1961-06-23

Mr. R. J. McCleave (Halifax):: Mr. Speaker, I have the honour to present the fifth report of the standing committee on miscellaneous private bills in English and in French. I think hon. members would be interested to know that for the first time for any parliamentary committee a female clerk attended my committee yesterday. The bill considered had to do with the Canadian Girl Guides Association. The chairman at that time was the hon. and fair member for Niagara Falls (Miss La-Marsh). One might say that the suffragette movement had blossomed into fullest and fairest flower at that instant in our history.



BANKING AND COMMERCE


[Stage Direction]
Sixth, seventh and eighth reports of standing committee on banking and commerce- Mr. Cathers.

Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, I returned last night from attending the conference on the situation in Laos which, as hon. members know, has been going on in Geneva for about five weeks. I went back to Geneva to attend this conference having in mind four objectives. The first was to do whatever was possible to get the conference down to actual drafting. So far they have been having what we would describe as a debate on the speech from the throne, without any actual work being done on the drafting of documents. For example, I think it is essential that as quickly as possible they start drafting terms of reference for the international supervisory commission, and also declarations, one of neutrality which it is planned would be signed by the 13 nations, apart from Laos, attending the conference, and a second declaration to be signed by Laos when agreement is reached as to the government of that very unhappy country.
The second objective was to outline in broad terms Canadian views on the terms of
reference for the truce supervisory commission. This commission, of course, is our main interest in the situation in Laos. It is because Canada is a member of that commission that she is attending this particular conference.
Then I had in mind also getting proper support for the truce supervisory commission in the way of more specific instructions and equipment.
Finally, I wanted to confer with the representatives of the other countries which are attending the conference. This I suggest is very important, because quite a bit can be accomplished by discussing the situation from time to time with all the other delegates no matter whether they are of our general point of view or not.
It might be helpful to those members of the house who are interested if the three statements which I made during my visit there could be printed as an appendix to Hansard. That would cut down the time required for me to make an adequate report to the house today.
With regard to the first objective, I am very hopeful that some time next week the conference will start to discuss in restricted session the terms of reference for the commission. The idea is that there should be perhaps two or three representatives of each country rather than the larger number who have been sitting in thus far, and that there will be discussions rather than a series of set speeches.
The plea for more support for the international commission met with quite wide approval from the other delegations. I made this plea on June 15. The following day the United States and France both submitted in writing to the co-chairmen of the conference, the United Kingdom and the Soviet union, offers of equipment. I should also like to have these offers printed, if I may.
The Soviet union as one of the co-chairmen must, of course, consent to any such support being given and Mr. Gromyko, the foreign minister, has been holding back on giving approval. He put forward the suggestion that the three member nations represented on the commission, India, Poland and Canada, should send messages to their commissioners in Laos asking if it would not be possible to get this equipment, particularly light airplanes and helicopters, from the Laotians themselves.

Report on Geneva Conference
That seemed to me to be a very foolish idea. However, we agreed to send a message to Mr. Leon Mayrand, our Canadian commissioner in Laos, asking for his views about the possibility of hiring from the Laotians the equipment necessary for the commission to do its job. We had a reply on Monday, June 19, and I think the house would be interested in reading that reply. It sets out very clearly just what obstacles the commission is facing in Laos because of the failure of the co-chairmen to supply adequate equipment. Incidentally when I criticize the cochairmen I am really criticizing the Soviet union, because all the way through the British have been prepared to have this equipment supplied but they alone cannot make the decision. It has to be a joint decision by the two co-chairmen. The Canadian reply from Laos was the only one which had been received when I left Geneva yesterday morning.
The day before yesterday I made a further statement dealing with the absolute necessity of supplying this equipment, and my statement was supported in a very helpful way by the representative of France and by Governor Averell Harriman, the rep-presentative of the United States, and by Right Hon. Malcolm Macdonald, the chairman of the British delegation, whose support was particularly important because he is one of the two co-chairmen of the conference.
In the meantime the three Laotian princes have been meeting in Zurich, Switzerland; Prince Boun Oum, premier of the government which has been recognized by the United States and Great Britain, Prince Soup-hanouvong, who is the head of the Pathet Lao and who is representing the communists, and Prince Souvanna Phouma, who is described as a neutralist. They apparently have been making some progress. There is an encouraging report this morning but it is in very general terms, and it would be unwise for the house to expect that any definite final agreement would be made among the three princes tomorrow, the next day or maybe for some time.
I am afraid that the Soviet union is not very anxious to have an effective commission in Laos. This is my judgment after listening to their remarks and noting their actions with regard to requests for equipment. One quite effective way of handicapping the commission is to fail to supply or to delay supplying the commission with what it needs in the way of equipment. That is not a very helpful process.
The task Canada has undertaken as a member of the truce supervisory commission is a very onerous one. The representatives of the Department of National Defence and the

Department of External Affairs in Laos are doing an excellent job under extremely difficult conditions. I think the work of the commission is exceedingly important. It might just be the means of preventing a third world war arising out of what is happening in that country in southeast Asia. In any event, the presence of the commission and the fact that the conference has been sitting in Geneva have, I am sure, greatly reduced the actual fighting in Laos. They have not stopped it altogether, but in my opinion there would have been much more fighting if the commission had not been set up and if the conference had not been held.
Canada will do what she can to help out. I am sure all hon. members of the house will support the Canadian delegation in their attempt to follow that course. We are very well represented. The chairman of our delegation is Chester A. Ronning, the Canadian high commissioner to India. He was born in China and speaks Chinese; in fact he attended school with one or two of the Chinese delegates, and is able to give great assistance in the deliberations at this conference. We also have Paul Bridle, our ambassador to Turkey, who served for a year as Canadian commissioner in Laos. A third member is Ralph Collins formally head of our far eastern division in Ottawa. Mr. Collins too was born in the Far East. We are also receiving excellent assistance from Brigadier George Leech of the Department of National Defence who has served on the Canadian commission for Viet Nam. These Canadians are working in Geneva in a situation which can in no sense be described as a holiday and, I believe, are rendering a great service to our country. I am glad to pay this tribute to them today.


Mr. Speaker:: Before I recognize the hon. member for Essex East may I ask leave of the house to have printed as an appendix to Hansard the documents referred to by the Secretary of State for External Affairs. Perhaps the minister would now produce the documents. Agreed?


Some hon. Members:: Agreed.
[Editor's note: For text of documents above referred to, see appendix.]


Hon. Paul Martin (Essex East):: Mr. Speaker, I am sure I express what every member of this house wishes me to express at this moment when I observe that once again we are glad to welcome the Secretary of State for External Affairs back from an important international conference. The fact that we have done so at least three times since January, during this session, indicates the interdependent character of the world in

which we live and the importance of our country in the context of this contracted world.
We note with interest that the minister says he hopes there will be a drafting of the terms of reference of the international truce commission next week, and also that there will be some form of the kind of neutrality in the government of Laos which it is hoped to be able to achieve. The minister has cautioned us about being overenthusiastic about the statement of the three princes as reported in today's press. Nevertheless their statement indicates that some progress has been achieved toward some form of coalition. It is to be hoped that the kind of neutrality which will emerge will be an honest neutrality, not one that will represent a government that will play closer to the communist world than to the western world. We hope that it will be, in fact, as President Kennedy said, a neutral government. However, we have reasons for being concerned about the likelihood of this result in the future.
The minister should know that we fully support him in his desire to see that the international truce commission of which Canada is a member is given every protection and every assistance to maintain its security and render efficient its operations. However, we note with concern the statement of the minister that he is of the opinion that the Soviet union is not anxious to see an effective commission operate in Laos. This statement from the minister confirms our own apprehensions; but coming from him, with his knowledge of the situation, it gives us reason to be greatly concerned.
We can only hope that we shall be able to meet the reluctance of the Soviet union in this particular and that, to the extent that it is possible, we shall be able to provide conditions of relative peace in an area which, as he said, is so vital at this time if we are to avoid a conflict on a much wider front. If the Soviet union does not co-operate with the commission as one of the chairmen of that commission I hope that Canada as a member of the commission will not hesitate to say so and will not hesitate to take steps consistent with this reluctance of the Soviet union to give full effect to the terms of the commission.
May I finally say to the minister that while he was away dealing with the problems of peace and war, we were serenely engaged in this house with matters that were very peaceful.
Report on Geneva Conference


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, on behalf of this group I wish to associate our members with the remarks of the hon. member for Essex East with respect to all of us being pleased to see the minister return safely home again. On behalf of our members I wish to thank him for his immediate report to this house on his latest mission. In doing so he shows for this house and this parliament a respect which has not always been shown in the past under similar circumstances. We give him full marks for that courtesy and for his very fair and, in our opinion, objective report.
I was also very glad to see that the hon. gentleman had the various statements and documents attached to today's Hansard as an appendix. This makes it very much easier for us to read them carefully and digest fully the results of his mission and the report he has given the house. I am glad to hear that the pleas on the part of the commission for more support met with a good response. I noticed that on reading some of the papers. That is a good sign. It shows there is a moral force behind this mission from persons of good intentions and good will.
I was also interested in the hon. gentleman's report with respect to the signs of progress, should I say, toward co-operation among the three princes involved. We must remember when we are dealing with circumstances like these, particularly with questions related to the Far East, that these people do not move as quickly as we do. We have to exercise a lot of patience. They do not think quite as we do. While at times it may be frustrating, I think the minister takes the right point of view when he indicates that there is hope of progress and co-operation in time. That depends to a great extent on the attitude of the members of the commission.
I was interested in the hon. gentleman's comment to the effect that the presence and actions of the commission had reduced the hazards of fighting in that area. Well, that is a major accomplishment in the first instance. All we have to do is imagine what could have been the circumstances without that commission and without the effective contribution made by the Canadian members on that commission.
Members of this group wish to join with others who have spoken in paying tribute to the excellent service being performed by Canada's representatives on the commission and in the related work for Canada and for the world as a whole. We pay tribute to them for the way they are performing what, as everyone must recognize, is a trying task.

Proposed Legislation
BANK OF CANADA	HOUSE OF COMMONS


Hon. Donald M. Fleming (Minister of Finance) moved: for leave to introduce Bill No. C-114, respecting the Bank of Canada.


Some hon. Members:: Explain.


Donald Methuen Fleming: The purpose of this bill is to provide that a vacancy in the office of the governor of the Bank of Canada shall arise upon its coming into force. It is a brief bill consisting of one clause, reading as follows:
The office of governor of the Bank of Canada shall be deemed to have become vacant immediately upon the coming into force of this act.
Motion agreed to and bill read the first time.


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


Some hon. Members:: Now.


Donald Methuen Fleming: I should be prepared to proceed with this bill now if the house would give consent to doing so.


Mr. Pickersgill:: There is not unanimous consent, Mr. Speaker.


Mr. Speaker:: Next sitting of the house. INDUSTRIAL DEVELOPMENT BANK ACT


Donald Methuen Fleming: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to amend the Industrial Development Bank Act to enlarge the classes of loans that may be made under the act so as to include therein all business enterprises without limitation as to the kind of business carried on; to increase the authorized capital of the bank from twenty-five million dollars to fifty million dollars; to increase the authorized borrowing authority of the bank to an amount not exceeding five times the aggregate amount of its paid-up capital and reserve fund; to enable the bank to make funds available in respect of transportation equipment by the purchase of equipment trust certificates; to enable the bank to acquire title to moveable property and to make such property available to a borrower under a conditional sales agreement or other arrangement under which the borrower has a right of redemption; to raise the limit on the aggregate amount of loans and other liabilities that exceed two hundred thousand dollars, from a maximum of seventy-five million dollars to a maximum of two hundred million dollars; and to make certain other changes in connection with the administration of the act.


[Stage Direction]
Motion agreed to.
[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I
direct a question to the Prime Minister and ask the right hon. gentleman if he was aware that Senator Courtemanche, according to his own evidence in Montreal yesterday, was acting as solicitor for a hospital receiving hospital grants at a time when he was a member of the government of Canada which was providing part of those grants.


Righi Hon. J. G. Diefenbalcer (Prime Minister):: As I said the other day, the government wants to secure the most definite and authentic information on this matter. Therefore a letter was sent on Saturday, June 17, by the Department of Justice to the chairman of the commission investigating this matter, asking that the government of Canada be provided as soon as possible with a copy of the transcript of evidence given the previous day, concerning Senator Courtemanche, together with a transcript of any further evidence which might be given in this matter.
That was last Saturday. To date no reply has been received. As soon as copies of the evidence are received the evidence will be carefully examined to the end that the proper course shall be taken. I am not going to deal with the matter on the basis of newspaper reports. The government wants the authentic evidence, and in order to ensure that the evidence shall be forthcoming the letter was directed to the chairman of the commission and a copy was sent to the deputy attorney general of the province of Quebec.


Lionel Chevrier: Could I ask the Prime Minister whether he was aware that the secretary of state at the time was acting as solicitor for the hospital?


John George Diefenbaker: I was not aware of that at any time. As a matter of fact, as I said yesterday, following a course somewhat different from that which the last government followed we made absolutely sure that ministers-


John Whitney Pickersgill: Apparently not.


John George Diefenbaker: An interruption from the hon. gentleman is always so far removed from the facts. He is always searching for something, and some day I hope he will find it. We ensured, as far as it was possible to do, that all ministers should be disconnected in every way from directorship and the like.


Hon. Paul Hellyer (Trinity):: Has the Prime Minister not asked his colleagues to refrain from active legal practice and the accepting of fees, along the same lines as the prohibition of directorships?


John George Diefenbaker: I seem to recollect that in the days when the hon. gentleman was a minister this matter was before the house-


Paul Theodore Hellyer: Would the Prime Minister just answer the question?


John George Diefenbaker: Calm yourself.


Paul Theodore Hellyer: Never mind the speech.


John George Diefenbaker: During those days-


Paul Theodore Hellyer: On a point of order, Mr. Speaker, surely the Prime Minister is not entitled to make a speech in answer to a question.


Mr. Speaker:: I think all hon. members appreciate that a debate does not take place at this time. We are limited to factual information and questions.


Paul Theodore Hellyer: Will the Prime Minister not answer the question, which is a simple one, and tell the house whether he has asked his colleagues not to engage in active legal practice or accept fees?


John George Diefenbaker: The hon. gentleman objected to the answer I was about to give. I am not going to pursue it, because he seemed to have something else in mind; therefore I think the matter had better rest.
(Translation):


Mr. Alfred Belzile (Matapedia-Mafane):: Mr. Speaker, I should like to put a question to the Minister of Transport. Could he inform the house whether the wives and dependents of members will be able to secure passes on C.N.R. passenger trains after June 30, 1961?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, following several requests submitted by my colleagues in the House of Commons, I got in touch with the presidents of the two main railways and they assured me that their companies would keep on issuing passes to wives and dependents of members of the house until one month after the end of the session.
Inquiries of the Ministry THE BUDGET


[Stage Direction]
On the orders of the day:
Miss Judy V. LaMarsh (Niagara Falls):: Mr. Speaker, I should like to direct a question to the Minister of Finance. Due to the fact that one of the first results and benefits to Canada on Tuesday's budget as announced in this morning's press by Mr. Joseph Conrad, president of General Bakeries Limited, is that the price of bread is to increase for all Canadians, can the minister advise the house whether he is now issuing instructions to let them eat cake?


Donald Methuen Fleming: Mr. Speaker, I did not hear the concluding words of the hon. lady's question.


Mr. Speaker:: Order. I shall not give the hon. lady the floor to repeat the question, which was not seeking information in the ordinary sense of the word but rather presenting a point of view.


[Stage Direction]
On the orders of the day:
Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, I should like to direct a question to the Minister of Finance. Will the minister tell the house whether prior to the presentation of the budget any consultations were held with the officers of the international monetary fund with respect to the action proposed by Canada to affect the exchange rate of the Canadian dollar?


Donald Methuen Fleming: Mr. Speaker, Canada's member on the executive board of the international monetary fund, Mr. Rasminsky, the deputy governor of the Bank of Canada, was in Washington on Tuesday and Wednesday of this week. I think he had some informal discussions to acquaint Mr. Jacobsson, the managing director of the international monetary fund, and perhaps some other members of the executive board who were there, with the nature of the proposals contained in the budget.


William Moore Benidickson: Mr. Speaker, my question was whether there were any consultations prior to the presentation of the budget.


Donald Methuen Fleming: Mr. Rasminsky was there on Tuesday and Wednesday. I am not sure of the exact times that he talked to Mr. Jacobsson and others. It may well have been that some of these discussions were held sometime late on Tuesday.


Lionel Chevrier: Mr. Speaker, may I ask another question of the Minister of Finance. Would the minister

Inquiries of the Ministry advise the house whether he has used resources of the exchange fund to influence the value of the Canadian dollar since the presentation of his budget and, if so, to what extent the fund has been so used?


Donald Methuen Fleming: Mr. Speaker, it has never been the practice in all the years the exchange fund has been in existence to disclose individual transactions at individual times such as the hon. member is now asking about. Whatever has been done in this respect has been done in accordance with the statement I made to the house on Tuesday evening.



CAPE BRETON


[Stage Direction]
On the orders of the day:
Mr. Arnold Peters (Timiskaming):: Mr. Speaker, I should like to ask the Prime Minister a question with reference to his reply on June 19 concerning the request for an extension of the operation of the Florence colliery. Is the Prime Minister now in a position to make a further statement so the miners who are threatened with loss of employment on July 2 may know as soon as possible what action, if any, the government intends to take?


Hon. Paul Comtois (Minister of Mines and Technical Surveys):: Mr. Speaker, in reply to that question I should like to say that we have a meeting scheduled for today after twelve o'clock noon with the representatives of district union No. 26 and the Florence local.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinity-Conception):: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. Could the minister please advise the house whether he has received a petition from the fishermen of Renews, Newfoundland requesting that their ancient rights in respect to hand line operations be restored and that an area be reserved for hand line operations from July 1 to October 31 only each year?


Hon. J. A. MacLean (Minisier of Fisheries):: Mr. Speaker, I have received such a petition as well as correspondence from various people in the area, including the local clergy. I might say that my colleague the Solicitor General has been of great assistance to me because of his local knowledge of that area which he 

represents. I have also received correspondence from Hon. Myles Murray, the representative of that area in the Newfoundland legislature. Meetings have been held between officials of my department and the fishermen concerned in an attempt to work out regulations which will be acceptable to the fishermen while at the same time not unduly inhibiting the trend toward more modern and efficient methods of catching fish.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, may I direct a question to the house leader and ask him, for the convenience of members of the house as well as for the orderly conduct of the business of this house, whether he can indicate what estimates will be taken up tomorrow?


Hon. Gordon Churchill (Minister of Veterans Affairs):: Mr. Speaker, I think it would be more appropriate to make this announcement at the conclusion of today's business.


Lionel Chevrier: I agree that is the normal procedure, Mr. Speaker, but because tomorrow is Saturday and because of the indication the Prime Minister gave during the course of a former debate that Saturday would be as a rule devoted to estimates, I wonder whether the house leader could indicate now what those estimates are likely to be.


Gordon Minto Churchill: Mr. Speaker, it would be easier to do so at the conclusion of the day's business, because negotiations are carried on during the course of the day. I have had suggestions from hon. members on the other side that the estimates which I proposed to be taken up on Saturday should not be taken up. In return I proposed that if the hon. members on the other side could give me some guarantee that something could be passed on Saturday, we might make a change. I suggest there is plenty of time to consider these matters during the next few hours.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Hubert Badanai (Fort William):: Mr. Speaker, I should like to ask a question of the Minister of Transport. It has been reported that the Areo-Flight Service Incorporated of Minneapolis has applied to the Canadian air transport board for a licence to operate an air service into Saskatchewan, Manitoba and

northwestern Ontario. Is the minister in a position to inform the house whether a licence has been granted to this company?


Léon Balcer: Mr. Speaker, it is a fact that a licence has been requested. I am not quite sure of the point of origin of this route, though I think it is somewhere in Minnesota and from there to a point in Manitoba and then to western Ontario. I shall be in a position to let the hon. member know either tomorrow or Monday if a licence has been issued.


Hubert Badanai: Mr. Speaker, I should like to ask a supplementary question. Have any objections to that application been made by Trans-Canada Air Lines?


Mr. Speaker:: Order. I think the hon. member is inquiring about matters presently before a board which has been charged with that responsibility, and it would be improper for the minister to intervene in those proceedings.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, may I ask the Secretary of State for External Affairs whether he is in a position to tell us if conclusions have been reached by the foreign ministers regarding the form of the next forum for disarmament discussions; and is the minister in a position to add anything to the proposal made by Mr. Khrushchev that nuclear talks be integrated into the disarmament discussions?


Howard Charles Green: Mr. Speaker, it would be quite a tall order for me to add anything to suggestions made by Premier Khrushchev, as it is hard enough to find out what he is getting at without trying to help him out.
There is no meeting of four foreign ministers on the question of disarmament. What is going on is a conference between the United States, represented by Mr. McCloy, who is the head of their disarmament branch, and Mr. Zorin, representing the Soviet Union, who is a deputy foreign minister and permanent representative at the United Nations. They are discussing informally in Washington the type of forum in which disarmament negotiations could be resumed. They started to meet on June 19 and those talks are still going on. Therefore it is impossible for me to say what the decision will be. The plan was that disarmament negotiations proper should commence about August 1.
The Budget-Mr. Dupuis
With regard to the test ban conference in Geneva it, too, is still in existence. The leading United States representative has been recalled to Washington for talks. It is true that Premier Khrushchev has suggested that those talks should be merged with the talks on general disarmament which are supposed to take place about August 1. I believe the United States has rejected that suggestion, and I do not know what will happen with regard to that particular three-nation conference in Geneva. The third country represented, of course, is the United Kingdom.



AGRICULTURE


[Stage Direction]
On the orders of the day:
William Arnold Peters: May I
direct a question to the Minister of Agriculture or, in his absence, to his parliamentary secretary. Since the practice in recent years has been to issue an interim payment, is the minister now in a position to inform the house whether the stabilization board intends to make an interim deficiency payment on eggs?


Mr. W. H. Jorgenson (Parliamentary Secretary to the Minister of Agriculture):: I will draw this matter to the minister's attention.



THE BUDGET


[Stage Direction]
The house resumed, from Thursday, June 22, consideration of the motion of Hon. Donald M. Fleming (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Benidickson, and the amendment to the amendment of Mr. Regier.
(Translation):
Mr. Yvon Dupuis (St. Jean-Iberville-Napier-ville):: Mr. Speaker, since I have only two minutes left of the time allotted to me-


Lionel Chevrier: Five minutes.


Yvon Dupuis: Five. Well, Mr. Speaker, if I still have five minutes at my disposal, I am pleased.
Since I have five minutes left of the time which was allotted to me yesterday, I should like to make a wish concerning our friends opposite. I hope that today they will rise in greater number than yesterday to defend the miserable budget presented by the Minister of Finance (Mr. Fleming).
Indeed, sir, last night's performance was not too impressive since only the Conservative members for Kingston (Mr. Allmark) and



SS38 HOUSE OF COMMONS

[Stage Direction]
The Budget-Mr. McMillan for Dorchester (Mr. Drouin) participated in the budget debate whereas on this side, the members for Grand Falls (Mr. Granger), Maisonneuve-Rosemont (Mr. Deschatelets), Drummond-Arthabaska (Mr. Boulanger), Bonavista-Twillingate (Mr. Pickersgill) and Niagara Falls (Miss LaMarsh) and I took the floor to discuss the budget we are now considering.
Or course, Mr. Speaker, I realize that this year just as last year, the budget has not provided much to satisfy the hopes of our friends on the government side. I can understand that they are disappointed, disenchanted, distressed, disillusioned, desperate and discouraged, but I ask them to change their attitude today, because when things go wrong, it is not good politics for a party to show it to the public.
I suggest that more of our Conservative friends should rise today and cover up their great disappointment. I would particularly ask the hon. member for Roberval (Mr. Tremblay)-who, I am told, is quite dissatisfied with the budget-to forget these things, come into the house and be as talkative on the occasion of the budget debate as he is when he interrupts the speeches of members of the opposition.
(Text):
Mr. W. H. McMillan (Welland):: Mr. Speaker, when I spoke in the budget debate on January 16 last I made some remarks which I should like to quote. I refer to the last sentence of my remarks as reported at page 1095 of Hansard. I said in connection with the baby budget:
-I believe also that the different members of the cabinet should be helping the Minister of Finance in a department in which we have a continuing and chronic emergency.
The events which have taken place since that time would lead one to believe that there is something wrong with the Department of Finance. The minister has been convinced by somebody somewhere to change his thinking on interest rates. For some three years and half I have been telling this house that our interest rates are too high and that they were at the very root of our economic ills. In the windy and wordy budget speech the other night the Minister of Finance certainly gave lip service to this premise. I shall quote some of his words. At page 6645 of Hansard he is reported as having said:
To begin with, interest rates in Canada are out of line with those in the United States and some of the European capital-exporting countries.
This is something that we have been saying for at least three years and a half. I recall quoting the New York Times in the house

three years ago to the effect that interest rates in Canada were out of line with those in the western free world. At one time I quoted the interest rates on Cuban bonds in New York, and at that time I said the Diefenbaker bonds were selling lower than those of the Batista government and certainly lower than those of the Castro revolutionary government in the first three months it was in office.
At page 46 of the budgetary papers there is a table showing the long term government bonds yields. It also shows the differential between interest rates in Canada and in the United States. At the time of the election in June, 1957 the differential was about one half of 1 per cent. Later, in the fall of 1957, this differential went down to, I would say, three eighths of 1 per cent. This table has not been so prepared as to give the exact figure, but I would say it is about three eighths of 1 per cent. After the conversion loan and after further financing the differential got up to around 1J per cent. Since last year it has eased somewhat. It has again eased somewhat lately, and according to this table I would say it stands at about 1J per cent today. I say that the actions of this government in handling our fiscal policy and in the management of our debt have brought this about. Further down on page 6645 the minister said:
High interest rates are a double drag, at times like these, on our economic activity and expansion.
Still further on the minister said:
Statistics indicating trends of interest rates in recent years in Canada and abroad are to be found in the white paper. These support the view that Canadian interest rates have grown out of harmony with those abroad ...
That was not the story of the minister previously. As I said before, I have been bringing up this matter in the house for the last three and one half years but the minister has only seen the situation lately. He has only seen it after a good part of our debt has been built into a debt structure of long term non-callable bonds at high interest rates. In the meantime the provinces and the municipalities have assumed long term debts by way of bonds and debentures, and the taxpayers in the provinces and the municipalities will be paying these debts with high interest for years. Some of them will not mature for 30 years, and I am thinking particularly now of debentures on sewers.
High interest rates have also brought about stagnation in our economy. I could quote innumerable statements I have made in the past to the effect that high interest rates would increase taxes at all governmental levels, and we know they have done so. We on this side of the house said that

high interest rates would increase the cost of living, and they have. We have said that high interest rates would increase the cost of production and therefore make us less competitive in the markets of the world, and this they have done. We have also said that high interest rates would attract foreign capital to this country in order to earn a higher yield on such capital and that this would contribute to a greater imbalance in our international payments. This too has been brought about. The budget attempts to correct the effects of high interest rates which the government itself has brought about.
As I have said, I think interest rates are basic to our economic well-being. When you remove from the budget the measures taken by the government to correct its former mistakes with respect to interest rates you have not got much left. I admit there are two or three things in the budget of which we approve. The first is the removal of the excise tax on automobiles. The hon. member for Essex East has often urged this, as have other members on this side of the house. I also want to thank the minister for giving some consideration to volunteer firemen. I think I was the only member of the house who brought up this matter at the time of consideration of the resolutions following the baby budget.


Donald Methuen Fleming: Many members spoke to me about that.


William Hector McMillan: At that time I asked the minister to exempt for income tax purposes at least $200 of the honorarium they receive. The minister has gone further and has set the amount at $300. I wish to thank the minister for that.


Paul Theodore Hellyer: That is to allow for the inflation he expects.


William Hector McMillan: Third, there is the provision, which I think will help the tobacco growers, by which more tobacco may be included in cigarettes. I hope the tobacco growers of western Ontario will get some relief and will be able to sell more tobacco. But when you take away from the budget the measures it contains to correct the mistakes of the government with respect to interest rates and the three other provisions I have just mentioned, there is absolutely nothing left in it. The budget contains little to cure our economic ills, including the imbalance in international payments of which interest rates have been the principal cause.
I am glad to see the minister give lip service to lower interest rates, but giving lip service to lower interest rates is not going to bring them about. The ordinary taxpayer will continue to pay high government taxes and in
The Budget

Mr. McMillan many cases high interest payments on bonds for the rest of his life. The taxpayers will continue to pay high interest rates for their share of every new school, every new sidewalk, road or sewer. Every new home owner will be called upon to pay high interest rates for a good many years to come.
Unfortunately the lip service given by the minister is no solution to those of us who have been caught up in the payment of high interest rates. I am glad that at this late date the minister has had a change of heart. It is something like a death bed confession, his last chance before wrecking our economy. Until his repentance he was the high priest of high interest rates in Canada.


Donald Methuen Fleming: Oh, no.


William Hector McMillan: Why does he merit this appellation? In debt management, purely under the control of the minister and in no way the responsibility of the Bank of Canada, we have had the spectacle of the Prime Minister and the Minister of Finance appearing on radio and television and making statements in the press recommending that bondholders should take more interest on their bonds. They were told that it was in the national interest and was the patriotic thing to do.
I am referring, of course, to the conversion loan. The Prime Minister and the Minister of Finance, on radio and television and through statements that appeared in the press, pleaded with and begged Canadians to convert their 3 per cent victory bonds into \\ per cent conversion loan bonds. They not only begged them to do so but they also paid them to do so. They paid every thousand dollar bondholder who converted to take $45 interest each year instead of $30 each year. At that time it did not make any difference to them whether interest rates in Canada got out of line with those in the rest of the world. At that time it did not matter whether interest rates were a double drag on our economy. It did not matter then if there was an increase in the imbalance of payments. It did not matter whether they caused stagnation in our economy. What mattered then was that the minister should be in charge of the greatest financial transaction that ever took place in Canada.
The minister continually required more money. To cover his deficits he had to continue to raise more money, and this caused an upward pressure on interest rates. It was not until early last year, when the country learned that the minister was going to budget for a surplus, that interest rates eased. In addition, the minister devised gimmicks for

The Budget-Mr. McMillan the benefit of the wealthy friends of the government. The government devised ways and means to give its wealthy friends some extra interest taxwise.


Donald Methuen Fleming: Untrue.


William Hector McMillan: Deficit or no deficit, these people had to be looked after. When the government came to power in 1957 the average rate of interest on our debt stood at 2.98 per cent, slightly under 3 per cent. The minister and the Prime Minister in the bond conversion loan tried to get as many people as possible to increase that by 50 per cent, to change as many bonds as possible from 3 per cent victory bonds to 4-J per cent conversion loan bonds. For subsequent borrowings the minister paid much higher rates, as I said before, and the total interest payment on our debt has now increased by approximately 50 per cent. I suppose they have reached their goal and achieved their objective. Now comes the deathbed repentance.
By the end of this fiscal year the extra debt charges imposed on the taxpayers of Canada in the four years, including this year, will be $800 million. It is made up mostly of interest. The first time I or anyone in this country had any indication that the minister had a change of heart in connection with interest rates was on June 14 last, when something was brought up in connection with the resignation of Mr. Coyne. I would say that the Prime Minister and the Minister of Finance blazed a trail for high interest rates on our national debt. They have now attempted to cover up this fact by erecting a smokescreen. Heads must roll and so Mr. Coyne, governor of the Bank of Canada, is losing his head. It is quite within the realm of possibility that before long he will be blamed for the conversion loan.
Firing the governor and erecting a smokescreen will never conceal the damage the minister himself has caused. So much of our debt is built into high interest non-callable bonds. If money could be borrowed tomorrow at 3 per cent this government could do nothing about these bonds because they would not be callable. Therefore we could not reduce our interest on these bonds.
The former government, and I think a great many former governments, sold bonds that were callable so that in a low interest period these bonds might be called in, redeemed and reissued at a lower rate. I have always maintained that this government was a prisoner of its own mistake in that conversion loan. I predicted in this house that the government would never escape and it never will.
I predicted that it would grope around, and it has. I predicted that it would blame some-

one else, and it has. The government in terms of taxes has stamped itself on our country for a generation.
It is interesting to think of the capital projects that could have been undertaken with the $800 million of extra interest. For instance, that amount of money would have built two St. Lawrence seaway canals or five Welland canals, on the basis of the cost of constructing the latter canal at the time it was built. If capital works had been built the people would have had employment and something tangible they could look at, instead of being faced with increasingly high income tax rates. It would not be so bad if the $800 million could be paid and we could then be done with it, but that is not the case. That sum has gone to create new debt. This year, as in previous years, the government will not raise sufficient money to pay the interest on the $800 million, so we will continue as we have in the past, paying interest on the interest.
In discussing the budget the Minister of Finance often counters our criticism with the argument that we are bringing up the same old stuff. I would be the first to agree with the minister, because if we adhere closely to the budget we are indeed discussing the same old stuff. The minister does not vary the diet. He gives us bigger and bigger deficits and more and more debt. He increasingly demonstrates his ability to be further off the mark in his predictions in respect to budgetary figures. Fifteen months ago the minister reported that we would have a $12 million surplus for the last fiscal year. I predicted then that the deficit would be much more. In December the minister predicted that there would be a deficit of $286 million. At that time I said it could not help but be more. He came along in the last budget and said the deficit would be $345 million, I believe, and his prediction was off the mark by $1 million a day.
For the next fiscal year the minister predicts a deficit of $650 million. I cannot agree with that figure. In view of past experience I do not think anyone could say that the minister's prediction is likely to be at all close to the mark. I recall that the minister used to find fault with former Liberal ministers of finance because they were out in their budget predictions by approximately $50 million on the favourable side. I predict that the present minister will be out more than this amount on the unfavourable side of the budget. I should like to be wrong once in my predictions for the sake of the taxpayers of Canada, but this last budget has not changed our idea about

the dismal Diefenbaker day. We are certainly going to continue to be confronted by a $2 million a day deficit.
When the former Liberal government left office in June of 1957 there was a surplus of $400,000 a day. Today the deficit in connection with extra interest alone is more than half a million dollars a day. In addition to this, when the former government left office there was approximately $900 million in the unemployment insurance fund and approximately $200 million in the defence equipment account.
What has happened? In order to conform to the needs of the various assessments of our economy made by the Minister of Finance the defence equipment account was soon raided and is now nonexistent. The unemployment insurance fund is almost bankrupt, containing at this time only approximately $65 million to meet a depletion of about $300 million a year. The daily deficit on overspending on current account has piled up to the point where it now reaches an enormous sum. After the budget it will stand at over $2.2 billion.
Considering the overspending on current account together with the depletion in government accounts, it will be seen that this represents an amount of more than $3.3 billion, a colossal sum. This is more than twice the cost of world war I between the call-up of troops in 1914 and demobilization in 1919. Since it came to office this government has indulged in overspending in an amount more than twice the cost of world war I during the period I mentioned. Canada had over 500,000 troops overseas in those years, yet in less time than the length of that war this government has found it possible to overspend more than double the cost of the war with little or nothing to show for it. We have heard much about the minister being expansive in his budget. He was expansive only in debt, not in tax cuts. We would not complain about tax cuts of sizeable proportions if they were designed to put people to work, but this amounts to only $65 million in this current fiscal year. The minister expects the budget proposals to cause a rise in our tax collections to offset the $65 million in tax cuts, yet he is predicting a deficit of $650 million this year as against a surplus of $12 million predicted in his last budget. I was interested in another halfhearted prediction of the minister to be found at page 6665 of Hansard, which reads as follows:
On the basis of the present situation and anticipated trends it is not unreasonable to expect that the current flows of revenue and expenditures will be approaching a balance by the end of 1962. Indeed, as our economy reaches high levels of
The Budget-Mr. McMillan employment, it is essential that the budget should achieve a balance, and that provision should be made for an orderly retirement of debt.
All I can say is that on two occasions the minister has attempted to predict the result of the budget for just three months ahead and he has been out by upwards of three quarters of a million dollars a day in those predictions. Last year, as I said, when he predicted ahead for 12 months he was out by about $1 million a day. How much is he going to be out when he starts to predict ahead for 18 months?
In speaking on the budget then I referred to the fact that some orderly reduction should take place in the value of our Canadian dollar, as I thought it would help exporters in the country. But at that time, as we all recall, the minister said it would cost too much to buy United States money in order to do this, that it would mean a considerable expenditure of money. The thinking on this matter by the minister has also somersaulted, just as it has done in connection with interest rates.
On Wednesday evening I was quite interested to note that the Conservative party here celebrated the fourth anniversary of their assumption of office and responsibility for the direction of the affairs of our country. I wish to congratulate the Prime Minister and the members of the government on attaining four years of power. I could not, however, but feel uneasy that on the very day of this anniversary our dollar was plunging in the various markets of the world, and there was chaos in those markets. I do not mind admitting that I experienced some emotion on learning that branches of the various Canadian banks in such centres as Los Angeles, New York, London and Paris did not have enough confidence in the Canadian dollar to trade in it. I heard that statement over the radio and I have since read it in the press. What dealings took place in those centres were mostly between United States banks and British banks. I know this situation will clear away, but certainly there has been left some lack of confidence.
I was laughed at in this house when I predicted that unless this government changed its ways there would be some flight of capital from Canada. On August 10, 1960, as found at page 7914 of Hansard, I said this in the house:
Two years ago I predicted these high interest rates. I am afraid that If the minister carries on as he has been there will be flight from the Canadian dollar.
Then I went on to say that I did not know how much more the Canadian taxpayer could take but that certainly, if the next two years were anything like the last two, we would

The Budget-Mr. Winch see our currency depreciated. I should like to ask the members of this house what was going on in the last few days if it was not a flight from the Canadian dollar-a temporary flight, at least-in the various markets of the world. In fact I myself know some people who were hurrying to get their money out of Canada at that time, and trying to get the best deal they could in United States dollars.
I do not know whether this abrupt change or abrupt fall in the Canadian dollar has ever occurred previously. However, I appeal to the minister and to the government to have a more orderly change in the future. If it is desirable to have our money selling at some figure below par, 1 suggest that this should be done in an orderly way and not in the way in which it was done the other day.


The Acting Speaker (Mr. Chown):: I am
sorry to interrupt the hon. member, but I must inform him that his time has expired.


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I must say that I was bitterly disappointed in the budget speech presented the other day by the Minister of Finance. After hearing, as we did, his vociferous emotionalism and oratory about the coming expansionist budget, I feel certain that all of us in this house as well as the people of Canada were really looking forward to a militant, progressive, constructive budget outlining policies, legislation and action which would aid to a considerable extent in curing the ills which have beset our Canadian economy in the past and still beset it. As I say, Mr. Speaker, I was bitterly disappointed because I did not see that much looked for expansionist policy.
But perhaps of even greater importance is the fact that I find the presentation made by the minister frustrating and confusing. It could not be anything but frustrating and confusing because almost in toto it was a tour de force lasting for over two and a half hours and consisting of cliches and platitudes and repetitions of cliches and platitudes. It was not what I think the members of this house and the people of Canada had a right to expect, namely a clear explanation of the basic and fundamental economics underlying the proposals which he made. I myself found it difficult to understand the basic economics. I believe the Minister of Finance owes it to this house to present a picture of the fundamental economics in such a way that there will be an understanding of why he has brought in the proposals contained in his budget speech.
May I say here also that I have been most disappointed in the fact that we have not heard from some of the backbenchers on the government side of the house. I have taken

it for granted that the Minister of Finance is a true believer in democratic methods and procedures and therefore that, in such an important matter as a budget, he would have taken all his backbenchers into his confidence and would have explained to them the economics of his proposals. If that procedure had been followed I would have thought the backbenchers would have an understanding of the economics and therefore, as one would gather from their applause for the Minister of Finance, would have been happy and proud to rise in their places and explain to the other backbenchers in this house and to their constituents the real and fundamental meaning of the economics of the budget.
I can only come to the conclusion that they also find the basic economics frustrating and confusing, and that the reason we have not heard from them is that they do not understand the matter and that it has not been explained to them. The situation is either that, Mr. Speaker, or the whip has really been cracked and they are under orders not to speak in the budget debate. As a matter of fact it is current in the corridors this morning that the whip has been cracked and that we shall not be hearing from the backbenchers. If that is so it is a peculiar expression of democratic procedure and a peculiar expression of Conservative back bench representation in this House of Commons. I hope we shall hear from some of them, because we should like some explanation.
It was interesting to note that when the Minister of Finance started he did not give us an analysis of the economic situation of Canada past and present, explaining from the position of government policy and administration what had gone wrong with our economy. No; it was something outside government, something outside Canada which had brought all these things to pass. Almost in his opening remarks the minister said, and I quote from page 6640 of Hansard:
Last December in presenting to the house a supplementary budget, I explained that the rate of economic expansion in Europe had shown some hesitation and that the economic outlook in the United States and Canada, which had been most encouraging at the beginning of 1960, had rather unexpectedly reversed itself, resulting in a disappointing slow down during the last three quarters of 1960.
So the failure of the government to succeed in its operations in Canada was because of what had taken place in the United Kingdom, in Europe and in the United States. I think that is a weak way in which to begin an expansionist budget and to explain away the mistakes and fallacies of the present government. However, it was not very long before we found that the Minister of Finance

had taken a second look. He put on his rosy glasses and told us that everything was going to be different in the future; because we also find on page 6640 these words attributed to the Minister of Finance:
Expansion is expected to continue in western Europe and in our other important overseas markets. These welcome developments will make possible further increases in our exports, production, employment and incomes. Thus, an improvement in our situation could be expected to occur even if no further efforts were taken to stimulate our economy.
Thus not only have the government's failures in the past been blamed on what was taking place in foreign countries, but now Canada is going to reach a new heaven because of what is taking place in other countries. I think that is a ridiculous way in which to introduce a budget and upon which to base government policy. Of course we all hope this new vision is not just something seen through rosy hued glasses. We hope the situation which the minister outlined is going to come about. But if it is, Mr. Speaker, that has got to be related to government policy and proposals as outlined in the speech of the Minister of Finance. I think the minister owes it to the house and to the people of Canada to explain just how his policies related to these other countries are going to bring about the desired result.
His economics are indeed most strange. The minister almost completely ignores all the fears which have been growing as to what is likely to be the effect on Canadian exports when we relate them to the expansion and the fulfilment of the plans, policies and purposes of the inner six and the outer seven. That, I think, cannot be explained away by the minister in the course of a casual mention. Neither can we accept without explanation the contention that his policy is going to mean a greater expansion in the export field. I refer in particular to the United Kingdom, although all our export markets come into the situation. We have to recognize this, and I do not know why we completely close our eyes to it. If you are going to export you have to import. If you are going to export, the countries to which you export have got to have Canadian dollars, and to have Canadian dollars they have to be able to get their exports into our country.
When you have a policy of devaluation of the dollar it is true that on the surface that is undoubtedly going to assist our exports, but how is that going to be counterbalanced by the fact that we have to get Canadian dollars in order to pay for our purchases from the countries to which we export. We have to import from them in order that they may get the Canadian dollars for our exports. By the devaluation of the dollar we are
The Budget-Mr. Winch without doubt, whether the minister wants to admit it or not, doing the same thing we would do by erecting higher tariff barriers. It means that we have to pay more dollars because our currency is being devalued.
I think it is stupid to talk, as the government is disposed to talk, about our rightful market in the United Kingdom, and to express our fears about the United Kingdom going in with the inner six; because we have to realize that Great Britain must think about her 48 million people, and that is her first concern; and that if we want to sell, as we do want to sell, more wheat or agricultural produce or lumber or pulp or paper or salmon or other fish to the United Kingdom, the United Kingdom has to be able in turn to export to Canada. Therefore we cannot consider in isolation the fact that the government policy of devaluing the dollar is going to help us with our exports. What is going to be the effect of the counterbalance if it is going to hurt us in regard to imports when we cannot get the Canadian dollars for the sale of our goods? Just what are the views of the minister on the counterbalance on the imbalance? What indeed? The minister did not tell us one word about that, and I say that is where he is being distinctly unfair. He only wants to show us one side of the picture, and if we are going to have a successful government and a successful policy we have to have both sides of the picture and we have to have a complete balance.
I do not think we have heard enough in the explanation given of the devaluation of the dollar as to what it is going to mean in Canada itself. As was pointed out in the question of the hon. member for Niagara Falls this morning, there is a certain impact which already has been felt.


An hon. Member:: It was the hon. member for Welland (Mr. McMillanj.


Harold Edward Winch: No, I am referring to the question about eating cake. If the reports in the press are correct the price of wheat has gone up. Because the price of wheat has gone up the price of flour has gone up, and because the price of flour has gone up the bakers say the price of bread is going up. So we are already feeling an impact. Now how is it going to affect other fields, other imports which are basic necessities in Canada? Let us take just a few small items in use in every home every day, whether it be tea or coffee or cocoa or spices, all those things which we shall now have to pay for with a devalued dollar. I think we are entitled to a better picture of the economic survey and analysis made by the minister so we may know just what this will mean as far as the cost of living in Canada is concerned.

The Budget-Mr. Winch
The minister is seeking to get the provinces and the municipalities to do more of their borrowing in Canada. That is a desirable objective. He hopes by his present policy to enable that money to be borrowed at lower interest rates. That is an objective with which we all agree, and we hope it saves the millions of dollars that the minister is looking for and anticipates. I should like to see this policy of economics carried all the way through, but the minister does not do that.
Of course we agree with the devaluation of the dollar and the stated objectives which we hope will follow, but what will be the cost on the other side of the picture, to the provinces and municipalities, which have to pay back hundreds of millions of dollars which they have borrowed in the United States and elsewhere, on the basis of that devaluated dollar? I suggest it will cost millions of dollars which the provinces and municipalities have not anticipated having to pay. How and to what extent is this going to be balanced? I suggest this involves some of the basic economics which have not been explained by the minister. I suggest that it is not fair to give only one side of the picture, and that to do so is to mislead the house and the people.
Mr. Speaker, as my time is moving on much faster than I anticipated I should like at this time to refer to one of the most important phases of the proposal of the Minister of Finance, which has not been referred to very much as yet. I refer to that portion of the minister's statement where he deals with dominion-provincial fiscal relations. I find his suggestion in this regard most disturbing. He has proposed that the tax rental system be discontinued on March 31, 1962. Mr. Speaker, I think I know something about this subject, because I was a member of the British Columbia legislature in 1941 when the first tax rental agreement was introduced. I was also there when this agreement was reaffirmed with changes five years later.
In 1941 the federal government asked the provinces of Canada to enter into a tax rental agreement. Why did the federal government do that? I suggest it was because of the necessity of the time for national planning and financing to meet the responsibilities of the national government in time of war. This necessity was recognized by the provinces at that time and they entered into agreements. During the years since the war these tax rental agreements have not been discontinued because they involve good principles and methods, and because of the basic thought that because this was good policy during wartime it might be good policy during

peacetime, as there is still a need for planning and the solving of problems which must be overcome.
I felt that this was a good arrangement when it was first made and I still feel it is a good arrangement. I believe the new proposals set forth by the Minister of Finance in his budget represent a backward step on a downward path in respect to federal-provincial fiscal relations, and that it cannot lead anywhere but to bickering and difficulties.


Donald Methuen Fleming: That is just what it does away with.


Harold Edward Winch: I feel this policy represents a serious departure from the path of progress which was laid out in 1941 toward national minimum standards. I suggest this new policy will renew the complications, duplications and inefficiencies in the taxation field. To use terms that were used at the time of the federal-provincial conference, the adoption of this new policy will mean a return to the tax jungles of the 1930's.
Mr. Speaker, I should like to emphasize the fact that I feel strongly about this matter of not only inviting but almost demanding that the provinces impose their own income taxes, because this policy is fraught with danger. I think we should recognize that without clear-cut leadership from Ottawa there is every possibility of a return, as I said earlier, to the tax jungles of the 1930's. Perhaps the most important result to the federal government will be the loss of its vestige of control over the use of income taxation as a means of combating unemployment and for stimulating economic growth. I can only envisage this proposal as an indication that from this time on the provinces and every individual in this country will be on their own.
I suggest all we have to do, Mr. Speaker, is to look back over the statements of the provincial premiers at the time of the October conferences, and the editorials which appeared in newspapers across this country at the time. I should like very briefly to refer to several of those editorials. In the Ottawa Citizen of October 26, 1960 there appeared an article under the heading, "Diefenbaker's Tax Proposals Stun Premiers". In the Leader Post of October 26, 1960 there appeared an article under the heading "Sask. Will Oppose Proposal on Taxes". That article reads in part as follows:
Premier T. C. Douglas has branded Prime Minister Diefenbaker's proposal to end the tax rental formula as a surrender to the wealthiest provinces and a "complete betrayal" of the others.
The Toronto Star of October 27, 1960, included an article under the heading "P.M.

Offers Return to Tax Jungle". Let me quote two paragraphs from this article as follows:
Prime Minister Diefenbaker proposes to abandon the present tax rental agreements with the provinces and let them levy their own income, corporation and succession taxes.
This would be a double step backward. It would tend toward the Canadian tax jungle of the 1930's and it might easily promote national disunity by setting province against province, region against region.
I should also like to make reference to a statement made by the premier of Quebec as reported in the Montreal Gazette of October 27, 1960, which appears in an article under the heading "Lesage Opposes Proposal". Also in that same newspaper appeared an article written by Arthur Blakely under the heading "Premiers Reject Diefenbaker's 'Suggestion' ".
The last article to which I wish to refer in order to give the broad editorial picture of that time appeared in the Toronto Star of October 27, 1960, written by John Bird, a very eminent member of our press gallery, under the heading "Dief 'Turns Clock Back 20 Years' ". That article in part reads as follows:
Prime Minister Diefenbaker's proposals to end tax-rental agreements, putting the clock back 20 years, have virtually united the provinces in opposition.
Mr. Speaker, I want to indicate how strongly I feel in regard to this matter of dominion-provincial fiscal relations and agreements, mostly because of one statement contained in the minister's budget speech as found on page 6655 of Hansard of June 20, 1961, which reads as follows:
In short, it was proposed that the provinces would reassume their constitutional rights and responsibilities to impose and vary their tax levies as they saw fit.
I think that is the key to the minister's statement; he wants to return the constitutional rights and responsibilities to the provinces. I suggest that is entirely different, and an about face, to statements as I recall them made by the Prime Minister when he spoke in Massey hall during the 1957 election campaign. He said then that the provinces and municipalities could not discharge their constitutional responsibilities. Great as were the men and great as was their thinking at the time of confederation, they could not possibly conceive of the development of Canada and the development of new responsibilities of federal, provincial and municipal governments. The fathers of confederation had no idea of the development of Canadian democracy, whereby people looked to government as a right for health services, old age pensions, mothers' allowances, family allowances and unemployment insurance.
I suggest that this proposal of the government in this realm of federal-provincial fiscal
The Budget-Mr. Winch relations, with a return of constitutional responsibilities to the provinces, is unfortunately an intervention in that section of the British North America Act which deals with property and civil rights, which means basically employment and all those other social benefits which I have mentioned. I suggest a serious mistake is being made here, because the result will be that those social benefits, which were not contemplated at the time by the fathers of confederation, will disappear because the residual power will now rest in the hands of the provinces.
Despite the interpretation of governments or courts I say that is wrong. The residual power should belong to and be a responsibility of, the federal government, and there is a section which can place it there. I say it is absolutely impossible for the municipal and provincial governments to accept these new responsibilities because of the limit on their taxation powers. I say it is absolutely impossible to have a national minimum across Canada on account of the difference in the wealth, in the resources and in the productivity of the provinces. Surely we have to have that in effect in legislation and in policy if we are all going to be Canadian citizens. I say, sir, that the government is throwing all this overboard by returning to the procedures in existence prior to 1941. In particular, of course, this can be applied to that vast problem of unemployment.
I remember reading not long ago a statement of the premier of one of the provinces in which he outlined this feeling-and I agree with him-that widespread unemployment is obviously a problem in which all members of government share a common concern, but the predominant responsibility of the national government to launch corrective measures cannot be denied. It is the national government alone that possesses the strategic control over fiscal policy, and foreign trade, and the constitutional powers and financial resources which must be thrown into the battle against unemployment at all times.
Sir, this matter of dominion-provincial fiscal relations is one of the most important things that could come before the members of this House of Commons. It is a matter which strikes home deeply to every citizen of Canada. Certainly it strikes home deeply in so far as the provincial and municipal governments are concerned. I say, sir, this government is letting down the people and the provincial and municipal governments in setting the clock back in not only the proposals but in the demand that I understand has been made by this government, by the Prime Minister, upon the provinces that they shall have their-I think the term is "acceptance"-in by the end of September of this year. The word
6S4G	HOUSE OF
The Budget-Mr. Winch "acceptance" may not be quite right, but I do know that on one of the releases the month of September was given as the time for the reply by the various provinces. We do know from the press that questions have been sent to the government regarding the working out of some of the details and problems.
I do not think this new plan is in the best interests of Canada. I do not think it will work. If the government insists on going ahead with it I believe that after a trial period of a year or two we shall have to return to something different and something more along the line of the five-year agreements that have been in effect now since 1941, which the government have said are going to end on March 2 of next year.
I know the government has said it will work out a plan whereby it will collect these taxes. That is so typical and is hemmed in by restrictions, particularly the one which is referred to on page 6656 of Hansard where it is said that the federal government will take care of the collection provided the provincial tax base is identical with the federal tax base at all times. If the federal government is going to collect only if the provincial tax base is identical with that of the federal government I do not quite see how the minister is returning their constitutional powers to them. If the tax base is not identical at all times, then we are going to have a duplication in the collection of income and corporation tax.
Sir, I notice I am just within a minute of my time being up. I say this entire matter of the budget is important. I have had time to outline only two aspects. First, we have not had an explanation of the basic economics and we have not had that trial balance with what appears to be good and what can have a serious inimical effect on the other side of the picture. I think we are entitled to that. I think we must know that if we are to have a full understanding of this budget.
As I conclude the last half of my remarks may I say I believe this matter of dominion-provincial fiscal relations and agreements is of such a serious nature that before the government proceeds as it has now outlined it should take a second comprehensive and exhaustive look at what it is doing; otherwise it may be endangering the true meaning of federalism and Canadianism.


The Acting Speaker (Mr. Chown):: I will give the floor to the hon. member for Leeds (Mr. Matheson) after the luncheon recess. It being one o'clock I do now leave the chair.
At one o'clock the house took recess.



COMMONS AFTER RECESS

[Stage Direction]
The house resumed at 2.30 p.m.
Mr. John R. Matheson (Leeds):: Mr. Speaker, I sit in this seat because there died on December 7, 1960, Hayden Stanton, a man greatly respected in Leeds and I believe by everyone with whom he ever came in contact. Hayden Stanton had the honour of representing my historic riding as a result of being elected in 1953 and re-elected in 1957 and 1958. What may not be so well known to members of the house is that before that time Hayden Stanton had a distinguished career in municipal government. He was loved by our people. I know he was loved in parliament, and I know that my presence in this house comes as something of a disappointment to an overwhelming group of representatives from different ridings in Canada. All I can say, sir, is that according to my lights I shall be as faithful to my convictions as I know my good and respected friend, Hayden Stanton, was for so long to his.
I must thank every member of the house for the chivalry with which I was received in this chamber just a few days ago. I walked up the aisle with something of a gasp in my throat. It reminded me of another vivid moment in my life when I was assisted by friends to look through a porthole of the Lady Nelson as we approached the city of Halifax and looking through wet snowflakes I had something of the same feeling that I had in joining this company of ladies and gentlemen.
It was a dramatic day on June 14, 1961, for many other reasons. We heard the Minister of Finance (Mr. Fleming) make an important statement respecting a senior servant of the government, Mr. Coyne. This came rather as a surprise because I think all of us who live anywhere near Ottawa had come to believe that there was a rather intimate relationship between these two gentlemen, the Minister of Finance and the governor of the bank. On December 9, 1960, the Montreal Gazette carried this story from Ottawa:
Regarding the "sweeping indictment" of James Coyne by seventeen university economists, Mr. Fleming said he is at a loss to know their grounds. .. However, Canada is a free country and university economists have as much right as anyone to express their views on current matters.
I do not, of course, intend to dilate on the merits of this particular matter which has actually been so disturbing to so many people for so long. We could not understand public utterances and silence from the treasury side but we understand it now. An article which appeared in the Financial Post of June 17,

1961, under the heading, "The Nation's Business", speaks of the big fight and refers to the serious blows to the public service. The article has this to say in part:
... the wisdom and efficiency of our governments depend on the calibre of our top public servants and on their candor and self-confidence ... Hence the beheading of a very senior servant of the government like Coyne is a profound cause for concern. The effect on the very important group of senior public servants not yet decapitated will be very serious.
If this were a single isolated event we would wipe it away, but within recent recollection we have sustained other serious losses to the public service such as the loss of: Hector McKinnon, chairman of the tariff board, Clarence Shepard, 47 years of age, chief commissioner of the board of transport commissioners, George Mclvor, chief commissioner of the Canadian wheat board, Davidson Dunton, 49 years of age, chairman of the board of governors of the C.B.C., Ernest Bushnell of the C.B.C., Mr. Nicholson, 57, commissioner of the R.C.M.P., Mitchell Sharp, deputy minister of the Department of Trade and Commerce, William Buchanan of the tariff board, Alan H. Jarvis, 46 years of age, in his prime, director of the national art gallery, Charles Gavsie, St. Lawrence seaway, Jean Lessard, St. Lawrence seaway-


Mr. Ricard:: Don't come into Quebec and talk that way.


John Ross Matheson: -General Worthington,
civil defence, and now in these last few days we have been hearing repercussions with respect to Donald Gordon. Again, without referring particularly to the merits of that or any other issue, all I can say is that in this country we can scarcely afford the wastage of any human resource, particularly human resources with this kind of intellectual quality.
We on this side believe and, indeed, I think it is believed throughout the whole house, that there is not one human being in Canada that we can waste. This is as important in the case of some senior civil servants and, indeed, perhaps more so, as in the case of the dreadful wastage that there has been among the youth in this country.


Mr. Grafftey:: We do not see any youth in the opposition.


John Ross Matheson: Figures indicate that in 1960 the average number of unemployed males between the ages of 20 and 35 was 153,000, or 24 brigade groups of young men with hope, with determination and with purpose in their lives who were doing nothing in 1960, and this, Mr. Speaker, is 18 per cent above the figure for 1959.
The Budget-Mr. Matheson
To touch again on the matter of the bank and the Minister of Finance, it is difficult to address oneself to the merits as we have been permitted to hear only one side. However, I should like to refer to an article in the Economic Journal, being the quarterly journal of the Royal Economic Society. The editors were J. M. Keynes and T. H. McGregor. The article was printed in March, 1934. This goes back a long way, but let me read a few words set out in this learned article by a man esteemed by all banking authorities and a well known student of this subject, Dr. Clifford A. Curtis. The paragraph to which I should like to refer appears at page 54:
There can be no question that it is the duty of the central bank to stand out against the pressure of governmental policies which the bank believes to be injurious to the public good. But, if a government decides that a certain monetary policyusing the term in its broad sense-is desirable, and if it is prepared to follow it at all costs and to be responsible to the public for it, then it must be, under a democratic scheme of government, the duty of the central bank to carry out this policy. In an extreme case, the bank may appeal to the sovereignty of the people by making the matter at stake a public issue between it and the government. Such a possibility, however remote, is bound to exercise some restraint upon even headstrong administrations.
The fact, Mr. Speaker, that such an issue has developed is a crisis in Canada. The reasons for it are, perhaps, not as important as the fact that this particular thing has happened. I come to this house with great respect for all members of this house, and particularly those gentlemen who adorn the treasury benches. We know the Minister of Finance as a man of scholarship in the law, hardworking, dedicated, of an exemplary character, and so on. I believe that when the minister presented his budget in June of 1957, he meant exactly what he said. I refer to an article in the Toronto Star of June 26, 1957. This article bears the headline "Fleming's First Budget 'Tremendous Challenge' ", and reads in part as follows:
But Mr. Fleming says firmly that there will be a balanced budget.
I think that the distinguished minister intended precisely that. I compare that with the type of newspaper clipping we read today. The Toronto Telegram says:
In a startling reversal of his past position, Mr. Fleming has devalued the dollar.
The Montreal Star says:
Mr. Fleming predicts only a below average rise in gross national product. Our deficit in the current fiscal year will be a whopper.
The Quebec Chronicle-Telegraph says:
Budget provisions pave road for more inflation.
We heard in detail something of the explanation of this in the speech given yesterday
6948	HOUSE OF
The Budget-Mr. Matheson by the parliamentary secretary to the Minister of Finance. I should like, in the few minutes that are available to me, Mr. Speaker, to try to address myself to some of the things referred to in this budget. I would say this, that the minister can be characterized as an expansionist nationalist, whereas Mr. Coyne can probably be described as a restrictionist nationalist. Probably the only safe course at the present time is for Canada to pursue a policy that is more internationalist. I put to you, sir, that the minister puts faith in exchange manipulation. The word "manipulation" is entirely appropriate to what is happening, dealing with the symptom rather than the economic problem, thinking that by manipulation of the symptom he somehow or other is going to be able to change the course of economic fortunes in this country.
I think we can credit the fact, in the light of the minister's explanation during his appearance on television, that he wishes to frighten capital so that a change will occur immediately. This is an extraordinary development. His course on the import side is obviously restrictionist; it could have no other connotation. Indeed the hon. gentleman's policy as outlined in the budget, so far as exchange is concerned, is just as restrictive as Mr. Coyne's policy is with respect to tariffs. What are some of the foreseeable results of such a policy? It certainly is going to increase the cost of consumer goods. This morning we heard about increased bread prices, and other increases will rapidly follow. Increases in the cost of machinery will be another result. It does mean that, in fact, there will be a drag on new investment in Canada. The minister has explained to this house that this exchange manipulation may provide something in the nature of a stimulus to exports. However, this is exceedingly uncertain because many of our important exports in this country are exports which do not respond very rapidly to price changes. It does seem, according to the best economic advice available, that a good many of our markets in the United States are to large buyers who need our products and are going to take these products in spite of a slight price variation. There will be a response in price very quickly by Canadian exporters who, regardless of the kindly advice and warnings of the minister, will take advantage of conditions. The result of this will certainly be to move export and all prices up, to give larger profits where there have been adequate profits before. What possible advantage will flow from this? The ultimate results will be higher costs for the Canadian people.
I would suggest, Mr. Speaker, that there is another very sinister aspect to this par-


ticular budget. This budget represents protection through depreciation. Some expansion is expected unless other countries catch on and retaliate. All we have to do is look back at the financial history of France and the United States, and particularly the morass into which Europe got itself in certain periods in the past, to realize how frightfully dangerous this course may be.
What about the international monetary fund? To what extent has Canada actually kept faith, to what extent is she now living up to her own exemplary record in the financial field? Moreover, such protection as is being afforded to certain people through this depreciation factor really means, if we analyse it at all, that Canadians hereafter must pay more for goods produced.
We are presently presented this choice, Mr. Speaker, in terms of achieving full employment. We can make the economy more efficient, and I submit that this budget does not do that, and does not address itself in any way to that problem. Alternatively, we can subsidize marginal industry by accepting a lower standard and that is the course of this particular administration. In so far as the exchange factor in this budget is concerned, certainly exchange depreciation rapidly destroys the competitive factor, the one thing on which Canadians should surely have concentrated their ingenuity in the last months and years. The exchange manipulation does not increase efficiency by one iota.
Let us look at it from another standpoint entirely. Up to now we have had a free exchange rate. The Prime Minister (Mr. Diefen-baker) has referred recently to his advocacy of private enterprise. Before this budget we have had a free exchange rate. What does that mean? It means an exchange rate determined by the play of day to day forces in the market-in the longer run by the position of our balance of payments. What about the alternatives, the fixed exchange rate which Canada enjoyed during the period from 1939 to 1950? This could work with certain advantages. A fixed exchange rate does give the trading community certainty about the rate. However, this government has given Canada neither. It has given Canada, if I may use the expression in a parliamentary sense, a bastard rate flexible but subject to political manipulation.
Now the minister gives us a manipulated rate influenced by market, by official action, that is the bank, and by the indecisiveness of the government itself. We have compounded on the natural laws of supply and demand the economic influence of the bank and the political influence of the government.

I put it to this house in earnestness that this is a dangerous and damaging thing to the future of this country.
How does the minister propose to "manipulate" the rate in the manner and to the extent he believes to be desirable? By the process of going into the market and buying United States dollars for which we need cash. Where are we going to get cash when we have an administration that, by its budget now, has piled up interest charges alone of something of the order of $200 million a year? Where are we going to go for the moneys that are going to be necessary to go into the market and buy these United States dollars? I submit that we have two alternatives. We are either going to borrow more or we are going to print more and neither is a very happy choice. We have to do one or the other.
I submit that this is an irresponsible act in another respect. We have had a policy declared with no action. What is the likely result of this announced policy? I submit that one of the first things we can look for is sharply increased United States investment in Canada-which I always thought was one of the things which the ministry side were very much against-but not United States investment in the sense of the past, not the establishment of some new industry and the earnest desire to build up, not speculative or risk taking at all, but rather such things as Americans buying Canadian homes, buying Canadian established businesses, buying what is already making a profit, buying stocks and so on and shares in Canada.
Can we not fairly say that the only result of this course-that is the Coyne-Fleming controversy-is victory for neither? No matter what the facts are, no matter what is presented to this house, there can be victory for no one. There can be only loss to all of Canada. When the Leader of the Opposition (Mr. Pearson) is being interviewed on television and elsewhere is being asked the question, "What would you do", I think there is only one proper answer. "No one else ever would have got into such a box." Have we ever heard of a situation in Canada where the head of the bank and the head of a ministry have worked so very badly together? Is this not part of a pattern-the decapitation policy of this government? Have we not seen this pattern develop with the loss of many extremely able people in Canada who were compelled to quit or who were fired?
This administration first came into power with tremendous fanfare. When we analyse the policy of the Prime Minister of Canada we find that he came into power in Canada with an approach that historically has had 90205-6-439
The Budget-Mr. Matheson a tremendous popular appeal. It was nationalism. Nationalism was the key note of this great victory of the government in 1958; "the call for a greater Canadianism" appeared in full page ads across the country. In the Toronto Daily Star the Prime Minister is reported as promising:
Probe of United States domination in Canadian firms.
In the Ottawa Journal he is reported to have pledged himself to:
Canada's fight to control her own affairs.
The Globe and Mail weekly carried the headline:
Won't take dictation: P.M.
This was the approach of this particular government, a very popular approach. I wonder whether this approach is not shown now more demonstrably than ever before by this unilateral monetary step which must be sharply resented and which will bring retaliation from other countries with which we have had happy and profitable relations in the past.
As my time runs out I think it would be wrong not to address myself more positively to the growth of Canada. I can only do so in a word but I would put to the house this submission. The thing that we should be aiming at now and exploring zealously and courageously is the extent to which Canada can truly become more competitive, not less competitive, in the international field.
There are one or two things about this budget that I like. I am greatly pleased about proposed portable pensions. I think it was the parliamentary secretary who said that this may be more important than perhaps anything else, and I agree with him. Surely this is something that can be a basis by which we can use and constantly upgrade human talents in this country and establish a program whereby no man or woman, however young or however old, is useless. Surely this can be a basis, conjoined with other things such as bold technical training and retraining whereby we can actually move rapidly towards a skilled society, one in which we are unafraid to meet competition from any source. We know what has happened in other countries. We know of the great developments in Germany under Ludwig Erhart. At page 33 of his book called "Prosperity Through Competition" we find this paragraph:
The foreign trade policy which we are pursuing, in spite of much criticism over the past nine months, is based on the conviction that our economic task- the employment and maintenance of over 12 million more people than before the war-cannot be carried through, but must founder in a cul de sac unless we create more air in this manner... Above all we must not try to achieve an apparent success through increasingly watering down our money-

The Budget-Mr. Badanai
Something we in Canada are doing right now.
-which has at last become stable and thus move towards inflation. In that way we would steal imperceptibly the money of those who have saved. That would be the most damnable method which could be conceived.
Surely this is the type of policy we need in Canada, and I think the Globe and Mail of March 15, 1961 summarizes this neatly when it says:
What is needed is a better economic climate in Canada-a climate that will encourage development, ingenuity, buying and selling: a climate that will stimulate competition by making competition worth while.
(Translation):
Mr. Speaker, I live along the upper St. Lawrence, in Brockville, the island city.
When I was young, I used1 to live in the picturesque port city of Quebec and sometimes I went sailing on the St. Lawrence at the point where the salt water begins.
Canada must be like its great river fearing neither depths nor vast expanses, working in close co-operation with all countries of the world, not only in the cultural field but also in the economic field.
We shall no more succeed in retaining the waters of the St. Lawrence than we shall be able to stop the development of our country, by trying to cut it off from the rest of the world through certain protectionist measures.
(Text):
I see that my time has almost expired Mr. Speaker, I thank the members of the house for their kind attention. It seems to me that if we are serious about this business of really using enterprise as the stimulus to move forward, we must be concerned about the extent to which we really mean what we say. In closing I quote from Canadian Insurance of May, 1961, where their opening editorial comment states this:
History records that no nation or empire has survived when 50 per cent of the people's income went to support the government and Canada is only 10 per cent short of that fateful margin.
All of us must take this as a warning and start to think in terms of real growth, of real development, of truly building a much larger gross national product. Only in this way, I earnestly submit, can we hope to achieve nobler goals in terms of social security and achieve genuine material progress for our people.


Hubert Badanai: The Budget-Mr. Badanai of our dollar with that of the United States would mean to our export trade and to the development of Canada.
Speaking on the baby budget on January 24, 1961, as reported at page 1382 of Hansard of that date again I referred to the subject of the premium on the Canadian dollar:
The minister had nothing to say about the premium on the Canadian dollar. It is true that it is now at near par with the United States dollar. However, a stabilization of the rate of exchange for the Canadian dollar should be considered now. It should have been done a long time ago.
The apparent advantage of the premium has actually been a problem which interfered with the stimulation of export trade. I directed a question to the Minister of Trade and Commerce in the house during the trade commissioners' conference in Ottawa. I asked whether the high priced Canadian dollar had been discussed. I was more than mildly surprised to receive a negative reply from the minister whose responsibility it is to promote exports.
I venture to say that the minister of the newly created Department of Forestry-to whom I wish to express my congratulations upon his appointment, and also my best wishes-will not find it difficult to agree that the premium on the Canadian dollar has been a definite detriment to the forest industries, which are substantial in the economy of our nation. Were it not for a healthy pulp and paper business northwestern Ontario would be economically insolvent. I need not remind the minister that practically one third of our annual total exports is represented by pulp and paper, lumber and other forest products.
It is no secret, therefore, that in respect to lowering the exchange rate of the Canadian dollar I am in agreement with the program.
The plan of portable pensions merits the support of every hon. member in this house. Speaking on the vesting of pension rights, a subject which was introduced by the hon. member for Welland (Mr. McMillan) on May 24, 1960, I had this to say as reported at page 4208 of Hansard of that date:
Mr. Speaker, I rise to participate in the discussion of this very important subject. I was interested in hearing the Minister of Finance state that portable pensions are not a matter of federal jurisdiction. I maintain, however, that the federal government has some responsibility in the matter of pensions and the provision of a general pension plan acceptable in every part of Canada. If that is the case, then it has got to be a federal proposition and not merely a matter of provincial jurisdiction.
One of the major problems facing workers in industry today is the difficulty of men over 40 getting another job if for some reason their previous job comes to an end. As everyone knows, the acceleration of technological change has hit the hardest at older workers who have been displaced by machines. Many of these displaced workers were participants in pension schemes of all kinds, as intimated by the Minister of Finance, but their prospects for security are threatened through loss of employment. As a result, people 45 years of age and over find it extremely difficult to get a job in industries that have their own pension plans which in many instances preclude the hiring of men and women over 40. The only fair solution to this problem, and it is a serious problem, is a measure or method, call it what you will, which would permit an employee to change his job without affecting his pension plan.

On March 16, 1961, as reported in Hansard at page 3033, I asked the Minister of Labour (Mr. Starr) if he knew of a statement made by an official of his department to the effect that legislation on portable pensions would be introduced in the near future. The minister replied that he had been informed that the statement had no reference to federal legislation, but dealt only with the possibility of provincial legislation.
These and similar observations have been placed on the record by me regarding these three subjects, which should indicate that these desirable measures were not hatched in the fertile brain of the Minister of Finance who, after much prodding, came to the conclusion that suggestions made by members of the opposition have merit, after all. I will give him credit for a belated acknowledgment of their worth.
I also appreciate the minister's concern for the tobacco grower who he is going to help by allowing a fatter cigarette without an increase in tax. However, while he was thinking of cigarette smokers, I am surprised he did not give consideration to the users of soft drinks, chocolate products and toilet goods, because these commodities are of general universal consumption as are fruit and meats.
A budget designed to expand the Canadian economy should certainly contain a proposal for a municipal development bank from which municipalities could borrow for essential projects on long term and at rates o1 interest close to those which the federal government pays. This is, among other things, one of the striking omissions of this budget. The absence of such a fund has forced municipalities to borrow heavily in the United States money market to finance their local improvements, and these municipalities will have to repay their debts in United States funds which, with the devaluation of the dollar, will mean a substantial loss to them. Both these measures, the lowering of the value of the Canadian dollar and the establishment of a loan fund to help municipalities, should have been undertaken at least three or four years ago.


Donald Methuen Fleming: Why not five or six years ago?


Hubert Badanai: The failure of the government to implement much earlier these recommendations which were made in this house over and over again, at least since I have been in the house-I am not concerned with what happened years ago; I am concerned only with the past three years since I was elected to this parliament-has been a contributing factor to unemployment and has served to retard the recovery of the economy

The idea of establishing some kind of a national institution to facilitate municipal borrowing has been put before the government on numerous occasions. The municipalities are asking for access to capital funds at costs within their capacity to pay. In their importance as basic community needs many local improvements are of equal priority with those of the senior government. It would be only fair to enable municipal governments to have the same advantages as senior governments in respect of the capital market, and the only effective way to accomplish this desirable equity is to establish a municipal development fund or bank, call it what you will, to assist the municipalities, with the co-operation of the provinces, in borrowing for their needs.
The Canadian Federation of Mayors and Municipalities favours a federal agency which could be named the municipal development bank, the main function of which would be to purchase the bonds of a municipality subject to the approval of the province. The terms of such loans to the municipal governments would be as favourable as possible, consistent with the cost of the federal government's own borrowing. This would not eliminate the private investor who would still participate in municipal, financing, either by sharing in the initial underwriting or by purchasing bonds from the bank. A federal government guarantee of such securities would be as sound in principle as the federal government's guarantee of Central Mortgage and Housing Corporation.
I wish to submit another good reason for such a municipal loan bank within the jurisdiction of the federal government. The federal government has a triple role to play in coordinating capital expenditures, public and private, which come within the framework of the national economy as a whole. Such coordination would ensure a condition of steady growth and stability. At present I doubt whether the government can clearly see, let alone co-ordinate, the capital expenditures of the three levels of government. Over and above any other consideration, such a bank would certainly facilitate borrowing within Canada for Canadian needs. It would, therefore, be a positive means of implementing the federal government's policy of encouraging more reliance upon domestic savings.
The establishment of such a fund or bank would also remove the frustration and obstacles to development; it would give a sharp incentive to the forward planning of growth and redevelopment. It would also help to keep in each urban area a planned capital development program which, if implemented, would
The Budget-Mr. Badanai provide work and satisfaction in seeing the fulfilment of community needs.
At the lakehead we have a lakehead planning board, with a full-time capable planning engineer, whose plans are awaiting capital to transform the lakehead cities into a coordinated unit which would have the sure effect of attracting new industries and more people. I ask the minister to consider the suggestion of establishing such a bank at the earliest opportune time.
The Bladen royal commission report contains a recommendation which would have been of doubtful value in my opinion, had the government implemented it in the budget. I am referring to the 10 per cent duty on British cars which the commission has recommended. Today the United Kingdom is more and more under pressure to divert her trade to the European community. Such a tariff proposal would be just another obstacle to our maintaining our trade relations with Britain. If Britain chooses to join the European economic community we should then lose no time in allying ourselves with the same bloc. After all, Britain buys in round figures $1 billion worth of commodities in Canada, while our purchases in that country do not give Britain a favourable trade balance. These are factors-


Mr. Pugh:: Will the hon. gentleman permit a question?


Hubert Badanai: Let me finish. At the conclusion of my remarks I will answer any question the hon. member wishes to ask.
These are factors which command the attention of the government to a degree which has seldom been necessary in the past. In this budget the Minister of Finance has endeavoured to create the impression that he is providing Canada with a planned deficit in order to stimulate the economy. In reality the deficit that the minister will incur this year will be the result of an increase in expenditures based on departmental estimates that were drawn up as early as September of last year, and which had very little to do with the recession or its cure because unfortunately at that time the government did not recognize that the economy was suffering from a recession which caused wholesale unemployment.
In the final analysis, Mr. Speaker, this budget can only be assessed in terms of whether or not it contains solutions to three of Canada's principal economic problems, first, unemployment; second, balance of payments; and, third, economic growth.
With regard to the solution of the unemployment problem, there is little in the budget to tackle effectively this basic trouble. There

The Budget-Mr. Badanai is little or no support for the vocational retraining program established recently on a federal-provincial basis.
The Minister of Finance cannot put everything in his budget, but at the present time it is almost inexcusable to overlook support for a program upon which the government has placed so much emphasis. One might even wonder how sincere the government is in its sponsorship of this vocational retraining program when in the budget it grants tax relief to volunteer firemen but nothing is granted by way of tax concessions to those who undertake the vocational retraining program which is being done largely on a voluntary basis, or for that matter to those who are trying to educate themselves or their children at their own expense.
With regard to tax concessions granted in the budget for research, there will be little increase in the amount of research done by Canadian firms. A more positive incentive must be provided. If research is to be effectively stimulated something like a double tax credit will have to be given for expenditures for research.
The minister proposes to raise the tariff on textiles coming into Canada. These will come largely from Britain, Japan, India and Italy with which usually we have a favourable balance of trade.


Mr. Deputy Speaker:: Order. I am sorry to interrupt the hon. member but his time has expired.


David Vaughan Pugh: The hon. gentleman said he would permit a question at the conclusion of his remarks. May I ask it now?


Mr. Deputy Speaker:: With the consent of the house it may be put.


Some hon. Members:: Go ahead.


David Vaughan Pugh: My question relates to the imbalance of trade with the United Kingdom. The hon. member said that exports from Britain to Canada were far greater than our exports to that country.


Hubert Badanai: No, it was the other way around. Our exports to Britain are greater than our imports from Britain.


David Vaughan Pugh: Yes, that is correct as to the total figure. Has the hon. member the figure for per capita trade with the United Kingdom and is he aware that it is greatly in excess of the per capita trade with Canada?


Hubert Badanai: The hon. member has asked a question that I should try to-


Mr. Robichaud:: Take it as notice and answer in due course.


Hubert Badanai: Great Britain has approximately 50 million people and Canada has


about 18 million. If you wish to establish that figure, all you have to do is to use your pen or pencil and you will have it right away.


David Vaughan Pugh: Would the hon. member answer the question? Is he aware that exports per capita from Canada are far in excess of imports from the United Kingdom on a per capita basis?


Hubert Badanai: I presume that some members on the government side will undoubtedly take part in this debate and I sincerely trust that the hon. member who has asked me this question will make a speech before the end of the debate. I think it would be in the interests of all concerned for as many members as possible to rise from their seats and speak on the budget.


J.-H.-Théogène Ricard: They would sound much better than your speech.


Hubert Badanai: Inasmuch as I have been asked these questions, I should like to quote from an editorial in the Fort William Times-Journal of Wednesday, June 21, which seems to sum up the general reaction to the budget in these words:
No doubt a host of Canadians feel disappointed with the budget brought down in the House of Commons last evening. Finance minister Fleming may have provided the right nourishment for an ailing economy. But the menu is nothing like the fare which many had led themselves to expect.
(Translation):


Mr. Maurice Bourget (Levis):: Mr. Speaker, I was trying to look around the house to see whether the friends of the Minister of Finance (Mr. Fleming) would rise at last to extol his budget and explain how beneficial were the provisions announced therein, according to him.
Mr. Speaker, I hope that we shall begin by having some order here, and if hon. members do not want to listen, let them go out. They did not speak last night. There was not a single Conservative member who rose to compliment or defend the Minister of Finance. They left him high and dry, and he is quite small.


Mr. Pigeon:: The hon. member for Sherbrooke spoke.


Maurice Bourget: I hope I did not insult the minister when I said that he is quite small, because I did not say it with any bad intent.
Mr. Speaker, last Tuesday night, we heard the Minister of Finance make his budget speech. It was the fifth budget of the Conservative administration and the second one for this fiscal year. He wanted-


Donald Methuen Fleming: It was the first for this fiscal year.


Maurice Bourget: I am sorry, the minister is right, it was the second in the fiscal year 1960-1961. Anyway, the minister took three hours to make that speech which, according to him should pull the Canadian economy out of its present stagnation. Well, after all the fuss of the last few weeks and the unusual delay in explaining the government's financial policies, the Canadian people, as I said last Tuesday night on television, was expecting a sensational budget. However, all the sensation contained in that budget was a deficit which will certainly this year exceed $700 million. The minister himself predicts that the deficit will be between $600 and $700 million but if we take the inaccuracy of his former predictions into account, we might easily expect a deficit varying between $700 million and $1 billion, an amount which is a far cry from the promises made by the Prime Minister at a press conference in Saskatoon on May 27, 1957, when he stated that the Progressive Conservative government would fulfil all its promises and reduce unnecessary taxes while balancing his budget.
And now, does the minister contradict this? Did the Prime Minister not say these words in Saskatoon?


Donald Methuen Fleming: It was a good speech.


Maurice Bourget: It now becomes evident, Mr. Speaker, more particularly after this fifth budget speech, that the Conservative government, in this field as in all others, has proved itself incompetent. Far from having succeeded, even on a single occasion, in balancing revenues and expenditures. It has the sad distinction of having reached a peacetime high in this respect for the last five years. The total of its five consecutive deficits reaches the phenomenal figure of more than $2 billion. That deficit-
(Text):


Mr. McGee:: Did you hear your leader on the radio last night? He approves of a deficit.


Maurice Bourget: The aggregate deficit incurred since 1957 exceeds $2 billion.


Donald Methuen Fleming: A deficit of $2 billion this year?


Maurice Bourget: Since 1957 the total deficit under a Conservative administration has reached a figure of over $2 billion. That is the budgetary deficit.
(Translation):
This record breaking deficit of $650 million which is forecast for the current fiscal year
The Budget-Mr. Bourget will bring the Canadian taxpayers no general income tax reduction nor will it cut down substantially the extremely high level of unemployment.
In fact, in his budget speech, the Minister of Finance did not foresee more than a 3 per cent rise in the national income, that is only a little better than in 1960, which was a recession year. In that connection, Mr. Speaker, a few days ago I read an article which was published in the Wednesday, June 21 issue of the Le Soleil. I should like to quote a paragraph from that article:
Mr. Fleming's speech mentions imports and exports. It also deals with several other important matters. It is based mainly on the expectation of an increase in the national product and income, but does not include anything likely to bring about an increase greater that could normally be expected. Indeed, it is a document lacking in dynamism. Short of a miracle happening from the outside, Canada must be content to mark time while seeing its national debt increase without being able to do anything about it.	-
That article gives us an idea of what independent people think of the present budget and of the results that can be expected from it.
At the outset of his remarks last Tuesday night, the Minister of Finance mentioned that every budget he has introduced since the Conservative party came into power was intended to answer current financial and fiscal problems. He added that this budget is designed to meet the present needs and difficulties of our country. "Flexibility, he said, has been the keynote of our financial policy in these four years."
Well, Mr. Speaker, allow me to say that besides having visions, the Conservative party now has delusions.
Indeed, one does not have to be an expert to understand that the measures enacted by the Conservative party since 1957, far from answering present problems, have only contributed to cause an economic stagnation.
After having been in power for four years, it seems obvious that the Conservative government is unable to correct the situation.
In June 1957 and March 1958, the people of Canada no doubt thought that they had elected people who could better look after the country's economy. Now, let us take a quick glance at what happened since the Diefenbaker team took over the administration.
Before I proceed, however, I think I should remind the house that when things are going badly in some sector of the economy, the Conservatives never miss a chance to imply

The Budget-Mr. Bourget that all that is due to the legacy we left them. What legacy did we leave them in June 1957?
A $260 million surplus. A national debt reduced by $2.5 billion. An unemployment insurance fund of more than $900 million. Trade agreements with the United States from which the Canadian uranium industry was deriving revenues of $300 million.
In October 1957, according to statistical reports, only 3.4 per cent of the labour force was unemployed.
As a matter of fact, when the Liberals handed over the administration, the nation's business was in good order and Canada's prestige abroad was very high. Today, after four years of Conservative administration, what is the situation?
I said a moment ago that, under the last year of the Liberal administration, there was a surplus of $260 million, and that, from 1946 to 1957, we had succeeded in reducing the debt by $2.5 billion.
Well, let us see what use was made of such a legacy. During the 1957 fall session, the Diefenbaker government, foreseeing undoubtedly the general election of March 1958, reduced taxes by a total of $204 million and increased social security payments-excepting naturally family allowances-by an amount of $115 or $120 million. But subsequently, that is in the April 1959 budget, the people of Canada were soon to find out that the Prime Minister had forgotten his promises for that year, taxes were increased by $352 million. Moreover, contributions from the workers to the unemployment insurance fund were raised 30 to 50 per cent, which meant a further tax increase of $75 million. If we add this amount to the $352 million mentioned earlier, we find that taxes which were reduced in 1957 by $204 million, were increased in 1959 by $427 million.
In short, that means that the tax reductions granted in December 1957 did not last very long and that we had to pay a high price for the increases in social security payments.
We would have had a right to expect that those new taxes would ensure subsequent balanced budgets; but far from it, all the budgets submitted by the Tory government since 1957, far from being balanced budgets, showed deficits totalling over $2 billion.
Deficits are a tradition with the Tories as is well known. Since confederation, that is since 1867, in all the years that they were

in power, and that means 43 years, there were only four years when the Conservatives succeeded in bringing down a surplus budget.
Should I also remind the hon. members of the colossal mistake made by this Conservative administration when in September 1958 it launched its famous conversion loan of $5.6 billion, the effects of which are still with us and the result of which has been to upset our whole economy.
We all remember that only a few months after this loan operation, the bonds lost from 12 to 18 points in value, with heavy losses for those who had to sell unmatured bonds. We remember also that money became tighter, which sent interest rates to an unprecedented level and deprived our industrialists, especially the smaller ones, as well as our businessmen of the funds required for modernization and development.
Our municipalities and school boards were also strongly affected by that situation, because when they were in need of money to carry out works that were absolutely necessary, they had to pay an interest rate which was often higher than 7.5 per cent. Needless to add that such an increase in interest rates meant for all our citizens an increase in municipal and school taxes for years to come. And, incidentally, do you know that since the Conservatives have been in power in Ottawa, the increase in the debt interest only has now reached more than $556 million?
It seems to me those arguments should suffice to show that the fiscal policy of the Conservatives has been a fiasco.
Have the results achieved by the Diefenbaker government been better in the field of federal-provincial relations? We still recall the promises made by the Prime Minister in that connection, among others, the one he made at St. Patrice de Beaurivage, in the constituency of my hon. friend from Lot-biniere (Mr. O'Hurley), on May 30, 1957, which is as follows:
Everyone admits that the relations between Ottawa and the provinces are bad and that they are unsatisfactory to both provincial governments and municipalities. The federal government is rich, but the provinces and the municipalities are poor and cannot go on assuming their obligations.
To summarize the attitude of our party, I repeat what X said when I opened the election campaign; we guarantee the provinces and municipalities a greater share of the tax dollar. We shall thus provide the provincial governments with the possibility of fulfilling their important constitutional responsibilities and of promoting the development of our natural resources.

Now, what has happened since then? Are the provinces and municipalities in a better financial position? Is it easier for them today to discharge their important constitutional responsibilities?
I say no, because at the fiscal conference last February, the government greatly disappointed most of the provinces. The federal government consented to very minor concessions in the field of the personal income tax. All it makes a pretence of giving the provinces in direct taxation it takes back immediately by changing the basis of equalization payments. Thus is sabotaged the formula for a fair redistribution of the national revenue the St. Laurent government had developed and called equalization.
After the last fiscal conference of February, the province of Quebec realized that there is nothing it can gain with the new proposals, that it will proportionally get nothing more than it did under the last agreement.
After the marvellous promises of the Conservatives in the elections of 1957 and 1958, our provinces were not expecting such a stab in the back. Therefore, the Conservative government must be held responsible for the unfavourable position in which it places the provinces as regards their future expansion.
I have here a statement made by the late premier of the province of Quebec, Hon. Paul Sauve, who had this to say in the fall of 1959, in a speech to the Canadian Manufacturers' Association:
We have reached the limit and unless there is a more equitable distribution of fields of taxation between Ottawa and the provinces, there is nothing left to be done. If the federal authorities do not realize that in 1962, I cannot see-
That was a speech by the then premier of Quebec, who was not a Liberal:
If the federal authorities do not realize that in 1962, I cannot see how confederation can continue to operate.
Neither must we forget, that, because of its numerous deficits and its many loans, the government runs the risk of dangerously exhausting sources of credit where the provinces and municipalities can find the capital they need.
It is therefore a mistake to contend that these new agreements will help the provinces to expand and develop.
Let us now look at the results of those steps taken by the Conservative government with regard to employment.
I said earlier today that in October 1957, 3.4 per cent of the entire labour force was 90205-6-440
The Budget-Mr. Bourget unemployed. Yet it can be remembered how the Conservatives, when they were sitting on this side of the house, criticized the Liberal government of the day. Well, if we take the trouble to look into the figures supplied by the dominion bureau of statistics, we find that the yearly average number of unemployed under Liberal administration was as follows:
In 1953, 3 per cent; in 1954, 4.6 per cent; in 1955, 4.4 per cent; in 1956, 3.4 per cent.
Let us now take a look at the statistics under the Conservative administration. I shall skip 1957, because the government was Liberal for one half of that year and Conservative during the other half:
In 1958, 7.1 per cent; in 1959, 6 per cent; in 1960, 7 per cent.
It can, therefore, clearly be seen that under the Conservatives unemployment has considerably increased. Yet, people still remember the famous statement of the Prime Minister who said, "no one will suffer as long as I am Prime Minister".
Well, again in this field, and especially in this one, the Conservatives have failed to find the required solutions to this situation, because at no time since they have come to power have we seen so many unemployed in this country.
In February this year, Mr. Speaker, there were 727,000 unemployed Canadians, or about 11.2 per cent of the total labour force. The government now seems to find some satisfaction in saying there are only 457,000 unemployed. They do not need much to be comforted, for it must be realized that this figure of 457,000 represents 7 per cent of this country's labour force, as well as 38,000 more than at this time last year.
The most deplorable thing is that the Prime Minister and his ministers have been denying during all these last few years that such a situation was abnormal. They merely said that that situation would disappear with the snow or with the coming of spring.
The only measure, I must make haste, Mr. Speaker, the only measure which was adopted to remedy the situation was the establishment of a winter works program which called for a federal contribution of only 12 per cent, the rest being assumed by the provinces and the municipalities. Perhaps the government will decide to put into practice the "bread and games" plan suggested by the Associate Minister of National Defence (Mr. Sevigny) or perhaps will they say, as they

The Budget

Mr. Bourget did before, that it is now up to employers and labourers to solve the problem because apparently the government has taken all the steps they feel they can take.
In short, that is a very sad inventory of the Conservative administration during the last four years.
The Minister of Finance has stated that the budget he has just presented is an expansionist budget. It is indeed an expansionist budget if, by that, he means that it increases the deficits we have had since the present government took power in 1957.
This is what he said to justify his deficit:
(Text):
In times like the present, a substantial budget deficit can promote economic expansion, with more jobs and better living standards for many thousands of Canadians.
(Translation):
In recent years, as I said a moment ago, we have had huge deficits. Hon. members will agree that in spite of that we have had a record number of unemployed and alarming spells of depression.
Since December 1957, Mr. Speaker, we have become used to hearing the Minister of Finance make optimistic predictions in the high sounding statements of his budget speeches. But at the end of the fiscal year, we always found that the government's financial proposals contained in the budget had in fact restricted our economic activities and had been utterly inadequate as far as increasing the production and volume of employment was concerned, as required for our expansion.
The speech delivered Tuesday night is only slightly different from the others. This is why it is a disappointment to the great majority of the Canadian people, and it can be concluded from the silence of our hon. friends on the government side that they are also disappointed with the deficit.


Louis-Joseph Pigeon: May I put a question to the hon. member?


Maurice Bourget: Mr. Speaker, I have always been willing to answer questions, but considering that since last night hon. members opposite did not have the courage to rise in order to defend their own budget, they have no right to ask questions.


Louis-Joseph Pigeon: You are a coward. You are a coward just like your leader.


Mr. Speaker:: Order, order.


Maurice Bourget: Let the dead rise.


Some hon. Members:: Silence, please.


Mr. Speaker:: Order.
(Text):


William Arnold Peters: It is very interesting to hear this exchange, Mr. Speaker, and also to note that the Conservatives must now make their contributions by way of questions to the opposition. This seems to me to be a surprising way of presenting contributions to any budget debate.


Louis-Joseph Pigeon: We shall show by our vote.


An hon. Member:: Sit down.


William Arnold Peters: We have all watched what has happened during the past few months and it is very seldom that the backbenchers call a vote which the cabinet does not stand up and demand first. So we do not even get their opinion by the vote. They are probably getting to be better sheep than the Liberals were who preceded them in following the leaders.


Mr. Habel:: We were not.


William Arnold Peters: Maybe you were not, but that was the suggestion made at various times.
I think the Canadian people must have been very unhappy after this budget was presented. For days and days they had listened to an argument between Mr. Coyne as head of the Bank of Canada and the hon. member for Eglinton as Minister of Finance. They had heard them carry on a duel by letter and by remote control. They had come to the conclusion, I am sure, after the day long debate which took place in this house, that there was a difference of opinion. However, after listening to the minister's two and a half hour performance the other night I think the Canadian public came to the conclusion that there was very little difference in the positions taken by those two men. This is as it should be, since they are both Conservative economic advisers trained in very much the same school.
Ever since 1957 the Canadian public has been faced with an increasing amount of deficit budgeting. Previously, many Conservatives-and I am sure the minister himself was one of them-had felt that a budget in order to be a satisfactory budget should at least be balanced, and that the only reason for a deficit was the need to overcome some definite national emergency. I believe the

Canadian people held the view that the only reason for incurring a deficit, either in government finances or in their own personal finances, was when a need arose to acquire something urgently for which it was neither convenient nor possible to pay immediately; in any case, there was some reason that argued against saving the money in advance. I believe that during the war, especially, the Canadian people were willing to see large deficit budgets introduced because they knew exactly why such budgets were necessary. After listening to the minister speak for two and a half hours the other night I believe many Canadians are going to wonder just what this particular deficit is for.
It seems to me that if a worker got into the habit of going down to the finance company at the end of the week and borrowing $10 to pay his grocery bill and the other current expenses of his household it would not be long before the finance company would begin to take a serious view of his carrying on on that basis. Certainly there are credit unions-and I think it is true that credit unions probably take more interest in the welfare of their borrowers than do some other agencies-which would call the borrower in after making a few loans of this type and suggest to him that it would be to his advantage to borrow money only when he intended to use it to solve a particular problem. I think the Canadian people would go along with a deficit budget if the government could show that they are planning to spend more money than is immediately available to them only for the purpose of dealing with the economic recession and embarking on an employment program for Canadian citizens. But I believe we must look at this budget very closely if we are to find any evidence that either of these problems is being tackled with sufficient imagination and energy.
I think the country will also be concerned about the statements which the minister made about the relation of our economy to conditions in the United Kingdom, the United States and some other countries in Europe. He said these nations are experiencing an upturn in their economy and that this in turn will be reflected to the benefit of the Canadian people. This is probably true but it is certainly no justification for incurring a deficit in this country. That deficit is not helping us to solve our particular problem.
The C.C.F. party moved an amendment which stated in part:
-and this house regrets that adequate consideration has not been given and the government has failed to undertake social and economic planning necessary to stimulate the economy, provide full employment, and give an adequate level of social security by such specific measures as:
90205-6-440J
The Budget-Mr. Peters
1.	Raising basic exemptions under the Income Tax Act.
2.	Increasing old age security and assistance payments.
The reason we have suggested this basic increase in the exemption granted to small wage earners is that the money will flow immediately into the purchase of manufactured goods and agricultural commodities. We believe similar beneficial results will follow an increase in old age security and assistance payments. Such increases would restore the original purchasing power of the payments. In addition, an increase in family allowances would in large part, through spending by the medium and lower income groups, return to the federal government to the tune of 33 per cent in taxation. It seems to me that these are places where some assistance could immediately be given back to the people.
It is my belief that this government has not told the Canadian people the whole story of the financial conditions which are facing us. I believe that if the whole story were really told it would probably become known that the unemployment insurance fund had been a much greater factor than anything else in stabilizing the economy in very serious circumstances. Had we not had the $900 million reserve nor the payments that have been made to the unemployment insurance fund, there should have been a great deal less consumer goods purchased in this country because a vast number of unemployed would be without money. I agree that this program has put money into the economy of this country and reduced to a great extent the impact of the recession that we have been through.
While it is true that these increases will put money into circulation almost immediately, it is also necessary for the government to provide employment immediately. I suggest one way of doing this, and I congratulate the Minister of Public Works in this regard, is to provide money for housing at times when private industry is not interested in doing so. The amount of money which was supplied through the Department of Public Works in this regard has done a great deal to alleviate the situation. I believe a similar policy should be followed in regard to providing money for municipal capital expenditure, as well as money for capital expenditures on the part of this government.
I was surprised to note, in the highlights of this budget, the number of things which are supposed to be of value in comparison with what has been suggested in a number of statements made by Mr. Coyne, the governor of the Bank of Canada. I agree that some of his statements have been made in regard to subjects outside the realm of his jurisdiction, and

The Budget-Mr. Peters a few of them have been made in a way with which the Minister of Finance did not agree. However, it has been generally conceded that a great deal of money being saved in Canada is being put into banks and other savings institutions, which should be reinvested in the national development of Canadian resources. There is very little difference of opinion as to how this should be done. The methods which are now being used are similar to those methods suggested by the governor on previous occasions.
I should like to ask a question, although I do not expect to receive an answer immediately. The fact that none of the Conservative backbenchers has spoken in regard to this budget I suggest is an indication that they have been directed to stand pat and not try to sell this budget, because it is impossible to sell unless the salesman possesses the extensive knowledge possessed by the Minister of Finance and his capable parliamentary secretary. Unless one does possess that ability and knowledge it is probably unwise, particularly for backbenchers, to try to show the value contained in this budget to their own constituencies because they are liable to muck the whole thing up.
In the choice of a new governor for the Bank of Canada I hope consideration will be given to the development that has taken place in respect to other banks in Canada, particularly with relation to consumer credit. The present governor of the Bank of Canada has had a great deal to say in this regard. He has suggested, as many Conservative backbenchers and others who support that party have said, that we should not spend more money than we have, and that it is not a good idea to live beyond our means. I believe that philosophy is followed by most Conservative finance experts and supporters.
Mr. Coyne has insisted that the 6 per cent interest rate be maintained. This has been a source of aggravation to the administrations of other federal lending legislation. The leader of the C.C.F. party, the hon. member for Assiniboia (Mr. Argue) has suggested on many occasions in this house that the limit on interest should be set at 6 per cent maximum in relation to loans made under federal legislation. He has introduced bills in this regard which have been talked out before even reaching a vote.
The head of one of the chartered banks in Canada has been suggested as a possible replacement for the present governor of the Bank of Canada. I should like to point out that the bank of which he is in charge has developed a small loans branch in competition with the finance companies. It is my understanding that the rate of interest charged, while not as high as the interest rate charged

by finance companies, which I understand is as high as 28 per cent, on occasion reaches 11 per cent, including the normal legitimate charges allowed. I should like to ask if the gentleman in charge of this type of activity is the type of individual this government is considering as a replacement for the present governor of the Bank of Canada? If that is the case then I suggest it is a good indication of the fact that there is a real difference in opinion between the Minister of Finance and the governor of the Bank of Canada.


Robert Jardine McCleave: Mr. Speaker, will the hon. member permit a question? Would he recommend the president of a credit union for this position? The rate charged by those organizations is even higher, at 12 per cent.


William Arnold Peters: That subject could lead to a long detailed discussion in which I do not intend to engage at this time. I should only like to state that I have been a member of different credit unions and have always understood that loans from those institutions have always been made at the rate of interest of 1 per cent per month on the unpaid balance, which amounts to just slightly over 6 per cent. Hon. members may argue that is just slightly under 12 per cent, but I am not prepared to take up that subject at this stage. If I am wrong and the interest rate amounts to 12 per cent then I suggest the Bank of Nova Scotia small loans branch is charging twice that rate, perhaps as high as 22 per cent.


Donald Methuen Fleming: Such nonsense.
Why do you not get the facts instead of talking nonsense off the top of your head like that?


William Arnold Peters: I have just said that I am not prepared to argue that subject. I have just suggested that the Bank of Nova Scotia, which the Minister of Finance seems happy and anxious to defend, makes loans charging an interest rate as high as 11 per cent. If the calculation made by the hon. member for Halifax (Mr. McCleave) is correct, then I suggest the interest rate charged by that bank is perhaps twice what I understand it to be.


Robert Jardine McCleave: Nonsense.


William Arnold Peters: Why do you not stand up and make your own speeches in this house if you wish to deal with this subject?


Robert Jardine McCleave: Why do you not sit down when you do not know anything about the subject?


William Arnold Peters: Mr. Speaker, hon. members are asking questions, to which I have tried to

The Budget-Mr. Peters
give the answers. If they are not happy with We were told by the minister that this is my answers they are perfectly entitled to done continually by manipulation of the rise later and say so.	amount of United States money we hold.


Donald Methuen Fleming: Why do you not
make a speech based on facts and refrain from making these statements of fantasy and imagination slurring these institutions when you do not have the facts to back them up?


An hon. Member:: He always does that.


William Arnold Peters: I suggest the hon. minister should not have used the word "imagination" because I listened for two and a half hours on Tuesday night to the hon. gentleman's budget speech which was nothing but imagination. As one of his own members has suggested, the facts were covered by so much confusion that it was impossible to understand what it was about. Perhaps that explains why there are so few of his colleagues speaking on this subject.
Mr. Speaker, a great deal has been made of the fact that the excise tax has been removed from automobiles. 1 am sure that the removal of the rl\ per cent tax will be of great interest to those engaged in the automobile industry. However, I suggest this will really not be of much help to the citizens of Windsor, because it is difficult for me to understand how a person can be said to be assisted because of the fact that he can now borrow $3,000 to buy a car in order to save $100 to $150. I suggest it is much more important that the unemployed in Windsor, Oshawa, the Oakville area and elsewhere be provided with jobs.
This tax alleviation fails to take into consideration the fact that we do not produce cars in Canada. All we do is assemble parts and, as the house knows, parts are going to be more expensive now than they have been before, because we have to import them. It has been decided that a great deal of our problem can be solved if we reduce the value of the Canadian dollar. I agree that the dollar should be reduced in value. I do not know why the Canadian dollar should ever have been valued higher than the United States dollar. Certainly our wage levels, our standards of living and other things are exceeded by those of the United States, except for the quantity of our natural resources. Why then should our dollar be higher in value than the United States dollar? I cannot understand this unless it has something to do with one of the highlights of the budget which says that the exchange rate on the Canadian dollar is to be pushed below United States parity by the purchase of United States dollars; lower exchange rates on the dollar are designed to help purchasers increase modestly the price of imported goods.


Donald Methuen Fleming: I never used the word "manipulation"; never.


William Arnold Peters: If the minister did not use this word in two and a half hours probably it is one of the few words in the dictionary that he did not use.


Donald Methuen Fleming: The hon. member is going to supply it now and attribute it to me.


William Arnold Peters: Well, I presume somebody regulates the supply and that would be manipulation. You would buy some when you wanted to lower the rate and sell some when you wanted to raise it which, in my opinion, would be manipulation. If the minister did not use this word, the effect I presume is the same.


Donald Methuen Fleming: The hon. member just does not know what he is talking about.


William Arnold Peters: This kind of action has a great influence in my part of the country, Mr. Speaker, because we have resources which are sold in the United States but we also depend heavily on the United States for imports. If it is done by the restriction of imports and the raising of prices on imported goods I am not sure that we are going to gain too much by this method of increasing our products. The gold mining industry is a good example of this. They have been suggesting for some time that the Canadian government do something constructive toward pegging the price of gold at a much higher figure than that at which it is pegged currently in the United States. Suggestions have been made, and certainly this would be one method by which the government could control-if the minister does not like the word "manipulate" -the purchase and the disposal of United States money. It would be a method that we could use to govern our exchange by our own holdings and maintain our reserves of gold in this country at a much higher rate than the current United States price of $35 per ounce.
I think the government has done some good in this budget. It has done one thing that I particularly like. It has permitted our volunteer firemen to get relief on those payments that are made by municipalities for out-of-pocket expenses. This has been a bone of contention with the volunteer fire departments because already income taxes and other taxes have been paid on this money. They are out of pocket in so far as this money is concerned. The minister-not this

The Budget-Mr. Peters minister but the Minister of National Revenue-is to be commended on having agreed to the many representations made to him in this regard. I thank the minister who introduced this in his budget as a method of giving this tax relief of $300 to the volunteer firemen who are doing such a good job in so many of our small communities across Canada.
I am concerned, and I think many people will be concerned, about the broad suggestions made in relation to expense accounts. While I agree with the minister that this is a free enterprise country, and that this may be a method of boosting sales-and it has been abused-I will be very surprised if it is not a fact that the people who will get it in the neck first are the salesmen across the country who are doing a good job. Although this is considered to be pretty wide open, I remember that the unions got called up on the carpet for allowances in this particular field. I hope the minister has other things in mind besides the small legitimate amounts which are necessary for people travelling across this country in the performance of their duties. I hope this is not to be considered income for that class of people.
The average man on the street is also interested in the statement the minister made about cigarets. I do not think the reaction will be quite what the minister expected. The proposal will mean one of two things. It will either frighten some people-who are already afraid-into thinking that they are going to get cancer that much faster because cigarets are all going to be king size, or it will provide longer butts for those who are unemployed and have to pick them up off the streets. In either case it is of doubtful value.


Donald Methuen Fleming: Is the hon. member speaking from experience?


William Arnold Peters: I am always glad to know there is so much interest around the house. So many hon. members are interested in this particular subject and yet they are unable to rise to their feet. They must have a special charm when they go back to their own electorate and tell them that the budget came down but they did not see fit to discuss it. There was nothing of any importance in the budget that affected their ridings. They did not want to hurt Mr. Fleming's feelings; they wanted to let him get on with firing Mr. Coyne and they were in a hurry to get the whole matter cleared up. This is not true of my riding. I do not necessarily have any exceptional charm but I have problems in that riding, as the people have. The minister talked about one of them and he talked about if in a way which indicates he has at least

given consideration to the matter. I refer to the discussion of portable pensions.
It is not many years ago that portable pensions were unheard of. I can remember when the subject was first discussed in the mining areas. Miners were working for many years in the mines. Sometimes they retired at an early age. Sometimes they lived to retire at a normal pensionable age, and faced the fact that there was no money, no funds, no pension plan for them. Their position was exceedingly aggravated by the fact that in most instances they knew they could not have earned their living in their employable lifetime in any one particular mine because the mines did not exist that long. To be employed in the mine the miner had to be young and healthy and by the time he reached 60, 62 or 63, mines would have closed down and he would have had 10 or 12 years employment in one mine, maybe 15 in a second mine and a further period in a third. The miner had no opportunity to have a pension plan. The miners were also concerned with those very few places where a pension plan was in effect but the mines used that entirely as a weapon not for the employee but against him. They kept the employees in low-paying jobs; they told them if they did not like it to quit and obviously they would lose whatever pension they had accumulated. Usually they did not have a strong organization to speak for them and when they approached retirement age they were retired and did not receive any benefit from the fund.
Therefore our experience in northern Ontario has been a very poor one in relation to pensions. I can safely say that with the exception of the Sudbury area where the employees have had a longer mining experience in one mine, there have been very limited and very unsatisfactory pension arrangements throughout the whole mining industry.
This is true also, Mr. Speaker, in relation to lumbering, logging and the complete forest industry in which I also have had the opportunity of gaining some experience.


The Acting Speaker (Mr. Chown):: Order. I regret to inform the hon. gentleman that his time has expired. Is the house ready for the question?


Mr. C. W. Carter (Burin-Burgeo):: Mr. Speaker, the presentation of a national budget is a very important matter. In fact, it is one of the most important items of business that come before parliament at any session. A budget is meant to serve two main purposes. In the first place, it affords the government an opportunity to give to parliament and to the Canadian people an account of their

national housekeeping and of their stewardship. In the second place, it affords the government an opportunity to make a statement with regard to changes in fiscal and monetary policies, with respect to current economic problems and also with respect to anticipated changes in future economic conditions. Incidentally, the budget can also be used as a political instrument to promote and advance party interests. I feel that it is in some ways a sad commentary on our political maturity both as parliamentarians and as a people that this aspect of the budget, which is rather incidental, should in some cases assume sufficient importance to overshadow its two primary purposes which I have just mentioned.
It is true, I think, from what we hear over the radio and read in the press that the greatest interest in the national budget stems from curiosity with respect to whether or not it will indicate an early election. I believe that the times in which we are now living are too serious to permit this kind of indulgence because the economic strength of our nation is an important factor in our national survival and I think we should look upon the Department of Finance in the same light as we regard the Department of National Defence.
The role of the opposition as I understand it is to examine the government's stewardship during the past fiscal year and that must be done, of course, in the light of last year's budget objectives. The opposition must also examine the proposed changes and these must be examined in the light of current problems and objectives. In presenting the national balance sheet and an account of the government's stewardship, the minister should remember that he is reporting not only to parliament but also to all the people of Canada and the people should be treated as fully grown and mature adults who are mature enough to face facts even though they may be unpleasant and who are willing and able to take whatever steps may be required by way of correction no matter how drastic those measures might be.
To accomplish that, these facts of the national budget, the national housekeeping, should be stated briefly, clearly and simply in language which can be understood by the average man in the street. That does not require a document like the minister presented on Tuesday, a document so lengthy and so verbose that it took him nearly 2| hours to read it. I might add that he read it very rapidly. If he had not done so, I am sure he would have taken well over three hours, which would have been another record of some kind or another.
The Budget-Mr. Carter
The document which the minister read had another disadvantage in that relatively simple facts of relatively minor significance were wrapped up in masses and masses of verbiage while matters of major importance, such as our international trading relations and the government's attitude to the trading blocs now emerging in Europe, were dismissed with only one or two sentences.


Donald Methuen Fleming: Nonsense. There is a whole chapter on that subject. Were you not here?


Chesley William Carter: I heard everything-


Donald Methuen Fleming: There is a whole
chapter on it.


Chesley William Carter: -but there was no information. The only information that the minister conveyed about these matters was wrapped up in one or two sentences. I made notes the other night and I will refer to them if the minister wishes me to do so. With respect to external trade relations I wrote down that the minister said there would be no regional integration, no isolation, no association with trading communities and as to diversification we would continue to support GATT. That was the sum and substance of what the minister said with respect to trading relations on Tuesday night and I made a summary of it as he spoke.


Donald Methuen Fleming: Will the hon. member permit me to direct his attention to pages 6650 to 6653, the chapter under the heading "International Trade and Commercial Policy". If he says this constitutes a few sentences, all I have to say is that he has done some extraordinary summarizing.


Chesley William Carter: Of course it is summarizing. I am simply complaining that the minister gave so little vital information that the house and the people need that it could be conveyed in merely two or three sentences. The rest is just superfluous words.


John Whitney Pickersgill: Verbiage, water.


William Moore Benidickson: Water plus Coyne.


Chesley William Carter: I have not been here too many years but I can remember when a budget speech that lasted beyond an hour and a half or an hour and a quarter was considered long. We have listened now to four budget speeches from the present minister-


Donald Methuen Fleming: You missed one.


Chesley William Carter: -and each one seems to be getting longer and longer with less and less information.


Donald Methuen Fleming: Keep on telling me what you are telling me and they are apt to

Division
be longer because you say you are not getting enough information now.


Chesley William Carter: Well, the minister has already doubled the normal length of time and is giving us just about half the information that we used to get.


Mr. Batten:: And double the deficit.


Chesley William Carter: Well, maybe the minister has had to expand his words to keep pace with his deficits. That may be the explanation for it. I want to urge the minister to consider this proposal, that in the future he prepare his budget in two parts. Part one should be prepared in simple, clear and concise language for the man on the street. It should contain the simple facts relating to housekeeping as they affect the lives of all Canadians. Part two should contain all the massive details in which only the financial experts and members of parliament who have a special interest in finance would be interested. I would be glad, if the minister would give me the job and pay me well during the summer, to condense his budget speech for him and put it in that format. I am sure it would be a model for him to follow in future years.


Donald Methuen Fleming: May I ask the hon. member a question? If I prepared the budget speech in these two parts about which he speaks, which part would he read?


Chesley William Carter: I would read the part for the man on the street; that is the information every Canadian wants to know and nobody knows at the present time, not even the experts.
As an illustration of stewardship, the government's report is not very reassuring. A year ago, in March 1960, the minister forecast a surplus of $12 million. On Tuesday evening he told us that a year later, on March 31, 1961, this $12 million surplus had turned out to be a deficit of around $345 million. Now, either the minister was very wrong-


Mr. Speaker:: I am sorry to interrupt the hon. member, but it being 4.45 o'clock p.m. it is my duty, pursuant to section 4 of standing order 58, as provisionally amended, to put forthwith the question on the amendment to the amendment.


Mr. Speaker:: I declare the subamendment lost.
It being five o'clock the house will now proceed to the consideration of public and private bills, the former having precedence.



SWEEPSTAKES


Mr. J. F. Browne (Vancouver-Kingsway) moved: the second reading of Bill No. C-36 to provide for the establishment of a hospital sweepstakes board.
He said: It gives me a great deal of pleasure to move the second reading of this Bill No. C-36 to provide for the establishment of a hospital sweepstakes board which would be empowered to operate a national hospital sweepstake. As hon. members know, there are some limits to the type of bill which a private member can introduce in this house, but it is my feeling that of all the bills which could be introduced by myself as a private member this one would be supported with the greatest degree of unanimity by my constituents and by Canadians in general.
I	think it is recognized that the people of Canada do want a national hospital sweepstake, and I should like to deal with some of the evidence in support of this contention. First of all, I would turn to the Gallup poll which has in recent years become a well known indicator of public opinion and the results of which have in most instances proved very accurate. The last time the Gallup poll questioned the people of Canada on this subject was in 1955 and the organization released the following statement on September 14 of that year:
There can be no doubt that a large majority of Canadians would like to see legalized lotteries and sweepstakes in this country. Even among the minority who disapprove, the largest number would change their opinion if the government were to run a lottery to raise money for health and welfare. Moreover, this feeling has persisted for a good many years.
The statement goes on to indicate that the question was asked: "Suppose the government operated a big national lottery to raise money for health and welfare; would you approve or disapprove?" Eighty two per cent of the people who were questioned answered "yes" to that question. I think that is a substantial indication that the people of Canada want a national hospital sweepstake.
It is interesting to look at some of the news stories which have appeared in recent years. I have here a number of photostatic
Sweepstakes
copies of news clippings which were kindly forwarded to me by the Vancouver Sun and the Vancouver Province after I had requested them to let me have copies of relevant items they had carried in their columns. Throughout, a great many bodies and organizations have advocated sweepstakes in this country including provincial legislatures. One dispatch from the Canadian Press in 1938 indicates that a resolution requesting the dominion government to legalize the operation of a sweepstake in the province to benefit hospitals was passed by the Ontario legislature by a vote of 48 to 34. Here we have a provincial legislature on the record, a good many years ago, expressing support for this proposal and there is a clear indication that since that time public opinion has swung further in favour of a national hospital sweepstake.
I have another clipping concerning Ontario. It is undated, but it is a United Press dispatch indicating that the Ontario municipal association has forwarded a resolution to the provincial government calling for lotteries to support hospitals. Here is the case of another substantial body supporting action of this sort. Then in 1954, according to a C.P. dispatch dated Ottawa, March 18 of that year, a further request was made for such a lottery. In this instance the request came from the unions. The cutting reads:
The trades and labour congress of Canada has repeated demands for a government sponsored lottery. The 580,000 member labour organization suggested an amendment to the Criminal Code allowing the federal government to set up a national lottery.
Here again is a substantial body on record as being in favour of a national sweepstake.
Another which appealed to me particularly is dated June 17, 1958 and is headed: "City Tories ask Legal Sweepstake". It reads:
Vancouver-Kingsway Progressive Conservative association favours a national legal sweepstake.
The article goes on to indicate that the association had asked the member for Vancouver-Kingsway to present its resolution to the federal government.
I have another cutting dated January 28, 1950 with the heading: "Vets Want Legal Lottery". The dateline is New Westminster.
An amendment to the Criminal Code to allow lotteries and raffles to be conducted in Canada providing all proceeds except necessary expenses be made available for charitable or/and benevolent purposes was requested in a resolution passed unanimously at the 27th provincial conference of the Army, Navy and Air Force Veterans in Canada held here Friday.
I think that is sufficient to indicate that there is large and varied support for a national hospital sweepstake in Canada. The position of Quebec is, of course, well known in this regard. Some years ago the province passed its own lotteries law, but because it

Sweepstakes
Chile-the law of August 30, 1890 holds only authorized lotteries to be legal. All other forms are under the penalties of the penal code.
Uruguay-lottery is under official control in Uruguay and is considered a source of revenue.
The conclusions in this article contained in the annals of the American academy of political and social sciences are as follows:
Only a state lottery may he considered an acceptable minor form of gambling but this again depends upon prevailing cultural patterns. General public opinion in Latin America does not consider such a state lottery as gambling.
I have been given figures on the Turkish national lottery. Unfortunately I have not had the opportunity to change them into percentages; therefore I will give the figures for the Turkish lottery for one year, and indicate how the money is brought in and distributed in the lottery. The distribution was as follows: The total revenue was 63,931,435 Turkish liras. The prizes paid out amounted to 32,417,795; commission given to sales agents amounted to 3,310,372; general expenses, 900,572. The net profit was 27,302,695. This will indicate quite clearly, Mr. Speaker, that the administrative expenses are comparatively low for the operation of sweepstakes.
The following information I have taken from the official year book of New South Wales, 1957:
State lotteries
State lotteries are conducted in New South Wales in terms of the state lotteries act, 1930. The act is administered by a director, and the lotteries are conducted on the cash-prize system.
The article goes on to indicate how the prizes are distributed and it appears to be operating quite satisfactorily.
My next information is from the year book of the commonwealth of Australia, 1958. It mentions the New South Wales state lotteries and indicates that the net proceeds of the lottery are paid to the consolidated revenue fund from which grants are made to hospitals. The Tattersalls lotteries in Tasmania have been going on for some time, and there again the money is paid into the hospitals and charities fund and the mental hospitals funds in such proportions as the treasurer determines from time to time.
In Queensland, the golden casket art union commenced in 1918 with the specific object of augmenting the funds of the Queensland war council. Since 1920 the net profits have been paid to the department of health and home affairs for the maintenance of hospitals, motherhood and child welfare trust funds, and so on.
In western Australia, lotteries are conducted by the lotteries commission under the lotteries control act of 1932. Profits are paid by the commission to hospitals and other charities.

Here again I might give the house some percentages so that an indication may be had of how effective and efficient lotteries in general are. These figures are for the golden casket art union of Queensland. I shall give just the figures for the year 1956-57. Amount of prize money paid out was 63.82 per cent; administration costs, 6.71 per cent; state stamp duty, 5 per cent; department of health and home affairs, 24.47 per cent. There again, Mr. Speaker, is a clear indication that the administration expense is not high in regard to the amount of money taken in.
I should now like to deal with the letter that I have received from the Mexican embassy indicating the value that sweepstakes have had in that country. It reads:
The national lottery for public welfare, of Mexico, is a federal government agency under the general authority of the department of health and public welfare.
Farther down it goes on to say:
The net proceedings are turned over to the department of health and public welfare for the construction and maintenance of hospitals, orphanages, clinics, etc.
The national lottery has been in existence for 90 years, and has performed a most meritorious work with complete public support.
I should now like to refer to an article which appeared in the Financial Post of October 10, 1959 entitled:
They Pay for Culture By Robson Black
Hon. President, Canadian-Scandinavian foundation
Sweden finances most of her culture by a chain of public lotteries. This may be "gambling" but in no sense does the system employ professional gamblers. Indeed, few countries in the world suppress with such a zeal all commercial games of chance, barbotte dens, cardsharps and roulette wheels.
Lotteries, however, are legal fund-raisers, all of them tightly supervised by government accountants.
The embassy of the Republic of China has given me the following breakdown of the distribution of their lotteries: 10 per cent to dealers as commission; 40 per cent as premium; 40 per cent as profit; 10 per cent for tax and administrative expenses.
I could go on, Mr. Speaker, and give the details of a good many sweepstakes and lotteries operated throughout the world, but I think I have given sufficient indication to support the view that not only the vast majority of Canadians are in favour of a national hospital sweepstake but no harm is seen throughout the world in the operation of a government-operated sweepstake.
It was rather interesting to note in the Ottawa Citizen of January 16, 1959 that this matter came before the board of the United church. I found it somewhat amusing. This statement is contained in the middle of the

article. I do not want to delay the passage of this bill and therefore I will not read the whole article. It reads in part:
Rev. J. H. Slade of Port Elgin, 22 miles west of Owen Sound, said service club-sponsored bingo and crown and anchor games were supported by some members of his church's session.
''What can I do?" he asked.
"I tried to say 'You'll go to the devil,' but they say they're having a good time."
Dr. Mutchmor advised him to seek action by the local United church conferences.
Finally, I say it is quite clear that there is a substantial amount of money going out of Canada. As has been mentioned, it is hard to get a proper estimate, but in the annals of the American academy of political and social sciences a couple of years ago- I do not have the exact reference here-it was estimated at that time that between $100 million and $200 million was going out of Canada each year to buy foreign sweepstake tickets. I firmly believe that we cannot stop the people of Canada from buying sweepstake tickets if they want to buy them. They have indicated quite clearly that they do want to buy them and it is the responsiblity of this parliament, if the democratic process is to operate properly, to carry out the wishes of the people of this country and institute at once a national hospital sweepstakes.
(Translation):


Mr. J. P. Deschaleleis (Maisonneuve-Rosemonl):: Mr. Speaker, a rumour is alleged to have been broadcast this afternoon that a mysterious ailment affected the Conservative members and prevented them from thinking and speaking.
We are happy to note that their ailment is now partly over and that they have at least regained the use of their speech.
My hon. friend from Vancouver-Kingsway (Mr. Browne) introduced a bill on sweepstakes and kept the floor for 35 minutes.
As far as I am concerned, I see no difficulty about the principle involved. I shall be brief and resume my seat in a moment.
However, to gain time and allow all parties to voice their views, so we can have a vote, I thought that I should say a few words about the stand our C.C.F. friends take on such a measure.
That will probably prevent one of those hon. members from taking part in the discussion, and so we will be able to vote immediately.
I have here a ticket bearing number 45863, under the name of-
(Text):
Drawing September 4, 1961 at annual labour day dance at Riverside pavilion.
1st prize-A crisp new $1,000 bill.
2nd prize-Acrisp new $500 bill.
Sweepstakes
The number of the ticket is 45386. Now that our C.C.F. friends are in favour of the principle of lotteries and drawings, I think we have nothing else to do but to call a vote.


Mr. Erharl Regier (Burnaby-Coquiilam):: Mr. Speaker, I can assure the house that I will not be very much longer than the hon. member who has just resumed his seat. I am very happy that occasionally we have private members' hours and I emphasize the word "private" because in this hour we do not necessarily speak on behalf of our party. Irrespective of the opinions expressed by the hon. member for Maisonneuve-Rosemont (Mr. Deschatelets), may I say I have never noticed any political party in Canada taking an official position with respect to this problem. They are all willing to cater to all interests in Canada in order to get votes.
I welcome this hour in which we are really able to speak on the basis of our own personal convictions. In my opinion, and I am now speaking only on behalf of myself as a member of the house, I believe that this campaign is part of an over-all long range campaign under which the people of Canada are offered something for nothing. They are being led to believe that some national benefit might accrue out of this business of gambling.
I know that the aim and intentions of the hon. member for Vancouver-Kingsway (Mr. Browne) who introduced the bill are perfectly honourable. As he said, he has introduced the bill in order to make it easier to raise money on behalf of Canadian hospitals. However, it is my conviction that this is part of an over-all campaign that has been going on for many years in Canada in an effort to persuade the people of Canada that they can really get something for nothing.
The hon. member complains about the vast amounts of money that are going out of Canada by reason of Canadians subscribing to hospital sweepstakes and other gambling schemes outside of our country. If this is a fact, and I believe the hon. member has some justification for making this claim, it is a reflection on our own society and also on our law enforcement agencies. In that regard I have particular reference to the Post Office Department. However, despite all the campaigns by most of the newspapers in our country-


Mr. Brunsden:: On a point of order, Mr. Speaker, the hon. member has made a reflection against the Post Office Department. I think he should explain what he means.


Erhart Regier: I believe you would not recognize that as a point of order, Mr. Speaker. As a member of the house, I believe I have the right to say what I like about the Post

Sweepstakes
Office Department. As long as I do not reflect on the hon. member's intentions, I believe I am within my rights.
As I indicated before, I am perfectly prepared to assume that the hon. member has introduced this bill in all honesty and with all good intentions, but I should like to ask this question. If we are unable to control the gambling instincts of the people of Canada now, how in the world does he expect the law to exercise any control over them if the law itself contains the basic principle involved here? Despite all the statistics he has presented, I would be prepared to predict that the racketeers who now operate illegally in this field would be many times multiplied if we opened the door to such operations.
On another occasion I expressed my opposition to any extension of the gambling that exists in connection with horse racing. These proposed hospital sweepstakes are linked with horse racing and there are a great many reasons why I am opposed to the extension of the incidence of gambling attached to horse racing. If we accept the bill now before the house it is my view that we would be enhancing the sport of horse racing, if you wish to call it a sport, although personally I have often referred to it as a racket. This bill is a very important one and it concerns our basic principles. If the Canadian people are not accepting the concepts expressed in legislation enacted in the past, maybe we legislators have been too eager for votes and have not met our responsibilities on the public platform.
I know the hon. member for Vancouver-Kingsway (Mr. Browne) will get a lot more votes because of what he has said than I can ever hope to get in my riding as a result of what I have now said. However, I should like to appeal to the members' of this house to recognize their responsibility as leaders in our nation. They ought not to be mere politicians who are merely looking for votes.
(Translation):


Louis-Joseph Pigeon: Mr. Speaker, having had the honour of introducing a bill based on a rather similar principle, I am pleased to say to the house that I fully support the bill put forward by the hon. member for Vancouver-Kingsway (Mr. Browne).
Everyone knows that La Presse took a poll on this subject and that the great majority of people in the province of Quebec favour such an amendment to the Criminal Code. This also applies to labour unions, including the syndicats catholiques et nationaux de Joliette which are in favour of a federal lottery.
[Mr. Regier.l
Use could be made of the experience of other countries in the preparation of this legislation. I sincerely hope that the bill of the hon. member will pass, and I would even suggest a first prize: Mr. Coyne. Then we would see if he is really popular, but I am afraid the first sweepstake would be a fiasco if we offered Mr. Coyne as a prize.
In principle, I therefore fully support the hon. member for Vancouver-Kingsway and I commend him for his courage in introducing such a bill.
(Text):


Harold Edward Winch: was afraid, for a while, the sponsor of the bill was going to talk out his own bill. I have no intention whatever of talking out the bill. However, I want it to be very clear that I am speaking personally and not on behalf of the C.C.F. or New party. I support the bill now before the house.
I believe I am the only member in the house at present, perhaps with one exception, who was a member of the joint committee of the Senate and House of Commons on capital punishment and lotteries. This committee conducted hearings for three years. I well remember the representations made before that committee and I know the final decision of the committee was in opposition to lotteries. I do not agree with that decision. I cannot agree, either, with my seatmate, the hon. member for Burnaby-Coquitlam (Mr. Begier). I just cannot believe he is so naive as is indicated in the way he spoke.
Let us look at the matter intelligently and from a psychological point of view. The majority of the people of Canada, whether it is right or wrong, moral or immoral, legal or illegal, are imbued with a sense of gambling. You are not going to change that by passing a law. This has been proven time after time in Canada. As a matter of fact, sir, I still remember that the people from whom we got the opposition were the top brass of certain organizations, and some of their own people ran some of the biggest gambling establishments in Canada. I say this because gambling is not limited to horse racing. Raffles are a form of gambling. I challenge, yes even my seatmate, to show me a political organization, fraternal organization or religious organization that does not conduct raffles. Raffles, as I said, are a form of gambling. I challenge anyone to show me a religious or fraternal organization that does not run a bingo. As a matter of fact, the biggest bingo operation in Canada-we had proof of it in our committee-was run in Ontario and Quebec by fraternal and religious organizations.
Raffles, bingo, horse racing, sweepstakes are all forms of gambling. There is a certain

instinct for this in our people, and I am afraid we are not going to be able to control it by passing a law. Whether we like it or not, millions upon millions of dollars are going out of Canada to the Irish sweepstakes, the United Kingdom football pools, the Australian sweepstakes and the Mexican sweepstakes. My hon. friend now mentions the Kentucky derby. You may control many things by law, but I am afraid you are not going to remove the inherent idea people have that they may get something, not for nothing, but for the purchase of a raffle ticket, a sweepstake ticket, a pool ticket or something else.
If we are going to be completely honest, surely we must ask: why not have some of this money stay in Canada to be used for social purposes in this country? I say, therefore, that in principle, because I think I know people and I think I have the evidence, I am in support of this bill and I believe it should be adopted.


Mr. Georges Valade (SI. Mary):: I just want to take a few minutes of the time left to give my opinion of this bill. I was amazed to hear the initial spokesman of the C.C.F. party say that horse racing was a racket. I wish he would communicate this amazing thought to Her Majesty the Queen who has her own horses, I believe, running in the English derby upon which lotteries are conducted. With respect to the remarks of the second speaker from the C.C.F. party, I say I do not believe we should call lotteries a form of gambling. From my point of view a lottery for a charitable purpose is not a form of gambling, but is an incentive or stimulus to the people to give some of their money for charitable and social purposes.
I favour the principle of this bill, Mr. Speaker, because I believe the people in this country want it. This has been proven, not this year, but in 1951 when the Conservative party held a convention in Ottawa. I had the honour to introduce a resolution at that convention in the name of the young Conservative association, and this resolution received a majority of votes. I recall that the Ottawa newspapers made a great deal of this resolution and this indication that the people of this country wanted lotteries. Personally, I would prefer a small change in the approach of this bill. I should like to see this bill consider the question of section 92 of the British North America Act which reserves health questions, hospital administration and management, to the provinces.
Of course, it is not my wish to discuss this matter at too great length. Like most of the people of this country, I should be happy to see a bill of this sort passed. Even though 1 should not like the amendment proposed
Sweepstakes
by this bill, I would support any bill that would attract the attention of the people of this country to the need for the people to spend their money not on foreign lotteries but on Canadian lotteries and Canadian welfare.


Edwin William Brunsden: Mr. Speaker, it is almost mandatory that a member who seconds a bill should speak to that bill.
There are in this country certain spiritual values, and I can quite understand those who, from the ecclesiastical viewpoint, will oppose this bill.
There are certain things about this bill that I do not like. I am not a gambler, but I buy sweepstake tickets. My money goes to Ireland. With respect to this question, as my hon. friend on my right has so well and eloquently said, I believe we must be realistic. Canadians have a tendency toward gambling. I am not too greatly impressed with the advocacy of hospital aid. I do not think that is the prime purpose. Certainly the Irish hospitals should be very well equipped.
I think the fundamental principle of the sweepstake is the opportunity that the person has to make a personal gain. I do not believe that in this house or anywhere else we can reform human nature.
Since we are exporting this large amount of money to foreign countries-to Ireland, Mexico and Australia-I think we should take a new look at our own position. I think we should become reconciled to the fact that our Canadian people wish to move in this direction and should legalize their position. As the seconder of this bill, may I say this, and the mover of it and I have talked about it a great deal. While there are some disquieting aspects with respect to the situation surrounding it, I believe the bill should be supported, that we should keep our money at home, and if there is any benefit for any institution such as a hospital or a children's educational institution, it should be applied here and not elsewhere.


Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, I am loathe to dampen the ardour of some of the hon. members who have spoken in favour of this bill, but there are some matters that I think should be pointed out. During the discussion of the bill that was introduced by the hon. member for Joliette-L'Assomption-Montcalm I remember that there was a great deal of enthusiasm at that time for those who wanted to speak for or against that bill. Whether or not it means that more have been won over to the cause, I do not know, but there evidently is in favour of this bill a preponderance which was not evident with regard to the other one.

Sweepstakes
I think it should be pointed out that the issue in this case, in my humble opinion, is not so much whether an individual is in favour of gambling or of lotteries but rather whether the state should become involved in such activities. I have before me the report of the royal commission that sat in the British house on this matter and I think that they dealt-


Harold Edward Winch: You will find the reference under the recommendations section. If the hon. member looks in the recommendations section he will find it there.


Thomas Miller Bell: I have it. It is page 120 of the royal commission on betting, lotteries and gaming, 1949-1951, in the British parliament. They dealt at length with this question I am now trying to explore, namely the involvement of the state in gambling. The first point that comes to mind is that they go to great lengths to point out that the revenue which might be obtained from such a national lottery is usually greatly exaggerated by the supporters of such a proposal. They examined in detail the Irish sweep, as they called it, and they admitted that nearly two thirds of the revenue may come from the United Kingdom in this regard but they simply mentioned, proving their point, that the net revenue from such a nationally approved lottery is greatly exaggerated. The conclusion to which they come, as found at page 120, is as follows:
392. Our conclusion is, therefore, that there is no important advantage to be gained by the establishment of a national lottery and that there is no reason, in this particular case, to depart from the general principle that it is undesirable for the state to make itself responsible for the provision of gambling facilities.


Some hon. Members:: Question.


An hon. Member:: Six o'clock.


Thomas Miller Bell: I should like to move the adjournment of the debate.


Mr. Speaker:: The hon. member moves the adjournment of the debate.


Some hon. Members:: Question.


An hon. Member:: Six o'clock.


Thomas Miller Bell: I note that it is six o'clock, Mr. Speaker.


Mr. Speaker:: In the vein of the debate, may I say that it was a photo finish.


Thomas Miller Bell: Do I understand, Mr. Speaker, you do not agree that it is six o'clock?


Mr. Speaker:: I see that it is six o'clock.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the house leader
what business we shall be taking tomorrow and what the business will be for as much of next week as the house leader can announce.


Gordon Minto Churchill: Tomorrow we shall take the estimates of the Department of National Health and Welfare followed by the estimates of the Department of National Revenue. The forecast for Monday and Tuesday, subject to change if circumstances so require, will be as follows. On Monday the first item will be an act respecting the Bank of Canada, followed by the resolution in the name of the Minister of Transport dealing with the Pine Point railway. The third item would be the resolution in the name of the Minister of Finance dealing with the Industrial Development Bank Act. On Tuesday I expect that we shall resume the budget debate.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing 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. Regier: 1.	What was the estimated interest rate on the indebtedness of the (a) federal government and
(b)	the provincial governments for the fiscal year 1959-60?
2.	What was the estimated total gross debt of the municipalities of Canada as of the latest date of record?
3.	What was the estimated average interest rate of such municipal debt for each of the years 1945, 1956, and 1960?
4.	What was the estimated indebtedness of (a) institutions of Canada, (b) corporations of Canada,
(c)	individuals; and what was the estimated average interest rate of each of the aforementioned categories of indebtedness for each of the years 1945, 1956, and 1960?
Answer by:	Hon. Donald M. Fleming
(Minisler of Finance):
1.	(a) 3.98 per cent,1 (b) 3.87 per cent.2
2.	$3,940 million as at fiscal year ends nearest December 31, 1958.3
3.	Information not available.
4.	(a) Information not available.
(b)	Taxation year 4-1945, $5,580 million; 1956, $23,594 million; 1960, not available.
Information on average interest rates not available.
(c)	Information not available.
1	Average interest rate on total unmatured debt. Source: Public accounts of Canada.
2	Average interest rate on bonded debt. Source: D.B.S. "Financial Statistics of Provincial Governments".
3	Source: D.B.S. "A Consolidation of Public Finance Statistics".
4	Gross liabilities of fully tabulated companies. Source: Department of National Revenue, taxation statistics 1947 and 1958.


FEDERAL ASSISTANCE, MUNICIPAL SEWERS AND DISPOSAL PLANTS
Mr. Regier: Relative to the plans announced some months ago by the government of assistance to municipalities for the building of sewers and sewage disposal plants, how many and which municipalities have of the latest date of record been able to qualify for federal assistance, and what is the amount of assistance approved in each case?
Answer by: Hon. D. J. Walker (Minister of Public Works):
As of June 19, 1961, governor in council approval has been given for loans under part
Questions
VIB of the National Housing Act to 45 municipalities as follows:
Municipalities	Estimated amount
Alberton, P.E.I	$	21,800
Belleville, Ont	 1,515,300
Berwick, N.S	 52,706
Blaine Lake, Sask	 15,733
*Bowmanville, Ont		308,933
Bracebridge, Ont	 43,162
Bradford, Ont	 95,013
Carrot River, Sask		28,225
Chilliwack City and Chilliwack Township,
B.C. jointly	 78,246
Courtenay, B.C	 177,576
Dawson Creek, B.C		80,000
Dinsmore, Sask	 15,045
Dundas, Ont	 248,000
Fort William, Ont	 884,000
Fort Coulonge, Que		49,050
Gibbons, Alta	 4,250
Gretna, Man	 33,310
Kamloops, B.C	 224,200
Kenaston, Sask	 9,183
Langenburg, Sask	 29,200
La Scie, Nfld	 80,000
Lucky Lake, Sask		9,333
Medicine Hat, Alta		222,000
Melfort, Sask	 47,000
Mitchell, Ont	 92,500
Morden, Man	 38,520
Neelon-Garson Township,
Ont	 201,467
Nelson, B.C	 95,400
Ottawa, Ont	 10,189,990
Port Colborne, Ont		38,667
Portage la Prairie, Man. ..	107,074
Peterborough, Ont	 593,000
Red Deer, Alta	 446,667
Saanich (District) B.C. ..	382,533
Sarnia, Ont	 94,300
Saskatoon, Sask	 280,000
Shelburne, Ont	 46,680
Stephenville Crossing,
Nfld	 36,275
Sudbury, Ont	 1,109,000
Toronto (Metro) Ont. .. .	1,975,600
Tugaske, Sask	 17,333
Greater Vancouver Sewerage and Drainage District, B.C	 8,221,799
Whitewood, Sask	 20,933
Willow Bunch, Sask __________ 19,333
Total	$28,278,336
The municipalities of Bowmanville, Ottawa and metropolitan Toronto in Ontario and the greater Vancouver sewerage and drainage district in British Columbia have had more than one loan approved.

Questions


FEDERAL GRANTS IN LIEU OF TAX, HALIFAX
Mr. Morris: 1.	Does the federal government pay grants to the
city of Halifax In lieu of taxation on federal government properties?	
2.	If so, does the grant formula use the rate of tax which would be applicable to federal property if that property were taxable? If so, in what year was this formula first applied, and what formula was used previously?
3.	What was the total grant paid by the federal government to the city of Halifax in lieu of taxation on federal government properties in (a) 1956 (b) 1957 (c) 1958 (d) 1959 (e) 1960?
4.	What was the total accepted value of federal property on which the 1960 grant to the city of Halifax was based, what portion was subject to the residential tax rate applied by the city of Halifax to taxpayers, and what portion was subject to the commercial tax rate applied by the city of Halifax to taxpayers?
Answer by: Hon. Donald M. Fleming (Minister of Finance):
1.	Yes.
2.	Yes. This formula was first applied with respect to the taxation year 1957.
For the taxation years 1955 and 1956 the grant was paid only in respect of that part of the value of federal property in excess of 2 per cent of the combined value of taxable and federal property in the municipality. The grant was determined by multiplying the value of federal property in excess of 2 per cent of the combined value of taxable and federal property in the municipality by a fraction in which the numerator was the total amount of the real estate tax levied in the appropriate tax year and the denominator was the assessed value of all taxable property in the municipality.
For the taxation years 1950 to 1954 inclusive, the formula for grant was similar to the formula for 1955 and 1956 except that only the excess of federal property over 4 per cent (in place of 2 per cent) of combined taxable and federal property was eligible for grant; also an additional factor which was applied reduced the resulting grant by 25 per cent.
3.	Grants to the city of Halifax: (a) 1956,
$806,187;	(b)	1957,	$1,408,422;	(c)	1958,$1,462,103;	(d) 1959, $1,492,875;	(e) 1960,

4.	Accepted values of federal property for 1960 grant:
Subject to residential tax rate, $13,788,250; subject to commercial tax rate, $27,718,450; total $41,506,700.


NATIONAL HARBOURS BOARD GRANTS IN LIEU OF TAX, HALIFAX
Mr. Morris: 1.	Does the national harbours board pay grants to the city of Halifax in lieu of taxation of national harbours board property?
2.	If so, what is the formula used in the payment of such grants, and is the formula related to the so-called commercial tax rate or to the residential tax rate applied by the city of Halifax to taxpayers?
3.	What was the total grant paid by the national harbours board to the city of Halifax in lieu of taxation on national harbours board properties in (a) 1956 (b) 1957 (c) 1958 (d) 1959 (e) 1960?
4.	What was the total accepted value of national harbours board properties on which the 1960 grant to the city of Halifax was based?
Answer by: Hon. Leon Balcer (Minisier of
Transport):
1.	The national harbours board makes a grant in lieu of taxes for municipal services such as fire and police, which might be required by the national harbours board in its administration of harbour properties.
2.	Basic formula:
a
Granit= - X c b
Where:
a=the accepted value of national harbours board property (August 1, 1959): (i) buildings, (ii) land above original high water mark occupied by buildings.
b:= total city assessment (1959) of taxable real estate plus (a)
c=city expenditure on fire and police services (estimates for 1959).
The grant calculated by means of this formula was rounded upwards to provide for other miscellaneous services apart from fire protection and police.
On the basis of experience at all national harbours board harbours over the preceding ten years this basic grant was further increased by just under 23 per cent to make provision for possible cost increases and harbour developments in the period 1960-1964.
The formula is not related to either the commercial tax rate (business tax) or the residential tax rate (household tax).
3.	Grants paid: 1956, $75,000; 1957, $75,000; 1958, $75,000; 1959, $75,000; 1960, $129,000.
4.	Accepted value of N.H.B. property on which 1960 grant based-$14,207,920.


FEDERAL GRANTS IN LIEU OF TAX, DARTMOUTH, N.S.
Mr. Morris: 1.	Does the federal government pay grants to the city of Dartmouth in lieu of taxation on federal government properties?
2.	If so, does the grant formula use the rate of tax which would be applicable to federal property if that property were taxable? If so, in what year was this formula first applied, and what formula was used previously?
3.	What was the total grant paid by the federal government to the city (then town) of Dartmouth in lieu of taxation on federal government properties in (a) 1956, (b) 1957, (c) 1958, (d) 1959, (e) 1960?

4.	What was the total accepted value of federal property on which the 1960 grant to the city (then town) of Dartmouth was based?
Answer by: Hon. Donald M. Fleming (Minister
of Finance):
1.	Yes.
2.	Yes. This formula was first applied with respect to the taxation year 1957.
For the taxation years 1955 and 1956 the grant was paid only in respect of that part of the value of federal property in excess of 2 per cent of the combined value of taxable and federal property in the municipality. The grant was determined by multiplying the value of federal property in excess of 2 per cent of the combined value of taxable and federal property in the municipality by a fraction in which the numerator was the total amount of the real estate tax levied in the appropriate tax year and the denominator was the assessed value of all taxable property in the municipality.
For the taxation years 1950 to 1954 inclusive, the formula for grant was similar to the formula for 1955 and 1956 except that only the excess of federal property over 4 per cent (in place of 2 per cent) of combined taxable and federal property was eligible for grant; also an additional factor was applied which reduced the resulting grant by 25 per cent.
3.	Grants to the town of Dartmouth: (a) 1956, $92,638; (b) 1957, $106,997; (c) 1958, $105,744; (d) 1959, $96,163; (e) 1960, $118,622.
4.	Accepted value of federal property for 1960 grant: $5,345,350.
Questions


FEDERAL GRANTS IN LIEU OF TAX, COUNTY OF HALIFAX
Mr. Morris: 1.	Does the federal government pay grants to the municipality of the county of Halifax in lieu of taxation on federal government properties?
2.	If so, does the grant formula use the rate of tax which would be applicable to federal property if that property were taxable? If so, in what year was this formula first applied, and what formula was used previously?
3.	What was the total grant paid by the federal government to the municipality of the county of Halifax in lieu of taxation on federal government properties in (a) 1956, (b) 1957, (c) 1958, (d) 1959, (e) 1960?
4.	What was the total accepted value of federal property on which the 1960 grant to the municipality of the county of Halifax was based?
Answer by: Hon. Donald M. Fleming (Minister
of Finance):
1.	Yes.
2.	Yes. This formula was first applied with respect to the taxation year 1957.
For the taxation years 1952 to 1956 inclusive the grant formula used the current tax rate but the grant was calculated by applying that rate to the assessment of federal land excluding buildings.
3.	Grants to the county of Halifax: (a) 1956, $45,840; (b) 1957, $76,964; (c) 1958, $83,278; (d) 1959, $94,927; (e) 1960, not yet settled.
4.	The 1960 grant to the county of Halifax is not yet settled and the accepted value on which it will be based is not yet determined.


APPENDIX
[Stage Direction]
Mr. Chairman and distinguished delegates:
This afternoon I should like to make a very brief speech concerning the effectiveness of the international commission for supervision and control.
As you are all aware, Canada's main interest in this whole Laos question arises through the fact that we were named as a member of this commission.
When I spoke here four weeks ago on May 18, I emphasized the vital importance of providing the commission with the essential technical means to supervise the cease fire and to report on the effectiveness of that cease fire. There was general agreement with these views and the co-chairmen sent a message, on May 19, asking the commission to inform them of requirements for the exercise of its functions in relation to the cease fire. I should have expected that by now, some four weeks later, the necessary equipment would have been provided.
The commission has submitted six reports from which it is evident that, while there has been no general renewal of hostilities, there have been a number of infractions of the cease fire, the most serious of which was the recent outbreak of hostilities at Ban Padong.
So far the commission has been unable to report on these violations from first hand observation. In their message to the commission on June 12, the co-chairmen referred to the commission's intention to discuss with the parties in Laos-now I am quoting from the message of the co-chairmen-"proposals for making the cease fire more effective" and the co-chairmen called on those parties in Laos, the three parties in Laos to co-operate with the commission in its task of supervising and controlling a cease fire.
But I must draw attention to the fact that even if that co-operation is forthcoming in Laos, as I hope it will be, the commission lacks its own means to move to areas of reported conflict and to inform the co-chairmen and the conference.
As the representative of France said on May 31-and I am quoting from that statement-"So far the commission which has its headquarters at Vientiane, has not been able to go anywhere else but Xieng Khouang,
and to do that it had to borrow a French aircraft which happened to be there".
In other words, this commission is not being given a fair chance to do its job. And to do that, it had to borrow a French aircraft which happened to be there. Why should this commission have to go around borrowing a French aircraft, or other equipment, in order to do its work? I suggest that this is putting an imposible onus on the commission.
More than six weeks ago the commission, in a report to the co-chairmen dated May 1, stated-and I am quoting now from a report to the commission from the co-chairmen -"The commission should be able to set up an effective machinery provided"-provided-"that the co-chairmen were willing to supply the commission with an adequate number of airplanes and helicopters, together with facilities for their maintenance".
That was six weeks ago. Three weeks ago, on May 22, in reply to the inquiry from the co-chairmen dated May 19, the commission said that its minimum requirement of helicopters was six and of aircraft, six. I submit that it would be a reasonable step-and I know we all want to be reasonable-without waiting for further word from the commission, for this conference to make available immediately at least three light aircraft and three helicopters and the personnel for their operation and maintenance.
It is perfectly clear, Mr. Chairman, that, if it were the will of this conference to provide the technical resources the commission requires, these could be immediately obtained from a variety of sources. In other words, this is not a case where it is impossible to get equipment. The equipment can be obtained, if the will is there, and the responsibility, I suggest with all deference, is on the two co-chairmen.
I therefore ask that the co-chairmen arrange without further delay to make these and other essential requirements available.
In this way the conference can insure that the commission is properly equipped to perform its immediate tasks, and, in so doing, can facilitate the work of this conference on other issues. And I hope to offer comment on these issues early next week.
But surely it is a test of the willingness of this conference to get some results. A very

good test is whether or not this commission- which after all has to do the work out in Laos of supervising the cease Are-the test is whether this commission can be given the equipment to do that work, and given it right away, without any further delay. And I do suggest that action be taken in order to bring about this result.
Thank you very much, Mr. Chairman.

[Stage Direction]
I listened with great interest to the statement by the distinguished representative of Burma and if I may be permitted to say so, I thought he made a very helpful contribution to the deliberations of this conference.
My own purpose today is to state Canadian views on the aims and principles of a settlement in Laos. But before discussing the details of such a settlement, I would remind the representatives here of the high expectations and hopes which the people of my country- indeed people everywhere-have of the conference. Today, of all the international conferences concerned with the peaceful settlement of important international disputes, this conference, by general consent, is the one that holds the greatest promise of constructive results. After all, we start with the advantage that all the parties to the conference are agreed on the main aim-a sovereign, independent and neutral Laos. This aim was explicitly endorsed by the President of the United States and the Premier of the Soviet union in Vienna. If we are to fail, the implications for peace would be far reaching. Therefore we here are concerned not only with Laos, but with the hopes of mankind for an orderly settlement of disputes and the future peace of the world.
We cannot, I suggest, disappoint world opinion. I suggest that the time has come for the conference to end general plenary discussions and begin consideration of the details of a settlement. Certain specific proposals have already been laid before the conference by the French and Soviet delegations. There are also the agreements on Laos of the Geneva conference of 1954, which are bound to be the foundation upon which any Laotian settlement now or in the future can be built.
As a first step I suggest that an article by article tabulation should be prepared of the French and Soviet proposals, setting comparable articles in parallel columns, alongside the relevant articles of the Geneva agreements of 1954, in order to focus the attention of the conference on specific topics and to serve as an initial basis of discussion. Such a
tabulation could be prepared by the co-chairmen's staff or by some working group, but I think it is an essential first step in an orderly approach to our work.
The conference in restricted session, not plenary session but in restricted session where free discussion rather than set speeches would be the rule, should then take up article by article the various parts of a Laotian settlement on the basis of this comparative tabulation. This discussion would proceed in sequence from topic to topic in order to reach as much of a common view as possible.
For instance, if we start with the functions and terms of reference of the international commission, we shall have to deal at some stage or other with the subject of the commission investigations. For discussion of this subject we would probably have before us article 7 of the Soviet draft terms for the international commission for supervision and control, article 6 of the French draft protocol on control, and article 30 of the cease fire agreement of 1954. In each of these there is already a high proportion of common language, and the differences which exist might well be narrowed by discussion in restricted session. Other delegations could propose their own version for improving the text or reconciling divergent views.
Then at that stage a drafting group might meet to work out a single agreed text. By adopting a procedure along these lines the conference could hasten a settlement in Laos. And I have in mind that a similar procedure would be followed with each of the topics.
I now turn to an outline of Canadian views on what should be included in a settlement. There will, of course, be declarations on the neutrality of Laos to be made by the government of Laos and by other governments represented here and we appreciate that such declarations are of great importance.
Canadian views on what a Laotian settlement should contain are based on our service, over many years, on the international commissions in Laos, Cambodia and Vietnam. Therefore I confine my remarks today mainly to those parts of the settlement which especially concern the international commission. With this experience in mind, my delegation wants to see the terms of reference of the international commission so worded as to enable it to do a useful job.
I am convinced, that in framing terms of reference as part of the present settlement, we should take as our starting point the cease fire agreement of 1954 modifying it only as has proven necessary in the light of experience and of course taking account of changed conditions. The terms of reference are like a well thumbed book of rules which
[Stage Direction]
have gained a certain authority and meaning by virtue of constant use. On the other hand, experience has shown that they were in some respects inadequate for the duties and responsibilities placed upon the commission in the past and they may not be wholly appropriate for the changed circumstances facing the commission in 1961. In the interests, however, of preserving those articles which have stood the test of time, I think it would be wise if the conference were to frame the relevant provisions of the new settlement as a protocol to the 1954 agreement on the cessation of hostilities in Laos.
Then a few words about relations with the government of Laos. We start, as I have already said, from a common position that the settlement should ensure a truly neutral, independent and sovereign Laos. Moreover, it is generally agreed that responsibility for the government of that country must rest with the Laotians themselves.
Let me make it perfectly clear that we have no desire to see the international commission interfere with the normal exercise of sovereignty by the government of Laos. Canada has no wish to see established in that country a commission which would have the slightest resemblance to what some have characterized as a super state. We look to a state of mutual confidence and co-operation between the commission and the government of Laos. We think this is vital and we are in full sympathy with the natural desire of the Laotian leaders to run their own affairs. Indeed, it is precisely to protect Laotian sovereignty that the commission is undertaking its duties of supervising a settlement in Laos.
However, if the international commission is to be an effective instrument of this conference in carrying out the terms of settlement, the responsibilities of the commission must be so defined as to enable it to perform its tasks. In this connection it must be recognized that the commission cannot function if it is made answerable at almost every step to some other authority and can act only at the request or with the agreement of such authority, for example the co-chairmen. Perhaps they could bear that in mind.
To avoid unnecessary friction and misunderstanding between the Laotian government and the commission, it is also important that the terms of reference should spell out with some precision the rights of the commission to obtain necessary information, both documentary and on the ground. To give an example, experience on international commissions suggest that it would be essential for the commission to be able to inspect
aircraft and to have access to manifests, in order to control the importation of war material.
Then a few words about the initial responsibilities of the international commission. While fully recognizing and welcoming the responsibility which the government of Laos will assume for its own affairs, the conference will obviously have to include in the settlement, provisions covering the steps to be taken in the military field in the early stages on such questions as the identification and withdrawal of foreign military personnel. Due account also will have to be taken of any formal cease fire agreement which is worked out in Laos. Arms which may have been brought in from outside will have to be collected and disposed of in some suitable way. The forces now opposing each other in Laos will have to be sorted out as a preliminary to the formation of Laotian security forces. All these matters, particularly the formation of Laotian forces will, of course, primarily be the responsibility of the government of Laos. The international commission, however, will have to accept some responsibilities, on behalf of this conference, for supervising these processes. This kind of activity by the commission will be essential for the establishment of a neutral and stable Laos.
Then there are the continuing responsibilities of the commission. The problems I have just been discussing are of a transitional nature. The main problems, however, with which the commission will be concerned will be of a more continuing nature. For example, it will have to assume responsibility in connection with preventing the re-entry of foreign military personnel; ensuring that armaments are not imported in excess of a level appropriate for the requirements of the reorganized Laotian security forces and taking other steps which may be necessary with respect to the security of the Laotian state.
I think we can assume that the commission will have some responsibility with respect to threats to the security of the Laotian state. Such threats obviously can originate either within or without the territory of Laos iself, or represent a combination of the two. In view of the general acceptance by all members of this conference that our primary concern is with the creation and maintenance of the conditions necessary for an independent and neutral Laos, and not with the internal affairs of Laos as such, the commission's responsibilities in this field will have to be very clearly defined.
And then freedom of movement. One of the facilities which the commission will certainly need if it is to assist the government

of Laos in ensuring that the provisions of the settlement are properly implemented is freedom of movement and freedom of access, where necessary to the effective discharge of its assigned tasks. And here I must register a complaint that just a few days ago the commission was refused by the Pathet Lao permission to visit Ban Padong which is the one place in Laos at the present time which in my opinion would justify a visit by the commission. But certainly within the last four or five or six days, the Pathet Lao has refused to allow the commission to go to Ban Padong. The commission will also need to have the co-operation of the Laotian authorities in providing protection for its personnel.
There can, I think, be no doubt that because the commission will have responsibility for safeguarding Laotian neutrality and independence through supervision of the entry of foreign military equipment and personnel, it must establish an adequate number of teams for this purpose. The number and location of commission teams should be sufficient to include all likely points of entry. If this conference should decide to make specific provision for the team structure, as was done in the 1954 agreement, it is important that provision be made at the same time for the commission to adjust this structure in the light of experience. Alternatively, the conference may wish to leave the question of number and location of teams for determination by the commission itself in consultation with the government of Laos.
Intimately related to the responsibilities mentioned above is co-operation by the government of Laos in furnishing periodic returns on the strength of the Laotian security forces. This is necessary to enable the commission to confirm that agreed force levels are not being exceeded and that military or paramilitary units are not being formed or maintained which might constitute a threat to the security of the Laotian state.
Then I come to the question of voting in the commission. Most countries represented here have expressed the view that the 1954 agreement should form the basis of a Laotian settlement. I have been very surprised to note, however, that some of the documents tabled contain provisions which depart radically in principle from those in the present agreement. The important question of voting in the commission is one outstanding example. Under the present agreement, decisions are taken by majority vote on all matters except three: first, violations or threats of violations which might lead to a resumption of hostilities; second, amendments to the agreement; and third, reduction of the activities of the commission To suggest that all
matters except purely procedural questions should now be decided unanimously is to depart completely from the Geneva agreement and would I submit make the commission utterly ineffective.
We who have served on the commission have had a good deal of experience with the voting procedure adopted in the present agreement, and I believe from what he has said in this conference that my Indian colleague, Mr. Menon, would support me when I say that this procedure has on the whole worked very well. It involves a striving for unanimous decisions whenever possible, but leaves the way open for majority action when this is necessary. I for my part, would resist any derogation from the existing provisions of the 1954 agreement in the direction of enforced unanimity.
Voting procedure in the commission is in many ways closely related to the manner in which investigations by the commission are handled in practice. And now I come to the question of investigations. I must confess that I am unable to see any justification for the double veto which has been suggested in one of the proposals before this conference. I am referring to the veto involved in the proposal for unanimity in the commission and the further veto contained in the proposal that investigations by the commission related to the introduction of foreign military personnel should be undertaken only on instructions from the two co-chairmen. I suggest that the two co-chairmen are getting a bit too high and mighty if they expect to have this power. This second restriction would deprive the commission of any initiative in its task of assisting the government of Laos to prevent the entry of foreign military personnel or to ensure the carrying out of the provisions of a settlement. We think that investigations should be undertaken by the commission either on its own initiative or at the request of the government of Laos.
It would seem highly desirable that the terms of reference should provide for regular reports at suitable intervals from the commission to the members of the conference. That, I am afraid, has not been the practice followed in the past with regard to these commissions and I presume Canada is as much to blame for that as any other country. Such reports would, of course, not in any way prejudice the obligation of the commission to keep the members of the conference informed of any serious situations which may arise, through the medium of special reports indicating whatever remedial measures might be considered appropriate. In addition, it is my view, that if the commission fails to reach
[Stage Direction]
unanimity on a report, it should submit majority and minority reports and, when necessary-when no two members of the commission can agree-it should have the authority to submit separate reports.
I should also like here to mention a special aspect of the problem of guaranteeing that adequate and suitable equipment be made available to the commission to enable it to carry out its task. I am sure my views on this general subject are by now well known, but I emphasize again that the terms of reference should specify that all equipment which it may require will be placed at the disposal of the commission, and that such equipment will be fully under the commission's control. This is a subject on which we suggest that the two co-chairmen of this conference must take action. It has been dillydallying on it long enough and now when a proposal is put forward that the members of the commission should try to beg, borrow and steal equipment from the Laotians themselves in Laos, this I suggest is going to a ridiculous extreme and it puts the members of the commission in an impossible position. To this end, the conference will also have to make provision for the funds necessary for the commission's operations. At the present time, India has agreed to advance I think the sum of two hundred thousand dollars but so far as I know there has been no thought given in this conference whatever to the financing and India is just holding the bag and I do repeat that this question of financing is a vital one which has to be faced by every delegation attending this conference.
There is a final point which the conference will have to take into consideration. This is the eventual termination of the commission's activities. Whatever arrangements are agreed upon by this conference, it is, I think, important that the commission itself be given the discretion to recommend when it considers it is no longer required. In addition, of course, the commission should have the capacity to adjust the scale of its operations as circumstances warrant.
I conclude, Mr. Chairman, by stressing again the urgent need for this conference to organize itself in such a way as to make steady and orderly progress toward agreement on specific texts. The urgent need now is to create a momentum toward agreement. This conference has been sitting for nearly five weeks. While we were not sitting for the first three or four days-the distinguished delegates will remember we were all hanging around waiting to start

but we have actually been sitting five weeks tomorrow and there is not much to record in the way of results and as I said the conference has not even
settled the simple matter of basic equipment for the commission, to which I shall have to refer again at another time.
Canada, as I have emphasized, approaches the problems of the conference from the point of view of trying to help a country to achieve neutrality, stability and genuine independence-to help an unfortunate country which has been torn by internal strife and subjected to external pressures. All that we ask of this conference is support for the commission in Laos and more rapid progress -much more rapid progress-towards an agreement which will put an end to the tragic situation in that unhappy country.

[Stage Direction]
On June 15 I raised the matter of equipment for the international commission in Laos and proposed that three aircraft and three helicopters be made available immediately. The following day, on June 16, the co-chairmen received offers of equipment from the governments of France and United States. These offers were contained in letters to the co-chairmen from the two delegations which have now been circulated as conference documents. You will note that these offers include three helicopters for the use of the commission as well as light aircraft, and the French offer includes the personnel to operate this and other equipment.
On the same day the two co-chairmen, however, met and came up with the idea, if I may use a colloquialism, which was communicated to me, that each member nation of the commission should separately inquire of its commissioner in Laos, whether the equipment might be made available by the parties in Laos, in other words, by Laotians. At the time, I found this notion strange, to say the least, in the light of the two unanimous requests-I repeat, unanimous requests-for equipment that had already been made by the commission and of the offers that had been received. However, in the hope that it would hasten action by the co-chairmen, I agreed to send a message to the Canadian commissioner in Laos asking him whether adequate transport and other requirements could be provided by the Laotian parties. I have now received Mr. Mayrand's reply, Mr. Chairman, which is available for distribution if it is so desired.
Because of the situation in Laos, the commission has had to accept severe limitations in practice on its right and duty to carry out investigations of breaches of the cease fire. As you know, there has been a failure of the

parties to give their agreement to such investigations, particularly on the part of the Pathet Lao, despite messages from the cochairmen urging the parties in Laos to cooperate; and despite also the unanimous decision, again by the three members of the commission that certain specified sensitive areas should be visited.
The results in Laos speak for themselves. In seven weeks of operation the commission has been unable to make a single on-site investigation of any alleged violation of the cease fire, even, as I stated on June 19, of the serious incident at Ban Padong.
Obviously, however, the co-operation of the parties is not the only condition which must be met to enable the commission to exercise full and effective control over the cease fire. The commission, in its report dated May 1, stated to the co-chairmen that it could set up effective machinery of supervision only if the co-chairmen were willing to supply adequate equipment including helicopters and light aircraft. On May 22 the commission provided the co-chairmen with a detailed list of technical requirements which again included an adequate number of helicopters and light aircraft. I remind the distinguished delegate from Poland that both these decisions were unanimous, and were concurred in by his commissioner in the field.
Now the Canadian commissioner in his reply to me sets out a list of the immediate requirements essential for the discharge of the commission, including three helicopters- later to be increased to six-and three light aircraft, together with the necessary maintenance and crews for both. In addition, he states a requirement of 20 jeeps and certain wireless sets.
His answer to the question of whether this kind of equipment can be obtained from the parties is that it would require double the amount of equipment and lead to endless difficulties in defining the territorial limits within which the aircraft and helicopters of each side could operate. This is a situation which would not end overnight even if there were a formal cease fire or political agreement reached among the various parties in Laos.
A further point raised by the Canadian commissioner in Laos is that reliance on Laotian parties for transport and other equipment would be wholly inconsistent with the commission's responsibility to this conference. The conference should deal promptly with this issue of whether the commission is to have the necessary equipment at its disposal and under its own independent control; and thereby free itself from the serious limitations of having to rely on others for its transportation needs.
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It must be clearly evident to all, Mr. Chairman, and really should not require a debate to establish that the ability of the commission to discharge its responsibilities in a fair and impartial manner cannot be made subject to the ability or willingness of one or other of the Laotian parties to provide transport and other necessary facilities. Just imagine the situation in which the commission would be placed if, before it could investigate any complaint against one of the parties, it not only would have to obtain the consent of that party to make the visit but also would have to rely on that party to furnish the transportation to the scene and then return the commissioners to the place from which they started. I find it very hard to believe it is the intention of the conference to reduce the commission which is its own agent to a position of impotence and indeed of exposure to ridicule.
This situation cannot and need not continue. Equipment in amounts adequate to the commission's immediate needs has been offered by the French and United States governments. All members have those offers in writing before them. The responsibility now lies fairly and squarely upon the two co-chairmen- the United Kingdom and the Soviet union -to see that this matter is settled. These offers cannot be ignored. The requirements of the commission cannot be ignored. They cannot be argued away. I suggest that without further ado the two co-chairmen should meet with representatives of the three members of the international commission to work out the practical details, consulting as necessary the governments that have made the offers of equipment and any other governments that might offer equipment. In this way, we can get the commission down to work on a practical basis, and we would go far to ensure the result and the success of this conference. I point out that the member nations of this conference cannot evade their responsibility to see that essential equipment is supplied to the commission.
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Delegation of the United States of America
June 16, 1961
Dear Mr. Co-Chairman:
I recall that on May 22 the international commission for supervision and control in Laos forwarded a list of its materiel requirements. This list was in response to the request by the co-chairman that the I.C.C. furnish them with information concerning its equipment needs. I also note that the commission in its letter to the parties in Laos of June 8, has expressed
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its intentions of visiting and making investigations at various points in Laos. Therefore, it would seem that the commission has immediate need for at least some of the equipment it has requested.
The Minister of External Affairs of Canada, Mr. Green, specifically referred to the need for helicopters among other items in his statement to the conference of June 15. It is with this need in mind that I have been authorized by my government to offer to the co-chairmen and the commission three helicopters (Model H 34) for use by the I.C.C. in Laos. These can be provided within a few days after the acceptance of this offer.
I understand that the government of France has also offered equipment and support, and I hope that other governments represented at this conference will be able to do likewise. The United States government does not preclude the possibility of supplying other equipment or support should it be requested to do so.
The United States government expects that it will receive credit for any equipment it provides under this offer against its share of costs under such arrangements for financial support of the international commission for supervision and control as may be decided upon by the conference.
Sincerely yours,
W. Averell Harriman U.S. Deputy Representative
The Rt. Honourable M. J. Macdonald Co-Chairman of the International Conference
on the Settlement of the Laotian Question, Villa "La Fenetre", route de Pregny,
Geneva
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Geneve, le 16 juin 1961 Monsieur le President,
Vous avez bien voulu communiquer aux nations membres de la Conference le message en date du 22 mai qui enumere les materiels et personnels techniques demandes par Monsieur SEN pour faciliter l'exercice des fonc-tions de la Commission Internationale de controle au Laos.
Je suis en mesure de vous soumettre, des a present, la liste des personnels et materiels que le Gouvernement frangais est susceptible de mettre a la disposition de la C.I.C., en sou-lignant que les delais de mise en place ne sont mentionnes qu'a titre indicatif, et pour-raient subir certaines modifications.
Au cas ou il serait fait appel au Gouvernement frangais pour la fourniture de tout ou
partie de ces materiels et personnels techniques, je tiens a preciser que le financement total de l'operation, y compris les soldes et 1'entretien, serait a la charge de la Commission Internationale de controle, dans le cadre des dispositions finales qui seront adoptees a cet effet par la conference.
Je vous prie d'agreer, Monsieur le President, l'assurance de ma tres haute consideration.
L'Ambassadeur de France Chef de la Delegation Frangaise:
S.	E. Lord Home
Ministre des Affaires Etrangeres de
Grande-Bretagne Co-President de la Conference
de Geneve.
Le 16 juin 1961
Liste des materiels et personnels techniques susceptibles d'etre mis a la disposition de la Commission Internationale au Laos par le Gouvernement frangais.
I-	Materiels
11-	Materiel radio
-3 postes SCR 193
(Dont 1 sur place les deux autres pouvant rejoindre dans un delai de 1 mois.)
-6 postes ANGRC 9
(Mis en place en 1 mois.)
12-	Materiel auto
-5 jeeps
-4 Dodge 4x4
(Les 5 jeeps et 1 Dodge 4x4 sont sur place. 3 des Dodge 4x4 venant de Metro-pole pourraient etre mis en place dans un delai de 1 mois.)
13-	Materiel aerien
-5 Max Holste
«Broussard*
Viendraient de Metropole a) soit par avion-cargo dans un delai de 10 a 15 jours (tres onereux), b) soit par bateau, dans un delai d'un mois au moins.)
-1 C. 47 (Dakota)
(Delai de mise en place, 3 semaines a 1 mois. Cet appareil pourrait etre detache pendant 6 mois.)
-Helieopteres
(Pas d'appareils disponibles (mais possibility's d'achat direct dans le secteur civil).)
II-	Personnels
21-Equipes radio
(Les personnels necessaires aux postes 193 et ANGRC 9, venant de Metropole, peuvent etre mis en place dans un delai approximatif de 50 jours.)

22-	Conducteurs auto
(Sur place.)
23-	Equipages d'avion
(Venant de Metropole pourraient etre mis en place en meme temps que les appareils (delais 1 mois environ).)
24-	Equipages d'helicopteres
(3 ou 4 equipages pourraient etre mis en place dans un delai d'un mois environ.)
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In its message of May 22, the I.C.S.C. in Laos expressed to the co-chairmen its unanimous recommendations as to the personnel and equipment which in its judgment would be required to carry out its functions. Since May 22 the Canadian delegation in Laos has not changed its views as to the requirements necessary for the proper functioning of the commission.
The Canadian delegation in Laos realizes, however, that it may take some time to engage the personnel and procure and dispatch the equipment which the commission has requested. In view of this fact it believes that it will be helpful to the co-chairmen to have an indication of the priorities which should be observed in fulfilling the commission's requirements so that what is immediately necessary may be dispatched without delay. The Canadian delegation in Laos therefore recommends most strongly that the following personnel and equipment be supplied to the commission at once as being essential for the discharge of its immediate responsibilities:
(a)	Three helicopters required immediately, and to be increased to six as soon as possible to ensure that four are always operational.
(b)	Three light aircraft with at least six-passenger capacity and capable of using short air strips and flying at ten thousand feet.
(c)	Maintenance organization for the helicopters and light aircraft to be established in Laos.
(d)	Pilots for the helicopters and light aircraft, preferably from India, Poland or Canada.
(e)	Twenty jeeps.
(f)	Wireless sets with two-hundred-mile range.
With the foregoing immediate needs in mind, the Canadian delegation in Laos has considered, in accordance with the co-chairmen's request, whether adequate transport and other requirements could be provided by the Laotian parties and has come to the following conclusions:
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(a)	The provision of helicopters by the Laotian parties is not practical because neither side will agree to permit aircraft piloted by the opposition party to overfly territory occupied or disputed by them nor will the parties admit into the area forward or a defended locality helicopters piloted by the other side. Provision of helicopters by the parties would also mean twice the number held in readiness for commission use, since all investigations and visits by that means would involve double movement or double teams approaching trouble spots first from one side and then the other, whereas neutral helicopters should be able to move from one side to the other without delay or difficulty. The confused situation on the ground often makes clear demarcation of areas under the control of either side virtually impossible and thus the selection of a helicopter from either side for transportation will meet with objection for the reasons already stated. Consequently the commission would be prevented from supervising the cease fire in those disputed areas where available evidence indicates that violations are occurring unless it is equipped with its own helicopters and pilots and the objections of the parties to its movement in such areas are thereby overcome.
(b)	Provision of light aircraft by the parties is impracticable for reasons similar to those applying to helicopters.
(c)	Provision of vehicles has already proved beyond the capabilities of the parties. The commission representatives of Xieng Khou-ang are at present provided by Xieng Khou-ang parties with a total of three jeeps which are in such bad mechanical condition that the commission is having to consider purchase of replacement vehicles. Further, the commission is already supplying, at the request of the Xieng Khouang parties, petrol oil and lubricants for the vehicles allotted for its use there. The Vientiane party is also experiencing difficulty in meeting the minimum needs of the commission for transport in the Vientiane area, and for petrol, oil, and lubricants for vehicles allotted to the 'commission.
(d)	With regard to wireless sets, the responsibility for providing communications between teams and the commission headquarters has been undertaken by India. Communications are as important as transport to the ability of the commission to do its duty. It is essential that the equipment provided be standard and acceptable to the Indian communications officer, upon whom responsibility for the communications service rests.
(e)	The most important consideration of all is that reliance upon the Laotian parties for transport and other requirements would be wholly inconsistent with the commission's
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responsibility for supervising the cease fire. Transport and communications are inseparable from commission operations. The commission must be independent of the parties in these respects if it is to retain its status as a neutral agency and be acceptable to all parties. The ability of the commission to discharge its responsibilities must not be subject to the ability or the willingness of one
or other of the Laotian parties to provide transport or other necessary facilities. Such a dependent position would place the commission under the control of the Laotian parties and nullify its capability for conducting impartial investigations. The interests of all the Laotian parties can be served only if the commission has the ability to move and administer itself independently.
[Stage Direction]
Saturday, June 24, 1961