on the floor of the house, because parliament was sitting. But when the commissioner makes an announcement in terms which suggested that 11,000 Chinese entered Canada illegally during the last ten years, that is bound to lead to misunderstanding and controversy, especially as in this case there has been no subsequent information that I have been able to secure from any governmental source which would confirm that that figure was any more than an estimate.

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The announcement also included other things which were bound to create uneasiness in a segment of our population which, by an announcement of this kind, would feel itself to have been put under suspicion. There was another story in the Ottawa Citizen a few days later attributed to the commissioner of the police which dealt with the same matter; in fact it almost seems like the same story. These announcements have created a situation where the police have been brought into public controversy, and that is something which I think is regrettable.
The reaction and feeling in a certain section of our population-I am referring primarily to the Chinese section of our Canadian population-have been increased by statements made by a representative of the police on television. These statements may be perfectly accurate; I am in no position to judge, but having seen one program I feel that it was not the kind of program to keep the R.C.M.P. out of controversy.
The result of all this has been what one could have expected. Chinese Canadians have understandably felt resentful that some of the implications of these statements as having conveyed a reflection on the Chinese community as a whole, although I am sure not by design on anybody's part. As the minister knows, there have been complaints and representations by citizens of the Chinese race in Canada as a result of the statements made and their implications, and the R.C.M.P. have been brought into controversy. I am not going into the details of these submissions, but they have been made to the government. The minister has replied to some of the statements made, denying them, but the statements are on the record and they do include what I think are unfortunate references to the R.C.M.P., references of a kind that underline my own view, which I am sure is shared by others, that the police should be very careful not to become involved in the kind of situation which may result in that type of submission.
One statement I have here is found in the Toronto Globe and Mail of June 4. In it the Chinese community centre association say they resent strongly the widespread raids by the R.C.M.P. into their houses and places of business and so on. These have been denied by spokesmen on behalf of the government, but it seems to me that if the R.C.M.P. had refrained from making the original statement about 11,000 illegal entries they might have been in a stronger position in respect of subsequent statements and submissions that were made which reflect on the conduct of the police.

I should like to ask the minister, as I think the hon. member who preceded me also did, to give the committee some information regarding the activities of the R.C.M.P. in checking into illegal entries from Hong Kong. In answer to questions in the house the minister has already dealt with some aspects of this matter. In one of his statements he said that they, meaning the government, were making use of the service of some members of the Hong Kong police force who have been sworn in as special members of the Royal Canadian Mounted Police. He went on to say that they had been very carefully instructed in Canadian police methods and in the law regarding the carrying out of investigations and the questioning of individuals.
Now, all that is quite true, but the actions of the police in this connection, assisted by police officers from Hong Kong, however carefully instructed, are bound to create and have created in some quarters a feeling of resentment and anxiety. Perhaps the minister could take advantage of this opportunity to enlarge upon statements he has already made. This may serve, I would hope, to remove some of this anxiety and also to remove any reflections which may have been cast on a large body of Canadians. He might also deal with the question of the desirability of any representative of the Royal Canadian Mounted Police making a statement of the kind made, no doubt, in good faith and with good intentions, but which in connection with a matter of this importance and of such a controversial nature should come from a spokesman of the government itself.


Edmund Davie Fulton: Supply-Justice
I do ask members, therefore, to bear in mind the fact that some of the things that are said are said obviously for this purpose. I do not mean they are said by members here, but some of the things that have been said outside have been said because nothing would better serve the interests of the racketeers than to have the Hong Kong police withdrawn. In order that this might be done we are told the Hong Kong police are brutal; that they have been carrying out their investigations and questioning in an entirely improper manner. We have investigated all allegations and have found them to be completely unfounded.
Therefore it is obvious that the allegations have at least one motive; that is, to try and force us, by creating prejudice against the use of the Hong Kong police, to discontinue their services. We have no intention of discontinuing their services, because their services are essential and are proving extremely valuable in assisting to uncover this racket.
The same thing is true with respect to the charges which have been made against the R.C.M. Police themselves in the course of carrying out these investigations. If the police could be prejudiced in the minds of the public, then the government presumably would tell them to take the pressure off, to ease up on the investigations and let the whole thing die. We have investigated every charge made against the R.C.M. Police and have found there is no allegation which need be taken seriously, except one relating to the use of the questionnaire, and I will deal with that separately. But as to the conduct of the investigations, the allegations that people have been haled out of their beds and homes in the small hours of the morning and practically dragged down to headquarters for questioning are entirely unfounded, and I say that on the basis of the most careful check on the circumstance about which the allegation was made. I am referring to a case in Montreal.
With respect to Prince Rupert and the use of the questionnaires, it is true the questionnaires were prepared, and they were prepared for the guidance primarily of the R.C.M. Police themselves. I am sure the hon. member for Skeena, who raised the matter, will appreciate that where you are dealing with a nation-wide investigation into the operations of an organized racket which itself is nationwide, then it is essential that all information should be collated. In order to make certain that the operation is successfully and expeditiously carried out it is essential that the same particulars be received in each case, that the same questions be asked of each

person being questioned. It was for this purpose that a form of questionnaire was prepared for the use of the police officers in conducting their interviews.
In Prince Rupert, as in other cities, the R.C.M. Police are carrying out investigations concerning this matter, and they have been provided with the form. The form was designed at headquarters as a guide for the use of members of the force during the questioning of persons who are voluntarily prepared to give a statement as to their status in Canada, and in carrying this out obviously some uniformity is a necessity. That is the purpose of the form.
As far as Prince Rupert is concerned, my information is that 11 members of the Chinese community were interviewed. Some of these were merely asked for advice as to the best approach to make to the local Chinese. Of the 11, only six were interrogated and only one supplied the answers and signed the form. The form was also shown by members of the force to the legal adviser of the local Chinese community. It is not a secret document with which they were suddenly confronted and asked to sign. Only one signed it, and only six were interrogated on the basis of the questionnaire.
I have made it clear, in case there was any lack of clarity, that the questionnaire is not to be used for the purpose of getting the Chinese to sign but only as a guide to interrogators in asking their questions.
Some objection seems to be taken to the fact that we are interviewing Chinese at all. As I say, we ask them if they are prepared to give information voluntarily; if they are not, then that is the end of the matter. But how could we conduct an investigation if we did not interrogate people and ask them for information? Of course we have to interrogate them, and interrogate them all across Canada, in some cases on the basis of information arising out of the documents seized and in other cases in the hope that we will get information from them which will enable us further to identify and establish and prove, and bring home the proof, that individuals are involved in this illegal racket. The interrogations must continue, but I again assert that every case of complaint which has been made has been investigated and will continue to be investigated.
I do not take the position that a mistake can never be made, and I am prepared to investigate every complaint that we receive. If there should be improper conduct we will deal with it; but these complaints so far made against the R.C.M. Police and the Hong Kong police, with the exception of the one incident

regarding the use of the questionnaire where a Chinese was actually asked to sign it-and that was not the intention for which it was designed-have proved to be completely unfounded.
The suggestion was made that there is concern and doubt in the minds of the Chinese community. I regret profoundly, in the same way as has been expressed by my colleague the Minister of Citizenship and Immigration, that this investigation should have proven necessary. I regret profoundly that a substantial number of Chinese Canadians are involved in one way or another, and I can quite understand the reason for their general concern.
But on one point there should be no doubt, and I have done what I can to remove the doubt from the minds of those with whom I have discussed it by way of interview, delegation or in statements I have made in the house, and that is that there will be prosecutions. This racket does exist; we have evidence that it exists, and we have evidence on the basis of which I am assured with confidence that charges can and will be laid. So there should be no doubt in the minds of the community on that point; guilty persons will be charged and prosecuted.
I refer now to persons who are guilty of operating an illegal racket. I am satisfied that when that is established and the Chinese community know that so far as we can we will get these racketeers off their backs, then the feeling of the Chinese community will be one of relief and satisfaction.
In this connection I want to read an extract from a paper entitled "Our Sunday visitor", the issue of June 19, under the heading "Chinese suffer 70 year old tragedy". There appear these two opening paragraphs:
When mounted police recently began raids on Chinese homes and offices across Canada, it was the latest act in a tragedy that began more than 70 years ago. The police were looking for evidence to convict blackmailers who have played monstrously on the urge of the Chinese to come to an empty land across the Pacific and the recoil of the whites who got here first.
The crime committed was not merely one of illegal entry-that is little more than a technical fault. The real evil has been the ruthless exploitation of Chinese dreams. The blackmailers have been cruel and greedy and have grown rich over the years.
Our investigations to date establish that point. We have, as I said, gathered a substantial amount of evidence to date as a result of the documents we have seized. We are also receiving confessions from Chinese. We are now receiving the co-operation of the Chinese community in this investigation, and it is our hope that co-operation will be even more forthcoming. It is also my belief 79951-0-367
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that it will be, when charges are laid and when it becomes evident in the clearest manner possible that our intention is to convict racketeers and not to prosecute or harass people who have, in many cases, committed no more than a technical offence many years ago. That has already been made clear by the Minister of Citizenship and Immigration in her statement, and I think it will become more abundantly clear when the prosecutions commence. Then I believe we shall receive increasingly the co-operation of the best elements of the Chinese community so we can clear up this racket and dispose of it once and for all.
The hon. member for Skeena referred in addition to a couple of other matters. He said it had been reported in the Vancouver Sun that the R.C.M.P. had said that red agents had come into this country under cover of this illegal immigration. I am advised that this is not correct. The R.C.M.P. made no such statement, because they have no information of that nature. I am sorry the story was not picked up and contradicted immediately it appeared in the paper. I am informed also that the police never said they were concerned about red agents coming in during the course of this illegal racket.
The hon. member also expressed concern arising from a statement which he said the R.C.M.P. had made that some people would be prosecuted while others would not. He said this indicated to him that there might be discrimination. May I point out that the decision as to prosecution is not one for the R.C.M.P. to make. There are two things involved here. First there is the operation of an illegal racket. There is no question but that everyone concerned and exposed there will be prosecuted. The other matter is the situation of those who came into this country under false identities. The decision whether to prosecute in these particular cases is not one for the R.C.M.P. It is one for the Minister of Citizenship and Immigration, and the minister has made her stand clear as far as the Chinese are concerned who were what I might call innocent passengers in this vehicle. We are after those who operated the vehicle itself. The decision as to prosecution in individual cases will be made by that department.
I think that covers most of the points raised. While I very definitely want to leave in the mind of the committee no possibility of misunderstanding as to our intention to continue this investigation and press it to the limit of every resource at our disposal, and to prosecute those who are thus exposed-I want to make that very clear so the racketeers will not be able to tell the innocent Chinese, "You

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had better keep quiet, because nothing is going to come of this"-I want also to assure the Chinese community that something is going to come of this, because to the best of our ability we want to get these racketeers off their backs. I want to assure the Chinese community of our deep sympathy that they should be involved in this situation, and of our desire to clear it up so they can go about their lives without fear or worry.


Lester Bowles Pearson: The minister has taken exception to my using the word "announcement". I used that word not in any sense to mean a formal, voluntary statement by the R.C.M.P. If that is the meaning the minister has given to it, I can understand his feeling and I am very glad to withdraw the word "announcement". But the press is not as skilled in semantics as the minister is, because whatever may have been the circumstances surrounding the statements made by the R.C.M.P. in connection with the matter, they have been referred to in the press as statements; statements at a press conference, if you like, but nevertheless statements from the R.C.M.P., as the first statements which were made following the announcement last January, they led to the kind of publicity which caused so much trouble. This was due mainly to the use of the figure 11,000.
Let me justify what I have just said when I spoke about statements. The Canadian Press story, which is the one that circulates from coast to coast, under a dateline of May 24, reads:
R.C.M.P. Commissioner C. W. Harvison estimated that the ring made it possible for about 11,000 Chinese to enter Canada illegally during the last 10 years. This figure represents more than half the 21,000 Chinese admitted in that period.
That was the original story. That was the first time numbers were used, as far as I know. If you like, that is not an announcement, but it is a statement made by the commissioner in reply to a question and confirming that 11,000 Chinese had entered Canada illegally.
On June 2 a story appeared in the Ottawa Citizen purporting to be an interview with the commissioner of the R.C.M.P. Asked whether he agreed with the estimate that between 50 per cent and 85 per cent of Chinese immigrants had used fraudulent documents, he said-and this is in quotation marks-
I think that 85 per cent is probably a little high. Our evidence indicates the majority came in that way.
So the information that came from the R.C.M.P. in the form, if you like, of answers to questions was bound to be made public once it confirmed, if it did not volunteer, the information that 11,000 Chinese had entered this country illegally.
[Mr. Fulton.l
I have a great many other clippings on this matter in which occur such phrases as "the commissioner said" or "the commissioner stated". One from the Montreal Star of June 22 says "The news from R.C.M.P. headquarters that 11,000 Chinese-" and so on. Therefore I think my point is a valid one. If the R.C.M.P. as a force is to remain aloof, as we think it should do, from a controversy of this kind, then it should not make through its spokesmen statements which are bound to be controversial and, indeed, sensational.
The minister said no statement was made by any representative of the R.C.M.P. with regard to the security aspect of illegal entry. It is just as well that the minister is able to deny that, as I think he has done before, because here again in this story in the Ottawa Citizen the commissioner is reported as replying to a question put to him on this subject. This story, dated June 2, contains the following paragraph. The commissioner was asked if it would be fair to assume that any type of security risk could have been included in the illegal flow of immigrants, and his answer is given, in quotation marks, as follows:
"Yes, because of the high percentage it is obvious any could have been schooled for any design in seeking entry."
The point I am trying to make, and I think it is a valid one, is that if the R.C.M.P. is to be kept out of these controversies, statements of this kind are not the best way to bring about that desirable result. The minister said that the R.C.M.P. as a force has the respon-sibiilty for deciding whether to give information or not.


Edmund Davie Fulton: Whether to answer questions or not.


Lester Bowles Pearson: As a principle, of course, I do not take exception to that, because there will undoubtedly be times when information should legitimately be given to the press by the R.C.M.P. But this kind of information, which converted what up to that time had been a not very sensational announcement by a representative of the government into something quite sensational because of what amounted to confirmation of the figure given of 11,000 illegal immigrants, is bound to cause controversy. When a statement of that kind is supplemented by television interviews, then it seems to me that the force is being brought unnecessarily into a controversial situation and acquiring a kind of publicity which will not do it any good.
Those of us who are anxious that this should not happen to the R.C.M.P. have, I think a legitimate reason to regret that in this case it did happen. Our quarrel is not with what is being done. The minister has

made a good case for the necessity of taking action of the kind he has indicated. Our quarrel is with the way it was done and with the publicity that was attached to it and which brought into the matter the R.C.M.P. itself.


Edmund Davie Fulton: Mr. Chairman, I think in his closing remarks the Leader of the Opposition has expressed a proper concern for the position of the R.C.M.P. in connection with publicity of this kind. On that issue I am quite prepared to say there is a concern that it is wise and useful to discuss. What I objected to earlier was the form of appearing to suggest that the R.C.M.P. were volunteering statements and making announcements.
There are just one or two further impressions in this regard that it is still necessary to clear up before we deal with the issue itself of whether or not the police should answer questions of the press. The impression has been given-and I think I can readily understand how it might have been received-by the Leader of the Opposition, that the commissioner held a number of press meetings, held a press conference or gave a series of answers to questions by the press over a considerable period. That is not the case. The commissioner did not hold a press conference at all, as a matter of fact. On the very day the search warrants were executed, quite contrary to what the Leader of the Opposition said, it became a sensational story. It became a sensational event with the executing of search warrants all across Canada. The commissioner's office was deluged with phone calls from the press and so were the local divisional offices, I am told.
The press knew about it. They regarded it as sensational, because an operation of this type had never taken place in Canada before. It was not sensational because of what the commissioner said but it was sensational because of what happened. The press knew there was a big story here, and that knowledge could not be kept from them. The commissioner of the police was then faced with this question. Here is a big sensational story; are we going to keep mum about it and not answer questions and therefore leave the whole thing to speculation, or will we answer questions where it is proper for us to do so on the basis of giving factual information?
The decision taken was that the latter course would be followed. I think, on balance, that was a proper decision. From hindsight one might now say it would have been safer to decide not to say anything. If anyone holds that view in this particular case he 79951-0-367J
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certainly could make a strong argument that it would have been safer not to say anything, but I think the wise and proper decision at the time was that in view of the widespread interest in the story and the unusual nature of the circumstances the answers that could properly be given should be given.
When you analyse the answers you will find that they were not widespread or sensational in themselves. There were not a repeated number of interviews. The Leader of the Opposition has referred to a large number of articles. The hon. gentleman himself, if he stops to think about it, I believe will realize that this always happens when the Canadian Press gets a story that is of national interest. The story is repeated all across Canada in the first place and it is frequently picked up by other papers and rerun as much as several days later.


James Stanley Speakman: And elaborated upon, too.


Edmund Davie Fulton: Yes, and elaborated upon, as the hon. gentleman just said. Therefore the story of one interview with the commissioner creates the impression that a tremendous number of interviews were held on separate occasions, which is not the case at all.
1 also want to say that there was only one television interview about which we have information, only one appearance on television by any officer of the R.C.M.P. It is therefore quite incorrect to leave the impression that there were widespread interviews on television and widespread appearances by R.C.M.P. officers.
The one television interview was held in Vancouver. In view of what has been said about it I feel I should put the interview on the record, because the impression has been created that the officer who appeared on that interview made sensational statements, gave answers and facts which were sensational, and in effect divulged information he should not have divulged.
I think when I read the interview with this officer hon. members can judge for themselves that great discretion and judgment were exercised and that he answered no questions that he should not have answered and gave no information that he should not have given. Perhaps I should not give the name of the officer so it will not appear on the record, although if anyone wants to inquire I have no objection to giving it personally. The interview in question and answer form was as follows:
Q. Can you give us some idea of the extent of the raid carried out here in British Columbia?
A. All of the searches we conducted were done in the greater Vancouver area and amounted to approximately fifteen business establishments and homes.
Q. Have any arrests been made?
A. No arrests.


Lester Bowles Pearson: May I just deal with two points raised by the minister in a serious way in replying to what I said. In so far as the reason for and the background of the somewhat sensational publicity that this matter has received are concerned, I still think that was due in large part to the statement made in what was called an interview- I do not know whether it was an interview or not-by the commissioner that "our evidence indicates the majority came in that way". He was there referring to the majority of Chinese immigrants in the last 10 years, which would make the figure of 11,000 a reasonable one. Once that figure was given out, how could publicity of this kind be avoided? Surely the minister would agree that it is unfortunate that this publicity should be attached to a statement, even an answer to a press inquiry, made by the commissioner.
I am not criticizing the commissioner. I know what newspapers can do to statements of this kind. I have some headlines for which the commissioner is not responsible; but once you get into this situation you may be asking for exaggeration and trouble. I think we can preserve the R.C.M.P. from that kind of thing. It would perhaps be better for everybody, including the force, that when statements of this kind are made- the press has the right to information-they should be made by representatives of the government and not by the police.

So far as the broadcast is concerned, I do not want to give the impression that there was a lot on television. I saw one broadcast. It was a national program; therefore it went across the country. I do not take issue with what the officer of the R.C.M.P. said on this occasion. But it seems to me that when an investigation of this seriousness is being made, when we are in the middle of that investigation it might have been desirable to keep an R.C.M.P. officer off the screen and from talking about the investigation which was being conducted. However responsibly he may have discussed it right after he finished speaking there was a spokesman for the Chinese community who took issue with the R.C.M.P. in this matter. That, I think, was undesirable in the circumstances. This is the only point I am trying to make, Mr. Chairman; I think it is a valid one.


James Stanley Speakman: The Leader of the Opposition is, of course, making a great to-do about implied statements. I think this is shameful when you consider the fact that in Canada we have one of the finest forces of its kind in the world. Every hon. member has a duty to uphold its reputation.


An hon. Member:: He said it to protect it.


James Stanley Speakman: He continues to imply that that these statements have been made.


Lester Bowles Pearson: Mr. Chairman, on a point of order, I am implying nothing. I have read quotations from newspapers attributed to the police which have not been denied by the minister. Perhaps the hon. member should not be too excited about it.


James Stanley Speakman: Of course the Leader of the Opposition believes everything that appears in the press, but he never inquires into the background.


Frank Howard: I did not want to get involved in this controversy between the hon. member for Wetaskiwin and the Leader of the Opposition, but it does seem that every time the hon. member speaks in this house he starts out by using the word "shameful".


James Stanley Speakman: I have had a lot of lessons from you.


Frank Howard: A few moments ago the minister said that a substantial number of Chinese Canadians are involved in this thing one way or another. Will the minister tell us what he meant by "substantial"?


Edmund Davie Fulton: I think the words speak for themselves. I am not going to give a figure because we have not got all the evidence gathered and analysed yet. For just that reason the commissioner did not give a figure,
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though he was asked about a figure. Incidentally, my clear recollection and knowledge is that figures of this order were being talked about openly. The press certainly were using this figure of 11,000 in their conversation before the warrants were executed on May 24; indeed ever since the Minister of Citizenship and Immigration made her announcement in January, very substantial figures of this order were being talked about, and it was in that context that one of the press men asked the commissioner, "Is it as high as 11,000?" And he said, "That is not my figure, but I would not quarrel with it". It was a figure commonly being mentioned.
With respect to the actual question asked, as to what I meant when I said "substantial numbers are involved in this in one way or another", I think these words have a perfectly clear meaning and I am not going to give a figure. We cannot give a figure. The Minister of Citizenship and Immigration refused to give a figure. We will not be in a position to give figures until we have all the information before us.


Frank Howard: I thought what the minister meant by "substantial" was what is meant by the use of the word under the Combines Investigation Act, but that is another matter.
I should like to deal briefly with the questionnaire. My complaint here is not that a questionnaire was necessary as a guide to the R.C.M. Police in eliciting information, so that when they got the information they would use the same questions all across the country and compile the results afterwards and come up with something worth while. I think it is necessary that such a method be used, but the difficulty which resulted in Prince Rupert- and I think the R.C.M. Police prejudiced themselves rather than anybody else prejudicing them-arose from the fact that an individual did in fact sign a piece of paper on which this information was contained.
People of Chinese extraction, especially those who have not been here too long, have certain attitudes. They group themselves together, as other people would do in a strange country, and are reluctant to append their signatures to anything. To their way of thinking a document is an official piece of paper and if they put their name or anybody else's name on it, it means that they are signing something official. In addition, a number of these people were asked to go down to the police station to answer questions. This indicated to them that some kind of full-fledged inquiry was being conducted and that these individual Chinese persons had to give the information requested. They thought they were obliged and forced to answer some of the questions when in fact that was not the case. They are not obliged to answer any

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questions whatsoever, although if proceedings were taken under section 11 of the Immigration Act there would be some obligation on the part of the individual to answer those questions. The manner in which the questionnaire was used, the attitude or the approach of the R.C.M. Police, in fact almost forcing people to come down to the police station and requiring one person to sign such a document, prejudiced the R.C.M. Police.
In the back of the minds of the people of Prince Rupert still lurks another matter. Those who recall the attitude of a number of people in Prince Rupert toward the R.C.M. Police will recollect that two or three times over the past few years there have been some difficulties between the police and the people of Prince Rupert. The R.C.M. Police have been involved in skirmishes, antagonisms and things of that nature. Knowledge of this background is still there; it has not been overcome. On top of that undercurrent which still exists in the minds of some people there is the use of this questionnaire and the manner in which it stirred up those antagonisms which would be there naturally anyway. In this instance I think the R.C.M.P. did more damage to themselves in attempting to elicit this information than anybody else could possibly do.


Edmund Davie Fulton: Mr. Chairman, while what the hon. member has said has been expressed calmly I think it could perhaps create misunderstanding and an unfortunate impression if we do not get the matter into perspective again. It is true that there was a misuse of the questionnaire in this one case. That was a mistake. It has been rectified, and it has been made clear that the questionnaire was not for that purpose. That was a mistake which was quite easy to make, but it has been corrected.
With regard to the larger issue of whether the police should invite people to come to headquarters for questioning and interviewing, or whether there is anything here which is in any way suggestive of strong arm tactics, let us just consider the position for a moment. These interviews are necessarily lengthy. All the questions have to be translated through an interpreter and the answers have to be translated and written down. My hon. friend knows the Chinese people and knows that these interviews take a long time.
Are the police to go to a Chinese person and stand in the middle of his restaurant or laundry for two hours interviewing him with an interpreter present? That would be an imposition on the individual concerned. Similarly, should the person concerned have two large police officers in the front room of his home while an interview is conducted? No;

the normal, courteous and sensible thing to do is to say, "Will you please come down to headquarters? We would like to interview you and ask you some questions." For this to be represented as something which either strikes fear into the heart of the Chinese or is used to compel him to come to headquarters and thus create a bad impression in connection with the way the police are operating just does not seem to be reasonable when you think of what the alternative would be. The alternative would be for the interview to take place in the man's restaurant or store over a period of two hours with the public hearing all the questions and answers, or else to impose on the man in his home for the same length of time. I am quite sure that when people stop to think about the matter they will see the operation in its proper perspective, and will appreciate that these normal police operations have good reasons behind them and in many cases are based on what is, frankly, consideration for the public when you stop to analyse the matter.


Mr. Bigg:: Mr. Chairman-


Frank Howard: I should like to reply to the minister's comments, and I express my appreciation to the hon. member for allowing me to do so. I do not think the Minister of Justice succeeded in getting the matter into perspective but rather succeeded in distorting it. Here are the circumstances that existed in the Chinese communities. There had been a statement that 11,000 of them had entered the country illegally, and whether or not that was an official announcement does not matter. The Chinese people had that understanding. In addition, search warrants were executed in a number of places across Canada just prior to the time the matter of the questionnaire was involved. Many people in the Chinese communities, in Prince Rupert for example, thought they were directly or indirectly involved. I do not know actually what they were thinking. However, with this background they are asked to go to R.C.M.P. headquarters and answer questions, and one of their number has to sign a document. As a result they immediately become concerned.
I think that puts the matter in its proper perspective. That is the way the Chinese people look at it, and that is why they have rebelled and held meetings to discuss the matter. That is why they went to a lawyer and were advised that they did not have to answer any of these questions. Looking at the matter from the point of view of the people in the Chinese communities, I think this is what their reaction would be and why they would think they were being subjected

to some sort of persecution in being asked to answer questions in the light of the other developments that had taken place just two or three weeks before.


Frederick Johnstone (Jack) Bigg: Mr. Chairman, as an ex-member of the mounted police I think I can speak with some authority on one or two of these questions. First of all, the trouble involving the Chinese is a question of public relations, as everybody can readily understand. I think a great deal of to-do is being made about something which is quite simple. The R.C.M.P. are charged with maintaining security in Canada. It is not an easy job but rather one of the most difficult jobs in the world, because on occasion they must interfere or appear to interfere in people's private affairs. I cannot see how any well-adjusted citizens of Canada, whether they have been here all their lives or have only been here for a few days, can object to the honest attempts of the R.C.M.P. to keep our country secure.
I think it is more than wrong to drag in racial prejudices at a time like this. There are a great many Chinese in Canada who are very proud of their Canadian citizenship and are just as anxious as we are that people do not enter Canada from China or anywhere else against the laws of our country. Looking at the matter from the point of view of a Canadian citizen, it would seem that a few groups have chosen to make a great to-do about it, perhaps because they are guilty, perhaps because they have had some hand in the matter, perhaps because they are related to some of the people who are guilty, or perhaps for purely partisan political purposes, and have exaggerated and expanded one or two minor incidents to make them look like national scandals.
The Royal Canadian Mounted Police are the finest police force in the world. They have operated now for a great many years, and I cannot imagine any force which operates with greater impartiality. Again I speak with some authority, because on two occasions I was relieved of my duties in the mounted police as a result of the strict observance of the regulations, once for having married without permission and again for indicating that I took an active interest in public affairs. For this I hold absolutely no rancour. I admire the mounted police for upholding the regulations in my case in the same way as they do with respect to every member of the force.
With respect to the question of public relations I should like to make this plea, and ask that it be given consideration by the commissioner and the department. I suggest that renewed attention should be given to what
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we used to call the youth and police program. When this program was in operation I think the mounted police made more progress so far as good public relations are concerned, particularly among young people. We were instrumental in instituting safety patrols for school children throughout the length and breadth of this country. Young mounted policemen started baseball, football and swimming activities and judo and boxing classes. Wherever the program was put into effect so-called juvenile delinquency, which is just another way of saying that boys are having a good time, decreased. The boys started to play baseball and get themselves in shape. They began to take an interest in the Boy Scouts and to box, swim, fish, hunt and do all the things a boy would rather do than steal or break windows or get into other trouble.
Wherever you find one of these fine young mounted policemen, a grown up Boy Scout if you like, working among young people you will find that the record speaks for itself. These activities are not confined solely, of course, to the mounted police. Municipal and provincial police forces have also done signal work along the same lines, but the mounties have always taken the lead in these affairs. Again I would plead with the commissioner and the department to provide whatever funds are necessary to make police transport and sports equipment available, and to give full recognition to this work which is often done beyond the call of duty.
Recently the marriage regulations were improved. When I joined the mounted police in 1935 it was necessary for a recruit, no matter what his age, to wait six years before he could marry the girl of his choice. In 1937, without any consultation with those who had signed on the force, this regulation was changed to seven years. Some of us got a little desperate because we thought it might be changed to 12 years, so we went out and got married. At one time I believe half the members of the mounted police force were married without permission, and if it had not been for the war coming along and the fact that I volunteered for the provost corps, I might have got away with it, like many others including officers. However, when it was brought to the attention of my superiors I was treated in the impartial manner in which everybody else was treated, and relieved of my duties. This enabled me to go overseas with the other volunteers with whom I chummed. When I came back to this country I was forgiven and rehired.
I should like to say something about the question of pay. When my father was a mounted policeman he rode across the plains for 50 cents a day. However, at that time

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50 cents would almost buy a quart of whisky, so the pay figured that way was not too much out of line with what it has been recently. Today, however, the job of a mounted policeman is very complicated. The standards are just as high, and they were always very high. We demand young men capable of holding down territories which are sometimes as large as some countries in Europe. I have patrolled a territory consisting of 14,000 square miles and supervised six other young men and their many duties. I feel that command pay is out of line these days. When a man has this responsibility I think he should be paid accordingly. I trust that the pay of the Royal Canadian Mounted Police is about to be raised, and I hope substantially.
We have the finest police force in the world. I believe the people of Canada appreciate the service they are getting, and that they intend to pay these men according to the service rendered. It is true that in times past the men have been willing to work for next to nothing, but those days are gone forever. The public servant who is doing a good job today is entitled to a realistic rate of pay.
In so far as training is concerned, I think that would bear some looking into. I am quite in agreement with putting the young man on a horse, introducing him to that noble animal and getting him away from his mother. However, I feel that perhaps better training on a typewriter and in office procedure might be in order. Perhaps most people are not aware of the fact that the average mounted policeman spends as much time pounding a typewriter as he does in the field. We have not yet reached the stage where we believe there should be stenographers in every police detachment, so these young men have to type voluminous reports on every conceivable subject. I feel that more attention to business training would be very helpful in this paper age.
We are short of men in the mounted police today because it is a hard job requiring high standards, and the discipline is strict. I feel that if young men leaving school or university knew what a satisfying career it is, what fine training it is for public service and for public life, they would be glad to serve in the mounted police for 20 or 30 years. They would work with the finest young men in the country, and I think the job is second to none for excitement and for personal satisfaction. If I had to do it all over again I would be very pleased to do so.

All I can say is that I hope the pay will be brought up somewhere near the high standard of service which these young men give to this country.


Mervyn Arthur Hardie: Mr. Chairman, I shall be brief, but first of all I wish, on behalf of my constituents and many people in northern Canada, to express through the minister to the recently retired commanding officer of "G" division, Superintendent Henry Larsen, our thanks for his years of devotion and his many accomplishments. I need not recite to this committee the many accomplishments of this great man. I am sure that his name is in the hearts and minds of many Canadians, and his accomplishments are known not only in Canada but throughout many parts of the world. The sincerity and interest of Superintendent Larsen, not only in the enforcement of law but in the general welfare and social and economic conditions of the people of the north, are things he passed on to the many men who served under him. We in the north wish him many happy years in retirement.
We were happy also that the Royal Canadian Mounted Police appointed in his place a man with northern experience, Superintendent Fraser. I am sure that during the course of his northern service he has had the general welfare and condition of the people in that part of the country very much in mind. We are sure that in the future he will pass on these fine qualities to the men who succeed him.
This brings me to another point. I am wondering what the policy of the force is with regard to men who come out of the north. The other day, on July 1, I walked out of the house to take a look at the proceedings on the hill. I saw a man who had spent, to my knowledge, nine or ten years in northern Canada. I saw him standing there directing people, telling them where to stand. Is this all the force has for a man who has spent the better years of his life in the north? Is he to be brought here to direct traffic? Surely there must be some other position for a man with northern experience. Surely the force must have young recruits who could stand in front of this building as a decoration for the tourists, or walk around putting parking tickets on cars. I ask through you, Mr. Minister, that the commissioner look into this business of the transfer of personnel who return from northern Canada and who are trying to establish themselves in this so-called civilization we enjoy here.
I would also like to bring up another matter. I have heard rumours over the past year and a half that the R.C.M.P. in northern

Canada are going to be relegated to office boys. The reason I say this is that I understand the Department of Northern Affairs and National Resources are considering putting men into many of the small, isolated communities in the north to take over responsibilities from the R.C.M.P. This all sounds very well, but at the same time in many of these places if the R.C.M.P. did not have to do a dog patrol to visit trappers' cabins or people on the trap lines they would have nothing to do. Their morale, as far as I am concerned, would go down to such an extent that you might as well have them out of the north altogether. Why have men sitting around in these communities doing nothing but pound a typewriter?
I say put the dog patrols back into these isolated places. In many of these isolated communities just the presence of an R.C.M.P. officer provides stability. I can tell you of many cases, in my own riding in particular, where in the past few years I have asked native people and others in these communities, "What do you think of the job which was originally done by the R.C.M.P. in game and forestry matters?" Of course a large part of our country has no forest, but we have forestry men running around the country looking after our forests. However, the inevitable answer I received was that the R.C.M.P. did a better job prior to these encroachments by northern affairs than has ever been done since.
I had occasion last year to ask natives in Fort Good Hope, "Who was the best public servant who ever spent any time in this community? Who did things because of his real interest in the people; interest in your housing and how you made out on the trap lines and your social and economic position?" The answer was a certain R.C.M.P. who had been stationed there some years before; I forget his name now. In any event this was how they felt.
Personally I feel that this co-ordinating committee which deals with northern Canada should be told that we do not need duplication of service in the north. The government should accept that. They are broke now trying to pay for what they have to pay for. Why duplicate the service in places like Fort Good Hope, Snowdrift, Resolution, Fort Providence and all those places? Give the R.C.M.P. man something to do. Give him the responsibility of visiting the trap lines, enforcing the game laws and doing the things he was trained to do.
Any R.C.M. Policeman who comes into that district can go into Fort Smith and, in co-operation with the game and forestry branch of the department of northern affairs,
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take a course for a week or two and once a year be called back to discuss these matters with the officers of the department. To put a forestry man or a game man into an area where you have someone like the R.C.M.P. to look after that sort of thing costs a great deal of money. There is the salary of the man you send in, and his removal expenses from Ottawa. You have to construct a building for him to live in, which costs at least $25,000 to $30,000. You have to operate this establishment and put fuel oil into the tanks. You have to provide electricity. I say, why do we duplicate effort, particularly in these days when we are not that well off that we can throw money around hiring people to take over duties which would leave others with nothing to do.
I have heard a rumour that this coordinating committee is considering suggesting to the R.C.M.P. in my riding that their establishment in Fort Smith be enlarged They are going to provide Fort Smith with lots of aircraft and take all the R.C.M.P. out of Snowdrift or wherever they are in these isolated communities. Of course the R C M P will be left at places like Yellowknife and Hay river, where there is a fair population, but the rest will be put into Fort Smith.
Now, let us suppose that someone in Snowdrift shoots somebody else. Someone will say "We will send a wire to Fort Smith for the mounties". Of course weather conditions are never too good, so maybe the mountie will not get there for five days. In the meantime this man, who has probably gone berserk, has shot half the community. This is the way they want to save money; they would put them all into Fort Smith.
I say the only thing to do is to put the R.C.M.P. to work; put them to work which every young man would enjoy, such as following a dog team, visiting the trap lines, taking an interest in the community and in community housing for these native people. Young men who go north heard about those things when they joined the R.C.M.P. Half of them would never join if they thought they would go north to pound a typewriter filling out birth statistics and family allowance forms.
I hope the minister suggests to his colleague the minister of northern affairs that he consider that rather than putting more people into these areas, he put the R.C.M.P. back to work. If there is a case where a community requires an Indian agent or an assistant agent to do something for the natives, for example to fill out statistics and possibly lend a hand in community projects, then that is fine; put in an agent.
It appears that now we want to fill the country with welfare officers. I understand

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that the civil service commission cannot hire a welfare officer unless he has a Ph.D. I have never heard of anything like it. The man has never seen an Eskimo, but he has to have a Ph.D. I know mounties and public servants who have been in the north and are still there who possibly had no more than a high school education, but they do have in their hearts a desire to do something for these people.
What happens today when they send in a welfare officer? Does he go to the R.C.M.P. and say, "What did you fellows do in these cases, because I want to try something"? Oh, no; to hell with the R.C.M.P. Does he go to the Hudson's Bay man who has spent 40 years in the north? Hell, no; not the Hudson's Bay man; he is stealing from the natives, piling fur and beaver skins up to the top of the barrel in order to buy a rifle. The days of the Hudson's Bay Company exploiting the Indians has gone, and have been gone for some years, but does he go to these men with experience? Heck, no. Does he go to any one of the missionaries, Anglican or Roman Catholic, and say, "What was your experience?" No. So they go ahead and do the same old thing that the missionaries tried, that the R.C.M.P. may have tried, or that the Hudson's Bay company may have tried, and all failed. But they are going to try it again.
I am tired of this same old rigmarole. I say, let us put the R.C.M.P. back to work. If you want to do something for the man who is slugging behind a dog team in those isolated communities, then do something like the department of northern affairs has done, or is still doing, and pay the teacher an extra $1,000 a year to do work other than he would normally do as a teacher; welfare work. At one time the R.C.M.P. were allowed to have trap lines to help them out, but that was taken away from them. Nowadays no one visits the isolated trappers. I hope the minister will consider these suggestions, and that he will not let this high-level interdepartmental committee force anything down his throat that he does no want to accept.
I say again that I deplore this tendency to take away certain duties from the R.C.M.P. in isolated communities and give them to other people who, it is claimed, are more qualified. This all stems from the starvation of Eskimos at Garry Lake a few years ago. We have read reports about this. Farley Mowat in his writings has blamed the R.C.M.P. for these deaths. This same Farley Mowat was given access to files in the department of northern affairs that I am not able to see, nor is any other member of this house

able to see them. But the policy of the department of northern affairs was, if we can't lick them let's join them.
That is a fine attitude. About that time in Maclean's magazine-it was January 31 of last year-a short article appeared under a headline "Background": "The Mounties' Rule in the North has been Challenged by the Federal Department of Northern Affairs". Let me say right away that the mounties did not rule in the north, anyhow; the mounties did a job in the north. The article went on to say:
The main issue; Eskimo policy. The resignation of Doug Wilkinson, best-known white man in the Arctic-
That is a real laugh.
-he's author of the award-winning "Land of the Long Day"-from northern affairs recently brought the conflict into the open. Wilkinson's gripe: Eskimos in some cases die of starvation.
This refers to Garry Lake, where this northern service officer was stationed as a welfare officer looking after the interests of those Eskimos, or I always thought the duties of a northern service officer were to look after the welfare of the Eskimos. Of course since that time I have not got out of that department an answer that suits me. I do not know what their duties are-


The Deputy Chairman:: Order. I think I should remind the hon. gentleman that these are the estimates of the Royal Canadian Mounted Police. I know he is trying to make a point, and I think the Chair has been lenient in allowing him to make his point of comparison, but I do wish he would come back now to the consideration of the R.C.M.P. and not the department of northern affairs.


Mervyn Arthur Hardie: Thank you. You have suggested, Mr. Chairman, that I have been trying to make a point. I want to impress this upon the commissioner of the R.C.M.P. or on whoever is going to sit on this interdepartmental committee. I am going to be very brief. Up to now, anyway, I have not been able to find out what are the duties of a northern service officer. In recent years many have been elevated to area administrators. People in the north wonder now whose duty it is to look after the welfare of Eskimos.
This article went on to say:
Northern affairs hasn't enough authority or facilities to help them, and it isn't the mounties' job. Although an officer of the government, Wilkinson had to buy his own plane to visit Eskimo settlements. Meanwhile, to police the north, mounties have every facility, including planes.
Mr. Wilkinson, or whoever wrote this article, does not know anything about what

the R.C.M.P. have done in the north if he thinks that all the R.C.M.P. have to do is police the north.
Mr. Chairman, on your suggestion I am going to end my remarks, but I hope the minister will consider some of the suggestions I have made, particularly as to the duties in the future of R.C.M.P. officers in the north. If there is any prospect of many of their duties being taken away from them, I personally feel that the R.C.M.P. will begin to acquire a very low opinion of the position they hold; because they will be relegated, as I say, to a strictly office type of job. The hon. member for Athabasca wants more typewriters. Well, let us keep the typewriter men down here; we do not want them in the north.


Edmund Davie Fulton: I rise only for one purpose, and that is with regard to the statement made by the hon. member for Mackenzie River that men are brought down from the north and then put on guard duty here on parliament hill with nothing better to do than direct the traffic or be a tourist attraction.
Unfortunately the hon. member did not identify the man he had in mind, as is perhaps right, but in consequence I have not had the opportunity to find out what the circumstances are. Now what will happen is, I suppose, that it will go on record and in the press that this is what the police are doing, but I know it is not what they are doing. Men are not brought down from the north to carry out traffic and guard duty on parliament hill.
July 1 was a special occasion. We have not many reserves, and it might well be that a man who was on some other duty altogether, having come out from the north, was brought up here on July 1 to help with the special problem of controlling the traffic and the crowd on that day; but for the hon. member to suggest that it would be our policy to bring men out of the north after years of service there and put them on parliament hill is absurd, and I am sure he knows it. It may have been done on that special day, but I think it is unfortunate that an impression to the effect that he was posted to parliament hill should be created. I feel bound to point out also that the hon. member could easily have checked on whether there was really cause for complaint before splashing it all over the record here on an inaccurate basis.
I do assure him and the committee that I know the feelings of the men who have served in the north. I went up there myself and spent two weeks in the western half of the Northwest Territories just to get some idea of what goes on. 1 know that the men up there have
Supply-Justice
a special pride in their status in the force and in their northern service, and many do not want to leave. But of course the opportunities for promotion are limited if they were to stay always in "G" division, which is one of the smaller divisions of the force, so they are posted out again. When they come out they are brought out on promotion and are given a different type of duty to perform so they may become more experienced policemen and have the opportunity of going right up through the force, which they would not have if they stayed in "G" division.
I know there is a problem in this respect. Many men who show great initiative in isolated northern posts are brought down and put perhaps on highway patrol somewhere in what they call the outside. Some people ask why should a man who has shown all this resourcefulness sustain this terrible comedown? Well, the fact is that highway patrol is a large part of a policeman's duty, and a large part of the duty of a police force. If a man is to have an opportunity for promotion he has to have experience in all parts of police work.
I can give the hon. member one example of a constable who came out after two years at Ellesmere island, and who is now in Ottawa. He was brought out for the purpose of being sent to university. Many of these northern men are men of great initiative, and we try to give them opportunities in the postings that are made after they come out from the north. I can assure the committee that no one who comes out from the north is posted to parliament hill.


Frederick Johnstone (Jack) Bigg: I should like to clear up a
small misapprehension. 1 certainly did not wish to leave the impression that I think the mounted police should be relegated to a typewriter. What I was pleading for was a little more training on the typewriter. Due to the many technical jobs which a mountie is called upon to perform these days, proficiency on the typewriter is absolutely essential. I did not like the typewriter myself, and I do not think many of our boys do, but I spent many laborious hours searching for the keys with two fingers, and had I learned the touch system I would have been able to provide better reports more rapidly and thus devote more time to the more interesting aspects of police work.


[Stage Direction]
Item agreed to.
375. Construction or acquisition of buildings, works, land and equipment, $3,804,029.
Mr. Godin:: Mr. Chairman, some time ago I had occasion to discuss the new police building in the Sudbury area, of which the citizens of Sudbury and I am sure the police

Supply-Justice
officers as well are proud. There seems to be some difficulty in making arrangements for landscaping the grounds of this building. The choice of the site was proper. The building is located on the outskirts of Sudbury on a large piece of property. The building unfortunately appears rather low, but this is not too serious. However, when you drive past the place you cannot help but think it resembles a hydro substation, a warehouse, a garage for storing telephone trucks or some similar building. There are garage doors facing the street. In the interests of good public relations, and with a view to creating a good impression on those who visit the building, I think some improvement should be made in its appearance.
I am advised that some difficulty has been encountered in attempting to obtain the trees and shrubs required to beautify the building. Perhaps the minister would investigate the situation and assist in bringing about an improvement to this fine building.


Mr. Robichaud:: Mr. Chairman, could the minister inform the committee whether the department intends to build adequate quarters for the R.C.M.P. detachment in the town of Shippegan in Gloucester county? This is an important detachment covering a large district, including the islands of Shippegan and Miscou. I believe they deserve better quarters.


Edmund Davie Fulton: I have to advise the hon.
member that there is nothing in this year's estimates for Shippegan.


Hédard-J. Robichaud: I urge the minister to have his department take this matter into consideration. I am familiar with the situation there. The accommodation provided is inadequate, and these men deserve better accommodation.


Edmund Davie Fulton: I thank the hon. member for bringing this to our attention. It will be considered. We are faced with a big problem in building quarters. There are many centres where accommodation has been inadequate for some time. We have had to establish a system of priority, but we will have a look at Shippegan.


[Stage Direction]
Item agreed to.
382. To provide, notwithstanding section 45 or other pertinent provisions of the Royal Canadian Mounted Police Act, being chapter 241 revised statutes of Canada, 1952, that L. H. Nicholson, former commissioner of the Royal Canadian Mounted Police, shall be paid, as of the day he ceased to be commissioner, a pension for life of one fiftieth of his pay at the time of his retirement for each completed year of service, $1.
Gabriel Roberge: Mr. Chairman, I merely want to say that we on this side of the house are

glad the government accepted the suggestion made last year by my colleague the hon. member for Cartier.


[Stage Direction]
Item agreed to.
Edmund Davie Fulton: I thank the committee for its consideration.
DEPARTMENT OF NATIONAL REVENUE Customs and excise divisions-
258. General administration, $4,807,852.


Osias.-J. Godin: Mr. Chairman, I trust the minister has an opening statement to make. Does he wish to segregate the discussion of the C.B.C. and the Department of National Revenue, or will both be discussable under this first item?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Chairman, the C.B.C. will be entirely separate from the Department of National Revenue. I propose to proceed, subject to the wish of the committee, with the customs and excise divisions, then with the taxation division of the Department of National Revenue, and following that with the C.B.C. and the board of broadcast governors.
I appreciate the fact that there may be some overlapping as between the C.B.C. and the board, and I do not think we should be too strict in attempting to hold the discussion to one element or the other. Of course if specific questions are asked about either the C.B.C. or the board I would ask that they be directed to me when the respective officers are before us.
I do not propose to make a lengthy statement on this question, but with respect to the customs and excise divisions perhaps I should say a word or two, because after all this is one branch of government without which it would be very difficult to carry on the government of Canada. As a matter of courtesy I perhaps should refer to the committee which met last year and interviewed the officers of the Department of National Revenue and particularly of the customs and excise division. They made three recommendations: one dealing with labelling of imported goods; one dealing with the tariff status of engineering drawings; and one dealing with imported articles exempt from sales and excise tax. Without boring or taking up the time of the committee I think I can say in brief that the department has tried to comply, and I believe has complied with the recommendations of the committee in so far as it was possible to do so. If there are any specific questions on that matter I should be glad to deal with them later on when we are dealing with the figures of the department.

I might point out in passing, Mr. Chairman, that the primary function of this division of the department, which is an administrative one, is the collecting of revenue. The total revenue collected by this division in the past fiscal year amounted to $2,152,553,299, which is an increase of 12.4 per cent over the revenue collected in the preceding year.
Our responsibility, of course, also extends to the administration of various acts and the inspection of vehicles coming across the border, and so on. There has been a substantial increase in the business in that direction. Vehicles reporting through customs last year totalled approximately 9 million, which was 190,000 more than the previous year.
This is a matter which I should like to draw to the attention of the committee with humility but also with a little bit of pride, I think. Despite all this increase in activity we have managed to reduce our total estimates by $608,000 as compared with last year. When you consider, that salaries alone amount to over 91 per cent of our total estimates I think you will agree that this is indicative of a very healthy appreciation on the part of the administration of this division of the virtues of efficiency and economy. For this I take no credit to myself at all except for responsibility for the division, but I do want to pay a well-deserved tribute to the officers of the division who have been able to achieve this economy and at the same time do more work than has been done heretofore.
It is within this area of estimated expenditure for salaries that we have been able to make a substantial reduction. We have reduced the number of establishments in the department by 99 and I might say that the dilution has not resulted in people being fired from the department. We have transferred them from one branch to another. It has been accomplished by bringing in more efficient methods, by the introduction to some extent of machines, computing devices and so on. In any event, we have achieved that. When we come to taxation I can point out that the same comparable result has been achieved there, and I think this is the one department of government which two years in succession has reported a decrease in expenditures and an increase in the work load which has been I believe satisfactorily carried out by the department.
Various changes have been made in the administrative branch during the year. I might refer to one or two of them in passing. Beginning with those which we have made to try to make it more convenient for the public as well as for efficiency for ourselves has been the abolition during the year of the customs form E-60, which Canadians, as many
Supply-National Revenue of you will recall, had to complete in respect of their motor vehicles when leaving Canada. We have made a change there and, judging from the reaction of the public, this change has been very well received.
Another change of notable effectiveness was the revising of the traveler's vehicle permit which has had the effect of considerably speeding up the clearance through customs of foreign travelers entering our country.
Then there is the new procedure with respect to the reporting of aircraft used for health or pleasure purposes and which are not carrying goods. Under this new system Canadians can proceed directly to a foreign country without first reporting to customs, and on returning to Canada complete at one time the outward and the inward reports.
I could draw the attention of the committee to various matters such as these which the division has brought into effect during the last year and which I think have resulted in not only increased efficiency but also better service in so far as the public is concerned. However, I do not intend to take up the time of the committee in dealing further with these general matters, but I shall be very glad to attempt to answer any specific questions and also reply to any comments which may be made during the course of this discussion.


Osias.-J. Godin: I understand that two separate discussions will take place, one on the Canadian Broadcasting Corporation and the other on the Department of National Revenue?


George Clyde Nowlan: That is right.


Osias.-J. Godin: And that the subheadings of the Department of National Revenue will be discussed on item 1. We all appreciate the fact that we are now discussing the department which collects revenue for the government of Canada. On other occasions we have been dealing with departments which spend the money which the Minister of National Revenue collects.
The minister mentioned that there has been a small decrease in the cost of the operations and in the estimates of this department. We have been told that certain devices have been installed in the department and we also realize that possibly some other changes may be made. The minister has indicated to the committee that some changes have been made by shifting operations from one section of the country to another. This shifting of operations may create not necessarily grave embarrassment but certain difficulties. I should like to ask the minister some questions with respect to the northern Ontario office which is located in the new federal building at Sudbury. Apparently in the last year or so directions have gone out that what are known as

Supply-National Revenue short forms for taxation purposes should be sent directly to Ottawa and not go through the Sudbury office as was the custom in years gone by.


George Clyde Nowlan: May I interrupt the hon. member. I think he is referring to the income tax office and not the customs office. I would prefer to have that matter raised when we are dealing with taxation.


Osias.-J. Godin: I thought we were dealing with the item.


George Clyde Nowlan: We can deal with the item if the hon. member wishes, but as far as answering specific questions is concerned, I would not want to take the responsibility for answering questions with respect to taxation without the taxing officers present.


Osias.-J. Godin: My remarks are of a general nature and have to do with the remarks the minister made. We find that directions have been given to the effect that the short forms should be sent directly to Ottawa. Can the minister tell me whether this means that there will be certain changes made in the Sudbury office and that possibly the work that is now done in that office will be done by people or machinery in the Ottawa office? Will the staff in the Sudbury office, which is the main office for northern Ontario, be reduced? As I understand it, the forms for as far away as Sault Ste. Marie were handled in the Sudbury office. People have been made aware of the fact that a request has been made for the short forms to be sent directly to Ottawa. Does this mean that there will be a curtailment of staff in the Sudbury area and an appreciable increase of staff in the Ottawa office? Were the facilities in Sudbury not capable of taking care of the northern Ontario forms?


George Clyde Nowlan: I will deal with that, Mr. Chairman, when we come to item 262.


Mr. McDonald (Hamilton South):: At the
outset of my remarks I should like to congratulate the Minister of National Revenue on the wonderful job he has done in his department. I remember that when the estimates of his department were before the committee on estimates of the House of Commons we were very impressed with the way in which he ran his department. I should also like to take this opportunity to congratulate the hon. member for Edmonton West on his appointment as parliamentary secretary to the Minister of National Revenue.
I come from a riding which is completely industrial and urban. It is a riding that depends upon imports and exports, on manufacturing and on the protection of manufacturing in this country. I have heard it said


from time to time that our opponents on the other side of the house are the great free traders. I found it very interesting to sit in the house and hear the hon. member for Essex East talk about protection for the automotive industry. It did my heart good to find that the great Liberal free traders have finally come to the realization that, with an economy such as we have today, with a country of 17 million people compared with 180 million people in the United States and so many millions in Europe awakening from the second world war, the impact of imported manufactured products is being felt by Canadian manufacturers.
I also realize that the import and export position of the country is not a matter that comes primarily within the jurisdiction of the Minister of National Revenue although I know that in the past several months the mayors and reeves of the country, the labour unions, the automotive industry and the chamber of commerce have been knocking on the door of the genial minister. I might also point out that the problem of imports into our country today is basically caused by exports into our country from the nation to the south of us. We hear a great deal about the low cost labour content areas of the world such as Japan and certain parts of Europe but my prime consideration today is the United States of America. I am not speaking as an anti-American because I have many good friends there. I am talking as a proCanadian vitally interested in my community and in looking after the interests of the workers in the riding of Hamilton South.
I should like to talk about the cotton textile industry purely as an example. Some people may say that this is a bad industry to take as an example because of its very desperate position in the country today but from reading the newspapers and the briefs of the mayors and reeves, of the textile industry and of the automotive industry apparently there are many interests that are looking for action on the part of the government to help them in their plight. I know that the industrialists and the labour unions have a very definite responsibility in this connection and I know that they cannot make up their minds what to do. However, purely by way of example, I should like to talk about the cotton industry in Canada today as it is affected by the Customs Tariff.
It is my understanding that before 1953 the cotton industry experienced relatively good times in Canada because it had its own markets and the awakening of Europe had not taken place. The United States were recovering from the effects of the war and were looking after their own domestic market. In

1956, for example, the cotton manufacturing industry in Canada had some 22,500 employees. 1 note with some distress, and again I am not trying to be political about the matter, that at the end of 1959 there were only 16,000 employees in that industry, a drop of 6,000.
It seems to me that with regard to any problem there must be symptoms of the disease, the disease itself and there must be solutions. I have heard it said by many members as well as some members of the other place that the textile industry did not look after its own interests, that it did not increase production and buy new machinery. This may be all very well but the remarks I intend to make today have to do with a matter under the direct responsibility of the Minister of National Revenue.
I understand that the Minister of Trade and Commerce is concerned with export markets and achieving a good balance of trade but in directing these remarks to the Minister of National Revenue now I have the specific point in mind that governments have a definite responsibility with respect to secondary manufacturing in Canada. I am not one of those who believe in complete government interference because I am a Conservative but I believe that where government interference is needed it should be exerted with all force.
Section 6A of the Customs Tariff was introduced by the former government in 1955 but they did not take any action under it. The section provided that where subsidized goods are imported into Canada directly or indirectly from a foreign country the Minister of National Revenue may take action when Canadian industries are being hurt. Section 6A of the Customs Tariff reads in part as follows:
6A. (1) Where in the opinion of the governor in council subsidized goods of a class or kind made or produced in Canada have been or may be directly or indirectly imported into Canada, he may declare such goods to be subject to an additional duty on their importation equal to the amount of the subsidy on those goods as determined by him.
As far as the cotton industry in concerned, in 1956 the United States congress passed an act which provided, with respect to manufactured cotton goods exported from the United States, no matter to which country they went, for the payment of a subsidy on such exports equivalent in some instances to five cents a pound and in some instances as high as 17 cents a pound, representing about seven or eight cents on the dollar. Ironically this legislation came into effect in the spring of 1956 when there were 22,500 people employed in the Canadian cotton industry. In
Supply-National Revenue the past the former government used to talk about its vigorous policy with respect to the United States, but I cannot seem to recall Canadian representatives going to the United States at that time and telling these people that they could not do this to Canada, that we on the North American continent are in the same economic climate, that we have the same wage scales and therefore they could not apply a subsidy on exports from their country into Canada because it would hurt the Canadian cotton industry and at the same time other such subsidies would hurt other industries. I do not recall them ever doing this.
The position is that on cotton goods exported from the United States to all countries the United States have paid subsidies amounting to some $54 million since 1956 and on exports to Canada they have paid subsidies amounting to over $13 million. I know the minister may say to me that there must be proof that the United States are violating the section of the Customs Tariff, that they are not playing the game with us, that they are not going along with the general agreement of tariffs and trade under which the countries concerned are supposed to play fair with each other.
Again as a pro-Canadian and not an antiAmerican I say that businessmen in the cotton textile industries of the United States have used the section in the Customs Tariff to further their own ends with the result that 6,000 people have been put out of work, some 400 to 500 in my own district. I have a letter here written by a United States manufacturer of cotton goods to a Canadian importer in Toronto, Ontario. The letter points out how advantage can be taken of a loophole in section 6A of the Customs Tariff. The first paragraph of the letter indicates the price of the cotton material in question and the second paragraph reads as follows:
In addition, we will allow, to an associate or affiliate of yours in the United States, a rebate of $.07 per net pound. We will show on the customs invoice that we are allowing such a rebate to the firm you designate-
In the broad sense the Minister of National Revenue has no responsibility to take action by the imposition of a dumping duty because there is no indication on the invoice that this is being done. However, I also understand that investigators from the Department of National Revenue can go to the United States, call upon manufacturers and say that in the interests of good relationships they would like to see how they are running their businesses. This letter states that an amount of seven cents per pound will be paid. A manufacturer in my own riding tried this. He bought so many thousand yards of cotton goods in the United States

Supply-National Revenue and there was deposited in a British bank an amount equal to $2,200, which did not appear on the customs invoice.
The cotton industry is an example of one of these producers who is having a tough enough time competing with the Japanese in the world market without some smart businessmen in the United States taking advantage of the situation. Let us not fool anyone. Imports of United States cotton manufactured goods, with the same labour content as our cotton goods, have come into this country in quite substantial amounts during the last three years. It seems to me that these imports are coming into the country because these people are taking advantage of this United States legislation to hurt Canadian manufacturers. If there were free competition both ways across the border I would be all for letting everyone find his own level. However, when a foreign government enacts legislation subsidizing the exports of a specific industry, the products of which are manufactured in Canada, then I think the Minister of National Revenue and his learned officials should look into all the ramifications of the situation.
I believe if they did that they would draw the conclusion that two things would have to be done. Either the officials of the Department of National Revenue or the Department of Finance would have to go down to the United States and request them to discontinue paying a subsidy on these goods coming into Canada or we must take the bull by the horns and invoke this section 6A of the tariff act by order in council. Then the United States manufacturers who are shipping millions of dollars worth of cotton goods into Canada by depositing moneys outside the country for the benefit of the Canadian importers-not the manufacturers but the fellows sitting along St. Lawrence street in Montreal-would be prevented from doing so. In the last two or three years many people in my riding have been put out of work as a result of this practice. It is the responsibility of this government, therefore, to have a close look at section 6A of the Customs Tariff or alternatively to ask the United States to quit paying the subsidy on goods coming into Canada.
As a result of conversations I have had with people in the United States I do not believe it would be possible for the United States to discontinue paying the subsidy because their legislation says they must pay an export subsidy on cotton goods which go out of the United States. The only alternative this government has then is for the Department of National Revenue to invoke section 6A of the Customs Tariff. This would be of benefit to the Canadian textile manufacturers. I have talked to some 50 or 60 people in the

past few months and they are convinced that this would help a great deal.
Before I resume my seat, I should like to state again that I am sure each one of us has problems in our constituency and unless we get up and put them forward the minister will not find out about them. I am sure he is aware of this problem, however. I feel so strongly about it that I thought today I might use part of my time by speaking about this industry. However, this is not the only industry in which we have this situation. There is the woodworking industry and other secondary industries in my riding that are feeling the result of the price squeeze from competition from products from Europe and Japan which have this low labour content. I have been told that within the last few months the Steel Company of Canada has not sold a keg of nails west of Winnipeg. This worries me. I suppose the Minister of National Revenue has enough worries at the present time, but I do ask him to take a look at this special problem to which I have referred. I hope he will take this under advisement and give adequate consideration to it.
(Translation):


Mr. Graffiey:: Mr. Chairman, being located along the Canada-United States boundary, the constituency of Brome-Missisquoi has a number of offices coming under the responsibility of the Minister of National Revenue (Mr. Nowlan). I should therefore like to discuss briefly the estimates of his department.
First of all, may I take this opportunity to commend the officials for the way the offices are operated and kept up. The people of Brome-Missisquoi have noted a number of improvements in those offices.
On behalf of the people of the Abercorn district, I wish to thank the minister and the officials of his department for providing that district with a new building, an exceptionally fine structure.
Mr. Chairman, I realize that most public buildings in Phillipsburg, come under the Department of Public Works. However I should like to refer very briefly to the fact that the department is planning to build a new warehouse in Phillipsburg and that, for various reasons unknown to me, there have been delays in the planning stage. I hope the plans will soon be ready, so that construction of this building in Phillipsburg may be completed as soon as possible.
(Text):
I should like to state briefly, Mr. Chairman, that Brome-Missisquoi is situated along the

border of the United States, mostly along the border of Vermont. I have had occasion to visit all the customs and immigration offices in my district over the past year. I should like to mention the fact that the officers at these border points are known to have treated the public, and are still treating the public, in a most courteous manner. I have said this before when these estimates were before the estimates committee, but I should like to repeat it. I feel that the officers of the departments of customs and immigration, perhaps more than any other officers, are the good will ambassadors of the people of Canada. I am very proud of the men who serve the department in my particular district. Every day they are dealing with visitors from the United States, ft is very important that this high degree of courtesy exhibited by these officers be underlined. I should like to congratulate the minister for encouraging this situation, and I know it will be emphasized in the future.
In talking with the various officers in my riding whom I visited, the question of pay often came up. I am sure the civil service authorities and the officers in the minister's department will give these demands most serious consideration.
I am going to deal for a moment, very briefly, with a general subject which has been touched upon already by the speaker who preceded me, and that is the question of dumping. I do not want to go into it in detail today, but the hon. member who preceded me said it not only affected the textile industry in his riding but affected many other products. The same is true of my riding, which is an eastern Canadian riding. The textile industry has in the past been seriously affected by dumping. The hon. member for Bonavista-Twillingate teased me in this connection by saying that the question of dumping was a tariff question. Such is not the case. The question of dumping today, and I think this should be underlined and brought to the attention of the public, does not in any way relate to a classical discussion of high or low tariffs. It is an entirely separate question. Those who suggest we should discuss the problem and confuse it with tariff questions are doing a disservice to the country.
The same could be true of a quota system. These questions are perhaps related but they should be discussed separately from the dumping problem per se. I should like to congratulate the minister upon the fact that special officers were appointed and duly trained in the past in order to enforce dumping procedures. I know that the department, certainly at the top echelon, is most seriously
Supply-National Revenue aware of the problem of dumping goods produced in the United States on the Canadian market. I should like to feel certain that these procedures are being vigorously and rigorously enforced all down the line.
In a day and age where we must recognize the fact that trade must expand, with the interdependence of nations in an expanding world economy, we must underline the benefits of expanding many aspects of free trade. Yet the dumping question is a serious one. It is brought to my attention almost every week by various people and companies in my constituency. I know the minister has taken vigorous steps in his department to train officers at the local level to enforce our dumping procedures. Like the previous speaker, I would say in my area not only is the textile industry affected but other industries too.
So, in summing up I should like to thank the minister for the great improvements which are being made in my riding in the accommodations sections of buildings. I would also like to congratulate him for the courteous treatment customs officers are affording to the public, be they Canadians or visitors. In any event they are good will ambassadors for our people and for our country. I would also underline the fact that dumping procedures should be rigorously enforced right down the line to the local level and perhaps the minister will report whether an advance is being made in this direction.


Douglas Mason Fisher: There are a couple of minor points I want to ask about and the initial one has to do with the role that his department plays as a sort of censor of obscene literature. The minister will prehaps remember that I was quite frightened and still am by the legislation introduced last year by the Minister of Justice which amended the Criminal Code. As I contended at that time, this legislation put into the hands of magistrates and provincial attorneys general power which would seem to be power to act as censors for the whole country. We have recently had a case where a Montreal judge ruled against the book "Lady Chat-terley's Lover" by D. H. Lawrence, and I have not been able to find out whether any instructions have gone forward through the provincial attorney general's office in Quebec across the country as a result of that decision.
I have seen it stated in a number of press reports now that "Lady Chatterley's Lover" has been banned from sale in Canada, and I should like to know whether any instructions have gone forward to the minister's officials to bar the entry of that publication

Supply-National Revenue into Canada. I know that most of the copies available for sale in Canada must have come through the customs office.
I should like to know what effect the new legislation has had upon the approach of the minister's officials in examining literature coming into this country. I should like to know how many books the minister himself in the past year has ruled to be unfit after examination, and whether he is in a position to tell me, perhaps not in the committee but privately as a result of a question placed on the order paper, just what these particular books are.
I should also like a statement from him as to how he is facing up to a problem mentioned before with regard to obscene publications and obscenity in the form of records, tapes and that sort of thing.
I would especially like an assurance from the minister that his officials are being as liberal as he gave us to believe in the past they would be in their interpretations. I know from my own examination of material in New York and Paris, there are certain kinds of literature that we do not need in this country. At the same time one cannot help but be a little frightened by the censors. I am especially frightened by the ruling of the Montreal magistrate, because if we have any Canadian literary men of merit it seems to me that the two representatives who have spoken in favour of this particular book were such. Yet their particular views and advice was ignored by the magistrate, and he said in effect that what they said about it was merely their own opinions. What else do you have in censorship matters but opinions and judgments? Quite frankly I tell the minister that I have a little more faith in some of the customs officials than I have in some of the magistrates in this country.
The other matter is more specific and relates to an answer I got to a question concerning ports and revenue stations which are not on or immediately adjacent to the international boundary or are on the Atlantic or Pacific coasts, and the costs of maintaining these particular ports and their revenues. My question was that I wanted an indication of the ports with revenue of less than $60,000 a year and I have been given a list which gives me 13 of these ports. I have just checked through them and I discover there is one in Southampton, Ontario, for which the total operation costs for 1959 and 1960 are set out, amounting to $4,812. By checking the annual report I see that the year before the total revenue for this particular port was in the neighbourhood of $7,800. I checked Drumheller in Alberta and I found

that the expenses are about $4,400 and the total revenue last year was around $8,000. For Southampton, Ontario the expenditures are about $5,000 and the total revenue about $18,000.
I am interested in this because I hear the argument that we have a number of ports and outports which are completely unnecessary in terms of the volume of business they do. This has been triggered by the changing situation which has taken place at the Fort William customs office in the past year or so, to which I made no objection; but it seems to me the minister or his deputy minister might well look at these ports which have such low revenue and this rather constant expense. It certainly seems to me we should have more consolidation in this field.
I admit I cannot carry this argument too far from the statistics that have been filed, but if you have a place which costs $5,000 and produces an income of just over $7,000 a year, then I begin to wonder whether the service could not be transferred to another place.
I would not like to sit down without making reference to the few occasions upon which I have had to deal with the department through the deputy minister. I have heard him referred to as the oldest of the old Ottawa warhorses, and of course in the nicest way possible so far as the use of that term is concerned. I have always found him very pleasant to deal with.
The last question I want to ask the minister again requires detail which he may have. I should like to know how many special cases under section 38 of the Customs Act have been determined in the last year by the minister. I should also like to know the nature of the goods involved and the country of their origin.
I hope to have some more remarks tc make later on when we are dealing with the taxation division and also with regard to the Canadian Broadcasting Corporation.
A number of hon. members mentioned that the customs people at the border points have always been fair, and I should like to say that that has also been my experience.
I should also like to ask the minister for some petty detail. We are trying to have an extension of our ski facilities at the lake-head and we would like an assurance that next winter, when we will have a plane bringing up 3,000 skiers from Minneapolis on the week ends, that the unofficial arrangement which was made last winter as a result of our request will continue and that there will be no worries on that score.


William Hector McMillan: I should like to compliment the minister on what he has described as the economy made in his department. I see that

expenditure is down this year, as it was last year, and I can only hope that this process continues through other departments of government, because if it does the hon. gentleman will have less to collect in his own department.
The minister referred to the movement of traffic across the international boundary, and I can say that at Niagara Falls and Fort Erie, places with which I am familiar, the movement of traffic over those crossings has been facilitated by action taken by the department. I should like to pay tribute to the officers at the bridges, the customs officers as well as those in the Department of Citizenship and Immigration.
I heard three hon. members here talking about dumping. I should like to ask the minister how many cases members of his staff have investigated, how many investigations have been made in the United States and what action has been taken as far as the customs tariff in concerned.
One question that I wish to raise has to do with the Canadian duty-free shops, and I think this matter could be discussed now, inasmuch as these shops, or the goods sold by them would be duty free and free of sales tax. I heard some time ago, and I have seen it in the press on several occasions, that one such shop was to be opened in the neighbourhood of the Canadian end of the Ivy Lea bridge, one or two in British Columbia and, one I think, at Niagara Falls. I do not know whether there are to be any others or not. These duty-free shops will probably sell luxury goods which would be admitted into Canada free of duty, free of Canadian sales tax and free of excise tax. They would include such articles as women's purses, perfumes, handbags and other luxury items. I know that the retail merchants association came here to make representations to the Prime Minister and, I think, to other members of the cabinet against the opening of the shops, and I think that in cases where local stores are selling similar articles the establishment of these shops might well interfere with their sales. I should like to hear from the minister on this point.
I can remember being down south, and about the only thing sold in these stores in Jamaica seemed to be large bottles of Scotch whisky, and rum. However, I think the merchants should be given every consideration, and I know that the merchants in Niagara Falls are greatly concerned over this matter, because citizens of the United States coming into Canada who are outside that country for 48 hours can take back $200 worth of goods with them free of duty. They can do that once a month, and if they buy certain of these luxury articles in duty-free
Supply-National Revenue shops that is likely to cut down the purchases they might otherwise make elsewhere in legitimate stores. I should like to hear from the minister on that point.
(Translation):


Mr. Pigeon:: Mr. Chairman, while we are on these estimates, may I say a few words on behalf of the cigar tobacco producers in the area of Joliette-L'Assomption-Montcalm, so that the Minister of National Revenue (Mr. Nowlan) and his departmental officials might consider whether customs duties on cigar tobacco leaf might not be raised in this way: Present rate Suggested Rate
Unstemmed	
12J cents	15 centsStemmed	
15 cents	22J cents
Mr. Chairman, on June 30, 1956 the government of the day lowered the tariff on unmanufactured cigar tobacco, stemmed and unstemmed, as I just said. I believe the attitude taken in the past has been detrimental to growers of cigar tobacco.
I therefore ask the minister to be so kind as to consider the possibility of an upward adjustment of those tariffs, so that they will not be harmful to cigar tobacco growers in the district of Joliette-L'Assomption-Montcalm.
May I say, incidentally, that in my area almost 1,400 farmers are interested in that crop, which represents about $lj million. So I again ask the minister to adjust those tariffs.
May I add that I entirely agree with the hon. member for Brome-Missisquoi (Mr. Grafftey) and with a previous speaker, who suggested that the textile industry, which is of interest to the province of Quebec, to the maritimes and to part of Ontario, be better protected by the elimination of dumping practices if possible.
It has been a pleasure, Mr. Chairman, to draw the minister's attention to those two points.
(Text):


Osias.-J. Godin: Since the minister wishes that we should discuss customs duty provisions at this time I should like to direct his attention to one or two matters and ask questions with regard to them. The first is the port of entry at Sault Ste. Marie, which is the closest available to the area which I represent. For many years it has been a port of entry through which thousands of American tourists enter Canada to the great benefit, especially, of northern Ontario. I have had occasion to arrive at this port on many occasions and I must say it is not exactly one of the best in terms of its construction and the

Supply-National Revenue facilities offered. For instance, there is no provision made for protecting the American travellers when they have to open their luggage, and so on: and when the minister thinks of the rainy weather we have been experiencing he will realize what this lack of facilities means. The fences are rusty and broken to a large extent. I must, however, be honest in admitting that there may be a reason why the port of entry is not in a better condition than it is, namely that a new bridge may soon be constructed in the vicinity. This will bring about increased traffic. I trust that the minister will ensure that the proper customs and excise facilities are available when construction of the bridge is undertaken to avoid inconvenience and delay.
The second matter with which I wish to deal is one touched upon by three hon. members of the government. In 1958 the minister introduced certain amendments to the Customs Act and in his opening statement as reported at page 4468 of Hansard of September 2 that year said:
The present law is adequate to deal with most cases of dumping or distress selling, but does not provide a safeguard against sales at prices below cost-plus.
It was the minister's opinion at that time that the law was adequate to deal with most cases of dumping but he wanted to take care of cost-plus sales. I should like the minister to tell us something about the effect of the amendments on the Canadian manufacturing industry and give us figures relating to imports under the new amendment.


Ernest James Broome: Mr. Chairman, I wish to deal with two or three points but before doing so I wish to compliment the minister and the department. This is one of the most efficient and competent departments of government with which I have had the pleasure to deal. It has one of the best deputy ministers who is to be congratulated in another sphere altogether.


George Clyde Nowlan: What about the poor minister?


Ernest James Broome: All in all there is little one can say in criticism of the department. What I intend to say is not by way of criticism at all. I merely wish to remind the department of a few matters they have under consideration and ask the minister if he would comment.
The first problem I wish to raise is one which I believe was raised in the estimates committee two years ago. It concerns the importation of machinery sold by an importer to a tax exempt user. The specific point I wish to place before the department is this. The original purchaser of machinery for use in logging or a forestry operation, let us say,

is able to have his machinery enter the country exempt of tax. After a certain use of the equipment he may sell it to someone in the construction industry for road building purposes and it becomes taxable. The department has always gone back to the original importer of the equipment for the amount of sales tax which is due on the reduced value of the machinery. The original importer has no control whatever over this equipment. I believe a suggestion was made that the actual sales tax exemption certificate should be in the form of a contract between the department and the original purchaser and any succeeding purchaser and the liability for the payment of any sales tax should rest on the purchaser who purchased the machine for use in a taxable industry. It is not fair at all in my opinion that the original importer of this equipment could be liable for actions over which he has no control. I understand that from the administrative point of view it is much easier to handle the problem this way but it is not right and I believe it should be changed.
The second item I wish to raise does not really come within the purview of the department but should come within its sphere. It has to do with the sale of United States war surplus equipment on which an arbitrary excise and customs figure of 16 or 17 per cent has been set to offset the fact that the equipment came into the country duty free when used on a United States base. Any ordinary secondhand machinery coming into the country will be assessed by the department at what they consider to be its proper value. Sales tax, if applicable, and duty will be levied on the assessed value. You may buy a machine in the United States for $500 but if the price of that machine in a similar condition here happens to be about $2,000 you will be taxed accordingly. These war surplus sales are disturbing to the economy. The United States economy is greater than ours and the people of the United States will not allow these machines to re-enter their country. An agreement was made some time ago between the governments of Canada and the United States. This equipment is sold by war assets. You may have the most ridiculous sales figure. The 16 and 17 per cent is paid on the actual sales figure and not on the assessed value as the department might assess it. That agreement should be changed. I would like to see us cut out the dumping of war surplus material but if this is not possible the taxation on such equipment should be on the same basis as on any other equipment sold to users in this country.

The third problem with which I wish to deal relates to the importation by manufacturers in Canada of United States components and the application of sales tax to the finished product either as assembled or made up from Canadian manufactured components or those plus United States components to make up a certain article. The deputy minister will be familiar with one article concerning which I have been in touch with him. The application of the sales tax is on the finished price, the factory cost as far as the Canadian manufacturer is concerned.
The importer importing an identical article completely made up in a foreign country will pay sales tax on the value at the border. He does not pay sales tax on his profit as the Canadian manufacturer has to do. He does not pay sales tax on transportation and other incidental costs incurred by the Canadian manufacturer. The importer does not pay sales tax on those costs but only as at the border point.
In effect the application of sales tax in this instance is less on a fully manufactured imported article than it is on a Canadian manufactured article which comprises imported parts and parts of Canadian manufacture. The Canadian manufacturer, as far as that part of his cost involving taxation is concerned, is at a price disadvantage as compared to a straight importer of a similar article.
They are not major points; they are not going to put anybody out of business but each of the three points I have brought forward, I think, is in its own way relatively important and deserves consideration from the department as to how it may reasonably be able to correct what is not exactly discrimination but different treatment of one person as opposed to another.


Herbert Wilfred Herridge: I shall be very brief in my remarks on the minister's estimates but I do first of all wish to express my appreciation of the courtesies extended to me by the minister and the promptness with which he and officials have dealt with any-and there have been a few-complaints that I have had to bring to their attention. However, on occasion the minister has been rather snappy on the orders of the day when answering my questions.
I also wish to express the same sentiments with respect to the deputy minister who is the most popular man I have ever known whose chief occupation in life is taking money away from people. At the same time, I wish to extend compliments to the other senior officials.
Supply-National Revenue
While I am in this mood I might say that I was talking quite recently to a long term employee of the minister's department connected with customs who retired a few years ago and who wished me to extend his kind regards and best wishes to the senior officials of the department. I refer to Mr. Warren Crowe, who has retired under some of the most happy circumstances that I had ever known. He owns a gold mine and spends part of the year mining gold and the rest of the time hunting and fishing and visiting the pioneers of the district. I think this is a very fine way to spend one's retirement.
So far as the local staffs at Nelway and Waneta and Patterson are concerned, I have not had a single complaint. Everyone in the district speaks of the general satisfaction with the way in which the staff services these various ports. However, I do want to bring to the minister's attention the fact that they work long hours to do that. I have had to tell this story before. I have been asked by people in the district to remind the minister again of the local circumstances. People generally are looking forward to the time when the service will be a 24-hour service. I fully appreciate the fact that there is some difficulty in making arrangements with the opposite numbers on the United States side of the line, but people in our district think 24-hour service is justified in view of the income collected at two of the ports, particularly in relation to the income collected at some other ports which have 24-hour service along the international boundary of British Columbia. I should appreciate the minister's informing the house just what the situation is at this time with respect to the possibilities of getting 24-hour service at Nelway and Patterson in fairness to the public and staff.
The other point I wish to bring to his attention is the question of water traffic on the Columbia which is increasing every year. Some years ago arrangements were made for United States citizens using small craft coming up the Columbia from as far south as Portland and going as far north as Revel-stoke to report at Trail. This was a very wise move because the small boats had to take a chance with some very swift water and in one case some whirlpools, and the occupants then travel through the woods for half a mile to try to find the customs office at Waneta. I have talked to a number of people on this question and I suggest that we are getting more and more people and strangers coming in from as far south as Portland. Many of the Spokane and Seattle people know the river quite well, but other people do not. I suggest the department would be

Supply-National Revenue well advised to have a prominent sign erected at the appropriate place near the international boundary, on the side of the river which the craft use in coming up from the United States, pointing out to them that Trail is the port of call and is so many miles from the border. We have had some cases of people not knowing exactly how far they need to go, and thus attempting to land at Waneta.
These are the only two matters I have to bring to the attention of the minister at this time.


John Russell Taylor: Mr. Chairman, I wish to say just a few words about these estimates, the minister and his most co-operative department. Today we were honoured with a few remarks by the minister, remarks which were short but certainly to the point. When one visits his office one is accorded the same type of businesslike treatment which is so much appreciated by hon. members. The minister possesses a great deal of business acumen which is so necessary in operating a huge department such as he must administer, and particularly when he and his officials must work so closely with other business houses throughout the country. He also possesses the great faculty of being able to get things done. One might say he is an expediter and a trouble shooter.
I am sure that this businesslike approach has removed many of the headaches which have plagued and which possibly will continue to plague departments such as his. Administrators such as the minister can bring about great savings to the country.
I always like to hear the minister speak in the house. As he towers above the desk so he must tower over the workload which is daily before his office. I think it can be fairly said that the minister has the ability to bring about team effort in his department. I know it has been a pleasure for me to do constituency work with his deputy minister and with other officials in his department.
May I say in passing in regard to Mr. Sim that he is on the executive of one of the local community clubs, and this in itself is a good thing because not only can he do a good job for the community but he can be a good will ambassador for his department. May I suggest to the minister that wherever possible he should encourage his division heads and others in his department to belong to local community clubs in order the better to get to know the problems of the particular area.
Maybe at this point I could make one constructive suggestion with respect to the customs end of the minister's department. I have been aware for some time of what has been

done in the United States immigration and customs service with respect to opening offices in Canada. For example, when one goes from Montreal to New York city one clears customs at the United States customs and immigration office in Montreal so that when one leaves the plane in New York city there is no further formality at that end at all. Therefore travellers are able to avoid a great deal of unnecessary delay at the other end. If that system could be extended to Seattle, for instance, for the benefit of passengers northbound to Canada, passengers could then descend from their planes at Vancouver having already cleared customs and immigration and there would be a great saving in time.
I also wish to compliment the minister upon the efficiency with which the customs officers go about their duties at the various border points across the country. People entering Canada from the United States meet these men first and they can certainly help to create a fair climate and do a great deal in the way of building up good will for Canada. There is no sense in spending a great deal of money in the United States to encourage more tourists to come to Canada if they are met at the border with a wall of indifference. That is not the case at the present time and, in all fairness, has not been for a long time. I wish to compliment the minister and his staff in that regard.
I hope that in due course the minister will be able to make a trip to Vancouver and call at the various border points in the west. We have not had a visit by him for some time but perhaps in due course he will make such a visit in order to see the western border points. As I have to go to a committee, I should like to crave the indulgence of hon. members in order to touch upon the C.B.C. briefly.


The Chairman:: I suggest it would be preferable if the hon. member would wait until the item for the C.B.C. is called. I know that many other hon. members would like to discuss the item and I think it would mean a more orderly discussion.


Mr, Taylor:: That is quite all right. I will abide by your ruling. Before I resume my seat, may I also say to the minister's parliamentary secretary that we appreciate the cooperative spirit he has shown toward members of the house and that he in turn is a great asset to the minister's department.


Mr. Badanai:: 
Mr. More:: On a point of order, Mr. Chairman, I want to be clear in my own mind. We are dealing with the collection agency of the government, not the tax imposing agency, and I think that the hon. member is making a speech in regard to matters with which this department has nothing to do.


Hubert Badanai: On the point of order, Mr. Chairman, may I submit that when I tried
Supply-National Revenue to introduce this very subject on a previous occasion the Speaker of the house said there would be other occasions on which to discuss it, and certainly this is the occasion. I continue:
To a vast majority of the owners in Canada a motor car can no longer be regarded as a luxury, but in the light of modern conditions must be regarded as a necessity. However, our tax legislation takes no account whatever of that fact. The burden which this tax has placed upon the automotive industry in Canada and indeed the acute way in which it has been making itself felt latterly are well known to every hon. member of the house. We have on every hand evidence of the increasing state of disorganization in motor car sales right across Canada.
The automotive industry is a major employer of labour in Canada.
That is what I have repeated over and over again, and the Minister of Finance agrees with me. No one disputes the fact that it is an industry which is essential to the well being and development of our country.


Jacques Flynn: Order. I did not rule on the point of order raised by the hon. member for Regina City. I may say that since the hon. member started his speech I have had some concern about the relevancy of his comments. I know that I allowed the hon. member for Joliette-L'Assomption-Montcalm to speak briefly on the question of customs taxes on tobacco. But I do not think it would be relevant at this point in the discussion of the estimates of the Department of National Revenue to discuss in such detail as the hon. member is attempting the excise tax on automobiles. It seems to me that this is a matter which would have been more properly discussed during the budget debate.
I do not want the hon. member to feel that I am trying to prevent him from continuing his speech. However, I do believe that he should try to be as brief as possible in his discussion of this question, otherwise we will have a repetition of the budget debate. As hon. members realize, the Minister of National Revenue is only charged with the collection of this tax. There is nothing he can do, personally, in connection with the request the hon. member is making. It is a matter either for the government as a whole or for the Minister of Finance. I think, strictly speaking, the hon. member's remarks would be more relevant to the budget debate.


Mr. Caron:: May I ask for clarification of this matter? I recall that the hon. member for Hamilton South made a speech about the cotton industry and I was under the impression that when we were discussing the revenues of the country we could discuss all matters pertaining to those revenues. I may be mistaken about that. I recall as well that when the hon. member for Fort William

Supply-National Revenue referred to the matter in the house Mr. Speaker said that there would be other occasions when the matter could be discussed and one of those occasions would be when the estimates of national revenue were being considered. I believe, therefore, that the hon. member should be entitled to go ahead with this speech, just as the hon. member for Hamilton South did a while ago.


Jacques Flynn: I may say that the matter was raised on June 13 and the Speaker did not mention exactly when the opnortunity would be given to the hon. member to make these comments. In so far as the speech made by the hon. member for Hamilton South is concerned, I was not in the chair at the time. I make a differentiation between discussing the application of the Customs Act and discussing the removal of a tax because the first is a matter of administration. The hon. member for Brome-Missisquoi discussed the application of an amendment introduced two or three years ago and made an attempt to ascertain the consequences of this change. A matter of this sort would be properly before this committee, but that is not the same thing as discussing the removal of a certain tax.
In any event, I have given the hon. member the opportunity if he wishes to continue. I thought I should warn the committee that if we allow the hon. member too much leeway we might precipitate a discussion which would be repetitious of the budget debate, which was the proper occasion for this kind of discussion.


Hubert Badanai: I promise you, Mr. Chairman, to be brief and not to deviate from the suggestions you have made. I maintain that what I am saying now is related to the excise tax on automobiles which is not only discriminatory because the automobile is the only major consumer product subject to a special tax but also because the employees in the motor car industry are the losers. Here is where the Minister of National Revenue is affected. If there are fewer people in these automobile plants, there will also be fewer income tax payments. If no growth is taking place in the productive capacity of this industry, then the corporate tax will be subject to reduction or decline and ultimately the government, instead of being the beneficiary of its tax policy will collect less instead of more.
If there ever was an illustration of the law of diminishing returns the retention of the excise tax on automobiles may indeed furnish the most shining example. I am only asking the minister to take this into consideration during consultations with his cabinet colleagues who have the power to bring about


desirable changes in this industry as well as in other matters which may be beneficial to the people of the country.
I am just going to make one more reference to this subject, Mr. Chairman, with your permission. Only yesterday a delegation of auto workers from the province of Ontario came here for a meeting with the Prime Minister. The greater Windsor industrial commission, in a brief submitted to the Prime Minister, made a worth-while suggestion in connection with the 7J per cent excise tax on automobiles. I shall only quote one paragraph from this submission, and it states:
The federal government could adopt a policy of encouraging the Canadian manufacture of foreign vehicles. (If Studebaker-Packard can manufacture in Canada while producing 5,000 units per year, surely Volkswagen, British Motors Corp., and some of the other foreign companies can do likewise on a volume many times this.) Australia has encouraged domestic manufacturing and Volkswagen produced 16,700 units in 1958 in an Australian plant.
Then the brief refers to exhibits which were attached to the brief, and the concluding sentence in that paragraph reads:
Foreign automobile companies could be encouraged to manufacture in Canada by offering an incentive, such as reducing the excise tax of 71 per cent on the manufacturer's sales price by a given percentage if the vehicle is of 50 per cent Canadian content, 75 per cent or higher. (71 per cent on a $2,000 passenger vehicle is $150.00.
This completes the reference I wish to make to the subject of the automobile industry.
There is, however, another matter I wish to bring to the attention of the Minister of National Revenue. Some time ago I referred to the possible or contemplated amalgamation of the two customs offices at Port Arthur and Fort William. I was told then there was no change with the exception of the elimination of one officer and, therefore, there was no diminution in the number of employees. However, I am concerned and the people of Fort William are concerned-perhaps the people at other points across Canada are concerned, too-as to whether or not this is going to be the policy of the government, to amalgamate these offices and to reduce staff. I must say this because I have been asked to object very strenuously to the fact that Fort William, one of the oldest ports in western Canada, established over 60 years ago, has been reduced to the status of an outport. The name of Fort William as a port of entry has been abolished and Port Arthur has been named as the port. Fort William is even subordinate to the port of Pigeon River, which is just an imaginary line and is mostly used for the accommodation of tourists coming from the United States.
These are questions which I wish to put to the minister. I know he has received many

representations from other parts of Canada which he has to study and solve to the best of his ability, to the enjoyment of all concerned and the satisfaction of everyone. On the other hand, I must say that the port of entry of the city of Fort William, one of the largest and oldest cities in northwestern Ontario, should not be eliminated as such and just made an outport. I am not suggesting it is his fault, and perhaps in the study of this question by the minister's department they selected certain points where they could effect some savings in the administration of certain offices. I am not objecting to saving money if it is possible but I do object when these savings are effected at the expense of employment, especially at the present time. Fort William is an important city.
These are the few remarks I wish to make at this time. There are a few other things I shall probably speak about later during the course of the estimates.


James Stanley Speakman: Mr. Chairman, I should just like to bring this matter to the attention of the minister and the committee. I should like to ask the minister to give consideration in his submissions next year, if it is not possible at this time, to the matter of the purchases by fraternal organizations, school boards and school divisions of equipment for school activities. I refer in particular to the purchases by two organizations in my area this year of used band uniforms for high school bands, and they asked for a tax refund which apparently is not permissible.
I would ask the minister and his officials to give consideration to this matter because this is money spent by associations, organizations and school boards and they do not have too much. They are trying to help Canada's youth in our educational program and these band activities are of very major assistance in all small rural and urban centres in keeping our youth occupied in their out of school hours. I think they are serving a very good purpose and should be entitled to consideration in the matter of being given a refund on this type of purchase.


Mr. Weichel:: It is not my intention to hold up the estimates of this department and of customs and excise but I feel a word of appreciation should be extended to the minister, his deputy, an old army pal of mine, and the department for the service we are receiving in Waterloo county. The city of Waterloo does appreciate the recent change in customs clearance regulations concerning shipments arriving by highway trucks at the warehouse. The resultant savings to the importers in Waterloo total thousands of dollars annually.
79951-0-368
Supply-National Revenue
Some complaints have been received by Waterloo firms concerning expenses involved in having to take their excise records to Kitchener every business day. The extent to which Waterloo firms contribute to excise taxes far exceeds that of Kitchener with three and a half times the population. I hope the minister will give Waterloo every consideration in this problem, as I feel that the Waterloo customs office can handle the excise records. Perhaps some time in the near future the top officials of the department can visit us and talk over this important matter with members of the chamber of commerce.


Alexis Pierre Caron: I want to bring to the attention of the minister something which could be remedied very easily. In January when I came back from the United States by air I was given form E. 24, the customs form. I asked whether they had one in French and they told me they had none, although when I got to Montreal I was told they had both French and English.
I should like to ask if these forms could be printed in both English and French. There is not very much on them but it would eliminate the inconvenience to travellers who cannot read English or who cannot read French if they had forms in both French and English. I think the minister should take that into consideration and if he looks the matter over I think he will consider my observations are very welcome.


Mr. Winkler:: Mr. Chairman, I would like to speak very briefly and add my compliments to the minister and his officials on their respective duties.
I want to refer now to the matter of labelling which was discussed in the estimates a year ago and the regulations made effective last December. With regard to textiles being brought into the country I find now that in practice importers of these materials are using a system of obliterating the label which manufacturers are attaching to garments, and because of the fact that the labels are usually made of a flimsy paper they can easily be removed merely by shaking or scratching them off, or that sort of thing. I find in practice that this sort of action is not fair to Canadian textile manufacturers and that it should be investigated by the department and necessary action should be taken.
I also had some discussions with the minister with regard to indicating in catalogues of mail order houses whether an item is imported or is manufactured domestically. This in my opinion has a great bearing upon the sales of domestic textiles. You will find that in mail order catalogues there is no indication

Supply-National Revenue whether the item which is advertised is manufactured in Canada or in some foreign country. At the time I asked the minister about this matter, which was on February 1 of this year, nothing had been done and I am wondering if any further consideration has been or could be given to this particular matter. It is one of great concern to the smaller textile manufacturers of Canada and I have had representations from people all over the province of Ontario. I feel this would be a worth while project for the department and certainly would be of tremendous benefit to domestic manufacturers in this field. You will realize that when a housewife is ordering from one of these catalogues there is no indication whether she is buying a Canadian produced article or an imported article.
I think it would be a very simple matter if these mail order houses were required to indicate under each item whether the item is imported or of domestic manufacture. This in my estimation would answer the problem and be of great benefit to the smaller textile manufacturers.


William Hector McMillan: I want to bring up a matter which might affect communities in British Columbia, in northern Ontario at Fort William, the Niagara district, Cornwall, Quebec and probably New Brunswick. It has to do with the proposal by the cabinet-and I take this from a newspaper-to remove the 20 per cent duty now placed on the finer grades of paper. I know that this comes under the Combines Investigation Act, and that I could have brought the matter up on the estimates of the Minister of Justice, but this matter was not brought to my attention until after that particular item in the estimates of that department had been dealt with.
I understand that in the year 1953, or thereabouts, the manufacturers of the finer grades of paper were fined under the provisions of the Combines Investigation Act. I also understand that not long ago the Minister of Justice sent out a questionnaire-


Charles Edward Rea: Order. I am afraid the hon. member is not in order in the remarks he is making on this estimate of the Department of National Revenue relating to customs and excise duties.


Lionel Chevrier: Would you allow me to say that this department is responsible in part for the administration of the provision with which the hon. member is about to deal, which concerns customs duty, and surely the customs and excise division of the department has something to do with this matter. Then again, as the minister knows, the hon. member for Welland has been obliged because of illness to be -absent for a large part of the

session, and he was unable to be here when this matter was discussed. This is, perhaps, the only opportunity he has to bring the matter up, and I am assured he is only going to spend about five minutes on it.


George Clyde Nowlan: I have no objection to the hon. member proceeding under those circumstances. This is clearly out of order, as this is an administrative department which has no responsibility for policy, but I have learned from experience that it is far better to allow members who are out of order to proceed than to try to save time by raising objections.


William Hector McMillan: I might say that I came across this in the papers only a week or ten days ago. If it came out before that, I was not aware of it. However, the paper manufacturers received a questionnaire from the Department of Justice asking them to supply proofs or reasons why the duty should not be removed. I was approached by representatives of labour, and not by the industry, and it was claimed that there would be considerable dislocation in the industry if this were done. I know that the hon. member for Lincoln has also been approached in connection with this matter. I am told that in our area a mill which was in the process of enlarging its operations was reported to be about to discontinue until this matter had been settled.
I think we have a right to ask a member of the cabinet who is here this afternoon what action is being taken or, if he cannot tell us that, for some assurance that a decision will soon be reached in order that the project may proceed without interruption.


Murray Lincoln McFarlane: I shall not take more than a minute or so. I should like to support the hon. member for Wetaskiwin in his request for the consideration of a reduction in the tax on school supplies. I should also like to ask the minister if he would give consideration to the .supplies and equipment used by organizations which care for retarded children. Many of these organizations are supported locally by small groups of interested people. Finances have to be raised locally, and any help which the department could give would be very much appreciated.
So far I have been very pleased with the service I have received from the minister's department and I hope the hon. gentleman will see fit to grant some consideration to items of the kind I have mentioned.


Lionel Chevrier: The minister has been so generous in his intervention as far as the hon. member for Welland is concerned that I am going td be as brief as I possibly can.

There are just two matters that I want to raise. One has to do with the anti-dumping regulations, and I wonder if when the minister rises to deal with a number of matters which have been discussed here he will give the committee some indication of what is happening as far as these regulations are concerned.
I am particularly concerned about areas such as Valleyfleld, certain parts of the city of Montreal, the eastern townships and the city of Cornwall where the position has become untenable because of textile importations. I am going to keep away at the moment from any political consideration of the subject and deal exclusively with the instruments which are in the hands of the minister.
I think we are all agreed that high tariffs certainly will not cure the situation in any of those communities. There is no doubt but that it is serious. The textile industry in the city of Cornwall has been completely wiped out. I know that in the city of Valleyfleld there has been a substantial and considerable reduction in employment because of competition, and that applies to the eastern townships to some extent although I must say I am not as familiar with that area as I am with my own area of Montreal and as well as that of Valleyfleld.
But notwithstanding the decision which was taken some few years ago in the house, what is the position? I know that the Minister of Finance announced an agreement in the house with Japan, but notwithstanding that there have still been substantial importations. There have been importations from China and, of course, there has been a considerable amount of dumping from the United States. That is what the anti-dumping legislation was established to prevent.
Is the government giving consideration to any other method of controlling these imports? I know that the problem is not an easy one. I know that the question of appraisers is one which has been given careful consideration by the department over a number of years and that these officials were sent into certain areas of the United States in order to evaluate goods. While they did good work, the point is this: is that sufficient to meet the position? That really is the point I wanted to bring to the attention of the minister.
The other question is one which I have already discussed with the hon. gentleman, and it concerns the Canadian association of income tax employees, Montreal branch. They have made representations to the government about their salaries. They feel that because of the peculiar position in which they find themselves, their salaries vis-a-vis those paid by private industry in Montreal are not at all commensurate with their work.
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They also indicate that the minister, and I believe too the deputy minister, stated before the estimates committee last year that in so far as assessors are concerned they are experiencing great difficulty in keeping them in the department, that at most they remain for two or three years. This association would like me to bring this matter to the attention of the minister. It may be that other hon. members have brought this to his attention and in a more capable fashion.
This job classification merits a higher salary. If the statement I have attributed to the minister is correct and these people go elsewhere after two or three years then there certainly must be an anomaly. Perhaps these people are not earning enough money and that is why they are attracted elsewhere. I presume that the civil service commission has a great deal to do with this matter and it may be true that an improvement has been made as the result of the recommendations made by the Minister of Finance. I have no doubt that this is true but none the less the situation still continues to exist in certain areas.
Also there has been brought to my attention the question of certain clerks in the customs branch as well as other employees who are in the same position. The point made with reference to the assessors as well as with reference to the clerks and other employees is that a trained man in the class of an assessor, for instance, earns a salary ranging between $5,000 and $7,000. If an assessor has been with the branch for a period of time he is of course much more experienced than a man who moves from branch to branch or from department to department or from the outside and because of that he is able to be of greater assistance in the collection of taxes than he otherwise would be.
My only purpose in rising was to bring these salaries in the Montreal district to the attention of the minister. While I know improvements have been made in part as a result of the recommendations of the civil service commission I still feel confident that the Canadian association of income tax employees is not fully satisfied. In the light of what I have said would the minister be good enough to give this matter his usual careful consideration?


Mr. Souiham:: Mr. Chairman, I have
recently had brought to my attention a problem which I wish to place before the minister. It has to do with the coal industry in my riding. As most hon. members know, we have' an extensive lignite coal development in that area and an increasing development in gas and oil. This matter has arisen as a result of the Competition created by these other commodities. The coal industry in that area for the last 30 years or more has been

Supply-National Revenue importing duty free machinery that is not manufactured in Canada. Recently due to keen competition they have brought in equipment for experimental purposes in order to make their production and manufacture more economic and competitive. They have been paying duty on this equipment. The point these people make is that the machinery they are using for experimental purposes is not manufactured in Canada. They ask that these regulations be made more flexible to include this type of equipment and have it enter duty free, too.


Mr. Gundlock:: Mr. Chairman, usually when I rise to speak in this chamber I am a bit out of order but I believe I am perfectly in order today in congratulating the minister and his department upon their most efficient execution of their regulations.
There is one question which I should like to ask the minister. Would the minister be kind enough to ask his officials why they differentiate between automatic stock water-ers and automatic stock feeders for the purposes of imposing duty on an agricultural implement?


Lester Bowles Pearson: Mr. Chairman, before the vote is carried I wish to say a few words. I apologize to the minister in advance if this matter has already been raised and he may stop me if it has been. I want to ask some questions which I think concern his department arising out of the trade treaty with Russia that will be coming before us for consideration. The minister knows that under that treaty although it is not a matter of the particular responsibility of his department there is a kind of mathematical relationship between the proportion of our imports from Russia and our exports to Russia. The impression is that there will have to be an increase of Russian imports to reach that proportion.
There has been a great deal of talk about how these figures will be increased with particular attention being paid in the discussion to the import of motor cars. Because this does come within his department I should like to ask the minister what are the procedures established? Are they the customary ones or are new procedures being adopted? What are the procedures in effect or to be in effect for the appraisal of values on Russian imports into this country? I am thinking particularly of manufactured imports and even more particularly of motor cars. Have there been any discussions and any negotiations with the Russian government which would lay down a procedure to be followed in regard to Russian imports under this treaty?


Douglas Mason Fisher: Mr. Chairman, I should like to know what part the minister played or did not play in the letter sent by the Minister of Justice to the companies involved in the prosecution with respect to fine papers. As I understand it the letter was in effect an invitation to them to state why the tariff protection on their particular products should not be removed. I want to know from the minister something about the consultation that took place.
To my knowledge this penalty has not been invoked before. I want to know what part the minister played in this matter and the general background of it. Like some other hon. members I have received some preliminary protests about the move and I wish to know what part, if any, the minister has played and can play.


Mr. Smith (Lincoln):: Mr. Chairman, I should like to join with the hon. member for Welland in bringing to the attention of the minister a problem that could develop in connection with the proposed removal of the tariff on fine papers. The Provincial Paper Mill and others in that area have to bring their raw materials a very long way, in some cases from down on the north shore of the St. Lawrence river. They also have to pay the toll on the Welland ship canal. To impose further penalties on them by removing the tariff would put them in the position of perhaps not being able to compete with papers of that kind coming in from the United States.
Another matter I wish to draw to the attention of the minister concerns imports from the United States. I recently saw an advertisement in a newspaper for a fishing reel. I sent for it and when it arrived I found it was made in Japan. Although it was made in Japan it carried the trade name of a prominent manufacturer in the United States. The warranty was to be taken care of by this company in the United States. What I am concerned about is this. The article was shipped to a wholesale house in Los Angeles. There it was packaged and received a United States trade name and a United States warranty. It is sold in Canada practically as a United States apparatus, yet it was made in Japan. I should like to know whether it comes into the country as a Japanese import or a United States import? (Translation):


Mr. Raielle:: Mr. Chairman, I have no intention of making a long speech; I just want a few bits of information.
Could the Minister of National Revenue (Mr. Nowlan) tell me whether some agreement was reached when he and the Minister of Finance (Mr. Fleming) met with confectioners and chocolate manufacturers who

were asking removal of the sales tax now applicable to their products?
I do not want to take up any more of the house's time, but I feel we should at least be given some information for the benefit of those who have been asking for the removal of that tax and would like to know the government's decision in this matter.
(Text):


Lester Bowles Pearson: I want to deal for a moment with the point raised by the hon. member for Port Arthur. If the tariff provision-I do not know what section-of the Combines Investigation Act is invoked by the government, it is not necessarily because of the application of the normal economic and trade considerations but because a combination in restraint of trade has been found presumably, and in those cases this clause is used as a punitive clause rather than one which would be invoked under normal economic considerations. I am not attempting to make any judgment of the particular case that has been mentioned but when the minister replies will he inform us about the application of that clause in such a case?


Lionel Chevrier: Before the item carries the minister should take the opportunity to reply to the requests that have been made, as is customary. Once the vote is carried, then we are bound by the particular vote under discussion and there can only be discussion of that item. I should like to get answers to the representations I made and I am sure that goes for most other hon. members. I know the minister cannot deal with all of them seriatim because it would take too much time, but surely he can deal in a general way with the requests which have been placed before him.


George Clyde Nowlan: I intended to deal with them. Being an optimist, as always, I had hoped that the other items could carry very quickly and I could deal with them all at the one time. I can go over them now but it will take a little time. I think this is what I did on other occasions. There certainly will not be any restriction by the Chair, I am sure, or by the minister, or any attempt to hold the discussion to any particular item. It will be as free as it was on the first item.


Lester Bowles Pearson: As long as there is no restriction later, as the minister has stated, I should think that would be satisfactory, and we will not be prevented from following up the answer-


George Clyde Nowlan: Not a bit.


Lester Bowles Pearson: -because the item is passed.


George Clyde Nowlan: Not a bit.
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Alexis Pierre Caron: Now that the minister intends to answer all the questions at one time, may I bring up one point with regard to taxation difficulties.


George Clyde Nowlan: Mr. Chairman, we are dealing only with customs and excise at this time; we shall have the taxation item as soon as these items are through.


Mr. Cathers:: Mr. Chairman, I should like to draw to the minister's attention, a regulation of the customs law which I think is creating a great deal of confusion in the trade. This is the regulation which reads, "A class or kind not manufactured in Canada". I believe this regulation was drafted to encourage new industries in Canada. Because of the particular case which I have drawn to the attention of the minister and his deputy I think they will agree that a great deal of confusion is caused by this regulation. I think it is a costly regulation to enforce. To find out whether any article is being manufactured in Canada at a certain time is a very long drawn out affair. I ask the minister and his department to take a good long look at the regulation and see whether something cannot be done to eliminate this confusion.
I should like to congratulate the minister and his deputy upon the courteous treatment I have received from his department in the past year.


[Stage Direction]
Item agreed to.
261. Construction or acquisition of buildings, works, land and equipment, $587,500.
George Clyde Nowlan: Before this item carries I think I should reply to some of the questions which have been asked and some of the problems which have been raised. As the hon. member for Laurier suggested a moment ago, there have been many of them, and if I do not attempt to deal with them all I am sure hon. members will not think it is a matter of discourtesy. I will try to refer to some of those which I think have been the more important ones and on which perhaps some explanation is necessary.
The hon. member for Hamilton South raised, as did many other members, including the member for Laurier, the question of textiles and the impact of imports on the textile industry. The hon. member for Hamilton South dealt at some length with the United States subsidy which is paid to cotton producers in the United States and suggested, as have many others here today and elsewhere, that this was a form of subsidization of the textiles which are imported here and is one on which we should impose dumping duty, or deal with in some other way. There is no doubt there is a subsidy paid in the

Supply-National Revenue United States on raw cotton; it is part of the statute law of that country. Incidentally, although the effects here may sometimes be as have been suggested, we also have to realize that cotton is bought by our manufacturers and, by our producers, at cheaper than it otherwise would be because of the fact the subsidy is paid on the cotton which is grown in the United States.
Now what may be termed dumping, of course, is an exercise in semantics. There is dumping in the popular mind and I think there is a misapprehension in the country and in this house that when goods are sold at a price lower than we produce them here, or at a price which seems to us to be low, that is immediately said to be dumping. Whatever may be the moral justification for that, and I think there is one sometimes, there is no legal justification for it unless the technical terms of the statute and of the law are met.
The term is, of course, as most hon. members know, that we are governed by the current market price in the country of origin. Given a free market and normal trading conditions, if that price is lower than ours it is still the free market price. That is the value which we have to impose on the goods, and it is not dumping. I think there is perhaps some misapprehension in the mind of the hon. member for Laurier and others. We are always hearing about dumping as if everybody dumped into this country. If they are selling goods a little bit cheaper than we are selling them in the open market here, then, unfortunate as that may be to some producers, that is not dumping under the act. We can only impose a dumping duty when the goods are sold here at a lower price than the open market price in the country of origin.
The department has had a number of complaints about the matter of subsidization. It has been suggested to us by textile manufacturers that subsidization is going on. The hon. member for Hamilton South read what I took to be a letter from a producer in the United States indicating that certain moneys were being kept there for the importer. If the money comes into Canada it is then something with which we can deal very easily but if there is money paid and it does not come into Canada it is questionable what is our legal position. All I can say is that the department has investigated this matter time and time again, has dealt with it and is attempting to deal with it in every possible way consistent with the law, and we would welcome any information or any co-operation which would assist us to deal further with this difficult problem.
As has been pointed out by various members, there is no question that the textile
[Mr. Nowlan.l

industry is experiencing difficulty. I think it was the hon. member for Hamilton South who pointed out that employment in the industry had fallen from 22,500 to 16,000 in the last three years. I think these facts can undoubtedly be established and that there is a serious situation. We have attempted to deal with it in various ways.
The hon. member for Laurier asked what had been the effect of the legislation we passed two years ago, the new section 39 of the Customs Act. You will remember that when that section was brought in we were told we were reverting to the law of the jungle, that this was going to raise a wall as high as Haman's gallows, that this was a reversion to R. B. Bennett and to the Toryism of a century ago, and so on and so forth. Unfortunately or fortunately not one of these dire prophecies has materialized and I think when hon. members read some of the speeches they made on that occasion they may wonder at the vehemence of their speeches at that time.


Lionel Chevrier: We also remember the
speeches of the Minister of Finance.


George Clyde Nowlan: I do not recall all the statements of the Minister of Finance at this time.


Lionel Chevrier: I do.


George Clyde Nowlan: The fact of the matter is that one of the reasons why that amendment was brought in was to deal with the question of goods being sold here at less than fair market price plus a mark-up of some kind and not in accordance with current market practice. We investigated sales which were made and we found at least as far as prime goods were concerned that as a result of that legislation or because we had been misinformed-I think it was a little bit of both but probably largely because of the indirect effect of the legislation-there was reason to be satisfied and we are satisfied today that goods now being brought into the country are complying with the provisions of section 39.
We believe that the indirect result of tha' section has been very great indeed. Wher. we started our investigations we encountered great difficulties. Theretofore we had received co-operation but when our investigations started we were denied information and we had to threaten to use some of the provisions of the new section in order to get the co-operation which we had received in the past and which we have been receiving since. So far as section 39 is concerned, I cannot point to any specific thing which we have done under that provision except that we believe that the tone of the market

has improved. We know that the legislation is being complied with and we think that in part at least this is due to the passing of the section itself.


Lionel Chevrier: May I ask the minister a question? Is it a fact that section 39 of the act is not being invoked in connection with dumping or alleged dumping?


George Clyde Nowlan: We actually have not used section 39 at all. We have not used that specific section but, as I said, I think the fact it is in the background has had a great deal of effect.
I want to mention casually and very briefly some of the things we have done in connection with the textile industry and without enumerating too much. As the toon, member for Laurier pointed out, we have increased our staff. We have increased the number of appraisers and have sent them around the world. We have strengthened that branch of the staff tremendously and we are reaping great results because of that. Our appraisers have had special warning about vigilance and checking more closely than they had in the past. A whole series of instructions have been issued to our officers with respect to these matters and, although I cannot point specifically to the result of this or that, we believe and are informed that there has been a substantial improvement in the situation because of that.
The values of imported textiles are constantly under review and every complaint which the department receives with respect to valuation is investigated by competent officials. We now have seven stationed in foreign countries. The appraisers on the headquarters staff in Ottawa are travelling all the time to various portions of the United States for the purpose of investigating and checking on values, complaints and so forth.
With respect to the matter of invoicing, we have also tightened up in that regard. To assist in the detection of undervaluation, exporters are now required to show technical information on invoices and to attach samples of the goods to the invoice so that we can check on those samples and make sure they are in keeping with the invoice which purports to cover them. We have issued other instructions to our officers dealing with these matters. We have given a course on textile cost accounting to all our appraisers. They have been instructed in these matters and we believe they are thoroughly efficient and are carrying out the law as it is today to the limit of the extent to which it can be enforced and maintained.
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We did bring seconds within the purview of the Customs Act in so far as dumping is concerned. Heretofore seconds were not included. Approximately a year ago we brought seconds under the act by order in council to protect against dumping. Seconds of course, comprise a very substantial portion of our textile imports because seconds from the United States are a very good class of goods. They are a substantial portion of our imports and by bringing them within the purview of the act we have improved the situation materially.
Reference was made by the hon. member for Laurier to importations from Japan and China and the action taken by the Minister of Finance in co-operation with the Japanese government with respect to the acceptance of quotas by that government. There is nothing much I need to say on that matter in addition to what has been said by the Minister of Finance. The department is administering the provision. I have imposed dumping duties on textiles from China. We have imposed very heavy duties against the protests, of course, of various importers who thought their valuations would be accepted but we refused to accept them. We are still continuing that course of action.
There are other matters, of course, such as discounts. We started to check on this matter a year or so ago and we found that discounts being authorized on imports of textiles were very substantial. As I reported to the house some time ago, we revised these discounts. We issued a new bulletin, appraisers' bulletin No. 12, and whereas discounts had run as high as 20, 25 or 30 per cent we reduced them substantially on the great majority of imports. On cotton sheets, cotton pillow cases, twill and clothing sateen we reduced the discount in each case to a maximum of 5 per cent and 10 per cent on denim. This has made a substantial contribution to the textile industry.
Far be it from me to say that the condition of the industry is good. It is not, and it is a matter which is causing us concern at all times. However, I can say this without fear of contradiction, that if it had not been for some of the steps we have taken and the action which this department has carried out as well as the investigations which are constantly carried out, bad as the condition of the industry is today, it would be infinitely worse if those actions had not been taken.


Lionel Chevrier: It could hardly be worse in certain areas.


George Clyde Nowlan: I am not trying to justify the situation. This is a matter over which this department has no control. We have administered the law to the extent that it is

Supply-National Revenue humanly possible in order to give the industry all the safeguards and protection which it could possibly receive.
The hon. member for Port Arthur raised a perennial question about which we have had many interesting discussions, the question of censorship. He asked if new instructions had been sent out to our port officers recently in connection with this matter. I can tell him no such instructions have gone out. The administration is exactly the same as it was at that time. It is an interesting problem as to what our position will be as decisions come out, become codified and the law becomes clear. We welcome that because it is a nasty situation in which one finds himself as the ultimate, in one sense, censor. It must be remembered that this only applies to periodicals coming across the border. It does not apply to anything printed in this country. It does not apply to anything on sale in the bookstores. It is only when books come through the customs house that we have a responsibility, and we are attempting to carry it out in the best way possible.


Douglas Mason Fisher: If I may summarize, then, there has been no change at all in the work of the minister's officials in this particular field as a result of the legislative change last year?


George Clyde Nowlan: No, the legislative change last year was concerned with administration within Canada. Our responsibility is for goods coming into the country. Obviously there has to be a close correlation between the two. We have made no change in the instructions issued to our officials up to the present time.


Lester Bowles Pearson: May I ask another question before the minister proceeds. Am I not correct in my recollection that a couple of sessions ago the minister expressed a rather determined desire to free himself from this responsibility of censorship? Can he tell the committee whether any progress has been made toward that desirable objective?


George Clyde Nowlan: I am afraid the progress has not been as great as the minister would like. There have been discussions between my department and the Department of Justice and the respective ministers thereof. I was very hopeful that some section could be worked out which would relieve this department entirely of any responsibility in connection with the matter. I am told that this is a matter of common practice, of common law, and I guess virtually every jurisdiction in the world which has a customs act has to deal with this problem. Every once in a while we do get books coming through customs and if you dropped them on the floor you


would have to clean them up with a shovel. These items do not present a great deal of difficulty. Beyond these the activities of the department have been of a very limited nature and I trust they will always continue to be.


Lester Bowles Pearson: The minister will recall the strong criticism levelled at his predecessor because the government of that day was not able to get rid of that responsibility which the minister of national revenue was exercising. Indeed, he was accused of being rather happy in the exercise of it, which was not true. It did add to his library, but I do not know whether it has served to add to the minister's library?


George Clyde Nowlan: No, I have been very careful, I must say, as to the ultimate destination of these books. I can assure you that they are all returned to the deputy minister, and no further inquiry is made. Of course, they only come to me when they have the signature of the deputy minister. In the first place they come through the port officials and finally to the deputy minister. If there is any disagreement about the decision then the book comes to me. I sometimes read of very interesting books in the newspapers and wonder why they do not get to my desk, and I sometimes wonder what would happen if they did. However, it is sometimes my unpleasant responsibility to read these books.


Lester Bowles Pearson: Is it not regrettably true that the deputy minister is soon to acquire a lot of time which he could use for this purpose?


George Clyde Nowlan: I will not pass any judgment on that, Mr. Chairman.
I think, too, the hon. member for Port Arthur raised a question about the closing of some ports. He could not understand why the revenue in some cases appeared to be very small and yet the ports would be kept open, whereas in other cases the revenue seemed to be larger and the ports were closed. It is very difficult to lay down any hard and fast rule with respect to these matters. The matter of port administration is always under review. It is true that we have closed some ports, and it is true that we will probably close some more. I get recommendations from time to time from our committee on port administration dealing with these matters, and one has to face these facts.
I pointed out earlier the reduction we had made in our expenditures. This has not been accomplished to any great extent by the closing of ports, but it is in keeping with the efficiency with which we have carried out this division of our responsibility and sometimes, unfortunately, we have to do that. One cannot measure it entirely, although it is a

big yardstick, by the dollars received. There is the question of proximity to other ports. It may be that people would have to travel great distances if there were not a port at a certain place, and that is a factor. There is also the factor of security arrangements and the deterrent. If there were not a port in a certain place and there were a road leading from one country to another which was not under surveillance at all I suspect the amount of travel on that particular road would increase. It is necessary sometimes, therefore, to have ports in areas which do not, in themselves, bring in a great deal of money. However, if those ports were not there we would perhaps lose a great deal more money.


Douglas Mason Fisher: I should like to remind the minister that the examples I gave were not of ports on boundaries or international waters, so one part of the minister's reply does not apply.


George Clyde Nowlan: 
excise tax on cars, a matter also referred to by one or two other hon. members. That again is a matter for the Minister of Finance. I administer the tax; I collect it, but it is not a matter which comes within the purview of this department and any discussion of that matter should be raised on the estimates of the Minister of Finance.
The hon. member for Fort William also complained about a step which this department took in, shall we say, making Fort William, as he termed it, an outport of Port Arthur. It is true we did make a change there. The collector at Fort William had reached retirement age and had retired; there was competent staff there and we all know the proximity of Fort William and Port Arthur. It certainly does not affect the efficiency of the department or the service. It may be a matter I suppose of some local pride that the port is now the port of Port Arthur and that Fort William is not a port but an outport of Port Arthur; 1 think that would be the technical description. But as I say the efficiency of the service to the public is exactly the same as before.
The hon. member for Waterloo North raised the matter of excise. There has been a great deal of consolidation in excise offices. We are trying to consolidate them and give better service by centralizing them across Canada instead of having excise offices in most of our ports. Outside of one area about which some complaints have been received we are effecting distinct economies and think we are giving a better service, because in this highly technical field it is desirable to have senior and competent officials in charge of administration.
The hon. member for Grey-Bruce raised again the question of marking goods. He has raised it privately with me before and I think I might say that some progress has been made there.
The hon. member for Laurier raised the problem about the Canadian association of income tax employees, Montreal branch. He was not in the committee when we started our discussion and apparently assumed we were covering both branches of the family, but we were only dealing with customs and excise; however, I will refer to this matter when we come to the taxation branch.
The hon. member for Moose Mountain raised the question of coal machinery. That machinery was brought in on a one sixtieth basis and presents this problem but we are going to study it again.
The hon. member for York North raised the question of "Made in Canada". I think the inference was that perhaps we should not have a "Made in Canada" ruling or that it

was a difficult one to administer. We do have more and more requests for that. One of my problems every week is to deal with applications for "Made in Canada" rulings and it is one without which we could not administer the features of the dumping act and many others.
The hon. member for Hull raised the question of the E.24 being in French and English and thought that we could combine the two languages on the one form. We are certainly prepared to take a look at that although I think my officials would say rather whimsically that they have enough trouble with the form in just one language and that if we had both languages on the form the confusion would be more confounded and the minister more damned than at the present time for having to enforce that section. But we will look at the matter.
I think that covers the matters raised.


Lester Bowles Pearson: I did ask a question about the Russian treaty and the procedures for valuations under that treaty.


George Clyde Nowlan: Yes. The Leader of the Opposition asked about the procedures which would be followed with respect to goods to be imported from Russia pursuant to the Russian trade treaty. The procedure there is one which is the normal procedure of the department, what we call the third country procedure. In the case of Russia we are dealing with a state-controlled nation where free marketing as we know it does not exist. Therefore we cannot estimate the value for duty purposes in the way we would with respect to goods imported from other countries. So the responsibility falls upon the Minister of National Revenue to devise a method whereby value for duty may be determined, and I propose dealing with imports from Russia and similar countries by invoking the third nation principle; to try to fix a valuation based on that of a similar product from a country where conditions are as comparable with those that obtain in Russia as possible.
There has been a great deal of misunderstanding about this. It has been suggested that the Minister of Trade and Commerce made a deal about oil. One would think from some of the things that have been said that this country is being flooded with Russian oil and Russian motor cars. As a matter of fact, there is not a gallon of Russian oil in the country, and outside the members of the diplomatic corps who may have one or two Russian cars, there is not a Russian car in the whole country.
There have been discussions between my officials and prospective importers and with
79951-0-369J
Supply-National Revenue officials of the Russian embassy here as to what method would be followed. That situation has been clarified, but at the moment there are no goods of that nature being brought in, either cars or gas, and no value for duty has yet been assessed by officials of my department.


Lester Bowles Pearson: May I ask the minister if the procedures which he says his department is working out will be influenced in any way by the obligation in the new treaty to import -I forget what the actual figures are-about half as much in valuation as we export. Will that have any influence on the procedure? Further, am I right in saying that at the present time there is no change from previous procedures with regard to Russia? May I finally ask the minister whether it is contemplated that an official of the Department of National Revenue should be stationed in Moscow for this purpose?


George Clyde Nowlan: There has been no change in the procedure whatsoever. Of course, attention has to be given to all facets of every problem but certainly in fixing this valuation we have to be guided by the facts as we find them and by the values which exist in comparable areas, if comparable areas can be found, as I think they can. Much as we may want to encourage an increase in trade -and we would be very pleased to see such an increase-we cannot allow that to influence us in fixing values on the basis of a proper comparison. On the advice of my officials I will try to find markets where the conditions are as closely comparable as is possible to find with conditions existing in whatever part of Russia these goods may originate.
As far as the sending of an official to Moscow is concerned, that matter has not yet arisen. It may be necessary to do so, but we have no immediate intention of doing so. (Translation):


Mr. Valade:: Mr. Chairman, the present plight of the confectionery and pure chocolate industry in Canada has been brought to the attention of the Minister of National Revenue (Mr. Nowlan), and I thought he would have given us the views of his department on the matter, because I know the minister is aware that that industry is facing serious competition from importers who are putting chocolate products on the market at a price lower than the costs to Canadian manufacturers. Might not the minister, with the

Supply-National Revenue co-operation of his officials, investigate the situation with a view to eliminating the 11 per cent tax on Canadian made confectionery and chocolate products, which raises the cost of such products?
I also wonder whether the minister would consider raising the tariff on the entry of such products, so as to enable-
(Text):


Charles Edward Rea: Order. I think the hon. member is talking about raising or lowering tariffs. That does not come under this department, but under the Department of Finance.


Georges-J. Valade: I thought that since questions of this kind were permitted before I would be allowed to produce them myself.


Charles Edward Rea: The minister has said he cannot answer these questions and I do not see any reason for asking him any more at the moment.
(Translation):


Georges-J. Valade: In that case, Mr. Chairman, perhaps the minister might consider classifying chocolates and candy as foods rather than luxuries. This would in effect remove the 11 per cent tax that weights upon that Canadian industry.
One confectionery manufacturer, in my constituency, is in serious trouble because of that tariff. He employs a few hundred workers, and I think that Canadian manufacturers of confectionery provide jobs for thousands of people across the country. I wonder, therefore, whether chocolate and sweets could not be regarded as foods rather than luxury products. This would reduce the cost to the manufacturer, and hence the selling price in Canada.
(Text):


George Clyde Nowlan: I must apologize to the hon. member for Lafontaine who raised the same question a while ago. I completely forgot to reply when I was speaking and I apologize to him. He asked specifically about any agreement or discussion which took place between the Minister of Finance and the chocolate manufacturers a short time ago. Of course, the discussion was in very general terms. The manufacturers made representations which were not entirely novel or original, to the effect that this was an evil tax and that it should be reduced or done away with. The minister listened very patiently to those representations, and that was the extent of any obligation that was undertaken or of the discussion which took place. I was there, and that is what took place as I recall it.
The hon. member for St. Marie raised roughly the same problem. This, of course, as you pointed out, Mr. Chairman, is a budget matter, a matter which comes within the pur-


view of the Minister of Finance. It concerns the rates of taxation and is something over which I have no direct responsibility, though I have an indirect one as a member of the government and, also, of course, as a member of the House of Commons.
The chocolate manufacturers visited me last week. The biscuit manufacturers turned out what at one time was called a chocolate bar. They now print across the label that it is a biscuit, and they rejoice in the freedom they have found in the change of label and also in having avoided an excise tax, because a decision of the tariff board has been handed down that biscuits are tax free. So I think this has been a good thing for the printing industry, since new labels have been printed very rapidly. There are other cases which are going to the tariff board as far as these items are concerned. As far as taxation is involved, that is a budgetary matter and will be dealt with at the appropriate time.


George James McIlraith: I should like to ask the minister if he would elaborate on his answer concerning the duty-free shops. There seems to be a good deal of confusion about them, and the minister will recall there was a great deal of concern about them in March of this year with particular reference to a proposed new enterprise at Niagara Falls.
The minister will also recall that a question was asked on the subject as appears in Hansard of March 3 of this year by the late hon. member for Niagara Falls to which an answer was given at that time. I think the answer is good as far as it goes, but I wonder if the minister could tell us exactly how this works out under sections 64 and 79 of the Customs Act, and give us a little more information with respect to the operation as it applies in such places as the Gananoque bridge where there was a great deal of talk about a proposed shop being operated, and Niagara Falls, and other places of that nature as distinguished from the operation carried on by regular merchants in inland cities where they do operate a certain portion of their trade in this way but only as a small factor of their total trade and where the articles that are being sold out of the bonded warehouse on a duty-free basis are shown in their stores in competition with similar Canadian articles. I am thinking of inland shops dealing with such things as woollen products and dishes from the United Kingdom and that sort of thing. If the minister would elaborate on the distinction it would be useful to have it on the record.


George Clyde Nowlan: I do not know if I am in a
position to elaborate. I have now forgotten what I previously said when speaking on the matter only a few moments ago.

As I point out there have always been bonded customs warehouses in this country where importers could bring goods in and store them and take them out at their convenience and pay a duty on them and use them themselves or re-export them-without the payment of duty or tax, of course,-and as long as they are in the warehouse they are not technically in Canada. I think I may say that. It is from this that someone got the bright idea of taking it one step further.
He was storing goods in the customs warehouse without the payment of duty. The goods were there along with millions of dollars worth of other goods such as are found in bonded customs warehouses all over the country. He takes from that warehouse a watch or a clock or a pair of stockings or some such article and pays on it the duty and excise tax if any is applicable. He then puts it in the store window. In the case we are thinking of he has built a retail store. It is not a large one but it is a store where these things are on display. A tourist who goes in there can pick out these expensive goods. Usually, of course, they are in the semi-luxury class such as woollens, china and so on. That night-depending on how good the service is that the man gives-he can have his clerk work or he can go and work all night or have the staff in the warehouse work if he is willing to pay for it because the warehouse does not operate for free, mind you, and he can package these goods and they are then sent out of the country. Technically they have never been in. They were only in the warehouse and then out they go. They do not pay excise tax or duty. A tourist must stay here at least 48 hours before he can make a purchase. He cannot just flip across the line and buy his goods and go right home. He has to stay 48 hours and he may stay longer.


George James McIlraith: There is a limitation on the amount set by his own country.


George Clyde Nowlan: The Americans are more generous than we are. They may spend $200 or $300-whatever it is-if they are here for 48 hours and it goes up proportionately. If they are here 12 days, which would be a good thing in many ways for the tourist industry of Canada, they can go back home and take with them or have shipped to them there $500 worth of goods. They do not have to take the goods home. The United States act is much more lenient than ours. We insist, as some hon. members know to their cost, that you bring the goods back with you. You carry them back. Under the United States act you can ship the goods back. That makes it possible for people to make purchases of this kind but they must be here at least 48 hours. They must be here a minimum of 12 days to
Supply-National Revenue get the maximum benefit of the thing which is viewed as a threat to our industry by Canadian merchants but during this time they would likely spend lots of money in restaurants, motels and so forth. At the worst it is not an unmixed deal.
This department has received many protests, not many but they have been localized'. My late lamented friend raised it with me pointedly. We know what we can do but it would involve changes in the regulations and statute and the last stage might be worse than the first. If the situation developed to the extent concerning which fears have been expressed we will undoubtedly have to take some action.


George James McIlraith: I have two questions on that point. First, is any licence required from the department for the operation of the so-called duty-free shops?


George Clyde Nowlan: Nothing whatever is required for the shop. There is, of course, a licence for the operation of the warehouse.


Douglas Mason Fisher: Mr. Chairman, I have a question on the order paper for the minister's department in connection with Quetico park. I think it would be out of order for me to attempt to bring it up here. I have been bothered by my own inability to understand the scope and nature of the problem raised by the hon. member for Kenora-Rainy River by correspondence with the department. I have brought it up since. I would appreciate the minister giving me an assurance that his department will send me a resume of the whole problem and how it may be approached and if anything can be done to stop the practice that arises from the fact that the people of the United States exploit the park more than Canadians do although it is a joint project.
Can the minister also tell me how many decisions he made last year under section 38 of the act? I know he made a couple in January but I want to know how this section is working out.


George Clyde Nowlan: I could not give an answer to that, Mr. Chairman. Some decisions are made by me personally. Others are fairly well laid down in the department. I made a decision on Russian pig iron and Chinese textiles. That was one class with which I dealt personally. I cannot answer that question. Frankly I would have to check the records and files and even then I would not be able to give a definite answer.


Douglas Mason Fisher: I am wondering if the changes in the act are working well. Are they effective? Does the minister make regular use of them?

Supply-National Revenue Mr. Nowlan: As I said when I brought in the section, I made an honest woman out of the department. Many administrative practices had been carried on previously without any definite authorization by statute. We incorporated them all in the act and are now operating under the statute.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
George James McIlraith: Mr. Chairman, how many appeals from customs rulings are now pending before the tariff board? How does the number compare with the comparable figure a year ago? Approximately how many appeals have to do with appeals on "made in Canada" ruling?


George Clyde Nowlan: I shall try to get the information for the hon. member in a moment.


Mr. Pugh:: I should like to ask the minister a question with reference to section 40A7(b) of the Customs Act, the section dealing with fair value for duty for fruits and vegetables. Will the minister comment on progress being made on the submission made through the Canadian horticultural council? The point is, what procedure will be followed to give immediate effect to an application as, if and when made for the establishment of a value for duty on any fruit or vegetable?
Before answering the question will the minister permit me to state that the fruit and vegetable market price-wise is a touchy one. Imports, small in quantity but based on quantity of sales at fair sale prices in the country of origin can ruin our price for the remainder of the season. Unless action is taken immediately when justified our total returns in specific cases may well go below the cost of production.


George Clyde Nowlan: Mr. Chairman, when I was replying this afternoon there were one or two members who had raised questions which inadvertently I had forgotten to deal with. Perhaps I can mention those at the moment. The hon. member for Vancouver-Burrard raised the questions of customs pre-clearance and compared our practice with that existing in the United States. This is a very complicated matter; it raises many problems of administration; but it is one which is receiving the attention of the department.
The hon. member for Wetaskiwin and also the hon. member for Kootenay East raised the question of excise tax on uniforms for school bands. I recall very well the individual case to which the hon. member for


Wetaskiwin referred. The hon. member for Kootenay East also raised a similar problem with respect to the application of sales tax on such organizations. This, of course, is a matter which one can look upon with a great deal of sympathetic interest, but after all, we are governed by the statute and we have to apply the statute as we find it at the moment. Generally speaking, unless there are very unusual circumstances, we have to administer the statute and parliament will have to decide what changes should be made in it.
The hon. member for Lethbridge raised the question of why it was that automatic stock waterers were classified as farm implements and therefore free of duty and stock feeders were not. There is a very simple answer to that question which perhaps does not satisfy anyone, but this is the situation. We administer the act. Under the Tariff Act one of those implements is described and named specifically in a section which provides for duty free entry. The other article to which the hon. member referred is not mentioned and therefore it must be classified under a different tariff section. That is how the difference arises between these two implements which perhaps to a layman, might be looked upon as both being agricultural implements and entitled to the same treatment.
The hon. member for Ottawa West raised the question of how many appeals there were to the tariff board. Frankly I am not in a position to answer that question. The tariff board, although it deals with problems affecting this department, comes under the aegis of the Minister of Finance and reports to the Minister of Finance, who has to deal with it. I would suggest to the hon. member that he should get the information there. I would be very glad to get the information and send it to him, but we do not have it here before us; we have not it available in the department at the moment. I am sure if he raises it on the estimates of the Minister of Finance he can get the answer then.


George James McIlraith: I would never get the answer from him.


George Clyde Nowlan: If this is satisfactory to the hon. member I will undertake to see that he gets an answer within a day or so; I will send it to him personally.


George James McIlraith: Perhaps I did not make myself clear. What I am concerned with is the part of the matter that is the responsibility of the minister namely the number of appeals pending from the rulings made by the customs division. My concern is whether or not the machinery of the tariff board is working with sufficient dispatch to prevent

any unreasonable delay in the hearing of appeals from customs rulings. That is the point I am really concerned with.


George Clyde Nowlan: I can only answer that in very general terms. My impression is-and it is confirmed by information which I receive from official sources-that probably there is a slightly increased load on the tariff board. I am not sure whether you spell "slightly" with a capital "S" or a small "s" but nevertheless the tariff board is carrying on and is administering its functions. I do not think it is markedly different from what it has been during the last few years.
The hon. member for-I have forgotten his constituency; I know he would say he represents all of the apple growers in Canada, however, since I come from the Annapolis valley I question the fact-raised a question with respect-


David Vaughan Pugh: If I may interrupt the minister just for a moment my constituency is Okanagan Boundary, but my colleague sitting across the way, the hon. member for Okan-agan-Revelstoke, feels exactly the same way as I do on this question; certainly we work together on it.


George Clyde Nowlan: I know very well the interest that the hon. member for Okanagan Boundary and other members from British Columbia, including the minister who comes from Kamloops, have taken in this problem. We have had many discussions of it. As hon. members well know, there was a time lag between the time the legislation was passed by the house and the time when this particular section was proclaimed. The hon. member has asked me where the situation stands at the moment. It is not a simple problem as there are various facets involved in it. All I can say at the moment is that discussions are taking place. As a matter of fact, there were discussions today between representatives of various departments of the government and also with some reference to our United States friends who should be kept in touch with our plans so that in the end machinery will be evolved which, when required will bring this section into operative effect with respect to specific problems which may be brought before me.


George James McIlraith: I wish to pursue the question of appeals to the tariff board a little further in order to make myself perfectly clear. The work load of the tariff board has been increasing over the years, as is inevitable in a growing country and as industrial development progresses. There are two main facets to the work load. One has to do with appeals to the tariff board against rulings of the customs department in which instance the board performs a quasi-judicial function in hearing
Supply-National Revenue appeals and interpreting the law. The other facet of the board's work load has to do with investigations it conducts by reason of references on the part of the government to the board of matters the government wishes investigated. That is a wholly different function. My concern is to be sure that the work load arising from references by the government through the Minister of Finance is not so extensive as to preclude the board from performing expeditiously its work as a quasijudicial tribunal in hearing appeals against rulings of the customs department.
I leave this subject with the request that the minister watch the situation closely. If we come to the point where it is desirable that the functions of the tariff board be rearranged in such a way that one tribunal will hear regular appeals and another tribunal will conduct investigations, I trust the minister will press forward to the end that the work of his own department will not be jeopardized or hampered in any way.


George Clyde Nowlan: I appreciate the interest of the hon. member. I will get the information I promised him and send it to him forthwith. A little bird somewhere-I am not sure where -whispered to me a moment ago that with the efficiency of this department there are very few questions that need to be appealed to the tariff board so that the tariff board is not being overworked at all in that regard.


George James McIlraith: I should like to ask the minister about the accommodation provided for the head office of the customs and excise division. There has been a bad problem for a number of years in this regard and it was sharply aggravated during the last war by reason of the shortage of space in Ottawa. It is my feeling that the accommodation allocated to this part of the government service has not been adequate enough to permit it to carry on its functions in the way that they should be carried on. It is also true that the situation has not been wholly satisfactory in the case of individual taxpayers wishing to discuss highly confidential problems with officials of the branch. They have to meet the officials with whom they are concerned at a desk in a very large room containing a great many other people hard at work. This is disturbing both to the employees and to the person who is dealing with officials of the branch.
With the completion of the large number of buildings that have been under construction for some years now I hope the department will be able to secure such accommodation as it feels is necessary and adequate for the purposes of the work it has to carry on.
5854	HOUSE OF
Supply-National Revenue


George Clyde Nowlan: I appreciate the interest that the hon. member has taken in this matter. He raised it last year on my estimates and I concur entirely in what he says. A terrible situation existed in that appraisers were working in one room and a businessman coming in to discuss his affairs with an appraiser could very easily be talking to a competitor at the same time as he was talking to the appraiser. To a reasonably satisfactory degree that situation has been ameliorated, although I will not say it has been corrected. We have made quite a substantial improvement in that regard so that at least people can feel free to talk to our officials without broadcasting information to all and sundry.
I quite agree with the hon. member that there is still room for improvement and I hope that the hope he has expressed about more space being available is not entirely a pious one because I share exactly the same hope. I am looking forward to the time when the officials of this department, as well as others who I hope will be mentioned in a very few minutes in connection with another branch of this family and whose need is equally as great as those in the customs branch, will be able to have entirely satisfactory accommodation.


George James McIlraith: I suggest to the minister that he is a very durable person. His colleagues, the present Minister of Public Works and the Secretary of State for External Affairs, who formerly held the public works portfolio, have devoted their attention ever since the change of government to finishing buildings that were started by the predecessor government and have not been noted for their capacity to originate new buildings. In saying this I am suggesting arguments that the minister may use on them. The present government has merely contented itself with finishing buildings started by the former government and has not originated any new buildings.
I hope the minister will have sufficient influence and be able to exert sufficient pressure on his colleague, the Minister of Public Works, so that the department will be provided with the kind of accommodation it requires because unfortunately taxation in Canada is very real and severe and it is a gigantic business. The department is not accommodated in the way it should be to perform its functions efficiently. I hope the minister will be able to make a real impression on his colleagues and have appropriate accommodation provided.
I also want to ask him a purely local question about accommodation having to do


with the provision of the new building at Prescott in connection with the construction of the new bridge across the St. Lawrence. What is the state of construction of that building, when will it be available and precisely what is happening with respect to it.


George Clyde Nowlan: The hon. member referred to a local question which was raised this afternoon. This matter depends, of course, upon the construction of the bridge. As the hon. member knows, the bridge authorities are responsible for providing quarters for the department and we are conducting conversations about this matter. As a matter of fact, by coincidence, discussions were held today on a similar question relative to the proposed international bridge at Sault Ste. Marie, Ontario. Conversations are going on with the bridge authorities with respect to their plans so that we can make sure that we will have satisfactory quarters when the bridge is completed.


George James McIlraith: Is it expected that the quarters will be available when the bridge is completed?


George Clyde Nowlan: That is right.


[Stage Direction]
Item agreed to.
Taxation division-
262. General administration. $3,414,200.
Osias.-J. Godin: Is it the intention of the minister to make a statement at this time on this item of his estimates?


George Clyde Nowlan: Yes, Mr. Chairman, I should like to make a brief statement on the taxation division of the Department of National Revenue. I am not going to elaborate at this time on the operations and functions of this division. I am certain everyone will agree with me that present day circumstances have not in any way decreased the work load involved in administering the Income Tax Act and the Estate Tax Act. I am, therefore, only going to comment very briefly on the costs of operation and give you some up to date figures with respect to our work load.
According to our estimates, this year this division will require $32,990,000 to carry on operations for 1960-61. This represents again, as I pointed out this afternoon in connection with customs and excise, a reduction of $217,000 when compared with the amounts which were appropriated for this division last year. As I mentioned this afternoon, and perhaps I will be forgiven for stressing it here, these two divisions are showing relatively substantial savings and at the same time, as I will show in a moment, are carrying a heavier work load than has ever been carried before.

There has been a decrease in the staff, and the estimated requirement to pay the working force for the new year has been reduced by $260,000. This reduction is, of course, offset to the extent of $43,000 because of anticipated increases in the costs of supplies, office stationery, and so on and so forth, and I might say legal expenses and travelling expenses. These minor increases are unavoidable as it is only reasonable that such items of expenditure will increase in relation to the increase in the work load.
The question which is probably foremost in the minds of many hon. members is, how is this increasing work load being efficiently handled when the number of employees has actually decreased? The answer to this question is that the division is continually seeking improved methods and techniques in the processing of its work. The achievements in this regard have been, I would suggest to the committee, without indulging in superlatives, remarkable. One has only to look at the statistics of the past three years to realize that the division has attained maximum results with minimum costs.
Taking the statistics as at March 31, 1959, it is computed that the cost to collect each $100 of tax was $1.05, and that there were 796 returns filed for each person employed in the division. The corresponding figures as at the end of March, 1960 show that the cost to collect each $100 of tax was $1. It is estimated that the total returns to be filed for the taxation year 1959 will be 5,860,000. This will mean that there will be approximately 1,002 returns for each employee in the department. I might say, in parenthesis, that last week I had the pleasure of having luncheon at a certain place at which there was an ambassador of one of the largest industrial nations in the world who discussed with me the costs of collecting taxes. He informed me that in his country it was estimated it cost $5 for every $100 of income tax they received. When I told him our figures he found them rather difficult to believe. Afterwards we gave him a breakdown of the costs and he certainly was very congratulatory to us in his references to the efficiency of this department.
This, I would say, confirms the fact that the division has achieved at least commendable results in handling an increased work load of the more routine work at decreased cost. However, the handling of the more complex types of income tax returns continues to be a serious problem. There is still a shortage, as the hon. member for Laurier mentioned this afternoon, of qualified assessors capable of carrying out these difficult investigations and assessments which have to 79951-0-370
Supply-National Revenue be made. Every effort is being made to attract this type of staff to the division.
I must say, in view of the circumstances mentioned by the hon. member for Laurier this afternoon-the competition of private industry-our success in that field has not been anything about which I would want to boast. I would stress here again, as was intimated by the hon. member, that this is not entirely the responsibility of this department. We have a civil service commission which fixes generally the over-all rates. We have the treasury board which, as they think, rather controls the relationship between departments with even-handed justice, but the results are not always satisfactory to a particular department which is facing one of these headaches.
The processing of the less complicated returns for the province of Ontario-I think this is something new this year-with the use of modern punch-card and electronic equipment put into effect this year has proved most satisfactory. It is anticipated that this centralized operation will be geared to handle more and more of these returns and consequently will enable the division to reduce the seasonal workers who each year have been processing these returns on a manual method basis.
Re-assessing, which reflects the work of field investigations and desk audits, has resulted in tax increases during 1959-60 for T-l and T-2 returns, excluding accounting adjustments, of $69.8 million and $49.1 million respectively. This may be compared with $51.2 million and $52.4 million for the previous fiscal year.
The appropriation requested for the operation of the tax appeal board is approximately the same as last year. There is a small increase in the administration expenses almost all of which is needed for the increased cost for court reporters who are used to transcribe the evidence given in the hearing of appeals. As you know, the tax appeal board carries out a very important function in allowing a taxpayer to appeal his tax assessment at very little cost. With the continuing increase in the number of taxpayers in Canada the volume of appeals being filed with the board has continued to increase. During the first three months of 1960 there was a total of 124 appeals filed with the board; during the same period in 1959, the total number of appeals filed was 104; that is an increase of 20 per cent. Similarly, the inventory of appeals outstanding and awaiting hearing has also increased. There were 531 appeals outstanding on March 30, 1960, compared with 446 at the same time in 1959.
There are many other matters to which I could refer but I think I have given a brief

Supply-National Revenue outline of some of the salient points connected with the activities of this division. Of course, I would be very glad to answer any questions with which I can deal or comment generally upon any matters to which reference is made during the course of this debate.


Osias.-J. Godin: The committee undoubtedly appreciates any indication of a decrease in the cost of operation of a department, especially this one from which most of the revenue is derived. However, there may be a fear that possibly in reducing costs the department is lessening the services which it renders.
Earlier today I had occasion to mention the fact that the tax returns of individuals in northern Ontario, that is the short form return, were directed to the Ottawa office this year instead of the Sudbury office. I should like to know if this has meant a decrease in the staff of the Sudbury office, and if the minister feels that the same service can be rendered to the public by having them correspond with Ottawa to find a solution to their problems instead of going to the Sudbury office. Perhaps the minister would like to wait and give his answer later or perhaps he might like to give it now.


George Clyde Nowlan: No, I will wait.


Osias.-J. Godin: There is another problem which pertains to the estate tax assessment branch. The act, of course, simply states that joint property is considered to be the property of the deceased person, except of course if proper proof of the segregation of ownership is properly given to the department. It has been found in many assessments that the department takes the absolute view that joint property is the property of the deceased in total. I realize that the estate can appeal and attempt to prove that the joint property was not fully the property of the deceased.
I would like to place before the minister a sample case and perhaps the minister will realize how some estates are very much embarrassed by the way the assessment is made by his department. Say a couple in 1920 purchased two lots of land and placed their property as a joint tenancy. Supposing they were worth about $500. In 1930, as they have been able to save, they are prepared to borrow perhaps $30,000 or $35,000 and build an apartment building on those two lots for $50,000 after getting the loan. From the proceeds of this apartment building, which is in the name of both of them, they pay back the $35,000. I argue it is joint property because they went into the venture and they paid this sum back from the profits of the property.
Then in 1960 the husband dies and the building is then worth $125,000 or $150,000 and the estate is taxed accordingly. I know

they are told they can appeal and show certain evidence, but I find this rule works unfairly against them. If the husband had died in 1925 when the lots were worth about $500 they would have been considered his property if the wife could not show she had paid half. You are bound to get an increase in the value of a building, and if a building costs in 1925, say, $50,000, in 1960 it would definitely be worth around $125,000.
My argument is that this widow on appeal might possibly be able to substantiate her case, but perhaps the minister could review the matter and the rules and the regulations with regard to assessment relating to properties built with loans. If that loan is repaid from the revenue of the building the person who survives, say a widow, should be credited with the capital which accrues to her and it should not be considered part of the estate of the deceased.
A further problem which troubles many legal firms and estates is this. In the sale of a property after the death of a person there is a refusal to consider as an expense against the sale of that property the sales commission paid to the real estate broker. Many people have failed to realize why that state of affairs exists but apparently it does, and I suggest that the regulations of the revenue department and its method of assessment and so on undoubtedly brings about in many instances burdens to an estate, especially in the case of a widow who is possibly faced with the prospect of retaining what she and her husband managed to save during their lifetime.


Mr. Hanbidge:: Mr. Chairman, the Minister of National Revenue deserves a certain amount of credit for the efficiency of his department and in the manner in which the staff co-operates with the general public in the matter of customs and excise. I should like to corroborate his statement with regard both to himself and his officials of this particular branch, the taxation division.
I have had occasion to contact him once in a while on behalf of the odd individual who felt he had not been fairly dealt with by the income tax department, and when the minister and his officials got through with that individual in practically every case he felt he was not being charged sufficient penalties, interest and so forth and the department should really charge more.
Having dealt with that point I should like to lay in the minister's lap one of the troubles which has come my way. Some weeks ago I had a letter from a prominent lawyer in Saskatchewan with regard to the estate tax branch. In the eastern part of the province,

as the minister probably knows, some of the old homesteads carry with them mineral rights. In other cases mineral lands are acquired or purchased from the C.P.R. or some other company and in the southeast corner of the province where those mineral rights exist, particularly oil rights in the part of the province where oil has been found, the estate tax branch is charging rather phenomenal values for lands carrying those mineral and oil rights. Whether or not oil has been discovered, in certain cases the department is charging such fantastic sums that it is a burden on the estate. Unfortunately my file has not been kept too well for some little time and the correspondence I have had in this connection has been mislaid, but in substance that is the fact.
It is a different proposition where oil has been discovered. In that case naturally where wells are producing those oil rights can very well be taxed; but where the mineral rights exist and the owner has ownership of the mineral rights but oil has not been discovered, they do not know whether there is any value to be placed upon it or not. This particular solicitor I am speaking about felt that the department was charging him too much.
_ I just bring that to the minister's attention and if I can locate the correspondence I would be glad to turn it over to him.


Hédard-J. Robichaud: In introducing the taxation division of his department a few moments ago the minister referred to the staff decrease which has involved savings of $270,000. In New Brunswick the population is served by the Saint John office and we all know that the citizens of New Brunswick are called upon to pay income tax whether they are farmers, fishermen, wage earners or others. In New Brunswick 42 per cent of the population are French speaking.
I would like to know from the minister what is the total number of employees in the Saint John office, and what percentage of those employees are classified as bilingual. I know that in the past we have had several complaints from French speaking taxpayers in New Brunswick to the effect that they could not be served in their own language by the Saint John office and I do not think there is any need for such complaints.


Mr. Smith (Calgary South):: Mr. Chairman, it is hardly necessary for me to compliment the minister because he knows the high regard held of him on this side of the house. However, I should like to join with my colleagues in congratulating his staff in particular, and I am sure the members of the committee will agree that no member 79951-0-370J
Supply-National Revenue of the civil service of Canada has a more difficult job and probably has more epithets directed at him. No one has done his work more conscientiously and I think for the benefit of all taxpayers he should be congratulated.
I want to remind the minister and his staff of two recommendations which were made a year ago by the estimates committee and to which he made some reference. I am referring specifically to our suggestion on the interpretation of taxation statutes.
We said at that time that the line separating taxable income from capital gain has in our view produced an area of uncertainty, particularly with regard to venture undertakings. We also argued that this lack of a clarity could act as a deterrent to resource development where high risk is involved. We went on to suggest a number of remedies and we came to the conclusion that one possible remedy would be to examine the advantages or disadvantages of providing advance taxation rulings in corporate or individual financial undertakings.
Otherwise, two problems arise. The first concerns a fair definition of what a business profit is, and what can be taxed as compared with a capital gain which is tax free, and the second point concerns the age old problem of knowing as a taxpayer exactly what your position is in the absence of competent advice as to whether or not your income is taxable. We have heard it said by taxpayers that the department is inclined to take the attitude: you go ahead and play the game, and we will make the rules afterwards. This I think exaggerates the situation but nevertheless that is an impression widely held. I would ask the minister to comment on this.
I would ask him also to make some further reference to the tax appeal board which he mentioned in his opening remarks. We noted a year ago that the board does indeed have a great deal of work. In fact, we said that while we appreciated that in some cases appeals were delayed at the request of an applicant, only 94 were postponed, 91 were listed for hearing and 188 were not dealt with at all, and we ended by recommending that the personnel should be increased so as to expedite the hearings, and we felt this was an important consideration.
Finally, I should like to bring to the attention of the minister a matter concerning assessment procedure and the assessment of individuals. We questioned whether there should not be greater uniformity in levying assessments from one area of Canada to another, and asked if greater liaison could not be brought about between one branch of his

Supply-National Revenue department and the others. The minister himself referred to the assessors and talked about the necessity of maintaining an informed and well-trained body of assessors in Canada. Certainly there could be no more important group of people in the department because, in the final analysis, they take our money.
In our examination of the department we were concerned about the training that some of the assessors had received and we were also concerned because in many instances after they had been trained they were lost to private industry. In effect the department was carrying on a training school for industry. The minister referred to this and pointed out that it was one of the problems. Our conclusion was that he should twist the arm of his colleague the Minister of Finance, in the hope that a more attractive scale of salaries could be applied so that these people might be encouraged to remain in the department. I leave these three thoughts with the minister and close by saying that through his supervision this is another department of the government which is doing an exceedingly fine job.


Herbert Wilfred Herridge: I rise to bring to the attention of the minister a matter which has been drawn to my attention by important leaders in various C.C.F. groups and trade unions across Canada and by a good number of individuals who are showing increasing concern about the the tax exemptions granted by the department to corporations and persons who subscribe to Moral Re-Armament.
The increased interest in this question has arisen because of the spate of full page advertisements which have appeared in practically every daily newspaper in Canada. A person who went to the trouble of calculating the cost of these advertisements estimated it was around $350,000. I want to make it clear that the objections are on two grounds. First of all, the persons who write to me and ask me to bring this matter to the attention of the committee, which I promised to do, say that this is not a religious organization and that it is therefore not qualified for exemption by law as bona fide religious organizations are and, second, the persons who write to me question the objectives and purposes of this organization which they view with considerable suspicion since they are in great doubt as to the real purposes of this organization.
I wish to emphasize before going further that I am going to read some strong resolutions. I recognize the integrity and sincerity of many individuals who subscribe to and support this organization, people who are attracted by its public appeals and the philosophy which it advances. I recognize that, and I do not for a moment question their sincerity

or the objectives and purposes which they believe in. However, since this matter has been brought to my attention I have made a careful study of the whole situation and I want to bring to the attention of the minister a few of the representations which have been directed to me.
The first item I wish to read into the record is a resolution passed by the provincial convention of the C.C.F. in Alberta at the last provincial conference as follows-


Mr. Jones:: Where was this convention held?


Herbert Wilfred Herridge: We are not like the Progressive Conservative party, we hold annual conventions.


J.-H.-Théogène Ricard: Being such a small party it is easy to do.


Charles Edward Rea: Order.


Herbert Wilfred Herridge: I wish the hon. member opposite would refrain from depositing his verbal offal in this chamber. The resolution reads as follows:
Whereas this convention is wholeheartedly in favour of the application of moral principles to our standards of national and international behaviour, and recognizes that there is a great need for moral improvement in the world today, and
Whereas the C.C.F. is a party which, by putting humanity first strives to bring about a more moral social and political order,
Nevertheless this convention believes that we must not allow ourselves to be deceived into supporting the enemies of peace, tolerance and a just social order, merely because they use the language of religion and morality.
This convention believes that M.R.A. is such a movement, and that we must look beneath its high sounding claims to absolute honesty, purity and love, to the sordid reality beneath.
If M.R.A. used its influence to free the black peoples of Africa, to end segregation in the U.S., to seek equality and justice for minorities everywhere, if it were in the forefront of the movement for disarmament and the abolition of nuclear weapons, if it really did strive for world peace and brotherhood, then it would be worthy of our support.
But it does none of these things, for it is chiefly occupied in spreading propaganda which aims at the intensification of the cold war and in building up in our minds the rigid ideology more appropriate to a militaristic dictatorship than to a free democracy.
Therefore be it resolved that this convention condemns M.R.A. as a movement which is opposed to the standards of honesty, tolerance and concern for humanity, which we believe characterize the C.C.F.
The convention further protests against the fact that contributions to M.R.A. are deductible for income tax purposes so that the public treasury is depleted by the amount of taxes which otherwise would be paid to the exchequer on the amount of the gifts. Therefore the result is that as taxpayers we are forced to contribute to a movement whose aims and purposes we deplore.
Be it further resolved that this convention contends that M.R.A. is a political and not a religious organization and urges the national executive to seek a legal test on M.R.A.'s status at an early date.


J.-H.-Théogène Ricard: Where are the others?


Charles Edward Rea: Order.


Herbert Wilfred Herridge: I cannot hear the hon. gentleman at this distance. This expresses the opinion of many people in various walks of life. That is why I read it.


William Heward Grafftey: Your's or the old party's?


Henry Frank Jones: Mr. Chairman, may I ask the hon. member a question? A little while ago I asked him what party it was that had moved the resolution of which he has spoken and he replied in general terms. Again I ask the hon. member this question. This is something we would like to know. What is the hon. member quoting from?


Herbert Wilfred Herridge: I misheard what the hon. member said the first time. This is a resolution passed at the annual provincial convention of the C.C.F. held in Edmonton recently.


Mr. Benidickson:: By telephone?


Henry Frank Jones: The C.C.F. of Alberta?


Herbert Wilfred Herridge: Yes. I will give a few illustrations to show how widespread the opposition is.


William Heward Grafftey: Oh yes, please do.


Herbert Wilfred Herridge: The following letter was written to me by the president of the Trail and district smelter workers' union:
At this time I am writing on a matter of great concern to our membership.
The membership consists of between 3,000 and 4,000 people. I continue:
The last few days has shown another surge in Moral Re-Armament propaganda in our local public press. We have no reason to oppose legitimate paid ads in any paper, however, we find that at the bottom corner of the page all donations to Moral Re-Armament are deductible for income tax purposes.
It is our position that since Dr. Frank Buchman has taken it upon himself to organize such a thing and no legitimate trade union has backed such a move and that all these donations are from big business, who are forced to deal with the workers, that tax evasion through such an organization is the ultimate end. Therefore, whether or not we like it we are paying for something that is against trade unions and all working people in particular.
A motion passed last night at our regular membership meeting-where there was a good crossrepresentation, political-wise-has directed me to urge you to question this in the house at the first opportunity that may arise.
I replied that I would bring it to the attention of the minister and the committee, I have another letter from the united automobile workers political action department in Toronto which states in part:
Don Houston in an issue of UAW ammunition a few years ago described M.R.A. as designed to "relieve the individual of all responsibility for solving economic and political problems and that God alone could solve such problems-M.R.A. not
Supply-National Revenue only relieves the conscience of political and business leaders, but it provides security for them at the same time. By diverting support from programs which would try to solve such man-made problems as unemployment, M.R.A. gains support from industrialists."


An hon. Member:: What a tiresome old bore.


Herbert Wilfred Herridge: It goes on to state:
Buchman's association with German nazi leaders in the thirties is commonly known. The World-Telegram of New York carried stories of Buchman's activities with such headlines as "Fascist World Rule by God, Buchman Idea" and quotes Buchman as saying, "I thank heaven for a man like Adolph Hitler-through such a man God could control a nation overnight and solve every last bewildering problem-they (social problems) could be solved through a God-controlled fascist dictatorship."
A. P. Herbert, a British M.P., is quoted in the House of Commons debates, September 7, 1941 as saying the technique and language of Buchman's group is strikingly similar to that of the nazis; that everything done against them is persecution but "they can ride roughshod over the feelings of everybody in the name of God."
Church spokesmen condemning M.R.A. include representatives of both Catholic and Protestant churches. Buchman has never divulged the source of his income which is estimated to be at least $2 million a year. Labour people have every reason to be more than suspicious of M.R.A.


William Heward Grafftey: Mr. Chairman, surely the hon. gentleman has read enough.


Herbert Wilfred Herridge: I have another one from the oil, chemical and atomic workers international union. The concluding paragraph states:
What I would like to know is, how in the world a contribution to this scabby outfit entitles a person to deduct same from income tax. In no way can we call upon them to provide us with a financial statement; the labour movement has tried. In no way are they a charitable organization: it would appear to me that they are a capitalist front for a war mongering crew.
If you have any information on this, would you please let me know.
I have a number of others but I will not take time to read them. However, I want to give a cross-section of opinion. There is a strong feeling about this in our group and in the trade union movement in Canada.
You find many articles in the paper on this subject. One written by Jack Scott, columnist for the Vancouver Sun is of interest and is very critical of M.R.A.


William Heward Grafftey: We have had enough letters.


Herbert Wilfred Herridge: However, I will not read it. I have another article entitled "Moral ReArmament-friend or foe" which was sent to me a few days ago which is very critical of M.R.A. Recently the Toronto Star carried an article by Pierre Burton which states in part:
No Cultural Changes-Peaceful co-existence Is part of the party line. Anybody who advocates neutrality or pacifism is a partyliner (i.e. a communist) . If you believe red China ought to be

Supply-National Revenue recognized or traded with or admitted to the United Nations, then you are a communist in Buchman's book.
To discredit Chiang Kai-shek is to follow the party line. To advocate total world disarmament is to follow the party line. To urge cultural exchanges-or indeed any contact-between east and west is to follow the party line.
"When a Montgomery, a Billy Graham, a group of governors, senators or industrialists visit Moscow they are entertained there by those who are planning their funeral", says Buchman's pamphleteer. Then he goes on to quote with approval a Swedish bishop who said: "Inviting Khrushchev to our country is the same as letting the enemy through the front line in a shooting war. It is wrong, unwise and stupid."
Thus we know what Moral Re-Armament is against. It is against any meeting of minds in the communist and non-communist world. It is for war-not necessarily a shooting war, but certainly a name-calling, rooftop shouting, hosannah-singing war. It is no accident that M.R.A. pamphlets stating that "World War III has begun" were distributed around the world on the eve of the summit fiasco.
It is more difficult to discover what else M.R.A. stands for (outside of those ever-present absolutes). As one Roman Catholic observer has commented about Buchmanism, it is "quite unaware of any social mission" and has "instituted no works of charity for the poverty-stricken or unemployed". It is much more concerned with what it calls "a superior ideology with a superior strategy" and "the incorruptible and inspired leadership that alone can create a full and free life for the nation."
Superiority and leadership are twin concepts that run like a twisted thread through Dr. Buchman's checkered career as a fashionable evangelist among the well-to-do. He has, we learn, "enjoyed personal friendship with four generations of Japanese leadership." When one realizes the dark alleyways into which that leadership took us all, one marvels at the temerity of such a boast.
He goes on at greater length. I have read quotations from these letters-and I have others-and from these articles that have been sent to me to indicate concern over Moral Re-Armament and over the fact that individuals and corporations are allowed exemption from taxation on contributions to this organization. The concern about this question is much stronger than the minister realizes. This applies to some members of all parties in this house who have given consideration to what this movement represents. If you read the literature of the last 20 years and the so-called moral philosophy preached by this movement you will realize why suspicions and doubts are aroused. Therefore, I promised to bring this matter to the attention of the committee and the minister. I read some extracts from these letters to indicate the feeling on the part of the people who wrote to me and sent me these articles.
Before I conclude I wish to bring one other illustration to the attention of the minister. This is a personal experience I had a month or so ago which convinced me that a great deal of thought should be given to this organization. Along with some other
[Mr. Herridge.l
members of this house I was invited to a dinner at the Rideau club given by the Presbytery of the United church to Dr. Donald Soper, one of England's most famous preachers, one time head of the Methodist conference in Great Britain, who at the present time is posted to the, I am not sure whether it is the City Temple or Westminster mission, London, a non-conformist church. He is a man of unquestioned integrity; and a brilliant preacher. At that dinner he addressed us for about an hour. He gave us a most interesting talk; he was listened to by members of parliament and prominent people in Ottawa. At the conclusion of his speech he received a very hearty round of applause.
On sitting down he said he was ready to answer a few questions from anyone at the dinner table who wished to ask him questions. Various persons asked questions; I asked one. My question was, "Dr. Soper, what is your opinion of Moral Re-Armament?" You should have seen his reaction. In the most vivid language he told us what he thought of this organization and of the ideas it presented to the western democratic world. He strongly advised us to do all we could to expose the machinations of this organization, I was very much convinced on hearing such a well-known gentleman express his opinion so freely, so exactly and with such vigour. I bring that to the attention of the committee, as evidence on this question, in my opinion, from an unquestioned source.
I have read these extracts about this organization on behalf of the people who have written to me and on behalf of the members of this group. I do suggest that this matter warrants thorough investigation. We want to know why persons and corporations contributing to this organization are allowed exemptions from income tax on their contributions? We want to know on what grounds they are exempt? We urge a thorough investigation and reconsideration of this departmental decision, and we wish to express in the most vigorous terms possible on behalf of the people for whom I am speaking this evening our objection to this exemption and procedure.


Lionel Chevrier: Mr. Chairman, at this stage I want to inject a pleasant note in the consideration of the minister's estimates and to tell him that I heard with interest the statement which he made on the item which is now under discussion. I think all of us, not only on this side of the house but in the house generally, will be pleased to see that this division of the Department of National Revenue has shown progress and efficiency to the extent that not only has it reduced

expenditures but also it has increased efficiency. As the minister has stated, this is due in no small measure to those who surround him from I suppose the most junior official right up to the deputy minister. On behalf of the opposition I wish to congratulate those who are responsible for this efficiency in his department.


William Moore Benidickson: Great integrity.


Lionel Chevrier: I had occasion to bring before some of the officers of the minister's department in Montreal a case which was of particular interest to certain constituents of mine. I am pleased to tell the minister that the courtesy and the efficiency with which the problems were dealt were certainly a matter which pleased those of us who had to discuss it. I am not saying that the matter has been ironed out to the satisfaction of all. I hope it will be possible to do that in due course, but I did not want to let the occasion pass without telling the minister that his officers, without naming them, with whom my constituents came in contact gave them a courteous reception.
But my purpose in rising is to bring to the attention of the minister a matter concerning a statement which he made. He said that these new operations brought about by automatic equipment will be responsible for a reduction of the number of employees. That is really the problem that worries me at the moment and I am sure it worries all hon. members. This is a matter concerning technological improvements. The point that arises is, what methods are being taken and what is being done by the department to look after those employees who because of the introduction of this new automatic equipment are without work? The problem is not one which concerns the minister alone; it concerns many other departments and the whole of Canada.
There is unemployment due not only to seasonal conditions, not only to business and cyclical conditions but also to technological improvements. On a number of occasions I have brought this up when the estimates of the Department of Transport and the Department of Citizenship and Immigration were under consideration. In each of those instances I believe means were taken to make sure that those who found themselves out of work because of the introduction of new methods received work elsewhere. I hope that is the position in the Department of National Revenue. When the minister replies to all these queries perhaps he will tell the committee what plan is being adopted to look after those people who find themselves out of work because of the new automatic equipment.
Supply-National Revenue


Mr. Nesbitt:: Mr. Chairman, I have one or two brief remarks. I must say I was rather astonished at the vitriolic attack by the hon. member for Kootenay West on those who belong to the group known as Moral ReArmament. I do not belong to the group myself, but I must confess that those I have met who do belong to the group would hardly fit the description given by the hon. member for Kootenay West. I must say I was indeed surprised but I suppose that those in this world who do not agree with the precepts of communism and socialism might well come under such attacks.
I should like to bring to the attention of the minister the report of the estimates committee which was set up a year ago and of which I was a member. While some comments have already been made on this report by the hon. member for Calgary South, there is one point which the hon. member did not deal with and on which I should like the minister to comment when he replies. I refer to paragraph 2 of the committee's report which deals with the evaluation of assets for succession duty purposes. The committee had this to say in its report:
The committee was advised of a difference of opinion between the provincial governments and the Department of National Revenue in evaluation of assets for succession duty purposes. While some progress has been made toward standardization, the department as yet has been unable to entirely resolve these differences.
When the minister replies perhaps he could tell us whether any progress has been made yet in this respect. I should also like to refer to the recommendation which reads as follows:
The committee also considered the inequality in the evaluation of certain assets in their relationship to the realizable value and therefore recommends the following:
That, for the purposes of income and succession duty taxation, the Department of National Revenue be authorized to value assets such as certain mortgages, securities, company assets and shares at their realizable values and not at unrealistic and arbitrary face values, market quotation values or book values.
I hope the minister will make some comment with respect to whether any progress has been made in making appropriate changes in the act in this regard.


Douglas Mason Fisher: Mr. Chairman, I want to ask the minister whether there have been any improvements in the financial position of the tax assessors. From the details of the estimates it does not appear that any particular increase in remuneration has beer, granted to this group. I think the minister will remember that in the proceedings of the estimates committee, to which reference has been made, it became quite apparent that there was a high rate of turnover. This is one
5862	HOUSE OF
Supply-National Revenue of the occupations in the government service where there seems to be difficulty in holding people, and for two reasons. One is that the training these people get in the income tax division makes them extremely valuable to private business. Second, it is not the most pleasant job in the world because in a sense it has to be approached with the idea that everyone is guilty or should at least be viewed with a certain amount of suspicion. That is obviously the case because these men are in a sense the custodians and protectors of the revenues of the crown.
The recommendation of the committee with regard to this matter was fairly strong. I have the wording here but there is no point in reading it. I would have thought that by now we would have had some indication of progress in this regard. A tax assessor is never going to be a popular man anyway but it certainly seems to me it is the kind of job that deserves a high level of remuneration for the very reason that it is an objectionable or difficult or hard job.
The work of the assessor is the nexus or link in many cases so far as the amount of money we have to spend is concerned. Most members want money to be spent. Very rarely have I ever heard a member of the house rise on estimates and advocate not spending money. At any rate, no instance springs to my mind. If the very people who are bringing in the revenue are dissatisfied with their lot it seems to me we should go out of our way to provide more satisfactory conditions. In particular, I think that the trend toward private business using these people must indicate their general value. If private business finds someone who has several years of experience in the department extremely useful, one cannot help but conjure up pictures of tax avoidance. There is nothing illegal about tax avoidance but we would like to think that the balance, in terms of sharpness, acuity and experience, remains with the department.
The second point I wish to ask the minister about relates to an objection I heard from a legal official who has left the minister's department to the effect that very often in the early stages of cases in the taxation division involving legal proceedings the men of the division prepare the case but when the case comes before a higher court as the result of an appeal the old patronage aspect enters the picture in that a lawyer outside the service is hired to handle the case for the department. The contention was put forward by this particular person that in many cases the talent hired was inferior to that of those who had handled the case up to that point and quite often these


people did not have the time to brief themselves nearly as well as the legal staff of the department. It was said that in many cases the people hired were nothing more than party hacks. I have very little knowledge of how these legal appointments are made but I should like the minister's views on the matter and some idea of the practice followed in bringing in outside lawyers when a taxation case is to come before an appeal court.


Deane Roscoe Gundlock: Mr. Chairman, would the minister care to comment at this time on what progress has been made in the inquiry with respect to the payment of income tax by the farming corporations of western Canada known as the Hutterian brethren?


William Moore Benidickson: Would the hon. member repeat the name of the taxpayer?


George Clyde Nowlan: Hutterites, he said.


Mr. Carter:: Mr. Chairman, I wish to say a few words in reply to the statements made by the hon. member for Kootenay West concerning Moral Re-Armament. The attack just made by the hon. member is in line with the attacks that have been appearing in the Canadian Tribune for several weeks.


Herbert Wilfred Herridge: I had not seen it but that
is the old line of Moral Re-Armament.


Chesley William Carter: I will send it right over to the hon. member. I just want to tell him that I am very much surprised to find him in such company. This is not the first attack that has appeared in the "Commie" Tribune. It is the latest of about seven or eight attacks. When the communists find it necessary to attack something, I think it behooves the rest of the people of Canada to sit up and take notice. I was not in the house when the hon. member made the statement but I understand that he quoted as his authority the Rev. Dr. Donald Soper.


Herbert Wilfred Herridge: Quite right.


Chesley William Carter: Hon. members who watch the television program "Tabloid" will recall that this is the same Dr. Donald Soper who appeared on that program and told Canadians that Khrushchev is our man. I do not think anything more need be said on that score. With regard to the specific charge as to eligibility for income tax reductions, the charge was answered by the Minister of National Revenue on March 31 as found on page 2643 of Hansard.
Moral Re-Armament is an incorporated body and was incorporated by letters patent in December, 1944. One of the purposes for which Moral Re-Armament is incorporated is

set forth in the letters patent as, among other things, the advancement of the Christian religion in particular, by means of and in accordance with the principles of the Oxford group movement founded in or about 1921 by Dr. F. N. D. Buchman.
My hon. friend must know that you do not have to be a religious body or a political body or any other body to engage in the advancement of the Christian religion, and that is what Moral Re-Armament purports to do. It does not compete with any religion; it has no body of doctrine. It is not a church and does not profess to be a religion, but it does heal mistrust, hates and resentments amongst the peoples of the world. It holds out to mankind the challenge of living by absolute moral standards, and that is something to which I want to give my support.


Frederick Johnstone (Jack) Bigg: I wish to say a word or two about income tax exemptions. This is something which I think is of universal interest. I am not asking for a reduction in income taxes across the board. I merely rise to suggest to the minister and his department that some consideration be given to students who are taking university courses or technical training, and who are trying to put themselves through these courses by taking seasonal employment during the summer. In many instances this has an effect on the income tax position of their families or themselves. They need this money immediately to go to university and the income tax levied on them at this particular time often delays them a year or two or sometimes prevents them from getting this higher training. I would suggest to the minister that this might be a field in which through some small reduction in our national income we could relieve these very worthy young people of this financial burden.
I might add at this time that this suggestion would not present any solution to the problem of nursing students because they do not get any income while they are learning their profession.


George James McIlraith: I want to raise a question concerning the administration of the estate tax by the Department of National Revenue. This question has been raised before with the minister on another occasion and his answers on that occasion were comparatively satisfactory. The difficulty can be best illustrated by indicating to the minister exactly how the matter works. A person dies leaving a commercial property which is immediately listed with real estate brokers for sale. It is sold at the highest possible price that can be obtained and the sale is completed within three months of the date of
Supply-National Revenue death. If you take the sale price as the basis for determining value, then the value is the gross sale figure less the agent's commission. The estate only receives the net figure.
The department, however, takes the position that the estate must pay tax on the gross sale price and injustice is caused by the increase in taxation caused by that administrative practice. The estate tax legislation deals with value, and the departmental interpretation should not enable the department to increase the "value". The value is what the selling authority can get for the property. This is one of the tests of value, in any event, although there are many others. In a case where there is an attempt made to sell immediately, the value must be what the vending authority realizes. I should like to have the minister's comments on that situation because I feel that what the department is in effect doing is to amend the Estate Tax Act by interpreting the value of the property in the example which I have given to mean the real estate agent's commission as well, a wholly unfair practice.


Mr. Dinsdale:: I should like to speak briefly on the subject raised by the hon. member for Kootenay West. I believe he raised a query as to the desirability or eligibility of certain religious groups having contributions to their organizations exempted from income tax. It seems to me that this principle that has been espoused by the Department of National Revenue has many benefits. As a matter of fact, I would be inclined to support this principle in preference to the principle recently adopted to the effect that automatically $100 per person be allowed as an income tax deduction.
We have many religious and charitable organizations in this country which are doing good work on behalf of Canadian citizens. It seems to me it is an entirely desirable principle to assume that this work should be encouraged by providing an incentive of the kind that is provided under our income tax legislation. So far as the Moral Re-Armament group is concerned, my acquaintance with the organization goes back to my student days when it was known as the Oxford group and carried on religious activity amongst the students of this country as well as England and European countries. The impression I have always received has been that it was made up of dedicated believers in the concepts and doctrines of the group, and that its purpose was none other than to encourage and stimulate religious life among the young people of this country and throughout the western world. More recently, in the post-war

Supply-National Revenue world, under the name of the Moral ReArmament group, the Oxford movement has reached out into the international field. I am certainly not going to enter into a discussion tonight along the lines of the subject that has been introduced here by the hon. member for Kootenay West, that is, as to whether or not the work they are doing in this field is tied up with international intrigue.
I would certainly lend my support to the principle that as a religious group they should enjoy the same privileges as all other religious organizations working for the moral enlightenment and benefit of mankind everywhere. I do not think this House of Commons is the place to indulge in intolerance of this kind and I certainly would lend my support for the continuation of the principle so far as this group is concerned.


Douglas Mason Fisher: Just one or two comments with regard to this matter. I do not think it is a question of intolerance at all; it is a question of judging the organization by its aims and programs and claims. I would like to suggest to hon. members who are so strongly for Moral Re-Armament that they look very closely at this organization and make up their minds whether this particular privilege they have received from the department is a benefit. I think a close examination would alter their judgment.
Since this point is being brought up I would like to know from the minister a little more about how such decisions are made. I know I helped put forward the appeal of one organization, the Canadian ski patrol, for an exemption. At the time I was somewhat bothered whether this was a worth-while cause so I spent a week end out on a ski slope as an observer and I came to the conclusion that it performed a worth-while function.
I can also see that there are unlimited possibilities in trying to prove or show that an organization is of a charitable or worthwhile nature and I would like to know more about how the limits are arrived at. As far as the hon. member for Brandon-Souris is concerned, I can get much more sympathetic about a genuine cause which deserves support or about the Canadian ski patrol or the Canadian Olympic association than I can about Moral Re-Armament.
I did ask a question previously of the minister on orders of the day about a big story which broke in Montreal with regard to an investigation currently going on into the question of charitable donations, and I believe this newspaper, the Montreal Gazette, mentioned the word "racket". I asked the minister about it and he indicated that there would be more information later about this. I did not want to address him further on

orders of the day because I thought I would have an opportunity here to ask for more detail about this investigation, what is involved and what kind of organization is involved. If there is very little truth to the matter I would like to know how this story was released, because the particular newspaper man who broke the story, Arthur Blakeley, has a reputation for probity and fairness, at least as far as I know. I must assume that there was something to the story and for that reason I would like an explanation from the minister as to what was behind it and where the information came from.


Jacques Flynn: Shall the item carry?


William Moore Benidickson: No explanation?


George Clyde Nowlan: I will reply later.


George James McIlraith: Is it the intention of the minister that we ask our questions on any item and then he will deal with them at the end?


George Clyde Nowlan: Yes, on the last item.


Alexis Pierre Caron: Does that mean we can go back to the items or will we have to stick to one?


George Clyde Nowlan: You can come back, of course.


[Stage Direction]
Item agreed to.
263. District offices, $29,576,139.
Alexis Pierre Caron: I have a problem which has been raised for years. It has been raised by all public bodies in western Quebec from the different counties because they want a collection office for the Quebec side separate from the Ottawa office. This has been asked for by boards of trade, by the junior chamber of commerce and the union of the chambers of commerce of western Quebec; and they have been asking for it for years.
Therefore I would ask the minister to think about this, not just to say, as he said last year, that he will look it over. I ask him to try and think how advantageous it would be for the Quebec side, and even for the Ontario side. We have the same trouble with the statistical information. It is all at Ottawa, unemployment statistics and everything, so we cannot make a difference when it is for the Quebec side or the Ontario side.
I know the minister will say, why did I not ask for this when the Liberals were in power? I did and I did not succeed then but I hope I will succeed now. If I do not I hope I will succeed with the next Liberal government in two years' time.


Some hon. Members:: Oh, oh.


Alexis Pierre Caron: I will give the minister the chance to make a good move before he goes out of office, and it is only a matter of generosity on my part. I would like him

to think about it seriously this year and give it to us for the beginning of next year.


[Stage Direction]
Item agreed to.
Tax appeal board-
264. Administration expenses, $116,500.
George James McIlraith: This is the last item and I understand the minister will now answer.


George Clyde Nowlan: Yes; I was waiting for other comments. Mr. Chairman, at least we are on the last item of my department and perhaps I could refer briefly to some of the matters which have been raised this evening.
The hon. member for Nickel Belt raised the highly technical question with respect to valuations of lots at Sudbury which were bought at a certain time and he asked what valuation might be put on them now. Frankly I do not think I can get involved in a technical discussion of that kind. He also mentioned the problem of joint property and raised many other technicalities which frankly I am not competent to deal with. Even if I thought I were I think it would be the height of presumption to try and deal with them on an estimate and give what might be construed as a legal opinion and afterwards have it used against me in another place. I would be very glad to discuss this question with the hon. member in my office, or he can discuss it with legal officers or with other officers of the department.
I can well understand how he takes more than a passing interest in the increase in the value of lots at Sudbury because I know about that from having visited my son there some 15 years ago. I saw vast expanses of rather unoccupied land, shall we say, and one can see how it has been built up during the last few years so that now you have almost a continuous town in areas where for miles you hardly saw a house. I realize the importance of the problem and I will do everything possible to provide satisfactory answers to it.
The hon. member also asked about the staff at Sudbury and the impact of this centre which we have in Ottawa upon the staff there. The hon. member for Laurier also asked about this problem of the reduction in staff. It is true we have reduced the temporary staffs who are normally employed during the rush season in the spring. As the result of centralizing operations here in Ottawa we have effected substantial reductions in those temporary staffs. We have not reduced all our permanent staff in any way, shape or form.
Earlier in my opening statement I spoke about the over-all reduction in staff. That was accomplished by efficiency and by modern methods perhaps, but we did not let anyone
Supply-National Revenue out of the department. What happened was that the people we had retired for various reasons, health, age, and so on, and we were able to effect economies by not filling all the vacancies which normally occur. That is how we accomplished a reduction in staff; it was not by letting anyone out who was in the employ of the department.
The hon. member for Kindersley raised with me a theoretical problem with respect to the evaluation of oil and mineral rights and the principle which the department follows in assessing those rights on those old properties when they were not reserved at the time the original grants were made. That, again, is a technical and legal matter and I think it would probably be better dealt with in conversations between the persons concerned and the officials of the department rather than my trying to deal with it inadequately at this time.
The hon. member for Gloucester raised a question as to the number of bilingual employees we have in the district office of Saint John. I am advised by my officials that we do not have a break down of the number of bilingual people we have at the district offices in Canada. We know, through a card record of individuals, those who are bilingual and those who are not. It is the policy of this division, as it is the policy of all branches of government, to make sure that there is a sufficient number employed in each one of the offices throughout Canada to serve whichever of the official languages that is used. I am sorry I cannot give the exact number tonight, but if the hon. member wishes me to obtain it we can get it by checking the individual cards of the staff in Saint John.
The hon. member for Calgary South together with others made some flattering references to the deputy minister and his staff. I want to express my appreciation for this. I think it speaks very highly of them, and I join with what has been said by hon. members in this committee tonight. Praise has been given to officials of the customs and excise division which is a tax collecting department and a tough one. I presume that of all the tough jobs in the service of Canada, administering the income tax division is probably the toughest of all.


William Moore Benidickson: They do it very well.


George Clyde Nowlan: They deal with millions of individual taxpayers, somewhere in the neighbourhood of six million individual taxpayers, I think. In addition we have scores of thousands of corporations and the number of complaints or criticisms we receive is so negligible that it does not come as a surprise to me that the officials responsible should

Supply-National Revenue receive praise. I do appreciate it, having served in the office for some three and a half years, and I want to express appreciation of what hon. members have said on behalf of the staff.
I might say that another deputy minister here, not too long ago, was marking down those who were tendering praise to him because he said he was sure they would be coming to his office with requests. I am sure this does not apply to those who have been bestowing praise on the income tax division, because they know they will not get anything anyway.
The hon. member for Calgary South also referred to the report and recommendations of the committee last year, as did the hon. member for Oxford. I have a long memorandum here which I do not think it is necessary for me to read in full. The recommendations of the committee did receive the very careful attention of the officials and of myself, and as far as we could in keeping with the rulings of the Department of Justice and the statutes involved we have attempted to meet them. There have been changes made in the assessment procedure and in the appointment of assessors. One hon. member, I think it was the hon. member for Port Arthur, raised the question of the salaries we are paying to the assessors and pointed to the recommendation which was made last year. I regret very much to have to say that no great progress has been made in that field.


Douglas Mason Fisher: Who is the stumbling block?


George Clyde Nowlan: I do not want to say there is a stumbling block. I am convinced, of course, that the officers of my department are the most valuable, the most able, the most intelligent of the officials of any department of the government of Canada, and that they make the greatest contribution to the public service; but many of my colleagues mistakenly hold the same opinion about their officials. The Department of Agriculture, for instance, is concerned about its veterinarians and the Department of Transport is concerned about its engineers, and the civil service commission has found it very difficult to deal with one class of officials, valuable as I am sure they realize they are, without dealing with them all at the same time. However, this matter is now under review by the civil service commission and the treasury board. I am disappointed that more concrete action has not yet been taken in this field. I am told that some time within the next few weeks we shall have a recommendation to go before treasury board from the civil service commission which I hope will rectify this situation.


William Moore Benidickson: May I ask the minister a question? The recommendations of a parliamentary committee are, of course, of some consequence. I know the minister has in his hands an observation on practically every point which was raised by the parliamentary committee when it examined the minister's estimates. I wonder if there is any chance of the minister making that document a public document in some way? I refer to the statement which the minister would perhaps, if pressed, be prepared to make with respect to the observations of the parliamentary committee of last year.


George Clyde Nowlan: Speaking from memory I feel certain that I did send to the chairman of that committee last year a copy of this memorandum. If I did not, I certainly will do so tomorrow, and I would also be glad to send one to the hon. member for Kenora-Rainy River so that he can see what has been done.


William Moore Benidickson: Not for myself. I was thinking that it might be filed with the Clerk of the house.


George Clyde Nowlan: Anyway that is the situation with respect to the salaries of assessors. There was another recommendation, one specific one, on which we made progress, of course. The committee recommended that the tax appeal board be enlarged and, as the committee knows, in the tax bill which is going through parliament at the present time -it is possibly in the other place-there is provision for one additional member of the board. That will assist in dealing with the problems with which the board is confronted.
We have spent a fair amount of time this evening dealing with a matter which is somewhat extraneous, that is the relative merits and demerits of a system or an organization known as Moral Re-Armament. Far be it from me to pass judgment or to enter into such a discussion, because I know that many hon. members in this house feel keenly on this matter and have had personal connections with this organization. This is not a subject on which I want to pass any judgment except to say that years ago, before I came into this department, the minister then responsible ruled that Moral Re-Armament was a charitable organization within the meaning of the act, and I have seen no reason, and I have heard no reason tonight, why that decision should be reversed or interfered with.
This is one of the problems with which the minister is continually confronted, this matter of ruling on charity, and I must say that I think there has been, if anything, a greater leniency shown in this respect in

the immediate past than there was in preceding years. This is a very difficult problem. Lawyers here know we go back to the definition of charities as laid down back in the time of Queen Elizabeth. The present minister as, I am sure, did all his predecessors, has attempted to define charities within the meaning of those statutes and has sometimes given them a very charitable interpretation.
I refer now to the question which the hon. member for Laurier raised with respect to lay-offs. I may say this about the temporary centre: there have not been many questions asked about it, and I thought that perhaps more attention would have been paid to it than has been the case. We have carried out a most interesting experiment this year by establishing in Ottawa a centre which deals with all the T-l short returns recording incomes of less than $20,000. That is something we have watched with great interest. It was an experiment.


William Moore Benidickson: Was it successful?


George Clyde Nowlan: We brought in electronic devices. It is necessary because of the increasing growth of population. We hope to have this as a sort of pilot plant here and having ironed out the bugs, as it were, to use a slang expression, we hope to establish the system in other parts of the country. On the whole we think it has been very successful. We have not got the complete returns, of course, but what I am about to say will interest the hon. member for Laurier who was talking about reduction. Speaking now of Ontario, at the peak load on April 30 this year we had 60 less temporary employees than we had at the peak load last year. Of course, we had many temporaries employed here in Ottawa so in areas such as Sudbury the diminution in temporaries would be greater than it would be in the whole province.
As a result of having the work centred here our permanent employees in the various departmental offices were able to give much more time to assessing the problems there. We had our senior expert people dealing with the urgent problems rather than with routine assessments as was the case in the past. It has been a successful experiment. We have had difficulty, of course, in working it out in the first year but I think it reflects credit on the staff responsible for it, and on the deputy minister and the senior officials who planned it. I want to pay my tribute to them for it.
One thing which did result was that rebates and refunds were processed much more quickly than last year. We got hundreds of
Supply-National Revenue letters of appreciation from people throughout the province. I think the only person whose enthusiasm about the speed with which rebates were made was somewhat tempered by other considerations was the Minister of Finance who found that the refunds were going out so fast that before the end of the year he was paying out more money in refunds than he anticipated. I do not want the financial critic of the Liberal party to hold that against the minister next year because probably next year the refunds will not be as great as a result of so many having been paid out so promptly this year.


William Moore Benidickson: Notwithstanding what has been said, has the minister got the capital and current costs of the system?


George Clyde Nowlan: No, frankly, I have not. As I said, there were 60 less temporaries this year. The current cost was less than the cost of the administration throughout the province.


William Moore Benidickson: The minister was referring to Ontario only?


George Clyde Nowlan: Yes. There was some capital equipment that we got from the electronic firms as my hon. friend knows. I am not sure what the cost was in that connection.
The hon. member for Port Arthur raised the question of assessors and I have dealt with that. He also raised the question of what he called legal patronage. This term "patronage" is one that rather intrigues me. I have not found any evidence of it in this place since I have been here. I thought it existed in some other fields. I doubt if that term can be justified in reference to the dealings of the federal government and certainly not in so far as legal counsel are concerned.
My hon. friend may recall a statement which was made by the Minister of Justice last year, I believe on his estimates, when he said and quite properly that he had to assume responsibility for the administration of justice in the trial of cases and when it came to cases going to appeal and cases in the superior courts of this country the Department of Justice and not the Department of National Revenue reserves and exercises the right to appoint counsel to handle cases where the Department of Justice feels this is justified.
I have the highest respect in the world for the legal staff of the Department of National Revenue. That staff is the permanent part of the department and could not possibly deal with all the cases and litigation with which we are confronted. We would have

Supply-National Revenue to enlarge the staff tremendously to deal with the volume of work confronting us. Everyone here knows and certainly the lawyers know that when you are handling cases involving millions of dollars in taxation, with all due respect to our permament staff who are fully qualified, it is highly desirable to have counsel who have had a great deal of experience in the appeal courts and in the higher courts of the country. Whether or not you call that patronage I am sure you must admit that it is the only way you could administer a department such as this.


Douglas Mason Fisher: That ain't the way I heard it.


George Clyde Nowlan: If the hon. member for Port Arthur has heard anything else I would like to see him rise in his place and say so and not mutter from his seat. I would like to know who the man is that has left the department and is now talking about legal patronage. I would like to know his name. Let us bring this out in the open. I am telling this committee and the hon. member that we do not appoint counsel except on the advice of the Department of Justice and the deputy minister of that deparment. Anyone in this committee who has had any experience in these matters knows, and certainly my hon. friends opposite in the Liberal party who had experience in administration know very well, how scrupulous the deputy minister of justice and all officials of that department are in naming counsel.
We have many counsel on our staff today whose political antecedents, if they have any, I am sure are not those that are identified with the party now in office; but that is a matter for the Department of Justice. I said I would defend that practice anywhere in this country. I challenge anyone to suggest that in the matter of handling cases in the superior courts-cases where you really have to present the best possible case because you are confronted there with the most competent and experienced counsel in the country-[DOT] patronage in the accepted sense of the term has never been used in any way, shape or form.
The hon. member for Ottawa West raised the question he raised last year with respect to valuations of the sale of real estate. The hon. member suggested-and I can see where from a public standpoint there would appear to be some merit in it-that when one sells a lot of land or a piece of property the estate tax branch assesses the gross price received whereas in many cases the vendor has retained an agent and perhaps with respect to a large and valuable property has paid between $20,000 and $40,000 in commission. As I said that is an argument which was an appeal.

All I can say, is that I am advised that the law is that the fair market value does not allow for agents' commissions. That has been laid down, I am told. I am not now giving a legal opinion. I am informed that this has been laid down in the courts of this country. One can see from a practical standpoint that whether a vendor uses an agent is, shall we say, a matter of option with the vendor. According to the argument advanced he would have to pay the tax on the whole property if the man sold the property himself whereas one who employed an agent would be able to claim payment of a commission even though it was somebody closely related to himself. In any event that is the practice that has been established and laid down, I am told, in accordance with the law as we interpret it. If there is any further clarification the hon. member would like I shall be glad to discuss the matter with him.
The hon. member for Brandon-Souris also raised the question or Moral Re-Armament and entered into a defence of it as did the hon. member for Burin-Burgeo in relation to Newfoundland.
The hon. member for Port Arthur also referred to the question of charity and mentioned some newspaper articles dealing with this matter. I do not know, of course, the sources of the information of the press gallery and I have been told that is something one can never discover. I have even found out that it is very difficult to discover the identity of those who take part in television shows, although that perhaps has been disabused. I believe it is much more difficult to define the sources of information, therefore I cannot satisfy the hon. member's, shall I say, curiosity on that any more than I can satisfy my own.


Douglas Mason Fisher: Has there been a special investigation?


George Clyde Nowlan: Yes; there are always investigations going on with respect to these matters. The affairs of individual taxpayers are subject to investigation and, of course, they are also a matter of absolute privacy. I do not think I can properly or profitably go into the matter any further than to say what issues have arisen from time to time with respect to these matters. They have been, they are and they will be investigated in years to come and settled in the best possible manner that the department can achieve.
The hon. member for Hull uttered a very forceful plea for the inauguration of a taxation office in his city. He said he raised this matter last year. Frankly if he did I have forgotten it. My recollection is that I passed my estimates last year with a great burst of speed. Today we had a great deal of praise.

I could have done without the praise if we had had the luck of last year. The estimates were passed last year in 30 seconds. Before the officers got down from the gallery we were through. If the hon. member raised the matter last year it must have been in the hurry of that moment and I did not notice it. He said that he raised it in years gone by. He did not say he had a deaf ear, but he certainly did not get it. He has no deaf ear this time, Mr. Chairman, but I am particularly concerned about him because the hon. member said if he did not get it from me he would keep at it here and finally he would get it from the next Liberal government.


George James McIlraith: Next year.


George Clyde Nowlan: I have the highest regard for the hon. member; we like him and we love him, but I do not want to see him around here forever. I think he does deserve a rest before the time he is 75 or 80. He would have to be coming here when he is that age if he expects to get it from a Liberal government. I will promise him we will give the matter consideration. If I made a promise last year I forgot it. I promise him that we will give this the most careful consideration and next year when he raises the matter again I hope I shall be able to be more specific on the matter.
I think this covers fairly well, if not fairly well at least slightly, the various points raised by hon. members. If there is anything further I can do-I hope there is not-I shall be very happy to do it. I think that covers the points at the moment.
I am sorry, one question was asked by the hon. member for Lethbridge with regard to the assessment for income tax purposes of farming corporations in western Canada known as the Hutterite brethren. This is a matter which has been raised on several occasions during the past few months. It is a matter of great concern to the members from western Canada and to the department. All I can say at the moment is that it is receiving the most careful study by the departmental officials. I am not in a position to go farther than that at the moment except to say that the whole matter is under review.


George James McIlraith: Mr. Chairman, there are two matters that I should like to raise that were dealt with by the minister in his remarks. I want to return first to this matter of valuation of estates. I am afraid the matter is not quite as simple as the minister has indicated in his most plausible answer. It is not a simple problem.


George Clyde Nowlan: If you can find anything simple about the administration of this act I should like to know it.
Supply-National Revenue


George James McIlraith: The point here is one which should be pursued by the minister because the problem is whether a taxing department is in fact increasing the taxes imposed by the statute. I am sure this is something that the minister will agree it is not desirable for it to do. The amount of the tax is fixed by statute and not by the department; at least, we like to think that that is the theory of our system.
The minister said the sale price was the absolute criteria and the estate executors, presumably, or beneficiaries, could sell the property themselves. That is neither possible nor practical with 80-year old widows when they are dealing with commercial property in most cases. I think it will be readily agreed that that is just not a good enough answer.
The problem does not arise in those commercial properties where you obtain a valuation because such valuation is based upon the amount the vendor can realize from the property and takes into account all factors; but where a sale is made within a short time after the death then the estate is improperly penalized because in most instances the only method of making a sale of a commercial property in a short time after the owner dies is by employing competent real estate agents. The real estate agents will sell the property to the best possible advantage, because they get a percentage in fees and because they seek to serve their clients well, but they turn over to the client only the net amount of the sale. That is all he gets. It is not a simple matter; the agent's commission is not a debt of the testator. The value is a matter of what the estate is able to realize from the asset. That is the true test of value. The test can only be determined in that way.
There are two practical methods of determining the value of those properties. One is to obtain a valuation by qualified appraisers, and usually no problem arises there. But this other problem arises and it can be a penalty that is very severe on the estate. If the minister would take the trouble to compute out the penalty in the case where the estate is of a value of $100,000 and the selling commission is $7,000 and from $60,000 to $80,000 is exempt, he will see just how heavy the penalty is. I respectfully submit that taking the gross sale price as the value is a wrong practice; it is only the practice of the department and I do ask to have the matter pursued.
It is not a sufficient answer to say that this matter can be appealed to the courts, because that involves tying up releases or deposits, as the case may be, and usually it

Supply-National Revenue is difficult to have the cash available to provide the deposit against payment of the tax, and it is not possible for the estate to involve itself in the delays inherent in an appeal and the cost involved in an appeal to the courts. For these reasons I ask the minister to pursue the matter in a more thorough way than his answer tonight would indicate. This is not a matter at all of simply working out the answer that will make for easy administrative practice. I am not sure but that the minister's department is verging on the difficulty of working injustices on taxpayers, by its attempt to be what it calls efficient in reducing its staff, as he has done. There is a point where your apparent efficiency becomes an injustice to the taxpayer.
The other matter I wanted to raise was the question of salaries of assessors. The matter was dealt with by the minister and in his answer the minister was unaware of what he did. He took shelter behind the civil service commission recommendations on this matter of pay increases and I am quite sure he did not want to do that, because the inference from his remarks as delivered by him-I think he will agree with me it was the only inference that could be drawn from his remarks-was that the civil service commission had not dealt with this matter, had not recommended the increases.
Under the act the civil service commission made a report to parliament on the matter of pay increases and for some reason or other that report was not tabled in the house although it was made at the request of the government of which the minister is a member. Notwithstanding the fact that the minister must assume responsibility for the failure to table that report, he is now seeking to leave the inference that the report failed to deal with this important matter. A great many of us will be quite unconvinced that it did not deal with this matter unless we see the report. For my part, knowing the work of the civil service commission I feel quite confident that they did deal with the matter of pay increases in a proper manner and that the responsibility for the failure to grant these pay increases must remain with the government. It is a government responsibility. The civil service commission has enough burdens without being treated in the way the minister in his remarks, perhaps unintentionally, treated the commission tonight. I would ask him to clarify that matter so far as the civil service commission and its report are concerned.


Hédard-J. Robichaud: Mr. Chairman, I have in mind another matter which I should like the minister to clarify. Why is it necessary for

officials of the taxation division, in many instances accompanied by officers of the R.C.M.P., to raid commercial establishments and seize all the books and papers of such corporations? I can understand why under liquor acts or the narcotics act it is necessary for the R.C.M.P. to raid certain establishments but I do not understand why it is necessary for long established companies with branches throughout a province or throughout the country to be raided at seven or eight o'clock in the morning by officials of the taxation division accompanied by R.C.M.P. officers and why officials of these companies have to open their safes and hand over all their books and papers. At a time when we are talking about the rights of individuals it seems to me that there must be ways and means of obtaining any necessary information without taking such measures. I should like to have an explanation from the minister as to the reason for such action.


Mervyn Arthur Hardie: Mr. Chairman, I am looking for guidance from you. On this department's estimates can I raise at this time the question of doing something about the vision of the government-


Douglas Mason Fisher: The vision?


Mervyn Arthur Hardie: The vision in developing northern Canada, particularly with reference to the policies of the taxation department and giving the same type of treatment to Canadian companies as is given to United States companies that spend money on exploration. I should like you to advise me whether I can speak at this time or whether I should delay my remarks on this subject which will be made for the purpose of helping the minister and the cabinet do something about the vision.


George Clyde Nowlan: It is a matter of fiscal policy and should be under finance, Mr. Chairman.


Mervyn Arthur Hardie: Did the chairman give me a ruling or did the minister?


Jacques Flynn: I have not given a ruling yet as to the point raised. I may say that this afternoon I gave an indication of my views on the discussion of fiscal policies and said that in my opinion they could not be discussed under the estimates of the Department of National Revenue because this department has no other duty than to collect the taxes imposed under such policies. Normally it would be a matter for the budget debate but it may be that in certain respects the matters the hon. member wishes to discuss could be discussed under the estimates of northern affairs.


Mervyn Arthur Hardie: How about finance?


Jacques Flynn: And possibly under finance. In any event I would not want to make a ruling in advance.


Arthur Smith: I wonder
whether I could make a comment with the consent of the hon. member.


Mervyn Arthur Hardie: On a point of order, I want to accept the ruling of the chairman that this is not the time to enter into such a discussion, a discussion that would add to the happiness and welfare of those people who have had so much to say about the northern vision. I accept the chairman's ruling that this is not the time for such a discussion.


Douglas Mason Fisher: Mr. Chairman, I obviously gave the wrong emphasis in the remarks I made about the question of lawyers outside the government service being called in to handle income tax appeal cases with the result that such cases pass out of the hands of the lawyers of the department. I think we all know that patronage in connection with legal appointments exists. I do not think the minister is so naive or would expect me to be so naive as to think it does not. I can give him examples in the appointment of lawyers to handle real estate dealings under Central Mortgage and Housing Corporation. I have collected such examples for several constituencies, and it is obvious that a lawyer has to be an open supporter of the government if he is going to get such an appointment. I obviously gave the wrong emphasis. What I was interested in was whether the system of using outside lawyers is by far the best or much better than using the legal staff of the department to carry on these cases.
In his reply the minister indicated that he felt it would be impossible for the poor overworked lawyers of his department to carry on these appeals and we accept his word for that. However, if the minister doubts the information I have put before him I should like to say that I too can doubt information but on the other hand may I suggest that this would be a most unlikely type of thing to be put before me if it had not been done by someone who at one time worked for and was familiar with the department.
The other point is that in challenging anyone to produce his source of information the minister must be aware that one is most unlikely to be in a position to do this. I make no apologies for not giving the source. I do not think it would add any additional validity, but I think the matter I have referred to remains as an insight into how these matters are conducted. Perhaps it is a wrong one. The minister certainly seemed to indicate that he thought it was a wrong one. The only way I can follow up this matter is by putting questions on the order paper.
Supply-National Revenue I will have to do that and obtain from the department details as to how many lawyers have been hired over the years, how many cases they have handled and what their fees have been. We will also know something then of the identity of these people. As a result, next year I will be in a much better position to present an argument to the minister on this point.


Arthur Smith: The minister made a very comprehensive reply to two of the three questions I put to him. I am sure he did not deal with the third one because he had such a variety to answer that it was not possible to remember them all. However, I would ask for his comments with respect to the suggestion of his department providing advance tax rulings for those individuals or corporate bodies who engage in venture or risk undertakings. There are a great many people involved in the development of our resources who are hesitant as to the extent to which they should use their capital because they have some doubt in their minds as to their tax position. This only tends to discourage the development of these resources by Canadians.
I know the committee is well aware of the fact that this is a practice which is followed in the United States. I realize also that the minister has some misgivings about it in that it would require a substantial additional body of assessors and that it would also disrupt certain procedures which are currently followed. The minister is quite right in saying he did give me a memorandum which, unfortunately, as chairman of the committee I could not submit to the committee because it was received after the committee had completed its hearings.
As I recall, in this memorandum the minister said some consideration is being given currently to this problem and stressed the difficulty in staffing such an operation. However, I do impress upon him the need for a very clear definition of what is taxable income and what is capital gain and, in particular, when any of these companies are in a position to bring a situation to his department which does involve extreme risk in my view it would be helpful if the taxpayers were in a position to know exactly where they stood with the department rather than having to complete the undertaking and then proceed without a clear understanding of their tax position. I wonder if the minister would comment on this particular aspect of my question.


Jacques Flynn: Shall this vote carry?


Mervyn Arthur Hardie: Not until after the minister has commented on the statement just made.

Supply-National Revenue


Jacques Flynn: Shall the vote carry?


George James McIlraith: No, Mr. Chairman, there are some replies to be made.


George Clyde Nowlan: I was waiting for the hon.
member who was addressing the Chair to stand on his feet.


George James McIlraith: I did.


George Clyde Nowlan: I was not referring to the hon. member for Ottawa West. This matter which the hon. member for Ottawa West has raised is one, of course, which is always a subject of discussion and debate. He did refer to the fact that the matter was discussed last year, and he suggested that there were rulings handed down or suggestions brought down which were not implemented. This is quite true. The matter, as the hon. member knows, is being reviewed this year. We are getting classifications and rulings on various classes in the national economy, and undoubtedly there will be one come down on some of these matters to which he referred.
I am not in a position, of course, to disclose any of these matters which he did raise. He said he would not be satisfied until the various matters are brought down. After all, the matter has been the subject of discussion in the house, and the issue was closed. We are getting further information on these matters and a further report dealing with them class by class. I hope further action will be taken on this particular matter in the early future.
The hon. member for Gloucester raised a question with respect to seizures of books and records by the Royal Canadian Mounted Police. It is true that under certain circumstances officers of the Royal Canadian Mounted Police do accompany officers of this department in making seizures. However, it should be stressed that these documents are not seized at any time in that manner without an order of the exchequer court. We have to apply to the exchequer court and have to satisfy that court by affidavit that this action is necessary and then the seizures may be made. A mounted police officer accompanies the official of this department, not to participate in the seizure in any way, shape or form, but simply to be there-what shall we say-to lend the majesty of the law to the procedure of the department and make sure that if there is a breach of the peace then the officer will be there to deal with it. Fortunately these cases which do arise very seldom involve any breach of the peace and the officers of the Royal Canadian Mounted Police go along and are there but do not actually participate in these seizures. This is only done, as I said, after this action has

been brought in exchequer court and an application made to that court. We cannot take that action otherwise.
The hon. member for Calgary South has again raised this matter which was raised last year in the report of the committee, as he said. I, perhaps, overlooked the fact that when he received this memorandum from the department the committee had been released and, therefore, he could not deal with it at that time. The committee advanced several points last year and the departmental officers attempted to deal with them to the best of their ability. This matter of advance rulings was under very careful consideration, and perhaps at this time I can do no better than to read an excerpt from a paragraph in this memorandum which I sent to the chairman of the committee.
The advantages and disadvantages of providing a service of advance tax rulings to a greater extent than is done at the present have received further study, and it is our feeling that the tax practitioners are not unhappy with the service presently being offered. The problems of attracting and retaining the qualified staff referred to in item 4 make it difficult to envisage an extension of the tax ruling service in the near future. There is some merit in this suggestion and it could be argued pro and con for some time. On balance, considering the demands made on our staff, we feel it is impossible at the moment to go further in the matter of making these rulings than we are doing, and that is the only definite answer which I can give to the hon. member for Calgary South at the moment.


George James McIlraith: I do not want to be overly persistent on this matter of salary adjustments and the civil service commission report. However, I think it should not be left the way it is. The minister indicated that the matter of the publication of the report had already been dealt with in the house, and that is so. But that is only part of the truth of the situation on that point, as I think he will agree. There was a motion made in the house for the production of that report, to which the government took exception, and the house sustained the government in that objection. It now becomes impossible for a member to put another motion on the same point because it has already been dealt with by the house.
However, the minister overlooked the fact that he chose to refer to the civil service commission recommendations in connection with these pay increases when he dealt with this subject. If he does that, he leaves himself open to the requirement of having to table the report. The minister's parliamentary

secretary does not seem to agree with that, but I think if he looks at the rules he will find that is the requirement. The government having taken the position it was a government document, and the minister having relied upon it, he is obliged to produce the report. I believe the rules are quite clear on that point.
In any event, I am not pressing the minister to table it now. 1 am pointing out to him the impropriety of taking shelter behind the document or leaving an inference as to the contents of that report, and then not producing it. This is the point I wanted to leave with him. If he does that, it is not open to him to say the matter of the production of the report is closed because by his own action he opens the whole matter and is required to produce it. I think it is quite important that the position of the government vis-a-vis the civil service commission in these matters be kept quite clear. I think he would be the first one to agree, having the responsibility he has for administering legislation of the parliament of Canada with his large staff, that the independence of the commission should be guaranteed and that nothing be done to impair or jeopardize its position in these matters.


[Stage Direction]
Item agreed to.

[Stage Direction]
41. Grant in respect of the net operating requirements of the radio and television services, $62,085,000.
Douglas Mason Fisher: Mr. Chairman, I should like to say to the minister that we have not got the annual report of the Canadian Broadcasting Corporation for the past year. We have the board of broadcast governors coming up perhaps this evening and again we have not got the report. These would be very important to us in our consideration of the estimates since they will be the first reports since the passing of the provisions of the Broadcasting Act. According to the Broadcasting Act both the board of broadcast governors and the corporation are required to file within three months of the end of their financial year their annual reports with the minister and he has to lay them before parliament within 15 days, which takes us to July 15. The minister must have in his hands the reports of these two agencies and I wonder whether it would be possible for us to have them tonight or before his estimates come up next time. It would make our criticism and judgment of the activities, especially of the board of broadcast governors, much more sensible and I ask the minister where these reports stand at the present time.
Supply-C.B.C.


Lionel Chevrier: Mr. Chairman, on this item I think the committee would be entitled to know what is the position of all these applications which have been made for private stations. I think the committee is entitled to a report from the minister on the result of the new policy. I am speaking generally now but I think the minister will know what I mean.
It is true that the committee has been set up and there will be a possibility to discuss many of these things and it may not be necessary to go into great detail at this time, but I think we are entitled to get a statement from the minister about the applications which have been recommended. My understanding is that applications are made to the Minister of Transport for technical clearance and from there they go to the board. The board then holds public hearings and after having heard the evidence makes a recommendation to the Minister of Transport.


George Clyde Nowlan: I do not want to interrupt
the hon. member, as he knows, but I thought we were dealing exclusively with the C.B.C. Is not the matter to which the hon. member refers a matter for the B.B.G. and the application of that act rather than the C.B.C.? I would be very glad to discuss the matter with him, but frankly I prefer to have the officers of the B.B.G. in front of me, because as he knows under the act the B.B.G. has to deal with all the applications for licences.


Lionel Chevrier: I apologize to the minister. I was outside and when I came in I understood we were on item No. 40. I will reserve my remarks for a later occasion.


Jacques Flynn: Item 40 will be called after the items dealing with the Canadian Broadcasting Corporation. I called item No. 41.


Arthur Smith: Mr. Chairman, may I deal with an item in relation to the Canadian Broadcasting Corporation?


Jacques Flynn: Yes, but I was going to recognize the hon. member for Madeleine islands.


Mr. Keays:: Thank you very much, Mr. Chairman.
(Translation):
Mr. Chairman, on behalf of my constituents of the Iles-de-la-Madeleine, may I ask that facilities for French language television broadcasts be provided in that area of the country, which is so isolated from the mainland.
At the moment, reception is quite poor, because coming as it does from station CHAU-T.V., at Carleton, 180 miles away, reception is equal only to about 5 per cent of the station's power.
5874	HOUSE OF COMMONS
Supply-C.B.C.
(Text):
Mr. Chairman, this 5 per cent efficiency of reception given to my constituents in the islands only angers them to the point where they wish to know why people living in this area are not entitled to television reception given other parts of the country.
To establish the policy that television will first be brought to those areas where the per capita cost is the lowest is, to my thinking, a good policy so far as the mainland of Canada is concerned. But when we think of those people who live 50 to 150 miles from the mainland I believe closer scrutiny should be given to their problem and we should consider very favourably an exception to the rule and bring at least a little bit of comfort to these people who spend from November until May almost completely isolated from the rest of Canada, with the exception of one plane service per day.
Would the solution be the extension of the microwave system of the French network from Moncton, first of all by increasing the output from that station and bringing it to the closet point to les Iles-de-la-Madeleine? From that point would then be a satellite which could bring to the Magdalen islands the reception which they so ardently desire, and we would like reception from the French network because 95 per cent of the population speak the French language. It would thereby bring to those few islands in the gulf of St. Lawrence, so often referred to as the gem of the gulf, television service which they deserve and so ardently desire.
I should like to speak at this time in the name of the hon. member for Gaspe who is unavoidably absent from this committee due to illness. As the minister may know, the station at Carleton, CHAU-TV, at present gives 65 per cent French television and 35 per cent English television service. That serves only a very small part of the Gaspe peninsula, and I, along with the hon. member for Gaspe, have received numerous representations asking why that part of the lower St. Lawrence should not be given television service when so much has been given to the area immediately to the west. I am thinking now of approximately 2,000 English speaking families in the Gaspe peninsula who enjoy this 35 per cent English television at about 35 per cent efficiency. I think also of the other 2,000 English speaking families and the 2,000 French speaking families in that area who have no opportunity whatever of enjoying television in that remote but beautiful area of Canada.
I trust that the engineers of the C.B.C. will immediately begin to study the problems which I know exist, and that they will look

at this request favourably, put forward as it is on behalf of these two areas which are so far away from the main centres of Canadian population. I can assure the minister that the people there will be very grateful and they will feel they are getting their just due and not having to pay a penalty for living outside the urban areas of the province of Quebec.
(Translation):


Mr. Lambert:: Mr. Chairman, on behalf of C.B.C. authorities, I wish to thank the hon. member for Magdalen islands (Mr. Keays) for the sound remarks he made tonight, because he explained the situation with regard to television in the Magdalen islands. The same situation also prevails in several other places in Canada. However, the hon. member must realize that certain technical problems cause serious difficulties at present. Anyhow, I can tell him that C.B.C. officials are aware of the situation and that, even if they have not yet inquired on the spot, the problem concerning the Magdalen islands and the Gaspe peninsula has been reviewed and is still being carefully looked into.
Moreover, it must be realized that some stations mentioned by the hon. member have rather low transmitting power and, since they are operated by private interests, the C.B.C. is not in a position to interfere and boost that power.
At all events, I can say to him and to other members who would like to raise similar matters, that the C.B.C. is doing its best to improve the service.
(Text):
The hon. member for Iles-de-la-Madeleine has raised a somewhat serious problem with respect to certain areas of Canada. I hesitate to use the term fringe areas to describe them because we do not like to consider them as being beyond the centres of civilization, if we can call it that, of Canada. They are an integral part of Canada and they are entitled to the services which are provided to their fellow citizens. However, it will be realized that because of the population pattern and the long distances involved there are severe technical problems which have to be faced not only by the corporation but by private radio facilities. I know that the same problem exists in certain areas of western Canada and in those regions where the corporation is not represented by television stations from which it can operate satellites where private stations are faced with similar problems, and the technical difficulties that arise from them.

However, I am assured by the officials of the corporation that continuing studies are being made of these problems and while detailed studies may not have been made in certain areas the situation there has been reviewed in some detail by the corporation. We hope that in due course those people who are affected will get some measure of satisfactory television service. I hope, also, that this time will not be too far away.


Mr. Batten:: I have one or two comments I should like to make on this item, but before doing so I point out that we have got well into this item already and since it is one which includes a large amount of money I wonder whether before we go any further the minister intends to make a statement.


George Clyde Nowlan: As the hon. member says, we got into this item quickly. Far be it from me to try to delay my own estimates, but I do have a preliminary statement here which perhaps I could make at this minute. It is very brief, and it would at least lay the foundation for other matters which might arise.
This is a brief statement dealing with a tremendous corporation and one which is among the largest spending corporations in the government service. I think it can be said that during the year we have improved the over-all broadcasting service through strengthening our Canadian produced programs and through continued development of the radio and television services.
In radio, C.B.C. station schedules were started one hour earlier in the day for the benefit of the early morning audience and I am sure that includes hard working members of this house. In television the program service was started one hour earlier in the afternoon during the fall and winter schedule. C.B.C. coverage was improved. Twelve new low power radio repeater stations were established. Radio coverage was further developed in the north country with the establishment of five additional C.B.C. stations located at Fort Smith, Hay River, Churchill, Fort Nelson and Watson Lake. The C.B.C. is now operating nine of these stations in its northern service and expects to add another at Inuvik by September of this year.
In television, four new low power stations were brought into operation. In addition, C.B.C.'s national program service was further improved for viewers of ten private stations affiliated with the C.B.C. when the corporation replaced television network recordings with microwave service to each of the stations.
Members may recall that the corporation forecast some years ago that the greatest coverage problem to be faced by the national
Supply-C.B.C.
service would arise in attempting to bring television service to the final 10 per cent of the population.
We have now arrived at that stage. I am told that just about 16.5 million Canadians now live within the A, B and C contours of at least one Canadian television station. This means that about 94 per cent of all Canadian homes have Canadian television coverage available. It is significant to note that 80 per cent of all homes in Canada actually have television sets.
This brings me to a quick look at the year ahead. The corporation expects to start work on new low or medium power television stations at various centres as well as continuing its studies of the problems and costs involved in making television available to other still unserved areas. The corporation does not expect to further increase its hours of regular program operation in the year ahead, other than a move toward equalization of the programming hours of the French television network with those of the English network.
In radio, the corporation expects to establish about 12 new low power repeater stations and to also continue work on the further development of the northern service. The experimental C.B.C.-Radio Canada FM network between Montreal, Ottawa and Toronto will be continued.
Referring now to the vote before the committee, hon. members will note that the appropriation they are being asked to approve represents an increase of $2,131,000 over last year's amount. This figure includes an increase in operations of $3,681,000 and a decrease in capital requirements of $1,550,000. The increase in operating requirements represents demands on the corporation as the result of union negotiations, artists' fees and wage scales, the development of broadcast coverage, as well as continued program development.
That is a very brief indication of the work of the corporation and the reason for the expenditures which are before the committee at this time.


Herman Maxwell Batten: Mr. Chairman, I want to assure the minister that I have no intention of delaying his estimates but I did feel that upon an item of this size and particularly one of such importance to the people of Canada he would want to make a statement and I thank him for the statement he has made. I wonder if the hon. gentleman would now give us a break down of the $62 million covered under this item?


Arthur Smith: Mr. Chairman, I am indebted for the applause with which hon. members have greeted me. I should like

Supply-C.B.C.
to ask the minister a number of questions which come to mind as a result of the committee's examination of the corporation a year ago. At this time I will make reference to only one or two.
I would hope that in the course of his remarks the minister could indicate the success or failure of the corporation in its attempt to obtain a greater recovery in relation to some of their productions which as we recall were produced at a great expense to the public treasury and from which in many instances the corporation received no return and in some instances received only a partial return. I would be interested in learning if they had any success with their sales staff in attempting to reduce the amount of money which the public treasury had to put up and upon which no return was realized.
Another point which is perhaps more local in nature but which is of great importance to us in western Canada is this. The corporation was recently awarded the television licence in the city of Edmonton. Naturally I do not want to discuss the award itself. Frankly I regret that the corporation decided to go into a market which is or could be so adequately served by private interests. I am interested in knowing whether or not the corporation is yet in a position to indicate if they are prepared to give extended facilities or boosted facilities at their Lacombe transmitter in Alberta so that all the corporations' interests are not centred in the northern half of the province. The situation as it is of present is that their radio signal covers only an area roughly south to Red Deer and no further. Consequently southern Alberta receives no radio signal and therefore no broadcasting from the corporation at all. It seems unfortunate that the corporation would entertain the idea of establishing at a great capital expense a television studio before fulfilling what I suggest it is their duty to complete, the establishment of facilities for the rest of the province with respect to radio transmission.
I also want to ask the minister whether in his view it is a sound policy for the corporation to compete in market areas such as Edmonton, and many other similar locations when there are yet so many areas in Canada which receive no television service. We have witnessed the unusual situation wherein these moneys were made available to the corporation and thus they entered into a market area to which a number of private broadcasters were prepared to offer much the same service. From the policy standpoint I ask if this is not a backward step in failing to provide television service to areas that require it. As it is we are providing this service to areas which could and should be adequately served by private interests.
There are a number of other points I should like to raise with respect to the corporation but I see that it is eleven o'clock.
Resolutions adopted in committee of supply this day reported and concurred in.



BUSINESS OF THE HOUSE

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


Gordon Minto Churchill: Tomorrow, Mr. Speaker, we will continue with the debate on second reading of the bill of rights. In view of the lengthened hours, each day now being the equivalent of two normal days, I am assuming that this debate will conclude during the course of the day. We will then go on with the estimates we were considering this evening, those of the C.B.C. and then the board of broadcast governors, followed by the estimates of the Department of Transport on which the committee has already spent four days. We are part way through.
On Friday there will be a continuation of estimates in the order I announced earlier in the week: external affairs, northern affairs, labour and public works. All of these are available for consideration.


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

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

Mr. Argue: 1.	Were any work orders issued in connection with the main contract for construction of the substructure for the south channel high level bridge at Cornwall, Ontario, by the St. Lawrence seaway authority?
2.	If so, what was the number of orders, the date of each, the name of the official authorizing and signing each, the value of each, and the nature of such orders?
3.	Was any change in tender price accepted by the St. Lawrence seaway authority for construction of the substructure after the contract was signed?
4.	If so, what was the date of each change, the name of the official authorizing it, the reason for it, and the actual amount?
5.	What is the actual number of work orders, which have been issued for remedial work in connection with the substructure of the Cornwall high level bridge, the date of each order, the value, the name of the official signing each, and the purpose of each?
6.	What is the total actual cost of remedial work on the substructure of the Cornwall high level bridge as of April 1, 1960?
7.	What is the total actual amount unpaid on this contract for the substructure as of April 1, 1960, and amounts unpaid on (a) the prime contract;
(b)	extras in connection with the main contract;
(c)	remedial work, and the reason for non-payment on each category?
Answer by: Hon. George H. Hees (Minister
of Transport):
The St. Lawrence seaway authority advises as follows:
1.	Yes.
2.	Five-as follows:
No. 1, dated December 29, 1956, providing for the substitution of 75-ton capacity "Franki" caisson piles at $15 per lineal foot for the 50-ton cast-in-place piles specified at the contract unit price of $10 per lineal foot. Because of a reduction in quantity from an estimated 7,000 lineal feet to 4,667 lineal feet, there was no change in total cost.
No. 2. dated August 18, 1958, providing for the supply and installation of rigid struts between the upstream and downstream
Questions
cylindrical shafts of each main pier to assure their stability during the 1957-58 winter season before the stabilizing effect of the steel tower weight and its bottom strut had been added. Value at cost plus 10 per cent- $5,435.28.
No. 3, dated November 12, 1958, providing for the removal costs of trestlework damaged beyond repair during winter of 1957-58 when left in place for the performance of remedial work on the main piers. Value at cost plus 10 per cent-$47,140.28.
No. 4, dated March 5, 1959, providing for the refinishing of the bearing surfaces on approach piers Nos. 1, 2, 3, 5, 7, 10 and 20 as required to suit changes in the psecified elevations and the relocation of anchor bolts in approach piers Nos. 1, 3, 4, 16, 21, 23 and 24 to suit revisions to the contract plans. Value at cost plus 10 per cent-$10,649.22.
No. 5, dated April 1, 1959, providing for a change in detail of the upper portion of the north abutment. Value $3,239.50.
All work orders were authorized by the authority and signed by the chief engineer and the president, as stipulated in the contract.
3.	Yes, as covered by work order No. 1 referred to in answer 2.
4.	Answered by 2.
5.	One, work order No. 3, referred to in answer 2. (Another formal order covering remedial work to the main piers is to be issued.)
6.	Estimated $335,402.20. (by contractor $228,218.81; by authority $107,183.39).
7.	$190,488.80 (estimated); (delayed pending negotiations of final quantities and extra work)
(a)	Overpaid $2,953.95;
(b)	$12,364.22 (work order No. 4-$10,649.22; work order No. 5-$1,715.00).
(c)	$181,078.53 (estimated).


GRAHAM AIRPORT, EXPENDITURES AND LANDINGS
Mr. Benidickson: 1.	In each of the years 1957-58, 1958-59, 1959-60, what expenditures have been made at the Graham airport (a) of a capital cost nature; (b) for operation and maintenance?
2.	How many landings have been made at the Graham airport in each of the above years?
Answer by: Hon. George H. Hees (Minister
of Transport):

Supply-Items Passed
1. Expenditures:
Operation and Capital	maintenance
expenditures	expenditures
T otal
(i) Airport
1957-	58.
1958-	59.
1959-	60.
(ii) Radio range
1957-	58.
1958-	59.
1959-	60.
2. Landings:
Non-schedule
(revenue)
1957-	58	
731958-	59	
71959-	60	
15$ 17,052	$ 35,004	$ 52,056-	67,204	67,204-	32,993	32,993

$ 1,481	$ 28,085	$ 29,566695	32,882	33,577-	32,899	32,899$ 96,042Itinerant (non-revenue)	Local	Military	Total92	46	2	213103	-	-	11089	29	1	134
[The following items were passed in committee of supply]:


DEPABTMENT OF JUSTICE
[Stage Direction]
B-Penitentiaries-
161.	Administration of the office of the commissioner of penitentiaries including $90,000 for grants to recognized prisoners' aid societies, as may be approved by the treasury board, $641,516.
162.	Operation and maintenance of penitentiaries including compensation to discharged inmates permanently disabled while in penitentiaries, $14,878,797.
163.	Construction, improvements and equipment, $2,353,840.
523.	Administration of the office of the commissioner of penitentiaries, including authority for a special adviser to the Minister of Justice on correctional planning, having the rank and status of a deputy head of a department, and one additional deputy commissioner of penitentiaries to be known as the senior deputy commissioner, having the power and authority of the senior deputy commissioner under the Penitentiary Act; to be appointed by the governor in council to hold office during pleasure and to be paid such salary as may be fixed by the governor in council-further amount required, $17,792.
524.	Operation and maintenance of penitentiaries -further amount required, $69,340.
525.	Construction, improvements and equipment -further amount required, $632,250.

[Stage Direction]
Headquarters administration and national police
services-
372.	Operation and maintenance, $6,753,539.
373.	Construction or acquisition of buildings, works, land and equipment, $101,276.
Land, air and training divisions-
374.	Operation and maintenance, $36,706,157.
375.	Construction or acquisition of buildings, works, land and equipment, $3,804,029.
Marine services-
376.	Operation and maintenance, $1,779,918.
377.	Construction or acquisition of buildings, works, land and equipment, $71,230.
378.	Grant to the Canadian association of chiefs of police, $500.
379.	Grant to the Royal Canadian Mounted Police
veterans' association, $300.
Pensions and other benefits-
380.	Government's contribution to the Royal Canadian Mounted Police pension account, $1,546,939.
381.	Pensions to families of members of the Mounted Police who have lost their lives while on duty, as detailed in the estimates, $14,352.
382.	To provide, notwithstanding section 45 or other pertinent provisions of the Royal Canadian Mounted Police Act, being chapter 241 revised statutes of Canada, 1952, that L. H. Nicholson, former commissioner of the Royal Canadian Mounted Police, shall be paid, as of the day he ceased to be commissioner, a pension for life of one fiftieth of his pay at the time of his retirement for each completed year of service, $1.

[Stage Direction]
Customs and excise divisions-
258.	General administration, $4,807,852.
259.	Inspection, investigation and audit services, $4,271,730.
Ports-
260.	Operation and maintenance including authority, notwithstanding the Financial Administration Act, to spend revenue received during the year from firms and individuals requiring special services, $28,929,225.
261.	Construction or acquisition of buildings, works, land and equipment, $587,500.
Taxation division-
262.	General administration, $3,414,200.
263.	District offices, $29,576,139.
Tax appeal board-
264.	Administration expenses, $116,500.


[Stage Direction]
queen's PRINTER AND CONTROLLER OF STATIONERY OTTAWA, 1960
[Stage Direction]
Monday, June 13, 1960