1961-09-15

Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, hon. members will be interested to learn that for the 1961-62 school year, 26 scholarships ranging in value from $250 to $1,750 are being awarded to Indian students of outstanding ability to encourage them to continue with their studies. The greatest number of scholarships previously given in any year since the government instituted this program in 1957 was 18, so the 26 awards for this year represent a substantial and encouraging increase.
Indians from Ontario and Quebec shared 14 scholarships; six were awarded in Saskatchewan and three each in the maritimes and British Columbia. The new awards include eight for university training; three for teacher training; four for nursing; six for various kinds of vocational training; four for studies in the arts; and, for the first time, one for forestry. It is particularly interesting to note the wide range of studies chosen by the recipients of university scholarships, which include dentistry, medicine, law, engineering and home economics.
I have a list of the scholarships here, Mr. Speaker, and if the house would give permission I should like to have it incorporated at this point with this announcement in Hansard.


Mr. Speaker:: Has the minister leave to incorporate the list in Hansard?


Some hon. Members:: Agreed.
[Editor's note: The list referred to above is as follows:]
List of Scholarship Winners-1961-62 B.C. Region
Catherine Leo, Kyuquot band, university scholarship, University of B.C., arts $1,200.
Rennie Brown, Gitlakdamix band, teacher training scholarship, University of Alberta, $1,200.
William Etzerza, Tahltan band, vocational scholarship, commercial training $1,050.
Saskatchewan Region
Thomas Stevenson, Cowessess band, cultural scholarship in music, $850.
David Sparvier, Cowessess band, university scholarship, University of Ottawa, arts, $1,300.
Harvey Tootoosis, Poundmaker band, University of Saskatchewan, engineering, $1,375.
Ida Ruth Crowe, Piapot band, teacher training scholarship, $1,250.
Rosella McKay, Kahkewistahaw band, nursing scholarship, $525.
Bernice Stonechild, Muscowpetung band, nursing scholarship, $525.
Northern Ontario Region
Joseph Land, Islington band, cultural scholarship in art, Manitoba U., $1,500.
Rene Bannon, Fort William band, vocational scholarship, technical high school, $775.
Southern Ontario Region
Clare Clifton Brant, Mohawks of Bay of Quinte band, university scholarship, Queens University, medicine, $1,500.
Lauren Chrisjohn, Oneidas of the Thames band, vocational scholarship, technical high school, $600.
Bruce White, St. Regis Iroquois band, vocational scholarship, technical high school, $1,500.
Janice King, St. Regis Iroquois band, cultural scholarship in music, $500.
Howard E. Statts, Six Nations band, university scholarship, Osgoode Hall, law, $1,150.
Quebec Region
Edouard Cree, Oka band, univ. scholarship, U. of Mtl., dentistry, $1,750.
Elisabeth Achini, Montagnais (Seven Island) band, nursing scholarship, $500.
Pauline Cote, River Desert band (Mani-waki), teacher tr. scholarship, $750.
Joseph Norman Connolly, Montagnais of Lac St. John, Pointe Bleue, forestry scholarship, Duchesnay, Que., $750.
Raynald Gedeon, Marie band, cultural scholarship, Univ. of America, drama, $1,750.
Claude Philippe, Montagnais of Lac St. John, Pointe Bleue, vocational scholarship, Three Rivers tech, inst., $1,200.
Abel Sinclair Kitchen, Waswanipi band, vocational scholarship, technical institute, $900.

Proposed Legislation Maritime Region
Joan Johnson, Eskasoni band, university scholarship, Mount St. Bernard-Antigonish, home economics, $1,050.
Carl Sacobie, St. Mary's band, university scholarship, St. Thomas College, arts, $950.
Elizabeth Mathews, Eskasoni band, nursing scholarship, $250.


Hon. J. W. Pickersgill (Bonavisia-Twillin-gate):: Perhaps I might be permitted to express my gratification, not merely as a member of parliament but as the person who occupied the position now occupied by the hon. lady at the time this system of scholarships for Indians was instituted. I am gratified that this system is so satisfactory in the view of my successor.


Mr. Frank Howard (Skeena):: Not having had the background which the hon. member for Bonavista-Twillingate has had, I cannot take any credit myself for this. However, we in this group also welcome the announcement of the minister. It is extremely gratifying to us that there are increases and we hope there will be increases in the future in such scholarships to our native people. The advancement of our native people, in all forms, rests so much upon the education of the younger children.



CANADIAN NATIONAL RAILWAYS


Hon. Leon Balcer (Minister of Transport) moved: for leave to introduce Bill No. C-126, respecting the construction of a line of railway in the province of Alberta and in the Northwest Territories by Canadian National Railway Company from a point at or near Grimshaw, in the province of Alberta, in a northerly direction to Great Slave lake, in the Northwest Territories.


Hon. Lionel Chevrier (Laurier):: Before the motion is put, Mr. Speaker, may I ask the minister whether the agreement upon which the resolution was based and, I presume, upon which the bill is based has been finalized between the government and the company?


Léon Balcer: Yes, the agreement has been finalized.


Lionel Chevrier: Will the minister table it before we discuss second reading of the bill?


Léon Balcer: I will study the request of my hon. friend and let him know later in the proper fashion.
Motion agreed to and bill read the first time.



INQUIRY AS TO REPORTED STATEMENTS BY CANADIAN MINISTERS

[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of ihe Opposition: Mr. Speaker, I should like to ask the Prime Minister whether statements made during the last two days at Accra in Ghana by the Minister of Finance and the Minister of Trade and Commerce behind closed doors, we are told, but given to the press in whole or in part, were approved in advance by the government.
Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I have not been able to secure a copy of those statements as yet, though I have endeavoured to do so. Communication between Canada and Accra by telephone is a major difficulty. I tried to do so yesterday afternoon for a number of hours. However, I think I should say at this time that throughout the years this party has stood for a strong commonwealth, and this during the days when there were others in other parts of the house who did not hold that view.


An hon. Member:: Including South Africa.


John George Diefenbaker: We still believe in the maintenance of a strong and effective commonwealth. That we have succeeded in many of the things we have endeavoured to do in that connection is apparent from the fact that we brought about a trade and economic conference. If anyone has any doubt about the stand we have taken in that regard he has but to read Taylor's book on the commonwealth, "The Years of Challenge".
Whatever the statements made may have been, any discussion thereon will be fruitless until those statements are available. The view of this government was expressed by me yesterday and on previous occasions. Our desire is not in any way to interfere with the right of any other member of the commonwealth to determine the course it will take, any more than other parts of the commonwealth can determine ours. However, we have the right among ourselves to point out the potential or possible effects of the action of any member of the commonwealth on the other members. Our desire is a strong and effective commonwealth, and to that end are our purposes directed and our representations made.


Mr. Pearson:: Mr. Speaker, in view of what the Prime Minister has said, and before I ask a supplementary question, may I be permitted to say that not only do we on this side agree that there should be a strong commonwealth, but we believe that if it

had not been for Liberal government policy in Canada in the past there might not have been any commonwealth at all.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: I should like to ask the Prime Minister whether he would consider it proper if the United Kingdom government indulged in the same kind of public criticism of Canadian policy that Canadian ministers are now aiming publicly at United Kingdom government policy on a matter so politically controversial as the one we are talking about.


John George Diefenbaker: Mr. Speaker, I am very glad to answer that question. When the hon. gentleman protests as to the attitude taken by this government to the commonwealth I would just recall the fact that in 1956 his leader said the days of power, in so far as the United Kingdom and France were concerned, were over. That was their attitude to Britain.


Lester Bowles Pearson: That is not what he said. On a question of privilege, Mr. Speaker, when the Prime Minister sees fit to quote in this house from one of his predecessors, he should quote accurately and not misrepresent what was said.


Lionel Chevrier: Mr. Speaker, may I direct a question to the Prime Minister. The Minister of Finance said at Accra, as reported by the Southam news service:
The United Kingdom cannot have a foot in each group and retain the freedom of action which is necessary to the leadership of the commonwealth.
Was he speaking for the government, or expressing the views of the government at that time?


John George Diefenbaker: Mr. Speaker, I have
already made very clear the views of the government with respect to this matter. I am not going to discuss reported statements until I see the remarks that have actually been made. 1 have seen reports of statements allegedly made by both the hon. gentleman and the Leader of the Opposition that I am sure they did not make. I am giving the same consideration to some of the remarks allegedly made at this conference.


Lester Bowles Pearson: In view of the fact that the Prime Minister has mentioned me, may I say that when I am faced with a quotation of that kind, which he says I did not make, I do not give it to the press in advance.


John George Diefenbaker: I seem to recall one which had to do with-no; that was a statement on a television program.
Inquiries of the Ministry


Mr. G. J. Mcllraith (Ottawa West):: I wish to direct a question to the Prime Minister based upon an excerpt from a speech made by the Minister of Trade and Commerce on this same occasion at Accra. The excerpt is as follows:
And so we in Canada are convinced that we are considering not only an economic problem which has far reaching implications for all of us, but also a problem which involves the future of the commonwealth itself. We strongly urge the government of the U.K. to consider this matter in this broader concept when the negotiations with the E.C.M. countries commence in the near future, and ensure that the trading arrangements which exist between the U.K. and her commonwealth partners which have been mutually beneficial over so many years remain unchanged.
My question is this. Is it the view of the government that any effort by any member of the commonwealth to change its trading pattern places the commonwealth itself in jeopardy?


John George Diefenbaker: That is another of those hypothetical questions based on a hypothetical quotation. I think it is perfectly clear that each member of the commonwealth may take the course it desires at all times, giving the fullest consideration, as Mr. Macmillan said would be the fact, to the effect it would have on other members of the commonwealth.
Indeed, I rely very strongly on the statement which the Prime Minister of the United Kingdom made in the House of Commons that an application was made for membership to the end that through negotiation the situation might be determined. He also stated -and I know this is the attitude of the United Kingdom government, and at all times it has been their attitude during the period in which the responsibility of government has rested upon my colleagues and myself-that in anything they do every consideration is given by them to assuring the achievement of that which is the common objective of both our governments, namely a strong and effective commonwealth, and that nothing should be done without the fullest consideration and regard always being paid to the welfare of all other members.


Lester Bowles Pearson: May I ask the Prime Minister a question arising out of what he has just said. In view of what he has said, will the right hon. gentleman instruct the ministers concerned to stop their public squealing before Canada is hurt?


John George Diefenbaker: I do not think the hon. gentleman is very much concerned about the latter part. I think that was an addition to the question. I have seen statements made by the hon. gentleman to which I might

Inquiries of the Ministry have ascribed the same words that he now ascribes to the statement which has been read.


John Whitney Pickersgill: I wonder if I may direct a supplementary question to the Prime Minister. Are we to understand from the answers he has given with respect to the statements which appear in quotation marks, alleged to have been made by the ministers in Accra, that there was no agreed position which the ministers were to take, determined in advance in Ottawa?


John George Diefenbaker: The agreed position was declared by me on behalf of this party and the government, in the house.


John Whitney Pickersgill: Evidently the ministers did not understand it.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Secretary of State for External Affairs. I apologize for not sending him notice owing to the rush of affairs. My question is this. In view of the recent disturbing developments which have taken place in the Congo, is the Secretary of State for External Affairs in a position to comment on the present situation in Katanga province?


Hon. Howard C. Green (Secretary of Stale for External Affairs):: Mr. Speaker, I share the concern which I know is felt by all hon. members of this house at the turn of events in Katanga. I am disturbed by the most recent press reports as to the apparent deterioration in the situation there. As I told the house on Wednesday last, it had been our hope that the action taken by the United Nations forces in the Congo would forestall the outbreak of large scale violence and would bring the potentially dangerous situation there effectively under control.
In view of the absence as yet of direct reports from our own people in the Congo, or of an official report from the United Nations command on the most recent developments, I do not wish to go any further than this in offering detailed comment at this stage. As the house is aware the secretary general, Mr. Hammarskjold, is still in Leopoldville, and will be in a position to report personally on these developments when he returns to New York in the near future.


Lionel Chevrier: Mr. Speaker, may I direct a question to the Prime Minister-


Mr. Laurier Regnier (St. Boniface):: Mr. Speaker, I have a supplementary question.


Mr. Speaker:: Order. The hon. member for St. Boniface has a supplementary question.


Laurier Arthur Régnier: Yes, Mr. Speaker. Can the minister explain the role of the United Nations in the Congo, and can the United Nations interfere in the political and local administration of a province in the Congo?


Howard Charles Green: Mr. Speaker, it would not be opportune for me to explain the role of the United Nations in the Congo on orders of the day. I believe that the effort now being made by the United Nations in Katanga is designed to bring all parts of that unfortunate country into one unit and under the control of one central government.



AIRPORTS


[Stage Direction]
On the orders of the day:
Léon Balcer: On Monday last the hon. member for Fort William asked a question concerning the runways at the lakehead. I have made inquiries and find that an operational requirement for improving the runways at the lakehead to accommodate larger aircraft has not been submitted to my department by T.C.A. Consequently there are no immediate plans to improve the runways at the lakehead. If an operational requirement for such improvement were presented and approved by treasury board, a suitable item would be placed in the estimates of my department to meet the requirement.



HUMAN RIGHTS


[Stage Direction]
On the orders of the day:
Mr. Alexis Caron (Hull):: I wish to direct a question to the Minister of Public Works. Has the minister been informed that the Ontario Building Cleaning Company Limited, which has contracts with the federal government, has practised discrimination against a French Canadian charwoman working on those contracts?


Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, the answer is no.


Alexis Pierre Caron: A supplementary question, Mr. Speaker. If it is established that the Ontario Building Cleaning Company is practising discrimination, is it the intention of the department to cancel the contract on the basis of the bill of rights?


Mr. Speaker:: Order. I fail to see how the hon. member could expect an answer to a question as hypothetical as the one he is posing.


Alexis Pierre Caron: Perhaps I could put it this way, Mr. Speaker. Would the minister establish an inquiry to see if it is true?


Mr. Grafftey:: Divide and rule again.


Alexis Pierre Caron: If I am not to receive an answer, may I direct a supplementary question to the Secretary of State.
(Translation):
In a matter of such importance, could we be assured of the good offices of the Secretary of State?


Hon. Noel Dorion (Secretary of State):: am always willing to be of assistance.
(Text):


David James Walker: Mr. Speaker, I was at a loss to understand the purport of the question of the hon. member for Hull which appeared to be a speech and a political one at that; but if he has any facts to substantiate the alleged story in the press I would be happy if he would bring them to my attention. As he must have been aware long since, in my position I am the champion of all efforts to see that there is no discrimination of any kind as to language, race, religion or even politics, and that is more than the hon. member for Ottawa West can fully comprehend. In fact we have even hired some Liberals.


Some hon. Members:: Order.


Alexis Pierre Caron: Mr. Speaker, may I tell the minister that since the present Secretary of State for External Affairs left the public works portfolio, no Liberal has been placed, because the present minister is one who always plays politics.


Mr. Speaker:: Order.


Alexis Pierre Caron: I will send the details to the minister.


Mr. Speaker:: Order. I hope hon. members on both sides will not take further liberties with the question period.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. Walter Pitman (Peterborough):: Mr. Speaker, I wish to direct a question to the Minister of Transport. Has the minister's attention been drawn to a letter from chief engineer A. J. Bonney, informing him that 90205-6-531
Inquiries of the Ministry the water flow past the Peterborough Hydraulic Power Company was 300 cubic feet per second less than expected, in spite of the fact that the storage lakes in the Haliburton region were well up?
Would the minister explain why this has happened, and whether there has been a change in policy in this regard in spite of assurances that were given?


Léon Balcer: Mr. Speaker, the hon. member was good enough to send me notice of his question. On the first point mentioned by the hon. member, a letter has been received from a Mr. A. J. Bonney of the Quaker Oats Company at Peterborough, and the points he has raised are now under study. A reply should go out shortly.
On the second point, I informed the hon. member on April 18, in this house, that no major changes in the method of regulation are likely to be made this year. This has, in fact, been the case. There are bound to be minor fluctuations from year to year, resulting both from over-all water levels in the system and from the varying needs of different groups. The hon. member must be aware that there are widely varying views among different public groups in the area as to the best method of water regulation on the Trent system.
(Translation):



REPORTED IRREGULARITIES RESPECTING ELECTION OF SECRETARY OF STATE

[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, I should like to direct a question to the Secretary of State. Would the minister have any comment to make on an item which was published in this morning's Gazette and which reads as follows:
(Text):
A former Quebec liquor police inspector testified yesterday he worked for two months as a political organizer in the riding of Secretary of State Noel Dorion during the 1958 federal election campaign and was paid with fraudulent expense accounts.
Rene Mercier, 45, said he did "election work" in Bellechasse riding-


Mr. Speaker:: Order. The hon. member appears to be reading a rather lengthy excerpt on a question which, although I did not hear it completely because of the switch from English to French, did not seem to relate to the public responsibility of the Secretary of State. If I am mistaken in that I shall be glad to be advised, of course.


Lionel Chevrier: Mr. Speaker, in the first place I was not reading a lengthy excerpt. I was reading one short paragraph from an article
8410	HOUSE OF
Inquiries of the Ministry which appeared in the Montreal Gazette of September 15, 1961. I was asking the Secretary of State whether he had any comment to make on it. I think that is a perfectly normal and ordinary question, and I again ask the Secretary of State whether he has a comment.


Mr. Speaker:: Before the hon. member proceeds, did the question relate to a public servant or was it a question arising out of some election activity? If so it does not seem to me to be a matter of the administrative responsibility of the minister.


Lionel Chevrier: Mr. Speaker, the question relates to the minister himself. I should think the minister would be the first to want to make a comment on that item.


John George Diefenbaker: Mr. Speaker, the question, as the hon. gentleman must know, is not a proper one; but I think since a portion of the particular news report has been read the Secretary of State ought to have the opportunity of answering it.
(Translation) :


Noël Dorion: Mr. Speaker, I heard about this last night through a journalist. I inquired of those concerned in order to know what was mentioned in the evidence referred to in the Gazette, and I must say that contrary to the allegations of the journalist my name was never mentioned during that preliminary investigation.
I must add, moreover, that I never had anything to do whatsoever with the administration of Quebec liquor control board authorities.
Finally, after inquiring of my chief organizer during the last election campaign, the latter told me repeatedly that he never retained the services of any police officer from the Quebec liquor control board to work for my election.
(Text):



DOMINION-PROVINCIAL RELATIONS NEW BRUNSWICK-CORRESPONDENCE RESPECTING TAX COLLECTING ARRANGEMENTS

[Stage Direction]
On the orders of the day:
Mr. W. L. M. Creaghan (Westmorland):: should like to direct a question to the Prime Minister. Has the Prime Minister replied to a recent communication from the premier of New Brunswick concerning federal proposals dealing with tax collecting arrangements?


John George Diefenbaker: Yes, Mr. Speaker, a reply has been given to the premier of New Brunswick.


[Later:)


William Lawrence Marven Creaghan: Mr. Speaker, may I ask a supplementary question. A moment ago the Prime Minister answered in the affirmative my question concerning correspondence with the New Brunswick premier. Would the Prime Minister make a statement on it, or agree to table the correspondence?


John George Diefenbaker: I think the best course would be, with leave of the house, to table the correspondence, although the hon. member for Bonavista-Twillingate usually rises to ask that it be printed as an appendix. While I have not asked the permission of Mr. Robichaud, I am sure he would not object to the reply being tabled as well as his letter, because he gave publicity to his letter in detail at the time he forwarded it to me.


John Whitney Pickersgill: I wonder if I might ask the Prime Minister a supplementary question which he has almost invited me to put. He may wish to have some consultations, but at the first convenient opportunity would he make available in good time all the correspondance there has been with the provincial governments since the last meeting of the conference, so that it will be available for study before we undertake consideration of the legislation now on the order paper?


John George Diefenbaker: Mr. Speaker, I accede to that request with great pleasure, and will make available copies of all the correspondence that has passed. In the meantime I would ask that my letter to Premier Robichaud and his reply be printed as an appendix to Hansard.


Mr. Speaker:: Has the Prime Minister leave to have printed as an appendix to today's Hansard the correspondence mentioned, namely the letter from the premier of New Brunswick and the Prime Minister's reply?


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



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. John Matheson (Leeds):: Mr. Speaker, my question is addressed to the Secretary of State for External Affairs. It arises out of a news story appearing in the Times of London of September 12, 1961. Has the government received two memoranda from the British government relating to the government's shipbuilding subsidy? If so, what is the effect of such memoranda?

Inquiries of the Ministry Hon. Howard C. Green (Secrelary of Slate cerning one Francis Tobias. A search has been for External Affairs): Mr. Speaker, I will made of my records, and I am advised that no have to take this question as notice.	such letter was received.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. J. P. Deschaielets (Maisonneuve-Rose-mont):: I should like to direct a question to the Minister of National Revenue. Is Mr. Raymond Dupuis, the chairman of the Union Nationale party convention to be held in Quebec on September 23, the same Raymond Dupuis who is a member of the board of directors of the Canadian Broadcasting Corporation? If so, would the minister say whether it is proper for a member of the board of directors of the C.B.C. to act as chairman of a political rally?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, I do not know anything about the political activities, past, present or future, of Mr. Dupuis.


Jean-Paul Deschatelets: Would the minister inquire if Mr. Raymond Dupuis is the same person acting in both capacities?


William Heward Grafftey: Find out for yourself.



NIAGARA FALLS AND TORONTO


[Stage Direction]
On the orders of the day:
Miss Judy V. LaMarsh (Niagara Falls):: Mr. Speaker, I have a question for the Minister of National Revenue. Can the minister inform the house whether the C.B.C. has been asked to give free live coverage to two political conventions to take place in Niagara Falls and Toronto in the month of October and, if so, what decision has been reached?


George Clyde Nowlan: I will make inquiries with respect to that matter. If the hon. member will advise me as to the political conventions she has in mind, it might make the inquiry much easier.


Julia Verlyn (Judy) LaMarsh: I will be glad to send a memorandum to the minister.



IMMIGRATION


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, the hon. member for Cartier asked me yesterday whether I had received a letter from one Sophia Horan con-90205-6-531i



COMMONWEALTH RELATIONS


[Stage Direction]
On the orders of the day:
Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Is the minister aware that the gear and fittings on the Federal Maple, one of the ships given to the West Indies federation by Canada, is marked "made in U.S.A." or "made in England" and, despite the government's buy-Canadian program, the cutlery on the ship is Japanese and the china is from the United States?


Howard Charles Green: Mr. Speaker, I have not made an examination of this ship to the extent that the hon. member appears to have done. These particular details do not come under my department at all.



TRANSPORT


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I wonder whether I might ask an unrelated question of the Minister of Public Works in the hope that he will give a plain answer and not make another political speech. My question is this. Has the long awaited and long delayed feasibility study on the causeway to Prince Edward Island been completed and, if so, will it be published?


David James Walker: Mr. Speaker, the hon. member for Bonavista-Twillingate, a former student of law, has been very quiet this session-


Some hon. Members:: Oh, oh.


David James Walker: -and it seems odd that he cannot think of anything better to raise at the moment. He knows full well the tremendous problem involved in this investigation, a problem that has so far never been solved anywhere in the world.


George James McIlraith: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: Order. The hon. member for Ottawa West is rising on a point of order.


George James McIlraith: We have had this spectacle of the Minister of Public Works contravening the rules in his answer to the question asked. The question appeared to be in order and the
8412	HOUSE OF COMMONS
Supply-National Defence answer was completely out of order, in that it made gratuitous and personal references to the member asking the question and did not deal with the subject matter of the question. My point of order is that if the question period is to be kept effective and serve any purpose, the answers to questions must be brought within the rules just as the questions now are.


Mr. Speaker:: I appreciate that the hon. member and most hon. members, I think, wish to observe the established practices. In this instance I think both the questioner and the questionee expressed themselves in terms beyond the normal range of questions and answers.


John Whitney Pickersgill: I wonder if I might put a supplementary question to the hon. gentleman, and ask him if he knows that the causeway is now referred to in Prince Edward Island as the "pauseway".


David James Walker: I know the hon. member for Bonavista-Twillingate is referred to as the lost cause in Newfoundland.

The house in committee of supply, Mr. Chown in the chair.
DEPARTMENT OF NATIONAL DEFENCE Royal Canadian Air Force-
239.	Operation and maintenance, $536,666,000.


Mr. Harkness:: Mr. Chairman, yesterday in a discussion of air force matters the hon. member for Trinity put on the record some fantastic figures of his own devising as to the cost of the acquisition of the F-101 airplane and the manning of the Pine Tree line that were involved in this particular deal. At the time I said if the allegation had come from a serious source I would have taken it seriously. However, I considered the source from which it came and merely said the figures the hon. gentleman was producing were comparable to figures he had produced before, which were quite evidently out. The Canadian Press carried a story in one of the morning newspapers making use of those figures and I think, therefore, I should refer back to what I said in connection with the cost to Canada of the acquisition of the F-101 and the manning of the radar stations on the Pine Tree line.
In order that there may be no question as to what the cost is, I refer to the figures I gave on June 13, which are the estimate of responsible officials of the department. They are the figures which will be used so far as the coming year's operations are concerned in the estimates which are put before this house for approval. I think they are the accurate figures and the figures that must be accepted.

At that time, on June 13, I said in answer to a question by the hon. member for Laurier that the annual cost of civilian staff operation and maintenance-this is the cost for the radar stations of the Pine Tree line which Canada has agreed to take over-is estimated at $5 million for 1961-62; $9.6 million for 1962-63; $15.1 million for 1963-64 and $16.1 million when the stations are fully manned. The NORAD agreement is to run until 1968, when it will be reviewed. The total estimated cost during that period is $94.1 million.
Then there was a supplementary question as to the cost of armed services personnel. I said that the military personnel, of course, will be provided from within existing R.C.A.F. staffs. The total number which will be required to man these stations will be in the neighbourhood of 1,700 to 1,800-I am speaking from memory now but I know it is in that area-and some 800 to 900 civilian staff. There was a further supplementary question, and I said that the estimated cost of the 1,700 to 1,800 military personnel which will be involved in manning these stations when the take-over is complete is around $9 million a year.
I should like to point out that I stated the plan was to provide these out of existing members of the R.C.A.F. The estimate of the total cost of manning the Pine Tree line and the cost for the support for the F-101, which we have to pay for, is $170 million rather than the $490.9 million which the hon. member represented was going to be the cost. In this case, I think he had it for ten years. However, that is the actual figure, $170 million.
This estimate is made up of the cost of the civilian staff and maintenance, which I have mentioned, of $94.1 million; $14.1 million for the spares and support that we have to secure for the F-101; $61.8 million for the cost of military personnel. In addition, of course, under the deal we are giving $50 million of mutual aid and the United States is giving approximately $150 million in the form of F-104 airplanes to our NATO allies in Europe. This $200 million is to be spent in Canada for the production of F-104 airplanes. This is, of course, one of the very attractive features of this whole deal, and will provide $200 million worth of business which means a very large amount of employment to Canadian workers.
Those are the costs and the definite costs. In view of the completely irresponsible calculations which the hon. member for Trinity made and which, unfortunately, have been printed, I thought I should make this definite statement so there would be no question as to what the costs are in connection with this whole deal.
At the same time the hon. member for Trinity talked about the costs of the F-101

and the manning of the Pine Tree line, he referred also to evidence given by the present chairman of the chiefs of staff committee, the then deputy minister, before the defence expenditures committee as to the cost of the Arrow. He made an allegation that the statement of the present chiefs of staff committee was contrary to the figures which I had given relating to what would have been the cost of the Arrow. He subsequently accused me of lying and, of course, was completely out of order so he had to retract; nevertheless that appeared in the newspapers.
I should like to make it clear that the figures I have given in connection with this matter at various times were figures which I quoted from the proceedings of the special committee on defence expenditures. I had in my hand a copy of those minutes and read from them when I gave the figures. The whole story is here in these minutes of the special committee on defence expenditures; therefore there does not need to be any argument as to what the figures are or what was said.
I should like, however, in order to show that the present chairman of the chiefs of staff committee used the same figures which I used, refer to his evidence as found on page 136 of the regular proceedings for Friday, May 12, 1960. He stated at that time:
So the figures to which the minister has referred in the amount of $7.8 million per copy is the average cost of the 100 aeroplanes.
This was on the presumption at that time, or the basis, that 100 airplanes would be secured. I should furthermore like to point out, however, that if the number had been reduced to the number of F-lOl's which we have actually secured, that is to 66, the cost per copy would be considerably higher and as a matter of fact would have come to something in the neighbourhood of $9 million for that smaller number of planes.
However, the main point is this, I think. All statements which I have made in connection with the cost of these planes were taken directly from the figures of the subcommittee and are substantiated by the officials in the department. These various allegations that I have been attempting to mislead the house and to give incorrect figures have no foundation in fact, as I think is quite apparent, I would hope that there would be no more wild statements of that kind.
The matter of continuing to flog the Arrow situation, of course, in view of the fact that it is now some considerable time since the contract was cancelled, I do not think gets us very far, where the discussion of the present estimates of the Department of National Defence is concerned. However, I think these
Supply-National Defence two corrections were necessary so there will be no doubt whatever as to what the situation is in connection with either matter.


Walter George Pitman: Last night just before the supper hour the hon. member for Greenwood I thought made a very profound statement, and I think it certainly refers to this area of the R.C.A.F. perhaps even more than to any other area. He said that we on this side appeared to be dealing with unreality or war games, whereas the minister was dealing with reality. When the hon. member for Greenwood says anything we on this side of the chamber listen, and indeed we search ourselves to find out just exactly the reason for what he has said.
I am the first to admit that we are only a part of the whole, or that we are only a small link in this chain. However, it seems to me that we in this committee are concerned with deciding just how effective or how strong this link is, with the dreadful realization that a chain is only as strong as all its links. Why is it that the minister's statements have this air of unreality? I cannot help feeling that we have a defence policy in reverse. What we are doing is this. We decide that we are a small partner with limited resources and that we can do only a very little. We therefore adjust the threat to what we are prepared to meet, in terms of the small area with which we are dealing in our relations with our allies.
Yesterday one or two examples of that tendency arose under the army estimates, when we asked about the Canadian army looking after the shore lines of North America. No matter how often the Minister of National Defence says that the army is concerned with dealing with parachutists and stopping them from taking over our radar installations, I cannot believe that in an all-out nuclear war they would send planes anywhere near the radar installations without realizing that the whole strategic air command would be on them before the parachutists had taken over the D.E.W. line or any other area.
The same criticism applies with respect to the navy estimates. The hon. member for Trinity has suggested that the anti-submarine activities of the Canadian navy are completely and hopelessly out of date in relation to the kind of nuclear submarines that we know the Russians are making. What are we using for our knowledge? The hon. member for Trinity is using a great deal of material from the United States congress. To some extent I have been using material from the London institute of strategic studies, which has attempted to make some study of the threat. They tell us that the Russians have 500 submarines, 10 of which are atomic powered submarines.

Supply-National Defence


Mr. Chambers:: I rise on a point of order, Mr. Chairman. We have passed the estimates concerning the navy as well as those of the army. We are now dealing with the Royal Canadian Air Force.


Walter George Pitman: I accept that point of order, Mr. Chairman, and will continue. I meant this only as an example of the same thing as that with which we are dealing now. The point is this. The reason for this feeling of unreality in the defence estimates is that what we are doing is adjusting the threat to what we think we can handle in our particular area in conjunction with our allies. I refer to this item for the R.C.A.F. We know that Russia is moving into the missile field. We know that we can do very little in this area, and indeed that the United States can do very little. So once again we adjust the threat to what we think we can deal with.
I tried to find out what the minister thinks the threat is. I think it is important to know this. Some extremely intelligent strategists have suggested that the Russians are manufacturing over 1,000 planes capable of making a one way flight. I think there are 100 to 200 which are long range planes capable of getting back again. However, it is suggested that over 1,000 planes can make a one way flight, and that is all that would be necessary.
The minister himself has suggested that the number of megaton bombs that could be dropped on the United States is unlimited, but he says he feels that the ability to drop them is limited. To what extent is it limited? This is what I want to know. He gave us some very interesting figures on the difference between a one megaton bomb and a five megaton bomb and he said that a five megaton bomb is not five times as effective as a one megaton bomb. There is no escalation in the price. A five megaton bomb is not five times more expensive or five times heavier. Therefore it is quite feasible that an aeroplane could carry 1 of these 100 megaton or super bombs, as has been suggested.
It seems to me that until we know what the absolute threat is, we cannot play our part. I realize that we are doing this in conjunction with our allies, but just how effective are we in this whole matter? If the Russians have 1,000 planes, one strategist suggests; that at least two thirds would get through. In the last war they were lucky to get 10 per cent through. But let us suppose that even with the much better bombers they have today and with the defence that is put up, 50 per cent get through. On this basis, in an all-out nuclear war, that would be enough to completely annihilate every single person on the North American continent.


I think the problem is that we must have some idea of what this danger is. I humbly appeal to the Minister of National Defence and to his department to tell the Canadian people just exactly what the threat is. What I am concerned about is the tremendous amount of propaganda that is coming out -I will not say it is from the Pentagon-to the effect that we can survive a nuclear war. Yet it has been suggested by the strategist whom I have quoted that there is no such possibility, no matter what kind of shelter we have or what emergency measures organization.
Perhaps I will be accused-and I hope that this will not be the case-of being childish and trying to scare people. I do not think this is the point at all. In a democracy I think if a danger exists we should have the truth. If it is suggested that the people cannot be told the truth because they would lose their compulsion or desire to fight, then I suggest that democracy has lost before the first missile has been launched.
I hope the minister will answer a few of these questions I have in this regard. To what extent is Russia armed with missiles that may be delivered by ICBM or by submarine? Perhaps along with that question I might ask this one, and here again I realize we are not trying to fight Russia by ourselves. Assuming the Russian determination, resources and technological skill which are quite evident from their research into space, how many years, will it be before they have enough missiles so they will be able to foresake bombers completely, and before the Bomarcs and other material we are using will be completely out of date? Can he give us any information in this area?


Douglas Scott Harkness: First of all, the hon. member said he wanted the truth. I should like to emphasize the fact that every statement I make in regard to this matter is truthful as far as the facts at my disposal are concerned. I would not think of telling the hon. member or the Canadian public as a whole anything but the truth in regard to these matters.
The general situation is this. We know that the Russians possess a very considerable number of nuclear weapons. We know they have a large fleet of submarines. We believe they perhaps have some submarines that are capable of firing nuclear tipped missiles. As I say, we believe this is probably the situation; of course we do not know the order of battle of the entire Russian army, navy and air force. We naturally receive some intelligence reports in connection with this. I think the hon. member will realize, however, that it would not be in the interests of

this country to state what the various intelligence estimates are from time to time as to Russian capabilities in certain of these things.
The statement I have made on several occasions previously and which I should like to repeat is that as far as air attack on this continent is concerned, we believe, and we think we have good reason for believing, that the number of intercontinental missiles which the Russians have and which would be available for delivery on this continent is quite limited. On the other hand, they have a very large fleet of both medium and long range bombers. Therefore in the event of a full scale nuclear war the appreciation is that the main weight of the attack would be delivered by these bombers.
The hon. member has said that, of course, in the last war a considerable number of bombers always got through. I said two days ago, I think, in this debate that naturally you cannot have a perfect defence against bombers or, as far as that goes, against almost anything else. But if your defence is sufficiently strong, that in itself constitutes a very strong deterrent to the use of these bombers, missiles or anything else. In other words, if we have sufficiently strong forces in the western world we thereby, in my view at least, greatly diminish the chances of attack. This is really the basis and the theory upon which the NATO alliance has been working, that if we maintain sufficiently strong forces, both nuclear and conventional, the chance of war is very much diminished because it would result in mutual destruction.
I do not think I can answer the hon. member's questions any better than that. I do not know if this is what he was trying to get at, but this is the situation as we see it.


Walter George Pitman: Mr. Chairman, first I wish to thank the Leader of the Opposition for giving way a moment ago; I have to leave the committee in a moment. I wish to make it very clear that in saying the Canadian people wanted the truth I was not implying that the minister was not telling the truth. I was simply seeking more information.
I understand that Russia is still producing aircraft such as the Bear, the Tupelov type 20 turbo-jet, the Bison and the Myasishchev turbo-jet. Do we have any idea how many of these aircraft they have? I fully appreciate the desire for security, but is there any reason for our not telling the Russians how much we know they have? Does the minister think these aircraft are really important strategically?
Since rising to my feet in this debate I think I have apologized for asking questions of this sort. In the blue book it is mentioned that the CF-100 is limited in its role. Would
Supply-National Defence the minister explain what is meant by that statement in the blue book? I think I am quoting it exactly.


Douglas Scott Harkness: The speed of the CF-100 is of course slow in comparison with modern, high speed jet aircraft. Therefore the CF-100 would not be able to catch the later models of Russian aircraft which fly at supersonic speeds. The only way in which the CF-100 could shoot down an airplane of that kind would be by catching it on a collision course, as it is called, when they were coming in toward each other. That is what we mean when we say its capabilities are limited.
Mr. pitman: Do the interceptor airplanes which have been purchased have the capability of intercepting the modern airplanes which the Russians have?


Douglas Scott Harkness: Yes.


Walter George Pitman: I am interested in knowing exactly how many bombers, flying simultaneously toward strategic air command bases, a Bomarc base could be expected to successfully down.


Douglas Scott Harkness: This is a matter about which I do not think there can be any definite answer. It would altogether depend upon how close together the airplanes were flying.


Mr. Hellyer:: And whether the Bomarc had an atomic warhead.


Douglas Scott Harkness: As the hon. member has interjected, and whether the Bomarc had a conventional or an atomic warhead, and many other factors.


Lionel Chevrier: And whether it was obsolete.


Walter George Pitman: My final question, Mr. Chairman, is this. What is the role at the moment of the mid-Canada and Pine Tree lines? Are they expected to pick up those airplanes missed by the D.E.W. line, are they for reporting later positions, or what is the major value of these rather expensive lines?


Douglas Scott Harkness: The Pine Tree line is what you might call the line which directs the Bomarcs and the interceptors. It is the line which is used to engage hostile aircraft coming in over Canada. The D.E.W. line, on the other hand, is a straight warning line to give warning of the coming of these aircraft. The mid-Canada line performs the same function.


Walter George Pitman: I have one other question before I resume my seat. How much of a self contained infantry battalion with all its ancillary arms and services could the air force transport in a single airlift at this time? How capable is the air force of carrying on United Nations operations in this respect?

Supply-National Defence


Douglas Scott Harkness: Mr. Chairman, I could give the committee a great many figures in this respect as to the number of miles flown, the number of trips of different distances, and so on. When the new Yukon long range transports come into operation by the end of this year, they will be capable of transporting a battalion, together with its equipment, at one time. We will have that capability when these transports come into operation by the end of the year. I do not want to convey the impression that we have it at the moment, because the Yukons are not all in operation yet.


Lester Bowles Pearson: The minister has made a plea for responsibility and accuracy in statements on this important matter, and I agree that this is of first importance. I find it difficult not to remind him of some statements which he himself has made and which contravene that principle, including his statement in Victoria as reported that the Arrow would have cost $15 million a plane.
I also wish to refer, because I think it should be corrected, to a statement which was made by the minister last evening and reported on page 8402 of Hansard with regard to Liberal policy on air defence and particularly continental air defence. The hon. gentleman said that the policy they have been stating since-"they" being the Liberal party, and "since" being last January-is that we do not need interceptors; we should have only a few airplanes for reconnaissance and identification purposes, but they should not shoot. The minister will have a hard time, I think, finding statements which I have made as the leader of this party since that time which would confirm that statement.
We have said that the number of interceptor squadrons, the number of continental air defence squadrons, should be reduced. I think I said it should be reduced to five or six squadrons. Well, the government itself have done this. They are, I understand, disbanding four of the nine squadrons, so the continental air defence force in this country will consist of five squadrons instead of nine. I do not know whether or not the minister considers that number to be sufficient for the purpose; I do not know whether he considers that to be only a "few" airplanes, but the number has been reduced.
Then we have said that we should not try to deceive anybody, especially our own people, by saying that those squadrons, especially squadrons of CF-100's-because that is what we were talking about at that time- could do anything to protect this country against the kind of jet bomber which now faces us if there should be war; because those particular planes, however effective


they may have once been and however skilfully operated, could not intercept the latest jet bombers. The minister confirmed that this morning. So there would be no protection from planes of that kind. They are to be replaced now by a plane which is no longer in production in the United States but which, the minister says, will be effective for this purpose.
We have said, without trying to deceive our people as to what can be done that there should be five or six squadrons-and we shall now have five-of the latest type of planes for reconnaissance, identification, tracking and interception of isolated intruders, capable, if necessary, of dealing with them. This is the only effective role which can now be performed, as we see it, by the R.C.A.F. in this sphere. I am not talking about other important roles on which the R.C.A.F. should be employed.
Then the minister went on to attribute to us the statement that they should not fire. I have more than once in the last six months said that of course any planes being sent into the air for such a purpose would have to be armed, but that they should not be armed with nuclear weapons, because this would be too high a price to pay for bringing Canada into the nuclear club. That is our position on this matter. The minister has been talking about the threat which faces us, and so has the hon. member for Peterborough. The minister has reaffirmed this morning that the Arrow was too expensive a plane for the purpose we had in mind, and I agree with the hon. gentleman that it does not get us much further if we rethresh that old straw. But because I think it is of first importance in assessing this problem, together with what was done and what was not done to solve it, I put on record again the words of the then minister of national defence on February 23, 1959, as reported on page 1280 of Hansard, when he said:
It would therefore not seem to make sense for us to go ahead and develop an interceptor which would be ready by the end of 1961 and which could be in squadron operation by the end of 1962, to meet a threat which would hardly exist at that time.
"That time" is 1962. We are purchasing these planes, or at any rate we are acquiring them from the United States-planes which are new to us but which are out of production in the United States now-to meet a threat which the minister of defence told us some years ago would hardly exist in 1962. That is the position.
As the hon. member for Peterborough has said, we on this side do not know all the facts of the situation. We do not have the



IS, 1961

[Stage Direction]
information which is available to the minister. That is one of the handicaps under which we must labour, and we have had no defence committee this year which would enable us to ascertain such facts as were available. The minister said yesterday, and he has said many times, that this was our fault because we were given a chance to debate this subject. And so we were, about a year ago, or ten months or so ago. We were given it at a time when the Prime Minister could not be here, and on a short day. That was to be our debate on defence. The fact that we did not have a debate on defence that day is surely no answer to our criticism that since that time there should have been a committee set up to deal with these matters so that we might get all the facts which are available.
The hon. member for Peterborough asked about some of these things, including the nature of the threat which faces us from the air, the quantity and quality of the bombers and missiles which constitute that threat, and all the rest of it. The minister has said that for security reasons it would be improper for him to give us that information. Well, the hon. gentleman must be the judge of that. We do not quarrel with him on that point. Nobody wants to have information which would prejudice our security, though we do not need to apologize for asking questions. But I would remind the minister, and he must know this, that a great deal of this information is given in Washington including details, in so far as they have been ascertained, of the nature of the bomber threat which faces this continent. Any member of this committee can read chapter after chapter, blue book after blue book of evidence given, for instance, to the house committee on defence appropriations and get a great deal of detailed information which we do not have at our disposal in this chamber. If we did have that information perhaps we should be in a better position to discuss these questions.
I have some detailed questions which perhaps I could address to the minister at this time. They arise out of passages in the blue book which I have before me. I should like to ask what role will be performed in Europe by those four squadrons which are not being converted. The minister tells us that the CF-100 is not now capable of performing the role in continental defence which was given to it. Are the CF-100 squadrons, or they may be Sabre squadrons, capable of performing their role with NATO? Also, with respect to the F-104 aircraft for the new role of strike attack, is it a fact, as stated by experts, including General Foulkes-who of course is not responsible for government policy and is
Supply-National Defence not speaking in any official capacity when he now talks or writes-that the F-104 aircraft cannot perform effectively the role of strike attack without carrying what have been referred to, among others by the NATO commander, as baby nuclear bombs?
Douglas Scott Harkness: Mr. Chairman, the Leader of the Opposition made some complaint about the statement I made to the effect that the Liberal party had withdrawn from the position taken at their national meeting. I am very glad they have, as a matter of fact. According to the newspapers they adopted a resolution at that meeting which, in effect, urged that we should stop wasting our defence resources on interceptor fighter squadrons and on Bomarc missiles, that although the United States with its vast resources and world responsibilities might find these forms of defence necessary there was no reason for Canada participating in that role in these circumstances.


Lester Bowles Pearson: Yes.


Douglas Scott Harkness: The Liberal party went on record as being against having any fighter squadrons. As I stated, the Leader of the Opposition has since modified that position. I am glad he has modified it. I feel he has now adopted a much more realistic position.
The hon. member referred to a statement made two years ago or more by the former minister in connection with the diminishing bomber threat. Whatever might have been said by him at that time, the present situation is that we are confronted with a bomber threat. All western governments recognize that it exists and are taking measures to counter it. Despite what might have been said two years ago or more about anybody's appreciation of the situation at that time, it is at the present situation we must look.
I believe the Leader of the Opposition recognizes that the recent Moscow air show was a demonstration of the fact that the Russians have been continuing to build planes of modern design, contrary to what perhaps might have been thought two or three years ago, would be the situation. Actually the development of the so-called stand-off bomber, the air to surface missile carried by a bomber, has undoubtedly considerably prolonged the useful life of bombers. That is one reason that led to a considerable modification of the thinking of two or three years ago in regard to bombers.
The Leader of the Opposition wished to know about the role of the CF-100 in Europe, the four squadrons which are not being replaced by F-104's. SACEUR has requested that these squadrons remain there for at least two more years to meet an existing need. As far as the strike reconnaissance role of the

Supply-National Defence F-104 is concerned, both SACEUR and the NATO council have asked Canada to assume this role with respect to the eight squadrons presently armed with Sabre aircraft which are now to be rearmed with the F-104. We have met that request.
The Leader of the Opposition asked if they would not be useless in that role unless armed with nuclear weapons. I believe that was the purport of the hon. gentleman's question.


Lester Bowles Pearson: Yes.


Douglas Scott Harkness: That is not the case. They could be armed otherwise and be effective to some extent, but there is no question but that they would be much more effective if equipped with nuclear warheads, just as in the case of the Bomarc and other weapons systems which are capable of carrying nuclear warheads. I think this is not an arguable matter. If you have a conventional warhead which has a force of one, and a nuclear warhead of the same size which has a force of one hundred, the nuclear warhead will be very much more effective. That is a plain fact. The situation with respect to F-104's is that they would be much more effective and destructive weapons if armed with nuclear warheads rather than conventional rockets.


Lester Bowles Pearson: Mr. Chairman, may I thank the minister for the information he has given. He has stated, and undoubtedly it is a fact, that while the former minister of defence spoke in 1959 and said the bomber threat would not likely exist to any extent in 1962, that situation has changed. A major factor which led the government to the decision it made in regard to air defence in 1959 turned out to be wrong in that the bomber threat, according to the minister, does exist, and it exists in an aggravated form perhaps because of what the minister has called the stand-off bomber by which a missile can be carried and let loose on a target, we have been informed, up to 1,000 miles away.
There is a difference of opinion on that. The minister says that range is too high. The information we have received indicates that if it is not now the range, it will be shortly. This, of course, establishes an entirely different set of conditions for continental defence against the bomber. The threat comes no longer from the bomber but from the missile which is capable of being discharged from a bomber at a distance of from 400 to 1,000 miles away from the target.
Presumably the government has had to modify its policy to meet that changed situation, and modification is a good thing when conditions change. I wish to assure the minister, however, that this party has not


changed its policy with respect to continental defence, to which the minister made reference. We have not changed our minds. We should not be engaged in continental defence with the United States continental air defence command in a way which would necessitate Canada becoming a member of the nuclear club.
That, of course, applies both to interceptor squadrons and to the Bomarc missile. If it were felt on this side of the house that such weapons were absolutely essential for the protection of this country, this continent and the strategic air bases, that perhaps would not be too high a price to pay, although it would be very high. But this is not essential in our view, and therefore we should not be performing this role. While we would advocate a fighting role in the sense that the planes would be armed and in the sense that Canadians could not allow Americans to do the fighting and shooting for them, Canada's role should not be a fighting role, in the sense that the planes need not be armed with nuclear weapons; because we do not think that this would be necessary in view of the changing nature of the threat; if such a threat is going to make Bomarcs and other weapons of that kind ineffective very shortly if they are not ineffective now.
That is the situation, and we have not modified our stand in that regard. I have made it quite clear, however, that we think the squadrons the R.C.A.F. should have should be the most effective and efficient that can be secured in terms of equipment, and they certainly should be in a position to defend themselves.
With respect to another question I directed to him, the minister said that while the F-104 could perform a role without what are described as baby nuclear bombs, that role would not be of maximum effectiveness without such nuclear weapons, and we can leave it at that.


Douglas Scott Harkness: Mr. Chairman, in view of what the Leader of the Opposition has said about stand-off bombers, the size and range of the missiles which they might discharge and so on, and in view of what was said yesterday about them, I think I should quote an extract from page 12 of the testimony of the secretary of defence of the United States before the subcommittee of the committee on appropriations in April of 1961. This was his statement at that time:
Also under development Is a more advanced air to ground missile, the Skybolt. This is a solid fuel ballistic missile with a design range of about 1,000 miles. Whereas the B-52 can carry only two Hound Dog missiles, it would be able to carry four Skybolt missiles. The successful development of an effective Skybolt missile would offset the

expected increase in Soviet air defence capabilities by increasing the effective attack radius of a B-52 and the penetration capability of its weapons, as well as increasing its ability to launch stand-off attacks on multiple targets. However, the Skybolt is a costly project and presents some unusually complex development problems. Even if the development is successful, it would take several years to bring it to operational status.
The hon. member for Trinity contended yesterday that this missile was in existence or would exist shortly, but the fact is that it does not exist. As the United States secretary of defence says, it presents a very difficult development problem, and even if the development is successful it will be several years before it will be in operation.


Paul Theodore Hellyer: I thank the minister for that explanation. As he probably realizes, elsewhere in the same testimony it is indicated that the total SAGE-Bomarc system will not be in operation in its entirety for several years either, and the time lapse, if that is the proper term for it, is approximately the same in each case.
If I understood the minister correctly, he indicated that the bomber threat is more substantial than it was two or three years ago. He told us the night before last, I believe, that he did not say it was not diminishing, but this morning he gives the impression that the facts today are different from what they were then, and that as a result of the facts existing today the government should take some action to meet this threat even though earlier it was not considered to be required.
If the threat is greater today than was anticipated, why are the government only acquiring 66 planes, when earlier their appraisal was somewhat different even on the basis of their then belief that the bomber threat was not so great? As found on page 1281 of Hansard for February 23, 1959 the former minister had this to say:
We therefore concluded that the maximum number of aircraft that we would require to meet the threat would be approximately 100 ...
If the threat is greater now, or is interpreted by the government as being greater now, why will 66 planes do more work now than 100 planes were estimated to be able to accomplish at that time?


Douglas Scott Harkness: There is no magic in the figure 66 or in the figure 100 in connection with this particular matter. The important point is that with the "Sageing" of the whole NORAD system, which incidentally will be completed in 1963, the means of employing the Bomarc chain and the interceptors of both the United States and Canada is very greatly improved, and therefore the capability of the whole system is much higher than it was two
Supply-National Defence years ago or three years ago. It has been constantly improved every year, in fact, and the ability of the system both to detect and then to direct on hostile intruders either Bomarc missiles or interceptor planes has been getting better and better all the time.
Therefore, as I say, there is no particular magic in 66 planes or 100 planes. You have an integrated system making use of the air defence command of Canada and the air defence command of the United States under the operational control of NORAD, and with constantly improving methods of employing those forces in order to destroy intruder aircraft.


Paul Theodore Hellyer: With respect to the cost of operating the Pine Tree line, the minister told us this morning that the committee would have to accept the figures prepared by responsible officials of the Department of National Defence. Can the minister explain the discrepancy between the figures prepared by responsible officials of the Department of National Defence on a previous occasion and those given to the committee this morning?


Douglas Scott Harkness: I do not know what previous occasion is referred to, Mr. Chairman.


Paul Theodore Hellyer: I am referring to the time his predecessor gave figures to the committee on defence expenditures, which presumably were also prepared by_ responsible officials of the Department of National Defence.


Douglas Scott Harkness: I think where the confusion exists with regard to this matter perhaps lies in the fact that General Pearkes quoted a figure of $43 million which, to begin with, included $5 million for equipment to be purchased in Canada. This equipment was new radars. Therefore the actual cost of operation and maintenance was $38 million. However, the $38 million covered not only those radars but also the radars in Newfoundland, the gap fillers and so forth, the nine group one radars and all their associated gap fillers. They were not included in the 11 that we have taken over and the five which we have been manning already, and for which we have assumed financial responsibility.


Paul Theodore Hellyer: Can the minister say who is paying for the new heavy radars that are being built?


Douglas Scott Harkness: This is part of a general cost sharing program of one third to Canada and two thirds to the United States. We are doing the construction as our contribution to the cost.


Frank Howard: Mr. Chairman, I have listened with great interest to the discussion so far this morning, and have attempted to follow

Supply-National Defence the minister's comments and statements. In order to have the matter clear perhaps I might give my understanding of his reasoning, and if I am in error in my interpretation of what he said he can correct me.
With respect to the use of the Bomarc, the Voodoo or CF-104 as I believe it is to be called, and perhaps even the Honest John surface to surface missile, I understood him to say that the greatest deterrent that exists to a war being started or visited upon us by enemy forces is if we have a sufficiently strong defence, and that the stronger our defence the greater is the deterrent to attack from other countries. If that is a correct understanding of what the minister said-


Douglas Scott Harkness: It is the retaliatory forces.


Frank Howard: This is what I want to get clear. It would seem to me that our defence and the deterrent is not the Bomarc, the rifle or the Honest John or any other kind of small, tactical weapon of that sort. The deterrent, as the minister has just stated, is the threat of retaliation, which is not something that Canada has. As I understand it, this threat of retaliation rests primarily at the moment in the United States strategic air command. The defence is really one of threatening to bomb the enemy country and do as much damage or more damage than the enemy expects he will be able to do to this country.
If that is a correct understanding, and I thought I had it correctly, then it seems to me that in view of what the minister told us on Wednesday, that NATO is and in fact has been since 1954 a nuclear element, operating on somewhat the same principle of retaliation as a defence more than anything else, Canada really is part of the nuclear club in NATO. It would seem to me that Canada is already part of the nuclear forces on the North American continent, whether or not we have such weapons in the hands of Canadian troops and on Canadian soil. It would seem to me that following this, whether we are in possession of the Bomarc with nuclear warheads or without them, or the Honest John or any other type of rocket with or without nuclear warheads, it really does not matter very much so far as being a deterrent to attack is concerned, because the deterrent rests not in our hands but in the hands of the United States strategic air command.
This is what makes incomprehensible to me the recent statement by the Leader of the Opposition that the acquiring of nuclear warheads by Canada is almost too high a price to pay, regardless of the circumstances, for some sort of defence. The defence rests in the possession by the United States of nuclear


and thermonuclear bombs and in the threat of retaliation, the threat of destruction to other countries. It seems to me that following from that Canada is in precisely the same position on the North American continent as we are in Europe with the NATO forces; that is, that we are already a part of the nuclear club whether we like it or not, and whether or not we have nuclear warheads on Canadian soil attached to Bomarcs or anything else is relatively inconsequential.
The point in so far as the deterrent is concerned is that it is not our deterrent, it is not Canada that is threatening retaliation. The only deterrent that exists, as the minister has said, is in United States miltiary forces that are threatening this sort of retaliation. This is the only defence which exists and is the greatest deterrent to attack. I think we can assume that the same situation applies to the Soviet union. This is substantially their defence or offence policy, whichever way you want to classify it. Any other nation that comes, by its own right or through development, into possession of nuclear weapons will fall into almost the same category.
It would seem to me that the very moment we endorsed the NORAD treaty, which was supported by the Liberal party in this house, we in fact joined the North American nuclear club. Those are forces in the control of or under the domination of the nuclear deterrent in the United States. This makes me wonder even more whether the minister and the Liberal party when they were in office- because the development of the nuclear deterrent was in process then, and it was during their term of office that NATO followed nuclear strategy and the NORAD agreement was spawned and finally came to fruition- were telling a completely factual story of Canada's position in so far as North American defence is concerned. I think it would be much more in keeping with our sense of responsibility to the electorate if the government would make a clear, definite statement as to just precisely where Canada stands.
It is my interpretation, following from what the minister has said and in this I may be incorrect, that Canada is in fact a participant in a nuclear agency, NATO. If that is the case, and I take it that it is, it seems to me also that Canada is a participant in another nuclear agency, namely that of the United States, primarily through our participation in NORAD. If these are the facts then they should be stated clearly to the Canadian public. There should not be any of this nonsense, and I term it nonsense in retrospect, of people in high places in this government talking about no nuclear weapons in the hands of Canadian troops; no nuclear weapons on Canadian soil, then changing



[Stage Direction]
later to say that there might be, depending on what arrangements we can work out with the United States and depending on what congress does with certain laws that exist down there. In my opinion this is all just a lot of double talk on the part of the government. If my interpretation is not correct, then I should like the minister to straighten it out.
Stated again, not for repetition only but just so it is clear, it is my understanding following upon what the minister stated that Canada really has no defence in terms of being a deterrent to attack; that that sort of defence of deterrence and prevention of invasion or attack by another country rests on the retaliatory force of the United States, primarily their bomber squadrons in the strategic air command; that Canada, particularly as a participant in NORAD, is in almost the same boat as she is in NATO, and that is that we are participants in a nuclear agency because we have in fact joined forces with the United States and its military forces.
If my interpretation is incorrect, I should like to have the minister clear it up. If it is correct, then I think a clear, unequivocal statement should be made to the Canadian public so we are not led down the garden path by the Prime Minister or anybody else talking about "no nuclear weapons on Canadian soil as long as I am Prime Minister", and all this other business.
Douglas Scott Harkness: First of all, the Prime Minister has never made any statement along that line. I do not think the hon. member should be making allegations of that kind without producing any proof of them whatever. I certainly have never seen or heard of any declaration along that line by the Prime Minister at any time.
I should like to make it clear that the deterrent consists of several elements. The deterrent is not merely the nuclear capability of the strategic air command of the United States, their intercontinental ballistic missiles, their Polaris submarines and the V-bomber force of Great Britain. These are the nuclear parts of the deterrent. They are the part of the deterrent which would respond to or retaliate or actually deliver nuclear weapons to Russian territory if the Russians attacked us. But the deterrent is made up of much more than that. It consists of all the defensive air measures which we take in order to ensure that as few as possible enemy bombers would be able to reach targets in the NATO countries. It consists also of all of the conventional forces. It consists of all the naval forces. In other words the entire military forces of the western world constitute the deterrent, not just the one part of them which would be used to drop bombs. It is an
Supply-National Defence integrated whole. The greater the strength of the armed forces as a whole, the greater the deterrent power we have and the more unlikely it is that the Russians would start a war.
That is the basic situation as far as the deterrent is concerned. You cannot isolate one part only and say it is the deterrent. If you had the SAC air force and some intercontinental ballistic missiles only and had no conventional forces to protect them, and no interceptor aircraft, radar warning lines and so forth, they would not last very long and they would not constitute very much of a deterrent. Actually the deterrent is not only what you have in peacetime but what the enemy think you will have left after he actually attacks you. This is where the striking part of the deterrent becomes so important.
The hon. member said that we had placed our forces under the control of the United States by entering into the NORAD agreement. As I have made clear in this debate and on many other occasions, this is not the case. The NORAD agreement was a means of co-ordinating the air defence command of Canada and the air defence command of the United States in order to get the quickest possible reaction time to any threat. In the event of attack it provided for operational control of these defence forces by a co-ordinated headquarters in which the commander is a United States general and the second in command is a Canadian air marshal. When the commander, General Kuter, is away from the Colorado Springs headquarters, as he is quite frequently, Air Marshal Slemon is in full command of the NORAD operation.
No control of Canadian forces has been given to the United States by entering into this agreement. It is a mutual undertaking. As I say, command is exercised by officers of both countries. At the headquarters in Colorado Springs, as is realized by those who have been there, there are officers from both countries and they are doing all kinds of different jobs. It is a fully integrated headquarters, with no distinction being made whether it is a Canadian in a particular job or whether it is an American. There is a good deal of changing around in the jobs from time to time as people's tours of duty come to an end and other people replace them.
I think the Prime Minister and I myself have been quite clear and quite plain in stating what is the position of Canada in connection with NATO, the NORAD agreement and the defence situation generally. I therefore think there is no justification for any allegations of double talk on the part of the government with regard to these matters. These are serious matters. I have made every effort to try to keep the public
8422	HOUSE OF
Supply-National Defence informed as well as I could as to what the situation was, at least as I saw it.


Mr. Maiheson:: I wonder whether I could ask of the minister a very short question arising out of a story appearing in the London Times of September 9. Under date of September 8 from Ottawa the correspondent of the Times says this:
But what is particularly in people's minds here now is whether Canada will be forced to accept nuclear warheads for her Bomarc missile weapons in Ontario and Quebec . ..
I wonder whether I might respectfully ask the minister if he could give us an answer and call it one o'clock, or perhaps he has an immediate answer?


Douglas Scott Harkness: I presume this is an article by some correspondent, Mr. Chairman. I do not know what answer I can give to it. This is speculation. I can see no answer that I can give to speculation on the part of a correspondent of the London Times.


John Whitney Pickersgill: Before you call it one o'clock, Mr. Chairman, perhaps I could ask the minister one question to which he may reply after one o'clock or perhaps immediately, as it is a very simple and direct one. Can the minister tell us whether there is in existence, awaiting signature by the government of Canada, a draft agreement for the joint control of nuclear weapons?


Douglas Scott Harkness: I am sorry to disappoint the curiosity of the hon. member.


Some hon. Members:: Carried.


The Deputy Chairman:: Shall vote 239 carry?


Paul Theodore Hellyer: No, Mr. Chairman. Would you be willing to call it one o'clock, or would you prefer another question at this time?
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Gordon Campbell Chown: Order. Shall vote 239 carry?


Paul Theodore Hellyer: Mr. Chairman, would the minister indicate whether the department did try to obtain an off-the-shelf price for the Voodoo aircraft, and if so, how much was it? Was it a cash price?


Douglas Scott Harkness: Mr. Chairman, we did not ask for any off-the-shelf price in regard to this airplane. The cost of the airplane to the United States government was in the neighbourhood of $1.6 million a copy, I believe. That was a fly away price, without any spares, supporting equipment and so forth.


Paul Theodore Hellyer: Could the minister say with what missile the Voodoo will be equipped?


Douglas Scott Harkness: The Falcon missile.


Paul Theodore Hellyer: Will that be the only missile it will carry?


Douglas Scott Harkness: No, the Voodoo can carry another type of missile, the MB-1, which is a nuclear weapon. The Falcon is a conventional warhead weapon.


Paul Theodore Hellyer: Will it carry the Sidewinder as well as the Falcon?


Douglas Scott Harkness: No.


Paul Theodore Hellyer: Will the hardware on the airplane be such that it will take the MB-1?


Douglas Scott Harkness: That is what I said a minute ago. It can carry the MB-1 as well as the Falcon.


Paul Theodore Hellyer: And that hardware will be on the airplanes which the R.C.A.F. is securing?


Douglas Scott Harkness: We are securing Falcons for the airplanes.


Paul Theodore Hellyer: I think the minister understood what I was asking for. That was, whether or not the attachments from which the other missile would be launched would be on the airplane as procured.


Douglas Scott Harkness: Yes. Perhaps I might explain that these missiles are launched from the airplane on a sort of table which can be turned. On one side are the attachments for the Falcon and on the other side are the attachments for the MB-1.


Mr. Garland:: Mr. Chairman, I wonder if I might bring a matter to the attention of the minister very briefly, and perhaps down from the high level of international commitments to the level of the local taxpayer, and specifically the taxpayer in my district.
The problem arises from the defence installations now being constructed in our area; in particular, SAGE at the Trout lake site. Early last year there was an announcement, as a committee will recall, that 200 homes would be built in that area to accommodate personnel at this military installation.
Some discussions have taken place among the local municipality, the local school board and the minister's department. I have here a letter dated May 19 this year from the chief of air staff to Mr. A. J. Norman, business administrator for the township school area of Widdifield. One passage of this letter reads as follows:
On the basis of 200 additional homes this could mean a requirement for Widdifield township to accommodate 340 elementary pupils-
The letter then goes on to deal with high school pupils, etc. The situation is that our

municipality, like other municipalities, is very heavily burdened, particularly in the field of providing facilities for education. To point up the problem, last year when we were examining the estimates of the Department of Public Works the minister indicated, as reported at page 6853 of Hansard for June 21, that the total housing requirement would be 575 units. On the basis of the figures of the Department of National Defence this would indicate a requirement for accommodation for almost 1,000 students at the elementary school level. The department is using-I was going to say "hiding behind"-the contention that the responsibility rests upon the local authority. Here again I should like to quote these words from a further letter from the chief of the air staff to the business administrator in the area:
However, as the proposed 200 additional housing units will not be constructed on federal property, the financing of providing and maintaining any additional school facilities for the occupants of those units is regarded by this headquarters as the responsibility of the municipality or township, in exactly the same manner as for other new civilian property ratepayers not necessarily employed by the R.C.A.F.
This is all very fine, and the department can retreat behind regulations of this type but, surely, the wise administration of any department calls for a high degree of common sense. Surely, in the light of the developments which are taking place in the area there is need for a further look at situations of this kind. As I said, we have been pursuing this subject with the department. My purpose in bringing the matter to the minister's attention today is to soften him up, because this problem will have to be met. The construction of 200 homes was announced last year. A second announcement later in the year spoke of 575 homes. The minister will correct me if I am wrong, but I believe current plans call for something in the order of 350 homes, 100 of which may be out for tender this month. There is another group off the station property itself and a further, third, block making up a total of some 350 homes which will probably be occupied by the end of 1962. Without pursuing the matter further here and delaying the committee, may I say that I hope the minister can tell us the exact requirements of the department as far as housing in this area is concerned and give us some assurance that representatives of his department will meet with our board to deal with this important problem.


Douglas Scott Harkness: Two types of housing are being referred to here. The first concerns the houses on the station itself and, of course, we have provided a school and are looking after the education of the children occupying those
Supply-National Defence houses. Then there are the houses being built in the town under a rental housing agreement just as there are low cost housing developments in various other cities across the country under the central mortgage and housing corporation. The houses which are being built in the town are being built so that they may be rented to the people who will be working at this station. They are in the same category as houses built for rental in other places. Taxes will be paid with respect to them, and these taxes contribute to the upkeep of the local schools and other facilities. As a result, the children of the people who live in the houses are entitled to go to the local schools.


John Richard Garland: So that there may be no misunderstanding about this, let me say that what the minister has told the committee is correct as far as it goes. But only a small portion of the homes to be built in the area is being built on national defence property. The great bulk of them will be built in the small local municipality, which has just completed an extensive program of providing new school accommodation and which may now be faced, according to the figures which are available, with the cost of providing school accommodation for a thousand additional students. I hope the minister will bear this in mind because the situation cannot be passed off as being the same as a situation arising from a housing development of any other kind. This burden has been dropped in our laps to accommodate the people who are to be absorbed by this defence installation. Some consideration will have to be given to assisting in the provision of the capital cost of providing these facilities and I hope the minister will bear that in mind when we pursue our representations in this regard.


Julia Verlyn (Judy) LaMarsh: There is one matter which I should like to raise with the minister. It was referred to me by a constituent, formerly a member of the R.C.A.F., who was stationed at the air station of St. Sylvestre, near Quebec city. I am not altogether familiar with the arrangements laid down for what are called non-public funds but I understand they are funds in the nature of canteen funds and the like. A number of projects are set up which give servicemen an opportunity to earn extra money and do interesting work in their leisure hours. I think that this is perhaps a good way of keeping the men interested and giving people associated with the service certain amenities which perhaps otherwise would not be available.
However, my informant advises me that in the air station at St. Sylvestre, which is one of the Pine Tree Stations, there is not only a

Supply-National Defence gas station where n.c.o.'s are employed full time to pump gas but also a grocery store where a flight sergeant, who is paid flight sergeant's pay, operates full time. I am also told that there is a snack bar and gift shop which, until recently, has been operating full time staffed by service personnel, in addition to a post office which was formerly operated by a civilian but which has recently been taken over by air force personnel. Most of these men, I am told, are skilled tradesmen in receipt of trade pay in addition to their regular pay and allowances as members of the air force but they are not performing air force duties, nor are they working at trades for which they receive extra remuneration.
My informant advises me that one of the reasons for this situation is that the chief administrative officer is in charge of the nonpublic funds and is responsible for detailing men from various sections to take jobs in connection with the non-public funds amenities available. This strikes me as being an improper practice. I cannot myself take responsibility for all these facts because I have not been in the area myself. However, my informant was stationed there and he tells me this has been going on for a protracted period. I should like the minister to tell us whether this is a proper practice or not, and how this situation has come into being. If it is not a proper practice perhaps he would have an inquiry made.


Mr, Harkness:: The regulations of the
R.C.A.F. in this regard are very strict. No R.C.A.F. personnel are to be employed in non-public fund operations in duty hours. If they are being employed, they are being improperly employed. I do not know what the situation is at this particular station at St. Sylvestre. I have never heard any complaints of this nature with regard to the station before, but I shall have an investigation made and see if there is any validity in these allegations.


Paul Theodore Hellyer: I wonder if the minister could tell us whether any of the CF-100 squadrons presently under air defence command will be retained in service or whether they will all be phased out as the Voodoo comes into service.


Douglas Scott Harkness: It is intended to retain some of the CF-lOO's in the electronic warfare school and for some other purposes, but not as interceptors.


Paul Theodore Hellyer: Not as complete squadrons?


Douglas Scott Harkness: No.


Paul Theodore Hellyer: The minister indicated this morning that the squadrons overseas equipped

with CF-lOO's would remain in service until the end of 1961 or 1962, I believe.


Douglas Scott Harkness: 1963.


Paul Theodore Hellyer: Could the minister say whether he has any plans to replace them at that time and, more particularly, with the F-101B?


Douglas Scott Harkness: No definite plans have been worked out as to what action might be taken to replace the CF-lOO's at that time.


Paul Theodore Hellyer: With respect to the F-104
could the minister say when the first squad-dons will be posted overseas?


Douglas Scott Harkness: In November of 1962.


Paul Theodore Hellyer: Have arrangements yet been worked out with the government of France for their operation from French air bases in the event they are equipped with atomic arms?


Douglas Scott Harkness: No, Mr. Chairman.


Mr. Carter:: Mr. Chairman, I was waiting for the appropriate item to be called but since I have been given the floor I should like to say a few words in praise of the R.C.A.F. While attending the war memorial celebrations in France last July I had an opportunity to make a brief visit to the air base at Marville. I was very much impressed by the way this unit was being run. I am sure the people of Canada have every reason to be proud of the R.C.A.F. units which are representing Canada overseas.
We were conveyed back and forth by the R.C.A.F. jet transport. At this point I should also like to say a few words of appreciation of that unit. We were treated with the utmost courtesy and consideration and were provided a meal in transit which compares very favourably with meals provided on commercial aircraft. When we reached the end of our journey we were provided with a card on which we were asked to note our suggestions concerning improvement of the service and I was unable to think of any way in which it could be improved.


Paul Theodore Hellyer: Mr. Chairman, I should like to join with my hon. friend in that tribute. We have an air force second to none. It is too bad that it has had to go so long since the proud days of 1955 and 1956 without new equipment. We also regret, as said before, that it is undertaking a new role of strike reconnaissance rather than having ground support fighter aircraft to back up the Canadian troops there.
Could the minister say what types of helicopter are being obtained by the air force and what they have available in Europe for support of the army when required?


Douglas Scott Harkness: The R.C.A.F. is obtaining some Vertol helicopters. This is a medium to heavy helicopter which will be used, particularly in Canada, for search and rescue. They are obtaining also, of course, some light helicopters.


Paul Theodore Hellyer: Is the Vertol the twin rotor helicopter that looks like an inverted banana?


Douglas Scott Harkness: It is the Vertol-107. I cannot say anything with respect to the description of an inverted banana. I think most helicopters look somewhat like that.


Paul Theodore Hellyer: Could the minister indicate the type of light helicopter the air force is obtaining? Is it the same one the army is receiving?


Douglas Scott Harkness: Yes.


John Richard Garland: Could the minister tell the committee if the figures concerning the completion of homes used in the schedule to which I referred are in agreement with the latest figures he has available? I purposely delayed pursuing that to give the officials an opportunity to check it.


Douglas Scott Harkness: I have not yet received those figures but I shall give them to the hon. member in a few moments.


Paul Theodore Hellyer: The minister indicated earlier today that most of the air transport aircraft would be in service by the end of this calendar year. Can the minister say how many of those currently on order will be available by then, if any?


Douglas Scott Harkness: The Yukons have all been delivered. They are undergoing flight testing and so on. I believe I said that they would be in full operation or full squadron use by the end of the year.


Paul Theodore Hellyer: Has the minister any plans to augment the transport command beyond those presently funded?


Douglas Scott Harkness: We have some projected plans but nothing has been definitely authorized so far. Of course, the retention of the North Stars in service which was announced this week means that the whole transport capability of the R.C.A.F. is now very much greater and will continue much greater than it has ever been before.


Paul Theodore Hellyer: Will the minister explain to the committee how the Caribou aircraft which was purchased in haste and delivered under such pressure by the de Havilland aircraft company for use in the Congo wound up in the Gaza strip?


Douglas Scott Harkness: All I can say is that in the final analysis it was decided they were not
Supply-National Defence needed in the Congo and the United Nations wanted them in the Gaza strip.


Paul Theodore Hellyer: Can the minister say whether any Canadian minister wrote the Secretary General of the United Nations asking that the Caribou be used only by Canadian troops and received the reply that that was not a condition satisfactory to the United Nations?


Douglas Scott Harkness: I cannot say that, no.


Paul Theodore Hellyer: Now that the Prime Minister has entered the chamber perhaps I could address this question to him. Can the Prime Minister say whether any representations were made on behalf of Canada to the United Nations that, first, the Caribou aircraft be used only by Canadian troops in the Congo or, second, that Canadian troops be given a preference in their use over other troops, and was this condition rejected by the United Nations? Is that the reason the Caribou aircraft were not used in the Congo by the United Nations forces?


John George Diefenbaker: Mr. Chairman, I cannot add anything to what has already been placed before the committee by the Minister of National Defence.


Paul Theodore Hellyer: Can the Minister of National Defence explain then why he would require employees from an aircraft company to give up the week which had been set apart for their holidays and to rush back to the aircraft factory to deliver aircraft which sat on the ramps at Trenton for weeks or months before they were used for anything?


Douglas Scott Harkness: All I can say is that the situation in the Congo, as all hon. gentlemen opposite are well aware, has been changing very rapidly from week to week and in some cases, in fact, from day to day.


Lester Bowles Pearson: It is a fact then, is it, that the Canadian government made no representations to the United Nations with regard to the use of this particular aircraft?


Douglas Scott Harkness: Well, Mr. Chairman, if any representations were made they were not made by me.


Paul Theodore Hellyer: I think that is correct. Perhaps the minister would not care to disclose whom they were made by-


Douglas Scott Harkness: I did not say they were made. I said that as far as I am concerned none was made.


Paul Theodore Hellyer: I said I believed that. Would the minister indicate why, at a time when we are under such pressure and tension and it is the policy of the government to expand the auxiliary forces and to train 100,000 new men for civil survival purposes, it is also

Supply-National Defence the policy of the Department of National Defence to disband existing auxiliary squadrons of the R.C.A.F. which, although they have had a different function in the past, might conceivably be converted to carry out some useful civil survival role?


Douglas Scott Harkness: The R.C.A.F. auxiliary squadrons, the disbandment of which was decided upon over a year ago and which has been going on for some considerable time, were aircraft warning and control squadrons whose function had disappeared. There was no other function that could be assigned to them at the present time and therefore in the interests of efficiency and economy the only thing that we really could do was to disband them. We were very regretful about having to disband these squadrons but there was really no function that could be given to them which would have added to the defence strength of the country. That was why, very regretfully, the decision was arrived at to disband them.


Paul Theodore Hellyer: On the basis of this theory of efficiency and economy, would the minister explain why one branch of the armed services is discharging people and disbanding units at the same time that other branches of the armed services are recruiting and training for other roles? Presumably there might be a possibility of retraining or readaptation.


Douglas Scott Harkness: All I can say is that we would be very glad to welcome all of the members of the squadrons being disbanded into the survival operations and the militia who are carrying out that role. The point is that the survival role in Canada has been given to the army and the militia is carrying a large part of the load in that regard. It is for that reason that we are giving special militia survival training to 100,000 men in order to increase the number of men available with training in survival operations. It would not be a reasonable proposition to be trying to give some sort of role to an air force squadron here, there or some place else when these squadons operate in a completely different manner.


Paul Theodore Hellyer: Apparently the minister has not achieved that state of integration yet in the Department of National Defence under which men can be transferred from role to role as required.


Douglas Scott Harkness: As I said, these men can transfer quite readily into the militia units. We would be glad to have them.


Paul Theodore Hellyer: The minister will recall that when the BMEWS was first put into operation an alleged false alarm was reported in the newspapers. Can the minister say whether there have been any recurrences of this

type of occupational hazard and can he give the committee any assurance that there are adequate precautions so that a general alarm would not result?


Douglas Scott Harkness: I think the short answer to that is that it was an alleged false alarm but it was not actually a false alarm.


Paul Theodore Hellyer: That was the exact phrase I used. I assume from the minister's answer that he is confident that a false alarm cannot in fact occur.


Douglas Scott Harkness: I am confident that it is extremely unlikely it will occur. Whether it is completely impossible for it to occur I am not competent to say. I feel quite certain, however, that no matter what the particular radars or recording screens might happen to show with regard to such an instance it would be well checked in other ways before any action was taken.


Paul Theodore Hellyer: Has the minister received any representations from Canadian personnel serving at Goose Bay in respect of the allegation that they are required to use other than Canadian legal tender to make purchases at the United States air force base there?


Douglas Scott Harkness: I have no information on that.


Paul Theodore Hellyer: Would the minister agree to look into that situation? I have received representations to the effect that since the Canadian dollar was devalued payment not only at the PX but other local stores is required to be made in United States funds and the Canadian civilians feel that this is an infringement of their rights and probably of their pride and pocketbooks as well. Would the minister undertake to investigate and see if the situation can be corrected?


Douglas Scott Harkness: Yes, I will be glad to.


Lester Bowles Pearson: Mr. Chairman, the minister knows, of course, that the situation in France with regard to the use of French bases for American air equipment with nuclear weapons is such that these bases are not now available to the United States air force. Has there been any indication of a change in that situation that he may know about and has he any reason to believe that the French government will adopt a different position with respect to the Canadian air force if that air force should be equipped with nuclear weapons?


Douglas Scott Harkness: I am not aware of any change in that position except that I noted in the newspapers the other day that some French units were going to be trained by the Americans in the use of nuclear weapons. This might well portend a change but I do not know.

With regard to the number of rental units and housing units generally at North Bay, may I say to the hon. member for Nipissing that there are under consideration 100 permanent married quarters for the station. Two hundred rental units have been approved and a further 200 rental units are under consideration.


Chesley William Carter: I should like to ask the minister to clarify the statement he just made in reply to the question about an alarm. The impression I got from listening to the minister's reply was that it was a genuine alarm and if that was not the case I think it should be made quite clear on Hansard.


Douglas Scott Harkness: The actual situation was that the system was really under test at the time. It had not been taken into full operational use. They began to get reflections from the moon, I believe it was, and this information was of course passed down the line. The way it was portrayed in the newspapers, however, made it appear that it was interpreted as an actual attack and that it was just by a hair's breadth that retaliatory action was not ordered. All that part of the story was completely incorrect.


[Stage Direction]
Item agreed to.
Defence research and development-
Defence research board-
241. Operation and maintenance, $24,993,564.
Paul Theodore Hellyer: I should like, first of all, to reiterate what I have said on previous occasions that it is my opinion Canadians are very fortunate in obtaining from the defence research board probably more results for the dollars expended than any other people in the western world. The achievements of this board have been remarkable for the size of the group and the amount of money expended. I should like the minister to indicate whether or not the financial support they are receiving at the present time is greater than in the past or whether he plans to enlarge it and make sure that this extraordinarily fine group is given every possible support in its work.


Douglas Scott Harkness: The amount of money being voted, as is shown in the estimates book, is approximately the same this year as last year. There is no question about what the hon. member has said in regard to the achievements of the defence research board. They have done a remarkably fine job and they are a remarkably good group of scientists. This is an activity of which we can be proud. The board has made great contributions to the defence of this country and of the whole western world and is continuing to do so.
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Chesley William Carter: Mr. Chairman, I should like to join with my colleague, the hon. member for Trinity and the minister in paying tribute to the defence research board. I have always had a very special interest in research, particularly in scientific research. Looking back over the years, it seems that the time has come when we should take a good, hard look at our policy in regard to defence research. I have done a little homework in this connection, and I should like to place a few figures on the record. In the year 1950-51, the expenditures on research and development were $23.4 million; in 1951-52, they were $35.4 million; in 1952-53, approximately $43 million; in 1953-54, approximately $41 million; in 1954, approximately $50 million; in 1955, $64 million; in 1956, $69 million; in 1957, $78 million; in 1958, $74 million. Then, in 1959, the figure dropped to $39 million.
All the figures I have mentioned so far have been taken from the public accounts and they are the actual expenditures on research and development. The two figures I want to mention now are estimates taken from the blue book for last year and for the item that is before us at this moment. In 1960, we voted $44.7 million and this year we have in the estimates a vote of just over $45 million. It seems to me that these figures show that since 1958 there has been a significant drop in the amount of money we are allocating to research and development. If we look back over the figures we see there is a steady increase from the $23.4 million in 1950 up to $78 million in 1957, then $74 million in 1958, while in 1959 the figure drops to $39 million and last year and this year is around $45 million. If we add the amounts for the last two years together, we only get a little more than the average of what we have been spending.
It seems to me we are reducing our expenditures on research and development at the very time when we should be increasing them. If there was need to increase them from 1950 to 1958, surely since 1958, with the world situation steadily deteriorating and with an ever-increasing emphasis on scientific development, we cannot hope to keep abreast of the times if we are going to drastically reduce the amount of money we allocate for this purpose. It is all right to praise the achievements of our defence research board, but we cannot expect them to make bricks without straw.
I should like to point out to the minister that the dollars we are giving them today are depreciated dollars. The dollars we are giving them this year have 20 per cent less purchasing power than the dollars we gave them in 1950. We are giving them fewer dollars and a smaller dollar with which to

Supply-National Defence work. We cannot expect them to do credit to Canada or even to their own establishment if we are not going to provide them with the money to enable them to carry on this work.
The minister said in his statement, I think, that the activities of the defence research board would be co-ordinated with industry. I heartily agree with that policy. I think there should be even more co-ordination. I should like to see some authority set up to co-ordinate all research in Canada. We have so many departments now, and practically every department has some research being conducted. Whatever research we may do in defence will always have, for the most part I think, some application in industry. A country like Canada, so dependent upon export trade, certainly should be placing the greatest emphasis on research and development. We should be following the examples of little countries like Switzerland and Sweden who have developed products and techniques that have enabled them to compete with other countries to compensate for their small domestic market.
Let me cite one example, alloys. Alloys are of the utmost importance in defence, particularly with the new weapons and rockets that are coming into use every day. Alloys are of extreme importance in industry as well, in our construction industry and in practically every product of which we can think. I should like to see Canada specialize along certain lines. I understand we have been doing something with regard to equipment for northern climates and also with regard to electronics. It seems that we have been able to take a lead in the electronic research. I realize our resources perhaps are small. But surely here is an opportunity worth embracing. I urge the minister to take another look at this policy and to provide more funds for this extremely important work.


Douglas Scott Harkness: The amount of money spent in research has gone up steadily year by year. The hon. member has taken the two votes together or rather he has taken the two votes for research and then added to them the vote for development. If he will look at the table at the back of the blue book which has a comparison of the expenditures for fiscal years, he will see that, as far as the expenditures of the defence research board are concerned, they have gone up from $23.7 million in 1952-53, to $30.8 million-almost $31 million-estimated for this year, $27 million the year previous and so on. Underneath that is given the development vote and it is quite variable. In some years it showed a figure of $45 million, $53 million, $47 million and so forth. Most of that amount actually was on account of this albatross around our necks.
I refer to the Arrow. It was development work on the Arrow which amounted to these considerable expenditures during those years but it is not part of the research activities. This is development activity.
As far as a program with industry is concerned may I say this. In the speech I made in introducing the estimates I stated that a program of industrial support was being put into effect in conjunction with the Department of Defence Production but under the control of the defence research board. It is designed to do this very thing, namely to assist industry to develop new products and things of that kind.


Chesley William Carter: I thank the minister for the explanation he has given me. It is true that I lumped the two together as I wanted to look back over as many years as possible and I just did not have the time in which to separate out the two figures. However, before coming into the chamber I took the trouble to look at the public accounts for 1960. In that year we allocated $51 million for research and development but we actually spent only $39,183,481. The unspent money I want to point out was for development. We voted $21.5 million that year and actually spent $11.5 million. Hence there was $10.5 million left over. That pattern fairly well holds true for a good part of the period I covered in the figures. I do not know what the situation was last year. Perhaps the minister can tell us exactly what the expenditures were. In last year's blue book we estimated $44,696,364 for research and development. I wonder what the expenditure actually was?


Douglas Scott Harkness: Again, Mr. Chairman, I would have to request the hon. gentleman to separate research from development. They are not the same thing. As I stated, the amount spent on research has been going up steadily year by year whereas the amount spent on development has varied greatly from year to year. If you look at the breakdown of the figures, you will find that the amount spent on development has varied. One year it was $42 million and the next year it was $5 million. You cannot possibly lump these two things together and say it is the amount spent on research. It is not the amount spent on research. The research items are items 241 and 242. The development item is a separate item altogether, namely, item 243. Again in this table at the back of the blue book that was issued it is shown that in 1960-61 there was appropriated in the vote for the defence research board the amount of $31,080,000 and that they expended $30,863,000.


Chesley William Carter: May I have those figures given again?


Douglas Scott Harkness: Have you not a copy of this document? This is the national defence blue book which was issued several months ago.


Chesley William Carter: Oh, yes. I was wondering whether that information is taken from the public accounts figures. Is that taken from the public accounts figures?


Douglas Scott Harkness: No. The public accounts for this fiscal year about which we are talking-
I refer to 1960-61-are not out yet.


Chesley William Carter: I know that. That is why I could not get them; but would the figures be the same?


Douglas Scott Harkness: Yes; I think they would be approximately the same.


Chesley William Carter: There is just one point I wish to make. The minister has stated that there has been a steady increase in research and development-*


Douglas Scott Harkness: No; not development.


Chesley William Carter: All right; we will take it as being for research. He mentioned that in 1951 we were spending $23 million on research. In 1959-60 the total expenditure as given in the public accounts was $39,183,481.


Douglas Scott Harkness: I am sorry to interrupt the hon. member but once more he has research and development lumped together.


Chesley William Carter: I know that. I would ask the minister to allow me to finish. That is the total expenditure. If the minister will be patient for a minute or two I will explain what I mean. I am saying that of that amount of $39 million, roughly $11.5 million was spent on development which leaves approximately $27.5 million for research. Hence from 1951 up to 1960, we have gone up only from $23 million to approximately $27 million. I still maintain that is not a sufficient rate of increase for this important work. I think we should be spending two or three times as much as that having regard to the changing circumstances, the deterioration of the world situation and the increased emphasis on mechanical and technical research and development.


Douglas Scott Harkness: If the hon. gentleman will get this publication, if he has not already obtained it, and if he will consult it, he will see what the expenditures were each year from 1952-53 up to the present time. The actual expenditure for 1959-60 was $27,696,000 as far as research was concerned. The chief scientist on the board here just informs me that they have never yet been able to spend the whole amount of money appropriated because of the difficulty of getting the proper kind of people to carry on this experimental work. They are difficult to procure and there is always a shortage of them.
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Paul Theodore Hellyer: You have to pay them.


Chesley William Carter: I appreciate the minister's position and I thank him for his explanation. However, I hope he will see my point. My point is that the $27 million that we spent last year-


Douglas Scott Harkness: No; $30 million.


Chesley William Carter: -or in 1959-60, will only have the same dollar value or same dollar equivalent as the $23 million we spent in 1951 because the dollar has gone down in value by 2 per cent a year since then. That is just about 20 per cent. If you take 20 per cent off the figure of $27 million you are back to about the same figure as 1951. I think what we have been doing is keeping pace with the depreciation of the Canadian dollar.


Mr. McFarlar.e:: Just before this vote carries, Mr. Chairman, I wish to make a few remarks. I may be using the words "research" in a broad fashion, but I feel it would be advisable at this time for some research and re-assessment to be carried out with regard to the location of our major airports in British Columbia.
At the present time our major military installations in British Columbia are pretty well grouped along the coast. I should like to enter a plea to the minister to have some research carried out on the selection of sites in the interior of British Columbia. In the event that the airports or installations are wiped out on the coast, the next installations are apparently in Alberta, located at Calgary and Edmonton. There are several ideal locations in the interior of the province which are suitable for development and research.


Egan Chambers: On a point of order, Mr. Chairman, I regret to interrupt the hon. member, but this matter does not come under the defence research board. It is under the air force construction program, with which we have dealt at some length.


Murray Lincoln McFarlane: Then, Mr. Chairman, may I ask permission to revert to item 240 for about two minutes.


Gordon Campbell Chown: Does the committee give unanimous consent to allowing the hon. member to revert to the item which brings his contribution into relevance?


Mr. Churchill:: Provided it does not reopen the whole item for general debate. It is a most unusual procedure.


Gordon Campbell Chown: The committee has to give unanimous consent. Perhaps the hon. gentleman could make his remarks on some other occasion, unless there is unanimous consent.


[Stage Direction]
Item agreed to.
8430	HOUSE OF
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Mutual aid-
244. Contributions to infrastructure and military costs of the North Atlantic treaty organization and the transfer of defence equipment and supplies and the provision of services and facilities for defence purposes in accordance with section 3 of The Defence Appropriation Act, 1950, not exceeding a total of $40,798,000 including the present value of defence equipment or supplies or the cost of services made available by the Canadian forces estimated in the amount of $24,848,000 and provided by appropriations for those forces in the current and former years in respect of which, notwithstanding subsection (3) of section 3 of the said act, no amount shall be charged to this appropriation or paid into a special account; provided by this vote, $15,950,000.
Mr.   Carier@: Mr. Chairman, I thought it would be interesting to look back over the years not only with respect to expenditures on research and development but also on mutual aid. I wish to place on the record some figures I have taken from the public accounts and use them as a basis for some questions I should like to put to the minister later.
It was not easy to obtain these figures because we did not call it mutual aid in the beginning. The first time there was any allocation for this purpose was in 1951. That was tied up with the allocation for pensions, and the figure was around $144.5 million. In 1952 we allocated $235 million for special aid. Then $289.7 million in 1953 for NATO, and in 1954 we got around to calling it mutual aid.
In 1954 we allocated $253.4 million; in 1955 the figure was $175 million; in 1956, $133.5 million; in 1957, $118.5 million; in 1958 there was a drop down to $13.4 million, and in 1959 the expenditure was $18.4 million. These figures, again, have been taken from the public accounts of those years.
Last year in the estimates we allocated $14.8 million and this year we have before us another item of $15.9 million. Looking back over these figures we see there was a steady decrease from $235 million in 1952 down to $118 million in 1957. But in 1958 there was a very sharp decrease, from $118 million down to $13 million, and it has been around that average for every year since, with the exception of 1959, when the figure was around $18 million.
So for the last four years, 1958 to 1961, inclusive the figures only add up to about $62 million, which is a little less than half of the amount we spent in 1957. If we add all these figures together they total around $1.4 billion.
While I realize that the bulk of it has been spent on stock, equipment, parts and so forth, it does promote two questions in my mind. First, what has been the result of this contribution on the part of Canada over the past ten years? Second, on what basis have
[The Deputy Chairman.]

these figures been arrived at? Have these contributions been evaluated on the actual cost of the equipment we contributed, on the replacement cost or the depreciated cost, because I presume some of it was used. I do not expect the minister to give me the figures for the whole period, but I wonder whether he could tell the committee how much of this money, if any, was contributed in cash.
When we look at the sharp drop from $118 million in 1957 to $15 million or $16 million this year, the other question which comes to our minds is, what is the future of this mutual aid? Is it something that is going to be wound up and will disappear in the near future, or are there continuing commitments which will require a vote for a considerable time in the future?


Douglas Scott Harkness: Mr. Chairman, the hon. member mentioned the purpose of this vote, which was to build up the strength of our NATO partners in Europe. This is why there is a period when the expenditures under this item were quite heavy, since when they have gradually been cut down.
Once again looking at this comparison of expenditures by fiscal years in the blue book, as far as aircrew training is concerned, for example, the amount went from $104 million down to $71 million, $52 million, $51 million, $47 million, $26 million, $6 million, and then nothing. That is because during those years 1952 to 1958-59 we were carrying on the training of a considerable number of airmen from the various NATO countries of Europe. That phase is now over so those expenditures are no longer being made.
During the same period we were supplying a large amount of equipment to these people to build up their stocks. That phase of the program is over to a great extent. Where you see this big drop in 1958-59 of $70.7 million to $18.3 million in 1959-60, the $18.3 million figure represents all cash contributions, whereas from there over it was some cash but mostly equipment taken out of stocks, and so forth.
The hon. member wanted to know how these figures were arrived at. As far as new equipment given as mutual aid is concerned, the actual cost of it is the figure used. So far as used equipment is concerned, or equipment which has been in stock for a considerable time, it was the estimated present value which was used in most cases. In some cases the replacement cost was used. It would depend on the type of item it was and whether it was an item which would be replaced or not. As to the question whether this is coming to an end, the answer is, no. Actually, the $50 million which is being appropriated to

supply F-104's to the NATO countries is a further contribution on our part toward mutual aid.


Julia Verlyn (Judy) LaMarsh: Could the minister tell the committee what material, if any, is being supplied to Portugal under this vote?


Douglas Scott Harkness: There is none being sent to Portugal at the present time.


[Stage Direction]
Item agreed to.
National defence general-
245, To authorize, notwithstanding section 30 of the Financial Administration Act, and subject to allotment by the treasury board, total commitments of $2,674,046,619 for the purposes of the foregoing votes relating to national defence, regardless of the year in which such commitments will come in course of payment (of which it is estimated that $1,123,561,879 will come due for payment in future years), $1.
Paul Theodore Hellyer: This item is probably one of the most important in the whole of the estimates of the Department of National Defence because it authorizes the government to make defence commitments in respect to procurement outlined in the book of estimates. It is the item which sets the course, the item which sets the direction for the future. It is the item which, to a very large degree, controls the flexibility of future expenditure. It governs to a large extent the course of Canadian defence policy for years to come. As a consequence, I cannot let this item pass without going back to some of the cardinal issues which face us. These are: how can Canada best contribute to collective defence, and how can Canada best contribute to the preservation of peace. These are the issues. These are the questions which have to be asked, and these are the questions which have to be answered. The answers, of course, are not easy. The answers are profoundly difficult and there is considerable difference of opinion with respect to them.
Are atomic weapons necessary as part of Canada's contribution? That is a question on which there is certainly no unanimity. The Globe and Mail in what I consider to be a most thoughtful editorial dated September 14, 1961 entitled "The Nuclear Dilemma" breaks this fundamental question into its two logical parts: (1) Is it or is it not our duty to our allies to equip ourselves with atomic weapons in order to provide the best possible defence in our sector against attacks on SACEUR and (2) Do our obligations to NATO require us to go the whole way and accept warheads.
With regard to the former we have attempted to demonstrate that the measures now contemplated by the government make no significant contribution to the protection of SAC and make no significant contribution to the deterrent. The deterrent would be as strong without these measures as it would
Supply-National Defence be with them. It is our opinion therefore, as we have indicated during this debate, that it is not necessary to have two Bomarc squadrons nor is it necessary to arm our defence squadrons with nuclear warheads. This is a new situation. This, as we have said, was not true in the past but it is true now and it will be true in the future. In the past an effective defence against the bomber did, in fact, help to protect SAC, but in the missile age this situation no longer exists and the experience of the past has to be reassessed.
Our problem in Canada is complicated by the fact that we have limited resources. The way in which these resources could best be utilized depends to a large extent on the point of view of the man with whom you are talking. If you were talking to the commander in chief of NORAD you would find that he naturally takes the position that Canada's main burden of effort should be in respect to the air defence of the North American continent. If you were talking to the commander in chief of the Atlantic forces you would find he would think it advisable for Canada to increase her contribution to the naval forces in the Atlantic. Of course, if you talk to the commander in chief of the Atlantic and ask him who is responsible for air defence against missiles he would say "talk to the commander in chief, NORAD" and if you asked the commander in chief NORAD he would tell you that you had better talk to SACLANT. Similarly, if you talked to SACEUR no doubt you would be told that building up our strength as part of the NATO shield was the most important thing on the priority list. This situation is not unusual. Each service grudgingly admits a limited role for the others but emphasises that it has the essential role and must have the larger share of the total budget. Melding these widely diverse opinions, each put forward in good faith by sincere and competent officers is a difficult task. They cannot all be right.
The minister takes pride in the acquisition of the Bomarc and the Voodoo, alleging that they will make a significant contribution to defence. Well, an old pal of his whom he used to quote often in debates, disagrees with him. Major General W. H. S. Macklin, C.B.E. in an article entitled "What air power do we need?" has this to say:
Why, for instance, should not some of these squadrons be equipped with our own CL-44 transport which the Americans rejected? The 32 CL-44s that the government proposed to trade for Voodoos would contribute far more to the common defence of the western alliance than the Voodoos ever will.
We need other types of flexible air transport, too; planes that can operate without great concrete airfields, such as the famous Beaver, Otter, Caribou series, all made in Canada, and various types of load-lifting helicopter. It could never

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be argued that these sorts of aircraft will become obsolete as fast as they are issued. Good models last a long, long time.
There is, for instance, the reliable, if slow DC-3 still in use after over 20 years, and the North Star, which has been on the air force inventory, since 1947 or '48.
Lastly, we ought to have some aircraft that could intervene tactically in a land battle, without resort to the nuclear bombs that the Starflghter we are buying will need to be useful. We have had the R.C.A.F. for 37 years, but it is an astounding fact that never has our air force been able to act in battle with the Canadian army. The army got its air support in the second world war from the British and in Korea, from the United States.
What we require, in short, is an air force that can co-operate effectively with the other Canadian armed forces to carry out strategic decisions made in Ottawa.
Consider that for a dozen years we have trained and maintained a parachute force at staggering expense. But never, no, never, has the air force been able to lift it with its armament. Does this make sense?
We know neither the day nor the hour when some new crisis, like Korea, Suez, or Congo, or worse, may arise in Africa, Asia or elsewhere. It is Premier Khrushchev's stated intention to promote such crises.
The Air Force ought to have the strategic, long-range air lift that could get an armed force to the danger area with speed, and then keep it there, with or without great airfields in the theatre. And if the peace-preserving role of such a force should fail and war ensue, the air force should be able to fight, under the conditions imposed by the enemy and geography. We can rarely make war as we might like to.
In regard to the second question, as to whether our obligations to NATO require us to go the whole way and accept warheads, the minister and the Leader of the Opposition agreed that subject to certain conditions, the answer to that question might be yes. The Leader of the Opposition reiterated the position of the Liberal party. The first priority is to build up the conventional strength, to give it flexibility, to give it the capacity to withstand an onslaught, at least long enough for the decision to use nuclear arms to be made at the proper level, which is the political level, and in this case by the NATO alliance. Then, he said that as a second line only to be used when conventional forces failed or when found inadequate to meet a situation, should it arise, atomic warheads might be used by separate units, preferably units which are held in reserve for such a contingency. This is a point on which there is not too much disagreement between the Leader of the Opposition and the minister.
The minister's friend of yesterday does not even think that NATO should have nuclear arms. Mr. John Gellner in an article entitled: "Needed: A Revision of NATO Policy" states, in part, as follows:
As long as the pretence is kept up that nuclear weapons can compensate for deficiencies in men and material, those member countries of NATO which have been inclined to shirk their military responsibilities, anyway, will not be persuaded that

they must at long last start to pull their weight. As long as the dubious doctrine that nuclear weapons can be used in limited wars is adhered to, NATO will not be able to gather the conventional forces which it needs to deal with the kind of emergency with which it may be faced. Above all, unless a military policy is laid down which will put the weight equitably on, and make sense to, all the allies, NATO will remain largely ineffective, militarily. In that case, the alliance itself will be meaningless.
But the government seems to have made a decision contrary to Mr. Gellner's; at least by its actions the government seems to have made the decision, but by its words we are left in doubt. Has the government made a secret decision in respect to the use of atomic warheads? One might speculate on that. Or is the government in fact spending hundreds of millions of dollars on weapons it might not arm? Is it again this afternoon under this item seeking authority to commit this country to the advance expenditure of further hundreds of millions of dollars on weapons that reach their full potential only when armed with nuclear warheads while at the same time having no intention to use them? This is the question which has to be answered: Are we going to or are we not?
In the meantime the government's indecision is causing considerable embarrassment and concern both at home and apparently in NATO. John Gellner in an article entitled "New Hope in the Alliance" has this to say:
There Is another impression which a visiting Canadian gets at the headquarters of NATO, and it is not encouraging: The standing of Canada in the alliance seems to be less than it used to be. From having been instrumental in the founding of NATO, and a main driving force in it for many years, Canada has receded into the background, particularly politically-we have become "consumers of information" as a leading NATO representative politely put it.
The reason for this is that the present Canadian government obviously sets less store by NATO than by the United Nations-and is in this respect at variance with virtually all other allies who consider NATO a much more useful instrument of international policy than the U.N. Hon. Howard Green's statements at the ministerial meeting last December, and to a lesser degree in Oslo last May, have certainly been interpreted in that way. Canadian indecision on whether or not to adopt nuclear weapons also does not enhance Canada's prestige. Their adoption would be considered a logical consequence of our acceptance of NATO strategy, and more specifically of the "strike" role (involving attack with nuclear weapons) for the Royal Canadian Air Force air division in Europe. Their rejection, even though belated, would probably be understood. But our fence-sitting, just as our apparently lessened interest in the Atlantic alliance, merely act as a dampener on the currently soaring spirit in NATO.
What is the Canadian position with respect to nuclear arms? We do not know. The hon. member for Bonavista-Twillingate asked earlier this afternoon if there was in existence a draft agreement awaiting signature under

which Canada would be able to obtain nuclear warheads under joint control. The minister said he would not say whether there is or is not a draft agreement awaiting signature. If there was not one would guess that the minister would say so, but we are left to conclude that the document is in existence awaiting signature.


Douglas Scott Harkness: Mr. Chairman, I think the hon. member should not appear to be quoting me as having said anything in that vein. What I said to the hon. member for Bonavista-Twillingate was that I was not prepared to satisfy his curiosity on the subject.


Paul Theodore Hellyer: It will be unfortunate if this item carries and this debate concludes without the committee and the country receiving a clear statement of the government's policy. It is not a satisfactory situation.
May I say that in my opinion our present method of dealing with the subject of defence is quite inadequate. Under the parliamentary system parliament is responsible for the voting of funds and it is this process in which we are engaged at the present time. And yet, we do not have adequate information. Parliament and the people are not given the facts. I am not alleging that this is completely new under the present government. It is probably traditional under our system but it is more important now. It is more urgent because the subject of defence is much more complicated. It has at last become a matter of survival, a matter of life and death, even on the North American continent. As I said, the information given to parliament and the public is inadequate.
At one time we used to receive a white paper which contained at least an outline of Canadian defence policy. The British issue a white paper which contains a thorough and exhaustive outline of the opinions of that government with respect to national defence. We used to have a similar paper here but now we have nothing. We now receive a blue book and I might say it is appropriately named because it would certainly make one blue to read its contents. It contains no information whatsoever in respect to defence policy. It merely, as it says, contains some information in respect to the roles and activities of the armed services and the defence research board.
Other important documents vital to the Canadian people are not made public. For example, the Graham report on civil defence was not disclosed either to the house or the Canadian people. We are led to wonder what it contained.
In addition, the government colours the information it gives to the committee and to the
90205-6-532
Supply-National Defence Canadian people. I suppose that is only natural. The government has a particular point of view, right or wrong, and it wishes to acquaint the public with it. The opposition, if it has a contrary point of view, also selects the available evidence to support its case. The difference is that the government has dozens and dozens of public relations men working full time faithfully and dutifully grinding out the truth as the boss sees it. That is quite natural too. As a matter of fact, I think that our expenditure in the Department of National Defence on public relations and public relations people is too great. I think it is too costly for the amount of benefit received by the Canadian people. I would recommend that treasury board have a look at it when the estimates for next year are being prepared.
At the same time the minister has deliberately tried to create the impression that the opposition is uninformed, and because the opposition is not at liberty to disclose its sources without losing them their contributions are not always given the consideration in the press and elsewhere that might be the case if the sources could be authenticated. Some better system must be found. I am aware of the traditional situation with respect to our parliamentary institutions but I think the time has come for a change. I think we waste too much time. We could accomplish a great deal more if we were to face the facts and make the necessary adjustment.
We must have some mechanics for making information available to the elected representatives of the people and I think that a good solution would be a small standing committee on defence. This committee would in no way attempt to usurp the functions of the Minister of National Defence but it would have briefings by serving officers. It would visit defence installations and see the hardware about which we are talking. It could meet in camera and be given classified information with respect to the Russian threat and our capacity to cope with it. It could study all aspects of defence, national survival and related subjects.
The result would be a small body of informed representatives of the people who would then be in a better position to help parliament and the public in a responsible examination of the public business. I have no doubt some criticism would be avoided, but I am sure the criticism that would be levelled would be better prepared and more authoritative. It would be much more difficult under those circumstances for either government or

Supply-National Defence opposition to colour their points of view appreciably without fear of immediate refutation by informed persons. The press and the public would know that spokesmen were or should be well informed.
The committee might issue a declassified record containing the maximum possible information to assist the public in appreciating better the complexities of the subject of defence and its many ramifications. I think that it would contribute to an improvement of the standard of debate. It should reduce irrelevancies and, most important of all, it should permit parliament to fulfil its function which is to give careful, thorough and responsible examination of the proposed expenditures of the executive branch. It would assist the public in assessing the issues, gauging the different policies if different ones are proposed and reaching conclusions. It would increase public confidence in the parliamentary system. In view of the gravity of the subject, which I think is appreciated by all of us on both sides of the house notwithstanding that sometimes in the heat of battle we do and say things which would not be appropriate under cooler circumstances, I think that under the circumstances I have outlined such a committee would assist us to do our job, to do it responsibly and to do it properly, which is the objective we have in mind. I therefore urge the government to give sympathetic consideration to this suggestion, and I know that in doing so it will have the support of parliament and the Canadian people.


Douglas Scott Harkness: Mr. Chairman, during the course of the debate in the last several days I think I have dealt with practically all of the matters which have been revived in the remarks just made, and I do not think it would contribute anything to the debate for me to repeat the arguments I have made throughout that period. I agree with the hon. member that too much time is wasted and has been wasted in this committee, most of it, I am sorry to say, by endless repetition of the same arguments in connection with the same subjects.
As far as committees are concerned, during the period from 1952 to 1957 there was, I believe, one committee during that time which met during two sessions of parliament. From 1957 to date there have been two separate committees which have dealt with defence matters. The hon. member is now advocating a standing committee on defence. This is something that certainly can be given consideration. Whether we should have a standing committee on defence as suggested or whether we should continue the system

which has been followed in the past of having special committees from time to time as conditions seem to warrant is really a matter for decision, and I have nothing definite that I can say on that at the moment.


Gordon Campbell Chown: Shall vote 245 carry?


Paul Theodore Hellyer: On division.


[Stage Direction]
Item agreed to.
Gordon Campbell Chown: This completes the estimates of the Department of National Defence.


Douglas Scott Harkness: Mr. Chairman, I should like to thank members of the committee generally for the interest which has been shown in defence matters and various members for the contributions they have made to the debate on this important subject.


Gordon Campbell Chown: We will now proceed to the consideration of the estimates of the Department of Defence Production.



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
67. Departmental administration, $9,574,385. (Translation):
Mr. O'Hurley:: Mr. Chairman, in my statement today I would like to discuss the principal responsibilities and accomplishments of the Department of Defence Production and in this connection to follow the procedure that I have followed in the past, that is, of dealing, where possible with the votes in the order that they appear in our departmental estimates.
In the course of my statement I would like to give you a brief outline of the work of the Department of Defence Production. I would also like to refer to those instances where there are differences between the amounts which we are asking to be voted this year and those amounts which were voted last year.
Under the provisions of the Defence Production Act, my department has exclusive authority to procure the goods and services that are required by the Department of National Defence. As the funds required in connection with this primary responsibility of my department are provided by the Department of National Defence, the defence production estimates do not provide too clear an illustration of the level and nature of departmental activities. I referred to this aspect during the discussion of the estimates of my department last year. However, I think it is worth while to touch upon the point again at the very outset of this statement.

The responsibility for procuring the equipment and material required for the Department of National Defence has been the primary task of my department since its establishment in 1951. This responsibility is still of primary importance but there are today other responsibilities which are of ever increasing significance.
The growing complexity of new weapon systems illustrates in most vivid terms how difficult it is for Canada to undertake the development and production of such systems on a purely independent basis. Against this background of changing conditions I shall continue, as I have in the past, to look to the resources of Canadian industry, whenever possible, to produce the weapons and material required for our armed forces and, as in the past, I shall continue to examine the demands of the services to see how they can contribute to the creation of new skills and facilities in Canadian industry. I wish to make it clear, however, that in addition to these activities new ways must be found-and are being found-to not only maintain but extend the capabilities of our defence industry. In this regard I would like to point out that my department has the responsibility for promoting the sale of Canadian defence items to the United States and our other NATO allies as well as the responsibility for co-ordinating Canada's activities in connection with the efforts of the North Atlantic Treaty Organization to increase co-operation in research, development and production in order to attain maximum efficiency in standardization and production by member countries.
My department is also placing increased emphasis on activities in the field of industrial research and development. This step is necessary if we are to ensure that Canadian industry will succeed both in finding and exploiting opportunities in the field of production sharing as well as responding to the future requirements of our own services. I am firm in my intent that we should do our full part to make these efforts succeed. (Text):
In the field covered by aircraft procurement the main production program is the CF-104 and the associated J-79 engine. Production schedules are being met for this 200 aircraft program and already five aircraft have been allocated to an advanced flight test program. The similarity between the Canadian version of the F-104 aircraft and that adopted by certain other NATO countries -Germany, the Netherlands, Belgium and Italy has resulted in close co-operation between the countries concerned. An officer of my department has been transferred to Germany as a representative to the European 90205-6-532J
Supply-Defence Production organization for direction and control of the F-104G program which is now a subsidiary body of NATO.
Defence production in Canada on behalf of the North Atlantic alliance is showing a marked increase with the order for 61 Caribou aircraft received by de Havilland from the United States army. Present negotiations contemplate an additional order for 53 aircraft. Other programs include the CC-106 and CL-44D, long range transports, Otter and Beaver aircraft. Contracts have also been placed for 3 UH-QE light observation helicopters for the R.C.A.F. and 21 for the Canadian army. These 24 light observation helicopters are being purchased from the Hiller Aircraft Corporation. Two Vertol model 107-11 heavy helicopters have been purchased from the Vertol division of Boeing of Canada Limited for the R.C.A.F. and the purchase of an additional four is being negotiated. Both these companies have placed business with Canadian contractors on a reciprocal basis in accordance with current production sharing policies and both are using the services of a significant number of Canadian subcontractors.
As a result of the phasing out of older types of aircraft, it is expected that there may be some reduction in the workload of repair and overhaul contractors. The new aircraft which are being introduced will offset to some extent the effects of this phase out but generally speaking the introduction will not have an effect this year.
Other factors such as decreased R.C.A.F. flying hours, reduced contractual expenditures, rising costs and reducing manhours are all tending to create a constantly diminishing workload in terms of manhours of employment for aircraft repair and overhaul contractors.
My colleague, the Minister of National Defence, announced to the house on September 11 that the CL-41A will be used as a basic jet trainer by the R.C.A.F.
My department, in co-operation with the Department of National Defence, is now working on detailed specifications for this aircraft, and we expect to request proposals from the various companies concerned within the next two or three weeks.
I also intend to enter into discussions with Canadair Limited with a view to assisting that company in the development of a systems trainer version of the CL-41A to be designated the CL-41R. This engineering study is primarily directed towards potential requirements by the NATO countries operating high performance jet aircraft with sophisticated navigation and radar systems.
The CL-41R would be used as an advanced systems trainer, in order to give the pilots complete systems training.
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Supply-Defence Production
The procurement and production of electronic equipment will continue at a high level. In airborne electronics, the major programs are related to the supply of fire control, communication, navigation, and identification systems for the CF-104 and the F-104G aircraft. There are also continuing retrofit programs for doppler navigation, communication and anti-submarine detection. Electronic training aids are increasing in importance, and flight and tactics simulators are being built for the R.C.A.F. and for the German, Netherlands and Belgian governments. There are other promising possibilities in foreign sales of this tactical simulator.
Communication equipment will be procured for the army including the requirements for national survival warning networks. Field radar and radiation detection equipment will also be obtained for the army. Programs for the Royal Canadian Navy include shipborne radar, navigation, identification and counter-measures equipment, and a new Canadian designed sonar. This sonar equipment is also being manufactured in Canada for the account of the Royal Navy and Royal Australian Navy.
Installation of the R.C.A.F. air defence communication system will continue and a major program to lease communications for the North American air defence system is underway. Operation and maintenance of the existing defence warning systems will also continue and ground navigation stations for air defence installations will be procured. Up-dating of equipment at existing air defence sites is in process and new stations will be installed.
Last October, the functions of the ammunition and gun branches of my department were combined to form the new armament branch which is now responsible for the procurement and production of all types of ammunition, explosive stores and weapons systems including fire control equipment, underwater weapons, guns, mortars, launchers and both guided and ballistic missiles.
In production at present to meet Canadian military requirements are small arms, torpedoes, antisubmarine mortars and projectiles, automatic rifles and naval destroyer-escort guns. In addition, a range of fire control instruments and a tank navigation system are being produced in Canada to meet U.K. and foreign as well as Canadian military requirements.
The shipbuilding program is continuing with particular emphasis, as during the past year, on the construction of six destroyer escorts of the repeat-Restigouche class. All contracts for the construction of these ships


were placed in Canadian shipyards. In addition, a very large number of components for these vessels are being purchased and manufactured in Canada.
Modernization programs are being initiated for the destroyer escorts of the St. Laurent class and also for the H.M.C.S. Crusader.
In addition to the destroyer escort program shipbuilding activities include the construction of the naval tanker supply vessel. A contract for this vessel was placed as a result of competitive tenders. This is the first time that a contract has been awarded for a large and complex Canadian naval vessel in this manner. A contract has also been placed as a result of competitive tenders for the construction of a hydrographic and oceanographic survey vessel for the Department of Mines and Technical Surveys.
Ship repair work will, of course, expand with the increase in the size and complexity of the Canadian fleet. Contracts for repair work as well as those for construction and modernization provide considerable employment in our Canadian shipbuilding industry.
I would also like to refer briefly to the general purchasing program which covers those supplies and services which do not normally involve special production arrangements. These items are procured both through departmental headquarters and the 14 district purchasing offices of my department which are located across Canada from St. John's, Newfoundland, to Victoria, British Columbia. These requirements although usually individually small in dollar value represent a great variety of items and a large sum of money in total. It is anticipated that procurement of this type will be approximately the same as last year.
All the programs to which I have just referred have a bearing on the amount of vote 67. The defence production and development sharing responsibilities, which I shall discuss very shortly, also have a bearing on this amount.
As you will note, there is an increase of $911,549 under vote 67 as compared with the estimate for 1960-61. The largest individual item involved in this increase is the provision for salaries which has been increased by over $830,000. This, of course, reflects the adjustments in the salaries of the public service that were made last year.
Vote 68 covers the care, maintenance and custody of stand-by defence plants, buildings, machine tools and production tooling. The amount provided in this year's estimates, namely $888,700, represents an increase of $98,645 over the amount provided in the estimates for 1960-61. The provision is dependent upon decisions to be taken during

the fiscal year as to whether continued production stand-by arrangements or disposal action will be required. Accordingly, these requirements cannot be forecast in precise terms at this time.
Vote 69 and supplementary vote 507 provide for capital assistance to Canadian industry and also for the provision of assistance in connection with tooling and preproduction costs involved in bids submitted by Canadian industry under the Canada-United States development and production sharing program. This is another case where there is an element of contingency involved and, as you will appreciate, it was not possible at the time of the preparation of these estimates to anticipate the number of cases where Canadian firms will ask for assistance nor the degree of success that will be obtained in such bids. I shall discuss the provisions of this vote at greater length when I review the provisions of vote 72.
Vote 70 provides for the payment of grants to municipalities in lieu of taxes on crown-owned defence plants operated by private contractors. As I explained at the time of the consideration of last year's estimates these plants are ones that have been acquired by the crown under capital assistance programs of past years. The grants are computed on the normal assessment evaluation by the municipality concerned subject to adjustment with respect to services rendered. There is a very small increase in the amount that is being provided this year.
Vote 71 covers the provision of funds to establish qualified sources for component parts and materials. This vote was established in October 1958 in order to establish qualified component production sources essential to the production of military electronic equipment in Canada.
The object of this vote is to prepare Canadian companies to participate in the production of components for future Canadian military requirements, in order that it will be possible to increase the Canadian content of defence procurement in Canada. This, of course, has the added advantage of increasing the Canadian content in allied countries' requirements for similar items.
From October 1958, to August 31, 1961, more than $860,000 has been spent. Twenty eight contracts have been placed and 12 of these have been completed. In addition, 18 projects are under consideration. These cover a wide range of items, from basic ceramic and precision bearing facilities to transistors, fuel pumps and servo-synchro components.
The operation of this vote shows clearly that Canadian industry is capable of producing new military components to acceptable standards. Some form of government support is
Supply-Defence Production required in this area where advanced military technology is a necessity, and vote 71 includes the provision for $607,000 with an additional future year's commitment authority for $300,000.
Vote 72 and the portion of vote 69 dealing with tooling and preproduction costs concern the Canada-United States defence production sharing program, and I should like to discuss the progress of the program, and in particular, the development sharing aspects of that program at this time. I should also like to refer to the important efforts being made to expand the role of Canadian military equipment in the programs of our NATO allies.
During 1960 co-operation between Canada and the United States resulted in the broadening of the areas of opportunity for Canadian defence industry to compete for U.S. defence requirements as well as the streamlining of the procedures involved in such cases. Extensive efforts on both sides of the border were required in this regard. The result has been the elimination of most of the obstacles to Canadian industrial access to the U.S. defence market. For example, the Buy American Act and U.S. duty barriers have been eliminated for a broad range of defence supplies from Canadian industry. It is also important to note that the U.S. defence directives which were issued in late 1960 in connection with the return of offshore procurement to U.S. sources, do not apply to the procurement of Canadian supplies which are included in the defence production sharing program.
One form of financial assistance which is made available by my department to Canadian industry actively interested in sales to the United States is the sharing with Canadian companies of certain preproduction engineering and special tooling costs to enable Canadian companies to cope on more equal terms with competing firms which have been able to write off such costs against previous orders.
In 1959-60 $1,250,000 was voted for this purpose and the same amount was voted last year. As a result of firm commitments for this type of assistance totalling approximately $2.5 million about $20.1 million in production contracts had been received by Canadian companies by August 31, 1961. In addition, these companies have been placed in a position to compete for follow-on orders for similar supplies. Actual expenditures made against the votes for the past two fiscal years have totalled $1,230,554. In the current fiscal year $175,602 has been spent to the end of August.

Supply-Defence Production
Expenditures have been less than provided by the votes because oi the difficulties involved in attempting to forecast expenditures in this area. The production sharing program is a comparatively new responsibility and there has not been an opportunity to accumulate sufficient data to establish trends in expenditure. Second, it is not possible to anticipate the number of cases in which Canadian firms will seek support from these funds. Third, the number of competitive contracts that will be won by Canadian firms cannot be forecast, and of course, expenditures are only made when a Canadian company has received a contract. Finally, the rate of our expenditure depends upon the period of time covered by the contract and the receipt of billings for progress payments. For these reasons provisional commitments against this vote fluctuate greatly throughout the year and actual expenditures do not fully indicate the amount of support offered during the year. In order to continue this assistance in the establishment of production capacity there has again been included the sum of $1,250,000 under vote 69, and an additional $500,000 has been requested under the supplementary vote 507.
The other major type of assistance made by my department is our contribution to development sharing to encourage Canadian defence industry to maintain technological developments at a level which will promote future defence exports. The sum of $5 millions was approved in both 1959-60 and 196061 for this purpose. Expenditures for these two fiscal years amounted to $4,752,775. In the current fiscal year expenditures to the end of August totalled $706,185.
The difficulties involved in forecasting expenditures under vote 69 also apply in the case of this vote. In addition there is a further element which has prevented the full use of the funds that have already been approved. Research and development is by its nature a long process. Most programs require only modest funds in the initial study stages and large expenditures do not occur until prototypes, testing facilities, and such items are required. Some of our programs will be moving into this stage this year.
We are assisting development in such selected fields of United States defence interest as, for example radar and communications, V/STOL aircraft and turbine engines, antisubmarine warfare devices, plasma physics and surface transportation such as hydrofoil vessels and light weight high mobility vehicles.
This support of Canadian industry takes several complementary approaches to defence development sharing with the United States. We have ratified procedural arrangements

with the United States army and are now negotiating with the United States air force to the end that selected United States developments requirements will be undertaken in and financed by Canada. Furthermore, in support of uniquely Canadian projects whose successful development wiE be of interest to the United States services my department has placed contracts with competent Canadian companies. In addition, to equalize the position of Canadian industry in competition with United States industry for U.S. financed development requirements, we are arranging to share the cost of selected projects with the United States government and the Canadian companies concerned.
These activities to August 31 have resulted in the Canadian government's contribution of about $20.1 millions to development projects now awarded to Canadian companies or fully approved and pending only final contractual details. In addition to these firm commitments, there are a number of projects under active consideration including several unique Canadian concepts and formal U.S. requirements approved in principle for support. These amount to about $4.6 millions.
In addition to these projects, which total some $24.7 millions for Canadian expenditure on defence development projects in Canadian industry, a variety of development possibilities are under preliminary investigation. These figures, which do not include some $13.7 millions of U.S. funded research and development and technical engineering assistance contracts, or Canadian industry's own contributions, indicate that substantial U.S. oriented research and development is now taking place in Canadian defence industry.
Examples of major projects included in this Canadian development program are V/STOL aircraft, Avro, Canadair and de Havilland; turbine engines, Orenda and Pratt and Whitney; airborne electronic equipment, Marconi and Computing Devices; radar items, Long Sault Woodcraft and Fleet Manufacturing; communications equipment, Radio Engineering Products; and rocket vehicles, Bristol and Canadair.
In order to continue this work of sustaining technological capability in Canadian defence industry the sum of $5.5 millions with additional commitment authority for $11 millions has been included under vote 72. If this development sharing activity is as successful as the present trend indicates then I expect that supplementary estimates will be proposed before the end of this fiscal year.
As a result of our continued co-operative arrangements with the United States. I am now able to report an increasing flow in the number of United States defence development

and production sharing contracts awarded to Canadian industry. These contracts totalled $112.7 millions in the calendar year 1960.
This total includes $61 millions in United States government prime contracts with Canadian companies and $51.7 millions in United States industry subcontracts to Canada. It should be noted that such subcontracting was negligible before 1959 and is largely the result of our production sharing program. The 1959 and 1960 two year total for United States defence production sharing in Canada is $209 millions.
The first eight months of 1961 have shown a similar favourable trend. Production sharing contracts in this period involve some $79.9 millions made up of prime contracts for about $43 millions and subcontracts for about $36.9 millions. This compares with the total of $65 millions of such United States defence business placed in Canada in the first eight months of 1960. Some major items involved in the prime contract area were in connection with de Havilland Caribou aircraft and spares for various de Havilland aircraft, $7.7 millions; Pratt and Whitney Aircraft engine spares, repair and overhaul, $11.7 millions; Sparton sonobuoys, $1.1 million; Canadian Arsenals' cartridges, $3.9 millions; Radio Engineering Products field telephones, $1.6 million; Orenda engine development, $913,000; and Marsland Engineering, plotting tables, $2.6 millions. A firm order for Marconi airborne doppler navigation radar in the amount of $370,000 has been received and negotiations are under way to increase this to $1.7 million. There are good prospects for additional large orders.
Some of the subcontracts consisted of counter-measure systems, $1.2 million, to Northern Electric; switchboards for FPS-26, $830,000, to Federal Pacific; radar equipment, $2.3 millions, to Canadian Westinghouse; NA-SARR subsystems to Westinghouse, $3.5 millions: training and installation AN/FST=2B (SAGE) Burroughs, $1 million; missile components, $2.7 millions, to Sperry; and Bomarc parts and components, $1.3 million, to several Canadian companies.
Significant impetus has been given to the Canada-United States defence production sharing program by the F101-F104-Pine Tree agreement between the two governments announced by the Prime Minister on June 12. This agreement clearly indicates the sincere intent of the United States and Canadian governments to make defence production sharing a vital program. It will make a singificant contribution to maintaining Canada's defence production base. Many of our most important defence contractors will receive contracts and subcontracts.
Supply-Defence Production
Only governments can negotiate transactions of the magnitude of the one that I have just mentioned. Generally, however, the government's role lies in the creation of a climate of opportunity for Canadian industry to compete for United States defence business. Therefore, real success of the program is dependent upon the efforts of Canadian industry. In this regard some companies have shown commendable initiative and effort but unfortunately some others have been reluctant to accept the challenge. In order to further stimulate Canadian industrial activity in the production sharing program I again wrote on May 29 to the senior officers of Canadian firms which have indicated an interest in the program, outlining progress for the past year, the continuing need for co-operation from industry, and the opportunities available. I once again urge all companies with capability and resources to make a determined effort to gain United States defence business for Canadian industry.
I should now like to turn to another area, quite separate from production sharing, in which my department has been endeavouring to expand the role of Canadian developed defence equipment-I refer to our efforts to co-operate with our NATO allies in the research, development and production of defence equipment requirements.
By direction of the NATO defence ministers, the NATO armaments committee and its various sub groups are providing a means by which research, development and production requirements can be co-ordinated to the mutual advantage of all countries participating. My department is working closely with the Department of National Defence and others in this long range plan of NATO cooperation which will, I trust, ensure that Canadian capabilities are recognized in the light of NATO requirements. It should be emphasized that the purpose of this co-operation is co-ordination and not sales promotion, and it is in this spirit that we are participating.
We have found, however, that our increased efforts in the NATO area have had supplementary benefits. Several countries have placed contracts for current Canadian equipment. These contracts involve substantial benefits for Canadian companies.
The interest shown by certain of our NATO allies in our aircraft, radar, anti-submarine warfare equipment, navigational aids and other equipments developed by Canada is heartening. Every effort is being made by my department in close co-operation with the Department of National Defence and Canadian industry to provide demonstrations, items for test purposes, and the administrative machinery to ensure that our industry is not in

Supply-Defence Production a disadvantageous position in relation to other potential suppliers in the European area.
We intend to provide financial support for preproduction and tooling costs and development costs, similar to that we now provide to companies entering the United States defence market. Support of a company under the production sharing program has a secondary benefit in that it also assists the same company in its efforts to sell to our overseas allies.
With respect to administrative machinery, I have offered to the defence ministers of our allies, the services of the Canadian Commercial Corporation to act on behalf of their governments and prime contractors in the procurement of defence equipment and supplies in Canada. Use of this crown corporation ensures that any purchases made by a foreign government will be negotiated and administered by the Department of Defence Production employing the same procedures and safeguards as are followed by the department in procuring supplies for the Canadian services. Such assurances are valuable to both foreign governments and Canadian suppliers since they eliminate many of the difficulties inherent in the establishment of new commercial relationships over large distances and outside of traditional military procurement channels.
The benefits which may accrue to Canadian industry in the years ahead as a result of co-operation with our NATO allies are indicated by the successful sales of Canadian developed products in connection with the F-104 aircraft adopted by Canada and other NATO countries. In 1960 letters of intent authorizing the manufacture of flight simulators up to about $3.5 millions were received. The total probable procurement involves about $22 millions. These flight simulators are produced by Canadian Aviation Electronics Co. for sale to Germany and the Netherlands. Our expectations are that further orders from other countries for these equipments will be received.
In addition, as a result of our arrangements with Lockheed Aircraft Corporation, we have received orders worth approximately $15.5 million for the wings, rear fuselage and empennage of F-104 aircraft. Further such procurement from Canadian sources may result in substantial future orders.
Other Canadian equipment has also found a place on these aircraft and I refer specifically to the electronics equipment sold to Lockheed for inclusion in the F-104's that have been sold by that corporation to overseas governments. For example position and homing indicator systems produced by Computing Devices of Canada and sold to Lockheed for Germany involve a value of $2.1
[Mr. O'Hurley.l
million. I have, of course, already reported these Lockheed orders as U.S. production sharing subcontracts.
In our efforts in the European area we are not neglecting our traditional relationship with the United Kingdom. Two major sales of Canadian developed items to the United Kingdom in 1960 were the sale of de Havilland Beaver aircraft and also variable depth sonars produced by EMI-Cossor Electronics.
For the first eight months of 1961, some $2.5 million in actual prime contracts were placed through the Canadian Commercial Corporation alone, covering such diverse fields as flight and tactics trainers (Canadian Aviation Electronics) and variable depth sonars (EMI-Cossor). In addition de Havilland has received this year prime contracts direct from Ghana for Otter, Beaver and Caribou aircraft totalling about $8.4 million; Orenda Engines has received about $4.8 millions direct from West Germany for spares, and Jarry Hydraulics has received about $1 million direct from West Germany for power flight controls. Furthermore, Canadair has received this year about $1.3 million in subcontracts from German and Dutch prime contractors for components for the F-104, and Computing Devices received contracts for P.H.I. systems valued at approximately $8.3 million destined for Germany, France and Italy. Further orders for such equipment are expected from NATO countries and their prime contractors. In most cases these sales were part of major continuing programs placed in Canada as a result of technological skill, competitive pricing and active selling by Canadian industry with the assistance of government departments concerned. For the first eight months of 1961 the total overseas defence business reported by Canadian companies, including the above-mentioned contracts, amounted to $28.8 millions.
In all these activities my department is fortunate in that it has developed over the years the machinery and the specialized knowledge of production and procurement officers essential in the field of military procurement. This background now enables us expeditiously to promote Canadian capabilities to meet the defence requirements of allied countries wherever they may arise. The efforts required are most substantial, entailing, among other things, considerable liaison abroad. I should like to say that the members of my department are pursuing these matters with energy and dedication.
Our progress in our efforts to expand the use of Canadian defence equipment both by our overseas allies, and also by the United

States in our production sharing program has been encouraging. We shall continue these efforts in a most vigorous fashion.
Mr. Chairman, in light of the recent unfortunate change in the international situation, I wish to bring the house up to date on the planning for a war supplies agency that has been going forward in the emergency supply planning branch of the department since May of last year.
As I explained in presenting last year's estimates, and as the Prime Minister reiterated on September 13, the government has decided that should nuclear war break out a war supplies agency would be brought into existence immediately, by order in council under the War Measures Act, to assume responsibility for all aspects of control over the production, distribution and pricing of supplies for both civil and military purposes, with the exception of certain aspects of the agricultural and fishing industries.
An interim organizational structure for the war supplies agency, designed to meet the anticipated needs for the period immediately following nuclear attack, has been developed and approved. Within the over-all organization of the war supplies agency, there will be national, regional, zonal and local components, in conformity with the system of emergency government being developed by the emergency measures organization under the direction of the Prime Minister. The staffing of the national component of the war supplies agency has been completed by the selection on a stand-by basis of suitably qualified persons from various government departments and agencies in Ottawa. The staffing of the ten regional components, likewise on a stand-by basis, is near completion. I might add that the war supplies agency was fully represented at the national level during exercise TOCSIN 1961 and had a nucleus staff at each regional headquarters. In the further exercise to be held this fall the war supplies agency will participate fully at both national and regional levels.
In connection with the staffing of the regional components of the war supplies agency, hon. members might be interested to know that arrangements are being made with the various provincial governments to draw on their personnel resources as well as on the field staffs of various federal departments and agencies. Formal agreements to this end are currently being negotiated. The next step in the organization of what might be termed a "shadow" war supplies agency, will be the establishment of the appropriate components at the zonal and local levels. For this purpose we would expect to draw on the personnel resources of business and industry as well as on federal and provincial field staffs.
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Supply-Defence Production
One of the major tasks of the war supplies agency, should it ever have to be brought into existence, would be to assess the country's surviving material resources. To provide the basis for making such an assessment, the emergency supply planning branch has initiated a research program designed to produce in readily useable form comprehensive inventory data on major stocks of essential commodities and related production facilities normally available in the country. This research program is necessarily long term in character, but substantial results have already been achieved with respect to the collection and processing of data on stocks of food and petroleum products. Methods have been developed in co-operation with the army and emergency measures organization for evaluating surviving resources after attack.
A third major aspect of our planning has been the preparation in draft form of various regulations and orders likely to be required by the war supplies agency in exercising effective control of supplies under conditions of nuclear war. Among other things, a plan for the emergency rationing of essential consumer goods is now before the government.
The staff of the emergency supply planning branch remains small. There are at present 12 officers at headquarters in Ottawa and five regional officers. Two additional officers for the headquarters staff and four more regional officers are currently being recruited.


Paul Theodore Hellyer: I should like to thank the minister for his very thorough and almost exhaustive report. He has gone over the activities of the department very carefully and he has given us considerable detail with respect to the projects on which it is presently engaged.
Last year we went over most of the items of this department very thoroughly and consequently it is not our intention to debate them at length on this occasion, particularly in view of the fact that a considerable portion of the money being asked for has already been spent.
There are, however, one or two questions which we shall ask on the details, and there is one I should like to ask at this time under the general subject of administration. The minister mentioned that although the amount of production sharing which had been obtained from the United States so far this year was greater than in the first eight months of last year it is, however, only about half last year's total. I wonder if the hon. gentleman could give the committee some assurance that during the remaining four months of the year the amount of business obtained will bring the total up well beyond last year's figure.
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Raymond Joseph Michael O'Hurley: 
Chesley William Carter: Last year in this committee there was some talk about contracts we hoped to get from Germany, Belgium and other European countries. Were we successful?


Raymond Joseph Michael O'Hurley: The discussion at the time was concerned with the simulator program and possible orders from Germany, Holland and Belgium. We obtained those contracts. We won the competition and we were awarded the contracts. The simulators are being built in Montreal at the present time for those countries, as well as to satisfy the Canadian order.


Paul Theodore Hellyer: Could the minister indicate in round figures the total amount involved in those contracts?


Raymond Joseph Michael O'Hurley: As it stands today the figure is around $3 million, but the total contract is going to be worth more than $20 million.


Frank Howard: My intention is to ask the minister a series of questions rather than to make specific comments. I placed some queries on the order paper before the summer recess and in due course I received some answers which are contained in sessional paper 267B of September 7. I should like to make some inquiries of the minister concerning the information contained in that sessional paper and the answers given to particular questions.
My inquiry had to do with subventions, or subsidies. The question which I asked was whether, since January 1, 1950, any subventions had been paid to any incorporated companies other than crown corporations and, if so, what was the amount of the subvention, the total amount paid to each company, and so on. Some of the information which was given to me by the Department of Defence Production contains the names of companies such as the Canadian Marconi Company, Canadian Steel Foundries, Canadian Steel Improvement, Canadian Vickers-a number of companies which have received subventions from the Department of Defence Production in respect of certain types of work. The information lists the fields of endeavour in which each of these particular companies are engaged-electronics, shipbuilding and the like for the period, I take it, from April 1, 1959 to May 31, 1961.


In so far as one part of the answer is concerned a total of about $1,250,000 is shown as having been paid to these companies by way of subvention or subsidy. I wonder if the minister could explain the reason for these particular subventions. I do not know whether the hon. gentleman has before him a copy of this particular sessional paper. If he has, it will not be necessary for me to go into detail with regard to the particular companies. However, if the minister has not got the list I could go into greater detail. Before doing so, I wonder if the minister is familiar with this particular subject matter I have before me.


Raymond Joseph Michael O'Hurley: I do not know whether this information would be sufficient but these subsidies or subventions are really payments in respect to pre-production and engineering assistance in connection with contracts for the United States. Would the hon. member for Skeena mind giving me a few examples? I have not got that paper before me today.


Frank Howard: Certainly. For example, the first company mentioned on this list is Beaconing, Optical and Precision Materials, of Montreal, Quebec. They are engaged in the electronics business and they received a subvention during the period between April 1, 1960 and May 31, 1961, to a total amount of $23,000. The authority for payment is given as treasury board minute 573346 of December 12, 1960. The second entry deals with the same firm and the amount is $25,596 over the same period of time. I think that, perhaps, will be sufficient.


Raymond Joseph Michael O'Hurley: I have a copy here of the answer given to the hon. member for Skeena at the time. These subventions were approved by treasury board, by the Department of National Defence and by the Department of Defence Production, this, of course, being a joint venture. The amounts are for tooling and pre-production so as to be competitive in obtaining United States contracts.


Frank Howard: This was in order that we might be competitive with United States firms?


Raymond Joseph Michael O'Hurley: In the United States market.


Frank Howard: Does the same reason apply in respect to the subsidies paid to each of the companies listed? Was it a question of competition?


Raymond Joseph Michael O'Hurley: Yes, Mr. Chairman.


Frank Howard: I wonder if I might ask a further question of the minister based on the same order. This is headed "Establishment of Qualified Production Sources of Components and Materials". I take it this relates to something different because in some instances the

same companies are listed-the Canadian Marconi Company and Canadian Arsenals, for example. This also applies to subventions given for some other reason. The total for the four year period is shown as $811,715. There is a further reply headed "Sustainment of Canadian Industrial Technological Capability". This is for a three year period and the total amount is $4,919 million.
Can the minister explain what is meant by the heading "Establishment of Production Sources of Components and Materials", the further heading "Sustainment of Canadian Industrial Technological Capability" and offer an explanation concerning the various subventions?


Raymond Joseph Michael O'Hurley: Mr. Chairman, the first question concerns vote No. 71. With a view to ensuring the maximum participation of Canadian firms in defence procurement, this requirement was first set up to establish qualified sources of supply of component parts and materials sufficiently in advance of Department of National Defence contract demands to lessen the dependence of end product producers on United States and other sources of supply. These are products we used to buy outside Canada which are now procured for the department in Canada. The program is essentially one of developing industrial capability in the military components field. It is to assist Canadian manufacturers to produce in Canada components to meet the requirements of the Canadian armed forces.
The hon. gentleman's other question related to vote No. 72. This vote was raised in 1959-60 to further the stated policy of the Canadian government of sustaining a research and development capability in Canadian industry with which to undertake the sharing of defence development and production tasks with the United States.


Frank Howard: What is the future expectation with respect to engaging in subvention of this type? Will the activity diminish, increase or remain stable?


Raymond Joseph Michael O'Hurley: Over the next few years we expect an increase in this activity which is valuable in providing work for Canadian industry. For the assistance of the hon. member I should point out that this activity prepares Canadian industry by assisting it to acquire skills that were not previously available. The benefit applies to defence and civil industries. They are able to acquire skills which they lacked previously and can thus produce material we formerly had to purchase outside Canada.


Frank Howard: I cannot resist commenting that I find it strange that these private enterprise companies should require assistance 90205-6-533J
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through the government from the Canadian taxpayer. I am not complaining about our helping them from time to time in the development of Canadian industry to ensure that as much of this work as possible is done in Canada but these are rugged individualists who in this case are asking the Canadian taxpayer to take the risk for them.


Paul Theodore Hellyer: Would the minister indicate to the committee what were the Canadian purchases for defence equipment in the United States for 1960 in relation to both contracts and subcontracts and what they have been this year to date?


Raymond Joseph Michael O'Hurley: The following are the Canadian government's defence purchases placed directly in the United States. In 1959, prime contracts $47 million; subcontracts $61.2 million. In 1960, prime contracts amounted to $83.3 million; subcontracts $113 million. For the first six months of 1961 the figures are as follows: prime contracts $18.7 million; subcontracts $36.4 million.


Paul Theodore Hellyer: These figures do not include contracts for defence equipment placed by Canadian industry directly in the United States?


Raymond Joseph Michael O'Hurley: Yes, they do include those
contracts which related to defence purchases.


[Stage Direction]
Item agreed to.
Raymond Joseph Michael O'Hurley: Mr. Chairman, now that the estimates of this department have been passed by the committee may I take this opportunity to extend my appreciation to hon. members of the committee. I think we have probably established a record for the passage of the estimates of this department. I wish to assure the committee of my continuing co-operation and understanding.


Paul Theodore Hellyer: As long as the minister appreciates that this does not establish a precedent.
Resolutions adopted in committee of supply this day reported and concurred in.



FLAGS OF CANADA


[Stage Direction]
On the order:
Resuming debate on the motion of Mr. Smith (Lincoln) for the second reading of Bill No. C-8, an act to authorize a Canadian flag.
Mr. John Pallet (Parliamentary Secretary to the Prime Minister):: Mr. Speaker, the hon. member for Lincoln is unable to be here this afternoon. He has asked me to request the unanimous consent of the house to allow this order to drop. There are other bills on the order paper relating to a national

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flag which will likely be reached and so the hon. member has requested unanimous consent to have this order dropped.


Mr. Speaker:: Does the house give unanimous consent to the withdrawal of the order for the resumption of the debate on the second reading of Bill No. C-8?


John Whitney Pickersgill: Mr. Speaker, I suppose it would be ungracious not to agree to give unanimous consent, but this is such an extraordinary and bizarre bill it seems rather a shame to take it off the order paper. However, I will not on that account object.


Herbert Wilfred Herridge: Mr. Speaker, in my opinion this is such an extraordinarily interesting and unusual bill that it would be a kindness to the hon. member to permit it to be withdrawn from the order paper.


Mr. Speaker:: Is it agreed that the bill be withdrawn?


Some hon. Members:: Agreed.
Bill withdrawn.



CANADA ELECTIONS ACT


Mr. M. W. Martin (Timmins) moved: the second reading of Bill No. C-50, to amend the Canada Elections Act (election expenses).
He said: Mr. Speaker, in rising to speak on second reading of this bill I might say that while technically we are dealing with the second reading, in actual fact we are really resuming debate on a bill that has been before the house for many years before I had the privilege of attending this chamber. It is very interesting also, and I think the house should be reminded of this, that such a bill has always been introduced by a member of this party. Similar bills have been introduced for many years by members of the C.C.F. party but unfortunately we have never had an expression of opinion of the house on the measure. The history of the bill in the past is that it has always been talked out, first by Liberal government members and then by Conservative government members. I should like to express the hope that after all these years we may have reached the stage where we can at least give second reading to the bill and accept the principle.
However, Mr. Speaker, the efforts of this group over many years have not been entirely lost because there is a growing interest and concern about this matter. We see examples of this right across the country from coast to coast. We are aware, and it has been referred to before, of the great assistance in

this regard that was rendered by two members of the clergy in the province of Quebec who, having become most concerned about corruption that arose out of contributions to political parties, proceeded to write a very thought-provoking article in this regard that has had great and beneficial results, particularly in the province of Quebec.
I should like to make it very clear that this problem is not confined to that province. It is very fine for those of us who come from other provinces to point a finger at Quebec and say that the problem is much worse there than in any other province but unfortunately that is not the case, as I intend to prove in my few brief remarks when I refer to certain articles that have been written.
It is our contention that a great deal of the corruption and a great deal of the fear and uneasiness that are growing across the country can certainly be curtailed, if not eliminated completely, by the adoption of a measure such as Bill No. C-50 which compels political parties to reveal the sources of their funds. I recall that some two years ago when a bill similar in many respects was being debated in the house a question was asked by the hon. member for Vancouver South (Mr. Broome). I believe the hon. member for Port Arthur (Mr. Fisher) was speaking at the time. As found on page 2744 of Hansard for April 16, 1959, the hon. member for Vancouver South asked the following question:
When your party evolves into the party you expect it to be, will you still be introducing a bill concerning the disclosure of election expenses.
I do not think there is any better answer than the fact that today, after the event has come about which was referred to two years ago, we who are now within the confines of the New Democratic party are introducing a bill similar to the ones we introduced when we were in the C.C.F.
We have also heard various spokesmen from the other parties expound the theory that it might be better if members did not know from where their support came. I believe that the same hon. member for Vancouver South expressed this idea as found on page 5308 of Hansard of June 30, 1959. I think he missed the point. The important thing is not that the candidate or member should know the source of these funds. Rather, it is that the public should know the source of these funds and that the house assembled here should know their source. Hon. members should know if breweries, contractors, yes, trade unions, contribute their money to support any political party. The house should know so that these factors can be taken into consideration when members are considering legislation that comes before the house. When legislation which is of

particular benefit to an organization that has contributed substantially to the party in power at any particular time, comes before the house I think it would be a very useful thing for the house to be fully aware of what has taken place in the past.
I should like to refer to two articles in recent issues of Maclean's magazine which deal with the subject matter of the bill now before us. The first one, written by Mr. Peter Newman, is found in the issue of May 6, 1961, some few months ago. It is entitled, "Who'll Pay the Record Shot for Our Next Election?". The subheading is, "The Smart Contributors Buy 'Insurance' with the Two Old Parties". The first paragraph reads as follows:
No process in the working of Canadian democracy is surrounded by a climate of greater mystery than the collection of campaign funds by political parties. The innuendo of scandal is so strong that the details of party finances can seldom be traced beyond the whispered exaggerations of Ottawa gossip.
I think that is one mystery which, if it is going to remain, should be made an illegal offence. He goes on to express the danger, as he sees it, of the streamlining of what I would call this malpractice that has gone on for so many years in our country. He goes on to say:
The Conservatives have set a precedent by appointing to the cabinet a man believed to be specifically charged with financial matters.
Certainly if that statement is true, and I do not know whether it is, it gives rise to further concern. Mr. Newman goes on to mention the methods used and says:
The biggest donors, as in past elections, are expected to be the large corporations, indulging in what they call "necessary" giving. These are contributions made without any expectation of specific returns, beyond the preservation of free enterprise and the two party system. The donation is almost always split 60-40, with the party in power getting the bigger share.
The interesting thing about this suggestion is that it is verified in another article to which I should like to refer in a moment, an article written by no less a person than the former national organizer for the Liberal party. Mr. Newman goes on to deal with another group which he says is much more dangerous than the one he has already mentioned, and says:
The most willing contributors to party treasuries are some of the contractors who deal in government work. They usually make the gift to the party in power fairly openly, but quietly also take out some insurance by making a smaller donation to the opposition.
Then he concludes his article by referring to what is probably the greatest known scandal of this kind that has ever hit a federal government.
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The last paragraph of this article reads as follows:
Meanwhile, the present system mysteriously continues to produce millions of dollars for the party war chests. Probably the most forthright clue came from R. O. Sweezey, the president of the Beauharnois Power Corporation, who in the late 1920's contributed about $700,000 to the Liberal party, after his company had secured hydro rights on the St, Lawrence. The contribution had been necessary, he said, because "gratefulness was always regarded as an important factor in dealing with democratic governments."
I think that outlines very clearly the situation. This problem has existed for many years in this country. In order to indicate that feeling of concern is growing, and growing at a very rapid rate, I should like to point out that not only was this article published in May of this year but we also find another one in a recent issue of Maclean's magazine. I should like to recommend this article to all hon. members. It was written by Mr. James Scott who, until recently, was the national organizer of the Liberal party. He says, "Political slush funds corrupt all parties".
There are some allegations or suppositions in this article of Mr. Scott's which I certainly cannot accept. For example, while he very frankly points out the contributions in the past and mentions specific cases, and after all as the national organizer of one of the two major parties in the country he should know what he is talking about in that respect, he goes on to say something to the effect that because the New Democratic party might have funds available to them in a somewhat unequal proportion to that of the other parties, the whole idea should be abolished.
I should like to submit that it is not in the giving of this money to political parties that the evil lies. I submit it is in the secretive giving. If any company wants to donate to the Liberal party or the Conservative party, it should be its privilege to do so. However, the public should be made aware of what it is doing. Then, the public could realize possibly why it is being done. As I say, it is very important when we have to deal with legislation in this house that we should be aware of any facts along this line. Mr. Scott endeavours to create the impression that it is just as evil for say a million members of the Canadian labour congress to contribute their 60 cents a year to the New Democratic party as it would be for one individual to contribute $600,000 a year to one of the other parties. I think any reasonable man would realize there is a great deal of difference here. Contribution of 60 cents a year from an individual would not place him in the same preferred position that a much larger contribution by an individual or by a company seeking favours from a government would be in as a result of that contribution.

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Again, on page 67 of this issue of Maclean's for September 9, we find some very interesting point to which I should like to refer. As I say, both Mr. Newman and myself are in agreement as to what occurred in the past. I quote:
However, the biggest corporate donors for the most part do not attempt to intervene directly in party policy. Generally speaking, they contribute to both the Conservative and the Liberal parties. The traditional split is usually 60 per cent to the party in power and 40 per cent to the party in opposition, but this is subject to many variations.
He points out how widespread this practice is. On page 67 I also find this:
Nevertheless, nobody who holds office or hopes to hold office can ignore his benefactors. Any citizen of Canada can lay his views before the Prime Minister or the Leader of the Opposition but, human nature being what it is (and these men are human), a man whose firm donates $25,000 or $50,000 to a political party every election is likely to get through to the party leader a lot faster than somebody the party never heard of.
Now, Mr. Speaker, I say that the evil here is not in the giving. The evil is in the fact that nobody knows about it except the two parties involved; that is where the danger lies. Then, on page 69 of this article, I find this, and this is something to which I referred a little while ago when I said that the favourite pastime of every province was to point the accusing finger at the province of Quebec.
It is often assumed in the rest of Canada that this occurs only in the province of Quebec, but this is far from the truth.
A year or two ago, during a provincial election campaign in another province I received a call from a small contractor of my acquaintance. He told me he had been telephoned by an official of the government party of the province who instructed him to have $2,000 ready in cash by the following week. It would be picked up by a party legman and would be the contractor's contribution to the party's campaign funds. This man's entire business had been built up on government contracts and he asked me what to do. I told him to give the man the money and me an affidavit stating how and why he had made the contribution. We could have broken the whole thing wide open; my informant told me other contractors had received similar instructions. But they were all frightened. They all paid up and kept quiet about it.
It is not my intention to take up too much of this private members' hour in speaking on this subject. I think I have pointed out some of the dangers involved. I think I have pointed out the fact that this practice is widespread and has gone on for many years. I feel it is time this matter was given serious consideration because if this practice continues unabated it will undermine our whole democratic system. This bill, Mr. Speaker, is designed to eliminate this danger, and I hope it receives approval in principle in this house today.


Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, in rising to take part in the debate on this particular bill today I do not

need to go into any detailed complaining or crying as the hon. member who just resumed his seat has done. I am not exactly sure where he stands with regard to former C.C.F. policy and that of the New Democratic party. I should like to draw to the attention of the house the fact that he is in no position to try to bluff as he has done today. It is nothing short of a bluff when any member gets up in this house and tries to make a case based on facts derived from some national magazine, of which he has no personal knowledge and for which he is more or less dependent on someone else.
I say it is a bluff for the simple reason that the success of the former C.C.F. party- if it is a former party because that is yet to be decided in view of the fact there does not seem to be the collusion between the two parties that they would like to have-is directly related to its success in the field of collections. If I may put it another way, the success of his political party at the polls is directly related to its success in the field of collections. You can see for yourself why they get up and complain.
The hon. member has referred to the fact that it is the secrecy of the giving that is evil and dangerous. I think if the Canadian people were given a choice they would rather have secret giving than the intimidation which has been imposed upon the workers and trade union men of this country by this New Democratic party in extracting 60 cents a year from these individuals. I say "forced upon the workers of this country" for the simple reason that it is nothing less than that. They have evolved a system whereby 60 cents per capita be taken from the members of an affiliated union of the Canadian labour congress. If any one individual does not choose to pay this 60 cents, he is given this democratic right to contract out. How can any man in this house stand up and imply that he belongs to anything that is democratic when they collect 60 cents a head from every individual who belongs to an affiliated union of the Canadian labour congress? How can they refer to this procedure as democratic?


Murdo William Martin: Will the hon. member permit a question.


Malcolm MacInnis: Yes.


Murdo William Martin: Is the hon. member aware of the fact that the only way in which he might be affiliated is by the democratic vote of his local?


Malcolm MacInnis: This hon. member has more experience than and just as much knowledge as the hon. member for Timmins who has just taken his seat as to what goes on in local

unions. I can give him and the other members of his party quite a rundown of how this develops. I might say that if he himself professes to be democratic, he will stand up and deny the attitude adopted by the new party in that they are giving every man an opportunity to contract out on this 60 cents payment. If there is anything whatever democratic about their intentions in this new party, the attitude should be "contract in". It is just a matter of mass intimidation when they bring this matter before the union membership for a vote and certain trade unions are affiliated with the congress. The situation is that an individual is obliged to declare himself against something. This is not the nature of the union men. They do not necessarily want to declare themselves against anything. Usually it is for something that they want to declare themselves. However, you have now put a question to the men throughout the unions in Canada, asking them to declare themselves against something. They do not wish to do this. The result is that through mass intimidation you have a great number of union men in this country being forced to pay into what is called the New Democratic party and I place the emphasis on the word "Democratic". If there were any guts whatsoever in the Canadian congress, the principle would be not to contract out but rather to contract in. That would be something in the way of a democratic movement. But that is not the situation. What you have is intimidation. You say the secret way of doing things is evil and dangerous. I say that intimidation is far worse than that.


Murdo William Martin: Will the hon. member permit another question?


Malcolm MacInnis: Yes; if it is a sensible question.


Murdo William Martin: Is the hon. member aware of the fact that this decision to contract in or out was an individual choice made by each and every affiliated trade union across Canada, a choice made by themselves?


Malcolm MacInnis: I note that the hon. member said that it was an individual choice of every union across Canada. May I remind the hon. member now that what I am speaking of in the way of the democratic movement on the part of the New Democratic party are the rights of the individual, not the decision of the union bosses. This is a situation that I am fully aware of as it has gone on in my own union at home for some time, where the C.C.F. party collected a per capita tax from the united mine workers when the constitution of the mine workers itself did not permit it.
Private Bills
The hon. member speaks of the rights of individuals and refers to the choice of individual unions. But here was a case in which men were paying into the C.C.F. party or giving financial support to it while their moral support was going somewhere else. I put this question to the hon. member for Timmins and if I were permitted to do so I would put it in the way of a question to him and would allow him to answer it. They have the new party and they are going through this system of check-off whereby individual members will pay through a checkoff to a political fund. When the request is put to the various companies or businesses through which the check-off will be asked to be deducted, what will the position of the new party be if the individual who agrees to this check-off, agrees with the condition that the check-off be taken for a political fund, that it be taken off and directed to the Liberal party while another person's is directed to the Conservative party? Are they then going to stand up and ask for the privilege of a check-off for the three political parties?
As a member of the Conservative party I certainly do not want any part of a check-off from a union man who supports my party. If he supports me through my party he does it voluntarily. If he pays to my party, he does it voluntarily and secretly. This is going to be the last party that would stand up and consider doing or attempting to do what is being done by the New Democratic party, even without intimidation, namely to ask and to collect fees from people who will be forced to pay 60 cents towards a political fund while they will go out and support another party. Something that is evident right across this country. Although the C.C.F. for years have been collecting through the check-off from the workers of the country, they still have not been collecting the votes. We ourselves will depend on the secret way, on what the hon. member considers to be the dangerous and evil way. I say to him, however, that the dangerous and evil way is the intimidation which they are placing on the union men of this country by asking them not to contract in but to contract out.
As a union man himself, the hon. member is fully aware that this is the least democratic approach they could possibly put to any kind of fund or check-off from the men for any such purpose. As I said before, this is a situation that has gone on for years with the C.C.F. party in Cape Breton. A few of the locals stood up and cut it off. But for years they have been collecting that per capita tax from the members of the union down there while the union constitution itself denies this as a right.

Private Bills
The hon. member talks about the individual. Still and all, this was something that was jockied into position by the executive of the union at the time, whereby the men were not given a choice at all. This money was just taken from them and paid into the coffers of the C.C.F. party. I could go on and tell what happened to some of that money also.


Murdo William Martin: Will the hon. member permit a question?


Malcolm MacInnis: Yes.


Murdo William Martin: If the situation is as stated by the hon. member, namely that the C.C.F. somehow collected this money from the miners down there without their consent, how were some of the locals able to cut it off, as he also stated?


Malcolm MacInnis: In a question earlier the hon. member referred to the individual choice of the union and I reminded him that he said "the individual", not the union. Now he wants an explanation as to how this was done. Again I say it was done by the union bosses. There was no referendum for the men with regard to the manner of this payment. Then one or two locals took objection to its being done and they stood up and asked that this money no longer be deducted. There was nothing then the union could do about it because there was no referendum held on it. Again I say this to the hon. member. If he wishes to inquire more about the working of these unions, I will give him a full and detailed explanation as to how it comes about. I do not think it is necessary for me to do that because I understand the hon. member is a union member and that he already knows the workings of it.
This thing has been going on for years. The C.C.F. party has collected this money, as I say, while the constitution of the united mine workers does not permit it. But here is a situation which went on, which has been stopped by the miners and which is again being imposed. Here is a condition being imposed upon the workers of this country by a per capita tax of 60 cents for every individual that belongs to a union affiliated with the Canadian labour congress. I say it is a shame. I would ask the hon. member, on union principles alone, to rise in his place and deny that contracting out is the proper way. I would ask him to rise in his place that is and support the idea that contracting in is democratic, as opposed to what they are trying to pull.


Murdo William Martin: Before the hon. member sits down, may I ask him one more question?
[Mr. Maclnnis.)


Malcolm MacInnis: Yes.


Murdo William Martin: Will the hon. member try to inform the miners of Nova Scotia that, like the rest of the country, they should run their union bosses instead of permitting the union bosses to run them, as I can only assume they did from the remarks made by the hon. member.


Malcolm MacInnis: Excuse me, Mr. Speaker, would the hon. member repeat that question.


Murdo William Martin: Mr. Speaker, the hon. member has just informed the house that the miners in Nova Scotia are being run by the union bosses. Will he endeavour to tell them that the practice across the rest of the country is for the union members to run the union bosses, instead of the other way around, as is apparently the case in Nova Scotia.


Malcolm MacInnis: Mr. Speaker, apparently I have to keep driving to get my point across. The hon. member has misinterpreted my remarks. The miners in Cape Breton decide what their union bosses should do. I have already pointed out that they took it upon themselves to stop the per capita tax that was being paid to the C.C.F. party. We stopped it where this was desired; and where it was not desired by the miners because of their affiliation to the C.C.F. party, it went on.
But the miners of my area and of my local in particular took it upon themselves to stop the C.C.F. per capita tax payment through the union check-off. The miners run the union, it does not run them.


Mr. Frank McGee (York-Scarborough):: Mr. Speaker, I listened with a great deal of interest this afternoon to the speech of the hon. member who introduced this bill and also to the speech of the hon. member for Cape Breton South (Mr. Maclnnis) who speaks with such authority and feeling on union matters.


Murdo William Martin: He speaks with such confusion.


Frank Charles McGee: It seems to me that in approaching this subject of campaign funds and campaign contributions the hon. member for Timmins (Mr. Martin) has fallen into a common error and has certainly departed from the direction and definition of his New Democratic party.
The tenor of the speech of the hon. member suggested that this matter of campaign giving was an evil thing; that the secrecy which clothed the contributions of individual members was hiding strange, dark shapes of men bent on twisting the purpose of parliament and corrupting the parties in this house.

When his colleague, the hon. member for Skeena (Mr. Howard) was speaking to a similar bill in 1959 he used the word "subvert". He said:
These persons who contribute to political parties attempt to subvert parliament and the political parties within parliament.
I looked up the specific meaning of the word "subvert". It means, to overturn; to effect the destruction or overthrow of a party. The approach of the hon. member for Skeena and other hon. members who have taken this position in this discussion is repudiated by the people who have provided what has been described as the intellectual backdrop of the new party. The book "Social Purpose for Canada", edited by Michael Oliver, discusses many interesting things in connection with the new party. I have yet to appreciate how the principles defined in this book, which was written and rushed into print before the convention, are accepted by the New Democratic party.
I suggest that the hon. member read this book. I refer him particularly to page six and an article written by George Grant entitled "An Ethic of Community". He touches on this question of campaign giving and campaign contributions. He goes on to describe the support the established parties have obtained in various ways, and then he says this:
In saying all this, however, it is necessary to disclaim any "cops and robbers" or "conspiracy" view of history, which would imply that our society is at the mercy of a few wealthy and powerfbul men with Machiavellian intentions.
Perhaps the hon. member should have checked before he proceeded with this bill again.


Murdo William Martin: Mr. Speaker, would the hon. member inform the house by whom those words were written? Did the hon. member say it was Grant?


Frank Charles McGee: George Grant is the name of the author.


Murdo William Martin: Does the hon. member know the gentleman's occupation or where he is from?


Frank Charles McGee: This particular book has been published, advertised and discussed. It is supposed to be, and is described as the intellectual backdrop of the New Democratic party. Being intrigued, as many of us were in all political parties, with all aspects of the New Democratic party I glanced through this publication to determine whether this particular group had anything to say about campaign funds.
I would mention one thing that has been said, and which 1 think has to be said. It is
Private Bills
easy to indulge in hand-wringing and to deplore all the various incidents which have occurred in connection with campaign giving. However I think it must, and should be, placed on the record that people over generations have considered campaign giving an important and integral part of their social responsibilities, just as contributing to a church collection and the various types of funds and community drives which occur in everyday life.
It would be indeed unfortunate, it seems to me, to lump in with this suggestion of unlawfulness and illegal practices, decent, honourable and idealistic persons in our society who, supporting the party of their choice over the years, have provided on a continuing basis the money they know is necessary to provide continuity and the essential ingredients that keep a party alive and functioning, as parties must do in our society to sustain the very essence of our democracy.
In connection with the articles written in Maclean's magazine, I am not suggesting for a moment that abuses have not taken place. The evidence is of course there. But I am suggesting that the men of obvious Liberal background and persuasion who contributed substantial sums of money to the purchase of a home for the current leader of the opposition, when the leader of the opposition of that day happened to be a Conservative, had no malicious or malevolent idea behind their contributions. Since the government has changed and that house is occupied by the Leader of the Opposition (Mr. Pearson), men who are Conservative supporters have donated to the refurbishing and continuing expense of that home. Is there any evil motive in this?
This book also contains another very interesting passage. I do not think I am at liberty to disclose the name of the gentleman in question, but he is well known to several hon. members of this house. He contributed substantially to one of the established parties, and in cases where an individual had the particular characteristics and attributes which he admired and respected, he supported that person regardless of political party. Another thing he supported is what is described on page 77 of this intellectual backdrop to the new party in an article entitled "The Mass Media" written by Neil Compton. He is discussing the small magazines in Canada today and he refers to the "scholarly and literary quarterlies we now have in plenty". However, he adds, "the poor old Canadian Forum once a mighty power in the land is perhaps the only publication in existence which could

Business of the House
the privilege of living in a democracy. I should explain that I have freely drawn during the course of my remarks from an article which appeared in the New York Times magazine in June 1958 when this campaign was initiated.
With the difficulties and failings of the experiment as I have outlined them, the campaign produced approximately $15 million. This was a non-presidential election. During one Easter recess I visited New York and I had several interesting discussions with political figures in that city concerning the details of this matter. The best guess that could be made was that $15 million was collected and the money was contributed in a ratio of $9 million to the Republicans and $6 million to the Democrats. These estimates of course vary, but the American heritage foundation and other persons connected with politics estimate that had the campaign been conducted without the difficulties I cited the resultant contribution would have been $35 million or $40 million.
I return now to my original proposition. Difficulties unquestionably exist but I feel the solution lies not exclusively along the lines the hon. member suggested. We should move into a constructive role, broaden the base of political participation and support and thus produce, I am certain, a healthier democracy.



BUSINESS OF THE HOUSE

Lionel Chevrier: Mr. Speaker, may I inquire what the business will be on Monday and the order of that business if the house leader can give it to us. I also wonder whether he could outline the business for the whole week if that is possible. When that is done I find there is a much better opportunity of making progress with the business of the house. I am sure the house leader will be pleased with what has been accomplished by parliament during the course of this week.


Gordon Minto Churchill: Yes, Mr. Speaker, we have made good progress this week. The outline of business for Monday is as follows. The first item to be taken will be No. 6 on today's order paper, the resolution in the name of the Prime Minister respecting the observance of the centennial of confederation in Canada. The second will be the resolution in the name of the Minister of Public Works with respect to amendments to the National Housing Act, No. 8 on today's order paper. The third will be the resolution in the name of the Minister of Finance relating to school lands and school land funds in the prairie provinces, No. 9 on today's order paper. The fourth item will be second reading of the bill relating to the Pine Point railway. If those items are completed we will then resume our study of the Civil Service Act, Bill No. C-71, No. 1 on today's order paper.
I have given the order of business for Monday. Depending on the progress made, the business for Tuesday will probably follow in the same order, if the resolutions I mentioned carry. The only other item that might be brought forward on Tuesday would be a resolution concerning amateur sport but I shall leave that open until I see how far we progress on Monday. If we complete the items I have mentioned including finalizing our study of the Civil Service Act, it might well consume two full days.
Again leaving it open for review on Tuesday night, if we have some legislation which could be proceeded with we might continue with it on Wednesday which is a short day. This decision might be made. Otherwise, we would go on with the estimates. With regard to the estimates the hope is that next week we could complete the departments of labour, transport, health and welfare and, if things go well-


Lionel Chevrier: The house leader is doing very well now.


Gordon Minto Churchill: Shall I stop at that point?


[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. Dupuis: 1.	Is the position of superintendent at the historic site of Fort Lennox, Ile-aux-Noix, Quebec, still vacant?
2.	If so, has a competition been held to fill such position?
3.	If not, who holds the said position, when was such person appointed, and what salary is he being paid?
4.	In the absence of a superintendent, who is in authority on the island: how old is such person, what is his salary, and what are his qualifications?
5.	How, by whom, and when was such person so appointed?
Answer by: Hon. W. G. Dinsdale (Minister of
Northern Affairs and National Resources):
1.	Yes.
2.	The competition was held by the civil service commission during the spring but none of the 21 applicants was considered qualified for the position. A second competition is now in process, but a decision has not been reached.
3.	N.A.
4.	Mr. Vildac Arteau, as caretaker of the Fort Lennox national historic park, is in authority on the island. He is 55 years old, his wages are $1.50 per hour for a 44 hour week. He is an experienced works foreman and is considered to be carrying out his duties very capably.
5.	Mr. Arteau was hired by the department as of November 10, 1960, as a result of the retirement of Mr. Romeo Soutiere, the former custodian of Fort Lennox.


SMALL BOATS-PROPOSALS TO CONFERENCE
Mr. Benidickson: 1.	What proposals, suggestions, etc., on behalf of the federal government were advanced to a recent
Questions
conference with the provincial authorities and others, to consider new regulations and/or laws relating to small boat operations, and the licensing of small boats, or the licensing of operators thereof?
2.	Did representatives of the federal government for such conference prepare and distribute documents and memoranda on the subjects for distribution to those representing non-federal government authorities?
3.	If the answer to paragraph (2) is in the affirmative, what is a short title or description of each of such documents, memoranda, etc.?
Answer by: Hon. Leon Balcer (Minister of
Transport):
1.	No concrete proposals were advanced by the federal government representatives on this occasion but many problems and possibilities regarding small boat regulation and safety were considered by the conference, including the idea of licensing of small boat operators; the desirability of increasing the scope of licensing of small boats, and restrictions on the operation of small boats in local waters, at the request of local authorities. No attempts were made to achieve a solution at this time since it was felt that this first meeting should be of a purely exploratory nature.
2 and 3. Representatives of the federal government distributed the following material on the subject to those representing nonfederal government authorities:
(a)	Letter to all provinces, dated June 15, 1961, confirming meeting to be held September 6, 1961, and informing provinces they would receive a further letter outlining problems to be discussed and some proposed solutions.
(b)	Letter to all provinces, dated July 31, 1961, and enclosing a draft agenda and brief outline in regard to: (I) licensing of small boats, (II) licensing of operators, (III) restriction of designated areas, (IV) drowning statistics.
(c)	A copy of small vessel regulations with amendments.
(d)	A copy of the booklet "Safety Afloat" for 1961.

Supply-Items Passed
[The following items were passed in committee of supply]:


DEPARTMENT OF NATIONAL DEFENCE
[Stage Direction]
Royal Canadian Air Force-
239.	Operation and maintenance, $536,666,000.
240. Construction or acquisition of buildings, works, land and major equipment, $235,887,000.
Defence research and development-
Defence research board-
241.	Operation and maintenance, $24,993,564.
242. Construction or acquisition of buildings, works, land and equipment, $5,810,813.
243.	Development, $14,200,000.
Mutual aid-
244.	Contributions to infrastructure and military costs of The North Atlantic Treaty Organization and the transfer of defence equipment and supplies and the provision of services and facilities for defence purposes in accordance with section 3 of The Defence Appropriation Act, 1950, not exceeding a total of $40,798,000 including the present value of defence equipment or supplies or the cost of services made available by the Canadian forces estimated in the amount of $24,848,000 and provided by appropriations for those forces in the current and former years in respect of which, notwithstanding subsection (3) of section 3 of the said act, no amount shall be charged to this appropriation or paid into a special account; provided by this vote, $15,950,000.
National defence general-
245.	To authorize, notwithstanding section 30 of the Financial Administration Act, and subject to allotment by the treasury board, total commitments of $2,674,046,619 for the purposes of the foregoing votes relating to national defence, regardless of the year in which such commitments will come in course of payment (of which it is estimated that $1,123,561,879 will come due for payment in future years), $1.
General services-
246.	Grants to military associations, institutes and others as detailed in the estimates, $230,795.
247.	Grants to the town of Oromocto, subject to the approval of treasury board, for municipal services including the maintenance and operation of schools and to promote the development of the town, $2,000,000.
248.	Grants to provinces and municipalities for civil defence and related purposes, $4,350,000.
Pensions and other benefits-
249.	Civil pensions, as detailed in the estimates, $3,406.
250.	To authorize in respect of members of the Royal Canadian Air Force on leave without pay and serving as instructors with civilian training organizations operating under the British Commonwealth air training plan who were killed, payments to their dependents of amounts equal to the amounts such dependents would have received under the Pension Act, as amended, had such service as instructors been military service in the armed forces of Canada, less the value of any benefits received by such dependents under insurance contracts which were effected on the lives of such members of the Royal Canadian Air Force by or at the expense of the civilian organization, $2,780.
482. To authorize loans to be made in the current and subsequent fiscal years in respect of housing projects constructed, pursuant to an agreement with the Minister of National Defence, for occupancy by members of the Canadian forces; such loans
to be at interest rates and in accordance with such terms and conditions as the governor in council prescribes, $5,000,000.
Defence research and development-
Defence research board-
541.	Construction or acquisition of buildings, works, land and equipment-further amount required, $1,100,000.
General services-
542.	Final instalment on grant to assist in the construction of the soldiers' memorial hospital at Middleton, Nova Scotia (Revote), $33,897.
Pensions and other benefits-
543.	To provide that Herbert John Weatherhead be deemed to have been designated by the governor in council pursuant to paragraph (f) of subsection (1) of section 4 of the Public Service Superannuation Act on the 1st day of October, I960, and that he be deemed for all purposes of the said act to have been a contributor thereunder during the period October 1, 1960, to November 20, 1960, $1.
544.	To authorize in respect of members of the Royal Canadian Air Force on leave without pay and serving as instructors with civilian training organizations operating under the British Commonwealth air training plan who were killed, payments to their dependents of amounts equal to the amounts such dependents would have received under the Pension Act, as amended, had such service as instructors been military service in the armed forces of Canada, less the value of any benefits received by such dependents under insurance contracts which were effected on the lives of such members of the Royal Canadian Air Force by or at the expense of the civilian organization-further amount required, $2,590.
545.	To authorize the governor in council, in respect of persons that elected to come under part V of the Militia Pension Act or the Defence Services Pension Act, to prescribe the terms and conditions under which a period of service in respect of which such persons, while subject to parts I to IV of either of the said acts, made a payment to the receiver general that purported to be a deduction, shall be deemed to be pensionable service for all purposes of the Canadian Forces Superannuation Act (or a former act as defined therein) from the date of such election to come under the said part V, $1.
546.	To authorize the treasury board to make regulations respecting the counting as pensionable service, for the purposes of the Canadian Forces Superannuation Act, of any period not otherwise countable as such, during which a person, before becoming a contributor under the said act, performed on a full-time basis duties of a kind specified in the regulations to be for the benefit of the crown in right of Canada, and providing, except in the case of a person who has ceased to be a member of the regular forces (for which case the regulations may otherwise provide) that the Canadian Forces Superannuation Act shall apply as though such period were a period of service in a portion of the public service of Canada that is countable pursuant to clause (A) of subparagraph (ii) of paragraph (b) of section 5 of that act with effect from a day specified in the regulations, $1.
547.	To authorize the governor in council to make regulations prescribing the terms and conditions under which a period of full-time service during time of war or otherwise in an organization or position that, in his opinion, was in support of any of the forces specified in clauses (E) and (F) of subparagraph (ii) of paragraph (b) of section 5 of the Canadian Forces Superannuation Act

may, for the purposes of that act, be counted by a contributor as if such service were a period of service in the forces specified in the said clauses, $1.
DEPARTMENT OF DEFENCE PRODUCTION A-Department-
67.	Departmental administration, $9,574,385.
68.	Care, maintenance and custody of standby defence plants, buildings, machine tools and production tooling, $888,700.
69.	For the establishment of production capacity and for capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to the approval of treasury board, $1,590,000.
70.	Grants to municipalities in lieu of taxes on crown-owned defence plants operated by private contractors, $145,300.
71.	To establish qualified sources for the production of component parts and materials, subject to the approval of treasury board, and to authorize commitments against future years in the amount of $300,000, $607,000.
Supply-Items Passed
72.	To sustain technological capability in Canadian industry by supporting selected defence development programs on terms and conditions approved by treasury board, and to authorize, notwithstanding section 30 of the Financial Administration Act, total commitments of $16,500,000 for the foregoing purposes during the current and subsequent fiscal years, $5,500,000.
B-Crown companies-
73.	Expenses incurred by Defence Construction (1951) Limited in procuring the construction of defence projects on behalf of the Department of National Defence and procuring the construction of such other projects as are approved by treasury board, $3,462,317.
Canadian Arsenals Limited-
74.	Administration and operation, $3,880,230.
75.	Construction, improvements and equipment, $302,075.
A-Department-
507. For the establishment of production capacity and for capital assistance-further amount required, $1,240,000.


[Stage Direction]
THE PREMIER Fredericton
July 19, 1961
My dear Prime Minister:-
It has now been possible for my colleagues and I to consider in detail your letter of June 16th regarding the federal-provincial tax-sharing arrangements to prevail after March 31, 1962. We are most disappointed that the federal government's position is rigidly unaltered from that outlined in your proposals at the conference in February. We do recognize that federal concessions have been made on two matters, but it is our firm belief that these are minor in nature and unrelated to the tax-sharing arrangements between our governments. It was also a further disappointment to us to learn that the federal government has seen fit to completely disregard all the proposals made by the provinces, both at the conference itself, and in the ensuing discussions by the committee of officials.
At the conference in February, our main criticism of the new proposals was directed at the provisions with respect to equalization payments generally, and the specific proposal to include the Atlantic provinces adjustment grants within the framework of these provisions. With respect to the equalization provisions, the new proposals remove emphasis from fiscal need, and substitute for it the increased ability to raise personal and corporate income taxes. This has the effect of discriminating against low income provinces like New Brunswick and will result in higher levels of taxation, relative to the rest of Canada, if national average standards of services are to be maintained.
The other aspect of the equalization provisions which we believe to be unrealistic and discriminatory, i.e., the inclusion of natural resource revenues in the formula, remains unchanged despite the many arguments which have been raised against it. In February, it was suggested that this proposal would provide a better measurement of the fiscal needs of the provinces, but we cannot see how this can possibly be the case. Surely, if better means of measurement are required, then a number of other provincial revenue sources must also be included. The
choice of this particular revenue source has neither been defended nor explained in this context, and your letter of June 16 merely repeats the federal sentiments expressed in February.
Generally, your proposals with respect to equalization payments will have the effect of reducing our revenues from this source by nearly two and one half million dollars. To offset this loss, it is proposed to increase the Atlantic provinces adjustment grant by three million dollars, which will provide a gain of some $600,000, or approximately one dollar per capita. This addition to revenues does not compare favourably with that of three dollars per capita for Ontario; $2.76 for Nova Scotia; $9.30 for Prince Edward Island; and $4.66 for Newfoundland. These are unalterable facts based on federal projections of revenues for the fiscal year 1962-63.
Furthermore, we strongly resent the inference drawn by the federal Minister of Finance in the House of Commons (see Hansard, July 11, 1961, p. 7928) that New Brunswick's share of the total of equalization payments available would rise substantially under the new proposals. The statement that New Brunswick's share of 6.4 per cent in 1957-58 would rise to 11.9 per cent under the new agreement is not only misleading but represents a rather insidious use of statistical techniques. A more proper comparison would be the last year of the current agreement with the first year of the new agreement. Excluding the Atlantic provinces adjustment grants, New Brunswick's share of the total equalization fund falls from 9.3 per cent to 8.8 per cent, while that for Nova Scotia rises from 10.8 per cent to 11.2 per cent; and that for Prince Edward Island, from 1.8 per cent to 1.9 per cent.
Finally, you have also indicated a complete rejection of our proposal that the Atlantic provinces adjustment grants should stand as a separate and distinct feature of the tax-sharing arrangements, and should not be included in the calculations of guaranteed payments to the provinces. This proposal was made in all sincerity based on the written record that these grants were of a special nature and were to be kept apart from the normal agreements. As such, my suggestion, which was reiterated by my officials at later

meetings, received the support of all the provinces of Canada, with the possible exception of one.
To all of us, it is clear that the Atlantic provinces will not get the full benefit of the ten million dollar increase proposed, but will in fact receive only a portion of it. We have consistently objected to this proposed procedure and have raised strong arguments against it. These arguments have not been answered, but have been dismissed with the comment that "this seems a reasonable procedure".
Both my colleagues and myself, along with the great majority of the other provinces, sincerely regret that the special nature and high objectives underlying these adjustment grants are to be destroyed merely to disguise the fact that the equalization formula provides a level of payments inconsistent with the fiscal needs of one entire region of Canada. I must urge you, Mr. Prime Minister, to reconsider whether the interests of the people of this region and the entire country are being best served by this procedure, which involves a saving to the federal treasury of only a few million dollars.
At the February conference, the federal proposals indicated that the provinces must assume the responsibility for levying their own personal and corporation income taxes to the extent of the federal withdrawal from these fields. Although we disagreed with this proposal, we did feel that this would provide the province with certain advantages in the field of provincial fiscal policy. In fact, you yourself suggested that the provinces would then be able "to impose, vary and adjust their levies from time to time as may be necessary in the light of their responsibilities to their provincial taxpayers and without recourse to the federal government".
From the subsequent meetings of officials and from your letter of June 16, we now find that the federal government wishes to restrict the provinces with respect to this type of flexibility in taxation. In other words, the province is not to be permitted the right of adjusting the tax base, or of altering the rate of progression, but has merely the right to determine the percentage of the federal rate which it is to impose.
In addition, there are no provisions to protect the interests of the provinces from the effects of changes in the federal rates which would significantly alter provincial revenues. The federal government, as indicated in your letter, reserves the right to alter its rates, whenever necessary for fiscal or other reasons, but the provincial percentage rates, once fixed, "must be constant throughout the year". These restrictions will inevitably produce a great deal of instability and uncertainty in
provincial financing, and may well result in significant reductions in revenues.
My reaction, and that of my colleagues, to these proposals is one of great disappointment and dissatisfaction. If there were available to us a suitable alternative, I am certain that our collective reaction would be a complete rejection of your proposals and a demand for more equitable treatment. However, no reasonable alternatives are available and we feel we must inevitably accept the federal position, no matter how arbitrarily it is taken. In view of this, and the many reasons expressed above, I am certain that many of the provincial premiers will join with me in urging you to call a final fiscal conference immediately, in order to permit further discussion of the proposals reiterated in your letter of June 16.
Having regard for the importance of the matter, and the fact that a precedent for such a conference exists, I am certain that you will agree that not to follow such a course would be a complete departure from the spirit of cooperation and flexibility which has been present in the past.
Yours very truly,

[Stage Direction]
The Right Honourable John Diefenbaker Prime Minister of Canada Ottawa, Canada
Ottawa,
August 30th, 1961.
Honourable Louis J. Robichaud, M.L.A., Premier of New Brunswick,
Fredericton, New Brunswick.
My dear Premier,
Your letter of July 19 which requests a further dominion-provincial conference to consider the federal-provincial fiscal arrangements for the five year period commencing April 1st, 1962, has been given consideration.
It is a matter of regret that you have chosen to be so critical of the federal proposals which are in fact the most generous proposals ever offered by a government of Canada to the provinces. You have chosen to ignore the concessions and improvements contained in the proposals made at the dominion-provincial conference of February 23 and 24, and to refer only to what you describe as two minor concessions described in my letter of June 16. In this connection it is well to recall that the federal proposals advanced in my letter of June 16 followed three dominion-provincial conferences. At the conference of July 26 to 28, 1960, the provinces presented their views on the possible arrangements for the period after April 1, 1962. The
[Stage Direction]
federal government considered these provincial proposals carefully which in the aggregate have been estimated to amount to over $2 billion per annum-an additional sum far in excess of what the federal government could or should impose on the taxpayers.
As a result of the consideration of the provincial proposals presented at the July conference, it became clear that the tax rental system was unsound and I made certain suggestions at the conference held October 26 and 27, 1960. I suggested that since the federal government was not in a position to finance the additional expenditure which the provinces judged to be necessary for the proper discharge of their responsibilities, the provinces themselves should again assume the task of levying their own taxes. I stated that the federal government was prepared to recommend to parliament that the federal taxes on personal income, corporation income, and estates be reduced by 14-9-50, that is, by the standard rates then in effect. In addition, the government was prepared to recommend that an equalization fund of $220 million per annum be made available to the provinces to be divided as they saw fit provided that the Atlantic provinces each received at least as much under agreed division as they then received from equalization, Atlantic provinces adjustment grants, and the additional grant to Newfoundland.
Apart from the fact that some provinces were not anxious to reassume their constitutional responsibility for levying taxes for the support of their expenditures, provincial criticism of the October suggestions was largely on the grounds that the federal withdrawal should be greater than existing standard rates and that equalization should include a growth factor. The federal government responded to these provincial requests by making very generous concessions in the proposals of February 23 and 24, 1961. The federal withdrawal of 14-9-50 offered at the October conference was increased to 16-9-50 for the first years of the new period and was to rise progressively throughout the period, reaching 20-9-50 in the final year. This was an increase of more than 40 per cent in the federal withdrawal from personal income tax over the present share and over the withdrawal offered at the October conference, and it raised the provincial share of personal income tax to an amount in the final year of double the 10 per cent in effect when this government took office. Second, the federal government proposed a new system of equalization broadened to take account of the most variable of all provincial revenues, namely, revenues from natural resources. However, equalization payments under the system proposed will rise year by year with the growth in standard taxes and revenue from natural resources thus fully meeting the request of the provinces for the inclusion of a growth factor. Third, the federal government offered to recommend to parliament an increase of $10 million per annum in the Atlantic provinces adjustment grants. Fourth, the federal government offered to collect without charge the provincial personal income and corporation income taxes at whatever levels of tax the provinces chose to impose thus restoring to them without adding to their administrative costs a freedom and flexibility they had been so long denied under the tax rental system.
The February proposals constituted considerable additions to and changes of the October suggestions and represented the federal government's willingness and desire to achieve an equitable and harmonious settlement with the provinces within the framework of the constitution. Following the February conference, careful consideration was given to further representations of the provincial premiers. This was done both at the official level in two meetings of the continuing committee on fiscal and economic matters and by further review of the various aspects of the proposals by the federal government itself. As was explained in my letter of June 16, the government took account of the representations which had been made with respect to the sharing of the tax on certain public utility corporations and agreed to extend this sharing for the next five years. In addition, the government offered a substantial concession with respect to taxes on logging income by offering to provide a tax credit if the provinces would take similar action although bearing a smaller part of the cost.
You have disregarded these latter concessions and the considerable adjustments which were made to the original October suggestions for the benefit of the provinces. I am reminded of the aptness of a statement made by the then prime minister, the Right Honourable Louis St. Laurent, as shown on page 2016 of Hansard of March 12, 1956. In answer to a question as to whether any further concessions were made to the provinces, he replied, "Mr. Speaker, the provinces would not admit that anything that is proposed is a concession".
Your letter raises a number of points which you allege support your request for another dominion-provincial conference. These have already received careful consideration. In my letter of June 16 I dealt at length with the issues raised and the decisions which have been reached with respect to the various aspects of the proposals. The Minister of Finance, in introducing the new federal-pro-

vincial fiscal arrangements bill in the House of Commons on July 11, 1961, gave a complete statement of the federal proposals and I note from your letter that you have read this statement. Despite the fact that we have given a full explanation of the federal proposals, I shall now attempt to clarify certain points to which you allude.
You refer at a number of points in your letter to the Atlantic provinces adjustment grants and contend that these grants should be kept separate from the other fiscal arrangements. In fact, the Atlantic provinces adjustment grants will continue to be a separate grant and the increase of $10 million in the total amount will benefit your province to the extent of $3 million per annum, which is the 30 per cent share of the additional grant of $10 million. This grant will be paid separately and is in no way connected with the basic equalization formula which ensures that New Brunswick will receive an equalization payment sufficient to raise revenues from the standard taxes and 50 per cent of the natural resource revenues to the per capita national average yield. This fact is clear from the provisions of Bill C-122 which was introduced into the House of Commons on July 12, 1961. In addition to providing for a basic equalization formula based on the standard taxes plus 50 per cent of natural resource revenue and the separate Atlantic provinces adjustment grants, increased in total by $10 million, the government has embodied in the bill two guarantee provisions which will lead in certain cases to the payment of even higher amounts of equalization. Under these provisions, no province will receive less than it received in the preceding year and no province which is below the national average in the yield of standard taxes and 50 per cent of natural resources revenue will receive less than enough to bring its total return to the amount it would have received under the preceding arrangements. It is in these guarantee provisions only that it was thought reasonable to take account of the increase in the Atlantic provinces adjustment grants in the same way as we would take account of all other payments under the previous arrangements. These guarantees ensured that no province below the national average could be worse off under the new arrangements than under the old arrangements. I should point out to you that this is on the basis of a personal income tax rate of 16 per cent Provision is made for the rate to rise to 20 per cent. If the 20 per cent rate were used instead of the 16 per cent rate, you would find that the over-all gain to New Brunswick would be in excess of $3 million per annum.
You have alleged that the new proposals remove emphasis from fiscal need and substitute for it increased ability to raise personal and corporate income taxes. Nothing could be farther removed from the facts. By instituting the system of Atlantic provinces adjustment grants and by increasing them for the coming period by a further $10 million per annum, by continuing the special payment of $8 million per annum to the province of Newfoundland, and by providing a new equalization formula based on the national average and including 50 per cent of the most variable of all provincial revenues, namely, natural resources, this government has ensured that a large percentage of fiscal aid payments will go to the less well to do provinces. This fact is well illustrated by the comparisons made by the Minister of Finance in the House of Commons on July 11, 1961, and to which you refer on page 2 of your letter. While the proposals have increased the emphasis on fiscal need, they also permit the provinces to cultivate their tax fields in the way each province deems fit. There is nothing inconsistent in these objectives. I must reaffirm this government's attention to the fiscal problems of the less well to do regions of Canada and repeat that its performance in this regard goes far beyond anything that has ever been done in the past.
I find it difficult to understand your opposition to the inclusion of 50 per cent of natural resources revenue in the equalization formula. As already stated, the natural resource factor was included because variations from province to province in per capita natural resource revenue are far more extreme than variations in any other provincial revenues. Indeed, the inclusion of the natural resource factor directly benefits the province of New Brunswick where the per capita revenue from natural resources is below the national average.
You refer also to the conditions under which the federal government will collect provincial taxes free of charge and cite these as evidence of a lack of flexibility in the federal proposals. The federal government's answer is that it is endeavouring to give the provinces all the freedom that is possible, subject only to the limitations of administrative feasilibity and our concern for the convenience of taxpayers.
It is the earnest desire of the federal government to achieve harmonious and equitable fiscal arrangements with the provinces. In a co-operative spirit we have sought a more equal and equitable partnership with the provinces. I hope that upon reconsideration the financial benefits of the new arrangements and the greater freedom and flexilibity which they afford to your province will commend themselves to you.
Yours sincerely,
John G. Diefenbaker.
[Stage Direction]


Monday, September 18, 1961