1961-09-27

[Stage Direction]
Eighth and ninth reports of the standing committee on miscellaneous private bills- Mr. Mandziuk.


Hon. Gordon Churchill (Minister of Veterans Affairs) moved:: That the second report of the special committee appointed to consider with Mr. Speaker the procedure of this house, presented on Tuesday, September 26, be now concurred in.


[Stage Direction]
Motion agreed to.


Hon. D. J. Walker (Minister of Public Works):: On September 19 last, during discussion on the second reading of Bill No. 128 to amend the National Housing Act, the hon. member for Bonavista-Twillingate asked if I would place on record in Hansard a list of those universities which have had loans approved under part VIA of the National
Housing Act. I now have this list, and with the permission of the house I shall be glad to have it tabled for inclusion in Hansard.
The hon. gentleman also asked for a list showing all the institutions which would be eligible for such loans. There is, of course, no such definitive list. I thought I had made this abundantly clear when replying to a similar question asked in December of last year, when my answer was recorded on page 1028 of Hansard. However, so as to avoid any further misunderstanding I will again define the meaning of "university" for the purposes of this part of the act. Institutions eligible for loans under part VIA of the National Housing Act are all degree conferring universities or colleges and also other institutions in which courses of full university standard are given although the degree may be conferred by a university with which it is affiliated.
May I have the permission of the house to table the list?


Mr. Speaker:: To table and print it. Perhaps it would be convenient if it were printed at the point in Hansard where the answer is given. Is that agreed?


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



N.H.A. LOAN APPROVALS FOR UNIVERSITY STUDENT RESIDENCES AS AT SEPTEMBER 25, 1961

[Stage Direction]
Name of Institution
Acadia University, Wolfeville, N.S	
Assumption University. Windsor, Ont	
Brandon College, Brandon, Man	
University of British Columbia, Vancouver, B.C	
Carleton University, Ottawa, Ont	
Emmanuel College, Saskatoon, Sask	
University of King's College, Halifax, N.S	
Laval University, Quebec City, Que	
Mount St. Bernard College, Antigonish, N.S	
University of New Brunswick, Fredericton. N.B	
Notre Dame College, Wilcox, Sask	
L'Academie de Quebec, Quebec City, Que	
St. Francis Xavier University, Antigonish, N.S	
University of Sherbrooke, Sherbrooke, Que	
United College, Winnipeg, Man	
Waterloo Lutheran University, Waterloo, Ontario	
University of St. Jerome's College, Kitchener, Ont	
Seminaire de Nicolet, P.Q	
Seminaire Saint-Pie X, Hauterive, Que	
College de Matane, Matane, Que	
nount of Loan	Students Accommodated
$ 503,370	145
1,378,564	220
905,972	152
1,331,948	336
1,512,000	315
394,176	82
689,670	106
3,255,000	465
560,862	126
1,800,000	428
213,975	36
810,000	200
1,315,863	314
1,750,000	461
692,658	136
275,790	100
300,000	98
483.300	125
221,706	90
630,900	120
$19,028,752	4055
Awaiting order in council approval.
8976	HOUSE OF
Starred Questions

Mr. Howard: 1.	Since January 1, 1961, have any representations been received regarding the building of a breakwater at Port Renfrew, Port San Juan bay, Vancouver island, B.C.?
2.	If so, what is the name and address of each person, organization or group which made such representations, and the date of each?
3.	What steps, if any, have been taken to build such a breakwater, and when will this project be started?


David James Walker: The answer to the first question is yes. As for the second question, I have a long list and would ask leave to table it or to have it made an order for return. In answer to the third question, may I say that the proposal is still being studied and no decision has yet been reached on starting the project.


Mr. Speaker:: Is it the pleasure of the house that the list be tabled?


Some hon. Members:: Agreed.

On the orders of the day:


Mr. Frank Howard (Skeena):: Mr. Speaker, I wish to direct a question to the Minister of Public Works arising out of his answer to starred question No. 472 the reply to which was tabled and which I have now examined. Why is the name of George Chatterton missing from the list, in view of the fact that on May 4, 1961 the minister indicated that Mr. Chatterton had made representations to him about the construction of this breakwater?


David James Walker: Mr. Speaker, the reeve of Saanich is very different from the hon. member for Skeena. He came to see me personally not once but many times. He was not content with simply writing me letters.


Frank Howard: Why, then, is his name not on the list?


David James Walker: If the hon. member reads the question and reply again he will have his answer.



COMBINES BRANCH


Mr. Benidickson: Has the director of investigation and research of the combines investigation branch initiated an investigation into a simultaneous price increase of radio and television tubes by two manufacturers in the electronics industry?


Hon. E. D. Fulion (Minister of Justice):: The
combines branch maintains a continuing interest in this field as in other fields, and any information coming to the attention of the


director which may indicate a possible contravention of the Combines Investigation Act is considered carefully to determine whether the situation is such as to warrant formal inquiry. The general practice, however, is that no information is given out as to whether an inquiry under the act is being pursued in a particular industry unless and until a report is published.



REDUCTION OF BENEFITS TO COAL MINERS, N.S.

Mr. Martin (Essex East): 1.	Has the Minister of Labour or the unemployment insurance commission received representations from the Phalen local of the united mine workers in Nova Scotia respecting the reduction in benefits during the week following the vacation period in the coal mines?
2.	If so, has a reply been made, and what is the nature of the reply?


Mr. R. D. Thrasher (Parliamentary Secretary to the Minister of Labour):: The answer to the first part of the question is yes. In answer to the second part, a telegram reading as follows was sent to the Phalen local of the united mine workers in Nova Scotia on August 24, 1961:
Holiday pay for Dominion Coal employees will be allocated on basis of normal earnings for six day work week. Believe this will rectify situation which you brought to my attention.



CONTEMPLATED CHANGES, MONTREAL-HALIFAX PASSENGER SERVICE

Mr. McWilliam: 1.	Is a change contemplated in the Montreal-Halifax passenger service provided by the Ocean Limited, the Scotian, and the Maritime Express?
2.	If so, (a) what are the changes contemplated? (b) what trades will be affected, and what will be the reduction in personnel in each trade? (c) will they affect present passenger services between divisional and subdivision points?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, in answer to parts 1 and 2 of this question, the management of Canadian National Railways advise that the maritime train services are currently under review but no changes have yet been decided upon.



WAGE INVESTIGATION, POINT EDWARD NAVAL BASE

Mr. Robichaud: 1.	Has the Minister of National Defence received a communication from the international association of machinists, Point Edward naval base, requesting an investigation of the wage structure at the base with a view to establishing rates comparable for similar employees in other industries in the same area?
2.	If so, what action has been taken on this request?


Mr. Egan Chambers (Parliamentary Secretary to the Minister of National Defence):: Mr. Speaker, the answer to part 1 of this question is yes. In answer to part 2, the information in this letter has been forwarded

to the Department of Labour, since that department is responsible for investigating and making recommendations regarding appropriate wage rates for prevailing rate employees of all government departments.



CHAMPLAIN BRIDGE, MONTREAL

Mr. Loiselle: 1.	When was the decision taken to build the Champlain bridge?
2.	What was the estimate of cost at that date?
3.	Have other estimates of cost been made since that date, and, if so, on what dates?
4.	What is the present estimate of cost?
5.	How many contracts have been given for the construction of this bridge and approaches, to whom, on what date, for what work, and in what amounts?
6.	Have any claims been filed with the national harbours board by any of these contractors or subcontractors, and in what amounts?
7.	What will be the final cost of this bridge?
8.	What will be the official date for the opening of the bridge?
9.	Will all the proposed approaches be ready at the opening of the bridge, and, if not, when will each approach be ready?
Starred Questions


Léon Balcer: Mr. Speaker, the details of a number of contracts are included in the answers to the several parts of this question. As the complete answer is very lengthy, perhaps the house will agree that it be printed in Hansard without being read.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.
[Editor's note: The answer above referred to is as follows:]
The national harbours board advises as follows:
1.	The construction of the bridge was authorized in 1955.
2.	The estimate of cost at that date was $35,000,000.
3.	No.
4.	The present estimated cost of the bridge is $35,300,338.
5.	The following contracts have been awarded in connection with the construction of Champlain bridge:
Description	Contractor	Amount	Date	Fill material, north end, Nuns' island bridge	Edouard Monette Ltee ..	$ 108,332.72	July	25/57Piers IE, 2E, and 1W, 2W, Nuns' island bridge 	Atlas Construction Co. Ltd	638,863.34	July	25/57Fill, south approach, Nuns' island bridge	Walsh-Canadian Construction Co	56,144.30	Sept.	25/57Construction of temporary causeway from city of Montreal to Nuns' island 	Edouard Monette Ltee ..	298,851.40	Feb.	26/58Construction of piers and abutments, section 3 of Nuns' island bridge ..	The Foundation Company of Canada Limited ...	1,640,650.00	July	29/58Supply and placing of fill on Nuns' island 	Miron Construction Limited	178,743.85	Sept.	19/58Extension of St. Pierre collector outlet .	McNamara (Quebec) Limited	343,223.00	June	5/59Construction of superstructure, section 3 of Champlain bridge 	Creaghan & Archibald Limited	1,044,540.00	July	17/59Construction of piers and superstructure, sections 5 and 7A, Champlain bridge 	McNamara (Quebec) Ltd. Key Construction, and Deschamps	8,317,797.00	June	29/59Construction of superstructure, section 6 of Champlain bridge	Dominion Bridge Company, Limited	5,907,000.00	Oct.	2/59Construction of abutment, piers and prestressed concrete superstructure, section 7B of Champlain bridge ..	A. Janin & Company ..	651,235.00	June	13/60
90205-6-566

Starred Questions
Description Supply and placing of fill for the main roadway embankment, section 2 of	Contractor	Amount	Date	Champlain bridge 	
Construction of the main overpass, sec-	Charles Duranceau Ltee .	$144,500.00	Sept.	2/60tion 2, Champlain bridge 	
Construction of the toll plaza and administration building, section 4,	Charles Duranceau Ltee .	266,684.00	Nov.	16/60Champlain bridge 	
Construction of north and south over-	Louis Donolo Inc	397,000.00	June	26/61passes, section 2, Champlain bridge Construction of roadways, sections 2 and	Quebec Engineering Ltd.	82,929.00	Aug.	18/613, Champlain bridge 	Miron Company Ltd. ..	618,892.39	Aug.	29/616. No.	DR. G. LANGIS7.	The final cost of the bridge and approaches will be approximately $35,000,000, exclusive of interest during construction.8.	It is expected that the bridge will be open for traffic in June, 1962.9.	Not all the final approaches will be completed when the bridge is opened in 1962 but means of access to the bridge will be available at both the north and south shore ends of the bridge so that it can be operated satisfactory.


Mr. Caron: 1.	Was Dr. G. Langis, M.D., at one time a temporary medical officer of the Department of National Health and Welfare, quarantine and sick mariners division?
2.	How long had he acted in this capacity?
3.	Has he been dismissed?
4.	When, and for what reason?
5.	Is Dr. Langis a veteran with overseas service?


Hon. J. W. Monteith (Minister of National Health and Welfare):: Mr. Speaker, the answers to the five parts of this question are as follows:



CHIGNECTO CANAL FEASIBILITY SURVEY

Mr. McWilliam: 1.	On what date did the federal government agree to participate in a survey of the feasibility and cost of the Chignecto canal?
2.	On what date did the survey actually start?
3.	Is survey work in progress on the site at the present time?
4.	Have any representations been received since July 1, 1961, in connection with the Chignecto canal survey, and, if so, from whom?


David James Walker: Mr. Speaker, I do not have the information available but it will be made available. This is the first time this question has appeared on the order paper. May I ask that this be made an order for return?


Mr. Speaker:: Order for return.

1.	Yes.
2.	Dr. Langis was appointed port physician at Rimouski on December 5, 1935, and retained that position until August 25, 1961, with the exception of some three years during and immediately after the second world war.
3 and 4. A successor was named on August 25 of this year because it was felt that the duties of a part time position of this type, involving night calls and other inconveniences, could best be undertaken by a younger doctor who has not developed other demands on his time nor had the same opportunity to build up a large private practice. The new port physician had performed services for my department previously when Dr. Langis was not available.
5.	Yes.
On the orders of the day:


Mr. G. R. McWilliam (Norlhumberland-Miramichi):: I wish to direct a question to the Minister of Public Works. In view of the minister's request that starred question No. 478 be made an order for return, and in view of the pending prorogation, I wonder if the minister would forward me the information requested as soon as possible.


David James Walker: I shall be very happy to do that.



IMPORTS FROM AND EXPORTS TO CUBA- SUGAR IMPORTS

Mr. Howard: 1.	What was the value in dollars of (a) imports from, and (b) exports to Cuba, in (i) 1958 (ii) 1959 (iii) 1960 (iv) 1961 to date?
2.	How much sugar was imported by Canada by countries, and by (a) tons (b) value in dollars, in (i) 1958 (ii) 1959 (iii) 1960 (iv) 1961 to date?


Mr. E. L. Morris (Parliamentary Secretary to the Minister of Trade and Commerce):: Mr. Speaker, the answer to this question requires

three pages of tabulated material. It should be made an order for return, the answer tabled herewith.


Mr. Speaker:: Order for return.



POLITICAL BROADCASTS, C.B.C.

Mr. Howard: 1.	For each year from January 1, 1956, to December 31, 1960, how many hours has the Canadian Broadcasting Corporation granted, on both the English and French networks, for (a) radio broadcasts, and (b) television broadcasts, to any of the conventions by the (i) Progressive Conservative party (ii) Liberal party (iii) Social Credit party, and (iv) Co-operative Commonwealth Federation?
2.	In each of the above-mentioned cases, what were the total amounts spent for broadcasting purposes?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, there is a tremendous amount of detail material necessary in preparing the answer to this question. The corporation has been working on it but the information is not available today. Perhaps the hon. member will be willing to have this made an order for return so the answer could be forthcoming in the very near future. Alternatively, the next time these questions are called it could appear on the order paper again.


Mr. Speaker:: Order for return.



BANK OP CANADA PENSION SCHEME

Mr. Matheson: 1.	What action, if any, has the government taken with respect to the pension scheme which was adopted by the board of directors of the Bank of Canada on February 15, 1960?
2. In what respect has such action, if any, affected the pension rights of the former governor, Mr. James Coyne?
3. In what respect has such action, if any. affected any other employees of the Bank of Canada?


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, the board of directors of the Bank of Canada at its meeting on July 22, 1961 decided to seek legal opinion on the validity of the bank's pension by-law and in particular rule No. 17 in that by-law. On the same day the board of directors adopted a resolution suspending rule No. 17 of the by-law pending further consideration by the board.



SARNIA INDIAN RESERVE


Mr. Pickersgill: 1.	Were any trusts established in connection with the sale of the Sarnia Indian reserve which has since been cancelled?
2.	What was the purpose of these trusts, and what amount was set aside for each of them?
3.	Are the trusts being used for the purpose for which they were established?
90205-6-566i
Starred. Questions
4.	If not, what disposition is to be made of these trusts?
5.	Has any attempt been made to ascertain the views of the Sarnia Indian band with respect to these trusts, and, if so, with what results?
6.	If the band has not been consulted, is it proposed to consult the band, and, if so, when, and how?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker,
the answers to the six parts of this question are as follows:
1.	Yes.
2.	(a) The sum of $500,000 for the establishment of a modern village.
(b) The sum of $100,000 to aid members without land holdings to acquire building sites in the village.
3.	The funds set aside in trust are being held to be used for the purposes stipulated.
4.	Not applicable.
5.	By vote taken on August 28, 1961 a majority of the electors of the band favoured a per capita distribution of these trust moneys. The legal problems involved are under study.
6.	Answered by 5.
On the orders of the day:


Hon. J. W. Pickersgill (Bonavisia-Twillingale):: Mr. Speaker, I should like to ask the Minister of Citizenship and Immigration a question supplementary to the starred question to which she replied earlier. May I ask the hon. lady whether there is any present intention of going ahead with the model village in the Sarnia reserve which was provided for in the agreement between the crown and Dimensional Investments Limited?


Ellen Louks Fairclough: Mr. Speaker, some progress has been made. Some houses have been built and are presently occupied. I would have to have more information about the present situation before I could definitely answer the hon. member.
While I am on this subject may I refer to the answer which I gave earlier this morning. Possibly I should draw attention to the fact that there is a slight discrepancy between the figure of $1 million I gave yesterday and the figures I gave the hon. member this morning, which amounted to $600,000. The explanation of the $400,000 discrepancy is that that sum is in the band funds. That is the amount required under section 64 (a), of the Indian Act, that is 50 per cent of the capital funds, to be deposited in the band funds, the balance being available for distribution in circumstances similar to those in this case.


John Whitney Pickersgill: I have another question I wish to put to the hon. lady. Are any negotiations or discussions going on at the present

Motions for Papers
time with respect to another sale or attempted sale of the reserve, or what is left of it?


Ellen Louks Fairclough: I cannot answer that, Mr. Speaker, because the initial negotiations would be with the Indians. I really could not say whether they are presently negotiating with other purchasers. We usually do not hear about these matters in the branch until such time as some progress has been made.


John Whitney Pickersgill: Well, the hon. lady is not aware of such discussions, is that correct?


Ellen Louks Fairclough: No, Mr. Speaker.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. McWilliam: 1.	On what date did the federal government agree to participate in a survey of the feasibility and cost of the Chignecto canal?
2.	On what date did the survey actually start?
3.	Is survey work in progress on the site at the present time?
4.	Have any representations been received since July 1, 1961, in connection with the Chignecto canal survey, and, if so, from whom?


IMPORTS FROM AND EXPORTS TO CUBA- SUGAR IMPORTS
Mr. Howard: 1.	What was the value in dollars of (a) imports from, and (b) exports to Cuba, in (i) 1958 (11) 1959 (iii) 1960 (iv) 1961 to date?
2.	How much sugar was imported by Canada by countries, and by (a) tons (b) value in dollars, in (i) 1958 (ii) 1959 (iii) 1960 (iv) 1961 to date?


POLITICAL BROADCASTS, C.B.C.
Mr. Howard: 1.	For each year from January 1, 1956, to December 31, 1960, how many hours has the Canadian Broadcasting Corporation granted, on both the English and French networks, for (a) radio broadcasts, and (b) television broadcasts, to any of the conventions by the (i) Progressive Conservative party (ii) Liberal party (iii) Social Credit party, and (iv) Co-operative Commonwealth Federation?
2.	In each of the above mentioned cases, what were the total amounts spent for broadcasting purposes?



MOTIONS FOR PAPERS


[Stage Direction]
Motion No. 164-Mr. Maiheson:
For copies of the texts of the speeches delivered by the Minister of Finance and the Minister of Trade and Commerce at the Accra conference.
Hon. George H. Hees (Minister of Trade and Commerce):: Mr. Speaker, as I stated on Monday last, as recorded at page 8829 of Hansard of that date, it is not considered
[Mr. Pickersgill.)
correct procedure for ministers, when they return to the governments which they represent, and to their houses of parliament, to table the text of speeches delivered at a conference. In view of this I wonder whether the hon. member would consider withdrawing his motion.


Mr. Maiheson:: No.


Mr. Speaker:: Those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those against will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the nays have it.
And more than five members having risen:


Mr. Speaker:: Call in the members.


Mr. Speaker:: I declare the motion lost.



INQUIRY AS TO EFFECT OF ANTI-COMBINES LEGISLATION

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Minister of Trade and Commerce and ask if it is a fact that the anti-combines legislation as it affects exports is not working satisfactorily, and that what was thought in 1960 to be a new spur to foreign sales has become in 1961 a disappointment to the trade department.


George Harris Hees: Mr. Speaker, I am not aware of this. If the hon. member wishes more specific information on how the anti-combines legislation is working, I think he should perhaps direct his question to the Minister of Justice.
Inquiries of the Ministry


Lionel Chevrier: A supplementary question, if I may, Mr. Speaker. I had reference, when I posed the question to the minister, to an article appearing in the Montreal Gazette of Monday in which it was indicated that because of the manner in which the legislation-


Mr. Speaker:: Order. I think the hon. member for Laurier will agree that a question about an opinion expressed in a newspaper is scarcely asking for factual information. If there is a question of fact about the administration of the department, I would of course be prepared to accept it.


Lionel Chevrier: It is not an opinion, Mr. Speaker; it is a question of fact. I was asking the minister whether it was a fact that this legislation was working a hardship.


George Harris Hees: Mr. Speaker, the hon. member has answered his own question. He says it is a fact, and then he asks me if it is a fact. I think that shows how confused the hon. member is.


Mr. G. J. Mcllrailh (Otiawa West):: Mr. Speaker, I should like to ask a related question of the Minister of Justice. It is based on a report in the Toronto Globe and Mail of today in which the head of the combines branch is reported as having made certain statements. My question is this. What are the weaknesses in the combines law that seem to be complained of and referred to in this speech?


Mr. Speaker:: Order. With due deference to the hon. members who opened this line of inquiry, it is a matter for debate on the expression of opinion and is not something that could be answered briefly on the orders of the day. It would require perhaps half an hour to expound in order to give an adequate answer.


George James McIlraith: Then I put a question that is capable of a very short answer, yes or no. Did the minister see the report of the speech made by Mr. D. W. W. Henry, director of investigation and research under the combines act, which is contained in today's Globe and Mail?


Edmund Davie Fulton: Mr. Speaker, Mr. Henry has made a number of speeches in recent months with my knowledge and approval, and I am sure I do not know to what speech the hon. member is referring.


George James McIlraith: I am referring to the one
reported in today's Globe and Mail.


Edmund Davie Fulton: As you have pointed out, Mr. Speaker, this is getting to be speculative. I have the article in today's Globe and Mail

Inquiries of the Ministry but I have not yet been able to pinpoint any speech made by Mr. Henry referred to therein.


George James McIlraith: It is at the bottom of the column.


Edmund Davie Fulton: Yes, I see. It was a speech made by Mr. Henry to the retail merchants' association in Toronto. If one reads that speech there is in it, as I see it, no statement that the legislation needs amending. My hon. friend has put a very different interpretation on it from that which I think a proper reading, even of the report in the Globe and Mail, would lead an ordinary, reasonable person to draw.


George James McIlraith: A further supplementary question, Mr. Speaker-


Mr. Speaker:: Order. I am sorry, but I think the matter has been pursued far enough.



FINANCE


[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I should like to direct a question to the Minister of Finance and ask the minister whether in recent days he has had any discussions with officials of the Bank of Montreal and the Bank of Nova Scotia relative to a merger of those two banks, and whether he has before him an application for a charter for a bank embracing the two banks I have mentioned.


Donald Methuen Fleming: No, sir.



INQUIRY AS TO QUOTA POSITION

[Stage Direction]
On the orders of the day:
Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, I should like to address a question to the Minister of Agriculture. Will the minister outline to the house the situation in regard to wheat delivery quotas on the prairies?


Hon. Alvin Hamilton (Minister of Agriculture):: I am very glad I have been asked this question, Mr. Speaker, because it gives me an opportunity to-


John Whitney Pickersgill: Make a speech.


Francis Alvin George Hamilton: -make a statement. In the last crop year we were able for the first time to give a 7-bushel quota to every delivery point on the prairies. For this year to date I can quote the figures by provinces. I know all members are interested. Last year at this time there were 360 places
[Mr. Fulton.l
in Manitoba on the initial unit quota and 9 on the 1-bushel quota. This year there are 89 on the initial unit quota, 169 on the 1-bushel quota, 50 on the 2-bushel quota, 20 on the 3-bushel quota, 4 on the 4-bushel quota, and 21 on the 5-bushel quota.
In Saskatchewan last year 959 were on the initial unit quota and 123 on the 1-bushel quota. This year there are 424 on the initial unit quota, 532 on the 1-bushel quota, 79 on the 2-bushel quota, 20 on the 3-bushel quota, 1 on the 4-bushel quota and 6 on the 5-bushel quota.
In Alberta last year there were 492 still on the initial unit quota and only 57 on the 1-bushel quota. This year there are 110 on the initial unit quota, 255 on the 1-bushel quota, 119 on the 2-bushel quota, 48 on the 3-bushel quota, 1 on the 4-bushel quota and 11 on the 5-bushel quota.
This indicates that we should be able, thanks to the exports of last year and the continuing good sales of this year, to have quotas up to 3 and 4 at most delivery points by Christmas.



LIVESTOCK


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: Mr. Speaker, I wonder whether I may direct a question to the Minister of Agriculture. Can the minister say if the federal authority is still in effect and if it will continue in respect of reimbursing the province of Ontario for 40 per cent of the money paid to Ontario farmers suffering loss of domestic animals through rabies?


Francis Alvin George Hamilton: Yes, Mr. Speaker, our legislation is effective as long as the provincial legislation in Ontario is effective.
(Translation):



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. J. E. Bissonnette (Quebec West):: Mr. Speaker, I should like to direct a question to the Minister of Finance. We were happy to hear of his recent visit to His Holiness Pope John XXIII.
Would the minister care to say a few words about the impression he had after his audience with the Holy Father and about the language in which they conversed?

Inquiries of the Ministry
(Text):


Mr. Speaker:: Order. I do not wish to circumscribe the minister, who has recently returned from an interesting trip, but as I understood the question it seemed like a general invitation to the minister to give us a travelogue, and perhaps he could do that more suitably on the estimates. If there is a short point, I have no objection.
(Translation):


Donald Methuen Fleming: The conversation I was privileged to have with His Holiness, during a private audience, was entirely in French. As all members know, His Holiness speaks French with great facility.
(Text):


John Whitney Pickersgill: May I put a supplementary question to the Minister of Finance and ask him if the question he has just answered has any relation to his administrative responsibility?


Mr. Speaker:: I am sorry, but I misunderstood the question. I did not realize it was limited to a particular interview.
[Later:)


Mr. Speaker:: Before calling orders of the day I wonder whether the house would allow me to make a correction in Hansard. I must apologize to the hon. member for Quebec West for misunderstanding his question. Unfortunately I relied on the translation, which was incomplete and faulty, and I did not understand that the hon. gentleman was asking about the minister's interview with His Holiness the Pope. I thought he was inviting the minister to give an account of his visit to Accra or to comment generally about his travels. I take the liberty of making this explanation because I am afraid earlier comments on what I thought had been asked might appear facetious in relation to the actual question.


REQUEST FOR COMMENT ON RUSSIAN PROPOSALS
[Stage Direction]
On the orders of the day:
Mr. Douglas Jung (Vancouver Centre):: wish to direct a question to the Prime Minister. Would the Prime Minister care to comment on the proposal made yesterday by the Soviet foreign minister, Mr. Gromyko, regarding Berlin?
Right Hon. J. G. Diefenbaker (Prime
Minister): I have read Mr. Gromyko's observations in which there were references to the type of settlement which might be acceptable to the U.S.S.R. in so far as the United Nations is concerned and its connection therewith. I think it was at Winnipeg,
at a meeting of the bar association, that I outlined the possibilities in this direction, and I did so again in the house some two weeks ago. I pointed out that a United Nations connection with the Berlin problem might be advantageous. As a matter of fact that view was presented by the Canadian government two years ago.
Whether or not Mr. Gromyko's plan or suggestion contains anything that would be acceptable, I cannot say. The whole matter is being canvassed at the moment. Discussions are taking place between the various members of the United Nations to ascertain whether or not the United Nations could play a role which would be generally acceptable. I hope that might be achieved.


CIVIL DEFENCE
[Stage Direction]
On the orders of the day:
Mr. L. D. Crestohl (Cartier):: I wish to direct a question to the Minister of National Health and Welfare. Did the government receive a request from the city of Westmount to assist financially in the inclusion of bomb emergency shelters in apartment houses being erected in that city, or to subsidize those shelters? If so, can the minister inform the house what the government is doing about this inquiry?


Jay Waldo Monteith: I know of no such request.


CONFORMITY OF RECOMMENDED SHELTER WITH BUILDING CODE
[Stage Direction]
On the orders of the day:
John Richard Garland: I should like to ask the Minister of Public Works whether he is in a position today to answer the question I put to him yesterday with respect to the conformity of the recommended shelters with the national building code.


David James Walker: I was waiting only until the other questions had been asked. I am very happy to answer the hon. member for Nipissing, who asked whether it was true that the fall-out shelters which the government is recommending people should build in their basements are inconsistent with the national building code.
Upon inquiry I find that this matter has been considered by the associate committee of the national research council which drew up and recommended the national building
8984	HOUSE OF
Inquiries of the Ministry code. They have made the following statement about the matter, which is incorporated in the booklet on this shelter:
The associate committee on the national building code of the national research council considers this design of household fall-out shelters to be structurally acceptable for its intended use for installation in the basements of dwellings, for emergency use only.
The associate committee makes this statement since the provisions of the national building code are intended for use with buildings for normal conditions of occupancy and not for emergency use.
There are two aspects of the shelter which diverge, for good reason, from certain of the details of the national building code. The first and most obvious one is that the code stipulates that each room in a house should have a window. It would, of course, defeat the whole purpose of the shelter to put a window in it, and the need for ventilation in the shelter is looked after otherwise by vents which it is recommended be built in appropriate places that will not impair the protective value of the shelter.
The other feature specified in the code which has not been carried into the shelter design is that which states that masonry should not be structurally supported on timber. The shelter uses masonry in the form of concrete blocks as a shielding material. To carry it on steel or on other masonry supports would make the shelter Very much more expensive and more difficult to build. For the emergency purposes for which the shelter is designed and for the period of usefulness that might reasonably be expected for a shelter, it has been determined that, as reflected by the quotation from the associate committee, the design proposed is quite adequate.


UNITED NATIONS
[Stage Direction]
On the orders of the day:
Mr. H. O. White (Middlesex East):: I wish to direct a question to the Prime Minister. Has the Prime Minister any report from our delegation at the United Nations to the effect that our Secretary of State for External Affairs could succeed the late Dag Ham-marskjold as secretary general?


Right Hon. J. G. Diefenbaker (Prime Minister):: I would be afraid to speak in appropriate terms as to the qualifications of the Secretary of State for External Affairs for that particular position because my words might be misunderstood, as was a previous statement I made, as evidence of a potential separation, which of course is non-existent. I know of no one who could discharge those responsibilities in a better manner, but, as


the hon. gentleman knows, decisions in this regard are the result of consultation and require the support of some nations which I am sure, having regard to some of the statements which the Secretary of State for External Affairs has made on behalf of freedom, would not find his candidature altogether acceptable; I have in mind certain members of the United Nations.


LABOUR CONDITIONS
[Stage Direction]
On the orders of the day:
Frank Howard: On Saturday last I put a question to the Minister of Justice. He was unavoidably absent at that moment. The question was based upon a speech made by Deputy Commissioner McClellan of the R.C.M.P. at Halifax with respect to some internal union matters at Sudbury. I wonder if the minister is now able to answer it.


Edmund Davie Fulton: I have looked into this matter, and I find that what the deputy commissioner was discussing there was the question of fact. Of course it is a well accepted rule that officers in his position do not make speeches on matters of policy. This speech dealt with a matter of fact to which I myself have already alluded in this house, that is, the efforts made by communists to infiltrate trade unions and other perfectly reputable organizations.


BRITISH NORTH AMERICA ACT
[Stage Direction]
On the orders of the day:
Miss Judy V. LaMarsh (Niagara Falls):: should like to direct a question to the Minister of Justice. In view of the statement made by Mr. William F. Ryan, Q.C., president of the association of Canadian law teachers, appearing in the Montreal Star of September 26, criticizing the government's course in formulating proposals to amend the British North America Act, will the minister advise the house whether the government intends to provide an opportunity for public representations to be made on constitutional amendments before legislation is introduced?


Edmund Davie Fulton: The
future course in respect of this matter is as I outlined it in reply to a question by the hon. member for Laurier about 10 days ago. Perhaps I should emphasize one point. When the final draft, which is being worked on at the present time, is circulated to the attorneys general in the near future it is the intention

Inquiries of the Ministry to make it public so there may be public ability of granting to part-time or seasonal information and discussion before legislative government employees paid holidays as for action is taken.	permanent employees?


Julia Verlyn (Judy) LaMarsh: Is it the minister's intention to provide for public hearings at which representations may be made in a formal way prior to the introduction of such legislation?


Edmund Davie Fulton: Mr. Speaker, no such decision has been made on that point.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: Mr. Speaker, I should like to direct a question to the Minister of National Defence. Has the minister received any indication of the possible cause of the tragic crash of an R.C.A.F. trainer aircraft north of Toronto Monday night?


Hon. D. S. Harkness (Minister of National Defence):: No, Mr. Speaker, I have not yet received a report of the investigation being carried on as to the cause of this tragic crash.



COMBINES


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Minister of Justice arising out of the livestock producers' concern that there shall not be a combine in the meat packing industry. Has the government come to a conclusion with regard to the recommendation by the restrictive trade practices commission that a court order should be sought to have a merger in the meat packing industry dissolved or to prevent further mergers taking place?


Edmund Davie Fulton: Mr. Speaker, the government is in process of selecting counsel in that particular matter now. As soon as that has been done we will, of course, be discussing with counsel the appropriate course to be followed in the light of the report.
(Translation):



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Azellus Denis (St. Denis):: Mr. Speaker, may I ask a question of the Secretary of State? Is he now in a position to report to the house on his work concerning the advis-


Hon. Noel Dorion (Secretary of State):: Mr. Speaker, I think I shall be able to give an answer to the hon. member tomorrow.
(Text):



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, may I also direct a question to the Secretary of State and ask whether he could give another interim report on his efforts to comply with the orders of the house made on November 30 last for returns respecting the travels of cabinet ministers?
(Translation):


Noël Dorion: Mr. Speaker, I must repeat the answer I gave the hon. member for St. Denis. I am waiting until all the documents are gathered before tabling the information the hon. member is asking for.
(Text):



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. P. B. Rynard (Simcoe East):: Mr. Speaker, I should like to direct two questions to the Minister of National Health and Welfare. Are any steps being taken by the government to develop methods for combatting the level of strontium 90? I should also like to know whether there has been any progress in the removal of strontium 90 once it actually enters the body.


Jay Waldo Monteith: Mr. Speaker, I should like to thank the hon. member for giving me notice of these questions. I am pleased to be able to advise that a method is being developed which might prove useful in this connection. It is based on the work of Dr. B. B. Migicovsky of the Department of Agriculture, who has been concerned with the removal of strontium 90 from milk and other food products. I understand that he has been successful at the laboratory stage and that his methods are being tried out on a small production basis.
In answer to the second part of the hon. member's question, I understand that research is being carried out along these lines but has as yet produced little of practical value.
90205-6-567

Dominion-Provincial Relations



DOMINION-PROVINCIAL RELATIONS AGREEMENTS RESPECTING TAX COLLECTION, ANNUAL GRANTS, ETC.

[Stage Direction]
The house resumed from Tuesday, September 26, consideration of the motion of Mr. Fleming (Eglinton) for the second reading of Bill No. C-122, to authorize agreements respecting tax collection and annual grants.
(Translation):
Mr. J. N. Tremblay (Roberval):: Mr. Speaker, I stated last night how astounded and how surprised I was to hear the Liberals proclaim their autonomist faith. We really know them too well to be misled about their sincerity and their sense of responsibility. They know all the arts of make-believe, that I grant; but they surely have exhausted all their acting tricks. Nothing doing now, the people know who they are.
They know that the Liberal party eagerly destroyed the country's constitution while protesting that they were respectful of principles and traditions. We only have to remember the risky initiative of university grants. It constitutes clear enough evidence.
What is happening nowadays? The Liberals are uselessly trying to restore their virginity because a former federalist and centralizer, Mr. Jean Lesage, has placed them in a strange and precarious situation by solemnly stating his deep respect for principles and realities which only yesterday he was despising and treading underfoot.
A frantic centralist in 1949, 1951 and 1954, Mr. Lesage would now be, in 1961, an out-and-out autonomist; and that, shamelessly and even without the elementary tactfulness it would be in order for him to show towards his former accomplices. Flinging his autonomy into their faces, he forgets that the Liberals in Ottawa used to be his friends and associates.
Walking in someone else's shoes, it will be recalled that Mr. Lesage came to Ottawa, in 1960, to bumptiously assert Quebec's rights. He is now opposed to university grants, after having had a hand in the legislation that has put them into effect. He now shamelessly contradicts himself, having finally realized that his own little salvation lies in his being able to show off as an autonomist. He does not care a bit about his associates. That is why they are now like tight-rope walkers. They said so many times that they were in favour of federal grants to universities that today they do not know how to reconcile their former creed with Mr. Lesage's new gospel. For there is no doubt that Liberal members in Ottawa do not share Mr. Lesage's thinking.

We only have to recall the various statements they made, one by one in turn, about
university grants.
With your permission, Mr. Speaker, I should like to read into the record some of the statements I find in volume 3 of Hansard for 1960, in particular the following from the hon. member for Megantic (Mr. Roberge), on page 3315.
I therefore think, Mr. Speaker, that I am entitled to express my humble opinion and to conclude that the central government, or rather the central parliament, has a perfect right to vote grants to the universities, without encroaching on provincial autonomy in the educational field.
Here is another statement, this one from the hon. member for Gatineau, which is found on page 3305 of the same volume of Hansard:
I have always been in favour of university grants.
And now, Mr. Speaker, to add a pleasant aspect to a useful one, I shall quote the hon. member for Hull (Mr. Caron), whose remarks are found on page 2759 of the same volume of Hansard:
Everybody knows that grants to universities are a Liberal achievement.
It is a Liberal legislation we adopted at the time, that we are approving today, and that we shall continue to approve.
And he added:
We feel that the federal government has not only the right, but the duty, to assist our institutions of higher learning.
As to the hon. member for Lapointe (Mr. Brassard), he made the following statement, which hon. members will find on page 3550, in the same volume:
There is no possible doubt that the Liberal party was and still is in favour of assistance to universities.
Mr. Speaker, those people should therefore either remain centralists in Ottawa or become autonomists to please their allies in Quebec. In either case, they are inconsistent.
That explains their urge to find in other people instances of their own inconsistency. I shall immediately state, in order to reassure a tortured Liberal conscience, that the Conservative members from Quebec did not break the promise they made to their voters to defend autonomy and the rights of the province of Quebec in general.
Let us recall their stand on Bill C-56. At that time, they voted in favour of a bill which allowed the province of Quebec to pass its own tax legislation without its taxpayers being penalized. For my part, I said at the time that the solution contained in

the bill was of a temporary nature, that it was, after all, a formula of compromise, a fair compromise under the circumstances because it left the door open for a final settlement of the thorny problem created by the Liberal party, when it brought the central power into the forbidden field of education.
At that time I did not hesitate to vote with my party, not only for reasons of political solidarity, but in order to co-operate realistically, without any surrender of principle.
I have always thought, and I want to state it quite categorically, that the problem of the federal government interference in the field of education was not solved for all that. While I had, for the time being, to accept compromise formulas, I have never made a surrender of principles. I would remind those who are looking for inconsistency, of the philosophical notions of end and means.
In my opinion, all the solutions that have been suggested or adopted to this day in order to solve the problem of grants to universities have been and still are only more or less efficient means to reach the goal, that is the progressive but finally total withdrawal of the central government from this prohibited field of education at all levels.
I know that this is not easy and that this problem is closely related to that of tax sharing. Therefore, I appreciate the efforts of the Conservative government to give satisfaction on the one hand to the fierce autonomist demands of the province of Quebec and on the other hand, to the wish of the other provinces which did not understand readily what was at stake in the constitutional fight that Quebec fought alone, or almost alone, in spite of all opposition.
Again I say that the province of Quebec is not like the other provinces. Its characteristics, its stands come from its conception of confederation. One should not be surprised to find that, on certain constitutional matters, the stand taken by the province of Quebec is not the same as that of other provinces. The reason is that things are not yet seen in the same light everywhere and that we must proceed slowly and by steps with those who do not have the same reasons as we have to be autonomists.
This dissimilarity is but the expression of confederation itself, which is a system of compromises that worked unevenly, and it worked only because a lot of concessions were made, often at the expense, unfortunately, of the minority.
90205-6-567i
Dominion-Provincial Relations
It seems that people are afraid to accept the facts and to admit obvious realities, especially this one: that the governments in Ottawa have always been obliged to seesaw.
The coming into power of the Conservative party in 1957 has not brought any change to this basic situation. Confederation remained what it was: a system of compromises the polishing of which is a slow, arduous and very painful process. Will it ever work easily and smoothly? Personally, I have my doubts. But I pay a tribute to the Conservative government which, having inherited a very bad situation, has tried, and successfully, to set things straight and to correct the errors of the past.
After all it cannot be expected to move faster than facts, circumstances and existing situations will allow. The press, which is usually not too friendly towards Conservatives in general, has given credit to the members from Quebec in that respect. It understood the difficult situation in which we find ourselves. But, despite certain appearances which can still lend themselves to confusion, people are beginning to realize that we have fulfilled our undertaking to correct the constitutional situation. We have initiated methods and ways of assertion which have been effective and which should progressively overcome the difficulties brought about by the Liberal regime.
I do not wish to evade the issue rising from the bill before us by confining myself to generalities. I feel this is a worth-while piece of legislation. I think it would be better still if the option clause had been kept in. I will not hold that against the Minister of Finance (Mr. Fleming) as long as he gives me the assurance that the government intends to continue its efforts in order to find a solution which will take into strict account the autonomist rights and demands of the province of Quebec. For we are not free to draw back. The problem of university grants has begun to be dealt with. The government should not, by shilly-shallying, lose the credit they have gained for themselves. Quebec members have no alternative. They need guarantees, while the government's action has only provided a deposit. But we want more than that. Looking at the facts I am led to believe that the government will not fail us, that they will not deceive us, that they will continue and complete the task.

Dominion-Provincial Relations
I know the government is awaiting the Lesage proposals. But he is shy-he is hesitant now, after refusing the offers made by the Prime Minister (Mr. Diefenbaker). He seems to be frightened by the consequences of autonomy. In any case, he is in no hurry to grasp the fiscal benefits of these offers, for he would then have the trouble-and quite serious trouble under the circumstances -to say a few words about it to Quebec taxpayers. Moreover, when you see how eager his so-called autonomist government has been to accept the joint plans, after having denounced them in 1960, you no longer have any illusion about the sincerity of his autonomist convictions. His is an awkward task since he must reassure the electors of the province of Quebec, whose votes he obtained under false pretenses, and at the same time, he must prepare his reappearance on the federal scene besides his centralizing associates.
In my opinion, Mr. Speaker, the Quebec members have no choice, regardless of who they are. In his own way, every one of them must keep up the fight for autonomy which was led by Mr. Duplessis. We must admit that it has forced the central government to show a better frame of mind and that it has compelled a new concept of confederation. Indeed, Mr. Duplessis' autonomy was never negative or disguised. He often had to reject bluntly unacceptable proposals. On the other hand, he took the necessary steps.
Many try to minimize the importance of the role he played, to cut down his stature. That is why it is said that his fight for autonomy was inspired by petty considerations. Those people do not want to admit that he was the champion of our rights. He devoted his talents and his energy to the defence and preservation of the work of the fathers of the confederation.
We can rightly ask ourselves: What would have become of the Canadian confederation without him? During the tragic hours of the option, he fought alone and against everyone by refusing to comply with the entreaties of a central government which was anxious to take away from the provinces the rights and privileges they had acquired. He did so only to give his compatriots legal weapons to protect their national heritage. Instinctively, the people of our province understood the meaning of Maurice Duplessis' actions and remained true to him until the end.
Today, as the constitutional situation is becoming less entangled and the central power is led to reconsider sympathetically present and future problems caused by the province of Quebec to other parts of the country, decency requires that we recognize that such an improvement is but the result of the


courageous stand taken by Mr. Duplessis, who showed himself capable placing our constitutional life back on its true course.
His stand brought the central government to repent. Solutions were tried, and then important reconquests were achieved, so that we can now say that he has restored confederation, opened avenues to new researches and shown the way that we think will lead to the political sovereignty of Quebec.
I close my remarks by saying that I have always felt that to work to this end was the responsibility of Quebec members in Ottawa. (Text):


Mr. H. J. Robichaud (Gloucester):: Mr. Speaker, the bill now under discussion is of major importance, not only because it concerns the economies of the ten provinces of Canada but because it also concerns the right of each province to participate equally in the progress and development of this country. It seems unfortunate that a measure of such importance is being discussed on the 173rd day of the present session and in what could be the dying moments not only of the present session but, according to rumours that are circulating, of Canada's twenty fourth parliament.
While speaking in the debate last evening the hon. member for Westmorland made certain remarks which I believe should be answered. First he accused the premier of New Brunswick of suggesting that the other three Atlantic provinces are not poor provinces and that New Brunswick is the only poor province in eastern Canada. I want to say that at no time has the premier of New Brunswick suggested that New Brunswick is the only poor province in eastern Canada. What the New Brunswick premier has done is to bring to the attention of the general public the discrepancy existing in the criteria used under these new arrangements for the distribution of federal grants, which arrangements result in discrimination against the province of New Brunswick.
The hon. member for Westmorland went further and said that the present government of New Brunswick is trying to get sufficient additional money from Ottawa to carry out in full its election promises of 1960. The fact is that the present government of New Brunswick has done more for that province in the first 15 months of its administration than the previous government of the province was able to promise in its eight years in office.


An hon. Member:: How absurd can you get?


Hédard-J. Robichaud: The hon. member took serious exception to the objections raised by the premier of New Brunswick and stated that these objections, to use his own words,

were hardly warranted. The position of the province of New Brunswick in so far as this legislation is concerned was made quite clear in a press release issued by the premier of New Brunswick on Monday of this week. I have here a copy of the premier's statement and I wish to place on record some parts of the statement and comment on others. The release issued by the premier of New Brunswick is in part as follows:
The Prime Minister has recently replied to my letter of July 19, 1961, in which I requested, on behalf of the government of New Brunswick, that a further federal-provincial conference be held to discuss the arrangements to prevail after March 31, 1962. This reply, which has been publicized widely, ignores our request for further discussions, points to our ignorance of the "generous concessions" offered by the federal government, but generally fails to provide any answers to the questions which have been raised, both by letter and in discussion.
For example, we expressed, along with all provinces, very great concern about the lack of flexibility permitted the provinces under the proposed tax collection agreements. The Prime Minister has replied that the new arrangements will permit the provinces-
And this point should be noted, Mr. Speaker,
-"to cultivate the tax fields in the way each province deems fit."
The Prime Minister has made this statement several times, and to this extent I, like him, am reminded of the aptness of a statement made by an ancient public figure, "When I've said it three times, you can consider it the truth".
As further stated in the New Brunswick premier's statement, the facts are that all the provinces have been informed by Ottawa that they are not free to use their own definition of income. The provinces cannot determine the rates of progression; they can take advantage of only those exemptions allowed by the federal government. With regard to the corporation profits tax, should any province or its municipalities impose a non-income tax contrary to federal regulations, there will be a corresponding deduction from the federal payments to the province. I ask the Minister of Finance this question: Is that the way in which to cultivate the tax fields as each province deems fit?
What are the so-called federal concessions? They have already been described as being two in number, and both concessions are very minor. One of these concessions allows the federal government to share substantially the burden of logging taxes imposed by the provinces of British Columbia and Ontario. Of this concession the other eight provinces cannot take advantage. The second concession is to continue the sharing of certain public utility taxes. Such a concession, says the New Brunswick premier, is beneficial only to those provinces which possess private electric power generating companies.
Dominion-Provincial Relations
During the past few months we all know that a great deal has been said about the proposed new arrangements which are before this house for approval, and specifically with regard to their financial effect on various provincial governments. It will be recalled that in his report to the legislature the premier of New Brunswick indicated that the new formula would provide some $600,000 more than the present formula if it were projected to the first year of the new agreement. Since then a number of statements have been made throughout the province of New Brunswick and published in the press to the effect that New Brunswick would receive approximately $2 million to $3 million in extra revenue in the first year of the new agreement, that is to say for the year 1962-63.
I note that the Minister of Forestry is in his seat listening to my remarks. I have here a press clipping from the Fredericton Gleaner under date of September 1, 1961. The heading of this article is "Federal Tax-Rental Scheme Said Not Discriminatory" and it reads as follows:
Federal forestry minister Hugh John Flemming, speaking at a rally of Progressive Conservative supporters in Victoria-Carleton last night, attacked Premier Robichaud's stand that the federal government's tax rental scheme is discriminatory to New 3runswick.
Then in quotation marks appear the minister's own words:
"Those who say, that the tax rental deal is discriminatory to New Brunswick are simply not acquainting you with the facts," he said. "New Brunswick will get $2 million more under the new deal with Ottawa.
"In addition, the Atlantic provinces premiers at Halifax had the responsibility of distributing the Atlantic provinces adjustment grants, which were increased from $25 million a year to $35 million a year, or 40 per cent.
I now wish to place on record figures which will clarify such statements once and for all. The figures I am going to quote assume a constant rate of growth in tax yields under each formula so as to make them comparable, and there can be no question that even the federal government and even the Minister of Finance will agree as to the validity of the projections.
The following figures are based on the revenue projections for 1962-63. Under the standard tax yield, New Brunswick under the present formula should receive $9,727,000. Under the proposed formula New Brunswick, again under the standard tax yield, would receive $10,295,000 or a gain of $568,000. But under the equalization payments, under the present formula, New Brunswick will receive $18,484,000 as against $15,698,000 under this proposed formula or a decrease of $2,786,000. Therefore in total, under the present formula New Brunswick would receive $28,211,000
8990	HOUSE OF
Dominion-Provincial Relations while under the proposed formula it will receive $25,993,000, or a total loss of $2,218,000.
To this it is true-and I wish to be fair- we have to add the Atlantic provinces adjustment grant. Under the present formula the adjustment grant which New Brunswick is to receive will amount to $7,500,000, for a grand total of $35,711,000. Under the proposed formula New Brunswick will receive $10,500,000 in adjustment grants for a grand total of $36,493,000. Therefore, Mr. Speaker, under the proposed formula the net gain to the province of New Brunswick is not $2 million or $3 million in the first year of the application of this act, but is in the vicinity of $782,000.
These figures clearly show the financial impact of each of the three components of the new arrangements as they will apply during the year 1962-63. They also show the reasons, as stated by the premier of New Brunswick, for New Brunswick's objection that such a formula will not make the best contribution to the public interest of that province.
If we consider the standard tax yield the new formula provides, as I have just stated, an additional $568,000 or an increase of nearly 6 per cent over the present formula. However, in order to achieve this result, the present personal income tax percentage accruing to the province will have been increased from 13 per cent to 16 per cent, which means an increase of over 23 per cent in total amount. The same tax increase in Ontario, for example, would raise their revenue by over 14 per cent, or more than twice the rate of 6 per cent allowed to New Brunswick.
This indicates why New Brunswick has stressed the fact that increased emphasis on the yields from the standard taxes discriminates against the poorer provinces with lower tax yields. If we take into consideration the equalization payments under the present formula, the low tax yields of the standard taxes are to a great extent offset by equalization payments which increase in proportion to the increase in the tax yields of the two wealthiest provinces in Canada, namely British Columbia and Ontario. By reducing this growth factor to the national average and by introducing natural resource revenue the new formula produces a decrease in equalization payments, as I stated earlier, of $2,786 million, and reduces the growth potential. Therefore the premier of New Brunswick was right in saying:
This latter statement is axiomatic since it is impossible for this type of "average" to grow as fast as the highest numbers which are included in it.
What are the bases for the new formula which will be applied following the passing


of this bill? The federal government is taking into consideration the natural resource revenue by provinces, and according to figures produced by the dominion bureau of statistics, the revenue for the province of New Brunswick, if the average is taken for the years 1956 to 1958, amounts to $3,978,000, or $7.03 per capita. If the same figures are used for the province of Ontario they amount to $31,381,000, or an average of $5.59 per capita.
Therefore under these new criteria New Brunswick is being looked upon as a province having exceptional revenue from its natural resources, but the fact is that no consideration is being given to the cost to the taxpayers of the province of New Brunswick to maintain and protect those natural resources. This is where there is discrimination.
As the premier of New Brunswick said in his statement, in total the standard taxes, together with the equalization payments, fall short by $2,218,000 of the level that would be achieved under a continuation of the present agreement. It is to cover this shortage that an additional $10 million in grants was awarded to the Atlantic provinces, from which New Brunswick will receive $3 million as its share. Instead of the guarantee, New Brunswick's share of the Atlantic provinces adjustment grants will be increased by $3 million, which will be incorporated into the basis for calculating the equalization payments to the Atlantic provinces.
The province of New Brunswick is objecting strongly to this treatment of what was intended as a special and separate payment to the Atlantic region. At the federal-provincial conference and also in letters to the Prime Minister, New Brunswick proposed that the Atlantic provinces adjustment grants be kept out of equalization and that the normal guarantee be applied. It is clear that New Brunswick does not receive the full benefit of the increase, since the bulk of it is used to offset the losses resulting from lower equalization payments.
In these objections New Brunswick has been strongly supported by every province in Canada with the exception of Ontario. The representatives of the other provinces made a point of supporting New Brunswick.


Donald Methuen Fleming: That is not true.


Hédard-J. Robichaud: Some of them have indicated their support in letters addressed to the Prime Minister which have been made public. In replying to the letter from the premier of New Brunswick with respect to this point, the Prime Minister said only that the Atlantic provinces adjustment grant is separate and "is in no way connected with the basic equalization formula".

I ask how can this be the case when one considers the figures I have quoted and the fact that subclause 4 of clause 4 of this bill, No. C-122, cited as the federal-provincial fiscal arrangements act, specifically says that the Atlantic provinces adjustment grants shall be included in determining the tax equalization payment to be paid to a province. There is no question but that the adjustment grant is included, and even less question about the fact that it should not be.
The additional amount provided in this bill is certainly inconsistent with the fiscal requirements of the province of New Brunswick, however measured. Even within the Atlantic region itself there seems to be little relationship between revenue increases and the fiscal needs of each of the Atlantic provinces. I am quoting these figures to give facts, not to complain. I am not complaining about the way the provinces of Newfoundland, Nova Scotia or Prince Edward Island would be treated; I am merely giving facts. Based on similar calculations Newfoundland will receive additional revenue, excluding the special grant of $8 million which they have a right to receive according to the constitution, to the extent of $5.10 per capita; Prince Edward Island, $9.31, and Nova Scotia $2.89. I ask, how do these amounts, particularly the $1.25 for New Brunswick compare with an increase of $2.95 per capita for the province of Ontario, the wealthiest province in Canada?
Hon. members on the government side will say there is no discrimination in the treatment being given to the province of New Brunswick. It is true that the Prime Minister has expressed the hope that upon consideration New Brunswick will recognize "the financial benefits of the new arrangements and the greater freedom and flexibility which they afford". After long consideration with many others no such recognition has resulted, and the premier of New Brunswick was right to make this abundantly clear to the federal government and to the people of New Brunswick. The government of New Brunswick has every right to feel that this new arrangement being forced upon the province is a poor deal for the province of New Brunswick, a poor deal for the government of the province and a poor deal for its people, as well as for the other less wealthy provinces. The provinces are being given no alternative. They must now levy their own taxes upon personal and corporation income, and the result will be to the full advantage of those provinces where the great corporations are located and where personal incomes are at the highest levels. The basis of equalization has been thrown out the
Dominion-Provincial Relations
window, notwithstanding the Prime Minister's
solemn promise to the contrary.
The inclusion of the natural resources income factor will definitely work to the disadvantage of New Brunswick, and as a result of the introduction of this new natural resource basis New Brunswick will receive an additional $1.25 per capita as against additional revenue of $2.95 for the wealthy province of Ontario. Is Ontario in more urgent need of financial consideration than New Brunswick? The facts are that notwithstanding the objections of the premier of New Brunswick, and notwithstanding the serious objections of the seven other premiers who have expressed dissatisfaction with the offer, the provinces have been told by the Prime Minister and by the Minister of Finance, "Take it or leave it".


Donald Methuen Fleming: That is untrue.


Hédard-J. Robichaud: I hear the Minister of Finance say "That is untrue". Those are the facts. When Premier Robichaud and Premier Lesage asked that the conference be reconvened so they could come back to Ottawa and discuss these problems further, they received a definite refusal from the Prime Minister. For these reasons, as a member from the province of New Brunswick, under no consideration can I support such a bill as this, and I will vote against it on second reading.


Hon. H. J. Flemming (Minister of Forestry):: It had not been my purpose to take part in this discussion, at least to any great extent, and I should not intervene now were it not for the remarks which have just been made by the hon. member for Gloucester, especially in connection with the special consideration which I feel has been given to the province of New Brunswick and which he, for some purpose, seems disposed to minimize.
Before continuing along that line, however, I should like to say that I listened carefully and with a great deal of interest, as I usually do, to the hon. member for Bonavista-Twil-lingate. I found myself in agreement with him in one particular. I would be the first person to admit that as far as the Atlantic provinces are concerned, without the special adjustment grant of $35 million a case might be made that the eastern provinces had a real grievance. In my opinion, however, that provision completely refutes the speech which was made just now by the hon. member for Gloucester, and I think it refutes to a great extent the assertions made yesterday by the hon. member for Bonavista-Twillingate on the question of equalization.
With regard to the adjustment of all provinces to the level of the national average, I acknowledge frankly that I took part in some

Dominion-Provincial Relations conferences in which we brought to the attention of the government, as it was constituted in those days, our feeling that the Atlantic provinces for one reason or another, partly for geographical reasons and partly because of certain commitments made at the time of confederation, should receive special consideration, and that attention should also be paid to the fact that the average national income was considerably higher than the average income in the maritime provinces. At no time did we suggest that attention should be paid by the federal authority to the adjustment of the eastern provinces' income to the level of that of the wealthiest provinces. Our comparison, generally speaking, was made with respect to the national average. I feel that the government today are perfectly justified in taking the national average as the level upon which to base their grants. It seems to me that the special consideration which has been given in that regard is a proper consideration, and I am satisfied to defend that position at any time.
We come now to the provision for stabilization, which I trust will never have to be used. I may say that the previous administration did suggest at one of the conferences,
I	believe it was in 1955 or 1956, that the stabilization feature should be incorporated, or in other words that a province should be protected against a drastic decline in the gross national income as reflected in returns to the central government. It would seem to me that this is a protective feature in so far as the eastern provinces are concerned, and I was very happy when it was decided that this would be the basis on which the new agreements would be drawn up.
In presenting this bill to the house on July
II	the Minister of Finance produced tables indicating the effect of the proposed agreements. I submit that great satisfaction was expressed by some premiers after the conference of last autumn. I suggest that the premier of Newfoundland was very well satisfied. I suggest that he was very happy. I do not know how the hon. member for Bonavista-Twillingate is going to justify the statements he made yesterday when he meets the premier of Newfoundland in Newfoundland. I found it difficult to reconcile the attitude he took here yesterday with the attitude he should have as the representative of the people of Bonavista-Twillingate. I say this because the hon. member on many occasions has called attention in his own inimitable fashion to the needs of the fishermen in his own riding.
The hon. member also gave credit to the government for the construction of wharves to facilitate the shipment of pulpwood. All

these things indicated to me that the hon. member for Bonavista-Twillingate was sincere in his approach, and I had no reason to think otherwise until yesterday. I received a terrific shock when the hon. gentleman addressed us yesterday. I thought he of all hon. members would say that this was about the best thing the government had done for a long time, that this was one of the few things on which he could agree with the government. Instead of that we found the hon. gentleman criticizing the government and saying at the conclusion of his remarks that he found it impossible to support this bill.


The Acting Speaker (Mr. Chown):: Order. It being one o'clock I do now leave the chair.


John Whitney Pickersgill: Before you do so, sir, I wonder whether I might have unanimous consent to ask a purely factual question of the Minister of Finance, which I think might facilitate the debate. The minister will recall that it has been suggested several times that we would like to see a projection over the five year period of the new scheme and the existing law. If the minister could have that available for the committee-at least a few copies so that hon. members could have them for consultation-I am sure it would save us a great deal of time in our deliberations in committee.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Hugh John Flemming: Mr. Speaker, when the house rose for lunch I was discussing in a complimentary way the speech of the hon. member for Bonavista-Twillingate yesterday and making some observations concerning the inconsistency of the position which I considered he occupied as reflected by some of his remarks made at that time. I might properly be requested to document to some extent those assertions; therefore I ask the house to refer to page 7916 of Hansard and to the figures appearing on that page with reference to the amounts of grants, unconditional and conditional, which have been received by the province of Newfoundland since 1956. I find a great difference since the present government assumed office, and that is the reason I give vent to my sense of disappointment in the observations of the hon. gentleman yesterday. I find that the unconditional grants for the year ended March 31, 1957 were something of the order of $17.8 million. The next year

Dominion-Provincial Relations
they were $19,244,000; but in 1958-59 they immediately rose to $40,847,000.


John Whitney Pickersgill: Will the hon. gentleman permit a question at that point?


Hugh John Flemming: Yes, indeed.


John Whitney Pickersgill: I am sure the hon. gentleman is adding in his figures the $8 million which Newfoundland receives as a constitutional right and which has no business to be in those calculations at all.


Hugh John Flemming: My answer to that is that I am simply reading the figures as reflected on that page. If my hon. friend disputes the figures, then he will have to have his quarrel with the Minister of Finance.


John Whitney Pickersgill: It is an old quarrel.


Hugh John Flemming: I am quoting the figures of the Minister of Finance which I believe are entirely accurate.
I go on to the next year, 1959-60, and I find that the unconditional grants went down to $37,263,000. The next year they were $37,658,000, and the following year, which is the current year, $38,032,000.
I agree that there may be some explanation of this large increase, but nevertheless it seems to me it is hardly fitting and proper that the government, under whose administration the province, of which the hon. member represents an important constituency, received more than twice as much money as it did under the administration of which he was a member, should be portrayed as public enemy No. 1 in that province.
With respect to the Atlantic provinces adjustment grant, perhaps some hon. members will recall that during one of the debates last winter when a motion of lack of confidence was moved by the opposition in connection with federal-provincial relations I made some rather extended remarks concerning my own association with governments, the present government and the previous government, with respect to representations made at conferences of which I was a member of a delegation from New Brunswick. I quoted my own remarks on many occasions and I also said that at the conclusion of each conference prior to June 10, 1957, all we received from the old administration was careful attention, some courtesy and no money. Now, Mr. Speaker, we could not finance on courtesy. It was impossible, and I speak now in order that I may make myself perfectly understood. I am referring now to financial recognition of the special situation in the east and not to any moneys that might be due to us as part of the regular uniform grants.


John Whitney Pickersgill: I was going to say it is
quite a difference.


Hugh John Flemming: We could not make a dent in the administration of those days and I have no way of knowing whether the hon. member for Gloucester (Mr. Robichaud) or the hon. member for Bonavista-Twillingate said anything to help their native provinces at that time, but if they did, then their words fell on deaf ears because no attention was paid to them.


Donald Methuen Fleming: On the ears of Bonavista-Twillingate also.


Hugh John Flemming: But on June 10, 1957, a new dispensation was ushered in in Canada as far as the Atlantic provinces were concerned. There is no question about that. Under that new dispensation, early in 1958 or possibly in the fall of 1957 a good deal of legislation was introduced in the House of Commons. I will not go into that legislation in detail because I do not need to do so but I do say that it was designed to be, and was, of tremendous benefit to the eastern provinces. There was the Beechwood loan. We had not been able to get the former government even to lend us the money at the prevailing rate of interest. That was put through by the new administration at an interest rate of 3| per cent. The money is now being paid back by the province and will be paid back.


Hédard-J. Robichaud: In eight years.


Hugh John Flemming: In eight years, yes. What is wrong with eight years? We could not get anything from the administration supported by the hon. member for Gloucester (Mr. Robichaud). He says eight years-


Hédard-J. Robichaud: Will the minister permit a question?


Hugh John Flemming: Of course.


Hédard-J. Robichaud: Is the minister aware that the province is having to borrow money at 6 per cent in order to repay this loan because the term was too short?


Hugh John Flemming: Mr. Speaker, I am sure the house is not interested in our entering into a debate on New Brunswick problems, but may I say for the benefit of the house that the New Brunswick power commission considered that eight years would be sufficient to earn nearly 50 per cent of the money required to pay the whole loan, and in my opinion that is a tremendous thing.
We have the Atlantic provinces adjustment grants which were initiated with the advent of the administration of which I now have the honour to be a member. I said last winter and I repeat that, so far as the Atlantic provinces are concerned, June 10, 1957, is a more important date than the date of confederation in 1867 because it was by reason
8994	HOUSE OF
Dominion-Provincial Relations of the legislation introduced by the present government that the people of the Atlantic provinces first got a glimmer of light, a glimmer of hope for the future.
I should like to refer to a statement made by the hon. member for Bonavista-Twillin-gate (Mr. Pickersgill) in concluding his remarks. I have a note of it here. I hope I have it right because it was my intention to have it right. He said, "I cannot possibly support the measure".


John Whitney Pickersgill: That is right.


Hugh John Flemming: That is what causes me a great deal of disappointment. I hope that his colleagues from Newfoundland will not be influenced by him to vote against the bill. To me that will be a terrible tragedy.
This morning we listened to some remarks by the hon. member for Gloucester in the course of which he referred to the situation in New Brunswick and New Brunswick's share of the moneys to be received under the bill now under consideration. To begin with, I can only repeat that many of the things I have said in connection with Newfoundland apply equally to New Brunswick. I do say, however, that I cannot fancy the hon. member for Gloucester in the federal election which is to come finding too much fault with a government which brought into being the special adjustment grants for four years under which the Atlantic provinces received $100 million and which under this legislation is asking the House of Commons for authority to pay another $175 million over the next five years or a total of $275 million over a nine-year period. I cannot imagine him asking the people of his constituency to vote against a government under which the people of the Atlantic provinces will receive $275 million over a nine-year period when those same people could not get one bit of recognition from the government which he supported previous to 1957.
That is the question which I think he has to ask himself. I give him full marks for being interested in his native province. So am I. But I do not give him any credit for some of the things which he said from his place this morning. Quite the opposite. Some of the things which the hon. member said, particularly with respect to the previous administration in the province of New Brunswick, possibly were uncalled for but that makes no particular difference to me. However, when he says, and expresses it as his opinion, that the present administration in the province of New Brunswick has done more in 15 months than the previous government did in eight years, then in my opinion he is expressing a politically partisan opinion which is


properly attributable only to the backwoods of Gloucester county and not to a member of parliament.


Hédard-J. Robichaud: The facts are there.


Hugh John Flemming: He has every right to his opinions but he should not voice them as a member of parliament in this chamber because they are not correct. May I say to you, Mr. Speaker, that many people in New Brunswick consider that the main activity of the present government has been to cut the ribbons on projects started by the previous administration. That is what most people think. The hon. member cannot name one project that they started and completed, not one. He laughs, but he cannot name one. I challenge him.


Lionel Chevrier: That sounds like the Prime Minister's speech.


Hédard-J. Robichaud: What happened in New Brunswick in June, 1960?


Hugh John Flemming: I am not talking about June, 1960. If the people of New Brunswick made a mistake in June, 1960, we are not going to hold it against them forever. Why should we?


John Whitney Pickersgill: Just for five years.


Hugh John Flemming: May I say to the
hon. member that in my opinion the majority of the people of New Brunswick think today that they made a mistake in June, 1960. There is no question about that.


John Whitney Pickersgill: Would the hon. gentleman permit me to ask him a question?


Hugh John Flemming: Of course.


John Whitney Pickersgill: The hon. gentleman said that he would not hold it against the people of New Brunswick forever. Does he mean that this five year sentence is a long enough one?


Hugh John Flemming: You mean the five year sentence they have under the present government in that province.


John Whitney Pickersgill: The five year sentence under this new bill.


Donald Methuen Fleming: Your speech yesterday was a long enough sentence.


Hugh John Flemming: 
Hédard-J. Robichaud: Will the minister permit a question?


Hugh John Flemming: Yes.


Hédard-J. Robichaud: Is that difference of $2 million due to the new formula? Is the minister not aware that every year the amounts payable to the province, even under the old formula, were increasing?


Hugh John Flemming: Mr. Speaker, I said nothing about formulas. In the course of my public remarks I said that the province of New Brunswick would receive $2 million more the first year of the new agreement than it is receiving in the last year of the old agreement. Those are the facts and figures I have just quoted and I have the documentary proof here. The hon. member starts out to say that now he wants to clarify this matter. No clarification is needed. We just examine the record. I gave the record. That is the amount. Those are the places where the figures are found. Those are the figures which I quoted in the course of a public address in New Brunswick which was referred to by the hon. member for Gloucester. Hon. members can judge for themselves who is trying to deceive whom.
It is not my intention, Mr. Speaker, to speak at any greater length at this time. There are many things I should like to speak about in connection with this bill, as it is an extremely important one. It is most important because, as I have just said, it contemplates the payment of $175 million by way of special adjustment grants for the Atlantic provinces for
Dominion-Provincial Relations a five year period. To me that is an extremely important feature of it. I try to reconcile my duties as a member of the central government with my loyalties to the province that I have the honour to represent. In the course of that reconciliation or attempted reconciliation I have not the slightest hesitation in saying to this house that I am prepared to defend at any time and in any place this agreement that is now before us for consideration. I think it takes into consideration all of the needs, angles and situations which apply to all parts of this great country of ours.
Having said that, having mentioned that we are protected by equalization grants and that we are protected by stabilization grants, and that all the protection that small provinces iand poorer provinces, if you like, need are embodied in the bill-all of these things and many others too that I will not mention at this time make me feel that as a group of men and women inerested in the progress of this great country of ours we should vote unanimously for the bill. There should not be any division on it whatsoever.


Mr. J. Edgar Fournier (Resligouche-Mada-waska):: Mr. Speaker, I should like at this moment to make possibly the shortest speech in my life. I should just like to refer to two things that were mentioned this morning.
(Translation):
Mr. Speaker, since Bill C-122 was introduced in the house, I listened closely and with pleasure to the arguments set forth in the hon. members' speeches. It is most obvious that our friends in the opposition are embarrassed by this bill. The howling we have heard from that side until now, clearly indicates their despair.
I know it is most humiliating for our friends in the opposition to see the government take steps which will be beneficial to the provinces of the dominion, which steps the central administration cruelly refused to take for such a long time.
Mr. Speaker, as I said a while ago, I shall only take a few minutes of the house's time.
First of all, I should like to draw the house's attention to the insult cast on Acadians and French Canadians, before recess, by the hon. member for Gloucester (Mr. Robichaud). who claims to be the champion of the Acadian faith, and who is the idol of New Brunswick's French newspapers, I'Evangeline and Le Madawaska.
I hope it was through nervousness that the hon. member for Gloucester did not deliver a single part of his speech in his own language, French. I hope that is only an oversight and not indifference and that, in future, he will practise what he preaches either through conviction or hypocrisy.

Dominion-Provincial Relations
(Text):
Mr. Speaker, what I want to mention here in a few words-


Azellus Denis: In French, please.


Edgar E. Fournier: The hon. member understands very well. This morning, Mr. Speaker, the hon. member for Gloucester said that the Robichaud government has done more in 15 months than the Conservative government did in the last eight years in which I was a member. I want to straighten out the record in this house. That was a true statement. I agree with it. The only difference is that he did more but in the wrong direction. I wish to point out what he has done and I will take only half a minute. First he increased the provincial debt from $83 million to $103 million. He has borrowed $35 million. He has cut the public works program almost to nothing. He has reduced many public services.


Mr. Speaker:: Order. I think the hon. member should remember that we are dealing with federal-provincial fiscal relations and it is only the acts of that government to which he is now referring which have a bearing on this bill which should occupy the time of the house.


Edgar E. Fournier: Thank you, Mr. Speaker. I am just trying to keep the record straight. I hope at some other time to have a chance to come back to this matter.


Donald Methuen Fleming: On the point of order you raised, Mr. Speaker, may I respectfully draw your attention to the fact that what the hon. member for Restigouche-Madawaska is now proposing to do is to put on record an answer to an assertion made this morning by the hon. member for Gloucester on this precise point. He is not proposing to go beyond the statement which was made this morning and with which he is now taking issue. He has indicated that he proposes to be quite brief in doing so. As we are dealing here with the subject of dominion-provincial fiscal relations, I would respectfully submit that the point is quite relevant to the debate now in progress.


Hédard-J. Robichaud: I wish to speak on the point of order, Mr. Speaker, as my name has been mentioned and as the hon. member for Restigouche-Madawaska is referring to a statement which I made this morning. May I say that the statement I made in the course of my remarks this morning was in answer to remarks made last evening by the hon. member for Westmorland (Mr. Creaghan) when he said that the government of the province of New Brunswick was trying to get more money from the federal government in order to keep its election promises.
[Mr. Fournier.l


John Whitney Pickersgill: I wonder whether I might say a word on the point of order, Mr. Speaker, as it is a very unusual intervention that has been made by the Minister of Finance. We have had many occasions on which the Minister of Finance has sought to maintain the narrowest limits of debate.


Mr. Martin (Essex East):: He does it all the
time.


John Whitney Pickersgill: However, this is the first occasion in my recollection on which he has taken the view that something which was totally irrelevant was relevant. I hope the same rule that is going to be applied, will be applied to both sides.


Mr. Bell (Carleton):: Mr. Speaker is on his feet.


John Whitney Pickersgill: So am I.


Mr. Speaker:: As the hon. member for Gloucester has just said, one thing leads to another. It is quite true that in debate it is relevant to answer arguments that have been admitted as relevant. In so far as the hon. member for Restigouche-Madawaska was replying to the hon. member for Gloucester I did not intervene. But on the point or the illustration on which he was embarking, he could go very far afield. I do not wish to proscribe the hon. member from talking about anything that relates to federal-provincial financial arrangements, but there are many things which the province of New Brunswick does in the course of its administration which have no relation to this bill. It was just a caution in that respect which I wanted the hon. member to have in mind as he proceeded.


Edgar E. Fournier: Thank you, Mr. Speaker. However, I was at the end of my remarks. I am very pleased to see that I have touched my opponents in a very sore spot, because they do not seem to be able to accept it when I give the facts. There are many things which they have done in the wrong way and in the wrong direction. I hope that in time I will have a chance to express my feelings on these matters and come back to this subject.
(Translation):


Mr. Robert Lafreniere (Quebec-Monimo-rency):: Mr. Speaker, I do not intend to deal with all the points relating to Bill C-122. However, there is a problem which is of particular interest to me and on which I had the opportunity, in April 1959, to voice my opinions in this house. As you must have already guessed, it is obviously the problem of university grants and the general problem of education.
In April 1959, when a discussion took place on this subject, several members had put forward their views in the house and each

one had expressed his satisfaction to see that the government was proposing a new formula to let the provinces collect 1 per cent of the taxable income of corporations and to allocate those revenues to the universities themselves. Amendment 9A had been included in Bill C-56; but now, in Bill C-122, this necessary formula completely disappears.
In 1959, when we supported this agreement, which I had said was not perfect but acceptable, we had the impression of taking one more step to consolidate with section 93, which places education under the exclusive jurisdiction of legislative assemblies.
Without repeating the speech I then had the pleasure to make, I should like to recall to the house that I firmly believe that education is exclusively the responsibility of the provinces up to university level, if not beyond that.
I very much regret that Bill C-122 does away with the agreement which we had found satisfactory in April, 1959.
However, I hope the hon. Minister of Finance (Mr. Fleming) will make definite plans on this education problem concerning the whole nation, which problem comes under the exclusive jurisdiction of the provinces. It might be necessary in cases of emergency to set up national organizations subsidized by the central government, but that day has not come yet and I am still of the opinion that we should do everything possible to leave to the provinces their exclusive jurisdiction in the field of education.
Consequently, Mr. Speaker, I must state quite frankly that I am displeased to see us abandon the formula we had accepted in April, 1959 and I say again that being aware of the broadmindedness and the sense of justice that have always animated the Prime Minister and the Minister of Finance, I hope that they have definite agreements in mind, so that we may revert to the full observance of the confederative pact.
(Text):


Hazen Robert Argue: Mr. Speaker, we are opposing this bill and voting against it because we think it is a retrograde step and moves Canada's federal-provincial relations away from some very valuable and important principles that had been established over the years.
It has been recognized by successive governments in Canada in recent years that in order to provide for the general prosperity
Dominion-Provincial Relations and welfare of the nation; in order to provide greater equality of services to Canadian citizens within the various provinces, it was necessary for the government to give leadership in bringing about federal-provincial agreements and arrangements that would stabilize the economy, that would provide certain additional revenues to the so-called "have not" provinces and would give the federal government greater opportunity to deal with fiscal measures in such a way as to mitigate widespread unemployment and provide for the general prosperity and expansion of the Canadian economy.
While we in this party have always supported the federal-provincial agreements of the past, we have not hesitated to point out weaknesses that existed and improvements that could be made. We feel that the old agreement was lacking in that it set as the standard for equalization the income from the taxes within the two provinces with the highest incomes, rather than taking the highest income. We think it would have been preferable to attempt to provide the citizens in each province with the services that would flow from the use of revenue in the province where there was the highest income.
Instead there is a retrograde step in this bill before us when it provides that we shall go from a standard of the average within the two highest provinces to the national average. This is a general downgrading of the whole concept of equalization. We think this measure is inferior to the existing system because it is forcing the provinces to go back into the income tax field themselves. This will mean an increase in the variations of income and corporation taxes as between the provinces. This is a return to the tax jungle of bygone days. Also, at least to some extent it does lessen the general effect of federal measures, certainly in the reduction of income tax, to stimulate purchasing power and employment by making certain through this particular measure that provinces have every opportunity, not having signed tax agreements on the original basis, of moving in and taking up, by increasing their own income taxes, any reduction that might have taken place in federal income taxes. This is a backward step, this is retrograde step, this is a piecemeal deal. It is neither fish nor fowl. It does not satisfy the aspirations of the people of any province but it appears to be designed to help, at least in some measure, those governments which are sympathetic to the present administration.


John Whitney Pickersgill: Except Manitoba.


Hazen Robert Argue: Except Manitoba, and I suppose Manitoba happens to be caught up with the province of Quebec and the province of
8998	HOUSE OF COMMONS
Dominion-Provincial Relations Saskatchewan, so it is just a victim of circumstances. I am sure if the Prime Minister (Mr. Diefenbaker) could have found any formula to add to the formulae which are already in this bill, that would have been done, but it must have posed a problem which could not have been solved.
Over the years in this house the Prime Minister has been a very staunch advocate of measures to help the municipalities and to help the provinces discharge their responsibilities. This is not a measure which will help the provinces to discharge their financial responsibilities. It is not a measure which will assist the provinces to pass on, in turn, aid to the municipalities within their jurisdiction so that the municipalities can discharge the functions for which they are responsible. I listened with interest to the Minister of Forestry (Mr. Flemming). He made a very spirited defence of the government but I was amazed that he should go along with this downgrading of the equalization principle from the level of the two highest provinces to the national level. His excuse for this seemed to be that there were additional grants going to the Atlantic provinces. That may be the excuse with respect to the Atlantic provinces but it is of no value as applied to the other provinces which are not eligible for those grants, though, of course, we all felt that something should be undertaken to overcome some of the disadvantages felt by the Atlantic provinces.
Ontario gains a little by this arrangement. Some of the Atlantic provinces stand to gain a little. But there is a group of provinces which stand not to gain at all. I refer to the four western provinces and, of course, to the province of Quebec. The Prime Minister has complained bitterly in this house over the years-and some of us have helped him- about the unjust deal given by the former administration to the prairie provinces, as well as to other provinces, of this nation. What is in this deal for Saskatchewan? What is in this deal for Manitoba? I ask the Prime Minister where, in this measure, the province of Saskatchewan has a chance to overcome some of the disadvantages imposed on it under the former agreement about which he complained so much? In a speech in the 1957 election campaign, the Prime Minister had this to say:
We believe there can be no national unity in this nation until there is a realization that the federal-provincial matters have handcuffed the provinces of this nation; have denied the municipalities adequate sources of revenue; have placed the provinces and the municipalities in a position where they cannot discharge their constitutional responsibilities or permitting the necessary development in their own territorial confines of the natural resources that there are.

Where the provinces have been developing their own natural resources, the income obtained will be used to weight the advantage from this legislation against them. Look at the table on page 7927 of Hansard. Learn from that table, placed there by the Minister of Finance, what some of the provinces stand to gain. The provinces I have been speaking about have nothing to gain. The province of Saskatchewan has co-operated with this federal government and with other federal governments in joint projects of benefit to the people of the province and to the people of this nation. No difficulties that I know about have arisen with regard to relations between the federal government and the government of Saskatchewan. I am not saying there has been trouble about relations with other provinces. But why should the people of Saskatchewan be discriminated against in this measure when the Prime Minister complained so bitterly in the past that a raw deal had been given to that province by the former Liberal administration? Yet the best he can do for Saskatchewan in this bill is to say:
In addition, two equalization guarantees are provided. First, for provinces below the national average in the yield of standard taxes and 50 per cent of natural resource revenue, the equalization will never be less than enough to make them at least as well off as they would have been under a projection of the present arrangements.
What a wonderful deal for Saskatchewan for this government. In effect, the Prime Minister says: Don't worry, you are all right; you are not going to be any worse off than you were under the Liberals. And he thinks this a reason why people in Saskatchewan should stand up and cheer.


Mr. Jones:: Thirty three million dollars in 1956 and $70 million in 1960. Laugh that one off, my friends.


Hazen Robert Argue: There has been no change, according to the statement made by the Minister of Finance (Mr. Fleming). The only change the government has made in the last few months is to deny the farmers of the three prairie provinces the $40 million they used to get.


Henry Frank Jones: Will the hon. member permit a question?


Hazen Robert Argue: In this legislation the government is saying: We shall not do anything more for the people of Saskatchewan, for the people of Manitoba or for the people of Quebec.


Henry Frank Jones: I wonder if the hon. member would permit a question?


Hazen Robert Argue: The hon. member for Saskatoon can make his statement when I have concluded.


Henry Frank Jones: I am asking a question: what is this $40 million?


Hazen Robert Argue: The $40 million is the money the farmers did not get this year on an acreage payment we have been asking about for weeks-


Henry Frank Jones: You said it was peanuts.


Hazen Robert Argue: The Prime Minister giggles. Even peanuts have their place.


Henry Frank Jones: You said you were opposed to that.


Hazen Robert Argue: That is not true. That is a false statement. That statement is completely false and inaccurate.


Henry Frank Jones: Mr. Speaker-


Mr. Speaker:: Order. The hon. member for Saskatoon may have the floor later if he desires. If he asks any more questions he will not have the right to speak as he will already have spoken.


Hazen Robert Argue: It might be the intention of the hon. member for Saskatoon to speak later but I do not think he is going to make a speech. I wish he would. I wish he would stand up and defend a bill which gives the same deal to the people of Saskatchewan as they have had in the past.
Mr. Speaker, the people of Saskatchewan do not want to stay where they are. They want to go forward. They do not like to be condemned as they are under this legislation to the same kind of deal in the next five years as they have had in recent years.
We do not know when the election is going to be, but this will be an election issue. It will be an election issue and we shall take this election issue to the people of Saskatchewan to demonstrate that this government has overlooked them, forgotten about them, and that when the Prime Minister, in all those campaign speeches of his in years gone by, was advocating a new deal in federal-provincial fiscal arrangements he meant a new deal for some and the same old deal for others.


John George Diefenbaker: Mr. Speaker, I would not have the house believe that I rise because of the vociferous ejaculations of the hon. member for Assiniboia (Mr. Argue). I do not rise for that purpose although he has touched upon a number of matters with which I shall deal. I intend to say something about Saskatchewan. I observed that the hon. member said Saskatchewan does not wish to stand still. I could not be more in agreement with that for under the rule of the C.C.F. in that province-and I use a name that is now an anathema in this house; it is now to
Dominion-Provincial Relations become the New Democratic party-extending over a period of 17 years, the province of Saskatchewan has witnessed under socialism a decline in population, compared with the population growth of other provinces in western Canada whose governments follow the principles of free enterprise.
The hon. member asked what Saskatchewan has received and then he indicated that he rose to give support to the need this year of a $40 million payment for the farmers.


Hazen Robert Argue: Oh, much more than that. That is not nearly enough.


John George Diefenbaker: The hon. member has been strangely silent in the last couple of months within his own group.


Hazen Robert Argue: That is not true.


John George Diefenbaker: The hon. gentleman was not listened to within his own group with that degree of attention we accord him in the house.


Hazen Robert Argue: Pretty cheap.


John George Diefenbaker: Did I say something the hon. gentleman did not like?
The hon. gentleman pointed out that something should be done for the farmers of western Canada. This government provided $40 million over a two year period. This is the hon. gentleman who said it was peanuts. This is the hon. gentleman who criticized the government for the assistance it gave to western farmers assistance that has been of benefit to every small farmer in that part of the country. It may not have helped the big farmers like the hon. gentleman who farms on a large scale in terms of acreage.


Hazen Robert Argue: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: Order. The hon. gentleman is seeking the floor for the purpose of raising a question of privilege.


Hazen Robert Argue: The Prime Minister has refer-ferred to the size of the farm I operate, describing it as a large farm.


Mr. Matthews:: Like the hon. member's head.


Hazen Robert Argue: The Prime Minister is wrong again.


Mr. Speaker:: There is no question of privilege there. Whether the farm is large or small does not give rise to a question of privilege. There may be an explanation which could be offered if the hon. member has been misinterpreted or if something has been

Dominion-Provincial Relations said which reflects on him, in which case I shall give him an opportunity at the conclusion of the remarks of the present speaker to offer his explanation.


John George Diefenbaker: Mr. Speaker, I am not going to argue with the hon. gentleman. I mentioned that he operated a large farm in terms of acreage. But if the hon. gentleman is a small farmer then surely he benefited. That is the point I am making. Apparently, having benefited, the hon. gentleman in retrospect over the last couple of years has some reason to question the accuracy of his designation of this assistance as "peanuts". The small farmers were able to benefit, and if he qualified to receive assistance perhaps he found it advantageous because he has asked once more that the government give assistance.


Hazen Robert Argue: That is pretty cheap stuff from a prime minister.


Mr. Ricard:: He is dealing with the hon. member for Assiniboia.


John Whitney Pickersgill: What has this to do with the bill?


J.-H.-Théogène Ricard: The proper time to raise these questions is when the hon. member who has the floor has completed his speech.


John Whitney Pickersgill: Mr. Speaker, I rise on a point of order. We are supposed to be debating a bill concerning the federal-provincial tax-sharing arrangements. It does not seem to me that the size of the farm of the hon. member for Assiniboia bears much relationship to the legislation before the house. It seems to me that the leader of the house should set an example to the house by obeying the rules.


John George Diefenbaker: Mr. Speaker, I shall be dealing with the hon. member for Bonavista-Twillingate in the course of my remarks. Perhaps I might be permitted to make a reference to him immediately. I am awaiting publication of that portion of the history of the life of Mr. Mackenzie King from the year 1925 forward in which period the right hon. gentleman used an expression with which the hon. member for Bonavista-Twil-lingate as not yet seen fit to deal, except in a general way yesterday when he stated that the policy of this government was to act in a manner detrimental to the welfare of the provinces where the governments were of a political faith different from the federal government. Let me tell the hon. gentleman that the days of the "five cent" speech are over, and as far as this government is concerned all provincial governments will receive equal consideration regardless of their political stripe.
TMr. Speaker.]


John Whitney Pickersgill: We shall see about that.


John George Diefenbaker: I can understand the hon. member for Assiniboia becoming aroused. He loves to make speeches concerning what this government has not done for Saskatchewan. Let me remind him that the assistance given in connection with the South Saskatchewan dam is a tremendous advance of public money for the benefit of the people of the province of Saskatchewan and I have yet to hear one word of commendation or approval of that action from the lips of the hon. gentleman.


Hazen Robert Argue: Wrong again.


John George Diefenbaker: In my opinion conduct of that type merits the designation "cheap".


Hazen Robert Argue: Mr. Speaker, I rise on a point of order. I do not think it is in order for the Prime Minister to disregard the record of the House of Commons and misinterpret the position I have taken in this house over the years without my being given an opportunity to reply at the time to the misleading statement made. I say to the Prime Minister that my record of support for that project in this house is clear. I have commended this government and the government of Saskatchewan for having jointly undertaken this project.


Mr. Speaker:: Order. The hon. member is rising to make a personal explanation as he did before. Unless the hon. member who has the floor yields it, that is more conveniently done at the end of the remarks of the speaker.


John George Diefenbaker: I am glad to have from the hon. member that commendation of what this government has done by way of assistance to Saskatchewan. Anything of that kind was strangely wanting a few moments ago when the hon. gentleman said that Saskatchewan had been discriminated against.


Hazen Robert Argue: Under these agreements.


John George Diefenbaker: Would the hon. member maintain the type of silence he has shown in recent months except for those frequent occasions when he has sought to interrupt for the purpose of making self-exculpatory statements which commonly have no basis in fact.


John Whitney Pickersgill: The Prime Minister seems overwrought.


John George Diefenbaker: Mr. Speaker, I shall return to the hon. member for Bonavista-Twil-lingate in due course and accord his remarks the attention they deserve.


John Whitney Pickersgill: Mr. Speaker, I wonder whether I could make a request of the Prime Minister.


Mr. Speaker:: Order. The hon. member is not entitled to interrupt unless the hon. gentleman who has the floor yields it.


John Whitney Pickersgill: Mr. Speaker, I am sure the Prime Minister would wish me to make this interruption. I wished to say to the Prime Minister that I regret very much that at ten minutes to four I have to leave the chamber because of a long-standing engagement and if he could make the remarks about me while I am still here I would be awfully grateful.


John George Diefenbaker: Mr. Speaker, I have at all times followed that practice and the hon. member has been very proper in his observance of it too, although there are some hon. gentleman who sit not too far from him who do not follow that course. If perchance we are going to lose the benefit of the hon. gentleman's presence at ten minutes to four, some of the comments I wished to make in their proper order may have to remain unsaid until another occasion.


John Whitney Pickersgill: I do not mind if they are said in my absence.


John George Diefenbaker: Apparently an attempt is being made through these frequent interruptions to prevent me from saying a number of things I should like to say. As I stated earlier, I did not rise because of the effusions of the hon. member for Assiniboia but I thought some slight reference might be made to his contribution and apparently I made pertinent references because they aroused the hon. gentleman.
I return now to deal in general with the bill before the house and to speak briefly to emphasize certain major points. I shall not recapitulate the history. An explanation of the various items and also of the course followed by the government in this connection was given by the Minister of Finance (Mr. Fleming) in the month of July. Taken together with the publication of the correspondence on this subject, which has been appended to Hansard, and the numerous tables that have been furnished, the Minister of Finance has set forth the whole situation regarding the government's proposals so that they could be understood and judged.
I want to say at once that the purposes of the changes made were to restore once more to the Canadian people the institution upon which confederation is built; in other words, to restore the basic principles of the British North America Act and to assure that the days of centralization in Canada are over. Hon. gentlemen opposite, those who still remain on the front bench, and the governments of their day took under the provisions of the War Measures Act and the powers having to do with war, rights belonging to
Dominion-rrovincial Relations the provinces that were outside of the field of dominion-provincial relations. What they did in this connection was similar to their conduct of invading provincial rights on every possible occasion during the days of war and immediately thereafter. We have decided that the time has come, as I said in 1957, to restore the spirit of the constitution and to return to the provinces their freedom and responsibilities with respect to the imposition of direct taxation on income.
The hon. member for Assiniboia objects strenuously. Those were the happy days, Mr. Speaker.


Mr. Benidickson:: Hear, hear.


John George Diefenbaker: If the hon. member will wait until the conclusion of the sentence I will wait for the applause at that stage. Those were the days when provinces like Saskatchewan could secure necessary funds from the federal government by having the federal government impose the taxation and accept the responsibility for it so far as the people of the several provinces and of Canada were concerned. I can understand why the hon. member for Assiniboia is disturbed. From now on when the government of Saskatchewan wants to impose taxation it will impose its taxation within the limitations of this legislation instead of leaving it to the federal government to impose taxation, pay it over and then allow the responsibility and condemnation for taxation and deficits to rest upon the federal government. We are going to restore as far as it is possible the inherent principles of the constitution.


John Whitney Pickersgill: There were no deficits in our day.


John George Diefenbaker: I thought the hon. gentleman said he had only 10 minutes. Would he allow me to proceed? We are going to restore to the provinces as far as possible their constitutional rights and their responsiblities.


John Whitney Pickersgill: Which they have always had.


John George Diefenbaker: Mr. Speaker, the hon. gentleman can favour us with his presence for only 10 minutes but he keeps up a persistent line of low voiced interruption. He says they have always had that.


John Whitney Pickersgill: Of course they have.


John George Diefenbaker: Nothing of the kind. From the day the tax rentals began the provinces were not in that position excepting as they might choose to impose what in effect would be double taxation. There is going to be no harm to the provinces in this.

Dominion-Provincial Relations


John Whitney Pickersgill: They are forced to do it now.


John George Diefenbaker: Is there nothing that can quiet the ebullient individual?


Mr. Speaker:: The Prime Minister has asked for that to which he is entitled. I trust hon. members will act accordingly.


John Whitney Pickersgill: As a matter of fact, I really feel, sir, that I owe the Prime Minister an apology and I willingly give it to him.


John George Diefenbaker: We have restored the inherent principles of the constitution, and this is something we undertook to do. We are ending centralization. We are putting in its place co-operation within the principles of the constitution. This bill represents not merely certain grants to the provinces, or the sharing of tax revenue. It follows in consequence of a series of dominion-provincial conferences; it follows long deliberation and a spirit of give-and-take on the part of both.
We had a number of those conferences. The question was raised whether or not, if the provinces imposed their taxation, there would not be too great an administrative responsibility and cost. We undertook to collect the taxation for the provinces if they chose, and to do so without appreciable cost to them. What we have endeavoured to do in this measure is, I think, tangible evidence of the aspirations of a growing Canada and of the inevitable competition which that brings about between the two levels of government in the use of the basic sources of revenue which are common to them. It reflects, as I see it, the efforts at co-operation between these two levels of government.
I reiterate that we are endeavouring to apply the spirit of confederation, with the sharing of responsibilities and concern for the service and the betterment of the lot of all Canadians wherever they live in this land.
I enunciated our views in this regard at the dominion-provincial conference of 1957, when I said at page 9 of the proceedings:
We believe that this federation cannot thrive in a climate of glaring disparities in levels and standards of service and development as between the several provinces from Newfoundland to British Columbia. Believing in a positive policy, this government intends in co-operation with the provinces to co-operate actively in promoting the development of Canada and all its regions.
This we have carried out by our system of assistance to the provinces under the roads to resources program. This is an example of co-operation to the end that the federal government will assist the provinces and the provinces will co-operate with the federal government in the development of those areas which otherwise would not have been developed for years. I continue:

It is our opinion that positive government is necessary both at the dominion and provincial levels in assuring national development and we are prepared to assist provinces in carrying out their functions where we agree that is necessary and when parliament approves. We are prepared to consider on their merits major projects which will contribute to national development and which are beyond the capacities of any of the provinces.
The example I gave earlier was one of those, the South Saskatchewan dam and others that I mentioned yesterday that I will not repeat now. I went on to say:
In that connection I might refer to three examples. In pursuance of that general plan we have announced a program in respect of power in the maritime provinces. In the speech from the throne reference was made to this government's willingness to recommend to parliament participation with the government of British Columbia in a joint program for the development of the immense potential of the Columbia river.
We do note that the co-operation is not as complete as I would like to see it.
Then I went on to mention the South Saskatchewan dam. I proceeded to outline the general principles in which we believe and the necessity of raising standards in all parts of Canada. I mentioned particularly the Atlantic provinces. When I hear the hon. member for Bonavista-Twillingate (Mr. Pickersgill), the expatriate from Manitoba and now the proponent of everything for Newfoundland, it surprises me that all during the years that he had this affection he did nothing to bring about anything equivalent to the Atlantic provinces grants to which the Minister of Forestry (Mr. Flemming) referred a moment ago. These are the steps that we have taken to elevate standards. I said at that time, as found on page 12:
I believe that we all recognize. .. that the Atlantic provinces as a group are confronted with greater difficulties in public finance than the rest of the nation, if they are to maintain the sort of provincial and municipal services that Canadians generally expect. The taxable capacity of the Atlantic provinces, even in the best of times, is significantly lower than that of the other provinces.
Then I said later:
Recognizing these principles, we are prepared to examine their application and to that end I invite the expression of your views.
In other words, throughout, there was a desire and a declaration in favour of bringing about something that is now being achieved under the policies of the government-the equalization of opportunity in the various parts of Canada and the raising of levels in provinces which did not enjoy the same economic development and present potential as some of the other provinces.
The bill reflects the efforts at co-operation, as I said, in the spirit of confederation. The

fiscal arrangements emphasize the government's desire to make clear both the rights and obligations of all levels of government in Canada as well as to provide through equalization a system of redistributing the fruits of our production on a more equitable basis than would otherwise result.
I am going to refer to the tables to which reference has already been made in order to answer the statement of the hon. member for Assiniboia (Mr. Argue) to the effect that what is being done does not improve the situation of the past and does not carry out the promises of 1957. The statistics answer such loud-spoken statements which are not based on fact and are not borne out by the evidence. I believe that the pattern of the past 15 or 20 years must give way to the requirements of the present. Restore the constitution. Is there any offence in doing that? Are we to alter the provisions of the basic principles of confederation through the medium of tax agreements and the like? Are we to evade those things in the constitution that have been acceptable since 1867? Are we to bring about changes? I agree that changes in the constitution may be necessary, outside of those things that are basic and are constitutional rights possessed thereunder by the province of Quebec and minorities in general which cannot be attacked in any way.
We have endeavoured to bring about a change in the constitution or at least a basis for a change. We have endeavoured over and over again through meetings to ascertain whether it would not be possible, as it should be, to amend Canada's constitution in Canada instead of having to go abroad to the parliament at Westminster. The Minister of Justice (Mr. Fulton) has done a great deal in this connection. I would point out that, if I understand the record correctly, the one province that stands in the way of this in very considerable measure is the province of Saskatchewan, the leadership of which during the years has spoken of the necessity of having our constitution amendable in Canada. Yet when we are in a position where most if not all of the provinces, I think, are willing to agree, it is the government of the province of Saskatchewan that stands against the fair and reasonable right of amendment as agreed to generally by the other provinces.
I believe there is need for a revised approach to the asumption of responsibilities while maintaining the constitutional distinctions. We want to give the provinces every right to carry out their constitutional responsibilities. It has been nice for some of them to be able to come to the federal government and say, "Give me, give me", while at the same time criticizing the federal government for in-
Dominion-Provincial Relations creased expenditures, and that is particularly the case with regard to expenditures by this government which have been brought about in order to improve the position of the provinces.
It was with these realities and this desire in mind that I proposed to the dominion-provincial conference that the federal government restore to the provinces the freedom to impose and collect taxes on personal and corporate incomes. In order to do this and yet retain the economy and simplicity of a single collecting agency and uniformity in the manner of determining the tax, the bill proposes to authorize the government to undertake on behalf of the provinces the collection of these taxes on personal and corporate incomes provided the tax base in each case is identical with the federal definition. In designing these tax collection agreements, freedom for the provinces to vary their rate of taxation was a prime objective. This freedom provides them with the flexibility to adjust their revenues from year to year in accordance with their needs, and also underlines their independence and direct responsibility.
There has been a great deal said about the promises made by this government. Maclean's magazine has never shown itself to be one of our inveterate friends. Yet I read in the issue of September 23 these words by one of its commentators which I am prepared to accept:
Out of 62 specific pledges made by the Prime Minister during the 1957 and 1958 campaigns, 50 have already been kept or are in process of being discharged.


Some hon. Members:: Oh, oh.


William Moore Benidickson: Through royal commissions.


John George Diefenbaker: I have again struck home, Mr. Speaker. I deeply regret the necessity of the departure of the hon. gentleman because he always attends the house with regularity. I know that we do not have to miss him for long because the house is about to prorogue, and I will desist from any personal references to him until he again graces the chamber.


John Whitney Pickersgill: I thank the Prime Minister. My regret is far greater than his.


John George Diefenbaker: The second point to be noted in regard to the new fiscal arrangements authorized in the bill is that they retain the vital principle of equalization. Over and over again I have referred to the question of equalization and the necessity of its preservation. I endorsed the principle of equalization.


Paul Joseph James Martin: The Minister of Finance (Mr. Fleming) did not until forced to do so.

Dominion-Provincial Relations


John George Diefenbaker: Mr. Speaker, I have to repeat that. I have endorsed the principle of equalization at all times, as has the Minister of Finance.


Donald Methuen Fleming: And carried it farther than ever before.


John George Diefenbaker: And, as the hon. gentleman says, with modesty, "carried it farther than ever before". We preserve the principle. We altered the form in order to ensure that the principle would be more generally effective and would carry out the intention of equalization. The principle was a valuable one. The question of its retention was never in doubt for throughout I have consistently stated that it was basic. Although differences have existed and are bound to exist in the methods or formulas by which the principle is to be applied, the purpose or spirit of the principle is not now and has not at any time been in issue. I have made it clear that the principle of equalization is basic. Because a certain formula was evolved some years ago by the former government we do not believe, Mr. Speaker, that such formula is, like the law of the Medes and the Persians, unchangeable. We believe that changes must be made in order to secure its full power and effectiveness, and those changes we have made. In these arrangements we are proposing a revised application of the principle that lays more emphasis upon fiscal need and takes into consideration the prolific revenue derived by some provinces from natural resources as well as the fields of direct tax revenues which have been taken into account previously.
We consider that the present system, based on the three standard tax rates and equalization to the average of the two top provinces, is neither logical nor practical. In some cases it has led to larger payments than could be justified on the basis of fiscal need. It ignored an important source of provincial revenue from national resources. It aimed at an impractical goal in seeking to equalize all to the exceptional top provinces. On the other hand-and I come back to this matter and I will come back to it from time to time-it did not give the needs of the Atlantic provinces in particular sufficient recognition. As the Minister of Forestry (Mr. Flemming) pointed out, this was basic to the promises and undertakings of this government. This government, from the very beginning, had a special concern for the fiscal needs of all provinces and, because of the situation in the Atlantic provinces, a special concern for them. We introduced the adjustment grants during the first year of office. It was the federal government that brought this matter before the conference of 1957. In the current proposal


these grants will be increased by 40 per cent. The grants of 1957, which we undertook and brought before parliament and which were passed, are being increased by 40 per cent as part of the broad program. The effect is illustrated in the table by the Minister of Finance on page 7927 of Hansard to which reference has been repeatedly made.
One or two hon. members have played over the same old gramophone record, the same speeches they gave in July last. They gave expression to the same ideas about inadequacy, saying that this government had done nothing to carry out its promises in this connection. I would have thought that the tables themselves would have been sufficient to answer this argument but apparently it is necessary to repeat them. As a whole-and it is always well to take the picture of Canada as a whole-the unconditional grants in Canada in 1956-57 amounted to-and I am speaking always in round numbers-$552 million. I make allowance for the fact that changes were made in the parliament of 1957, as the hon. member for Kenora-Rainy River (Mr. Beni-dickson) indicates, in the manual manner. The amount in 1957-58 was $658 million. They say we have done nothing for the provinces. May I say that the amount in 1960-61 was $841 million and the amount for 1961-62 is $875 million.
If you take into consideration the figures for 1956-57, there will be some who will argue that changes were made by the previous government. But taking the figures at their worst in 1957-58, the result is that there has been an increase of unconditional grants to the provinces of $200 million. When I hear the expressions of some hon. members to the effect that we have done nothing to assist the provinces and to make it possible for the provinces to give greater assistance to the municipalities, may I say the answer is there in the computations as to unconditional grants.
What about conditional grants? As to conditional grants there was no legislative change that I know of in the session of 1957. Therefore we take the figures for 1956-57. In that year there was paid to the provinces in conditional grants an amount of $110 million. The amount in 1960-61 was $430 million, an increase of $320 million. In 1961-62 the amount will be $550 million or, since this government came into power, an increase in assistance to the provinces in the way of conditional grants of $440 million.


William Moore Benidickson: Who introduced hospital insurance?


John George Diefenbaker: That is exactly five times the amount that was paid in the last year of office of the Liberal government. This seems to be part of the pattern. They go around and

they say things like this: "There has been no assistance given to the provinces" because they exchange their prejudices and they think they are thinking. They exchange ideas which they must know are not in accordance with the facts for the purpose of bringing condemnation on a government which has multiplied by far, so far as these grants are concerned, the amounts paid in the last years of the Liberal administration.


William Moore Benidickson: Hospital insurance is overlooked.


John George Diefenbaker: One hon. gentleman mentioned hospital insurance. Yes, it is true that the Liberals brought it in but we pay for it. There is no doubt about that fact and it has to be included in that amount.
Now for the payments to provincial institutions. The amount payable to provincial institutions in 1956-57, for university grants and grants to municipalities in lieu of taxes on federal property in 1956-57, was $25 million. In 1960-61, it was $43 million and for 1961-62 it will be $44 million. Again there is a tremendous increase.
In the face of these tremendous increases these hon. gentlemen opposite, by simply repeating statements which they must know are not borne out by the facts, believe that the Canadian people can be fooled into believing that we have not improved the position of the provinces very greatly since 1957.
I am not going to go over all of the provinces but I must mention Newfoundland even in the absence of the hon. member, although there are others who have a representative position here from that province and therefore it will permit me to refer to it. Newfoundland, which was spoken of in lachrymose tones by an hon. gentleman now not with us, in 1956-57 received $17 million, in 1957-58 received $19 million and in 1961-62 the estimate is $38 million. Those amounts are in connection with unconditional grants. In conditional grants it received $6,500,000 in 1956-57 and the amount for 1961-62 is $23 million. He said, "Well, we have not got anything. We have not received that consideration which we should have received". I simply point out those facts, Mr. Speaker! In addition to that, there are payments for the benefit of provincial institutions. These were $415,000 in 1956-57 and today the estimate is $780,000. So I could go on through the record.
I now come to the province of New Brunswick, to which some reference was made. However, I do not think I have to cover the figures there because they were dealt with amply and carefully by the Minister of Foresty (Mr. Flemming).
Dominion-Provincial Relations
Then I come to the province of Saskatchewan. After all, I could not but be touched by the words of the hon. member for Assiniboia. He spoke with everything but authority.


An hon. Member:: How true.


John George Diefenbaker: He said this is how serious the situation was. I have his exact words here. He said, "This is a retrograde step, a backward step and it is most unfair to the province of Saskatchewan."


Hazen Robert Argue: Hear, hear.


John George Diefenbaker: Let me read the record. Unconditional grants for 1956-57 were $29\ million; for 1957-58, $35 million; for 1960-61, $42 million; and approximately the same for the present year. Conditional grants were $7,700,000 in 1956-57, and in 1961-62 they are $27 million. I do not understand the mentality of anyone who, knowing those figures, would make the type of suggestion that the hon. member made here today, that Saskatchewan for some reason was being penalized and we had done nothing to improve the situation of Saskatchewan since 1957 over what had been the prevailing condition during the years prior to 1957. In the field of payments for the benefit of provincial institutions the figure was $1,165,000 in 1956-57, and in 1961-62 it is a total of $2,140,000. I place those figures on the record simply for the purpose of having objective consideration given to the rather- and I understate the situation when I say this-distorted view given by the hon. gentleman.
There was another province that was being discriminated against, as I remember. I have dealt with Newfoundland; New Brunswick was dealt with by the Minister of Forestry and I have covered Saskatchewan. Then Alberta and British Columbia were mentioned. As far as Alberta is concerned, the total amount of unconditional grants, conditional grants and payments for the benefit of provincial institutions amounted in 1956-57 to $49 million; in 1957-58 it amounted to $62 million, and in 1961-62 the figure is $103 million.


William Moore Benidickson: How much under the new agreement?


John George Diefenbaker: I find it difficult to understand that the hon. gentlemen would make these kind of loose, idle and disorderly statements. Certainly they are vagrant observations which have no foundation in fact.
Now we come to British Columbia. I think it was the hon. member for Burnaby-Coquit-lam (Mr. Regier), the financial man, who dealt with this during the month of July.

Dominion-Provincial Relations He spoke, too, of how British Columbia was another of these forgotten provinces. The total amount paid to British Columbia in 1956-57 in unconditional grants, conditional grants and payments for the benefit of provincial institutions was $77 million; for 196162 the figure is $150 million.
These are the increases that have taken place during a period of four years. I think they emphasize that this government has carried out its promise to give the provinces a new deal; to give to the provinces moneys which they in turn may pass on in whole or in part to the municipalities. We have made that very clear.
Besides this type of thing there are the other plans that we have announced and which are in effect. There is the assistance to technical education. That is something that affects every part of this country. This is a tremendous benefit. The Minister of Labour (Mr. Starr) brought this measure into being whereby we give to the provinces 75 per cent of the costs of building technical schools and providing the equipment.
These hon. gentlemen say there has not been a new deal. Well, Mr. Speaker, I will be glad to hear them argue that question any time when the opportunity is at hand and I will give even greater detail than I have given up to now. This table shows strikingly how the total of the grants to the provinces under these new arrangements and the revenues they can procure by utilizing the room to be left to them under the new plan-I refer to the table at page 7927 of Hansard-exceed very substantially the benefits they would have secured under a continuation of the position under the 1957 act before the amendments this government put forward. Moreover, in addition to the improvement reflected in this table for the year 1962-63, there will be further improvement in the following years due to the increasing federal withdrawal from the individual income tax field.
Mr. Speaker, there are other matters that I thought I might put before the house, but I will leave them to the Minister of Finance (Mr. Fleming) to deal with. I did feel, however, that I had a responsibility simply to place the record before the house; not the expurgated record, not the self interpreted record, but the facts. On the basis of facts and on that record I think all of us have reason to agree with the summary made by the Minister of Forestry, with provincial experience behind him, that this government has indeed been serious, and more than serious, has been effective in raising the standards of the provinces, and in the years ahead under the new plan as I understand it, no province will receive less than it is receiving today.


Does not this reveal the actual facts of what we have done? There are some who believe that because this rental plan was evolved in the fertile mind of one who is not now with us-at least he has been given the honour of having produced it-that therefore it should be unchanged. The changes that have been made hurt no one. The changes that have been made will actually assure to each of the provinces at least the amount they are receiving today; that amount, as I have shown, being tremendously greater-two, three, four, five times greater-than the amounts that were being paid to the provinces either conditionally or unconditionally in 1957.
On examination it will be seen that the total of federal contributions to the provinces, certain payments to institutions normally the responsibility of the provincial governments and tax abatements made to facilitate the raising of provincial revenues, has risen-and I summarize-from $689 million in the fiscal year 1956-57 to an estimated $1,470 million for the current fiscal year. This is a prodigious increase in the amounts granted from the federal budget to the provincial budgets of this nation. It is not going to be lower under the new plan. Had it not been for the change of government, where would the Atlantic provinces have been? Where would have been several provinces which have received assistance to provide for policies of expansion and development? Where would they be in reference to the development of power in the maritimes, the potential power and irrigation in the province of Saskatchewan and the possibilities of the province of British Columbia, if agreement can be secured, as apparently it had been verbally secured prior to the signing of the Columbia treaty in 1961? These increases, as I have pointed out, have been related to a much better assessment of the fiscal needs of the provinces than ever before as well as to the needs and desires of the Canadian people for various worth-while services in respect to which payments and grants have been made to provincial institutions.
I shall not try to describe the variety and scope of this program, ranging as it does from such small but important items as assistance toward the construction of fishing vessels, which has recently been substantially improved, to such huge programs as those for hospital and diagnostic services. All these programs, as well as the fiscal arrangements themselves, are designed to assist all the provinces in providing for their citizens the best services and facilities which Canada can afford and the Canadian people will support.
I think that no one who is fair minded, no one who is not blinded by party prejudice or

local considerations, can fail to appreciate that the burden on the federal treasury has been very heavy indeed as a consequence of these programs to assist the provinces. When people speak about deficits, due regard should be paid to the increases which have been made in other fields, realizing that those deficits have in large, in overwhelming measure, been the result of the fact that for too long the people have waited for action. They demanded that there should be action and we have tried to carry out that action to a degree which, I think, the Canadian people will appreciate. The Canadian people, whenever the opportunity comes will not, I am sure, listen to the whiners and the wailers but will realize that here has been solid achievement on behalf of all Canadians.
I believe that this bill, which provides for a considerable increase in the provincial sharing of the personal income tax in addition to an improved equalization formula and increased Atlantic provinces adjustment grants, constitutes a generous arrangement with the provincial governments.


An hon. Member:: They want more.


John George Diefenbaker: Somebody said "They want more". I can understand that, Mr. Speaker. Did you ever know of anyone to whom something had been given who did not want more? That is human nature. When the opposition was in power, the provinces said they were not getting enough. We increased the amount, two, three, four times, five times. And, naturally, they said: Don't we get more than this?


Paul Joseph James Martin: Mr. Frost, particularly, complains about this government.


John George Diefenbaker: So far as Mr. Frost is concerned, I am glad to see some recognition today. That is the Liberal way-always to recognize ability when a person is about to give up office. Those were not the hon. gentleman's words a year or two ago; but reformation, however late it comes, always means forgiveness.
The proposed agreements to collect taxes for the provinces without charge, thereby safeguarding the simplicity and uniformity of our tax system means that greater freedom will be left to the provinces to set their own rates of taxes. I am sure this is something which serves the interests and convenience of the taxpayers. I am confident that the new arrangements will make it possible to meet the problems of disparity in provincial revenues more fairly and realistically than in the past. Greater recognition has been given to the persistent fiscal disabilities of the Atlantic provinces. The preservation and extension of the fundamental principles of freedom for provinces to tax as they see
Dominion-Provincial Relations fit, of equalization based on broader determination of fiscal need and the fuller recognition of fiscal disabilities peculiar to the large eastern segment of Canada will contribute to the financial strength and independence of the provinces and to equality of opportunity for Canadians throughout Canada. It will lead to a restoration of the constitution to its basic concept, to the maintenance of provincial rights; to the assurance, by federal aid, that those who live in provinces which are underprivileged economically by comparison with others will have their standards raised. It is in the spirit of fair and equal treatment, within the framework of our constitution, that this bill has been presented, and I hope it will receive the support of the house.


Lionel Chevrier: This debate began very quietly with the Minister of Finance (Mr. Fleming) saying very little, contrary to his habit in the house. I understand that he had made a long trip, and perhaps that had something to do with his reticence in the house when this matter came before us.
However, during the course of the afternoon the debate seems to have warmed up, particularly since the Minister of Forestry (Mr. Flemming) and then, later, the Prime Minister (Mr. Diefenbaker) decided to enter the discussion. The hon. member for Royal objected to a statement made by the hon. member for Gloucester (Mr. Robichaud) to the effect that the Robichaud government had done more in 15 months than the former provincial administration had done in eight years. I do not know whether that is the case or not, because I am not familiar with New Brunswick politics, but I do know that if this was the language used by the hon. member for Gloucester he was using precisely the kind of language which the Prime Minister and his followers use consistently when they say that in the last three or four years they have done more than was done by the previous administration in 22 years.
The hon. member went on to say that in New Brunswick, now, they are cutting the ribbons in connection with projects started by the former administration. Well, for the last four years that is all hon. gentlemen on the other side of the house have been doing. They have been cutting the ribbons of a multifarious number of projects started by the former administration and, very often, they have not even had the courtesy to invite those who had something to do with those projects-


An hon. Member:: The public paid for them.


Mr. Speaker:: Order. I thought the house had composed itself with its usual courtesy to listen to argument. I hope it will not depart from that attitude.
9008	HOUSE OF
Dominion-Provincial Relations


Lionel Chevrier: But when he started his remarks this afternoon I felt, rightly or wrongly, that he was not abiding by the rules so far as references to personalities are concerned. I shall certainly try to keep away from any such references whether they be to the hon. member for Assiniboia (Mr. Argue) or the hon. member for Bonavista-Twillingate (Mr. Pickersgill).
As I listened to the Prime Minister, particularly toward the middle and the end of his speech, the feeling grew within me with increasing intensity that perhaps there is an election in the air.


John George Diefenbaker: Hon. gentlemen opposite have been predicting that for six months.


Mr. Pugh:: You had better read Maclean's.


Lionel Chevrier: Here there was "a repetition"-to use the expression the Prime Minister likes to use-of speeches that he and many of his followers made in the 1957 and 1958 campaigns. I tell the Prime Minister that if there is to be an election on this or any other issue, we on this side of the house are ready for it.


William Moore Benidickson: This would be a dandy.


Donald Methuen Fleming: The hon. member for Essex East (Mr. Martin) is not ready.


Lionel Chevrier: The Prime Minister in his statement said that all provinces will be treated alike, that there will be no difference in the treatment accorded the provinces. Well, Ontario will receive $18 million and Quebec nothing additional under the new bill.


John George Diefenbaker: Nothing?


Lionel Chevrier: The Prime Minister went on to say that this is the end of centralization, that we are concluding centralization and substituting co-operation. I should like to remind the Prime Minister who dealt at some length with the matter that there were no taxes imposed under the War Measures Act.


John George Diefenbaker: In 1948?


Lionel Chevrier: There was no centralization in the tax rental agreements. Even during the war they were voluntary. Quebec never accepted after the war. When in the early 1950's Quebec introduced double taxation the St. Laurent government provided for a deduction from the federal tax the same year and then introduced equalization which removed any shadow of disability between the agreeing and non-agreeing provinces. Again in 1957 the equalization system increased payments to the provinces by $100 million, more than anything yet done by the present government in the tax sharing field.
[Mr. Speaker.)

I wish to remind the Prime Minister that during the campaign of 1957 he and his followers claimed that under the tax sharing agreements negotiated by the former administration which will expire on March 31 next the provinces had been "forced into a starved condition". Those were the words the Prime Minister used. He promised to assure fairness to all.
As the house knows, during the campaign of 1957 Mr. Frost supported the Prime Minister's policy, as did the Frost government in Ontario, and said that if the Conservative party was elected Ontario would receive an additional $100 million annually out of the federal treasury. What is happening now? As I said, Ontario will receive $18 million more and has to impose a tax of 3 per cent in order to meet the difference.
Here is the situation. The government pretends that this is a better scheme than the one which existed before. Mr. St. Laurent in his statements in the house and outside never pretended at any time that the formula which he brought forward was perfect. He said it could be improved but he also said that under the circumstances it was the best formula that could be found. I am convinced that the formula contained in this legislation is not as equitable as the previous one.
What are the facts? The government pretends that the formula contained in this legislation is a better one. It is better for Ontario, by $18 million-


Paul Joseph James Martin: Far short of what Ontario expected.


Lionel Chevrier: As my hon. friend has said, it is far short of what Ontario expected and had a right to expect.


William Moore Benidickson: They thought they had a wink for $100 million.


Lionel Chevrier: But what is the situation in Quebec, Manitoba and Saskatchewan? All three are in the same position. The government's formula is so bad it did not dare apply the formula to those provinces. Instead of applying this fine new formula to those provinces the government will have those provinces remain under the existing law. In other words for those three provinces the present law is better than the government's new scheme, as is clearly demonstrated in this bill.
For British Columbia and Alberta there is an actual reduction and those provinces will be worse off under the new scheme than under the existing law. As the Minister of Forestry said before the luncheon adjournment, the Atlantic provinces would have been so much worse off under the new scheme

that the government had to add another $10 million to the Atlantic provinces grants to make up the difference. But this device created new inequalities within the Atlantic provinces themselves as the hon. member for Gloucester so clearly pointed out this morning.


Donald Methuen Fleming: So erroneously.


Lionel Chevrier: To sum up, there is no improvement whatever in the new equalization formula for nine of the ten provinces. I ask, Mr. Speaker, whether this is the way to promote the national unity and harmony which the Prime Minister promised in 1957? So far as Quebec is concerned there is absolutely no improvement. The minister has refused to indicate whether there is any prospect of improvement as he did by not answering the question put to him by the hon. member for Bonavista-Twillingate in which the minister was asked to produce in this house a comparative table which would illustrate the situation under the new formula as compared with that under the old. Obviously such a comparison would not be helpful to the government.
This is the great new deal for the provinces and municipalities which the Prime Minister promised in his opening campaign speech at Massey Hall on April 26, 1957 when he said:
We believe there can be no national unity in this nation until there is a realization that the federal-provincial matters have handcuffed the provinces of this nation: have denied the municipalities adequate sources of revenue: have placed the provinces and the municipalities in a position where they cannot discharge their constitutional responsibilities or permitting the necessary development in their own territorial confines of the natural resources that there are. We believe the provinces and municipalities must have the financial resources to carry out those responsibilities. We believe in the federal system of government. We believe that its preservation is essential to Canadian unity. We believe the federal system is today being challenged by the centralization complex of the St. Laurent government and that a healthy division and balance of revenues as between the federal and provincial governments must be assured.
We intend to form a government to immediately convene a dominion-provincial conference to bring about a settlement of these problems, not in the spirit of arrogant domination as displayed by the present government, but in the spirit of unity and amity and with mutual tolerance and respect.


Some hon. Members:: Hear, hear.


Lionel Chevrier: The Prime Minister nods in affirmation of what he has said. I ask if it was evidence of national unity when, following the conference here, practically all of the premiers, except perhaps one, declared their inability to abide by the proposals put forward by the present government and voiced their dissatisfaction.
90205-6-568
Dominion-Provincial Relations


Donald Methuen Fleming: What a gross exaggeration.


Lionel Chevrier: I state, in the light of what is being said here and what has happened in the form of this legislation, the federal government puts forward this proposal which was set out at the conference last February and in a spirit of, I say to you, "arrogant domination" they have refused to change at all, and what is more, they have even refused to confer again with the provinces that have asked for a conference. They have refused to confer even though seven premiers expressed strong opposition to this scheme and several of them, including the premier of the province of Quebec, have asked for another conference.
In order to support that contention I intend to put on Hansard portions of the letter which the Quebec premier wrote to the Prime Minister. The letter from Premier Lesage is dated July 13, 1961, and reads as follows:
(Translation):
The Right Hon. John G. Diefenbaker, P.C., Q.C. Prime Minister of Canada,
Parliament Buildings,
Ottawa, Ontario.
Dear sir:
My colleagues and I have dutifully given close consideration to your letter of June 16, 1961, in which you set forth the federal government's intentions with regard to the questions raised during the recent federal-provincial conferences and, more particularly, the one which was held in Ottawa on February 23 and 24 last.
The province of Quebec has passed its own laws in the matter of personal and corporation income tax. I have no intention of proposing to the legislature that the care of collecting those taxes be entrusted to the Department of National Revenue. For that reason, I shall refrain from commenting on the collection agreements suggested.
With respect to the equalization formula, the guarantee offered and the gradual widening of the taxation field reserved to the provinces in the matter of personal income tax, I must point out once again that the effect of widening the taxation field is illusory for us, to all practical purposes, since what is given to us with one hand is taken away with the other, due to the decrease in equalization.
Personal and corporation income tax is already a heavy burden for our taxpayers. Therefore, our government will not be able to avail itself of a freer hand in the taxation field without maintaining or increasing double taxation.
You will understand that my colleagues and myself were bitterly disappointed by your letter. As I pointed out in Ottawa, the province of Quebec is in full expansion and needs additional revenues. In order to reach the national average, its expenditures, according to D.B.S. figures should be materially increased in the important fields of education, health and communications. Those are priority requirements and only through an increase in the revenues at our disposal shall we be in a position to carry out our obligations under the constitution.

Dominion-Provincial Relations (Text):
I jump over several paragraphs (to come to this concluding one.
(Translation):
Under the circumstances, it is urgent that another conference be held in order to seek an agreement and to see that no such serious misunderstanding be allowed to subsist.
I have no objection to quoting the answer given by the Prime Minister (Mr. Diefenbaker) in his letter; the only thing to which I would object is what I have noticed going on between the Prime Minister and the Minister of Finance (Mr. Fleming). I am not saying this to be at all mean toward the Prime Minister.
However, I do congratulate him for his contribution at that time and, with his permission, I should prefer not to read his letter, first because it is long and second, because it is printed in Hansard where he can easily find it.


Mr. Deschalelels:: It has no meaning, anyway.
(Text):


Lionel Chevrier: But the point is this, sir, here is one of seven premiers of the various provinces who demanded that this matter be reconsidered. Apparently the answer has been a positive negative, a positive no.
In so far as the premier of the province of Quebec is concerned, this is not a good agreement for that province. It is certainly not as good as the one that had been submitted by the previous administration. As the hon. member for Leeds (Mr. Matheson) said last night, if a careful view is taken of the proposals it looks very much as if those provinces which decided to vote in favour of a Conservative administration received better treatment than they otherwise would have received, and those provinces which support a Liberal administration or administrations other than Conservative seem to have lost considerably under the proposal.


William Moore Benidickson: Pretty shrewd.


Lionel Chevrier: In any event, the answer to the request made by the premiers of the provinces has in effect been this, take it or leave it.


Donald Methuen Fleming: Nonsense.


Lionel Chevrier: That is why we are going to vote against this measure.


Donald Methuen Fleming: Mr. Speaker-


Mr. Speaker:: I must inform the house that if the minister speaks now he will close the debate.


Paul Joseph James Martin: Mr. Speaker, before the Minister of Finance takes part in this debate, I should like to supplement what

members on this side of the house have had to say about this measure. I join with my colleague the hon. member for Laurier (Mr. Chevrier) to put in perspective some of the things which have been put improperly in attempted perspective today by the Prime Minister.
It must not be forgotten that one of the assurances given by the Prime Minister in the election of 1957, as we were reminded today by the hon. member for Laurier, was that if his party was elected to office and he was made Prime Minister, he would end once and for all the unfair situation that prevailed in fiscal matters between the federal and provincial governments. It will be recalled that he associated that promise with the statement that not later than the month of September, 1957 a conference would be held with the provinces to resolve this question. Well, parliament was called together in the fall of that year. This government sat to your right, Mr. Speaker, for the first time in the autumn of 1957. No conference had been called, as was promised by the government of the day. Hansard records persistent interrogation of the Prime Minister and of the Minister of Finance asking when a conference of the provinces was going to take place. Well do I remember particularly reminding the Prime Minister of the promise he made in that regard at St. Patrice de Beaurivage in the province of Quebec. But, Mr. Speaker, no conference took place until after prodding by members of the Liberal party. At the end of October we were told by the Minister of Finance (Mr. Flemming) that the provinces were going to meet with the federal government some time in the month of November We all remember what took place then. The conference met, it is true. Every provincial premier made his declaration of policy and intention and made his requests to the government, a government that had promised to resolve this question for all time.
After the provinces had stated their case and the Minister of Finance his preliminary statement, and the Prime Minister (Mr. Diefenbaker) had expressed solicitous phrases of welcome to the capital of our country, the conference adjourned. No action was taken, no policy statements were formulated, no agreement was entered into between the provincial and federal governments in November, when they first met. The communique issued after that conference clearly indicated that it was understood that the conference would be reconvened in the month of January. We were told that in this house by the Minister of Finance. Well, what happened? Before many days in the month of January had expired the Minister of Finance rose and.

instead of announcing the date that the conference would be reconvened, gave to the house the terms of a telegram which had been dispatched to the provincial premiers and in which the government, a government that was going to sit down at the table and have joint exchanges with the provinces on these complicated and highly important matters, laid down to the provinces its policy: "We are going to give you so much money; these are our terms and this is the situation whether you like it or not". Those were not the elegant words used by the Minister of Finance but I am paraphrasing the thought.
We all remember too that the amounts of money set forth in the telegram were later proven to be erroneous and not in harmony with the facts. In other words, the mathematical calculation of the minister in that telegram was proven to be erroneous. I later charged, and I repeat the charge now, that that telegram sent to the provinces was prepared by an official in the treasury of the government of Ontario and not by an official here in Ottawa.


Donald Methuen Fleming: Your charge is just as false today as it ever was.


Mr. Marlin (Essex Easl):: No one has disproved it.


Donald Methuen Fleming: It is a false charge.


Paul Joseph James Martin: The minister says it is a false charge. I say to the minister, as I said on another occasion, that the telegram was prepared by Mr. George Gathercole-


Donald Methuen Fleming: And I tell the hon. member that his charge is false.


Murdo William Martin: -assistant to the premier of Ontario. I have made that statement on three occasions in this house.


Donald Methuen Fleming: It has been false every time.


Murdo William Martin: Well, why did the
minister not take issue with my statement on the other occasions? Under the rules of the house I am bound to accept the statement of the Minister of Finance but only because of the rules do I have no other recourse. I repeat that on three former occasions I made this charge and only now are we receiving a denial from the Minister of Finance.
In any event, the fact is that the provinces were not called back and every premier expressed his indignation in public. Premier Stanfield of Nova Scotia did so as did Premier Roblin of Manitoba and all the other premiers joined these two to express their displeasure and indignation at the high-handed manner in which federal-provincial fiscal relations 90205-6-568i
Dominion-Provincial Relations were being treated by a government that was going to resolve this problem once and for all.
We know what took place then. An election took place. That was the reason for the telegram. It was not because the government was anxious to make a deal. It was because they were on the verge of an election. They knew that if the Prime Minister went to western Canada, particularly to Manitoba, the Prime Minister, in the face of the negative attitude taken by the federal government in November, would have been greatly embarrassed, especially in Saskatchewan and Manitoba by the state of federal-provincial fiscal relations at that time.
We talk now about the principle of equalization. Let us not forget the attitude of the government including the Prime Minister and more particularly the Minister of Finance. We know that the former government under the leadership of Mr. St. Laurent, having in mind the unequal conditions that prevailed with regard to tax revenues available to the provinces, embarked upon the principle of equalization based upon the direct tax revenues of the two wealthier provinces. That was a principle which the provinces recognized as a satisfactory way of providing for the inequities existing under our federal system, so far as a number of the provinces were concerned in relation to the two wealthier provinces. When we came back after the election of 1958-


An hon. Member:: You were sad.


Paul Joseph James Martin: My friend says that I was sad. Yes, I was very sad, as are the people of Canada today. That was one of the saddest days in Canadian history because it put into office the most incompetent government we have ever had in our history, a government that has been unwilling to meet its obligations and its problems and instead has assigned them continually almost day by day to royal commissions. Yes, it was a very sad day. I agree with my hon. friend. When we came back we asked the Minister of Finance if he would commit himself to the principle of equalization. The record of Hansard is there to show that the Minister of Finance, notwithstanding the statement made by the Prime Minister on equalization in Winnipeg during the course of the election, would not commit the government to the principle of equalization beyond 12 months, beyond one year. I had no intention of speaking today-


Donald Methuen Fleming: Oh, no?


Paul Joseph James Martin: I was aroused only after listening to the Prime Minister.

Dominion-Provincial Relations Otherwise I would have my finger-tips on the very remarks, admissions and statements of the Minister of Finance.


Donald Methuen Fleming: You certainly have not got them.


Paul Joseph James Martin: I challenge him to deny that in this house he refused to commit the government to the principle of equalization beyond one year. That is a fact.


Donald Methuen Fleming: It is not.


Murdo William Martin: It was only when the Prime Minister realized what the attitude of the province of Manitoba was, particularly with regard to the failure of the government to commit itself to the principle of equalization for all time, that pressure was brought to bear on the Minister of Finance by the Prime Minister. No other conclusion is open.


Donald Methuen Fleming: That is untrue. You are dreaming.


Murdo William Martin: The minister keeps interrupting my remarks and saying, "That is untrue". That is his view. It certainly is not my view and my view is borne out by the facts.


Donald Methuen Fleming: By your dreams.


Murdo William Martin: It is true that the government has recognized the principle of equalization only because of pressure brought to bear on the government and the Prime Minister by the Leader of the Opposition (Mr. Pearson), the hon. member for Bonavista-Twillingate (Mr. Pickersgill), the hon. member for Kenora-Rainy River (Mr. Benidick-son), the hon. member for Laurier (Mr. Che-vrier) and others.


Donald Methuen Fleming: What about Essex East?


Murdo William Martin: I will have to leave to the Minister of Finance-


Donald Methuen Fleming: Don't be so modest.


Murdo William Martin: -the assessment of the amount of influence which the member for Essex East has on the minister. My judgment is that my influence on the Minister of Finance grows more and more negligible in proportion to the esteem that the Canadian people have for this government. In any event, the fact is that this government did not affirm its belief in the principle of equalization until pressed to do so, something that was essential for the poorer provinces particularly. No amount of histrionics today, September 27, 1961, will change the record and the provincial governments are aware of this fact.


Donald Methuen Fleming: You are changing it in your speech.


Murdo William Martin: My hon. friend says I am changing it. If I am changing it, that is something my hon. friend ought to recognize, namely that there is a value in changing one's position from time to time, particularly if it is wrong.
The Prime Minister today made much of the conditional grants given to the maritime provinces. My hon. friend can point right now to an increase, dollarwise, in current grants to the provinces. But this is not the test. The test of this legislation and of the principle behind it is this: What is the permanent structure on which will be based future grants to be made to the provinces by the federal government? To say that this particular year there is being given to the Atlantic provinces the sum of X dollars more than was given three or four years ago does not in any way meet the issue that is involved in this discussion. Of course there are increases but those increases, based on the present principle of grants made to the provinces, will in ensuing years result in a financial situation to the provinces less favourable under the present formula than would have been the case under the formula for which the present bill provides a substitute. That is the incontestable fact.
For instance, let us consider the province of Newfoundland and the maritime provinces generally. They are not treated as generously as the Prime Minister seems to suggest. We must not forget that Prince Edward Island, as well as Nova Scotia and New Brunswick are full partners in confederation as of course are the provinces of Saskatchewan and Manitoba. The government talks of equal treatment because of its forced adherence now to the principle of equalization. That principle of equal treatment is not observed in the tax arrangements as far as Prince Edward Island is concerned, for instance. Under the new proposal the total increase in revenues to be received in the province of Prince Edward Island will be $3 per person. The annual increase to my own province of Ontario in the same period will be $6 per person. In the face of this how can the Prime Minister talk about fairness to all the provinces?
A moment ago I was talking about the principle of equalization. The application of the principle of equalization ensures, I repeat, that the direct tax revenue from the three sources of taxation for every province, on a per person basis, would equal the direct tax revenues of the two wealthiest provinces. That principle is vital, I repeat, to Prince Edward Island and to all the provinces that

are economically less well endowed. But I repeat that it has been jeopardized by the new arrangements now being embodied in the bill, the principle of which we are now discussing, because the national average has been substituted for the average of the top two provinces.
I say that does not fully give to the provinces-the so-called have not provinces, the so-called less developed provinces-the same benefits as those given under our application of the principle of equalization. If our application of the principle of equalization were to be applied the treasury of the province of Prince Edward Island would receive an additional half million dollars per year on top of the moneys now extended to it. That is the situation. Yet we have the Prime Minister repeating words which the Minister of Finance has put in his mouth and which we know do not represent the true situation.
However, we have not had the whole story. It is connected with one of the most important political personalities in our country. I refer to Premier Frost. In April 1957, in the opening campaign meeting in connection with the elections of that year, Premier Frost appeared on the platform with the present Prime Minister. We all remember the assurance given by those two hon. gentlemen to the people of Canada and to the province. On that occasion, Mr. Frost put his hand on the shoulder of the present Prime Minister, then leader of the opposition, and said, "This is my man. Elect this man and Ontario will get from the federal government what Ontario has not been able to get from the St. Laurent government. We want at least another $100 million in order to discharge our obligations. This amount we cannot get from the present federal government. Elect this man, my friend John, and Ontario will get a new deal". That was an assurance given by the premier of Ontario. The Prime Minister did not say, "Oh, I cannot commit myself to assurances like these. This is a very large sum of money. I must take into account the situation in Manitoba and the situation in Saskatchewan. I must realize that if I am elected I am going to be the prime minister of all of Canada."


Mr. Pallell:: For a long time.


Paul Joseph James Martin: My hon. friend says, "For a long time". All my hon. friend does is to make interjections like that. Because of this he will not be here for a long time.
In any event, that was the promise made by those two gentlemen. What is the situation? After the election of 1957 Mr. Frost wore out the red carpet from Toronto to the east block with his visits in an attempt to get a new deal from the Prime Minister,
Dominion-Provincial Relations his friend John, the man whom he had recommended to the people of Canada. He could get nowhere with the Prime Minister because the Prime Minister could get nowhere with the Minister of Finance. That was the reason. It was not until two years had elapsed that the premier of Ontario, his patience exhausted, said that his first responsibility was to the province of Ontario and that because he could not get what he wanted out of the then federal government, now headed by the present Prime Minister, he would have to change his formula. We know what that change amounted to. Instead of the premier of Ontario asking for $100 million or $118 million, when he came here to Ottawa on the second last occasion he raised his ante and he said, "Since I was not able to get my original amount,"-and, he might have added, at least in parenthesis, what had been promised at that Massey Hall meeting in April of 1957-"I now must ask for $500 million. In no other way can I, as premier of Ontario, discharge my responsibilities and see that schools are built, provide for the building of highways and the like". As a result of that last conference Ontario did not get what it wanted, of course. Ontario got much less than the $500 million, and not anything like the full amount of the $100 million originally asked for.
What is the result? The result is that in the province of Ontario today there has been imposed a sales tax which has aroused the people of Ontario as very few tax imposts in that province have done.
Mr. Pallet!: A tax fully supported by the leader of the Liberal party in Ontario.


Paul Joseph James Martin: My hon. friend may make whatever objections he wishes from his seat but the fact is-and this is the place in which to say it-that Premier Frost has said he was forced into this situation because of the intransigent position taken by this government and the Minister of Finance (Mr. Fleming).


Donald Methuen Fleming: That is not what he said.


Paul Joseph James Martin: So when we are now confronted with criticisms of this sales tax which has been imposed in the province of Ontario we must bear in mind that we have as our witness-and indeed he is an unimpeachable witness-the premier of Ontario, who says, "Do not blame me for this sales tax, you grocers, retailers, purchasers of commodities, and the like". He does not say, "Blame the Minister of Finance" in these words-

Dominion-Provincial Relations


Donald Methuen Fleming: That is what you said a moment ago.


Paul Joseph James Martin: -but everybody knows that on the shoulders of the Minister of Finance and this government must rest, according to the premier of Ontario, the primary responsibility for the imposition of this sales tax in Ontario at this time.
I am not in the know of the councils of the Conservative party, and I must say that as the years go on they become less and less communicative to me with regard to matters that go on in the councils of that party. You will therefore understand, Mr. Speaker, how helpless I feel in the matter-


Donald Methuen Fleming: And you look helpless.


Paul Joseph James Martin: -but I am entitled to draw certain deductions. It is not without some significance that Premier Frost, who has had a very long and distinguished sojourn as head of the government of Ontario, has decided in his moment of glory at the moment when everyone is giving him accolades, bowing to him and acknowledging his contribution to the public life of Ontario, to suddenly leave the government of Ontario and public life.
It has been suggested that the foremost reason for that decision is his inability to extract from this government a fulfilment of the assurance it gave-


Donald Methuen Fleming: That is utter rot.


Paul Joseph James Martin: -with regard to this matter of federal-provincial fiscal relations.


Donald Methuen Fleming: Fantastic rot.


Murdo William Martin: The Minister of Finance says it is all rot.


Donald Methuen Fleming: I said it is more than that; it is fantastic rot.


Murdo William Martin: Of course, Mr. Speaker, the Minister of Finance has been away for a long time. He has been visiting several countries of the world and he has been on several continents. He is perhaps unaware of some of the things that have been taking place in the innermost recesses of the councils of the Conservative party. But I hear on the best authority-


Some hon. Members:: Oh, oh.


Murdo William Martin: -that Mr. Allan, the provincial treasurer, one of the candidates for the leadership of the Conservative party in Ontario, feels just as Premier Frost does, that perhaps they had better give up-


Mr. Mariineau:: Is that why he is seeking the leadership?


Murdo William Martin: -expecting any assistance along the lines promised by this government in the election of 1957. However, someone some day will write the history of the premier of the province of Ontario, and we hope the real reason for his resignation-


Donald Methuen Fleming: We hope it will not be written by Pickersgill.


Murdo William Martin: -will be made known. We hope we will learn the nature of the conversation between the premier of Ontario and the Prime Minister of Canada (Mr. Diefenbaker) on the day before the premier of Ontario announced, with understandable reluctance, his decision to leave Ontario politics. Some have even suggested he is not going to leave politics, that he is going to come to Ottawa and take up an appointment in another institution of this parliament. It may be that he hopes in that capacity to exercise a greater influence on this government than he did as premier of the province of Ontario.
The government is confronted with this background to this bill. It must not be forgotten that this government's policy in this particular is most regressive. When one thinks of the complicated financial structure that exists in this confederation of ours, with ten provincial governments and one federal government, a government which since the war has rented certain tax fields from the provinces, corporation taxes, income taxes and succession duties; when one realizes the confusion that prevailed before the present arrangement and the demands made by responsible people of all classes in this country almost since the beginning of this century up to the Rowell-Sirois report in 1941, and what followed that report; and the decision of a former minister of finance, Mr. Ilsley, to bring about this new formula in connection with these tax fields, all one can say in the light of all this history is that we are now embarking legislatively on a program that is most regressive. Some day this government will regret the step it is taking.
It may relieve the government of political embarrassment. They may now more successfully resist some of the requests and demands being made by the provinces, but as a result of this bill which we are shortly going to discuss-


Donald Methuen Fleming: Discuss?


An hon. Member:: We are discussing it now.


Paul Joseph James Martin: As a result of this bill, the details of which we are shortly going to discuss, this government has embarked on a course that is regressive and

is going to encourage provinces to enter fields of taxation-which it will be within their right to do-which will place on the Canadian taxpayer a serious burden. After all, all the moneys that come to governments on all levels originate in only one source, and that is the Canadian citizen who, out of his hard work provides governments on all levels with the financial resources to carry on the projects of government.
Premier Robichaud announced yesterday in New Brunswick that as a result of this bill he is going to have to go out and get $2J million more. There is talk now of the provincial legislature being called for the purpose of enabling that body to consider additional forms of taxation to be imposed on the people of New Brunswick, just as a similar situation has developed in the province of Ontario and as it will develop in other provinces.
The federal government has obligations in national defence, social welfare and the like. In the latter field we have not stopped. There is still a great deal to be done. But I say that this government, by the regressive step it is taking, in this measure, is putting one of the greatest halting blocks to further social reform in this country, because it is imposing obligations on the Canadian people that will come from further imposts by the provinces, and which our people will find it increasingly difficult to bear.
The Prime Minister did not say a word about that. He simply referred to the increases in the conditional grants since this government came into office. Incidentally, these increased conditional grants were based on grants originally provided for by Liberal governments under Mr. Mackenzie King and Mr. St. Laurent. The Prime Minister referred to the increases in hospital insurance payments and to other conditional grants. Let it not be forgotten, that long before this government came along, and sometimes against the opposition of its supporters in this house, grants were made to the provinces in the field of social welfare by the former government in a wide area of social interest. When we compare what was paid out in old age pensions, old age assistance, blindness allowances, family allowances, unemployment insurance and disability pensions, and the like, by the former government with the allocations made during the past four years, it is no wonder that we marvel at the daring of the Prime Minister (Mr. Diefenbaker) in suggesting today that the increases in the social services represent the unique interest of this government in social welfare. Of course, these are obligations which would have to be continued by this government. But the Prime Minister said nothing about
Dominion-Provincial Relations the authorship of these measures; he said nothing about the antecedent situation and how the structure on which these measures are based was provided.
While this legislation will relieve the government of certain payments for a period, in taking this step the present administration has embarked on a negative and regressive course-a course which negates the work of men such as John W. Dafoe, and the late Newton Rowell, of men like Frank Scott, Dr. Skelton and others who over a period of many years laid the groundwork in this country for the principles embodied in the recommendations of the Rowell-Sirois report, which was later carried out in part under the former administration when Mr. Ilsley was prime minister.


Donald Methuen Fleming: When was Mr. Ilsley ever prime minister?


Paul Joseph James Martin: I meant minister of finance. Whether he was prime minister or not the contribution made by that right hon. gentleman as minister of finance was such that he certainly would have made a great prime minister. I must say that as I look at the Minister of Finance (Mr. Fleming) who has been engaging in long extended peregrinations outside our country over many continents, as I look at him now, happy to see him back in his place, it is understandable that I should naturally become confused sometimes, and that is why today I look toward the chair rather than be diverted by his happy presence.


Donald Methuen Fleming: You are confused most of the time.


Paul Joseph James Martin: The minister says I am confused most of the time. I simply want to say this to the hon. gentleman. He has been in this house for a long time, and he has been a student of government in this country for a long time. He knows that what I have said is true. He knows that this legislation is putting back the clock of progress in the matter of federal-provincial fiscal relations. He knows that it is undoing all that was done after a previous government accepted the recommendation of the Rowell-Sirois report. The minister and his friends have undone the basic and important decisions arrived at by the federal government and the provinces in the many conferences which took place in those days, and particularly that which followed the conclusions of the green book in 1945. The hon. gentleman has been made an unwitting instrument of negative action. He should be the last to rise and say that as a result of this measure the Prime Minister can boast with Maclean's magazine: "We have fulfilled our promises."

Dominion-Provincial Relations
This bill is a demonstration that the Prime Minister-who now comes in at the end of my speech-has failed, together with his government, to live up to any serious percentage of the hundreds of wild promises which were made to the people of this country during the course of two elections. This bill will be judged for what it is. Like other unfulfilled promises it will be taken as a reason for throwing this government out of office and putting someone else in who can govern.


Mr. Speaker:: I repeat my injunction that if the Minister of Finance speaks now he will close the debate.


Donald Methuen Fleming: The hon. gentleman has just regaled the house with a speech which was put before us as an impromptu performance, though it was obviously a well rehearsed repetition of a performance we have seen on his part on many previous occasions. He talked about wild promises. Well, I do not think any member has heard in half an hour in this house as many wild statements as we have heard from the hon. member for Essex East this afternoon. In that respect, the hon. gentleman was at his peak. He was all over the horizon today.
Let us see what there is in substance in these criticisms. We are told that there is some discrimination in the formula which has been put forward in this bill, that there is an attempt being made to favour provinces with Conservative provincial administrations and to give less than equal treatment to provinces with administrations of another political stripe. That statement just is not true. This is a formula which applies to all the provinces. We have not doctored the formula. We have not put forward a formula which applies to some while another applies to others. This bill contains one formula applicable to all the provinces.
I shall make a qualification as regards favouritism. It is that this bill favours four provinces, and those are the four Atlantic provinces. It does favour them. We admit that. It favours them to a degree that no fiscal legislation in the history of this country has ever favoured any province. When it comes to a charge of favouritism in that respect, we plead guilty and we put our case before the house.
This is definitely a Conservative measure. Atlantic provinces adjustment grants were never heard of before this government came into office. This afternoon we heard from the hon. member for Essex East (Mr. Martin). We heard from the hon. member for Laurier (Mr. Chevrier). We heard at great length yesterday


from the hon. member for Bonavista-Twil-lingate (Mr. Pickersgill). These were all members of the former administration. Their formula, the 1956 formula which came into effect in April, 1957, was: 10 per cent of the individual income tax for the provinces. These are the 10 per cent men. Look at them -10 per cent written all over them.


Paul Joseph James Martin: Look at the 3 per
cent Minister of Finance.


Donald Methuen Fleming: There were no Atlantic provinces adjustment grants in their minds then. But it did not take this government very long to introduce them-the greatest measure of fiscal recognition that the Atlantic provinces of this country have ever received. There has been nothing like it in Canada's history.
We did not stop there. We moved swiftly to increase from 10 per cent to 13 per cent the provincial share of the yield from personal income tax. The 10 per cent men opposite did not think of that, and they did not give any place to that in their comments today about the fulfilment of promises.
In 1957 when the electorate passed upon the record of the former government and the policy which was offered to them by the present Prime Minister, the people made their choice and hon. members opposite know perfectly well in their hearts, notwithstanding their hollow blustering today, that the promise made by the present Prime Minister before that 1957 election was carried out within a matter of months of his taking office. This course of aiding the provinces was not concluded then. It has been the policy of this government to increase progressively out of the federal treasury provisions for the provinces, whether in the form of conditional or unconditional payments, on a scale never dreamed of by those 10 per cent gentlemen opposite. The 10 per cent tag is firmly stuck on them and it will remain so. For them to try to appear now before the Canadian electorate as the champions of the provinces is a pose that will not delude the sound, intelligent Canadian electorate. So much for the change of favouritism.
It will be remembered that of those four Atlantic provinces two happen to have Conservative administrations and two happen to have Liberal administrations. It is quite obvious that the government has not attempted to draw political lines in this very greatly increased aid that it is providing under the present measure, just as no political lines were drawn in the substantial increases made in aid of the provinces in the years since 1957.


An hon. Member:: That was a five cent speech.


Donald Methuen Fleming: There has been no five cent thinking on the part of this government at any time. That is a tag that belongs exclusively to hon. members opposite.


Paul Joseph James Martin: I thought it was 10 per cent?


Donald Methuen Fleming: As might have been expected we were told this afternoon by the hon. member for Laurier that there is no improvement. He complained that the province of Quebec is not getting enough.


Lionel Chevrier: What improvement is there?


Donald Methuen Fleming: The premier of the province of Quebec is a gentleman who was a member of the former government back in 1956-57. At that time it was evidently his conviction that 10 per cent was a sufficient proportion for that province to receive from the personal income tax yield, not 13 per cent as it has been since 1958, not the 16 per cent that it is going to be in the first year after this bill comes into effect, moving up to 20 per cent five years from now. No, Mr. Speaker, it was 10 per cent, another 10 per cent tag attached to hon. members opposite. These hollow words from hon. members opposite do not strike a very convincing note. The record is all too plain in their case. The people know their record, the 10 per cent record. These are also the "six dollars a month" men.
What are the facts in relation to the province of Quebec? If we look at page 7920 of Hansard of July 11, 1961 it will be seen what happened in the case of Quebec since this country was emancipated from the ramshackle Liberal government that was defeated in 1957. The payments to the province of Quebec are to be found at that page of the record. In the fiscal year 1956-57 when hon. members opposite were in office for the full 12 months, the total of payments-unconditional grants, conditional grants and payments for the benefit of provincial institutions was $17,463,000.


Paul Joseph James Martin: Give the total for the whole period.


Donald Methuen Fleming: In 1957-58, the year when the two governments shared responsibility, the total paid was $204,757,000. This year, 1961-62, it has moved up to $390 million.


Murdo William Martin: Give the total for the whole period.


Donald Methuen Fleming: The province of Quebec-


Lionel Chevrier: Will the minister permit a question?


Donald Methuen Fleming: The province of Quebec-
90205-6-569
Dominion-Provincial Relations


Lionel Chevrier: Will the minister permit a question?


Donald Methuen Fleming: The province of Quebec, Mr. Speaker, must be very thankful indeed that a change of government was brought about on June 21, 1957 so that the province instead of receiving the $200 million, in round figures, is now receiving just about double that sum this year. That is the record of this government.


Lionel Chevrier: Will the minister permit a question? Will the minister put on the record alongside these tables a table which would indicate what the provinces would receive under the new tax sharing agreement?


Donald Methuen Fleming: Mr. Speaker, the hon. gentleman evidently does not read Hansard. This information will be found at page 7927.


Lionel Chevrier: It is not on record.


Donald Methuen Fleming: Yes, it is on record. I will tell the hon. member that I was going to come to that because there are some interesting things to be found in that table. We have at page 7927 given to the house three tabulations. We have shown what will be available in the coming fiscal year, 1962-63 under the new formula, the formula under this bill. This shows Quebec receiving $241,500,000. It shows also in the second table what the present formula under the Federal-Provincial Tax-Sharing Agreements Act would yield to the provinces if there were no new legislation and if we simply continued the existing legislation. That shows that the province of Quebec would receive in the next fiscal year the same amount. But we have also given here a third figure which is what the yield to the provinces would have been in the year 1962-63 if the old government were still in office with its old 10-9-50 formula. This is the Liberal, 10 per cent formula. This shows that if hon. members opposite were still in office with their old 10 per cent formula the province of Quebec next year would receive $217,284,000. The province of Quebec, in round figures, is $25 million better off next year by reason of the defeat of the Liberal government in 1957, not to count the cumulative effects that I have pointed out in the earlier table which show the over-all increase over the five year period to be $200 million per annum in round figures.


Lionel Chevrier: Will the minister permit a question?


Donald Methuen Fleming: I think some of these questions might be more appropriate in the committee stage, Mr. Speaker.

Dominion-Provincial Relations


Lionel Chevrier: Perhaps they would be, but the minister was kind enough to allow me to interrupt a moment ago. Would the minister, in order that there will be no misunderstanding about what I ask, put on the record a hypothetical illustration of provincial revenues for the years 1962 to 1967 under the new agreement?


Donald Methuen Fleming: Mr. Speaker, we will deal with facts here and not hypotheses.


Lionel Chevrier: That is exactly what the minister's table is. It is a hypothetical illustration.


Donald Methuen Fleming: No, Mr. Speaker.


Lionel Chevrier: Oh yes, it is.


Donald Methuen Fleming: The hon. gentleman can be wrong perhaps more chronically than most people would wish. The fact is that the figures shown in the table which I invite the hon. member to examine for the first time demonstrate very clearly that these tables are based on the 1961-62 estimates of 1962-63. That is as close as any experts can come to next year's figures, the figures for 1962-63.


Lionel Chevrier: Give us the calculation for five years.


Donald Methuen Fleming: Something was said about New Brunswick. The Prime Minister has put on the record the figures in relation to New Brunswick. Here is a province that in terms of its sharing in the Atlantic provinces adjustment grants is going to receive the $7.5 million it has received in each of these last four years from that source and an additional $3 million per annum out of the $10 million per annum increase which this measure will offer the provinces in the Atlantic area.
I wish now to touch briefly on the subject of what have been called the guarantees. It is an essential part of the formula in this bill that, in the first place, no province shall receive less, in dollars, than it is receiving this year, 1961-62. It is equally a fact and a provision of this bill that no province in which the yield from the standard taxes and the revenues from resources is less than the national average will receive less than it would have received if the present formula were continued into the new period.
There are firm guarantees that undergird the fiscal position of the provinces. These are an essential part of the formula presented in this measure. This undergirding of the fiscal position of the provinces does not stop there because this bill, in compliance with the earnest pleas made by the provinces, does write into the arrangements a provision in relation to the stabilization of revenues on the 95 per cent basis that has been requested by


the provinces. Therefore, Mr. Speaker, there are guarantees of the firmest kind here, and we have here the most generous provision that has ever been made or that any parliament in this country's history has ever been invited to make for the assistance of the provinces and the buttressing of confederation in this country.
We are asked, sir, to confer again, to call another dominion-provincial conference. This request is echoed in this house by hon. members who have been busying themselves for the last several years in deriding the numerous dominion-provincial conferences that we have called. There have never been as many dominion-provincial conferences at any time as there have been in the past several years. The present formula is the outcome of three dominion-provincial conferences.
Hon. members opposite have been asleep. The first of those conferences was held, July 25 to 27, 1960; the second from October 26 to 28. 1960, and the third on February 23 and 24 of this year. There have been three plenary conferences with relation to this coming period and the fiscal arrangements that are to govern in this period.
Hon. members opposite have engaged in such exaggerations. Actually the requests in this respect have come from only three provinces. We have heard the views of those provinces on every feature of the present proposals. There is nothing in this bill that has not already been discussed in one form or another at the conferences, so there is nothing that can be accomplished by another conference except repetition. Therefore a conference, as the Prime Minister has pointed out in his very courteous and understanding letters in reply to those letters from provincial premiers which are on the record of Hansard, would serve no useful purpose. It is clear that no useful purpose would be served by calling another conference.
This legislation is required now in order that the provinces may be in a position to know what their fiscal positions are going to be and so that the provincial treasurers will be able to guide themselves accordingly in making their plans for the approaching fiscal year.
In conclusion, may I draw attention to some of the things that hon. members say they want to vote against? On this matter of the firm guarantees that I have spoken of, Mr. Speaker, let me say that this is the kind of provision which apparently did not occur to hon. members opposite in 1956. The fact is that if the Federal-Provincial Tax-Sharing Arrangements Act of 1956 had not been amended by parliament in 1958 five provinces would in one or more years have received

Dominion-Provincial Relations
less under the former government's 1956 proposals than those provinces would have received under a projection of the 1952 tax rental agreements.
In the years that I have mentioned the following provinces would have received a greater payment under a projection of the 1952 proposals than under the 1956 Federal-Provincial Tax-Sharing Arrangements Act before we amended it. The deficiency of the 1956 arrangements over a projection of the 1952 tax rental agreements I can indicate briefly, Mr. Speaker. In the fiscal year 195758, Prince Edward Island and British Columbia, are in the class I have mentioned; in 1958-59, Newfoundland, Prince Edward Island, New Brunswick, Manitoba and British Columbia; in 1959-60, Prince Edward Island and British Columbia; in 1960-61, Newfoundland, Prince Edward Island, Manitoba and British Columbia; in 1961-62, Newfoundland, Prince Edward Island and British Columbia. The house will then be able to appreciate, Mr. Speaker, the value of the new formula that is contained in the measure now before the house and the very great benefit that it will bring to the provinces as compared with the inadequate treatment provided for the provinces in the 1956 legislation sponsored by the 10 per cent government.
It must have surprised hon. members who are aware of the terms of this measure and of the welcome that was extended to the proposals of the present government by the premier of Newfoundland to hear the hon. member for Bonavista-Twillingate announce at the end of his 80 minute tiring discourse yesterday that he was going to vote against the measure. We heard one or two other members say they were going to vote against the measure. This applies to the hon. member for Essex East and one or two others.


Paul Joseph James Martin: What did I say?


Donald Methuen Fleming: What then are they going to vote against, Mr. Speaker? In the first place they are going to vote against withdrawing from the provinces the shackles that have been imposed on them in times past under the kind of arrangement that the former government imposed.


Paul Joseph James Martin: On a point of order Mr. Speaker; I suggest to you that the Minister of Finance is now embarking on a line of argument contrary to our rules. No hon. gentleman has the right to attribute reasons with respect to voting on the part of any member. My hon. friend is now imputing motives and going away beyond the kind of argument permitted. He may say that we propose to vote for reasons that he does not accept, or things of that sort, but to say that 90205-6-569J
we are going to vote for the reasons that he has in mind is absolutely contrary to the rules, and no one knows it better than the Minister of Finance. He ought to stop indulging in this violation of the rules in his remarks.


Mr. Speaker:: I do not know what the minister has in mind but what he has said so far, as I heard it, is not contrary to the rules.


Paul Joseph James Martin: I know what he is going to do.


Mr. Speaker:: He is referring to the consequences of a vote against the bill. It seems to me that that is perfectly in order.


Donald Methuen Fleming: Exactly; it is the consequences of the vote of hon. members opposite to which I was referring. I do not know anything about the reasons of the hon. member because he has not any-no good ones, anyway.
This measure will remove the strait-jacket that the previous arrangements have imposed on the provinces. In that way, as the Prime Minister pointed out this afternoon, it will restore the proper constitutional relationships between the provinces and the dominion and also beween the provinces and the taxpayers in the provinces. It will place responsibility where it ought to be borne. Hon. members opposite wish to vote against this very necessary and desirable improvement.
Next, we, the federal government, today in this formula, offer without charge to collect for the provinces the personal and corporate income taxes that they may choose to impose. Hon. members opposite wish to vote against that. In his speech today the hon. member for Gloucester had a good deal to say about this. We do not ask any province to turn over to us the collection of its own taxes; it is completely free under the constitution to collect as well as levy its own. What we say is, if you wish us to collect, then there must be a common tax base. This is absolutely necessary. Anybody who knows anything about tax collection knows that, Mr. Speaker, but it was not clear to the hon. member for Gloucester today.
Therefore, I say, in the second place, Mr. Speaker, that hon. members who are going to vote against this bill will be voting against an opportunity given by the federal government to the provinces at the expense of the federal government to provide this service to the provinces, to collect their personal and corporate income taxes for them.
Next, Mr. Speaker, a vote against this measure is a vote to restrain the federal government from withdrawing progressively from

Dominion-Provincial Relations the field of personal income tax, to leave that field more and more to the provinces in aid of their revenues.


Paul Joseph James Martin: Oh.


Donald Methuen Fleming: A vote against this measure, Mr. Speaker, is a vote against the progressive withdrawal that this bill provides for the benefit of the provinces. We move up this year from something under 14 per cent to 16 per cent next year, 17 per cent the year after and progressively 1 per cent per annum until in the last year of the new five-year period the federal government will have withdrawn to the extent of 20 per cent from the personal income tax field. In that way, Mr. Speaker, the share of that tax accruing to the provinces simply on the basis of withdrawal will have increased in the five-year period by 40 per cent.


Paul Joseph James Martin: It relieves the federal government but not the Canadian taxpayer.


Donald Methuen Fleming: I say to those hon. gentlemen whose words are more profuse than their knowledge of this subject, and who say there is no benefit to the provinces here-


Paul Joseph James Martin: That is right.


Donald Methuen Fleming: -that they can contradict facts but they will not change facts.
Next, in relation to equalization a vote against this measure is a vote against the most progressive and far-reaching application of the principle of equalization that has ever been put before the Canadian parliament in legislation. This measure means and offers the application of the equalization principle to give more effect to the principle of fiscal need in the case of the provinces than has ever been the case before in any proposal put before parliament. We are proposing to take into this calculation one half of the resource revenues in the interests of equalization. When we talk about equalizing revenues among the provinces we should not simply confine it to the yields from the three standard taxes but we should have some regard to the yield from the resources as well, so that for this purpose decisions will not be made without regard to the fact that in one province the average per capita yield from resource revenues is 18 cents today and in another province $112.17. So, Mr. Speaker, if you are talking about equalization in terms of the true principle of helping out by federal resources to meet fiscal need in the case of the provinces, I say that this measure goes farther than ever before.

Then there are the Atlantic provinces adjustment grants which have been moved up to $35 million. Newfoundland gets its $8 million. It gets its increased share of the Atlantic provinces adjustment grants. These are reasons why any member from Newfoundland should welcome this measure and should give it his support.
How did the premier of Newfoundland react to this proposal? You will recall, Mr. Speaker, that at the conference where these proposals were put forward the premier of Newfoundland indicated how much he welcomed them. What is going to happen today in the face of that assessment of these proposals? What is the hon. member for Burin-Burgeo (Mr. Carter) going to do? What is the hon. member for Grand Falls-White Bay-Labrador (Mr. Granger) going to do? What is the hon. member for Trinity-Conception (Mr. Tucker) going to do? What is the hon. member for Humber-St. George's (Mr. Batten) going to do? Are they going to follow the lead of the hon. member for Bonavista-Twillingate (Mr. Pickersgill) and vote against this measure that brings so much assistance to Newfoundland? Are they going to say in that way that Premier Smallwood did not know what he was talking about, did not properly represent the interests of Newfoundland?


Paul Joseph James Martin: What a deceptive argument.


Donald Methuen Fleming: They have their choice, Mr. Speaker.


Paul Joseph James Martin: What specious reasoning.


Donald Methuen Fleming: Likewise all hon. members opposite will have their opportunity to say today whether they want the improved deal for the provinces that this measure offers, whether they want this vastly improved measure for the next five years or whether they want to deny to the provinces the benefit of these features of this new measure. This is a measure which is put before the house, Mr. Speaker, not by a government with a 10 per cent tag on it but by a government which has shown itself more responsive to the needs of the provinces than any government in Canada's history.


Mr, Speaker:: I declare the motion carried.


John George Diefenbaker: Mr. Speaker, if the house will agree to revert to motions I should like to make a statement regarding the bill on class or kind. A question was asked the other day in this regard. If the house would agree, I could now make a statement on the matter.


Mr. Speaker:: I would ask the Prime Minister to bear with me just a moment until I get an order about the committee stage of this bill. When shall the said bill be referred to committee of the whole? Next sitting of the house; agreed?


Some hon. Members:: Agreed.


Mr. Speaker:: Has the Prime Minister leave to revert to motions?


Some hon. Members:: Agreed.


John George Diefenbaker: I thank the house for its courtesy.



BUSINESS OF THE HOUSE

John George Diefenbaker: Mr. Speaker, item No. 1 on the
orders of the day reads as follows:
Consideration of a message from the Senate insisting upon its amendment to Bill C-72, an act to amend the Customs Tariff.
On July 6, as reported at page 7626 of Hansard, I stated the view of the government with regard to this matter in these words:
We shall not, as the Minister of Finance has said, accept the authority or right of the Senate to make this amendment. I hope the house will agree with that stand. The bill will be sent back to that body. If they choose to stand on what they have done this legislation, beneficial to the Canadian people, legislation that has universally been requested, can only pass out of existence, for we on our side will not accept the amendment.
The house overwhelmingly endorsed this stand in voting on the motion made by the Minister of Finance (Mr. Fleming) to this effect. In the circumstances I see no need of reiterating the arguments that were clearly set forth at that time. Those in the Senate who have insisted on asserting that which we regard, on the basis of constitutional practice, as an untenable constitutional position must accept responsibility for the economic consequences of their action-


Paul Theodore Hellyer: Because of the bill of rights.

Private Bills


John George Diefenbaker: And they must accept the blame for the thousands of jobs which, because of the action they have taken, will remain uncreated.


Lionel Chevrier: Mr. Speaker, I would remind the house first of all that the Prime Minister (Mr. Diefenbaker) asked for leave to revert to motions, to which we agreed. This was not the kind of statement that is ordinarily made on motions but is a statement which is made under other circumstances. However, in the light of the importance of the statement I do not think I should say anything at this time.


Some hon. Members:: Oh, oh.


Hazen Robert Argue: Mr. Speaker, this is a strange attitude for the Prime Minister (Mr. Diefenbaker) to take after having threatened the Senate earlier this year and having led the nation to believe that a particular course would be followed in the eventuality that the Senate insisted on its amendment.


Mr. Speakman:: Irresponsible.


Hazen Robert Argue: While the other place has taken this action, we can only say that we feel it is right that Canadians should have the right to appeal from a minister's decision. We think that the government itself is unable to slough off the responsibility for unemployment on the Senate-


Some hon. Members:: Oh, oh.


Hazen Robert Argue: -even though the Prime
Minister has tried to do that.


William Moore Benidickson: Passing the buck to the Senate.


James Stanley Speakman: An irresponsible statement from an irresponsible source.



PRIVATE BILLS


Robert B. Lafrenière: Mr. Speaker, I rise to bring before the house Bill No. S-30 which is a bill to incorporate the Equitable General Insurance Company. I admit the bill has arrived late from the other place, but since this session might be prorogued at any moment may I ask that with unanimous consent we pass now to the second reading of this measure?


Lionel Chevrier: I have looked at this bill. It is the usual kind of bill
which would be brought forward in the circumstances had it been introduced in this house first rather than in the other place. If it is the intention of the hon. member to get second reading only, there would be no objection from this side. If, having got second reading, he wishes to go into the committee of the whole on the measure, I think, since it is now 6.15 or almost that, that we should leave the subject matter over until tomorrow when I feel sure in the light of the terms of the bill that there would be no objection from this side of the house.


Hazen Robert Argue: I believe the position taken by the hon. member for Laurier is a sound one. I believe this bill has been recommended by the superintendent of insurance, so we have no objection at all to the contents, and I think the procedure which has been suggested is satisfactory to us.


Mr. Speaker:: I take it, then, that the house is willing to accede to the request of the hon. member for Quebec-Montmorency and to read this bill the second time, waiving the rule which stands in the way of having it then referred to committee, and that it be proceeded with tomorrow.


William Moore Benidickson: Will it not appear on the order paper tomorrow?


Mr. Speaker:: The bill must go before the committee on banking and commerce unless, of course, the rule is suspended.


Lionel Chevrier: Could we not dispose of it in this manner? The bill might be read the second time and tomorrow we shall deal with it in committee of the whole. We wish to assist the hon. member in connection with this measure. I understand there has been some discussion on it in the Senate and that it has been approved. However, I do not think we should spend another 10 or 15 minutes in committee of the whole on the measure at this time, though there would be no objection to proceeding with it tomorrow in committee of the whole if that is the wish of the hon. member.


Robert B. Lafrenière: the second reading of the bill.
Motion agreed to and bill read the second time.


Mr. Speaker:: Under standing order 105, the said bill stands referred to the special committee on banking and commerce.


Gordon Minto Churchill: To the committee of the whole house, I think.


William Moore Benidickson: We were prepared to go a step further than that for the assistance of the hon. member, by unanimous consent.


Mr. Speaker:: Is it the pleasure of the house, then, that the rule with regard to reference to the committee on banking and commerce be suspended and that this item be ordered for consideration tomorrow by the committee of the whole house?


Some hon. Members:: Agreed.
Business of the House BUSINESS OF THE HOUSE


Gordon Minto Churchill: The business for tomorrow will be a continuation of what has already been outlined-a continuation of consideration of Bill No. C-122 and of the estimates of the Department of Finance and of Transport.


[Stage Direction]
It being 16 minutes after six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Thursday, September 28, 1961

[Stage Direction]
Eighth and ninth reports of the standing committee on miscellaneous private bills- Mr. Mandziuk.