1961-03-16

Hon. Gordon Churchill (Leader of ihe House):: Owing to circumstances which I did not foresee it is necessary to announce a change in the order of business for today. The parties on the opposite side have very kindly co-operated. We shall begin this afternoon with the debate on the Income Tax Act. If that is completed early in the afternoon we shall go on with item No. 11 on the order paper, the resolution in the name of the Minister of Labour dealing with the rehabilitation program for disabled persons. Then at eight o'clock tonight we shall resume the study of the estimates of the Department of Agriculture and continue consideration of those estimates tomorrow.


EXTERNAL AFFAIRS
[Stage Direction]
Hon. Howard C. Green (Aciing Prime
Minister): It gives me great pleasure to announce that His Excellency Habib Bourguiba Sr., President of Tunisia, has accepted the invitation of the government to pay a state visit to Ottawa on May 1 and 2. The President and Madame Bourguiba will be the personal guests of Their Excellencies the Governor General and Madame Vanier at Government house during their stay. Details of the program will be announced as soon as arrangements have been completed.
Hon. members will be aware of the significant role which Tunisia has played in international affairs since achieving independence in 1956. President Bourguiba has headed the government of his country since then, and to him personally must go much of the credit for Tunisia's outstanding international contribution. By his wisdom and understanding he has always exerted a constructive influence not only in matters of direct concern to his country but also in major international issues and particularly those involving the Arab world and Africa. It is at the United Nations that Canada has best been able to observe and appreciate the contribution which this dynamic country has made to international understanding.
Any reference to the international posture of Tunisia and the important part played by President Bourguiba would be incomplete without mention of his continuing contribution to a solution of the problem of Algeria. Not only has his moderating influence been felt in the United Nations on this question, but he has been unstinting in his effort to contribute to an honourable solution of a problem which has been such a deep source of friction between his Arab neighbours in Algeria and France. If, as we all hope, this problem is resolved in the near future, the final settlement will owe much to the dedicated efforts of President Bourguiba.
Yesterday I announced to the house the appointment to Tunisia of Canada's first ambassador, Mr. H. F. Feaver. I mentioned, too, that for more than three years His Excellency Mongi Slim has been ably discharging his function as Tunisian ambassador to Canada. It is with regret that we have now received word of Mr. Slim's impending departure for another and very important assignment, for we have learned to value highly his friendship and effectiveness. With President Bourguiba about to visit this country it is, however, particularly fitting that we should receive the welcome news that Mr. Slim's successor is to be the president's son, His Excellency Habid Bourguiba Jr., who will shortly present his letters of credence to the Governor General. His previous appointments have been as Tunisian ambassador to Italy and France, and I am sure the house will agree that the appointment of the president's son here is a mark of the high esteem in which Canada is held by the Tunisian president and government.
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I am certain that His Excellency Mr. Bourguiba will receive an especially warm welcome when he visits Ottawa, not only because of the constructive part that his progressive young country is playing at the United Nations but even more, perhaps, because of the important mediatory part that Mr. Bourguiba himself has played in what we hope will be a successful effort to bring to an end the unhappy conflict which is now and has been for many years raging in Algeria.


Mr. H. W. Herridge (Kootenay West):: Mr
Speaker, this group welcomes the announcement of the visit of the president of Tunisia.

Inquiries of the Ministry We recognize him as one of the architects of constructive solutions to the complicated and difficult problems that face that historic area of the world.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. Paul Marlin (Essex East):: Mr. Speaker, may I direct a question to the Minister of Labour and ask if there is any special reason why the unemployment figures for the last available period are not given to the house and the country today? I understand that usually those figures are given at this time.


Some hon. Members:: Order.


Hon. Michael Starr (Minister of Labour):: Those figures have been released on a variety of dates; the date of each month is not exactly the same. There has been a variation in the issuing dates of this statistic from week to week. I have not checked as to why it has not been issued. If the hon. member wishes me to check into why it has not been issued I shall be glad to do so.


Paul Joseph James Martin: A supplementary question, Mr. Speaker. In view of the minister's last statement, will he give the house an assurance that it is not because any particular-


Some hon. Members:: Order.


Mr. Speaker:: Order. I think the house might let the hon. member for Essex East say what he has to say. If it is out of order it is appropriate, of course, to rise and say so, or it would be appropriate for me to intervene. I did not hear what the hon. member said. If he considers that it is in order I will give him a chance to ask his supplementary question.


Paul Joseph James Martin: I am sure, Mr. Speaker, you will consider that I am in order. Will the minister give the house an assurance that the figures are not being withheld at this time because of any special event that is taking place in the city of Ottawa?


Some hon. Members:: Order.


Michael Starr: Mr. Speaker, in order to refute the implication of the hon. member, I definitely say that nothing has been done on the basis of the hon. member's question; but I am not surprised at the implication of the hon. member who stoops so low in many instances in asking questions.
LLater:)


Mr. Theogene Ricard (St. Hyacinthe-Bagot):: Mr. Speaker, as the hon. member for Essex East has opened the door, may I be permitted


to extend a most hearty welcome to the Progressive Conservative party members and supporters from all over Canada who are in the galleries this afternoon.
(Translation):



GRAND'MERE, QUE.    REPORTED CLOSING OF KNITTING MILLS

[Stage Direction]
On the orders of the day:
Mr. J. A. Richard (St. Maurice-Lafleche):: Mr. Speaker, I should like to put a question to the Minister of National Revenue.
Is the minister aware that the Grand'Mere Knitting Mills and the Grand'Mere Handicraft, both located in the city of Grand'Mere in my riding, have permanently closed down.
According to an article published in yesterday evening's issue of La Presse, three hundred persons are out of work.
Has the government taken action in accordance with the powers conferred to the Minister of National Revenue under the legislation, either on its own or at the companies' request, in order to assist those industries?


Mr. M. J. A. Lambert (Parliamentary Secretary to the Minister of National Revenue):: The hon. member was good enough to send notice of this question to the minister. The minister and myself have discussed the matter and he assured me that he was unaware of this situation, but that he would inquire and report to the hon. member.
(Text):


Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I ask the Minister of Labour a question arising out of that which was just asked by the hon. member for St. Maurice-Lafleche of the Minister of National Revenue, when reference was made to the 300 people who were put out of work at the knitting mills at Grand'Mere. The question is this. Could the minister tell us what measures the government is taking to see that alternative employment is found for those people?


Michael Starr: Before I answer that question in detail I should like to have the opportunity to make a complete investigation of that situation, of which I am only at this moment aware. After doing so, then we can decide on the action to be taken.


J.-H.-Théogène Ricard: I would like to ask a supplementary question. Would the minister also find out the number of those persons in the St. Hyacinthe district who have found employment with the Goodyear Cotton Company of Canada Limited?



GLEN EXELBY


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavista-Twillin-gate):: Mr. Speaker, I should like to ask the Minister of Labour whether he has replied to the letter he received from Mr. Exelby, and if so, would the minister table the letter in the house in order to complete the record?


Michael Starr: Mr. Speaker, I have replied and I have no hesitation in tabling my reply.


Mr. Frank Howard (Skeena):: Mr. Speaker, I have a question supplementary to that asked by the hon. member for Bonavista-Twillingate of the Minister of Labour a few minutes ago. Does the minister not think it would make the record clearer if other hon. members who may have had such correspondence also tabled it?


Mr. Speaker:: Order.



COMMONWEALTH RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: I should like to direct a question to the Acting Prime Minister. Can the Acting Prime Minister say whether, since South Africa has announced it is leaving the commonwealth, there will be an automatic economic penalty by this nation losing its trade preference with Canada?


Hon. Howard C. Green (Acting Prime Minister):: As I explained to the house yesterday, South Africa has withdrawn its application for re-entry into the commonwealth after becoming a republic on May 31. For the time being she continues to be a member of the commonwealth.
With regard to the latter half of the question of the hon. member for Assiniboia, may I suggest that in fairness it is not very helpful for Canadians to start advocating that there be reprisals of any kind against South Africa.


Hazen Robert Argue: A supplementary question. Do I take it from the Acting Prime Minister's answer that South Africa will enjoy all the commonwealth trade preferences even while following the apartheid policy which resulted in being forced to leave the commonwealth?


Howard Charles Green: This is not the spirit that helps to settle difficult problems. The trade preferences are based on treaties between countries. Canada has a treaty with South Africa, and it is the practice of Canada to live up to the terms of her treaties.
Inquiries of the Ministry


Lester Bowles Pearson: Is it or is it not a fact that preferential treatment automatically ends with withdrawal of any nation from the commonwealth?


Mr. Nowlan:: What about Ireland?


Lester Bowles Pearson: It was negotiated separately afterward.


Howard Charles Green: I am not in a position to give a definite answer to this question.



PENSIONS


[Stage Direction]
On the orders of the day:
Mr. Hubert Badanai (Fort William):: Mr. Speaker, I wish to direct a question to the Minister of Labour. My question is based on a news report of a statement made by the director of the legislative branch of the Department of Labour to the effect that legislation on portable pensions will be introduced in the near future. Will the minister indicate to the house whether such legislation is under active consideration by the government?


Michael Starr: I thank the hon. member for giving me notice of his intention to ask this question. I have had a check made with the person who made the statement, and I am informed that the statement had no reference to federal legislation at this time but dealt only with the possibility of provincial legislation in this field.



LACK OF IDENTIFICATION WORN BY CABINET MEMBERS

[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I wonder whether I might direct a question to the Acting Prime Minister primarily for the benefit of his rally supporters. Does he consider there is anything significant in the fact that none of the cabinet ministers appears to be wearing any identifying picture or emblem today?


Hazen Robert Argue: Those who are here.


Mr. Speaker:: Order. I am sure the hon. member has got out of the administrative field.
(Translation):



REPORTED STATEMENT BY MINISTER OF TRANSPORT

[Stage Direction]
On the orders of the day:
Mr. Augustin Brassard (Lapointe):: Mr. Speaker, I should like to put a question to
3034	HOUSE OF
Inquiries of the Ministry the Minister of Transport, and I would not do so if 1 did not know his sense of humour.
He said yesterday, at a meeting in Montreal, that the House of Commons was the only insane asylum managed by its patients.


An hon. Member:: That was in 1957.


Some hon. Members:: Order.


Augustin Brassard: He did not mention any date.
Mr. Speaker, I should like him to assure the house that he was not speaking of the honourable private counsellors of the Queen who are sitting on the government benches today.


Hon. Leon Balcer (Minister of Transport):: If I used that expression, it is because I have been facing the hon. members opposite too long.


Mr. Azellus Denis (St. Denis):: On this side of the house, there is not a single one.
(Text):



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to address a question, rather in the nature of a welcome home favour, to the Minister of Public Works. In view of the importance of and interest in the Department of Public Works, will the committee of supply be favoured with his genial and benign presence when his supplementary estimates are under consideration?


Mr. Speaker:: Order. I think the hon. member is asking about what may transpire in the committee of supply. It would be more appropriate for him to communicate with the minister privately than to expect the house to deal with the conduct of the committee of supply.


Herbert Wilfred Herridge: I must explain. There is more in this than meets the eye.



CONSIDERATION OF REMAINDER OF THRONE SPEECH ITEMS

[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I should like to ask the Acting Prime Minister whether he can give the house an indication as to when the balance of the items mentioned in the speech from the throne may be presented for consideration.


Howard Charles Green: Mr. Speaker, I would suggest that the hon. member put that question on the order paper.


Frank Howard: A supplementary question, Mr. Speaker-


Mr. Speaker:: Order. I think the hon. member's question encompasses a bit too much ground to be answered briefly on the orders of the day.



COLUMBIA RIVER


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to direct a question to the Acting Prime Minister. In view of the fact that the Senate foreign relations committee in Washington has unanimously approved the Columbia river development treaty, and that the president of the United States has now asked congress for funds to construct the Libby dam as the first step in the implementation of the treaty, does the government propose to submit the treaty to parliament for approval in the near future irrespective of the position taken by the government of British Columbia at this time?


Howard Charles Green: Mr. Speaker, the Leader of the Opposition knows very well what the position is at the present time, because it has been explained on more than one occasion. As yet Canada and the province of British Columbia have not reached agreement on this particular project, so it would be premature for us to take the step that the Leader of the Opposition has mentioned.


Lester Bowles Pearson: Does the Acting Prime Minister not feel that as Canada has signed the treaty, and the United States has now taken the first step toward implementation, it would be appropriate to have the treaty before the House of Commons at the earliest possible date?


Howard Charles Green: Mr. Speaker, the Leader of the Opposition knows very well that all that has happened in the United States has been that the Senate foreign relations committee has recommended to the Senate that the treaty should be approved.


Lester Bowles Pearson: And money is being voted.


Howard Charles Green: No money voted at all.


Herbert Wilfred Herridge: Mr. Speaker, I would like to ask a question supplementary to that asked of the Acting Prime Minister by the leader of the official opposition. Is the Acting Prime Minister confident that an agreement will be reached between

the government of Canada and the government of British Columbia with respect to the development of the Columbia prior to the conclusion of this session?


Howard Charles Green: Mr. Speaker, the hon. member for Kootenay West has just as good an idea as I as to whether it is possible to reach an agreement with the premier of British Columbia on anything.



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. E. W. Brunsden (Medicine Hat):: Mr. Speaker, I would like to direct a question to the Minister of Transport. Has the minister's attention been directed to the dangerous condition of the federally owned airport in Medicine Hat, and has he under active review a program of immediate repair which will make the airport safe for landings and takeoffs not only by Trans-Canada Air Lines planes but also by those planes privately owned?


Léon Balcer: Mr. Speaker, knowing the very keen interest of the hon. member in this airport I am pleased to tell him that my department has the situation under very active review at the present time.



TRANSPORT


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: I would like to direct a question to the Minister of Public Works. Could the minister say when the government will be in a position to make an announcement in respect to the application of the corporation of metropolitan Toronto regarding a loan for the construction of an east-west subway?


Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, I know the interest the hon. member for Trinity takes in this matter, and I can inform him that it has been under consideration by the cabinet for some time. This will be a question for cabinet decision, as well as the application received from Montreal, and we hope that very shortly after the return of the Prime Minister a decision will be arrived at covering both applications.
Inquiries of the Ministry FREIGHT RATES



REQUEST FOR DISALLOWANCE OF IN- CREASED RATES TO EASTERN PORTS

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, on February 27 I asked the Minister of Transport whether the government would consider under section 53 of the Railway Act, disallowing the freight increase on grain moved from Georgian bay ports to the St. Lawrence. The minister answered at that time by saying that the matter would be taken under advisement. My question now is, since eastern and western provinces have indicated that they will ask the government to disallow this increase in freight rates, has the government now had an opportunity to consider the question?


Léon Balcer: The matter is still under consideration, Mr. Speaker.


Hazen Robert Argue: Could the minister inform the house whether a formal petition has been received from the provinces in this regard, asking for disallowance?


Léon Balcer: I am not quite sure, Mr. Speaker, whether a formal petition has reached the government.



TURKEYS


[Stage Direction]
On the orders of the day:
Mr. Lucien Cardin (Richelieu-Vercheres):: Mr. Speaker, I would like to direct a question to the Minister of Agriculture, or in his absence to his parliamentary secretary. Is it the intention of the government to abolish the four million pound maximum quota on the importation of turkeys from the United States?


Mr. L. E. Cardiff (Parliamentary Secretary to the Minister of Agriculture):: Mr. Speaker, I will have to take the question as notice and give an answer later.



HUMAN RIGHTS


[Stage Direction]
On the orders of the day:
Léon Balcer: Mr. Speaker, on Tuesday the hon. member for Assiniboia asked a question concerning a reported refusal of accommodation to two United States negroes at the MacDonald hotel in Edmonton.
The management of the C.N.R. advise me they have checked with the hotel and have been informed that the hotel management

Inquiries of the Ministry have no knowledge of accommodation being refused under the circumstances suggested in the question. The management further assure me that their hotel operations are conducted in accordance with the principles of the bill of rights.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I should like to join the hon. member for St. Hyacinthe-Bagot (Mr. Ri-card) in welcoming back one Tory we have not seen in the house for some time. I should like to direct a question to him, the Minister of Public Works, and ask whether during his absence from the house he has been able to meditate on the problem which I know was vexing him before he left, of a suitable site for the post office at Reserve Mines, Nova Scotia, and whether he has reached a conclusion.


David James Walker: Mr. Speaker, I did not realize until now who was behind the many, many letters, anonymous and otherwise, that I have received. I want to thank the hon. member for Bonavista-Twillingate for disclosing his hand. I can assure him that the matter will now receive just the same consideration that it would have received if he had not asked the question.


John Whitney Pickersgill: Mr. Speaker, on a question of privilege-


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: -affecting my personal honour-


Mr. Speaker:: Arising out of the answer?


John Whitney Pickersgill: Arising out of the answer.


Mr. Speaker:: I think the hon. member would have to stretch the King's English quite a bit to find any imputation there.


John Whitney Pickersgill: With respect, sir-


David James Walker: Mr. Speaker, may I suggest that the hon. member be permitted to proceed.


John Whitney Pickersgill: With respect, Your Honour, I have been accused of writing anonymous letters-


Some hon. Members:: No.


John Whitney Pickersgill: -and that surely is a shocking accusation for one hon. member to make against another. I wanted to assure the hon. gentleman that I have never, unlike some of his friends, been ashamed to sign my name to my letters.


J.-H.-Théogène Ricard: You have somebody else do it for you.


Mr. Speaker:: Order. A question of privilege would undoubtedly arise if the answer were given serious construction, but 1 did not take it in that vein.


John Whitney Pickersgill: Nor did I.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I wonder whether I could address a question to the parliamentary secretary to the Minister of Citizenship and Immigration in the hon. lady's absence, and ask the parliamentary secretary whether Dimensional Investments Limited made their payment which was due yesterday in connection with the notorious contract made by the government?


Some hon. Members:: Order.


Mr. John Charlton (Parliamentary Sec-cretary to the Minister of Citizenship and Immigration):: Mr. Speaker, I will get the information for the hon. member.



INCOME TAX ACT

[Stage Direction]
The house resumed from Wednesday, March 15, consideration of the motion of Hon. Donald M. Fleming (Minister of Finance) for the second reading of Bill No. C-73, to amend the Income Tax Act.
Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Question.


Paul Joseph James Martin: Mr. Speaker-


Mr. Speaker:: Order. On reference to the clerk's roster I find that the hon. member for Essex East has already spoken in this debate.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: Hon. gentlemen seem to be very sensitive today about something; I do not know what it is. My recollection is that yesterday I asked a question of the Minister of Finance with regard to tuition fees. I was not aware that a question, even though it may have been extended, constitutes a breach of the rules and would not permit a member to speak a second time. However, as always I am in the hands of Your Honour in this matter.


Hazen Robert Argue: You have to be.


Mr. Speaker:: I am afraid the hon. member whose intervention seems to have occupied almost two columns of Hansard will have to accept the record as being correct. It is true that he did ask a question, but I think in the circumstances revealed by Hansard and the clerk's record I cannot allow him the floor again.


John Whitney Pickersgill: Mr. Speaker, I do not think it can be contested that I did not speak, because I was not even in the house. I intend to speak only long enough to move, seconded by the hon. member for Laurier (Mr. Chevrier):
That all the words after "that" he struck out and the following substituted therefor:
"this house, while wishing to establish special measures in connection with tuition fees and nonresident investment in Canada, inter alia, declines to give second reading to a bill the provisions of which do not include any changes in the tax laws for the purpose of implementing the policy proposed in the supplementary budget in order to assist areas where there is a substantial degree of continued unemployment over the years."
The reason for moving this amendment will be apparent at once to the house. The view was taken by me on behalf of the Liberal party, at the resolution stage, that certain changes which the Minister of Finance proposed in the application of the Income Tax Act should be made by parliament and not by order in council. It is my view that they are of a far-reaching character and the terms and conditions of these proposed tax concessions are of a kind which should be made by parliament-


Hon. Donald M. Fleming (Minister of Finance):: On a point of order, Mr. Speaker-


An hon. Member:: Here we go.


Donald Methuen Fleming: Yes, here we go. Hon. members opposite are never very interested in points of order raised on this side of the house.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. The Minister of Finance has risen on a point of order.


Donald Methuen Fleming: Mr. Speaker, the hon. member for Bonavista-Twillingate has read and submitted to you an amendment to the motion for second reading. He is now proceeding to discuss his amendment. I suggest that if he has submitted a motion the motion should be read, because I should like to raise a point of order in connection with the motion. I do not believe the motion is in order as an amendment to the motion for second reading of this bill.


Lester Bowles Pearson: Another gag.


Donald Methuen Fleming: The Leader of the Opposition is continuing to make comments
Income Tax Act
from his seat as though he were addressing others on the maintenance of the rules of this house. Nobody breaks them more often than he does. I suggest that he be told what the rules of the house are, because he does not know them.


Lionel Chevrier: You don't know them either.


Lester Bowles Pearson: I shall be glad to make my comments while on my feet.


Mr. Speaker:: Order. The Minister of Finance has injected two points of order into the proceedings. I think it would be appropriate to deal with the first point of order now, or at the conclusion of the hon. member's speech, whichever is convenient. The question of relevancy is the same. On reflection, perhaps it would not be the same if the amendment were out of order and the hon. member were allowed to speak on it. I suggest therefore, we should deal now with the question whether this amendment is acceptable. I will hear the Minister of Finance on that point first.


Donald Methuen Fleming: As I understand the rule pertaining to amendments introduced to motions for second reading, an amendment to be in order must assert a contrary principle. The form which is always followed in such cases, as I recall it, is "That the said bill be not now read a second time but that-Then follows an assertion of the contrary principle. This is not being done in the present case at all. What we have here in effect is an attempt to say that while the opposition are in favour of one provision of the bill they ask the house to decline to give-they do not say second reading to this bill,-but to decline to give second reading to a bill the provisions of which do not include certain other things.
In my submission the amendment shows no adherence to the rule at all in this respect.
The scope of amendments which may be introduced on second reading is very limited, as you well know, Mr. Speaker. When one clears away the mass of verbiage here there are two things which stand out. The first is an attempt to preserve support for one provision of the bill, and then follows an assertion in very vague terms that the house should not give second reading to a bill which does not make provision for certain other things.
I refer to Beauchesne, citation 201, paragraph 12 where it is stated:
An amendment proposing a direct negative, though it may be covered up by verbiage, is out of order.
I invoke that citation, but I also invoke the clear rule that an amendment is not in order unless it asserts a contrary principle, and I do not find this to be the case in the present proposed amendment. In any event, on examination it will be seen that this is not the type

Income Tax Act
of direct assertion of a contrary principle which is required. The amendment talks about not giving second reading to a bill the provisions of which do not include certain things. That is not the form in which a principle contrary to that set forth in this particular bill, No. C-73, can be put for the purpose of the procedure applicable to amendments on second reading.
The final point I wish to make is that the concluding words of the amendment relating to changes which are said not to be included are not changes which are required in the tax law at all. This is taking the house into an area which under the provisions of the Income Tax Act has been conferred by parliament on the executive branch of government. These come within the regulatory powers conferred on the government by the Income Tax Act.
I refer further to Beauchesne, citation 202, paragraph 15, where it is stated:
An amendment approving part of a motion and disapproving the remainder is out of order.
That is precisely what we have here, an attempt to preserve or approve that part of the motion for second reading which relates to one of the provisions of the bill respecting tuition fees of university students, while expressing disapproval of the remainder of the measure. That clearly comes within the ban set forth in citation 202 on page 170. It thus seems that on any one of several grounds this amendment is clearly out of order.


Paul Joseph James Martin: I should like to say a word on the point of order raised in his habitual manner by the Minister of Finance. May I deal with the hon. gentleman's last observation with regard to paragraph 15 of citation 202 of Beauchesne at page 170. The minister says this amendment is out of order because it approves part of a motion and disapproves the remainder.
The hon. gentleman did not read all the references made by Beauchesne, nor has he referred to the other authorities. As a matter of fact this particular amendment is on all fours with an amendment which was moved in the United Kingdom parliament, and I have reference to it in Mr. Bailey's well known book "British Parliamentary Democracy" at page 90, where the author says:
On the second reading the main principles of the bill are discussed. It is in order to speak about the methods proposed for achieving the objects of the bill or about alternative methods which might be employed. The debate might last only a few hours or it may extend over two or three days. Opposition to the bill may take the form of an amendment to the effect that the bill be read "on this day six months" which would, if passed, kill the bill, or by a reasoned amendment setting out the reasons why the bill should not proceed or showing that the objects of the bill could be achieved in some other way.

It is important to note the particular amendment referred to by Bailey in this context, and I shall read the amendment here moved to show that the amendment introduced by the hon. member for Bonavista-Twillingate is on all fours with the motion which was allowed in the United Kingdom parliament. That amendment was a reasoned amendment to the national health service bill of 1946, and it was moved by an opposition member of parliament. It was in the following terms:
I beg to move to leave out from ''that" to the end of the question and to add instead thereof- "this house while wishing to establish a comprehensive health service declines to give a second reading to a bill which prejudices a patient's right to an independent family doctor, which retards the development of the hospital service by destroying local ownership-"
-and so on.
The amendment put forward by my hon. friend is in precisely the same form. This amendment says, in effect, that this house while approving the establishment of special features in connection with tuition fees and in connection with non-resident investment in Canada inter alia, declines to give second reading to a bill the provisions of which do not include any changes in the tax laws to provide for implementing the policy proposed in the supplementary budget so as to assist areas where there has been a substantial degree of unemployment over the years. The Minister of Finance says the amendment is out of order though, as a matter of fact, it is in precisely the form in which an amendment was allowed in connection with the national health service bill in the United Kingdom in 1946. On that score the Minister of Finance has not assisted Your Honour in coming to a conclusion with regard to this all-important matter-


Lionel Chevrier: As so often happens.


Paul Joseph James Martin: -as my friend the hon. member for Laurier points out, somewhat gratuitously, "as so often happens".


Gordon Minto Churchill: The hon. member for Essex East needs some help, though.


Paul Joseph James Martin: In May's sixteenth edition at page 530 that distinguished author deals with the question of reasoned amendment. He says:
It is also competent for a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move what is known as a "reasoned amendment". This amendment is to leave out all the words in the main question after the word "that" and to add other words; and the question proposed upon the amendment is, that the words proposed to be left out stand part of the question. A reasoned amendment is placed on the paper in the form of a motion and may fall into one of several categories.

(1) It may be declaratory of some principle adverse to, or differing from, the principles, policy or provisions of the bill-
That is exactly what this amendment does. This amendment complains about the fact that in the bill before the house there are not included amendments not with regard to a minor matter but with regard to a matter that was regarded as important enough to be considered as a declaration of policy in the budget speech of last December, and which is still being discussed in this house as a result of the intransigence, if I may say so, of the Minister of Finance.
We are asking that this bill be strengthened by including in it provisions that are not now included. In response to that the Minister of Finance suggests that the existing law already gives the government the authority which we are seeking to have incorporated in this bill. That is one of the very points of the amendment. We are asking that there be incorporated in the form of a legislative amendment the authority which the governor in council now has in respect of a matter so vital as to warrant inclusion in the budget and which should form part of our statutory law and not be capable of giving authority to the government merely by the exercise of a secret order in council. That is one of the principles involved in this amendment.
The Minister of Finance says this is not a direct amendment, as though that were a very important observation in so far as the validity of this amendment is concerned. It is true that the government has acted in this particular matter under an order in council belatedly passed by the governor in council. Our contention is that the matter is of such importance that it ought to be included in an enactment of this house and that the particular authority authorizing the passing of an order in council is an authority that was never envisaged to cover a matter of this fundamental importance.
For those reasons, Mr. Speaker, I would urge Your Honour, and I do so with confidence, to accept this amendment.


Donald Methuen Fleming: Mr. Speaker, there is one further point on which I should have touched and it will be, I think, quite obvious to the Chair. That is that the amendment introduces something that is quite outside the scope of the bill and therefore offends the rule as to relevancy.
The hon. member for Essex East, of course, wishes to revive the budget debate. This bill, C-73, is, of course, only one of the legislative measures which have been brought forward in pursuance of the resolutions introduced at the conclusion of the budget speech of December 20. I would point out that what has been attempted by the opposition in this
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amendment is to evade a ruling that was made with respect to this very matter at the resolution stage in committee of ways and means. This was in the resolution dealing with the proposed amendments to the Income Tax Act. Because this question of double depreciation, which was announced in that speech and which of course is a matter of regulation under the provisions of the Income Tax Act, was not referred to in the resolution, hon. members opposite including the hon. member for Essex East sought to debate that question in the committee of ways and means on the resolution. That discussion was ruled to be out of order by the chairman of the committee.


Paul Joseph James Martin: That is not the
case.


Donald Methuen Fleming: You will find that at page 2606 of Hansard of March 2. The hon. member for Essex East was allowed a great deal of latitude. It seems to be that the only way any progress can be achieved in the house or committee is to extend to the hon. member for Essex East latitude to ride roughshod all over the rules of the house.


Lester Bowles Pearson: A reflection on the Chair.


Donald Methuen Fleming: After that had been done a point of order was raised. You will find reference to this at page 2606. Again the hon. member for Essex East made the same kind of voluble statement he has made today, and even the Leader of the Opposition took part in this discussion on the point of order.


Mr. Marlin (Essex Easl):: That is not a fact.


Donald Methuen Fleming: The deputy chairman disposed of the point of order. He disposed of it by ruling that kind of discussion to be out of order on the resolution. Here are his words to be found at page 2606-


Peter Francis Martin: Read them out.


Donald Methuen Fleming: I certainly intend to read them out, but I do not need to take orders from the hon. member for Essex East. The deputy chairman said:
I think hon. members will realize first of all, of course, that the Chair does not make the rules of the house. The job of the Chair is to try to interpret the rules. When the hon. member for Essex East first rose and started talking about double depreciation I began to read the resolution very carefully and I have read it three times. Up to this point I have not been able to find in the resolution any reference to double depreciation.
I have no other alternative than to suggest to hon. members that they try to be more relevant to the particular resolution that is before us. We are not debating the budget. We are debating one resolution of the budget. I am sure hon.

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members will appreciate the position that the Chair has to take and will do what they can to co-operate.


An hon. Member:: That is no ruling.


Donald Methuen Fleming: From that stage, the point was not raised again. No further effort was made by hon. members opposite to defeat or evade the ruling of the Chair in that respect.
We come now to the bill stage. There is nothing in this bill that relates to this matter of the double depreciation. That was not a matter requiring legislation. It is, therefore, outside the scope of the bill, and the purpose of the amendment is to enlarge the scope of the debate and revive the debate on the budget rather than have a debate on the bill itself. On the rule of relevancy I respectfully submit that this amendment is completely out of order.


Mr. Speaker:: Before the hon. member for Bonavista-Twillingate speaks I wish to say that he should endeavour to meet the point that this amendment can be brought within the terms of the resolution.


John Whitney Pickersgill: That is what I was seeking to do, Mr. Speaker. Evidently the Minister of Finance has had a lapse of memory, because later on March 2, as Your Honour will find from examining Hansard at page 2609, I got up to address the committee and said:
I should like to address myself to the first few words in this resolution which are:
"Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:"
The whole crux of my remarks was that among the other things that ought to be included in the bill as coming within the scope of the Income Tax Act which was being amended were precisely those things dealt with by this amendment, supported by my hon. friend, which I moved earlier today; that is to say, the inclusion in the bill of specific legislative authority for the kind of double depreciation which the government was seeking to give by order in council under existing legislation. Neither the chairman nor the Minister of Finance nor indeed anyone else took the slightest exception to that observation of mine.


Donald Methuen Fleming: With respect, Mr. Speaker, that is not true. Will the hon. member look at page 2610 of Hansard, where he will see in the second paragraph that when the hon. member for Essex East attempted to revert to this subject I said "Order", and the deputy chairman made a ruling. He said:
Order. The hon. member was referring to what might be put into the Income Tax Act. That was quite in order. But I think the hon. member is going a little further than he is entitled to go-


John Whitney Pickersgill: Since 1 had the floor, after this usual intervention in the middle of speeches perhaps I might be permitted to proceed. I said no exception was taken to my observations, and no exception was taken to my observations, Your Honour. My observations were the only ones that dealt specifically with the point that the amendment I submitted to the house today deals with, namely whether this amendment can be brought within the scope of the bill. Nothing is more obvious than that. What we are seeking to suggest is that this amendment to the Income Tax Act should amend the act with specific respect to a matter which is now dealt with in the Income Tax Act. Surely the minister would not contend, and I am sure Your Honour would not support the contention, that because there is a provision for doing something one way in an existing act of parliament there cannot be an amendment to that act of parliament and provision made to do it in another way. All we are seeking to suggest here is that we find this bill unacceptable because it does not contain a specific provision to do in another way, which we think would be the better way, what the government is seeking to do though it is a new policy, by means of the use of old and existing legislation. If parliament cannot change existing legislation, and if the opposition cannot put forward alternative views as to what the legislation should be, it seems to me that we would have very little legislative function here whatever. However pleasant that would be to the Minister of Finance it is not a conception of parliament, I am sure, that Your Honour would accept.


Donald Methuen Fleming: I was endeavouring to read the observations of the deputy chairman at page 2610 of Hansard of March 2. May I conclude the reading. He said, referring to the hon. member for Essex East:
But I think the hon. member is going a little further than he is entitled to go in asking what has or has not been done in an order in council.
This is the whole matter of double depreciation which hon. members opposite are seeking to drag into this debate now. If it is in order to amend a motion for second reading by bringing in something which lies outside the scope of the bill for which second reading is being moved, it will be perfectly in order to bring in any subject at all that has any relevance at all to the main statute, in this case the Income Tax Act. That is not the test of relevancy on a motion for second reading of a bill to amend an existing statute. The rule is that the relevancy applies to the terms of the amending bill, not to the main statute, because this present hill deals with

only a few of the many sections of the Income Tax Act. Were this amendment to be in order, then, Mr. Speaker, I think literally hundreds of amendments could be introduced on such a motion just dealing with matters that relate to the main existing statute but have no relevancy whatsoever to the amending bill under consideration.


John Whitney Pickersgill: Sir, since you have allowed the minister to speak twice, perhaps I can reply to his last observation. The effect of the last observation of the minister would be that no amendment could be offered to any bill. In other words we must accept or reject the bill en bloc, and that has certainly not been the practice.


Donald Methuen Fleming: How ridiculous.


Mr. Speaker:: The amendment proposed is an amendment on the motion for second reading of a money bill, a bill preceded by a resolution, which distinguishes this bill and the type of amendment which may be moved from other bills which do not have to be preceded by a resolution, so there is that additional limiting factor to amendments which might not be applicable to other bills before the house for second reading.
It is not safe to apply generally decisions with respect to amendments on the second reading of non-money bills to bills which do require a preliminary resolution. In this instance the resolution does contain some general terms which the hon. member for Bonavista-Twillingate has pointed out. The resolution which was adopted by the house begins:
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things-
Then follow paragraphs numbered 1, 2, 3 and so on, setting out a number of specific items. The only argument that troubles me is the question whether "among other things" opens the door to specific propositions which are not enumerated in the resolution itself- I would be inclined to think not from rules of interpretation-which the reasoned amendment would have to contain; and it is agreed that reasoned amendments on second reading are acceptable.
If this were an acceptable reasoned amendment I would have no doubt about it. The question is whether it is that category of amendment, having regard to the necessity of bringing the reasons within the limitations of the resolution. I think my best judgment- and I agree that these are matters of judgment and might be decided in many instances one way or the other-is that the reason
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given here, in so far as it is specific or ascertainable, is not within the terms of the resolution, and therefore could not have been incorporated in the bill in the first instance.
As I try to interpret the reason, which is the latter part of the amendment, I read these words:
That the house declines to give second reading to the bill because it does not include tax laws to assist areas where there is a substantial degree of continued unemployment over the years.
I think the hon. member who introduced the amendment would agree that this is pretty indefinite and vague, but it does assert the contrary principle to some other tax laws relating to assistance to areas where there is substantial unemployment and what he has in mind and what he asserts should be in the bill. The resolution in its terms certainly had no place for tax laws to assist areas where there is a substantial degree of continued unemployment-


John Whitney Pickersgill: Before you give the full judgment would Your Honour hear a word on that specific point?


Mr. Speaker:: Yes.


John Whitney Pickersgill: My word is this. If the amendment contained a reason for not accepting second reading, which would be competent for a member to make as a motion to amend the bill itself in committee, then of course it would not be competent to entertain it on second reading. Your Honour ruled on that very point in one instance on another amendment of mine some years ago, perhaps two sessions ago, when I sought to do by a reasoned amendment something which was competent to do in committee on the bill itself because it was within the scope of the terms of the bill, and for that reason it could not be given as a reason for rejecting the bill as a whole. Therefore I would say that if our reason for seeking to get the house to reject the second reading of this bill was something that could be done to transform the bill in committee, then we would be out of order.
It follows, therefore, that if the reasoned amendment could be made at all it must have as its subject matter something that, though germane to the bill, could not be done in committee on the bill itself. I would not argue for one minute that this can be done in committee on the bill itself. Therefore it seems to me, sir, that that is a consideration that it did not seem to me had been brought out before; and before Your Honour gave a ruling, since this is an important matter, I thought I should draw it to your attention.


Mr. Speaker:: I appreciate the force of the argument that an amendment which might

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be made at the committee stage to a particular section might also be expanded into a reason. If they were the same then presumably the ruling referred to would prevent it being used as a reason, because it could be dealt with in committee. But many reasons could be advanced against reading this bill the second time which would be within the scope of the resolution and yet would not be specific amendments to clauses, and I think I can give an example which will satisfy the hon. member. It would be a reason of principle that the effect of a particular tax measure would be to interfere with trade or investment between two countries, or something of that kind which would not be the subject matter of an amendment in committee. In the result I find that this latter part does not satisfy my mind that it is a reason which can be advanced on this bill because of the preliminary stage.
There is a further difficulty which I think is a real one, in that the amendment seeks to approve part of the bill and to disapprove the remainder. There is fairly clear authority on that point which has already been referred to. As found in Beauchesne, fourth edition, page 170, it is stated:
An amendment approving part of the motion and disapproving the remainder is out of order.
Then an instance is given. In effect this amendment attempts to approve that part of the bill which deals with allowances for tuition fees but to disapprove the bill otherwise, and on that ground I think it would fall. The hon. member has the floor and is free, of course, to continue.


Paul Joseph James Martin: Before Your Honour makes a final ruling may I ask Your Honour to consider the case in the United Kingdom parliament to which I referred, which was a specific amendment following a specific rule. A money bill was involved and the mover of the amendment expressed his approval of parts of the main content of the bill and rejected others for certain reasons. I will admit there is that statement in Beauchesne, but it so happens that in the case of that learned authority there is a mere assertion which, without the citation of instances, surely makes the statement of that learned author nothing more than an authority of persuasive value, whereas in the case I have cited we have a decision of the Speaker of the House of Commons.


Mr. Speaker:: May I say to the hon. member for Essex East that I appreciated the force of his argument and the precedent he produced, and distinguished it in my mind, because the first part of the amendment he cited is simply a general declaration in favour

of a national health policy. It does not really approve part of the bill, and it is quite different from the amendment before us which attempts to approve specifically some provisions of the bill. In the other case there is a general declaration in favour-I do not recall the exact words-of the institution of a national health program, but that is not specific approval of something in the bill itself, and on that ground I distinguish it.


John Whitney Pickersgill: Perhaps I might resume my observations on second reading of the bill itself just long enough to express a regret that the government has not seen fit to take parliament into its confidence and give parliament an opportunity on the bill amending the Income Tax Act to make specific provision for double depreciation for what it pains hon. members so much to call distressed areas. When one thinks of the flights of eloquence that issued from this side of the house over the years from 1940 to 1957 from the present head of the administration, those immediately surrounding him and, not the least, from the Minister of Finance himself about the evils of government by order in council, about the restoration of the rights of parliament, about taking parliament into the government's confidence, about permitting parliament to have a share in the conduct of affairs, it does seem to me that in seeking to inaugurate a new policy of this kind it is a pretty sad thing for the government to follow the procedure of acting by order in council in a matter which they profess is going to be of such very great importance, as this was supposed to be when the advance pre-Christmas billing was given in the baby budget but which has turned out, of course, to be such a damp squib that it is perhaps understandable that the government did not want to make any reference to it in the bill. The government was so ashamed of what a poor, puny little mouse the mountain had laboured and brought forth that it preferred to have that labour in secret and to have the mouse concealed as much as possible, instead of allowing members of parliament the opportunity to discuss the matter and put forward amendments which would not perhaps affect the balance of ways and means but which might make the scheme more effective.
As I say, Mr. Speaker, it does seem to me very unfortunate that this government, which was going to restore the rights of parliament that had been so eroded, to use another of the minister's favourite words, by the previous government, should now be doing something which I cannot ever imagine the previous prime minister or any of the previous ministers of finance attempting to do in this hole in the corner fashion. It is all the more

astonishing when one recalls that the very day before the order in council was passed, whose provisions or better provisions, we think, should be in the bill itself; the very day before when anyone who knows anything about the processes of government knows that the recommendation must have been before the government, must have been in the privy council office in the last stages of being processed, the minister by every possible device of evasion evaded the simple, straightforward questions which the hon. member for Kenora-Rainy River was asking-


Donald Methuen Fleming: That is not true.


John Whitney Pickersgill: -in a vain effort to find out what the government was doing about this matter. Since I cannot ask the house to join me in an expression of opinion as I had hoped to be able to do, I can only express for myself profound-


Mr. Jones:: Just killing time.


John Whitney Pickersgill: The hon. member for
Saskatoon suggests that upholding the rights of parliament is killing time.


Henry Frank Jones: All you are doing is killing time.


John Whitney Pickersgill: Unless his leader has
changed even more than I would accuse him of changing, I think the hon. member will find difficulty in getting him to support that particular proposition. However, I think we ought to have it on Hansard that the hon. member for Saskatoon thinks that upholding the rights of parliament is killing time, because it shows what a transformation comes about-


Henry Frank Jones: On a point of order, Mr. Speaker-


John Whitney Pickersgill: -when hon. gentlemen sit on the treasury benches.


Henry Frank Jones: On a point of order, Mr. Speaker, I have never suggested and would never state that upholding the rights of parliament would be killing time. Of course we are all concerned about upholding the rights of parliament.


Mr. Speaker:: Order. The hon. member has risen to make a personal explanation, which he has made.


John Whitney Pickersgill: I suppose the hon. member does not consider that the time of parliament is being wasted when his friends are speaking, but like many hon. gentlemen on the back benches over there he probably thinks that the time of parliament is wasted whenever anyone in the opposition is speaking. However, sir, I recognize that I have digressed somewhat from the subject matter of the bill. I simply want to emphasize once more my
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profound sorrow and regret that the government, instead of taking action in a straightforward, open fashion, instead of acting in a generous way and assuming its own responsibility rather than trying to foist it on the municipalities, has chosen to act in this hole in the corner manner and not allow parliament to participate in what should be a very important piece of legislation.


Mr. W. H. McMillan (Welland):: Mr. Speaker, I move, seconded by the hon. member for Kenora-Rainy River (Mr. Benidick-son):
That all the words after "that" be struck out and the following substituted therefor:
This house, while not opposing all the features of the bill, declines to give second reading to a bill the provisions of which do not include any changes in the tax laws for the purpose of implementing the policy proposed in the supplementary budget in order to assist areas where there is a substantial degree of continued unemployment over the years.
Yesterday the Minister of Finance took objection-


Donald Methuen Fleming: Mr. Speaker, may I ask for a ruling on this amendment before it is discussed?


Mr. Speaker:: The hon. member for Welland has proposed an amendment, and I think it would be appropriate to consider it for a moment before he proceeds with his discussion of it.


Donald Methuen Fleming: Mr. Speaker,
copies of this further amendment have not been furnished us, so I really am not in a position to discuss it in detail or comment on the detailed terms included in it. I have only heard the hon. member for Welland reading it, but it seems to me that it is a repetition, in essence, of the amendment which you have just ruled out of order. It offends the same rules of the house as that previous amendment did, including the citation at page 170 of Beauchesne, that an amendment approving part of a motion and disapproving the remainder is out of order.


Mr. Speaker:: I am inclined to agree. I express my preliminary view that while there is some change in the form of this amendment from the amendment moved by the hon. member for Bonavista-Twillingate, I do not see that there is sufficient change to alter the principle which would be applicable to it. If the hon. member for Essex East wishes to speak I will hear him.


Paul Joseph James Martin: I had thought that the case of the amendment proposed in the United Kingdom parliament in 1946 was applicable in every particular to the amendment that was introduced by the hon. member for Bonavista-Twillingate. However, Your

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Honour did point out a flaw when he indicated that in the amendment proposed in 1946 the approval of the bill was in general terms. The amendment now before the house expresses no opposition to the general principles of the bill but finds an inadequacy in the bill, because it does not deal with the specific matter of providing legislatively for authority to deal with the matter of double depreciation. The amendment, therefore, which Your Honour now has before him moved by the hon. member for Welland does meet the objection which Your Honour pointed out, differentiating the amendment of the hon. member for Bonavista-Twillingate from the amendment moved in the British house in 1946.


Mr. Speaker:: Would the hon. member allow me to have the text he refers to, and while I am considering it, the hon. member for Welland might continue with his remarks.


William Hector McMillan: Mr. Speaker, yesterday the Minister of Finance took objection when anyone on this side of the house referred to the exchange rate or the value of the Canadian dollar. He said it had nothing to do with these income tax resolutions. One of the clauses of this bill has to do with the imposition of a 15 per cent tax on interest on bonds held by non-residents. The minister himself, as a reason for this tax, said:
Under current conditions it is not helpful to the balance of payments-


Donald Methuen Fleming: Would the hon. member indicate what page he is reading from?


William Hector McMillan: I am reading from page 1009 of Hansard. The minister is reported as follows:
Under current conditions it is not helpful to the balance of payments, to the exchange rate or, indirectly but more important, to the employment situation, to continue to encourage provincial, municipal or corporate borrowers to issue bonds in other countries.
The minister gave that as a reason for the imposition of this tax; so that our municipalities and provinces would not be going out of the country to such a great degree to borrow money. He admitted that this would increase the inflow of capital from outside and therefore increase the value of our dollar.
I think we should have some opportunity to refer to the exchange rate during the discussion of these income tax resolutions. I agree with the minister in his statement, but I do not agree that he alone and no one else in this house can discuss the exchange rate or the value of the Canadian dollar during the discussion of these income tax resolutions, and that in effect is what he said yesterday.

I suggest that if the minister did not take all the money available in Canada to meet his requirements, our provinces and municipalities would not need to go to New York to borrow money, or not to such a great degree.
The governor of the Bank of Canada said that among the problems that would have to be faced would be that of moderating the rate of capital inflow into Canada. This is what the minister is attempting to do by these income tax resolutions. At page 19 of the Bank of Canada annual report the following statement appears:
The basic reason why interest rates are lower in the United States than in Canada is that the total level of borrowing, the aggregate demand for funds by governments, business and individuals combined, is less (proportionately) in the United States than in Canada.
I maintain that the minister is the worst offender in demanding more money from our economy. According to the minister pension funds are increasing by $300 million a year. Canadian workmen and Canadian people are putting aside $300 million a year into pension funds. All I can say in this regard is that even if the minister had impounded this $300 million each year for the last four years there would not be enough money in these funds to cover his overspending on current account alone. If the minister's money requirements during this next year are anything like the amount prophesied by the Canadian tax foundation, I suggest the provinces and municipalities will have to go to New York to get money to a greater extent than they have heretofore. If they do go to New York for money and there is a tax imposed on the income from the bonds, I maintain that the minister then will be taxing our provinces and the municipalities for their capital expenditures, because in the price of the bond and in the rate of interest the lenders will charge an amount to cover this 15 per cent tax on income from these particular bonds.
In a speech in New York the minister said that these measures were not antagonistic towards United States capital coming into Canada. However, in his budget speech he said that this measure would withdraw some of the special incentives which were designed to attract foreign capital.
I do not see how both these things can be so. In one case it is said the measure is designed to keep out foreign capital, and in the other case the minister says it is not designed to prevent United States capital coming into Canada.
In my view the real reason for the influx of foreign capital is the differential between interest rates in Canada and those in the

United States. I say that the minister himself has contributed to this differential more than any other person in Canada.
Mr. Speaker, there were some other matters with which I intended to deal. There is the question of high interest rates. The minister proposes now to tax bonds that are issued at less than par value. In the past the minister has done this and has thus allowed wealthy people to escape their rightful taxation. Now, when the provinces are doing what he did, the minister says they cannot do it. In the past he has made it possible-


Mr. Benidickson:: They had to compete with him somehow.


William Hector McMillan: -for corporations with high income tax of 50 per cent or more to net about 5.3 per cent after income tax, or the equivalent of nearly 10.6 per cent before income tax.


Donald Methuen Fleming: Nonsense.


William Hector McMillan: I think this is absolutely wrong, and again I say the minister should start to clean house at home before he starts after the provinces.


Mr. Speaker:: I think I should now deal with the proposed amendment. The amendment which has been submitted by the hon. member for Welland (Mr. McMillan) is substantially the same as that which was dealt with earlier, the difference being that the first few lines read:
This house, while not opposing all the features of the hill, declines to give second reading-
Whereas the previous amendment read:
This house, while wishing to establish special measures in connection with tuition fees and nonresident investment in Canada, inter alia, declines to give second reading-
I think they are substantially the same. The statement that the house does not oppose all the features of the bill is equivalent to a statement that the house approves some of the features of the bill. As I said before, I do not think the house has accepted amendments which attempt to approve the bill in part at second reading and at the same time disapprove it in part. On that ground alone, I would not accept this proposed amendment.
With regard to my former ruling on the latter part of the amendment, to make clear what I had in mind, I would say that it may be asserted as a reason that the bill does some things that are not acceptable to the house, and that might constitute an acceptable amendment. But what is attempted to be said here is that because the bill does not make tax provisions to assist areas where there is extensive unemployment, the house declines to proceed.
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Admittedly the bill does not make those provisions, and in my view the bill could not make those provisions without going back to the resolution stage and broadening the resolution to permit such provisions to be introduced into the bill.
That was the point made by the Minister of Finance (Mr. Fleming), and it seems to me that is an insuperable obstacle to the amendment. Therefore with regret I have to advise the hon. member for Welland (Mr. McMillan) that I do not think his amendment comes within the rule.
I must inform the house that if the hon. minister speaks now he will close the debate.


Donald Methuen Fleming: Mr. Speaker, I shall be brief. I have no intention of following the practice of some hon. members opposite who have spoken of matters that lie quite outside the scope of the bill. This is not a continuation of the budget debate; it is a debate on second reading of Bill No. C-73.
Yesterday the hon. member for Kootenay West (Mr. Herridge) raised a question concerning the lapse of time between the introduction of the bill and the motion for second reading. This bill was introduced on March 2 after the antecedent resolution had been reported out of the committee of ways and means and adopted. We moved for second reading on March 15.
This is not an unusual period of time to elapse between first and second readings of the annual bill to amend the Income Tax Act. Indeed last year when I sought to move second reading, I think one week after the bill had been introduced and given first reading, objection was taken that some of those who are interested, the professional organizations who make a study of the technical features of such bills, had not had enough time to complete their detailed examination.
Therefore there has been no unusual delay in this case. It was a matter of affording the usual period of time for such study as those interested might wish to make of the measure.
The hon. member for Essex East (Mr. Martin) raised a question yesterday concerning tuition fees. I think he may not have fully informed himself of the amendment that was made in the committee of ways and means on the resolution respecting the tax position of students paying university tuition fees and the parents of such dependent students. I think he will find the answer in the terms of the measure itself. However, if the hon. member wishes to raise the matter at the committee stage, I think that would be the appropriate place in which to discuss it.

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Paul Joseph James Martin: I agree.


Donald Methuen Fleming: I will not attempt to review the remarks of some hon. members. The remarks of the hon. member for Welland (Mr. McMillan) this afternoon were thoroughly wild in many respects. He has made these remarks before and persists in making them time and again and I shall not take up further time of the house with denials of these very wild assertions.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Flynn in the Chair.
On clause 1-Obligation issued at discount.
William Moore Benidickson: Mr. Chairman, would the minister give the committee an explanation of the purpose and intent of this clause beyond that given in the explanatory notes.


Donald Methuen Fleming: Mr. Chairman, I think this matter was very fully explained in the budget speech. Its necessity arises from the way in which some provinces in particular, and municipalities have been issuing bonds with a very low coupon rate and issuing them at a substantial discount. I gave some instances in my budget speech on December 20 and the hon. member is, I am sure, aware of them.
The only point which I think could usefully be added to the remarks I made in the budget speech on December 20 and to the explanatory notes in the bill, would concern the position of treasury bills. In the case of treasury bills the lender is remunerated by receiving an amount on redemption which is in excess of the purchase price of the security. This remuneration has been taxed in the past and this practice will continue. However, this income is made subject to tax by a provision already in the Income Tax Act. It is not intended that a purchaser of treasury bills should also be made subject to a further tax under these new subsections added by clause 1.


William Hector McMillan: I think the minister stated that what I said was wild. I referred to the fact that a particular bond sold at a discount returned something over 5 per cent after income tax to corporations having a 50 per cent income tax assessment. I should like to ask the minister whether that is not so.


Donald Methuen Fleming: Whether what is not so?


William Hector McMillan: That it would return to corporations paying 50 per cent income tax over 5 per cent after income tax had been paid.


Donald Methuen Fleming: If the hon. member is speaking about a particular case I

shall have to have all the details of the case about which he is asking me.


William Hector McMillan: Yes. I am thinking of that particular 3 per cent bond which was sold at 94.65-I think that is the amount.


Donald Methuen Fleming: As I indicated at an earlier stage, there is only one case since the present government came to office where an issue of bonds by the treasury would have been subject to the tax provided for in clause 1 if it had been in effect.


William Hector McMillan: The minister said my statement was wild. I said the net return would be over 5 per cent after income tax to certain corporations. Is that so or is it not so? Where is my statement wild?


Donald Methuen Fleming: The hon. member has made assertions of that kind in the past and I have endeavoured to correct them. He goes on making them. If he wishes a detailed comment on what is the effective interest rate in any particular case perhaps the hon. member would give me particulars of any case he has in mind. I shall then be glad to give him an answer. I have already made my comment on the kind of statements he made in an earlier stage of this debate today. We are dealing now with the question of whether there should be a tax applied with a view to discouraging the practice of issuing these bonds at a discount price with a very low interest rate-


Paul Joseph James Martin: Below a hundred.


Donald Methuen Fleming: Let me explain. This does not apply in the case of any bond where the coupon rate is 5 per cent or more but in the case of bonds issued with a coupon rate below 5 per cent. If the effect is to create a difference of 33J per cent as between the effective yield and the coupon rate, then this clause will apply a tax in the case of the first holder. This, of course, applies only in the case of issues where the issuing authority is not subject to income tax. It will not apply to issues by corporations.


William Moore Benidickson: Yesterday I quoted a newspaper report on a debate which occurred in 1959 on this subject of discounts on government bonds and the advantages which accrue under certain circumstances to people in the high income tax bracket. The minister, as usual on technical grounds, challenged me and said I should bring forward the words used in that debate as they are found in Hansard rather than quote from a newspaper, as I did yesterday, the slurs which he had tossed to me then in debate, just as he tossed slurs to the very well informed member for Welland today when he called his statements in connection with these matters "wild as usual".

Normally these matters would not have to be dealt with over and over again. Some of us do not have the argumentative capacity of the Minister of Finance on questions of this kind which really, in effect, results in aspersions upon the integrity and intelligence of those who have the obligation, as part of their democratic duty, to question some of the hon. gentleman's parliamentary activities. If the hon. gentleman's assertions were correct and could be substantiated, a great deal of time and debate would be eliminated because we would have no justification for continuing the argument. But I must refer back to one of the early assertions in this discussion to illustrate what we are being asked to do under this new legislation in order to reduce the opportunities for tax exempt borrowers to issue bonds at a first issue price that is considerably discounted below the eventual price which will be paid when due for repayment.
Under these circumstances, and particularly if the term of the lending is relatively short, there is a provision in our tax laws which results in a capital gain. This is exceedingly important as a bond selling gimmick, and I am using a term which the hon. member for Welland has often, and very properly, used. This gimmick, while not understood too well except to sophisticated lenders, is of extreme importance when it comes to competition among governments seeking funds from the savings of the public. This includes borrowers at federal level, and the Minister of Finance has been the giant in that field in recent years. He competes with others for the savings of Canadians and, indeed, for the savings of investors even outside Canada if he offers a sufficiently big reward for the money he borrows. The hon. gentleman competes with the municipalities and with the provinces for such funds.
Now on March 18, 1959, I referred to this subject just as the hon. member for Welland referred to it and again today. There has just been an attempt made to cut him down with a broadside that his statements were "wild". As reported on page 2027 of Hansard of March 18, 1959, I pointed out that the Minister of Finance was so desperate for funds he was offering special attractions, attractions which were of unusual value to people for whom a capital gain was important in relation to their income tax. Indeed, this attraction had a net result for those whose prevailing income tax rate was at least 50 per cent which was far beyond what the figures inserted by the Minister of Finance in a public advertisement might have led unsophisticated readers to imagine was the cost to the government of this borrowing.
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I referred also to an other bond advertisement in the name of the Minister of Finance which appeared on February 16, 1959. In great big letters reference is made to one year plus one month bonds at nominally 2f per cent interest. As I say, the unknowing investor, the average citizen, might think, "We have a very competent Minister of Finance and even in these times of relatively high interest rates seemingly he is able to borrow money on our behalf at the rate of 2f per cent". But if we look at the fine print, we see why we have now this clause of the bill. Reference is made to the discount to certain lenders. This is all-important as I pointed out in the debate on March 18, 1959 when, as reported at page 2027 of Hansard, I said:
In the minister's advertisements to the public the issue is referred to as 2% per cent, due April 1, 1960, issued at 97.90, a discount from 100 to yield on that basis 4.76 per cent-
That is ostensibly the effective rate of interest for everybody, not 2| per cent. I went on to say:
I want to point out to the minister that the corporation tax is approximately 50 per cent and that a great number of the personal taxpayers who buy bonds are paying on the last portion of their income an income tax of at least 50 per cent. The result is that people in that category who buy these bonds would have to get a rate of 6.6 per cent on another bond sold at par in order to net the same. That is how attractive the minister has been forced to make his interest rates for his purposes.
Corrective action is being taken in this bill at this time after these things were pointed out to the minister, because the hon. gentleman found that he was not the only one who could play this game. There are other tax exempt borrowers, such as the provinces and the municipalities, and they are beating him at this game of gimmicks. So the minister is now plugging this loophole.
Following the experience of yesterday, I want only to show that the minister's attitude toward ordinary debate here has not changed over the years. Two years ago this was the kind of language used against me when I advanced in this chamber what I thought was an accurate and appropriate argument in debate on this subject. The minister referred to me, as reported at page 2027 of Hansard of March 18, 1959, in the following terms:
Surely my hon, friend is not going to leave on the record a shockingly misleading and inaccurate statement of that kind.


Paul Joseph James Martin: The minister's well known adjectives.


William Moore Benidickson: As the hon. member for Essex East says, these are adjectives which come from the mouth of the minister so

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frequently that we cannot, after constant repetition, believe that they appropriately apply time after time.
I could deal with another similar short term issue of June 15, 1959 but it is not my wish to burden the committee members. However, as I said yesterday, in June 1959 there was also given an effective interest rate to a lender in a 50 per cent income tax bracket over a term of about 13 months only which would have required, if the bonds had been issued at par and at a fully stated rate of interest, a real interest rate in excess of 8 per cent. I see it was 8.27 per cent. That is what taxpayers of this country paid for money at that time.
When this was brought to the attention of the citizens of our country as we felt it our duty to do the minister tried to mow us down saying that we made misleading, malicious and inaccurate statements.


Donald Methuen Fleming: I do not think I ever said malicious.


Paul Joseph James Martin: That is a word very commonly used by the minister.


Donald Methuen Fleming: No. It is a Liberal word, an Essex East word.


William Moore Benidickson: I would be the first to acknowledge that I have tremendous respect for the mental capacity of the Minister of Finance.


Paul Joseph James Martin: Though not for his
judgment.


William Moore Benidickson: Indeed, sometimes not for his judgment as for example when he bought money at rates much beyond the rates which private corporations were paying for money at that time, but I suppose the lenders thought it was dandy.
As I said, I should be the first to acknowledge the industry and fundamental intelligence of the Minister of Finance.


Peter Francis Martin: And his stubbornness.


William Moore Benidickson: But one of the features of that debate that surprised me most was when the Minister of Finance told the hon. member for Welland that he was indulging in wild statements; that he did not know what he was talking about and suggested that, in so far as the length of the term of the loan was concerned, it was an insignificant matter. The debate in this connection occurred on March 18, 1959.
In the course of his remarks on that occasion the minister suggested that selling bonds at a discount was not an unusual practice and that it had been engaged in by the previous administration. The minister gave a number of examples. However, the amazing thing was
[Mr. Benidickson.)
that due to lack of experience in these matters or for some other reason, the minister neglected to place importance upon the length of the term of each borrowing. I think the discount figures recited were 98.5, 99.5, 97 and 99 and in each case he used as illustrations terms that were related to longer issues with the result that, to a lender in a high income tax group it was only insignificant with respect to capital gains.
We have before us in clause 1 an attempt on the part of the minister to stop this form of competition in so far as other non-taxable governmental borrowers are concerned-the provinces and municipalities. I do not in any way object to the purposes of this clause. In fact, I suggested in 1959 that a dangerous trend had been established and I felt that the minister was making opportunities available to lenders that were affecting the people who pay the shot, the taxpayers. As I say, generally most taxpayers in this area are not sophisticated and failed to realize the true cost of the minister's borrowings. I welcome this clause because I realize the trend referred to could reach ridiculous extremes.
The minister did not refer to some of his own borrowings at terrific cost to the treasury. I allude to the cost to the treasury because normally the treasury would receive more income tax from certain lenders. However, if they could avoid the payment of the tax on the capital gains portion of their lending to the government over short periods like 13 months, then the treasury, of course, would suffer a loss. Because of these comments I felt duty bound to reply to the minister's statement of yesterday when he was just as disparaging-I quoted from the newspaper rather than Hansard-of the possibility that I might in some way be accurate. I wish to draw this to the attention of the committee and reassert that events have proven that the warnings which were given by me in 1959 as to the dangers of competition in this field of discounting bonds, and they were also given by the hon. member for Welland, have proven to be well founded. Indeed, the minister himself has come forward now and made sure that there will be limitations on the power of his competitors in the borrowing field, the provinces and municipalities, to do what he did in a most extravagant way since he assumed office as Minister of Finance.


William Hector McMillan: The minister asked me to give him one definite bond. He said I was wild in my reference to the fact that over 5 per cent would accrue to those people paying 50 per cent income tax. He said my statement that this amount would accrue to them after they had paid their income tax was wild.

On October 1, 1959, the minister advertised bonds at 3 per cent. He sold them at $94.65, to mature in 19 months. Afterwards, on the orders of the day, he said that $125 million worth of those bonds were sold. I would challenge the minister to say that the return is not over 5 per cent net to those corporations that paid 50 per cent income tax. He asked me to name one specific bond, and I am naming it.


William Moore Benidickson: While the minister is contemplating a reply to that question-


Donald Methuen Fleming: Over 5 per cent? But the hon. member was talking earlier this afternoon about 10 per cent, not 5 per cent. He used this extravagant expression this afternoon.
The hon. member for Kenora-Rainy River, when speaking earlier this afternoon, referred to what I said in this house on March 18, 1959. He told only part of the story because it will be recalled that when I was enumerating a list of issues by the former government at discounts, the hon. member for Ottawa West rose and said "Those are not short term". Then, I was able to give him another list of issues by the former government that were precisely of that nature, issues at a discount and with precisely the same effect that he was contending the issues of the present government were having at that time. The fact is-I repeat it, Mr. Chairman-that there has been only one issue in the past three years and nine months by the federal government that would have come within the scope of this present amendment had it been in effect at the time.


William Moore Benidickson: Mr. Chairman, the minister has again used very positive and assertive language. He said that I questioned the length of the term and on March 18, 1959, in reply to me, he said that length of bond terms were "precisely" the same under the former government. I will allow the minister considerable leeway over his usual extreme language. In this context he uses the word "precisely". I will send him over my copy of Hansard debates of March 18, 1959. I indicated that the previous government had issued bonds at times at a discount as is the common practice. But I say, the minister used the word "precisely". Will he indicate to me where any of those issues of the previous government were on a basis of anything near a 13 months term?


Donald Methuen Fleming: I have sent for the volume of Hansard. I think the hon. member is aware that I have not the volume with me.


William Moore Benidickson: No; but I Dromised to send over mine.
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Donald Methuen Fleming: Perhaps the date may not be the same, but I was referring to the time two years ago when we had a two-day debate on a supply motion and this subject was discussed at some considerable length. I gave two extended lists of issues at discounts by the former government.


William Moore Benidickson: I agree with the hon. member's recollection of his presentation during a supply motion in 1959 of certain details respecting a lengthy list of issues of government bonds at less than par. My recollection is that on that occasion the minister recited the rate of interest and the issue price. On that occasion I was astonished that after two years in office, in answer to a question raised by the hon. member for Welland, the minister suggested that the question of the length of term of each lending was unimportant.


William Hector McMillan: The minister seems to accept my contention that 5 per cent after income tax is correct. This is one of the statements which he said was wild. He said that I referred to 10 per cent. I did not say that the government was paying 10 per cent. I said these people would receive from the minister the same amount as they would from a bond that paid 10 per cent if sold at par.


William Moore Benidickson: Just for the record, Mr. Chairman, because the minister has referred to it again today, at the resolution stage of the Income Tax Act amendments this year, the minister said as reported at page 2614 of Hansard:
-out of all the federal bond issues in the last three years and eight months there is only one to which this resolution would have applied.
I have referred to two issues in 1959; one, I think, in June and one in March or April. Does the minister refer to either of those issues?


Donald Methuen Fleming: My statement
was one made after a detailed study prior to the supplementary budget of December 20 of all the issues of the present government.


William Moore Benidickson: The minister does not recall the particular issue to which he referred on Hansard page 2614?


Donald Methuen Fleming: The date, no; I have not the list here at the present time.


William Moore Benidickson: It is public information. I will not press the minister for it here.


[Stage Direction]
Clause agreed to.
On clause 2-Tuition fees of students.
Paul Joseph James Martin: Will the minister indicate in what particular I seem to have been misinformed? My point was, briefly,

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that the bill as it now reads provides tor assistance for the year 1961 only. I had suggested that since the academic year began in the fall of 1960, the provision of benefits should run from that time. The minister seems to suggest that I had not properly understood what the amendment offers, and I should be very happy to be shown where I was wrong.


Donald Methuen Fleming: Yes, Mr. Chairman. Subclause (2) of clause 2 makes it quite clear that the proposed new subsection (1) of section 11 as amended is applicable to the 1961 and subsequent taxation years. When this matter was discussed on an earlier occasion the question was raised as to payments made by university students in the fall of 1960 of their fees for the 1960-61 academic year. As the resolution appeared in its original form such payments would not have qualified for the intended benefits, but the amendment does open the way now to a student who did pay his 1960-61 academic year fees in September, 1960, let us say, to deduct in his 1961 taxation year that portion of the fees which was paid in respect of the period commencing January 1, 1961.


Paul Joseph James Martin: Where does this clause say that? It is clearly stated that the clause is applicable to 1961 and subsequent taxation years.


Donald Methuen Fleming: The hon. member must look further in the clause. In line 28 he will find the words, "in respect of a period not exceeding 12 months commencing in the year . . ."


Paul Joseph James Martin: Certainly if the minister intends this to apply to 1960 that is very acceptable but I am simply pointing out that the clause does not say that. It is true that in line 28 it says, "in respect of a period not exceeding 12 months commencing in the year", but surely that is qualified by subclause 2 which says that this clause is applicable to the 1961 and subsequent taxation years.
When the bill is passed and some student will go and apply for relief, he will point out what the minister may have said in the house. The tax collector, as will the courts, will not interpret this clause on the basis of the language used by the minister in the house but on the basis of the literal meaning of the words as they appear in the clause. The clause as it is now drawn does not warrant the conclusion which the minister has reached. The only way that can be done is to say that the clause is applicable to 1960-61 and subsequent taxation years.


Donald Methuen Fleming: Mr. Chairman, the hon. member has not been following me today 
with his usual clarity of thought. My remarks are consonant with the provisions of the bill. There will be no difference found between them and the plain language of the bill. The bill does not provide tax relief in respect of the calendar year 1960, but it does offer tax relief for periods commencing January 1, 1961.


Paul Joseph James Martin: That is it.


Donald Methuen Fleming: However, in relation to payments that were made in 1960 in respect of fees for a period commencing on or after January 1, 1961, the amendment introduced in committee of ways and means permits a student to have the benefit of deduction in respect of fees paid in relation to periods following January 1, 1961, notwithstanding that the fees may have been paid prior to that date.


William Moore Benidickson: Mr. Chairman, I want to assure the minister that I am speaking without any belligerence. However, I should like him to indicate to the extent he can, the consideration he may have given in preparing his budget proposals to alternatives so far as the actual mechanics are concerned. I think we all approve of the further step he has taken which goes beyond what was initiated by the previous administration to try to provide additional tax exemptions to assist parents and also to encourage students to remain at college.
The federal government cannot enter the field of education directly but this has seemed to be an area in which the federal government can make some contribution by way of encouragement along these lines. I have no doubt that the minister and his officials have given consideration to alternatives. However, I was greatly impressed in reading last month an editorial in an issue of a magazine or newspaper called "Labour" which is distributed to all railroad workers in the United States and also to the members of the international railway brotherhoods in Canada. The editorial comments upon proposals similar to those of the minister today which were advanced in the United States congress. It gives an example which I put before the minister because he will recognize its practical value and the fact that it can be applied to the Canadian situation. The editorial goes on to point out that there are flaws in connection with proposals for tax relief for students in college and has this to say in part:
A $1,500 deduction would save $300 taxes for a family in the 20 per cent income tax bracket. The higher a family's income, the more taxes it would save by the deduction, up to $1,305 saving for a family in the 91 per cent tax bracket.

Here is the point that I think has significance for all of us if we are concerned about making sure that those who need help most are likely to be helped through the mechanism of income tax at the federal level where other opportunities to assist are limited. We do make grants to universities, and the desirability of doing this has been challenged somewhat in some quarters from the point of view of whether or not it was an encroachment on provincial rights. We all have knowledge of this argument. If the federal field is limited, are we looking after those whose need is greatest?
The editorial goes on to say that if, instead of a tax deduction, a credit of $500 a year were offered or any other fixed sum as a deduction from the tax of the parent or the student this would be much more consequential so far as actual value to the neediest is concerned. One realizes, of course, that while the provision before us would be of some value to the students it could be of no possible value to the parent in a family whose numbers were sufficiently large and where the over-all earnings were so modest that after deductions the parent either would have to pay no taxes at all or would not pay income tax at an important percentage rate. Therefore the relief to such a parent, who might need help most, would not be too important under the proposal before us compared with some form of fixed lump sum deduction.
I am sure the minister has given consideration to these matters and perhaps he could indicate to us what the difficulties are. It is quite obvious that the parent with a very large income really does not need to be encouraged financially to send his children to college. Under this legislation he gets the benefit of a much larger dollar value in respect of tuition fees and other deductible expenses than the man who is not paying any taxes at all or is paying taxes at such a low rate that 13 or 14 per cent of $1,500 is not nearly as important as 75 per cent or more on the same amount of tuition fee expenditure to a wealthy person.


Paul Joseph James Martin: I wondered if the minister proposed to reply.


Donald Methuen Fleming: To be brief I would say that any amendment of this kind of course does not apply to all taxpayers but only to those who qualify within its provisions. This provision is intended to provide tax relief to the student who would otherwise be taxable, and will permit him to deduct the tuition fees which he pays from his income in determining whether he is taxable or not. In the case of a parent of a dependent student it means that the amount 90205-6-193
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of the tuition fees paid will be taken into account in determining whether the student is still a dependent, that is to say, whether he has an income in excess of $950 or not. If, after deducting the tuition fees, the amount of income is below $950 then that student still qualifies as a dependent under the provisions of the act, and the parent in that case is entitled to the full $500 exemption provided. I think the situation is quite clear, Mr. Chairman.


Paul Joseph James Martin: I regret that it is not clear to me and it may be my fault. The minister has been looking over at me with some amusement and on that account I feel very humble in raising the matter again because it may be in this particular instance that I am more obtuse than I normally am. In any event, because there is an important principle involved here, I venture to raise it again.
The minister may have provided for this in some other way but he has not convinced me that he has any authority for the conclusion that he has reached. I have looked around this chamber and asked at least two others whose mental I.Q. I am sure approximates that of the Minister of Finance, even if my own might fall far short, and their conclusion is the same as mine that this measure deals not with the taxpayer who may have dependents but deals rather with the taxpayer who himself is a student. The question I have raised is simply this; this measure provides, with respect to fees paid by students beginning in January, 1961 for a period of 12 months, a relief to that student. My complaint was with regard to those fees paid by the taxpayer student for the full academic term and this measure, as now drawn, does not warrant the conclusion which the minister has given.


Donald Methuen Fleming: I suggest you have misinterpreted the conclusion. I will say this again as simply as I can; there is no change created by this amendment with respect to the 1960 taxation year. The change that was made in the original resolution made it possible for the student who in 1960 paid his tuition fees in full for the academic year 1960-61, to have the benefit of a deduction in respect of those fees applicable to the portion of the academic year commencing January 1, 1961.


Paul Joseph James Martin: I am glad the minister now agrees with me.


Donald Methuen Fleming: That is all I have said.


Paul Joseph James Martin: The original proposal I made was, why did the minister not

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extend this provision for the full academic year beginning in the fall of 1960?


Donald Methuen Fleming: Well, the reason-


Paul Joseph James Martin: May I finish. I am now glad to see that the difficulty of comprehension did not reside with the member for Essex East, but perhaps because of the confusion and all the concerns and preoccupations of the Minister of Finance, it was he who had not understood what apparently all of us now admit is a very simple point; and that is that tuition fees paid in the academic year 1960 should be embraced by this measure. I will tell the minister that I have had a considerable number of representations made to me by students, most of them attending the university in my own city and many of them married. The suggestion I make if adopted would provide them with some assistance, that is, if this measure applied to fees that they either have paid or that are owing for the full term. Some of the students will graduate in May and consequently the provision "not exceeding 12 months" will give them no relief whatsoever. It applies only to those students who will be at the university from January, 1961 until December, 1961. Many of the students will graduate this year and the plea that 1 am making to the minister is that, while this is a good provision-


Donald Methuen Fleming: Thank you.


Paul Joseph James Martin: -and will assist during this period of the emergency of unemployment, many students-I am glad to see that the Minister of Labour applauds this today. This, in an indirect way, provides small relief to many people who are very seriously affected by unemployment. Why does the minister not extend this benefit to the period of the full term so that those who are taxpayers, many of them married, and attending university, can get this relief?
The government has embarked upon a delayed program of vocational guidance, delayed by the Minister of Labour's procrastination, and finally he has accepted our recommendations over the years-


Michael Starr: You never had any recommendations.


Paul Joseph James Martin: My hon. friend says we never have had any. We have made these recommendations to the Minister of Labour repeatedly while he sat in his seat ignoring this question of unemployment.


Michael Starr: Quit laughing when you say that.


The Chairman:: Order. May I suggest that the exchange between the hon. member for Essex East and the Minister of Labour is not in order.


Paul Joseph James Martin: I think you are right. I was simply going to say that if the Minister of Labour had the equanimity and the serenity of the Minister of Finance he would not provoke these outbursts.
I appeal to the Minister of Finance, now that he and I do understand this question, to extend the benefits of this provision for the full term so that the 12 months covered in line 28 would run from September or early October to the end of the academic year in the spring of 1961. If the minister would do that he would win, I am sure, the undying affection of thousands of students who find it difficult to follow him now.


Donald Methuen Fleming: Mr. Chairman, I am glad that the hon. member now understands the effect of that clause. He attributed some element of misunderstanding to me and I hope I have not added to his confusion because that is the last thing I would wish to do. I thought the only thing I did not understand in this situation was the mental process that led him into such confusion in regard to the clear provisions of the clause. I have known the day when he was much clearer in following these explanations of the terms of these clauses than perhaps he has been today.
Let me now deal with the point in substance that he has raised. With respect to any tax change there must be a starting date. In this particular case the budget was introduced on December 20, 1960 and therefore the logical starting date was January 1, 1961. We are dealing with tax years and it is the calendar year that is the taxation year. It is not the academic year; it is the taxation year.
The hon. member has now taken note of the fact that fees paid in 1960 in respect of the academic period commencing January 1, 1961, can be deducted.


Paul Joseph James Martin: Yes, I am clear on that.


Donald Methuen Fleming: As to students who were in attendance in 1960 and paid their fees in the autumn of that year, if those students continue in attendance throughout the calendar year 1961 they will of course qualify for the academic fees they have paid for the full year 1961; that is to say, the two portions, the portion paid in respect to the term from January to May in the one academic year and the second portion from September to December in the following academic year.
With respect to those students who will be graduating in the spring of 1961, obviously they will qualify under this clause only for

that portion of the fees paid for the 1960-61 academic year in respect of the period commencing January 1, 1961.
There must be a starting date and that is the reason why the particular date is chosen. Obviously the proper date to choose here was January 1, 1961, which was then within 12 days of the date of the budget and marked the beginning of the new taxation year.


Herbert Wilfred Herridge: Mr. Chairman, before the minister rose I intended to rise very briefly in support of what I thought was a very eloquent and earnest plea by the hon. member for Essex East. I listened carefully to the minister's explanation. We all understand that there is a calendar year and there must be a starting date. However, I think this is a somewhat different circumstance than applies to most taxation fields. I think the hon. member for Essex East was quite sound when he pointed out that those students who graduate in May this year will only enjoy partial benefit under this measure.
These young people will be going out into the world to seek employment, and so on-


Paul Joseph James Martin: And these students are themselves taxpayers.


Herbert Wilfred Herridge: Yes, Mr. Chairman, that is a very good point and I am glad the hon. member for Essex East has mentioned it. I do ask the minister to reconsider his decision in this respect. I think that under these circumstances, when we are considering giving some relief to these students, this amendment is very necessary and very worth while. The members of this group are very pleased to see this clause in the bill, but I would earnestly ask the minister to permit an amendment to the clause to provide for the inclusion of fees that are not included at the present time. I refer to fees incurred from last September to the end of the year.
I fully appreciate the minister's argument about the starting date, the calendar year and so on. If I recollect correctly, we have not previously had a situation of this kind in any discussion on the Income Tax Act. These are special circumstances that surround this request for an amendment to the clause.


Donald Methuen Fleming: Mr. Chairman,
when you begin to go back on new legislation you have the same problem of drawing the line. What we are asked to do now is move the date back to September, 1960. What about those students who graduated in the spring of 1960 and paid fees in respect of the term in 1960 from January until May? If they were left out, they would have the same reason to complain.
You can go back further. Those students who graduated the previous year could make 90205-6-193J
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out the same case. It becomes necessary, under these circumstances, to draw the line. There will always be some people who will be included and some who will be excluded in new legislation of this kind. That will apply no matter what date we choose. There will always be those who made their payments in an earlier period. That is inescapable in legislation of this kind.


Herbert Wilfred Herridge: I am sure the minister would have the support of the whole opposition if he accepted this amendment. We recognize the validity of his argument in this respect, but I think he would have the support of the whole opposition if he would accept the amendment on that basis, because it is a reasonable request.
You cannot go back year after year, but when you are considering the student year, I agree with the argument of the hon. member for Essex East that the measure should be amended in this way.


Paul Joseph James Martin: Mr. Chairman, I am so encouraged by the support of the hon. member for Kootenay West that I think there may still be some hope of impressing the Minister of Finance.
I agree with the minister that there has to be a starting date, but surely the proper starting date is not the middle of the academic year but the beginning of the academic year. The beginning of the academic year is in the fall. The minister has made this measure start in the middle of the year. I am sure that if this amendment were accepted the loss of revenue to the crown would not be very great.
Clause 2 provides for this kind of relief extending for 12 months in the year. Subclause 2 provides that this clause is applicable to the 1961 and subsequent taxation years-it is going to extend for many taxation years-and time being what it is, surely it would not be a matter of inconvenience to the crown for the measure to begin at the proper time. As I have said, the proper time is not the middle of the academic year but the beginning of the academic year.
We are not asking for a privilege to be afforded to a select group in the country. University education in Canada today is not being pursued as it was in the days of the Minister of Finance and myself, on a somewhat restricted basis. In our universities today we have men who are attending university and working at the same time. Many students are married. The students who came to see me were men who were earning their way by working in one of the Windsor plants. Some of them were married.
It is a very difficult assignment for this type of student to obtain an education under these

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circumstances. I know the particular financial situation of people like that. The hon. member for Kootenay West, the hon. member for Kenora-Rainy River and myself are making a plea for a very substantial number of people. We hope that the minister will be consistent and will apply this measure, as he said, at the proper period. The proper period is surely not the middle of the academic year but the beginning of the academic year. If the minister would do that I am sure he would be giving needed assistance to a large body of students in this country, particularly at a time when we are trying to encourage men to become trained in order to maintain our standard of living and to raise it still higher. This is all part and parcel of the process of trying to meet unemployment and the like. This does not seem to be an unreasonable request.
Once again 1 appeal to the minister, who knows the value of this kind of training, who received it himself in circumstances that indicated his own capacity for acquiring an education in the face of difficulties. I ask the minister to remember his student days, the days when he walked across the campus of the University of Toronto with holes in his pants and his stockings. I ask him to remember his own example, and I hope this will be the means by which he accepts the strong plea made by those on this side of the chamber.
This is the kind of occasion when the minister should swallow his pride. He should not be afraid to admit that he has made a mistake. This is the kind of admission that would endear the hon. gentleman to the hon. member for Essex East.


Donald Methuen Fleming: Mr. Chairman, I am sure that nothing the Minister of Finance could possibly do could have the effect of endearing him to the hon. member for Essex East more than is the case at this present time.


Paul Joseph James Martin: I do like you.


Donald Methuen Fleming: I do not recall the holes that the hon. member speaks about. 1 think I was decently, if modestly, attired in those days.


Paul Joseph James Martin: You could not see from behind.


Donald Methuen Fleming: Mr. Chairman, I have given the reasons in this matter. I can add to those reasons only that after the resolution was introduced on December 20 there were representations from various student bodies and from some hon. members of this house. I recall, for instance, what was said by the hon. member for Regina, and others. The burden of these representations in this

respect was that we should permit the inclusion in the benefit of the clause of payments made by some students in 1960 in respect of that portion of the academic year 1960-61 commencing after January 1, 1961. That was the burden of the representations we received from the student bodies, and effect was given to those representations in the amendment which I introduced into the resolution in the committee of ways and means. It is now reflected in this clause.
I am glad that the merits of this new proposal are so widely recognized that hon. members who have not even raised the question in the past, now think so well of the idea that they would like to see it extended backwards.


William Hector McMillan: I should like to ask the minister a question. Supposing a student starts attending college this coming fall, in September, and has paid his fee, say, $400. Will he be able to charge that $400 against income tax in 1961 or must it be allocated over the number of months he goes to college?


Donald Methuen Fleming: In such a case the student could take the full benefit in the year 1961 or he could take part of it in 1962 if the payment was made in respect of the academic year 1961-62. But he could not have it twice.


William Moore Benidickson: I wish to suggest to the minister that he might be able to find an easy way around this difficulty. There is already precedent in the Income Tax Act. I refer to the language which relates to medical expense deductions. There is not a direct tie-up between expenses incurred in the taxpaying calendar year such as the minister suggests is generally necessary. It is stated there that the reduction for medical expenses shall be within the period of 12 months ended in the tax year and not included in the calculation of a deduction for medical expenses for a previous year.
We all know that normally the academic year in this country does not coincide with the calendar year. I am confident the minister will have to make a change to take cognizance of this fact in the future and I suggest that we should let this section stand until we have dealt with the remainder. I should like the minister to consider whether or not he ought to look further at the possibilities in the light of this precedent relating to deductions in respect of medical expenses which, though they confine the deduction to expenditures incurred in a 12-month period they do not necessarily relate to the actual 12 months of the calendar year for which a person has filed an income tax statement.


Herbert Wilfred Herridge: I think the agile mind of the hon. member for Kenora-Rainy River has helped the committee to arrive at a solution to this difficulty. I may say that the hon. member for Kenora-Rainy River, the hon. member for Essex East and the hon. member for Kootenay West seem to be three hearts that beat as one on this issue. I think this is a very worth-while suggestion. I think the argument raised by the hon. member for Kenora-Rainy River is a valid one and 1 should like to hear the minister's counter argument. I do not see why the minister should be unable to take action along the lines suggested.


William Moore Benidickson: I thank the hon. member for Kootenay West for his compliment, though I do not think my mind is as agile as it should have been on this point. I recall now another precedent which I think might be helpful, where deductions are not related to the calendar year. I am thinking of the deduction which is made possible for selfemployed persons in connection with savings plans for the period after their retirement, plans made on a basis resembling payments into a pension fund. My recollection is that such self-employed persons are able to make those contributions without strict restriction to the calendar year. I believe they had an additional leeway of two months-the months of January and February in the year following the calendar tax year-in which to make that contribution.


Donald Methuen Fleming: The point raised by the hon. member for Kenora-Rainy River does not at all touch the problem which has been raised. The point he is raising is really in support of the answer I gave the hon. member for Welland, who asked about the applications of payments made once the clause comes into effect. I pointed out that this new clause extends to a student the benefit of being able to divide the payment between the calendar years embraced in part within the academic year.
This does not touch at all the question of the starting date. There still has to be a starting date and whatever date is chosen we shall find some qualifying after that date and others excluded, just before that date. That is inseparable from the legislation of this kind. We have to fix a date, and we have made the date conform with the first day of this present calendar year. That was a sound and proper date having regard to the date of the introduction of the budget, and the change we have made in this clause in favour of students in the academic year 1960-61 is made in full harmony with the representations addressed to us by the student bodies of this country.
Income Tax Act


Paul Joseph James Martin: We have heard a suggestion from the hon. member for Kenora-Rainy River which I hope the Minister of Finance will accept, namely, to allow this clause to stand so that we may make some progress with the rest of the measure before us. Perhaps the minister would wish to think this over. If, after reflection, he is still of the same mind he could tell us so but I would suggest that this clause should stand at the moment in order that we could make some progress.


Donald Methuen Fleming: I should very much like to see the committee make some progress, although I cannot accept the suggestion which has just been made. We have already spent three quarters of an hour discussing this question. Nothing new has arisen in the debate; these matters have all been considered previously. I should certainly like to see some progress made so that we might pass this bill and give effect to the benefits for students v/hich it contains.


Paul Joseph James Martin: The minister himself may not be impressed by the arguments which have been made. He has said repeatedly that there must be a starting date and our suggestions as to the date differ. This is a question involving executive decision. The minister makes recommendations to his colleagues, and they have as much responsibility and as much right to pass on a suggestion of this kind as has the Minister of Finance himself. In the interest of a quick passage of this bill I recommend once more that the minister should allow this clause to stand. He would then have the opportunity to discuss it with his colleagues and see whether they do not agree with the representations which have been made from this side. The fact that the minister does not agree is no reason for believing that there may not be others in the cabinet who would take the position put forward from this side of the chamber, and if I judge correctly the temper of this committee there are very few members supporting the minister today who do not share strongly the views which we have put forward on this question this afternoon.


Herbert Wilfred Herridge: I wish to support the proposal made by the hon. member for Essex East. When he referred to the silent sympathy with his arguments felt by members supporting the government I looked to my left and happened to see the hon. member for Brome-Missisquoi. If I read that hon. member's countenance aright he has been very sympathetic to the arguments used by the hon. member for Essex East. Perhaps if we defer consideration of this clause there may be enough young Conservatives down at the Progressive Conservative organization who will express

Income Tax Act
their views and bring this matter further to the attention of the minister and his colleagues. I think the suggestion is a good one. By delay, we might make some further progress.


Mr. Graffley:: The hon. member brought up my name in this debate. Let me say that I heartily concur in what the Minister of Finance said. I only hope we can make speedy progress and pass this legislation which is for the benefit of all Canadian students. I see no reason for there being any delay.


[Stage Direction]
Clause agreed to.
Clause 3 agreed to.
On clause 4-Part payments.
William Moore Benidickson: Mr. Chairman, would the minister indicate again the number of taxpaying corporations that are in the area for which a change is provided here?


Donald Methuen Fleming: Is the hon. member not referring to clause 5 rather than clause 4?


William Moore Benidickson: Yes. The point I was going to make with respect to clause 4 is this. The minister has in front of him some tax experts and I should appreciate hearing their comment through the minister concerning the analysis of the baby budget published in the Journal of the Canadian tax foundation, issue of February, 1961, in which an interesting observation was made by a partner in the well-known accounting firm of Price, Waterhouse and Company, Mr. W. C. Shakespeare.
Mr. Shakespeare points out that the proposals under clause 4 will be reduced in some measure by the amendments that were made with respect to associated companies in the main budget in March of 1960. Would the minister care to comment in that connection?


Donald Methuen Fleming: Mr. Chairman, I do not think the hon. member has the right clause here. There is nothing in clause 4 that relates to associated companies.


[Stage Direction]
Clause agreed to.
On clause 5-Idem.
William Moore Benidickson: Mr. Chairman, I wish to revert to the question I had in my notes made some time ago where I had it under numerals that referred to the original resolutions rather than to the clauses of the bill recently presented.
In clause 5 reference is made to the so-called small business corporations. Would the minister please indicate how many corporations might be affected and benefit as a result of the reduction in the tax rate from 50

per cent to 21 per cent which of course includes the calculation for the old age security tax. I have before me notes I made some time ago which indicate that perhaps 55,000 out of 65,000 tax-reporting businesses have profits under $35,000. Would that be a reasonable report?


Donald Methuen Fleming: Mr. Chairman, if the hon. member will refer to my budget speech, as reported at page 1007 of Hansard of December 20, he will find I dealt with the matter thus:
The present proposal to enlarge this bracket by a further $10,000 to $35,000-
That is, the income bracket to which the low rate applies. I continue:
-will extend the benefit of the low rate of tax to an additional 4,000 companies. Out of approximately 62,000 corporate income tax payers 55,000 have incomes below $35,000, and will in future pay no more than 21 per cent.


[Stage Direction]
Clause agreed to.
On clause 6-Pension trust or corporation.
William Moore Benidickson: Mr. Chairman, could the minister indicate to what extent his investigation suggests that Canadian pension funds as they exist now without this legislation do not already comply with what is proposed? Would not practically all pension funds in Canada at the moment be set up on a basis providing that about 90 per cent of their income is derived from sources in Canada.


Donald Methuen Fleming: Mr. Chairman, there is no precise information available on that point.


William Hector McMillan: Mr. Chairman, my understanding is that pension funds now pay no income tax.


Donald Methuen Fleming: That is correct, if they are registered.


William Hector McMillan: My question is this. Suppose a pension fund did not meet these investment requirements. What income tax would they be called upon to pay?


Donald Methuen Fleming: If the registered trust or registered pension fund does not qualify, it would then be a matter of the tax falling on the trustee as an individual.


William Moore Benidickson: A further question, Mr. Chairman. The minister I know is very familiar with what used to be called the blue pension book issued under the name of the Minister of National Revenue which had a connection with qualifications for certification or acceptance-


Donald Methuen Fleming: Registration.


William Moore Benidickson: Yes, registration. What is the present equivalent of the book with the

form of which I was more familiar three or four years ago? Is there still a publication of this kind made available by the Department of National Revenue?


Donald Methuen Fleming: The blue book to which the hon. member refers ran out of print a while ago and has not been reprinted. There was an information bulletin put out for a limited period but it was withdrawn. As I pointed out in our discussion last year as the matter now stands the blue book is simply out of print.


William Moore Benidickson: What does a new organization setting up a pension fund do in the most direct and simple way to ascertain governmental views as to the qualifications of their proposals that might result in the least possible tax burden in so far as the pension fund is concerned?


Donald Methuen Fleming: The pension trustees in question simply make application to the department for registration of their plan as they have had to do ever since the legislation came into effect.


William Moore Benidickson: But there is no explanatory book available at the moment similar to the former blue book?


Donald Methuen Fleming: Not at present, no.


William Hector McMillan: Mr. Chairman, I think the minister said the income tax burden would fall to the responsibility of the trustee in connection with a pension fund if the investment requirements were not met.


Donald Methuen Fleming: Yes, the income of the fund will be income in the hands of the trustee unless it qualifies under the terms of the act. The method for qualification for exemption under the act is quite clear and simple, and this bill deals with one requirement in that respect.


William Hector McMillan: Would they then pay 21 per cent if those requirements were not met?


Donald Methuen Fleming: It would depend, of course, on whether the trustee were a corporation or an individual.


[Stage Direction]
Clause agreed to.
On clause 7.
William Moore Benidickson: I rather imagine that the officials of the department have given some thought to what results might flow from this new legislation respecting mutual funds. Have these funds, to the knowledge of the department, been investing in sizeable percentages in foreign securities?


Donald Methuen Fleming: No, I do not think one can say that, Mr. Chairman. Some of these companies do publish their statements,
Income Tax Act
but we have not information from them all in this respect, and I cannot be precise in an estimate in this regard.


William Moore Benidickson: Has the minister given consideration to the drafting of this clause? It seems to make reference to revenue. Gross revenue percentage figures are used, not a percentage of assets invested abroad. It seems to me it could be possible in a deliberate way for such organizations to invest perhaps rather heavily in no-dividend paying foreign growth stock. As I see it, that would not come within the compass of the word "revenue". The actual investments might be made in foreign securities that are non-dividend paying. Has that been given consideration?


Donald Methuen Fleming: Yes, it was given consideration. We have to think of all these changes on the basis of income. There is a theoretical element in the view put forward by the hon. member, but I think it is a practical view that is contained in the clause.


[Stage Direction]
Clause agreed to.
On clause 8-Associated corporations.
William Moore Benidickson: We refer to taxes on associated corporations. I have forgotten the difference in the tax rate with respect to utility corporations engaged in electrical energy, gas and steam business, based on whether they are described as having class B income or class A income. What is the significance?


Donald Methuen Fleming: Corporations deriving more than 50 per cent of their gross revenue from the sale of electrical energy, gas or steam, are subject to special rates of tax provided by section 85 of the act.


William Moore Benidickson: You are calling these clauses in the bill very rapidly, Mr. Chairman. I have a reference here to clause 4, in the discussion of which I was told that I was perhaps not relevant. I raise now a question with respect to associated corporations. The amendments made in the fall of 1960 reduced what, on the face of it, might, appear to be a fairly general and broad advantage to companies whose net incomes are in excess of $25,000 and under $35,000.


Donald Methuen Fleming: Mr. Chairman, all that this subclause does is to extend to the associated corporations herein described, the benefit of the increase from $25,000 to $35,000 of the corporate income that now attracts only the lower rate of tax. The amendment substituted the figure $35,000 for $25,000 and the figures $6,300 for $4,500. This, of course, is consequential on the amendment made by an earlier clause.

Income Tax Act


William Moore Benidickson: For the record, in reference to this particular clause, I am simply going to give the committee the benefit of expert comment in connection with it. I refer again to the Price Waterhouse statement in the Canadian Tax Journal. So far as I am concerned I am hoping we can conclude our discussion by six o'clock and if the minister will be patient I think we can do it. The statement reads:
On the other hand, the changes in the rules relating to associated companies made earlier in 1960 will limit this benefit to a smaller number of taxpayers than previously enjoyed the lower rate.


Donald Methuen Fleming: Of course, the reasons for the 1960 amendment were clearly understood at that time. The legislation that had existed up to 1960 had evidently attracted a proliferation of those associated companies, each seeking to qualify for the low rate of tax. And, for reasons which commended themselves to parliament, the amendment of 1960 was introduced and adopted. What we are doing here is simply carrying through the consequential amendments in regard to the application of the reduced rate to the income.


William Moore Benidickson: The minister gave statistics as to the number of tax-paying corporations which might benefit and be in this profit area, between $25,000 and $35,000 and about which he directed my attention to his budget speech of December 20. Were his figures then based on statistics available prior to or after the budget of March, 1960, which perhaps reduced the number of associated companies which could actually benefit at the lower tax rate?


Donald Methuen Fleming: Of course there were no statistics available in respect of 1960, because we did not have the 1960 returns in at that time, but this is the statistical information available as of 1959.


[Stage Direction]
Clause agreed to.
On clause 9.
William Moore Benidickson: This clause contains one of those phrases which formerly and invariably aroused the curiosity and sometimes the excitement of the Minister of Finance when he was sitting on the opposition side. Having been well schooled in the careful supervision of these bills that he used to provide, I do feel obliged to ask a question about clause (1) (ii) (B), which gives notice that certain regulations are likely to be prescribed by order in council, which used to be a bad term to use in legislation. What are the intentions and requirements of the government, as the minister sees them now, in utilizing this opportunity which the statute would provide to
[Mr. Fleming (Eglinton) .3
give the cabinet in council the right to make an order or a regulation under this clause?


Donald Methuen Fleming: Mr. Chairman, these words "prescribed by regulation" apply only to the words "any international organization or agency". This was intended to have application to the purchase of securities by organizations such as the international bank for reconstruction and development. This is in keeping with the practice in, I think, most if not all of the countries that are members of the international bank. As I have said, in this respect we simply propose to follow the practice that has prevailed in other countries that are members of such organizations as the international bank.


William Moore Benidickson: Mr. Chairman, you realize we have several pages of this clause which could be passed too rapidly. We are now dealing with clause 9. This clause involves the underlying principles of increasing withholding taxes on bonds and stipulates that the new taxes will not be retroactive-and I agree with this policy-but will apply only after notice as given by the minister in his supplementary budget speech on December 20. I am led to believe, however, that this is going to result in two ranges of prices and quotations for similar securities in the investment market. There will be quotations with respect to pre-December 20 and post-December 20 issues which have the same nominal rate of interest and length of term. One will not bear a tax and the other will bear a tax.
This is a rather technical matter and I am not going to burden the committee with it because I do not understand some of the intricacies myself. There will ensue a great distinction between the advantages of the pre-December 20 issues and the post-December 20 issues so far as certain types of borrowers are concerned, particularly those abroad living in areas where income tax is not paid, and I am given to understand that difficulty and confusion will arise as a result of this situation.
In other words, we know that hitherto there has been a general level of quotations on issues of the federal government, which quotations are based on interest rate and the term or time for payment of the principal but now, irrespective of these basic factors there will be a different set of quotations relating to bonds issued before December 20 compared with those issued after December 20 even though they may mature at the same time.


Donald Methuen Fleming: Mr. Chairman,
every issue is quoted separately in the market as to its market value from time to time, so that I do not think the point can arise except in a theoretical or academic sense.

The only situation where I could see a problem arising would be if some issuing authority decided after December 20 to issue more bonds of the same maturity and with precisely the same terms as an issue prior to December 20, in other words, to enlarge the existing issue. The point might arise there but otherwise I think it can be no more than an academic question.


[Stage Direction]
Clause agreed to.
On clause 10.
William Moore Benidickson: This clause refers to the increase in the withholding tax with respect to dividends paid to a non-resident corporation. The minister has recently returned from Washington. I take it that difficulties were not substantial or perhaps were non-existent with respect to the tax treaty with the United States and these income tax changes. On the other hand, we have a number of tax treaties with other countries in respect of which the decision taken by the minister in his supplementary budget last December would not result in an automatic change in the tax arrangements on a reciprocal basis by the other party. What countries are in that category where the implementation of this clause will not be effective until further negotiations take place with respect to the existing tax treaties? In the case of the United States they took action automatically and their action cannot be regarded as retaliatory at all. It was simply foreseen in the setting up of the tax treaty that in this context if one country made any such move the other country would automatically do so and could do so without in any way abridging the basic purport of the treaty.


Donald Methuen Fleming: We have tax treaties specifying the rate of withholding tax with the United Kingdom, the Netherlands, Sweden, Ireland, Denmark and Finland. Agreements have been negotiated with Belgium and Norway but these have not yet been ratified by parliament.


[Stage Direction]
Clause agreed to.
On clause 11-Income and capital combined.
Donald Methuen Fleming: Mr. Chairman, there is an amendment to clause 11 which I would ask my colleague, the Minister of Labour, to move, seconded by the Minister of Forestry.


Michael Starr: I move, seconded by the Minister of Forestry:
That Bill C-73, an act to amend the Income Tax Act, be amended by adding thereto, immediately after line 40 on page 9 thereof, the following:
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Income Tax Act
"(3a) Where a person resident in Canada has, at any time after March 16, 1961, sold to a nonresident person a treasury bill issued by Her Majesty in right of Canada or a province, that proportion of the amount by which
(a)	the amount payable on the maturity of the bill, exceeds
(b)	the price for which the bill was sold by the issuer (or if more than one such bill was included in the same issue, the product obtained by multiplying the average price per $100 for which the bills so included were sold by the issuer by the number of multiples of $100 in the amount mentioned in paragraph (a)), that
(c)	the number of days in the period commencing with the day the bill was issued and ending with the day of its maturity that were after the day the bill was sold to the non-resident person, is of
(d)	the number of days in the whole of that period, shall, for the purpose of this part, be deemed to be a payment of interest made by the person resident in Canada to the non-resident person at the time of the sale of the bill to the non-resident person, except that where it is established that, at any subsequent time before the maturity of the bill, the non-resident person has sold the bill to a person resident in Canada, the amount of the tax under this part that the nonresident person is liable to pay in respect thereof shall be deemed, for the purpose of subsection (7) of section 123, to be that proportion of the tax that he would otherwise have been liable to pay in respect thereof that the number of days in the period commencing with the day the bill was sold to him and ending with the day the bill was sold by him is of the number determined under paragraph (c).
(3) subsection (3) does not apply in respect of a payment to a non-resident person under any obligation in respect of which that person is liable to pay tax under this part by virtue of subsection (3a)."


Donald Methuen Fleming: Mr. Chairman, I have furnished copies of this amendment today to hon. members of the opposition parties. It is an amendment relating to the sale of treasury bills. There is one change in the text of the proposed clause compared with the copy I gave the hon. member for Kenora-Rainy River. In the second line of the proposed subclause 3(a) he has the date "March 15, 1961" in his copy. It should be today, of course, and accordingly in the amendment which has been handed to the chairman it is March 16,	1961. Unless the chairman
wishes to read the amendment first, I should like to say a word by way of explanation. The amendment is very long and perhaps it is not necessary to read it. The explanation is to this effect.
This amendment, which adds a new subsection to section 108 of the act, is necessary to facilitate the collection of the non-resident withholding tax on interest in the case of treasury bills sold to non-residents.
Treasury bills are generally sold without a provision to pay interest in the usual way. Instead, the lender is remunerated by receiving an amount on redemption which is in excess of the purchase price of the security.

Income Tax Act
This remuneration is in lieu of interest and should be taxed as interest. It has always been taxed when received by a resident of Canada but before December 20, 1960, it was not taxed when received by a non-resident because the non-resident withholding tax did not apply to interest paid on government of Canada securities.
This amendment provides that when a resident of Canada sells a treasury bill to a non-resident the non-resident shall be deemed to have received a payment of interest. The amount of interest he shall be deemed to have received shall be equal to the proportion of the difference between the original issue price and the face value of the bill, that is, the proportion of the original discount, which is attributable to the unexpired portion of the term of the bill remaining at the time it is purchased by the non-resident.
Since this amendment deems interest to have been paid to the non-resident at the time the non-resident purchased a treasury bill the Canadian resident who sells the treasury bill will be obliged to withhold the 15 per cent non-resident withholding tax on the amount that is deemed to be interest.
If at some subsequent time before maturity the non-resident sells the treasury bill back to a Canadian resident the non-resident will be eligible for a refund of that part of the tax he has paid which is attributable to the unexpired portion of the term of the bill.
In other words, in this case the interest deemed to have been earned is prorated in respect of the period that the bill is held by these several holders.


William Moore Benidickson: I cannot recall the definitions as contained in the act but when the minister refers to a Canadian resident does that mean, so far as treasury bills are concerned, a government, in other words, a nontaxpaying borrower via treasury bills? Is it only a government that issues treasury bills or would a commercial organization issue treasury bills as well?


Donald Methuen Fleming: I am not aware that any treasury bills are issued by corporations or by anyone other than the government in this country.


[Stage Direction]
Amendment agreed to.
Clause 11 as amended agreed to.
On clause 12.
William Moore Benidickson: Clause 12 as I recall involves some amendment since it was originally brought forward in December, with proper notice to the house in Votes and Proceedings under a policy I have given the minister credit for initiating in the past. Regarding new 110B (lHbXiii), is this a right

that is already available to the executive under the section that is being repealed? While we are discussing this portion perhaps I could ask a question with respect to (2) of the new HOB (d) which reads:
a corporation that was incorporated before the first day of July, 1867-
It is my understanding that there will exist perhaps some embarrassment regarding some foreign companies operating through an unincorporated subsidiary in Canada. I am thinking of the Hudson's Bay Company. It enjoys a very ancient and unusual charter. Would that company find any special difficulty in attempting to incorporate a Canadian company at this time? As I understand it, these foreign corporations who operate branch businesses without incorporation in Canada, pay full Canadian taxes, federal and provincial. I understand this new tax will be paid after the normal full federal and provincial taxes have been deducted, and if so, the tax would not be, for example, simply 15 per cent added to the present federal corporation tax of 50 per cent but would be based on the formula which I have outlined and perhaps would be nearer a rate of 57J per cent instead of the present tax of 50 per cent. Is that perhaps the practical result for the majority of such branch businesses in Canada owned by companies abroad which do not have incorporated subsidiaries in Canada?


Donald Methuen Fleming: Yes. The 15 per
cent is calculated on that portion of taxable income remaining after the regular income tax has been deducted. This will not amount to 57J per cent but will be something less than that by reason of the lower rate of tax to which the first $35,000 of taxable income is subject.
In one or two United States newspaper articles appearing after the budget there was a complete misapprehension on this score. Some articles referred to a tax of 65 per cent. These reports were quite wrong. So far as the regulations referred to by the hon. member are concerned-HOB (1) (a) (b)
(iii)-they are of course not available yet and cannot be settled or promulgated until this legislation has been passed and receives royal assent.


William Moore Benidickson: Regarding the question I raised with respect to (2) (d), am I right in thinking that this is an amendment that was advanced after the budget resolutions of December 20 and perhaps was advanced to meet some of the representations that were made by this rather unusual company, the Hudson's Bay Company?


Donald Methuen Fleming: Yes.

Clause 12 agreed to.
Clause 13 agreed to.


[Stage Direction]
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the bill be read
the third time, now?


William Moore Benidickson: Next sitting of the house.


Donald Methuen Fleming: Would the hon. member ailow this bill to be read now so that it can go to the other place?


William Moore Benidickson: Has the other place any particular need of this bill now? I know this is not debatable, Mr. Speaker, but I would prefer to have an opportunity to reflect on the rather long amendment which the minister will agree, was only introduced this afternoon, almost three months after presentation of his supplementary budget on December 20.

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



DEPARTMENT OF AGRICULTURE

[Stage Direction]
1. Departmental administration, including advisory committee on agricultural services, $911,098.
The Deputy Chairman:: It being six o'clock I do now leave the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
Mr. Horner (Jasper-Edson):: Mr. Chairman,
in speaking on the estimates for the Department of Agriculture I should first of all like to take this opportunity to congratulate the minister on his new portfolio. I am sure he will continue the good work which he carried out in his former portfolio, with which I was closely connected as a result of my interest in national parks.
I am sure that agriculture all across Canada will receive the proper and deserved attention of the new minister. He has already made some notable strides in the department. We in Alberta particularly have witnessed the massive sales of grain which are going to be of direct benefit to the farmers in our province, for which we thank him. We thank the minister and the former minister of trade and commerce for their initiative and ability in getting out and selling our grain.
At this time I wish to touch briefly on some of the major points in our national agricultural policy. I want to mention our crop 90205-6-194i
Supply-Agriculture
insurance scheme. We in western Canada have heard some opposition to this scheme, but we have not heard anything objective.
I should like to suggest through you, sir, that some of the M.L.A.'s in the Alberta legislature would be better off to start considering a crop insurance scheme, rather than making speeches condemning the government for this, that and the other thing. We have initiated a crop insurance scheme which will be of benefit particularly to the farmers in my area. I hope the Alberta legislature will give serious consideration to implementing such a scheme in our province.
Then, I want to talk about farm credit. Certainly no other government has done as much as this one for farm management and the improvement and establishment of economic units in western Canada. My friends in the Liberal party talk glibly about some of the agricultural problems in western Canada. Their glibness is notable for its absolute lack of policy with regard to western agriculture.
I should like to say to the minister through you, Mr. Chairman, that we must be always on the look out to make sure the farm credit corporation does not become stereotyped in its form of loan because, in western Canada and in my area particularly, we have a variety of soils and a variety of farming operations that are suited to the area. I should not like to think that because certain areas in my constituency cannot raise one thing but can raise another they will be hampered in securing from the Farm Credit Corporation proper loans to go ahead and develop a particular kind of agriculture.
Then I would move on to the stabilization act. I think that was a great stride forward, even though the hon. member for Assiniboia did not agree. However, the new program for hogs and eggs has worked out well. As with any new program, some wrinkles will need to be ironed out. The farmers in my constituency feel very strongly that we should give consideration to at least semi-annual deficiency payments on hogs and payment on a regional basis. We feel that the deficiency payment on eggs might be made on a quarterly basis.


Paul Joseph James Martin: That is the position of the Liberal party.


Hugh Macarthur Horner: I will tell my hon. friend the position of the Liberal party in a moment or two. We know their position in western Canada. We know the Liberal party is dead. We know they have not any agricultural policy. I can also quote what the hon. member for Essex East said when this program was brought into the house. He threw it aside and said it was nothing. He did not know what he was talking about. He made a big speech for an hour and a half-

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Paul Joseph James Martin: Mr. Chairman, would the hon. gentleman permit a question?


Hugh Macarthur Horner: If you will wait until I have finished my speech I will answer all the questions you wish to ask.


Paul Joseph James Martin: Thank you.


Hugh Macarthur Horner: As I was saying, the initiation of the new program for hogs and eggs required a great deal of courage on the part of the former minister of agriculture. We in Alberta are particularly proud that he had the courage to introduce this kind of program, in spite of strong protests from some organized groups. We think, as he did, that after a year's trial certain changes might be made.
Then I would go on to one other subject under the stabilization act. I ask that the minister give further consideration, as he has in the past, to the whole question of the sheep industry, particularly in western Canada, under the rehabilitation scheme. In our area we are interested in this industry. We feel we could go a long way in developing a proper sheep industry there with a higher support price for lamb, with the continuation of the present support price through deficiency payments on wool, and the establishment of information and experimental stations, sheep flocks for crossbreeding, and other technical details to help our sheep farmers develop a strong sheep industry in that particular area.
In the last three years we have developed a good national policy for agriculture. Its main points are good. As I have said, some of them require the wrinkles ironed out. I am sure this will come as time goes by.
I wish to say a word with regard to acreage payments. The hon. member for Essex East says that the Liberal party policy is such and such. I know that out of the Liberal rally came the big idea that we should pay something like $300 on a unit quota. How well would this go over in my area? I will tell the hon. member and the committee several things with regard to acreage payments and permit books. In 1958, when this government made the first acreage payment, there were 1,800 new permits issued in my constituency. Why were these new permits issued? They were issued primarily because we have an area which is just now being developed agriculturally, and we do not have the delivery stations or the railway stations that some of the other areas in the prairies have.
We found that in 1958 the Canadian wheat board did not know anything about 25 per cent of the agricultural land in my constituency. As a matter of fact, over 50 per cent of the farmers in my area would have received absolutely nothing under the Liberal

party scheme or the C.C.F. scheme for deficiency payments. I am very proud to be able to say that most of them received payments under the acreage payments scheme.
However I do have a quarrel with some of the officers of the Canadian wheat board. I think this is another example of people who are working for the government thinking they have become so smart that they should take over the policies and legislation of the government. I wish to say with regard to the question of issuing permit books to the producers in my area the Canadian wheat board have at times, and are now, discriminating against the farmers of my region. This is not the result of a government decision; it is a decision made by some of the civil servants of the Canadian wheat board. I say this with adequate proof, and I wish to quote for the record the opinion of the solicitor to the Canadian wheat board at Winnipeg concerning who should be entitled to a permit book in any one year. I quote from a memorandum of Henry B. Monk, solicitor to the chief commissioner of the Canadian wheat board:
In the writer's view to be entitled to a permit book under the Canadian Wheat Board Act the applicant must first qualify as a person engaged in the production of grain or as a producer within the foregoing. At the time of his application in this respect I would not regard the fact that the applicant had all his land in summer fallow or seeded to forage crops or had no grain on hand as necessarily conclusive against the application. The question at issue in deciding each application for a permit book must be what is the bona fide purpose and object of the applicant's farming operations.
I wish to say that in 1958 the Canadian wheat board did not follow out the instructions of its solicitor. In 1960 and 1961 they have not followed the instructions of their solicitor in issuing permit books to some of the farmers in my area.
I went further and obtained from a lawyer who is well known to members of this house another legal opinion as to who should be entitled to permit books under the Canadian Wheat Board Act. This is the opinion he has given me;
I am of the opinion that the recent suggestion of the Board that farmers having only cultivated lands producing grain qualify for delivery permit books is not substantiated either by anything in the Wheat Board Act or in the wheat board regulations or in the western grain producers acreage payment regulations nor is it consistent with the interpretation placed on the act and on the regulations by the board itself in dealing with other farmers.
I would ask the minister to take this matter up with the Canadian wheat board because there has been discrimination in my area against farmers who had permit books in 1958-59 and who had permit books in 1960-61. They were refused a further permit book because it was said that they did not

have acreage under grain in 1959-60. In taking this position, the board was not carrying out its obligations as determined by its own solicitor and I would ask the minister to investigate this problem and correct the situation as soon as possible.
There has been some suggestion on occasion, particularly from government officials, that the region which I have the honour to represent is not a grain producing area. I wish to correct that impression. Only last year the world barley king at the Toronto Royal Winter Fair, Mr. George Lamb, came from the town of Cherhill. We have had numerous world wheat kings from the area of Wolf Creek, which is in the vicinity of the Rockies in western Alberta. We can and do grow grain in our area. I hope recognition that we do will be forthcoming, and that the farmers may be treated accordingly.
Now I wish to turn to the feed grain regulations about which we have heard a great deal in this house. We have seen the hon. member for Assiniboia get up and wave his hands. We do not know what the Liberals think about this-I doubt whether they have any thoughts about it at all. We have seen the hon. member for Assiniboia claim we are wrecking the wheat board. We are doing nothing of the kind. In my opinion the new regulations will strengthen the board. First of all, they will give the board a comprehensive idea of all the land under cultivation in western Canada, something which it did not have before. Again, a secondary feed industry is needed in western Canada to provide us with the necessary equipment so as properly to finish our product and increase its market value. This will provide a secondary industry in western Canada and correspondingly create more jobs in that area, something which the hon. member for Assiniboia seems unwilling to do.
Reverting for a few moments to this question of permit books, in the light of the experience with the wheat board I wish to suggest to the minister that we scrap the entire permit department of the board and set up in its place local authorities in the municipalities who would have the duty of issuing permits to the farmers in the area. In this way we might bring an end to the business of father and son, brother and brother, or husband and wife partnerships operated so as to secure two permit books. Let us get back to good democratic principles. Let us say to the farmers: we are going to set up boards in your area and these cases will be judged by your peers. These are the people who will say whether or not you are going to have a permit book. It seems to me this could be done by using the field crop men who are already at work
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in western Canada, by using the district's agriculturists, by having representatives from the pools and the elevators and of the farmers themselves on these boards. It seems to me that a board composed of three such men could equitably distinguish between those who should receive permit books and those who should not. It would be far better done this way than by some civil servants in Winnipeg who have no knowledge of the land in question and who sometimes make arbitrary decisions one way or another. I hope the minister will at least give consideration to this view, because I think it would constitute a step forward in returning to the principles of democracy.
I wish to make some comments on one subject in connection with the experimental farm service. I want to ask the minister to set up an experimental farm on the muskeg we have in western Canada so that this land might, in time, produce the crops which it could produce after proper study and development. Right now we are importing into Canada, an agricultural country, crops worth in the neighbourhood of $650 million a year. This is a tremendous sum to spend on importing goods of this character into an agricultural country, though I realize that a portion of these imports is made up of fresh fruit and vegetables grown during the off season in some more southerly regions. On the other hand, there are a great many things which are imported into Canada which we could be growing ourselves and some of them, I believe, could be grown on the many millions of acres of muskeg we have in this country. I know the minister is interested in projects of this sort. I know he has paid a great deal of attention to conservation and that his work in connection with rural rehabilitation could mean a great deal for us in parts of northwest Alberta.
I wish to mention briefly the subject of butter and its support price. In addition, if I may be so bold, I should like to refer to reports with medical implications which have been rife in the lay press of late. I wish to say that as a country general practitioner I have in the past year conducted some very rough experimental work in my area on the cholesterol levels of the blood. I wish to take this opportunity of passing on to the committee and the public at large my findings in this respect. I agree with those renowned scientists who say that butter is a grade A food which we can eat and enjoy without regard for the bogey man of coronary thrombosis, for behind the threat of coronary thrombosis are a number of other factors besides the cholesterol level in the blood.
I think the greatest underlying factor is a lack of exercise. Canadians and the people

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of the United States in general are victims of what we might call transportationitis which leads to their taking little physical exercise. This, rather than the overeating of fats, is probably the greatest cause of heart disease. Of course, I hasten to say that moderation in all things is a sound principle the application of which is essential for good health and this applies to the consumption of animal fats as it applies to other foods.
We certainly will not improve the general standard of health of Canadians by subscribing to every new fad diet that comes along. As a matter of fact, it can be shown there is a correlation between the amount of heart disease in the country and the number of automobiles and television sets to be found there. But this of course does not represent the entire answer.
I wish to suggest to the minister and the government that we commission the national research council, through its medical division, to undertake a further comprehensive study of the question of cholesterol in the blood and that the findings of this study be correlated with the research done in various other countries so that we may find a proper and reasonable answer to this problem.
Certainly there is no reason at all at the present time for Canadians not to eat butter. It is a complete fallacy that anything would be gained by substituting margarine for butter because the process of the hydrogenation of vegetable oil into margarine renders it a fat chemically equivalent to butter. I wish to place these brief points on the record because I feel, although there is no way of measuring the degree, the drop in domestic butter consumption has been caused to some extent by lay press reports concerning arteriosclerosis and heart disease resulting from the overeating of animal fats. I suggest this is not true and that there is no evidence to support this contention. I suggest, rather, that these diseases arise from complex factors, that these are complicated conditions in which a number of factors play a part, such as stress, inherited resistance and others. Again I ask the minister to suggest to the national research council that they undertake a study to correlate information pertaining to this important subject.
In concluding let me pay a general tribute to the Department of Agriculture and, in particular, to the veterinary medical branch for the excellent work they have done in Canada which has made Canada's veterinary medical health service one of the best in the world. Having had some previous experience with the department in this regard, I can assure the committee and the country that we

in Canada are fortunate in having such an effective group working under the able direction of the director general.
These are the comments I wished to place on the record. Again I invite the minister to investigate my complaints with regard to the issuing of permits through the Canadian wheat board. This is of particular importance to the farmers in the western portion of my constituency, who do not enjoy the privileges or the easy access to elevators and transportation that are enjoyed by the other farmers in western Canada.
If my friend the hon. member for Essex East has any questions I shall be very pleased to answer them.


Paul Joseph James Martin: Mr. Chairman, I simply want to ask the hon. member about the suggestion he has made with regard to the application of the principle of regionalization to the deficiency payments on hogs. Does the hon. member not recall that that proposal was made by me on behalf of the Liberal party at the last session of parliament? Is he not aware that our proposal is consistent with the recommendations made recently to the government by the federation of agriculture, and turned down by the government? We welcome the support of the hon. gentleman in this regard.


Hugh Macarthur Horner: Finally I am able to welcome some reasonable support from the hon. member for Essex East who will recall that when speaking about this subject he said, "It is a good thing, but". Then, he proceeded to qualify his endorsement of the principle. I cannot quote the hon. member directly but it will be recalled that at that time the minister said he was eager to try the scheme for a year to see if it would average out properly, and if it did not the government would do something about it. All the farmers in my area accepted that. We now come to the government and say we do not think that national averaging was a good principle.


Paul Joseph James Martin: And we agree with you.


Hugh Macarthur Horner: I am pleased that the hon. gentleman finally agrees with something that will be of benefit to the farmers. It is the first time the hon. member has ever done so.
(Translation):


Mr. Deschaielels:: Before dealing with the matter of agricultural research I would like to make a few general remarks.
In view of the importance of this branch, so vital to the welfare of all Canadians, I felt it would have been appropriate for the minister, in submitting his estimates, to make a comprehensive statement on the present

position of agriculture in this country, on the problems our farmers have to face today, and to explain the relation between the estimates he is asking us to vote and the plan which the government proposes to carry out to raise farm income.
In his speech, the minister stated that 21 per cent of Canadian farms bring less than $1,200 yearly income to their operators. While this is obviously a disturbing figure, I am still more concerned over the present status of family farm operators, many of whom are found not only in the province of Quebec but also in central Ontario, in the maritimes, and elsewhere.
Mr. Chairman, I am asking myself to what extent those sums of money we are asked to vote will improve the situation of our farmers. I listened carefully to the statement which the Minister of Agriculture (Mr. Hamilton) made on February 24 last, I have read and reread his report, because I wanted to take part in the discussion, as I did in 1958 and 1959.
Now, Mr. Chairman, I think that, after thoroughly considering the matter, the minister himself will admit that nothing in his speech holds out any very comforting prospects for our farmers. Yet the problems are there before us. They are serious by reason of their extent, and they are urgent. To talk of farming in Canada in 1961 is to talk of low and uncertain price levels, unstable and inadequate income, selling at a loss and surplus production. Those are, in general, the difficulties which our rural producers have to face.
No amount of speeches or statistical gimmicks can change any of the facts facing us in 1961. The answer to such conditions lies in over-all planning, in new and dynamic prospects. In other words, what is required is a national farm policy, in keeping with the needs of the moment.
If the government has any plan to offer, now is the time to do it. Until then, we are and shall be justified in saying that the government is not up to its task, is not assuming its responsibilities in the matter of agriculture, and that farmers in this country can rightfully say and repeat that they are not receiving their fair share of the national income.
Mr. Chairman, I listened with great care to the speeches of the hon. members for Drum-mond-Arthabaska (Mr. Boulanger) and for Beauce (Mr. Racine), who very clearly explained to us the problems peculiar to Quebec,
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as well as other matters of national scope with regard to the farming industry.
I hope the government will note the recommendations of those two hon. members and act upon them.
Mr. Chairman, I was quite amused when the hon. member for Assiniboia (Mr. Argue), at the beginning of his remarks, compared the speech made by the Minister of Agriculture and those made under the former government by the Hon. Mr. Gardiner. This provides me with an opportunity to recall the legendary figure of Mr. Gardiner and the debt of gratitude which Canadian farmers owe him. Let me say, therefore, to the hon. member who spoke before me and who referred to a national policy, that if he and his colleagues in the government are really interested in working out a policy, I heartily suggest that they consult the official record of debates under the former administration. They will see how vigorously and boldly Mr. Gardiner set out to apply an agricultural policy in this country, at a time when the major problem facing him was a problem of production. When Mr. Gardiner left the administration, he could take pride in the fact that in the matter of production, Canada's farmers were in the position he had dreamed for them, that is to say they were at that time the greatest wheat producers in the world.
Mr. Chairman, since the years 1956-57, great changes have occurred. It is unfortunate that this government has remained in a static position, because technology and scientific research have been transforming not only industry but also agricultural operations in Canada. Even more serious, such changes have also occurred in other countries of the world, so that today countries which at the time were our customers have now become our competitors. If as soon as it took over the country's administration this government had taken note of those structural changes, the yield of our farms would be much higher than it is now.
This view was expressed just recently not only by specialists and experts but also by the Canadian Federation of Agriculture in the brief it submitted to the government on March 1 last. This brief not only reflects our present agricultural problems but offers to the government various practical solutions which could not be safely ignored.
The Montreal Gazette, in an editorial which appeared on March 2 last, reported on some

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comments with regard to this brief from the Canadian Federation of Agriculture and mentioned the fourteen suggestions put forward in this brief to the government. I quote: (Text):
In the annual brief which it submitted to Prime
Minister Diefenbaker and other federal cabinet ministers for the calendar year 1961, the Canadian Federation of Agriculture laid it right on the line.
The federation was downright disturbed by a tendency which it saw developing. And it didn't hesitate to speak out.
The federation, as it turned out, came well armed with constructive proposals.
(Translation):
Mr. Chairman, this brief raises a very important question, one which I consider vital and which establishes something that we, in the official opposition, have been preaching for years, that is to say the interdependence of farm policy and business policy. May I therefore be allowed to read very slowly a few lines from page 5 of the brief submitted by the Canadian Federation of Agriculture:
(Text):
Trade In agricultural products is, of course, but one aspect of general trade, and is vitally affected by general trade policies. It was the opinion of the delegate body that there are at present heavy pressures from secondary industry for an increased degree of protection, and it would view with alarm any trend in this direction in Canada. There are of course fundamental issues and philosophies of economic policy involved here. As a surplus producer of agricultural products Canada has a great and fundamental stake in expanding trade. The Canadian Federation of Agriculture believes that the long-run interests of Canada lie in its development as a modern industrial trading nation, rather than a nation with the pattern of its industrial development shaped by a policy of increasing protection for Canadian manufacturing industry.
(Translation):
Mr. Chairman, there is obviously no point in producing, or in improving production methods if, on the other hand, the government, by its shortsighted commercial policy, does not at the same time take steps to promote the marketing of our products throughout the world.
I hope the government will reconsider its position in trade matters, because in a country like ours with its surplus problems, the only possible solution, the only plausible one, is a bold and dynamic policy of expanded trade. To that end, hon. members will recall that the leader of the official opposition (Mr. Pearson) missed no opportunity to express that view. In fact, at the Liberal rally, last January, one promptly adopted resolution advocated that policy of economic expansion, which would save our farm producers from their present predicament.
Mr. Chairman, the brief of the Canadian Federation of Agriculture puts great emphasis

on research. Allow me to read, in this connection, a few lines from page 17 of the brief: (Text):
In a different field, we would bring to your attention that we believe, in view of the need for developing markets for farm products to an absolute maximum, that there should be stepped up programs by the national research council aimed at developing new and better utilization of farm products. Investigation into the use of wheat in food forms other than bread has been specifically mentioned as an area of research needing attention.
(Translation):
Mr. Chairman, in 1958 and 1959, I drew the attention of the minister of agriculture who today is Minister of National Defence to that matter. And, according to page 2401 of Hansard of 1959, I said this:
I wish to bring to the attention of the Minister of Agriculture (Mr. Harkness) a very important point. I feel that if we are to improve the efficiency of agriculture in this country, in the west as well as in the eastern and central parts of this country, we should at once adjust our research procedure. Let us set up a new co-ordination of existing services and give a new, bold and forward looking impulse to these research services-
Mr. Chairman, I understand that since January 1 last the minister has proceeded to a diversion of technical and research services with regard to marketing under the Canadian wheat board. I shall say right away that this is a step in the right direction. It is unfortunate that his predecessor, who is now Minister of National Defence, did not think it advisable to start setting up such a service two or three years ago.
We have of course in our service efficient experts and the most up-to-date material facilities with regard to research; but, if I am not mistaken, about 98 per cent of our research is still focused on production or the improvement of production methods.
I submit that it is absolutely necessary to underline the economic aspect. We should apply to agriculture the same methods which have been so successful in industry. How can production costs be reduced, how can the quality of our products be raised, and how can they be made marketable abroad? That is the whole Canadian farm problem which must be considered anew in the light of modern scientific information.
According to page 2407 of Hansard, the minister had a word to say on the matter on February 24, 1961. I quote:
Another point I should like to mention in this connection is that it is now very obvious that there are other things for which wheat can be utilized besides the traditional products, bread. It is no secret that thousands of years ago wheat and barley were used as a staple diet not in the form of bread. In many countries of the world where the tendency to turn to the use of the

new product, bread, is slow, it might be possible for us to sell wheat ready for human consumption closer to the natural form.
Mr. Chairman, with regard to this question of bread, I would like to make two remarks. First of all, I shall repeat a question recently asked by the hon. member for Mount Royal (Mr. Macnaughton) who inquired from experts:
How can it be that we have, in this country, the best wheat and perhaps the worst bread in the world?
I leave it to the experts to comment upon it. My second remark is consequential to what I just said. I note in the report of the standing committee on agriculture and colonization, volume 10, page 138, that bread consumption in Canada per head is falling off in an alarming way.
The problem was submitted to experts and I am wondering whether the national research council would not have here a field to explore with a view to improving the quality of the bread we eat and, second, to finding the reasons why bread consumption has decreased in Canada, while our population is constantly on the increase.
In connection with those remarks, I would also like to mention my personal views with regard to the matter of research.
We know that in several other countries of the world, such as southern Asia-I refer particularly to India and China-the staple food is rice. Those countries, however, are chronically famished, while we have surpluses.
I wonder, Mr. Chairman, whether our research division could not step up its work so that we might offer those countries some of our surplus products in a form that they could eat and assimilate.
I think, Mr. Chairman, that the research council should also look into the most important matter of family farms.
In the minister's own statement as recorded on page 2405 of Hansard, we were informed that from year to year, the number of our farmers declined by about 10,000 a year. I quote the figures he gave. In 1958, there were
555,000	farmers; in 1959, 546,000 and in 1960, 536,000. I say, Mr. Chairman, that these statistics are alarming. All the more so because the bulk of these figures consists of family farms. This, I think, involves the most stable element of our population.
I think we have a duty to consider immediately the reasons why, from year to
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year, there is a decline in the number of farms, and particularly family farms, in Canada. I refer not only to the province of Quebec but also to other provinces.
I think this problem must be considered in our research effort. In the last analysis, it is a matter of determining what should be the exact structure or the mould of a family farm. Through such a study, a means might be found to make such farms economically sound and profitable.
And to show the economic benefits which can accrue from agricultural research, I was reading a few days ago in a Montreal newspaper that a manufacturer whose industry depends on imported vegetable oils-I think it refers to Mr. Pascale Gattuso-had decided to conduct experiments in Manitoba with this fodder plant called rapeseed, and from which vegetable oil is extracted. Well, through the initiative of a businessman, we now have in Manitoba a co-operative producing vegetable oil. I wonder why this initiative was taken by one of our businessmen rather than by our research experts.
On how many items is our trade dependent on imports? How many of those items could we produce ourselves? I have mentioned this example just to show the full importance of the research division.
Mr. Chairman, it is through scientific research that we have been able to increase production and sales, and raise the yield of our plants, our land and our stocks. We have doubled and even tripled the yield. It does seem that it is also through scientific research that we can substantially reduce our surpluses.
The time has come to throw into this struggle a larger portion of our financial resources.
Mr. Chairman, I understand that next fall a conference will be held in Montreal on "Resources and our future", all the provinces, as well as the Department of Agriculture and the federal government, will be represented.
I should like to quote from this booklet which has been submitted to us, a paragraph which shows the approach to be taken at this conference, and I quote:
Great stress will be laid on the vast problem of land use for agricultural purposes. It is known how difficult it is for domestic farms in the prairies to survive as such, and how quickly Ontario's farm lands become unproductive (at the rate of a million acres every four or five years); it is known at what rate the orchards in the Ontario peninsula and the farms along the south shore of the St. Lawrence, towards Montreal, are

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being taken over as industrial sites. In less than ten years, the agricultural situation has changed to such an extent that it can no longer be studied except on a national basis.
So, Mr. Chairman, I do hope that at that conference, a practical scheme will be worked out.
To that end, I should like to put forward a suggestion. I was saying a moment ago that as a result of the change in production techniques and of the fact that certain countries which were formerly our customers are now our competitors, what we need today in the agricultural field is to find out where we stand and work out a program.
I recognize at the outset that this is no easy task. Why? Canada will always have two major difficulties to overcome ir, the agricultural field. In the first place, we have an extremely vast territory; I think we have have the greatest area of tillable land in the world. The second problem is that the territory being heterogeneous, our land use is completely different from one point to another.
In view of those difficulties and of those important problems, and in view of the fact that we must necessarily take an inventory before drawing up a practical program on a national basis-a program which would be practical not only for the west or for central Canada but also for the east and for the maritime, in other words a truly national program, I wonder whether it would not be desirable to set up within the department a joint advisory council, as it was suggested at our last convention, a council in which every part of Canada would be represented. Those experts would have no other administrative duty than to study, comment, inform and suggest to the government what, to their mind, would be the most practical thing to do, in the various areas they represent.
The department would also have available some qualified and representative men from all parts of this country, who would be familiar with the special problems of those districts. Moreover, should a problem arise in any part of the country, then the minister could have those experts make inquiries on the spot.
I think the establishment of such a board would be to the benefit of the government and certainly in the best interest of the whole country.
Mr. Chairman, those are my suggestions. I hope that the minister will take them into consideration. Before closing my remarks, may I draw the attention of my hon. friends from the Conservative party, and more particularly of

those who represent the rural and agricultural districts, to the fact that, in 1958 they received a token of trust, such as no government ever received before. In 1958, they obtained-


Mr. Parizeau:: That will happen again in 1962.


Jean-Paul Deschatelets: -this vote of confidence by making promises. Now I would point out that, at this time, those promises have not been kept.


Joseph Aimé Roger Parizeau: Which ones?


Jean-Paul Deschatelets: I shall tell my hon. friends that time is pressing them, because, very soon, their political future will be their past and they shall have to face those who have sent them here.
(Text):


Charles Edward Rea: I am sorry to interrupt the hon. member but his time has expired.
(Translation):


J.-H.-Théogène Ricard: Mr. Chairman, it is a pleasure to take the floor after the farmer-lawyer from Maisonneuve-Rosemont (Mr. Deschatelets). My task will be that much easier, since his knowledge of agriculture seems to be limited. However, I would not like to be considered as an expert myself in agriculture. Be that as it may, it seems to me my hon. friend from Maisonneuve-Rosemont could have learned his lesson better, before lecturing Conservative members who none the less received, as he did say, a testimony of invaluable confidence on the part of the people, especially on the part of farmers.
It is true, Mr. Chairman, that the present Conservative government has received unlimited confidence from the agricultural class, because during the 21 years they were in power, the Liberal government failed dismally to live up to the task. Mr. Chairman, I should like to recall to the house some of the measures we have taken since we have been in power.
Mr. Chairman, may I first be allowed to remind the house that one of the first measures taken by the Conservative government after having been elected, after having obtained the confidence of the people, as the hon. member for Maisonneuve-Rosemont (Mr. Deschatelets) said a moment ago, was to put at the disposal of farmers $250 million as a revolving fund to stabilize the prices of farm products.
I should like also to remind all members that in 1959 the Conservative government granted, in subsidies to dairy products, the

sum of $4,750,000. In 1960, that is from May to December, those subsides reached the amount of $3,750,000.
Furthermore, in 1960, the Conservative government paid $208,394.92 in support prices on eggs.
We all know that the Canadian Farm Loan Act has been improved substantially under the present Conservative administration.
Under our Liberal friends farmers could only borrow $15,000, while under the present Conservative administration they may borrow up to $20,000, since such loans are calculated now on the basis of 75 per cent of the value of the farm, while under the Liberal administration it was on the basis of only 65 per cent.
The Farm Improvement Loans Act was amended by the Conservative government and the amount of the loan was increased from $5,000 to $7,000.
Mr. Chairman, all those improvements have been made to the great resentment of our Liberal friends, whose whining we are hearing today and who were not able, during the 21 years they were in power, to understand the agricultural class.
Mr. Chairman, I should like all Canadian farmers to remember those things so that when the time comes for another general election they may not be fooled by our Liberal friends, who after a delay of 21 years now claim to be the friends of farmers.
Mr. Chairman, at the time of the Liberal administration the subsidy paid under the Animal Contagious Diseases Act was $100 per purebred animal slaughtered; the Conservative government increased that subsidy to $140 per animal. The sum of $40 which was paid for each half-bred animal slaughtered has been increased to $70.
Mr. Chairman, at this stage of my remarks, I should like to take a few minutes to inform the house of what the Conservative party policy has meant for the constituency I have the honour to represent.
Thanks to the measures introduced by the present Conservative government, thanks to the initiative of the present Minister of Agriculture (Mr. Hamilton) and of his predecessor, the present Minister of National Defence (Mr. Harkness), the citizens of my constituency received in 1959 the sum of $221,523.04 in subsidies on dairy products; those subsidies reached $295,364 in 1960.
As for sugar beets, farmers of my constituency received in subsidies the sum of
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$41,390.70, while in 1960 the 65,000 tons of sugar beets produced in our area brought to farmers of my constituency the sum of $74,015. I would suggest to the hon. member for Essex East (Mr. Martin) to take good note of those figures.
Mr. Chairman, I might inform the house that through the beneficial legislation proposed by the Minister of Agriculture in the present government, a farmer of my riding has received an amount of $1,300, a thing that never happened under the previous Liberal government. In addition, he benefited from other grants under legislation passed by the Conservative government.
Mr. Chairman, I realize that our Liberal friends, especially the members for Maison-neuve-Rosemont and for Essex East, both of them lawyers, now wish to get closer to the farm people. But as in the story of the hare and the tortoise, it is too late to start when the opponent is already at the winning post.
Gentlemen of the Liberal party, you may well grieve. You have every reason to be sorry, because you have had your chance to show what you could do for the farm people. As for us, even though we came later, we knew how to take advantage of the situation and we gave to the farm people what they were entitled to expect from a truly Canadian government, devoted to all Canadians and not only to the Liberals.
Gentlemen of the Liberal party, you may give up that opportunity as lost, but we, of the Conservative party, are forging ahead, and we shall go from one achievement to the other, to the satisfaction of our constituents, people who are only waiting for the chance to return us to office with an even greater majority.


Mr. Boulanger:: Mr. Chairman, may I put a question to the hon. member for St. Hyacin-the-Bagot?


J.-H.-Théogène Ricard: Certainly. In view of your ignorance, I can answer all your questions.


Samuel Boulanger: Mr. Chairman, I wish the hon. member for St. Hyacinthe-Bagot would tell me when the Right Hon. Prime Minister (Mr. Diefenbaker) will keep his promise about a price support on pulpwood?


J.-H.-Théogène Ricard: Mr. Chairman, let me first of all remind the house that the present premier of Quebec, who for some months travelled all over the province, promising to do and

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give all sorts of things certainly has a duty to fulfil in that respect. However, the hon. member for Drummond-Arthabaska may rest assured that as long as the Minister of Agriculture and the Conservative party have a responsibility in the matter the party will certainly honour its obligations, contrary to what happened under the administration of those for whom he cares much.
(Text):


Herbert Wilfred Herridge: Whenever the agriculture estimates are under discussion I see in my mind's eye the hon. member for Assiniboia up to his ears in grain. I almost hear the lowing of cattle waiting to be fed and I can smell bales of new mown hay.
While I was listening to the doxology to Conservatism and the hymn of thanksgiving for Conservative policies a moment or two ago, I could not help but remember reading some reports and statistics recently. Surely, while the hon. gentleman was performing this eulogy and protecting the flanks of the Minister of Agriculture he must have remembered that the province of Quebec has had a form of Conservative government for 16 years.


J.-H.-Théogène Ricard: It did very well for the province, too.


Herbert Wilfred Herridge: And the net income per farmer for Quebec is one of the lowest in Canada.


J.-H.-Théogène Ricard: Because the earlier Liberal regime did not accept its responsibility.


Some hon. Members:: Oh.


Herbert Wilfred Herridge: Now, I want to express my appreciation for the courtesy with which the Minister of Agriculture has attended to any of my complaints, that is, to individual complaints, not complaints relating to the whole farming industry. I have found the hon. gentleman courteous and co-operative in that respect and I appreciate it. I suppose it would be fair to say that the Minister of Agriculture is the roving ambassador for the government. From his remarks when the discussion of these estimates began, there appears no doubt that while he has not been able to present substantial solutions to many of the problems now facing agriculture he is finding out what the problems of the farmer are. I also wish to express my appreciation of the good work of the senior staff and the field men of the department. We must not forget, when we discuss these estimates in the relative comfort of this chamber-that is, the comfort of all of us except the minister-that the field staff do a lot of slogging 
day by day. It is not very glamorous work; it does not reach the newspapers, and to many people it is unknown. However, the department has some excellent field staff officers. I have known many of them for a goodly number of years, and I want to express the appreciation of this group for the work they are doing.
I do not intend to speak at length at this stage of the discussion because I shall have various things to say on the particular items as they arise, but I do want to speak briefly on one or two matters. I think one of the first things to be done is to get the public to recognize the importance of agriculture to the Canadian economy and to the country. There is a tendency to underestimate the importance of agriculture because, shall I say, of the dynamism of the growth of industry and things of that sort.
I notice that the hon. member for Essex East is listening intently, and I want to say this in connection with that hon. member. The member for Essex East is not a farmer but I know from lengthy discussions with him that he is a student of farmers' problems and needs, and that is what is required at this time. There has to be a greater recognition on the part of the people of Canada as a whole of the importance of agriculture, and this is lacking in many quarters. There is a tendency to underestimate it and in some cases almost to jeer at the maintenance of the economic family farm and agriculture of that type.
I think there a responsibility falls on the Department of Agriculture, as well as on the provincial departments and the farm organizations, to improve their public relations so as to inform the remainder of the population of the importance of the agricultural sector of the economy. In this connection, I wish briefly to read from a magazine called "Canadian Commentator" which often contains some very informative articles. The issue of June, 1960 to which I am referring contains an article by Mr. George R. McLaughlin on the Canadian farmer which I think puts the question very well indeed. I quote briefly from this article:
I have been concerned these last few years about the misunderstanding which exists in the minds of non-farmers with regard to the economic position of farm people in this land of plenty. This misunderstanding has grown for quite obvious reasons, and there seems little indication that agriculture's public relations, if there is such a thing, has done much to correct the situation.
It goes on to say:
Not many people realize that the farmers of Canada represent a consumer's market of some $2.8 billion a year, about $1.7 billion of which is spent for the goods and services required in the production of food, and another $1.1 billion

for the requirements of family living, such as radios and cosmetics, children's toys and lawn mowers, coffee and canned goods, skates and cameras, furniture and overcoats, and all the hundreds of other goods and services required by any family, urban or rural. In the United States it has been said that the farmer as a consumer of goods and services is worth two and a half times as much as any other individual consumer in the country. I see no reason why the same comparison should not be used in Canada.
I think that is very well put indeed. There should be a public relations job done to inform the people of the importance of agriculture not only to the farmer but to the rest of the economy.
I could not help noticing, in the quotation I read, a reference to the purchase of cosmetics. What a change there has been in the world in which we live. I remember 50 years ago talking to a farmer who had to drive many miles along a mountain trail to get his groceries. He did not use cosmetics, nor did his wife. He got into the habit of putting a rooster into the crate to accompany him on his journey so that he would not be lonely. What a difference in the way things are done today. I have lived in the same circumstances, and I am proud of it.
It is only fitting when speaking on the estimates of this department to make some reference to the fact that the Canadian Federation of Agriculture has celebrated its twenty fifth anniversary. I was very closely associated with the British Columbia federation of agriculture and on that account I realize what good work the organization has done throughout the years for the Canadian farmer. In saying this, I fully recognize the excellent work which has been done by other organizations, such as the farmers' union and those organizations connected with particular branches of the industry. In the early days our first president was the Hon. E. D. Barrow, former Liberal minister of agriculture of British Columbia and a great personal friend of mine.


An hon. Member:: Where did he live?


Herbert Wilfred Herridge: Chilliwack. He was a practical farmer who spent many years of his life working for his fellow farmers in British Columbia. I think we should remember these things. There was also Mr. Charles Hayden, the first secretary-treasurer, who lived in Vernon. Under his guidance the work of the organization was greatly developed. At the present time the British Columbia federation of agriculture has a membership of between
16,000	and 17,000 which shows how important the agriculture industry is in British Columbia when we relate it to other industries in the province.
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I am pleased to see the hon. member for Cariboo has his hearing aid on and is listening to me, determined not to miss a single one of my words of wisdom.
Before taking my seat, I want to refer to some of the matters brought to the attention of the government by the Canadian Federation of Agriculture. I will avoid repetition and mention only those points that are important to the farmers I represent and farmers generally across the country.
In their brief, the federation indicate great interest in marketing farm products in commercial markets overseas and also in the development of the world food pool under the United Nations as well as other agencies for the proper use of our surpluses. In their representations they presented a resolution to the government in these words:
1.	Receive from nations having the ability to do so, undertakings to contribute to an internationally conducted program of food distribution to areas of need. Such contributions could take the form of commitments to supply food, or could take the form of funds, or necessary services for transporting food contributions to needy countries.
2.	Receive and appraise information on food needs, and, on the basis of such information and the requests of participating nations, carry out the equitable distribution of the food supplies made available.
3.	Co-ordinate and advise on the orderly conduct of non-commercial food distribution in its broadest implications. The aim of such consultation and co-ordination should be to give direction and purpose, through the United Nations, to all programs and activities contributing to the goal of an international food program.
To indicate what farmers are thinking I wish to quote a statement made by the president of the British Columbia federation of agriculture:
H. D. Arnold of Duncan, president of the B.C. federation of agriculture, told the B.C. fruit growers association that Canada could do more for the world by helping backward nations in peaceful development than it could possibly achieve by its own armament.
He urged all sections of agriculture to press this viewpoint.
Mr. Arnold agreed that arms expenditure should be slashed-but instead of cutting taxes with the money so saved, he would spend it building up and developing backward countries.
He suggested Canada should select one or two countries and concentrate on them, or contribute to a master international fund for the same purpose.
"From a propaganda viewpoint alone," he said, "the other countries would not stand by and let us do it on our own."
"A tractor or a plow sent to Nigeria, for instance, would do more for world peace than providing another tank for our armed forces; better a fruit ladder to Nigeria than an aircraft.
That is a growing sentiment among farmers and I was pleased to see that this gentleman thinks along lines similar to those of hon. members of this group.
I shall mention one or two other matters of particular importance to the people in my

Supply-Agriculture
district. In addition to supplying food overseas, all sections of the British Columbia Federation of Agriculture are concerned about the cost of taxation of the land for educational purposes. This reference is found at page 7 of the brief of the Canadian Federation of Agriculture, and I will quote briefly from it because it concerns British Columbia farmers who believe that there must be some change in taxation, in view of the increased costs of hospitals and education, if the economic family farm is to continue to exist. The brief reads:
One subject which we would mention only briefly-although it is a matter of very great importance-is that of education costs. It is becoming more and more widely recognized that as the importance and the cost of education increases that two things are necessary: first that a high standard of education and educational opportunity should be assured for every Canadian child; second, that the real property tax imposed by the local school district is becoming increasingly inadequate and inequitable as a basis for meeting education costs. This inadequacy and inequity does not concern the farmer alone, but as a heavy investor in land in relation to his income the farmer tends to feel the situation much more keenly.
They propose that this matter must receive the attention of the government.
The federation also deals with the question of transportation, with which I shall not deal at length. They deal, too, with the question of land and water use and rural development. This is the subject of a resolution recently brought forward by the Minister of Agriculture, which I hope will come forward again in the near future.


Paul Joseph James Martin: Will the hon. member permit me to point out that at the bottom of page 10 of the brief, the Canadian Federation of Agriculture expresses the hope that the legislation on that subject introduced by the minister by way of resolution will be passed at this session of parliament and not postponed as the minister proposes.


Herbert Wilfred Herridge: I am glad that the hon. member for Essex East, with his usual attention to detail in these matters, has reminded me of this important part of the representation.


Mr. Winkler:: Mr. Chairman, I wonder if the hon. member who has the floor would mind telling the committee from what he and the other professional farmer who spoke are quoting?


Herbert Wilfred Herridge: I am surprised that the hon. member is ignorant of what has happened in Ottawa in recent weeks and months. I am reading from a presentation of the Canadian Federation of Agriculture to the Prime Minister of Canada and members of the cabinet on February 28, 1961. Incidentally, that is my birthday and a very important event. I was

born in London but only because my mother was visiting there that day. No doubt the hon. member has received a copy of this brief.


Eric Alfred Winkler: Mr. Chairman, I thank the hon. member. I certainly have a copy of the brief but I attend the meetings of these organizations and rarely read briefs. I must congratulate the hon. gentleman on celebrating his eightieth birthday.


Herbert Wilfred Herridge: The federation in its brief deals with land and water use and rural development and expresses the hope that the legislation will be passed this session, as the hon. member for Essex East so kindly reminded me.
There is another subject in which I am interested because of its increasing importance. I shall deal with it and one or two other matters only briefly. I dealt with research at some length on the minister's estimates last year and if anyone wishes to be well-informed as to the needs of agriculture in respect of research I suggest he look up the speech I made last year on item No. 1 of the minister's estimates.
The federation is still interested in medical health insurance. The recommendation in the brief on this point reads:
We do think no time should be lost in moving forward in the study of ways and means of aiding the provinces in the establishment of provincial medical health insurance plans.
This subject does not come directly under the Minister of Agriculture but the quotation shows that farmers are interested not only in their own problems but in problems of national scope and importance.
The federation also deals with unemployment insurance for farm workers. In this respect, I urge the government to act as soon as possible to institute a plan for unemployment insurance coverage for farm workers, either on voluntary or on a suitable selective basis.
It has frequently been said that farmers operate under severe circumstances. They may not want to work in industries or occupations covered by unemployment insurance. In conditions of full employment, nine times out of 10 an individual given a choice between working on a farm or accepting a position in industry will accept an industrial position. I urge the Minister of Agriculture to use his influence with the Minister of Labour to again stress the importance to the farmers of Canada of this subject.
I believe it was the British Columbia Federation of Agriculture which first brought forward a request with respect to land expropriation and easement, which subjects are also dealt with in the brief of the Canadian Federation of Agriculture. We in British Columbia suffer from iniquitous laws in

respect to the expropriation of property for utilities, whether publicly or privately owned. There is absolutely no respect at all for the rights of the farmers or the land owners under the present legislation. Numerous instances have been brought to my attention of farmers whose timber had been cut down without any prior arrangements being made, of surveys being made, of fields being crossed, and things of that sort. This has created such concern that the British Columbia federation of agriculture has given the problem a great deal of study and has employed legal counsel. A good number of my constituents are concerned because, as the committee knows, the Minister of Justice has a plan under which 2,000 of them will be drowned in the near future if he has his way. They are all working together as a unit with the British Columbia federation of agriculture to try to protect their interests because, as I said before, the laws of British Columbia do not offer the proper protection. We are told that farmers are all for free, private ownership. Why, the government is destroying private enterprise, legitimate free enterprise and the small scale industry of farming right and left. Whenever the rights of the ordinary farmer come in conflict with the big corporations they go over the small farmer like a steamroller.
I should like to read a paragraph from page 18 of the brief of the Canadian Federation of Agriculture:
Land expropriation and easement.
The Railway Act provides that proceedings for drainage works arising out of the location of railways may be taken either under provincial law or under the provisions of the Railway Act. at the option of the land owner. It seems to us that this is a very reasonable principle in relation to problems of compensation and expropriation. We think this option principle should be extended to include all utilities operating under federal charter, and also to apply to proceedings not only for drainage works, but to proceedings for compensation and works connected with expropriation and easements generally.
I think it is the responsibility of the federal Minister of Agriculture, at the dominion-provincial agricultural conferences which are held annually, to work in co-operation with the ministers of agriculture of the provinces to provide some federal and provincial legislation which will protect the rights of Canadian citizens against vested interests and those who, up to date, have had the economic power to do what they like.
The federation commends the government's decision to hold an inquiry into farm machinery prices. We are glad that matter has been referred to a committee. I am also very pleased to see that the Canadian Federation of Agriculture has passed a resolution with respect to nuclear weapons, as follows:
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Resolved that Canada should provide leadership in a plan to control the spread ol nuclear weapons by promoting an agreement of all nations that they will not test, manufacture, or possess any nuclear devices for warfare, and Further resolved that Canada should encourage that this agreement be under the jurisdiction of the United Nations.
I hope the minister will draw this resolution to the particular attention of the Secretary of State for External Affairs because I am sure that when he deals with the Minister of National Defence he will welcome the additional support he is receiving from the Canadian Federation of Agriculture.
The Canadian Federation of Agriculture reiterates its strong support of the Canadian Broadcasting Corporation. I have mentioned briefly the majority of the questions which the Canadian federation brought to the attention of the cabinet. I do urge that the minister give these serious consideration as representing the views of a very responsible segment of our economy, upon which a great deal depends in Canada, and for the welfare of which we should recognize our responsibility on all occasions.
I shall have a few things to say when we discuss the various items.


Mr. Weichel:: Mr. Chairman, I should like to say a few words on the agricultural estimates, since Waterloo county is a farming district equal to most counties in Ontario.
Although the growing of wheat, oats, corn and turnips is predominant, this county is well known for producing outstanding livestock and has on various occasions won prizes at the Canadian National Exhibition in Toronto as well as at other well known places.
The Waterloo county federation of agriculture was formed in 1944 and, along with junior farmers, has assisted the whole agricultural economy. The Waterloo county farmers have contributed much to the welfare of farming and the Mennonites, long established here, have carried on this work in a successful way.
Perhaps one of the problems is the lack of help on these farms, as many of the young people are entering other fields of activity. Last year a farmer friend of mine was unable to secure help. This was finally supplied when a Negro working in our district, being an agriculturalist, carried on the duties to the utmost satisfaction of his employer.
On a previous occasion the hon. member for Halton and I mentioned in the house the limited facilities which were available for hog testing programs at Waterloo, Ontario. In 1938, a 48-pen piggery was opened in Waterloo. The building program for the advanced registry station was resumed after the second world war and in 1948 a 60-pen

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piggery was constructed at the Waterloo station. In 1959 the capacity of this station was 112 pens. Yet, the capacity of this station appears to be inadequate, as a number of entries have had to be turned away from time to time owing to the lack of sufficient facilities. While there has been some unused space in recent months, I should like to suggest to the government and the minister that they consider in detail the problem of more room. Mr. Ken Cappindale deserves a great deal of credit for his splendid work here. This station has played a prominent part in the breeding and selection of better hogs, and it must be increased in size if it is to continue to fulfil this objective.
The 4-H clubs have increased greatly, and I understand that today we have well over
77,000	boys and girls in this movement. They learn good practices at an age when they have no time to learn bad ones. They are a real credit to the agricultural set-up of our country, and their contributions are outstanding.
Elmira is the egg and chicken capital of Ontario. I understand that the largest broiler breeding farm in Ontario is located five miles from my home and operated by the Selling hatchery. The output last year was 2,500,000 chicks. In addition, three other major chick hatcheries are located in our area. They are the Reliable, the Bonny Chick and the Produce. It may be interesting to know that Mr. Seiling of the Seiling hatchery developed his own incubator and holds a patent on it. He has been in the business over 40 years. A few years ago the hatchery discontinued hatching laying chicks and now concentrates on the broiler market. Broilers are hatched the year round.
In my travels across Canada, especially across Ontario, I have been deeply impressed with the value of fall fairs in our villages, towns and cities. After all, they are the show windows of agriculture in our country. Displays of baking, dairy and good food products, crafts and art exhibits, along with a showing of cattle, hogs, horses and so on have provided a great deal of interest in many communities. Horse racing, of course, is always popular, as the hon. member for Victoria, Ontario, well knows.
In my own town of Elmira we held our 106th annual fall fair last year over the Labour day week end, at which time the attendance was 22,000 people drawn from a wide area.
In order to provide better facilities for our patrons the Elmira and Woolwich agricultural society are building a new grandstand to seat well over 1,000 people. It is interesting to know that all the directors of this society are farmers, or those having business dealings with them or a background of rural life. Their [Mr. Weichel.l
efforts have provided this fair with real possibilities for the future. Our memorial arena built on land owned by this society has seating accommodation for 1,500 people and many of the exhibits are shown in this building. As mentioned before, a new steel and cement block grandstand and exhibition building is being erected this year. Better facilities will be provided for the comfort of the people and also for the junior farmers and 4-H clubs which are all important in today's rural relationships. I hope that financial assistance will be available for this worthy project. In closing, may I commend the minister and his department for their efforts to bring about better conditions in agriculture.


Mr. Forgie:: Mr. Chairman, I listened very carefully to the remarks of the hon. member for Jasper-Edson and the hon. member for St. Hyacinthe-Bagot. I cannot reply to the remarks made by the member from western Canada because I am not a farmer. I am an agriculturalist. So that there may be no mistake about the distinction between the two, may I say that a farmer is a man who makes his money in the country and spends it in the city while an agriculturalist is a man who makes his money in the city and spends it in the country.
The hon. member for St. Hyacinthe-Bagot spoke very glowingly of his constituency. I only wish I could speak as glowingly of mine because not since the hungry 30's have we had anything like the unemployment that we have in Renfrew North at the present time. The hon. member referred to the Farm Credit Corporation. May I say to him that he has very little cause to be worried for no organization of the government has done a better job, thanks to the personnel largely secured from the Veterans' Land Act administration, than the Farm Credit Corporation is doing at the present time. We have great hopes that the efficiency which was so evident in the administration of the Veterans' Land Act will be continued under the Farm Credit Corporation.
The hon. member for Jasper-Edson dealt with problems facing the farmers of western Canada. With that I have no quarrel, but not one word was spoken tonight, other than by the hon. member for St. Hyacinthe-Bagot, with regard to eastern farmers. I am interested in having the question of the differences between the viewpoints of western farmers and eastern farmers aired in the standing committee on agriculture which is now sitting, and I would therefore ask the Minister of Agriculture to refer to that committee the problem of feedstuffs which is a sore spot in the economy of eastern Canadian farmers. I think this matter should

be referred to the committee so that we will be allowed to call witnesses both from the west and the east in order to see if we can solve this problem which is a serious one, particularly to the feed manufacturers and farmers of Ontario and Quebec.
Sometimes I really worry about the situation as far as eastern and western Canada are concerned. I once heard the remark made that if the North American continent had been divided at the Mississippi river conditions east and west of that line would probably be better than they are today. I do not want to suggest that we should have a minister of agriculture for western Canada and one for eastern Canada but nevertheless, having regard to the situation that exists in this part of the country, in my opinion this might be a brilliant idea.


Henry Frank Jones: It is certainly not one to which the Liberals subscribed.


James Moffat Forgie: Supply-Agriculture
That was three years ago and nothing has been done yet. I presume that these statements by the Prime Minister were not made for the purpose of gaining votes but I am afraid that is exactly what the tobacco growers have accused him of doing.
In 1953 the present Minister of Finance stated that in his opinion the tax on cigarettes and tobacco was too high and that if there was smuggling at the United States border it was largely due to the actions of the Liberal government in imposing sky-high excise taxes. What action did the Minister of Finance take when his government took over? He increased the excise tax on a package of cigarettes by two cents. The increase in the sales in 1959 was only 3.8 per cent, compared with an increasee of 7.5 per cent in the previous year.
The general value of flue-cured tobacco far exceeds the value of any other agricultural commodity. There are approximately 4,500 qualified farms in Ontario growing tobacco in 16 counties. The estimated capital investment in these farms is $300 million or an average of between $65,000 to $70,000 per farm. The farm buildings and equipment required to cultivate flue-cured tobacco is upwards of $40,000, depending on the size of the unit. Salaries and wages of the tobacco industry amount to over $30 million and the number of employees is over 10,000. There are over 50 tobacco products establishments in Canada.
When we examine the production figures we find that the total yield of all types of tobacco products from 1949 to 1959 was 1,600 million pounds and the excise tax and duty on cigarettes alone totalled $1,960 million. In 1958 the Conservative member for Norfolk, who is himself a substantial tobacco grower, urged the government to reduce the excise tax on cigarettes. A reduction in the taxes on cigarettes has been proved to be advantageous to the government because the reduced tax results in higher sales and yields a higher tax level. The accuracy of this statement was proven in 1952-53 when the minister of finance at that time, Mr. Abbott, cut the tax by two cents a pound and the revenue then increased by $7,800,000. I must say that Mr. Abbott raised the tax by two cents a pound the previous year but realized his mistake in so doing.
It has been pointed out to the government that if Canadian cigarettes could be made longer, without this additional cost of two cents per package, there exists the probability of a greatly increased export trade in Canadian cigarettes. It is obvious that it is highly advantageous to increase our export trade.
The total excise tax, including sales tax, on manufactured tobacco products in the fiscal year 1958-59 amounted to $294 million. In comparison, the total excise tax levied on Canadian cars-


Charles Edward Rea: Order. I am sorry to have to inform the hon. member that it is now ten o'clock.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I inquire what the
business is for tomorrow and Monday as well?


Gordon Minto Churchill: Mr. Speaker, tomorrow we will commence with third reading of Bill No. C-73, an act to amend the Income Tax Act and follow then with the estimates of the Department of Agriculture.
The forecast for next week subject to change is as follows: Monday and Tuesday a supply motion; Wednesday, interim supply and if concluded, supplementary estimates. On Thursday we will commence with No. 8 on today's order paper which is a resolution in the name of the Minister of Agriculture dealing with agricultural development. Following, on Thursday and Friday, we will have the estimates of the Department of Agriculture.
The remaining three days prior to the Easter recess will be available for the completion of supplementary estimates and such other business as the house sees fit to bring forward.


Lionel Chevrier: Mr. Speaker, should we finish agriculture on Thursday or on Friday-I doubt if it can be finished Thursday-what other business would we take up?


Gordon Minto Churchill: We would very likely in that event consider the post office estimates.


Lionel Chevrier: Thank you.


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

Question

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

Mr. Argue: 1. Have (a) any government loans been made (b) any government credits been granted, to any
foreign countries in 1959, 1960 and up to February 28, 1961?
2. If so, (a) to which countries (b) in what amounts by years?
Answer by:	Hon. Donald M. Fleming
(Minister of Finance):
1.	(a) Yes. (b) No.
2.	(a) Ceylon 1958-59, $1,484,073.99; India
1958-59,	$16,826,999.92; Ceylon 1959-60,
$492,112.36; 1960-61, (Up to February 28, 1961), nil. (b) Nil.

Friday. March 17, 1961